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EubJished bv Adam k Charles Black AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS By ADAM SMITH, LL.D. WITH A LIFE OF THE AUTHOR, AN INTRODUCTORY DISCOURSE, NOTES AND SUPPLEMENTAL DISSERTATIONS. By J. R. M‘CULLOCH, Esq. MEMBER OF THE INSTITUTE OF FRANCE. FOURTH EDITION, CORRECTED AND IMPROVED. EDINBURGH: ADAM AND CHARLES BLACK ; AND LONGMAN, BROWN, GREEN, & LONGMANS, LONDON. / MDCCCL. \ * PREFACE TO THIS EDITION. The period that has elapsed since the last Edition of this work was published in 1838, has been distinguished by some of the most memo¬ rable events in the history of our domestic policy. The regulations with regard to Paper Money and Banking, introduced in 1844 ; the abolition of the Corn Laws ; the repeal of the greater portion of the Navigation Laws ; and the assimilation of the Scottish Law of Entail to the Eng¬ lish, are measures of primary importance. And though it would be rash to speculate too confidently on their results, our conviction is, that, on the whole, they will be found to be eminently beneficial. We have endeavoured to give some account of these and other important measuies, and to estimate their probable influence. If we have succeeded in our object, this Edition of the “ Wealth of Nations’’ will be found to be adapted to the present state of our internal and foreign policy, and to be on a level with the improved science of the time. We have not hesitated in reviewing the doctrines and measures that have come under our notice, to express our opinions upon them openly and plainly. But, we trust, not with unwarranted confidence, and cer¬ tainly with no personal or party bias. London, December 1849. PREFACE TO THE EDITION OF 1838. feiNCE 1784, when Dr. Smith put the last hand to the “Wealth of Nations,” the science of which it treats has made a rapid progress. The shock given by the French Revolution to old systems and prejudices, the sti¬ mulus it imparted to the public mind in every part of the civilised world, and the wars and convulsions to which it led, produced a nearly total change in the internal organisation and foreign policy of many powerful states. The fetters by which industry was clogged, and the partial and oppressive imposts by which it was burdened, in France, Germany, and Italy ; the feudal privileges of the nobility ; and the immunities enjoyed by the clergy of these countries in the days of Dr. Smith, have been mostly swept away. Representative governments have been established in France, Holland, Belgium, and some other continental states ; and the downfall of the old colonial system, and the emancipation of America, have enabled her inhabitants to avail themselves of all the advantages of their situation, and to enter, with the spirit and energy inspired by freedom, on the career of improvement. Nowhere, however, have the events of the last half century produced more interesting results than in Great Britain. We have not, indeed, been overrun by foreign armies, and continue to enjoy that free system of government to which we are mainly indebted for our prosperity. But the struggle pro aris et facts in which we were so long engaged, and the changes in the situation of the surrounding nations, have had a powerful influence over our condition ; and have furnished abundant materials for the investigations of practical and speculative politicians. The increase of the public debt and taxes; the restrictions on the importation of foreign corn; the suspension of cash payments at the Bank of England in 1797, and their resumption in 1819 ; the prodigious growth of the manufacturing population of Great Britain, and of the agricultural popu¬ lation of Ireland ; the rapid increase of the poor rates since 1795 ; and a variety of other topics of nearly equal importance, have excited, and will long continue to excite, the anxious attention of the Legislature and the public. Few periods of equal duration have ever been so productive of EDITOR S PREFACE. great events ; and the economists of the present day have to trace the causes and consequences of many highly interesting phenomena which had not exhibited themselves in the age of Smith. Under these circumstances, it would have been singular, indeed, had not large additions been made to the science of wealth. Its paramount importance in a national point of view, and the new combinations of cir¬ cumstances that have arisen, have roused the attention of the ablest men in England and generally throughout Europe, and stimulated them to engage in its investigations. The result has been, that several leading principles, which either escaped the attention of Dr. Smith, or were only incidentally alluded to by him, have been discovered and established ; and that some of those to which he has given his sanction have been found to be partially, and a few wholly, unsound. It is obvious, too, considering the lengthened period which has elapsed since the publication of the “Wealth of Nations,” that many of those gradual changes which necessarily occur in the progress of society, must have taken place ; and that these, independently altogether of any extra¬ ordinary events, would render not a few of the references made by Dr. Smith to facts and circumstances connected with the condition and policy of this and other countries, quite inapplicable at present. Still, however, the great and distinguishing merits of the “ Wealth of Nations” continue unimpaired. Nothing of importance has been added to the masterly exposition given in it of the benefits arising from the freedom of industry : and even those parts that are least sound as to principle, uniformly abound in the most sagacious remarks and disquisi¬ tions, and are illustrated with unrivalled skill and felicity. It is hardly possible, in fact, to supersede such a work. In particular parts it might be improved ; but as a whole it has so many excellences, and such a well-founded celebrity, that it will doubtless continue for a very long period, to be the fountain whence succeeding economists must draw in¬ spiration— -A quo, ceu fonte perenni, Vatum Pieriis ora rigantur aquis. Such being the case, it appeared to the Editor that he might advan¬ tageously employ himself in the publication of an edition of the “ Wealth of Nations ” that should embody such remarks and additions as might make it more suitable to the existing state of things, and more on a level with the progress made in the science since the period when it was published. What he has attempted in furtherance of this object may be thus briefly stated :— I. The majority of those who refer to any work of authority or ce¬ lebrity being anxious to learn something of the author, a sketch is given of the Life of Dr. Smith. This is principally abridged from Dugald EDITOR’S PREFACE. Stewart’s valuable memoir; but a few remarks and some facts gleaned from other sources have been added. II. Following the life is an Introductory Discourse, in which an attempt is made to trace the rise and progress of the science of wealth down to the publication of the “ Wealth of Nations to estimate the principal merits and defects of that wrnrk ; and to point out the dis¬ tinguishing steps in the subsequent history of the science. This, which is now considerably enlarged, is believed to have been, when first pub¬ lished, the only sketch of its kind that had appeared in the English language: and it seemed to be necessary, as w ell to enable the reader fairly to estimate the services rendered by Dr. Smith in this great de¬ partment of human knowdedge, as to do justice to those who in less enlightened times laid the foundations of that liberal system of com¬ mercial policy, that has already done so much to promote the well-being of mankind ; and to those who, at a later period, have assisted in bring¬ ing the science to the advanced state in w hich w T e now r find it. III. Numerous foot Notes are subjoined to the text. These are some¬ times of a controversial character; but their principal purpose is to point out the more prominent changes that have occurred in the law’s, customs, and institutions referred to by the author. The Supplemental Notes or Dissertations are given together at the end of the volume. The latter have a twofold object in view: being partly intended to make the reader aware of the fallacy or insufficiency of the principles wdiicli Dr. Smith has sometimes adopted ; and partly to exhibit a view of the principal discoveries and improvements made in the science of wealth, and of the more important changes introduced into our economical legislation, since the close of the American war. They also embrace several additional speculations on subjects of general interest and im¬ portance. Such are the objects the Editor had in view in preparing this edi¬ tion. To have executed it in a manner worthy the original work, wrnuld have required talents and acquirements to which he makes no pretensions. But if industry, long continued attention to the subject, and an anxious desire to acquit himself creditably of his task, can at all qualify for such an arduous undertaking, he is not without hopes that wdiat he has done may be approved by the public. The text has been carefully printed from the fourth edition, published in 1786, being the last that was revised by the author. Dr. Smitli having subjoined very few notes to his text, the w r ords “ Note by the Author” have been affixed to those that belong to him ; those contributed by the Editor being printed without any particular mark. The best thanks of the Editor are due to Dr. Browne, advocate, and Mr. Oliver of Lochend, for their valuable contributions. The paper of EDITOR’S PREFACE. the last-mentioned gentleman is one of the ablest hitherto published on the interesting subject of which it treats Kj* The ten years that have elapsed since the Editor published his former edition of the Wealth of Nations, have thrown considerable light on several interesting questions. He has endeavoured to profit by this additional illumination; and, besides subjecting his previous contributions to a careful and unsparing revision, and endeavouring to supply their deficiencies, he has added some entirely new notes and dissertations. One of these contains an admirable letter of Dr. Smith to the celebrated Dr. Cullen of Edinburgh on university degrees. Hence, the Editor presumes to hope that, how deficient soever, this edition will, at least, be found to be materially improved ; while, by printing it in a more condensed, though not less handsome form, the publishers are able to offer it for less than half the price of the preceding edition. London, May, 1 S3 8 . # I 1 SKETCH OF THE LIFE OF DR. SMITH. -Adam Smith, author of the Wealth of Nations , was born at Kirkcaldy, on the 5th of June, 172& His father, who held the situation of comp¬ troller of customs in that town, died a few months before his birth ; so that the charge of his early education devolved wholly on his mother, the daughter of Mr. Douglas of Strathenry, in the county of Fife. Flis constitution during infancy is said to have been extremely infirm and delicate, and required all the anxious attention of his mother, who treatecTTiim with the greatest indulgence. This did not, however, produce any unfavourable effect on his temper or dispositions ; and he repaid the fond solicitude of his parent by every attention that filial gratitude and affection could dictate, during the long period of sixty years. When only three years of age, he was stolen from Strathenry, to which place he had been carried by his mother, by a party of gips ys. Fortunately, however, for the best interests of mankind, he was speedily recovered by the exertions of his uncle. He received the first rudiments of his education in the grammar school of Kirkcaldy. The weakness of his constitution prevented him from indulging in the amusements common to boys of his age. But Mr. Stewart states, that he was even then distinguished by his passion for books, and by the extraordinary powers of his memory; that he w^as much beloved by his schoolfellows, many of whom subsequently attained to great eminence, for his friendly and generous disposition; and that he was thus early remarkable for those habits which remained with him through life, of speaking to himself when alone, and of absence in company. He continued at Kirkcaldy until 1737? when he was sent to the University of Glasgow, where he remained for three years. He then entered Baliol College, Oxford, as an exhibitioner on Snelfs foundation ; and continued for seven years to prosecute his studies at that celebrated seminary. Mr. Stewart mentions, on the authority of Dr. Maclaine of the Hague, that mathem atics and natural philosophy formed young Smith’s favourite p ursui ts while at Glasgow. But subsequently to his removal to Oxford he seems to have entirely abandoned them, and to have principally devoted the time not consumed in the routine duty of the University to the study of the belles lettres , and of those moral and political sciences of which he was destined afterwards to become so great a master.* Dr. Smith does not seem to have felt any very peculiar respect for his English alma mater . The just though severe remarks in the Wealth of * Mr. Stewart has justly applied to Dr. Smith what Lord Bacon said of Plato : “ Ilium, licet ad rempubiicam non accessisset, tamen natura et inclinatione omnino ad res civiles propensum, vires eo prsecipue intendisse; neque de Philosophia Naturali admodum solli- citum esse; nisi quatenus ad Philosophi nomen et celebritatem tuendam, et ad majestatem quandam moralibus et civilibus doctrinis addendam et aspergendam sufliceret. 5 ’ i LIFE OF DR. SMITH. • • n Nations on the system of* education followed in Oxford and Cambridge, had evidently been suggested by his own observation. He shows that it is reasonable to expect that the plan of appointing professors with handsome salaries, who are not permitted to receive fees from their pupils, should, in all ordinary cases, induce them either wholly to neglect the important duties of their office, or to discharge them in the most slovenly manner ; and he refers to the example of Oxford, to prove the accuracy of this con¬ clusion ; “ the greater part of the public professors of that seminary having, for these many years, given up altogether even the pretence of teaching .” W hile at Oxford* Dr. Smith frequently employed himself in the practice of translating, particularly from the French, in the view of improving his style ; and he used often to express a favourable opinion of such exercises. But this was a species of employment he might have prosecuted with nearly equal advantage at any other place. No doubt, however, he must have reaped considerable advantage from his residence at Oxford, by its con¬ tributing to improve and perfect his acquaintance with the niceties and delicacies of the English language, as well as by rendering him a greater proficient in classical learning, of which his knowledge was both extensive and accurate ; but it is not, perhaps, very easy to discover what other obligations he could owe to it. What advantage could he derive in prosecuting his inquiries into the history of society and civilization, and the progress and distribution of wealth, from living among those who were satisfied with what had been known on these subjects two thousand years ago; and who compelled the noble and aspiring youth of the country, committed to their charge, to draw the principal part of their information with respect to politics and philosophy from the politics and the logic of Aristotle? * Something had occurred while Dr. Smith was at Oxford to excite the suspicions of his superiors with respect to the nature of his private pursuits; and the heads of his college, having entered his apartment without his being aware, unluckily found him engaged reading Hume’s Treatise of Human Nature. The objectionable work was, of course, seized; the young philo¬ sopher being at the same time severely reprimanded. j~ He continued, subsequently to his return from Oxford in 1747, to reside for nearly two years at Kirkcaldy, with his mother. He h ad been sent to Oxford that he might be qualified for entering the Church of England. The ecclesiastical profession was not, however, agreeable to his taste ; and, in opposition to the advice of his friends, he returned to Scotland, resolved to devote himself exclusively to literary pursuits. In the latter part of the year 1748, Dr. Smith fixed his residence in Edinburgh, where, in consequence of the encouragement and persuasion of Lord Karnes, and some of his other friends, he was prevailed upon to deliver, during that and the two following years, a course of lectures on rhetoric and belles lettres . The lectures were attended by a respectable auditory, composed chiefly of students of law and theology ; and he had the honour to reckon among his pupils Mr. Wedderburn, afterwards Lord Lough¬ borough, Mr. William Johnston, afterwards Sir William Pulteney, Dr. Blair, &c.; with all of whom he subsequently continued on the most intimate terms. It was also at this period that he laid the foundation of that friend- * It is perhaps unnecessary to observe, that these remarks apply only to the state of edu¬ cation at Oxford at the period when it was attended by Dr. Smith. Latterly it has been very much improved; though the defects inherent in the constitution of the University oppose almost invincible obstacles to the introduction of the best system. f Mr. Stewart has not mentioned this circumstance, but it rests on the best authority. LIFE OF DR. SMITH. iii y ship with Mr. David Hume which lasted, without the slightest interruption, till the deatlTof the taller. No part of these lectures was ever published ; but it would appear from the statement of Dr. Blair, who commenced his course of lectures on rhetoric and belles lettres in 1758, ten years after Dr. Smith’s first course, that they had been reduced into a systematic shape. In a note to his eighteenth lecture, Dr. Blair mentions that he had borrowed several of the ideas respecting the general characters of style, particularly the plain and simple, and the characters of those English authors who are classed under them, from a manuscript treatise of Dr. Smith on Rhetoric, of which the author had shown him a part. In consequence of his increasing celebrity, Dr. Smith was elected, in 175 1, p rofessor of logic in the University of Glasgow; and the year following he" was elevated to the chair of moral philosophy in the same University, vacant by the death of Mr. Craigie, the immediate successor of the celebrated Dr. Hutcheson, under whom Dr. Smith had formerly studied. He continued to hold this situation for thirteen years; and, as the studies and inquiries in which his academical duties daily engaged him were the most agreeable to his taste, it is not surprising that he should have considered the period of his residence at Glasgow as the happiest portion of his life* At the same time, it seems reasonable to conclude that his professional pursuits must have had a great effect in maturing his speculations in morals and politics, and, consequently, in determining him to undertake those great works which have immortalized his name, and largely benefited the whole human race. Mr. Millar, the distinguished author of the Historical View of the English Government, and professor of law in the University of Glasgow, had the advantage of hearing Dr. Smith’s course of lectures on moral philosophy; of which he has given the following account:— “ His course of lectures w r as divided into four parts. The first contained Natural Theology ; in which he considered the proofs of the being and attributes of God, and those principles of the human mind upon which religion is founded. The second comprehended Ethics, strictly so called, and consisted chiefly of the doctrines which he afterwards published in his Theory of Moral Sentiments. In the third part, he treated at more length of that branch of morality which relates to justice, and which, being sus¬ ceptible of precise and accurate rules, is for that reason capable of a full and particular explanation. “ Upon this subject he followed the plan that seems to be suggested by Montesquieu ; endeavouring to trace the gradual progress of juris¬ prudence, both public and private, from the rudest to the most refined ages, and to point out the effects of those arts which contribute to subsistence, and to the accumulation of property, in producing correspondent improve¬ ments or alterations in law and government. This important branch of his labours he also intended to give to the public ; but his intention, which is mentioned in the conclusion of the Theory of Moral Sentiments, he did not live to fulfil. “ In the last part of his lectures, he examined those political regulations which are founded, not upon the principle o £ 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. ] V LIFE OF DR. SMITH. “ There was no situation in which the abilities of Dr. Smith appeared to greater advantage than as a professor. In delivering his lectures, he trusted almost entirely to extemporary elocution. His manner, though not graceful, was plain and unaffected ; and, as he seemed to be always interested in the subject, he never failed to interest his hearers. Each discourse con¬ sisted commonly of several distinct propositions, which he successively endeavoured to prove and illustrate. These propositions, when announced in general terms, had, from their extent, not unfrequently something of the air of a paradox. In his attempts to explain them, he often appeared, at first, not to be sufficiently possessed of the subject, and spoke with some hesitation. As he advanced, however, the matter seemed to crowd upon him, his manner became warm and animated, and his expression easy and fluent. In points susceptible of controversy, you could easily discern, that he secretly conceived an opposition to his opinions, and that he was led upon this account to support them with greater energy and vehemence. By the fulness and variety of his illustrations, the subject gradually swelled in his hands, and acquired a dimension which, without a tedious repetition of the same views, was calculated to seize the attention of his audience, and to afford them pleasure, as well as instruction, in following the same object through all the diversity of shades and aspects in which it was presented, and afterwards in tracing it backwards to that original proposition or general truth from which this beautiful train of speculation had pro¬ ceeded. “ His reputation as a professor was accordingly raised very high, and a multitude of students from a great distance resorted to the University, merely upon his account. Those branches of science which he taught be¬ came fashionable at this place, and his opinions were the chief topics of discussion in clubs and literary societies. Even the small peculiarities in his pronunciation or manner of speaking became frequently the objects of imitation.” It is understood that Dr. Smith made his debtit as an author by contri¬ buting, anonymously, two articles to a publication entitled the Edinburgh Review, commenced in 1755, of which only two numbers were ''published. The first of these articles is a review of Dr. Johnson’s Dictionary, and displays considerable acuteness; the second is in the form of a letter to the editor, and contains some general observations on the literature of the different European countries. It is chiefly remarkable as evincing the attention paid by the.authorto continental literature, at a period when it was comparatively neglected in this country. In 175 9 Dr. Smith published his Theory oj'^IoryjJ^ Spntimpn ts. He had been engaged for a very considerable period in the composition of this work, which is throughout elaborated with the greatest care. The fun¬ damental principle maintained by the author is, that sympathy forms the real foundation of morals ; that we do not immediately approve or disapprove of any given action, when we have become acquainted with the intention of the agent and the consequences of what lie has done, but that we previously enter, by means of that sympathetic affection which is natural to us, into the feelings of the agent and those to whom the action relates; that, having considered all the motives and passions by which the agent was actuated, we pronounce, with respect to the propriety or impropriety of the action, according as we sympathize or not with him ; while we pronounce, with respect to the merit or demerit of the action, according as we sym¬ pathise with the gratitude or resentment of those who were its objects, and that we necessarily judge of our own conduct by comparing it with such LIFE OF DR. SMITH. v maxims and rules as we have deduced from observations previously made on the conduct of others. “ Whatever judgment,” says Dr. Smith, “ we form with respect to our own motives and actions must always bear some secret reference, either to what are, or to what, upon a certain condition, would be, or to what we imagine ought to be, the judgment of others. We endeavour to examine our own conduct as we imagine any other fair and impartial spectator would examine it. If, upon placing ourselves in his situation, we thoroughly enter into all the passions and motives which influenced it, we approve of it by sympathy with the approbation of this supposed equitable judge. If otherwise, we enter into his disapprobation and condemn it.”* Several, and, as it is now generally admitted, some unanswerable, ob¬ jections have been urged against this most ingenious theory. But, whatever difference of opinion may exist with respect to the truth of the principle it involves, the “ Theory of Moral Sentiments ” has been universally allow¬ ed to abound in the most admirable disquisitions, in a faithful and skilful delineation of character, and in the soundest and most elevated maxims for the practical regulation of human life. The style various, but always elo¬ quent, is worthy of the subject; and while it serves, by the beauty and richness of its colouring, to relieve the dryness of some of the more abstract discussions, it gives additional force to the powerful recommendations of generous, upright, and disinterested conduct to be found in every part of the work. Dr. Brown, who has criticised this theory with his usual acuteness, and has shown that though sympathy may diffuse moral sentiments it can never originate them, bears, notwithstanding, the strongest testimony to the transcendent merits of Dr. Smith’s work. “ The Theory of Moral Senti¬ ments,” he observes, “ is, without all question, one of the most interesting works, perhaps I should have said the most interesting work, in moral science. It is valuable, however, as I before remarked, not for the leading doctrine, of which we have seen the fallacy, but for the minor theories which are adduced in illustration of it; for the refined analysis which it exhibits in many of its details ; and for an eloquence which, adapting itself to all the temporary varieties of its subject, familiar, with a sort of majestic grace, and simple even in its magnificence, can play amid the little decencies and proprieties of common life, or rise to all the dignity of that sublime and celestial virtue, which it seems to bring from heaven indeed, but to bring down gently and humbly, to the humble bosom of man.”f Having published the substance of so important a part of his lectures, Dr. Smith was enabled to make considerable retrenchments from the ethical parts of his course, and to give a proportionally greater extension to the disquisitions on Jurisprudence and Political Economy. He had long been in the habit of embodying the results of his studies and investigations with respect to both these departments of political science, and particularly the latter, in his lectures; and it appears from a statement which he drew up in 1755, in order to vindicate his claims to certain political and literary opinions, that he had been in the habit of teaching, from the time he obtained a chair in the University of Glasgow, and even when at Edinburgh, the same enlarged and liberal doctrines with respect to the freedom of industry, and the impolicy and injurious influence of artificial restraints and regulations, which he afterwards so fully established in the * Theory of Moral Sentiments, part iii. chap. I. t Brown’s Lectures, vol. iv. p. 132. edit. 1824. H VI LIFE OF DR. SMITH. Wealth of Nations. His residence in a large commercial city, like Glasgow, gave him considerable advantage in the prosecution of his favourite studies, by affording means of easily obtaining that correct practical information, on many points, which cannot be learned from books, and by enabling him to compare his theoretical doctrines with the experimental conclusions of his mercantile friends. Notwithstanding the disinclination, so common among men of business, to listen to speculative opinions, and the opposition of his leading principles to the old maxims of trade, he was able, before he quitted his situation in the University, to rank some very eminent merchants among his proselytes. The publication of the “ Theory of Moral Sentiments ” brought a vast ac¬ cession of reputation to Dr. Smith; and placed him, in the estimation of all who were qualified to form an opinion on such a subject, in the first rank of moralists, and of able and eloquent writers. In 1762 the Senatus Academicus of the University of Glasgow unani¬ mously conferred on him the honorary degree of Doctor of Laws; in testimony, as it is expressed in the minutes of the meeting, of their respect for his universally acknowledged talents, and of the advantage that had resulted to the University from the ability with which he had for many years expounded the principles of jurisprudence. But the most important effect of his increasing celebrity, in so far at least as respected himself, was his receiving in 1763 an invitation from Mr. Charles Townsend, who had married the Duchess of Buccleugh, to attend her Grace’s son, the young Duke, on his travels ; and the advantageous terms that were offered, com¬ bined with the strong desire he entertained of visiting the Continent, induced him to accept the offer, and to resign his chair at Glasgow. “ With the connexion which he was led to form in consequence of this change in his situation,” says Mr. Stewart, “ he had reason to be satisfied in an un¬ common degree, and he always spoke of it with pleasure and gratitude. To the public it was not perhaps a change equally fortunate; as it interrupted that studious leisure for which nature seems to have destined him, and in which alone he could have hoped to accomplish those literary projects which had flattered the ambition of his youthful genius.” Dr. Smith set out for France in company with his noble pupil in March 176F. They remained only a very few days at Paris on their first visit to that capital, but proceeded to Toulouse, where they resided for about eighteen months. The society of Toulouse, a considerable city, and at that time the seat of a parliament, must have been a good deal superior to that of most country towns ; and Dr. Smith would, no doubt, avail himself of it, and of the leisure he then enjoyed, to perfect and extend his knowledge of the literature, internal policy? and state of France. He has told us that he was not disposed to place much confidence in the facts and reasonings of political arithmeticians ; and it is evident, from his rarely stating facts on , the authority of others, and from the references he occasionally makes to circumstances connected with Toulouse, Geneva, and other places he visited, that he was chiefly indebted to his own observation and inquiries for the accurate and extensive information he is universally acknowledged to have possessed with respect to the institutions, habits, and condition of the French people. After leaving Toulouse, Dr. Smith and his pupil proceeded to Geneva, where they resided two months. They returned to Paris at Christmas, 1765, and remained in that city for nearly twelve months. During the whole of this period, Dr. Smith lived on the most friendly footing with the best society in Paris. Turgot, afterwards Comptroller General of Finance, LIFE OF DR. SMITH. VI1 D’Alembert, Helvetius, Marmontel, the Abbe Morellet*, the Due de la Rochefoucault, Madame Riccoboni, &c. were of the number of his ac¬ quaintances ; and some of them he continued e^ ei afiei to reckon among his friends. He was also on familiar terms with M. Quesnay, founder of the sect of the Economists; and there is every reason to think that he derived considerable advantage from his intercourse with that able and excellent person, than whom none was better qualified to strike out original and ingenious views. So sensible indeed was Smith of his great and various merits as a man and a philosopher, that he intended, had he not been prevented by Quesnay’s death, to have left a lasting testimony of the estimation in which he held him, by dedicating to him the Y\ ealth of Nations. In October, 1766, the Duke of Buccleugh and Dr. Smith returned to London. The latter soon a fie r ^remove cl to his old residence at Kirkcaldy ; where he continued to reside, with very little interruption, for about ten years, habitually occupied in study? and in the elaboration of his great work. The Inquiry into the Nature and Causes of the Wealth of Nations appeared in 1776 — an aera that will be for ever memorable in the history of political philosophy. But, as we shall have other opportunities of minutely examining most of the theories and doctrines advanced in this great work')', it is suffi¬ cient, at present, to observe, that, notwithstanding the defects that have been discovered in some of its principles, and the objections that have been made, and, perhaps, with justice, to its arrangement, it will ever remain one of the noblest monuments of profound sagacity, great and varied learning, sound judgment, and persevering research, directed to the best, because the most useful, purposes. There can be no question with respect to the claim of Dr. Smith to be considered as the real founder of the modern system of Political Economy. Though he has not left a perfect work, he has left one which contains a greater number of useful truths than have e^er been given to the world by any other individual; and he has pointed out and smoothed the route, by following which subsequent philosophers have been able to perfect much that he left incomplete, to rectify the mistakes into which he fell, and to make many new and important discoveries. Whether, indeed, we refer to the soundness of its leading doctrines, the liberality and universal applicability of its practical conclusions, or the powerful and beneficial influence it has had on the progress of economical science, and on the policy and conduct of nations, the YY ealth of Nations must be placed in the foremost rank of those works that have helped to liberalize, enlighten, and enrich mankind.j: * The paragraph which follows is extracted from the Memoires of the Abbe Morellet, published in 1821. “ J’avais connu Smith dans un voyage qu’il avait fait en France, vers 1762; il parlait fort mal notre langue; mais sa Theorie des Sentimens Moraux, publiee en 1759, m’avait donne une grande idee de sa sagacite et de sa profondeur. Et veritablement je le regarde encore aujourd’hui comme un des hommes qui a fait les observations et les analyses les plus completes dans toutes les questions qu il a traitees. M. Tuigot, qui aimait ainsi que moi la metaphysique, estimait beaucoup son talent. !Nous le vimes plusieurs fois; il fut presente chez Helvetius: nous parlames theorie commerciale, banque, credit public, et de plusieurs points du grand ouvrage qu’il meditait. Il me fit present aun fort joli portefeuille anglais de poche, qui etait a son usage, et dont je me suis eeivi vingt ans.” Tome i. p. 237. . 7 For a general view of the principal merits and defects of the M ealth of Nations,. see Introductory Discourse, § 2. | Sir James Mackintosh has made the following just and discriminating remarks on the great works of Grotius, Locke, Montesquieu, and Smith. “ I he treatise on the Law of War and Peace, The Essay on the Human Understanding, the Spirit of Laws, and the Inquiry into the Causes of the Wealth of Nations, are the works which have most 1 viii LIFE OF DR. SMITH. Dr. Smith survived the publication of the Wealth of Nations fifteen years, He had the satisfaction to see it translated into all the languages of Europe ; to hear his opinions quoted in the House of Commons ; to be consulted by the minister; and to observe that the principles he had ex¬ pounded were beginning to produce a material change in the public opinion, and in the councils of this and other countries ; and he must have enjoyed the full conviction that the progress of events would ensure their ultimate triumph, by showing that they were productive of signal advantage, not only to the general mass of mankind, but to the inhabitants of every country which should have good sense enough to adopt them. Mr. Hume died very soon after the publication of the Wealth of Nations. Dr. Smith, with whom he had long lived on the most intimate terms, was most solicitous in his attentions to his illustrious friend during his illness ; and gave a brief but interesting account of the circumstances connect¬ ed with his death, and a sketch of his character in a letter addressed to Mr. Strachan of London, that was soon after published as a supplement to Mr. Hume’s autobiography. The unqualified eulogium pronounced in this letter on Mr. Hume’s character excited the indignation of those who took offence at his religious opinions. Dr. Horne, Bishop of Norwich, in an anonymous letter, attacked Dr. Smith on this ground ; and ascribed to him, though without any certain data to go upon, the same sceptical opinions that had been entertained by his deceased friend. But he took no notice of this effusion ; and wisely declined entering upon a controversy that could have led to no useful result. Dr. Smith resided principally in London during the two years immediately subsequent to the publication of the W T ealth of Nations ; caressed by the most distinguished persons in the metropolis, who were justly proud of his acquaintance, and who, though they could not always subscribe to the justice of his remarks, were equally delighted with the goodness of his heart, the simplicity of his manners, the vigour of his understanding, and the variety of his attainments. In 1778 he was appointed, through the unsoli¬ cited application of his old pupil and friend the Duke of Buccleugh, a commissioner of customs for Scotland. In consequence of this appointment directly influenced the general opinion of Europe during the two last centuries. They are also the most conspicuous landmarks in the progress of the sciences to which they relate. It is remarkable that the defects of all these great works are very similar. The leading notions of none of them can, in the strictest sense, be said to be origi¬ nal, though Locke and Smith in that respect surpass their illustrious rivals. All of them employ great care in ascertaining those laws which are immediately deduced from experience, or directly applicable to practice; but apply metaphysical and abstract principles with considerable negligence. None pursues the order of science, beginning with first elements, and advancing to more and more complicated conclusions: though Locke is, perhaps, less defective in method than the rest. All admit digressions which, though often intrinsically excellent, distract attention, and break the chain of thought. None of them are happy in the choice, or constant in the use, of technical terms; and in none do we find much of that rigorous precision which is the first beauty of philosophical language. Grotius and Montesquieu were imitators of Tacitus, — the first with more gra¬ vity — the second with more vivacity; but both were tempted to forsake the simple diction of science, in pursuit of the poignant brevity which that great historian has carried to a vicious excess. Locke and Smith chose an easy, clear, and free, but somewhat loose and verbose, style — more concise in Locke — more elegant in Smith, — in both exempt from pedantry, but not void of ambiguity and repetition. Perhaps all these apparent defects contributed in some degree to the specific usefulness of these great works; and, by ren¬ dering their contents more accessible and acceptable to the majority of readers, have more completely blended their principles with the common opinions of mankind.”— Article on Stewart’s View of the Progress of Metaphysical, Ethical, and Political Science, in the 71st number of the Edinburgh Review life of dr. smith. Lx he removed to Edinburgh, where he continued afterwards to reside, pos¬ sessed of an income more than equal to his wants, and in the enjoyment of the society of his earliest and most esteemed friends. His mother, then in extreme old age, and his cousin, Miss Douglas, accompanied him to Edin¬ burgh, the latter superintending the domestic arrangements and economy of his family. But though his appointment to the customs reflects high credit on the nobleman by whose intervention it was procured, it may be doubted whether it was worthy of the country or of Dr.. Smith. The philosopher who had produced a work in which the true sources of national wealth and pro¬ sperity were, for the first time, fully explored and laid open, deserved a different and a higher reward. There were thousands of persons who could have performed the duties of a commissioner of the customs quite as well as Dr. Smith, or perhaps better ; but there was not one, besides himself, who could have given that “ 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*,” which it was his intention to give ; — an intention that he would most probably have fulfilled, had the well-earned bounty of the public not been clogged with the performance of petty routine duties that engrossed the greater part of his time, and left him but little leisure for study. In 1787 Dr. Smith was elected Lord Rector of the University of Glas¬ gow ; on which occasion he addressed a letter to that learned body, which strikingly evinces the high sense he felt of this honour, and his affectionate regard for those from whom it emanated. “ No preferment,” says he, “ could have given me so much real satisfaction. No man can owe greater obligations to a society than I do to the University of Glasgow. They educated me; they sent me to Oxford. Soon after my return to Scotland, they elected me one of their own members ; and afterwards preferred me to another office, to which the abilities and virtues of the never to be forgotten Dr. Hutcheson had given a superior degree of illustration. The period of thirteen years, which I spent as a member of that society, I remember as by far the most useful, and therefore as by far the happiest and most honourable, period of my life ; and now, after three and twenty years absence, to be remembered in so very agreeable a manner by my old friends and protec¬ tors, gives me a heart-felt joy which I cannot easily express to you.” His constitution, which had at no time been robust, began early to give way; and his decline was accelerated by the grief and vexation he felt on account of the death of his mother, to whom he had been most tenderly attached, in 1784, and of Miss Douglas, in 1788. He survived the latter only about two years, having died in July 1790. His last illness, which was occasioned by a chronic obstruction of the bowels, was both tedious and painful. But he bore it with the greatest fortitude and resignation: his cheerfulness never forsook him ; and he had all the consolation that could be derived from the affectionate sympathy and attention of his friends. His conduct in private life did not belie the generous principles incul¬ cated in his works. He was in the habit of allotting a considerable part of his income to offices of secret charity. Mr. Stewart mentions that he had been made acquainted with some very affecting instances of his be¬ neficence. “ They were all,” he observes, “ on a scale much beyond w hat might have been expected from his fortune; and w ere accompanied with circumstances equally honourable to the delicacy of his feelings and the liberality of his heart.” * See the concluding paragraph of the Theory of Moral Sentiments. LIFE OF DR. SMITH. > Dr. Smith amassed an exceedingly valuable and well-selected, though not a very extensive, library. He was very particular, not only with respect to the books themselves, but also with respect to the condition of the copies admitted into his collection. u The first time,” says Mr. Smellie, u I hap¬ pened to be in his library, observing me looking at the books with some de¬ gree of curiosity and perhaps surprise, for most of the volumes were elegantly and some of them most superbly bound, 1 You must have remarked,’ said he, ‘ that I am a beau in nothing but my books.’ ” * Notwithstanding the apparent flow and artlessness of his style, and his great experience in composition, Dr. Smith stated, not long before his death, that he continued to compose as slowly, and with as great difficulty, as at first. lie did not write with his own hand, but generally walked up and down his apartment, dictating to an amanuensis,! a habit which may in part, perhaps, account for the diffuseness of style which is so observable in the u Wealth of Nations.” He regarded the works of Middleton as affording the best specimens of English composition ; and he was accustomed to re¬ commend the careful study of his u Life of Cicero ” to all who wished to write easily, perspicuously, and in correct English. Dr. Smith had been long resolved that none of his manuscripts, except those which he himself judged fit for publication, should ever see the light ; and a few days before his death he carried this resolution into effect, by having all his papers committed to the flames, with the exception of the fragments of some essays, intended to illustrate the principles that lead and direct philosophical inquiries, which he left to the discretion of his friends to publish or not as they thought proper. The contents of the manuscripts that were destroyed are not exactly known ; but they certainly contained the course of lectures on rhetoric and belles lettres delivered at Edinburgh in 1748, and the lectures on jurisprudence and natural religion, which formed a most important part of the course of moral philosophy delivered at Glas¬ gow. The loss of the latter must ever be a subject of deep regret. We are ignorant of the motives which induced Smith to destroy them ; but Mr. Stewart supposes that it was not so much on account of any apprehended injury to his literary reputation from the publication of such unfinished works, as from an anxiety lest the progress of truth should be retarded by the statement of doctrines of which the principles were not fully de¬ veloped. The following observations on the private character and habits of Dr. Smith proceed from the pen of Mr. Stewart, who knew him well, and who was the last survivor of that galaxy of illustrious men who shed, during the last century, so imperishable a glory over the literature of Scotland. “ The more delicate and characteristical features of his mind,” Mr. Stewart observes, “ it is perhaps impossible to trace. That there were many pecu¬ liarities, both in his manners and in his intellectual habits, was manifest to the most superficial observer; but although, to those who knew him, these peculiarities detracted nothing from the respect which his abilities com¬ manded ; and although, to his intimate friends, they added an inexpressible charm to his conversation, while they displayed, in the most interesting light, the artless simplicity of his heart; yet it would require a very skilful pencil * Smellie’s Lives, p. 296 . f Mr. Stewart states that all Hume’s works were written with his own hand; and that the last volumes of his history were printed from the original copy, with only a few marginal cor¬ rections. LIFE OF DR. SMITH. XI to present them to the public eye. He was certainly not fitted for the general commerce of the world, or for the business of active life. The comprehensive speculations with which he had been occupied from his youth, and the variety of materials which his own invention continually supplied to his thoughts, rendered him habitually inattentive to familiar objects, and to common occurrences; and he frequently exhibited in¬ stances’ of absence, which had scarcely been surpassed by the fancy of La Bruyere.* Even in company he was apt to be engrossed with his studies ; and appeared at times, by the motion of his lips, as well as by his looks and gestures, to be in the fervour of composition. I have often, however, been struck, at the distance of years, with his accuiate memoiy of the most trifling particulars j and am inclined to belie\e, fiom this and some othei circumstances, that he possessed a power, not perhaps uncommon among absent men, of recollecting, in consequence of subsequent efforts of lefrection, many occurrences which, at the time when they happened, did not seem to have sensibly attracted his notice. # “ To the defect now mentioned, it was probably owing, m part, that he . did not fall in easily with the common dialogue of conversation, and that he was somewhat apt to convey his own ideas in the form of a lectiue.. When he did so, however, it never proceeded from a wish to engross the discourse, or to gratify his vanity. His own inclination disposed him so stiongl^ to enjoy°in silence the gaiety of those around him, that his friends were often led to concert little schemes, in order to engage him in the discussions most likely to interest him. Nor do I think I shall be accused of going too far when I sav, that he was scarcely ever known to start a new topic himself, or to appear unprepared upon those topics that were introduced by others. Indeed, his conversation was never more amusing than when he gave a loose to his genius upon the very few branches of knowledge of which he only possessed the outlines. The opinions he formed of men, upon a slight acquaintance, weie fre¬ quently erroneous 5 but the tendency of his nature inclined him much moie to blind partiality than to ill-founded prejudice. The .enlarged views of human affairs, on which his mind habitually dwelt, left him neithei time nor inclination to study, in detail, the uninteresting peculiarities of oidinaiy characters; and accordingly, though intimately acquainted with the capa¬ cities of the intellect, and the workings of the heait, and accustomed, in his theories, to mark, with the most delicate hand, the nicest shades, both of genius and of the passions ; yet, in judging of individuals, it sometimes hap¬ pened that his estimates were, in a surprising degree, wide of the truth. The opinions, too, which, in the thoughtlessness and confidence of his social hours, he w^as accustomed to hazard on books, and on questions of speculation, were not uniformly such as might have been expected from the superiority of his understanding, and the singular consistency of his philosophical principles. They were liable to be influenced by accidental circumstances, and by the humour of the moment j and, vlien retailed by those who only saw him occasionally, suggested false and conti adictoiy ideas of his real sentiments. On these, however, as on most other occasions,.there was always much truth, as well as ingenuity, in his remaiks; and if the * Some instances of this sort have been specified in an article in the Quarterly Review ; but of these some are said to be of doubtful authenticity, and they are all too evident y Canca tured to warrant any confidence being placed in them. i XU LIFE OF DR, SMITH. different opinions which, at different times, he pronounced upon the same subject had been all combined together, so as to modify and limit each other, they would probably have afforded materials for a decision, equally compre¬ hensive and just. But, in the society of his friends, he had no disposition to form those qualified conclusions that we admire in his writings ; and he generally contented himself with a bold and masterly sketch of the object, from the first point of view in which his temper, or his fancy, presented it. Something of the same kind might be remarked, when he attempted, in the flow of his spirits, to delineate those characters which, from long intimacy, he might have been supposed to understand thoroughly. The picture Tvas always lively and expressive, and commonly bore a strong and amusing resemblance to the original, when viewed under one particular aspect ; but seldom, perhaps, conveyed a just and complete conception of it in all its dimensions and proportions. In a word, it was the fault of his unpremedi¬ tated judgment to be too systematical, and too much in extremes. u But, in whatever way these trifling peculiarities in his manners may be explained, there can be no doubt that they were intimately connected with the genuine artlessness of his mind. In this amiable quality, he often recalled to his friends the accounts that are given of good La Fontaine ; a quality which in him derived a peculiar grace from the singularity of its combina¬ tion with those powers of reason and of eloquence, which, in his political and moral writings, have long engaged the admiration of Europe. “ In his external form and appearance there was nothing uncommon. "When perfectly at ease, and when warmed with conversation, his gestures were animated, and not ungraceful: and, in the society of those he loved, his features were often brightened with a smile of inexpressible benignity. In the company of strangers, his tendency to absence, and perhaps still more his consciousness of this tendency, rendered his manner somewhat embar¬ rassed ;—an effect which was probably not a little heightened by those speculative ideas of propriety, which his recluse habits tended at once to perfect in his conception, and to diminish his power of realizing. He never sat for his picture; but the medallion of Tassie conveys an exact idea of his profile, and of the general expression of his countenance.” * The following is a list of the published works of Dr. Smith. 1. Two articles in the Edinburgh Be view for 1755, being, (1) a Beview of Johnson's English Dictionary ; and (2) A Letter to the Editors. 2. Theory of Moral Sentiments. The first edition of this work was pub¬ lished in 8vo, early in 1759. The sixth edition was published a short time before the author’s death. It contains several additions, most of which were executed during his last illness. 3. Considerations concerning the first Formation of Languages , and the different Genius of Original and Compounded Languages. This essay was originally subjoined to the first edition of the Moral Sentiments. It is an ingenious and pretty successful attempt to explain the formation and progress of language, by means of that species of investiga¬ tion to which Dugald Stewart has given the appropriate name of Theoretical or Conjectural History • and w r hich consists in endeavouring to trace the pro¬ gress and vicissitudes of any art or science, partly from such historical facts as have reference to it, and, where facts are wanting, from inferences derived from considering what would be the most natural and probable conduct of mankind under the circumstances supposed. * An engraving from this medallion, executed by Horsburgh, is prefixed to this edition. -XT ► LIFE OF DR. SMITH. 4 An Inquiry into the Nature and Causes of the Wealth of Nations . The first edition was published at London in 1776, in two volumes 4to. The fourth edition, which was the last revised by the author, appeared m three volumes 8vo, in 1786, , r t 5. His posthumous works , or those which he exempted from the general destruction of his manuscripts, and which were published by Ins friends . Doctors Black and Hutton. These gentlemen, in an advertisement prefixed to the publication, state that, when the papers which Dr. Smith had left in their hands were examined, “ the greater number appeared to be parts of a plan he once had formed for giving a connected history of the liberal sciences and elegant arts." “ It is long," they add, “ since he found it necessary to abandon that plan as far too extensive ; and these parts of it lay beside him neglected until his death. The reader will find in them that happy connection, that full and accurate expression, and that clear illustra¬ tion which are conspicuous in the rest of his works ; and though it is difficult to add much to the great fame he so justly acquired by his other writings, these will be read with satisfaction and pleasure." . The papers in question comprise, I. fragments of a great work On the Principles which lead and di¬ rect Philosophical Inquiries , illustrated (1 ) by the History of Astronomy ; (2) by the History of the Ancient Physics ; and (3) by the History of the Ancient Logics and Metaphysics. II. An essay entitled, Of the Nature of that Imita¬ tion which takes place in what are called the Imitative Arts. III. A short tract, Of the Affinity between certain English and Italian Verses . IV. A dis¬ quisition, Of the External Senses . Of the historical dissertations, the first only,, on the History of Astronomy , seems to be nearly complete. They are all.written on the plan of the disser¬ tation on the Formation of Languages , being partly theoretical and partly founded on fact. In the essay on the History of Astronomy, after premising some acute and ingenious speculations with respect to the effects of unex¬ pectedness and surprise, and of wonder and novelty, the authoi proceeds to give a brief, masterly, outline of the different astronomical systems, from the earliest ages down to that of Newton. The fragments that remain of the other two historical essays are much less complete, and do not possess the interest of the formei. Dr. Smith contends, in the essay on the Imitative Arts, that the. pleasure derived from them depends principally upon the difficulty of. the imitation, or, as he has expressed it, u upon our wonder at seeing an object of one kind represent so well an object of a very different kind, and upon our admiration of the art which surmounts so happily that disparity which nature had established between them.”* On this principle he explained the preference so generally given in tragedy to blank verse over prose : and Mr. Stewart mentions that, for the same reason, he was inclined to piefei rhyme in tragedy to blank verse, and that he extended the same principle to comedy ; and even went so far as to regret that those graphic delineations of 1 cal life and manners, exhibited on the English stage, had not been subjected to the fetters of rhyme, and executed in the manner of the French school. His theoretical conclusions, on this curious topic of speculation, wcie confiimed by the admiration he entertained for the great dramatic authois of Fiance—— an admiration that was heightened in no small degree when lie saw theii chef ~d’oeuvres represented on the stage. * Smith’s Works, vol. v. p. 261. edit. 1811. XIV LIFE OF DR. SMITH. The short essay, of the Affinity between certain English and Italian verses, is curious rather than valuable. It affords a striking illustration of the variety and extent of Dr. Smith's literary pursuits. The disquisition with respect to the External Senses is of considerable extent. It embraces some ingenious discussions; and is a valuable contri¬ bution to the science of which it treats. INTRODUCTORY DISCOURSE. i I. RISE AND PROGRESS OF POLITICAL ECONOMY DOWN TO TIIE PUBLICATION OF TIIE U WEALTH OF NATIONS.** If tlie interest and importance of the subjects of which it treats be any test of the interest and importance of a science, Political Economy will be found to have the strongest claims on the public attention. It points out the means by which the necessaries, comforts, and enjoyments that constitute wealth may be most easily and cheaply produced ; it ascertains the laws by which they are divided among the different classes of the community ; and the mode in which they may be most advantageously consumed. Its inti¬ mate connection with all the best interests of mankind is consequently obvi¬ ous. No other science comes so directly home to our every-day occupations and business. The consumption of wealth is indispensable to existence ; but the eternal law of Providence has decreed that it can only be procured by industry—that man must earn his bread in the sweat of his brow. This twofold necessity renders the attainment of wealth the principal object of the exertions of the vast majority of the human race : it has subdued the natural aversion of man from labour, given activity to indolence, and armed the patient hand of industry with zeal to undertake, and perseverance to over¬ come, the most irksome and disagreeable tasks. Such being the circumstances under which society is placed, the science which teaches how the production of wealth may be most effectually pro¬ moted ; and which, also, unfolds the principles that govern its distribution, must certainly deserve to be carefully studied and meditated. There are none to whom it can be considered extrinsic or superfluous. There are some, doubtless, such as statesmen and those engaged in the administration of pub¬ lic affairs, to whom it may be of more consequence than others ; but it is of importance to all. Even the few who, having inherited ample fortunes, are exempted from any necessity of attending to the means by which they may be further augmented, must, notwithstanding, feel interested in many of the inquiries pertaining to this science. All of them involve considerations deeply affecting the well-being of numerous individuals, or of the public. The prices of all sorts of commodities—the profits of the manufacturer and merchant—the rent of the landlord—the wages of the labourer—and the incidence and effect of taxes and regulations, depend on principles which it belongs to the Political Economist to ascertain and elucidate. Neither is wealth necessary only because it affords the means of subsist¬ ence. Where it has not been amassed, the care of providing for their imme¬ diate wants engrosses the undivided attention of all; and the views, sentiments, and feelings of the people are alike contracted and illiberal. The possession of a decent competence, or the ability to indulge in other pursuits than those that directly tend to satisfy our animal wants and desires, is ne¬ cessary to soften the selfish passions, to improve the moral and intellectual XVI Sect. I. INTRODUCTORY DISCOURSE. character, and to insure any considerable proficiency in liberal studies and pursuits. Without the tranquillity and leisure afforded by the enjoyment of accumulated riches, those speculative and elegant studies which enlarge our views, purify our taste, and lift us higher in the scale of being, could not be successfully prosecuted. The barbarism and refinement of nations depend more on their wealth than on any other circumstance. No people have ever made any distinguished figure in philosophy or the fine arts, without having been, at the same time, celebrated for their riches and industry. Pericles and Phidias, Petrarch and Raphael, adorned the flourishing ages of Grecian and Italian commerce. The influence of wealth is, in this respect, almost omnipotent. It raised Venice from the bosom of the deep, and made the desert and sandy islands on which she is built, and the unhealthy swamps of Holland, the favoured abodes of literature, science, and art. In our own country its effects have been equally striking. The number and eminence of our philosophers, poets, scholars, and artists, have always increased pro¬ portionally to the increase of the public wealth, or to the means of rewarding and honouring their labours. Wealth being thus essential to individual existence and comfort, and to national civilization and distinction in the arts, it may justly excite surprise that so few efforts should have been made, until a very recent period, to in¬ vestigate its sources; and that Political Economy was not early considered as forming a principal part in all comprehensive systems of education. A va¬ riety of circumstances might be specified as having conspired to occasion its unmerited neglect; but of these we shall only notice the two which seem to have had the greatest influence, viz. the political doctrines and institutions of the ancient world, and the darkness of the period w T hen the universities of modern Europe were founded. The citizens of Greece and Rome considered it degrading to engage in those branches of manufacturing and commercial industry which form, per¬ haps, the principal business of the inhabitants of modern Europe. This prejudice doubtless descended from those ages of violence and disorder, an¬ tecedent to the establishment of regular governments, when man, constantly exposed to hostile attacks, depended on his sword alone for protection, and devolved on the softer sex, or on the captives wdiom the fortune of war had put in his power, all those sedentary and laborious occupations which were considered as incompatible with the higher functions he was called upon to discharge. The constitution of the ancient republics tended to foster and perpetuate the early opinions with respect to the inferiority of mechanical pursuits. The citizens of Sparta,* and of some of the other Grecian states, were prohibited from engaging in manufactures or commerce: and though this prohibition did not exist in Athens, the same opinions prevailed in it; and these employments being regarded as unworthy of freemen, were, in consequence, wholly carried on either by slaves or by the very dregs of the populace. Aristotle uniformly speaks in the most contemptuous terms of artisans and merchants, who, he says, are to be classed with things useful to the commonwealth, but are not to be ranked with the citizens :f and Plato goes so far as to propose banishing them entirely from his imaginary republic.J The same prejudice had a still more pow* * Cragius, de Republica Lacedaemomorum, p. 284. *}* Aristot. Polit. lib. vii. cap. 9.; lib. viii. cap. 4. &c. t De Republica, Lib. ii. Sect. I. INTRODUCTORY DISCOURSE. XVI» erful influence at Rome, which had less of an industrial character than Athens. Instead of endeavouring to enrich themselves by their own exer¬ tions, the Romans trusted to the reluctant labour of slaves, and to subsidies extorted from conquered countries. Even Cicero, who had mastered all the philosophy of the ancient world, and raised himself above many of the pre¬ judices of his age and country, does not scruple to affirm, that there can be nothing ingenuous in a workshop; that commerce, when conducted on a small scale, is mean and despicable, and, when most extended, barely tole¬ rable —Non admodum vituperanda ! * Agriculture, indeed, was treated with more respect. Some of the most distinguished characters in the earlier ages of Roman history had been actively engaged in rural affairs; but, notwith¬ standing their example, in the flourishing period of the Republic, and under the Emperors, the soil was principally cultivated by slaves belonging to the landlord, and employed on his account. The mass of Roman citizens were either engaged in the military service, or derived a precarious and de¬ pendent subsistence from the supplies of corn furnished by the conquered provinces. The relations subsisting in modern Europe between landlords and tenants, and masters and servants, being, in consequence, almost unknown, the ancients were comparative strangers to those interesting questions, growing out of the rise and fall of rents and wages, which form so important a branch of economical science. Their philosophy was also ex¬ tremely unfavourable to the cultivation of Political Economy. The luxury of the rich, or their more refined mode of living, was regarded by the ancient moralists as an evil of the first magnitude. They considered it as subversive of those warlike virtues which they principally admired; and they, conse¬ quently, denounced the passion for accumulation as fraught with the most injurious consequences. It was impossible that this science should become an object of attention to minds imbued with such prejudices, or that it should be studied by those who contemned the objects about which it is conversant, and vilified the labour by which wealth is produced. The clergy being possessed of almost all the knowledge extant when universities were established in the course of the middle ages, were entrusted with the regulation of these seminaries; and their peculiar habits and pursuits had a marked influence over the plans of education they were employed to frame. Grammar, rhetoric, logic, school divinity, and civil law, comprised the whole course of study. To have appointed professors to explain the principles of commerce, and the means by which labour may be rendered most productive, would have been considered as equally super¬ fluous and degrading to the dignity of science. The ancient prejudices against commerce, manufactures, and luxury, retained a powerful influence in the ages in question. Few had then any clear ideas concerning the true sources of national wealth and prosperity. The intercourse among states was extremely limited; and was maintained rather by marauding incursions, and piratical expeditions in search of plunder, than by a commerce founded on the gratification of reciprocal wants. These circumstances sufficiently account for the late rise of this science, and the little attention paid to it previously to the last century. And, since it became an object of more general attention and inquiry, the differences which have subsisted among the more eminent of its professors, have proved * De Officiis, lib. i. cap. 42. INTRODUCTORY DISCOURSE. xviii Sect. I. exceedingly unfavourable to its progress, and have generated a disposition to doubt its best established conclusions. It is clear, however, that those who distrust the conclusions of Political Economy, because of the various theories that have been advanced to ex¬ plain the phenomena about which it is conversant, might, on the same ground, distrust the conclusions of almost every other science. The discrepancies among the theories successively put forth by the ablest physicians, chemists, natural philosophers, and moralists, are quite as great as any that have ex¬ isted among those advanced by the ablest economists. But who would therefore conclude that medicine, chemistry, natural philosophy, and morals, rest on no solid foundation, or that they are incapable of presenting a system of well-established, consentaneous truths? We do not refuse our assent to the demonstrations of Newton and Laplace, because they are subversive of the hypotheses of Ptolemy, Tycho Brahe, and Descartes ; and why should we refuse our assent to the demonstrations of Smith and Ricardo, because they have subverted the false theories that were previously advanced re¬ specting the sources and the distribution of wealth ? Political Economy has not been exempted from the fate common to all the sciences. None of them has been instantaneously carried to perfection ; more or less of error has al¬ ways insinuated itself into the speculations of their earliest cultivators. But the errors with which this science was formerly infected have nearly disap¬ peared; and it has been repeatedly shown that it admits of as much certainty in its conclusions as any science founded on reasonings deduced from facts and experience can possibly do. Those who reflect on the variety of information required for the construction of a sound theory of Political Economy, will cease to feel any surprise at the errors into which its cultivators have been betrayed, or at the diversity of opinion that still prevails on some important points. To arrive at a true knowledge of the laws which regulate the production, distribution, and con¬ sumption of national wealth, we must draw our materials from a very wide surface. The economist should study man in every different situation. He should resort to the history of society, arts, commerce, and government; to the works of philosophers and travellers; to every thing, in short, fitted to throw light on the progress of opulence and civilization. He should mark the successive changes which have taken place in the fortunes and con¬ dition of the different ranks and orders of men in his own country and in others ; he should trace the rise, progress, and decline of population and in¬ dustry ; and, above all, he should analyse and compare the influence of dif¬ ferent institutions and regulations, and carefully discriminate the various cir¬ cumstances wherein advancing and declining societies differ from each other. These investigations are so very complex and difficult, that it is not possible, perhaps, always to arrive at a right conclusion. But though they may not be quite free from error, they are sufficient, when made with the requisite care and attention, to unfold the principal sources of national opulence and refinement, and of poverty and degradation. And, however defective, they furnish the only available means for satisfactorily solving the various pro¬ blems in the science of wealth, and for devising a scheme of public adminis¬ tration fitted to ensure the advancement of nations in the career of improve¬ ment. It is obvious, however, that such extensive and complicated inquiries must require the co-operation of many individuals, and the lapse of a long series of years, before they become capable of affording those well-established Sect. I. INTRODUCTORY DISCOURSE. XIX and universally applicable conclusions that may be deduced from them. But while the science of wealth is of comparatively recent origin, its early culti¬ vators were both few in number, and without any accurate ideas with respect to its nature, limits, and objects. Various treatises of considerable merit had been published on some of its detached parts previously to the middle of last century ; but it was not treated as a whole, or in a systematic man¬ ner, until about that period. This circumstance is of itself enough to account for the number of erroneous theories that have since appeared. In¬ stead of drawing their general conclusions from a comparison of particular facts, and a careful examination of the phenomena attending the operation of different principles, and of the same principles under different circumstances, the first cultivators of almost every science begin by framing their theories on a very narrow and insecure basis. Nor is it really in their power to go to work differently. Observations are scarcely ever made, or particulars noted, for their own sakes. It is not until they begin to be sought after, as furnishing the only test by which to ascertain the truth or falsehood of some popular theory, that they are made in sufficient numbers, and with sufficient accuracy. In the phraseology of this science, it is the effectual demand of the theorist that occasions the production of the raw materials or facts he is afterwards to work into a system. The history of Political Economy strik¬ ingly exemplifies the truth of this remark. Being, as already observed, en¬ tirely unknown to the ancients, and but little attended to by our ancestors down to a comparatively late period, the details by means of which we might have estimated the wealth and civilization of the more celebrated states of antiquity and of the middle ages, and appreciated the circum¬ stances that accelerated their progress or occasioned their decline, have either been thought unworthy of notice by historians, or been very imper¬ fectly and carelessly specified. Those, therefore, who first began to trace the principles of this science, had but a very limited experience from which to deduce their conclusions. Nor did they even avail themselves of the few historical facts with which they might easily have become acquainted ; but in general confined their attention to such as happened to come within the contracted sphere of their own observation. The once prevalent opinion, that wealth consists exclusively of gold and silver, naturally grew out of the circumstance of the money of civilized countries, consisting principally of these metals. Having been long used, as standards by which to measure the values of commodities, and as the equi¬ valents for which they are most frequently exchanged, gold and silver gradually acquired a factitious importance, not merely in the estimation of the vulgar, but in that of persons of the greatest discernment. The simple and decisive consideration, that to buy and to sell is merely to barter one commodity for another—to exchange, for example, a certain quantity of corn or cloth for a certain quantity of gold or silver, and vice versd —was entirely overlooked. The attention was gradually transferred from the end to the means, from the money’s worth to the money itself; and the wealth of indivi¬ duals and of states was no longer measured by the abundance of their dispos¬ able products, or by the number and value of the articles with which they could afford to purchase the precious metals, but by the stock of these metals actually in their possession. And hence the policy, as obvious as it was universal, of attempting to increase national wealtli by forbidding the export¬ ation of gold and silver, and encouraging their importation. It appears from a passage of Cicero, that the exportation of the precious XX INTRODUCTORY DISCOURSE. Sect. I. metals from Rome bad been frequently prohibited during the Republic ; * and this prohibition was repeatedly renewed, though to very little purpose, by the Emperors.-}- Neither, perhaps, has there been a state in modern Eu¬ rope, which has not at some period or other forbidden the exportation of gold and silver. It is said to have been interdicted by the law of England previously to the Conquest; and several statutes were subsequently passed to the same effect; one of which, the 3d Henry VIII. cap. 1., enacted so late as 1512, declares, that all persons carrying over sea any coins, plate, or jewels, shall, on detection, forfeit double their value. The extraordinary extension of commerce during the fifteenth and six¬ teenth centuries occasioned the substitution of a more refined and complex system for increasing the supply of the precious metals in the place of the coarse and vulgar one previously acted upon. The establishment of a direct intercourse with India by the Cape of Good Hope, seems to have had the greatest influence in effecting this change. Until very recently, the pre¬ cious metals have always been among the most advantageous articles of ex¬ port to the East: and, notwithstanding the old and deeply rooted prejudices against their exportation, the East India Company obtained, when estab¬ lished in 1600, leave annually to export foreign coin, or bullion, of the value of L.30,000 ; on condition, however, that they imported within six months of the termination of every voyage, except the first, as much gold and silver as should together be equal to the value of the silver they had ex¬ ported. Rut their opponents contended, that this condition was not com¬ plied with ; and that it was moreover contrary to principle, and highly injurious to the public interests, to send gold and silver out of the king¬ dom ! The merchants and others interested in the Company, could not controvert this allegation, without openly impugning the ancient policy of absolutely preventing the export of the precious metals. They did not, however, venture to contend, nor is there, perhaps, any good reason for thinking that it really occurred to them, that the export of bullion to the East, was advantageous, because the commodities obtained for it were more valuable in England. They took a narrower ground, and contended, that it was advantageous, because the commodities imported from India were chiefly re¬ exported to other countries, whence we got back in exchange a greater amount of bullion than had been expended on their purchase. Mr Thomas Mun, the ablest of the Company’s advocates, compares the operations of the mer¬ chant in conducting a trade carried on by the export of gold and silver, to the seed-time and harvest of agriculture. u If we only behold,” says he, u the actions of the husbandman in the seed-time, when he casteth away much good corn into the ground, we shall account him rather a madman than a husbandman. But when we consider his labours in the harvest, which is the end of his endeavours, we shall find the worth and plentiful increase of his actions.” J Such was the origin of what has been called the mercantile system : and, when compared with the previous prejudice — for it hardly deserves the name * u Exportciri ciurum non optortere, cum scope anted senatus , turn me consule , gravissime judicavitl Orat. pro L. Flacco, sect. 28. j* Pliny, when enumerating the silks, spices, and other Eastern products imported into Italy, says, “ Minimaque computatione millies centena millia sestertium annis omnibus , India et Seres , peninsulaque ilia ( Arabia ) imperio nostro demunt (Hist. Nat. lib. xii. cap. 38.) t Treasure by Foreign Trade, orig. ed. p. 50.—This work was published in 1664, a conside¬ rable period after Mun’s death. Most probably it had been written about 1635 or 1640. Mun Sect. I. INTRODUCTORY DISCOURSE. xxi of system—which wholly interdicted the export of gold and silver, it must be allowed that it was a considerable step in the progress to sounder opinions. The founders of the mercantile system, admitted, like their pre¬ decessors, that gold and silver were the only constituents of wealth ; but they alleged that their export might be safely permitted, 1st, when the produce brought back in their stead was subsequently sold, either wholly or in part, to the foreigner for more bullion than it had cost; and, 2d, when the import of such foreign produce occasioned an equal or greater increase in the previous export of native produce. They contended that in the last, as well as in the former, of these cases, the original export of bullion would be balanced or more by its subsequent import. And hence the theory of the Balance of Trade . Its supporters endeavoured to acquire the largest supplies of the precious metals, by framing various complex schemes for encouraging exportation, and for restraining the importation of most products not intend¬ ed for. future exportation, except gold and silver. The excess of the value of the Exports over that of the Imports came, in consequence, to be looked upon as being at once the sole cause and measure of the progress of a country in the accumulation of wealth. This excess, it was taken for granted, occa¬ sioned the importation of an equal amount of gold or silver, or of the only real wealth which it was supposed a nation could possess. It will be afterwards seen that, speaking generally, there is no country, the value of the imports into which does not exceed the value of its exports ; and that, therefore, the favourable balance of the mercantile system has no existence in fact. But, though wholly false and erroneous, its principles and conclusions afford a tolerable explanation of a few pretty obvious pheno¬ mena ; and what did more to recommend them, they were in perfect unison with the popular prejudices on the subject. The founders of this system did not subject its doctrines to any very refined analysis or examination. But, taking for granted that the common consent of mankind was a sufficient evidence of their truth, they thought only of the measures required to give them the greatest practical efficacy. How singular soever it may now appear, this theory was approved, when first promulgated, by the most eminent philosophers, as well as by the entire body of merchants and practical men. Even Lord Bacon gave it the sanc¬ tion of his authority. His advice to Sir George Yilliers, afterwards Duke of Buckingham, though not published till 1661, was most probably written in 1615 or 1616, about the time when Yilliers became the chief favourite and minister of the king, James I. ; and in it he has referred, as follows, to the balance of trade :— u This realm is much enriched of late years by the trade of merchandise which the English drive in foreign parts; and, if it be wisely managed, it must of necessity very much increase the wealth thereof: care being taken that the exportation exceed in value the importation ; for then the balance of trade must of necessity he returned in coin or bullion.”* But Mun was the great apostle of the mercantile system. u Although,” says he, 11 a kingdom may be enriched by gifts received, or by purchase taken, from some other nations, yet these are things uncertain, and of small consideration, when they happen. The ordinary means, therefore, to in- had previously advanced the same doctrines, and nearly in the same words, in his Defence of the East India Trade, originally published in 1609 (?), and in a petition to Parliament, drawn up by him for the East India Company in 1628. * Bacon’s Works, ii. 273, 4to Ed. 1765. C xxn INTRODUCTORY DISCOURSE. Sect. I. crease our wealth and treasure, is by foreign trade, wherein we must ever observe this rule —to sell more to strangers yearly than we consume of theirs in value . For, suppose, that when this kingdom is plentifully served with cloth, lead, tin, iron, fish, and other native commodities, we do yearly export the overplus to foreign countries to the value of L.2,200,000, by which means we are enabled, beyond the seas, to buy and bring in foreign wares for our use and consumption to the value of L.2,000,000: by this order duly kept in our trading, we may rest assured that the kingdom shall be en¬ riched yearly L.200,000, which must be brought to us as so much treasure ; because that part of our stock which is not returned to us in wares, must ne¬ cessarily be brought home in treasure.” * This statement is wholly bottomed on the absurd hypothesis, that a mer¬ chant will send abroad goods worth at home a certain sum, merely that he may bring back goods or bullion, worth as much ! But not to insist on this, can any thing be more preposterous, than to set about measuring the gain on foreign commerce by the mere amount of gold and silver, which, it is taken for granted, must be brought home in payment of the excess of exports ; and to lay no stress whatever on its influence in supplying an in¬ finite variety of useful and agreeable products, many of which could not be produced at all, and none of them so cheaply at home ! We are desired to consider as nothing, the vast additions which are thus made to the mo¬ tives that stimulate, and to the comforts and enjoyments that reward the efforts of the industrious classes, and to fix our attention exclusively on the balance, which in most cases is imaginary, of gold and silver! This is something like telling us to estimate the advantageousness of a suit of clothes, by the number and glare of the metal buttons by which they are fastened. And yet this rule for measuring the profit upon foreign com¬ merce, was long regarded as infallible ; and, such is the influence of ancien. prejudices, that until very recently we were annually congratulated, by the finance minister, on the excess of our exports over our imports! There were, however, many other circumstances, in addition to the erro¬ neous notions respecting the precious metals, which led to the enacting of regulations restrictive of the freedom of industry, and secured the ascendancy of the mercantile system. The feudal governments established in the coun¬ tries, which formed the western division of the Roman Empire, early sunk into a state of confusion and anarchy. The princes, unable of themselves to restrain the usurpations of the greater barons, or to control their violence, endeavoured to strengthen their influence and consolidate their power, by attaching the inhabitants of cities and towns to their interests. For this purpose, they granted them charters, enfranchising the citizens, abolishing every existing mark of servitude, and forming them into corporations, or bodies politic, to be governed by councils and magistrates of their own se¬ lection. The order and good government that were thus established in cities, and the security of property enjoyed by their inhabitants, while the rest of the country was a prey to rapine and disorder, stimulated their industry, and gave them a marked superiority over the cultivators of the soil. It was from them that the princes derived the greater portion of the men and mo¬ ney, which enabled them to subdue the pride and independence of the barons. But the citizens did not render this assistance to their sovereign merely out of gratitude for the original gift of their charters. They were *' Treasure by Foreign Trade, p. 11. Sect. I. INTRODUCTORY DISCOURSE. xxm continually soliciting and obtaining new privileges. And it was not to be supposed that princes, whom they had laid under so many obligations, and who justly regarded them as the most industrious and deserving portion of their subjects, should feel disinclined to gratify their wishes. That they might obtain cheap provisions and carry on their employments to the best advantage, the export of corn and of the raw materials of their manufac¬ tures was strictly forbidden. Duties and prohibitions were at the same time employed to secure to their products the monopoly of the home market by preventing the importation of similar articles. And, that nothing might be wanting that could contribute to the same ends, bounties were given to en¬ courage or force the export and sale of native fabrics in foreign countries. These, with the privilege granted to corporate bodies of preventing all individuals, except by their leave, from carrying on any sort of business within the towns in which they were situated, and of making regulations or bye-laws which prescribed the quantity and quality of the work to be executed by those admitted into their fellowship, the number of apprentices to be engaged by each associate, and the duration of their servitude, form the principal features of the policy adopted, in the view of encouraging do¬ mestic industry, in almost every country of Europe, in the 14th, loth, 16th, and 17th centuries. It would be easy to mention a thousand instances of the extent to which this artificial system was carried here and elsewhere ; but as many such must be familiar to every moderately well informed reader, it is sufficient to observe, as illustrative of its spirit, that it was ordered by an act passed in 1678, for the encouragement of the woollen manufacture, that all dead bodies should be wrapped in woollen shrouds ! The exclusion of foreign competition, and the institution of corporate bodies, were not, however, the only grievances with which the public had to contend. The freedom of internal industry, in cases where corporations did not interfere, though guaranteed by the common law of the country, and by repeated acts of the Legislature, was well nigh suppressed.* During the arbitrary reigns of the princes of the house of Tudor, the notion that the Crown was entitled, by virtue of its prerogative, to grant patents for the sole making, buying, and selling of commodities, became fashion¬ able among the court lawyers ; and, in consequence, various individuals procured the privilege of carrying on certain branches of industry to the exclusion of others. This abuse was carried to an oppressive height during the reign of Elizabeth, who granted many new patents. And the grievance became, at length, so insupportable, as to make all classes join in petitioning for its abolition; and this, after much opposition on the part of the Crown, which parted most reluctantly with the power to erect mo¬ nopolies, was effected by the act of 1624, the 21 Jac. I. cap. 3.-}- By abo- * The common law and the ancient statute law of England are decidedly hostile to mono¬ polies and restrictions on internal commerce and industry. In his third Institute, Lord Coke lays it down, that Commercium jure gentium commune esse debet , et non in monopolium et pri¬ vatum paululorum qucestum convertendum. Iniquum est aliis permittere, aliis inhibere mercatu- ram. In Magna Charta a clause is inserted, which bears, that all merchants shall have safe and sure conduct to come into England and to depart from it; and to buy and sell without the obstruction of evil tolls. This privilege was confirmed by several subsequent statutes, as 9 Edward III. cap. 1, 14 Edward III. cap. 2, 25 Edward III. cap. 2, 2 Richard II. cap. 1, &c. And Lord Coke, after reviewing the clause in Magna Charta and these statutes, states distinctly, “ That all monopolies concerning trade and traffic, are against the liberty and free¬ dom granted by the Great Charter , and divers other acts of Parliament which are good com¬ mentaries upon that charter.” t Bacon, in theory at least, was opposed to monopolies.—In his advice to Sir George Vil* XXIV INTRODUCTORY DISCOURSE. Sect. I. lishing a number of monopolies, and restoring the freedom of internal in¬ dustry, this act did more, perhaps, than any other in the statute-book, to accelerate improvement: but it did not touch any of the fundamental prin¬ ciples of the mercantile or manufacturing system ; and the privileges of all bodies legally incorporated were exempted from its operation. In France the interests of the manufacturers were warmly espoused by Colbert, the celebrated finance minister of Louis XIY. : And the year 1664, when the new tariff, compiled under his direction, was promulgated, has been sometimes considered, by the continental writers, though, as we have seen, erroneously, as the sera of the mercantile system. * The restrictions in favour of the manufacturers were all zealously supported by the advocates of the mercantile system, and the balance of trade. The facilities given to the exportation of goods manufactured at home, and the obstacles thrown in the way of importation from abroad, seemed peculiarly well fitted for making the exports exceed the imports, and procuring a fa¬ vourable balance. Instead, therefore, of being regarded as the offspring of a selfish monopolizing spirit, these regulations were looked upon as having been dictated by the soundest policy. The interests of the manufacturers and merchants were supposed to be identified with each other, and with those of the public. The acquisition of a favourable balance of payments was the grand object in view ; and heavy duties and restrictions on im¬ portation, and bounties and premiums on exportation, were the means by which it was to be accomplished. It cannot excite surprise that a system having so many popular prejudices in its favour, and which afforded a plau¬ sible apology for the exclusive privileges enjoyed by the manufacturing and commercial classes, should have early attained, or that it should still pre¬ serve, notwithstanding the overthrow of its principles, a powerful practical influence. 7 “ It is no exaggeration,” says M. Storch, u to affirm, that there are very few political errors which have produced more mischief than the mercantile system. Armed with power, it commanded and forbid when it should only have protected. The regulating mania which it inspired has tormented in¬ dustry in a thousand ways, to force it from its natural channels. It has made each nation regard the welfare of its neighbours as incompatible with its own : hence their reciprocal desire of injuring and impoverishing each other; and hence that spirit of commercial rivalry which has been the im¬ mediate or remote cause of the greater number of modern wars. This system has stimulated nations to employ force or cunning to extort commercial treaties, productive of no real advantage to themselves, from the weakness or ignorance of others. It has formed colonies, that the mother country might enjoy the monopoly of their trade, and force them to resort exclusively to her markets. In short, where it has been least injurious, it has retarded the progress of national prosperity; everywhere else it has deluged the earth with blood, and has depopulated and ruined some of those countries liers, already referred to, he says, “ Care must be taken that monopolies, which are the can¬ kers of all trading, be not admitted under specious colours of public good.” * Mengotti, Dissertazione sul Colbertismo , cap. 11. •}• Melon and Forbonnais in France, Genovesi in Italy, Mun, Sir Josiah Child, Dr. Dave- nant, the authors of the British Merchant, and Sir James Steuart, in England, are the ablest writers who have espoused, some with more and some with fewer exceptions, the leading prin¬ ciples of the mercantile system. Sect. I. INTRODUCTORY DISCOURSE. XXV whose power and opulence it was supposed it would carry to the highest pitch.” * The shock given to previous prejudices and systems by the great disco¬ veries and events, which will for ever distinguish the fifteenth and sixteenth centuries, and the greater attention which the progress of civilization and industry naturally drew to the sources of national power and opulence, pre¬ pared the way for the downfall of the mercantile system. The advocates of the East India Company, whose interests originally prompted them to question the prevailing doctrines in regard to the export of bullion, gradually as¬ sumed a higher tone ; and at length boldly contended that it was nothing but a commodity, and that there was no good reason for restraining its export¬ ation. These and other novel opinions having progressively gained ground, were no longer confined within the pale of the East India Company. Many eminent individuals began to look with suspicion on some of the best re¬ ceived maxims; and were consequently led to acquire more correct and comprehensive views with respect to the just principles of commercial inter¬ course. The new ideas ultimately made their way into the House of Com¬ mons; and in 1663, the statutes prohibiting the export of foreign coin and bullion were repealed, and leave given to the East India Company, and to private traders, to export them in unlimited quantities. The representatives of towns, or rather of the corporate bodies established in them, continued, for a lengthened period, to be the most determined sup¬ porters of the monopoly system in parliament; and being supposed to be peculiarly well versed in the business of trade and manufacture, of the prin¬ ciples of which they really knew little or nothing, their opinions had a powerful influence over the acts of the legislature, and the theories of politi¬ cal writers. Had government been able to act according to its sense of what was most for the public advantage, without being influenced by the narrow views and prejudices of the commercial classes, there seem to be good grounds for thinking that there would have been, comparatively, few restrictions on industry. Edward III. and others of our princes, incurred no little odium by the judicious protection which they afforded to the foreign ma¬ nufacturers who took refuge amongst us. Perhaps, however, the best evidence of the enlightened opinions that frequently prevailed in the councils of our monarchs, when they were not swayed by interested parties, is to be found in the letter given to Sir Hugh Willoughby and Captain Richard Chancel- lour, in 1553, when they set out on their famous voyage of discovery. This letter, written in Latin, Greek, and other languages, and addressed to all kings, princes, and persons in authority, has been preserved by Hakluyt. It is pervaded by the most enlarged and liberal views, and would do no discredit to the statesmen of our own time. It begins by setting forth the disposition to cultivate the love and friendship of his kind, implanted by the Almighty in the heart of man,—the consequent duty of all, accord¬ ing to their power, to maintain and augment this disposition—and the conduct of the king's ancestors in this respect, which had ever been “to shewe good affection to those who came to them from farre countries." It then proceeds as follows:— “ And if it be right and equity to shewe such humanitie to all men, doubtlesse the same ought chiefly to be shewed to merchants, who, wander¬ ing about the world, search both the land and the sea, to carry such good * Storch, Cours d'Economie Politique , tome i. p. 122. Paris ed. XXVI INTRODUCTORY DISCOURSE. Sect. I. and profitable things as are found in their countries to remote regions and kingdomes, and again to bring from the same such things as they find there commodious for their own countries : both as well that the people to whom they goe may not be destitute of such commodities as their countries bring not forth to them, as that also they may be partakers of such things whereof they abound. For the God of heaven and earth, greatly providing for man- kinde, would not that all things should be found in one region, to the ende that one should have need of another ; that, by this means, friendship might be established among all men, and every one seek to gratifie all. For the establishing and furtherance of which universal amitie, certaine men of our realme, moved hereunto by the said desire, have instituted and taken upon them a voyage by sea into farre countries, to the intent that, between our people and them, a way may bee opened to bring in and carry out merchan¬ dises, desiring us to further their enterprises. Who, assenting to their peti¬ tion, have licensed the right valiant and worthy Sir Hugh Willoughby, Knight, &c., according to their desire, to goe to countries to them heretofore unknown, as well to seeke such things as we lacke, as also to carry unto them, from our regions, such things as they lacke. So that hereby not only commoditie may ensue both to them and us, but also an indissoluble and perpetual league and friendship. We, therefore, desire you, kings and princes, and all other to whom there is any power on earth, to permit, unto these our servants, free passage by your regions and dominions; for they shall not touch any thing of yours unwilling to you. Consider you that they also are men. If, therefore, they shall stand in neede of any thing, we desire you, of all humanitie and for the nobilitie which is in you, to aide and help them with such things as they lacke. Shewe yourselves towards them as you would that we and our subjects should shewe themselves towards your servants, if, at anie time, they shall passe by our regions.”* Ministers, capable of writing such a letter as this, could have had but little confidence in the illiberal sophistries of the mercantile system. In addition to the controversies respecting the East India trade, the foun¬ dation of the colonies in America and the West Indies, the establishment of a compulsory provision for the support of the poor, and the acts prohibiting the exportation of wool, &c., gave rise to much discussion, and attracted an extraordinary share of the public attention to questions connected with do¬ mestic policy. In the course of the seventeenth century, a more than usual proportion of tracts were published on commercial and economical subjects. And although the authors of the greater number were strongly imbued with the prevailing spirit of the age, it cannot be denied, that some of them rose above the prejudices of their contemporaries, and have an unquestionable right to be regarded as the founders of the modern theory of commerce—as the earliest expositors of those sound and liberal doctrines, which show, that the prosperity of states can never be promoted by restrictive regulations, or by the depression of their neighbours—that the genuine spirit of commerce is altogether inconsistent with the selfish and shallow policy of monopoly —and that the self-interest of mankind, not less than their duty, requires them to live in peace, and to cultivate a fair and friendly intercourse with each other. With the exception of Mun, to whom reference has been already made, * Hakluyt, vol. iii. p. 231. Sect. I. INTRODUCTORY DISCOURSE. xxvii Sir Josiah Child is perhaps the best known of the commercial writers of the seventeenth century. His “ New Discourse of Trade,” originally published in 1668, but much enlarged in the next edition, published in 1690, contains many sound and liberal doctrines. The argument to show that colonies do not depopulate the mother country is as conclusive as if it had proceeded from the pen of Malthus ; and the reasoning in defence of the naturalisation of the Jews is creditable to the liberality and good sense of the.writer, and discovers a mind greatly superior to existing prejudices. Sir Josiah has also some excellent observations on the laws against forestalling and regrating; on those limiting the number of apprentices, and preventing the exportation of bullion ; and on corporation privileges. The principal defect of Sir Josiah Child’s Discourse consists in its being written to illustrate the advantages which, he supposes, w T ould result from reducing the legal rate of interest to four per cent ; an error into which he was led by mistaking the low rate of interest in Holland for the principal cause of her wealth, when it was in truth the effect of her comparatively heavy taxation.* It is, however, worthy of remark, that this error was very soon detected. In the same year (1668) that Sir Josiah’s Discourse appeared, a tract was published, entitled, “ Interest of Money mistaken, or a Treatise, proving that the Abatement of Interest is the Effect and not the Cause of the Riches of a Nation.” The author of this tract maintains the opinion afterwards held by Locke and Montesquieu, that the interest of money does not depend on sta¬ tutory regulations, but that it varies according to the comparative opulence of a country • or rather according to the scarcity and abundance of money increasing when the latter diminishes, and diminishing when it increases.! Having endeavoured to establish this principle, the author of the tract suc¬ cessfully contends that Sir Josiah Child had mistaken the cause of the wealth of the Dutch, of which he shows the lowness of their interest was a conse¬ quence merely. The writings of Mun, Child, &c., were not deficient so much from their erroneous opinions respecting the superior importance of the precious metals, and the balance of trade, as from those respecting the greater advantages which they contended were derived from importing durable, rather than rapidly perishable commodities. This, however, was an extremely natural opinion. It was sanctioned by Bacon.f And we can feel little surprise that an error which escaped his sagacious discernment should have deceived mercantile men, or that in a later age it should have imposed on Locke and Harris. Its fallacy was, however, perceived as early as 1677. In that year, there appeared a small tract, entitled, u England’s Great Happiness ; or, a Dia¬ logue between Content and Complaint j” in which the author contends, that * Sir Josiah Child was the author of several tracts in defence of East India trade. The principles advanced in them are similar to those in his Discourse. J It has been generally supposed that Hume was the first to show ( Essay on Interest ) the fallacy of this opinion, and to prove that the rate of interest does not depend on the abundance or scarcity of money, but on the abundance or scarcity of disposable capital compared with the demands of the borrowers, and the rate of profit. This, however, is a mistake, the doctrine in question having been fully demonstrated in a pamphlet written by Mr Massie, “ Essay on the Governing Causes of the Natural Rate of Interest,” published two years before Hume s Essay appeared. ^ “In the importation of foreign commodities, let not the merchant return toys and vani¬ ties, as sometimes, it was elsewhere apes and peacocks, but solid merchandise , first for neces¬ sity, next for pleasure, but not for luxury.”—Advice to Sir George \ illiers, where there are I number of similar passages. XXV111 INTRODUCTORY DISCOURSE. Sect. I. the importation of wine and other perishable commodities, for which there is a demand, in exchange for money, is advantageous : and, on this ground, he defends the French trade, which has been uniformly declaimed against by the supporters of the mercantile system* We give a short extract from this remarkable tract : u Complaint .—You speak plain ; but what think you of the French trade? which draws away our money by wholesale. Mr Fortrey, * whom I have heard you speak well of, gives an account that they get L.1,600,000 a-year from us. u Content .—’Tis a great sum ; but, perhaps, were it put to a vote in a wise Council, whether for that reason the trade should be left off, ’twould go in the negative.-1 must confess, I had rather they’d use our goods than money; but if not, I would not lose the getting of ten pounds because I can’t get an hundred; and I don’t question but when the French get more foreign trade, they’ll give more liberty to the bringing in foreign goods. I’ll suppose John-a-Nokes to be a butcher, Dick-a-Styles to be an Exchange man, yourself a lawyer, will you buy no meat or ribands, or your wife a fine Indian gown or fan, because they will not truck with you for indentures which they have need of? I suppose no ; but if you get money enough of others, you care not though you give it away in specie for these things; I think ’tis the same case.” The spirit which pervades this tract may perhaps be better inferred from the titles of some of the dialogues. Among others, we have u To export money, our great advantage “ The French trade a profitable trade — “ Variety of wares for all markets, a great advantage ;”—“ High living, a great improvement to the arts“ Invitation of foreign arts, a great ad¬ vantage ;”— u Multitudes of traders, a great advantage.” But its influence was far too feeble to arrest the current of popular prejudice. In 1678, the year after its publication, the importation of French commodities was pro¬ hibited for three years. This prohibition, after being repealed, was re-en¬ acted and made perpetual in the reign of William III., when the legislature declared that the trade with France was a nuisance !—a principle, if it may be so called, which was acted upon down to a very late epoch, with the ex¬ ception of the short period during which the commercial treaty, negotiated in 1786, had effect. Notwithstanding the endless variety of pursuits in which Sir William Petty was engaged, his discriminating and original genius enabled him to strike out new lights, and to make many valuable discoveries in them all. His treatise 11 On Taxes and Contributions,” published in 1667,—his “ Quantu - lumcunque ,” published in 1682,—his u Essays on Political Arithmetic,” first published in 1687, and his “ Political Anatomy of Ireland,” published in 1691, are among the best of the political tracts of the seventeenth century, and contain many original remarks, and much curious and interesting infor¬ mation. He was one of the first to lay down, though only incidentally, the doctrine, that the value of commodities is determined by the labour required for their production. In his treatise “ On Taxes and Contributions,” he says, 11 If a man bring to London an ounce of silver out of the earth in Peru, in the same time that he can produce a bushel of corn, the one is the natural * Fortrey’s pamphlet has been much referred to. It was published in 1663, and reprinted in 1673. It contains a good argument in favour of inclosures. The reference in the text sufficiently explains the opinions of the writer in regard to commerce. Sect. I. INTRODUCTORY DISCOURSE. XXIX price of tlie other; now, if, by reason of new and more easy mines, a man can get two ounces of silver as easily as formerly he did one, then porn will be as cheap at ten shillings the bushel as it was before at five shillings, cae- teris paribus. * * Let a hundred men work ten years upon corn, and the same number of men the same time upon silver ; I say that the neat proceed of the silver is the price of the whole neat proceed of the corn; and like parts of the one the price of like parts of the otherand, in another place, he observes, “ Corn will be twice as dear when there are two hundred husband¬ men to do the same work which an hundred could perform.” * In the “ Quantulumcunque,” the subject of money is treated with great ability, and the idea that a country may be drained of cash by an unfavour¬ able balance, successfully exposed. Petty has also strongly condemned the laws regulating the rate of interest, observing that there might as well be laws to regulate the rate of exchange or of insurance, f The essays on “ Political Arithmetic” are too well known to require any particular notice. But the “Political Anatomy of Ireland,” though perhaps the best of Petty’s political works, is now comparatively neglected. This treatise is valuable alike for the accurate information it affords respecting the state of Ireland in the latter part of the seventeenth century, and for the judicious suggestions of the author, with a view to its improvement. He was fully aware of the benefits that would result from an incorporating union between Great Britain and Ireland, and from the establishment of'.a free intercourse between the two countries. Speaking of the act passed in 1664, prohibiting the importation of cattle and beef from Ireland, he asks, u If it be good for England to keep Ireland a distinct kingdom, why do not the predominant party in Parliament, suppose the western members, make England beyond Trent another kingdom, and take tolls and customs upon the borders ? Or why was there ever any union between England and Wales ? And why may not the entire kingdom of England be further can- tonised for the advantage of all parties?” J But a tract, entitled, u Discourses on Trade, principally directed to the Cases of Interest, Coynage, Clipping, and Increase of Money,” written by Sir Dudley North, and published in 1691, contains a far more able statement of the true principles of commerce than any that had previ¬ ously appeared. North is throughout the intelligent advocate of all the great principles of commercial freedom. He is not, like the most eminent of his predecessors, well informed on one subject, and erroneous on another. His system is consistent and complete. He shows, that in commercial matters, nations have the same interests as individuals ; and forcibly exposes the absurdity of supposing, that any trade advantageous to the merchant can be injurious to the public. His opinions respecting a seignorage on the coinage of money, and the advantage of sumptuary laws, then very popular, are equally enlightened. The leading principles embodied in this tract are announced in the pre¬ face, as follows:— u That the whole world as to trade is but as one nation or people, and therein nations are as persons. u That the loss of a trade with one nation is not that only, separately con¬ sidered, but so much of the trade of the world rescinded and lost, for all is combined together. * Treatise on Taxes and Contributions, ed. 1679, pp. 31. 24. and 67. f Pp. 3. 6. 8. orig. edit. I 34, edit. 1719. XXX INTRODUCTORY DISCOURSE. Sect. I. 11 That there can be no trade unprofitable to the public ; for if any prove so, men leave it off; and wherever the traders thrive, the public, of which they are a part, thrive also. “ That to force men to deal in any prescribed manner may profit such as happen to serve them ; but the public gains not, because it is taken from one subject to give to another. u That no laws can set prices in trade, the rates of which must and will make themselves. But when such laws do happen to lay any hold, it is so much impediment to trade, and therefore prejudicial. u That money is a merchandise, whereof there may be a glut, as well as a scarcity, and that even to an inconvenience. u That a people cannot want money to serve the ordinary dealing, and more than enough they will not have. u That no man will be the richer for the making much money, nor have any part of it, but as he buys it for an equivalent price. u That the free coynage is a perpetual motion found out, whereby to melt and coyn without ceasing, and so to feed goldsmiths and coyners at the pub¬ lic charge. u That debasing the coyn is defrauding one another, and to the public there is no sort of advantage from it; for that admits no character, or value, but intrinsic. 11 That the sinking by alloy or weight is all one. 11 That exchange and ready money are the same, nothing but carriage and re-carriage being saved. u That money exported in trade is an increase to the wealth of the nation; but spent in war, and payments abroad, is so much impoverishment. “ In short, that all favour to one trade, or interest, is an abuse, and cuts so much of profit from the public.” Unluckily this admirable tract never obtained any considerable circulation. It was supposed indeed, on apparently good grounds, to have been design¬ edly suppressed. * And having speedily become excessively scarce, was never referred to by any subsequent writer on commerce till after it had been noticed in the first edition of this Discourse. It is material to observe, that none of the authors of the previously mentioned works, appear ever to have attempted carefully to investigate the real sources of wealth, or to show how they might be rendered most productive. It has been seen that some of them were fully aware that wealth did not depend on the mere abundance of gold and silver, but on that of all sorts of useful and desirable products; and that they distinctly laid down and ably supported the grand principle of commercial freedom. But here they appear to have stopped short. None of them undertook to analyze the means by which wealth is produced, or by which new forms and qualities are given to the raw products of nature, and they are rendered ca¬ pable of ministering to our wants and desires. And with the single excep¬ tion of Sir William Petty, who only slightly touched on the subject, none of them explored the sources whence they derive their value, or capacity of ex¬ changing for or buying others. These, however, are plainly the most elemen¬ tary and fundamental inquiries in the science; and, if it could be said to exist at all, it is, at all events, quite evident it could not assume a systematic shape until some considerable progress had been made in their elucidation. * See the Hon. Roger North’s Life of his Brother, the Hon. Sir Dudley North, p. 179. Sect# X. INTRODUCTORY DISCOURSE. xxxi Hobbes seems to have been one of the first who was fully impressed with a conviction of the paramount importance of labour in the production of wealth. At the commencement of the 24th chapter * of the Leviathan , pub¬ lished in 1651, he says, “ The nutrition of a commonwealth consisteth in the plenty and distribution of materials conducing to life. “ As for the plenty of matter, it is a thing limited by nature to those com¬ modities which, from (the two breasts of our common mother) land and sea , God usually either freely giveth, or for labour selleth to mankind. “ For the matter of this nutriment, consisting in animals, vegetables, minerals, God hath freely laid them before us, in or near to the face of the earth ; so as there needeth no more but the labour and industiy of receiving them. Insomuch that plenty dependeth (next to G od s favour) on the labour and industry of man” % . Locke, however, had a much clearer apprehension of tins doctnne. In his Essay on Civil Government , published in 1689, he has enteied into a discriminating and able analysis to show that it is from labour that the pro- ducts of the earth derive almost all their value. u Let any one consider, says he, u what the difference is between an acre of land planted with to¬ bacco or sugar, sown with wheat or barley, and an acre of the same land ly¬ ing in common, without any husbandry upon it, and he will find that the improvement of labour makes the far greater part of the v alue. I think it will be but a very modest computation to say, that of the products of the earth useful to the life of man, nine-tenths are the effects of labour; nay, if we will rightly consider things as they come to our use, and cast up the several expenses about them, what in them is purely owing to nature, and what to labour, we shall find, that in most of them ninety-nine hundredths are wholly to be put on the account of labour. 11 To make this a little clearer, let us but trace some of the ordinary pioM- sions of life through their several progresses, before they come to our use, and see how much they receive of their value from human industry.. Bread, wine, and cloth, are things of daily use, and great plenty; yet,, notwithstand¬ ing, acorns, water, and leaves or skins, must be our bread, drink, and cloth¬ ing, did not labour furnish us with these more useful commodities; for what¬ ever bread is more worth than acorns, wine than water, and cloth or silk than leaves, skins, or moss, that is solely owing to labour and industry ; the one of these being the food and raiment which unassisted nature furnishes us with ; the other provisions which our industry and pains prepare for us ; which how much they exceed the other in value, when any one hath com¬ puted, he will then see how much labour makes the far greatest part of the value of things we enjoy in this world; and the ground which produces the materials is scarce to be reckoned in as any, or, at most, but a \eiy sma part of it; so little, that even amongst us, land that is wholly left to nature that hath no improvement of pasturage, tillage, or planting, is called, as in¬ deed it is, waste ; and we shall find the benefit of it amount to little moie than nothing. u An acre of land that bears here twenty bushels of wheat, and another m America, which, with the same husbandry, would do the like, are, without doubt, of the same natural intrinsic value (utility). But yet, the benefit mankind receives from the one in a year is worth 5?., and from the otliei pos¬ sibly not worth one penny ; if all the profit an Indian received from it ^\eie to be valued and sold here, at least I may truly say, not hr. Tis laboui, * Of the Nutrition and Procreation of a Commonwealth. INTRODUCTORY DISCOURSE. Sect. I. xxxii then, which put the greatest part of the value upon land, without which it would scarcely he worth any thing . ’Tis to that we owe the greatest part of all its useful products; for all that the straw, bran, bread, of that acre of wheat, is more worth than the product of an acre of good land, w T hich lies waste, is all the effect of labour. For Tis not merely the ploughman’s pains, the reaper’s and thrasher’s toil, and the baker’s sweat, is to be counted into the bread we eat; the labour of those wTio broke the oxen, who digged and wrought the iron and stones, who felled and framed the timber employed about the plough, mill, oven, or any other utensils, which are a vast number, requisite to this corn, from its being seed to be sown, to its being made bread, must all be charged on the account of labour , and received as an effect of that: nature and the earth furnishing only the almost worthless materials as in themselves.—Twould be a strange catalogue of things that industry provided and made use of about every loaf of bread, before it came to our use, if we could trace them. Iron, wood, leather, barks, timber, stone, brick, coals, lime, cloth, dyeing-drugs, pitch, tar, masts, ropes, and all the materials made use of in the ship that brought away the commodities made use of by any of the workmen, to any part of the work ; all of which, ’twould be almost impossible, at least, too long to reckon up.”* Locke has here all but established the fundamental principle which lies at the bottom of the science of wealth. Had he carried his analysis a little further, he could hardly have failed to perceive that water, leaves, skins, and other spontaneous productions of nature, have no value, except what they owe to the labour required for their appropriation. The value of water to a man on the bank of a river depends on the labour necessary to raise it to his lips ; and its value, when carried ten or twenty miles off, is equally dependent on the labour necessary to convey it there. Nature is not niggard or parsimonious. Her rude products, powers, and capacities are all offered gratuitously to man. She neither demands nor receives an equivalent for her favours. An object which may be appropriated or adapted to our use, without any voluntary labour on our part, may be of the very highest utility; but, as it is the free gift of nature, it is quite impossible it can have the smallest value .7 Shortly after the publication of the Essay on Civil Government, Locke engaged in the controversy relative to the great re-coinage in the reign * Of Civil Government , Book II. sect. 40, 41, 42, 43. This is a very remarkable passage. It contains a far more distinct and comprehensive statement of the fundamental doctrine, that labour is the constituent principle of value, than is to be found in any other writer previous to Dr. Smith, or than is to be found even intheTTeaM of Nations . But Locke does not seem to have been aware of the value of the principle he had elucidated, and has not deduced from it any important practical conclusion. On the contrary, in his tract on liaising the Value of Money , published in 1691, he lays it down broadly that all taxes, however imposed, fall ulti¬ mately on the land ; whereas, it is plain he ought, consistently with the above principle, to have shown that they would fall generally on the produce of industry, or on all species of commodities. *J* Say appears to think ( Discours Preliminaire, p. 37) that Galiani was the first who showed, in his treatise Della Moneta , published in 1750, that labour is the only source of wealth. But the passages now laid before the reader prove the erroneousness of this opinion. Galiani has entered into no analysis or argument to prove the correctness of his statement; and, as it appears from other parts of his work, that he was well acquainted with Locke’s Tracts on Money, a suspicion naturally arises that he had seen the Essay on Civil Govern¬ ment, and that he was really indebted to it for a knowledge of this principle. This suspicion derives strength from the circumstance of Galiani being still less aware than Locke of the value of the discovery.—See Trattato Della Moneta , p. 39, ediz. 1780. Sect. I. INTRODUCTORY DISCOURSE. XXXlll of William III. His tracts on money were published in 1691 and 1695.* They immediately obtained a very extensive circulation ; and, though in¬ fected with some very grave errors, they powerfully contributed to prevent Mr. Lowndes's proposal for degrading the standard from being carried into effect, and to establish the true theory of money. The restoration of the currency was not, however, effected without much opposition. A large minority in Parliament supported Lowndes's views; and they were also supported by a number of writers. Mr Nicholas Barbon, in a tract, entitled, u A Discourse concerning Coining the New Money Lighter,” published in 1696, pointed out some of the errors into which Locke had fallen. He, also, de¬ monstrated the fallacy of the popular opinions respecting the balance of trade, and showed that bullion is never sent abroad in payment of an unfa¬ vourable balance, unless it be at the time the cheapest and most profitable article of export. But although Barbon had sagacity to perceive that bullion differed in no respect from other commodities, he contended that the value of coins chiefly depends on the stamp affixed to them by government! This extraordinary error destroyed the effect of his tract; and was, most probably, the cause of the oblivion into which it very soon fell, and of its never having attracted that attention to which, on other accounts, it was justly entitled. A violent controversy was carried on for some years previously to 1700, respecting the importation of East Indian silks and cotton stuffs. Those who wished to prevent their importation, had recourse to the arguments uni¬ formly resorted to on such occasions ; affirming that the substitution of In¬ dian for English goods had occasioned the ruin of a large proportion of our manufacturers, the exportation of the coin and the general impoverishment of the country ! The merchants engaged in the trade with India could not, as had previously happened to them in the controversy in regard to the export of bullion, defeat these arguments without attacking the prin¬ ciples on which they rested, and maintaining in opposition to them, that it was for the public advantage to buy whatever might be wanted in the cheapest market. This sound principle was, consequently, embodied in various petitions laid before Parliament by the importers of Indian goods ; and it was also enforced in several publications. Of these, an anonymous tract, entitled, u Considerations on the East India Trade,” printed in 1701, is one of the best. It is written with no common talent. The author has endea¬ voured to refute the various arguments advanced to justify the prohibition of East Indian goods, and has also made some statements strikingly illus¬ trative of the advantages of the division of labour, and the employment of machinery. In answer to the objection that the goods brought from India are pro¬ duced by the labour of fewer hands than those made in England, and that by allowing them to be imported, some of our people must be thrown out of employment, we have the following statements :— “ The East India trade destroys no profitable English manufacture ; it deprives the people of no employment which we should wish to be preserved. The foundation of this complaint is that manufactures are procured from the East Indies by the labour of fewer people than are necessary to make the like in England; and this shall be admitted. Hence it follows that to reject * Considerations on the Lowering of Interest and Raising the Value of Money, 1691. Further Considerations concerning Raising the Value of Money, 1695. XXXiV INTRODUCTORY DISCOURSE. Sect. I the Indian manufactures that like may be made by the labour of more hands in England, is to employ many to do the work that may be done as well by few; is to employ all, more than necessary to procure such things from the East Indies, to do work that may be done as well without them. 11 A saw-mill with a pair or two of hands will split as many boards as thirty men without this mill; if, then, the use of this mill shall be rejected, that thirty may be employed to do the work, eight and twenty are em¬ ployed more than are necessary, or are employed to do the work that may be as well done without ’em. So if by any art, or trade, or engine, the labour of one can produce as much for our consumption, or other use, as can other¬ wise be procured by the labour of three ; if this art, or trade, or engine shall be rejected, if three shall rather be employed to do the work, two are employed more'than are necessary, or to the profit of the kingdom. For, if the providence of God should provide corn for England as manna heretofore for Israel, the people would not be well employed to plough, and sow, and reap, for no more corn than might be had without this labour. Wherefore to employ more hands to manufacture things in England than are necessary to procure the like from India, is to employ so many to no profit that might otherwise be profitably employed. For there can be no want of profitable employment so long as England is not built, beautified, and improved to the utmost perfection; so long as we either have or can produce any thing that others want, or that they have any thing that we want. “ We are very fond of being restrained to the consumption of English manufactures, and, therefore, contrive laws, either directly or by high cus¬ toms, to prohibit all that come from India. By this time Tis easy to see some of the natural consequences of this prohibition :— u ’Tis to oblige things to be provided by the labour of many, which might as well be done by few; Tis to oblige many to labour to no purpose, to no profit of the kingdom, nay, to throw away their labour, which otherwise might be profitable. ’Tis to provide the conveniences of life at the dearest and most expensive rates, to labour for things that might be had without. ’Tis all one as to bid us refuse bread or clothes, tho’ the providence of God, or bounty of our neighbours, should bestow them on us ; Tis all one as to destroy an engine or a navigable river, that the work which is done by few may rather be done by many. u As often as I consider these things, I am ready to say with myself, that God has bestowed his blessings upon men that have neither hearts nor skill to use them. For, why are we surrounded with the sea ? Surely that our wants at home might be supplied by our navigation into other countries. By this we taste the spices of Arabia, yet never feel the scorching sun which brings them forth ; we shine in silks which our hands have never wrought; we drink of vineyards which we never planted ; the treasures of those mines are ours, in which we have never digged ; we only plough the deep and reap the harvests of every country in the world.”* But these arguments, how unanswerable soever they may now appear, made but little impression when they were published ; and an Act was soon after passed prohibiting the importation of manufactured Indian goods for home consumption. The commercial and financial writings of Dr. Davenant, Inspector-General * Pp. 51, 52, &c. It is probable that Addison bad in his eye the concluding paragraph now quoted when he wrote his admirable paper on Commerce. See Spectator, No. 69. Sect. I. INTRODUCTORY DISCOURSE. XXXV of Imports and Exports in the reign of Queen Anne, were published in the interval between 1695 and 1711. Though a partisan of the mercantile sys¬ tem, Davenant was free from some of the prejudices of its more indiscri¬ minate and zealous supporters. He considers a watchful attention to the balance of trade, and its “ right government,” as of the highest importance ; but wealth, in his estimation, does not consist exclusively of gold and sil¬ ver, nor does he recommend that prohibitions and restrictions should be rashly imposed, even on the intercourse with those countries with which the balance is supposed to be unfavourable. There are, however, but slender grounds for thinking that his writings deserve the eulogies formerly bestowed on them, or that they materially hastened the progress of commercial science. They contain little that may not be found in the work of Sir Josiah Child. Some detached paragraphs are exceedingly good ; but the treatises of which they form a part are remarkably inconclusive, and are for the most part pervaded by the narrowest and most illiberal views. There is no evi¬ dence to show that Davenant had ever reflected on the influence of com¬ merce in facilitating the production of wealth, by enabling the division of labour to be carried to its fullest extent; that is, by its enabling the people of different countries to apply themselves, in preference, to those employ¬ ments for the prosecution of which they have some natural or acquired advantage.* In 1734, Jacob Vanderlint, who calls himself a tradesman, published a tract, entitled u Money answers all things.” Dugald Stewart lias referred to it in the Appendix to his u Life of Dr. Smith,” and has quoted some pas¬ sages illustrative of the advantages of commercial freedom, which he truly says, a will bear a comparison, both in point of good sense and of liberality, with what was so ably urged by Mr. Hume twenty years afterwards, in his I Essay on the Jealousy of Trade.’ ” Vanderlint closes his pamphlet with an argument in favour of the repeal of the existing taxes, and the substitu¬ tion in their stead of a territorial tax, an idea borrowed from Locke, and sub¬ sequently adopted by the French economists. In 1744, Mr. William Richardson, an extensive merchant, published his II Essay on the Causes of the Decline of Foreign Trade.” -j- This essay has been frequently referred to by Dr. Smith, and it deserved his notice. Richard¬ son is an intelligent and uncompromising enemy of restrictions, monopolies, and prohibitions. To give full freedom to industry, he proposed that the privileges of corporations should be abolished; and the existing taxes re¬ pealed, and replaced by a single tax laid on the consumers of luxuries, pro¬ portionally to their incomes. The following extracts will give an idea of the spirit which pervades the work, and of the ability with which it is writ¬ ten :— * The progress of liberal opinions with regard to commerce seems to have been in no small degree counteracted by the publication of the British Merchant. This work was written by some of the first merchants of the time, and was intended to expose the alleged defects in the commercial treaty with France negotiated by Queen Anne’s Tory administration in 1713. It consists of a series of papers published weekly, and afterwards collected in three volumes. Public opinion being very much against the treaty, the British Merchant enjoyed a large share of popularity. Its authors appear to have been thoroughly imbued with all the preju¬ dices of the mercantile sect; and the work is now only deserving of notice as containing the fullest exposition of their peculiar doctrines. f This work has been ascribed by Dr. Smith and others, but erroneously, to Sir Matthew Decker.—See Literature of Political Economy, p. 329. XXXVI INTRODUCTORY DISCOURSE. Sect. I. u Trade cannot, will not, be forced : let other nations prohibit, by what severity they please, interest will prevail; they may embarrass their own trade, but cannot hurt a nation, whose trade is free, so much as themselves. Spain has prohibited our woollens; but, had a reduction of our taxes brought them to their natural value only, they would be the cheapest in Europe of their goodness, consequently must be more demanded by the Spaniards, be smuggled into their country in spite of their government, and sold at better prices; their people would be dearer clothed, with duties and prohibitions, than without, consequently must sell their oil, wine, and other commodities, ' dearer; whereby other nations, raising the like growths, would gain ground upon them, and their balance of trade grow less and less. But should we, for that reason, prohibit their commodities ? By no means ; for the dearer they grow, no more than what are just necessary will be used ; their pro¬ hibition does their own business; some may be necessary for us ; what are so, we should not make dearer to our own people; some may be proper to assort cargoes for other countries, and why should we prohibit our people that advantage ? Why hurt ourselves to hurt the Spaniards t If we would retaliate effectually upon them for their ill-intent, handsome premiums given to our plantations to raise the same growths as Spain might enable them to supply us cheaper than the Spaniards could do, and establish a trade they could never return. Premiums may gain trade, hut prohibitions will destroy it.”* Richardson applies the same argument to expose the folly and injurious in¬ fluence of the restraints on the trade with France. “ Would any wise dealer in London/ 5 he asks, “ buy goods of a Dutch shopkeeper for 15d. or 18d. when he could have the same from a French shopkeeper for Is. ? Would he not consider that, by so doing, he would empty his own pockets the sooner, and that, in the end, he would greatly injure his own family by such whims ? And shall this nation commit an absurdity that stares every pri¬ vate man in the face ? * * * The certain way to be secure is to be more powerful, that is, to extend our trade as far as it is capable of; and, as re¬ straints have proved its ruin, to reject them, and depend on freedom for our security; bidding defiance to the French, or any nation in Europe, that took umbrage at our exerting our natural advantages. 55 f Hume’s “Political Essays 55 appeared in 1752. Among them are essays on Commerce, Interest, Balance of Trade, Jealousy of Trade, Public Credit, The Populousness of Ancient Nations, &c. They display the same felicity of style and illustration that distinguish the other works of their illustrious author. The last-mentioned essay is one of the finest specimens ever pub¬ lished of an inquiry into the public economy of the ancients. His views of the commercial intercourse that should subsist among nations are enlightened and liberal; and he has successfully exposed the groundless nature of the prejudices that were then entertained against a free intercourse with France, and the fear of being deprived of a sufficient supply of bullion were the re¬ straints on its exportation withdrawn. It did not, however, enter into Hume’s plan to inquire systematically into the influence of commerce, or to analyse the sources of wealth. Mr. Harris endeavoured to supply the latter deficiency ; and his u Essay upon Money and Coins, 55 published in 1757, is one of the best economical treatises that preceded the “ Wealth of Nations.’ 5 The mistake into which Harris fell in supposing that it is profitable to import * P. 163. f P. 184. Sect. I. INTRODUCTORY DISCOURSE. xxxv ii durable rather than rapidly consumable commodities, has been already no¬ ticed ; and, as a writer on commerce, he is undoubtedly very inferior to Sir Dudley North and Mr. Richardson. But the able way in which he has treated the subject of money, and shown the influence of the division of labour in facilitating production, and the near approach he has made to some of the fun¬ damental doctrines of Smith, if they do not give him a pre-eminence, cer¬ tainly place him in the first rank among his precursors. The extensive treatise, entitled “ An Inquiry into the Principles of Poli¬ tical Econony,” by Sir James Steuart, was published in 1767, in two vols. 4to. Though intended to serve as an exposition, or systematic view, of the principles of the mercantile system, this work is by no means destitute of enlarged and ingenious views. The first book treats of the mutual action and reaction of population and agriculture, and contains several passages in which the true theory of population is set in the most striking light. There are, besides, many judicious observations interspersed throughout the rest of the work, more especially in those parts which treat of money and exchange. It must, however, be acknowledged that, even when sound, the statements and reasonings are singularly tedious and perplexed. Sir James had no clear idea of the real sources of wealth, or of the means by which they may be rendered most productive ; and, even as an exposition of the mercantile system, his work is inferior to the Lezioni of Genovesi, published three years previously. Though well acquainted with Sir James Steuart, Smith has not once referred to his treatise ; and, if we except those parts of the first book which treat of population, he could have gleaned little from it, that he might not have found in other works. We have treated thus fully of the progress of economical science in Eng¬ land, partly on account of the interest of the subject, which has hitherto been very imperfectly investigated; and partly because it was necessary, in order to form a fair estimate of the merits of Dr. Smith, to show what had been accomplished previously to the publication of the u Wealth of Nations.” * Say, and other continental writers, claim for the Italians and French the honour of being the first to discover and establish the correct principles of commercial intercourse. But the details now given seem to leave little doubt in regard to the priority of the English. The works of the early Italian economists, Davanzati, Serra, Turbulo, and Scaruffi, are principally occupied with discussions respecting the influence of a reduction of the standard of money.f They deserve credit for having opposed all tampering with the * It will readily occur that, among the immense number of tracts on commercial and finan¬ cial subjects, published in the seventeenth century, and during the early part of the eighteenth, there must be many, besides those referred to above, in which sound principles are occa¬ sionally advanced ; but it is believed that most of those have now been specified in which the distinguishing and peculiar prejudices of the age were openly attacked, or in which any of those germinal truths were elicited that have subsequently served as the foundation of systems. There are many interesting passages, and just and valuable remarks, in the tracts of Misscl- den, Lewis Roberts, Roger Coke, Graunt, &c., and in the Britannia Languens , and other anonymous publications ; but none of them seem to bear so directly on the principles of the science as those quoted in the text. t The work of Serra, published in 1613, must be in part exempted from this remark ; and it is worthy of attention for the liberality and correctness of many of its views. Pecchio (“Storia della Economia Pubblica in Italia,” p. 61.), and some other Italian writers, contend, indeed, that Serra should be regarded as the founder of the true theory of political economy; but, without denying his merit, it is clear he can have no well-founded pretensions to any such distinction. IIis analysis of the sources of wealth is altogether faulty ; and, in proof of this, d INTRODUCTORY DISCOURSE. Sect. I. xxxviii currency; but the arguments they employ to show its injustice and impolicy are stated with far greater brevity, and at least equal force, in Sir Robert Cotton’s speech* before the privy Council in 1626. The Discorso Econo - mico of Bandini, the earliest commercial writer whose writings have been thought worthy of a place in the voluminous collection of Italian works on political economy, f was published so late as 1737. The essays of Belloni and Algarotti On Commerce , both very inferior to those of Sir Josiah Child and Sir Dudley North, were published, the former in 1750, and the latter in 1763. The French have still less claim than the Italians to the discovery of the true principles of commerce. The u Detail de la France,” an anonymous publication, by Pierre le Pesant, Seigneur de Bois Guilbert, published in 1695, is, perhaps, the earliest French work in which sound principles are laid down, respecting money, commerce, and taxation. It is prolix and ill- arranged ; but it is worthy of attention, if not for its general views, for the authentic information it communicates in regard to the state of France at the period when it was written, and the sentiments that intelligent persons were then beginning to entertain respecting the system of administration. Guilbert is particularly hostile to the restraints on the corn trade ; and he exposed the inequality and injurious operation of the taille , tithe, and other burdens, with a freedom and boldness that alarmed those interested in their support. In consequence of the enmity thus excited, he was deprived of his place of Ad¬ vocate-General in the Cour des Aides of Normandy, and exiled to a distant part of the kingdom, where he ended his days in disgrace and poverty— a victim to the vindictive spirit of the clergy and nobility. Twelve years after the publication of the u Detail de la France,” appeared the u Dixme Royale ” of Marshal Yauban, a work creditable alike to the heart and head of its celebrated author. Though high in the favour of Louis XIV., who had advanced him to the first dignities of the state, Vau- it is only necessary to mention that, in his estimation, manufacturing industry is far more im¬ portant and valuable than agriculture ! It is needless to say any thing of his opinions as to commerce : it will not be pretended that they are more liberal than those we have seen were embodied in a public document put forth by the government of England sixty years before his hook was published. It is admitted, too, that his work made no impression whatever; that it was all but unknown to his contemporaries, and totally so to their descendants. (Peechio, in loc. cit. ; and Galliani, “ Della Moneta,” p. 410.) * This speech was originally printed in 1641 as the speech of Sir Thomas Rowe at the Council table in July 1640, with respect to brass money ; but there is not a sentence in the speech that has any reference to any such subject, the whole relating to a project for enfeebling the standard of the coin. It was again printed in 1651, with some additions, as the speech of Sir Robert Cotton at the Council table, the 2d September 1626; and, as it is known that a project for reducing the standard was then entertained, it seems most probable that Sir R. Cotton was its real author. But to whichever of these learned persons the honour may belong of making this speech, it is not too much to say that the injustice and impolicy of debasing the standard have never been more successfully demonstrated. A “ Discourse of Coin and Coinage,” by Rice Vaughan, Esq., was published in 12mo, in 1675. This is a very complete and valuable treatise ; and is, indeed, inferior to few that have since appeared. We learn from the dedication that it was a posthumous publication, and had most probably been written several years previously. The Traite Historique des Monnoyes de France, by Leblanc, published in 1689, is one of the best of the early treatises on money. It contains a vast deal of information with respect to the history of French money, and the successive changes and debasements it has undergone from the earliest ages of the monarchy. *f Scrittori Classici Italiani di Fconomia Politica. This collection of the works of her economical writers does honour to Italy. It was begun in 1803, and finished in 1805, in 50 volumes 8vo, under the patronage of Napoleon. INTRODUCTORY DISCOURSE. XXXIX Sect. I. ban did not suffer bis gratitude to liis Prince to efface liis sense of the duty which he owed to his country. In this treatise, of which he placed a manu¬ script copy in the hands of the King, he has borne, in express terms, unequi¬ vocal testimony to the truth of the statements of Guilbert, relating to the in¬ equality of taxation, and the frauds and extortion practised by those employ¬ ed in the collection of the revenue: and, not satisfied with this, he has added many details of his own, to prove the miserable state to which the people were reduced by means of these abuses, and of the increased demands made upon them through the rapidly increasing wants of the state. To remedy these grievances, and especially to get rid of the exemptions from tax¬ ation enjoyed by the nobility and clergy, Yauban proposed that all existing taxes should be repealed, and replaced by a single tax, or Dixme Royale , made to press equally on every part of the kingdom. It is unneces¬ sary to enter into any details with respect to this project. When brought forward, its enemies contended, that it ^vas impracticable; and it is now very generally allowed that in this, at least, they were in the right. The Marshal died about the time that his work appeared; and, but for this, it may be doubted, considering the power and influence of those whose privileges and oppressive proceedings he had so boldly attacked and exposed, whether his unimpeachable integrity, his services as the greatest of engineers, or his credit-at Court, could have saved him from a fate similar to that of Guilbert.* It should, however, be observed, that the works of Guilbert and Yauban have more of a political than of an economical character: And though they embody many just and liberal principles, and much valuable information, they are not generally reckoned, even by the French, among the writers who contributed to the establishment of sound commercial doctrines. It might have been supposed that the disordered state of the finances in the latter part of the reign of Louis XIY., the projects of Law, and the bankruptcy in which they terminated, would have enabled the French writers, by whom these subjects were discussed, to throw considerable light on many parts of the theory of money and taxation. But this does not appear to have been the case. With the exception, indeed, of a Memoir on the state of the Fi¬ nances, at the death of Louis XIY., by a Committee of the Council of State, and a Memoir subsequently presented by Law to the Regent, which contains some just, intermingled with many erroneous, views,! none of the tracts published at that period, which we have been fortunate enough to meet with, deserve any particular notice. So slow was the progress of correct informa¬ tion upon these subjects in France, that even Montesquieu has a chapter en¬ titled u A quelles nations il est d6savantageux de faire le commerce.” J M. de Gournay, Intendant of Commerce in France, about the middle of * The Dixme Royale was published in 4to, at Rouen, in 1707. Marshal Yauban died 30th March, same year. t These “ Memoirs ” are printed in the last volume of the “ Recherches et Considerations sur les Finances de France,” by Forbonnais. The principles advanced in Law’s Memoire are substantially the same with those he had previously developed in his Treatise entitled “ Money and Trade Considered,” published at Edinburgh in 1705. + Maupertuis, in his “ Eloge de Montesquieu,” candidly admits that France is indebted for the science of commerce, finance, and population, or of political economy, to England. The passage is curious :—“ Comme le plan de Montesquieu,” he observes, “ renfermoit tout ce qui peut etre utile au genre humain, il n’a pas oublid cette partie essentielle qui regarde le com¬ merce, les finances, la population : science si nouvelle jparmi nous , qu’elle n’y a encore point de nom. C’est clicz nos voisins qu'elle est nee ; et clle y demeura jusqu'a ce que M. Melon lui fit passer la mer .” The “ Essai Po tique sur le Commerce,” by Melon, was published in 1734. It is entirely INTRODUCTORY DISCOURSE. Sect. I. si last century, is said by his contemporaries to have entertained the most en¬ lightened opinions on commercial subjects ; and, by his station and reputation for talent, to have done much to disseminate them among his countrymen. De Gournay did not publish any work of his own, but he assisted in the compilation of several; and a translation of Sir Josiah Child’s Treatise, from his pen, appeared at Paris in 1752. We are, however, inclined to think that the 11 Essai sur la Police des Grains,” by M. Herbert, Berlin (Paris), 1754, should be placed at the head of all the commercial treatises that had appeared either in France or any where else on the Continent, previously to the aera of Quesnay and the Eco¬ nomists. It is, in all respects, an excellent work; is clearly and ably written ; and contains all the arguments that could be advanced to show the pernicious influence of restrictions on the corn trade, and the advantages of freedom, with the exception of those deduced from the new doctrines re¬ specting rent and profits. But the efforts hitherto made by the English and continental writers, though they had shaken some of its outworks, were ineffectual to the subver¬ sion of the mercantile system. Their opinions respecting the nature of wealth were confused and contradictory; and, as they neither attempted to investigate its sources with sufficient care, nor to trace the causes of national opulence, their arguments in favour of a liberal system of commerce had somewhat of an empirical aspect, and failed of making the impression that is always made by reasonings logically deduced from well-established prin¬ ciples, and shown to be consistent with experience. Locke, as has been already seen, demonstrated the paramount influence of labour in the produc¬ tion of wealth; but he did not prosecute his investigations in the view of elucidating the principles of the science, and made no reference to them in his subsequent writings. And, though Harris adopted Locke’s views, and drew from them some important practical inferences, his general principles are merely introduced by way of preface to his Treatise on Money, and are not explained at sufficient length, or in the logical and systematic manner necessary in scientific investigations. What had thus been left undone by his countrymen and others, was attempted, about the middle of the eighteenth century, by a French philo¬ sopher, equally distinguished for the subtlety and originality of his under¬ standing, and the integrity and simplicity of his character. The cele¬ brated M. Quesnay, a physician, attached to the court of Louis XV. has the merit of being the first who investigated and analysed the sources of wealth, with the intention of ascertaining the fundamental principles of political economy; and who, in consequence, gave it a systematic form, and raised it to the rank of a science. Quesnay's father was a small proprietor; and, having been educated in the country, he was naturally inclined to regard agriculture with more than ordinary partiality. At founded on the principles of the mercantile system. Mr Bindon translated it into English, and published it, along with some rather valuable annotations and remarks, at Dublin in 1739. Melon advocated the ruinous policy of raising the denomination of the coin. This led to the publication of a very acute work by Dutot, entitled, Reflexions Politiques sur les Finances et le Commerce; 2 tomes, 12mo, 1738. Dutot’s work was in its turn ably criticised by Duverney, in his Examen des Reflexions Politiques sur les Finances , &c. ; 2 tomes, 12mo, 1740. These works contain a great deal of interesting information respecting French finance. Duverney’s account of the Mississippi Scheme is particularly good. Sect. I. INTRODUCTORY DISCOURSE. xii an early period of life he was struck with its depressed state in France, and set himself to discover the causes which had prevented its making that progress, which the industry of the people, the fertility of the soil, and the excellence of the climate, seemed to insure. In the course of this inquiry, he speedily discovered that the prohibition of the exportation of corn, and the preference given in the policy of Colbert to the manufacturing and com¬ mercial classes, formed the most powerful obstacles to the progress and im¬ provement of agriculture. But Quesnay was not satisfied with exposing the injustice of this preference, and its pernicious consequences: his zeal for the interests of agriculture led him, not merely to place it on the same level with manufactures and commerce, but to raise it above them, by endeavour¬ ing to show that it was the only species of industry that could increase the riches of a nation. Founding on the indisputable fact, that every thing that ministers to our wants or gratifies our desires must be originally derived from the land or the water, Quesnay assumed as a self-evident truth, and as the basis of his system, that the earth is the only source of wealth ; and con¬ sequently that labour is incapable of producing any new value, unless when it is employed in agriculture, including therein fisheries and mines. The powerful influence of the vegetative powers of nature, and his inability to explain the origin and causes of rent, confirmed him in this opinion. The circumstance, that, of all who engage in industrious undertakings, none, save the cultivators of the soil, pay rent for the use of natural agents, ap¬ peared to him a convincing proof that agriculture is the only species of in¬ dustry which yields a nett surplus ( produit net ) over and above the expenses of production. Quesnay allowed that manufacturers and merchants are highly useful; but, as they realise no nett surplus in the shape of rent, he contended that the value added by them to the products which they manu¬ facture or carry from place to place is barely equivalent to the capital or stock they consume, or the expenses they incur, during the time they are necessarily engaged in these operations. These principles being established, Quesnay proceeded to divide society into three classes : the first, or produc¬ tive, class, by whose agency all wealth is produced, consists of the farmers and labourers engaged in agriculture, who subsist on a portion of the pro¬ duce of the land reserved to themselves as the wages of their labour, and as a reasonable profit on their capital; the second, or proprietary, class consists of those who live on the rent of the land, or on the nett surplus produce raised by the cultivators after their necessary expenses and profits have been deducted; and the third, or unproductive class, consists of manufacturers, merchants, menial servants, &c. who derive their entire subsistence from the wages paid them by the other two classes, and whose labour, though exceedingly useful, adds nothing to the national wealth. It is obvious, sup¬ posing this classification to be made on just principles, that all taxes must fall on the landlords. The third, or unproductive, class have nothing but what they receive from the other two classes, who pay them only what is required to enable them to subsist and continue their services; and were any deduction made from the fair and reasonable profits and wages of the husbandmen, it would paralyse their exertions, and spread poverty and misery throughout the land, by drying up the only source of wealth. It, therefore, necessarily follows, on Quesnay’s theory, that the entire expenses of government, and every description of public burden, must, however im¬ posed, be ultimately defrayed out of the produit net , or rent, of the land¬ lords j and, consistently with this principle, he proposed that every existing adii INTRODUCTORY DISCOURSE. Sect. I. tax should be repealed, and that a single tax {Vimpot unique) laid directly on the nett produce, or rent, of the land, should be imposed in their stead. But, however much impressed with the superior importance of agriculture Quesna} did not solicit foi it any exclusive favour or protection. lie success¬ fully contended that the interests of the agriculturists, and of the other classes would, be best promoted by establishing a system of perfect freedom. “ Qu’on maintienne, says he in one of his general maxims, u Rentiere liberte du commerce ; car la police du commerce interieur et exterieur la plus sure , la plus exacte, la plus profitable , d la nation et d Vetat, consiste dans la pleine liberte DE la concurrence.”* Quesnay showed that it can never be for the interest of the proprietors and cultivators of the soil to fetter or dis¬ courage merchants and manufacturers ; for the greater their liberty, the gieater v\ill be their competition, and their services will, in consequence, be rendered so much the cheaper. Neither can it ever be for the interest of the unpioductive class to harass and oppress the agriculturists, by preventing the free export of their products, or by subjecting them to restrictive regulations. When the cultivators enjoy the greatest degree of freedom, their industry, and, consequently, their nett surplus produce—the only fund whence any accession of national wealth can be derived_will be augmented to the gieatest possible extent. According to this u liberal and generous system,”f the establishment of perfect liberty, security, and justice, is the only, as it is the infallible, means of securing the highest degree of prosperity to all classes of society.;); On a "s u, soys the ablest expositor of this system, j\X. Mercier de la * Physiocratie^ premiere partle, p. 119. f Wealth of Nations, book iv. cap. 9. $ That Quesnay is entitled to the merit of originality cannot be disputed. He had certainly, however, been anticipated in several of his peculiar doctrines by some English writers of the previous century. The fundamental principles of the economical system" are distinctly set forth m a tract entitled Reasons for a limited Exportation of Wool published in 16/7. “ That it is of the greatest concern and interest of the nation,” says the author of the tract, “ to preserve the nobility, gentry, and those to whom the land of the country belono-s" at least, much greater than a few artificers employed in working the superfluity of our wool °or the merchants who gain by the exportation of our manufactures, is manifest—1. Because they are the masters and proprietaries of the foundation of all the wealth in this nation , all profit arising out of the ground which is theirs. 2. Because they hear all taxes and public burdens; winch, m truth are only borne by those who buy, and sell not; all sellers, raising the price ot their commodities, or abating of their goodness, according to their taxes.”_ p. 5 In 1696 Mr Asgill published a treatise entitled Several Assertions Proved, in order to Create another Species of Money than Gold , in support of Dr. Chamberlayne’s proposition for a If nd . /kefoHowmg extract from this treatise breathes, as Dugald Stewart has justly ° u m 11S ^ r * very spirit of Quesnay’s philosophy :_ “ \Y hat we call commodities is nothing but land severed from the soil— Man deals in no¬ thing but earth. Tne merchants are the factors of the world, to exchange one part of the earth for another The king himself is fed by the labour of the ox: and the clothing of the army and victualling of the navy must all be paid for to the owner of the soil as the ultimate receiver. All things m the world are originally the produce of the ground, and there must all things be raised. -(This passage has been quoted in Lord Lauderdale’s Inquiry into the JSature and Origin of Public Wealth , 2d ed. p. 109.) These passages are interesting, as exhibiting the first germs of the theory of the Econo- nnsts : but there is no ground for supposing that Quesnay was aware of the existence of either ot the tracts referred to. The subjects treated of in them were of too local a description to ex¬ cite the attention of foreigners ; and Quesnay was too candid to conceal his obligations, had he really owed them any It is probable he may have seen Locke’s treatise on Raising the atue oj Money , where the idea is thrown out that all taxes fall ultimately on the land ; but there is an immeasurable difference between the suggestion of Locke and the well-digested and ingenious system of Quesnay. & Sect. I. INTRODUCTORY DISCOURSE. xliii Riviere, “ qu’il est de V essence de l’ordre que l’interet particulier d’un seul ne puisse jamais etre separee de l’interet commun de tous ; nous en trouvons line preuve bien convaincante dans les effets que produit naturellement et necessairement la plenitude de la liberte qui doit regner dans le commerce, pour ne point blesser la propriety. L’interet personnel encouragee par cette grande liberte, presse vivement et perpetuellement chaque homme en parti¬ culier, de perfectionner, de multiplier les choses dont il est vendeur; de grossir ainsi la masse des jouissances qu’il peut procurer aux autres hommes, atin de grossir, par ce moyen, la masse des jouissances que les autres hommes peuvent lui procurer en echange. Le monde alors va delui-meme ; le desir de jouir, et la liberte de jouir, ne cessant de provoquer la multiplication des productions et l’accroissement de l’industrie, ils impriment a toute la societe, un mouvement qui devient une tendance perpetuelle vers son meilleur etat possible.’’* To enter into a full examination of the principles of this very ingenious theory would greatly exceed the limits of this Discourse. It is sufficient at present to remark, that, in assuming agriculture to be the only source of wealth, because the matter or substance of commodities must be originally derived from the earth, Quesnay and his followers mistook altogether the nature of production, and really supposed wealth to consist of matter; where¬ as, in its natural state, matter is very rarely possessed of any immediate or direct utility, and is always destitute of value. It is only through the labour expended on its appropriation, and in fitting and preparing it for being used, that matter acquires exchangeable value, and becomes wealth. The latter is not produced by adding to the matter of our globe, that being a quantity susceptible neither of augmentation nor diminution. All industrial opera¬ tions are intended to create wealth by giving utility to existing materials; and it has been repeatedly demonstrated, that the labour employed in manu¬ factures and commerce is in all respects as creative of utility, and conse¬ quently of wealth, as that employed in agriculture. Neither is the latter, as Quesnay supposed, the only species of industry which yields a surplus after the expenses of production are deducted. 'When none but the most fertile soils are cultivated, no rent, or produit net , is obtained from the land; and it is only after recourse has been had to poorer soils, and when, consequently, the productive powers of the land newly employed in cultivation begin to diminish, that rent begins to appear : so that, instead of rent being a conse¬ quence of the superior productiveness of agricultural industry, it is merely a consequence of one piece of land being more productive than others.t The Tableau E'conomique , a formulary constructed by Quesnay, to ex¬ hibit the various phenomena attendant on the production of wealth, and. its distribution among the productive, proprietary, and unproductive classes, was published at Versailles, in 1758 ; and the novelty and ingenuity of the theory which it expounded, its systematic and scientific shape, and the liberal commercial policy which it recommended, speedily obtained for it a very high degree of reputation. It is to be regretted that the friends and disci¬ ples of Quesnay, among whom were the Marquis de Mirabeau, Mercier de la Riviere, Dupont de Nemours, Saint Peravy, Turgot, and other distinguished individuals, in France, Italy, and Germany, should, in their zeal for his pe¬ culiar doctrines, which they enthusiastically exerted themselves to defend 1 * L'Ordre Naturel et Essential des Societes Politiques , tome ii. p. 444. f See the supplemental note on Rent. xliv INTRODUCTORY DISCOURSE. Sect. L and propagate, have exhibited more of the character of partisans, than of (what they really were) sincere and honest inquirers after truth. To this is to he ascribed the unusual sameness of their works,* and their being ge¬ nerally regarded as a sect known by the name of Economists or Physiocrats. It may, however, be truly said of them— • Secta fuit, servare modum, fineinque tenere, Naturamque sequi, patriaeque impendere vitam ; Nec sibi, sed toti genitum se credere mundo. There can be no question, notwithstanding their defects, that the labours of the Economists powerfully contributed to the improvement of the science. After the publication of the Tableau Economique , it was found to be necessary, in reasoning on topics connected with national wealth, to subject its sources, and the laws which regulate its production and distribution, to a more accu¬ rate and searching analysis. In the course of this examination, it was speedily discovered that both the mercantile and economical theories were erroneous and defective ; and that, to establish the science of wealth on a firm foundation, it was necessary to take a more extensive survey, and to seek for its principles, not in a few partial and distorted facts, or in metaphysical abstractions, but in the connection and relation subsisting among the various phenomena manifested in the progress of civilization. The Count di Verri, whose 11 Meditazioni sulla Economia Political were published in 1771, de¬ monstrated the fallacy of the opinion entertained by the Economists respect¬ ing the superiority of agricultural labour; and showed that all industrial operations really resolve themselves into modifications of matter already in ex¬ istence.^ But Verri did not trace the consequences of this principle ; and, having no clear and definite notions of what constituted wealth, he did not attempt to investigate the means by which its production might be facili¬ tated. He made some valuable additions to particular branches of the * The following are the principal -works published by the Economists :— Tableau Economique , et Mciximes Generates du Gouvernement Economique , par Francois Quesnay, 4to. Versailles, 1758. Theorie de VImpot , par M. de Mirabeau, 4to. and 12mo. 1760. La Philosophie Rura'le, par M. de Mirabeau, 4to. and 3 tomes 12mo. 1763. LdOrdre Naturel et Essentiel des Societes Politiques , par Mercier de la Riviere, 4to. and 2 tomes 12mo. 1767. Sur VOrigine et progres d'une Science Nouvelle , brochure par Dupont de Nemours, 1767. La Physiocrcdie, ou Constitution Naturelle du Gouvernement le plus avantageux au Genre Humain , Recueil des Principaux Ouvrages Economiques de M. Quesnay, redige et publie par Dupont de Nemours, 2 Parties, 1768. Lettres d'un Citoyen a un Magistrate sur les Vingtiemes et les autres Impots , par l’Abbe Paudeau, 12mo. 1768. Memoire sur les Effets de V Lmpot indirect; qui a remporte le Prix propose par la Socieie Roy ale d'Agriculture de Limoges , par Saint Peravy, 12mo. 1768. j Reflexions sur la Formation , et la Distribution des Richesses, par Turgot, 8vo. 1771. This is the best of all the works founded on the principles of the Economists; and is, in some re¬ spects, the best work on Political Economy published previously to the Wealth of Nations. The Journal PAgriculture , Spc. and the Ephemerides du Citoyen, contain a variety of val¬ uable articles by Quesnay and other leading Economists. The Ephemerides w r as begun in 1767, and dropped in 1775; it was first conducted by the Abbe Baudeau, and then by Dupont. *f Accostare et separare sono gli unici elementi che l’ingegno umano ritrova analizando l’idea della riproduzione ; e tanto e riproduzione di valore e di richezza se la terra, l’aria, e l'aqua ne’ campi si trasmutino in grano, come se colla mano dell’ homo il gluttine di un insetto si trasmuti in velluto, o vero alcuni pezzetti di metallo si organizzino a formare una ripetizione.— Meditazioni sulla Economia Politico, § 3. Sect. II. INTRODUCTORY DISCOURSE. * xlv science, and had acuteness sufficient to detect errors in the systems of others ; but the task of constructing a better system in their stead required talents of a far higher order. II.-PUBLICATION OF THE “ WEALTH OF NATIONS”-PRINCIPAL MERITS AND DEFECTS OF THAT WORK. In 1776, our illustrious countryman, Adam Smith, published the u Wealth of Nations,” a work which has done for Political Economy what the Treatise of Grotius de Jure Belli ac Pads , did for public law. In this work the science was, for the first time, treated in its fullest extent. In opposition to the Economists, Smith has shown that labour is the real source of wealth ; that the wish to augment our fortunes and to rise in the world,— u a wish that comes with us from the womb, and never leaves us till we go into the grave,”—is the cause of wealth being saved and accumulated; and that, labour is productive of wealth, not only when it is employed in the cultivation of the land, but also when it is employed in manufactures and commerce. He has traced the various means by which labour may be rendered most effective ; and has strikingly exhibited the prodigious additions made to its powers by its division among different individuals and countries, and by the employ¬ ment of accumulated wealth, or capital, in industrious undertakings. He has also shown, in opposition to the popular opinions of his time, that wealth does not consist of gold and silver, but of the various necessaries, conve¬ niences, and enjoyments of human life; that it is, in every case, sound policy to leave individuals to pursue their own interest in their own way ; and that, when they prosecute branches of industry advantageous to them¬ selves, they necessarily also prosecute such as are advantageous to the public. And he has farther shown, with a force of reasoning and an amplitude of illustration which leaves little to be desired, that the principles of the mer¬ cantile or exclusive system are at once inconsistent and absurd; and that all regulations intended to force industry into particular channels, or to de¬ termine the species of intercourse to be carried on between different parts of the same country, or between distant and independent countries, are impolitic and pernicious—subversive of the rights of individuals—and adverse to the progress of real opulence and lasting prosperity. “ The statesman,” he ob¬ serves, “ who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could only safely be trusted, not only to no single person, but to no senate or council whatever; and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.”* But, however excellent, there are errors, and those too of no slight im¬ portance, even in those parts of the u Wealth of Nations ” which treat of the production of wealth. So long as Smith confines himself to a statement of the advantages resulting from the freedom of industry, and of the mischiefs occasioned by the frequent attempts to fetter its operations, and to force it into certain channels in preference to others, his principles and reasonings are equally sound and conclusive; but they are less so in other instances. He does not say that those branches of industry which are found to be most * Rook iv. cap. 2. xlvi INTRODUCTORY DISCOURSE. Sect. II. for the advantage of individuals, are necessarily, also, most for the advan¬ tage of the public. His leaning to the system of the Economists—a leaning perceptible in every part of his work—made him so far swerve from his own principles, as to admit that individual and public advantage do not al¬ ways coincide. He contends that agriculture, though not the only produc¬ tive employment, is more productive than any one else; that the home trade is more productive than a direct foreign trade ; and the latter than the carrying trade. It is clear, however, that these distinctions are entirely imaginary. A state being nothing but a collection of individuals, whatever is most advantageous to them individually must be so also to the collective body; and it is obvious, that the interest of the parties will always prevent them from engaging in manufactures and commerce, unless they yield as large profits, and are, consequently, as publicly beneficial as agriculture. Dr. Smith made a very great improvement upon the system of the Econo¬ mists, by showing that the labour of manufacturers and merchants is pro¬ ductive. But his theory on this important point is, notwithstanding, incom¬ plete and defective. He limits his idea of productive labour to that which is u fixed and realised in some vendible commodity whereas all labour is plainly productive, which yields a return to the labourer without lessening the wealth of the society. It is only through the security and protection afforded by the exertions of some of those placed by Smith in the unproduc¬ tive class, that the supply of those material products on which he exclusively ~ fixed his attention, can ever become considerable, or that society can emerge from barbarism. But the principal defect of the u Wealth of Nations,” and the source of most of the errors by which it is infected, consists in the erroneous doctrines ad¬ vanced with respect to the circumstances which determine the value of com¬ modities and the rise and progress of rent. Smith has truly stated, that in the remote period which preceded the accumulation of capital, and the establish¬ ment of private property in land, the quantities of labour required to produce commodities determined their value in exchange, or worth as compared with each other. But he supposed that after capital had been accumulated, work¬ men been employed by others, and land been appropriated and let, the value of commodities no longer depended wholly on the labour required to produce them and bring them to market; but that it depended partly on it, and partly, also, on the amount of profit, wages, and rent; and that, supposing one or other of these elements to remain constant, their value would fluctuate ac¬ cording to the variations in the others—rising when they rose, and falling when they fell. In making this statement Smith forgot to remark, that the variations in question are, in fact, nothing but changes in the distribution of commodities; and being such they do not, in any degree, affect the circumstances which determine their value, or their power to exchange for or buy each other. An article A, produced by independent workmen, freely exchanges for, or is worth another, B, produced by similar workmen. Suppose now that these workmen hire themselves to capitalists, and work on their account: it is plain that this change will not occasion any difference in the relation of A and B, or in their value ; and it is farther plain, that whether the wages paid to the workmen employed in producing these articles rise or fall, their value will remain wholly unaltered. Whatever exerts the same degree of influence over different commodities, leaves their comparative values exactly where it found them. To vary these, a change must be made in the circumstances under which some of them are produced which does not extend to others. So long as all Sect. IT. INTRODUCTORY DISCOURSE. xlvii are equally affected—and Smith has shown that, generally speaking, varia¬ tions in the rates of wages and profit affect them all to the same extent—their value cannot vary. The relative values of A and B will not be disturbed, unless the value of A be raised or depressed in a different ratio from that of B. This, however, can only be done by varying the quantity of labour required to produce the one or the other; for, it has been repeatedly shown, that variations in the rate of wages, or in the price paid for the labour by which A and B are produced, necessarily affect them, and, indeed, all other commodities, in the same degree ;* and cannot, consequently, occa¬ sion any change in their relation to each other, or in their value. It is not, therefore, true, as is supposed throughout the “Wealth of Nations,” that variations in the price or wages paid for labour have the same influence over the value or price of commodities as variations in the amount of such labour. The quantity of labour required to produce any one com¬ modity may vary, as compared with that required to produce another; and every such variation will, of course, occasion a change in their relation to each other, or in their values. But wherever industry is free, variations of wages are never confined, for any lengthened period, to particular classes of workmen, but gradually extend, all things being taken into account, to every class: they cannot, consequently, modify or alter, in any material de¬ gree, the relations previously subsisting among commodities; and merely occasion a change in the proportions in which they are divided between the workmen and their masters. It may also be worth while to remark, even in this brief sketch of the more prominent principles advanced by Smith, that he has endeavoured to show, that the value of corn is less subject to variation than that of any other commo¬ dity. He founds this opinion on the assumption that, corn being the principal article of food, its consumers increase and diminish proportionally to varia¬ tions in its quantity, and that “ the raising of equal quantities of corn in the same soil and climate, will, at an average, require nearly equal quantities of labour, or, what comes to the same thing, the price of nearly equal quantities. ”7 (Book i. cap. 11.) There will be other opportunities of showing the fallacy of this doctrine ; but it is obviously, at first sight, altogether untenable. Corn, though usually the principal, is not by any means the whole subsistence of the labourer, and its abundance or scarcity cannot, therefore, exclusively determine the increase or diminution of population : and it is farther evi¬ dent, that when, in the less advanced stages of society, population being scanty, it is only necessary to cultivate the most fertile soils, the labour re¬ quired to raise corn, and, of course, its value, will, cceteris paribus , be less than when population has become comparatively dense, and when, conse¬ quently, inferior lands must be cultivated. Smith’s views, with respect to the rent of land, are partly just and partly erroneous. His mistakes seem to be owing to his not having carefully ana¬ lysed the circumstances which determine the value of raw produce at diffe¬ rent periods. Had he done this, he would have seen that his doctrine, that * It is here assumed, in order to exemplify the principle, that the capitals employed in the production of commodities are of the same degree of durability, or that they are returnable in the same period. AVe shall afterwards point out the influence that differences in the durability of capitals have on the value of the commodities produced by their agency. f This is one of the many passages that might be produced to prove the identity which Dr. Smith uniformly supposes to exist between the quantity of labour required to produce a commodity, and the price paid for that quantity. xlviii INTRODUCTORY DISCOURSE. Sect. II. all land wliicli yields food must, at the same time, yield rent, was not uni¬ versally true. In colonies and other countries where none but the best soils are cultivated, and where, consequently, the greatest quantity of food is ob¬ tained in return for the same outlay, no rent is paid. And though there are some circumstances among those which occasion the rise and progress of rent, and which also limit its amount, that partake of the nature of monopoly, and might perhaps have justified Smith in considering it as being, in a modi¬ fied sense, and under peculiar limitations, determined on that principle, it is notwithstanding certain, that the price of the raw produce grown upon land which pays rent, is uninfluenced by its payment, and would not be affected though it were entirely relinquished * In consequence of the incorrectness of Dr. Smith’s opinions on two such important, and, indeed, fundamental points, as the source and measure of value, and the source and progress of rent, some of the principles which per¬ vade other parts of his work are defective and unsound. This is particularly observable in his inquiry into the circumstances wdnch determine wages and profits, and where he traces the incidence and practical operation of taxes. It is true, indeed, that these, like the other parts of his great work, are enriched with many valuable remarks and disquisitions. But it is necessary to separate be¬ tween the latter and the theoretical doctrines with which they are sometimes mixed up. Those who implicitly adopt all Smith’s principles, take for grant¬ ed, that investigations which depend on a careful analysis and comparison of many circumstances that are constantly varying and exceedingly difficult to be correctly appreciated, could be completed by the efforts of one individual. This, however, is to suppose what is in the nature of things all but impos¬ sible. Nulla est ars quce singulari consummata sit ingenio.j It is only by slow degrees, by the aid of the lights successively struck out by experience and observation, and the continued researches of the most ingenious men, that sciences involving so many considerations are perfected. Previously to the publication of the u Wealth of Nations,” it was generally concluded that the prices of commodities depended on their scarcity or abundance, or, as it was more commonly expressed, on the proportion which their supply bore to the demand. But Smith has shown that as regards the great bulk of commodities, or those of which the supply may be inde¬ finitely increased according to the demand, this principle holds only for very limited periods ; and that, at an average, their market price corresponds w r ith their necessary price, or with the cost of their production . And though he erred in estimating the elements which enter into and form this necessary or natural price, the arguments by w r hich he has shown its general identity with the market price, and how the discrepancies that occasionally take place be¬ tween them are corrected, are alike conclusive and ingenious. Some of the most valuable chapters in the u Wealth of Nations ” are those which show, that the differences between the profits realised by the parties who employ capital in different businesses, and the wages of those en¬ gaged in them, are not real but apparent ; that these differences de¬ pend on peculiar circumstances connected with each business ; and that, al¬ lowing for these, and reducing them all to a common standard, profits and * The errors of Dr. Smith in regard to rent are the more remarkable, as its true theory was explained with singular clearness and ability in a pamphlet published by Dr. Anderson in 1777 (An Inquiry into the Nature of the Corn Laws, Edinburgh, 1777), seven years be¬ fore Dr. Smith published the third edition of the “Wealth of Nations ” in 1784, to "which he made several important additions. See supplemental note on Rent. f Columella, De Re Rustica, lib. i. Sect. II. INTRODUCTORY DISCOURSE. xlix i 4 ■ i i i. i * t i < * i k i wages are found to be respectively the same, or very nearly the same, in them all. High profits in a particular trade are occasioned by the extraordinary risk to which the capital vested in it is exposed, its want of respectability, or some other unfavourable circumstance ; while a low rate of profit is occasioned by the opposite circumstances, the more than ordinary security of the capital, the great respectability of the business, &c. The case is similar with respect to wages ; when they are unusually high it proceeds from the greater seve¬ rity of the labour to be performed, the greater skill and dexterity required in the workmen, or the unhealthiness, disagreeableness, or unsteadiness of the employment; while their unusual lowness is occasioned by the contrary qualities, the lightness of the labour, its healthiness, agreeableness, or steadi¬ ness, and the little skill required to carry it on. Nothing can exceed the sagacity manifested in the analysis of the various topics connected with these subjects. And though the equality, or rather the constant tendency to equality, of the profits of the capitalists, and of the w r ages of the workmen en¬ gaged in different employments, had been previously pointed out, it is to Smith that we are indebted for its demonstration; and for a satisfactory ex¬ planation of the causes, why profits and wages, in particular businesses and professions, differ so very widely as they are seen to do from profits and wages in others without either capital or individuals going from the one to the other. The arrangement of the u Wealth of Nations ” has been described as per¬ plexed and illogical; and it must be confessed that this censure is in a con¬ siderable degree well-founded. The thread of the investigation is often in¬ terrupted to make way for digressions upon some collateral topic. But though these be sometimes only very slightly connected with the main subject of investigation in the chapter in which they are placed, they generally involve some highly important considerations. They are evidently the favourite topics of the author, who has displayed in their treatment all that compre¬ hensive sagacity which formed the distinguishing feature of his mind. Al¬ though, therefore, it must be admitted that these digressions are not always introduced in the best, or most natural manner, they notwithstanding add materially to the value of the work ; and have greatly increased the num¬ ber of its readers, by rendering it as interesting as it is instructive, and re¬ commending it to those who might have felt indisposed to its study, had it abounded less in discussion and illustration. Dr. Smith begins with a statement of the influence of the division of labour on industry, and then proceeds to investigate the circumstances which determine the real and nominal (money) price of commodities, and the laws which govern wages, profit, and rent. These subjects are discussed in the first and second books, which contain all that strictly belongs to his theory of the production and distribution of wealth. The third book is occupied with an investigation, partly resting on historical facts, and partly on probabilities, of what would be the progress of industry in countries in which every one should be left to pursue his own interest in his own way, or in which full scope should be given to the principle of competition ; and of those circum¬ stances in the policy of the different European nations which have contri¬ buted to produce the existing order of things. This he endeavours to show has not grown out of any theoretical views, or of the combinations of states¬ men, but has been the necessary result of the peculiar situation in which so¬ ciety has been placed, and of the efforts of particular ranks and orders of men to advance their own interests. The fourth book is chiefly of a con¬ troversial character ; and besides an examination of the system of the French Sect. III. 1 INTRODUCTORY DISCOURSE. economists, it contains a full and masterly exposition and refutation of the principles and practical conclusions of the mercantile or exclusive system. The first half of the fifth and last book consists of a series of disquisitions respecting the principal objects on which the public revenue is or ought to be expended; but these, though generally excellent, undoubtedly belong more to politics than to political economy. In the latter part of the book he investigates the principles of taxation, and the influence of national debts over the public welfare. The “ Wealth of Nations,” owing, perhaps, to the nature of the subject, is neither so elegantly nor so eloquently written as the “ Theory of Moral Sentiments.” But its plain, unaffected, and flowing style, though generally verbose and sometimes even tedious, is, probably, on the whole, the best suited to the work. It is never involved, nor is the meaning ever obscure. Owing, however, to a want of precision in the definitions, and in the use of scientific terms, the scope and tendency of its doctrines is not to be learned from particular paragraphs or even chapters; and can only be properly appre¬ ciated by those who carefully study and compare the whole book. A considerable diversity of opinion has existed respecting Smith’s claims to originality. The quotations already made from the works of various authors published before the u Wealth of Nations,” show that some of his most important doctrines had been distinctly anticipated, and that obvious traces of them all may be found in previous writers. But this can hardly be considered as detracting in any, or only in a very slight degree, from the merits of Smith. In adopting the discoveries of others, he made them his own ; he demonstrated the truth of principles on which his predecessors had, in most cases, stumbled by chance ; separated them from the errors by which they were encumbered ; traced their remote consequences ; pointed out their limitations, mutual dependence, and real value; and reduced them into a consistent and beautiful system. If the observations now hazarded be well founded, it will be seen that it is necessary, in studying the “ Wealth of Nations,” to exercise a reasonable degree of scepticism ; and that our admiration of the author’s talents, and his deserved celebrity, should not make us blindly follow his steps, and adopt his principles, without examination. This would neither be to profit by his example nor his precepts: For he has never suffered himself to be misled through mere deference to illustrious names, but has uniformly sifted and examined the arguments in favour of the different theories and opinions he had occasion to review. And though those wdio study his work in this mode, should see reason to reject several of his doctrines and conclusions, enough will still remain to reward their industry, as well as to justify the high¬ est admiration of the individual who in investigating, for the first time, almost all the topics belonging to so extensive and difficult a field of inquiry, established so many important principles, and developed them in so instruc¬ tive and excellent a work. III.-PROGRESS OF POLITICAL ECONOMY SINCE THE PUBLICATION OF THE “ WEALTH OF NATIONS.” In! r Maltiius’s Essay on the u Principle of Population,” published in 1798,^ was the first considerable contribution to the science made subsequently to * One vol. 8vo.; last edition in 1826, in two vols. INTRODUCTORY DISCOURSE. li £ect. III. the publication of the “ Wealth of Nations.” The fact that the population of every country has a tendency not only to rise to the level of the means of subsistence, but to exceed them, had been frequently observed by pre¬ vious writers, and had been set in a striking point of view by Sir James Steuart, and Mr. Townsend, author of the “Travels in Spain, ” in his “Disser¬ tation on the Poor Laws” published in 1786. Put though not the original discoverer of this principle, Mai thus was the first to establish it on a solid foundation, and to show its vast consequence to a right understanding of the great questions connected with the well-being of society ; more especially those respecting the governing causes of the rate of wages and the condition of the poor. He demonstrated, by an extensive and careful examination of the state of population in different countries and stages of society, that an increase in the means of subsistence is the only sure criterion of a permanent and beneficial increase in the numbers of a people : that, so far from there being the least risk of population falling below the level of subsistence, the danger is all on the other side ; that, instead of there being a deficiency, there is, generally speaking, an excess of numbers in every country, as com¬ pared with the means of subsistence ; and that, were population not kept down to its proper level by the prevalence of moral restraint, or of a due degree of prudence in the formation of matrimonial connections, it would necessarily be kept down by the prevalence of vice, w T ant, and misery. From the remotest antiquity down to our own times, it had been the policy of legislators to stimulate population by encouraging early marriages, and bestowing rewards on those who reared the greatest number of children. But the doctrines of Malthus show the mischievous nature of such inter¬ ferences. They show, that an increase in the numbers of a people, when it is not either preceded or accompanied by a corresponding increase in the means of subsistence, can be productive only of misery, or of increased mor¬ tality, or both ; that the difficulty is not to bring human beings into the world, but to feed, clothe, and educate them when there; that mankind every where increase their numbers, till their further augmentation is re¬ strained by the difficulty of providing subsistence, and the poverty of some part of the society; and that, consequently, instead of attempting to strengthen the principle of increase, we should rather endeavour to provide for its control and regulation. It is proved by what has occurred in America and elsewhere, that when a population, far advanced in the arts, is planted in a country abounding in Ihrge tracts of fertile and unoccupied land, it may go on for a lengthened period doubling its numbers in the short space of twenty or five and twenty years. But though population may advance for a century or more, at this rate, in the valleys of the Mississippi and the Missouri, it is quite impossible it could go on for a dozen years together at any such rate in England, France, or any old-settled and densely peopled country. Luckily, however, though the principle or instinct which prompts man to propagate his species be quite as strong in one country as in another, the different circumstances under which he is placed powerfully influence his habits, and render the progress of population commensurate to the increase of the means of subsistence. It is not enough to occasion a marriage that the parties should be attached to each other ; it is further necessary that they should have a reasonable pro¬ spect of being able to provide for the children that maybe expected to spring from their union. Numbers, it is true, are not influenced by such considera¬ tions, and, seeing the future through the deceitful medium of the passions, are not deterred from gratifying their inclinations by any fear of the conse- lii INTRODUCTORY DISCOURSE. Sect. 111. quences ; but it is, notwithstanding, abundantly certain that they do influence the great mass of society; and that celibacy is more practised, and marriage deferred to a later period in countries where the difficulty of providing for a family is greater than in others. Much of the unpopularity of Malthus’s work, and of the abuse of which he was the object, would have been obviated had he laid sufficient stress on the circumstances now so briefly alluded to. It is true that the principle of population, or the tendency to increase, would, if not restrained by pruden¬ tial considerations, speedily fill the richest countries with want and wretched¬ ness. But man is influenced by reason as well as by instinct; and experience shows that when necessary the considerations in question acquire a corre¬ sponding power; and that the desire of the bulk of the people not merely to preserve themselves in their present position, but to attain to one still higher, does in all ordinary cases, effectually hinder the too great development of the principle of population, and renders it subordinate to the increase of the means of subsistence. That such is the case is seen by comparing the past and present condition of all countries. Every people of Europe has gained in the progress of society ; and is infinitely better provided with necessaries and conveniences at this moment than their ancestors 1000, 500, or 100 years ago. And it would be unphilosophical to suppose that it should be otherwise in time to come. The tendency to increase will, doubtless, be in future, as hitherto, controlled and regulated by the providence and good sense of society. The principle of population is not, therefore, the bugbear, the invincible obstacle to all real and permanent improvement it has been represented by those who have exaggerated and misunderstood its influence. On the contrary, it is easy to see that this principle is the great cause of the ad¬ vance of the human race in civilization and the arts; for, by keeping up population to a level with the means of subsistence, it makes the demand for fresh discoveries and inventions as great at one period as another, and insures the continued improvement of mankind. Mr Malthus has all but entirely overlooked these considerations. His work is, consequently, valu¬ able rather for its showing the uselessness and impolicy of attempts directly to encourage population, and for having awakened public attention to the subject, than for its giving anything like a complete view of the department of the science of which it treats. The Trcdte cVEconomie Politique of M. Say of Paris, originally published in 1802, would deserve to be respectfully mentioned in a sketch of the pro¬ gress of Political Economy, were it only for the influence which his skilful exposition of the advantageousness of the freedom of commerce and industry has had in abating illiberal prejudices on the Continent. It is singular, however, that though familiar with the works of Malthus and Ricardo, Say should have profited nothing by their elucidation of the origin and nature of rent, and that, in this important respect, the first editions of his book are as valuable as the last. The principal merit of his work, in a scientific point of view, consists in the explanation of the nature and causes of gluts . This is an able, and in part, also, an original disquisition. Smith showed how pro¬ duction might be carried to the farthest extent; and Say has completed his doctrine by showing that no conceivable increase of production can occasion a general glut, or universal overloading of the market. Too much of one com¬ modity may occasionally be produced; but there can never be too great a Sect. III. INTRODUCTORY DISCOURSE. liii supply of all sorts of commodities. For every excess there is a corresponding deficiency. It is admitted on all hands, that how much soever the powers of production may be increased, such commodities as are directly used by the producers, without the intervention of an exchange, cannot be in excess; for to suppose that they should be in this predicament, is to suppose a production without a motive—an efiect without a cause! Commodities carried to market may be in excess, but none else. These, however, are produced only that they may be exchanged for others ; and the fact that they are in excess, or cannot be disposed of, shows a corresponding deficiency in the supply of those they were intended to exchange for, or buy. Those who offer products for sale are stimulated to produce, when they find they can readily exchange them for others. And hence the most effectual en¬ couragement of industry plainly consists, not, as has been supposed, in an increase of unproductive and wasteful expenditure, but in an increase of pro¬ duction. Every new commodity is a new equivalent for, or a new means of purchasing some one else. It must be remembered, that the mere desire to possess any article, however strong, cannot of itself be a means of encourag¬ ing production. To become a real demander, a man must have the power as well as the will to purchase the articles he wishes to possess; in other words, he must be able to offer an equivalent for them. But it is not in the nature of things that there should be any limits to our wfish to possess the products of art and industry. Our desires are too ample ever to be satisfied :— Nec Croesi for tuna unquam, nec Persica Regna Sufficient animo !- The power to accomplish our wishes—to give equivalents for the objects of our desire—is the only desideratum. The more, consequently, this power is increased, that is, the more industrious individuals become, their means of buying will be so much the greater, and the market so much the more ex¬ tensive. It is clear, therefore, that gluts do not originate in over produc¬ tion, but that, in all cases, they are a consequence of the wrong application of productive power—of the production of articles not suited to the tastes or wants of those to whom they are offered, or which cannot be directly made use of by the producers. If attention be paid to these two grand requisites, if those things only be produced which are in demand by others, or which may be used by the producers, the powers of production may be doubled or trebled, and there will be as little excess as if they were diminished in the same proportion. Miscalculation, and the too great ardour of speculation, occasionally divert capital into unprofitable channels. But, if Government do not interfere to assist the parties, they will not fail to withdraw from the losing businesses; a regard for their own interest correcting, sooner than any artificial remedy, the improper distribution of capital, and restoring the natural equilibrium between the price and the cost of commodities. While M. Say was thus successfully cultivating the science in France, it was rapidly rising in importance, and acquiring fresh converts in England. The extraordinary changes occasioned by the late war in every department of the public economy, deeply affected the interests of all classes, and created flie most anxious and universal attention. The experience of centuries was crowded into the short space of thirty years ; and while novel combinations of circumstances served as tests by which to try existing theories, they enabled even inferior writers to extend the boundaries of the science, and to become liv INTRODUCTORY DISCOURSE. Sect. III. the discoverers of new truths. The discussions to which the restriction on cash payments by the Bank of England, the depreciation of the currency, and its subsequent restoration to par, gave rise, all but perfected the theory of money. The conflicting opinions that were entertained in regard to the influence of the restrictions on the corn trade, and the causes of the heavy fall of prices which took place in 1814 and 1815, stimulated some very able men to subject the laws regulating the price of raw produce, the rent of land, and the rate of profit, to a new and searching examination. In consequence several novel principles were elicited; and a work was produced, which, however inferior in interest to the “ Wealth of Nations,” rivals it in ability and originality. The first considerable step towards the successful investigation of the laws which regulate the distribution of wealth was made in 1815, when the nature, origin, and causes of rent were explained, so as to be fully under¬ stood by the public, in pamphlets, published nearly at the same time, by 11 A Fellow of University College, Oxford,”* and Mr. Mai thus.*}- But their investigations, though of great interest, were comparatively limited in their object; and it was reserved for Mr. Ricardo to carry his researches into every department of the science, to correct errors sanctioned by the highest authority, and to elucidate and establish many undiscovered and im¬ portant principles. The appearance of his work on the “ Principles of Poli¬ tical Economy and Taxation,” in 1817, forms a new sera in the history of the science. Exclusive of many interesting correlative discussions, Mr. Ricardo has carefully analysed the principles which determine the value and distri¬ bution of commodities. The powers of mind displayed in these investigations —the dexterity with which the most abstruse and difficult questions are un¬ ravelled—the sagacity displayed in tracing the operation of general princi¬ ples, in disentangling them from such as are of a secondary and accidental nature, and in perceiving and estimating their remote consequences— have rarely been surpassed; and will for ever secure the name of Ricardo a conspicuous place amongst those who have done most to unfold the me¬ chanism of society, and to perfect this science. Mr. Ricardo was the first to trace and exhibit the principle which deter¬ mines the cost , or real value, of all descriptions of freely produced com¬ modities. He perceived the fundamental error into which Dr. Smith had fallen, in supposing that the increase or diminution of the labour required to produce commodities, and the increase or diminution of the wages or price paid for that labour, were identical in their effects. He showed, that varia¬ tions of profits and wages, by affecting all descriptions of freely produced commodities, to the same, or nearly the same extent, would either have no influence over their value, or, if they had any, it would depend on the degree in which they occasionally affect some commodities more than others. And, Messrs. West and Malthus having shown that rent is not an element of cost or value, it follows that the value of all freely produced commodities depends, * Essay on the Application of Capital to Land , by a Fellow of University College, Oxford, Mr. (afterwards Sir Edward) West. f An Inquiry into the Nature and Progress of Rent , by the Rev. T. R. Malthus. There was nothing new in either of these pamphlets ; the Origin, Nature, and Causes of Rent having been quite as well, or better explained in Dr. Anderson’s pamphlet already alluded to, and in his Agricultural Recreations (vol. v. p. 401), published in 1801. But the investiga¬ tions and discoveries of Anderson, did not attract any attention, and were, perhaps, wholly forgotten. S ECT . m. INTRODUCTORY DISCOURSE. lv in advanced societies, as well as in those that are rudest and poorest, on the quantities of labour required to produce and bring them to market. This cardinal principle being established, it is plain, seeing the employers of labour are not indemnified for a rise of wages by an increase in the value or price of commodities, that the portion of the produce that would otherwise go to them will be diminished to the extent to which wages may be raised. It is not true, however, as Mr. Ricardo has stated, that the rate of profit is necessarily reduced in the same proportion that wages are increased. By profit is meant the surplus produce, or its value, accruing to those who em¬ ploy capital in industrious undertakings, after replacing the capital, or such parts of it as have been necessarily wasted in the undertakings ; and the rate of profit is always estimated in aliquot parts of the capital employed, and is in fact merely the expression of the proportion which the whole profit bears to the whole capital. And hence, it is clear that whenever the produc¬ tiveness of industry is increased, the produce assigned to the labourer, as his wages, may also be increased, without the share that remained to his em¬ ployer, or the rate of profit, being diminished. It is easy, indeed, to see that both wages and profits may be simultaneously increased. Having shown the influence which variations in the rate of wages exercise^ over the rate of profit, Mr. Ricardo applied himself to discover the circum¬ stances which determine wages. These he found to depend principally on the cost of producing the articles required for the subsistence of the labourer. However high their price, he must, it is plain, always receive a supply of food and clothes sufficient to enable him to exist, and continue his race. But owing to the progressively decreasing fertility of the soils to which advancing countries are obliged to resort, the quantity of raw produce, or of food, obtained by equal outlays of labour has, speaking gene¬ rally, a constant tendency to diminish in the progress of society; and when¬ ever wages cease to be reduced in the same proportion, the rate of profit will be depressed, not merely through the diminished productiveness of in¬ dustry, but, also, because an increased part of its diminished produce goes to the labourers.* These, however, are theoretical rather than practical conclusions; and are liable to be, and in fact are, every now and then, materially affected by the improvements that are always being made in the progress of society. These may neutralise, for an almost indefinite period, the influence that would other¬ wise be exercised over prices and profits, by resorting to inferior lands. It is to be regretted that Mr. Ricardo did not sufficiently attend to the circum¬ stances which practically countervail several of the principles on which he laid the greatest stress; and which, though less constant in their operation than the latter, make as much a part of the order of nature, and exercise a powerful influence. * The decreasing fertility of the soils to which every advancing society must resort, was, we believe, first distinctly shown in a work, in which there are many sound, intermixed with many fanciful and erroneous, views, entitled Principes de tout Gouverneruent , 2 tomes 12mo. published in 1766. The author has, on one occasion, hit upon the real origin ol rent “ Q>uand les cultivateurs, devenus combreux , auront defriche toutes les bonnes ter res; par leur augmentation successive , et par la continuity du defrichement , il se trouvera un point ou il sera phis avantageux a un nouveau colon de prendre aferme des terres fecondes , que d'en de fncher de nouvelles beaucovp moins bonnes —(Tome i. p. 126.) It is plain, however, from his not reverting to the subject, that he was not at all aware of the importance of the principle he had stated; and it is apparent, indeed, from other passages ol the work, that he supposed rent entered into price. 1 lvi INTRODUCTORY DISCOURSE. Sect. III. That a fall of profits usually takes place in the progress.of society, is a fact of which there can be no doubt. It had, however, been generally sup¬ posed that this fall was a consequence of the increase of capital, or rather of the increased competition of its possessors, or of their efforts to undersell each other. But Mr. Ricardo has shown the fallacy of this opinion. And it has since been sufficiently established that all permanent reductions in the rate of profit are a consequence, 1st, of an increase in the rate of wages; or, 2nd, of a diminished productiveness of industry; or, 3rd, of an increase of the taxes and public burdens affecting those engaged in industrious under¬ takings. In establishing his peculiar doctrines Mr. Ricardo not only made a large addition to the mass of useful and universally interesting truths ; but has ex¬ hibited some of the finest examples to be met with of discriminating analysis and profound and refined discussion. His doctrines are not, as has some¬ times been stated, merely speculative. On the contrary, they enter deeply into almost all the investigations of the science. That part of his work which treats of the incidence and operation of taxes on rent, profit, wages, and raw produce, is altogether practical; and, though not quite free from error, must always be a subject of careful study to those who wish to render themselves thoroughly acquainted with this important department of econo¬ mical science. MR. M'CULLOCH’S PUBLICATIONS. Besides this Edition of the “ Wealth of Nations,” Mr. M‘Culloch has published the following Works, viz.:— 1. A DICTIONARY, PRACTICAL, THEORETICAL, and HISTORI¬ CAL, of COMMERCE and COMMERCIAL NAVIGATION. Illus¬ trated with Maps and Plans. A New Edition, corrected, enlarged, and improved. In one closely-printed vol. 8vo, containing above 1500 pages. London, 1849. 2. A DICTIONARY, GEOGRAPHICAL, STATISTICAL, and HIS¬ TORICAL, of the various Countries, Places, and principal Natural Objects in the World. Illustrated with Maps and Plans. A New and Improved Edition. 2 thick and closely-printed vols. 8vo. London, 1S49. 3. A DESCRIPTIVE and STATISTICAL ACCOUNT of the BRITISH EMPIRE, exhibiting its Extent, Physical Capacities, Population, In¬ dustry, and Civil and Religious Institutions. Third, and greatly im¬ proved Edition. 2 thick vols. 8vo. London, 1847. 4. THE PRINCIPLES OF POLITICAL ECONOMY ; with some In¬ quiries respecting their Application, and a Sketch of the Rise and Prooress of the Science. Fourth and amended Edition. 1. vol. 8vo. © Edinburgh, 1849. 5. A TREATISE ON THE PRINCIPLES and PRACTICAL INFLU¬ ENCE of TAXATION and the FUNDING SYSTEM. 1 vol. 8vo. London, 1845. 6 THE LITERATURE OF POLITICAL ECONOMY: a Classified Catalogue of Select Publications in the different Departments of that Science, with Historical, Critical, and Biographical Notices. 1 vol. 8vo. London, 1845. 7. A TREATISE ON THE SUCCESSION TO PROPERTY VACANT BY DEATH : including Inquiries into the influence of Primogeniture, Entails, Compulsory Partition, Foundations, &c., over the Public In¬ terests. 1 vol. 8vo. London, 1848. INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS. ADVERTISEMENT TO THE THIRD EDITION. 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 men¬ tioned, 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 writ¬ ing the book. To the 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 Mer¬ cantile System ; and a new article to the chapter upon the expenses 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 begin¬ ning of the year 1784. ADVERTISEMENT TO THE FOURTH EDITION. In this fourth edition I have made no alterations of any kind. I now’, how r ever, find myself at liberty to acknowledge my very great obligations to Mr. Henry Hope of Amsterdam. To that gentleman I ow r e the most distinct, as well as liberal information, concerning a very interesting 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 w r ell known in Europe, the information w’hich 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 myself the pleasure of pre¬ fixing this advertisement to the new r edition of my book. m . i * m t CONTENTS. Introduction and Plan of the V ork. BOOK I. Of the Causes ofjn^i^vefhent in the pro¬ ductive Powers of Labour, and of the Order according to which its Produce is naturally distributed among the different Ranks of the People. CHAP. I. Of the Division of Labour - Page 2 Digression concerning the Variations in the Value of Silver during the Course of the four last Centuries - Page 81 Variations in the Proportion between the respec¬ tive Values of Gold and Silver - . - 97 Grounds of the Suspicion that the Value of Sil¬ ver still continues to decrease - - - 99 Different Effects of the Progress of Improve, ment upon three different Sorts of rude Pro¬ duce ------ 100 Conclusion of the Digression concerning the Va¬ riations in the Value of Silver - 110 / Effects of the Progress of Improvement upon the Real Price of Manufactures - - - - 112 CHAP. II. Of the Principle which gives Occasion to the Division of Labour ----- 6 CHAP. III. That the Division of Labour is limited by the Extent of the Market - - - - 8 CHAP. IV. Of the Origin and Use of Money - - 10 CHAP. V. Of the real and nominal Price of Commodities, or of their Price in Labour, and their Price in Money - -------13 CHAP. VI. Of the Component Parts of the Price of Com¬ modities - - - - - 21 CHAP. VII. Of the Natural and Market Price of Commodi¬ ties --------25 BOOK II. Of the Nature, Accumulation, and Em¬ ployment of Stock - - - 118 CHAP. I. Of the Division of Stock ----- 119 CHAP. IL Of Money considered as a particular Branch of the General Stock of the Society, or of the Expense of maintaining the National Capital 123 CHAP. III. Of the Accumulation of Capital, or of produc¬ tive and unproductive Labour - 145 CHAP. IV. Of Stock lent at Interest ----- 155 CHAP. V. Of the different Employment of Capitals - - 159 CHAP. VIII. Of the Wages of Labour CHAP. IX. Of the Profits of Stock - CHAP. X. Of Wages and Profit in the different Employ - 29 - 40 - 45 ments of Labour and Stock Part I. Inequalities arising from the Nature of the Em¬ ployments themselves 45 Puit II. Inequalities occasioned by the Policy of Europe 54 CHAP. XI. Of the Rent of Land ----- 66 Part I. Of the Produce of Land which always afTords Rent -.67 BOOK III. On the different Progress of Opulence in different Nations - - - 168 CHAP. I. Of the natural Progress of Opulence - 168 CHAP. II. Of the Discouragement of Agriculture in the ancient State of Europe, after the Fall of the Roman Empire ------ 170 CHAP. III. Of the Rise and Progress of Cities and Towns, after the Fall of the Roman Empire - - 176 CHAP. IV. How the Commerce of Towns contributed to the Improvement of the Country - 181 BOOK IV. Part II. Of the Produce of Land which sometimes does, and sometimes does not, afford Rent - - 74 Part III. Of the Variations in the Proportion between the respective Values of that Sort of Produce which always affords Rent, and of that which sometimes does and sometimes does not afford Rent - -- - ---.80 Of Systems of Political Economy 187 CHAP. I. Of the Principles of the Commercial or Mercan¬ tile System .------187 CHAP. IL Of Restraints upon the Importation from Foreign / Countries of such Goods as can be produced at home - - - - - 198 CONTENTS. Ixiv CHAP. III. Of the extraordinary Restraints upon the Im¬ itation of Goods of almost all Kinds, from those Countries with which the Balance is sup. posed to be disadvantageous - - Page 208 Part I. Of the Unreasonableness of those Restraints upon the Principles of the Commercial System 208 Digression concerning Banks of Deposit, parti¬ cularly concerning that of Amsterdam - * 211 Part II. Of the Unreasonableness of those extraordinary Restraints upon other Principles - 216 CHAP. IV. Of Drawbacks ------- 221 CHAP. V. Of Bounties.223 Digression concerning the Corn Trade and Corn Laws -------- 232 % CHAP. VI. Of Treaties of Commerce ... 243 CHAP. VII. ARTICLE III. Of the Expense of the Institutions for the In¬ struction of People of all Ages - - Page 353 Part IV. Of the Expense of supporting the Dignity of the Sovereign - - - 366 CHAP. II. Of the Sources of the general or public Revenue of the Society - 367 Part I. Of the Funds or Sources of Revenue which may peculiarly belong to the Sovereign or Common¬ wealth - - 357 Part II. Of Taxes - 371 article i . Taxes upon Rent. — Taxes upon the Rent of Land ------ 372 Taxes which are proportioned, not to the Rent, but to the Produce of Land - - 377 Taxes upon the Rent of Houses - - 378 ARTICLE II. Of Colonies ----- 249 Part I. Of the Motives for establishing new Colonies - 249 Part II. Causes of the Prosperity of new Colonies - 253 Part III. Of the Advantages which Europe has derived from the Discovery of America, and from that of a Passage to the East Indies b\ the Cape of Good Hope - - - 265 CHAP. VIII. Conclusion of the Mercantile System - - 289 CHAP. IX. Of the Agricultural Systems, or of those Sys¬ tems 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 - " 299 BOOK V. Of the Revenue of the Sovereign or Com¬ monwealth. CHAP. I. Of the Expenses of the Sovereign or Common¬ wealth - - •• - 311 Part I. Of the Expense of Defence - - 311 Part II. Of the Expense of Justice - - -319 Taxes upon Profit, or upon the Revenue arising from Stock - 382 Taxes upon the Profits of particular Employ¬ ments - 384 APPENDIX TO ARTICLES I. AND II- Taxes upon the Capital Value of Land, Houses, and Stock - 387 ARTICLE III. Taxes upon the Wages of Labour - - 390 ARTICLE IV. Taxes which it is intended should fall indiffer¬ ently upon every different Species of Revenue 3°9 Capitation Taxes - 392 Taxes upon consumable Commodities - - 393 CHAP. III. Of Public Debts - - - - 411 SUPPLEMENTAL NOTES AND DISSERTATIONS. NOTE I. Definition of Labour - 435 NOTE II. Definition, Sources, and Regulating Principles of Value - - - 437* NOTE III. Nature, Origin, and Progress of Rent. — Influ¬ ence of Improvements on Rent - - 444 NOTE IV. Population. Part III. Of the Expense of public Works and public In¬ stitutions - - - - - 325 ARTICLE I. Of the Public Works and Institutions for facili¬ tating the Commerce of the Society. And, first, of those which are necessary for faci¬ litating Commerce in general - - 325 Of the Public Works and Institutions which are necessary for facilitating particular Branches of Commerce - 329 ARTICLE II. Comparative Increase of Population, and of the Means of Subsistence. — Influence of the Prin¬ ciple of Increase on the Condition of Mankind. — Progress of Population in Great Britain - in Ireland. — Changes in the Laws of Mortality in Europe since 1780 ... 453 NOTE V. Consequences resulting from the Use of the Po¬ tato as a principal Article of Food - - 467 NOTE VI. Wages of Labour - - 470 NOTE VII. Of the Expense of the Institutions for the Edu. cation of Youth - 341 Circumstances which determine the Rate of Profit - 475 CONTENTS. lxv NOTE VIII. Effects of Variations in the Rates of wages, and Profits on the Value of Commodities - Page 477 NOTE IX. Money. Section I.—Principles which determine the Value of Money.—t'l.) When its Supply may be increased at the Pleasure of Individuals— and, (2.), When its Supply is placed under Limitation and Restraint ... 480 Section II. Defects incident to a Currency consisting of the Precious Metals.—Variable Value of these Metals—Expense of a metallic Currency.— Means by which that Expense may be les¬ sened ------ 484 Section III. Means by which the Value of Paper Money may be kept on a Par with Gold - - 489 Section IV. Quantity of Paper afloat necessarily different at different Periods.—Destruction of Country Bank Paper in 1792-93.—Crisis of 1797.—De¬ struction of Country Bank Paper in 1814-16, and in 1825-26.—Growth of Joint Stock Banks.—Defects in the Joint Stock Banking System.—Remarks on the Proposals for the suppression of Local Issues, and for taking Security from the Issuers - - - 493 Section V. Measures adopted in 1844 for the Improvement of the Paper Currency.—Banking in Scotland and Ireland.—Tables, &c. ... 504 NOTE X. Corn Laws and Ccfrn Trade - - - 511 of the Navigation Laws which relates to the Foreign Trade of tlie Empire ... 534 NOTE XII. Impressment.—Plan for its Abolition - - 542 NOTE XIII. Commercial Treaty with France in 1786 - - 545 NOTE XIV. Petition of the Merchants of Loudon for a Free Trade - - - - . 547 NOTE XV. Commercial Revulsions - 549 NOTE XVI. Herring Fishery .... 551 NOTE XVII. Navigation of the Egyptians - - . 552 NOTE XVIII. Disposal of Property by Will. History, Advantages, and Disadvantages of En¬ tails.—Primogeniture.—Law of Equal Succes¬ sion.—Effects of that Law in France.—Law of Landlord and Tenant in Ireland.—Ditto in Scotland.—Effects of these Laws - - 556 NOTE XIX. Government, Revenue, and Commence, of India 575 NOTE XX. On the Value and proper Mode of conferring Literary and Scientific Degrees - - 587 NOTE XXI. Scotch System of Parochial Education - - 594 Part I. Historical Sketch of the Corn Laws from 1773, down to their extinction in 1849 - - 511 Part II. Principles of the Corn Laws - - - 518 section r. Inquiry into the Policy and Effect of granting a Bounty on the Exportation of Corn - 518 section 11. Fluctuations caused by a Restriction on the Im¬ portation of Foreign Corn.—Burden imposed by the Corn Laws.—Diminution effected there¬ in by Improvements.—Indefinite extent to which the latter may be carried - - 520 SECTION III. Question respecting the peculiar Burdens affect¬ ing the Land.—A duty on Importation should be accompanied by a corresponding Drawback —Probable effect of the Abolition of the Corn Laws.—Remarks on that Measure - -525 NOTE XXII. Poor Laws—Policy, and probable Operation of the Poor Law Amendment Act.—Late Scotch Act - - - - - - 596 NOTE XXIII. Colonial Policy. The Monopoly of the Colony Trade does not augment the Rate of Profit.—Bad Effects of the Monopoly, and of the Forced Submission of Colonies able and willing to govern them¬ selves.—Causes of the usually rapid growth of Colonies.—Impolicy of exacting a High Price for unoccupied Colonial Lands.—Probable In¬ fluence of the Abolition of Slavery on the Growth of Sugar in the West Indies.—Popu¬ lation, Trade, &c. of our Colonies. - - 605 NOTE XXIV. Taxes on the Rent of Land - - 613 NOTE XXV. Taxes on Profits - - - - 617 NOTE XI. Navigation Laws. Rise of the Navigation Laws.—Influence as¬ cribed to them.—Modification of these Laws in 1825.—Abolition, in 1849, of that portion NOTE XXVI. Taxes on Wages. 1. Direct Taxes on Wages—2. Taxes on the Articles consumed by the Labourers - - 618 ]xvi CONTEXTS, NOTE XXVII. Taxes on Raw Produce.—Tithes - - 620 NOTE XXVIII. Incidence and Effect of Taxes on particular Commodities, and of an ad valorem duty on all Commodities - 622 NOTE XXIX. Highways.—Tolls.—Railways NOTE XXX. Advantages and Disadvantages of the Funding System, compared with the plan for raising the supplies for a war, within the Year, by a corresponding increase of Taxation.—Sinking Fund.- 625 Index ------ 635 - 624 AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH 1 OF NATIONS. INTRODUCTION AND JTke annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consist al¬ ways either in the immediate produce of that labour, or in what is purchased with that produce from other nations. According, therefore, as this produce, or what is purchased with it, bears a greater or smaller proportion to the number of those who are to consume it, the nation will be better or worse supplied with all the ne¬ cessaries and conveniences for which it has occasion. But this proportion must, in every nation, be regulated by two different circumstances; first, by the skill, dexterity, and judgment with which its labour is generally applied; and, secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed. Whatever be the soil, climate, or extent of territory of any particular nation, the abundance or scantiness of its annual supply must, in that particular situation, de¬ pend upon those two circumstances. The abundance or scantiness of this supply, too, seems to depend more upon the former of those two circumstances than upon the 1 Dr. Smith has not stated the precise meaning he attached to the term wealth; though he most commonly describes it as the “ annual produce of land and labour.” It has, however, been justly objected to this definition, that it refers to the sources of wealth, before we know what wealth is, and that it includes all the useless products of the earth, as well as those that are appropriated and en¬ joyed by man. We are inclined to think that wealth should be considered as comprising all the articles or products that are necessary, useful, or agreeable to man, and which at the same time possess exchangeable value — meaning by this quality the power or capacity to exchange for or buy some quantity of labour, or of one or more commodities or products obtain¬ able only by means of labour. This definition distinguishes between wealth and such articles as are bestowed gratuitously in unlimited quantities by Providence on man. The latter, though they may be of the very highest utility, are necessarily alto¬ gether destitute of exchangeable value; for, it is plain, no one will ever exert any labour, or give any portion of its produce, to obtain what he may command at all times, and in any quantity, without PLAN OF THE WORK. latter. Among the savage nations of hunters and fishers, every individual, who is able to work, is more or less employed in useful labour, and endeavours to provide, as well as he can, the necessaries and conveniences of life for himself, or such of his family or tribe as are either too old, or too young, or too infirm, to go a hunting and fishing. Such nations, however, are so miserably poor, that from mere want, they are frequently reduced, or, at least, think themselves reduced, to the necessity sometimes of directly destroying, and sometimes of abandoning, their infants, their old people, and those afflicted with lingering diseases, to perish with hunger, or to be devoured by wild beasts. Among civilised and thriving nations, on the contrary, though a great number of people do not labour at all, many of whom consume the produce of ten times, frequently of a hundred times, more labour than the greater part of those who work ; yet the produce of the whole labour of the society is so great, that all are often abundantly supplied, and a workman, even of the lowest and poorest order, if he is frugal and industrious, may enjoy a greater share of the necessaries and conveniences of life than it is possible for any savage to acquire. exertion. The grounds on which a distinction is made between wealth and articles or products not possessed of exchangeable value, are, therefore, ob¬ vious, and have been universally recognised. A man is not said to be wealthy because he can command inexhaustible supplies of atmospheric air, this being a privilege which he enjoys in common with every one else, and which, for that reason, can form no ground of distinction ; but he is said to be wealthy according to the degree in which he can afford to command those necessaries, conveniences, and luxuries which cannot be procured or preserved without the exertion of some labour or industry, and which may be appropriated by one individual, and enjoyed by him to the exclusion of others. These articles or products are alone possessed of ex¬ changeable value; and they alone form what is properly understood by wealth. The results of the industry of man are tne only objects of which the Political Economist takes any account. This science might, indeed, be called the science of values ; for whatever is not possessed of exchangeable value, or will not be received as an equivalent for something else which has required labour to produce or obtain, can never fairly come within the scope of its inquiries. 2 DIVISION OF LABOUR. Book I. The causes of this improvement, in the productive powers of labour, and the order according to which its produce is naturally distributed among the different ranks and conditions of men in the society, make the subject of the First Book of this Inquiry. Whatever be the actual state of the skill, dexterity, and judgment with which labour is applied in any nation, the abundance or scantiness of its annual supply must depend, during the continuance of that state, upon the proportion between the number of those who are annually employed in useful labour, and that of those who are not so employed. The number of useful and productive la¬ bourers, it will hereafter appear, is every ■where in proportion to the quantity of capital stock which is employed in setting them to work, and to the particular way in which it is so employed. The Second Book, therefore, treats of the nature of capital stock, of the manner in which it is gradually accumulated, and of the different quantities of labour which it puts into motion, according to the different ways in which it is employed. Nations, tolerably well advanced as to skill, dexterity, and judgment, in the appli¬ cation of labour, have followed very different plans in the general conduct or direction of it; and those plans have not all been equally favourable to the greatness of its produce. The policy of some nations has given extraordinary encouragement to the industry of the country ; that of others to the industry of towns. Scarce any nation has dealt equally and impartially with every sort of industry. Since the downfal of the Roman empire, the policy of Europe has been more favourable to arts, manufactures, and com¬ merce, the industry of towns; than to agri¬ culture, the industry of the country. The circumstances which seem to have introduced and established this policy are explained in the Third Book. Though those different plans were, per¬ haps, first introduced by the private interests and prejudices of particular orders of men, without any regard to, or foresight of, their consequences upon the general welfare of the society; yet they have given occasion to very different theories of political economy ; of which some magnify the importance of that industry which is carried on in towns, others of that which is carried on in the countiy. Those theories have had a con¬ siderable influence, not only upon the opinions of men of learning, but upon the public conduct of princes and sovereign states. I have endeavoured, in the Fourth Book, to explain, as fully and distinctly as I can, those different theories, and the prin¬ cipal effects they have produced in different ages and nations. To explain in what has consisted the revenue of the great body of the people, or what has been the nature of those funds, which, in different ages and nations, have supplied their annual consumption, is the object of these four first books. The Fifth and last Book treats of the revenue of the sovereign, or commonwealth. In this book I have endeavoured to show, first, what are the necessary expenses of the sovereign, or commonwealth; which of those expenses ought to be defrayed by the general contri¬ bution of the whole society ; and which of them, by that of some particular part only, or of some particular members of it; secondly, what are the different methods in which the whole society may be made to contribute towards defraying the expenses incumbent on the whole society, and what are the principal advantages and inconveniences of each of those methods; and, thirdly and lastly, what are the reasons and causes which have induced almost all modern go¬ vernments 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. BOOK I. OF THE CAUSES OF IMPROVEMENT IN THE PRO¬ DUCTIVE POWERS OF LABOUR, AND OF THE ORDER ACCORDING TO WHICH ITS PRODUCE IS NATURALLY DISTRIBUTED AMONG THE DIFFERENT RANKS OF THE PEOPLE. CHAP. I. Of the Division of Labour. The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment, with which it is any where directed or applied, seem to have been the effects of the division of labour. The effects of the division of labour, in the general business of society, will be more easily understood, by considering in what manner it operates in some particular manu¬ factures. It is commonly supposed to be carried furthest in some very trifling ones; not, perhaps, that it really is carried further in them than in others of more importance; but in those trifling manufactures which are destined to supply the small wants of but a small number of people, the whole number of workmen must necessarily be small; and those employed in every different branch of the work can often be collected into the same w’orkhouse, and placed at once under the view of the spectator. In those great ma¬ nufactures, on the contrary, which are destined to supply the great wants of the great body of the people, every different branch of the work employs so great a Chap. I. DIVISION Ob LABOUR. S number of workmen, that it is impossible to collect them all into the same workhouse. We can seldom see more, at one time, than those employed in one single branch. Though in such manufactures, therefore, the work may really be divided into a much greater number of parts than in those of a more trifling nature, the division is not near so obvious, and has accordingly been much less observed. To take an example, therefore, from a very trifling manufacture, but one in which the division of labour has been very often taken notice of, the trade of the pin-maker, a workman not educated to this business, (which the division of labour has rendered a distinct trade,) nor acquainted with the use of the machinery employed hi it, (to the invention of which the same division of labour has probably given occasion,) could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty. But, in the way in which this business is now carried on, not only the whole work is a peculiar trade, but it is divided into a number of branches, of which the greater part are likewise peculiar trades. One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head: to make the head requires two or three distinct operations: to put it on is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them. I have seen a small manufactory of this kind where ten men only were employed, and where some of them, consequently, per¬ formed two or three distinct operations. But though they were very poor, and, there¬ fore, but indifferently accommodated with the necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. There are in a pound upwards of four thousand pins of a middling size. Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins, might be con¬ sidered as making four thousand eight hun¬ dred 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 each of them have made twenty, per¬ haps not one, pin in a day ; that is, certainly, not the two hundred and fortieth, perhaps not the four thousand eight hundredth, part of what they are at present capable of performing, in consequence of a proper division and combination of their different operations. In every other art and manufacture the effects of the division of labour are similar to what they are in this very trifling one; though, in many of them, the labour can neither be so much subdivided, nor reduced to so great a simplicity of operation. The division of labour, however, so far as it can be introduced, occasions, in every art, a pro¬ portionable increase of the productive powers of labour. The separation of different trades and employments from one another, seems to have taken place in consequence of this advantage. This separation, too, is generally carried furthest in those countries which enjoy the highest degree of industry and improvement; what is the work of one man in a rude state of society being generally that of several in an improved one. In every improved society, the farmer is generally nothing but a farmer, the manufacturer nothing but a manufacturer. The labour, too, which is necessary to produce any one complete manufacture is almost always di¬ vided among a great number of hands. How many different trades are employed in each branch of the linen and woollen manufac¬ tures, from the growers of the flax and the wool to the bleachers and smoothers of the linen, or to the dyers and dressers of the cloth ! j The nature of agriculture, indeed, does not admit of so many subdivisions of labour, nor of so complete a separation of one business from another, as manufactures. It is impossible to separate so entirely the business of the grazier from that of the corn- farmer, as the trade of the carpenter is com¬ monly separated from that of the smith. The spinner is almost always a distinct person from the weaver; but the ploughman, the harrower, the sower of the seed, and the reaper of the corn, are often the same. The occasions for those different sorts of labour returning with the different seasons of the year, it is impossible that one man should be constantly employed in any one of them. This impossibility of making so complete and entire a separation of all the different branches of labour employed in agriculture, is, perhaps, the reason why the improvement of the productive powers of labour in this art does not always keep pace with their improvement in manufactures. The most opulent nations, indeed, generally excel all their neighbours in agriculture as well as in manufactures ; but they are commonly more distinguished by their superiority in the latter than in the former. Their lands are, in general, better cultivated, and, having more labour and expense bestowed upon them, produce more in proportion to the extent and natural fertility of the ground. But this superiority of produce is seldom much more than in proportion to the supe- B 2 DIVISION OF LABOUR. Book I. rioritv of labour and expense. In agricul¬ ture, the labour of the rich country is not always much more productive than that of the poor, or, at least, it is never so much more productive, as it commonly is in manu¬ factures. The corn of the rich country, therefore, will not always, in the same degree of goodness, come cheaper to market than that of the poor. The corn of Poland, in the same degree of goodness, is as cheap as that of France, notwithstanding the superior opulence and improvement of the latter country. The corn of France is, in the corn provinces, fully as good, and, in most years, nearly about the same price, with the corn of England, though, in opulence and im¬ provement, France is, perhaps, inferior to England. The corn lands of England, however, are better cultivated than those of France, and the corn lands of France are said to be much better cultivated than those of Poland. But though the poor country, notwithstanding the inferiority of its cultiva¬ tion, can, in some measure, rival the rich in the cheapness and goodness of its corn, it can pretend to no such competition in its manu¬ factures ; at least if those manufactures suit the soil, climate, and situation of the rich country. The silks of France are better and cheaper than those of England, because the silk manufacture, at least under the present high duties upon the importation of raw silk, does not so well suit the climate of England as that of France. But the hard¬ ware and the coarse woollens of England are, beyond all comparison, superior to those of France, and much cheaper, too, in the same degree of goodness. In Poland there are said to be scarce any manufactures of any kind, a few of those coarser household ma¬ nufactures excepted, without which no country can well subsist. 1 This great increase of the quantity of work, which, in consequence of the division of labour, the same number of people are capable of performing, is owing to three different circumstances ; first, to the increase of dexterity in every particular workman; \A "secondly, to the saving of the time which is OH-UUUJJ , W --- - -_ — commonly lost in passing from one species of > work to another ; and, lastly, to the invention < of a great number of machines which facili¬ tate and abridge labour, and enable one man \to do the work of many. \ First , the improvement of the dexter ty of the workman necessarily increases the quantity of the work he can perform ; and the division of labour, by reducing every man’s business to some one simple operation, and by making this operation the sole em¬ ployment of his life, necessarily increases very much the dexterity of the workman. A common smith, who, though accustomed to handle the hammer, has never been used to make nails, if, upon some particular oc¬ casion, he is obliged to attempt it, will scarce, I am assured, be able to make above two or three hundred nails in a day, and those, too, very bad ones. A smith, who has been accustomed to make nails, but whose sole or principal business has not been that of a nailer, can seldom, with his utmost diligence, make more than eight hundred or a thou¬ sand nails in a day. I have seen several boys, under twenty years of age, who had never exercised any other trade but that of making nails, and who, when they exerted themselves, could make, each of them, up¬ wards of two thousand three hundred nails in a day. The making of a nail, however, is by no means one of the simplest operations. The same person blows the bellows, stirs or mends the fire as there is occasion, heats the iron, and forges every part of the nail: in forging the head, too, he is obliged to change his tools. The different operations into which the making of a pin, or of a metal button, is subdivided, are all of them much more simple; and the dexterity of the person, of whose life it has been the sole business to perform them, is usually much greater. The rapidity with which some of the opera¬ tions of those manufactures are performed, exceeds what the human hand could, by those who had never seen them, be supposed capable of acquiring. i The statement in the text, with respect to the impossibility of carrying the division of labour to the same extent in agriculture as in either manufactures or commerce, is undoubtedly correct; but this cir¬ cumstance is not, as Smith supposes, the only or even the principal reason why the price of corn, in highly cultivated countries, is generally as high as in those that are comparatively ill-cultivated and barbarous, and frequently much higher.. If superiority of agriculture, a greater subdivision of rural employ¬ ments, and a more extensive introduction of machi¬ nery into the labours of the field, were sufficient to determine the price of raw produce, it would be very decidedly lower in Great Britain than in Poland or Russia. But it is obvious that the price of corn in different countries depends only par¬ tially on their system of cultivation, and that it is also very materially dependent on the comparative fertility of the soils they have under cultivation — an element which Smith has, by some strange over¬ sight, totally neglected. The scantiness of the popu¬ lation of rude nations renders it unnecessary for them to cultivate any but lands of the highest degree of fertility ; but as society advances, and population increases,' it becomes necessary to resort to less fertile soils, the produce of which must, because of the greater amount of capital and labour required in their cultivation, be comparatively dear. It was stated, bv several of the witnesses examined by a Committee of the House of Commons on the state or agriculture, in 1821, that the produce obtained from the lands under cultivation in England, and \\ ales, estimated in wheat, varied from thirty-six and forty to eight and nine bushels an acre. The required supplies of food could not be obtained without culti¬ vating these inferior lands ; and it is this necessi v of resorting to soils of a diminished degree of fertility, that is the real cause of the comparatively high price of corn, and other raw products, m highly populous countries, which, it is needless to add, would be very much greater than it is, were it not tor the superiority of "their agr icultiye, and the improve¬ ments that are always being made in it. . . For further illustrations of this important princi¬ ple, see the notes on Rent and Wages, at the end of the Volume. C IAP. I. DIVISION OF LABOUR. 5 Secondly , the advantage which is gained, by saving the time commonly lost in passing from one sort of work to another, is much greater than we should at first view be apt to imagine it. It is impossible to pass very quickly from one kind of work to another, that is carried on in a different place, and with quite different tools. A country weaver, who cultivates a small farm, must lose a good deal of time in passing from his loom to the field, and from the field to his loom. When the two trades can be carried on in the same work-house, the loss of time is no doubt much less. It is even in this case, however, very considerable. A man com¬ monly saunters a little in turning his hand from one sort of emplovment to another. \V hen he first begins the new work, he is seldom very keen and hearty; his mind, as they say, does not go to it, and for some time he rather trifles than applies to good pur¬ pose. The habit of sauntering, and of in¬ dolent careless application, which is naturally, or rather necessarily, acquired by every country workman who is obliged to change his work and his tools every half hour, and to apply his hand in twenty different ways almost every day of his life, renders him almost always slothful and lazy, and incapable of any vigorous application, even on the most pressing occasions. Independent, therefore, of his deficiency in point of dexterity, this cause alone must always reduce considerably the quantity of work which he is capable of performing. Thirdly , and lastly, every body must be sensible how much labour is facilitated and abridged by the application of proper machi¬ nery. It is unnecessary to give any example. I shall only observe, therefore, that the inven¬ tion of all those machines, by which labour is so much facilitated and abridged, seems to have been originally owing to the division of labour. Men are much more likely to discover easier and readier methods of at¬ taining any object, when the whole attention of their minds is directed towards that single object, than when it is dissipated among a great variety of things. But, in consequence of the division of labour, the whole of every man’s attention comes naturally to be directed towards some one very simple object. It is naturally to be expected, therefore, that some one or other of those who are employed in each particular branch of labour should soon find out easier and readier methods of per¬ forming their own particular work, wherever the nature of it admits of such improvement. A great part of the machines, made use of in those manufactures in which labour is most subdivided, were originally the inven¬ tions of common workmen, who, being each of them employed in some very simple operation, naturally turned their thoughts to¬ wards finding out easier and readier methods of performing it. Whoever has been much accustomed to visit such manufactures, must frequently have been shown very pretty machines, which were the inventions of such workmen, in order to facilitate and quicken their own particular part of the work. In the first fire-engines, a boy was constantly employed to open and shut alternately the communication between the boiler and the cylinder, according as the piston either as¬ cended or descended. One of those boys, who loved to play with his companions, observed that, by tying 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, and leave him at liberty to divert himself with his playfellows. One of the greatest improvements that has been made upon this machine, since it was first invented, was, in this manner, the discover)' of a boy who wanted to save his own labour. All the improvements in machinery, how¬ ever, have by no means been the inventions of those who had occasion to use the ma¬ chines. Many improvements have been made by the ingenuity of the makers of the machines, when to make them became the business of a peculiar trade, and some by that of those who are called philosophers, or men of speculation, whose trade it is not to do any thing, but to observe every thing ; and who, upon that account, are often capable of combining together the powers of the most distant and dissimilar objects. In the pro¬ gress of society, philosophy or speculation becomes, like every other employment, the principal or sole trade and occupation of a particular class of citizens. Like every other employment, too, it is subdivided into a great number of different branches, each of- which affords occupation to a peculiar tribe or class of philosophers; and this sub¬ division of 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 by it. It is the great multiplication of the pro¬ ductions of all the different arts, in conse¬ quence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. Every workman has a great quantity of his own work to dis¬ pose of, beyond what he himself has occasion for ; and, every other workman being exactly in the same situation, he is enabled to ex¬ change a great quantity of his own goods for a great quantity, or, what comes to the same thing, for the price of a great quantity of theirs. He supplies them abundantly with what they have occasion for, and they ac- B 3 6 DIVISION OF LABOUR. Book I. commodate him as amply with what he has occasion for, and a general plenty diffuses itself through all the different ranks of the society. Observe the accommodation of the most common artificer or day-labourer in a civ¬ ilised and thriving country, and you will perceive, that the number of people of whose industry a part, though but a small part, has been employed in procuring him this accom¬ modation, exceeds all computation. The woollen coat, for example, which covers the day-labourer, as coarse and rough as it may appear, is the produce of the joint labour of a great multitude of workmen. The shep¬ herd, the sorter of the wool, the woolcomber or carder, the dyer, the scribbler, the spinner, the weaver, the fuller, the dresser, with many others, must all join their different arts in order to complete even this homely produc¬ tion. How many merchants and carriers, besides, must have been employed in trans¬ porting the materials from some of those workmen to others, who often live in a very distant part of the country! How much commerce and navigation, in particular, how many shipbuilders, sailors, sailmakers, rope- makers, must have been employed, in order to bring together the different drugs made use of by the dyer, which often come from the remotest corners of the world ! What a variety of labour, too, is necessary in order to produce the tools of the meanest of those workmen ! To say nothing of such com¬ plicated machines as the ship of the sailor, the mill of the fuller, or even the loom of the weaver, let us consider, only, what a va¬ riety of labour is requisite, in order to form that very simple machine the shears, with which the shepherd clips the wool. The miner, the builder of the furnace for smelting the ore, the feller of the timber, the burner of the charcoal, to be made use of in the smelting-house, the brickmaker, the brick¬ layer, the workmen who attend the furnace, the millwright, the forger, the smith, must all of them join their different arts in order to produce them. Were we to examine, in the same manner, all the different parts of his dress and household furniture, the coarse linen shirt which he wears next his skin, the shoes which cover his feet, the bed which he lies on, and all the different parts which compose it, the kitchen-grate at which he prepares his victuals, the coals which he makes use of for that purpose, dug from the bowels of the earth, and brought to him perhaps by a long sea and a long land carriage, all the other utensils of his kitchen, all the furniture of his table, the knives and forks, the earthen or pewter plates upon which he serves up and divides his victuals, the different hands employed in preparing his bread and his beer, the glass window which lets in the heat and the light, and keeps out the wind and the rain, with all the knowledge and art 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 thou¬ sands, the very meanest person in a civilised country could not be provided, even ac¬ cording to, what we very falsely imagine, the easy and simple manner in which he is com¬ monly 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 accommo¬ dation of an European prince does not always so much exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many an African king, the absolute master of the lives and liberties of ten thousand naked savages. 4 CHAP. II. Of the Principle which gives Occasion to the Division of Labour. This division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom, which foresees and intends that general opulence to which it gives occasion. It is the necessary, though very slow and gradual, consequence of a cer¬ tain propensity in human nature which has in view no such extensive utility, the propensity to truck, barter, and exchange one thing for another. Whether this propensity be one of those original principles in human nature, of which no further account can be given, or whether, as seems more probable, it be the necessary consequence of the faculties of reason and speech, it belongs not to our pre¬ sent subject to inquire. It is common to all men, and to be found in no other race of animals, which seem to know neither this nor any other species of contracts. Two grey¬ hounds, in running down the same hare, have sometimes the appearance of acting in some sort of concert. Each turns her towards his companion, or endeavours to intercept her when his companion turns her towards him¬ self. This, however, is not the effect of any contract, but of the accidental concur¬ rence of their passions in the same object at that particular time. Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody Chap. II» DIVISION OF LABOUR. 7 ever saw one animal, by its gestures and natural cries, signify to another, this is mine, that yours : I am willing to give this for that. When an animal wants to obtain something either of a man or of another ani¬ mal, it has no other means of persuasion but to gain the favour of those whose service it requires. A puppy fawns upon its dam, and a spaniel 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 engaging them to act according to his inclinations, endeavours, by every servile and fawning attention, to obtain their good will. He has not time, however, to do this upon every occasion. In civilised society, he stands at all times in need of the co-operation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. In almost every other race of animals, each individual, when it is grown up to maturity, is entirely inde¬ pendent, 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 show them that it is for their own ad¬ vantage to do for him wdiat 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, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens. Even a beggar does not depend upon it entirely. The charity of well-disposed people, indeed supplies him with the whole fund of his subsistence. But though this principle ulti¬ mately provides him with all the necessaries of life which he has occasion for, it neither does nor can provide him with them as he has occasion for them. The greater part of his occasional wants are supplied in the same manner as those of other people, by treaty, by barter, and by purchase. With the money which one man gives him he purchases food. The old clothes which another bestows upon him, he exchanges for other old clothes which suit him better, or for lodging, or for food, or for money, with which he can buy either food, clothes, or lodging, as he has occasion. As it is by treaty, by barter, and by pur¬ chase that we obtain from one another the greater part of those mutual good offices which we stand in need of, so it is this same trucking disposition which originally gives occasion to the division of labour. In a tribe of hunters or shepherds, a particular person makes bows ai d arrows, for example, with more readiness and dexterity than any other. He frequently exchanges them for cattle or for venison with his companions ; and he finds, at last, that he can in this manner get more cattle and venison than if he himself went to the field to catch them. From a regard to his own interest, therefore, the making of bows and arrows grows to be his chief business, and he becomes a sort of armourer. Y Another excels in making the frames and covers of their little huts or moveable houses. He is accustomed to be of use in this way to his neighbours, who reward him, in the same manner, with cattle and with venison, till at last he finds it his interest to dedicate himself entirely to this employment, and to become a sort of house- carpenter. In the same manner, a third be¬ comes a smith or a brazier, a fourth, a tanner or dresser of hides or skins, the principal part of the clothing of savages. And thus the certainty of being able to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he may have occasion for, encourages every man to apply himself to a particular occupation, and to cultivate and bring to perfection whatever talent or genius he may possess for that particular species of busi¬ ness. The difference of natural talents in differ¬ ent 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 cha¬ racters, between a philosopher and a common street-porter, for example, seems to arise, not so much from nature, as from habit, custom, and education. When they came into the world, and for the first six or eight years of their existence, they were very much alike, and neither their parents nor play-fellows could perceive any remarkable difference. About th'at age, or soon after, they come to be employed in very different occupations. The difference of talents comes then to be taken notice of, and widens by degrees, till, at last, the vanity of the philosopher is willing to acknowledge scarce any resemblance. But without the disposition to truck, barter, and exchange, every man must have procured to B 4 8 DIVISION OF LABOUR. Book himself every necessary and conveniency of life which he wanted. All must have had the same duties to perform, and the same work to do, and there could have been no such difference of employment as could alone give occasion to any great difference of talents. As it is this disposition which forms that difference of talents, so remarkable among men of different professions, so it is this same disposition which renders that difference useful. Many tribes of animals acknowledged to be all of the same species, derive from nature a much more remarkable distinction of genius, than what, antecedent to custom and education, appears to take place among men. By nature, a philosopher is not in genius and disposition half so different from a street-porter, as a mastiff is from a grey¬ hound, or a greyhound from a spaniel, or this last from a shepherd’s dog. K Those different tribes of animals, however, though all of the same species, are of scarce any-use to one another. The strength of the mastiff is not, in the least, supported either by the swift¬ ness of the greyhound, or by the sagacity of the spaniel, or by the docility of the shep¬ herd’s dog. The effects of those different geniuses and talents, for want of the power or disposition to barter and exchange, cannot be brought into a common stock, and do not in the least contribute to the better accom¬ modation 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 talents with which nature has dis¬ tinguished its fellows. Among men, on the contrary, the most dissimilar geniuses are of use to one another; the different produces of their respective talents, by the general disposition to truck, barter, and exchange, being brought, as it were, into a common stock, where every man may purchase what¬ ever part of the produce of other men s talents he has occasion for , 1 1 Dr. Smith’s speculations with respect to the principle which gives occasion to the division of labour, though sufficiently ingenious, do not seem to rest on any very solid foundation.. That division is plainly a consequence of our .being able to per- ceive or ? severity against the combinations of servants, labourers, and journeymen. The workmen, accordingly, very seldom derive any advan¬ tage from the violence of those tumultuous combinations, which, partly Irom the inter¬ position 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 submitting for the sake of present subsistence, generally end in nothing but the punishment or ruin of the ringleaders. But though in disputes with their work¬ men, masters must generally have the ad¬ vantage, there is however a certain rate below which it seems impossible to reduce, for any considerable time, the ordinary wages even of the lowest species of labour. A man must always live by his work, and his wages must dt' least be sufficient to maintain him. They must even upon most ^occasions be somewhat more; otherwise it ( would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation. J\Ii\_ ajQti pQU seems, upon this account, to suppose that the lowest species of common labourers must every where earn at least double their own maintenance, in order that one with another they may be enabled to _br ing up two children; the labour of the wife, on account of her necessary attendance on the children, being supposed no more than ^sufficient to provide for herself. But one- half the children born, it is computed, die before the age of manhood. The poorest labourers, therefore, according to this account, must, one with another, attempt to rear at least four children, in order that two may have an equal chance of living to that age. But the necessary maintenance of four children, it is supposed, may be nearly equal to that of one man. The labour of an able- bodied slave, the same author adds, is com¬ puted to be worth double his maintenance ; and that of the meanest labourer, he thinks, cannot be worth less than that of an able- bodied slave. Thus far at least seems certain, that in order to bring up a family, the labour of the husband and wife together must, even in the lowest species of common labour, be able to earn something more than what is precisely necessary for their own maintenance ; but in what proportion, whether in that above mentioned or in any other^ I shall not take upon me to determine. (/^There are certain circumstances, however, which sometimes give the labourers an advantage, and enable them to raise their wages considerably above this rate ; evidently the lowest which is consistent with common humanity. ! ^- AYhcp, in any country the demand for those who live by wages—labourers, jour¬ neymen, servants of every kind—is con¬ tinually increasing; when every year furnishes employment for a greater number than had been employed the year before, the workmen have no occasion to combine in order to raise their wages. The scarcity of hands occasions a competition among masters, who bid against one another, in order to get workmen, and thus voluntarily break through the natural combination of masters not to raise wages. The demand for those who live by wage* it is evident, cannot increase but in proportion to the increase of the funds which are des¬ tined for the payment of wages. These funds are of two kinds ; first, the revenue which is over and above what is necessary for the maintenance ; and, secondly, the stock which is over and above what is necessary for the employment of their masters. When the landlord, annuitant, or monied man, has a greater revenue than what he judges sufficient to maintain his own family, he employs either the whole or a part of the surplus in maintaining one or more menial servants. Increase this surplus, and he will naturally increase the number of those servants. When an independent workman, such as a weaver or shoemaker, has got more stock than what is sufficient to purchase the materials of his own work, and to maintain himself till he can dispose of it, he naturally employs one or more journeymen with the surplus, in order to make a profit by their work. Increase this surplus, and he will naturally increase the number of his journey¬ men. The demand for those who live by wages, therefore, necessarily increases with the increase of the revenue and stock of every country, and cannot possibly increase with¬ out it. The increase of revenue and stock is the increase of national wealth. The demand for those who live by wages, there¬ fore, naturally increases with the increase of national wealth, and cannot possibly increase without it. ' It is not the actual greatness of national'^ wealth, but its continual increase, which occasions a rise in the wages of labour. It is not, accordingly, in the richest countries, but in the most thriving, or in those which are growing rich the fastest, that the wages of labour are highest. England is certainly, in the present times, a much richer country than any part of North America. The wages of labour, however, are much higher in North America than in any part of England. In theprovince of New York, common labourers earn 1 three shillings and sixpence currency, equal to two shillings sterling, a day; ship carpenters, ten shillings and sixpence currency, with a pint of rum worth sixpence sterling, 1 This was written in 1773, before the commence¬ ment of the late disturbances. (Note by the author.) 32 WAGES OF LABOUR. Book I. equal in all to six shillings and sixpence sterling ; house carpenters and bricklayers, eight shillings currency, equal to four shillings and sixpence sterling ; journeymen tailors, five shillings currency, equal to about two shillings and ten pence sterling. These prices are all above the London price ; and wages are said to be as high in the other colonies as in New York. The price of provisions is every where in North America much lower than in England. A dearth has never been known there. In the worst seasons, they have always had a sufficiency for themselves, though less for exportation. If the money price of labour, therefore, be higher than it is any where in the mother country, its real price, the r ^ a i command of the necessaries and conveniences of life which it conveys to the labourer, must be higher in a still greater proportion. But though North America is not yet so rich as England, it is much more thriving, and advancing with much greater rapidity to the further acquisition of riches. The most decisive mark of the prosperity of any country is the increase of the number of its inhabit¬ ants. In Great Britain, and most other European countries, they are not supposed to double in less than five hundred years. 1 In the British colonies in North America, it has been found, that they double in twenty or five-and-twenty years. Nor in the pre¬ sent times is this increase principally owing to the continual importation of new inhabit¬ ants, but to the great multiplication of the species. Those who live to old age, it is said, frequently see there from fifty to a hun¬ dred, and sometimes many more, descendants from their own body. Labour is there so well rewarded that a numerous family of | children, instead of being a burthen, is a source of opulence and prosperity to the parents. The labour of each child, before it can leave their house, is computed to be worth a hundred pounds clear gain to them. A young widow with four or five young children, who, among the middling or infe¬ rior ranks of people in Europe, would have so little chance for a second husband, is there frequently courted as a sort of fortune. I he value of children is the greatest of all encou¬ ragements to marriage. W e cannot, there- fore, wonder that the people in North Ame¬ rica should generally marry very young. Notwithstanding the great increase occa¬ sioned by such early marriages, there is a continual complaint of the scarcity of hands in North America. The demand for labour¬ ers, the funds destined for maintaining them, increase, it seems, still faster than they can find labourers to employ. Though the wealth of a country should be very great, yet if it has been long station- 1 The increase of population in Great Britain has been greatly accelerated since 1776, when the Wealth ary, we must not expect to find the wages of labour very high in it. The funds destined for the payment of wages, the revenue and stock of its inhabitants, may be of the great¬ est extent; but if they have continued for several centuries of the same, or very nearly of the same extent, the number of labourers employed every year could easily supply, and even more than supply, the number wanted the following year. There could seldom be any scarcity of hands, nor could the masters be obliged to bid against one another in order to get them. The hands, on the contrary, would, in this case, naturally multiply beyond their employment. There would be a con¬ stant scarcity of employment, and the labour^ ers would be obliged to bid against one another in order to get it. If in such a country the wages of labour had ever been more than sufficient to 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 is consistent with com¬ mon humanity. China has been long one of the richest, that is, one of the most fertile, best cultivated, most industrious, and most populous countries in the world. It seems, however, to have been long stationary. Marco Polo, who visited it more than five hundred years ago, describes its cultivation, industry, and populousness, almost in the same terms in which they are described by travellers in the present times. It had perhaps, even long before his time, acquired that full com¬ plement of riches which the nature of its laws and institutions permits it to acquire. The accounts of all travellers, inconsistent in many other respects, agree in the low wages of labour, and in the difficulty which a la¬ bourer 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 work-houses, for the calls of their customers, as in Europe, they are conti¬ nually running about the streets with the tools of their respective trades, offering their service, and as it were begging employ¬ ment. The poverty of the lower ranks of people in China far surpasses that of the most beggarly nations in Europe. In the neighbourhood of Canton manv hundreds, it is commonly said, many thousand families have no habitation on the land, but live con¬ stantly in little fishing boats upon the rivers and canals. The subsistence which they find there is so scanty that they are eager to fish up the nastiest garbage thrown over¬ board from any European ship. Any car¬ rion, the carcass of a dead dog or cat, for of Nations was published. See tables in the note gh P opulation at the end. WAGES OF LABOUR. 33 Chap. VIII. example, though half putrid and stinking, is as welcome to them as the most wholesome food to the people of other countries. Mar¬ riage 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. China, however, though it may perhaps stand still, does not seem to go backwards. Its towns are nowhere deserted by their inhabitants. The lands which had once been cultivated are nowhere neglected. The same or very nearly the same annual labour must therefore continue to be performed, and the funds destined for maintaining it must not, consequently, be sensibly diminished. The lowest class of labourers, therefore, notwith¬ standing their scanty subsistence, must some way or another make shift to continue their race so far as to keep up their usual num¬ bers. But it would be otherwise in a country where the funds destined for the maintenance of labour were sensibly decaying. Every year the demand for servants and labourers would, in all the different classes of employ¬ ments, be less than it had been the year before. Many who had been bred in the superior classes, not being able to find em¬ ployment in their own business, would be glad to seek it in the lowest. The lowest class being not only overstocked with its own workmen, but with the overflowings of all the other classes, the competition for employ¬ ment would be so great in it, as to reduce the wages of labour to the most miserable and scanty subsistence of the labourer. Many would not be able to find employment even upon these hard terms, but would either starve or be driven to seek a subsistence either by begging, or by the perpetration perhaps of the greatest enormities. Want, famine, and mortality would immediately prevail in that class, and from thence extend themselves to all the superior classes, till the number of inhabitants in the country was reduced to what could easily be maintained by the revenue and stock which remained in it, and which had escaped either the tyranny or calamity which had destroyed the rest. This perhaps is nearly the present state of Bengal, and of some other of the English settlements in the East Indies. In a fertile country which had before been much depopulated, where subsistence, consequently, should not be very 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 reward of labour, therefore, as it is the necessary effect, so it is the natural symptom of increasing national wealth. The scanty maintenance of the labouring poor, on the other hand, is the natural symptom that things are at a stand, and their starving condition that they are going fast backwards. In Great Britain the wages of labour seem, in the present times, to be evidently more than what is precisely necessary to enable the labourer to bring up a family. In order to satisfy ourselves upon this point, it will not be necessary to enter into any tedious or doubtful calculation of what may be the lowest sum upon which it is possible to do this. There are many plain symptoms that the wages of labour are nowhere in this country regulated by this lowest rate, which is consistent with common humanity. First, In almost every part of Great Britain there is a distinction, even in the lowest species of labour, between summer and winter wages. Summer wages are always highest. But on account of the extraordi¬ nary expense of fuel, the maintenance of a family is most expensive in winter. Wages, therefore, being highest when this expense is lowest, it seems evident that they are not regulated by what is necessary for this ex¬ pense ; but by the quantity and supposed value of the work. A labourer, it may be said indeed, ought to save part of his summer wages in order to defray his winter expense; and that through the whole year they do not exceed what is necessary to maintain his family through the whole year. A slave, however, or one absolutely dependent on us for immediate subsistence, would not be treated in this manner. His daily subsist¬ ence would be proportioned to his daily ne¬ cessities. Secondly, The wages of labour do not in Great Britain fluctuate with the price of provisions. These vary everywhere from year to year, frequently from month to month. But in many places the money price of labour remains uniformly the same sometimes for half a century together. If in these places, therefore, the labouring poor can maintain their families in dear years, they must be at their ease in times of moderate plenty, and in affluence in those of extraordinary cheapness. The high price of provisions during these ten years past has not in many parts of the kingdom been accom¬ panied with any sensible rise in the money price of labour. It has, indeed, in some ; owing probably more to the increase of the demand for labour than to that of the price of provisions D 34 WAGES OF LABOUR. Book I. Thirdly, As the price of provisions varies more from year to year than the wages of labour, so, on the other hand, the wages of labour vary more from place to place than the price of provisions. The prices of bread and butcher's meat are generally the same, or very nearly the same, through the greater part of the United Kingdom. These and most other things which are sold by retail, the way in which the labouring poor buy all things, are generally fully as cheap or cheaper in great towns than in the remoter parts of the country, for reasons which I shall have occasion to explain hereafter. But the wages of labour in a great town and its neighbour¬ hood are frequently a fourth or a fifth part, twenty or five-and-twenty per cent, higher than at a few miles distance. Eighteen pence a day may be reckoned the common price of labour in London and its neighbour¬ hood. At a few miles distance it falls to fourteen and fifteen pence. Tenpence may be reckoned its price in Edinburgh and its neighbourhood. At a few miles distance it falls to eight pence, the usual price of com¬ mon labour through the greater part of the low country of Scotland, where it varies a good deal less than in England . 1 Such a difference of prices, which it seems is not always sufficient to transport a man from one parish to another, would necessarily occasion so great a transportation of the most bulky commodities, not only from one parish to another, but from one end of the kingdom, almost from one end of the world to the other, as would soon reduce them more nearly to a level. After all that has been said of the levity and inconstancy of human nature, it appears evidently from experience, that a man is of all sorts of luggage the most difficult to be transported. If the labouring poor, therefore, can maintain their families in those parts of the kingdom where the price of labour is lowest, they must be in affluence where it is highest. Fourthly, The variations in the price of labour not only do not correspond either in place or time with those in the price of provisions, but they are frequently quite opposite. Grain, the food of the common people, is dearer in Scotland than in England, whence Scotland receives almost every year very large supplies . 2 But English corn must be sold dearer in Scotland, the country to which it 1 The great increase of communication between the various provinces of the empire, that has taken place of late years, in consequence of the extraordinary facilities of conveyance afforded by means of improved roads, canals, railways, and steam navigation, has brought the prices of all sorts of produce, and the wages of labour in different districts much nearer to a common level than at the period of the publication of the Wealth of Nations. In the southern counties of England the wages of labour were in many places artificially reduced, in consequence of the practice adopted in 1795, and continued almost to the present day, of paying them partly out of the poor rates. is brought, than in England, the country from which it comes; and in proportion to its quality it cannot be sold dearer in Scotland than the Scotch corn that comes to the same market in competition with it. The quality of grain depends chiefly upon the quantity of flour or meal which it yields at the mill, and in this respect English grain is so much superior to the Scotch, that, though often dearer in appearance, or in proportion to the measure of its bulk, it is generally cheaper in reality, or in proportion to its quality, or even to the measure of its weight. The price of labour, on the contrary, is dearer in England than in Scotland. If the labouring poor, therefore, can maintain their families in the one part of the United Kingdom, they must be in affluence in the other. Oatmeal indeed supplies the common people in Scot¬ land with the greatest and the best part of their food, which is in general much inferior to that of their neighbours of the same rank in England. This difference, however, in the mode of their subsistence, is not the cause but the effect of the difference in their wages; though, by a strange misapprehension, I have frequently heard it represented as the cause. It is not because one man keeps a coach while his neighbour walks a-foot, that the one is rich and the other poor; but be¬ cause the one is rich he keeps a coach, and because the other is poor he walks a-foot. During the course of the last century, taking one year with another, grain was dearer in both parts of the United Kingdom than during that of the present. 3 This is a matter of fact which cannot now admit of any reasonable doubt; and the proof of it is, if possible, still more decisive with regard to Scotland than with regard to England. It^ is in Scotland supported by the evidence of the public fiars, annual valuations made upon oath, according to the actual state of the markets, of all the different sorts of grain in everv different countv of Scotland. If such * y direct proof could require any collateral evidence to confirm it, I would observe that this has likewise been the case in France, and probably in most other parts of Europe. With regard to France there is the clearest proof. But though it is certain that in both parts of the United Kingdom grain was some¬ what dearer in the last century than in the present, it is equally certain that labour was much cheaper. If the labouring poor, But except where this pernicious practice has pre¬ vailed, they are nearly the same all over the country, and may, perhaps, be estimated, on a rough average, at from 20 cl. to 2s. a day. 2 The case is now precisely the reverse; grain is not, generally speaking, so dear in Scotland as in England ; anil there is, pretty uniformly, an excess of exports from the former to the latter. 3 This is true of the eighteenth century (the present in the text) down to 1765 only. From 1765 to 1820 the prices of all sorts of grain in Great Britain were, at an average, higher than at any former period. Since 1820 they have fallen back to nearly their old level. Chap. VIII. WAGES OF LABOUR. 35 therefore, could bring up their families then, they must be much more at their ease now. 1 In the last century the most usual day-wages of common labour through the greater part of Scotland were sixpence in summer and fivepence in winter. Three shillings a week, the same price very nearly, still continues to be paid in some parts of the Highlands and • Western Islands. Through the greater part of the low country the most usual wages of common labour are now eightpence a day ; tenpence, 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, Ayrshire, &c. In England the improvements of agriculture, manufactures, and commerce began much earlier than in Scotland. The demand for labour, and consequently its price, must necessarily have increased with those improvements. In the last century, accordingly, as well as in the present, the wages of labour were higher in England than in Scotland. They have risen too considerably since that time, though, on account of the greater variety of wages paid there in different places, it is more difficult to ascertain how much. In 1614, the pay of a foot soldier was the same as in the present times, eightpence a day. 2 When it was first established, it 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., com¬ putes the necessary expense of a labourer’s family, consisting of six persons, the father and mother, two children able to do some¬ thing, 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 inquired very carefully into this subject. 3 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, of three and a half persons. His calculation, therefore, though different in appearance, corresponds very nearly at bottom with that of Judge Hales. Both suppose the weekly expense of such families to be about twenty pence a head. Both the pecuniary income and ex¬ pense of such families have increased con¬ siderably since that time through the greater 1 It is necessary to bear in mind that these remarks of Dr. Smith are applicable only to the condition of [f the labourers in 1775. See note on Wages, end of the volume. 2 It is now 13 d. a day from the time he is enrolled ; part of the kingdom ; in some places more, and in some less; though perhaps scarce anywhere 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 anywhere, different prices being often paid at the same place and for the same sort of labour, not only according to the different abilities of the 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 show that law can never regulate them properly, though it has often pretended to do so. The real recompence of labour, the real quantity of the necessaries and conveniences of life which it can procure to the labourer, has, during the course of the present century, increased perhaps in a still greater proportion than its money price. Not only grain has become somewhat cheaper, but many other things from which the industrious poor de¬ rive an agreeable and wholesome variety of food, have become a great deal cheaper. Potatoes, for example, do not at present, through the greater part of the kingdom, cost half the price which they used to do thirty or forty years ago. The same thing may be said of turnips, carrots, cabbages ; things which were formerly never raised but by the spade, but which are now commonly raised by the plough. All sort of garden stuff too has become cheaper. The greater part of the apples, and even of the onions consumed in Great Britain, were in the last century imported from Flanders. The great improvements in the coarser manufactures of both linen and woollen cloth furnish the labourers with cheaper and better clothing ; and those in the manufactures of the coarser metals, with cheaper and better instruments of trade, as well as with many agreeable and convenient pieces of household furniture. Soap, salt, candles, leather, and fermented liquors have, indeed, become a good deal dearer; chiefly from the taxes which have been laid upon them. The quantity of these, however, which the labouring poor are under any necessity of consuming, is so very small, that the increase in their price does not compensate the diminution in that of so many other things. The common complaint that luxury extends itself even to the lowest ranks of the people, and that the labouring poor will not now be contented with the same food, clothing, and lodging which satisfied them in former times, may increasing to 14rf. after seven years’ service, and to 15 d. after fourteen years’ service. 3 See his scheme for the maintenance of the poor, in Burn’s history of the Poor-laws. (Note by the author.) D 2 36 WAGES OF LABOUR. Book I. convince us that it is not the money price of labour only, but its real recompence, which has augmented. Is this improvement in the circumstances of the lower ranks of the people to be re¬ garded as an advantage or as an inconveni- ency to the society ? The answer seems at first sight abundantly plain. Servants, labourers, and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged. Poverty, though it no doubt discourages, does not always prevent marriage. It seems even to be favourable to generation. A half- starved Highland woman frequently bears more than twenty children, while a pampered fine lady is often incapable of bearing any, and is generally exhausted by two or three. Barrenness, so frequent among women of fashion, is very rare among those of inferior station. Luxury in the fair sex, while it inflames perhaps the passion for enjoyment, seems always to weaken, and frequently to destroy altogether, the powers of generation. But poverty, though it does not prevent the generation, is extremely unfavourable to the rearing of children. The tender plant is produced, but in so cold a soil and so severe a climate, soon withers and dies. It is not uncommon, I have been frequently told, in the Highlands of Scot¬ land, for a mother who has borne twenty children not to have two alive. Several officers of great experience have assured me, that so far from recruiting their regiment, they have never been able to supply it with drums and fifes from all the soldiers’ children that were born in it. A greater number of fine children, however, is seldom seen any¬ where than about a barrack of soldiers. Very few of them, it seems, arrive at the age of thirteen or fourteen. In some places one half the children born die before they are four years of age ; in many places before they are seven ; and in almost all places before they are nine or ten. This great mortality, however, will everywhere be found chiefly among the children of the common people, who cannot afford to tend them with the same care as those of better station. Though their marriages are generally more fruitful than those of people of fashion, a smaller proportion of their children arrive at maturity. In foundling hospitals, and among the children brought up by parish charities, the mortality is still greater than among those of the common people. 1 ^-Every species of animals naturally mul¬ tiplies in proportion to the means of their subsistence, and no species can ever multiply beyond it. But in civilized society it is only among the inferior ranks of people that the scantiness of subsistence can set limits to the further multiplication of the human species; and it can do so in no other way than by destroying a great part of the children which their fruitful marriages produce. 2 The liberal reward of labour, by enab’ing them to provide better for their children, and consequently to bring up a greater num¬ ber, naturally tends to widen and extend those limits. It deserves to be remarked, too, that it necessarily does this as nearly as possible in the proportion which the demand for labour requires. If this demand is con¬ tinually increasing, the reward of labour must necessarily encourage in such a man¬ ner the marriage and multiplication of la¬ bourers, as may enable them to supply that continually increasing demand by a continu¬ ally increasing population. If the reward should at any time be less than what was requisite for this purpose, the deficiency of hands would soon raise it; and if it should at any time be more, their excessive mul¬ tiplication would soon lower it to this neces¬ sary rate. The market would be so much under-stocked with labour in the one case, and so much over-stocked in the other, as would soon force back its price to that pro¬ per rate which the circumstances of the so¬ ciety required. It is in this manner that the demand for men, like that for any other commodity, necessarily regulates the produc¬ tion of men ; quickens it when it goes on too slowly, and stops it when it advances too fast. It is this demand which regulates and determines the state of propagation in all the different countries of the world, in North America, in Europe, and in China; which renders it rapidly progressive in the first, slow and gradual in the second, and altoge¬ ther stationary in the last. 3 The wear and tear of a slave, it has been said, is at the expense of his master; but that of a free servant is at his own expense. 1 The mortality formerly so destructive in the earlier periods of life, has been very greatly dimi¬ nished within the last forty or fifty years. See note on Population at the end of the volume. 2 It may do so by giving increased efficacy to the principle of moral restraint , or by diminishing the number of marriages. 3 The statements made by Dr. Smith in this chapter, with respect to the causes which stimu¬ late, and which also set bounds to the progress of population, are most commonly accurate. But the researches of Mr. Malthus and others have shed a new and powerful light on this very important de¬ partment of the science. See supplemental note on Population. WAGES OF LABOUR. 37 Chap. VIII. The wear and tear of the latter, however, is, in reality, as much at the expense of his master as that of the former. The wages paid to journeymen and servants of every kind must be such as may enable them, one with another, to continue the race of journey¬ men and servants, according as the increasing, diminishing, or stationary demand of the so¬ ciety may happen to require. But though the wear and tear of a free servant be equally at the expense of his master, it generally costs him much less than that of a slave. The fund destined for replacing or repairing, if I may say so, the wear and tear of the slave, is commonly managed by a neg¬ ligent master or careless overseer. That destined for performing the same office with regard to the free man, is managed by the free man himself. The disorders which generally prevail in the economy of the rich, naturally introduce themselves into the man¬ agement of the former: the strict frugality and parsimonious attention of the poor as naturally establish themselves in that of the latter. Under such, different management, the same purpose must require very different degrees of expense to execute it. It appears, accordingly, from the experience of all ages and nations, I believe, that the work done by freemen comes cheaper in the end than that performed by slaves. It is found to do so even at Boston, New York, and Philadel¬ phia, where the wages of common labour are so ver y high. The liberal reward of labour, therefore, ^as it is the effect of increasing wealth, so it is the cause of increasing population. To complain of it is to lament over the neces¬ sary effect and cause of the greatest public prosperity. It deserves to be remarked, perhaps, that it is in the progressive state, while the society is advancing to the further acquisition, rather than when it has acquired its full comple¬ ment of riches, that the condition of the labouring poor, of the great body of the people, seems to be the happiest and the most comfortable. It is hard in the stationary, and miserable in the declining state. The progressive state is in reality the cheerful and the hearty state to all the different orders of the society. The stationary is dull; the declining, melancholy. The liberal reward of labour, as it en¬ courages the propagation, so it increases the industry of the common people. The wages of labour are the encouragement of industry, which, like every other human quality, im¬ proves in proportion to the encouragement it receives. A plentiful subsistence increases the bodily strength of the labourer ; and the comfortable hope of bettering his condition, and of ending his days perhaps in ease and plenty, animates him to exert that strength to the utmost. Where wages are high, ac¬ cordingly, we shall always find the workmen more active, diligent, and expeditious, than where they are low; in England, for ex¬ ample, than in Scotland; in the neighbour¬ hood of great towns, than in remote country places. Some workmen, indeed, when they can earn in four days what will maintain them through the week, will be idle the other three. This, however, is by no means the case with the greater part. Workmen, on the contrary, when they are liberally paid by the piece, are very apt to overwork them¬ selves, and to ruin their health and constitu¬ tion in a few years. A carpenter in London, and in some other places, is not supposed to last in his utmost vigour above eight years. Something of the same kind happens in many other trades, in which the workmen are paid by the piece; as they generally are in manufactures, and even in country labour, wherever wages are higher than ordinary. Almost every class of artificers is subject to some peculiar infirmity occasioned by ex¬ cessive application to their peculiar species of work. Ramazzini, an eminent Italian physician, has written a particular book con¬ cerning such diseases. We do not reckon our soldiers the most industrious set of people among us. Yet when soldiers have been employed in some particular sorts of work, and liberally paid by the piece, their officers have frequently been obliged to sti¬ pulate with the undertaker, that they should not be allowed to earn above a certain sum every day, according to the rate at which they were paid. Till this stipulation was made, mutual emulation and the desire of greater gain frequently prompted them to overwork themselves, and to hurt their health by excessive labour. Excessive ap¬ plication during four days of the week, is frequently the real cause of the idleness of the other three, so much and so loudly com¬ plained of. Great labour, either of mind or body, continued for several days together, is in most men naturally followed by a great desire of relaxation, which, if not restrained by force, or by some strong necessity, is almost irresistible. It is the call of nature, which requires to be relieved by some in¬ dulgence, sometimes of ease only, but some¬ times too of dissipation and diversion. If it is not complied with, the consequences are often dangerous, and sometimes fatal, and such as almost always, sooner or later, bring on the peculiar infirmity of the trade. If masters would always listen to the dictates of reason and humanity, they have frequently occasion rather to moderate, than to animate the application of many of their workmen. It will be found, I believe, in every sort of trade, that the man who works so moderately as to be able to work constantly, not only I D 3 S3 WAGES OF LABOUR. Book T. preserves his health the longest, but, in the | course of the year, executes the greatest quantity of work. In cheap years, it is pretended, workmen are generally more idle, and in dear ones more industrious than ordinary. A plentiful subsistence, therefore, it has been concluded, relaxes, and a scanty one quickens their in¬ dustry. That a little more plenty than ordinary may render some workmen idle, cannot well be doubted; but that it should have this effect upon the greater part, or that men in general should work better when they are ill fed than when they are well fed, when they are disheartened than when they are in good spirits, when they are frequently sick than when they are generally in good health, seems not very probable. Years of dearth, it is to be observed, are generally among the common people years of sickness and mortality, which cannot fail to diminish the produce of their industry. In years of plenty, servants frequently leave their masters, and trust their subsist¬ ence to what they can make by their own industry. But the same cheapness of pro¬ visions, by increasing the fund which is destined for the maintenance of servants, encourages masters, farmers especially, to employ a greater number. Farmers upon such occasions expect more profit from their corn by maintaining a few more labouring servants, than by selling it at a low price in the market. The demand for servants in¬ creases, while the number of those who offer to supply that demand diminishes. The price of labour, therefore, frequently rises in cheap years. In years of scarcity, the difficulty and uncertainty of subsistence make all such people eager to return to service. But the high price of provisions, by diminishing the funds destined for the maintenance of ser¬ vants, disposes masters rather to diminish than to increase the number of those they have. In dear years, too, poor independent workmen frequently consume the little stocks with which they had used to supply themselves with the materials of their work, and are obliged to become journeymen for 1 subsistence. More people want employ¬ ment than can easily get it; many are willing to take it upon lower terms than ordinary, and the wages of both servants and journeymen frequently sink in dear years. Masters of all sorts, therefore, frequently make better bargains with their servants in dear than in cheap years, and find them more humble and dependent in the former than in the latter. They naturally, therefore, com¬ mend the former as more favourable to industry. Landlords and farmers, besides, two of the largest classes of masters, have another reason for being pleased with dear years. The rents of the one and the profits of the other depend very much upon the price of provisions. Nothing can be more absurd, however, than to imagine that men in general should work less when they work for themselves, than when they work for other people. A poor independent workman will generally be more industrious than even a journeyman who works by the piece. The one enjoys the whole produce of his own industry; the other shares it with his master. The one, in his separate independent state, is less liable to the temptations of bad com¬ pany, which in large manufactories so fre¬ quently ruin the morals of the other. The superiority of the independent workman over those servants who are hired by the month or by the year, and whose wages and maintenance are the same whether they do much or do little, is likely to be still greater. Cheap years tend to increase the proportion of independent workmen to journeymen and servants of all kinds, and dear years to di¬ minish it. A French author of great knowledge and ingenuity, Mr. Messance, receiver of the taillies in the election of St. Etienne, en¬ deavours to show that the poor do more work in cheap than in dear years, by comparing the quantitj r and value of the goods made upon those different occasions in three dif¬ ferent manufactures ; one of coarse woollens carried on at Elbeuf; one of linen, and another of silk, both which extend through the whole generality of Rouen. It appears from his account, which is copied from the registers of the pubic offices, that the quan¬ tity and value of the goods made in all those three manufactures has generally been greater in cheap than in dear years; and that it has always been greatest in the cheapest, and least in the dearest years. All the three seem to be stationary manufactures, or which, though their produce may vary somewhat from year to year, are upon the whole neither going backwards nor for¬ wards. The manufacture of linen in Scotland, and that of coarse woollens in the west riding of Yorkshire, are growing manufactures, of which the produce is generally, though with some variations, increasing both in quantity and value. Upon examining, however, the accounts which have been published of their annual produce, I have not been able to observe that its variations have had any sen¬ sible connection with the dearness or cheap¬ ness of the seasons. In 1740 , a year of great scarcity, both manufactures, indeed, appear to have declined very considerably. But in 1756, another year of great soarcity, the Scotch manufacture made more than ordinary advances. The Yorkshire manu¬ facture, indeed, declined, and its produce did not rise to what it had been in 1755 till Chap. VIII. WAGES OF LABOUR. 39 17 66, after the repeal of the American stamp act. In that and the following year it greatly exceeded what it had ever been be¬ fore, and it has continued to advance ever since. The produce of all great manufactures for distant sale must necessarily depend, not so much upon the dearness or cheapness of the seasons in the countries where they are car¬ ried on, as upon the circumstances which affect the demand in the countries where they are consumed; upon peace or war, upon the prosperity or declension of other rival manufactures, and upon the good or bad humour of their principal customers. A great part of the extraordinary work, be¬ sides, which is probably done in cheap years, never enters the public registers of manu¬ factures. The men servants who leave their masters become independent labourers. The women return to their parents, and commonly spin in order to make clothes for themselves anti their families. Even the independent ■workmen do not always work for public sale, but are employed by some of their neighbours in manufactures for family use. The produce of their labour, therefore, frequently makes no figure in those public registers of which the records are sometimes published with so much parade, and from which our merchants and manufacturers would often vainly pretend to announce the prosperity or declension of the greatest empires. Though the variations in the price of la¬ bour not only do not always correspond with those in the price of provisions, but are fre¬ quently quite opposite, we must not, upon this account, imagine that the price of pro¬ visions 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 happens to be in¬ creasing, stationary, or declining, or to re¬ quire an increasing, stationary, or declining population, determines the quantity of the necessaries and conveniencies of life which must be given to the labourer; and the money price of labour is determined by what is requisite for purchasing this quantity. Though the money price of labour, therefore, is sometimes high where the price of provi¬ sions is low, it would be still higher, the demand continuing the same, if the price of provisions was high. It is because the demand for labour in¬ creases in years of sudden and extraordinary plenty, and diminishes in those of sudden and extraordinary scarcity, that the money price of labour sometimes rises in the one, and sinks in the other. In a year of sudden and extraordinary plenty, there are funds in the hands of many of the employers of industry, sufficient to maintain and employ a greater number of industrious people than had been employed the year before ; and this extraordinary num¬ ber cannot always be had. Those masters, therefore, who want more workmen, bid against one another, in order to get them, which sometimes raises both the real and the money price of their labour. The contrary of this happens in a year of sudden and extraordinary scarcity. The funds destined for employing industry are less than they had been the year before. A considerable number of people are thrown out of employment, who bid against one another, in order to get it, which sometimes lowers both the real and the money price of labour. In 1740, a year of extraordinary scarcity, many people were willing to work for bare subsistence. In the succeeding years of plenty, it was more difficult to get labourers and servants. The scarcity of a dear year, by diminishing the demand for labour, tends to lower its price, as the high price of provisions tends to raise it. The plenty of- a cheap year, on the contrary, by increasing the demand, tends to raise the price of labour, as the cheapness of provisions tends to lower it. In the ordinary variations of the price of provisions, those two opposite causes seem to counterbalance one another; which is probably in part the reason why the wages of labour are every where so much more steady and permanent than the price of pro¬ visions. The increase in the wages of labour neces¬ sarily increases the price of many commo¬ dities, by increasing that part of it which resolves itself into wages, and so far tends to diminish their consumption both at home and abroad. The same cause, however, which raises the wages of labour, the increase of stock, tends to increase its productive powers, and to make a smaller quantity of labour produce a greater quantity of work. The owner of the stock which employs a great number of labourers, necessarily endeavours, for his own advantage, to make such a proper division and distribution of employment, that they may be enabled to produce the greatest quantity of work possible. For the same reason, he endeavours to supply them with the best machinery which 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 more they naturally divide themselves into different classes and subdivisions of em¬ ployment. More heads are occupied in inventing the most proper machinery for executing the work of each, and it is, therefore, more likely to be invented. There are many commodities, therefore, which, in con¬ sequence of these improvements, come to D 4 40 PROFITS OF STOCK. Book I. be produced by so much less labour than be¬ fore, that the increase of its price is more than compensated by the diminution of its quantity. CHAP. IX. Of the Profits of Stock. The rise and fall in the profits of stock depend upon the same causes with the rise and fall in the wages of labour, the increas¬ ing or declining state of the wealth of the society ; but those causes affect the one and the other very differently. Fhe increase of stock, which raises wages, tends to lower profit. When the stocks’ of many rich merchants are turned into the same trade, their mutual competition natu¬ rally tends to lower its profit; and when there is a like increase of stock in all the different trades carried on in the same so¬ ciety, the same competition must produce the same effect in them all. 1 It is not easy, it has already been observed, to ascertain what are the average wages of labour even in a particular place, and at a particular time. We can, even in this case, seldom determine more than what are the most usual wages. But even this can sel¬ dom be done with regard to the profits of stock. Profit is so very fluctuating that the person who carries on a particular trade cannot always tell you himself what is the average of his annual profit. It is affected, not only by every variation of price in the commodities which he deals in, but by the good or bad fortune both of bis rivals and of his customers, and by a thousand other acci¬ dents to which goods, when carried either by sea or by land, or even when stored in a warehouse, are liable. It varies, therefore, not only from year to year, but from day to day, and almost from hour to hour. To as¬ certain what is the average profit of all the different trades carried on in a great king¬ dom, must be much more difficult; and to judge of what it may have been formerly, or in remote periods of time, with any degree of precision, must be altogether impossible. But though it may be impossible to de¬ termine, with any degree of precision, what are or were the average profits of stock, either in the present or in ancient times, some notion may be formed of them from the interest of money. It may be laid down as a maxim, that wherever a great deal can be made by the use of money, a great deal will commonly be given for the use of it; 1 The fall in the rate of profit that almost invariably takes place in the progress of society is not, as Dr. Smith supposes, a consequence of the increasing competition of capitalists caused by the increase of their capitals ; but is a consequence of a diminished power to employ capital with equal advantage, and that wherever little can be made by it, less will commonly be given for it. Accord¬ ing, therefore, as the usual market rate of interest varies in any country, we may be assured that the ordinary profits of stock must vary with it, must sink as it sinks, and rise as it rises. The progress of interest, therefore, may lead us to form some notion of the progress of profit. By the 37th of Henry VIII., all interest above ten per cent, was declared unlawful. More, it seems, had sometimes been taken before that. In the reign of Edward VI. religious zeal prohibited all interest. This prohibition however, like all others of the same kind, is said to have produced no effect, and probably rather increased than diminished the evil of usury. The statute of Henry VIII. was revived by the 13th of Elizabeth, cap. 8., and ten per cent, conti¬ nued to be the legal rate of interest till the 21st of James I., when it was restricted to eight per cent. It was reduced to six per cent, soon after the Restoration, and by the 12th of Queen Anne, to five per cent. All these different statutory regulations seem to 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 bor¬ rowed. 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 ca¬ pital, and in many other parts of the king¬ dom, at three and a half, four, and four and a half per cent. Since the time of Henry VIII. the wealth and revenue of the country have been conti¬ nually advancing, and, in the course of their progress, their pace seems rather to have been gradually accelerated than retarded. They seem, not only to have been going on, but to have been going on faster and faster. The wages of labour have been continually increasing during the same period; and in the greater part of the different branches of trade and manufactures the profits of stock have been diminishing. It generally requires a greater stock to\ carry on any sort of trade in a great town \ than in a country village. The great stocks \ employed in every branch of trade, and the number of rich competitors, generally re- ! duce the rate of profit in the former below /v what it is in the latter. But the wages of labour are generally higher in a great town than in a country village. In a thriving town the people who have great stocks to resulting either (1) from the diminished fertility of the soils, to which every advancing country must resort or (2) from an increase of taxation, or (3) from a rise of wages. See supplemental note on the Circumstances which Determine the Rate of Profit. Chap. IX. PROFITS OF STOCK. 41 employ, frequently cannot get the number of workmen they want, and therefore bid against one another in order to get as many as they can, which raises the wages of labour, and lowers the profits of stock. In the re¬ mote parts of the country there is frequently not stock sufficient to employ all the people, who therefore bid against one another in order to get employment, which lowers the wages of labour, and raises the profits of stock. In Scotland, though the legal rate of in¬ terest is the same as in England, the market rate is rather higher. People of the best credit there seldom borrow under five per cent. Even private bankers in Edinburgh give four per cent, upon their promissory notes, of which payment, either in whole or in part, may be demanded at pleasure. Pri¬ vate bankers in London give no interest for the money which is deposited with them. There are few trades which cannot be car¬ ried 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 observ¬ ed, are lower in Scotland than in England. The country, too, is not only much poorer, but the steps by which it advances to a bet¬ ter condition, for it is evidently advancing, seem to be much slower and more tardy. 1 The legal rate of interest in France has not, during the course of the present century, been always regulated by the market rate. 2 In 1720 interest was reduced from the twen¬ tieth to the fiftieth penny, or from five to two per cent. In 1724 it was raised to the thirtieth 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 administration of Mr. Laverdy, it was reduced to the twenty-fifth penny, or to four per cent. The Abbe Terray raised it afterwards to the old rate of five per cent. The supposed purpose of many of those violent reductions of interest was to prepare the way for redu¬ cing that of the public debts; a purpose which has sometimes been executed. France is perhaps in the present times not so rich a Country as England; and though the legal rate of interest has in France frequently been lower than in England, the market rate has generally been higher ; for there, as in other ountries, they have several very safe and easy l 1 Since the American war, the progress of improve¬ ment in Scotland has been decidedly more rapid than in England, or perhaps in any other country. See the account of agriculture, and the chapter on im¬ provements in food, clothing, &c. in JVTCulloch’g Statistics of the British Empire. 2 See Denisart. Article Taux des Interets, tom. iii. p; 18 . 3 The low' rate of profits in Holland is wholly or almost wholly, ascribable to the oppressiveness of taxation. See Principles of Political Economy, 2d ed. p. 4S4. 4 Dr. Smith does not seem to have been aware that an official account was drawn up in 1762, showing I / i J methods of evading the law. The profits of trade, I have been assured by British mer¬ chants who had traded in both countries, are higher in France than in England ; and it is no doubt upon this account that many British subjects choose rather to employ their capi¬ tals in a country where trade is in disgrace, than in one where it is highly respected. The wages of labour are lower in France than in England. When you go from Scotland to England, the difference which you may remark between the dress and coun¬ tenance of the common people in the one country and in the other, sufficiently indi¬ cates the difference in their condition. The contrast is still greater when you return from France. France, though no doubt a richer country than Scotland, seems not to be going forward so fast. It is a common and even a popular opinion in the country, that it is going backwards ; an opinion which, I appre¬ hend, is ill founded even with regard to France, but which nobody can possibly enter¬ tain with regard to Scotland, who sees the country now, and who saw it twenty or thirty years ago. The province of Holland, on the other hand, in proportion to the extent of its terri¬ tory and the number of its people, is a richer country than England. The government there borrow at two per cent., and private people of good credit at three. The wages of labour are said to be higher in Holland than in England, and the Dutch, it is well known, trade upon lower profits than any people in Europe. The trade of Holland, it has been pretended by some people, is de¬ caying, and it may perhaps be true that some particular branches of it are so. But these symptoms seem to indicate sufficiently that there is no general decay. When profit diminishes, merchants are very apt to com¬ plain that trade decays; though the diminu¬ tion of profit is the naturaf^effect of its pros¬ perity, or of a greater stock being employed in it than before. 3 During the late war the Dutch gained the whole carrying trade of France, of which they still retain a very large share. The great property which they pos¬ sess both in the French and English funds, about forty millions, it is said, in the latter (in which I suspect, however, there is a considerable exaggeration 4 ;) the great sums which they lend to private people, in coun- that the portion of the several funds then transferable at the Bank of England, standing in the names of foreigners, or their agents, amounted to only -£*14, 956,395. This account does not include the foreign property in the South Sea stock and annuities, and in the East India stock ; but if we estimate the whole amount of property in the British funds then held by all descriptions of foreigners at .£18,000,000, we shall certainly exceed the mark. In 1806, the property in the British funds held by foreigners, as ascertained by means of the exemption, allowed them from any charge on account of the property or income tax, amounted to £*18,598,606, exclusive of the Bank stock, and terminable annuities 42 PROFITS OF STOCK. Boox I. tries 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 man, though acquired by a particular trade, may increase beyond what he can employ in it, and yet that trade continue to increase too, so may likewise the capital of a great nation. In our North American and West Indian colonies, not only the wages of labour, but the interest of money, and consequently the profits of stock, are higher than in England. In the different colonies both the legal and the market rate of interest run from six to eight per cent. High wages of labour and high profits of stock, however, are things, perhaps, which scarce ever go together, except in the peculiar circumstances of new colonies. * A new colony must always for some time be more under-stocked in proportion to the extent of its territory, and more underpeo¬ pled in proportion to the extent of its stock, than the greater part of other countries. They have more land than they have stock to cultivate. What they have, therefore, is applied to the cultivation only of what is most fertile and most favourably situated, the land near the sea shore, and along the banks of navigable rivers. Such land too is frequently purchased at a price below the value even of its natural produce. Stock employed in the purchase and improvement of such lands must yield a very large profit, and consequently afford to pay a very large interest. Its rapid accumulation in so pro¬ fitable an employment enables the planter to increase the number of his hands faster than he can find them in a new settlement. Those whom he can find, therefore, are very libe¬ rally rewarded. As the colony increases, the profits of stock gradually diminish. When the most fertile and best situated lands have been ail occupied, less profit can be made by the cultivation of what is inferior both in soil and situation, and less interest can be afforded for the stock which is so employed. In the greater part of our colo¬ nies, accordingly, both the legal and the market rate of interest have been considerablv reduced during the course of the present which on a large estimate might amount to, perhaps, =£^2,000,000 additional. Since the peace, the amount of stock held by foreigners has been rapidly de¬ creasing. In August, 1818, it amounted to ^£*12,486,000, and is not supposed at this moment (1838) to exceed .£*8,000,000. Fairman on the Funds, 7th ed. p. 229. 1 Interest has declined because profits have de¬ clined ; and profits have declined, partly because the increase of population and the exclusion of foreign corn have forced recourse to soils that yield a less quantity of produce in return for the same outlay ol capital and labour; partly because taxes I century. As riches, improvement, and popu¬ lation have increased, interest has declined, i The wages of labour do not sink with the profits of stock. The demand for labour increases with the increase of stock, whatever be its profits; and after these are diminished, stock may not only continue to increase, but to increase much faster than before. It is with industrious nations, who are advancing in the acquisition of riches, as with indus¬ trious individuals. A great stock, though with small profits, generally increases faster than a small stock with great profits. Money, says the proverb, makes money. When you have got a little, it is often easy to get more. The great difficulty is to get that little. The connection between the increase of stock and that of industry, or of the demand for useful labour, has partly been explained already, but will be explained more fully hereafter in treating of the accumulation of stock. The acquisition of new territory, or of new branches of trade, may sometimes raise the profits of stock, and with them the in¬ terest of money, even in a country which is fast advancing in the acquisition of riches. 2 The stock of the country not being suffi- cient for the whole accession of business, which such acquisitions present to the differ¬ ent people among whom it is divided, is ap¬ plied to those particular branches only which afford the greatest profit. Part pf what had before been employed in other trades is ne¬ cessarily withdrawn from them, and turned into some of the new and more profitable ones. In all those old trades, therefore, the competition comes to be less than before: the market comes to be less fully supplied with many different sorts of goods. Their price necessarily rises more or less, and yields a greater profit to those who deal in them, who can, therefore, afford to borrow at a higher interest. For some time after the conclusion of the late war, not only private people of the best credit, but some of the greatest companies in London, commonly borrowed at five per cent, who before that had not been used to pay more than four, and four and a half per cent. The great accession both of territory and trade by our acquisitions in North America and the West Indies, will sufficiently account for this, without supposing any diminution in the capital stock of the society. So great an accession of new business to be carried on by have been increased; and partly, and principally, perhaps, because wages have been materially aug¬ mented. 2 It will raise them, provided the new territory be more fertile than the land last brought under tillage in the country that has made the acquisition, or provided the new branches of trade enable corn, or such other articles as enter into the consumption of the labourer, to be obtained at a cheaper rate, but not otherwise. See note on the Circumstances which determine the Rate of Profit, end of the volume. FROFITS OF STOCK. 43 Chat. IX. the old stock, must necessarily have dimi¬ nished the quantity employed in a great number of particular branches, in which the competition being less the profits must have been greater. I shall hereafter have occa¬ sion to mention the reasons which dispose me to believe that the capital stock of Great Britain was not diminished even by the enormous expense of the late war. The diminution of the capital stock of the society, or of the funds destined for the maintenance of industry, however, as it lowers the wages of labour, so it raises the profits of stock, and, consequently, the inte¬ rest of money. By the wages of labour being lowered, the owners of what stock re¬ mains in the society can bring their goods at less expense to market than before, and less stock being employed in supplying the market than before, they can sell them dearer. 1 Their goods cost them less, and they get more for them. Their profits, therefore, being augmented at both ends, can well afford a large interest. I he great fortunes so suddenly and so easily acquired in Bengal, and the other British settlements in the East Indies, may satisfy us that, as the wages of labour are very low, so the profits of stock are very high in those ruined countries. The interest of money is pro- portionably so. In Bengal, money is fre¬ quently lent to the farmers at forty, fifty, and sixty per cent., and the succeeding crop is mortgaged for the payment. As the profits which can afford such an interest must eat up almost the whole rent of the landlord, so such enormous usury, must, in its turn, eat up the greater part of those profits. Before the fall of the Roman republic, a usury of the same kind seems to have been common in the provinces, under the ruinous adminis¬ tration of their proconsuls. The virtuous Brutus lent money, in Cyprus, at eight-and- forty per cent, as we learn from the letters of Cicero. In a country which had acquired that full complement of riches which the nature of its soil and climate, and its situation with re¬ spect to other countries allowed it to acquire, which could, therefore, advance no further, and which was not going backwards, both the wages of labour and the profits of stock would, probably, be very low. In a country fully peopled in proportion to what either its territory could maintain or its stock em¬ ploy, the competition for employment would necessarily be so great, as to reduce the wages of labour to what was barely sufficient to keep up the number of labourers; and, the country being already fully peopled, that number could never be augmented. In a country fully stocked in proportion to all the business it had to transact, as great a W 1 A fall in the rate of wages raises profits without, generally speaking, affecting prices. See supple- quantity of stock would be employed in every particular branch as the nature and extent of the trade would admit. The competition, therefore, would everywhere be as great, and consequently the ordinary profit as low as possible. But, perhaps, no country has ever yet ar¬ rived at this degree of opulence. China seems to have been long stationary, and had, probably, long ago acquired that full com¬ plement of riches which is consistent w r ith the nature of its laws and institutions. But this complement may be much inferior to what, with other laws and institutions, the nature of its soil, climate, and situation, I might admit of. A 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 whicii it might do with different law's and institutions. In a country, too, where, though the rich or the owners of large capitals enjoy a good deal of security, the poor or the owners of small capitals enjoy scarce any, but are liable, under the pretence of justice, to be pillaged and plundered at any time by the inferior mandarines, the quantity of stock employed in all the different branches of business transacted within it, can never be equal to what the nature and extent of that business might admit. In every different branch, the oppression of the poor must establish the monopoly of the rich, w r ho, 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 interest of money in China, and the ordinary profits of stock must be sufficient to afford this large interest. A defect in the law may sometimes raise the rate of interest considerably above what the condition of the country, as to wealth or poverty, would require. When the law does not enforce the performance of contracts, it puts all borrowers nearly upon the same footing with bankrupts or people of doubtful credit in better regulated countries. The uncertainty of recovering his money makes the lender exact the same usurious interest which is usually required from bankrupts. Among the barbarous nations who overrun the western provinces of the Roman empire, the performance of contracts w r as left for many ages to the faith of the contracting parties. The courts of justice of their kings seldom intermeddled in it. dhe high rate of interest which took place in those ancient times may perhaps be partly accounted for from this cause. When the law prohibits interest altogether, it does not prevent, it. Many people must borrow, and nobody w r ill lend without such mental note on the F.ft'ect of Variations in the Rate# of Wages and Profit on Prices. 44 PROFITS OF STOCK. a consideration for the use of their money as is suitable, not only to what can be made by the use of it, but to the difficulty and danger of evading the law. The high rate of m- terest among all Mahometan nations, is ac¬ counted for by M. Montesquieu, not from their poverty, but partly from this, and partly from the difficulty of recovering the money. he low est ordinary rate of profit must always be something more than what is suf¬ ficient to compensate the occasional losses to ' which every employment of stock is exposed. It is this surplus only which is neat or clear profit. What is called gross profit compre¬ hends frequently, not only this surplus, but what is retained for compensating such ex¬ traordinary losses. The interest which the borrower can afford to pay is in proportion to the clear profit only. I he lowest oidinary rate of interest must, in the same manner, be something more than sufficient to compensate the occasional losses to which lending, even with tolerable pru¬ dence, is exposed. Were it not more, charity or friendship could be the only motives for lending. In a country which had acquired its full complement of riches, where in every par¬ ticular branch of business there was the greatest, quantity of stock that could be em¬ ployed in it, as the ordinary rate of clear profit would be very small, so the usual market rate of interest which could be af¬ forded out of it, would be so low as to render it impossible for any but the very wealthiest people to live upon the interest of their money. All people of small or middling fortunes would be obliged to superintend themselves the employment of their own stocks. It would be necessary that almost every man should be a man of business, or engage m some sort of trade. The province of Holland seems to be approaching near to this state. It is there unfashionable not to be a man of business. Necessity makes it usual for almost every man to be so, and custom everywhere regulates fashion. As U is ridiculous not to dress, so is it, in some measure, not to be employed, like other people. As a man of a civil profession seems awkward in a camp or a garrison, and is even in some danger of being despised there, so does an idle man among men of business. I he highest ordinary rate of profit may be such as in the price of the greater part of commodities, eats up the whole of what should go to the rent of the land, and leaves only what is sufficient to pay the labour of preparing and bringing them to market, according to the lowest rate at which labour Book I. mo e d sir vss s- can any where be paid, the bare subsistence of the labourer. The workman must always have been fed in some way or other w hile he was about the work ; but the landlord may not always have been paid. The profits of the trade which, the servants of the East India Company carry on in Bengal may not perhaps be very far from this rate. d he proportion which the usual market rate of interest ought to bear to the ordinary rate of clear profit, necessarily varies as profit rises or falls. Double interest is in Great Britain reckoned, what the merchants call a good, moderate, reasonable profit; terms which I apprehend mean no more than a common and usual profit. In a country where the ordinary rate of clear profit is eight or ten per cent., it may be reasonable that one half of it should go to interest. Wherever business is carried on with borrowed money, the stock is at the risk of the bor¬ rower, who, as it were, insures it to the lender; and four or five per cent, may, in the greater part of trades, be both a sufficient piofit upon the risk of this insurance, and a sufficient recompence for the trouble of em- Pl°>ing the stock. But the proportion be¬ tween interest and clear profit might not be the same in countries where the ordinary rate of profit was. either a good deal lower or a good deal higher. If it were a good deal lower, one half of it perhaps could not be afforded for interest; and more might be afforded if it were a good deal higher. . In countries which are fast advancing to riches, the low rate of profit may, in the price of many commodities, compensate the high wages of labour, and enable those countrfes to sell as cheap as their less thriving neigh- bours, among whom the wages of labour may be lower. J In reality high profits tend much more to raise the price of work than high wages. 1 f in the linen manufacture, for example, the wages of the different working people, the flax-dressers, the spinners, the weavers, &c., snould, all of them, be advanced two-pence a day; it would be necessary to heighten the price of a piece of linen only by a number of two-pences equal to the number of people that had been employed about it, multiplied • t ^ ie n ’omber of days during which they had been so employed. That part of the price of commodity which resolved itself into wao- es would, through all the different stages ""of the manufacture, rise only in arithmetical proportion to this rise of wages. But if the profits of all the different employers of those working people should be raised five per cent that part of the price of the commodity which resolved itself into profit, would, S?reri tieS dh ; ided between capitalists and labourers. See supplemental note on the Effect of Sees 5 111 ‘ he KateS of Wa S'“ 8 and Profit oq Chap. X. WAGES AND PROFIT, &c. 4$ through all the different stages of the manu¬ facture, rise in geometrical proportion to this rise of profit. The employer of the flax-dressers would, in selling his flax, require an additional five per cent, upon the whole value of the materials and wages which he advanced to his workmen. The employer of the spinners would require an additional five per cent., both upon the advanced price of the flax and upon the wages of the spin¬ ners. 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 same manner as simple interest does in the accumulation of debt. The rise of profit operates like compound interest. Our merchants and master manu¬ facturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people. CHAP. X. Of Wages and Profit in the different Employ¬ ments of Labour and Stock . 1 The whole of the advantages and disadvan¬ tages of the different employments of labour and stock must, in the same neighbourhood, be either perfectly equal or continually tend¬ ing to equality. If in the same neighbour¬ hood, there was any employment evidently either more or less advantageous than the rest, so many people would crowd into it in the one case, and so many would desert it in the other, that its advantages would soon return to the level of other employments. This at least would be the case in a society where things were left to follow their natural course, where there was perfect liberty, and where every man was perfectly free both to choose what occupation he thought proper, and to change it as often as he thought proper. Every man’s interest would prompt him to seek the advantageous, and to shun the disadvantageous employment. Pecuniary wages and profit, indeed, are everywhere in Europe extremely different, according to the different employments of labour and stock. But this difference arises partly from certain circumstances in the employments themselves, which either really, or at least in the imaginations of men, make up for a small pecuniary gain in some, and 1 This is an important and valuable chapter. With very few exceptions the principles and reason¬ ings are equally sound and conclusive. counterbalance a great one in others; and partly from the policy of Europe, which nowhere leaves things at perfect liberty. The particular consideration of those cir¬ cumstances and of that policy will divide the chapter into two parts. Part I. Inequalities arising from the Nature of the Employments themselves. The five following are the principal circum¬ stances which, so far as I have been able to observe, make up for a small pecuniary gain in some employments, and counterbalance a great one in others : First, The agreeableness or disagreeableness of the employments them¬ selves ; Secondly, The easiness and cheap¬ ness, or the difficulty and expense of learning them; Thirdly, The constancy or incon¬ stancy of employment in them; Fourthlv, The small or great trust which must be re¬ posed in those who exercise them; and, Fifthly, The probability or improbability of success in them. First, The wages of labour vary with the ease or hardship, the cleanliness or dirtiness, the honourableness or dishonourableness of the employment. Thus in most places, take the year round, a journeyman tailor earns less than a journeyman weaver. His work is much easier. A journeyman weaver earns less than a journeyman smith. His work is not always easier, but it is much cleanlier. A journeyman blacksmith, though an arti¬ ficer, seldom earns so much in twelve hours as a collier, who is only a labourer, does in eight. His work is not quite so dirty, is less dangerous, and is carried on in day-light, and above ground. Honour makes a great part of the reward of all honourable pro¬ fessions. 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 effect. The trade of a butcher is a brutal and an odious business; but it is in most places more profitable than the greater part of common trades. The most detestable of all employments, that of public executioner, is, in proportion to the quantity of work done, better paid than any common trade whatever. Hunting and fishing, the most important employments of mankind in the rude state of society", become in its advanced state their most agreeable amusements, and they" pursue for pleasure what they once followed from necessity. In the advanced state of society, therefore, they are all very poor people who follow as a trade what other people pursue as a pastime. Fishermen have been so since the time of Theocritus. 2 A poacher is 2 Sec Idyilium xxi. 46 WAGES AND PROFIT Book I. everywhere a very poor man in Great Bri¬ tain. In countries where the rigour of the law suffers no poachers, the licensed hunter is not in a much better condition. The natural taste for those employments makes more people follow them than can live com¬ fortably by them, and the produce of their labour, in proportion to its quantity, comes always too cheap to market to afford any thing but the most scanty subsistence to the labourers. Disagreeableness and disgrace affect the profits of stock in the same manner as the wages of labour. The keeper of an inn or tavern, who is never master of his own house, and who is exposed to the brutality of every drunkard, exercises neither a very agreeable nor a very creditable 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 cheapness, or the difficulty and expense of learning the business. When any expensive machine is erected, the extraordinary work to be performed by it before it is worn out, it must be expected, will replace the capital laid out by it, with at least the ordinary profits. A man educated at the expense of much labour and time to any of those employments which require extraordinary dexterity and skill, may be compared to one of those expensive machines. Ihe work which he learns to perform, it must be expected, over and above the usual wages of common labour, will replace to him the whole expense of his education, with at least the ordinary profits of an equally va¬ luable capital. It must do this too in a reasonable time, regard being had to the very uncertain duration of human life, in the same manner as to the more certain duration of the machine. The difference between the wages of skilled labour and those of common labour, is founded upon this principle The policy of Europe considers the labour of all mechanics, artificers, and manufac¬ turers, as skilled labour; and that of all country labourers as common labour. It seems to suppose that of the former to be of a more nice and delicate nature than that of the latter. It is so perhaps in some cases ; but in the greater part it is quite otherwise, as I shall endeavour to show by and by. The laws and customs of Europe, therefore, in order to qualify any person for exercising the one species of labour, impose the necessity of an apprenticeship, though with different degrees of rigour in different places. .They leave the other free and open to every body. During the continuance of the apprenticeship, the whole labour of the apprentice belongs to his master. In the mean time he must, in many cases, be maintained by his parents or relations, and in almost all cases must be clothed by them. Some money, too, is commonly given to the master for teaching him his trade. They who cannot give money give time, or become bound for more than the usual number of years; a consideration which, though it is not always advantageous to the master, on account of the usual idleness of apprentices, is always disadvantageous to the apprentice. In country labour, on the contrary, the labourer, while he is employed about the easier, learns the more difficult parts of his business, and his own labour maintains him through all the different stages of his em¬ ployment. It is reasonable, therefore, that in Europe the wages of mechanics, artificers, and manufacturers, should be somewhat higher than those of common labourers. They are so accordingly, and their superior gains make them in most places be consi¬ dered as a superior rank of people. This superiority, however, is generally very small; the daily or weekly earnings of journeymen in the more common sorts of manufactures, such as those of plain linen and woollen cloth, computed at an average, are, in most places, very little more than the day wages of common labourers. Their employ¬ ment, indeed, is more steady and uniform, and the superiority of their earnings, taking the whole year together, may be somewhat greater. It seems evidently, however, to be no greater than what is sufficient to compensate the superior expense of their education. Education in the ingenious arts and in the liberal professions, is still more tedious and expensive. The pecuniary recompence, therefore, of painters and sculptors, of law¬ yers and physicians, ought to be much more liberal: and it is so accordingly. The profits of stock seem to be very little affected by the easiness or difficulty of learn¬ ing the trade in which it is employed. All the different ways in which stock is com¬ monly employed in great towns seem, in reality, to be almost equally easy and equally difficult to learn. One branch either of foreign or domestic trade, cannot well be a much more intricate business than another. Thirdly, The wages of labour, in differ¬ ent occupations vary with the constancy or inconstancy of employment. Employment is much more constant in some trades than in others. In the greater part of manufactures, a journeyman may be pretty sure of employment almost every day in the year that he is able to work. A ma¬ son or bricklayer, on the contrary, can work neither in hard frost nor in foul weather, and his employment at all other times depends upon the occasional calls of his customers. He is liable, in consequence, to be frequently without any. What he earns, therefore, while he is employed, must not only main- Chat. X. IN DIFFERENT EMPLOYMENTS. 47 tain him while he is idle, but make him some compensation for those anxious and de¬ sponding moments which the thought of so precarious a situation must sometimes occa¬ sion. Where the computed earnings of the greater part of manufacturers, accordingly, are nearly upon a level with the day wages of common labourers, those of masons and bricklayers are generally from one half more to double those wages. Where common la¬ bourers 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 former earn nine and ten, as in London, the latter commonly earn fifteen and eighteen. 1 No species of skilled labour, however, seems more easy to learn than that of masons and bricklayers. Chairmen in London, during the summer season, are said sometimes to be employed as bricklayers. The high wages of those workmen, therefore, are not so much the recompence of their skill, as the compensation for the inconstancy of their employment. A house carpenter seems to exercise rather a nicer and more ingenious trade than a mason. In most places, however, for it is not universally so, his day-w'ages are some¬ what lower. His employment, though it depends much, does not depend so entirely upon the occasional calls of his customers; and it is not liable to be interrupted by the weather. When the trades which generally afford constant employment, happen in a particular place not to do so, the wages of the work¬ men always rise to a good deal above their ordinary proportion to those of common la¬ bour. In London almost all journeymen artificers are liable to be called upon and dismissed by their masters from day to day, and from week to week, in the same manner as day-labourers in other places. The lowest order of artificers, journeymen tailors, accord¬ ingly, earn their half a crown a day, though eighteen pence may be reckoned the wages of common labour. 2 In small towns and country villages, the wages of journeymen tailors frequently scarce equal those of com¬ mon labour; but in London they are often many weeks without employment, particu¬ larly during the summer. When the inconstancy of employment is combined with the hardship, disagreeable¬ ness, and dirtiness of the wrnrk, it sometimes raises the vrages 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 1 The rates of wages mentioned in the text are now very much increased. 2 The wages of journeymen tailors in London high wages arise altogether from the hard¬ ship, disagreeabieness, 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 disagree¬ ableness, almost equals that of colliers ; and from the unavoidable irregularity in the ar¬ rivals of coal-ships, the employment of the greater part of them is necessarily very in-, constant. If colliers, therefore, commonly earn double and triple the wages of com¬ mon labour, it ought not to seem unreason¬ able that coal-heavers should sometimes earn four and live times those wages. In the in¬ quiry made into their condition a few years ago, it was found that at the rate at which they were then paid, they could earn from six to ten shillings a day. Six shillings are about four times the wages of common la¬ bour in London, and in every particular trade, the lowest common earnings may always be considered as those of the far greater number. LIow extravagant soever those earnings may appear, if they were more than sufficient to compensate all the disagreeable circumstan¬ ces of the business, there would soon be so great a number of competitors as, in a trade which has no exclusive privilege, would quickly reduce them to a lower rate. The constancy or inconstancy of employ¬ ment cannot affect the ordinary profits of stock in any particular trade. Whether the stock is or is not constantly employed de¬ pends, not upon the trade, but the trader. Fourthly, The wages of labour vary ac¬ cording to the small or great trust which must be reposed in the workmen. The wages of goldsmiths and jewellers are everywhere superior to those of many other workmen, not only of equal, but ot much superior ingenuity ; on account of the precious materials with which they are in¬ trusted. We trust our health to the physician; our fortune, and sometimes our life and reputa¬ tion, to the lawyer and attorney. Such con¬ fidence could not safely be reposed in people of a very mean or low condition. Their reward must be such, therefore, as may give them that rank in the society which so im¬ portant a trust requires. The long time and the great expense which must be laid out in their education, when combined with this circumstance, necessarily enhance still fur¬ ther the price of their labour. When a person employs only his own stock in trade, there is no trust; and the credit which he may get from other people, depends, not upon the nature of his trade, but upon their opinion of his fortune, pro¬ bity, and prudence. The different rates of amount at present (1S33) to about thirty shillings a week, or live shillings a clay. 48 Book I. WAGES AND PROFIT profit, therefore, in the different branches of trade, cannot arise from the different degrees of trust reposed in the traders. Fifthly, The wages of labour in different employments vary according to the proba¬ bility or improbability of success in them. The probability that any particular person shall ever be qualified for the employment to which he is educated, is very different in different occupations. In the greater part of mechanic trades, success is almost certain; but very uncertain in the liberal professions! Put your son apprentice to a shoemaker, there is little doubt of his learning to make a pair of shoes: but send him to study the law, it is at least twenty to one if ever he makes such proficiency as will enable him to live by the business. In a perfectly fair lottery, those who draw the prizes ought to gain all that is lost by those who draw the blanks. In a profession where twenty fail for one that succeeds, that one ought to gain all that should have been gained by the un¬ successful twenty. The counsellor at law who, perhaps, at near forty years of age, begins to make something by his profession,' ought to receive the retribution, not only of his own so tedious and expensive education, but of that of more than twenty others who are never likely to make any thing by it. How extravagant soever the fees of counsel¬ lors at law may sometimes appear, their real retribution is never equal to this. Compute in any particular place, what is likely to be annually gained, and what is likely to be annually spent, by all the different workmen in any common trade, such as that of shoe¬ makers or weavers, and you will find that the former sum will generally exceed the latter. But make the same computation with regard to all the counsellors and students of law, in all the different inns of court, and you will find that their annual gains bear but a very small proportion to their annual expense, even though you rate the former as high, and the latter as low, as can well be done. The lottery of the law, therefore, is very far from being a perfectly fair lottery ; and that, as well as many other liberal and honour¬ able professions, are, in point of pecuniary gain, evidently under-recompensed. Those professions keep their level, how¬ ever, with other occupations, and, notwith¬ standing these discouragements, all the most generous and liberal spirits are eager to crowd into them. Two different causes contribute to recommend them. First, the desire of the reputation which attends upon superior excellence in any of them; and, secondly, the natural confidence which every man has, more or less, not only in his own abilities, but in his own good fortune. lo excel in any profession, in which but vw airi\e at mediocrity, is the most decisive mark of what is called genius or superior talents. The public admiration which at¬ tends upon such distinguished abilities, makes always a part of their reward; a greater or smaller in proportion as it is higher or lower in degree. It makes a considerable part of that reward in the profession of physic ; a still greater perhaps in that of law; in poetry and philosophy it makes almost the whole. There are some very agreeable and beauti¬ ful talents of which the possession commands a certain sort of admiration; but of which the exercise for the sake of gain is considered, whether from reason or prejudice, as a sort of public prostitution. The pecuniary re- compence, therefore, of those who exercise them in this manner, must be sufficient, not only to pay for the time, labour, and expense of acquiring the talents, but for the discredit which attends the employment of them as the means of subsistence. The exorbitant rewards of players, opera-singers, opera- dancers, &c., are founded upon those two principles; the rarity and beauty of the taients, and the discredit of employing them I in this manner. It seems absurd at first sight that we should despise their persons, and yet reward their talents with the most profuse liberality. While we do the one, however, we must of necessity do the other. Should the public opinion or prejudice ever alter with regard to such occupations, their pecuniary recompence would quickly dimi¬ nish. More people would apply to them, and the competition would quickly reduce the price of their labour. Such talents, though far from being common, are by no means so rare as is imagined. Many people possess them in great perfection, who disdain to make this use of them; and many more are capable of acquiring them, if any thing could be made honourably by them. The overweening conceit which the greater part of men have of cheir own abilities, is an ancient evil remarked by the philosophers and moralists of all ages. Their absurd presumption in their own good fortune has been less taken notice of. It is, however, if possible, still more universal. There is no man living who, when in tolerable health and spirits, nas not some share of it. The chance of gain is by every man more or less overvalued, and the chance of loss is by most men undervalued, and by scarce any man, who is in tolerable health and spirits, valued more than it is worth. That the chance of gain is naturally over¬ valued, we may learn from the universal success of lotteries. The world neither ever saw, nor ever will see, a perfectly fair lottery; or one in which the whole gain compensated the whole loss; because the undertaker could make nothing by it. In the state lotteries the tickets are really not worth the price which is paid by the original subscribers, and yet commonly sell in the market for twenty. Chap. X. IN DIFFERENT EMPLOYMENTS. 49 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 know that even that small sum is per¬ haps twenty or thirty per cent, more than the chance is worth. In a lottery in which no prize exceeded twenty pounds, though in other respects it approached much nearer to a perfectly fair one than the common state lotteries, there would not be the same de¬ mand for tickets. In order to have a better chance for some of the great prizes, some people purchase several tickets, and others, small shares in a still greater number. There is not, however, a more certain proposition in mathematics, than that the more tickets you adventure upon, the more likely you are to be a loser. Adventure upon all the tickets in the lottery, and you lose for certain; and the greater the number of your tickets, the nearer you approach to this certainty. That the chance of loss is frequently un¬ dervalued, and scarce ever valued more than it is worth, we may learn from the very moderate profit of insurers. In order to make insurance, either from fire or sea-risk, a trade at all, the common premium must be sufficient to compensate the common losses, to pay the expense of management, and to afford such a profit as might have been drawn from an equal capital employed in any common trade. The person who pays no more than this, evidently pays no more than the real value of the risk, or the lowest price at which he can reasonably expect to insure it. But though many people have made a little money by insurance, very few have made a great fortune ; and from this consideration alone, it seems evident enough, that the ordinary balance of profit and loss is not more advantageous in this, than in other common trades by which so many people make fortunes. Moderate, however, as the premium of insurance commonly is, many people despise the risk too much to care to pay it. Taking the whole kingdom at an average, nineteen houses in twenty, or rather, perhaps, ninety-nine in a hundred, are not insured from fire. 1 Sea risk is more alarming to the greater part of people, and the proportion of ships insured to those not insured is much greater. Many sail, however, at all seasons, and even in time of war, without any insurance. This may sometimes, perhaps, be done without any imprudence. When a great company, or even a great merchant, has twenty or thirty ships at sea, they may, as it were, insure one another. The premium saved upon them all, may more than compensate such losses 1 The proportion of houses insured to the total number, is now vastly greater than when the Wealth oi Nations w f as published. as they are likely to meet with in the common course of chances. The neglect of insurance upon shipping, however, in the same manner as upon houses, is, in most cases, the effect of no such nice calculation, but of mere thoughtless rashness and pre¬ sumptuous contempt of the risk. The contempt of risk and the presump- tuous hope of success are in no period of life more active than at the age at which young people choose their professions. How little the fear of misfortune is then capable of ba¬ lancing the hope of good luck, appears still more evidently in the readiness of the common people to enlist as soldiers, or to go to sea, than in the eagerness of those of better fashion to enter into what are called the liberal professions. What a common soldier may lose is obvious enough. Without regarding the danger, however, young volunteers never enlist so readily as at the beginning of a new war; and though they have scarce any chance of preferment, they figure to them¬ selves, in their youthful fancies, a thousand occasions of acquiring honour and distinc¬ tion which never occur. These romantic hopes make the whole price of their blood. Their pay is less than that of common la¬ bourers, and in actual service their fatigues are much greater. The lottery of the sea is not altogether so disadvantageous as that of the army. The son of a creditable labourer or artificer may frequently go to sea with his father’s consent; but if he enlists as a soldier, it is always without it. Other people see some chance of his making something by the one trade •. nobody but himself sees any of his making any thing by the other. The great admiral is less the object of public admiration than the great general; and the highest success in the sea service promises a less brilliant fortune and reputation than equal success in the land. The same difference runs through all the inferior degrees of preferment in both. By the rules of precedency a captain in the navy ranks with a colonel in the army : but he does not rank with him in the common estimation. As the great prizes in the lot. tery are less, the smaller ones must be more numerous. Common sailors, therefore, more frequently get some fortune and preferment than common soldiers ; and the hope of those prizes is what principally recommends the trade. Though their skill and dexterity ^ — " * are much superior to that of almost any ar¬ tificers, and though their whole life is one continual scene of hardship and danger, yet for all this dexterity and skill, for all 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 sur¬ mounting the other. Their wages are not E 50 WAGES AND PROFIT Book I. greater than those of common labourers at the port which regulates the rate of seamen’s wages. As they are continually going from port to port, the monthly pay of those who sail from all the different ports of Great Bri¬ tain, is more nearly upon a level than that of any other workmen in those different places ; and the rate of the port to and from which the greatest number sail, that is, the port of London, regulates that of all the rest. At London the wages of the greater part of the different classes of workmen are about double those of the same classes at Edin¬ burgh. 1 But the sailors who sail from the port of London seldom earn above three or four shillings a month more than those who sail from the port of Leith, and the differ¬ ence is frequently not so great. In time of peace, and in the merchant service, the London price is from a guinea to about seven-and-twenty shillings the calendar month. 2 A common labourer in London, at the rate of nine or ten shillings a week, may earn in the calendar month from forty to five-and-forty shillings. The sailor, in¬ deed, over and above his pay, is supplied with provisions. Their value, however, may not, perhaps, always exceed the difference between his pay and that of the common labourer ; and though it sometimes should, the excess will not be clear gain to the sailor, because he cannot share it with his wife and family, whom he must maintain out of his wages at home. 3 The dangers and hair-breadth escapes of a life of adventures, instead of disheartening young people, seem frequently to recommend a trade to them. A tender mother, among the inferior ranks of people, is often afraid to send her son to school at a sea-port town, lest the sight of the ships and the convers¬ ation and adventures of the sailors should entice him to go to sea. The distant pro¬ spect of hazards, from which we can hope to extricate ourselves by courage and address, is not disagreeable to us, and does not raise the wages of labour in any employment. It is otherwise with those in which courage and address can be of no avail. In trades which are known to be very unwholesome, the wages of labour are always remarkably high. Unwholesomeness is a species of disagree¬ ableness, and its effects upon the wages of labour are to be ranked under that general head. In all the different employments of stock, the ordinary rate of profit varies more or less with the certainty or uncertainty of the returns. These are in general less uncer¬ tain in the inland than in the foreign trade, and in some branches of foreign trade than 1 See note, ante, p. 34. 2 It may now be rated at from 505. to 60 5 . a month. 3 It is singular that Dr. Smith should not have alluded to the practice of impressment, in enumer¬ ating the disadvantages incident to the sea service. in others; in the trade to North America, for example, than in that to Jamaica. The ordinary rate of profit always rises more or less with the risk. It does not, however, seem to rise in proportion to it, or so as to compensate it completely. Bankruptcies are most frequent in the most hazardous trades. The most hazardous of all trades, that of a smuggler, though when the adventure suc¬ ceeds it is likewise the most profitable, is the infallible road to bankruptcy. The presump¬ tuous 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 their profit below what is sufficient to compensate the risk. To compensate it completely, the common returns ought, over and above the ordinary profits of stock, not only to make up for all occasional losses, but to afford a surplus profit to the adventurers of the same nature with the profit of insurers. But if the common returns were sufficient for all this, bankruptcies would not be more fre¬ quent in these than in other trades. Of the five circumstances, therefore, which vary the wages of labour, two only affect the profits of stock; the agreeableness or dis¬ agreeableness of the business, and the risk or , security with which it is attended. In point of agreeableness or disagreeableness, there is little or no difference in the far greater part of the different employments of stock, but a great deal in those of labour; and the ordi¬ nary profit of stock, though it rises with the risk, does not always seem to rise in propor¬ tion to it. It should follow from all this, that, in the same society or neighbourhood, the average and ordinary rates of profit in the different employments of stock should be more nearly upon a level than the pecu¬ niary wages of the different sorts of labour. They are so accordingly. The difference between the earnings of a common labourer and those of a well-employed lawyer or phy¬ sician, is evidently much greater than that between the ordinary profits in any two dif¬ ferent branches of trade. The apparent dif¬ ference, 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 w r hat ought to be considered as profit. Apothecaries’ profit is become a by-word, denoting something uncommonly extrava¬ gant. This great apparent profit, however, is frequently no more than the reasonable wages of labour. The skill of an apothecary is a much nicer and more delicate matter than that of any artificer whatever; and the trust which is reposed in him is of much For some remarks on this practice, the effect it has in deterring young men from entering the sea service, and the means by which it might be abolished with¬ out injury to the navy, see note on Impressment, end of the volume. IN DIFFERENT EMPLOYMENTS. 51 Ch A*. X. i ■ greater importance. He is the physician of the poor in all cases, and of the rich when the distress or danger is not very great. His reward, therefore, ought to be suitable to his skill and his trust, and it arises generally from the price at which he sells his drugs. But the whole drugs which the best em¬ ployed apothecary, in a large market town, will sell in a year, may not perhaps cost him above thirty or forty pounds. Though he should sell them, therefore, for three or four hundred, or at a thousand per cent, profit, this may frequently be no more than the reasonable wages of his labour, charged, in the only way in which he can charge them, upon the price of his drugs. The greater part of the apparent profit is real wages disguised in the garb of profit. In a small sea-port town, a little grocer will make forty or fifty per cent, upon a stock of a single hundred pounds, while a considerable wholesale merchant in the same place will scarce make eight or ten per cent, upon a stock of ten thousand. The trade of the grocer may be necessary for the conveni- ency of the inhabitants, and the narrowness of the market may not admit the employment of a larger capital in the business. The man, however, must not only live by his trade, but live by it suitably to the qualifications which it requires. Besides possessing a little ca¬ pital, he must be able to read, write, and account, and must be a tolerable judge too of, perhaps, fifty or sixty different sorts of goods, their prices, qualities, and the mar¬ kets where they are to be had cheapest. He must have all the knowledge, in short, that is necessary for a great merchant, which nothing hinders him from becoming but the want of a sufficient capital. Thirty or forty pounds a year cannot be considered as too great a recompence for the labour of a per¬ son so accomplished. Deduct this from the seemingly great profits of his capital, and little more will remain, perhaps, than the ordinary profits of stock. The greater part of the apparent profit is, in this case too, real wages. The difference between the apparent profit of the retail and that of the wholesale trade, is much less in the capital than in small towns and country villages. Where ten thousand pounds can be employed in the grocery trade, the wages of the grocer’s labour make but a very trifling addition to the real profits of so.great a stock. The apparent profits of the wealthy retailer, therefore, are there more nearly upon a level with those of the wholesale merchant. It is upon this account that goods sold by retail are generally as cheap and frequently much cheaper in the capital than in small towns and country villages. Grocery goods, for example, are generally much cheaper ; bread and butcher’s meat frequently as cheap. It costs no more to bring grocery goods to the great town than to the country village; but it costs a great deal more to bring corn and cattle, as the greater part of them must be brought from a much greater distance. The prime cost of grocery goods, therefore, being the same in both places, they are cheapest where the least profit is charged upon them. The prime cost of bread and 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 equally cheap. In such ar¬ ticles as bread and butcher’s meat, the same cause, which diminishes apparent profit, in¬ creases prime cost. The extent of the market, by giving employment to greater stocks, diminishes apparent profit; but by requiring supplies from a greater distance, it increases prime cost. This diminution of the one and increase of the other seem, in most cases, nearly to counterbalance one another ; which is probably the reason that, though the prices of corn and cattle are commonly very differ¬ ent in different parts of the kingdom, those of bread and butcher’s meat are generally very nearly the same through the greater part of it. Though the profits of stock both in the wholesale and retail trade are generally less in the capital than in small towns and country villages, yet great fortunes are fre¬ quently acquired from small beginnings in the former, and scarce ever in the latter. In small towns and country villages, on account of the narrowness of the market, trade can¬ not always be extended as stock extends. In such places, therefore, though the rate of a particular person’s profits may be very high, the sum or amount of them can never be very great, nor consequently that of his an¬ nual accumulation. In great towns, on the contrary, trade can be extended as stock in¬ creases, and the credit of a frugal and thriv¬ ing man increases much faster than his stock. His trade is extended in proportion to the amount of both, and the sum or amount of his profits is in proportion to the extent of his trade, and his annual accumulation in proportion to the amount of his profits. It seldom happens, however, that great fortunes are made even in great towns by any one regular, established, and well-known branch of business, but in consequence of a long life of industry, frugality, and attention. Sudden fortunes, indeed, are sometimes made in such places by what is called the trade oi speculation. The speculative merchant ex¬ ercises no one regular, established, or well- known branch of business. He is a corn merchant this year, and a wine merchant the next, and a sugar, tobacco, or tea merchant the year after. He enters into every trade when he foresees that it is likely to be more w than commonlv profitable, and he quits it E 2 52 when he foresees that its profits are likely to return to the level of other trades. His profits and losses, therefore, can bear no re¬ gular proportion to those of any one esta¬ blished and well-known branch of business. A bold adventurer may sometimes acquire a considerable fortune by two or three success¬ ful speculations; but is just as likely to lose one by two or three unsuccessful ones. This trade can be carried on nowhere but in great towns. It is only in places of the most ex¬ tensive commerce and correspondence, that the intelligence requisite for it can be had. The five circumstances above mentioned, though they occasion considerable inequali¬ ties in the wages of labour and profits of stock, occasion none in the whole of the advan¬ tages and disadvantages, real or imaginary, of the different employments of either. The na¬ ture of those circumstances is such, that they make up for a small pecuniary gain in some, and counterbalance a great one in others. In order, however, that this equality may take place in the whole of their advantages or disadvantages, three things are requisite, even where there is the most perfect free¬ dom. First, the employments must be well known and long established in the neigh¬ bourhood ; secondly, they must be in their ordinary, or what may be called their na¬ tural state ; and, thirdly, they must be the sole or principal employments of those who occupy them. First, This equality can take place only in those employments which are well known, and have been long established in the neigh¬ bourhood. Where all other circumstances are equal, wages are generally higher in new than in old trades. When a projector attempts to establish a new manufacture, he must at first entice his workmen from other employments by higher wages than they can either earn in their own trades, or than the nature of his work would otherwise require, and a consi¬ derable time must pass away before he can venture to reduce them to the common level. Manufactures for which the demand arises altogether from fashion and fancy, are con¬ tinually changing, and seldom "last long enough to be considered as old established manufactures. Those, on the contrary, for which the demand arises chiefly from use or necessity, are less liable to change, and the same form or fabric may continue in demand for whole centuries together. The wages of labour, therefore, are likely to be higher in manufactures of the former, than in those of the latter kind. Birmingham deals chieflv in manufactures of the former kind.; Shef¬ field in those of the latter; and the wages of labour in those two different places, ar e said to be suitable to this difference in the nature of their manufactures. I he establishment of any new manufac¬ Bo»k I. ture, of any new branch of commerce,' or of any new practice in agriculture, is always a speculation, from which the projector pro¬ mises himself extraordinary profits. These profits sometimes are very great, and some¬ times, more frequently perhaps, they are quite otherwise; but in general they bear no regular proportion to those of other old trades in the neighbourhood. If the project succeeds, they are commonly at first very high. W hen the trade or practice becomes thoroughly established and well known, the competition reduces them to the level of other trades. Secondly, This equality in the whole of the advantages and disadvantages of the dif¬ ferent employments of labour and stock, can take place only in the ordinary, or what may be called the natural, state of those employ¬ ments. The demand for almost every different species of labour is sometimes greater and sometimes less than usual. In the one case the advantages of the employment rise above, in the other they fall below the common level. The demand for country labour is greater at hay time and harvest than during the greater part of the year; and wages rise with the demand. In time of war, when forty or fifty thousand sailors are forced from the merchant service into that of the king, the demand for sailors to merchant ships ne¬ cessarily rises with their scarcity; and their wages upon such occasions commonly rise from a guinea and seven-and-twenty shil¬ lings, to forty shillings and three pounds a month. In a decaying manufacture, on the contrary, many workmen, rather than quit their old trade, are contented with smaller wages than would otherwise be suitable to the nature of their employment. The profits of stock vary with the price of the commodities in which it is employed. As the price of any commodity rises above the ordinary or average rate, the profits of at least some part of the stock that is employed in bringing it - to market, rise above their proper level, and as it foils they sink below it. All commodities are more or less liable to variations of price, but some are much more so than others. In all commodities which are produced by human industry, the quantity of industry annually employed is necessarily regulated by the annual demand, in such a manner that the average annual produce may, as nearly as possible, be equal to the average annual 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 same number of hands will annuallv work up very nearly the same quantity of linen and woollen cloth. The variations in the WAGES AND PROFIT Chap. X. IN DIFFERENT EMPLOYMENTS. 53 market price of such commodities, therefore, can arise only from some accidental variation in the demand. A public mourning raises the price of black cloth; but as the demand for most sorts of plain linen and woollen cloth is pretty uniform, so is likewise the price. But there are other employments in which the same quantity of industry will not always produce the same quantity of com¬ modities. 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 com¬ modities, therefore, varies not only with the variations of demand, but with the much greater and more frequent variations of quantity, and is consequently extremely fluc¬ tuating ; but the profit of some of the deal¬ ers must necessarily fluctuate with the price of the commodities. The operations of the speculative merchant are principally em¬ ployed about such commodities. He endea¬ vours to buy them up when he foresees that their price is likely to rise, and to sell them when it is likely to fall. Thirdly, This equality in the whole of the advantages and disadvantages of the different employments of labour and stock, can take place only in such as are the sole or principal employments of those who occupy them. When a person derives his subsistence from one employment, which does not occupy the greater part of his time, in the intervals of his leisure he is often willing to work at another for less wages than would otherwise suit the nature of the employment. There still subsists in many parts of Scot¬ land a set of people called Cotters or Cot¬ tagers, though they were more frequent some years ago than they are now. 1 They are a sort of out-servants of the landlords and farm¬ ers. The usual reward which they receive from their masters is a house, a small garden for pot-herbs, as much grass as will feed a cow, and perhaps an acre or two of bad arable land. When their master has occa¬ sion for their labour, he gives them, besides, two pecks of oatmeal a week, worth about sixteen pence sterling. During a great part of the year he has little or no occasion for their labour, and the cultivation of their own little possession is not sufficient to occupy the time which is left at their own disposal. When such occupiers were more numerous : than they are at present, they are said to oave been willing to give their spare time for i very small recompence to any body, and to lave wrought for less wages than other abourers. In ancient times they seem to lave been common all over Europe. In coun¬ ties ill-cultivated and worse inhabited, the greater part of landlords and farmers could not otherwise provide themselves with the ex¬ traordinary number of hands which country labour requires at certain seasons. The daily or weekly recompence which such labourers occasionally received from their masters, was evidently not the whole price of their labour. Their small tenement made a considerable part of it. This daily or weekly recom¬ pence, however, seems to have been consi¬ dered 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 won¬ derfully low. The produce of such labour comes fre¬ quently cheaper to market than would other¬ wise be suitable to its nature. Stockings in many parts of Scotland are knit much cheaper, than they can anywhere be wrought upon the loom. They are the work of ser¬ vants and labourers, who derive the principal part of their subsistence from some other employment. More than a thousand pair of Shetland stockings are annually imported into Leith, of which the price is from five pence to seven pence a pair. At Learwick, the small capital of the Shetland islands, ten pence a day, I have been assured, is a com¬ mon price of common labour. In the same islands, they knit 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 hired for other purposes. They earn but a very scanty subsistence, who endeavour to get their whole livelihood by either of those trades. In most parts of Scotland she is a good spinner who can earn twenty pence a week. 2 In opulent countries the market is gene¬ rally so extensive, that any one trade is suffi¬ cient to employ the whole labour and stock of those who occupy it. Instances of peo¬ ple’s living by one employment, and at the same time deriving some little advantage from another, occur chiefly in poor countries. The following instance, however, of some¬ thing of the same kind is to be found in the capital of a very rich one. There is no city in Europe, I believe, in which house-rent is dearer than in London, and yet I know no capital in which a furnished apartment can be hired so cheap. Lodging is not only much cheaper in London than in Paris; it is much cheaper than in Edinburgh of the same degree of goodness ; and what may seem ex¬ traordinary, the dearness of house-rent is the cause of the cheapness of lodging. The dearness of house-rent in London arises, not only from those causes which render it dear in all great capitals — the dearness of labour, the dearness of all the materials of building, 2 Linen yarn is now principally spun by means of machinery. E 3 1 Af^®sent this class is nearly extinct. 54 WAGES AND PROFIT Book I. which must generally be brought from a great distance, and above all the dearness of ground-rent, every landlord acting the part of a monopolist, and frequently exacting a higher rent for a single acre of bad land in a town, than can be had for a hundred of the best in the country; but it arises in part from the peculiar manners and customs of the people, which oblige every master of a family to hire a whole house from top to bot¬ tom. A dwelling-house in England means every thing that is contained under the same roof. In France, Scotland, and many other parts of Europe, it frequently means no more than a single 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 upon the ground-floor, and he and his family sleep in the garret; and he endea¬ vours to pay a part of his house-rent by letting the two middle stories to lodgers. He expects to maintain his family by his trade, and not by his lodgers. Whereas, at Paris 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 expense of the family. Part II. Inequalities occasioned by the Policy of Europe . Such are the inequalities in the whole of the advantages and disadvantages of the different employments of labour and stock, which the defect of any of the three requi¬ sites above mentioned must occasion, even where there is the most perfect liberty. But the policy of Europe, by not leaving things at perfect liberty, occasions other inequalities of much greater importance. It does this chiefly in the three following ways. First, by restraining the competition in some employments to a smaller number than would otherwise be disposed to enter into them; secondly, by increasing it in others beyond what it naturally would be; and, thirdly, by obstructing the free cir¬ culation of labour and stock, both from em¬ ployment to employment, and from place to place. First, the policy of Europe occasions a very important inequality in the whole of the advantages and disadvantages of the different employments of labour and stock, by restraining the competition in some em¬ ployments to a smaller number than might otherwise be disposed to enter into them. The exclusive privileges of corporations | Although there can be no doubt that corporation privileges are both oppressive and vexatious, still we cannot help thinking that their injurious operation has been considerably exaggerated by Dr. Smith. Competition is always free among the members of are the principal means it makes use of for this purpose. The exclusive privilege of an incorporated trade necessarily restrains the competition, in the town where it is established, to those who are free of the trade. 1 To have served an apprenticeship in the town, under a master properly qualified, is commonly the necessary requisite for obtaining this freedom. The by-laws of the corporation regulate sometimes the number of apprentices which any master is allowed to have, and almost always the number of years which each ap¬ prentice is obliged to serve. The intention of both regulations is to restrain the compe¬ tition to a much smaller number than might otherwise be disposed to enter into the trade. The limitation of the number of apprentices restrains it directly. A long term of ap¬ prenticeship restrains it more indirectly, but as effectually, by increasing the expense of education. In Sheffield no master cutler can have more than one apprentice at a time, by a by-law of the corporation. In Norfolk and Norwich no master weaver can have more than two apprentices, under pain of forfeiting five pounds a month to the king. No master hatter can have more than two apprentices anywhere in England, or in the English plantations, under pain of forfeiting five pounds a month, half to the king, and half to him who shall sue in any court of record. Both these regulations, though they have been confirmed by a public law of the kingdom, are evidently dictated by the same corporation spirit which enacted the by-law of Sheffield. The silk-weavers in London had scarce been incorporated a year when they enacted a by-law, restraining any master from having more than two apprentices at a time. It required a particular act of par¬ liament to rescind this by-law. Seven years seem anciently to have been, all over Europe, the usual term established for the duration of apprenticeships in the greater part of incorporated trades. All such incorporations were anciently called universities; which indeed is the proper Latin name for any incorporation whatever. The university of smiths, the university of . tailors, &c. are expressions which we com- ; monly meet with in the old charters of i ancient towns. When those particular in¬ corporations, which are now peculiarly called universities, were first established, the term j of years which it was necessary to study, in !; order to obtain the degree of master of arts, Ij appears evidently to have been copied from the term of apprenticeship in common every corporation ; and there are but few in which i their number is not so considerable as to preclude the chance of their forming any effectual combination for a rise of prices. Chap. X. IN DIFFERENT EMPLOYMENTS. 55 trades, of which the incorporations were much more ancient. As to have wrought seven years under a master properly qualified, was necessary, in order to entitle 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, teacher, or doctor (words anciently synony r mous) in the liberal arts, and to have scholars or apprentices (words likewise originally synonymous) to study under him. By the 5th of Elizabeth, commonly called the Statute of Apprenticeship, it was enacted, that no person should for the future exercise any trade, craft, or mystery at that time exercised in England, unless he had pre¬ viously served to it an apprenticeship ot seven years at least; and what before had been the by-law of many particular corpo¬ rations, became in England the general and public law of all the trades carried on in market towns. For though the words of the statute are very general, and seem plainly to include the whole kingdom, by interpre¬ tation 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 fre¬ quently not being sufficient to supply each with a particular set of hands. 1 By a strict interpretation of the words, too, the operation of this statute has been limited to those trades which were established in England before the 5th of Elizabeth, and has never been extended to such as have been introduced since that time. This limitation has given occasion to several distinctions which, considered as rules of police, appear as foolish as can well be imagined. It has been adjudged, for ex¬ ample, that a coachmaker can neither him¬ self make nor employ journeymen to make his coach wheels, but must buy them of a master wheelwright; this latter trade having been exercised in England before the 5th ot Elizabeth. But a wheelwright, though he has never served an apprenticeship to a coachmaker, may either himself make or employ journeymen to make coaches ; the trade of a coachmaker not being within the statute, because not exercised in England at the time when it was made. The manu¬ factures of Manchester, Birmingham, and Wolverhampton, are many of them, upon this account, not within the statute; not having » The Statute of- Apprenticeship was repealed in 1814, by the statute 54 Geo. Hi. cap. 96. This act did not, however, interfere with any of the existing rights, privileges, or by-laws, of the different legally been exercised in England before the 5th of Elizabeth. In France the duration of apprenticeships is different in different towns and in different trades. In Paris five years is the term re¬ quired in a great number; but before any person can be qualified to exercise the trade as a master, he must, in many of them, serve five y r ears more as a journeyman. During this latter term he is called the companion of his master, and the term itself is called his companionship. In Scotland there is no general law which regulates universally the duration of appren¬ ticeships. The term is different in different corporations. Where it is long, a part of it may generally be redeemed by paying a small fine. In most towns too a very small fine is sufficient to purchase the freedom of any corporation. The weavers of linen and hempen cloth, the principal manufactures of the country, as well as all other artificers subservient to them, wheelmakers, reelmakers, &c. may exercise their trades in any town corporate without paying any fine. In all towns corporate all persons are free to sell butcher’s meat upon any lawful day of the week. Three years is in Scotland a common term of apprenticeship, even in some very nice trades; and, in general, I know of no country in Europe in which corporation laws are so little oppressive. The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of a poor man lies in the strength and dexterity of his hands ; and to hinder him from em¬ ploying this strength and dexterity in what manner he thinks proper without injury to his neighbour, is a plain violation of this most sacred property. It is a manifest en croachment upon the just liberty both of the workman and of those who might be disposed to employ him. As it hinders the one from working at what he thinks proper, so it hinders the others from employing whom they think proper. To judge whether he is fit to be employed, may surely be trusted to the discretion of the employers whose inter¬ est it so much concerns. The affected anxiety of the lawgiver lest they should employ an improper person, is evidently as impertinent as it is oppressive. The institution of long apprenticeships can give no security that insufficient work¬ manship shall not frequently be exposed to public sale. When this is done it is gene¬ rally the effect of fraud, and not of inability *, and" the longest apprenticeship can give no constituted corporations ; but wherever these do not stand in the way, the formation of apprenticeships, and their duration, is now entirely left to be adjusted by the parties themselves. E 4 56 Boox I. WAGES security against fraud. Quite different re¬ gulations are necessary to prevent this abuse. The sterling mark upon plate, and the stamps upon linen and woollen cloth, give the pur¬ chaser much greater security than any statute of apprenticeship. He generally looks at these, but never thinks it worth while to inquire whether the workman had served a seven years’ apprenticeship. I he institution of long apprenticeships has no tendency to form young people to A journeyman who works by the piece is likely to be industrious, because he derives a benefit from every exertion of his industry. An apprentice is likely to be idle, and almost, always is so, because he has no immediate interest to be otherwise. In the inferior employments, the sweets of labour consist altogether in the recompence of la¬ bour. They who are soonest in a condition to enjoy the sweets of it, are likely soonest to conceive a relish for it, and to acquire the eaily habit of industry. A young man na¬ turally 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. Apprenticeships were altogether unknown to the ancients. The reciprocal duties of master and apprentice make a considerable article in every modern code. The Roman law is perfectly silent with regard to them. I know no Greek or Latin word (I might venture, I believe, to assert that there is none) which expresses the idea we now annex to tue word Apprentice, a servant bound to work at a particular trade for the benefit of a master, during a term of years, upon condition that the master shall teach him that trade. Long apprenticeships are altogether un¬ necessary. The arts, which are much supe¬ rior to common trades, such as those of making clocks and watches, contain no such mystrey as to require a long course of in¬ struction.. The first invention of such beauti¬ ful machines, indeed, and even that of some of the instruments employed in making them, must, no doubt, have been the work of deep thought and long time, and may justly be considered as among the happiest efforts of human ingenuity. But when both have been fairly invented and are well un¬ derstood, to explain to any young man, in the completest manner, how to apply the instruments and how to construct the ma¬ chines, cannot well require more than the lessons of a few weeks : perhaps those of a a few days might be sufficient. In the common mechanic trades, those of a few days might certainly be sufficient. The dexteiity of hand, indeed, even in common trades, cannot be acquired without much practice and experience. But a young man D PROFIT would practise with much more diligence and attention, if from the beginning he wrought as a journeyman, being paid in proportion to the little work which he could execute, and paying in his turn for the mate¬ rials which he might sometimes spoil through awkwardness and inexperience. His edu- cation would generally in this way be more euectual, and always less tedious and expen¬ sive. The master, indeed, would be a loser. He would lose all the wages of the appren¬ tice, which he now saves, for seven years together. In the end, perhaps, the apprentice himself would be a loser. In a trade so easily learnt he would have more competitors, and his wages, when he came to be a com¬ plete workman, would be much less than at piesent. dhe same increase of competition would reduce the profits of the masters as well as the wages of the workmen. The trades, the crafts, the mysteries, would all be losers. But the public would be a gainer, the work of all artificers coming in this way much cheaper to market. It is to prevent this reduction of price, and consequently of wages and profit, by restraining that free competition which would most certainly occasion it, that all corpor¬ ations, and the greater part of corporation laws, have been established. In order to erect a corporation, no other authority in ancient times was requisite in many parts of Europe, but that of the town corporate in which it was established. In England, indeed, a charter from the king was likewise necessary. But this prerogative of the crown seems to have been reserved rather for extort¬ ing money from the subject, than for the defence of the common liberty against such oppressive monopolies. Upon paying a fine to the king, the charter seems generally to have been readily granted; and when any particular class of artificers or traders thought proper to act as a corporation without a charter, such 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 privileges. 1 The immediate inspec¬ tion of all corporations, and of the by-laws which they might think proper to enact for their own government, belonged to the town corporate in which they were estab¬ lished ; 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. lhe government of towns corporate was altogether in the hands of traders and artifi¬ cers ; and it was the manifest interest of er y particular class of them to prevent the market from being over-stocked, as they commonly express it, with their own parti- 1 See Madox Firma Burgi, p. 26. See. Chap. X. IN DIFFERENT EMPLOYMENTS. 57 cular species of industry ; which is in reality to keep it always under-stocked. Each class was eager to establish regulations proper for this purpose, and, provided it was allowed to do so, was willing to consent that every other class should do the same. In conse¬ quence of such regulations, indeed, each class was obliged to buy the goods they had occasion for from every other within the town, somewhat dearer than they otherwise might have done. But in recompence, they were enabled to sell their own just as much dearer ; so that so far it was as broad as long, as they say; and in the dealings of the dif¬ ferent classes within the town with one another, none of them were losers by these regulations. But in their dealings with the country they were all great gainers; and in these latter dealings consists the whole trade which supports and enriches every town. Every town draws its whole subsistence, and all the materials of its industry, from the country. It pays for these chiefly in two ways : first, by sending back to the country a part of those materials wrought up and manufactured; in which case their price is augmented by the wages of the workmen, and the profits of their masters or immediate employers : secondly, by sending to it a part both of the rude and manufactured produce, either of other countries, or of distant parts of the same country, imported into the town ; in which case too the original price of those goods is augmented by the wages of the car¬ riers or sailors, and by the profits of the merchants who employ them. In what is gained upon the first of those two branches of commerce, consists the advantage which the town makes by its manufactures ; in what is gained upon the second, the advantage of its inland and foreign trade. The wages of the workmen, and the profits of their differ¬ ent employers, make up the whole of what is gained upon both. Whatever regulations, therefore, tend to increase those wages and profits beyond what they otherwise would be, tend to enable the town to purchase, with a smaller quantity of its labour, the produce of a greater quantity of the labour of the country. They give the traders and artifi¬ cers in the town an advantage over the land¬ lords, farmers, and labourers in the country, and break down that natural equality which would otherwise take place in the commerce which is carried on between them. The whole annual produce of the labour of the society is annually divided between those two different sets of people. By means of those regulations a greater share of it is given to the inhabitants of the town than would otherwise fall to them; and a less to those of the country. 1 Industry is not really, upon an average, better rewarded in towns than in the country ; but traders and manufacturers residing in a town have, as Dr. Smith has already explained, a greater field for the The price which the town really pays for the provisions and materials annually im¬ ported into it, is the quantity of manufactures and other goods annually exported from it. The dearer the latter are sold, the cheaper the former are bought. The industry of the town becomes more, and that of the country less advantageous. That the industry which is carried on in towns is, everywhere in Europe, more advan¬ tageous than that which is carried on in the country, without entering into any very nice computations, we may satisfy ourselves by one very simple and obvious observation. In every country of Europe we find, at least, a hundred people who have acquired great for¬ tunes from small beginnings by trade and manufactures, the industry which properly belongs to towns, for one who has done so by that which properly belongs to the country, the raising of rude produce by the improve¬ ment and cultivation of land. Industry, therefore, must be better rewarded, the wages of labour and the profits of stock must evi¬ dently be greater in the one situation than in the other. 1 But stock and labour na¬ turally seek the most advantageous employ¬ ment. They naturally, therefore, resort as much as they can to the town, and desert the country. The inhabitants of a town, being collected into one place, can easily combine together. The most insignificant trades carried on in towns have accordingly, in some place or other, been incorporated; and even where they have never been incorporated, yet the corporation spirit, the jealousy of strangers, the aversion to take apprentices, or to com¬ municate 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 by-laws. The trades which employ but a small number of hands, run most easily into such combinations. Half a dozen woolcombers, perhaps, are ne¬ cessary to keep a thousand spinners and weavers at w’ork. By combining not to take apprentices they can not only engross the employment, but reduce the whole manufac¬ ture into a sort of slavery to themselves, and raise the price of their labour much above what is due to the nature of their w r ork. The inhabitants of the country, dispersed in distant places, cannot easily combine to¬ gether. They have not only never been incorporated, but the corporation spirit never has prevailed among them. No apprentice¬ ship has ever been thought necessary to qua¬ lify for husbandry, the great trade of the country. After what are called the fine arts and the liberal professions, however, there is prosecution of their industry, or greater opportunities for making a fortune by the employment of a large capital. \ <58 WAGES AND PROFIT Book I. perhaps no trade which requires so great a variety of knowledge and experience. The innumerable volumes which have been writ¬ ten upon it in all languages, may satisfy us, that among the wisest and most learned nations, it has never been regarded as a mat¬ ter very easily understood. And from all those volumes we shall in vain attempt to collect that knowledge of its various and complicated operations, which is commonly possessed even by the common farmer; how contemptuously soever the very contemptible authors of some of them may sometimes affect to speak of him. There is scarce any com¬ mon mechanic trade, on the contrary, of which all the operations may not be as com¬ pletely and distinctly explained in a pam¬ phlet of a very few pages, as it is possible for words illustrated by figures to explain them. In the history of the arts, now publishing by the French academy of sciences, several of them are actually explained in this manner. The direction of operations, besides, which must be varied with every change of the weather, as well as with many other acci¬ dents, requires much more judgment and discretion than that of those which are al¬ ways the same or very nearly the same. Not only the art of the farmer, the ge¬ neral direction of the operations of hus¬ bandry, but many inferior branches of' country labour require much more skill and experience than the greater part of mechanic trades. The man who works upon brass and iron, works with instruments, and upon materials of which the temper is always the same, or very nearly the same. But the man who ploughs the ground with a team of horses or oxen, works with instruments of which the health, strength, and temper are very different upon different occasions. The condition of the materials which he works upon, too, is as 1 Whatever may have been the case formerly, the statement in the text is most certainly inapplicable at present. (1S3S.) Instead of its being true that the workmen employed in manufactures and commerce are less intelligent and acute than those employed in agriculture, the fact is distinctly and completely the reverse. The weavers, and other mechanics of Glasgow, Manchester, Birmingham, &c. possess far more general and useful information than is possessed by the agricultural labourers of any part of the empire. And this is really what a more unprejudiced inquiry into the subject would lead to anticipate. The various occupations in which the husbandman successively engages, their constant liability to be affected by so variable a power as the weather, and the perpetual change in the appearance of the objects which daily meet his eyes, and with which he is con¬ versant, occupy his attention, and render him a stranger to that ennui and desire for adventitious excitement which must ever be felt by those who are constantly engaged in burnishing the point of a pin, or in performing the same endless routine of precisely similar operations. This want of excitement cannot, however, be so cheaply or effectually gratified in any way as it may be by stimulating, that is, by cultivating the mental powers. Most workmen have no time for dissipation ; and though they had, the vvages of la¬ bour in old settled and densely peopled countries are too low, and the propensity to save and accumulate too powerful, to permit their generally seeking to divert themselves by indulging in riot and excess. variable as that of the instruments which he works with, and both require to be managed with much judgment and discretion. The common ploughman, though generally re¬ garded as the pattern of stupidity and igno¬ rance, is seldom defective in this judgment and discretion. He is less accustomed, in¬ deed, to social intercourse than the mechanic who lives in a town. His voice and lan¬ guage are more uncouth and more difficult to be understood by those who are not used to them. His understanding, however, being accustomed to consider a greater variety of objects, is generally much superior to that of the other, whose whole attention from morning till night is commonly occupied in performing one or two very simple oper¬ ations. How much the lower ranks of people in the country are really superior to those of the town, is well known to every man whom either business or curiosity has led to converse much with both . 1 In China and Indostan, accordingly, both the rank and the wages of country labourers are said to be superior to those of the greater part of artificers and manufacturers. They would, probably, be so everywhere, if corporation laws and the corporation spirit did not pre¬ vent it. The superiority which the industry of the towns has everywhere in Europe over that of the country, is not altogether owing to corporations and corporation laws. It is supported by many other regulations. The high duties upon foreign manufactures, and upon all goods imported by alien merchants, all tend to the same purpose. Corporation laws enable the inhabitants of towns to raise their prices, without fearing to be undersold by the free competition of their own country¬ men. Those other regulations secure them equally against that of foreigners / 2 The They are thus driven to seek for recreation in mental excitement; and the circumstances under which they are placed afford them every possible facility for gratifying themselves in this manner. By working together in considerable numbers they have what the agriculturists generally want, constant opportunities of discussing every topic of interest or importance ; they are thus gradually trained to habits of thinking and reflection ; their intellects are sharpened by the collision of conflicting opinions ; and a small contri¬ bution from each individual enables them to obtain supplies of newspapers and of the cheaper class of periodical publications. But whatever difference of opinion may exist respecting the cause there can be no doubt of the fact, that the intelligence of manu¬ facturing and commercial workmen has increased according as their numbers have increased, and as their employments have been more and more sub¬ divided. We doubt whether there be any good grounds for supposing that they were ever less in¬ telligent than the agriculturists ; though, whatever may have been the case a century or two since, few will now venture to affirm that they are inferior to them in intellectual acquirements, or that they are mere machines without sentiment or reason. 2 These regulations have not been productive of any real advantage to the tow r ns ; they have attracted a greater portion of capital and industry to certain employments than what properly belonged to them ; but as competition has been always free among the inhabitants of the towns, it is quite impossible they Chap. X. IN DIFFERENT EMPLOYMENTS. 59 enhancement of price occasioned by both is 1 everywhere 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 fitness to enter into combinations 1 ; and the clamour and so¬ phistry of merchants and manufacturers easily persuade them that the private interest of a part, and of a subordinate part of the society, is the general interest of the whole. In Great Britain the superiority of the industry of the towns over that of the coun¬ try, seems to have been greater formerly than in the present times. The wages of country labour approach nearer to those of manufacturing labour, and the profits of stock employed in agriculture to those of trading and manufacturing stock, than they are said to have done in the last century, or in the beginning of the present. This change may be regarded as the necessary, though very late consequence of the extra¬ ordinary encouragement given to the in¬ dustry of the towns. The stock accumulated in them comes in time to be so great, that it can no longer be employed with the an¬ cient profit, in that species of industry which is peculiar to them. That industry has its limits like every other ; and the increase of stock, by increasing the competition, neces¬ sarily reduces the profit. The lowering of profit in the town forces out stock to the country, where, by creating a new demand for country labour, it necessarily raises its wages. It then spreads itself, if I may say so, over the face of the land, and by being employed in agriculture is, in part, restored to the country, at the expense of which, in a great measure, it had originally been accu¬ mulated in the town. That everywhere in Europe the greatest improvements of the country have been owing to such overflow¬ ings of the stock originally accumulated in the towns, I shall endeavour to show T here¬ after ; and at the same time to demonstrate, that though some countries have, by this course, attained to a considerable degree of opulence, it is, in itself, necessarily slow, uncertain, liable to be disturbed and inter¬ rupted by innumerable accidents, and in every respect contrary to the order of nature and of reason. The interests, prejudices, laws and customs which have given occasion to it, I shall endeavour to explain as fully and distinctly as I can in the third and fourth books of this inquiry. People of the same trade seldom meet to¬ gether, even for merriment and diversion, can have raised their profits sensibly above the common and ordinary rate of profit in the country at large. i Had Dr. Smith witnessed the proceedings that have taken place since 1791 with respect to the corn laws, he would perhaps, have somewhat modified this statement.. but the conversation ends in a conspiracy against the public, or -in some contrivance to raise prices . 2 It is impossible, indeed, to prevent such meetings, by any law which either could be executed, or would be con¬ sistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such as¬ semblies; much less to render them necessary. A regulation which obliges all those of the same trade in a particular town to enter their names and places of abode in a public register, facilitates such assemblies. It con¬ nects individuals who might never otherwise be known to one another, and gives every man of the trade a direction where to find every other man of it. A regulation which enables those of the same trade to tax themselves in order to pro¬ vide for their poor, their sick, their widows and orphans, by giving them a common interest to manage, renders such assemblies necessary. An incorporation not only renders them necessary, but makes the act of the majority binding upon the whole. In a free trade an effectual combination cannot be esta¬ blished but by the unanimous consent of every single trader, and it cannoi last longer than every single trader continues of the same mind. The majority of a corporation can enact a by-law with proper penalties, which will limit the competition more ef¬ fectually and more durably than any volun¬ tary combination whatever. The pretence that corporations are neces¬ sary for the better government of the trade, is without any foundation. The real and effectual discipline which is exercised over a workman, is not that of his corporation, but that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence. An exclusive corporation necessarily weakens the force of this discipline. A particular set of workmen must then be employed, let them behave well or ill. It is upon this account that in many large incorporated towns no tolerable workmen are to be found even in some of the most necessary trades. If you would have your work tolerably exe¬ cuted, it must be done in the suburbs, where the workmen, having no exclusive privilege, have nothing but their character to depend upon; and you must then smuggle it into the town as well as you can. It is in this manner that the policy of Europe, by restraining the competition in 2 But it is next to impossible for any such con¬ trivance to have the effect supposed. The moment a combination to force prices up to an artificial elevation begins to take effect, the interest of indi¬ viduals to secede from it becomes too great to allow it to be maintained for any considerable period. 60 WAGES AND PROFIT Book I some employments to a smaller number than would otherwise be disposed to enter into them, occasions a very important inequality in the whole of the advantages and disad¬ vantages of the different employments of labour and stock. Secondly, The policy of Europe, by in¬ creasing the competition in some employ¬ ments beyond what it naturally would be, occasions another inequality of an opposite kind in the whole of the advantages and disadvantages of the different employments of labour and stock. It has been considered as of so much im¬ portance that a proper number of young people should be educated for certain pro¬ fessions, tnat sometimes the public and sometimes the piety of private founders have established many pensions, scholarships, ex¬ hibitions, bursaries, &c. for this purpose, 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 church¬ men is paid for m this manner. \ T ery few of them are educated altogether at their own expense. _ The long, tedious, and ex¬ pensive education, therefore, of those who are, will not always procure them a suitable reward, the church being crowded with people who, in order to get employment, are willing to accept of a much smaller recom- pence than what such an education would otherwise have entitled them to; and in this manner the competition of the poor takes away the reward of the rich. It would be indecent, no doubt, to compare either a curate or a chaplain with a journeyman in any common trade. The pay of a curate or chaplain, however, may very properly be considered as of the same nature with the wages of a journeyman. They are, all three, paid for their work according to the contract which they may happen to make with their respective superiors. Till after the middle of the fourteenth century, live merks, con¬ taining about as much silver as ten pounds of our present money, was in England the usual pay of a curate or a stipendiary parish piiest, as we find it regulated by the decrees of several different national councils. At the same period four pence a day, containing the same quantity of silver as a shilling of our present money, was declared to be the pay of a master mason, and three pence a day, equal to nine pence of our present money, that of a journeyman mason. 1 2 The wages of both these labourers, therefore, supposing them to have been constantly employed, were much superior to those of 1 See the statute of labourers, 25 Ed. III. • 2 By an act passed in 1817 (57 Geo. III. cap. 99.), bishops are empowered to license curates and as- sign them salaries, which are in no case to be less a year, and which are to increase up to X150 a year, according as the population of the the curate. The wages of the master mason, supposing him to have been without employ¬ ment one-third of the year, would have fully equalled them. By the 12th of Queen Anne, c. 12, it is declared, u That whereas for want of sufficient maintenance and encouragement to curates, the cures have in several places been meanly supplied, the bishop is, there¬ fore, empowered to appoint by writing under his hand and seal a sufficient certain stipend or allowance, not exceeding fifty and not less than twenty pounds a year.” Forty pounds a year is reckoned at present very good pay for a curate, and notwithstanding this act of parliament, there are many curacies under twenty pounds a year.2 There are journey¬ men shoemakers in London who earn forty pounds a year, and there is scarce an indus¬ trious workman of any kind in that metro¬ polis who does not earn more than twenty. This last sum indeed does not exceed what is frequently earned by common labourers in many country parishes. Whenever the law has attempted to regulate the wages of workmen, it has always been rather to lower them than to raise them. But the law has upon many occasions attempted to raise the wages of curates, and for the dignity of the church, to oblige the rectors of parishes to give them more than the wretched mainte¬ nance which they themselves might be willing to accept of. And in both cases the law seems to have been equally ineffectual, and has never either been able 'to raise the wages of curates, or to sink those of labour¬ ers to the degree that was intended; because it has never been able to hinder either the one from being willing to accept of less than the legal allowance, on account of the in¬ digence 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 ecclesias¬ tical dignities support the honour of the church, notwithstanding the mean circum¬ stances of some of its inferior members. The respect paid to the profession too makes some compensation even to them for the meanness of their pecuniary recompence. In England, and in all Roman Catholic countries, the lottery of the church is in leality much more advantageous than is ne¬ cessary. The example of the churches of Scotland, of Geneva, and of several other protestant churches, may satisfy us that in so creditable a profession, in which educa¬ tion is so easily procured, the hopes of much parish increases in magnitude. But though this act has certainly made a very decided improvement in the condition of curates, still it may be doubted, for the reasons stated by Dr. Smith, whether its pro¬ visions be not sometimes defeated by a private arrangement between them and their employers. IN DIFFERENT EMPLOYMENTS. 61 Chap. X. i more moderate benefices will draw a suffi¬ cient number of learned, decent, and re¬ spectable men into holy orders. 1 In professions in which there are no be¬ nefices, such as law and physic, if an equal proportion of people were educated at the public expense, the competition would soon be so great, as to sink very much their pe¬ cuniary reward. It might then not be worth any man’s while to educate his son to either of those professions at his own expense. They would be entirely abandoned to such as had been educated by those public chari¬ ties, whose numbers and necessities would oblige them in general to content themselves with a very miserable recompence, to the entire degradation of the now respectable professions of law and physic. That unprosperous race of men, commonly called men of letters, are pretty much in the situation which lawyers and physicians pro¬ bably would be in upon the foregoing sup¬ position. In every part of Europe the greater part of them have been educated for the church, but have been hindered by dif¬ ferent reasons from entering into holy orders. They have generally, therefore, been edu¬ cated at the public expense, and their num¬ bers are everywhere so great, as commonly to reduce the price of their labour to a very paltry recompence. Before the invention of the art of printing, the only employment by which a man of letters could make any thing by his talents, was that of a public or private teacher, or by communicating to other people the curious and useful knowledge which he had ac¬ quired himself: and this is still surely a more honourable, a more useful, and in general even a more profitable employment, than that other, of writing for a bookseller, to which the art of printing has given occasion. The time and study, the genius, knowledge, and application requisite to qualify an emi¬ nent teacher of the sciences, are at least equal to what is necessary for the greatest practitioners in law and physic. But the usual reward of the eminent teacher bears no proportion to that of the lawyer or phy¬ sician ; because the trade of the one is crowded with indigent people, who have been brought up to it at the public expense; whereas those of the other two are incum¬ bered with very few who have not been edu¬ cated at their own. The usual recompence, however, of public and private teachers, small as it may appear, would undoubtedly be less than it is, if the competition of those 1 An act passed in 1812, raised the stipends of such Scotch clergymen as were below J&150 a year, exclusive of their houses and glebes, to that sum. It seems, however, to be generally admitted that such an income is inadequate to support a clergyman in his proper station ; and that the minimum stipend, exclusive of glebes and houses, should be raised to -£*250 or ^*300 a year. yet more indigent men of letters, who write for bread, was not taken out of the market. Before the invention of the art of printing, a scholar and a beggar seem to have been terms very nearly synonymous. The different governors of the universities, before that time, appear to have often granted licences to their scholars to beg. In ancient times, before any charities of this kind had been established for the edu¬ cation of indigent people to the learned pro¬ fessions, the rewards of eminent teachers ap¬ pear to have been much more considerable. Isocrates, in what is called his discourse against the sophists, reproaches the teachers of his own times with inconsistency. “ They make the most magnificent promises to their scholars,” says he, “ and undertake to teach them to be wise, to be happy, and to be just, and in return for so important a service they stipulate the paltry reward of four or five mina?. They who teach wisdom,” continues he, “ ought certainly to be wise themselves ; but if any man were to sell such a bargain for such a price, he would be convicted of the most evident folly.” He certainly does not mean here to exaggerate the reward, and we may be assured that it was not less than he represents it. Four minae were equal to thirteen pounds, six shillings and eight pence; five minae to sixteen pounds thirteen shillings and four pence. 2 Something not less than the largest of these two sums, therefore, must at that time have been usu¬ ally paid to the most eminent teachers at Athens. Isocrates himself demanded ten minae, 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 thousand minae, or 3333/. 6s. 8 d. A thousand minae, accordingly, is said by Plu¬ tarch in another place, to have been his di- dactron, or usual price of teaching. Many other eminent teachers in those times ap¬ pear to have acquired great fortunes. Gor- gias 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 2 Dr. Smith has followed the estimateof Arbuthnot, who supposes the Attic mina to have been equivalent to .£*3 6s. 8 d. There are very cogent reasons, how¬ ever, for supposing that this estimate is greatly exaggerated, and that very little reliance can be placed on Arbuthnot’s Tables. See Gamier, Ricliesse des Nations, tome v. p. 408, and the article Money in the Encyclopaedia Britannica. 62 WAGES AND PR0FI1 Book I. that of Hippias and Protagoras, two other eminent teachers of those times, is repre¬ sented by Plato as splendid even to ostenta¬ tion. Plato himself is said to have lived with a good deal of magnificence. Aristotle, after having been tutor to Alexander, and most munificently rewarded, as it is universally agreed, both by him and his father Philip, thought it worth while, notwithstanding, to return to Athens, in order to resume the teaching of his school. Teachers of the sciences were probably in those times less common than they came to be in an age or two afterwards, when the competition had probably somewhat reduced both the price of their labour and the admiration for their persons. The most eminent of them, how¬ ever, appear always to have enjoyed a de¬ gree of consideration much superior to any of the like profession in the present times. The Athenians sent Carneades the academic, and Diogenes the stoic, upon a solemn em¬ bassy to Rome; and though their city had then declined from its former grandeur, it was still an independent and considerable republic. Carneades, too, was a Babylonian by birth ; and as there never was a people more jealous of admitting foreigners to public offices than the Athenians, their consideration for him must have been very great. This inequality is, upon the whole, per¬ haps rather advantageous than hurtful to the public. It may somewhat degrade the pro¬ fession of a public teacher ; but the cheap¬ ness of literary education is surely an advan¬ tage which greatly overbalance-s this trifling inconveniency. The public too, might de¬ rive still greater benefit from it, if the con¬ stitution 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. Thirdly , The policy of Europe, by ob¬ structing the free circulation of labour and stock both from employment to employment, and from place to place, occasions in some cases a very inconvenient inequality in the whole of the advantages and disadvantages of their different employments. The statute of apprenticeship obstructs the free circulation of labour from one em¬ ployment to another, even in the same place. The exclusive privileges of corporations ob¬ struct it from one place to another, even in the same employment. It frequently happens that while high wages are given to the workmen in one ma¬ nufacture, those in another are obliged to content themselves with bare subsistence. The one is in an advancing state, and has, therefore, a continual demand for new hands: the other is in a declining state, and the superabundance of hands is continually in¬ creasing. Those two manufactures may sometimes be in the same town, and same- times in the same neighbourhood, without being able to lend the least assistance to one another. The statute of apprenticeship may oppose it in the one case, and both that and an exclusive corporation in the other. In many different manufactures, however, the operations are so much alike, that the work¬ men could easily change trades with one another, if those absurd laws did not hinder them. The arts of weaving plain linen and plain silk, for example, are almost entirely the same. That of weaving plain woollen is somewhat different; but the difference is so insignificant, that either a linen or a silk weaver might become a tolerable workman in a very few days. If any of those three capital manufactures, therefore, were decay¬ ing, the workmen might find a resource in one of the other two which was in a more prosperous condition, and their wages would neither rise too high in the thriving, nor sink too low in the decaying manufacture. The linen manufacture indeed is, in England, by a particular statute, open to every body; but as it is not much cultivated through the greater part of the country, it can afford no general resource to the workmen of other decaying manufactures, who, wherever the statute of apprentice¬ ship takes place, have no other choice but either to come upon the parish, or to work as common labourers, for which, by their habits, they are much w*orse qualified than for any sort of manufacture that bears any resem¬ blance to their own. They generally, there¬ fore, choose to come upon the parish. Whatever obstructs the free circulation of labour from one employment to another, ob¬ structs that of stock likewise ; the quantity of stock which can be employed in any branch of business depending very much upon that of the labour which can be employed in it. Corporation laws, however, give less obstruc¬ tion to the free circulation 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 for a poor artificer to obtain that of working in it. The obstruction which corporation laws give to the free circulation of labour is com¬ mon, I believe, to every part of Europe. That which is given to it 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 is the labour of artificers and manufacturers only of which the free circulation is ob¬ structed by corporation laws. The difficulty of obtaining settlements obstructs even that of common labour. It may be worth while to give some account of the rise, progress, IN DIFFERENT EMPLOYMENTS. 63 Chap. X. and present state of this disorder, the greatest, perhaps, of any in the police of England. When by the destruction of monasteries the poor had been deprived of the charity of those religious houses, after some other ineffectual attempts for their relief, it was enacted by the 43d of Elizabeth, c. 2., that every parish should be bound to provide for its own poor ; and that overseers of the poor should be annually appointed, who, with the churchwardens, should raise by a parish rate competent sums for this purpose. By this statute, the necessity of providing for their own poor was indispensably imposed upon every parish. Who were to be consi¬ dered as the poor of each parish, became, therefore, a question of some importance. This question, after some variation, was at last determined by the 13th and 14th of Charles II., when it was enacted, that forty days’ undisturbed residence should gain any person a settlement in any parish ; but that within that time it should be lawful for two justices of the peace, upon complaint made by the churchwardens or overseers of the poor, to remove any new inhabitant to the parish where he was last legally settled, unless he either rented a tenement of ten pounds a year, or could give such security for the discharge of the parish where he was then living, as those justices should judge sufficient. Some frauds, it is said, were committed in consequence of this statute; parish officers sometimes bribing their own poor to go clandestinely to another parish, and by keep¬ ing themselves concealed for forty days to gain a settlement there, to the discharge of that to which they properly belonged. It was enacted, therefore, by the 1st of James II. that the forty days’ undisturbed residence of any person necessary to gain a settlement, should be accounted only from the time of his delivering notice in writing, of the place of his abode and the number of his family, to one of the churchwardens or overseers of the parish where he came to dwell. But parish officers, it seems, were not always more honest with regard to their own, than they had been with regard to other parishes, and sometimes connived at such intrusions, receiving the notice, and taking no proper steps in consequence of it. As every person in a parish, therefore, was supposed to have an interest to prevent as much as possible their being burdened by such intruders, it was further enacted by the 3d of William III. that the forty days’ re¬ sidence 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, by continuing forty days after publication of notice in writing, is very sel¬ dom obtained; and the design of the acts is not so much for gaining of settlements, as for the avoiding of them, by persons coming into a parish clandestinely: for the giving of notice is only putting a force upon the parish to remove. But if a person’s situation is such, that it is doubtful whether he is actually removable or not, he shall by giving of notice compel the parish either to allow him a settlement uncontested, by suf¬ fering him to continue forty days ; or, by removing him, to try the right.” This statute, therefore, rendered it almost impracticable for a poor man to gain a new settlement in the old way, by forty days’ inhabitancy. But that it might not appear to preclude altogether the common people of one parish from ever establishing them¬ selves with security in another, it appointed four other ways by which a settlement might be gained without any notice delivered or published. The first was, by being taxed to parish rates and paying them ; the second, by being elected into an annual parish office, and serving in it a year ; the third, by serv¬ ing an apprenticeship in the parish; the fourth, by being hired into service there for a year, and continuing in the same service during the whole of it. Nobody can gain a settlement by either of the two first ways, but by the public deed of the whole parish, who are too well aware of the consequences to adopt any new comer who has nothing but his labour to support him, either by taxing him to parish rates, or by electing him into a parish office. No married man can w r ell gain any settle¬ ment in either of the two last ways. An apprentice is scarce ever married; and it is expressly enacted, that no married servant shall gain any settlement by being hired for a year. The principal effect of introducing settlement by service, has been to put out in a great measure the old fashion of hiring for a year, which before had been so customary in England, that even at this day, if no par¬ ticular term is agreed upon, the law intends that every servant is hired for a year. But masters are not always willing to give their servants a settlement by hiring them in this manner ; and servants are not always wil¬ ling to be so hired, because, as every last settlement discharges all the foregoing, they might thereby lose their original settlement in the places of their nativity, the habitation of their parents and relations. No independent workman, it is evident, whether labourer or artificer, is likely to gain any new settlement either by appren¬ ticeship or by service. When such a person, therefore, carried his industry to a new parish, he was liable to be removed, how healthy and industrious soever, at the caprice of any churchwarden or overseer, unless he either 64 WAGES AND PROFIT rented a tenement of ten pounds a year, a thing impossible tor one who has nothing but his labour to live by; or could give such security for the discharge of the parish as two justices of the peace should judge sufficient. What security they shall require, indeed, is left altogether to their discretion ; but they cannot well require less than thirty pounds, it having been enacted, that the pur¬ chase 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 this is a secu¬ rity which scarce any man who lives by labour can give ; and much greater security is fre quently demanded. In order to restore in some measure that free circulation of labour which those differ¬ ent statutes had almost entirely taken a wav, the invention of certificates was fallen upon. By the 8th and 9th of William III. it was enacted, that if any person should bring a certificate from the parish where he was last legally settled, subscribed by the church¬ wardens and overseers of the poor, and allowed by two justices of the peace, that every other parish should be obliged to re¬ ceive him ; that he should not be removable merely upon account of his being likely to become chargeable, but only upon his be¬ coming actually chargeable, and that then the parish which granted the certificate should be obliged to pay the expense both of his maintenance and of his removal. And in order to give the more perfect security to the parish where such certificated man should come to reside, it was further enacted by the same statute, that he should gain no settle¬ ment there by any means whatever, except either by renting a tenement of ten pounds a year, or by serving upon his own account in an annual parish office for one whole year ; and consequently neither by notice, nor by ser¬ vice, nor by apprenticeship, nor by paying parish rates. By the 12th of Queen Anne too, stat. 1. c. 18., it was further enacted, that neither the servants nor apprentices of suc h certificated man should gain any settle¬ ment in the parish where he resided under such certificate. How far this invention has restored that fiee ciiculation of labour which the preced¬ ing statutes had almost entirely taken away, we may learn from the following very judi¬ cious observation of Doctor Burn. “ It is obvious,” says he, “that there are divers good reasons for requiring certificates with persons coming to settle in any place; namely, that persons residing under them can gain no settlement, neither by appren¬ ticeship, nor by service, nor by giving notice, 1 The act of William III., which obliged a poor Book I. nor by paying parish rates; that they can settle neither apprentices nor servants • that if they become chargeable, it is certainly known whither to remove them, and the parish shall be paid for the removal, and for their maintenance in the mean time • and that if they fall sick, and cannot be removed the parish which gave the certificate must maintain them; none of all which can be without a certificate. Which reasons will hold proportionably for parishes not grant¬ ing certificates in ordinary cases; for it is far more than an equal chance, but that they . ,lave tl,e certificated persons again, and in a worse condition.” The moral of this observation seems to be, that certificates ought always to be required by the parish where any poor man comes to reside, and that they ought very seldom to be granted by that which he proposes to leave. “ There is somewhat 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 offi¬ cer to imprison a man as it were for life • however inconvenient it may be for him to continue at that place where he has had the misfortune to acquire what is called a settle¬ ment, or whatever advantage he may propose to himself by living elsewhere.” 1 Though a certificate carries along with it no testimonial of good behaviour, and certi¬ fies nothing but that the person belongs to the parish to which he really does belong, it is altogether discretionary in the parish offi¬ cers either to grant or to refuse it. A man¬ damus was once moved for, says Doctor Burn, to compel the churchwardens and overseers to sign a certificate, but the Court ot King’s Bench rejected the motion as a very strange attempt. The very unequal price of labour which we frequently find in England in places at no great distance from one another, is pro¬ bably owing to the obstruction which the law of settlements gives to a poor man who would carry his industry from one parish to another without a certificate. A single man, indeed, who is healthy and industrious, may sometimes reside by sufferance 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 mfin should afterwards marry, he would generally be removed likewise. 'The scarcity of hands in one parish, therefore, cannot always be relieved by their super¬ abundance in another, as it is constantly in Scotland, and, I believe, in all other countries where there is no difficulty of settlement. In such countries, though wages may sometimes nian to ehe*^ I “W "V paH / h or *«“ & 0 ™ * P ? ns VT ^pealed in 1795 ; and it w™ at the P| ac ? of their last the same time declared that no poor persons should able* sett * ement > un bl they actually became charge- IN DIFFERENT EMPLOYMENTS. Chat. X. rise a little in the neighbourhood of a great town, or wherever else there is an extraor¬ dinary demand for labour, and sink gradually as the distance from such places increases, till they fall back to the common rate of the country; yet we never meet with those sud¬ den and unaccountable differences in the wages of neighbouring places which we sometimes find in England, where it is often more difficult for a poor man to pass the arti¬ ficial boundary of a parish, than an arm of the sea or a ridge of high mountains, natural boundaries which sometimes separate very distinctly different rates of wages in other countries. To remove a man who has committed no misdemeanour from the parish where he chooses to reside, is an evident violation of natural liberty and justice. The common people of England, however, so jealous of their liberty, but like the common people of most other countries, never rightly under¬ standing wherein it consists, have now for more than a century together suffered them¬ selves to be exposed to this oppression with¬ out a remedy. Though men of reflection, too, 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 a poor man in England of forty years of age, I will venture to say, who has not in some part of his life felt himself most cruelly op¬ pressed by this ill-contrived law of settle¬ ments. * I shall conclude this long chapter with observing, that though anciently it was usual to rate wages, first by general laws extending over the whole kingdom, and afterwards by particular orders of the justices of peace in every particular county, both these practices have now gone entirely into disuse. “ By the experience of above four hundred years,” says Doctor Burn, “ it seems time to lay aside all endeavours to bring under strict re¬ gulations wdiat in its own nature seems inca¬ pable of minute limitation ; for if all persons in the same kind of work were to receive equal wages, there would be no emulation, and no room left for industry or inge¬ nuity.” Particular acts of Parliament, however, still attempt sometimes to regulate wages in particular trades and in particular places. 1 f)r. Smith has been accused of exaggerating the pernicious effects of the laws respecting settlements, j and the charge is perhaps, to a certain extent, well founded. But notwithstanding the improvement effected in these laws by the act of 1795, abolishing certificates, and preventing the forcible removal of the poor until they actually become chargeable, they continued to give rise to a vast deal of litigation. The expenses of actions at law regarding settlements f and removals, previously to the change in the poor laws in 1834, were seldom less than from .£300,000 to 6f> Thus the 8th of George III. prohibits under heavy penalties, all master tailors in London, and five miles round it, from giving, and their workmen from accepting, more than two shillings and seven-pence half¬ penny a day, except in the case of a general mourning. Whenever the legislature at¬ tempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regu¬ lation, therefore, is in favour of the work¬ men, it is always just and equitable; but it is sometimes otherwise when in favour of the masters. Thus the law which obliges the masters in several different trades to pay their workmen in money and not in goods, is quite just and equitable. It imposes no real hardship upon the masters; it only obliges them to pay that value in money, which they pretended to pay, but did not always really pay, in goods. This law is in favour of the workmen; but the 8th of George III. is in favour of the masters. W hen masters combine together in order to reduce the wages of their workmen, thev commonly enter into a private bond or agreement, not to give more than a certain wage under a certain penalty. Were the workmen to enter into a contrary combin¬ ation of the same kind, not to accept of a certain wage under a certain penalty, the law would punish them very severely; and if it dealt impartially, it would treat the masters in the same manner. But the 8th of George III. enforces by law that very regulation which masters sometimes attempt to establish by such combinations. The complaint of the workmen, that it puts the ablest and most industrious upon the same footing with an ordinary workman, seems perfectly well founded. 2 In ancient times, too, it was usual to at¬ tempt to regulate the profits of merchants and other dealers, by rating the price both of provisions and other goods. The assize of bread is, so far as I know, the only rem¬ nant of this ancient usage. Where there is an exclusive corporation, it may, perhaps, be proper to regulate the price of*the first ne¬ cessary of life; but where there is none, the competition will regulate it much better than any assize. "1 he method of fixing the assize of bread, established by the 31st of George II., could not be put in practice in Scotland, on account of a defect in the law; its execution depending upon the office of clerk of the market, which does not exist •£330,000 a year ! So long indeed as a svstem of compulsory provision for the support of the poor exists, parishes will naturally be exceedingly averse from allowing a poor man' to obtain a settlement, and will be disposed to throw every obstacle in his way. 2 These, and all other laws for the regulation of wages, were repealed by the 5 Geo. IV. cap. 95.: masters and workmen may now enter into voluntary combinations lor the purpose of depressing or raising wages. F jm ** Co RENT OF LAND. Book I. there. This defect was not remedied till the 3d of George III. The want of an assize occasioned no sensible inconveniencv, and the establishment of one, in the few places where it has yet taken place, has pro¬ duced no sensible advantage. In the greater part of the towns of Scotland, however, there is an incorporation of bakers who claim exclusive privileges, though they are not very strictly guarded. 1 The proportion between the different rates both of wages and profit in the different employments of labour and stock, seems not to be much affected, as has already been observed, by the riches or poverty, the ad¬ vancing, stationary, or declining state of the society. Such revolutions in the public welfare, though they affect the general rates both of wages and profit, must in the end affect them equally in all different employ¬ ments. The proportion between them, there¬ fore, must remain the same, and cannot well be altered, at least for any considerable time, by any such revolutions. CHAP. XI. Of the Rent of Land. 2 Rent, considered as the price paid for the use of land, is naturally the highest which the tenant can afford to pay in the actual circumstances of the land. In adjusting the terms of the lease, the landlord endeavours to leave him no greater share of the produce than what is sufficient to keep up the stock from which he furnishes the seed, pays the labour, and purchases and maintains the cattle and other instruments of husbandly, together with the ordinary profits of farming stock in the neighbourhood. This is evi¬ dently the smallest share with which the tenant can content himself without being a loser, and the landlord seldom means to leave him any more. Whatever part of the 1 The laws relating to the assize and price of bread in London and its environs, were repealed by a local act passed in 1815 (55 Geo III. cap. 19.). And those relating to the assize and price of bread out of London, are now very rarely acted upon. 2 The variety and interest of its details and disquisitions render this chapter well worthy of an attentive perusal ; but, considered as an exposition ot the nature, origin, and causes of rent, it is alto¬ gether defective. The fundamental position laid down by Dr. Smith, that there are certain species of produce that aiways yield rent, is contradicted by the widest and most comprehensive experience. Were such the case, rents would always exist, whereas they are uniformly unknown in the earlier stages of society. The truth is, that rent is entirely a consequence of the decreasing productiveness of the soils successively brought under cultivation as society advances, or rather of the decreasing productiveness ol the capitals successively applied to them. It is vf VeJ i ieart ^ newly settled countries, such as New Holland, Illinois, or Indiana, nor in any country w here none but the best of the good soils are cultivated. It only begins to appear when cultivation bas been extended to inferior lands ; and it increases according to the extent to which they are brought produce, or, what is the same thing, what¬ ever 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 frequently the ignorance, of the land¬ lord, makes him accept of somewhat less than this portion; and sometimes too, though more rarely, the ignorance of the tenant makes him undertake to pay some¬ what more, or to content himself with some¬ what less than the ordinary profits of farming stock in the neighbourhood. This portion, however, may still be considered as the natural rent of land, or the rent for which it is naturally meant that land should for the most part be let. The rent of land, it may be thought, is frequently no more than a reasonable profit or interest for the stock laid out by the land¬ lord upon its improvement. This, no doubt, may be partly the case upon some occasions, for it can scarce ever be more than partly the case. 3 The landlord demands a rent even for unimproved land, and the supposed in¬ terest or profit upon the expense of improve¬ ment is generally an addition to this original rent. Those improvements, besides, are not always made by the stock of the landlord, but sometimes by that of the tenant. When the lease comes to be renewed, however, the landlord commonly demands the same aug¬ mentation of rent as if they had been all made by his own. He sometimes demands rent for what is altogether incapable of human improvement. Kelp is a species of sea-weed, which, when burnt, yields an alkaline salt, useful for mak¬ ing glass, soap, and for several other pur¬ poses. It grows in several parts of Great Britain, particularly in Scotland, upon such rocks only as lie within the high water mark, which are twice every day covered with the sea, and of which the produce, therefore, was under tillage, and diminishes according as their culture is relinquished. Neither is it true, as is assumed in every part of the Wealth of Nations, that rent enters into and forms a constituent part of the cost or price of raw produce ; for that is determined by the cost of producing that portion of the required supply that is raised under the most unfavourable circumstances, or by the agency of the capital last applied to the land ; and it has been shown over and over again that neither this capital, nor its produce ever pays any rent. But the reader is referred for a lull exposition of what appear to be the true doctrines with respect to rent, to the note on that subject at the end of the volume. a The rent of land, properly so called, is the sum paid lor the use ot the natural and inherent powers ot the soil, and is entirely distinct from the sum paid on account ot buildings, roads, fences, or other im¬ provements effected upon it. The latter is plainly the profit on, or return for, the capital laid out on the land. Practically these sums are uniformly almost confounded, as they have been in this instance by Dr. Smith, under the general term rent. But they are essentially distinct; and should be so consider ed in every inquiry of this sort. RENT OF LAND. 67 Chat. XI. never augmented by human industry. The landlord, however, whose estate is bounded by a kelp shore of this kind, demands a rent for it as much as for his corn fields. The sea in the neighbourhood of the islands of Shetland is more than commonly abundant in fish, which make a great part of the subsistence of their inhabitants. But in order to profit by the produce of the water, they must have a habitation upon the neighbouring land. The rent of the land¬ lord is in proportion, not to what the farmer can 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 cf the very few instances in which rent makes a part of the price of that commodity, is to be found in that country. The rent of land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take ; but to what the farmer can afford to give. Such parts only of the produce of land can commonly be brought to market, of which the ordinary price is sufficient to re¬ place the stock which must be employed in bringing them thither, together with its or¬ dinary profits. If the ordinary price is more than this, the surplus part of it will natur¬ ally go to the rent of the land. If it is not more, though the commodity may be brought to market, it can afford no rent to the land¬ lord. Whether the price is, or is not more, depends upon the demand. There are some parts of the produce of land for which the demand must always be such as to afford a greater price than what is sufficient to bring them to market; and there are others for which it either may or may not be such as to afford this greater price. The former must always afford a rent to the landlord — the latter sometimes may, and sometimes may not, according to different circumstances. Rprrtrlris to be observed, therefore, enters info the composition of the price of commo¬ dities in a different way from wages and profit. Higb_or_lQW^-wages and profit are the causes of high or low price ; high or low refif'is the effect of it. 1 It is because high or low wages and profit must be paid in order to bring a particular commodity to market, that its price is high or low. But it is be-vj cause its price is high or low, a great deal more, or very little more, or no more, than what is sufficient to pay those wages and pro¬ fit, that it affords a high rent, or a low rent,^ or no rent at all. The particular consideration, first, of those 1 Th'.c high or low rent is the effect and not the caus r of high or low price, is a true and most im¬ portant principle. parts of the produce o p iand which always afford some rent; secondly, of those which sometimes may and sometimes may not afford rent; and thirdly, of the variations which, in the different periods of improve¬ ment, naturally take place, in the relative value of those two different sorts of rude produce, when compared both with one ano¬ ther and with manufactured commodities, will divide this chapter into three parts. Part I. Of the Produce of Land which always affords Rent . As men, like all ether animals, naturally multiply in proportion to the means of their subsistence, food is always, more or less, in demand. It can always purchase or com¬ mand a greater or smaller quantity of labour, and somebody can always be found who is willing to do something in order to obtain it. The quantity of labour, indeed, which it can purchase, is not always equal to what it could maintain, if managed in the most eco¬ nomical manner, on account of the high wages which are sometimes given to labour. But it can always purchase such a quantity of labour as it can maintain, according to the raie at which that sort of labour is com¬ monly maintained in the neighbourhood. But land, in almost any situation, pro¬ duces a greater quantity of food than what is sufficient to maintain all the labour ne¬ cessary for bringing it to market, in the most liberal way in which that labour is ever maintained. The surplus, too, is always more than sufficient to replace the stock which employed that labour, together with its profits. Something, therefore, always remains for a rent to the landlord* The most desert moors in Norway and Scotland produce some sort of pasture for cattle, of which the milk and the increase are always more than sufficient, not only to maintain all the labour necessary for tending them, and to pay the ordinary profit to the farmer or owner of the herd or flock, but to afford some small rent to the landlord. The rent increases in proportion to the goodness of the pasture. The same extent of ground not only maintains a greater number of cattle, but as they are brought within a smaller compass, less labour becomes requisite to tend them, and to collect their produce. The landlord gains both ways; by the increase of the produce, and by the diminution of the labour which must be /maintained out of it. The rent of land not only varies with its fertility, whatever be its produce, but with its situation, whatever be its fertility. Land 2 For some observations on this statement, see supplemental note on Kent. F 2 68 RENT OF LAND. Book I. in the neighbourhood of a town gives a greater rent than land equally fertile in a distant part of the country. Though it may cost no more labour to cultivate the one than the other, it must always cost more to bring the produce of the distant land to market. A greater quantity of labour, therefore, must be maintained out of it; and the surplus, from which are drawn both the profit of the farmer and the rent of the landlord, must be diminished. But in re¬ mote parts of the country the rate of profits, as has already been shown, is generally higher than in the neighbourhood of a large town. A smaller proportion of this dimi¬ nished surplus, therefore, must belong to the landlord. Good roads, canals, and navigable rivers, by diminishing the expense of carriage, put the remote parts of the country more nearly upon a level with those in the neigh¬ bourhood of the town. They are upon that account the greatest of all improvements. They encourage the cultivation of the re¬ mote, which must always be the most extensive, circle of the country. They are advantageous to the town, by breaking down the monopoly of the country in its neigh¬ bourhood. They are advantageous even to that part of the country. Though they introduce some rival commodities into the old market, they open many new markets to its produce. Monopoly, besides, is a great enemy to good management, which can never be universally established bur in consequence of that free and universal com¬ petition which forces every body to have recourse to it for the sake of self-defence. It is not more than fifty years ago, that some of the counties in the neighbourhood of London petitioned the parliament against the extension of the turnpike roads into the remoter counties. Those remoter counties, they pretended, from the cheapness of la¬ bour, would be able to sell their grass and corn cheaper in the London market than themselves, and would thereby reduce their rents, and ruin their cultivation. Their rents, however, have risen, and their cultiva¬ tion has been improved since that time. A corn field of moderate fertility produces a much greater quantity of food for man than the best pasture of equal extent. I hough its cultivation requires much more labour, yet the surplus which remains after replacing the seed and maintaining all that labour, is likewise much greater. If a pound of butcher’s meat, therefore, was never sup¬ posed to be worth more than a pound of bread, this greater surplus would everywhere be of greater value, and constitute a greater fund both for the profit of the farmer and the rent of the landlord. It seems to have done so universally in the rude beginnings >f agriculture. But the relative values of those two dif¬ ferent species of food, bread and butcher’s meat, are very different in the different pe¬ riods of agriculture. In its rude beginnings, the unimproved wilds, which then occupy the far greater part of the country, are all abandoned to cattle. There is more but¬ cher’s meat than bread, and bread, therefore, is the food for which there is the greatest competition, and which consequently brings the greatest price. At Buenos Ayres, we are told by Ulloa, four reals (one-and-twenty pence halfpenny sterling), was, forty or fifty years ago, the ordinary price of an ox, chosen from a herd of two or three hundred. He says nothing of the price of bread, pro¬ bably because he found nothing remarkable about it. An ox there, he says, costs little more than the labour of catching him. But corn can nowhere be raised without a great deal of labour ; and in a country which lies upon the river Plate, at that time the direct road from Europe to the silver mines of Potosi, the money price of labour could not be very cheap. It is otherwise when culti¬ vation is extended over the greater part of the country. There is then more bread than butcher’s meat. The competition changes its direction, and the price of but¬ cher’s meat becomes greater than the price of bread By the extension besides of cultivation, the unimproved wilds become insufficient to supply the demand for butcher’s meat. A great part of the cultivated lands must be employed in rearing and fattening cattle, of which the price, therefore, must be sufficient to pay, not only the labour necessary for tending them, but the rent which the land¬ lord and the profit which the farmer could have drawn from such land employed in tillage. The cattle bred upon the most un¬ cultivated moors, when brought to the same market, are, in proportion to their weight or goodness, sold at the same price as those which are reared upon the most improved land. The proprietors of those moors profit by it, and raise the rent of their land in proportion to the price of their cattle. It is not more than a century ago that in many parts of the highlands of Scotland, butcher’s meat was as cheap or cheaper than even bread made of oatmeal. The Union opened the market of England to the high¬ land cattle. Their ordinary price is at present about three times greater than at the beginning of the century, and the rents of many highland 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 pre¬ sent times, generally worth more than two pounds of the best white bread; and in plentiful years it is sometimes worth three or four pounds. Chap. XI. RENT OF LAND. 69 It is thus that in the progress of improve¬ ment the rent and profit of unimproved pas¬ ture come to be regulated in some measure by the rent and profit of what is improved, and these again by the rent and fjrofit of corn. Corn is an annual crop; butcher’s meat a crop which requires four or five years to grow. As an acre of land, therefore, will produce a much smaller quantity of the one species of food than of the other, the inferi¬ ority of the quantity must be compensated by the superiority of the price. If it was more than compensated, more corn land would be turned into pasture ; and if it was not compensated, part of what was in pasture would be brought back into corn. This equality, however, between the rent and profit of grass and those of corn, of the land of which the immediate produce is food for cattle, and of that of which the immediate produce is food for men, must be understood to take place only through the greater part of the improved lands of a great country. In some particular local situations it is quite otherwise, and the rent and profit of grass are much superior to what can be made by corn. Thus in the neighbourhood of a great town the demand for milk and for forage to horses frequently contribute, together with the high price of butcher’s meat, to raise the value of grass above what may be called its natural proportion to that of corn. This local advantage, it is evident, cannot be communicated to the lands at a distance. Particular circumstances have sometimes rendered some countries so populous, that the whole territory, like the lands in the neighbourhood of a great town, has not been sufficient to produce both the grass and the corn necessary for the subsistence of their inhabitants. Their lands, therefore, have been principally employed in the production of grass, the more bulky commodity, and which cannot be so easily brought from a great distance ; and corn, the food of the great body of the people, has been chiefly imported from foreign countries. Holland is at present in this situation, and a consider¬ able part of ancient Italy seems to have been so during the prosperity of the Romans. To feed well, old Cato said, as we are told by Cicero, was the first and most profitable thing in the management of a private estate; to feed tolerably well, the second ; and to feed ill, the third. To plough, he ranked only in the fourth place of profit and advan¬ tage. Tillage, indeed, in that part of ancient Italy which lay in the neighbourhood of Rome, must have been very much discou¬ raged by the distributions of corn which -were frequently made to the people, either gratuit¬ ously, or at a very low price. This corn was brought from the conquered provinces, of which several, instead of taxes, were obliged to furnish a tenth part of their produce at a stated price, about sixpence a peck, to the republic. The low price at which this corn was distributed to the people, must neces¬ sarily have sunk the price of what could be brought to the Roman market from Latium, or the ancient territory of Rome, and must have discouraged its cultivation in that country. In an open country too, of which the principal produce is corn, a well-inclosed piece of grass will frequently rent higher than any corn field in its neighbourhood. It is convenient for the maintenance of the cattle employed in the cultivation of the corn, and its high rent is, in this case, not so pro¬ perly paid from the value of its own produce, as from that of the corn lands which are cultivated by means of it. It is likely to fall, if ever the neighbouring lands are completely inclosed. The present high rent of inclosed land in Scotland seems owing to the scarcity of inclosure, and will probably last no longer than that scarcity. The advantage of in- closure is greater for pasture than for corn. It saves the labour of guarding the cattle, which feed better too when they are not liable to be disturbed by their keeper or his dog. But where there is no local advantage of this kind, the rent and profit of corn, or whatever else is the common vegetable food of the people, must naturally regulate, upon the land which is fit for producing it, the rent and profit of pasture. The use of the artificial grasses, of turnips, carrots, cabbages, and the other expedients which have been fallen upon to make an equal quantity of land feed a greater number of cattle than when in natural grass, should sornewmat reduce, it might be expected, the superiority which, in an improved country, the price of butcher’s meat naturally has over that of bread. It seems accordingly to ha\e done so ; and there is some reason for be¬ lieving that, at least in the London market, the price of butcher’s meat, in proportion to the price of bread, is a good deal lower in the present times than it was in the begin¬ ning of the last century. In the appendix to the life of prince Henry, Doctor Birch has given us an account of the prices of butcher’s meat as commonly paid by that prince. It is there said, that the four quarters of an ox weighing six hundred pounds usually cost him nine pounds ten shillings, or thereabouts; that is, thirty-one shillings and eight-pence per hundred pounds weight. Prince Henry died on the 6th of November 1612, in the nineteenth year of his age. In march 1764 there w*as a parliamentary inquiry into the causes of the high price of provisions at that time. It was then, among other proof to the same purpose, given in F 3 70 RENT OF LAND. Book I. evidence by a Virginia 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 price ; whereas, in that dear year, he had paid twenty-seven shillings for the same weight and sort. This high price in 1764 is, however, four shillings and eight- pence cheaper than the ordinary price paid by prince Henry ; and it is the best beef onlv, it must be observed, which is fit to be salted for those distant voyages. The price paid by prince Henry amounts to 3 id. per pound weight of the whole car¬ case, coarse and choice pieces taken together; and at that rate the choice pieces could not have been sold by retail for less than 4 ±d. or 5J. the pound. In the parliamentary inquiry in 1764, the witnesses stated the price of the choice pieces of the best beef to be to the consumer 4cZ. and 4^*Z. the pound, and the coarse pieces in general to be from seven farthings to 2 ^d. and 2 \d .; and this they said was in general one halfpenny dearer than the same sort of pieces had usually been sold in the month of March. But even this high price is still a good deal cheaper than what we can well suppose the ordinary retail price to have been in the time of prince Henry. During the twelve first years of the last century, the average price of the best wheat at the Windsor market was 1Z. 18s. 3kZ. the # O 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 in the same market was 2Z. Is. 9\d. In the twelve first years of the last cen¬ tury, therefore, wheat appears to have been a good deal cheaper, and butcher’s meat a good deal dearer, than in the twelve years pre¬ ceding 1764, including that year. In all great countries the greater part of the cultivated lands are employed in pro¬ ducing either food for men or food for cat¬ tle. The rent and profit of these regulate the rent and profit of all other cultivated land. If any particular produce afforded less, the land would soon be turned into corn or pasture; and if any afforded more, some part of the lands in corn or pasture would soon be turned to that produce. Those productions, indeed, which require either a greater original expense of improve¬ ment, or a greater annual expense of culti¬ vation, in order to fit the land for them, ap¬ pear commonly to afford, the one a greater rent, the other a greater profit, than corn or pasture. This superiority, however, will seldom be found to amount to more than a reasonable interest or compensation for this superior expense. In a hop garden, a fruit garden, a kitchen garden, both the rent of the landlord, and the profit of the farmer, are generally greater than in a corn or grass field. But to bring the ground into this condition re¬ quires more expense. Hence a greater rent becomes due to the landlord. It requires too a more attentive and skilful manage- ment. Hence a greater profit becomes due to the farmer. The crop, too, at least in the hop and fruit garden, is more precari¬ ous. Its price, therefore, besides compen¬ sating all occasional losses, must afford something like the profit of insurance. The circumstances of gardeners, generally mean, and always moderate, may satisfy us that their great ingenuity is not commonly over¬ recompensed. Their delightful art is prac¬ tised by so many rich people for amusement, that little advantage is to be made by those who practise it for profit; because the per¬ sons who should naturally be their best cus¬ tomers, supply themselves with all their most precious productions. The advantage which the landlord de¬ rives from such improvements seems at no time to have been greater than what was sufficient to compensate the original expense of making them. In the ancient husbandry, after the vineyard, a well-watered kitchen garden seems to have been the part of the farm which was supposed to yield the most valuable produce. But Democritus, who wrote upon husbandry about two thousand years ago, and who was regarded by the an¬ cients as one of the fathers of the art, thought they did not act wisely who inclosed a kitchen garden. The profit, he said, would not compensate the expense of a stone wall; and bricks (he meant, I suppose, bricks baked in the sun) mouldered with the rain, and the winter storm, and required continual re¬ pairs. Columella, who reports this judg¬ ment of Democritus, does not controvert it; but proposes a very frugal method of en¬ closing with a hedge of brambles and briars which, he says, he had found by experience to be both a lasting and an impenetrable fence ; but which, it seems, was not com¬ monly known in the time of Democritus. Palladius adopts the opinion of Columella, which had before been recommended by Varro. In the judgment of those ancient improvers, the produce of a kitchen garden had, it seems, been little more than sufficient to pay the extraordinary culture and the ex¬ pense of watering; for in countries so near the sun, it was thought proper, in those times as in the present, to have the com¬ mand of a stream of water, which could be conducted to every bed in the garden. Through the greater part of Europe, a kitchen garden is not at present supposed to deserve a better enclosure than that recom- i mended by Columella. In Great Britain, and some other northern countries, the finer j fruits cannot be brought to perfection but RENT OF LAND. 71 Chat*. XI. by the assistance of a wall, llieir price, therefore, in such countries must be suffi¬ cient to pay the expense of building and maintaining what they cannot be had with¬ out. The fruit-wall frequently surrounds the kitchen garden, which thus enjoys the benefit of an inclosure which its own pro¬ duce could seldom pay for. That the vineyard, when properly planted and brought to perfection, was the most va¬ luable part of the farm, seems to have been an undoubted maxim in the ancient agii- culture, as it is the modern through all the wine countries. But whether it was advan¬ tageous to plant a new vineyard, was a matter of dispute among the ancient Italian husbandmen, as we learn from Columella. He decides, like a true lover of all curious cultivation, in favour of the vineyard, and endeavours to show, by a comparison of the profit and expense, that it was a most advan¬ tageous improvement. Such comparisons, however, between the profit and expense of new projects, are commonly very fallacious, and in nothing more so than in agrculture. Had the gain actually made by such plant¬ ations been commonly as great as he ima¬ gined it might have been, there could have been no dispute about it. The same point is frequently at this day a matter oi contro¬ versy in the wine countries. Their writers on agriculture, indeed, the lovers and pro¬ moters of high cultivation, seem generally disposed to decide with Columella, in favour of the vineyard. In France the anxiety of the proprietors of the old vineyards to pre¬ vent the planting of any new ones, seems to favour their opinion, and to indicate a con¬ sciousness in those who must have the ex- x perience, that this species of cultivation is at present in that country more profitable than any other. It seems at the same time, how¬ ever, to indicate another opinion, that this superior profit can last no longer than the laws which at present restrain the free culti¬ vation 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 cultivation had been interrupted for two years, without a particular permission from the king, to be granted only in consequence of an inform¬ ation from the intendant of the province, cer¬ tifying that he had examined the land, and that it was incapable of any other culture. The pretence of this order was the scarcity of corn and pasture, and the superabundance of wine. But had this superabundance been real, it would, without any order of council, have effectually prevented the plantation of new vineyards, by reducing the profits of this species of cultivation below their na¬ tural proportion to those of corn and pas¬ ture. With regard to the supposed scarcity of corn occasioned by the multiplication of vineyards, corn is nowhere in I ranee moie carefully cultivated than in the wine pro¬ vinces, 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, by affording a ready market for its produce. To diminish the number of those who are capable of paying for it, is surely a most unpromising expe¬ dient for 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 ori¬ ginal expense of improvement in order to fit the land for them, or a greater annual ex¬ pense of cultivation, though oiten much superior to those of corn and pasture, yet when they do no more than compensate such extraordinary expense, are in reality regula¬ ted by the rent and profit of those common crops. It sometimes happens, indeed, that the quantity of land which can be fitted for some particular produce, is too small to supply the effectual demand. The whole produce can be disposed of to those who are willing to give somewhat more than what is sufficient to pay the whole rent, wages, and profit ne¬ cessary for raising and bringing it to market according to their natural rates, or according to the rates at which they are paid in the greater part of other cultivated land. The surplus part of the price which remains after defraying the whole expense of improvement and cultivation may commonly, in this case, and in this case only, bear no regular pro¬ portion to the like surplus in corn or pasture, but may exceed it in almost any degree ; and the greater part of this excess naturahy goes to the rent of the landlord. The usual and natural proportion, for example, between the rent and profit of wine and those of corn an^. pasture, must be under¬ stood to take place only with regard to those vineyards which produce nothing but good common wine, such as can be raised almost any where, upon any light, gravelly, or sandy soil, and which has nothing to recommend it but its strength and wholesomeness. It is with such vineyards only that the common land of the country can be brought into competition; for with those of a peculiar quality it is evident that it cannot. The vine is more affected by the difference of soils than any other fruit tree. I rom 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 extends through the greater part of a small district, and some¬ times through a considerable part of a large province. The whole quantity of such wine* F 4 r 7 2 RENT OF LAND. Book I. that is brought to market falls short of the effectual demand, or the demand of those who would be willing to pay the whole rent, profit and wages necessary for preparing and bringing them thither, according to the or¬ dinary rate, or according to the rate at which they are paid in common vineyards. The whole quantity, therefore, can be disposed of to those who are willing to pay more, which necessarily raises the price above that of common wine. The difference is greater or less, according as the fashionableness and scarcity of the wine render the competition of the buyers more or less eager. Whatever it be, the greater part of it goes to the rent of the landlord. For though such vineyards are in general more carefully cultivated than most others, the high price of the wine seems to be, not so much the effect, as the cause of this careful cultivation. In so valuable a produce the loss occasioned by negligence is so great as to force even the most careless to attention. A small part of this high price, therefore, is sufficient to pay the wages of the extraordinary labour bestowed upon their cultivation, and the profits of the extraordi¬ nary stock which puts that labour into mo¬ tion. The sugar colonies, possessed by the Euro¬ pean nations in the West Indies, may be compared to those precious vineyards. The whole produce falls short of the effectual demand of Europe, and can be disposed of to those who are willing to give more than what is sufficient to pay the whole rent, pro¬ fit, and wages necessary for preparing and bringing it to market, according to the rate at which they are commonly paid by any other produce. In Cochin-china the finest white sugar commonly sells for three piastres the quinta], about thirteen shillings and six¬ pence of our money, as we are told by Mr. Poivre 1 , a very careful observer of the agri¬ culture 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 shil¬ lings 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 Cochin-china are employed in pro¬ ducing corn and rice, the food of the great body of the people. The respective prices of corn, rice, and sugar, are there probably in the natural proportion, or in that which naturally takes place in the different crops of 1 Voyages d’un Philosophe. 2 The statements in the text, with respect to the profits of, the sugar planters, were most probably greatly exaggerated at the period when Dr. Smith wrote, and have long been altogether inapplicable, •nstead of being exceedingly profitable, the business the greater part of cultivated land, and which recompenses the landlord and farmer, as nearly as can be computed, according to what is usually the original expense of im¬ provement and the annual expense of culti¬ vation. But in our sugar colonies the price of sugar bears no such proportion to that of the produce of a rice or corn field either in Europe or in America. It is commonly said, that a sugar planter expects that the rum and the molasses should defray the whole expense of his cultivation, and that his sugar should be all clear profit. 2 If this be true, for I pretend not to affirm it, it is as if a corn farmer expected to defray the expense of his cultivation with the chaff and the straw, and that the grain should be all clear profit. We see frequently societies of merchants in London and other trading towns, purchase waste lands in our su^ar colonies, which they expect to improve and cultivate with profit by means of factors and agents; notwithstanding the great distance and the uncertain returns, from the defective administration of justice in those countries. Nobody will attempt to improve and culti¬ vate in the same manner the most fertile lands of Scotland, Ireland, or the corn pro- 1 inces of North America; though from the more exact administration of justice in these countries, more regular returns might be ex¬ pected. In \ iiginia and Maryland the cultivation of tobacco is preferred, as more profitable, to that of corn. Tobacco might be culti- ^ ated with advantage through the greater part of Europe; but in almost every part of Europe it has become a principal subject of taxation; and to collest a tax from every different farm in the country where this plant might happen to be cultivated, would be more difficult, it has been supposed, than to levy one upon its importation at the custom house. The cultivation of tobacco has, upon this account, been most absurdly prohibited through the greater part of Eu¬ rope, which necessarily gives a sort of mono¬ poly to the countries where it is allowed ; and as \ irginia and Maryland produce the greatest quantity of it, they share largely, though with some competitors, in the ad¬ vantage of this monopoly. The cultivation of tobacco, however, seems not to be so ad- "vantageous as that of sugar. I have never even heard of any tobacco plantation that was improved and cultivated by the capital of merchants who resided in Great Britain; and our tobacco colonies send us home no such wealthy planters as we see frequently arrive from our sugar islands. Though from of a sugar planter has been, during the last thirty years generally very much the reverse. Cultivation has been too far extended ; and the quantity of produce brought to market has been so great as frequently to reduce the price to little more than the sum required to defray the expenses of cultivation and the duty. Chap. XI. RENT OF LAND. 73 the preference given in those colonies to the cultivation of tobacco above that of corn, it would appear that the effectual demand of Europe for tobacco is not completely sup¬ plied, it probably is more nearly so than that for sugar ; and though the present price of tobacco is, probably, more than sufficient to pay the whole rent, wages and profit neces¬ sary for preparing and bringing it to market, according to the rate at which they are commonly paid in corn land; it must not be so much more as the present price of sugar. Our tobacco planters, accordingly, have shown the same fear of the superabun¬ dance of tobacco, which the proprietors of the old vineyards in France have of the su¬ perabundance of wine. By act of assembly they have restrained its cultivation to six thousand plants, supposed to yield a thou¬ sand weight of tobacco, for every negro be¬ tween sixteen and sixty years of age. Such a negro, over and above this quantity of to¬ bacco, can manage, they reckon, four acres of Indian corn. To prevent the market from being overstocked, too, they have some¬ times, in plentiful years, we are told by Dr. Douglas 1 , (I suspect he has been ill informed) burnt a certain quantity of tobacco for every negro, in the same manner as the Dutch are said to do of spices. If such violent methods are necessary to keep up the present price of tobacco, the superior advantage of its culture over that of corn, if it still has any, will not, probably, be of long continuance. It is in this manner that the rent of the cultivated land, of which the produce is human food, regulates the rent of the greater part of other cultivated land. No particular produce can long afford less, because the land would immediately be turned to another use: and if any particular produce commonly affords more, it is because the quantity of land which can be fitted for it is too small to supply the effectual demand. In Europe corn is the principal produce of land, which serves immediately for hu¬ man food. Except in particular situations, therefore, the rent of corn land regulates in Europe that of all other cultivated land. Britain need envy neither the vineyards of France nor the olive plantations of Italy. Except in particular situations, the value of these is regulated by that of corn, in which the fertility of Britain is not much inferior to that of either of those two countries. If in any country the common and fa¬ vourite vegetable food of the people should be drawn from a plant of which the most common land, with the same or nearly the • Douglas’s Summary, vol. ii. p. 372, 373. 2 In point of fact, however, no portion of this surplus will go to the landlord, unless the rice fields under cultivation be of different productive powers. The best lands in Indiana are probably as fertile as same culture, produced a much greater quantity than the most fertile does of corn, the rent of the landlord, or the surplus quantity of food which would remain to him, after paying the labour and replacing the stock of the farmer together with its ordinary profits, would necessarily be much greater. Whatever was the rate at which labour was commonly maintained in that country, this greater surplus could always maintain a greater quantity of it, and conse¬ quently enable the landlord to purchase or command a greater quantity of it. The real value of his rent, his real power and authority, his command of the necessaries and conveniencies of life with which the labour of other people could supply him, would necessarily be much greater. A rice field produces a much greater quan¬ tity of food than the most fertile corn field. Two crops in the year from thirty to sixty bushels each, are said to be the ordinary produce of an acre. Though its cultivation, therefore, requires more labour, a much greater surplus remains after maintaining all that labour. In those rice countries, therefore, where rice is the common and favourite vegetable food of the people, and where the cultivators are chiefly maintained with it, a greater share of this greater sur¬ plus should belong to the landlord than in corn countries. 2 In Carolina, where the planters, as in other British colonies, are generally both farmers and landlords, and where rent consequently is confounded with profit, the cultivation of rice is found to be more profitable than that of corn, though their fields produce only one crop in the year, and though, from the prevalence of the customs of Europe, rice is not there the common and favourite vegetable food of the people. A good rice field is a bog at all seasons, and at one season a bog covered with water. It is unfit either for corn, or pasture, or vineyard, or, indeed, for any other vegetable produce that is very useful to men : and the lands which are fit for those purposes, are not fit for rice. Even in the rice countries, therefore, the rent of rice lands cannot regu¬ late the rent of the other cultivated land which can never be turned to that produce. The food produced by a field of potatoes is not inferior in quantity to that produced by a field of rice, and much superior to what is produced by a field of wheat. twelve thousand weight of potatoes from an acre of land is not a greater produce than two thou¬ sand weight of wheat. The food or solid nourishment, indeed, which can be drawn the best lands in East Lothian, and yet they yield no surplus in the shape of rent to the proprietor ; nor will they ever yield any, unless inferior lands be taken into tillage. 71 RENT OF LAND. Book I. from each of those two plants, is not alto¬ gether in proportion to their weight, on account of the watery nature of potatoes. Allowing, however, half the weight of this root to go to water, a very large allowance, such an acre of potatoes will still produce six thousand weight of solid nourishment, three times the quantity produced by the acre of wheat. An acre of potatoes is cultivated with less expense than an acre of wheat; the fallow, which generally precedes the sowing of wheat, more than compensating the hoe¬ ing and other extraordinary culture which is always given to potatoes. Should this root ever become in any part of Europe, like rice in some rice countries, the common and favourite vegetable food of the people, so as to occupy the same proportion of the lands in tillage which wheat and other sorts of grain for human food do at present, the same quantity of cultivated land would maintain a much greater number of people ; and the labourers being generally fed with potatoes, a greater surplus would remain, after replac¬ ing all the stock, and maintaining all the labour employed in cultivation. A greater share of this surplus, too, would belong to the landlord. Population would increase, and rents would rise much beyond what thev are at present. The land which is fit for potatoes, is fit for almost every other useful vegetable. If they occupied the same proportion of cultivated land which corn does at present, they would regulate in the same manner the rent of the greater part of other cultivated land. In some parts of Lancashire, it is pre¬ tended, I have been told, that bread of oat¬ meal is a heartier food for labouring people than wheaten bread ; and I have frequently heard the same doctrine held in Scotland. I am, however, somewhat doubtful of the truth of it. The common people in Scotland, who are fed with oatmeal, are in general neither so strong nor so handsome as the same rank of people in England, who are fed with wheaten bread. They neither work so "well nor look so well; and as there is not the same difference between the people of fashion in the two countries, experience would seem to show that the food of the common people in Scotland is not so suitable to the human constitution as that of their neighbours of the same rank in England ; but it seems to be otherwise with potatoes. The chairmen, porters, and coalheavers in London, and those unfortunate women who live by pro¬ stitution, the strongest men and the most beautiful women perhaps in the British do¬ minions, are said to be, the greater part of them, from the lowest rank of people in Ireland, who are generally fed with this 1 The inquiry with respect to the profitable effect of substituting the potato for corn in the food of the lower classes, is one of great importance. See some root. No food can afford a more decisive proof of its nourishing quality, or of its being peculiarly suitable to the health of the human constitution. It is difficult to preserve potatoes through the year, and impossible to store them like corn, for two or three years together. The fear of not being able to sell them before they rot, discourages their cultivation, and is, perhaps, the chief obstacle to their ever be¬ coming in any great country, like bread, the principal vegetable food of all the different ranks of the people. 1 Part II. Of the Produce of Land which sometimes does , and sometimes does not , afford Rent. Human food seems to be the only produce of land which always and necessarily affords some rent to the landlord. Other sorts of produce sometimes may and sometimes may not, according to different circumstances. After food, clothing and lodging are the two great wants of mankind. Land in its original rude state can afford the materials of clothing and lodging to a much greater number of people than it can feed. In its improved state it can sometimes feed a greater number of people than it can supply with those materials; at least in the way in which they require them, and are willing to pay for them. In the one state, therefore, there is always a superabundance of those materials, which are frequently, upon that account, of little or no value. In the other there is often a scarcity, which necessarily augments their value. In the one state a great part of them is thrown away as useless, and the price of what is used is considered as equal only to the labour and expense of fitting it for use, and can, therefore, afford no rent to the landlord. In the other they are all made use of, and there is frequently a demand for more than can be had. Somebody is always willing to give more for every part of them than what is sufficient to pay the expense of bringing them to market. Their price, therefore, can always afford some rent to the landlord. The skins of the larger animals were the original materials of clothing. Among nations of hunters and shepherds, therefore, whose food, consists chiefly in the flesh of those animals, every man, by providing him¬ self with food, provides himself with the materials of more clothing than he can wear. If there was no foreign commerce, the greater part of them would be thrown away as things of no value. This was probably the case among the hunting nations of North Ame¬ rica, before their country was discovered by observations on this subject in the note on the Use of the Potato as an Article of Food at the end of the volume. Chap. XI. RENT OF LAND. 75 the Europeans, with whom they now ex¬ change their surplus peltry, for blankets, fire-arms, and brandy, which gives it some value. In the present commercial state of the known world, the most barbarous nations I believe, among whom land property is esta¬ blished, have some foreign commerce of this kind, and find among their wealthier neigh¬ bours such a demand for all the mateiials of clothing, which their land produces, and which can neither be wrought up nor con¬ sumed at home, as raises their price above what it costs to send them to those wealthier neighbours. It affords, therefore, some rent to the landlord. When the greater part of the highland cattle were consumed on their own hills, the exportation of their hides made the most considerable article of the commerce of that country, and what they were ex¬ changed for afforded some addition to the rent of the highland estates. The wool of England, which in old times could neither be consumed nor wrought up at home, found a market in the then wealthier and more industrious country of Flanders, and its price afforded something to the rent of the land which produced it. In countries not better cultivated than England was then, or than the highlands of Scotland are now, and which had no foreign commerce, the mate¬ rials of clothing would evidently be so super¬ abundant, that a great part of them would be thrown away as useless, and no part could afford any rent to the landlord. The materials of lodging cannot always be transported to so great a distance as those of clothing, and do not so readily become an object of foreign commerce. When they are superabundant in the country which produces them, it frequently happens, even in the present commercial state of the world, that they are of no value to the landlord. A good stone quarry in the neighbourhood of London would afford a considerable rent. In many parts of Scotland and W ales it affords none. Barren timber for building is of great value in a populous and well-cultivated country, and the land which produces it affords a considerable rent. But in many parts of North America the landlord would be much obliged to any body who would carry away the greater part of his large trees. In some parts of the highlands of Scotland the bark is the only part of the wood which, for want of roads and water- carriage, can be sent to market. The tim¬ ber is left to rot upon the ground. When the materials of lodging are so superabundant, the part made use of is worth only the labour and expense of fitting it for that use. It affords no rent to the landlord, who gene¬ rally grants the use of it to whoever takes the trouble of asking it. The demand of wealthier nations, however, sometimes ena¬ bles him to get a rent for it. r Ihe paving of the streets of London has enabled the owners of some barren rocks on the coast of Scotland to draw a rent from what never afforded any before. The woods of Norway and of the coasts of the Baltic find a market in many parts of Great Britain which they could not find at home, and thereby afford some rent to their proprietors. Countries are populous, not in proportion to the number of people whom their pro¬ duce can clothe and lodge, but in proportion to that of those whom it can feed. When food is provided, it is easy to find the neces¬ sary clothing and lodging. But though these are at hand, it may often be difficult to find food. In some parts even of the British dominions what is called a house, may be built by one day’s labour of one man. The simplest species of clothing, the skins of animals, require somewhat more labour to dress and prepare them for use. They do not, however, require a great deal. Among savage and barbarous nations, a hundredth or little more than a hundredth part of the labour of the whole year, will be sufficient to provide them with such clothing and lodging as satisfy the greater part of the people. All the other ninety-nine parts are frequently no more than enough to provide them with food. But when by the improvement and cul¬ tivation of land, the labour of one family can provide food for two, the labour of half the society becomes sufficient to provide food for the whole. The other half, therefore, or at least the greater part of them, can be employed in providing other things, or in satisfying the other w^ants and fancies of mankind. Clothing and lodging, household furniture, and what is called equipage, are the principal objects of the greater part of those wants and fancies. The rich man con¬ sumes no more food than his poor neigh¬ bour. In quality it may be very different, and to select and prepare it may require more labour and art; but in quantity it is very nearly the same. But compare the spacious palace and great wardrobe of the one with the hovel and the few rags of the other, and you will be sensible that the dif¬ ference between their clothing, lodging, and household furniture, is almost as great in quantity as it is in quality. The desire of food is limited in every man by the narrow capacity of the human stomach ; but the desire of the conveniences and ornaments of building, dress, equipage, and household furniture, seems to have no limit or certain boundary. Those, therefore, who have the command of more food than they themselves can consume, are always willing to exchange the surplus, or, what is the same thing, the price of it, for gratifications of this other kind. What is over and above satisfying the limited desire, is given for the amusement 76 Book I. RENT OF LAND. of those desires which cannot be satisfied, but seem to be altogether endless. The poor, in order to obtain food, exert them¬ selves to gratify those fancies of the rich; and to obtain it more certainly, they vie with one another in the cheapness and perfection of their work. The number of workmen increases with the increasing quantity of food, or with the growing improvement and cultivation of the lands; and as the nature of their business admits of the utmost sub¬ division of labour, the quantity of materials which they can work up, increases in a much greater proportion than their num¬ bers. Hence arises a demand for every sort of material which human invention can em¬ ploy, either usefully or ornamentally, in building, dress, equipage, or household fur¬ niture ; for the fossils and minerals contained in the bowels of the earth, the precious me¬ tals, and the precious stones. Food is in this manner not only the ori¬ ginal source of rent, but every other part of the produce of land which afterwards affords rent, derives that part of its value from the improvement of the powers of labour in pro¬ ducing food by means of the improvement and cultivation of land. Those other parts of the produce of land, however, which afterwards afford rent, do not afford it always. Even in improved and cultivated countries, the demand for them is not always such as to afford a greater price than what is sufficient to pay the labour, and replace, together with its ordinary profits, the stock which must be employed in bring¬ ing them to market. Whether it is or Is not such, depends upon different circum¬ stances. Whether a coal mine, for example, can afford any rent, depends partly upon its fer¬ tility, and partly upon its situation. A mine of any kind may be said to be either fertile or barren, according as the quantity of mineral which can be brought from it by a certain quantity of labour, is greater or less than what can be brought by an equal quantity from the greater part of other mines of the same kind. Some coal mines, advantageously situated, cannot be wrought on account of their bar¬ renness. The produce does not pay the ex¬ pense. They can afford neither profit nor rent. There are some of which the produce is barely sufficient to pay the labour, and re¬ place, together with its ordinary profits, the stock employed in working them. They afford some profit to the undertaker of the work, but no rent to the landlord. They can be wrought advantageously by nobody but the landlord, who being himself under¬ taker of the work, gets the ordinary profit of the capital which he employs in it. Many coal mines in Scotland are wrought in this manner, and can be wrought in no other. The landlord will allow nobody else to work them without paying some rent, and nobody can afford to pay any. Other coal mines in the same country, sufficiently fertile, cannot be wrought on account of their situation. A quantity of mineral sufficient to defray the expense of working, could be brought from the mine by the ordinary, or even less than the or¬ dinary quantity of labour: but in an inland country, thinly inhabited, and without either good roads or water-carriage, this quantity could not be sold. Coals are a less agreeable fuel than wood *. they are said to be less wholesome. The expense of coals, therefore, at the place where they are consumed, must generally be somewhat less than that of wood. The price of wood again varies with the state of agriculture, nearly in the same manner, and exactly for the same reason, as the price of cattle. In its rude beginnings tne greater part of every country is covered with wood, which is then a mere incum¬ brance, of no value to the landlord, who would gladly give it to any body for the cutting. As agriculture advances, the woods are partly cleared by the progress of tillage, and partly go to decay in consequence of the increased number of cattle. These, though the) do not increase in the same proportion as corn, which is altogether the acquisition of human industry, yet multiply under the care and protection of men, who store up in the season of plenty what may maintain them in that of scarcity; who through the whole year furnish them with a greater quantity of food than uncultivated nature pi ovides for them; and who by destroying and extirpating their enemies, secure them in the free enjoyment of all that she pro¬ vides. Numerous herds of cattle, when al¬ lowed to wander through the woods, though they do not destroy the old trees, hinder any young ones from coming up, so that in the course of a century or two the whole forest goes to ruin. The scarcity of wood then raises its price. It affords a good rent ; and the landlord sometimes finds that he can scarce employ his best lands more advanta¬ geously than in growing barren timber, of w hich the greatness of the profit often com¬ pensates the lateness of the returns. This seems in the present times to be nearly the state of things in several parts of Great Britain, where the profit of planting is found to be equal to that of either of corn or pasture. The advantage which the landlord derives from planting, can nowhere exceed, at least for any considerable time, the rent which these could afford him ; and in an inland country which is highly cultivated, it will rrequently not fall much short of this rent, L pon the sea-coast of a well-imp roved coun- Chap. XI. RENT OF LAND. *7 i try, indeed, if coals can conveniently be had for fuel, it may sometimes be cheaper to bring barren timber for building from less cultivated foreign countries, than to raise it at home. In the new town of Edinburgh, built within these few years, there is not, perhaps, a single stick of Scotch timber. Whatever may be the price of wood, if that of coals is such that the expense of a coal fire is nearly equal to that of a wood one, we may be assured, that at that place, and in these circumstances, the price of coals is as high as it can be. It seems to be so in some of the inland parts of England, par¬ ticularly in Oxfordshire, where it is usual, even in the fires of the common people, to mix coals and wood together, and where the difference in the expense of those two sorts of fuel cannot, therefore, be very great. Coals, in the coal countries, are every¬ where much below this highest price. If they were not, they could not bear the ex¬ pense of a distant carriage, either by land or by water. A small quantity only could be sold ; and the coal masters and coal proprie¬ tors find it more for their interest to sell a great quantity at a price somewhat above the lowest, than a small quantity at the highest. The most fertile coal mine, too, regulates the price of coals at all the other mines in its neighbourhood. 1 Both the proprietor and the undertaker of the work find, the one that he can get a greater rent, the other that he can get a greater profit, by somewhat underselling all their neighbours. Their neighbours are soon obliged to sell at the same price, though they cannot so well afford it, and though it always diminishes, and sometimes takes away altogether both their rent and their profit. Some works are abandoned altogether ; others can afford no rent, and can be wrought only by the pro¬ prietor. The lowest price at which coals can be sold for any considerable time, is, like that of all other commodities, the price which is barely sufficient to replace, together with its ordinary profits, the stock which must be employed in bringing them to market. At a coal mine for which the landlord can get no rent, but which he must either work him¬ self or let it alone altogether, the price of coals must generally be nearly about this price. Rent, even where coals afford one, has generally a smaller share in their price than in that of most other parts of the rude pro¬ duce of land. The rent of an estate above 1 This is an error. The price of the coal extracted from the least fertile mine which it is necessary to work, in order to supply the demand, will determine the price of the coal extracted from all the other mines: for if, on the one hand, the coal extracted from the poorest mine did not sell at a price sufficient to defray the cost of its production with a reasonable profit to the undertakers, it would ground, commonly amounts to what is sup¬ posed to be a third of the gross produce ; and it is generally a rent certain, and inde¬ pendent of the occasional variations in the crop. In coal mines a fifth of the gross pro¬ duce is a very great rent; a tenth the com¬ mon rent: and it is seldom a rent certain, but depends upon the occasional variations in the produce. These are so great, that in a coun¬ try where thirty years’ purchase is considered as a moderate price for the property of a landed estate, ten years’ purchase is regarded as a good price for that of a coal mine. The value of a coal mine to the proprie¬ tor frequently depends as much upon its situation as upon its fertility. That of a metallic mine depends more upon its ferti¬ lity and less upon its situation. The coarse, and still more the precious metals, when separated from the ore, are so valuable that they can generally bear the expense of a very long land, and of the most distant sea carriage. Their market is not confined to the countries in the neighbourhood of the mine, but extends to the whole world. The copper of Japan makes an article of com¬ merce in Europe; the iron of Spain in that of Chili and Peru. The silver of Peru finds its way, not only to Europe, but from Europe to China. The price of coals in Westmoreland or Shropshire can have little effect on their price at Newcastle ; and their price in the Lionnois can have none at all. The pro¬ ductions of such distant coal mines can never be brought into competition with one another. But the productions of the most distant metallic, mines frequently may, and in fact commonly are. The price, therefore, of the coarse, and still more that of the pre¬ cious metals, at the most fertile mines in the world, must necessarily more or less affect their price at every other in it. The price of copper in Japan must have some influence upon its price at the copper mines in Europe. The price of silver in Peru, or the quantity either of labour or of other goods which it will purchase there, must have some influ¬ ence on its price, not only at the silver mines of Europe, but at those of China. After the discovery of the mines of Peru, the silver mines of Europe were, the greater part of them, abandoned. The value of silver was so much reduced that their pro¬ duce could no longer pay the expense of working them, or replace, with a profit, the food, clothes, lodging, and other necessaries which were consumed in that operation. not be brought to market, and the required supply would no longer be obtained ; while if, on the other hand, it were to sell for more than this, additional capital would be employed in working it and other mines, until the price of coal had sunk, in consequence of the increase of its quantity, to the price necessary to yield the common and average rate of profit, and no more, to the owners of the mine in question. 78 RENT OF LAND. Book I. This was the case, too, with the mines of Cuba and St. Domingo, and even with the ancient mines of Peru, after the discovery of those of Potosi. I he price ot every metal at every mine, therefore, being regulated in some measure by its price at the most fertile mine in the world that is actually wrought, it can at the greater part of mines do very little more than pay the expense of working, and can seldom afford a very high rent to the land¬ lord. Rent, accordingly, seems at the greater part of mines to have but a small share in the price of the coarse, and a still smaller in that of the precious metals. Labour and profit make up the greater part of both. A sixth of the gross produce may be reckoned the average rent of the tin mines of Cornwall, the most fertile that are known in the world, as we are told by the reverend Mr. Borlace, vice-warden of the stannaries. Some, he says, afford more, and some do not afford so much. A sixth part of the gross produce is the rent too of several very fertile lead mines in Scotland. In the silver mines of Peru, we are told by Frezier and Ulloa, the proprietor frequently exacts no other acknowledgment from the undertaker of the mine, but that he will grind the ore at his mill, paying him the ordinary mulcture or price of grinding. Till 1736, indeed, the tax of the king of Spain amounted to one-fifth of the standard silver, which till then might be considered as the real rent of the greater part of the silver mines of Peru, the richest which have been known in the world. If there had been no tax this fifth would naturally have belonged to the landlord, and many mines might have been wrought which could not then be wrought, because they could not afford this tax. The tax of the duke of Cornwall upon tin is supposed to amount to more than five per cent, or one-twentieth part of the value ; and whatever may be his proportion, it would naturally too belong to the proprietor of the mine, if tin was duty free. But if you add one-twentieth to one-sixth, you will find that the whole average rent of the tin mines of Cornwall, was to the whole average rent of 1 In Mexico, previously to the revolutionary war, speculators in mines were usually persons of fortune and distinction, who could afford to make large advances from their own funds for carrying on their works ; and the business of mining is stated to have been considered, when under such management, as safe as either manufactures or commerce. But in Peru, to which Smith’s observations particularly apply, speculators in mines were of a very different class ; being commonly persons in necessitous cir¬ cumstances, whose capital was all borrowed at an exorbitant interest, and who were, in fact, almost entirely at the mercy of their creditors and the bullion merchants. Neither prudence nor economy could be expected from individuals placed under such un¬ favourable circumstances : and the great majority.of them are described as having been at once dishonest, poor, and prodigal. (See details extracted from the the silver mines of Peru, as thirteen to twelve. But the silver mines of Peru are not now able to pay even this low rent, and the tax upon silver was, in 1736, reduced from one-fifth to one-tenth. Even this tax upon silver too gives more temptation to smuggling than the tax of one-twentieth upon tin ; and smuggling must be much easier in the precious than in the bulky commodity. The tax of the king of Spain accordingly is said to be very ill paid, and that of the duke of Cornwall very well. Rent, therefore, it is probable, makes a greater part of the price of tin at the most fertile tin mines, than it does of silver at the most fertile silver mines in the world. After replacing the stock employed in working those different mines, together with its ordi¬ nary profits, the residue which remains to the proprietor, is greater it seems in the coarse than in the precious metal. Neither are the profits of the undertakers of silver mines commonly very great in Peru. The same most respectable and well-informed authors acquaint us, that when any person undertakes to work a new mine in Peru, he is universally looked upon as a man destined to bankruptcy and ruin, and is upon that account shunned and avoided by everybody. Mining, it seems, is considered there in the same light as here, as a lottery, in which the prizes do not compensate the blanks, though the greatness of some tempts many adven¬ turers to throw away their fortunes in such unprosperous projects. 1 As the sovereign, however, derives a con¬ siderable part of his revenue from the produce of silver mines, the law in Peru gives every possible encouragement to the discovery and working of new ones. Whoever discovers a new mine, is entitled to measure off two hun¬ dred and forty-six feet in length, according to what he supposes to be the direction of the vein, and half as much in breadth. He becomes proprietor of this portion of the mine, and can work it without paying any acknowledg¬ ment to the landlord. The interest of the duke of Cornwall has given occasion to a regulation nearly of the same kind in that ancient duchy. In waste and uninclosed lands any person who discovers a tin mine, Mercurio Tcruano, a periodical paper published at Lima from 1791 to 1794, in the Edinburgh Review, vol. ix. p. 444.) The associations formed in this country during 1824 and 1825 for carrying on the business of mining in America have been very unsuccessful and have indeed been mostly abandoned. This however is only what might have been anticipated from the outset. The greater number were set on foot, without any accu¬ rate information having been previously obtained with respect to the actual state of the mines, the merits and defects of the modes in which they had been wrought, or the susceptibilities they possessed for the advantageous introduction of the'machinery and processes made use of in Europe. A vast loss has in consequence been incurred * and it seems to be in the last degree problematical whether any consider¬ able portion of it will ever be repaid. Chap. XI. KENT OF LAND. 79 may mark out its limits to a certain extent, which is called bounding a mine. The bounder becomes the real proprietor of the mine, and may either work it himself, or give it in lease to another, without the con¬ sent of the owner of the land, to whom, however, a very small acknowledgment must be paid upon working it. In both regu¬ lations the sacred rights of private property are sacrificed to the supposed interests of public revenue. The same encouragement is given in Peru to the discovery and working of new gold mines ; and in gold the king’s tax amounts only to a twentieth part of the standard metal. It was once a fifth, and afterwards a tenth, as in silver; but it was found that the work could not bear even the lowest of these two taxes. If it is rare, however, say the same authors, Frezier and Ulloa, to find a person who has made his fortune by a silver, it is still much rarer to find one who has done so by a gold mine. This twentieth part seems to be the whole rent which is paid by the greater part of the gold mines in Chili and Peru. Gold too is much more liable to be smuggled than even silver ; not only on account of the superior value of the metal in proportion to its bulk, but on ac¬ count of the peculiar way in which nature produces it. Silver is very seldom found virgin, but, like most other metals is gene¬ rally mineralized with some other body, from which it is impossible to separate it in such quantities as will pay for the expense, but by a very laborious and tedious operation, which cannot well be carried on but in workhouses erected for the purpose, and therefore exposed to the inspection of the king’s officers. Gold, on the contrary, is almost always found virgin. It is sometimes found in pieces of some bulk; and even when mixed in small and almost insensible par¬ ticles with sand, earth, and other extraneous bodies, it can be separated from them by a very short and simple operation, which can be carried on in any private house by any body who is possessed of a small quantity of mercury. If the king’s tax, therefore, is but ill paid upon silver, it is likely to be much worse paid upon gold ; and rent must make a much smaller part of the price of gold, than even of that of silver. The lowest price at which the precious metals can be sold, or the smallest quantity of other goods for which they can be ex¬ changed during any considerable time, is regulated by the same principles which fix the lowest ordinary price of all other goods. The stock which must commonly be em¬ ployed, the food, clothes, and lodging which must commonly be consumed in bringing them from the mine to the market, deter¬ mine it. It must at least be sufficient to replace that stock, with the ordinary profits. Their highest price, however, seems not to be necessarily determined by any thing but the actual scarcity or plenty of those metals themselves. It is not determined by that of any other commodity, in the same manner as the price of coals is by that of wood, beyond which no scarcity can ever raise it. Increase the scarcity of gold to a certain degree, and the smallest bit of it may become more precious than a diamond, and exchange for a greater quantity of other goods. The demand for those metals arises partly from their utility, and partly from their beauty. If you except iron, they are more useful than, perhaps, any other metal. As they are less liable to rust and impurity, they can more easily be kept clean ; and the utensils either of the table or the kitchen are often upon that account more agreeable when made of them. A silver boiler is more cleanly than a lead, copper, or tin one; and the same quality would render a gold boiler still better than a silver one. Their princi¬ pal merit, however, arises from their beauty, which renders them peculiarly fit for'the ornaments of dress and furniture. No paint or dye can give so splendid a colour as gild¬ ing. The merit of their beauty is greatly enhanced by their scarcity. With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their eye is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves. In their eyes the merit of an object which is in any degree either useful or beautiful, is greatly enhanced by its scar¬ city, or by the great labour which it requires to collect any considerable quantity of it, a labour which nobody can afford to pay but themselves. Such objects they are willing to purchase at a higher price than things much more beautiful and useful, but more common. These qualities of utility, beauty, and scarcity, are the original foundation of the high price of those metals, or of the great quantity of other goods for which they can everywhere be exchanged. This value was antecedent to and independent of their being employed as coin, and was the quality which fitted them for that employment. That employment, however, by occasioning a new demand, and by diminishing the quantity which could be employed in any other way, may have afterwards contributed to keep up or increase their value. The demand for the precious stones arises altogether from their beauty. They are of no use, but as ornaments; and the merit of their beauty is greatly enhanced by their scarcity, or by the difficulty and expense of getting them from the mine. Wages and profit, accordingly, make up, upon most oc¬ casions, almost the whole of their high price. so RENT OF LAND. Eook I. Rent comes in but for a very small share ; frequently for no share; and the most fertile mines only afford any considerable rent. When Tavernier, a jeweller, visited the dia¬ mond mines of Goleonda and Visiapour, he was informed that the sovereign of the country, for whose benefit they were wrought, had ordered all of them to be shut up, ex¬ cept those which yield the largest and finest stones. The others, it seems, were to the proprietor not worth the working. As the price both of the precious metals and of the precious stones is regulated all over the world by their price at the most fertile mine in it, the rent which a mine of either can afford to its proprietor is in pro¬ portion, not to its absolute, but to what may be called its relative fertility, or to its supe¬ riority over other mines of the same kind. If new mines were discovered as much superior to those of Rotosi as they were superior to those of Europe, the value of silver might be so much degraded as to render even the mines of Potosi not worth the working. Before the discovery of the Spanish West Indies, the most fertile mines in Europe may have afforded as great a rent to their proprietor as the richest mines in Peru do at present. Though the quantity of silver was much less, it might have ex¬ changed for an equal quantity of other goods, and the proprietor’s share might have enabled him to purchase or command an equal quantity either of labour or commo¬ dities. The value both of the produce and of the rent, the real revenue which they af¬ forded both to the public and to the pro¬ prietor, might have been the same. The most abundant mines, either of the precious metals or of the precious stones, could add little to the wealth of the world. A produce of which the value is principally derived from its scarcity, is necessarily de¬ graded by its abundance. A service of plate, and the other frivolous ornaments of dress and furniture, could be purchased for a smaller quantity of labour, or for a smaller quantity of commodities; and in this would consist the sole advantage which the world could derive from that abundance. It is otherwise in estates above ground. The value both of their produce and of their rent is in proportion to their absolute, and not to their relative fertility. The land which produces a certain quantity of food, clothes, and lodging, can always feed, clothe, and lodge a certain number of people ; and whatever may be the proportion of the land¬ lord, it will always give him a proportion- able command of the labour of those people, and of the commodities with which that labour can supply him. The value of the most barren lands is not diminished by the neighbourhood of the most fertile. On the contrary, it is generally increased by it. The great number of people maintained by the fertile lands afford a market to many parts of the produce of the barren, which they could never have found among those whom their own produce could maintain. Whatever increases the fertility of land in producing food, increases not only the value of the lands upon which the improvement is bestowed, but contributes likewise to in¬ crease that of many other lands, by creating a new demand for their produce. That abundance of food, of which, in consequence of the improvement of land, many people have the disposal beyond what they them¬ selves can consume, is the great cause of the demand both for the precious metals and the precious stones, as well as for everv other conveniency and ornament of dress, lodging, household furniture, and equipage. Food not only constitutes the principal part of the riches of the world, but it is the abundance of food which gives the principal part of their value to many other sorts of riches. The poor inhabitants of Cuba and St. Do- mingo, when they were first discovered by the Spaniards, used to wear little bits of gold, as ornaments, in their hair, and other parts of their dress. They seemed to value them as we would do any little pebbles of somewhat more than ordinary beauty, and to consider them as just worth the picking up, but not worth the refusing to any body who asked them. They gave them to their new guests at the first request, without seeming to think that they had made them any very valuable present. They were as¬ tonished to observe the rage of the Spaniards to obtain them; and had no notion that there could anywhere be a country in which many people had the disposal of so great a superfluity of food, so scanty always among themselves, that for a very small quantity of those glittering baubles they would willingly give as much as might maintain a whole family for many years. Could they have been made to understand this, the passion of the Spaniards would not have surprised them. Part III. Of the Variations in the Proportion between the respective Values of that Sort of Produce which always affords Rent , and of that which sometimes does and sometimes does not afford Rent. The increasing abundance of food, in con¬ sequence of increasing improvement and cultivation, must necessarily increase the demand for every part of the produce of land which is not food, and which can be applied either to use or to ornament. In the whole progress of improvement, it might therefore be expected there should be only one varia¬ tion in the comparative values of those two Chap. XI. VARIATIONS IN THE VALUE OF SILVER. 81 different sorts of produce. The value of that sort which sometimes does and some¬ times does not afford rent, should constantly rise in proportion to that which always affords some rent. As art and industry advance, the materials of clothing and lodg¬ ing, the useful fossils and minerals of the earth, the precious metals and the precious stones should gradually come to be more and more in demand, should gradually ex¬ change for a greater and a greater quantity of food, or, in other words, should gradually become dearer and dearer. This accordingly has been the case with most of these things upon most occasions, and would have been the case with all of them upon all occasions, if particular accidents had not upon some occasions increased the supply of some of them in a still greater proportion than the demand. The value of a free-stone quarry, for ex¬ ample, will necessarily increase with the increasing improvement and population of the country round about it; especially if it should be the only one in the neighbourhood. But the value of a silver mine, even though there should not be another within a thou¬ sand miles of it, will not necessarily increase with the improvement of the country in which it is situated. The market for the produce of a free-stone quarry can seldom extend more than a few miles round about it, and the demand must generally be in proportion to the improvement and popu¬ lation of that small district. But the mar¬ ket for the produce of a silver mine may ex¬ tend over the whole known world. Unless the world in general, therefore, be advancing in improvement and population, the demand for silver might not be at all increased by the improvement even of a large country in the neighbourhood of the mine. Even though the world in general were improving, yet if, in the course of its improvement, new mines should be discovered, much more fer¬ tile than any which had been known before, though the demand for silver would neces¬ sarily increase, yet the supply might increase in so much a greater proportion, that the real price of that metal might gradually fall; that is, any given quantity, a pound weight of it, for example, might gradually purchase or command a smaller and a smaller quantity of labour, or exchange for a smaller and a smaller quantity of corn, the principal part of the subsistence of the labourer. The great market for silver is the com¬ mercial and civilized part of the world. If by the general progress of improve¬ ment the demand of this market should increase, while at the same time the supply did not increase in the same proportion, the value of silver would gradually rise in pro¬ portion to that of corn. Any given quantity of silver would exchange for a greater and a greater quantity of corn : or, in other words, the average money price of corn would gradually become cheaper and cheaper. If, on the contrary, the supply by some accident should increase for many years to¬ gether in a greater proportion than the demand, that metal would gradually become cheaper and cheaper ; or, in other words, the average money price of corn would, in spite of all improvements, gradually become dearer and dearer. But if, on the other hand, the supply of the metal should increase nearly in the same proportion as the demand, it would continue to purchase or exchange for nearly the same quantity of corn, and the average money price of corn would, in spite of all improve¬ ments, continue very nearly the same. These three seem to exhaust all the pos¬ sible combinations of events which can happen in the progress of improvement ; and during the course of the four centuries pre¬ ceding the present, if we may judge by what has happened both in France and Great Britain, each of those three different combin¬ ations seem to have taken place in the European market, and nearly in the same order too in which I have here set them down. Digression concerning the Variations in the Value of Silver during the Course of the four last Centuries. FIRST PERIOD. In 1350, and for some time before, the ave¬ rage price of the quarter of wheat in England seems not to have been estimated lower than four ounces of silver, Tower-weight, equal to about twenty shillings of our present money. From this price it seems to have fallen gradually to two ounces of silver, equal to about ten shillings of our present money, the price at which we find it esti¬ mated in the beginning of the sixteenth cen¬ tury, and at which it seems to have continued to be estimated till about 1570. In 1350, being the 25th of Edward III., was enacted what is called, The statute ot labourers. In the preamble it complains much of the insolence of servants, who en¬ deavoured to raise their wages upon their masters. It therefore ordains, that all ser¬ vants and labourers should for the future be contented with the same wages and liveries (liveries in those times signified, not only clothes, but provisions) which they had been accustomed to receive in the 20th vear of the king, and the four preceding years; that upon this account their livery wheat should nowhere be estimated higher than tenpence a bushel, and that it should always be in the option of the master to deliver them either the wheat or the money. Tenpence a bushel, therefore, had, in the 25th of Edward III. G 82 VARIATIONS IN THE Book I. been reckoned a very moderate price of wheat, since it required a particular statute to oblige servants to accept of it in exchange for their usual liverj of provisions; and it had been reckoned a peasonable price ten years before that, or in the 16th year of the king, the term to which the statute refers. But in the 16th year of Edward III. ten- pence contained about half an ounce of silver, Tower-weight, and was nearly equal to half a crown of our present money. Four ounces of silver, Tower-weight, therefore, equal to six shillings and eightpence of the money of those times, and to near twenty shillings of that of the present, must have been reckoned a moderate price for the quarter of eight bushels. This statute is surely a better evidence of what was reckoned in those times a moderate price of grain, than the prices of some par¬ ticular years which have generally been re¬ corded by historians and other writers, on account of their extraordinary dearness or cheapness, and from which, therefore, it is difficult to form any judgment concerning what may have been the ordinary price. There are, besides, other reasons for believ¬ ing that in the beginning of the fourteenth century, and for some time before, the com¬ mon price of wheat was not less than four ounces of silver the quarter, and that of other grain in proportion. In 1309, Ralph de Born, prior of St. Augustine’s, Canterbury gave a feast upon his installation day, of which William Thorn has preserved, not only the bill of fare, but the prices of many particulars. In that feast were consumed, 1st, fifty-three quarters of wheat, which cost nineteen pounds, or seven shillings and twopence a quarter, equal to about one-and-twenty shillings and sixpence of our present money: 2dly, fifty-eight quar¬ ters of malt, which cost seventeen pounds ten shillings, or six shillings a quarter, equal to about eighteen shillings of our present money : 3dly, twenty quarters of oats, which cost four pounds, or four shillings a quarter, equal to about twelve shillings of our pre¬ sent money. The prices of malt and oats seem here to be higher than their ordinary proportion to the price of wheat. These prices are not recorded on account of their extraordinary dearness or cheapness, but are mentioned accidentally, as the prices actually paid for large quantities of grain consumed at a feast which was famous for its magnificence. In 1262, being the 51st of Henry III., was revived an ancient statute, called, The Assize of Bread and Ale , which, the king says in the preamble, had been made in the times of his progenitors, sometime kings of England. It is probably, therefore, as old at least as the time of his grandfather, Henry II., and may have been as old as the Conquest. It regulates the price of bread according as the prices of wheat may happen to be, from one shilling to twenty shillings the quarter of the money of those times. But statutes of this kind are gene¬ rally presumed to provide with equal care for all deviations from the middle price, for those below it as well as for those above it. Ten shillings, therefore, containing six ounces of silver, Tower-weight, and equal to about thirty shillings of our present money, must, upon this supposition, have been reckoned the middle price of the quarter of wheat when this statute was first enacted, and must have continued to be so in the 51st of Henry III. We cannot, therefore, be very wrong in supposing that the middle price was not less than one-third of the highest price at which this statute regulates the price of bread, or than six shillings and eightpence of the money of those times, containing four ounces of silver, Tower- weight. From these different facts, therefore, we seem to have some reason to conclude, that about the middle of the fourteenth century, and for a considerable time before, the aver¬ age or ordinary price of the quarter of wheat was not supposed to be less than four ounces of silver, Tower-weight. From about the middle of the fourteenth to the beginning of the sixteenth century, what was reckoned the reasonable and mo¬ derate, that is, the ordinary or average price of wheat, seems to have sunk gradually to about one-half of this price ; so as at last to have fallen to about two ounces of silver, Tower-weight, equal to about ten shillings of our present money. It continued to be estimated at this price till about 1570. In the household book of Henry, the fifth earl of Northumberland, drawn up in 1512, there are two different estimations of wheat. In one of them it is computed at six shil¬ lings and eightpence the quarter, in the other at five shillings and eightpence only. In 1512, six shillings and eightpence con¬ tained only two ounces of silver, Tower- weight, and were equal to about ten shil¬ lings of our present money. From the 25th of Edward III. to the beginning of the reign of Elizabeth, during the space of more than two hundred years, six shillings and eightpence, it appears from several different statutes, had continued to be considered as what is called the moder¬ ate and reasonable, that is, the ordinary or average price of wheat. The quantity of silver, however, contained in that nominal sum was, during the course of this period, continually diminishing, in consequence of some alterations which were made in the coin. But the increase of the value of sil¬ ver had, it seems, so far compensated the diminution of the quantity of it contained I Chap. XI. VALUE OF SILVER. 8 * in the same nominal sum, that the legisla¬ ture did not think it worth while to attend to this circumstance. Thus in 1436 it was enacted, that wheat might be exported without a licence when the price was so low as six shillings and eightpence: and in 1463 it was enacted, that no wheat should be imported if the price was not above six shillings and eightpence the quarter. The legislature had imagined, that when the price was so low, there could fj be no inconveniency in exportation, but that when it rose higher, it became prudent to 4 allow of importation. Six shillings and eightpence, therefore, containing about the same quantity of silver as thirteen shillings and fourpence of our present money, (one third part less than the same nominal sum contained in the time of Edward III.) had in those times been considered as what is called the moderate and reasonable price of wheat. In 1554, by the 1st and 2d of Philip and Mary, and in 1558, by the 1st of Elizabeth, the exportation of wheat was in the same manner prohibited, whenever the price of the quarter should exceed six shillings and eightpence, which did not then contain two penny worth more silver than the same nominal sum does at present. But it had soon been found that to restrain the export¬ ation of wheat till the price was so very low, was, in reality, to prohibit it altogether. In 1562, therefore, by the 5th of Elizabeth, the exportation of wheat was allowed from cer¬ tain ports whenever the price of the quarter should not exceed ten shillings, containing nearly the same quantity of silver as the like nominal sum does at present. This price had at this time, therefore, been con¬ sidered as what is called the moderate and reasonable price of wheat. It agrees nearly * with the estimation of the Northumberland * book in 1512. That in France the average price of grain was, in the same manner, much lower in the * end of the fifteenth and beginning of the sixteenth century, than in the two centuries * preceding, has been observed both by M. Dupre de St. Maur, and by the elegant author of the Essay on the Police of Grain. Its price, during the same period, had pro¬ bably sunk in the same manner through the greater part of Europe. This rise in the value of silver in propor¬ tion to that of corn, may either have been owing altogether to the increase of the de¬ mand for that metal, in consequence of increasing improvement and cultivation, the supply in the mean time continuing the same as before ; or, the demand continuing the same as before, it may have been owing alto¬ gether to the gradual diminution of the supply ; the greater part of the mines which were then known in the world being much exhausted, and consequently the expense of working them much increased ; or it may have been owing partly to the one, and partly to the other of those two circum¬ stances. In the end of the fifteenth and beginning 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. The increase of security would naturally in crease industry and improvement; and the demand 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 would require a greater quantity of coin to circulate it; and a greater number of rich people would re¬ quire a greater quantity of plate and other ornaments of silver. It is natural to sup pose, too, that the greater part of the mines which then supplied the European market with silver, might be a good deal exhausted, and have become more expensive in the working. They had been wrought, many of them, from the time of the Romans. It has been the opinion, however, of the greater part of those who have written upon the prices of commodities in ancient times, that, from the Conquest, perhaps from the invasion of Julius Caesar till the discovery of the mines of America, the value of silver was continually diminishing. This opinion they seem to have been led into, partly by the observations which they had occasion to make upon the prices both of corn and of some other parts of the rude produce of land; and partly by the popular notion, that as the quantity of silver naturally in¬ creases in every country with the increase of V » wealth, so its yalue diminishes as its quan¬ tity increases. In their observations upon the prices o* corn, three different circumstances seem fre¬ quently to have misled them. First , In ancient times almost all rents were paid in-kind ; in a certain quantity of corn, cattle, poultry, &c. It sometimes hap¬ pened, however, that the landlord would sti¬ pulate that he should be at liberty to de¬ mand of the tenant either thennnual payment in kind, or a certain sum of money instead of it. The price at which the payment in kind was in this manner exchanged for a certain sum of money, is in Scotland called the conversion price. As the option is always in the landlord to take either the substance or the price, it is necessary for the safety of the tenant, that the conversion price should rather be below than above the average market price. In many places, ac¬ cordingly, it is not much above one half of this price. Through the greater part of Scotland this custom still continues with regard to poultry, and in some places with regard to cattle. It might probably have G 2 84 VARIATIONS IN THE Book I. continued to take place, too, with regard to corn, had not the institution of the public fiars put an end to it. These are annual valuations, according to the judgment of an assise, of the average price of all the differ¬ ent sorts of grain, and of all the different qualities of each, according to the actual market price in every different county. This institution rendered it sufficiently safe for the tenant, and much more convenient for the landlord, to convert, as they call it, the corn rent, rather at what should happen to be the price of the liars of each year, than at any certain fixed price ; but the writers who have collected the prices of corn in ancient times, seem frequently to have mis¬ taken what is called in Scotland the conver¬ sion price for the actual market price. Fleet- wood 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 acknow¬ ledgment till after transcribing this conver¬ sion price fifteen times. The price is eight shillings the quarter of wheat. This sum in 1423, the year at which he begins with it, contained the same quantity of silver as six¬ teen shillings of our present money ; but in 1562, the year at which he ends with it, it contained no more than the same nominal sum does at present. Secondly , They have been misled by the slovenly manner in which some ancient sta¬ tutes of assize had been sometimes trans¬ cribed by lazy copiers ; and sometimes, per¬ haps, actually composed by the legislature. The ancient statutes of assize seem to have begun always with determining what ought to be the price of bread and ale when the price of wheat and barley were at the lowest, and to have proceeded gradually to determine what it ought to be, according as the prices of those two sorts of grain should gradually rise above this lowest price. But the transcribers of those statutes seem fre¬ quently to have thought it sufficient to copy the regulation as far as the three or four first and lowest prices ; saving in this manner their own labour, and judging, I suppose, that this was enough to show what propor¬ tion ought to be observed in all higher prices. Thus in the assize of bread and ale, of the 51st of Henry III., the price of bread was regulated according to the different prices of wheat, from one shilling to twenty shillings the quarter, of the money of those times. But in the manuscripts from which all the different editions of the statutes, pre¬ ceding that of Mr. Ruffhead, were printed, the copiers had never transcribed this regu¬ lation beyond the price of twelve shillings. Several writers, therefore, being misled by this faulty transcription, very naturally con¬ cluded that the middle price, or six shillings the quarter, equal try about eighteen shillings of our present money, was the ordinary or average price of wheat at that time. In the statute of Tumbrel and Pillory, enacted nearly about the same time, the price of ale is regulated according to every sixpence rise in the price of barley, from two shillings to four shillings the quarter. That four shillings, however, was not consi¬ dered as the highest price to which barley might frequently rise in those times, and that these prices were only given as an ex¬ ample of the proportion which ought to be observed in all other prices, whether higher or lower, we may infer from the last words of the statute ; “ et sic deinceps crescetur vel diminuetur per sex denarios.” The ex¬ pression is very slovenly, but the meaning is plain enough: “ That the price of ale is in this manner to be increased or diminished according to every sixpence rise or fall in the price of 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 is a statute of assize, in wdiich the price of bread is regulated according to all the dif¬ ferent prices of wheat, from tenpence to three shillings the Scotch boll, equal to about half an English quarter. Three shil¬ lings Scotch, at the time when this assize is supposed to have been enacted, were equal to about nine shillings* sterling of our pre¬ sent money. Mr. Ruddiman seems 1 to conclude from this, that three shillings was the highest price to which wheat ever rose in those times, and that tenpence, a shilling, or at most two shillings, were the ordinary prices. Upon consulting the manuscript, however, it appears evidently, that all these prices are only set down as examples of the proportion which ought to be observed be¬ tween the respective prices of wheat and bread. The last words of the statute are, “ reliqua judicabis secundum praescripta ha- bendo respectum ad pretium bladi.” “ You shall judge of the remaining cases according to what is above written, having a respect to the price of corn.” Thirdly , They seem to have been misled too by the very low price at which wheat was sometimes sold in very ancient times; and to have imagined, that as its lowest price was then much lower than in later times, its ordinary price must likewise have been much lower. They might have found, how¬ ever, that in those ancient times, its highest pi ice 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 1 See his preface to Anderson’s Diplomata Scotia?. VALUE OF SILVER. 85 Chap. XI. if h- shillings of the money of those times, equal to fourteen pounds eight shillings of that of the present; the other is six pounds eight shillings, equal to nineteen pounds four shil¬ lings of our present money. 1 No price can be found in the end of the fifteenth, or be¬ ginning of the sixteenth century, which ap¬ proaches to the extravagance of these. The price of corn, though at all times liable to variation, varies most in those turbulent and disorderly societies, in which the interrup¬ tion of all commerce and communication hinders the plenty of one part of the country from relieving the scarcity of another. In the disorderly state of England under the Plantagenets, who governed it from about the middle of the twelfth, till towards the end of the fifteenth century, one district might be in plenty, while another, at no great distance, by having its crop destroyed either by some accident of the seasons, or by the incursion of some neighbouring baron, might be suffering all the horrors of a fa¬ mine ; and yet if the lands of some hostile lord were interposed between them, the one might not be able to give the least assistance to the other. Under the vigorous admini¬ stration of the TudorSj who governed Eng¬ land during the latter part of the fifteenth, and through the whole of the sixteenth cen¬ tury, no baron was powerful enough to dare to disturb the public security. The reader will find at the end of this chapter all the prices of wheat which have been collected by Fleetwood, from 1202 to 1597, both inclusive, reduced to the money of the present times, and digested according to the order of time, into seven divisions of twelve years each. At the end of each divi¬ sion too, he will find the average price of the twelve years of which it consists. In that long period of time, Fleetwood has been able to collect the prices of no more than eighty years, so that four years are wanting to make out the last twelve years. I have added, therefore, from the accounts of Eton college, the prices of 1598, 1599, 1600, and 1601. It is the only addition which I have made. The reader will see, that from the beginning of the thirteenth, till after the middle of the sixteenth century, the average price of each twelve years grows gradually lower and lower; and that towards the end of the sixteenth century it begins to rise again. The prices, indeed, which Fleetwood has been able to collect, seem to have been those chiefly which were remark¬ able for extraordinary dearness or cheapness; and I do not pretend that any very certain conclusions can be drawn from them. So far, however, as they prove arty thing at all, 1 Very little dependence can be placed on the accounts of prices at this remote aera. It is, indeed, quite impossible that the prices mentioned in the they confirm the account which I have been endeavouring to give. Fleetwood himself, however, seems, with most other writers, to have believed, that during all this period the value of silver, in consequence of its in¬ creasing abundance, was continually dimin¬ ishing. 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 Fleetwood and Mr. Dupre de St. Maur are the two authors who seem to have collected, with the greatest diligence and fidelity, the prices of things in ancient times. It is 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, however, so much from the low price of corn, as from that of some other parts of the rude produce of land, that the most judicious writers have inferred the great value of silver in those very ancient times. Corn, it has been said, being a sort of manufacture, was, in those rude ages, much dearer in proportion than the greater part of other commodities; it is meant, I suppose, than the greater part of unmanu¬ factured commodities ; such as cattle, poul¬ try, game of all kinds, &c. That in those times of poverty and barbarism these were proportionably much cheaper than corn, is undoubtedly true. But this cheapness was not the effect of the high value of silver, but of the low value of those com¬ modities. It was not because silver would in such times purchase or represent a greater quantity of labour, but because such com¬ modities would purchase or represent a much smaller quantity than in times of more opu¬ lence and improvement. Silver must cer¬ tainly be cheaper in Spanish America than in Europe; in the country where it is pro¬ duced, than in the country to which it is brought, at the expense of a long carriage both by land and by sea, of a freight and an insurance. One-and-twenty pence halfpenny sterling, however, we are told by Ulloa, was, not many years ago, at Buenos Ayres, the price of an ox chosen from a herd of three or four hundred. Sixteen shillings sterling, we are told by Mr. Byron, was the price of a good horse in the capital of Chili. In a country naturally fertile, but of which the far greater part is altogether uncultivated, cattle, poultry, game of all kinds, &c., as they can be acquired with a very small quantity of labour, so they will purchase or command but a very small quantity. The low money price for which they may be sold, text should have been paid by any considerable number of persons. G 3 L 8 6 VARIATIONS IN THE Book I is no proof that the real value of silver is there very high, but that the real value of those commodities is very low. Labour, it must always be remembered, and not any particular commodity or set of commodities, is the real measure of the value both of silver and of all other commodities. But in countries almost waste, or but thinly inhabited, cattle, poultry, game of all kinds, 8cc., as they are the spontaneous pro¬ ductions of nature, so she frequently produces them in much greater quantities than the consumption of the inhabitants requires. In such a state of things the supply com¬ monly exceeds the demand. In different states of society, in different stages of im¬ provement, therefore, such commodities will represent, or be equivalent to, very different quantities of labour. In every state of society, in every stage of improvement, corn is the production of hu¬ man industry. But the average produce of every sort of industry is always suited, more or less exactly, to the average consumption; the average supply to the average demand. In every different stage of improvement, besides, the raising of equal quantities of corn in the same soil and climate, will, at an average, require nearly equal quantities of labour ; or what comes to the same thing, the price of nearly equal quantities; the continual increase of the productive powers of labour in an improving state of cultivation, being more or less counterbalanced by the continually increasing price of cattle, the principal instruments of agriculture. 1 Upon all these accounts, therefore, we may rest assured, that equal quantities of corn will, in every state of society, in every stage of improvement, more nearly represent, or be equivalent to, equal quantities of labour, than equal quantities of any other part of the rude produce of land. Corn, accord¬ ingly, it has already been observed, is, in all the different stages of wealth and improve¬ ment, a more accurate measure of value than any other commodity or set of commodities. In all those different stages, therefore, we can judge better of the real value of silver, by comparing it with corn, than by comparing it with any other commodity, or set of com¬ modities. Corn, besides, or whatever else is the common and favourite vegetable food of the people, constitutes, in every civilized country, the principal part of the subsistence of the labourer. In consequence of the extension of agriculture, the land of every country produces a much greater quantity of vege¬ table than of animal food, and the labourer everywhere lives chiefly upon the wholesome food that is cheapest and most abundant. 1 For an exposition of the fallacy of this doctrine, see notes on Corn Laws and Kent, end of the volume. Butcher’s ifi^t, except in the most thriving countries, or where labour is most highly rewarded, makes but an insignificant part of his subsistence ; poultry makes a still smaller part of it, and game no part of it. In France, and even in Scotland, where labour is some¬ what better rewarded than in France, the labouring poor seldom eat butcher’s meat, except upon holidays, and other extraordi¬ nary occasions. The money price of labour, therefore, depends much more upon the average money price of corn, the subsistence of the labourer, than upon that of butcher’s meat, or of any other part of the rude pro- dace of land. The real value of gold and silver, therefore, the real quantity of labour which they can purchase or command, de¬ pends much more upon the quantity of corn which they can purchase or command, than upon that of butcher’s meat, or any other part of the rude produce of land. Such slight observations, however, upon the prices either of corn or of other com¬ modities, would not, probably, have misled so many intelligent authors, had they not been influenced, at the same time, by the popular notion, that as the quantity of silver naturally increases in every country with the increase of wealth, so its value di¬ minishes as its quantity increases. This notion, however, seems to be altogether groundless. The quantity of the precious metals may increase in any Gountry from two different causes: either, first, from the increased abundance of the mines which supply it; or, secondly, from the increased wealth of the people, from the increased produce of their annual labour. The first of these causes is, no doubt, necessarily connected with the diminution of the value of the precious metals ; but the second is not. Wh en more abundant mines are disco¬ vered, a greater quantity of the precious metals is brought to market, and the quan¬ tity of the necessaries and conveniences of life for which they must be exchanged being the same as before, equal quantities of the metals must be exchanged for smaller quan¬ tities of commodities. So far, therefore, as the increase of the quantity of the precious metals in any country arises from the in¬ creased abundance of the mines, it is neces¬ sarily connected with some diminution of their value. When, on the contrary, the wealth of any country increases, when the annual produce of its labour becomes gradually greater and greater, a greater quantity of coin becomes necessary, in order to circulate a greater quantity of commodities ; and the people, as they can afford it, as they have more commodities to give for it, will naturally purchase a greater and a greater quantity of plate. The quantity of their coin will in- VALUE OF SILVER. 87 Chap. XI. T7 crease from necessity ; the quantity of their plate from vanity and ostentation, or from the same reason that the quantity of fine statues, pictures, and of every other luxury and curiosity, is likely to increase among them. But as statuaries and painters are not likely to be worse rewarded in times of wealth and prosperity, than in times of po¬ verty and depression, so gold and silver are not likely to be worse paid for. The price of gold and silver, when the accidental discovery of more abundant mines does not keep it down, as it naturally rises with the wealth of every country, so, what¬ ever be the state of the mines, it is at all times naturally higher in a rich than in a poor country. Gold and silver, like all other commodities, naturally seek the market where the best price is given for them, and the best price is commonly given for every thing in the country which can best afford it. Labour, it must be remembered, is the ultimate price which is paid for every thing, and in countries where labour is equally well rewarded, the money price of labour will be in proportion to that of the subsist¬ ence of the labourer. But gold and silver will naturally exchange for a greater quan¬ tity of subsistence in a rich than in a poor country, in a country which abounds with subsistence, than in one which is but indif¬ ferently supplied with it. If the two coun¬ tries are at a great distance, the difference may be very great; because though the metals naturally fly from the worse to the better market, yet it may be difficult to transport them in such quantities as to bring their price nearly to a level in both. If the countries are near, the difference will be smaller, and may sometimes be scarce per¬ ceptible ; because in this case the transport¬ ation will be easy. China is a much richer country than any part of Europe, and the difference between the price of subsistence in China and in Europe is very great. 1 Rice in China is much cheaper than wheat is anywhere in Europe. England is a much richer country than Scotland; but the difference between the money price of corn in those two countries is much smaller, and is but just perceptible. In proportion to the quantity or measure, Scotch corn gene¬ rally appears to be a good deal cheaper than English; but in proportion to its quality, it is, certainly, somewhat dearer. Scotland receives, almost every year, very large sup¬ plies 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. 2 English corn, there- 1 Dr. Smith must have formed his opinion of the riches of China from the representations of the earlier travellers, and the jesuits. Later and better authen¬ ticated accounts show that China, instead of being a rich, is really a poor ill-cultivated country. The population is exceedingly redundant; and poverty fore, must be dearer in Scotland than in England, and yet in proportion to its qua¬ lity, or to the quantity and goodness of the flour or meal which can be made from it, » it cannot commonly be sold higher there than the Scotch corn, which comes to market in competition with it. The difference between the money price of labour in China and in Europe is still greater than that between the money price of subsistence ; because the real recompence of labour is higher in Europe than in China, the greater part of Europe being in an im¬ proving state, while China seems to be standing still. The money price of labour is lower in Scotland than in England, be¬ cause the real recompence of labour is much lower; Scotland, though advancing to greater wealth, is advancing much more slowly than England. 3 The frequency of emigration from Scotland, and the rarity of it from England, sufficiently prove that the demand for labour is very different in the two coun¬ tries. The proportion between the real re¬ compence of labour in different countries, it must be remembered, is naturally regulated, not by their actual wealth or poverty, but by their advancing, stationary, or declining condition. Gold and silver, as they are naturally of the greatest value among the richest, so they are naturally of the least value among the poorest nations. Among savages, the poor¬ est of all nations, they are of scarce any value. In great towns corn is always dearer than in remote parts of the country. This, how¬ ever, is the effect not of the real cheapness of silver, but of the real dearness of corn. It does not cost less labour to bring silver to the great town than to the remote parts of the country; but it costs a great deal more to bring corn. In some very rich and commercial coun¬ tries, such as Holland and the territory of Genoa, corn is dear for the same reason that it is dear in great towns. They do not pro¬ duce enough to maintain their inhabitants. They are rich in the Industry and skill of their artificers and manufacturers ; in every sort of machinery which can facilitate and abridge labour; in shipping, and in all the other instruments and means of carriage and commerce ; but they are poor in corn, which, as it must be brought to them from distant countries, must, by an addition to its price, pay for the carriage from those countries. It does not cost less labour to bring silver to Amsterdam than to Dantzick ; but it costs a great deal more to bring corn. The real and misery prevail to an extent unknown any where in Europe, with the exception of Ireland. * This, as was previously observed, is no longer the case. The exports of corn from Scotland to England are now generally greater than the imports. 3 See notes ante , pp. 34. and 41. G 4 88 VARIATIONS IN TIIE Book I. cost of silver must be nearly the same in both places ; but that of corn must be very differ¬ ent. Diminish the real opulence either of Holland or of the territory of Genoa, while the number of their inhabitants remains the same : diminish their power of supplying themselves from distant countries ; and the price of corn, instead of sinking with that diminution in the quantity of their silver, which must necessarily accompany this de- dension either as its cause or as its effect, will rise to the price of a famine. When we are in want of necessaries, we must part with all superfluities, of which the value, as it rises in times of opulence and prosperity, so it sinks in times of poverty and distress. It is otherwise with necessaries. Their real price, the quantity of labour which they can purchase or command, rises in times of poverty and distress, and sinks in times of opulence and prosperity, w’hich are always times of great abundance ; for they could not otherwise be times of opulence and pros¬ perity. Corn is a necessary, silver is only a superfluity. Whatever, therefore, may have been the increase in the quantity of the precious metals, which, during the period between the middle of the fourteenth and that of the six¬ teenth century, arose from the increase of wealth and improvement, it could have no tendency to diminish their value either in Great Britain or in any other part of Europe. If those who have collected the prices of things in ancient times, therefore, had, during this period, no reason to infer the diminution of the value of silver, from any observations which they had made upon the prices either of corn or of other commo¬ dities, they had still less reason to infer it from any supposed increase of wealth and improvement. SECOND PERIOD. But how various soever may have been the opinions of the learned concerning the progress of the value of silver during the first period, they are unanimous concerning it during the second. From about 1570 to about 1640, during a period of about seventy years, the variation in the proportion between the value of silver and that of corn, held a quite opposite course. Silver sunk in its real value, or would exchange for a smaller quantity of labour than before; and corn rose in its nominal price, and instead of being com¬ monly sold for about two ounces of silver the quarter, or about ten shillings of our present money, came to be sold for six and eight ounces of silver the quarter, or about thirty and forty shillings of our present money. I he discovery of the abundant mines of America seems to have been the sole cause of this diminution in the value of silver in propoition to that of corn. It is accounted for accordingly in the same manner by every body ; and there never has been any dispute either about the fact, or about the cause of it. The greater part of Europe was, during this period, advancing in industry and im¬ provement, and the demand for silver must consequently have been increasing. But the inciease of the supply had, it seems, so far exceeded that of the demand, that the value of that metal sunk considerably. The discovery of the mines of America, it is to be observed, does not seem to have had any very sensible effect upon the prices of things in England till after 1570; though even the mines of I otosi had been discovered more than twenty years before. From 1595 to 1620, both inclusive, the average price of the quarter of nine bushels of the best wheat at Windsor market, ap¬ pears, from the accounts of Eton College, to have been <£ J 2 Is. 6$d. From which & sum, neglecting the fraction, and deducting a ninth, or 4s. 7 \d., the price of the quarter of eight bushels comes out to have been £} 16s. 10gf/. And from this sum, neglecting likewise the fraction, and deducting a ninth^ or 4s. 1 for the difference between the price of the best wheat and that of the mid¬ dle wheat, the price of the middle wheat comes out to have been about £l 1 2s. 8 8 d. or about six ounces and one-third of an ounce of silver. From 1621 to 1636, both inclusive, the average price of the same measure of the best wheat at the same market appears, from the same accounts, to have been £2 10s. ; from which, making the like deductions as in the foregoing case, the average price of the quarter of eight bushels of middle wheat comes out to have been £\ 19s. 6d., or about seven ounces and two-thirds of an ounce of silver. THIRD PERIOD. Between 1630 and 1640, or about 1636, the effect of the discovery of the mines of America in reducing the value of silver, ap¬ pears to have been completed; and the value of that metal seems never to have sunk lower in proportion to that of corn than it was about that time. It seems to have risen somewhat in the course of the present cen¬ tury, and it had probably begun to do so even some time before the end of the last. From 1637 to 1700, both inclusive, being the sixty-four last years of the last century, the average price of the quarter of nine bushels of the best wheat at Windsor market appears, from the same accounts, to have been £2 11s. Oje?. ; which is only Is. OjrZ. dearer than it had been during the sixteen years before. But in the course of these Chap. XT. VALUE OF SILVER. 89 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. The first of these events was the civil war, which, by discouraging tillage and inter¬ rupting commerce, must have raised the price of corn much above what the course of the seasons would otherwise have occa¬ sioned. It must have had this effect more or less at all 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 47. 5s., and in 1649 j to have been 47. the quarter of nine bushels. The excess of those two years above 27. 10s. (the average price of the sixteen years pre¬ ceding 1637) is 37. 5s. ; which, divided among the sixty-four last years of the last century, will alone very nearly account for that small enhancement of price which seems to have taken place in them. These, how¬ ever, though the highest, are by no means the only high prices which seem to have been occasioned by the civil wars. The second event was the bounty upon the exportation of corn, granted in 1688. 1 The bounty, it has been thought by many people, by encouraging tillage, may, in a long course of years have occasioned a greater abundance, and consequently a greater cheapness of corn in the home market than what would other¬ wise have taken place there. How far the bounty could produce this effect at anytime, I shall examine hereafter ; I shall only observe at present, that between 1688 and 1700 it had not time to produce any such effect. During this short period its only effect must have been by encouraging the exportation of the surplus produce of every year, and thereby I 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 further exportation of corn was prohibited for nine months. There was a third event which occurred in the course of the same period, and which, though it could not occasion any scarcity of corn, nor, perhaps, any augmentation in the real quantity of silver which was usually W 1 For some observations on the effects of the bounty, see note on tho Corn Laws, end of the volume. * paid for it, must necessarily have occasioned some augmentation in the nominal sum. This event was the great debasement of the silver coin, by clipping and wearing. This evil had begun in the reign of Charles II., and had gone on continually increasing till 1695; at which time, as we may learn from Mr. Lowndes, the current silver coin was, at an average, near five-and-twenty per cent, below its standard value. But the nominal sum which constitutes the market price of every commodity is necessarily regulated, not so much by the quantity of silver, which, according to the standard, ought to be con¬ tained in it, as by that which, it is found by experience, actually is contained in it. This nominal sum, therefore, is necessarily higher when the coin is much debased by clipping and wearing, than when near to its standard value. In the course of the present century, the silver coin has not at any time been more below its standard weight than it is at pre¬ sent. But though very much defaced, its value has been kept up by that of the gold coin for which it is exchanged. For though before the late recoinage, the gold coin was a good deal defaced too, it was less so than the silver. In 1695, on the contrary, the value of the silver coin was not kept up by the gold coin ; a guinea then commonly exchang¬ ing for thirty shillings of the worn and dipt silver. Before the late recoinage of the gold, the price of silver bullion was seldom higher than five shillings and sevenpence an ounce, which is but fivepence above the mint price. But in 1695, the common price of silver bullion was six shillings and fivepence an ounce, 2 which is fifteen pence above the mint price. Even before the late recoinage of the gold, therefore, the coin, gold and silver together, when compared with silver bullion, was not supposed to be more than eight per cent, below its standard value. In 1695, on the contrary, it had been supposed to be near five-and-twenty per cent, below that value. But in the beginning of the present century, that is, immediately after the great recoinage in King William’s time, the greater part of the current silver coin must have been still nearer to its standard weight than it is at present. In the course of the present century too there has been no great public calamity, such as the civil war, which could either discourage tillage, or interrupt the interior commerce of the country. And though the bounty, which has taken place through the greater part of this century, must always raise the price of corn somewhat higher than it otherwise would be in the actual state of tillage, yet as, in the course of this century, the bounty has had full time to produce all the good 2 Lowndes’s Essay on the Silver Coin, p. 68. 90 VARIATIONS IN THE Book 1. effects commonly imputed to it, to encourage tillage, and thereby to increase the quantity of corn in the home market, it may, upon the principles of a system which I shall explain and examine hereafter, 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 supposed to have done more. In the sixty- four first years of the present century accord¬ ingly, the average price of the quarter of nine bushels of the best wheat at Windsor market, appears, by the accounts of Eton College, to have been 27. Os. 6\\d., which is about ten shillings and sixpence, or more than five-and- twenty per cent, cheaper than it had been during the sixty-four last years of the last century ; and about nine shillings and six¬ pence cheaper than it had been during the sixteen years preceding 1636, when the dis¬ covery of the abundant mines of America may be supposed to have produced its full effect ; and about one shilling cheaper than it had been in the twenty-six years preceding 1620, before that discovery can well be supposed to have produced its full effect. According to this account, the average price of middle wheat, during these sixty-four ftrst years of the present century, comes out to have been about thirty-two shillings the quarter of eight bushels. The value of silver, therefore, seems to have risen somewhat in proportion to that of corn during the course of the present cen¬ tury, and it had probably begun to do so even some time before the end of the last. In 1687, the price of the quarter of nine bushels of the best w r heat at Windsor market was 17. 5s. 2d ., the lowest price at which it had ever been from 1595. In 1688, Mr. Gregory King, a man fa¬ mous for his knowledge of matters of this kind, estimated the average price of wheat in years of moderate plenty to be to the grower 35. 6d. the bushel, or eight-and- twenty shillings the quarter. The grower’s price I understand to be the same with what is sometimes called the contract price, or the price at which a farmer contracts for a cer¬ tain number of years to deliver a certain quantity of corn to a dealer. As a contract of this kind saves the farmer the expense and trouble of marketing, the contract price is generally lower than what is supposed to be the average market price. Mr. King had judged eight-and-twenty shillings the quar¬ ter to be at that time the ordinary contract price in years of moderate plenty. Before the scarcity occasioned by the late extraor¬ dinary course of bad seasons, it was, I have been assured, the ordinary contract price in all common years. In 1688 was granted the parliamentary bounty upon the exportation of corn. The country gentlemen, who then composed a till greater proportion of the legislature than they do at present, had felt that the money price of corn was falling. The bounty was an expedient to raise it artificially to the high price at which it had frequently been sold in the times of Charles I. and II. It was to take place, therefore, till wheat was so high as forty-eight shillings the quar¬ ter ; that is twenty shillings, or 5ths dearer than Mr. King had in that very year esti¬ mated the grower’s price to be in times of moderate plenty. If his calculations de¬ serve any part of the reputation which they have obtained very universally, eight-and- forty shillings the quarter was a price which, without some such expedient as the bounty, could not at that time be expected, except in years of extraordinary scarcity. But the government of King William was not then fully settled. It was in no condition to re¬ fuse any thing to the country gentlemen, from whom it was at that very time soliciting the first establishment of the annual land-tax. The value of silver, therefore, in propor¬ tion to that of corn, had probably risen somewhat before the end of the last century; and it seems to have continued to do so during the course of the greater part of the present; though the necessary operation of the bounty must have hindered that rise from being so sensible as it otherwise would have been in the actual state of tillage. In plentiful years the bounty, by occa¬ sioning an extraordinary exportation, neces¬ sarily raises the price of corn above what it otherwise would be in those years. To en¬ courage tillage, by keeping up the price of corn even in the most plentiful years, was the avowed end of the institution. In years of great scarcity, indeed, the bounty has generally been suspended. It must, however, have had some effect even upon the prices of many of those years. By the extraordinary exportation which it oc¬ casions in years of plenty, it must frequently hinder the plenty of one year from compen¬ sating the scarcity of another. Both in years of plenty and in years of scarcity, therefore, the bounty raises the price of corn above what it naturally would be in the actual state of tillage. If, during the sixty-four first years of the present cen¬ tury, therefore, the average price has been lower than during the sixty-four last years of the last century, it must, in the same state of tillage, have been much more so, had it not been for this operation of the bounty. But without the bounty, it may be said, the state of tillage would not have been the same. What may have been the effects of this institution upon the agriculture of the country, I shall endeavour to explain here¬ after, when I come to treat particularly of bounties. I shall only observe at present, that this rise in the value of silver, in pro- Chap. XI. VALUE OF SILVER. 91 portion to thart of corn, has not been pecu¬ liar to England. It has been observed to have taken place in France during the same period, and nearly in the same proportion too, by three very faithful, diligent, and la¬ borious collectors of the prices of corn, M. Dupre de St. Maur, Mr. Messance, and the author of the Essay on the Police of Grain. But in France, till 1764, the exportation of grain was by law prohibited; and it is somewhat difficult to suppose, that nearly the same diminution of price which took place in one country, notwithstanding this prohibition, should in another be owing to the extraordinary encouragement given to exportation. It would be more proper, perhaps, to consider this variation in the average money price of corn as the effect rather of some gradual rise in the real value of silver in the European market, than of any fall in the real average value of corn. Corn, it has already been observed, is at distant periods of time a more accurate measure of value than either silver, or perhaps any other com¬ modity. When, after the discovery of the abundant mines of America, corn rose to three and four times its former money price, this change was universally ascribed, not to any rise in the real value of corn, but to a fall in the real value of silver. If, during the sixty-four first years of the present cen¬ tury, therefore, the average money price of corn has fallen somewhat below what it had been during the greater part of the last cen¬ tury, we should in the same manner impute this change, not to any fall in the real value of corn, but to some rise in the real value of silver in the European market.. The high price of corn during these ten or twelve years past 1 , indeed, has occasioned a suspicion that the real value of silver still continues to fall in the European market. This high price of corn, however, seems evidently to have been the effect of the ex¬ traordinary unfavourableness of the seasons, and ought therefore to be regarded, not as a permanent, but as a transitory and occasi¬ onal event. The seasons for these ten or twelve years past have been unfavourable through the greater part of Europe; and the disorders of Poland have very much in¬ creased the scarcity in all those countries which, in dear years, used to be supplied 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 inquired much into the history of the prices of corn in former times, will be at no loss to recollect several other examples of the same kind. Ten years of extraordinary scarcity besides are not more wonderful than ten years of extraordinary plenty. The low price of corn from 1741 to 1750, both inclu- i That is, the ten or twelve years ending with 1775, sive, may very well be set in opposition to its high price during these last eight or ten years. From 1741 to 1750, the average price of the quarter of nine bushels of the best wheat at Windsor market, it appears from the accounts of Eton College, was only 1/. 13s. 9 id., which is nearly 6s. 3d. below the average price of the sixty-four first years of the present century. The average price of the quarter of eight bushels of middle wheat comes out, according to this account, to have been, during these ten years, only 1/. 6s. 8d. Between 1741 and 1750, however, the bounty must have hindered the price of corn from falling so low in the home market as it naturally would have done. During these ten years the quantity of all sorts of grain exported, it appears from the custom-house books, amounted to no less than eight mil¬ lions twenty-nine thousand one hundred and fifty-six quarters one bushel. The bounty paid for this amounted to 1,51 4,9621. 17 s. 4 \d. In 1749 accordingly, Mr. Pelham, at that time prime minister, observed to the House of Commons, that for the three years preced¬ ing, a very extraordinary sum had been paid as bounty for the exportation of corn. He had good reason to make this observation, and in the following year he might have had still better. In that single year the bounty paid amounted to no less than 324,176/. 10s. 6d.' 2 It is unnecessary to observe how much this forced exportation must have raised the price of corn above what it otherwise would have been in the home market. At the end of the accounts annexed to this chapter the reader will find the particu¬ lar account of those ten years separated from the rest. He will find there too the par¬ ticular account of the preceding ten years, of which the average is likewise below, though not so much below, the general average of the sixty-four first years of the century. The year 1740, however, was a year of extraordinary scarcity. These twenty years preceding 1750, may very well be set in opposition to the twenty preceding 1770. As the former were a good deal below the general average of the century, notwith¬ standing the intervention of one or two dear years; so the latter have been a good deal above it, notwithstanding the intervention of one or two cheap ones, of 1759, for ex¬ ample. If the former have not been so much below the general average, as the latter have been above it, we ought probably to impute it to the bounty. The change has evidently been too sudden to be ascribed to any change in the value of silver, which is always slow and gradual. The suddenness of the effect can be accounted for only by a cause which can operate suddenly, the accidental variation of the seasons. * See Tracts on the Corn Trade : Tract 3d. 99 . VARIATIONS IN THE Book I. The money price of labour in Great Bri¬ tain has, indeed, risen during the course of the present century. This, however, seems to be the effect, not so much of any diminu¬ tion in the value of silver in the European market, as of an increase in the demand for labour in Great Britain, arising from the great and almost universal prosperity of the country. In France, a country not alto¬ gether so prosperous, the money price of la¬ bour has, since the middle of the last century, been observed to sink gradually with the average money price of corn. Both in the last century and in the present, the day- wages of common labour are there said to have been pretty uniformly about the twen¬ tieth part of the average price of the septier of wheat, a measure which contains a little more than four Winchester bushels. In Great Britain the real recompence of labour, it has already been shown, the real quantities of the necessaries and conveniences of life which are given to the labourer, has in¬ creased considerably during the course of the piesent century. The rise in its monev price seems to have been the effect, not of any diminution of the value of silver in the general market of Europe, but of a rise in the real price of labour in the particular market of Great Britain, owing to the pecu¬ liarly happy circumstances of the country. For some time after the first discovery of America, silver would continue to sell at its former, or not much below its former price. The profits of mining would for some time be very great, and much above their natural rate. Those who imported that metal into Europe, however, would soon find that the whole annual importation could not be dis¬ posed of at this high price. Silver would gradually exchange for a smaller and a smal¬ ler quantity of goods. Its price would sink gradually lower and lower till it fell to its natural price ; or to what was just sufficient to pay, according to their natural rates, the wages of the labour, the profits of the stock, and the rent of the land, which must be paid in order to bring it from the mine to the market. In the greater part of the silver mines of Peru, the tax of the king of Spain, amounting to a tenth of the gross produce, eats up, it has already been observed, the whole rent of the land. This tax was ori¬ ginally a half; it soon afterwards fell to a third, then to a fifth, and at last to a tenth, at which rate it still continues. In the greater part of the silver mines of Peru this,, it seems, is all that remains, after re¬ placing the stock of the undertaker of the work, together with its ordinary profits; and it seems to be universally acknowledged that these profits, which were once very 5 Solorzano, vol. ii. minp^nf Pm™ n0 1 ? ng ? r clain ? this distinction. The - of Guanaxuato, in Mexico, discovered in 1760, high, are now as low as they can well be, consistently with carrying on their works. The tax of the king of Spain was reduced to a fifth part of the registered silver in 1504 1 , one-and-forty years before 1545, the date of the discovery of the mines of Potosi. In the course of ninety years, or before 1636, these mines, the most fertile in all America" 2 , had time sufficient to produce their full effect, or to reduce the value of silver in the European market as low as it could well fall, while it continued to pay this tax to the king of Spain. Ninety years is time sufficient to reduce any commodity, of which there is no monopoly, to its natural price, or to the lowest price at which, while it pa\ s a particular tax, it can continue to be sold for any considerable time together. The price of silver in the European mar¬ ket might, perhaps, have fallen still lower, and it might have become necessary either to reduce the tax upon it, not only to one- tenth, as in 1736, but to one-twentieth, in the same manner as that upon gold, or to give up working the greater part of the American mines which are now wrought. The gradual increase of the demand for silv er, or the gradual enlargement of the market for the produce of the silver mines Ameiica, is probably the cause which has pi evented this from happening, and which has not only kept up the value of silver in tne European market, but has perhaps even raised it somewhat higher than it was about the middle of the last century. Since the first discovery of America, the maiket for the produce of its silver mines has been growing gradually more and more extensive. First, The market of Europe has become gradually more and more extensive. Since the discovery of America, the greater part of Europe has been much improved. England, Holland, France, and Germany; even Swe¬ den,.Denmark, and Russia, have all advanced considerably both in agriculture and in ma¬ nufactures. Italy seems not to have gone backwards. The fall of Italy preceded the conquest of Peru. Since that time it seems rather to have recovered a little. Spain and Portugal, indeed, are supposed to have gone backwards. Portugal, however, is but a very small part of Europe, and the declen¬ sion of Spain is not, perhaps, so great as is commonly imagined. In the beginning of the sixteenth century, Spain was a very poor country, even in comparison with France, which has been so much improved since that time. It was the well-known remark of the Emperor Charles V., who had travelled so frequently through both countries, that every thing abounded in France, but that every have been nearly twice as productive as those of rotosi. See Humboldt, Essai Politique sur la Nou- velle Espagne, tome iii. p. 377. Chai\ XI. VALUE OF SILVER. 93 thing was wanting in Spain. The increas¬ ing produce of the agriculture and manu¬ factures of Europe must necessarily have required a gradual increase in the quantity of silver coin to circulate it; and the in¬ creasing number of wealthy individuals must have required the like increase in the quan¬ tity of their plate and other ornaments of silver. Secondly, America is itself a new market for the produce of its own silver mines; and as its advances in agriculture, industry, and population are much more rapid than those of the most thriving countries in Europe, its demand must increase much more rapidly. The English colonies are altogether a new market, which, partly for coin and partly for plate, requires a con¬ tinually augmenting supply of silver through a great continent where there never was any demand before. The greater part, too, of the Spanish and Portuguese colonies are altogether new markets. New Grenada, the Yucatan, Paraguay, and the Brazils were, before discovered by the Europeans, inha¬ bited 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 considered as altogether new markets, are certainly much more extensive ones than they ever were before. After all the wonderful tales which have been pub¬ lished concerning the splendid state of those countries in ancient times, whoever reads, with any degree of sober judgment, the his¬ tory of their first discovery and conquest, will evidently discern that in arts, agricul¬ ture, and commerce, their inhabitants were much more ignorant than the Tartars of the Ukraine are at present. Even the Peru¬ vians, 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 house¬ hold furniture, their own clothes, shoes, and instruments of agriculture. The few arti¬ ficers among them are said to have been all maintained by the sovereign, the nobles, and the priests, and were probably their servants or slaves. All the ancient arts of Mexico and Peru have never furnished one single manufacture to Europe. The Spanish armies, though they scarce ever exceeded five hundred men, and frequently did not amount to half that number, found almost every¬ where great difficulty in procuring subsist¬ ence. 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 cultiva¬ tion is in a great measure fabulous. The Spanish colonies are under a government in many respects less favourable to agricul¬ ture, 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 circum¬ stance common to all new colonies, is, it seems, so great an advantage as to compen¬ sate many defects in civil government. Frezier, who visited Peru in 1713, repre¬ sents Lima as containing between twenty- five and twenty-eight thousand inhabitants. Ulloa, who resided in the same country between 1740 and 1746, represents it as con¬ taining more than fifty thousand. The difference in their accounts of the populous¬ ness of several other principal towns in Chili and Peru is nearly the same ; and as there seems to be no reason to doubt of the good information of either, it marks an increase which is scarce inferior to that of the Eng¬ lish colonies. America, therefore, is a new market for the produce of its own silver mines, of which the demand must increase much more rapidly than that of the most thriving country in Europe. Thirdly , The East Indies is another mar¬ ket for the produce of the silver mines of America, and a market which, from the time of the first discovery of those mines, has been continually taking off a greater and a greater quantity of silver. Since that time, the direct trade between America and the East Indies, which is carried on by means of the Acapulco ships, has been continually augmenting, and the indirect intercourse by the way of Europe, has been augmenting in a still greater propor¬ tion. During the sixteenth century, the Portuguese were the only European nation who carried on any regular trade to the East Indies. In the last years of that cen¬ tury the Dutch began to encroach upon this monopoly, and in a few years expelled them from their principal settlements in India. During the greater part of the last century those two nations divided the most consider¬ able 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, but it has been greatly augmented in the course of the present. The East India trade of the Swedes and Danes began in the course of the present century. Even the Muscovites now trade regularly with China by a sort of caravans which go over land through Siberia and Tartary to Pekin. The East India trade of all these nations, if we except that 94 VARIATIONS IN TIIE Book I. of the French, which the last war had well nigh annihilated, has been almost continually augmenting. The increasing consumption of East India goods in Europe is, it seems, so great, as to afford a gradual increase of employment to them all. Tea, for example, was a drug very little used in Europe before the middle of the last century. At present the value of the tea annually imported by the English East India Company, for the use of their own countrymen, 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, and of innumerable other articles, has in¬ creased very nearly in a like proportion. The tonnage accordingly of all the Euro¬ pean shipping employed in the East India trade, at any one time during the last cen¬ tury, was not, perhaps, much greater than that of the English East India Company before the late reduction of their shipping. But in the East Indies, particularly in China and Indostan, the value of the pre¬ cious metals, when the Europeans first began to trade to those countries, was much higher than in Europe ; and it still continues to be so. In rice countries, which generally yield two, sometimes three crops in the year, each of them more plentiful than any common crop of corn, the abundance of food must be much greater than in any corn country of equal extent. Such countries are accord¬ ingly much more populous. In them too the rich, having a greater superabundance of food to dispose of beyond what they them¬ selves can consume, have the means of pur¬ chasing a much greater quantity of the labour of other people. The retinue of a grandee in China or Indostan accordingly is, by all accounts, much more numerous and splendid than that of the richest subjects in 1 The consumption of tea has been greatly in¬ creased since 1775. The quantity of tea legally imported during the three years ending with 1783 amounted to about five and a half millions of pounds weight; but in addition to this, it was estimated that a farther quantity of above seven and a half millons of pounds was clandestinely imported, making the whole imports amount to about thirteen millions of pounds. This excess of smuggling was entirely a consequence of the oppressively high duties on tea ; and in 1784, after every other resource had in vain been tried for its suppression, Mr. Pitt reduced the duties from about 119 to 12£ per cent, ad valorem . This measure was eminently successful. Smuggling, having ceased to be lucrative, was immediately abandoned ; and the quantity of tea legally imported was increased in a threefold proportion in less than two years. The consumption of tea continued to increase with considerable rapidity until 1800 ; but from that period to 1817 It remained pretty stationary, a conse¬ quence principally of the great additions made to the duty during the interval; but partly, also, of the way in which the E. I. Company supplied the market, rrom 1817, when the consumption of Great Britain Europe. The same superabundance of food of which they have the disposal, enables them to give a greater quantity of it for all those singular and rare productions which nature furnishes but in very small quantities; such as the precious metals and the precious stones, the great objects of the competition of the rich. Though the mines, therefore, which supplied the Indian market had been as abundant as those which supplied the European, such commodities would natu¬ rally exchange for a greater quantity of food in India than in Europe. But the mines which supplied the Indian market with the precious metals seem to have been a good deal less abundant, and those which supplied ’t 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 some¬ what a greater quantity of the precious stones and for a much greater quantity of food than in Europe. The money price of diamonds, the greatest of all superfluities, would be somewhat lower, and that of food, the first of all necessaries, a great deal lower in the one country than in the other. But the real price of labour, the real quantity of the necessaries of life which is given to the labourer, it has already been observed, is lower both in China and Indostan, the two great markets of India, than it is through the greater part of Europe. The wages of the labourer will there purchase a smaller quantity of food; and as the money price of food is much lower in India than in Europe, the money price of labour is there lower upon a double account; upon account both of the small quantity of food which it will purchase, and of the low price of that food. But in countries of equal art and industry, the money price of the greater part of manu¬ factures will be in proportion to the money price of labour ; and in manufacturing art and industry, China and Indostan, though inferior, seem not to be much inferior to any part of Europe. The money price of the greater part of manufactures, therefore, and Ireland amounted to about twenty-four millions of pounds, it gradually went on increasing till 1833, when it amounted to 31,829,G201bs. In 1834 the trade with China was thrown open ; and the large imports of the private traders, added to the stock accumulated by the East India Company, having sunk prices very materially, the consumption has been so much extended that it now (1838) amounts to about 40,000,0001bs. producing 4,000,000/. revenue ! On the first introduction of the new system the duties were fixed at Is. 6 d., 2s. 2 d. and 3s. per pound, ac¬ cording to quality ; but this plan, not being found to answer, was abandoned in 1835, when a uniform duty of 2s. 1 d. per pound was laid on all teas without respect to quality. — Supposing the present duty to be equivalent to an ad valorem tax of 100 per cent., which is believed to be pretty near the mark, it follows that the tea now annually consumed costs the people of Britain and Ireland 8,000,000/., exclusive of the profits of the retail dealers. For further in¬ formation as t-o the history and present state of the tea trade, see art. Tea, M‘Culloch’s Commer¬ cial Dictionary. Chap. XI. VALUE OF SILVER. 95 will naturally be much lower in those great empires than it is anywhere in Europe. Tnrough the greater part of Europe too the expense of land-carriage increases very much both the real and nominal price of most manufactures. It costs more labour, and therefore more money, to bring first the materials, and afterwards the complete manu¬ facture to market. In China and Indostan the extent and variety of inland navigations save the greater part of this labour, and con¬ sequently of this money, and thereby reduce still lower both the real and the nominal price of the greater part of their manufac¬ tures. Upon all these accounts, the precious metals are a commodity which it always has •» • been, and still continues to be, extremely advantageous to carry from Europe to India. 1 There is scarce any commodity which brings a better price there ; or which, in proportion to the quantity of labour and commodities which it costs in Europe, will purchase or command a greater quantity of labour and commodities in India. It is more advan¬ tageous too to carry silver thither than gold ; because in China, and the greater part of the other markets of India, the proportion be¬ tween fine silver and fine gold is but as ten, or at most as twelve to one ; whereas in Europe it is as fourteen or fifteen to one. In China and the greater part of the other markets of India, ten, or at most twelve, ounces of silver will purchase an ounce of gold : in Europe it requires from fourteen to fifteen ounces. In the cargoes, therefore, of the greater part of European ships which sail to India, silver has generally been one of the most valuable articles. It is the most valuable article in the Acapulco ships which sail to Manilla. The silver of the new continent seems in this manner to be one of the principal com¬ modities by which the commerce between the two extremities of the old one is carried on, and it is by means of it, in a great mea¬ sure, that those distant parts of the world are connected with one another 2 . In order to supply so very widely ex¬ tended a market, the quantity of silver an¬ nually brought from the mines must not only be sufficient to support, that continual increase both of coin and of plate which is required in all thriving countries; but to repair that continual waste and consumption of silver which takes place in all countries where that metal is used. 1 Within the last few years, the drain of bullion to the East has nearly ceased; and considerable quantities have occasionally been imported from India and China Into this country. 2 Humboldt estimates, that of the sum of 43,500,000 dollars of gold and silver annually brought from Ame¬ rica to Europe previously to the revolutionary convul¬ sions in the former, no less than 25,500,000 were subse¬ quently exported to Asia; viz.:—4,000,000 by the Levant; 17,500,000 by the route round the Cape of Good Hope; The continual consumption of the preci¬ ous metals in coin by wearing, and in plate both by wearing and cleaning, is very sensi¬ ble ; and in commodities of which the use is so very widely extended, would alone re¬ quire a very great annual supply. The consumption of those metals in some par¬ ticular 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 em¬ ployed in gilding and plating, and thereby disqualified from ever afterwards appearing in the shape of those metals, is said to amount • to more than fifty thousand pounds sterling. We may from thence form some notion how great must be the annual consumption in all the different parts of the world, either in manufactures of the same kind with those of Birmingham, or in laces, embroideries, gold and silver stuffs, the gilding of books, furniture, &c. A considerable quantity too must be annually lost in transporting 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 know¬ ledge frequently dies with the person who makes the concealment, must occasion the loss of a still greater quantity. The quantity of gold and silver imported at both Cadiz and Lisbon (including not only what comes under register, but what may be supposed to be smuggled) amounts, according to the best accounts, to about six millions sterling a year. According to Mr. Meggens 3 , the annual importation of the precious metals into Spain, at an average of six years, viz. from 1748 to 1753, both inclusive ; and into Portugal, at an average of seven years, viz. from 1747 to 1753, both inclusive ; amounted in silver to 1,101,107 pounds weight; and in gold to 49,940 pounds weight. The silver at sixty- two shillings the pound Troy, amounts to 3,413,431/. 10s. sterling. The gold, at forty- four guineas and a half the pound Troy, amounts to 2,333,4467. 14s. sterling. Both together amount to 5,746,878/. 4s. sterling. The account of what was imported under register, he assures us is exact. He gives us the detail of the particular places from and 4,000,000 through Russia by way of Kiachta, To¬ bolsk, &C. —See Essai Politique sur la Nouvelle Espagne , iv. p. 278. 3 Postscript to the Universal Merchant, p. 15 and 16. This postscript was not printed till 1756, three years af¬ ter 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.— tNote by the Author.) 96 VARIATIONS IN THE which the gold and silver were brought, and of the particular quantity of each metal, which, according to the register, each of them afforded. He makes an allowance too for the quantity of each metal which he supposes may have been smuggled. The great experience of this judicious merchant renders his opinion of considerable weight. According to the eloquent and sometimes well-informed author of the Philosophical and Political History of the Establishment of the Europeans in the two Indies, the annual importation of registered gold and silver into Spain, at an average of eleven years, viz. from 1754 to 1764, both inclusive, amounted to 13,984,185? piasters of ten reals. On account of what may have been smug¬ gled, however, the whole annual importation, he supposes, may have amounted to seven¬ teen millions of piasters ; which at 4 . 5 . 6d. the piaster, is equal to 3,825,000/. sterling. He gives the detail too of the particular places from which the gold and silver were brought, and of the particular quantities of each metal which, according to the register, each of them afforded. He informs us too, that if we were to judge of the quantity of gold annually imported from the Brazils into Lisbon by the amount of the tax paid to the king of Portugal, which it seems is one-fifth of the standard metal, we might value it at eighteen millions of cruzadoes, or forty-five millions of French livres, equal to about two millions sterling. On account of what may have been smuggled, however, we may safely, he says, add to this sum an eighth more, or 250,000/. sterling, so that the whole will amount to 2,250,000/. ster¬ ling. According to this account, therefore, the whole annual importation of the preci¬ ous metals into both Spain and Portu- 1 The researches of M. Humboldt show that the im¬ portation of gold and silver from America was consid¬ erably greater when the “ Wealth of Nations” was pub¬ lished (1776), than Smith supposed, and that it continued to increase down to the commencement of the revolu¬ tionary disturbances. According to Humboldt, the annual produce of the American mines, at the commencement of the present century, amounted to 17,291 kilog. (46.349 lbs. Troy) of gold, and 795,581 kilog. (2,132,157 lbs. Troy) of silver, the value of the two being 43,500,000 dollars ; or (taking the dollar at 4s. 3c?,) 9,243,75o?. Humboldt farther esti¬ mated the annual produce of the European mines, and those of N. Asia, at about a million more. Mr Jacob, author of an Historical Inquiry into the Consumption of the Precious Metals, estimated the an¬ nual average produce of the American mines, from i«00 to 1810, at 47,061,000 dollars. But the revolutionary strug¬ gles which began, in 1810, to disturb Spanish America, speedily made some of the most productive mines be en¬ tirely abandoned, and occasioned an extraordinary fall¬ ing off in the supply of the precious metals. Jacob esti¬ mated the annual average produce of the mines, from 1810 to 1829, at only 4,036,000?. ; and though this estimate has been suspected of being somewhat underrated, there are pretty good grounds for thinking that it was not far from accurate. (Jacob, ii. p. 267.) The failure of the companies formed in this country in 1825 for working the American mines, the instability of the revolutionary governments, and the insecurity that has prevailed down Book I. gal, amounts to about 6,075.000/. ster¬ ling. Several other very well authenticated, though manuscript, 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 little less. I lie annual importation of the precious metals into Cadiz and Lisbon, indeed, is not equal to the whole annual produce of the mines of America. Some part is sent annually by the Acapulco ships to Manilla; some part is employed in the contraband trade which the Spanish colonies carry on with those of other European nations ; and some part, no doubt, remains in the country. The mines of America, besides, are by no means the only gold and silver mines in the world. They are, however, by far the most abundant The produce of all the other mines which are known, is insignificant, it is acknowledged, in comparison with theirs; and the far greater part of their produce, it is likewise acknowledged, is annually im¬ ported into Cadiz and Lisbon. But the consumption of Birmingham alone, at the rate of fifty thousand pounds a year, is equal to the hundred-and-twentieth part of this annual importation at the rate of six millions a year. The whole annual consumption of gold and silver, therefore, in all the different countries of the world where those metals are used, may perhaps be nearly equal to the whole annual produce. The remainder may be no more than sufficient to supply the increasing demand of all thriving countries. It may even have fallen so far short of this demand as somewhat to raise the price of those metals in the European market. 1 The quantity of brass and iron annually to the present time In most parts of Mexico and the greater portion of S. America, have proved serious ob¬ stacles to an increase in the supply of bullion. Lat¬ terly, however, the supplies from Peru, Chili, and some other provinces, have been increased; and we believe we shall not be far from the mark if we estimate the pre¬ sent aggregate produce of the American mines and work¬ ings (exclusive of those of California) at about 5,000,000?. a-year. In regard to the supply from California, we are at pre¬ sent (1849) perhaps too near the epoch when the search for gold began to be prosecuted in that country, and the accounts of the productiveness of the washings are too conflicting, to permit of any very positive opinion being formed upon the subject. But however exaggerated, there can be no reasonable doubt that the sands of the rivers, in various parts of California, are richly impreg¬ nated with gold ; and that considerable quantities of gold obtained from them have been already sent to Eu¬ rope and other parts of America. And, on the whole, the presumption would seem to be, that a large increase of the supplies from this region may be fairly antici¬ pated. There has also been, within the last few years, an ex¬ traordinary increase in the produce of gold in Russia, especially in that obtained from the Siberian rivers. So much is this the case, that the total annual supply from Russia exceeds at present (1S49 ) 4,000,000?. sterling; and it is alleged that there is every probability of this quan¬ tity being still farther increased. I - h: I I l t t Chap. XI. brought from the mine to the market is out of all proportion greater than that of gold and silver. We do not, however, upon this account, imagine that those coarse metals are likely to multiply beyond the demand, or to become gradually cheaper and cheaper. Why should we imagine that the precious metals are likely to do so ? The coarse metals, indeed, though harder, are put to much harder uses; and, as they are of less value, less care is employed in their preserv¬ ation. The precious metals, however, are not necessarily immortal any more than they, but are liable too to be lost, wasted, and consumed in a great variety of ways. The price of all metals, though liable to slow and gradual variations, varies less from year to year than that of almost any other part of the rude produce of land ; and the price of the precious metals is even less liable to sudden variations than that of the coarse ones. -The durableness of metals is the foundation of this extraordinary steadi¬ ness of price. The corn which was brought to market last year, will be all or almost all consumed long before the end of this year. But some part of the iron which was brought from the mine two or three hundred years ago, may be still in use, and perhaps some part of the gold which was brought from it two or three thousand years ago. The different masses of corn which in differ¬ ent years must supply the consumption of the world, will always be nearly in propor¬ tion to the respective produce of those different years. But the proportion between the different masses of iron which may be in use in two different years, will be very little affected by any accidental difference in the produce of the iron mines of those two years ; and the proportion between the masses of gold will be still less affected by any such difference in the produce of the gold mines. Though the produce of the greater part of metallic mines, therefore, varies perhaps still more from year to year than that of the greater part of corn fields, those variations have not the same effect upon the price of the one species of commo¬ dities as upon that of the other. Variations in the Proportion between the re¬ spective Values of Gold and Silver. Before the discovery of the mines of Ame¬ rica, the value of fine gold to fine silver was Hence, taking the total supply of bullion from Ame¬ rica (ex. California), and Russia at 9,200,000*. (200,000?., being the estimated value of the silver raised in Russia), and adding to this 1,000,0001. for the produce of the mines of Hungary, Saxony, &c., we have in all a gross sum of 10,200,000?. It may consequently be concluded, that the available supply of the precious metals (ex. Califor¬ nia), is at present about as great as when the S. Ame¬ rican and Mexican mines had attained their maximum degree of productiveness. And as the exports to the East have, as already seen, been greatly reduced, it fol- 97 regulated in the different mints of Europe, betweeii the proportions of one to ten and one to twelve ; that is, an ounce of fine gold was supposed to be worth from ten to twelve ounces of fine silver. About the middle of the last century, it came to be regulated, between the proportions of one to fourteen and one to fifteen ; that is, an ounce of fine gold came to be supposed worth between fourteen and fifteen ounces of fine silver. Gold rose in its nominal value, or in the quantity of silver which was given for it. Both metals sunk in their real value, or in the quantity of labour which they could pur¬ chase ; but silver sunk more than gold. Though both the gold and silver mines of America exceeded in fertility all those which had ever been known before, the fertility ot the silver mines had, it seems, been pro- portionably still greater than that of the gold ones. The great quantities of silver carried an¬ nually from Europe to India, have, in some of the English settlements, gradually re¬ duced the value of that metal in proportion to gold. In the mint of Calcutta, an ounce of fine gold is supposed to be worth fifteen ounces of fine silver, in the same manner as in Europe. It is in the mint, perhaps, rated too high for the value which it bears in the market of Bengal. In China, the proportion of gold to silver still continues as one to ten, or one to twelve. In Japan, it is said to be as one to eight. The proportion between the quantities ot gold and silver annually imported into Europe, according to Mr. Meggens’s account, is as one to twenty-two nearly ; that is, for one ounce of gold there are imported a little more than twenty-two ounces of silver. The great quantity of silver sent annually to the East Indies, reduces, he supposes, the quan¬ tities of those metals which remain in Europe to the proportion of one to fourteen or fifteen, the proportion of their • values. The proportion between their values, he seems to think, must necessarily be the same as that between their quantities, and would therefore be as one to twenty-two, were it not for this greater exportation of silver. But the ordinary proportion between the respective values of two commodities, is not necessarily the same as that between the quantities of them which are commonly in the market. 1 The price of an ox, reckoned : at ten guineas, is about three score times the lows that Europe and America have now a decidedly larger supply of bullion for their own use than at any for¬ mer period. Under these circumstances, a fall in the value of tho precious metals may be confidently expected, should the supply from Russia continue undiminished, and the ex¬ pectations in regard to California be not in great mea¬ sure disappointed. i The proportion between the average values of any number of non-monopolised commodities depends upon the comparative cost of their production, and not on the H VALUE OF SILVER. 98 VARIATIONS IN THE Book I. price of a lamb, reckoned at 35. 6d. It would be absurd, however, to infer from thence, that there are commonly in the market threescore lambs for one ox ; and it would be just as absurd to infer, because an ounce of gold will commonly purchase from fourteen to fifteen ounces of silver, that there are commonly in the market only fourteen or fifteen ounces of silver for one ounce of gold. The quantity of silver commonly in the market, it is probable, is much greater in proportion to that of gold, than the value of a certain quantity of gold is to that of an equal quantity of silver. The whole quan¬ tity of a cheap commodity brought to mar¬ ket, is commonly not only greater, but of greater value, than the whole quantity of a dear one. The whole quantity of bread annually brought to market, k not only greater, but of greater value than the whole quantity of butcher’s meat; the whole quan¬ tity of butcher’s meat than the whole quan¬ tity of poultry ; and the whole quantity of poultry than the whole quantity of wild fowl. There are so many more purchasers for the cheap than for the dear commodity, that, not only a greater quantity of it, but a greater value, can commonly be disposed of. The whole quantity, therefore, of the cheap commodity must commonly be greater in proportion to the whole quantity of the dear one, than the value of a certain quantity of the dear one is to the value of an equal quantity of the cheap one. When we com¬ pare the precious metals with one another, silver is a cheap, and gold a dear commodity. We ought naturally to expect, therefore, that there should always be in the market, not only a greater quantity, but a greater value of silver than of gold. Let any man, who has a little of both, compare his own silver with his gold plate, and he will proba¬ bly find, that not only the quantity, but the value of the former greatly exceeds that of the latter. Many people, besides, have a good deal of silver who have no gold plate, which, even with those who have it, is gene¬ rally confined to watch-cases, snuff-boxes, and such like trinkets, of which the whole amount is seldom of great value. In the British coin, indeed, the value of the gold preponderates greatly, but it is not so in that of all countries. In the coin of some countries, the value of the two metals is nearly equal. In the Scotch coin, before the union with England, the gold prepon¬ derated very little, though it did somewhat, 1 as it appears by the accounts of the mint. In the coin of many countries, the silver Quantities brought to market. If it require fourteen or fifteen times the labour and expense to produce a pound of gold that is required to produce a pound of silver, the value of the former will be fourteen or fifteen times greater than that ol the latter, and this, whether the preponderates. In France, the largest sums are commonly paid in that metal, and it is there difficult to get more gold than what is necessary to carry about in your pocket. The superior value, however, of the silver plate above that of the gold, which takes place in all countries, will much more than compensate-the preponderancy of the gold coin above the silver, which takes place only in some countries. Though, in one sense of the word, silver always has been, and probably always will be, much cheaper than gold, yet, in another sense, gold may, perhaps, in the present state of the Spanish market, be said to be somewhat cheaper than silver. A commo¬ dity may be said to be dear or cheap, not only according to the absolute greatness or smallness of its usual price, but according as that price is more or less above the low¬ est for which it is possible to bring it to market for any considerable time together. This lowest price is that which barely re¬ places, 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 some¬ what nearer to this lowest price than silver. The tax of the King of Spain upon gold is only one-twentieth part of the standard metal, or five per cent.; whereas his tax upon silver amounts to one-tenth part of it, or to ten per cent. In these taxes, too, it has already been observed, consists the whole rent of the greater part of the gold and silver mines of Spanish America ; and that upon gold is still worse paid than that upon silver. The profits of the undertakers of gold mines, too, as they more rarely make a fortune, must, in general, be still more moderate than those of the undertakers of silver mines. The price of Spanish gold, therefore, as it affords both less rent and less profit, must, in the Spanish market, be somewhat nearer to the lowest price for which it is possible to bring it thither, than the price of Spanish silver. When all ex¬ penses are computed, the whole quantity of the one metal, it would seem, cannot in the Spanish market, be disposed of so advanta¬ geously as the whole quantity of the other. The tax, indeed, of the King of Portugal upon the gold of the Brazils, is the same with the ancient tax of the King of Spain upon the silver of Mexico and Peru; or one-fifth part of the standard metal. It quantity of silver brought to market should be ten or twenty times more or less than the quantity of gold.— See Principles of Political Economy, p. 310, 2d edit. 1 See Ruddimau s Preface to Anderson’s Diplomata 4 0 0 0 6 8 0 0 2 3 0 4 0 10 li 1 10 6 1 19 6 Total - 35 9 3 2 19 li 0 10 0 0 3 Ci 0 9 Of 1 10 4i 2 8 0 2 8 0 0 12 0 1 1 6 3 0 0 4 116 5 18 6 0 6 0 0 10 0 Total - 23 4 111 Average Price - 1 18 8 1339 0 9 0 • • 1349 0 2 0 • • 1359 1 6 8 • • 1361 0 2 0 • • 1363 0 15 0 • • 1369 {\ 0 4 0 l 0 j 1 2 0 1379 0 4 0 • • • 1387 0 2 0 • • • C 0 13 4 ) 1390 ] 0 14 0 [ 0 14 5 c o 16 o 3 1401 0 16 0 • • • 1407 o © 4 3 n 0 3 10 1416 0 16 0 • • • 1 7 0 5 3 2 0 4 0 2 2 8 1 15 0 2 9 4 0 9 4 0 4 8 1 13 7 1 17 4 0 8 11 1 12 0 Total - 15 9 4 Average Price - 1 5 9| * Very little reliance can be placed on the ac¬ counts cf prices at this early period. It is obviously impossible that so high a price as 16/. 16s. per quarter could have been paid for anv considerable quantity of corn in a countrvso poor as England in the thirteenth century. In order to obtain a more accurate me¬ dium price, Gamier has proposed to exclude this and several other years where the prices quoted are either very high or very low, before striking an average— Richessc des Nations, tom. ii. p. 177. I 3 113 PRICES OF WHEAT, Rook II, Prices of the Quarter of nine Bushels of the best or highest priced Wheat at Windsor Market, on Lady-Day and Michaelmas, from 1595 to 1764, both inclusive ; the Price of each Year being the Medium between the highest Prices of those Two Market days. Years. Wheat per qr. 1595 • £ 2 s. 0 d. 0 1596 • 2 8 0 1597 • 3 9 6 1598 • 2 16 8 1599 • 1 19 2 1600 • 1 17 8 1601 • 1 14 10 1602 • 1 9 4 1603 • 1 15 4 1604 • 1 10 8 1605 • 1 15 10 1606 • 1 13 0 1607 • 1 16 8 1608 • 2 16 8 1609 • 2 10 0 1610 • 1 15 10 1611 • 1 18 8 1612 • 2 2 4 1613 • 2 8 8 1614 • 2 1 1615 • 1 18 8* 1616 • 2 0 4 1617 • 2 8 8 1618 • 2 6 8 1619 • 1 15 4 1620 1 10 4 26)54 0 6£ \ cars. Wheat per qr. 1621 • • £ 1 s. 10 d. 4 1622 • • 2 18 8 1623 • • 2 12 0 1624 • • 2 8 0 1625 • • 2 12 0 1626 • • 2 9 4 1627 • • 1 16 0 1628 • • 1 8 0 1629 • • 2 2 0 1630 • • 2 15 8 1631 • • 3 8 0 1632 • • 2 13 4 1633 • • 2 18 0 1634 • • 2 16 0 1635 • • 2 16 0 1636 • • 2 16 8 16)40 0 0 2 10 0 2 1 69 ‘ Wanting in the account. The year 1646 supplied by bishop Fleetwood. Y ears. Wheat per qr 1701 1702 1703 1704 1705 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 £ s. 1 17 1 1 2 9 16 6 1 10 1 1 2 3 3 2 2 2 2 2 2 2 6 8 1 18 18 14 6 11 10 3 8 5 1 18 10 1 15 0 1 17 d. 8 6 0 6 0 0 6 6 6 0 0 4 0 4 0 0 8 1 17 1 16 1 14 1 17 2 2 2 2 2 1 8 6 2 14 6 16 0 6 0 8 0 6 0 0 6 10 6 1 12 10 1 1 6 8 8 4 Carry over 69 8 8 Years. Wheat per qr 13 rt. 1734 . 1735 . 1736 . 1737 . 1738 . 1739 . 1740 . 1741 . 1742 . 1743 . 1744 . 1745 . 1746 . 1747 . 1748 . 1749 . 1750 . 1751 . 1752 . 1753 . 1754 . 1755 . 1756 . 1757 . 1758 . 1759 . 1760 . 1761 . 1762 . 1763 . 1764 . ^ s • d • over 69 8 8 1 18 10 2 2 1 3 0 18 1 15 1 18 2 10 2 6 0 4 0 6 6 8 8 1 14 0 1 4 10 1 4 10 1 7 6 1 19 0 1 14 10 1 17 0 1 17 1 12 0 6 1 18 6 2 1 10 2 4 8 1 14 8 1 13 10 5 3 0 0 10 0 1 19 10 1 16 6 1 10 1 19 2 0 2 6 3 0 9 9 64)129 13 6 2 0 6 9 _ 52 Years. Wheat per qr. Years. Wheat 3er qr. £ s. d. £ s . d. 1731 • . 1 12 io; 1741 . 2 6 8 1732 • . 1 6 8 1742 • . 1 14 0 1733 • . 1 8 4 1743 . 1 4 10 1734 • . 1 18 10 1744 . 1 4 10 1735 • . 2 3 0 1745 . 1 7 6 1736 • . 2 0 4 1746 . 1 19 0 1737 • . 1 18 0 1747 • . 1 14 10 1738 • . 1 15 6 1748 . 1 17 0 1739 • . 1 18 6 1749 • . 1 17 0 1740 • . 2 10 8 1750 • . 1 12 6 10)18 12 8 10)16 18 2 1 17 CO 1 13 9 i For a continuation of this table, and for accounts of the prices of the other species of grain, with the quantities imported and exported, down to 1837, see the tables annexed to the note on the Corn Laws at the end of the volume. BOOK II. OF THE NATURE, ACCUMULATION, AND EMPLOY¬ MENT OF STOCK. INTRODUCTION. In that rude state of society in which there is no division of labour, in which exchanges are seldom made, and in which every man provides every thing for himself, it is not necessary that any stock should be accumu¬ lated or stored up beforehand in order to carry on the business of the society. Every NATURE, ACCUMULATION, &c. OF STOCK. 119 Chap. I. man endeavours to supply by his own in¬ dustry his own occasional wants as they occur. When he is hungry, he goes to the forest to hunt; when his coat is worn out, he clothes himself with the skin of the first large animal he kills; and when his hut begins to go to ruin, be repairs it, as well as he can, with the trees and the turf that ' . are nearest it. But when the division of labour has once been thoroughly introduced, the produce of a man’s own labour can supply but a very small part of his occasional wants. The far greater part of them are supplied by the produce of other men’s labour, which he purchases with the produce, or, what is the same thing, with the price of the produce of his own. But this purchase cannot be made till such time as the produce of his own labour has not only been completed, but sold. A stock of goods of different kinds, therefore, must be stored up somewhere sufficient to maintain him, and to supply him with the materials and tools of his work till such time, at least, as both these events can be brought about. A weaver cannot apply himself entirely to his peculiar busi¬ ness, unless there is beforehand stored up somewhere, either in his own possession or in that of some other person, a stock suffi- ent to maintain him, and to supply him with the materials and tools of his work, till he • has not only completed, but sold his web. This accumulation must, evidently, be pre¬ vious to his applying his industry for so long a time to such a peculiar business. As the accumulation of stock must, in the nature of things, be previous to the division of labour, so labour can be more and more subdivided in proportion only as stock is , previously more and more accumulated. V The quantity of materials which the same ' number of people can work up, increases in a great proportion as labour comes to be more and more subdivided; and as the operations of each workman are gradually reduced to a greater degree of simplicity, a variety of new machines come to be invented for facilitating and abridging those oper¬ ations. As the division of labour advances, therefore, in order to give constant employ¬ ment to an equal number of workmen, an equal stock of provisions, and a greater stock of materials and tools than what would have been necessary in a ruder state of things, must be accumulated beforehand. But the number of workmen in every branch of bu¬ siness generally increases with the division of labour in that branch, or rather it is the increase of their number which enables them to class and subdivide themselves in this manner. As the accumulation of stock is previously necessary for carrying on this great improve¬ ment in the productive powers of labour, so that accumulation naturally leads to this improvement. The person who emplovs his stock in maintaining labour, necessarily wishes to employ it in such a manner as to produce as great a quantity of work as pos¬ sible. He endeavours, therefore, both to make among his workmen the most proper distribution of employment, and to Airnish them with the best machines which he can either invent or afford to purchase. His abilities in both these respects are generally in proportion to the extent of his stock, or to the number of people whom it can em¬ ploy. The quantity of industry, therefore, not only increases in every country with the increase of the stock which employs it, but, in consequence of that increase, the same quantity of industry produces a much greater quantity of work. Such are in general the effects of the in¬ crease of stock upon industry and its pro¬ ductive powers. In the following book I have endeavoured to explain the nature of stock, the effects of its accumulation into capitals of different kinds, and the effects of the different employ¬ ments of those capitals. This book is divided into five chapters. In the first chapter, I have endeavoured to show what are the different parts or branches into which the stock, either of an individual or of a great society, naturally divides itself. In the se¬ cond, I have endeavoured to explain the nature and operation of money considered as a particular branch of the general stock of the society. The stock which is accumu- lated into a capital, may either be employed by the person to whom it belongs, or it may be lent to some other person. In the third and fourth chapters, I have endeavoured to examine the manner in which it operates in both these situations. The fifth and last chapter treats of the different effects which the different employments of capital immedi¬ ately produce upon the quantity both of na¬ tional industry, and of the annual produce of land and labour. CHAP. I. Of the Division of Stock. W hen the stock which a man possesses is no more than sufficient to maintain him for a few days or a few weeks, he seldom thinks of deriving any revenue from it. He con¬ sumes it as sparingly as he can, and endea¬ vours by his labour to acquire something which may supply its place before it be con¬ sumed altogether. His revenue is, in this case, derived from his labour only. This is I 4 120 DIVISION OF STOCK. Book II. the state of the greater part of the labouring poor in all countries . 1 But when he possesses stock sufficient to maintain him for months or years, he natu¬ rally endeavours to derive a revenue from the greater part of it; reserving only so much for his immediate consumption as may maintain him till this revenue begins to come in. His whole stock, therefore, is dis¬ tinguished into two parts. That part which he expects is to afford him this revenue, is called his capital. The other is that which supplies his immediate consumption, and which consists either, first, in that portion of his whole stock which was originally reserved for this purpose ; or, secondly, in his revenue, from whatever source derived, as it gradually comes in ; or, thirdly, in such things as had been purchased by either of these in former years, and which are not yet entirely con¬ sumed ; such as a stock of clothes, house¬ hold furniture, and the like. In one, or other, or all of these three articles, consists the stock which men commonly reserve for their own immediate consumption. There are two different ways in which a / capital may be employed so as to yield a revenue or profit to its employer. First , It may be employed in raising, manufacturing, or purchasing goods, and selling them again with a profit. The capi¬ tal employed in this manner yields no revenue or profit to its employer, while it either remains in his possession, or continues in the same shape. The goods of the mer¬ chant yield him no revenue or profit till he sells them for money, and the money yields him as little till it is again exchanged for goods. His capital is continually going from him in one shape, and returning to him in another, and it is only by means of such circulation, or successive exchanges, that it can yield him any profit. Such capitals, therefore, may very properly be called circu¬ lating capitals. Secondly , It may be employed in the im¬ provement of land, in the purchase of useful machines and instruments of trade, or in suchlike things as yield a revenue or profit without changing masters, or circulating any 1 The grounds on which Dr. Smith has divided the stock of a country into capital and revenue seem to be unsatisfactory, and lead to erroneous conclusions. The capital of a nation really comprises all those portions of the produce of industry existing in it, that may be directly employed either to support human existence, or to facilitate production. Por¬ tions of stock employed without any view to the production of revenue, are often the most pro¬ ductive. The stock, for example, that a master manufacturer employs in his own consumption, and without which he could not subsist, is laid out as revenue ; and yet it is quite clear that it contributes as much to increase his wealth, and consequently that of the country, as any equal quantity of stock expended on the artisans in his service. It is always extremely difficult to say when stock is, or is not, productively employed ; and any defini¬ tion of capital which involves the determination of this point, can serve only to embarrass and obscure j further. Such capitals, therefore, may very properly be called fixed capitals. Different occupations require very differ- ten proportions between the fixed and circu¬ lating capitals employed in them. The capital of a merchant, for example, is altogether a circulating capital. He has occasion for no machines or instruments of trade, unless his shop or warehouse be con¬ sidered as such. Some part of the capital of every master artificer or manufacturer must be fixed in the instruments of his trade. This part, however, is very small in some, and very great in others. A master tailor requires no other instruments of trade but a parcel of needles. Those of the master shoemaker are a little, though but a very little, more expensive. Those of the weaver rise a good deal above those of the shoemaker. The far greater part of the capital of all such master artificers, however, is circulated either in the wages of their workmen or in the price of their materials, and repaid with a profit by the price of the work. In other works a much greater fixed capital is required. In a great iron-work, for example, the furnace for melting the ore, the forge, the slitt-mill, are instruments of trade which cannot be erected without a very great expense. In coal-works and mines of every kind, the machinery neces¬ sary both for drawing out the water and for other purposes, is frequently still more ex¬ pensive. That part of the capital of the farmer which is employed in the instruments of agriculture, is a fixed, that which is em¬ ployed in the wages and maintenance of his labouring servants, is a circulating capital. He makes a profit of the one by keeping it in his own possession, and of the other by parting with it. The price or value of his labouring cattle is a fixed capital in the same manner as that of the instruments of hus¬ bandry ; their maintenance is a circulating capital in the same manner as that of the labouring servants. The farmer makes his profit by keeping the labouring cattle, and by parting with their maintenance. Both a subject that is otherwise abundantly simple. In our view of the matter, it is enough to’make an ar¬ ticle be regarded as capital, that it can either directly contribute to the support of man, or assist him in appropriating or producing commodities. It may not, it is true, be employed for either of these pur¬ poses ; but the question as to the mode of employing an article is perfectly distinct from the question whether it be capital. For any thing we can, a priori know to the contrary, a horse yoked to a gentleman’s coach may be as productively employed as if he were yoked to a brewer’s dray. But whatever difference may really obtain in the two cases, the identity of the horse is not affected — he is equally possessed, in the one case and the other, of the capacity to assist in production; and, should therefore to be viewed, independently of all other considerations, as a portion of the capital of the country. — See Principles of Political Economy, p. 9. 2d ed. Chat. I. DIVISION OF STOCK. 121 the price and the maintenance of the cattle which are bought in and fattened, not for labour, but for sale, are a circulating capital. The farmer makes his profit by parting with them. A flock of sheep or a herd of cattle, that, in a breeding country is bought in, neither for labour nor for sale, but in order to make a profit by their wool, by their milk, and by their increase, is a fixed capital. Their profit is made by keeping them. Their maintenance is a circulating capital. The profit is made by parting with it, and it comes back with both its own profit and the profit upon the whole price of the cattle, in the price of the wool, the milk, and the increase. The whole value of the seed, too, is properly a fixed capital. Though it goes backwards and forwards between the ground and the granary, it never changes masters, and therefore does not properly circulate. The farmer makes his profit, not by its sale, but by its increase. The general stock of any country or society is the same with that of all its inha¬ bitants or members, and therefore naturally divides itself into the same three portions, each of which has a distinct function or office. The first is that portion which is reserved for immediate consumption, and of which the characteristic is, that it affords no reve¬ nue or profit . 1 It consists in the stock of food, clothes, household furniture, &c., which have been purchased by their proper con¬ sumers, but which are not yet entirely con¬ sumed. The wdiole stock of mere dwelling- houses, too, subsisting at any one time in the country, make a part of this first portion. The stock that is laid out in a house, if it is to be the dwelling-house of the proprietor, ceases from that moment to serve in the function of a capital, or to afford any reve¬ nue to its owner. A dwelling-house, as such, contributes nothing to the revenue of its inhabitant; and though it is, no doubt, extremely useful to him, it is as his clothes and household furniture are useful to him, which, however, make a part of his expense, and not of his revenue . 2 If it is to be let to a tenant for rent, as the house itself can produce nothing, the tenant must always pay the rent out of some other revenue which he derives either from labour, or stock, or land. Though a house, therefore, may yield a revenue to its proprietor, and thereby serve in the function of a capital to him, it cannot yield any to the public, nor serve in the function of a capital to it, and the revenue 1 See preceding note. 2 A dwelling-house is indirectly at least, if not directly, a source of revenue. To enable any useful or industrious undertaking to be carried on, those employed in it must be lodged. and it therefore follows, that the capital laid out in building houses for such persons is employed as much for the public advantage as if it were vested of the whole body of the people can never be in the smallest degree increased by it. Clothes and household furniture, in the same manner, sometimes yield a revenue, and thereby serve in the function of a capital to particular persons. In countries w r here masquerades are common, it is a trade to let out masquerade dresses for a night. Uphol¬ sterers frequently let furniture by the month or by the year. Undertakers let the furni¬ ture of funerals by the day and by the week. Many people let furnished houses and get a rent, not only for the use of the house, but for that of the furniture. The revenue, how¬ ever, which is derived from such things, must always be ultimately drawn from some other source of revenue. Of all parts of the stock, either of an individual or of a society reserved for immediate consumption, what is laid out in houses is most slowly consumed. A stock of clothes may last several years ; a stock of furniture half a century or a cen¬ tury ; but a stock of houses, well built and properly taken care of, may last many cen¬ turies. Though the period of their total consumption, however, is more distant, they are still as really a stock reserved for imme¬ diate consumption as either clothes or house¬ hold furniture. The second of the three portions into which the general stock of the society di¬ vides itself, is the fixed capital; of which the characteristic is, that it affords a revenue or profit without circulating or changing masters. It consists chiefly ot the four fol¬ lowing articles : First , Of all useful machines and instru¬ ments of trade which facilitate and abridge labour : Secondly , Of all those profitable buildings which are the means of procuring a revenue, not only to their proprietor who lets them for a rent, but to the person who possesses them and pays that rent for them; such as shops, warehouses, workhouses, farm-houses, with all their necessary buildings ; stables, granaries, &c. These are very different from mere dwelling-houses. They are a sort of instruments of trade, and may be considered in the same light: Thirdly , Of the improvements of land, of what has been profitably laid out in clearing, draining, enclosing, manuring, and reducing it into the condition most proper for tillage and culture. An improved farm may \eiy justly be regarded in the same light as those useful machines which facilitate and abridge labour, and by means ol which, an equal in the tools or instruments they make use of in their respective businesses. The possession ol a house is quite as necessary to enable a weaver, lor example, to prosecute his business, as the possession of a loom • and if the latter be said to be a productive instrument, because it facilitates the labour of the weaver, the other must, for the same reason, be pro¬ ductive also. 122 DIVISION OF STOCK. circulating capital can afford a much greater revenue to its employer. An improved farm is equally advantageous and more durable than any of those machines, frequently requiring no other repairs than the most profitable application of the farmer’s capital employed in cultivating it : Fourthly , Of the acquired and useful abilities ol all the inhabitants or members of the society. The acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprentice¬ ship, always costs a real expense, which is a capital fixed and realised, as it were, in his person. Those talents, as they make a part of his fortune, so do they likewise of that of the society to which he belongs. The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labour, and which, though it costs a certain expense, repays that expense with a profit. The third and last of the three portions into which the general stock of the society naturally divides itself, is the circulating capital; of which the characteristic is, that it affords a revenue only by circulating, or changing masters. It is composed likewise of four parts: First, Of the money by means of which all the other three are circulated and distri¬ buted to their proper consumers : Secondly, Of the stock of provisions which are in the possession of the butcher, the grazier, the farmer, the corn-merchant, the brewer, &c., and from the sale of which they expect to derive a profit: Thirdly, Of the materials, whether alto¬ gether rude, or more or less manufactured, of clothes, furniture, and building, which are not yet made up into any of those three shapes, but which remain in the hands of the growers, the manufacturers, the mercers and drapers, the timber-merchants, the carpenters and joiners, the brickmakers, &c. Fourthly, and lastly, Of the work which is made up and completed, but which is still in the hands of the merchant or manufac¬ turer, and not yet disposed of or distributed to the proper consumers; such as the finished work which we frequently find ready-made in the shops of the smith, the cabinet-maker, the goldsmith, the jeweller, the china-merchant, &c. The circulating capital consists in this manner, of the pro¬ visions, materials, and finished work of all kinds that are in the hands of their re¬ spective dealers, and of the money that is necessary for circulating and distributing them to those who are finally to use or to consume them. Of these four parts three, provisions, materials, and finished work, are, either Book II. I annually, or in a longer or shorter period, regularly withdrawn from it, and placed either in the fixed capital or in the stock reserved for immediate consumption. Every fixed capital is both originally derived from, and requires to be continually supported by a circulating capital. All useful machines and instruments of trade are originally derived from a circulating capital, which furnishes the materials of which they are made, and the maintenance of the workmen who make them. They require, too, a capital of the same kind to keep them in constant repair. No fixed capital can yield any revenue but by means of a circulating capital. The most useful machines and instruments of trade will produce nothing without the cir¬ culating capital which affords the materials they are employed upon, and the mainte¬ nance of the workmen who employ them. Land, however improved, will yield no revenue without a circulating capital, which maintains the labourers who cultivate and collect its produce. d o maintain and augment the stock which may be reserved for immediate consumption, is the sole end and purpose both of the fixed and circulating capitals. It is this stock which feeds, clothes, and lodges the people. Their riches or poverty depends upon the abundant or sparing supplies which those t\v o capitals can afford to the stock reserved for immediate consumption. So great a part of the circulating capital being continually withdrawn from it, in order to be placed in the other two branches of the general stock of the society ; it must in its turn require continual supplies, with¬ out which it would soon cease to exist. These supplies are principally drawn from three sources, the produce of land, of mines, and of fisheries. These afford continual supplies of provisions and materials, of which part is afterwards wrought up into finished work, and by which are replaced the provisions, materials, and finished work continually withdrawn from the circulating capital. From mines, too, is drawn what is necessary for maintaining and augmenting that part of it which consists in money. For though, in the ordinary course of business, this part is not, like the other three, neces¬ sarily withdrawn from it, in order to be placed in the other two branches of the ge¬ neral stock of the society, it must, however, like all other things, be wasted and worn out at last, and sometimes, too, be either lost or sent abroad, and must, therefore, require continual, though, no doubt, much smaller supplies. Land, mines, and fisheries, require all both a fixed and a circulating capital to cultivate them; and their produce replaces with a profit, not only those capitals, but all the DIVISION OF STOCK. 123 Li Chap. I. ethers 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 other, are directly bartered for one another; because it seldom happens that the farmer sells his corn and his cattle, his flax and his wool, to the very same person of whom he chooses to purchase the clothes, furniture, and instruments of trade which he wants. He sells, therefore, his rude produce for money, with which he can purchase, wherever it is to be had, the manufactured produce he has occasion for. Land even replaces, in part at least, the capitals with which fisheries and mines are cultivated. It is the produce of land which draws the fish from the waters; and it is the produce of the surface of the earth which extracts the minerals from its bowels. The produce of land, mines, and fisheries, when their natural fertility is equal, is in proportion to the extent and proper appli¬ cation of the capitals employed about them. When the capitals are equal and equally well applied, it is in proportion to their na¬ tural fertility. In all countries where there is tolerable security, every man of common understand¬ ing will endeavour to employ whatever stock he can command in procuring either present enjoyment or future profit. If it is employed in procuring present enjoyment, it is a stock reserved for immediate con¬ sumption. If it is employed in procuring future profit, it must procure this profit either by staying with him or by going from him. in the one case it is a fixed, in the other it is a circulating capital. A /man must be perfectly crazy who, where there is tolerable security, does not em¬ ploy all the stock which he commands, whether it be his own or borrowed of other people, in some one or other of those three ways. in those unfortunate countries, indeed, where men are continually afraid of the violence of their superiors, they frequently bury and conceal a great part of their stock, in order to have it always at hand to carry with them to some place of safety, in case of their being threatened with any of those disasters to which they consider themselves as at all times exposed. This is said to be a common practice in Turkey, in Indostan, and, I believe, in most other governments of Asia. It seems to have been a common practice among our ancestors during the violence of the feudal government. Trea¬ sure-trove was in those times considered as no contemptible part of the revenue of the greatest sovereigns in Europe. It consisted in such treasure as was found concealed in the earth, and to which no particular person could prove any right This was regarded in those times as so important an object that it was always considered as belonging to the sovereign, and neither to the finder nor to the proprietor of the land, unless the right to it had been conveyed to the latter by an express clause in his charter. It was put upon the same footing with gold and silver mines, which, without a special clause in the charter, were never supposed to be comprehended in the general grant of the lands, though mines of lead, copper, tin, and coal were, as things of smaller conse¬ quence. CHAP. II. Of Money considered as a particular Branch of the General Stock of the Society , or of the Expense of maintaining the National Capital. It has been shown in the first Book, that the price of the greater part of commodities resolves itself into three parts, of which one pays the wagek *of the labour, another the profits of the stock, and a third the rent of the land which had been employed in pro¬ ducing and bringing them to market: that there are, indeed, some commodities of which the price is made up of two of those parts only, the wages of labour, and the profits of stock : and a very few in which it consists altogether in one, the wages of labour: but that the price of every commodity neces¬ sarily resolves itself into some one or other, or all of these three parts; every part of it which goes neither to rent nor to wages, being necessarily profit to somebody. Since this is the case, it has been observed, with regard to every particular commodity, taken separately ; it must be so with regard to all the commodities which compose the whole annual produce of the land and labour of every country, taken complexly. The whole price or exchangeable value of that annual produce must resolve itself into the same three parts, and be parcelled out among the different inhabitants of the country, either as the wages of their labour, the pro¬ fits of their stock, or the rent of their land. But though the whole value of the an¬ nual produce of the land and labour of every country is thus divided among and constitutes a revenue to its different inhabit¬ ants, yet as in the rent of a private estate, we distinguish between the gross rent and the 124 METALLIC AND neat rent, so may we likewise in the revenue of all the inhabitants of a great country. I he gross rent of a private estate com¬ prehends whatever is paid by the farmer; the neat rent, what remains free to the land¬ lord, attei deducting the expense of manage¬ ment, of repairs, and all other necessary ciiarges; or what, without hurting his estate he can afford to place in his stock reserved for immediate consumption, or to spend upon his table, equipage, the ornaments of his house anva furniture, his private enjoyments and amusements.- His real wealth is in propor¬ tion, not to his gross, but to his neat rent. The gross revenue of all the inhabitants of a great country comprehends the whole annual produce of their land and labour; the neat revenue, what remains free to them after deducting the expense of maintaining, first, their fixed, and secondly, their circu¬ lating capital; or what, without encroaching upon their capital, they can place in their stock reserved for immediate consumption, or spend upon their subsistence, convenien- cies, and amusements. Their real wealth, too, is in proportion, not to their gross, but to their neat revenue. The whole expense of maintaining the fixed capital must evidently be excluded from the neat revenue of the society. Nei- tner the materials necessary for supporting tneir useful machines and instruments of trade, their profitable buildings, &c., nor the produce of the labour necessary for fashion¬ ing those materials into the proper form, can ever make any part of it. The price of that labour may, indeed, make a part of it; as the workmen so employed may place the whole value of their wages in their stock leserved for immediate consumption. But in other sorts of labour, both the price and tne pioauce go to this stock ; the price to that of the workmen, the produce to that of otnei people, whose subsistence, convenien- cies, and amusements, are augmented by the labour of those workmen. The intention of the fixed capital is to increase the productive powers of labour, or to enable the same number of labourers to perform a much greater quantity of work. In a farm where all the necessary buildings, fences, drains, communications, &c., are In the most perfect good order, the same num¬ ber of labourers and labouring cattle will raise a much greater produce than in one of equal extent and equally good ground, but not furnished with equal conveniencies. In manufactures the same number of hands, assisted with the best machinery, will work up a much greater quantity of goods than with more imperfect instruments of trade, liie expense which is properly laid out upon a fLed capital of any kind, is always repaid with great profit, and increases the annual produce by a much greater value than that PAPER MONEY. Book II. of the support which such improvements require. This support, however, still re¬ quires a certain portion of that produce, a certain quantity of materials, and the la¬ bour of a certain number of workmen, both ^ hich might have been immediately em¬ ployed to augment the food, clothing, and lodging, the subsistence and conveniencies of the society, are thus diverted to another employment, highly advantageous indeed, but still different from this one. It is upon this account that all such improvements in mechanics, as enable the same number of "Hoikmen to perform an equal quantity of work with cheaper and simpler machinery than had been usual before, are always re¬ garded as advantageous to every society. A certain quantity of materials, and the labour of a certain number of workmen, which had before been employed in supporting a more complex and expensive machinery, can after¬ wards be applied to augment the quan¬ tity of work which that or any other ma¬ chinery is useful only for performing. The undertaker of some great manufactory, who employs a thousand a year in the mainte¬ nance of his machinery, if he can reduce this expense to five hundred, will naturally employ the other five hundred in purchasing an additional quantity of materials to be wrought up by an additional number of workmen. The quantity of that work, therefore, which his machinery was useful only for performing, will naturally be aug¬ mented, and with it all the advantage and conveniency which the society can derive from that work. The expense of maintaining the fixed capital in a great country, may very pro¬ perly be compared to that of repairs in a private estate. The expense of repairs mav frequently be necessary for supporting the produce of the estate, and consequently both the gross and the neat rent of the landlord. When by a more proper direction, however, it can be diminished without occasioning any diminution of produce, the gross rent re¬ mains at least the same as before, and the neat rent is necessarily augmented. But though the whole expense of main¬ taining the fixed capital is thus necessarily excluded from the neat revenue of the so¬ ciety* it is not the same case with that of maintaining the circulating capital. Of the four parts of which this latter capital is composed, money, provisions, materials, and finished work, the three last, it has already been observed, are regularly withdrawn from it, and placed either in the fixed capital of the society, or in their stock reserved for immediate consumption. Whatever portion of those consumable goods is not employed in maintaining the former, goes all to the latter, and makes a part of the neat revenue of the society. The maintenance of those i Chap. II. METALLIC AND PAPER MONEY. 125 three parts of the circulating capital, there¬ fore, withdraws no portion of the annual produce from the neat revenue of the so¬ ciety, besides what is necessary for main¬ taining the fixed capital. The circulating capital of a society is in this respect different from that of an indi¬ vidual. That of an individual is totally excluded from making any part of his neat revenue, which must consist altogether in his profits. But though the circulating capital of every individual makes a part of that of the society to which he belongs, it is not upon that account totally excluded from making a part likewise of their neat revenue. Though the whole goods in a merchant’s shop must by no means be placed in his own stock reserved for immediate consumption, they may in that of other people, who, from a revenue derived from other funds, may regularly replace their value to him, together with its profits, without occasioning any diminution either of his capital or of theirs. Money, therefore, is the only part of the circulating capital of a society of which the maintenance can occasion any diminution in their neat revenue. The fixed capital, and that part of the circulating capital which consists in money, so far as they affect the revenue of the so¬ ciety, bear a very great resemblance to one another. First, As those machines and instruments of trade, &c., require a certain expense, first to erect them, and afterwards to support them, both which expenses, though they make a part of the gross, are deductions from the neat revenue of the society; so the stock of money which circulates in any country must require a certain expense, first to collect it, and afterwards to support it, both which expenses, though they make a part of the gross, are, in the same manner, deductions from the neat revenue of the so¬ ciety. A certain quantity of very valuable materials, gold and silver, and of very cu¬ rious labour, instead of augmenting the stock reserved for immediate consumption, the subsistence, conveniencies, and amuse¬ ments of individuals, is employed in sup¬ porting that great but expensive instrument of commerce, by means of which every in¬ dividual in the society has his subsistence, conveniencies, and amusements regularly dis¬ tributed to him in their proper proportions. Secondly , As the machines and instru¬ ments of trade, &c. which compose the fixed capital either of an individual 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 re¬ venue. The great wheel of circulation is altogether different from the goods which are circulated bv means of it. The revenue w of the society consists altogether in those goods, and not in the wheel which circulates them. In computing either the gross or the neat revenue of any society, we must alwavs, 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. It is the ambiguity of language only which can make this proposition appear either doubtful or paradoxical. 'When pro¬ perly explained and understood, it is almost self-evident. When we talk of any particular sum of money, we sometimes mean nothing but the metal pieces of which it is composed ; and sometimes we include in our meaning some obscure reference to the goods which can be had in exchange for it, or to the power of purchasing which the possession of it con¬ veys. Thus when we say that the circu¬ lating money of England has been computed at eighteen millions, we mean only to ex¬ press the amount of the metal pieces which some writers have computed, or rather have supposed to circulate in that country. But when we say that a man is worth fifty or a hundred pounds a year, we mean commonly to express not only the amount of the metal pieces which ar-e annually paid to him, but the value of the goods which he can annually purchase or consume. We mean commonly to ascertain what is or ought to be his way of living, or the quantity and quality of the necessaries and conveniencies of life in which he can with propriety indulge himself. When, by any particular sum of money, we mean not only to express the amount of the metal pieces of which it is composed, but to include in its signification some ob¬ scure 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 one of the two values which are thus intimated somewhat ambiguously by the same word, and to the latter more properly than to the former, to the money’s worth more properly than to the money. Thus if a guinea be the weekly pension of a particular person, he can in the course of the week purchase with it a certain quantity of subsistence, conveniencies, and amusements. In proportion as this quantity is great or small, so are his real riches, his real weekly reve¬ nue. His weekly revenue is certainly not equal both to the guinea, and to what can be purchased with it, but only to one or other of those two equal values; and to the latter more properly than to the former, to the guinea’s worth rather than to the guinea. If the pension of such a person was paid to him, not in gold, but in a weekly bill for a guinea, his revenue surely would not so properly consist in the piece of paper, as in 126 METALLIC AND PAPER MONEY. Look II. what he could get for it. A guinea may be considered as a bill for a certain quantity of necessaries and conveniencies upon all the tradesmen in the neighbourhood. The reve¬ nue of the person to whom it is paid, does not so properly consist in the piece of gold, as in what he can get for it, or in what he can exchange it for. If it could be ex¬ changed for nothing, it would, like a bill upon a bankrupt, be of no more value than the most useless piece of paper. Though the weekly or yearly revenue of all the different inhabitants of any country, in the same manner, may be, and in reality frequently is paid to them in money, their real riches, however, the real weekly or yearly revenue of ail of them taken together, must always be great or small in proportion to the quantity of consumable goods which they can all of them purchase with this mo¬ ney. The whole revenue of all of them taken together is evidently not equal to both the money and the consumable goods; but only to one or other of those two values, and to the latter more properly than to the former. Though we frequently, therefore, express a person’s revenue by the metal pieces which are annually paid to him, it is because the amount of those pieces regulates the extent of his power of purchasing, or the value of the goods which he can annually afford to consume. We still consider his revenue as consisting in this power of purchasing or consuming, and not in the pieces which con¬ vey it. But if this is sufficiently evident even with regard to an individual, it is still more so with regard to a society The amount of the metal pieces which are annually paid to an individual, is often precisely equal to his revenue, and is upon that account the short¬ est and best expression of its value. But the amount of the metal pieces which circulate in a society, can never be equal to the revenue of all its members. As the same guinea which pays the weekly pension of one man to-day, may pay that of another to-morrow, and that of a third the day thereafter, the amount of the metal pieces which annually circulate in any country, must always be of much less value than the whole money pen¬ sions annually paid with them. But the power of purchasing, or the goods which can successively be bought with the whole of those money pensions as they are success¬ ively paid, must always be precisely of the same value with those pensions; as must like¬ wise be the revenue of the different persons to whom they are paid. That revenue, there¬ fore, cannot consist in those metal pieces, of which the amount is so much inferior to its value, but in the power of purchasing, in the goods which can successively be bought with them as they circulate from hand to hand. Money, therefore, the great wheel of cir¬ culation, the great instrument of commerce, t like all other instruments of trade, though it makes a part, and a very valuable part of the capital, makes no part of the revenue of the : society to which it belongs ; and though the metal pieces of which it is composed, in the course of their annual circulation, distribute to every man the revenue which properly belongs to him, they make themselves no part of that revenue. Thirdly, and lastly, The machines and in¬ struments of trade, &c. 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 expense of erecting and supporting those machines, which does not diminish the pro¬ ductive powers of labour, is an improvement of the neat revenue of the society; so every saving in the expense of collecting and sup¬ porting that part of the circulating capital which consists in money, is an improvement of exactly the same kind. It is sufficiently obvious, and it has partly too been explained already, in what manner every saving in the expense of supporting the fixed capital is an improvement of the neat revenue of the society. The whole capital of the undertaker of every work is necessarily divided between his fixed and his circulating capital. While his whole capital remains the same, the smaller the one part, the greater must necessarilv 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 expense of maintaining the fixed capital, which does not diminish the product¬ ive powers of labour, must increase the fund which puts industry into motion, and con¬ sequently the annual produce of land and labour, the real revenue of every society. The substitution of paper in the room of gold and silver money, replaces a very expen¬ sive instrument of commerce with one much less costly, and sometimes equally convenient. Circulation comes to be carried on by a new wheel, which it costs less both to erect and to maintain than the old one. But in what manner this operation is performed, and in what manner it tends to increase either the gross or the neat revenue of the society, is not altogether so obvious, and may therefore require some further explication. There are several different sorts of paper money ; but the circulating notes of banks and bankers are the species which is best known, and which seems best adapted for this purpose. When the people of any particular coun¬ try have such confidence in the fortune, probity, and prudence of a particular banker, as to believe that he is always ready to pay upon demand such of his promissory notes as are likely to be at any time presented to r METALLIC AND PAPER MONEY. 127 hL,. CUD con be i II. / "anu pur : sarr- mo gain tm* part and v ralL extc thoe. those notes come to have the same < y as gold and silver money, from the ./nee that such money can at any time (for them. .articular banker lends among his cus- his own promissory notes, to the ve shall suppose, of a hundred thou- | nnds. As those notes serve all the i'bof money, his debtors pay him the j '**est as if he had lent them so much .This interest is the source of his lough some of those notes are con¬ aming back upon him for payment, ‘Wm continue to circulate for months together. Though he has gene- circulation, therefore, notes to the rf a hundred thousand pounds, twenty / jd pounds in gold and silver may fre- quei. h |be a sufficient provision for answering occas. l demands. By this operation, thert . Jf -, twenty thousand pounds in gold and^iver perform all the functions which a hundred thousand could otherwise have per¬ formed. The same exchanges may be made, the same quantity of consumable goods may be circulated and distributed to their proper consumers, by means of his promissory notes, to the value of a hundred thousand pounds, as by an equal value of gold and silver money. Eighty thousand pounds of gold and silver, therefore can, in this manner, be spared from the circulation of the country ; and if different operations of the same kind should, at the same time, be carried on by many different banks and bankers, the whole circulation may thus be conducted with a fifth part only of the gold and silver which would otherwise have been requisite. Let us suppose, for example, that the whole circulating money of some particular country amounted, at a particular time, to one million sterling, that sum being then sufficient for circulating the whole annual produce of their land and labour. Let us suppose too, that some time thereafter, dif¬ ferent banks and bankers issued promissory notes payable to the bearer, to the extent of one million, reserving in their different cof¬ fers two hundred thousand pounds for answer¬ ing occasional demands. There would remain, therefore, in circulation, eight hundred thou¬ sand pounds in gold and silver, and a million of bank notes, or eighteen hundred thousand pounds of paper and money together. But the annual produce of the land and labour of the country had before required only one million to circulate and distribute it to its proper consumers, and that annual produce cannot be immediately augmented by those operations of banking. One million, there¬ fore, will be sufficient to circulate it after them. The goods to be bought and sold 1 That is. provided the value of gold continue the same as before, and paper be of the same value as gold. Should the value of gold decline, or should being precisely the same as before, the same quantity of money will be sufficient for buying and selling them. The channel of circulation, if I may be allowed such an ex¬ pression, will remain precisely the same as before. One million we have supposed suf- ’ ficient to fill that channel. Whatever, there¬ fore, is poured into it beyond this sum, cannot run in it, but must overflow, i One million eight hundred thousand pounds are poured into it. Eight hundred thousand pounds, therefore, must overflow, that sum being over and above what can be employed in the circulation of the country. But though this sum cannot be employed at home, it is too valuable to be allowed to lie idle. It will, therefore, be sent abroad, in order to seek that profitable employment which it cannot find at home. But the paper cannot go abroad; because at a distance from the banks which issue it, and from the country in which payment of it can be exacted by law, it will not be received in common payments. Gold and silver, therefore, to the amount of eight hundred thousand pounds will be sent abroad, and the channel of home circulation will remain filled with a million of paper, instead of the million of those metals which filled it before. But though so great a quantity of gold and silver is thus sent abroad, we must not imagine that it is sent abroad for nothing, or that its proprietors make a present of it to foreign nations. They will exchange it for foreign goods of some kind or another, in order to supply the consumption either of some other foreign country or of their own. If they employ it in purchasing goods in one foreign country in order to supply the consumption of another, or in what is called the carrying trade, whatever profit they make will be an addition to the neat revenue of their own country. It is like a new fund, created for carrying on a new trade ; domes¬ tic business being now transacted by paper, and the gold and silver being converted into a fund for this now trade. If they employ it in purchasing foreign goods for home consumption, they may either, first, purchase such goods as are likely to be consumed by idle people who produce nothing, such as foreign wines, foreign silks, &c. ; or, secondly, they may purchase an ad¬ ditional stock of materials, tools, and pro¬ visions, in order to maintain and employ an additional number of industrious people, who reproduce, with a profit, the value of their annual consumption. So far as it is employed in the first w*ay, it promotes prodigality, increases expense and consumption without increasing production, or establishing any permanent fund for sup- the value of paper fall below that of gold, the quan¬ tity of the one or the other remaining in circulation would be proportionally increased. 128 METALLIC AND PAPER MONEY. T )OK II, porting that expense, and is in every respect hurtful to the society. 1 So far as it is employed in the second way, it promotes industry; and though it in¬ creases the consumption of the society, it provides a permanent fund for supporting that consumption, the people who consume re-producing, with a profit, the whole value of their annual consumption. The gross revenue of the society, the annual produce of their land and labour, is increased by the whole value which the labour of those work¬ men adds to the materials upon which they are employed ; and their neat revenue by what remains of this value, after deducting what is necessary for supporting the tools and instruments of their trade. That the greater part of the gold and silver which, being forced abroad by those operations of banking, is employed in pur¬ chasing foreign goods for home consumption, is and must be employed in purchasing those of this second kind, seems not only probable, but almost unavoidable. Though sonve par¬ ticular men may sometimes increase their expense very considerably, though their re¬ venue does not increase at all, we may be assured that no class or order of men ever does so ; because, though the principles of common prudence do not always govern the conduct of every individual, they always influence that of the majority of every class or order; but the revenue of idle people, considered as a class or order, cannot, in the smallest degree, be increased by those oper¬ ations of banking. Their expense in gene¬ ral, therefore, cannot be much increased by them, though that of a few individuals among them may, and in reality sometimes is. The demand of idle people, therefore, for foreign goods being the same, or very nearly the same, as before, a very small part of the money, which being forced abroad by those operations of banking, is employed in purchasing foreign goods for home consump¬ tion, is likely to be employed in purchasing those for their use. The greater part of it will naturally be destined for the employ¬ ment of industry, and not for the mainte¬ nance of idleness. When we compute the quantity of indus¬ try which the circulating capital of any society can employ, we must always have regard to those parts of it only which con¬ sist 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 put industry into motion, three things are requisite : materials to work upon, tools to work with, and the wages or recompence lor 1 Dr. Smith admits that a very small part only of the metallic money of a country belongs to the idle classes of which he is now speaking ; and it is diffi¬ cult to see in what respect their consumption of the equivalents obtained for such money, can be more the sake of which the work is done ^Money is neither a material to work upon, «0r a tool to work with ; and though the wc as of the workmen are commonly paid to him in money, his real revenue, like that of all other men, consists not in the money, lv t in the money’s worth ; not in the metal pieces, but in what can be got for them. The quantity of industry which any capi¬ tal can employ, must evidently be equal to the 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 tl. >d with it; but only to one or other n>' ^se two values, and to the latter more pr ^*ihan to the former. When paper is substituted in the nx. i of gold and silver money, the quantity of the materials, tools, and maintenance 'which the whole circulating capital can supply, may be increased by the whole value of gold and silver which used to be employed in purchas¬ ing them. The whole value of the great wheel of circulation and distribution is added to the goods which are circulated and distri¬ buted by means of it. The operation, in some measure^ resembles that of the under¬ taker of some great work, who, in conse¬ quence of some improvement in mechanics, takes down his old machinery, and adds the difference between its price and that of the new to his circulating capital, to the fund from which he furnishes materials and wages to his workmen. What is the proportion which the circu¬ lating money of any country bears to the whole value of the arniual produce circulated by means of it, it is, perhaps, impossible to determine. It has been computed by differ¬ ent authors at a fifth, at a tenth, at a twen¬ tieth, and at a thirtieth part of that value ; but how small soever the proportion which the circulating money may bear to the whole value of the annual produce, as but a part, and frequently but a small part of that pro¬ duce is ever destined for the maintenance of industry, it must always bear a very consi¬ derable proportion to that part. When, therefore, by the substitution of paper, the gold and silver necessary for circulation is reduced to, perhaps, a fifth part of the former quantity, if the value of only the greater part of the other four-fifths be added to the funds which are destined for the maintenance hurtful to the society than their consumption of any other equal amount of wealth. We shall afterwards endeavour to point out the fallacy ot Dr. Smith’s theory with respect to productive and unproductive expenditure. Chap. II. METALLIC AND PAPER MONEY. 129 of industry, it must make a very consider¬ able addition to the quantity of that indus¬ try, 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 banking companies in almost every considerable town, and even in some country villages. The effects of it have been pre¬ cisely those above described. The business of the country is almost entirely carried on by means of the paper of those different banking companies, with which purchases and payments of all kinds are commonly made. Silver very seldom appears except in the change of a twenty shillings bank note, and gold still seldomer. But though the conduct of all those different companies has not been unexceptionable, and has accord¬ ingly required an act of parliament to regu¬ late it, the country, notwithstanding, has evidently derived great benefit from their trade. I have heard it asserted, that the trade of the city of Glasgow doubled in about fifteen years after the first erection of the banks there ; and that the trade of Scotland has more than quadrupled since the first erection of the two public banks at Edin¬ burgh, of which the one, called the Bank of Scotland, was established by act of par¬ liament in 1695 ; the other, called the Royal Bank, by royal charter in 1727. Whether the trade, either of Scotland in general, or of the city of Glasgow in particular, has really increased in so great a proportion during so short a period, I do not pretend to know. If either of them has increased in this pro¬ portion, it seems to be an effect too great to be accounted for by the sole operation of this cause. That the trade and industry of Scot¬ land, however, have increased very consider¬ ably during this period, and that the banks have contributed a good deal to this increase, cannot be doubted. The value of the silver money which cir¬ culated in # Scotland before the Union, in 1707, and which, immediately after it, was brought into the Bank of Scotland in order to be re-coined, amounted to 411,117/. 10s. 9c/. sterling. No account has been got of the goid coin ; but it appears from the ancient accounts of the mint of Scotland, that the value of the gold annually coined some¬ what exceeded that of the silver. 1 There were a good many people too upon this occasion, who, from a diffidence of repay¬ ment, did not bring their silver into the Bank of Scotland : and there was, besides, 1 See Ruddiman’s Preface to Anderson’s Diplo- mata, &c. Scotiae. 2 The amount of the paper currency of Scotland, in 1825, was estimated by the Committee of the House of Commons on the Promissory Notes of Scotland and Ireland, at 3,309,000/, of which 2,079,000/. was said to be in notes of less than five pounds. There are extremely few gold coins in cir- some English coin, which was not called in. The whole value of the gold and silver, therefore, which circulated in Scotland before the Union, cannot be estimated at less than a million sterling. It seems to have consti¬ tuted almost the whole circulation of that country ; for though the circulation of the Bank of Scotland, which had then no rival, was considerable, it seems to have made but a very small part of the whole. In the present times the whole circulation of Scotland can¬ not be estimated at less than two millions, of which that part which consists in gold and silver, most probably, does not amount to half a million.2 But though the circulating gold and silver of Scotland have suffered so great a diminution during this period, its real riches and prosperity do not appear to have suffered any. Its agriculture, manu¬ factures, and trade, on the contrary, the annual produce of its land and labour, have evidently been augmented. It is chiefly by discounting bills of ex¬ change, that is, by advancing money upon them before they are due, that the greater part of banks and bankers issue their promis¬ sory notes. They deduct always, upon what¬ ever 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 ad¬ vanced, together with a clear profit of the interest. The banker who advances to the merchant whose bill he discounts, not gold and silver, but his own promissory notes, has the advantage of being able to discount to a greater amount, by the whole value of his promissory notes, which he finds by experi¬ ence, are commonly in circulation. He is thereby enabled to make his clear gain of interest on so much a larger sum. The commerce of Scotland, which at pre¬ sent is not very great, was still more incon¬ siderable when the two first banking com¬ panies were established; and those companies would have had but little trade, had they confined their business to the discounting of bills of exchange. 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 thou¬ sand pounds 3 , for example,) to any individual who could procure two persons of undoubted credit and good landed estate to become surety for him, that whatever money should be advanced to him, within the sum for which the credit had been given, should be repaid upon demand, together with the legal inte- culation ; and their value and that of the silver coins taken together, is not supposed to amount to 500,000/. Perhaps the entire currency of that part of the empire may now (1838) be estimated at from 3,500,000/. to 4,000,000/. 3 Cash accounts are now frequently given for sums of only 100/., 200/., &c. K 1-30 METALLIC AND PAPER MONEY. Book II. rest. Credits of this kind are, I believe, commonly granted by banks and bankers in all different parts of the world. But the easy terms upon which the Scotch banking companies accept of repayment are, so far as I know, peculiar to them, and have perhaps been the principal cause, both of the great trade of those companies, and of the benefit which the country has received from it. Whoever has a credit of this kind with one of those companies, and borrows a thou¬ sand pounds upon it, for example, may repay this sum piecemeal, by twenty and thirty pounds at a time, the company discounting a proportionable part of the interest of the great sum from the day on which each of those small sums is paid in, till the whole be in this manner repaid. All 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 readily receiving their notes in all payments, and by encouraging all those with whom they have any influence to do the same. The banks, when their customers apply to them for money, generally advance it to them in their own promissory notes. These the merchants pay away to the manufacturers for goods, the manufacturers to the farmers for materials and provisions, the farmers to their 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 ac¬ counts, 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. Lienee the great trade of those companies. By means of those cash accounts every merchant can, without imprudence, carry on a greater trade than he otherwise could do. If there are two merchants, one in London, and the other in Edinburgh, who employ equal stocks in the same branch of trade, the Edinburgh merchant can, without imprudence, carry on a greater trade, and give employment to a greater number of people than the London merchant. The London merchant must always keep by him 1 Mr. Ricardo has denied this position, and, as it seems, on good grounds. “ Cash accounts,” he ob¬ serves, “are credits given by the Scotch bankers to their customers, in addition to the bills which they discount for them ; but as the bankers, in proportion as they advance money one way, and send it into cir¬ culation, are debarred from sending so much in the other, it is difficult to perceive in what the advantage consists. If the whole circulation will bear only one million of paper, one million only can be circulated ; and it can be of no real importance either to the bankers or the merchants, whether the whole be paid in discounting bills, or a part be so paid, and the remainder be issued by means of these cash ac¬ counts.”— Principles of Political Economy , first edit. p. 515. The peculiar advantage of a cash account does not a considerable sum of money, either in his own coffers, or in those of his banker, who gives him no interest for it, in order to answer the demands continually coming upon him for payment of the goods which he purchases upon credit. Let the ordinary amount of this sum be supposed five hundred pounds. The value of the goods in his warehouse must always be less by five hundred pounds than it would have been, had he not been obliged to keep such a sum unemployed. Let us suppose that he generally disposes of his whole stock upon hand, or of goods to the value of his whole stock upon hand, once in the year. By being obliged to keep so great a sum unemployed, he must sell in a year five hundred pounds worth less goods than he might otherwise have done. His annual profits must be less by all that he could have made by the sale of five hundred pounds worth more goods; and the number of people employed in preparing his goods for the market must be less by all those that five hundred pounds more stock could have employed. The merchant in Edin¬ burgh, on the other hand, keeps no money unemployed for answering such occasional demands. When they actually come upon him, he satisfies them from his cash account with the bank, and gradually replaces the sum borrowed with the money or paper which comes in from the occasional sales of his goods. With the same stock, therefore, he can, without imprudence, have at all times in his warehouse a larger quantity of goods than the London merchant; and can thereby both make a greater profit himself, and give constant employment to a greater number of industrious people who prepare those goods for the market. Hence the great benefit which the country has derived from this trade. The facility of discounting bills of ex¬ change, it may be thought indeed, gives the English merchants a conveniency equivalent to the cash accounts of the Scotch merchants. But the Scotch merchants, it must be remem¬ bered, can discount their bills of exchange as easily as the English merchants; and have, besides, the additional conveniency of their cash accounts. 1 The whole paper money of every kind really consist in its enabling a banker to enlarge his advances to his customers ; but it consists in — what Mr. Ricardo has not adverted to — the extreme fa¬ cility it affords of making them. A merchant, or trader, who has obtained such an account, may ope¬ rate upon it at any time he pleases, and by drafts for sums of any amount; an advantage he could not enjoy to any thing like the same extent, without an infinite deal of trouble and expense, were the loans or advances made to him through the discount of bills. It is singular, however, notwithstanding the advan¬ tage of cash accounts, that the amount of the notes of the Scotch banks in circulation, issued by their means* is but very small, perhaps not more than an eighth or a tenth part of those issued in the discount of bills. See Evidence of Mr. Gilchrist in Chap. II. METALLIC AND PAPER MONEY. 131 which can easily circulate in any country never can exceed the value of the gold and silver, of which it supplies the place, or which (the commerce being supposed the same) would circulate there, if there was no paper money. If twenty shilling notes, for exam¬ ple, are the lowest paper money current in Scotland, the whole of that currency which can easily circulate there cannot exceed the sum of gold and silver which would be neces¬ sary for transacting the annual exchanges of twenty shillings value and upwards usually transacted within that country. Should the circulating paper at any time exceed that sum, as the excess could neither be sent abroad nor be employed in the circulation of the country, it must immediately return upon the banks to be exchanged for gold and silver. Many people would immediately perceive that they had more of this paper than was necessary for transacting their business at home, and as they could not send it abroad, they would immediately demand payment 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 they could find none while it remained in the shape of paper. There would immediately, therefore, be a run upon the banks to the whole extent of this superfluous paper, and, if they showed any difficulty or backwardness in payment, to a much greater extent; the alarm which this would occasion necessarily increasing the run. Over and above the expenses which are common to every branch of trade,—such as the expense of house rent, the wages of ser¬ vants, clerks, accountants, &c., the expenses peculiar to a bank consist chiefly in two articles : First, in the expense of keeping at all times in its coffers, for answering the occasional demands of the holders of its notes, a large sum of money, of which it loses the interest: and, secondly, in the expense of replenishing those coffers as fast as they are emptied by answering such occasional demands. A banking company which issues more paper than can be employed in the circu¬ lation of the country, and of which the excess is continually returning upon them for payment, ought to increase 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 a much greater proportion ; their notes returning upon them much faster than in proportion to the excess of their quan¬ tity. Such a company, therefore, ought to increase the first article of their expense, not only in proportion to this forced increase of ffie Appendix to the Commons’ Report on the Expediency of the Bank’s resuming Cash Payments tn 1819, p. 216.; and the evidence of Mr. Kinnear in their business, but in a much greater pro¬ portion. The coffers of such a company too, though they ought to be filled much fuller, yet must empty themselves much faster than if their business was confined within more reason¬ able bounds, and must require, not only a more violent, but a more constant and unin¬ terrupted exertion of expense in order to replenish them. The coin too, which is thus continually drawn in such large quan¬ tities from their coffers, cannot be employed in the circulation of the country. It comes in place of a paper which is over and above what can be employed in that circulation, and is therefore over and above what can be employed in it too. But as that coin will not be allowed to lie idle, it must, in one shape or another, be sent abroad, in order to find that profitable employment which it cannot find at home; and this continual exportation of gold and silver, by enhancing the difficulty, must necessarily enhance still further the expense of the bank, in finding new gold and silver in order to replenish those coffers, which empty themselves so very rapidly. Such a company, therefore, must, in proportion to this forced increase of their business, increase the second article of their expense still more than the first. Let us suppose that all the paper of a particular bank, which the circulation of the country can easily absorb and employ, amounts exactly to forty thousand pounds; and that for answering occasional demands, this bank is obliged to keep at all times in its coffers ten thousand pounds in gold and silver. Should this bank attempt to circu¬ late 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 all times in its coffers, not eleven thousand pounds only, but fourteen thousand pounds. It will thus gain nothing by the interest of the four thousand pounds exces¬ sive circulation; and it will lose the whole expense of continually collecting four thou¬ sand pounds in gold and silver, which will be continually going out of its coffers as fast as they are brought into them. Had every particular banking company always understood and attended to its own particular interest, the circulation never could have been over-stocked with paper money. But every particular banking com¬ pany has not always understood or attended to its own particular interest, and the circu¬ lation has frequently been overstocked with paper money. the Appendix to the Report of the Committee on the Promissory Notes of Scotland, &c. in 1823. p. 140. K 2 132 METALLIC AND PAPER MONEY. Book II. By issuing too great a quantity of paper, of which the excess was continually return¬ ing, in order to be exchanged for gold and silver, the Bank of England was for many years together obliged to coin gold to the extent of between eight hundred thousand pounds and a million a year; or at an average, about eight hundred and fifty thousand pounds. For this great coinage the bank (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 bullion at the high price of four pounds an ounce, which it soon after issued in coin at 37. 17 s. lO^d. an ounce, losing in this manner between two and a half and three per cent, upon the coinage of so very large a sum. Though the bank, therefore, paid no seignorage, though the government was properly at the expense of the coinage, this liberality of government did not prevent altogether the expense of the bank. 1 The Scotch banks, in consequence of an excess of the same kind, were all obliged to employ constantly agents at London to col¬ lect money for them, at an expense which was seldom below one and a half or two per cent. This money was sent down by the waggon, and insured by the carriers at an additional expense of three quarters per cent, or fifteen shillings on the hundred pounds. Those agents were not always able to re¬ plenish the coffers of their employers so fast as they were emptied. In this case the re¬ source 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 correspondents afterwards drew upon them for the payment of this sum, to¬ gether 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 some¬ times more than two or three journeys; 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 em¬ ploy this ruinous resource. The gold coin which was paid out either by the Bank of England, or by the Scotch banks, in exchange for that part of their paper which was over and above what could 1 The drain of gold, previously to 1772, here al¬ luded to, has sometimes been considered not as the effect of an over-issue of bank paper, but of the de¬ graded state of the bulk of the gold coin then in circulation. It is certain, however, that if the Bank of England had narrowed her issues a little, the value not only of her own paper, but of the degraded be employed in the circulation of the country, being likewise over and above what could be employed in that circulation, was sometimes sent abroad in the shape of coin, sometimes melted down and sent abroad in the shape of bullion, and sometimes melted down and sold to the Bank of England at the high price of four pounds an ounce. It was the newest, the heaviest, and the best pieces only which were carefully picked out of the whole coin, and either sent abroad or melted down. At home, and while they remained in the shape of coin, those heavy pieces were of no more value than the light; but they were of more value abroad, or when melted down into bullion, at home. The Bank of 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, not¬ withstanding 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 conti¬ nual rise in the price of gold bullion, in consequence of the continual wearing and clipping of the coin, the expense of this great annual coinage became every year greater and greater. The Bank of England, it is to be observed, by supplying its own coffers with coin, is indirectly obliged to supply the whole kingdom, into which coin is continually flowing from those coffers in a great variety of ways. Whatever coin, therefore, was wanted to support this exces¬ sive circulation, both of Scotch and English paper money, whatever vacuities this exces¬ sive circulation occasioned in the necessary coin of the kingdom, the Bank of England was obliged to supply them. The Scotch banks, no doubt, paid all of them very dearly for their own imprudence and inattention. But the Bank of England paid very dearly, not only for its own imprudence, but for the much greater imprudence of almost all the Scotch banks. The over-trading of some bold projectors in both parts of the United Kingdom, was the original cause of this excessive circulation of paper money. What a bank can with propriety advance to a merchant or undertaker of any kind, is not, either the whole capital with which he trades, or even any considerable part of that capital; but that part of it only which he gold currency, would have been raised. The price of bullion would, in consequence, have fallen ; and there would no longer have been a motive to demand coin from the Bank. For some farther elucidations of this principle, see note on Money, end of the volume. Chap. II. METALLIC AND PAPER MONEY. 133 would otherwise be obliged to keep by him unemployed and in ready money for answer¬ ing occasional demands. If the paper money which the bank advances never ex¬ ceeds this value, it can never exceed the value of the gold and silver which would necessarily circulate in the country if there was no paper money ; it can never exceed the quantity which the circulation of the country can easily absorb and employ. When a bank discounts to a merchant a Teal bill of exchange drawn by a real creditor upon a real debtor, and which, as soon as it becomes due, is really paid by that debtor, it only advances to him a part of the value which he would otherwise be obliged to keep by him unemployed and in ready money for answering occasional demands. The pay¬ ment of the bill, -when it becomes due, re¬ places to the bank the value of what it had advanced, together with the interest. The coffers of the bank, so far as its dealings are confined to such customers, resemble a water pond, from which, though a stream is con¬ tinually running out, yet another is con¬ tinually running in, fully equal to that which runs out; so that without any further care or attention, the pond keeps always equally, or very near equally full. Little or no ex¬ pense can ever be necessary for replenishing the coffers of such a bank. A merchant, without over-trading, may frequently have occasion for a sum of ready money, even when he has no bills to discount. When a bank, besides discounting his bills, advances him likewise upon such occasions, such sums upon his cash account, and accepts of a piecemeal repayment as the money comes in from the occasional sale of his goods, upon the easy terms of the banking companies of Scotland ; it dispenses him entirely from the necessity of keeping any part of his stock by him unemployed and in ready money for answering occasional de¬ mands. When such demands actually come upon him, he can answer them sufficiently from his cash account. The bank, however, in dealing with such customers, ought to observe with great attention, whether in the course of some short period (of four, five, six, or eight months, for example) the sum of the repayments which it commonly receives from them, is, or is not, fully equal to that of the advances which it commonly makes to them. If, within the course of such short periods, the sum of the repayments from certain customers is, upon most occasions, fully equal to that of the advances, it may safely continue to deal with such customers. Though the stream which is in this case continually running out from its coffers may be very large, that which is continually running into them must be at least equally large ; so that without any further care or attention those coffers are likely to be always r equally or very near equally full, and scarce ever to require any extraordinary expense to replenish them. If, on the contrary, the sum of the repayments from certain other customers falls commonly very much short of the advances which it makes to them, it cannot with any safety continue to deal with such customers, at least if they continue to deal with it in this manner. The stream which is in this case continually running out from its coffers is necessarily much larger than that which is continually running in ; so that, unless they are replenished by some great and continual effort of expense, those coffers must soon be exhausted altogether. The banking companies of Scotland, ac¬ cordingly, were for a long time very care¬ ful to require frequent and regular repay¬ ments from all their customers, and did not care to deal with any person, whatever might be his fortune or credit, who did not make what they call frequent and regular oper¬ ations with them.. By this attention, besides saving almost entirely the extraordinary ex¬ pense of replenishing their coffers, they gained two other very considerable advantages. First , By this attention they were enabled to make some tolerable judgment concerning the thriving or declining circumstances of their debtors, without being obliged to look out for any other evidence besides what their own books afforded them ; men being for the most part either regular or irregular in their repayments, according as their circum¬ stances are either thriving or declining. A private man who lends out his money to perhaps half a dozen, or a dozen of debtors, may, either by himself or his agents, observe and inquire both constantly and carefully into the conduct and situation of each of them. But a banking company, which lends money to perhaps five hundred different people, and of which the attention is con¬ tinually occupied by objects of a very differ¬ ent kind, can have no regular information concerning the conduct and circumstances of the greater part of its debtors beyond what its own books afford it. In requiring fre¬ quent and regular repayments from all their customers, the banking companies of Scot¬ land had probably this advantage in view. Secondly , By this attention they secured themselves from the possibility of issuing more paper money than what the circulation of the country could easily absorb and em¬ ploy. When they observed, that within moderate periods of time the repayments of a particular customer were upon most oc¬ casions fully equal to the advances which they had made to him, they might be as¬ sured that the paper money which they had advanced to him had not at any time ex¬ ceeded the quantity of gold and silver which he would otherwise have been obliged to keep by him for answering occasional de- K 3 134 METALLIC AND PAPER MONEY. Book II. mands; and that consequently the paper money which they had circulated by his means, had not at any time exceeded the quantity of gold and silver which would have circulated in the country, had there been no paper money. The frequency, re¬ gularity, and amount of his repayments would sufficiently demonstrate that the amount of their advances had at no time exceeded that part of his capital which he would otherwise have been obliged to keep Oy him unemployed and in ready money for answering occasional demands ; that is, for the purpose of keeping the rest of his capital in constant employment. It is this part of his capital only which, within moderate periods of time, is continually returning to every dealer in the shape of money, whether paper or coin, and continually going from him in the same shape. If the advances of the bank had commonly exceeded this part of his capital, the ordinary amount of his repayments could not, within moderate periods of time, have equalled the ordinary • amount of its advances. The stream which, by means of his dealings, was continually running into the coffers of the bank, could not ha \ r 2 been equal to the stream which, by means of the same dealings, was con¬ tinually running out. The advances of the bank paper, by exceeding the quantity of gold and silver which, had there been no such advances, he would have been obliged to keep by him for answering occasional demands, might soon come to exceed the whole quantity of gold and silver which (the commerce being supposed the same) would have circulated in the country had there been no paper money, and conse¬ quently to exceed the quantity which the circulation of the country could easily ab¬ sorb and employ ; and the excess of this paper money would immediately have re¬ turned upon the bank in order to be ex¬ changed for gold and silver. This second advantage, though equally real, was not, per¬ haps, so well understood by all the different banking companies of Scotland as the first. When, partly by the convenience of dis¬ counting bills, and partly by that of cash accounts, the creditable traders of any coun¬ try can be dispensed from the necessity of keeping any part of their stock by them unemployed and in ready money for an¬ swering occasional demands, they can rea¬ sonably expect no farther assistance from banks and bankers, who, when they have gone thus far, cannot, consistently with their own interest and safety, go farther. A bank cannot, consistently with its own interest, advance to a trader the whole or even the greater part of the circulating capital with which he trades; because, though that ca¬ pital is continually returning to him in the shape of money, and going from him in the same shape, yet the whole of the returns is too distant from the whole of the outgoings, and the sum of his repayments could not equal the sum of its advances within such moderate periods of time as suit the con- veniency of a bank. Still less could a bank afford to advance him any considerable part of his fixed capital; of the capital which the undertaker of an iron forge, for example, employs in erecting his forge and smelting- house, his workhouses and warehouses, the dwelling-houses of his workmen, &c.; of the capital which the undertaker of a mine employs in sinking his shafts, in erecting engines for drawing out the water, in making roads and waggon-ways, &c. ; of the capital which the person who undertakes to improve land employs in clearing, draining, enclosing, manuring and ploughing waste and uncultivated fields, in building farm¬ houses, with all their necessary appendages of stables, granaries, &c. The returns of the fixed capital are, in almost all cases, much slower than those of the circulating capital; and such expenses, even when laid out with the greatest prudence and judgment, very seldom return to the undertaker till after a period of many years, a period by far too distant to suit the conveniency of a bank. Traders and other undertakers may, no doubt, with great propriety, carry on a very considerable part of their projects with bor¬ rowed money. In justice to their creditors, however, their own capital ought, in this case, to be sufficient to ensure, if I may say so, the capital of those creditors; or to render it extremely improbable that those creditors should incur any loss, even though the success of the project should fall very much short of the expectation of the pro¬ jectors. Even with this precaution, too, the money which is borrowed, and which it is meant should not be repaid till after a period of several years, ought not to be borrowed of a bank, but ought to be bor¬ rowed upon bond or mortgage, of such private people as propose to live upon the interest of their money, without taking the trouble themselves to employ the capital; and who are, upon that account, willing to lend that capital to such people of good credit as are likely to keep it for several years. A bank, indeed, which lends its money without the expense of stamped pa¬ per or of attorneys’ fees for drawing bonds and mortgages, and which accepts of repay¬ ment upon the easy terms of the banking companies of Scotland, would, no doubt, be a very convenient creditor to such traders and undertakers. But such traders and undertakers would, surely, be most inconve¬ nient debtors to such a bank. It is now more than five-and-twenty years since the paper money issued by the different banking companies of Scotland was fully Chap. II. METALLIC AND PAPER MONEY. 135 equal, or rather was somewhat more than fully equal, to what the circulation of the country could easily absorb and employ. Those companies, therefore, had so long ago given all the assistance to the traders and other undertakers of Scotland which it is possible for banks and bankers, consistently with their own interest, to give. They had even done somewhat more. They had over¬ traded a little, and had brought upon them¬ selves that loss, or at least that diminution of profit, which in this particular business never fails to attend the smallest degree of over-trading. Those traders and other under¬ takers, having got so 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 ex¬ pense besides that of a few reams of paper. They complained of the contracted views and dastardly spirit of the directors of those banks, which did not, they said, extend their credits in proportion to the extension of the trade of the country ; meaning, no doubt, by the extension of that trade, the extension of their own projects beyond what they could carry on, either with their own capital, or with what they had credit to borrow of private people in the usual way of bond or mortgage. The banks, they seem to have thought, were in honour bound to supply the deficiency, and to provide them with all the capital which they wanted to trade with. The banks, however, were of a dif¬ ferent opinion, and upon their refusing to extend their credits, some of those traders had recourse to an expedient which, for a time, served their purpose, though at a much greater expense, yet as 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 ; the shift to which unfortunate traders have sometimes recourse when they are upon the brink of bankruptcy. The practice of raising money in this manner had been long known in England, and during the course of the late war, when the high profits of trade afforded a great temptation to over-trading, is gaid to have been carried on to a very great extent. From England it was brought into Scotland, where, in pro¬ portion to the very limited commerce, and to the very moderate capital of the country, it was soon carried on to a much greater extent tlian 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 give an account of it. But as this book may come into the hands of many people who arc not men of business, and as the effects of this practice upon the banking trade are not perhaps generally understood even by men of business themselves, I shall endeavour to explain it as distinctly as I can. The customs of merchants, which were established when the baibarous laws of Europe did not enforce the performance of their contracts, and which during the course of the two last centuries have been adopted into the laws of all European nations, have given such extraordinary privileges to bills of exchange, that money is more readily advanced upon them than upon any other species of obligation ; especially when they are made payable within so short a period as two or three months after their date. I£ when the bill becomes due, the acceptor does not pay it as soon as it is presented, he be¬ comes from that moment a bankrupt. The bill is protested, and returns upon the drawer, who, if he does not immediately pay it, be¬ comes likewise a bankrupt. If, before it came to the person who presents it to the acceptor for payment, it had passed through the hands of several other persons, who had successively advanced to one another the contents of it either in money or goods, and who to express that each of them had in his turn received those contents, had all of them in their order 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, acceptor, and endorsers of the bill should all of them be persons of doubtful credit, yet still the shortness of the date gives some security to the owner of the bill. Though all of them may be very likely to become bankrupts, it is a chance if they all become so in so short a time. The house is crazy, says a weary traveller to himself, and will not stand very long ; but it is a chance if it falls to-night, and I will venture, therefore, to sleep in it to-night. The trader A. in Edinburgh, we shall suppose, draws a bill upon B. in London, payable two months after date. In reality B. in London owes nothing to A. in Edin¬ burgh ; but he agrees to accept of A. ’s bill, upon condition that before the term of pay¬ ment he shall redraw upon A. in Edinburgh for the same sum, together with the interest and a commission, another bill, payable like¬ wise two months afterdate. B. accordingly, before the expiration of the first two months, redraws this bill upon A. in Edinburgh; who again, before the expiration of the second two months, draws a second bill upon B. in London, payable likewise two months after date ; and before the expiration of the third two months, B. in London redraws upon A. in Edinburgh another bill, payable also two months after date. This practice has some¬ times gone on, not only for several months, but for several years together, the bill always K 4 13 6 METALLIC AND PAPER MONEY. Book II. returning upon A. in Edinburgh, with the accumulated interest and commission of all the former bills. The interest was five per cent, in the lyear, and the commission was never less than one half per cent, on each draught. This commission being repeated more than six times in the year, whatever money A. might raise by this expedient must necessarily have cost him something more than eight per cent, in the year, and some¬ times a great deal more, when either the price of the commission happened to rise, or when he was obliged to pay compound in¬ terest upon the interest and commission of former bills. This practice was called raising money by circulation. 1 In a country where the ordinary profits of stock in the greater part of mercantile pro¬ jects are supposed to run between six and ten per cent., it must have been a very fortunate speculation of which the returns could not only repay the enormous expense at which the money was thus borrowed for carrying it on, but afford, besides, a good surplus profit to the projector. Many vast and ex¬ tensive projects, however, were undertaken, and for several years carried on without any other fund to support them besides what was raised at this enormous expense. The projectors, no doubt, had in their golden dreams the most distinct vision of this great profit. Upon their awaking, however, either at the end of their projects, or when they were no longer able to carry them on, they very seldom, I believe, had the good fortune to find it. 2 The bills which A. in Edinburgh drew upon B. in London, he regularly discounted two months before they were due with some bank or banker in Edinburgh ; and the bills which B. in London redrew upon A. in 1 Mr. H, Thornton has shown, in his Essay on Paper Credit (p. 34.), that Dr. Smith has overrated the expense of raising money by drawing and re¬ drawing bills. The fact is, that transactions in fictitious bills are, in the vast majority of instances, carried on for the joint benefit of the parties. When A. draws on B., he pays him a commission; but when B. is the drawer, A. gets the commission. On the whole, therefore, each party may be supposed to receive about as much as he pays in the shape of commission : and the discount in turning the bills into money, which can hardly exceed five per cent, per annum, must, generally speaking, be considered as the whole expense incurred, exclusive of the stamps. 2 The method described in the text was by no means either the most common or the most ex¬ pensive one in which those adventurers sometimes raised money by circulation. It frequently happened that A. in Edinburgh would enable B. in London to pay the first bill of exchange by drawing, a few days before it became due, a second bill at three months date upon the same B. in London. This bill, being payable to his own order, A. sold in Edinburgh at par ; and with its 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 Edinburgh and London was frequently three per cent, against Edinburgh, and those bills at sight must frequently have cost A. that premium. This transaction there¬ fore being repeated at least four times in the year, Edinburgh, he as regularly discounted either w ith the Bank of England, or with some other bankers in London. Whatever was advanced upon such circulating bills, was, in Edinburgh, advanced in the paper of the Scotch banks, and in London, wTien they were discounted at the Bank of England, in the paper of that bank. Though the bills upon which this paper had been advanced, were all of them repaid in their turn as soon as they became due, yet the value which had been really advanced upon the first bill was never really returned to the banks which advanced it; because, before each bill became due, another bill was always drawn to some¬ what a greater amount than the bill which was soon to be paid; and the discounting of this other bill was essentially necessary to¬ wards the payment of that which was soon to be due. This payment, therefore, was altogether fictitious. The stream, which, by means of those circulating bills of ex¬ change, had once been made to run out from the coffers of the banks, was never replaced by any stream which really run into them. The paper which was issued upon those circulating bills of exchange, amounted, upon many occasions, to the whole fund destined for carrying on some vast and extensive pro¬ ject of agriculture, commerce, or manufac¬ tures; and not merely to that part of it which, had there been no paper money, the projector would have been obliged to keep by him, unemployed and in ready money for answering occasional demands. The greater part of this paper was, consequently, over and above the value of the gold and silver which would have circulated in the country, had there been no paper money. It was over and above, therefore, what the circulation of the country could easily absorb and em- and being loaded with a commission of at least one half per cent, upon each repetition, must at that pe¬ riod have cost A. at least fourteen per cent, in the year. At other times A. would enable B. to discharge the first bill of exchange by drawing, a few days before it became due, a second bill at two months date ; not upon B., but upon some third person,C., for example, in London. This other bill was made payable to the order of B., who, upon its being ac¬ cepted by C., discounted it with some banker in London ; and A. enabled C. to discharge it by draw¬ ing, 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 opera¬ tions 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 London, it was less ex¬ pensive than that mentioned in the foregoing part of this note ; but then it required an established credit with more houses than one in London, an advantage which many of these adventurers could not always find it easy to procure. (Note by the Author.) Chap. II. METALLIC AND PAPER MONEY. 137 ploy, and upon that account, immediately [ returned upon the banks in order to be ex¬ changed for gold and silver, which they were to find as they could. It was a capital which those projectors had very artfully contrived to draw from those banks, not only without their knowledge or deliberate consent, but for some time, perhaps, without their having the most distant suspicion that thev had really advanced it. When two people, who are continually drawing and redrawing upon one another, discount their bills always with the same banker, he must immediately discover what they are about, and see clearly that they are trading, not with any capital of their own, but with the capital which he advances to them. But this discovery is not altogether so easy when they discount their bills some¬ times with one banker, and sometimes with another, and when the same two persons do not constantly draw and redraw upon one another, but occasionally run the round of a great circle of projectors, who find it for their interest to assist one another in this method of raising money, and to render it, upon that account, as difficult as possible to distinguish between a real and a fictitious bill of exchange; between a bill drawn by a real creditor upon a real debtor, and a bill for which there was properly no real creditor but the bank which discounted it, nor any real debtor but the projector who made use of the money. When a banker had even made this dis¬ covery, he might sometimes make it too late, and might find that he had already dis¬ counted the bills of those projectors to so great an extent, that, by refusing to discount any more, he would necessarily make them all bankrupts, and thus, by ruining them, might perhaps ruin himself. For his own interest and safety, therefore, he might find it neces¬ sary, in this very perilous situation, to go on for some time, endeavouring, however, to withdraw gradually, and upon that account making every day greater and greater diffi¬ culties about discounting, in order to force those projectors by degrees to have recourse, either to other bankers, or to other methods of raising money; so as that he himself might, as soon as possible, get out of the circle. The difficulties, accordingly, which the Bank of England, which the principal bankers in London, and which even the more prudent Scotch banks began, after a certain time, and when all of them had already gone too far, to make about discounting, not only alarmed, but enraged in the highest degree those projectors. Their own distress, of 1 This bank commenced business at Ayr, in No¬ vember 1769, under the firm of Douglas, Heron, & Co., and had branches at Edinburgh and Dumfries. It suspended payments on the 25th of June 1772,when, as stated in the text, though its paid up capital only amounted to 128,000/. (80 per cent, of 160,000/.) it had incurred obligations for no less than 800,000/. viz. 600,090/. of debt accumulated in London, and 200,000/. which this prudent and necessary reserve of the banks was, no doubt, the immediate oc¬ casion, they called the distress of the coun¬ try, and this distress of the country, they said, was altogether owing to the ignorance, pusillanimity, and bad conduct of the banks, which did not give a sufficiently liberal aid to the spirited undertakings of those who exerted themselves in order to beautifv, im- y 7 prove, and enrich the country. It was the duty of the banks, they seemed to think, to lend for as long a time, and to as great an extent as they might wish to borrow. The banks, however, by refusing in this manner to give more credit to those, to whom they had already given a great deal too much, took the only method by which it was now possible to save either their own credit or the public credit of the country. In the midst of this clamour and distress, a new bank was established in Scotland, for the express purpose of relieving the distress of the country. 1 The design was generous; but the execution was imprudent, and the nature and causes of the distress which it meant to relieve were not, perhaps, well un¬ derstood. This bank was more liberal than any other had ever been, both in granting cash accounts, and in discounting bills of exchange. With regard to the latter, it seems to have made scarce any distinction between real and circulating bills, but to have discounted all equally. It was the avowed principle of this bank to advance, upon any reasonable security, the whole capital which was to be employed in those improvements of which the returns are the most slow and distant, such as the improve¬ ments of land. To promote such improve¬ ments was even said to be the chief of the public-spirited purposes for which it was instituted. By its liberality in granting cash accounts, and in discounting bills of exchange, it, no doubt, issued great quanti¬ ties of its bank notes. But those bank notes being, the greater part of them, over and above what the circulation of the country could easily absorb and employ, returned upon it, in order to be exchanged for gold and silver, as fast as thev were issued. Its coffers were never well filled. The capital which had been subscribed to this bank at two different subscriptions, amounted to one hundred and sixty thousand pounds, of which eighty per cent, only was paid up. This sum ought to have been paid in at several different instalments. A great part of the proprietors, when they paid in their first instalment, opened a cash account with the of outstanding notes ! The large private fortunes of the partners enabled them, in the end, to discharge all claims upon the bank. The total loss incurred before its affairs were finally wound up is said to have amounted to about 400,000/.— 8ee the work entitled Precipitation and Fall qf Messrs. Luug/a*, heron Co.. 4to., Edinburgh, 1778. 138 Boox II. METALLIC AND PAPER MONEY. bank ; and the directors, thinking themselves obliged to treat their own proprietors with the same liberality with which they treated all other men, allowed many of them to bor¬ row upon this cash account what they paid in upon all their 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 bank been filled ever so well, its ex¬ cessive circulation must have emptied them iaster than they could have been replenished by any other expedient but the ruinous one of drawing upon London, and when the bill became due, paying it, together with interest and commission, by another draught upon the same place. Its coffers having been filled so very ill, it is said to have been driven to this resource within a very few months after it began to do business. The estates of the proprietors of this bank were worth several millions, and by their subscription to the original bond or contract of the bank, were really pledged for answering all its en¬ gagements. By means of the great credit which so great a pledge necessarily gave it, it was, notwithstanding its too liberal con¬ duct, enabled to carry on business for more than two years. When it was obliged to stop, it had in the circulation about two hundred thousand pounds in bank notes. In order to support the circulation of those notes, which were continually returning upon it as fast as they were issued, it had been constantly in the practice of drawing bills of exchange upon London, of which the number and value were continually increasing, and, when it stopt, amounted to upwards of six hundred thousand pounds. This bank, there¬ fore, had, in little more than the course of two years, advanced to different people up¬ wards of eight hundred thousand pounds at five per cent. Upon the two hundred thou¬ sand pounds which it circulated in bank notes, this five per cent, might, perhaps, be considered as clear gain, without any other deduction besides the expense of manage¬ ment. But upon upwards of six hundred thousand pounds, for which it was continu¬ ally drawing bills of exchange upon London, it was paying, in the way of interest and commission, upwards of eight per cent., and w r as consequently losing more than three per cent, upon more than three fourths of all its dealings. The operations of this bank seem to have produced effects quite opposite to those which were intended by the particular persons who planned and directed it. They seem to have intended to support the spirited underta¬ kings, for as such they considered them,which were at that time carrying on in different parts of the country; and at the same time, by drawing the whole banking business to themselves, to supplant all the other Scotch banks; particularly those established at Edinburgh, whose backwardness in discount¬ ing bills of exchange had given some of¬ fence. This bank, no doubt, gave some temporary relief to those projectors and en¬ abled them to carry on their projects for about two years longer than they could otherwise have done. But it thereby only enabled them to get so much deeper into debt, so that when ruin came, it fell so much the heavier both upon them and upon their creditors. The operations of this bank, there¬ fore, instead of relieving, in reality aggra¬ vated in the long-run the distress which those projectors had brought both upon them¬ selves and upon their country. It would have been much better for themselves, their creditors, and their country, had the greater part of them been obliged to stop two years sooner than they actually did. The tem¬ porary relief, 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 exchange, which those other banks had become so backward in discounting, had re¬ course to this new bank, where they were received with open arms. Those other banks, therefore, were enabled to get very easily out of that fatal circle, from which they could not otherwise have disengaged themselves, without incurring a considerable loss, and perhaps too even some degree of discredit. \ In the long-run, therefore, the operations of this bank increased the real distress of the country which it meant to relieve; and ef¬ fectually relieved from a very great distress those rivals whom it meant to supplant. At the first setting out of this bank, it was the opinion of some people, that how fast soever its coffers might be emptied, it might easily replenish them by raising money upon the securities of those to whom it had advanced its paper. Experience, I believe, soon convinced them that this method of raising money was by much too slow to an¬ swer their purpose; and that coffers which originally were so ill filled, and which emptied themselves so very fast, could be replenished by no other expedient but the ruinous one of drawing bills upon London, and when they became due, paying them by other draughts upon the same place with accumulated interest and commission. But though they had been able by this method to raise money as fast as they wanted it, yet, instead of making a profit, they must have suffered a loss by every such operation; so that in the long-run they must have ruined themselves as a mercantile company, though, perhaps, not so soon as by the more ex¬ pensive practice of drawing and redrawing. They could still have made nothing by the interest of the paper, which, being over and above what the circulation of the coun¬ try could absorb and employ, returned upon them, in order to be exchanged for gold Chap. II METALLIC AND PAPER MONEY. 139 and silver, as fast as they issued it; and for the payment of which they were them¬ selves continually obliged to borrow money. On the contrary, the whole expense of this borrowing, of employing agents to look out for people who had money to lend, of nego¬ tiating with those people, and of drawing the proper bond or assignment, must have fallen upon them, and have been so much clear loss upon the balance of their accounts. The project of replenishing their coffers in this manner may be compared to that of a man who had a water-pond, from which a stream was continually running out, and into which no stream was continually running, but who proposed to keep it always equally full by employing a number of people to go continually with buckets to a well at some miles distance, in order to bring water to replenish it. But though this operation had proved, not only practicable, but profitable to the Bank, as a mercantile company, yet the country could have derived no benefit from it; but, on the contrary, must have suffered a very considerable loss by it. This opera¬ tion could not augment in the smallest de¬ gree 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 who wanted to borrow, must have applied to this bank, instead of applying to the private persons who had lent it their mo¬ ney. But a bank which lends money, perhaps, to five hundred different people, the greater part of whom its directors can know very little about, is not likely to be more judi¬ cious in the choice of its debtors, than a pri¬ vate person who lends out his money among a few people whom he knows, and in whose sober and frugal conduct he thinks he has good reason to confide. The debtors of such a bank, as that whose conduct I have been giving some account of, were likely, the greater part of them, to be chimerical pro¬ jectors, the drawers and redrawers of cir¬ culating bills of exchange, who would employ the money in extravagant under¬ takings, which, with all the assistance that could be given them, they would probably never be able to complete, and which, if they should be completed, would never re¬ pay the expense which they had really cost, would never afford a fund capable of main¬ taining 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 under¬ takings, which were proportioned to their capitals, and which, though they might have less of the grand and the marvellous, would have more of the solid and the profitable, which would repay with a large profit whatever had been laid out upon them, and which would thus afford a fund capable of maintaining a much greater quantity of la¬ bour than that which had been employed about them. The success of this operation, therefore, without increasing in the smallest degree the capital of the country, would only have transferred a great part of it from prudent and profitable, to imprudent and unprofitable undertakings. That the industry of Scotland languished for want of money to employ it, was the opi¬ nion of the famous Mr. Law. By establish¬ ing 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 country, he proposed to remedy this want of money. The parliament of Scotland, when he first proposed his project, did not think proper to adopt it. It was afterwards adopted, with some variations, by the Duke of Orleans, at that time regent of France. The idea of the possibility of mul¬ tiplying 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 differ¬ ent operations of this scheme are explained so fully, so clearly, and with so much order and distinctness, by Mr. Du Verney, in his Ex¬ amination of the Political Reflections upon Commerce and Finances of Mr. Du Tot, that I shall not give any account of them. The principles upon which it was founded are explained by Mr. Law himself, in a dis¬ course concerning money and trade, which he published in Scotland, when he first pro¬ posed his project. The splendid, but vision¬ ary, ideas which are set forth in that and some other works upon the same principles, still continue to make an impression upon many people, and have perhaps, in part, con¬ tributed to that excess of banking which has of late been complained of both in Scotland and in other places. The Bank of England is the greatest bank of circulation in Europe. It was incorpo¬ rated, in pursuance of an act of parliament, by a charter under the great seal, dated the 27th of July, 1694. It at that time advanced to government the sum of one million two hun¬ dred thousand pounds, for an annuity of one hundred thousand pounds; or for 96,000/. a year interest, at the rate of eight per cent., and 4000/. a year for the expense of manage¬ ment. The credit of the new government, established by the Revolution, we may be¬ lieve, must have been very low, when it was obliged to borrow at so high an interest. In 1697 the bank was allowed to enlarge its capital stock by an engraftment of 1,001,171/. 105. Its whole capital stock, therefore, amounted at this time to 2,201,171/. 105 This engraftment is said to have been for the support of public credit. In 1696, taillics 140 METALLIC AND PAPER MONEY. ILox II, had been at forty, and fifty, and sixty per cent, discount, and bank notes at'twenty per cent. 1 During the great recoinage of the silver, which was going on at this time, the bank had thought proper to discontinue the payment of its notes, which necessarily occa¬ sioned their discredit. In pursuance of the 7tli Anne, c. vii. the bank advanced and paid into the exchequer the sum of 400,000/.; making in all the sum of 1,600,000/. which it had advanced upon its original annuity of 96,000/. interest, and 4000/. for expense of management. In 1708, therefore, the credit of government was as good as that of private persons, since ic could borrow at six per cent, interest, the common legal and market rate of those times. Id pursuance of the same act, the bank can¬ celled exchequer bills to the amount of I, 775,027/. 17s. 10at six per cent, inte¬ rest, 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 advanced to government the sum of 3,375,027/. 17s. lOjtf. By a call of fifteen per cent, in 1709, there was paid in and made stock 656,204/. Is. 9d .; and by another of ten per cent, in 1710, 501,448/. 12s. 1 Id. Inconsequence of those two calls, therefore, the bank capital amounted to 5,559,995/. 14s. 8 d. In pursuance of the 3d George I. c. 8. the bank delivered up two millions of ex¬ chequer bills to be cancelled. It had at this time, therefore, advanced to government 5,375,027/. 17s. lOd. In pursuance of the 8th George I. c. 21. the bank purchased of the South Sea Company, stock to the amount of 4,000,000/.; and in 1722, in consequence of the subscriptions which it had taken in for enabling it to make this purchase, its capital stock was increased by 3,400,000/. At thi 9 time, therefore, the bank had ad¬ vanced to the public 9,375,027/. 17s. 10 2 cZ. ; 1 James Postlethwaite’s History of the Public Re¬ venue, p. 301. 2 In 1800 the bank agreed to advance 3,000,000/. to government for six years, without interest, in consideration of which the charter was prolonged till 12 months’ notice, after the 1st of August, 1833. In 1807 the bank agreed to continue this loan of 3 , 000 , 000 /., without interest, till six months after a definitive treaty of peace ; and in 1816 she farther aereed to continue it till 1833, at 3 per cent, interest. The permanent debt due by the public to the bank from 1800 to 1833 was consequently 14,686,800/.; but from 1800 to 1816, the bank only received interest on II, 686,800/. In 1833 the charter was continued till 12 months’ notice after the 1st of August 1855, with the proviso that it might be terminated on 12 months notice after the 1st of August 1845. On^this occa¬ sion the public paid off 4 th part, or 3,6< 1,700/. of the sum then due to the bank, making the total debt now (1849) due to her 11,015,100/., exclusive, of course, of any sums she may be entitled to on account of the dead weight and other public securities in her possession. In 1844 the charter was farther continued, by the 7 and 8 Viet. c. 32, till 12 months after the 1 st of August 1855. For an account of the various important alterations effected by this act in the constitution, &c. of the bank, see Supplemental Note on Money. In 1782 the bank capital, or the sum on which and its capital stock amounted only to 8,959,995/. 145.8c/. It was upon this occa¬ sion that the sum which the bank had ad¬ vanced to the public, and for which it received interest, began first to exceed its capital stock, or the sum for which it paid a dividend to the proprietors of bank stock ; or, in other words, that the bank began to have an undi¬ vided capital, over and above its divided one. It has continued to have an undivided capi¬ tal of the same kind ever since. In 1746, the bank had, upon different occasions, ad¬ vanced to the public 11,686,800/., and its divided capital had been raised by different calls and subscriptions to 10,780,000/. The state of those two sums has continued to be the same ever since. In pursuance of the 4th of George III. c. 25. the bank agreed to pay to government for the renewal of its charter 110,000/., without interest or repay¬ ment. This sum, therefore, did not increase either of those two other sums. 1 2 The dividend of the bank has varied ac¬ cording to the variations in the rate of the interest which it has, at different times, re¬ ceived for the money it had advanced to the public, as well as according to other circum¬ stances. This rate of interest has gradually been reduced from eight to three per cent. For some years past the bank dividend has been at five and a half per cent . 3 The stability of the Bank of England, is equal to that of the British government. All that it has advanced to the public must be lost before its creditors can sustain any loss. No other banking company in Eng¬ land can be established by act of parliament, or can consist of more than six members. It acts, not only as an ordinary bank, but as a great engine of state. It receives and pays the greater part of the annuities which are due to the creditors of the public 4 * * 7 , it cir¬ culates exchequer bills, and it advances to government the annual amount of the land and malt taxes, which are frequently not paid dividends are paid, was increased from 10,786.000/., the amount mentioned by Smith, to 11,642.400/. ; and, in 1816, it was further increased_to_14,553,000/. It was intended that the sum of 3,671,700/., repaid bv the public to the bank in 1833, should be deducted from her capital. But this intention being abandoned, the sum referred to was vested in an annuity termi¬ nable in 1860. s The dividends on bank stock, from 1767 to the present time, have been :—From 1767 to 1781, 5^ per cent, per annum ; from 1781 to 1788, 6 per cent. ; from 1788 to 1807, 7 per cent.; from 1807 to 1823, 10 per cent ; from 1823 to 1839, 8 per cent. ; and from 1839 to the present time (1849), 7 per cent. The sums paid as dividends are exclusive of those which have occasionally been advanced as bonuses. 4 The sum paid by the public to the Bank of Eng¬ land for managing the public debt, amounted, previ¬ ously to 1833, to about 270,000/. a year. But the act for renewing the charter in that year (3 and 4 ^ ill. IV., c. 98) directed that 120,000/. a year should be deducted from the sums she was previously authorised to charge for such management, and they were still farther reduced in 1844. At present (184y) the ma¬ nagement of the debt costs about 95,000/. a year. For full details in regard to the history and present state of the Bank of England, the reader is referred to the art. on that establishment in the Commercial IHchonary . Chap. II. METALLIC AND PAPER MONEY. 141 up till some years thereafter. In those dif¬ ferent 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 likewise discounts merchants’ bills, and has, upon several differ- ent occasions, supported the credit of the principal houses, not only of England, but of Hamburgh and Holland. Upon one oc- i casion, in 1763, it is said to have advanced for this purpose, in one week, about 1,600,000/.; a great part of it in bullion. I do not, however, pretend to warrant either the greatness of the sum or the shortness or the time. Upon other occasions, this great company has been reduced to the necessity of • s paying in sixpences. 1 2 It is not by augmenting the capital of the country, but by rendering a greater part of that capital active and productive than would otherwise be so, that the most judicious operations of banking can increase the indus¬ try of the country. That part of his capital which a dealer is obliged to keep by him unemployed, and in ready money for an¬ swering occasional demands, is so much dead stock, which, so long as it remains in this situation, produces nothing either to him or to his country. The judicious operations of banking enable him to convert this dead stock into active and productive stock ; into materials to work upon, into tools to work with, and into provisions and subsistence to work for ; into stock which produces some¬ thing both to himself and to his country. The gold and silver money which circulates in any country, and by means of which the produce of its land and labour is annually circulated and distributed to the proper consumers, is, in the same manner as the ready money of the dealer, all dead stock. It is a very valuable part of the capital of the country, which produces nothing to the country.2 The judicious operations of bank¬ ing, by substituting paper in the 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 stock; into stock which produces something to the country. 3 The gold and silver money which circulates in any country may very properly be compared to a highway, which, while it circulates and carries to market all the grass and corn of the country, produces itself not a single pile of either. The judicious oper¬ ations of banking, by providing, if I may be allowed so violent a metaphor, a sort of waggon-way through the air, enable the 1 For an account of the circumstances which led to the restriction on cash payments in 1797, and the subsequent history of the Bank of England, see Note on Money, end of the volume. 2 It is a capital error to affirm, that the gold and l silver used as money produce nothing. On the con¬ trary, it is quite obvious that by facilitating ex¬ changes, and enabling the division of labour to be country to convert, as it were, a great part of its highways into good pastures and corn¬ fields, and thereby to increase very consider¬ ably the annual produce of its land and labour. The commerce and industry of the country, however, it must be acknowledged, though they may be somewhat augmented, cannot be altogether so secure, when they are thus, as it were, suspended upon the Daeda¬ lian wings of paper money, as when they travel about upon the solid ground of gold and silver. Over and above the accidents to which they are exposed from the unskilful¬ ness of the conductors of this paper money, they are liable to several others, from which no prudence or skill of those conductors can guard them. An unsuccessful war, for example, in which the enemy got possession of the capi¬ tal, and consequently of that treasure which supported the credit of the paper money, would occasion a much greater confusion in a country where the whole circulation was carried on by paper, than in one where the greater part of it was carried on by gold and silver. The usual instrument of commerce having lost its value, no exchanges could be made but either by barter or upon credit. All taxes having been usually paid in paper money, the prince would not have where¬ withal either to pay his troops or to furnish his magazines ; and the state of the country would be much more irretrievable than if the greater part of its circulation had con¬ sisted in gold and silver. A prince anxious to maintain his dominions at all times in the state in which he can most easily defend them, ought, upon this account, to guard, not only against that excessive multiplication of paper money which ruins the very banks which issue it; but even against that multi¬ plication of it which enables them to fill the greater part of the circulation of the country with it. The circulation of every country may be considered as divided into two different branches : the circulation of the dealers with one another, and the circulation between the dealers and the consumers. Though the same pieces of money, whether paper or metal, may be employed sometimes in the one circulation and sometimes in the other, yet as both are constantly going on at the same time, each requires a certain stock of money of one kind or another, to carry it on. The value of the goods circulated between the different dealers never can exceed the value of those circulated between the dealers and carried to a much greater extent than it could be under a system of barter, they are in no ordinary degree productive. 3 The operations of banking do not really turn anv dead stock into active and productive stock. Their effect is merely to substitute cheap in the place of dear instruments of exchange. 142 METALLIC AND PAPER MONEY. Book II. the consumers ; whatever is bought by the dealers being ultimately destined to be sold to the consumers. The circulation between the dealers, as it is carried on by wholesale, requires generally a pretty large sum for every particular transaction. That between the dealers and the consumers, on the con¬ trary, as it is generally carried on by retail, frequently requires but very small ones, a shilling, or even a halfpenny, being often sufficient. But small sums circulate much faster than large ones. A shilling changes masters more frequently than a guinea, and a halfpenny more frequently than a shilling. Though the annual purchases of all the con¬ sumers, therefore, are at least equal in value to those of all the dealers, they can generally be transacted with a much smaller quantity of money; the same pieces, by a more rapid circulation, serving as the instrument of many more purchases of the one kind than of the other. Paper money may be so regulated, as either to confine itself very much to the cir¬ culation between the different dealers, or to extend itself likewise to a great part of that between the dealers and the consumers. Where no bank notes are circulated under ten pounds value, # as in London, paper money confines itself very much to the cir¬ culation between the dealers. When a ten pound bank note comes into the hands of a consumer, he is generally obliged to change it at the first shop where he has occasion to purchase five shillings’ worth of goods, so that it often returns into the hands of a dealer, before the consumer has spent the fortieth part of the money. Where bank notes are issued for so small sums as twenty shillings, as in Scotland, paper money extends itself to a considerable part of the circulation between dealers and consumers. Before the act of parliament, which put a stop to the circulation of ten and five shilling notes, it filled a still greater part of that circulation. In the currencies of North America, paper was commonly issued for so small a sum as a shilling, and filled almost the whole of that circulation. In some paper currencies of Yorkshire, it was issued even for so small a sum as a sixpence. Where the issuing of bank notes for such very small sums is allowed and commonly practised, many mean people are both ena¬ bled and encouraged to become bankers. A person whose promissory note for five pounds, or even for twenty shillings, would be re¬ jected by every body, will get it to be received without scruple when it is issued for so small a sum as a sixpence. But the 1 The Bank of England began to issue ten pound notes in 1759 ; five pound notes in 1793 ; and one and two pound notes in March 1797. The notes for less than five pounds were mostly withdrawn from circulation in 1822. During the crisis of 1826, how¬ ever, it was judged expedient to make a fresh issue frequent bankruptcies to which such beggarly bankers must be liable, may occasion a very considerable inconveniency, and sometimes even a very great calamity to many poor people who had received their notes in pay¬ ment. It were better, perhaps, that no bank notes were issued in any part of the kingdom for a smaller sum than five pounds. Paper money would then, probably, confine itself, in every part of the kingdom, to the circu¬ lation between the different dealers, as much as 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 will purchase, perhaps, little more than half the quantity of goods, is as much considered, and is as seldom spent all at once, as ten pounds are amidst the profuse expense of London. 1 W here paper money, it is to be observed, is pretty much confined to the circulation between dealers and dealers, as in London, there is always plenty of gold and silver. Where it extends itself to a considerable part of the circulation between dealers and consumers, as in Scotland, and still more in North America, it banishes gold and silver almost entirely from the country; almost all the ordinary transactions of its interior com¬ merce being thus carried on by paper. The suppression of ten and five shilling bank notes, somewhat relieved the scarcity of gold and silver in Scotland; and the 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 pretty much confined to the circulation between dealers and dealers, yet banks and bankers might still be able to give nearly the same assistance to the industry and commerce of the country, as they had done when paper money filled almost the whole circulation. The ready money which a dealer is obliged to keep by him, for answering occasional demands, is destined altogether for the circu¬ lation between himself and other dealers, of whom he buys goods. He has no occasion to keep any by him for the- circulation be¬ tween himself and the consumers, who are his customers, and who bring ready money to him, instead of taking any from him. Though no paper money, therefore, was allowed to be issued, but for such sums as of about 1,500,000 one pound notes ; but a large proportion of these very soon found their way back to the bank. In Dec. 1835, only 282,000 one pound notes were onstanding.most of which have no doubf been lost or destroyed. METALLIC AND PAPER MONEY. 143 Chap. II. would confine it pretty much to the circula¬ tion between dealers and dealers, yet, partly by discounting real bills of exchange, and partly by lending upon cash accounts, banks and bankers might still be able to relieve the greater part of those dealers from the neces¬ sity of keeping any considerable part of their stock by them, unemployed and in ready money, for answering occasional demands. They might still be able to give the utmost assistance which banks and bankers can with propriety, give to traders of every kind. To restrain private people, it may be said, from receiving in payment the promissory notes of a banker, for any sum whether great or small, when they themselves are willing to receive them ; or, to restrain a banker from issuing such notes, when all his neigh¬ bours are willing to accept of them, is a manifest violation of that natural liberty which it is the proper business cf law not to infringe, but to support. Such regulations may, no doubt, be considered as in some respect a violation of natural liberty! but those exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the law’s of all govern¬ ments ; of the most free, as well as of the most despotical. The obligation of building party walls, in order to prevent the commu¬ nication of fire, is a violation of natural liberty, exactly of the same kind with the regulations of the banking trade which are here proposed. A paper money consisting in bank notes, issued by people of undoubted credit, pay¬ able upon demand without any condition, and in fact always readily paid as soon as presented 1 , is, in every respect, equal in value to gold and silver money ; since gold and silver money can at any time be had for it. Whatever is either bought or sold for such paper, must necessarily be bought or sold as cheap as it could have been for gold and silver. > The increase of paper money, it has been said, by augmenting the quantity, and conse¬ quently diminishing the value of the whole currency, necessarily augments the money price of commodities. But as the quantity of gold and silver which is taken from the currency, is always equal to the quantity of paper which is added to it, paper money | does not necessarily increase the quantity ot the whole currency. From the beginning of the last century to the present time, pro¬ visions never were cheaper in Scotland than in 1759, though, from the circulation of ten and five shilling bank notes, there was then 1 The compelling of bankers to give security for the payment of their notes, seems to be the only means by which it is possible effectually to protect the public against their insolvency. That, however, more paper money in the country than at present. The proportion between the price of provisions in Scotland and that in Eng¬ land, is the same now as before the great multiplication of banking companies in Scot¬ land. Corn is, upon most occasions, fully as cheap in England as in France; though there is a great deal of paper money in Eng¬ land) 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 money in Scotland, there was a very sensible rise in the price of provisions, owing, probably, to the badness of the seasons, and not to the multiplication of paper money. It would be otherwise, indeed, with a paper money consisting in promissory notes, of which the immediate payment depended, in any respect, either upon the good will of those who issued them, or upon a condition which the holder of the notes might not always have it in his power to fulfil; or of which the payment was not exigible till after a certain number of years, and which in the mean time bore no interest. Such a paper money would, no doubt, fall more or less below the value of gold and silver, according as the dif¬ ficulty or uncertainty of obtaining imme¬ diate payment was supposed to be greater or less; or according to the greater or less distance of time at which payment was exi¬ gible. Some years ago the different banking com¬ panies 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 in¬ terest for the said six months. The directors of some of those banks sometimes took ad¬ vantage of this optional clause, and sometimes threatened those who demanded gold and silver in exchange for a considerable number cf their notes, that they would take advan¬ tage of it, unless such demanders would con¬ tent themselves with a part of what they demanded. The promissory notes of those hanking companies constituted at that time the far greater part of the currency of Scot¬ land, which this uncertainty of payment necessarily degraded below the value ot gold and silver money. During the continuance ofthisabuse, (which prevailed chiefly in 1762, 1763, and 1764,) while the exchange between London and Carlisle was at par, that between London and Dumfries would sometimes be four per cent, against Dumfries, though this town is not thirty miles distant from Carlisle. would not obviate those fluctuations in the supply of money that must always occur so long as it is sup¬ plied by different issuers, and which are in the last degree injurious. See supplemental note on Money. 144 METALLIC AND PAPER MONEY. But at Carlisle, bills were paid in gold and silver ; whereas at Dumfries they were paid in Scotch bank notes, and the uncertainty of getting those bank notes exchanged for gold and silver coin had thus degraded them four per cent, below the value of that coin. The same act of parliament which suppressed ten and five shilling bank notes, suppressed like¬ wise this optional clause, and thereby restored the exchange between England and Scotland to its natural rate, or to what the course of trade and remittances might happen to make it. In the paper currencies of Yorkshire, the payment of so small a sum as a sixpence sometimes depended upon the condition that the holder of the note should bring the change of a guinea to the person who issued it; a condition, which the holders of such notes might frequently find it very difficult to fulfil, and which must have degraded this currency below the value of gold and silver money. An act of parliament, accordingly, declared all such clauses unlawful, and sup¬ pressed, in the same manner as in Scotland, all promissory notes, payable to the bearer, under twenty shillings value. The paper currencies of North America consisted, not in bank notes payable to the bearer on demand, but in a government pa¬ per, of which the payment was not exigible till several years after it was issued : and though the colony governments paid no interest to the holders of this paper, they declared it to be, and in fact rendered it, a legal tender of payment for the full value for which it was issued. But allowing the colony security to be perfectly good, a hundred pounds pay¬ able fifteen years hence, for example, in a country where interest is at six per cent, is worth little more than forty pounds ready money. To oblige a creditor, therefore, to accept of this as full payment for a debt of a hundred pounds actually paid down in ready money, was an act of such violent in¬ justice, as has scarce, perhaps, been attempted by the government of any other country which pretended to be free. It bears the evident marks of having originally been, what the honest and downright Dr. Douglas assures us it was, a scheme of fraudulent debtors to cheat their creditors. The government of Pennsylvania, indeed, pretended, upon their first emission of paper money, in 1722, to render their paper of equal value with gold and silver, by enacting penalties against all those who made any difference in the price of their goods when they sold them for a colony paper, and when they sold them for gold and silver ; a regulation equally tyran¬ nical, but much less effectual than that which it was meant to support. A positive law may render a shilling a legal tender for a guinea; because it may direct the courts of Book II, justice to discharge the debtor who has made that tender. But no positive law can oblige a person who sells goods, and who is at li¬ berty to sell or not to 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, it appeared by the course of exchange with Great Britain, that a hundred pounds sterling was occasionally considered as equivalent, in some of the co¬ lonies, to a hundred and thirty pounds, and in others to so great a sum as eleven hun¬ dred pounds currency ; this difference in the value arising from the difference in the quan¬ tity 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 com¬ plained of in the colonies, which declared that no paper currency to be emitted there in time coming, should be a legal tender of payment. . Pennsylvania was always more moderate in its emissions of paper money than any other of our colonies. Its paper currency accordingly is said never to have sunk below the 'value of the gold and silver which was current in the colony before the first emission of its paper money. Before that emission, the colony had raised the denomination of its coin, and had, by act of assembly, ordered five shillings sterling to pass in the colony for six and threepence, and afterwards for six and eightpence. A pound colony currency, therefore, even when that currency was gold and silver, was more than thirty per cent, below the value of a pound sterling, and when that currency was turned into paper, it was seldom much more than thirty per cent, below that value. The pretence for raising the denomination of the coin, was to prevent the exportation of gold and silver, by making equal quantities of those metals pass for greater sums in the colony than they did in the mother country. It was found, however, that the price of all goods from the mother country rose exactly in proportion as they raised the denomination of their coin, so that their gold and silver were exported as fast as ever. The paper of each colony being received in the payment of the provincial taxes, for the full value for which it had been issued, it necessarily derived from this use some additional value, over and above what it womd have had, from the real or supposed distance of the term of its final discharge and redemption. This additional value was greater or less, according as the quantity of paper issued was more or less above what could be employed in the payment of the taxes of the particular colony which issued it. It was in all the colonies very much METALLIC AND PAPER MONEY. 145 Chap. II. above what could be employed in this manner. 1 A prince, who should enact that a certain proportion of his taxes should be paid in a paper money of a certain kind, might thereby give a certain value to this paper money \ even though the term of its final discharge and redemption should depend altogether upon the will of the prince. If the bank which issued this paper was careful to keep the quantity of it always somewhat below what could easily be employed in this manner, the demand for it might be such as to make it even bear a premium, or sell for somewhat more in the market than the quantity of gold or silver currency for which it was issued. Some people account in this manner for what is called the Agio of the bank of Amsterdam, or for the superiority of bank money over current money; though this bank money, as they pretend, cannot be taken out of the bank at the will of the owner. The greater part of foreign bills of exchange must be paid in bank money, that is, by a transfer in the books of the bank ; and the directors of the bank, they allege, are careful to keep the whole quantity of bank money always below what this use occasions a demand for. It is upon this account, they say, that bank money sells for a premium, or bears an agio of four or five per cent, above the same nominal sum of the gold and silver currency of the country. This account of the bank of Amsterdam, however, it will appear hereafter, is in a great measure chimerical. A paper currency which falls below the value of gold and silver coin, does not thereby sink the value of those metals, or occasion equal quantities of them to exchange for a smaller quantity of goods of any other kind. The proportion between the value of gold and silver and that of goods of any other kind, depends in all cases, not upon the nature or quantity of any particular paper money, which may be current in any parti¬ cular country, but upon the richness or poverty of the mines, which happen at any particular time to supply the great market of the commercial world with those metals. It depends upon the proportion between the quantity of labour which is necessary in order to bring a certain quantity of gold and silver to market, and that which is necessary in order to bring thither a certain quantity of any other sort of goods. If bankers are restrained from issuing any circulating bank notes, or notes payable to 1 Convertibility into gold or silver, at the pleasure of the holder, is not, as Dr. Smith supposes, neces¬ sary to sustain the value of such paper as has been made legal tender. Its value may be kept on a par with that of gold, or may be raised to any higher level, by merely limiting its quantity. See note on Money, end of the volume. 2 But in order to make the obligation of immediate the bearer, for less than a certain sum ; and if they are subjected to the obligation of an immediate and unconditional payment of such bank notes as soon as presented, their trade may, with safety to the public, be rendered in all other respects perfectly free. 2 The late multiplication of banking compa¬ nies in both parts of the United Kingdom, an event by which many people have been much alarmed, instead of diminishing, in¬ creases the security of the public. It obliges all of them to be more circumspect in their conduct, and, by not extending their currency beyond its due proportion to their cash, to guard themselves against those malicious runs which the rivalship of so many com¬ petitors is always ready to bring upon them. It restrains the circulation of each particular company wfithin a narrower circle, and reduces their circulating notes to a smaller number. By dividing the whole circulation into a greater number of parts, the failure of any one company — an accident which, in the course of things, must sometimes happen — becomes of less consequence to the public. This free competition too obliges all bankers to be more liberal in their dealings with their customers, lest their rivals should carry them away. In general, if any branch of trade or any division of labour, be advan¬ tageous to the public, the freer and more general the competition, it will always be the more so CHAP. III. Of the Accumulation of Capital , or of produc¬ tive and unproductive Labour. There is one sort of labour which adds to the value of the subject upon which it is be¬ stowed ; there is another which has no such effect. The former, as it produces a value, may be called productive, the latter unpro¬ ductive 3 , labour. Thus the labour of a ma¬ nufacturer adds generally to the value of the materials which he works upon, that of his own maintenance, and of his master’s profit. The labour of a menial servant, on the con¬ trary, adds to the value of nothing. Though the manufacturer has his wages advanced to him by his master, he in reality costs him no expense, the value of those wages being generally restored, together with a profit, in the improved value of the subject upon which his labour is bestowed ; but the main- and unconditional payment effectual, it is indis¬ pensable that security should be taken from the bunks* 3 Some French authors of great learning and in¬ genuity have used those words in a different sense. In the last chapter of the fourth book I shall endea¬ vour to show that their sense is an improper one. (Note by the author.) PRODUCTIVE AND Book II. 1 16 tenance of a menial servant never is restored. A man grows rich by employing a multitude of manufacturers ; he grows poor by main¬ taining a multitude of menial servants. The labour of the latter, however, has its value, and deserves its reward as well as that of the former; but the labour of the manufacturer fixes and realises 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 em¬ ployed, if necessary, upon some other occa¬ sion. That subject, or, what is the same thing, the price of that subject, can after¬ wards, if necessary, put into motion a quan¬ tity of labour equal to that which had originally produced it. The labour of the menial servant, on the contrary, does not fix or realise itself in any particular subject or vendible commodity. His services generally perish in the very instant of their perform¬ ance, and seldom leave any trace or value behind them, for which an equal quantity of service could afterwards be procured. The labour of some of the most respect¬ able orders in the society is, like that of menial servants, unproductive of any value, and does not fix or realise itself in any per¬ manent subject or vendible commodity which endures after that labour is past, and for which an equal quantity of labour could afterwards be procured. The sovereign, for example, with all the officers both of justice and war who serve under him, the whole army and navy, are unproductive labourers. They are the servants of the public, and are main- 1 It has been already observed (Introductory Dis¬ course, sect. 2.) that Dr. Smith’s distinction between productive and unproductive labour, did not rest on any good foundation. All sorts of labour should plainly be regarded as productive, which occasion, whether directly or indirectly, the production of a greater amount of value than was expended in carrying them on, or even if they only occasion the production of the same amount. Dr. Smith looks upon every sort of labour as unproduc¬ tive which does not directly contribute to the production of some material and vendible product that may be stocked and stored up for a shorter or longer period. But even if it were true (and Smith has himself admitted that it is not *) that wealth con¬ sists only of material and vendible products, his definition would, notwithstanding, be essentially defective. If the multiplication of material objects be the only means of increasing national wealth, it follows that whatever tends (whether directly or indirectly is of no consequence) to facilitate their production must be productive. It is now univer¬ sally admitted, that agriculturists, manufacturers, and merchants, are productive labourers ; and that when they increase their own capitals, they at the same time increase the capital of the country to which they belong. But what is it that enables them to devote all their energies to their respective callings, to prosecute them without interruption, and thus to produce an incomparably greater supply of commo- 1 See anti , p. 46, where Dr. Smith justly compares a man educated to a difficult and nice trade, at the expense of much labour and time, to an expensive machine, the owner of which is entitled to greater profits on account of the greater capital expended upon and embodied in it. tained by a part of the annual produce of the industry of other people. Their service, how honourable, how useful, or how necessary soever, produces nothing for which an equai quantity of service can afterwards be pro¬ cured. The protection, security, and defence of the commonwealth, the effect of theii/ labour this year, will not purchase its pro¬ tection, security, and defence for the year to come. In the same class must be ranked, some both of the gravest and most import¬ ant, and some of the most frivolous profes¬ sions ; churchmen, lawyers, physicians, men of letters of all kinds ; players, buffoons, musicians, opera-singers, opera-dancers, &c. The labour of the meanest of these has a certain value, regulated by the very same principles which regulate that of every other sort of labour; and that of the noblest and most 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 pro¬ duction. 1 Both productive and unproductive labour¬ ers, and those who do not labour at all, are all equally maintained by the annual pro¬ duce of the land and labour of the country. This produce, how great soever, can never be infinite, but must have certain limits. Accordingly, therefore, as a smaller or greater proportion of it is in any one year employed in maintaining unproductive hands, the more in the one case and the less in the other will remain for the productive, and the dities than if they were distracted by a multiplicity of avocations ? We answer, the services and co¬ operation of those set down by Dr. Smith in the unproductive class ! Security is essential to the exercise of every species of industry, and without it no society can emerge from barbarism. And, such being the case, on what pretence can it be said that the magistrates and public functionaries, by whose exertions internal peace is preserved, and the soldiers and sailors by whom we are protected from foreign insult and aggression, are unproductively employed ? So far from this being true, it is certain that when these persons properly discharge their high functions, and are not unnecessarily paid or multiplied, they have a right to be classed among those who are most productive. With respect to menial servants, the case is equally clear : a manu¬ facturer, merchant, or banker, who is making a large sum by his business, is also, perhaps, paying a large sum to his servants: now suppose he tries to save this sum ; it is evident he cannot do this otherwise than by turning his servants adrift, and becoming coachman, footman, cook, and washerwoman, for himself; and if he do this, it is pretty obvious that, instead of increasing his gains, he will reduce them to a wretched pittance. A man will undoubtedly be ruined if he keep too many servants or too many horses ; but then the fault is in the excess, and not in the species of labour he employs. Dr. Smith’s observations in this chapter are quite inconsistent with his statements as to the division of labour ; for it is obviously as advantageous that there should be separate classes to perform the functions of magis¬ trates, lawyers, physicians, menials, &c. as that there should be separate classes employed in the different departments of industry. For a further discus¬ sion of this question, see Principles of Political Economy , 2d ed. p. 523—533. Chap. III. UNPRODUCTIVE LABOUR. 147 next year’s produce will be greater or smaller accordingly ; the whole annual produce, if we except the spontaneous productions of the earth, being the effect of productive labour. Though the whole annual produce of the land and labour of every country is, no doubt, ultimately destined for supplying the consumption of its inhabitants and for pro¬ curing a revenue to them, yet when it first .comes either from the ground or from the hands of the productive labourers, it natu¬ rally divides itself into two parts. One of them, and frequently the largest, is, in the first place, destined for replacing a capital, or for renewing the provisions, materials, and finished work, which had been withdrawn from a capital; the other for constituting a revenue either to the owner of this capital, as the profit of his stock, or to some other person, as the rent of his land. Thus, of the produce of land, one part replaces the capital of the farmer; the other pays his profit and the rent of the landlord; and thus constitutes a revenue both to the owner of this capital, as the profits of his stock, and to some other person, as the rent of his land. Of the produce of a great manufactory, in the same manner, one part, and that always the largest, replaces the capital of the under¬ taker of the work ; the other pays his profit, and thus constitutes a revenue to the owner of this capital. That part of the annual produce of the land and labour of any country which re¬ places a capital, never is immediately em¬ ployed to maintain any but productive hands. It pays the wages of productive labour only. That which is immediately destined for con¬ stituting a revenue, either as profit or as rent, may maintain indifferently either productive or unproductive hands. Whatever part of his stock a man employs as a capital, he always expects it to be re¬ placed to him with a profit. He employs it, therefore, in maintaining productive hands c nly; and after having served in the func¬ tion of a capital to him, it constitutes a re¬ venue to them. Whenever he employs any part of it in maintaining unproductive hands of any kind, that part is from that moment withdrawn from his capital, and placed in his stock reserved for immediate consumption. Unproductive labourers, and those who do not labour at all, are all maintained by reve¬ nue ; either, first, by that part of the annual produce which is originally destined for con¬ stituting a revenue to some particular per¬ sons, either as the rent of land, or as the profits of stock; or, secondly, by that part which, though originally destined for replac¬ ing a capital, and for maintaining productive labourers only, yet when it comes into their hands, whatever part of it is over and above their necessary subsistence, may be employed in maintaining indifferently either produc¬ tive or unproductive hands. Thus, not only the great landlord or the rich merchant, but even the common workman, if his wages are considerable, may maintain a menial servant, or he may sometimes go to a play or a pup¬ pet-show, and so contribute his share towards maintaining one set of unproductive labour¬ ers ; or he may pay some taxes, and thus help to maintain another set, more honour¬ able and useful, indeed, but equally unpro¬ ductive. No part of the annual produce, however, which had been originally destined to replace a capital, is ever directed towards maintaining unproductive hands, till after it has put into motion its full complement of productive labour, or all that it could put into motion in the way in which it was em¬ ployed. The workman must have earned his wages by work done, before he can em¬ ploy any part of them in this manner. Tliat part, too, is generally but a small one. It is his spare revenue only, of which productive labourers have seldom a great deal. They generally have some, however; and in the payment of taxes the greatness of their num¬ ber may compensate, in some measure, the smallness of their contribution. The rent of land and the profits of stock are every¬ where, therefore, the principal sources from which unproductive hands derive their sub¬ sistence. These are the two sorts of revenue of which the owners have generally most to spare. They might both maintain indif¬ ferently either productive or unproductive hands. They seem, however, to have some predilection for the latter. The expense of a great lord feeds generally more idle than industrious people. The rich merchant, though with his capital he maintains indus¬ trious people only, yet by his expense, that is, by the employment of his revenue, he feeds commonly the very same sort as the great lord. The proportion, therefore, between the productive and unproductive hands depends very much in every country upon the pro¬ portion between that part of the annual pro¬ duce which, as soon as it comes either from the ground or from the hands of the pro¬ ductive labourers, is destined for replacing a capital, and that which is destined for con¬ stituting a revenue, either as rent or as profit. This proportion is very different in rich from what it is in poor countries. Thus, at present, in the opulent countries of Europe, a very large, frequently the largest, portion of the produce of the land is destined for replacing the capital of the rich and independent farmer; the other for pay¬ ing his profits, and the rent of the land¬ lord. But anciently, during the prevalency of the feudal government, a very small por¬ tion of the produce was sufficient to re¬ place the capital employed in cultivation. I, 2 148 PRODUCTIVE AND Book II. It consisted commonly in a few wretched cattle, maintained altogether by the spon¬ taneous produce of uncultivated land, and which might, therefore, be considered as a part of that spontaneous produce. It gene¬ rally, too, belonged to the landlord, and was by him advanced to the occupiers of the land. All the rest of the produce properly belonged to him too, either as rent for his land, or as profit upon this paltry capital. The occupiers of land were generally bondmen, whose persons and effects were equally his property. Those who were not bondmen were tenants at will; and though the rent which they paid was often nominally little more than a quit-rent, it really amounted to the whole produce of the land. Their lord could at all times command their labour in peace, and their service in war. Though they lived at a distance from his house, they were equally dependant upon him as his retainers who lived in it. But the whole produce of the land undoubtedly belongs to him, who can dispose of the labour and ser¬ vice of all those whom it maintains. In the present state of Europe, the share of the landlord seldom exceeds a third, sometimes not a fourth, part of the whole produce of the land. The rent of land, however, in all the improved parts of the country, has been tripled and quadrupled since those ancient times ; and this third or fourth part of the annual produce is, it seems, three or four times greater than the whole had been before. In the progress of improvement, rent, though it increases in proportion to the extent, diminishes in proportion to the produce of the land. In the opulent countries of Europe, great capitals are at present employed in trade and manufactures. In the ancient state, the little trade that was stirring, and the few homely and coarse manufactures that were carried on, required but very small capitals. These, however, must have yielded very large profits. The rate of interest was no¬ where less than ten per cent., and their profits must have been sufficient to afford this great interest. At present, the rate of interest, in the improved parts of Europe, is nowhere higher than six per cent.; and in some of the most improved it is so low as four, three, and two per cent. Though that part of the revenue of the inhabitants which is derived from the profits of stock, is always much greater in rich than in poor countries, it is because the stock is much greater : in pro¬ portion to the stock, the profits are generally much less. That part of the annual produce, therefore, which, as soon as it comes either from the ground or from the hands of the productive labourers, is destined for replacing a capital, is not only much greater in rich than in poor countries, but bears a much greater proportion to that which is immediately des¬ tined for constituting a revenue either as rent or as profit. The funds destined for the maintenance of productive labour are not only much greater in the former than in the latter, but bear a much greater proportion to those which, though they may be employed to maintain either productive or unproduc¬ tive hands, have generally a predilection for the latter. The proportion between those different funds necessarily determines in every country the general character of the inhabitants as to industry or idleness. We are more indus¬ trious than our forefathers, because, in the present times, the funds destined for the maintenance of industry are much greater in proportion to those which are likely to be employed in the maintenance of idleness, than they were two or three centuries ago. Our ancestors were idle for want of a suf¬ ficient encouragement to industry. It is better, says the proverb, to play for nothing, than to work for nothing. In mercantile and manufacturing towns, where the inferior ranks of people are chiefly maintained by the employment of capital, they are in gene¬ ral industrious, sober, and thriving; as in many English, and in most Dutch towns. In those towns which are principally sup¬ ported by the constant or occasional residence of a court, and in which the inferior ranks of people are chiefly maintained by the spend¬ ing of revenue, they are in general idle, dissolute, and poor ; as at Rome, Versailles, Compiegne, and Fontainbleau. If you except Rouen and Bordeaux, 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 expense of the members of the courts of justice, and of those who come to plead be¬ fore them, are in general idle and poor. The great trade of Rouen and Bordeaux seems to be altogether the effect of their situation. Rouen is necessarily the entrepot of almost all the goods which are brought either from foreign countries, or from the maritime pro¬ vinces of France, for the consumption of the great city of Paris. Bordeaux is, in the same manner, the entrepot of the wines which grow upon the banks of the Garonne, and of the rivers which run into it, one of the richest wine countries in the world, and which seems to produce the wine fittest for exportation, or best suited to the taste of foreign nations. Such advantageous situa¬ tions necessarily attract a great capital by the great employment which they afford it; and the employment of this capital is the cause of the industry of those two cities. In the other parliament towns of France, very little more capital seems to be employed than what is necessary for supplying their own consumption; that is, little more than Chap. III. UNPRODUCTIVE LABOUR. the smallest capital which can be employed in them. The same thing may be said of Paris, Madrid, and Vienna. Of those three cities, Paris is by far the most industrious ; but Paris itself is the principal market of all the manufactures established at Paris, and its own consumption is the principal object of all the trade which it carries on. London, Lisbon, and Copenhagen, are, perhaps, the only three cities in Europe, which are both the 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 own consumption, but for that of other cities and countries. The situation of all the three is extremely advantageous, and naturally fits them to be the entrepots of a great part of the goods destined for the consumption of distant places. In a city where a great 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 capital. The idleness of the greater part of the people who are maintained by the expense of revenue, corrupts, it is probable, the industry of those who ought to be maintained by the employ¬ ment of capital, and renders it less advanta¬ geous to employ a capital there than in other places. There was little trade or industry in Edinburgh before the Union. When the Scotch parliament was no longer to be assembled in it, when it ceased to be the necessary residence of the principal nobility and gentry of Scotland, it became a city of some trade and industry. It still continues, however, to be the residence of the principal courts of justice in Scotland, of the boards of customs and excise, &c. A considerable revenue, therefore, still continues to be spent in it. In trade and industry it is much in¬ ferior to Glasgow, of which the inhabitants are chiefly maintained by the employment of capital. The inhabitants of a large village, it has sometimes been observed, after having made considerable progress in manufactures, have become idle and poor, in consequence of a great lord’s having taken up his resi¬ dence in their neighbourhood. The proportion between capital and reve¬ nue, therefore, seems everywhere to regulate the proportion between industry and idle¬ ness. Wherever capital predominates, in¬ dustry prevails; wherever revenue, idleness. Every increase or diminution of capital, therefore, naturally tends to increase or di¬ minish the real quantity of industry, the number of productive hands, and conse¬ quently the exchangeable value of the annual produce of the land and labour of the coun¬ try, the real wealth and revenue of all its inhabitants. 149 Capitals are increased by parsimony, and diminished by prodigality and misconduct, j Whatever a person saves from his revenue ? he adds to his capital, and either employs it himself in maintaining an additional number of productive hands, or enables some other person to do so, by lending it to him for an interest, that is, for a share of the profits. As the capital of an individual can be increased only by what he saves from his annual re¬ venue or his annual gains, so the capital of a society, which is the same with that of all the individuals who compose it, can be increased only in the same manner. Parsimony, and not industry, is the imme¬ diate cause of the increase of capital. In¬ dustry, indeed, provides the subject which parsimony accumulates. But whatever in¬ dustry might acquire, if parsimony did not save and store up, the capital would never be the greater. Parsimony, by increasing the fund which - is destined for the maintenance of productive hands, tends to increase the number of those hands whose labour adds to the value of the subject upon which it is bestowed. It tends, therefore, to increase the exchangeable value of the annual produce of the land and labour of the country. It puts into motion an ad¬ ditional quantity of industry, w’hich gives an additional value to the annual produce. What is annually saved is as regularly con¬ sumed as what is annually spent, and nearly in the same time too; but it is consumed by a different set of people. That portion of his revenue which a rich man annually spends, is, in most cases, consumed by idle guests and menial servants, who leave nothing be¬ hind 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 la¬ bourers, manufacturers, and artificers, who reproduce, with a profit, the value of their annual consumption. His revenue, we shall suppose, is paid him in money. Had he spent the whole, the food, clothing, and lodging, which the whole could have pur¬ chased, 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 purchased with it, are necessarily reserved for the latter. The consumption is the same, but the consumers are different. By what a frugal man annually saves, he not only affords maintenance to an additional num¬ ber of productive hands, for that or the ensuing year, but, like the founder of a public work- house, he establishes, as it were, a perpetual fund for the maintenance of an equal number L 3 150 PRODUCTIVE AND Book II. in all times to come. The perpetual allot¬ ment and destination of this fund, indeed, is not always guarded by any positive law, by any trust right or deed of mortmain. It is always guarded, however, by a very powerful principle, the plain and evident interest of every individual to whom any share of it shall ever belong. No part of it can ever afterwards be employed to maintain any but productive hands, without an evident loss to the person who thus perverts it from its proper destination. The prodigal perverts it in this manner : By not confining his expense within his in¬ come, he encroaches upon his capital. Like him who perverts the revenues of some pious foundation to profane purposes, he pays the wages of idleness with those funds which the frugality of his forefathers had, as it were, consecrated to the maintenance of industry. By diminishing the funds destined for the employment of productive labour, he neces¬ sarily diminishes, so far as it depends upon him, the quantity of that labour which adds a value to the subject upon which it is be¬ stowed, and, consequently, the value of the annual produce of the land and labour of the whole country, the real wealth and revenue cf its inhabitants. If the prodigality of some was not compensated by the frugality of others, the conduct of every prodigal, by feeding the idle with the bread of the indus¬ trious, tends not only to beggar himself, but to impoverish his country. Though the expense of the prodigal should be altogether in home-made, and no part of it in foreign commodities, its effect upon the productive funds of the society would still be the same. Every year there would still be a certain quantity of food and clothing, which ought to have maintained productive, em¬ ployed in maintaining unproductive hands. Every year, therefore, there would still be some diminution in what would otherwise have been the value of the annual produce of the land and labour of the country. This expense, it may be said indeed, not being in foreign goods, and not occasioning any exportation of gold and silver, the same quantity of money would remain in the coun¬ try as before. But if the quantity of food and clothing which were thus consumed by unproductive, had been distributed among productive hands, they "would have repro¬ duced, together with a profit, the full value of their consumption. The same quantity of money would, in this case, equally have remained in the country, and there would, besides, have been a reproduction of an equal value of consumable goods. There would have been two values instead of one. The same quantity of money, besides, cannot long remain in any country in which the value of the annual produce diminishes. The sole use of money is to circulate con¬ sumable goods. By means of it, provisions, materials, and finished work, are bought and sold, and distributed to their proper con¬ sumers. The quantity of money, therefore, which can be annually employed in any country, must be determined by the value of the consumable goods annually.circulated within it. These must consist either in the immediate produce of the land and labour of the country itself, or in something which had been purchased with some part of that pro¬ duce. Their value, therefore, must diminish as the value of that produce diminishes, and along with it the quantity of money which can be employed in circulating them. But the money which, by this annual diminution of produce, is annually thrown out of domes¬ tic circulation, will not be allowed to lie idle. The interest of whoever possesses it requires that it should be employed. But having no employment at home, it will, in spite of all laws and prohibitions, be sent abroad, and employed in purchasing con¬ sumable goods which may be of some use at home. Its annual exportation will, in this manner, continue for some time to add some¬ thing to the annual consumption of the country beyond the value of its own annual produce. What in the days of its prosperity had been saved from that annual produce, and employed in purchasing gold and silver, will contribute, for some little time, to sup¬ port its consumption in adversity. The ex¬ portation of gold and silver is, in this case, not the cause, but the effect, of its declension, and may even, for some little time, alleviate the misery of that declension. The quantity of money, on the contrary, must in every country naturally increase as the value of the annual produce increases. The value of the consumable goods annually cir¬ culated within the society being greater, will require a greater quantity of money to circu¬ late them. A part of the increased produce, therefore, will naturally be employed in purchasing, wherever it is to be had, the additional quantity of gold and silver neces¬ sary for circulating the rest. The increase of those metals will, in this case, be the effect, not the cause, of the public prosperity. Gold and silver are purchased every where in the same manner. The food, clothing, and lodging, the revenue and maintenance, ot all those whose labour or stock is employed in bringing them from the mine to the mar¬ ket, is the price paid for them in Peru as "well as in England. The country which has this price to pay, will never be long without the quantity of those metals which it has occasion for ; and no country will ever long retain a quantity which it has no oc¬ casion for. Whatever, therefore, we may imagine the real wealth and revenue of a country to con¬ sist in, whether in the value of the annual Chap. III. UNPRODUCTIVE LABOUR. 151 produce of its land and labour, as plain rea¬ son seems to dictate, or in the quantity of the precious metals which circulate within it, as vulgar prejudices suppose ; in either view of the matter, every prodigal appears to be a public enemy, and every frugal man a public benefactor. The effects of misconduct are often the same as those of prodigality. Every inju¬ dicious and unsuccessful project in agricul¬ ture, mines, fisheries, trade, or manufactures, tends in the same manner to diminish the funds destined for the maintenance of pro¬ ductive labour. In every such project, though the capital is consumed by produc¬ tive hands only, yet as, by the injudicious manner in which they are employed, they do not reproduce the .full value of their con¬ sumption, there must always be some dimi¬ nution in what would otherwise have been the productive funds of the society. It can seldom happen, indeed, that the circumstances of a great nation can be much affected either by the prodigality or miscon¬ duct of individuals; the profusion or im¬ prudence of some being always more than compensated by the frugality and good con¬ duct of others. With regard to profusion, the principle which prompts to expense, is the passion for present enjoyment; which, though some¬ times violent and very difficult to be re¬ strained, is in general only momentary and occasional. But the principle which prompts to save, is the desire of bettering our con¬ dition ; a desire which, though generally calm and dispassionate, comes with us from the womb, and never leaves us till we go into the grave. In the whole interval which separates those two moments, there is scarce, perhaps, a single instant, in which any man is so perfectly and completely satisfied with his situation, as to be without any wish of alteration or improvement of any kind. An augmentation of fortune is the means by which the greater part of men propose and wish to better their condition. It is the means the most vulgar and the most obvious; and the most likely way of augmenting their fortune, is to save and accumulate some part of what they acquire, either regularly and annually, or upon some extraordinary occa¬ sion. Though the principle of expense, therefore, prevails in almost all men upon 1 The capital error of Dr. Smith, in considering the labour of the functionaries employed to main¬ tain internal peace and political independence as unproductive, has been already pointed out (p. 146.). If the number of such functionaries be too much multiplied, or if they be too liberally rewarded, a loss will, no doubt, be incurred. This, however, is a circumstance that has nothing to do with the nature of the services they render. If the public pay their servants excessive salaries, or employ more than are required for the purposes of security and good go¬ vernment, it is their own fault. Their conduct is similar to that of a manufacturer who pays his labourers comparatively high wages, and employs some occasions, and in some men upon almost all occasions, yet in the greater part of men, taking the whole course of their life at an average, the principle of frugality seems not only to predominate, but to predominate very greatly. With regard to misconduct, the number of prudent and successful undertakings is everywhere much greater than that of in¬ judicious and unsuccessful ones. After all our complaints of the frequency of bank¬ ruptcies, the unhappy men who fall into this misfortune make but a very small part of the whole number engaged in trade, and all other sorts of business; not much more, perhaps, than one in a thousand. Bank¬ ruptcy is perhaps the greatest and most hu¬ miliating calamity which can befall an inno¬ cent man. The greater part of men, therefore, are sufficiently careful to avoid it. Some indeed do not avoid it; as some do not avoid the gallows. Great nations are never impoverished by private, though they sometimes are by public, prodigality and misconduct. The whole, or almost the whole, public revenue is, in most countries, employed in maintaining unpro¬ ductive hands. Such are the people who compose a numerous and splendid court, a great ecclesiastical establishment, great fleets and armies, who in time of peace produce nothing, and in time of war acquire no¬ thing which can compensate the expense of maintaining them, even while the war lasts. Such people, as they themselves produce nothing, are all maintained by the produce of other men’s labour. When mul¬ tiplied, therefore, to an unnecessary number, they may in a particular year consume so great a share of this produce, as not to leave a sufficiency for maintaining the productive labourers, who should reproduce it next year. 1 The next year’s produce, therefore, will be less than that of the foregoing; and if the same disorder should continue, that of the third year will be still less than that of the second. Those unproductive hands, who should be maintained by a part only of the spare revenue of the people, may consume so great a share of their whole revenue, and thereby oblige so great a number to encroach upon their capitals, upon the funds destined for the maintenance of productive labour, that all the frugality and good conduct of more than he has occasion for. But though a state or an individual may act in this absurd manner, it would be rather rash thence to conclude, that all public servants, and all manufacturing labourers are unproductive ! If the establishments which provide security and protection be formed on an extravagant scale—if there be more judges and magistrates, more soldiers and sailors than necessary, or if their salaries be larger than would suffice to procure the services of others, let both be reduced. The excess, if there be any, is not of the essence of such establish¬ ments, but grows out of the too liberal scale on which they have been arranged. L 4 PRODUCTIVE AND Book II. 152 individuals may not be able to compensate the waste and degradation of produce occa¬ sioned by this violent and forced encroach¬ ment. This frugality and good conduct, however, is upon most occasions, it appears from ex¬ perience, sufficient to compensate, not only the private prodigality and misconduct of individuals, but the public extravagance of government. The uniform, constant, and uninterrupted effort of every man to better his condition, the principle from which public and national, as well as private opulence, is originally derived, is frequently powerful enough to maintain the natural progress of things toward improvement, in spite both of the extravagance of government, and of the greatest errors of administration. Like the unknown principle of animal life, it fre¬ quently restores health and vigour to the constitution, in spite not only of the disease, but of the absurd prescriptions of the doctor. The annual produce of the land and labour of any nation can be increased in its value by no other means but by increasing either the number of its productive labourers, or the productive powers of those labourers who had before been employed. The number of its productive labourers, it is evident, can never be much increased, but in consequence of an increase of capital, or of the funds destined for maintaining them. The pro¬ ductive powers of the same number of labourers cannot be increased, but in conse¬ quence either of some addition and improve¬ ment to those machines and instruments which facilitate and abridge labour, or of a more proper division and distribution of em¬ ployment. In either case an additional capital is almost always required. It is by means of an additional capital only, that the undertaker of any work can either provide his workmen with better machinery, or make a more proper distribution of employment among them. When the work to be done consists of a number of parts, to keep every man constantly employed in one way, requires a much greater capital than where every man is occasionally employed in every dif¬ ferent part of the work. When we compare, therefore, the state of a nation at two differ¬ ent periods, and find that the annual produce of its land and labour is evidently greater at the latter than at the former, that its lands are better cultivated, its manufactures more numerous and more flourishing, and its trade more extensive ; we may be assured that its capital must have increased during the inter¬ val between those two periods, and that more must have been added to it by the good con¬ duct of some, than had been taken from it either by the private misconduct of others, or by the public extravagance of government. Rut we shall find this to have been the case of almost all nations, in all tolerably quiet and peaceable times, even of those who have not enjoyed the most prudent and parsimo¬ nious governments. To form a right judg¬ ment of it, indeed, we must compare the state of the country at periods somewhat distant from one another. The progress is frequently so gradual, that, at near periods, the improvement is not only not sensible, but, from the declension either of certain branches of industry or of certain districts of the country, things which sometimes happen though the country in general be in great prosperity, there frequently arises a suspicion that the riches and industry of the whole are decaying. The annual produce of the land and labour of England, for example, is certainly much greater than it was a little more than a cen¬ tury ago, at the restoration of Charles II. Though at present few people, I believe, doubt of this, yet during this period five years have seldom passed away, in which some book or pamphlet has not been pub¬ lished, written too with such abilities as to gain some authority with the public, and pretending to demonstrate that the wealth of the nation was fast declining, that the coun¬ try was depopulated, agriculture neglected, manufactures decaying, and trade undone. Nor have these publications been all party pamphlets, the wretched offspring of false¬ hood and venality : many of them have been written by very candid and very intelligent people, who wrote nothing but what they be¬ lieved, 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 to have been about an hundred years before, at the accession of Elizabeth. At this period, too, we have all reason to believe the country was much more advanced in improvement than it had been about a century before, to¬ wards the close of the dissensions between the houses of York and Lancaster. Even then . it was probably in a better condition than it had been at the Norman conquest; and at the Norman conquest than during the con¬ fusion of the Saxon heptarchy. Even at this early period, it was certainly a more im¬ proved country than at the invasion of Julius Caesar, when its inhabitants were nearly in the same state with the savages in North America. In each of those periods, however, there was not only much private and public pro¬ fusion, many expensive and unnecessary wars, great perversion of the annual pro¬ duce from maintaining productive to main¬ tain unproductive hands ; but sometimes, in the confusion of civil discord, such absolute waste and destruction of stock, as might be supposed, not only to retard, as it certainly UNPRODUCTIVE LABOUR. 153 Chap. III. did, the natural accumulation of riches, but to have left the country at the end of the period poorer than at the beginning. Thus, in the happiest and most fortunate period of them all, that which has passed since the Restoration, how many disorders and misfor¬ tunes have occurred, which, could they have been foreseen, not only the impoverishment, but the total ruin of the country would have been expected from them ? The fire and the plague of London, the two Du>.ch wars, the disorders of the Revolution, the war in Ire¬ land, the four expensive French wars of 1688, 1702, 1742, and 1756, together with the two rebellions of 1715 and 1745. In the course of the four French wars, the nation has con¬ tracted more than a hundred and forty-five millions of debt, over and abo\e all the other extraordinary annual expense 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 differ¬ ent occasions, in maintaining an extraordinary number of unproductive hands. But had not those wars given this particular direction to so large a capital, the greater part of it would naturally have been employed in main¬ taining productive hands, whose labour would have replaced, with a profit, the whole value l The American war and the late French war occasioned an expenditure ot blood and treasure that has no parallel in the history of the world. The principal of the unredeemed funded and unfunded public debt, which amounted to about 145 jnillions in 1772, amounts at present (1838) to about 785 mil¬ lions ; and, in addition to the immense sums raised by borrowing, the gross produce of the taxes levied in Great Britain and Ireland during the late war exceeded the enormous sum of 1300 millions ! And yet the rapid increase of population, the extension and improvement of agriculture, manufactures, and commerce, the formation of so many new docks, roads, and canals, and the infinite variety of ex¬ pensive undertakings entered upon «md completed during the continuance of hostilities, show clearly that the savings of the mass of the people greatly exceeded the warlike expenditure of Government, and the unprofitable expenditure of individuals. It may be safely affirmed, that no other country could have made such extraordinary exertions without being ruined ; and we owe the power to make them to a variety of causes ; but chiefly, perhaps, to that security ot property and freedom ot industry which we enjoy in a greater degree than any other Euro¬ pean nation ; and to that universal diffusion of intel¬ ligence which enables those who carry on any industrious undertaking to press all the powers ot nature into their service, and to avail themselves of productive energies, of which a less instructed people would be wholly ignorant. It has been doubted by some whether the existing capital of the country would have been really greater than it is, had the late war not occurred. It is diffi¬ cult to come to an exact conclusion upon such a point; but we are very far from supposing, had there been no war, that all, or even the greater part of the vast sums expended in carrying it on, would have been added to the national capital. The gradually increasing pressure of taxation stimulated the indus¬ trious portion of the community to make correspond¬ ing efforts to preserve their place in society ; and gave a spur to industry and invention, and produced a spirit of economy that we should have in vain attempted to excite by any less powerful means. Had taxation been very oppressive, it would not have of their consumption. The value of the annual produce of the land and labour of the country would have been consider¬ ably increased by it every year, and every year’s increase would have augmented still more that of the following year. 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, and those which had been established before would have been more extended ; and to what height the real wealth and revenue of the country might by this time have been raised, it is not perhaps very easy even to imagine. 1 But though the profusion of government must undoubtedly have retarded the natural progress of England towards wealth and improvement, it has not been able to stop it. The annual produce of its land and labour is undoubtedly much greater at present than it was either at the Restoration or at the Revolution. The capital, therefore, annually employed in cultivating this land, and in maintaining this labour, must likewise be much greater. In the midst of all the ex¬ actions of government, this capital has been silently and gradually accumulated by the private frugality and good conduct of indi¬ viduals, by their universal, continual, and had this effect; but it was not so high as to produce dejection or despair ; though it was at the same time sufficiently heavy to render a considerable increase of exertion and parsimony necessary to prevent it from encroaching on the fortunes of individuals, or at all events from diminishing the rate at which they had previously been increasing. To the excitement afforded by the desire of rising in the world, the fear of falling superadded an additional and powerful stimulus ; and the two produced results that could not have been produced by the unassisted operation of either. Without the war, there would have been less industry and less frugality; and, therefore, it may, perhaps, be concluded that the comforts of the mass of the people would have been greater had peace been preserved. But with respect to the capital of the country, it is extremely doubtful whether it would have been materially greater than it is, had tranquillity been maintained without inter¬ ruption from 1793 to the present time. It would be altogether foreign from the object of this work to enter into any discussion with respect to the moral and political influence of the late con¬ test, or of wars in general. Perhaps, however, were the subject properly investigated, it would be found that war, how afflicting soever to humanity, is not so unfavourable as is commonly supposed to civilisa¬ tion and the arts. But whatever opinion may be entertained on this point, it is certain that the pri¬ vations occasioned by the m' st destructive contest are but a trifling evil compared with the loss of political independence and national existence._ And no people who set a proper value on their best interests, or entertain a just sense of what they owe to themselves, will ever hesitate about resorting to arms to repel and avenge foreign aggression, to vindicate their honour, or to defend their rights and liberties from outrage and attack. Summum crede nefas, animam praeferre pudori, Et propter vitam, vivendi perdere causas. For an able and ingenious discussion of this im¬ portant subject, see the Discours Prcliminaire pre¬ fixed by Ancillou to the first volume of his Tableau dcs Revolutions. 154 PRODUCTIVE AND Book II, uninterrupted effort to better their own con¬ dition. It is this effort, protected by law, and allowed by liberty to exert itself in the manner that is most advantageous, which has maintained the progress of England towards opulence and improvement in almost all for¬ mer times, and which, it is to be hoped, will do so in all future times. England, how¬ ever, as it has never been blessed with a very parsimonious government, so parsimony has at no time been the characteristical virtue of its inhabitants. It is the highest impertin¬ ence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense, either by sumptuary laws or by prohibiting the importation of foreign luxuries. They are themselves always, and without any exception, the greatest spend¬ thrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will. As frugality increases, and prodigality diminishes the public capital, so the conduct of those whose expense just equals their revenue, without either accumulating or en¬ croaching, neither increases nor diminishes it. Some modes of expense, however, seem to contribute more to the growth of public opulence than others. The revenue of an individual may be spent, either in things which are consumed immediately, and in which one day’s expense can neither alleviate nor support that of an¬ other ; or it may be spent in things more dur¬ able, which can therefore be accumulated, and in which every day’s expense may, as he chooses, either alleviate or support and heighten the effect of that of the following day. A man of fortune, for example, may either spend his revenue in a profuse and sumptuous table, and in maintaining a great number of menial servants, and a multitude of dogs and horses; or, contenting himself with a frugal table and few attendants, he may lay out the greater part of it in adorn¬ ing his house or his country villa, in useful or ornamental buildings, in useful or orna¬ mental furniture, in collecting books, sta¬ tues, pictures ; or in things more frivolous— jewels, baubles, ingenious trinkets of differ¬ ent kinds; or., what is most trifling of all, in amassing a great wardrobe of fine clothes, like the favourite and minister of a great prince who died a few years ago. Were two men of equal fortune to spend their revenue, the one chiefly in the one way, the other in the other, the magnificence of the person whose expense had been chiefly in durable commodities, would be continually increas¬ ing : every day’s expense contributing some¬ thing to support and heighten the effect of that of the following day ; that of the other, on the contrary, would be no greater at the end of the period than at the beginning. The former too would, at the end of the period, be the richer man of the tveo ; 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 some¬ thing. No trace or vestige of the expense of the latter would remain, and the effects of ten or twenty years profusion would be as completely annihilated as if they had never existed. As the one mode of expense is more fa¬ vourable than the other to the opulence of an individual, so is it likewise to that of a nation. The houses, the furniture, the cloth¬ ing of the rich, in a little time, become useful to the inferior and middling ranks of people. They are able to purchase them when their superiors grow weary of them ; and the general accommodation of the whole people is thus gradually improved, when this mode of expense becomes universal among men of fortune. In countries which have long been rich, you will frequently find the inferior ranks of people in possession both of houses and furniture perfectly good and entire, but of which neither the one could have been built, nor the other have been made for their use. What was formerly a seat of the family of Seymour, is now an inn upon the Bath road. The marriage-bed of James the First of Great Britain, which his queen brought with her from Denmark as a present fit for a sovereign to make to a sovereign, was, a few years ago, the ornament of an ale¬ house at Dunfermline. In some ancient cities, which either have been long stationary or have gone somewhat to decay, you will sometimes scarce find a single house which could have been built for its present inhabit¬ ants. If you go into those houses, too, you will frequently find many excellent, though antiquated pieces of furniture, which are still very fit for use, and which could as little have been made for them. Noble palaces, magnificent villas, great collections of books, statues, pictures, and other curio¬ sities are frequently both an ornament and an honour, not only to the neighbourhood, but to the whole country to which they be¬ long. Versailles is an ornament and an honour to France, Stowe and Wilton to England. Italy still continues to command some sort of veneration by the number of monuments of this kind which it possesses, though the wealth -which produced them has decayed, and though the genius which planned them seems to be extinguished, perhaps from not having the same employ¬ ment. The expense too, which is laid out in dur¬ able commodities, is favourable not only to accumulation, but to frugality. If a person should at any time exceed in it, he can 155 UNPRODUCTIVE LABOUR. ^HAI*. IIL >asilv reform without exposing himself to the •ensure of the public. To reduce very much he number of his servants, to reform liis i able from great profusion to great frugality, j :o lay down his equipage after he has once *et it up, are changes which cannot escape the observation of his neighbours, and which are supposed to imply some acknowledgment 3 f preceding bad conduct. Few, therefore, af those who have once been so unfortunate as to launch out too far into this sort of ex¬ pense, have afterwards the courage to reform, till ruin and bankruptcy oblige them. But if a person has, at any time, been at too I great an expense in building, in furniture, in books, or pictures, no imprudence can be ! inferred from his changing his conduct. These are things in which further expense is frequently rendered unnecessary by former expense; andwhen a person stops short, he ap¬ pears to do so, not because he has exceeded his fortune, but because he has satisfied his fancy. The expense, besides, that is laid out in durable commodities, gives maintenance, commonly, to a greater number of people than that which is employed in the most pro¬ fuse hospitality. Of two or three hundred weight of provisions, which may sometimes be served up at a great festB al, one half, perhaps, is thrown to the dunghill, and theie is always a great deal wasted and abused. But if the expense of this entertainment had been employed in setting to work masons, carpenters, upholsterers, mechanics, &c., a quantity of provisions of equal value would have been distributed among a still greater number of people, who would have bought them in pennyworths and pound weights, and not have lost or thrown away a single ounce of them. In the one way, besides, this expense maintains productive, in the other unproductive hands. In the one way, there¬ fore, it increases, in the other it does not in¬ crease, the exchangeable value of the annual produce of the land and labour of the country. I would not, however, by all this, be un¬ derstood to mean, that the one species of expense always betokens a more liberal cr generous spirit than the other. V hen a man of fortune spends his revenue chiefly in hospitality, he shares the greater part of it with his friends and companions ; but when he employs it in purchasing such durable commodities, he often spends the whole upon his own person, and gives nothing to any body without an equivalent. The latter species of expense, therefore, especial¬ ly when directed towards frivolous objects, the little ornaments of dress and furniture, jewels, trinkets, gewgaws, frequently indi¬ cates, not only a trifling, but a base and self¬ ish disposition. All that I mean is, that Jj the one sort of expense, as it always occasions some accumulation of valuable commodities, as it is more favourable to private frugality, and, consequently, to the increase of the pub¬ lic capital, and as it maintains productive rather than unproductive hands, conduces more than the other to the growth of public opulence. CHAP. IV. Of Stock lent at Interest. The stock which is lent at interest is always considered as a capital by the lender. Fie expects that in due time it is to be restored to him, and that in the mean time the bor¬ rower is to pay him a certain annual rent for the use of it. The borrower may use it either as a capital, or as a stock reserved for immediate consumption. If he uses it as a capital, he employs it in the maintenance of productive labourers, who reproduce the value with a profit. He can, in this case, both restore the capital and pay the interest, without alienating or encroaching upon any other source of revenue. If he uses it as a stock reserved for immediate consumption, he acts the part of a prodigal, and dissipates, in the maintenance of the idle, what was destined for the support of the industrious. He can, in this case, neither restore the capital nor pay the interest, without either alienating or encroaching upon some other source of reve¬ nue, 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 fre¬ quently than in the latter. Fhe man who borrows in order to spend,, will soon be ruined, and he who lends to him will gene¬ rally have occasion to repent of his folly. To borrow or to lend for such a purpose, therefore, is, in all cases, where gross usury is out of the question, contrary to the interest of both parties ; and though it no doubt hap¬ pens sometimes that people do both the one and the other, yet, from the regard that all men have for their own interest, w e maj be assured that it cannot happen so 'v eiy fre¬ quently as we are sometimes apt to imagine. Ask any rich man of common prudence, to which of the two sorts of people he has lent the greater part of his stock, to those who he thinks w r ill employ it profitably, or to those who will spend it idly, and he will laugh at you for proposing the question. Even among borrowers, therefore, not the people in the w r orld most famous for frugtil- ity, the number of the frugal and industrious surpasses considerably that of the piodigal and idle. The only people to whom stock is com¬ monly lent without their being expected to make any very profitable use of it, are coun¬ try gentlemen who borrow upon mortgage. Even they scarce ever borrow merely to spend. What they borrow, one may say, is 15(5 INTEREST OF CAPITAL. Book IT. commonly spent before they borrow it. They have generally consumed so great a quantity of goods, advanced to them upon credit by shopkeepers and tradesmen, that they find it necessary to borrow at interest in order to pay the debt. The capital bor¬ rowed replaces the capitals of those shop¬ keepers and tradesmen, which the country gentlemen could not have replaced from the rents of their estates. It is not properly borrowed in order to be spent, but in order to replace a capital which had been spent before. Almost all loans at interest are made in money, either of paper, or of gold and silver; but what the borrower really wants, and what the lender readily supplies him with, is not the money, but the money’s worth, or the goods which it can purchase. If he wants it as a stock for immediate con¬ sumption, it is those goods only which he can place in that stock. If he wants it as a capi¬ tal for employing industry, it is from those goods only that the industrious can be fur¬ nished with the tools, materials, and main¬ tenance, necessary for carrying on their work. By means of the loan, the lender, as it were, assigns to the borrower his right to a certain portion of the annual produce of the land and labour of the country, to be employed as the borrower pleases. The quantity of stock, therefore, or, as it is commonly expressed, of money which can be lent at interest in any country, is not regulated by the value of the money, whe¬ ther paper or coin, which serves as the instrument of the different loans made in that country, but by the value of that part of the annual produce which, as soon as it comes either from the ground or from the hands of the productive labourers, is des¬ tined, not only for replacing a capital, but such a capital as the owner does not care to be at the trouble of employing himself. As such capitals are commonly lent out and paid back in money, they constitute what is called the monied interest. It is distinct, not only from the landed, but from the trad¬ ing and manufacturing interests, as in these last the owners themselves employ their own capitals. Even in the monied interest, how¬ ever, the money is, as it were, but the deed of assignment, which conveys from one hand to another those capitals which the owners do not care to employ themselves. Those capitals may be greater, in almost any pro¬ portion, than the amount of the money which serves as the instrument of their conveyance; the same pieces of money successively serv¬ ing for many different loans, as well as for many different purchases. A., for example, lends to \V. a thousand pounds, with which W. immediately purchases of B. a thousand pounds’ worth of goods. B. having no occa¬ sion for the money himself, lends the iden¬ tical pieces to X., with which X. immediately purchases of C. another thousand pounds worth of goods. C., in the same manner, and for the same reason, lends them to Y., wdio again purchases goods with them of D. In this manner, the same pieces, either of coin or of paper, may in the course of a few days serve as the instrument of three differ¬ ent loans, and of three different purchases, each of which is, in value, equal to the whole amount of those pieces. What the three monied men, A., B., and C., assign to the three borrowers, W., X., and Y.,is the power of making those purchases. In this power consist both the value and the use of the loans. The stock lent by the three monied men is equal to the value of the goods which can be purchased with it, and is three times greater than that of the money with which the pur¬ chases are made. Those loans, however, may be all perfectly well secured, the goods pur¬ chased by the different debtors being so em¬ ployed, as, in due time, to bring back, with a profit, an equal value either of coin or of paper. And as the same pieces of money can thus serve as the instrument of different loans to three, or, for the same reason, to thirty times their value, so they may likewise successively serve as the instrument of re¬ payment. A capital lent at interest may, in this manner, be considered as an assignment, from the lender to the borrower, of a certain considerable portion of the annual produce ; upon condition that the borrower in return shall, during the continuance of the loan, annually assign to the lender a smaller por¬ tion, called the interest; and at the end of it a portion equally considerable with that which had originally been assigned to him, called the repayment. Though money, either coin or paper, serves generally as the deed of assignment both to the smaller and to the more considerable portion, it is itself altogether different from what is assigned by it. In proportion as that share of the annual produce which, as soon as it comes either from the ground or from the hands of the productive labourers, is destined for replacing a capital, increases in any country, what is called the monied interest naturally increases with it. The increase of those particular capitals from which the owners wish to de¬ rive a revenue, without being at the trouble of employing them themselves, naturally ac¬ companies the general increase of capitals; or, in other words, as stock increases, ths quantity of stock to be lent at interest grows gradually greater and greater. As the quantity of stock to be lent at in¬ terest increases, the interest, or the price which must be paid for the use of that stock, necessarily diminishes, not only from these general causes which make the market price INTEREST OF CAPITAL. 157 Chap. IV. ff things commonly diminish as their quan¬ tity increases, but from other causes which ire peculiar to this particular case. As capitals increase in any country, the profits .vhich can be made by employing them ne¬ cessarily diminish. It becomes gradually more and more difficult to find within the country a profitable method of employing any new capital. There arises, in conse¬ quence, a competition between different capitals, the owner of one endeavouring to get possession of that employment which is occupied by another. But, upon most oc¬ casions, he can hope to justle that other out of this employment, by no other means but by dealing upon more reasonable terms. He must not only sell what he deals in somewhat cheaper, but, in order to get it to sell, he must sometimes too buy it dearer. The demand for productive labour, by the increase of the funds which are destined for maintaining it, grows every day greater and greater. Labourers easily find employ¬ ment, but the owners of capitals find it diffi¬ cult to get labourers to employ. Their competition raises the wages of labour, and sinks the profits of stock. But when the N profits which can be made by the use of a capital are in this manner diminished, as it were, at both ends, the price which can be paid for the use of it, that is, the rate of interest, must necessarily be diminished with them. Mr. Locke, Mr. Law, and Mr. Montes¬ quieu, as well as many other writers, seem to have imagined that the increase of the quantity of gold and silver, in consequence of the discovery of the Spanish West Indies, was the real cause of the lowering of the rate of interest through the greater part of Eu¬ rope. Those metals, they say, having become of less value themselves, the use of any par¬ ticular portion of them necessarily became of less value too, and consequently the price which could be paid for it. This notion, which at first sight seems so plausible, has been so fully exposed by Mr. Hume, that it is perhaps unnecessary to say any thing more about it. The following very short and plain argument, however, may serve to explain more distinctly the fallacy which seems to have misled those gentlemen. Before the discovery of the Spanish West Indies, ten per cent, seems to have been the common rate of interest through the greater part of Europe. It has since that time, in different countries, sunk to six, five, four, and three per cent. 1 Let us suppose that in every particular country the value of silver 1 The rate of interest includes not only a return for the use of the capital lent, but also a farther sura or premium, to indemnify the lender for any risk he may run in making the loan. During the period to which Dr. Smith refers, this premium, owing to the unsettled and turbulent state of the times, and the prejudice then so universally entertained against has sunk precisely in the same proportion as the rate of interest; and that in those coun¬ tries, for example, where interest has been reduced from ten to five per cent, the same quantity of silver can now purchase just half the quantity of goods which it 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 utterly impossible that the lowering of the value of silver could have the smallest tendency to lower the rate of interest. If a hundred pounds are in those countries now of no more value than fifty pounds were then, ten pounds must now be of no more value than five pounds were then. W hatever were the causes which lowered the value oi the capital, the same must necessarily have lowered that of the interest, and exactly in the same pro¬ portion. The proportion between the value of the capital and that of the interest must have remained the same, though the rate had never been altered. By altering the rate, on the contrary the proportion between those two values is necessarily altered. If a hundred pounds now are worth no more than fifty were then, five pounds now can be worth no more than two pounds ten shillings were then. By reducing the rate of interest, therefore, from ten to five per cent., we give for the use of a capital, which is supposed to be equal to one half of its former value, an interest which is equal to one fourth only of the value of the former interest. Any increase in the quantity of silver, while that of the commodities circulated by means of it remained the same, could have no other effect than to diminish the value of that metal. The nominal value of all sorts of goods would be greater, but their real value would be precisely the same as before. They would be exchanged for a greater number of pieces of silver ; but the quantity of labour which they could command, the number of people whom they could maintain and employ, would be precisely the same. The capiti 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 assignment, like the convey¬ ances 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. I he funds for maintaining productive labour being the same, the demand for it would be the same. taking interest, was much greater than at present : and when allowance is made for this circumstance, it may be doubted whether the rate ot interest, pro¬ perly so called, or the return for the services of capital lent on unquestionable security, was consi¬ derably higher in these rude ages than in our own times. 158 INTEREST OF CAPITAL. Book IT. Its price or wages, therefore, though nomin¬ ally greater, would really be the same. They would be paid in a greater number of pieces of silver, but they would purchase only the same quantity of goods. The profits of stock would be the same, both nominally and really. The wages of labour are com¬ monly computed by the quantity of silver which is paid to the labourer. When that is increased, therefore, his wages appear to be increased, though they may sometimes be no greater than before. But the profits of stock are not computed by the number of pieces of silver with which they are paid, but by the proportion which those pieces bear to the whole capital employed. Thus, in a particular country, five shillings a week are said to be the common wages of labour, and ten per cent, the common profits of stock. But the whole capital of the country being the same as before, the competition between the different capitals of individuals into which it was divided would likewise be the same. They would all trade with the same advantages and disadvantages. The common proportion between capital and profit, there¬ fore, would be the same, and consequently the common interest of money; what can commonly be given for the use of money being necessarily regulated by what can commonly be made by the use of it. Any increase in the Quantity of commodi¬ ties annually circulated within the country, while that of the money which circulated them remained the same, would, on the con¬ trary, produce many other important effects, besides that of raising the value of the money. The capital of the country, though it might nominally be the same, would really be aug¬ mented. It might continue to be expressed by the same quantity of money, but it would command a greater quantity of labour. The quantity of productive labour which it could maintain and employ would be increased, and consequently the demand for that labour. Its wages would naturally rise with the de¬ mand, and yet might appear to sink. They might be paid with a smaller quantity of money, but that smaller quantity might pur¬ chase a greater quantity of goods than a greater had done before. The profits of stock would be diminished, both really and in appearance. The whole capital of the country being augmented, the competition between the different capitals of which it was composed would naturally be augmented along with it. The owners of those par¬ ticular capitals would be obliged to content 1 It is singular Dr. Smith should have advanced so untenable a proposition. There is evidently no reason for supposing, were the usury laws repealed, and men allowed to bargain for the use of money as they are allowed to bargain for the use of land, houses, Sec., that they would be less careful of their interests in the former case than in the latter. The prudence and success of persons engaged in new and unusual undertakings are always considered doubtful; and they rarely obtain loans on such easy terms as those themselves with a smaller proportion of the produce of that labour which their respective capitals employed. The interest of mo¬ ney, keeping pace always with the profits of stock, might, in this manner, be greatly diminished, though the value of money, or the quantity of goods which any particular sum could purchase, was greatly augmented. In some countries the interest of money has been prohibited by law. But as some¬ thing can every where be made by the use of money, something ought every where to be paid for the use of it. This regulation, in¬ stead of preventing, has been found from experience to increase the evil of usury; the debtor being obliged to pay, not only for the use of the money, but for the risk which his creditor runs by accepting a compensation for that use. He is obliged, if one may say so, to insure his creditor from the penalties of usury. In countries where interest is permitted, the law, in order to prevent the extortion of usury, generally fixes the highest rate which can be taken without incurring a penalty. This rate ought always to be somewhat above the lowest market price, or the price which is commonly paid for the use of money by those who can give the most undoubted se¬ curity. If this legal rate should be fixed below the lowest market rate, the effects of this fixation must be nearly the same as those of a total prohibition of interest. The cre¬ ditor will not lend his money for less than the use of it is worth, and the debtor must pay him for the risk which he runs by ac¬ cepting the full value of that use. If it is fixed precisely at the lowest market price, it ruins, with honest people who respect the laws of their country, the credit of all those who cannot give the very best security, and obliges them to have recourse to exorbitant usurers. In a country, such as Great Bri¬ tain, where money is lent to government at three per cent., and to private people upon good security at four and four and a half, the present legal rate, five per cent., is per¬ haps as proper as any. The legal rate, it is to be observed, though it ought to be somewhat above, ought not to be much above the lowest market rate. If' the legal rate of interest in Great Britain, for example, was fixed so high as eight or ten per cent., the greater part of the money which was to be lent, would be lent to pro¬ digals and projectors, who alone would bo willing to give this high interest . 1 Sober people, who will give for the use of money engaged in the ordinary and understood branches of industry. It is, however, unnecessary to enlarge on this subject, as it has been ably discussed, and every objection to the unconditional repeal of the usury laws, on the ground of its encouraging projectors, satisfactorily answered by Mr. Bentham, in his letter to Dr. Smith, in his Defence of Usury. The reader may also consult the art. Interest, in the new edi¬ tion of the Encyclopedia Brilannica. INTEREST OF CAPITAL. 159 U Chap. IV. no more than a part of what they are likely to make by the use of it, would not venture into the competition. A great part of the capital of the country would thus be kept [ out of the hands which were most likely to make a profitable and advantageous use of it, and thrown into those which were most Ij. likely to waste and destroy it. Where the legal rate of interest, on the contrary, is fixed but a very little above the lowest market rate, sober people are universally preferred, as borrowers, to prodigals and projectors. The person who lends money gets nearly as much interest from the former as he dares to take from the latter, and his money is much safer in the hands of the one set of people i than in those of the other. A great part of the capital of the country is thus thrown into the hands in which it is most likely to be employed with advantage. No law can reduce the common rate of I interest below the lowest ordinary market rate at the time when that law is made. Notwithstanding the edict of 1766, by which the French king attempted to reduce the rate of interest from five to four per cent., money continued to be lent in France at five per cent., the law being evaded in several different ways. The ordinary market price of land, it is to be observed, depends every where upon the ordinary market rate of interest. The per¬ son who has a capital from which he wishes to derive a revenue, without taking the trouble to employ it himself, deliberates whether he should buy land with it, or lend it out at interest. The superior security of land, together with some other advantages which almost every where attend upon this 1 We have already (Introductory Discourse, §.2.) noticed the fallacy of the principles advanced by Dr. Smith, with respect to the comparative advantage of L employing capitals in different departments of in¬ dustry. He has very clearly shown, in treating of the wages of labour, that those countries in which capital is increasing with the greatest rapidity, are, ccelcris paribus, the most prosperous. They have a constantly increasing demand for labour; and the supply of necessaries and conveniencies falling to the share of the labourers, or to the great bulk of society, in such countries, is large compared with the supply that falls to their share iu countries that are either stationary or declining. But it is from profits that capital is almost entirely formed ; and it is one of the best established doctrines in the science, that the power of countries, in which pro¬ perty is about equally secure, and industry equally free, to amass capital, and, by consequence, to ad¬ vance in the career of wealth and population, will be dependent upon, and pretty nearly proportioned ! to, the rates of profit in each. (See M‘Culloch’s Principles of Political Economy, p. 111. 2d ed.) It is this circumstance, or the different rates of profit in Holland, England, and the United States, that renders the increase of capital and population almost stationary in the first, moderately progressive in the second, and comparatively rapid in the last. A capital of a million employed in these different countries would probably yield 25,000/. nett profit in Holland, 50,000/. in England, and 80,000/. in the United States 1 ; and as the owners of capital must in 1 These sums are not set down as being accurate, though probably they are not very wide of the mark, but to illustrate the priuciple. species of property, will generally dispose him to content himself with a smaller re¬ venue from]land than what he might have by lending out his money at interest. These advantages are sufficient to compensate a certain difference of revenue ; but they will compensate a certain difference only ; and if the rent of land should fall short of the interest of money by a greater difference, nobody would buy land, which would soon reduce its ordinary price. On the contrary, if the advantages should much more than compensate the difference, every body would buy land, which again would soon raise its ordinary price. When interest was at ten per cent, land was commonly sold for ten or twelve years purchase. As interest sunk to six, five, and four per cent., the price of land rose to twenty, five-and-twenty, and thirty years’ purchase. The market rate of interest is higher in France than in England, and the common price of land is lower. In England it commonly sells at thirty; in France at twenty years’ purchase. CHAP. 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 capi¬ tals are capable of putting into motion, varies extremely according to the diversity of their employment; as does likewise the value which that employment adds to the annual produce of the land and labour of the coun¬ try. 1 A capital may be employed in four dif- in all cases live upon its profits, the means of accu¬ mulation in England would, under the circumstances supposed, be more than double what they are in Holland, and in the United States nearly double what they are in England. It is plain, therefore, that the prosperity of a country is to be measured by the rate of profit w hich her capital yields, or (for it is the same thing) by her capacity of employing capital and labour with ad¬ vantage, and not by the actual amount of her capital, or the number of her people. The capital of Holland is undoubtedly much larger, compared with her po¬ pulation, than that of the United States ; though, as the latter is able to employ her capital with far greater advantage than the former, every one is ready to admit that she is also by far the more prosperous. “ The progressive state ” is justly characterised by Dr. Smith (p. 37.) as being “in reality the cheerful and hearty state to all the different orders of the so¬ ciety ; the stationary is dull, the declining melan¬ choly.” But as this progressive state is mainly a consequence of a comparatively high rate of profit, he ought, in consistency, to have maintained the doctrine that the rate of profit realised in different employments is the best standard by which to judge of their advantageousness. This, in truth, is the only doctrine which harmonises with the funda¬ mental principles of his system ; for it 6hows that the freedom of industry is uniformly productive ol the greatest public as well as private advantage. The interest of individuals will always prompt them to employ their capitals in those businesses which they believe will yield, all things considered, the largest nett profits ; and, in doing so, it is clear they are employing them in the way most likely to in¬ crease their own fortunes, and consequently to 160 EMPLOYMENT OF CAPITALS. Book II. ferent ways: either, first, in procuring the rude produce annually required for the use and consumption of the society ; or, secondly, in manufacturing and preparing that rude produce for immediate use and consumption; or, thirdly, in transporting either the rude or manufactured produce from the places where they abound to those where they are wanted ; or, lastly, in dividing particular portions of either into such small parcels as suit the occasional demands of those who want them. In the first way are employed the capitals of all those who undertake the improvement or cultivation of lands, mines, or fisheries; in the second, those of all master manufacturers ; in the third, those of all wholesale merchants; and in the fourth, those of all retailers. It is difficult to con¬ ceive that a capital should be employed in any way which may not be classed under some one or other of those four. Each of those four methods of employing a capital is essentially necessary either to the existence or extension of the other three, or to the general conveniency of the society. Unless a capital was employed in furnish¬ ing rude produce to a certain degree of abundance, neither manufactures nor trade of any kind could exist. Unless a capital was employed in manu¬ facturing that part of the rude produce which requires a good deal of preparation before it can be fit for use and consumption, it either would never be produced, because there could be no demand for it; or if it was pro¬ duced spontaneously, it would be of no value in exchange, and could add nothing to the wealth of the society. Unless a capital was employed in trans¬ porting either the rude or manufactured pro¬ duce from the places where it abounds to those where it is wanted, no more of either could be produced than was necessary for the consumption of the neighbourhood. The capital of the merchant exchanges the sur¬ plus produce of one place for that of another, and thus encourages the industry and in¬ creases the enjoyments of both. Unless a capital was employed in break¬ ing and dividing certain portions either of the rude or manufactured produce into such small parcels as suit the occasional demands of those who want them, every man would be obliged to purchase a greater quantity of the goods he wanted than his immediate occasions required. If there was no such augment the capital of the country, to furnish subsistence to an increasing population, and to add to the comforts and enjoyments of society. It should be recollected that profits and rent form the only sources from which any great amount of taxes can ever be derived ; and were a government to attempt, by fettering the employment of capital, to force it into channels where it would yield a less amount of nett profit, they w r ould not only check the increase of the national capital, but would gradually lessen the fund from which the public revenue must always be drawn, and depress the country in relation trade as a butcher, for example, every man would be obliged to purchase a whole* ox or a whole sheep at a time. This would ge¬ nerally be inconvenient to the rich, and much more so to the poor. If a poor workman was obliged to purchase a month’s or six month’s provisions at a time, a great part of the stock which he employs as a capital in the instruments of his trade, or in the furniture of his shop, and which yields him a revenue, he would be forced to place in that part of his stock which is reserved for immediate 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 dav, or even from hour to hour, as he wants it. He is thereby enabled to employ almost his whole stock as a capital. He is thus en¬ abled to furnish work to a greater value ; and the profit which he makes by it in this way, much more than compensates the ad¬ ditional price which the profit of the retailer imposes upon the goods. The prejudices of some political writers against shopkeepers and tradesmen are altogether without found¬ ation. So far is it from being necessary either to tax them or to restrict their num¬ bers, that they can never be multiplied so as to hurt the public, 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, which can be employed in the grocery trade, cannot exceed what is sufficient to purchase that quantity. If this capital is divided between two different grocers, their competition will tend to make both of them sell cheaper than if it were in the hands of one only; and if it were divided among twenty, their competition would be just so much the greater, and the chance of their combining together, in order to raise the price, just so much the less. Their competition, might, perhaps, ruin some of themselves; but to take care of this is the business of the parties concerned, and it may safely be trusted to their discretion. It can never hurt either the consumer or the pro¬ ducer : on the contrary, it must tend to make the retailers both sell cheaper and buy dearer than if the whole trade was monopolised by one or two persons. Some of them, perhaps, may sometimes decoy a weak customer to buy what he has no occasion for. This evil, to other states. And thus it appears, looking at the question in every point of view, that there are no grounds whatever for supposing that the utmost freedom of industry should ever be a means of attracting capital to a comparatively disadvantageous employment. In this respect public and private interests are always in unison. If capital flow to foreign trade rather than to agriculture or the home trade, it is because it is believed it will yield larger profits to the individual, and consequently to the state. 1 EMPLOYMENT OF CAPITALS. 161 i; Chap. V. however, is of too little importance to deserve the public attention, nor would it necessarily be prevented by restricting their numbers. It is not the multitude of alehouses, to give the most suspicious example, that occasions a general disposition to drunkenness among the common people; but that disposition, arising from other causes, necessarily gives employment to a multitude of alehouses. The persons whose capitals are employed in any of those four ways, are themselves ^productive labourers. Their labour, when properly directed, fixes and realises itself in the subject or vendible commodity upon which it is bestowed, and generally adds to its price the value at least of their own maintenance and consumption. The profits of the farmer, of the manufacturer, of the merchant and retailer, are all drawn from the price of the goods which the two first produce, and the two last buy and sell. Equal capitals, however, employed in each of those four different ways, will immediately put into motion very different quantities of productive labour, and augment, too, in very different proportions, the value of the annual produce of the land and labour of the so¬ ciety to which they belong. The capital of the retailer replaces, toge¬ ther with its profits, that of the merchant of whom he purchases goods, and thereby en- S abies him to continue his business. The retailer himself is the only productive la¬ bourer whom it immediately employs. In his profits consists the whole value which its employment adds to the annual produce of the land and labour of the society. The capital of the wholesale merchant re¬ places, together with their profits, the capi¬ tals of the farmers and manufacturers of ■whom he purchases the rude and manufac¬ tured produce which he deals in, and thereby enables them to continue their respective trades. It is by this service chiefly that he contributes indirectly to support the produc- Rt tive labour of the society, and to increase the value of its annual produce. His capi- jr tal employs, too, the sailors and carriers who |i transport his goods from one place to ano- L ther, and it augments the price of those goods l by the value, not only of his profits, but of | their wages. This is all the productive la¬ bour which it immediately puts into motion, and all the value which it immediately adds to the annual produce. Its operation in both these respects is a good deal superior to that of the capital of the retailer. Part of the capital of the master manu- E facturer is employed as a fixed capital in the instruments of his trade, and replaces, toge¬ ther with its profits, that of some other arti- |j 4 ficer of whom he purchases them. Part of his circulating capital is employed in pur¬ chasing materials, and replaces, with their profits, the capitals of the farmers and miners U of whom he purchases them ; hut a great part of it is always, either annually, or in a much shorter period, distributed among the different workmen whom he employs. It augments the value of those materials by their wages, and by their master’s profits upon the whole stock of wages, materials, and instruments of trade employed in the business. It puts immediately into motion, therefore, a much greater quantity of pro¬ ductive labour, and adds a much greater value to the annual produce of the land and labour of the society, than an equal capital in the hands of any wholesale merchant. No equal capital puts into motion a greater quantity of productive labour than that of the farmer. Not only his labouring servants, but his labouring cattle, are pro¬ ductive labourers. In agriculture, too, na¬ ture labours along with man ; and though her labour costs no expense, its produce has its value, as well as that of the most expen¬ sive workmen. The most important opera¬ tions of agriculture seem intended, not so much to increase—though they do that too— as to direct the fertility of nature towards the production of the plants most profitable to man. A field overgrown with briers and brambles may frequently produce as great a quantity of vegetables as the best culti¬ vated vineyard or corn field. Planting and tillage frequently regulate more than they animate the active fertility of nature ; and after all their labour, a great part of the work always remains to be done by her. The labourers and labouring cattle, therefore, employed in agriculture, not only occasion, like the workmen in manufactures, the re¬ production of a value equal to their own consumption, or to the capital which em¬ ploys them, together with its owner’s profits, but of a much greater value, Over and above the capital of the farmer and all its profits, they regularly occasion the reproduc¬ tion of the rent of the landlord. This rent may be considered as the produce of those powers of nature, the use of which the land¬ lord lends to the farmer. It is greater cr smaller according to 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 manufactures i can ever occasion so great a reproduction.^' In them nature does nothing — man does all; and the reproduction must always be in proportion to the strength of the agents that occasion it. The capital employed in agri¬ culture, therefore, not only puts into motion a greater quantity of productive labour than M 162 EMPLOYMENT OF CAPITALS. Book II. any equal capital employed in manufactures, but in proportion, too, to the quantity of productive labour which it employs, it adds a much greater value to the annual produce of the land and labour of the country, to the real wealth and revenue of its inhabitants. Of all the ways in which a capital can be employed, it is by far the most advantageous to the society. 1 The capitals employed in the agriculture and in the retail trade of any society, must always reside within that society. Their employment is confined almost to a precise spot, to the farm, and to the shop of the re¬ tailer. They must generally, too — though there are some exceptions to this — belong to resident members of the society. The capital of a wholesale merchant, on the contrary, seems to have no fixed or necessary residence anywhere, but may wander about from place to place, according as it can either buy cheap or sell dear. The capital of the manufacturer must, no doubt, reside where the manufacture is car¬ ried on ; but where this shall be, is not al¬ ways necessarily determined. It may fre¬ quently be at a great distance both from the place where the materials grow, and from that where the complete manufacture is con¬ sumed. Lyons is very distant both from the places which afford the materials of its manufactures, and from those which consume them. The people of fashion in Sicily are clothed in silks made in other countries from the materials which their own produces. Part of the wool of Spain is manufactured in Great Britain, and some part of that cloth is afterwards sent back to Spain. 1 This is perhaps the most objectionable passage in the Wealth of Nations ; and it is really astonish¬ ing so acute and sagacious a reasoner as "Dr. Smith should have maintained a proposition so manifestly erroneous as that “ nature does nothing for man in manufactures .” The powers of water and of wind, which move our machinery, support our ships, and impel them over the deep — the pressure of the atmosphere and the elasticity of steam, which en¬ able us to work the most stupendous engines — are they not the spontaneous gifts of nature? The single advantage of machinery consists, in fact, in its enabling us to press the powers of nature into our service, and to make them perform a large part of what must otherwise have been wholly the w T ork of man. In bleaching and fermentation, the whole processes are carried on by natural agents; and it is to the influence of heat in softening and melting metals, and warming houses, that we owe many of our most powerful and convenient instruments, and that these northern climates have been made to afford a comfortable habitation. Owing to the advances that are almost constantly being made in the arts, it is abundantly certain that whatever amount of capital may be required at present to construct a steam-engine, or to build a ship, a less amount of capital will, at a future period, suffice for the same purpose ; and how' much soever these machines and ships may be multiplied, the last will be as efficient in saving labour and producing wealth as the first. But such is not the case with the capital employed upon the soil. Lands of the first quality are speedily exhausted; and it is in practice found to be impossible, notwith¬ standing the frequent discoveries and inventions made in the business of agriculture, to go on ap¬ plying capital indefinitely even to the best lands, Whether the merchant whose capital ex¬ ports the surplus produce of any society be a native or a foreigner, is of very little im¬ portance. If he is a foreigner, the number of their productive labourers is necessarily less than if he had been a native, by one man only ; and the value of their annual produce, by the profits of that one man. The sailors or carriers whom he employs may still belong indifferently either to his country, or to their country, or to some third country, in the same manner as if he had been a native. The capital of a foreigner gives a value to their surplus produce equally with that of a native, by exchanging it for something for which there is a demand at home. It as effectually replaces the capital of the person w'ho produces that surplus, and as effectually enables him to continue his business ; the service by which the capi¬ tal of a wholesale merchant chiefly contri¬ butes to support the productive labour, and to augment the value of the annual produce of the society to which he belongs. It is of more consequence that the capital of the manufacturer should reside within the country. It necessarily puts into motion a greater quantity of productive labour, and adds a greater value to the annual produce of the land and labour of the society. It may, however, be very useful to the country, though it should not reside within it. The capitals of the British manufacturers who work up the flax and hemp annually im¬ ported from the coasts of the Baltic, are surely very useful to the countries which produce them. Those materials are a part of the surplus produce of those countries, without in the end obtaining a diminished return. Now it is this diminishing productiveness of the capital employed in cultivation that is the source of rent. No rent is ever paid w r hen the best lands only are under tillage ; but when the increase of popula¬ tion forces recourse to those of inferior fertility, the price of raw' produce necessarily rises proportionally to the increased cost of its production on them : and, as there cannot be two rates of profit, or two prices for the same article at the same time, and in the same market, the excess of produce obtained from the best lands under cultivation over that which is ob¬ tained from the w'orst, or its value, goes to the land¬ lord as rent. Instead, therefore, of its being true that rent is the result of the superior productiveness of the capital employed upon the land, as compared with that employed in manufactures and commerce, it is really the result of its inferior productiveness. “ It is singular,” says Mr. Ricardo, “ that this qua¬ lity of the land, which should have been noticed as an imperfection, compared with the natural agents by which manufactures are assisted, should have been pointed out as constituting its peculiar pre¬ eminence. If air, water, the elasticity of steam, and the pressure of the atmosphere, w r ere of various qualities; if they could be appropriated, and each quality existed only in moderate abundance, they as well as the land would afford a rent, as the successive qualities were brought into use. With ever)' worse quality employed, the value of the commodities in the manufacture of which they were used would rise, because equal quantities of labour would be less productive. Man would do more by the sweat of his brow, and nature perform less ; and the land would be no longer pre-eminent for its limited powers.”—p. 63. 1st ed. See further, note on Rent, at the end. EMPLOYMENT OF CAPITALS. 163 Chap. V. I which, unless it was annually exchanged for something which is in demand there, would be of no value, and would soon cease to be produced. The merchants who export it, replace the capitals of the people who pro¬ duce it, and thereby encourage them to con¬ tinue the production ; and the British ma¬ nufacturers replace the capitals of those merchants. A particular country, in the same manner as a particular person, may frequently not have capital sufficient both to improve and cultivate all its lands, to manufacture and prepare their whole rude produce for imme¬ diate use and consumption, and to transport the surplus part either of the rude or manu¬ factured produce to those distant markets wdiere it can be exchanged for something for which there is a demand at home. The in- i habitants of many different parts of Great Britain have not capital sufficient to improve and cultivate all their lands. The wool of ! the southern counties of Scotland is, a great part of it, after a long land carriage through very bad roads, manufactured in Yorkshire, for want of a capital to manufacture it at home. There are many little manufacturing towns in Great Britain, of which the inha¬ bitants have not capital sufficient to trans¬ port the produce of their own industry to those distant markets where there is demand and consumption for it. If there are any merchants among them, they are, properly, only the agents of wealthier merchants who reside in some of the greater commercial cities. When the capital of any country is not sufficient for all those three purposes, in proportion as a greater share of it is em¬ ployed in agriculture, the greater will be the quantity of productive labour which it puts into motion within the country; as will likewise be the value which its employment adds to the annual produce of the land and labour of the society. After agriculture, the capital employed in manufactures puts into motion the greatest quantity of pro¬ ductive labour, and adds the greatest value to the annual produce. That which is em¬ ployed in the trade of exportation has the least effect of any of the three. The country, indeed, which has not ca¬ pital sufficient for all those three purposes, has not arrived at that degree of opulence for which it seems naturally destined. To attempt, however, prematurely and with an insufficient capital to do all the three, is certainly not the shortest way for a society, no more than it would be for an individual, to acquire a sufficient one. The capital of all the individuals of a nation has its limits, in the same manner as that of a single in¬ dividual, and is capable of executing only certain purposes. The capital of all the in¬ dividuals of a nation is increased in the same manner as that of a single individual, by their continually accumulating and add¬ ing to it whatever they save out of their revenue. It is likely to increase the fastest, therefore, when it is employed in the way that affords the greatest revenue to all the inhabitants of the country, as they will thus be enabled to make the greatest savings. But the revenue of all the inhabitants of the country is necessarily in proportion to the value of the annual produce of their land and labour. It has been the principal cause of tlia rapid progress of our American colonit* towards wealth and greatness, that almost their whole capitals have hitherto been employed in agriculture. They have no manufactures, those household and coarser manufactures excepted which necessarily ac¬ company the progress of agriculture, and which are the work of the women and chil¬ dren in every private family. The greater part both of the exportation and coasting trade of America is carried on by the capitals of merchants who reside in Great Britain. Even the stores and warehouses from which goods are retailed in some provinces, par¬ ticularly in Virginia and Maryland, belong many of them to merchants who reside in the mother country, and afford one of the few instances of the retail trade of a society being carried on by the capitals of those who are not resident members of it. Were the Americans, either by combination or by any other sort of violence, to stop the im¬ portation of European manufactures, and by thus giving a monopoly to such of their own countrymen as could manufacture the like goods, divert any considerable part of their capital into this employment, they would retard, instead of accelerating, the further increase in the value of their annual produce, and would obstruct, instead of promoting, the progress of their country towards real wealth and greatness. This would be still more the case, were they to attempt, in the same manner, to monopolise to themselves their whole exportation trade. The course of human prosperity, indeed, seems scarce ever to have been of so long continuance as to enable any great country to acquire capital sufficient for all those three purposes; unless, perhaps, we give credit to the wonderful accounts of the wealth and cultivation of China, of those of ancient Egypt, and of the ancient state of Indostan. Even those three countries, the wealthiest, according to all accounts, that ever were in the world, are chiefly renowned for their superiority in agriculture and ma¬ nufactures. They do not appear to have been eminent for foreign trade. The ancient E gyp tains had a superstitious antipathy to the sea: a superstition nearly of the same kind prevails among the Indians; mid the M 2 164 EMPLOYMENT OF CAPITALS. Book II. Chinese have never excelled in foreign commerce. The greater part of the surplus produce of all those three countries seems to have been always exported by foreigners, who gave in exchange for it something else for which they found a demand there, fre¬ quently gold and silver. It is thus that the same capital will in any country put into motion a greater or smaller quantity of productive labour, and add a greater or smaller value to the annual pro¬ duce of its land and labour, according to the different proportions in which it is employed in agriculture, manufactures, and wholesale trade. The difference, too, is very great, according to the different sorts of wholesale trade in which any part of it is employed. All wholesale trade, all buying in order to sell again by wholesale, may be reduced to three different sorts : the home trade, the foreign trade of consumption, and the carry¬ ing trade. The home trade is employed in purchasing m one part of the same country, and selling in another, the produce of the industry of that country. It comprehends both the inland and the coasting trade. The foreign trade of consumption is employed in purchasing foreign goods for home con¬ sumption. The carrying trade is employed in transacting the commerce of foreign countries, or in carrying the surplus produce of one to another. The capital which is employed in pur¬ chasing in one part of the country, in order to sell in another the produce of the industry of that country, generally replaces, by every such operation, two distinct capitals, that had both been employed in the agriculture or manufactures of that country, and thereby enables them to continue that employment. When it sends out from the residence of the merchant a certain value of commodities, it generally brings back in return at least an equal value of other commodities. When both are the produce of domestic industry, it necessarily replaces, by every such oper- 1 Dr. Smith does not say that the importation of foreign commodities has any tendency to force capital abroad; and, unless it did this, it is plain that his statement with respect to the effect of changing a home for a foreign trade of consumption, is quite inconsistent with the fundamental principle he has elsewhere established, that industry is always in pro¬ portion to the amount of capital. Suppose, for the sake of illustration, that the case put by Dr. Smith actually occurs — that the Scotch manufactures are sent to Portugal; it is obvious, if the same de¬ mand continue in London for these manufactures as before they began to be sent abroad, that additional capital and labourers will be required to furnish commodities for both the London and Portuguese markets. In this case, therefore, instead of the in¬ dustry of the country sustaining any diminution from the export of Scotch manufactures to a foreign country, it w ould evidently be augmented, and a new field would be discovered for the profitable employ¬ ment of stock. But if, when the Scotch merchants begin to export manufactures to Portugal, the London merchants also find out a foreign market where they may be supplied at a cheaper rate with the goods they previously imported from Scotland, all inter- ation, two distinct capitals, which bad both been employed in supporting producthe labour, and thereby enables them to continue that support. The capital which sends Scotch manufactures to London, and brings • 7 C back English corn and manufactures to Edinburgh, necessarily replaces, by every such operation, two British capitals, which had both been employed in the agriculture or manufactures of Great Britain. The capital employed in purchasing foreign goods for home consumption, when this pur¬ chase is made with the produce of domestic industry, replaces too, by every such opera¬ tion, two distinct capitals ; but one of them only is employed in supporting domestic industry. The capital which sends British goods to Portugal, and brings back Por¬ tuguese goods to Great Britain, replaces, by every such operation, only one British capital. The other is a Portuguese one. Though the returns, therefore, of the foreign trade of consumption should be as quick as those of the home trade, the capital employed in it will give but one half of the encourage¬ ment to the industry or productive labour of the country. 1 But the returns of the foreign trade of consumption are very seldom so quick as those of the home trade. The returns of the home trade generally come in before the end of the year, and sometimes three or four times in the year. The returns of the foreign trade of consumption seldom come in before the end of the year, and some¬ times not till after two or three years. A capital, therefore, employed in the home trade, will sometimes make twelve oper¬ ations, or be sent out and returned twelve times, before a capital employed in the foreign trade of consumption has made one. If the capitals are equal, therefore, the one will give four-and-twenty times more encouragement and support to the industry of the country than the other. 2 The foreign goods for home consumption course between Scotland and London will imme¬ diately cease, and the home trade of consumption will be changed for a foreign trade of consumption. It is obvious, however, that this change would not occasion any embarrassment, or be a means of throwing a single individual out of employ¬ ment. On the contrary, it is plain that a fresh stimulus would be given to the manufactures both of Scotland and the metropolis, inasmuch as nothing but their being able to dispose of their produce to greater advantage, would have made the merchants change the home for a foreign market. The fact is, that when a home trade is changed for a foreign trade, an additional capital belonging to the nation with w hich it is carried on enters into it; but there is no diminution whatever of the capital or industry of the nation w hich has made the change ; both the one and the other being employed under more advantageous circumstances, and with greater effect. See Ricardo’s Principles of Political Economy and Taxation , 3d cd. p. 419. 2 This is altogether erroneous. If the returns to the capital employed in the foreign trade of con¬ sumption be at longer distances than the returns to the capital employed in the home trade, they will, Chap. V. EMPLOYMENT OF CAPITALS. 165 may sometimes be purchased, not with the produce of domestic industry, but with some other foreign goods. These last, however, must have been purchased either immedi¬ ately with the produce of domestic industry, or with something else that had been pur¬ chased with it; for, the case of war and con¬ quest excepted, foreign goods can never be acquired but in exchange for something that had been produced at home, either immedi¬ ately or after two or more different ex¬ changes. The effects, therefore, of a capital employed in such a roundabout foreign trade of consumption, are, in every respect, the same as those of one employed in the most direct trade of the same kind, except that the final returns are likely to be still more distant, as they must depend upon the returns of two or three distinct foreign trades. If the flax and hemp of Riga are purchased with the tobacco of Virginia, which had been purchased with British ma¬ nufactures, the merchant must wait for the returns of two distinct foreign trades, before he can employ the same capital in repur¬ chasing a like quantity of British manufac¬ tures. If the tobacco of Virginia had been purchased, not with British manufactures, but with the sugar and rum of Jamaica which had been purchased with those manu¬ facture.^ he must wait for the returns of three. If those two or three distinct foreign trades should happen to be carried on by two or three distinct merchants, of whom the second buys the goods imported by the first, and the third buys those imported by the second, in order to export them again, each merchant indeed will, in this case, receive the returns of his own capital more quickly ; but the final returns of the whole capital employed in the trade will be just as slow as ever. Whether the whole capital em¬ ployed in such a roundabout 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 mer¬ chants. Three times a greater capital must in both cases be employed, in order to ex¬ change a certain value of British manufac¬ tures for a certain quantity of flax and hemp, than would have been necessary, had the manufactures and the flax and hemp been directly exchanged for one another. The whole capital employed, therefore, in such a roundabout foreign trade of consumption, will generally give less encouragement and support to the productive labour of the country, than an equal capital employed in a more direct trade of the same kind. Whatever be the foreign commodity with which the foreign goods for home consump¬ tion are purchased, it can occasion no essen- when made, be proportionally larger. Dr. Smith has shown that, upon an average, all capitals, in whatever way they may be employed, yield the same nett tial difference, either in the nature of the trade, or in the encouragement and support which it can give to the productive labour of the country from which it is carried on. If they are purchased with the gold of Brazil, for example, or with the silver of Peru, this gold and silver, like the tobacco of Virginia, must have been purchased with something that either was the produce of the indus¬ try of the country, or that had been pur¬ chased with something else that was so. So far, therefore, as the productive la¬ bour of the country is concerned, the foreign trade of consumption which is carried on by means of gold and silver, has all the advan¬ tages and all the inconveniencies of any other equally roundabout foreign trade of consump¬ tion ; and will replace just as fast or just as slow, the capital which is immediately em¬ ployed in supporting that productive labour. It seems even to have one advantage over any other equally roundabout 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 their insurance not greater; and no goods, besides, are less liable to suffer by the car¬ riage. An equal quantity of foreign goods, therefore, may frequently be purchased with a smaller quantity of the produce of domes¬ tic industry, by the intervention of gold and silver, than by that of any other foreign goods. The demand of the country may frequently, in this manner, be supplied more completely and at a smaller expense than in any other. Whether, by the continual export¬ ation of those metals, a trade of this kind, is likely to impoverish the country from which it is carried on, in any other way, I shall have occasion to examine at great length hereafter. That part of the capital of any country which is employed in the carrying trade, is altogether withdrawn from supporting the productive labour of that particular country, to support that of some foreign countries. Though it may replace, by every operation, two distinct capitals, yet neither of them be¬ longs to that particular country. The ca¬ pital of the Dutch merchant, which carries the corn of Poland to Portugal, and brings back the fruits and wines of Portugal to Poland, replaces by every such operation two capitals, neither of which had been employed in supporting the productive labour of Hol¬ land ; 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 pro¬ profit ; and, so long as they do this, they must, how much soever they may differ in many respects, be equally advantageous. See nolo, p. 159, M 3 1 66 EMPLOYMENT OF CAPITALS. Book II. once of the land and labour of that country. 1 When, indeed, the carrying trade of any par¬ ticular country is carried on with the ships and sailors of that country, that part of the capital employed in it which pays the freight is distributed among, and puts into motion, a certain number of productive labourers of that country. Almost all nations that have had any considerable share of the carrying trade have, in fact, carried it on in this manner. The trade itself has probably derived its name from it, the people of such countries being the carriers to other countries. It does not, however, seem essential to the nature of the trade that it should be so. A Dutch merchant may, for example, employ his capital in transacting the commerce of Poland and Portugal, by carrying part of the surplus produce of the one to the other, not in Dutch, but in British bottoms. It may be presumed, that he actually does so upon some particular occasions. It is upon this account, however, that the carrying trade has been supposed peculiarly advantageous to such a country as Great Britain, of which the defence and security depend upon the number of its sailors and shipping. But the same capital may employ as many sailors and shipping, either in the foreign trade of consumption, or even in the home trade, when carried on by coasting vessels, as it could in the carrying trade. The number of sailors and 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 value, and partly upon the distance of the ports be¬ tween which they are to be carried; chiefly upon the former of those two circumstances. The coal trade from Newcastle to London, for example, employs more shipping than all the carrying trade of England, 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 it, will not always neces¬ sarily increase the shipping of that country. The capital, therefore, employed in the home trade of any country will generally give encouragement and support to a greater quantity of productive labour in that coun¬ try, and increase the value of its annual pro¬ duce more than an equal capital employed in the foreign trade of consumption: and the capital employed in this latter trade has, in both these respects, a still greater ad¬ vantage over an equal capital employed in the carrying trade. The riches, and, so far as power depends upon riches, the power of every country must always be in proportion J But the fact of capital being employed in the carrying trade, shows that the nett profits it yields are quite as great as any that could be obtained by employing it in agriculture or the home trade; and to the value of its annual produce, the fund from which all taxes must ultimately be paid. But the great object of the political economy of every country, is to increase the riches and power of that country. It ought, therefore, to give no preference nor superior encouragement to the foreign trade of con¬ sumption above the home trade, nor to the carrying trade above either of the other two. It ought neither to force nor to allure into either of those two channels a greater share of the capital of the country, than what would naturally flow into them of its own accord. Each of those different branches of trade, however, is not only advantageous, but necessary and unavoidable, when the course of things, without any constraint or violence, naturally 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 at home. Without such exportation, a part of the productive labour of the country must cease, and the value of its annual produce diminish. The land and labour of Great Britain produce generally more corn, woollens, and hardware, than the demand of the home market requires. The surplus part of them, therefore, must be sent abroad, and ex¬ changed for something for which there is a demand at home. It is only by means of such exportation, that this surplus can acquire a value sufficient to compensate the labour and expense of producing it. The neighbourhood of the sea-coast, and the banks of all navigable rivers, are advan¬ tageous situations for industry, only because they facilitate the exportation and exchange of such surplus produce for something else which is more in demand there. When the foreign goods which are thus purchased with the surplus produce of domestic industry exceed the demand of the home market, the surplus part of them must be sent abroad again, and exchanged for something more in demand at home. About ninety-six thousand hogsheads of tobacco are annually purchased in Virginia and Mary¬ land with a part of the surplus produce of British industry. But the demand of Great Britain does not require, perhaps, more than fourteen thousand. If the remaining eighty- two thousand, therefore, could not be sent abroad, and exchanged for something more in demand at home, the importation of them must cease immediately, and with it the productive labour of all those inhabitants of Great Britain who are at present employed it is, as already observed, by the amount of such nett profits, that the real advantage of the employment is to be estimated. Chap. V. EMPLOYMENT OF CAPITALS. 167 . in preparing the goods with which these eightv-two thousand hogsheads are annually purchased. Those goods, which are part of the produce of the land and labour of Great Britain, having no market at home, and being deprived of that which they had abroad, must cease to be produced. Ihe most roundabout foreign trade of consumption, therefore, may, upon some occasions, be as necessary for supporting the productive labour of the country, and the value of its annual produce, as the most direct. When the capital stock of any country is increased to such a degree that it cannot be all employed in supplying the consumption, and supporting the productive labour of that particular country, the surplus part of it naturally disgorges itself into the carrying trade and is employed in performing the same offices to other countries. The carrying trade, is the natural effect and symptom of great national wealth; but it does not seem to be the natural cause of it. Those states¬ men who have been disposed to favour it with particular encouragements, seem 'to have mistaken the effect and symptom for the cause. Holland, in proportion to the extent of the land and the number of its inhabitants by far the richest country in Europe, has accordingly the greatest share of the carrying trade of Europe. England, perhaps the second richest country of Europe, is likewise supposed to have a considerable share in it; though what commonly passes for the carrying trade of England will frequently, perhaps, be found to be no more than a roundabout foreign trade of consumption. Such are, in a great measure, the trades w hich carry the goods of the East and West Indies and of America to different European markets. Those goods are generally pur¬ chased either immediately with the produce of British industry, or w r ith something else which had been purchased with that produce, and the final returns of those trades are ge¬ nerally used or consumed in Great Britain. The trade which is carried on in British bottoms between the different ports of the Mediterranean, and some trade of the same kind carried on by British merchants between the different ports of India, make, perhaps, the principal branches of what is properly the carrying trade of Great Britain. The extent of the home trade, and of the capital which can be employed in it, is necessarily limited by the value of the surplus produce of all those distant places within the country which have occasion to exchange their respective productions with one another: that of the foreign trade of consumption, by the value of the surplus produce of the wffiole country, and of what can be purchased wdth it; that of the carrying trade, by the value of the surplus produce of all the different countries in the world. Its possible extent, therefore, is in a manner infinite in comparison of that of the other tw r o, and is capable of absorbing the greatest capitals. The consideration of his owni private profit is the sole motive which determines the owner of any capital to employ it either in agriculture, in manufactures, or in some particular branch of the wholesale or retail trade. The different quantities of productive labour wffiich it may put into motion, and the different values w r hich it may add to the annual produce of the land and labour of the society, according as it is employed in one or other of those different w r avs, never enter into his thoughts. In countries, therefore, wffiere agriculture is the most profitable ot all employments, and farming and improving the most direct roads to a splendid fortune, the capitals of individuals will naturally be employed in the manner most advantageous to the whole society. The profits of agri¬ culture, however, seem to have no superiority over those of other employments in any part of Europe. Projectors, indeed, in every corner of it, have, within these few v'_ars, amused the public with most magnificent accounts of the profits to be ".nde by the cultivation and improvement 'j A land. With¬ out entering into - ^ particular discussion of their calculations, a very simple observation ma) satisfy us that the result of them must be false. We see, every day, the most splendid fortunes that have been acquired in the course of a single life by trade and manufactures, frequently from a very small capital, sometimes from no capital. A single instance of such a fortune acquired by agriculture in the same time, and from such a capital, has not, perhaps, occurred in Europe during the course of the present century. In all the great countries of Europe, however, much good land still remains uncultivated; and the greater part of what is cultivated is far from being improved to the degree of which it is capable. Agriculture, therefore, is almost everywhere capable of absorbing a much greater capital than has ever yet been em¬ ployed in it. What circumstances in the policy of Europe have given the trades wffiich are carried on in tow T ns so great an advantage over that which is carried on in the country that private persons frequently find it more for their advantage to employ their capitals in the most distant carrying trades of Asia and America, than in the improvement and cultivation of the most fertile fields in their own neighbourhood, I shall endeavour to explain at full length in the tw'o following books. M4 163 NATURAL PROGRESS OF OPULENCE. Book HI. BOOK III. OF THE DIFFERENT PROGRESS OF OPULENCE IN DIFFERENT NATIONS. CHAP. I. Of the natural Progress of Opulence. The great commerce of every civilised so¬ ciety is that carried on between the inhabit¬ ants of the town and those of the country. It 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 manufactured produce to the inhabitants of the country. The town, in which there neither is nor can be any re¬ production of substances, may very properly be said to gain its whole wealth and subsist¬ ence f?;om the country. We must not, however, upon this account imagine that the gain of the x. wn is the loss of the country. The gains of both arc "putual and reciprocal, and the division of labour is m this as in all other cases advantageous to all the ulffc-itmt persons employed in the various occupations into which it is subdivided. The inhabit¬ ants of the country purchase of the town a greater quantity of manufactured goods with the produce of a much smaller quantity of their own labour than they must have em¬ ployed had they attempted to prepare them themselves. The town affords a market for the surplus produce of the country, or what is over and above the maintenance of the cultivators; and it is there that the inhabit¬ ants of the country exchange it for some¬ thing else which is in demand among them. Ike greater the number and revenue of the inhabitants of the town, the more extensive is the market which it affords to those of the country ; and the more extensive that market, it is always the more advantageous to a great number. The corn which grows within a mile of the town, sells there for the same price with that which comes from twenty miles distance. But the price of the latter must, generally, not only pay the expense of raising it and bringing it to market, but afford, too, the ordinary profits of. agriculture to the farmer. The pro¬ prietors and cultivators of the country, therefore, which lies in the neighbourhood or the town, over and above the ordinary pronts of agriculture, gain, in the price of what they sell, the whole value of the car¬ riage of the like produce that is brought from more distant parts; and they save* besides, the whole value of this carriage in the price of what they buy. Compare the cultivation of the lands in the neighbourhood of any considerable town with that of those which lie at some distance from it, and you will easily satisfy yourself how much the country is benefited by the commerce of the town. Among all the absurd specu¬ lations that have been propagated concern¬ ing the balance of trade, it has never been pietended that either the country loses by its commerce with the town, or the town by that with the country which main¬ tains it. As subsistence is, in the nature of things, prior to conveniency and luxury, so the in¬ dustry which procures the former must ne¬ cessarily be prior to that which ministers to the lattei. The cultivation and improve¬ ment of the country, therefore, which affords subsistence, must necessarily be prior to the increase oi the town, which furnishes only the means of conveniency and luxury. It is the surplus produce of the country only, or what is over and above the mainten¬ ance of the cultivators, that constitutes the subsistence of the town, which can, therefore, increase only with the increase of this sur¬ plus produce. The town, indeed, may not always derive its whole subsistence from the country in its neighbourhood, or even from the territory to which it belongs, but from very distant countries ; and this, though it forms no exception from the general rule, has occasioned considerable variations in the progress of opulence in different ages and nations. Tnat order of things which necessity im¬ poses in general, though not in every parti¬ cular country, is in every particular country promoted by the natural inclinations of man. If human institutions had never thwarted those natural inclinations, the towns could nowhere have increased beyond what the improvement and cultivation of the territory in which they were situated could support; till such time, at least, as the whole of that territory was completely cultivated and improved. Upon equal, or nearly equal, profits, most men will choose to employ their capitals rather in the improvement and cultivation of land, than either in manufac¬ tures or in foreign trade. The man who employs his capital in land has it more under his view and command, and his fortune is much less liable to accidents than that of the trader, who is obliged frequently to commit it, not only to the winds and the waves, but to the more uncertain elements ot human folly and injustice, by giving great credits, in distant countries, to men with whose character and situation he can seldom be thoroughly acquainted. The capital of the landlord, on the contrary, which is fixed in the improvement of his land, seems to be Chap. I. NATURAL PROGRESS OF OPULENCE. as well secured as the nature of human affairs can admit of. The beauty of the country, besides the pleasures of a country life, the tranquillity of mind which it pro¬ mises, and, wherever the injustice of human laws does not disturb it, the independency which it really affords, have charms that more or less attract every body; and as to cultivate the ground was the original des¬ tination of man, so in every stage of his existence he seems to retain a predilection for this primitive employment. Without the assistance of some artificers, indeed, the cultivation of land cannot be carried on but with great inconveniency and continual interruption. Smiths, carpenters, wheelwrights and ploughwrights, masons and bricklayers, tanners, shoemakers, and tailors, are people whose service the farmer has frequent occasion for. Such artificers, too, stand occasionally in need of the as¬ sistance of one another ; and as their resi¬ dence is not, like that of the farmer, neces¬ sarily tied down to a precise spot, they na¬ turally settle in the neighbourhood of one another, and thus form a small town or village. The butcher, the brewer, and the baker soon join them, together with many other artificers and retailers, necessary or useful for supplying their occasional wants, and who contribute still further to augment the town. The inhabitants of the town, and those of the country, are mutually the servants of one another. The town is a continual fair or market, to which the in¬ habitants of the country resort, in order to exchange their rude for manufactured pro¬ duce. It is this commerce which supplies the inhabitants of the town both with the materials of their work and the means of their subsistence. The quantity of the finished work which they sell to the inhabit¬ ants of the country necessarily regulates the quantity of the materials and provisions which they buy. Neither their employment nor subsistence, therefore, can augment, but in proportion to the augmentation of the demand from the country for finished work ; and this demand can augment only in pro¬ portion to the extension of improvement and cultivation. Had human institutions, therefore, never disturbed the natural course of things, the progressive wealth and in¬ crease of the towns would, in every political society, be consequential, and in proportion to the improvement and cultivation of the territory or country. In our North American colonies, where uncultivated land is still to be had upon easy terms, no manufactures for distant sale have ever yet been established in any of their towns. When an artificer has acquired a little more stock than is necessary for carry¬ ing on his own business in supplying the neighbouring country, he does not in North L i 1 69 America attempt to establish with it a ma¬ nufacture for more distant sale, but employs it in the purchase and improvement of un¬ cultivated land. From artificer he becomes planter ; and neither the large wages nor the easy subsistence which that country affords to artificers, can bribe him rather to work for other people than for himself. He feels that an artificer is the servant of his customers, from whom he derives his sub¬ sistence ; but that a planter who cultivates his own land, and derives his necessary sub¬ sistence from the labour of his own family, is really a master, and independent of all the world. In countries, on the contrary, where there is either no uncultivated land, or none that can be had upon easy terms, every artificer who has acquired more stock than he can employ in the occasional jobs of the neigh¬ bourhood, endeavours to prepare work for more distant sale. The smith erects some sort of iron, the weaver some sort of linen or woollen manufactory. Those different manufactures come, in process of time, to be gradually subdivided, and thereby im¬ proved and refined in a great variety of ways -which may easily be conceived, and which it is therefore unnecessary to explain any further. In seeking for employment to a capital, manufactures are, upon equal or nearly equal profits, naturally preferred to foreign com¬ merce, for the same reason that agriculture is naturally preferred to manufactures. As the capital of the landlord or farmer is more secure than that of the manufacturer, so the capital of the manufacturer, being at all times more within his view and command, is more secure than that of the foreign mer¬ chant. In every period, indeed, of every society, the surplus part both of the rude and manufactured produce, or that for which there is no demand at home, must be sent abroad, in order to be exchanged for some¬ thing for which there is some demandat home. But whether the capital which carries this surplus produce abroad be a foreign or a domestic one, is of very little importance. If the society has not acquired sufficient capital, both to cultivate all its lands, and to manufacture in the completest manner the whole of its rude produce, there is even a considerable advantage that that rude pro¬ duce should be exported by a foreign capital, in order that the whole stock of the society may be employed in more useful purposes. The wealth of ancient Egypt, that of China and Indostan, sufficiently demonstrate that a nation may attain a very high degree of opulence, though the greater part of its ex¬ portation trade be carried on by foreigners. The progress of our North American and West Indian colonies would have been much less rapid, had no capital but what belonged 170 Book III. DISCOURAGEMENT OF AGRICULTURE. to themselves been employed in exporting their surplus produce. According to the natural course of things, therefore, the greater part of the capital of every growing society is first directed to agriculture, afterwards to manufactures, and last of all to foreign commerce. This order of things is so very natural, that in every society that had any territory, it has always, I believe, been in some degree observed. Some of their lands must have been culti¬ vated before any considerable towns could be established, and some sort of coarse industry of the manufacturing kind must have been carried on in those towns before they could well think of employing themselves in foreign commerce. But though this natural order of things must have taken place in some degree in every such society, it has, in all the modern states of Europe, been in many respects en¬ tirely inverted. The foreign commerce of some of their cities has introduced all their finer manufactures, or such as were fit for distant sale ; and manufactures and foreign commerce together have given birth to the principal improvements of agriculture. The manners and customs which the nature of their original government introduced, and which remained after that government was greatly altered, necessarily forced them into this unnatural and retrograde order. CHAP. II. Of the Discouragement of Agriculture in the ancient State of Europe , after the Fall of the Roman Empire. When the German and Scythian nations overran the western provinces of the Roman empire, the confusions which followed so great a revolution lasted for several centuries. The rapine and violence which the barbarians exercised against the ancient inhabitants, in¬ terrupted the commerce between the towns and the country. The towns were deserted, and the country was left uncultivated ; and the western provinces of Europe, which had enjoyed a considerable degree of opulence under the Roman empire, sunk into the low r est state of poverty and barbarism. Dur¬ ing the continuance of those confusions, the chiefs and principal leaders of those nations acquired or usurped to themselves the greater part of the lands of those countries. A great part of them was uncultivated ; but no part of them, whether cultivated or uncultivated, was left without a proprietor. All of them were engrossed, and the greater part by a few great proprietors. This original engrossing of uncultivated lands, though a great, might have been but a transitory evil. They might soon have been divided again, and broke into small parcels, either by succession or by alienation. The law of primogeniture hindered them from being divided by succession: the in¬ troduction of entails prevented their beino- broke into small parcels by alienation. AN hen jand, like moveables, is considered as the means only of subsistence and enjoy¬ ment, the natural law of succession divides it, like them, among all the children of the family; of all of whom the subsistence and enjoyment may be supposed equally dear to the father. I his natural law of succession, accordingly, took place among the Romans, who made no more distinction between elder and younger, between male and female, in the inheritance of lands, than we do in the dis- tiibution of moveables. „,But when land was 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. His tenants were his subjects. He was their judge, and in some respects their legislator in peace and their leader in war. He made war according to his own discretion, frequently against his neighbours, and some¬ times against his .sovereign. The security of a landed estate, therefore, the protection which its owner could afford to those who dwelt on it, depended upon its greatness. To divide it was to ruin it, and to expose every part of it to be oppressed and swal¬ lowed up by the incursions of its neighbours. The law of primogeniture, therefore, came to take place, not immediately indeed, but in process of time, in the succession of landed estates, for the same reason that it has gene¬ rally taken place in that of monarchies, though not always at their first institution. That the power, and consequently the secur¬ ity of the monarchy, may not be weakened by division, it must descend entire to one of the children. To which of them so import¬ ant a preference shall be given, must be determined by some general rule, founded not upon the doubtful distinctions of personal merit, but upon some plain and evident dif¬ ference which can admit of no dispute. Among the children of the same family there can be no indisputable difference but that of sex, and that of age. The male sex is universally preferred to the female ; and when all other things are equal, the elder every where takes place of the younger. Hence the origin of the right of primogeni¬ ture, and of what is called lineal succession. Laws frequently continue in force long after the circumstances which first gave oc¬ casion to them, and which could alone render them reasonable, are no more. In the pre¬ sent state of Europe, the proprietor of a single acre of land is as perfectly secure in his possession as the prorprietor of a hundred Chap. II. DISCOURAGEMENT OF AGRICULTURE. 171 thousand. The right of primogeniture, how¬ ever, still continues to be respected; and as of all institutions it is the fittest to support the pride of family distinctions, it is still i bkely to endure for many centuries. In every other respect, nothing can be more contrary to the real interest of a numerous family, than a right which, in order to enrich one, beggars all the rest of the children. Entails are the natural consequences of the law of primogeniture. They were in¬ troduced to preserve a certain lineal succes¬ sion, of which the law of primogeniture first gave the idea, and to hinder any part of the original estate from being carried out of the proposed line, either by gift or devise, or alienation; either by the folly or by the misfortune of any of its successive owners. They were altogether unknown to the Ro- L mans. Neither their substitutions nor fidei- commisses bear any resemblance to entails, though some French lawyers have thought proper to dress the modern institution in the language and garb of those ancient ones. When great landed estates were a sort of principalities, entails might not be unreason¬ able. Like what are called the fundamental laws of some monarchies, they might fre¬ quently hinder the security of thousands from being endangered by the caprice or extravagance of one man. But in the pre¬ sent state of Europe, when small as well as great estates derive their security from the laws of their country, nothing can be more completely absurd. They are founded upon the most absurd of all suppositions, the sup¬ position that every successive generation of men have not an equal right to the earth, and to all that it possesses; but that the property of the present generation should be restrained and regulated according to the fancy of those who died, perhaps, five hun¬ dred years ago. Entails, however, are still respected through the greater part of Europe, in those countries particularly in which noble birth is a necessary qualification for the en¬ joyment either of civil or military honours. Entails are thought necessary for maintain¬ ing this exclusive privilege of the nobility to the great officers and honours of their coun¬ try ; and that order having usurped one unjust advantage over the rest of their fel¬ low-citizens, lest their poverty should render it ridiculous, it is thought reasonable that they should have another. The common law of England, indeed, is said to abhor perpetuities, and they are accordingly more restricted there than in any other European monarchy ; though even England is not al¬ together without them. In Scotland, more 1 We have stated at length, in a supplemental note on the Disposal of Property by Will, and the Policy of Entails, our reasons for venturing to dissent from the opinion of Dr. Smith as to the custom of pri¬ mogeniture, or the custom of leaving the whole | than one fifth, perhaps more than one third, part of the whole lands of the country, are at present supposed to be under strict entail. 1 Great tracts of uncultivated land were in this manner not only engrossed by particu¬ lar families, but the possibility of their being divided again was as much as possible pre¬ cluded for ever. It seldom happens, however, that a great proprietor is a great improver. In the disorderly times which gave birth to those barbarous institutions, the great pro¬ prietor was sufficiently employed in defending his own territories, or in extending his juris¬ diction and authority over those of his neigh¬ bours. He had no leisure to attend to the cultivation and improvement of land. When the establishment of law and order afforded him this leisure, he often wanted the inclin¬ ation, and almost always the requisite abili¬ ties. If the expense of his house and person either equalled or exceeded his revenue, as it did very frequently, he had no stock to employ in this manner. If he was an economist, he generally found it more pro¬ fitable to employ his annual savings in new purchases than in the improvement of his old estate. To improve land with profit, like all other commercial projects, requires an exact attention to small savings.and small gains, of which a man born to a great fortune, even though naturally frugal, is very seldom ca¬ pable. The situation of such a person naturally disposes him to attend rather to ornament, which pleases his fancy, than to profit, for which he has so little occasion. The elegance of his dress, of his equipage, of his house and household furniture, are objects which, from his infancy, he has been accustomed to have some anxiety about. The turn of mind which this habit naturally forms, follows him when he comes to think of the improvement of land. He embellishes, perhaps, four or five hundred acres in the neighbourhood of his house, at ten times the expense which the land is worth after all his improvements ; and finds that if he was to improve his whole estate in the same man¬ ner, and he has little taste for any other, he would be a bankrupt before he had finished the tenth part of it. There still remain, in both parts of the United Kingdom, some great estates which have continued, without interruption, in the hands of the same family since the times of feudal anarchy. Compare the present condition of those estates with the possessions of the small proprietors in their neighbourhood, and you will require no other argument to convince you how un¬ favourable such extensive property is to improvement. If little improvement was to be expected or the greater portion of the landed property belonging to a family to the eldest son. We have there also entered pretty fully into the questions with respect to entails, and the system of equal division. 172 Book III. DISCOURAGEMENT OF AGRICULTURE, from such great proprietors, still less was to be hoped for from those who occupied the land under them. In the ancient state of Europe, the occupiers of land were all tenants at will. They were all, or almost all, slaves ; but their slavery was of a milder kind than that known among the ancient Greeks and Romans, or even in our West Indian colonies. They were supposed to belong more directly to the land than to their master. They could, therefore, be sold with it, but not separately. They could marry, provided it was with the consent of their master; and he could not afterwards dissolve the marriage by selling the man and wife to different persons. If he maimed or murdered any of them, he was liable to some penalty, though generally but to a small one. They were not, however, capable of acquiring property. Whatever they ac¬ quired was acquired to their master, and he could take it from them at pleasure. What¬ ever cultivation and improvement could be carried on by means of such slaves, was pro¬ perly carried on by their master. It was at his expense. The seed, the cattle, and the instruments of husbandry, were all his. It was for his benefit. Such slaves could ac¬ quire nothing but their daily maintenance. It was properly the proprietor himself, there¬ fore, that in this case occupied his own lands, and cultivated them by his own bondmen. This species of slavery still subsists in Russia, Poland, Hungary, Bohemia, Mora¬ via, and other parts of Germany. It is only in the western and south-western provinces of Europe, that it has gradually been abo¬ lished altogether. 1 But if great improvements are seldom to be expected from great proprietors, they are least of all to be expected when they employ slaves for their workmen. The experience of all ages and nations, I believe, demon¬ strates that the work done by slaves, though it appears to cost only their maintenance, is in the end the dearest of any. A person 1 The best account ever published of the influence of slavery over national wealth and civilisation, and the various modifications it has undergone, will be found in the third volume of the Cours d' Economie Eulitique of M. Storch, Paris, 1823. The species of slavery, alluded to in the text, was not altogether extinct in Scotland when the Wealth of Nations was published. Colliers, coalbearers, salters, and all individuals employed in collieries and saltworks were placed, by the old law of Scotland, enforced by several comparatively modern statutes, in the exact condition of the adscripli glebce of the middle ages. They were bound to perpetual service at the works to which they belonged ; upon a sale of the works the new proprietor acquired a right to their service; all persons were prohibited from re¬ ceiving them into their employment, without the express consent of their last master; and, in the event of their deserting to another work, and being claimed within twelve months, their employers were obliged to restore them within twenty-four hours, under a high penalty ! Such was the state of the Scotch colliers, &c. so late as 1775 ; but in that year an act was passed (15 Geo. III. cap. 28.) for the abo¬ lition of this species of servitude, and declaring that who can acquire no property, can have no other interest but to eat as much and to labour as little as possible. Whatever work he does beyond what is sufficient to purchase his own maintenance, can be squeezed out of him by violence only, and not by any interest of his own. In ancient Italy, how much the cultivation of corn degenerated, how unpro¬ fitable it became to the. master when it fell under the management of slaves, is remarked by both Pliny and Columella. In the time of Aristotle it had not been much better in an¬ cient Greece. Speaking of the ideal repub¬ lic described in the laws of Plato, to maintain five thousand idle men (the number of war¬ riors supposed necessary for its defence) together with their women and servants, would require, he says, a territory of bound¬ less extent and fertility, like the plains of Babylon. The pride of man makes him love to j domineer, and nothing mortifies him so much as to be obliged to condescend to persuade his inferiors. Wherever the law allows it, and the nature of the work can afford it, there¬ fore, he will generally prefer the service of slaves to that of freemen. The planting of sugar and tobacco can afford the expense of slave cultivation. The raising of corn, it seems, in the present times cannot. In the English colonies, of which the principal produce is corn, the far greater part of the work is done by freemen. The late resolu¬ tion of the Quakers in Pennsylvania, to set at liberty all their negro slaves, may satisfy us that their number cannot be very great. Had they made any considerable part of their property, such a resolution could never have been agreed to. In our sugar colonies, on the contrary, the whole work is done by slaves, and in our tobacco colonies a very great part of it. The profits of a sugar plantation in any of our West Indian colo¬ nies are generally much greater than those of any other cultivation that is known either in Europe or America 2 : and the profits of a no individual should henceforth be bound to a col¬ liery or saltwork, otherwise than as a common ser¬ vant or labourer. But this act did not effect the object in view : for by clogging the emancipation of the colliers, &c. with a variety of burdensome con¬ ditions, it rendered the greater number unable to avail themselves of its enactments in their favour ; and those that were emancipated, having become indebted to their masters for sums which they could not pay, were obliged to enter into engagements to continue their service on the old footing. This state of things necessarily gave rise to alarming combina¬ tions among the colliers, and to endless disputes between them and their masters. At length, in 1799, the colliers were completely emancipated, by being placed at once and without any condition, on the same footing as other labourers with respect to their personal freedom and independence. The statute by which this act of tardy justice was effected (39 Geo. III. cap. 56.) in order to prevent its object from being defeated, took from the masters all title to pursue the colliers for sums of money advanced to them in loan, unless they had been advanced for the support of the collier or his family during sickness. 2 See note, ante, p. 72. Chap. II. 173 DISCOURAGEMENT OF AGRICULTURE. tobacco plantation, though inferior to those [ of sugar, are superior to those of corn, as has [ already been observed. Both can afford the expense of slave cultivation, but sugar can afford it still better than tobacco. The num¬ ber of negroes accordingly is much greater, in proportion to that of whites, in our sugar than in our tobacco colonies. To the slave cultivators of ancient times, gradually succeeded a species of farmers known at present in France by the name of Metayers. They are called in Latin, Coloni Partiarii. They have been so long in disuse in England that at present I know no En¬ glish name for them. The proprietor fur¬ nished them with the seed, cattle, and instru¬ ments of husbandry, the whole stock, in short, necessary for cultivating the farm. The produce was divided equally between the proprietor and the farmer, after setting aside what was judged necessary for keeping up the stock, which was restored to the pro¬ prietor when the farmer either quitted or was turned out of the farm. Land occupied by such tenants is properly cultivated at the expense of the proprietors, as much as that occupied by slaves. There is, however, one very essential difference be¬ tween them. Such tenants, being freemen, are capable of acquiring property; and hav¬ ing a certain proportion of the produce of the land, they have a plain interest that the w hole produce should be as great as possible, in order that their own proportion may be so. A slave, on the contrary, who can acquire nothing but his maintenance, consults his own ease, by making the land produce as little as possible over and above that main¬ tenance. It is probable that it w r as partly upon account of this advantage^ and partly upon account of the encroachments which the sovereigns, always jealous of the great lords, gradually encouraged their villains to make upon their authority, and which seem at last to have been such as rendered this species of servitude altogether inconvenient, that tenure in villanage gradually wore out through the greater part of Europe. The time and manner, however, in which so im- [ portant a revolution was brought about, is one of the most obscure points in modern history. The church of Rome claims great merit in it; and it is certain, that so early as the twelfth century, Alexander the Third published a bull for the general emancipa¬ tion of slaves. It seems, however, to have I been rather a pious exhortation than a law, to which exact obedience was required from the faithful. Slavery continued to take place almost universally for several centuries after¬ wards, till it was gradually abolished by the joint operation of the two interests above men¬ tioned, — that of the proprietor on the one hand, and that of the sovereign on the other. A villain enfranchised, and at the same time I r allowed to continue in possession of the land having no stock of his own, could cultivate it only by means of what the landlord ad¬ vanced to him, and must therefore have been what the French call a Metayer. It could never, however, be the interest even of this last species of cultivators to lay out, in the further improvement of the land, any part of the little stock which they might save from their own share of the produce , because the lord, who laid out nothing, was to get one half of whatever it produced. The tithe, which is but a tenth of the pro¬ duce, is found to be a very great hindrance to improvement. A tax, therefore, which amounted to one half, must have been an effectual bar to it. It might be the interest of a metayer to make the land produce as much as could be brought out of it by means of the stock furnished by the proprietor; but it could never be his interest to mix any part of his own with it. In France, where five parts out of six of the whole kingdom are said to be still occupied by this species of cultivators, the proprietors complain that their metayers take every opportunity of em¬ ploying the master’s cattle rather in carriage than in cultivation; because, in the one case, they get the whole profits to them¬ selves, in the other they share them with their landlord. This species of tenants still subsists in some parts of Scotland. I hey are called steel-bow tenants. Those ancient English tenants, who are said by Chief Baron Gilbert and Doctor Blackstone to have been rather bailiffs of the landlord than farmers properly so called, were probably of the same kind. To this species of tenancy succeeded, though by very slow degrees, farmers pro¬ perly so called, who cultivated the land with their own stock, paying a rent certain to the landlord. When such farmers have a lease for a term of years, they may some¬ times find it for their interest to lay out part of their capital in the further improvement of the farm; because they may sometimes expect to recover it, with a large profit, be¬ fore the expiration of the lease. The pos¬ session even of such farmers, however, was long extremely precarious, and still is so in many parts of Europe. They could, before the expiration of their term, be legally outed of their lease by a new purchaser; in Eng¬ land, even by the fictitious action of a coni/- mon recovery. If they were turned out illegally by the violence of their master, the action by which they obtained redress w as extremely imperfect. It did not always re¬ instate them in the possession of the land, but gave them damages which never amount¬ ed to the real loss. Even in England, the country perhaps of Europe where the yeo¬ manry has always been most respected, it was not till about the 14th of Henry the 174 DISCOURAGEMENT OF AGRICULTURE. Book III Seventh that the action of ejectment was in¬ vented, by which the tenant recovers, not damages only, but possession, and in which his claim is not necessarily concluded by the uncertain decision of a single assize. This action has been found so effectual a remedy, that, in the modern practice, when the land¬ lord has occasion to sue for the possession of the land, he seldom makes use of the actions which properly belong to him as landlord— the writ of right or the writ of entry—but sues in the name of his tenant, by the writ of ejectment. In England, therefore, the security of the tenant is equal to that of the proprietor. In England, besides, a lease for life of forty shillings a year value is a free¬ hold, and entitles the lessee to vote for a member of parliament; and as a great part of the yeomanry have freeholds of this kind, the whole order becomes respectable to their landlords, on account of the political consi¬ deration which this gives them. There is, I believe, nowhere in Europe, except in England, any instance of the tenant building upon the land of which he had no lease, and 1 Subjoined is a copy of the act of 1449, cap. 18., which has been truly called the Magna Charta of the Scotch agriculturists: — “ Item it is ordained, for the safetie and favour of the puir people thatlabouris the ground, that they, and all utheris that has taken, or sail take landes in time to come fra lordis, and has termes and zeirs thereof, that suppose the lordis sell or annally (alienate) that land or landes, the takers sail remaine with their tackes (leases) unto the ischue of their termes, quhai handes that ever thay landes come to, for siklike maill (rent) as they took them for.” 2 The statute referred to by Dr. Smith (10 Geo. III. c. 51.), deserved a more particular notice. It en¬ acts, that the possessor of an entailed estate may grant leases for any number of years certain not exceeding thirty-one, or for fourteen years and one existing life ; or for two existing lives, provided that in leases for two lives, or for any term of years ex¬ ceeding nineteen, the tenant be taken bound to execute certain improvements specified in the act. It has been questioned, but not decided, whether a lease for nineteen years, supposing it were prohibited by the entail, and which did not stipulate for any improvements on the part of the tenant, could be supported under this statute. The question is not free from difficulty ; but an unlearned person would be inclined to think, on a fair interpretation of the statute, that such lease would be valid. Power is also given under this act to heirs of entail to grant leases for the purpose of building for ninety-nine years, under certain conditions. And heirs of entail are also authorised to burden the estate with three-fourths of the sums they have laid out in draining, planting, building farm-houses, &c., provided the aggregate amount of these sums does not exceed four years’ free rental of the estate. It has been decided by the Court of Session, and affirmed by the House of Lords, that though there should be no restriction in an entail upon the length of the leases which the heirs in possession are au¬ thorised to grant, they are not entitled, in conse¬ quence of the general prohibition of alienation, to grant such as are of extraordinary endurance. A lease for fifty-seven years has been cancelled on this ground ; and it is doubtful whether a lease for a longer period than thirty-one years might not be objected to on the same principle. All leases on entailed estates, granted in consideration of fines (Scottzce grassu/ns), payable at the commencement of the lease, may be set aside by the succeeding heir : and, generally speaking, the Courts are inclined to look unfavourably upon all covenants or stipulations that have any very obvious tendency to lessen the future value of the estate, or which have not been trusting that the honour of his landlord would take no advantage of so important an improvement. Those laws and customs, so favourable to the yeomanry, have perhaps contributed more to the present grandeur of England, than all their boasted regulations of commerce taken together. The law which secures the longest leases against successors of every kind, is, so far as I know, peculiar to Great Britain. It was introduced into Scotland so early as 1449, by a law of James the Second. 1 Its bene¬ ficial influence, however, has been much obstructed by entails; the heirs of entail being generally restrained from letting leases for any long term of years, frequently for more than one year. A late act of parlia¬ ment has, in this respect, somewhat slack¬ ened their fetters, though they are still by much too strait. 2 In Scotland, besides, as no leasehold gives a vote for a member of par¬ liament, the yeomanry are upon this account less respectable to their landlords than in England. 3 In other parts of Europe, after it was entered upon in the view of securing its due and proper administration. The letting of farms by fine is, in a public point of view, most objectionable. It deprives the tenant of the capital he would otherwise have been able to expend on the improvement of the farm, and most commonly incapacitates him from making any vigor¬ ous exertions during the currency of the lease: hence the opposition made by the Courts to this practice, seems not only consistent with the regard they are bound to entertain, so long as the system of entail is supported, for the interests of the succeeding heirs, but with the most enlarged views of national advantage. It does not indeed appear, in so far as respects the occupancy of lands by tenants, that there are any very good grounds, since the passing of the 10 Geo. III. cap. 51. for supposing that it suffers per¬ ceptibly from the circumstance of estates being entailed. From information derived from indi¬ viduals well qualified to decide upon such subjects, we believe we may say, that at present leases on entailed estates, in Scotland, are, generally speaking, granted for longer terms 'than on most others ; and, except where they are of immoderate length, or where they have been entered into for the collusive purpose of defeating the just rights of the succeeding heir of entail, they are equally valid. 3 Had Dr. Smith said that the circumstance of the tenantry of Scotland not having the right to exercise the elective franchise rendered them less “ useful ” to their landlords, there wouM not, perhaps, have been much to object to in his statement. The Re¬ form Act conferred the right of voting on all tenants holding land to the amount of 50/. a year in Scot¬ land as well as in England; and no individual acquainted with the state of Scotland previously to and since the passing of that act, will say that it has made the tenants more “ respectable ” in the estima¬ tion of their landlords. It is certain, indeed, that it has had the very opposite effect; and, whatever may be its operation in other respects, it has already had, and will, there is every reason to think, continue to have, a most pernicious influence over the interests of the tenants and of agriculture. Formerly the land¬ lords of Scotland rarely inquired as to the politics of their tenants ; and, provided they paid their rents, and managed their lands according,to the stipulations in their leases, they might be of any political or reli¬ gious party they pleased. But now it is altogether different. The landlords desirous, like other people, of extending their political influence, endeavour to control, or rather command, the suffrages of their tenants, and to multiply the dependent voters on their estates. In furtherance of these objects they t have not scrupled, in many instances, to resort DISCOURAGEMENT OF AGRICULTURE. 175 Chap. II. found convenient to secure tenants both against heirs and purchasers, the term of their security was still limited to a very short period: in France, for example, to nine years from the commencement of the lease. It has in that country, indeed, been lately extended to twenty-seven, — a period still too short to encourage the tenant to make the most important improvements. The proprietors of land were anciently the legislators of every part of Europe. The laws relating to land, therefore, were all calculated for what they supposed the in¬ terest of the proprietor. It was for his in¬ terest, they had imagined, that no lease granted by any of his predecessors should hinder him from enjoying, during a long term of years, the full value of his land. Avarice and injustice are always short¬ sighted, and they did not foresee how much nthis 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 landlord, which were seldom either specified in the lease, or regulated by any precise rule, but by the use and want of the manor or barony. These services, therefore, being almost entirely arbitrary, subjected the tenant to many vexations. In Scotland, the abolition of all services not precisely stipulated in the lease, has, in the course of a few years, very much altered for the better the condition of the yeomanry of that country. The public services to which the yeomanry were bound, were not less arbitrary than the private ones.. To make and maintain the high roads, a servitude which still subsists, I believe, everywhere, though with different degrees of oppression in different countries, was not the only one. When the king’s troops, when his household, or his officers of any kind, passed through any part of the to a system of intimidation, and to adopt vin- j dictive measures against such of their tenants as have voted contrary to their wishes. This, how- i ever, though the most prominent at the time, is but the least evil resulting from the new state of things. It has already led, in numerous instances, to a change in the mode of letting lands ; and there is but too much reason to fear that it will in the end » subvert that system of giving leases for nineteen or twenty years certain, that has been the main cause of the w onderful improvement of Scotch agriculture. It has also occasioned, in various instances, a subdivi¬ sion of farms, for the mere purpose of creating voters ; and there cannot, indeed, be a question that, however well intended, the conferring of the elective franchise on the tenants has been one of the greatest blows ever struck at their independence, and at the pros¬ perity of agriculture. Nor is there any thing in this but what might have been, and in fact was, anticipated from the outset. Tenants, as such, are about the very last description of persons to whom the franchise "ought to be conceded. Very many of them are indebted to and dependent upon their landlords ; and the few who are independent are so because they have accumulated property, and would, in consequence, have boon entitled to the franchise, country, the yeomanry were bound to pro¬ vide them with horses, carriages, and provi¬ sions, at a price regulated by the purveyor. Great Britain is, I believe, the only mo¬ narchy in Europe where the oppression of purveyance has been entirely abolished. It still subsists in France and Germany. 1 The public taxes to which they were sub¬ ject, were as irregular and oppressive as the services. The ancient lords, though ex¬ tremely unwilling to grant, themselves, any pecuniary aid to their sovereign, easily al¬ lowed him to tallage, as they called it, their tenants, and had not knowledge enough to foresee how much this must, in the end, affect their own revenue. The taille, as it still subsists in France, mav serve as an ex- ample of those ancient tallages. It is a tax upon the supposed profits of the farmer, which they estimate by the stock that he has upon the farm. It is his interest, therefore, to appear to have as little as possible, and consequently to employ as little as pos¬ sible in its cultivation, and none in its im¬ provement. Should any stock happen to accumulate in the hands of a French farmer, the taille is almost equal to a prohibition of its ever being employed upon the land. This tax, besides, is supposed to dishonour whoever is subject to it, and to degrade him below, not only the rank of a gentleman, but that of a burgher; and whoever rents the lands of another becomes subject to it. No gentleman, nor even any burgher who has stock, will submit to this degradation. This tax, therefore, not only hinders the stock which accumulates upon the land from being employed in its improvement, but drives away all other stock from it. The ancient tenths and fifteenths, so usual in England in former times, seem, so far as they affected the land, to have been taxes of the same nature with the taille. 2 L’nder all these discouragements, little improvement could be expected from the occupiers of land. That order of people, had it been conferred, as it should have been, on those only who possessed a certain amount of independent property. If that be the best system of voting that brings the greatest number of independent electors to the poll, and keeps back the greatest number of those that are dependent, the giving of the franchise to the tenants and occupiers of land must be about the very worst system, for they are, of all classes, that which is most dependent and most at the mercy of others. It would be easy to corroborate what has now been stated by references to the history of the letting of land in England and Ireland, in both of which, but particularly in the latter, the conferring of the franchise on tenants has been most injurious to agriculture and to the public interests. But the cir¬ cumstances must be sufficiently well known to all moderately well-informed readers ; and the further discussion of the subject might not be considered suitable to a work of this description. 1 In France all these feudal privileges were abo¬ lished at the Revolution. 2 The taille was abolished at the Revolution ; the contribution fonder e, established in its stead, affects all lands without distinction. 1 76 DISCOURAGEMENT OF AGRICULTURE. Book III. with all the liberty and security which law can give, must always improve under great disadvantages. The farmer, compared with the proprietor, is as a merchant who trades with borrowed money, compared with one who trades with his own. The stock of both may improve ; but that of the one, with only equal good conduct, must always im¬ prove more slowly than that of the other, on account of the large share of the profits which is consumed by the interest of the loan. The lands cultivated by the farmer must, in the same manner, with only equal good conduct, be improved more slowly than those cultivated by the proprietor, on account of the large share of the produce which is consumed in the rent, and which, had the farmer been proprietor, he might have em¬ ployed in the further improvement of the land. The station of a farmer, besides, is, from the nature of things, inferior to that of a proprietor. Through the greater part of Europe, the yeomanry are regarded as an inferior rank of people, even to the better sort of tradesmen and mechanics, and in all parts of Europe to the great merchants and master manufacturers. It can seldom hap¬ pen, therefore, that a man of any consider¬ able stock should quit the superior, in order to place himself in an inferior station. Even in the present state of Europe, therefore, little stock is likely to go from any other profession to the improvement of land in the way of farming. More does, perhaps, in Great Britain than in any other country, though even there the great stocks which are in some places employed in farming, have generally been acquired by farming, the trade, perhaps, in which, of all others, stock is commonly acquired most slowly. After small proprietors, however, rich and great farmers are in every country the principal improvers. There are more such, perhaps, in England than in any other European monarchy. In the republican governments of Holland and of Berne, in Switzerland, the farmers are said to be not inferior to those of England. The ancient policy of Europe was, over and above all this, unfavourable to the im¬ provement and cultivation of land, whether carried on by the proprietor or by the farmer ; first, by the general prohibition of the ex¬ portation of corn without a special licence, which seems to have been a very universal regulation ; and, secondly, by the restraints which were laid upon the inland commerce, not only of corn, but of almost every other part of the produce of the farm, by the ab¬ surd laws against engrossers, regraters, and forestallers, and by the privileges of fairs and markets. It has already been observed in what manner the prohibition of the export¬ ation of corn, together with some encourage¬ ment given to the importation of foreign corn, 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 com¬ merce of this commodity, joined to the general prohibition of exportation, must have discouraged the cultivation of countries less fertile, and less favourably circumstanced, it is not, perhaps, very easy to imagine. CHAP. III. Of the Rise and Progress of Cities and Towns , after the Fall of the Roman Empire. The inhabitants of cities and towns were, after the fall of the Roman empire, not more favoured than those of the country. They consisted, indeed, of a very different order of people from the first inhabitants of the ancient republics of Greece and Italy. These last were composed chiefly of the proprietors of lands, among whom the public territory was originally divided, and who found it convenient to build their houses in the neighbourhood of one another, and to sur¬ round them with a wall, for the sake of com¬ mon defence. After the fall of the Roman empire, on the contrary, the proprietors of land seem generally to have lived in fortified castles on their own estates, and in the midst of their own tenants and dependants. The towns were chiefly inhabited by tradesmen and mechanics, who seem, in those days, to have been of servile, or very nearly of servile condition. The privileges which we find granted by ancient charters to the inhabitants of some of the principal towns in Europe, sufficiently show what they were before those grants. The people to whom it is granted as a privilege, that they might give away their own daughters in 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 dif¬ ferent countries of Europe then, in the same manner as in several of the Tartar govern¬ ments of Asia at present, taxes used to be levied upon the persons and goods of travel¬ lers, 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 Chap. III. RISE AND PROGRESS OF CITIES AND TOWNS. 177 it a booth or stall to sell them in. These different taxes were known in England by the names of passage, pontage, lastage, and stallage. Sometimes the king, sometimes a great lord, who had, it seems, upon some occasions, authority to do this, would grant to particular traders, to such particularly as lived in their own demesnes, a general ex¬ emption from such taxes. Such traders, though in other respects of servile, or very nearly of servile, condition, were upon this account called free traders. They, in return, usually paid to their protector a sort of annual poll-tax. In those days protection was sel¬ dom granted without a valuable consider¬ ation, and this tax might perhaps be consi¬ dered as compensation for what their patrons might lose by their exemption from other taxes. At first, both those poll-taxes and those exemptions seem to have been alto¬ gether personal, and to have affected only particular individuals, during either their lives or the pleasure of their protectors. In the very imperfect accounts which have been published from Domesday-book, of several of the towns of England, mention is fre¬ quently made, sometimes of the tax which particular burghers paid, each of them, either to the king or to some other great lord, for this sort of protection, and sometimes of the general amount only of all those taxes. 1 But how servile soever may have been originally the condition of the inhabitants of the towns, it appears evidently that they arrived at liberty and independence much earlier than the occupiers of land in the coun¬ try. That part of the king’s revenue which arose from such poll-taxes in any particular town, used commonly to be let in farm, during a term of years, for a rent certain, sometimes to the sheriff of the county, and sometimes to other persons. The burghers themselves frequently got credit enough to be admitted to farm the revenues of this sort which arose out of their own town, they becoming jointly and severally answerable for the whole rent. 2 i To let a farm in this manner, was quite agreeable to the usual economy of, I believe, the sovereigns of all the different countries of Europe ; who used frequently to let whole manors to all the tenants of those manors, they becoming jointly and severally answer- able for the whole rent; but in return being allowed to collect it in their own way, and to pay it into the king’s exchequer by the hands of their own bailiff, and being thus altoge¬ ther freed from the insolence of the king’s officers; a circumstance in those days re¬ garded as of the greatest importance. At first, the farm of the town was probably let to the burghers, in the same manner as it had been to other farmers, for a term of years only. In process of time, however, it seems to have become 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 was made, naturally became perpetual too. Those exemptions, therefore, ceased to be personal, and could not after¬ wards be considered as belonging to indivi¬ duals as individuals, but as burghers of a particular burgh, which, upon this account, was called a free burgh, for the same reason that they had been called free burghers or free traders. Along with this grant, the important privileges above mentioned, that they might give away their own daughters in marriage, that their children should succeed to them, and that they might dispose of their own effects by will, were generally bestowed upon the burghers of the town to whom it was given. Whether such privileges had before been usually granted, along with the freedom of trade, to particular burghers, as individuals, I know not. I reckon it not improbable that they were, though I cannot produce any direct evidence of it. But however this may have been, the principal attributes of villanage and slavery being thus taken away from them, they now at least became really free, in our present sense of the word freedom. Nor was this all. They were generally at the same time erected into a commonalty or corporation, with the privilege of having magistrates and a town-council of their own, of making by-laws for their own government, of building walls for their own defence, and of reducing all their inhabitants under a sort of military discipline, by obliging them to watch and ward; that is, as anciently un¬ derstood, to guard and defend those walls against all attacks and surprises by night as well as by day. In England they were ge¬ nerally exempted from suit to the hundred and county courts; and all such pleas as should arise among them, the pleas of the crown excepted, were left to the decision of their own magistrates. In other countries, much greater and more extensive jurisdic¬ tions were frequently granted to them. 3 It might, probably, be necessary to grant to such towns as w ere admitted to farm their own revenues, some sort of compulsive juris¬ diction to oblige their own citizens to make payment. In those disorderly times, it might have been extremely inconvenient to 1 See Brady’s Historical Treatise of Cities and Burroughs, p. 3, &c. 3 See Madox, Firma Burgi, p. 18.; also History of |r f he Exchequer, chap. x. sect. v. p. 223, 1st ed. (Note by the author.) 3 See Madox, Firma Burgi. See also Pfeffel in the Remarkable Events under Frederick the Second, and his Successors of the House of Suabia. (Note by the author.) N 178 RISE AND PROGRESS Book III. have left them to seek this sort of justice from any other tribunal. But it must seem extraordinary, that the sovereigns of all the different countries of Europe should have exchanged in this manner for a rent certain, never more to be augmented, that branch of their revenue which was, perhaps, of all others, the most likely to be improved by the natural course of things, without either expense or attention of their own; and that they should, besides, have in this manner voluntarily erected a sort of independent republics in the heart of their own domi¬ nions. In order to understand this, it must be remembered, that, in those days, the sove¬ reign of perhaps no country in Europe was able to protect, through the whole extent of his dominions, the weaker part of his sub¬ jects from the oppression of the great lords. Those whom the law could not protect, and who were not strong enough to defend them¬ selves, were obliged either to have recourse to the protection of some great lord, and in order to obtain it, to become either his slaves or vassals; or to enter into a league of mu¬ tual defence for the common protection of one another. The inhabitants of cities and burghs, considered as single individuals, had no power to defend themselves; but by en¬ tering into a league of mutual defence with their neighbours, they were capable of mak¬ ing no contemptible resistance. The lords despised the burghers, whom they considered not only as of a different order, but as a par¬ cel of emancipated slaves, almost of a differ¬ ent species from themselves. The wealth of the burghers never failed to provoke their envy and indignation, and they plundered them upon every occasion without mercy or remorse. The burghers naturally hated and feared the lords. The king hated and feared them too ; though perhaps he might despise, he had no reason either to hate or fear the burghers. Mutual interest, therefore, dis¬ posed them to support the king, and the king to support them against the lords. They were the enemies of his enemies, and it was his interest to render them as secure and independent of those enemies as he could. By granting them magistrates of their own, the privilege of making by-laws for their own government, that of building walls for their own defence, and that of reducing all their inhabitants under a sort of military discipline, he gave them all the means of security and independency of the barons which it was in his power to bestow. With¬ out the establishment of some regular go¬ vernment of this kind, without some au¬ thority 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 security, or have enabled them to give the king any considerable support. By grant¬ ing them the farm of their town in fee, he took away from those whom he wished to have for his friends, and, if one may say so, for his allies, all ground of jealousy and suspicion that he was ever afterwards to op¬ press them, either by raising the farm-rent of their town, or by granting it to some other farmer. The princes who lived upon the worst terms with their barons, seem accordingly to have been the most liberal in grants of this kind to their burghs. King John of England, for example, appears to have been a most munificent benefactor to his towns. 1 Philip the First of France lost all authority over his barons. Towards che end of his reign, his son Lewis, known afterwards by the name of Lewis the Fat, consulted, ac¬ cording to Father Daniel, with the bishops of the royal demesnes, concerning the most proper means of restraining the violence of the great lords. Their advice consisted of two different proposals. One was to erect a new order of jurisdiction, by establishing magistrates and a town-council in every con¬ siderable town of his demesnes. The other was to form a new militia, by making the inhabitants of those towns, under the com¬ mand of their own magistrates, march out upon proper occasions to the assistance of the king. It is from this period, according to the French antiquarians, that we are to date the institution of the magistrates and councils of cities in France. It was during the unprosperous reigns of the princes of the house of Suabia, that the greater part of the free towns of Germany received the first grants of their privileges, and that the famous Hanseatic league first became for¬ midable. 2 The militia of the cities seems, in those times, not to have been inferior to that of the country ; and as they could be more readily assembled upon any sudden occasion, they frequently had the advantage in their disputes with the neighbouring lords. In countries such as Italy and Switzerland, in which, on account either of their distance from the principal seat of government, of the natural strength of the country itself, or of some other reason, the sovereign came to lose the whole of his authority; the cities generally became independent republics, and conquered all the nobility in their neighbour¬ hood ; obliging them to pull down their castles in the country, and to live, like other peaceable inhabitants, in the city. This is the short history of the republic of Berne, as well as of several other cities in Switzer¬ land. If you except Venice, for of that city the history is somewhat different, it is the history of all the considerable Italian repub¬ lics, of which so great a number arose and 1 See Madox. 2 See Pfeffel. Chap. III. / OF CITIES AND TOWNS. 179 perished between the end of the twelfth and the beginning of the sixteenth century. In countries such as France or England, where the authority of the sovereign, though frequently very low, never was destroyed al¬ together, the cities had no opportunity of becoming entirely independent. They be¬ came, however, so considerable, that the sovereign could impose no tax upon them, besides the stated farm-rent of the town, without their own consent. They were, therefore, called upon to send deputies to the general assembly of the states of the kingdom, where they might join with the clergy and the barons in granting, upon urgent occasions, some extraordinary aid to the king. Being generally, too, more favourable to his power, their deputies seem sometimes to have been employed by him as a counterbalance in those assemblies to the authority of the great lords. Hence the origin of the representation of burghs in the states-general of all great monarchies in Europe. Order and good government, and along with them the liberty and security of indi¬ viduals, were in this manner established in cities, at a time when the occupiers of land in the country were exposed to every sort of violence. But men in this defenceless state naturally content themselves with their ne¬ cessary subsistence; because, to acquire more, might only tempt the injustice of their op¬ pressors. On the contrary, when they are secure of enjoying the fruits of their indus¬ try, they naturally exert it to better their condition, and to acquire not only the neces¬ saries, but the conveniencies and elegancies of life. That industry, therefore, which aims at something more than necessary subsist¬ ence, was established in cities long before it was commonly practised by the occupiers of land in the country. If, in the hands of a poor cultivator, oppressed with the servitude of villanage, some little stock should ac¬ cumulate, he would naturally conceal it with great care from his master, to whom it would otherwise have belonged, and take the first opportunity of running away to a town. The law was at that time so indulgent to the inhabitants of towns, and so desirous of diminishing the authority of the lords over those of the country, that if he could conceal himself there from the pursuit of his lord K for a year, he was free for ever. Whatever stock, therefore, accumulated in the hands of the industrious part of the inhabitants of the country, naturally took refuge in cities, as the only sanctuaries in which it could be secure to the person that acquired it. The inhabitants of a city, it is true, must always ultimately derive their subsistence, and the whole materials and means of their industry, from the country. But those of a city, situated near either the sca-coast or the banks of a navigable river, are not neces¬ sarily confined to derive them from the country in their neighbourhood. They have a much wider range, and may draw them from the most remote corners of the world, either in exchange for the manufactured pro¬ duce of their own industry, or by performing the office of carriers between distant coun¬ tries, and exchanging the produce of one for that of another. A city might, in this man¬ ner, grow up to great wealth and splendour, while not only the country in its neighbour¬ hood, but all those to which it traded, were in poverty and wretchedness. Each of those countries, perhaps, taken singly, could afford it but a small part either of its subsistence or of its employment; but all of them taken together, could afford it both a great subsist¬ ence and a great employment. There were, however, within the narrow circle of the commerce of those times, some countries that were opulent and industrious. Such was the Greek empire as long as it subsisted, and that of the Saracens during the reigns of the Abassides. Such, too, was Egypt till it was conquered by the Turks, some part of the coast of Barbary, and all those provinces of Spain which were under the government of the Moors. The cities of Italy seem to have been the first in Europe which were raised by com¬ merce to any considerable degree of opulence. Italy lay in the centre of what was at that time the improved and civilised part of the world. The Crusades, too, though by the great waste of stock and destruction of in¬ habitants which they occasioned, they must necessarily have retarded the progress of the greater part of Europe, were extremely favourable to that of some Italian cities. The great armies which marched from all parts to the conquest of the Holy Land, gave extraordinary encouragement to the shipping of Venice, Genoa, and Pisa, some¬ times 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 befell the European nations, was a source of opulence to those republics. The inhabitants of trading cities, by im¬ porting the improved manufactures and expensive luxuries of richer countries, af¬ forded some food to the vanity of the great proprietors, who eagerly purchased them with great quantities of the rude produce of their own lands. The commerce of a great part of Europe in those times, accordingly, consisted chiefly in the exchange of their own rude, for the manufactured produce of more civilised nations. Thus the wool of England used to be exchanged for the wines of France, and the flue cloths of Flanders in the same manner as the corn in Poland is at this day exchanged for the wines and N 2 180 RISK AND PROGRESS OF CITIES AND TOWNS. Book III. brandies of France, and for tlie silks and velvets of France and Italy. A taste for the finer and more improved manufactures was, in this manner, introduced by foreign commerce into countries where no such works were carried on. But when this taste became so general as to occasion a considerable demand, the merchants, in order to save the expense of carriage, naturally endeavoured to establish some manufactures of the same kind in their owm country. Hence the origin of the first manufactures for distant sale that seem to have been esta¬ blished in the western provinces of Europe, after the fall of the Roman empire. No large country, it must be observed, ever did or could subsist without some sort of manufactures being carried on in it; and when it is said of any such country that it has no manufactures, it must always be understood of the finer and more improved, or of such as are fit for distant sale. In every large country, both the clothing and household furniture of the far greater part of the people are the produce of their own industry. This is even more universally the case in those poor countries which are com¬ monly said to have no manufactures, than in those rich ones that are said to abound in them. In the latter you will generally find, both in the clothes and household furniture of the lowest rank of people, a much greater proportion of foreign 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, if one may say so, of the stocks of particular merchants and undertakers, who established them in imitation of some foreign manufactures of the same kind. Such ma¬ nufactures, therefore, are the offspring of foreign commerce, and such seem to have been the ancient manufactures of silks, vel¬ vets, and brocades, whieh flourished in Lucca during the thirteenth century. They were banished from thence by the tyranny of one of Machiavel’s heroes, Castruccio Castracani. In 1310, nine hundred families were driven out of Lucca, of whom thirty-one retired to Venice, and offered to introduce there the silk manufacture. 1 Their offer was accepted, many privileges were conferred upon them, and they began the manufacture with three hundred workmen. Such, too, seem to have been the manufactures of fine cloths that anciently flourished in Flanders, and which were introduced into England in the begin¬ ning of the reign of Elizabeth ; and such are the present siik manufactures of Lyons * See Sandi Istoria Civile de Vinezia, part ii. vol. i. p. 247. and 256. and Spitalfieids. Manufactures introduced in this manner are generally employed upon foreign materials, being imitations of foreign manufactures. When the Venetian manu¬ facture was first established, the materials were all brought from Sicily and the Levant. The more ancient manufacture of Lucca was likewise carried on with foreign materials. The cultivation of mulberry trees, and the breeding of silk-worms, seem not to have been common in the northern parts of Italy before the sixteenth century. Those arts were not introduced into France till the reign of Charles IX. The manufactures of Flan¬ ders were carried on chiefly with Spanish and English wool. Spanish wool was the material, not of the first woollen manufacture in England, but of the first that was fit for distant sale. More than one half the mate¬ rials of the Lyons manufacture is at this day foreign silk ; when it was first established, the whole, or very nearly the whole, was so* No part of the materials of the Spitalfieids manufacture is ever likely to be the produce of England. The seat of such manufactures, as they are generally introduced by the scheme and project of a few individuals, is sometimes established in a maritime city, and sometimes in an inland town, according as their interest, judgment, or caprice, happen to determine. At other times manufactures for distant sale grow up naturally, and, as it were, of their own accord, by the gradual refinement of those household and coarser manufactures which must at all times be carried on even in the poorest and rudest countries. Such manufactures are generally employed upon the materials which the country produces, and they seem frequently to have been first refined and improved in such inland coun¬ tries as were not, indeed, at a very great, but at a considerable distance from the sea- coast, and sometimes even from all water carriage. An inland country, naturally fer¬ tile and easily cultivated, produces a great surplus of provisions beyond what is neces¬ sary for maintaining the cultivators; and on account of the expense of land carriage, and inconveniency of river navigation, it may frequently be difficult to send this surplus abroad. Abundance, therefore, renders pro¬ visions cheap, and encourages a great num¬ ber of workmen to settle in the neighbour¬ hood, who find that their industry can there procure them more of the necessaries and conveniencies of life than in other places. They work up the materials of manufacture which the land produces, and exchange their finished work, or, what is the same thing, the price of it, for more materials and pro¬ visions. They give a new value to the sur¬ plus part of the rude produce, by saving the expense of carrying it to the water-side, or to some distant market; and they furnish COMMERCE OF TOWNS. 181 ) Chap. IV. the cultivators with something in exchange for it, that is either useful or agreeable to them, upon easier terms than they could have obtained it before. The cultivators get a better price for their surplus produce, and can purchase cheaper other convenien- cies which they have occasion for. They are thus both encouraged and enabled to increase this surplus produce by a further improvement and better cultivation of the land ; and as the fertility of the land had given birth to the manufacture, so the pro¬ gress of the manufacture re-acts upon the land, and increases still further its fertility. The manufacturers first supply the neigh¬ bourhood, and afterwards, as their work im¬ proves and refines, more distant markets, k For though neither the rude produce, nor even the coarse manufacture, could, with¬ out the greatest difficulty, support the ex¬ pense of a considerable land carriage, the refined and improved manufacture easily may. In a small bulk it frequently con¬ tains the price of a great quantity of rude produce. A piece of fine cloth, for ex¬ ample, 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 main¬ tenance of the different working people, and of their immediate employers. The corn, which could with difficulty have been carried abroad in its own shape, is in this manner virtually exported in that of the complete manufacture, and may easily be sent to the remotest corners of the world. In this manner have grown up naturally, and, as it were, of their owm accord, the manufactures of Leeds, Halifax, Sheffield, Birmingham, and Wolverhampton. Such manufactures are the offspring of agricul¬ ture. In the modern history of Europe, their extension and improvement have ge¬ nerally been posterior to those which were the offspring of foreign commerce. Eng¬ land was noted for the manufacture of fine cloths, made of Spanish wool, more than a century before any of those which now flou¬ rish in the places above mentioned w’ere fit for foreign sale. The extension and im¬ provement of these last could not take place but in consequence of the extension and improvement of agriculture, the last and greatest effect of foreign commerce, and of the manufactures immediately introduced by it, and which I shall now proceed to explain. CHAP. IV. How the Commerce of Towns contributed tc the Improvement of the Country. 1 he increase and riches of commercial and manufacturing towns contributed to the improvement and cultivation of the coun¬ tries to which they belonged, in three dif¬ ferent ways: — First, By affording a great and ready market for the rude produce of the country, they gave encouragement to its cultivation and further improvement. This benefit was not even confined to the countries in which they were situated, but extended more or less to all those with which they had any dealings. To all of them they afforded a market for some part either of their rude or manufactured produce, and, consequently, gave some encouragement to the industry and improvement of all. Their own coun¬ try, ho'wever, on account of its neighbour¬ hood, necessarily derived the greatest benefit from this market. Its rude produce being charged with less carriage, the traders could pay the growers a better price for it, and yet afford it as cheap to the consumers as that of more distant countries. Secondly, The wealth acquired by the in¬ habitants of cities was frequently employed in purchasing such lands as were to be sold, of which a great part would frequently be uncultivated. Merchants are commonly ambitious of becoming country gentlemen, and, when they do, they are generally the best of all improvers. A merchant is ac¬ customed to employ his money chiefly in profitable projects; whereas a mere country gentleman is accustomed to employ it chiefly in expense. The one often sees his money go from him and return to him again with a profit; the other, wdien once he parts with it, very seldom expects to see any more of it. Those different habits naturally affect their temper and disposition in every sort of bu¬ siness. The merchant is commonly a bold, a country gentleman a timid undertaker. The one is not afraid to lay out at once a large capital upon the improvement of his land, when he has a probable prospect of raising the value of it in proportion to the expense; the other, if he has any capital, which is not always the case, seldom ven¬ tures to employ it in this manner. If he improves at all, it is commonly not with a capital, but with what he can save out of his annual revenue. Whoever has had the for¬ tune to live in a mercantile town, situated in an unimproved country, must have fre¬ quently observed how much more spirited the operations of merchants were in this way than those of mere country gentlemen. The habits, besides, of order, economy, and attention, to which mercantile business na¬ turally forms a merchant, render him much fitter to execute, with profit and success, aii} project of improvement. Thirdly, and lastly, Commerce and manu¬ factures gradually introduced order and good government, and with them the liberty and security of individuals, among the inhabit- N 3 182 COMMERCE OF TOWNS. Book III. ants 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, is by far the most import¬ ant of all their effects. Mr. Hume is the only writer who, so far as I know, has hitherto taken notice of it. In a country which has neither foreign commerce nor any of the finer manufactures, a great proprietor, having nothing for which he can exchange the greater part of the pro¬ duce 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 sufficient to maintain a hundred or a thousand men, he can make use of it in no other way than by maintaining a hundred or a thousand men. He is at all times, therefore, surrounded with a multi¬ tude of retainers and dependants, who having no equivalent to give in return for their maintenance, but being fed entirely by his bounty, must obey him, for the same reason that soldiers must obey the prince who pays them. Before the extension of commerce and manufactures in Europe, the hospitality of the rich and the great, from the sovereign down to the smallest baron, exceeded every thing which, in the present times, we can easily form a notion of. Westminster-hall was the dining-room of William Rufus, and might frequently, perhaps, not be too large for his company. It was reckoned a piece of magnificence in Thomas Becket, that he strewed the floor of his hall with clean 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 his different manors, thirty thousand people; and though the number here may have been exaggerated, it must, however, have been very great to admit of such exaggeration. A hospitality nearly of the same kind was exercised, not many years ago, in many different parts of the highlands of Scotland. It seems to be common in all na¬ tions to whom commerce and manufactures are little known. I have seen, says Doctor Pocock, an Arabian chief dine in the streets of a town where he had come to sell his cat¬ tle, and invite all passengers, even common beggars, to sit down with him and partake of his banquet. The occupiers of land were in every re¬ spect as dependent upon the great proprietor as his retainers. Even such of them as were not in a state of villanage, were tenants at will, who paid a rent in no respect equivalent to the subsistence which the land afforded them. A crown, half a crown, a sheep, a lamb, was some years ago, in the highlands of Scotland, a common rent for lands which maintained a family. In some places it is so at this day; nor will money at present purchase a greater quantity of commodities there than in other places. In a country where the surplus produce of a large estate must be consumed upon the estate itself, it will frequently be more convenient for the proprietor that part of it be consumed at a distance from his own house, provided they who consume it are as dependent upon him as either his retainers or his menial servants. He is thereby saved from the embarrassment of either too large a company or too large a family. A tenant at will, who possesses land sufficient to maintain his family for little more than a quit-rent, is as dependent upon the proprietor as any servant or retainer whatever, and must obey him with as little reserve. Such a proprietor, as he feeds his servants and retainers at his own house, so he feeds his tenants at their houses. The sub¬ sistence of both is derived from his bounty, and its continuance depends upon his good pleasure. Upon the authority which the great pro¬ prietors necessarily had in such a state of things over their tenants and retainers, was founded the power of the ancient barons. They necessarily became the judges in peace and the leaders in war, of all who dwelt upon their estates. They could maintain order, and execute the law, within their respective demesnes, because each of them could there turn the whole force of all the inhabitants against the injustice of any one. No other person had sufficient authority to do this. The king, in particular, had not. In those ancient times he was little more than the greatest proprietor in his dominions, to whom for the sake of common defence against their common enemies, the other great proprietors paid certain respects. To have enforced payment of a small debt within the lands of a proprietor, where all the inhabitants were armed and accustomed to stand by one another, would have cost the king, had he attempted it by his own authority, almost the same effort as to extinguish a civil war. He was therefore obliged to abandon the administration of justice, through the greater part of the country, to those who were capa¬ ble of administering it; and, for the same reason, to leave the command of the country militia to those whom that militia would obey. It is a mistake to imagine that those terri¬ torial jurisdictions took their origin from the feudal law. Not only the highest jurisdic¬ tions, both civil and criminal, but the power of levying troops, of coining money, and even that of making by-laws for the govern¬ ment of their own people, were all rights possessed allodially by the great proprietors of land, several centuries before even the name of the feudal law was known in Europe. Chat*. IV. COMMERCE OF TOWNS. 183 I The authority and jurisdiction of the Saxon lords in England appear to have been as great before the conquest as that of any of the Norman lords after it. But the feu¬ dal law is not supposed to have become the common law of England till after the con¬ quest. That the most extensive authority and jurisdictions were possessed by the great lords in France allodiallv, long before the feudal law was introduced into that country, is a matter of fact that admits of no doubt. That authority, and those jurisdic¬ tions, all necessarily flowed from the state of property and manners just now described. Without remounting to the remote antiqui¬ ties of either the French or English mon¬ archies, we may find in much later times many proofs that such effects must always flow from such causes. It is not thirty years ago since Mr. Cameron of Lochiel, a gentleman of Lochaber in Scotland, without any legal warrant whatever, not being what was then called a lord of regality, nor even a tenant in chief, but a vassal of the Duke of Argyle, and without being so much as a justice of peace, used, notwithstanding, to exercise the highest criminal jurisdiction over his own people. He is said to have done so with great equity, though without any of the for¬ malities of justice : and it is not improbable that the state of that part of the country at that time made it necessary for him to assume this authority, in order to maintain the pub¬ lic peace. That gentleman, whose rent never exceeded five hundred pounds a year, carried, in 1745, eight hundred of his own people into the rebellion with him. The introduction of the feudal law, so far from extending, may be regarded as an at¬ tempt to moderate the authority of the great allodial lords. It established a regular sub¬ ordination, accompanied with a long train of services and duties, from the king down to the smallest proprietor. During the minority of the proprietor, the rent, together with the management of his lands, fell into the hands of his immediate superior, and consequently, those of all great proprietors into the hands of the king, who was charged with the main¬ tenance and education of the pupil, and who, from his authority as guardian, was supposed to have a right of disposing of him in mar¬ riage, provided it was in a manner not un¬ suitable to his rank. But though this insti¬ tution necessarily tended to strengthen the authority of the king, and to weaken that of the great proprietors, it could not do either sufficiently for establishing order and good government among the inhabitants of the country; because it could not alter suffi¬ ciently that state of property and manners from which the disorders arose. The au- |. thority of government still continued to be, as before, too weak in the head, and too J • ' strong in the inferior members; and the excessive strength of the inferior members was the cause of the weakness of the head. After the institution of feudal subordination, the king was as incapable of restraining the violence of the great lords as before. They still continued to make war according to their own discretion, almost continually upon one another, and very frequently upon the king; and the open country still con¬ tinued to be a scene of violence, rapine, and disorder. But what all the violence of the feudal institutions could never have effected, the si¬ lent and insensible operation of foreign com¬ merce and manufactures gradually brought about. These gradually furnished the great proprietors with something for which they could exchange the whole surplus produce of their lands, and which they could consume themselves, without sharing it either with tenants or retainers. All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. As soon, therefore, as they could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons. For a pair of diamond buckles, perhaps, or for something as frivolous and useless, they exchanged the maintenance, or, what is the same thing, the price of the maintenance, of a thousand men for a year, and with it the whole weight and authority which it could give them. The buckles, how¬ ever, were to be all their own, and no other human creature was to have any share of them; whereas, in the more ancient method of expense, they must have shared with at least a thousand people. With the judges that were to determine the preference, this differ¬ ence was perfectly decisive; and thus, for the gratification of the most childish, the meanest, and the most sordid of all vanities, they gradually bartered their whole power and authoritv. In a country where there is no foreign commerce, nor any of the finer manufactures, a man of ten thousand a year cannot well employ his revenue in any other way than in maintaining, perhaps, a thousand families, who are all of them necessarily at his com¬ mand. In the present state of Europe, a man of ten thousand a year can spend his whole revenue, and he generally does so, without directly maintaining twenty people, or being able to command more than ten footmen not worth the commanding. Indi¬ rectly, perhaps, he maintains as great or even a greater, number of people than he could have done by the ancient method of expense: for though the quantity of pre¬ cious productions for which he exchanges his whole revenue be very small, the number of workmen employed in collecting and pre¬ paring it, must necessarily have been very N 4 ' 184 COMMERCE OF TOWNS. Book III. great. Its great price generally arises from the wages of their labour, and the profits of all their immediate employers. By paying that price, he indirectly pays all those wages and profits, and thus indirectly contributes to the maintenance of all the workmen and their employers. He generally contributes, however, but a very small proportion to that of each; to very few, perhaps, a tenth, to many not a hundredth, and to 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 inde¬ pendent of him, because generally they can all be maintained without him. When the great proprietors of land spend their rents in maintaining their tenants and retainers, each of them maintains entirely all his own tenants and all his own retainers. But when they spend them in maintaining tradesmen and artificers, they may, all of them taken together, perhaps maintain as great, or, on account of the waste which attends rustic hospitalit}', a greater number of people than before. Each of them, how¬ ever, 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 a hundred or a thousand different customers. Though in some measure obliged to them all, therefore, he is not absolutely dependent upon any one of them. The personal expense of the great proprie¬ tors having in this manner gradually in¬ creased, it was impossible that the number of their retainers should not as gradually dimi¬ nish, till they were at last dismissed altoge¬ ther. The same cause gradually led them to dismiss the unnecessary part of their tenants. Farms were enlarged, and the occupiers of land, notwithstanding the com¬ plaints of depopulation, reduced to the number necessary for cultivating it, ac¬ cording to the imperfeet state of culti¬ vation and improvement in those times. By the removal of the unnecessary mouths, and by exacting from the farmer the full value of the farm, a greater surplus, or what is the same thing, the price of a greater surplus, was obtained for the proprietor, which the merchants and manufacturers soon furnished him with a method of spending upon his own person, in the same manner as he had done the rest. The cause continuing to operate, he was desirous to raise his rents above what his lands, in the actual state of their improvement, could afford. His tenants could agree to this upon one condition only, that they should be secured in their posses¬ sion for such a term of years as might give them time to recover, with profit, whatever they should lay out in the further improve¬ ment of the land. The expensive vanity of the landlord made him willing to accept of this condition ; and hence the origin of long leases. Even a tenant at will, who pays the full value of the land, is not altogether depend¬ ent upon the landlord. The pecuniary ad¬ vantages which they receive from one another, are mutual and equal, and such a tenant will expose neither his life nor his fortune in the service of the proprietor. But if he has a lease for a long term of years, he is altoge¬ ther independent; and his landlord must not expect from him even the most trifling ser¬ vice, beyond what is either expressly stipu¬ lated in the lease, or imposed upon him by the common and known law of the country. The tenants having in this manner become independent, and the retainers being dis¬ missed, the great proprietors were no longer capable of interrupting the regular execution of justice, or of disturbing the peace of the country. Having sold their birthright, not like Esau for a mess of pottage in time of hunger and necessity, but in the wantonness of plenty, for trinkets and baubles, fitter to be the playthings of children than the serious pursuits of men, they became as insignificant as any substantial bujrgher or tradesman in a city. A regular government was established in the country as well as in the city, nobody having sufficient power to disturb its oper¬ ations in the one, any more than in the other. It does not, perhaps, relate to the present subject, but I cannot help remarking it, that very old families, such as have possessed some considerable estate from father to son for so many successive generations, are very rare in commercial countries. In countries which have little commerce, on the contrary, such as Wales or the highlands of Scotland, they are very common. The Arabian his¬ tories seem to be all full of genealogies; and there is a history written by a Tartar Khan, which has been translated into seve¬ ral European languages, and which contains scarce any thing else ; a proof that ancient families are very common among those nations. In countries where a rich man can spend his revenue in no other way than by maintaining as many people as it can main¬ tain, he is apt to run out, and his benevo¬ lence, it seems, is seldom so violent as to attempt to maintain more than he can afford. But where he can spend the greatest revenue upon his own person, he frequently has no bounds to his expense, because he frequently has no bounds to his vanity, or to his affec¬ tion for his own person. In commercial countries, therefore, riches, in spite of the most violent regulations of law to prevent their dissipation, very seldom remain long in the same family. Among simple nations, on COMMERCE OF TOWNS. 185 * s r i I i < I t I Chap. IV< Cne contrary, they frequently do, without any regulations of law ; for among nations of shepherds, such as the Tartars and Arabs, the consumable nature of their property necessarily renders all such regulations im¬ possible. A revolution of the greatest importance to the public happiness was in this manner brought about by two different orders of people, who had not the least intention to serve the public. To gratify the most childish vanity was the sole motive of the great pro¬ prietors. The merchants and artificers, much less ridiculous, acted merely from a view to their own interest, and in pursuit of their own pedlar principle of turning a penny wherever a penny was to be got. Neither of them had either knowledge or foresight of that great revolution which the folly of the one and the industry of the other was gradually bringing about. It was thus that through the greater part of Europe the commerce and manufactures of cities, instead of being the effect, have been the cause and occasion of the improve¬ ment and cultivation of the country. This order, however, being contrary to the natural course of things, is necessarily both slow and uncertain. Compare the slow progress of those European countries, of which the wealth depends very much upon their commerce and manufactures, with the rapid advances of our North American colo¬ nies, of which the wealth is founded altoge¬ ther in agriculture. Through the greater part of Europe, the number of inhabitants is not supposed to double in less than five hundred years. In several of our North American colonies, it is found to double in twenty or five-and-twenty years. In Eu¬ rope, the law of primogeniture, and per¬ petuities of different kinds, prevent the di¬ vision of great estates, and thereby hinder the multiplication of small proprietors. A small proprietor, however, who knows every part of his little territory, who views it with all the affection which property, especially small property, naturally inspires, and who upon that account takes pleasure not only in cultivating, but in adorning it, is generally of all improvers the most industrious, the most intelligent, and the most successful. The same regulations, besides, keep so much land out of the market, that there are always more capitals to buy than there is land to sell, so that what is sold always sells at a monopoly price. The rent never pays the 1 No legitimate inference, with respect to what would have been the progress of Europe under a system different from that which obtained during the middle ages, can be drawn from observing what has taken place in America. Owing to the thinness of the aboriginal population, and their ignorance of the arts of civilised life, the American colonists had their choice of boundless tracts of fertile and unoccupied land. This circumstance was, of itself, almost suffi¬ cient to have insured their rapid progress ; but their interest of the purchase money, and is, besides, burdened with repairs and other occasional charges, to which the interest of money is not liable. To purchase land is, everywhere in Europe, a most unprofitable employment of a small capital. For the sake of the superior security, indeed, a man of moderate circumstances, when he retires from business, will sometimes choose to lay out his little capital in land. A man of profession, too, whose revenue is derived from another source, often loves to secure his savings in the same w^ay. But a young man, who, instead of applying to trade or to some profession, should employ a capital of two or three thousand pounds in the pur¬ chase and cultivation of a small piece of land, might indeed expect to live very hap¬ pily and very independently, but must bid adieu for ever to all hope of either great fortune or great illustration, which, by a different employment of his stock, he might have had the same chance of acquiring with other people. Such a person, too, though he cannot aspire at being a proprietor, will often disdain to be a farmer. * The small quantity of land, therefore, which is brought to mar¬ ket, and the high price of what is brought thither, prevents a great number of capitals from being employed in its cultivation and improvement, which would other wise have taken that direction. In North America, on the contrary, fifty or sixty pounds is often found a sufficient stock to begin a plantation with. The purchase and improvement of uncultivated land is there the most profitable employment of the smallest as well as of the greatest capitals, and the most direct road to all the fortune and illustration which can be acquired in that country. Such land indeed, is, in North America, to be had almost for nothing, or at a price much below the value of the natural produce ; a thing impossible in Europe, or indeed in any country where all lands have long been private property. If landed estates, however, were divided equally among all the children, upon the death of any proprietor who left a numerous family, the estate would generally be sold. So much land would come to market, that it could no longer sell at a monopoly price. The free rent of the land would go nearer to pay the interest of the purchase-money, and a small capital might be employed in purchas¬ ing land as profitably as in any other way. 1 England, on account ot the natural fertility of the soil, of the great extent of the sea- situation in most other respects was equally favour¬ able. The colonists that England sent to America left a country far advanced in civilisation ; they had been trained from infancy to habits of industry and subordination ; they were practically acquainted with the best form of civil polity that had been established in the old world ; and were placed in a situation that enabled them to obviate its defects, and to try every institution by the test of utility. America, too, has been enriched by the capital, as well as by the arts IS 6 COMMERCE OF TOWNS. Book III. coast in proportion to that of the whole country, and of the many navigable rivers which run through it, and afford the con- veniency of water carriage to some of the most inland parts of it, is perhaps as well fitted by nature as any large country in Europe to be the seat of foreign commerce, of manufactures for distant sale, and of all the improvements which these can occasion. From the beginning of the reign of Elizabeth, too, the English legislature has been pecu¬ liarly attentive to the interests of commerce and manufactures, and in reality there is no country in Europe, Holland itself not ex¬ cepted, of which the law is, upon the whole, more favourable to this sort of industry. Commerce and manufactures have accord¬ ingly been continually advancing during all this period. The cultivation and improve¬ ment of the country has, no doubt, been gradually advancing too : but it seems to have followed slowly, and at a distance, the more rapid progress of commerce and manu¬ factures. The greater part of the country must probably have been cultivated before the reign of Elizabeth ; and a very great part of it still remains uncultivated, and the cultiva¬ tion of the far greater part much inferior to what it might be. The law of England, how¬ ever, favours agriculture, not only indirectly by the protection of commerce, but by several direct encouragements. Except in times of scarcity, the exportation of com is not only free, but encouraged by a bounty. In times of moderate plenty, the importation of foreign corn is loaded with duties that amount to a prohibition. The importation of live cattle, except from Ireland, is pro¬ hibited at all times, and it is but of late that it was permitted from thence. Those who cultivate the land, therefore, have a monopoly against their countrymen for the two greatest and most important articles of land produce, bread and butcher’s meat. These encourage¬ ments, 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 perpetuities, though contrary to the spirit of the law, are admitted in some cases, can give more en¬ couragement to agriculture than England- Such, however, notwithstanding, is the state of its cultivation. What would it have been, had the law given no direct encouragement to agriculture besides what arises indirectly from the progress of commerce, and had left the yeomanry in the same condition as in most other countries of Europe ? It is now more than two hundred years since the be¬ ginning of the reign of Elizabeth,— a period as long as the course of human prosperity usually endures. France seems to have had a considerable share of foreign commerce near a century before England was distinguished as a com¬ mercial country. The marine of France was considerable, according to the notions of the times, before the expedition of Charles VIII. to Naples. The cultivation and improve¬ ment of France, however, is, upon the whole, inferior to that of England. The Jaw of the country has never given the same direct encouragement to agriculture. The foreign 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 greater, on account of the great riches and extent of those colonies. But it has never introduced any considerable manufactures for distant sale into either of those countries, and the greater part of both still remains unculti¬ vated. The foreign commerce of Portugal is of older standing than that of any great country in Europe, except Italy. Italy is the only great country of Europe which seems to have been cultivated and improved in every part, by means of foreign commerce and manufactures for distant sale. Before the invasion of Charles VIII., Italy, according to Guicciardini, was cultivated not less in the most mountainous and barren parts of the country, than in the plainest and most fertile. The advantageous situation of the country, and the great number of independent states which at that time sub¬ sisted in it, probably contributed not a little to this general cultivation. It is not im¬ possible, too, notwithstanding this general expression of one of the most judicious and reserved of modern historians, that Italy was not at that time better cultivated than Eng¬ land is at present. The capital, however, that is acquired to any country by commerce and manufac¬ tures, is all a very precarious and uncertain and sciences of Europe. Avast amount of wealt has been transferred across the Atlantic, to be era p.oyed m countries where the facilities of accumula tion are so very great; while the importation c manufactured goods from Europe has permitted th colonists to devote their principal attention to agri culture, •— a pursuit in which the vast extent of thei fertile and unoccupied land gave them a natural am decided advantage. It is plain, therefore, that without some very powerful countervailing circum stances, the progress of America could not fail to be infinitely more rapid than that of Europe: and, though it must be admitted that some of our institu¬ tions have not been the most favourable that might have been devised for promoting the progress of civilisation, still the slowness of our advance, as com¬ pared with that of the Americans, affords hardly even a presumption, much less a proof, of their infe - rionty. | Chap, PRINCIPLES OF THE MERCANTILE SYSTEM. 187 possession, till some part of it has been se¬ cured and realised in the cultivation and improvement ot its lands. A merchant, it has been said very properly, is not necessa¬ rily the citizen of any particular country. It is in a great measure indifferent to him from what place he carries on his trade ; and a very trifling disgust will make him remove his capital, and, together with it, all the in¬ dustry which it supports, from one country to another. No part of it can be said to be¬ long to any particular country, till it has been spread, as it were, over the face of that country, either in buildings, or in the lasting improvement of lands. No vestige now re¬ mains of the great wealth said to have been possessed by the greater part of 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 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 popu¬ lous 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 con¬ tinues to be one of the richest, best culti¬ vated, and most populous provinces of Europe. The ordinary revolutions of war and government easily dry up the sources of that wealth which arises from commerce only. That which arises from the more solid improvements of agriculture is much more durable, and cannot be destroyed but by those more violent convulsions occasioned by the depredations of hostile and barbarous nations continued for a century or two together; such as those that happened for some time before and after the fall of the Roman em¬ pire in the western provinces of Europe. < | I BOOK IV. OF SYSTEMS OF POLITICAL ECONOMY. INTRODUCTION. POLITICAL economy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first to provide a plentiful revenue or subsistence for the 1 Political economy is nowjnost commonly defined “ the science of the laws which regulate the produc¬ tion, distribution, and consumption of those articles or products that have exchangeable value, and are, at the same time, necessarv, useful, or agreeable to 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 suffi¬ cient for the public services. It proposes to enrich both the people and the sovereign. 1 The different progress of opulence in dif¬ ferent ages and nations, has given occasion to two different systems of political economy, with regard to enriching the people. The one may be called the system of commerce, the other that of agriculture. I shall en¬ deavour to explain both as fully and dis¬ tinctly as I can, and shall begin with the system of commerce. It is the modern sys¬ tem, and is best understood in our own coun¬ try and in our own times. CHAP. I. Of the Principles of the Commercial or Mercantile System. That wealth consists in money, or in gold and silver, is a popular notion which natu¬ rally arises from the double function of mo¬ ney, as the instrument of commerce, and as the measure of value. In consequence of its being the instrument of commerce, when we have money we can more readily obtain whatever else we have occasion for, than by means of any other commodity. The great affair, we always find, is to get money. When that is obtained, there is no difficulty in making any subsequent purchase. In consequence of its being the measure of value, we estimate that of all other commo¬ dities by the quantity of money which they will exchange for. We say of a rich man that he is worth a great deal, and of a poor man that he is worth very little money. A frugal man, or a man eager to be rich, is said to love money; and a careless, a generous, or a profuse man, is said to be indifferent about it. To grow rich is to get money; and wealth and money, in short, are, in common language, considered as in every respect sy¬ nonymous. A rich country, in the same manner as a rich man, is supposed to be a country abound¬ ing in money ; and to heap up gold and silver in any country is supposed to be the readiest way to enrich it. For some time after the discovery of America, the first inquiry of the Spaniards, when they arrived upon any un¬ known coast, used to be, if there was any gold or silver to be found in the neighbourhood ? By the information which they received, they judged whether it was worth while to make a settlement there, or if the country was worth man.” When thus understood, it obviously embraces most of the investigations into which Dr. Smith has entered in his “ Inquiry into the Nature and Causes of the Wealth of Nations.” 188 PRINCIPLES OF TIIE Book IV. the conquering. Plano Carpino, a monk, sent ambassador from the king of France to one of the sons of the famous Gengis Khan, says, that the Tartars used frequently to ask him, if there was plenty of sheep and oxen in the-kingdom of France? Their inquiry had the same object with that of the Spa¬ niards. They wanted to know if the country was rich enough to be worth the conquering. Among the Tartars, as among all other na¬ tions ot shepherds, who are generally igno¬ rant of the use of money, cattle are the instruments of commerce and the measures of value. W ealth, therefore, according to them, consisted in cattle, as, according to the Spaniards, it consisted in gold and silver. Of the two, the Tartar notion, perhaps, was ' 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 consum¬ able a nature, that the wealth which consists in them cannot be much depended on ; and a nation which abounds in them one vear may, without any exportation, but merely by their own waste and extravagance, be in great want of them the next. Money, on the contrary, is a steady friend, which, though it may travel about from hand to hand, yet if it can be kept from going out of the coun¬ try, is not very liable to be wasted and consumed. Gold and silver, therefore, are, according to him, the most solid and sub¬ stantial part of the moveable wealth of a nation ; and to multiply those metals ought, he thinks, upon that account, to be the great object of its political economy. Others admit, that if a nation could be separated from all the world, it would be of no consequence how much or how little mo¬ ney circulated in it. The consumable goods, which were circulated by means of this mo¬ ney, would only be exchanged for a greater or a smaller number of pieces; but the real wealth or poverty of the country, they allow, would depend altogether upon the abundance or scarcity of those consumable goods. But it is otherwise, they think, with countries which have connections with foreign nations, and which are obliged to carry on foreign wars, and to maintain fleets and armies In distant countries. This, they say, cannot be done, but by sending abroad money to pay them with ; and a nation cannot send much money abroad, unless it has a good deal at home. Every such nation, therefore, must endeavour in time of peace to accu¬ mulate gold and silver, that, when occasion requires, it may have wherewithal to carry on foreign wars. In consequence of these popular notions, nil tne different nations of Europe have studied, though to little purpose, every pos¬ sible means of accumulating gold and silver in their respective countries. Spain and Poitugal, the proprietors of the principal mines which supply Europe with those me¬ tals, ha-v e either prohibited their exportation under the severest penalties, or subjected it to a considerable duty. The like prohibition seems anciently to have made a part of the policy of most other European nations. It is even to be found, where we should least of all expect to find it, in some old Scotch acts of parliament, which forbid, under heavy penalties, the carrying gold or silver forth of tne kingdom. The like policy anciently took place both in France and England. When those countries became commercial, the merchants found this prohibition, upon many occasions, extremely inconvenient. i hey could frequently buy more advanta¬ geously with gold and silver, than with any other commodity, the foreign goods which they wanted, either to import into their own, or to carry to some other foreign countrv. Tney remonstrated, therefore, against this prohibition as hurtful to trade. They represented, first, that the export¬ ation of gold and silver, in order to purchase foreign goods, did not always diminish the quantity of those metals in the kingdom. That, on the contrary, it might frequently increase the quantity; because, if the con¬ sumption of foreign goods was not thereby inci eased in the country, those goods might be re-exported to foreign countries, and, be¬ ing there sold for a large profit, might bring back much more treasure than was origin^ ally sent out to purchase them. Mr.Mun compares this operation of foreign trade to the seed-time and harvest of agriculture. “ If we only behold,” says he, “ the actions of the husbandman in the seed-time, when he casteth away much good corn into the ground, we shall account him rather a mad- roan. than a husbandman. But when we consider his labours in the harvest, which is the end of his endeavours, we shall find the worth and plentiful increase of his actions. ” . T1 } e y re P r esented, secondly, that this pro¬ hibition could not hinder the exportation of gold and silver, which, on account of the smallness of their bulk in proportion to their value, could easily be smuggled abroad. That this exportation could only be pre¬ vented by a proper attention to what they called the balance of trade, t That when the country exported to a greater value than it imported, a balance became due to it from foreign nations, which was necessarily paid to it in gold and silver, and thereby increased the quantity of those metals in the kingdom. Lut that when it imported to a greater value ’ r!? e c re ? d ? r will find, in the Introductory I which lpd e 2‘ 1 * an account of the circumstan which led ihe merchants to complain of the resti tions on the exportation of the precious metals, and gave rise to the notions with respect to the balance of trade. MERCANTILE SYSTEM. 189 Chat. I. than it exported, a contrary balance became due to foreign nations, which was necessarily paid to them in the same manner, and there¬ by diminished that quantity. That in this case to prohibit the exportation ot those metals could not prevent it, but only, by making it more dangerous, render it more expensive. That the exchange was thereby turned more against the country which owed the balance than it otherwise might have been; the merchant who purchased a bill upon the foreign country being obliged to pay the banker who sold it, not only for the natural risk, trouble, and expense of sending the money thither, but for the extraordinary risk arising from the prohibition. But that the more the exchange was against any coun¬ try, the more the balance of trade became necessarily against it; the money of that country becoming necessarily of so much less value, in comparison with that ot the country to which the balance was due. That if the exchange between England and Hol¬ land, for example, was five per cent, against England, it would require a hundred and five ounces of silver in England to purchase a bill for a hundred ounces of silver in Hol¬ land: that a hundred and five ounces of silver in England, therefore, would be worth only a hundred ounces of silver in Holland, and would purchase only a proportionable quantity of Dutch goods : but that a hun¬ dred ounces of silver in Holland, on the contrary, would be .worth a hundred and five ounces in England, and would purchase a proportionable quantity of English goods : that the English goods which were sold to Holland would be sold so much cheaper, and the Dutch goods which were sold to England, so much dearer, by the differ¬ ence of the exchange: that the one would draw so much less Dutch money to England, and the other so much more English money to Holland, as this difference amounted to: and that the balance of trade, therefore, would necessarily be so much more against England, and would require a greater ba¬ lance of gold and silver to be exported to Holland. Those arguments were partly solid and partly sophistical. They were solid, so far as they asserted that the exportation of gold and silver in trade might frequently be ad¬ vantageous to the country. They were solid, too, in asserting that no prohibition could prevent their exportation, when private peo¬ ple found any advantage in exporting them. But they were sophistical, in supposing, that either to preserve or to augment the quantity of those metals required more the attention of government, than to preserve or to aug¬ ment the quantity of any other useful com¬ modities, which the freedom of trade, without any such attention, never fails to supply in the proper quantity. They were sophistical too, perhaps, in asserting that the high price of exchange necessarily increased what they called the unfavourable balance of trade, or occasioned the exportation of a greater quantity of gold and silver. That high price, indeed, was extremely disadvantageous to the merchants who had any money to pay in foreign countries. They paid so much dearer for the bills which their bankers granted them upon those countries. But though the risk arising from the prohibition might occasion some extraordinary expense to the bankers, it would not necessarily carry any more money out of the country. This expense would generally be all laid out in the country, in smuggling the money out of it, and could seldom occasion the ex¬ portation of a single sixpence beyond the precise sum drawn for. The high price of exchange, too, would naturally dispose the merchants to endeavour to make their ex¬ ports nearly balance their imports, in order that they might have this high exchange to pay upon as small a sum as possible. The high price of exchange, besides, must neces¬ sarily have operated as a tax, in raising the price of foreign goods, and thereby diminish¬ ing their consumption. It would tend, there¬ fore, not to increase, but to diminish, what they called the unfavourable balance of trade, and consequently the exportation of gold and silver. Such as they were, however, those argu¬ ments convinced the people to whom they were addressed. They were addressed by merchants to parliaments and to the councils of princes, to nobles and to country gentle¬ men ; by those who were supposed to under¬ stand trade, to those who were conscious to themselves that they knew nothing about the matter. That foreign trade enriched the country, experience demonstrated to the nobles and country gentlemen, as well as to the merchants; but how, or in what manner, none of them well knew. The merchants knew perfectly in what manner it enriched themselves ; it was their business to know it: but to know in what manner it enriched the country, was no part of their business. The subject never came into their consider¬ ation, but when they had occasion to apply to their country for some change in the laws relating to foreign trade. It then became necessary to say something about the bene¬ ficial effects of foreign trade, and the manner in which those effects were obstructed by the laws as they then stood. To the judges who were to decide the business, it appeared a most satisfactory account of the matter, when they were told that foreign trade brought money into the country, but that the laws in question hindered it from bringing so much as it otherwise would do. Those arguments, therefore, produced the wished-for effect. The prohibition of exporting gold and silver r ^ypi 190 PRINCIPLES OF THE Booklll was, in France and England, confined to the coin of those respective countries. The exportation of foreign coin and of bullion was made free. In Holland and in some other places, this liberty was extended even to the coin of the country. The attention w of government was turned away from guard¬ ing against the exportation of gold and silver, to watch over the balance of trade, as the only cause which could occasion any aug¬ mentation or diminution of those metals. From one fruitless care, it was turned away to another care much more intricate, much more embarrassing, and just equally fruit¬ less. The title of Mun’s book, England’s Treasure in Foreign Trade, became a funda¬ mental maxim in the political economy, not of England only, but of all other commer¬ cial countries. The inland or home trade, the most important of all, the trade in which an equal capital affords the greatest revenue 1 , 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, nor carried any out of it. The country, therefore, could never become either richer or poorer by means of it, except so far as its prosperity or decay might indirectly influ¬ ence the state of foreign trade. A country that has no mines of its own, must undoubtedly draw its gold and silver from foreign countries, in the same manner as one that has no vineyards of its own must draw its ivines. It does not seem necessarv, 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, will always get the wine which it has occasion for; and a country that has wherewithal to buy gold and silver, will never be in want of those metals. They are to be bought for a certain price, like all other commodities, and as they are the price of all other commodities, so all other commodities are the price of those metals. We trust with perfect security that the freedom of trade, without any attention of government, will always supply us with the wine which we have occasion for; and we may trust with equal security that it will always supply us with all the gold and sil¬ ver which we can afford to purchase or to employ, either in circulating cur commodi¬ ties, or in other uses. The quantity of every commodity which human industry can either purchase or pro¬ duce, naturally regulates itself in every country according to the effectual demand, or according to the demand of those who are willing to pay the whole rent, labour, and profits which must be paid in order to pre¬ pare and bring it to market. But no com- 1 Not the greatest nett revenue, which is the real standard by which the comparative advantageousness modities regulate themselves more easilv or more exactly according to this effectual demand, than gold and silver ; because, on account of the small bulk and great value of those metals, no commodities can be more easily transported from one place to another, from the places where they are cheap to those where they are dear; from the places where they exceed, to those where they fall short of this effectual demand. If there were in England, for example, an effectual de¬ mand for an additional quantity of gold, a packet-boat could bring from Lisbon, or trom wherever else it was to be had, fifty tuns of gold, which could be coined into more than five millions of guineas. But if there were an effectual demand for grain to the same value, to import it would require, at five guineas a tun, a million of tuns of shipping, or a thousand ships of a thousand tuns each. The navy of England would not be sufficient. When the quantity of gold and silver im¬ ported into any country exceeds the effectual demand, no vigilance of government can prevent their exportation .} All the san¬ guinary laws of Spain and Portugal are not able to keep their gold and silver at home. The continual importations from Peru and Brazil exceed the effectual demand of those countries, and sink the price of those metals there below that in the neighbouring coun¬ tries. If, on the contrary, in any particular country, their quantity fell short of the effectual demand, so as to raise their price above that of the 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 import¬ ation, it would not be able to effectuate it. Those metals, when the Spartans had got wherewithal to purchase them, broke through all the barriers which the laws of Lycurgus opposed to their entrance into Lacedemon. All the sanguinary 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 hundred times the bulk of one of the highest prices, sixteen shillings, that is commonly paid for it in sil¬ ver, and more than two thousand times the bulk of the same price in gold, and conse¬ quently just so many times more difficult to smuggle. It is partly owing to the easy transporta¬ tion of gold and silver from the places where they abound to those where they are wanted, that the price of those metals does not fluc¬ tuate continually, like that of the greater part of other commodities, which are hin¬ dered by their bulk from shifting their situ- of different employments is to be estimated. See note, ante, p. 159. Chap. I. MERCANTILE SYSTEM. 191 < ( ation, when the market happens to be either over or under-stocked with them. The price of those metals, indeed, is not altogether ex¬ empted from variation; but the changes to which it is liable are generally slow, gradual, and uniform. In Europe, for example, it is supposed, without much foundation perhaps, that during the course of the present and preceding century they have been constantly, but gradually, sinking in their value, on ac¬ count of the continual importations from the Spanish West Indies. But to make any sudden change in the price of gold and sil¬ ver, so as to raise or lower at once, sensibly and remarkably, the money price of all other commodities, requires such a revolution in commerce as that occasioned by the disco¬ very of America. If, notwithstanding all this, gold and sil¬ ver should at any time fall short in a country which has wherewithal to purchase them, there are more expedients for supplying their place than that of almost any other commo¬ dity. If the materials of manufacture are wanted, industry must stop. If provisions are wanted, the people must starve. But if money is wanted, barter will supply its place, though with a good deal of inconve- niency. Buying and selling upon credit, and the different dealers compensating their credits with one another once a month or once a year, will supply it w T ith less incon- veniency. A well-regulated paper money will supply it not only without any incon- veniency, but, in some cases, with some ad¬ vantages. Upon every account, therefore, the attention of government never was so unnecessarily employed, as when directed to watch over the preservation or increase of the quantity of money in any country. No complaint, however, is more common than that of a scarcity of money. Money, like wine, must always be scarce with those who have neither wherewithal to buy it, nor credit to borrow it. Those who have either, will seldom be in want either of the money or of the wine which they have occasion for. This complaint, however, of the scarcity of money is not always confined to improvi¬ dent spendthrifts. It is sometimes general through a whole mercantile town and the country in its neighbourhood. Over-trading is the common cause of it. Sober men, whose projects have been disproportioned to their capitals, are as likely to have neither wherewithal to buy money, nor credit to borrow it, as prodigals whose expense has been disproportioned to their revenue. Be¬ fore their projects can be brought to bear, their stock is gone, and their credit with it. They run about everywhere to borrow money, and every body tells them that they have none to lend. Even such general com¬ plaints of the scarcity of money do not al¬ ways prove that the usual number of gold and silver pieces are not circulating in the country, but that many people want those pieces who have nothing to give for them. When the profits of trade happen to be greater than ordinary, over-trading becomes a general error both among great and small dealers . 1 They do not always send more money abroad than usual, but they buy upon credit, both at home and abroad, an unusual quantity of goods, which they send to some distant market, in hopes that the returns will come in before the demand for payment. The demand comes before the returns, and they have nothing at hand with which they can either purchase money, or give solid se¬ curity for borrowing. It is not any scarcity of gold and silver, but the difficulty which such people find in borrowing, and which their creditors find in getting payment, that occasions the general complaint of the scar¬ city of money. It would be too ridiculous to go about seriously to prove, that wealth does not con¬ sist in money, or in gold and silver, but in what money purchases, and is valuable only for purchasing. Money, no doubt, makes always a part of the national capital; but it has already been shown that it generally makes but a small part, and always the most unprofitable part of it. It is not because wealth consists more es¬ sentially in money than in goods, that the merchant finds it generally more easy to buy goods with money than to buy money with goods; but because money is the known and established instrument of commerce, for which every thing is readily given in ex¬ change, but which is not always with equal readiness to be got in exchange for every thing. The greater part of goods, besides, are more perishable than money, and he may frequently sustain a much greater loss by keeping them. When his goods are upon hand, too, he is more liable to such demands for money as he may not be able to answer, than when he has got their price in his coffers. Over and above all this, his profit arises more directly from selling than from buying; and he is, upon all these ac¬ counts, generally much more anxious to ex¬ change liis goods for money than his money for goods. But though a particular mer¬ chant, with abundance of goods in his ware¬ house, may sometimes be ruined by not being able to sell them in time, a nation or country is not liable to the same accident. The whole capital of a merchant frequently consists in perishable goods destined for purchasing money. But it is but a very small part of the annual produce of the land and labour of a country which can ever be deatined for purchasing gold and silver from 1 For an account of the circumstances which occa¬ sion over-trading, see the supplemental note on Commercial Revulsions. 102 PRINCIPLES OF THE Rook IV. their neighbours. The far greater part is circulated and consumed among themselves; and even of the surplus which is sent abroad, the greater part is generally destined for the purchase of other foreign goods. Though gold and silver, therefore, could not be had in exchange for the goods destined to pur¬ chase them, the nation would not be ruined. It might, indeed, suffer some loss and in- conveniency, 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 em¬ ployed in maintaining it. And though goods do not always draw money so readily as money draws goods, in the long run they draw it more necessarily than even it draws them. Goods can serve many other pur¬ poses besides purchasing money; but money can serve no other purpose besides pur¬ chasing goods. Money, therefore, neces¬ sarily runs after goods, but goods do not always or necessarily run after money. The man who buys, does not always mean to sell again, but frequently to use or to consume; whereas he who sells, always means to buy again. The one may frequently have done the whole, but the other can never have done more than the one-half of his business. It is not for its own sake that men desire money, but for the sake of what they can purchase with it. Consumable commodities, it is said, are soon destroyed; whereas gold and silver are of a more durable nature, and were it not for this continual exportation, might be accumulated for ages together, to the in¬ credible augmentation of the real wealth of the country. Nothing, therefore, it is pre¬ tended, can be more disadvantageous to any country, than the trade which consists in the exchange of such lasting for such perishable commodities. We do not, however, reckon that trade disadvantageous which consists in the exchange of the hardware of England for the wines of France ; and yet hardware is a very durable commodity, and were it not for this continual exportation, might too be accumulated for ages together, to the incredible augmentation of the pots and pans of the country. But it readily occurs, that the number of such utensils is in every country necessarily limited by the use which there is for them; that it would be absurd to have more pots and pans than were necessary for cooking the victuals usually consumed there ; and that if the quantity of victuals were to increase, the number of pots and pans would readily increase along with it, a part of the increased quantity of victuals being employed in purchasing them, or in maintaining an additional number of workmen, whose business it was to make them. It should as readily occur, that the \ quantity of gold and silver is in every coun¬ try limited by the use which there is for those metals ; that their use consists in cir¬ culating commodities as coin, and in afford¬ ing a species of household furniture as plate; that the quantity of coin in every country is regulated by the value of the commodities which are to be circulated by it: increase that value, and immediately a part of it will be sent abroad to purchase, wherever it is to be had, the additional quantity of coin requisite for circulating them: that the quantity of plate is regulated by the number and wealth of those private families who choose to indulge themselves in that sort of magnificence: increase the number and wealth of such families, and a part of this increased wealth will, most probably, be employed in purchasing, wherever it is to be found, an additional quantity of plate: that to attempt to increase the wealth of any country, either by introducing or by detaining in it an unnecessary quantity of gold and silver, is as absurd as it would be to attempt to increase the good cheer of private families by obliging them to keep an unnecessary number of kitchen utensils. As the expense of purchasing those unne¬ cessary utensils would diminish, instead of increasing, either the quantity or goodness of the family provisions, so the expense of purchasing an unnecessary quantity of gold and silver must, in every country, as neces¬ sarily diminish the wealth which feeds, clothes, and lodges, which maintains and employs the people. Gold and silver, whether in the shape of coin or of plate, are utensils, it must be remembered, as much as the furniture of the kitchen. Increase the use for them, increase the consumable commodities which are to be circulated, managed, and prepared by means of them, and you will infallibly increase the quan¬ tity ; but if you attempt by extraordin¬ ary means to increase the quantity, you will as infallibly diminish the use, and even the quantity too, which in those metals can never be greater than what the use requires. Were they ever to be accumulated beyond this quantity, their transportation is so easy, and the loss which attends their lying idle and unemployed so great, that no law could prevent their being immediately sent out of the country. It is not always necessary to accumulate gold and silver in order to enable a country to carry on foreign wars, and to maintain fleets and armies in distant countries. Fleets and armies are maintained, not with gold and silver, but with consumable goods. The nation which, from the annual produce of its domestic industry, from the annual revenue arising out of its lands, labour and con- MERCANTILE SYSTEM. 193 Chap. I. sumable stock, has wherewithal to purchase those consumable goods in distant countries, can maintain foreign wars there. A nation may purchase the pay and pro¬ visions of an army in a distant country three different ways: by sending abroad either, first, some part of its accumulated gold and silver, or, secondly, some part of the annual produce of its manufactures ; or, last of all, some part of its annual rude produce. The gold and silver which can properly be considered as accumulated or stored up in any country, may be distinguished into three parts : first, the circulating money ; secondly, the plate of private families ; and, last of all, the money which may have been collected by many years’ parsimony, and laid up in the treasury of the prince- It can seldom happen that much can be i spaced 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 cir¬ culate and distribute them to their proper consumers, and can give employment to no more. The channel of circulation neces¬ sarily draws to itself a sum sufficient to fill it, and never admits any more. Something, however, is generally withdrawn from this channel in the case of foreign war. By the great number of people who are main¬ tained abroad, fewer are maintained at home. Fewer goods are circulated there, and less money becomes necessary to circulate them. An extraordinary quantity of paper money of some sort or other, too, such as exchequer notes, navy bills, and bank bills in England, is generally issued upon such occasions, and, by supplying the place of circulating gold and silver, gives an opportunity of sending a greater quantity of it abroad. All this, however, could afford but a poor resource for maintaining a foreign war, of great expense and several years’ duration. The melting down the plate of private i families has, upon every occasion, been found a still more insignificant one. The French,' in the beginning of the last war, did not derive so much advantage from this expe¬ dient as to compensate the loss of the fashion. The accumulated treasures of the prince i have, in former times, afforded a much greater and more lasting resource. In the present times, if you except the king of Prussia, to accumulate treasure seems to be no part of the policy of European princes. The funds which maintained the foreign wars of the present century, the most expen¬ sive perhaps which history records, seem to have had little dependency upon the export¬ ation either of the circulating money, or of the plate of private families, or of the trea¬ sure of the prince. The last French war cost Great Britain upwards of ninety millions | i ■ including not only the seventy-five millions of new debt that was contracted, but the additional two shillings in the pound land- tax, and what was annually borrowed of the sinking fund. More than two-thirds of this expense were laid out in distant countries ; in Germany, Portugal, America, in the ports of the Mediterranean, in the East and West Indies. The kings of England had no accumulated treasure. We never heard of any extraordinary quantity of plate being melted down. The circulating gold and silver of the country had not been supposed to exceed eighteen millions. Since the late recoinage of the gold, however, it is believed to have been a good deal under-rated. Let us suppose, therefore, according to the most exaggerated computation which I remember to have either seen or heard of, that, gold and silver together, it amounted to thirty millions. Had the war been carried on by means of our money, the whole of it must, even according to this computation, have been sent out and returned again at least twice, in a period of between six and seven years. Should this be supposed, it would afford the most decisive argument to demon¬ strate how unnecessary it is for government to watch over the preservation of money, since, upon this supposition, the whole money of the country must have gone from it and returned to it again, two different times in so short a period, without any body’s knowing any thing of the matter. The channel of circulation, however, never appeared more empty than usual during any part of this period. Few people wanted money who had wherewithal to pay for it. The profits of foreign trade, indeed, were greater than usual during the whole war, but especially towards the end of it. This occasioned, what it always occasions, a gene¬ ral over-trading in all the ports of Great Britain ; and this again occasioned the usual complaint of the scarcity of money, which always follows over-trading. Many people wanted it, who had neither wherewithal to buy it, nor credit to borrow it; and because the debtors found it difficult to borrow, the creditors found it difficult to get payment. Gold and silver, however, were generally to be had for their value, by those who had that value to give for them. The enormous expense of the late war, therefore, must have been chiefly defrayed, not by the exportation of gold and silver, but by that of British commodities of some kind or other. When the government, or those who acted under them, contracted with a merchant for a remittance to some foreign country, he would naturally endeavour to pay his foreign correspondent, upon whom he had granted a bill, by sending abroad rather commodities than gold and silver. If the commodities of Great Britain w r erc not O 194 PRINCIPLES OF THE Book IV. in demand in that country, he would endea¬ vour to send them to some other country, in which he could purchase a bill upon that country. The transportation of commodities, when properly suited to the market, is al¬ ways attended with a considerable profit; whereas that of gold and silver is scarce ever attended with any. When those metals are sent abroad in order to purchase foreign commodities, the merchant’s profit arises, not from the purchase, but from the sale of the returns. But when they are sent abroad merely to pay a debt, he gets no returns, and consequently no profit. He naturally, therefore, exerts his invention to find out a way of paying his foreign debts, rather by the exportation of commodities than by that of gold and silver. The great quantity of British goods exported during the course of the late war, without bringing back any returns, is accordingly remarked by the author of the Present State of the Nation. Besides the three sorts of gold and silver above mentioned, there is in all great com¬ mercial countries a good deal of bullion alternately imported and exported, for the purposes of foreign trade. This bullion, as it circulates among different commercial countries in the same manner as the national coin circulates in every particular country, may be considered as the money of the great mercantile republic. The national coin re¬ ceives its movement and direction from the commodities circulated within the precincts of each particular country ; the money of the mercantile republic from those circulated between different countries. Both are em¬ ployed in facilitating exchanges: the one between different individuals of the same, the other between those of different nations. Part of this money of the great mercantile republic may have been, and probably was, employed in carrying on the late war. In time of a general war, it is natural to sup¬ pose that a movement and direction should be impressed upon it, different from what it usually follows in profound peace ; that it should circulate more about the seat of the war, and be more employed in purchasing there, and in the neighbouring countries, the pay and provisions of the different armies. 1 See anti, p. 96. note. 2 It appears* from the official statements printed by order of tne House of Commons, that the expenses in¬ curred by this country on account of the armies in the Peninsula in 1812 and 1813, amounted to 31,767,000/., of which only 3,284,000/. were remitted in coin and bullion : and it may be doubted whether the remittances in specie would have been so great, had it not been for the reduction of its value caused by the great additional quantities of bank paper that were then thrown into circulation. When a foreign debt has to be discharged, the merchant naturally selects those commodities for exportation by which it may be most advantageously paid. If bullion be one of them, it will of course be exported; but if otherwise, not. Bullion, how’ever, is of all commo¬ dities that of which the value approaches nearest to an equality in different countries ; and it is therefore But whatever part of this money of the mer¬ cantile republic Great Britain may have an¬ nually employed in this manner, it must have been annually purchased, either with British commodities, or with something else that had been purchased with them ; which still brings us back to commodities, to the annual produce of the land and labour of the country, as the ultimate resources which enabled us to carry on the war. It is na¬ tural indeed to suppose, that so great an an¬ nual expense must have been defrayed from a great annual produce. The expense of 1761, for example, amounted to more than nine¬ teen millions. No accumulation could have supported so great an annual profusion. There is no annual produce, even of gold and silver, which could have supported it. The whole gold and silver annually imported into both Spain and Portugal, according to the best accounts, does not commonly much exceed six millions sterling 1 , which, in some years, would scarce have paid four months’ expense of the late war. 2 The commodities most proper for being transported to distant countries, in order to purchase there either the pay and provisions of an army, or some part of the money of the mercantile republic to be employed in purchasing them, seem to be the finer and more improved manufactures; such as con¬ tain a great value in a small bulk, and can therefore be exported to a great distance at little expense. A country whose industry produces a great annual 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 silver, or even having any such quantity to export. A considerable part of the annual surplus of its manufactures must, indeed, in this case, be exported without bringing back any returns to the country, though it does to the merchant; the govern¬ ment purchasing of the merchant his bills upon foreign countries, in order to purchase there the pay and provisions of an army. Some part of this surplus, however, may still continue to bring back a return. The manu¬ facturers, during the war, will have a double the least likely to be exported to pay a foreign balance. The demand for bullion is comparatively steady ; and if, on the one hand, an unusual quantity were imported into one country, it would reduce its value, and cause its efflux ; while, on the other hand, if an unusual supply of bullion were exported, it would raise its value, and occasion its influx. In point of fact, bullion is never exported to destroy, but always to find its level. The operations of the merchants who deal in it are chiefly confined to the distribution of the fresh supplies annually dug from the mines. Its price is too invariable, or, which is the same thing, its supply and demand are too constant, to admit of its becoming a favourite object of speculative demand, or of its being either imported into or exported from particular countries in much larger quantities at one time than another, MERCANTILE SYSTEM. Chap. I. demand upon them, and be called upon, first, to work up goods to be sent abroad, for paying the bills drawn upon foreign coun¬ tries for the pay and provisions of the army; and, secondly, to work up such as are neces¬ sary for purchasing the common returns that had usually been consumed in the coun¬ try. In the midst of the most destructive foreign war, therefore, the greater part of ma¬ nufactures may frequently flourish greatly; and, on the contrary, they may decline on the return of peace. They may flourish amidst the ruin of their country, and begin to decay upon the return of its prosperity. The different state of many different branches of the British manufactures during the late war, and for some time after the peace, may serve as an illustration of what has been just now said. No foreign war of great expense or dura¬ tion could conveniently be carried on by the exportation of the rude produce of the soil. The expense of sending such a quantity of it into a foreign country as might purchase the pay and provisions of an army, would be too great. Few countries, too, produce much more rude produce than what is suffi¬ cient for the subsistence of their own inha¬ bitants. To send abroad any great quantity of it, therefore, would be to send abroad a part of the necessary subsistence of the peo¬ ple. It is otherwise with the exportation of manufactures. The maintenance of the people employed in them is kept at home, and only the surplus part of their work is exported. Mr. Hume frequently takes no¬ tice of the inability of the ancient kings of England to carry on, without interruption, any foreign war of long duration. The English in those days had nothing where¬ withal to purchase the pay and provisions of their armies in foreign countries, but either the rude produce of the soil, of which no con¬ siderable part could be spared from the home consumption, or a few manufactures of the coarsest kind, of which, as well as of the rude i produce, the transportation was too expen¬ sive. This inability did not arise from the want of money, but of the finer and more im¬ proved manufactures. Buying and selling was transacted by means of money in Eng¬ land then as well as now. The quantity of circulating money must have borne the same proportion to the number and value of pur¬ chases 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 manufac¬ tures are little known, the sovereign, upon 1 extraordinary occasions, can seldom draw any considerable aid from his subjects, for reasons which shall be explained hereafter. It is in such countries, therefore, that he generally endeavours to accumulate a trea¬ sure, as the only resource against such emer¬ gencies. Independent of this necessity, he is, in such a situation, naturally disposed to the parsimony requisite for accumulation. In that simple state, the expense even of a sovereign is not directed by the vanity which delights in the gaudy finery of a court, but is employed in bounty to his tenants, and hospitality to his retainers. But bounty and hospitality very seldom lead to extravagance; though vanity almost always does. Every Tartar chief, accordingly, has a treasure. The treasures of Mazeppa, chief of the Cossacs in the Ukraine, the famous ally of Charles the Twelfth, are said to have been very great. The French kings of the Mero¬ vingian race had all treasures. When they divided their kingdom among their different children, they divided their treisures too. The Saxon princes, and the first kings after the Conquest, seem likewise to have accumu¬ lated treasures. The first exploit of every new reign, was commonly to s' ize the trea¬ sure of the preceding king, as the most essential measure for securing the succes- sion. The sovereigns of improved and com¬ mercial countries are not under the same necessity of accumulating treasures, be¬ cause they can generally draw from their subjects extraordinary aids upon extraor¬ dinary occasions. They are likewise less disposed to do so. They naturally, per¬ haps necessarily, follow the mode of the times, and their expense comes to be regu¬ lated by the same extravagant vanity which directs that of all the other great proprietors in their dominions. The insignificant pa¬ geantry of their court becomes every day more brilliant, and the expense of it not only prevents accumulation, but frequently encroaches upon the funds destined for more necessary expenses. What Dercyllidas said of the court of Persia, may be applied to that of several European princes, that he saw there much splendour, but little strength, and many servants, but few soldiers. The importation of gold and silver is not the principal, much less the sole, benefit which a nation derives from its foreign trade. Between whatever places foreign trade is carried on, they all of them derive two dis¬ tinct benefits from it. it carries out that surplus part of the produce of their land and labour for which there is no demand among them, and brings back in return for it some¬ thing else for which there is a demand. It gives a value to their superfluities, by ex¬ changing them for something else, which may satisfy a part of their wants and increase their enjoyments. By means of it, the nar¬ rowness of the home market does not hinder the division of labour in any particular branch of art or manufacture from being O 2 \96 PRINCIPLES OF TIIE Book IV. carried to the highest perfection. By open¬ ing a more extensive market for whatever part of the produce of their labour may ex¬ ceed the home consumption, it encourages them to improve its productive powers, and to augment its annual produce to the utmost, and thereby to increase the real revenue and wealth of the society. These great an'd im¬ portant services foreign trade is continually occupied in performing to all the different countries between which it is carried on. They all derive great benefit from it, though that in which the merchant resides gene¬ rally derives the greatest as he is generally more employed in supplying the wants, and carrying out the superfluities of his own, than of any other particular country. To import the gold and silver which may be wanted into the countries which have no mines, is, no doubt, a part of the business of foreign commerce. It is, however, a most insignificant part of it. A country which carried on foreign trade merely upon this account, could scarce have occasion to freight a ship in a century. It is not by the importation of gold and silver that the discovery of America has enriched Europe. By the abundance of the American mines, those metals have be¬ come cheaper. A service of plate can now be purchased for about a third part of the corn, or a third part of the labour, which it would have cost in the fifteenth century. With the same annual expense of labour and commodities, Europe can annually purchase about three times the quantity of plate which it could have purchased at that time. But when a commodity comes to be sold for a third part of what had been its usual price, not only those who purchased it before can purchase three times their former quantity, but it is brought down to the level of a much greater number of purchasers, perhaps to more than ten, perhaps to more than twenty times the former number. So that there may be in Europe at present, not only more than three times, but more than twenty or thirty times the quantity of plate which would have been in it, even in its present state of improvement, had the discovery of the American mines never been made. So far Europe has, no doubt, gained a real conveniency, though surely a very trifling one. The cheapness of gold and silver ren¬ ders those metals rather less fit for the pur¬ poses of money than they were before. In order to make the same purchases, we must load ourselves with a greater quantity of them, and carry about a shilling in our pocket where a groat would have done before. It is difficult to say which is most trifling — this inconveniency, or the opposite conve¬ niency. Neither the one nor the other could have made any very essential change in the state of Europe. The discovery of America, however, certainly made a most essential one. By opening a new and in¬ exhaustible market to all the commoditieTof Europe, it gave occasion to new divisions of labour and improvements of art, which, in the narrow circle of the ancient commerce, could never have taken place, for want of a market to take off the greater part of their produce. The productive powers of labour were improved, and its produce increased in all the different countries of Europe, and together with it the real revenue and wealth of the inhabitants. The commodities of Europe were almost all new to America, and many of those of America were new to Europe. A new set of exchanges, therefore, began to take place, which had never been thought of before, and which should na¬ turally have proved as advantageous to the new, as it certainly did to the old continent. The savage injustice of the Europeans ren¬ dered an event, which ought to have been beneficial to all, ruinous and destructive to several of those unfortunate countries. The discovery of a passage to the East Indies by the Cape of Good Hope, which happened much about the same time, opened perhaps a still more extensive range to foreign commerce than even that of America, not¬ withstanding the greater distance. There were but two nations in America in any respect superior to savages, and these were destroyed almost as soon as discovered. The rest were mere savages. But the empires of China, Indostan, Japan, as well as several others in the East Indies, without having richer mines of gold or silver, were, in every other respect, much richer, better cultivated, and more advanced in all arts and manufac¬ tures, than either Mexico or Peru, even though we should credit, what plainly de¬ serves no credit, the exaggerated accounts of the Spanish writers concerning the ancient state of those empires. But rich and civil¬ ised nations can always exchange to a much greater value with one another than with savages and barbarians. Europe, however, has hitherto derived much less advantage from its commerce with the East Indies than from that with America. The Portu¬ guese monopolised 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 free commerce to the East Indies. No other reason need be assigned why it has never been so advantageous as the trade to America, Chat. I. MERCANTILE SYSTEM. 197 , which, between almost every nation of Eu¬ rope and its own colonies, is free to all its subjects. The exclusive privileges of those East India companies, their great riches, the great favour and protection which these have procured them from their respective govern¬ ments, have excited much envy against them. This envy has frequently represented their trade as altogether pernicious, on account ot the great quantities of silver which it every year exports from the countries from which it is carried on. The parties concerned have replied, that their trade, by this continual exportation of silver, might indeed tend to impoverish Europe in general, but not the particular country from which it was carried on ; because, by the exportation of a part of the returns to other European countries, it annually brought home a much greater quan¬ tity of that metal than it carried out. Both the objection and the reply are founded in the popular notion which I have been just now examining. It is therefore unnecessary to say any thing further about either. By the annual exportation of silver to the East Indies, plate is probably somewhat dearer in Europe than it otherwise might have been; and coined silver probably purchases a larger quantity both of labour and com¬ modities. The former of these two effects is a very small loss, the latter a very small advantage ; both too insignificant to deser\ e any part of the public attention. The trade to "the East Indies, by opening a market to the commodities of Europe, or, what comes nearly to the same thing, to the gold and silver which is purchased with those com¬ modities, must necessarily tend to increase the annual production of European com- I modities, and consequently the real wealth and revenue of Europe. That it has hitherto increased them so little, is probably owing to the restraints which it every where la¬ bours under. 1 thought it necessary, though at the ha¬ zard of being tedious, to examine at full length this popular notion, that wealth consists in money, or in gold and silver. Money, in common language, as I have al¬ ready observed, frequently signifies wealth ; and this ambiguity of expression has ren¬ dered this popular notion so familiar to us, that even they who are convinced of its ab¬ surdity are very apt to forget their own prin¬ ciples, and, in the course of their reasonings, to take it for granted as a certain and unde¬ niable truth. Some of the best English writers upon commerce set out with observ¬ ing, that the wealth of a country consists, not in its gold and silver only, but in its lands, houses, and consumable goods of all different kinds. In the course of their rea¬ sonings, however, the lands, houses, and consumable goods, seem to slip out of their memory ; and the strain of their argument frequentlv supposes that all wealth consists in gold and silver, and that to multiply those metals is the great object of national industry and commerce. The two principles being established, how¬ ever, that wealth consisted in gold and silver, and that those metals could be brought into a country which had no mines, only by the balance of trade, or by exporting to a greater value than it imported, it necessarily became the great object of political economy to di¬ minish as much as possible the importation of foreign goods for home consumption, and to increase as much as possible the exporta¬ tion of the produce of domestic industry. Its two great engines for enriching the country, therefore, were restraints upon im¬ portation, and encouragement to exportation. The restraints upon importation were of two kinds: — First, Restraints upon the importation of such foreign goods for home consumption as could be produced at home, from whatever country they were imported. Secondly , Restraints upon the importation of goods of almost all kinds from those par - ticular countries with which the balance of trade was supposed to be disadvantageous. Those different restraints consisted some¬ times in high duties, and sometimes in ab¬ solute prohibitions. Exportation was encouraged, sometimes by drawbacks, sometimes by bounties, some¬ times by advantageous treaties of commerce with foreign states, and sometimes by the establishment of colonies in distant countries. Drawbacks were given upon two different occasions. When the home manufactures were subject to any duty or excise, either the whole or a part of it was frequently drawn back upon their exportation; and when fo¬ reign goods liable to a duty were imported, in order to be exported again, either the whole or a part of this duty was sometimes given back upon such exportation. Bounties were given for the encourage¬ ment either of some beginning manufactures, or of such sorts of industry of other kinds as were supposed to deserve particular favour. By advantageous treaties of commerce, particular privileges were procured in some foreign state for the goods and merchants of the country, beyond what were granted to those of other countries. By the establishment of colonies in dis¬ tant countries, not only particular privileges, but a monopoly was frequently procured lor the goods and merchants of the country which established them. The two sorts of* restraints upon importa¬ tion above mentioned, together with these four encouragements to exportation, consti¬ tute the six principal means by which the commercial system proposes to increase the quantity of gold and silver in any country, 1 OS RESTRAINTS UPON IMPORTATION. Rook IV. by turning the balance of trade in its favour. I shall consider each of them in a particular- chapter, and, without taking much further notice of their supposed tendency to bring money into the country, I shall examine chiefly what are likely to be the effects of each of them upon the annual produce of its industry. According as they tend either to increase or diminish the value of this annual produce, they must evidently tend either to increase or diminish the real wealth and revenue of the country. CHAP. II. Of Restraints upon the Importation from Foreign Countries of such Goods as can he produced at home. By restraining, either by high duties, or bv absolute prohibitions, the importation of such goods from foreign countries as can be produced at home, the monopoly of the home market is more or less secured to the domes¬ tic industry employed in producing them. hus the prohibition of importing either lb e cattle or salt provisions from foreign countries secures to the graziers of Great Britain the monopoly of the home market for butcher s meat. The high duties upon the importation of corn, which, in times of moderate plenty, amount to a piohibition, give a like advantage to the growers of that commodity. The prohibition of the import¬ ation of foreign woollens is equally favour¬ able to the woollen manufactures. 'The silk manufacture, though altogether employed upon foreign materials, has lately obtained the same advantage. The linen manufac¬ ture has not yet obtained it, but is making great strides towards it. Many other sorts of manufacturers have, in the same manner, obtained in Great Britain, either altogether or very nearly, a monopoly against their countrymen. The variety of goods, of which the importation into Great Britain is prohi¬ bited, either absolutely or under certain cir¬ cumstances, greatly exceeds what can easily be suspected by those who are not well acquainted with the laws of the Customs. 1 That this monopoly of the home market frequently gives great encouragement to that particular species of industry which enjoys it, and frequently turns towards that employ¬ ment a greater share of both the labour and stock of the society than would otherwise have gone to it, cannot be doubted. But whether, it tends either to increase the general industry of the society, or to give it the most advantageous direction, is not per¬ haps altogether so evident. The general industry of the society never can exceed what the capital of the society can employ. As the number of workmen that can be kept in employment by any particular person must bear a certain pro¬ portion to his capital, so the number of those that can be continually employed by all the members of a great society must bear a certain proportion to the whole capital of that society, and never can exceed that proportion. No regulation of commerce can increase the quantity of industry in any society beyond what its capital can maintain. It can only divert a part of it into a direc¬ tion into which it might not otherwise have gone; and it is by no means certain that this artificial direction is likely to be more advantageous to the society than that into which it would have gone of its own accord. Every individual is continually exerting himselt to find out the most advantageous employment for whatever capital he can com¬ mand. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society. First , Every individual endeavours to employ his capital as near home as he can, and consequently as much as he can in the support of domestic industry; provided always that he can thereby obtain the ordinary, or not a great deal less than the ordinary, profits of stock. Thus, upon equal, or nearly equal, profits, every wholesale merchant naturally prefers the home trade to the foreign trade of con¬ sumption, and the foreign trade of con¬ sumption to the carrying trade. 2 In the home trade his capital is never so long out of his sight as it frequently is in the foreign trade of consumption. He can know better the character and situation of the persons whom he trusts ; and if he should happen to be deceived, he knows better the laws of the country from which he must seek redress. In consequence of the more general diffusi< of enlightened views upon such subjects, petitio were presented to parliament in 1820, by the pri; cipal merchants and manufacturers in favour of more liberal commercial policy; and some conside able modifications of the restrictive system were soc a ter effected by Mr Huskisson. But it was reserve lor Sir Robert Peel fully to carry out the liber, policy recommended by Smith. Moderate ad valore duties are now imposed on many articles that we] lormerly either entirely prohibited, or loaded wit auties equivalent to a prohibition. For exampli woollen goods are now admitted on paying an a valorem duty of 10 per cent.; cotton goods, 10 p< cent.; silk goods, 15 per cent.; linens, 10 per cent., &c.. Similar reductions have been made in the duties on a vast variety of other commodities, and very many have been wholly repealed. The changes effected in the laws regulating the importation of corn since the publication of the Wealth of Nations, and their ultimate abolition, are detailed in the Sup¬ plemental note on the Corn Laws. 1 Upon equal, or nearly equal, gross profits this is the case. But when the nett profits of different businesses are equal, it is immaterial to capitalists whether they invest their stock in the home trade, or the carrying trade, and it is also immaterial to the public. Chap II. RESTRAINTS UPON IMPORTATION. 199 In the carrying trade, the capital of the merchant is, as it were, divided between two foreign countries; and no part of it is ever necessarily brought home, or placed under his own immediate view and command. The capital which an Amsterdam merchant employs in carrying corn from Konnigsberg to Lisbon, and fruit and wine from Lisbon to Konnigsberg, must generally be the one half of it at Konnigsberg and the other half at Lisbon. No part of it need ever come to Amsterdam. The natural residence of such a merchant should either be at 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 Kon¬ nigsberg, to Amsterdam : and though this necessarily subjects him to a double charge of loading and unloading, as ’well as to the payment of some duties and customs, yet, for the sake of having some part of his capital always under his own view and command, he willingly submits to this extraordinary charge ; and it is in this manner that every country which has any considerable share of the carrying trade, becomes always the emporium, or general market, for the goods of all the different countries whose trade it carries on. The merchant, in order to save a second loading and unloading, endeavours always to sell in the home market as much of the goods of all those different countries as he can, and thus, so far as he can, to convert his carrying trade into a foreign trade of consumption. A merchant, in the same manner, who is engaged in the foreign trade of consumption, when he collects goods for foreign markets, will always be glad, upon equal, or nearly equal, profits, to sell as great a part of them at home as he can. He saves himself the risk and trouble of exportation, when, so far as he can, he thus converts his foreign trade of con¬ sumption into a home trade. Home is in this manner the centre, if I may say so, round which the capitals of the inhabitants of every country are continually circulating, and towards which they are always tending, though by particular causes they may some¬ times be driven off and repelled from it towards more distant employments. But a capital employed in the home trade, it has already been shown, necessarily puts into motion a greater quantity of domestic industry, and gives revenue and employment to a greater number of the inhabitants of the country, than an equal capital employed in the foreign trade of consumption: and one employed in the foreign trade of consumption has the same advantage over an equal capital employed in the carrying trade. 1 Upon equal, or only nearly equal, profits, therefore, every individual naturally inclines to employ his capital in the manner in which it is likely to afford the greatest support to domestic industry, and to give revenue and employment to the greatest number of people of his own country. Secondly , Every individual who employs his capital in the support of domestic indus¬ try, necessarily endeavours so to direct that industry, that its produce may be of the greatest possible value. The produce of industry is what it adds to the subject or materials upon which it is employed. In proportion as the value of this produce is great or small, so will likewise be the profits of the employer. But it is only for the sake of profit that any man employs a capital in the support of industry; and he will always, therefore, endeavour to employ it in the support of that industry of which the produce is likely to be of the greatest value, or to exchange for the greatest quan¬ tity either of money or of other goods. But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its in¬ dustry", or rather is precisely the s^me thing with that exchangeable value, j As every individual, therefore, endeavour^as much as he can both to employ his capital in the sup¬ port of domestic industry, and so to direct that industry that its produce may be of the greatest value, every individual necessarily labours to render the annual revenue of the society' as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promot¬ ing it. ’^By preferring the support of domes¬ tic to that of foreign industry, he intends only his own security ; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to pro¬ mote an end which was no part of his inten¬ tion. Nor is it always the worse for the society that it was no part of it. By pur¬ suing his own interest he frequently pro¬ motes that of the society more effectually than when he really intends to promote it.) I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it. What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. 1 See ante, p. 159. O 4 RESTRAINTS UPON IMPORTATION. Book IV. 200 / The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presump¬ tion enough to fancy himself fit to exercise it- \ Jo give the monopoly of the home market to the produce of domestic industry, in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must, in almost all cases, be either a useless or a hurtful regulation. If the pro¬ duce of domestic can be brought there as cheap as that of foreign industry, the regu¬ lation is evidently useless. If it cannot, it must generally be hurtful. It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoe¬ maker does not attempt to make his own clothes, but employs a tailor. The farmer attempts to make neither the one nor the other, but employs those different artificers. All of them find it for their interest to em¬ ploy their whole industry in a way in which they have some advantage over their neigh¬ bours, and to purchase with a part of its produce, or, what is the same thing, with the price of a part of it, whatever else they have occasion for. What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage. The general in¬ dustry of the country, being always in pro¬ portion to the capital which employs it, will not thereby be diminished, no more than that of the above-mentioned artificers, but only left to find out the way in which it can be employed with the greatest advantage. It is certainly not employed to the greatest advantage, when it is thus directed towards an object which it can buy cheaper than it can make. The value of its annual produce is certainly more or less diminished, when it is thus turned away from producing commo¬ dities evidently of more value than the com¬ modity which it is directed to produce. According to the supposition, that commo¬ dity could be purchased from foreign coun¬ tries cheaper than it can be made at home, it could, therefore, have been purchased with a part only of the commodities, or, what is the same thing, with a part only of the price of the commodities, which the industry employed by an equal capital would have produced at home, had it been left to follow its natural course. The industry of the country, therefore, is thus turned away from a more to a less advantageous employment, and the exchangeable value of its annual produce, instead of being increased, accord- ing to the intention of the lawgiver, must necessarily be diminished by every such regulation. By means of such regulations, indeed, a particular manufacture may sometimes be acquired sooner than it could have been otherwise, and after a certain time may be made at home as cheap or cheaper than in the foreign country. But though the indus¬ try of the society may be thus carried with advantage into a particular channel sooner than it could have been otherwise, it will by no means follow that the sum total, either of its industry, or of its revenue, can ever be augmented by any such regulation. The industry of the society can augment only in proportion as its capital augments, and its capital can augment only in proportion to what can be gradually saved out of its re¬ venue. But the immediate effect of every such regulation is to diminish its revenue ; and what diminishes its revenue is certainly not very likely to augment its capital faster than it would have augmented of its own accord, had both capital and industry been left to find out their natural employments. Though for want of such regulations the society should never acquire the proposed manufacture, it would not, upon that ac¬ count, necessarily be the poorer in any one period of its duration. In every period of its duration its whole capital and industry might still have been employed, though upon different objects, in the manner that was most advantageous at the time. In every period its revenue might have been the greatest which its capital could afford, and both capital and revenue might have been augmented with the greatest possible rapidity. The natural advantages which one coun¬ try has over another in producing particular commodities are sometimes so great, that it is acknowledged by all the world to be in vain to struggle with them. By means of glasses, 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 expense for which at least equally good can be brought from fo¬ reign countries. Would it be a reasonable law to prohibit the importation of all fo¬ reign wines merely to encourage the making of claret and burgundy in Scotland ? But if there would be a manifest absurdity in turning towards any employment thirty Chap. II. RESTRAINTS UPON IMPORTATION. 201 times more of tlie capital and industry of the country, than would be necessary to purchase from foreign countries an equal quantity of the commodities wanted, there must be an absurdity, though not altogether so glaring, yet exactly of the same kind, in turning towards any such employment a thirtieth, or even a three hundredth part more of either. Whether the advantages which one country has over another be na¬ tural or acquired, is in this respect of no consequence. As long as the one country has those advantages, and the other wants them, it will always be more advantageous for the latter rather to buy of the former than to make. It is an acquired advantage only, which one artificer has over his neigh¬ bour, who exercises another trade ; and yet they both find it more advantageous to buy of one another, than to make what does not belong to their particular trades. Merchants and manufacturers are the people who derive the greatest advantage from this monopoly of the home market. 1 The prohibition of the importation of foreign cattle, and of salt provisions, together with the high duties upon foreign corn, which in times of moderate plenty amount to a pro- 1 The advantage they derive from the monopoly is really very inconsiderable. Competition being always free among the home producers, the exclusion of any particular species of foreign manufactured goods cannot elevate the profits of those who pro¬ duce similar articles at home above the common level, and merely attracts as much additional capital to that particular business, as may be required to furnish an adequate supply of goods. It has never been contended, that the businesses deepest en¬ trenched behind ramparts of prohibitions and re¬ strictions, are in any respect more lucrative than those that are exposed to the freest competition. It is obvious, too, that there are no means of extending such businesses beyond what may be required for the supply of the domestic consumer ; for those who can produce the same commodities at less expense, are sure to obtain the entire command of the foreign market. 2 There are good grounds for thinking that the loss and inconvenience that must ahvays follow the exchange of an exclusive for a free commercial sys¬ tem, have been very greatly exaggerated. The indi¬ viduals engaged in those branches of manufacturing industry in Great Britain that could not be carried on in the event of an unrestrained foreign competition being allowed, form a very inconsiderable propor¬ tion indeed of our manufacturing population ; but as they only derive any advantage from the restrictive system, they only would sustain any injury from its abolition. The value of the manufactured goods annually produced in Great Britain has been estimated by the latest statistical writers at about 125 millions sterling, inclusive of the raw material. But the linen and silk manufactures are the only branches that could be at all seriously affected by the freest intercourse with other countries ; and the aggregate value ol both these branches, inclusive of the raw material, does not probably exceed 17 or 18 millions, or from a seventh to an eighth part of our whole manu¬ factures ; and cannot, therefore, be supposed to afford employment to more than a correspond¬ ing proportion of our manufacturing population. (Statistical Account of the British Empire , arts. Linen, Silk.) In point of fact, however, the free importation of foreign linens and 6ilks would only supersede a very small part of these manufactures. There is no reason, we have been well assured, for supposing that a»iy of the principal branches of the linen manu- hibition, are not near so advantageous to the graziers and farmers of Great Britain, as other regulations of the same kind are to its merchants and manufacturers. Manufac¬ tures, those of the finer kind especially, are more easily transported from one country to another than corn or cattle. It is in the fetching and carrying manufactures, accord¬ ingly, that foreign trade is chiefly employed. In manufactures, a very small advantage will enable foreigners to undersell our own workmen, even in the home market. It will require a very great one to enable them to do so in the rude produce of the soil. If the free importation of foreign manufactures were permitted, several of the home manu¬ factures would, probably, suffer, and some of them, perhaps, go to ruin altogether, and a considerable part of the stock and industry at present employed in them would be forced to find out some other employment. 2 But the freest importation of the rude pro¬ duce of the soil could have no such effect upon the agriculture of the country. If the importation of foreign cattle, for example, were made ever so free, so few could be imported, that the grazing trade of Great Britain could be little affected by it. facture would be materially injured by the gradual reduction of the existing duties on the importation of linens. And although the French excel in the manufacture of lighter silk fabrics, we are superior or at least equal to them in the manufacture of gloves and hosiery, and in that of poplins, and all those mixed fabrics of which silk is the basis ; and w r e are also rivalling them in the brightness of our colours, and the durability of our dyes. It appears from evidence given before committees of the House of Commons, that it has been a common practice to insure the safe delivery of French silks in any part of London for from 10 to 15 per cent, premium. It is not, therefore, as they commonly supposed, so much, perhaps, to prohibitory regulations, as to their own ingenuity, that our silk manufacturers were really indebted for that monopoly of the market they so long enjoyed. But their supposed dependence on custom-house regulations made them comparatively indifferent to improvements ; and to such an extent did this operate, that, even in respect of machinery, they were decidedly inferior to either the French or German manufacturers. Mr. Huskisson had sagacity to perceive the cause of this inferiority, and courage to undertake the introduction of a new system. This was accomplished in 1825, by reducing the duties on raw silk to a nearly nominal amount, and materially diminishing those on thrown or organzined silk ; while, at the same time, the prohibition against im¬ porting foreign silk goods was repealed, and they were allowed to be entered in unlimited quantities for home consumption, on paying an import duty of 30 per cent, ad valorem. This change of system was violently opposed, and many predicted that it would occasion the ruin of the manufacture. But these sinister auguries have been proved to be wholly fallacious. The measure, in fact, was signally suc¬ cessful. The manufacturers, finding they could no longer depend on the wrttched resource of custom-house regulations, put forth all their ener¬ gies; and, having called the various resources of science and ingenuity to their aid, the manufacture was more improved and extended during the dozen years ending with 1837, than it had been during the previous century. But the duty of 30 per cent, on importation, inasmuch as it greatly exceeded the ex¬ pense of smuggling, gave a considerable stimulus to that nefarious traffic; and hence the expediency of the late reduction of the duties to 15 per cent, ad valorem. At present (1849) the entire annual value of the silk manufacture is supposed to exceed 10,000,000/. 502 RESTRAINTS UPON IMPORTATION. Book IV. Live cattle are, perhaps, the only commodity of which the transportation is more expensive by sea than by land. By land they carry themselves to market. By sea, not only the cattle, but their food and their water too, must he carried at no small expense and inconveniency. The short sea between Ireland and Great Britain, indeed, renders the importation of Irish cattle more easy. But though the free importation of them, which was lately permitted only for a limited time, were rendered perpetual, it could have no considerable effect upon the interest of the graziers of Great Britain. 1 Those parts of Great Britain which border upon the Irish sea are all grazing countries. Irish cattle could never be imported for their use, but must be drove through those very extensive countries, at no small expense and inconveniency, before they could arrive at their proper market. Fat cattle could not be drove so far. Lean cattle, therefore, only could be imported; and such import¬ ation could interfere, not with the interest of the feeding or fattening countries, to which, by reducing the price of lean cattle, it would rather be advantageous, but with that of the breeding countries only. The small number of Irish cattle imported since their importation was permitted, together with the good price at which lean cattle still continue to sell, seem to demonstrate that even the breeding countries of Great Britain are never likely to be much affected by the free importation of Irish cattle. The com¬ mon people of Ireland, indeed, are said to have sometimes opposed with violence the exportation of their cattle. But if the ex¬ porters had found any great advantage in continuing the trade, they could easily, when the law was on their side, have conquered this mobbish opposition. Feeding and fattening countries, besides, must always be highly improved, whereas breeding countries are generally unculti¬ vated. The high price of lean cattle, by augmenting the value of uncultivated land, is like a bounty against improvement. To any country which was highly improved throughout, it would be more advantageous to import its lean cattle than to breed them. The pi'ovince of Holland, accordingly, is said to follow this maxim at present. The mountains of Scotland, Wales, and North¬ umberland, indeed, are countries not capa¬ ble of much improvement, and seem destined by nature to be the breeding countries of Great Britain. The freest importation of foreign cattle could have no other effect 1 This limitation and all the restraints formerly imposed on the commerce between Great Britain and Ireland, have been repealed. 2 The imports of foreign corn have greatly in¬ creased since 176G, when the tracts on the Corn Trade were published. During the half dozen years ending with 1837, they fell off very considerably; a conse- than to hinder those breeding countries from taking advantage of the increasing po¬ pulation and improvement of the rest of the kingdom, from raising their price to an ex¬ orbitant height, and from laying a real tax upon all the more improved and cultivated parts of the country. The freest importation of salt provisions, in the same manner, could have as little effect upon the interest of the graziers of Great Britain as that of live cattle. Salt pro¬ visions are not only a very bulky commodity, but when compared with fresh meat, they are a commodity both of worse quality, and as they cost more labour and expense, of higher price. They could never, therefore, come into competition with the fresh meat, though they might with the salt provisions of the country. They might be used for victualling ships for distant voyages, and such like uses, but could never make any considerable part of the food of the people. The small quantity of salt provisions im¬ ported from Ireland since their importation was rendered free, is an experimental proof that our graziers have nothing to appre¬ hend from it. It does not appear that the price of butcher’s meat has ever been sen¬ sibly affected by it. Even the free importation of foreign corn could very little affect the interest of the farmers of Great Britain. Corn is a much more bulky commodity than butcher’s meat. A pound of wheat at a penny is as dear as a pound of butcher’s meat at fourpence. The small quantity of foreign corn import¬ ed even in times of the greatest scarcity, may satisfy our farmers that they can have nothing to fear from the freest importa¬ tion. The average quantity imported, one year with another, amounts only, according to the very well informed author of the tracts upon the corn trade, to twenty-three thousand seven hundred and twenty-eight quarters of all sorts of grain, and does not exceed the five hundredth and seventy-one part of the annual consumption. 2 But as the bounty upon corn occasions a greater exportation in years of plenty, so it must of consequence occasion a greater importation in years of scarcity, than in the actual state of tillage would otherwise take place. By means of it, the plenty of one year does not compen¬ sate the scarcity of another; and as the average quantity exported is necessarily augmented by it, so must likewise, in the actual state of tillage, the average quantity imported. If there were no bounty, as less corn would be exported, so it is probable that, one year quence partly, no doubt, of the then existing regu¬ lations in regard to importation, but far more of favourable harvests and the spread of agricul¬ tural improvement. Latterly, however, or from 1838 down to the present time (1849), the imports have been very large. See Supplemental Note on Corn Laws. Chap. II. RESTRAINTS UPON IMPORTATION. 203 with another, less would be imported than at present. The corn merchants, the fetchers and carriers of corn between Great Britain and foreign countries, would have much less employment, and might suffer considerably; but the country gentlemen and farmers could suffer very little. It is in the corn mer¬ chants accordingly, rather than in the coun¬ try gentlemen and farmers, that I have ob¬ served the greatest anxiety for the renewal and continuation of the bounty. 1 Country gentlemen and farmers are, to their great honour, of all people the least subject to the wretched spirit of monopoly. The undertaker of a great manufactory is sometimes alarmed if another work of the same kind is established within twenty miles of him. The Dutch undertaker of the wool¬ len manufacture at Abbeville stipulated that no work of the same kind should be esta¬ blished within thirty leagues of that city. Farmers and country gentlemen, on the contrary, are generally disposed rather to promote than to obstruct the cultivation and improvement of their neighbours’ farms and estates. They have no secrets, such as those of the greater part of manufacturers, but are generally rather fond of communicating to their neighbours, and of extending, as far as possible, any new practice which they have found to be advantageous. Pius qucestus , says old Cato, stabilissimusque, minimeque invidiosus; minimeque male cogitantes sunt, qui in eo studio occupati sunt . 2 3 Country gentlemen and farmers, dispersed in differ¬ ent parts of the country, cannot so easily combine as merchants and manufacturers, who being collected into towns, and accus¬ tomed to that exclusive corporation spirit which prevails in them, naturally endea¬ vour to obtain against all their countrymen the same exclusive privilege which they ge¬ nerally possess against the inhabitants of their respective towns. They accordingly seem to have been the original inventors of those restraints upon the importation of foreign goods, which secure to them the monopoly of the home market. It was probably in imitation of them, and to put themselves upon a level with those who, they found, were disposed to oppress them, that the country gentlemen and farmers of Great Britain so far forgot the generosity which is natural to their station, as to de¬ mand the exclusive privilege of supplying their countrymen with corn and butcher’s meat. They did not, perhaps, take time to consider how much less their interest could be affected by the freedom of trade, than that of the people -whose example they followed. To prohibit by a perpetual law the im¬ portation of foreign corn and cattle, is in 1 The bounty was repealed in 1815. See supple¬ mental note on the Corn Laws. 3 See anti, p. 115. note. reality to enact, that the population and industry of the country shall at no time ex¬ ceed what the rude produce of its own soil can maintain. There seem, however, to be two cases in which it will generally be advantageous to lay some burden upon foreign, for the en¬ couragement of domestic industry. The first is, when some particular sort of industry is necessary for the defence of the country. The defence of Great Britain, for example, depends very much upon the num¬ ber of its sailors and shipping. The act of navigation, therefore, very properly endea¬ vours to give the sailors and shipping of Great Britain the monopoly of the trade of their own country, in some cases, by abso¬ lute prohibitions, and in others by heavy burdens upon the shipping of foreign coun¬ tries. The following are the principal dis¬ positions of this act. First, All ships, of which the owners, masters, and three-fourths of the mariners are not British subjects, are prohibited, upon pain of forfeiting ship and cargo, from trad¬ ing to the British settlements and planta¬ tions, or from being employed in the coasting trade of Great Britain. Secondly, A great variety of the most bulky articles of importation can be brought into Great Britain only, either in such ships as are above described, or in ships of the country where those goods are produced, and of which the owners, masters, and three- fourths of the mariners, are of that particular country; and when imported even in ships of this latter kind, they are subject to double aliens duty. If imported in ships of any other country, the penalty is forfeiture of ship and goods. When this act was made, the Dutch were, what they still are, the great carriers of Europe; and by this regulation they were entirely excluded from being the carriers to Great Britain, or from importing to us the goods of any other European country. Thirdly, A great variety of the most bulky articles of importation are prohibited from being imported, even in British ships, from any country but that in which they are pro¬ duced, under pain of forfeiting ship and cargo. This regulation, too, was probably intended against the Dutch. Holland was then, as now, the great emporium for all European goods ; and by this regulation, British ships were hindered from loading in Holland the goods of any other European country. Fourthly, Salt fish of all kinds, whale-fins, whale bone, oil, and blubber, not caught by and cured on board British vessels, when imported into Great Britain, are subjected to double aliens duty. The Dutch, as they are still the principal, were then the only fishers in Europe that attempted to supply 204 RESTRAINTS UPON IMPORTATION. foreign nations with fish. By this regula¬ tion, a very heavy burden was laid upon their supplying Great Britain. When the act of navigation was made, though England and Holland were not ac¬ tually at war, the most violent animosity subsisted between the two nations. It had begun during the government of the long parliament, which first framed this act, and it broke out soon after in the Dutch wars during that of the Protector and of Charles the Second. It is not impossible, therefore, that some of the regulations of this famous act may have proceeded from national ani¬ mosity. They are as wise, however, as if they had all been dictated by the most deli¬ berate wisdom. National animosity at that particular time aimed at the very same object which the most deliberate wisdom would have recommended, — the diminution of the naval power of Holland, the only naval power which could endanger the secur¬ ity. of England. V. The act of navigation is not favourable to foreign commerce, or to the growth of that opulence which can arise from it. The in¬ terest of a nation in its commercial relations to foreign nations, is, like that of a merchant with regard to the different people with whom he deals, to buy as cheap and to sell as dear as possible. But it will be most likely to buy cheap, when by the most per¬ fect freedom of trade it encourages all nations to bring to it the goods which it has occasion to purchase ; and, for the same reason, it will be most likely to sell dear, when its markets are thus filled with the greatest number of buyers^ The act of navigation, it is true, lays no burden upon foreign ships that come to export the produce of British industry. Even the ancient aliens duty, which used to be paid upon all goods exported as well as imported, has, by several subsequent acts, been taken off from the greater part*of the articles of exportation ; buttaf foreigners, either by prohibitions or high duties, are hindered from coming to sell, they cannot always afford to come to buy, because coming without a cargo, they must lose the freight from their own country to Great Britain. By diminishing the number of sellers, therefore, we necessarily diminish that of buyers, and are thus likely not only to buy foreign goods dearer, but to sell our own cheaper than ifthere was a more per¬ fect freedom of tradej As defence, however, is of much more importance than opulence, the act of navigation is, perhaps, the wisest of all the commercial regulations of Eng¬ land. 1 * * 4 1 For an inquiry into the policy of the navigation act, and of the alterations made in it, the reader is referred to the supplemental note on the Navigation Caws, where the subject is treated of at considerable length. 4 ’there can be no doubt that taxes upon the Buox IV. The second case, in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry, is, when some tax is imposed at home upon the produce of the latter. In this case, it seems reasonable that an equal tax should be imposed upon the like produce of the former. This would not give the monopoly of the home market to domestic industry, nor turn towards a particular em¬ ployment a greater share of the stock and labour of the country, than what would naturally go to it. It would only hinder any part of what -would naturally go to it from being turned away by the tax into a less natural direction, and would leave the competition between foreign and domestic industry, after the tax, as nearly as possible upon the same footing as before it. In Great Britain, when any such tax is laid upon the produce of domestic industry, it is usual at the same time, in order to stop the clamorous complaints of our merchants and manufacturers, that they will be undersold at home, to lay a much heavier duty upon the importation of all foreign goods of the same kind. This second limitation of the freedom of trade, according to some people, should, upon some occasions, be extended much far¬ ther than to the precise foreign commodities which could come into competition with those which had been taxed at home. When the necessaries of life have been taxed in any country, it becomes proper, they pretend, to tax not only the like necessaries of life im¬ ported from other countries, but all sorts of foreign goods which can come into compe¬ tition with any thing that is the produce of domestic industry. Subsistence, they say, becomes necessarily dearer in consequence of such taxes ; and the price of labour must always rise with the price of the labourer’s subsistence. Every commodity, therefore, which is the produce of domestic industry, though not immediately taxed itself, becomes dearer in consequence of such taxes, because the labour which produces it becomes so. 2 Such taxes, therefore, are really equivalent, they say, to a tax upon every particular commodity produced at home. In order to put domestic upon the same footing with foreign industry, therefore, it becomes neces- sary, they think, to lay some duty upon every foreign commodity, equal to this en¬ hancement of the price of the home con- modities with which it can come into com¬ petition. V hether taxes upon the necessaries of life, such as those in Great Britain upon necessaries of life raise the wages of labour ; but it will be shown, in the supplemental note on the Effect of Variations in the rates of Wages, and Profit on the Value of Commodities, that a rise of wages does not occasion a general rise in the price of commodi¬ ties. Chap. II. RESTRAINTS UPON IMPORTATION. 205 soap, salt, leather, candles, &c., necessarily raise the price of labour, and consequently that of all other commodities, I shall con¬ sider hereafter, when I come to treat of taxes. Supposing, however, in the mean time, that they have this effect, and they have it undoubtedly, this general enhance¬ ment of the price of all commodities, in consequence of that of labour, is a case which differs in the two following respects from that of a particular commodity, of wdiich the price was enhanced by a particu¬ lar tax immediately imposed upon it. First , It might always be known with great exactness how far the price of such a commodity could be enhanced by such a tax: but how far the general enhancement of the ' price of labour might affect that of every different commodity, about which labour was employed, could never be known with any tolerable exactness. It would be im¬ possible, therefore, to proportion with any tolerable exactness the tax upon every foreign, to this enhancement of the price of every home commodity. Secondly , Taxes upon the necessaries of life have nearly the same effect upon the circumstances of the people as a poor soil and a bad climate. Provisions are thereby rendered dearer in the same manner as if it required extraordinary labour and expense to raise them. As in the natural scarcity arising from soil and climate, it would be absurd to direct the people in what manner they ought to employ their capitals and in¬ dustry, so is it likewise in the artificial scarcity arising from such taxes. To be left to accommodate, as well as they could, their industry to their situation, and to find out those employments in which, notwithstand¬ ing their unfavourable circumstances, they might have some advantage either in the home or in the foreign market, is what in both cases would evidently be most for their advantage. To lay a new tax upon them, because they are already overburdened with taxes, and because they already pay too dear for the necessaries of life, to make them likewise too dear for the greater part of other commodities, is certainly a most absurd way of making amends. Such taxes, when they have grown up to a certain height, are a curse equal to the barrenness of the earth and the inclemency of the heavens; and yet it is in the richest and most industrious countries that they have been most generally imposed. No other countries could support so great a disorder. As the strongest bodies only can live and enjoy health under an unwholesome regimen, so the nations only that in every sort of industry have the greatest natural and acquired advantages can subsist and prosper under such taxes. Holland is the country in Europe in which they abound most, and which from peculiar circumstances continues to prosper, not by means of them, as has been most absurdly supposed, but in spite of them. As there are two cases in which it will generally be advantageous to lay some bur¬ den upon foreign for the encouragement of domestic industry, so there are two others in which it may sometimes be a matter of de¬ liberation ; in the one, how far it is proper to continue the free importation of certain foreign goods; and in the other, how far, or in what manner, it may be proper to restore that free importation after it has been for sometime interrupted. The case in w r hich it may sometimes be a matter of deliberation how far it is proper to continue the free importation of certain foreign goods, is, w r hen some foreign nation restrains by high duties or prohibitions the importation of some of our manufactures into their country. Revenge in this case naturally dictates retaliation, and that we should impose the like duties and prohibi¬ tions upon the importation of some or all of their manufactures into ours. Nations, accordingly, seldom fail to retaliate in this manner. The French have been particularly forward to favour their own manufactures by restraining the importation of such foreign goods as could come into competition with them. In this consisted a great part of the policy of Mr. Colbert, who, notwithstanding his great abilities, seems in this case to have been imposed upon by the sophistry of mer¬ chants and manufacturers, who are always demanding a monopoly against their coun¬ trymen. It is at present the opinion of the most intelligent men in France that his operations of this kind have not been bene¬ ficial to his country. That minister, by the tarif, of 1667, imposed very high duties upon a great number of foreign manufactures. Upon his refusing to moderate them in fa¬ vour of the Dutch, they, in 1671, prohibited the importation of the wines, brandies, and manufactures of France. The w T ar of 1672 seems to have been in part occasioned by this commercial dispute. The peace of Nimeguen put an end to it in 1678, by moderating some of those duties in favour of the Dutch, who in consequence took oil' their prohibition. It was about the same time that the French and English began mutually to oppress each other’s industry, by the like duties and prohibitions, of which the French, however, seem to have set the first example. The spirit of hostility which has subsisted between the two nations ever since, has hitherto hindered them from being moderated on either side. In 1697 the English prohibited the importation of bone- lace, the manufacture of Flanders. The government of that country, at that time under the dominion of Spain, prohibited in 206 RESTRAINTS UPON IMPORTATION Book IV. return the importation of English woollens. In 1700 the prohibition of importing bone- lace into England was taken off, upon con¬ dition that the importation of English wool¬ lens into Flanders should be put on the same footing as before. There may be good policy in retaliations of this kind, when there is a probability that they will procure the repeal of the high du¬ ties or prohibitions complained of. The recovery of a great foreign market will ge¬ nerally more than compensate the transitory inconveniency of paying dearer during a short time for some sorts of goods. To judge whether such retaliations are likely to pro¬ duce such an effect, does not perhaps belong so much to the science of a legislator, whose deliberations ought to be governed by gene¬ ral principles which are always the same, as to the skill of that insidious and crafty ani¬ mal, vulgarly called a statesman or politician, whose councils are directed by the moment¬ ary fluctuations of affairs. When there is no probability that any such repeal can be procured, it seems a bad method of com¬ pensating the injury done to certain classes of our people, to do another injury ourselves, not only to those classes, but to almost all the other classes of them. When our neighbours prohibit some manufacture of ours, we generally prohibit, not only the same, for that alone would seldom affect them considerably, but some other manufac¬ ture of theirs. This may no doubt give encouragement to some particular class of workmen among ourselves, and by excluding some of their rivals, may enable them to raise their price in the home market. Those workmen, however, who suffered by our neighbours’ prohibition will not be benefited by ours. On the contrary, they and almost all the other classes of our citizens will thereby be obliged to pay dearer than before for certain goods. Every such law, there¬ fore, imposes a real tax upon the whole country, not in favour of that particular class of workmen who were injured by our neighbours’ prohibition, but of some other class. The case in which it may sometimes be a matter of deliberation, how far, or in what manner, it is proper to restore the free im¬ portation of foreign goods, after it has been for some time interrupted, is, when parti¬ cular manufactures, by means of high duties or prohibitions upon all foreign goods which can come into competition with them, have been so far extended as to employ a great multitude of hands. Humanity may in this case require that the freedom of trade should be restored only by slow gradations, and with a good deal of reserve and circumspec¬ tion. Were those high duties and prohibi¬ tions taken away all at once, cheaper foreign goods of the same kind might be poured so fast into the home market, as to deprive all at once many thousands of our people of their ordinary employment and means of subsistence. The disorder which this would occasion might no doubt be very consider¬ able. It would in all probability, however, be much less than is commonly imagined, for the two following reasons: — First , All those manufactures, of which any part is commonly exported to other European countries without a bounty, could be very little affected by the freest importa¬ tion of foreign goods. Such manufactures must be sold as cheap abroad as any other foreign goods of the same quality and kind, and consequently must be sold cheaper at home. They would still, therefore, keep possession of the home market, and though a capricious man of fashion might some¬ times prefer foreign wares, merely because they were foreign, to cheaper and better goods of the same kind that were made at home, this folly could, from the nature of things, extend to so few, that it could make no sensible impression upon the general em¬ ployment of the people. But a great part of all the different branches of our woollen manufacture, of our tanned leather, and of our hardware, are annually exported to other European countries without any bounty, and these are the manufactures which employ the greatest number of hands. The silk, per¬ haps, is the manufacture which would suffer the most by this freedom of trade, and after it the linen, though the latter much less than the former. 1 Secondly , Though a great number of peo¬ ple should, by thus restoring the freedom of trade, be thrown all at once out of their or¬ dinary employment and common method of subsistence, it would bv no means follow that they would thereby be deprived either of employment or subsistence. By the re¬ duction of the army and navy at the end of the late war, more than a hundred thousand soldiers and seamen—a number equal to what is employed in the greatest manufactures— were all at once thrown out of their ordi¬ nary employment; but, though they no doubt suffered some inconveniency, they were not thereby deprived of all employ¬ ment and subsistence. The greater part of the seamen, it is probable, gradually betook themselves to the merchant-service, as they could find occasion, and in the mean time, both they and the soldiers were absorbed in the great mass of the people, and employed in a great variety of occupations. Not only no great convulsion, but no sensible disorder arose from so great a change in the situation of more than a hundred thousand men, all accustomed to the use of arms, and many of them to rapine and plunder. The number of vagrants was scarce anywhere sensibly in- 1 See ante, note, p. 201. RESTRAINTS UPON IMPORTATION. 207 i i I ! K I I I f Chap. II. creased by it, even the wages of labour were not reduced by it in any occupation, so far as I have been able to learn, except in that of seamen in the merchant-service. But if we compare together the habits of a soldier and of any sort of manufacturer, we shall find that those of the latter do not tend so much to disqualify him from being employed in a new trade, as those of the former from being employed in any. The manufac¬ turer has always been accustomed to look for his subsistence from his labour only; the soldier to expect it from his pay. Applica¬ tion and industry have been familiar to the one ; idleness and dissipation to the other. But it is surely much easier to change the direction of industry from one sort of labour to another, than to turn idleness and dissipation to any. To the greater part of manufactures besides, it has already been observed, there are other collateral manu¬ factures of so similar a nature, that a work¬ man can easily transfer his industry from one of them to another. The greater part of such workmen too are occasionally em¬ ployed in country labour. The stock which employed them in a particular manufacture before, will still remain in the country, to employ an equal number of people in some other way. The capital of the country re¬ maining the same, the demand for labour will likewise be the same, or very nearly the same, though it may be exerted in different places and for different occupations. Sol¬ diers and seamen, indeed, when discharged from the king’s service, are at liberty to ex¬ ercise any trade, within any town or place of Great Britain or Ireland. Let the same natural liberty of exercising what species of industry they please, be restored to all his majesty’s subjects, in the same manner as to soldiers and seamen ; that is, break down the exclusive privileges of corporations, and repeal the statute of apprenticeship 1 , both which are real encroachments upon natural liberty, and add to these the repeal of the law of settlements, so that a poor workman, when thrown out of employment either in one trade or in one place, may seek for it in another trade or in another place, without the fear either of a prosecution or of a re¬ moval, and neither the public nor the in¬ dividuals will suffer much more from the occasional disbanding some particular classes of manufacturers than from that of soldiers. 1 The statute of apprenticeship was repealed in 1814* See anti, p. 55. note. 2 This expectation does not seem so absurd at present as it must have done in 1775. A very consi¬ derable approach has been made since 1825 to the freedom of trade, and it is no longer visionary to suppose that ultimately it may be carried into full effect. It is necessary to bear in mind that a free trade does not suppose a trade in which imported commodities shall be exempted from duties; but a trade without any prohibitions of import or export, and without any duties on importation for the sake of protecting some department of native industry, or Our manufacturers have no doubt great merit with their country, but they cannot have more than those who defend it with their blood, nor deserve to be treated with more delicacy. To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain, is as absurd as to expect that an Oceana or Utopia should ever be esta¬ blished in it. 2 Not only the prejudices of the public, but, what is much more uncon¬ querable, the private interests of many indi¬ viduals, irresistibly oppose it. Were the officers of the army to oppose with the same zeal and unanimity any reduction in the number of forces, with which master manu¬ facturers set themselves against every law that is likely to increase the number of their rivals in the home market; were the former to animate their soldiers, in the same man¬ ner as the latter inflame their workmen, to attack with violence and outrage the pro¬ posers of any such regulation; to attempt to reduce the army would be as dangerous as it has now become to attempt to dimi¬ nish in any respect the monopoly which our manufacturers have obtained against us. This monopoly has so much increased the number of some particular tribes of them, that, like an overgrown standing army, they have become formidable to the government, and, upon many occasions, intimidate the legislature. The member of parliament who supports every proposal for strengthening this monopoly, is sure to acquire not only the reputation of understanding trade, but great popularity and influence with an order of men whose numbers and wealth render them of great importance. If he opposes them, on the contrary, and still more, if he has authority enough to be able to thwart them, neither the most acknowledged pro¬ bity, nor the highest rank, nor the greatest public services, can protect him from the most infamous abuse and detraction, from personal insults, nor sometimes from real danger, arising from the insolent outrage of furious and disappointed monopolists. 3 The undertaker of a great manufacture, who, by the home markets being suddenly laid open to the competition of foreigners, should be obliged to abandon his trade, would no doubt suffer very considerably. That part of his capital which had usually been employed in purchasing materials and for any purpose other than the acquisition of revenue. Duties imposed for this purpose may, however, be very high, and even oppressive, without encroaching on the principle of freedom. 3 The more general diffusion of information with respect to the sound principles of commercial eco¬ nomy, and the influence of restrictions on trade, has effected a great change in the public opinion with .n the last few years. Many restrictions have been abolished, sometimes with none, and generally with less opposition on the part of the manufacturers than might have been anticipated. 208 RESTRAINTS UPON IMPORTATION. Book IV. in paying his workmen, might, without much difficulty, perhaps, find another em¬ ployment. But that part of it which was fixed in workhouses, and in the instruments of trade, could scarce be disposed of without considerable loss. The equitable regard, therefore, to his interest, requires that changes of this kind should never be intro¬ duced suddenly, but slowly, gradually, and after a very long warning. The legislature, were it possible that its deliberations could be always directed, not by the clamorous importunity of partial interests, but by an extensive view of the general good, ought upon this very account, perhaps, to be par¬ ticularly careful neither to establish any new monopolies of this kind, nor to extend far¬ ther those which are already established. Every such regulation introduces some de- gree of real disorder into the constitution of the state, which it will be difficult afterwards to cure without occasioning another dis¬ order. How far it may be proper to impose taxes upon the importation of foreign goods, in order, not to prevent their importation, but to raise a revenue for government, I shall consider hereafter, when I come to treat of taxes. Taxes imposed with a view to pre¬ vent, or even to diminish importation, are evidently as destructive of the revenue of the customs as of the freedom of trade. CHAP. III. Of the extraordinary Restraints upon the Im¬ portation of Goods of almost all Kinds f from those Countries with ivhich the Balance is supposed to be disadvantageous. Tart I. Of the Unreasonableness of those Restraints even upon the Principles of the Commercial System. To lay extraordinary restraints upon the importation of goods of almost all kinds, from those particular countries with which the balance of trade is supposed to be dis¬ advantageous, is the second expedient by which the commercial system proposes to increase the quantity of gold and silver. Thus in Great Britain, Silesia lawns may be imported for home consumption, upon pav¬ ing certain duties; but French cambrics and lawns are prohibited to be imported, except into the port of London, there to be ware¬ housed for exportation. 1 Higher duties are imposed upon the wines of France than upon those of Portugal, or indeed of any 1 Freneli cambrics and lawns may now be imported for home consumption on paying a duty of six shil¬ lings the piece of eigh t yards long and seven-eighths broad, and 60 in proportion. other country. By what is called the im¬ post 1692, a duty of five-and-twenty per cent., of the rate or value, was laid upon all French goods, while the goods of other nations were, the greater part of them, subjected to much lighter duties, seldom exceeding five per cent. The wine, brandv, salt, and vinegar of France, were indeed excepted ; these commodities being sub¬ jected to other heavy duties, either by other laws, or by particular clauses of the same law. In 1696, a second duty of twenty- five per cent., the first not having been thought a sufficient discouragement, was imposed upon all French goods, except brandy ; together with a new duty of five and twenty pounds upon the tun of French wine, and another of fifteen pounds upon the tun of French vinegar. French goods have never been omitted in any of those general subsidies, or duties of five per cent, which have been imposed upon all, or the greater part of the goods enumerated in the book of rates. If we count the one-third and two-third subsi¬ dies as making a complete subsidy between them, there have been five of these general subsidies, so that before the commencement of the present war, seventy-five per cent, may be considered as the lowest duty, to which the greater part of the goods of the growth, produce, or manufacture of France were liable ; but upon the greater part of goods, those duties are equivalent to a pro¬ hibition. The French in their turn have, I believe, treated our goods and manufactures just as hardly ; though I am not so well acquainted with the particular hardships which they have imposed upon them. Those mutual restraints have put an end to almost all fair commerce between the two nations, and smugglers are now the principal im¬ porters, either of British goods into France, or of French goods into Great Britain. The principles which I have been examining in the foregoing chapter, took their origin from private interest and the spirit of mono¬ poly ; those which I am going to examine in this, from national prejudice and animo¬ sity. They are, accordingly, as might well be expected, still more unreasonable. They are so, even upon the principles of the com¬ mercial svstem. 2 J First , Though it were certain that in the case of a free trade between France and England, for example, the balance would be in favour of France, it would by no means follow that such a trade would be disadvan¬ tageous to England, or that the general balance of its whole trade would thereby be turned more against it. If the wines of France are better and cheaper than those of Portugal, or its linens than those of Ger- 2 See the supplemeRtal note on the trade with France. Chap. III. RESTRAINTS UPON IMPORTATION. 209 ' r l! ! I I . I * 11 many, it would be more advantageous for Great Britain to purchase both the wine and the foreign linen which it had occasion for of France, than of Portugal and Ger¬ many. Though the value of the annual importations from France would thereby be greatly augmented, the value of the whole annual importations would be diminished, in proportion as the French goods of the same quality were cheaper than those of the other two countries. This would be the case even upon the supposition that the whole French goods imported were to be consumed in Great Britain. But, secondly , A great part of them might be re-exported to other countries, where, being sold with profit, they might bring back a return equal in value, perhaps, to the prime cost of the whole French goods im¬ ported. What has frequently been said of the East India trade might, possibly, be true of the French,—that though the greater part of East India goods were bought with gold and silver, the re-exportation of a part of them to other countries brought back more gold and silver to that which carried on the trade than the prime cost of the whole amounted to. One of the most important branches of the Dutch trade, at present, consists in the carriage of French goods to other European countries. Some part even of the French wine drunk in Great Britain is clandestinely imported from Holland and Zealand. If there was either a free trade between France and England, or if French goods could be imported upon paying only the same duties as those of other European nations, to be drawn back upon exportation, England might have some share of a trade which is found so advantageous to Holland. Thirdly , and lastly, There is no certain criterion by which we can determine on which side what is called the balance be¬ tween any two countries lies, or which of them exports to the greatest value. National prejudice and animosity, prompted always by the private interest of particular traders, are the principles which generally direct our judgment upon all questions concerning it. There are two criterions, however, which have frequently been appealed to upon such occasions: the custom-house books and the course of exchange. The custom-house books, I think, it is now generally acknow¬ ledged, are a very uncertain criterion, on account of the inaccuracy of the valuation at which the greater part of goods are rated in them. The course of exchange is, per¬ haps, almost equally so. When the exchange between two places,! such as London and Paris, is at par, it is said to be a sign that the debts due from London to Paris are compensated by those due from Paris to London. On the con¬ trary, when a premium is paid at London for a bill upon Paris, it is said to be a sign I that the debts due from London to Paris! are not compensated by those due from Paris 1 to London, but that a balance in money I must be sent out from the latter place; for ■ the risk, trouble, and expense, of exporting which, the premium is both demanded and given. But the ordinary state of debt and credit between those two cities must neces¬ sarily be regulated, it is said, by the ordi¬ nary course of their dealings with one ano¬ ther. When neither of them imports from the other to a greater amount than it ex¬ ports to that other, the debts and credits of each may compensate one another. But when one of them imports from the other to a greater value than it exports to that other, the former necessarily becomes in¬ debted to the latter in a greater sum than the latter becomes indebted to it: the debts and credits of each do not compensate one another, and money must be sent out from that place of which the debts overbalance the credits. The ordinary course of ex¬ change, therefore, being an indication of the ordinary state of debt and credit between two places, must likewise be an indication of the ordinary course of their exports and im¬ ports, as these necessarily regulate that state. But though the ordinary course of ex¬ change should be allowed to be a sufficient indication of the ordinary state of debt and credit between any two places, it would not from thence follow that the balance of trade! was in favour of that place which had the 1 ordinary state of debt and credit in its I favour. The ordinary state of debt and credit between any two places is not always entirely regulated by the ordinary course of their dealings with one another, but is often influenced by that of the dealings of either with many other places. If it is usual, for example, for the merchants of England to pay for the goods which they buy of Hamburgh, Dantzic, Riga, &c. by bills upon Holland, the ordinary state of debt and credit between England and Hol¬ land will not be regulated entirely by the ordinary course of the dealings of those two countries with one another, but will be in¬ fluenced by that of the dealings of England with those other places. England may be obliged to send out every year money to\ Holland, though its annual exports to that! country may exceed very much the annual! value of its imports from thence; and though what is called the balance of trade may be very much in favour of England. In the way, besides, in which the par of exchange has hitherto been computed, the ordinary course of exchange can afford no sufficient indication that the ordinary state of debt and credit is in favour of that coun¬ try which seems to have, or which is sup¬ posed to have, the ordinary course of P i 210 RESTRAINTS UPON IMPORTATION. Book IV. exchange in its favour : or, in other words, the real exchange may be, and in fact often is, so very different from the computed one, that from the course of the latter no certain conclusion can, upon many occasions, be drawn concerning that of the former. When for a sum of money paid in Eng¬ land, containing, according to the standard of the English mint, a certain number of ounces of pure silver, you receive a bill for a sum of money to be paid in France, con¬ taining, according to the standard of the (French mint, an equal number of ounces of jure silver, exchange is said to be at par jetween England and France. When you ^>ay more, you are supposed to give a pre¬ mium, and exchange is said to be against England and in favour of France. W hen of coinage is defrayed by the government; in others, it is defrayed by the private peo¬ ple, who carry their bullion to the mint, and the government even derives some revenue from the coinage. In England, it is de¬ frayed by the government, and if you carry a pound weight of standard silver to the mint, you get back sixty-two shillings, con¬ taining a pound weight of the like standard silver. In France, a duty of eight per cent, is deducted for the coinage, which not only defrays the expense of it, but affords a small revenue to the government. 1 In Eng-1 and, as the coinage costs nothing, the cur-\ ent coin can never be much more valuable! han the quantity of bullion which it actually contains. In France, the workmanship, as you pay for it, adds to the value, in the same ou pay less, you are supposed to get a manner as to that of wrought plate. A sum premium, and exchange is said to be against 0 f French money, therefore, containing a France and in favour of England. £ certain weight of pure silver, is more valu-1 But, first , We cannot always judge of the *)|ble than a sum of English money contain-! value of the current money of different r^_ing an equal weight of pure silver, and mustj ( countries by the standard of their respective ^Jlrequire more bullion, or other commodities, mints : in some, it is more, in others it is fco purchase it. Though the current coin of less worn, dipt, and otherwise degenerated the two countries, therefore, were equally I from that standard. But the value of the current coin of every country, compaied with that of any other country, is in proportion, not to the quantity of pure silver which it I ought to contain, but to that which it ac¬ tually does contain. Before the reformation of the silver coin in King William’s time, exchange between England and Holland, computed in the usual manner according to the standard of their respective mints, was five-and-twenty per cent, against England. But the value of the current coin of Eng¬ land, as we learn from Mr. Lowndes, was at that time rather more than five-and- twenty per cent, below its standard value. The real exchange, therefore, may even at that time have been in favour of England, notwithstanding the computed exchange was so much against it; a smaller number of ounces of pure silver, actually paid in Eng¬ land, may have purchased a bill for a greater number of ounces of pure silver to be paid in Holland, and the man who was supposed to give may in reality have got the premium. The French coin was, before the late reform¬ ation of the English gold coin, much less worn than the English, and was, perhaps, two or three per cent, nearer its standard. If the computed exchange with France, therefore, was not more than two or three per cent, against England, the real exchange might have been in its favour. Since the reformation of the gold coin, the exchange has been constantly in favour of England and against France. Secondly , In some countries, the expense 1 No seignorage is charged in England on the coinage of gold, but a seignorage of 6 14-31 per cent, has been charged since 1816 on the coinage of silver. near the standards of their respective mints, a sum of English money could not well pur¬ chase a sum of French money, containing an equal number of ounces of pure silver, nor consequently a bill upon France for such a sum. If for such a bill no more additional money was paid than what was sufficient to compensate the expense of the French coin¬ age, the real exchange might be at par be¬ tween the two countries, their debts and credits might mutually compensate one another, while the computed exchange was considerably in favour of France. If less than this was paid the real exchange might be in favour of England, while the computed was in favour of France. Thirdly , and lastly, In some places, as at Amsterdam, Hamburgh, Venice, &c. foreign bills of exchange are paid in what they call bank money ; while in others, as at London, Lisbon, Antwerp, Leghorn, &c. they are paid in the common currency of the coun¬ try. What is called bank money is always! lof more value than the same nominal sum of \ {common currency. A thousand guilders in the bank of Amsterdam, for example, are of more value than a thousand guilders of I Amsterdam currency. The difference be-' /tween them is called the agio ot the bank, | which, at Amsterdam, is generally about five *■ per cent. Supposing the current money of the two countries equally near to the stand¬ ard of their respective mints, and that the one pays foreign bills in this common cur¬ rency, while the other pays them in bank money, it is evident that the computed ex- / In France, the seignorage does not exceed £ per cent, on gold, and 1£ per cent, on silver. See ante, p. u. and p. 21. Chap. III. BANK OF AMSTERDAM. 21 1 change may be in favour of that which pays in bank money, though the real exchange should be in favour of that which pays in current money ; for the same reason that the computed exchange may be in favour of that which pays in better money, or in money nearer to its own standard, though the real exchange should be in favour of that which pays in worse. The computed exchange, before the late reformation of the gold coin, was generally against London with Amsterdam, Hamburgh, Venice, and, I believe, with all other places which pay in what is called bank money. It will by no means follow, however, that the real ex^- change was against it. Since the reformation of the gold coin, it has been in favour of London even with those places. The com¬ puted exchange has generally been in favour of London with Lisbon, Antwerp, Leghorn, and, if you except France, I believe, with most other parts of Europe that pay in com¬ mon currency; and it is not improbable that the real exchange was so too. 1 Digression concerning Banks of Deposit , par¬ ticularly concerning that of Amsterdam. The currency of a great state, such as France or England, generally consists almost en¬ tirely of its own coin. Should this currency, therefore, be at any time worn, dipt, or otherwise degraded below its standard value, the state by a reformation of its coin can effectually re-establish its currency. But the currency of a small state, such as Genoa or Hamburgh, can seldom consist altogether in its own coin, but must be made up, in a great measure, of the coins of all the neigh¬ bouring states with which its inhabitants have a continual intercourse. Such a state, therefore, by reforming its coin, will not always be able to reform its currency. If foreign bills of exchange are paid in this currency, the uncertain value of any sum, of what is in its own nature so uncertain, must render the exchange always very much against such a state, its currency being, in all foreign states, necessarily valued even below what it is worth. In order to remedy the inconvenience to which this disadvantageous exchange must have subjected their merchants, such small states, when they began to attend to the in¬ terest of trade, have frequently enacted, that foreign bills of exchange of a certain value should be paid, not in common currency, but by an order upon, or by a transfer in the books of a certain bank, established upoi: the credit, and under the protection of the state; this bank being always obliged tc pay, in good and true money, exactly ac 1 For a more complete exposition of the theory and practice of exchange, the reader is referred to Mr. Blake’s celebrated pamphlet, entitled Obscrva cording to the standard of the state. The banks of Venice, Genoa, Amsterdam, Ham¬ burgh and Nuremberg, seem to have been all originally established with this view, though some of them may hav afterwards been made subservient to other purposes. The money of such banks, being better than the common currency of the country, necessarily bore an agio, which was greater or smaller, according as the currency was supposed to be more or less degraded below the standard of the state. The agio of the bank of Ham¬ burgh, for example, which is said to be commonly about fourteen per cent., is the supposed difference between the good stand¬ ard money of the state, and the dipt, worn, and diminished currency poured into it from all the neighbouring states. Before 1609 the great quantity of dipt and worn foreign coin, which the extensive trade of Amsterdam brought from all parts of Europe, reduced the value of its currency! about nine per cent, below that of good mo-1 ney fresh from the mint. Such money not sooner appeared than it was melted down or I carried away, as it always is in such circum- / stances. The merchants, with plenty of cur¬ rency, could not always find a sufficient quan¬ tity of good money to pay their bills of ex¬ change ; and the value of those bills, in spite of several regulations which were made to pre¬ vent it, became in a great measure uncertain. In order to remedy these inconveniencies, a bank was established in 1609 under the guarantee of the city. This bank received both foreign coin, and the light and worn coin of the country at. its ppaLintr^nsic yalpal * in the good standard money of the country, | deducting only so much as was necessary for defraying the expense of coinage, and the other necessary expense of management. For the value which remained, after this small deduction was made, it gave a credit in its books. This credit was called bank money, which, as it represented money ex¬ actly according to the standard of the mint, was always of the same real value, and in¬ trinsically worth more than current money. It was at the same time enacted, that all bills drawn upon or negotiated at Amstei- dam of the value of six hundred guilders and upwards should be paid in bank money, which at once took away all uncertainty in the value of those bills. Every merchant, in consequence of this regulation, was obliged to keep an account with the bank in order to pay his foreign bills of exchange, which necessarily occasioned a certain demand for bank money. Bank money, over and above botn its intrinsic superiority to currency, and the additional value which this demand ncces- tions on Exchange and to the article “ Exchange," in the new edition of the Encyclopedia, Britannica • 212 BANKS OF DEPOSIT. Book IV. sarily gives it, has likewise some other ad¬ vantages. It is secure from fire, robbery, and other accidents ; the city of Amsterdam is bound for it; it can be paid away by a simple transfer, without the trouble of count¬ ing, or the risk of transporting it from one place to another. In consequence of those different advantages, it seems from the be¬ ginning to have borne an agio, and it is generally believed that all the money origin¬ ally deposited in the bank was allowed to remain there, nobody caring to demand pay¬ ment of a debt which he could sell for a premium in the market. By demanding payment of the bank, the owner of a bank credit would lose this premium. As a shil¬ ling fresh from the mint will buy no more goods in the market than one of our common worn shillings, so the good and true money which might be brought from the coffers of the bank into those of a private person, being mixed and confounded with the com¬ mon currency of the country, would be of no more value than that currency, from which it could no longer be readily distin¬ guished. While it remained in the coffers I of the bank, its superiority was known and ascertained. When it had come into those of a private person, its superiority could not well be ascertained without more trouble than perhaps the difference was worth. By being brought from the coffers of the bank, besides, it lost all the other advantages of bank money; its security, its easy and safe transferability, its use in paying foreign bills of exchange. Over and above all this, it could not be brought from those coffers, as it will appear by and by, without previously paying for the keeping. Those deposits of coin, or those deposits which the bank was bound to restore in coin, constituted the original capital of the bank, or the whole value of what was represented by what is called bank money. At present they are supposed to constitute but a very small part of it. In order to facilitate the trade in bullion, the bank has been for these many years in the practice of giving credit in its books upon deposits of gold and silver bullion. This credit is generally about five per cent, below the mint price of such bul¬ lion. The bank grants at the same time what is called a recipice or receipt, entitling the person who makes the deposit, or the 1 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 . .1 Guilders. French crowns . . > B — 22 per mark. English silver coin . 3 Mexico dollars, new coin . 21 10 Ducatoons . . . .30 Rix-dollars . . . .28 Bar silver, containing 11-12 fine silver, 21 per mark, and in this proportion down to x fine, on which five guilders arc given. Fine bars, 23 per mark. bearer, to take out the bullion again at any time within six months, upon re-transferring to the bank a quantity of bank money equal to that for which credit had been given in its books when the deposit was made, and upon paying one-fourth per cent, for the keeping, if the deposit was in silver, and one-half per cent, if it was in gold ; but at the same time declaring, that in default of such payment, and upon the expiration of this term, the deposit should belong to the bank at the price at which it had been re¬ ceived, or for which credit had been given in the transfer books. What is thus paid for the keeping of the deposit may be con¬ sidered as a sort of warehouse rent; and why this warehouse rent should be so much dearer for gold than for silver, several dif¬ ferent reasons have been assigned. The fineness of gold, it has been said, is more difficult to be ascertained than that of silver. Frauds are more easily practised, and occa¬ sion a greater loss in the more precious metals. Silver, besides, being the standard metal, the state, it has been said, wishes to encourage 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 it happens to rise. In Holland, the market price of bullion is generally above the mint price, for the same reason that it was so in England before the late reform¬ ation of the gold coin. The difference is said to be commonly from about six to six¬ teen stivers upon the mark, or eight ounces of silver of eleven parts fine, and one part alloy. The bank price, or the credit which the bank gives for deposits of such silver (when made in foreign coin, of which the fineness is well known and ascertained, such as Mexico dollars) is twenty-two guilders the mark; the mint price is about twenty- three guilders, and the market price is from twenty-three guilders six to twenty-three guilders sixteen stivers, or from two to three per cent, above the mint price . 1 The pro¬ portions between the bank price, the mint price, and the market price of gold bullion are nearly the same. A person can gener¬ ally sell his receipt for the difference between the mint price of bullion and the market price. A receipt for bullion is almost GOLD. Portugal coin . . .1 Guilders. Guineas.v B — 310 per mark- Louis d’ors, new . .j Ditto, old . . . 300 New ducats . . . 4 19 8 per ducat. Bar or ingot gold is received in proportion to its fineness compared with the above foreign gold coin. Upon fine bars the bank gives 340 per mark. In general, however, something more is given upon coin of a known fineness than upon gold and silver bars, of which the fineness cannot be ascertained but by a process of melting and assaying. (Note by the author.) . BANK OF AMSTERDAM. 213 Ciiaf. III. always worth something, and it very seldom happens, therefore, that any body suffers his receipt to expire, or allows his bullion to fall to the bank at the price at which it had been received, either by not taking it out before the end of the six months, or by neglecting to pay the one-fourth or one-half per cent., in order to obtain a new receipt for another six months. This, however, though it hap¬ pens seldom, is said to happen sometimes, and more frequently with regard to gold than with regard to silver, on account of the higher warehouse rent which is paid for the keeping of the more precious metal. The person who, by making a deposit of bullion, obtains both a bank credit and a receipt, pays his bills of exchange as they become due with his bank credit, and either sells or keeps his receipt according as he judges that the price of bullion is likely to rise or to fall. The receipt and the bank credit seldom keep long together, and there is no occasion that they should. The person who has a receipt, and who wants to take out bullion, finds always plenty of bank credits or bank money to buy at the ordin¬ ary price and the person who has bank v money, and wants to take out bullion, finds receipts always in equal abundance. The owners of bank credits and the hold¬ ers of receipts constitute two different sorts of creditors against the bank. (The holder of a receipt cannot draw out the bullion for which it is granted, without re-assigning to the bank a sum of bank money equal to the price at which the bullion had been received. If he has no bank money of his own, he must purchase it of those who have it. The owner of bank money cannot draw out bul¬ lion without producing to the bank receipts for the quantity which he wants. If he has none of his own, he must buy them of those who have them. The holder of a receipt, when he purchases bank money, purchases the power of taking out a quantity of bul¬ lion, of which the mint price is five per cent, above the bank price. The agio of five per cent., therefore, which he commonly pays for it, is paid, not for an imaginary, but for a real value. The owner of bank money, when he purchases a receipt, purchases the power of taking out a quantity of bullion, of which the market price is commonly from two to three per cent, above the mint price. The price which he pays for it, therefore, is paid likewise for a real value. The price of the receipt and the price of the bank money compound or make up between them the full value or price of the bullion. i Upon deposits of the coin current in the country, the bank grants receipts likewise as well as bank credits ; but those receipts are frequently of no value, and will bring no price in the market. Upon ducatoons, for example, which in the currency pass for three guilders three stivers each, the bank gives a credit of three guilders only, or five per cent, below their current value. It grants a re¬ ceipt likewise, entitling the bearer to take out the number of ducatoons deposited at any time within six months, upon paying one-fourth per cent, for the keeping. This receipt will frequently bring no price in the market. Three guilders bank money gener¬ ally sell in the market for three guilders three stivers, the full value of the ducatoons if they were taken out of the bank ; and before they can be taken out, one-fourth per cent, must be paid for the keeping, which would be mere loss to the holder of the re¬ ceipt. If the agio of the bank, however, should at any time fall to three per cent., such receipts might bring some price in the market, and might sell for one and three- fourths per cent. But the agio of the bank being now generally about five per cent., such receipts are frequently allowed to ex¬ pire, or, as they express it, to fall to the bank. The receipts which are given for deposits of gold ducats fall to it yet more frequently, because a higher warehouse rent, or one-half per cent, must be paid for the keeping of them before they can be taken out again. The five per cent, which the bank gains, when deposits either of coin or bullion are allowed to fall to it, may be con¬ sidered as the warehouse rent for the perpe¬ tual keeping of such deposits. The sum of bank money for which the re¬ ceipts are expired must be very considerable. It must comprehend the whole original capital of the bank, which, it is generally supposed, has been allowed to remain there from the time it was first deposited, nobody caring either to renew his receipt or to take out his deposit, as, for the reasons already assigned, neither the one nor the other could be done without loss. But whatever may be the amount of this sum, the proportion which it bears to the whole mass of bank money is supposed to be very small. The bank of Amsterdam has for these many years past been the great warehouse of Eu¬ rope for bullion, for which the receipts are very seldom allowed to expire, or, as they ex¬ press it, to fall to the bank. The far greater part of the bank money, or of the credits upon the books of the bank, is supposed to have been created, for these many years past, by such deposits, which the dealers in bul¬ lion are continually both making and with¬ drawing. No demand can be made upon the bank but by means of a recipice or receipt.. The smaller mass of bank money, for which the receipts are expired, is mixed and con¬ founded with the much greater mass for which they are still in force; so that though there may be a considerable sum of bank money, for which there arc no receipts, P 3 » ' 214 BANKS OF DEPOSIT. Book IV. there is no specific sum or portion of it which may not at any time be demanded by one. The bank cannot be debtor to two persons for the same thing; and the owner of bank money who has no receipt cannot demand payment of the bank till he buys one. In ordinary and quiet times, he can find no difficulty in getting one to buy at the market price, which generally corre¬ sponds with the price at which he can sell the coin or bullion it entitles him to take out of the bank. It might be otnerwise during a public calamity, — an invasion, for example, such as that of the French in 1672. The owners of bank money being then all eager to draw it out of the bank, in order to have it in their own keeping, the demand for receipts might raise their price to an exorbitant height. The holders of them might form extravagant expectations, and, instead of two or three per cent., demand half the bank money for which credit had been given upon the deposits that the receipts had respectively been granted for. The enemy, informed of the constitu¬ tion of the bank, might even buy them up, in order to prevent the carrying away of the treasure. In such emergencies the bank, it is supposed, would break through its or¬ dinary rule of making payment only to the holders of receipts. The holders of receipts, who had no bank money, must have received within two or three per cent, of the value of the deposit for which their respective re¬ ceipts had been granted. The bank, there¬ fore, it is said, would in this case make no scruple of paying, either with money or bullion, the full value of what the owners of bank money who could get no receipts were credited for in its books; paying at the same time two or three per cent, to such holders of receipts as had no bank money, that being the whole value which, in this state of things, could justly be supposed due to them. Even in ordinary and quiet times it is the interest of the holders of receipts to depress the agio, in order either to buy bank money (and consequently the bullion, which their receipts would then enable them to take out of the bank) so much cheaper, or to sell their receipts to those who have bank mo¬ ney, and who want to take out bullion, so much dearer; the price of a receipt being generally equal to the difference between the market price of bank money, and that of the coin or bullion for which the receipt had been granted. It is the interest of the own¬ ers of bank money, on the contrary, to raise the agio, in order either to sell their bank money so much dearer, or to buy a receipt so much cheaper. To prevent the stock- jobbing tricks which those opposite interests might sometimes occasion, the bank has of late years come to the resolution to sell at all times bank money for currency, at five per cent, agio, and to buy it in again at four per cent. agio. In consequence of this reso¬ lution, the agio can never either rise above five or sink below four per cent.; and the proportion between the market price of bank and that of current money is kept at all times very near to the proportion between their intrinsic values. Before this resolution was taken, the market price of bank money used sometimes to rise so high as nine per cent, agio, and sometimes to sink so low as par, according as opposite interests happened to influence the market. The bank of Amsterdam professes to lend out no part of what is deposited with it, but, for every guilder for which it gives credit in its books, to keep in its repositories the value of a guilder either in money or bul¬ lion. That it keeps in its repositories all the money or bullion for which there are receipts in force, for which it is at all times liable to be called upon, and which in reality, is continually going from it and re¬ turning to it again, cannot well be doubted; but whether it does so likewise with regard to that part of its capital, for which the re¬ ceipts are long ago expired, for which in ordinary and quiet times it cannot be called upon, and which in reality is very likely to remain with it for ever, or as long as the States of the United Provinces subsist, may perhaps appear more uncertain. At Amster¬ dam, however, no point of faith is better established than that for every guilder, circu¬ lated as bank money, there is a corre¬ spondent guilder in gold or silver to be found in the treasure of the bank. The city is guarantee that it should be so. The bank is under the direction of the four reigning burgomasters, who are changed every year. Each new set of burgomasters visits the treasure, compares it with the books, receives it upon oath, and delivers it over with the same awful solemnity, to the set which succeeds; and in that sober and religious country oaths are not yet^disre- garded. A rotation of this kind seems alone a sufficient security against any practices which cannot be avowed. Amidst all the revolutions which faction has ever occa¬ sioned in the government of Amsterdam, the prevailing party has at no time accused their predecessors of infidelity in the ad¬ ministration of the bank. No accusation could have affected more deeply the repu¬ tation and fortune of the disgraced party, and if such an accusation could have been supported, we may be assured that it would have been brought. In 1672, when the French king was at Utrecht, the bank of Amsterdam paid so readily as left no doubt of the fidelity with which it had observed its engagements. Some of the pieces which were then brought from its repositories Chap. III. BANK OF AMSTERDAM. 21 5 appeared to have been scorched with the fire which happened in the town-house soon after the bank was established. Those pieces, there¬ fore, must have lain there from that time. What may be the amount of the treasure in the bank, is a question which has long employed the speculations of the curious: nothing but conjecture can be offered con¬ cerning it. It is generally reckoned that there are about two thousand people who keep accounts with the bank, and allowing them to have, one with another, the value of fifteen hundred pounds sterling lying upon their respective accounts, (a very large allowance,) the whole quantity of bank mo¬ ney, and consequently of treasure in the bank, will amount to about three millions sterling, or, at eleven guilders the pound sterling, thirty-three millions of guilders; a great sum, and sufficient to carry on a very i extensive circulation; but vastly below the extravagant ideas which some people have formed of this treasure. The city of Amsterdam derives a consi¬ derable revenue from the bank. Besides ; what may be called the warehouse rent above mentioned, each person, upon first 1 opening an account with the bank, pays a fee of ten_gui!ders; and for every new ac¬ count three guilders three stivers; for every transfer two stivers; and if the transfer is for less than three hundred guilders, six stivers, in order to discourage the multiplicity of small transactions. The person who ne¬ glects to balance his account twice in the year forfeits twenty-five guilders. The per¬ son who orders a transfer for more than is upon his account is obliged to pay three per cent, for the sum overdrawn, and his 1 The events that have transpired since the pub¬ lication of the Wealth of Nations have shown that the directors of the bank of Amsterdam had abused the confidence placed in them. Towards the midule of last century they began to make considerable advances, in a private way, from the bullion deposited in their coffers, to the government and the East Ind ia Companj'. But as this was a proceeding altogether inconsistent with the principles on which the bank was founded, it could not fail to endanger its sta¬ bility ; and as the directors must have been early aware of the difficult situation in which they had placed themselves, M. Stcrrch thinks that the regula¬ tions described by Dr. Smith, with respect to the mode of recovering bullion deposited in the bank, instead of being intended to facilitate the commerce in bullion, had been devised to guard the bank from the effects of the underhand proceedings of the di¬ rectors. At all events, it is certain that the regula¬ tions in question were enacted about the time when the directors began to make secret advances to ! government and the East India Company ; and, on examination, it will be found that they, in fact, shut the coffers of the bank. The bearer of a receipt for a deposit of bullion could not withdraw it without previously placing in the hands of the bank an amount of bank money equal to the price at which the bullion had been recei ved, or to the credit given him in the books ol the bank. If, therefore, the holder of a receipt for a deposit of gold or silver had made use of this credit or bank money, and in nine cases out of ten it was the desire to avail himself of that credit that led him to make the deposit — he had no power to make a demand upon the bank for the gold or silver he had order k set aside into the bargain. The bank is supposed too to make a considerable profit by the sale of the foreign coin or bul¬ lion which sometimes falls to it by the ex¬ piring of receipts, and which is always kept till it can be sold with advantage. It makes a profit likewise by selling bank money at five per cent, agio, and buying it in at four. These different emoluments amount to a good deal more than what is necessary for paying the salaries of officers, and defraying the expense of management. What is paid for the keeping of bullion upon receipts, is alone supposed to amount to a neat annual revenue of between one hundred and fifty thousand and two hundred thousand guil¬ ders. Public utility, however, and not revenue, was the original object of this in¬ stitution. Its> object was to relieve the merchants from tfie inconvenience of a dis¬ advantageous exchange. The revenue which has arisen from it was unforeseen, and may be considered as accidental. But it is now time to return from this long digression, into which I have been insensibly led, in endeavouring to explain the reasons why the exchange between the countries which pay in what is called bank money, and those which pay in common currency, should ge¬ nerally appear to be in favour of the former, and against the latter. The former pay in a species of money of which the intrinsic value is always the same, and exactly agreeable to the standard of their respective mints ; the latter in a species of money of which the intrinsic value is continually varying, and is almost always more or less below that standard. 1 lodged in its hands, until he purchased an equivalent amount of bank money from some other individual ; and as no bank money was ever issued, except on a deposit of bullion, it is clear that, in the vast majority of cases, no individual could draw bullion from the bank until some other individual had previously placed an equal sum in its coders. By this inge¬ nious contrivance the bank received on the one hand what she paid out on the other; and the amount of bullion in her possession continued un¬ diminished by the demands of her ordinary cus¬ tomers. But, however strange it may seem, these regula¬ tions do not appear to have excited any suspicion with respect to their real object. The habit of seeing the bank always fulfil her engagements, the remem¬ brance of what had taken place in 1672, and the confidence placed in the integrity of the city magis¬ trates, by whom the bank was administered, all contributed to blind the public and allay suspicion. This delusion was partially dissipated in December 1790. In the course of that month the bank pub¬ lished a notice stating that she would, in future, fix from time to time the price at which she would pay the silver deposited in her coffers ; and she began by fixing it at such a rate that those who withdrew it sustained a loss of 10 per cent. She announced, at the same time, that she would pay no deposits except to those creditors who had bullion of the value of 2,500 florins and upwards in the bank. This declaration could not fail to excite universal distrust. But the confidence placed in the rectitude of the management and the stability of the bank was still so great as to enable her to get over this crisis. Her dissolution was, however, at hand. In 1795 the F 4 21 6 RESTRAINTS UPON IMPORTATION. Book IV. Part II. Of the Unreasonableness of those extraordi¬ nary Restraints upon other Principles. In the foregoing Part of this Chapter I have endeavoured to show, even upon the principles of the commercial system, how unnecessary it is to lay extraordinary re¬ straints upon the importation of goods from those countries with which the balance of trade is supposed to be disadvantageous. Nothing, however, can be more absurd than this whole doctrine of the balance of trade, upon which, not only these restraints, but almost all the other regulations of com¬ merce are founded. When two places trade with one another, this doctrine supposes that, if the balance be even, neither of them either loses or gains; but if it leans in any degree to one side, that one of them loses and the other gains in proportion to its declension from the exact equilibrium. Both supposi¬ tions are false. A trade which is forced by means of bounties and monopolies, may be, and commonly is, disadvantageous to the country in whose favour it is meant to be established, as I shall endeavour to show hereafter. But that trade which, without force or constraint, is naturally and regu¬ larly carried on between any two places, is always advantageous, though not always equally so, to both. By advantage or gain, I understand, not the increase of the quantity of gold and sil¬ ver, but that of the exchangeable value of the annual produce of the land and labour of the country, or the increase of the annual revenue of its inhabitants. If the balance be even, and if the trade between the two places consist altogether in the exchange of their native commodities, they will, upon most occasions, not only both gain, but they will gain equally, or very near equally: each will in this case afford a market for a part of the surplus produce of the other: each will replace a capital which had been employed in raising and preparing for the market this part of the surplus produce of the other, and which had been distributed among, and given re¬ venue and maintenance to a certain number of its inhabitants. Some part of the inha¬ bitants of each, therefore, will indirectly de¬ rive their revenue and maintenance from French invaded Holland; and the provisional go¬ vernment established in the city of Amsterdam was obliged to issue a declaration which put to rest all doubts with respect to the real situation of the bank, by informing the public that, during the last fifty years, the directors had successively advanced 10,624,793 florins to the East India Company, the provinces of Holland and West Friezland, and the city of Amsterdam ! And thus, though the bullion actually in the coffers of the bank, and the debts due to her, were together fully equal to her engagements, vet, as she had advanced so large a sum as ten and a half millions to those who were no longer in a con- i the other. As the commodities exchanged too are supposed to be of equal value, so the two capitals employed in the trade will, upon most occasions, be equal, or very nearly equal; and both being employed in raising the native commodities of the two countries, the revenue and maintenance which their distribution will afford to the inhabitants of each will be equal, or very nearly equal. This revenue and maintenance, thus mutu¬ ally afforded, will be greater or smaller in proportion to the extent of their dealings. If these should annually amount to an hun¬ dred 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 of them exported to the other nothing but native commodities, while the returns of that other consisted altogether in foreign goods, the balance, in this case, would still be supposed even, commodities being paid for with commodities. They would, in this case too, both gain, but they would not gain equally ; and the inhabitants of the country which exported nothing but native commodities would derive the great¬ est 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, we shall sup¬ pose, and East India goods; this trade, though it would give some revenue to the inhabitants of both countries, would give more to those of France than to those of England. The whole French capital an¬ nually employed in it would annually be distributed among the people of France; but that part of the English capital only which was employed in producing the En¬ glish commodities with which those foreign goods were purchased, would be annually distributed among the people of England. The greater part of it would replace the capitals which had been employed in Virgi¬ nia, Indostan, and China, and which had given revenue and maintenance to the in¬ habitants of those distant countries. If the capitals were equal, or nearly equal, there¬ fore, this employment of the French capital dition to meet the claims upon them, this statement of her affairs was really equivalent to a declaration of bankruptcy. In consequence, bank money, which had previously borne a premium of 5 per cent, over the current metallic money of Holland, immediately fell to 16 per cent, below it. This extraordinary decline marked the fall of an institution which had enjoyed for nearly two centuries unlimited credit in the commercial world, and rendered the greatest services to the country in which it was established. Storch, Cours d'Economic Politique, iv. p. 96, Paris, 1823. Chap. III. RESTRAINTS UPON IMPORTATION. 217 would augment much more the revenue of the people of France, than that of the Eng¬ lish capital would the revenue of the people of England. France would in this case carry on a direct foreign trade of consump¬ tion with England ; whereas England would carry on a roundabout trade of the same kind with France. The different effects of a capital employed in the direct, and of one employed in the roundabout foreign trade of consumption, have already been fully ex¬ plained. 1 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 ano¬ ther partly native and partly foreign goods. That country, however, in whose cargoes there is the greatest proportion of native, and the least of foreign goods, will always be the principal gainer. If it was not with tobacco and East India goods, but with gold and silver, that Eng¬ land 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 foregoing, give some revenue to the inhabitants of both countries, but more to those of France than to those of England . 2 It would give some revenue to those of England. The capital which had been employed in producing the English goods that purchased this gold and silver, the capital which had been distributed among, and given revenue to, certain in¬ habitants of England, would thereby be re¬ placed, and enabled to continue that employ¬ ment. The whole capital of England would no more be diminished by this exportation of gold and silver, than by the exportation of an equal value of any other goods. On the contrary, it would, in most cases, be augmented. No goods are sent abroad but those for which the demand is supposed to be greater abroad than at home, and of which the returns consequently, it is expected, will be of more value at home than the commo¬ dities 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 1 But in the cases supposed, France would have a much larger amount of capital employed in the trade : for, by the supposition, she has to employ capital in the production of the commodities she sends to England, whereas the latter has no capital employed in the production of the commodities she sends to France, but only in their carriage ; and on this portion of her capital she would gain the same profit as the French. a It would render no more revenue to the one country than to the other. The exportation of gold and silver doe9 not affect capital more than the ex- f r thousand pounds. If a hundred thousand pounds of English gold, in the same man¬ ner, purchase French wine, which, in Eng¬ land, is worth a hundred and ten thousand, this exchange will equally augment the capital of England by ten thousand pounds. As a merchant who has a hundred and ten thousand pounds’ worth of wine in his cellar, is a richer man than he who has only a hun¬ dred thousand pounds worth of tobacco in his warehouse, so is he likewise a richer man than he who has only a hundred thousand pounds’ worth of gold in his coffers. Fie can put into motion a greater quantity of industry, and give revenue, maintenance, and employment to a greater number of people than either of the other two. But the capital of the country is equal to the capitals of all its different inhabitants, and the quantity of industry which can be an¬ nually maintained in it is equal to what all those different capitals can maintain. Both the capital of the country, therefore, and the quantity of industry which can be annually maintained in it, must generally be aug¬ mented by this exchange. It would, indeed, be more advantageous for England that it could purchase the wines of France with its own hardware and broad-cloth, than with either the tobacco of Virginia, or the gold and silver of Brazil and Peru. A direct foreign trade of consumption is always more advantageous than a roundabout one . 3 But a roundabout foreign trade of consumption, which is carried on with gold and silver, does not seem to be less advantageous than any other equally roundabout one. Neither is a country which has no mines more likely to be exhausted of gold and silver by this annual exportation of those metals, than one which does not grow tobacco by the like annual exportation of that plant. As a country which has wherewithal to buy to¬ bacco will never be long in want of it, so neither will one be long in want of gold and silver which has wherewithal to purchase those metals. It is a losing trade, it is said, which a workman carries on with the alehouse ; and the trade which a manufacturing nation would naturally carry on with a wine coun¬ try may be considered as a trade of the same nature. I answer, that the trade with the alehouse is not necessarily a losing trade. In its own nature it is just as advantageous as any other, though, perhaps, somewhat more liable to be abused. The employment of a portation of an equivalent amount of any other species of merchandise; and could not, therefore, occasion any greater change in the industry of the country. 3 It is more advantageous to the consumers, be¬ cause the shorter the distance from which foreign goods are brought, the expense of their conveyance, and, consequently, their price, is so much the less ; but in other respects it is quite immaterial whether we carry on a trade with our nearest neighbours, or with those at the farthest part of the globe. 218 RESTRAINTS UPON IMPORTATION. Book IV. brewer, and even that of a retailer of fer¬ mented liquors, are as necessary divisions of labour as aiWother. It will generally be more advantageous for a workman to buy of the brewer the quantity he has occasion for, than to brew it himself; and if he is a poor workman, it will generally be more advanta¬ geous for him to buy it by little and little of the retailer, than a large quantity of the brewer. He may no doubt buy too much of either, as he may of any other dealers in his neighbourhood: of the butcher, if he is a glutton, or of the draper, if he affects to be a beau among his companions. It is advantageous to the great body of work¬ men, notwithstanding, that all these trades should be free, though this freedom may be abused in all of them, and is more likely to be so, perhaps, in some than in others. Though individuals, besides, may sometimes ruin their fortunes by an exces¬ sive consumption cf fermented liquors, there seems to be no risk that a nation should do so. Though in every country there are many people who spend upon such liquors more than they can afford, there are always many more who spend less. It deserves to be remarked too, that, if we consult expe¬ rience, 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 : wit¬ ness the Spaniards, the Italians, and the inhabitants of the southern provinces of France. People are seldom guilty of excess in what is their daily fare. Nobody affects the character of liberality and good fellow¬ ship, by being profuse of a liquor which is as cheap as small beer. On the contrary, in the countries which, either from excessive heat or cold, produce no grapes, and where wine consequently is dear and a rarity, drunkenness is a common vice, as among the northern nations, and all those who live between the tropics, the negroes, for exam¬ ple, on the coast of Guinea. When a French regiment comes from some of the northern provinces of France, where wine is somewhat dear, to be quartered in the southern, where it is very cheap, the soldiers, I have fre¬ quently heard it observed, are at first de¬ bauched by the cheapness and novelty of good wine ; but after a few months’ residence the greater part of them become as sober as the rest of the inhabitants. Were the duties upon foreign wines, and the excises upon malt, beer, and ale, to be taken away all at 1 Merchants now very generally entertain more liberal and enlarged, and, at the same time, more correct views of their real interests. In proof of this it is sufficient to refer to the petition subscribed by all the most eminent merchants of London, and laid before the House of Commons in 1820. It recognises in the most unqualified manner the superior advan¬ tage of unrestricted competition ; and prays for the repeal of all prohibitions and regulations intended to protect domestic industry, and for the abolition of all duties on importation not imposed for the sake of revenue The presentation of such a petition marks once, it might, in the same manner, occasion in Great Britain a pretty general and tem¬ porary drunkenness among the middling and inferior ranks of people, which would pro¬ bably be soon followed by a permanent and almost universal sobriety. At present, drunk¬ enness is by no means the vice of the people of fashion, or of those who can easily afford the most expensive,liquors. A gentleman drunk with ale has scarce ever been seen among us. The restraints upon the wine trade in Great Britain, besides, do not so much seem calculated to hinder the people from going, if I may say so, to the alehouse, as from going where they can buy the best and cheapest liquor. They favour the wine trade of Portugal, and discourage that of France. The Portuguese, it is said, indeed, are better customers for our manufactures than the French, and should therefore be encouraged in preference to them. As they give us their custom, it is pretended we should give them ours. The sneaking arts of underling tradesmen are thus erected into political maxims for the conduct of a great empire : for it is the most underling trades¬ men only who make it a rule to employ chiefly their own customers. A great trader purchases his goods always where they are cheapest and best, without regard to any little interest of this kind. By such maxims as these, however, nations have been taught that their interest consisted in beggaring all their neighbours. Each nation has been made to look with an invi¬ dious eye upon the prosperity of all the nations with which it trades, and to consider their gain as its own loss. Commerce, which ought naturally to be, among nations as among individuals, a bond of union and friendship, has become the most fertile source of discord and animosity. The capricious ambition of kings and ministers has not, during the present and the preceding century been more fatal to the repose of Europe, than the impertinent jealousy of merchants anfl manufacturers. The violence and in¬ justice of the rulers of mankind is an ancient evil, for which, I am afraid, the nature of human affairs can scarce admit of a remedy. But the mean rapacity, the monopolising spirit of merchants and manufacturers, who neither are, nor ought to be, the rulers of mankind, though it cannot perhaps be cor¬ rected, may very easily be prevented from disturbing the tranquillity of any body but themselves . 1 an important sera in the history of commerce, inas¬ much as it shows that there is no longer any discre¬ pancy between the views entertained with respect to it by rational theorists, and the most intelligent practical men. Could Dr. Smith have foreseen that his principles would be espoused, and the mercantile system condemned, by the best informed and most extensive merchants in the world, he would, perhaps, have somewhat softened the severity of his remarks on mercantile rapacity in this and other paragraphs. The reader will find the petition referred to in a supplemental note. I Chap. III. RESTRAINTS UPON IMPORTATION. 219 That it was the spirit of monopoly which originally both invented and propagated this doctrine, cannot be doubted ; and they who first taught it were by no means such fools as they who believed it. In every country it always is, and must be, the interest of the great body of the people, to buy whatever they want of those who sell it cheapest. I he proposition is so very manifest, that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question, had not the interested sophistry of merchants and manufacturers confounded the common sense of mankind. Their interest is, in this respect, directly opposite to that of the great body of the people. As it is the in J :e “ rest of the freemen of a corporation to hinder the rest of the inhabitants from employing any workmen but themselves, so it is the interest of the merchants and manufacturers of every country to secure to themsel\es the monopoly of the home market. Hence, in Great Britain, and in most other European countries, the extraordinary duties upon almost all goods imported by alien mer¬ chants. Hence the high duties and prohi¬ bitions upon all those foreign manufactures which can come into competition with our own. Hence too the extraordinary restraints upon the importation of almost all sorts of goods from those countries with which tne balance of trade is supposed to be disadv an- tageous ; that is, from those against whom national animosity happens to be most "vio¬ lently inflamed. The wealth of a neighbouring nation, however, though dangerous in war and politics, is certainly advantageous in trade. In a state of hostility it may enable our enemies to maintain fleets and armies supe¬ rior to our own ; but in a state of peace and commerce it must likewise enable them to exchange with us to a greater value, and to afford a better market, either for the imme¬ diate produce of our own industry, or for whatever is purchased with that produce. As a rich man is likely to be a better cus¬ tomer to the industrious people in his neighbourhood than a poor, so is likewise a rich nation. A rich man, indeed, who is himself a manufacturer, is a very dangerous neighbour to all those who deal in the same i We doubt whether there be any good foundation for either of these assertions. The reader will find, in the supplemental note on the Navigation ox the Ancient Egyptians, grounds stated for questioning the current opinion as to their being averse from navigation and foreign trade. It is now admitted by every one acquainted with such subjects, that the notion that the Chinese are inattentive to and despise foreign commerce, is wholly without foundation. On the contrary, they are eminently commercial. They carry on a very extensive intercourse in junks, ot ships of their own built, with the Philippine Islands, Japan, Siam, Singapore, Batavia, &c. ; a pd vast numbers of Chinese settlers have emigrated to, and settled in the principal places of the Eastern Archipelago, where they are distinguished by their superior industry, intelligence, and enterprise. 1 he Chinese are at present, and have long been in the way. All the rest of the neighbourhood, however, by far the greatest number, profit by the good market which his expense af¬ fords them. They even profit b\ his under¬ selling the poorer workmen who deal in the same way with him. The manufacturers of a rich nation, in the same manner, may no doubt be very dangerous rivals to those of their neighbours. This very competition, however, is advantageous to the great body of the people, who profit greatly besides by the good market which the great expense of such a nation affords them in every other wav. Private people who want to make a fortune, never think of retiring to the remote and poor provinces of the country, but resort either to the capital, or to some of the great commercial towns. They know, that where little wealth circulates, there is little to be got; but that where a great deal is in mo¬ tion, some share of it may tall to them. The same maxims which would in this manner direct the common sense oi one, or ten, or twenty individuals, should regulate the judgment of one, or ten, or twenty mil¬ lions, and should make a whole nation regard the riches of its neighbours, as a probable cause and occasion for itself to acquire riches. A nation that would enrich itself by foreign trade, is certainly most likely to do so when its neighbours are all rich, industrious, and commercial nations. A great nation, sur¬ rounded on all sides by wandering sa"\ ages and poor barbarians, might, no doubt, ac¬ quire riches by the cultivation of its ow n lands, and by its own interior commerce, but not by foreign trade. It seems to have been in this manner that the ancient Egyp¬ tians and the modern Chinese acquired their \ great wealth. The ancient Egyptians, it is said, neglected foreign commerce, and the modern Chinese, it is known, hold it in the utmost contempt, and scarce deign to afford it the decent protection of the laws . 1 The modern maxims of foreign commerce, by aiming at the impoverishment of all our neighbours, so far as they are capable of producing their intended effect, tend to ren¬ der that very commerce insignificant and contemptible. It is in consequence of these maxims, that the commerce between France and England 'ast what the Dutch formerly were in Europe — ie carriers and merchants of the sun-ounding states, t suited the views of the companies to whom the lonopoly of the trade with China was formerly ssignedf here and in Holland, to [present "hinese as hostile to commerce, and difficult to deal dth ffiafmuch as this afforded a kind ot excuse for heir peculiar privileges. But experience hasi shown ince the trade to China has been thrown open to all lations, that the represenUtions referred to w ere ntirelv destitute of any good foundation , that the Chinese are not averse from strangers or commerce ; md that though their government be corrupt and ill- nformed, and their customs and laws widely different rom ours, business may be as easily, safely, and ipeedily transacted at Canton as at either London or Sew York. Book IV. 220 RESTRAINTS UPON IMPORTATION. has, in both countries, been subjected to so many discouragements and restraints. IV those two countries, however, were to con¬ sider their real interest without either mer¬ cantile jealousy or national animosity, the commerce of France might be more advan¬ tageous to Great Britain than that of anv other country, and, for the same reason, that of Great Britain to France. France is the nearest neighbour to Great Britain. In the trade between the southern coast of Eng¬ land and the northern and north-western coasts of France, the returns might be ex¬ pected, in the same manner as in the inland trade, four, five, or six times in the year. The capital, therefore, employed in this trade could, in each of the two countries, keep in motion four, five, or six times the quantity of industry, and afford employment and subsistence to four, five, or six times the number ol people, which an equal capital could do in the greater part of the other branches of foreign trade. Between the parts of France and Great Britain most remote from one another, the returns might be expected, at least, once in the year ; and even this trade would so far be at least equally advantageous as the greater part of the other branches of our foreign European trade. It would be, at least, three times more advantageous than the boasted trade with our North American colonies, in which the returns were seldom made in less than three years, frequently not less than four or five years . 1 France, besides, is sup¬ posed to contain twenty-four millions of in¬ habitants . 2 Our North American colonies were never supposed to contain more than three millions 3 : and France is a much richer country than North America ; though, on account of the more unequal distribution of riches, there is much more poverty and beg¬ gary in the one country than in the other. France, therefore, could afford a market at least eight times more extensive, and, on account of the superior frequency of the returns, four and twenty times more advan¬ tageous than that which our North Ameri¬ can colonies ever afforded. The trade of Great Britain would be just as advantageous to France, and, in proportion to the wealth, population, and proximity of the respective countries, would have the same superiority over that which France carries on with her own colonies. Such is the very great dif¬ ference between that trade which the wisdom of both nations has thought proper to discou- rage, and that which it has favoured the most. But the very same circumstances which would have rendered an open and free com¬ merce between the two countries so advan¬ tageous to both, have occasioned the princi¬ pal obstructions to that commerce. Being neighbours, they are necessarily enemies, and the wealth and power of each becomes, upon that account, more formidable to the other ; and what would increase the advan¬ tage of national friendship serves only to inflame the violence of national animosity. They are both rich and industrious nations ; and the merchants and manufacturers of each dread the competition of the skill and acti¬ vity of those of the other. Mercantile jealousy is excited, and both inflames, and is itself inflamed, by the violence of national animosity ; and the traders of both countries have announced, with all the passionate con¬ fidence of interested falsehood, the certain ruin of each, in consequence of that unfa¬ vourable balance of trade, which, they pre¬ tend, would be the infallible effect of an unrestrained commerce with the other. There is no commercial country in Europe of which the approaching ruin has not fre¬ quently been foretold by the pretended doc¬ tors of this system, from an unfavourable balance of trade. After all the anxiety, however, which they have excited about this, after all the vain attempts of almost all trad¬ ing nations to turn that balance in their own favour, and against their neighbours, it does not appear that any one nation in Europe has been, in any respect, impoverished by this cause. Every town and country, on the contrary, in proportion as they have opened their ports to all nations, instead of being ruined by this free trade, as the principles of the commercial system would lead us to ex¬ pect, have been enriched by it. Though there are in Europe, indeed, a few towns which in some respects deserve the name of free ports, there is no country which does so. Holland, perhaps, approaches the nearest to this character of any, though still very re¬ mote from it; and Holland, it is acknow¬ ledged, not only derives its whole wealth, but a great part of its necessary subsist¬ ence, from foreign trade. There is another balance, indeed, which has already been explained, very different from the balance of trade, and which, accord¬ ing as it happens to be either favourable or unfavourable, necessarily occasions the pros¬ perity or decay of every nation. This is the balance of the annual produce and con¬ sumption. If the exchangeable value of the annual produce, it has already been ob¬ served, exceeds that of the annual consump¬ tion, the capital of the societ)' must annually increase in proportion to this excess. The society in this case lives within its revenue; and what is annually saved out of its revenue, is naturally added to its capital, and em¬ ployed so as to increase still further the 1 See ante, note 2d, p.* 164. 2 1 he population of France amounted, accordin the census of 1836, to 33,540,908 g to 3 The population of the United States in 1830 amounted to 12,788,742. Chap. IV. DRAWBACKS. 221 annual produce. If the exchangeable value of the annual produce, on the contrary, fall short of the annual consumption, the capital of the society must annually decay in pro¬ portion to this deficiency. The expense of the society in this case exceeds its revenue, and necessarily encroaches upon its capital. Its capital, therefore, must necessarily decay, and, together with it, the exchangeable value of the annual produce of its industry. This balance of produce and consumption is entirely different from what is called the balance of trade. It might take place in a nation which had no foreign trade, but which was entirely separated from all the world. It may take place in the whole globe of the earth, of which the wealth, population, and improvement may be either gradually in¬ creasing or gradually decaying. The balance of produce and consumption may be constantly in favour of a nation, though what is called the balance of trade be generally against it. A nation may im¬ port to a greater value than it exports for half a century, perhaps, together ; the gold . and silver which comes into it during all this time may be all immediately sent out of it; its circulating coin may gradually decay, different sorts of paper money being substi¬ tuted in its place, and even the debts, too, which it contracts in the principal nations with whom it deals, may be gradually in¬ creasing ; and yet its real wealth, the ex¬ changeable value of the annual produce of its lands and labour, may, during the same period, have been increasing in a much greater proportion. The state of our North American colonies, and of the trade which they carried on with Great Britain, before the commencement of the present disturb¬ ances 1 , may serve as a proof that this is by r.o means an impossible supposition. CHAP. IV. Of Drawbacks. .Merchants and manufacturers are not con¬ tented with the monopoly of the home mar¬ ket, but desire likewise the most extensive foreign sale for their goods. Their country has no jurisdiction in foreign nations, and therefore can seldom procure them any mo¬ nopoly there. They are generally obliged, therefore, to content themselves with peti¬ tioning for certain encouragements to ex¬ portation. 1 This paragraph was written in the year 1775. (Note by the author.) . 2 In 1787, in order to obviate the trouble and incon¬ venience arising from the multiplicity of separate acts relative to the customs, Mr. Pitt introduced a bill for their consolidation. Several similar consoli¬ dations have been effected at subsequent periods ; the last of these was in 1834, when the various Of these encouragements what are called Drawbacks seem to be the most reasonable. To allow the merchant to draw back upon exportation, either the whole or a part of whatever excise or inland duty is imposed upon domestic industry, can never occasion the exportation of a greater quantity of goods than what would have been exported had no duty been imposed. Such encou¬ ragements do not tend to turn towards any particular employment a greater share of the capital of the country than what would go to that employment of its own accord, but only to hinder the duty from driving away any part of that share to other em¬ ployments. They tend not to overturn that balance which naturally establishes itself among all the various employments of the society, but to hinder it from being over¬ turned by the duty ; they tend not to destroy, but to preserve, what it is in most cases advantageous to preserve, the natural division and distribution of labour in the society. The same thing may be said of the draw¬ backs upon the re-exportation of foreign goods imported; which in Great Britain generally amount to by much the largest part of the duty upon importation. By the second of the rules, annexed to the act of parliament, which imposed what is now called the old subsidy, every merchant, whe¬ ther English or alien, was allowed to draw back half that duty upon exportation; the English merchant, provided the exportation took place within twelve months; the alien, provided it took place within nine months. Wines, currants, and wrought silks were the only goods which did not fall within this rule, having other and more advantageous allowances. The duties imposed by this act of parliament were, at that time, the only duties upon the importation of foreign goods. The term within which this, and all other drawbacks, could be claimed, was afterwards (by 7 Geo. I. chap. 21. sect. 10.) extended to three years. 2 The duties which have been imposed since the old subsidy, are, the greater part of them, wholly drawn back upon exportation. This general rule, however, is liable to a great number of exceptions, and the doctrine of drawbacks has become a much less simple matter than it was at their first institution. Upon the exportation of some foreign goods, of which it was expected that the im¬ portation would greatly exceed what was necessary for the home consumption, the custom duties were established, nearly on their present footing, by the act 3 & 4 \\ ill. H . cap. 5o. In consequence of these consolidations, the distinc- * tions to which Dr. Smith alludes between old and new duties, have been wholly done away; and the drawbacks now allowed, of which there are but few, have reference only to the entire amount of the duty. 222 DRAWBACKS. Book IV. whole duties are drawn back, without re¬ taining even half the old subsidy. Before the revolt of our North American colonies, we had the monopoly of the tobacco of Maryland and Virginia. We imported about ninety-six thousand hogsheads, and the home consumption was not supposed to exceed fourteen thousand. To facilitate the great exportation which was necessary, in order to rid us of the rest, the whole duties were drawn back, provided the exportation took place within three years. We still have, though not altogether, yet very nearly, the monopoly of the sugars of our West Indian islands. If sugars are ex¬ ported within a year, therefore, all the duties upon importation are drawn back, and if ex¬ ported within three years, all the duties, except half the old subsidy, which still con¬ tinues to be retained upon the exportation of the greater part of goods. Though the im¬ portation 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 . 1 Some goods, the particular objects of the jealousy of our own manufacturers, are pro¬ hibited to be imported for home consump- , tion. They may, however, upon paying certain duties, be imported and warehoused for exportation. But upon such exporta¬ tion, no part of these duties are drawn back. Our manufacturers are unwilling, it seems, that even this restricted importation should be encouraged, and are afraid lest some part of these goods should be stolen out of the warehouse, and thus come into competition with their own. It is under these regula¬ tions only that we can import wrought silks, French cambrics and lawns, calicoes painted, printed, stained, or dyed, &c. We are unwilling even to be the carriers of French goods, and choose rather to forego a profit to ourselves, than to suffer those whom we consider as our enemies to make any profit by our means. Not only half the old subsidy, but the second twenty-five per cent., is retained upon the exportation of all French goods . 2 By the fourth of the rules annexed to the old subsidy, the drawback allowed upon the exportation of all wines amounted to a great deal more than half the duties which were, at that time, paid upon their importation ; and it seems, at that time, to have been the object of the legislature to give somewhat more than ordinary encouragement to the carrying trade in wine. Several of the other duties too, which were imposed, either at 1 For an account of the quantities of tobacco and sugar imported into the United Kingdom, with the quantities entered for home consumption, and the revenue derived from them, see Commercial Dic¬ tionary. 2 These restrictions are now repealed. 3 We are glad to have to state that the discrimin¬ ating duty on French wine, perhaps the most ob- the same time, or subsequent to the old sub¬ sidy ; what is called the additional duty, the new subsidy, the one-third and the 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 im¬ post 1692, being paid down in ready money, upon importation, the interest of so large a sum occasioned an expense, which made it unreasonable to expect any profitable carry¬ ing trade in this article. Only a part, there¬ fore, of the duty called the impost on wine, and no part of the twenty-five pounds the tun upon the French wines, or of the duties imposed in 1745, in 1763, and in 1778, were allowed to be drawn back upon exportation, The two imposts of five per cent., imposed in 1779 and 1781, upon all the former duties of customs, being allowed to be wholly drawn back upon the exportation of all other goods, were likewise allowed to be drawn back upon that of wine. The last duty that has been particularly imposed upon wine, that of 1780, is allowed to be wholly drawn back, — an indulgence which, when so many heavv duties are retained, most probably could never occasion the exportation of a single tun of wine. These rules take place with regard to all places of lawful exportation, except the British colonies in America. 3 The 15th Charles II. chap. 7. called an act for the encouragement of trade, had given Great Britain the monopoly of sup¬ plying the colonies with all the commodities of the growth or manufacture of Europe; and, consequently, with wines. In a coun¬ try of so extensive a coast as our North American and West Indian colonies, where our authority was always so very slender, and where the inhabitants were allowed to carry out, in their own ships, their non- enumerated commodities, at first, to all parts of Europe, and afterwards, to all parts of Europe south of Cape Finisterre, it is not very probable that this monopoly could ever be much respected; and they probably, at all times, found means of bringing back some cargo from the countries to which they were allowed to carry out one. They seem, however, to have found some difficulty in importing European wines from the places of their growth, and they could not well import them from Great Britain, where they were loaded with many heavy duties, of which a considerable part was not drawn back upon exportation. Madeira wine, not being a European commodity, could be im¬ ported directly into America and the West jectionable of all the old duties, has been abolished, and that the same equal duty of 5s. 6 d. per imperial gallon is at present (1838) imposed on all foreign wines imported into England, whatever may be the place of their origin. The duty on wine imported from the Cape of Good Hope is only 2s. 9d.per gallon — a re¬ duction in its favour for which no good reason can be assigned. DRAWBACKS. 223 I Chap. IV. Indies, countries which, in all their non- enumerated commodities, enjoyed a free trade to the island of Madeira. These cir¬ cumstances had, probably, introduced that general taste for Madeira wine, which our officers found established m all our colonies at the commencement of the war, which began in 1755, and which they brought back with them to the mother country, where that wine had not been much in fashion before. Upon the conclusion of that war, in 1763 (by the 4 Geo. III. chap. xv. sect. 12.) all the duties, except 3 1. 105. were allowed to be drawn back, upon the export¬ ation to the colonies of all wines, except French wines, to the commerce and con¬ sumption of which national prejudice would allow no sort of encouragement. The pe¬ riod between the granting of this indulgence and the revolt of our North American co¬ lonies, was, probably, too short to admit of any considerable change in the customs of those countries. The same act, which, in the drawback upon all wines, except French wines, thus favoured the colonies so much more than other countries, in those upon the greater part of other commodities, favoured them much less. Upon the exportation of the greater part of commodities to other coun¬ tries, half the old subsidy was drawn back. But this law enacted, that no part of that duty should be drawn back upon the export¬ ation to the colonies of any commodities, of the growth or manufacture either of Europe or the East Indies, except wines, white cali¬ coes, and muslins. Drawbacks were, perhaps, originally granted for the encouragement of the carry¬ ing trade, which, as the freight of the ships is frequently paid by foreigners in money, was supposed to be peculiarly fitted for bringing gold and silver into the country. But though the carrying trade certainly deserves no peculiar encouragement, though the motive of the institution was, perhaps, abundantly foolish, the institution itself seems reasonable enough. Such drawbacks cannot force into this trade a greater share of the capital of the country than what would have gone to it of its own accord, had there been no duties upon importation. They only prevent its being excluded altogether by those duties. The carrying trade, though it deserves no preference, ought not to be precluded, but to be left free like all other trades. It is a necessarv 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 of the customs, instead of suffering, profits from such drawbacks, by that part of the duty which is retained. If the whole duties had been retained, the foreign goods upon which they are paid could seldom have been exported, nor con¬ sequently imported, for want of a market. The duties, therefore, of w r hich a part is re¬ tained, would never have been paid. These reasons seem sufficiently to justify drawbacks, and would justify them, though the whole duties, w T hether upon the produce of domestic industry, or upon foreign goods, were always drawn back upon exportation. The revenue of excise would, in this case, indeed, suffer a little, and that of the cus¬ toms a good deal more; but the natural balance of industry, the natural division and distribution of labour, which is always more or less disturbed by such duties, would be more nearly re-established by such a regulation. These reasons, however, will justify draw¬ backs only upon exporting goods to those countries which are altogether foreign and independent, not to those in which our merchants and manufacturers enjoy a mo¬ nopoly. A drawback, for example, upon the exportation of European goods to our American colonies, will not always occasion a greater exportation than what would have taken place without it. By means of the monopoly which our merchants and manu¬ facturers enjoy there, the same quantity might frequently, perhaps, be sent thither, though the whole duties were retained. The drawback, therefore, may frequently be pure loss to the revenne of excise and cus¬ toms, without altering the state of the trade or rendering it in any respect more exten¬ sive. How far such drawbacks can be jus¬ tified, as a proper encouragement to the industry of our colonies, or how far it is ad¬ vantageous to the mother country, that they should be exempted from taxes which are paid by all the rest of their fellow-subjects, will appear hereafter when I come to treat of colonies. Drawbacks, however, it must always be understood, are useful only in those cases in which the goods for the exportation of which they are given, are really exported to some foreign country, and not clandestinely re¬ imported into our own. That some draw¬ backs, particularly those upon tobacco, have frequently been abused in this manner, and have given occasion to many frauds equally hurtful both to the revenue and to the fair trader, is well known. CHAP. V. Of Bounties. Bounties upon exportation are, in Great Britain, frequently petitioned for, and some¬ times granted to the produce of particular branches of domestic industry. By means 224 BOUNTIES. Book IV. of them our merchants and manufacturers, it is pretended, will be enabled to sell their goods as cheap, or cheaper than their rivals in the foreign market. A greater quantity, it is said, will thus be exported, and the ba¬ lance of trade consequently turned more in favour of our own country. We cannot give our workmen a monopoly in the foreign, as we have done in the home market. We cannot force foreigners to buy their goods, as we have done our own countrymen. The next best expedient, it has been thought, therefore, is to pay them for buying. It is in this manner that the mercantile system proposes to enrich the whole country, and to put money into all our pockets by means of the balance of trade. Bounties, it is allowed, ought to be given to those branches of trade only which can¬ not be carried on without them. But every branch of trade in which the merchant can sell his goods for a price which replaces to him, with the ordinary profits of stock, the whole capital employed in preparing and sending them to market, can be carried on without a bounty. Every such branch is evidently upon a level with all the other branches of trade which are carried on with¬ out bounties, and cannot, therefore, require one more than they. Those trades only re¬ quire bounties in which the merchant is obliged to sell his goods for a price which does not replace to him his capital, together with the ordinary profit; or in which he is obliged to sell them for less than it really costs him to send them to market. The bounty is given in order to make up this loss, and to encourage him to continue, or perhaps to begin, a trade of which the ex¬ pense is supposed to be greater than the returns, of which every operation eats up a part of the capital employed in it, and which is of such a nature, that, if all other trades resembled it, there would soon be no capital left in the country. The trades, it is to be observed, which are carried on by means of bounties, are the only ones which can be carried on between two nations for any considerable time to¬ gether, in such a manner as that one of them shall always and regularly lose, or sell its goods for less than it really costs to send them to market. But if the bounty did not repay to the merchant what he would other¬ wise lose upon the price of his goods, his own interest would soon oblige him to em¬ ploy his stock in another way, or to find out a trade in which the price of the goods would replace to him, with the ordinary profit, the capital employed in sending them to market. The effect of bounties, like 1 The second edition of the Tracts on the Corn Trade was published in 1766. Since that period very great changes have taken place in the corn trade of Great Britain. From being a regularly exporting, we that of all the other expedients of the mer¬ cantile system, can only be to force the trade of a country into a channel much less advantageous than that in which it would naturally run of its own accord. The ingenious and well-informed author of the tracts upon the corn trade has shown very clearly, that since the bounty upon the exportation of corn was first established, the price of the corn exported, valued mode¬ rately enough, has exceeded that of the corn imported, valued very high, by a much greater sum than the amount of the whole bounties which had been paid during that period. 1 This, he imagines, upon the true principles of the mercantile system, is a clear proof that this forced corn trade is beneficial to the nation ; the value of the exportation exceeding that of the importation by a much greater sum than the whole extraor¬ dinary expense which the public has been at in order to get it exported. He does not consider that this extraordinary expense, or the bounty, is the smallest part of the expense which the exportation of corn really costs the society. The capital which the farmer employed in raising it, must likewise be taken into the account. Unless the price of the corn when sold in the foreign markets replaces, not only the bounty, but this ca¬ pital, 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, is the supposed insufficiency of the price to do this. • The average price of corn, it has been said, has fallen considerably since the esta¬ blishment of the bounty. That the average price of corn began to fall somewhat towards the end of the last century, and has conti¬ nued to do so during the course of the sixty- four first years of the present, I have already endeavoured to show. But this event, sup¬ posing it to be as real as I believe it to be, must have happened in spite of the bounty, and cannot possibly have happened in con¬ sequence of it. It has happened in France, as well as in England, though in France there was, not only no bounty, but, till 1764, the exportation of corn was subjected to a general prohibition. This gradual fall in the average price of grain, it is probable, therefore, is ultimately owing neither to the one regulation nor to the other, but to that gradual and insensible rise in the real value of silver, which, in the first book of this dis¬ course, I have endeavoured to show has taken place in the general market of Europe, during the course of the present century. became, for fifty years, an almost regularly importing country; but, as already stated, (see note, p. 34.), importation has again almost entirely ceased. Chap. V. BOUNTIES. It seems to be altogether impossible that the bounty could ever contribute to lower the price of grain. In years of plenty, it has already been observed, the bounty, by occasioning an ex¬ traordinary exportation, necessarily keeps up the price of corn in the home market above what it would naturally fall to. To do so was the avowed purpose of the insti¬ tution. In years of scarcity, though the bounty is frequently suspended, yet the great exportation which it occasions in years of plenty must frequently hinder more or less the plenty of one year from relieving the scarcity of another. Both in years of plenty and in years of scarcity, therefore, the bounty necessarily tends to raise the money price of corn somewhat higher than it otherwise would be in the home market. That, in the actual state of tillage, the bounty must necessarily have this tendency, will not, I apprehend, be disputed by any reasonable person. But it has been thought by many people that it tends to encourage tillage, and that in two different ways : first, by opening a more extensive foreign market to the corn of the farmer, it tends, they ima¬ gine, to increase the demand for, and conse¬ quently the production of, that commodity; and, secondly, by securing to him a better price than he could otherwise expect in the actual state of tillage, it tends, they suppose, to encourage tillage. This double encou¬ ragement must, they imagine, in a long period of years, occasion such an increase in the production of corn, as may lower its price in the home market, much more than the bounty can raise it, in the actual state which tillage may, at the end of that period, happen to be in. I answer, that whatever extension of the foreign market can be occasioned by the bounty, must, in every particular year, be altogether at the expense of the home mar¬ ket ; as every bushel of corn which is ex¬ ported by means of the bounty, and which would not have been exported without the bounty, would have remained in the home market to increase the consumption, and to lower the price of that commodity. 1 The corn bounty, it is to be observed, as well as every other bounty upon exportation, im¬ poses two different taxes upon the people : first, the tax which they are obliged to con¬ tribute, in order to pay the bounty ; and secondly, the tax which arises from the advanced price of the commodity in the home market, and which, as the whole body of the people are purchasers of corn, must, in this particular commodity, be paid by the whole 1 But if the bounty cause an increased exportation of corn, it also causes an increased production. It is true, however, inasmuch as a larger quantity of corn can Seldom be obtained without resorting to inferior lands requiring a greater amount of capital and 2’15 body of the people. In this particular com¬ modity, therefore, this second tax is by much the heaviest of the two. Let us suppose that, taking one year with another, the bounty of five shillings upon the exportation of the quarter of wheat raises the price of that commodity in the home market only sixpence the bushel, or four shillings the quarter, higher than it otherwise would have been in the actual state of the crop. Even upon this very moderate supposition, the great body of the people, over and above contributing the tax which pays the bounty of five shillings upon every quarter of wheat exported, must pay another of four shillings upon every quarter which they themselves consume. But, according to the very well informed author of the tracts upon the corn trade, the average proportion of the corn exported to that consumed at home is not more than that of one to thirty-one. For every five shillings, therefore, which they con¬ tribute to the payment of the first tax, they must contribute six pounds four shillings to the payment of the second. So very heavy a tax upon the first necessary of life, must either reduce the subsistence of the labouring poor, or it must occasion some augmentation in their pecuniary wages, proportionable to that in the pecuniary price of their subsist¬ ence. So far as it operates in the one way, it must reduce the ability of the labouring poor to educate and bring up their children, and must, so far, tend to restrain the popu¬ lation of the country. So far as it operates in the other, it must reduce the ability of the employers of the poor, to employ so great a number as they otherwise might do, and must, so far, tend to restrain the industry of the country. The extraordinary exportation of corn therefore, occasioned by the bounty, not only in every particular year, diminishes the home, just as much as it extends the foreign, market and consumption, but, by restraining the population and industry of the country, its final tendency is to stunt and restrain the gradual extension of the home market; and thereby, in the long run, rather to diminish than to augment the whole market and consumption of corn. This enhancement of the money price of corn, however, it has been thought, by ren¬ dering that commodity more profitable to the farmer, must necessarily encourage its production. I answer, that this might be the case if the effect of the bounty was to raise the real price of corn, or to enable the farmer, with an equal quantity of it, to maintain a greater number of labourers in the same manner, labour for their cultivation, that average prices are commonly raised by means of a bounty ; but they are never raised to its whole, and seldom, perhaps, to more than half its amount. See supplemental note on the Corn Laws. Q 226 BOUNTIES. Book IV. whether more liberal, moderate, or scanty, that other labourers are commonly main¬ tained in his neighbourhood. But neither the bounty, it is evident, nor any other human institution can have any such effect. It is not the real but the nominal price of corn, which can in any considerable degree be affected by the bounty . 1 And though the tax which that institution imposes upon the whole body of the people may be very bur¬ densome to those who pay it, it is of very little advantage to those who receive it. The real effect of the bounty is not so much to raise the real value of corn, as to degrade the real value of silver ; or to make an equal quantity of it exchange for a smaller quantity, not only of corn, but of all other home-made commodities: for the money price of corn regulates that of all other home-made commodities . 2 It regulates the money price of labour, which must always be such as to enable the labourer to purchase a quantity of corn suf¬ ficient to maintain him and his family either in the liberal, moderate, or scanty manner in which the advancing, stationary or declin¬ ing circumstances of the society oblige his employers to maintain him. It regulates the money price of all the other parts of the rude produce of land, which, in every period of improvement, must bear a certain proportion to that of corn, though this proportion is different in different periods. It regulates, for example, the money price of grass and hay, of butcher s meat, of horses, and the maintenance of horses, of land carriage consequently, or of the greater part of the inland commerce of the country. But regulating the money price of all the other parts of the rude produce of land, it regulates that of the materials of almost all manufactures. By regulating the money price of labour, it regulates that of manufac¬ turing art and industry ; and by regulating both, it regulates that of the complete manu¬ facture. The money price of labour, and of every thing that is the produce either of land or labour, must necessarily either rise or fall in proportion to the money price of corn. Though in consequence of the bounty, therefore, the farmer should be enabled to sell his corn for four shillings the bushel instead of three and sixpence, and to pay his landlord a money rent proportionable to this rise in the money price of his produce ; yet if, in consequence of this rise in the price of corn, four shillings will purchase no more home-made goods of any other kind than three and sixpence would have done before, neither the circumstances of the farmer nor 1 Dr. Smith here confounds the utility of corn, or its capacity to feed and support human beings, with its price, or value, as compared with other things. The former does not vary; but the latter varies with every variation in the fertility of the soils on those of the landlord will be much mended by this change. The farmer will not be able to cultivate much better: the landlord will not be able to live much better. In the purchase of foreign commodities this enhancement in the price of corn may give them some little advantage: in that of home-made commodities it can give them none at all; and almost the whole expense of the farmer, and the far greater part even of that of the landlord, is in home-made commodities. That degradation in the value of silver which is the effect of the fertility of the mines, and which operates equally, or very near equally, through the greater part of the commercial world, is a matter of very little consequence to any particular country. The consequent rise of all money prices, though it does not make those who receive them really richer, does not make them really poorer. A service of plate becomes really cheaper, and every thing else remains pre¬ cisely of the same real value as before. But that degradation in the value of sil¬ ver which, being the effect either of the peculiar situation or of the political institu¬ tions of a particular country, takes place only in that country, is a matter of very great consequence, which, far from tending to make any body really richer, tends to make every body really poorer. . The rise in the money price of all commodities, which is in this case peculiar to that country, tends to discourage more or less every sort of in¬ dustry which is carried on within it, and to enable foreign nations, by furnishing almost all sorts of goods for a smaller quantity of silver than its own workmen can afford to do, to undersell them, not only in the foreign, but even in the home market. It is the peculiar situation of Spain and Portugal, as proprietors of the mines, to be the distributors of gold and silver to all the other countries of Europe. Those metals ought naturally, therefore, to be somewhat cheaper in Spain and Portugal than in any other part of Europe. I he difference, how¬ ever, should be no more than the amount of the freight and insurance; and, on account of the great value and small bulk of those metals, their freight is no great matter, and their insurance is the same as that of any other goods of equal value. Spain and Portugal, therefore, could suffer very little from their peculiar situation, if they did not aggravate its disadvantages by their political institutions. Spain by taxing, and Portugal by pro¬ hibiting the exportation of gold and silver, load that exportation with the expense of which corn is raised, and with every improvement in agriculture. 2 This is an error. The money price of corn does not regulate the money price of other things. See supplemental note on the Corn Laws. Chap. V. BOUNTIES. 227 smuggling, and raise the value of those me¬ tals in other countries so much more above what it is in their own, by the whole amount of this expense. When you dam up a stream of water, as soon as the dam is full, as much water must run over the dam-head as if there was no dam at all. The prohibition of ex¬ portation cannot detain a greater quantity of gold and silver in Spain and Portugal than what they can afford to employ, than what the annual produce of their land and labour will allow them to employ, in coin, plate, gilding, and other ornaments of gold and silver. When they have got this quan¬ tity the dam is full, and the whole stream which flows in afterwards must run over. The annual exportation of gold and silver from Spain and Portugal accordingly is, by all accounts, notwithstanding these restraints, very near equal to the whole annual import¬ ation. As the water, however, must always be deeper behind the dam-head than before it, so the quantity of gold and silver which these restraints detain in Spain and Portu¬ gal must, in proportion to the annual pro¬ duce of their land and labour, be greater than what is to be found in other countries. The higher and stronger the dam-head, the greater must be the difference in the depth of water behind and before it. The higher the tax, the higher the penalties with which the prohibition is guarded, the more vigilant and severe the police which looks after the execution of the law, the greater must be the difference in the proportion of gold and silver to the annual produce of the land and labour of Spain and Portugal, and to that of other countries. It is said accordingly to be very considerable, and that you frequently find there a profusion of plate in houses, where there is nothing else which would, in other countries, be thought suitable or cor¬ respondent to this sort of magnificence. The cheapness of gold and silver, or, what is the same thing, the dearness of all commodities, which is the necessary effect of this redun¬ dancy of the precious metals, discourages both the agriculture and manufactures of Spain and Portugal, and enables foreign nations to supply them with many sorts of rude, and with almost all sorts of manufac¬ tured produce, for a smaller quantity of gold and silver than what they themselves can either raise or make them for at home. 1 The tax and prohibition operate in two dif¬ ferent ways : they not only lower very much 1 It is quite impossible that the restrictions al¬ luded to in the text, or any similar restrictions, however rigidly enforced, could have had the effect ascribed to them by Dr. Smith. If the restrictions on the exportation of gold and silver from Spain and Portugal really sunk their value there as compared with their value in other countries, then, as the goods imported into them must have exchanged for a proportionally greater quantity of such depreciated gold and silver, it is plain that the demand for them would neither be greater nor less than if there had the value of the precious metals in Spain and Portugal, but by detaining there a certain quantity of those metals which would other¬ wise flow over other countries, they keep up their value in those other countries some¬ what above what it otherwise would be, and thereby give those countries a double ad¬ vantage in their commerce with Spain and Portugal. Open the flood-gates, and there will presently be less water above, and more below, the dam-head, and it will soon come to a level in both places. Remove the tax and the prohibition, and as the quantity of gold and silver will diminish considerably in Spain and Portugal, so it will increase somewhat in other countries, and the value of those metals, their proportion to the an¬ nual produce of land and labour, will soon come to a level, or very near to a level, in all. The loss which Spain and Portugal could sustain by this exportation of their gold and silver would be altogether nominal and ima¬ ginary. The nominal value of their goods, and of the annual produce of their land and labour, would fall, and would be expressed or represented by a smaller quantity of silver than before : but their real value would be the same as before, and would be sufficient to maintain, command, and employ, the same quantity of labour. As the nominal value of their goods would fall, the real value of what remained of their gold and silver would rise, and a smaller quantity of those metals would answer all the same purposes of com¬ merce and circulation which had employed a greater quantity before. The gold and silver which would go abroad would not go abroad for nothing, but would bring back an equal value of goods of some kind or another. Those goods too would not be all matters of mere luxury and expense, to be consumed by idle people who produce no¬ thing in return for their consumption. As the real wealth and revenue of idle people would not be augmented by this extraordi¬ nary exportation of gold and silver, so neither would their consumption be much augmented by it. Those goods would, probably, the greater part of them, and certainly some part of them, consist in materials, tools, and pro¬ visions, for the employment and maintenance of industrious people, who would reproduce, with a profit, the full value of their con¬ sumption. A part of the dead stock of the society would thus be turned into active stock, and would put into motion a greater been no depreciation. To suppose that the trade of a country should be permanently affected by regula¬ tions which reduce the value of gold and silver in it below their natural level, is equivalent to supposing that it might be permanently affected by degrading the standard of its coin. The real disadvantage of restrictions on the exportation of the precious metals consists, in so far as they add factitiously to their supply, to deprive the country of the value of the commodities it would obtain in exchange for the sur¬ plus metals. Q 2 228 BOUNTIES. Book IV. quantity of industry than had been employed before. The annual produce of their land and labour would immediately be augmented a little, and in a few years would, probably, be augmented a great deal; their industry being thus relieved from one of the most op¬ pressive burdens which it at present labours under. The bounty upon the exportation of corn necessarily operates exactly in the same way as this absurd policy of Spain and Portugal. Whatever be the actual state of tillage, it renders our corn somewhat dearer in the home market than it otherwise would be in that state, and somewhat cheaper in the foreign ; and as the average money price of corn regulates more or less that of all other commodities, it lowers the value of silver considerably in the one, and tends to raise it a little in the other. In enables foreigners, the Dutch in particular, not only to eat our corn cheaper than they otherwise could do, but sometimes to eat it cheaper than even our own people can do upon the same occa¬ sions ; as we are assured by an excellent authority, that of Sir Matthew Decker. It hinders our own workmen from furnishing their goods for so small a quantity of silver ns they otherwise might do, and enables the Dutch to furnish theirs for a smaller. It tends to render our manufactures somewhat dearer in every market, and theirs somewhat cheaper than they otherwise would be, and consequently to give their industry a double advantage over our own . 1 The bounty, as it raises in the home mar¬ ket, not so much the real as the nominal price of our corn, as it augments, not the quantity of labour which a certain quantity of corn can maintain and employ, but only the quantity of silver which it will exchange for, it discourages our manufactures without rendering any considerable service either to our farmers or country gentlemen. It puts, indeed, a little more money into the pockets of both, and it will, perhaps, be somewhat difficult to persuade the greater part of them that this is not rendering them a very con¬ siderable service. But if this money sinks in its value, in the quantity of labour, pro¬ visions, and home-made commodities of all different kinds which it is capable of pur¬ chasing, as much as it rises in its quantity, the service will be little more than nominal and imaginary. There is, perhaps, but one set of men in 1 The bounty tended to lower profits, but not to raise the price of any commodity except corn. 2 A permanent and equal bounty, like that which was long established in this country, could not have these effects. Its operation must have been uniform and steady. It is true, that on the w'hole it must have occasioned a greater exportation than would have taken place without it; but not a greater ex¬ portation at one time than at another. 3 There is a great deal of exaggeration in this statement. The inriuence of a bounty on the ex¬ portation of manufactured goods, on their price, and the whole commonwealth to whom the bounty either was or could be essentially serviceable. These were the corn merchants, the exporters and importers of corn. In years of plenty, the bounty necessarily oc¬ casioned a greater exportation than would otherwise have taken place ; and by hinder¬ ing the plenty of one year from relieving the scarcity of another, it occasioned in years of scarcity a greater importation than would otherwise have been necessary. It increased the business of the corn merchant in both ; and in years of scarcity, it not only enabled him to import a greater quantity, but to sell it for a better price, and consequently with a greater profit than he could otherwise have made, if the plenty of one year had not been more or less hindered from relieving the scarcity of another . 2 It is in this set of men, accordingly, that I have observed the greatest zeal for the continuance or renewal of the bountv. J Our country gentlemen, when they im¬ posed the high duties upon the importation of foreign corn, which in times of moderate plenty amount to a prohibition, and when they established the bounty, seem to have imitated the conduct of our manufacturers. By the one institution, they secured to them¬ selves the monopoly of the home market, and by the other they endeavoured to pre¬ vent that market from ever being over¬ stocked with their commodity. By both they endeavoured to raise its real value, in the same manner as our manufacturers had, by the like institutions, raised the real value of many different sorts of manufactured goods. They did not, perhaps, attend to the great and essential difference which nature has established between corn and almost every other sort of goods. When, either by the monopoly of the home market, or by a bounty upon exportation, you enable our woollen or linen manufacturers to sell their goods for somewhat a better price than they otherwise could get for them, you raise, not only the nominal but the real price of those goods. You render them equivalent to a greater quantity of labour and subsistence ; you increase not only the nominal but the real profit, the real wealth and revenue of those manufacturers; and you enable them either to live better themselves, or to em¬ ploy a greater quantity of labour in those particular manufactures . 3 You really en¬ courage those manufactures, and direct on the profits of the manufacturer, very soon ceases. The rise of price w hich the bounty occasions, in the first instance, is sure speedily to attract as much additional capital to the favoured business as is sufficient to supply the increased demand for goods ; and, at the same time, to reduce the profits of the manufacturer and merchant to the common level; so that, unless some addition be made to the cost of producing the goods, their price necessarily, and not very slowly, sinks to its old level. It is seldom, how r ever, that any thing occurs in manufactures to cause an increased difficulty of production, when an Chap. V. BOUNTIES. 229 towards them a greater quantity of the in¬ dustry of the country, than what would probably go to them of its own accord ; but when by the like institutions you raise the nominal or money price of corn, you do not raise its real value — you do not increase the • real wealth, the real revenue either of our farmers or country gentlemen — you do not encourage the growth of corn, because you do not enable them to maintain and employ more labourers in raising it. The nature of things has stamped upon corn a real value which cannot be altered by merely altering its money price. No bounty upon export¬ ation, no monopoly of the home market, can raise that value. The freest competition cannot lower it. Through the world in general that value is equal to the quantity of labour which it can maintain ; and in every particular place it is equal to the quantity of labour which it can maintain in the way, whether liberal, moderate, or scanty, in which labour is commonly maintained in that place. Woollen or linen cloth are not the regulating commodities by which the real value of all other commodities must be finally measured and determined ; corn is. The real value of every other commodity is finally measured and determined by the pro¬ portion which its average money price bears to the average money price of corn. The real value of corn does not vary with those variations in its average money price, which sometimes occur from one century to ano¬ ther. It is the real value of silver which varies with them. 1 Bounties upon the exportation of any home-made commodity are liable, first, to that general objection which may be made to all the different expedients of the mercan¬ tile system ; the objection of forcing some part of the industry of the country into a channel less advantageous than that in which it would run of its own accord: and, secondly, to the particular objection of forcing it, not only into a channel that is less advantageous, but into one that is actually disadvanta¬ geous ; the trade which cannot be carried on increased quantity of produce is required. But in¬ asmuch as an additional supply of corn can rarely be obtained without resorting to inferior lands, this is usually the case in agriculture. And hence it follows, that the granting of a bounty on the exportation of raw produce occasions a faulty distribution of the national capital, by attracting more of it to agricul¬ ture than would naturally have gone, while, by forcing the cultivation of poor soils, it raises its cost and price to the home consumer. A bounty on ma¬ nufactured goods is objectionable only in the first of these respects. It does not cause a permanent rise of prices ; and is, for that reason, decidedly less injurious than a bounty on the exportation of corn or other raw produce. For a farther discussion of this subject, see supplemental note on the Corn Laws. 1 This seems to be a most fallacious statement. Dr. Smith says, that the value of corn is equal to the quantity of labour it will maintain; and he therefore concludes, because the same quantity of corn has the capacity, at all times, of feeding the same number of men, that its value is invariable ! But the but by means of a bounty being necessarily a losing trade. The bounty upon the ex¬ portation of corn is liable to this further objection, that it can in no respect promote the raising of that particular commodity of which it was meant to encourage the pro¬ duction. When our country gentlemen, therefore, demanded the establishment of the bounty, though they acted in imita¬ tion of our merchants and manufacturers, they did not act with that complete compre¬ hension of their own interest which com¬ monly directs the conduct of those two other orders of people. They loaded the public revenue with a very considerable expense; they imposed a very heavy tax upon the whole body of the people; but they did not, in any sensible degree, increase the real value of their own commodity; and by lowering somewhat the real value of silver, they discouraged, in some degree, the gene¬ ral industry of the country, and, instead of advancing, retarded more or less the improve¬ ment of their own lands, which necessarily depends upon the general industry of the country. 2 To encourage the production of any com¬ modity, a bounty upon production, one should imagine, would have a more direct operation than one upon exportation. It would, besides, impose only one tax upon the people, that which they must contribute in order to pay the bounty. Instead of raising, it would tend to lower the price of the commodity in the home market; and thereby, instead of imposing a second tax upon the people it might, at least in part, repay them for what they had contributed to the first. Bounties upon production, how¬ ever, have been very rarely granted. The prejudices established by the commercial system have taught us to believe, that na¬ tional wealth arises more immediately from exportation than from production. 11 has been more favoured accordingly, as the more im¬ mediate means of bringing money into the country. Bounties upon production, it has been said too, have been found by experi- value of a commodity, or its power to exchange for or buy labour and other commodities, is a totally different and distinct quality from its utility, that is, from its capacity to satisfy our wants and desires. Utility, though essential to value, is not the principle by which it is determined : that depends wholly on the facility or difficulty of production. A quarter of corn is at one time produced by a given amount of labour ; but if, owing to the necessity of cultivating inferior soils or any other cause, the same amount of labour should at some other time only produce half a quarter, the value of corn will be doubled, while its utility or capacity of supporting man will be unal¬ tered. For a farther illustration of this principle, see supplemental note on Value. 2 The reverse of what is stated in this paragraph is true. A bounty on the exportation of corn raises its price, and, by forcing the cultivation of inferior lands, raises rents. It is, therefore, productive of a real and lasting advantage to the landlords ; whereas a bounty on the exportation of manufactured goods confers only a temporary and comparatively trifling advantage on their producers. 0,3 230 BOUNTIES. Book IV. ence more liable to frauds than those upon exportation. How far this is true, I know not. That bounties upon exportation have been abused to many fraudulent purposes, is very well known. But it is not the inte¬ rest of merchants and manufacturers, the great inventors of all these expedients, that the home market should be overstocked with their goods, — an event which a bounty upon production might 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, accord¬ ingly, it is the one of which they are the fondest. I have known the different un¬ dertakers of some particular works agree privately among themselves to give a bounty out of their own pockets upon the exporta¬ tion of a certain proportion of the goods which they dealt in. This expedient suc¬ ceeded so well, that it more than doubled, the price of their goods in the home mar¬ ket, notwithstanding a very considerable in¬ crease in the produce. The operation of the bounty upon corn must have been wonder¬ fully different, if it has lowered the money price of that commodity. 1 Something like a bounty upon produc¬ tion, however, has been granted upon some particular occasions. The tonnage boun¬ ties given to the white-herring and whale fisheries may, perhaps, be considered as somewhat of this nature. They tend di¬ rectly, it may be supposed, to render the goods cheaper in the home market than they otherwise would be. In other respects their effects, it must be acknowledged, are the same as those of bounties upon exportation. By means of them a part of the capital of the country is employed in bringing goods to market, of which the price does not repay the cost, together with the ordinary profits of stock. But though the tonnage bounties to those fisheries do not contribute to the opulence of the nation, it may perhaps be thought, that they contribute to its defence, by augment¬ ing the number of its sailors and shipping. This, it may be alleged, may sometimes be done by means of such bounties at a much smaller expense, than by keeping up a great standing navy, if I may use such an expression, in the same way as a standing army. Notwithstanding these favourable allega¬ tions, however, the following considerations dispose me to believe, that in granting at least one of these bounties, the legislature has been very grossly imposed upon. First , The herring buss bounty seems too large. 1 For a more detailed and scientific inquiry into the operation of bounties on production, see the From the commencement of the winter fishing 1771 to the end of the winter fishing 1781, the tonnage bounty upon the herring buss fishery has been at thirty shillings the ton. During these eleven years the whole number of barrels caught by the herring buss fishery of Scotland amounted to 378,347. The herrings caught and cured at sea, are called sea sticks. In order to render them what are called merchantable herrings, it is necessary to repack them with an additional quantity of salt; and in this case, it is reckoned, that three barrels of sea sticks are usually repacked into two barrels of mer¬ chantable herrings. The number of barrels of merchantable herrings, therefore, caught during these eleven years, will amount only, according to this account, to 252,23 lg. During these eleven years the tonnage boun¬ ties paid amounted to 155,463/. 11s. or to 8s. 2 \d. upon every barrel of sea sticks, and to 12s. 3fc7. upon every barrel of merchant¬ able herrings. The salt with which these herrings are cured is sometimes Scotch, and sometimes foreign salt; both which are delivered, free of all excise duty, to the fish-curers. The excise duty upon Scotch salt is at present Is. 6d ., that upon foreign salt 10s. the bushel. A barrel of herrings is supposed to require about one bushel and one-fourth of a bushel foreign salt. Two bushels are the supposed average of Scotch salt. If the herrings are entered for exportation, no part of this duty is paid up ; if entered for home consumption, whether the herrings were cured with foreign or with Scotch salt, only one shilling the barrel is paid up. It was the old Scotch duty upon a bushel of salt, the quantity which, at a low estimation, had been supposed necessary for curing a barrel of herrings. In Scotland, foreign salt is very little used for any other purpose but the curing of fish. But from the 5th April 1771 to the 5th April 1782, the quantity of foreign salt imported amounted to 936,974 bushels, at eighty-four pounds the bushel: the quantity of Scotch salt, delivered from the works to the fish-curers, to no more than 168,226, at fifty-six pounds the bushel only. It would appear, therefore, that it is principally foreign salt that is used in the fisheries. Upon every barrel of herrings exported there is, besides, a bounty of 2s. 8 d .; and more than two-thirds of the buss caught herrings are exported. Put all these things together and you will find, that, during these eleven years, every barrel of buss caught herrings, cured with Scotch salt when exported, has cost government 17s. Ilf d. ; and when entered for home consumption 14s. 3 4d. : and that every barrel cured with foreign salt, when exported, has cost go- chapter on that subject in Fucardo’s Principles cf Political Economy and Taxation. Chap. V. BOUNTIES. 231 vernment 1/. 7s. 5\d. ; and when entered for home consumption 1/. 3s. 9| d. The price of a barrel of good merchantable herrings runs from seventeen and eighteen to four and five and twenty shillings; about a guinea at an average. 1 Secondly , The bounty to the white herring fishery is a tonnage bounty, and is propor¬ tioned to the burden of the ship, not to her diligence or success in the fishery ; and it has, I am afraid, been too common for vessels to fit out for the sole purpose of catching, not the fish, but the bounty. In the year 1759, when the bounty was at fifty shillings the ton, the whole buss fishery of Scotland brought in only four barrels of sea sticks. In that year each barrel of sea sticks cost government in bounties alone 113/. 15s.; each barrel of merchantable herrings 159/. 7s. 6d. Thirdly , The mode of fishing for which this tonnage bounty in the rvhite herring fishery has been given (by busses or decked vessels from twenty to eighty tons burthen,) seems not so well adapted to the situation of Scotland as to that of Holland; from the practice of which country it appears to have been borrowed. Holland lies at a great distance from the seas to which herrings are known principally to resort, and can, there¬ fore, carry on that fishery only in decked vessels, which can carry water and provisions sufficient for a voyage to a distant sea. But the Hebrides or western islands, the islands of Shetland, and the northern and north¬ western coasts of Scotland, the countries in whose neighbourhood the herring fishery is principally carried on, are everywhere in¬ tersected by arms of the sea, which run up a considerable way into the land, and which, in the language of the country, are called sea-lochs. It is to these sea-lochs that the herrings principally resort, during the seasons in which they visit those seas; for the visits of this, and, I am assured, of many other sorts of fish, are not quite re¬ gular and constant. A boat fishery, there¬ fore, seems to be the mode of fishing best adapted to the peculiar situation of Scot¬ land ; the fishers carrying the herrings on shore, as fast as they are taken, to be either cured or consumed fresh. But the great encouragement, which a bounty of thirty shillings the ton gives to the buss fishery, is necessarily a discouragement to the boat fishery; which, having no such bounty, cannot bring its cured fish to market upon the same terms as the buss fishery. The boat fishery, accordingly, which, before the establishment of the buss bounty, was very considerable, and is said to have employed a number of seamen, not inferior to what the buss fishery employs at present, is now gone 1 See the accounts at the end of the chapter. (Note by the author.) almost entirely to decay. Of the former extent, however, of this now ruined and abandoned fishery, I must acknowledge, that I cannot pretend to speak with much pre¬ cision. As no bounty was paid upon the outfit of the boat fishery, no account w*as taken of it by the officers of the customs or salt duties. Fourthly , In many parts of Scotland, during certain seasons of the year, herrings make no inconsiderable part of the food of the common people. A bounty, which tend¬ ed to lower their price in the home market, might contribute a good deal to the relief of a great number of our fellow-subjects, whose circumstances are by no means affluent. But the herring buss bounty contributes to no such good purpose. It has ruined the boat fishery, -which is by far the best adapted for the supply of the home market, and the ad¬ ditional bounty of 2s. 8 d. the barrel upon exportation, carries the greater part, more than two thirds, of the produce of the buss fishery abroad. Between thirty and forty years ago, before the establishment of the buss bounty, sixteen shillings the barrel, I have been assured, was the common price of white herrings. Between ten and fifteen years ago, before the boat fishery was en¬ tirely ruined, the price is said to have run from seventeen to twenty shillings the barrel. For these last five years, it has, at an aver¬ age, been at twenty-five shillings the barrel. This high price, however, may have been owing to the real scarcity of the herrings upon the coast of Scotland. I must ob¬ serve, too, that the cask or barrel, which is usually sold with the herrings, and of which the price is included in all the foregoing prices, has, since the commencement of the American war, risen to about double its former price, or from about three shillings to about six shillings. I must likewise ob¬ serve, that the accounts I have received of the prices of former times, have been by no means quite uniform and consistent; and an old man of great accuracy and experience has assured me that more than fifty years ago, a guinea was the usual price of a bar¬ rel of good merchantable herrings ; and this, I imagine, may still be looked upon as the average 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 the undertakers of fisheries, after such liberal bounties have been bestowed upon them, continue to sell their commodity at the same, or even at a higher price than they were accustomed to do before, it might be expected that their profits should be very great; and it is not improbable that those of some individuals may have been so. In general, however, I have every reason to believe, they have been quite otherwise. Q 4 232 BOUNTIES. Book IV. The usual effect of such bounties is to en¬ courage rash undertakers to adventure in a business which they do not understand, and what they lose by their own negligence and ignorance, more than compensates all that they can gain by the utmost liberality of go¬ vernment. In 1750, bv the same act which * * first gave the bounty of thirty shillings the ton for the encouragement of the white her¬ ring fishery (the 23 Geo. II. chap. 24.), a joint stock company was erected, with a capital of five hundred thousand pounds, to which the subscribers (over and above all other encouragements, the tonnage bounty just now mentioned, the exportation bounty of two shillings and eight pence the barrel, the delivery of both British and foreign salt duty free) were, during the space of four¬ teen years, for every hundred pounds which they subscribed and paid in to the stock of the society, entitled to three pounds a year, to be paid by the receiver-general of the customs in equal half-yearly payments. Be¬ sides this great company, the residence of whose governor and directors was to be in London, it was declared lawful to erect dif¬ ferent fishing chambers in all the different outports of the kingdom, provided a sum not less than ten thousand pounds was sub¬ scribed into the capital of each, to be ma¬ naged at its own risk, and for its own profit and loss. The same annuity, and the same encouragements of all kinds, were given to the trade of those inferior chambers, as to that of the great company. The subscription of the great company was soon filled up, and several different fishing chambers were erect¬ ed in the different outports of the kingdom. In spite of all these encouragements, almost all those different companies, both great and small, lost either the whole, or the greater part of their capitals; scarce a vestige now remains of any of them, and the white her¬ ring fishery is now entirely, or almost en¬ tirely, carried on by private adventurers. 1 If any particular manufacture was neces¬ sary, indeed, for the defence of the society, it might not always be prudent to depend upon our neighbours for the supply; and if such manufacture could not otherwise be supported at home, it might not be unreason¬ able that all the other branches of industry should be taxed in order to support it. The bounties upon the exportation of British- made sailcloth, and British-made gun¬ powder, may, perhaps, both be vindicated upon this principle. But though it can very seldom be reason- able to tax the industry of the great body of the people, in order to support that of some particular class of manufacturers, yet in the wantonness of great prosperity, when the public enjoys a greater re%*enue than it knows well what to do with, to give such bounties to favourite manufactures, may, perhaps, be as natural as to incur any other idle expense. In public, as well as in private expenses, great wealth may, perhaps, frequently be ad¬ mitted as an apology for great folly; but there must surely be something more than ordin¬ ary absurdity, in continuing such profusion in times of general difficulty and distress. What is called a bounty is sometimes no more than a drawback, and consequently is not liable to the same objections as what is properly a bounty. The bounty, for ex¬ ample, upon refined sugar exported, may be considered as a drawback of the duties upon the brown and muscovado sugars, from which it is made ; the bounty upon wrought silk exported, a drawback of the duties upon raw and thrown silk imported; the bounty upon gunpowder exported, a drawback of the duties upon brimstone and saltpetre im¬ ported. In the language of the customs those allowances only are called drawbacks, which are given upon goods exported in the same form in which they are imported. W hen that form has been so altered by ma¬ nufacture of any kind, as to come under a new denomination, they are called bounties. Premiums given by the public to artists and manufacturers who excel in their parti¬ cular occupations, are not liable to the same objections as bounties. By encouraging ex¬ traordinary dexterity and ingenuity, they serve to keep up the emulation of the work¬ men actually employed in those respective occupations and are not considerable enough to turn towards any one of them a greater share of the capital of the country than what would go to it of its own accord. Their tend¬ ency is not to overturn the natural balance of employments, but to render the work which is done in each as perfect and complete as possible. The expense of premiums, be¬ sides, is very trifling; that of bounties very great. The bounty upon corn alone has sometimes cost the public in one year, more than three hundred thousand pounds. Bounties are sometimes called premiums, as drawbacks are sometimes called bounties. But we must in all cases attend to the na¬ ture of the thing, without paying any regard to the word. Digression concerning the Corn Trade and Corn Laws. I cannot conclude this chapter concerning bounties, without observing that the praises which have been bestowed upon the law which establishes the bounty upon the ex¬ portation of corn, and upon that system of regulations which is connected with it, are 1 Several important changes have been made in the herring-fishery regulations since the publication sf the Wealth of Nations. An account of these changes, and of the present state of the fishery, is given in a supplemental note. Chap. V. CORN TRADE AND CORN LAWS. 2S3 altogether unmerited. A particular examin¬ ation of the nature of the corn trade, and of the principal British laws which relate to it, will sufficiently demonstrate the truth of this assertion. The great importance of this subject must justify the length of the digression. The trade of the corn merchant is com¬ posed of four different branches, which, though they may sometimes be all carried on by the same person, are in their own nature four separate and distinct trades. These are, first, the trade of the inland dealer; secondly, that of the merchant importer for home consumption ; thirdly, that of the merchant exporter of home produce for foreign con¬ sumption ; and, fourthly, that of the mer¬ chant carrier, or of the importer of corn, in order to export it again. I. The interest of the inland dealer, and that of the great body of the people, how opposite soever they may at first sight ap¬ pear, are, even in years of the greatest scar¬ city, exactly the same. It is his interest to raise the price of his corn as high as the real scarcity of the season requires, and it can never be his interest to raise it higher. By raising the price, he discourages the con¬ sumption, and puts every body, more or less, but particularly the inferior ranks of people, upon thrift and good management. If, by raising it too high, he discourages the con¬ sumption so much that the supply of the season is likely to go beyond the consump¬ tion of the season, and to last for some time after the next crop begins to come in, he runs the hazard, not only of losing a consi¬ derable part of his corn by natural causes, but of being obliged to sell what remains of it for much less than what he might have had for it several months before. If by not raising the price high enough he discourages the consumption so little, that the supply of the season is likely to fall short of the con¬ sumption of the season, he not only loses a part of the profit which he might otherwise have made, but he exposes the people to suffer before the end of the season, instead of the hardships of a dearth, the dreadful horrors of a famine. It is the interest of 1 Mr. Buchanan, in a note on this passage, ob¬ serves — “ Those who still imagine that corn is arti¬ ficially raised in price, would do well to consider, that, as the supply of provisions is liable to great variations, there must be some provision in the economy of nature for making a smaller supply last as long as a larger supply ; that there is no way of thus regulating the consumption but by the price, and that it is, accordingly, in reference to this great object that the price is invariably fixed. It neither can be lowered nor increased but for the sake of more exactly suiting the daily and weekly waste to the supply of the year. If we suppose, for example, that the supply falls in, one year one twelfth below the level of an average crop, (which we know fre¬ quently happens,) it would, if consumption were to go on at the ordinary rate, be consumed in the course of eleven months, leaving the last month wholly unprovided for. But this we know never the people that their dally, weekly, and monthly consumption, should be propor¬ tioned 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 high¬ est price, and with the greatest profit; and his knowledge of the state of the crop, and of his daily, weekly, and monthly sales, enable him to judge, with more or less accu¬ racy, how far they really are supplied in this manner. Without intending the interest of the people, he is necessarily led, by a regard to his own interest, to treat them, even in years of scarcity, pretty much in the same manner as the prudent master of a vessel is sometimes obliged to treat his crew. When he foresees that provisions are likely to run short, he puts them upon short allow¬ ance. Though from excess of caution he should sometimes do this without any real necessity, yet all the inconveniencies which his crew can thereby suffer, are inconsider¬ able, in comparison of the danger, misery, and ruin to which they might sometimes be exposed by a less provident conduct. Though from excess of avarice, in the same manner, the inland corn merchant should sometimes raise the price of his corn somewhat higher than the scarcity of the season requires, yet all the inconveniencies which the people can suffer from this conduct, which effectually secures them from a famine in the end of the season, are inconsiderable, in comparison of what they might have been exposed to by a more liberal way of dealing in the begin¬ ning: of it. The corn merchant himself is likely to suffer the most by this excess of avarice ; not only from the indignation which it generally excites against him, but though he should escape the effects of this indigna¬ tion, from the quantity of corn which it ne¬ cessarily leaves upon his hands in the end of the season, and which, if the next season happens to prove favourable, he must always sell for a much lower price than he might otherwise have had. 1 Were it possible, indeed, for one great company of merchants to possess themselves happens, and it is only prevented by a rise of price, which measures the consumption by the deficiency of the crop; and whether therefore there is an abundant, middling, or scarce crop, a suitable allow¬ ance is sure to be measured out to the consumer, by a low, a middling, or a high price. The corn dealer, indeed, thinks nothing about all this : his object is to sell his commodity at the highest price ; and in a scarcity he takes his full advantage ; but while he is thinking only of himself—while he is only playing his own paltry game, he is a mere instrument in the hands of him who brings good out of evil, and who turns the little passions of man to the purposes of his own benevolence and wisdom. There is really no¬ thing in nature more wonderful than that great law of society by which subsistence is measured out in due proportion to the supply of the year ; and the more deeply it is considered, the more worthy will it appear of profound and rational admiration.” CORN TRADE AND Book IV 234 of the whole crc-p of an extensive country, it might, perhaps, be their interest to deal with it as the Dutch are said to do with the spice- ries of the Moluccas, to destroy or throw away a considerable part of it, in order to keep up the price of the rest. But it is scarce possible, even by the violence of law, to establish such an extensive monopoly with regard to corn ; and, wherever the law leaves the trade free, it is of all commodities the least liable to be engrossed or monopolised by the force of a few large capitals, which buy up the greater part of it. Not only its value far exceeds what the capitals of a few private men are capable of purchasing, but, supposing they were capable of purchasing it, the manner in which it is produced ren¬ ders this purchase altogether impracticable. As in every civilised country it is 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. When it first comes from the ground, too, it is ne¬ cessarily divided among a greater number of owners than any other commodity; and these owners can never be collected into one place like a number of independent manufacturers, but are necessarily scattered through all the different corners of the country. These first owners either immediately supply the con¬ sumers in their own neighbourhood, or they supply other inland dealers who supply those consumers. The inland dealers in corn, therefore, including both the farmer and the baker, are necessarily more numerous than the dealers in any other commodity, and their dispersed situation renders it altogether im¬ possible for them to enter into any general combination. If in a year of scarcity, there¬ fore, anv of them should find that he had a w good deal more corn upon hand than, at the current price, he could hope to dispose of before the end of the season, he would never think of keeping up this price to his own loss, and to the sole benefit of his rivals and competitors, but would immediately lower it, in order to get rid of his corn before the new crop began to come in. The same motives, the same interests, which would thus regu¬ late the conduct of any one dealer, would regulate that of every other, and oblige them all in general to sell their corn at the price which, according to the best of their judg¬ ment, was most suitable to the scarcity or plenty of the season. Whoever examines with attention the his¬ tory of the dearths and famines which have afflicted any part of Europe, during either the course of the present or that of the two preceding centuries, of several of which we have pretty exact accounts, will find, I be¬ lieve, that a dearth never has arisen from any combination among the inland dealers in corn, nor from any other cause but a real scarcity, occasioned sometimes, perhaps, and in some particular places by the waste of war, but in by far the greatest number of cases by the fault of the seasons; and that a famine has never arisen from any other cause but the violence of government attempting, by improper means, to remedy the incon- veniencies of a dearth. In an extensive corn country, between all the different parts of which there is a free commerce and communication, the scarcity occasioned by the most unfavourable seasons can never be so great as to produce a famine ; and the scantiest crop, if managed with fru¬ gality and economy, will maintain through the year the same number of people that are commonly fed in a more affluent manner by one of moderate plenty. The seasons most unfavourable to the crop are those of exces¬ sive drought or excessive rain. But, as corn grows equally upon high and low lands, upon grounds that are disposed to be too wet, and upon those that are disposed to be too dry, either the drought or the rain which is hurtful to one part of the country is favourable to another; and though both in the wet and in the dry season the crop is a good deal less than in one more properly tempered, yet in both what is lost in one part of the country is in some measure compen¬ sated by what is gained in the other In rice countries, where the crop not only re¬ quires a very moist soil, but where in a cer¬ tain period of its growing it must be laid under water, the effects of a drought are much more dismal. Even in such countries, however, the drought is, perhaps, scarce ever so universal as necessarily to occasion a famine, if the government would allow a free trade. The drought in Bengal, a few years ago, might probably have occasioned a very great dearth. Some improper regulations, some injudicious restraints imposed by the servants of the East India Company upon the rice trade, contributed, perhaps, to turn that dearth into a famine. When the government, in order to remedy the inconveniencies of a dearth, orders all the dealers to sell their corn at what it supposes a reasonable price, it either hinders them from bringing it to market, which may some¬ times produce a famine even in the begin¬ ning of the season ; or if they bring it thither, it enables the people, and thereby encourages them to consume it so fast, as must neces¬ sarily produce a famine before the end of the season. The unlimited, unrestrained free¬ dom of the corn trade, as it is the only effectual preventative of the miseries of a famine, so it is the best palliative of the in¬ conveniencies of a dearth; for the inconve¬ niencies of a real scarcity cannot be remedied, they can only be palliated. No trade de¬ serves more the full protection of the law, and no trade requires it so much, because Chap. V. CORN LAWS. 23 5 r no trade is so much exposed to popular odium. In years of scarcity the inferior ranks of people impute their distress to the avarice of the corn merchant, who becomes the ob¬ ject of their hatred and indignation. Instead of making profit upon such occasions, there¬ fore, he is often in danger of being utterly ruined, and of having his magazines plun¬ dered and destroyed by their violence. It is in years of scarcity) however, when prices are high, that the corn merchant expects to make his principal profit. He is generally in contract with some farmers to furnish him for a certain number of years with a certain quantity of corn at a certain price. 1 This contract price is settled according to what is supposed to be the moderate and reasonable, that is, the ordinary or average price, which, before the late years of scarcity, was com¬ monly 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 for the ordinary price, and sells it for a much higher. That this ex¬ traordinary profit, however, is no more than sufficient to put his trade upon a fair level with other trades, and to compensate the many losses which he sustains upon other occasions, both from the perishable nature of the commodity itself, and from the fre¬ quent and unforeseen fluctuations of its price, seems evident enough, from this single circumstance, that great fortunes are as sel¬ dom made in this as in any other trade. 1 he popular odium, however, which attends it in years of scarcity, the only years in which it can be very profitable, renders people of character and fortune averse to enter into it. It is abandoned to an inferior set of dealers ; and millers, bakers, mealmen, and meal fac¬ tors, together with a number of wretched hucksters, are almost the only middle people that, in the home market, come between the grower and the consumer. The ancient policy of Europe, instead of discountenancing this popular odium against a trade so beneficial to the public, seems, on the contrary, to have authorised and encou¬ raged it. By the 5th and 6th of Edward VI. cap. 14. it was enacted, that whoever should buy any corn or grain with intent to sell it again, should be reputed an unlawful engrosser, and should, for the first fault, suffer two months’ imprisonment, and forfeit the value of the corn ; for the second, suffer six months’ imprisonment, and forfeit double the value ; and for the third, be set in the pillory, suf¬ fer imprisonment during the king’s pleasure, and forfeit all his goods and chattels. The » This is not now (1838), whatever it may have been in the clays of Dr. Smith, by any means a com¬ mon practice. ancient policy of most other parts of Europe was no better than that of England. Our ancestors seem to have imagined that the people would buy their corn cheaper of the farmer than of the corn merchant, who, they were afraid, would require, over and above the price which he paid to the farmer, an exorbitant profit to himself. They en¬ deavoured, therefore, to annihilate his trade altogether. They even endeavoured to hin¬ der as much as possible any middle man of any kind from coming in between the grower and the consumer ; and this was the meaning of the many restraints which they imposed upon the trade of those whom they called kidders or carriers of corn, a trade which nobody was allowed to exercise without a licence ascertaining his qualifications as a man of probity and fair dealing. The au¬ thority of three justices of the peace was, by the statute of Edward VI., necessary, in order to grant this licence. But even this restraint was afterwards thought insufficient, and by a statute of Elizabeth, the privilege of granting it was confined to the quarter sessions. The ancient policy of Europe endeavoured in this manner to regulate agriculture, the great trade of the country, by maxims quite different from those which it established with regard to manufactures, the great trade of the towns. By leaving the farmer no other customers but either the consumers or their immediate factors, the kidders and carriers of corn, it endeavoured to force him to ex¬ ercise the trade, not only of a farmer, but of a corn merchant or corn retailer. On the contrary, it in many cases prohibited the manufacturer from exercising the trade of a shopkeeper, or from selling his own goods by retail. It meant by the one law to pro¬ mote the general interest of the country, or to render corn cheap, without, perhaps, its being well understood how this was to be done. By the other it meant to promote that of a particular order of men, the shop¬ keepers, who "would be so much undersold by the manufacturer, it was supposed, that their trade would be ruined if he was allowed to retail at all. The manufacturer, however, though he had been allowed to keep a shop, and to sell his own goods by retail, could not have un¬ dersold the common shopkeeper. V hatever part of his capital he might have placed in his shop, he must have withdrawn it from his manufacture. In order to carry on his business on a level with that of other people, as he must have had the profit of a manu¬ facturer on the one part, so he must have had that of a shopkeeper upon the other. Let us suppose, for example, that in the particular town where he lived, ten per cent, was the ordinary profit both of manufactur¬ ing and shopkeeping stock ; he must in this 23 6 CORN TRADE AND Rock IV. case liave charged upon every piece of his own goods which he sold in his shop a profit of twenty per cent. When he carried them from his workhouse to his shop, he must have valued them at the price for which he could have sold them to a dealer or shop¬ keeper, who would have bought them by wholesale. If he valued them lower, he lost a part of the profit of his manufacturing capital. When again he sold them from his shop, unless he got the same price at which a shopkeeper would have sold them, he lost a part of the profit of his shopkeeping capital. Though he might appear, therefore, to make a double profit upon the same piece of goods, yet as these goods made successively a part of two distinct capitals, he made but a single profit upon the whole capital em¬ ployed about them ; and if he made less than his profit, he was a loser, or did not employ his whole capital with the same advantage as the greater part of his neighbours. What the manufacturer was prohibited to do, the farmer was in some measure enjoined to do : to divide his capital between two different employments; to keep one part of it in his granaries and stack-yard, for sup¬ plying the occasional demands of the market; and to employ the other in the cultivation of his land. But as he could not afford to employ the latter for less than the ordinary profits of farming stock, so he could as little afford to employ the former for less than the ordinary profits of mercantile stock. Whether the stock which really carried on the business of the corn merchant belonged to the person who was called a farmer, or to the person who was called a corn merchant, an equal profit was in both cases requisite, in order to indemnify its owner for employ¬ ing it in this manner; in order to put his business upon a level with other trades, and in order to hinder him from having an in¬ terest to change it as soon as possible for some other. The farmer, therefore, who was thus forced to exercise the trade of a corn merchant, could not afford to sell his corn cheaper than any other corn merchant would have been obliged to do in the case of a free competition. The dealer who can employ his whole stock in one single branch of business, has an advantage of the same kind with the workman who can employ his whole labour in one single operation. As the latter ac¬ quires a dexterity which enables him, with the same two hands, to perform a much greater quantity of work ; so the former acquires so easy and ready a method of trans¬ acting his business, of buying and disposing of his goods, that with the same capital he can transact a much greater quantity of business. As the one can commonly afford his work a good deal cheaper, so the other can commonly afford his goods somewhat cheaper than if his stock and attention were both employed about a greater variety of objects. The greater part of manufacturers could not afford to retail their own goods so cheap as a vigilant and active shopkeeper, whose sole business it was to buy them by wholesale, and to retail them again. The greater part of farmers could still less afford to retail their own corn, to supply the inha¬ bitants of a town, at perhaps four or five miles distance from the greater part of them, so cheap as a vigilant and active corn mer¬ chant, 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 manufac¬ turer from exercising the trade of a shop¬ keeper, endeavoured to force this division in the employment of stock to go on faster than it might otherwise have done; the law which obliged the farmer to exercise the trade of a corn merchant, endeavoured to hinder it from going on so fast: both laws were evident violations of natural liberty, and therefore unjust; and they were both too as impolitic as they were unjust. It is the interest of every society, that things of this kind should never either be forced or obstructed. The man who employs either his labour or his stock in a greater variety of ways than his situation renders necessary, can never hurt his neighbour by underselling him: he may hurt himself, and he gene¬ rally does so. Jack of all trades will never be rich, says the proverb. But the law ought always to trust people with the care of their own interest, as in their local situa¬ tions they must generally be able to judge better of it than the legislator can do. The law, however, which obliged the farmer to exercise the trade of a corn merchant was by far the most pernicious of the two. It obstructed not only that division in the employment of stock which is so advanta¬ geous to every society, but it obstructed likewise the improvement and cultivation of the land. By obliging the farmer to carry on two trades instead of one, it forced him to divide his capital into two parts, of which one only could be employed in cultivation. But if he had been at liberty to sell his whole crop to a corn merchant as fast as he could thersh it out, his whole capital might have returned immediately to the land, and have been employed in buying more cattle, and hiring more servants, in order to improve and cultivate it better. But by being obliged to sell his corn by retail, he was obliged to keep a great part of his capital in his granaries and stack-yard through the year, and could not, therefore, cultivate so well as with the same capital he might other¬ wise have done. This law, therefore, neces¬ sarily obstructed the improvement of the land, and, instead of tending to render corn Chat. V. CORN LAWS. 2S7 cheaper, must have tended to render it scarcer, and therefore dearer, than it would otherwise have been. After the business of the farmer, that of the corn merchant is in reality the trade which, if properly protected and encouraged, would contribute the most to the raising of corn. It would support the trade of the farmer, in the same manner as the trade of the wholesale dealer supports that of the manufacturer. The wholesale dealer, by affording a ready market to the manufacturer, by taking his goods off his hand as fast as he can make them, and by sometimes even advancing their price to him before he has made them, enables him to keep his whole capital, and sometimes even more than his whole capital, constantly employed in manufacturing, and consequently to manufacture a much greater quantity of goods than if he was obliged to dispose of them himself to the immediate consumers, or even to the retailers. As the capital of the wholesale merchant too is generally sufficient to replace that of many manufacturers, this intercourse between him and them interests the owner of a large capi¬ tal to support the owners of a great number of small ones, and to assist them in those losses and misfortunes which might other¬ wise prove ruinous to them. An intercourse of the same kind univer¬ sally established between the farmers and the corn merchants, would be attended with effects equally beneficial to the farmers. They would be enabled to keep their whole capitals, and even more than their whole capitals, constantly employed in cultivation. In case of any of those accidents, to which no trade is more liable than theirs, they would find in their ordinary customer, the ■wealthy corn merchant, a person who had both an interest to support them, and the ability to do it, and they would not, as at present, be entirely dependent upon the for¬ bearance of their landlord, or the mercy of his steward. Were it possible, as perhaps it 1 This is a mistake.. The statute of 1772 (12 Geo. III. cap. 71.) repeals the restrictions and penal¬ ties imposed by the statute of Charles II., as well as those imposed by the more ancient statutes, on the buying and selling of corn and other raw products ; the following distinct acknowledgment of their injurious operation being made in the preamble: “ Whereas it has been found by experience, that the restraints laid by several statutes upon the dealing in corn, meal, flour, cattle, and other sundry sort of victuals, by preventing a free trade in the said com¬ modities, have a tendency to discourage the growth, and enhance the price of the same, which statutes, if put into execution, would bring great distress on the inhabitants of many parts of the kingdom, and parti¬ cularly on the cities of London and Westminster, be it therefore,” &c. Unfortunately, however, the statute did not declare that no one should henceforth be liable to be indicted at common law for the imaginary otfences of forestalling, regrating, and engrossing. The framers of the act were perhaps afraid lest any interference with the common law might, by exciting a prejudice in the public mind, be fatal to the success of the measure ; and they probably supposed that the is not, to establish this intercourse univer¬ sally, and all at once, were it possible to turn all at once the whole farming stock of the kingdom to its proper business, the cultiva¬ tion of land, withdrawing it from every other employment into which any part of it may be at present diverted, and were it pos¬ sible, in order to support and assist upon occasion the operations of this great stock, to provide all at once another stock almost equally great, it is not perhaps very easy to imagine how great, how extensive, and how sudden would be the improvement which this change of circumstances would alone produce upon the whole face of the country. The statute of Edward VI., therefore, by prohibiting as much as possible any middle man from coming in between the grower and the consumer, endeavoured to annihilate trade, of which the free exercise is not only the best palliative of the inconveniencies of a dearth, but the best preventative of that calamity ; after the trade of the farmer, no trade contributing so much to the growing of corn as that of the corn merchant. The rigour of this law was afterwards softened by several subsequent statutes, which successively permitted the engrossing of corn when the price of wheat should not exceed twenty, twenty-four, thirty-two, and forty shillings the quarter. At last, by the 15th of Charles II. c. 7. the engrossing or buying of corn in order to sell it again, as long as the price of wheat did not exceed forty-eight shillings the quarter, and that of other grain in proportion, was declared lawful to all persons not being forestalled, that is, not selling again in the same market within three months. All the freedom which the trade of the inland corn dealer has ever yet enjoyed, was bestowed upon it by this sta¬ tute. The statute of the twelfth of the present king, which repeals almost all the other ancient laws against engrossers and forestalled, does not repeal the restrictions of this particular statute, which therefore still continue in force. 1 increasing knowledge and spirit of the age were a sufficient security that no proceeding, subversive of the freedom of "the corn trade, would be founded upon it. But, if such were their opinion, it proved fallacious. In 1795 and 1800, the prices of corn rose to an unusual height; and despite the conclu¬ sive reasonings of Dr. Smith and other able writers, and the explicit acknowledgment in the preamble to the act now quoted, the clamour against the proceedings of the corn factors and corn dealers was as loud as it could well have been in the age of the Edw’ards and the Henrys. The mu¬ nicipal authorities of the city of London denounced the speculations of the corn merchants, without which it could not exist for a day, as the main, or rather sole cause of the scarcity which then afflicted the country; and thus aggravated in no common degree, though no doubt unconsciously, the misery and suffering occasioned by the deficiency of food. Some of the principal law authorities gave into the delusion ; and a corn merchant, of the name of Kusby, was indicted, in 1800, for reprating, that is, for selling in the same market, and on the same day in which he had purchased them, thirty quarters of oats 238 CORN TRADE AND Book IV. This statute, however, authorises in some measure two very absurd popular prejudices : First , It supposes that when the price of wheat has risen so high as forty-eight shil¬ lings the quarter, and that of other grain in proportion, corn is likely to be so engrossed as to hurt the people. But from what has been already said, it seems evident enough that corn can at no price be so engrossed by the inland dealers as to hurt the people : and forty-eight shillings the quarter besides, though it may be considered as a very high price, yet in years of scarcity it is a price which frequently takes place immediately after harvest, when scarce any part of the new crop can be sold off, and when it is im¬ possible even for ignorance to suppose that any part of it can be so engrossed as to hurt the people. Secondly , It supposes that there is a certain price at which corn is likely to be forestalled, that is, bought up in order to be sold again soon after in the same market, so as to hurt the people. But if a merchant ever buys up corn, either going to a particular market or in a particular market, in order to sell it again soon after in the same market, it must be because he judges that the market cannot be so liberally supplied through the whole sea¬ son as upon that particular occasion, and that the price, therefore, must soon rise. If he judges wrong in this, and if the price does not rise, he not only loses the whole profit of the stock which he employs in this manner, but a part of the stock itself, by the expense and loss which necessarily attend the storing and keeping of corn. He hurts himself, therefore, much more essentially than he can hurt even the particular people whom he may hinder from supplying themselves upon that particular market day, because they may afterwards supply themselves just as cheap upon any other market day. If he judges right, instead of hurting the great body of the people, he renders them a most important service. By making them feel the incon- veniencies of a dearth somewhat earlier than they otherwise might do, he prevents their feeling them afterwards so severely as they certainly would do, if the cheapness of price encouraged them to consume faster than suited the real scarcity of the season. When the scarcity is real, the best thing that can be done for the people is to divide the inconveniencies of it as equally as possi¬ ble through all the different months, and weeks, and days of the year. The interest of the corn merchant makes him study to do at an advance of two shillings a quarter. The charge of lord Kenyon, who presided at the trial, shows how thoroughly he was imbued with the popular pre¬ judices on the subject. But as some of the other judges doubted whether the act for which the indict¬ ment was laid, was really punishable at common law, Rusby, though convicted, was never brought up for judgment. There i6 not much reason to think that an indictment for such an offence w r ould now be this as exactly as he can: and as no other person can have either the same interest, or the same knowledge, or the same abilities to do it so exactly as he, this most important operation of commerce ought to be trusted entirely to him; or, in other words, the corn trade, so far at least as concerns the supply of the home market, ought to be left perfectly free. The popular fear of engrossing and fore¬ stalling may be compared to the popular terrors and suspicions of witchcraft. The unfortunate wretches accused of this latter crime were not more innocent of the mis¬ fortunes imputed to them than those who have been accused of the former. The law which put an end to all prosecutions against witchcraft, which put it out of any man’s power to gratify his own malice by accusing his neighbour of that imaginary crime, seems effectually to have put an end to those fears and suspicions, by taking away the great cause which encouraged and supported them. The law which should restore entire free¬ dom to the inland trade of corn, would probably prove as effectual to put an end to the popular fears of engrossing and fore¬ stalling. The 15th of Charles II. c. 7. however, with all its imperfections, has, perhaps, con¬ tributed more both to the plentiful supply of the home market, and to the increase of tillage, than any other law in the statute book. It is from this law that the inland corn trade has derived all the liberty and protection which it has ever yet enjoyed; and both the supply of the home market and the interest of tillage are much more effectually promoted by the inland, than either by the importation or exportation trade. The proportion of the average quantity of all sorts of grain imported into Great Britain to that of all sorts of grain consumed, it has been computed by the author of the tracts upon the corn trade, does not exceed that of one to five hundred and seventy. For supplying the home market, therefore, the importance of the inland trade must be to that of the importation trade as five hun¬ dred and seventy to one. The average quantity of all sorts of grain exported from Great Britain does not, ac¬ cording to the same author, exceed the one- and-thirtieth part of the annual produce. For the encouragement of tillage, therefore, by providing a market for the home produce, the importance of the inland trade must be sustained. The more general diffusion of those liberal and enlarged principles which the judges and even merchants of 1705 and 1800 sneered at as abstract and theoretical, will in future effectually shield those engaged in the corn trade from being dragged into Court, and treated like felons, for endeavouring to supply the public with food, and to distribute it in the best manner. CORN LAWS. 239 Chap. V. to that of the exportation trade as thirty to one. 1 2 I have no great faith in political arithme¬ tic, and I mean not to warrant the exact¬ ness of either of these computations. I mention them only in order to show of how much less consequence, in the opinion of the most judicious and experienced persons, the foreign trade of corn is than the home trade. The great cheapness of corn in the years immediately preceding the establish¬ ment of the bounty, may perhaps, with rea¬ son, be ascribed in some measure to the operation of this statute of Charles II., which had been enacted about five and twenty years before, and which had there¬ fore full time to produce its effect. A very few words will sufficiently explain all that I have to say concerning the other three branches of the com trade. II. The trade of the merchant importer of foreign corn for home consumption evi¬ dently contributes to the immediate supply of the home market, and must so far be im¬ mediately beneficial to the great body of the people. It tends, indeed, to lower some¬ what the average money price of corn, but not to diminish its real value, or the quantity of labour which it is capable of maintaining. If importation was at all times free, our farmers and country gentlemen w'ould, pro¬ bably, one year with another, get less money for their corn than they do at present, when importation is at most times in effect pro¬ hibited ; but the money which they got would be of more value, would buy more goods of all other kinds, and would employ more la¬ bour. Their real wealth, their real revenue, therefore, would be the same as at present, though it might be expressed by a smaller quantity of silver ; and they would neither be disabled nor discouraged from cultivating corn as much as they do at present. On the contrary, as the rise in the real value of silver, in consequence of lowering the money price of corn, lowers somewhat the money price of all other commodities, it gives the indus¬ try of the country, w'here it takes place, some advantage in all foreign markets, and thereby tends to encourage and increase that indus¬ try. But the extent of the home market for corn must be in proportion to the general in¬ dustry of the country where it grows, or to the number of those who produce something else, and therefore have something else, or what f 1 For the state of the corn trade with respect to imports and exports down to 1838, see the tables annexed to the supplemental note on the Corn Laws. 2 Before the 13th of the present king, the follow ing were the duties payable upon the importation of the different sorts of grain :— Grain. Duties. Duties. Duties. a. d- a. d. a. d. d. Beans to 28 a per quarterl9 10 after till 40 0 16 8 then 12 Barley to 28 a. 19 10 32 0 16 0 12 Malt is prohibited by the annual malt-tax bill. Oats to 16*. 5 10 after 9^ comes to the same thing, the price of some¬ thing else, to give in exchange for corn. But in every country the home market, as it is the nearest and most convenient, so is it likewise the greatest and most important market for corn. That rise in the real value of silver, therefore, which is the effect of lowering the average money price of corn, tends to en¬ large the greatest and most important market for corn, and thereby to encourage, instead of discouraging, its growth. By the 22d of Charles II. c. 13. the im¬ portation of wheat, whenever the price in the home market did nor exceed fffty-three shillings and fourpence the quarter, was subjected to a duty of sixteen shillings the quarter ; and to a duty of eight shillings whenever the price did not exceed four pounds: the former of these two prices has, for more than a century past, taken place only in times of very great scarcity ; and the latter has, so far as I know, not taken place at all. Yet, till wheat had risen above this latter price, it was by this statute subjected to a very high duty ; and, till it had risen above the former, to a duty which amounted to a prohibition. The importa¬ tion of other sorts of grain was restrained at rates, and by duties, in proportion to the value of the grain, almost equally high. 12 Subsequent laws still further increased those duties. The distress which, in years of scarcity, the strict execution of those law's might have brought upon the people, would probably have been very great; but, upon such occa¬ sions, its execution was generally suspended by temporary statutes, w'hich permitted, for a limited time, the importation of foreign corn. The necessity of these temporary sta¬ tutes sufficiently demonstrates the impro¬ priety of this general one. These restraints upon importation, though prior to the establishment of the bounty, w'ere dictated by the same spirit, by the same principles, w'hich afterwards enacted that regulation. How hurtful soever in themselves, these or some other restraints upon importation became necessary in con¬ sequence of that regulation. If, when wheat w r as either below forty-eight shillings the quarter, or not much above it, foreign corn could have been imported either duty free, or upon paying only a small duty, it might have been exported again, with the benefit of Grain. Duties. Duties. Duties. >. d. a. d. a. d. d. Pease to 40*. 16 0 after 9| Rye to 36*. 19 10 till 40 0 16 8 then 12 Wheat to 44*. 21 9 till 53 4 17 0 then 8*. till il., and after that about 1*. 4 d. Buck-wheat to 32*. er quarter to pay 16*. These different duties were imposed, partly by the 22d of Charles II. in place of the old subsidy, partly by the new subsidy, by the one-third and two-thirds subsidy, and by the subsidy 1747. (Note by the author.) 2-10 CORN TRADE AND Rook IV. the bounty, to the great loss of the public revenue, and to the entire perversion of the institution, of which the object was to extend the market for tlie home growth, not that for the growth of foreign countries. III. The trade of the merchant exporter of corn for foreign consumption, certainly does not contribute directly to the plentiful supply of the home market : it does so, however, indirectly. From whatever source this supply may be usually drawn, whether from home growth or from foreign importa¬ tion, unless more corn is 1 either usually grown, or usually imported into the country than what is usually consumed in it, the supply of the home market can never be very plentiful. But, unless the surplus can, in all ordinary cases, be exported, the grow¬ ers will be careful never to grow more, and the importers never to import more, than what the bare consumption of the home mar¬ ket requires. That market will very seldom be overstocked; but it will generally be understocked, the people, whose business it is to supply it, being generally afraid lest their goods should be left upon their hands. The prohibition of exportation limits the improvement and cultivation of the country to what the supply of its own inhabitants requires. The freedom of exportation ena¬ bles it to extend cultivation for the supply of foreign nations. By the 12th of Charles II. c. 4. the ex¬ portation of corn was permitted whenever the price of wheat did not exceed forty shil¬ lings the quarter, and that of other grain in proportion. By the 15th of the same prince, this liberty was extended till the price of wheat exceeded forty-eight shillings the quar¬ ter ; and by the 22d, to all higher prices. A poundage, indeed, was to be paid to the king upon such exportation. But all grain was rated so low in the book of rates, that this poundage amounted only upon wheat to a shilling, upon oats to fourpence, and upon all other grain to sixpence the quarter. By the 1st of William and Mary, the act which established the bounty, this small duty was virtually taken off whenever the price of wheat did not exceed forty-eight shillings the quarter; and by the 11th and 12th of William III. c. 20. it was expressly taken off at all higher prices. The trade of the merchant exporter was, in this manner, not only encouraged by a bounty, but rendered much more free than that of the inland dealer. By the last of these statutes, corn could be engrossed at any price for exportation; but it could not be engrossed for inland sale, except when the price did not exceed forty-eight shillings the quarter. The interest of the inland dealer, however, it has already been shown, can never be opposite to that of the great body of the people. That of the merchant exporter may, and in fact sometimes is. If, while his own country labours under a dearth, a neighbouring country should be afflicted with a famine, it might be his interest to carry corn to the latter country in such quantities as might very much aggravate the calamities of the dearth. The plentiful supply of the home market was not the direct object of those statutes; but, under the pretence of encouraging agriculture, to raise the money price of corn as high as possible, and thereby to occasion, as much as possible, a constant dearth in the home market. By the dis¬ couragement of importation, the supply of that market, even in times of great scarcity, was confined to the home growth ; and by the encouragement of exportation, when the price was so high as forty-eight shillings the quarter, that market was not, even in times of considerable scarcity, allowed to enjoy the whole of that growth. The temporary laws, prohibiting for a limited time the exportation of corn, and taking off for a limited time the duties upon its importation,—expedients to which Great Britain has been obliged so frequently to have recourse, sufficiently de¬ monstrate the impropriety of her general system. Had that system been good, she would not so frequently have been reduced to the necessity of departing from it. M ere all nations to follow the liberal sys¬ tem of free exportation and free importation, the different states into which a great conti¬ nent was divided would so far resemble the different provinces of a great empire. As among the different provinces of a great empire the freedom of the inland trade ap¬ pears, both from reason and experience, not only the best palliative of a dearth, but the most effectual preventative of a famine ; so would the freedom of the exportation and importation trade be among the different states into which a great continent was di¬ vided. The larger the continent, the easier the communication through all the different parts of it, both by land and by water, the less would any one particular part of it ever be exposed to either of these calamities, the scarcity of any one country being more likely to be relieved by the plenty of some other. But very few countries have entirely adopted this liberal svstem. The freedom of the m corn trade is almost everywhere more or less restrained, and, in many countries, is con¬ fined by such absurd regulations, as fre¬ quently aggravate the unavoidable misfortune of a dearth into the dreadful calamity of a famine. The demand of such countries for corn may frequently become so great and so urgent, that a small state in their neigh¬ bourhood, which happened at the same time to be labouring under some degree of dearth, could not venture to supply them without exposing itself to the like dreadful calamity. The very bad policy of one country may Chap. V. CORN LAWS. 241 thus render it in some measure dangerous and imprudent to establish what would otherwise be the best policy in another. The unlimited freedom of exportation, how¬ ever, would be much less dangerous in great states, in which the growth being much greater, the supply could seldom be much affected by any quantity of corn that was likely to be exported In a Swiss canton, or in some of the little states of Italy, it may, perhaps, sometimes be necessary to restrain the exportation of corn : in such great countries as France or England it scarce ever can. To hinder, besides, the farmer from sending his goods at all times to the best market is evidently to sacrifice the ordinary laws of justice to an idea of public utility, to a sort of reasons of state; an act of legislative authority which ought to be exercised only, which can be pardoned only in cases of the most urgent necessity. The price at which the exportation of corn is pro¬ hibited, if it is ever to be prohibited, ought always to be a very high price. The laws, concerning corn may every¬ where be compared to the laws concerning religion. The people feel themselves so much interested in what relates either to their subsistence in this life, or to their happiness in a life to come, that government must yield to their prejudices, and, in order to preserve the public tranquillity, establish that system which they approve of. It is upon this account, perhaps, that we so sel¬ dom find a reasonable svstem established • ^ with regard to either of those two capital objects. IV. The trade of the merchant carrier, or of the importer of foreign corn in order to export it again, contributes to the plentiful supply ot the home market. It is not in¬ deed the direct purpose of his trade to sell his corn there; but he will generally be willing to do so, and even for a good deal less money than he might expect in a foreign market; because he saves in this manner the expense of loading and unloading, of freight and insurance. The inhabitants of the country which by means of the carrying trade, becomes the magazine and storehouse for the supply of other countries, can very seldom be in want themselves. Though the carrying trade might thus contribute to re¬ duce the average money price of corn in the home market, it w r ould not thereby low’er its real value: it would only raise somewhat the real value of silver. The carrying trade was in effect prohibited in Great Britain, upon all ordinary occa¬ sions, by the high duties upon the import¬ ation of foreign corn, of the greater part of which there was no drawback: and upon extraordinary occasions, when a scarcity made it necessary to suspend those duties by tem¬ porary statutes, exportation was always pro¬ hibited. By this system of law’s, therefore, the carrying trade was in effect prohibited upon all occasions. 1 hat system of law’s, therefore, wdiich is connected with the establishment of the bounty seems to deserve no part of the praise which has been bestowed upon it. The im¬ provement and prosperity of Great Britain, which has been so often ascribed to those law r s, may very easily be accounted for by other causes. That security w’hich the law r s in Great Britain give to every man that he shall enjoy the fruits of his own labour, is alone sufficient to make any country flourish, notwithstanding these and twenty other ab¬ surd regulations of commerce; and this security was perfected by the Revolution, much about the same time that the bounty w r as established. The natural effort of every individual to better his own condition, w’hen 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 hun dred impertinent obstructions w’ith which the folly of human laws too often incumbers its operations; though the effect of these obstructions is always more or less either to encroach upon its freedom, or to diminish its security. In Great Britain industry is per¬ fectly secure; and though it is far from being perfectly free, it is as free or freer than in any other part of Europe. Though the period of the greatest pros¬ perity and improvement of Great Britain has been posterior to that system of laws which is connected with the bounty, we must not upon that account impute it to those law’s. It has been posterior likewise to the na¬ tional debt. But the national debt has most assuredly not been the cause of it. Though the system of laws which is con¬ nected with the bounty has exactly the same tendency with the police of Spain and Por¬ tugal,—to lower somewhat the value of the precious metals in the country w’here it takes place; yet Great Britain is certainly one of the richest countries in Europe, while Spain and Portugal are perhaps among the most beggarly. This difference of situation, how- evcr, may easily be accounted for from tw r o different causes: First, the tax in Spain, the prohibition in Portugal of exporting gold and silver, and the vigilant police which w’atches over the execution of those law’s, must, in two very poor countries, which be¬ tween them import annually upwards of six millions sterling, operate, not only more di¬ rectly, but much more forcibly in reducing the value of those metals there than the corn laws can do in Great Britain ; and, secondly, this bad policy is not in those countries counterbalanced by the general liberty and security of the people. Industry is there R 242 CORN TRADE AND CORN LAWS. Book IV. neither free nor secure, and the civil and ecclesiastical governments of both Spain and Portugal are such as would alone be suffi¬ cient to perpetuate their present state of poverty, even though their regulations of commerce were as wise as the greater part of them are absurd and foolish. The 13th of the present king, c. 43. seems to have established a new system with regard to the corn laws, in many respects better than the ancient one, but in one or two re¬ spects perhaps not quite so good. By this statute, the high duties upon im¬ portation for home consumption are taken off so soon as the price of middling wheat rises to forty-eight shillings the quarter; that of middling rye, pease, or beans, to thirty-two shillings; that of barley to twenty- four shillings ; and that of oats to sixteen shillings ; and instead of them, a small duty is imposed of only sixpence upon the quar¬ ter of wheat, and upon that of other grain in proportion. With regard to all these dif¬ ferent sorts of grain, but particularly with regard to wheat, the home market is thus opened to foreign supplies at prices con¬ siderably lower than before. By the same statute, the old bounty of five shillings upon the exportation of wheat ceases so soon as the price rises to forty-four shillings the quarter, instead of forty-eight, the price at which it ceased before; that of two shillings and sixpence upon the export¬ ation of barley ceases so soon as the price rises to twenty-two shillings, instead of twenty-four, the price at which it ceased be¬ fore ; that of two shillings and sixpence upon the exportation of oatmeal ceases so soon as the price rises to fourteen shillings, instead of fifteen, the price at which it ceased before. The bounty upon rye is reduced from three shillings and sixpence to three shillings, and it ceases so soon as the price rises to twenty-eight shillings instead of thirty-two, the price at which it ceased be¬ fore. If bounties are as improper as I have endeavoured to prove them to be, the sooner they cease, and the lower they are, so much the better. The same statute permits, at the lowest prices, the importation of corn, in order to be exported again, duty free, provided it is in the mean time lodged in a warehouse under the joint locks of the king and the importer. This liberty, indeed, extends to no more than twenty-five of the different ports of Great Britain. They are, however, the principal ones, and there may not, perhaps, be ware¬ houses proper for this purpose in the greater part of the others. So far this law seems evidently an im¬ provement upon the ancient system. But by the same law a bounty of two shillings the quarter is given for the export¬ ation of oats whenever the price does not exceed fourteen shillings. No bounty had ever been given before for the exportation of this grain, no more than for that of pease or beans. By the same law, too, the exportation of wheat is prohibited so soon as the price rises to forty-four shillings the quarter ; that of rye so soon as it rises to twenty-eight shil¬ lings ; that of barley so soon as it rises to twenty-two shillings; and that of oats so soon as they rise to fourteen shillings. Those several prices seem all of them a good deal too low, and there seems to be an impro¬ priety, besides, in prohibiting exportation altogether at those precise prices at which that bounty, which was given in order to force it, is withdrawn. The bounty ought certainly either to have been withdrawn at a much lower price, or exportation ought to have been allowed at a much higher. So far, therefore, this law seems to be in¬ ferior to the ancient system. With all its imperfections, however, we may perhaps say of it what was said of the laws of Solon, that, though not the best in itself, it is the best which the interests, prejudices, and temper of the times would admit of. It may, perhaps, in due time prepare the way for a better. 1 1 The two following accounts are subjoined, in order to illustrate and confirm what is said in this chapter, 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 empty Barrels carried out , and the Number of Barrels of Herrings caught; also the Bounty at a Medium on each Barrel of Seasteeks, and on each Barrel when fully packed. Years. 1 Number Empty of j Barrels Busses, carried out Barrels of Herrings caught. Bounty paid on the Busses. 1771 29 5948 2832 £ s. d. 2085 0 0 1772 168 41,316 22,237 11,055 7 6 1773 190 42.333 42,055 12,510 8 6 1774 248 59,303 56,365 16,952 2 6 1775 275 69,144 52,879 19,315 15 0 1776 294 76,329 51,863 21,290 7 6 1777 240 62,679 43,313 17,592 2 6 1778 220 56,390 40,958 16,316 2 6 1779 206 55,194 29,367 15,287 0 0 1780 181 48,315 19,885 13,445 12 6 1781 135 33,992 16,593 9613 12 6 Total 2186 550,943 378,347 155,463 11 0 Seasteeks, 378347 Bounty at a medium for each barrel of sea¬ steeks - - -BO 8 2\ But a barrel of seasteeks being only reckoned two- thirds of a barrel fully packed, one-third is de¬ ducted, which brings the \ deducted, 126,115§ bounty to - £Q 12 3f B p r ack!d UU } 252,231* And if the herrings are exported, there is besides a premium of - - 0 2 8 £0 14 Ilf Chap. VI. COMMERCIAL TREATIES. 2-13 CHAP. VI. Of Treaties of Commerce A w hen a nation binds itself by treaty either to permit the entry of certain goods from one foreign country which it prohibits from all others, or to exempt the goods of one country from duties to which it subjects those of all others, the country, or at least the merchants and manufacturers of the country, whose commerce is so favoured, must necessarily derive great advantage from the treaty. Those merchants and manufac¬ turers enjoy a sort of monopoly in the coun¬ try which is so indulgent to them. That country becomes a market both more exten¬ sive and more advantageous for their goods : more extensive, because the goods of other nations being either excluded or subjected to heavier duties, it takes off a greater quan¬ tity of theirs : more advantageous, because the merchants of the favoured country, en¬ joying a sort of monopoly there, will often So that the bounty paid by govern¬ ment in money for each barrel, is - - £0 14 11^ But if to this, the duty of the salt * usually taken credit for as expended in curing each barrel, which at a medium is of foreign, one bushel and one-fourth of a bushel, at 10$. a bushel, be added, V1Z .0 12 6 The bounty on each barrel would amount to . £\ 7 5f If the herrings are cured with British salt, it will stand thus, viz. Bounty as before - — but if to this bounty the duty on two bushels of Scots salt at 1$. 6d. per bushel, supposed to be the quantity at a me¬ dium used in curing each barrel, is added, viz. . - £0 14 Ilf 0 3 0 The bounty on each barrel will amount to - - £0 17 Ilf And, when buss herrings are entered for home consumption in Scotland, and pay the shilling a barrel of duty, the bounty stands thus, viz. as before - £0 12 From which the 1$. a barrel is to be deducted - - . 3f But to that there is to be added again, the duty of the foreign salt used in curing a barrel of herrings, viz. 0 1 0 0 11 3f 0 12 6 So that the premium allowed for each barrel of herrings entered for home con¬ sumption is - - - _ _ _ _£*1 92 If the herrings are cured with British salt, it will stand as follows, viz. Bounty on each barrel brought in by the busses as above - 22 From which deduct the Is. a barrel paid at the time they are entered for home consumption - _ _ . 0 1 0 32 Carried forward £0 11 3f sell their goods for a better price than if ex posed to the free competition of all other nations. 2 Such treaties, however, though they may be advantageous to the merchants and manu¬ facturers of the favoured, are necessarily dis¬ advantageous to those of the favouring coun¬ try. A monopoly is thus granted against them to a foreign nation; and they must frequently buy the foreign goods they have occasion for, dearer than if the free competi¬ tion of other nations was admitted. That part of its own produce with which such a nation purchases foreign goods, must conse¬ quently be sold cheaper, because when two things are exchanged for one another, the cheapness of the one is a necessary conse¬ quence, or rather is the same thing with the dearness of the other. The exchangeable value of its annual produce, therefore, is likely to be diminished by every such treaty. This diminution, however, can scarce amount to any positive loss, but only to a lessening of the gain which it might otherwise make. Though it sells its goods cheaper than it 3 * Brought forward - . £0 11 But if to the bounty the duty on two bushels of Scots salt at 1$. 6d. per bushel, supposed to be the quantity at a medium used in curing each barrel, is added, viz. - - - - . _ 030 The premium for each barrel entered for home consumption will be £0 14 3f Though the loss of duties upon herrings exported cannot, perhaps, properly be considered as bounty, that upon herrings entered fee name consumption certainly may. An 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 bth of April 1771, to the bth of April 1782, with a Me¬ dium of both for one Year. period. From the 5th of Aprils 1771, to the 5th off- April 1782. 3 Medium for one year Foreign Salt imjxirted. Scots Salt delivered from the Works. Bushels. Bushels. 936,974 168,226 851,79.^ 152,93^. It is to be observed that the bushel of Foreign salt weighs 841bs., that of British salt 561bs. only. (Note by the author.) For an account of the statutes that have been passed since 1773, for the regulation of the corn trade see supplemental note on the Corn Laws. 1 For an account of the commercial treaty with France, negotiated by Mr. Pitt in 1786, see supple¬ mental note on the trade with France. 2 The advantages to which Dr. Smith alludes are really of very small importance. If they occasion an increased demand for any species of goods, they will, no doubt, in the first instance, raise the profits of the producers. But this rise, by attracting capital from other employments, will increase the supply of goods proportionally to the demand, and speedily reduce profits to their former level. R 2 244 COMMERCIAL TREATIES. Book IV. otherwise might do, it will not probably sell them for less than they cost; nor, as in the case of bounties, for a price which will not replace the capital employed in bringing them to market, together with the ordinary profits of stock. The trade could not go on long if it did. Even the favouring coun¬ try, therefore, may still gain by the trade, though less than if there was a free compe¬ tition. Some treaties of commerce, however, have been supposed advantageous upon principles very different from these ; and a commercial country has sometimes granted a monopoly of this kind against itself to certain goods of a foreign nation, because it expected that in the whole commerce between them, it would annually sell more than it wouid buy, and that a balance in gold and silver would be annually returned to it. It is upon, this principle that the treaty of commerce be¬ tween England and Portugal, concluded in 1703, by Mr. Methuen, has been so much commended. The following is a literal translation of that treaty, which consists of three articles only : — ART. i. His sacred royal majesty of Portugal pro¬ mises, both in his own name and that of his successors, to admit, for ever hereafter, into Portugal, the woollen cloths, and the rest of the woollen manufactures of the British, as was accustomed, till they were prohibited by the law; nevertheless upon this condition : ART. II. That is to say, that her sacred royal ma¬ jesty of Great Britain shall, in her own name, and that of her successors, be obliged, for ever hereafter, to admit the wines of the growth of Portugal into Britain ; so that at no time, whether there shall be peace or war between the kingdoms of Britain and Prance, 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, deduct¬ ing or abating a third part of the custom or duty. But if at any time this deduction or abatement of customs, which is to be made as aforesaid, shall in any manner be attempted and prejudiced, it shall be just and lawful for his sacred royal majesty of Portugal, again to prohibit the woollen cloths, and the rest of the British woollen manufactures. art. iii. The most excellent lords the plenipoten¬ tiaries promise and take upon themsehes, that their above-named masters shall ratify this treaty; and within the space of tw o months the ratifications shall be exchanged. By this treaty the crown of Portugal be¬ comes bound to admit the English woollens upon the same footing as before the pro¬ hibition ; that is, not to raise the duties which had been paid before that time. But it does not become bound to admit them upon any better terms than those of any other nation, of France or Plolland, for example. The crowm of Great Britain, on the contrary, becomes bound to admit the wines of Por¬ tugal, upon paying only two-thirds of the duty which is paid for those of France, the wines most likely to come into competition w r ith them. So far this treaty, therefore, is evidently advantageous to Portugal, and dis¬ advantageous to Great Britain. It has been celebrated, however, as a mas¬ terpiece of the commercial policy of England. Portugal receives annually from the Brazils a greater quantity of gold than can be em¬ ployed in its domestic commerce, w-hether in the shape of coin or of plate. The sur¬ plus is too valuable to be allowed to lie idle and locked up in coffers, and as it can find no advantageous market at home, it must, notwithstanding any prohibition, be sent abroad, and exchanged for something for which there is a more advantageous marKet at home. A large share of it comes an¬ nually to England, in return either for En¬ glish goods, or for those of other European nations that receive their returns through England. Mr. Baretti w^as informed that the weekly packet-boat from Lisbon brings, one w r eek with another, more than fifty thou¬ sand pounds in gold to England. T-he sum had probably been exaggerated. It would amount to more than two millions six hun¬ dred thousand pounds a year, which is more than the Brazils are supposed to afford. Our merchants were some years ago out of humour with the crown of Portugal. Some privileges which had been granted them, not by treaty, but by the free grace of that crown, at the solicitation, indeed, it is probable, and in return for much greater favours, defence, and protection, from the crown of Great Britain, had been either in¬ fringed or revoked. The people, therefore, usually most interested in celebrating the Portugal trade, were then rather disposed to I represent it as less advantageous than it had commonly been imagined. T- he far greater part, almost the wdiole, they pretended, of this annual importation of gold, was not on account of Great Britain, but of other Eu¬ ropean nations ; the fruits and wines of Por¬ tugal annually imported into Great Britain nearly compensating the value of the British goods sent thither. Let us suppose, however, that the whole w r as on account of Great Britain, and that it amounted to a still greater sum than Mr. I Baretti seems to imagine: this trade w r ould not, upon that account, be more advanta- >! ' , l » ( \ Chap. VI. geous than any other in which, for the same value sent out, we received an equal value of consumable goods in return. It is but a very small part of this import¬ ation which, it can be supposed, is employed as an annual addition either to the plate or to the coin of the kingdom. The rest must all be sent abroad and exchanged for con¬ sumable goods of some kind or other. But if those consumable goods were purchased di¬ rectly with the produce of English industry, it would be more for the advantage of England, than first to purchase with that produce the gold of Portugal, and afterwards to purchase with that gold those consumable goods. A direct foreign trade of consumption is always more advantageous than a roundabout one; and to bring the same value of foreign goods to the home market, requires a much smaller capital in the one way than in the other. If a smaller share of its industry, therefore, had been employed in producing goods fit for the Portugal market, and a greater in pro¬ ducing those fit for the other markets, where those consumable goods for which there is a demand in Great Britain are to be had, it would have been more for the advantage of England. To procure both the gold, which it wants for its own use, and the consumable goods, would, in this way, employ a much smaller capital than at present. There would be a spare capital, therefore, to be employed for other purposes, in exciting an additional quantity of industry, and in raising a greater annual produce. Though Britain were entirely excluded from the Portugal trade, it could find very little difficulty in procuring all the annual supplies of gold which it wants, either for the purposes of plate, or of coin, or of foreign trade. Gold, like every other commodity, is always somewhere or another to be got for its value, by those who have that value to give for it. The annual surplus of gold in Portugal, besides, would still be sent abroad, and though not carried away by Great Britain, would be carried away by some other nation, which would be glad to sell it again for its price, in the same manner as Great Britain does at present. In buying gold of Portugal, indeed, we buy it at the first hand ; whereas, in buying it of any other nation, except Spain, we should buy it at the second, and might pay somewhat dearer. This difference, however, would surely be too insignificant to deserve the public attention. Almost all our gold, it is said, comes from Portugal. With other nations the balance of trade is either against us, or not much in our favour. But we should re¬ member, that the more gold we import from one country, the less we must necessarily import from all others. The effectual de¬ mand for gold, like that for every other corn- 245 modity, is in every country limited to a certain quantity. If nine-tenths of this quantity are imported from one country, there remains a tenth only to be imported from all others. The more gold besides that is annually imported from some parti¬ cular 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 par¬ ticular countries, the more it must neces¬ sarily appear to be against us with many others. It was upon this silly notion, however, that England could not subsist without the Portugal trade, that, towards the end of the late war, France and Spain, without pre¬ tending either offence or provocation, re¬ quired 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* Flad the king of Portugal submitted to those ignominious terms which his brother-in-law the king of Spain proposed to him, Britain would have been freed from a much greater inconveniency than the loss of the Portugal trade, the burden of supporting a very weak ally, so unprovided of everything for his own defence, that the whole power of Eng¬ land, had it been directed to that single purpose, could scarce perhaps have defended him for another campaign. The loss of the Portugal trade would, no doubt, have occa¬ sioned a considerable embarrassment to the merchants at that time engaged in it, who might not, perhaps, have found-out, for a year or two, any other equally advantageous method of employing their capitals ; and in this would probably have consisted all the inconveniency which England could have suffered from this notable piece of commer¬ cial policy. The great annual importation of gold and silver is neither for the purpose of plate nor cf coin, but of foreign trade. A round¬ about foreign trade of consumption can be carried on more advantageously by means of these metals than of almost any other goods. As they are the universal instru¬ ments of commerce, they are more readily received in return for all commodities than any other goods; and on account of their small bulk and great value, it costs Jess to transport them backward and forward from one place to another than almost any other sort of merchandise, and they lose less of their value by being so transported. Of all the commodities, therefore, which are bought in one foreign country, for no other purpose but to be sold or exchanged again for some other goods in another, there are none so convenient as gold and silver. In R 3 COMMERCIAL TREATIES. 246 COMMERCIAL TREATIES. Book IV. facilitating all the different roundabout foreign trades of consumption which are carried on in Great Britain, consists the principal advantage of the Portugal trade ; and though it is not a capital advantage, it is, no doubt, a considerable one. That any annual addition which, it can reasonably be supposed, is made either to the plate or to the coin of the kingdom, could require but a very small annual im¬ portation of gold and silver, seems evident enough; and though we had no direct trade with Portugal, this small quantity could always, somewhere or other, be very easily got. Though the goldsmiths’ trade be very considerable in Great Britain, the far greater part of the new plate which they annually sell, is made from other old plate melted down; so that the addition annually made to the whole plate of the kingdom cannot be very great, and could require but a very small annual importation. It is the same case with the coin. No¬ body imagines, I believe, that even the greater part of the annual coinage, amount¬ ing, for ten years together, before the late reformation of the gold coin, to upwards of eight hundred thousand pounds a year in gold, was an annual addition to the money before current in the kingdom. In a coun¬ try where the expense of the coinage is de¬ frayed by the government, the value of the coin, even when it contains its full standard weight of gold and silver, can never be much greater than that of an equal quantity of those metals uncoined; because it requires only the trouble of going to the mint, and the delay perhaps of a few weeks, to procure for any quantity of uncoined gold and silver an equal quantity of those metals in coin. But, in every country, the greater part of the current coin is almost always more or less worn, or otherwise degenerated from its standard. In Great Britain it was, before the late reformation, a good deal so, the gold being more than two per cent., and the silver more than eight per cent, below its standard weight. But if forty-four guineas and a half, containing their full standard weight, a pound weight of gold, could purchase very little more than a pound weight of uncoined gold, forty-four 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 make up the deficiency. The current price of gold bullion at market, therefore, instead of being the same with the mint price, or 46/. 14s. 6d ., was then about 47/. 14s., and sometimes about forty-eight pounds. When the greater part of the coin, however, was in this degenerate con¬ dition, 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 after¬ wards be distinguished without more trou¬ ble than the difference was worth. Like other guineas they were worth no more than 46/. 14s. 6d. If thrown into the melting pot, however, they produced, without any sensible loss, a pound weight of standard gold, which could be sold at any time for between 47/. 14s. and 48/., either in gold or silver, as fit for all the purposes of coin as that which had been melted down. There was an evident profit, therefore, in melting down new coined money, and it was done so instantaneously, that no precaution of government could prevent it. The opera¬ tions of the mint were, upon this account, somewhat like the web of Penelope; the work that was done in the day was undone in the night. The mint was employed, not so much in making daily additions to the coin, as in replacing the very best part of it which was daily melted down. Were the private people who carry their gold and silver to the mint to pay them¬ selves for the coinage, it would add to the value of those metals in the same manner as the fashion does to that of plate. Coined gold and silver would be more valuable than uncoined. The seignorage, if it was not exorbitant, would add to' the bullion the whole value of the duty; because, the government having everywhere the exclu¬ sive privilege of coining, no coin can come to market cheaper than they think proper to afford it. If the duty was exorbitant indeed, that is, if it was very much above the real value of the labour and expense requisite for coinage, false coiners, both at home and abroad, might be encouraged, by the great difference between the value of bullion and that of coin, to pour in so great a quantity of counterfeit money as might reduce the value of the government money. In France, however, though the seignorage is eight per cent, no sensible inconveniency of this kind is found to arise from it . 1 The dangers to which a false coiner is every¬ where exposed, if he lives in the country of which he counterfeits the coin, and to which his agents or correspondents are exposed if he lives in a foreign country, are by far too great to be incurred for the sake of a profit of six or seven per cent. The seignorage in France raises the value of the coin higher than in proportion to the quantity of pure gold which it con¬ tains. Thus, by the edict of January, 1726, 1 It has been previously shown (p. 21.) that the seignorage in France was not nearly so great as Dr. Smith had been led. to believe. Chap. VI. COMMERCIAL TREATIES. 247 the 1 mint price of fine gold of twenty-four carats was fixed at seven hundred and forty livres nine sous and one denier one-eleventh, the mark of eight Paris ounces. The gold coin of France, making an allowance for the remedy of the mint, contains twenty-one carats and three-fourths of fine gold, and two carats one-fourth of alloy. 4 he mark of standard gold, therefore, is worth no more than about six hundred and seventy- one livres ten deniers. But in Franee this mark of standard gold is coined into thirty Louis-d’ors of twenty-four livres each, or into seven hundred and twenty livres. The coinage, therefore, increases the value of a mark of standard gold bullion, by the dif¬ ference between six hundred and seventy- one livres ten deniers, and seven hundred and twenty livres; or by forty-eight livres nineteen sous and two deniers. A seignorage will, in many cases, take away altogether, and will, in all cases, diminish the profit of melting down the new coin. This profit always arises from the difference between the quantity of bullion which the common currency ought to con¬ tain, and that which it actually does contain. If this difference is less than the seignorage, there will be loss instead of profit. If it is equal to the seignorage, there will neither be profit nor loss. If it is greater than the seignorage, there will indeed be some profit, but less than if there was no seignorage. If, before the late reformation of the gold coin, for example, there had been a seignor¬ age of five per cent, upon the coinage, there would have been a loss of three per cent, upon the melting down of the gold coin. If the seignorage had been two per cent, there would have been neither profit nor loss. If the seignorage had been one per cent, there would have been a profit, but of one per cent, only, instead of two per cent. Wherever money is received by tale, there¬ fore, and not by weight, a seignorage is the most effectual preventative of the melting down of the coin, and, for the same reason, of its exportation. It is the best and hea¬ viest pieces that are commonly either melted down or exported; because it is upon such that the largest profits are made. The law for the encouragement of the coinage, by rendering it duty-free, was first enacted, during the reign of Charles II., for a limited time; and afterwards con¬ tinued, by different prolongations, till 1769, when it was rendered perpetual. The Bank of England, in order to replenish their cof¬ fers with money, are frequently obliged to carry bullion to the mint ; and it was more for their interest, they probably imagined, that the coinage should be at the expense of the government, than at their own. It 1 See Dictionnaire des Monnoies, tom. ii. article Seigneurage, p. 489, par M. Abot de Bazinghen, Con- was, probably, out of complaisance to this great company that the government agreed to render this law perpetual. Should the custom of weighing gold, however, come to be disused, as it is very likely to be on account of its inconveniency; should the gold coin of England come to be received by tale, as it was before the late re-coinage, this great company may, perhaps, find that they have upon this, as upon some other occasions, mistaken their own interest not a little. Before the late re-coinage, when the gold currency of England was two per cent, below its standard weight, as there was no seignorage, it was two per cent, below the value of that quantity of standard gold bullion which it ought to have contained. When this great company, therefore, bought gold bullion in order to have it coined, they were obliged to pay for it two per cent, more than it was worth after the coinage. But if there had been a seignorage of two per cent, upon the coinage, the common gold currency, though two per cent, below its standard weight, would, notwithstanding, have been equal in value to the quantity of standard gold which it ought to have con¬ tained ; the value of the fashion compensat¬ ing in this case the diminution of the weight. They would indeed have had the seignorage to pay, which being two per cent., their loss upon the whole transaction would have been two per cent.; exactly the same, but no greater than it actually was. If the seignorage had been five per cent, and the gold currency only two per cent, below its standard weight, the bank would in this case have gained three per cent, upon the price of the bullion; but as they would have had a seignorage of five per cent, to pay upon the coinage, their loss upon the whole transaction would, in the same manner, bave been exactly two per cent. If the seignorage had been only one per cent, and the gold currency two per cent, below its standard weight, the bank would in this case have lost only one per cent, upon the price of the bullion; but as they would likewise have had a seignorage of one per cent, to pay, their loss upon the whole trans¬ action would have been exactly two per cent, in the same manner as in all other cases. If there was a reasonable seignorage, while at the same time the coin contained its full standard weight, as it has done very nearly since the late re-coinage, whatever the bank might lose by the seignorage, they would gain upon the price of the bullion ; and whatever they might gain upon the price of the bullion, they would lose by the seignor¬ age. They would neither lose nor gain, therefore, upon the whole transaction, and seiller-Comissaire en la Cour des Monnoies a Paris. | (Note by the author.) R 4 248 COMMERCIAL TREATIES. they would in this, as in all the foregoing cases, be exactly in the same situation as if there was no seignorage. When the tax upon a commodity is so moderate as not to encourage smuggling, the merchant who deals in it, though he advances, does not properly pay the tax, as he gets it back in the price of the commodity. The tax is finally paid by the last purchaser or consumer. But money is a commodity with regard to which every man is a merchant. Nobody buys it but in order to sell it again ; and with regard to it there is in ordinary cases no last purchaser or consumer. When the tax upon coinage, therefore, is so mode¬ rate as not to encourage false coining, though every body advances the tax, nobody finally pays it; because every body gets it "back in the advanced value of the coin. A . moderate seignorage, therefore, would not in any case augment the expense of the bank, or of any other private persons who carry their bullion to the mint in order to be coined, and the want of a moderate seignorage does not in any case diminish it. Whether there is or is not a seignorage, if the currency contains its full standard weight, the coinage costs nothing to any body, and it it is short of that weight, the coinage must always cost the difference between the quan¬ tity of bullion which ought to be contained in it, and that which actually is contained in it. The government, therefore, when it de¬ frays the expense of coinage, not only incurs some small expense, but loses some small revenue which it might get by a proper duty; and neither the bank nor any other private persons are in the smallest degree benefited by this useless piece of public gene¬ rosity. The directors of the bank, however, would probably be unwilling to agree to the impo¬ sition of a seignorage, upon the authority of a speculation which promises them no gain, but only pretends to insure them from any ioss. In the present state of the gold coin, and as long as it continues to be received by weight, they certainly would gain nothing by such a change. But if the custom of weighing the gold coin should ever go into disuse, as it is very likely to do, and if the gold coin should ever fall into the same state of degradation in which it was before the late re-coinage, the gain, or more properly the savings of the bank, in consequence of the imposition of a seignorage, would pro¬ bably 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 Book IV. to repair the unavoidable losses and neces¬ sary wear and tear of the coin, it could sel¬ dom exceed fifty thousand or at most a hundred thousand pounds. But when the coin is degraded below its standard weight, the annual coinage must, besides this, fill up the large vacuities which exportation and the melting pot are continually making in the current coin. It was upon this account that during the ten or twelve years immediately preceding the late reformation of the gold coin, the annual coinage amounted at an average to more than eight hundred and fifty thousand pounds. But if there had been a seignorage of four or five per cent, upon the gold coin, it would probably, even in the state in which things then were, have put an effectual stop to the business both of exportation and of the melting pot. The bank, instead of losing every year about two and a half per cent, upon the bullion which was to be coined into more than eight hun¬ dred and fifty thousand pounds, or incurring an annual loss of more than twenty-one thousand two hundred and fifty pounds, would not probably have incurred the tenth part of that loss. The revenue allotted by parliament for defraying the expense of the coinage is but fourteen thousand pounds a year, and the real expense which it costs the government, or the fees of the officers of the mint, do not upon ordinary occasions, I am assured, ex¬ ceed the half of that sum. The saving of so very small a sum, or even the gaining of another,which could not well be much larger, are objects too inconsiderable, it may be thought, to deserve the serious attention of government. But the saving of eighteen or twenty thousand pounds a year in case of an event which is not improbable, which has frequently happened before, and which is very likely to happen again, is surely an ob¬ ject which well deserves the serious attention even of so great a company as the Bank of England. Some of the foregoing reasonings and observations might perhaps have been more properly placed in those chapters of the first book which treat of the origin and use of money, and of the difference between the real and the nominal price of commodities. But as the law for the encouragement of coinage derives its origin from those vulgar prejudices which have been introduced by the mercantile system, I judged it more pro¬ per to reserve them for this chapter. Nothing could be more agreeable to the spirit of that system than a sort of bounty upon the pro¬ duction of money, the very thing which, it supposes, constitutes the wealth of every nation. It is one of its many admirable ex¬ pedients for enriching the country. Ciiai*. VII. FOUNDATION OF COLONIES. 249 CHAP. VII. Of Colonies. Part I. Of the Motives for establishing new Colonies. The interest which occasioned the first set¬ tlement of the different European colonies in America and the West Indies was not altogether so plain and distinct as that which directed the establishment of those of ancient Greece and Rome. All the different states of ancient Greece possessed, each of them, but a very small territory, and when the people in any one of them multiplied beyond what that territory could easily maintain, a part of them were sent in quest of a new habitation in some re¬ mote and distant part of the world; the warlike neighbours who surrounded them on all sides, rendering it difficult for any of them to enlarge very much its territory at home. The colonics of the Dorians resorted chiefly to Italy and Sicily, which, in the times preceding the foundation of Rome, were inhabited by barbarous and uncivilised nations: those of the Ionians and Eolians, the two other great tribes of the Greeks, to Asia Minor and the islands of the Egean Sea, of which the inhabitants seem at that time to have been pretty much in the same state as those of Sicily and Italy. The mo¬ ther city, though she considered the colony as a child, at all times entitled to great favour and assistance, and owing in return much gratitude and respect, yet considered it as an emancipated child, over whom she pretended to claim no direct authority or ju¬ risdiction. The colony settled its own form of government, enacted its own laws, elected its own magistrates, and made peace or war with its neighbours as an independent state, which had no occasion to wait for the appro¬ bation or consent of the mother city. No¬ thing can be more plain and distinct than the interest which directed every such estab¬ lishment. Rome, like most of the other ancient republics, was originally founded upon an Agrarian law, which divided the public ter¬ ritory in a certain proportion among the different citizens who composed the state. The course of human affairs, by marriage, by succession, and by alienation, necessarily deranged this original division, and frequently threw the lands, which had been allotted for the maintenance of many different families, into the possession of a single person. To remedy this disorder, for such it was supposed to be, a law was made, restricting the quan¬ tity of land which any citizen could possess to five hundred jugera, about three hundred and fifty English acres. This law, however, though we read of its having been executed upon one or two occasions, was either ne¬ glected or evaded, and the inequality of for¬ tunes went on continually increasing. The greater part of the citizens had no land, and without it the manners and customs of those times rendered it difficult for a freeman to maintain his independency. In the present times, though a poor man has no land of his own, if he has a little stock, he may either farm the lands of another, or he may carry on some little retail trade ; and if he has no stock, he may find employment either as a country labourer, or as an artificer. But, among the ancient Romans, the lands of the rich were all cultivated by slaves, who wrought under an overseer, who was likewise a slave; so that a poor freeman had little chance ot being employed either as a farmer or as a labourer. All trades and manufactures too, even the retail trade, were carried on by the slaves of the rich for the benefit of their mas¬ ters, whose wealth, authority, and protection made it difficult for a poor freeman to main¬ tain the competition against them. The citizens, therefore, who had no land, had scarce any other means of subsistence but the bounties of the candidates at the annual elections. The tribunes, when they had a mind to animate the people against the rich and the great, put them in mind of the an¬ cient division of lands, and represented that law which restricted this sort of private pro¬ perty as the fundamental law of the republic. The people became clamorous to get land, and the rich and the great, we may believe, were perfectly determined not to give them any part of theirs. To satisfy them in some measure, therefore, they frequently proposed to send out a new colony. But conquering Rome was, even upon such occasions, under no necessity of turning out her citizens to seek their fortune, if one may say so, through the wide world, without knowing where they were to settle. She assigned them lands generally in the conquered provinces of Italy, where, being within the dominions of the republic, they could never form any in¬ dependent state; but were at best but a sort of corporation, which, though it had the power of enacting by-laws for its own govern¬ ment, was at all times subject to the correc¬ tion, jurisdiction, and legislative authority of the mother city. The sending out a colony of this kind, not only gave some satisfaction to the people, but often established a sort of garrison too in a newly conquered province, of which the obedience might otherwise have been doubtful. A Roman colony, therefore, whether we consider the nature of the estab¬ lishment itself, or the motives for making it, was altogether different from a Greek one. The words accordingly, which in the original languages denote those different establish¬ ments, have very different meanings. The 2J9 FOUNDATION OF COLONIES. Book IV Latin word, ( Colonia ) signifies simply a plantation. The Greek word ( airotKia ), on the contrary, signifies a separation of dwel¬ ling, a departure from home, a going out of the house. But though the Roman colonies were in many respects different from the Greek ones, the interest which prompted to establish them was equally plain and distinct. Both institutions derived their origin either from irresistible necessity, or from clear and evident utility . 1 The establishment of the European colo¬ nies in America and the West Indies arose from no necessity; and though the utility which has resulted from them has been very great, it is not altogether so clear and evident. It was not understood at their first establish¬ ment, and was not the motive either of that establishment or of the discoveries which gave occasion to it; and the nature, extent, and limits of that utility are not, perhaps, well understood at this day. The Venetians, during the fourteenth and fifteenth centuries, carried on a very advan¬ tageous commerce in spiceries and other East India goods, which they distributed among the other nations of Europe. They purchased them chiefly in Egypt, at that time under the dominion of the Mamane- luks, the enemies of the Turks, of whom the Venetians were the enemies; and this union of interest, assisted by the money of Venice, formed such a connection as gave the Venetians almost a monopoly of the trade. The great profits of the Venetians tempt¬ ed the avidity of the Portuguese. They had been endeavouring, during the course of the fifteenth century, to find out by sea a way to the countries from which the Moors brought them ivory and gold dust across the Desert. They discovered the Madeiras, the Canaries, the Azores, the Cape de Verd 1 The constitution of the ancient colonies involves considerations which have excited a good deal of in¬ terest, and has been repeatedly investigated. A Dis¬ sertation by Bougainville, which gained a prize given by the French Academy for the best essay on this sub¬ ject, was published in 1745. Professor Barron of St. Andrews, in an anonymous treatise on the History of the Colonisation of the Free States of Antiquity , pub¬ lished in 1777, laboured to prove that the ancients exercised the same species of control over their co¬ lonists that has been commonly exercised by the moderns. Barron’s tract was answered by Dr. Symonds of Cambridge, who published Remarks on it in 1778 ; and by Sir William Meredith, in his His¬ torical Remarks on the Taxation of Free States , published in 1781. Heyne has some learned disqui¬ sitions on this subject in his Opuscula Academica. Perhaps, however, the best work on the colonies of the ancients, is that of St. Croix, De VEtat et du Soi't des Anciennes Colonies , published in 1778. There is an excellent account of the Roman system of colonis¬ ation in the Verona Illustrata of the learned Mar¬ quis Maffei. Raoul Rochette, in his voluminous work, Sur les Colonies Grecques , has investigated their history with the greatest minuteness ; but he is deficient in knowledge of principle, and his general views are narrow and superficial. Notwithstanding the numerous works that have appeared on colonial policy during the last half cen¬ tury, a really good treatise on that very important islands, the coast of Guinea, that of Loango, Congo, Angola, and Benguela, and, finally, the Cape of Good Hope. They had long wished to share in the profitable traffic of the Venetians, and this last discovery opened to them a probable prospect of doing so. In 1497, Vasco de Gama sailed from the port of Lisbon with a fleet of four ships; and, after a navigation of eleven months, arrived upon the coast of Indostan, and thus completed a course of discoveries which had been pursued with great steadi¬ ness, and with very little interruption, for near a century together. Some years before this, while the expect¬ ations of Europe were in suspense about the projects of the Portuguese, of which the success appeared yet to be doubtful, a Genoese pilot formed the yet more daring project of sailing to the East Indies by the West. The situation of those countries was at that time very imperfectly known in Europe. The few European travellers who had been there had magnified the distance; perhaps through simplicity and ignorance, what was really very great, appearing almost infinite to those who could not measure it; or, perhaps, in order to increase somewhat more the marvellous of their own adven¬ tures in visiting regions so immensely re¬ mote from Europe. The longer the way was by the East, Columbus very justly con¬ cluded, the shorter it would be by the West. He proposed, therefore, to take that way, as both the shortest and the sur¬ est, and he had the good fortune to convince Isabella of Castile of the probability of his project. He sailed from the port of Palos in August, 1492, near five years before the expedition of Vasco de Gama set out from Portugal; and, after a voyage of between two and three months, discovered first some of the small Bahama or Lucayan islands, subject is still a desideratum. Brj r an Edwards’ His¬ tory of the British West Indian Colonies is ably written ; but lie exaggerates their importance, and has a strong bias in favour of the slaveholders. Mr. (now Lord) Brougham’s Colonial Policy was pub¬ lished in 1803. It contains accounts of the colonial systems of the different European nations; but in other respects the work is of little value. The learned gentleman exaggerates the importance of colonies even more than Edwards; he defends or extenuates the oppressive restrictions so frequently imposed on their trade, and which have uniformly been as injurious to the mother countries as to the colonies; and he con¬ tends, in vindication of these restrictions, that “ the interests of traders, in the employment of their capi¬ tals, are by no means the same, in all cases, with the interests of the community to which they belong.” (Vol. i. p. 254.) No one can be much surprised that, despite the celebrity of its author, such a work, if not actually still-born, speedily sunk into oblivion. Of the more recent works on colonisation it is unneces¬ sary to speak. In the Supplemental note on Colonial Policy, we have given a brief exposition of someof the principal questions embraced in this department of political science, with a synoptical view of the popu¬ lation, trade, &c. of our different colonies. The reader is farther referred, for a variety of details in regard to this interesting subject, to the article Colo¬ nies and Colony Trade in the Commercial Dictionary. FOUNDATION OF COLONIES. 251 Chap. VII. and afterwards the great island of St. Domingo. But the countries which Columbus dis¬ covered, either in this or in any of his sub- 1 sequent voyages, had no resemblance to those which he had gone in quest of. In¬ stead of the wealth, cultivation, and popu¬ lousness of China and Indostan, he found, in St. Domingo, and in all the other parts of the new world which he ever visited, nothing but a country quite covered with wood, uncultivated, and inhabited only by some tribes of naked and miserable savages. He was not very willing, however, to be¬ lieve that they were not the same with some of the countries described by Marco Polo, the first European who had visited, or at I least had left behind him, any description of China or the East Indies ; and a very slight resemblance, such as that which he found between the name of Cibao, a mountain in St. Domingo, and that of Cipango, men¬ tioned by Marco Polo, was frequently suffi- I cient to make him return to this favourite prepossession, though contrary to the clear¬ est evidence. In his letters to Ferdinand and Isabella he called the countries which he had discovered, the Indies. He enter¬ tained no doubt but that they were the extremity of those which had been de¬ scribed by Marco Polo, and that they were not very distant from the Ganges, or from the countries which had been conquered by Alexander. Even when at last convinced that they were different, he still flattered himself that those rich countries were at no great distance; and, in a subsequent voyage, accordingly, went in quest of them along I the coast of Terra Firma, and towards the isthmus of Darien. In consequenee of this mistake of Colum¬ bus, the name of the Indies has stuck to those unfortunate countries ever since; and when it was at last clearly discovered that the new were altogether different from the old Indies, the former were called the West, in contradistinction to the latter, which were called the East Indies. It was of importance to Columbus, how¬ ever, that the countries which he had dis¬ covered, whatever they were, should be represented to the court of Spain as of very great consequence; and, in what constitutes S the real riches of every country, the animal and vegetable productions of the soil, there was at that time nothing which could well justify such a representation of them. The Cori, something between a rat and a ! rabbit, and supposed by Mr. Buffon to be the same with the Aperea of Brazil, was the largest viviparous quadruped in St. Do¬ mingo. This species seems never to have IT been very numerous, and the dogs and cats of the Spaniards are said to have long ago almost entirely extirpated it, as well as some other tribes of a still smaller size. These, however, together with a pretty large lizard, called the Ivana or Iguana, constituted the principal part of the animal food which the land afforded. The vegetable food of the inhabitants, though from their want of industry not very abundant, was not altogether so scanty. It consisted in Indian corn, yams, potatoes, bananes, &c., plants which were then alto¬ gether unknown in Europe, and which have never since been very much esteemed in it, or supposed to yield a sustenance equal to what is drawn from the common sorts of grain and pulse, which have been cultivated in this part of the world time out of mind. The cotton plant, indeed, afforded the material of a very important manufacture, and was at that time to Europeans un¬ doubtedly the most valuable of all the vege¬ table productions of those islands. But though in the end of the fifteenth century, the muslins and other cotton goods of the East Indies were much esteemed in every part of Europe, the cotton manufacture itself was not cultivated in any part of it. Even this production, therefore, could not at that time appear in the eyes of Euro¬ peans to be of very great consequence. Finding nothing either in the animals or vegetables of the newly discovered coun¬ tries, which could justify a very advanta¬ geous representation of them, Columbus turned his view towards their minerals; and in the richness of the productions of this third kingdom, he flattered himself he had found a full compensation for the insig¬ nificancy of those of the other two. The little bits of gold with which the inhabitants ornamented their dress, and which, he was informed, they frequently found in the rivu¬ lets and torrents that fell from the moun¬ tains, were sufficient to satisfy him that those mountains abounded with the richest gold mines. St. Domingo, therefore, was represented as a country abounding with gold ; and, upon that account (according to the prejudices not only of the present times, but of those times), an inexhaustible source of rea] wealth to the crown and kingdom of Spain. When Columbus, upon his return from his first voyage, was introduced with a sort of triumphal honours to the sovereigns of Castile and Arragon, the principal pro¬ ductions of the countries which he had dis¬ covered were carried in solemn procession before him. The only valuable part of them consisted in some little fillets, brace¬ lets, and other ornaments of gold, and in some bales of cotton. The rest were mere objects of vulgar wonder and curiosity; some reeds of an extraordinary size, some birds of a very beautiful plumage, and some stuffed skins of the huge alligator and 252 FOUNDATION OF COLONIES. Book IV. manati; all of which were preceded by six or seven of the wretched natives, whose sin¬ gular colour and appearance added greatly to the novelty of the show. In consequence of the representations of Columbus, the council of Castile determined to take possession of countries of which the inhabitants were plainly incapable of defend¬ ing themselves. The pious purpose of con¬ verting them to Christianity sanctified the injustice of the project. But the hope of finding treasures of gold there was the sole motive which prompted to undertake it; and to give this motive the greater weight, it was proposed by Columbus that the half of all the gold and silver that should be found there should belong to the crown. This proposal was approved of by the council. As long as the whole or the far greater part of the gold which the first adventurers imported into Europe, was got by so very easy a method as the plundering of the de¬ fenceless natives, it was not, perhaps, very difficult to pay even this heavy tax ; but when the natives were once fairly stript of all that they had, which, in St. Domingo, and in all the other countries discovered by Columbus, was done completely in six or eight years, and when in order to find more it had become necessary to dig for it in the mines, there was no longer any possibility of paying this tax. The rigorous exaction of it, accordingly, first occasioned, it is said, the total abandoning of the mines of St. Do¬ mingo, which have never been wrought since. It was soon reduced, therefore, to a third, then to a fifth, afterwards to a tenth, and at last to a twentieth part of the gross produce of the gold mines. The tax upon silver continued for a long time to be a fifth of the gross produce. It was reduced to a tenth only in the course of the present cen¬ tury. But the first adventurers do not ap¬ pear to have been much interested about silver. Nothing less precious than gold seemed worthy of their attention. All the other enterprizes of the Spaniards in the new world, subsequent to those of Columbus, seem to have been prompted by the same motive. It was the sacred thirst of gold that carried Oieda, Nicuessa, and Vasco Nugnes de Balboa, to the isthmus of Darien, that carried Cortez to Mexico, and Almagro and Pizzarro to Chili and Peru. When those adventurers arrived upon any unknown coast, their first inquiry was always if there was any gold to be found there ; and according to the information which they re¬ ceived concerning this particular, they deter¬ mined either to quit the country or to settle in it. Of all those expensive and uncertain pro¬ jects, however, which bring bankruptcy upon the greater part of the people who engage in them, there is none, perhaps, more perfectly ruinous than the search after new silver and gold mines. It is, perhaps, the most disad¬ vantageous 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 for¬ tune of a very rich man. Projects of min¬ ing, instead of replacing the capital employed in them, together with the ordinary profits of stock, commonly absorb both capital and profit. They are the projects, therefore, to which of all others a prudent lawgiver, who desired to increase the capital of his nation, would least choose to give any extraordinary encouragement, or to turn towards them a greater share of that capital than what would go to them of its own accord. Such in realitv is the absurd confidence which al- most all men have in their own good fortune, that wherever there is the least probability of success, too great a share of it is apt to go to them of its own accord. But though the judgment of sober reason and experience concerning such projects has always been extremely unfavourable, that of human avidity has commonly been quite otherwise. The same passion which has suggested to so many people the absurd idea of the philosopher’s Stone, has suggested to others the equally absurd one of immense rich mines of gold and silver. They did not consider that the value of those metals has, in all ages and nations, arisen chiefly from their scarcity, and that their scarcity has arisen from the very small quantities of them which nature has any where deposited in one place, from the hard and intractable sub¬ stances with which she has almost every where surrounded those small quantities, and consequently from the labour and expense which are every where necessary in order to penetrate to and get at them. They flat¬ tered 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 con¬ vinced of the reality of that wonderful country, and expressed with great warmth, and I dare to say, with great sincerity, how happy he should be to carry the light of the gospel to a people who could so well reward the pious labours of their missionary. In the countries first discovered by the Spaniards, no gold or silver mines are at present known which are supposed to be worth the working. The quantities of those metals which the first adventurers are said to Chap. VII. FOUNDATION OF COLONIES. 253 > have found there, had probably been very much magnified, as well as the fertility of the mines which were wrought immediately after the first discovery. What those ad¬ venturers were reported to have found, how¬ ever, was sufficient to inflame the avidity of all their countrymen. Every Spaniard who sailed to America expected to find an Eldo¬ rado. Fortune, too, did upon this what she has done upon very few other occasions : she realised in some measure the extravagant hopes of her votaries, and in the discovery and conquest of Mexico and Peru (of which the one happened about thirty, the other about forty, years after the first expedition of Columbus), she presented them with some¬ thing not very unlike that profusion of the precious metals which they sought for. A project of commerce to the East Indies, therefore, gave occasion to the first discovery of the West. A project of conquest gave occasion to all the establishments of the Spaniards in those newly discovered coun¬ tries. The motive which excited them to this conquest was a project of gold and silver mines; and a course of accidents, which no human wisdom could foresee, rendered this project much more successful than the under¬ takers had any reasonable grounds for ex¬ pecting. „ The first adventurers of all the other nations of Europe, who attempted to make settlements in America, were animated by the like chimerical views ; but they were not equally successful. It was more than a hun¬ dred years after the first settlement of the Brazils, before any silver, gold, or diamond mines were discovered there. In the English, French, Dutch, and Danish colonies, none have ever yet been discovered ; at least none that are at present supposed to be worth the working. The first English settlers in North America, however, offered a fifth of all the gold and silver which should be found there to the king, as a motive for granting them their patents. In the patents to Sir Walter Raleigh, to the London and Plymouth com¬ panies, to the council of Plymouth, &c. this fifth was accordingly reserved to the crown. To the expectation of finding gold and silver mines, those first settlers too joined that of discovering a north-west passage to the East Indies. They have hitherto been disap¬ pointed in both. f* !i 1 Part II. Causes of the Prosperity of new Colonies. The colony of a civilised nation which takes possession, either of a waste country, or of one so thinly inhabited, that the natives easily give place to the new settlers, advances more rapidly to wealth and greatness than any other human society. The colonists carry out with them a know¬ ledge of agriculture and of other useful arts, superior to what can grow up of its own accord in the course of many centuries among savage and barbarous nations. They carry out with them too the habit of subordination, some notion of the regular government which takes place in their own country, of the system of laws which support it, and of a regular administration of justice ; and they naturally establish something of the same kind in the new settlement. But amonjj savage and barbarous nations, the natural progress of law and government is still slower than the natural progress of arts, after law and government have been so far established, as is necessary for their protection. Every colonist gets more land than he can possibly cultivate. He has no rent, and scarce any taxes to pay. No landlord shares with him in its produce, and the share of the sovereign is commonly but a trifle. He has every motive to render as great as possible a pro¬ duce, which is thus to be almost entirely his own. But his land is commonly so exten¬ sive, that with all his own industry, and with all the industry of other people whom he can get to employ, he can seldom make it produce the tenth part of what it is capable of producing. He is eager, therefore, to collect labourers from all quarters, and to reward them with the most liberal wages. But those liberal wages, joined to the plenty and cheapness of land, soon make those labourers leave him, in order to become land¬ lords themselves, and to reward, with equal liberality, other labourers, who soon leave W * them for the same reason that they left their first master. The liberal reward of labour encourages marriage. The children, during the tender years of infancy, are well fed and properly taken care of; and when they are grown up, the value of their labour greatly overpays their maintenance. When arrived at maturity, the high price of labour, and the low price of land, enable them to esta¬ blish themselves in the same manner as their fathers did before them. In other countries, rent and profit eat up wages, and the two superior orders of people oppress the inferior one. But in new colo¬ nies, the interest of the two superior orders obliges them to treat the inferior one with more generosity and humanity ; at least, where that inferior one is not in a state of slavery. Waste lands, of the greatest natural fertility, are to be had for a trifle. The in¬ crease of revenue which the proprietor, who is always the undertaker, expects from their improvement, constitutes his profit; which in these circumstances is commonly very great. But this great profit cannot be made without employing the labour of other people in clearing and cultivating the land ; and the disproportion between the great extent of the land and the small number of the people, £54 CAUSES OF THE PROSPERITY Book IV, which commonly takes place in new colonies, makes it difficult for him to get this labour. Pie does not, therefore, dispute about wages, but is willing to employ labour at any price. The high wages of labour encourage popu¬ lation. The cheapness and plenty of good land encourage improvement, and enable the proprietor to pay those high wages. In those wages consists almost the whole price of the land; and though they are high, con¬ sidered as the wages of labour, they are low, considered as the price of what is so very va¬ luable. What encourages the progress of po¬ pulation and improvement, encourages that of real wealth and greatness. The progress of many of the ancient Greek colonies towards wealth and greatness seems accordingly to have been very rapid. In the course of a century or two, several of them appear to have rivalled, and even to have surpassed, their mother cities. Syracuse and Agrigentum in Sicily, Tarentum and Locri in Italy, Ephesus and Miletus in Lesser Asia, appear by all accounts to have been at least equal to any of the cities of ancient Greece. Though posterior in their establish¬ ment, yet all the arts of refinement, philo¬ sophy, poetry, and eloquence, seem to have been cultivated as early, and to have been improved as highly, in them, as in any part of the mother country. The schools of the two oldest Greek philosophers, those of Thales and Pythagoras, were established, it is re¬ markable, 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 barba¬ rous nations, who easily gave place to the new settlers. They had plenty of good land; and as they were altogether independent of the mother city, they were at liberty to manage their own affairs in the way that they judged was most suitable to their own interest. The history of the Roman colonies is by no means so brilliant. Some of them, in¬ deed, such as Florence, have in the course of many ages, and after the fall of the mother city, grown up to be considerable states. But the progress of no one of them seems ever to have been very rapid. They were all established in conquered provinces, which in most cases had been fully inhabited before. The quantity of land assigned to each colonist was seldom very considerable; and as the colony was not independent, they were not always at liberty to manage their own affairs in the way that they judged was most suit¬ able to their own interest. In the plenty of good land, the European colonies established in America and the West Indies resemble, and even greatly surpass, 1 The population of the different countries and cities of America has been greatly increased since the publication of the Wealth of Nations. We have given some statements as to the present population those of ancient Greece. In their depend¬ ency upon the mother state, they resemble those of ancient Rome ; but their great dis¬ tance from Europe has in all of them allevi¬ ated more or less the effects of this depend¬ ency. Their situation has placed them less in the view and less in the power of their mother country. In pursuing their interest their own way, their conduct has, upon many occasions, been overlooked, either because not known or not understood in Europe; and upon some occasions it has been fairly suffered and submitted to, because their dis¬ tance rendered it difficult to restrain it. Even the violent and arbitrary government of Spain has, upon many occasions, been obliged to recal or soften the orders which had been given for the government of her colonies, for fear of a general insurrection. The progress of all the European colonies in wealth, population, and improvement, has accordingly been very great. The crown of Spain, by its share of the gold and silver, derived some revenue from its colonies, from the moment of their first establishment. It was a revenue, too, of a nature to excite in human avidity the most extravagant expectations of still greater riches. The Spanish colonies, therefore, from the mo¬ ment of their first establishment, attracted very much the attention of their mother country; while those of the other European nations were for a long time in a great mea¬ sure neglected. The former did not, perhaps, thrive the better in consequence of this at¬ tention ; nor the latter the worse in conse¬ quence of this neglect. In proportion to the extent of the country which they in some measure possess, the Spanish colonies are considered as less populous and thriving than those of almost of any other European nation. The progress even of the Spanish colonies, however, in population and im¬ provement, has certainly been very rapid and very great. The city of Lima, founded since the conquest, is represented by Ulloa, as containing fifty thousand inhabitants near thirty years ago. Quito, which had been but a miserable hamlet of Indians, is repre¬ sented by the same author as in his time equally populous. Gemelli Carreri, a pre¬ tended traveller, it is said, indeed, but who seems every where to have written upon ex¬ treme good information, represents the city of Mexico as containing a hundred thousand inhabitants,—a number which, in spite of all the exaggerations of the Spanish writers, is, probably, more than five times greater than what it contained in the time of Montezuma. These numbers exceed greatly those of Boston, New York, and Philadelphia, the three greatest cities of the English colonies . 1 of America, and the West Indies, with Humboldt’s classification of the different races, in the supple¬ mental note on Colonies. Chat. VII. OF NEW COLONIES. 255 Oefore the conquest of tlic Spaniards, there [ tvere no cattle fit for draught either in Mexico Dr Peru. The lama was their only beast of Durthen, and its strength seems to have been I i good deal inferior to that of a common ass. The plough was unknown among them. They were ignorant of the use of iron. They had no coined money, nor any estab¬ lished instrument of commerce of any kind. Their commerce was carried on by barter. A sort of wooden spade was the principal instrument of agriculture. Sharp stones served them for knives and hatchets to cut with; fish bones and the hard sinews of cer¬ tain animals served them for needles to sew with; and these seem to have been their principal instruments of trade. In this state Df things, it seems impossible that either of those empires could have been so much im- Droved or so well cultivated as at present, [ when they are plentifully furnished with all ;orts of European cattle, and when the use :>f iron, of the plough, and of many of the irts of Europe, has been introduced among them. But the populousness of every coun¬ try must be in proportion to the degree of ts improvement and cultivation. In spite )f the cruel destruction of the natives which ollowed the conquest, these two great em- Dires are, probably, more populous now than | hey ever were before : and the people are ;urely very different; for we must acknow- , edge, I apprehend, that the Spanish creoles ire in many respects superior to the ancient Indians. After the settlements of the Spaniards, ;hat of the Portuguese in Brazil is the old¬ est of any European nation in America. But as for a long time after the first dis- I iovery, neither gold nor silver mines were bund in it, and as it afforded, upon that iccount, little or no revenue to the crown, I t was for a long time in a great measure leglected ; and during this state of neglect, t 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 bxpected soon to conquer the other seven, when Portugal recovered its independency I Dy the elevation of the family of Braganza :o the throne. The Dutch then, as enemies :o the Spaniards, became friends to the Portu¬ guese, who were likewise the enemies of the Spaniards. They agreed, therefore, to leave hat part of Brazil which they had not con¬ quered to the king of Portugal, who agreed :o leave that part which they had conquered X) them, as a matter not worth disputing ibout with such good allies. But the Dutch government soon began to oppress the Portu¬ guese colonists, who, instead of amusing :hemselves with complaints, took arms against ;heir new masters, and by their own valour and resolution, with the connivance, indeed, but without any avowed assistance from the mother country, drove them out of Brazil. The Dutch, therefore, finding it impossible to keep any part of the country to themselves, were contented that it should be entirely re¬ stored to the crown of Portugal. In this colony there are said to be more than six hundred thousand people, either Portuguese or descended from Portuguese, creoles, mu- lattoes, and a mixed race between Portuguese and Brazilians. No one colony in America is supposed to contain so great a number of people of European extraction. Towards the end of the fifteenth, and dur¬ ing the greater part of the sixteenth, century, Spain and Portugal were the two great naval powers upon the ocean ; for though the com¬ merce of Venice extended to every part of Europe, its fleets had scarce ever sailed beyond the Mediterranean. The Spaniards, in virtue of the first discovery, claimed all America as their own; and though they could not hinder so great a naval power as that of Portugal from settling in Brazil, such was, at that time, the terror of their name, that the greater part of the other nations of Europe were afraid to establish themselves in any other part of that great continent. The French, who attempted to settle in Florida, were all murdered by the Spaniards. But the declension of the naval power of this latter nation, in consequence of the defeat or miscarriage of what they called their Invin¬ cible Armada, which happened towards the end of the sixteenth century, put it out of their power to obstruct any longer the settlements of the other European nations. In the course of the seventeenth century, therefore, the English, French, Dutch, Danes, and Swedes, all the great nations who had any ports upon the ocean, attempted to make some settlements in the new world. The Swedes established themselves in New Jersey: and the number of Swedish families still to be found there sufficiently demon¬ strates that this colony was very likely to prosper, had it been protected by the mother country ; but being neglected by Sweden, it was soon swallowed up by the Dutch colony of New York, which again, in 1674, fell under the dominion of the English. The small islands of St. Thomas and Santa Cruz are the only countries in the new world that have ever been possessed by the Danes. These little settlements, too, were under the government of an exclusive com¬ pany, which had the sole right, both of pur¬ chasing the surplus produce of the colonists, and of supplying them with such goods of other countries as they wanted, and which, therefore, both in its purchases and sales, had not only the power of oppressing them, but the greatest temptation to do so. The go¬ vernment of an exclusive company of mer- 256 CAUSES OF THE PROSPERITY Book IV. cliants is, perhaps, the worst of all govern¬ ments for any country whatever. It was not, however, able to stop altogether the progress of these colonies, though it rendered it more slew and languid. The late king of Den¬ mark dissolved this company, and since that time the prosperity of these colonies has been very great. The Dutch settlements in the West, as well as those in the East, Indies were ori¬ ginally put under the government of an exclusive company. The progress of some of them, therefore, though it has been con¬ siderable, in comparison with that of almost any country that has been long peopled and established, has been languid and slow in comparison with that of the greater part of new colonies. The colony of Surinam, though verv 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 pro¬ vinces of New York and New r Jersey, would probably have soon become considerable too, even though it had remained under the government of the Dutch. The plenty and cheapness of good land are such powerful causes of prosperity, that the very worst government is scarce capable of checking al¬ together the efficacy of their operation. The great distance too from the mother country would enable the colonists to evade more or less, by smuggling, the monopoly which the company enjoyed against them. At present the company allows all Dutch ships to trade to Surinam upon paying two and a half per cent, upon the value of their cargo for a licence ; and only reserves to itself exclu¬ sively 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 pros¬ perity which that colony at present enjoys. Cura^oa and Eustatia, the two principal islands belonging to the Dutch, are free ports open to the ships of all nations; and this freedom, in the midst of better colonies whose ports are open to those of one nation only, has been the great cause of the pros¬ perity of those two barren islands. The French colony of Canada was, dur¬ ing the greater part of the last century, and some part of the present, under the govern¬ ment of an exclusive company. Under so unfavourable an administration its progress was necessarily very slow in comparison with that of other new colonies ; but it became much more rapid when this company was dissolved after the fall of what is called the Mississippi scheme. When the English got possession of this country, they found in it near double the number of inhabitants which father Charlevoix had assigned to it betw r een twenty and thirty years before. That jesuit had travelled over the whole country, and had no inclination to represent it as less con¬ siderable than it really w r as. The French colony of St. Domingo was established by pirates and freebooters, who for a long time neither required the pro¬ tection nor acknowledged the authority of France; and when that race of banditti became so far citizens as to acknowledge this authority, it was for a long time necessary to exercise it with very great gentleness. During this period the population and im¬ provement of this colony increased very fast. Even the oppression of the exclusive com¬ pany, to which it was for some time subjected, with, all the other colonies of France, though it no doubt retarded, had not been able to stop, its progress altogether. The course of its prosperity returned as soon as it was relieved from that oppression. It is now the most important of the sugar colonies of the West Indies, and its produce is said to be greater than that of all the English sugar colonies put together. The other sugar colonies of France are in general all very thriving. 1 But there are no colonies of which the progress has been more rapid than that of the English in North America. Plenty of good land, and liberty to manage their own affairs their own way, seem to be the two great causes of the prosperity of all 1 new colonies. In the plenty of good land the English colonies of North America, though no doubt very abundantly provided, are, how r ever, inferior to those of the Spaniards and Portuguese, and not superior to some of those possessed by the French before the late war. But the political institutions of the English colonies have been more favour¬ able to the improvement and cultivation of this land than those of any of the other three nations. First , The engrossing of uncultivated land, though it has by no means been prevented altogether, has been more restrained in the English colonies than in any other. The colony law which imposes upon every pro¬ prietor the obligation of improving and cultivating, within a limited time, a certain proportion of his lands, and wdiich, in case of failure, declares those neglected lands grantable to any other person, though it has not, perhaps, been very strictly executed, has however, had some effect. Secondly , In Pennsylvania there is no right of primogeniture, and lands, like moveables, are divided equally among all the children of the family. In three of the provinces of New England the oldest has only a double share as in the Mosaical law. Though in 1 The revolution in St. Domingo occasioned the destruction of a great many plantations, and the ex¬ ports of sugar from it are now very trilling. OF NEW COLONIES. 257 Chap. VII. takes place, as in the law of England. But • — — _ o those provinces, therefore, too great a quan¬ tity of land should sometimes be engrossed by a particular individual, it is likely, in the course of a generation or two, to be suffi¬ ciently divided again. In the other English colonies, indeed, the right of primogeniture in all the English colonies the tenure of the lands, which are all held by free socage, facilitates alienation, and the grantee of any extensive tract of land generally finds it for his interest to alienate, as fast as he can, the greater part of it, reserving only a small quit-rent. In the Spanish and Portuguese colonies, what is called the right of Major- azzo i takes place in the succession of all those great estates to which any title of honour is annexed. Such estates go all to one person, and are in effect entailed and unalienable. The French colonies, indeed, are subject to the custom of Paris, which, in the inheritance of land, is much more favourable to the younger children than the law of England. But, in the French colonies, if any part of an estate, held by the noble tenure of chivalry and homage , is alienated, it is, for a limited time, subject to the right of redemption, either by the heir of the superior or by the heir of the family ; and all the largest estates of the country are held by such noble tenures, which necessarily embarrass alienation. But, in a new colony, a great uncultivated estate is likely to be much more speedily divided by alienation than by succession. The plenty and cheap¬ ness of good land, it has already been ob¬ served, are the principal causes of the rapid prosperity of new colonies. The engrossing of land, in effect, destroys this plenty and cheapness. The engrossing of uncultivated j land, besides, is the greatest obstruction to its improvement. But the labour that is employed in the improvement and culti¬ vation of land affords the greatest and most valuable produce to the society. The pro¬ duce of labour, in this case, pays not only its own wages, and the profit of the stock which employs it, but the rent of the land too upon which it is employed. The labour of the English colonists, therefore, being more em¬ ployed in the improvement and cultivation of land, is likely to afford a greater and more valuable produce than that of any of the other three nations, which, by the engrossing of land, is more or less diverted towards other employments. Thirdly , The labour of the English co¬ lonists is not only likely to afford a greater and more valuable produce, but, in conse¬ quence of the moderation of their taxes, a greater proportion of this produce belongs to themselves, which they may store up and employ in putting into motion a still greater Lquantity of labour. The English colonists Jus Majoratus. have never yet contributed any thing towards the defence of the mother country, or towards the support of its civil government. They themselves, on the contrary, have hitherto been defended almost entirely at the expense of the mother country. But the expense of fleets and armies is out of all proportion greater than the necessary expense of civil government. The expense of their own civil government has always been very mo¬ derate : it has generally been confined to what was necessary for paying competent salaries to the governor, to the judges, and to some other officers of police, and for maintaining a few of the most useful public works. The expense of the civil establish¬ ment of Massachusetts Bay, before the commencement of the present disturbances, used to be but about 18,000/. a year. That of New Hampshire and Rhode Island 35001. each. That of Connecticut 4000/. That of New York and Pennsylvania 4500/. each. That of New Jersey 1200/. That of Virginia and South Carolina 8000/. each. The civil establishment of Nova Scotia and Georgia are partly supported by an annual grant of parliament. But Nova Scotia pays, besides, about 7000/. a year towards the public ex¬ penses of the colony ; and Georgia about 2500/. a year. All the different civil establish¬ ments in North America, in short, exclusive of those of Maryland and North Carolina, of which no exact account has been got, did not, before the commencement of the present dis¬ turbances, cost the inhabitants above 64,700/. a year ; an ever-memorable example at how small an expense three millions of people may not only be governed, but well go¬ verned. The most important part of the expense of government, indeed — that of de¬ fence and protection — has constantly fallen upon the mother country. The ceremonial, too, of the civil government in the colonies, upon the reception of a new governor, upon the opening of a new assembly, &c., though sufficiently decent, is not accompanied with any expensive pomp or parade. Their eccle¬ siastical government is conducted upon a plan equally frugal. Tithes are unknown among them; and their clergy, who are far from being numerous, are maintained either by moderate stipends, or by the volun¬ tary contributions of the people. The power of Spain and Portugal, on the contrary, derives some support from the taxes levied upon their colonies. France, indeed, has never drawn any considerable revenue from its colonies, the taxes which it levies upon them being generally spent among them. But the colony government of all these three nations is conducted upon a much more expensive plan, and is accompanied with a much more expensive ceremonial. The sums spent upon the reception of a new viceroy of Peru, for example, have frequently 258 CAUSES OF THE PROSPERITY Book IV. been enormous. Such ceremonials are not only real taxes paid by the rich colonists upon those particular occasions, but they serve to introduce among them the habit of vanity and expense upon all other occasions. They are not only very grievous occasional taxes, but they contribute to establish per¬ petual taxes of the same kind still more grievous ; the ruinous taxes of private luxury and extravagance. In the colonies of all those three nations too, the ecclesiastical government is extremely oppressive. Tithes take place in all of them, and are levied with the utmost rigour in those of Spain and Portugal. All of them besides are oppressed with a numerous race of mendi¬ cant friars, whose beggary being not only licensed, but consecrated by religion, is a most grievous tax upon the poor people, who are most carefully taught that it is a duty to give, and a very great sin to refuse them their charity. Over and above all this, the clergy are, in all of them, the greatest engrossers of land. Fourthly , In the disposal of their surplus produce, or of what is over and above their own consumption, the English colonies have been more favoured, and have been allowed a more extensive market than those of any other European nation. Every European nation has endeavoured more or less to mo¬ nopolise to itself the commerce of its colo¬ nies, and, upon that account, has prohibited the ships of foreign nations from trading to them, and has prohibited them from import¬ ing European goods from any foreign nation. But the manner in which this monopoly has been exercised in different nations has been very different. Some nations have given up the whole commerce of their colonies to an exclusive company, of whom the colonists were obliged to buy all such European goods as they wanted, and to whom they were obliged to sell the whole of their own surplus produce. It was the interest of the company, there¬ fore, not only to sell the former as dear, and to buy the latter as cheap, as possible, but to buy no more of the latter, even at this low price, than what they could dispose of for a very high price in Europe. It was their interest not only to degrade in all cases the value of the surplus produce of the colony, but in many cases to discourage and keep down the natural increase of its quantity. Of all the expedients that can well be contrived to stunt the natural growth of a new colony, that of an exclusive company is undoubtedly the most effectual. This, however, has been the policy of Holland, though their com¬ pany, in the course of the present century, has given up in many respects the exertion of their exclusive privilege. This, too, was the policy of Denmark till the reign of the late king. It has occasionally been the I policy of France ; and of late, since 1755, after it had been abandoned by all other nations, on account of its absurdity, it has become the policy of Portugal, with regard at least to two of the principal provinces of Brazil, Fernambuco and Marannon. Other nations, without establishing an ex¬ clusive company, have confined the whole commerce of their colonies to a particular port of the mother country, from whence no ship was allowed to sail, but either in a fleet and at a particular season, or, if single, in consequence of a particular license, which in most cases was very well paid for. This policy opened, indeed, the trade of the colo¬ nies to all the natives of the mother country, provided they traded from the proper port, at the proper season, and in the proper ves¬ sels. But as all the different merchants, who joined their stocks in order to fit out those licensed vessels, would find it for their interest to act in concert, the trade which was carried on in this manner would necessarily be conducted very nearly upon the same principles as that of an exclusive company. The profit of those merchants would be almost equally exorbitant and oppressive. The colonies would be ill supplied, and would be obliged both to buy very dear, and to sell very cheap. This, however, till within these few years, had always been the policy of Spain, and the price of all European goods, accordingly, is said to have been enormous in the Spanish West Indies. At Quito, we are told by Ulloa, a pound of iron sold for about four and sixpence, and a pound of steel for about six and ninepence sterling. But it is chiefly in order to pur¬ chase European goods that the colonies part with their own produce. The more, there¬ fore, they pay for the one, the less they really get for the other, and the dearness of the one is the same thing with the cheapness of the other. The policy of Portugal is, in this respect, the same as the ancient policy of Spain, with regard to all its colonies, ex¬ cept Fernambuco and Marannon, and with regard to these it has lately adopted a still worse. Other nations leave the trade of their colonies free to all their subjects, who may carry it on from all the different ports of the mother country, and who have occasion for no other license than the common dispatches of the customshouse. In this case, the num¬ ber and dispersed situation of the different traders renders it impossible for them to enter into any general combination, and their competition is sufficient to hinder them from making very exorbitant profits. Under so liberal a policy the colonies are enabled both to sell their own produce and to buy the goods of Europe at a reasonable price ; but since the dissolution of the Plymouth com¬ pany, when our colonies were but in their Chap. VII. OF NEW COLONIES. 259 : infancy, this has always been the policy of [ England : it has generally too been that of France, and has been uniformly so since the dissolution of what, in England, is com¬ monly called their Mississippi company. The profits of the trade, therefore, which France and England carry on with their colonies, though no doubt somewhat higher than if the competition was free to all other nations, are, however, by no means exorbi¬ tant ; and the price of European goods ac¬ cordingly is not extravagantly high in the greater part of the colonies of either of those nations. In the exportation of their own surplus I produce, too, it is only with regard to cer¬ tain commodities that the colonies of Great Britain are confined to the market of the mother country. These commodities having been enumerated in the act of navigation and in some other subsequent acts, have upon that account been called enumerated [ commodities : the rest are called non-enume- I rated ; and may be exported directly to other countries, provided it is in British or Plant¬ ation ships, of which the owners and three- fourths of the mariners are British subjects. I Among the non-enumerated commodities are some of the most important productions of America and the West Indies : grain of all sorts, lumber, salt provisions, fish, sugar, and rum. Grain is naturally the first and principal object of the culture of all new colonies. By allowing them a very extensive market for it, the law encourages them to extend this culture much beyond the consumption of a thinly inhabited country, and thus to provide beforehand an ample subsistence for a continually increasing population. In a country quite covered with wood, where timber consequently is of little or no value, the expense of clearing the ground i is the principal obstacle to improvement. I By allowing the colonies a very extensive market for their lumber, the law endeavours to facilitate improvement by raising the price ^ of a commodity which would otherwise be of little value, and thereby enabling them to i ma ke some profit of what would otherwise be mere expense. In a country neither half-peopled nor j half-cultivated, cattle naturally multiply | be> ond the consumption of the inhabitants, and are often upon that account of little or no value. But it is necessary, it has already been shown, that the price of cattle should bear a certain proportion to that of corn, before the greater part of the lands of any country can be improved. By allow¬ ing to American cattle, in all shapes, dead and alive, a very extensive market, the law |i endeavours to raise the value of a commo- dity of which the high price is so very essential to improvement. The good effects j of this liberty, however, must be somewhat f diminished by the 4th of George III. c. 15. which puts hides and skins among the enu¬ merated commodities, and thereby tends to reduce the value of American cattle. To increase the shipping and naval power of Great Britain, by the extension of the fisheries of our colonies, is an object which the legislature seems to have had almost constantly in view. Those fisheries, upon this account, have had all the encourage¬ ment which freedom can give them, and they have flourished accordingly. The New England fishery in particular was, before the late disturbances, one of the most important, perhaps, in the world. The whale-fishery which, notwithstanding an extravagant bounty, is in Great Britain carried on to so little purpose, that in the opinion of many people (which I do not, however, pretend to warrant) the whole produce does not much exceed the value of the bounties which are annually paid for it, is in New England carried on without any bounty to a very great extent. Fish is one of the principal articles with which the North Americans trade to Spain, Portugal, and the Mediterranean. Sugar was originally an enumerated com¬ modity which could be exported only to Great Britain. But in 1731, upon a repre¬ sentation of the sugar-planters, its exporta¬ tion was permitted to all parts of the world. The restrictions, however, with which this liberty was granted, joined to the high price of sugar in Great Britain, have ren¬ dered it in a great measure ineffectual. Great Britain and her colonies still con¬ tinue to be almost the sole market for all the sugar produced in the British planta¬ tions. Their consumption increases so fast, that though, in consequence of the increas¬ ing improvement of Jamaica, as well as of the ceded islands, the importation of sugar has increased very greatly within these twenty years, the exportation to foreign countries- is said to be not much greater than before. Rum is a very important article in the trade which the Americans carry on to the coast of Africa, from which they bring back negro slaves in return. If the whole surplus produce of America in grain of all sorts, in salt provisions, and in fish, had been put into the enumeration, and thereby forced into the market of Great Britain, it would have interfered too much with the produce of the industry of our own people. It was probably not so much from any regard to the interest of America, as from a jealousy of this interference, that those important commodities have not only been kept out of the enumeration, but that the importation into Great Britain of all grain, except rice, and of salt provisions. 260 CAUSES OF THE PROSPERITY Book IV. has, in the ordinary state of the law, been prohibited. The non-enumerated commodities could originally be exported to all parts of the world. Lumber and rice, having been put into the enumeration, when they were after¬ wards taken out of it, were confined, as to the European market, to the countries that lie south of Cape Finisterre. By the 6th of George III. c. 52. all non-enumerated commodities were subjected to the like restriction. The parts of Europe which lie south of Cape Finisterre, are not manu¬ facturing countries, and we were less jealous of the colony ships carrying home from them any manufactures which could inter¬ fere with our own. The enumerated commodities are of two sorts : first, such as are either the peculiar produce of America, or as cannot be pro¬ duced, or at least are not produced, in the mother country. Of this *kind are, mo¬ lasses, coffee, cacao-nuts, tobacco, pimento, ginger, whale-fins, raw silk, cotton-wool, beaver, and other peltry of America, indigo, fustic, and other dyeing woods; secondly, such as are not the peculiar produce of America, but which are and may be pro¬ duced in the mother country, though not in such quantities as to supply the greater part of her demand, which is principally supplied from foreign countries. Of this kind are all naval stores, masts, yards, and bowsprits, tar, pitch, and turpentine, pig and bar iron, copper ore, hides and skins, pot and pearl ashes. The largest importa¬ tion of commodities of the first kind could not discourage the growth or interfere with the sale of any part of the produce of the mother country. By confining them to the home market, our merchants, it was ex¬ pected, would not only be enabled to buy them cheaper in the Plantations, and conse¬ quently to sell them with a better profit at home, but to establish between the Planta¬ tions and foreign countries an advantageous carrying trade, of which Great Britain was necessarily to be the centre or emporium, as the European country into which those commodities were first to be imported. The importation of commodities of the second kind might be so managed too, it was supposed, as to interfere, not with the sale of those of the same kind which were produced at home, but with that of those which were imported from foreign coun¬ tries ; because, by means of proper duties, they might be rendered always somewhat dearer than the former, and yet a good deal cheaper than the latter. By confining such commodities to the home market, therefore, it was proposed to discourage the produce, not of Great Britain, but of some foreign countries with which the balance of trade was believed to be unfavourable to Great Britain. The prohibition of exporting from the colo¬ nies, to any other country but Great Britain, masts, yards, and bowsprits, tar, pitch, and turpentine, naturally tended to lower the price of timber in the colonies, and conse¬ quently to increase the expense of clearing their lands, the principal obstacle to their improvement. But about the beginning of the present century, in 1703, the pitch and tar company of Sweden endeavoured to raise the price of their commodities to Great Britain, by prohibiting their exportation, except in their own ships, at their own price, and in such quantities as they thought pro¬ per. In order to counteract this notable piece of mercantile policy, and to render her¬ self as much as possible independent, not only of Sweden, but of all the other northern powers, Great Britain gave a bounty upon the importation of naval stores from America; and the effect of this bounty was to raise the price of timber in America, much more than the confinement to the home market could lower it; and as both regulations were enacted at the same time, their joint effect was rather to encourage than to discourage the clearing of land in America. Though pig and bar iron too have been put among the enumerated commodities, yet as, when imported from America, they are exempted from considerable duties to which they are subject when imported from any other country, the one part of the regulation contributes more to encourage the erection of furnaces in America, and the other to dis¬ courage it. There is no manufacture which occasions so great a consumption of wood as a furnace, or which can contribute so much to the clearing of a country overgrown with it. The tendency of some of these regulations to raise the value of timber in America, and thereby to facilitate the clearing of the land, was neither, perhaps, intended nor understood by the legislature. Though their beneficial effects, however, have been in this respect accidental, they have not upon that account been less real. The most perfect freedom of trade is permitted between the British colonies of America and the West Indies, both in the enumerated and in the non-enumerated com¬ modities. Those colonies are now become so populous and thriving, that each of them finds in some of the others a great and ex¬ tensive market for every part of its produce. All of them taken together, they make a great internal market for the produce of one another. The liberality of England, however, to¬ wards the trade of her colonies has been con¬ fined chiefly to what concerns the market for Chap. VII. OF NEW COLONIES. 261 i their produce, either in its rude state, or in what may be called the very first stage of manufactures. The more advanced or more refined manufactures even of the colony pro¬ duce, the merchants and manufacturers of Great Britain choose to reserve to them¬ selves, and have prevailed upon the legislature to prevent their establishment in the colonies, sometimes by high duties, and sometimes by absolute prohibitions. While, for example, Muskovado sugars from the British plantations pay upon im¬ portation only 6s. 4 d. the hundred weight, white sugars pay 1Z. 1.9. Id., and refined, either double or single, in loaves 4Z. 2s. 5£d. When those high duties w r ere imposed, Great Britain was the sole, and she still continues to be the principal market to which the sugars of the British colonies could be ex¬ ported. They amounted, therefore, to a prohibition, at first of claying or refining sugar for any foreign market, and at present of claying or refining it for the market, which takes off, perhaps, more than nine-tenths of the whole produce. The manufacture of claying or refining sugar accordingly, though it has flourished in all the sugar colonies of France, has been little cultivated in any of those of England, except for the market of the colonies themselves. While Grenada was in the hands of the French, there was a refinery of sugar, by claying at least, upon almost every plantation. Since it fell into those of the English, almost all works of this kind have been given up, and there are at present, October 1773, I am assured, not above two or three remaining in the island. At present, however, by an indulgence of the custom-house, clayed or refined sugar, if reduced from loaves into powder, is com¬ monly imported as Muskovado. While Great Britain encourages in Ame¬ rica the manufactures of pig and bar iron, by exempting them from duties to which the like commodities are subject when imported from any other country, she imposes an ab¬ solute prohibition upon the erection of steel furnaces and slit-mills in any of her Ameri¬ can plantations. She would not suffer her colonists to work in those more refined manufactures even for their own consump¬ tion; but insists upon their purchasing of her merchants and manufacturers all goods of this kind which they have occasion for. She prohibits the exportation from one province to another by water, and even the carriage by land upon horseback or in a cart, of hats, of wools and woollen goods, of the produce of America; a regulation which effectually prevents the establishment of any manufacture of such commodities for distant sale, and confines the industry of her colo¬ nists in this way to such coarse and house¬ hold manufactures, as a private family com¬ monly makes for its own use, or for that of some of its neighbours in the same province. To prohibit a great people, however, from making all that they can of every part of their own produce, or from employing their stock and industry in the way that they judge most advantageous to themselves, is a manifest violation of the most sacred rights of mankind Unjust, however, as such pro¬ hibitions may be, they have not hitherto been very hurtful to the colonies. Land is still so cheap, and, consequently, labour so dear among them, that they can import from the mother country almost all the more re¬ fined or more advanced manufactures cheaper than they could make them for themselves. Though they had not, therefore, been prohi¬ bited from establishing such manufactures, yet in their present state of improvement, a regard to their own interest would, probably, have prevented them from doing so. In their present state of improvement, those prohibitions, perhaps, without cramping their industry, or restraining it from any employ¬ ment to which it would have gone of its own accord, are only impertinent badges of slavery imposed upon them, without any suf¬ ficient reason, by the groundless jealousy of the merchants and manufacturers of the mother country. In a more advanced state they might be really oppressive and insup¬ portable. Great Britain too, as she confines to her own market some of the most important pro¬ ductions 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 im¬ ported from other countries, and sometimes by giving bounties upon their importation from the colonies. In the first way she gives an advantage in the home market to the sugar, tobacco, and iron of her own colonies, and in the second to their raw silk, to their hemp and flax, to their indigo, to their naval stores, and to their building-timber. This second way of encouraging the colony pro¬ duce by bounties upon importation, is, so far as I have been able to learn, peculiar to Great Britain: the first is not. Portugal does not content herself with imposing higher duties upon the importation of tobacco from any other country, but prohibits it under the severest penalties. With regard to the importation of goods from Europe, England has likewise dealt more liberally with her colonies than any other nation. Great Britain allows a part, almost always the half, generally a larger portion, and some¬ times the whole of the duty which is paid upon the importation of foreign goods, to be drawn back upon their exportation to any foreign country. No independent foreign S 3 26 2 CAUSES OF THE PROSPERITY Rook IV. country, it was easy to foresee, would receive them if they came to it loaded with the heavy duties to which almost all foreign goods are subjected on their importation into Great Britain. Unless, therefore, some part of those duties was drawn back upon export¬ ation, there was an end of the carrying trade; a trade so much favoured by the mercantile system. Our colonies, however, are by no means independent foreign countries ; and Great Britain having assumed to herself the ex¬ clusive right of supplying them with all goods from Europe, might have forced them (in the same manner as other countries have done their colonies) to receive such goods, loaded with all the same duties which they paid in the mother country. But, on the contrary, till 1763, the same drawbacks were paid upon the exportation of the greater part of foreign goods to our colonies as to any independent foreign country. In 1763, in¬ deed, by the 4th of Geo. III. c. 15. this indulgence was a good deal abated, and it was enacted, “ That no part of the duty called the old subsidy could be drawn back for any goods of the growth, production, or manufacture of Europe or the East Indies, which should be exported from this kingdom to any British colony or plantation in Ame¬ rica ; wines, white calicoes, and muslins ex¬ cepted.” Before this law, many different sorts of foreign goods might have been bought cheaper in the plantations than in the mother country; and some may still. Of the greater part of the regulations con¬ cerning the colony trade, the merchants who carry it on, it must be observed, have been the principal advisers. We must not wonder, therefore, if, in the greater part of them, their interest has been more considered than either that of the colonies or that of the mother country. In their exclusive privilege of supplying the colonies with all the goods which they wanted from Europe, and of pur¬ chasing all such parts of their surplus produce as could not interfere with any of the trades which they themselves carried on at home, the interest of the colonies was sacrificed to the interest of those merchants. In allowing the same drawbacks upon the re-exportation of the greater part of European and East India goods to the colonies, as upon their re-exportation to any independent country, the interest of the mother country was sacri¬ ficed to it, even according to the mercantile ideas of that interest. It was for the interest of the merchants to pay as little as possible for the foreign goods which they sent to the colonies, and, consequently, to get back as much as possible of the duties which they advanced upon their importation into Great Britain. They might thereby be enabled to sell in the colonies, either the same quan¬ tity of goods with a greater profit, or a greater quantity with the same profit, and, conse¬ quently, to gain something either in the one way or the other. It was, likewise, for the interest of the colonies to get all such goods as cheap and in as great abundance as pos¬ sible ; but this might not always be for the interest of the mother country. She might frequently suffer both in her revenue, by giving back a great part of the duties which had been paid upon the importation of such goods ; and in her manufactures, by being undersold in the colony market, in conse¬ quence of the easy terms upon which foreign manufactures could be carried thither by means of those drawbacks. The progress of the linen manufacture of Great Britain, it is commonly said, has been a good deal retarded by the drawbacks upon the re¬ exportation of German linen to the Ameri¬ can colonies. But though the policy of Great Britain with regard to the trade of her colonies has been dictated by the same mercantile spirit as that of other nations, it has, however, upon the whole, been less illiberal and op¬ pressive than that of any of them. In every thing, except their foreign trade, the liberty of the English colonists to ma¬ nage their own affairs their own way is com¬ plete. It is in every respect equal to that of their fellow-citizens at home, and is se¬ cured in the same manner by an assembly of the representatives of the people, who claim the sole right of imposing taxes for the support of the colony government. The authority of this assembly overawes the ex¬ ecutive power, and neither the meanest 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 pro¬ vince. The colony assemblies, though, like the House of Commons in England, they are not always a very equal representation of the people, yet they approach more nearly to that character ; and as the executive power either has not the means to corrupt them, or, on account of the support which it receives from the mother country, is not under the necessity of doing so, they are perhaps in general more influenced by the inclinations of their constituents. The councils, which, in the colony legislatures, correspond to the House of Lords in Great Britain, are not composed of an hereditary nobility. In some of the colonies, as in three of the go¬ vernments of New England, those councils are not appointed by the king, but chosen, by the representatives of the people. In none of the English colonies is there any hereditary nobility. In all of them, indeed as in all other free countries, the descendant of an old colony family is more respected than an upstart of equal merit and fortune : but he is only more respected, and he has Chap. VII. OF NEW COLONIES. 263 i no privileges by which he can be troublesome to his neighbours. Before the commence¬ ment of the present disturbances, the colony assemblies had not only the legislative but a part of the executive power. In Connec¬ ticut and Rhode Island they elected the governor. In the other colonies they ap¬ pointed the revenue officers who collected the taxes imposed by those respective assem¬ blies, to whom those officers were immedi¬ ately responsible. There is more equality, therefore, among the English colonists than among the inhabitants of the mother country. Their manners are more republican, and their governments, those of three of the pro¬ vinces of New England in particular, have hitherto been more republican too. The absolute governments of Spain, Por¬ tugal, and France, on the contrary, take place in their colonies ; and the discretionary powers which such governments commonly delegate to all their inferior officers are, on account of the great distance, naturally exer¬ cised there with more than ordinary violence. Under all absolute governments there is more liberty in the capital than in any other part of the country. The sovereign himself can never have either interest or inclination to pervert the order of justice, or to oppress the great body of the people. In the capi¬ tal his presence overawes more or less all his inferior officers, who in the remoter pro¬ vinces, from whence the complaints of the people are less likely to reach him, can ex¬ ercise their tyranny with much more safety. But the European colonies in America are more remote than the most distant provinces of the greatest empires which had ever been known before. The government of the En¬ glish colonies is perhaps the only one which, since the world began, could give perfect security to the inhabitants of so very distant a province. The administration of the French colonies, however, has always been conducted with more gentleness and moderation than that of the Spanish and Portuguese. This superiority of conduct is suitable both to the character of the French nation and to what forms the character of every nation — the na¬ ture of their government, which, though arbitrary and violent in comparison with that of Great Britain, is legal and free in comparison with those of Spain and Por¬ tugal. It is in the progress of the North Ameri¬ can colonies, however, that the superiority of the English policy chiefly appears. The progress of the sugar colonies of France has been at least equal, perhaps superior, to that of the greater part of those of England ; and yet the sugar colonies of England enjoy a free government nearly of the same kind with that which takes place in her colonies of North America. But the sugar colonies of France are not discouraged, like those of | England, from refining their own sugar; and, what is of still greater importance, the genius of their government naturally intro¬ duces a better management of their negro slaves. In all European colonies the culture of the sugar cane is carried on by negro slaves. The constitution of those who have been born in the temperate climate of Europe could not, it is supposed, support the labour of digging the ground under the burning sun of the West Indies; and the culture of the sugar cane, as it is managed at present, is all hand labour, though, in the opinion of many, the drill plough might be introduced into it with great advantage. But as the profit and success of the cultivation which is carried on by means of cattle depend very much upon the good management of those cattle, so the profit and success of that which is carried on by slaves must depend equally upon the good management of those slaves; and in the good management of their slaves the French planters, I think it is generally allowed, are superior to the En¬ glish. The law, so far as it gives some weak protection to the slave against the violence of his master, is likely to be better executed in a colony where the government is in a great measure arbitrary, than in one where it is altogether free. In every country where the unfortunate law of slavery is established, the magistrate, when he protects the slave, in¬ termeddles in some measure in the manage¬ ment of the private property of the master; and, in a free country, where the master is perhaps either a member of the colony assem¬ bly, or an elector of such a member, he dare not do this but with the greatest caution and circumspection. The respect which he is obliged to pay to the master, renders it more difficult for him to protect the slave. But in a country where the government is in a great measure arbitrary, where it is usual for the magistrate to intermeddle even in the management of the private property of individuals, and to send them, perhaps, a lettre de cachet if they do not manage it ac¬ cording to his liking, it is much easier for him to give some protection to the slave» and common humanity naturally disposes him to do so. The protection of the magis¬ trates renders the slave less contemptible in the eyes of his master, who is thereby induced to consider him with more regard, and to treat him with more gentleness. Gentle usage renders the slave not only more faithful but more intelligent, and therefore, upon a double account, more useful. He approaches more to the condition of a free servant, and may possess some degree of in¬ tegrity and attachment to his master’s in¬ terest, virtues which frequently belong to free servants, but which never can belong to a slave, who is treated as slaves commonly are S 4 264 CAUSES OF THE PROSPERITY, &c. Book IV. in countries where the master is perfectly free and secure. That the condition of a slave is better under an arbitrary than under a free government, is I believe, supported by the history of all ages and nations. In the Roman history, the first time we read of the magistrate interposing to protect the slave from the violence of his master, is under the emperors. When Vedius Pollio, in the presence of Augustus, ordered one of his slaves, who had committed a slight fault, to be cut into pieces and thrown into his fish pond in order to feed his fishes, the emperor commanded him with indignation, to emancipate immediately not only that slave, but all the others that belonged to him. Under the republic no magistrate could have had authority enough to protect the slave, much less to punish the master. The stock, it is to be observed, which has improved the sugar colonies of France, par¬ ticularly the great colony of St. Domingo, has been raised almost entirely from the gradual improvement and cultivation of those colonies. It has been almost altoge¬ ther the produce of the soil and of the in¬ dustry ofrthe colonists, or, what comes to the same thing, the price of that produce gra¬ dually accumulated by good management, and employed in raising a still greater pro¬ duce. But the stock which has improved and cultivated the sugar colonies of England has, a great part of it, been sent out from England, and has by no means been altoge¬ ther the produce of the soil and industry of the colonists. The prosperity of the En¬ glish sugar colonies has been, in a great measure, owing to the great riches of Eng¬ land, of which a part has overflowed, if one may say so, upon those colonies; but the prosperity of the sugar colonies of France has been entirely owing to the good conduct of the colonists, which must therefore have had some superiority over that of the English, and this superiority has been remarked in nothing so much as in the good management of their slaves. Such have been the general outlines of the policy of the different European nations with regard to their colonies. The policy of Europe, therefore, has very little to boast of, either in the original esta¬ blishment, or, so far as concerns their in¬ ternal government, in the subsequent pros¬ perity of the colonies of America. Folly and injustice seem to have been the principles which presided over and directed the first project of establishing those colo¬ nies ; the folly of hunting after gold and silver mines, and the injustice of coveting the possession of a country whose harmless natives, far from having ever injured the people of Europe, had received the first ad¬ venturers with every mark of kindness and hospitality. The adventurers, indeed, who formed some of the later establishments, joined to the chimerical project of finding gold and silver mines other motives more reasonable and more laudable; but even these motives do very little honour to the policy of Europe. The English puritans, restrained at home, fled for freedom to America, and established theie the four governments of New England. The English catholics, treated with much greater injustice, established that of Mary¬ land; the Quakers, that of Pennsylvania. The Portuguese Jews, persecuted by the in¬ quisition, stript of their fortunes, and banished to Brazil, introduced, by their example, some sort of order and industry among the trans¬ ported felons and strumpets, by whom that colony was originally peopled and taught them the culture of the sugar-cane. Upon all these different occasions it was, not the wisdom and policy, but the disorder and in¬ justice of the European governments, which peopled and cultivated America. In effectuating some of the most import¬ ant of these establishments, the different governments of Europe had as little merit as in projecting them. The conquest of Mexico was the project, not of the council of Spain, but of a governor of Cuba ; and it was effectuated by the spirit of the bold adventurer to whom it was intrusted, in spite of every thing which that governor, who soon repented of having trusted such a person, could do to thwart it. The con¬ querors of Chili and Peru, and of almost all the other Spanish settlements upon the continent of America, carried out with them no other public encouragement, but a gene¬ ral permission to make settlements and con¬ quests in the name of the king of Spain. Those adventures were all at the private risk and expense of the adventurers. The go¬ vernment of Spain contributed scarce any thing to any of them. That of England contributed as little towards effectuating the establishment of some of its most important colonies in North America. When those establishments were effectu¬ ated, and had become so considerable as to attract the attention of the mother country, the first regulations which she made with regard to them had always in view to secure to herself the monopoly of their commerce ; to confine their market, and to enlarge her own at their expense, and, consequently, rather to damp and discourage than to quicken and forward the course of their prosperity. In the different ways in which this monopoly has been exercised consists one of the most essential differences in the policy of the different European nations with regard to their colonies. The best of them all, that of England, is only somewhat less illiberal and oppressive than that of any of the rest. Chap. VII. COLONIAL POLICY. 265 In what way, therefore, 'has the policy of Europe contributed either to the first estab¬ lishment, or to the present grandeur of the colonies of America ? In one way, and in one way only, it has contributed a good deal. Magna virum Mater ! It bred and formed the men who were capable of achieving such great actions, and of laying the foundation of so great an empire; and there is no other quarter of the world of which the policy is capable of forming, or has ever actually and in fact formed such men. The colonies owe to the policy of Europe the education and great views of their active and enterprising founders ; and some of the greatest and most important of them, so far as concerns their internal government, owe to it scarce any thing else. * Part III. Of the Advantages which Europe has derived from the Discovery of America , and from that of a Passage to the East Indies by the i Cape of Good Hope. Such are the advantages which the colonies of America have derived from the policy of Europe. What are those which Europe has de¬ rived from the discovery and colonisation of America ? Those advantages may be divided, first, into the general advantages which Europe, considered as one great country, has derived from those great events; and, secondly, into the particular advantages which each colo¬ nising country has derived from the colonies which particularly belong to it, inconsequence of the authority or dominion which it exer¬ cises over them. I I he general advantages which Europe, considered as one great country, has derived from the discovery and colonisation of Ame¬ rica, consist, first, in the increase of its en¬ joyments ; and, secondly, in the augmentation of its industry. / The surplus produce of America, im¬ ported into Europe, furnishes the inhabitants of this great continent with a variety of commodities which they could not otherwise I have possessed; some for conveniency and use, some for pleasure, and some for orna¬ ment, and thereby contributes to increase their enjoyments. The discovery and colonisation of America, it will readily be allowed, have contributed to augment the industry, first, of all the countries which trade to it directly ; such as [ Spain, Portugal, France, and England- and, secondly, of all those which, without trading to it directly, send, through the me- r dium of other countries, goods to it of their own produce; such as Austrian Flanders, and seme provinces of Germany, which, through the medium of the countries before mentioned, send to it a considerable quantity of linen and other goods. All such countries have evidently gained a more extensive market for their surplus produce, and must consequently have been encouraged to in¬ crease its quantity. But, that those great events should like¬ wise have contributed to encourage the industry of countries, such as Hungary and Poland, which majr never, perhaps, have sent a single commodity of their own pro¬ duce to America, is not, perhaps, altogether so evident. That those events* have done so, however, cannot be doubted. Some part of the produce of America is consumed in Hungary and Poland, and there is some demand there for the sugar, chocolate, and tobacco, of that new quarter of the world. But those commodities must be purchased with something which is either the produce of the industry of Hungary and Poland, or with something which had been purchased with some part of that produce. Those commodities of America are new values, new equivalents, introduced into Hungary and Poland to be exchanged there for the surplus produce of those countries. By being carried thither, they create a new and more extensive market for that surplus pro¬ duce. They raise its value, and thereby contribute to encourage its increase. Though no part of it may ever be carried to America, it may be carried to other countries which purchase it with a part of their share of the surplus produce of America; and it may find a market by means of the circulation of that trade which was originally put into motion by the surplus produce of America. Those great events may even have con¬ tributed to increase the enjoyments, and to augment the industry of countries which not only never sent any commodities to America, but never received any from it. Even such countries may have received a greater abun¬ dance of other commodities from countries of which the surplus produce had been aug¬ mented by means of the American trade. This greater abundance, as it must neces¬ sarily have increased their enjoyments, so it must likewise have augmented their industry. A greater number of new equivalents of some kind or other must have been presented to them to be exchanged for the surplus produce of that industry. A more extensive market must have been created for that sur¬ plus produce, so as to raise its value, and thereby encourage its increase. The mass of commodities annually thrown into the great circle of European commerce, and by its various revolutions annually distributed among all the different nations compre¬ hended within it, must have been augmented 266 COLONIAL POLICY. Book IV. by the whole surplus produce of America. A greater share of this greater mass, there¬ fore, is likely to have fallen to each of those nations, to have increased their enjoyments, and augmented their industry. The exclusive trade of the mother coun¬ tries tends to diminish, or, at least, to keep down below what they would otherwise rise to, both the enjoyments and industry of all those nations in general, and of the American colonies in particular. It is a dead weight upon the action of one of the great springs which puts into motion a great part of the business of mankind. By rendering the colony produce dearer in all other countries, it lessens its consumption, and thereby cramps the industry of the colonies, and both the enjoyments and the industry of all other countries, which both enjoy less when they pay more for what they enjoy, and pro¬ duce less when they get less for what they produce. By rendering the produce of all other countries dearer in the colonies, it cramps, in the same manner, the industry of all other countries, and both the enjoyments and the industry of the colonies. It is a clog which, for the supposed benefit of some particular countries, embarrasses the plea¬ sures, and encumbers the industry of all other countries; but of the colonies more than of any other. It not only excludes, as much as possible, all other countries from one particular market, but it confines, as much as possible, the colonies to one parti¬ cular market: and the difference is very great between being excluded from one par¬ ticular market, when all others are open, and being confined to one particular market when all others are shut up. The surplus produce of the colonies, however, is the original source of all that increase of en¬ joyments and industry which Europe derives from the discovery and colonisation of America; and the exclusive trade of the mother countries tends to render this source much less abundant than it otherwise would be. The particular advantages which each ccIonising country derives from the colonies which particularly belong to it, are of two different kinds: first, those common advan¬ tages which every empire derives from the provinces subject to its dominion ; and, se¬ condly, those peculiar advantages which are supposed to result from provinces cf so very peculiar a nature as the European colonies of America. The common advantages which every empire derives from the provinces subject to its dominion consist, first, in the military force which they furnish for its defence; and, secondly, in the revenue which they furnish for the support of its civil govern¬ ment. The Roman colonies furnished oc¬ casionally both the one and the other. The Greek colonies sometimes furnished a mili¬ tary force, but seldom any revenue. They seldom acknowledged themselves subject to the dominion of the mother city. They were generally her allies in war, but very seldom her subjects in peace. The European colonies of America have never yet furnished any military force for the defence of the mother country Their military force has never yet been sufficient for their own defence ; and in the different wars in which the mother countries have been engaged, the defence of their colonies has generally occasioned a very considerable distraction of the military force of those countries. In this respect, therefore, all the European colonies have, without excep¬ tion, been a cause rather of weakness than of strength to their respective mother coun¬ tries. The colonies of Spain and Portugal only have contributed any revenue towards the defence of the mother country, or the sup¬ port of her civil government. The taxes which have been levied upon those of other European nations, upon those of England in particular, have seldom been equal to the expense laid out upon them in time of peace, and never sufficient to defray that which they occasioned in time of war. Such colo¬ nies, therefore, have been a source of expense and not of revenue to their respective mother countries. The advantages of such colonies to their respective mother countries, consist alto¬ gether in those peculiar advantages which are supposed to result from provinces of so very peculiar a nature as the European co¬ lonies of America; and the exclusive trade, it is acknowledged, is the sole source of all those peculiar advantages. In consequence of this exclusive trade, ail that part of the surplus produce of the En¬ glish colonies, for example, which consists in what are called enumerated commodities, can be sent to no other country but Eng¬ land. Other countries must afterwards buy it of her. It must be cheaper, therefore, in England than it can be in any other coun¬ try, and must contribute more to increase the enjoyments of England than those of any other country : it must likewise con¬ tribute more to encourage her industry. For all those parts of her own surplus pro¬ duce which England exchanges for those enumerated commodities, she must get a better price than any other countries can get for the like parts of theirs, when they ex¬ change them for the same commodities. The manufactures of England, for example, will purchase a greater quantity of the sugar and tobacco of her own colonies, than the like manufactures of other countries can purchase of that sugar and tobacco. So far, therefore, as the manufactures of Eng- Chap. VII. COLONIAL POLICY. 267 land and those of other countries are both to be exchanged for the sugar and tobacco of the English colonies, this superiority of price gives an encouragement to the former, beyond what the latter can in these circum¬ stances enjoy. The exclusive trade of the colonies, therefore, as it diminishes, or, at least, keeps down below what they would otherwise rise to, both the enjoyments and the industry of the countries which do not possess it; so it gives an evident advantage to the countries which do possess it over those other countries. This advantage, however, will perhaps be found to be rather what may be called a relative than an absolute advantage; and to give a superiority to the country which enjoys it, rather by depressing the industry and produce of other countries, than bv raising those of that particular country above what they would naturally rise to in the case of a free trade. The tobacco of Maryland and Virginia, for example, by means of the monopoly which England enjoys of it, certainly comes cheaper to England than it can do to France, to whom England commonly sells a considerable part of it. But had France, and all other European countries been at all times allowed a free trade to Maryland and Virginia, the tobacco of those colonies might by this time have come cheaper than it actually does, not only to all those other countries but likewise to England. The produce of tobacco, in consequence of a market so much more extensive than any which it has hitherto enjoyed, might, and probably would, by this time have been so much increased as to reduce the profits of a tobacco plantation to their natural level with those of a corn plantation, which, it is sup¬ posed, they are still somewhat above. The price of tobacco might, and probably would, by this, time have fallen somewhat lower than it is at present. An equal quantity of the commodities either of England or of those other countries might have purchased in Maryland and \ irginia a greater quan¬ tity of tobacco than it can do at present, and, consequently, have been sold there for so much a better price. So far as that weed, therefore, can, by its cheapness and abundance, increase the enjoyments or aug¬ ment the industry either of England or of any other country, it would probably, in the case of a free trade, have produced both these effects in somewhat a greater degree than it can do at present. England, indeed, would not in this case have had any advan¬ tage over other countries. She might have bought the tobacco of her colonies some- 1 The doctrine advanced by Dr. Smith in this chapter with respect to the supposed influence of the monopoly of the colony trade in increasing the rate ot profit, is a consequence of his theory which makes that rate depend on the quantity of capital, compared [ what cheaper, and, consequently, have sold some of her own commodities somewhat dearer than she actually does. But she could neither have bought the one cheaper nor sold the other dearer than any other country might have done. She might, perhaps, have gained an absolute, but she would certainly have lost a relative, advan¬ tage. In order, however, to obtain this relative advantage in the colony trade, in order to execute the invidious and malignant project of excluding as much as possible other nations from any share in it, England, there are very probable reasons for believing, has not only sacrificed a part of the absolute advantage which she, as well as every other nation, might have derived from that trade, but has subjected herself both to an absolute and to a relative disadvantage in almost every other branch of trade. W hen, by the act of navigation, England assumed to herself the monopoly of the colony trade, the foreign capitals which had before been employed in it were necessarily withdrawn from it. The English capital, which had before carried on but a part of it, was now to carry on the whole. The capital which had before supplied the colo¬ nies with but a part of the goods which they wanted from Europe, was now all that was employed to supply them with the whole; but it could not supply them with the whole, and the goods with which it did supply them were necessarily sold very dear. The capital which had before bought but a part of the surplus produce of the colonies, was now all that was enrployed to buy the whole; but it could not buy the whole at any thing near the old price, and, therefore, whatever it did buy it necessarily bought very cheap. But in an employment of capital in which the merchant sold very dear and bought very cheap, the profit must have been very great, and much above the ordi¬ nary level of profit in other branches of trade. This superiority of profit in the colony trade could not fail to draw from other branches of trade a part of the capital which had before been employed in them. But this revulsion of capital, as it must have gradually increased the competition of capitals in the colony trade, so it must have gradually diminished that competition in all those other branches of trade ; as it must have gradually lowered the profits of the one, so it must have gradually raised those of the other, till the profits of all came to a new level, different from and somewhat higher than that at which they had been before . 1 with the extent of the field for its employment. In point of fact, however, the rate of profit is wholly dependent on the productiveness of industrious un¬ dertakings, and not on the extent to which they arc carried. Profits are the excess cf the commodities 263 COLONIAL POLICY. Book IV. Th is double effect, of drawing capital from all other trades, and of raising the rate of profit somewhat higher than it otherwise would have been in all trades, was not only produced by this monopoly upon its first es¬ tablishment, but has continued to be pro¬ duced by it ever since. First , This monopoly has been continually drawing capital from all other trades to be employed in that of the colonies. Though the wealth of Great Britain has increased very much since the establishment of the act of navigation, it certainly has not increased in the same proportion as that of the colonies; but the foreign trade of every country naturally increases in proportion to its wealth, its surplus produce in proportion to its whole produce ; and Great Britain having engrossed to herself almost the whole of what may be called the foreign trade of the colonies, and her capital not having in¬ creased in the same proportion as the extent of that trade, she could not carry it on with¬ out 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 foreign trade, particularly of that to other parts of Europe? have been continually decaying . 1 Our manufactures for foreign sale, instead of being suited, as before the act of navigation, to the neigh¬ bouring market of Europe, or to the more distant one of the countries which lie round the Mediterranean sea, have, the greater part of them, been accommodated to the still more distant one of the colonies, to the mar¬ ket in which they have the monopoly, rather than to that in which they have many com¬ petitors. The causes of decay in other branches of foreign trade, which, by Sir Matthew Decker 2 and other writers, have been sought for in the excess and improper mode of taxation, in the high price of labour, in the increase of luxury, &c. , may all be found in the overgrowth of the colony trade. The mercantile capital of Great Britain, though very great, yet not being infinite ; and though greatly increased since the act of navigation, yet not being increased in the same proportion as the colony trade, that trade could not possibly be carried on with¬ er wealth produced by the outlay of capital and la¬ bour in industrious undertakings, after the capital and the value of the labour so laid out have been replaced. It is clear, therefore, that they must be wholly unaffected by any extension of the held for the employment of capital: and as it is only by ex¬ tending this held that the monopoly of the colony trade is supposed by Dr. Smith to raise the rate of profit, it follows that it cannot have the effects he has ascribed to it. See Supplemental Note on Colo¬ nial Policy. out withdrawing some part of that capital from other branches of trade, nor conse¬ quently without some decay of those other branches. England, it must be observed, was a great trading country ; her mercantile capital was very great, and likely to become still greater and greater every day, not only before the act of navigation had established the mono¬ poly of the colony trade, but before that trade was very considerable. In the Dutch war, during the government of Cromwell, her navy was superior to that of Holland ; and in that which broke out in the beginning of the reign of Charles II. it was at least equal, perhaps superior, to the united navies of France and Holland. Its superiority, perhaps, would scarce appear greater in the present times ; at least if the Dutch navy was to bear the same proportion to the Dutch commerce now which it did then; but this great naval power could not, in either of those wars, be owing to the act of navigation. During the first of them, the plan of that act had been but just formed *, and though before the breaking out of the second it had been fully enacted by legal au¬ thority, yet no part of it could have had time to produce any considerable effect, and least of all that part which established the exclusive trade to the colonies. Both the colonies and their trade were inconsiderable then in comparison of what they are now. The island of Jamaica was an unwholesome desert, little inhabited, and less cultivated. New York and New Jersey were in the pos¬ session of the Dutch ; the half of St. Christ¬ ophers in that of the French. The island of Antigua, the two Carolinas, Pennsylvania, Georgia, and Nova Scotia, were not planted. Virginia, Maryland, and New England were planted; and though they were very thriv¬ ing colonies, yet there was not, perhaps, at that time, either in Europe or America, a single person who foresaw or even suspected the rapid progress which they have since made in wealth, population, and improve¬ ment. The island of Barbadoes, in short, was the only British colony of any conse¬ quence of which the condition at that time bore any resemblance to what it is at pre¬ sent. The trade of the colonies, of which England, even for some time after the act of navigation, enjoyed but a part, (for the act of navigation was not very strictly executed till several years after it was enacted) could 1 It would have been well had Smith given some proofs of this assertion. The Essa} r to which he refers is acute and able ; but it must at the same time be admitted, that the decay of foreign trade, of which the author endeavours to assign the causes, had no existence in fact. All the branches of our foreign trade have been gradually increasing during the last hundred years. 2 Mr. William Richardson, and not Decker, was the author of the work referred to by Smith—Literature of Political Economy, 329. Chap. VII. COLONIAL POLICY. 269 not at that time be the cause of the great trade of England, nor of the great naval power which was supported by that trade. The trade which at that time supported that great naval power was the trade of Europe, and of the countries which lie round the Mediterranean sea. But the share which Great Britain at present enjoys of that trade could not support any such great naval power. Had the growing trade of the colo¬ nies been left free to all nations, whatever share of it might have fallen to Great Bri¬ tain, and a very considerable share would probably have fallen to her, must have been all an addition to this great trade, of which she was before in possession. In consequence of the monopoly, the increase of the colonv trade has not so much occasioned an addition to the trade which Great Britain had before, as a total change in its direction. Secondly , This monopoly has necessarily contributed to keep up the rate of profit in all the different branches of British trade higher than it naturally would have been, had all nations been allowed a free trade to the British colonies . 1 The monopoly of the colony trade, as it necessarily drew* towards that trade a greater proportion of the capital of Great Britain than what would have gone to it of its own accord, so by the expulsion of all foreign capitals it necessarily reduced the whole quantity of capital employed in that trade below what it naturally would have been in the case of a free trade. But, by lessening the competition of capitals in that branch of trade, it necessarily raised the rate of profit in that branch. By lessening too the com¬ petition of British capitals in all other branches of trade, it necessarily raised the rate of British profit in all those other branches. Whatever may have been, at any particular period, since the establishment of the act of navigation, the state or extent of the mercantile capital of Great Britain, the monopoly of the colony trade must, during the continuance of that state, have raised the ordinary rate of British profit higher than it otherwise would have been both in that and in all the other branches of British trade. If, since the establishment of the act of navigation, the ordinary rate of British profit has fallen considerably, as it certainly has, it must have fallen still lower, had not the monopoly established by that act contributed to keep it up. But whatever raises in any country the 1 See note, antt, p. 267. 2 If the monopoly of the colony trade really caused an increase in the rate of profit, it would, in so far, be undoubtedly advantageous : for a comparatively high rate of profit is one of the very best tests of national prosperity. (See anti, p. 159, note.) But the monopoly in question has no such effect. See note, ante , p. 267. * This statement is partly true and partly erro- ordinary rate of profit higher than it other¬ wise would be, necessarily subjects that country both to an absolute and to a relative disadvantage in every branch of trade of which she has not the monopoly . 2 It subjects her to an absolute disadvan¬ tage ; because in such branches of trade her merchants cannot get this greater profit, without selling dearer than they otherwise would do both the goods of foreign coun¬ tries which they import into their own, and the goods of their own country which they export to foreign countries. Their own country must both buy dearer and sell dear¬ er ; must both buy less, and sell less ; must both enjoy less and produce less, than she otherwise would do . 3 It subjects her to a relative disadvantage; because in such branches of trade it sets other countries which are not subject to the same absolute disadvantage, either more above her or less below her than they other¬ wise would be. It enables them both to enjoy more and to produce more in proportion to what she enjoys and produces. It ren¬ ders their superiority greater or their infe¬ riority less than it otherwise would be. By raising the price of her produce above what it otherwise would be, it enables the mer¬ chants of other countries to undersell her in foreign markets, and thereby to justle her out of almost all those branches of trade, of which she has not the monopoly. Our merchants frequently complain of the high wages of British labour as the cause of their manufactures being undersold in foreign markets ; but they are silent about the high profits of stock. They complain of the ex¬ travagant gain of other people ; but they say nothing of their own. The high profits of British stock, however, may contribute to¬ wards raising the price of British manufac¬ tures in many cases as much, and in some perhaps more, than the high wages of Bri¬ tish labour . 4 It is in this manner that the capital of Great Britain, one may justly say, has partly been drawn and partly been driven from the greater part of the different branches of trade of which she has not the monopolv; from the trade of Europe in particular, and from that of the countries which lie round the Mediterranean sea. It has partly been drawn from those branches of trade, by the attraction of supe¬ rior profit in the colony trade in consequence of the continual increase of that trade, and neous. See supplemental note on the Efleet of fluctuations in the Hates of Wages and Profits on the Price of Commodities. 4 A rise of profit occasions a rise in the price of some sorts of produce ; but it occasions an equal fall in the price of other sorts, and, generally speaking, therefore, its effect may be said to be null. Se« reference in the foregoing note. 270 COLONIAL POLICY. Book IV. of the continual insufficiency of the capital which had carried it on one year to carry it on the next. It has partly been driven from them, by the advantage which the high rate of profit, established in Great Britain, gives to other countries, in all the different branches of trade of which Great Britain has not the monopoly . 1 As the monopoly of the colony trade has drawn from those other branches a part of the British capital which would otherwise have been employed in them, so it has forced into them many foreign capitals which would never have gone to them, had they not been expelled from the colony trade. In those other branches of trade it has diminished the competition of British capitals, and thereby raised the rate of British profit higher than it otherwise would have been. On the con¬ trary, it has increased the competition of foreign capitals, and thereby sunk the rate of foreign profit lower than it otherwise would have been. Both in the one way and in the other it must evidently have subjected Great Britain to a relative disadvantage in all those other branches of trade. The colony trade, however, it may perhaps be said, is more advantageous to Great Britain than any other; and the monopoly, by forcing into that trade a greater propor¬ tion of the capital of Great Britain than what would otherwise have gone to it, has turned that capital into an employment more advantageous to the country than any other which it could have found. The most advantageous employment of any capital to the country to which it be¬ longs is that which maintains there the greatest quantity of productive labour, and increases the most the annual produce of the land and labour of that country. But the quantity of productive labour which any capi¬ tal employed in the foreign trade of con¬ sumption can maintain, is exactly in propor¬ tion, it has been shown in the second book, to the frequency of its returns. A capital of a thousand pounds, for example, employed in a foreign trade of consumption, of which the returns are made regularly once in the year, can keep in constant employment, in the country to which it belongs, a quantity of productive labour equal to what a thousand pounds can maintain there for a year. If the returns are made twice or thrice in the year, it can keep in constant employment a quan¬ tity of productive labour equal to what two or three thousand pounds can maintain there for a year.2 A foreign trade of consumption 1 It is singular how Dr. Smith should have said that the monopoly of the colony trade had driven us from some of the most productive branches of the trade of Europe, when, with the exception perhaps of the trade to France, our commerce with every other country was much greater than it had ever been before. -We hare already shown the fallacy of this doc- carried on with a neighbouring, is, upon this account, in general, more advantageous than one carried on with a distant country ; and for the same reason a direct foreign trade of consumption, as it has likewise been shown in the second book, is in general more advan¬ tageous than a roundabout one. But the monopoly of the colony trade, so far as it has operated upon the employment of the capital of Great Britain, has in all cases forced some part of it from a foreign trade of consumption carried on with a neigh¬ bouring, to one carried on with a more distant country, and in many cases from a direct foreign trade of consumption to a roundabout one. jF irst, The monopoly of the colony trade has in all cases forced some part of the capi¬ tal of Great Britain from a foreign trade of consumption carried on with a neighbouring to one carried on with a more distant coun¬ try. It has, in all cases, forced some part of that capital from the trade with Europe, and with the countries which lie round the Medi¬ terranean sea, to that with the more distant regions of America and the West Indies, from which the returns are necessarily less frequent, not only on account of the greater distance, but on account of the peculiar cir¬ cumstances of those countries. New colonies, it has already been observed, are always un¬ derstocked. Their capital is always much less than wffiat they could employ with great profit and advantage in the improvement and cultivation of their land. They have a con¬ stant demand, therefore, for more capital than they have of their own ; and, in order to supply the deficiency of their own, they en¬ deavour to borrow as much as they can of the mother country, to whom they are, therefore, always in debt. The most common way in which the colonists contract this debt, is not by borrowing upon bond of the rich people of the mother country, though they sometimes do this too, but by running as much in arrear to their correspondents, 'who supply them with goods from Europe, as those corre¬ spondents will allow them. Their annual returns frequently do not amount to more than a third, and sometimes not to so great a proportion of what they owe. The whole capital, therefore, which their correspond¬ ents advance to them is seldom returned to Britain in less than three, and sometimes not in less than four or five years. But a British capital of a thousand pounds, for example, which is returned to Great Britain only once in five years, can keep in constant trine {ante, p. 159). It is by the rate of nett profit which capital yields, that the advantageousness of the employments in which it is vested, is to be deter¬ mined ; and if it should be returned three or four times a year when employed in the home trade, and only once when employed in foreign trade, this single return will be equal ’ to the whole amount of the others. COLONIAL POLICY. 271 Cuap. VII. I 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 . 1 The planter, no doubt, by the high price which he pays for the goods from Europe, by the interest upon the bills which he grants at distant dates, and by the com¬ mission 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 cor¬ respondent, he cannot make up that of Great Britain. In a trade of which the returns are very distant, the profit of the merchant may be as great or greater than in one in which they are very frequent and near ; but the advantage of the country in which he resides, the quantity of productive labour constantly maintained there, the annual pro¬ duce of the land and labour, must always be much less. That the returns of the trade to America, and still more those of that to the West Indies, are, in general, not only more distant, but more irregular, and more uncertain too, than those of the trade to any part of Europe, or even of the countries which lie round the Mediterranean sea, will readily be allowed, I imagine, by every body, who has any experience of those different branches of trade. Secondly , The monopoly of the colony trade has, in many cases, forced some part of the capital of Great Britain from a direct foreign trade of consumption, into a round¬ about one. Among the enumerated commodities which can be sent to no other market but Great Britain, there are several of which the quan¬ tity exceeds very much the consumption of Great Britain, and of which a part, therefore, must be exported to other countries. But |. this cannot be done without forcing some part of the capital of Great Britain into a roundabout foreign trade of consumption. Maryland and Virginia, for example, send annually to Great Britain upwards of ninety- six thousand hogsheads of tobacco, and the consumption of Great Britain is said not to exceed fourteen thousand. Upwards of eighty-two thousand hogsheads, therefore, must be exported to other countries, to France, to Holland, and to the countries which lie round the Baltic and Mediterranean seas. ji But that part of the capital of Great Britain which brings those eighty-two thousand hogsheads to Great Britain, which re-exports them from thence to those other countries, and which brings back from those other I U 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 fo¬ reign 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 em¬ ployed in this roundabout one is not likely to come back in less than four or five. If the one can keep in constant employment but a third or a fourth part of the domestic industry which could be maintained by a capital returned once in the year, the other can keep in constant employment but a fourth or a fifth part of that industry. At some of the outports a credit is commonly given to those foreign correspondents to whom they export their tobacco. At the port of London, indeed, it is commonly sold for ready money. The rule is, Weigh and pay. At the port of London, therefore, the final returns of the whole roundabout 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 some¬ times 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 consump¬ tion with the great surplus of tobacco which she exports to other countries, she would, in this case, probably have purchased with the immediate produce of her own industry, or with some part of her own manufactures. That produce, those manufactures, instead of being almost entirely suited to one great market, as at present, would probably have been fitted to a great number of smaller mar¬ kets. Instead of one great roundabout foreign trade of consumption, Great Britain would probably have carried on a great num¬ ber 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 roundabout trade, might have been sufficient to carry on all those small direct ones, might have kept in constant em¬ ployment an equal quantity of British indus¬ try, and have equally supported the annual produce of the land and labour of Great Britain. All the purposes of this trade being, in this manner, answered by a much smaller capital, there would have been a 1 See previous, note. 272 COLONIAL POLICY. Book IV, large spare capital to apply to other purposes; to improve the lands, to increase the manu¬ factures, and to extend the commerce of Great Britain ; to come into competition at least with the other British capitals employed in all those different ways, to reduce the rate of profit in them all, and thereby to give to Great Britain, in all of them, a superior¬ ity over other countries still greater than what she at present enjoys. The monopoly of the colony trade, too, has forced some part of the capital of Great Britain from all foreign trade of consump¬ tion to a carrying trade; and, consequently, from supporting more or less the industry of Great Britain, to be employed altogether in supporting partly that of the colonies, and partly that of some other countries. The goods, for example, which are an¬ nually purchased with the great surplus of eighty-two thousand hogsheads of tobacco annually re-exported from Great Britain, are not all consumed in Great Britain. Part of them—linen from Germany and Holland, for example—is returned to the colonies for their particular consumption. But that part of the capital of Great Britain which buys the tobacco with which this linen is after¬ wards bought, is necessarily withdrawn from supporting the industry of Great Britain, to be employed altogether in supporting, partly that of the colonies, and partly that of the particular countries who pay for this tobacco with the produce of their own industry . 1 The monopoly of the colony trade besides, by forcing towards it a much greater propor¬ tion of the capital of Great Britain than what would naturally have gone to it, seems to have broken altogether that natural balance which would otherwise have taken place among all the different branches of British industry. The industry of Great Britain, instead of being accommodated to a great number of small markets, has been principally suited to one great market. Her commerce, instead of running in a great number of small channels, has been taught to run principally in one great channel; but the whole system of her industry and com¬ merce has thereby been rendered less secure ; the whole state of her body politic less health¬ ful than it otherwise would have been. In her present condition, Great Britain resem¬ bles one of those unwholesome bodies in which some of the vital parts are overgrown, 1 Dr. Smith justly maintains that the monopoly of the colony trade is productive of no real advantage to the mother country. But if it had really raised the rate of profit, as he contends it did, it would have been advantageous. Having once admitted that it had that effect, he had no means of proving that it was disadvantageous, but by resorting to his theory with respect to the comparative advantageousness of the capitals vested in different businesses ; a theory which is equally at variance w r ith Dr. Smith’s own system, and with the principles of the science. See anti, p. 159, note. 2 Dr. Smith seems to have greatly overrated this and which, upon that account, are liable to many dangerous disorders scarce incident to those in which all the parts are more pro¬ perly proportioned. A small stop in that great blood-vessel, which has been artificially swelled beyond its natural dimensions, and through which an unnatural proportion of the industry and commerce of the country has been forced to circulate, is very likely to bring on the most dangerous disorders upon the whole body politic. The expectation of a rupture with the colonies, accordingly, has struck the people of Great Britain with more terror than they ever felt for a Spanish armada or a French invasion. It was this terror, whether well or ill grounded, which rendered the repeal of the stamp act, among the merchants at least, a popular measure. In the total exclusion from the colony mar¬ ket, was it to last only for a few years, the greater part of our merchants used to fancy that they foresaw an entire stop to their trade ; the greater part of our master manu¬ facturers, the entire ruin of their business ; and the greater part of our workmen, an end of their employment. A rupture with any of our neighbours upon the continent, though likely too to occasion some stop or interrup¬ tion in the employments of some of all these different orders of people, is foreseen, how¬ ever, without any such general emotion. The blood, of which the circulation is stopt in some of the smaller vessels, easily dis¬ gorges itself into the greater, without occa¬ sioning any dangerous disorder ; but when it is stopt in any of the greater vessels, con¬ vulsions, apoplexy, or death, are the imme¬ diate and unavoidable consequences. If but one of those overgrown manufactures, which, by means either of bounties or of the mono¬ poly of the home and colony markets, have been artificially raised up to an unnatural height, finds some small stop or interruption in its employment, it frequently occasions a mutiny and disorder alarming to govern¬ ment, and embarrassing even to the deliber¬ ations of the legislature. How great, there¬ fore, would be the disorder and confusion, it was thought, which must necessarily be oc¬ casioned by a sudden and entire stop in the employment of so great a proportion of our principal manufacturers ? 2 Some moderate and gradual relaxation of the laws which give to Great Britain the exclusive trade to the colonies, till it is ren- danger. If, on the one hand, the mother country have no natural or acquired capacity for carrying on an intercourse with her colonies, it is hardly possible to suppose that restrictive regulations should ever be able to secure her any very extensive traffic with them ; and if, on the other hand, the mother country have any real capacity for carrying on the colonial trade, there is but little reason for thinking that the separation of all political connexion between her and her colonies will occasion any material diminu¬ tion of the commercial intercourse between them. See supplemental note on Colonial Policy. COLONIAL TOLICY. 273 Chap VJI. n I dered in a great measure free, seems to be the only expedient Vhich can, in all future times, deliver her from this danger, which can enable her or even force her to withdraw some part of her capital from this overgrown employment, and to turn it, though with less profit, towards other employments ; and which, by gradually diminishing one branch of her industry, and gradually increasing all the rest, can by degrees restore all the dif¬ ferent branches of it to that natural, health¬ ful, and proper proportion which perfect liberty necessarily establishes, and which per¬ fect liberty can alone preserve. To open the colony trade all at once to all nations, might not only occasion some transitory in- conveniency, but a great permanent loss to the greater part of those whose industry or capital is at present engaged in it. The sudden loss of the employment even of the ships which import the eighty-two thousand hogsheads of tobacco, which are over and above the consumption of Great Britain, might alone be felt very sensibly. Such are the unfortunate effects of all the regulations of the mercantile system ! They not only introduce very dangerous disorders into the state of the body politic, but disorders which it is often difficult to remedy, without occa¬ sioning, for a time at least, still greater dis¬ orders. In what manner, therefore, the colony trade ought gradually to be opened; what are the restraints which ought first, and what are those which ought last to be taken away ; or in what manner the natural system of perfect liberty and justice ought gradually to be restored, we must leave to the wisdom of future statesmen and legisla¬ tors to determine. Five different events, unforeseen and un- thought of, have very fortunately concurred to hinder Great Britain from feeling, so sensibly as it was generally expected she would, the total exclusion which has now taken place for more than a year (from the first of December 1774) from a very import¬ ant branch of the colony trade, that of the twelve associated provinces of North Ame¬ rica. First, those colonies, in preparing themselves for their non-importation agree¬ ment, drained Great Britain completely of all the commodities which were fit for their market; secondly, the extraordinary demand of the Spanish Flota has, this year, drained Germany and the North of many commodi¬ ties—linen in particular—which used to come into competition, even in the British market, with the manufactures of Great Britain ; thirdly, the peace between Russia and Tur¬ key has occasioned an extraordinary demand from the Turkey market, which, during the distress of the country, and while a Russian fleet was cruizing in the Archipelago, had been very poorly supplied; fourthly, the demand of the north of Europe for the manufactures of Great Britain has been increasing from year to year for some time past; and, fifthly, the late partition and con¬ sequential pacification of Poland, by opening the market of that great country, have this year added an extraordinary demand from thence to the increasing demand of the North. These events are all, except the fourth, in their nature transitory and accidental, and the exclusion from so important a branch of fhe colony trade, if unfortunately it should continue much longer, may still occasion some degree of distress. This distress, how¬ ever, as it will come on gradually, will be felt much less severely than if it had come on all at once ; and, in the mean time, the industry and capital of the country may find a new employment and direction, so as to prevent this distress from ever rising to any considerable height. The monopoly of the colony trade, there¬ fore, so far as it has turned towards that trade a greater proportion of the capital of Great Britain than what would otherwise have gone to it, has in all cases turned it from a foreign trade of consumption with a neighbouring, into one with a more distant country ; in many cases, from a direct foreign trade of consumption into a roundabout one; and in some cases, from all foreign trade of eon- sumption into a carrying trade. It has in all cases, therefore, turned it from a direction in which it would have maintained a greater quantity of productive labour, into one in which it can maintain a much smaller quan¬ tity. By suiting, besides, to one particular market only, so great a part of the industry and commerce of Great Britain, it has ren¬ dered the whole state of that industry and commerce more precarious and less secure than if their produce had been accommo¬ dated to a greater variety of markets. We must carefully distinguish between the effects of the colony trade and those of the monopoly of that trade. The former are always and necessarily beneficial; the latter always and necessarily hurtful. But the former are so beneficial, that the colony trade, though subject to a monopoly, and notwithstanding the hurtful effects of that monopoly, is still upon the whole beneficial, and greatly beneficial; though a good deal less so than it otherwise would be. Ihe effect of the colony trade in its natu¬ ral and free state is to open a great though distant market for such parts of the produce of British industry as may exceed the demand of the markets nearer home, of those of Eu¬ rope, and of the countries which lie round the Mediterranean sea. In its natural and free state, the colony trade, without drawing from those markets any part of the produce which had ever been sent to them, encourages Great Britain to increase the surplus continu¬ ally, by continually presenting new equi- 274 COLONIAL POLICY. Book IV. valents to be exchanged for it. In its natural and free state, the colony trade tends to in¬ crease the quantity of productive labour in Great Britain, but without altering in any respect the direction of that which had been employed there before. In the natural and free state of the colony trade, the competition of all other nations would hinder the rate of profit from rising above the common level either in the new market or in the new em¬ ployment. The new market, without draw¬ ing 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 con¬ stitute 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 profit both in the new market and in the new employment, draws produce from the old market and capital from the old employ¬ ment. To augment our share of the colony trade beyond what it otherwise would be, is the avowed purpose of the monopoly 7 . If our share of that trade were to be no greater with, than it would have been without the monopoly, there could have been no reason for establishing the monopoly. But what¬ ever forces into a branch of trade of which the returns are slower and more distant than those of the greater part of other trades, a greater proportion of the capital of any coun¬ try, than what of its own accord would go to that branch, necessarily renders the whole quantity of productive labour annually main¬ tained 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 coun¬ try, below what it would naturally rise to, and thereby diminishes their power of ac¬ cumulation. It not only hinders, at all times, their capital from maintaining so great a quantity of productive labour as it would otherwise maintain, but it hinders it from increasing so fast as it would otherwise increase, and consequently from maintain¬ ing a still greater quantity of productive labour. The natural good effects of the colony trade, however, more than counterbalance to Great Britain the bad effects of the mo¬ nopoly ; so that, monopoly and all together, that trade, even as it is carried on at pre¬ sent, is not only T advantageous, but greatly advantageous. The new market and the new employment which are opened by the colony trade are of much greater extent than that portion of the old market and of the old employment which is lost by the monopoly'. The new produce and the new capital which has been created, if one may say so, by the colony trade, maintain in Great Britain a greater quantity of productive labour than what can have been thrown out of employ¬ ment by the revulsion of capital from other trades of which the returns are more fre¬ quent. If the colony trade, however, even as it is carried on at present, is advantageous to Great Britain, it is not by means of the monopoly, but in spite of the monopoly. It is rather for the manufactured than for the rude produce of Europe that the colony trade opens a new market. Agriculture is the proper business of all new colonies; a business which the cheapness of land ren¬ ders more advantageous than any other. They abound, therefore, in the rude produce of land, and instead of importing it from other countries, they have generally a large surplus to export. In new colonies, agri¬ culture either draws hands from all other employments, or keeps them from going to any other employment. There are few hands to spare for the necessary and none for the ornamental manufactures. The greater part of the manufactures of both kinds they find it cheaper to purchase of other countries than to make for themselves. It is chiefly by encouraging the manufactures of Europe, that the colony trade indirectly encourages its agriculture. The manufacturers of Eu- rope, to whom that trade gives employment, constitute a new market for the produce of the land ; and the most advantageous of all markets—the home market for the corn and cattle, for the bread and butcher’s meat of Europe — is thus greatly extended by means of the trade to America. But that the monopoly of the trade of populous and thriving colonies is not alone sufficient to establish, or even to maintain manufactures in any country the examples of Spain and Portugal sufficiently demon¬ strate. Spain and Portugal were manufac¬ turing countries before they had any consider- able colonies. Since they had the richest and most fertile in the world, they have both ceased to be so. In Spain and Portugal, the bad effects of the monopoly, aggravated by other causes, have, perhaps, nearly overbalanced the natu¬ ral good effects of the colony trade. These causes seem to be, other monopolies of dif¬ ferent kinds: the degradation of the value of gold and siiver below what it is in most other countries; the exclusion from foreign markets by improper taxes upon export¬ ation, and the narrowing of the heme mar¬ ket, by still more improper taxes upon the transportation of goods from one part of the country to another; but above all, that ir¬ regular and partial administration of justice, which often protects the rich and powerful debtor from the pursuit of his injured cre¬ ditor, and which makes the industrious part of the nation afraid to prepare goods for the consumption of those haughty and great men. Chap. VII. COLONIAL POLICY. 275 to whom they dare not refuse to sell upon credit, and from whom they are altogether uncertain of repayment. In England, on the contrary, the natural good effects of the colony trade, assisted by other causes, have in a great measure con¬ quered the bad effects of the monopoly. These causes seem to be, the general liberty of trade, which, notwithstanding Some re¬ straints, is at least equal, perhaps superior, to what it is in any country; the liberty of exporting, duty free, almost all sorts of goods which are the produce of domestic in¬ dustry, to almost any foreign country ; and what, perhaps, is of still greater importance, the unbounded liberty of transporting them from any one part of our own country to any other, without being obliged to give any account to any public office, without being liable to question or examination of any kind; but above all, that equal and impar¬ tial administration of justice which renders 7 the rights of the meanest British subject respectable to the greatest, and which, by securing to every man the fruits of his own industry, gives the greatest and most effec¬ tual encouragement to every sort of industry. If the manufactures of Great Britain, how¬ ever, have been advanced, as they certainly have, by the colony trade, it has not been by means of the monopoly of that trade, but in spite of the monopoly. The effect of the monopoly has been, not to augment the quantity, but to alter the quality and shape of a part of the manufac¬ tures of Great Britain, and to accommodate to a market, from which the returns are slow and distant, what would otherwise have been accommodated to one from which the returns are frequent and near. Its effect has consequently been to turn a part of the capital of Great Britain from an employ¬ ment in which it would have maintained a greater quantity of manufacturing industry, to one in which it maintains a much smaller, and thereby to diminish, instead of increas¬ ing, the whole quantity of manufacturing industry maintained in Great Britain. The monopoly of the colony trade, there¬ fore, like all the other mean and malignant expedients of the mercantile system, de¬ presses the industry of all other countries, but chiefly that of the colonies, without in the least increasing, but on the contrary diminishing, that of the country in whose favour it is established. The monopoly hinders the capital of that country, whatever may at any particular time be the extent of that capital, from main¬ taining so great a quantity of productive la- . hour as it would otherwise maintain, and from affording so great a revenue to the indus¬ trious inhabitants as it would otherwise afford. But as capital can be increased only by savings from revenue, the monopoly, by hindering it from affording so great a revenue as it would otherwise afford, necessarily hinders it from increasing so fast as it would otherwise increase, and consequently from maintaining a still greater quantity of pro¬ ductive labour, and affording a still greater revenue to the industrious inhabitants of that country. One great original source of revenue, therefore, the w r ages of labour, the j monopoly must necessarily have rendered at all times less abundant than it otherwise would have been. By raising the rate of mercantile profit the monopoly discourages the improvement of land. The profit of improvement depends upon the difference between what the land actually produces, and what, by the applica¬ tion of a certain capital, it can be made to produce. If this difference affords a greater profit than what can be drawn from an equal capital in any mercantile employment, the improvement of land will draw capital from all mercantile employments. If the profit is less, mercantile employments will draw capital from the improvement of land. Whatever, therefore, raises the rate of mer¬ cantile profit, either lessens the superiority or increases the inferiority of the profit of improvement; and in the one case hinders capital from going to improvement, and in the other draws capital from it. But by discouraging improvement, the monopoly necessarily retards the natural increase of another great original source of revenue—the rent of land. By raising the rate of profit too, the monopoly necessarily keeps up the market rate of interest higher than it other¬ wise would be. But the price of land in proportion to the rent which it affords, the number of years’ purchase which is com¬ monly paid for it, necessarily falls as the rate of interest rises, and rises as the rate of interest falls. The monopoly, therefore, hurts the interest of the landlord two differ¬ ent ways ; by retarding the natural increase, first, of his rent, and secondly, of the price which he would get for his land in propor¬ tion to the rent which it affords. The monopoly, indeed, raises the rate of mercantile profit, and thereby augments somewhat the gain of our merchants. But as it obstructs the natural increase of capital, it tends rather to diminish than to increase the sum total of the revenue which the in¬ habitants of the country derive from the profits of stock ; a small profit upon a great capital generally affording a greater revenue than a great profit upon a small one. The monopoly raises the rate of profit ; but it hinders the sum of profit from rising so high as it otherwise would do. 1 1 It has been already shown that the rise in the rate of profit occasioned by the monopoly of the colony trade, and consequently the various effects ascribed to it by Dr. Smith, arc quite imaginary T 2 276 COLONIAL POLICY. Book IV. All the original sources of revenue, the wages of labour, the rent of land, and the profits of stock, the monopoly renders much less abundant than they otherwise would be. To promote the little interest of one little order of men in one country, it hurts the in¬ terest of all other orders of men in that coun¬ try, and of all men in all other countries. It is solely by raising the ordinary rate of profit that the monopoly either has proved or could prove advantageous to any one particular order of men. But besides all the bad effects to the country in general, which have already been mentioned as necessarily resulting from a high rate of profit, there is one more fatal, perhaps, than all these put together, but which, if we may judge from experience, is inseparably con¬ nected with it. The high rate of profit seems everywhere to destroy that parsimony which in other circumstances is natural to the character of the merchant. 1 When profits are high, that sober virtue seems to be superfluous, and expensive luxury to suit better the affluence of his situation. But the owners of the great mercantile capitals are necessarily the leaders and conductors of the whole industry of every nation, and their example has a much greater influence upon the manners of the whole industrious part of it than that of any other order of men. If his employer is attentive and par¬ simonious, the workman is very likely to be so too; but if the master is dissolute and 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 example which he sets him. Accumulation is thus prevented in the hands of all those who are naturally the most disposed to accumulate; and the funds destined for the maintenance of productive labour receive no augmentation from the revenue of those who ought naturally to augment them the most. The capital of the country, instead of increasing, gradually dwindles away, and the quantity of pro¬ ductive labour maintained in it grows every day less and less. Have the exorbitant profits of the merchants of Cadiz and Lisbon augmented the capital of Spain and Portu¬ gal? 2 Have they alleviated the poverty, have they promoted the industry, of those two beggarly countries? Such has been the tone of mercantile expense in those two trading cities, that those exorbitant profits, far from augmenting the general capital of the country, seem scarce to have been suffi- The monopoly has occasioned no such rise. If it had, it would be very difficult, indeed, to show that it was injurious. 1 Has it done this in the United States, New Holland or Van Diemen’s Land ? or in any country in which a high rate of profit is accompanied with security of property, and freedom of industry ? * It is very questionable, indeed, whether the cient to keep up the capitals upon which they were made. Foreign capitals are every day intruding themselves, if I mav say so, more and more into the trade of Cadiz and Lisbon. It is to expel those foreign capitals from a trade which their own grows every day more and more insuf¬ ficient for carrying on, that the Spaniards and Portuguese endeavour every day to straiten more and more the galling bands of their absurd monopoly. Compare the mer¬ cantile manners of Cadiz and Lisbon with those of Amsterdam, and you will be sen¬ sible how differently the conduct and cha¬ racter of merchants are affected by the high and by the low profits of stock. The mer¬ chants of London, indeed, have not yet generally become such magnificent lords as those of Cadiz and Lisbon; but neither are they in general such attentive and parsimo¬ nious burghers as those of Amsterdam. They are supposed, however, many of them, to be a good deal richer than the greater part of the former, and not quite so rich as many of the latter. But the rate of their profit is commonly much lower than that of the former, and a good deal higher than that of the latter. Light come light go, says the proverb; and the ordinary tone of expense seems everywhere to be regulated, not so much according to the real ability of spending, as to the supposed facility of get¬ ting 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 pur¬ pose of raising up a people of customers, may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shop¬ keepers. Such statesmen, and such states¬ men only, are capable of fancying that they will find some advantage in employing the blood and treasure of their fellow-citizens, to found and maintain such an empire. Say to a shopkeeper, Buy me a good estate, and I shall always buy my clothes at your shop, even though I should pay somewhat dearer than what I can have them for at other shops ; and you will not find him very for¬ ward to embrace your proposal. But should any other person buy you such an estate, the shopkeeper would be much obliged to your benefactor if he would enjoin you to buy all average nett profits realised by the Cadiz and Lisbon merchants, to whom Dr. Smith alludes, were reallv greater than those realised by the merchants of London ; though, if they were, the wretched insti¬ tutions and police of Spain would have prevented them from accumulating and employing their sur¬ pluses in the same way. Chap. VIT. COLONIAL POLICY. 277 your clothes at his shpp. England pur¬ chased for some of her subjects, who found themselves uneasy at home, a great estate in a distant country. The price, indeed, was very small, and instead of thirty years’ pur¬ chase, the ordinary price of land in the pre¬ sent times, it amounted to little more than the expense of the different equipments which made the first discovery, reconnoitred the coast, and took a fictitious possession of the country. The land was good and of great ex¬ tent and the cultivators having plenty of good ground to work upon, and being for some time at liberty to sell their produce where they pleased, became in the course of little more than thirty or forty years (between 1620 and 1660) so numerous and thriving a people, that the shopkeepers and other traders of England wished to secure to themselves the monopoly of their custom. Without pre¬ tending, therefore, that they had paid any part, either of the original purchase money, or of the subsequent expense of improvement, they petitioned the parliament that the cul¬ tivators of America might for the future be confined to their shop : first, for buying all the goods which they wanted from Europe; and, secondly, for selling all such parts of their own produce as those traders might find it convenient to buy, — for they did not find it convenient to buy every part of it. Some parts of it imported into England might have interfered, with some of the trades which they themselves carried on at home. Those particular parts of it, therefore, they were willing that the colonists should sell where they could; the farther off the bet¬ ter ; and upon that account proposed that their market should be confined to the coun¬ tries south of Cape Finisterre. A clause in the famous act of navigation established this truly shopkeeper proposal into a law. The maintenance of this monopoly has hitherto been the principal, or more properly perhaps the sole, end and purpose of the dominion which Great Britain assumes over her colonies. In the exclusive trade, it is supposed, consists the great advantage of provinces, which have never yet afforded either revenue or military force for the sup¬ port of the civil government, or the defence of the mother country. The monopoly is the principal badge of their dependency, and it is the sole fruit which has hitherto been gathered from that dependency. Whatever expense Great Britain has hitherto laid out in maintaining this dependency, has really been laid out in order to support this mono¬ poly. The expense of the ordinary peace establishment of the colonies amounted, be¬ fore the commencement of the present dis¬ turbances, to the pay of twenty regiments of foot; to the expense of the artillerv, stores, and extraordinary provisions with which it was necessary to supply them; and to the expense of a very considerable naval free which was constantly kept up, in order to guard, from the smuggling vessels of other nations, the immense coast of North America, and that of our West Indian islands. The whole expense of this peace establishment was a charge upon the revenue of Great Britain, and was, at the same time, the smallest part of what the dominion of the colonies has cost the mother country. If we would know the amount of the whole, we must add to the annual expense of this peace establishment the interest of the sums which, in consequence of her considering her colonies as provinces subject to her dominion, Great Britain has upon different occasions laid out upon their defence. We must add to it, in particular, the whole expense of the late war, and a great part of that of the war which preceded it. The late war was alto¬ gether a colony quarrel, and the whole ex¬ pense of it, in whatever part of the world it may have been laid out, whether in Germany or the East Indies, ought justly to be stated to the account of the colonies. It amounted to more than ninety millions sterling, in¬ cluding not only the new debt which was contracted, but the two shillings in the pound additional land tax, and the sums which were every year borrowed from the sinking fund. The Spanish war which began in 1739 was principally a colony quarrel. Its principal object was to prevent the search of the colony ships which carried on a contraband trade with the Spanish main. This whole expense is, in reality, a bounty which has been given in order to support a monopoly. The pre¬ tended purpose of it was to encourage the manufactures and to increase the commerce of Great Britain : but its real effect has been to raise the rate of mercantile profit, and to enable our 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 pro¬ portion of their capital than they otherwise would have done,— two events which, if a bounty could have prevented, it might per¬ haps have been very well worth while to give such a bounty. Under the present system of management, therefore, Great Britain derives nothing but loss from the dominion which she assumes over her colonies. To propose that Great Britain should vo¬ luntarily give up all authority over her colo¬ nies, and leave them to elect their own ma¬ gistrates, to enact their own laws, and to make peace and war as they might think proper, would be to propose such a measure as never was, and never will be, adopted by any nation in the world. No nation ever voluntarily gave up the dominion of any province, how troublesome soever it might be to govern it, and how small soever the T 3 5278 COLONIAL POLICY. Book IV. revenue which it afforded might be in pro¬ portion to the expense which it occasioned. Such sacrifices, though they might frequently be agreeable to the interest, are always mor¬ tifying to the pride of every nation ; and, what is perhaps of still greater consequence, they are always contrary to the private in¬ terest of the governing part of it, who would thereby be deprived of the disposal of many places of trust and profit, of many opportu¬ nities of acquiring wealth and distinction, which the possession of the most turbulent, and, to the great body of the people, the most unprofitable province seldom fails to afford. The most visionary enthusiast would scarce be capable of proposing such a mea¬ sure, with any serious hopes at least of its ever being adopted. If it was adopted, how¬ ever, Great Britain would not only be im¬ mediately freed from the whole annual ex¬ pense of the peace establishment of the colonies, but might settle with them such a treaty of commerce as would effectually secure to her a free trade, more advantageous to the great body of the people, though less so to the merchants than the monopoly which she at present enjoys. 1 By thus part¬ ing good friends, the natural affection of the colonies to the mother country, which, per¬ haps, our late dissensions have well nigh extinguished, would quickly revive. It might dispose them not only to respect, for whole centuries together, that treaty of commerce which they had concluded with us at part¬ ing, but to favour us in war as well as in trade, and, instead of turbulent and factious subjects, to become our most faithful, affec¬ tionate, and generous allies ; and the same sort of parental affection on the one side, and filial respect on the other, might-revive between Great Britain and her colonies, which used to subsist between those of an¬ cient Greece and the mother city from which they descended. In order to render any province advan¬ tageous to the empire to which it belongs, it ought to afford, in time of peace, a revenue to the public sufficient not only for defraying the whole expense of its own peace establish¬ ment, but for contributing its proportion to the support of the general government of the empire. Every province necessarily con¬ tributes, more or less, to increase the expense of that general government. If any parti¬ cular province, therefore, does not contribute its share towards defraying this expense, an unequal burden must be thrown upon some other part of the empire. The extraordin¬ ary 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 * It would be in every respect as advantageous to the merchants ; for no monopoly can ever raise their profits above the common level, and cannot, empire which its ordinary revenue docs in time of peace. That neither the ordinary nor extraordinary revenue which Great Bri¬ tain derives from her colonies bears this proportion to the whole revenue of the Bri¬ tish empire will readily be allowed. The monopoly, it has been supposed, indeed, by increasing the private revenue of the peo¬ ple of Great Britain, and thereby enabling them to pay greater taxes, compensates the deficiency of the public revenue of the colo¬ nies. But this monopoly, I have endea¬ voured to show, though a very grievous tax upon the colonies, and though it may increase the revenue of a particular order of meu in great Britain, diminishes instead of in¬ creasing, that of the great body of the peo¬ ple ; and consequently diminishes instead of increasing the ability of the great body of the people to pay taxes. The men, too, whose revenue the monopoly increases, con¬ stitute a particular order, which it is both absolutely impossible to tax beyond the pro¬ portion, of other orders, and extremely im¬ politic even to attempt to tax beyond that proportion, as I shall endeavour to show in the following book. No particular resource, therefore, can be drawn from this particular order. The colonies may be taxed either by their own assemblies, or by the parliament of Great Britain. That the colony assemblies can ever be so managed as to levy upon their constituents a public revenue sufficient, not only to main¬ tain at all times their own civil and military establishment, but to pay their proper pro¬ portion of the expense of the general govern¬ ment of the British empire, seems not very probable. It was a long time before even the parliament of England, though placed immediately under the eye of the sovereign, could be brought under such a system of management, or could be rendered suffi¬ ciently liberal in their grants for supporting the civil and military establishments even of their own country. It was only by distri¬ buting among the particular members of parliament a great part either of the offices, or of the disposal of the offices, arising from this civil and military establishment, that such a system of management could be es¬ tablished even with regard to the parliament of England. But the distance of the colony assemblies from the eye cf the sovereign, their number, their dispersed situation, and their various constitutions, would render it very difficult to manage them in the same manner, even though the sovereign had the same means of doing it; and those means are wanting. It would be absolutely im¬ possible to distribute among all the leading therefore, be of any real or lasting advantage to them. Chat. VII. COLONIAL POLICY. 279 ^ • members of all the colony assemblies such a share, either of the offices or of the disposal of the offices, arising from the general go¬ vernment of the British empire, as to dispose them to give up their popularity at home, and to tax their constituents for the support of th&t general government, of which almost the whole emoluments were to be divided among people who were strangers to them. The unavoidable ignorance of administra¬ tion, besides, concerning the relative import¬ ance of the different members of those dif¬ ferent assemblies, the offences which must frequently be given, the blunders which must constantly be committed in attempting to manage them in this manner, seems to ren¬ der such a system of management altogether impracticable with regard to them. The colony assemblies, besides, cannot be supposed the proper judges of what is ne¬ cessary for the defence and support of the wnole empire. The care of that defence and support is not intrusted to them. It is not their business, and they have no regular means of information concerning it. The assembly of a province, like the vestry of a parish, may judge very properly concerning the affairs of its own particular district, but can have no proper means of judging concerning those of the whole empire. It cannot even judge properly concerning the proportion which its own province bears to the whole empire ; or concerning the rela¬ tive degree of its wealth and importance, compared with the other provinces ; because those other provinces are not under the inspection and superintendency of the as¬ sembly 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 in¬ spects and superintends the affairs of the whole empire. It has been proposed, accordingly, that the colonies should be taxed by requisition, the parliament of Great Britain determining the sum which each colony ought to pay, and the provincial assembly assessing and levying it in the way that suited best the circumstances of the province. What con¬ cerned the whole empire would in this way be determined by the assembly which in¬ spects and superintends the affairs of the whole empire; and the provincial affairs of each colony might still be regulated by its own assembly. Though the colonies should in this case have no representatives in the British parliament, yet, if we may judge by experience, there is no probability that the parliamentary requisition would be unreasonable. The parliament of England has not upon any occasion shown the smallest disposition to overburden those parts of the empire which are not represented in par¬ liament. The islands of Guernsey and Jersey, without any means of resisting the authority of parliament, are more lightly taxed than any part of Great Britain. Par¬ liament, in attempting to exercise its sup¬ posed right, whether well or ill grounded, of taxing the colonies, has never hitherto demanded of them any thing which even approached to a just proportion to what was paid by their fellow-subjects at home. If the contribution of the colonies, besides, was to rise or fall in proportion to the rise or fall of the land tax, parliament could not tax them without taxing at the same time its own constituents, and the colonies might in this case be considered as virtually repre¬ sented in parliament. Examples are not wanting of empires in which all the different provinces are not taxed, if I may be allowed the expression, in one mass; but in which the sovereign regulates the sum which each province ought to pay, and in some provinces assesses and levies it as he thinks proper ; while in others he leaves it to be assessed and levied as the respective states of each province shall de¬ termine. In some provinces of France the king not only imposes what taxes he thinks proper, but assesses and levies them in the way he thinks proper. From others he de¬ mands a certain sum, but leaves it to the states of each province to assess and levy that sum as they think proper. According to the scheme of taxing by requisition, the parliament of Great Britain would stand nearly in the same situation towards the colony assemblies, as the king of France does towards the states of those provinces which still enjoy the privilege of having states.of their own, the provinces of France which are supposed to be the best go¬ verned. But though, according to this scheme, the colonies could have no just reason to fear that their share of the public burdens should ever exceed the proper proportion to that of their fellow-citizens at home, Great Britain might have just reason to fear that it never would amount to that proper proportion. The parliament of Great Britain has not for some time past had the same established authority in the colonies which the French king has in those provinces of France which still enjoy the privilege of having states of their own. The colony assemblies, if they were not very favourably disposed (and un¬ less more skilfully managed than they ever have been hitherto, they are not very likely to be so), might still find many pretences for evading or rejecting the most reasonable requisitions of parliament. A French war breaks out. we shall suppose ; ten millions must immediate]v be raised, in erdef dc* T 4 £80 COLONIAL POLICY. Book IV. fend the seat of the empire. This sum must be borrowed upon the credit of some par¬ liamentary fund mortgaged for paying the interest. Part of this fund parliament pro¬ poses to raise by a tax to be levied in Great Britain, and part of it by a requisition to all the different colony assemblies of America and the West Indies. Would people readily advance their money upon the credit of a fund which partly depended upon the good humour of all those assemblies, far distant from the seat of the war, and sometimes, perhaps, thinking themselves not much con¬ cerned in the event of it ? Upon such a fund no more money would probably be advanced than what the tax to be levied in Great Britain might be supposed to answer for. The whole burden of the debt con¬ tracted on account of the war would in this manner fall, as it always has done hitherto, upon Great Britain; upon a part of the empire, and not upon the whole empire. Great Britain is, perhaps, since the world began, the only state which, as it has ex¬ tended its empire, has only increased its expense without once augmenting its re¬ sources. Other states have generally dis¬ burdened themselves upon their subject and subordinate provinces of the most consider¬ able part of the expense of defending the empire. Great Britain has hitherto suffered her subject and subordinate provinces to disburden themselves upon her of almost this whole expense. In order to put Great Britain upon a footing of equality with her own colonies, which the law has hitherto supposed to be subject and subordinate, it seems necessary, upon the scheme of taxing them by parliamentary requisition, that par¬ liament should have some means of rendering its requisitions immediately effectual, in case the colony assemblies should attempt to evade or reject them; and what those means are, it is not very easy to conceive, and it has not yet been explained. Should the parliament of Great Britain, at the same time, be ever fully established in the right of taxing the colonies, even inde¬ pendent of the consent of their own as¬ semblies, the importance of those assemblies would from that moment be at an end, and with it that of all the leading men of British America. Men desire to have some share in the management of public affairs chiefly on account of the importance which it gives them. Upon the power which the greater part of the leading men, the natural aristocracy of every country, have of pre¬ serving or defending their respective import¬ ance, depends the stability and duration of every system of free government. In the attacks which those leading men are con¬ tinually making upon the importance of one another, and in the defence of their own, consists the whole play of domestic faction and ambition. The leading men of America, like those of all other countries, desire to preserve their own importance. They feel, or imagine, that if their assemblies, which they are fond of calling parliaments, and of considering as equal in authority to the parliament of Great Britain, should be so far degraded as to become the humble ministers and executive officers of that parliament, the greater part of their own importance would be at an end. They have rejected, therefore, the proposal of being taxed by parliamentary requisition, and like other ambitious and high-spirited men, have rather chosen to draw the sword in defence of their own im¬ portance. Towards the declension of the Roman republic, the allies of Rome, who had borne the principal burden of defending the state and extending the empire, demanded to be admitted to all the privileges of Roman citizens. Upon being refused, the social war broke out. During the course of that war Rome granted those privileges to the greater part of them, one by one, and in proportion as they detached themselves from the gene¬ ral confederacy. The parliament of Great Britain insists upon taxing the colonies; and they refuse to be taxed by a parliament in which they are not represented. If to each colony, which should detach itself from the general confederacy Great Britain should allow such a number of representatives as suited the proportion of what it contributed to the public revenue of the empire, in consequence of its being subjected to the same taxes, and in compensation admitted to the same freedom of trade with its fellow- subjects at home; the number of its repre¬ sentatives to be augmented as the proportion of its contribution might afterwards augment; a new method of acquiring importance, a new and more dazzling object of ambition would be presented to the leading men of each colony. Instead of piddling for the little prizes which are to be found in what may be called the paltry raffle of colony faction, they might then hope, from the pre¬ sumption which men naturally have in their own ability and good fortune, to draw some of the great prizes which sometimes come from the wheel of the great state lottery ot British politics. Unless this or some othei method is fallen upon, and there seems to be none more obvious than this, of preserving the importance and of gratifying the ambition of the leading men of America, it is not very probable that they will ever voluntarily sub¬ mit to us; and we ought to consider that the blood which must be shed in forcing them to do so, is, every drop of it, the blood either of those who are, or of those whom we wish to have for our fellow-citizens. They are very weak who flatter themselves that, in the state to, which things have coma Chap. VII. COLONIAL POLICY. 281 L | I r i L I our colonies will be easily conquered by force alone. The persons who now govern the resolutions of what they call their con¬ tinental congress, feel in themselves at this moment a degree of importance which, perhaps, the greatest subjects in Europe scarce feel. From shopkeepers, tradesmen, and attorneys, they are become statesmen and legislators, and are employed in con¬ triving a new form of government for an extensive empire, which, they flatter them¬ selves, will become, and which, indeed, seems very likely to become, one of the greatest and most formidable that ever was in the world. Five hundred different people, per¬ haps, who in different ways act immediately under the continental congress; and five hundred thousand, perhaps, who act under those five hundred, all feel in the same manner a proportionable rise in their own importance. Almost every individual of the governing party in America, fills, at present, in his own fancy, a station superior, not only to what he had ever filled before, but to what he had ever expected to fill; and unless some new object of ambition is presented either to him or to his leaders, if he has the ordinary spirit of a man, he will die in defence of that station. It is a remark of the president Henault, that we now read with pleasure the account of many little transactions of the Ligue, which when they happened were not per¬ haps considered as very important pieces of news. But every man then, says he, fancied himself of some importance; and the innu¬ merable memoirs which have come down to us from those times, were, the greater part of them, written by people who took plea¬ sure in recording and magnifying events in which, they flattered themselves, they had been considerable actors. How obstinately the city of Paris upon that occasion de¬ fended itself, what a dreadful famine it sup¬ ported rather than submit to the best and afterwards to the most beloved of all the French kings, is well known. The greater part of the citizens, or those who governed the greater part of them, fought in defence of their own importance, which they foresaw was to be at an end whenever the ancient govern¬ ment should be re-established. Our colo¬ nies, unless they can be induced to consent to a union, are very likely to defend themselves against the best of all mother countries, as obstinately as the city of Paris did against one of the best of kings. The idea of representation was unknown in ancient times. When the people of one state were admitted to the right of citizenship in another, they had no other means of exer¬ cising that right but by coming in a body to vote and deliberate with the people of that other state. The admission of the greater part of the inhabitants of Italy to the privi¬ leges of Roman citizens, completely ruined the Roman republic. It was no longer pos¬ sible to distinguish between who was and who was not a Roman citizen. No tribe could know its own members. A rabble of any kind could be introduced into the assemblies of the people, could drive out the real citi¬ zens, and decide upon the affairs of the re¬ public as if they themselves had been such. But though America were to send fifty or sixty new representatives to parliament, the doorkeeper of the House of Commons could not find any great difficulty in distinguishing between who was and who was not a member. Though the Roman constitution, therefore, was necessarily ruined by the union of Rome with the allied states of Italy, there is not the least probability that the British constitution would be hurt by the union of Great Britain her colonies. That con¬ stitution, on the contrary, would be com. pleted by it, and seems to be imperfect without it. The assembly which deliberates and decides concerning the affairs of every part of the empire, in order to be properly informed, ought certainly to have represent¬ atives from ever} part of it. That this union, however, could be easily effectuated, or that difficulties and great difficulties might not occur in the execution, I do not pretend. I have yet heard of none, however, which ap¬ pear insurmountable. The princioal per¬ haps arise, not from the nature of things, but from the prejudices and opinions of the peo¬ ple both on this and on the other side of the Atlantic. We, on this side the water, are afraid lest the multitude of American representatives should overturn the balance of the constitu¬ tion, and increase too much either the influ¬ ence of the crown on the one hand, or the force of the democracy on the other. But if the number of American representatives were to be in proportion to the produce of Ameri¬ can taxation, the number of people to be managed would increase exactly in propor¬ tion to the means of managing them ; and the means of managing, to the number of people to be managed. The monarchical and de- mocratical parts of the constitution would, after the union, stand exactly in the same degree of relative force with regard to one another as they had done before. The people on the other side of the water, are afraid lest their distance from the seat of government might expose them to many op¬ pressions. But their representatives in par¬ liament, of which the number ought from the first to be considerable, would easily be able to protect them from all oppression. The distance could not much weaken the depend¬ ency of the representative upon the constitu¬ ent, and the former would still feel that he owed his seat in parliament, and all the consequence which he derived from it, to the 282 COLONIAL POLICY. Bock IV. good will of the latter. It would be the interest of the former, therefore, to cultivate that good will by complaining, with all the authority of a member of the legislature, of every outrage which any civil or military officer might be guilty of in those remote parts of the empire. The distance of America from the seat of government, besides, the na¬ tives of that country might flatter themselves with some appearance of reason too, would not be of very long continuance. Such has hitherto been the rapid progress of that country in wealth, population, and improve¬ ment, that in the course of little more than a century, perhaps the produce of American might exceed that of British taxation. The seat of the empire would then naturally remove itself to that part of the empire which contributed most to the general defence and support of the whole. The discovery of America, and that of a passage to the East Indies by the Cape of Good Hope, are the two greatest and most important events recorded in the history of mankind. Their consequences have already been very great: but, in the short period of between two and three centuries which has elapsed since these discoveries were made, it is impossible that the whole extent of their consequences can have been seen. What benefits or what misfortunes to mankind may hereafter result from those great events, no human wisdom can foresee. By uniting, in some measure, the most distant parts of the world, by enabling them to relieve one another’s wants, to increase one another’s enjoyments, and to encourage one another’s * industry, their general tendency would seem to be beneficial. To the natives, however, both of the East and West Indies, all the commercial benefits which can have resulted from those events have been sunk and lost in the dreadful misfortunes which they have occasioned. These misfortunes, however, seem to have arisen rather from accident than from any thing in the nature of those events themselves. At the particular time when these discoveries were made, the superiority of force happened to be so great on the side of the Europeans, that they were enabled to commit with impunity every sort of injus¬ tice in those remote countries. Hereafter, perhaps, the natives of those countries may grow stronger, or those of Europe may grow weaker, and the inhabitants of all the differ¬ ent quarters of the world may arrive at that equality of courage and force which, by in¬ spiring mutual fear, can alone overawe the injustice of independent nations into some sort of respect for the rights of one another. But nothing seems more likely to establish this equality of force than that mutual com¬ munication of knowledge and of all sorts of improvements which an extensive commerce from all countries to all countries natu¬ rally, or rather necessarily, carries along with it. In the mean time, one of the principal effects of those discoveries has been to raise the mercantile system to a degree of splen¬ dour and glory which it could never other¬ wise have attained to. It is the object of that system to enrich a great nation rather by trade and manufactures than by the im¬ provement and cultivation of land, rather by the industry of the towns than by that of the country. But, in consequence of those discoveries, the commercial towns of Europe, instead of being the manufacturers and car¬ riers for but a very small part of the world, (that part of Europe which is washed by the Atlantic ocean, and the countries which lie round the Baltic and Mediterranean seas,) have now become the manufacturers for the numerous and thriving cultivators of America, and the carriers, and in some respects the manufacturers too, for almost all the different nations of Asia, Africa, and America. Two new worlds have been opened to their industry, each of them much greater and more extensive than the old one, and the market of one of them growing still greater and greater every day. The countries which possess the colonies of America, and which trade directly to the East Indies, enjoy, indeed, the whole show and splendour of this great commerce. Other countries, however, notwithstanding all the invidious restraints by which it is meant to exclude them, frequently enjoy a greater share of the real benefit of it. The colonies of Spain and Portugal, for example, give more real encouragement to the indus¬ try of other countries than to that of Spain and Portugal. In the single article of linen alone the consumption of those colo¬ nies amounts, it is said, but I do not pre¬ tend to warrant the quantity, to more than three millions sterling a year. But this great consumption is almost entirely sup¬ plied by France, Flanders, Holland, and Germany. Spain and Portugal furnish but a small part of it. The capital which sup- • plies the colonies with this great quantity of linen is annually distributed among, and furnishes a revenue to, the inhabitants of those other countries. The profits of it only are spent in Spain and Portugal, where they help to support the sumptuous profusion of the merchants of Cadiz and Lisbon. Even the regulations by which each nation endeavours to secure to itself the ex¬ clusive trade of its own colonies, are fre¬ quently more hurtful to the countries in favour of which they are established than to those against which they are established. The unjust oppression of the industry of other countries falls back if I may say so, COLONIAL POLICY. 283 Chap. VII. ? 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 which he destines for the American market to Lon¬ don, 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 America, nor bring back the other directly from thence. By this restraint he is probably obliged to sell the one somewhat cheaper, and to buy the other somewhat dearer, than he otherwise might have done; and his profits are probably somewhat abridged by means of it. In this trade, however, between Hamburgh and London, he certainly receives the returns of his capital much more quickly than he could possibly have done in the direct trade to America, even though we should sup¬ pose, what is by no means the case, that the payments of America were as punctual as those of London. In the trade, therefore, to which those regulations confine the mer¬ chant of Hamburgh, his capital can keep in constant employment a much greater quan¬ tity of German industry than it possibly could have done in the trade from which he is excluded. Though the one employment, therefore, may to him perhaps be less pro¬ fitable than the other, it cannot be less advantageous to his country. It is quite otherwise with the employment into which the monopoly naturally attracts, if I may say so, the capital of the London merchant. That employment may, perhaps, be more profitable to him than the greater part of other employments, but on account of the slowness of the returns, it cannot be more advantageous to his country. After all the unjust attempts, therefore, of every country in Europe to engross to itself the whole advantage of the trade of its own colonies, no country has yet been able to engross to itself any thing but the expense of supporting in time of peace and of de¬ fending in time of war the oppressive author¬ ity which it assumes over them. The in- conveniencies resulting from the possession of its colonies every country has engrossed to itself completely. The advantages result¬ ing from their trade it has been obliged to share with many other countries. At first sight, no doubt, the monopoly of the great commerce of America naturally seems to be an acquisition of the highest value. To the undiscerning eye of giddy ambition, it naturally presents itself amidst the confused scramble of politics and war, as a very dazzling object to fight for. The dazzling splendour of the object, however, the immense greatness of the commerg*, is the very quality which renders the mono¬ poly of it hurtful, or which makes one employment — in its own nature necessarily less advantageous to the country than the greater part of other employments — absorb a much greater proportion of capital of the country than what would otherwise have gone to it. The mercantile stock of everv countrv, it has been shown in the second book, natu¬ rally seeks, if one may say so, the employ¬ ment most advantageous to that country. If it is employed in the carrying trade, the country to which it belongs becoxnes the emporium of the goods of all the countries whose trade that stock carries on. But the owner of that stock necessarily wishes to dispose of as great a part of those goods as he can at home. He thereby saves himself the trouble, risk, and expense of export¬ ation, and he will upon that account be glad to sell them at home, not only for a much smaller price, but with somewhat a smaller profit than he might expect to make by sending them abroad. He naturally, therefore, endeavours as much as he can to turn his carrying trade into a foreign trade of consumption. If his stock again is em¬ ployed in a foreign trade of consumption, he will, for the same reason, be glad to dis¬ pose of at home as great a part as he can of the home goods, which he collects in order to export to some foreign market, and he will thus endeavour, as much as he can, to turn his foreign trade of consumption into a home trade. The mercantile stock of every country naturally courts in this manner the near, and shuns the distant employment; naturally courts the employment in which the returns are frequent, and shuns that in which they are distant and slow; naturally courts the employment in which it can maintain the greatest quantity of productive labour in the countrv to which it belongs, or m which its owner resides, and shuns that in which it can maintain there the smallest quantity. It naturally courts the employment which in ordinary cases is most advantageous, and shuns that which in or¬ dinary cases is least advantageous to that countrv. •> But if in any of those distant employ¬ ments, which in ordinary cases are less ad¬ vantageous to the country, the profit should happen to rise somewhat higher than what is sufficient to balance the natural preference which is given to nearer employments, this superiority of profit will draw stock from those nearer employments, till the profits of all return to their proper level. This su¬ periority of profit, however, is a proof that, in the actual circumstances of the society, those distant employments are somewhat understocked in proportion to other employ¬ ments, and that the stock of the society is not distributed in the properest manner among all the different employments carries 284 COLONIAL POLICY. Book IV. on in it. It is a proof that something is either bought cheaper or sold dearer than it ought to be, and that some particular class of citizens is more or less oppressed, either by paying more or by getting less than what is suitable to that equality which ought to take place, and which naturally does take place among all the different classes of them. Though the same capital never will maintain the same quantity of productive labour in a distant as in a near employment, yet a dis¬ tant employment may be as necessary for the welfare of the society as a near one; the goods which the distant employment deals in being necessary, perhaps, for carrying on many of the nearer employments. But if the profits of those who deal in such goods are above their proper level, those goods will be sold dearer than they ought to be, or somewhat above their natural price, and all those engaged in the nearer employments will be more or less oppressed by this high price. Their interest, therefore, in this case requires that some stock should be with¬ drawn from those nearer employments, and turned towards that distant one, in order to reduce its profits to their proper level, and the price of the go.ods which it deals in to their natural price. In this extraordinary case, the public interest requires that some stock should be withdrawn from those em¬ ployments which in ordinary cases are more advantageous, and turned towards one which in ordinary cases is less advantageous to the public : and in this extraordinary case, the natural interests and inclinations of men co¬ incide as exactly with the public interest as in all other ordinary cases, and lead them to withdraw stock from the near, and to turn it towards the distant employment. It is thus that the private interests and passions of individuals naturally dispose them to turn their stock towards the employments which in ordinary cases are most advantage¬ ous to the society. But if from this natural preference they should turn too much of it towards those employments, the fall of profit in them and the rise of it in all others im¬ mediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests and pas¬ sions of men naturally lead them to divide and distribute the stock of every society, among all the different employments carried on in it, as nearly as possible in the propor¬ tion which is most agreeable to the interest of the whole society . 1 All the different regulations of the mer¬ cantile system necessarily derange more or less this natural and most advantageous dis¬ tribution of stock. But those which concern 1 Capitals are uniformly attracted to those em¬ ployments in which it is supposed they will, all things considered, yield the largest nett profits : and, how- the trade to America and the East Indies derange it perhaps more than any other ; be¬ cause the trade to those two great continents absorbs a greater quantity of stock than any two other branches of trade. The regu¬ lations, however, by which this derangement is effected in those two different branches ot trade are not altogether the same. Mono¬ poly is the great engine of both ; but it is a different sort of monopoly. Monopoly of one kind or another, indeed, seems to be the sole engine of the mercantile system. In the trade to America every nation en¬ deavours to engross as much as possible the whole market of its own colonies, by fairly excluding all other nations from any direct trade to them. During the greater part of the sixteenth century, the Portuguese en¬ deavoured to manage the trade to the East Indies in the same manner, by claiming the sole right of sailing in the Indian seas, on account of the merit of having first found out the road to them. The Dutch still con¬ tinue to exclude all other European nations from any direct trade to their spice islands. Monopolies of this kind are evidently estab¬ lished against all other European nations, who are thereby not only excluded from a trade to which it might be convenient for them to turn some part of their stock, but are obliged to buy the goods which that trade deals in somewhat dearer, than if they could import them themselves directly from the countries which produce them. But since the fall of the power of Portu¬ gal, no European nation has claimed the exclusive right of sailing in the Indian seas, of which the principal ports are now open to the ships of all European nations. Except in Portugal, however, and within these few years in France, the trade to the East Indies has in every European country been sub¬ jected to an exclusive company. Monopo¬ lies of this kind are properly established against the very nation which erects them. The greater part of that nation are thereby not only excluded from a trade to which it might be convenient for them to turn some part of their stock, but are obliged to buy the goods which that trade deals in, some¬ what dearer than if it was open and free to all their countrymen. Since the establish- ment of the English East India company, for example, the other inhabitants of Eng¬ land, over and above being excluded from the trade, must have paid in the price of the East India goods which'they have consumed, not only for all the extraordinary profits which the company may have made upon those goods in consequence of their mono¬ poly, but for all the extraordinary waste ever much they may differ in other respects, such employments as yield the same nett profits are equally advantageous to the public. COLONIAL POLICY. 283 Chap. VII. I * which the fraud and abuse, inseparable from the management of the affairs of so great a company, must necessarily have occasioned. The absurdity of this second kind of mono- i poly, therefore, is much more manifest than that of the first. Both these kinds of monopolies derange more or less the natural distribution of the stock of the society; but they do not always derange it in the same way. Monopolies of the first kind always attract to the particular trade in which they are es¬ tablished, a greater proportion of the stock of the society than what would go to that trade of its own accord. Monopolies of the second kind may some¬ times attract stock towards the particular trade in which they are established, and sometimes repel it from that trade according to different circumstances. In poor coun¬ tries they naturally attract towards that trade more stock than would otherwise go to it. In rich countries they naturally repel from it a good deal of stock which would otherwise go to it. Such poor countries as Sweden and Den¬ mark, for example, would probably have never sent a single ship to the East Indies, had not the trade been subjected to an ex¬ clusive company. The establishment of such a company necessarily encourages adventur¬ ers. Their monopoly secures them against all competitors in the home market, and they have the same chance for foreign mar¬ kets with the traders of other nations. Their monopoly shows them the certainty of a great profit upon a considerable quantity of goods, and the chance of a considerable profit upon a great quantity. Without such extraor¬ dinary encouragement, the poor traders of such poor countries would probably never have thought of hazarding their small capi¬ tals in so very distant and uncertain an ad¬ venture as the trade to the East Indies must naturally have appeared to them. Such a rich country as Holland, on the contrary, would probably, in the case of a free trade, send many more ships to the East Indies than it actually does. The limited stock of the Dutch East India com¬ pany probably repels from that trade many great mercantile capitals which would other¬ wise go to it. The mercantile capital of Holland is so great that it is, as it were, continually overflowing, sometimes into the public funds of foreign countries, sometimes into loans to private traders and adventurers of foreign countries, sometimes into the most roundabout foreign trades of consumption, and sometimes into the carrying trade. All i 1 This is incorrectly stated The commerce be¬ tween Portugal and India was at no time open to all i the subjects of the former. With the exception of a short period, when it was placed in the hands of two exclusive companies, it was conducted under a regal monopoly, by means of a licensed number of register near employments being completely filled up, all the capital which can be placed in them with any tolerable profit being already placed in them, the capital of Holland ne¬ cessarily flows towards the most distant em¬ ployments. The trade to the East Indies, if it were altogether free, would probably ab¬ sorb the greater part of this redundant capi¬ tal. The East 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 distri¬ bution of stock is necessarily hurtful to the society in which it takes place ; whether it be by repelling from a particular trade the stock which would otherwise go to it, or by attracting towards a particular trade that which would not otherwise come to it. If> without any exclusive company, the trade of Holland to the East Indies would be greater than it actually is, that country must suffer a considerable loss by part of its capital being excluded from the employment most convenient for that part. And in the same manner, if, without an exclusive company, the trade of Sweden and Denmark to the East Indies would be less than it actually is, or, what perhaps is more probable, would not exist at all, those two countries must likewise suffer a considerable loss by part of their capital being drawn into an employ¬ ment which must be more or less unsuitable to their present circumstances. Better for them, perhaps, in their present circumstances, to buy East India goods of other nations, even though they should pay somewhat dearer, than to turn so great a part of their small capital to so very distant a trade, in which the returns are so very slow, in which that capital can maintain so small a quantity of productive labour at home, where pro¬ ductive labour is so much wanted, where so little is done, and where so much is to do. Though without an exclusive company, therefore, a particular country should not be able to carry on any direct trade to the East Indies, it will not from thence follow that such a company ought to be established there, but only that such a country ought not in these circumstances to trade directly to the East Indies. That such companies are not in general necessary for carrying on the East India trade, is sufficiently demon¬ strated by the experience of the Portuguese, who enjoyed almost the whole of it for more than a century together, without any exclu¬ sive company . 1 ships, nearly in the same way as the intercourse for¬ merly carried on between Spain and her South American colonies. The internal trade of India,was in a great measure left to individuals by the king ; but it was made a job of by the governors, and other official personages, who sold licenses for carrying it 28(5 COLONIAL POLICY. Book. IV. No private merchant, it has been said, could well have capital sufficient to main¬ tain factors and agents in the different ports of the East Indies, in order to provide goods for the ships which he might occasionally send thither; and yet, unless he was able to do this, the difficulty of finding a cargo might frequently make his ships lose the season for returning, and the expense of so long a delay would not only eat up the whole profit of the adventure, but frequently occasion a very considerable loss. This ar¬ gument, however, if it proved any thing at all, would prove that no one great branch of trade could be carried on without an exclu¬ sive company, which is contrary to the experience of all nations. There is no great branch of trade in which the capital of any one private merchant is sufficient for carrying on all the subordinate branches which must be carried on, in order to carry on the principal one. But when a nation is ripe for any great branch of trade, some merchants naturally turn their capitals towards the principal, and some towards the subordinate, branches of it; and though all the different branches of it are in this manner carried on, yet it very seldom happens that they are all carried on by the capital of one private merchant. If a nation, therefore, is ripe for the East India trade, a certain por¬ tion of its capital will naturally divide itself among all the different branches of that trade. Some of its merchants will find it for their interest to reside in the East Indies, and to employ their capitals there in pro¬ viding goods for the ships which are to be sent out by other merchants who reside in Europe. The settlements which different European nations have obtained in the East Indies, if they were taken from the exclusive companies to which they at present belong, and put under the immediate protection of the sovereign, would render this residence both safe and easy, at least to the merchants of the particular nations to whom those settlements belong. If at any particular time that part of the capital of any country which of its own accord tended and in¬ clined, if I may say so, towards the East India trade, was not sufficient for carrying on all those different branches of it, it would be a proof that, at that particular time, that country was not ripe for that trade, and that it would do better to buy for some time, even at a higher price, from other European nations, the East India goods it had occasion for, than to import them itself directly from the East Indies. What it might lose by the high price of those goods could seldom be equal to the loss which it would sustain by the distraction of a large portion of its on to any adventurer, however worthless, who could afford to purchase them. See M'Pherson’s Cora- capital from other employments more neces¬ sary, or more useful, or more suitable to its circumstances and situation, than a direct trade to the East Indies. Though the Europeans possess many considerable settlements both upon the coast of Africa and in the East Indies they have not yet established in either of those coun¬ tries such numerous and thriving colonies as those in the islands and continent of America. Africa, however, as well as several of the countries comprehended under the general name of the East Indies, are inhabited by barbarous nations. But those nations were by no means so weak and defenceless as the miserable and helpless Americans ; and, in proportion to the na¬ tural fertility of the countries which they inhabited, they were besides much more populous. The most barbarous nations either of Africa or of the East Indies were shepherds; even the Hottentots were so. But the natives of every part of America, except Mexico and Peru, were only hunters; and the difference is very great between the number of shepherds and that of hunters whom the same extent of equally fertile territory can maintain. In Africa and the East Indies, therefore, it was more difficult to displace the natives, and to extend the European plantations over the greater part of the lands of the original inhabitants. The genius of exclusive companies, besides, is unfavourable, it has already been observed, to the growth of new colonies, and has probably been the principal cause of the little progress which they have made in the East Indies. The Portuguese carried on the trade both to Africa and the East Indies without any exclusive companies, and their settlements at Congo, Angola, and Benguela on the coast of Africa, and at Goa in the East Indies, though much depressed by superstition and every sort of bad govern¬ ment, yet bear some faint resemblance to the colonies of America, and are partly inhabited by Portuguese who have been established there for several generations . 1 The Dutch settlements at the Cape of Good Hope and at Batavia are at present the most considerable colonies which the Eu¬ ropeans have established either in Africa or in the East Indies, and both these settlements are peculiarly fortunate in their situations. The Cape of Good Hope was inhabited by a race of people almost as barbarous and quite as incapable of defend¬ ing themselves as the natives of America. It is besides the half-way house, if one may say so, between Europe and the East Indies, at which almost every European ship makes some stay both in going and returning. The merce with India, p. 348, and Mickle’s Lusiad. vol. i. p. 234. 1 See previous n^e. COLONIAL POLICY. 287 Chap. VII. supplying of those ships with every sort of fresh provisions, with fruit and sometimes with wine, affords alone a very extensive market for the surplus produce of the colonists. What the Cape of Good Hope is between Europe and every part of the East Indies, Batavia is between the principal countries of the East Indies. It lies upon the most frequented road from Indostan to China and Japan, and is nearly about mid¬ way upon that road. Almost all the ships, too, that sail between Europe and China touch at Batavia; and it is, over and above all this, the centre and principal mart of what is called the country trade of the East Indies; not only of that part of it which is carried on by Europeans, but of that which is carried on by the native Indians; and vessels navigated by the inhabitants of China and Japan, of Tonquin, Malacca, Cochin- China, and the island of Celebes, are fre¬ quently to be seen in its port. Such ad¬ vantageous situations have enabled those two colonies to surmount all the obstacles which the oppressive genius of an exclusive company may have occasionally opposed to their growth. They have enabled Batavia to surmount the additional disadvantage of perhaps the most unwholesome climate in the world. The English and Dutch companies, though they have established no considerable colonies, except the two above mentioned, have both made considerable conquests in the East Indies. But in the manner in which they both govern their new subjects, the natural genius of an exclusive company has shown itself most distinctly. In the spice islands the Dutch are said to burn all the spiceries which a fertile season produces beyond what they expect to dispose of in Europe with such a profit as they think suf¬ ficient. In the islands where they have no settlements, they give a premium to those who collect the young blossoms and green leaves of the clove and nutmeg trees which naturally grow there, but which this savage policy has now, it is said, almost completely extirpated. Even in the islands where they have settlements they have very much re¬ duced, it is said, the number of those trees. If the produce even of their own islands was much greater than what suited their market, the natives, they suspect, might find means to convey some part of it to other nations; and the best way, they imagine, to secure | their own monopoly, is to take care that no more shall grow than what they themselves carry to market. By different arts of op¬ pression they have reduced the population of i several of the Moluccas nearly to the num¬ ber which is sufficient to supply with fresh provisions and other necessaries of life their own insignificant garrisons, and such of their ships as occasionally come there for a cargo of spices. Under the government even of the Portuguese, however, those islands are said to have been tolerably well inhabited. The English company have not jet had time to establish in Bengal so perfectly destruc¬ tive a system. The plan of their government, however, has had exactly the same tendency. It has not been uncommon, I am well assured, for the chief, that is, the first clerk of a fac¬ tory, to order a peasant to plough up a rich field of poppies, and sow it with rice or some other grain. The pretence was, to prevent a scarcity of provisions ; but the real reason to give the chief an opportunity of selling at a better price a large quantity of opium, which he happened then to have upon hand. Upon other occasions the order has been reversed ; and a rich field of rice or other grain has been ploughed up, in order to make room for a plantation of poppies; when the chief foresaw that extraordinary profit was likely to be made by opium. The servants of the company have upon several occasions attempted to establish in their own favour the monopoly of some of the most important branches, not only of the foreign but of the inland trade of the country. Had they been allowed to go on, it is impossible that they should not at some time or another have at¬ tempted 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 pur¬ chase, but to that which they could expect to sell with such a profit as they might think sufficient. In the course of a century or two, the policy of the English company would in this manner have probably proved as completely destructive as that of the Dutch. Nothing, however, can be more directly contrary to the real interest of those com¬ panies, considered as the sovereigns of the countries which they have conquered, than this destructive plan. In almost all countries the revenue of the sovereign is drawn from that of the people. The greater the revenue of the people, therefore, the greater the an¬ nual produce of their land and labour, the more they can afford to the sovereign. It is his interest, therefore, to increase as much as possible that annual produce. But if this is the interest of every sovereign, it is peculiarly so of one whose revenue, like that of the sovereign of Bengal, arises chiefly from a land-rent. That rent must necessarily be in proportion to the quantity and value of the produce, and both the one and the other must depend upon the extent of the market. The quantity will always be suited with more or less exactness to the consumption of those who can afford to pay for it, and the price which they will pay wdll ahvays be in proportion to the eagerness of their competi¬ tion. It is the interest of such a sovereign, 288 COLONIAL POLICY. B; OK IV. therefore, to open the most extensive market for the produce of his country, to allow the most perfect freedom of commerce, in order to increase as much as possible the number and the competition of buyers; and upon this account to abolish, not only all monopo¬ lies, but all restraints upon the transportation of the home produce from one part of the country to another, upon its exportation to foreign countries, or upon the importation of goods of any kind for which it can be ex¬ changed. He is in this manner most likely to increase both the quantity and value of that produce, and consequently of his own share of it, or of his own revenue. But a company of merchants are, it seems, incapable of considering themselves as sove¬ reigns, even after they have become such. Trade, or buying in order to sell again, they still consider as their principal business, and by a strange absurdity, regard the character of the sovereign as but an appendix to that of the merchant, as something which ought to be made subservient to it, or by means of which they may be enabled to buy cheaper in India, and thereby to sell with a larger pro¬ fit in Europe. They endeavour for this pur¬ pose to keep out as much as possible all com¬ petitors from the market of the countries which are subject to their government, and consequently to reduce at least some part of the surplus produce of those countries to what is barely sufficient for supplying their own demand, or to what they can expect to sell in Europe with such a profit as they may think reasonable. Their mercantile habits draw them in this manner, almost necessarily, though perhaps insensibly, to prefer upon all ordinary occasions the little and transitory profit of the monopolist to the great and permanent revenue of the sovereign, and would gradually lead them to treat the coun¬ tries subject to their government nearly as the Dutch treat the Moluccas. It is the interest of the East India company, consi¬ dered as sovereigns, that the European goods which are carried to their Indian dominions, should be sold there as cheap as possible; and that the Indian goods which are brought from thence should bring there as good a price, or should be sold there as dear as pos¬ sible. But the reverse of this is their in¬ terest as merchants. As sovereigns, their interest is exactly the same with that of the country which they govern. As merchants their interest is directly opposite to that interest. But if the genius of such a government, even as to what concerns its direction in Europe, is in this manner essentially and perhaps incurably faulty, that of its adminis¬ tration in India is still more so. That ad¬ ministration is necessarily composed of a council of merchants, — a profession no doubt extremely respectable, but which in no country in the world carries along with it that sort of authority which naturally overawes the people, and without force commands their willing obedience. Such a council can com¬ mand obedience only by the military force with which they are accompanied, and their government is therefore necessarily military and despotical. Their proper business, how¬ ever, is that of merchants. It is to sell, upon their masters’ account, the European goods consigned to them, and to buy in return Indian goods for the European market. It is to sell the one as dear and to buy the other as cheap as possible, and consequently to exclude as much as possible all rivals from the particular market where they keep their shop. The genius of the administration, therefore, so far as concerns the trade of the company, is the same as that of the direction It tends to make government subservient to the interest of monopoly, and consequently to stunt the natural growth of some parts at least of the surplus produce of the country to what is barely sufficient for answering the demand of the company. All the members of the administration, besides, trade more or less upon their own account, and it is in vain to prohibit them from doing so. Nothing can be more com¬ pletely foolish than to expect that the clerks of a great counting-house at ten thousand miles distance, and consequently almost quite out of sight, should, upon a simple order from their masters, give up at once doing any sort of business upon their own account, abandon for ever all hopes of making a for¬ tune, of which they have the means in their hands, and content themselves with the moderate salaries which those masters allow them, and which, moderate as they are, can seldom be augmented, being commonly as large as the real profits of the company trade can afford. In such circumstances, to pro*? hibit the serv ants of the company from trading upon their own account can have scarce any other effect than to enable the superior ser¬ vants, 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 servants naturally endeavour to establish the same monopoly in favour of their own private trade as of the public trade of the company. If they are suffered to act as they could wish, they will establish this monopoly openly and directly, by fairly prohibiting all other people from trading in the articles in which they choose to deal; and this, perhaps, is the best and least oppressive way of establishing it. But if by an order from Europe they are prohi¬ bited from doing this, they will, notwithstand¬ ing, endeavour to establish a monopoly of the same kind, secretly and indirectly, in a way that is much more destructive to the country. They will employ the whole authority of COLONIAL POLICY. 289 Chap. VII. government, and pervert the administration of justice, in order to harass and ruin those who interfere with them in any branch of commerce which, by means of agents, either concealed, or at least not publicly avowed, they may choose to carry on. But the pri¬ vate trade of the servants will naturally extend to a much greater variety of articles than the public trade of the company. The public trade of the company extends no fur¬ ther than the trade with Europe, and com¬ prehends a part only of the foreign trade of the country. But the private trade of the servants may extend to all the different branches both of its inland and foreign trade. The monopoly of the company can tend only to stunt the natural growth of that part of the surplus produce which, in the case of a free trade, would be exported to Europe. That of the servants tends to stunt the natural growth of every part of the produce in which they choose to deal, of what is destined for home consumption, as well as of what is des¬ tined for exportation ; and consequently to degrade the cultivation of the whole country, and to reduce the number of its inhabitants. It tends to reduce the quantity of every sort of produce, even that of the necessaries of life, whenever the servants of the company choose to deal in them, to what those ser¬ vants can both afford to buy and expect to sell with such a profit as pleases them. From the nature of their situation too the servants must be more disposed to support with rigorous severity their own interest against that of the country which they govern than their masters can be to support theirs. The country belongs to their masters, who cannot avoid having some regard for the interest of what belongs to them. But it does not belong to the servants. The real interest of their masters, if they were capable of understanding it, is the same with that of the country ] , and it is from ignorance chiefly and the meanness of mercantile prejudice, that they ever oppress it. But the real in¬ terest of the servants is by no means the same with that of the country, and the most per¬ fect information would not necessarily put an end to their oppressions. The regulations accordingly which have been sent out from Europe, though they have been frequently weak, have upon most occasions been well- meaning. More intelligence and perhaps less good meaning has sometimes appeared in those established by the servants in India. It is a very singular government in which every member of the administration wishes to get out of the country, and consequently to have done with the government, as soon r 1 The interest of every' proprietor of India stock, however, is by rm means the same with that of the country in the government of which his vote gives ■ dm some influence. See Book V. Chap. i. Part 3d. (Note by the author.) as he can, and to whose interest, the day after he has left it and carried his whole for¬ tune with him, it is perfectly, indifferent though the whole country was swallowed up by an earthquake. I mean not, however, by any thing which I have here said, to throw any odious im¬ putation upon the general character of the servants of the East India company, and much less upon that of any particular persons. It is the system of government, the situation in which they are placed, that I mean to censure; not the character of those who have acted in it. They acted as their situation naturally directed, and they who have clamoured the loudest against them would, probably, not have acted better them¬ selves. In war and negotiation, the councils of Madras and Calcutta have upon several occasions conducted themselves with a re¬ solution and decisive wisdom which would have done honour to the senate of Rome in the best days of that republic. The members of those councils, however, had been bred to professions very different from war and politics. But their situation alone, without education, experience, or even example, seems to have formed in them all at once the great qualities which it required, and to have inspired them both with abilities and virtues which they themselves could not well know that they possessed. If upon some occasions, therefore, it has animated them to actions of magnanimity which could not well have been expected from them, we should not wonder if upon others it has prompted them to exploits of somewhat a different nature. Such exclusive companies, therefore, are nuisances in every respect; always more or less inconvenient to the countries in which they are established, and destructive to those which have the misfortune to fall under their government . 2 ciiap. viii. Conclusion of the Mercantile System. Though the encouragement of exportation and the discouragement of importation are the two greatengines by which the mercantile system proposes to enrich every country, yet, with regard to some particular commodities, it seems to follow an opposite plan : to dis¬ courage exportation and to encourage im¬ portation. Its ultimate object, however, it pretends, is always the same, to enrich the country by an advantageous balance of trade. 2 For some farther observations on this subject, see the supplemental note on the Government, lie- venue, and Trade of India. u 290 CONCLUSION OF THE Book IV. It discourages the exportation of the materials of manufacture, and of the instruments of trade, in order to give our own workmen an advantage, and to enable them to undersell those of other nations in all foreign markets : and by restraining, in this manner, the ex¬ portation of a few commodities, of no great price, it proposes to occasion a much greater and more valuable exportation of others. It encourages the importation of the materials of manufacture, in order that our own people may be enabled to work them up more cheaply, and thereby prevent a greater and more valuable importation of the manu¬ factured commodities. I do not observe, at least in our statute book, any encouragement given to the importation of the instruments of trade. When manufactures have advanced to a certain pitch of greatness, the fabrication of the instruments of trade becomes itself the object of a great number of very important manufactures. To give any particular en¬ couragement to the importation of such instruments, would interfere too much with the interest of those manufactures. Such importation, therefore, instead of being encouraged has frequently been prohibited. Thus the importation of wool cards, except from Ireland, or when brought in as wreck or prize goods, was prohibited by the Sd of Edward IV.; which prohibition was re¬ newed by the 39th of Elizabeth, and has been continued and rendered perpetual by subsequent laws. 1 The importation of the materials of ma¬ nufacture has sometimes been encouraged by an exemption from the duties to which other goods are subject, and sometimes by bounties. The importation of sheep’s wool from se¬ veral different countries, of cotton wool from all countries, of undressed flax, of the greater part of dyeing drugs, of the greater part of undressed hides from Ireland or the British colonies, of seal skins from the British Greenland fishery, of pig and bar iron from the British colonies, as well as of several other materials of manufacture, has been encouraged by an exemption from all duties, if properly entered at the custom-house. The private interest of our merchants and manufacturers may, perhaps, have extorted frcm the legislature these exemptions, as well as the greater part of our other com¬ mercial regulations. They are, however, perfectly just and reasonable, and if, con¬ sistently with the necessities of the state, they could be extended to all the other ma¬ terials of manufacture, the public would certainly be a gainer. The avidity of our great manufacturers, however, has in some cases extended these exemptions a good deal beyond what can justly be considered as the rude materials of 1 This restriction no longer exists. their work. By the 24 Geo. II. c. 46. a small duty of only one penny the pound was imposed upon the importation of foreign brown linen yarn, instead of much higher duties to which it had been subjected before, viz. of sixpence the pound upon sail yarn, of one shilling the pound upon all French and Dutch yarn, and of two pounds thirteen shillings and fourpence upon the hundred weight of all spruce or Muscovia yarn; but our manufacturers were not long satisfied with this reduction. By the 29th of the same king, c. 15. the same law which gave a bounty upon the exportation of Bri¬ tish and Irish linen, of which the price did not exceed eighteenpence the yard, even this small duty upon the importation of brown linen yarn was taken away. In the different operations, however, which are necessary for the preparation of linen yarn, a good deal more industry is employed than in the sub¬ sequent operation of preparing linen cloth from linen yarn. To say nothing of the industry of the flax-growers and flax-dress¬ ers, three or four spinners, at least, are ne¬ cessary, 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 is em¬ ployed in that of linen yarn ; but our spin¬ ners are poor people—women commonly— scattered about in all different parts of the country, without support or protection. It is not by the sale of their work, but by that of the complete work of the weavers, that our great master manufacturers make their profits. As it is their interest to sell the complete manufacture as dear, so is it to buy the materials as cheap, as possible. By ex¬ torting from the legislature bounties upon the exportation of their own linen, high duties upon the importation of all foreign linen, and a total prohibition of the home consumption of some sorts of French linen, they endeavour to sell their own goods as dear as possible. By encouraging the im¬ portation of foreign linen yarn, and thereby bringing it into competition with that which is made by our own people, they endeavour to buy the work of the poor spinners as cheap as possible. They r*ve as intent to keep down the wages of their own weavers, as the earnings of the poor spinners, and it is by no means for the benefit of the work¬ men, that they endeavour either to raise the price of the complete work, or to lower that of the rude materials. It is the industry which is carried on for the benefit of the rich and the powerful that is principally encou¬ raged by our mercantile system. That which is carried on for the benefit of the poor and the indigent, is too often either neglected or oppressed. Both the bounty upon the exportation of linen, and the exemption from duty upon the Chap. VIII. MERCANTILE SYSTEM. 291 importation of foreign yarn, which were granted only for fifteen years, but continued by two different prolongations, expire with the end of the session of parliament which shall immediately follow the 24th of June, 1786.1 The encouragement given to the import¬ ation of the materials of manufacture by bounties has been principally confined to such as w*ere imported from our American plantations. The first bounties of this kind were those granted about the beginning of the present century, upon the importation of naval stores from America. Under this denomin¬ ation, were comprehended timber fit for masts, yards, and bowsprits ; hemp, tar, pitch, and turpentine. The bounty, how¬ ever, of one pound the ton upon masting- timber, and that of six pounds the ton upon hemp, were extended to such as should be imported into England from Scotland. Both these bounties continued without any varia¬ tion, at the same rate, till they were severally allowed to expire ; that upon hemp on the 1st of January 1741, and that upon masting- timber at the end of the session of parlia¬ ment immediately following the 24th June 1781. The bounties upon the importation of tar, pitch, and turpentine underwent, during their continuance, several alterations. Ori¬ ginally, that upon tar was four pounds the ton ; that upon pitch the same ; and that upon turpentine three pounds the ton. The bounty of four pounds the ton upon tar was afterwards confined to such as had been prepared in a particular manner ; that upon other good, clean, and merchantable tar was reduced to two pounds four shillings the ton. The bounty upon pitch was likewise reduced to one pound ; and that upon turpentine to one pound ten shillings the ton. The second bounty upon the import¬ ation of any of the materials of manufac¬ ture, according to the order of time, -was that granted by the 21 Geo. II. c 30. upon the importation of indigo from the British plantations. When the plantation indigo was worth three-fourths of the price of the best French indigo, it was by this act en¬ titled to a bounty of sixpence the pound. This bounty, which, like most others, was granted only for a limited time, was con¬ tinued by several prolongations, but was re¬ duced to fourpence the pound. It was allowed to expire with the end of the session of parliament which followed the 25th March, 1781. The third bounty of this kind was that granted (much about the time that we were . beginning sometimes to court and sometimes 1 Raw linen yarn is at present charged with a duty of one shilling a cwt. on importation ; and, according to the provisions in the act 6 Geo. IV. cap. 113., the to quarrel with our American colonies) by the 4 Geo. III. c. 26. upon the im¬ portation of hemp, or undressed flax, from the British plantations. This bounty was granted for twenty-one years, from the 24th June 1764, to the 24th June 1785. For the first seven years it was to be at the rate of eight pounds the ton, for the second at six pounds, and for the third at four pounds. It was not extended to Scotland, of which the climate (although hemp is sometimes raised there in small quantities, and of an inferior quality) is not very fit for that pro¬ duce. Such a bounty upon the importation of Scotch flax into England would have been too great a discouragement to the native produce of the southern part of the United Kingdom. The fourth bounty of this kind was that granted by the 5 Geo. III. c. 45. upon the importation of wood from America. It was granted for nine years, from the 1st January 1766, to the 1st January 1775. During the first three years it was to be for every hundred and twenty good deals, at the rate of one pound; and for every load con¬ taining fifty cubic feet of other squared timber at the rate of twelve shillings. For the second three years it was, for deals, to be at the rate of fifteen shillings ; and for other squared timber at the rate of eight shillings; and for the third three years it was, for deals, to be at the rate of ten shil¬ lings, and for other squared timber at the rate of five shillings. The fifth bounty of this kind was that granted by the 9 Geo. III. c. 38. upon the importation of raw silk from the British plantations. It was granted for twenty-one y r ears, from the 1st January 1770, to the 1st January 1791. For the first seven years it was to be at the rate of twenty-five pounds for every hundred pounds’ value; for the second, at twenty pounds ; and for the third, at fifteen pounds. The management of the silk-worm, and the preparation of silk, re¬ quires so much hand labour, and labour is so very dear in America, that even this great bounty, I have been informed, was not likely to produce any considerable effect. The sixth bounty of this kind was that granted by the 11 Geo. III. c. 50. for the importation of pipe, hogshead, and barrel staves and heading from the British plant¬ ations. It was granted for nine years, from 1st January 1772, to the 1st January 1781. For the first three years it was for a certain quantity of each to be at the rate of six pounds; for the second three years at four pounds ; and for the third three years at two pounds. The seventh, and last bounty of this kind, bounties on the exportation of linens manufactured in the United Kingdom ceased in 1834. U 2 292 CONCLUSION OF THE Book IV. was that granted by the 19 Geo. III. c. 37. upon the importation of hemp from Ire¬ land. It was granted in the same manner as that for the importation of hemp and un¬ dressed flax from America, for twenty-one years, from the 24th June 1779, to the 24th June 1800. This term is divided, likewise, into three periods of seven years each ; and in each of those periods the rate of the Irish bounty is the same with that of the Ameri¬ can. It does not, however, like the American bounty, extend to the importation of un¬ dressed flax. It would have been too great a discouragement to the cultivation of that plant in Great Britain. When this last bounty was granted, the British and Irish legislatures were not in much better humour with one another than the British and Ame¬ rican had been before. But this boon to Ireland, it is to be hoped, has been granted under more fortunate auspices than all those to America. The same commodities upon which we thus gave bounties, when imported from America, were subjected to considerable du¬ ties when imported from any other country. The interest of our American colonies was regarded as the same with that of the mother country. Their wealth was considered as our wealth. Whatever money was sent out to them, it was said, came all back to us by the balance of trade, and we could never become a farthing the poorer, by any expense which we could lay out upon them. They were our own in every respect, and it was an expense laid out upon the improvement of our own property, and for the profitable employment of our own people. It is un¬ necessary, I apprehend, at present to say any thing further, in order to expose the folly of a system which fatal experience has now sufficiently exposed. Had our American colonies really been a part of Great Britain, those bounties might have been considered as bounties upon production, and would still have been liable to all the objections to which such bounties are liable, but to no other. The exportation of the materials of manu¬ facture is sometimes discouraged by absolute prohibitions, and sometimes by high duties. Our woollen manufacturers have been more successful than any other class of workmen, in persuading the legislature that the prosperity of the nation depended upon the success and extension of their particular business. They have not only obtained a monopoly against the consumers by an absolute prohibition of importing woollen cloths from any foreign country, but they have likewise obtained another monopoly against the sheep farmers and growers of wool, by a similar prohibition of the ex¬ portation of live sheep and wool. The seve¬ rity of many of the laws which have been enacted for the security of the revenue is very justly complained of, as imposing heavy penalties upon actions which, antecedent to the statutes that declared them to be crimes, had always been understood to be innocent. But the cruellest of our revenue laws, I will venture to affirm, are mild and gentle, in comparison of some of those which the cla¬ mour of our merchants and manufacturers has extorted from the legislature, for the support of their own absurd and oppressive monopolies. Like the laws of Draco, these laws may be said to be all written in blood. By the 8th of Elizabeth, c. 3. the ex¬ porter of sheep, lambs, or rams, was for the first offence to forfeit all his goods for ever, to suffer a year’s imprisonment, and then to have his left hand cut off in a market town upon a market day, to be there nailed up; and for the second offence to be adjudged a felon, and to suffer death accordingly. To prevent the breed of our sheep from being propagated in foreign countries, seems to have been the object of this law. By the 13th and 14th of Charles II. c. 18. the exportation of wool was made felony, and the exporter subjected to the same penalties and forfeitures as a felon. For the honour of the national humanity, it is to be hoped that neither of these statutes were ever executed. The first of them, how¬ ever, so far as I know, has never been directly repealed, and Serjeant Hawkins seems to consider it as still in force. It may, however, perhaps, be considered as virtually repealed by the 12th of Charles II. c. 32. s. 3. which, without expressly taking away the penalties imposed by former statutes, imposes a new penalty, viz. that of twenty shillings for every sheep exported, or attempted to be exported, together with the forfeiture of the sheep and of the owner’s share of the ship. The second of them was expressly re¬ pealed by the 7th and 8th of William III. c. 28. s. 4., by which it is declared that, “ Whereas the statute of the 13th and 14th of King Charles II. made against the ex¬ portation 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 relates to the making the said offence felony be repealed and made void.” The penalties, however, which are either imposed by this milder statute, or which, though imposed by former statutes, are not repealed by this one, are still sufficiently severe. Besides the forfeiture of the goods, the exporter incurs the penalty of three shillings for every pound weight of wool either exported or attempted to be exported, that is, about four or five times the value. Any merchant or other person convicted of this offence is disabled from requiring any debt or account belonging to him from any Chap. VIII. MERCANTILE SYSTEM. 293 factor or other person. Let his fortune be what it will, whether he is or is not able to pay those heavy penalties, the law means to ruin him completely. But as the morals of the great body of the people are not yet so corrupt as those of the contrivers of this statute, I have not heard that any advantage has ever been taken of this clause. If the person convicted of this offence is not able to pay the penalties within three months after judgment, he is to be transported for seven years, and if he returns before the expiration of that term, he is liable to the pains of felony, without benefit of clergy. The owner of the ship knowing this offence forfeits all his interest in the ship and fur¬ niture. The master and mariners knowing this offence forfeit all their goods and chat¬ tels, and suffer three months’ imprisonment. By a subsequent statute the master suffers six months’ imprisonment. In order to prevent exportation, the whole inland commerce of wool is laid under verv burdensome and oppressive restrictions. It cannot be packed in any box, barrel, cask, case, chest, or any other package, but only in packs of leather or pack-cloth, on which must be marked on the outside the words wool or yarn , in large letters not less than three inches long, on pain of forfeiting the same and the package, and three shillings for every pound weight, to be paid by the owner or packer. It cannot be loaden on any horse or cart, or carried by land within five miles of the coast, but between sun-rising and sun¬ setting, on pain of forfeiting the same, the horses and carriages. The hundred next adjoining to the sea-coast, out of or through which the wool is carried or exported, for¬ feits twenty pounds, if the wool is under the value of ten pounds; and if of greater value, then treble that value, together with treble costs, to be sued for within the year: the execution to be against any two of the inhabitants, whom the sessions must reim¬ burse, by an assessment on the other inha¬ bitants, as in the cases of robbery. And if any person compounds with the hundred for less than this penalty, he is to be impri¬ soned for five years; and any other person may prosecute. These regulations take place through the whole kingdom. But in the particular counties of Kent and Sussex the restrictions are still more troublesome. Every owner of wool within ten miles of the sea-coast must give an account in writing, three days after shear¬ ing, to the next officer of the customs, of the number of his fleeces, and of the places where they are lodged; and before he removes any part of them he must give the like notice of the number and weight of the 1 The influence of the oppressive regulations noticed in the text has, we believe, been much exaggerated. But, however that may be, they are happily now fleeces, and of the name and abode of the person to whom they are sold, and of the place to which it is intended they should be carried. No person within fifteen miles of the sea, in the said counties, can buy any wool, before he enters into bond to the king, that no part of the wool which he shall so buy shall be sold by him to any other per¬ son within fifteen miles of the sea. If any wool is found carrying towards the sea-side in the said counties, unless it has been entered and security given as aforesaid, it is forfeited, and the offender also forfeits three shillings for every pound weight. If any person lays any wool, not entered as afore¬ said, within fifteen miles of the sea, it must be seized and forfeited; and if, after such seizure, any person shall claim the same, he must give security to the exchequer, that if he is cast upon trial he shall pay treble costs, besides all other penalties. W hen such restrictions are imposed upon the inland trade, the coasting trade, we may believe, cannot be left very free. Every owner of wool who carrieth or causeth to be carried any wool to any port or place on the sea-coast, in order to be from thence transported by sea to any other place or port on the coast, must first cause an entry thereof to be made at the port from whence it is intended to be conveyed, containing the weight, marks, and number of the packages before he brings the same within five miles of that port, on pain of forfeiting the same ; and also the horses, carts, and other car¬ riages ; and also of suffering and forfeiting, as by the other laws in force against the exportation of wool. This law, however, (1 Will. III. c. 32.) is so very indulgent as to declare,that “this shall not hinder any person from carrying his wool home from the place of shearing, though it be within five miles of the sea, provided that in ten days after shearing, and before he remove the wool, he do under his hand certify to the next officer of the customs the true number of fleeces, and where it is housed , and do not remove the same, without certi¬ fying to such officer, under his hand, his intention so to do, three days before.” Bond must be given that the wool to be carried coast-ways is to be landed at the particular port for which it is entered outwards; and if any part of it is landed without the pre¬ sence of an officer, not only the forfeiture of the wool is incurred as in other goods, but the usual additional penalty of three shillings for every pound weight is likewise incurred. 1 Our woollen manufacturers, in order to justify their demand of such extraordinary restrictions and regulations, confidently as- only matters of history. The importation and ex¬ portation of wool have for some years been quite free. See ante , p. 107. 294 CONCLUSION OF THE Book IV, sorted, that English wool was of a peculiar quality, superior to that of any other coun¬ try ; that the wool of other countries could not, without some mixture of it, be wrought up into any tolerable manufacture; that fine cloth could not be made without it; that England, therefore, if the exportation of it could be totally prevented, could monopolise to herself almost the whole woollen trade of the world; and thus, having no rivals, could sell at what price she pleased, and in a short time acquire the most incredible degree of wealth by the most advantageous balance of trade. This doctrine, like most other doctrines which are confidently as¬ serted by any considerable number of people, was, and still continues to be, most impli¬ citly believed by a much greater number ; by almost all those who are either unac¬ quainted with the woollen trade, or who have not made particular inquiries. It is, however, so perfectly false, that English wool is in any respect necessary for the making of fine cloth, that it is altogether unfit for it. Fine cloth is made altogether of Spanish wool. English wool cannot be even so mixed with Spanish wool as to enter into the composition without spoiling and degrading, in some degree, the fabric of the cloth. It has been shown in the foregoing part of this work, that the effect of these regu¬ lations has been to depress the price of English wool, not only below what it natu¬ rally would be in the present times, but very much below what it actually was in the time of Edward III. The price of Scots wool, when in consequence of the Union it be¬ came subject to the same regulations, is said to have fallen about one-half. It is observed by the very accurate and intelligent author of the Memoirs of Wool, 1 the Reverend Mr. John Smith, that the price of the best English wool in England is generally below what wool of a very inferior quality commonly sells for in the market of Amsterdam. To depress the price of this commodity below what may be called its natural and proper price, was the avowed purpose of those re¬ gulations ; and there seems to be no doubt of their having produced the effect that was expected from them. This reduction of price, it may perhaps be thought, by discouraging the growing of wool, must have reduced very much the annual produce of that commodity, though not below what it formerly was, yet below what, in the present state of things, it pro¬ bably would have been, had it, in conse¬ quence of an open and free market, been allowed to rise to the natural and proper price. I am, however, disposed to believe, 1 This elaborate and excellent work throws a great deal oi light, not merely on the history of the woollen manuincture, bat on that of the domestic policy of | that the quantity of the annual produce cannot have been much, though it may perhaps have been a little, affected by these regulations. The growing of wool is not the chief purpose for which the sheep farmer employs his industry and stock. He expects his profit, not so much from the price of the fleece, as from that of the carcass ; and the average or ordinary price of the latter must even, in many cases, make up to him whatever deficiency there may be in the average or ordinary price of the former. It has been observed, in the foregoing part of this work, that “ Whatever regulations tend to sink the price, either of wool or of raw hides, below what it naturally would be, must, in an improved and cultivated coun¬ try, 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 suffi¬ cient to pay the rent which the landlord, and the profit which the farmer, has reason to expect from improved and cultivated land. If it is not, they will soon cease to feed them. Whatever part of this price, therefore, is not paid by the wool and the hide, must be paid by the carcass. The less there is paid for the one, the more must be paid for the other. In what manner this price is to be divided upon the different parts of the beast is indifferent to the land¬ lords and farmers, provided it is all paid to them. In an improved and cultivated country, therefore, their interest as landlords and farmers cannot be much affected by such regulations, though their interest, as con¬ sumers, may, by the rise in the price of provisions.” According to this reasoning, therefore, this degradation in the price of wool is not likely, in an improved and cultivated country, to occasion any diminu¬ tion in the annual produce of that com¬ modity; except so far as, by raising the price of mutton, it may somewhat diminish the demand for, and consequently the pro¬ duction of, that particular species of but¬ cher’s meat. Its effect, however, even in this way, it is probable, is not very con¬ siderable. But though 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 in the quality of English wool, if not below what it was in former times, yet below what it naturally w'ould have been in the present state of improvement and cultivation, must have been, it may perhaps be supposed, very nearly in proportion to the degradation of price." As the quality depends upon the the country. It was first published in 1747, in 2 vols. 8vo, and again in 1757, hi 2 vols. 4to. Chap. VIII. MERCANTILE SYSTEM. ‘J93 breed, upon the pasture, and upon the ma¬ nagement and cleanliness of the sheep, during the whole progress of the growth of the fleece, the attention to these circum¬ stances, it may naturally enough be imagined, can never be greater than in proportion to the recompense which the price of the fleece is likely to make for the labour and expense which that attention requires. It happens, however, that the goodness of the fleece depends, in a great measure, upon the health, growth, and bulk of the animal; the same attention which is necessary for the improve¬ ment of the carcass, is, in some respects, sufficient for that of the fleece. Notwith¬ standing the degradation of price, English wool is said to have been improved consider¬ ably during the course even of the present century. The improvement might perhaps have been greater if the price had been better ; but the lowness of price, though it may have obstructed, yet certainly it has not altogether prevented, that improvement. The violence of these regulations, there¬ fore, seems to have affected neither the quan¬ tity nor the quality of the annual produce of wool so much as it might have been ex¬ pected to do ; (though I think it probable that it m; y have affected the latter a good deal more than the former ;) and the interest of the growers of wool, though it must have been hurt in some degree, seems, upon the whole, to have been much less hurt than could well have been imagined. 1 These considerations, however, will not justify the absolute prohibition of the export¬ ation of wool. But they will fully justify the imposition of a considerable tax upon tha^ exportation. To hurt in any degree the interest of any one order of citizens, for no other purpose but to promote that of some other, is evi¬ dently contrary to that justice and equality of treatment which the sovereign owes to all the different orders of his subjects But the prohibition certainly hurts, in some degree, the interest of the growers of wool, for no other purpose but to promote that of the manufacturers. Every different order of citizens is bound to contribute to the support of the sovereign or commonwealth. A tax of five, or even of ten shillings upon the exportation of every tod of wool, would produce a very consider¬ able revenue to the sovereign. It would hurt the interest of the growers somewhat less than the prohibition, because it would not probably lower the price of wool ouite so much. It would afford a sufficient advan¬ tage to the manufacturer, because, though he might not buy his wool altogether so cheap 1 For some observations on this subject,see p. 107. note. 2 These restrictions no longer exist. Fuller’s earth and tobacco-pipe clay may now be exported on paying a duty'of one-nail per cent, ad valorem. as under the prohibition, he would still buy it, at least, five or ten shillings cheaper than any foreign manufacturer could buy it, besides saving the freight and insurance, which the other would be obliged to pay. It is scarce possible to devise a tax which could produce any considerable revenue to the sovereign, and at the same time occasion so little incon- veniency to any body. The prohibition, notwithstanding all the penalties which guard it, does not prevent the exportation of wool. It is exported, it is well known, in great quantities. The great difference between the price in the home and that in the foreign market, presents such a temptation to smuggling, that all the rigour of the law cannot prevent it. This illegal exportation is advantageous to nobody but the smuggler. A legal exportation sub¬ ject to a tax, by affording a revenue to the sovereign, and thereby saving the imposition of some other, perhaps, more burdensome and inconvenient taxes, might prove advan¬ tageous to all the different subjects of the state. r lhe exportation of fuller’s earth, or fuller’s clay, supposed to be necessary for preparing and cleansing the woollen manufactures, has been subjected to nearly the same penalties as the exportation of wool. Even tobacco- pipe clay, though acknowledged to be differ¬ ent from fullers clay, yet, on account of their resemblance, and because fuller’s clay might sometimes be exported as tobacco-pipe clay, has been laid under the same prohibitions and penalties. 2 By the 13th and 14t.h of Charles IT. c. 7. the exportation, not only of raw hides, but of tanned leather, except in the shape of boots, shoes, or slippers was prohi¬ bited ; and the law gave a monopoly to our bootmakers and shoemakers, not only against our graziers, but against our tanners. By subsequent statutes our tanners bavt got themselves exempted from this m-. nopoly, 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 with¬ out further manufacture. All manufactures of leather may be exported duty-free; and the exporter is besides entitled to the draw¬ back of the whole duties of excise. 3 Our graziers still continue subject to the old mo¬ nopoly. Graziers separated from one another and dispersed through all the different cor¬ ners of the country, cannot, without great difficulty, combine together for the purpose either of imposing monopolies upon their 3 By the 6th Geo. IV. cap. 111., a duty of one-half per cent, act valorem is charged on the exportation of all sorts of manufactures of leather. U 4 996 CONCLUSION OF THE Book IV. fellow-citizens, or of exempting themselves from such as may have been imposed upon them by other people. Manufacturers of all kinds, collected together in numerous bodies in all great cities, easily can. Even the horns of cattle are prohibited to be exported 1 ; and the two insignificant trades of the horner and comb-maker enjoy, in this respect, a monopoly against the graziers. Restraints, either by prohibitions or by taxes upon the exportation of goods which are partially, but not completely manufactured, are not peculiar to the manufacture of leather. As long as any thing remains to be done, in order to fit any commodity for immediate use and consumption, our manufacturers think that they themselves ought to have the doing of it. Woollen yarn and worsted are prohibited to be exported under the same penalties as wool. 2 Even white clothes are subject to a duty upon exportation, and our dyers have so far obtained a monopoly against our clothiers. Our clothiers would probably have been able to defend themselves against it, but it happens that the greater part of our principal clothiers are themselves likewise dyers. Watch-cases, clock-cases, and. dial-plates for clocks and watches, have been prohibited to be exported. Our clockmakers and watchmakers are, it seems, unwilling that the price of this sort of workmanship should be raised upon them by the competi¬ tion of foreigners. 3 By someold statutes of Edward III., Henry VIII., and Edward VI., the exportation of all metals was prohibited. Lead and tin were alone excepted; probably on account of the great abundance of those metals ; in the exportation of which, a considerable part of the trade of the kingdom in those days consisted. For the encouragement of the mining trade, the 5th of William and Mary, c. 17., exempted from this prohibition, iron, copper, and mundic metal made from British ore. The exportation of all sorts of copper bars, foreign as well as British, was afterwards permitted by the 9th and 10th of V illiam III. c. 26. The exportation of unmanufactured brass, of what is called gun- metal, bell-metal, and shroff' metal, still con¬ tinues to be prohibited. 4 Brass manufactures of all sorts may be exported duty-free. The exportation of the materials of ma¬ nufacture, where it is not altogether prohi¬ bited, is in many cases subjected to consi¬ derable duties. By the 8 Geo. I. c. 15., the exportation of all goods, the produce or manufacture of Great Britain, upon which any duties had been imposed by former statutes, was ren- 1 This prohibition no longer exists. 2 This restriction has been repealed. The duty on the exportation of woollen yarn and worsteds :c one penny per pound. 3 The prohibition of the importation of clock- cases, watch-cases, &c. is still continued. dered duty-free. The following goods, however, were excepted: allum, lead, lead oi e, tin, tanned leather, copperas, coals, wool cards, white woollen cloths, lapis cala- minaris, skins of all sorts, glue, coney hair or wool, hares’ wool, hair of all sorts, horses, and litharge of lead. If you except horses, all these are either materials of manufacture, or incomplete manufactures (which may be considered as materials for still further 'ma¬ nufacture), 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. 5 By the same statute a great number of foreign drugs tor dyers’ use are exempted from all duties upon importation. Each of them, however, is afterwards subjected to a certain duty, not indeed a very heavy one, upon exportation. Our dyers, it seems, while they thought it for their interest to encourage the importation of those drugs by an exemption from all duties, thought it likewise for their interest to throw some small discouragement upon their exportation. The avidity, however, which suggested this notable piece of mercantile ingenuity, most probably disappointed itself of its object. It necessarily taught the importers to be more careful than they might otherwise have been, that their importation should not exceed what was necessary for the supply of the home market. The home market was at all times likely to be more scantily supplied; the commodities were at all times likely to be somewhat dearer there than they wmuld have been had the ex¬ portation been rendered as free as the im¬ portation. By the above-mentioned statute, gum Senegal, or gum arabic, being among the enumerated dyeing drugs, might be imported duty-free. They were subjected indeed to a small poundage duty, amounting only to threepence in the hundred weight upon their re-exportation. France enjoyed at that time an exclusive trade to the country most productive of those drugs, that which lies in the neighbourhood of the Senegal; and the British market could not easily be sup¬ plied by the immediate importation of 'them from the place of growth. By the 25 Geo. II. therefore, gum Senegal was allowed to be imported (contrary to the general dispositions of the act of navigation) from any part of Europe. As the law, however, did not mean to encourage this species of trade, so contrary to the general principles of the mercantile policy of England, 4 This prohibition has been repealed. 5 The duties on these articles have been either wholly repealed or greatly modified by some recent acts. See Tariff in Commercial Dictionary . \ ’ . MERCANTILE SYSTEM. 297 Chap. VIII. it imposed a duty of ten shillings the hundred weight upon such importation, and no part of this duty was to be afterwards drawn back upon its exportation. The successful war which began in 1755 gave Great Britain the same exclusive trade to those countries which France had enjoyed before. Our manufacturers, as soon as the peace was made, endeavoured to avail themselves of this advantage, and to establish a monopoly in their own favour, both against the growers and against the importers of this commodity. By the 5th of Geo. III. therefore, c. 37., the exportation of gum Senegal from his ma¬ jesty’s dominions in Africa was confined to Great Britain, and was subjected to all the same restrictions, regulations, forfeitures, and penalties, as that of the enumerated commodities of the British colonies in America and the West Indies. Its im¬ portation, indeed, was subjected to a small duty of sixpence the hundred weight, but its re-exportation was subjected to the enormous duty of one pound ten shillings the hundred weight. 1 It was the intention of our manufacturers that the whole produce of those countries should be imported into Great Britain; and in order that they themselves might be enabled to buy it at their own price, that no part of it should be exported again, but at such an expense as would sufficiently discourage that exportation. Their avidity, however, upon this, as well as upon many other occa¬ sions, disappointed itself of its object. This enormous duty presented such a temptation to smuggling, 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 14th of Geo. III. c. 10., this duty upon exportation was reduced to five shillings the hundred weight. In the book of rates, according to which the old subsidy was levied, beaver skins were estimated at six shillings and eight- pence a-piece, and the different subsidies and imposts, which before the year 1722 had been laid upon their importation, amounted to one-fifth part of the rate, or to sixteen pence upon each skin; all of which, except half the old subsidy, amounting only to twopence, was drawn back upon export¬ ation. This duty upon the importation of so important a material of manufacture had been thought too high, and, in the year 1722, the rate was reduced to two shillings and The duty on gum Senegal imported into Great Britain for home consumption is at present (1838) six shillings a cwt. If it be imported and warehoused for re-exportation, no duty is charged. •* The present (1838) duty on raw beaver-wool, when imported, is one shilling and sevenpence per lib. and if cut or combed, four shillings and nino- Pence per lib. sixpence, which reduced the duty upon im¬ portation to sixpence, and of this only one half was to be drawn back upon exportation. The same successful war put the country most productive of beaver under the do¬ minion of Great Britain, and beaver skins being among the enumerated commodities, their exportation from America was conse¬ quently confined to the market of Great Britain. Our manufacturers soon bethought themselves of the advantage which they might make of this circumstance, and, in the year 1764, the duty upon the importation of bearer-skin was reduced to one penny, but the duty upon exportation was raised to sevenpence each skin, without any draw¬ back of the duty upon importation. By the same law, a duty of eighteen pence the pound was imposed upon the exportation of beaver-wool or wombs, without making any alteration in the duty upon the import¬ ation of that commodity, which, when im¬ ported by British and in British shipping, amounted at that time to between fourpence and fivepence the piece. 2 Coals may be considered both as a material of manufacture and as an instrument of trade. Heavy duties, accordingly, have been im¬ posed upon their exportation, amounting at present (1783) to more than five shillings the ton, or to more than fifteen shillings the chaldron, Newcastle measure ; which is in most cases more than the original value of the commodity at the coal pit, or even at the shipping port for exportation. 3 The exportation, however, of the instru¬ ments of trade, properly so called, is com¬ monly restrained, not by high duties, but by absolute prohibitions. Thus by the 7th and 8th of William III. c. 20. s. 8. the ex¬ portation of frames or engines for knitting gloves or stockings is prohibited under the penalty, not only of the forfeiture of such frames or engines, so exported, or attempted to be exported, but of forty pounds, one half to the king, the other to the person who shall inform or sue for the same. In the same manner, by the 14th of Geo. III. c. 71. the exportation to foreign parts, of any uten¬ sils made use of in the cotton, linen, woollen, and silk manufactures, is prohibited under the penalty, not only of the forfeiture of such utensils, but of two hundred pounds, to be paid by the person who shall offend in this manner, and likewise of two hundred pounds to be paid by the master of the ship who shall knowingly suffer such utensils to be loaded on board his ship. 4 When such heavy penalties were imposed 3 By a late act coal may be exported to foreign countries in British ships, dutyfree , and in foreign ships on paying a duty of 4s. a ton. 4 For an account of the restrictions existing in 1838, on the exportation of machinery, see act 3 & 4 Will. IV. c. 52. S98 CONCLUSION OF THE Book IV. upon the exportation of the dead instruments of trade, it could not well be expected that the living instrument, the artificer, should be allowed to go free. Accordingly, by the 5th of Geo. I. c. 27. the person who shall be convicted of enticing any artificer of or in any of the manufactures of Great Britain, to go into any foreign parts, in order to practise or teach his trade, is liable for the first offence to be fined in any sum not ex¬ ceeding one hundred pounds, and to three months’ imprisonment, and until the fine shall be paid ; and for the second offence, to be fined in any sum at the discretion of the court, and to imprisonment for twelve months, and until the fine shall be paid. By the 23d of Geo. II. c. 13. this penalty is increased for the first offence to five hundred pounds for every artificer so enticed, and to twelve months’ imprisonment, and until the fine shall be paid ; and for the second offence, to one thousand pounds, and to two years’ im¬ prisonment, and until the fine shall be paid. By the former of those two statutes, upon proof that any person has been enticing any artificer, or that any artificer has promised or contracted to go into foreign parts for the purposes aforesaid, such artificer may be obliged to give security at the discretion of the court, that he shall not go beyond the seas, and may be committed to prison until he give such security. If any artificer has gone beyond the seas, and is exercising or teaching his trade in any foreign country, upon warning being given to him by any of his majesty’s ministers or consuls abroad, or by one of his majesty’s secretaries of state for the time being, if he does not, within six months after such warn¬ ing, return into this realm, and from thence¬ forth abide and inhabit continually within the same, he is from thenceforth declared incapable of taking any legacy devised to him within this kingdom, or of being executor or administrator to any person, or of taking any lands within this kingdom by descent, devise, or purchase. He likewise forfeits to the king all his lands, goods, and chattels, is declared an alien in every respect, and is put out of the king’s protection. It is unnecessary, I imagine, to observe how contrary such regulations are to the boasted liberty of the subject, of which we affect to be so very jealous; but which, in this case, is so plainly sacrificed to the futile interests of our merchants and manufac¬ turers*. 1 The laudable motive of all these regu¬ lations is to extend our own manufactures, not by their own improvement, but by the depression of those of all our neighbours, and by putting an end, as much as possible, to the troublesome competition of such 1 The restrictions on the emigration of artisans were repealed in 1S&1. odious and disagreeable rivals. Our master manufacturers think it reasonable that they themselves should have the monopoly of the ingenuity of all their countrymen. Though by restraining, in some trades, the number of apprentices which can be employed at one time, and by imposing the necessity or a long apprenticeship in all trades, they en¬ deavour, all of them, to confine the know¬ ledge of their respective employments to as small a number as possible; they are unwil¬ ling, however, that any part of this small number should go abroad to instruct fo¬ reigners. Consumption is the sole end and purpose of all production ; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident, that it would be ab¬ surd to attempt to prove it. But in the mercantile system, the interest of the con¬ sumer is almost constantly sacrificed to that of the producer ; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce. In the restraints upon the importation ot all foreign commodities which can come into competition with those of our own growth or manufacture, the interest of the home consumer is evidently sacrificed to that of the producer. It is altogether for the bene¬ fit of the latter, that the former is obliged to pay that enhancement of price which this monopoly almost always occasions. It is altogether for the benefit of the pro¬ ducer that bounties are granted upon the exportation of some of his productions. The home consumer is obliged to pay, first, the tax which is necessary for paying the bounty, and secondly, the still greater tax which necessarily arises from the enhancement ot the price of the commodity in the home market. By the famous treaty of commerce with Portugal, the consumer is prevented by high duties from purchasing of a neighbouring country a commodity which our own climate does not produce, but is obliged to purchase it of a distant country, though it is acknow¬ ledged that the commodity of the distant country is of a worse quality than that of the near one. The home consumer is obliged to submit to this inconveniency, in order that the producer may import into the distant country some of his productions upon more advantageous terms than he would otherwise have been allowed to do. Tne consumer, too, is obliged to pay whatever enhancement in the price of those very pro¬ ductions this forced exportation may occasion in the home market. But in the system of laws which hai been established for the management of our Ame- Chap. VIII. MERCANTILE SYSTEM. 299 rican and West Indian colonies, the interest of the home consumer has been sacrificed to that of the producer with a more extrava¬ gant profusion than in all our other com¬ mercial regulations. A great empire has been established for the sole purpose of rais¬ ing up a nation of customers, who should be obliged to buy from the shops of our differ¬ ent producers all the goods with which these could supply them. For the sake of that little enhancement of price which this mo¬ nopoly might afford our producers, the home consumers have been burdened with the whole expense of maintaining and defending that empire. For this purpose, and for this purpose only, in the two last wars, more than two hundred millions have been spent, and a new debt of more than a hundred and seventy millions has been contracted over and above all that had been expended for the same purpose in former wars. The interest of this debt alone is not only greater than the whole extraordinary profit which it ever could be pretended was made by the mono¬ poly of the colony trade, but than the whole value of that trade, or than the whole value of the goods, which at an average have been annually exported to the colonies. It cannot be very difficult to determine who have been the contrivers of this whole mercantile system ; not the consumers, we may believe, whose interest has been en¬ tirely neglected ; but the producers, whose interest has been so carefully attended to ; and among this latter class, our merchants and manufacturers have been by far the prin¬ cipal architects. In the mercantile regula¬ tions, which have been taken notice of in this chapter, the interest of our manufacturers has been most peculiarly attended to ; and the interest, not so much of the consumers as that of some other sets of producers, has been sacrificed to it. CHAP. IX. Of the Agricultural Systems , or of those Sys¬ tems of Political Economy which represent the Produce of Land as either the sole or the principal Source of the Revenue and Wealth of every Country. The agricultural systems of political eco¬ nomy will not require so long an explanation as that which I have thought it necessary to bestow upon the mercantile or commercial system. That system which represents the produce of land as the sole source of the revenue and wealth of every country has, so far as I know, never been adopted by any nation, and it at present exists only in the specula¬ tions of a few men of great learning and ingenuity in France. It would not, surely, be worth while to examine at great length the errors of a system which never has done, and probably never will do, any harm in any part of the world. I shall endeavour to explain, however, as distinctly as I can, the great outlines of this very ingenious system. Mr. Colbert, the famous minister of Lewis XIV., was a man of probity, of great in¬ dustry and knowledge of detail; of great experience and acuteness in the examination of public accounts ; and of abilities, in short, every way fitted for introducing method and good order into the collection and expend¬ iture of the public revenue. That minister had unfortunately embraced all the preju¬ dices of the mercantile system, in its nature and essence a system of restraint and regu¬ lation, and such as could scarce fail to be agreeable to a laborious and plodding man of business, who had been accustomed to regulate the different departments of public offices, and to establish the necessary checks and controls for confining each to its proper sphere. The industry and commerce of a great country he endeavoured to regulate upon the same model as the departments of a public office; and instead of allowing every man to pursue his own interest his own way, upon the liberal plan of equality, liberty, and justice, he bestowed upon cer¬ tain branches of industry extraordinary pri¬ vileges, while he laid others under as extra¬ ordinary restraints. He was not only disposed, like other European ministers, to encourage more the industry of the towns than that of the country; but, in order to support the industry of the towns, he was willing even to depress and keep down that of the country. In order to render provi¬ sions cheap to the inhabitants of the towns, and thereby to encourage manufactures and foreign commerce, he prohibited altogether the exportation of corn, and thus excluded the inhabitants of the country from every foreign market, for by far the most important part of the produce of their industry. This prohibition, joined to the restraints imposed by the aucient provincial laws of France upon the transportation of corn from one province to another, and to the arbitrary and degrading taxes which are levied upon the cultivators in almost all the provinces, dis¬ couraged and kept down the agriculture of that country very much below the state to which it would naturally have risen in so very fertile a soil, and so very happy a cli¬ mate. This state of discouragement and depression was felt more or less in every different part of the country, and many dif¬ ferent inquiries were set on foot concerning the causes of it. One o£ those causes ap¬ peared to be the preference given by the 300 AGRICULTURAL SYSTEMS. Book IV. institutions of Mr. Colbert to the industry of the towns above that of the country. If the rod be bent too much one way, says the proverb, in order to make it straight you must bend it as much the other. The French philosophers, who have proposed the system which represents agriculture as the sole source of the revenue and wealth of every country, seem to have adopted this proverbial maxim ; and as in the plan of Mr. Colbert the industry of the towns was cer¬ tainly overvalued in comparison with that of the country, so in their system it seems to be as certainly undervalued. 1 The different orders of people who have ever been supposed to contribute in any re¬ spect towards the annual produce of the land and labour of the country, they divide into three classes. The first is the class of the proprietors of land. The second is the class of the cultivators, of farmers and country labourers, whom they honour with the pecu¬ liar appellation of the productive class. The third is the class of artificers, manufacturers, and merchants, whom they endeavour to degrade by the humiliating appellation of the barren or unproductive class. The class of proprietors contributes to the annual produce by the expense which they may occasionally lay out upon the improve¬ ment of the land, upon the buildings, drains, inclosures, and other ameliorations, which they may either make or maintain upon it, and by means of which the cultivators are enabled, with the same capital, to raise a greater produce, and consequently to pay a greater rent. This advanced rent may be considered as the interest or profit due to the proprietor, upon the expense or capital which he thus employs in the improvement of his land. Such expenses are in this system called ground expenses (defenses fonderes). The cultivators or farmers contribute to the annual produce by what are in this sys¬ tem called the original and annual expenses (defenses frimitives et defenses annuelles') which they lay out upon the culivation of the land. The original expenses consist in the instruments of husbandry, in the stock of cattle, in the seed, and in the maintenance of the farmer’s family, servants, and cattle, during at least a greater part of the first year of his occupancy, or till he can receive some return from the land. The annual expenses consist in the seed, in the wear and tear of the instruments of husbandry, and in the annual maintenance of the farmer’s servants and cat¬ tle, and of his family too, so far as any part of them can be considered as servants employed in cultivation. That part of the produce of the land which remains to him after pay¬ ing the rent, ought to be sufficient, first to 1 For some account of the rise of this system, and its distinguishing features, 6ee Introductory Dis¬ course, pp. xxxix—xliii. replace to him within a reasonable time, at least during the term of his occupancy, the whole of his original expenses, together with the ordinary profits of stock ; and, secondly, to replace to him annually the whole of his annual expenses, together likewise with the ordinary profits of stock. Those two sorts of expenses are two capitals which the farmer employs in cultivation; and unless they are regularly restored to him, together with a reasonable profit, he cannot carry on his employment upon a level with other employ¬ ments ; but from a regard to his own interest, must desert it as soon as possible, and seek some other. That part of the produce of the land which is thus necessary for enabling the farmer to continue his business ought to be considered as a fund sacred to cultivation, which if the landlord violates, he necessarily reduces the produce of his own land, and in a few years not only disables the farmer from paying this racked rent, but from paying the reasonable rent which he might otherwise have got for his land. The rent which pro¬ perly belongs to the landlord is no more than the neat produce which remains after paying, in the completest manner, all the necessary expenses which must be previously laid out, in order to raise the gross or the whole produce. It is because the labour of the cultivators, over and above paying com¬ pletely all those necessary expenses, affords a neat produce of this kind, that this class of people are in this system peculiarly distin¬ guished by the honourable appellation of the productive class. Their original and annual expenses are for the same reason called, in this system, productive expenses, because, over and above replacing their own value, they occasion the annual reproduction of this neat produce. The ground expenses, as they are called, or what the landlord lays out upon the im¬ provement of his land, are, in this system too, honoured with the appellation of pro¬ ductive expenses. Till the whole of those expenses, together with the ordinary profits of stock, have been completely repaid to him by the advanced rent which he gets from his land, that advanced rent ought to be regarded as sacred and inviolable, both by the church and by the king; ought to be subject neither to tithe nor to taxation. If it is otherwise, by discouraging the im¬ provement of land, the church discourages the future increase of her own tithes, and the king the future increase of his own taxes. As in a well ordered state of things, therefore, those ground expenses, over and above reproducing in the completest manner their own value, occasion likewise after a certain time a reproduction of a neat pro¬ duce, they are in this system considered as productive expenses. The ground expenses of the landlord, how- Chat. IX. AGRICULTURAL SYSTEMS. 301 ever, together with the original and the annual expenses of the farmer, are the only- three sorts of expenses which in this system are considered as productive. All other ex¬ penses, and all other orders of people, even those who in the common apprehensions of men are regarded as the most productive, are in this account of things represented as alto¬ gether barren and unproductive. Artificers and manufacturers, in particular, whose industry, in the common apprehen¬ sions of men, increases so much the value of the rude produce of land, are in this system represented as a class of people altogether barren and unproductive. Their labour, it is said replaces only the stock which employs them, together with its ordinary profits. That stock consists in the materials, tools, and wages, advanced to them by their em¬ ployer ; and is the fund destined for their employment and maintenance. Its profits are the fund destined for the maintenance of their employer. Their employer, as he ad¬ vances to them the stock of materials, tools, and wages, necessary for their employment, so he advances to himself what is necessary for his own maintenance; and this mainten¬ ance 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 him¬ self, as well as the materials, tools, and wages, which he advances to his workmen, it evi¬ dently does not repay to him the whole expense which he lays out upon it. The profits of manufacturing stock, therefore, are not, like the rent of land, a neat produce which remains after completely repaying the whole expense which must be laid out in order to obtain them. The stock of the farmer yields him a profit, as well as that of the master manufacturer ; and it yields a rent likewise to another person, which that of the master manufacturer does not. The expense, therefore, laid out in employing and maintaining artificers and manufacturers does no more than continue, if one may say so, the existence of its own value, and does not produce any new value. It is therefore altogether a barren and unproductive ex¬ pense. The expense, on the contrary, laid out in employing farmers and country la¬ bourers, over and above continuing the exist¬ ence of its own value, produces a new value, — the rent of the landlord. It is therefore a productive expense. Mercantile stock is equally barren and unproductive with manufacturing stock. It only continues the existence of its own value, without producing any new value. Its pro¬ fits are only the repayment of the mainten¬ ance which its employer advances to himself during the time that he employs it, or till he receives the returns of it. They are only the repayment of a part of the expense which must be laid out in employing it. The labour of artificers and manufacturers never adds any thing to the value of the whole annual amount of the rude produce of the land. It adds indeed greatly to the value of some particular parts of it. But the consumption which in the mean time it occa¬ sions of other parts, is precisely equal to the value which it adds to those parts; sc that the value of the whole amount is not, at any one moment of time, in the least augmented by it. The person who works the lace of a pair of fine ruffles, for example, will some¬ times raise the value of perhaps a pennyworth of flax to thirty pounds sterling. But though at first sight he appears thereby to multiply the value of a part of the rude produce about seven thousand and two hundred times, he in reality adds nothing to the value of the whole annual amount of the rude produce. The working of that lace costs him perhaps two years’ labour. The thirty pounds which he gets for it when it is finished, is no more than the repayment of the subsistence which he advances to himself during the two years that he is employed about it. The value which, by every day’s, month’s, or year’s labour, he adds to the flax, does no more than replace the value of his own consump¬ tion during that day, month, or year. At no moment of time, therefore, does he add any thing to the value of the whole annual amount of the rude produce of the land ; the portion of that produce which he is conti¬ nually consuming, being always equal to the value which he is continually producing. The extreme poverty of the greater part of the persons employed in this expensive though trifling manufacture, may satisfy us that the price of their work does not in or¬ dinary cases exceed the value of their sub¬ sistence. It is otherwise with the work of farmers and country labourers. The rent of the landlord is a value which, in ordinary cases, it is continually producing, over and above replacing, in the most complete man¬ ner, the whole consumption, the whole ex¬ pense laid out upon the employment and maintenance both of the workmen and of their employer. Artificers, manufacturers, and merchants, can augment the revenue and wealth of their society by parsimony only ; or, as it is ex¬ pressed in this system, by privation, that is, by depriving themselves of a part of the funds destined for their own subsistence. They annually reproduce nothing but those funds. Unless, therefore, they annually save some part of them, unless they annually deprive themselves of the enjoyment of some part of them, the revenue and wealth of their society can never be in the smallest degree aug¬ mented by means of their industry. Farmers 302 AGRICULTURAL SYSTEMS. Book IV. and country labourers, on the contrary, mav enjoy completely the whole funds destined for their own subsistence, and yet augment at the same time the revenue and wealth of their society. Over and above what is des¬ tined for their own subsistence, their industry annually affords a neat produce, of which the augmentation necessarily augments the revenue and wealth of their society. Nations, therefore, which, like France or England, consist in a great measure of proprietors and cultivators, can be enriched by industry and enjoyment. Nations, on the contrary, which, like Holland and Hamburgh, are composed chiefly of merchants, artificers, and manu¬ facturers, can grow rich only through parsi¬ mony and privation. As the interest of nations so differently circumstanced is very different, so is likewise the common character of the people. In those of the former kind, libe¬ rality, frankness, and good fellowship, natu¬ rally make a part of their common character; in the latter, narrowness, meanness, and a selfish disposition, averse to all social pleasure and enjoyment. The unproductive class, that of merchants, artificers, and manufacturers, is maintained and employed altogether at the expense of the two other classes, of that of proprietors, and of that of cultivators. They furnish it both with the materials of its work and with the fund of its subsistence, with the corn and cattle which it consumes while it is employed about that work. The proprietors and cul¬ tivators finally pay both the wages of all the workmen of the unproductive class, and the profits of all their employers. Those work¬ men and their employers are properly the servants of the proprietors and cultivators. They are only servants who work without doors, as menial servants work within. Both the one and the other, however, are equally maintained at the expense of the same mas¬ ters. The labour of both is equally unpro¬ ductive. It adds nothing to the value of the sum total of the rude produce of the land. Instead of increasing the value of that sum total, it is a charge and expense which must be paid out of it. The unproductive class, however, is not only useful, but greatly useful to the other two classes. By means of the industry of merchants, artificers, and manufacturers, the proprietors and cultivators can purchase both the foreign goods and the manufactured pro¬ duce of their own country which they have occasion for, with the produce of a much smaller quantitj r of their own labour than what they would be obliged to employ if they were to attempt, in an awkward and unskilful manner, either to import the one, or to make the other for their own use. By means of the unproductive class, the cultiva¬ tors are delivered from many cares which would otherwise distract their attention from the cultivation of land. The superiority of prouuce, which, in consequence of this un¬ divided attention, they are enabled to raise, is fully sufficient to pay the whole expense which the maintenance and employment of the unproductive class costs either the pro¬ prietors or themselves. The industry of merchants, artificers, and manufacturers, though in its own nature altogether unpro¬ ductive, yet contributes in this manner in¬ directly to increase the produce of the land. It increases the productive powers of pro¬ ductive labour, by leaving it at liberty to confine itself to its proper employment — the cultivation of land ; and the plough goes frequently the easier and the better by means of the labour of the man whose business is most remote from the plough. It can never be the interest of the pro¬ prietors and cultivators to restrain or to discourage in any respect the industry of merchants, artificers, and manufacturers. The greater the liberty which this unpro¬ ductive class enjoys, the greater will be the competition in all the different trades which compose it, and the cheaper will the other two classes be supplied, both with foreign goods and with the manufactured produce of their own country. It can never be the interest of the unpro¬ ductive class to oppress the other two classes. It is the surplus produce of the land, or what remains after deducting the maintenance, first of the cultivators, and afterwards of the pro¬ prietors, that maintains and employs the un¬ productive class. The greater this surplus, the greater must likewise be the maintenance and employment of that class. The estab¬ lishment of perfect justice, of perfect liberty, and of perfect equality, is the very simple secret which most effectually secures the highest degree of prosperity to all the three classes. The merchants, artificers, and manufac¬ turers of those mercantile states which, like Holland and Hamburgh, consist chiefly of this unproductive class, are in the same manner maintained and employed altogether at the expense of the proprietors and cul¬ tivators of land. The only difference is, that those proprietors and cultivators are, the greater part of them, placed at a most inconvenient distance from the merchants, artificers, and manufacturers whom they supply with the materials of their work and the fund of their subsistence, — are the inhabitants of other countries, and the sub¬ jects of other governments. Such mercantile states, however, are not only useful, but greatly useful to the inha¬ bitants of those other countries. They fill up, in some measure, a very important void, and supply the place of the merchants, artificers, and manufacturers, whom the inhabitants of those countries ought to find at home, but Chap. IX. AGRICULTURAL SYSTEMS. whom, from some defect in their policy, they do not find at home. It can never be the interest of those landed nations, if I may call them so, to discourage or distress the industry of such mercantile states, by imposing high duties upon their trade, or upon the commodities which they furnish. Such duties, by rendering those commodities dearer, could serve only to sink the real value of the surplus produce of their own land, with which, or, what comes to the same thing, with the price of which, those commodities are purchased. Such duties could serve only to discourage the increase of that surplus produce, and consequently the improvement and cultivation of their own land. The most effectual expedient, on the contrary, for raising the value of that surplus produce, for encouraging its increase, and consequently the improvement and cul¬ tivation of their own land, would be to allow the most perfect freedom to the trade of all such mercantile nations. This perfect freedom of trade would even be the most effectual expedient for supplying them in due time with all the artificers, manu¬ facturers, and merchants whom they wanted at home, and for filling up, in the properest and most advantageous manner, that very important void which they felt there. The continual increase of the surplus pro¬ duce of their land would, in due time, create a greater capital than w’hat could be employed with the ordinary rate of profit in the im¬ provement and cultivation of land ; and the surplus part of it would naturally turn itself to the employment of artificers and manu¬ facturers at home. But those artificers and manufacturers, finding at home both the materials of their work and the fund of their subsistence, might immediately, even with much less art and skill, be able to work as cheap as the like artificers and manufacturers of such mercantile states, who had both to bring from a great distance. Even though, from want of art and skill, they might not for some time be able to work as cheap, yet, finding a market at home, they might be able to sell their work there as cheap as that of the artificers and manufacturers of such mercantile states, which could not be brought to that market but from so great a distance ; and as their art and skill improved, they would soon be able to sell it cheaper. The artificers and manufacturers of such mer¬ cantile states, therefore, would immediately be rivalled in the market of those landed nations, and soon after undersold and justled out of it altogether. The cheapness of the manufactures of those landed nations, in consequence of the gradual improvements of art and skill, would in due time extend their sale beyond the home market, and carry them to many foreign markets, from which they would in the same manner gradually SOS justle out many of the manufactures of such mercantile nations. This continual increase, both of the rude and manufactured produce of those landed nations, would in due time create a greater capital than could, with the ordinary rate of profit, be employed either in agriculture or in manufactures. The surplus of this capital would naturally turn itself to foreign trade, and be employed in exporting to foreign countries such parts of the rude and manu¬ factured produce of its own country as exceeded the demand of the home market. In the exportation of the produce of their own country the merchants of a landed nation would have an advantage of the same kind over those of mercantile nations which its artificers and manufacturers had over the artificers and manufacturers of such nations ; the advantage of finding at heme that cargo, and those stores and provisions, which the others were obliged to seek for at a distance. With inferior art and skill in navigation, therefore, they would be able to sell that cargo as cheap in foreign markets as the merchants of such mercantile nations; and with equal art and skill they would be able to sell it cheaper. They would soon, therefore, rival those mercantile nations in this branch of foreign trade, and in due time would justle them out of it altogether. According to this liberal and generous system, therefore, the most advantageous method in which a landed nation can raise up artificers, manufacturers, and merchants of its own, is to grant the most perfect free¬ dom of trade to the artificers, manufacturers, and merchants of all other nations. It thereby raises the value of the surplus pro¬ duce of its own land, of which the continual increase gradually establishes a fund, which in due time necessarily raises up all the artificers, manufacturers and merchants whom it has occasion for. When a landed nation, on the contrary, oppresses, either by high duties or by pro¬ hibitions, the trade of foreign nations, it necessarily hurts its own interest in two different ways: first, by raising the price of all foreign goods, and of all sorts of manufactures, it necessarily sinks the real value of the surplus produce of its own land, with which, or, what comes to the same thing, with the price of which it purchases those foreign goods and manufactures. Secondly, by giving a sort of monopoly of the home market to its own merchants, artificers, and manufacturers, it raises the rate of mercantile and manufacturing profit in proportion to that of agricultural profit, and consequently either draws from agri¬ culture a part of the capital which had before been employed in it, or hinders from going to it a part of what would otherwise have gone to it. This policy, therefore, S04 AGRICULTURAL SYSTEMS. Boos IY. discourages agriculture in two different ways: first, by sinking the real value of its produce, and thereby lowering the rate of its profits; and, secondly, by raising the rate of profit in all other employments. Agriculture is rendered less advantageous, and trade and manufactures more advan¬ tageous than they otherwise would be ; and every man is tempted by his own interest to turn, as much as he can, both his capital and his industry from the former to the latter employments. Though by this oppressive policy a landed nation should be able to raise up artificers, manufacturers, and merchants of its own, somewhat sooner than it could do by the freedom of trade—a matter, however, which is not a little doubtful; yet it would raise them up, if one may say so, prematurely, and before it was perfectly ripe for them. By raising up too hastily one species of industry, it would depress another more valuable species of industry. By raising up too hastily a species of industry which only replaces the stock which employs it, together with the ordinary profit, it would depress a species of industry which, over and above replacing that stock with its profit, affords likewise a neat produce, a free rent to the landlord. It would depress productive labour, by encouraging too hastily that labour which is altogether barren and un¬ productive. In what manner, according to this sys¬ tem, the sum total of the annual produce of the land is distributed among the three classes above mentioned, and in what man¬ ner the labour of the unproductive class does no more than replace the value of its own consumption, without increasing in any respect the value of that sum total, is repre¬ sented by Mr. Quesnay, the very ingenious and profound author of this system, in some arithmetical formularies. 1 The first of these formularies, which, by way of eminence, he peculiarly distinguishes by the name of the Economical Table, represents the manner in which he supposes this distribution takes place, in a state of the most perfect liberty, and therefore of the highest prosperity; in a state where the annual produce is such as to afford the greatest possible neat produce, and where each class enjoys its proper share of the whole annual produce. Some subsequent formularies represent the manner in which he supposes this distribution is made in differ¬ ent states of restraint and regulation; in which either the class of proprietors or the barren and unproductive class is more fa¬ voured 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. 1 The reader will find a pretty full account of the life of this ingenious and excellent person in the Every such encroachment, every violation of that natural distribution which the most perfect liberty would establish, must, accord¬ ing to this system, necessarily degrade more or less, from one year to another, the value and sum total of the annual produce, and must necessarily occasion a gradual declen¬ sion in the real wealth and revenue of the society; a declension, of which the progress must be quicker or slower,, according to the degree of this 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, correspond to the different degrees in which this natural distribution of things is violated. Some speculative physicians seem to have imagined that the health of the human body could be preserved only by a certain precise regimen of diet and exercise, of which every, the smallest, violation necessarily occasioned some degree of disease or disorder propor¬ tioned to the degree of the violation. Ex¬ perience, however, would seem to show, that the human body frequently preserves, to all appearance at least, the most perfect state of health under a vast variety of different regi¬ mens ; even under some which are generally believed to be very far from being perfectly wholesome. But the healthful state of the human body, it would seem, contains in it¬ self some unknown principle of preservation, capable either of preventing or of correcting, in many respects, the bad effects even of a very faulty regimen. Mr. Quesnay, who was himself a physician, and a very specula¬ tive physician, seems to have entertained a notion of the same kind concerning the po¬ litical body, and to have imagined that it would thrive and prosper only under a cer¬ tain precise regimen, the exact regimen of perfect liberty and perfect justice. He seems not to have considered, that in the political body the natural effort which every man is continually making to better his own condi¬ tion is a principle of preservation capable of preventing and correcting, in many respects, the bad effects of a political economy, in some degree both partial and oppressive. Such a political economy, though it no doubt retards more or less, is not always ca¬ pable of stopping altogether the natural pro¬ gress of a nation towards wealth and prosperity, and still less of making it go backwards. If a nation could not prosper without the enjoyment of perfect liberty and perfect justice, there is not in the world a nation which could ever have prospered. In the political body, however, the wisdom of nature has fortunately made ample provision for remedying many of the bad effects of the new edition of the Encyclopedia Britannica, art. Quesnay. Chap. IX. AGRICULTURAL SYSTEMS. S05 folly and injustice of man; in the same man¬ ner as it lias done in the natural body, for remedying those of his sloth and intemper¬ ance. The capital error of this system 1 , however, seems to lie in its representing the class of» artificers, manufacturers, and merchants, as a’together barren and unproductive. The following observations may serve to show the impropriety of this representation. First , This class, it is acknowledged, re¬ produces annually the value of its own annual consumption, and continues at least the existence of the stock or capital which maintains and employs it. But, upon this account alone, the denomination of barren or unproductive should seem to be very im¬ properly applied to it. We should not call a marriage barren or unproductive, though it produced only a son and a daughter, to re¬ place the father and mother, and though it did not increase the number of the human species, but only continued it as it was before. Farmers and country labourers, in¬ deed, over and above the stock which main¬ tains and employs them, reproduce annually a neat produce, a free rent to the landlord. As a marriage which affords three children is certainly more productive than one which affords only two, so the labour of farmers and country labourers is certainly more pro¬ ductive than that of merchants, artificers, and manufacturers. 2 The superior produce of the one class, however, does not render the other barren or unproductive. Secondly , It seems, upon this account, al¬ together improper to consider artificers, ma¬ nufacturers, and merchants, in the same light as menial servants. The labour of menial servants does not continue the existence of the fund which maintains and employs them. Their maintenance and employment is alto¬ gether at the expense of their masters, and the work which they perform is not of a nature to repay that expense. That work consists in services which perish generally in the very instant of their performance, and does not fix or realise itself in any vendible 1 This error seems to have originated in the view taken by Quesnay and the Economists, of the nature and causes of rent. They remarked, that the industry of merchants and manufacturers did nothing but re¬ place their capitals with wages and profits ; whereas the industry of agriculturists yielded them the same wages and profits, exclusive of an additional surplus or produit net , paid to the landlords as rent. This circumstance appeared to the Economists to prove conclusively that agriculture was the only really productive employment, that is, the only one that afforded a greater quantity of products than were necessarily consumed in carrying it on ; and it is on this assumption that their whole theory is built. Had they been acquainted with the circumstances which give rise to, and which also limit and deter¬ mine, the amount of rent, they would not have drawn 6uch conclusions. They would then have soen that when none but the finest lands are under tillage, no rent, or produit net , is obtained from the ground ; that rent is, in truth, a consequence of the decreasing commodity which can replace the value of their wages and maintenance. The labour, on the contrary, of artificers, manufacturers, and merchants, naturally does fix and realise itself in some such vendible commodity. It is upon this account that, in the chapter in which I treat of productive and unproduc¬ tive labour, I have classed artificers, manu¬ facturers, and merchants, among the pro¬ ductive labourers, and menial servants among the barren or unproductive. 3 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. Though we should suppose, for example, as it seems to be supposed in this system, that the value of the daily, monthly, and yearly consumption of this class was exactly equal to that of its daily, monthly, and yearly pro¬ duction ; yet it would not from thence fol¬ low that its labour added nothing to the real revenue, to the real value of the annual produce of the land and labour of the society. An artificer, for example, who, in the first six months after harvest, executes ten pounds’ worth of work, though he should, in the same time, consume ten pounds’ worth of corn and other necessaries, yet really adds the value of ten pounds to the annual pro¬ duce of the land and labour of the society. While he has been consuming a half-yearly revenue of ten pounds’ worth of corn and other necessaries, he has produced an equal value of work, capable of purchasing, either to himself or to some other person, an equal half-yearly revenue. The value, therefore, of what has been consumed and produced during these six months, is equal, not to ten, but to twenty pounds. It is possible, in¬ deed, that no more than ten pounds’ worth of this value may ever have existed at any one moment of time. But if the ten pounds’ worth of corn and other necessaries, which were consumed by the artificer, had been consumed by a soldier, or by a menial ser¬ vant, the value of that part of the annual produce which existed at the end of the six fertility of the soil, or of our being obliged to resort to inferior lands to obtain supplies of food for an In¬ creasing population ; and that it is determined by the extent to which such inferior lands are culti¬ vated— increasing as they are taken into cultivation, and diminishing as they are thrown out of cultivation. Dr. Smith was not aware of this principle, and therefore his refutation of the system of the Econo¬ mists is far from satisfactory. See Introductory Discourse , p. xlii., and the supplemental note on Rent. 2 I have endeavoured to show the fallacy of this opinion. See anti, p. 14f>. note. 3 The distinction which Dr. Smith has attempted to make between the labour of menial servants and artificers, is in every respect as imaginary as that which the Economists attempted to make between the labour of agriculturists and that of artificers and merchants. See reference in the previous note, and Principles oj Political Economy, 2d ed. p. 526. 506 AGRICULTURAL SYSTEMS. Book IV. months, would have been ten pounds less than it actually is in consequence of the labour of the artificer. 1 Though the value of what the artificer produces, therefore, should not at any one moment of time be supposed greater than the value he con¬ sumes, yet at every moment of time the ac¬ tually existing value of goods in the market is, in consequence of what he produces, greater than it otherwise would be. When the patrons of this system assert, that the consumption of artificers, manufac¬ turers, and merchants is equal to the value of what they produce, they probably mean no more than that their revenue, or the fund destined for their consumption, is equal to it. But if they had expressed themselves more accurately, and only asserted that the reve¬ nue of this class was equal to the value of what they produced, it might readily have occurred to the reader, that what would naturally be saved out of this revenue must necessarily increase more or less the real wealth of the society. In order, therefore, to make out something like an argument, it was necessary that they should express them¬ selves as they have done ; and this argu¬ ment, even supposing things actually were as it seems to presume them to be, turns out to be a very inconclusive one. Fourthly , Farmers and country labourers can no more augment, without parsimony, the real revenue, the annual produce of the land and labour of their society, than artifi¬ cers, manufacturers, and merchants. The annual produce of the land and labour of any society can be augmented only in two ways: either, first, by some improvement in the productive powers of the useful labour ac¬ tually maintained within it; or, secondly, by some increase in the quantity of that labour. The improvement in the productive powers of useful labour, depends, first, upon the improvement in the ability of the workman ; and secondly, upon that of the machinery with which he works. But the labour of artificers and manufacturers, as it is capable of being more subdivided, and the labour of each workman reduced to a greater simpli¬ city of operation than that of farmers and country labourers, so it is likewise capable of both these sorts of improvement in a much higher degree. 2 In this Respect, therefore, the class of cultivators can have no sort of advantage over that of artificers and manufacturers. The increase in the quantity of useful labour actually employed within any society, must depend altogether upon the increase of the capital which employs it; and the in¬ crease of that capital, again, must be exactly But the services rendered by the soldier or menial bervant, would enable others to produce a propor- equal to the amount of the savings from the revenue, either of the particular persons who manage and direct the employment of that capital, or of some other persons who lend it to them. If merchants, artificers, and manufacturers are, as this system seems to suppose, naturally more inclined to parsi¬ mony and saving than proprietors and culti¬ vators, they are, so far, more likely to aug¬ ment the quantity of useful labour employed within their society, and consequently to increase its real revenue, the annual produce of its land and labour. Fifthly, and lastly, Though the revenue of the inhabitants of every country was sup¬ posed to consist altogether, as this system seems to suppose, in the quantity of subsist¬ ence which their industry could procure to them ; yet, even upon this supposition, the revenue of a trading and manufacturing country must, other things being equal, al¬ ways be much greater than that of one without trade or manufactures. By means of trade and manufactures, a greater quan¬ tity of subsistence can be annually imported into a particular country than what its own lands, in the actual state of their cultivation, could afford. The inhabitants of a town, though they frequently possess no lands of their own, yet draw to themselves, by their industry, such a quantity of the rude pro¬ duce of the lands of other people as supplies them, not only with the materials of their work, but with the fund of their subsistence. What a town always is with regard to the country in its neighbourhood, one independ¬ ent state or country may frequently be with regard to other independent states or coun¬ tries. It is thus that Holland draws a great part of its subsistence from other countries ; live cattle from Holstein and Jutland, and corn from almost all the different countries of Europe. A small quantity of manufac¬ tured produce purchases a great quantity of rude produce. A trading and manufactur¬ ing country, therefore, naturally purchases, with a small part of its manufactured pro¬ duce, a great part of the rude produce of other countries; while, on the contrary, a country without trade and manufactures is generally obliged to purchase, at the expense of a great part of its rude produce, a very small part of the manufactured produce of other countries. The one exports what can subsist and accommodate but a very few, and imports the 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 al¬ ways enjoy a much greater quantity of sub¬ sistence than what their own lands, in the tionally greater amount of produce. See preceding references. 3 See book i. chap. i. Chap. IX. AGRICULTURAL SYSTEMS. 307 actual state of their cultivation, could afford. The inhabitants of the other must always enjoy a much smaller quantity. This system, however, with all its imper¬ fections, is perhaps the nearest approxima¬ tion to the truth that has yet been published upon the subject of political economy ; and is upon that account well worth the consi¬ deration of every man who wishes to examine with attention the principles of that very important science. Though in representing the labour which is employed upon land as the only productive labour, the notions which it inculcates are perhaps too narrow and confined ; yet in representing the wealth of nations as consisting, not in the unconsum¬ able riches of money, but in the consumable goods annually reproduced by the labour of the society; and in representing perfect liberty as the only effectual expedient for rendering this annual reproduction the great¬ est possible, its doctrine seems to be in every respect as just as it is generous and liberal. Its fbllowers are very numerous ; and as men are fond of paradoxes, and of appearing to understand what surpasses the comprehension of ordinary people, the paradox which it maintains, concerning the unproductive na¬ ture of manufacturing labour, has not per¬ haps contributed a little to increase the number of its admirers. They have for some years past made a pretty considerable sect, distinguished in the French republic of let¬ ters by the name of the Economists. Their works have certainly been of some service to their country, not only by bringing into general discussion many subjects which had never been well examined before, but by influencing in some measure the public ad¬ ministration in favour of agriculture. It has been in consequence of their representations, accordingly, that the agriculture of France has been delivered from several of the op¬ pressions which it before laboured under. The term during which a lease can be grant¬ ed, as will be valid against every future pur¬ chaser or proprietor of the land, has been prolonged from nine to twenty-seven years. The ancient provincial restraints upon the transportation of corn from one province of the kingdom to another have been entirely taken away, and the liberty of exporting it to all foreign countries has been established as the common law of the kingdom in all ordinary cases. This sect, in their works, which are very numerous, and which treat not only of what is properly called Political Economy, or of the nature and causes 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. Quesnay. There is, upon this account, little variety in the greater part of their works. The most distinct and best connected account of this doctrine is to be found in a little book written by Mr. Mercier de la Riviere, some time intendant of Martinico, entitled, The Natural and Es¬ sential Order of Political Societies. The admiration of this whole sect for their master, who was himself a man of the greatest mo¬ desty 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 inven¬ tions which have principally given stability to political societies, independent of many other inventions which have enriched and adorned them. The first is, the invention of writing, which alone gives human nature the power of transmitting, without alteration, its laws, its contracts, its annals, and its dis¬ coveries. The second is, the invention of money, which binds together all the rela¬ tions between civilised societies. The third is, the economical table, the result of the other two, which completes them both by perfecting their object; the great discovery of our age, but of which our posterity will reap the benefit.” As the political economy of the nations of modern Europe has been more favourable to manufactures and foreign trade, the industry of the towns, than to agriculture, the indus¬ try of the country, so that of other nations has followed a different plan, and has been more favourable to agriculture than to manu¬ factures and foreign trade. The policy of China favours agriculture more than all other employments. In China, the condition of a labourer is said to be as much superior to that of an artificer, as in most parts of Europe that of an artificer is to that of a labourer. In China, the great ambition of every man is to get possession of a little bit of land, either in property or in lease ; and leases are there said to be granted upon very moderate terms, and to be suffi¬ ciently secured to the lessees. The Chinese have little respect for foreign trade. Your beggarly commerce ! was the language in which the mandarins of Pekin used to talk to Mr. De Lange, the Russian envoy, con¬ cerning it. 1 Except with Japan, the Chinese carry on, themselves, and in their own bot¬ toms, little or no foreign trade ; and it is only into one or two ports of their kingdom that they even admit the ships of foreign nations. Foreign trade therefore is, in China, every way confined within a much narrower circle than that to which it would naturally extend itself, if more freedom was allowed to it, either in their own ships or in those of foreign nations. Manufactures, as in a small bulk they 1 See the Journal of Mr. De Lange, in Bell’s Travels, vol. ii. p. 259. 276. 293. (Note bj tho author.) X 2 SOS AGRICULTURAL SYSTEMS. Book IV. frequently contain a great value, and can upon that account be transported at less ex¬ pense from one country to another than most parts of rude produce, are, in almost all countries, the principal support of foreign trade. In countries, besides, less extensive, and less favourably circumstanced for inferior commerce than China, they generally require the support of foreign trade. Without an extensive foreign market, they could not well flourish, either in countries so mode¬ rately extensive as to afford but a narrow home market, or in countries where the communication between one province and another was so difficult, as to render it im¬ possible for the goods of any particular place to enjoy the whole of that home market which the country could afford. The per¬ fection of manufacturing industry, it must be remembered, depends altogether upon j the division of labour ; and the degree to which the division of labour can be intro¬ duced into any manufacture, is necessarily regulated, it has already been shown, by the t extent of the market. But the great extent of the empire of China, the vast multitude of its inhabitants, the variety of climate, and consequently of productions in its different provinces, and the easy communication by means of water carriage between the greater part of them, render the home market of that country of so great extent, as to be alone sufficient to support very great manu¬ factures, and to admit of very considerable subdivisions of labour. The home market of China is perhaps, in extent, not much inferior to the market of all the different countries of Europe put together. A more extensive foreign trade, however, which to this great home market added the foreign market of all the rest of the world, especially if any considerable part of this trade was carried on in Chinese ships, could scarce fail to increase very much the manufactures of China, and to improve very much the pro¬ ductive powers of its manufacturing industry. By a more extensive navigation, the Chinese would naturally learn the art of using and constructing, themselves, all the different machines made use of in other countries, as well as the other improvements of art and industry which are practised in all the dif¬ ferent parts of the world. Upon their pre¬ sent plan, they have little opportunity of improving themselves by the example of any other nation, except that of the Japanese. The policy of ancient Egypt too, and that of the Gentoo government of Indostan, seem to have favoured agriculture more than all other employments. Both in ancient Egypt and Indostan, the whole body of the people was divided into different casts or tribes, each of which was confined, from father to son, to a particular employment or class of employments. The son of a priest was necessarily a priest; the son of a soldier, a soldier; the son of a la¬ bourer, a labourer ; the son of a weaver, a weaver; the son of a tailor, a tailor, &c. In both countries, the cast of the priests held the highest rank, and that of the sol¬ diers the next; and in both countries, the cast of the farmers and labourers was superior to the casts of merchants and manufacturers. The government of both countries was particularly attentive to the interest of agri¬ culture. The works constructed by the an¬ cient sovereigns of Egypt, for the proper distribution of the waters of the Nile, were famous in antiquity, and the ruined remains of some of them are still the admiration of travellers. Those of the same kind which were constructed by the ancient sovereigns of Indostan, for the proper distribution of the waters of the Ganges as well as of many other rivers, though they have been less cele¬ brated, seem to have been equally great. Both countries, accordingly, though subject occasionally to dearths, have been famous for their great fertility. Though both were extremely populous, yet, in years of moderate plenty, they were both able to export great quantities of grain to their neighbours. The ancient Egyptians had a superstitious aversion to the sea 1 ; and as the Gentoo re¬ ligion does not permit its followers to light a fire, nor consequently to dress any victuals upon the water, it in effect prohibits them from all distant sea voyages. Both the Egyptians and Indians must have depended almost altogether upon the navigation of other nations for the exportation of their surplus produce; and this dependency, as it must have confined the market, so it must have discouraged the increase of this surplus produce. It must have discouraged too the increase of the manufactured produce more than that of the rude produce. Manufac¬ tures require a much more extensive market than the most important parts of the rude produce of the land. A single shoemaker will make more than three hundred pairs of shoes in the year ; and his own family will not perhaps wear out six pairs. Unless therefore he has the custom of at least fifty such families as his own, he cannot dispose of the whole produce of his own labour. The most numerous class of artificers will seldom, in a large country, make more than one in fifty, or one in a hundred, of the whole number of families contained in it. But in such large countries as France and England, the number of people employed in agricul¬ ture has, by some authors, been computed at a hal£ by others at a third, and by no author 1 There is reason to doubt this assertion. See supplemental note on the Navigation of the Ancient Egyptians. Chap. IX. AGRICULTURAL SYSTEMS. 300 that I know of, at less than a fifth of the whole inhabitants of the country . 1 But as the produce of the agriculture of both France and England is, the far greater part of it, consumed at home, each person employed in it must, according to these computations, require little more than the custom of one, two, or, at most, of four such families as his own, in order to dispose of the whole pro¬ duce of his own labour. Agriculture, there¬ fore, can support itself under the discourage¬ ment of a confined market much better than manufactures. In both ancient Egypt and Indostan, indeed, the confinement of the fo¬ reign market was in some measure compen¬ sated by the conveniency of many inland navigations, which opened, in the most ad¬ vantageous manner, the whole extent of the home market to every part of the produce of every different district of those countries. The great extent of Indostan, too, rendered the home market of that country very great, and sufficient to support a great variety of manufactures. But the small extent of ancient Egypt, which was never equal to England, must at all times have rendered the home market of that country too narrow for supporting any great variety of manufac¬ tures. Bengal accordingly, the province of Indostan which commonly exports the great¬ est quantity of rice, 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 exportation of grain. It was long the granary of the Roman empire. The sovereigns of China, of ancient Egypt, and of the different kingdoms into which Indostan has at different times been divided, have always derived the whole, or by far the most considerable part, of their revenue from some sort of land-tax or land-rent. This land-tax or land-rent, like the tithe in Europe, consisted, in a certain proportion, of a fifth, it is said, of the produce of the land, which was either delivered in kind or paid in money, according to a certain valuation, and which therefore varied from year to year, according to all the variations of the produce. It was natural, therefore, that the sovereigns of those countries should be particularly attentive to the interests of agriculture, upon the prosperity or de¬ clension of which immediately depended the yearly increase or diminution of their own revenue. The policy of the ancient republics of Greece, and that of Rome, though it honoured agriculture more than manufac- } According to the census of 1831, of 3,414,175 fa¬ milies in Great Britain, only 961,134 were engaged in agriculture. In Ireland, on the contrary, of tures or foreign trade, yet seems rather to have discouraged the latter employments, than to have given any direct or intentional encouragement to the former. In several of the ancient states of Greece, foreign trade was prohibited altogether : and in several others, the employments of artificers and manufacturers were considered as hurtful to the strength and agility of the human bodv, as rendering it incapable of those habits which their military and gymnastic exercises endeavoured to form in it, and as thereby disqualifying it more or less for undergoing the fatigues and encountering the dangers of war. Such occupations were considered as fit only for slaves, and the free citizens of the state were prohibited from exercising them. Even in those states where no such prohibition took place, as in Rome and Athens, the great body of the people were in effect excluded from all the trades which are now commonly exercised by the lower sort of the inhabitants of towns. Such trades were, at Athens and Rome, all occupied by the slaves of the rich, who exercised them for the benefit of their masters, whose wealth, power, and protection, made it almost impossible for a poor freeman to find a market for his work, when it came into competition with that of the slaves of the rich. Slaves, however, are very seldom inventive ; and all the most important im¬ provements, either in machinery or in the arrangement and distribution of w*ork which facilitate and abridge labour, have been the discoveries of freemen. Should a slave propose any improvement of this kind, his master would be very apt to consider the proposal as the suggestion of laziness, and of a desire to save his own labour at the master’s expense. The poor slave, instead of reward, would probably meet with much abuse, perhaps with some punishment. In the manufactures carried on by slaves, there¬ fore, more labour must generally have been employed to execute the same quantity of work than in those carried on by freemen. The work of the former must, upon that account, generally have been dearer than that of the latter. The Hungarian mines, it is remarked by Mr. Montesquieu, though not richer, have always been wrought with less expense, and therefore with more profit, than the Turkish mines in their neighbour¬ hood. 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 1,385,066 families, 884,339 were employed in agri* culture. x 3 310 AGRICULTURAL SYSTEMS. Book IV. the price of manufactures in the times of the Greeks and Romans, it would appear that those of the finer sort were excessively dear. Silk sold for its weight in gold. It was not, indeed, in those times an European manufacture; and as it was all brought from the East Indies, the distance of the carriage may in some measure account for the greatness of the price. The price, how¬ ever, which a lady, it is said, would some¬ times pay for a piece of very fine linen, seems to have been equally extravagant; and as linen was always either an European, or, at farthest, an Egyptian manufacture, this high price can be accounted for only by the great expense of the labour which must have been employed about it, and the expense of this labour again could arise from nothing but the awkwardness of the machinery which is made use of. The price of fine woollens too, though not quite so extravagant, seems however to have been much above that of the present times. Some cloths, we are told by Pliny, dyed in a particular manner, cost a hundred denarii, or three pounds six shillings and eightpence the pound weight, * Others, dyed in another manner, cost a thousand denarii the pound weight or thirty- three pounds six shillings and eightpence. - The Roman pound, it must be remembered, contained only twelve of our avoirdupois ounces. This high price, indeed, seems to have been principally owing to the dye. But had not the cloths themselves been much dearer than any which are made in the present times, so very expensive a dye would not probably have been bestowed upon them. The disproportion would have been too great between the value of the accessory and that of the principal. The price mentioned by the same authors of some triclinaria, a sort of woollen pillows or cushions made use of to lean upon as they reclined upon their couches at table, passes all credibility ; some of them being said to have cost more than thirty thousand, others more than three hundred thousand pounds. This high price too is not said to have arisen from the dye. In the dress of the people of fashion of both sexes there seems to have been much less variety, it is observed by Doctor Arbuthnot, in ancient than in modern times; and the very little variety which we find in that of the ancient statues confirms his observation. He infers from this that their dress must, upon the whole, have been cheaper than ours : but the con¬ clusion does not seem to follow. When the expense of fashionable dress is very great, the variety must be very small. But when, by the improvements in the productive 1 Plin. 1. ix. c. 39. 2 Plin. 1. viii. c. 48. 3 Phe statements with respect to the prices of articles in antiquity in this and other parts of the powers of manufacturing art and industry the expense of any one dress comes to be very moderate, the variety will naturally be very great. The rich, not being able to distinguish themselves by the expense of any one dress, will naturally endeavour to do so by the multitude and variety of their dresses. 3 The greatest and most important banch of the commerce of every nation, it has already been observed, is that which is carried on be¬ tween the inhabitants of the town and those of the country. The inhabitants of the town draw from the country the rude produce which constitutes both the materials of their work and the fund of their subsistence; and they pay for this rude produce by sending back to the country a certain portion of it manufactured and prepared for immediate use. The trade which is carried on between these two different sets of people, consists ultimately in a certain quantity of rude pro¬ duce exchanged for a certain quantity of manufactured produce. The dearer the lat¬ ter, 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 pro¬ duce which any given quantity of rude pro¬ duce, or, what comes to the same thing, which the price of any given quantity of rude produce is capable of purchasing, the ' smaller the exchangeable value of that given quantity of rude produce; the smaller the encouragement which either the landlord has to increase its quantity by improving, or the farmer by cultivating the land. Whatever, besides, tends to diminish in any country the number of artificers and manu¬ facturers, tends to diminish the home market, the most important of all markets for the rude produce of the land, and thereby still further to discourage agriculture. Those systems, therefore, which preferring agriculture to all other employments, in order to promote it, impose restraints upon manufactures and foreign trade, act contrary to the very end which they propose, and indirectly discourage that very species of in¬ dustry which they mean to promote. They are so far, perhaps, more inconsistent than even the mercantile system. That system, by encouraging manufactures and foreign trade more than agriculture, turns a certain portion of the capital of the society from supporting a more advantageous, to support a less advantageous species of industry. But still it really and in the end encourages that species of industry which it means to Wealth of Nations, are deduced from the tables of Arbuthnot, which are of very doubtful authority. See ante, p. 61, note. , AGRICULTURAL SYSTEMS. 311 Chap. IX. • promote. Those agricultural systems, on the contrary, really and in the end discourage their own favourite species of industry. It is thus that every system which en¬ deavours either by extraordinary encourage¬ ments to draw towards a particular species of industry a greater share of the capital of the society than what would naturally go to it, or by extraordinary restraints to force from a particular species of industry some share of the capital which would otherwise be employed in it, is, in reality, subversive of the great purpose which it means to pro¬ mote. It retards, instead of accelerating, the progress of the society towards real wealth and greatness; and diminishes, instead of increasing, the real value of the annual pro¬ duce of its land and labour. All systems either of preference or of re¬ straint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men. The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society. According to the system of natural liberty, the sovereign has only three duties to attend to ; three duties of great importance, indeed, but plain and intelligible to common under¬ standings : first, the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administra¬ tion of justice; and, thirdly, the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any indi¬ vidual, or small number of individuals, to erect and maintain ; because the profit could never repay the expense to any individual, or small number of individuals, though it may frequently do much more than repay it to a great society. The proper performance of those several duties of the sovereign necessarily supposes a certain expense; and this expense again necessarily requires a certain revenue to support it. In the following book, there¬ fore, I shall endeavour to explain, first, what are the necessary expenses of the sovereign or commonwealth, and which of those ex¬ penses ought to be defrayed by the general contribution of the whole society ; and which of them, by that of some particular part only, or of some particular members of the society ; secondly, what are the different methods in which the whole society may be made to contribute towards defraying the expenses incumbent on the whole society; and what are the principal advantages and inconveniences of each of those methods; and, thirdly, what are the reasons and causes which have induced almost all modern go¬ vernments to mortgage some part of this re¬ venue, or to contract debts; and what have been the effects of those debts upon the real wealth, the annual produce of the land and labour of the society. The following book, therefore, will naturally be divided into three chapters. BOOK V. OF THE REVENUE OF THE SOVEREIGN OR COM¬ MONWEALTH. CHAP. I. Of the Expenses of the Sovereign or Common¬ wealth . Part I. Of the Expense of Defence. The first duty of the sovereign, that of pro¬ tecting the society from the violence and invasion of other independent societies, can be performed only by means of a military force. But the expense both of preparing this military force in time of peace, and of employing it in time of w T ar, is very different in the different states of society, in the dif¬ ferent periods of improvement. Among nations of hunters, the lowest and rudest state of society, such as we find it among the native tribes of North America, every man is a warrior, as well as a hunter. When he goes to w’ar, either to defend his society, or to revenge the injuries which have been done to it by other societies, he maintains himself by his own labour, in the same manner as when he lives at home. His society—for in this state of things there is properly neither sovereign nor common¬ wealth — is at no sort of expense, either to prepare him for the field, or to maintain him while he is in it. Among nations of shepherds, a more ad¬ vanced state of society, such as we find it among the Tartars and Arabs, every man is, in the same manner, a warrior. Such na¬ tions have commonly no fixed habitation, but live either in tents or in a sort of covered waggons, which are easily transported from place to place. The whole tribe or nation X 4 S12 EXPENSE OF DEFENCE. Book V. changes its situation according to the differ¬ ent seasons of the year, as well as according to other accidents. When its herds and flocks have consumed the forage of one part of the country, it removes to another, and from that to a third. In the dry season, it comes down to the banks of the rivers ; in the wet season, it retires to the upper coun¬ try. When such a nation goes to war, the warriors will not trust their herds and flocks to the feeble defence of their old men, their women and children; and their old men, their women and children, will not be left without defence, and without subsistence. The whole nation, besides, being accustomed to a wandering life, even in time of peace, easily takes the field in time of war. Whe¬ ther it marches as an army, or moves about as a company of herdsmen, the way of life is nearly the same, though the object proposed by it be very different. Tiiey all go to war together, therefore, and every one does as well as he can. Among the Tartars, even the women have been frequently known to engage in battle. If they conquer, whatever belongs to the hostile tribe is the recompense of the victory; but if they are vanquished, all is lost, and not only their herds and flocks, but their women and children become the booty of the conqueror. Even the greater part of those who survive the action are obliged to submit to him, for the sake of immediate subsistence. The rest are com¬ monly dissipated and dispersed in the desert. The ordinary life* the ordinary exercises of a Tartar or Arab, prepare him sufficiently for war. Running, wrestling, cudgel-play¬ ing, throwing the javelin, drawing the bow, &c. are the common pastimes of those who live in the open air, and are all of them the images of war. When a Tartar or Arab actually goes to war, he is maintained by his own herds and flocks, which he carries with him, in the same manner as in peace. His chief or sovereign—for those nations have all chiefs or sovereigns—is at no sort of ex¬ pense in preparing him for the field; and when he is in it, the chance of plunder is the only pay which he either expects or re¬ quires. An army of hunters can seldom exceed two or three hundred men. The precarious subsistence which the chase affords could seldom allow a greater number to keep to¬ gether for any considerable time. An army of shepherds, on the contrary, may some¬ times amount to two or three thousand. As long as nothing stops their progress, as long as they can go on from one district, of which they have consumed the forage, to another which is yet entire, there seems to be scarce any limit to the number who can march on together. A nation of hunters can never be formidable to the civilised na¬ tions in their neighbourhood. A nation of shepherds may. Nothing can be more con¬ temptible than an Indian war in North America. Nothing, on the contrary, can be more dreadful than a Tartar invasion has frequently been in Asia. The judgment of Thucydides, that both Europe and Asia could not resist the Scythians united, has been verified by the experience of all ages. The inhabitants of the extensive but de¬ fenceless plains of Scythia or Tartary have been frequently united under the dominion of the chief of some conquering horde or clan ; and the havoc and devastation of Asia have always signalised their union. The inhabitants of the inhospitable deserts of Arabia, the other great nation of shepherds, have never been united but once, — under Mahomet and his immediate successors. Their union, which was more the effect of religious enthusiasm than of conquest, was signalised in the same manner. If the hunt¬ ing nations of America should ever become shepherds, their neighbourhood would be much more dangerous to the European colonies than it is at present. In a yet more advanced state of society, among those nations of husbandmen who have little foreign commerce, and no other manufactures but those coarse and household ones which almost every private family pre¬ pares for its own use, every man, in the same manner, either is a warrior, or easily becomes such. Those who live by agriculture gene¬ rally pass the whole day in the open air, exposed to all the inclemencies of the sea¬ sons. The hardiness of their ordinary life pre¬ pares them for the fatigues of war, to some of which their necessary occupations bear a great analogy. The necessary occupation of a ditcher prepares him to work in the trenches, and to fortify a camp, as well as to enclose a field. The ordinary pastimes of such husbandmen are the same as those of shepherds, and are in the same manner the images of war. But as husbandmen have less leisure than shepherds, they are not so frequently employed in those pastimes. They are soldiers, but soldiers not quite so much masters of their exercise. Such as they are, however, it seldom costs the sovereign or commonwealth any expense to prepare them for the field. Agriculture, even in its rudest and lowest state, supposes a settlement; some sort of fixed habitation which cannot be abandoned without great loss. When a nation of mere husbandmen, therefore, goes to war, the whole people cannot take the field together. The old men, the women and children, at least, must remain at home to take care of the habitation. All the men of the military age, however, may take the field, and, in small nations of this kind, have frequently done so. In every nation, the men of the military age are supposed to amount to about a fourth Chap. I. EXPENSE OF DEFENCE. S13 or a fifth part of the whole body of the peo¬ ple. If the campaign too should begin after seed-time, and end before harvest, both the husbandman and his principal labourers can be spared from the farm without much loss. He trusts that the work which must be done in the mean time, can be well enough exe¬ cuted by the old men, the women and the children. He is not unwilling, therefore, to serve without pay during a short campaign, and it frequently costs the sovereign or com¬ monwealth as little to maintain him in the field as to prepare him for it. The citizens of all the different states of ancient Greece seem to have served in this manner till after the second Persian war; and the people of Peloponnesus till after the Peloponnesian war. The Peloponnesians, Thucydides ob¬ serves, generally left the field in the summer, and returned home to reap the harvest. The Roman people, under their kings and during the first ages of the republic, served in the same manner. It was not till the siege of Veii, that they who staid at home began to contribute something towards maintaining those who went to "war. In the European monarchies, which were founded upon the ruins of the Roman empire, both before and for some time after the establishment of what is properly called the feudal law, the great lords, with all their immediate dependents, used to serve the crown at their own expense. In the field, in the same manner as at home, they maintained themselves by their own revenue, and not by any stipend or pay which they received from the king upon that parti¬ cular occasion. In a more advanced state of society, two different causes contribute to render it alto¬ gether impossible that they who take the field should maintain themselves at their own expense. Those two causes are, the progress of manufactures, and the improve¬ ment in the art of war. Though a husbandman should be employed in an expedition, provided it begins after seed-time and ends before harvest, the inter¬ ruption of his business will not always oc¬ casion any considerable diminution of his revenue. Without the intervention of his labour, nature does herself the greater part of the work which remains to be done. But the moment that an artificer, a smith, a car¬ penter, or a weaver, for example, quits, his workhouse, the sole source of his revenue is completely dried up. Nature does nothing for him ; he does all for himself. When he takes the field, therefore, in defence of the public, as he has no revenue to maintain himself, he must necessarily be maintained by the public. But in a country, of which a great part of the inhabitants are artificers and manufacturers, a great part of the people who go to war must be drawn from those classes, and must therefore be maintained by the public as long as they are employed in its service. When the art of war too has gradually grown up to be a very intricate and compli¬ cated science, when the event of war ceases to be determined, as in the first ages of so¬ ciety, by a single irregular skirmish or battle, but when the contest is generally spun out through several different campaigns, each of which lasts during the greater part of the year ; it becomes universally necessary that the public should maintain those who serve the public in war, at least while they are employed in that service. Whatever, in time of peace, might be the ordinary occu¬ pation of those who go to war, so very tedious and expensive a service would otherwise be by far too heavy a burden upon them. After the second Persian war, accordingly, the armies of Athens seem to have been gene¬ rally composed of mercenary troops ; con¬ sisting, indeed, partly of citizens, but partly too of foreigners ; and all of them equally hired and paid at the expense of the state. From the time of the siege of Veii, the armies of Rome received pay for their service during the time which they remained in the field. Under the feudal governments, the military service both of the great lords and of their immediate dependents was, after a certain period, universally exchanged for a payment in money, which was employed to maintain those who served in their stead. The number of those who can go to war, in proportion to the whole number of the people, is necessarily much smaller in a civilised than in a rude state of society. In a civilised society, as the soldiers are main¬ tained altogether by the labour of those who are not soldiers, the number of the former can never exceed what the latter can main¬ tain, over and above maintaining, in a man¬ ner suitable to their respective stations, both themselves and the other officers of govern¬ ment and law, whom they are obliged to maintain. In the little agrarian states of ancient Greece, a fourth or a fifth part of the whole body of the people considered themselves as soldiers, and would sometimes, it is said, take the field. Among the civil¬ ised nations of modern Europe, it is com¬ monly computed, that not more than one hundredth part of the inhabitants of any country can be employed as soldiers, without ruin to the country which pays the expense of their service. The expense of preparing the army for the field seems not to have become consider¬ able in any nation, till long after that of maintaining it in the field had devolved entirely upon the sovereign or common¬ wealth. In all the different republics of ancient Greece, to learn his military exer¬ cises, was a necessary part of education im¬ posed by the state upon every free citizen. Book V. 314 EXPENSE ( In every city there seems to have been a public field, in which, under the protection of the public magistrate, the young people were taught their different exercises by dif¬ ferent masters. In this very simple institu¬ tion, consisted the whole expense which any Grecian state seems ever to have been at, in preparing its citizens for war. In ancient Rome, the exercises of the Campus Martius answered the same purpose with those of the Gymnasium in ancient Greece. Under the feudal governments, the many public ordin¬ ances, that the citizens of every district should practise archery, as well as several other military exercises, were intended for promoting the same purpose, but do not seem to have promoted it so well. Either from want of interest in the officers intrust¬ ed with the execution of those ordinances, or from some other cause, they appear to have been universally neglected ; and in the pro¬ gress. of all those governments, military exercises seem to have gone gradually into disuse among the great body of the people. In the republics of ancient Greece and Rome, during the whole period of their ex¬ istence, and under the feudal governments, for a considerable time after their first estab¬ lishment, the trade of a soldier was not a separate, distinct trade, which constituted the sole or principal occupation of a parti¬ cular class of citizens. Every subject of the state, whatever might be the ordinary trade or occupation by which he gained his liveli¬ hood, considered himself, upon all ordinary occasions, as fit likewise to exercise the trade of a soldier, and, upon many extraordinary occasions, as bound to exercise it. The art of war, however, as it is certainly the noblest of all arts, so in the progress of improvement it necessarily becomes one of the most complicated among them. The state of the mechanical, as well as of some other arts, with which it is necessarily con¬ nected, determines the degree of perfection to which it is capable of being carried at any particular time. But in order to carry it to this degree of perfection, it is necessary that it should become the sole or principal occu¬ pation of a particular class of citizens ; and the division of labour is as necessary for the improvement of this as of every other art. Into other arts the division of labour is na¬ turally introduced by the prudence of indi¬ viduals, who find that they promote their private interest better by confining themselves to a particular trade, than by exercising a great number. But it is the wisdom of the state only which c^in render the trade of a soldier a particular trade, separate and dis¬ tinct from all others. A private citizen who, in time of profound peace, and without anv particular encouragement from the public, should spend the greater part of his time in military exercises, might, no doubt, both 7 DEFENCE. improve himself very much in them, and amuse himself very well; but he certainl) would not promote his own interest. It is the wisdom of the state only which can ren¬ der it for his interest to give up the greater part of his time to this peculiar occupation ; and states have not always had this wisdom, even when their circumstances had become such that the preservation of their existence required that they should have it. A shepherd has a great deal of leisure ; a husbandman, in the rude state of husbandry, has some ; an artificer or manufacturer has none at all. The first may, without any loss, employ a great deal of his time in mar¬ tial exercises ; the second may employ some part of it ; but the last cannot employ a single hour in them without some loss, and his attention to his own interest naturally leads him to neglect them altogether. Those improvements in husbandry, too, which the progress of arts and manufactures necessarily introduces, leave the husbandman as little leisure as the artificer. Military exercises come to be as much neglected by the in¬ habitants of the country as by those of the town, and the great body of the people be¬ comes altogether unwarlike. That wealth, at the same time, which always follows the improvements of agriculture and manufac¬ tures, and which in reality is no more than the accumulated produce of those improve¬ ments, provokes the invasion of all their neighbours. An industrious, and upon that account a wealthy nation,, is of all nations the most likely to be attacked ; and unless the state takes some new measures for the public defence, the natural habits of the people render them altogether incapable of defending themselves. In these circumstances, there seem to be but two methods by which the state can make any tolerable provision for the public defence. It may either, first, by means of a very rigorous police, and in spite of the whole bent of the interest, genius, and inclinations of the people, enforce the practice of military exercises, and oblige either all the citizens of the military age, or a certain number of them, to join in some measure the trade of a soldier to whatever other trade or profession they may happen to carry on. Or, secondly, by maintaining and employ¬ ing a certain number of citizens in the con¬ stant practice of military exercises, it may render the trade of a soldier a particular trade, separate and distinct from all others. If the state has recourse to the first of those two expedients, its military force is said to consist in a militia; if to the second, it is said to consist in a standing army. The practice of military exercises is the sole or principal occupation of the soldiers of a standing army, and the maintenance or pay Chap. I. EXPENSE OF DEFENCE. SI 5 which the state affords them is the principal and ordinary fund of their subsistence. The practice of military exercises is only the occa¬ sional occupation of the soldiers of a militia, and they derive the principal and ordinary fund of their subsistence from some other oc¬ cupation. In a militia, the character of the labourer, artificer, or tradesman, predomin¬ ates over that of the soldier; in a standing army, that of the soldier predominates ovei every other character; and in this distinction seems to consist the essential difference be¬ tween those two different species of military force* ,.,- Militias have been of several different kinds. In some countries, the citizens des¬ tined for defending the state seem to have been exercised only, without being, if I may say so, regimented; that is, without being divided into separate and distinct bodies of troops, each of which performed its exercises under its own proper and permanent offi¬ cers. In the republics of ancient Greece and Rome, each citizen, as long as he re¬ mained at home, seems to have practised liis exercises either separately and independently, or with such of his equals as he liked best; and not to have been attached to any par¬ ticular body of troops till he was actually called upon to take the field. In other countries, the militia has not only been ex¬ ercised but regimented. In England, in Switzerland, and, I believe, in every other country of modern Europe, where any im¬ perfect 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 which the soldiers had, each individually, the greatest skill and dex¬ terity in the use of their arms. Strength and agility of body were of the highest con¬ sequence, and commonly determined the fate of battles. But this skill and dexteiity in the use of their arms could be acquired only, in the same manner as fencing is at present, by practising, not in great bodies, but each man separately, in a particular school, under a particular master, or with his own particular equals and companions. Since the invention of fire-arms, strength and agility of body, or even extraordinary dexterity and skill in the use of arms, though they are far from being of no consequence, are however of less consequence. The nature of the weapon, though it by no means puts the awkward upon a level with the skilful, puts him more nearly so than he ever was before. All the dexterity and skill, it is supposed, which are necessary for using it, can be well enough acquired by practising in great bodies. Regularity, order, and prompt obedience to command, are qualities which, in modern armies, are of more importance towards determining the fate of battles, than the dex¬ terity and skill of the soldiers in the use of their arms. But the noise of fire-arms, the smoke, and the invisible death to which every man feels himself every moment ex¬ posed, as soon as he comes within cannon- shot, and frequently a long time before the battle can be well said to be engaged, must render it very difficult to maintain any con¬ siderable degree of this regularity, order, and prompt obedience, even in the beginning of a modern battle. In an ancient battle, there was no noise but what arose from the human voice; there was no smoke, there was no invisible cause of wounds or death. Every man, till some mortal weapon actually did appioach him, saw clearly that no such weapon was near him. In these circumstances, and among troops who had some confidence in their own skill and dexterity in the use of their arms, it must have been a good deal less difficult to preserve some degree of regu¬ larity and order, not only in the beginning, but through the whole progress of an ancient battle, and till one of the two armies was fairly defeated. But the habits of regulant), order, and prompt obedience to command, can be acquired only by troops which are ex¬ ercised in great bodies* A militia, however, in whatever manner it may be either disciplined or exercised, must always be much inferior to a well-dis¬ ciplined and well-exercised standing army. The soldiers who are exercised only once a week, or once a month, can never be so ex¬ pert in the use of their arms as those who are exercised every day, or every other day ; and though this circumstance may not be of so much consequence in modern, as it was m ancient times, yet the acknowledged superi¬ ority of the Prussian troops, owing, it is said, very much to their superior expertness in their exercise, may satisfy us that it is, even at this day, of very considerable con¬ sequence. . The soldiers who are bound to obey their officer only once a week or once a month, and who are at all other times at liberty to manage their own affairs their own way, without being in any respect accountable to him, can nc^ er be under the same awe in his presence, can never have the same disposition to ready obe¬ dience, with those whose whole life and con¬ duct are every day directed by him, and who every day even rise and go to bed, or at least retire to their quarters, according to his orders. In what is called discipline, or in the habit of ready obedience, a militia must always be still more inferior to a standing army, than it may sometimes be in what is called the manual exercise, or in the manage¬ ment and use of its arms. But, in modern 816 EXPENSE OF DEFENCE. war, the habit of ready and instant obedi¬ ence is of much greater consequence than a considerable superiority in the management of arms. Those militias which, like the Tartar or Arao militia, go to war under the same chieftains whom they are accustomed to obey in peace, are by far the best. In respect for their officers, in the habit of ready obedience, they approach nearest to standing armies' rhe highland militia, when it served under its own chieftains, had some advantage of the same kind. As the highlanders, how¬ ever, were not wandering, but stationary shepherds, as they had all a fixed habitation, and were not, in peaceable times, accustomed to follow their chieftain from place to place ; so in time of war they were less willing to follow him to any considerable distance, or to continue for any long time in the field. When they had acquired any booty, they were eager to return home, and his authority was seldom sufficient to detain them. In point of obedience they were always much inferior to what is reported of the Tartars and Arabs. As the highlanders, too, from their stationary life, spend less of their time in the open air, they were always less accus¬ tomed to military exercises, and were less expert in the use of their arms than the Tartars and Arabs are said to be. A militia of any kind, it must be ob- servea, however, which has served for several successi\ e campaigns in the field, becomes in every respect a standing army. The soldiers are every day exercised in the use of their arms, and, being constantly under the com¬ mand of their officers, are habituated to the same prompt obedience which takes place in standing armies. \\ hat they were before they took the field, is of little importance. The\ necessarily become in every respect a standing army,, after they have passed a few campaigns in it. Should the war in Ame¬ rica drag out through another campaign, the American militia may become in every re¬ spect a match for that standing army, of which the valour appeared, in the last war, at least not inferior to that of the hardiest veterans of France and Spain. This distinction being well understood, the history of all ages, it will be found, bears testimony to the irresistible superiority which a well-regulated standing army has over a militia. One of the first standing armies of which we have any distinct account in any well- authenticated history, is that of Philip of iUacedon. His frequent wars with the Thracians, Illyrians, Thessalians, and some of the Greek cities in the neighbourhood of ~ Dicedon, gradually formed Lis troops, which in the beginning were probably militia, to t e exact discipline of a standing army, w hen ho was at peace, which he was very Boos V. seldom, and never for any long time together, he was careful not to disband that army It vanquished and subdued, after a lon Birth and fortune are evidently the two circumstances which principally set one man above another. They are the two great sources of personal distinction, and are there¬ fore the principal causes which naturally establish authority and subordination among men. Among nations of shepherds, both those causes operate with their full force. The great shepherd or herdsman, respected an account of his great wealth, and of the ?reat number of those who depend upon him 'or subsistence, and revered on account of the nobleness of his birth, and of the immemo- *ial antiquity of his illustrious family, has a latural authority over all the inferior shep- lerds or herdsman of his horde or clan. He ‘an command the united force of a greater lumber of people than any of them. His nilitary power is greater than that of any >f them. In time of war they are all of them naturally disposed to muster themselves under his banner, rather than under that of any other person, and his birth and fortune thus naturally procure to him some sort of executive power. By commanding, too, the united force of a greater number of people than any of them, he is best able to compel any one of them who may have injured an¬ other to compensate the wrong. He is the person, therefore, to whom all those who are too weak to defend themselves naturally look up for protection. It is to him that they naturally complain of the injuries which they imagine have been done to them, and his interposition in such cases is more easily submitted to, even by the person complained of, than that of any other person would be. His birth and fortune thus naturally procure him some sort of judical authority. It is in the age of shepherds, in the second period of society, that the inequality of for¬ tune first begins to take place, and intro¬ duces among men a degree of authority and subordination which could not possibly exist before. It thereby introduces some degree of that civil government which is indispens¬ ably necessary for its own preservation ; and it seems to do this naturally, and even inde¬ pendent of the consideration of that neces¬ sity. The consideration of that necessity comes, no doubt, afterwards to contribute very much to maintain and secure that au¬ thority and subordination. The rich, in particular, are necessarily interested to sup¬ port that order of things, which can alone secure them in the possession of their own advantages. Men of inferior wealth com¬ bine to defend those of superior wealth in the possession of their property, in order that mep of superior wealth may combine to de¬ fend them in the possession of theirs. All the inferior shepherds and herdsmen feel, that the security of their own herds and flocks depends upon the security of those of the great shepherd or herdsman; that the maintenance of their lesser authority de¬ pends upon that of his greater authority ; and that upon their subordination to him depends his power of keeping their inferiors in subordination to them. They constitute a sort of little nobility, who feel themselves interested to defend the property and to support the authority of their own little sovereign, in order that he may be able to defend their property and to support their authority. Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all. I be judicial authority of such a sovereign, however, far from being a cause of expense, w’as for a long time a source of revenue to him. The persons who applied to him for Y 322 EXPENSE OF JUSTICE. Book V. justice were always willing to pay for it, and a present never failed to accompany a peti¬ tion. After the authority of the sovereign, too, was thoroughly established, the person found guilty, over and above the satisfaction which he was obliged to make to the party, was likewise forced to pay an amercement to the sovereign. He had given trouble, he had disturbed, he had broke the peace of his lord the king, and for those offences an amerce¬ ment was thought due. In the Tartar go¬ vernments of Asia, in the governments of Europe which were founded by the German and Scythian nations who overturned the Roman empire, the administration of justice was a considerable source of revenue, both to the sovereign and to all the lesser chiefs or lords who exercised under him any parti¬ cular jurisdiction, either over some particular tribe or clan, or over some particular terri¬ tory or district. Originally, both the sove¬ reign and the inferior chiefs used to exercise this jurisdiction in their own persons. After¬ war Is, they universally found it convenient to delegate it to some substitute, bailiff, or judge. This substitute, however, was still obliged to account to his principal or con¬ stituent for the profits of the jurisdiction. Whoever reads the instructions 1 which were given to the judges of the circuit in the time of Henry II. will see clearly that those judges were a sort of itinerant factors, sent round the country for the purpose of levying certain branches of the king’s revenue. In those days the administration of justice not only afforded a certain revenue to the sove¬ reign, but to procure this revenue seems to have been one of the principal advantages which he proposed to obtain by the adminis¬ tration of justice. This scheme of making the administration of justice subservient to the purposes of re¬ venue, could scarce fail to be productive of several very gross abuses. The person who applied for justice with a large present in his hand, was likely to get something more than justice ; while he who applied for it with a small one, was likely to get some¬ thing less. Justice too might frequently be delayed, in order that this present might be repeated. The amercement, besides, of the person complained of, might frequently sug¬ gest a very strong reason for finding him in the wrong, even when he had not really been so. That such abuses were far from being uncommon, the ancient history of every country in Europe bears witness. When the sovereign or chief exercised his judicial authority in his own person, how much soever he might abuse it, it must have been scarce possible to get any redress; be¬ cause there could seldom be any body pow- 1 They are to be found in Tyrrel’s History of England. erful enough to call him to account. When he exercised it by a bailiff, indeed, redress might sometimes be had. If it was for his own benefit only that the bailiff had been guilty of any act of injustice, the sovereign himself might not always be unwilling to punish him, or to oblige him to repair the wrong. But if it was for the benefit of his sovereign, if it was in order to make court to the person who appointed him and who might prefer him, that he had committed any act of oppression, redress would, upon most occasions, be as impossible as if the sovereign had committed it himself. In all barbarous governments, accordingly, in all those an¬ cient governments of Europe in particular which were founded upon the ruins of the Roman empire, the administration of justice appears for a long time to have been ex¬ tremely corrupt; far from being quite equal and impartial, even under the best monarchs, and altogether profligate under the worst. Among nations of shepherds, where the sovereign or chief is only the greatest shep¬ herd or herdsman of the horde or clan, he is maintained, in the same manner as any of his vassals or subjects, by the increase of his own herds or flocks. Among those nations of husbandmen who are but just come out of the shepherd state, and who are not much advanced beyond that state, — such as the Greek tribes appear to have been about the time of the Trojan war, and our German and Scythian ancestors -when they first settled upon the ruins of the western empire, — the sovereign or chief is, in the same manner, only the greatest landlord of the country, and is maintained, in the same manner as any other landlord, by a revenue derived from his own private estate, or from what, in modern Europe, "was called the demesne of the crown. His subjects, upon ordinary occasions, contribute nothing to his support, except when, in order to protect them from the oppression of some of their fellow-sub¬ jects, they stand in need of his authority. The presents which they make him upon such occasions, constitute the whole ordinary revenue, the whole of the emoluments which, except perhaps upon some very extraordi¬ nary emergencies, he derives from his domi¬ nion over them. When Agamemnon, in Homer, offers to Achilles for his friendship the sovereignty of seven Greek cities, the sole advantage which he mentions as likely to be derived from it was, that the people would honour him with presents. As long as such presents, as long as the emoluments of justice, or what may be called the fees of court, constituted in this manner the whole ordinary revenue which the sovereign derived from his sovereignty, it could not well be expected, it could not even decently be pro¬ posed, that he should give them up altoge¬ ther. It might, and it frequently was pro- Chap. I. EXPENSE OF JUSTICE. 323 r posed, that he should regulate and ascertain them. But after they had been so regulated and ascertained, how to hinder a person who was all-powerful from extending them be¬ yond those regulations, was still very difficult, not to say impossible. During the continu¬ ance of this state of things, therefore, the corruption of justice, naturally resulting from the arbitrary and uncertain nature of those presents, scarce admitted of any effec¬ tual remedy. *** But when from different causes, chiefly from the continually increasing expense of defending the nation against the invasion of other nations, the private estate of the sove¬ reign had become altogether insufficient for defraying the expense of the sovereignty, and when it had become necessary that the peo¬ ple should, for their own security, contribute towards this expense by taxes of different kinds, it seems to have been very commonly stipulated, that no present for the adminis¬ tration of justice should, under any pretence, be accepted either by the sovereign, or by his bailiffs and substitutes the judges. Those presents, it seems to have been supposed, could more easily be abolished altogether than effectually regulated and ascertained. Fixed salaries were appointed to the judges, which were supposed to compensate to them the loss of whatever might have been their share of the ancient emoluments of justice; as the taxes more than compensated to the{ sovereign the loss of his. Justice was then ; said to be administered gratis. r ^J Justice, however, never was in reality ad¬ ministered gratis in any country. Lawyers and attorneys at least must always be paid by the parties; and if they were not, they would perform their duty still worse than they actually perform it. The fees annually paid to lawyers and attorneys amount, in every court, to a much greater sum than the salaries of the judges. The circumstance of those salaries being paid by the crown, can nowhere much diminish the necessary ex¬ pense of a lawsuit. But it was not so much to diminish the expense, as to prevent the corruption of justice, that the judges were prohibited from receiving any present or fee from the parties. The office of judge is in itself so very ho¬ nourable that men are willing to accept of it though accompanied with very small emo¬ luments. The inferior office of justice of peace, though attended with a good deal of trouble, and in most cases with no emolu¬ ments at all, is an object of ambition to the greater part of our country gentlemen. The salaries of all the different judges, high and low, together with the whole expense of the administration and execution of justice, even where it is not managed with very good eco¬ nomy, makes, in any civilised country, but a very inconsiderable part of the whole ex¬ pense of government. The whole expense of justice too might easily be defrayed by the fees of court; and without exposing the administration of justice to any real hazard of corruption, the pubUc revenue might thus be entirely dis¬ charged from a certain though perhaps but a small incumbrance. It is difficult to regulate the fees of court effectually, where a person so powerful as the sovereign is to share in them, and to derive any considerable part of his revenue from them. It is very easy where the judge is the principal person who can reap any benefit from them. The law can very easily oblige the judge to respect the regulation, though it might not always be able to make the sovereign respect it. Where the fees of court are precisely regulated and ascertained, where they are paid all at once at a certain period of every process into the hands of a cashier or receiver, to be by him distributed in certain known proportions among the different judges after the process is decided, and not till it is decided, there seems to be no more danger of corruption than where such fees are prohibited altogether. Those fees, with¬ out occasioning any considerable increase in the expense of a lawsuit, might be rendered fully sufficient for defraying the whole expense of justice. But not being paid to the judges till the process was determined, they might be some incitement to the diligence of the court in examining and deciding it. In courts which consisted of a considerable number of judges, by pro¬ portioning the share of each judge to the number of hours and days which he had employed in examining the process, either in the court or in a committee by order of the court, those fees might give some encouragement to the diligence of each particular judge. Public services are never better performed than when their reward comes only in consequence of their being performed, and is proportioned to the dili¬ gence employed in performing them. In the different parliaments of France, the fees of court (called epices and vacations) consti¬ tute 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 these epices too is according to the diligence of the judges. A diligent judge gains a comfort¬ able though moderate revenue by his office, Y 2 324 EXPENSE OF JUSTICE. Book V. an idle one gets little more than his salary. Those parliaments are perhaps, in many respects, not very convenient courts of justice ; but they have never been accused; they seem never even to have been suspected of corruption. The fees of court seem originally to have been the principal support of the different courts of justice in England. Each court endeavoured to draw to itself as much busi¬ ness as it could, and was, upon that account, willing to take cognisance of many suits which were not originally intended to fall under its jurisdiction. The Court of King’s Bench, instituted for the trial of criminal causes only, took cognisance of civil suits; the plaintiff pretending that the defendant, in not doing him justice, had been guilty of some trespass or misdemeanour. The court of exchequer, instituted for the levying of ihe king’s -revenue, and for enforcing the payment of such debts only as were due to the king, took cognisance of all other con¬ tract debts; the plaintiff alleging that he could not pay the king, because the defend¬ ant would not pay him. In consequence of such fictions it came, in many cases, to de¬ pend altogether upon the parties, before what court they would choose to have their cause tried; and each court endeavoured, by superior dispatch and impartiality, to draw to itself as many causes as it could. The present admirable constitution of the courts of justice in England was perhaps originally, in a great measure, formed by this emulation, which anciently took place between their respective judges; each judge endeavouring to give, in his own court, the speediest and most effectual remedy which the law would admit, for every sort of in¬ justice. Originally, the courts of law gave damages only for breach of contract. The Court of Chancery, as a court of conscience, first took upon it to enforce the specific per¬ formance of agreements. When the breach of contract consisted in the nonpayment of money, the damage sustained could be com¬ pensated in no other way than by ordering payment, which was equivalent to a specific performance of the agreement. In such cases, therefore, the remedy of the courts of law was sufficient. It was not so in others. When the tenant sued his lord for having unjustly outed him of his lease, the damages which he recovered were by no means equi¬ valent to the possession of the land. Such causes, therefore, for some time, went all to the Court of Chancery, to the no small loss of the courts of law. It was to draw back such causes to themselves that the courts of law are said to have invented the artificial and fictitious writ of ejectment, the most effec¬ tual remedy for an unjust outer or disposses¬ sion of land. A stamp duty upon the law proceedings of each particular court, to be levied by that court, and applied towards the maintenance of the judges and other officers belonging to it, might, in the same manner, afford a reve¬ nue sufficient for defraying the expense of the administration of justice, without bring¬ ing any burden upon the general revenue ox the society. The judges indeed might, in this case, be under the temptation of multi- plying unnecessarily the proceedings upon every cause, in order to increase, as much as possible, the produce of such a stamp duty. It has been the custom in modern Europe to regulate, upon most occasions, the pay¬ ment of the attorneys and clerks of court according to the number of pages which they had occasion to write ; the court, however, requiring that each page should contain so many lines, and each line so many words. In order to increase their payment, the at¬ torneys and clerks have contrived to multi¬ ply words beyond all necessity, to the cor¬ ruption of the law language of, I believe, every court of justice in Europe. A like temptation might perhaps occasion a like corruption In the form of law proceedings. But whether the administration of justice be so contrived as to defray its own expense, or whether the judges be maintained by fixed salaries paid to them from some other fund, it does not seem necessary that the person or persons intrusted with the executive power should be charged with the management of that fund, or with the payment of those sala¬ ries. That fund might arise from the rent of landed estates, the management of each estate being intrusted 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 intrusted to the court which was to be maintained by it. A part, though indeed but a small part, of the salary of the judges of the court of session in Scotland, arises from the interest of a sum of money. The necessary instability of such a fund seems, however, to render it an im¬ proper one for the maintenance of an institu¬ tion which ought to last for ever. The separation of the judicial from the executive power, seems originally to have arisen from the increasing business of the society, in consequence of its increasing im¬ provement. The administration of justice became so laborious and so complicated a duty, as to require the undivided attention of the person to whom it was intrusted. The person intrusted with the executive power, not having leisure to attend to the decision of private causes himself, a deputy was appointed to decide them in his stead. In the progress of the Roman greatness, the consul was too much occupied with the political affairs of the state to attend to the administration of justice. A pretor, there- Chap. I. EXPENSE OF JUSTICE. S 25 fore, 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 came universally to con¬ sider the administration of justice as an office both too laborious and too ignoble for them to execute in their own persons. They universally, therefore, discharged them¬ selves of it by appointing a deputy, bailiff, or judge. When the judicial is united to the execu¬ tive power, it is scarce possible that justice should not frequently be sacrificed to what is vulgarly called politics. The persons in¬ trusted with the great interests of the state may, even without any corrupt views, some¬ times imagine it necessary to sacrifice to those interests the rights of a private man. But upon the impartial administration of justice depends the liberty of every indi¬ vidual, the sense which he has of his own security. In order to make every individual feel himself perfectly secure in the possession of every right which belongs to him, it is not only necessary that the judicial should be separated from the executive power, but that it should be rendered as much as possible independent of that power. The judge should not be liable to be removed from his office according to the caprice of that power. The regular payment of his salary should not depend upon the good will, or even upon the good economy of that power. Part III. Of the Expense of public Works and public Institutions . t r The third and last duty of the sovereign or commonwealth, is that of erecting and main¬ taining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are however of such a nature, that the profit could never repay the expense to any individual, or small number of indivi¬ duals j and which it, therefore* cannot be expected that any individual, or small num¬ ber of individuals, should erect or maintain. The performance of this duty requires, too, very different degrees of expense in the dif¬ ferent periods of society. . After the public institutions and public works necessary for the defence of the so¬ ciety, and for the administration of justice, both of which have already been mentioned, the other works and institutions of this kind are chiefly those for facilitating the com¬ merce of the society, and those for promoting the instruction of the people. The institu¬ tions for instruction are of two kinds : those for the education of the youth, and those for the instruction of people of all ages. The consideration of the manner in which the expense of those different sorts of public works and institutions may be most properly defrayed will divide this third part of the present chapter into three different articles. ARTICLE i. Of the public Works and Institutions for facilitating the Commerce of the Society. And,first, of those which are necessary for facilitating Commerce in general. That the erection and maintenance of the public works which facilitate the commerce of any country, such as good roads, bridges, navigable canals, harbours, &c. must require very different degrees of expense in the dif¬ ferent periods of society, is evident without any proof. The expense of making and maintaining the public roads of any country must evidently increase with the annual produce of the land and labour of that country, or with the quantity and weight of the goods which it becomes necessary to fetch and carry upon those roads. The strength of a bridge must be suited to the number and weight of the carriages which are likely to pass over it. The depth and the supply of water for a navigable canal must be proportioned to the number and tonnage of the lighters which are likely to carry goods upon it; the extent of a harbour to the number of the shipping which are likely to take shelter in it. It does not seem necessarv that the ex- pense of those public works should be de¬ frayed from that public revenue, as it is commonly called, of which the collection and application is, in most countries, assigned to the executive power. The greater part of such public works may easily be so ma¬ naged as to afford a particular revenue, sufficient for defraying their own expense, without bringing any burden upon the gene¬ ral revenue of the society. A highway, a bridge, a navigable canal, for example, may in most cases be both made and maintained by a small toll upon the carriages which make use of them: a har¬ bour, by a moderate port-duty upon the tonnage of the shipping which load or un¬ load in it. The coinage, another institution for facilitating commerce, in many coun¬ tries, not only defrays its own expense, but affords a small revenue or a seignorage to the sovereign. The post-office, another in¬ stitution for the same purpose, over and above defraying its own expense, affords, in almost all countries, a very considerable re¬ venue to the sovereign. When the carriages which pass over a highway or a bridge, and the lighters which sail upon a navigable canal, pay toll in pro¬ portion to their weight or their tonnage, they pay for the maintenance of those public works exactly in proportion to the wear and Y 3 326 EXPENSE OF PUBLIC WORKS. Book V. tear which thev occasion of them. It seems | * scarce possible to invent a more equitable way of maintaining such works. This tax or toll, too, though it is advanced by the carrier, is finally paid by the consumer, to whom it must always be charged in the price of the goods. As the expense of carriage, however, is very much reduced by means of such public works, the goods, notwithstand¬ ing the toll, come cheaper to the consumer than they could otherwise have done; their price not being so much raised by the toll, as it is lowered by the cheapness of the car¬ riage. The person who finally pays this tax, therefore, gains by the application more than he loses by the payment of it. His payment is exactly in proportion to his gain. It is in reality no more than a part of that gain which he is obliged to give up, in order to get the rest. It seems impossible to imagine a more equitable method of rais¬ ing a tax. When the toll upon carriages of luxury, upon coaches, post-chaises, &c., is made somewhat higher in proportion to their weight than upon carriages of necessary use, such as carts, waggons, &c., the indolence and vanity of the rich is made to contribute in a very easy manner, to the relief of the poor, by rendering cheaper the transportation of heavy goods to all the different parts of the country. When high roads, bridges, canals, &c. are in this manner made and supported by the commerce which is carrried on by means of them, they can be made only where that commerce requires them, and, consequently, where it is proper to make them. Their expense, too, their grandeur and magni¬ ficence, must be suited to what that com¬ merce can afford to pay. They must be made consequently as it is proper to make them. A magnificent high road cannot be made through a desert country, where there is little or no commerce, or merely because it happens to lead to the country villa of the intendant of the province, or to that of some great lord to whom the intendant finds it convenient to make his court. A great bridge cannot be thrown over a river at a o place where nobody passes, or merely to em¬ bellish the view from the windows of a neighbouring palace ; things which some¬ times happen in countries where works of this kind are carried on by any other revenue than that which they themselves are capable of affording. In several different parts of Europe, the toll or lock-duty upon a canal is the property of private persons, whose private interest obliges them to keep up the canal. If it is not kept in tolerable order, the navigation necessarily ceases altogether, and along w r ith it the whole profit which they can make by the tolls. If those tolls were put under the management of commissioners, who had themselves no interest in them, they nrght be less attentive to the maintenance of the works which produced them. The canal of Languedoc cost the king of France and the province upwards of thirteen millions of livres, which (at twenty-eight livres the mark of silver, the value of French money in the end of the last century) amounting to up¬ wards of nine hundred thousand pounds sterling. When that great work was finished, the most likely method, it was found, of keeping it in constant repair, was to make a present of the tolls to Riquet, the engineer, who planned and conducted the work. Those tolls constitute at present a very large estate to the different branches of the family of that gentleman, who have therefore a great interest to keep the work in constant repair. But had those tolls been put under the management of commissioners, who had no such interest, they might perhaps have been dissipated in ornamental and unneces¬ sary expenses, while the most essential parts of the work were allowed to go to ruin. The tolls for the maintenance of a hish road cannot with any safety be made the w m property of private persons. A high road though entirely neglected, does not become altogether impassable, though a canal does. The proprietors of the tolls upon a high road, therefore, might neglect altogether the repair of the road, and yet continue to levy very nearly the same tolls. It is proper, therefore, that the tolls for the maintenance of such a work should be put under the management of commissioners or trustees. In Great Britain, the abuses which the trustees have committed in the management of those tolls, have in many cases been very justly complained of. At many turnpikes, it has been said, the money levied is more than double of what is necessary for execut¬ ing, in the completest manner, the work which is often executed in a very slovenly manner, and sometimes not executed at all. The system of repairing the high roads by tolls of this kind, it must be observed, is not of very long standing. We should not won¬ der, therefore, if it has not yet been brought to that degree of perfection of which it seems capable. If mean and improper persons are frequently appointed trustees, and if proper courts of inspection and account have not yet been established for controlling their conduct, and for reducing the tolls to what is barely sufficient for executing the work to be done by them, the recency of the insti¬ tution both accounts and apologises for those defects, of which, by the wisdom of parlia¬ ment, the greater part may iu due time be gradually remedied. The money levied at the different turn- pikes in Great Britain is supposed to exceed so much what is necessary for repairing the Chap. I. ROADS, CANALS, &c. S27 I | | ( I f r i . I I i |t i j L roads, that the savings which, with proper economy, might be made from it, have been considered, even by some ministers, as a very great resource which might at some time or another be applied to the exigencies of the state. Government, it has been said, by taking the management of the turnpikes into ifs own hands, and by employing the soldiers, who would work for a very small addition to their pay, could keep the roads in good order at a much less expense than it can be done by trustees, who have no other workmen to employ but such as derive their whole sub¬ sistence from their wages. A great revenue, half a million, perhaps 1 , it 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 expense of the state, in the same manner as the post- office does at present. 2 That a considerable revenue might be gained in this manner, I have no doubt, though probably not near so much as the projectors of this plan have supposed. The plan itself, however, seems liable to several very important objections. First , If the tolls which are levied at the turnpikes should ever be considered as one of the resources for supplying the exigencies of the state, they would certainly be augmented as those exigencies were supposed to require. According to the policy of Great Britain, therefore, they would probably be augmented very fast. The facility with which a great revenue could be drawn from them, would probably encourage administration to recur very frequently to this resource. Though it may, perhaps, be more than doubtful whe¬ ther half a million could by any economy be saved out of the present tolls, it can scarce be doubted but that a million might be saved out of them, if they were doubled; and perhaps two millions, if they were tripled. 3 This great revenue, too, might be levied without the appointment of a single new officer to collect and receive it; but the turnpike tolls being continually augmented in this manner, instead of facilitating the inland commerce of the country as at pre¬ sent, would soon become a very great in¬ cumbrance upon it. The expense of trans¬ porting all heavy goods from one part of the country to another, would soon be so much increased, the market for all such goods consequently would soon be so much nar¬ rowed, that their production would be in a great measure discouraged, and the most im¬ portant branches of the domestic industry of the country annihilated altogether. 1 Since publishing' the two first editions of this book, I have got good reasons to believe that all the turnpike tolls levied in Great Britain do not produce a neat revenue that amounts to half a million ; a sum which, under the management of government, would not be sufficient to keep in repair five of the principal roads in the kingdom. (Note by the author.) Secondly , A tax upon carriages in pro¬ portion to their weight, though a very equal tax when applied to the sole purpose of repairing the roads, is a very unequal one when applied to any other purpose, or to supply the common exigencies of the state. When it is applied to the sole purpose above mentioned, each carriage is supposed to pay exactly for the wear and tear which that carriage occasions of the roads. But when it is applied to any other purpose, each car¬ riage is supposed to pay for more than that wear and tear, and contributes to the supply of some other exigency of the state. But as the turnpike toll raises the price of goods in proportion to their weight and not to their value, it is chiefly paid by the consumers of coarse and bulky, not by those of precious and light, commodities. Whatever exigency of the state, therefore, this tax might be intended to supply, that exigency would be chiefly supplied at the expense of the poor, not of the rich ; at the expense of those who are least able to supply it, not of those who are most able. Thirdly , If government should at any time neglect the reparation of the high roads it would be still more difficult than it is at present to compel the proper application of any part of the turnpike tolls. A large re¬ venue might thus be levied upon the people, without any part of it being applied to the only purpose to which a revenue levied in this manner ought ever to be applied. If the meanness and poverty of the trustees of turnpike roads render it sometimes difficult, at present, to oblige them to repair their wrong; their wealth and greatness would render it ten times more so in the case which is here supposed. In France, the funds destined for the reparation of the high roads are under the immediate direction of the executive power. Those funds consist, partly in a certain number of days’ labour, which the country people are in most parts of Europe obliged to give to the reparation of the highways; and partly in such a portion of the general revenue of the state as the king chooses to spare from his other expenses. By the ancient law of France, as well as by that of most other parts of Europe, the labour of the country people was under the direction of a local or provincial magistracy, which had no immediate dependency upon the king’s council. But, by the present prac¬ tice, both the labour of the country people, whatever other fund the king may cnoose to assign for the reparation of the high roads in any particular province or generality, are 2 For some remarks on this subject, see supple¬ mental note on Tolls and Highways. 3 I have now good reasons to believe that all these conjectural sums are by much too large. (Not« by the author.) Y 4 32S EXPENSE OF PUBLIC WORKS. Book V entirely under the management of the in- tendant; an officer who is appointed and removed by the king’s council, who receives his orders from it, and is in constant corre¬ spondence with it. In the progress of des¬ potism, the authority of the executive power gradually absorbs that of every other power in the state, and assumes to itself the ma¬ nagement of every branch of revenue which is destined for any public purpose. In France, however, the great post-roads, the roads which make the communication be¬ tween the principal towns of the king- dom, 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 impass¬ able for any heavy carriage. In some places it is even dangerous to travel on horseback, and mules are the only conveyance which can safely be trusted. The proud minister of an ostentatious court may frequently take pleasure in executing a work of splendour and magnificence, such as a great highway, which is frequently seen by the principal nobility, whose applauses not only flatter his vanity, but even contribute to support his interest at court. But to execute a great number of little works, in which no¬ thing that can be done can make any great appearance, or excite the smallest degree of admiration in any traveller, and which, in short, have nothing to recommend them but their extreme utility, is a business which ap¬ pears, in every respect, too mean and paltry to merit the attention of so great a magis¬ trate. Under such an administration, there¬ fore, such works are almost always entirely neglected. In China, and in several other govern¬ ments of Asia, the executive power charges itself both with the reparation of the high roads, and with the maintenance of the na¬ vigable canals. In the instructions which are given to the governor of each province, those objects, it is said, are constantly recommended to him, and the judgment which the court forms of his conduct is very much regulated by the attention which he appears to have paid to this part of his instructions. This branch of public police, accordingly, is said to be very much attended to in all those countries, but particularly in China, where the high roads, and still more the navigable canals, it is pretended, exceed very much every thing of the same kind which is known in Europe, The accounts of those works, however, which have been transmitted to Europe, have generally been drawn up by weak and wondering travellers; frequently by stupid and lying missionaries. If they had been examined by more intelligent eyes, and if the accounts of them had been reported by more faithful witnesses, they would not, per¬ haps, appear to be so wonderful. The ac¬ count which Bernier gives of some works of this kind in Indostan falls very much short of what had been reported of them by other travellers more disposed to the marvellous than he was. It may too, perhaps, be in those countries, as it is in France, where the great roads, the great communications, which are likely to be the subjects of conversation at the court and in the capital, are attended to, and all the rest neglected. In China, besides, in Indostan, and in several other governments of Asia, the revenue of the sovereign arises almost altogether from a land tax or land-rent, which rises or falls with the rise and fall of the annual produce of the land. The great interest of the sovereign, therefore, his revenue, is in such countries necessarily and immediately connected with the cultivation of the land, with the greatness of its produce, and with the value of its pro¬ duce. But in order to render that produce both as great and as valuable as possible, it is necessary to procure to it as extensive a market as possible, and consequently to es¬ tablish the freest, the easiest, and the least expensive communication between all the different parts of the country; which can be done only by means of the best roads and the best navigable canals. But the revenue of the sovereign does not, in any part of Europe, arise chiefly from a land-tax or land-rent. In all the great kingdoms of Europe, perhaps, the greater part of it may ultimately depend upon the produce of the land : but that de¬ pendency is neither so immediate nor so evident. In Europe, therefore, the sovereign does not feel himself so directly called upon to promote the increase, both in quantity and value, of the produce of the land, or by main¬ taining good roads and canals, to provide the most extensive market for that produce. Though, it should be true, therefore, what I apprehend is not a little doubtful, that in some parts of Asia this department of the public police is very properly managed by the executive power, there is not the least probability that during the present state of things, it could be tolerably managed by that power in any part of Europe. Even those public works which are of such a nature that they cannot afford any revenue for maintaining themselves, but of which the conveniency is nearly confined to some particular place or district, are always better maintained by a local or provincial revenue, under the management of a local and provincial administration, than by the general revenue of the state, of which the executive power must always have the ma¬ nagement. Were the streets of London to be lighted and paved at the expense of the treasury, is there any probability that they Chat*. I. REGULATED COMPANIES, &c ? S29 would be so well lighted and paved as they are at present, or even at so small an expense? The expense, besides, instead of being raised by a local tax upon the inhabitants of each particular street, parish, or district in Lon¬ don, would in this case be defrayed out of the general revenue of the state, and would consequently be raised by a tax upon all the inhabitants of the kingdom, of whom the greater part derive no sort of benefit from the lighting and paving of the streets of London. The abuses which sometimes creep into the local and provincial administration of a local and provincial revenue, how enormous soever they may appear, are in reality, how¬ ever, almost always very trifling, in compari¬ son of those which commonly take place in the administration and expenditure of the revenue of a great empire.' They are, be¬ sides, 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 high¬ ways, is not always, perhaps, very judiciously applied, but it is scarce ever exacted, with any circumstance of cruelty or oppression. In France, under the administration of the intendants, the application is not always more judicious, and the exaction is frequently the most cruel and oppressive. Such cor- vees, as they are called, make one of the principal instruments of tyranny by which those officers chastise any parish or commu- neaute which has had the misfortune to fall under their displeasure. Of the Public Works and Institutions which are necessary for facilitating particular Branches of Commerce. The object of the public works and institu¬ tions above mentioned is to facilitate com¬ merce in general. But in order to facilitate some particular branches of it, particular institutions are necessary, which again re¬ quire a particular and extraordinary ex¬ pense. Some particular branches of commerce, which are carried on with barbarous and uncivilised nations, require extraordinary protection. An ordinary store or counting- house could give little security to the goods of the merchants who trade to the western coast of Africa. To defend them from the barbarous natives, it is necessary that the place where they are deposited should be in some measure fortified. The disorders in the government of Indostan have been sup¬ posed to render a like precaution necessary even among that mild and gentle people ; and it was under pretence of securing their persons and property from violence that both the English and French East India companies were allowed to erect the first forts which they possessed in that country. Among other nations, whose vigorous go¬ vernment will suffer no strangers to possess any fortified place within their territory, it may be necessary to maintain some ambas¬ sador, minister, or consul, who may both decide, according to their own customs, the differences arising among his own country¬ men ; and, in their disptues with the natives, may, by means of his public character, inter¬ fere with more authority, and afford them a more powerful protection than they could expect from any private man. The interests of commerce have frequently made it neces¬ sary to maintain ministers in foreign coun¬ tries, where the purposes either of war or alliance would not have required any. The commerce of the Turkey company first oc¬ casioned the establishment of an ordinary ambassador at Constantinople. The first English embassies to Russia arose altogether from commercial interests. The constant interference which those interests necessarily occasioned between the subjects of the dif¬ ferent states of Europe has probably intro¬ duced 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 cen¬ tury ; that is, than the time when commerce first began to extend itself to the greater part of the nations of Europe, and when they first began to attend to its interests. It seems not unreasonable that the extra¬ ordinary expense which the protection of any particular branch of commerce may occasion should be defrayed by a moderate tax upon that particular branch ; by a moderate fine, for example, to be paid by the traders when they first enter into it; or, what is more equal, by a particular duty of so much per cent, upon the goods which they either im¬ port into, or export out of, the particular countries with which it is carried on. The protection of trade in general, from pirates and freebooters is said to have given occa¬ sion to the first institution of the duties of customs. But if it was thought reasonable to lay a general tax upon trade, in order to defray the expense of protecting trade in general, it should seem equally reasonable to lay a particular tax upon a particular branch of trade, in order to defray the extra¬ ordinary expense of protecting that branch. The protection of trade in general has always been considered as essential to the defence of the commonwealth, and, upon that account, a necessary part of the duty of the executive power. The collection and application of the general duties of customs, therefore, have always been left to that power. But the protection of any particu¬ lar branch of trade is a part of the general protection of trade; a part therefore of S30 EXPENSE OF PUBLIC WORKS. Book V. the duty of that power; and if nations always acted consistently, the particular du¬ ties levied for the purposes of such particu¬ lar protection should always have been left equally to its disposal. But in this respect, as well as in many others, nations have not always acted consistently ; and in the greater part of the commercial states of Europe, particular companies of merchants have had the address to persuade the legislature to intrust to them the performance of this part of the duty of the sovereign, together with all the powers which are necessarily con¬ nected with it. These companies, though they may per¬ haps have been useful for the first introduc¬ tion of some branches of commerce, by mak¬ ing, at their own expense, an experiment which the state might not think it prudent to make, have in the long-run proved, uni¬ versally, either burdensome or useless, and have either mismanaged or confined the trade. When those companies do not trade upon a joint stock, but are obliged to admit any person, properly qualified, upon paying a certain fine, and agreeing to submit to the regulations of the company, each member trading upon his own stock, and at his own risk, they are called regulated companies. \Vhen they trade upon a joint stock, each member sharing in the common profit or loss in proportion to his share in this stock, they are called joint stock companies. Such companies, whether regulated or joint stock, sometimes have, and sometimes have not, exclusive privileges. Regulated companies resemble, in every respect, the corporations of trades, so com¬ mon in the cities and towns of all the differ¬ ent countries of Europe; and are a sort of enlarged monopolies of the same kind. As no inhabitant of a town can exercise an in¬ corporated trade, without fi^st obtaining his freedom in the corporation, so, in most cases, no subject of the state can lawfully carry on any branch of foreign trade, for which a re¬ gulated company is established, without first becoming a member of that company. The monopoly is more or less strict, according as the terms of admission are more or less dif¬ ficult, and according as the directors of the company have more or less authority, or have it more or less in their power to ma¬ nage in such a manner as to confine the greater part of the trade to themselves and their particular friends. In the most ancient re¬ gulated companies, the privileges of appren¬ ticeship were the same as in other corpo¬ rations, and entitled the person who had served his time to a member of the company, to become himself a member, either without paying any fine, or upon paying a much smaller one than what was exacted of other people. The usual corporation spirit, wherever the law does not restrain it,prevails in all regulated companies. When they have been allowed to act according to their natural genius, they have always, in order to confine the competition to as small a number of persons as possible, endeavoured to subject the trade to many burdensome regulations. When the law has restrained them from do¬ ing this, they have become altogether useless and insignificant. The regulated companies for foreign com¬ merce, which at present subsist in Great Britain, are the ancient merchant-adventur¬ ers’ company, now commonly called the Hamburgh company, the Russia company, the Eastland company, the Turkey company, and the African company. The terms of admission into the Hamburgh company are now said to be quite easy ; and the directors either have it not in their power to subject the trade to any burdensome re¬ straint or regulations, or at least have not of late exercised that power. It has not always been so. About the middle of the last cen¬ tury, the fine for admission was fifty, and at one time one hundred pounds, and the con¬ duct of the company was said to be extremely oppressive. In 1643, in 1645, and in 1661, the clothiers and free traders of the west of England complained of them to parliament, as of monopolists who confined the trade and oppressed the manufactures of the country. Though those complaints produced no act of parliament, they had probably intimidated the company so far as to oblige them to re¬ form their conduct : since that time, at least, there have been no complaints against them. By the 10th and 11th of William III. c. 6., the fine for admission into the Russian com¬ pany was reduced to five pounds: and by the 25th of Charles II. c. 7. that for admis¬ sion in the Eastland company to forty shil¬ lings; while, at the same time, Sweden, Denmark and Norway, all the countries on the north side of the Baltic, were exempted from their exclusive charter. The conduct of those companies had probably given occa¬ sion to those two acts of parliament. Before that time, Sir Josiah Child had represented both these and the Hamburgh company as extremely oppressive, and imputed to their bad management the low state of their trade, which we at that time carried on to the countries comprehended within their respect¬ ive charters. But though such companies may not, in the present times, be very op¬ pressive, they are certainly altogether useless. To be merely useless, indeed, is perhaps the highest eulogy which can ever justly be be¬ stowed upon a regulated company ; and all the three companies above mentioned seem, in their present state, to deserve this eulogy. 1 The fine for admission into the Turkey 1 These companies have now, in effect, ceased to exist. Chap. I. REGULATED COMPANIES, &c. 331 company was formerly twenty-five pounds for all persons under twenty-six years of age, and fifty pounds for all persons above that age. Nobody but mere merchants could be admitted; a restriction which excluded all shopkeepers and retailers. By a by-law, no British manufactures could be exported to Turkey but in the general ships of the com¬ pany ; and as those ships sailed always from the port of London, this restriction confined the trade to that expensive port, and the traders to those who lived in London and in its neighbourhood. By another by-law, no person living within twenty miles of London, and not free of the city, could be admitted a member ; another restriction which, joined to the foregoing, necessarily excluded all but the freemen of London. As the time for the loading and sailing of those general ships depended 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 mo¬ nopoly. Those abuses gave occasion to the act of the 26th of George II. c. 18. reducing the fine for admission to twenty pounds for all persons, without any distinction of ages, or any restriction, either to mere merchants, or to the freemen of London ; and granting to all such persons the liberty of exporting, from all the ports of Great Britain to any port in Turkey, all British goods of which the exportation was not prohibited ; and of importing from thence all Turkish goods, of which the importation was not prohibited, upon paying both the general duties of cus¬ toms, and the particular duties assessed for defraying the necessary expenses of the com¬ pany ; and submitting, at the same time, to the lawful authority of the British ambassa¬ dor and consuls resident in Turkey, and to the by-laws of the company duly enacted. To prevent any oppression by those by-laws, it was by the same act ordained, that if any seven members of the company conceived themselves aggrieved by any by-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 by-law was enacted; and that, if any seven members conceived themselves aggrieved by any by¬ law which had been enacted before the pass¬ ing 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 by-law’; and if se¬ veral of them should afterwards discover it, neither the board of trade nor the committee of council can afford them any redress. The object, besides, of the greater part of the by¬ laws of all regulated companies, as well as of all other corporations, is not so much to oppress those who are already members, as to discourage others from becoming so; which may be done not only by a high fine, but by many other contrivances. The con¬ stant view of such companies is always to raise the rate of their own profit as high as they can ; to keep the market, both for the goods, which they export and for those which they import, as much understocked as they can; which can be done only by restraining the competition, or by discouraging new ad¬ venturers from entering into the trade. A fine of twenty pounds, besides, though it may not perhaps be sufficient to discourage any man from entering into the Turkey trade with an intention to continue in it, may be enough to discourage a speculative merchant from hazarding a single adventure in it. In all tra ; es, the regular established traders, even though not incorporated, naturally com¬ bine to raise profits, w’hich are no way so likelv to be kept at all times down to their proper level as by the occasional competition of speculative adventurers. The Turkey trade, though in some measure laid open by this act of parliament, is still considered by many people as very far from being altoge¬ ther free. The Turkey company contribute to maintain an ambassador and two or three consuls, who, like other public ministers, ought to be maintained altogether by the state, and the trade laid open to all his ma¬ jesty’s subjects. The different taxes levied by the company, for this and other corpora¬ tion purposes, might afford a revenue much more than sufficient to enable the state to maintain such ministers. 1 Regulated companies, it w’as observed by Sir Josiah Child, though they had fre¬ quently supported public ministers, had never maintained any forts or garrisons in the countries to which they traded ; w’hereas joint stock companies frequently had. And in reality the former seem to be much more unfit for this sort of service than the latter. First, The directors of a regulated company have no particular interest in the prosperity of the general trade of the company, for the sake of which such forts and garrisons are maintained. The decay of that general trade may even frequently contribute to the advantage of their own private trade ; as by diminishing the number of their competitors, it may enable them both to buy cheaper and to sell dearer. The directors of a joint stock company, on the contrary, having only 1 The Turkey company surrendered all their rights and privileges into the hands of government in 1825, and have ceased to exist. 332 Boor V. EXPENSE OF their share in the profits which are made upon the common stock committed to their management, have no private trade of their own, of which the interest can be separated from that of the general trade of the com¬ 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 for its defence. They are more likely, there¬ fore, to have that continual and careful attention which that maintenance necessarilv requires. Secondly, The directors of a joint stock company have always the management of a large capital, the joint stock of the company, a part of which they may fre¬ quently employ, with propriety, in building, repairing, and maintaining such necessary forts and garrisons. But the directors of a regulated company, having the management of no common capital, have no other fund to employ in this way but the casual revenue arising from the admission fines, and from the corporation duties, imposed upon the trade of the company. Though they had the same interest, therefore, to attend to the maintenance of such forts and garrisons, they can seldom have the same ability to render that attention effectual. The main¬ tenance of a public minister requiring scarce any attention, and but a moderate and limited expense, is a business much more suitable both to the temper and abilities of a regulated company. Long after the time of Sir Josiah Child, however, in 1750, a regulated company was established, the present company of mer¬ chants trading to Africa; which was ex¬ pressly charged at first with the maintenance of all the British forts and garrisons that lie between Cape Blanc and the Cape of Good Hope, and afterwards with that of those only which lie between Cape Rouge and the Cape of Good Hope. The act which esta¬ blishes this company (23 Geo. II. c. 31.) seems to have had two distinct objects in view: first, to restrain effectually the op¬ pressive and monopolising spirit which is natural to the directors of a regulated com¬ pany ; and, secondly, to force them as much as possible to give an attention, which is not natural to them, towards the maintenance of forts and garrisons. For the first of these purposes the fine for admission is limited to forty shillings. The company is prohibited from trading in their corporate capacity, or upon a joint stock ; from borrowing money upon common seal, or from laying any restraints upon the trade which may be carried on freely from all places, and by all persons being British sub¬ jects, and paying the fine. The government is in a committee of nine persons, who meet in London, but who are chosen annually by the freemen of the company at London, PUBLIC WORKS. Bristol, and Liverpool; three from each place. No committee-man can be continued in office for more than three years together. Any committee-man might be removed by the board of trade and plantations; now by a committee of council, after being heard in his own defence. The committee are forbid to export negroes from Africa, or to import any African goods into Great Britain; but as they are charged with the maintenance of forts and garrisons, they may, for that pur¬ pose, export from Great Britain to Africa goods and stores of different kinds. Out of the monies which they shall receive from the company, they are allowed a sum, not exceeding eight hundred pounds, for the salaries of their clerks and agents at London, Bristol, and Liverpool, the house-rent of their office at London, and all other expenses of management, commission, and agency in England. What remains of this sum, after defraying these different expenses, they may divide among themselves, as compensation for their trouble, in what manner they think proper. By this constitution, it might have been expected that the spirit of mono¬ poly would have been effectually restrained, and the first of these purposes sufficiently answered. It would seem, however, that it had not. Though by the 4 Geo. III. c. 20. the fort of Senegal, with all its dependencies, had been vested in the com¬ pany of merchants trading to Africa, yet in the year following (by 5 Geo. III. c. 44.) not only Senegal and its dependencies, but the whole coast from the port of Sallee, in South Barbary, to Cape Rouge, was ex¬ empted from the jurisdiction of that com¬ pany, was vested in the crown, and the trade to it declared free to all his majesty’s sub¬ jects. The company had been suspected of restraining the trade, and of establishing some sort of improper monopoly. It is not, however, very easy to conceive how, under the regulations of the 23d Geo. II. they could do so. In the printed debates in the House of Commons, not always the most authentic records of truth, I observe, how¬ ever, that they have been accused of this. The members of the committee of nine being all merchants, and the governors and factors in their different forts and settlements being all dependent upon them, it is not unlikely that the latter might have given peculiar attention to the consignments and commissions of the former, which would establish a real monopoly. For the second of these purposes, the maintenance of the forts and garrisons, an annual sum has been allotted to them by parliament, generally about thirteen thou¬ sand pounds. For the proper application of this sum, the committee is obliged to account annually to the cursitor baron of exchequer; which account is afterwards to Chap. I. JOINT STOCK COMPANIES. 533 be laid before parliament. But parliament, which gives so little attention to the appli¬ cation of millions, is not likely to give much to that of thirteen thousand pounds a year; and the cursitor baron of exchequer, from his profession and education, is not likely to be profoundly skilled in the proper expense of forts and garrisons. The captains of his majesty’s navy, indeed, or any other com¬ missioned officers, appointed by the board of admiralty, may inquire into the condition of the forts and garrisons, and report their observations to that board. But that board seems to have no direct jurisdiction over the committee, nor any authority to correct those whose conduct it may thus inquire into ; and the captains of his majesty’s navy, besides, are not supposed to be always deeply learned in the science of fortification. Re¬ moval from an office, which can be enjoyed only for the term of three years, and of which the lawful emoluments, even during that term, are so very small, seems to be the utmost punishment to which any committee¬ man is liable for any fault, except direct malversation, or embezzlement either of the public money or of that of the company; and the fear of that punishment can never be a motive of sufficient weight to force a continual and careful attention to a business to which he has no other interest to attend. The committee are accused of having sent out bricks and stones from England for the reparation of Cape Coast Castle on the coast of Guinea ; a business for which parliament had several times granted an extraordinary sum of money. These bricks and stones, too, which had thus been sent upon so long a voyage, were said to have been of so bad a quality, that it was necessary to rebuild from the foundation the walls which had been repaired with them. The forts and garrisons which lie north of Cape Rouge, are not only maintained at the expense of the state, but are under the immediate go¬ vernment of the executive power ; and why those which lie south of that cape, and which too are, in part at least, maintained at the expense of the state, should be under a different government, it seems not very easy even to imagine a good reason. The pro¬ tection of the Mediterranean trade was the original purpose or pretence of the garrisons of Gibraltar and Minorca; and the main¬ tenance and government of those garrisons has always been, very properly, committed, not to the Turkey company, but to the exe¬ cutive power. In the extent of its dominion consists, in a great measure, the pride and dignity of that power; and it is not very likely to fail in attention to what is neces¬ sary for the defence of that dominion. The garrisons at Gibraltar and Minorca, accord¬ ingly, have never been neglected; though Minorca has been twice taken, and is now probably lost for ever, that disaster was never even imputed to any neglect in the executive power. I would not, however, be under¬ stood to insinuate, that either of those expensive garrisons was ever, even in the smallest degree, necessary for the purpose for which they w r ere originally dismembered from the Spanish monarchy. That dismem¬ berment, perhaps, never served any other real purpose than to alienate from England her natural ally, the king of Spain, and to unite the two principal branches of the house of Bourbon in a much stricter and more permanent alliance than the ties of blood could ever have united them. Joint stock companies, established either by royal charter or by act of parliament, differ in several respects, not only from regulated companies, but from private copartneries. First, In a private copartnery, no partner, without the consent of the company, can transfer his share to another person, or in¬ troduce a new member into the company. Each member, however, may, upon proper warning, withdraw from the copartnery, and demand payment from them of his share of the common stock. In a joint stock company, on the contrary, no member can demand payment of his share from the company; but each member can, without their consent, transfer his share to another person, and thereby introduce a new member. The value of a share in a joint stock is always the price which it will bring in the market; and this may be either greater or less, in any proportion, than the sum which its owner stands credited for in the stock of the company. Secondhj, In a private copartnery, each partner is bound for the debts contracted by the company to the whole extent of his fortune. In a joint stock company, on the contrary, each partner is bound only to the extent of his share. The trade of a joint stock company is always managed by a court of directors. This court, indeed, is frequently subject in many respects to the control of a general court of proprietors. But the greater part of those proprietors seldom pretend to under¬ stand any thing of the business of the com¬ pany ; and when the spirit of faction happens not to prevail among them, give themselves no trouble about it, but receive contentedly such half-yearly or yearly dividend as the directors think proper to make to them. This total exemption from trouble and from risk, beyond a limited sum, encourages many people to become adventurers in joint stock companies, who would, upon no account, hazard their fortunes in any private copart¬ nery. Such companies, therefore, commonly draw to themselves much greater stocks than any private copartnery can boast of. The trading stock of the South Sea company at 3 34 EXPENSE OF PUBLIC WORKS. Boos V one time amounted to upwards of thirty- three millions eight hundred thousand pounds. The divided capital of the Bank of England amounts, at present, to ten mil¬ lions seven hundred and eighty thousand pounds. The directors of such companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. Like the stewards of a rich man, they are apt to con¬ sider attention to small matters as not for their master’s honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail, more or less, in the manage¬ ment of the affairs of such a company. It is upon this account, that joint stock com¬ panies for foreign trade have seldom been able to maintain the competition against private adventurers. They have, accordingly, very seldom succeeded without an exclusive privilege; and frequently have not succeeded with one. Without an exclusive privilege, they have commonly mismanaged the trade. With an exclusive privilege, they have both mismanaged and confined it. The Royal African company, the prede¬ cessors of the present African company, had an exclusive privilege by charter: but as that charter had not been confirmed by act of parliament, the trade, in consequence of the declaration of rights, was, soon after the Revolution, laid open to all his majesty’s subjects. The Hudson’s Bay company are, as to their legal rights, in the same situation as the Royal African company. Their ex¬ clusive charter has not been confirmed by act of parliament. The South Sea company, as long as they continued to be a trading com¬ pany, had an exclusive privilege confirmed by act of parliament ; as have likewise the present united company of merchants trading to the East Indies. The Royal African company soon found that they could not maintain the competition against private adventurers, whom, notwith¬ standing the declaration of rights, they con¬ tinued for some time to call interlopers, and to persecute as such. In 1698, however, the private adventurers were subjected to a duty of ten per cent, upon almost all the different branches of their trade, to be employed by the company in the maintenance of their forts and garrisons. But, notwithstanding this heavy tax, the company were still unable to maintain the competition. Their stock and credit gradually declined. In 1712, their debts had become so great, that a par¬ ticular act of parliament was thought neces¬ sary, both for their security and for that of their creditors. It was enacted, that the resolution of two-thirds of these creditors in number and value should bind the rest, both with regard to the time which should be allowed to the company for the payment of their debts, and with regard to any other agreement which it might be thought proper to make with them concerning those debts. In 1730, their affairs were in so great disorder, that they-were altogether incapable of maintaining their forts and garrisons, the sole purpose and pretext of their institution. From that year till their final dissolution, the parliament judged it necessary to allow the annual sum of ten thousand pounds for that purpose. In 1732, after having been for many years losers by the trade of carry¬ ing negroes to the West Indies, they at last resolved to give it up altogether; to sell to the private traders to America the negroes which they purchased upon the coast; and to employ their servants in a trade to the inland parts of Africa for gold dust, elephants’ teeth, dying drugs, &c. But their success in this more confined trade was not greater than in their former extensive one. Their affairs continued to go gradually to decline, till at last, being in every respect a bankrupt com¬ pany, they were dissolved by act of parlia¬ ment, and their forts and garrisons vested in the present regulated company of merchants trading to Africa. Before the erection of the Royal African company, there had been three other joint stock companies success¬ ively established, one after another, for the African trade. They were all equally un¬ successful. They all, however, had exclusive charters, which though not confirmed by act of parliament, were in those days supposed to convey a real exclusive privilege. The Hudson’s Bay company, before their misfortunes in the late war, had been much more fortunate than the Royal African com¬ pany. Their necessary expense is much smaller. The whole number of people whom they maintain in their different settlements and habitations, which they have honoured with the name of forts, is said not to exceed a hundred and twenty persons. This num¬ ber, however, is sufficient to prepare before¬ hand the cargo of furs and other goods necessary for loading their ships, which, on account of the ice, can seldom remain above six or eight weeks in those seas. This ad¬ vantage of having a cargo ready prepared, could not, for several years, be acquired by private adventurers; and without it there seems to be no possibility of trading to Hudson’s Bay. The moderate capital of the company, which, it is said, does not exceed one hundred and ten thousand pounds, may, besides, be sufficient to enable them to en¬ gross the whole, or almost the whole, trade and surplus produce of the miserable-though extensive country comprehended within their charter. No private adventurers, accord¬ ingly, have ever attempted to trade to that \ Chap. I. country in competition with them. This company, therefore, have always enjoyed an exclusive trade in fact, though they have no right to it in law. Over and above all this, the moderate capital of this company is said to be divided among a very small number of proprietors. But a joint stock company, consisting of a small number of proprietors, with a moderate capital, approaches very nearly to the nature of a private copartnery, and may be capable of nearly the same de¬ gree of vigilance and attention. It is not to be wondered at, therefore, if, in consequence of these different advantages, the Hudson’s Bay company had, before the late war, been able to carry on their trade with a consider¬ able degree of success. It does not seem probable, however, that their profits ever approached to what the late Mr. Dobbs imagined them. A much more sober and 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 together, of their exports and imports, and upon making proper allowances for their extraor¬ dinary risk and expense, it does not appear that their profits deserve to be envied, or that they can much, if at all, exceed the ordinary profits of trade. The South Sea company never had any forts or garrisons to maintain, and therefore were entirely exempted from one great ex¬ pense, to which other joint stock companies for foreign trade are subject. But they had an immense capital divided among an im¬ mense number of proprietors. It was natu¬ rally to be expected, therefore, that folly, negligence, and profusion, should prevail in the whole management of their affairs. The knavery and extravagance of their stock-job¬ bing projects are sufficiently known, and the explication of them would be foreign to the present subject. Their mercantile projects were not much better conducted. The first trade which they engaged in was that of supplying the Spanish West Indies with negroes, of which (in consequence of what was called the Assiento contract granted them by the treaty of Utrecht) they had the ex¬ clusive privilege. But as it was not expected that much profit could be made by this trade, both the Portuguese and French companies, who had enjoyed it upon the same terms before them, having been ruined by it, they were allowed, as compensation, to send an¬ nually a ship of a certain burden to trade directly to the Spanish West Indies. Of the ten voyages which this annual ship was allowed to make, they are said to have gained considerably by one, that of the Royal Caro¬ line in 1731, and to have been losers, more or less, by almost all the rest Their ill success was imputed, by their factors and 335 agents, to the extortion and oppression of Spanish government; but was, perhaps, prin¬ cipally owing to the profusion and depreda¬ tions of those very factors and agents ; some of whom are said to have acquired great for¬ tunes even in one year. In 1734, the com¬ pany petitioned the king, that they might be allowed to dispose of the trade and tunnage of their annual ship, on account of the little profit which they made by it, and to accept of such equivalent as they could obtain from the king of Spain. In 1724, this company had undertaken the whale fishery. Of this, indeed, they had no monopoly; but as long as they carried it on, no other British subjects appear to have engaged in it. Of the eight voyages which their ships made to Greenland, they were gainers by one, and losers by all the rest. After their eighth and last voyage, when they had sold their ships, stores, and utensils, they found that their whole loss upon this branch, capital and interest included, amounted to upwards of two hundred and thirty-seven thousand pounds. In 1722, this company petitioned the par¬ liament to be allowed to divide their im¬ mense capital of more than thirty-three millions eight hundred thousand pounds, the whole of which had been lent to government, into two equal parts ; the one half, or up¬ wards of sixteen millions nine hundred thou¬ sand pounds, to be put upon the same footing with other government annuities, and not to be subject to the debts contracted or losses incurred, by the directors of the company, in the prosecution of their mercantile projects; the other half to remain, as before, a trading stock, and to be subject to those debts and losses. The petition was too reasonable not to be granted. In 1733, they again peti¬ tioned the parliament, that three-fourths of their trading stock might be turned into an¬ nuity stock, and only one-fourth remain as trading stock, or exposed to the hazards arising from the bad management of their directors. Both tkeir annuity and trading stocks had, by this time, been reduced more than two millions each, by several different payments from government; so that this fourth amounted only to 3,662,784?. 8s. 6d. In 1748, all the demands of the company upon the king of Spain, in consequence of the Assiento contract, were, by the treaty of Aix-la-Chapelle, given up for what was sup¬ posed an equivalent. An end was put to their trade with the Spanish West Indies, the remainder of their trading stock was turned into an annuity stock, and the com¬ pany ceased in every respect to be a trading company. It ought to be observed, that in the trade which the South Sea company carried on by means of their annual ship, the only trade by which it ever was expected that they could JOINT STOCK COMPANIES. 336 EXPENSE OF PUBLIC WORKS. Book V. make any considerable profit, they were not without competitors, either in the foreign or in the home market. At Carthagena, Porto Bello, and La Vera Cruz, they had to en¬ counter the competition of the Spanish mer¬ chants, who brought from Cadiz to those markets European goods, of the same kind with the outward cargo of their ship; and in England they had to encounter that of the English merchants, who imported from Cadiz goods of the Spanish West Indies, of the same kind with the inward cargo. The goods both of the Spanish and English mer¬ chants, indeed, were perhaps subject to higher duties. But the loss occasioned by the neg¬ ligence, profusion, and malversation of the servants of the company, had probably been a tax much heavier than all those duties. That a joint stock company should be able to carry on successfully any branch of foreign trade, when private adventurers can come into any sort of open and fair competition with them, seems contrary to all experience. The old English East India company was established in 1600 by a charter from Queen Elizabeth. In the first twelve voyages which they fitted out for India, they appear to have traded as a regulated company, with separate stocks, though only in the general ships of the company. In 1612 they united into a joint stock. Their charter was exclusive, and though not confirmed by act of parlia¬ ment, was in those days supposed to convey a real exclusive privilege. For many years, therefore, they were not much disturbed by interlopers. Their capital, which never ex¬ ceeded seven hundred and forty-four thousand pounds, and of which fifty pounds was a share, was not so exorbitant, nor their deal¬ ings so extensive, as to afford either a pretext for gross negligence and profusion, or a cover to gross malversation. Notwithstanding some extraordinary losses, occasioned partly by the malice of the Dutch East India com¬ pany, and partly by other accidents, they carried on for many years a successful trade. But in process of time, when the principles of liberty were better understood, it became every day more and more doubtful how far a royal charter, not confirmed by act of par¬ liament, 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 multi¬ plied upon them; and towards the end of the reign of Charles II., through the whole of that of James II., and during a part of that of William III., reduced them to great distress. In 1698, a proposal was made to parliament, of advancing two millions to government at eight per cent., provided the subscribers were erected into a new East India company, with exclusive privileges. The old East India company offered seven hundred thousand pounds, nearly the amount of their capital, at four per cent, upon the same conditions. But such was at that time the state of public credit, that it was more convenient for government to borrow two millions at eight per cent, than seven hun¬ dred thousand pounds at four. The pro¬ posal of the new subscribers was accepted, and a new East India company established in consequence. The old East India com¬ pany, however, had a right to continue their trade till 1701. They had, at the same time, in the name of their treasurer, sub¬ scribed, very artfully, three hundred and fif¬ teen thousand pounds into the stock of the new. By a negligence in the expression of the act of parliament, which vested the East India trade in the subscribers to this loan of two millions, it did not appear evident that they were all obliged to unite into a joint stock.. A few private traders, whose sub¬ scriptions amounted only to seven thousand two hundred pounds, insisted upon the pri¬ vilege 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 com¬ panies 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 com¬ pany, in opposition to this proposal, repre¬ sented in very strong terms what had been at this time the miserable effects, as they thought them, of this competition. In India, they said, it raised the price of goods so high, that they were not worth the buying ; and in England, by overstocking the market, it sunk their price so low, that no profit could be made by them. That by a more plentiful supply, to the great advantage and conveniency of the public, it must have re¬ duced very much the price of India goods in the English market, cannot well be doubted ; but that it should have raised very much their price in the Indian market, seems not very probable, as all the extraordinary de¬ mand which that competition could occasion must have been but as a drop of water in the immense ocean of Indian commerce. The increase of demand, besides, though in the beginning it may sometimes raise the price of goods, never fails to lower it in the long run. It encourages production, and thereby increases the competition of the producers, who, in order to undersell one another, have Chav. I. JOINT STOCK COMPANIES. 337 recourse to new divisions of labour and new improvements of art, which might never otherwise have been thought of. The miser¬ able effects of which the company com¬ plained, were the cheapness of consumption and the encouragement given to production : precisely the two effects which it is the great business of political economy to promote. The competition, however, of which they gave this doleful account had not been al¬ lowed to be of long continuance. In 1702, the two companies were, in some measure, united by an indenture tripartite, to which the queen was the third party ; and in 1708, they were, by act of parliament, perfectly consolidated into one company by their pre¬ sent name of the United Company of Mer¬ chants trading to the East Indies. Into this act it was thought worth while to insert a clause, allowing the separate traders to continue their trade till Michaelmas 1711 ; but at the same time empowering the direc¬ tors, upon three years’ notice, to redeem their little capital of seven thousand two hundred pounds, and thereby to convert the whole stock of the company into a joint stock. By the same act, the capital of the company, in consequence of a new loan to government, was augmented from two millions to three millions two hundred thousand pounds. In 1743, the company advanced another million to government; but this million being raised, not by a call upon the proprietors, but by selling annuities and contracting bond-debts, it did not augment the stock upon which the proprietors could claim a dividend. It augmented, however, their trading stock, it being equally liable with the other three millions two hundred thousand pounds to the losses sustained, and debts contracted, by the company in prosecution of their mercan¬ tile projects. From 1708, or at least from 1711, this company, being delivered from all competitors, and fully established in the monopoly of the English commerce to the East Indies, carried on a successful trade, and, from their profits, made annually a moderate dividend to their proprietors. During 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 many signal successes, and equally signal losses, they at last lost Madras, at that time their principal settlement in India. It was re¬ stored to them by the treaty of Aix-la-Cha- pelle ; and about this time the spirit of war and conquest seems to have taken possession of their servants in India, and never since to have left them. During the French war, which began in 1755, their arms partook of the general good fortune of those of Great Britain. They defended Madras, took Pon¬ dicherry, recovered Calcutta, and acquired the revenues of a rich and extensive terri¬ tory, amounting, it was then said, to up¬ wards of three millions a year. They remained for several years in quiet possession of this revenue : but in 1767, administration laid claim to their territorial acquisitions, and the revenue arising from them, as of right belonging to the crown ; and the com¬ pany, in compensation for this claim, agreed to pay to government four hundred thousand pounds a year. They had before this gradually augmented their dividend from about six to ten per cent. ; that is, upon their capital of three millions two hundred thousand pounds, they had increased it by a hundred and twenty-eight thousand pounds, or had raised it from one hundred and nine¬ ty-two thousand to three hundred and twenty thousand pounds a year. They were at¬ tempting about this time to raise it still fur¬ ther, to twelve and a half per cent.; which would have made their annual payments to their 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 agree¬ ment with government was to take place, they were restrained from any further in¬ crease of dividend by two successive acts of parliament, of which the object was to enable them to make a speedier progress in the pay¬ ment of their debts, which were at this time estimated at upwards of six or seven millions sterling. In 1769, they renewed their agree¬ ment 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 an¬ nual payments, to their proprietors and go¬ vernment together, but by six hundred and eight thousand pounds beyond what they had been before their late territorial acquisitions. What the gross revenue of those territorial acquisitions was supposed to amount to, has already been mentioned ; and by an account brought by the Cruttenden East Indiaman in 1768, the net revenue, clear of all deductions and military charges, was stated at two mil¬ lions 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 cus¬ toms 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 chair¬ man 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 thou¬ sand ; according to the lowest account, at Z S38 EXPENSE OF PUBLIC WORKS. Book V. 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 thou¬ sand pounds in their annual payments; and, at the same time, have left a large sinking fund sufficient for the speedy reduction of their debts. In 1773, however, their debts, instead of being reduced, were augmented by an arrear to the treasury in the payment of the four hundred thousand pounds; by another to the custom-house for duties un¬ paid ; by a large debt to the bank for money borrowed ; and by a fourth, for bills drawn upon them from India, and wantonly ac¬ cepted, to the amount of upwards of twelve hundred thousand pounds. The distress which these accumulated claims brought upon them obliged them not only to reduce all at once their dividend to six per cent., but to throw themselves upon the mercy of govern¬ ment, and to supplicate, first, a release from the further payment of the stipulated four hundred thousand pounds a year; and, se¬ condly, a loan of fourteen hundred thousand, to save them from immediate bankruptcy. The great increase of their fortune had, it seems, only served to furnish their servants with a pretext for greater profusion, and a cover for greater malversation, than in pro¬ portion even to that increase of fortune. The conduct of their servants in India, and the general state of their affairs both in In¬ dia and in Europe, became the subject of a parliamentary inquiry; in consequence of which, several very important alterations were made in the constitution of their go¬ vernment, both at home and abroad. In India, their principal settlements of Madras, Bombay, and Calcutta, which had before been altogether independent of one another, were subjected to a governor-general, assisted by a council of four assessors, parliament assuming to itself the first nomination of this governor and council who were to reside at Calcutta; that city having now become, what Madras was before, the most important of the English settlements in India. The court of the mayor of Calcutta, originally instituted for the trial of mercantile causes, which arose in the city and neighbourhood, had gradually extended its jurisdiction with the extension of the empire. It was now reduced and confined to the original purpose of its institution. Instead of it, a new su¬ preme court of judicature was established, consisting of a chief justice and three judges, to be appointed by the crown. In Europe, the qualification necessary to entitle a pro¬ prietor to vote at their general courts was raised, from five hundred pounds, the original price of a share in the stock of the company, to a thousand pounds. In order to vote upon this qualification too, it was declared necessary that he should have possessed it, if acquired by his own purchase, and not by inheritance, for at least one year, instead of six months, the term requisite before. The court of twenty-four directors had before been chosen annually; but it was now en¬ acted that each director should, for the future, be chosen for four years ; six of them, how¬ ever, to go out of office by rotation every year, and not to be capable of being re-chosen at the election of the six new directors for the ensuing year. In consequence of these alterations, the courts both of the proprietors and directors, it was expected, would be likely to act with more dignity and steadi¬ ness than they had usually done before. But it seems impossible by any alterations to render those courts in any respect fit to govern, or even to share in the government of a great empire ; because the greater part of their members must always have too little interest in the prosperity of that empire to give any serious attention to what may pro¬ mote it. Frequently a man of great, some¬ times even a man of small fortune is willing to purchase a thousand pounds share in India stock, merely for the influence which he ex¬ pects 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 court of di¬ rectors, though they make that appointment, being necessarily more or less under the influence of the proprietors, who not only elect those directors, but sometimes overrule the appointments of their servants in India. Provided he can enjoy this influence for a few years, and thereby provide for a certain number of his friends, he frequently cares little about the dividend, or even about the value of the stock upon which his vote is founded. About the prosperity of the great empire, in the government of which that vote gives him a share, he seldom cares at all. No other sovereigns ever were, or, from the nature of things, ever could be, so per¬ fectly indifferent about the happiness or misery of their subjects, the improvement or waste of their dominions, the glory or disgrace of their administration, as, from irresistible moral causes, the greater part of the proprietors of such a mercantile company are, and necessarily must be. This indiffer¬ ence, too, was more likely to be increased than diminished by some of the new regu¬ lations, which were made in consequence of the parliamentary inquiry. By a resolution of the House of Commons, for example, it was declared, that when the fourteen hundred thousand pounds lent to the company by government should be paid, and their bond- debts be reduced to fifteen hundred thousand pounds, they might then, and not till then, divide eight per cent, upon their capital; and that whatever remained of their revenues and neat profits at home should be divided Chap. I. JOINT STOCK COMPANIES. 339 1 into four parts ; three of them to be paid into the exchequer for the use of the public, and the fourth to be reserved as a fund, either for the further reduction of their bond-debts, or for the discharge of other contingent exigencies which the company might labour under. But if the company were bad stewards and bad sovereigns, when the whole of their net revenue and profits belonged to themselves, and were at their own disposal, they were surely not likely to be better, when three-fourths of them were to belong to other people, and the other fourth, though to be laid out for the benefit of the company, yet to be so, under the in¬ spection, and with the approbation of other people. It might be more agreeable to the com¬ pany that their own servants and dependants should have either the pleasure of wasting, or the profit of embezzling, whatever surplus might remain, after paying the proposed dividend of eight per cent., than that it should come into the hands of a set of people with whom those resolutions could scarce fail to set them in some measure at variance. The interest of those servants and dependants might so far predominate in the court of proprietors, as sometimes to dispose it to support the authors of depredations which had been committed in direct violation of its own authority. With the majority of proprietors, the support even of the authority of their own court might sometimes be a matter of less consequence than the support of those who had set that authority at defiance. The regulations of 1773, accordingly, did not put an end to the disorders of the com¬ pany’s government in India. Notwith¬ standing 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 domi¬ nion or their depredations over a vast acces¬ sion of some of the richest and most fertile countries in India, all was wasted and de¬ stroyed. They found themselves altogether unprepared to stop or resist the incursion of Hyder Ali; and, in consequence of those disorders, the company is now (1784) in greater distress than ever; and, in order to prevent immediate bankruptcy, is once more reduced to supplicate the assistance of government. Different plans have been proposed by the different parties in parlia¬ ment for the better management of its affairs; and all those plans seem to agree in sup- f posing, what was indeed always abundantly evident, that it is altogether unfit to govern its territorial possessions. Even the com- 1 For an account of the changes effected in the ‘ constitution of the Fast India company in 17H4, and of its present condition, see supplemental y',- f pany itself seems to be convinced of its own incapacity so far, and seems, upon that account, willing to give them up to go¬ vernment. 1 With the right of possessing forts and garrisons in distant and barbarous countries is necessarily connected the right of making peace and war in those countries. The joint stock companies which have had the one right have constantly exercised the other, and have frequently had it expressly conferred upon them. How unjustly, how capriciously, how cruelly they have commonly exercised it, is too well known from recent experience. When a company of merchants undertake, at their own risk and expense, to establish a new trade with some remote and barbarous nation, it may not be unreasonable to incor¬ porate them into a joint stock company, and to grant them, in case of their success, a monopoly of the trade for a certain number of years. It is the easiest and most natural way in which the state can recompense them for hazarding a dangerous and expensive experiment, of which the public is afterwards to reap the benefit. A temporary monopoly of this kind may be vindicated, upon the same principles upon which a like monopoly of a new machine is granted to its inventor, and that of a new book to its author. But upon the expiration of the term, the mono¬ poly ought certainly to determine; the forts and garrisons, if it was found necessary to establish any, to be taken into the hands of government, their value to be paid to the company, and the trade to be laid open to all the subjects of the state. By a per¬ petual monopoly, all the other subjects of the state are taxed very absurdly in two different ways : first, by the high price of goods, which, in the case of a free trade, they could buy much cheaper; and, se¬ condly, by their total exclusion from a branch of business which it might be both conve¬ nient and profitable for many of them to carry on. It is for the most worthless of all purposes, too, that they are taxed in this manner. It is merely to enable the company to support the negligence, profusion, and malversation of their own servants, whose disorderly conduct seldom allows the divi¬ dend of the company to exceed the ordinary rate of profit in trades which are altogether free, and very frequently makes it fall even a good deal short of that rate. Without a monopoly, however, a joint stock company, it would appear from experience, cannot long carry on any branch of foreign trade. To buy in one market, in order to sell with profit in another, when there are many competitors in both ; to watch over, not only note on the Government, Revenue, and Trade of India. Z 2 340 EXPENSE OF PUBLIC WORKS. Book V. the occasional variations in the demand, but the much greater and more frequent varia¬ tions in the competition, or in the supply which that demand is likely to get from other people, and to suit with dexterity and judgment both the quantity and quality of each assortment of goods to all these cir¬ cumstances, is a species of warfare of which the operations are continually changing, and which ean 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. The East India company, upon the redemption of their funds, and the expiration of their exclusive privilege, have a right, by act of parliament, to continue a corporation with a joint stock, and to trade in their corporate capacity to the East Indies in common with the rest of their fellow-subjects. But in this situa¬ tion, the superior vigilance and attention of private adventurers would, in all pro¬ bability, soon make them weary of the trade. An eminent French author, of great knowledge in matters of political economy, the Abbe Morellet, gives a list of fifty-five joint stock companies for foreign trade, which have been established in different parts of Europe since the year 1600, and which, according to him, have all failed from mis¬ management, notwithstanding they had ex¬ clusive privileges. He has been misinformed with regard to the history of two or three of them, which were not joint stock companies and have not failed. But, in compensation, there have been several joint stock com¬ panies which have failed, and which he has omit ted. The only trades which it seems possible for a joint stock company to carry on suc¬ cessfully, without an exclusive privilege, are those of which all the operations are capable of being reduced to what is called a routine, or to such a uniformity of method as admits of little or no variation. Of this kind is, first, the banking trade ; secondly, the trade of insurance from fire, and from sea risk and capture in time of war; thirdly, the trade of making and maintaining a na¬ vigable cut or canal; and, fourthly, the similar trade of bringing water for the supply of a great city. Though the principles of the banking trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To depart upon any occasion from those rules, in consequence of some flattering speculation of extraordinary gain, is almost 1 This privilege was restricted in 1826 to within a circle of sixty-five miles round London. A bank for the issue of notes or paper money established be¬ yond that distance may now consist of any number of partners ; and banks of deposit, or banks for taking care of other people’s money, may consist of any | always extremely dangerous, and frequently fatal to the banking company which attempts it. But the constitution of joint stock companies renders them, in general, more tenacious of established rules than any private copartnery. Such companies, there¬ fore, seem extremely well fitted for this trade. The principal banking companies in Europe, accordingly, are joint stock companies, many of which manage their trade very successfully without any ex¬ clusive privilege. The Bank of England has no other exclusive privilege, except that no other banking company in England shall consist of more than six persons. 1 The two banks ot Edinburgh are joint stock compa¬ nies without any exclusive privilege. 2 The value of the risk, either from fire, or from loss by sea, or by capture, though it cannot perhaps be calculated very exactly, admits however of such a gross estimation as renders it, in some degree, reducible to strict rule and method. The trade of insurance, therefore, may be carried on successfully by a joint stock company without any exclusive privilege. Neither the London Assurance nor the Royal Ex¬ change Assurance companies have any such privilege. When a navigable cut or canal has been once made, the management of it becomes quite simple and easy, and it is reducible to strict rule and method. Even the making . of it is so, as it may be contracted for with undertakers, at so much a mile, and so much a lock. The same thing may be said of a canal, an aqueduct, or a great pipe for bring¬ ing water to supply a great city. Such undertakings, therefore, may be, and accord¬ ingly frequently are, very successfully ma¬ naged by joint stock companies without any exclusive privilege. To establish a joint stock company, how¬ ever, for any undertaking, merely because such a company might be capable of manag¬ ing it successfully, or to exempt a particular set of dealers from some of the general laws which take place with regard to all their neighbours, merely because they might be capable of thriving if they had such an ex¬ emption, would certainly not be reasonable. To render such an establishment perfectly reasonable, with the circumstance of being reducible to strict rule and method, two other circumstances ought to concur : first, it ought to appear with the clearest evidence, that the undertaking is of greater and more general utility than the greater part of com¬ mon trades; and, secondly, that it requires a greater capital than can easily be collected number of partners, either in London or anywhere else. 2 There are now several joint stock banking com¬ panies which issue notes in Edinburgh and other parts of Scotland. Chap. I. JOINT STOCK COMPANIES. 341 into a private copartnery. If a moderate capital were sufficient, the great utility of the undertaking would not be a sufficient reason for establishing a joint stock company, because in this case the demand for what it was to produce would readily and easily be supplied by private adventurers. In the four trades above mentioned, both those cir¬ cumstances concur. The great and general utility of the bank¬ ing trade, when prudently managed, has been fully explained in the second book of this inquiry. But a public bank which is to sup¬ port public credit, and upon particular emer¬ gencies to advance to government the whole produce of a tax, to the amount perhaps of several millions, a year or two before it comes in, requires a greater capital than can easily be collected into any private copartnery. The trade of insurance gives great security to the fortunes of private people, and by di¬ viding among a great many that loss which would ruin an individual, makes it fall light and easy upon the whole society. In order to give this security, however, it is necessary that the insurers should have a very large capital. Before the establishment of the two joint stock companies for insurance in London, a list, it is said, was laid before the attorney-general, of one hundred and fifty private insurers who had failed in the course of a few years. That navigable cuts and canals, and the works which are sometimes necessary for sup¬ plying a great city with water, are of great and general utility, while, at the same time, they frequently require a greater expense than suits the fortunes of private people, is sufficiently obvious. Except the four trades above mentioned, I have not been able to recollect any other, in which all the three circumstances requisite for rendering reasonable the establishment of a joint stock company concur. The En¬ glish copper company of London, the lead smelting company, the glass grinding com¬ pany, have not even the pretext of any great or singular utility in the object which they pursue; nor does the pursuit of that object seem to require any expense unsuitable to the fortunes of many private men. Whether the trade which those companies carry on is reducible to such strict rule and method as to render it fit for the management of a joint stock company, or whether they have any reason to boast of their extraordinary profits, I do not pretend to know. The mine ad¬ venturers company has been long ago bank¬ rupt. A share in the stock of the British Linen Company of Edinburgh sells, at pre¬ sent, very much below par, though less so than it did some years ago. The joint stock companies, which are established for the public-spirited purpose of promoting some particular manufacture, over and above ma¬ naging their own affairs ill, to the diminu¬ tion of the general stock of the society, can, in other respects, scarce ever fail to do more harm than good. Notwithstanding the most upright intentions, the unavoidable partiality of their directors to particular branches of the manufacture, of which the undertakers mislead and impose upon them, is a real dis¬ couragement to the rest, and necessarily breaks, more or less, that natural proportion which would otherwise establish itself be¬ tween judicious industry and profit, and which, to the general industry of the country, is of all encouragements the greatest and the most effectual. ARTICLE II. Of the Expense of the Institutions for the Education of Youth. The institutions for the education of youth may, in the same manner, furnish a revenue sufficient for defrayiug their own expense. The fee or honorary which the scholar pays to the master naturally constitutes a revenue of this kind. Even where the reward of the master does not arise altogether from this natural revenue it still is not necessary that it should be derived from that general revenue of the so¬ ciety, of which the collection and application is, in most countries, assigned to the execu¬ tive power. Through the greater part of Europe, accordingly, the endowment of schools and colleges makes either no charge upon that general revenue, or but a very small one. It everywhere arises chiefly from some local or provincial revenue, from the rent of some landed estate, or from the interest of some sum of money allotted and put under the management of trustees for this particu¬ lar purpose, sometimes by the sovereign him¬ self, and sometimes by some private donor. Have those public endowments contri¬ buted, in general, to promote the end of their institution ? Have they contributed to encourage the diligence, and to improve the abilities of the teachers ? Have thev di- w rectcdthe course of education towards objects more useful, both to the individual and to the public, than those to which it would na¬ turally have gone of its own accord? It should not seem very difficult to give at least a probable answer to each of those ques¬ tions. In every profession, the exertion of the greater part of those who exercise it is al¬ ways in proportion to the necessity they are under of making that exertion. This neces¬ sity is greatest with those to whom the emo¬ luments of their profession are the only source from which they expect their fortune, or even their ordinary revenue and subsist¬ ence. In order to acquire this fortune, or Z 3 342 EXPENSE OF PUBLIC WORKS. Book V. even to get this subsistence, they must, in the course of a year, execute a certain quan¬ tity of work of a known value; and, where the competition is free, the rivalship of com¬ petitors, who are all endeavouring to justle one another out of employment, obliges every man to endeavour to execute his work with a certain degree of exactness. The greatness of the objects which are to be acquired by success in some particular professions may, no doubt, sometimes animate the exertions of a few men of extraordinary spirit and am¬ bition. Great objects, however, are evidently not necessary in order to occasion the great¬ est exertions. Rivalship and emulation ren¬ der excellency, even in mean professions, an object of ambition, and frequently oc¬ casion the very greatest exertions. Great objects, on the contrary, alone and unsup¬ ported by the necessity of application, have seldom been sufficient to occasion any con¬ siderable exertion. In England, success in the profession of the law leads to some very great objects of ambition ; and yet how few men, born to easy fortunes, have ever in this country been eminent in that profes¬ sion ! The endowments of schools and colleges have necessarily diminished more or less, the necessity of application in the teachers. Their subsistence, so far as it arises from their salaries, is evidently derived from a fund altogether independent of their success and reputation in their particular professions. In some universities the salary makes but a part, and frequently put a small part, of the emoluments of the teacher, of which the greater part arises from the honoraries or fees of his pupils. The necessity of appli¬ cation, though always more or less dimi¬ nished, is not, in this case, entirely taken away. Reputation in his profession is still of some importance to him, and he still has some dependency upon the affection, grati¬ tude, 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, that is, by the abilities and diligence with which he discharges every part of his duty. In other universities the teacher is pro¬ hibited from receiving any honorary or fee from his pupils, and his salary constitutes the whole of the revenue which he derives from his office. His interest is, in this case, set as directly in opposition to his duty as it is possible to set it. It is the interest of every man to live as much at his ease as he can; and if his emoluments are to be precisely the same, whether he does or does not perform some 7~ry laborious duty, it is certainly his interest, at least as interest is vulgarly under¬ stood, either to neglect it altogether, or if he is subject to some authority which will not suffer him to do this, to perform it in as careless and slovenly a manner as that au¬ thority will permit. If he is naturally active and a lover of labour, it is his interest to employ that activity in any way Rom which he can derive some advantage, rather than in the performance of his duty, from which he can derive none. If the authority to which he is subject resides in the body corporate, the college, or university, of which he himself is a member, and in which the greater part of the other members are, like himself, persons who either are or ought to be teachers, they are likely to make a common cause, to be all very indul¬ gent to one another, and every man to con¬ sent that his neighbour may neglect his duty, provided he himself is allowed to neglect his own. In the university of Oxford, the greater part of the public professors have, for these many years, given up altogether even the pretence of teaching. If the authority to which he is subject re¬ sides not so much in the body corporate of which he is a member as in some other ex¬ traneous persons, in the bishop of the diocese, for example, in the governor of the province, or perhaps in some minister of state, it is not indeed in this case very likely that he will be suffered to neglect his duty altogether. All that such superiors, however, can force him to do is to attend upon his pupils a certain number of hours, that is, to give a certain number of lectures in the week, or in the year. What those lectures shall be, must still depend upon the diligence of the teacher; and that diligence is likely to be proportioned to the motives which he has for exerting it. An extraneous jurisdiction of this kind, besides, is liable to be exercised both ignorantly and capriciously. In its nature it is arbitrary and discretionary : and the persons who exercise it, neither at¬ tending upon the lectures of the teacher themselves, nor perhaps understanding the sciences which it his business to teach, are seldom capable of exercising it with judgment. From the insolence of office, too, they are frequently indifferent how they exercise it, and are very apt to cen¬ sure or deprive him of his office wantonly and without any just cause. The person subject to such jurisdiction is necessarily degraded by it, and, instead of being one of the most respectable, is rendered one of the meanest and most contemptible persons in the society. It is by powerful protection only that he can effectually guard himself against the bad usage to which he is at all times exposed; and this protection he is most likely to gain, not by ability or diligence in his profession, but by obsequiousness to the will of his superiors, and by being ready at all times to sacrifice to that will the rights, the interest, and the honour of the body cor- Chap. I. EDUCATION OF YOUTH. 343 7 porate of which he is a member. Whoever has attended for any considerable time to the administration of a French university must have had occasion to remark the effects which naturally result from an arbitrary and extra¬ neous jurisdiction of this kind. Whatever forces a certain number of stu¬ dents to any college or university, inde¬ pendent 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 ob¬ tained only by residing a certain number of years in certain universities, necessarily force a certain number of students to such univer¬ sities, independent of the merit or reputation of the teachers. The privileges of graduates are a sort of statutes of apprenticeship, which have contributed to the improvement of education, just as the other statutes of ap¬ prenticeship have to that of arts and manu¬ factures. The charitable foundations of scholarships, exhibitions, bursaries, &c. necessarily attach a certain number of students to certain col¬ leges, independent altogether of the merit of those particular colleges. Were the stu¬ dents upon such charitable foundations left free to choose what college they liked best, such liberty might perhaps contribute to excite some emulation among different col¬ leges. A regulation, on the contrary, which prohibited even the independent members of every particular college from leaving it, and going to any other, without leave first asked and obtained of that which they meant to abandon, would tend very much to extin¬ guish that emulation. If in each college the tutor or teacher, who was to instruct each student in all arts and sciences should not be voluntarily chosen by the student, but appointed by the head of the college ; and if, in case of neglect, inability, or bad usage, the student should not be allowed to change him for another, without leave first asked and obtained ; such a regulation would not only tend very much to extinguish all emulation among the different tutors of the same college, but to diminish very much in all of them the necessity of diligence and of attention to their respective pupils. Such teachers, 1 though very well paid by their students, might be as much disposed to neglect them as those who are not paid by them at all, or who have no other recompense but their salary. If the teacher happens to be a man of sense, it must be an unpleasant thing to him to be conscious, while he is lecturing to his students, that he is either speaking or reading nonsense, or what is very little better than nonsense. It must, too, be unpleasant to him to observe that the greater part of his students desert his lectures, or perhaps attend upon them with plain enough marks of neglect, contempt, and derision. If he is obliged, therefore, to give a certain number of lectures, these motives alone, without any other interest, might dispose him to take some pains to give tolerably good ones. Several different expedients, however, may be fallen upon, which will effectually blunt the edge of all those incitements to diligence. The teacher, instead of explaining to his pupils himself the science in which he proposes to instruct them, may read some book upon it; and if this book is written in a foreign and dead language by inter¬ preting it to them into their own, or, what would give him still less trouble, by making them interpret it to him, and by now and then making an occasional remark upon it, he may flatter himself that he is giving a lecture. The slightest degree of knowledge and application will enable him to do this, without exposing himself to contempt or derision, or saying any thing that is really foolish, absurd, or ridiculous. The discipline of the college, at the same time, may enable him to force all his pupils to the most regular attendance upon his sham lecture, and to maintain the most decent and respect¬ ful behaviour during the whole time of the performance. The discipline of colleges and universities is in general contrived, not for the benefit of the students, but for the interest, or, more properly speaking, for the ease of the masters. Its object is, in all cases, to maintain the authority of the master, and, whether he neglects or performs his duty, to oblige the students in all cases to behave to him as if he performed it with the greatest diligence and ability. It seems to presume perfect wisdom and virtue in the one order, and the greatest weakness and folly in the other. Where the masters, however really perform their duty, there are no examples, I believe, that the greater part of the students ever neglect theirs. No discipline is ever requisite to force attendance upon lectures which are really worth the attending, as is well known wherever any such lectures are given. Force and restraint may, no doubt, be in some degree requisite, in order to oblige children, or very young boys, to attend to those parts of education which it is thought necessary for them to acquire during that early period of life ; but after twelve or thirteen years of age, provided the master does his duty, force or restraint can scarce ever be necessary to carry on any part of education. Such is the generosity of the greater part of young men, that, so far from being disposed to neglect or despise the instructions of their master, provided he shows some serious intention of being of use to them, they are generally inclined to pardon a great deal of incorrect- Z 4 344 EXPENSE OF PUBLIC WORKS. Book V. ness in the performance of his duty, and sometimes even to conceal from the public a good deal of gross negligence. Those parts of education, it is to be ob¬ served, for the teaching of which there are no public institutions, are generally the best taught. When a young man goes to a fenc¬ ing or a dancing school, he does not, indeed, always learn to fence or to dance very well; but he seldom fails of learning to fence or to dance. The good effects of the riding school are not commonly so evident. The expense of a riding school is so great, that in most places it is a public institution. The three most essential parts of literary education, to read, write, and account, it still continues to be more common to acquire in private than in public schools; and it very seldom hap¬ pens that any body fails of acquiring them to the degree in which it is necessary to ac¬ quire them. In England, the public schools are much less corrupted than the universities. In the schools the youth are taught, or at least may be taught, Greek and Latin ; that is, every thing which the masters pretend to teach, or which it is expected they should teach. In the universities the youth neither are taught, nor always can find any proper means of being taught, the sciences, which it is the business of those incorporated bodies to teach. The reward of the schoolmaster in most cases depends principally, in some cases almost entirely, upon the fees or ho- noraries of his scholars. Schools have no exclusive privileges. In order to obtain the honours of graduation, it is not necessary that a person should bring a certificate of his having studied a certain number of years at a public school. If upon examination he appears to understand what is taught there, no questions are asked about the place where he learnt it. The parts of education which are com¬ monly taught in universities, it may perhaps be said, are not very well taught. But had it not been for those institutions, they would not have been commonly taught at all; and both the individual and the public would have suffered a good deal from the want of those important parts of education. The present universities of Europe were originally, the greater part of them, ecclesi¬ astical corporations, instituted for the edu¬ cation of churchmen. They were founded by the authority of the pope, and were so entirely under his immediate protection, that their members, whether masters or students, had all of them what was then called the benefit of clergy, that is, were exempt from the civil jurisdiction of the countries in which their respective universities were situated, and were amenable only to the ecclesiastical tribunals. What was taught ill the greater part of those universities was suitable to the end of their institution, either theology, or something that was merely pre¬ paratory to theology. When Christianity was first established by law, a corrupted Latin had become the common language of all the western parts of Europe. The service of the church, accord¬ ingly, and the translation of the Bible which was read in churches, were both in that corrupted Latin ; that is, in the common language of the country. After the irruption of the barbarous nations who overturned the Roman empire, Latin gradually ceased to be the language of any part of Europe. But the reverence of the people naturally preserves the established forms and ceremonies of re¬ ligion long after the circumstances which first introduced and rendered them reason¬ able 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. Two different languages were thus established in Europe, in the same manner as in ancient Egypt: a language of the priests, and a language of the people; a sacred and a profane, a learned and an un¬ learned language. But it was necessary that the priests should understand something of that sacred and learned language in which they were to officiate; and the study of the Latin language therefore made, from the beginning, an essential part of university education. It was not so with that either of the Greek or of the Hebrew language. The infallible decrees of the church had pronounced the Latin translation of the Bible, commonly called the Latin Vulgate, to have been equally dictated by divine inspiration, and therefore of equal authority with the Greek and He¬ brew originals. The knowledge of those two languages, therefore, not being indis¬ pensably requisite to a churchman, the study of them did not for a long time make a ne¬ cessary part of the common course of univer¬ sity education. There are some. Spanish universities, I am assured, in which the study of the Greek language has never yet made any part of that course. The first reformers found the Greek text of the New Testament, and even the Hebrew text of the Old, more favourable to their opinions than the vulgate translation, which, as might na¬ turally be supposed, had been gradually accommodated to support the doctrines of the Catholic Church. They set themselves, therefore, to expose the many errors of that translation, which the Roman Catholic clergy were thus put under the necessity of defend¬ ing or explaining. But this could not well be done without some knowledge of the original languages, of which the study was therefore gradually introduced into the greater part of universities; both of those Chap. I. EDUCATION OF YOUTH. 345 which embraced, and of those which rejected the doctrines of the Reformation. The Greek language tvas connected with every part of that classical learning which, though at first principally cultivated by Catholics and Ita¬ lians, happened to come into fashion much about the same time that the doctrines of the Reformation were set on foot. In the greater part of universities, therefore, that language was taught previous to the study of philosophy, and as soon as the student had made some progress in the Latin. The Hebrew language having no connection with classical learning, and, except the holy scrip¬ tures, being the language of not a single book in any esteem, the study of it did not commonly commence till after that of phi¬ losophy, and when the student had entered upon the study of theology. Originally the first rudiments both of the Greek and Latin languages were taught in universities, and in some universities they still continue to be so. In others it is ex¬ pected that the student should have previ¬ ously acquired at least the rudiments of one or both of those languages, of which the study continues to make everywhere a very considerable part of university education. The ancient Greek philosophy was divided into three great branches: physics, or natu¬ ral philosophy ; ethics, or moral philosophy; and logic. This general division seems per¬ fectly agreeable to the nature of things. The great phenomena of nature, the revo¬ lutions of the heavenly bodies, eclipses, co¬ mets ; thunder, lightning, and other extra¬ ordinary meteors; the generation, the life, growth, and dissolution of plants and ani¬ mals; are objects which, as they necessarily excite the wonder, so they naturally call forth the curiosity, of mankind to inquire into their causes. Superstition first attempted to satisfy this curiosity, by referring all those wonderful appearances to the immediate agency of the gods. Philosophy afterwards endeavoured to account for them from more familiar causes, or from such as mankind were better acquainted with than the agency of the gods. As those great phenomena are the first objects of human curiosity, so the science which pretends to explain them must naturally have been the first branch of phi¬ losophy that was cultivated. The first phi¬ losophers, accordingly, of whom history has preserved any account, appear to have been natural philosophers. In every age and country of the world, men must have attended to the characters, de¬ signs, and actions of one another ; and many reputable rules and maxims for the conduct of human life must have been laid down and approved of by common consent. As soon as writing came into fashion, wise men, or those who fancied themselves such, would naturally endeavour to increase the number of those established and respected maxims, and to express their own sense of what was either proper or improper conduct, sometimes in the more artificial form of apologues, like what are called the fables of iEsop; and sometimes in the more simple one of apoph¬ thegms, or wise sayings, like the Proverbs of Solomon, the verses of Theognis and Pho- cylides, and some part of the works of Hesiod. They might continue in this manner for a long time merely to multiply the number of those maxims of prudence and morality, without even attempting to arrange them in any very distinct or methodical order, much less to connect them together by one or more general principles, from which they were all deducible, like effects from their natural causes. The beauty of a systematical ar¬ rangement of different observations con¬ nected by a few common principles, was first 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 com¬ mon life were arranged in some methodical order, and connected together by a few com¬ mon principles, in the same manner as they had attempted to arrange and connect the phenomena of nature. The science which pretends to investigate and explain those connecting principles, is what is properly called moral philosophy. Different authors give different systems both of natural and moral philosophy ; but the arguments by which they supported those different systems, far from being al¬ ways demonstrations, were frequently at best but very slender probabilities, and some¬ times mere sophisms, which had no other foundation but the inaccuracy and ambiguity of common language. Speculative systems have, in all ages of the world, been adopted for reasons too frivolous to have determined the judgment of any man of common sense, in a matter of the smallest pecuniary inte¬ rest. Gross sophistry has scarce ever had any influence upon the opinions of mankind, except in matters of philosophy and specula¬ tion ; and in these it has frequently had the greatest. The patrons of each system of natural and moral philosophy naturally en¬ deavoured to expose the weakness of the arguments adduced to support the systems which were opposite to their own. In ex¬ amining those arguments, they were necessa¬ rily led to consider the difference between a probable and a demonstrative argument, be¬ tween a fallacious and a conclusive one ; and logic, or the science of the general principles of good and bad reasoning, necessarily arose out of the observations which a scrutiny of this kind gave occasion to. Though in its origin posterior both to physics and to ethics, it was commonly taught, not indeed in all, but in the greater part of the ancient schools 346 EXPENSE OF PUBLIC WORKS. Book V. of philosophy, previously to either of those sciences. The student, it seems to have been thought, ought to understand well the dif¬ ference between good and bad reasoning, before he was led to reason upon subjects of so great importance. This ancient division of philosophy into three parts was in the greater part of the universities of Europe, changed for another into five. In the ancient philosophy, -whatever was taught concerning the nature of the human mind or of the Deity, made a part of the system of physics. Those beings, in whatever their essence might be supposed to consist, were parts of the great system of the uni¬ verse, and parts, too, productive of the most important effects. Whatever human reason could either conclude or conjecture concern¬ ing them, made, as it were, two chapters, though no doubt two very important ones, of the science which pretended to give an account of the origin and revolutions of the great system of the universe. But in the universities of Europe, where philosophy was taught only as subservient to theology, it was natural to dwell longer upon these two chapters than upon any other of the sci¬ ence. They -were gradually more and more extended, and were divided into many infe¬ rior chapters, till at last the doctrine of spirits, of which so little can be known, came to take up as much room in the system of philosophy as the doctrine of bodies, of which so much can be known. The doctrines con¬ cerning those two subjects were considered as making two distinct sciences. What are catled metaphysics, or pneumatics, were set in opposition to physics, and were cultivated not only as the more sublime, but for the purposes of a particular profession, as the more useful science of the two. The proper subject of experiment and observation, a subject in which a careful attention is capa¬ ble of making so many useful discoveries, was almost entirely neglected. The subject in which, after a few very simple and almost obvious truths, the most careful attention can discover nothing but obscurity and un¬ certainty, and can consequently produce nothing but subtleties and sophisms, was greatly cultivated. When those two sciences had thus been set in opposition to one another, the com¬ parison between them naturally gave birth to a third, to what was called ontology, or the science which treated of the qualities and at¬ tributes which were common to both the subjects of the other two sciences. But if subtleties and sophisms composed the greater part of the metaphysics or pneumatics of the schools, they composed the whole of this cob¬ web science of ontology, which was likewise sometimes called metaphysics. ^ herein consisted the happiness and per¬ fection of a man, considered not only as an individual, but as the member of a family, of a state, and of the great society of mankind, was the object which the ancient moral phi¬ losophy proposed to investigate. In that philosophy, the duties of human life were treated of as subservient to the happiness and perfection of human life. But when moral as well as natural philosophy came to be taught only as subservient to theology, the duties of human life were treated of as chiefly subservient to the happiness of a life to come. In the ancient philosophy, the perfection of virtue was represented as neces¬ sarily productive, to the person who pos¬ sessed it, of the most perfect happiness in this life. In the modern philosophy, it was frequently represented as generally, or rather as almost always, inconsistent with any de¬ gree of happiness in this life; and heaven was to be earned only by penance and mor¬ tification, by the austerities and abasement of a monk, not by the liberal, generous, and spirited conduct of a man. Casuistry and an ascetic morality made up, in most cases, the greater part of the moral philosophy of the schools. By far the most important of all the different branches of philosophy became in this manner by far the most corrupted. Such, therefore, was the common course of philosophical education in the greater part of the universities in Europe. Logic was taught first : ontology came in the second place: pneumatology, comprehending the doctrine concerning the nature of the human soul and of the Deity, in the third : in the fourth followed a debased system of moral philosophy, which was considered as imme¬ diately connected with the doctrines of pneu¬ matology, with the immortality of the human soul, and with the rewards and punishments which, from the justice of the Deity, w r ere to be expected in a life to come : a short and superficial system of physics usually con¬ cluded the course. The alterations which the universities of Europe thus introduced into the ancient course of philosophy were all meant for the education of ecclesiastics, and to render it a more proper introduction to the study of theology. But the additional quantity of subtlety and sophistry, the casuistry and the ascetic morality which those alterations in¬ troduced into it, certainly did not render it more proper for the education of gentlemen or men of the world, or more likely either to improve the understanding or to mend the heart. This course of philosophy is what still continues to be taught in the greater part of the universities of Europe ; with more or less diligence, according as the constitution of each particular university happens to ren¬ der diligence more or less necessary to the teachers. In some of the richest and best Chap. I. EDUCATION OF YOUTH. S47 endowed universities, the tutors content themselves with teaching a few unconnected shreds and parcels of this corrupted course ; and even these they commonly teach very negligently and superficially. The improvements which in modern times have been made in several different branches of philosophy have not, the greater part of them, been made in universities, though some no doubt have. The greater part of univer¬ sities have not even been very forward to adopt those improvements after they were made ; and several of those learned societies have chosen to remain for a long time the sanctuaries in which exploded systems and obsolete prejudices found shelter and pro¬ tection, after they had been hunted out of every other corner of the world. In gene-\ ral, the richest and best endowed universities have been slowest in adopting those im¬ provements, 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 teach¬ ers, depending upon their reputation for the greater part of their subsistence, were obliged to pay more attention to the current opinions of the world. But though the public schools and uni¬ versities of Europe were originally intended only for the education of a particular pro¬ fession— that of churchmen; and though they were not always very diligent in in¬ structing their pupils even in the sciences which were supposed necessary for that pro¬ fession, yet they gradually drew to them¬ selves the education of almost all other people, particularly of almost all gentlemen and men of fortune. No better method, it seems, could be fallen upon of spending, with any advantage, the long interval be¬ tween infancy and that period of life at which men begin to apply in good earnest to the real business of the world, the business which is to employ them during the remainder of their days. The greater part of what is taught in schools and universities, however, does not seem to be the most proper prepar¬ ation for that business. r In England, it becomes every day more and more the custom to send young people to travel in foreign countries immediately upon their leaving school, and without send¬ ing them to any university. Our young people, it is said, generally return home much improved by their travels. A young man who goes abroad at seventeen or eighteen, and returns home at one-and- twenty, returns three or four years older than he was when he went abroad ; and at that age it is very difficult not to improve a good deal in three or four years. In the course of his travels, he generally acquires some knowledge of one or two foreign lan¬ guages ; a knowledge, however, which is seldom sufficient to enable him either to speak or write them with propriety. In other respects, he commonly returns home more conceited, more unprincipled, more dissipated, and more incapable of any serious application either to study or to business, than he could well have become in so short a time, had he lived at home. By travelling so very youug — by spending in the most frivolous dissipation the most precious years of his life, at a distance from the inspection and control of his parents and relations, every useful habit which the earlier parts of his education might have had some tendency to form in him, instead of being rivetted and confirmed, is almost necessarily either weakened or effaced. Nothing but the dis¬ credit into which the universities are allow¬ ing themselves to fall, could ever have brought into repute so very absurd a prac¬ tice 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 seem to have taken place in other ages and nations. In the republics of ancient Greece, every free citizen was instructed, under the direc¬ tion of the public magistrate, in gymnastic exercises and in music. By gymnastic ex¬ ercises it was intended to harden his body, to sharpen his courage, and to prepare him for the fatigues and dangers of war ; and as the Greek militia was, by all accounts, one of the best that ever was in the world, this part of their public education must have an¬ swered completely the purpose for which it was intended. By the other part, music, it was proposed, at least by the philosophers and historians who have given us an account of those institutions, to humanise the mind, to soften the temper, and to dispose it for performing all the social and moral duties of public and private life. In ancient Rome, the exercises of the Campus Martius answered the same purpose as those of the Gymnasium in ancient Greece, and they seem to have answered it equally well. But among the Romans there was nothing which corresponded to the musical education of the Greeks. The morals of the Romans, however, both in private and public life, seem to have been not only equal, but, upon the whole, a good deal superior, to those of the Greeks. That they were superior in private life we have the express testimony of Polybius and of Dionysius of Halicarnassus, two authors well acquainted with both na¬ tions ; and the whole tenor of the Greek and 348 Book V. EXPENSE OF Roman history bears witness to the supe¬ riority of the public morals of the Romans. The good temper and moderation of contend- { 11 }S factions seems to be the most essential circumstances in the public morals of a free ^ people But the factions of the Greeks were almost always violent and sanguinary; where¬ as, till the time of the Gracchi, no blood had ever been shed in any Roman faction ; and from the time of the Gracchi, the Roman republic may be considered as in reality dis¬ solved. Notwithstanding, therefore, the very respectable authority of Plato, Aristotle, and Polybius, and notwithstanding the very in¬ genious reasons by which Mr. Montesquieu endeavours to support that authority, it seems probable that the musical education of the Greeks had no great effect in mending their morals, since, without any such education, those of the Romans were upon the whole superior. The respect of those ancient sages for the institutions of their ancestors had probably disposed them to find much politi¬ cal wisdom in what was perhaps merely an ancient custom, continued without interrup¬ tion from the earliest period of those socie¬ ties, to the times in which they had arrived at a considerabl e degree of refi nement. Music and dancing are the great amusements of al¬ most all barbarous nations, and the great accomplishments which are supposed to fit any man. for entertaining his society. It is so at this day among the negroes on the coast of Africa. It was so among the ancient Ce^ts, among the ancient Scandinavians, and, as we may learn from Homer, among the ancient Greeks in the times preceding the Trojan war. When the Greek tribes had formed themselves into little republics, it was natural that the study of those accom- plishments should for a long time make a part of the public and common education of the people. i he masters who instructed the young people either in music or in military exer¬ cises, do not seem to have been paid or even appointed by the state, either in Rome or even in Athens, the Greek republic of whose laws and customs we are the best informed. The state required that every free citizen should fit himself for defending it in war, and should, upon that account, learn his mi¬ litary exercises; but it left him to learn them of such masters as he could find, and it seems to have advanced nothing for this pur¬ pose, but a public field or place of exercise, in which he should practise and perform them' In the early ages both of the Greek and Roman republics, the other parts of educa¬ tion seem to have consisted in learning to read, write, and account according to the arithmetic of the times. These accomplish¬ ments the richer citizens seem frequently to have acquired at home, by the assistance of some domestic pedagogue, who was gene- UBLIC WORKS. rally either a slave or a freedman ; and the poorer citizens, in the schools of such mas- teis as made a trade of teaching for hire. Such parts of education, however, were aban¬ doned altogether to the care of the parents or guardians of each individual. It does not appear that the state ever assumed any inspection or direction of them. By a law of Solon, indeed, the children were acquitted from maintaining those parents in their old age who had neglected to instruct them in some profitable trade or business. In the progress of refinement, when phi¬ losophy and rhetoric came into fashion, the better sort of people used to send their chil¬ dren to the schools of philosophers and rhe¬ toricians, in order to be instructed in these fashionable sciences ; but those schools were not supported by the public : they were for a long time barely tolerated by it. The demand for philosophy and rhetoric was for a long time so small, that the first professed teachers of either could not find constant employment in any one city, but were obliged to travel about from place to place. In this manner lived . Zeno of Elea, Protagoras, Gorgias, Hippias, and many others. As the demand increased, the schools both of philo¬ sophy and rhetoric became stationary : first m. Athens, and afterwards in several other cities. The state, however, seems never to have encouraged them further than byassign- mg 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 Epi¬ curus bequeathed his gardens to his own school.. Till about the time of Marcus Antoninus, however, no teacher appears to have had any salary from the public, or to have had any other emoluments but what arose from the honoraries or fees of his scholars. The bounty which that philoso¬ phical emperor, as we learn from Lucian, bestowed upon one of the teachers of philo- sophy, probably lasted no longer than his own life. There was nothing equivalent to the privileges of graduation; and to have attended any of those schools was not neces¬ sary, in order to be permitted to practise any particular trade or profession. If the opi¬ nion of their own utility could not draw scholars to them, the law neither forced any body to 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 autho¬ rity which superior virtue and abilities never fail to procure from young people towards those who are intrusted with any part of their education. At Lome, the study of the civil law made a part of the education, not of the greater Chav. I. EDUCATION OF YOUTH. S49 part of the citizens, but of some particular families. The young people, however, who wished to acquire knowledge in the law, had no public school to go to, and had no other method of studying it than by frequenting the company of such of their relations and friends as were supposed to understand it. It is, perhaps, worth while to remark, that though the laws of the twelve tables were, many of them, copied from those of some ancient Greek republics, yet law never seems to have grown up to be a science in any re¬ public of ancient Greece. In Rome it be¬ came a science very early, and gave a consi¬ derable degree of illustration to those citizens who had the reputation of understanding it. In the republics of ancient Greece, parti¬ cularly in Athens, the ordinary courts of justice consisted of numerous, and therefore disorderly, bodies of people, who frequently decided almost at random, or as clamour, faction, and party spirit happened to deter¬ mine. The ignominy of an unjust decision, when it was to be divided among five hun¬ dred, a thousand, or fifteen hundred people, (for some of their courts were so very nume¬ rous,) could not fall very heavy upon any individual. At Rome, on the contrary, the principal courts of justice consisted either of a single judge, or of a small number of judges, whose characters, especially as they deliberated always in public, could not fail to be very much affected by any rash or un¬ just decision. In doubtful cases, such courts, from their anxiety to avoid blame, would naturally endeavour to shelter themselves under the example or precedent of the judges who had sat before them either in the same or in some other court. This attention to practice and precedent necessarily formed the Roman law into that regular and orderly system in which it has been delivered down to us ; and the like attention has had the like effects upon the laws of every other country where such attention has taken place. The superiority of character in the Romans over that of the Greeks, so much remarked by Polybius and Dionysius of Halicarnassus, was probably more owing to the better constitution of their courts of justice than to any of the circumstances to which those authors ascribe it. The Romans are said to have been particularly distin¬ guished for their superior respect to an oath ; but the people who were accustomed to make oath only before some diligent and well-informed court of justice would natu¬ rally be much more attentive to what they swore, than they who were accustomed to do the same thing before mobbish and disorderly assemblies. The abilities, both civil and military, of the Greeks and Romans, will readily be al¬ lowed to have been at least equal to those of any modern nation ; our prejudice is, per¬ haps, rather to overrate them. But except in what related to military exercises, the state seems to have been at no pains to form those great abilities ; for I cannot be induced to believe that the musical education of the Greeks could be of much consequence in forming them. Masters, however, had been found, it seems, for instructing the better sort of people among those nations in every art and science in which the circumstances of their society rendered it necessary or con¬ venient for them to be instructed. The de¬ mand for such instruction produced, what it always produces, the talent for giving it; and the emulation which an unrestained competition never fails to excite appears to have brought that talent to a very high de¬ gree of perfection. In the attention which the ancient philosophers excited, in the em¬ pire which they acquired over the opinions and principles of their auditors, in the faculty which they possessed of giving a certain tone and character to the conduct and convers¬ ation of those auditors, they appear to have been much superior to any modern teachers. In modern times, the diligence of public teachers is more or less corrupted by the cir¬ cumstances which render them more or less independent of their success and reputation in their particular professions. Their sala¬ ries, too, put the private teacher, who would pretend to come into competition with them, in the same state with a merchant who at¬ tempts to trade without a bounty, in compe¬ tition with those who trade with a consider¬ able one. If he sells his goods at nearly the same price he cannot have the same profit; and poverty and beggary at least, if not bankruptcy and ruin, will infallibly be his lot. If he attempts to sell them much dearer he is likely to have so few customers, that his circumstances will not be much mended. The privileges of graduation, besides, are in many countries necessary, or at least ex¬ tremely convenient, to most men of learned professions; that is, to the far greater part of those who have occasion for a learned edu¬ cation. But those privileges can be obtained only by attending the lectures of the public teachers. The most careful attendance upon the ablest instructions of any private teacher cannot always give any title to demand them. It is from these different causes that the pri¬ vate teacher of any of the sciences which are commonly taught in universities is, in modern times, generally considered as in the very lowest order of men of letters. A man of real abilities can scarce find out a more humiliating or a more unprofitable employment to turn them to. The endow¬ ments of schools and colleges have, in this manner, not only corrupted the diligence of public teachers, but have rendered it almost impossible to have any good private ones. Were there no public institutions for edu- 1 \ i i 350 EXPENSE OF PUBLIC WORKS. Book V. cation, no system, no science would be taught for which there was not some demand, or which the circumstances of the times did not render it either necessary or convenient, or at least fashionable, to learn. A private teacher could never find his account in teach¬ ing either an exploded and antiquated system of a science acknowledged to be useful, or a science universally believed to be a mere use¬ less and pedantic heap of sophistry and non¬ sense. Such systems, such sciences, can subsist nowhere but in those incorporated societies for education, whose prosperity and revenue are in a great measure independent of their reputation, and altogether inde¬ pendent of their industry. Were there no public institutions for education, a gentle¬ man, after going through, with application and abilities, the most complete course of education which the circumstances of the times were supposed to afford, could not come into the world completely ignorant of every thing which is the common subject of conversation among gentlemen and men of the world. There are no public institutions for the education of women, and there is accordingly nothing useless, absurd, or fantastical, in the common course of their education. They are taught what their parents or guardians judge it necessary or useful for them to learn, and they are taught nothing else. Every part of their education tends evidently to some useful purpose: either to improve the natural attractions of their person, or to form their mind to reserve, to modesty, to chastity, and to economy; to render them both likely to become the mistresses of a family, and to behave properly when they have become such. In every part of her life a woman feels some conveniency or advantage from every part of her education. It seldom happens that a man, in any part of his life, derives any conveniency or advantage from some of the most laborious and troublesome parts of his education. Ought the public, therefore, to give no attention, it may be asked, to the education of the people ? Or, if it ought to give any, what are the different parts of education which it ought to attend to in the different orders of the people ? and in what manner ought it to attend to them ? In some cases the state of society neces¬ sarily places the greater part of individuals in such situations as naturally form in them, 1 The statements in this paragraph are as un¬ founded as can well be imagined. We have already (anti, p. 58.) endeavoured to show that there is no ground whatever for the notion that agricultural labourers are more intelligent than those employed in manufactures and commerce, or that the faculties of the latter are impaired in consequence of their being generally confined to particular callings. The fact is, indeed, distinctly and completely the reverse ; the manufacturing population being uniformly better informed than the agricultural, and their intelligence I without any attention of government, almost all the abilities and virtues which that state requires, or perhaps can admit of. In other cases the state of the society does not place the greater part of the individuals in such situations, and some attention of government is necessary in order to prevent the almost entire corruption and degeneracy of the great body of the people. In the progress of the division of labour, the employment of the far greater part of those who live by labour, that is, of the great body of the people, comes to be confined to a few very simple operations ; frequently to one or two. But the understandings of the greater part ot men are necessarily formed by their ordinary employments. The man whose whole life is spent in performing a few simple operations, of which the effects too are perhaps always the same, or very nearly the same, has no occasion to exert his under¬ standing, or to exercise his invention in finding out expedients for removing difficul¬ ties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. The torpor of his mind renders him not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judg¬ ment concerning many even of the ordinary duties of private life. Of the great and ex¬ tensive interests of his country he is alto¬ gether incapable of judging; and unless very particular pains have been taken to render him otherwise, he is equally incapable of defending his country in war. The uni¬ formity of his stationary life naturally cor¬ rupts the courage of his mind, and makes him regard with abhorrence the irregular, uncertain, and adventurous life of a soldier. It corrupts even the activity of his body, and renders him incapable of exerting his strength with vigour and perseverance, iji any other employment than that to which he has been bred. His dexterity at his own particular trade seems, in this manner, to be acquired at the expense of his intellectual, social, and martial virtues. But in every improved and civilised society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it. 1 It is otherwise in the barbarous societies, having improved according to the increase of their numbers, and the greater subdivision of their em¬ ployments. The notion that manufactures are hostile to the social and martial virtues of the w< rk- people engaged in carrying them on, is, if possiole, still more erroneous. The cities and countries, both in antiquity and in modern times, that have been most distinguished by their proficiency in the arts and in commerce, have at the same time been the most distinguished by their patriotism and courage. But it is unnecessary to travel out of Great Chap. I. EDUCATION OF YOUTH. S51 as they are commonly called, of hunters, of shepherds, and even of husbandmen in that rude state of husbandry which precedes the improvement of manufactures, and the ex¬ tension of foreign commerce. In such so¬ cieties the varied occupations of every man oblige every man to exert his capacity, and to invent expedients for removing difficulties which are continually occurring. Invention is kept alive, and the mind is not suffered to fall into that drowsy stupidity, which, in a civilised society, seems to benumb the un¬ derstanding of almost all the inferior ranks of people. In those barbarous societies, as they are called, every man, it has already been observed, is a warrior. Every man too is in some measure a statesman, and can form a tolerable judgment concerning the interest of the society, and the conduct of those who govern it. How far their chiefs are good judges in peace, or good leaders in war, is obvious to the observation of almost every single man among them. In such a society, indeed, no man can well acquire that im¬ proved and refined understanding which a few men sometimes possess in a more civil¬ ised state. Though in a rude society there is a good deal of variety in the occupations of every individual, there is not a great deal in those of the whole society. Every man does, or is capable of doing, almost every thing which any other man does, or is capa¬ ble of doing. Every man has a considerable degree of knowledge, ingenuity, and inven¬ tion ; but scarce any man has a great degree. The degree, however, which is commonly possessed is generally sufficient for conduct¬ ing the whole simple business of the society. In a civilised state, on the contrary, though there is little variety in the occupations of the greater part of the individuals, there is an almost infinite variety in those of the whole society. These varied occupations present an almost infinite variety of objects to the contemplation of those few, who, be¬ ing attached to no particular occupation themselves, have leisure and inclination to examine the occupations of other people. The contemplation of so great a variety of objects necessarily exercises their minds in endless comparisons and combinations, and renders their understandings, in an extra¬ ordinary degree, both acute and comprehen- Britain for conclusive proofs of the entire fallacy of every assertion advanced by Dr. Smith in this para¬ graph. Our manufactures have increased to an un¬ precedented extent during the last half century, and the division of employments is carried further in England than in any other country ; but, though government has done nothing, in the way of educa¬ tion or otherwise, for their improvement, who will presume to say that the people employed in work¬ shops have become “ stupid and ignorant” ? — that they are less capable than the agriculturists of judging of “ the great and extensive interests of their country ” ? _ or that they are “ incapable of de¬ fending it in war ” ? There is not, and there never was, so much as the shadow of a foundation for such imputations. His giving them credit is one of the sive. Unless those few, however, happen to be placed in some very particular situations, their great abilities, though honourable to themselves, may contribute very little to the good government or happiness of their so¬ ciety. Notwithstanding the great abilities of those few, all the nobler parts of the hu¬ man character may be, in a great measure, obliterated and extinguished in the great body of the people. The education of the common people re¬ quires, perhaps, in a civilised and commercial 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 busi¬ ness, profession, or trade, by which they pro¬ pose to distinguish themselves in the world. They have before that full time to acquire, or at least to fit themselves for afterwards ac¬ quiring, every accomplishment which can recommend them to the public esteem, or render them worthy of it. Their parents or guardians are generally sufficiently anxious that they should be so accomplished, and are, in most cases, willing enough to lay out the expense which is necessary for that purpose. If they are not always properly educated, it is seldom from the want of expense laid out upon their education, but from the improper application of that expense : it is seldom from the want of masters, but from the negligence and incapacity of the masters who are to be had, and from the difficulty, or rather from the impossibility which there is, in the pre¬ sent state of things, of finding any better. The employments too in which people of some rank or fortune spend the greater part of their lives are not, like those of the com¬ mon people, simple and uniform : they are almost all of them extremely complicated and such as exercise the head more than the hands. The understandings of those who are engaged in such employments can seldom grow torpid for want of exercise. The em¬ ployments of people of some rank and for¬ tune, besides, are seldom such as harass them from morning to night. They generally have a good deal of leisure, during which they may perfect themselves in every branch either of useful or ornamental knowledge of which they may have laid the foundation, or few instances in which Dr. Smith has suffered his judgment to be swayed by ancient prejudices. He might have known that General Eliott's regiment of light horse, which so highly distinguished itself during the seven years’ war, was principally recruited from among the tailors of the metropolis. But, as respects the statement that manufactures weaken the corporeal and martial powers, it is necessary only to call to mind that the great manufacturing and trading towns furnished by far the largest portion of recruits to the army during the late war : for every one will allow that the events of that contest proved, beyond dispute, that whatever other changes may have taken place in the habits of our people, our troops are as much distinguished as ever for capacity to bear fatigue and invincible courage and resolution. ii 5 2 EXPENSE OF PUBLIC WORKS. Book V. for which they may have acquired some taste in the earlier part of life. It is otherwise with the common people. They have little time to spare for education. Their parents can scarce afford to maintain them even in infancy. As soon as they are able to work, they must apply to some trade by which they can earn their subsistence. That trade too is generally so simple and uni¬ form as to give little exercise to the under¬ standing ; while, at the same time, their labour is both so constant and so severe, that it leaves them little leisure and less inclin¬ ation to apply to, or even to think of any thing else. But though the common people cannot, in any civilised society, be so well instructed as people of some rank and fortune, the most essential parts of education, however, to read, write, and account, can be acquired at so early a period of life, that the greater part even of those who are to be bred to the low¬ est occupations, have time to acquire them before they can be employed in those occu¬ pations. For a very small expense the public can facilitate, can encourage, and can even impose upon almost the whole body of the people, the necessity of acquiring those most essential parts of education. The public can facilitate this acquisition, by establishing in every parish or district a little school where children may be taught for a reward so moderate, that even a common labourer may afford it; the master being partly, but not wholly paid by the public ; because if he was wholly, or even principally paid by it, he would soon learn to neglect his business. In Scotland 1 the establish¬ ment of such parish schools has taught al¬ most the whole common people to read, and a very great proportion of them to write and account. In England the establishment of charity schools has had an effect of the same kind, though not so universally, because the establishment is not so universal. If in those little schools the books, by which the children are taught to read ■were a little more instructive than they commonly are j and if instead of a little smattering in Latin, which the children of the common people are sometimes taught there, and which can scarce ever be of any use to them, they were instructed in the elementary parts of geo¬ metry and mechanics, the literary education of this rank of people would perhaps be as complete as it can be. There is scarce a common trade which does not afford some op¬ portunities of applying to it the principles of geometry and mechanics, and which would not therefore gradually exercise and improve the common people in those principles, the 1 The reader will find, in a supplemental note, a Educatio° Un ^ s J’ stem of Parochial necessary introduction to the most sublime as well as to the most useful sciences. The public can encourage the acquisition of those most essential parts of education, by giving small premiums, and little badges of distinction, to the children of the common people who excel in them. The public can impose upon almost the whole body of the people the necessity of ac¬ quiring the most essential parts of education, by obliging every man to undergo an ex¬ amination or probation in them before he can obtain the freedom in any corporation, or be allowed to set up any trade either in a vil¬ lage or town corporate. It was in this manner, by facilitating the acquisition of their military and gymnastic exercises, by encouraging it, and even by im¬ posing upon the whole body of the people the necessity of learning those exercises, that the Greek and Roman republics maintained the martial spirit of their respective citizens. They facilitated the acquisition of those ex¬ ercises by appointing a certain place for learning and practising them, and by grant¬ ing to certain masters the privilege of teach¬ ing in that place. Those masters do not appear to have had either salaries or exclu¬ sive privileges of any kind. Their reward consisted altogether in what they got from their scholars ; and a citizen who had learnt his exercises in the public gymnasia had no sort of legal advantage over one who had learnt them privately, provided the latter had learnt them equally well. Those re¬ publics encouraged the acquisition of those exercises, by bestowing little premiums and badges of distinction upon those who excelled in them. To have gained a prize in the Olympic, Isthmian, or Nemasan games, gave illustration, not only to the person who gained it, but to his whole family and kin¬ dred. The obligation which every citizen was under to serve a certain number of years, if called upon, in the armies of the republic, sufficiently imposed the necessity of learning those exercises, without which he could not be fit for that service. That in the progress of improvement the practice of military exercises, unless govern¬ ment takes proper pains to support it, goes gradually to decay, and, together with it, the martial spirit of the great body of the people, the example of modern Europe sufficiently demonstrates. But the security of every society must always depend, more or less, upon the martial spirit of the great body of the people. In the present times, indeed, that martial spirit alone, and unsupported by a well-disciplined standing army, would not, perhaps, be sufficient for the defence and security of any society. But where every citizen had the spirit of a soldier, a smaller standing army would surely be requisite. Chai\ I. EDUCATION OF YOUTH. 353 That spirit, besides, would necessarily di¬ minish very much the dangers to liberty, whether real or imaginary, which are com¬ monly apprehended from a standing army. As it would very much facilitate the oper¬ ations of that army against a foreign in¬ vader, so it would obstruct them as much if unfortunately they should ever be directed against the constitution of the state. The ancient institutions of Greece and Home seem to have been much more effectual, for maintaining the martial spirit of the great body of the people, than the establish¬ ment of what are called the militias of modern times. They were much more simple. When they were once established, they executed themselves, and it required little or no attention from government to maintain them in the most perfect vigour. Whereas to maintain, even in tolerable execution, the complex regulations of any modern militia, requires the continual and painful attention of government, without which they are constantly falling into total neglect and disuse. The influence, besides, of the ancient institutions was much more universal. By means of them the whole body of the people was completely instructed in the use of arms. Whereas it is but a very small part of them who can ever be so in¬ structed by the regulations of any modern militia ; except, perhaps that of Switzerland. But a coward, a man incapable either of defending or of revenging himself, evidently wants one of the most essential parts of the character of a man. He is as much mutilated and deformed in his mind as another is in his body, who is either deprived of some of its most essential members, or has lost the use of them. He is evidently the more wretched and miserable of the two ; because happiness and misery, which reside altogether in the mind, must necessarily depend more upon the healthful or unhealthful, the muti¬ lated or entire state of the mind, than upon that of the body. Even though the martial spirit of the people were of no use towards the defence of the society, yet, to prevent that sort of mental mutilation, deformity, and wretchedness, which cowardice neces¬ sarily involves in it, from spreading them¬ selves through the great body of the people, would still deserve the most serious attention of government ; in the same manner as it would deserve its most serious attention to prevent a leprosy or any other loathsome and offensive disease, though neither mortal nor dangerous, from spreading itself among them; though, perhaps, no other public good might result from such attention be¬ sides the prevention of so great a public evil. The same thing may be said of the gross ignorance and stupidity which, in a civilised society, seem so frequently to benumb the understandings of all the inferior ranks of people. A man without the proper use of the intellectual faculties of a man, is, if possible, more contemptible than even a coward, and seems to be mutilated and deformed in a still more essential part of the character of human nature. Though the state was to derive no advantage from the instruction of the inferior ranks of people, it would still deserve its attention that they should not be altogether uninstructed. The state, however, derives no inconsiderable ad¬ vantage from their instruction. The more they are instructed, the less liable they are to the delusions of enthusiasm and super¬ stition, which, among ignorant nations, frequently occasion the most dreadful dis¬ orders. An instructed and intelligent people, besides, are always more decent and orderly than an ignorant and stupid one. They feel themselves, each individually, more respectable, and more likely to obtain the respect of their lawful superiors, and they are therefore more 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 government depends very much upon the favourable judgment which the people may form of its conduct, it must surely be of the highest importance that they should not be disposed to judge rashly or capriciously concerning it. article in. Of the Expense of the Institutions for the Instruction of People of all Ages. The institutions for the instruction of people of all ages are chiefly those for religious in¬ struction. This is a species of instruction of which the object is not so much to render the people good citizens in this world, as to prepare them for another and a better world in a life to come. The teachers of the doctrine which contains this instruction, in the same manner as other teachers, may either depend altogether for their subsistence upon the voluntary contributions of their hearers ; or they may derive it from some other fund to which the law of their country may entitle them : such as a landed estate, a tithe or land tax, an established salary or stipend. Their exertion, their zeal and industry, are likely to be much greater in the former situation than in the latter. In this respect the teachers of new religions have always had a considerable advantage in attacking those ancient and established systems of which the clergy reposing them¬ selves upon their benefices, had neglected to keep up the fervour of faith and devotion in A a 35 4 EXPENSE OF PUBLIC WORKS. Book V. the great body of the people ; and having given themselves up to indolence, were become altogether incapable of making any vigorous exertion in defence even of their own establishment. The clergy of an estab¬ lished and well-endowed religion frequently become men of learning and elegance, who possess all the virtues of gentlemen, or which can recommend them to the esteem of gentlemen ; but they are apt gradually to lose the qualities, both good and bad, which gave them authority and influence with the inferior ranks of people, and which had perhaps been the original causes of the success and establishment of their religion. Such a clergy, when attacked by a set of popular and bold, though perhaps stupid and ignorant enthusiasts, feel themselves as perfectly defenceless as the indolent, effem¬ inate, and full-fed nations of the southern parts of Asia, when they were invaded by the active, hardy and hungry Tartars of the north. Such a clergy, upon such an emer¬ gency, have commonly no other resource than to call upon the civil magistrate to persecute, destroy, or drive out their adver¬ saries, as disturbers of the public peace. It was thus that the Roman catholic clergy called upon the civil magistrate to persecute the protestants, and the church of England to persecute the dissenters; and that in general every religious sect, when it has once enjoyed for a century or two the security of a legal establishment, has found itself in¬ capable of making any vigorous defence against any new sect which chose to attack its doctrine or discipline. Upon such oc¬ casions, the advantage in point of learning and good writing may sometimes be on the side of the established church. But the arts of popularity, all the arts of gaining prose¬ lytes, are constantly on the side of its adversaries. In England, those arts have been dong neglected bv the well-endowed clergy of the established church, and are at present chiefly cultivated by the dissenters and by the methodists. The independent provisions, however, which in many places have been made for dissenting teachers, by means of voluntary subscriptions, of trust rights, and other evasions of the law, seem very much to have abated the zeal and activity of those teachers. They have, many of them, become very learned, ingenious, and respect¬ able men ; but they have in general ceased to be very popular preachers. The method¬ ists, without half the learning of the dissent¬ ers, are much more in vogue. In the church of Rome the industry and zeal of the inferior clergy are kept more alive by the powerful motive of self-interest, than perhaps in any established protestant church. The parochial clergy derive, many of them, a very considerable part of their subsistence from the voluntary oblations of the people; a source of revenue which confession gives them many opportunities of improving. The mendicant orders derive their whole subsist¬ ence from such oblations. It is with them as with the hussars and light infantry of some armies: no plunder, no pay. The parochial clergy are like those teachers whose reward depends partly upon their salary, and partly upon the fees or lionora- ries which they get from their pupils; and these must always depend more or less upon their industry and reputation. The mendi¬ cant orders are like those teachers whose subsistence depends altogether upon their industry. They are obliged, therefore, to use every art which can animate the devotion of the common people. The establishment of the two great mendicant orders of St. Dominic and St. Francis, it is observed by Machiavel, revived, in the thirteenth and fourteenth centuries, the languishing faith and devotion of the catholic church. In Roman catholic countries the spirit of devo¬ tion is supported altogether by the monks and by the poorer parochial clergy. The great dignitaries of the church, with all the accomplishments of gentlemen and men of the world, and sometimes with those of men of learning, are careful enough to maintain the necessary discipline over their inferiors, but seldom give themselves any trouble about the instruction of the people. “ Most of the arts and professions in a state,” says by far the most illustrious phi¬ losopher and historian of the present age, “ are of such a nature, that, while they pro¬ mote the interests of the society, they are also useful or agreeable to some individuals ; and in that case, the constant rule of the magistrate, except, perhaps, on the first in¬ troduction of any art, is, to leave the profes¬ sion to itself, and trust its encouragement to the individuals who reap the benefit of it. The artisans, finding their profits to rise by the favour of their customers, increase, as much as possible, their skill and industry; and as matters are not disturbed by any in¬ judicious tampering, the commodity is always sure to be at all times nearly proportioned to the demand. “ But there are also some callings which, though useful and even necessary in a state, bring no advantage or pleasure to any indi¬ vidual ; and the supreme power is obliged to alter its conduct with regard to the re¬ tainers of those professions. It must give them public encouragement in order to their subsistence; and it must provide against that negligence to which they will naturally be subject, either by annexing particular honours to the profession, by establishing a long subordination of ranks and a strict de¬ pendence, or by some other expedient. The Chap. I. EDUCATION OF PEOPLE OF ALL AGES. 355 persons employed in the finances, fleets, and magistracy, are instances of this order of men. “ It may naturally be thought, at first sight, that the ecclesiastics belong to the first class, and that their encouragement, as well as that of lawyers and physicians, may safely be entrusted to the liberality of indi¬ viduals, who are attached to their doctrines, and who find benefit or consolation from their spiritual ministry and assistance. Their in¬ dustry and vigilance will, no doubt, be whet¬ ted by such an additional motive; and their skill in the profession, as well as their address in governing the minds of the people, must receive daily increase, from their increasing practice, study, and attention. « But if we consider the matter more closely, we shall find that this interested diligence of the clergy is what every wise legislator will study to prevent; because, in every religion except the true, it is highly pernicious, and it has even a natural tendency to pervert the true, by infusing into it a strong mixture of superstition, folly, and delusion. Each ghostly practitioner, in order to render himself more precious and sacred in the eyes of his retainers, will inspire them with the most violent abhorrence of all other sects, and continually endeavour, by some novelty, to excite the languid devotion of his audi¬ ence. No regard will be paid to truth, mo¬ rals, or decency in the doctrines inculcated. Every tenet will be adopted that best suits the disorderly affections of the human frame. Customers will be drawn to each conventicle by new industry and address in practising on the passions and credulity of the populace; and, in the end, the civil magistrate will find that he has dearly paid for his intended frugality in saving a fixed establishment for the priests ; and that, in reality, the most decent and advantageous composition which he can make with the spiritual guides, is to bribe their indolence, by assigning stated salaries to their profession, and rendering it superfluous for them to be farther active, than merely to prevent their flock from straying in quest of new pastures. And in this manner ecclesiastical establishments, though commonly they arose at first from religious views, prove in the end advantage¬ ous to the political interests of society.” But whatever may have been the good or bad effects of the independent provision of the clergy, it has perhaps been very seldom bestowed upon them from any view to those effects. Times of violent religious contro¬ versy have generally been times of equally violent political faction. Upon such occa¬ sions, each political party has either found it, or imagined it, for his interest, to league itself with some one or other of the contend¬ ing religious sects. But this could be done only by adopting, or at least by favouring, the tenets of that particular sect. The sect which had the good fortune to be leagued with the conquering party, necessarily shared in the victory of its ally, by whose favour and protection it was soon enabled in some degree to silence and subdue all its adver¬ saries. Those adversaries had generally leagued themselves with the enemies of the conquering party, and were therefore the enemies of that party. The clergy of this particular sect having thus become complete masters of the field, and their influence and authority with the great body of the people being in its highest vigour, they were power¬ ful enough to overawe the chiefs and leaders of their own party, and to oblige the civil magistrate to respect their opinions and in¬ clinations. Their first demand was gene¬ rally, that he should silence and subdue all their adversaries ; and their second, that he should bestow an independent provision on themselves. As they had generally contri¬ buted 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 this demand, therefore, they con¬ sulted their own ease and comfort, without troubling themselves about the effect which it might have, in future times, upon the in¬ fluence and authority of their order. The civil magistrate, who could comply with this demand only by giving them something which he would have chosen much rather to take, or to keep to himself, was seldom very forward to grant it. Necessity, how¬ ever, always forced him to submit at last, though frequently not till after many delays, evasions, and affected excuses. But if politics had never called in the aid of religion, had the conquering party never adopted the tenets of one sect more than those of another, when it had gained the victory, it would probably have dealt equally and impartially with all the different sects, and have allowed every man to choose his own priest and his own religion as he thought proper. There would in this case, no doubt, have been a great multitude of religious sects. Almost every different congregation might probably have made a little sect by itself, or have entertained some peculiar tenets of its own. Each teacher would, no doubt, have felt himself under the necessity of making the utmost exertion, and of using every art, both to preserve and to increase the number of his disciples. But as every other teacher would have felt himself under the same necessity, the success of no one teacher, or sect of teachers, could have been very great. The interested and active zeal of religious teachers can be dangerous and troublesome only where there is either but one sect tolerated in the society, or where the A a 2 356 EXPENSE OF PUBLIC WORKS. Book V. whole of a large society is divided into two or three great sects ; the teachers of each acting by concert, and under a regular disci¬ pline and subordination. But that zeal must be altogether innocent where the society is divided into two or three hundred, or, per¬ haps, into as many thousand small sects, of which no one could be considerable enough to disturb the public tranquillity. The teach¬ ers of each sect, seeing themselves surround¬ ed on all sides with more adversaries than friends, would be obliged to learn that can¬ dour and moderation, which is so seldom to be found among the teachers of those great sects, whose tenets, being supported by the civil magistrate, are held in veneration by almost all the inhabitants of extensive king¬ doms and empires, and who therefore see nothing round them but followers, disciples, and humble admirers. The teachers of each little sect, finding themselves almost alone, would be obliged to respect those of almost every other sect; and the concessions which they would mutually find it both convenient and agreeable to make one to another, might in time probably reduce the doctrine of the greater part of them to that pure and ra¬ tional religion, free from every mixture of absurdity, imposture, or fanaticism, such as wise men have, in all ages of the world, wished to see established ; but such as posi¬ tive law has, perhaps, never yet established, and probably never will establish in any country ; because, with regard to religion, positive law always has been, and probably always will be, more or less influenced by popular superstition and enthusiasm. This plan of ecclesiastical government, or more properly of no ecclesiastical government, was what the sect called Independents, a sect, no doubt, of very wild enthusiasts, proposed to establish in England towards the end of the civil war. If it had been established, though of a very unphilosophical origin, it would probably, by this time, have been productive of the most philosophical g<5od temper and moderation with regard to every sort of reli¬ gious principle. It has been established in Pennsylvania, where, though the quakers happen to be the most numerous, the law in reality favours no one sect more than an¬ other ; and it is there said to have been pro¬ ductive of this philosophical good temper and moderation But though this equality of treatment should not be productive of this good tem¬ per and moderation in all, or even in the greater part of the religious sects of a parti¬ cular country ; yet, provided those sects were sufficiently numerous, and each of them con¬ sequently too smal’l to disturb the public tranquillity, the excessive zeal of each for its particular tenets could not well be produc¬ tive of any very hurtful effects, but, on the contrary, of several good ones • and if the government was perfectly decided, both to let them all alone, and to oblige them all to let alone one another, there is little danger that they would not, of their own accord, subdivide themselves fast enough, so as soon to become sufficiently numerous. In every civilised society, in every society where the distinction of ranks has once been completely established, there have been 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 generally ad¬ mired and revered by the common people, the latter is commonly more esteemed and adopted by what are called people of fashion. 1 he degree of disapprobation with which we ought to mark the vices of levity, the vices which are apt to arise from great prosperity, and from the excess of gaiety and good hu¬ mour, seems to constitute the principal dis¬ tinction between those two opposite schemes or systems. In the liberal or loose system, luxury, wanton and even disorderly mirth, the pursuit of pleasure to some degree of intem¬ perance, the breach of chastity, at least in one of the two sexes, &c., provided they are not accompanied with gross indecency, and do not lead to falsehood or injustice, are ge¬ nerally treated with a good deal of indul¬ gence, and are easily either excused or par¬ doned altogether. In the austere system, on the contrary, those excesses are regarded with the utmost abhorrence and detestation. The vices of levity are always ruinous to the common people, and a single week’s thought¬ lessness and dissipation is often sufficient to undo a poor workman for ever, and to drive him, through despair, upon committing the most enormous crimes. The wiser and bet¬ ter sort of the common people, therefore, have always the utmost abhorrence and de¬ testation of such excesses, which their ex¬ perience tells them are so immediately fatal to people of their condition. The disorder and extravagance of several years, on the contrary, will not always ruin a man of fashion ; and people of that rank are very apt to consider the power of indulging in some degree of excess as one of the advan¬ tages of their fortune, and the liberty of doing so without censure or reproach as one of the privileges which belong to their sta¬ tion. In people of their own station, there¬ fore, they regard such excesses with but a small degree of disapprobation, and censure them either very slightly or not at all. Almost all religious sects have begun among the common people, from whom they have generally drawn their earliest as well as their most numerous proselytes. The austere system of morality has accordingly been adopted by those sects almost constantly or with very few exceptions, for there have Chap. I. EDUCATION OF PEOPLE OF ALL AGES. S57 been some. It was the system by which they could best recommend themselves to that order of people to whom they first proposed their plan of reformation upon what had been before established. Many of them, perhaps the greater part of them, have even endeavoured to gain credit by refining upon this austere system, and by carrying it to some degree of folly and extravagance ; and this excessive rigour has frequently recom¬ mended them more than any thing else to the respect and veneration of the common people. A man of rank and fortune is, by his sta¬ tion, the distinguished member of a great society, who attend to every part of his con¬ duct, and who thereby oblige him to attend to every part of it himself. His authority and consideration depend very much upon the respect which this society bears to him. He dare not do any thing which would dis¬ grace or discredit him in it; and he is obliged to a very strict observation of that ( species of morals, whether liberal or austere, which the general consent of this society prescribes to persons of his rank and fortune. A man of low condition, on the contrary, is far from being a distinguished member of any great society. While he remains in a country village, his conduct may be attend¬ ed to, and he may be obliged to attend to it himself. In this situation, and in this situ¬ ation only, he may have what is called a cha¬ racter to lose. But as soon as he comes into a great city, he is sunk in obscurity and darkness. His conduct is observed and at¬ tended to by nobody ; and he is therefore very likely to neglect it himself, and to abandon himself to every sort of low profli¬ gacy and vice. He never emerges so effect¬ ually from this obscurity, his conduct never excites so much the attention of any respect¬ able society, as by his becoming the mem¬ ber of a small religious sect. He from that moment acquires a degree of consideration which he never had before. All his brother sectaries are, for the credit of the sect, inter¬ ested to observe his conduct; and, if he gives occasion to any scandal, if lie deviates very much^from those austere morals which they almost always require of one another, to punish him by what is always a very se¬ vere punishment, even where no evil effects attend it, expulsion or excommunication from the sect. In little religious sects, ac¬ cordingly, the morals of the common people have been almost always remarkably regular and orderly ; generally much more so than in the established church. The morals of those little sects indeed have frequently been rather disagreeably rigorous and unsocial. There are two very easy and effectual re¬ medies, however, by whose joint operation the state might, without violence, correct whatever was unsocial or disagreeably ri¬ gorous in the morals of all the little sects into which the country was divided. The first of those remedies is the study of science and philosophy, which the state might render almost universal among all people of middling or more than middling rank and fortune; not by giving salaries to teachers in order to make them negligent and idle, but by instituting some sort of pro¬ bation, even in the higher and more difficult sciences, to be undergone by every person before he was permitted to exercise any libe¬ ral profession, or before he could be re¬ ceived as a candidate for any honourable office of trust or profit. If the state im¬ posed upon this order of men the necessity of learning, it would have no occasion to give itself any trouble about providing them with proper teachers. They would soon find bet¬ ter teachers for themselves than any whom the state could provide for them. Science is the great antidote to the poison of enthu¬ siasm and superstition; and where all the superior ranks of people ■were secured from it, the inferior ranks could not be much ex¬ posed to it. The second of those remedies is the fre¬ quency and gaiety of public diversions. The state, by encouraging, that is, by giving entire liberty to all those who, for their own interest, would attempt, without scandal or indecency, to amuse and divert the people b) r painting, poetry, music, dancing, — by all sorts of dramatic representations and ex¬ hibitions, — would easily dissipate, in the greater part of them, that melancholy and gloomy humour which is almost always the nurse of popular superstition and enthusiasm. Public diversions have always been the ob¬ jects of dread and hatred to all the fanatical promoters of those popular frenzies. The gaiety and good humour which those diver¬ sions inspire, were altogether inconsistent with that temper of mind which was fittest for their purpose or which they could best work upon. Dramatic representations, be¬ sides, frequently exposing their artifices to public ridicule, and sometimes even to pub¬ lic execration, -were upon that account, more than all other diversions, the objects of their peculiar abhorrence. In a country where the law favoured the teachers of no one religion more than those of another, it would not be necessary that any of them should have any particular or immediate dependency upon the sovereign or executive power ; or that he should have any thing to do either in appointing or in dismissing them from their offices. In such a situation, he would have no occasion to give himself any concern about them, further than to keep the peace among them, in the same manner as among the rest of his sub- A a 3 | 358 EXPENSE OF PUBLIC WORKS. Boos V. jects; that is, to hinder them from perse¬ cuting, abusing, or oppressing one another. But it is quite otherwise in countries where there is an established or governing religion. The sovereign can in this case never be secure, unless he has the means of influencing in a considerable degree the greater part of the teachers of thau religion. The clergy of every established church constitute a great incorporation. They can act in concert, and pursue their interest upon one plan and with one spirit, as much as if they were under the direction of one man ; and they are frequently too under such di¬ rection. Their interest as an incorporated body is never the same with that of the sove¬ reign, and is sometimes directly opposite to it. Their great interest is to maintain their authority with the people; and this authority depends upon the supposed certainty and im¬ portance of the whole doctrine which they inculcate, and upon the supposed necessity of adopting every part of it with the most im¬ plicit faith, in order to avoid eternal misery. Should the sovereign have the imprudence to appear either to deride or doubt himself of the most trifling part of their doctrine, or from humanity attempt to protect those who did either the one or the other, the punctili¬ ous honour of a clergy who have no sort of dependency upon him, is immediately pro¬ voked to proscribe him as a profane person, and to employ all the terrors of religion in order to oblige the people to transfer their allegiance to some more orthodox and obedi¬ ent prince. Should he oppose any of their pretensions or usurpations, the danger is equally great. The princes who have dared in this manner to rebel against the church, over and above this crime of rebellion have generally been charged too with the addi¬ tional crime of heresy, notwithstanding their solemn protestations of their faith and hum¬ ble submission to every tenet which she thought proper to prescribe to them. But the authority of religion is superior to every other authority. The fears which it suggests conquer all other fears. When the author¬ ised teachers of religion propagate through the great body of the people doctrines sub¬ versive of the authority of the sovereign, it is by violence only, or by the force of a stand¬ ing army that he can maintain his authority. Even a standing army cannot in this case give him any lasting security; because if the soldiers are not foreigners, which can seldom be the case, but drawn from the great body of the people, which must almost always be the case, they are likely to be soon cor¬ rupted by those very doctrines. The revolu¬ tions which the turbulence of the Greek clergy was continually occasioning at Constantino¬ ple, as long as the eastern empire subsisted; the convulsions which, during the course of several centuries, the turbulence of the Roman clergy was continually occasioning in every part of Europe, sufficiently demon¬ strate how precarious and insecure must al¬ ways be the situation of the sovereign who has no proper means of influencing the clergy of the established and governing reli¬ gion of his country. Articles of faith, as well as all other spi¬ ritual matters, it is evident enough, are not ■within the proper department of a temporal sovereign, who, though he may be very well qualified for protecting, is seldom supposed to be so for instructing the people. With regard to such matters, therefore, his author¬ ity can seldom be sufficient to counterbalance the united authority of the clergy of the established church. The public tranquillity, however, and his own security, may fre¬ quently depend upon the doctrines which they may think proper to propagate con¬ cerning such matters. As he can seldom directly oppose their decision, therefore, with proper weight and authority, it is necessary that he should be able to influence it; and he can influence it only by the fears and ex¬ pectations 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 prefer¬ ment. In all Christian churches the benefices of the clergy are a sort of freeholds which they enjoy, not during pleasure, but during life or good behaviour. If they held them by a more precarious tenure, and were liable to be turned out upon every slight disobligation either of the sovereign or of his ministers, it would perhaps be impossible for them to maintain their authority with the people, who would then consider them as mercenary dependents upon the court, in the sincerity of whose instructions they could no longer have any confidence. But should the sove¬ reign attempt irregularly, and by violence, to deprive any number of clergymen of their freeholds, on account, perhaps, of their hav¬ ing propagated, with more than ordinary zeal, some factious or seditious doctrine, he would only render by such persecution, both them and their doctrine ten times more popular, and, therefore, ten times more trou¬ blesome and dangerous than they had been before. Fear is in almost all cases a wretched instrument of government, and ought in par¬ ticular never to be employed against any order of men who have the smallest preten¬ sions to independency. To attempt to ter¬ rify them, serves only to irritate their bad humour, and to confirm them in an opposi¬ tion which more gentle usage, perhaps, might easily induce them either to soften or to lay aside altogether. The violence which the French government usually employed in order to oblige all their parliaments, or sove- Chap. I. EDUCATION OF PEOPLE OF ALL AGES. 355 reign courts of justice, to enregister any un¬ popular edict, very seldom succeeded. The means commonly employed, however, the imprisonment of all the refractory members, one would think were forcible enough. The princes of the house of Stewart sometimes employed the like means in order to influ¬ ence some of the members of the parliament of England : and they generally found them equally intractable. The parliament of Eng¬ land is now managed in another manner; and a very small experiment, which the duke of Choiseul made about twelve years ago upon the parliament of Paris, demonstrated sufficiently that all the parliaments of France might have been managed still more easily in the same manner. That experiment was not pursued. For though management and per¬ suasion are always the easiest and safest instruments of government, as force and vio¬ lence 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 can¬ not or dare not use the bad one. The French government could and durst use force, and therefore disdained to use manage¬ ment and persuasion. But there is no order of men, it appears, I believe, from the expe¬ rience of all ages, upon whom it is so dan¬ gerous, or rather so perfectly ruinous, to employ force and violence, as upon the re¬ spected clergy of an established church. The rights, the privileges, the personal liberty of every individual ecclesiastic, who is upon good terms with his own order, are, even in the most despotic governments, more re¬ spected than those of any other person of nearly equal rank and fortune. It is so in every gradation of despotism, from that of the gentle and mild government of Paris to that of the violent and furious government of Constantinople. But though this order of men can scarce ever be forced, they may be managed as easily as any other ; and the se¬ curity of the sovereign, as well as the public tranquillity, seems to depend very much upon the means which he has of managing them ; and those means seem to consist altogether in the preferment which he has to bestow upon them. In the ancient constitution of the Chris¬ tian church, the bishop of each diocese was elected by the joint votes of the clergy and of the people of the episcopal city. The people did not long retain their right of election; and while they did retain it, they almost always acted under the influence of the clergy, who, in such spiritual matters, appeared to be their natural guides. The clergy, however, soon grew weary of the trouble of managing them, and found it easier to elect their own bishops themselves. The abbot, in the same manner, was elected by the monks of the monastery, at least in the greater part of abbacies. All the in¬ ferior ecclesiastical benefices comprehended within the diocese were collated by the bishop, who bestowed them upon such ec¬ clesiastics as he thought proper. All church preferments were in this manner in the dis¬ posal of the church. The sovereign, though he might have some indirect influence in those elections, and though it was sometimes usual to ask both his consent to elect, and his approbation of the election, yet had no direct or sufficient means of managing the clergy. The ambition of every clergyman naturally led him to pay court, not so much to his sovereign, as to his own order, from which only he could expect preferment. Through the greater "part of Europe the pope gradually drew to himself first the col¬ lation of almost all bishoprics and abbacies, or of what were called consistorial benefices, and afterwards, by various machinations and pretences, of the greater part of inferior benefices comprehended within each diocese; little more being left to the bishop than what was barely necessary to give him a decent authority with his own clergy. By this arrangement the condition of the sove¬ reign was still worse than it had been before. The clergy of all the different conntries of Europe were thus formed into a sort of spi¬ ritual 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 detachment of that army, of which the operations could easily be supported and seconded by all the other detachments quartered in the different countries round about. Each detachment was not only independent of the sovereign of the country in which it was quartered, and by which it was maintained, but de¬ pendent upon a foreign sovereign, who could at any time turn its arms against the sovereign of that particular country, and support them by the arms of all the other detachments. Those arms were the most formidable that can well be imagined. In the ancient state of Europe, before the establishment of arts and manufactures, the wealth of the clergy gave them the same sort of influence over the common people which that of the great barons gave them over their respective vassals, tenants, and retainers. In the great landed estates, which the mistaken piety both of princes and private persons had bestowed upon the church, jurisdictions were established, of the same kind with those of the great barons ; and for the same reason. In those great landed estates, the clergy, or their bailiffs, could easily keep the peace without the support or assistance either of the king or of any other person ; and neither A a 4 S6‘0 EXPENSE OF PUBLIC WORKS. Book. V. the king nor any other person could keep the peace there without the support and assistance of the clergy. The jurisdictions of the clergy, therefore, in their particular baronies or manors, were equally indepen¬ dent, and equally exclusive of the authority of the king’s courts, as those of the great temporal lords. The tenants of the clergy were, like those of the great barons, almost all tenants at will, entirely dependent upon their immediate lords, and therefore liable to be called out at pleasure, in order to fight in any quarrel in which the clergy might think proper to engage them. Over and above the rents of those estates, the clergy possessed, in the tithes, a very large portion of the rents of all the other estates in every kingdom of Europe. The revenues arising from both those species of rents were, the greater part of them, paid in kind, in corn, wine, cattle, poultry, &c. The quantity exceeded greatly what the clergy could themselves consume ; and there were neither arts nor manufactures for the produce of which they could exchange the surplus. The clergy could derive advantage from this immense surplus in no other way than by employing it, as the great barons employed the like surplus of their revenues, in the most profuse hospitality, and in the most extensive charity. Both the hospitality and the charity of the ancient clergy, accordingly, are said to have been very great. They not only maintained almost the whole poor of every kingdom, but many knights and gentlemen had frequently no other means of subsistence than by travelling about from monastery to monastery, under pretence of devotion, but in reality to enjoy the hospi¬ tality of the clergy. The retainers of some particular prelates were often as numerous as those of the greatest lay-lords; and the retainers of all the clergy taken together were perhaps more numerous than those of all the lay-lords. There was always much more union among the clergy than among the lay-lords. The former were under a regular discipline and subordination to the papal authority. The latter were under no regular discipline or subordination, but al¬ most always equally jealous of one another, and of the king. Though the tenants and retainers of the clergy, therefore, had both together been less numerous than those of the great lay-lords, and their tenants were probably much less numerous, yet their union would have rendered them more formidable. The hospitality and charity of the clergy, too, not only gave them the com¬ mand of a great temporal force, but increased very much the weight of their spiritual weapons. Those virtues procured them the highest respect and veneration among all the inferior ranks of people, of whom many were constantly, and almost all occasionally, fed by them. Every thing belonging or re¬ lated to so popular an order, its possessions, its privileges, its doctrines, necessarily ap¬ peared sacred in the eyes of the common people, and every violation of them, whether real or pretended, the highest act of sacrile¬ gious wickedness and profaneness. In this state of things, if the sovereign frequently found it difficult to resist the confederacy of a few of the great nobility, we cannot wonder that he should find it still more so to resist the united force of the clergy of his own dominions, supported by that of the clergy of all the neighbouring dominions. In such circumstances the wonder is, not that he was sometimes obliged to yield, but that he ever was able to resist. The privileges of the clergy in those an¬ cient times, (which to us who live in the pre¬ sent times appear the most absurd,) their total exemption from the secular jurisdiction, for example, or what in England was called the benefit of clergy, were the natural or rather the necessary consequences of this state of things. How dangerous must it have been for the sovereign to attempt to punish a clergyman for any crime whatever, if his own order were disposed to protect him, and to represent either the proof as in¬ sufficient for convicting so holy a man, or the punishment as too severe to be inflicted upon one whose person had been rendered sacred by religion ! The sovereign could, in such circumstances, do no better than leave him to be tried by the ecclesiastical courts, who, for the honour of their own order, were interested to restrain, as much as possible, every member of it from committing enor¬ mous crimes, or even from giving occasion to such gross scandal as might disgust the minds of the people. In the state in which things were through the greater part of Europe during the tenth, eleventh, twelfth, and thirteenth centuries, and for some time both before and after that period, the constitution of the church of Rome may be considered as the most for¬ midable combination that ever was formed against the authority and security of civil government, as well as against the liberty, reason and happiness of mankind, which can flourish only where civil government is able to protect them. In that constitution the grossest delusions of superstition were sup¬ ported in such a manner by the private in¬ terests of so great a number of people as put them out of all danger from any assault of human reason ; because though human reason might perhaps have been able to unveil, even to the eyes of the common people, some of the delusions of superstition, it could never have dissolved the ties of private interest. Had this constitution been attacked by no other enemies but the feeble efforts of human reason, it must have endured for ever. But Chap. I. EDUCATION OF PEOPLE OF ALL AGES. that immense and well-built fabric, which all the wisdom and virtue of man could never have shaken, much less have overturned, was by the natural course of things, first weakened, and afterwards in part destroyed, and is now likely, in the course of a few centuries more, perhaps, to crumble into ruins altogether. The gradual improvements of arts, manu¬ factures, and commerce, the same causes which destroyed the power of the great ba- ] rons, destroyed in the same manner, through the greater part of Europe, the whole tem¬ poral power of the clergy. In the produce of arts, manufactures, and commerce, the clergy, like the great barons, found some¬ thing 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 con¬ siderable share of them to other people. Their charity became gradually less exten¬ sive, their hospitality less liberal or less pro¬ fuse. Their retainers became consequently less numerous, and by degrees dwindled away altogether. The clergy too, like the great barons, wished to get a better rent from their landed estates, in order to spend it, in the same manner, upon the gratification of their own private vanity and folly. But this increase of rent could be got only by grant¬ ing leases to their tenants, who thereby be¬ came in a great measure independent of them. The ties of interest, which bound the inferior ranks of the people to the clergy, were in this manner gradually broken and dissolved. They were even broken and dis¬ solved sooner than those which bound the same ranks of people to the great barons ; because the benefices of the church being, the greater part of them, much smaller than the estates of the great barons, the possessor of each benefice was much sooner able to spend the whole of its revenue upon his own person. During the greater part of the fourteenth and fifteenth centuries the power of the great barons was, through the greater part of Europe, in full vigour. But the temporal power of the clergy, the absolute command which they had once had over the great body of the people, was very much de¬ cayed. 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 spi¬ ritual authority was much weakened when it ceased to be supported by the charity and hospitality of the clergy. The inferior ranks of the people no longer looked upon that order, as they had done before, as the com¬ forters of their distress, and the relievers of their indigence. On the contrary, they were provoked and disgusted by the vanity, luxury, and expense of the richer clergy, who ap¬ peared to spend upon their own pleasures what had always before been regarded as the patrimony of the poor. In this situation of things, the sovereigns in the different states of Europe endeavoured to 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 of their ancient right of electing the bishop, and to the monks of each abbacy that of electing the abbot. The re-establishing of this ancient order was the object of several statutes enacted in England during the course of the fourteenth century, particularly of what is called the statute of provisors; and of the pragmatic sanction established in France in the fifteenth century. In order to render the election valid, it was necessary that the sovereign should both consent to it beforehand, 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 neces¬ sarily afforded him, of influencing the clergy in his own dominions. Other regulations of a similar tendency were established in other parts of Europe. But the power of the pope, in the collation of the great bene¬ fices of the church, seems, before the reform¬ ation, to have been no where 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 consisto- rial benefices of the Gallican church. Since the establishment of the pragmatic sanction and of the concordat, the clergy of France have in general shown less respect to the decrees of the papal court than the clergy of any other catholic country. In all the disputes which their sovereign has had with the pope, they have almost con¬ stantly taken part with the former. This independency of the clergy of France upon the court of Rome seems to be principally founded upon the pragmatic sanction and the concordat. In the earlier periods of the monarchy, the clergy of France appear to have been as much devoted to the pope as those of any other country. "\\ hen Robert, the second prince of the Capetian race, was most unjustly excommunicated by the court of Rome, his own servants, it is said, threw the victuals which came from his table to the dogs, and refused to taste any thing them¬ selves which had been polluted by the con¬ tact of a person in his situation. 1 hey were taught to do so, it may very safely be presumed, by the clergy of his own do¬ minions. The claim of collating to the great bene¬ fices of the church, a claim in defence of which the court of Rome had frequently shaken, and sometimes overturned the 362 EXPENSE OF PUBLIC WORKS. Book V. tlirones of some of the greatest sovereigns in Christendom, was in this manner either restrained or modified, or given up altoge¬ ther, in many different parts of Europe, even before the time of the reformation. As the clergy had now less influence over the peo¬ ple, so the state had more influence over the clergy. The clergy, therefore, had both less power and less inclination to disturb the state. The authority of the church of Rome was in this state of declension, when the disputes which gave birth to the reformation began in Germany, and soon spread themselves through every part of Europe. The new doctrines were everywhere received with a high degree of popular favour. They were propagated with ail that enthusiastic zeal which commonly animates the spirit of party, when it attacks established authority. The teachers of those doctrines, though perhaps in other respects not more learned than many of the divines who defended the established church, seem in general to have been better acquainted with ecclesiastical history, and with the origin and progress of that system of opinions upon which the authority of the church was established ; and they had there¬ by the advantage in almost every dispute. The austerity of their manners gave them authority with the common people, who contrasted the strict regularity of their con¬ duct with the disorderly lives of the greater part of their own clergy. They possessed, too, in a much higher degree than their ad¬ versaries, all the arts of popularity and of gaining proselytes ; arts which the lofty and dignified sons of the church had long neg¬ lected, as being to them in a great measure useless. The reason of the new doctrines recommended them to some, their novelty to many ; the hatred and contempt of the es¬ tablished clergy to a still greater number ; but the zealous, passionate, and fanatical, though frequently coarse and rustic eloquence with which they were almost everywhere in¬ culcated, recommended them to by far the greatest number. The success of the new doctrines was al¬ most everywhere so great, that the princes who at that time happened to be on bad terms with the court of Rome, w^ere by means of them easily enabled, in their own dominions, to overturn the church, which, having lost the respect and veneration of the inferior ranks of people, could make scarce any resistance. The court of Rome had disobliged some of the smaller princes in the northern parts of Germany, whom it had probably considered as too insignificant to be worth the managing. They universally therefore, established the reformation in their own dominions. The tyranny of Christiern II. and of Troll, archbishop of Upsal, enabled Gustavus Vasa to expel them both from Sweden. The pope favoured the tyrant and the archbishop, and Gustavus Vasa found no difficulty in establishing the reformation in Sweden. Christiern II. was afterwards deposed from the throne of Den¬ mark, where his conduct had rendered him as odious as in Sweden. The pope, how¬ ever, was still disposed to favour him ; and Frederick of Holstein, who had mounted the throne in his stead, revenged himself by following the example of Gustavus Vasa. The magistrates of Berne and Zurich, who had no particular quarrel with the pope, established with great ease the reformation in their respective cantons, where just before some of the clergy had, by an imposture somewhat grosser than ordinary, rendered the whole order both odious and con¬ temptible. In this critical situation of its affairs, the papal court was at sufficient pains to culti¬ vate the friendship of the powerful sove¬ reigns of France and Spain, of whom the latter was at that time emperor of Germany. With their assistance, it was enabled, though not without great difficulty and much blood¬ shed, either to suppress altogether or to ob¬ struct very much the progress of the reform¬ ation in their dominions. It was well enough • _ a _ ^ O inclined, too, to be complaisant to the king of England ; but, from the circumstances of the times, it could not be so without giving offence to a still greater sovereign, Charles V. king of Spain and emperor of Germany. Henry VIII. accordingly, though he did not embrace himself the greater part of the doc¬ trines of the reformation, was yet enabled, by their general prevalence, to suppress all the monasteries, and to abolish the author¬ ity of the church of Rome in his dominions. That he should go so far, though he went no further, gave some satisfaction to the patrons of the reformation, who, having got posses¬ sion of the government in the reign of his son and successor, completed, without any difficulty, the work which Henry VIII. had begun. In some countries, as in Scotland, where the government was weak, unpopular, and not very firmly established, the reformation was strong enough to overturn, not only the church, but the state likewise for attempting to support the church. Among the followers of the reformation, dispersed in all the different countries of Europe, there was no general tribunal, which, like that of the court of Rome, or an oecumenical council, could settle all disputes among them, and with irresistible authority prescribe to all of them the precise limits of orthodoxy. When the followers of the re¬ formation in one country, therefore, hap¬ pened to differ from their brethren in another as they had no common judge to appeal to, the dispute could never be decided; and [I Crap. I. EDUCATION OF PEOPLE OF ALL AGES. many such disputes arose among them. Those concerning the government of the church, and the right of conferring ecclesi¬ astical benefices, were perhaps the most in¬ teresting to the peace and welfare of civil society. 0 They gave birth, accordingly, to the two principal parties or sects among the followers of the reformation, the Lutheran and Calvinistic sects, the only sects among them of which the doctrine and discipline have ever yet been established by law in any part of Europe. The followers of Luther, together with what is called the church of England, pre¬ served more or less of the episcopal govern¬ ment, established subordination among the clergy, gave the sovereign the disposal of all the bishopricks, and other consistorial bene¬ fices within his dominions, and thereby ren¬ dered him the real head of the church ; and without depriving the bishop of the right of collating to the smaller benefices within his diocese, they, even to those benefices, not only admitted but favoured the right of presentation both in the sovereign and in all other lay-patrons. This system of church government was, from the beginning, favourable to peace and good order, and to submission to the civil sovereign. It has never, accordingly, been the occasion of any tumult or civil commotion in any country in which it has once been established. The church of England, in particular, has always valued herself, with great reason, upon the j unexceptionable loyalty of her principles. Under such a government the clergy natu¬ rally endeavour to recommend themselves to the sovereign, to the court, and to the nobi¬ lity and gentry of the country, by whose influence they chiefly expect to obtain pre¬ ferment. They pay court to those patrons, sometimes, no doubt, by the vilest flattery and assentation, but frequently too by culti¬ vating all those arts which best deserve, and which are therefore most likely to gain them the esteem of people of rank and fortune; by their knowledge in all the different branches of useful and ornamental learning, by the decent liberality of their manners, by the social good humour of their conversation, and by their avowed contempt of those ab¬ surd and hypocritical austerities which fa¬ natics inculcate and pretend to practise, in order to draw upon themselves the veneration and upon the greater part of men of rank and fortune, who avow that they do not practise them, the abhorrence of the com¬ mon people. Such a clergy, however, while they pay their court in this manner to the higher ranks of life, are very apt to neglect I altogether the means of maintaining their influence and authority with the lower. They are listened to, esteemed and respected by their superiors ; but before their inferiors they are frequently incapable of defending, L S S63 effectually and to the conviction of such hearers, their own sober and moderate doc¬ trines against the most ignorant enthusiast who chooses to attack them. The followers of Zuinglius, or more pro¬ perly those of Calvin, on the contrary, be¬ stowed upon the people of each parish, whenever the church became vacant, the right of electing their own pastor ; and es¬ tablished at the same time the most perfect equality among the clergy. The former part of this institution, as long as it remained in vigour, seems to have been productive of nothing but disorder and confusion, and to have tended equally to corrupt the morals both of the clergy and of the people. The latter part seems never to have had any effects but what were perfectly agreeable. As long as the people of each parish pre¬ served the right of electing their own pas¬ tors, they acted almost always under the influence of the clergy, and generally of the most factious and fanatical of the order. The clergy, in order to preserve their in¬ fluence in those popular elections, became, or affected to become, many of them, fanatics themselves, encouraged fanaticism among the people, and gave the preference almost always to the most fanatical candidate. So small a matter as the appointment of a pa¬ rish priest occasioned almost always a violent contest, not only in one parish, but in all the neighbouring parishes, who seldom failed to take part in the quarrel. When the parish happened to be situated in a great city, it divided all the inhabitants into two parties; and when that city happened either to con¬ stitute itself a little republic, or to be the head and capital of a little republic, as is the case with many of the considerable cities in Switzerland and Holland, every paltry 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. In those small republics, there¬ fore, the magistrate very soon found it ne¬ cessary, for the sake of preserving the public peace, to assume to himself the right of pre¬ senting to all vacant benefices. In Scotland, the most extensive country in which this presbyterian form of church government has ever been established, the rights of patronage were in effect abolished by the act which es¬ tablished presbytery in the beginning of the reign of William III. That act at least put it in the power of certain classes of people in each parish to purchase, for a very small price, the right of electing their own pastor. The constitution which this act established was allowed to subsist for about two and twenty years, but was abolished by the 10th of Queen Anne, c. 12., on account of the confusions and disorders which this most popular mode of election had almost every 3G4 EXPENSE OF PUBLIC WORKS. Book V where occasioned. In so extensive a coun¬ try as Scotland, however, a tumult in a remote parish was not so likely to give dis¬ turbance to government as in a smaller state. I he 10th ot Queen Anne restored the rights of patronage. But though in Scotland the law gives the benetice without any exception to the person presented by the patron, yet the church requires sometimes (for she has not in tills 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 eccle¬ siastical jurisdiction in the parish. She sometimes at least, from an affected concern for the peace ot the parish, delays the settle¬ ment till this concurrence can be procured. The private tampering of some of the neigh¬ bouring clergy, sometimes to procure, but more frequently to prevent this concurrence, and the popular arts which they cultivate in order to enable them upon such occasions to tamper more effectually, are perhaps the causes which principally keep up whatever remains of the old fanatical spirit, either in the clergy or in the people of Scotland. The equality which the presbyterian form of church government establishes among the clergy consists, first, in the equality of authority or ecclesiastical jurisdiction; and, secondly, in the equality of benefice. In all presbyterian churches the equality of au¬ thority is perfect : that of benefice is not so. The difference, however, between one bene¬ fice and another is seldom so considerable as commonly to tempt the possessor even of the small one to pay court to his patron, by the vile arts of flattery and assentation, in order to get a better. In all the presby¬ terian 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 life, and by the faithful and diligent discharge of their duty. Their patrons even frequently complain of the independency of their spirit, which they are apt to construe into ingratitude for past favours, but which at worst, perhaps, is sel¬ dom any more than that indifference which naturally arises from the consciousness that no further favours of the kind are ever to be expected. There is scarce perhaps to be found anywhere in Europe a more learned, decent, independent, and respectable set of men than the greater part of the presbyterian clergy of Holland, Geneva, Switzerland, and Scotland. ^ here the church benefices are all nearly equal, none of them can be very great; and this mediocrity of benefice, though it may no doubt be carried too far, has, however, some very agreeable effects. Nothing but the mest exemplary morals can give dignity to a man of small fortune. The vices of levity and vanity necessarily render him ridiculous, and are besides almost as ruinous to him a^ they are to the common people. Jn his own conduct, therefore, he is obliged to follow that system of morals which tin* common people respect the most. He gains their esteem and affection by that plan of life which his own interest and situation would lead him to follow. The common people look upon him with that kindness with which we naturally regard one who approaches somewhat to our own condition, l \ ut who, we think, ought to be in a higher. Their kindness naturally provokes his kind¬ ness. He becomes careful to instruct them, and attentive to assist and relieve them. He does not even despise the prejudices of people who are disposed to be so favourable to him, and never treats them with those con¬ temptuous and arrogant airs which we so often meet with in the proud dignitaries of opulent and well-endowed churches. The presbyterian clergy, accordingly, have more influence over the minds of the common people than perhaps the clergy of any other established church. It is accordingly in presbyterian countries only that we ever find the common people converted, without persecution, completely, and almost to a man, to the established church. In countries where church benefices are the greater part of them very moderate, a chair in a university is generally a better es¬ tablishment than a church benefice. The universities have, in this case, the picking and choosing of their members from all the churchmen of the country, who in every country constitute by far the most numer¬ ous class of men of letters. Where church benefices, on the contrary, are many of them very considerable, the church naturally draws from the universities the. greater part of their eminent men of letters; who generally find some patron who does himself honour by procuring them church preferment. In the former situation we are likely to find the uni¬ versities filled with the most eminent men of letters that are to be found in the country. In the latter we are likely to find few emi¬ nent men among them, and those few among the youngest members of the society, who are likely too to be drained away from it, before they can have acquired experience and knowledge enough to be of much use to it. It is observed by M. de Voltaire, that father Poree, a jesuit of no great eminence in the republic ol letters, was the only professor they had ever had in Prance whose works were worth the reading. In a country which has produced so many eminent men of let¬ ters, it must appear somewhat singular, that scarce one of them should have been a pro¬ fessor in a university. The famous Gas¬ sendi was, in the beginning of his life, a 3 65 IlIAf. I. EDUCATION OF PEOPLE OF ALL AGES. Professor in the university of Aix. Upon he first dawning of his genius, it wa, repre- ented to him, that by going into the church le could easily find a much more quiet and omfcrtable subsistence, as 'well as a better fituation for pursuing his studies ; and he mmediately followed the advice. The ob- ervation ofM. de Voltaire may be applied, I jelieve, not only to France, but to all other Roman catholic countries. We very rarely find n any of them an eminent man of letters who hs a professor in a university, except, perhaps, n the professions of law and physic ; profes¬ sions from which the church is not so likely o draw them. After the church of Rome, ;hat of England is by far the richest and oest endowed church in Christendom. In England, accordingly, the church is continu- dly draining the universities of all their jest and ablest members; and an old college [tutor, who is known and distinguished in l Europe as an eminent man of letters, is as rarely to be found there as in any Roman catholic country. In Geneva, on the con- B trary, in the protestant cantons of Switzer¬ land, in the protestant countries of Germany, in Holland, in Scotland, in Sweden, and Den¬ mark, the most eminent men of letters whom those countries have produced, have, not all Pindeed, but the far greater part of them, been professors in universities. In those countries the universities are continually draining the church of all its most eminent men of letters. It may perhaps be worth while to remark, that if we except the poets, a few orators, and a few historians, the far greater part of the other eminent men of letters, both of Greece and Rome, appear to have been cither public or private teachers ; generally either of philosophy or of rhetoric. This remark will be found to hold true from the days of Lysias and Isocrates, of Plato and Aristotle, down to those of Plutarch and Epictetus, of Suetonius and Quintilian. To impose upon any man the necessity of teach¬ ing, year after year, in any particular branch af science, seems in reality to be the most effectual method for rendering him com¬ pletely master of it himself. By being abliged to go every year over the same ground, if he is good for any thing, he neces¬ sarily becomes, in a few years, well ac¬ quainted with every part of it: and if, upon any particular point he should form too hasty an opinion one year, when he comes in the course of his lectures to reconsider the same [•'subject the year thereafter, he is very likely to correct it. As to be a teacher of science, is certainly the natural employment of a mere man of letters, so is it likewise, per¬ haps, the education which is most likely to render him a man of solid learning and knowledge. The mediocrity of church bene¬ fices naturally tends to draw the greater part of men of letters, in the country where it takes place, to the employment in which they can be the most useful to the public, and at the same time to give them the best educa¬ tion, perhaps, they are capable of receiving. It tends to render their learning both as solid as possible, and as useful as possible. The revenue of every established church, such parts of it excepted as may arise from particular lands or manors, is a branch, it ought to be observed, of the general revenue of the state, which is thus diverted to a pur¬ pose very different from the defence of the state. The tithe, for example, is a real land- tax, which puts it out of the power of the proprietors of land to contribute so largely towards the defence of the state as they other¬ wise might be able to do. The rent of land however is, according to some, the sole fund, and according to others, the principal fund, from which, in all great monarchies, the exi¬ gences of the state must be ultimately sup¬ plied. The more ojf this fund that is given to the church, the less it is evident, can be spared to the state. It may be laid down as a certain maxim, that, all other things being supposed equal, the richer the church, the poorer must necessarily be, either the sove¬ reign on the one hand, or the people on the other; and, in all cases, the less able must the state be to defend itself. In several protest- ant countries, particularly in all the pro¬ testant cantons of Switzerland, the revenue which anciently belonged to the Roman catholic church, the tithes and church lands, has been found a fund sufficient not only to afford competent salaries to the established clergy, but to defray with little or no addition all the other expenses of the state. The magistrates of the powerful canton of Berne, in particular, have accumulated out of the savings from this fund a very large sum, supposed to amount to several millions; part of which is deposited in a public trea¬ sure, and part is placed at interest in what are called the public funds of the different indebted nations of Europe; chiefly in those of France and Great Britain. What may be the amount of the whole expense which the church either of Berne or of any other protestant canton costs the state, I do not pretend to know. By a very exact account it appears, that, in 1755, the whole revenue of the clergy of the church of Scotland, includ¬ ing their glebe or church lands, and the rent of their manses or dwelling-houses, estimated according to a reasonable valuation, amount¬ ed only to 68,514/. Is. 5-^d. This very moderate revenue affords a decent subsist¬ ence to nine hundred and forty-four minis¬ ters. The whole expense of the church, including what is occasionally laid out for the building and reparation of churches, and of the manses of ministers, cannot well be sup¬ posed to exceed eighty or eighty-five thou- 3 66 EXPENSE OF PUBLIC WORKS. sand pounds a year. The most opulent church in Christendom does not maintain better the uniformity of faith, the fervour of devotion, the spirit of order, regularity, and austere morals in the great body of the peo¬ ple, than this very poorly endowed church of Scotland. All the good effects, both civil and religious, which an established church can be supposed to produce, are produced by it v as completely as by any other . 1 The greater part of the protestant churches of Switzer¬ land, which in general are not better endowed than the church of Scotland, produce those effects in a still higher degree. In the greater part of the protestant cantons, there is not a single person to be found who does not profess himself to be of the established church. If he professes himself to be of any other indeed, the law obliges him to leave the canton. But so severe, or rather indeed so oppressive a law, could never have been exe¬ cuted in such free countries, had not the diligence of the clergy before-hand converted to the established church the whole body of the people, with the exception of perhaps a few individuals only. In some parts of Switzerland, accordingly, where, from the accidental union of a protestant and Roman catholic country, the conversion has not been so complete, both religions are not only tolerated but established by law. The proper performance of every service seems to require that its pay or recompense should be, as exactly as possible, proportioned to the nature of the service. If any service is very much underpaid, it is very apt to suffer by the meanness and incapacity of the greater part of those who are employed in it. If it is very much overpaid, it is apt to suffer perhaps still more by their negligence and idleness. A man of a large revenue, what¬ ever may be his profession, thinks he ought to live like other men of large revenues, and to spend a great part of his time in festivity, in vanity, and in dissipation. But in a clergyman this train of life not only con¬ sumes the time which ought to be employed in the duties of his function, but in the eyes of the common people destroys almost en¬ tirely that sanctity of character which can alone enable him to perform those duties with proper weight and authority. Part IV. Qf the Expense of supporting the Dignity of the Sovereign. Over and above the expenses necessary for enabling the sovereign to perforin his several 1 Estimating the present revenue of the Scotch clergy, exclusive of their glebes and houses, at 200/. a year each at an average, the entire cost of the es¬ tablishment will amount to about 190,000/. a year. We have already observed (p. 61, note) that by an act passed in 1812, the stipends of such Scotch cler¬ gymen as were below 150/. a year, exclusive of their Book T duties, a certain expense is requisite for thd support of his dignity. This expense varies both with the different periods of improve-] ment, and with the different forms of govern me lit. In an opulent and improved society, wher^ all the different orders of people are growing every day more expensive in their houses, itj their furniture, in their tables, in their dress] and in their equipage ; it cannot well be ex¬ pected that the sovereign should alone hole out against the fashion. lie naturally, thereJ fore, or rather necessarily becomes mor« expensive in all those different articles toe His dignity even seems to require that h ! r r L [ fj i p f i ( | ; H I i CHAr. I. any estate or fund sufficient for paying those fees. Those local or provincial expenses of which the benefit is local or provincial (what is laid out, for example, upon the police of a par¬ ticular town or district) ought to be defrayed by a local or provincial revenue, and ought to be no burden upon the general revenue of the society. It is unjust that the whole so¬ ciety should contribute towards an expense of which the benefit is confined to a part of the society. The expense of maintaining good roads and communications is, no doubt, beneficial to the whole society, and may therefore, without any injustice, be defrayed by the general contribution of the whole society. This expense, however, is most immediately and directly beneficial to those who travel or carry goods from one place to another, and to those who consume such goods. The turnpike tolls in England, and the duties called peages in other countries, lay it alto¬ gether upon those two different sets of people, and thereby discharge the general revenue of the society from a very considerable bur¬ den. The expense of the institutions for edu¬ cation and religious instruction is likewise, no doubt, beneficial to the whole society, and may therefore, without injustice, be defrayed by the general contribution of the whole society. This expense, however, might perhaps, with equal propriety, and even with some advantage, be defrayed alto¬ gether by those who receive the immediate benefit of such education and instruction, or bv the voluntary contribution of those "who think they have occasion for either the one or the other. When the institutions or public v/orks which are beneficial to the whole society either cannot be maintained altogether, or are not maintained altogether, by the con¬ tribution of such particular members of the society as are most immediately benefited by them/the deficiency must, in most cases, be made up by the general contribution of the whole society. The general revenue of the society, over and above defraying the expense of defending the society, and of supporting the dignity of the chief magistrate, must make up for the deficiency of many particu¬ lar branches of revenue. The sources of this general or public revenue, I shall endeavour to explain in the following chapter. 1 See Memoires concemant les F)roit6 et Imposi¬ tions en Europe, tome i. p. 73. This work was com¬ piled by the order of the court for the use of a commission employed for some years past in consi¬ dering 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 CHAP II. Of the Sources of the general or public Revenue of the Society. The revenue which must defray, not only the expense of defending the society and of supporting the dignity of the chief magis¬ trate, but all the other necessary expenses of government, for which the constitution of the state has not provided any particular re¬ venue, may be drawn either, first, from some fund which peculiarly belongs to the sove¬ reign or commonwealth, and which is inde- u pendent of the revenue of the people ; or, secondly, from the revenue of the people. Part I. Oj the Funds or Sources of Revenue which may peculiarly belong to the Sovereign or Commonwealth . The funds or sources of revenue which mav peculiarly belong to the sovereign or commonwealth, must consist either in stock or in land. The sovereign, like any other owner of stock, may derive a revenue from it, either by employing it himself, or by lending it. His revenue is in the one case profit, in the other interest. The revenue of a Tartar or Arabian chief consists in profit. It arises principally from the milk and increase of his own herds and flocks, of which he himself superintends the management, and is the principal shepherd or herdsman of his own horde or tribe. It is, however, in this earliest and rudest state of civil government only that profit has ever made the principal part of the public revenue of a monarchical state. Small republics have sometimes derived a considerable revenue from the profit of mer¬ cantile projects. The republic of Hamburgh is said to do so from the profits of a public wdne cellar and apothecary’s shop . 1 The state cannot be very great of which the sove¬ reign has leisure to carry on the trade of a wine merchant or apothecary. The profit of a public bank has been a source of re¬ venue to more considerable states. It has been so not only to Hamburgh, but to Venice and Amsterdam. A revenue of this kind has even by some people been thought not below the attention of so great an em¬ pire as that of Great Britain. Reckoning the ordinary dividend of the bank of Eng land at five and a half per cent., and its capital at ten millions seven hundred and as perfectly autnentic. That of those of other European nations was compiled from such informa¬ tions 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. (Note by the author.) SC8 SOURCES OF Boo 1 .: V. eighty thousand pounds, the neat annual profit, after paying the expense of manage¬ ment, must amount, it is said, to five hun¬ dred and ninety-two thousand nine hundred pounds. Government, it is pretended, could borrow this capital at three per cent, interest, and by taking the management of the bank into its own hands, might make a clear pro¬ fit of two hundred and sixty-nine thousand five hundred pounds a year. The orderly, vigilant, and parsimonious administration of such aristocracies as those of Venice and Amsterdam, is extremely proper, it appears from experience, for the management of a mercantile project of this kind. But whe¬ ther such a government as that of England — which, whatever may be its virtues, has never been famous for good economy, which, in time of peace, has generally conducted itself with the slothful and negligent profu¬ sion that is, perhaps, natural to monarchies, and in time of war has constantly acted with all the thoughtless extravagance that demo¬ cracies are apt to fall into — could be safely trusted with the management of such a pro¬ ject, must at least be a good deal more doubtful. The post-office is properly a mercantile project. The government advances the ex¬ pense of establishing the different offices, and of buying or hiring the necessary horses or carriages, and is repaid, with a large profit, by the duties upon what is carried. It is, perhaps, the only mercantile project which has been successfully managed by, I believe, every sort of government. The capital to be advanced is not very considerable. There is no mystery in the business. The returns are not only certain, but immediate. Princes, however, have frequently engaged in many other mercantile projects, and have been willing, like private persons, to mend their fortunes by becoming adventurers in the common branches of trade. They have scarce ever succeeded. The profusion with which the affairs of princes are always ma¬ naged, renders it almost impossible that they should. The agents of a prince regard the wealth of their master as inexhaustible ; are careless at what price they buy; are careless at what price they sell; are careless at what expense they transport his goods from one place to another. Those agents frequently live with the profusion of princes, and some¬ times too, in spite of that profusion, and by a proper method of making up their ac¬ counts, acquire the fortunes of princes. It was thus, as we are told by Machiavel, that the agents of Lorenzo of Medicis, not a prince of mean abilities, carried on his trade. The republic of Florence was several times obliged to pay the debt into which their ex¬ travagance had involved him. He found it convenient, accordingly, to give up the busi¬ ness of merchant, the business to which his family had originally owed their fortune, and in the latter part of his life to employ both what remained of that fortune, and the revenue of the state of which he had the disposal, in projects and expenses more suit¬ able to his station. No two characters seem more inconsistent than those of trade and sovereign. If the trading spirit of the English East India company renders them very bad sovereigns, the spirit of sovereignty seems to have rendered them equally bad traders. While they were traders only, they managed their trade successfully, and were able to pay from their profits a moderate dividend to the proprietors of their stock. Since they became sovereigns, with a revenue which, it is said, was originally more than three millions sterling, they have been obliged to beg the extraordinary assistance of 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 may sometimes derive some part of its public revenue from the interest of money, as well as from the profits of stock. If it has amassed a treasure, it may lend a part of that treasure either to foreign states or to its own subjects. The canton of Berne derives a considerable revenue by lending a part of its treasure to foreign states; that is, by placing it in the public funds of the different indebted nations of Europe, chiefly in those of France and England. The security of this revenue must depend, first, upon the security of the funds in which it is placed, or upon the good faith of the government which has the management of them ; and, secondly, upon the certainty or probability of the continuance of peace with the debtor nation. In the case of a war, the very first act of hostility, on the part of the debtor nation, might be the forfeiture of the funds of its creditor. This policy of lending money to foreign states is, so far as I know, peculiar to the canton of Berne. Hie city of Hamburgh 1 has established a sort of public pawn-shop, which lends money to the subjects of the state upon pledges at six per cent, interest. This pawn-shop, or Lombard, as it is called, affords a revenue, it is pretended, to the state of a hundred and fifty thousand crowns, which, at four and sixpence the crown, amounts to 33,750/. sterling. The government of Pennsylvania, with¬ out amassing any treasure, invented a method of lending, not money indeed, but what is equivalent to money, to its subjects. By 1 See Memoires concernant les Droits et Imposi¬ tions eu Europe, tome i. p. 73. Chap. II. PUBLIC REVENUE. advancing to private people, at interest, and upon land security to double the value, paper bills of credit to be redeemed fifteen years after their date, and in the mean time made transferable from hand to hand like bank notes, and declared by act of assembly to be a legal tender in all payments from one inha¬ bitant of the province to another, it raised a moderate revenue, which went a considerable way towards defraying an annual expense of about 4500/., the whole ordinary expense of that frugal and orderly government. The success of an expedient of this kind must have depended upon three different circum¬ stances : first, upon the demand for some other instrument of commerce, besides gold and silver money, or upon the demand for such a quantity of consumable stock as could not be had without sending abroad the greater part of their gold and silver money, in order to purchase it; secondly, upon the good credit of the government which made use of this expedient; and, thirdly upon the moderation with which it was used, the whole value of the paper bills of credit never exceeding that of the gold and silver money which would have been necessary for carrying on their circulation, had there been no paper bills of credit. The same expedient was, upon different occasions, adopted by several other American colonies ; but, from want of this moderation, it produced in the greater part of them much more disorder than con- veniency. The unstable and perishable nature of stock and credit, however, render them unfit to be trusted to as the principal funds of that sure, steady, and permanent revenue, which can alone give security and dignity to go¬ vernment. The government of no great nation, that was advanced beyond the shep¬ herd state, seems ever to have derived the greater part of its public revenue from such sources. Land is a fund of a more stable and per¬ manent nature ; and the rent of public lands, accordingly, has been the principal source of the public revenue of many a great nation that was much advanced beyond the shep¬ herd state. From the produce or rent of the public lands, the ancient republics of Greece and Italy derived, for a long time, the greater part of that revenue which defrayed the necessary expenses of the com¬ monwealth. The rent of the crown lands constituted for a long time the greater part of the revenue of the ancient sovereigns of Europe. War and the preparation for war are the two circumstances which in modern times occasion the greater part of the necessary expense of all great states. But in the 1 The ordinary gross revenue of Great Britain for the year ending 5th of January, 1837, amounted to 369 ancient republics of Greece and Italy every citizen was a soldier, who both served and prepared himself for service at his own ex¬ pense. Neither of these two circumstances, therefore, could occasion any very consider¬ able expense to the state. The rent of a very moderate landed estate might be fully sufficient for defraying all the other necessary expenses of government. In the ancient monarchies of Europe, the manners and customs of the times sufficiently prepared the great body of the people for war; and when they took the field, they were, by the condition of their feudal tenures, to be maintained either at their own expense or at that of their immediate lords, without bringing any new charge upon the sovereign. The other expenses of government were, the greater part of them, very moderate. The administration of justice, it has been shown, instead of being a cause of expense, was a source of revenue. The labour of the country people for three days before and for three days after harvest was thought a fund sufficient for making and maintaining all the bridges, highways, and other public works which the commerce of the country was supposed to require. In those days the principal expense of the sovereign seems to have consisted in the maintenance of his own family and household. The officers of his household, accordingly, were then the great officers of state. The lord treasurer received his rents. The lord steward and lord cham¬ berlain looked after the expense 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 of those houses or castles might be consi¬ dered as a sort of military governors. They seem to have been the only military officers whom it was necessary to maintain in time of peace. In these circumstances the rent of a great landed estate might, upon ordinary occasions, very well defray all the necessary expenses of government. In the present state of the greater part of the civilised monarchies of Europe, the rent of all the lands in the country, managed as they probably would be if they all be¬ longed to one proprietor, would scarce per¬ haps amount to the ordinary revenue which they levy upon the people even in peaceable times. The ordinary revenue of Great Britain, for example, including not only what is necessary for defraying the current expense of the year, but for paying the interest of the public debts, and for sinking a part of the capital of those debts, amounts to upwards of ten millions a year. 1 But 50,174,89G/., exclusive of the revenue derived from Ireland. The ordinary nett revenue of Great Britain Bb $70 SOURCES OF Book V. the land tax, at four shillings in the pound, falls short of two millions a year. This land tax, as it is called, however, is supposed to be one-fifth, not only of the rent of all the land, but of that of all the houses, and of the interest of all the capital stock of Great Britain, that part of it only excepted which is either lent to the public, or em¬ ployed as farming stock in the cultivation of land. 1 A very considerable part of the produce of this tax arises from the rent of houses and the interest of capital stock. The land tax of the city of London, for example, at four shillings in the pound, amounts to 123,399/. 6s. Id. That of the city of West¬ minster to 63,0927. Is. 5(1. That of the palaces of Whitehall and St. James’s to 30,7547. 6s. Scl. A certain proportion of the land tax is in the same manner assessed upon all the other cities and towns corporate in the kingdom; and arises almost altoge¬ ther either from the rent of houses or from what is supposed to be the interest of trading and capital stock. According to the esti¬ mation, therefore, by which Great Britain is rated to the land tax, the whole mass of revenue arising from the rent of all the lands, from that of all the houses, and from the interest of all the capital stock, that part of it only excepted which is either lent to the public, or employed in the cultivation of land, does not exceed ten millions sterling a year, the ordinary revenue which govern¬ ment levies upon the people even in peace¬ able times. The estimation by which Great Britain is rated to the land tax is, no doubt, taking the whole kingdom at an average, very much below the real value; though in several particular counties and districts it is said to be nearly equal to that value. The rent of the lands alone, exclusive of that of houses and of the interest of stock, has by many people been estimated at twenty mil¬ lions ; an estimation made in a great measure at random, and which, I apprehend, is as likely to be above as below the truth. But if the lands of Great Britain, in the present state of their cultivation, do not afford a rent of more than twenty millions a year, they could not well afford the half, most probably not the fourth part of that rent, if they all belonged to a single proprietor, and were put under the negligent, expensive, and oppressive management of his factors and agents. The crown lands of Great Britain do not at present afford the fourth part of the rent which could probably be drawn from them if they were the property of private persons. If the crown lands were more extensive, it is probable they would be still worse managed. for the same year amounted to 48,035,502/. See, for further particulars, the accounts at the end of this volume. 1 The land tax at two shillings in the pound does The revenue which the great body of the people derives from land is in proportion, not to the rent, but to the produce of the land. The whole annual produce of the land of every country, if we except what is re- Sv,i \ ed for seed, is either annually consumed by the gieat body of the people, or exchan¬ ged foi something else that is consumed by them. Whatever keeps down the produce of the land below what it would otherwise rise to, keeps down the revenue of the oreat body of the people, still more than it does that of the proprietors of land. The rent of land, that portion of the produce which be¬ longs to the proprietors, is scarce anywhere in Great Britain supposed to be more than a third part of the whole produce. If the land which, in one state of cultivation, affords a rent of ten millions sterling a year, would in another afford a rent of twenty millions; the rent being, in both cases, supposed a third part of the produce; the revenue of the pro¬ prietors would be 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 it otherwise might be by thirty millions a year, deducting only what would be necessary for seed. The population of the country would be less by the number of people which thirty millions a year, de¬ ducting always the seed could maintain, ac¬ cording to the particular mode of living and expense which might take place in the dif¬ ferent ranks of men among whom the re¬ mainder was distributed. Though there is not at present in Europe any civilised state of any kind which derives the greater part of its public revenue from the rent cf lands which are the propertv of the state ; yet in all the great monarchies of Europe there are still many large tracts of land which belong to the crown. They are generally forest; and sometimes forest where, after travelling several miles, you will scarce find a single tree; a mere wnste and loss of country in respect both of produce and popu¬ lation. In every great monarchy of Europe the sale of the crown lands wmuld produce a very large sum of money, which, if applied to the payment of the public debts, would deliver from mortgage a much greater re¬ venue than any which those lands have ever afforded to the crown. In countries w r here 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 sell at forty, fifty, or sixty years’ purchase. The crown might immediately enjoy the revenue not at this moment certainly exceed one-fifteenth part of the rent of the land, independently alto¬ gether of the rent of houses and the interest of stock. Chap. II. PUBLIC REVENUE. 371 which this great price would redeem from mortgage. In the course of a few years it would probably enjoy another revenue. When the crown lands had become private proper¬ ty, 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 augment¬ ing the revenue and consumption of the people. But the revenue which the crown derives from the duties of customs and ex¬ cise would necessarily increase with the re- venue and consumption of the people. The revenue which, in any civilised mo- narchv, the crown derives from the crown lands, though it appears to cost nothing to individuals, in realitv costs more to the so- ciety than perhaps any other equal revenue which the crown enjoys. It would, in all cases, be for the interest of the society to re¬ place this revenue to the crown by some other equal revenue, and to divide the lands among the people, which could not well be done better, perhaps, than by exposing them to public sale Lands for the purposes of pleasure and magnificence, parks, gardens, public walks, &c. possessions which are everywhere consi¬ dered as causes of expense, not as sources of revenue, seem to be the only lands which, in a great and civilised monarchy, ought to be¬ long to the crown. Public stock and public lands, therefore, the two sources of revenue which may pecu¬ liarly belong to the sovereign or common¬ wealth, being both improper and insufficient funds for defraying the necessary expense of any great and civilised state ; it remains that this expense must, the greater part of it, be defrayed by taxes of one kind or another ; the people contributing a part of their own private revenue in order to make up a pub¬ lic revenue to the sovereign or common¬ wealth. Tart II. Of Taxes. The private revenue of individuals, it has been shown in the first book of this inquiry, arises ultimately from three different sources: rent, profit, and wages. Every tax must finally be paid from someone or other of those three different sorts of revenue, or from all of them indifferently. I shall endeavour to give the best account I can, first, of those taxes which it is intended should fall upon rent; secondly, of those which it is intended should fall upon profit; thirdly, of those which it is intended should fall upon wages; and, fourthly, of these which it is intended should fall indifferently upon all those three different sources of private revenue. The particular consideration of each of these four different sorts of taxes will divide the second part of the present chapter into four articles, three of which will require several other subdivisions. Many of these taxes, it will appear from the following review, are not finally paid from the fund, or source of re¬ venue, upon which it was intended they should fall. Before I enter upon the examination of particular taxes, it is necessary to premise the four following maxims with regard to taxes in general. I. The subjects of every state ought to contribute towards the support of the go¬ vernment, as nearly as possible, in proportion to their respective abilities ; that is, in pro¬ portion to the revenue which they respect¬ ively enjoy under the protection of the state. The expense of government to the individuals of a great nation is like the expense of ma¬ nagement to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation. Every tax, it must be observed once for all, which falls finally upon cne only of the three sorts of revenue above-mentioned, is necessarily un¬ equal, in so far as it does not affect the other two. In the following examination of dif¬ ferent taxes I shall seldom take much further notice of this sort of inequality, but shall, in most cases, confine my observations to that inequality w'hich is occasioned by a particular tax falling unequally upon that particular sort of private revenue which is affected by it. II. The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the man¬ ner of payment, the quantity to be paid, ought all to be clear and plain to the con¬ tributor, 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, wdio can either aggravate the tax upon any obnoxious contributor, or ex¬ tort, by the terror of such aggravation, some present or perquisite to himself. The un¬ certainty of taxation encourages the insolence and favours the corruption of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt. The certainty of what each individual ought to pay is, in taxation, a matter of so great im¬ portance, that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of un¬ certainty. III. Every tax ought to be levied at the time or in the manner in which it is most likely to be convenient for the contributor to pay it. A tax upon the rent of land or of houses, payable at the same term at which 13 b 2 372 SOURCES OF PUBLIC REVENUE. Boox V. such rents are usually paid, is levied at the time when it is most likely to be convenient for the contributor to pay, or when he is most likely to have wherewithal to pay. Taxes upon such consumable goods as are articles of luxury, are all finally paid by the consumer, and generally in a manner that is very convenient for him. He pays them by little and little, as he has occasion to buy the goods. As he is at liberty too either to buy or not to buy, as he pleases, it must be his own fault if he ever suffers any considerable inconveniency from such taxes. IV. Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible, over and above what it brings into the pub¬ lic treasury of the state. A tax may either take out or keep out of the pockets of the people a great deal more than it brings into the public treasury, in the four following ways : — First, the levying of it may require a great number of officers, whose salaries may eat up the greater part of the produce of the tax, and whose perquisites may im¬ pose another additional tax upon the people. Secondly, it may obstruct the industry of the people, and discourage them from apply¬ ing to certain branches of business which might give maintenance and employment to great multitudes. While it obliges the peo¬ ple to pay, it may thus diminish, or perhaps destroy, some of the funds which might en¬ able them more easily to do so. Thirdly, by the forfeitures and other penalties which those unfortunate individuals incur who at¬ tempt unsuccessfully to evade the tax, it may frequently ruin them, and thereby put an end to the benefit which the community might have received from the employment of their capitals. An injudicious tax offers a great temptation to smuggling; but the penalties of smuggling must arise in propor¬ tion to the temptation. The law, contrary to all the ordinary principles of justice, first creates the temptation, and then punishes those who yield to it; and it commonly en¬ hances the punishment too in proportion to the very circumstance which ought certainly to alleviate it, the temptation to commit the crime 1 Fourthly, by subjecting the people to the frequent visits and the odious examin¬ ation of the tax-gatherers, it may expose them to much unnecessary trouble, vexation, and oppression; and though vexation is not, 6trictly speaking, expense, it is certainly equivalent to the expense at which every man would be willing to redeem himself from it. It is in some one or other of these four different ways that taxes are frequently so much more burdensome to the people than they are beneficial to the sovereign. The evident justice and utility of the fore- 1 See Sketches of the History of Man, p. 474, cH SCq. going 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 con¬ venient to the contributor, both in the time and in the mode of payment, and in propor¬ tion to the revenue which they brought to the prince, as little burdensome to the peo¬ ple. The following short review of some of the principal taxes which have taken place in different ages and countries will show that the endeavours of all nations have not in this respect been equally successful. ARTICLE i. Taxes vpon Rent. — Taxes upon the Rent of Land. A tax upon the rent of land may either be imposed according to a certain canon, every district being valued at a certain rent, which valuation is not afterwards to be al¬ tered ; or it may be imposed in such a manner as to vary with every variation in the real rent of the land, and to rise or fall with the improvement or declension of its cultivation. A land-tax which, like that of Great Bri¬ tain, is assessed upon each district according to a certain invariable canon, though it should be equal at the time of its first esta¬ blishment, necessarily becomes unequal in process of time, according to the unequal degrees of improvement or neglect in the cultivation of the different parts of the coun¬ try. In England, the valuation according to which the different counties and parishes were assessed to the land-tax by the 4th of William and Mary, was very unequal even at its first establishment. This tax, there¬ fore, so far offends against the first of the four maxims above-mentioned. It is per® fectly agreeable to the other three. It is perfectly certain. The time of payment for the tax being the same as that for the rent, is as convenient as it can be to the contri¬ butor. Though the landlord is in all cases the real contributor, the tax is commonly advanced by the tenant, to whom the land¬ lord 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 with the rise of the rent, the sovereign does not share in the profits of the landlord’s im¬ provements. Those improvements sometimes contribute, indeed, to the discharge of the other landlords of the district. But the ag¬ gravation of the tax, which this may some¬ times occasion upon a particular estate, is always so very small that it never can dis¬ courage those improvements, nor keep down the produce of the land below what it would Chap. II. TAXES ON THE RENT OF LAND. S73 otherwise rise to. As it has no tendency to diminish the quantity, it can have none to raise the price of that produce. It does not obstruct the industry of the people. It subjects the landlord to no other inconve- niency besides the unavoidable one of paying the tax. The advantage, however, which the land¬ lord has derived from the invariable con¬ stancy of the valuation by which all the lands of Great Britain are rated to the land- tax, has been principally owing to some cir¬ cumstances altogether extraneous to the nature of the tax. It has been owing in part to the great prosperity of almost every part of the coun¬ try, the rents of almost all the estates of Great Britain having, since the time when this valuation was first established, been con¬ tinually rising, and scarce any of them having fallen. The landlords, therefore, have almost all gained the difference between the tax which they would have paid, according to the present rent of their estates, and that which they actually pay according to the ancient valuation. Had the state of the country been different, had rents been gra^ dually falling in consequence of the declen¬ sion of cultivation, the landlords would almost all have lost this difference. In the state of things which has happened to take place since the revolution, the constancy of the valuation has been advantageous to the landlord and hurtful to the sovereign. In a different state of things it might have been advantageous to the sovereign and hurtful to the landlord. As the tax is made payable in money, so the valuation of the land is expressed in money. Since the establishment of this valuation, the value of silver has been pretty uniform, and there has been no alteration in the standard of the coin either as to weight or fineness. Had silver risen considerably in its value, as it seems to have done in the course of the two centuries which preceded the discovery of the mines of America, the constancy of the valuation might have proved very oppressive to the landlord. Had silver fallen considerably in its value, as it certainly did for about a century at least after the discovery of those mines, the same constancy of valuation would have reduced very much this branch of the revenue of the sovereign. Had any considerable alteration been made in the standard of the money, either by sink¬ ing the same quantity of silver to a lower denomination, or by raising it to a higher ; had an ounce of silver, for example, instead of being coined into five shillings and two¬ pence, been coined either into pieces which bore so low a denomination as two shillings and sevenpence, or into pieces which bore so high a one as ten shillings and fourpence, it would in the one case have hurt the revenue of the proprietor, in the other that of the sovereign. In circumstances, therefore, somewhat dif¬ ferent from those which have actually taken place, this constancy of valuation might have been a very great inconveniency, either to the contributors or to the commonwealth. In the course of ages such circumstances, however, must at some time or other hap¬ pen. But though empires, like all the other works of men, have all hitherto proved mor¬ tal, yet every empire aims at immortality. Every constitution, therefore, which it is meant should be as permanent as the empire itself, ought to be convenient, not in certain circumstances only, but in all circumstances; or ought to be suited, not to those circum¬ stances which are transitory, occasional, or accidental, but to those which are necessary, and therefore always the same. A tax upon the rent of land which varies with every variation of the rent, or which rises and falls according to the improvement or neglect of cultivation, is recommended by that sect of men of letters in France, who call themselves the economists, as the most equitable of all taxes. All taxes, they pretend, fall ultimately upon the rent of land, and ought therefore to be imposed equally upon the fund which must finally pay them. That all taxes ought to fall as equally as possible upon the fund which must finally pay them is certainly true. But without entering into the disagreeable discussion of the metaphysical arguments by which they support their very ingenious theory, it will sufficiently appear, from the following review, what are the taxes which fall finally upon the rent of the land, and what are those which fall finally upon some other fund. In the Venetian territory all the arable lands which are given in lease to farmers are taxed at a tenth of the rent. 1 The leases are recorded in a public register which is kept by the officers of revenue in each province or district. When the proprietor cultivates his own lands, they are valued according to an equitable estimation, and he is allowed a deduction of one-fifth of the tax ; so that for such land he pays only eight instead of ten per cent, of the supposed rent. A land-tax of this kind is certainly more equal than the land-tax of England. It might not, perhaps, be altogether so certain, and the assessment of the tax might fre¬ quently occasion a good deal more trouble to the landlord. It might too be a good deal more expensive in the levying. Such a system of administration, however, might perhaps be contrived as would, in a great measure, both prevent this uncertainty and moderate this expense. The landlord and tenant, for example, 1 M£moires concernant les Droits, p. 240, 241. B b S 374 TAXES ON THE Book V. might jointly be obliged to record their lease in a public register. Proper penalties might be enacted against concealing or misrepre¬ senting any of the conditions ; and if part of those penalties were to be paid to either of the two parties who informed against and convicted the other of such concealment or misrepresentation, it would effectually deter them from combining together in order to defraud the public revenue. All the con¬ ditions of the lease might be sufficiently known from such a record. Some landlords, instead of raising the rent, take a fine for the renewal of the lease. This practice is in most cases the expedient of a spendthrift, who for a sum of ready money sells a future revenue of much greater value. It is in most cases, therefore, hurtful to the landlord. It is frequently hurtful to the tenant, and it is always hurtful to the com¬ munity. It frequently takes from the tenant so great a part of his capital, and thereby diminishes so much his ability to cultivate the land, that he finds it more difficult to pay a small rent than it would otherwise have been to pay a great one. Whatever diminishes his ability to cultivate, necessarily keeps down, below what it would otherwise have been, the most important part of the revenue of the community. By rendering the tax upon such fines a good deal heavier than upon the ordinary rent, this hurtful practice might be discouraged, to the no small advantage of all the different parties concerned, of the landlord, of the tenant, of the sovereign, and of the whole community. 1 Some leases prescribe to the tenant a certain mode of cultivation, and a certain succession of crops during the whole con¬ tinuance of the lease. This condition, which is generally the effect of the landlord’s con¬ ceit of his own superior knowledge (a con¬ ceit in most cases very ill founded,) ought always to be considered as an additional rent; as a rent in service instead of a rent in money. In order to discourage the practice, which is generally a foolish one, this species of rent might be valued rather high, and conse¬ quently taxed somewhat higher than common money rents. 2 1 See p. 174, note. 2 There is great room for doubting whether the censure here passed upon the conditions in leases be well-founded. In fact, the best practical farmers con¬ cur in opinion that such conditions, if judiciouslv devised, may be of great service to agriculture, and that they ought never to be dispensed with. This, it must be observed, is not a question that can be decided on the principle of leaving every one to be regulated by his own sense of what is most advantageous ; for here we have two parties, the landlord and the tenant, each with separate and often conflicting interests. It is for the landlord’s interest that his farm should always be in good order, and more especially that it should be so when the lease is about to expire, inasmuch as the rent that it will then bring will depend very much on this circum¬ stance. But the tenant is in a very different situation. His interest in the farm is limited to the period for y/hich his lease endures, and it must, generally Some landlords, instead of a rent in money require a rent in kind, in corn, cattle, poul¬ try, wine, oil, &c. ; others again require a rent in service. Such rents are always more hurtful to the tenant than beneficial to the landlord. They either take more or keep more out of the pocket of the former than they put into that of the latter. In every country where they take place, the tenants are poor and beggarly, pretty much accord¬ ing to the degree in which they take place. By valuing, in the same manner, such rents rather high, and consequently taxing them somewhat higher than common money rents, a practice which is hurtful to the whole community might perhaps be sufficiently discouraged. V hen the landlord chose to occupy himself a part of his own lands, the rent might be valued according to an equitable arbitration of the farmers and landlords in the neigh¬ bourhood, and a moderate abatement of the tax might be granted to him in the same manner as in the Venetian territory ; pro¬ vided the rent of the lands which he occupied did not exceed a certain sum. It is of im¬ portance that the landlord should be en¬ couraged to cultivate a part of his own land. His capital is generally greater than that of the tenant, and with less skill he can fre¬ quently raise a greater produce. The landlord can afford to try experiments, and is generally disposed to do so. His unsuc¬ cessful experiments occasion only a moderate loss to himself. His successful ones con¬ tribute to the improvement and better cul¬ tivation of the whole country. It might be of importance, however, that the abate¬ ment of the tax should encourage him to cultivate to a certain extent only. If the landlords should, the greater part of them, be tempted to farm the whole of their own lands, the country (instead of sober and industrious tenants, who are bound by their own interest to cultivate as well as their capital and skill will allow them) would be filled with idle and profligate bailiffs, whose abusive management would soon degrade the cultivation, and reduce the annual pro¬ duce of the land, to the diminution, not only speaking, be his object to make the most of it during the term of his occupation, without caring about the state in which he leaves it. Although, therefore, restrictions as to the mode of cultivating a farm in the early part of a lease of considerable duration may perhaps be fairly objected to, no landlord who has a just sense of his own interest, or who wishes to keep his estate permanently in good order, ought ever to let a farm without laying down rules for its management, which the tenant should be bound to follow during the six or seven years immediately preceding the termination of the lease. It is true that these rules may not always be the best that might be devised, but they can hardly be so very defective as not to preserve the farm from being overcropped and exhausted previously to the tenant's leaving it; and, if they do this, they must, both in a pri¬ vate and public point of view, be decidedly bene¬ ficial. Chap. II. RENT OF LAND. 375 of the revenue of their masters, but of the most important part of that of the whole society. Such a system of administration might, perhaps, free a tax of this kind from any degree of uncertainty which could occasion either oppression or inconveniency to the contributor, and might at the same time serve to introduce into the common manage¬ ment of land such a plan or policy as might contribute a good deal to the general im¬ provement and good cultivation ot the country. The expense of levying a land-tax, which varied with every variation of the rent, would no doubt be somewhat greater than that of levying one which was always rated accord¬ ing to a fixed valuation. Some additional expense would necessarily be incurred, both by the different register offices which it would be proper to establish in the different districts of the country, and by the different valuations which might occasionally be made of the lands which the proprietor chose to occupy himself. The expense of all this, however, might be very moderate, and much below what is incurred in the levying of many other taxes, which afford a very in¬ considerable revenue in comparison of what might easily be drawn from a tax of this kind. The discouragement which a variable land tax of this kind might give to the improve¬ ment of land seems to be the most import¬ ant objection which can be made to it. I he landlord would certainly be less disposed to improve, when the sovereign, who contri¬ buted nothing to the expense, was to share in the profit of the improvement. Even this objection might perhaps be obviated by allowing the landlord, before he began his improvement, to ascertain, in conjunction with the officers of revenue, the actual value of his lands, according to the equitable ar¬ bitration of a certain number of landlords and farmers in the neighbourhood, equally chosen by both parties; and by rating him according to this valuation for such a num¬ ber of years as might be fully sufficient for his complete indemnification. To draw the attention of the sovereign towards the im¬ provement of the land, from a regard to the increase of his own revenue, is one of the principal advantages proposed by this species of land-tax. The term, therefore, allowed for the indemnification of the landlord ought not to be a great deal longer than what was necessary for that purpose, lest the remote¬ ness of the interest should discourage too much this attention. It had better, how¬ ever, be somewhat too long than in any respect too short. No incitement to the attention of the sovereign can ever counter¬ balance the smallest discouragement to that of the landlord. The attention of the sovereign can be, at best, but a very general and vague consideration of what is likely to contribute to the better cultivation of the greater part of his dominions. The attention of the landlord is a particular and minute consideration of what is likely to be the most advantageous application of every inch of ground upon his estate. The principal attention of the sovereign ought to be to encourage, by every means in his power, the attention both of the landlord and of the farmer; by allowing both to pursue their own interest in their own way, and according to their own judgment ; by giving to both the most perfect security that they shall enjoy the full recompense of their own in¬ dustry ; and, by procuring to both the most extensive market for every part of their produce, in consequence of establishing the easiest and safest communications both by land and by water, through every part of his own dominions, as well as the most un¬ bounded freedom of exportation to the do¬ minions of all other princes. If by such a system of administration a tax of this kind could be so managed as to give, not only no discouragement, but, on the contrary, some encouragement to the improvement of land, it does not appear likely to occasion any other inconveniency to the landlord, except always the unavoidable one of being obliged to pay the tax. In all the variations of the state of the so¬ ciety, in the improvement and in the declen¬ sion of agriculture ; in all the variations in the value of silver, and in all those in the standard of the coin, a tax of this kind would of its own accord and -without any attention of government, readily suit itself to the actual situation of things, and would be equally just and equitable in all those different changes. It would, therefore, be much more proper to be established as a perpetual and unalterable regulation, or as what is called a fundamental law of the commonwealth, than any tax which was always to be levied ac¬ cording to a certain valuation. Some states, instead of the simple and ob¬ vious expedient of a register of leases, have had recourse to the laborious and expensive one of an actual survey and valuation of all the lands in the country. They have sus¬ pected, probably, that the lessor and lessee, in order to defraud the public revenue, might combine to conceal the real terms of the lease. Doomsday-book seems to have been the result *of a very accurate survey of this kind. In the ancient dominions of the king of Prussia, the land-tax is assessed according to an actual survey and valuation, which is reviewed and altered from time to time. 1 According to that valuation, the lay proprie- 1 Memoires concernant les Droits, Sec. tome i. p. 114, 115, 116, &c. B b 4 TAXES ON THE Book V. H7G tors pay from twenty to twenty-five per cent, of their revenue: ecclesiastics from forty to forty-five per cent. The survey and valua¬ tion of Silesia was made by order of the pre¬ sent king; it is said with great accuracy. According to that valuation, the lands be¬ longing to the bishop of Breslaw are taxed at twenty-five per cent, of their rent. The other revenues of the ecclesiastics of both re¬ ligions, at fifty per cent. The commanderies of the Teutonic order, and of that 6f Malta, at forty per cent. Lands held by a noble tenure, at thirty-eight and one-third per cent. Lands held by a base tenure, at thirty-five and one-third per cent. The survey and valuation of Bohemia is said to have been the work of more than a hundred years. It was not perfected till after the peace of 1748, by the orders of the present empress queen. 1 The survey of the dutchy of Milan, which was begun in the time of Charles the VI., was not perfected till after 1760. It is esteemed one of the most accurate that has ever been made. The survey of Savoy and Piedmont was executed under the orders of the late king of Sar¬ dinia. 2 In the dominions of the king of Prussia, the revenue of the church is taxed much higher than that of lay proprietors. The revenue of the church is, the greater part of it, a burden upon the rent of land. It sel¬ dom happens that any part of it is applied towards the improvement of land; or is so employed as to contribute in any respect to¬ wards increasing the revenue of the great body of the people. Plis Prussian majesty had probably, upon that account, thought it reasonable, that it should contribute a good deal more towards relieving the exigencies of the state. In some countries the lands of the church are exempted from all taxes. In others they are taxed more lightly than other lands. In the dutchy of Milan, the lands which the church possessed before 1575, are rated to the tax at a third only of their value. In Silesia, lands held by a noble tenure are taxed three per cent, higher than those held by a base tenure. The honours and privileges of different kinds annexed to the former, his Prussian majesty had probably imagined would sufficiently compensate to the proprietor a small aggravation of the tax ; while at the same time the humiliating in¬ feriority of the latter would be in some mea¬ sure alleviated by being taxed somewhat more lightly. In other countries the system of taxation, instead of alleviating, aggravates 1 Memoires concernant les Droits, &c. tome i. p. 83, 84. 2 Id. tome i. p. 280. Sec .; also p. 287. &c. to 31G. 3 Id. tome ii. p. 139. &c. 1 1 ne view taken by Dr. Smith, of the effect of taxes on rent, is incomplete, from his having made no distinction between their influence on the rent of land, properly so called, or on the sum paid to the this inequality. In the dominions of the king of Sardinia, and in those provinces of France which are subject to what is called the real or predial taille, the tax falls alto¬ gether upon the lands held by a base tenure. Those held by a noble one are exempted. A land-tax assessed according to a general survey and valuation, how equal soever it may be at first, must in the course of a very moderate period of time become unequal. To prevent its becoming so would require the continual and painful attention of govern¬ ment to all the variations in the state and produce of every different farm in the coun¬ try. The governments of Prussia, of Bohe¬ mia, of Sardinia, and of the duchy of Milan, actually exert an attention of this kind ; an attention so unsuitable to the nature of government, that it is not likely to be of long continuance, and which, if it is con¬ tinued, will probably, in the long run, occa¬ sion much more trouble and vexation than it can possibly bring relief to the contri¬ butors. In 1666, the generality of Montauban was assessed to the real or predial taille, accord¬ ing, it is said, to a very exact survey and valuation. 3 By 1727 this assessment had become altogether unequal. In order to remedy this inconveniency, government has found no better expedient than to impose upon the whole generality an additional tax of a hundred and twenty thousand livres. This additional tax is rated upon all the dif¬ ferent districts subject to the taille according to the old assessment. But it is levied only upon those which in the actual state of things, are by that assessment under-taxed; and it is applied to the relief of those which, by the same assessment, are over-taxed. Two districts, for example, one of which ought, in the actual state of things, to be taxed at nine hundred, the other at eleven hundred livres, are by the old assessment, both taxed at a thousand livres. Both these districts are, by the additional tax, rated at eleven hundred livres each. But this additional tax is levied only upon the district under¬ charged, and it is applied altogether to the relief of that over-charged, which conse¬ quently pays only nine hundred livres. The government neither gains nor loses by the additional tax, which is applied altogether to remedy the inequalities arising from the old assessment. The application is pretty much regulated according to the discretion of the intendant of the generality, and must there fore be in a great measure arbitrary. 4 landlord for the use of the natural and inherent powers of the soil, and their influence on that part oi the gross rent which consists of a return for the capital laid out on buildings, improvements, &c. The reader is referred, for some further observations on this subject, to the supplemental note on Taxes on the Rent of Land. PRODUCE OF LAND. S77 Chat. IT. 1 . M V 1 Taxes -which are proportioned , not to the Rent , hut to the Produce of Land. Taxes upon the produce of land are in reality taxes upon the rent; and, though they may be originally advanced by the far¬ mer, are finally paid by the landlord. "W hen a certain portion of the produce is to be paid away for a tax, the farmer computes, as well as he can, what the value of this portion is, one year with another, likely to amount to, and he makes a proportionable abatement in the rent which he agrees to pay to the land- I lord. There is no farmer who does not compute beforehand what the church tithe, which is a land tax of this kind, is, one 5 ear with another, likely to amount to. The tithe, and every other land-tax of this kind, under the appearance of perfect equality, are very unequal taxes; a cei tain portion of the produce being, in different situations, equivalent to a very different por¬ tion of the rent. In some very rich lands the produce is so great, that the one half of it is fully sufficient to replace to the farmer his capital employed in cultivation, together with the ordinary profits of farming stock in the neighbourhood. The other half, or, what comes to the same thing, the value of the other half, he could afford to pay as rent to the landlord, if there was no tithe. But if a tenth of the produce is taken from him in the way of tithe, he must require an abate¬ ment of the fifth part of his rent, otherwise he cannot get back his capital with the ordi¬ nary profit. In this case the rent of the landlord, instead of amounting to a half, or five-tenths of the whole produce, will amount only to four-tenths of it. In poorer lands, on the contrary, the produce is some¬ times so small, and the expense of cultivation so great, that it requires four-fifths of the whole produce to replace to the farmer his capital with the ordinary profit. In this case, though there was no tithe, the rent of the landlord could amount to no more than one-fifth or two-tenths of the whole produce. But if the farmer pays one-tenth of the pro¬ duce in the way of tithe, he must require an equal abatement of the rent of the landlord, which will thus be reduced to one-tenth only of the whole produce. Upon the rent of rich lands the tithe may sometimes be a tax of no more than one-fifth part, or four shillings in the pound; whereas upon that of poorer lands, it may sometimes be a tax of one-half, or of ten shillings in the pound. The tithe, as it is frequently a very un¬ equal tax upon the rent, so it is always a great discouragement both to the improve¬ ments of the landlord and to the cultivation of the farmer. The one cannot venture to make the most important, which are gener¬ ally the most expensive, improvements ; nor the other to raise the most valuable, which are generally too the most expensive, crops, when the church, which lays out no part of the expense, is to share so very largely in the profit. The cultivation of madder was, for a long time, confined by the tithe to the United Provinces, which, being presbyterian countries, and upon that account exempted from this destructive tax, enjoyed a sort of monopoly of that useful dying drug against the rest of Europe. The late attempts to in¬ troduce the culture of this plant into Eng¬ land, have been made only in consequence of the statute which enacted that five shil¬ lings an acre should be received in lieu of all manner of tithe upon madder. As through the greater part of Europe the church, so in many different countries of Asia the state is principally supported by a land-tax, proportioned not to the rent, but to the produce of the land. In China, the principal revenue of the sovereign consists in a tenth part of the produce of all the lands of the empire. This tenth part, however, is estimated so very moderately, that, in many provinces, it is said not to exceed a thirtieth part of the ordinary produce. The land-tax or land-rent which used to be paid to the Mahometan government of Bengal, before that country fell into the hands of the En¬ glish East India company, is said to have amounted to about a fifth part ol the pro¬ duce. The land-tax of ancient Egypt is said likewise to have amounted to a fifth pait. In Asia, this sort of land-tax is said to interest the sovereign in the improvement and cultivation of land. The sovereigns of China, those of Bengal while under the Mahometan government, and those of an¬ cient Egypt, are said, accordingly, to have been extremely attentive to the making and maintaining of good roads and navigable canals, in order to increase as much as pos¬ sible both the quantity and value of every part of the produce of the land, by procur¬ ing to every part of it the most extensive market which their own dominions could afford. The tithe of the church is divided into such small portions, that no one of its proprietors can have any interest of this kind. The parson of a parish could never find his account in making a road or canal to a distant part of the country, in order to extend the market for the produce of his ov, n particular parish. Such taxes, when destined for the maintenance of the state, have some advantages which may serve in some mea¬ sure to balance their inconveniency. 'When destined for the maintenance oi the church, they are attended with nothing but incon- veniency. Taxes upon the produce of land may be levied either in kind, or, according to a cer¬ tain valuation, in money. The parson of a parish, or a gentleman of small fortune who lives upon his estate, may sometimes, perhaps, find some advantage in 378 PRODUCE OF LAND. Boox V. receiving, the one his tithe, and the other his rent, in kind. The quantity to be collected, and the district within which it is to be col¬ lected, are so small, that they both can over¬ see, with their own eyes, the collection and disposal of every part of what is due to them. A gentleman of great fortune, who lived in the capital, would be in danger of suffering much by the neglect, and more by the fraud of his factors and agents, if the rents ol an estate in a distant province were to be paid to him in this manner. The loss of the sovereign, from the abuse and depre¬ dation of his tax-gatherers, would necessarily be much greater. The servants of the most careless private person are, perhaps, more under the eye of their master than those of the most careful prince ; and a public reve¬ nue, which was paid in kind, would suffer so much from the mismanagement of the col¬ lectors, that a very small part of what was levied upon the people would ever arrive at the treasury of the prince. Some part of the public revenue of China, however, is said to be paid in this manner. The man¬ darins and other tax-gatherers will, no doubt, find their advantage in continuing the prac¬ tice of a payment which is so much more liable to abuse than any payment in money. A tax upon the produce of land which is levied in money, may be levied either ac¬ cording to a valuation which varies with all the variations of the market price, or accord¬ ing to a fixed valuation, a bushel of wheat, for example, being always valued at one and the same money price, whatever may be the state of the market. The produce of a tax levied in the former way will vary only according to the variations in the real pro¬ duce of the land, according to the improve¬ ment or neglect of cultivation. The produce of a tax levied in the latter way will vary, not only according to the variations in the produce of the land, but according to both those in the value of the precious metals, and those in the quantity of those metals which is at different times contained in coin of the same denomination. The produce of the former will always bear the same pro¬ portion to the value of the real produce of the land. The produce of the latter may, at different times, bear very different propor¬ tions to that value. M hen, instead either of a certain portion of the produce of land, or of the price of a certain portion, a certain sum of money is to be paid in full compensation for all tax or tithe, the tax becomes, in this case, exactly of the same nature with the land-tax of England. It neither rises nor falls with the rent of the land ; it neither encourages nor discourages improvement. The tithe, in the greater part of those parishes which pay 3 U r St * on w dh respect to the real incidence % i t ‘? xes > Proportioned to the gross produce oi tnc land, is one of much greater difficulty and ’ what is called a modus in lieu of all other tithe, is a tax of this kind. During the Mahometan government of Bengal, instead of the payment in kind of a fifth part of the produce, a modus, and, it is said, a very mo¬ derate one, was established in the greater part of the districts or zemindaries of the country. Some of the servants of the East India company, under pretence of restoring the public revenue to its proper value, have, in some provinces, exchanged this modus for a payment in kind. Under their manage¬ ment this change is likely both to discourage cultivation and to give new opportunities for abuse in the collection of the public re¬ venue, which has fallen very much below what it was said to have been when it first fell under the management of the company. I he servants of the company may, perhaps, have profited by this change, but at the ex¬ pense, it is probable, both of their masters and of the country . 1 Tuxes upon the Rent of Houses. The rent of a house may be distinguished into two parts, of which the one may very properly be called the building rent, the other is commonly called the ground rent. The building rent is the interest or profit of the capital expended in building the house. In order to put the trade of a builder upon a level with other trades, it is necessary that this rent should be sufficient, first, to pay him the same interest which he would have got for his capital if he had lent it upon good security; and, secondly, to keep the house in constant repair, or, what comes to the same thing, to replace, within a certain term of years, the capital which had been employed in building it. The building rent, or the ordinary profit of building, is therefore every where regulated by the ordinary interest of money. Where the market rate of interest is four per cent, the rent of a house which, over and above paying the ground-rent, af¬ fords six or six and a half per cent, upon the whole expense of building, may perhaps afford a sufficient profit to the builder. Where the market rate of interest is five per cent, it may perhaps require seven or seven and a half per cent. If, in propor- tion to the interest of money, the trade of the builder affords at anytime a much greater profit than this, it will soon draw so much capital from other trades as will reduce the profit to its proper level. If it affords at any time much less than this, other trades will soon draw so much capital from it as will again raise that profit. W hatever part of the whole rent of a house is over and above what is sufficient for afford¬ ing this reasonable profit, naturally goes to nicety than Dr. Smith seems to have supposed. Sc^ supplemental note on this subject. Chap. II. TAXES ON THE k the ground-rent; and where the owner of the ground and the owner ot the building are p‘ two different persons, is, in most cases, com¬ pletely paid to the former. This surplus rent is the price which the inhabitant ot k the house pays for some real or supposed advantage of the situation. In country houses, at a distance from any great town, } where there is plenty of ground to choose upon, the ground-rent is scarce any thing, or no more than what the ground which the house stands upon would pay if employed in agriculture. In country villas, in the neigh¬ bourhood of some great town, it is sometimes a good deal higher; and the peculiar con- veniency or beauty of situation is there tie- quently very well paid for. Ground-rents are generally highest in the capital, and in those particular parts of it where there hap¬ pens to be the greatest demand for houses, whatever be the reason of that demand, whether for trade and business, for pleasure and society, or for mere vanity and fashion. A tax upon house-rent, payable by the tenant, and proportioned to the whole rent of each house, could not, for any considerable time at least, affect the building rent. If the builder did not get his reasonable profit, he would be obliged to quit the trade; which, by' raising the demand for building, would in a short time bring back its profit to its proper level with that of other trades. Neither would such a tax fall altogether upon the ground-rent; but it would divide itself in such a manner as to fall, partly upon the inhabitant of the house, and partly upon the owner of the ground. Let us, suppose, for example, that a par¬ ticular person judges that he can afford for house-rent an expense of sixty pounds a year; and let us suppose too that a tax of four shillings in the pound, or of one-fifth, payable by the inhabitant, is laid upon house- rent, — a house of sixty pounds rent will, in ffiis case, cost him seventy-two pounds a year, which is twelve pounds more than he thinks he can afford. He will, therefore, content himself with a worse house, or a house of fifty pounds rent, which, with the additional ten pounds that he must pay for the tax, will make up the sum of sixty pounds a year, the expense which he judges he can afford ; and, in order to pay the tax, he will give up a part of the additional conveniency which he might have had from a house of ten pounds a year more rent. lie will give up, I say, a part of this additional conveniency ; for he will seldom be obliged to give up the whole, but will, in consequence of the tax, get a better house for fifty pounds a year, than he could have got if there had been no tax: for as a tax of this kind, by taking away this particular competitor, must diminish the competition for houses of sixty pounds rent, so it must likewise diminish it for those RENT OF HOUSES. 379 of fifty pounds rent, and in the same manner for those of all other rents, except the lowest rent, for which it would for some time in¬ crease the competition. But the rents of every class of houses for which the com¬ petition was diminished would necessarily be more or less reduced. As no part of this reduction however could, for any r consider¬ able time at least, affect the building rent, the whole of it must, in the long run, neces¬ sarily 1 ' fall upon the ground-rent. The final payment of this tax, therefore, would fall, partly upon the inhabitant of the house, who, in order to pay his share, would be obliged to give up a part of his conveniency; and partly upon the owner of the ground, who, in order to pay his share, would be obliged to give up a part of his revenue. In what proportion this final payment would be di¬ vided between them, it is not perhaps very easy to ascertain. The division would probably be very' different in different cir¬ cumstances, and a tax ot this kind might, according to those difierent circumstances, affect very unequally both the inhabitant of the house and the owner of the ground. The inequality with which a tax of this kind might fall upon the owners of different ground-rents woijld arise altogetner from the accidental inequality of this division. But the inequality with which it might fall upon the inhabitants of different houses would arise not only from this but from another cause. The proportion of the ex¬ pense of house-rent to the whole expense of living is different in the difierent degrees of fortune. It is perhaps highest in the highest degree, and it diminishes gradually through the inferior degrees, so as in general to be lowest in the lowest degree. The necessaiies of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. d. he luxuries and \ anities of life occasion the principal expense of the rich j and a magnificent nouse cmbcllisncs and sets off to the best advantage all the other luxuries and vanities which they pos¬ sess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich ; and in this sort of inequality there would not, perhaps, be any thing very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion. The rent of houses, though it in some respects resembles the rent of land, is in one respect essentially difierent from it. I he rent of land is paid for the use of a productive subject. The land which pays it produces it. ” The rent of houses is paid for the use of an unproductive subject. 1 Neither the 1 This opinion is consistent with Dr. Smith’s theory of productive and unproductive expenditure ; 380 TAXES OX THE Book V. house nor the ground which it stands upon produce any thing. The person who pays the rent, therefore, must draw it from some other source of revenue, distinct from and independent of this subject. A tax upon the rent of houses, so far as it falls upon the inhabitants, must be drawn from the same source as the rent itself, and must be paid from their revenue, whether derived from the wages of labour, the profits of stock, or the rent of land. So far as it falls upon the inhabitants, it is one of those taxes which fall, not upon one only, but indifferently upon all the three different sources of revenue, and is, in every respect, of the same nature as a tax upon any other sort of consumable commodities. In general, there is not perhaps any one article of expense or consumption by which the liberality or narrowness of a man’s whole expense can be better judged of than by his house-rent. A proportional tax upon this particular article of expense might perhaps produce a more considerable revenue than any which has hitherto been drawn from it in any part of Europe. If the tax indeed was very high, the greater part of people would endeavour to evade it as much as they could, by contenting themselves with smaller houses, and by turning the greater part of their expense into some other channel. The rent of houses might easily be ascer¬ tained with sufficient accuracy, by a policy of the same kind with that which would be necessary for ascertaining the ordinary rent of land. Houses not inhabited ought to pay no tax. A tax upon them would fall altogether upon the proprietor, who would thus be taxed for a subject which afforded him neither conveniency nor revenue. Houses inhabited by the proprietor ought to be rated, not according to the expense which they might have cost in building, but ac¬ cording to the rent which an equitable arbitration might judge them likely to bring if leased to a tenant. If rated accord- ing to the expense which they might have cost in building, a tax of three or four shillings in the pound, joined with other taxes, would ruin almost all the rich and great families of this, and, I believe, of every other civilised country. Whoever will examine with attention the different town and country houses of some of the richest and greatest families in this country, will find that, at the rate of only six and a half or seven per cent, upon the original expense of building, their house-rent is nearly equal to the whole neat rent of their h it it is, notwithstanding, fundamentally erroneous. 1 no house that an individual lives in may not in all eases be directly productive, but that it is indirectly so is obvious ; for how could production be carried on were tnose engaged in it deprived of the shelter and accommodation afforded by houses ? The food 4 inch supports the workman is not, in fact, more estates. It is the accumulated expense of i several successive generations, laid out upon objects of great beauty and magnificence, indeed, but, in proportion to what they cost, of very small exchangeable value . 1 Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the j greatest rent which can be got for the use of his ground. More or less can be got for it, j according as the competitors happen to be richer or poorer, or can afford to gratify their fancy for a particular spot of ground at a greater or smaller expense. In every country the greatest number of rich com¬ petitors is in the capital, and it is there accordingly that the highest ground-rents are always to be found. As the wealth of those competitors would in no respect be increased by a tax upon ground-rents, they would not probably be disposed to pay more for the use of the ground. Whether the tax was to be advanced by the inhabitant or by the owner of the ground, would be of little importance. The more the inhabitant was obliged to pay for the tax, the less he would incline to pay for the ground so that the final payment of the tax would fall altogether upon the owner of the ground-rent. The ground-rents of uninhabited houses ought to pay no tax. Both ground-rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Though a part of this revenue should be taken from him in order to defray the expenses of the state, no discouragement will thereby be given to any sort of industry, The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people might he the same after such a tax as before. Ground-rents, and the ordinary rent of land, are therefore, perhaps, the species of revenue which can best bear to have a peculiar tax imposed upon them. Ground-rents seem, in this respect a more proper subject of peculiar taxation than even the ordinary rent of land. The ordinary rent of land is, in many cases, owing partly at least to the attention and good management of the landlord. A very heavy tax might discourage too much this attention and good manage¬ ment. Ground-rents, so far as they exceed the ordinary rent of land, are altogether owing to the good government of the sovereign, necessary to his existence than his house ; and, if the former be held to be productive, the latter must, it is plain, be so too. 1 Since the first publication of this book, a tax nearly upon the above-mentioned principles has been imposed. (Note by the author.) I II Chap. II. . which, by protecting the industry either of ‘the whole people or of the inhabitants of isome particular place, enables them to pay so much more than its real \alue for the ground which they build their houses upon ; or to make to its owner so much more than compensation for the loss which he might sustain by this use of it. Nothing can be more reasonable than that a fund which owes its existence to the good government of the state should be taxed peculiarly, or should contribute something more than the greater part of other funds towards the support of that government. Though, in many different countries of Europe, taxes have been imposed upon the rent of houses, I do not know of any in which ground-rents have been considered as a se¬ parate subject of taxation. fhe conti i\ers of taxes have probably found some difficulty in ascertaining what part of the rent ought to be considered as ground-rent, and what part ought to be considered as building rent. It should not, however, seem very difficult to distinguish those two parts of the rent from one another. In Great Britain the rent of houses is supposed to be taxed in the same proportion as the rent of land, by what is called the an¬ nual land-tax. The valuation, according to which each different parish and district is assessed to this tax, is always the same. It was originally extremely unequal, and it still continues to be so. Tnrough 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 consi¬ derably, the land-tax of three or four shil¬ lings in the pound is said to amount to an equal proportion of the real rent oi houses. Untenanted houses, though by law subject to the tax, are, in most districts, exempted from it by the favour of the assessors ; and this exemption sometimes occasions some little variation in the rate of particular houses, though that of the district is always the same. Improvements of rent, by new build¬ ings, repairs, &c. go to the discharge of the district, which occasions still further varia¬ tions in the rate of particular houses. In the province of Holland i every house is taxed at two and a half per cent, of its value, without any regard either to the rent which it actually pays or to the circumstance of its being tenanted or untenanted. There seems to be a hardship in obliging the pro¬ prietor to pay a tax for an untenanted house from which he can derive no revenue; espe¬ cially so very heavy a tax. In Holland, 1 Me moires coneernant les Droits, &c. p. 223. 2 In 1835 the house duty was repealed, but the window duty still exists. At present (! ">3S) houses having less than eight windows are exempted trom this duty ; those that have eight windows pay a duty ill 381 where the market rate of interest does not exceed three per cent., two and a half per cent, upon the whole value of the bouse must in most cases, amount to more than a third of the building rent, perhaps of the whole rent. The valuation, indeed, according to which the houses are rated, though very un¬ equal, is said to be always below the real value. When a house is rebuilt, improved or enlarged, there is a new valuation, and the tax is rated accordingly. The contrivers of the several taxes which in England have, at different times, been imposed upon houses, seem to have imagined that there was some great difficulty in ascer¬ taining, with tolerable exactness, what was the real rent of every house. They have re¬ gulated 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-mo¬ ney ; or a tax of two shillings upon every hearth. In order to ascertain how many hearths were in the house, it was necessary that the tax-gatherer should enter every room in it. This odious visit rendered the tax odious. Soon after the revolution, therefore, it was abolished as a badge of slavery. The next tax of this kind was a tax of two shillings upon every dwelling-house inha¬ bited. A house with ten windows to pay four shillings more. A house with twenty win¬ dows and upwards to pay eight shillings. This tax was afterwards so far altered, that houses with twenty windows, and with less than thirty, were ordered to pay ten shillings, and those with thirty windows and up warns to pay twenty shillings. The number of win¬ dows can, in most cases, be counted from the outside, and, in all cases, without entering every room in the house. The visit of the tax-gatherer, therefore, was less offensive in this tax than in the hearth-money. This tax was afterwards repealed, and in the room of it was established the window- tax, which has undergone too several alter¬ ations and augmentations. The window-tax, as it stands at present (January 1775), over and above the duty of three shillings upon every house in England, and of one shilling upon every house in Scotland, lays a duty upon every window, which in England aug¬ ments gradually from twopence, the lowest rate, upon houses with not more than seven windows, to two shillings, the highest rate, upon houses with twenty-five windows and upwards. 2 The principal objection to all such taxes is their inequality ; an inequality of the worst kind, as they must frequently fall much hea- of 16s. 6 d. a year ; those that have nine pav 1/. Is. ; those that have ten 1/. 8s. ; and so on until the house has 180 windows, when the duty is lixed at 46 1 .1 Is. 3d.; an additional Is. id. being added for every window above 180. RENT OF HOUSES. 382 TAXES ON THE vier upon the poor than upon the rich. A house of ten pounds rent in a country town may sometimes have more windows than a house of five hundred pounds rent in London; and though the inhabitant of the former is likely to be a much poorer man than that of the latter, yet so far as his contribution is re¬ gulated by the window-tax, he must contri¬ bute more to the support of the state. Such taxes are, therefore, directly contrary to the first of the four maxims above-mentioned, lliey do not seem to offend much against any of the other three. The natural tendency of the window-tax, and of all other taxes upon houses, is to lower rents. The more a man pays for the tax, the less, it is evident, he can afford to pay tor the rent. Since the imposition of the window-tax, however, the rents of houses have, upon the whole, risen more or less in almost every town and village of Great Bri¬ tain with which I am acquainted. Such has been almost everywhere the increase of the demand for houses, that it has raised the rents more than the window-tax could sink them,—one of the many proofs of the great prosperity of the country, and of the increas¬ ing revenue of its inhabitants. Had it not been for the tax, rents would probably have risen still higher. ARTICLE II. 1 axes upon JProJit, or upon the Revenue arising from Stock. The revenue or profit arising from stock naturally divides itself into two parts : that which pays the interest, and which belongs to the owner of the stock, and that surplus part which is over and above what is neces¬ sary for paying the interest. This latter part of profit is evidently a subject not taxable directly. It is the com¬ pensation, and in most cases it is no more than a very moderate compensation, for the risk and trouble of employing the stock. The employer must have this compensation, otherwise he cannot, consistently with his own interest, continue the employment. If he was taxed directly, therefore, in propor¬ tion to the whole profit, he would be obliged either to raise the rate of his profit, or to charge the tax upon the interest of money ; that is, to pay less interest. If he raised the rate of his profit in proportion to the tax, the w hole tax, though it might be advanced by him, would be finally paid by one or othei oi two different sets of people, accord¬ ing to the different ways in which he might employ the stock of which he had the ma¬ nagement. 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 gi eater portion, or, what comes to the same Book V. # thing, the price of a greater portion of the produce of the land ; and as this could be done only by a reduction of rent, the final payment of the tax would fall upon the land¬ lord. If he employed it as a mercantile or manufacturing stock, he could raise the rate of his profit only by raising the price of his goods ; in which case the final payment of the tax would fall altogether upon the con¬ sumers 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, lie could afford less interest for whatever stock he borrowed, and the whole weight of the tax would, in this case, fall ultimately upon the interest of money. So far as he could not relieve himself from the tax in the one way, he would be obliged to relieve him¬ self in the other. The interest of money seems at first sight a subject equally capable of being taxed di¬ rectly as the rent of land. Like the rent of land, it is a neat produce which remains after completely compensating the whole risk and trouble of employing the stock. As a tax upon the rent of land cannot raise rents, be¬ cause 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 it; so, for the same reason, a tax upon the interest of money could not raise the rate of interest; the quantity of stock or money in the country, like the quantity of land, being supposed to remain the same after the tax as before it. The ordinary rate of profit, it has been shown in the first book, is everywhere regulated by the quantity of stock to be employed in pro¬ portion to the quantity of the employment, or of the business which must be done by it. But the quantity of the employment, or of the business to be done by stock, could nei¬ ther be increased nor diminished by any tax upon the interest of money. If the quan¬ tity of the stock to be employed, therefore, was neither increased nor diminished by it, the ordinary rate of profit would necessarily remain the same ; but the portion of this profit necessary for compensating the risk and trouble of the employer would likewise remain the same, that risk and trouble being in no respect altered. The residue, therefore, that portion which belongs to the owner of the stock, and which pays the interest of money, would necessarily remain the same too. At first sight, therefore, the interest of money seems to be a subject as fit to be taxed directly as the rent of land. There are, however, two different circum¬ stances which render the interest of money a much less proper subject of direct taxation than the rent of land. First , The quantity and value of the land which any man, possesses can never be a Chap. II. INTEREST OF MONEY. S S3 secret, and can always be ascertained with great exactness; but the whole amount of the capital stock which he possesses is almost always a secret, and can scarce ever be ascer¬ tained with tolerable exactness. It is liable, besides, to almost continual variations. A year seldom passes away, frequently not a month, sometimes scarce a single day, in which it does not rise or fall more or less. An inquisition into every mans private cir¬ cumstances, and an inquisition which, in order to accommodate the tax to them, watched over all the fluctuations ot his toi- tune, would be a source ot such continual and endless vexation as no people could support. Secondly, Eand is a subject which cannot be removed; whereas stock easily may. i he^ proprietor of land is necessarily a citizen ot the particular country in which his estate lies. The proprietor of stock is properly a citizen of the world, and is not necessarily attached to any particular country. He would be apt to abandon the counti\ in which he was exposed to a vexatious inqui¬ sition, in order to be assessed to a burden¬ some tax, and would remove his stock to some other country, where he could either carry on his business or enjoy his fortune more at his ease. By removing his stock, he would put an end to all the industry which it had main¬ tained in the country which he left. Stock cultivates land; stock employs labour. A tax which tended to drive away stock from any particular country would so far tend to dry up every source of revenue, both to the sovereign and to the society. Not only the profits of stock but the rent of land and the wages of labour would necessarily be more or less diminished by its removal. The nations, accordingly, who have at¬ tempted to tax the revenue arising from stock, instead of any severe inquisition of this kind, have been obliged to content them¬ selves with some very loose, and, therefore, more or less arbitrary estimation. The ex¬ treme inequality and uncertainty of a tax assessed in this manner can be compen¬ sated only by its extreme moderation; in consequence of which, every man finds him¬ self rated so very much below his real reve¬ nue that he gives himself little disturbance though his neighbour should be rated some- • what lower. By what is called the land-tax in England, it was intended that the stock should be taxed in the same proportion as land. \\ hen the tax upon land was at four shillings in the pound, or at one-fifth of the supposed rent, it was intended that stock should be taxed at one-fifth of the supposed interest. 'When the present annual land-tax was first im¬ posed, the legal rate of interest was six per cent. Every hundred pounds stock, accord¬ ingly, was supposed to be taxed at twenty- four shillings, the fifth part of six pounds. Since the legal rate of interest lias been reduced to five per cent., every hundred pounds stock is supposed to be taxed at twenty shillings only. The sum to be raised, by what is called the land-tax, was divided between the country and the principal towns. The greater part of it was laid upon the country; and of what was laid upon the towns, the greater part was assessed upon the houses. What remained to be assessed upon the stock or trade of the towns (for the stock upon the land was not meant to be taxed) was very much below the real value of that stock or trade. Whatever inequalities, there¬ fore, there might be in the original assess¬ ment gave little disturbance. Every parish and district still continues to be rated for its land, its houses, and its stock, according to the original assessment; and the almost uni¬ versal prosperity of the country, which in most places has raised very much the value of all these, has rendered those inequalities of still less importance now. The rate too upon each district continuing always the same, the uncertainty of this tax, so far as it might be assessed upon the stock of any in¬ dividual, has been very mueh diminished, as well as rendered of much less consequence. If the greater part of the lands of England are not rated to the land-tax at half their ac¬ tual value, the greater part of the stock cf England is, perhaps, scarce rated at the fifti¬ eth part of its actual value. In some towns the whole land-tax is assessed upon houses; as in Westminster, where stock and trade are free. It is otherwise in London. In all countries a severe inquisition into the circumstances of private persons has been carefully avoided. At Hamburgh 1 , every inhabitant is obliged to pay to the state one-fourth per cent, of all that he possesses; and as the wealth of the people of Hamburgh consists principally in stock, this tax may be considered as a tax upon stock. Every man assesses himself, and, in the presence of the magistrate, puts annually into the public coffer a certain sum of money, which he declares upon oath to be one-fourth per cent, of all that he possesses, but without declaring what it amounts to, or being liable to any examination upon that subject. This tax is generally supposed to be paid with great fidelity. In a small re¬ public, where the people have entire confi¬ dence 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 payment may sometimes be expected. It is not peculiar to the people of Hamburgh. The canton of Underwald in Switzerland is frequently ravaged by storms and inundations, 1 Memoires concernant les Droits, tome i. p. 74. TAXES ON THE PROFITS Book V 384 and is thereby exposed to extraordinary ex¬ penses. Upon such occasions the people as¬ semble, and every one is said to declare with the greatest frankness what he is worth, in order to be taxed accordingly. At Zurich the law orders, that, in cases of necessity, every one should be taxed in proportion to his revenue; the amount of which he is obliged to declare upon oath. They have no suspicion, it is said, that any of their fel¬ low citizens will deceive them. At Basil the principal revenue of the state arises from a small custom upon goods exported. All the citizens make oath that they will pay every three months all the taxes imposed by the law. All merchants, and even all innkeepers, are trusted with keeping themselves the account of the goods which they sell either within or without the territory. At the end of every three months they send this account to the treasurer, with the amount of the tax computed at the bottom of it. It is not suspected that the revenue suffers by this confidence . 1 To oblige every citizen to declare pub¬ licly upon oath the amount of his fortune must not, it seems, in those Swiss cantons, be reckoned a hardship; at Hamburgh it would be reckoned the greatest. Merchants engaged in the hazardous projects of trade all tremble at the thoughts of being obliged at all times to expose the real state of their circumstances. The ruin of their credit, and the miscarriage of their projects, they foresee, would too often be the consequence. A sober and parsimonious people, who are strangers to all such projects, do not feel that they have occasion for any such concealment. In Holland, soon after the exaltation of the late prince of Orange to the stadtliolder- ship, a tax of two per cent, or the fiftieth penny, as it was called, was imposed upon the whole substance of every citizen. Every citizen assessed himself and paid his tax in the same manner as at Hamburgh; and it was in general supposed to have been paid with great fidelity. The people had at that time the greatest affection for their new government, which they had just established by a general insurrection. The tax was to be paid but once, in order to relieve the state in a particular exigency: it was, indeed, too heavy to be permanent. In a country where the market rate of interest seldom exceeds three per cent., a tax of two per cent, amounts to thirteen shillings and fourpence in the pound upon the highest neat revenue which is commonly drawn from stock. It is a tax which very few people could pay without encroaching more or less upon their capitals. In a particular exigency the people may, from great public zeal, make a great effort, and give up even a part of their capital, in i Memoires concernant les Droits, tome i. p. 1G3. 106. 171. order to relieve the state ; but it is impos¬ sible that they should continue to do so for any considerable time: and if they did, the tax would soon ruin them so completely as to render them altogether incapable of support¬ ing the state. The tax upon stock, imposed by the land- tax bill in England, though it is proportioned to the capital, is not intended to diminish or to take away any part of that capital. It is meant only to be a tax upon the interest of money, proportioned to that upon the rent of land; so that when the latter is at four shillings in the pound, the former may be at four shillings in the pound too. The tax at Hamburgh, and the still more moderate taxes of Lnderwald and Zurich, are meant, in the same manner, to be taxes, not upon the capital, but upon the interest or neat j revenue of stock : that of Holland was meant to be a tax upon the capital. Taxes upon the Profits of particular Employ¬ ments . In some countries extraordinary taxes are : imposed upon the profits of stock; some¬ times when employed in particular branches of trade, and sometimes when employed in agriculture. Of the former kind are in England the tax upon hawkers and pedlars, that upon hackney coaches and chairs, and that which the keepers of alehouses pay for a licence to retail ale and spirituous liquors. During the late war, another tax of the same kind was proposed upon shops. The war having been undertaken, it was said, in defence of the trade of the country, the merchants, who were to profit by it, ought to contribute to¬ wards the support of it. A tax, however, upon the profits of stock employed in any particular branch of trade can never fall finally upon the dealers, (who must in all ordinary cases have their reason¬ able profit, and, where the competition is free, can seldom have more than that profit,) but always upon the consumers, who must be obliged to pay in the price of the goods the tax which the dealer advances, and ge¬ nerally with some overcharge. A tax of this kind, when it is proportioned to the trade of the dealer, is finally paid by the consumer, and occasions no oppression to the dealer. When it is not so propor¬ tioned, but is the same upon all dealers, though in this case too it is finally paid by the consumer, yet it favours the great, and occasions some oppression to the small dealer. The tax of five shillings a week upon every hackney coach, and that of ten shillings a year upon every hackney chair, so far as it is ad¬ vanced by the different keepers of such coaches and chairs, is exactly enough proportioned to the extent of their respective dealings. It OF PARTICULAR EMPLOYMENTS. 385 I Chap. II. 7 neither favours the great, nor oppresses the : smaller dealer. The tax of twenty shillings - a year for a licence to sell ale, of forty shil¬ lings for a licence to sell spirituous liquors, ' and of forty shillings more for a licence to sell wine, being the same upon all retailers, ■ must necessarily give some advantage to the great, and occasion some oppression to the j; small dealers. The former must find it more easy to get back the tax in the price of their goods than the latter. The moderation of the tax, however, renders this inequality of less importance; and it may to many people appear not improper to give some discou¬ ragement to the multiplication of little ale¬ houses. The tax upon shops, it was intended, should be the same upon all shops. It could not well have been otherwise. It would have been impossible to proportion with tolerable exactness the tax upon a shop to the extent of the trade carried on in it, with¬ out such an inquisition as would have been altogether insupportable in a free country. If the tax had been inconsiderable, it would have oppressed the small, and forced almost the whole retail trade into the hands of the great dealers. The competition of the former being taken away, the latter would have en¬ joyed a monopoly of the trade ; and, like all other monopolists, would soon have combined to raise their profits much beyond what was necessary for the payment of the tax. The final payment, instead of falling upon the shopkeeper, would have fallen upon the consumer, with a considerable overcharge to the profit of the shopkeeper. For these reasons, the project of a tax upon shops was laid aside, and in the room of it was sub- I stituted the subsidy 1759. 1 What in France is called the personal taille, is perhaps the most important tax upon the profits of stock employed in agri¬ culture that is levied in any part of Europe. In the disorderly state of Europe during the prevalence of the feudal government, the sovereign was obliged to content himself r with taxing those who were too weak to refuse to pay taxes. The great lords, though willing to assist him upon particular emer¬ gencies, refused to subject themselves to any constant tax, and he was not strong enough to force them. The occupiers of land all over Europe were, the greater part of them, originally bondmen. Through the greater part of Europe they were gradually eman¬ cipated. Some of them acquired the pro¬ perty 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 copyhold¬ ers of England. Others, without acquiring 1 An equal tax laid on the profits of the capital vested in every different employment, would fall wholly on the capitalists, and would neither affect the prices of commodities nor the distribution of the property, obtained leases for terms of years, of the lands which they occupied un¬ der their lord, and thus became less depend¬ ent upon him. The great lords seem to have beheld the degree of prosperity and in¬ dependency which this inferior order of men had thus come to enjoy, with a malignant and contemptuous indignation, and willingly consented that the sovereign should tax them. In some countries this tax was confined to the lands which were held in property by an ignoble tenure; and in this case the taille was said to be real. The land-tax estab¬ lished by the late king of Sardinia, and the taille in the provinces of Languedoc, Pro¬ vence, Dauphine, and Brittany, — in the generality of Montauban, and in the elec¬ tions of A gen and Condom, as well as in some other districts of France, are taxes upon lands held in property by an ignoble tenure. In other countries the tax was laid upon the supposed profits of all those who held, in farm or lease, lands belonging to other people, whatever might be the tenure by which the proprietor held them; and in this case the taille was said to be personal. In the greater part of those provinces of France, which are called the countries of elections, the taille is of this kind. The real taille, as it is imposed only upon a part of the lands of the country, is necessarily an unequal, but it is not always an arbitrary tax, though it is so upon some occasions. The personal taille, as it is intended to be proportioned to the profits of a certain class of people, which can only be guessed at, is necessarily both arbitrary and unequal. In France the personal taille at present (1775) annually imposed upon the twenty generalities, called the countries of elections, amounts to 40,107,239 livres, 16 sous. 2 The proportion in which the sum is assessed upon those different provinces, varies from year to year, according to the reports which are made to the king’s council concerning the goodness or badness of the crops, as well as other circumstances, which may either increase or diminish their respective abilities to pay. Each generality is divided into a certain number of elections ; and the pro¬ portion in which the sum imposed upon the whole generality is divided among those different elections varies likewise from year to year, according to the reports made to the council concerning their respective abilities. It seems impossible that the council, with the best intentions, can ever proportion, with tolerable exactness, either of those two assessments to the real abilities of the province or district upon which they are respectively laid. Ignorance and mis- capital. See supplemental note on Taxes and Profits. 2 Memoires concernant les Droits, &c. tome li. 386 TAXES ON THE PROFITS Book V. information must always, more or less, mislead the most upright council. The proportion which each parish ought to sup¬ port of what is assessed upon the whole election, and that which each individual ought to support of what is assessed upon his particular parish, are both in the same manner varied, from year to year, according as circumstances are supposed to require. These circumstances are judged of, in the one case, by the officers of the election, in the other by those of the parish ; and both the one and the other are, more or less, under the direction and influence of the in- tendant. Not only ignorance and misin¬ formation, but friendship, party animosity, and private resentment, are said frequently to mislead such assessors. No man subject to such a tax, it is evident, can ever be cer¬ tain, before he is assessed, of what he is to pay. He cannot even be certain after he is assessed. If any person has been taxed who ought to have been exempted, or if any person has been taxed beyond his proportion, though both must pay in the mean time, yet if they complain, and make good their complaints, the whole parish is reimposed next year, in order to reimburse them. If any of the contributors become bankrupt or insolvent, the collector is obliged to advance his tax ; and the whole parish is reimposed next year, in order to reimburse the col¬ lector. If the collector himself should become bankrupt, the parish which elects him must answer for his conduct to the receiver-general of the election. But, as it might be troublesome for the receiver to prosecute the whole parish, he takes at his choice five or six of the richest contributors, and obliges them to make good what had been lost by the insolvency of the collector. The parish is afterwards reimposed, in order to reimburse those five or six. Such reim¬ positions are always over and above the taille of the particular year in which they are laid on . 1 When a tax is imposed upon the profits of stock in a particular branch of trade, the traders are all careful to bring no more goods to market than what they can sell at a price sufficient to reimburse them from advancing the tax. Some of them withdraw a part of their stocks from the trade, and the market is more sparingly supplied than before. The price of the goods rises, and the final pay¬ ment of the tax falls upon the consumer. But when a tax is imposed upon the profits of stock employed in agriculture, it is not the interest of the farmers to withdraw any part of their stock from that employment. 1 The taille was abolished at the Revolution. For an account of the present French land tax, or Con¬ tribution Fonciere, see supplemental note on Taxes on Profits. 2 This statement is fallacious. A large portion of the produce brought to market in every extensive Each farmer occupies a certain quantity of land, for which he pays rent. For the proper cultivation of this land, a certain Quantity of stock is necessary ; and by withdrawing any part of this necessary quantity, the farmer is not likely to be more able to pay either the rent or the tax. In order to pay the tax, it can never be his interest to diminish the quantity of his produce, nor consequently to supply the market more sparingly than before. The tax, therefore, will never en¬ able him to raise the price of his produce, so as to reimburse himself by throwing the final payment upon the consumer. The farmer, however, must have his reasonable profit as well as every other dealer, other¬ wise he must give up the trade. After the imposition of a tax of this kind, he can get this reasonable profit only by paying less rent to the landlord. The more he is obliged to pay in the way of tax, the less he can afford to pay in the way of rent. A tax of this kind, imposed during the currency of a lease, may, no doubt, distress or ruin the farmer. Upon the re¬ newal of the lease, it must always fall upon the landlord . 2 In the countries where the personal taille takes place, the farmer is commonly assessed in proportion to the stock which he appears to employ in cultivation. He is, upon this account, frequently afraid to have a good team of horses or oxen, but endeavours to cultivate with the meanest and most wretched instruments of husbandry that he can. Such is his distrust in the justice of his assessors, that he counterfeits poverty, and wishes to appear scarce able to pay any thing, for fear of being obliged to pay too much. By this miserable policy, he does not, perhaps, always consult his own interest in the most effectual manner ; and he probably loses more by the diminution of his produce than he saves by that of his tax. Though, in consequence of this wretched cultivation, the market is, no doubt, somewhat worse supplied, yet the small rise of price which this may occasion, as it is not likely even to indemnify the farm¬ er for the diminution of his produce, it is still less likely to enable him to pay more rent to the landlord. The public, the farmer, the landlord, all suffer more or less by this degraded cultivation. That the personal taille tends, in many different ways, to dis¬ courage cultivation, and consequently to dry up the principal source of the wealth of every great country, I have already had occasion to observe in the third book of this Inquiry. YV hat are called poll-taxes in the southern provinces of North America, and in the West country pays no rent; and it is, consequently, impos¬ sible that its producers should be indemnified for a tax on profits by making a deduction from rent. For some remarks on this subject, see reference in the preceding note. OF PARTICULAR EMPLOYMENTS. S87 f K Chai\ II. Indian islands, annual taxes of so much a head upon every negro, are properly taxes upon the profits of a certain species of stock employed in agriculture. As the planters are, the greater part of them, both farmers and landlords, the final payment of the tax falls upon them in their quality of landlords without any retribution. Taxes of so much a head upon the bond- men employed in cultivation, seem anciently to have been common all over Europe. There subsists at present a tax of this kind in the empire of Russia. It is probably upon this account that poll-taxes of all kinds have often been represented as badges of slavery, Every tax however is, to the person who pays it, a badge, not of slavery, but of liberty. It denotes that he is subject to government, indeed, but that, as he has some property he cannot himself be the property of a master. A poll-tax upon slaves is altogether different from a poll-tax upon freemen : the latter is paid by the persons upon whom it is imposed, the former by a different set of persons. The latter is either altogether arbitrary or altogether unequal, and, in most cases, is both the one and the other ; the former, though in some respects unequal, different slaves being of different values, is in no respect arbitrary. Every master who knows the number of his own slaves, knows exactly what he has to pay. Those different taxes, however, being called by the same name, have been considered as of the same nature. The taxes which in Holland are imposed upon men and maid servants are taxes, not upon stock, but upon expense, and so far resemble the taxes upon consumable com¬ modities. The tax of a guinea a head for every man servant, which has lately been imposed in Great Britain, is of the same kind. It falls heaviest upon the middling rank. A man of two hundred a year may keep a single man servant. A man of ten thousand a year will not keep fifty. It does not affect the poor. Taxes upon the profits of stock in parti¬ cular employments can never affect the in¬ terest of money. Nobody will lend his money for less interest to those who exercise the taxed than to those who exercise the untaxed employments. Taxes upon the re¬ venue arising from stock in all employments, where the government attempts to levy them with any degree of exactness, will, in many cases, fall upon the interest of money. The vingtieme, or twentieth penny, in France, is a tax of the same kind with what is called the land-tax in England, and is assessed, in the same manner, upon the revenue arising from land, houses, and stock. So far as it affects stock, it is assessed, though not with great rigour, yet with much more exactness than that part of the land-tax of England which is imposed upon the same fund. It in many cases falls altogether upon the interest of money. Money is frequently sunk in France upon what are called con¬ tracts for the constitution of a rent; that is, perpetual annuities redeemable at any time by the debtor upon repayment of the sum originally advanced, but of which this re 7 demption is not exigible by the creditor, except in particular cases. The vingtieme seems not to have raised the rate of those annuities, though it is exactly levied upon them all. APPENDIX TO ARTICLES I. AND II. Taxes upon the Capital Value of Land , Houses , and Stock. While property remains in the possession of the same person, whatever permanent taxes may have been imposed upon it, they have never been intended to diminish or take away any part of its capital value, but only some part of the revenue arising from it. But when property changes hands, when it is transmitted either from the dead to the living, or from the living to the living, such taxes have frequently been imposed upon it as necessarily take away some part of its capital value. The transference of all sorts of property from the dead to the living, and that of immoveable property, of land and houses, from the living to the living, are transactions which are in their nature either public and notorious, or such as cannot be long con¬ cealed. Such transactions, therefore, may be taxed directly. The transference of stock, or moveable property, from the living to the living, by the lending of money, is frequently a secret transaction, and may always be made so. It cannot easily, there¬ fore, be taken directly. It has been taxed indirectly in two different ways: first, by requiring that the deed, containing the ob¬ ligation to repay should be written upon paper or parchment which had paid a certain stamp-duty, otherwise not to be valid ; se¬ condly, by requiring, under the like penalty of invalidity, that it should be recorded either in a public or secret register, and by imposing certain duties upon such registra¬ tion. Stamp-duties, and duties of registra¬ tion, have frequently been imposed likewise upon the deeds transferring property of all kinds from the dead to the living, and upon those transferring immoveable pro¬ perty from the living to the living, — trans¬ actions which might easily have been taxed directly. The vicesima hereditatum, the twentieth penny of inheritances, imposed by Augustus upon the ancient Romans, was a tax upon C c 2 888 TAXES ON TIIE CAPITAL VALUE Book V. the transference of property from the dead to the living. Dion Cassius 1 2 , the author who writes concerning it the least indistinctly, says that it was imposed upon all successions, legacies, and donations, in case of death, ex¬ cept upon those to the nearest relations, and to the poor. Of the same kind is the Dutch tax upon successions.- Collateral successions are taxed, according to the degree of relation, from five to thirty per cent, upon the whole value of the succession. Testamentary do¬ nations, or legacies to collaterals, are subject to the like duties. Those from husband to wife, or from wife to husband, to the fiftieth penny. The luctuosa hereditas, the mourn¬ ful succession of ascendants to descendants, to the twentieth penny only. Direct suc¬ cessions, or those of descendants to ascend¬ ants, pay no tax. The death of a father, to such of his children as live in the same house with him, is seldom attended with any increase, and frequently with a consider¬ able diminution of revenue; by the loss of his industry, of his office, or of some life- rent estate, of wliish he may have been in possession. That tax would be cruel and oppressive which aggravated their loss by taking from them any part of his succession. It may, however, sometimes be otherwise with those children who, in the language of the Roman law, are said to be emancipated; in that of the Scotch law, to be forisfa¬ miliated; that is, who have received their portion, have got families of their own, and are supported by funds separate and inde¬ pendent of those of their father. Whatever part of his succession might come to such children would be a real addition to their fortune, and might therefore, perhaps, with¬ out more inconveniency than what attends all duties of this kind, be liable to some tax. The casualties of the feudal law were taxes upon the transference of land, both from the dead to the living, and from the living to the living. In ancient times they con¬ stituted, in every part of Europe, one of the principal branches of the revenue of the crown. The heir of every immediate vassal of the crown paid a certain duty, generally a year’s rent, upon receiving the investiture of the estate. If the heir was a minor, the whole rents of the estate, during the continuance 1 Lib. lv. See also Burman de Vectigalibus Pop. Rom. cap. xi. and Bouchaudde V Impot duVingtieme sur les Successions. (Note by the author.) 2 See Memoires concernant les Droits, &c. tome i. p. 225. 3 Ibid, tome i. p. 154. 4 Ibid. p. 157. 5 At present (1838) the case is different. The stamp on a bond for any sum of money not exceeding 5u/. is 1/.: if the sum be 50/., and not exceeding 100/. tho stamp is 1/. 10s. : if 100/., and not exceeding 200/., of the minority, devolved to the superior without any other charge, besides the main¬ tenance of the minor, and the payment of the widow’s dower, when there happened to be a dowager upon the land. When the minor came to be of age, another tax, called relief, was still due to the superior, which generally amounted likewise to a year’s rent. A long minority, which in the pre¬ sent times so frequently disburdens a great estate of all its incumbrances, and restores the family to their ancient splendour, could in those times have no such effect. The waste, and not the disincumbrance of the estate, was the common effect of a long mi¬ nority. By the feudal law the vassal could not alienate without the consent of his superior, who generally extorted a fine or composition for granting it. This fine, which was at first arbitrary, came in many countries to be regulated at a certain portion of the price of the land. 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 a very considerable branch of the revenue of the sovereign. In the canton of Berne it is so high as a sixth part of the price of all noble fiefs ; and a tenth part of that of all ignoble ones . 3 In the canton of Lucerne the tax upon the sale of lands is not uni¬ versal, and takes place only in certain dis¬ tricts ; but if any person sells his land in order to remove out of the territory, he pays ten per cent, upon the whole price of the sale . 4 5 Taxes of the same kind upon the sale either of all lands, or of lands held by certain tenures, take place in many other countries, and make a more or less con¬ siderable branch of the revenue of the sovereign. Such transactions may be taxed indi¬ rectly, by means either of stamp-duties or of duties upon registration ; and those du¬ ties either may or may not be proportioned to the value of the subject which is trans¬ ferred. In Great Britain the stamp-duties are higher or lower, not so much according to the value of the property transferred (an eighteen-penny or half-crown stamp being sufficient upon a bond for the largest sum of money) as according to the nature of the deed . b The highest do not exceed six the stamp is 2/., &c. The stamp on a bond for 10,000/. is 15/., and that on a bond for 20,000/. is 25/. The stamps on conveyances or deeds van* also with the variations in the purchase money. \Vhere the value of the subject conveyed is above 300/. and under 500/., the stamp for the conveyance is 3/. ; if above 750/., and under 1000/., the stamp is 9/., and so on. The stamp-duty on other sorts of conveyances is fixed at 1/. 155., provided the deed do not exceed a certain length ; if it exceed the prescribed limits, an additional duty is charged. OF LAND, HOUSES, &c. X Chap. II. h pounds upon every sheet of paper, or skin of parchment; and these high duties fall chiefly upon grants from the crown, and upon certain law proceedings, without any regard to the value of the subject. There are in Great Britain no duties on the regis¬ tration of deeds or writings, except the fees of the officers who keep the register; and these are seldom more than a reasonable recompense for their labour. The crown derives no revenue from them. In Holland 1 , there are both stamp-duties and duties upon registration; which in some cases are, and in some are not, proportioned to the value of the property transferred. All testaments must be written upon stamped paper of which the price is proportioned to the property disposed of; so that there are stamps which cost from threepence, or three stivers a sheet, to three hundred florins, equal to about twenty-seven pounds ten shillings of our money. If the stamp is of an inferior price to what the testator ought to have made use of,, his succession is confis¬ cated. This is over and above all their other taxes on succession. Except bills of ex¬ change, and some other mercantile bills, all other deeds, bonds, and contracts, are subject to a stamp-duty. This duty, however, does not rise in proportion to the value of the subject. All sales of land and of houses, and all mortgages upon either, must be registered, and, upon registration, pay a duty to the state of two and a half per cent, upon the amount of the price or of the mortgage. This duty is extended to the sale of all ships and vessels of more than two tons burthen, whether decked or undecked. These, it seems, are considered as a sort of houses upon the water. The sale of moveables, when it is ordered by a court of justice, is subject to the like duty of two and a half per cent. In France there are both stamp-duties and duties upon registration. The former are considered as a branch of the aides or excise, and in the provinces where those duties take place, are levied by the excise officers. The latter are considered as a branch of the domain of the crown, and are levied by a different set of officers. Those modes of taxation, by stamp-duties and by duties upon registration, are of very modern invention. In the course of little more than a century, however, stamp-duties have, in Europe, become almost universal, and duties upon registration extremely com¬ mon. There is no art which one govern¬ ment sooner learns of another than that of 1 Memoires concernant les Droits, &c. tome i. p. 223, 224, 225. 2 Stamp-duties were first levied in Holland. Most of the accustomed methods of taxation having been resorted to, the republic, in order to provide funds for carrying on her contest with the Spanish monarchy, adopted the novel device of offering a considerable reward to any one who should devise draining money from the pockets of the people. 2 Taxes upon the transference of property from the dead to the living fall finally, as well as immediately, upon the person to whom the property is transferred. Taxes upon the sale of land fall altogether upon the seller. The seller is almost always un¬ der the necessity of selling, and must there¬ fore take such a price as he can get; the buyer is scarce ever under the necessity of buying, and will therefore only give such a price as he likes. He considers what the land will cost him in tax and price together: the more he is obliged to pay in the way of tax, the less he will be disposed to give in the way of price. Such taxes, therefore, fall almost always upon a necessitous person, and must therefore be frequently very cruel and oppressive. Taxes upon the sale of new- built houses, where the building is sold without the ground fall generally upon the buyer, because the builder must generally have his profit; otherwise he must give up the trade. If he advances the tax, therefore, the buyer must generally repay it to him. Taxes upon the sale of old houses, for the same reason as those upon the sale of land, fall generally upon the seller, whom, in most cases, either conveniency or necessity obliges to sell. The number of new-built houses that are annually brought to market, is more or less regulated by the demand. Unless the demand is such as to afford the builder his profit, after paying all expenses, he will build no more houses. The number of old houses which happen at any time to come to market, is regulated by accidents of -which the greater part have no relatiojn to the de¬ mand. Two or three great bankruptcies in a mercantile town will bring many houses to sale, which must be sold for what can be got for them. Taxes upon the sale of ground- rents fall altogether upon the seller, for the S2me reason as those upon the sale of land. Stamp-duties, and duties upon the registra¬ tion of bonds and contracts for borrowed money, fall altogether upon the borrower, and in fact are always paid by him. Duties of the same kind upon law proceedings fall upon the suitors. They reduce to both the capital value of the subject in dispute. The more it costs to acquire any property, the less must be the neat value of it when ac¬ quired. All taxes upon the transference of pro¬ perty of every kind, so far as they diminish the capital value of that property, tend to the best new tax ! Among many others, that of the vectigal charUe , or stamp-duty, was suggested ; and, having been approved of, it was introduced by an Ordinance in 1624, setting forth its necessity, and the advantages which it was supposed would result from its imposition. See Beckman’s History of Inventions x vol. i. p.379. Eng. trans. C c 3 390 Book V. TAXES ON THE CAPITAL VALUE, Ac. diminish the funds destined for the main¬ tenance of productive labour. They are all more or less unthrifty taxes that increase the revenue of the sovereign, which seldom main¬ tains any but unproductive labourers, at the expense of the capital of the people, which maintains none but productive . 1 Such taxes, even when they are propor¬ tioned to the value of the propertv trans¬ ferred, are still unequal; the frequency of transference not being always equal in pro¬ perty of equal value. When they are not proportioned to this value, which is the case with the greater part of the stamp-duties, and duties of registration, they are still more so. They are in no respect arbitrary, but are or may be in all cases perfectly clear and cer¬ tain. Though they sometimes fall upon the person who is not very able to pay, the time of payment is in most cases sufficiently con¬ venient for him. When the payment be¬ comes due, he must, in most cases, have the money to pay. They are levied at very little expense, and in general subject the contributors to no other inconveniency be¬ sides always the unavoidable one of paying the tax. In France the stamp-duties are not much complained of; those of registration, which they call the contrble, are. They give oc¬ casion, it is pretended, to much extortion in the officers of the farmers general who col¬ lect the tax, which is in a great measure arbitrary and uncertain. In the greater part of the libels which have been written against the present system of finances in France, the abuses of the contrble make a principal article. Uncertainty, however, does not seem to be necessarily inherent in the nature of such taxes. If the popular complaints are well founded, the abuse must arise not so much from the nature of the tax as from the want of precision and distinctness in the words of the edicts or laws which im¬ pose it. The registration of mortgages, and in general of all rights upon immoveable pro¬ perty, as it gives great security both to creditors and purchasers, is extremely ad¬ vantageous to the public. That of the greater part of deeds of other kinds is fre¬ quently inconvenient and even dangerous to individuals, without any advantage to the public. All registers which, it is acknow¬ ledged, ought to be kept secret, ought certainly never to exist. The credit of individuals ought certainly never to depend upon so very slender a security as the pro¬ bity and religion of the inferior officers of revenue. But where the fees of registration have been made a source cf revenue to the sovereign, register offices have commonly been multiplied without end, both for the deeds which ought to be registered, and for 1 See p. 146, note* those which ought not. In France there are several different sorts of secret registers. This abuse, though not perhaps a necessary, it must be acknowledged is a very natural, effect of such taxes. Such stamp-duties as those in England upon cards and dice, upon newspapers and periodical pamphlets, &e. are properly taxes upon consumption; the final payment falls upon the persons who use or consume such commodities. Such stamp-duties as those upon licenses to retail ale, wine, and spi¬ rituous liquors, though intended perhaps to fall upon the profits of the retailers, are likewise finally paid by the consumers of those liquors. Such taxes, though called by the same name, and levied by the same officers and in the same manner with the stamp-duties above mentioned upon the transference of property, are however of a quite different nature, and fall upon quite different funds. ARTICLE III. Taxes upon the Wages of Labour. The wages of the inferior classes of work¬ men, I have endeavoured to show in the first book, are everywhere necessarily regu¬ lated by two different circumstances: the demand for labour, and the ordinary or average price of provisions. The demand for labour, according as it happens to be either increasing, stationary, or declining, or to require an increasing, stationary, or declining population, regulates the subsist¬ ence of the labourer, and determines in what degree it shall be, either liberal, moderate, or scanty. The ordinary or average price of provisions determines the quantity of money which must be paid to the work nan in order to enable him, one year with another, to purchase this liberal, moderate, or scanty subsistence. While the demand for labour and the price of provisions, therefore, re¬ main 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 par¬ ticular place the demand for labour and the price of provisions were such as to render ten shillings a week the ordinary wages of labour; and that a tax of one-fifth, or four shillings in the pound, was imposed upon wages. If the demand for labour and the price of provisions remained the same, it would still be necessary that the labourer should in that place earn such a subsistence as could be bought only for ten shillings a week, or that after paying the tax he should have ten shillings a week free wages. But in order to leave him such free wages after paying such a tax, the price of labour must in that place soon rise, not to twelve shil¬ lings a week only, but to twelve and six- 391 Chap. II. TAXES ON THE WAGES OF LABOUR. :i ' Li I- pence; that is, in order to enable him to pay a tax of one-fifth, his wages must necessarily soon rise, not one-fifth part only, but one- fourth. Whatever was the proportion of the tax, the wages of labour must in all cases rise, not only in that proportion, but in a higher proportion. If the tax, for example, was one-tenth, the wages of laboui must necessarily soon rise, not one-tenth part only, but one-eighth. A direct tax upon the wages of labour, therefore, though the labourer might per¬ haps pay it out of his hand, could not pro¬ perly be said to be even advanced by him ; at least if the demand for labour and the average price of provisions remained the same after the tax as before it. In all such cases, not only the tax, but something more than the tax, would in reality be advanced by the person who immediately employed him. The final payment would, in different cases, fall upon different persons. The rise which such a tax might occasion in the wages of manufacturing labour would be advanced by the master manufacturer, who would both be entitled and obliged to charge it, with a profit, on the price of his goods. The final payment of this rise of wages, therefore, together with the addi¬ tional profit of the master manufacturer, would fall upon the consumer. The rise which such a tax might occasion in the wages of country labour would be advanced by the farmer, who, in order to maintain the same number of labourers as before, would be obliged to employ a greater capi¬ tal. In order to get back this greater capital, together with the ordinary profits of stock, it would be necessary that he should retain a larger portion, or, what comes to the same thing, the price of a larger portion, of the produce of the land, and consequently that he should pay less rent to the landlord. The final payment of this rise of wages, therefore, would in this case fall upon the landlord, together with the additional profit of the farmer who had advanced it. In all cases a direct tax upon the wages of labour, must, in the long run, occasion both a greater reduction in the rent of land, and a greater rise in the price of manufactured goods, than would have followed from the proper assessment of a sum equal to the produce of the tax, partly upon the rent of land, and partly upon consumable com¬ modities. 1 If direct taxes upon the wages of labour have not always occasioned a proportional rise in those wages, it is because they have generally occasioned a considerable fall in the demand for labour. The declension of 1 The statements in this article as to the effect of taxes on the wages of labour require much modifica¬ tion. It is only under certain circumstances that such taxes occasion a rise of wages ; and in these cases the rise falls wholly on the employers, who industry, the decrease of employment for the poor, the diminution of the annual pro¬ duce of the land and labour of the country, have generally been the effects of such taxes. In consequence of them, however, the price of labour must always be higher than it otherwise would have been in the actual state of the demand : and this enhancement of price, together with the profit of those who advance it, must always be finally paid by the landlords and consumers. A tax upon the wages of country labour does not raise the price of the rude produce of the land in proportion to the tax ; for the same reason that a tax upon the farmer’s profit does not raise that price in that pro¬ portion. Absurd and destructive as such taxes are, however, they take place in many countries. In France, that part of the taille which is charged upon the industry of workmen and day-labourers in country villages, is properly a tax of this kind. Their wages are com¬ puted according to the common rate of the district in which they reside; and that they may be as little liable as possible to any overcharge, their yearly gains are estimated at no more than two hundred working days in the year.^ The tax of each individual is varied from year to year according to differ¬ ent circumstances, of which the collector or the commissary, whom the intendant ap¬ points to assist him, are the judges. In Bohemia, in consequence of the alteration in the system of finances which was begun in 1748, a very heavy tax is imposed upon the industry of artificers. They are divided into four classes. The highest class pay a hundred florins a year; which, at two and twenty pence halfpenny a florin, amounts to 91 7s. 6d» The second class are taxed at seventy; the third at fifty; and the fourth, comprehending artificers in villages, and the lowest class of those in towns, at twenty-five florins. 3 The recompense of ingenious artists and of men of liberal professions, I have endea¬ voured to show in the first book, necessarily keeps a certain proportion to the emoluments of inferior trades. A tax upon this recom- pence, therefore, could have no other effect than to raise it somewhat higher than in pro¬ portion to the tax. If it did not rise in this manner, the ingenious arts and the liberal professions, being no longer upon a level with other trades, would be so much deserted that they would soon return to that level. The emoluments of offices are not, like those of trades and professions, regulated by the free competition of the market, and do not, therefore, always bear a just proportion are not indemnified for it by a rise of prices. See supplemental note on this subject. 2 Memoires concernant les Droits, &c. tome ii. p. 108. 3 Ibid, tome iii. p. 87. C c 4 392 CAPITATION TAXES. Book V. to what the nature of the employment re¬ quires. They are, perhaps, in most countries, higher than it requires; the persons who have the administration of government being generally disposed to reward both themselves and their immediate dependants rather more than enough. The emoluments of offices, therefore, can in most cases very well bear to be taxed. The persons, besides, who en¬ joy public offices, especially the more lucra¬ tive, 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 al¬ ways a very popular tax. In England, for example, when by the land-tax every sort of revenue was supposed to be assessed at four shillings in the pound, it was very popular to lay a real tax of five shillings and sixpence in the pound upon the salaries of offices which exceeded a hundred pounds a vear ; the pensions of the younger branches of the royal family, the pay of the officers of the army and navy, and a few others less ob¬ noxious to envy, excepted. There are in England no other direct taxes upon the wages of labour, ARTICLE IV. Taxes which it is intended should fall indiffer¬ ently upon every different Species of Revenue. The taxes which it is intended should fall indifferently upon every different species of revenue are capitation taxes, and taxes upon consumable commodities. These must be paid indifferently from whatever revenue the contributors may possess; from the rent of their land, from the profits of their stock, or from the wages of their labour. Capitation Taxes. Capitation taxes, if it is attempted to pro¬ portion them to the fortune or revenue of each contributor, become altogether arbi¬ trary. The state of a man’s fortune varies from day to day, and without an inquisition more intolerable than any tax, and renewed at least once every year, can only be guessed at. His assessment, therefore, must in most cases depend upon the good or bad humour of his assessors, and must therefore be alto¬ gether arbitrary and uncertain. Capitation taxes, if they are proportioned, not to the supposed fortune, but to the rank of each contributor, become altogether un- equal ; the degrees of fortune being fre¬ quently unequal in the same degree of rank. Such taxes, therefore, if it is attempted to render them equal, become altogether arbi¬ trary and uncertain ; and if it is attempted to render them certain and not arbitrary, become altogether unequal. Let the tax be light or heavy, uncertainty is always a great grievance. In a light tax, a considerable j degree of inequality may be supported; in a heavy one it is altogether intolerable. In the different poll-taxes which took place in England during the reign of Wil¬ liam III., the contributors were, the greater part of them, assessed according to the de¬ gree of their rank ; as dukes, marquesses, earls, viscounts, barons, esquires, gentlemen, the eldest and youngest sons of peers, &c. All shopkeepers and tradesmen worth more than three hundred pounds, that is, the bet¬ ter sort of them, were subject to the same assessment, how great soever might be the difference in their fortune. Their rank was more considered than their fortune. Seve¬ ral of those who in the first poll-tax were rated according to their supposed fortune, were afterwards rated according to their rank. Serjeants, attorneys, and proctors at law, who in the first poll-tax were assessed at three shillings in the pound of their sup¬ posed income, were afterwards assessed as gentlemen. In the assessment of a tax which was not very heavy, a considerable degree of inequality had been found less insupportable than any degree of uncer¬ tainty. In the capitation which has been levied in France without any interruption since the beginning of the present century, the high¬ est orders of people are rated according to their rank, by an invariable tariff; the lower orders of people, according to what is sup¬ posed to be their fortune, by an assessment which varies from year to year. The officers of the king’s court, the judges and other officers in the superior courts of justice, the officers of the troops, &c, are assessed in the first manner. The inferior ranks of people in the provinces are assessed in the second. In France, the great easily submit to a con¬ siderable 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 as¬ sessment of an intendant. The inferior ranks of people must, in that country, suffer patiently the usage which their superiors think proper to give them. In England, the different poll-taxes never produced the sum which had been expected from them, or which it was supposed they might have produced had they been exactly levied. In France the capitation always produces the sum expected from it. The mild government of England, when it as¬ sessed the different ranks of people to the poll-tax, contented itself with what that assessment happened to produce ; and re¬ quired no compensation for the loss which the state might sustain either by those who could not pay, or by those who would not pay (for there were many such), and who, by the indulgent execution of the law, were not forced to pay. The more severe govern¬ ment of France assesses upon each generality wHAP. II. CAPITATION TAXES. S93 \ certain sum, which the intendant must find is he can. If any province complains of ^eing assessed too high, it may, in the assess¬ ment of next year, obtain an abatement pro¬ portioned to the overcharge of the year before \ hut it must pay in the mean time. , The intendant, in order to be sure of finding the sum assessed upon his generality, was empowered to assess it in a larger sum, that the failure or inability of some of the con¬ tributors might be compensated by the over¬ charge of the rest; and till 1765, the fixation of this surplus assessment was left altogether to his discretion. In that year, indeed, the council assumed this power to itself. In the capitation of the provinces, it is observed by the perfectly well-informed author of the | Memoirs upon the Impositions in France, the proportion which falls upon the nobility and upon those whose privileges exempt them from the taiile, is the least consider- j a ble. The largest falls upon those subject to the taiile, who are assessed to the capita¬ tion at so much a pound of what they pay to that other tax. Capitation taxes, so far as they are levied upon the lower ranks of people, are direct taxes upon the wages of labour, and are at¬ tended with all the inconveniencies of such taxes. Capitation taxes are levied at little ex¬ pense ; and, where they are rigorously exacted, afford a very sure revenue to the state. It is upon this account that in coun¬ tries where the ease, comfort, and security of the inferior ranks of people are little at¬ tended to, capitation taxes are very common. It ls in general, however, but a small part of the public revenue, which, in a great empire, has ever been drawn from such taxes ; and the greatest sum which they have ever afforded, might always have been found in some other way much more convenient to the people. Taxes upon consumable Commodities. The impossibility of taxing the people in proportion to their revenue, by any capita¬ tion, seems to have given occasion to the invention of taxes upon consumable commo¬ dities. The state not knowing how to tax directly and proportionally the revenue of its subjects, endeavours to tax it indirectly by taxing their expense, which, it is sup¬ posed, will in most cases be nearly in pro¬ portion to their revenue. Their expense is taxed by taxing the consumable commodities upon which it is laid out. Consumable commodities are either neces¬ saries or luxuries. By necessaries I understand not only the commodities which are indispensably neccs- ij sary for the support of lite, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without. A linen shirt, for ex¬ ample, is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably, though they had no linen ; but in the present times, through the greater part of Europe, a creditable day- labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that dis¬ graceful degree of poverty, which, it is pre¬ sumed, nobody can well fall into without extreme bad conduct. Custom, in the same manner, has rendered leather shoes a neces¬ sary of life in England. The poorest credit¬ able person of either sex would be ashamed to appear in public without them. In Scotland, custom has rendered them a neces¬ sary of life to the lowest order of men, but not to the same order of women, who may, without any discredit, walk about barefooted. In France, they are necessaries neither to men nor to women ; the lowest rank of both sexes appearing there publicly, without any discredit, sometimes in wooden shoes, and sometimes barefooted. Under necessaries, therefore, I comprehend not only those things which nature, but those things which the established rules of decency, have ren¬ dered necessary to the lowest rank of people. All other things I call luxuries ; without meaning, by this appellation, to throw the smallest degree of reproach upon the tem¬ perate use of them. Beer and ale, for ex¬ ample, in Great Britain, and wine, even in the wine countries, I call luxuries. A man of any rank may, without any reproach, ab¬ stain totally from tasting such liquors. Nature does not render them necessary for the support of life ; and custom nowhere renders it indecent to live without them. As the wages of labour are everywhere regulated partly by the demand for it, and partly by the average price of the necessary articles of subsistence, whatever raises this average price must necessarily raise those wages, so that the labourer may still be able to purchase that quantity of those necessary articles which the state of the demand for labour, whether increasing, stationary, or de¬ clining, requires that he should have. 1 A tax upon those articles necessarily raises their price somewhat higher than the amount of the tax, because the dealer, who advances the tax, must generally get it back with a profit. Such a tax must, therefore, occasion a rise in the wages of labour proportionable to this rise of price. It is thus that a tax upon the necessaries of life operates exactly in the same manner as a direct tax upon the wages of labour. The labourer, though he may pay it out of his hand, cannot, for any considerable time at least, be properly said even to advance it. It must always in the long run be advanced » See book i. chap. 8. 394 TAXES ON COMMODITIES. to him by his immediate employer in the advanced rate of his wages. His employer, if he is a manufacturer, will charge upon the price of his goods this rise of wages, toge¬ ther with a profit; so that the final payment of the tax, together with this overcharge, will fall upon the consumer. If his em¬ ployer is a farmer, the final payment, toge¬ ther with a like overcharge, will fall upon the rent of the landlord . 1 It is otherwise with taxes upon what I call luxuries, even upon those of the poor. The rise in the price of the taxed commodi¬ ties will not necessarily occasion any rise in the wages of labour. A tax upon tobacco, for example, though a luxury of the poor, as well as of the rich, will not raise wages. _ o Though it is taxed in England at three times, and in France at fifteen times its ori¬ ginal price, those high duties seem to have no effect upon the wages of labour. The same thing may be said of the taxes upon tea and sugar, which in England and Hol¬ land have become luxuries of the lowest ranks of people ; and of those upon choco¬ late, which in Spain is said to have become so. The different taxes which, in Great Britain, have in the course of the present cen¬ tury been imposed upon spirituous liquors, are not supposed to have had any effect upon the wages of labour. The rise in the price of porter, occasioned by an additional tax of three shillings upon the barrel of strong beer, has not raised the wages of common labour in London. These were about eighteen pence and twenty pence a day before the tax, and they are not more now. The high price of such commodities does not necessarily diminish the ability of the inferior ranks of people to bring up families. Upon the sober and industrious poor, taxes upon such commodities act as sumptuary laws, and dispose them either to moderate, or to refrain altogether from the use of su¬ perfluities which they can no longer easily afford. Their ability to bring up families, in consequence of this forced frugality, in¬ stead of being diminished, is frequently, perhaps, increased by the tax. It is the sober and industrious poor who generally bring up the most numerous families, and who principally supply the demand for use¬ ful labour. All the poor indeed are not sober and industrious, and the dissolute and disorderly might continue to indulge them¬ selves in the use of such commodities after this rise of price, in the same manner as be¬ fore, without regarding the distress which this indulgence might bring upon their families. Such disorderly persons, however, seldom rear up numerous families; their children generally perishing from neglect, 1 See anti, p. 391. note. 2 For a refutation of this statement, see supple¬ mental note on the Effect of Variations in the Book V. mismanagement, and the scantiness or un¬ wholesomeness of their food. If by the strength of their constitution they survive the hardships to which the bad conduct of their parents exposes them, yet the example of that bad conduct commonly corrupts their morals, so that instead of being useful to society by their industry, they become public nuisances by their vices and disorders. Though the advanced price of the luxuries of the poor, therefore, might increase some¬ what the distress of such disorderly families, and thereby diminish somewhat their ability to bring up their children, it would not pro¬ bably diminish much the useful population of the country. Any rise in the average price of neces¬ saries, unless it be compensated by a propor¬ tionable rise in the wages of labour, must necessarily diminish more or less the ability of the poor to bring up numerous families, and consequently to supply the demand for useful labour, whatever may be the state of that demand, whether increasing, stationary, or declining, or such as requires an increas¬ ing, stationary, or declining population. Taxes upon luxuries have no tendency to raise the price of any other commodities except that of the commodities taxed. Taxes upon necessaries, by raising the wages of labour, necessarily tend to raise the price of all manufactures, and consequently to dimi¬ nish the extent of their sale and consump¬ tion . 2 Taxes upon luxuries are finally paid by the consumers of the commodities taxed, without any retribution. They fall indiffer¬ ently upon every species of revenue, the wages of labour, the profits of stock, and the rent of land. Taxes upon necessaries, so far as they affect the labouring poor, are finally paid, partly by landlords in the diminished rent of their lands, and partly by rich con¬ sumers, whether landlords or others, in the advanced price of manufactured goods ; and always with a considerable overcharge. The advanced price of such manufactures as are real necessaries of life, and are destined for the consumption of the poor—of coarse wool¬ lens, for example — must be compensated to the poor by a farther advancement of their wages. The middling and superior ranks of people, if they understood their own in¬ terest, ought always to oppose all taxes upon the necessaries of life, as well as all direct taxes upon the wages of labour. The final payment of both the one and the other falls altogether upon themselves, and always with a considerable overcharge. They fall heaviest upon the landlords, who always pay in a dou¬ ble capacity: in that of landlords, by the reduction of their rent; and in that of rich consumers, by the increase of their expense. Rates of Profit and Wages on the Value of Com¬ modities. Chap. II. TAXES ON COMMODITIES. 395 The observation of Sir Matthew Decker, that certain taxes are, in the price of certain goods, sometimes repeated and accumulated four or five times, is perfectly just with re- card to taxes upon the necessaries ot life. In the price of leather, for example, you must pay, not only for the tax upon the lea¬ ther of your own shoes, but for a part ot that upon those of the shoemaker and the tanner. You must pay too for the tax upon the salt, upon the soap, and upon the candles which those workmen consume while employed in your service ; and for the tax upon the lea¬ ther which the saltmaker, the soapmaker, and the candlemaker consume while em¬ ployed in their service. In Great Britain, the principal taxes upon the necessaries of life are those upon the four commodities just now mentioned, salt, lea¬ ther, soap, and candles. Salt is a very ancient and a very universal subject of taxation. It was taxed among the Romans, and it is so at present in, I believe, every part of Europe. The quantity annu¬ ally consumed by any individual is so small, and may be purchased so gradually', that no¬ body, it seems to have been thought, coulu feel very sensibly even a pretty heavy tax upon it. It is in England taxed at three shillings and fourpence a bushel; about three times the original price of the com¬ modity. 1 In some other countries the tax is still higher. Leather is a real necessary of life. The use of linen renders soap such. In countries where the winter nights are long, candles are a necessary instrument of trade. Leather and soap are in Great Bri¬ tain taxed at three halfpence a pound; candles at a penny 2 , —taxes which, upon the original price of leather, may amount to about eight or ten per cent.: upon that of soap to about twenty or five and twenty per cent, and upon that of candles to about fourteen or fifteen per cent., taxes which, though lighter than that upon salt, are still very heavy. As all those four commodities are real necessaries of life, such heavy taxes upon them must increase somewhat the ex¬ pense 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 comtortable sub¬ sistence of many different sorts of workmen who work within doors ; and coals aie the cheapest ot all fuel. I he price of fuel has so important an influence upon that of la¬ bour, that all over Great Britain manufac- • tures have confined themselves principally to the coal countries ; other parts ot the country 7 , on account of the high price of this necessary article, not being able to work so cheap. In some manufactures, besides, coal is a necessary instrument ot trade ; as in those of glass, iron, and all other metals. If a bounty could in any case be reasonable, it might perhaps be so upon the transport¬ ation 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 7 , has imposed a tax of three sniffings and three-pence a ton upon coal carried coast ways, which upon most soits of coal is more than sixty per cent, of the original price at the coal-pit. Coals carried either by land or by inland navigation pay no duty. Where they are naturally cheap, they are consumed duty T -free: where they are naturally dear, they are loaded with a heavy duty. 3 . c Such taxes, though they raise the price oi subsistence, and consequently the wages of labour, yet they afford a considerable revenue to government, which it might not be easy to find in any other way. There, may, therefore, be good reasons for continuing them. The bounty upon the exportation of corn, so far as it tends in the actual state of tillage to raise the price of that necessary article, produces all the like bad effects; and instead of affording any revenue, frequently occasions a very great expense to go% em¬ inent. The % high duties upon the import¬ ation of foreign corn, which in years cf mo¬ derate plenty amount to a prohibition, and the absolute prohibition ot the importation either of live cattle or of salt provisions,^ which takes place in the ordinary state of the law, and which, on account of the scar¬ city 7 . is at present suspended for a limited time with regard to Ireland and the British plantations, have all had the bad effects of taxes upon the necessaries of life, and pro¬ duce no revenue to government. Nothing seems necessary 7 for the repeal of such regu¬ lations, but to' convince the public of the futility of that system in consequence of which they have been established. Taxes upon the necessaries of life are much higher in many other countries than in Great Britain. Duties upon flour and meal when ground at the mill, and upon biead when baked at the oven, take place in many countries. In Holland the money price of the bread consumed in towns is supposed to be doubled by means of such taxes. In lieu of a part of them, the people who live in the country pay every year so much a head, according to the sort of bread they are 1 In England the salt-tax, previously to its repeal, in lw23, was as high as fifteen shillings a bushel. 2 The duty on candles was repealed in 1831 • /- i _l J ./Non 11/7 nor lib the * me uuiy un — ... ---- . — - existing (1838) duty on hard soap is per lib. ana on soft soap 1 d. per do. 3 The duties on coal for home consumption, whether carried by sea or land, were repealed in 1831. S96 TAXES ON COMMODITIES. Book V supposed to consume. Those who consume wheaten bread pay 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 manufactures of Holland, 1 2 Similar taxes, though not quite so heavy, take place in the Milanese, in the states of Genoa, in the dutchy of Modena, in the dutchies of Parma, Placentia, and Guastalla, and in the ecclesiastical state. A French author 2 0 f some note has proposed to reform the finances of his country, by substituting in the room °f the greater part of other taxes this most ruinous of all taxes. Fhere is nothing so absurd, says Cicero, which has not sometimes been asserted by some philosophers. Taxes upon butchers’ meat are still more common than those upon bread. It may indeed be doubtful whether butchers’ meat is an} where a necessary of life. Grain and other vegetables, with the help of milk, cheese, and butter, or oil, where butter is not to be had, it is known from experience, can, without any butchers’ meat, afford the most plentiful, the most wholesome, the most nourishing, and the most invigorating diet. Decency nowhere 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. Consumable commodities whether neces¬ saries or luxuries, may be taxed in two differ¬ ent ways : the consumer may either pay an annual sum on account of his using or con¬ suming goods of a certain kind; or the goods may be taxed while they remain in the hands of the dealer, and before they are delivered to the consumer. The consumable goods which last a considerable time before they are consumed altogether, are most properly taxed in the one way; those of which the consumption is either immediate or more speedy, in the other. The coach- tax and plate-tax are examples of the former method of imposing; the greater part of the other duties of excise and customs, of the latter. A coach may, with good management, last ten or twelve years. It might be taxed, once for all, before it comes out of the hands of the coachmaker. But it is certainly more convenient for the buyer to pay four pounds a year for the privilege of keeping a coach 1 , than to pay all at once forty or forty-eight pounds additional price to the coachmaker; or a sum equivalent to what the tax is likely to cost him during the time he uses the same coach. A service of plate, in the same manner, may last more than a century. It is certainly easier for the consumer to pay 1 Memoires concernant les Droits, &c. p. 210, 211. 2 L,e Reformateur. The present (1838) duty on a single four- five shillings a year for every hundred ounces of plate, near one per cent, of the value than to redeem this long annuity at five and twenty or thirty years’purchase, which would enhance the price at least five and twenty or thirty per cent. The different taxes which affect houses are certainly more conveniently paid by moderate annual payments than by a heavy tax of equal value upon the first building or sale of the house. It was the well-known proposal of Sir Matthew Decker that all commodities, even those of which the consumption is either im¬ mediate or very speedy, should be taxed in this manner; the dealer advancing nothing, but the consumer paying a certain annual sum for the license to consume certain goods. The object of his scheme was to promote all the different branches of foreign trade, par- the carrying trade, by taking’away all duties upon importation and exportation, and thereby enabling the merchant to employ his whole capital and credit in the purchase of goods and the freight of ships, no part of either being diverted towards the advancing of taxes. The project, however, of taxing, in this manner, goods of immediate or speedy consumption seems liable to the four foil owing very important objections: First, the tax would be more unequal, or not so well proportioned to the expense and con¬ sumption of the different contributors, as in the way in which it is commonly imposed. .The taxes upon ale, wine, and spirituous liquors, which are advanced by the dealers, are finally paid by the different consumers’ exactly in proportion to their respective con¬ sumption. But if the tax were to be paid by purchasing a license to drink those liquors, the sober would, in proportion to his con- sumption, be taxed much more heavily than the drunken consumer. A family 'which exercised great hospitality would be taxed much more lightly than one who entertained fewer guests. Secondly, this mode of tax¬ ation, by paying for an annual, half-yearly, or quarterly license to consume certain goods, would diminish very much one of the prin¬ cipal conveniences of taxes upon goods of speedy consumption, the piece-meal pay¬ ment. In the price of threepence halfpennv, which is at present paid for a pot of porter,’ the different taxes upon malt, hops, and beer, together with the extraordinary profit which the brewer charges for having advanced them, may perhaps amount to about three half¬ pence. If a workman can conveniently spare those three halfpence, he buys a pot of por- tei ; if lie 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 piecemeal, as he can afford to pay wheeled carriage is 61. a year, on two 13/., oil three 21/. &c. *> mt. Chav II. TAXES ON COMMODITIES. S97 it, and when he can afford to pay it, and every act of payment is perfectly voluntary, and what he can avoid if he chooses to do so. Thirdly, such taxes would operate less as sumptuary laws. When the license was once purchased, whether the purchaser drunk much or drunk little, his tax would be the same. Fourtly, if a workman were to pay all at once, by yearly, half-yearly, or quarterly payments, a tax equal to what he at present pays, with little or no inconveniency, upon all the differ¬ ent pots and pints of porter which he drinks in any such period of time, the sum might fre¬ quently distress him very much. This mode of taxation, therefore, it seems evident, could never, without the most grievous oppression, produce a revenue nearly equal to what is derived from the present mode without any oppression. In several countries, however, commodities of an immediate or very speedy consumption are taxed in this manner. In Holland, people pay so much a head for a license to drink tea. I have already men- tioned a tax upon bread, which so far as it is consumed in farm-houses and country villages, is there levied in the same manner. The duties of excise are imposed chiefly upon goods of home produce destined for home consumption ; they are imposed only upon a few sorts of goods of the most general use. There can never be any doubt either concerning the goods which are subject to those duties, or concerning the particular duty which each species of goods is subject to. They fall almost altogether upon what I call luxuries, excepting always the four du¬ ties above mentioned, upon salt, soap, leather, candles, and perhaps that upon green glass. The duties of customs are much more an¬ cient than those of excise. They seem to have been called customs, as denoting cus¬ tomary payments which had been in use from time immemorial; they appear to have been originally considered as taxes upon the pro¬ fits of merchants. During the barbarous times of feudal anarchy, merchants, like all the other inhabitants of burghs, were con¬ sidered as little better than emancipated bondmen, whose persons were despised, and whose gains were envied. The great no¬ bility, who had consented that the king should tallage the profits of their own tenants, were not unwilling that he should tallage likewise those of an order of men whom it was much less their interest to protect. In those ignorant times, it was not understood that the profits of merchants are a 'subject not taxable directly ; or that the final pay¬ ment of all such taxes must fall, with a con¬ siderable overcharge, upon the consumers. The gains of alien merchants were looked upon more unfavourably than those of En¬ glish merchants; it was natural, therefore, that those of the former should be taxed more heavily than those of the latter. This distinction between the duties upon aliens and those upon English merchants, which was begun from ignorance, has been con- tinued from the spirit of monopoly, or in order to give our own merchants an advantage both in the home and in the foreign market. With this distinction, the ancient duties of customs were imposed equally upon all sorts of goods, necessaries as well as luxuries, goods exported as well as goods imported. Why should the dealers in one sort ot goods, it seems to have been thought, be more favoured than those in another ? or why should the merchant exporter be more fa¬ voured than the merchant importer ? The ancient customs were divided into three branches: the first, and perhaps the most ancient of all those duties, w r as that upon wool and leather. It seems to have been chiefly or altogether an exportation duty. When the woollen manufacture came to be established in England, lest the king should lose any part of his customs 1 upon wool by the exportation of woollen cloths, a like duty was imposed upon them. The other two branches were, first, a duty upon wine, which being imposed at so much a ton, was called a tonnage ; and, secondly, a duty upon all other goods, which, being imposed at so much a pound of their supposed value, was called a poundage. In the forty-seventh year of Edward III., a duty of sixpence in the pound was imposed upon all goods exported and imported, except wools, wool- fells, leather, and wines, which were sub¬ ject to particular duties. In the fourteenth of Richard II. this duty was raised to one shilling in the pound; but three years afterwards, it was again reduced to six¬ pence. It was raised to eightpence in the second year of Henry I\ . ; and in the fourth of the same prince, to one shilling. From this time to the ninth year of W illiam III. this duty continued at one shilling in the pound. The duties of tonnage and pound¬ age were generally granted to the king by one and the same act of parliament, and were called the subsidy of tonnage and poundage. The subsidy of poundage having continued for so long a time at one shilling in the pound, or at five per cent., a subsidy came, in the language of the customs, to denote a general duty of this kind of five per cent. This subsidy, which is now called the old subsidy, still continues to be levied according to the book of rates established in the twelfth of Charles II. The method of ascertaining, by a book of rates, the value of goods sub¬ ject to this duty is said to be older than the time of James I. The new subsidy, im¬ posed by the ninth and tenth of William III., was an additional five per cent, upon the greater part of goods. I he one-third and the two-third subsidy made up between them another five per cent., of which they were 393 TAXES ON COMMODITIES. Book V, proportionable parts. The subsidy of 1747 made a fourth five per cent, upon the greater part of goods ; and that of 1759, a fifth upon some particular sorts of goods. Besides those five subsidies, a great variety of other duties have occasionally been imposed upon parti¬ cular sorts of goods, in order sometimes to relieve the exigencies of the state, and some¬ 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 a few exceptions, been laid altogether upon im¬ portation. The greater part of the ancient duties which had been imposed upon the ex¬ portation of the goods of home produce and manufacture, have either been lightened or taken away altogether. In most cases they have been taken away. Bounties have even been given upon the exportation of some of them. Drawbacks too, sometimes of the whole, and, in most cases, of a part of the duties which are paid upon the importation of foreign goods, have been granted upon their exportation. Only half the duties im¬ posed by the old subsidy upon importation are drawn back upon exportation : but the whole of those imposed by the latter subsidies and other imposts are, upon the greater part of goods, drawn back in 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 some manufactures. These, our merchants and manufacturers are willing should come as cheap as possible to them¬ selves, and as dear as possible to their rivals and competitors in other countries. Foreign materials are, upon this account, sometimes allowed to be imported duty-free ; Spanish wool, for example, flax, and raw linen yarn. The exportation of the materials of home produce, and of those which are the particu¬ lar 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 Senegal, has been subjected to higher duties ; Great Britain, by the conquest of Canada and Se- negal, having got almost the monopoly of those commodities. 1 I hat the mercantile system has not been very favourable to the revenue of the great body of the people, to the annual produce of the^ land and labour of the country, I have endeavoured to show in the fourth book of this Inquiry. It seems not to have been Soe ante, p. 297, note. more favourable to ihe revenue of the sove- reign, so far at least as that revenue depends upon the duties of customs. In consequence of that system, the im¬ portation of several sorts of goods has been prohibited altogether. This prohibition has in some cases entirely prevented, and in others has very much diminished the importation of those commodities, by reducing the im¬ porters, to the necessity of smuggling. It has entirely prevented the importation of foreign woollens; and it has very much di¬ minished that of foreign silks and velvets. In both cases it has entirely annihilated the revenue of customs which might have been levied upon such importation. Ihe high duties which have been imposed upon the importation of many different sorts of foreign goods, in order to discourage their consumption in Great Britain, have in manv cases served only to encourage smuggling; and in all cases have reduced the revenue of the customs below what more moderate duties would have afforded. The saying of Dr. Swift, that in the arithmetic of the customs two and two, instead of making four, make sometimes only one, holds perfectly true with regard to such heavy duties, which never could have been imposed, had not the mer¬ cantile system taught us, in many cases, to employ taxation as an instrument, not of re¬ venue, but of monopoly. The bounties which are sometimes given upon the exportation of home produce and manufactures, and the drawbacks which are paid upon the re-exportation of the greater part of foreign goods, have given occasion to many frauds, and to a species of smuggling more destructive of the public revenue than any other. In order to obtain the bounty or drawback, the goods, it is well known, are sometimes shipped and sent to sea ; but soon afterwards clandestinely relanded in some other part of the country. The defal¬ cation of the revenue of customs occasioned by bounties and drawbacks, of which a great part are obtained fraudulently, is very great. The gross produce of the customs, in the year which ended on the 5th of January, 1755, amounted to 5,068,000/. The bounties which were paid out of this revenue, though in that year there was no bounty upon corn amounted to 167,800/. The drawbacks which were paid upon debentures and cer¬ tificates, to 2,156,800/. Bounties and draw- backs together amounted to 2,324,600/. In consequence of these deductions the revenue of the customs amounted only to 2,743,400/. : from which, deducting 287,900/. for the ex¬ pense of management in salaries and other incidents, the neat revenue of the customs for that year comes out to be 2,455,500/. Ihe expense of management amounts in this manner to between five and six per cent, upon the gross revenue of the customs, and TAXES ON COMMODITIES. 399 Chaf. II. to something more than ten per cent, upon what remains of that revenue, after de¬ ducting what is paid away in bounties and drawbacks. Heavy duties being imposed upon almost all goods imported, our merchant importers smuggle as much, and make entry of as ^little as they can. Our merchant exporters, on the contrary, make entry of more than they export; sometimes out of vanity, and ||to pass for great dealers in goods which pay •i> no duty ; and sometimes to gain a bounty ' or a drawback. Our exports, in conse¬ quence of these different frauds, appear upon the custom-house books greatly to overba¬ lance our imports; to the unspeakable f comfort of those politicians who measure the national prosperity by what they call the balance of trade. All goods imported, unless particularly ; exempted, and such exemptions are not very numerous, are liable to some duties of cus¬ toms. If any goods are imported not mentioned in the book of rates, they are taxed at 4s. 9^eZ. for every twenty shillings value, according to the oath of the importer, that is, nearly at live subsidies, or five poundage duties. The book of rates is extremely comprehensive, and enumerates a great variety of articles, many of them little used, and therefore not well known. It is upon this account frequently uncertain under what article a particular sort of goods ought to be classed, and consequently what duty they ought to pay. Mistakes with regard to this sometimes ruin the custom¬ house officer, and frequently occasion much trouble, expense, and vexation to the im- porter. In point of perspicuity, preci- siony and distinctness, therefore, the duties of customs are much inferior to those of excise. In order that the greater part of the mem¬ bers of any society should contribute to the public revenue in proportion to their re- spective expense, it does not seem necessary that every single article of that expense - should be taxed. The revenue which is - levied by the duties of excise is supposed to fall as equally upon the contributors as that which is levied by the duties of cus¬ toms ; and the duties of excise are imposed upon a few articles only of the most ge¬ neral use and consumption. It has been the opinion of many people, that, by pro¬ per management, the duties of customs might likewise, without any loss to the public revenue, and with great advantage to foreign trade, be confined to a few articles only. The foreign articles of the most general use and consumption in Great Britain seem at present to consist chiefly in foreign wines and brandies ; in some of the productions of America and the West Indies, sugar, rum, tobacco, cocoa-nuts, &c. ; and in some of those of the East Indies, tea, coffee, china- ware, spiceries, of all kinds, several sorts of piec.e-goods, &c. These different articles afford, perhaps, at present, the greater part of the revenue which is drawn from the duties of customs. The taxes which at present subsist upon foreign manufactures, if you except those upon the few 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 pro¬ hibitions, and by subjecting all foreign manufactures to such moderate taxes as it was found from experience afforded upon each article the greatest revenue to the public, our own workmen might still have a considerable advantage in the home mar¬ ket ; and many articles, some of which at present afford no revenue to government, and others a very inconsiderable one, might afford a very great one. High taxes, sometimes by diminishing the consumption of the taxed commodities, and sometimes by encouraging smuggling, fre¬ quently afford a smaller revenue to govern¬ ment than what might be drawn from more moderate taxes. When the diminution of revenue is the effect of the diminution of consumption, there can be but one remedy, and that is the lowering of the tax. When the diminution of the revenue is the effect of the encouragement given to smuggling, it may perhaps be remedied in two ways: either by diminishing the tempt¬ ation to smuggle, or by increasing the difficulty of smuggling. The temptation to smuggle can be diminished only by the lowering of the tax ; and the difficulty of smuggling can be increased only by esta¬ blishing that system of administration which is most proper for preventing it. The excise laws, it appears, I believe, from experience, obstruct and embarrass the operations of the smuggler much more effectually than those of the customs. By introducing into the customs a system of administration as similar to that of the ex¬ cise as the nature of the different duties will admit, the difficulty of smuggling might be very much increased. This alteration, it has been supposed by many people, might very easily be brought about. The importer of commodities liable to any duties of customs, it has been said, might, at his option, be allowed either to carry them to his own private warehouse, or to lodge them in a warehouse provided either at his own expense or that of the public, but un¬ der the key of the custom-house officer, and never to be opened but in his presence. If the merchant carried them to his own private 400 TAXES ON COMMODITIES. Book V. warehouse, the duties to be immediately paid, and never afterwards to be drawn back; and that warehouse to be at all times sub¬ ject to the visit and examination of the custom-house officer, in order to ascertain how far the quantity contained in it cor¬ responded with that for which the duty had been paid. If he carried them to the public warehouse, no duty to be paid till they wpre taken out for home consumption. If taken out for exportation, to be duty-free ; proper security being always given that they should be so exported. The dealers in those par¬ ticular commodities, either by wholesale or retail, to be at all times subject to the visit and examination of the custom-house officer; and to be obliged to justify by proper certi¬ ficates the payment of the duty upon the whole quantity contained in their shops or warehouses. What are called the excise- duties upon rum imported are at present levied in this manner; and the same system of administration might perhaps be extended to all duties upon goods imported; pro¬ vided always that those duties were, like the duties of excise, confined to a few sorts of goods of the most general use and consump¬ tion. If they were extended to almost all sorts of goods, as at present, public ware¬ houses of sufficient extent could not easily be provided, and goods of a very delicate nature, or of which the preservation required much care and attention, could not safely be trusted by the merchant in any warehouse but his own. If, by such a system of administration, smuggling to any considerable extent could be prevented, even under pretty high duties; and if every duty was occasionally either heightened or lowered according as it was most likely, either the one way or the other, to afford the greatest revenue to the state, taxation being always employed as an in¬ strument of revenue, and never of monopoly, it seems not improbable that a revenue, at least equal to the present neat revenue of the customs, might be drawn from duties upon the importation of only a few sorts of goods of the most general use and consumption; and that the duties of customs might thus be brought to the same degree of simplicity, certainty and precision, as those of excise. What the revenue at present loses by draw¬ backs upon the re-exportation of foreign goods, which are afterwards relanded and consumed at home, "would, under this system, be saved altogether. If to this saving, which would alone be very considerable, were added the abolition of all bounties upon the exportation of home produce — in all cases in which those bounties were not in reality drawbacks of some duties of excise which had before been advanced — it cannot well be doubted but that the neat revenue of cus¬ toms might, after an alteration of this kind, be fully equal to what it had ever been before. If, by such a change of system, the public revenue suffered no loss, the trade and manu¬ factures of the country would certainly gain a very considerable advantage. The trade in the commodities not taxed, by far the greatest number, would be perfectly free, and might be carried on to and from all parts of the world with every possible ad¬ vantage. Among those commodities would be comprehended all the necessaries of life, and all the materials of manufacture. So far as the free importation of the necessaries of life reduced their average money price in the home market, it would reduce the money price of labour, but without reducing in any respect its real recompense. The value of money is in proportion to the quantity Of the necessaries of life which it will purchase; that of the necessaries of life is altogether independent of the quantity of money which can be had for them. The reduction in the money price of labour would necessarily be attended with a proportionable one in that of all home manufactures, which would thereby gain some advantage in all foreign markets. The price of some manufactures would be reduced in a still greater propor¬ tion by the free importation of the raw materials. If raw silk could be imported from China and Indostan duty-free, the silk manufacturers in England could greatly un¬ dersell those of both France and Italy. There would be no occasion to prohibit the importation of foreign silks and velvets; the cheapness of their goods would secure to our own workmen not only the possession of the home but a very great command of the foreign market : even the trade in the com¬ modities taxed would be carried on with much more advantage than at present. If those commodities were delivered out of the public warehouse for foreign exportation, being in this case exempted from all taxes, the trade in them would be perfectly free. The carrying trade in all sorts of goods would, under this system, enjoy every possi¬ ble advantage. If those commodities were delivered out for home consumption, the importer not being obliged to advance the tax till he had an opportunity of selling his goods, either to some dealer or to some con¬ sumer, he could always afford to sell them cheaper than if he had been obliged to ad¬ vance it at the moment of importation. Under the same taxes, the foreign trade of consumption, even in the taxed commo¬ dities, might in this manner be carried on with much more advantage than it can at present. It was the object of the famous excise scheme of Sir Robert Walpole to establish, with regard to wine and tobacco, a system not very unlike that which is here proposed. ?HAr. II. TAXES ON COMMODITIES. 401 3ut though the bill which was then brought nto parliament comprehended those two ommodities only, it was generally sup- •osed to be meant as an introduction to a ■lore extensive scheme of the same kind, ^action, combined with the interest of muggling merchants, raised so violent, hough so unjust a clamour against that bill, hat the minister thought proper to drop it; nd from a dread of exciting a clamour of he same kind, none of his successors have lared to resume the project. 1 The duties upon foreign luxuries im- >orted for home consumption, though they ometimes fall upon the poor, fall principally ipon people of middling or more than mid- lling fortune. Such are, for example, the luties upon foreign wines, upon coffee, cho- olate, tea, sugar, &c. The duties upon the cheaper luxuries of iome produce, destined for home consump- ion, fall pretty equally upon people of all anks in proportion to their respective ex¬ cuse. The poor pay the duties upon malt, lops, beer, and ale, upon their own con- umption : the rich, upon both their own ;onsumption and that of their servants. The whole consumption of the inferior anks of people, or of those below the niddling rank, it must be observed, is in ;very country much greater, not only in juantity but in value, than that of the niddling and of those above the middling ank. The whole expense of the inferior is nuch greater than that of the superior ranks. In the first place, almost the whole capital >f every country is annually distributed imong the inferior ranks of people, as the vages of productive labour. Secondly, a (reat part of the revenue arising from both he rent of land and the profits of stock is mnually distributed among the same rank, n the wages and maintenance of menial ser- ants, and other unproductive labourers. Thirdly, some part of the profits of stock >elongs to the same rank, as a revenue aris- ng from the employment of their small apitals. The amount of the profits an¬ nually made by small shopkeepers, trades- uen, and retailers of all kinds, is everywhere ery considerable, and makes a very con- iderable portion of the annual produce, fourthly and lastly, some part even of the ent of land belongs to the same rank ; a onsiderable part to those who are somewhat >elow the middling rank, and a small part ven to the lowest rank ; common labourers ometimes possessing in property an acre or wo of land. Though the expense of those nferior ranks of people, therefore, taking 1 The adoption of the warehousing and bonding ystem has fully realised all the advantages pointed ut by Dr. Smith, and is one of the greatest improve¬ ments ever effected in the commercial and financial oliev of the country. 2 The duty on beer, which produced about them individually, is very small, yet the whole mass of it, taking them collectively, amounts always to by much the largest por¬ tion of the whole expense of the society; what remains of the annual produce of the land and labour of the country, for the con¬ sumption of the superior ranks being always much less, not only in quantity but in value. The taxes upon expense, therefore, which fall chiefly upon that of the superior ranks of people, upon the smaller portion of the annual produce, are likely to be much less productive than either those which fall in¬ differently upon the expense of all ranks, or even those which fall chiefly upon that of the inferior ranks, than either those which fall indifferently upon the whole annual produce, or those which fall chiefly upon the larger portion of it. The excise upon the materials and manufacture of home-made fermented and spirituous liquors is accord¬ ingly, of all the different taxes upon expense, by far the most productive ; and this branch of the excise falls very much, perhaps princi¬ pally, upon the expense of the common peo¬ ple. 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/. 9s. 9c/. 2 It must always be remembered, however, that it is the luxurious and not the necessary expense of the inferior ranks of people that ought ever to be taxed. The final payment of any tax upon their necessary expense would fall altogether upon the superior ranks of people ; upon the smaller portion of the annual produce, and not upon the greater. Such a tax must in all cases either raise the wages of labour, or lessen the de¬ mand for it. It could not raise the wages of labour without throwing the final pay¬ ment of the tax upon the superior ranks of people. It could not lessen the demand for labour without lessening the annual produce of the land and labour of the country, the fund from which all taxes must be finally paid. 'Whatever might be the state to which a tax of this kind reduced the demand for labour, it must always raise wages higher than they otherwise would be in that state ; and the final payment of this enhancement of wages must in all cases fall upon the superior ranks of people. Fermented liquors brewed, and spirituous liquors distilled, not for sale but for private use, are not in Great Britain liable to any duties of excise. This exemption, of which the object is to save private families from the odious visit and examination of the tax- gatherer, occasions the burden of those duties to fall frequently much lighter upon 3,000,000/. a year, was repealed in 1830. The gross produce of the duties on British spirits and malt, in Great Britain, for the year ended the 5th January, 1837, amounted to 9,701,558/., and their nett produce to 9,527,341/. D d 402 TAXES ON COMMODITIES. Book V. the rich than upon the poor. It is not, in¬ deed, 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 com¬ mon brewer, who must have his profit upon the tax, as well as upon all the other ex¬ pense which he advances. Such families, therefore, must drink their beer at least nine or ten shillings a barrel cheaper than any liquor of the same quality can be drunk by the common people, to whom it is every¬ where more convenient to buy their beer, by little and little, from the brewery or the ale¬ house. Malt, in the same manner, that is made for the use of a private family is not liable to the visit or examination of the tax- gatherer ; but in this case the family must compound at seven shillings and sixpence a head for the tax . 1 Seven shillings and six¬ pence are equal to the excise upon ten bushels of malt,—a quantity fully equal to what all the different members of any sober family, men, women, and children, are at an average likely to consume. But in rich and great families, where country hospitality is much practised, the malt liquors consumed by the members of the family make but a small part of the consumption of the house. Either on account of this composition, how¬ ever, or for other reasons, it is not near so common to malt as to brew for private use. It is difficult to imagine any equitable reason why those who either brew or distil for pri¬ vate use should not be subject to a com¬ position of the same kind. A greater revenue than what is at present drawn from all the heavy taxes upon malt, beer, and ale, might be raised, it has fre¬ quently been said, by a much lighter tax upon malt; the opportunities of defrauding the revenue being much greater in a brewery than in a malt-house ; and those who brew for private use being exempted from all du¬ ties or composition for duties, which is not the case with those who malt for private use. In the porter brewery of London, a quar¬ ter of malt is commonly brewed into more than two barrels and a half, sometimes into three barrels of porter. The different taxes upon malt amount to six shillings a quarter ; those upon strong beer and ale to eight shil¬ lings a barrel . 2 In the porter brewery, therefore, the different taxes upon malt, beer, and ale, amount to between twenty-six and thirty shillings upon the produce of a quarter of malt. In the country brewery, for common country sale, a quarter of malt is seldom brewed into less than two barrels of strong and one barrel of small beer ; fre¬ quently into two barrels and a half of strong- beer. The different taxes upon small beer amount to one shilling and four-pence a barrel. In the country brewery, therefore, the different taxes upon malt, beer, and ale, seldom amount to less than twenty-three shil¬ lings and four-pence, frequently to twenty- six shillings, upon the produce of a quarter of malt. Taking the whole kingdom at an average, therefore, the whole amount of the duties upon malt, beer, and ale, cannot be estimated at less than twenty-four or twenty- five shillings upon the produce of a quarter of malt. But by taking off all the different duties upo A beer and ale, and by tripling the malt .ax, or by raising it from six to eighteen shillings upon the quarter of malt, a greater revenue, it is said, might be raised by this single tax than what is at present drawn from all those heavier taxes. £ In 1772, the old malt-tax produced - 722,023 The additional - 356,776 In 1773, the old tax produced - - 561,627 The additional - 278,650 In 1774, the old tax produced - - 624,614 The additional - 310,745 In 1775, the old tax produced - - 657,357 The additional - - - 323,785 s. d. 11 11 7 9f 3 7* 15 3| 17 5f 2 81 0 8 | 12 6i 4)3,835,580 12 Of Average of these four years - 958,895 3 0.? £ s. d. In 1772, the country excise produced 1,243,128 5 3 - 408,260 7 2| - 1,245,808 3 3 - 405,406 17 101 - 1,246,373 14 bl - 320,601 18 0i - 1,214,583 6 1 - 463,670 7 01 4)6,547,832 19 2£ Average of these four years - 1,636,958 4 9£ To which adding the average 7 n , Q Qf ir; , n .r malt-tax, or - 3 y58,8yo 6 The whole amount of those different taxes comes out to be - But, by tripling the malt-tax, or by raising it from six to eighteen shillings upon the quarter of malt, that single tax would produce - - J A sum which exceeds the fore- 7 oon Q ~ 0 , 0 • going by - - j 280,832 1 Under the old malt-tax, indeed, is com¬ prehended a tax of four shillings upon the hogshead of cyder, and another of ten shil¬ lings upon the barrel of mum.3 In 1774, tlu tax upon cyder produced only 30837. 6s. 8 d. It probably fell somewhat short of its usua amount; all the different taxes upon cydei 2,595,853 7 &ji l 2,876,685 9 0$ xhe London brewery In 1773, the country excise - The London brewery In 1774, the country excise - The London brew'ery In 1775, the country excise - The London brew'ery 1 This distinction has long ceased to exist; the malt that is used in private families being subjected to the same duty as that which is used in the public breweries. 2 The existing (1838) duty on malt amounts to 2s. 7d. a bushel, or 205. 8 rf. a quarter. There is nc longer, as already stated, any duty on beer. 3 The duties on cyder, perry, and mum have al been repealed. TAXES ON COMMODITIES. 403 Chap. II. naving that year produced less than ordinary. ^The tax upon mum, though much heavier, is still less productive, on account of the smaller consumption of that liquor. But to balance whatever maybe the ordinary amount of those two taxes, there is comprehended under what is called the country excise, first, the old excise of six shillings and eight-pence upon the hogshead of cyder; secondly, a like tax of six shillings and eight-pence upon the hogshead of verjuice ; thirdly, another of weight shillings and nine-pence upon the hogshead of vinegar; and lastly, a fourth tax of eleven-pence upon the gallon of mead or metheglin : the produce of those different taxes will probably much more than counter¬ balance that of the duties imposed, by what is called the annual malt-tax upon cyder ['land mum. Malt is consumed not only in the brewery of beer and ale, but in the manufacture of low wines and spirits. If the malt-tax were to be raised to eighteen shillings upon the quarter, it might be necessary to make some abatement in the different excises which are imposed upon those particular sorts of low wines and spirits of which malt makes any part of the materials. In what are called malt spirits, it makes commonly but a third part of the materials ; the other two-thirds being either raw barley, or one-third barley I and one-third wheat. In the distillery of malt spirits, both the opportunity and the temptation to smuggle are much greater than either in a brewery or in a malt-house : the opportunity, on account of the smaller bulk and greater value of the commodity ; and the temptation, on account of the supe¬ rior height of the duties, which amount to 3s. 10 1 upon the gallon of spirits. By increasing the duties upon malt, and reducing [i those upon the distillery, both the oppor¬ tunities and the temptation to smuggle would be diminished, w T hich might occasion a still further augmentation of revenue. It has for some time past been the policy of Great Britain to discourage the consump¬ tion of spirituous liquors, on account of their supposed tendency to ruin the health and corrupt the morals of the common people. According to this policy, the abatement of Rthe taxes upon the distillery ought not to be so great as to reduce, in any respect, the p price of those liquors. Spirituous liquors might remain as dear as ever; while, at the same time, the wholesale and invigorating ( liquors of beer and ale might be considerably reduced in their price. The people might jl,' thus be in part relieved from one of the bur¬ dens of which they at present complain the 1 Though the duties directly imposed upon proof tpirits amount only to 2s. G d. per gallon, these added to the duties upon the low wines, from which they • are distilled, amount to 35. lO^i. lloth low wines and proof spirits are, to prevent frauds, now rated according to what they gauge in the wash. (Note by the author.) most, while, at the same time, the revenue might be considerably augmented. The objections of Dr. Davenant to this alteration in the present system of excise duties seem to be without foundation. Those objections are, that the tax; instead of dividing itself, as at present, pretty equally upon the profit of the maltster, upon that of the brewer, and upon that of the retailer, would, so far as it affected profit, fall alto¬ gether upon that of the maltster ; that the maltster could not so easily get back the amount of the tax in the advanced price of his malt, as the brewer and retailer in the advanced price of their liquor ; and that so heavy a tax upon malt might reduce the rent and profit of barley land. No tax can ever reduce, for any consider¬ able time, the rate of profit in any particular trade, which must always keep its level with other trades in the neighbourhood. The present duties upon malt, beer, and ale, do not affect the profits of the dealers in those commodities, who all get back the tax with an additional profit in the enhanced price of their goods. A tax, indeed, may render the goods, upon which it is imposed so dear as to diminish the consumption of them. But the consumption of malt is in malt liquors ; and a tax of eighteen shillings upon the quarter of malt could not well render those liquors dearer than the different taxes, amounting to twenty-four or twenty-five shillings, do at present. Those liquors, on the contrary, would probably become cheaper, and the consumption of them would be more likely to increase than to diminish. It is not very easy to understand why it should be more difficult for the maltster to get back eighteen shillings in the advanced price of his malt, than it is at present for the brewer to get back twenty-four or twenty- five, sometimes thirty shillings, in that of his liquor. The maltster, indeed, instead of a tax of six shillings, would be obliged to ad¬ vance one of eighteen shillings upon every quarter of malt. But the brewer is at pre¬ sent obliged to advance a tax of twenty-four or twenty-five, sometimes thirty shillings, upon every quarter of malt which he brews. It could not be more inconvenient for the maltster to advance a lighter tax than it is at present for the brewer to advance a heavier one. The maltster does not always keep in his granaries a stock of malt which it will require a longer time to dispose of than the stock of beer and ale which the brewer fre¬ quently keeps in his cellars. The former, therefore, may frequently get the returns of his money as soon as the latter. But what- The duty on British spirits entered for home con¬ sumption in England is at present (1838 ) 7s. per im¬ perial gallon ; in Scotland it is 3*\4rf., and in Ireland ‘2s. Ad. per do. For some account of the duties on, and of their influence w hen oppressive in diminish¬ ing the revenue and increasing smuggling, see Com- mcrciiU Dictionary, art. Spuuts. D d 2 404 TAXES ON COMMODITIES. Book V. ever inconveniency might arise to the malt¬ ster from being obliged to advance a heavier tax, it could easily be remedied by granting him a few months longer credit than is at present commonly given to the brewer. Nothing could reduce the rent and profit of barley land which did not reduce the de¬ mand for barley. But a change of system, which reduced the duties upon a quarter of malt brewed into beer and ale from twenty- four and twenty-five shillings to eighteen shillings, would be more likelv to increase than diminish that demand. The rent and profit of barley land, besides, must always be nearly equal to those of other equally fertile and equally well cultivated land. If they were less, some part of the barley land would soon be turned to some other purpose ; and if they were greater, more land would soon be turned to the raising of barley. When the ordinary price of any particular produce of land is at what may be called a monopoly price, a tax upon it necessarily reduces the rent and profit of the land which grows it. A tax upon the produce of those precious vineyards, of which the wine falls so much short of the effectual demand, that its price is always above the natural proportion to that of the produce of other equally fertile and equally well cultivated land, would ne¬ cessarily reduce the rent and profit of those vineyards. The price of the wines being already the highest that could be got for the quantity commonly sent to market, it could not be raised higher without diminishing that quantity ; and the quantity could not be diminished without still greater loss, be¬ cause the lands could not be turned to any other equally valuable produce. The whole weight of the tax, therefore, would fall upon the rent and profit ; properly upon the rent of the vineyard. When it has been proposed to lay any new tax upon sugar, our sugar planters have frequently complained that the whole weight of such taxes fell, not upon the consumer, but upon the producer ; they never having been able to raise the price of their sugar after the tax higher than it was before. The price had, it seems, before the tax, been a monopoly price; and the argument adduced to show that sugar was an improper subject of taxation, demonstrated, perhaps, that it was a proper one; the gains of monopolists, whenever they can be come at, being cer¬ tainly of all subjects the most proper. 1 But the ordinary price of barley has never been a monopoly price ; and the rent and profit of barley land have never been above their na¬ tural proportion to those of other equally fertile and equally well cultivated land. The different taxes which have been imposed upon malt, beer, and ale, have never lowered 1 The price of sugar cannot be said to be a mono¬ poly price. All individuals are at libertv to carry their capital and industry to Jamaica, Cuba, &c., the price of barley; have never reduced the rent and profit of barley land. The price of' malt to the brewer has constantly risen in proportion to the taxes imposed upon it; and those taxes, together with the different duties upon beer and ale, have constantly either raised the price, or, what comes to the same thing, reduced the quality cf those com¬ modities to the consumer. The final pay¬ ment of those taxes has fallen constantly I upon the consumer, and not upon the pro¬ ducer. The only people likely to suffer by the | change of system here proposed are those who brew for their own private use. But i the exemption which this superior rank of people at present enjoy, from very heavy taxes which are paid by the poor labourer and artificer, is surely most unjust and unequal, and ought to be taken away, even though this change was never to take place. It has probably been the interest of this superior order of people, however, which has hitherto prevented a change of system that could not well fail both to increase the revenue and to ! relieve the people. Besides such duties as those of customs and excise above mentioned, there are seve¬ ral others which affect the price of goods more unequally and more indirectly. Of this kind are the duties which in French are called peages, which in old Saxon times were called duties of passage, and which seem to have been originally established for the same purpose as our turnpike tolls, or the tolls upon our canals and navigable ri¬ vers, for the maintenance of the road or of i the navigation. Those duties when applied ! to such purposes, are most properly imposed i according to the bulk or weight of the goods. As they were originally local and provincial duties, applicable to local and provincial purposes, the administration of them was in most cases intrusted to the particular town, parish, or lordship, in which they were levied; such communities being in some way or other supposed to be accountable for the application. The sovereign, who is alto¬ gether unaccountable, has in many countries assumed to himself the administration of those duties; and though he has in most cases enhanced very much the duty, he has i in many entirely neglected the application. If the turnpike tolls of Great Britain should ever become one of the resources of govern¬ ment, we may learn, by the example of many other nations, what would probably be the ; consequence. Such tolls are, no doubt, finally paid by the consumer; but the con¬ sumer is not taxed in proportion to his ex¬ pense when he pays, not according to the value, but according to the bulk or weight of j and to become producers of sugar. And, in point of fact, its price has risen with the increase of the duty. TAXES ON COMMODITIES. 4C5 rhat he consumes. When such duties are mposed, not according to the bulk or weight, >ut according to the supposed value of the roods, they become properly a sort of inland ustoms or excise, which obstruct very much he most important of all branches of com- nerce, the interior commerce of the coun- ry. In some small states, duties similar to hose passage duties are imposed upon goods :arried across the territory, either by land n by water, from one foreign country to mother. These are in some countries called p.ransit- duties. Some of the little Italian tates which are situated upon the Po, and he rivers which run into it, derive some •evenue from duties of this kind, which are foaid altogether by foreigners, and which aerhaps are the only duties that one state ;an impose upon the subjects of another, without obstructing in any respect the in¬ dustry or commerce ol its own. The most important transit-duty in the world is that levied by the king of Denmark upon all '(merchant ships which pass through the Sound. U Such taxes upon luxuries as the greater part of the duties of customs and excise, though they all fall indifferently upon every different species of revenue, and are paid finally, or without any retribution, by who¬ ever consumes the commodities upon which they are imposed, yet they do not always fall equally or proportionally upon the re¬ venue of every individual. As every man’s humour regulates the degree of his consump¬ tion, every man contributes rather according to his humour than in proportion to his revenue: the profuse contribute more, the parsimonious less, than their proper pro¬ portion. During the minority of a man of great fortune, he contributes commonly very little, by his consumption, towards the sup¬ port of that state from whose protection he derives a great revenue. Those who live in t another country contribute nothing, by their consumption, towards the support of the government of that country in which is situated the source of their revenue. If in this latter country there should be no land- tax, nor any considerable duty upon the tranference either of moveable or immoveable property, as is the case in Ireland, such absentees may derive a great revenue from the protection of a government to the support of which they do not contribute a single shilling. This inequality is likely to be greatest in a country of which the govern¬ ment is in some respects subordinate and dependent upon that of some other. The people who possess the most extensive pro¬ perty in the dependent, will in this case lb generally choose to live in the governing country. Ireland is precisely in this situa¬ tion, 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 ascer¬ tain either what sort or what degree of absence would subject a man to be taxed as an absentee or at what precise time the tax should either begin or end. If you except, however, this very peculiar situation, any inequality in the contribution of individuals which can arise from such taxes, is much more than compensated by the very circum¬ stance which occasions that inequality ; the circumstance that every man’s contribution is altogether voluntary ; it being altogether in his power either to consume or not to consume the commodity taxed. Where such taxes, therefore, are properly assessed, and upon proper commodities, they are paid with less grumbling than any other. When they are advanced by the merchant or manu¬ facturer, the consumer, who finally pays them, soon comes to confound them with the price of the commodities, and almost forgets that he pays any tax. Such taxes are, or may be, perfectly cer¬ tain ; or mav be assessed so as to leave no doubt concerning either what ought to be paid, or when it ought to be paid ; con¬ cerning either the quantity or the time of payment. Whatever uncertainty there may sometimes be, either in the duties of customs in Great Britain, or in other duties of the same kind in other countries, it cannot arise from the nature of those duties, but from the inaccurate or unskilful manner in which the law that imposes them is ex¬ pressed. Taxes upon luxuries generally are, and always may be, paid piece-meal, or in pro¬ portion as the contributors have occasion to purchase the goods upon which they are imposed. In the time and mode of pay-, ment they are, or may be, of all taxes the most convenient. Upon the whole, such taxes, therefore, are perhaps as agreeable to the three first of the four general maxims concerning taxation as any other. They offend ‘in every respect against the fourth. Such taxes, in proportion to what they bring into the public treasury of the state, always take out or keep out of the pockets of the people more than almost any other taxes. They seem to do this in all the four different ways in which it is possible to do it. First , The levying of such taxes, even when imposed in the most judicious manner, requires a great number of custom-house and excise officers, whose salaries and per¬ quisites are a real tax upon the people, which brings nothing into the treasury of the state. This expense, however, it must be acknowledged, is more moderate in Great Britain than in most other countries. In D d 3 406 TAXES CN COMMODITIES: Book \ the year which ended on the 5th of July, 1775, the gross produce of the different duties, under the management of the com¬ missioners of excise in England, amounted to 5,507,308/. 18s. 8^c/., which was levied at an expense of little more than five and a half per cent. 1 From this gross produce, however, there must be deducted what was paid away in bounties and drawbacks upon the exportation of exciseable goods, which will reduce the neat produce below five millions. 2 The levying of the salt duty, an excise duty, but under a different manage¬ ment, is much more expensive. The neat revenue of the customs does not amount to two millions and a half, which is levied at an expense of more than ten per cent, in the salaries of officers, and other incidents. 3 But the perquisites of custom-house officers are everywhere much greater than their salaries ; at some ports more than double or triple those salaries. If the salaries of offi¬ cers, and other incidents, therefore, amount to more than ten per cent, upon the neat revenue of the customs, the whole expense of levying that revenue may amount, in sa¬ laries and perquisites together, to more than twenty or thirty per cent. The officers of excise receive few or no perquisites ;✓ and the administration of that branch of the revenue being of more recent establishment, is in general less corrupted than that of the customs, into which length of time has in¬ troduced and authorised many abuses. By charging upon malt the whole revenue which is at present levied by the different duties upon malt and malt liquors, a saving, it is supposed of more than fifty thousand pounds, might be made in the annual ex¬ pense of the excise. By confining the duties of customs to a few sorts of goods, and by levying those duties according to the excise laws, a much greater saving might probably be made in the annual expense of the customs. Secondly , Such taxes necessarily occasion some obstruction or discouragement to cer¬ tain branches of industry. As they always raise the price of the commodity taxed, they so far discourage its consumption, and con¬ sequently its production. If it is a commo¬ dity of home growth or manufacture, less labour comes to be employed in raising and producing it. If it is a foreign commodity of which the tax increases in this manner the price, the commodities of the same kind which are made at home may thereby, indeed, gain some advantage in the home market, and a greater quantity of domestic industry may thereby be turned toward preparing 1 1 he nett produce of the different excise duties in Great Britain, for the year ended 5th of January, 1&3/, deducting drawbacks and other allowances, amounted to 13,654,034/. The total expenses of coll ection for the same year amounted to 861,815/. 1 he neat produce of that year, after deducting all them. But though this rise of price in foreign commodity may encourage domest industry in one particular branch, it nece. sarily discourages that industry in alino every other. The dearer the Birmingham manufacturer buys his foreign wine, til cheaper he necessarily sells that part of 1: hardware with which, or, what comes to t; same thing, with the price of which he bu it. rhat part of his hardware, therefor becomes of less value to him, and he has le encouragement to work at it. The dear the consumers in one country pay for tb surplus produce of another, the cheaper the necessarily sell that part of their own surpli produce with which, or, what comes to tb same thing, with the price of which tin buy it. That part of their own surplus pr< duce becomes of less value to them, and the have less encouragement to increase its qua* tity. All taxes upon consumable commod ties, therefore, tend to reduce the quantit of productive labour below what it otherwi would be, either in preparing the commod ties taxed, if they are home commodities; c in preparing those with which they are pum chased, if they are foreign commodities Such taxes too always alter, more or less, tl natural direction of national industry, an: turn it into a channel always different fror and generally less advantageous than tb; in which it would have run of its own &• cord. Thirdly, The hope of evading such taxc by smuggling gives frequent occasion tofo feitures and other penalties, which entire! ruin the smuggler; a person who, thoug no doubt highly blameable for violating tb laws of his country, is frequently incapab ot violating those of natural justice, arm would have been, in every respect, an excel lent citizen, had not the laws of his countr made that a crime which nature never mean to be so. In those corrupted government where there is at least a general suspicion c much unnecessary expense, and great misad plication of the public revenue, the law which guard it are little respected. Nd many people are scrupulous about smugglin' when, without perjury, they can find an easy and safe opportunity of doing so. T pretend to have any scruple about buyir smuggled goods, though a manifest encou ragement to the violation of the revenue law and to the perjury which almost always a; tends it, would, in most countries, be regards as one of those pedantic pieces of hypocris which, instead of gaining credit with an body, serve only to expose the person wl affects to practise them to the suspicion ; expenses and allowances, amounted to 4,975,653 195. 6e\ (Note by the author.) f The nett revenue of the customs of Great Br tain, for the year ended 5th of January, 183 amounted to 21,018,907/. ; and the charges of co lection for the same year, amounted to 1,070,625/. Chap. II. TAXES ON COMMODITIES. 407 being a greater knave than most of his neigh¬ bours. By this indulgence of the public, the smuggler is often encouraged to continue a trade which he is thus taught to consider as in some measure innocent; and when the severity of the revenue laws is ready to fall upon him, he is frequently disposed to defend with violence what he has been accustomed to regard as his just property. From being at first, perhaps, rather imprudent than cri¬ minal, he at last too often becomes one of the hardiest and most determined violators of the laws of society. By the ruin of the smuggler, his capital, which had before been employed in maintaining productive labour, is absorbed either in the revenue of the state or in that of the revenue officer, and is em¬ ployed in maintaining unproductive, to the diminution of the general capital of the so¬ ciety, and of the useful industry which it might otherwise have maintained. Fourthly , Such taxes, by subjecting at least the dealers in the taxed commodities to the frequent visits and odious examination of the tax gatherers, expose them sometimes, no doubt, to some degree of oppression, and always to much trouble and vexation ; and though vexation, as has already been said, is not strictly speaking expense, it is certainly equivalent to the expense at which every man would be willing to redeem himself from it. The laws of excise, though more effectual for the purpose for which they were instituted, are, in this respect, more vexatious than those of the customs. When a merchant has imported goods subject to certain duties of customs, when he has paid those duties, and lodged the goods in his warehouse, he is not in most cases liable to any further trouble or vexation from the custom-house officer. It is otherwise with goods subject to duties of excise. The dealers have no respite fiom the continual visits and examination of the excise officers. T-he duties of excise are, upon this account, more unpopular than those of the customs; and so are the officers who levy them. Those officers, it is pretended, though in general perhaps they do their duty fully as well as those of the customs, yet, as that duty obliges them to be frequently very troublesome to some of their neighbours, commonlv contract a certain hardness of cha- racter which the others frequently have not. This observation, however, may very pro¬ bably be the mere suggestion of fraudulent dealers, whose smuggling is either prevented or detected by their diligence. The inconveniencies, however, which are perhaps in some degree inseparable from taxes upon consumable commodities, fall as light upon the people of Great Britain as upon those of any other country of which the government is nearly as expensive. Our state is not perfect, and might be mended; but it is as good or better than that of most of our neighbours. In consequence of the notion that duties upon consumable goods were taxes upon the profits of merchants, those duties have, in some countries, been repeated upon eveiy successive sale of the goods. If the profits of the merchant importer or merchant ma- unfacturer were taxed, equality seemed to require that those of all the middle buyers who intervened between either of them and the consumer should likewise be taxed. The famous alcavala of Spain seems to have been established upon this principle. It was at first a tax of ten per cent., afterwards of fourteen per cent., and is at present only six per cent, upon the sale of every sort of property, whether moveable or immoveable; and it is repeated every time the property is sold, i The levying of this tax requires a multitude of revenue officers sufficient to guard the transportation of goods not only from one province to another but from one shop to another. It subjects not only the dealers in some sorts of goods but those in all sorts, every farmer, every manufacturer, every merchant and shopkeeper, to the con¬ tinual visits and examination of the tax- gatherers. Through the greater part of a country in which a tax of this kind is es¬ tablished, nothing can be produced for dis¬ tant sale. The produce of every part of the country must be proportioned to the con¬ sumption of the neighbourhood. It is to the alcavala, accordingly, that Ustaritz imputes the ruin of the manufactures of Spain. He might have imputed to it likewise the de¬ clension of agriculture, it being imposed not only upon manufactures but upon the rude produce of the land. In the kingdom of Naples there is a similar tax of three per cent, upon the value of all contracts, and consequently upon that of all contracts of sale. It is both lighter than the Spanish tax, and the greater part of towns and parishes are allowed to pay a com¬ position in lieu of it. They levy this com¬ position in what manner they please, gene¬ rally in a way that gives no interruption to the interior commerce of the place. The Neapolitan tax, therefore, is not near so ruinous as the Spanish one. The uniform system of taxation, which, with a few exceptions of no great conse¬ quence, takes place in all the difficient pa its of the United Kingdom of Great Britain, leaves the interior commerce of the country, the inland and coasting trade, almost entirely free. The inland trade is almost perfectly free, and the greater part of goods may be car¬ ried from one end of the kingdom to the other, without requiring any permit or let-pass, 1 Memoires concemant les Droits, &c. tome i. p. 455. D d 4 403 Book V. TAXES OX COMMODITIES. without being subject to question, visit, or examination from the revenue officers. There are a few exceptions, but they are such as can give no interruption to any important branch of the inland commerce of the coun¬ try ; goods carried coastwise, indeed, re¬ quire certificates of coast-cockets. If you except coals, however, the rest are almost all duty-free. This freedom of interior com¬ merce, the effect of the uniformity of the system of taxation, is perhaps one of the principal causes of the prosperity of Great Britain; every great country being neces¬ sarily the best and most extensive market for the greater part of the productions of its own industry. If the same freedom, in conse¬ quence of the same uniformity, could be extended to Ireland and the plantations, both the grandeur of the state and the pros¬ perity of every part of the empire would probably be still greater than at present. 1 In rrance, the different revenue laws which take place in the different provinces require a multitude of revenue officers to surround not only the frontiers of the king¬ dom but those of almost each particular province, in order either to prevent the im¬ portation of certain goods, or to subject it to the payment of certain duties, to the no small interruption of the interior commerce of the country. Some provinces are allowed to compound for the gabelle or salt-tax; others are exempted from it altogether." Some provinces are exempted from the ex¬ clusive sale of tobacco, which the farmers generally enjoy through the greater part of the kingdom. The aides, which correspond to the excise in England, are very different in different provinces. Some provinces are exempted from them, and pay a composi¬ tion or equivalent. In those in which they take place and are in farm, there are many local duties which do not extend beyond a particular town or district. The traites, which correspond to our customs, divide the kingdom into three great parts: first, the provinces subject to the tariff of 1664, which are called the provinces of the five great farms, and under which are comprehended Normandy, and the greater part of the interior provinces of the kingdom; secondly, the provinces subject to the tariff of 1667, which are called the provinces reckoned foreign, and under which are com¬ prehended 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 com¬ merce with the other provinces of France, 1 Almost all the restrictions on the commerce i 6 icoc D Britain and Ireland were repealed n ih-j. The intercourse between the two countries is now conducted on the principle of a coasting subjected to the same duties as other foreign countries. These are Alsace, the three bishoprics of Mentz, Toul, and Verdun, and the three cities of Dunkirk, Bay onne, and Marseilles. Loth in the provinces of the five great farms, (called so on account of an ancient division of the duties of customs into five great branches, each of which was originally the subject of a particular farm, though they are now all united into one,) and in those which are said to be reckoned foreign, there are many local duties which do not extend beyond a particular town or district. There are some such even in the provinces which are said to be treated as foreign, particularly in the city of Marseilles. It is unnecessary to observe how much, both the restraints upon the interior com¬ merce of the country', and the number of the revenue officers, must be multiplied, in order to guard the frontiers of those different provinces and districts which are subject to such different systems of taxation. 2 Over and above the general restraints arising from this complicated system of re¬ venue laws, the commerce of' wine, after corn perhaps the most important production of France, is, in the greater part of the pro- \inces, subject to particular restraints, arising fiom the favour which has been shown to the vineyards of particular provinces and districts, above those of others. The pro¬ vinces most famous for their wines it will be found, I believe, are those in which the trade in tiiat article is subject to the fewest re¬ straints of this kind. The extensive market which such provinces enjoy, encourages good management both in the cultivation of their vineyards, and in the subsequent preparation of their wines.3 Such various and complicated revenue laws are not peculiar to France. The little dutchy of Milan is divided into six provinces, in each of which there is a different system of taxation with regard to several different sorts of consumable goods. The still smaller territories of the duke of Parma are divided into three or four, each of which has, in the same manner, a system of its own. Under such absurd management, nothing but the great fertility of the soil, and happiness of the climate, could preserve such countries from soon relapsing into the lowest state of poverty and barbarism. 1 axes upon consumable commodities may either be levied by an administration of which the officers are appointed by government and ai e immediately accountable to government, of which the revenue must in this case vary from year to year, according to the occasional 2 These distinctions were abolished at the Revolu- tIon -7 . sa,ne system of equal taxation is now established in every part of France. 3 1 he internal trade of France is now quite free. Chap. II. TAXES ON COMMODITIES. 409 a / variations in the produce of the tax ; or they may be let in farm for a rent certain, the S fanner being allowed to appoint his own odicers, who, though obliged to levy the tax in the manner directed by the law, are under his immediate inspection, and are immediately ;■ accountable to him. The best and most fru¬ gal way of levying a tax can never be by farm. Over and above what is necessary for pjiyidg the stipulated rent, the salaries ot the officers, and the whole expense of adminis¬ tration, the farmer must always draw from the produce of the tax a certain profit, pro¬ portioned at least to the advance which he makes, to the risk which he luns, to the trouble which he is at, and to the knowledge and skill which it requires to manage so very complicated a concern. Government, by establishing an administration under their own immediate inspection, ot the same kind with that which the farmer establishes, might at least save this profit, which is almost al¬ ways exorbitant. lo farm any considerable branch of the public revenue requires either a great capital or a great credit; circum¬ stances which would alone restrain the com¬ petition for such an undertaking to a very small number of people. Of the few who have this capital or credit, a still smaller number have the necessary knowledge or experience ; another 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 instead of competitors, and when the farm is set up to auction, to offer no rent but what is much below the real value. In countries where the public revenues are in farm, the farmers are generally the most opulent people. Their wealth would alone excite the public indignation; and the vanity which almost always accompanies such upstart fortunes, the foolish ostentation with which they com¬ monly display that wealth, excites that in¬ dignation still more. The farmers of the public revenue never find the laws too severe, which punish any attempt to evade the payment ot a tax. They have no bowels for the contributors, who are not their subjects, and whose uni¬ versal bankruptcy, if it should happen the day after their farm is expired, would not much affect their interest. In the greatest exigencies of the state, when the anxiety ot the sovereign for the exact payment ot his revenue is necessarily the greatest, they sel¬ dom fail to complain that without laws more rigorous than those which actually take place, it will be impossible for them to pay even the usual rent. In those moments of public distress their demands cannot be dis¬ puted. The revenue laws, therefore, become gradually more and more severe. The most sanguinary are always to be found in coun¬ tries where the greater part of the public reve¬ nue is in farm; the mildest, in countries where it is levied under the immediate inspection of the sovereign. Even a bad sovereign feels more compassion for his people than can ever be expected from the farmers of his revenue. He knows that the permanent grandeur of his family depends upon the prosperity of his people, and he will never knowingly ruin that prosperity for the sake of any momentary interest of his own. It is otherwise with the farmers ot his revenue, whose grandeur may frequently be the effect of the ruin, and not of the prosperity of his people. A tax is sometimes not only farmed for a certain rent, but the farmer has, besides, the monopoly of the commodity taxed. In France, the duties upon tobacco and salt are levied in this manner. In such cases the farmer, instead of one, levies two exorbitant profits upon the people : the profit of the farmer, and the still more exorbitant one of the monopolist. Tobacco being a luxury, every man is allowed to buy or not to buy as he chooses. But salt being a necessary, every man is obliged to buy of the farmer a certain quantity of it; because if he did not buy this quantity of the farmer, he would, it is presumed, buy it of some smuggler. The taxes upon both commodities are exorbitant. The temptation to smuggle, consequently, is to many people irresistible; while at the same time the rigour of the law, and the vigilance of the farmer’s officers, render the yielding to that temptation almost certainly ruinous. The smuggling of salt and tobacco sends every year several hundred people to the galleys, besides a very considerable num¬ ber whom it sends to the gibbet. Those taxes levied in this manner yield a very con¬ siderable revenue to government. In 1767, the farm of tobacco vras let for twenty-two millions five hundred and forty-one thousand two hundred and seventy-eight livres a year; that of salt, for thirty-six millions four hun¬ dred and ninety-two thousand four hundred and four livres. The farm in both cases was to commence in 1768, and to last for six years. Those who consider the blood of the people as nothing in comparison with the revenue of the prince may perhaps ap¬ prove of this method of levying taxes. Simi¬ lar taxes and monopolies of salt and tobacco have been established in many other coun¬ tries, particularly in the Austrian and Prus¬ sian dominions, and in the greater part of the states of Italy. In France, the greater part of the actual revenue of the crown is derived from eight different sources: the taille, the capitation, the two vingtiemes, the gabelles, the aides, the traites, the domaine, and the farm of to¬ bacco. The five last are, in the greater part of the provinces, under farm. The three 410 TAXES OX COMMODITIES. Book V. first are everywhere levied by an adminis- - tration under the immediate inspection and direction of government; and it is univer¬ sally acknowledged that, in proportion to what they take out of the pockets of the people, they bring more into the treasury of the prince than the other five, of which the administration is much more wasteful and expensive. The finances of France seem, in their present state, to admit of three very obvious reformations : first, by abolishing the taille and the capitation, and by increasing the number of vingtiemes, so as to produce an additional revenue equal to the amount of those other taxes, the revenue of the crown might be preserved ; the expense of collec¬ tion might be much diminished ; the vexa¬ tion of the inferior ranks of people, which the taille and capitation occasion, might be entirely prevented ; and the superior ranks might not be more burdened than the greater part of them are at present. The vingtieme, I have already observed, is a tax very nearly of the same kind with what is called the land-tax of England. The burden of the taille, it is acknowledged, falls finally upon the proprietors of land ; and as the greater part of the capitation is assessed upon those who are subject to the taille at so much a pound of that other tax, the final payment of the greater part of it must likewise fall upon the same order of people. Though the number of the vingtiemes, therefore, was increased so as to produce an additional revenue equal to the amount of both those taxes, the superior ranks of people might not be more burdened than they are at pre¬ sent. Many individuals, no doubt, would, on account of the great inequalities with which the taille is commonly assessed upon the estates and tenants of different indivi¬ duals. The interest and opposition of such favoured subjects are the obstacles most likely to prevent this or any other reform¬ ation of the same kind. Secondly, by ren¬ dering the gabelle, the aides, the traites, the taxes upon tobacco, all the different customs and excises, uniform in all the different parts of the kingdom, those taxes might be levied at much less expense, and the interior com¬ merce of the kingdom might be rendered as free as that of England. Thirdly and lastly. 1 Taxes in France are now placed almost on the footing suggested by Dr. Smith. The taille and ca¬ pitation have been abolished, and replaced by the contribution fonder e; the different taxes have been rendered equal throughout the kingdom, and they are chiefly collected by officers appointed by govern¬ ment. 2 The revenue of France, since 1830, has amounted, at an average, to about 1,100,000.000 francs, or 44,000,000/. ; which has been derived nearly as follows, viz. from Equal to Francs. about Direct taxes, as contribu¬ tion foncirre or land-tax, forests, personal tax, doors and windows, licences,&c. 400,000,000 .£16,000,000 by subjecting all those taxes to an adminis¬ tration under the immediate inspection and direction of government, the exorbitant pro¬ fits of the farmers general might be added to the revenue of the state. The opposition arising from the private interest of indivi¬ duals is likely to be as effectual for prevent¬ ing the two last as the first-mentioned scheme of reformation. 1 The French system of taxation seems, in every respect, inferior to the British. In Great Britain, ten millions sterling are an¬ nually levied upon less than eight millions of people, without its being possible to say that any particular order is oppressed. From the collections of the Abbe Expilly, and the observations of the author of the Essay upon the Legislation and Commerce of Corn, it appears probable that France, including the provinces of I^orraine and Bar, contains about twenty-three or twenty-four millions of people—three times the number, perhaps, contained in Great Britain. The soil and climate of France are better than those of Great Britain. The country has been much longer in a state of improvement and culti¬ vation, and is, upon that account, better stocked with all those things which it re¬ quires a long time to raise up and accumu¬ late, 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 a revenue of ten millions is in Great Britain. In 1765 and 1766, the whole revenue paid into the treasury of France, according to the best, though, I acknowledge, very imperfect, ac¬ counts which I could get of it, usually run between 308 and 325 millions of livres ; that is, it did not amount to fifteen millions sterling ; not the half of what might have been expected, had the people contributed in the same proportion to their numbers as the people of Great Britain. 2 The people of France, however, it is generally acknow¬ ledged, are much more oppressed by taxes than the people of Great Britain. France, however, is certainly the great empire in Europe which, after that of Great Britain, enjoys the mildest and most indulgent go¬ vernment. France Stamps and domains - 250,000,000 Customs and salt duties 200,000,000 Excise duties, or duties on liquids, tobacco, &c. - 200,000,000 Postage, and other items 50,000,000 Equal to about 10,000,000 8,000,000 8,000,000 2.000,000 1,100,000,000 £44,000,000 The revenue is collected at an expense of about twelve per cent, on the gross produce. The revenue of France, previously to the Revo¬ lution, amounted to about 585,000,000 fr., and the expenses of collection to about 10£ per cent. Ci?ap. II. 411 TAXES ON COMMODITIES. In Holland, the heavy taxes upon the necessaries of life have ruined, it is said, their principal manufactures, and are likely to discourage, gradually, even their fisheries and their trade in ship-building. I ne taxes Opon the necessaries of life are inconsider¬ able in Great Britain, and no manufacture has hitherto been ruined by them. I he British taxes which bear hardest on manu¬ factures are some duties upon the import¬ ation of raw materials, particularly upon that of raw silk. The revenue of the states general and of the different cities, howev er, is said to amount to more than five millions two hundred and fifty thousand pounds sterling; and as the inhabitants of the United Provinces cannot well be supposed to amount to more than a third part of those of Great Britain, they must, in pro¬ portion to their number, be much moie heavily taxed. After all the proper subjects of taxation have been exhausted, if the exigencies of the state still continue to require new taxes, thev must be imposed upon improper ones. The taxes upon the necessaries of life, there¬ fore, may be no impeachment of the wisdom of that republic, which, in order to acquire and to maintain its independency, has, in spite of its great frugality, been involved in such expensive wars as have obliged it to contract great debts. The singular countries of Holland and Zealand, besides, require a considerable expense even to preserve their existence, or to prevent their being swal¬ lowed up by the sea, which must have con¬ tributed to increase considerably the load of taxes in those two provinces. The repub¬ lican form of government seems to be the principal support of the present grandeur of Holland. The owners of great capitals, the great mercantile families, have generally either some direct share or some indirect influence in the administration of that go¬ vernment. For the sake of the respect and authority which they derive from this situa¬ tion, they are willing to live in a country where their capital, if they employ it them¬ selves, will bring them less profit, and if they lend it to another, less interest; and where the very moderate revenue which they can draw from it will purchase less of the neces¬ saries and conveniences of life than in any other part of Europe. The residence of such wealthy people necessarily keeps aliv c, in spite of all disadvantages, a certain degree of industry in the country. Any public calamity which should destroy the republi¬ can form of government, which should throw the whole administration into the hands of nobles and of soldiers, which should anni¬ hilate 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 com¬ merce of Holland would soon follow the capitals which supported them. CHAP. III. Of Public Debts. In that rude state of society which pre¬ cedes the extension of commerce and the improvement of manufactures, when those expensive luxuries which commerce and ma¬ nufactures can alone introduce are altogether unknown, the person who possesses a large revenue, I have endeavoured to show in the third book of this Inquiry, can spend or en¬ joy that revenue in no other way than by maintaining nearly as many people as it can maintain. A large revenue may at all times be said to consist in the command of a large quantity of the necessaries of life. In that rude state of things it is commonly paid in a large quantity of those necessaries, in the materials of plain food and coarse clothing, in corn and cattle, in wool and raw hides. When neither commerce nor manufactures furnish any thing for which the owner can exchange the greater part of those materials which are over and above his own consump¬ tion, he can do nothing with the surplus but feed and clothe nearly as many people as it will feed and clothe. A hospitality in which there is no luxury, and a liberality in which there is no ostentation, occasion, in this situ¬ ation of things, the principal expenses ot the rich and the great. But these, I have likewise endeavoured to show in the same book, are expenses by which people are not very apt to ruin themselves. dhere is not, perhaps, any selfish pleasure so frivolous, of which the pursuit has not sometimes ruined even sensible men : a passion for cock- fighting has ruined many. But the instances, I believe, are not very numerous of people who have been ruined by a hospitality or liberality of this kind; though the hospitality of luxury and the liberality of ostentation have ruined many. Among our feudal an¬ cestors, the long time during which estates used to continue in the same family, suffi¬ ciently demonstrates the general disposition of people to live within their income. Though the rustic hospitality, constantly exercised by the great landholders, may not to us in the present times seem consistent with that order which we are apt to consider as inse¬ parably connected with good economy, yet we must certainly allow them to have been at least so far frugal as not commonly to have spent their whole income. A part of their wool and raw hides they had generally an opportunity of selling for money. Some 412 OF PUBLIC DEBTS. Book V. part of this money, perhaps, they spent in purchasing the few objects of vanity and luxury with which the circumstances of the times could furnish them : but some part of it they seem commonly to have hoarded. They could not well indeed do any thing else but hoard whatever money they saved. To trade was disgraceful to a gentleman, and to lend money at interest, which at that time was considered as usury, and prohibited by law, would have been still more so. In those times of violence and disorder, besides, it was convenient to have a hoard of money at hand, that in case they should be driven from their own home, they might have some¬ thing of known value to carry with them to some place of safety. The same violence which made it convenient to hoard made it equally convenient to conceal the hoard. The fre¬ quency of treasure-trove, or of treasure found ot 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 sove¬ reign. All the treasure-trove of the kingdom would scarce perhaps in the present times make an important branch of the revenue of a private gentleman of a good estate. The same disposition to save and to hoard prevailed in the sovereign, as well as in the subjects. Among nations to whom com¬ merce and manufactures are little known, the sovereign, it has already been observed in the fourth book, is in a situation which natu¬ rally disposes him to the parsimony requisite for accumulation. In that situation the ex¬ pense even of a sovereign cannot be directed by that vanity which delights in the gaudy finery of a court The ignorance of the times affords but few of the trinkets in which that finery consists. Standing armies are not then necessary; so that the expense even of a sovereign, like that of any other great lord, can be 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 sove¬ reigns of Europe, accordingly, it has already been observed, had treasures : every Tartar chief in the present times is said to have one. In a commercial country abounding with every sort of expensive luxury, the sovereign, in the same manner as almost all the great proprietors in his dominions, naturally spends a great part of his revenue in pur¬ chasing those luxuries. His own and the neighbouring countries supply him abun¬ dantly with all the costly trinkets which compose the splendid, but insignificant pa¬ geantry of a court. For the sake of an infe¬ rior pageantry of the same kind, his nobles dismiss their retainers, make their tenants independent, and become gradually them¬ selves as insignificant as the greater part of the wealthy burghers in his dominions. The same in\olous passions which influence their conduct influence his. How can it be sup¬ posed that he should be the only rich man in his dominions who is insensible to pleasures of this kind ? If he does not, what he is very likely to do, spend upon those pleasures so great a part of his revenue as to debilitate very much the defensive power of the state, it cannot well be expected that he should not spend upon them all that part of it which is over and above what is necessary for support¬ ing that defensive power. His ordinary ex¬ pense becomes equal to his ordinary revenue, and it is well if it does not frequently exceed it. The amassing of treasure can no longer be expected, and when extraordinary exigen¬ cies require extraordinary expenses, he must necessarily call upon his subjects for an ex¬ traordinary aid. The present and the late king of Prussia are the only great princes of Europe who, since the death of Henry IV. of trance, in 1610 , are supposed to have amassed any considerable treasure. The par¬ simony which leads to accumulation has be¬ come almost as rare in republican as in monarchical governments. The Italian re¬ publics, the United Provinces of the Nether¬ lands, are all in debt. The canton of Berne is the single republic in Europe which has amassed any considerable treasure : the other Swiss republics have not. The taste for some sort of pageantry, for splendid build¬ ings, at least, and other public ornaments, frequently prevails as much in the apparently sober senate-house of a little republic as in the dissipated court of the greatest king. The want of parsimony in time of peace, imposes the necessity of contracting debt in time of war. When war comes, there is no money in the treasury but what is necessary for carrying on the ordinary expense of the peace establishment. In war an establish¬ ment of three or four times that expense becomes necessary for the defence of the state, and consequently a revenue three or four times greater than the peace revenue. Supposing that the sovereign should have— what he scarce ever has — the immediate means of augmenting his revenue in pro¬ portion to the augmentation of his expense, yet still the produce of the taxes, from which this increase of revenue must be drawn, will not begin to come into the treasury till perhaps ten or twelve months after they are imposed; but the moment in which war begins, or rather the moment in which it appears likely to begin, the army must be augmented, the fleet must be fitted out, the garrisoned towns must be put into a posture of defence ; that army, that fleet, those garrisoned towns, must be furnished with arms, ammunition, and provisions : an im¬ mediate and great expense must be incurred o Chap. III. OF I’UBL in that moment of immediate danger, which will not wait for the gradual and slow returns of the new taxes. In this exigency govern¬ ment can have no other resource but in borrowing. The same commercial state of society which, by the operation of moral causes, brings government in this manner into the necessity of borrowing, produces in the subjects both an ability and an inclination to lend. If it commonly brings along with it the necessity of borrowing, it likewise brings with it the facility of doing so. A country abounding with merchants and manufacturers necessarily abounds with a set of people through whose hands not only their own capitals, but the capitals of all those who either lend them money or trust them with goods, pass as frequently, or more frequently than the revenue of a private man, who, without trade or business, lives upon his income, passes through his hands. The revenue of such a man can regularly pass through his hands only once in a year ; but the whole amount of the capital and credit of a merchant, who deals in a trade of which the returns are very quick, may sometimes pass through his hands two, three, or four times in a year. A country abounding with merchants, and manufacturers, therefore, necessarily abounds with a set of people who have it at all times in their power to advance, if they choose to do so, a very large sum of money to government. Hence the ability in the subjects of a commercial state to lend. Commerce and manufactures can seldom flourish long in any state which does not enjoy a regular administration of justice ; in which the people do not feel themselves secure in the possession of their property ; in which the faith of contracts is not sup¬ ported by law ; and in which the authority of the state is not supposed to be regularly employed in enforcing the payment of debts from all those who are able to pay. Com¬ merce and manufactures, in short, can seldom flourish in any state in which there is not a certain degree of confidence in the justice of government. I he same confidence which disposes great merchants and manu¬ facturers, upon ordinary occasions, to trust their property to the protection of a par¬ ticular government, disposes them, upon extraordinary occasions, to trust that govern¬ ment with the use of their property. By lending money to government, they do not even for a moment diminish their ability to carry on their trade and manufactures ; on the contrary, they commonly augment it. The necessities of the state render govern¬ ment, upon most occasions, willing to borrow upon terms extremely advantageous to the lender. The security which it grants to the original creditor is made transferable to any 2 DEBTS. 41S other creditor, and, from the universal con¬ fidence in the justice of the state, generally sells in the market for more than was originally paid for it. The merchant or monied man makes money by lending money to government, and instead of diminishing, increases his trading capital. lie generally considers it as a favour, therefore, when the administration admits him to a share in the first subscription for a new loan. Hence the inclination or willingness in the subjects of a commercial state to lend. The government of such a state is very apt to repose itself upon this ability and willingness of its subjects to lend their money on extraordinary occasions. It fore¬ sees the facility of borrowing, and therefore dispenses itself from the duty of saving. In a rude state of society there are no great mercantile or manufacturing capitals. The individuals who hoard whatever money they can save, and who conceal their hoard, do so from a distrust of the justice of govern¬ ment, from a fear that if it was known that they had a hoard, and where that hoard was to be found, they would quickly be plun¬ dered. In such a state of things few people would be able, and nobody would be willing, to lend their money to government on extraordinary exigencies. The sovereign feels that he must provide for such exigencies by saving, because he foresees the absolute impossibility of borrowing. This foresight increases still further his natural disposition to save. The progress of the enormous debts which at present oppress, and will in the long run probably ruin, all the great nations of Eu¬ rope, has been pretty uniform. Nations, like private men, have generally begun to borrow upon what may be called personal credit, without assigning or mortgaging any particular fund for the payment ol the debt; and when this resource has failed them, they have gone on to borrow upon assignments or mortgages of particular funds. What is called the unfunded debt of Great Britain is contracted in the former of those two ways. It consists partly in a debt which bears, or is supposed to bear, no interest, and which resembles the debts that a private man contracts upon account; and partly in a debt which bears interest, and which re¬ sembles what a private man contracts upon his bill or promissory note. The debts which are due cither for extraordinary ser¬ vices, or for services either not provided for or not paid at the time when they are per¬ formed ; part of the extraordinaries of the army, navy, and ordnance, the arrears of subsidies to foreign princes, those of seamen’s wages, &c. usually constitute a debt of the first kind. Navy and exchequer bills, which are issued sometimes in payment of a part of such debts, and sometimes for other pur* 414 OF PUBLIC DEBTS. Book; V. poses, constitute a debt of the second kind ; exchequer bills bearing interest from the day on which they are issued, and navy bills six months after they are issued. The Bank of England, cither by voluntarily discounting those bills at their current value, or by agree¬ ing with government for certain consider¬ ations to circulate exchequer bills, that is, to receive them at par, paying the interest which happens to be due upon them, keeps up their value and facilitates their circulation, and thereby frequently enables government to contract a very large debt of this kind. In France, where there is no bank, the state bills (billets d’etat 1 ) have sometimes sold at sixty and seventy per cent, discount. During the great recoinage in King William’s time, when the Bank of England thought proper to put a stop to its usual transactions, ex¬ chequer bills and tallies are said to have sold from twenty-five to sixty per cent, discount; owing partly, no doubt, to the supposed instability of the new government esta¬ blished by the revolution, but partly too to the want of the support of the Bank of Eng¬ land. When this resource is exhausted, and it becomes necessary, in order to raise money, to assign or mortgage some particular branch of the public revenue for the payment of the debt, government has, upon different occa~ sions, done this in two different ways : some¬ times it has made this assignment or mort¬ gage for a short period of time only, a year, or a few years, for example; and sometimes for perpetuity. In the one case the fund was supposed sufficient to pay, within the limited time, both principal and interest of the money borrowed. In the other it was supposed sufficient to pay the interest only, or a perpetual annuity equivalent to the in¬ terest, government being at liberty to redeem at any time this annuity, upon paying back the principal sum borrowed. When money was raised in the one way, it was said to be raised by anticipation ; when in the other, by perpetual funding, or, more shortly, by funding. In Great Britain, the annual land and malt taxes are regularly anticipated every year, by virtue of a borrowing clause con¬ stantly inserted into the acts which impose them. The Bank of England generally ad¬ vances at an interest, which, since the revo¬ lution, lias varied from eight to three per cent., the sums for which those taxes are granted, and receives payment as their pro¬ duce gradually comes in. If there is a de¬ ficiency, which there always is, it is provided for in the supplies of the ensuing year. The only considerable branch of the public reve¬ nue which yet remains unmortgaged, is thus regularly spent before it comes in. Like 1 See Examen dcs Reflexions Folitiques sur les Finances. an improvident spendthrift, whose pressing occasions will not allow him to wait for the regular payment of his revenue, the state is in the constant practice of borrowing of its own factors and agents, and of paying inter¬ est for the use of its own money. In the reign of King William, and during a great part of that of Queen Anne, before we had become so familiar as we are now with the practice of perpetual funding, the greater part of the new taxes were imposed but for a short period of time, (for four, five, six, or seven years only,) and a great part of the grants of every year consisted in loans upon anticipations of the produce of those taxes. The produce being frequently insuf¬ ficient for paying, within the limited term, the principal and interest of the money borrowed, deficiencies arose, to make good which, it became necessary to prolong the term. In 1697, by the 8th of William III. c. 20. the deficiencies of several taxes were charged upon what was then called the first general mortgage or fund, consisting of a prolongation to the first of August 1706, of several dif¬ ferent taxes, which would have expired within a shorter term, and of which the produce was accumulated into one general fund. The deficiencies charged upon this prolonged term amounted to 5,160,459/. 14s. 9^eZ. In 1701, those duties, with some others, were still further prolonged for the like pur¬ poses till the first of August 1710, and were called the second general mortgage or fund. The deficiencies charged upon it amounted to 2,055,999/. 7s. 11 \d. In 1707, those duties were still further prolonged, as a fund for new loans, to the first of August 1712, and were called the third general mortgage or fund. The sum borrowed upon it was 983,254/. 11s. 9\d. In 1708, those duties were all (except the old subsidy of tonnage and poundage, of which one moiety only was made a part of this fund, and a duty upon the importation of Scotch linen, which had been taken off by the articles of union) still further con¬ tinued, as a fund for new loans, to the first of August 1714, and were called the fourth general mortgage or fund. The sum borrowed upon it was 925,176/. 9s. <2\d. In 1709, those duties were all (except the old subsidy of tonnage and poundage, which was now left out of this fund altogether) still further continued for the same purpose to the first of August 1716, and were called the fifth general mortgage or fund. The sum borrowed upon it was 922,029Z. 6s. In 1710, those duties were again pro¬ longed to the first of August 1720, and were called the sixth general mortgage or fund. The sum borrowed upon it was 1,296,552/. 9s. lQtf. In 1711, the same duties, (which at this 415 OF PUBLIC DEBTS. Chap. III. time were thus subject to four different anti¬ cipations,) together with several others, were continued for ever, and made a fund for paying the interest of the capital of the So'uth° Sea company, which had thsft year advanced to government, for paying debts and making good deficiencies, the sum o 9,177,967/. 155. 4c/.; the greatest loan which at that time had ever been made. Before this period, the principal, and, so far as I have been able to observe, the only taxes which in order to pay the interest of a debt had been imposed for perpetuity, were those for paying the interest of the money which had been advanced to government by the bank and East India company, and of what it was expected would be advanced, but w hich was never advanced, by a projected land bank. The bank fund at this time amounted to 3,375,027/. 175. lOi OF PUBLIC DEBTS. ations, all that they could suffer from the in¬ crease of the duties of customs. The excise is the only part of the British system of taxation which would require to be varied in any respect according as it was applied to the different provinces of the em¬ pire. It might be applied to Ireland with¬ out any variation; the produce and consump¬ tion of that kingdom being exactly of the same nature with those of Great Britain. In its application to America and the West Indies, oi which the produce and consump¬ tion are so very different from those of Great Britain, some modification might be neces- S:lr ) > i n same manner as in its application to the cider and beer counties of England. A fermented liquor, for example, which is called beer, but which, as it is made of mo¬ lasses, bears very little resemblance to our beer, makes a considerable part of the com¬ mon drink of the people in America. This liquor, as it can be kept only for a few days, cannot, like our beer, be prepared and stored up for sale in great breweries; but every private family must brew it for their own use, in the same manner as they cook their victuals. But to subject every private fa¬ mily to the odious visits and examination of the tax-gatherers, in the same manner as we subject the keepers of alehouses and the brewers for public sale, would be altogether inconsistent with liberty. If, for the sake of equality, it was thought necessary to lay a tax upon this liquor, it might be taxed by taxing the material of which it is made, either at the place of manufacture, or, if the circum¬ stances of the trade rendered such an excise improper, by laying a duty upon its importa¬ tion into the colony in which it was to be consumed. Besides the duty of one penny a gallon imposed by the British parliament upon the importation of molasses into America, there is a provincial tax of this kind upon their importation into Massachusetts Bay, in ships belonging to any other colony, of eightpence the hogshead ; and another upon their importation from the northern colonies into South Carolina, of fivepence the gallon. Or, if neither of these methods was found convenient, each family might compound for its consumption of this liquor, either accord- ing to the number of persons of which it consisted, in the same manner as private families compound for the malt-tax in Eng¬ land ; or according to the different ages and sexes of those persons, in the same manner as several different taxes are levied in Hol¬ land, or nearly as Sir Matthew Decker pro¬ poses that all taxes upon consumable com¬ modities should be levied in England. This mode of taxation, it has already been ob- sei\ed, when applied to objects of a speedy 1 consumption, is not a very convenient one. It might be adopted, however, in cases where 110 better could be done. Sugar, rum, and tobacco, are commodities which are nowhere necessaries of life, which are become objects of almost universal con¬ sumption, and which are therefore extremelv proper subjects of taxation. If a union with the colonies were to take place, those com¬ modities might be taxed either before they go out of the hands of the manufacturer or grower; or, if this mode of taxation did not suit the circumstances of those persons, the) might be deposited in public warehouses, both at the place of manufacture and at all the different ports of the empire to which they might afterwards be transported, to re¬ main there, under the joint custody of the owner and the revenue officer, till such time as they should be delivered out, either to the consumer, to the merchant retailer for home consumption, or to the merchant exporter ; the tax not to be advanced till such delivery. ^ hen delivered out for exportation, to go duty-free, upon proper security being given, that they should really be exported out of the empire. These are perhaps the principal commodities, with regard to which a union with the colonies might require some consi¬ derable change in the present system of British taxation. y * lat 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 alto¬ gether impossible to ascertain with tolerable exactness. By means of this system, there is annually levied in Great Britain, upon less than eight millions of people, more than ten millions of revenue. Ireland contains more than two millions of people, and, ac¬ cording to the accounts laid before the con¬ gress, the twelve associated provinces of America contain more than three. Those ac¬ counts, however, may have been exaggerated, in order, perhaps, either to encourage their own people, or to intimidate those of this coun¬ try ; and we shall suppose, therefore, that our ISorth American and West Indian colonies, taken together, contain no more than three millions ; or that the whole British empire, in Europe and America, contains no more than thirteen millions of inhabitants. If upon less than eight millions of inhabitants this system of taxation raises a revenue of more than ten millions sterling, it ought upon thirteen millions of inhabitants to raise a revenue of more than sixteen millions two hundred and fifty thousand pounds sterling, hrom this revenue, supposing that this sys¬ tem could produce it, must be deducted the revenue usually raised in Ireland and the plantations for defraying the expense of their respective civil governments. The expense of the civil and military establishment of Ireland, together with the interest of the public debt, amounts, at a medium of the two years, which ended March 1775, to Chap. III. OF PUBLIC DEBTS. 427 something less than seven hundred and fifty thousand pounds a year. By a very exact account of the revenue of the principal colo¬ nies of America and the West Indies, it amounted, before the commencement of the present disturbances, to a hundred and forty- one thousand eight hundred pounds. In this account, however, the revenue of Mary¬ land, of North Carolina, and of all our late acquisitions both upon the continent and in the islands, is omitted ; which may perhaps make a difference of thirty or forty thousand pounds. For the sake of even numbers, therefore, let us suppose that the revenue necessary for supporting the civil government 3 of Ireland and the plantations may amount to a million. There would remain, conse¬ quently, a revenue of fifteen millions two hundred and fifty thousand pounds, to be applied towards defraying the general ex¬ pense of the empire, and towards paying the public debt. But if from the present revenue of Great Britain a million could in peaceable times be spared towards the payment of that ij 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 be sufficient in a few years to discharge the whole debt, and thus to restore com¬ pletely the at present debilitated and lan¬ guishing vigour of the empire. In the mean time the people might be relieved from some of the most burdensome taxes; from those which are imposed either upon the neces¬ saries of life or upon the materials of manu¬ facture. The labouring poor would thus be enabled to live better, to work cheaper, and to send their goods cheaper to market. The cheapness of their goods would increase the demand for them, and consequently for the labour of those who produced them. This increase in the demand for labour would both increase the numbers and improve the circumstances of the labouring poor. Their consumption would increase, and together with it the revenue arising from all those articles of their consumption upon which the taxes might be allowed to remain. The revenue arising from this system of taxation, however, might not immediately increase in proportion to the number of peo¬ ple w r ho were subjected to it. Great indul¬ gence would for some time be due to those provinces of the empire which were thus subjected to burdens to which they had not before been accustomed; and even when the same taxes came to be levied every where as exactly as possible, they w r ould not every where produce a revenue proportioned to the numbers of the people. In a poor coun¬ try the consumption of the principal com¬ modities subject to the duties of customs and excise is very small; and in a thinly inhabited country the opportunities of smug¬ gling are very great. The consumption Oi malt liquors among the inferior ranks of people in Scotland is very small; and the excise upon malt, beer, and ale, produces less there than in England, in proportion to the numbers of the people and the rate of the duties, which upon malt is different, on account of a supposed difference of quality. In these particular branches of the excise, there is not, I apprehend, much more smug¬ gling in the one country than in the other. The duties upon the distillery, and the greater part of the duties of customs, in proportion to the numbers of people in the respective countries, produce less in Scotland than in England, not only on account of the smaller consumption of the taxed commodi¬ ties, but of the much greater facility of smuggling. In Ireland the inferior ranks of people are still poorer than in Scotland, and many parts of the country are almost as thinly inhabited. In Ireland, therefore, the consumption of the taxed commodities might, in proportion to the number of the people, be still less than in Scotland, and the facility of smuggling nearly the same. In Ame¬ rica and the West Indies the white people, even of the lowest rank, are in much better circumstances than those of the same rank in England, and their consumption of all the luxuries in which they usually indulge themselves is probably much greater. The blacks, indeed, who make the greater part of the inhabitants both of the southern colo¬ nies upon the continent and of the West India islands, as they are in a state of slavery, are, no doubt, in a worse condition than the poorest people either in Scotland or Ireland. We must not, however, upon that account, imagine that they are worse fed, or that their consumption of articles which might be sub¬ jected to moderate duties is less than that even of the lower ranks of people in Eng¬ land. In order that they may work well, it is the interest of their master that they should be fed well, and kept in good heart, in the same manner as it is his interest that his working cattle should be so. The blacks, accordingly, have almost every where their allowance of rum and of molasses or spruce beer, in the same manner as the white ser¬ vants ; and this allowance would not pro¬ bably be withdrawn, though those articles should be subjected to moderate duties. The consumption of the taxed commodities, therefore, in proportion to the number of inhabitants, would probably be as great in America and the West Indies as in any part of the British empire. The opportunities of smuggling, indeed, would be much greater; America, in proportion to the extent of the country, being much more thinly inhabited 428 Book V OF PUBLIC DEBTS than either Scotland or Ireland. If the re¬ venue, however, which is at present raised by the different duties upon malt and malt liquors, were to be levied by a single duty upon malt, the opportunity of smuggling in the most important branch of the excise would be almost entirely taken away : and if the duties of customs, instead of being imposed upon almost all the different articles of importation, were confined to a few of the most general use and consumption, and if the levying of those duties were subjected to the excise laws, the opportunity of smug¬ gling, though not so entirely taken away, would be very much diminished. In con¬ sequence of those two apparently very simple and easy alterations, the duties of customs and excise might probably produce a revenue as great in proportion to the consumption of the most thinly inhabited province, as they do at present in proportion to that of the most populous. The Americans, it has been said, indeed, have no gold or silver money ; the interior commerce of the country being carried on by a paper currency, and the gold and silver which occasionally come among them being all sent to Great Britain in return for the commodities which they receive from us ; but without gold and silver, it is added, there is no possibility of paying taxes. We already get all the gold and silver which they have. How is it possible to draw from them what they have not ? The present scarcity of gold and silver money in America is not the effect of the poverty of that country, or of the inability of the people there to purchase those metals. In a country where the wages of labour are so much higher, and the price of provisions so much lower than in England, the greater part of the people must surely have where¬ withal to purchase a greater quantity, if it were either necessary or convenient for them to do so. The scarcity of those metals, there¬ fore, must be the effect of choice, and not of necessity. It is for transacting either domestic or foreign business, that gold and silver money is either necessary or convenient. The domestic business of every country, it has been shown in the second book of this Inquiry, may, at least in peaceable times, be transacted by means of a paper currency, with nearly the same degree of conveniency as by gold and silver money. It is con¬ venient for the Americans, who could always employ with profit in the improvement of their lands, a greater stock than they can easily get, to save as much as possible the expense of so costly an instrument of com¬ merce as gold and silver ; and rather to em¬ ploy that part of their surplus produce which would be necessary for purchasing those metals, in purchasing the instruments of trade, the materials of clothing, several parts of household furniture, and the iron work necessary for building and extending their settlements and plantations ; in purchasing, not dead stock, but active and productive stock. The colony governments find it for their interest to supply the people with such a quantity of paper money as is fully suffi¬ cient, and generally more than sufficient, for transacting their domestic business. Some of those governments, that of Pennsylvania particularly, derive a revenue from lending this paper money to their subjects, at an in¬ terest of so much per cent. Others, like that of ^Massachusetts Bay, advance, upon extraordinary emergencies, a paper money of this kind for defraying the public expense, and afterwards, when it suits the conve¬ niency of the colony, redeem it at the de¬ preciated value to which it gradually falls. In 1747 1 , that colony paid in this manner the greater part of its public debts, with the tenth part of the money for which its bills had been granted. It suits the conveniency of the planters to save the expense of em¬ ploying gold and silver money in their domestic transactions ; and it suits the con¬ veniency of the colony governments to sup¬ ply them with a medium, which, though attended with some very considerable disad¬ vantages, enables them to save that expense. The redundancy of paper money necessar i]y banishes gold and silver from the domestic transactions of the colonies, for the same reason that it has banished those metals from the greater part of the domestic transactions in Scotland; and in both countries it is not the poverty, but the enterprising and pro¬ jecting spirit of the people, their desire of employing all the stock which they can get as active and productive stock, which has occasioned this redundancy of paper money. In the exterior commerce which the dif¬ ferent colonies carry on with Great Britain, gold and silver are more or less employed, exactly in proportion as they are more or less necessary. Where those metals are not necessary, they seldom appear. Where they are necessary, they are generally found. In the commerce between Great Britain and the tobacco colonies, the British goods are generally advanced to the colonists at a pretty long credit, and are afterwards paid tor in tobacco, rated at a certain price. It is more convenient for the colonists to pay in tobacco than in gold and silver. It 'would be more convenient for any merchant to pay for the goods which his correspondents had sold to him in some other sort of goods which he might happen to deal in, than in money. Such a merchant would have no 1 See Hutchinson’s History of Massachusetts Bav, vol. ii. p. 436. ct ncq. OF PUBLIC DEBTS. 429 ClIAI*. III. occasion to keep any part of his stock by trim unemployed, and in ready money, for answering occasional demands. He could have at all times a larger quantity of goods ’n his shop or warehouse, and he could deal to a greater extent. But it seldom happens to be convenient for all the correspondents of a merchant to receive payment for the goods which they sell to him, in goods of some other kind which he happens to deal in. The British merchants who trade to Virginia and Maryland happen to be a par¬ ticular set of correspondents, to whom it is more convenient to receive payment for the goods which they sell to those colonies in tobacco than in gold and silver. They ex¬ pect to make a profit by the sale of the tobacco. They could make none by that of the gold and silver. Gold and silver, there¬ fore, very seldom appear in the commerce between Great Britain and the tobacco co¬ lonies. Maryland and Virginia have as little occasion for those metals in their foreign as in their domestic commerce. They are said, accordingly, to have less gold and silver money than any other colonies in America. They are reckoned, however, as thriving, and consequently as rich, as any of their neighbours. In the northern colonies, Pennsylvania, New York, New Jersey, the four govern¬ ments of New England, &c., the value of their own produce which they export to Great Britain is not equal to that of the manufactures which they import for their own use, and for that of some of the other colonies to which they are the carriers. A balance, therefore, must be paid to the mo¬ ther country in gold and silver, and this balance they generally find. In the sugar colonies the value of the pro¬ duce annually exported to Great Britain, is much greater than that of all the goods im¬ ported from thence. If the sugar and rum annually sent to the mother country were paid for in those colonies, Great Britain would be obliged to send out every year a very large balance in money ; and the trade to the West Indies would, by a certain spe¬ cies of politicians, be considered as extremely disadvantageous. But it so happens that many of the principal proprietors of the sugar plantations reside in Great Britain. Their rents are remitted to them in sugar and rum, the produce of their estates. The susrar and rum which the West India mer- o chants purchase in those colonies upon their own account are not equal in value to the goods which they annually sell there. A balance, therefore, must necessarily be paid to them in gold and silver, and this balance too is generally found. The difficulty and irregularity of payment from the different colonies to Great Britain have not been at all in proportion to the greatness or smallness of the balances which were respectively due from them. Payments have in general been more regular from the northern than from the tobacco colonies, though the former have generally paid a pretty large balance in money, while the latter have either paid no balance, or a much smaller one. The difficulty of getting pay¬ ment from our different sugar colonies has been greater or less in proportion, not so much to the extent of the balances respect¬ ively due from them, as to the quantity of uncultivated land which they contained; that is, to the greater or smaller temptation which the planters have been under of over¬ trading, or of undertaking the settlement and plantation of greater quantities of waste land than suited the extent of their capitals. The returns from the great island of Jamaica, where there is still much uncultivated land, have, upon this account, been in general more irregular and uncertain than those from the smaller islands of Barbadoes, An¬ tigua, and St. Christopher’s, which have for these many years been completely cultivated, and have, upon that account, afforded less field for the speculations of the planter. The new acquisitions of Grenada, Tobago, St. Vincent’s, and Dominica, have opened a new field for speculations of this kin.d ; and the returns from those islands have of late been as irregular and uncertain as those from the great island of Jamaica. It is not, therefore, the poverty of the co¬ lonies which occasions, in the greater part of them, the present scarcity of gold and silver money. Their great demand for active and productive stock makes it convenient for them to have as little dead stock as possible ; and disposes them, upon that account, to content themselves with a cheaper though less commodious instrument of commerce than gold and silver. They are thereby en¬ abled to convert the value of that gold and silver into the instruments of trade, into the materials of clothing, into household furni¬ ture, and into the iron work necessary for building and extending their settlements and plantations. In those branches of business which cannot be transacted without gold and silver money, it appears that they can always find the necessary quantity of those metals; and if they frequently do not find it, their failure is generally the effect, not of their necessary poverty, but of their unnecessary and excessive enterprise. It is not because they are poor that their payments are irre¬ gular and uncertain, but because they are too eager to become excessively rich. 1 hough all that part of the produce of the colony taxes which was over and above what was necessary for defraying the expense of their own civil and military establishments were to be remitted to Great Britain in gold and silver, the colonies have abundantly where- 4S0 OF PUBLIC DEBTS. Book V. withal to purchase the requisite quantity of those metals. They would in this case be obliged, indeed, to exchange a part of their surplus produce, with which they now pur¬ chase active and productive stock, for dead stock. In transacting their domestic busi¬ ness they would be obliged to employ a costly instead of a cheap instrument of commerce ; and the expense of purchasing this costly instrument might damp somewhat the viva¬ city and ardour of their excessive enterprise in the improvement of land. It might not, however, be necessary to remit any part of the American revenue in gold and silver. It might be remitted in bills drawn upon and accepted by particular merchants or compa¬ nies in Great Britain, to whom a part of the surplus produce of America had been con¬ signed, who would pay into the treasury the American revenue in money, after having themselves received the value of it in goods; and the whole business might frequently be transacted without exporting a single ounce of gold or silver from America. It is not contrary to justice that both Ire¬ land and America should contribute towards the discharge of the public debt of Great Britain. That debt has been contracted in support of the government established by the revolution ; a government to which the pro- testants of Ireland owe, not only the whole authority which they at present enjoy in their own country, but every security which they possess for their liberty, their property, and their religion ; a government to which several of the colonies of America owe their present charters, and consequently their pre¬ sent constitution, and to which all the colo¬ nies of America owe the liberty, security, and property which they have ever since en¬ joyed. That public debt ha been contracted in the defence, not of Great Britain alone, but of all the different provinces of the empire; the immense debt contracted in the late war in particular, and a great part of that con¬ tracted in the war before, were both properly contracted in defence of America. By a union with Great Britain, Ireland would gain, besides the freedom of trade, other advantages much more important, and which would much more than compensate any increase of taxes that might accompany that union. By the union with England, the middling and inferior ranks of people in Scotland gained a complete deliverance from the power of an aristocracy which had always before oppressed them. By a union with Great Britain, the greater part of the people of all ranks in Ireland would gain an equally complete deliverance from a much more oppressive aristocracy; an aristocracy not founded, like that of Scotland, in the natural and respectable distinctions of birth and for- > The incorporating union with Ireland effected in 1 m) 1 , has hitherto only partially delivered the people in that country from the domination of the oppressive tune, but in the most odious of all distinc¬ tions, those of religious and political preju¬ dices ; distinctions which, more than any other, animate both the insolence of the op¬ pressors and the hatred and indignation of the oppressed, and which commonly render the inhabitants of the same country more hostile to one another than those of different coun¬ tries ever are. Without a union with Great Biuain, the inhabitants of Ireland are not likely, for many ages, to consider themselves as one people. 1 No oppressive aristocracy has ever prevailed in the colonies. Even they however would, in point of happiness and tranquillity, gain considerably by a union with Great Britain. It would at least deliver them from those rancorous and virulent factions which are in¬ separable from all small democracies, and which have so frequently divided the affections of their people, and disturbed the tranquillity of their governments, in their form so nearly democratical. In the case of a total separa¬ tion from Great Britain, which, unless pre¬ vented by a union of this kind, seems very likely to take place, those factions would be ten times more virulent than ever. Before the commencement of the present disturb¬ ances, the coercive power of the mother coun¬ try had always been able to restrain those factions from breaking out into any thing worse than gross brutality and insult. If that coercive power were entirely taken away, they would probably soon break out into open violence and bloodshed. In all great countries which are united under one uniform government, the spirit of party commonly prevails less in the remote provinces than in the centre of the empire. The distance of those provinces from the capital, from the principal seat of the great scramble of faction and ambition, makes them enter less into the views of any of the contending parties, and renders them more indifferent and im¬ partial spectators of the conduct of all. The spirit of party prevails less in Scotland than in England. In the case of a union it would probably prevail less in Ireland than in Scot¬ land, and the colonies would probably soon enjoy a degree of concord and unanimity at present unknown in any part of the British empire. Both Ireland and the colonies, in¬ deed, would be subjected to heavier taxes than, any which they at present pay. In consequence, however, of a diligent and faithful application of the public revenue to¬ wards 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 territorial acquisitions of the East and intolerant aristocracy alluded to by Dr. Smith : but it has paved the way for the complete consum* mation of that desirable consequence. OF PUBLIC DEBTS. 431 ?UAI\ III* ndia company, the undoubted right of the rown, that is, of the state and people of jreat Britain, might be rendered another ource of revenue more abundant, perhaps, ban all those already mentioned. Those :ountries are represented as more fertile, nore extensive, and, in proportion to their >xtent, much richer and more populous than Great Britain. In order to draw a great •evenue from them, it would not probably >e necessary to introduce any new system )f taxation into countries which are already efficiently and more than sufficiently taxed, [t might perhaps be more proper to lighten :han to aggravate the burden of those un¬ fortunate countries, and to endeavour to iraw a revenue from them, not by imposing new taxes, but by preventing the embezzle¬ ment and misapplication of the greater part those which they already pay. If it should be found impracticable for Great Britain to draw any considerable augmentation of revenue from any of the resources above mentioned; the only re¬ source which can remain to her, is a dimi¬ nution of her expense. In the mode of collecting and in that of expending the public revenue, though in both there may be still room for improvement, Great Britain seems to be at least as economical as any of her neighbours. The military establishment which she maintains for her own defence in time of peace is more moderate than that of any European state which can pretend to rival her either in wealth or in power. None of those articles, therefore, seem to admit of any considerable reduction of ex¬ pense. The expense of the peace establish¬ ment of the colonies was, before the com¬ mencement of the present disturbances, very considerable, and is an expense which may, and, if no revenue can be drawn from them, ought certainly to be saved altogether. This constant expense in time of peace, though very great, is insignificant in com¬ parison with what the defence of the colonies has cost us in time of war. The last war, which was undertaken altogether on account of the colonies, cost Great Britain, it has already been observed, upwards of ninety mil¬ lions. ’ The Spanish war of 1739 was princi¬ pally undertaken on their account; in which, and in the French war that was the conse¬ quence of it, Great Britain spent upwards of forty millions, a great part of which ought justly to be charged to the colonies. In those two wars the colonies cost Great Britain much more than double the sum which the national debt amounted to before the commencement of the first of them. Had it not been for those wars, that debt might, and probably would, by this time have been completely paid ; and had it not been for the colonies, the former of those wars might not, and the latter certainly would not, have been undertaken. It was because the colonies were supposed to be provinces of the British empire, that this expense was laid out upon them. But countries which contribute neither revenue nor military force towards the support of the empire, cannot be considered as pro¬ vinces. They may perhaps be considered as appendages, as a sort of splendid and showy equipage of the empire. But if the empire can no longer support the expense of keeping up this equipage, it ought cer¬ tainly to lay it down ; and if it cannot raise its revenue in proportion to its expense, it ought at least to accommodate its expense to its revenue. If the colonies, notwith¬ standing their refusal to submit to British taxes, are still to be considered as provinces of the British empire, their defence in some future war may cost Great Britain as great an expense as it ever has done in any former war. The rulers of Great Britain have, for more than a century past, amused the people with the imagination that they possessed a great empire on the west side of the Atlantic. This empire, however, has hitherto existed in imagination only. It has hitherto been, not an empire, but the project of an empire; not a gold mine, but the project of a gold mine; a project which has cost, which con¬ tinues to cost, and which, if pursued in the same way as it has been hitherto, is likely to cost immense expense, without being likely to bring any profit; for the effects of the monopoly of the colony trade, it has been shown, are, to the great body of the people, mere loss instead of profit. It is surely now time that our rulers should either realise this golden dream, in which they have been indulging themselves, per¬ haps, as well as the people, or that they should awake from it themselves, and en¬ deavour to awaken the people. If the project cannot be completed, it ought to be given up. If any of the provinces of the British empire cannot be made to contribute towards the support of the whole empire, it is surely time that Great Britain should free herself from the expense of defending those provinces in time of war, and of supporting any part of their civil or mili¬ tary establishments in time of peace, and endeavour to accommodate her future views and designs to the real mediocrity of her circumstances. END OF THE WEALTH OF NATIONS. SUPPLEMENTAL NOTES AND DISSERTATIONS. Non enim me cuiquam mancipari, nullius nomen fero: multum magnorum virorum judicio credo, aliquid et meo vindico. Nam illi quoque, non inventa, sed quasrenda, nobis reliquerunt. Seneca. F f NOTES AND DISSERTATIONS NOTE I. DEFINITION OF LABOUR. As most reasonings in political economy- have either a direct or indirect reference to labour, it is of the utmost importance to have a clear conception of what is meant by that term. Dr. Smith has nowhere stated the precise meaning he attached to the word labour. It seems, however, that generally speaking, he supposed it to mean the exertions made by human beings to bring about some desir¬ able result. 1 But he has not always under¬ stood it in this confined sense; and had he done so, it would have been a departure from ordinary usage, and would have involved him in inconsistencies. It has been the universal custom, not of political economists only, but of all who have had occasion to treat of such subjects, to apply the term labour to the exertions made by' such of the lower animals as have been domesticated and employed in industrious undertakings. Conformably to this custom, Dr. Smith has denominated the horses and oxen employed by the farmer “ labouring cattle ; ” and we are not aware that it has ever been alleged that this is an improper denomination, or that the term labour should not be extended so far. But we incline to think that this term ought to be understood still more compre¬ hensively. It is universally admitted that, in an economical point of view, the lower animals are to be regarded only as a species of machines. But if it may be justly said that a horse labours, may it not also be said that a steam engine labours? In point of j orinciple there is no real difference between ; :he two operations. In both power is em¬ ployed to produce a desirable result; and if ! ;he value of the power, applied and expended, >e the same, the value of the results will be he same, though the agents employed be in r:he one case sensible of toil and privation, ind in the other not. Nor is it easy to see ! 1 Mr. Senior, the author of the able article on i Political Economy, in the Encyclopaedia. Metropoli- anu , in his remarks on some definitions in this 1 cience published in the Appendix to Dr A\ hateley’s Treatise on Logic, states that the word labour signi- ies beth the act of labour and the result of that act; >bservmg that it is used in the second sense when how, under such circumstances, it can be justly considered as in any respect unwar¬ rantable to appty the same common term to express the action or operation by which the wished-for result is produced. Suppose, still further to illustrate this principle, that a piece of work may be per¬ formed, or an effect produced, by the agency' of men, horses, machinery, or natural powers, as wind or water: everv one would admit that it was correct to sav that it might be performed, or the result produced indiffer¬ ently by the action or operation of any of these agents. But no more is meant when it is said that it may be performed or brought about by their labour. In this respect labour is synonymous with action, opera¬ tion, &c. It consists in the application of power to produce a result The thing that applies the power is the acting, operating, or labouring instrument: and though it be most certainly true, that the species of instru¬ ment is, in other respects, of very great im¬ portance, that circumstance affects neither the nature of the operation nor its physical and wished-for results. It appears, therefore, that labour may be properly defined any sort of action or oper¬ ation, whether performed by man, the lower animals, machinery, or natural agents, that tends to bring about anv desirable result. In as far, however, as that result is brought about by the labour or operation of natural agents, that can neither be monopolised nor appropriated, it has no value. What is done by these agents is done gratuitously. They cost nothing; and every one may r avail him¬ self at pleasure of their services. But when such is the case, it is plain that no individual will part with any portion of what has cost him any r trouble to acquire to get possession of what may be obtained in unlimited quan¬ tities for nothing. Thus, in the instance of corn ground by a wind-mill, the action or labour of the wind in turning the machinery of the mill is the spontaneous gift of nature, we talk of accumulated labour. But the latter phrase is merely a compendious, though inaccurate, mode of signifying the accumulated products or results of labour. A steam-engine is the produce of labour, but no one ever thought of ciling it labour. F f 2 436 DEFINITION OF LABOUR. Note I. and is therefore of no value, and fetches no price ; so that the cost of grinding the corn, or the value of the work performed by the mill, is determined, partly by the wages of the persons employed in working the machine, and partly by its cost, the time it is em¬ ployed, and its wear and tear. It cannot be doubted, to give another instance, that the impulse of the wind, and the buoy¬ ancy of the water, contribute quite as much as the skill or labour of the sailor to trans¬ port ships from one hemisphere to an¬ other. But the services performed by these agents is the free gift of Providence, and -cannot be monopolised. And hence, in es¬ timating the freight of goods brought from a distant port, the aid derived from natural agents is wholly neglected, and it is exclu¬ sively determined by the wages of the sailors and the value of the ship or capital. It follows, therefore, that all effects may be properly considered as the product or sequence of labour of some sort or other: but their value is entirely dependant on the quantity of the labour of man, or of capital, that is, of the accumulated produce of the anterior labour of man and of machinery, expended in bringing them about. Hence, when it is said that commodities are wholly produced by means of labour, reference is necessarily made to all sorts of labour, whe¬ ther of man, capital, or natural agents. But when it is said, that the value of commodities or products is determined by the quantity of labour expended on their production, reference is made only to that species of labour which is possessed of valuer that is, to the amount of human labour, or of capital expended, or both. When non-monopolised natural agents concur in production, what they do is done gratis. Their operations are often of vastly more consequence than those of man, or the capital produced by man; but as they are performed spontaneously, they are neither valuable themselves, nor can communicate that quality to any thing else. It has been said by some of those who admit the accuracy of the principles now stated, that it might notwithstanding be ad¬ visable to restrict the term labour, so as to make it expressive only of the voluntary action of man and the lower animals, or of beings susceptible of the feelings of toil and privation ; and to call the action or operation ■of machinery and natural agents by some •other name. But a distinction of this sort, though in some respects perhaps it might be desirable, is on the whole objectionable ; because it gives countenance to the idea that there is some radical difference between the labour of man and of machinery, whereas, in so far as the doctrines and conclusions of political economy are concerned, they are in all respects the same. If equal sums be expended on the wages of labourers, the maintenance of horses, and the hire of ma¬ chines, the work performed by all of them will obviously be of the same value. And as all the investigations of this science turn upon questions connected with value, it is only reasonable that agents producing the same or similar values, how widely soever they may differ in other respects, should be regarded by the economist under the same point of view, and be designated by the same common term. But admitting that it may be best to ex¬ press the action of men, the lower animals, and machinery, that is, of men and capital, by the same common term, still it may be contended, that it is wrong to apply this term to express the action of natural powers or agents. But the production of a desired effect, of some sort or other, seems to be the best criterion of labour that can be adopted. When we succeed in employing water or wind in any industrious undertaking, it is uniformly said that we make them perform a part of what must otherwise have been wholly the work of man, that we make them labour or work for us. It is true, as already stated, that what such agents do is gratuitous; but their labour is not the less real on that account. The influence of the wind on the sails of a ship is as sensible as the influence of the hand on the helm or of a fire on the boiler of a steam engine ; though, as it is not like them, either wholly or partially the im¬ mediate or remote result of human industry, it has no value. Those who object to the application of the same term to designate the action of man, capital, and natural agents in the production of commodities are involved in inextricable difficulties. There are a variety of products which, after they are brought into a certain state, and are no longer subjected to the action of man or machinery, notwithstanding under¬ go further changes through the operation of natural agents, and acquire additional value. Now the question is, of what is this increased value the result ? Those who contend that it is in no degree dependant on labour, say that it is a compensation for the time the capital vested in the commodities is retained in a state of inaction. But that this is not a satis¬ factory or accurate explanation, is obvious from the circumstance, that were no change produced upon the commodities, they might be retained in a cellar or a warehouse for the most lengthened period, without becoming more desirable, or acquiring the smallest additional value. Owing, however, to the change that has been effected, the commo¬ dities acquire greater utility, and become more in demand; while, as time is required for the completion of the change, they also acquire an additional value : the amount of this added value depending partly on the magnitude and waste of the capital, and Note I. DEFINITION O-F LABOUR. 427 partly on the time during which it is em¬ ployed, or which is required to produce the desired change. There is not, in fact, any substantial dii- ference, in point of principle, between the process of fermentation, carried on inside a cask of wine or beer, and the action of the wind on the sails of a ship, or the blades of a wind-mill. And if we may justly say that corn is ground by means of labour, we may also justly say that wine or beer is purified by its means. A cask of new wine is a capital which represents, or is the result of, the labour laid out in cultivating, gathering, and pressing the grapes of which it is made; and the natural processes carried on inside the cask have the same sort of influence on this capital that the action of the wind has on a ship or a mill. They produce the de¬ sired change or effect. The value of that change is not, however, dependant on them, but on the amount of capital, or of the pro¬ duce of previous labour, that co-operatea with them in the production of the effect, and the time during which it was so em¬ ployed ; quite as the cost of grinding corn does not depend on the wind or water that turns the mill, but on the amount of ca¬ pital wasted in the operation. M. Say is one of those who contend that na tural agents, by contributing materially to the production of most sorts of commodities, not only add to the mass of useful and desirable products, but also to their value in exchange. (77s ont non seu'ement une valeur (Tutilitc mais une valeur echangeable. 1 ) This is a fundamental error into which Say was led from his con¬ founding utility and value. There is, how¬ ever, no more analogy between the utility of a commodity, or its capacity to satisfy our wants and desires, and its value in exchange, than there is between its weight and colour. M. Say observes, that when a manufacturer, by availing himselt of some natural power, reduces the cost of an article from twenty to fifteen francs, those who purchase the com¬ modity have five francs more than they had before to expend on other things. This is true; but instead of proving that the em¬ ployment of the natural power has been productive of these five francs, or of any value, it proves the reverse. Those who buy the commodity at its reduced price obtain the same utility, or the same quantity of produce, as before the reduction took place; but they do this because the commodity has declined proportionally in value—because a natural power or agent whose services cost nothing, and which is therefore wholly inca¬ pable of communicating value to any thing, has been employed to perform a part of the work that had previously been performed either by man or by capital. It is singular, that notwithstanding this radical error was set in a very striking point of view by Mr. Ricardo, INI. Say allowed it to continue to infect and vitiate every part of his work. In conclusion, therefore, it may be ob¬ served that every useful or desirable result must be brought about by the action, oper¬ ation, or labour of man, capital, or natural agents. Except, however, in cases where they admit of being monopolised and appro¬ priated, the labour or action of natural agents being performed gratuitously, it follows that the value of the result or effect produced is to be measured by the quantity of capital, or of labour required to produce it. i Traite d’ Economie Politique, tome i. p. 36. 5me edit. NOTE II. DEFINITION, SOURCES, AND REGULATING PRIN¬ CIPLES OF VALUE. A knowledge of the sources whence the value of commodities is derived, and of the principles by which it is limited and deterr mined, being of essential importance in all inquiries in political economy, we shall here take leave to submit the following observ¬ ations on these points, by way of supplement to those made by Dr. Smith in the fifth chapter of the first book of the Wealth of Nations, and other parts of that work.. I. Definition of Value. — W hen it is said that an article or product is possessed of value, it is meant that individuals are dis¬ posed to give some quantity of human labour, or some quantity of an article or product obtainable only by means of that labour, in exchange for it. II. Sources of Value. —The power or ca- N pacity which certain articles or products pos¬ sess of satisfying one or more of the wants and desires of which man is susceptible, con¬ stitutes their utility, and renders them ob¬ jects of demand. Possessing utility commodities derive their value from two sources First, from the labour required to produce, procure, or preserve them ; or, second , from their being placed under a natural or an artificial mo¬ nopoly. (1.) An article may be possessed of the highest degree of utility, or of power to minister to our wants and enjoyments, and be universally made use of, without possessing exchangeable value. It is true that if it be destitute of utility of some spe¬ cies or other, it can never become an object of demand ; but how necessary soever any article may be to our comfort or even exist¬ ence, still, if it be a spontaneous production of nature — if it exist independently of human agency — and if all individuals may command it in indefinite quantities, without F f n 438 DEFINITION, &e. OF VALUE. any voluntary exertion or labour on their part, it is destitute of value, and can afford no basis for the reasonings of the economist. .An article is not valuable simply because it is useful; but it is valuable when, having this quality, it cannot be procured except by the exertion of labour, that is, by the sacri¬ fice of a certain amount of sweat and toil, or of its produce. It cannot justly be said, that, the food with which we appease the cravings of hunger, or the clothes by which we are defended from the inclemency of the weather, are more useful than atmospheric air; and yet they possess exchangeable value pf which air is totally destitute. The reason is, that the former are not, like the latter, gratuitous products ; they cannot be had at ah. times and in any quantity without ex¬ ertion j on the contrary, labour is always required for their production or appropria¬ tion., 01 both ; and as no one will voluntarily sacrifice the fruits of his industry without getting an equivalent, they are truly said to possess value, or the power of exchanging for ethers produced under like circum¬ stances. (2.) The expenditure of labour, or of its produce, in the production or acquisition of commodities is not, however, the only source, though it be by far the most abundant one, of value. Provided a commodity or product in demand be appropriated and enjoyed by one or a. number of persons to the exclusion of others, it may have exchangeable value, that is, other persons may be disposed to give a portion of their labour, or of its produce, in exchange for it, though it have not really cost its owners anything. This results from the circumstance of the commodity existing only in a limited degree of abundance, and consequently under such circumstances as admit of its being monopolised. A person who has a water-fall on his estate may some¬ times get a considerable rent for it; and a person who has stumbled upon an antique gem may probably sell it at a very high price. The number of water-falls and *of antique gems is limited, and cannot be in¬ creased ; fresh capital and labour cannot be applied to their production ; and, therefore, although the water-fall originally cost no¬ thing, it may, notwithstanding, come to be let for a sum equivalent to the value of the labour it will save to those who employ it to give motion to machinery, or to produce some desired effect. The value of the gem will not be thus regulated : for, as the de¬ mand for it depends wholly on the caprices of taste and fashion, and on the wealth of those desirous to possess such rarities, it may tluctuate to almost any extent. Abstracting, however, from those natural Note II. 1 It is, perhaps, unnecessary to remark, that the word labour means here, and in all discussions re¬ specting value, unless the contrary be distinctly powers or capacities capable of being mono¬ polised, and the value of which must always be limited by that of the labour they can save to those who employ them, such com¬ modities as are either absolutely limited in their quantity or admit of being monopolised aie but few and unimportant when compared with the mass of commodities in circulation. Vv hen. however, it is said that the labour of man is either immediately and directly, or remotely and indirectly, the chief sou’rce and limiting principle of exchangeable value, all descriptions of monopolised products and commodities are expressly or tacitly ex¬ cepted, and reference is made to those only v hose quantity may be increased to any ex¬ tent by applying fresh capital and labour to their pioduction, and which are not sub- jected to any species of fetter or restraint. lhe word value has been frequently em¬ ployed to express, not only the exchangeable worth of an article, or its capacity ofexchang- ing for other things obtainable only by means of labour, but also its utility, or its fitness for satisfying our wants, and contributing to our comforts and enjoyments. But it is ob- ^ous that the utility of commodities — that tiie capacity of bread, for example, to appease hunger, or of water to quench thirst — is a totally different quality from their capacity °f exchanging for other commodities. Dr. Smith perceived this difference, and showed tne importance of distinguishing between the utility, or, as he expressed it, the “ value in use" of commodities, and their value in ex¬ change. To confound such essentially dif¬ ferent qualities must evidently lead to the most absurd conclusions. And hence, to a^ oid mistaking the sense of so important a word as value, it would be better not to use it except to signify exchangeable worth or value in exchange ; and to use the word utility to express the power or capacity of an article to satisfy our wants or gratify our desires. Having premised these observations with respect to the source or origin of value, the next object of importance is to discover the principle by which its amount is limited or determined. Suppose that two commodities, A and B, are produced in the degree necessary fully to supply the effectual demand, or the demand of those able and willing to pay the expense of their production ; that the quantity of each may be indefinitely increased ; and that double the labour 1 is required to produce a given quantity of A that is required to pro¬ duce the same quantity of B. Under such circumstances, 1 A would obviously ex¬ change for, or be worth, 2 B. The labour required for their production forms, by the supposition, the only source and measure of mentioned, the immediate labour of man, or the la- bour of the capital produced by man, or both ; as explained in the note on Labour. f ■ \t 0TE II. DEFINITION, Sec, OF VALUE. their value ; and, therefore, if double the □quantity of labour that is required to produce the one be required to produce the other, it must necessarily be of double value. Hence it results that the value of such commodities as are the product of labour, and are not subjected to any species of mo¬ nopoly, is determined, so long as their supply is adjusted according to the effective demand, by the quantities of labour required for their production. It has been said, that it cannot truly be affirmed that the supply of commodities is ever adjusted precisely in proportion to the demand; and if reference be made to the entire mass of commodities, this is most pro¬ bably true. But the producers are always endeavouring to establish this proportion; though, owing to the unforeseen changes which are perpetually taking place in the d demand for certain articles, and in the sup¬ ply of others, it generally happens, when a considerable number are brought to market, that the supply of some is either too great or too small, their value being in the for¬ mer case, depressed below its natural level, and in the latter, raised above it. An un¬ usually luxuriant harvest, by increasing the supply of corn above its average amount, sinks its value or price ; while an unusually deficient harvest has an opposite effect; for by reducing the supply of corn below its average, it increases the competition of the buyers, and raises its value or price ; though the quantity of labour expended on the crop in both years may have been about the same, and so of any other commodity. And hence, in order to disentangle this important subject, and to set it in a clear point of view, it is necessary to distinguish between the value and cost of commodities or products. By the first , or the value of a commodity or product, is meant its power or capacity of exchanging for or buying other commodities or labour; and by the second , or its cost, is meant the quantity of labour which was required for its production or ap¬ propriation, or rather the quantity which would be required for the production or ap¬ propriation of a similar commodity at the time when the investigation is made. I. Exchangeable value, or the capacity of exchanging for labour or its produce, is a quality inherent in every commodity for which there is any demand, provided any quantity of labour has been directly or indi¬ rectly expended upon it, or that it exists in limited quantities only. But this quality can neither be manifested nor appreciated, except when commodities are compared with each other or with labour. It is indeed quite impossible to speak of the value of a commo¬ dity, without referring to some one else, or 1 The conditions essential to an invariable measure of exchangeable value were first clearly pointed out to labour as a standard. No article, or pro¬ duct, possesses exchangeable value, except in relation to something else, that either is or may be exchanged for it. It would be quite as correct to talk about absolute height or absolute depth, as about absolute value. A is said to possess value, because it will ex¬ change for a certain quantity of B or C ; and it is evident, that this quantity forms the only attainable measure of, or expression for, the value of A ; as the quantity of A forms the measure of or expression for the value of B or C. It follows, from the circumstance of ex¬ changeable value being the power which a commodity has of exchanging for others or for labour, that the exchangeable value of no single commodity can vary without occa¬ sioning a simultaneous variation in the value of every one with which it may be compared. Suppose that a bushel of corn exchanged, in 1830, for five shillings, and that it now ex¬ changes for ten shillings ; in this case, it is evident that corn has doubled in value as compared with silver ; or, which is the same thing, that silver has lost half its value as compared with corn. This case is, mutatis mutandis, the identical case of all commodi¬ ties or products exchanged for each other. If A rise, it must be in relation to something else, as B ^ and if B fail, it must be in rela¬ tion to something else, as A ; so that it is obviously impossible to change the relation of A to B without at the same time chang¬ ing that of B to A. It appears, therefore, that no commodity can be constant or invariable in its value, unless it will at all times exchange for, or purchase, the same quantity of all other commodities and of labour. Suppose A ex¬ change for B V C, D, &c., its value will be constant, provided it always preserves its present relation to them, but not otherwise. And it is obvious, that to communicate this constancy of value to A it is indispensable that those circumstances, whatever they may be, that now determine its relation to B, C, D, &c. should, in all time to come, continue to exert precisely the same comparative in¬ fluence over it and them. 1 Experience, by exhibiting the value of commodities in a state of constant fluctuation, sufficiently proves that the circumstances under which they are actually produced are widely different from those now supposed. Perhaps, however, it may be worth while to observe, that had commodities been really produced under these circumstances, not A only, but every one else would have been an invariable stand¬ ard ; in the same way that any commodity in a market may be used as a standard to which to refer the value of the rest. It is evi¬ dent too, that the possession of such a stand- in the Dissertation on the Nature, Measures, and Causes of Value, p. 17. F f 4 440 DEFINITION, &c. OF VALUE Note II. arc! would be of no use whatever. All that it would teach us would be, that the circum¬ stances which first made A exchange for 13 continued to affect them both to the same proportional extent; but of the nature of those circumstances, and the intensity of their operation, We should be left wholly in the dark. II. But by carrying our researches a little farther back, we arrive at some more definite conclusions. . Every commodity possessed of Nalue must either be of the class which re¬ quires labour for its production or appropria¬ tion, and which may be produced in indefi¬ nite quantities, or it must be of the class of those that exist only in a limited quantity, or which are placed under a monopoly. But it has been already seen that the value of monopolised commodities does not depend on any fixed or ascertainable principle, but ■varies according to the varying tastes and wealth of their owners, and of those who wish to acquire them. This class being, therefore, left for the present out of view, suppose that A and B are commodities of the former class, which readily exchanged twelve months since for each other; and suppose farther, that 1 A now exchanges for 2 B : the fact of this variation having taken place, will com¬ municate nothing that can teach us how it has arisen; for it may have been occasioned by causes exclusively affecting A, or exclu¬ sively affecting B; or which have affected them both, but in unequal degrees. It is clear, however, that were it really impossible to trace these causes, and to determine their operation, the science of political economy, as now understood, could not exist; inasmuch as it would be worse than idle to set about inquiring into the causes which determine the value of commodities, were value altoge¬ ther capricious, and dependant on no fixed principle. But we are not thus left in the dark. Let it be supposed that when A and B were brought to market twelve months since, the supply of each was adjusted pretty exactly in proportion to the demand. It is plain that, under such circumstances, their value must have been limited, and determined ex¬ clusively by their cost, that is, by the quan¬ tity of labour required to produce them and bring them to market. Now the subsequent variation in the rela¬ tion of A to B could only arise from some variation in the demand for them as compared with the supply, or from some change in the quantities of labour required for their pro¬ duction, or partly from the one cause and partly from the other. ! . ^ ft* 1 respect to the influence of variations ] in the supply and demand, it would be easily appreciated, and could not obtain for any considerable period. The producers of 1 commodities, the demand for which has in¬ creased in a greater degree than the supply obviously gain more than the common and average rate of profit, while the producers of those for which the demand has declined faster than the supply, must as obviously gain less than this common and average rate. In such a case, therefore, capital would begin to be transferred from the production of the latter class to that of the former, and would continue flowing in that direction un¬ til the supply of those commodities which were more in demand had been sufficiently augmented, and those which were less in demand had been sufficiently reduced, and conversely. M. Gamier has set this subject in a clear point of view. “ Ce qu’une sage administration publique,” says he, “ doit desirer, ce qu’elle doit chercher a etablir, c est que toute marchandise ou production soit a son prix naturel. Toute deviation du pnx naturel est un desordre et porte dom- mage a la richesse nationale. Les marchan- dises et productions qui sont a leur prix naturel sont celles ou la consommation et la reproduction ont toute l’etendue et l’activite dont elles sont susceptibles. II est de l’interet du consommateur de ne donner ni plus ni moms que l’equivalent de chaque article qu’il consomme. S’il est force de donner plus que l’equivalent, il faut qu’il s’impose, pour y suffire, la privation de quelque autre chose qu il aurait eu droit de consommer avec ce surplus. S’il paie moins que l’equiva¬ lent, il decourage la reproduction, et il ne tardera pas a eprouver les effets d’une rarete qui 1 obligera a sacrifier beaucoup plus que 1 equivalent, et lui fera payer beaucoup plus que la vilete momentanee du prix lui a fait gagner. Il est egalement de l’interet du producteur, soit manufacturier, soit agricole, de vendre a ce prix naturel qui lui rembourse le juste equivalent de ses avances avec le profit convenable. S’il re^oit plus que cet equivalent, la consommation ne sera pas longtemps sans diminuer, et il perdra bien- tot, par le retrecissement du marche, fort au-dela du benefice accidentel produit par l’exageration du prix. 17 n'y a de durable que le prix naturel; ce n’est que sur ce prix qu on peut etablir des calculs certains et en- treprendre des speculations vraiment avan- tageuses. Fout gain, toute economie qui procede d’une deviation du prix naturel, est un appat trompeur, comme celui d’une lote- rie, dont les perfides presens sont toujours les avant-coureurs d’une perte plus conside¬ rable.”! It is clear, therefore, that no per¬ manent variations in the value of commo¬ dities, can ever be occasioned by fluctua¬ tions of supply and demand, and that they must arise from some other cause. Now this cause can be no other than a variation in the cost of commodities, or in the quantity of labour required to produce 1 Richesse des Nations, tome v. p. 289. ed. 2de. Note II. DEFINITION, &c. OF VALUE. 441 i one set. as compared with that required to produce another set. Suppose that the com¬ modities A, B, C, &c., exchange for each other. If A suddenly rise in value as com¬ pared with the others, the presumption might be, supposing we were ignorant of the cir¬ cumstances, that something had occurred to increase the demand for A, or to lessen its supply, or both. But these are temporary and accidental causes of variation, and must, for the reasons stated above, speedily disap¬ pear. And hence, if A continued to main¬ tain its increased value as compared with B, C, &e., it would be a conclusive proof either that the quantity of labour required for its production had been increased, or that the quantity required for the production of the others had been diminished. It is labour, therefore, that is the true and only measure of the cost, or as it has been sometimes tei med, the real value of all things ; and where there are no monopolies, and the supply of com¬ modities is proportioned to the effectual demand, their exchangeable value and cost are identical; so that in every such case the quantity of labour required for their pro¬ duction is a measure both of the one and the other. These principles are in the main the same with those laid down by Dr. Smith in the beginning of the fifth chapter of his fust book. “ The real price of everything,” says he, “ what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. "W hat every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. V hat is bought with money or with goods is purchased by labour as much as what we acquire with the toil of our own body. That money or those goods indeed save us this toil, d hey contain the value of a certain quantity of labour which we exchange for what is supposed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.” 1 The quantity of commodities produced by equal quantities of labour is not always equal: but the cost of an article depends on the quantity of labour, or of toil and trouble, expended on its production, and not on the mode in which it has been expended, or tne degree of its productiveness. The various in¬ ventions and discoveries by which the pro¬ ductive powers of labour are augmented, add nothing either to its value or to that of the commodities produced by its means. A day’s labour in a rude state of society, when the arts are in their infancy, and ma¬ chinery comparatively inefficient, yields a very different quantity of produce from a day’s labour in an advanced and civilised period when the arts are highly improved, and the most powerful machinery is univer¬ sally introduced. Nothing, however, can be more obvious than that the sacrifice made by the labourer is quite as great in the one case as in the other. The variation is not in the amount of physical force, or of labour ex¬ erted by the agent that produces, but merely in the mode in which that force is applied. But, however the same quantity of labour may be laid out, and whatever may be the magnitude of its produce, its performance unavoidably occasions the same sacrifice to those by whom it is performed ; and hence it is plain that the products of equal quanti¬ ties of labour, or of toil and trouble, must, however much they may differ in amount, alwavs cost the same, and have generally, therefore, the same value. Suppose an individual could produce two pecks of wheat by a day’s labour in 1830, and that, from being obliged to cultivate bad soils, or any other cause, he can now with the same labour produce only one peck: this single peck will be deemed by that in¬ dividual, and by every one else, to be of the same value that the two were before. It has cost the same amount of sweat and toil; and it will, consequently, exchange for, or buy, the identical quantity of such com¬ modities as continue to be produced by the same amount of labour as in 1830, that the two pecks did then. Nothing that is ■salli¬ able can be obtained except by some volun¬ tary exertion of labour or physical force. This is the price that man must pay for all things not spontaneously furnished by na¬ ture ; and it is plainly by the magnitude of the price so paid, and not by that of the things themselves, that their value is to be estimated. It appears, therefore, that the value of any commodity is measured or determined by the quantity of some one else, or of labour, for which it will actually exchange ; whereas the cost of a commodity is measured or de¬ termined by the amount of the sacrifice expended upon it, or, wlwe* the same thing, by the quantity of labour requ.red to produce or obtain it. It follows from what has been previously stated, that the cost of a commodity, or its value estimated in labour, may increase at the same time that its value estimated in any other commodity may diminish, and con- ‘ AntZs p. 13. 442 Note II. DEFINITION, 8 versely. Suppose A and B are commodities produced by equal quantities of labour, and that their supply at market is proportioned to the effectual demand, their value and cost will in such a case be equal. Suppose now that, from some cause or other, the quantity of labour required to produce A is doubled, and the quantity required to produce B trebled : in this case it is plain that the cost of A will be double what it was before; but as the cost of B has increased still more rapidly, the value of A will sink as compared with that of B in the proportion in which the labour required to produce B exceeds that required to produce A, or in the ratio of two to three. And on the other hand, it is plain that if the cost of both A and B had declined, but in unequal degrees, the value of the one whose cost had declined least rapidly would have increased as compared with the other. Assuming, then, that the quantities of labour expended on the production of com¬ modities is the sole determining principle of their cost, it follows that, if any com¬ modity required at all times the same quan¬ tity of labour, or of toil and trouble, for its production, its cost would be invariable. It is obvious, however, that there is no such commodity. The varying fertility of the soils to which recourse must successively be had, and the various improvements that are always being made in the application of la¬ bour, occasion perpetual variations in the quantities required to produce all sorts of commodities. And, therefore, it is not to any one commodity, or set of commodities, but to some given quantity of labour, that we must refer for an unvarying standard of cost or real value. It has sometimes been said, that if such a commodity as that now supposed did really exist, it might be appealed to on all occasions, as an unerring standard by which to ascertain the value in exchange of other things. But it is obvious that it could not be so appealed to, unless the value of commodities and their cost were at all times identical. This, how¬ ever, is but occasionally and rarely the case. The value of a commodity is liable to be raised above its cost, either by a sudden in¬ crease of the usual demand, or a sudden deficiency of the usual supply, and to be depressed below it by the opposite circum¬ stances. And though it be true that any given fluctuation is seldom of very consider¬ able duration, yet as the causes of fluctuation are perpetually recurring, a special inquiry must be made, in each particular instance, to ascertain whether they are really in oper¬ ation, and the extent of their disturbing in¬ fluence. We should, therefore, be involved m the most inaccurate conclusions were we to assume that the mere equality of the la¬ bour required for the production of a com- *. OF VALUE. modity rendered it in all cases an accurate measure or standard of marketable value ; for the value of that commodity might vary bom the influence of causes affecting itself, though extrinsic to, and independent on, the quantity of labour required for its produc¬ tion ; or it might vary from similar causes operating on the commodities with which it v as compared. If A were always produced by the same quantity of labour, and if B and C were produced by varying quantities of laoour, then, if value depended on nothing but quantities of labour, or if it always bore the same relation to these quantities, we should be able, by comparing B and C with A, to say at once, whether their value had remained constant, or to point out the pre¬ cise extent to which it had varied. But when there are other causes which may affect the \alue of A itself, as well as the values of B and C, it is obvious we should not be able, by merely comparing A with the others, to say, when a variation took place in the relation that previously obtained amongst them, whether it had been occasioned by causes exclusively affecting A, or exclusively affecting B and C, or whether they had all been affected, though in different degrees. But although a knowledge of the compa¬ rative quantities of labour, required for the production of non-monopolised commodities may not enable us to pronounce as to their exchangeable value at any given moment, we may notwithstanding be assured that it must, generally speaking, be identical with their cost. The latter forms as it were the centre or pivot round which the former oscil¬ lates; and when a sufficiently lengthened period is taken into account, the oscillations on the one side balance those on the other; so that the medium market, or exchangeable value of the commodities in question uni¬ formly coincides with their cost or real value, that is, they exchange for each other, at an average, according to the quantities of labour required for their production. V nen it is said that the cost of a given quantity of labour or its produce is always equal, it is not meant to affirm, that those by whom labour is bought uniformly give the same proportion of the produce of an unvarying quantity of labour for equal quan¬ tities of it. What is really meant is, that when the market is not affected by real or artificial monopolies, and when the supply of commodities is equal to the effectual de¬ mand, their cost or the quantities of labour required for their production will determine the proportions in which they exchange for each other, and for labour. A commodity produced by a certain quantity of labour will, under the supposed circumstances, uniformly exchange for, or buy any other commodity produced by the same quan¬ tity of labour. It will never, however, 443 Note II. DEFINITION, J exchange for exactly the same quantity of labour °that produced it 1 ; but though it will not do this, it will always exchange for, or buy as much labour as any other com¬ modity produced under the same circum¬ stances, or by an equal quantity ot labour, with itself. When an individual exchanges capital or commodities for labour, he really exchanges the produce of labour that has been for labour that is to be performed. It is obvious, too, inasmuch as there is no fund except capital, or the commodities produced and actually existing in a country, to feed and support the labourers employed in the production of new commodities, that their wages, or the quantity of produce they re¬ ceive in payment of their labour, must vary according to the variations in its amount, and in their number. At one period they may be so numerous, compared with the capital that has to maintain them, that a labourer may be willing to offer an entire day’s labour for the existing produce of half a day’s labour; while, at another period, the number of labourers, compared with capital, may be so much reduced, that he may be able to obtain the produce of ten or eleven hours’ performed labour for twelve hours future labour. But the cost, and, in all ordinary states of the market, the exchange¬ able value of the commodities, on which equal quantities of labour are laid out, is not affected by these variations. 1 he change is not in the principle that regulates and de¬ termines value— the physical exertion, or the sweat and toil of the labourer — but in what he obtains for it. W hat he produces or ac¬ quires by equal quantities of labour, always costs him the same sacrifice, and has, there¬ fore, the same real value, whether it be large or small. He gives a constant, but receives a variable, quantity in its stead. In stating that the quantity of labour re¬ quired to produce commodities is the only determining principle and measure of their cost, and also of their average exchangeable value, it is taken for granted, of course, that all sorts of labour are reduced to the same standard of skill and intensity. The ine¬ qualities in the physical force ot such indivi¬ duals as have attained to their full growth, and are perfectly formed, arc in themselves not very material; and when they are consi¬ dered in a general point of view, they entirely disappear, for, whatever superiority may ob¬ tain amongst a few on the one hand, is sure to be balanced by a corresponding deficiency amongst as many on the other. It may, perhaps, be thought, that though the statements and reasonings by which it has been endeavoured to trace all permanent 1 In point of fact, it will always exchange for more ; and it is this excess that constitutes profits. No capitalist could have any motive to exchange the produce of labour already performed for the produce fcc. OF VALUE. variations in the value of commodities not subject to any species of monopoly, to varia¬ tions in the amount of labour required for their production, should be in other respects conclusive, they are defective, inasmuch as nothing has been allowed for the value of th« raw material of which they are composed But it is easy to see that no such allowance should be made. Raw material is the fiee gift of Providence, and is therefore, wholly destitute of value. Suppose, to illustrate this, that, you take any article of convenience or luxury in your possession, and abstracting from it all that it owes to labour, observe what you will have at last. lake, for in¬ stance, a gold watch: if you abstract from it all that it owes to the labour ot the watch¬ maker, the smelter and refiner of the ore, the miner,&c. you "will have, in the end, only a tew grains of mineral sunk six hundred fathoms, perhaps, below the surface of the earth, and as absolutely destitute of value as the dust you trample under foot. W e say destitute of value; for, it will be observed, that when the miner has dug his way down to these grains of mineral, he gets them for the lifting; so that their value, when brought to the sur¬ face of the mine, is wholly dependant on the labour required to fetch them there. The same principle holds universally. We often hear, to give another instance, of the value of the raw material in a piece ot cotton cloth. But what is so improperly called raw r mate¬ rial, is the cotton in a pretty advanced stage of its manufacture, and after a great deal ot labour has been expended upon it. i he raw material of cotton consists wholly of the car¬ bon and other constituent elements of the plant; which being gratuitously furnished by nature, are, for that reason, completely des¬ titute of all value in exchange. A similar analysis might be made in respect ot all other commodities: and in no case would it be found that their value is in any degree dependant on quantities of matter ; but that in all cases in which a natural or an artificial monopoly is not interposed, it is wholly owing, in periods of average duration, to the labour necessary to appropriate that matter, or to give it the desired shape, or both. The principal results of the previous state¬ ments and reasonings may be summed up as follows : — 1st, That the utility of certain articles or products, or their capacity to minister to our wants and desires, renders them ob¬ jects of demand; and is, consequently, the cause of labour being expended on their ac¬ quisition, or, in other words, of their value. 2d, That the value or power of one com¬ modity to exchange for another is measured of the same quantity of labour to be performed. This would be to lend' without receiving any interest on the loan. 444 Note III. DEFINITION, &c. OF VALUE. by the quantity of any other commodity, or of labour for which it will exchange; and that this quantity depends upon, and is regu¬ lated partly by, the quantities of labour re¬ quired for the production of the commodities compared together, and partly by the state of their supply as compared with the demand. 3d, That the cost of a commodity is mea¬ sured by, and is wholly dependant on, the quantity of labour required for its produc¬ tion. 4th, That to whatever extent fluctuations in the demand and supply of freely produced commodities, whose quantity may be indefi¬ nitely increased, may sometimes raise their value above, they must at other times equally sink it below their cost; so that at an average their value and cost are identical, and depend upon, and are measured by, the quantities of labour required for their production. NOTE III. NATURE, ORIGIN, AND PROGRESS OF RENT.- INFLUENCE OF IMPROVEMENTS ON RENT. There are few parts of the Wealth of Na¬ tions more unsatisfactory than the chapter on rent. It contains, indeed, many curious and valuable disquisitions on several topics con¬ nected with rent; but it hardly touches on the fundamental questions with respect to its origin, nature, and causes. Those theo¬ retical principles which had not been disco¬ vered by his precursors, were not discovered by Dr. Smith : it was left to others to ascer¬ tain the causes of rent, the laws which deter¬ mine its amount, and the manner in which it is affected by the progress of society. The price of every commodity, according to Dr. Smith, must at an average be at least sufficient to replace the capital expended in its production, together with the ordinary profits of stock ; because, if the price were permanently lower than this, the commodity would not be produced. But although this be the lowest price at which a commodity can be sold for any length of time, it is not the highest. Some commodities, indeed, can never permanently sell for more than the lowest price which will enable them to be brought to market; but others can. Corn, cattle, and all the most important articles of raw produce belong to the latter class ; their price is usually such as to leave a surplus, after replacing with average profits the whole expense of their production and conveyance to market; and this surplus falls to the land¬ lord, since competition will not allow the farmer permanently to receive a profit on his capital exceeding what it would yield in other trades. Dr. Smith’s investigations appear to have stopped at this point. It is obvious, how¬ ever, that the nature of rent was yet only half-explained, or rather was not explained at all. It is no explanation to say, that rent is a surplus above the ordinary profits of stock ; because the fact to be explained is the existence of such surplus. If the price of manufactured goods be limited to the sum necessary for replacing the capital expended on their production, with ordinary profits, and il competition will not allow it for any length of time to exceed this limit, how is it that competition does not also keep down the price of raw produce to the same limit? Dr. Smith seems to have considered this dis¬ crepancy as not requiring any explanation, or as being sufficiently accounted for by the greatness of the demand. “ There are some parts,” says he, “ of the produce of land, for which the demand must always be such as to afford a greater price than what is sufficient to bring them to market” (p. 67 .) : a reason with which he could hardly have been well satisfied, and which he had not certainly deduced from any very careful analysis. A great demand is by no means sufficient to account for a high price. There are some commodities which, whatever may be the demand, must always be cheap ; because they may always be produced and brought to market at a small cost. Others, however trifling the demand, must always be dear; because were they not dear, the heavy cost of bringing them to market would not be defrayed. Price, in short, does not depend upon magnitude of demand. To occasion a high price, the demand must be attended with some principle of limitation in the supply. Had Dr. Smith attended to this important truth, of which he has elsewhere shown he was well aware, he would have proceeded to inquire what is the limiting principle in the case of corn ; and in prose¬ cuting this inquiry he would most probably have detected the true theory of rent. In the preceding note on Value, com¬ modities were divided into two classes: those which cannot be increased in quantity as the demand increases, and those which can. It was shown, that there is no limit, to the price of the former class except the inability or unwillingness of the purchasers to give more; but that, the price of the other class, comprising the great mass of the physical objects of human desire, is deter¬ mined by the cost of production ; that is, by the quantity of labour required to produce them and bring them to market. Corn and other farm products belong to the latter class ; for their quantity may be increased by additional labour, so as to meet any conceiv¬ able increase of demand. Their value, there¬ fore, depends upon the cost of their produc¬ tion. But there is a peculiarity in the circum¬ stances under which they are produced which causes an apparent deviation from this law. The value of every thing not limited in k ! Note III. NATURE, ORIGIN, &c. OF RENT. 445 quantity depends upon the cost of its pro¬ duction. But the cost of producing some commodities cannot be reduced to the same uniform standard, certain quantities being occasionally produced at one rate, while other quantities are necessarily produced at a different rate. Suppose, to illustrate this principle, that an article may be produced in two ways, one of them being much less expensive than the other, but depending on the use of peculiar means or instruments which exist in a limited quantity ; and let it be supposed that there is a greater demand for the article than can be supplied in the cheaper of the two ways, so that recourse must be had to the dearer. Under these circumstances the price of the commodity will evidently be determined by the cost of that portion which is produced with the greatest difficulty , or by the least effective means; for, unless the price were such as to indemnify the producers of this portion they would withdraw from their business, and the necessary supply would no longer be obtained; while, if it were moie than adequate.for this purpose, their profits would exceed the average amount,—a circumstance which the competition of other capitalists would necessarily prevent. # It is clear, however, that a price which affords the ordinary profits of stock to those who manufacture commodities by one pro¬ cess, will afford an extraordinary profit to those who manufacture them by a more effective or less expensive process. And if the means or instruments by which the cheaper process is carried on be engrossed by or belong to one or more individuals, the whole extra profit which it yields, that is, the whole amount of produce manufactured by it beyond what is manufactured by the less efficient process, will belong to its en¬ grossers or proprietors, and may be called rent. Hence it appears that any commodity in producing which equal capitals or equal quantities of labour do not yield equal returns, may yield rent, whenever the sup¬ ply obtained through the agency of the most productive capital becomes inadequate to the demand. The price of such commodity must always be sufficient to replace with its ordinary profit the least productive of the capitals employed in raising it; but, if the produce raised by this capital afford 01 din¬ ary profits, an equal amount of produce will yield ordinary profits to each of the other and more productive capitals: and whatever any of them produces beyond this amount, constitutes a fund to the extent of which rent may be paid. The produce of land is obtained under i This is what is meant by the application of addi¬ tional capital. Inasmuch as all capital was ori¬ ginally produced by labour, it is the application of circumstances precisely analagous to those now supposed. The supply of corn or cattle may be indefinitely increased by the employ¬ ment of additional capital and labour, but it cannot always be increased in the same pro¬ portion to the delay. A double capital employed in the manufacture of cottons, woollens, and silks, generally produces a double quantity of these articles; but a double capital employed in agriculture seldom yields a double quantity of corn. In the earlier stages of cultivation the quantity of produce may, perhaps, be doubled, or more, by doubling the outlay. But land does not admit of being indefinitely forced with an equal return. And notwithstanding the frequent occurrence of improvements, it is invariably found in the long run that theii influence is overbalanced by the decreasing productiveness of the land ; and that, speak¬ ing generally, additional supplies of food can only be obtained by a greater proportional sacrifice of capital and labour. When an increased supply of corn is re¬ quired, it may be got in one of two ways. Uncultivated land may be taken into culti¬ vation ; or the old land may be made. more productive by a better system of drainage, the use of more powerful manures and im¬ plements, the employment of additional cat¬ tle, hands, &C . 1 It is characteristic of both these methods of increasing the produce, that a diminished quantity is at an average, ob¬ tained in return for the same outlay. In the case of new land this is obvious, since it would have been cultivated before, had its cultivation .not been less advantageous, all things considered, than that of the land w hich was cultivated. It is equally true, that when additional food is obtained from the old. cul¬ tivated land, the new capital employed in its production rarely yields so much, in propor¬ tion to its amount, as the previous capitals. And were this not the case, none but the best lands (in fertility and situation),would be cul¬ tivated; for if the growing demands of the community might always have been supplied from the superior lands, without any enhance¬ ment of expense, the price of corn would never have been sufficiently high to enable the cultivation of inferior lands to be under¬ taken. It being thus quite clear, that after a cer¬ tain stage in the progress of cultivation, fur¬ ther supplies of food must be obtained (it obtained at all), not only at a greater abso¬ lute but at a greater comparative expense, it follows that when they are wanted, their price rises in proportion to the necessaiy in¬ crease in the cost of production ; — and this, for one of the best possible reasons, viz. that otherwise the supplies will not be pro- additional labour. Either the one phrase or the other may be used indiscriminately, as was explained in the note on Labour. *! 446 Note III, NATURE, ORIGIN, &c. OF RENT. duced. The value of corn has consequently a constant tendency to rise with the increased demand occasioned by an increase of popula¬ tion. But the price which indemnifies the producers of the corn raised at the greatest expense, will more than indemnify the pro¬ ducers of that which is raised at the least expense; and a competition for the lands occupied by the latter will take place till the whole excess of produce raised on them, or its price, be offered to the proprietors as rent. Had land always yielded the same or a greater proportional return to every fresh outlay of capital and labour, the entire sup¬ ply of food required by the most populous nation might, it is obvious, have been raised from ten acres or even from one acre as easily as from millions. In such a state of things, prices could not have risen, and rent must have been wholly unknown. Neither could prices have risen, nor rent appeared, had there been an unbounded extent of good land. . But the earth is of limited extent, and yields, generally speaking, a decreasing return, according as cultivation is extended, to equal outlays of capital and labour; and it is this that occasions a rise of prices, and gives birth to and determines the amount of rent. When in the progress of cultivation that indefinable stage is attained at which the re¬ turn to continued applications of capital to the lands already under tillage begins to decrease, additional capital will not be laid out upon them, nor will inferior lands be broken up, without a rise of prices. The agriculturists, it is plain, would prefer vest¬ ing their savings in other businesses to em¬ ploying them in agriculture, unless prices were such as to indemnify them for the diminished returns obtained in the latter. But in advancing countries the increase of population raises prices to the limit re¬ quired to obtain the necessary supplies of food; and in consequence of such rise fresh capital may be again applied either to the improvement of the best lands, or to the cul¬ tivation of those of a lower quality. As soon, however, as this new investment has been made, different capitals employed in cul¬ tivation will be yielding different products ; and it consequently follows, that to what¬ ever extent the produce of the superior lands, or of the capitals first laid out on im¬ provements, exceeds the produce of the in¬ ferior lands, or of the capitals last laid out, to that extent will the profits realised by the owners or occupiers of the former exceed the ordinary and average rate of profit at the time, that is, they will constitute a nett sur¬ plus or rent. Suppose, for example, that the productive¬ ness of capital, on a particular piece of land, of the highest degree of fertility, begins to decline after it has been made to produce twenty bushels of corn : let it be supposed, that by superadding another capital equal to the first, not twenty, but fifteen bushels are added to the crop. These fifteen bushels may be said to be the produce of the second capital, and the twenty bushels of the first. As soon as this additional supply is called for, by an increase of demand, corn must rise until the fifteen bushels fetch as high a pnce as the twenty did before; for these at their former price, did not afford more than the usual profits of stock ; the fifteen bushels, therefore, will not afford this much until they rise to that price. But as the capitals are equal, when fifteen bushels come to afford ordinary profits to the second capi¬ tal, they will also afford them to the first. Hence the remaining five bushels form a surplus above the ordinary profits of stock ; and this being the case, competition will make the farmers agree to pay them as rent to the landlord. To carry the illustration a little farther, suppose that population increases until it becomes necessary to raise a still greater supply of corn. This must be obtained by a farther increase of expenditure upon the soil, attended, most probably, with a still greater falling oft in the proportional re¬ turn. Suppose, for instance, that a third capital, equal to either of the foregoing, yields a return of no more than ten bushels.’ Before they are produced, ten bushels must fetch as much money as the twenty bushels did at first, and the fifteen afterwards. They will, therefore, yield the ordinary rate of profit upon the last outlay of capital. But it ten bushels afford the farmer the ordinary profit upon a third part of his stock, thirty bushels will afford him that rate of profit upon the whole. A surplus of ten bushels wiil therefore remain out of the produce of the first capital, and one of five out of that of the second, — in all fifteen ; the whole of which, being above the ordinary rate of profit, will constitute rent. Ibis case does not strictly exemplify the real course of circumstances, though it cor¬ responds with it accurately enough for the purpose of illustration. The decline in the proportional return to capital does not take place at regular intervals or successive stages, but gradually and imperceptibly. The fif¬ teen bushels, and afterwards the ten, would not all be produced at the same cost; on the contrary, every bushel would probably, un¬ less some improvement took place in the interim, cost somewhat more than that which preceded it. The slightest increase of de¬ mand would accordingly, in the absence of improvements, be attended with some rise of price ; and every bushel, except the last, would yield a rent equal to the difference between its cost of production and that of NATURE, ORIGIN, See. OF RENT. 447 Note III. the last. When, therefore, there came to be i demand for the whole thirty-five or forty- ive bushels, the land would in reality yield i much higher rent than five or fifteen imshels. But to attempt explaining in detail these minutiae would produce only confusion md obscurity. It is not, however, necessary in explaining the nature of rent to resort to hypothetical trases. The produce raised from the best lands under tillage in England and Wales may, at present (1838), be taken at a rough average it from forty to fifty bushels an acre, decreas¬ ing by imperceptible degrees down to twelve Dr fifteen bushels, the produce per acre raised on the worst lands under tillage. It seldom, however, costs more to cultivate an acre of the best land than it costs to cultivate an acre of the worst, and generally, indeed, not so much. But the fact of the poorest land being cultivated shows that the price of corn is sufficient to indemnify those engaged in its husbandry; and, consequently, as the out¬ lay is about the same, if twelve or fifteen bushels be deducted from the produce of the best land, the residue, or from twenty-five to thirty-five bushels, will be a surplus re¬ ceived by its occupiers over and above the cost of production, — in other words it will be rent. Let us now briefly recapitulate the princi¬ ples we have endeavoured to establish : 1. That if the produce of land could al¬ ways be increased in proportion to the outlay on it, there would be no such thing as rent. 2. That the produce of land cannot, at an average, be increased in proportion to the outlay, but may be indefinitely increased in a less proportion. 3. That the least productive portion of the outlay, which, speaking generally, is the last, must yield the ordinary profits of stock; and, 4. That all which the other portions yield more than this, being above ordinary profits, is rent. Differences of proximity to market are a source of rent precisely analogous to differ¬ ences of fertility. When corn, cattle, &c. raised on different lands sell in the same market, and consequently at the same price, the land which is nearest to the market, and pays least for carriage, has the same sort of advantage over the others that it would have were it more fertile. The price of the arti¬ cles sold must be sufficient to indemnify all who bring any part of them to market; but if it indemnify those who bring them from the greatest distance, it will more than in¬ demnify those who bring them from the least distance ; and competition will compel the latter to pay the owners an addi¬ tional rent equal to what they save in the reduced cost of carriage. The increased demand of towns occasioned by the in¬ crease of population not only tempts the cultivators in their vicinity to improve their lands more highly, but frequently makes large portions of their supplies be brought from a great distance. Hence it sometimes happens that the advantage of vicinity more than counterbalances the disadvantage of comparative barrenness, and that lands of inferior fertility in the immediate environs of a large town yield a considerable rent, while much richer land at a distance from good markets yields little, or, perhaps no rent. As vicinity to a town is a cause of rent, so vicinity to a road, navigable river or canal, by diminishing the expense of carriage to some great market, may have a similar effect. It must be kept in mind that it is not the absolute fertility or position of any given lands, but their superiority, in these respects, as compared with other lands, sup¬ plying the same market, that enables their cultivators to pay a superior rent. It is obvious, too, that the larger the surface from which any particular market draws its sup¬ plies, the higher, in proportion to their fer¬ tility, will be the rent of the lands in its immediate neighbourhood. The two sources of rent above described, fertility and proximity to market, are totally distinct from those peculiarities of soil or situation which afford a rent on the principle of monopoly. Tokay, fine hock, chambertin, constantia, or any peculiar kind of produce, obtainable only from particular soils, and in limited quantities, may, from deficiency of supply, fetch a price exceeding, in any pos¬ sible proportion, the cost of production. The whole of this excess, after deducting the ordinary profit upon the capital, naturally goes to the landlord. Land occupied with dwelling-houses, gardens, or parks, and pos¬ sessing peculiar beauties of situation or dis¬ position, is also of the nature of a monopolised article, and its rent is governed entirely by the demand. It cannot indeed yield less rent than if it were devoted to agriculture, but it may yield a vast deal more. W hen any situation affords greater facilities for business, as, for example, when a shop, by being in a fashionable part of the town, enables the oc¬ cupier to obtain greater profits than could be made in a shop possessing no such peculiar advantage, this extra profit will be added to its rent. The reader will easily trace, in this and similar cases, how much of what is termed rent is analogous to the price of a monopolised commodity, and how much is analogous to rent properly so called. If this account of the theory of rent be sufficiently clear and intelligible, it has the advantage of freeing it from a variety of objections which have been urged against it, though without any good foundation, when expressed in other language, and stated differently. 44S NATURE, ORIGIN, &c. OF RENT. Note III, None of those who have explained the origin and progress of rent ever imagined that it depended wholly on the varying fer¬ tility of different soils. They knew that the inequality in the returns to the capitals suc¬ cessively expended on the same soil, was, as well as differences of soil, a source of rent. Not only indeed were they fully aware of this circumstance, but all of them have dis¬ tinctly referred to it; and have left none of its effects on wages, profits, and values unexplored. But after its nature had been fully explained, when rent had to be alluded to, for purposes which did not make it ne¬ cessary to advert to the distinction between its sources, it was thought more convenient to speak of differences of soil being the source of rent, than to refer at the same time to its other source, and speak at once of “ the different qualities of the soil, and the differences in the returns to the capitals suc¬ cessively applied to the same soil; ” it being supposed, of course, that the theory would be judged of by its detailed exposition, and not by incidental allusions. This laxity has, however, given occasion to misinterpreta¬ tion. And it has been repeatedly urged, by those who contend that the theory of rent rests upon no good foundation, that there is no land which does not pay rent; that rent would exist though all land were of a uniform quality; and that all sorts of land invariably pay rent whenever they are taken into cultivation. Any one who has read the previous state¬ ments will perceive that these assertions, in so far as they are true, may be deduced from the principle they are supposed to disprove. Rent being the result of the unequal re¬ turns of the capitals successively employed in agriculture, it follows, whether the land be of equal or unequal fertility, that it will all yield rent when it is all cultivated, pro¬ vided additional capital be employed in forcing it with a diminished return. The capital employed to cultivate the last and worst portion of land produces a cer¬ tain return ; but, owing to an increased demand, it becomes necessary to force this land for further supplies; that is, to lay out more capital upon it with a diminished re¬ turn, and hence all the lands will yield rent, though the last capital employed upon them yields only the ordinary rate of profit. It is not, therefore, as is frequently ima¬ gined, in any respect essential to the truth of this theory, that there should be land in a country for which rent is not paid. It is established the moment it is admitted that a part of the capital employed in agricul¬ ture barely replaces itself with the ordinary profits of stock. The existence of large quantities of capital in every civilised country employed in the way now men¬ tioned, is the circumstance that forms the real foundation of this theory ; and it is one that neither has been nor can be called in question. The cultivators of the soil are actuated by the same principles that actuate those engaged in other departments of in¬ dustry ; nor do they ever hesitate about laying out capital on the land, provided they think there is a fair prospect of their ob¬ taining the rate of profit current at the time. If, on the one hand, the last capital employed in agriculture yielded more than this, it would be the best of all businesses, and so much capital would be diverted to it, that prices would be reduced until they left only ordinary profits; and if, on the other hand, agriculture did not yield this much, capital would be withdrawn from it, until the rise of prices raised profits to their proper level. The extent to which land yields rent depends wholly on the extent to which cultivation has been carried. In most extensive countries there are large tracts of barren land, apparently unfit for any useful purpose, and that could not, at all events, be cultivated with any thing like the pre¬ sent prices; and which it is exceedingly unlikely it will ever answer to cultivate at any future period. But it can never be ne¬ cessary to inquire as to whether such is the case, in the view of deciding as to the cor¬ rectness of this theory. It depends not on the existence of land that yields no rent, but on the fact that the last capital employed in cultivation yields, at an average, only the common and ordinary rate of profit. There are in Great Britain millions of acres that yield no rent; but though every rood of land in the empire paid a high rent, it would be still true that the produce raised under the most unfavourable circumstances, or by the agency of the capital last applied to the soil, pays no rent; and it is this portion of produce that determines the value of all the rest. It is necessary to bear in mind throughout these discussions that we are using the word rent in its scientific, and not in its popular sense; and that we mean by it the sum paid by the occupiers of the land for the use of its natural and inherent powers. Land that would not yield any rent of this sort may notwithstanding, if houses have been erected upon it, or if it have been fenced, drained, manured, or otherwise improved, yield what is in popular language termed rent. But this is not really rent, but merely the return to, or interest of, the capital laid out on the land. It is the confounding of this return with what is strictly meant by rent, that makes it be believed that all qualities of land pay some, though it may only be a small, amount of rent. Lands offered to be let have, for the most part, houses upon them, and are generally in some degree im- )TF TIT. NATURE, ORIGIN, &c. OF RENT. 449 )ved; and besides it is customary to let i land in immense tracts, which generally dude some fertile spots; so that a rent I ly be paid to the landlord for the use of uses and other improvements, or for small jces of good land, while nothing is really id him for the thousands of unimproved res attached to the house, or to the more •tile patches. That such is, in fact, the se in all extensive countries is known to ery one acquainted with the merest rudi- ents of rural economy. It is farther objected to this theory, that is a mistake to suppose that the most fer- e lands are soonest taken into cultivation, ight and sandy soils, it is said, are usually st cultivated, while the clay and alluvial ils, though ultimately by far the most oductive, require greater outlays of capital bring them into cultivation than can be j ared in the early stages of agriculture. Now, admitting the facts to be as stated, is singular how any one should suppose mpared with expenses of cultivation. Sup- ase, there are two fields of the same extent i tillage, one of which yields 100 quarters, id the other 150 ; and suppose farther that 3/. were expended on the cultivation of the rmer, and 90/. on that of the latter. Un- ?r these circumstances, the land producing le 100 quarters would be deemed by an jriculturist, and by every one else, the more fertile of the two ; inasmuch as fertility is never estimated by mere quantities of produce, but by the proportion which they bear to the necessary outlay. It might, per¬ haps, be possible, by forcing at an immense expense, to make an acre of some worthless moor in Wales or the Highlands, yield as much corn as is usually produced by an acre in the vale of Gloucester or the Carse of Gowrie; but would any one maintain that the moor was therefore as fertile ? To sup¬ pose, indeed, that the more fertile lands should require higher prices to keep them in cultivation than the less fertile, is an ob¬ vious contradiction. It is true that in rude societies, when but little capital has been accumulated, it may sometimes be necessary to consider, in its employment, not what will afford the greatest, but what will afford the most immediate return. The want of capital may then hinder the cultivation of lands which might be advantageously cultivated were there means; but when the capital is found, and applied to these lands, then, if they be really more fertile than the old lands, that is, more fertile in proportion to the outlay, they will admit of being culti¬ vated at a lower price than before, instead of requiring a higher. Land which needs a higher price to make it equally profitable to the cultivator may be the more productive, in as far as gross produce is concerned, but with a view to nett profit, — the only thing looked to by a practical agriculturist— it is unquestionably the more barren. It has also been urged in opposition to this theory, that it regards the cultivation of in¬ ferior land as the cause of high prices. But this, it is alleged, is to invert the order of the phenomena ; the cultivation of inferior soils not being the cause but the effect of high price, the latter being itself the effect of de¬ mand. This supposed inversion is, however, alto¬ gether imaginary. Dr. Anderson and those who have supported his views, never con¬ tended that a high price of corn was caused by the previous cultivation of inferior land : what they have contended is, that it is caused by the necessity under which every increasing population is placed, of cultivating inferior land, or of being starved. The wants and desires of man make commodities be pro¬ duced, and may, in consequence, be said to be the cause of their value; but it is the difficulty experienced in satisfying these wants and desires, or, in other words, the cost incurred in the production of commodities, that measures and determines this value. This is the principle laid down by all who understand any thing of the real nature of rent, and it is needless to say it cannot be in any degree affected by the petty cavils alluded to. We must again repeat that the rent of land is not to be confounded with the con- Gg NATURE, ORIGIN, Sec. OF RENT. Note III 4 50 sideration, annul 1 or otherwise, paid to the landlord on account of houses or fences, drains, or other improvements. These are as much a part of the capital employed in cul¬ tivation, as cattle, ploughs or thrashing ma¬ chines, and differ only by being in general the property of the landlord. If the latter supplied, on the metayer principle, half the stock on the farm, part of his income would evidently be profit, not rent: nor is the case different when besides the land, he supplies the buildings, &c., required upon it; and which, if not supplied by him, must be pro¬ vided for out of the capital of the farmer. The rent of mines is regulated by princi¬ ples similar to those which determine the rent of land. The cost of production at the least fertile mine which must be worked to obtain the required supply, regulates the price of the produce obtained from the others. 1 The chief difference in principle between agricultural and mining rents, is, that the decrease in the returns to different portions of the capital employed on land, does not take place in mines. It is true that the dif¬ ficulty of working mines increases as they become deeper. The return, therefore, to any new capital, applied to a mine, is gene¬ rally, though not always, a diminished re¬ turn ; but the return to the old capital diminishes along with it: there are not, as in the case of land, two portions of capital vested in the same mine, one producing more, and another less. One of the consequences which flow from this distinction is, that the least productive mining capital may, per¬ haps, yield a rent. The productiveness of different mines does not differ by impercep¬ tible degrees, like that of the capitals ap¬ plied to the soil. If, for example, the rich¬ est mine could singly supply the demand of an entire country, or of the world, the under¬ taker might keep the price of its produce permanently above the cost of its production, provided he kept it a little below the cost of production at any other mine ; and this sur¬ plus would go to the proprietor as rent. A good deal of misconception has prevailed with respect to the effect of improvements on rent. It has been already shown that rent depends on the extent to which tillage has been carried ; but the most common ef¬ fect of improvements being to enable the same quantity of produce to be raised on a less extent of land, it would seem, on a su¬ perficial view, that they are injurious to the landlord. But there is no such opposition between his interests and those of the rest of the community ; and it will be found, when rirhtly examined, that improvements are no ' See ante, p. 77. note. less advantageous to the owners and occu piers of land than to others. 1. To have a distinct idea of the operatioi and effect of improvements, it may be prope to consider them both as applying generalh to all sorts of land, and to some particula sorts only. In the first case, then, let it b< supposed, to illustrate the principle, that th< following quantities of produce are obtainer from the different qualities of land cultivated and the following rents paid, viz. : A. B. C. D. E. Qualities of land. 100 90 80 70 GO f Quantities of produce ol> t tamed with equal capitals 40 30 20 10 0 Rent. Now, suppose an improvement is made which enables ten per cent, more produce tc be obtained with the same outlay, and that this improvement extends to all qualities cr land, the quantities produced, and the rent would then be 110 99 88 77 66 Quantities of produce. 44 33 22 11 0 Rent. In this case it is plain, that if the de¬ mand for corn w T ere increased so as to take, off the greater quantity brought to market, the landlord would not sustain any inconve¬ nience whatever from the improvement, but would be immediately as well as perma¬ nently benefited by it. He would obtain a greater quantity of corn as rent; and not¬ withstanding the reduction of its price, that greater quantity would exchange for the same quantity of other things that the smaller quantity did before. If, however, there were no increase of demand, ten per cent, of the capital at present employed in agriculture would be withdrawn from that business, so that the quantity of produce would be the same as before the improvement: the corn rent would also be the same; though as corn would, under the circumstances supposed, be ten per cent, cheaper, money rents would fall in that proportion. But it is abundantly obvious, that though the demand might not be immediately increased, so as to take oflf the whole additional quantity brought to market in consequence of the improvement, it would not remain constant. It is impos¬ sible, indeed, that such should be the case. The consumption of the lower classes, and the quantity of corn given to the horses em¬ ployed in industrious undertakings, or kept for pleasure, is invariably increased when prices fall; at the same time that the stimu¬ lus which the fall gives to population, would of itself at no very remote period increase the demand, so as to absorb not only the increased quantity of corn, but to occasion the cultivation of fresh soils. 2. Let it now be supposed that the im¬ provement is partial; that it affects the superior qualities of land only; and that NATURE, ORIGIN, &c. OF RENT. 451 Note III. the quantities produced after it has been car¬ ried into effect are as follows, viz. A B. C. D. E. Qualities of land. ,10 95 82* 70 60 {^ 60 35 22A 10 0 Kent after ditto. Now it is evident, that if the improvement in the productiveness of the qualities A, B, C, increased the produce brought to market, so as merely to lessen the extent of land of the class E under tillage, without causing its cultivation to be entirely relinquished, it would not affect prices ; and the money rents, as well as the corn rents of the pro¬ prietors of A, B, C, would rise so as to ena¬ ble them to gain the whole advantage result¬ ing from the improvement. If the whole of the class E were thrown out of tillage, corn rents would be as fol¬ lows : — A. B. C. D. Qualities of land. 40 25 12i 0 Kent. But in this case, as in the former, the contraction of cultivation -would be of very short duration ; for, owing to the increased cheapness, the demand would very speedily rise so as to require the renewed cultivation of E ; so that any inconvenience that might by possibility arise to the proprietors in the first instance, would at most be only trifling and transitory, while the advantage would be great and permanent. 3. In the third and last case, let it be sup¬ posed that the improvement is greatest on the worst lands, and that it decreases as their fertility improves. Thus suppose, A. B. C. D. E. Qualities of land. IPO 00 80 "o fO $ Quantities before iraprove- iuv yu ou ‘ u ou l ment. 40 30 20 10 0 Kent before ditto. 100 90 82* 75 70 f«“ n « aes after im P rove - 5 0 Kent after ditto. 30 20 12£ If the improvement were so great as to throw E out ot cultivation, rents would be 25, 16, O. But as in this case the fall of price, and consequent rise of profits, would be very great, a proportionally powerful sti¬ mulus would be given to population ; and the increased demand that would, at no dis¬ tant period, be experienced, would be such as inevitably to bring the next qualities of land, or F, G, &c. under cultivation; so that in this, as in all other cases both corn and money rents would be in the end very greatly increased by the improvement. These statements sufficiently show that, supposing an improvement were introduced so rapidly and widely as to occasion an im¬ mediate fall of price, and consequently of money rents, these effects w ould be of very limited duration; for the greater cheapness of raw produce, by increasing the demand for it on the part of the existing population ; as well as by stimulating the increase of that population, could not fail speedily to raise prices to their old level, and even to carry them beyond it. But it is material to observe, that these suppositions have been made merely to illus¬ trate the principle, and that, in point of fact, they are never realised in practice. In the vast majority of cases improvements apply to all sorts of soil. They take place principally in machinery, in the rotation of crops, in the breeds of stock, the composition and applica¬ tion of manures, &c., wdiich are generally applicable not to one or a few only, but to almost every description of land. Improve¬ ments, too, rarely if ever precede, but almost always follow r , a rise of prices, occasioned either by an increased demand for raw pro¬ duce, or by some previous scarcity. Neither do they ever rapidly spread over any con¬ siderable extent of country ; they make their w r ay only by slow, and indeed almost imper¬ ceptible degrees ; and tend not so much to occasion any actual reduction of prices as to prevent their rising to an oppressive height. Improvements are at first adopted by a few of the more intelligent proprietors and far¬ mers in different districts, and are thence gradually diffused throughout the country. This progress is, however, much more tedious than one not acquainted with the obstacles by which it is opposed might be inclined to believe. Improvements which effect mate¬ rial changes in long-established customs, have always been slowly and reluctantly ad¬ mitted ; but the agricultural class is the least of all disposed to innovation, and the most peculiarly attached to ancient customs and routine. “ The farmer is not so much within the reach of information as the merchant and manufacturer; he has net, like those who reside in towns, the means of ready inter¬ course and constant communication with others engaged in the same occupation. He lives retired; his acquaintance is limited and but little varied ; and unless he is accus¬ tomed to read, he is little likely to acquire any other knowledge of his art than what is traditionary — what is transmitted from fa¬ ther to son, and limited in its application to his own immediate neighbourhood.” 1 So powerful has been the influence of these circumstances, that notwithstanding the advances in agricultural science during the last century, and the efforts made to dif¬ fuse it, there is but a comparatively small portion of England and Scotland where the most improved system of husbandry is intro¬ duced, while in Ireland it cannot be said to be introduced at all. Even in some of the counties adjoining the metropolis, practices are persevered in that are utterly incon¬ sistent with all the rules of good agriculture. 1 Preface to Rigby’s Translation of Chateauvieux on the Agriculture of Italy. G g 2 452 NATURE/ ORIGIN, &c. OF RENT. Note III. In the rich soil of Essex, the wretched sys¬ tem of fleet ploughing and whole year fal¬ lows, is still pretty generally followed ; the agriculture of Sussex is said to be at least a century behind that of East Lothian or Nor¬ folk ; and in some of the midland counties it is customary to yoke four or five horses to a plough for the tillage of light land. “ Those improvements that are well known and sys¬ tematically practised in one county, are fre¬ quently unknown or utterly disregarded in the adjacent district; and what is to every unprejudiced observer evidently erroneous and injurious to the land, is, in some quar¬ ters, persisted in most pertinaciously, though a journey of not many miles would open to view the beneficial effects of a contrary practice.” 1 Practically, therefore, nothing can be more futile and visionary than to suppose that there is the least chance of improvements ever becoming, even for the shortest period, injurious to the landlords, in consequence of their introduction causing a fall of prices. There is not the shadow of a ground for supposing that they can ever be so rapidly diffused as to produce this effect; and the most extensive and successful improver may prosecute his patriotic labours, without any apprehension that either his efforts or exam¬ ple will be sufficiently powerful to occasion any glut of the market, or fall of price. 2 The elucidation of the true theory of rent is one of the most important services ever rendered to this science, and has contributed in no ordinary degree to throw light on the constitution of society, and to clear up seve¬ ral important questions that were previously involved in all but impenetrable obscurity. The principles now explained show that the price of corn is not in any degree affected by the payment of rent; for that price depends wholly on the cost of the corn raised on the worst land, or by the last capital laid out on the soil, which, it has been shown, never yields more than the ordinary rate of profit. Rent is a surplus above and beyond the cost of production ; and when inferior land is resorted to, or good land forced with a diminished return, this surplus must necessarily exist, and must belong to some one or other. The abolition of rent would not, therefore, enable corn to be sold one farthing cheaper. Such a measure, supposing it were carried, would convert farmers into landlords and landlords into beggars : but there its effect would stop. It could not have the slightest influ¬ ence over prices. High rent does not oc¬ casion high prices, nor low rent low prices Its payment entails no burden on any one ; and nothing can be more futile and un¬ founded than to represent the income of the landlords in the light of a tax or tribute paid by the other classes. Every one is aware that the landlords no longer enjoy, either here or anywhere else, the same influence and consideration that they enjoyed one or two centuries ago. This, however, is wholly a consequence of the extraordinary increase of manufactures and commerce, and consequently of the classes dependant on them. The extension and improvement of agriculture contribute powerfully to the advancement of the land¬ lords ; and but for this they would now have been comparatively much more de¬ pressed. Rent, as we have seen, increases with every increase of tillage; and what¬ ever may be their immediate effect, all improvements, by diminishing the expense of cultivation, are sure in the end to be beneficial to the landlords by enabling the occupiers to pay proportionally higher rents. It is this latter circumstance, or their more efficient and less costly system of farming, that accounts for the high rents paid by the Scotch farmers as contrasted with those paid by the occupiers of as good or better land in most parts of England. The following statement shows how, in the progress of society, the landlords get both a greater absolute quantity of the produce of the soil, and a greater proportional share of that produce: — Qualities } of land f in culti-f vation 3 Produce Rent Qualities } of land j Produce Rent Qualities > of land 3 Produce Rent A. B. C. 100 90 80 aggregate 270 20 10 0 — 30 = § produce. A. B. C.D. 100 90 80 70 aggregate 340 30 20 10 0 — 60 = g do. nrly. A. B. C. D. E. 1 00 90 80 70 60 aggregate 400 40 30 20 10 0 — 100 = a prod. and so on. This shows the increased quantity and proportion of the produce of the land that accrues to the landlords in con¬ sequence of the mere extension of tillage ; and the share, as has been already seen, becomes still greater in consequence of improvements. It is all but certain too, notwithstanding the counteracting influence of improvements, that the value of the landlord’s share of the produce, as well as its quantity, is increased as tillage is ex¬ tended. The theory of rent explained in this note, was, as already stated, (Introductory Dis¬ course p. xlvii.) first promulgated and satis¬ factorily established in a tract on the corn laws published in 1777, by Dr. James 1 Kennedy Introd. p. 8i and Grainger on the Tenancy of Land, 2 See Principles of Political Economy. 2d ed. pp. 452—457. Note III. NATURE, ORIGIN, &c. OF RENT 453 Anderson, a native of Ilermandston in Midlothian. Anderson was at the period referred to, extensively engaged in farming in Aberdeenshire; but having removed to London in 1797, he edited various publi¬ cations, and among others, “ Observations in Agriculture, and Natural History, &c.” in which he gave (vol. v. pp. 401—405.) a clear and able exposition of the nature, origin, and progress of rent. But notwithstanding these repeated publications, it does not appear that his profound and important disquisitions attracted any attention. And so completely were they forgotten that when Sir Edward West and Mr. Malthus pub¬ lished their tracts on rent, in 1815, they were universally regarded as the real authors of the theory. There is, we believe, no question as to their originality; but it may well be doubted whether they succeeded in explaining the theory as well as it had been explained about forty years before. 1 1 The tract referred to above is now very scarce. It is entitled, “ An Inquiry into the Nature of the Corn Laws, with a view to the Com Bill proposed for Scotland. Edinburgh. 1777.” We subjoin an ex¬ tract : “ It is not, however, the rent of the land that de¬ termines the price of its produce, but it is the price of that produce which determines the rent of the land ; although the price of that produce is often highest in those countries where the rent of land is lowest. This seems to be a paradox that deserves to be explained. “ In every country there is a variety of soils, differ¬ ing considerably from one another in point of fertility. These we shall at present suppose arranged into different classes, which we shall denote by the letters A, B, C, D, E, F, &c., the class A comprehending the soils of the greatest fertility, and the other letters ex¬ pressing different classes of soils, gradually decreasing in fertility as you recede from the first. Now, as the expense of cultivating the least fertile soil is as great, or greater, than that of the most fertile field, it neces¬ sarily follows, that if an equal quantity of corn, the produce of each field, can-be sold at the same price, the profit on cultivating the most fertile soil must be much greater than that of cultivating the others ; and as this continues to decrease as the sterility in¬ creases, it must at length happen that the expense of cultivating some of the inferior classes will equal the value of the whole produce. “ This being premised, let us suppose that the class F includes all those fields whose produce in oat-meal, if sold at fourteen shillings per boll, would be just I sufficient to pay the expense of cultivating them, without affording any rent at all. That the class E comprehended those fields, whose produce, if sold at thirteen shillings per boll, would free the charges without affording any rent; and that in like manner, the classes D, C, B, and A, consisted of fields, whose produce, if sold respectively at twelve, eleven, ten, and nine shillings per boll, would exactly pay the charge of culture, without any rent. “ Let us now' suppose that all the inhabitants of the country, where such fields are placed, could be sus¬ tained by the produce of the first four classes, vi z-, A, B, C, and I). It is plain, that if the average sell¬ ing price of oat-meal in that country was twelve shillings per boll, those who possess the fields D could just afford to cultivate them, without paying any rent at all; so that if there were no other pro¬ duce of the fields that could be reared at a smaller expense than corn, the farmer could afford no rent whatever to the proprietor of them ; and if »o, no NOTE IV. POPULATION. Comparative Increase of Population , and of the Means of Subsistence.—Influence of the Principle • of Increase on the Condition of Mankind. — Progress of Population in Great Britain — in Ireland. — Changes in the Laws of Mortality in Europe since 1780. It has been already stated (Introductory Discourse, p. xlix.) that the publication of Mr. Malthus’s Essay on the Principle of Population in 1798, was the first consider¬ able improvement effected in the science posterior to the publication of the Wealth of Nations. 2 The prevalent opinion had pre¬ viously been, that an increase of population was the most decisive mark of the prosperity of a state, and that it was the duty of gu= vernment to stimulate its increase, by encouraging early marriages, and granting exemptions from onerous public services, rents could be afforded for the fields E and F ; nor could the utmost avarice of the proprietor in this case extort a rent for them. In these circumstances, however, it is obvious that the farmer who possessed the fields in the class C could pay the expense of cul¬ tivating them, and also afford to the proprietor a rent equal to one shilling for every boll of their produce \ in like manner, the possessors of the fields B and A could afford a rent equal to two and three shillings per boll of their produce respectively. Nor w'ouid the proprietors of these fields find any difficulty in ob¬ taining these rents, because farmers, finding they could live equally well upon such soils, though paying these rents, as they could upon the fields D without any rent at all, w r ould be equally willing to take the one as the other. “ But let us again suppose that the wffiole produce of the fields A, B, C, and D, was not sufficient to maintain the whole of the inhabitants. If the average selling price should continue at twelve shillings per boll, as none of the fields E and F could admit of being cultivated, the inhabitants w r ould be under the necessity of bringing grain from some other country to supply their wants But if it should be found that grain could not be brought from that other country, at an average, under thirteen shillings per boll, the price in the home market would rise to that rate, sq that the fields E could then be brought into culture, and those of the class D could afford a rent to the proprietor equal to what w as formerly yielded by C, and so on of others ; the rents of every class rising in the same proportion. If these fields were sufficient to maintain the whole of the inhabitants, the price would remain permanently at thirteen shillings ; but if there was still a deficiency, and if that could not be made up for less than fourteen shillings per boll, the price would rise in the market to that rate ; in which ease the fields F might also be brought into culture, and the rents of all others would rise in proportion,’ 1 — (pp. 45^-47.) 2 Mr. Malthus has no claim to be considered a* the discoverer of the principle of population. Its constant tendency to outrun the means of subsistence had been set in a very clear point of view by Sir James Steuart, in the first book of his Treatise on Political Economy, and by the Rev. Mr. Towuisend in his Essay on the Poor Laws, published (under the signature of a Wellwisher to Mankind) in 1786, But Mr. Malthus was the first to treat and unfold thq , constant operation of the principle. G g 3 454 POPULATION. Note IV and bestowing rewards on those who reared the greatest number of children. Mr. Malthus has set the erroneous nature of this policy in the most striking point of view. He has shown, by a careful examin¬ ation of the state of countries in every stage of civilisation, and placed under the most opposite circumstances, that the number of inhabitants is everywhere proportioned to the means of subsistence; that the tendency of the principle of increase is not to fall be¬ low, but to exceed these means ; and that, consequently, wherever the population is not kept down to its necessary level, by the in¬ fluence of moral restraint, or by the exercise of a proper degree of prudence and fore¬ thought in the formation of matrimonial connections, it must be kept down by the in¬ fluence of mortality originating in vice, want, and misery. The different progress of population in different countries and periods is not a con¬ sequence of any variation in the principle or instinct which prompts man to multiply his species, but depends principally on the dif¬ ferences in the facility with which food, and the various articles necessary for his subsist¬ ence and accommodation, may be procured under different circumstances. The passion between the sexes has appeared in all ages, and under every diversity of circumstances, so nearly the same, that it may be called, in the language of mathematicians, a constant quantity; differing in this respect most ma¬ terially from the power or capacity of acquir¬ ing subsistence which is liable to very great variation. But however great the facility with which subsistence has been sometimes obtained, population seldom fails to advance with, at least, a corresponding rapidity. This is particularly evinced by the progress of all those colonies, both in the ancient and modern world, that have been planted in advantageous situations, or in situations where the fewness of the aboriginal inhabit' ants, or their inferiority to the colonists in the arts of civilised life, has enabled the latter to extend themselves over the coun¬ try. The Greek colonies of Syracuse and Agrigentum in Sicily, Tarentum and Locri in Italy, and Ephesus and Miletus in Asia Minor, rose from the smallest beginnings, in the course of one or two centuries, to an equality in power and population with their parent states. But not to dwell on these remote instances, the progress of the Eu¬ ropean settlements in America bears the most decisive testimony to the truth of what has now been stated. It has been proved that the population of some of the states of North America has, after making the most ample deduction on account of immigrants, continued to double for a century, in so short a period as twenty, or, at most, five and twenty years ; and there seems little reason to doubt, had supplies of food, am other articles necessary for the accommoda¬ tion of man, been increased in a more rapic proportion, that the population would have kept pace with their progress. But without entering upon any hypothetical reasonings as to what might have been the progress of population in the United States, undei other circumstances, its actual increase shows that when the means of subsistence are supplied in sufficient abundance, the principle of increase is powerful enough to cause population toadvance in a geometrical proportion, or in the ratio of the numbers, 1, 2, 4, 8, 16, 32, 64, 128, 256, &c. the term of doubling being five and twenty years. It follows, therefore, taking the present popu¬ lation of the United States at fifteen millions, that if it increase during the next hundred years at the same rate that it has done dur¬ ing the last hundred, it will amount, at the termination of that period, to 240 millions; and should it go on for a second century in the same proportion, it would amount to the prodigious sum of 3,840 millions ! It is easy, however, to show, in the first place, that in old settled countries like Great Britain, France, &c. the supply of food and consequently the population cannot be aug¬ mented so rapidly as in newly-settled coun¬ tries like the United States ; and, second , that the food, and consequently also the popu¬ lation of the United States, cannot continue to increase for any very considerable period, so rapidly as they have increased during the last hundred years. When a country is thinly peopled, none but the best of the good lands need be cul¬ tivated ; but after it has become densely peopled it is quite different. The superior lands being no longer able to furnish suffi¬ cient supplies of food, recourse must he had to those of inferior fertility, requiring a proportionally greater outlay to make them yield the same supplies. The ability to increase the supply of food, after population becomes pretty dense, so rapidly as when it is comparatively thin, being thus diminished, a corresponding check is given to the increase of population ; and, instead of being doubled in five and twenty years, it may not be doubled in less than fifty or a hundred. We have seen, in the preceding note on Rent, that the average productiveness of the best lands under tillage in England and Wales may be taken, at a rough average, at from forty to fifty bushels an acre; and that of the worst at from twelve to fifteen bushels. If, therefore, we had two countries with nearly the same knowledge of agriculture, the one cultivating soils generally yielding fifty, and the other soils generally yielding only twelve bushels an acre, the means of obtaining additional supplies of food would be more than four times greater in the former POPULATION. 45.S f y t. Note IV. than in the latter; and its population might, supposing their situation in other respects to be about the same, increase tour times more rapidly. Now this latter is the situation of America, as compared with Great Britain, France, and most other European states. ihe Americans are masters of an immense extent of rich and unoccupied land. They enjoy most of the advantages of civilisation, with but few of its inconveniences. They are acquainted with the various arts and sciences of Europe, and they cultivate those soils only that are of the highest degree of fer¬ tility. Their industry is, in consequence, comparatively well rewarded. Each culti¬ vator having a great deal more produce than is required for his consumption, speedily accumulates capital, and has a proportionally great demand for labour. There is, there¬ fore, every motive to form early marriages; while the comfortable situation of the pa¬ rents enables them to bestow due attention to the rearing of their children, and lessens the mortality so destructive in the early period of life. . . . It is needless to say that the situation ot Great Britain, and of all old settled, and comparatively populous countries, is widely different. Our most fertile lands have been long under tillage; and we are obliged to raise a portion of our food partly by foicing the more fertile lands, and partly by resoitmg to such as are inferior. The consequence is, that agricultural industry is here compa¬ ratively ill rewarded. The produce that remains to the cultivator, after the expenses of raising it are deducted, is consideiably less than in America: and there is thus a proportionally slo^ increase of capital, of the demand for labour, and consequently of population. # . But it must be kept in mind, that not¬ withstanding the facility of obtaining addi¬ tional sunplies of food is thus a good deal greater in the United States than in Great Britain and most other European countries, the sexual passion is quite as strong in the latter as in the former. Man, how r e\er, is not, like the lower animals, actuated by in¬ stinct only. The reason with which he is endowed enables him to perceive and ap¬ preciate, with more or less accuracy, the consequences of his actions, and to shape his conduct accordingly. In the United States every industrious individual, who has attained to a marriageable age, may enter into the matrimonial contract without dread¬ ing its results. But experience has shown that similar conduct on the part of most poor persons in this country could hardly fail of entailing ruinous consequences on them and their offspring. There are a few, no doubt, on whom this experience is thrown away; and who scruple not to enter into the most improvident unions. But the great majority act on sounder principles. They are anxious not to preserve merely, but to improve their own condition in society ; and cannot bear the idea that their family should be in a worse situation than them¬ selves. But to attain these ends a certain degree of foresight and restraint is com¬ monly required. Hence marriages are very generally deferred to a later period than in America, and a larger proportion of the population pass their lives in a state of ce¬ libacy. And it is fortunate that this is the case_that the good sense of the people, and their laudable desire to maintain and better their condition, make them control the violence of their passions, and disregard the dicta of spurious advisers. Man cannot increase beyond the means of subsistence available to his support; and it is quite obvious that if the tendency to multiplica¬ tion in countries advanced in the career of civilisation, and where there is, in conse- quence, a considerably increased difficulty o providing supplies of food, were not checked bv the prevalence of moral restiaint, or by the forethought and consideration of the people, it would occasion the constant ^pie- valence of misery and famine, ffheie is no alternative. The population of e\ ery country has the power, supposing food to be ade¬ quately supplied, to go on doubling every five and twenty years; but as the limited extent and limited fertility of the soil render it impossible to go on permanently pro¬ ducing food in this ratio, it una% oidably follows that unless the passions be. mode¬ rated, and a proportional diminution be effected in the number of births, the standard of human subsistence will be reduced to the lowest assignable limit, and famine and pestilence will be perpetually at work to re¬ lieve the population of wretches born only to be starved. II. The necessity under which the inha¬ bitants of old settled countries are placed, of controlling the principle of population, in order to prevent the birth of a greater number of human beings than can be fur¬ nished wdth the means of subsistence, must, at no very distant period, be as sensibly felt in America as in either England 01 Holland. The rate of doubling every five and tw enty years, which has continued in North Ame¬ rica for a century, may perhaps continue during the next half century, or until the population has increased to sixty millions, but it is hardly possible to suppose that it should continue for twenty-five years longer, or until the population had increased to 120 millions. Before it attained to this magnitude, the inhabitants wmuld be spread over the wdiole continent, vast as it un¬ doubtedly is; the good lands would be all, or mostly all, occupied ; and the supplies of 456 POPULATION. food required for the increasing number of inhabitants could only be obtained bv a greater sacrifice of labour and expense from soils of inferior fertility. Sooner or later, theiefore, population must, under any cir¬ cumstances, arrive at that limit when the previous rate of increase cannot be main¬ tained; so that unless the number of births e diminished by the greater prevalence of moral restraint or of some such check, the condition of the entire population will e depressed, and an increased rate of mortality will take place. Even though America were ten times more fertile, and ten times more extensive than she really is a very few generations would see her peopled up to the highest limit to which, with her present system of cultivation, population could be carried. But when she arrived at this point, when lands of every description were forced for supplies of food, and when we may suppose its quantity could not, without great difficulty, be materially in¬ creased, the same power that is now doubling the population every five and twenty years would be in existence, and would, conse¬ quently, unless its operations were controlled by prudential considerations, delude the country with the most appalling wretched¬ ness. Mr. Malthus has endeavoured to show, that wl u le population may increase indefi¬ nitely in a geometrical proportion, or in the ratio of 1, 2, 4, 8, 16, 32, 64, &c., doubling every five and twenty years, supplies of food and other necessary accommodations could not be made to increase faster, during the same periods, than in an arithmetical propor¬ tion, or in the ratio of the numbers 1, 2, 3, 4, 5, 6, &c. But it is impossible to lay down any fixed or certain principle with respect to the increase of food. Perhaps it will be found that the ratio assigned by Mr. Malthus, it applied to countries in which the best lands are already under tillage, is too high. But whether Mr. Malthus have over or under stated the increase of food, is of no conse¬ quence. It is, at all events, true, on the one hand, that an increased difficulty of obtaining augmented supplies of food, though occasion¬ ally obviated for a while by new discoveries and inventions, is uniformly experienced, ac¬ cording as society advances and population becomes denser : while, on the other hand, it is equally true that the power to produce fresh human beings — a power capable of doublingthe population every five and twenty years sustains no diminution. And hence it results, as was stated at the commencement of this note, that the tendency of population is to outrun production; and that if this tendency be not countervailed by the preva¬ lence of moral restraint, it will be counter- Note I V. 1 Lettre cxxii, tom/ b y want > misery, and increased mor- It appears, therefore, that an increase of the means of subsistence is the only sure cri¬ terion of a permanent and beneficial increase of population. If these means be not in¬ creased, an increase in the number of mar¬ riages and births can be productive only of poverty and increased mortality. Such go vernments as attempt directly to stimulate p pulation begin at the wrong end. The difficulty is not to bring human beings into the world, but to feed, clothe, and educate them when there. The principle of increase requites no artificial encouragement. We should never try to strengthen, but rather to control and regulate it. « The natural tend- ency to marriage is in every country so great, that without any encouragements, wherever a proper place for a marriage occurs, it is always sure to be filled up. Such encourage¬ ments must therefore be either perfectly fu¬ tile, or produce a marriage where there is no room for one; and the consequence must necessarily be, increased poverty and mortal¬ ity. Montesquieu, in his Lettres Persannes 1 says, that in the past wars of France, the fear of being enrolled in the militia tempted a great number to marry without the proper means of supporting a family, and the effect was, the birth of a crowd of children, que Von cherche encore en France, et que la misere, la famine et les maladies en ont fait disna- roitre. ”2 J 1 Wars, plagues, and epidemic disorders those “ terrible correctives* as they have been justly termed by Dr. Short, of the redun¬ dance of mankind, set the operation of the principle of population in the most striking point of view. These scourges tend to place an old country in the situation of a colony. They lessen the number of the inhabitants, without, in most cases, lessening the capital that is to feed and maintain them. And the increased power over subsistence that is thus acquired by the survivors, accelerates the pe¬ riod of marriage and the increase of the population. The Netherlands, which has been so often the seat of the most destructive wars, has, after a respite of a few years, al ways appeared as rich and populous as ever. Not¬ withstanding the massacres of the Revolution, and the sanguinary wars in which France was incessantly engaged for more than twenty years, her population was considerably aug¬ mented in the interval between the expulsion and restoration of the Bourbons. The abo¬ lition of the restraints previously laid on in¬ ternal commerce, of the feudal privileges of the nobles, and of several oppressive and unequal burdens, improved the condition and stimulated the industry of the people. The means of subsistence were thus considerably sni ^ « tl Vlo on the Princi P le Population, 5th ed v uii L p* Note IV. POPULATION. 457 increased ; at the same time that the conti¬ nued drafts for the military service, by lessen¬ ing the supply of labour in the market, and raising the rate of wages, gave such a stimu¬ lus to the principle of increase, that in 1815 the population was supposed to be about three millions greater than it had been in 1789. The establishment of a tyrannical or vicious system of government, by paralys¬ ing industry, and diminishing the supplies of food and other accommodations, necessa¬ rily occasions a corresponding diminution in the number of inhabitants. But an accidental calamity, such as a w^ar or pestilence, how afflicting soever to humanity, has no lasting influence on the average population of a country. The bigotry and oppressiveness of the government, and not the plague, is the cause of the depopulation of the countries subject to the Turks. It was long a prevalent opinion that the emigrations to the New World had depopu¬ lated Spain, and it was also suspected that they had diminished the population of Eng¬ land. There is not, however, the least ground for any such opinion or conjecture. The depopulation of Spain proceeded from a very different cause,— from the vicious nature of her political institutions and the intolerance of her rulers. Ustariz, a Spanish author of distinguished talent, and who enjoyed the best means of acquiring accurate information, has proved that Andalusia, Biscay, and those provinces that have sent the greatest num¬ ber of adventurers to the colonies, have, at the same time, been the most populous. 1 Voluntary emigration is never carried so far as to occasion any sensible diminution of the numbers of a people, or to raise the rate of wages. If it did this it would im¬ mediately stop. No considerable emigration takes place from this, or, indeed, any coun¬ try in prosperous years ; it is only when there is a slack demand for labour, or when pro¬ visions are unusually dear, that it is carried on upon a pretty large scale ; at other times it is but trifling. Mr. Malthus has been much blamed for what he has stated with respect to the ra¬ vages of the small-pox and other diseases ; but it would seem that the greater number of the reproaches thrown out against him have originated either in misapprehension or in a desire to misrepresent his doctrines. “ I am far from doubting,” says he, “ that millions upon millions of human beings have been destroyed by the small-pox. But were its devastations, as Dr. Haygarth supposes, many thousand degrees greater than the plague, I should still doubt whether the average population of the earth had been diminished by them. The small-pox is cer- 1 Theory and Practice of Commerce, voi. i. p. 45. Eng. trans. 2 Essay on Pop. vol. iii. p. 136. I tainly one of the channels, and a very broad and deep one, which nature has opened for the last thousand years, to keep down the population to the level of the means of sub¬ sistence ; but had this been closed, others would have become wider, or new ones would have been formed. In ancient times the mortality from war and the plague was incomparably greater than in modern. On the gradual diminution of this stream of mortality, the generation and almost uni¬ versal prevalence of the small-pox is a great and striking instance of one of those changes in the channels of mortality which ought to awaken our attention and animate us to pa¬ tient and persevering investigation. For my own part, I feel not the slightest doubt that, if the introduction of the cow-pox should extirpate the small-pox, and yet the number of marriages continue the same , we shall find a very perceptible difference in the increased mortality of some other dis¬ ease.” 2 We do not see how it is possible, on any fair principle, to contest the accuracy of this statement. So long as the number of births, as compared with the means of subsistence, continues the same, so long must there be the same number of deaths The laws of nature are not to be defeated by human contrivances. We may, it is true, stop up one or more of the existing channels of mortality ; but if w r e do not, at the same time, lessen the current that w~as carried off by their means, we shall assuredly open new ones, or enlarge those already opened, or both. The real advantage of medical discoveries, of improvements in the art of surgery, and of the greater prevalence of habits of cleanliness, sobriety, &c. amongst the poor, does not consist in their adding to the population, for nothing can do this un¬ less the means of subsistence be at the same time increased 3 , but in their enabling the population to be maintained w’ith a less pro¬ portion of births and deaths, and consequentlv with a less amount of animal suffering. Whatever has a tendency to prolong human existence, tends also, by lessening the field for new comers, and adding force to the principle of moral restraint, to increase the prudential virtues, and to lessen the sum of human misery. The fact that the principle of increase is strong enough to repair the loss of the multitudes which famine, epi¬ demics and war sweep into an untimely grave, can never be alleged as a valid reason why we should intermit our efforts to obviate such calamities. We are not to estimate their disastrous effects by the mere suffering they inflict upon their immediate victims, though that is sufficiently appaling; we 3 This, of course, supposes the habits of the people not to be deteriorated. 458 POPULATION. must, at the same time, take into view the sorrow, and perhaps destitution of their sur¬ viving relatives and friends. Nothing surely that has any tendency to lessen the frequency of such calamities can be too highly valued ; and this is what medical discoveries and improved habits and modes of living effect. They prolong the average duration of human life; and, by diminishing the demand for fresh supplies of children, discourage mar¬ riage, and cause the population ° to be maintained with fewer births, and con¬ sequently with a smaller waste of animal existences. W e must have a care, however, in treating ot this important subject, not to exaggerate the principles now explained, or to conceal or underrate the influence of those by which they are countervailed. Food is indispensable for the support of human life ; and it may be said that this condition of our existence has a natural tendency to make every man die of hunger! In point of fact, however, very few perish of want, and the tendency in question is, in the great majority of cases, far more than counterbalanced by the op¬ posing principles to which it gives rise —by the industry and foresight which it enforces on the attention of every man. It is the same with the tendency to increase. If al¬ lowed full scope it would, as already stated, fill the fairest countries with want and wretchedness. But it rarely is allowed full scope. Man is not a mere slave of instinct: his conduct, speaking generally, is invariably influenced either in a less or greater degree by prospective considerations; and when we look at bodies of individuals we uniformly find that the period and frequency of marriages and the rate of increase, are determined by the increase of food, and that the latter is never outrun by the former. Mr. Malthus did not sufficiently attend to these considerations; and they have been entirely left out of view by several of those who have since written on the subject of population. It has, for example, been con¬ tended that the greatest improvements in agriculture and the arts can effect no real 1 The change that has taken place in the manners, dress, and diet of the English people since the six¬ teenth century is much greater than those who have not paid some attention to the subject would, at first, be disposed to believe. Erasmus, who visited London in the reign of Henry VIII., ascribes the sweating sickness, and the plague, from which England was then hardly ever free, to the incommo¬ dious form and bad exposition of the houses, the nastiness of the streets, and the almost inconceivable sluttishness that prevailed within doors. “ Con- "lavia,” says he, “ sola fere strata sunt argilla, turn ! scirpis palustribus, qui subinde sic renovantur, ut fundamentum maneat aliquoties annos viginti sub se Jovens sputa, vomitus, mictum canum et hominum, projectam cerevisiam, et piscium reliquias, aliasque soides non nominandas.” Hentzer, speaking of the presence chamber at Greenwich Palace in the time Note IV, or lasting improvement in the condition of the bulk of the people; that population speedily rises up to the higher level of sub¬ sistence ; and that in the end the only differ¬ ence is that we “ have a greater instead of a smaller number of wretched families !” But as \\ e elsewhere stated (Introd. Uicourse, p. li.), the principle of increase is not the bugbear, the invincible obstacle to all real improvement supposed by those who put forth such statements. It is always a diffi¬ cult matter suddenly to change the habits of a people with respect to marriage. No doubt it is influenced by every change in tlieii condition ; but there is a vis inertice to be overcome that usually prevents habits from changing to the extent that circum¬ stances change. Suppose that in conseq uence ot the introduction of some new species of vegetable, some new or more powerful ma¬ nure, or some other cause, the average annual produce of our agriculture were doubled, this would evidently increase the number of marriages; but there is no reason to think that they would be doubled, and though they were for a year or two immediately following the increase, they could hardly be so for more. But whatever might be the influence of the change on marriages, the population could not be doubled for very many years; and a period of at least eighteen or twenty years would have to elapse before the stimulus given by the improved con¬ dition of the population could bring a single fresh labourer into the field. It is clear, there¬ fore, that during all this lengthened period the labourers would enjoy an increased com¬ mand over the necessaries and conveniences of life ; their notions as to what was required for their comfortable and decent subsistence would consequently be raised; and they would acquire those improved tastes and habits that are not the hasty product of a day, a month, or a year, but the late result of a long series of continuous impressions. There would in consequence be a greater prevalence of moral restraint; and the in¬ crease of population would be adjusted so as permanently to maintain the bulk of the people in possession of their augmented comforts. of Queen Elizabeth, obser ves, that “ the floor, after the English fashion, was strewed with hay .” Chim- mes were hardly known in England previously to the sixteenth century. Dr. Heberden, whose excellent tract on the Increase and Decrease of Diseases, con¬ tains a great deal of curious and important inform¬ ation on this subject, is clearly of opinion that the gieat plague, which raged in London in 1665, was chiefly occasioned by the filthiness of the streets and houses, and the want of water and ventilation ; and he ascribes the subsequent absence of the plague, and the extraordinary increase of health that has taken place since 1750 or 1760, principally to the different circumstances under which the population are now placed, their greater love of cleanliness and ventilation, and the various improvements that hare been made in their dress and diet. Note IV. POPULATION. 459 A fact mentioned by Sussmilch and referred to in the former edition of this work, has been much relied on by those who contend that population is always sure not i, merely to increase, but to increase exactly in the same proportion that the means ot subsistence are augmented. Sussmilch states that the marriages in a district of Prussia amounted during the six years ending with f l708, to 6,082 a year. In 1709 and 1710 this district was visited by a severe plague, f which is said to have swept off about a third ^ part of the population ; and yet, notwith¬ standing this excessive mortality, in 1711, 5 the first year after it had subsided, the marriages amounted to 12,028, or to neail\ double" their amount previously to the pestilence ! This is a greater immediate increase than we should have anticipated, and perhaps were we acquainted with all J the facts, there might be circumstances to explain it. But the number of marriages immediately fell off; and they did not again rise to their amount previously to the plague, till about 1750, or forty years after it had laid waste the district. 1 It is really, theie- fore, the greatest imaginable error to suppose that any sudden and considerable diminution of the population can be rapidly filled up. This can only be effected in a long course of years; and during that period the comforts of the inhabitants being increased they acquire improved tastes and habits, so that the population does not again approach so near the level of subsistence. That the tendency to increase is not inconsistent with the improvement of society, is a fact as to which there can be no dispute. Without going back to antiquity, let any • one compare the state of this or any other European country 500 or 100 years ago, with its present state, and he will be satisfied J that prodigious advances have been made, that the means of subsistence have increased much more rapidly than the population, and that the labouring classes are now generally in the possession of conveniences and luxuries that were formerly not enjoyed even by the richest lords. The principle of increase is not, however, merely consistent with the continued improvement of the bulk of society _it is the great cause of this improvement and of the wonderful progress made in the arts. Had the principle been less power¬ ful, or had it not existed at all, every new discovery by diminishing the necessity for others would have occasioned a decline in the spirit of invention ; and society would long since have been either in a languishing or a stationary state. But the increase of popu¬ lation, though generally subordinate to the increase of food, is always sufficiently power- k » See Sussmilch’s table in Malthus on Population, 5th, ed. vol. ii. p. 170. ful to keep invention on the stretch. All that numerous class who live by their labour, and who are either striving to raise themselves to a higher station, or to maintain their present position, are at this moment impelled by the same powerful motives to invent and contrive new and more powerful methods of production that impelled their ancestors 5,000 years ago; and so it will be in all time to come. I he ciiris acuens mortalia corda will never cease to operate, and will secure the continued advancement of society. To suppose, as some have done, that the extraordinary progress already made in science and the arts would have been equal or greater had the tendency to increase been less powerful, is in ti uth equivalent to supposing that industry and invention would be promoted by lessening the motives to their exercise, and the advan¬ tages derivable from them. There might, perhaps, have been less squalid poverty among the very dregs of the population had there been no principle of increase ; but it is a contradiction to pretend had such really been the case, that the powers and resources of industry would have been so astonishingly developed, that scientific investigations would have been prosecuted with equal perse\erance and zeal, that so much wealth would have been accumulated by the upper and middle classes, or that the same circumstances which urged society forward in its infancy would have continued, in every subsequent age, to preserve their energy unimpaired : and it may well be doubted whether an exemption from the evils incident to poverty would not have been dearly purchased, even by the very lowest classes, by the sacrifice of the hopes and fears attached to their present condition, and the extraordinary gratification they now reap from successful industry. If these conclusions be well founded, it follows that the schemes proposed for directly repressing population in the ancient and modern world, besides being for the most part atrocious and disgusting, have really been opposed to the ultimate objects their pro¬ jectors had in view. Could the rate of increase be subjected to any easily applied physical control, few comparatively among the poorer classes would be inclined to burden them¬ selves with the task of providing for a family; and the most effective stimulus to exertion being destroyed, society would gradually sink into apathy and languor. It is there¬ fore to the principle of moral restraint, or tc the exercise of the prudential virtues, that we should exclusively trust tor the legulation of the increase or population. In an instruct¬ ed society, where there are no institutions favourable to improvidence, this check is sufficiently powerful to confine the progress of population within due limits, at the same time that it is not so powerful as to hinder it 460 POPULATION. from operating, in all cases, as the strongest incentive to industry and economy. * The influence of the various causes of increased healthiness, arising from an in¬ crease in the means of subsistence as compared Note IV. with the population, improvements in medi¬ cine, Sec. have been strikingly exemplified throughout Europe during the last half cen¬ tury, but nowhere, perhaps, so powerfully as in Great Britain. We subjoin from the pre¬ liminary remarks to the census of 1831, a Burials, and Marriages, in the Five Years nr^Hino-n, ^ ,, 1 J . 1 Baptisms, 1811 1891 and i sqI . Qnfl r 5 . . e ? rs Py ecedm g the several Enumerations of 1801 1 lb - 1 » and 18 -' 1 » and distinguishing the several Counties. ' 1816—1820. 1826—1330. Bedford Berks Bucks Cambridge Chester Cornwall Cumberland - Derby Devon Dorset - Durham Essex Gloucester Hereford Hertford Huntingdon Kent Lancaster Leicester Lincoln - Middlesex Monmouth Norfolk Northampton - Northumberland Nottingham Oxford Rutland - Salop Somerset Southampton Stafford - Suffolk Surrey - Sussex Warwick Westmoreland Wilts Worcester York, East Riding City and Ainsty North Riding. West Riding - Summary of England, including Wales - i 35 34 37 33 39 33 38 35 36 41 38 35 37 40 38 33 30 34 35 32 39 56 32 42 47 32 35 33 34 39 34 34 34 37 31 35 35 41 34 51 51 50 45 51 58 54 52 49 62 43 44 55 65 54 46 41 47 49 50 37 72 47 51 57 51 53 50 54 55 46 49 56 42 55 52 50 60 46 114 148 129 118 130 120 143 138 109 142 116 126 327 183 4 61 104 116 114 130 117 95 169 126 130 139 116 139 131 142 139 104 124 129 134 126 116 142 142 137 39 J 55 I 129 36 j 53 142 35 49 124 32 48 131 33 53 144 32 49 129 30 30 32 31 34 32 32 131 49 132 62 142 52 I 132 58 138 50 113 139 34 56 32 | 49 32 | 45 35 j 61 35 [ 60 33 57 32 28 28 ! 49 115 36 58 30 49 39 36 45 64 31 50 131 130 120 144 168 49 | 134 38 | 115 35 i 53 35 32 33 33 34 34 30 31 31 35 28 34 31 34 31 54 52 56 54 59 53 46 52 54 44 52 43 53 57 51 29 43 30 ' 51 31 51 n0 !j 36 48 j 123 134 125 94 146 135 132 160 119 141 161 142 128 102 118 132 129 128 119 137 138 129 108 124 123 32 49 121 Supposing the burial registers to have been all the while about equally accurate, it ap¬ pears from the above table, that, during the 5 years ending with 1800, 1 in every 48 of the population died annually ; during the 5 years ending with 1810, the ratio of mor¬ tality was 1 in every 49 ; during the 5 years ending with 1820, it was reduced to 1 in ff9 129 32 52 139 4 55 129 35 50 135 7 57 139 36 52 134 2 54 124 31 , 51 122 3 57 148 32 : 53 141 4 62 143 33 1 52 137 4 54 148 35 53 | 140 5 61 140 35 58 147 1 61 128 34 56 131 1 51 123 32 51 126 | 3 65 134 35 59 137 3 49 139 38 49 129 > 68 142 33 58 142 48 118 34 58 120 I 52 149 32 56 X 63 134 35 57 148 53 140 31 51 127 54 122 f 35 51 118 l 36 52 113 1 61 147 33 55 144 57 | 124 35 51 131 1 >5 1 i 127 34 51 i 128 It may be, and, indeed, frequently has been, supposed that this diminution in the proportional number of deaths indicates a corresponding improvement of human life. Such, however, is not the case. No coni elusions of this sort can be drawn, unless allowance be made for the increase of popu¬ lation ; for it is plain that, if the population be progressively augmented by an increasing number of births, the ratio of deaths to the pp. 224—230 ; and Sumners's Records of the Crea¬ tion, 4th ed. vol. ii. p. I6Q. POPULATION. 461 ■ r|H Note 1V. population will not fairly represent the rate of mortality, or entitle us positively to infer whether it has been diminished or not. But it is, notwithstanding, abundantly certain that the rate of mortality in England has materially diminished, since the American war. The number of burials, estimated by averages of 5 years, did not differ considerably during the entire period from 1780 to 1815, though the population increased about 3,300,000 in the interval. — (Preliminary Discourse to Census of 1831, p. 35.) Neither was the increase occasioned by any increase in the number of births as compared with the bearing women, but by the increased number of children that have been reared, and passed through the different stages of life. " About 100 years back,” says Mr. Griffith Davies, “ if any dependence can be placed on the registers, the number of annual births did not exceed the number of annual burials, so that the population could not then have been on the increase. The in¬ crease since that period must, therefore, be attributed to an increased fruitfulness of the female sex, to immigration, to a diminution in the rate of mortality, or to two or more of those causes combined. But it does not appear that the first of these causes has had any sensible operation, and the second can have had none, otherwise the number of burials must have increased in comparison with the number of births, which is contrary to the fact: the increase of population must, therefore, be entirely attributable to a dimi¬ nution in the rate of mortality .”—(Report vf 1827 on Friendly Societies , p. 38.) There cannot, in fact, be a doubt that the value of life, in England and Wales, regu¬ larly increased from 1740 or 1750 down to 1815 ; and there are good grounds for think¬ ing that it then exceeded its value in any other country, with the exception of Scot¬ land. Mr. Finlaison has calculated 3 Tables, which are subjoined in an abridged form, that set this improvement in a very striking point of view. The first gives the expecta¬ tion of life, as deduced from the ages of the subscribers to the Million Tontine of 1695 ; the second, the expectation of life among the government annuitants, in the interval be¬ tween 1785 and 1825; and the third, the expectation of life for the whole population, as deduced from the deaths and ages recorded in the parish registers from 1813 to 1830: distinguishing, in all cases, between male and female life. Those on whom the esti¬ mates in the first two tables are founded, being annuitants, and generally, therefore, in decidedly comfortable circumstances, must be regarded as picked lives : whereas the latter embrace all sorts. Now, it appears from these tables that the probable life of a male annuitant, 20 years of age, in 1695, was 29’34 years; while, in 1830, the pro¬ bable life of a male of the same age, taken indiscriminately from the mass of the popu¬ lation, was 39 '65 years; exceeding that of the former by more than ten years ! The improvement in female life has been equally great; but, for obvious reasons, it is not so great when we compare females taken from the mass of the people with female annui¬ tants. Statement of the Expectation of Life in England and Wales at every 5th Year of Age, deduced from the Ages of the Subscribers to the Million Tontine of 1 695; the Annuitants from 1785 to 1825 ; and the Deaths in the Parish Registers from 1813 to 1830. Age. Million Tontine of 1695. Annuitants, 1785- -1825. Parish Registers,! 813—1830. Expect¬ ation. Males. Difference Expect¬ ation. Females Expect¬ ation. Males. Difference Expect¬ ation. Females Expect¬ ation. Males. Expect- Difference ation. Females Under 1 • year - 1 37-61 - - 50-16 5-35 55-51 39-96 3-24 43-20 38*49 5-36 43-85 5013 5-46 55-59 4778 2-36 50-14 5 39 03 3-41 42-44 48-93 5-30 54-23 49-80 1-49 51-29 10 35-71 4-72 40-43 45-57 5-48 51-05 46-83 1-12 4795 15 32-05 5-27 37 32 41-76 5-43 47-19 43-08 1-00 44-08 20 29 34 4-91 34-25 38-39 5-60 43-99 39-65 1-03 40-68 25 27 96 3-71 31*67 35-90 4-91 40-81 36-55 1-09 37 64 30 26-27 2-71 28-98 3317 4-40 37 57 33*34 1-29 34 63 35 24 12 2*20 26-32 30-17 4-14 34-31 30 03 1 '48 3151 40 21-74 l 91 2365 27-02 410 31-12 26-75 1-63 28-38 45 19-15 1-47 20-62 23 75 4-06 27-81 23-48 1-66 25-14 50 16-86 •92 17-78 20-30 405 24-35 20-31 1-52 21-83 55 14-52 *94 15-46 1715 364 20-79 17-19 1 *32 1851 60 11-65 1-60 1325 14-39 293 17 32 14-20 1-08 15-28 65 9-30 •93 .1023 11-63 2-37 14 00 11-43 •89 12-32 70 7-19 •60 779 9-22 1-77 1099 8-94 •73 9-67 75 5-61 •05 5-56 7-12 1-34 8-46 6-78 •55 733 80 4-92 1*13 3-79 4-94 1-56 6-50 5-05 •41 5-46 85 3 58 •22 3-80 312 1 72 4-84 3 85 •37 4-22 90 2-01 •53 2-54 1-95 •88 2-83 3-42 •28 3-70 95 118 •46 1-64 1-18 •37 1-55 3-06 •16 3 22 100 0-00 000 0 •50 •50 2-78 •06 2-72 Sums of ages 370-68 411-37 465-79 535-80 474 30 495-70 4653 POPULATION. Note IV. This wonderful improvement must, no doubt, be ascribed to a variety of causes : partly to the drainage of bogs and marshes, by which agues and marsh fevers have been entirely banished from many districts ; partly to improvements in the diet, dress, lodgings, and other accommodations of the mass of the people; partly to the greater prevalence of cleanliness ; and partly, and, since 1800, chiefly, perhaps, to the discoveries in medical science, and the extirpation of the small¬ pox. It appears, however, that the rate of mor¬ tality had been reduced to a minimum in 1815, and that it increased somewhat in the interval between that and 1830. Probably this was only, in part at least, a temporary effect, caused by the distress resulting from the sudden transition from a state of war to one of peace ; and by the severe shock that the fall of prices in 1815, and the destruction of country banks and of country bank paper, in that year, gave to almost every species of industry. If the increased mortality be still maintained, the causes that have produced it will afford matter for interesting investiga¬ tion. Perhaps it will be found that the Irish immigration, alluded to in the sequel, has had a good deal to do in bringing it about. The improved condition of the people has been accompanied with, and no doubt materially promoted by, a greater preva¬ lence of moral restraint. Its increase is evinced by the proportion of marriages to the population having fallen from one in 123 persons during the five years ending with 1800, down to one in 128 during the five years ending with. 1830. Had the table been carried further back, the diminution would have been still more obvious. In 1770, for example, there was one marriage for every 118 persons. The average fruitfulness of marriages in England may be taken at from 4-1 to 4-2 ; in other words for every 100 marriages, there are, at an average, from 410 to 420 births. The following account of the population of England and Wales, from 1700 to 1830, is extracted from the preliminary remarks prefixed to the census of 1831. Population of England and Wales, from the year 1 700 to the year 1830, including the Army, Navy, and Merchant Seamen. V rears. Population. Years. Population. Years. Population. 1700 5,134,516 1750 6,039,684 1800 9,187,176 1710 5,066,337 1760 6,479,730 1810 10^407^556 1720 5,345,351 1770 7,227,586 1820 11.957,565 1730 5,687,993 1780 7,814,827 1830 13,840,751 1740 5,829,705 1790 8,540,738 The population of Scotland in 1700 has been estimated, though necessarily upon very loose and unsatisfactory grounds, at 1,050,000; in 1755, it was estimated at 1,265,380; in 1801, it amounted to 1,599,068 ; and in 1831 to 2,365,114. The first authentic account of the popu¬ lation of Ireland is given by Sir William Petty, in his tract entitled the Political Ana¬ tomy of Ireland. Sir William was employed by government to superintend the survey and valuation of the forfeited estates, instituted during the protectorate ; and so well did he execute his task, that his survey continues, after the lapse of near two centuries, to be the standard of reference in the courts of law, as to all points of property. He had, there¬ fore, the best means of obtaining accurate information with respect to the numbers and condition of the people; and as the results of his researches on these points are exceedingly curious, it is best to give them in his own words “ The number of people now in Ireland (1762) is about 1,100,000, viz. 300,000 Eng¬ lish, Scotch, and Welch protestants, and 800,000 papists; whereof one fourth are children unfit for labour, and 75,000 of the remainder are, by reason of their quality and estates, above the necessity of corporal la¬ bour ; so as there remains 750,000 labouring men and women, 500,000 whereof do per¬ form the present work of the nation. “ The said 1,100,000 people do live in about 200,000 families or houses, whereof there are about 16,000 which have more than one chimney in each, and about 24,000 which have but one ; all the other houses, being 160,000 are wretched nasty cabins, without chimney, window, or door-shut, even worse than those of the savage Americans, and wholly unfit for the making merchant¬ able butter, cheese, or the manufactures of woollen, linen, or leather. “ By comparing the extent of the terri¬ tory with the number of people, it appears that Ireland is much under-peopled; foras¬ much as there are above 10 acres of good land to every head in Ireland ; whereas in England and France there are but four, and in Holland scarce one !” 1 In 1731 an inquiry was instituted, by order of the House of Lords of Ireland, for 1 Pol. Anatomy of Ireland, pp. 114 and 118, ed* 1719. POPULATION. 463 t - | *» I * I I Note IV. ascertaining the population, through the medium of the magistrates and established clergy, the result of which gives a population of 2,010,221. At this period, and for long after, Ireland was essentially a grazing coun¬ try. To such an extent, indeed, was the pasturage system carried, that, in 1727, dur¬ ing the administration of Primate Boulter, a law was made to compel every occupier of 100 acres of land to cultivate at least Jive acres, under a penalty of 40s. ! According to the returns of the hearth- money collectors, which are believed to have been pretty accurate, the uumber of houses in Ireland in 1754 was 395.439 ^ 1767 — 424,646 1777 _ 448,426 l 1785 — 474,322 1788 — 650,000 1791 — 701,102 J Which, allowing six inhabitants to each house, gives a population of r 2,372,634 2,544,276 2,690,556 2,845,932 3,900,000 1.4,206,612 In 1805, Mr. Newenham estimated the population at 5,395,456. An incomplete census was taken in 1812, from which the population was computed at 5,937,856. At length a complete census was taken in 1821, when Ireland was found to contain a popu¬ lation of 6,801,827. According to the last census taken in 1841, the population amount¬ ed to 8,175,124, viz. Leinster, 1,973,731 ; Munster, 2,396,161 ; Ulster, 2,386,373 ; Connaught, 1,418,859: total, 8,175,124. Considering the extent of bogs in Ireland, the backward state of its agriculture, the deficiency of manufactures and trade, and the fewness of the great towns, its population is astonishingly dense. There is, in fact, at an average of the entire kingdom, an indi¬ vidual for every 2*57 acres; whereas in England, notwithstanding the number and magnitude of her great towns, and the vast amount of her manufacturing and commercial population, there are 2*66 acres for every individual ; and in Scotland there is only one individual to every eight acres 1 This wonderful density of population in Ireland is entirely ascribable to the interminable di¬ vision and subdivision of the land, and the general dependence on the potato. But however it may have originated, there can be no question that it is the immediate cause of the abject poverty and depressed condi¬ tion of the great bulk of the people. It is not too much to say that there are at present (1838) more than double the number of persons in Ireland it is, with its existing means of production, able either fully to employ or to maintain in a moderate state of comfort. It may be convenient to the reader to be able to refer to the following Summary Account of the Population of Great Britain and Ireland, including the Army and Navy, at the Periods at which Censuses have been taken, with the Ratio ot Increase in the intervening decennial Periods. Popula¬ tion, 1801. Inc. per cent. Popula¬ tion, 1811. Inc. per cent. Popula¬ tion, 1821. Inc. per cent. Popula¬ tion, 1831. Inc. per cent. Popula¬ tion, 1841. Great Britain. England Wales - Scotland Army, Navy, &c. - 8,331,434 541,546 1,599,068 470,598 14§ 13 14 9,551,888 611,788 1,805,688 640,500 171 17 16 m 11,261,437 717,438 2,093,456 •319,300 16J 12 13 13,091,005 806,182 2,365,114 277,017 141 13' io§ 15,000,154 911,603 2,620,184 188,453 Ireland - - - 10,942,646 15* 12,609,864 — m 14 14,391,631 6,801,827 15 H* 16,539,318 7,767,401 13* H 18,720,394 8,175,124 Totals - Population of Jersey, Guernsey, Man, f Ac., not included! in the above J • • 9 9 21,193,458 « 9 15 24.306,719 103,710 10* 19* 26,895,518 124,040 Total population ofT the empire in 1831 ?- and 1841 J r « - m m 24,410,429 10* i 27,019,558 The excess to which population has ar¬ rived in Ireland, and the extreme misery of the inhabitants, threatens, by causing an ex¬ traordinary emigration to Great Britain, to exert a most pernicious influence over the condition of the labouring classes here. This is, indeed, a subject ot paramount import¬ ance, and calls loudly for the attention of government. If the existing sources of pau¬ perism be left to flow unchecked in Ireland, and to seek a vent for themselves, it is not easy to see how we shall escape being over¬ run by them. Nothing hut the abolition of all intercourse between the two countries will suffice for our protection. Pauperism, like water, will find its level. It cannot be heaped up in Leinster and Ulster, without overflowing upon England and Scotland 464 POPULATION. Note IV. But it is needless to reason hypothetically on this subject. The process of equalisation has been for a while begun; and at this moment a large proportion of the labourers in the western parts of Scotland and England are either Irish, or descendants of Irish. In 1831 there were above 35,000 natives of Ireland established in Glasgow and its vici¬ nity ; and they are proportionally abundant in Liverpool, Manchester, Paisley, &c. They are everywhere, indeed, supplanting the Scotch and English labourers in those de¬ partments of industry in which strength is of more importance than skill; and are, rapidly gaining on them in others. A dou¬ ble injury is thus inflicted upon the native population of Britain: their wages being reduced by the competition of the Irish ; and their opinions as to what is necessary for their comfortable and decent subsistence, being lowered by the contaminating influence of example, and by familiar intercourse with those who are content to live in filth and misery. We are persuaded that few things so injurious to the character and habits of our people have ever occurred as the extra¬ ordinary influx of Irish labourers; and yet it may be said to be only commenced. Previously to the increased facilities of com¬ munication afforded by means of steam navi¬ gation, the expense of the passage from Ire¬ land to Great Britain, trifling as it was even then, formed a serious obstacle to the immi¬ gration of the Irish poor. But this expense has been reduced to next to nothing ; and it may be said, almost without a metaphor, that floating bridges have been constructed between Dublin and Liverpool, Belfast and Glasgow, Waterford and Bristol, to carry the people of Ireland to our shores. We should not, therefore, flatter ourselves with the delusive idea, that the misery and desti¬ tution of the Irish people is a matter which only affects us indirectly and remotely. On the contrary, it seems pretty certain that nothing ever exerted so direct, and, at the same time, so destructive an influence over all our best interests. If another bias be not given to the current of emigration, Great Britain will necessarily continue to be the grand outlet for the pauper population of Ireland; and the tide of beggary and degradation will flow in this direction until the plague of poverty has spread its ravages equally over both divisions of the empire. We are aware that it has been and may be objected to what is now stated that the immigration of Irish labourers has been ad¬ vantageous to the manufacturers, and that without them several important works could hardly have been completed, and might not have been undertaken. We incline to think that this statement is partly true; but | it is not enough to show that the Irish immi¬ gration is innoxious, much less advanta¬ geous. It must be judged of by its influence on the condition of the bulk of the British people, and not by its influence on manufac¬ tures, or any department of industry. Im¬ provements in machinery, or in the skill and dexterity of the labourer are always advan¬ tageous ; but it is quite another thing when a totally different labourer, one whose tastes and habits are comparatively degraded, is brought into competition with the existing labourers. This cannot fail to injure the lat¬ ter, that is, it cannot fail to injure the bulk of society, and is, therefore, publicly injurious. Neither is the advantage to manufacturers arising from this influx of cheap labour so great as might be supposed. Security is, of all things, that which is most indispensable to successful manufactures. But security and poverty are rarely found together : the former is always greatest where the labourers are well off, where they have “ a stake in the hedge, and can afford to retrench in periods of distress. Hence it appears that it is no less for the advantage of Great Britain than of Ireland that a vigorous effort should be made to stop the progress of pauperism in the latter, and to divert a part of the existing surplus popu¬ lation to our transatlantic colonies. The most likely means of effecting the former would be the establishment of a compulsory provision for the support of the poor ; for, this would compel the landlords, through a regard to their own interests, to oppose themselves to that splitting of the land which is the bane of Ireland, and to take efficient measures for checking the too rapid increase of population. Were a system of emigration on a large scale introduced at the same time with a poor law, the latter would greatly facilitate the working of the former ; and it seems highly probable that their combined influence would, in no very lengthened pe¬ riod, effect a great change for the better in the condition of the population. The mere increase of population is not an object that should ever be aimed at. If its increase be commensurate with the in¬ crease of the means of subsistence, the con¬ dition of the people will, in so far as their command over necessaries and conveniences is involved, continue stationary : if the in¬ crease of population be less rapid than that of subsistence, their condition will be im¬ proved ; and, if it be more rapid, it will be deteriorated. It results, therefore, that it should be a principal object of every wise* government to take away all artificial sti¬ mulants to population ; and to adopt such measures as may tend, by giving the great¬ est security to property, and the greatest POPULATION. 465 Note I V. freedom to industry, as well as by enlight¬ ening the public with respect to their real interests, to accelerate the increase of subsistence as compared with the popula¬ te tion. It has been already observed that an im¬ provement in the health of the people, and a retardation of the period of marriage, si¬ milar, though inferior in degree, to that which has taken place in Great Britain, has been experienced in France and most other continental states. We subjoin, in illus¬ tration of this interesting subject, the sub¬ stance of a memoir, read by M. Benoiston de Chateauneuf, to the Royal Academy of Sciences at Paris in 1826. In this memoir M. de Chateauneuf endeavours to show what was the average rate of mortality in most countries of Europe in 1780, or thereabouts, and what was its average rate in 1825, since which it has not undergone any very mate¬ rial change. There must, of course, be a good deal of looseness in the estimates from which some of the conclusions are drawn ; but in general they seem to be accurate, and as far as respects France, they may be relied on. “ Of a given number of individuals newly born in the period from 1775 to 1780, the half died during the first ten years. “ Three fourths had perished before fifty years, and four fifths at sixty ; or in other words, of a hundred individuals, eighteen only arrived at this age. “ brom eighty to a hundred years, none remained : a whole generation had run its course. “ The average proportion of deaths to the whole population was found to be as one to 32*2, and that of births as one to 27*7. “ It was reckoned that there was one mar¬ riage for every hundred and ten or hundred and fifteen individuals, and that the degree of fecundity might be taken at an average, at four children for each couple, although at the same time, this, as well as all the other relations, was liable to vary according to the places. “ These facts have been deduced from the calculations of Necker, Moheau, and Pom- melles in France; Short and Price in Eng¬ land ; Sussmilcli in Germany; and War- gentin in Sweden. “ Such then, about the year 1780, were the principal laws to which a more or less perfect state of society, a more or less active industry, and a more or less limited com¬ mand of subsistence, subjected the course of human life in Europe. ** Since then facts have been multiplied, and have, at the same time, been more accu¬ rately observed ; great political changes have taken place ; civilisation and the industrious arts have advanced with rapidity; and k j science demands that we examine what may have been their influence upon human life. “ We have seen what were its laws half a century ago: with the old state let us com¬ pare the present. “ At the period in which we write, (1825) of a given number of children born in Eu¬ rope, there dies, in the first ten years, a little more than a third (38*3 in 100) instead of the half (49*9) which formerly died. “ Fifty years after the period of birth, three fourths of a generation (74'2 in 100) were formerly found to be extinct. At pre¬ sen the proportion of dead to living, in the samt period of time, is not more than thir¬ teen twentieths, or 65 in 100. “ Lastly, twenty-three persons in a hun¬ dred now arrive at the age of sixty, instead of eighteen who attained that age half a century ago. “ These proportions are mean terms; taken separately they become still more fa¬ vourable. Thus in France, the proportion of those who survive at sixty years is 24 *3 in the hundred, while formerly it did not exceed fifteen (14*7). “ These results, sufficiently remarkable of themselves, give rise to others which are not less so. “ From the 40th degree of latitude to the 65th, that is to say, upon a line which ex¬ tends from Lisbon to Stockholm, embracing an extent of about a thousand leagues, and in a population of sixty-five millions of individuals, inhabiting Portugal, Naples, France, England, Prussia, Denmark, and Sweden, the proportion of deaths is 1 to 40*3; that of births 1 to 30*1 ; that of marriages 1 to 123 '3; and the fecundity, four children by each marriage. “ On comparing these proportions with those of the last century, we are struck with the extraordinary difference which exists between the rate of mortality in early life at these two periods, a difference which is not less than between 38 and 50 in 100. “ This difference is sufficient to attest the happy effects of vaccination, to which it is partly owing; but it also proves a great amelioration in the treatment of children; and this amelioration indicates the greater prosperity and improved condition of fami¬ lies. If we reflect that it is amongst the lower classes that the mortality of children is greatest, we may conclude, that if these classes lose fewer at the present day, it is because they are better able to take care of them, and bring them up. “ It is evident also, that unless these and other causes had extended their benign in¬ fluence beyond the years of childhood, they would only have had the melancholy effect of delivering over a greater number of victims to death in the immediately subsequent stages of human life. The contrary, how- H h 466 POPULATION. Note IV. ever, takes place, and at the present day more individuals attain the age cf fifty and sixty than formerly. The action of the preserving causes of childhood must therefore continue to operate upon the grown up person during the remaining part of his career; and these preserving causes seem to resolve themselves into an improved state of society, a more diffused civilisation, from whence results a more happy and comfortable existence. “ Along with the fact of a diminution in the number of deaths, we have to place a second, which equally results from the comparison of the two epochs, namely that of a diminution of marriages. They were formerly in the proportion of about one in every hundred and ten individuals ; they are now in that of about one in every hundred and twenty-three. This, which is a mean term, is even too high for some countries. In France, where, according to the calcula¬ tions of Necker, there was, in 1780, one marriage for every hundred and eleven indi¬ viduals, there is now only one for every hundred and thirty-five.” And we have already seen that in England, where the proportion of marriages to the whole popu¬ lation in 1760 was one in a hundred and sixteen, and in 1770 one in a hundred and eighteen, it is now one in a hundred and twenty-eight. “ The natural consequence of the dimi¬ nution of marriages is that of births. But this diminution is only relative to an increased population ; for though the proportion of marriages to the population has fallen from a hundred and ten to a hundred and twenty- three, and that of births from twenty-eight to thirty, the absolute numbers of both are not¬ withstanding augmented. “ The fruitfulness of marriages appears to have remained the same. In the present century, as in the last, the numerical ex¬ pression which represents it is four children for each marriage. But this proportion is somewhat beyond the true one, since we are obliged to include illegitimate children among the births, from the want of proper distinctions in the accounts with respect to them, especially in foreign countries. In France, the exact proportion of legitimate births to marriages is 3*965 to 1. “ The proportional number of marriages, as well as births, has diminished in Europe within these fifty years, and yet the popula¬ tion is seen to increase. This apparent contradiction is explained by the very great diminution in the proportion of deaths. There was formerly one death in thirty-two individuals ; there is at present only one in 40*3. This diminution of mortality is chiefly perceptible in the earlier stages of life. But while there are, on the one hand, more newly-born individuals that survive, there are on the other more adults that grow old. “ The necessary result of this state of things is the prolongation of the mean duration of life, which has extended beyond the limits within which it was formerly con¬ fined. “ This simultaneous diminution of the marriages and deaths throughout Europe, confirms Mr. Malthus’s observation, that wherever the deaths are numerous, the marriages are so also ; for then the vacuities must be filled up, and there is room for every body; and that, on the contrary, wherever there are few deaths, there are also few marriages. The reason is, that from the period when the augmentation of individuals is fully equal to the demand for them, the means of subsistence become scarce and even uncertain. People must then be restrained from gratifying the desire of marrying, and having a family, by the difficulty which is foreseen of providing for one. Thus, although it may appear paradoxical, it is not the less true, that there is a period when population forms an obstacle to population, and industry arrests industry. “ From all that has been stated, it would appear that the following conclusions may be drawn. “ The laws of mortality in Europe, such as they were established fifty years ago by the philosophers who were then engaged in their investigation, appear since that period to have undergone the following modifica¬ tions : — Mortality at different Ages . 1780. 1825. From birth to the age of 10, 50 in 100 38*3 in IOC 50, 74-4 60, 82*0 Proportion of deaths to the whole population, 1 : 32*2 births 1 : 27*7 marriages 1 : 110*4 Fecundity - 4*0 “ This table no doubt, contains errors. These might however be obviated, if persons accustomed to such calculations, or learned societies, would publish accounts similar to those given above. From these various elements, a general and accurate mean might be obtained. “ I subjoin a state of the population of France, such as it is represented to have been by Necker, who had the best means ol acquiring accurate information ] , in 1780, and such as it is at the present day, (1 825) according to the official accounts given in the Annuaire du Bureau des Longitudes for the year 1826. 1 Administration des Finances, tome i. p. 206. i POPULATION. 457 Note IV. i: Population on an average of ten years,ending with 1780. 24,800,000 inhabitants. Deaths on an average Population on an average of seven years,ending with 1825. 30,400,000 inhabitants. 1 of 10 years, Births do. do. Marriages do. do. Natural children 818,491 a year. 761,230 a year, on an average of 7 years. 957,970 do. 224,570 do. 65 ’ 760 (ti ) 2 940,935 213,774 20,480(^) Mortality at different Ages . Average of ten years, ending with 1780. Average of seven years, ending with 1825. From birth to the age 43*7 in 100 of 10 50‘5 in 100 Do. to the age of 50 78\5 67 5 60 85-3 75-7 Proportion of deaths to the whole population - 1 : 30*2 1 : 39-9 births 1 : 25-7 1 : 31-7 marriages 1 : 111*3 1 : 135-3 Fecundity (na- tural children deducted) - 4-4 3 96 3 CONSEQUENCES NOTE V. RESULTING FROM THE USE O THE POTATO AS A PRINCIPAL ARTICLE OF FOOD. t r ! It has been justly observed by Dr. Paley, that “ as the state of population is governed and limited by the quantity of provisions, perhaps there is no single cause that affects it so powerfully as the kind and quantity of food which chance or usage has introduced into the country.” 4 In corroboration of this remark, we may observe, that M. Humboldt, who has left nothing untouched that could throw light on the state of the countries he visited, mentions, in his account of New Spain, that the same extent of land that would furnish food sufficient for fifty indi¬ viduals, if planted with bananas, would not furnish a sufficient supply of wheat for tw,o. It is evident, therefore, that a country suit- 1 The population of France in 1826 was estimated at about 31,500,000. 2 This increase in the proportion of illegitimate children is ascribed by Peuchet (Statisque Elemen- taire, p. 232.), partly to the effects of the Revolution, but chiefly to the marriage law of 1803. Its enact¬ ments seem to be in no common degree vexatious and oppressive, and must undoubtedly have had a considerable influence in increasing the number of ( illicit amours. Had it not been for the increase in the number of illegitimate births, the increase of health in France since the Revolution would have appeared consider¬ ably greater. It was formerly supposed that the mortality amongst illegitimate children, during the first three or four years, was about twice as great as amongst those born in wedlock ; and though there is reason to think that this extraordinary disproportion has been lessened, still there are a variety of consi¬ derations, that must at once suggest themselves to the mind of every one, which render it certain that a much larger proportion of illegitimate children must, in all cases, perish in infancy. “ Les conjonctions able for the cultivation of bananas, might, provided its inhabitants used them as food, be upwards of twenty-five times more popu¬ lous than if they fed on corn ! Humboldt observes, that nothing strikes a European newly arrived in Mexico with more astonish¬ ment than the extreme smallness of the patches of ground that furnish subsistence for a numerous family ; and such, he adds, is the facility with which the banana is cul¬ tivated, that two days a week of the most moderate species of labour is all that is re¬ quired for the tillage of these little patches. 5 The climate of Europe is not suitable for the growth of the banana. We are, however, indebted to America for the potato; which, though inferior in productiveness to the banana, is yet greatly superior in that re¬ spect to any other species of crop cultivated in Europe. Those who have investigated the subject differ considerably in their state¬ ments as to the number of individuals that may be supported on an acre of land planted with potatoes, compared with those that may be supported on one sown with wheat; some stating the proportion as high as six to one, and others at only two to one. According to Arthur Young, a pound of wheat is equal in nutritive power to about five pounds of potatoes. But Mr. Newenham, who has carefully investigated this subject, states that “three pounds of good mealy potatoes are undoubtedly more than equivalent to a pound of bread 6 ;” and his estimate is rather above Mr. Wakefield’s. 7 Supposing, however, that a pound of wheat is fully equal to four pounds of potatoes, still the difference in favour of the superior quantity of food derived from land planted with the latter is very decided. According to Arthur Young, the average produce of potatoes in Ireland may be taken at 82 barrels the Irish acre ; which, at 20 stones the barrel, is equal to 22,960 lbs.; and this, being divided by four, to bring it to the same standard, in point of nutritive power, as wheat, gives 5,740 lbs. Mr. Young farther estimates the average produce of wheat by the Irish illicites,” says Montesquieu, “ contribuent peu a la propagation de l’espece. Le pere qui a l’obligation naturelle de nourrir et d’elever les enfans, n’y est point fixe; et la mere, a qui 1’obligaticn reste, trouve mille obstacles, par la honte, les remords, la gene de son sexe, la rigueur des lois : la plupart du terns elle manque de moyens.” — L'Esprit des Lois, liv. xxiii. cap. 2. 3 The proportion of births to a marriage in England is nearly the same as in France—a circumstance which shows the degree of weight that ought to be attached to the singular statements made by M. Sis- mondi and others, with respect to the prudence dis¬ played by married persons in France. 4 Paley’s Works, vol. ii. p. 71. London, 1819. 5 Essai Politique sur la Nouvelle Espa/jne. tome iii. pp. 29. 36. 6 Newenham on the Population of Ireland, p. 340. 7 Mr. Newenham estimates the daily consumption of a potato-feeding family of six persons at 36 lbs. a day, or 6 lbs. each, at an average; • whereas Mr. Wakefield’s average is 5$ lbs. H h 2 468 USE OF THE POTATO. Note V. acre at four quarters 1 ; which, supposing the quarter to weigh 480 lbs. gives in all 1,920 lbs. or about a third part of the solid nourishment afforded by an acre of potatoes. This estimate must, however, be somewhat modified when applied to Great Britain ; the soil of which, while it is better adapted to the growth of wheat, is generally supposed not to be quite so suitable for the potato as that of Ireland. But it notwithstanding admits of demonstration, that even here “ an acre of potatoes will feed double the number of individuals that can be fed from an acre of wheat.” 2 It is clear, therefore, on the most moderate estimate, that the population of a potato¬ feeding country may become, other things being about equal, from two to three times as dense as it could be, were the inhabitants fed wholly on corn. We are not, however, to ascribe the superior population of Ireland, notwithstanding the want of manufactures and commerce, wholly to the circumstance of the population subsisting chiefly on pota¬ toes, while those of England subsist chiefly on wheat. A good deal of the difference must be ascribed to the greater consumption of butcher’s meat in the latter. “ Compar¬ atively speaking,” says Mr. Newenham, “ a very small quantity of animal food is con¬ sumed in Ireland ; a very great one in Eng¬ land. Much of that sort of food is saved there by religious fasts; and a very trifling quantity here. By the lowest class in Eng¬ land it is, generally speaking, eaten once a week ; by the lowest class in Ireland, gene¬ rally speaking, never. In England, that most numerous class next above the lowest, eat flesh meat three times, or at least twice a week. In Ireland the same class, which is in proportion more numerous than in England, do not, generally speaking, eat it once a month : a great majority of that class do not eat it oftener than six times in the year. Substantial farmers and country arti¬ ficers in England live chiefly on animal food: the same description of persons in most parts of Ireland live chiefly on potatoes and milk. Manufacturers in England sub¬ sist for the most part on flesh meat and bread : manufacturers in Ireland subsist for the most part on potatoes, oatmeal, and bread, consuming a very trifling proportion of animal food.” 3 But it is admitted on all hands, that a much larger breadth of land is required for the support of individuals using a consider¬ able quantity of butcher’s meat, than if they used wheat only. Mr. Newenham states, that the average quantity of land required for the support of an individual who subsists on animal food, and uses bread only as a sup¬ plementary article, will maintain four people 1 Tour in Ireland, Appen. pp. 12. 24, &c. 4to. edit. who subsist wholly on bread, or twelve who subsist wholly on potatoes; and comparing the food of the mass of the Irish people with that of the mass of the people of Great Bri¬ tain, we shall certainly be within the mark if we suppose that the same extent of land which furnishes food for one individual in England, would furnish it for four in Ire¬ land !— These are the circumstances to which the superior population of Ireland is chiefly to be ascribed. But for the almost universal dependence of the people on the potato for the principal part of their subsistence, and the facility with which they have obtained huts and slips of land, it is quite impossible that population could have advanced so ra¬ pidly as it has done since 1780. While, however, the use of the potato as a principal article of food renders population comparatively dense, it tends also to render the people habitually poor, and to multiply the chances of famine. Nothing, it will be seen in the following note, has so mych in¬ fluence in determining the rate of wages as the species of food consumed by the la¬ bourers ; and, other things being equal, wages are high wherever food is expensive, and low wherever it is cheap. But potatoes being the cheapest species of food hitherto cultivated in Europe, and the Irish labourers being wholly dependent on them, their wages are regulated by the lowest standard. "When¬ ever, therefore, the potato crop happens to be deficient, they are left without resource. So long as potatoes are used only as a sub¬ sidiary species of food, their introduction im¬ proves the condition of the labourer, afford¬ ing him, in most instances, an additional means of support, in years when there is a failure of the corn crops. But those who are habitually and entirely fed on potatoes, are placed upon the extreme v erge of human subsistence. W hen deprived of their accus¬ tomed food, they are unable, from the small¬ ness of their wages, to purchase what is dearer; and there is nothing cheaper to which they can resort. To a people placed under such unfortunate circumstances, scar¬ city and famine are nearly synonymous. It may be said, perhaps, that had potatoes not been introduced, corn, of some sort, would have been the lowest species of food; and that had its supply happened to tail, the population would have been as destitute as they are at present when po¬ tatoes are deficient. It must, however, be observed, that wheat, or any species of grain, always fetches a decidedly greater price as compared with butcher’s meat, tea, sugar, beer, &c., than potatoes; and it there¬ fore follows that a people who have adopted wheat, or any sort of corn, for the principal part of their food, are much better able to 2 General Report of Scotland, vol, i. p. 571. 3 Inquiry into the Population of Ireland, p. 337. Note V. USE OF THE POTATO. 4S9 make occasional purchases of butcher’s meat and other things; and will consequently be more likely to have their habits elevated, so as to consider the consumption of animal food, colonial products, &c. as indispensable to existence. And hence it appears reason¬ able to conclude, that those who subsist chiefly on corn, would, in most cases, subsist partially on butcher’s meat, and would enjoy a greater or less quantity of other articles ; so that it would be possible for them, in a period of scarcity, to make retrenchments sufficient to elude the severity of its pres¬ sure. But though the population in corn-feeding countries were dependent on the cheapest species of grain, not for a part only, but for the whole of their food, their situation would, notwithstanding, be a good deal less hazard¬ ous than that of a population subsisting wholly on potatoes. In the first place: Owing to the impos¬ sibility, as to all practical purposes at least, of preserving potatoes, the surplus produce of a luxuriant crop cannot be stored up or reserved as a stock to meet any subsequent scarcity. The whole crop must necessarily be exhausted in a single year; so that when the inhabitants are overtaken by a scarcity, its pressure cannot be alleviated, as is almost uniformly the case in corn-feeding countries, by bringing the reserves of former harvests into the market. Every year has to provide subsistence for itself. W hen, on the one hand, the crop is luxuriant, the surplus is of comparatively little use, and is wasted un- profitably; and when, on the other hand, it is deficient, famine and disease necessarily prevail. In the second place : The general opinion seems to be that the differences in the pro¬ duce obtained from year to year, from land planted with potatoes, are very materially greater than the differences in the produce of land on which wheat or other corn is raised. And lastly : Owing to the great bulk and weight of potatoes, and the difficulty of preserving them on ship-board, the expense of their conveyance from one country to another is so very great that a scarcity can seldom be materially relieved by their im¬ 1 Minutes of Evidence taken before the Agricul¬ tural Committee of 1821, p. 212. 2 It seems to be the prevalent opinion that potatoes ■were first introduced into Europe by Sir Walter Italeigh. Sir Walter discovered Virginia, where the potato was indigenous, in 1584 ; but it is doubtlul whether he brought any potatoes along with him on his first voyage. They must, however, have been imported previously to 1590 ; for Gerard, an old English botanist, mentions that he had reared seed¬ lings of the potato about that time, and that it grew as well in his garden as in its native soil, Virginia. Gerard gave to the potato the botanical name of tolanum tuberosum — a name adopted by Linnaeus, and which it still retains. Previously to 1684, its cultivation in England was confined to the gardens portation from abroad. In consequence, those who chiefly depend on potatoes are practically excluded from the benevolent provision made by nature for equalising the variations in the harvests of particular countries by means of commerce, and are thrown almost wholly on their own re¬ sources. We should therefore be warranted in concluding, even though we possessed no direct evidence on the subject, from the potato being a crop that cannot be kept on hand, its natural fickleness, and the inca¬ pacity of either importing it when deficient, or of exporting it when in excess, that the oscillations in its price must be decidedly greater than in the price of wheat; and such in fact is the case. The oscillation in wheat is thought great when its price is doubled ; but in a scarce year the potato is not un- frequently six times as dear as in a plentiful one ! 1 And the comparatively frequent re¬ currence of scarcity in Ireland, and the destitution and misery in which the popu¬ lation are then involved, afford but too con¬ vincing proofs of the accuracy of what has now been stated. It is therefore of the utmost consequence to the wellbeing of every people, and to their protection in years of scarcity, that they should not subsist principally on the potato. In Great Britain the pressure of a scarcity is evaded by resorting to an inferior species of food, and a lower standard of comfort; but if our people were habitually fed on the potato, this would be impossible. The chances of famine would thus be vastly in¬ creased ; while, owing to the low value of the potato as compared with most other things, the labourers would have far less chance of acquiring a taste for animal food, or other necessaries and luxuries; and conse¬ quently, of changing, at any future period, their actual condition for a better. For these reasons it would seem that the rapid extension of the potato culture is by no means the unmixed benefit it is regarded by some. Little more than two centuries have elapsed since seedlings of this vegetable were first introduced into Europe 2 , and so astonishing has been its increase, that it has already become the of a few of the nobility and gentry. It was then first planted in the open fields in Lancashire, a county in which it is now very extensively cultivated. In an account of the household expenses of Queen Anne, wife of James I., who died in 1618, and which is supposed to have been compiled in 1613, the price of potatoes is stated at Is. a pound. Potatoes were not introduced into Ireland until 1610, when a small parcel was sent by Sir Walter Raleigh to be planted on his estate in the vicinity of Yougnall. There is no other instance of the culti¬ vation of an exotic having been so rapidly extended in so short a period as has elapsed 6ince potatoes were introduced into Ireland. Potatoes were not raised in Scotland, except in gardens, till 1728, when they were planted in the II h 3 470 Note V. USE OF THE POTATO. almost exclusive food of the people of Ireland, and is used to a very considerable extent also by those of Great Britain and of many parts of the Continent. The culture of the potato was gradually extended in the west of Scotland, and throughout England in consequence of the high prices of corn that generally prevailed from 1795 down to 1830. Since the last mentioned epoch, however, corn having been comparatively cheap, and wages good, the culture of the potato is believed to have been either station¬ ary or retrograde; and it is to be wished that no circumstances may ever occur to lead the labouring classes to place their principal dependence on it. Should it ever form the principal part of their subsistence, their wages would be regulated accordingly, and their situation would become comparatively critical. They might not fall into the same depressed state as the peasantry of Ireland ; but their numbers would, no doubt, be greatly increased; and the probability is that they would not unfrequently be exposed to severe distress. It has been suggested, in order to provide effectually against the occurrence of such a state of things, that it might be expedient to lay a tax on ground planted with potatoes. But no impost of the sort could be imposed, or would be tolerated. We should think, however, that there are but few who reflect on the subject, who would not admit, that though it may be impolitic directly to interfere, to prohibit, or fetter the cultivation of potatoes, it should not, at any rate, receive any artificial encouragement. This, how¬ ever, is the effect of all regulations that tend, w hether by shutting out foreign supplies or otherwise, to add materially to the price of corn, and is not one of the least con¬ clusive reasons that may be urged against them. NOTE VI. WAGES OF LABOUR. Dr. Smith has shown in the tenth chapter of his first book, that when all things are taken into account the wages earned by the labourers engaged in different employments approach nearly to an equality; that the higher rate in some is caused by their unhealthiness or disagreeableness, the se¬ verity of the labour, or the greater skill and dexterity required to carry it on; while the lower rate in others is caused by the opposite circumstances —by their healthiness or agree¬ ableness, the lightness of the labour, or the iP-? n by Tfr° mas Prentice, day-labourer at 1792 Prentice died at Edinburgh so late as , Those who wish to enter more at large into the nistory of this vegetable, may consult Dr. Camp- little skill required in the workmen. With¬ out, therefore, stopping to investigate the influence of those causes which raise wa°'es in certain employments above, and in others sink them below the common and averao-e late, we shall confine the following remarks to a brief statement, intended to serve as a supplement to the eighth chapter of Dr. Smith s first book, of the circumstances which determine the common or average rate of wages, and the more prominent causes and effects of variations in its amount. To facilitate the acquisition of clear and conect ideas with respect to the circum¬ stances which determine the rate of wages, they may be considered in a double point of view, viz. either (1.) as the sum which the labourers receive at any given period in re¬ turn for their services, or (2.) as the sum w Inch the habits of society render necessary to enable them to subsist and continue their race. Wages considered in the first point of view, may be denominated market or ac¬ tual wages; and considered in the second they may be denominated natural or neces¬ sary wages. I. Dr. Smith has said, (ante p. 30.) that the common or market rate of wages depends everywhere upon the terms of the contract between the workmen and their employers. But we must not thence infer that these terms are adjusted on any arbitrary or ca¬ pricious principle. In businesses of small extent, and placed under peculiar circum¬ stances, this may occasionally be the case. But in the vast majority of cases, it is not possible for any combination, whether of the masters or the workmen, materially to affect the rate of wages. That must always de¬ pend on the amount of capital devoted to the payment of wages, as compared with the number of the labourers. That portion of the capital, or wealth of a country, which the employers of labour in¬ tend or are willing to lay out in the purchase of labour, may be much larger at one time than at another. But whatever may be its ab¬ solute magnitude, it obviously forms the only source from which any portion of the wages of labour can be derived. No other fund is in existence from which the labour¬ ers, as such, can draw a single shilling. And hence it follows that the average rate of wages, or the share of the national capital appropriated to the employment of labour falling, at an average, to each labourer, must entirely depend on its amount as compared with the number of those amongst whom it has to be divided. An increase of capital, or of the means of supporting and employing labourers, is not, bell’s Political Survey of Britain, vol. i. p. 246, 4to. edit. ; Smith’s Ancient and Present State of the County and City of Cork, vol. i. p. 128 ; Sir F. M. Eden on the State of the Poor, vol. i. p. 508 ; Wake¬ field’s Ireland, vol. i. p. 442, &c. WAGES OF LABOUR. 471 Notf. VI. U ' therefore, as is so generally supposed, always productive of an increased rate of wages. It has this effect, when the number of labour¬ ers remains stationary, or when it increases in a less proportion than capital, but not otherwise. W ere capital and population to increase or diminish in the same proportion, the rate of wages, or the quantity of neces¬ saries and conveniences falling to the share of the labourer, would undergo no change. But if the mass of capital be, on the one hand, augmented without a corresponding augmentation taking place in the popula¬ tion, a larger share of such capital will fall to each individual, or the rate of wages will be increased. And if, on the other hand, population be augmented faster than capital, a less share will be apportioned to each indi- k vidual, or the rate of wages will be reduced. The wellbeing and comfort of the labouring classes are, thus, especially dependent on the proportion which their increase bears to the increase of capital. there are, in fact, no means whatever by which their command over the necessaries and conveniences of life can be increased that do not, at bottom, re¬ solve themselves into an increase of capital as compared with population ; and every scheme for improving the condition of the labouring class, not founded on this principle can hardly fail to prove nugatory and inef¬ fectual. It is needless to enter into any disquisi- 1 tion with respect to the circumstances which tend to increase capital. Suffice it to observe that its increase is always of the greatest importance to the bulk of the popu¬ lation. It may not, indeed, occasion a cor¬ responding increase in the demand for labour, but it is, notwithstanding, sure to increase it considerably, and consequently to improve the condition of the labourers. Their con¬ dition may also be improved by a greater prevalence of moral restraint or of foresight in the formation of matrimonial connections ; for by lessening the rate at which population was previously increasing, such increased restraint would tend to reduce the number of labourers as compared with the demand, and would contribute to improve their condi- L tion in the same way as an increase of capital. On this ground it is believed that the establish¬ ment of a proper system of education might be made to contribute, by enlightening the public as to the governing causes of the rate of wages, to increase their amount. It were right, certainly, that education should be made to embrace such subjects. The causes of national poverty should be explained to every one, that all may be made aware of their existence, and enabled in some mea¬ sure to provide against them. It should be impressed on the labouring classes that the means of increased comfort are to a very great degree in their own hands ; that what others can do for them is but trivial compared with what they can do for them¬ selves ; that the best institutions, and the most tolerant and liberal system of govern¬ ment cannot shield them from poverty and degradation should their numbers become too great as compared with the means of subsistence ; and that to obviate this and to advance their individual and collective interests, they should exercise a reasonable degree of foresight in the formation of ma¬ trimonial engagements, and should, if pos¬ sible, endeavour to make some previous pro¬ vision against unfavourable contingencies. We have already seen that the native saga¬ city of the bulk of the people, and their laudable desire to preserve their present po¬ sition, or to rise to a higher, are powerful enough to make the progress of population subordinate to the increase in the means of subsistence. And it seems reasonable to conclude, without overrating the power of education, that the prudential virtues would acquire greater strength were their import¬ ance and the influence they exercise over the condition of society explained to and en¬ forced on the attention of every one. It should be kept in mind, that however well instructed in other respects, if the poor be not made aware of the circumstances which determine the rate of wages, comparatively little is done in the way of education, to improve their condition. A mere knowledge of the arts of reading and writing will not enable workmen to obtain higher wages; nor supposing they were all taught greater expertness in their several trades and occu¬ pations would that do much to improve their condition. Nothing but a change in the proportion which their numbers bear to the amount of capital applied to the payment of wages can increase their command over the necessaries and conveniences ot life. And it should be a principal object of a judiciously conducted system of public instruction to show that such a change might be brought about as well by the exercise of a little more prudence and forethought, and the adoption of a higher standard of necessary subsistence as well as by an increase of capital. The laws with respect to corporations, apprenticeships, combinations, &c. the efiect of which on the market rate of wages has been so ably pointed out by Dr. Smith, have undergone very great modifications since the publication of the W ealth of Na¬ tions. The statute of the 5th of Elizabeth, regulating the duration of apprenticeships in most common trades in England and Wales, was repealed in 1814 ; the laws preventing voluntary combinations amongst workmen were repealed in 1824; and the privileges of the different corporations have, in so far as matters of this sort are concerned, ceased to be oppressive. A similar change has H h 4 472 Note VI. WAGES OF been made in many of the continental states. The Revolution swept off all the vexatious enactments with respect to apprenticeships and corporations that formerly restricted the freedom of industry in France ; and they have also disappeared in Prussia, the Nether¬ lands, &c. The compulsory provision for the support of the able-bodied poor is the only institution now existing in England that seems to have any very considerable influence on the rate of wages. This, how¬ ever, is a subject that may be more pro¬ perly noticed in the note on the Poor Laws. The repeal of the act against voluntary combinations in 1824 was a just and a wise measure. If any number of persons choose to combine to refuse to work, except for a certain amount of wages, or for certain hours per day, or week, to forbid them would seem to be a most oppressive interference with one of the distinguishing privileges of free labourers. It was found too that practically the laws against such combinations were good for nothing, and that, instead of put¬ ting them down, they gave them a secret character, and made them be easily perverted to other and more objectionable objects. But when workmen have power to refuse to employ themselves on terms of which they disappio\e, they have got all , in this respect, to which they are entitled. None of them have any right to dictate to their fellows ; or to say that because they object to certain stip il¬ lations in the terms offered by such and such employers, no one else shall be allowed to accept them. A pretension of this sort strikes at the very foundations of society; and if tolerated might enable juntos of de¬ signing individuals to inflict irreparable in¬ jury, not only on the employers of labour, but on the manufactures of the country, and consequently on the lasting interests of the labouring class. W e need not however be surprised to learn that this is what numbers of workmen in various places have attempted to do; and that combinations have been formed, not for the legitimate purpose of re¬ fusing to work except on certain conditions, but for preventing other workpeople who may disapprove of, or not choose to insist on, these conditions, accepting the terms offered by their employers. The measures taken to enforce this most unjustifiable pretension have in some instances been of a very obnox¬ ious description ; and have evinced the exist¬ ence of a very dangerous spirit. Nothing should be omitted that may serve to root out and suppress combinations for such ille¬ gal ends. They are completely subversive of that security essential to the prosecution of all industrious undertakings; and are, at bottom, as hostile to the interests of those that enter into them as they are to the inte¬ rests of every one else. labour. II. But whatever fluctuations may take place in the rate of wages, there is in all countries a limit below which it is generally difficult to reduce wages for any consider¬ able period; and below which they can never be permanently reduced without a change taking place in the habits of the po¬ pulation. This limit forms what has been denominated the natural or necessary rate of wages, and consists of the various necessaries and accommodations, or the money sufficient for their purchase, required to enable the labourers to exist and continue their race according to the habits and customs pre¬ vailing in the countries to which they belong. It is obvious, from what has now been stated, that the natural or necessary rate of wages is susceptible of much variation. It varies in different countries according to the varying wants and necessities of the labour¬ ers ; and it varies in the same country ac¬ cording to the perpetually occurring changes in their diet, dress, lodgings, and other ac¬ commodations. The varieties in the climate of different countries occasion considerable variations in the necessary rate of wages. Humboldt states that there is a difference of about a third part between the wages of labour in the hot and temperate districts of Mexico. Nor is it difficult to see why this is the case. According as the climate becomes colder, warmer and, for that reason, speaking ge¬ nerally, more expensive clothing, more sub¬ stantially built houses, and a larger supply of fuel become necessary. The influence of these circumstances may, it is true, be either partially or wholly countervailed by others; such as the superior progress made by countries with a less genial climate in the arts of civilised life, the possession of unusually productive coal mines, &c. But abstracting from these circumstances, it is plain, as a general proposition, that the rate of necessary wages must vary with variations of climate; and that, other things being equal, it will be highest in countries where the most expensive clothes and houses and the largest supplies of fuel are required. The share of the wages of labour appro¬ priated to the purchase of food necessarily differs in different countries. In all, how¬ ever, it is very large ; and even in Great Britain, where the labourers consider com¬ fortable clothes and neat cottages as indis¬ pensable, it is commonly supposed that, at an average, from two to three fifths of their earnings are laid out on food. It is obvious, therefore, that the necessary, and by conse¬ quence also the market rate of wages, must be especially dependent on the sort of food consumed by the inhabitants, and the cost at which it may be raised. Taking, for ex¬ ample, the present average rate of wages in WAGES OF LABOUR. 473 XOTE VI. agricultural employments in England at 2 51. a year ; and supposing three fifths of this sum, or 15/., to be expended on food, it is obvious that, if either by a reduction in the price of corn, or by substituting potatoes in its place, or any other means, the cost of food were reduced a half, the necessary rate of wages might be reduced in the same proportion, or from 2 51. to 17/. 105. Such a reduction in the price of corn, or such a change in the species of food as has been supposed, would lead to an increase in the means of subsistence ; an additional stimulus would in consequence be given to popula¬ tion, and though the market rate of wages would not sink in the same degree that ne¬ cessary wages are supposed to have sunk, it would sink to some extent; and were necessary wages to sink still more, market wages would also sustain a certain decline, which would be greater or less according to the habits and foresight of the people. The state of the labouring classes in every country furnishes abundant proofs of what has now been stated. In Bengal, for ex¬ ample, where clothing, lodging, and fuel are of comparatively inferior importance, the necessary wages of labour are almost entirely determined by the cost of the food consumed by the labourer. And this food, being the simplest and cheapest imaginable, consisting merely of boiled rice with split pulse and salt to relieve its insipidity, a labourer is able to subsist on the merest trifle; and the consequence is that the customary rate of wages in common employments is so low as 2^d. a day! 1 But it is unnecessary to refer to distant countries or remote periods for an example of this principle. The contrast between the wages and the condition of the labouring clas¬ ses in Great Britain, and the wages and con¬ dition of the same classes in Ireland, illustrates it in the most striking manner. In Great Britain the necessary rate of wages is prin¬ cipally determined by the cost of wheat and butcher’s meat, and in a less degree by the rent of a comfortable cottage, the price of clothes, beer, tea, &c. In Ireland, on the contrary, the peasantry rarely taste butcher’s meat: they do not even consider bread as necessary to their subsistence; they are generally without either beer or tea; and their hats, clothes, &c. are all of the most miserable description. The rate of neces¬ sary wages is there almost entirely deter¬ mined by the price of potatoes; and as a quantity of these sufficient for the support of a family may be bought for a third part of the price of the bread and other articles required for that purpose, the necessary rate of wages is proportionally low. The market rate of wages too, owing to the weakness in 1 Colebrooke, on the Husbandry of Bengal, pp. 20. 131. Ireland, of moral restraint, and the nearly to¬ tal non-existence of that prudent forethought and decent pride which distinguishes the labouring class in Great Britain, does not differ sensibly from the necessary rate. r lhe principle of increase has filled up the popu¬ lation to the level of mere subsistence ; so that while the wages of common labour may be taken on a rough average at 20 d. a day in England, they are not supposed to exceed 6d ., or at most, 7c/. a day in Ireland. If we except the influence that would be exerted on the progress of population, and consequently also on the rate of wages, by the prevalence of a greater degree of moral restraint, an increased demand for labour, and a fall in the price of the articles con¬ sumed by the labourer, seem to be the only modes in which wages can be raised, from whatever causes an increased demand for labour may proceed, it must obviously raise the rate of wages: and it is hardly less ob¬ vious that a fall in the cost of producing any article consumed by the labourer, or suitable for his consumption, must in so tar improve his condition. The demand for labour is in most cases immediately in¬ creased, and it is never generally or per¬ manently reduced by a reduction in the cost of producing commodities. But, supposing that the demand for labour continues the same after commodities fall in price, then, as the number of labourers in the market, and consequently the money wages paid them, must, also, be the same as before the fall, it is plain they will obtain a greater quantity of produce, and that their condition will be in so far improved. It is no doubt true that, were population to increase, as it is sometimes alleged it would, proportionally to the increased demand for labour, or to the fall in the price of produce, the improve¬ ment in the condition of the labourer would only be temporary. But it is not impro¬ bable merely, but next to impossible, that population should increase in the same pro¬ portion. A period of about twenty years necessarily elapses before the stimulus which an increased demand for labour gives to population can occasion any increase in the number of labourers; and the labourers being accustomed, during this long interval, to an improved manner of living, the stand¬ ard of natural or necessary wages becomes elevated ; and the majority will be disinclined to do any thing that might tend to sink themselves and their children below the new level to which they have attained. The effects produced by a decreasing de¬ mand for labour, or by a rise in the price of the articles usually consumed by the la¬ bourer, are directly the reverse of those now stated. The number of labourers continu¬ ing, for a while at least, the same, the rate of wages is necessarily diminished when the 1 WAGES OF LABOUR. Note VI. 471 demand for labour declines, and it neces¬ sarily continues at its old level when prices rise; so that in both cases the condition of the labourers is changed for the worse. In consequence they are obliged to economise ; and should the pressure continue for a con¬ siderable period, there is a risk that their habits should be degraded, or that they should learn to be satisfied with an inferior species of food, or a lower standard of com¬ fort. Should this change unfortunately take place, the population would accommodate itself to the new state of things; and it would be difficult for the labourers to attain, at any subsequent period, to the elevation from which they had been cast down. When the labourers are already subsisting, as in Ireland, on the lowest species of food, it is of course impossible for them to go to a lower in a period of scarcity; and should their wages, or the means of subsistence falling to their share, sustain any serious decline, an increase would necessarily take place in the rate of mortality. But in a country like England, where the inhabitants have been long accustomed to superior com¬ forts, and enjoy various privileges, it is proba¬ ble that they might pass through a pretty long period of privation, and that it would rather give new efficacy to the principle of moral restraint, and lessen the proportion of mar¬ riages and births, than induce them to sub¬ mit to a lower scale of living, or to relinquish comforts they have long possessed, and been taught to regard as indispensable. As the well being of the labouring classes is essen¬ tial to the tranquillity and happiness of the state, it is of the highest importance that this principle should be strengthened by every possible means. It is easy from this to see that a principal advantage of a com¬ pulsory provision for the support of the poor consists in the assistance it gives them in periods of adversity, and in its thereby contributing to prevent their tastes and ha¬ bits, or their standard of comfort from being lowered by the privations to which they might otherwise be compelled to submit. It has been already seen that the cost of raw produce has a natural tendency to rise in the progress of society ; and as the greater part of the wages of labour is laid out on its purchase, it is plain that the rate of wages, though occasionally reduced by improve¬ ments in agriculture, manufactures, &c., must also have a natural tendency to rise as society advances and population becomes denser. And hence the distinction, to which it is sometimes of importance to advert, be¬ tween what may be called absolute wages, or wages measured by the quantity of com¬ modities they will exchange for or buy, and proportional wages, or wages measured by the share of the produce of his labour that goes to the labourer. His condition depends, of course, entirely on the magnitude of the former, or of absolute wages; and these are generally greatest when proportional wages are lowest. This is easily explained. In newly settled countries, where only the best lands are cultivated, a large amount of raw produce, the principal element in the subsistence of the labourer is usually raised by a comparatively small outlay of labour; and labourers being scarce in such countries, their wages uniformly almost afford them a large supply of necessaries and conveni¬ ences. But in old settled and more densely peopled countries, though the supply of la¬ bour be greater, the raw produce raised by its outlay is so much less that wages, even when considerably reduced in quantity, ge¬ nerally constitute a larger share or propor¬ tion of such produce than in the others. Suppose, for example, that a day’s labour produces a bushel of wheat on the land last taken into cultivation in Kentucky, and only three fourths of a bushel on that last taken into cultivation in England; and that the labourers in both countries get half a bushel, or the price of half a bushel a day, as wages: in this case it is plain that wages estimated absolutely or by quantities of produce, would be equal in England and Kentucky; but wages estimated by the pro¬ portion of the produce of industry falling to the share of the labourer, would be 25 per cent, higher here than in America. And such, generally speaking, is always the case with wages in countries far advanced in the career of civilisation, as compared with wages in those whose progress is less considerable. The land gradually yields a less and less quantity of produce, according as tillage is extended over inferior soils, or as the superior soils are further and further forced for ad¬ ditional supplies; but as the labourers must always obtain such a proportion of this pro¬ duce as may enable them to exist and continue their race, it follows that, in the progress of society, proportional wages are generally augmented; though, unless the principle of moral restraint be in active operation, this augmentation is usually accompanied by a decline in the quantity of produce accruing to the labourer. Dr. Smith has said (p. 29.) that had that ori- ginal state of things continued in which the whole produce of industry belonged to the la¬ bourer, all things would gradually have be¬ come cheaper in consequence of improvements in the arts, and wages would have been con¬ stantly augmented. But the principles es¬ tablished in the notes on rent and population show the fallacy of this statement. Corn rises in the progress of society, because good land cannot be indefinitely forced with¬ out yielding a diminished return, and because more labour is required to raise it upon in¬ ferior lands. And, therefore, it is obvious 4oTE VII. WAGES OF LABOUR. 475 hat though there had been none but labour¬ ers to divide the produce of industry, their .ituation would have deteriorated in the jrogress of society, had the increase of their lumbers not been lessened in the same de¬ cree that the difficulty of obtaining supplies if food was augmented. NOTE VII. CIRCUMSTANCES WHICH DETERMINE THE RATE OF PROFIT. By profit , in political economy, is meant that part of the produce, or the value of the produce, obtained by the employment of capital in industrious undertakings, which remains to its employers, after replacing the capital, or such portion of it as may have been wasted in the undertakings, and every other expense necessarily incurred in carry¬ ing them on. The rate of profit is the proportion which the amount of profit derived from an under¬ taking bears to the capital employed in it. Thus, suppose an agriculturist employs a capital equivalent to 1000 quarters of corn, or 1000/. in the cultivation of a farm, and that the nett surplus produce remaining to him at the end of a year, after his capital has been replaced, and he has been indem¬ nified for the trouble of superintendence, and for every necessary expense incurred in the management of the farm, is 100 quarters, or 100/.: this nett surplus would form the profits of the agriculturist; being to the capital, by whose agency they are obtained, in the ratio of 100 to 1000, or at the rate of ten per cent. It has been shown by Dr. Smith and others, that the capital vested in different businesses, yields, provided they be not subjected to any species of monopoly* about the same rate of nett profit. V e shall en¬ deavour, in this note, to state the circum¬ stances which determine this rate. In this investigation it is not necessary to inquire whether the capital engaged in cer¬ tain businesses yields rent as well as profits, or profits only. 1 he competition of the producers will always reduce profits in dif¬ ferent businesses to what is, taking all things into account, nearly the same common level; and as rent is, in every case, a surplus over and above profits, it may, for the pre¬ sent, be left wholly out of view. The laws by which profits are regulated in countries where the best lands only are cultivated, and no rents are paid, are in no respect different from those which regulate them in countries where cultivation has been widely extended, and where lands of superior fertility yield a high rent. Suppose, therefore, that rent is deducted *, or set aside, it follows that the whole of the remaining produce of industry must, in the first instance, be divided between capitalists and labourers, — that is, between those who furnish the capital and those who furnish the manual labour made use of in the production of commodities. And hence, were taxation either unknown or constant, the proportion of the produce of industry, under deduction of rent, falling to the share of the capitalists, could not be increased with¬ out the proportion falling to the share of the labourers being at the same time diminished, and conversely. But the share of the pro¬ duce of industry falling to the capitalists, includes, besides profit, the portion required to replace the capital wasted in production, and to defray the wages of superintendence. So that the rate of profit is not, as has been already stated, determined by the ratio which the share of the produce of industry that goes, in the first instance, to the capitalists, bears to the whole produce, but by the ratio which the nett amount of profits, or the pro¬ duce remaining to the capitalists, after every sort of outlay has been deducted, bears to the total capital employed. Suppose, for example, that an agriculturist employs a quantity of capital of the value of 1000 quarters of corn, or 1000/. in cultivating a farm ; that halt this capital consists of seed, horses, and other instru¬ ments used in agriculture, the other half being employed in the payment of wages; and suppose that, after his rent has been deducted or set aside, he has produce equi¬ valent to 1200 quarters, or 1200/. : of this sum 1000 quarters, or 1000/. must go to replace his capital; and supposing that his taxes amount to 100 quarters, or 100/., it follows that 100 quarters, or 100/., will re¬ main for his profits, which are consequently at the rate of ten per cent. Now, in this case_and this case is, mutatis mutandis , the case of every man engaged in business — it is obvious that the rate of profit may be raised in three, but only in three, ways, — viz. (1.) by industry becoming more productive ; or (2.) by a reduction in the rate of wages ; or (3 ) by a reduction in the amount of taxation: and it may be reduced by the opposite cir¬ cumstances; or (l.)by industry becoming less productive ; or (2.) by a rise in the rate of > all classes of producers; and it is obvious -i that whatever affects them to the same extent 'i cannot influence the relation which the commodities produced by one class bear to those produced by another. A and B are produced by immediate labour or by equal !> proportions of capital and immediate labour, the one exchanging for or buying the other ; suppose now that wages vary and observe the result. It is obvious, inasmuch as the variation cannot be confined to one depart¬ ment of industry, that the wages of the labourers employed in the production of A will vary in the same way, and in the same degree as the wages of those employed in the production of B, and conversely : and such being the case, the commodities will l.< necessarily continue to preserve the same relation to each other, whether wages rise to five shillings or fall to sixpence a day; the only difference being that, in the one case, a large proportion of the commodities will go to the labourers as a return to their labour, and a comparatively small one to the capitalist as a return to their capital, and conversely. It is as impossible to change the relation of commodities produced under similar circumstances by varying the rates k of wages and profits, as it is to vary the relation of numbers to each other by multi¬ plying or dividing them by the same number. The relation of A and B will not be varied, unless one of them be affected by a cause whose influence does not extend, in the same degree, to the other. And as variations i See Introductory Discourse, p. xlv. in the rates of wages and profits are, at an average, equal and universal in their oper» ation, it follows that whenever we find two or more sets of commodities produced by the agency of about equal proportions of fixed and circulating capital, we may be sure that their value as compared with each other or with labour, cannot be affected by vari¬ ations in the rates of wages and profits ; and that such changes as take place in it must be occasioned by a change in the quantities of labour required for their production. (2.) It is easy, from what has now been stated, to discover the mode in which fluctu¬ ations in the rates of wages and profits affect commodities produced under different cir¬ cumstances, that is, with different propor¬ tions of fixed or circulating capital, or with capital of different degrees of durability. Suppose, for the sake of illustration, that A and B are commodities that exchange freely for each other; that A is produced chiefly by the aid of fixed capital or machinery, and B chiefly by manual labour; and suppose, further, that wages rise. In this case it is obvious, inasmuch as A is produced chiefly by machinery, that its producers will not be so much affected by a rise of wages as the producers of B, which is chiefly the work of the hand. The profits of the latter will, therefore, be di- ; minished in a greater degree than those of the former. And, in consequence, capital will be diverted from the production of B to the production of A ; until by diminishing the supply of the former, and increasing that of the latter, their quantities are adjusted so that they respectively yield the same nett profit to their producers. It appears, therefore, on comparing two sets of commodities, one of which is pro¬ duced by the aid of a larger quantity of fixed capital than the other, that when wages rise, the value of the set produced by the least amount of fixed capital is raised as compared with the other set, and conversely when wages fall. It is proper, however, to observe, that these effects will not be necessarily produced by the labourers getting higher or lower wa'ies estimated in money, or in quantities of produce, unless the cost of money and the productiveness of industry have re¬ mained constant or increased. Nothing connected with "wages, unless it be a change in their proportional rate, can vary the rela¬ tion of commodities. If the cost or real value of money declines, -wages and prices of all sorts will rise when rated in money; but it is plain that in such a case prices rise, not because more money is given to the labourer, but because this money is cheaper, or is obtained by a less sacrifice than for¬ merly. It results, from what has been previously 480 VARIATIONS, &c. Note VIII. stated, assuming any commodity, as gold or silver, as a standard by which to measure variations in the value of others, that when wages rise commodities produced by larger proportional quantities of fixed capital than the standard fall in value, while those pro¬ duced by larger quantities of circulating capital or of immediate labour rise in value ; the opposite effects being, of course, pro¬ duced by a fall of wages; while the com¬ modities produced under the same circum¬ stances as the standard neither rise nor fall, however wages may vary, but remain sta¬ tionary. Variations in the value of commodities occasioned by a rise of proportional wages, being always accompanied by a fall in the aggregate amount of profit, the one effect has a tendency to neutralise or destroy the other. And it is only when we compare commodi¬ ties in the production of which fixed capital or machinery very decidedly preponderates with those in the production of which the preponderance is equally on the side of im¬ mediate labour, that the difference is at all sensible. The value of all that very large class of commodities which is produced by nearly equal quantities of both sorts of capi¬ tal is not in any sensible degree affected by the fluctuations in question. It is necessary also to remember that though the value of a particular commodity may be affected by a rise or fall of wages or profits, its cost undergoes no change, and the value of some other commodity must vary to the same extent in a contrary di¬ rection. The aggregate value of all sorts of commodities continues, therefore, always the same. And though it may not, in all cases, be strictly true of a particular commodity, that its value is directly as its cost, or as the quantity of labour required to produce it and bring it to market, it is most true to affirm this of the mass of commodities taken to¬ gether. 1 NOTE IX. MONEY. Section I. — Principles which determine the Value of Money — (1.) When its Supply may be increased at the Pleasure of Indi¬ viduals — and , (2.), When its Supply is placed under Limitation and Restraint. Dr. Smith has given, in the fourth chapter °* his first book, a full and clear account of the circumstances which led to the origin and use of money, or of a common medium of exchange ; and of the qualities belonging to the precious metals, which have induced 1 Those who wish to enter more at large into the investigation of the topics touched upon in this note, are referred to the first chapter of Ricardo’s Princi- [ ever y People emerging from barbarism to employ them in preference for that purpose. But he has not given, either in this or any other part of his work, a sufficiently dis¬ tinct account of the circumstances which determine the value of these metals. He observes, indeed, that “ gold and silver, like every other commodity, vary in their value, are sometimes cheaper and sometimes dearer, sometimes of easier and sometimes of more difficult purchase. The quantity of labour which any particular quantity of them can purchase or command, or the quantity of other goods which it will exchange for, de¬ pends always upon the fertility or barren¬ ness of the mines which happen to be known about the time when such exchanges are made. The discovery of the abundant mines of America reduced, in the sixteenth century, the value of gold and silver in Eu¬ rope to about a third of what it had been before. As it cost less labour to bring those metals from the mine to the market, so when they were brought thither they could pur¬ chase or command less labour ; and this re¬ volution in their value, though perhaps the greatest, is by no means the only one of which history gives some account.” (ante, P* If.) The principle laid down in this paragraph, that the value of the precious metals depends on the quantity of labour required to pro¬ duce them and bring them to market, is cor¬ rect, provided their production may be undertaken at pleasure by any one. It should, however, have been more fully eluci¬ dated; and the effect of limiting or restricting the power to bring gold and silver to market, on their value, should, also, have been clearly explained. But Dr. Smith has not entered into this part of the investigation, and his theory of money is, therefore, in many re¬ spects, incomplete. It is chiefly, indeed, from not sufficiently distinguishing between the circumstances under which money is sup¬ plied, and supposing that the principles which determine its value in one case deter¬ mine it in every other case, that the extreme prevalence of erroneous opinions with re¬ spect to it has proceeded. For these reasons we shall divide what re¬ marks w r e have to offer on the value of money into two parts: the first embracing an inquiry into the principles by which its value is determined, when every one is allowed to bring additional supplies of gold and silver to market; and the second, an inquiry how far these principles are liable to be affected by the operation of monopoly. I. Locke and others have contended that the value of the precious metals is imaginary, pies of Political Economy and. Taxation ; to Mill's Elements , p. 100; and to Principles of Political Economy , 2d ed. p. 333—359. Sjict. I. MONEY. 481 or that it depends on the consent of the na¬ tions who have adopted them, to serve as a circulating medium. Locke was betrayed into this erroneous opinion, from his con- & founding the useful qualities of these metals, or the qualities which fit them for being used as money, with the circumstances which determine their value in exchange. But it has been already seen, that the value of all freelv produced commodities, whose quantity h; mav be increased proportionally to the de- d mand, is in no degree dependant on the h qualities they possess, but wholly on the cost of their production, or on the labour and capital required to produce them and :j bring them to market. Gold is not mere valuable than iron or lead, because of its i greater brilliancy, durability, or ductility, |f but because a far greater outlay is required to produce a quantity of gold than is re¬ quired to produce the same quantity of either of these metals. The distinction between the utility and value of commodities is of fundamental importance, and must never be lost sight of. Those who, in treating of such subjects, confound qualities so essen¬ tially different, need not expect to arrive, except by the merest accident, at any sound conclusion. Though gold, in its native or unmanufactured state, had been infinitely more useful than it really is, still it is plain that if the labour, or the sweat and toil, required to obtain it had been the same as at present, this greater utility would have added nothing whatever to its value. The capacity or aptitude which certain articles or products possess of grati¬ fying our wants or desires, is either the spon¬ taneous gift of nature, or is communicated to them by the labour and industry of man. But though utility derived from the first of these sources may make an article an object of demand, it cannot, inasmuch as it costs nothing, contribute any thing to its exchange¬ able worth. And hence, when articles or products are brought to market, produced by equal quantities of labour, their values are equal, though some of them may be incomparably more useful than others. It must also be remembered that wherever industry is free, the principle of competition reduces the rate of nett profit in different businesses to nearly the same level. It is sufficiently well known that those who em¬ ploy themselves in the working of gold or silver mines, do not, at an average, obtain any greater returns than those engaged in the raising of coals or the manufacture of bricks. The production of the precious me¬ tals is not subjected to any species of mono¬ poly or restraint. All individuals may at¬ tempt the extraction of bullion from the mines; and there are no conceivable limits to the extent to which its supply may be increased. Under such circumstances, the competition of the producers is sure to force the bullion to be sold at its necessary price, or at such a price as will merely afford them the common and ordinary rate of profit on their capitals. Should new and more abun¬ dant mines, or improved methods of working the old ones, be discovered, the value of bul¬ lion -would proportionally fall ; and if, on the contrary, the more productive mines were exhausted, and it became necessary to resort to those that are less rich, the value of bullion would necessarily sustain a corre¬ sponding rise. It is not meant, by any thing now stated, to deny that the value of gold and silver is affected by variations of supply and demand. It is difficult, however, to suppose that such variations should take place to any great extent, unless they have been occasioned by a change in the cost of producing the me¬ tals. The commercial intercourse established amongst the remotest quarters of the world, har distributed gold and silver, so that their valu > in one country differs but little from their value in others; and while their great durability prevents any sudden diminution of their quantity, the immense surface over which they are spread, and the various pur¬ poses to which they are applied, render the effect of a considerably increased supply hardly sensible. All great and permanent variations in the value of the precious me¬ tals must, therefore, be occasioned by corre¬ sponding variations in the cost of production. It was not by increasing their amount, but by enabling them to be obtained at a less expense, that the discovery of America pro¬ duced the great revolution that took place in their value in the sixteenth century. The bullion accumulated by the natives was very soon exhausted ; and if its importation pro¬ duced any effect on the value of bullion in Europe, it would, had there been no other cause in operation, have been very slight and transient. But the value of gold and silver was permanently and greatly reduced, because owing to the greater richness of the American mines, they furnished unlimited supplies of these metals for about a fourth or a fifth part of what it cost to extract them from the mines of the old world. In conse¬ quence of this reduction, the demand for gold and silver was vastly augmented; a proportionally greater supply was required for money ; and instead of being confined to the houses of noble and opulent individuals, the use of plate became universal among the middle classes, at the same time that im¬ mense quantities of bullion were consumed in gilding, embroidery, &c. It is clear, therefore, that those who suppose that the value of bullion fell, because its quantity was increased, mistake the effect for the cause ; the truth being, that its quantity was increased, because its value had been pre- I i t 482 MONEY Note IX. viously lowered — because means had been discovered of obtaining the same supply of gold and silver for about a fourth or a filth part of what it had previously cost. After gold and silver have been brought to market, they may be converted either into coin or manufactured articles; their conversion into the one in perference to the other depending entirely on a comparison of the profits derivable from each. No mer¬ chant would take bullion to the mint, if he could realise a greater profit by selling it to a jeweller ; and no jeweller would convert bullion into plate, provided he could turn it to greater account by converting it into coin. Hence, in countries where the expense of coinage is defrayed by the state, the value of bullion and coin must nearly correspond. When there is any unusual demand for bul¬ lion in the arts, coin will be melted down ; and when, on the contrary 7 , there is any un¬ usual demand for coin, plate will be sent to the mbit, and the equilibrium of value main¬ tained by its fusion. It appears, therefore, that when gold and silver are produced under a system of free competition, their value depends, like that of all other commodities, on the cost of their production — that is, on the quantity of la¬ bour required to bring them to market. While they 7 form the currency of the com¬ mercial world, the price of commodities, or their value estimated in money, will conse¬ quently vary, not only according to the vari¬ ations in the cost, demand, and supply of commodities, but also according to the vari¬ ations in the cost of the gold or silver with which they are compared. II. We come now to the second branch of our inquiry, or that which has for its object to discover the laws which regulate the value of gold and silver when the power to supply them is placed under restraint. It is obvious, supposing competition were not allowed to operate in the production of the precious metals, and that they were mo¬ nopolised and limited in their quantity, that their value would no longer depend on the principles previously laid down. W henever the supply of money is limited, its value varies in the inverse ratio of its quantity as compared with the quantity of commodities brought to market, or with the business it has to perform. If, on the one hand, double the usual supply of commodities were brought to market in a country with a limited currency, their money price would be reduced a half; and if, on the other hand, only half the usual supply of commodities were brought to market, their price would be doubled ; and this, whether the cost of their production was increased or diminished. Sovereigns, shillings, livres, dollars, &c. . would then really constitute mere tiokets or counters, to be used in computing the value of property, and in transferring it from one individual to another. And as small tickets or counters would serve for that purpose quite as well as large ones, it is unquestion¬ ably true that a debased currency may, by first reducing, and then limiting its quantity, be made to circulate at the value it would bear were the power to supply it unre¬ stricted, and were it of the legal weight and fineness; and by still further limiting its quantity, it may be made to pass at any higher value. It appears, therefore, that whatever be the matter of which money is made, and however destitute of intrinsic value, it is yet possible, by sufficiently limiting its quantity, to raise its value to any conceivable extent. Suppose, still better to illustrate this prin¬ ciple, that the money of Great Britain con¬ sists of fifty or sixty millions of one pound notes, and that all increase or diminution of this sum is prevented; and suppose farther, that no considerable change takes place in the modes in which money is economised and made use of: it is obvious, on this hy¬ pothesis, that the quantity of commodities for which such notes would exchange, would vary inversely, according to the increase or diminution of the commodities brought to market. If we suppose that twice the amount of products that were offered for sale when the currency was limited, are of¬ fered for sale a year or two afterwards, prices would obviously fall to half their former amount; or, wffiich is the same thing, the value of money would be doubled : and if, on the other hand, the products brought to market were diminished in the same de¬ gree, the value of money would be equally reduced. Again, assume as before, that the currency consists of fifty or sixty millions of sove¬ reigns : suppose now that government with¬ draws them and supplies their place with fifty or sixty millions of half sovereigns, and that the issue of additional coins and of paper money is effectually prevented : in this case, it is plain, should the same quan¬ tity of commodities be brought to market, there would be the same number of coins to exchange against them. There would not, therefore, unless the supply of commodities varied, be any change in their price. The hat that had previously sold for a gold coin would still sell for one. It is true that the coin for which it now sells is only half the intrinsic value of the one previously in cir¬ culation ; but this deficiency has been fully compensated by the artificial value given to it by the monopoly. The country has a certain number of exchanges to perform; and it is quite obvious that were the cur¬ rency which is to perform them sufficiently limited, a shilling or a sixpence might be MONEY. 483 Sect. I. made to do the business, or to pass at the value of a sovereign. These principles are of the greatest im¬ portance to a right understanding of the real nature of money. In inquiring into the circumstances on which its value depends, we must always ascertain, in the first place, whether its supply be free or monopolised. Down to a recent period, it was universally maintained that the value of money depended entirely on the relation between its amount and the demand; but this is true only of a gold or silver currency when its quantity is limited, and of a currency formed of ma¬ terials having little intrinsic worth when its quantity is limited, and it is not convertible, at the pleasure of the holder, into some more valuable commodity. It is obvious, indeed, without any reasoning on the subject, that the value of a currency consisting of incon¬ vertible paper, or of any other very cheap material, must depend on the proportion which its amount bears to the commodities brought to market, or to the demand. And wherever a currency of this kind, or a limited gold currency, is in circulation, the common opinion, that the prices of commodities de¬ pend wholly on the proportion between them and the supply of money is quite correct. But it is altogether different with a freely- supplied currency consisting of gold or silver, or of any other article possessed of consider¬ able value. The fluctuations in the supply and demand of such currency have no per¬ manent influence over its value; this is de¬ termined by the cost of its production. If a sovereign commonly exchange for a couple of bushels of wheat or a hat, it is because its production has cost as much as either of these commodities ; while, if with a limited and inconvertible paper money, the latter exchange for a one pound note, it is because such is the proportion which, as a part of the mass of commodities offered for sale, they bear to the supply of paper, or of mo¬ ney, in the market. This proportion would, it is evident, be not only immediately, but permanently, affected by an increase or di¬ minution of the supply of paper or of com¬ modities. But the relation which com¬ modities bear to a freely-supplied metallic currency cannot be permanently changed, except by a change in the cost of producing the commodities or the metals. Such are the circumstances which deter¬ mine the value of money, both when the power to supply it is not subjected to any species of control, and when it is controlled and limited. In the former case its value depends, like that of most other things, on the cost of its production ; while, in the lat¬ ter case, its value is totally unaffected by that circumstance, and depends on the extent to which it has been issued compared with the demand. m ki We have stated these principles so much at large, because those not familiar with them can form no accurate idea of the cir¬ cumstances which sustain and determine the value of paper money. It may, however, be proper to observe that the principle of limit¬ ation could hardly, supposing an attempt were made to apply it, have any material influence over the value of metallic money. From the smallness of their bulk in propor¬ tion to their value, the precious metals are very easily smuggled. And were govern¬ ment to attempt, by limiting the gold and silver in circulation, materially to increase their value, such an overpowering temptation would be held out to their clandestine im¬ portation from foreign countries as no vigil¬ ance on the part of the custom-house officers could counteract. And, therefore, while it is true that if the currency be limited it may be made to pass at a higher value than what naturally belongs to it, it is no less true that this principle cannot be prac¬ tically acted upon, at least to any material extent, when the currency consists of the precious metals, or of paper immediately convertible into them; the facilities of im¬ porting them from other countries being such as to prevent any considerable limit¬ ation of their quantity being either made or maintained. But though it is impracticable, by limit¬ ing the supply of metallic money, to raise its value considerably above that of bullion, it must not, therefore, be supposed that it would be improper to impose a moderate seignorage or duty on the coinage of money. Coins charged with a seignorage equal to the expense of coinage do not pass at a higher value than what naturally belongs to them, but at that precise value ; whereas, if the expense of coinage be defrayed by the state, coins pass at less than their real value. A sovereign is of greater utility and value than a piece of pure unfashioned gold bullion ol the same weight; because while it is as well fitted as bullion for being used in the arts, it is, owing to the coinage, better adapted for being used as money, or in the exchange of commodities. On what principle, then, should government decline to charge a sei¬ gnorage or duty on coins, equal to the expense of coinage, that is, to the value which it adds to the coins? Those who contend that the state should defray the expense of coin¬ ing gold and silver, might, with equal co¬ gency of reasoning, contend that it should also defray the cost of manufacturing gold and silver tea-pots, vases, &c. In both cases the value of the bullion is increased by the cost of the workmanship; and it is only fair and reasonable that those who carry bullion to the mint should be obliged, like those who carry it to a jeweller, to pay the ex¬ pense of its conversion into the desired shape. 484 MONEY. Note IX. It is unnecessary to recapitulate the rea¬ sonings by which Dr. Smith has shown that the imposition of a seignorage would both prevent the exportation of coins, on every slight fall of the exchange, and their fusion. Abroad a British coin is only worth so much bullion; but if a seignorage were charged upon it, its value here would be increased by the amount of that seignorage. The ex¬ change would, therefore, have to fall to a greater extent than at present, before it would suit a merchant to export such coins ; and though they were exported they would, under the circumstances supposed, stand a much better chance of being preserved en¬ tire, and of being again sent back to us the moment the exchange became favourable. ( See ante , p. 247.) Section II. Defects incident to a Currency consisting of the Precious Metals. Variable Value of these Metals. — Expense of a metallic Currency. — Means by which that Expense may be lessened. Notwithstanding the almost universal adoption of the precious metals as a medium of exchange, and the many qualities that fit them for that function, they are still very far from being a perfect currency. And before proceeding to treat of the substitutes that have been introduced in the place of gold and silver, it may be proper to endeavour to point out the circumstances which form the great drawbacks upon their use as money. These circumstances may be classed under two prominent heads — first , the variable value of the precious metals ; and second , the heavy expense which it costs to maintain them in circulation. (1.) It is obvious, inasmuch as the value of the precious metals depends on the cost of their production, that in the event of the more fertile mines being exhausted, it would be increased according to the increased diffi¬ culty of raising them ; and it is farther ob¬ vious, from the circumstance of the obliga¬ tions in most contracts being estimated, or rated in money, that should its value increase there would be a change in the situation of the debtor and creditor portions of society— the condition of the former being improved, and that of the latter depressed : and if, on the other hand, instead of the mines being exhausted, new and more productive ones should be discovered, or more improved me¬ thods of mining be introduced, the opposite effects would follow. In this case the value of gold and silver would fall; and debtors would be enriched at the expense of their creditors. Every one knows that this oc¬ curred after the discovery of the American mines. Owing to the greater facility with which gold and silver were then supplied, | their value, as compared with the mass of commodities, sunk during the sixteenth cen- tury and the first half of the seventeenth, when the fall seems to have ceased, to about a fourth part of what it had previously been : so that the heirs of an individual, who had in 1490 bought a perpetual annuity of one hundred pounds a year, were not really re¬ ceiving more in 1650 than 2 51. a year of money of the value of that which had been in circulation, and in the contemplation of the parties, when the contract was entered into. But with the exception of the fall that took place in consequence of the discovery of America, the precious metals have been com¬ paratively steady in their value. It is, in¬ deed, impossible to say when or by what means their value may be again affected; but at present there does not seem much piobabiiity of any very material change. But supposing such to occur, no commodities it is possible to select as standards by which to measure the value of others, can be wholly exempted from these contingencies. All ar¬ ticles produced by labour must necessarily vary in value according to the skill with which it is applied. Although, however, the precious metals fall very short of being a perfect standard, they certainly are the best of anv hitherto suggested. Their quantity cap .ot be suddenly diminished; and the demand for them is such as to prevent any unusual productiveness of the mines from speedily lowering their value. It may, therefore be concluded, that though the value of gold and silver may differ widely at distant periods, because of the varying pro¬ ductiveness of the mines, and of improve¬ ments in the art of mining and working metals, it is, in all ordinary cases, abundantly uniform to secure us against any risk of sudden and injurious fluctuations. (2.) The expense of a currency consisting of gold and silver is undoubtedly a most im¬ portant consideration. If, for example, the currency of Great Britain amounted to fifty millions of gold sovereigns, and if the cus¬ tomary rate of profit were five per cent,, this currency, it is plain, wouid not cost less than two and a half millions a year ; for had these 50 millions not been employed as a circulating medium, they would have been vested in branches of industry, in which, besides affording employment to some thou¬ sands of individuals, they would have yielded five per cent., or two and a half millions a year, nett profit to their owners. Nor is this the only loss that the keeping up of a gold currency would occasion. The capital of 50 millions would be liable to perpetual diminution. The wear and tear of coin is by no means inconsiderable ; and supposing the expenses of coinage were defrayed by a seignorage, the deficiency in the weight of Sect. II. MONEY. 4S5 the old worn coins, when they are called in to be recoined, has to be made up by the public. There is, besides, a constant loss from shipwrecks, fire, and other accidents; and, when due allowance is made for these different causes of waste, perhaps it would not be too much to suppose, that a country which had 50 millions of gold coins in cir¬ culation, would have annually to import the 100th part of that sum, or half a million to maintain its currency at its proper level. If these remarks be well founded, it fol¬ lows that were the customary rate of profit in Great Britain five per cent, it would cost us three millions a year to maintain 50 mil¬ lions of gold coins in circulation ! And though it be true that a reduction of the rate of profit would proportionally reduce the nominal amount of this expense, yet as the reduced expense would, in consequence of the fall of profits, bear the same proportion to the public income that the higher expense did, the cost of the currency would not be in any degree diminished by a circumstance of this sort. The case of France furnishes a still more striking example of the heavy charges at¬ tending the general use of a metallic cur¬ rency. The total amount of the gold and silver currency of that kingdom has been estimated by Necker at 2200 millions of francs, and by Peuchet at 1850 millions. Now, taking the mean of these estimates, as most likely to be nearest the truth, and sup¬ posing the rate of profit to be six per cent., this currency must cost France 121 millions of francs a year, exclusive of the wear and tear and loss of coins ; and supposing as before, that these amount to 100th part of the entire mass, it will make its whole an¬ nual expense amount to the large sum of 141 millions of francs, or about five millions six hundred and forty thousand pounds ster- iing. But this heavy expense, though certainly the greatest, is not the only drawback at¬ tendant on the use of the precious metals as currency. The possession of great value in small bulk is one of the circumstances which have recommended their adoption as money, or rather it has particularly fitted gold fov being used for that purpose. Still, how- ever, the weight of a large sum in gold is so very considerable as to render its transport¬ ation from place to place a matter of consi¬ derable difficulty and expense. One thou¬ sand sovereigns weigh above 21/55. troy ; so that a carriage would be necessary to convey the gold required to discharge a debt of 50,000/. ; while, if silver were employed to pay it, upwards of five tons would be re¬ quired ! The wish to lessen the original expense of a metallic currency, and the subsequent ex¬ pense attendant upon its conveyance from place to place, has doubtless been the chief source of the various contrivances devised for economising money, and for fabricating it of less costly materials. The most im¬ portant of these contrivances may be classed under the heads of bills of exchange, banks of deposit, and banks of circulation. I. Bills of exchange were invented in order to obviate the necessity of conveying money from one place to another. When commerce is carried on to any considerable extent, each commercial town has most com¬ monly within itself individuals who are cre¬ ditors and debtors of the towns with which it maintains an intercourse. There are, for example, in Liverpool persons who have creditors in Glasgow and others who have debtors, and Glasgow is, of course, in pre¬ cisely the same situation with respect to Liverpool. When, therefore, a merchant A., in one of these towns, as Liverpool, has to pay a debt due by him to B. in the other, he does not transmit money to Glasgow for its payment, but he goes to one of his neigh¬ bours, C. of Liverpool, to whom some person, D. in Glasgow is indebted, and having paid him a sum equivalent to his debt to B., he gets in return a letter or order, technically denominated a bill of exchange, addressed to D., requesting him to pay that sum to A. or his order; and A. transmits this letter or order to B., who presents it to D., and re¬ ceives payment. By this means the debt due by A. to B., and by C. to D., is extin¬ guished ; the debtor in one place is exchanged for the debtor in the other ; and the ex¬ pense and trouble of carrying money from Liverpool to Glasgow to pay the debt of A. to B., and from Glasgow to Liverpool to pay the debt of D. to C., is rendered quite unnecessary. Each debtor gets payment from his immediate neighbour, so that the convenience as well as the interest of all par¬ ties is consulted. In highly commercial countries, like Great Britain, every possible facility is given to the settlement of transactions by means of bills of exchange. The banking companies established in all our considerable towns maintain a constant correspondence with each other and with London ; so that an individual residing in any part of the coun¬ try, who may wish to make a payment in any other part, has always the means, by applying to the bank nearest him, of getting a bill for the amount. By far the greatest proportion, both of the inland and foreign bills, is made payable in London, the grand focus to which all the great pecuniary trans¬ actions of the empire are ultimately brought to be adjusted. And in order still farther to economise the use of money, the principal bankers of the metropolis are in the habit of I daily sending a clerk to the clearing house in I i 3 486 MONEY. Note IX. Lombard Street, who carries with him the various bills in the possession of his house drawn upon other bankers, and having ex¬ changed them for the bills in the possession of those others that are drawn upon his con¬ stituents, the balance is paid in cash or bank of England paper. By this contrivance the bankers of London are enabled to settle transactions to the extent of several millions a day by the intervention of not more at an average than from 200,000/. to 300,0007. of cash or bank notes. 1 The facilities for the purchase and sale of foreign bills of exchange, or of bills drawn on individuals resident in foreign countries, are almost equally great. The bill merchants, or bill-brokers resident in London, and all great commercial towns, are always ready to buy or sell bills on every quarter with which we have directly or indirectly any commer¬ cial intercourse : so that means are always at hand of effecting the largest payments in any quarter of the world without in general requiring the transmission of a single ounce of gold. II. The second species of device for eco¬ nomising the use of money, consists in the establishment of banks of deposit. Bills of exchange, it is plain, can only be conve¬ niently used in the payment of considerable sums owing by persons residing at a dis¬ tance from each other. But there is every¬ where, and especially in large towns, an im¬ mense number of payments that are con¬ stantly being made by one set of individuals to another. And to facilitate the making of such payments with the least possible incon¬ venience, banks of deposit have been esta¬ blished. These are either carried on with¬ out any view to profit for the accommodation of those who subscribe to them, or they are carried on by individuals as a mercantile speculation on their own account. The bank of Amsterdam did, and the bank of Hamburgh does, belong to the first class, while the private banking companies of Lon¬ don belong to the second. When a public deposit bank is established, those who make use of its services deposit with its officers the money they must otherwise have kept at home in order to meet the current demands upon them; and when an individual who has obtained a bank credit has a payment to make to any other person dealing with the bank — and the principal traders in most towns in which a public bank of deposit is established belong to it — it is made by the transfer of so much credit, or bank money , from the one account to another ; and it is only in the event of a person having to pay money to a stranger that he has any motive 1 For an account of the technical operations at the clearing house, gee Mr. Gilbart’s Practical Treatise on Banking, p. 16, to withdraw his deposit from the bank. In this way the circulation of money is ren¬ dered superfluous for all but the smallest payments; and individuals are exempted from the risk attending the keeping of cash at home. A depositor has nothing to fear from robbers or accidents, nor is he liable to loss from fraud or inattention either in re¬ ceiving or paying money. Banks of deposit have been established, not merely for the sake of economising cur- rency, but also, as Dr. Smith has explained, (p. 211.) for the purpose of giving uniformity to the value of the money of commercial cities, into which large quantities of foreign specie, of various denominations and degrees of fineness, are usually introduced. If bills drawn upon a city so situated were paid in current money, it might frequently be diffi¬ cult to ascertain their precise value ; and this circumstance would tend to depress the ex¬ change below its natural level. But a bank of deposit affords the greatest facilities for obviating these inconveniences; it being sufficient to order, as was done at Amster¬ dam, that the deposits should be made in coin of the standard weight and purity, or in assayed bullion, and that bills of exchange should be uniformly paid in bank money. The deposit bank at Hamburgh, which is one of the best managed establishments of the kind in Europe, receives no deposits in coin, but only in bullion of a certain degree of fineness, which it binds itself to repay ac¬ cording to a fixed and invariable scale. By this means the expense of coinage is saved on all the bullion deposited with the bank ; and instead of representing quantities of coin, the credits in the bank books represent certain quantities of standard silver. Those who deal with a public bank of deposit do so for the sake of convenience and security merely, without any view of profiting in any other way by the concern. A pure deposit bank has nothing in it of the nature of a trading association. It is to those by whom it is made use of what the clearing house is to the London bankers. Money is not lodged in it that it may be lent to others, or employed in any sort of speculation or adventure, but for the sake of security, and as a means of facilitating the payments to be made by the depositors. Bank credits vary from day to day, and even from hour to hour, according to the pay¬ ments which those who hold them have to make and receive ; so that it would be al¬ most impossible, were it attempted, to cal¬ culate the share that each individual dealing with the bank ought to have of its profits, supposing it to make any. The expenses attending the management of a deposit bank are most commonly defrayed either by a small fee charged on every transfer of bank money from one individual to another, or bv MONEY. 487 Sect II. a charge on the coin or bullion deposited, or both. The bank of Hamburgh, for example L reC eives the bullion deposited in its coffers at the rate of 442 schillings the mark, and is¬ sues it at the rate of 444 schillings; being a charge of 4-9ths, or nearly one half per cent, for its retention. 1 It is plain, from these statements, that any attempt to accommodate individuals by loans of bullion or of bank credit is totally incon¬ sistent with the principles of a public depo¬ sit bank, and the objects for which it is insti¬ tuted. So long, however, as the managers of such an establishment are chosen b\, and made directly responsible to, the uepositors, there is little fear of any such proceedings taking place; for it is not to be supposed that the depositors will consent to have the institution perverted from its object, and their security lessened, for the mere advan¬ tage of the managers. The want of all con¬ trol on the part of the public, was the radical defect in the constitution of the bank of Amsterdam. The magistrates of the city were, cx ojjiciOf the managers of the bank, the depositors being, divested of all power to inquire into the real state of the con¬ cern. In consequence, its affairs were shrouded in impenetrable mystery ; so that the honour of the directors was in truth, the only security on which the pub¬ lic had to rely ; and the result showed how dangerous it is to trust to such a guarantee, (ante,?. 215.) In this respect the constitution of the bank of Hamburgh is infinitely pre¬ ferable to that of Amsterdam. Its managers, who are appointed for short periods onl\, are chosen by the depositors; and its affairs are conducted with the greatest publicity, and without any sort of reserve. A deposit bank, managed in this way, can never be deprived of the public confidence, but must necessarily continue, consistently with the objects for which it was instituted, to be neither more nor less than a place for the safe deposit of bullion, and for its commo¬ dious transfer from one individual to an¬ other. The private banking companies establish¬ ed in London, and other parts of the coun¬ try, are partly banks of deposit, and partly trading concerns. They are not public insti¬ tutions, but are conducted by and for the advantage of private individuals. Those who keep an account at a private banking house, send all bills and drafts payable to them to it, to be presented and re¬ ceived on their account ; and they are, also, in the habit of making all consider¬ able payments by checks on it. To indem¬ nify the bankers for their trouble, it is un¬ derstood or stipulated, that the individuals dealing with them shall keep an average balance of cash in their hands, varying ac- 1 Storch, Economic Politique, tome iv. p. 104. cording to the amount of business transacted on their account. The bankers then calcu¬ late, as well as they can, the amount of cash they must keep in their coffers to meet the probable demands of their customers, and employ the balance in discounting mercan¬ tile bills, the purchase of government secur¬ ities, or in some other sort of profitable adventure ; so that their profits consist of the difference between the various expenses attendant on the management of their esta¬ blishments, and the profits they derive from such part of the sums lodged in their hands as they are enabled to employ in an advan¬ tageous way. It is obvious, from this statement, that the security afforded by a private bank of depo¬ sit is a matter as to which there must always be more or less of doubt. Y hen, indeed, pri¬ vate banking companies confine themselves to their proper business, and do not embark in speculations of unusual hazard, or from which their funds cannot easily be withdrawn in the event of any run being made upon them, they can hardly ever fail of being in a situation to meet their engagements; while the large private fortunes that most com¬ monly belong to the partners afford those who deal with them an additional guarantee. Much, however, depends on the character of the parties, and on a variety of circumstances with respect to which the public can never be correctly informed. Hence, though there can be no doubt that the security afforded by many private banks of deposit is of the most unexceptionable description, this may not be the case with others. In one respect a private deposit bank has an advantage over a public one. The latter, as has been already seen, has no motive to lend any portion of the bullion deposited in its coffers, which, in fact, it can never do without injury.. But the confidence usually inspired by the wealth of the partners of a private bank, and the excess of the deposits they receive above the sums which are de¬ manded, give them the means of employing, as capital, a considerable portion of the mo¬ ney lodged in their hands, and thus, by rendering what would otherwise be idle, or only emploved in circulating commodities, available for industrious purposes, they are in so far productive of benefit; though it may, at the same time, be doubted, whether this be sufficient to balance their greater insecurity. III. But notwithstanding the economy of money, and the saving of risk and trouble resulting from the use of bills of exchange and banks of deposit, there is still a very heavy expense attendant upon the employ¬ ment of the precious metals as currency. The impossibility of employing bills of ex¬ change in the settlement of the great ma- 4S8 money. Note IX. jority of transactions renders the employment of a large quantity of money indispensable ; while the state loses the whole value of the bullion or capital that is locked up in the coffers of the deposit banks. Should, therefore, means be devised for fabricating that portion of the currency required for the settlement of such transactions as cannot be adjusted by bills of exchange, of some ma¬ terial having little real value, the cost of its maintenance would be proportionally dimi¬ nished ; and the bullion in the * coffers of the deposit banks would be disengaged for other purposes. Of the materials suggested for this purpose, paper has been by far the most generally resorted to, and is in every respect the most eligible. By usino* paper instead of gold, we substitute the cheapest in room ot the most expensive cur¬ rency ; and enable the society, without loss to any individual, to send abroad all the coins rendered superfluous by the use of paper, getting in return from the foreigner an equi¬ valent in raw materials, or manufactured goods. To trace the various steps in the progress of paper money, from its first introduction to its present state, would greatly exceed our limits. It is sufficient to observe that the pecuniary engagements of individuals are early reduced to writing. This is neces¬ sary to give security to the creditor, that he shall be able to claim the full amount of his debt, and to the debtor, that he shall not be liable to any overcharge ; in a word, to avoid aL those differences which seldom fail to arise when the terms of contracts are not dis¬ tinctly specified. In process of time, and when society becomes more commercial, in¬ dividuals possessed of the written obligations of others begin to transfer them to those to whom they are indebted; and, after the advantages derivable from employing them m this way have been ascertained, it is an obvious source of emolument for individuals m whose wealth and discretion the public have confidence, to issue their obligations to pay certain sums, in such a form as may fit them for performing the functions of a cir¬ culating medium in the ordinary transactions of life. Such is the origin of paper money. None would refuse to accept the promissory notes or obligations of individuals of large fortune, and of whose solvency no doubt could be entertained, in payment of debts. And while the circulation of such notes is an accom¬ modation to the public, it is a very consider¬ able source of profit to the issuers. Suppose, for example, that an individual issues a pro¬ missory note payable on demand, or at some fixed period, for 5,000/ ; he must, previously to his issuing it, have received an equivalent or some sort or other, or, which is by far the most common case, he must have advanced i*. to an individual who has given him secur¬ ity for its repayment, with interest. In point of fact, therefore, the issuer has ex¬ changed his promise to pav 5,000/. for the interest to be derived from a real capital of that amount ; so that while the promissory note, whose intrinsic worth cannot well ex¬ ceed sixpence, remains in circulation, he will, supposing interest to be five per cent, receive from it a revenue of 250/. a yea/ It is on this principle that such bankers as issue notes conduct their business. A banker could make no profit were the dead stock he is obliged to keep in his coffers equal to the amount of his notes in circulation. But if he be in good credit, a third or a fourth part ot this sum will perhaps be sufficient; and his profits, deducting the expense of his es¬ tablishment, and of the manufacture of his notes, depend on the excess of the profit derived from the paper he has in circulation, over the profit he might realise by employ¬ ing the stock kept in his coffers to meet the demands of the public. “ A bank,” says Mr. Ricardo, “ would never be established, it it obtained no other profits than those derived from the employment of its own capital: the real advantage of a banker com¬ mences only when he begins to employ the capital of others.” It is unnecessary, after the statements made by Dr. Smith with respect to the Bank of England, and the notes we have subjoined to them, {ante, p. 140.) to enter in this place into any details with respect to the history and organisation of that es¬ tablishment. But some remarkable changes have taken place, since the publication of the ^ ealth of Nations, in the numbers, consti¬ tution, and importance of private banks. I he number of such establishments existing in England and ales in 1776 is not exactly known; but we believe it may be estimated at about 150. In 1792 the private banks amounted to about 350, of which about 100 were destroyed by the revulsion that took place in the latter part of that year and the beginning of 1793. In 1800 the private banks exceeded 300; and so rapidly did they in¬ crease during the immediately subsequent years, that in 1814 they amounted to 940! It is material to observe that the greater number of these banks issued notes; they supplied, indeed, the greater part of the currency of many extensive districts their issues forming a large proportion of the mo¬ ney of the empire. The act of 1708, pro¬ hibiting the introduction of more than six paitneis into any establishment for the issue of notes payable on demand in England and Wales continued in operation till 1826, when, as will be afterwards seen, it was repealed in consequence of the events of that and the preceding year. There is a considerable difference in the manner of transacting business in the bank- j SliCT. II. MONEY. ing establishments in different parts of the kingdom. The country bankers of Eng¬ land allow interest on the balances of money in their hands, the majority charging com¬ mission, over and above the interest, on the money they lend. The private bankers of London rarely allow interest on de¬ posits. As they do not issue notes their own, they are not interested in the increase but in the economising of the currency. Their proper business is to take care of other people’s money, and to make and receive payments for them. They charge no commission ; their profits being derived, as already stated, from the balances of their customers’ money in their hands. The majority of the Scotch banks are at once banks of issue and of depo¬ sit. Such of them as issue notes do not charge any commission beyond the com¬ mon rate of interest on the sums they lend ; but such as do not issue notes, sometimes charge a commission. 1 At present (1848) the deposits in the Scotch banks are supposed to exceed 30,000,000/. It would be most desirable were it possible to adopt some such system in England, and particularly in London, with respect to deposits, as is adopted in Scotland. At present, neither the Bank of England nor any of her branches allows interest on de¬ posits. The middle and lower classes are therefore, by the want of any safe and advantageous method of disposing of their savings, rendered less anxious than they otherwise would be to accumulate; at the same time that thev are rendered more dis- posed to adventure their money in hazardous undertakings, or to lend it to individuals of doubtful characters and desperate fortunes. It is true that there are in England provident banks, conducted upon the deposit system But these banks are not universally esta¬ blished, and besides they are much restricted. No person can contribute more than 30/. exr i elusive of interest, in a year, or 150/. in all; and whenever the deposits, and the interest accruing thereon, amount together to 200/. no farther interest is paid on such deposit. But it is desirable that the widest encourage¬ ment should be given to this system. Were ! the Bank of England to receive deposits of 10/. and upwards, and allow interest upon them at about one per cent, less than the market rate, she would confer an advantage upon the com¬ munity, and open a source of profit to herself. ; It is doubtful, however, whether the Bank of England could offer interest on deposits in the way now suggested without having such an amount forced upon her as might 1 The private bankers in Scotland, who do not issue notes, pay the same rate ot interest on the money deposited in their hands as those who do issue notes; they most frequently, too, discount -1 o3 endanger her stability. And it were better that matters should continue on their present footing, than that any risk of this sort should be incurred. As no means have been devised, or seem practicable, for limiting the promissory notes issued by private individuals, their value, it is plain, could not be maintained should those by whom they are issued fall into discredit, or be relieved from their pro¬ mise to pay them. But it is otherwise with notes issued by the state, or by a com-i pany acting under its control. The quantity of such notes may be effectually limited; and it has been shown, in the previous section, that, when this is done, intrinsic worth is not necessary to a currency ; it consequently follows, that by properly limiting the supply of paper money declared to be legal tender its value may be sustained on a par with gold, or any other commodity. It will be shown, in the next section, how this limit¬ ation may be best effected. Section III. Means by which the Value of Paper Money may be kept on a Par with Gold. In the first part of this note we endea¬ voured to show, in the first place, that when the power to supply money is not restricted, its value depends, like that of most other commodities, entirely on the cost of its pro¬ duction ; and that in the second place, or when the power to supply money is mono¬ polised, its value does not depend on the cost of its production, but on the quantity in circulation compared with the demand. This distinction is of very great import- 4 ance, and should never be lost sight of. Its elucidation has served to clear up almost all the doubts and difficulties with which the theory of money was previously encum¬ bered, and has been a means of suggest¬ ing several important practical measures. Until very recently it was universally sup¬ posed that the ability to convert paper into gold, at the pleasure of the holder, was necessary to sustain its value. But it is plain, as well from the principles already stated, as from experience, that the mere limitation of the quantity of paper made legal tender is quite sufficient to preserve its value on a par with the value of gold, or to raise it higher. When the restriction on cash payments at the Bank of England took place in 1 797, it was very generally and confidently predicted that the value of her notes would immediately fall: but their employment in the payment of the dividends and ot the public taxes really made them, in some most im- on the same terms as the others; and they occa¬ sionally also grant cash accounts, or cash credits, on the same terms. 490 MONEY. Note IX. portant respects, a species of legal tender; and to the surprise, both of the friends and opposers of the restriction, they continued for three years to bear a small premium over gold; and their depreciation, which began in 1800, was entirely owing to the greatly increased quantities that were then thrown upon the market. The history of the paper currency of most other countries affords abundant proofs of the operation of this principle. 1 In Russia, to give only one example, forty millions of paper rubles, or assignats, were issued in 1769 by the government bank established in the preceding year. There were some regu¬ lations with respect to the conversion of these assignats into copper • but M. Storch has shown that these were altogether illusorv, and that, practically, the assignats were inconvertible. They were, however, made legal tender at the same rate as silver rubles ; while, in order to insure their ciix-ulation, it was ordered that a certain proportion of the taxes due by each individual should be paid in them. In consequence of these regula¬ tions, the assignats really formed a species of inconvertible paper money; and as their supply had not been originally excessive, and no further additions were made to it for about eighteen years, they continued, during the whole of that period, to circulate at about the same value as silver. In 1787, however, a fresh emission of sixty millions of additional assignats took place, which imme¬ diately depressed their value about eight per cent, under silver. And owing to suc¬ cessive emissions, the mass of assignats in circulation in 1811 was increased to the enormous sum of 577 millions, when they fell to a discount of 400 per cent., as com¬ pared with silver! Since 1815 the mass of assignats has been much diminished ; and their value has uniformly increased with every diminution of their quantity. Can any more conclusive proof be required, to show that the value of such paper currencv, as is legal tender, is always proportioned — other things being the same—to the quantity in circulation ? 2 It may be worth while, perhaps, to ob¬ serve that neither the existence nor the want of confidence in the solvency of the issuers exercises the smallest influence over the value of paper money, properly so called. Notes not legal tender, and pay¬ able on demand, or at some stipulated pe¬ riod, are not paper money, though they serve the same purposes during the time they continue to circulate. The value of such notes is wholly derived from the confidence placed in the ability of the issuers to retire them when presented for payment, or when 1 For an instructive account oi the paper cur¬ rency of the different continental states, see Storch, they become due. Whenever, therefore, this confidence ceases, their circulation necessa¬ rily ceases also. But no such circumstances affect paper money , meaning by paper mo¬ ney, paper made legal tender, and not legally convertible into gold or any thing else, at the pleasure of the holders, or at any given period. No part whatever of the value of such paper money is derived from confidence. It circulates because it is made legal tender, and because the use of a cir¬ culating medium is indispensable ; and its value, supposing the demand to be constant, is in all cases inversely as the quantity in circulation. It has been already seen that in the event of an attempt being made by limiting the quantity of gold and silver, in a particular country, to raise their value in it higher than in other countries, it could not, owing to the extreme facility with which they may be clandestinely imported, have any con¬ siderable, or, indeed, almost perceptible in¬ fluence. And, on the other hand, if an unusually large supply of the precious me¬ tals were, upon any occasion, imported into a particular country, or extracted from mines belonging to it, the excess would speedily find its way abroad, notwithstanding the intervention of any laws or regulations to the contrary. These principles are now almost universally assented to, as well by govern¬ ments as by theorists. The restraints once so prevalent on the trade in the precious metals, which Locke happily compared to attempts to hedge in the cuckoo, are now either relinquished or have become inoper¬ ative. Since 1819 the trade in gold and silver in this country has been perfectly free, every one having fiill liberty to deal with the foreigner in coin or bullion. And such is the facility with which bullion may be con¬ veyed from one country to another, that its value at Hamburgh and Amsterdam can hardly, in a period of peace, differ more than one eighth per cent, from its value in London, without causing it to be sent from where its value is least to where it is greatest. It is evident, therefore, that the supply of the precious metals in one country, must, generally speaking, be limited to the quan¬ tity required to supply its effectual demand for them, that is, to preserve their value in it on a par with their value in other countries. And, therefore, when the cur¬ rency of any particular country consists of the precious metals, the value of any given quantity or weight of its currency cannot differ materially from the value of the same quantity or weight of the currency of another country, also consisting of the precious me- Cours D’Economie Politique, tome iv. pp. 94—233. Paris, 1823. 2 Storch, tome iv. p. 201. MONEY. 491 ect. III. tls. Such, however, is not the case with a urrency consisting of inconvertible paper. J aper money is necessarily confined to the ountry in which it is issued : its value is ot real and universal, hut aitiiicial and ical. It does not depend on the cost of its roduction, but on the circumstance of its eing made legal tender in a particular ountry, and issued in limited quantities. The moment it is carried out of the country therein it is legal tender, it becomes nearly , r perhaps entirely worthless. Paper money 5 completely destitute of that power of self- ontraction and expansion which is possessed >y a currency consisting of the precious me¬ als, or of paper immediately convertible into hem. It can neither be exported to other “ountnes when issued in excess, nor can it >e imported from them when the issues are induly contracted. Its value, in fact, de¬ fends in every case, as already stated, on he magnitude of its issues compared with ;he business it has to perform. If its quail- city be unduly increased, its value will fall aelow that of gold ; and if it be unduly di¬ minished, it will rise above it. It would not, however, be difficult for the issuers even of inconvertible paper, w ere they so disposed, to preserve its value on a par with that of gold or silver. Suppose, for example, that there are no gold coins in circulation in Great Britain, and that our currency consists wholly of inconvertible paper issued by go¬ vernment, or by a board acting under its orders : under these circumstances, it is quite plain that no gold would be imported either to be used as money or to be kept as reserves in the coffers of the bankers; but the demand for it in the arts would notwithstanding cause it to be imported in large quantities; and it might still be made a standard by which to regulate the issues of paper, lhus, when the holders of 3\$1. (3Z. 17s. lOitf. ) of paper could readily exchange it for an ounce of gold bullion of 22 carats fine, it would be a proof that it was of exactly the same value as gold, and that, consequently, its quantity should neither be increased nor diminished. But if more or fewer than 3\$l. in paper were required to buy an ounce ot bullion, it would show in the one case that the value ot paper had fallen too low, and that its quantity should be lessened; and in the other, that its value had risen too high, and that its quantity should be increased. By acting in this way, or, which is substantially the same thing, by attending to the ex¬ changes, and lessening the supply of cur¬ rency when they begin to fall, and increasing it when they begin to rise, the value of paper money might be kept very nearly on a level ■with the value of the metallic money that would circulate in its stead were it with¬ drawn. This conduct is that, in fact, of every prudent banker obliged to pay his L notes on demand. lie does not defer nar¬ rowing his issues until a heavy drain for bullion has set upon his coffers, but sets about their contraction the moment he ob¬ serves the price of bullion rising, and the exchanges falling; enlarging them under the opposite circumstances. 'I he obligation to pay in bullion compels attention to be paid to principles that might otherwise be contemned ; but that is all. And hence it follows, that if sufficient security could be obtained, that the power to issue inconvert¬ ible paper would not be abused, and that its amount would be enlarged and diminished so as to preserve its value on a par "with gold,—the latter might be entirely dis¬ pensed with for all pecuniary purposes, except as a standard, though it might still be expedient to use a subsidiary silver and copper currency, as at present, for small payments. Unfortunately, however, no such security can be given. This is a point, respecting which there is no room for difference of opinion. The widest experience shows that no man, or set of men, has ever had power to make unrestricted issues of paper without abusing it, that is, without issuing it in in¬ ordinate quantities. Should the power to supply the state with paper money be un¬ conditionally vested in a private banking company ; then, to suppose that they should endeavour, by carefully limiting their issues, constantly to sustain the value of their paper, would be to suppose that they should be ex- tremelv attentive to the public interests, and extremely inattentive to their own ! The re-enactment of the restriction on cash pay¬ ments at the Bank of England, and the rendering it perpetual, would have no per¬ ceptible effect on the value of bank notes, provided their quantity w’ere not at the same time increased. But there cannot be a doubt that, under such circumstances, it would be increased. The directors of the Bank of England would then be able to exchange scraps of engraved paper not worth perhaps five shillings a quire, for as many, or the value of as many hundreds of thou¬ sands of pounds. And is it to be supposed that they should not avail themselves of such an opportunity to amass wealth ? If govern¬ ment allow a private gentleman to exchange a bit of paper for an estate, will he be de¬ terred from doing so by any considerations about its effect on the value of the currency ? It is indispensable, therefore, that the issuers of paper money should be placed under some efficient check or control; and the compar¬ atively steady value of the precious metals at once suggests that no check can be so effectual as to subject the issuers of paper to the obligation of exchanging their notes, at the pleasure of the holder, for an unvarying quantity of gold or silver. 492 MONEY. Note IX It has been contended, however, that there is a material difference between notes issued by government in payment of the debts it has contracted and those issued by private banking companies in discount of good bills. In regard to the former, it is admitted, on all hands, that they may be issued in excess; but, in regard to the latter, it has been strenuously urged, that “ notes issued only in proportion to the demand, in exchange for good and convertible securities, payable at specific periods, cannot occasion any excess in the circulation, or any depreciation.” As most of the arguments advanced by those who contended that the currency of Great Britain was not depreciated in the interval between 1800 and 1819, involve this prin¬ ciple, it may be worth while briefly to ex¬ amine it. In the Jlrst place it is to be observed, that the demand for discounts does not depend nearly so much on the species of security required for the repayment of the sums ad¬ vanced by a bank as on the rate of interest for which they may be obtained, compared with the ordinary rate of profit that may be made by their employment. If an indi¬ vidual can borrow from a banker, at four or five per cent., and if he can realise seven or eight per cent, by the employment of the loans, it is evidently for his intere^- and it would be for the interest of every oftier per¬ son similarly situated, to borrow to an un¬ limited extent. But a banking company, relieved from the obligation to pay its notes in cash, and not, of course, obliged to keep any unproductive stock or bullion in its coffers, would be able to issue notes at the lowest possible rate of interest, and the de¬ mand for its paper would therefore be pro¬ portionally great. From 1809 to 1815, inclusive, the period in which the value of our paper currency as compared with gold was lowest, the market rate of interest considerably exceeded the rate (5 per cent.) at which the Bank of England and most of the country banks lent previously to the reduction in 1823. Although, therefore, the quantity of paper afloat had been in the interim very much increased, the demand for fresh discounts continued as great towards the end of the period in question as at the beginning. And there seems no reason to doubt that the amount of notes in circulation would have been very much increased, had the issuers not been apprehensive that ultimately they might have to pay them in specie ; at least such would certainly have been the case, had they acted up to their avowed opinion that it is impossible to issue too much paper, or to reduce its value, by engrossing into the circulation notes issued in discount of good bills. The wants of commerce are altogether insatiable. Inconvertible paper, provided the rate of interest at which bill- are discounted be less than the market rate can never be so abundant as to prevent i demand for additional supplies. So long a; this is the case, million after million may b* thrown upon the market. The value of the currency might be so reduced as to require a five or ten pound note to purchase an ounc^ of gold; but the circumstance of its value being diminished in proportion to the in- crease of its quantity would render the de¬ mand for additional supplies as great as ever. On the whole, therefore, it is plain, that whether the power of issuing paper monev be nested in the hands of a private bankm-/ company or of government, it should be placed under some efficient check or control, such as the. obligation to pay it in gold or silver. It is easy to discover the manner in which a check of this kind limits the issue of paper, and sustains its value. Whenever so much paper.is issued as to sink its value below bullion, it begins to be returned upon the issuers for payment; and they are, in consequence, obliged to prevent the exhaust¬ ion of their coffers, by contracting their issues, and raising their paper to a level with gold. A very slight depression in the value of paper below gold or silver, is sufficient to make them be demanded in exchange for it; so that its value when convertible at pleasure into unvarying quantities of the precious metals, never differs considerably from their value. The issues of the Bank of England were for more than a century limited on this principle, and in the manner now explained; and during the whole of that period they were hardly ever depreciated one fourth per cent., and never more than one per cent., and that but for a few days only towards the end of the American war. But though it be thus necessary, in order to avoid all sudden and injurious fluctuations in the value of paper, that it should be made exchangeable at the pleasure of the holder for gold or silver, it is not essential to this end that it should be made exchangeable for gold or silver coins. Previously to the resumption of specie payments by the Bank of England in 1821, she was obliged to give bars of assayed bullion in exchange for her notes, according to a plan suggested by Mr. Ricardo.; and there can be no doubt that this obligation would sustain the value of paper quite as effectually as it is sus¬ tained by the obligation to pay in coin of the legal weight and purity, at the same time that it would save the greater part of the heavy expense occasioned by the use of metallic money. But, how important soever, these are not the only consider¬ ations to be attended to. The discovers of means for the prevention, or at least diminution, of the forgery to which the MONEY. 493 Sect. III. b substitution of notes in the place of coins had given rise, was indispensably necessary to the maintenance of Mr. Ricardo's plan ; and notwithstanding all the efforts that have been made, this desideratum has not yet been supplied. Forgery in the larger description of notes, or in those for 57. and upwards, [>. mav with due precaution be prevented from becoming injuriously prevalent. But low notes, or those of the value of 1Z. or 2/., p having to circulate amongst the labouring classes, and in immense numbers, present facilities for the issue of spurious paper, which it has been found impossible ma¬ terially to diminish. Hence, in 1821, the plan of paying in bars of bullion was aban- k. doned, and the Bank of England recom¬ menced paying in specie. Section IV. Quantity of Paper afloat necessarily different at different Periods. — Destruction of Coun¬ try Bank Paper in 1792-93.— Crisis of 1797.— Destructionof Country Bank Paper in 1814—16, and in 1825-26.— Growth of Joint Stock Banks. — Defects in the Joint Stock Banking System.—Remarks on the Proposals for the suppression of I^ocal Issues, and for taking Security from the Issuers. r( When the currency consists, as in England, partly of the precious metals, and partly of paper convertible into them, the effects pro- ; duced by an overissue of paper are the same as those resulting from an overissue of gold or silver. The excess of paper is not indi¬ cated by a depreciation or fall in the value of paper compared with gold, but by a de¬ preciation in the value of the whole currency, gold as well as paper, as compared with that of other states. Suppose that our currency is at its proper level, or, that the amount of gold and paper in circulation is 3 such as to render the currency of Great Bri¬ tain equivalent to that of the surrounding states, so that there is neither an influx nor an efflux of the precious metals; and, sup¬ pose that, under these circumstances, an ad¬ ditional million of notes is issued by the Bank of England, or the country banks : it is obvious that this issue of paper will have precisely the same effect on the value of money as if it consisted of a million of ( sovereigns. There cannot, it is clear, be any depreciation in the value of paper as i compared with gold in this country; for it may be immediately exchanged for gold, and it is as readily received in all payments. The effect of inordinate issues of immediately convertible notes is not, therefore, to cause any discrepancy between paper and gold in the home market, but f to increase the amount of the currency, and by rendering it redundant as compared with that of other countries, to depress the exchange ; and thus, inasmuch as notes do not circulate abroad, to cause a drain upon the Bank, and an exportation of coin. Although, therefore, an overissue of paper payable on demand be not indicated by any fall in its value, as compared with gold in the country in which it is issued, it is clearly indicated by a fall of the exchange, and an efflux of gold. The fact of the exchange being depressed, and of gold continuing, for any considerable period, to be demanded from the Bank and exported, is, independ¬ ently of all other considerations, a conclusive proof that the currency is redundant or de¬ preciated, as compared with the currency of other countries. In most instances such re¬ dundancy is occasioned by additional quan¬ tities of coin or paper having been brought into circulation; but this is not always the case. The demand for money differs at dif¬ ferent periods. A currency susceptible nei¬ ther of increase nor of diminution might be at one time in excess, and at another defici¬ ent, according to the varying state of credit and confidence in the country, and the nature of its commercial relations with foreigners. It is, therefore, of importance to bear in mind, that it is not by the absolute amount of the currency that any correct judgment can be formed whether it be in excess or not. At one time an issue of eighteen millions of Bank of England notes might probably be too great, while at another time, and under other circumstances, an issue of twenty or five and twenty millions might not be enough. The state of the exchange, or rather the influx and efflux of bullion, is the only safe and unerring test by which to judge when the currency is or is not at its proper level. If the exchange be generally on the advance, it is a proof that the currency of the country is becoming deficient, and that it may be slowly and cautiously enlarged, and conversely when it is falling. The di¬ rectors of the Bank of England have some¬ times involved themselves and the country in difficulties from their not being suffici¬ ently aware of this principle. Observing the exchange to fall, and a drain for bullion to begin to operate on their coffers, when, perhaps their issues were not greater than usual, they have concluded that this drain originated in circumstances that had no con¬ nection with the amount of bank paper afloat, and that it would not be stopped by its con¬ traction. But the previous statements show the fallacy of this notion. In the supposed case the currency has become redundant, not because it has been absolutely increased, but because a less quantity is sufficient for the purpose* to which it is applied, and it has not been proportionally diminishedL 494 MONEY. Note IX. It is not always possible nor is it very often, indeed, of much importance, to point out the circumstances which render the same amount of currency that may be barely sufficient at one time redundant at another ; but, whatever they may be, a fall of the exchange, and an efflux of bullion, show, beyond all question, that some of them are in operation, and that the currency is in excess. Bullion, like other commodities, is exported only when its exportation is profit¬ able. It is never sent from England to France or America, unless it be more valu¬ able in these countries than here. It is invariably, in fact, imported and ex¬ ported to find, and never to destroy, its level. And how much soever opinions may vary with respect to the causes which occasion a redundancy of currency—whe¬ ther it should be ascribed to an absolute increase of quantity, to an increase of credit or confidence, or to commercial speculations — the fact that the exchange has fallen, and that bullion is being exported, proves incon- trovertibly that it is redundant; and that, con¬ sequently, the directors of the Bank of Eng¬ land should immediately set about contract¬ ing their issues, to prevent the exhaustion of their coffers, and to check that tendency to hazardous speculations which a redundant currency never fails to promote. And this, in point of fact,is what the direct¬ ors generally do. Being situated in London, the centre, as it were, of the pecuniary trans¬ actions of the empire, and the place at which all foreign bills are made payable, the Bank of England is instantly made aware of any fluctuation of the exchange ; and there being no other establishment with which to divide the responsibility of providing bullion for exportation when the currency becomes re¬ dundant, her issues are usually governed by the state of the exchange ; and it is most for the interest of the Bank, as well as of the public, that they should be so governed. But the vicious part of our currency is, that it is not supplied by one, but by hundreds of issuers, all actuated by conflicting views and interests. A paper currency should, if issued on right principles, always correspond with the standard, that is, it should vary in amount and value precisely as a gold cur¬ rency would do, were the notes withdrawn and coins substituted in their stead. Now to insure this identity between paper and gold, and to avoid those fluctuations in the supply and value of money that are so very injurious, it is indispensable that the issue of notes should be regulated by the influx and efflux of bullion. But, with the single ex¬ ception of the Bank of England, there is hardly another establishment for the issue of notes in the empire whose proceedings are at all influenced by a regard to the exchange. 'I lie joint stock banks and the private banks of England and Wales, whose joint is¬ sues amounted in August 1849 to nearly 6 ,000,OQOZ. are wholly governed by their own separate estimates of what is most for their own interest. Variations of the exchange affect them only indirectly and remotely ; and in regulating their issues they look only to the state of prices and ci edit among their customers. They cannot, indeed, be expected to act otherwise. Sup¬ pose that owing to any circumstance the cur¬ rency becomes redundant, and that the Bank of England is, in consequence, obliged to contract her issues : in such a case the coun¬ try bankers may, and some of them, no doubt, do see that they ought also to contract; but being a very numerous body, comprising se¬ veral hundred establishments, scattered over all parts of the country, each is impressed with the well-founded conviction that all that he could do in the way of contraction would be next to imperceptible, and no one ever thinks of attempting it so long as he feels satisfied of the stability of those with whom he deals. On the contrary, every banker knows, were he to withdraw a portion of his issues, that some of his competitors would most likely embrace the opportunity of fill¬ ing up the vacuum so created; and that, consequently, he should lose a portion of his business, without in any degree lessenin°“ the amount of paper afloat. Hence in nine¬ teen out of twenty cases, the country banks go on increasing their aggregate issues long after the exchange has been notoriously against the country; and when, at last, they are compelled, because of the altered state of things in the metropolis, to pull up, the chances are ten to one that the con¬ traction is carried to an improper extent. It seldom, indeed, occurs without destroying some of the country banks, and provoking a run on the others ; and these are sure to be followed by a total derangement of credit, prices, and of all sorts of speculative en¬ gagements. We have had, and, had the for¬ mer system been maintained, we should, no doubt, have continued to have, a constant al¬ ternation of glut aud deficiency. At one time money was in excess, confidence blind and in- discriminating, and prices high; and at another time money was sure to be deficient, distrust universal, and prices low. It is not easy to exaggerate the evils inseparable from such alternations; they go far to convert indus¬ trious undertakings into mere gambling spe¬ culations ; and render it impossible, even for the most prudent individuals engaged in business, to form at any time any distinct notion of what may be their state twelve months hence. The following statements will evince the truth of what has now been stated. The first great destruction of bank paper 5CT. IV. MONEY. 49.5 <;asioned by a contraction of the currency »nsequent to its previous overissue, took ace in 1792-3. Previously to 1759, the ank of England had not issued any notes r less than 20Z. : but having then com- .enced the issue of 10Z. notes, its paper was j radually introduced into a wider circle, and ie pubiic became more habituated to its nployment as money in their ordinary ansactions. The distress and embarrass- lent that grew out of the American war roved exceedingly unfavourable to the for- iation of country banks, or of any establish- lents requiring unusual credit and confi- ence. No sooner, however, had peace been oncluded than every thing assumed a new ice. Agriculture and commerce, and espe- ially manufactures, into which Sir Richard Arkwright’s inventions had been lately intro- uced, immediately began to advance with rapidity unknown at any former period ; o that the public confidence which had >een very much weakened by the disastrous vents of the war, was soon fully re-esta- >lished. The extended transactions of the ountry required fresh facilities for carrying hem on ; and, in consequence, a bank was irected in every market town, and almost n every village. The prudence, capital, and ;onnections of the individuals who set up hese establishments were but little attended :o. The great object of a large class of raders was to obtain discounts; and the jankers of an inferior description were equally anxious to accommodate them. All >orts of paper were thus forced into circula¬ tion, and enjoyed nearly the same degree of esteem. The bankers, and those with whom they dealt, had the fullest reliance on each other. None seemed to suspect that there was any thing hollow or unsound in the system. Credit of every r kind was strained to the utmost; and the available funds at the disposal of the bankers were reduced far below the level which the magnitude of their transactions required to render them secure. The catastrophe which followed was such as might easily have been foreseen. -The currency having become redundant, the ex¬ changes took an unfavourable turn in the early part of 1792 ; and the Bank of Eng¬ land having been, in consequence, obliged to narrow her issues, a violent revulsion took place in the latter part of 1792 and the be¬ ginning of 1793. The failure of one or two great houses excited a panic which proved fatal to myriads more. V hen this revulsion began, there were, as already stated, about , S50 country banks in England and Wales, of which about 100 were compelled to stop payment, and upwards of 50 were totally destroyed, producing by their fall an extent of misery and bankruptcy that had until then been unknown in England. “ In the general distress and dismay,’* says Mr. Macpherson, “ every" one looked upon his neighbour with caution, if not with suspicion. It was impossible to raise money upon the security of machinery, or shares ot canals ; for the value of such property seem¬ ed to be annihilated in the gloomy appre¬ hension of the sinking state of the country, its commerce and manufactures : and those who had any" money, not knowing where they" could place it with safety, kept it un¬ employed and locked up in their coffers. Amidst the general calamity, the country banks, which had multiplied greatly beyond the demand of the country, for circulating paper currency", and whose eagerness t o push their notes into circulation had laid the found¬ ation of their own misfortunes, were among the greatest sufferers, and, consequently, among the greatest spreaders of distress and ruin among those connected with them ; and they were also the chief cause of the drain of cash from the Bank of England, exceeding any" demand of the kind for about ten years back. Of these banks, above one hundred failed, whereof there were twelve in 1 ork- shire, seven in Northumberland, seven in Lincolnshire, six in Sussex, five in Lanca¬ shire, four in Northamptonshire, four in Somersetshire,” &c. 1 Attempts have sometimes been made to show that this crisis was not really occasioned by an excess of paper having been forced into circulation, but by the agitation caused by the war then on the eve oi breaking out. But there do not seem to be any good grounds for this opinion. The unerring sy*m- ptoms of an overflow of paper — a fall of the exchange, and an efflux of bullion—exhibited themselves early in 1792, or about twelve months before the breaking out of hostilities. Mr. Chalmers states that none of the great houses that failed during this crisis had sustained any damage from the war. 2 r Ihe efforts of the country bankers to force their paper into circulation occasioned the redun¬ dancy of the currency ; and it was on them, and the country" traders and dealers depend¬ ent on them, that the violence of the storm chiefly fell. “ And this circumstance is alone sufhcient to show, that the cause of our commercial maladies arose at home, without infection from abroad; that it arose from the fulness of peace, without the mis¬ fortunes of war. ” 3 It is of importance to remark, inasmuch as it illustrates some of the principles that have been already", and some that will hereafter be laid down, that antecedently to this crisis the Bank of England had no notes for less than 10/. nor the country banks for less than 51. in circulation. The issue of low notes 1 Annals of Commerce, vol. iv. pp. 2G6-7. 2 Comparative Estimate, &c. p. 216. ed. 1812. 3 Ibid., p. 228. 496 MONEY. Note 13 had indeed been expressly forbidden by repeated acts of parliament; and it was perhaps supposed that this limitation of their value would prevent them from being issued in excess, and driving gold coin from circulation. But if such notions were really entertained, the result showed their fallacy. The ease with which supplies of paper were procured from the country bankers, occa¬ sioned its employment in an immense number of transactions previously carried on by means of specie ; and ultimately occasioned that overflow of the currency and fall of the exchange which led to the crisis. The next, and certainly the most important, crisis in the history of the paper currency of Great Britain took place in 1797. Owing partly to events connected with the war in which we were then engaged, to loans to the emperor of Germany, to bills drawn on the treasury by the British agents abroad, and partly and chiefly, perhaps, to the large advances made by the Bank of England to government, the exchange became unfavour¬ able in 1 1 95, and in that and the following year large quantities of specie were demanded from the Bank. No doubt, however, the ultimate crisis was wholly owing to political causes. Alarms with respect to invasion, and reports of descents said to have been made on the coast, became exceedingly prevalent in the latter part of 1796 and the beginning of 1797. This produced a strong desire among many individuals, but chiefly among the small farmers and retail dealers, to convert as much as possible of their pro¬ perty into cash. Ideavy runs were in con¬ sequence made upf the very large additions that the opening »f so many new banks suddenly made to the lumber of notes afloat, and still more to the lumber of bills, checks, and other substi- utes for money, the currency became redun- lant, and the exchange depressed; and the leficient harvests of 1838 and 1839 conspir- ng with this redundancy, occasioned a far- her fall in the exchange, and a severe drain lpon the Bank of England for gold. But while he latter w r as narrowing her issues by sup¬ plying the exporters of bullion with gold in jxchange for notes, the country banks went pn increasing their issues ! What the former lid by contracting, on the one hand, the latter more than undid by letting out on the other. The vacuum created by the withdrawal of bank of England paper was immediately fill- ad up and made to overflow by the issue of a more than equal amount of country paper: so that, had it not been for the rise in the rate of interest, and the other repressive mea¬ sures adopted by the Bank, the probability is, she might have gone on paying away bul¬ lion for notes till she had been drained of her last sixpence, without in any degree affect¬ ing the exchange ; and as it was, the bullion in her coffers in August 1839 was reduced to 2,420,000/., so that we narrowly escaped a tremendous crisis. This perilous experience having again for¬ cibly attracted the public attention to the state of our banking system, Sir Robert Peel was induced to attempt its improvement. The clause in the act 3 & 4 Will. 4. c. 98, which renewed the charter in 1833, gave to parlia¬ ment power to revise or cancel it in 1845, and thus afforded a legitimate opportunity for the introduction of the new system. But, however desirable, the total suppression of the issue of notes by joint-stock and private bank¬ ing companies would have been a measure too much opposed to popular prejudices, and to the real or supposed interests of a large and powerful class, to have had any chance of being carried; and there were also great, though inferior, difficulties in the way of the plan for taking security from the issuers. It was in¬ deed indispensable, in attempting to obviate the defects inherent in our banking system, to proceed cautiously, to respect, in as far as possible, existing interests, and to avoid taking any step that might excite the fears or suspicions of the public ; the grand diffi¬ 505 culty being to reconcile the introduction of such a course with the adoption of any plan that would obviate in any considerable degree the defects complained of. Happily this diffi¬ cult problem was satisfactorily solved by Sir Robert Peel; the measures he introduced and carried through parliament in 1844 and 1845, for the improvement of our banking system, having been so skilfully contrived as to pro¬ voke little opposition, at the same time that they effected very extensive and most bene¬ ficial changes. The measures in question consisted of the act 7 and 8 Viet. c. 32, which refers to the Bank of England, and the English country banks ; and the acts 8 & 9 Yict. c. 38, 37, referring to the banks of Scotland and Ireland. These statutes were intended to obviate the chances of over-issue and of sudden fluctua¬ tions in the quantity and value of money, by limiting the power to issue notes payable on demand, and by making the amount of such notes in circulation vary more nearly than previously with the amount of bullion in the possession of the issuers. Sir Robert Peel adopted, in dealing with the Bank of Eng¬ land, the proposal made by Mr Loyd, in 1837, for effecting a complete separation be¬ tween the issuing and banking departments of that establishment. And while the Direc¬ tors are left at liberty to manage the latter at discretion ; their management of the former, or issue department, is subjected to what seems to be a well-devised system of restraint. The Bank is allowed to issue 14,000,000/. of notes upon securities (of which the debt of 11,015,100/. lent by her to government is a part) ; and whatever paper the issue de¬ partment may at any time issue over and above this maximum amount of securities, it must have an equal amount of coin and bullion in its coffers. 1 Hence it is imprac¬ ticable for the issue department to increase its issues without, at the same time, propor¬ tionally increasing its stock of coin and bul¬ lion ; or to diminish the latter without propor¬ tionally diminishing the amount of paper supplied to the public and the banking de¬ partment. And therefore if the latter issued the whole notes assigned to it, the total amount issued by the issue department and the amount in circulation would be identical; and it might under such circumstances be truly said that, in so far as the currency consists of bank of England notes payable on demand, it va¬ ried in amount and value as it would do were it wholly metallic, and, consequently, by being so closely identified with the standard, realised the beau ideal of a paper currency. But, though the currency approaches to, it Las not arrived at this degree of perfection. 1 A clause is inserted in the act allowing the 13ank to increase her issue upon securities, in the event of her notes being issued instead of these of any or of all the existing banks of is^ue. MONEY. f 506 MONEY. Note IX. The public does not deal alone with the issue, but also, and to a far greater extent, with the banking department. And this latter de¬ partment retained such a portion of the notes issued to it by the former, under the 2d clause of the 7 & 8 \ ict. cap. 32, as was supposed at the time to be sufficient to carry on its business, their amount having since varied with the varying demands for bullion, the sales and purchases of securities, &e. But it is sufficient, in illustration of what is now stated, to observe that during the week ended the 4th of November 1848, notes to the amount of 26,796,660/. had been issued to the public and the banking department, of which the latter had 8,242,575/. in its cof¬ fers. making the sum in the hands of the public 18,554,085/. And as it is some¬ times supposed that the banking department might issue this sum of 8,242,575/., or the spare notes at any time in its coffers, in the discount of bills, or any other way, it is concluded that there is still room for some, though but little, derangement of the cur¬ rency from mistaken proceedings on the part of the Bank ; and this, no doubt, may be sometimes true, at least to some extent. * But it is idle to suppose that the banking depart¬ ment could carry on business without a large reserve of notes or of coin. This department may have, owing to a variety of circumstan¬ ces, to meet a drain for deposits ; and as it is very unsafe to trust to the sale of securities in periods of discredit, a very considerable supply of notes or of bullion, or of both, can never be advantageously or safely dispensed with. This shows the little weight to be attached to the statements of those who contend that the late measure has laid no real restraint on the issues of the Bank, because, say they, she has a large reserve of unissued notes which she might legitimately throw on the market. But in truth and reality she can do nothing of the sort. A reserve is indispensable, not only to her safety, but to her ability to carry on banking business. More vigilance and caution are now required on the part of the Bank Directors than formerly; for otherwise the banking department of the Bank may be reduced to the greatest difficulties, without its being possible for it to obtain any assistance from the issue department, how able soever the latter might be to render it. This was strikingly evinced in the autumn of 1847 ; and nothing but the exercise of a proper degree of foresight and caution can prevent its recurrence. No gold can now be obtain¬ ed from the issue department except in ex¬ change for notes ; nor can the latter be ob¬ tained from it except in exchange for gold. Hence it is no longer, as formerly, in the power of the Bank to create paper money at pleasure to supply the place of cash in any emergency in which she may be involved ; and instead of less, she requires to act with more circumspection under the new system than under the old. But though the check on the over-issue of bank notes be thus nearly effectual, it appears rather singular that no check should be es¬ tablished on the issue of bank post-bills, a- mounting to about a million, which are and may be substituted for notes. No doubt, however, were the Bank (which is hardly to be imagined) to abuse the privilege of issuing post-bills, by making advances in them which she could not have made in notes, measures would be taken to prevent the abuse; and perhaps, on the whole, it was as well to postpone devising means for the prevention of what seems so unlikely to oc¬ cur. Weekly returns are published of the issues of the Bank, and of the securities, bullion, &c., in her possession ; and the charter is con¬ tinued till twelve months’ notice after the 1st of August 1855. The provisions made in this act for re¬ straining the country circulation were, per¬ haps, still more important. The maximum future issue of the joint-stock and other banks in England andWales was limited to the average amount of the circulation of each during the twelve months preceding the 27th of April 1844; the aggregate being 3,477,321/. for the joint-stock, and 5,011,097/. for the pri¬ vate banks. It was farther enacted that no new bank should be established for the issue of notes; and that the names of the partners in joint-stock and other banks, which had pre¬ viously been obtained by the Stamp-office, should be periodically published. The regulations in the statutes relating to banking in Scotland and Ireland are nearly similar. The maximum amount of notes to be issued by the banks of both countries is, in time to come, not to exceed the average amount which each bank had in circulation during the twelve months ending the 1st May 1845. Certain returns, including amongst others the amount of gold and silver coin held by the banks, the names of the partners, &e., are periodically published. The small- note currency of Scotland was not affected by the measure. It is impossible to doubt that these regula¬ tions interpose a formidable obstacle to over¬ issue ; and that, consequently, they discourage over-trading, and tend to reduce both the number and the violence of those commercial revulsions and changes in the value of money, that have always been, and must necessarily continue to be, productive of the greatest mischief. No one ever pretended to say that these or any other measures which could be adopted with respect to the currency would wholly prevent unsafe speculation and over¬ trading. These may originate in an endless variety of circumstances; but in times past the tendency to speculation and gambling, when once set on foot, was, in most cases, MONEY. 507 SCT. V. iwerfully stimulated by the facility which inks then possessed of issuing additional aantities of paper ; and of that facility they :e now all but deprived. It is, perhaps, i - U e, that the fair and legitimate influence of ie acts now referred to may be in some de- ree countervailed by the circulation to a reater extent than formerly of bills and other )rts of paper not payable on demand, but at lort dates; and it is not improbable that joner or later the question may arise, whe- ler any regulations should be adopted in re- ard to the issue of such paper. In so far, owever, as respects the issue of paper money , r notes payable on demand, the regulations 1 the act of 1844 appear to have left little to e desired. No doubt, also, numbers of the rivate and other banks that now issue notes ;ill from time to time wind up their affairs ; nd as no new banks of issue can be estab- iS hed in their stead, the vacuum caused by he withdrawal of their notes will be supplied >y those of the Bank of England ; so that a radual progress will be made towards the de- irable consummation of having only one )ank of issue. It is sometimes contended, by those opposed o the policy of limiting the issues, that they iever can be in excess so long as they arc )ayable on demand. Such, however, is not he case : notes payable, and ready paid, on lemand cannot, it is true, fall below the value >f specie in the country in which they are ssued ; but the check of payment in specie toes not, in fact, begin to operate till their i )ver-issue has depreciated the value of the .vhole currency, gold as well as paper, in such country, below its level in the surrounding :ountries, and till, consequently, the exchange becomes unfavourable, and it is advantageous to export gold. Then, of course, the over-issue is stopped, but such stoppage is almost always accompanied by a great deal of public distress and inconvenience; while it by no means ne¬ cessarily folloAvs that any considerable portion of the loss thence arising will fall on those banks by whose misconduct or over-issue the fall in the exchange and the demand for bul- 1 lion may have been occasioned. The measures adopted in 1844, though they deeply affected many powerful private inte¬ rests, were passed with little difficulty, and were very generally approved of. In this respect, however, public opinion subsequent¬ ly varied a little ; and the act of 1844 was charged by various parties with having ag¬ gravated the pressure experienced by the i mercantile world in 1847. But we are sa- I tisfied that there is no real ground for any , such imputation. The crisis of 1847 was a consequence, partly of the railway mania of the previous year, and partly of the fail- i ure of the potato crops of 1845 and 1846. The failure in the latter year deprived fully two thirds of the people of Ireland, and a considerable portion, also, of those of Great Britain, of their accustomed supplies of food. In consequence of this deficiency, and of go¬ vernment having come forward to provide the means for its relief, there was an unprecedent¬ ed importation of all sorts of corn; and the demand for bullion for exportation to meet this importation, occurring simultaneously with a vast railway expenditure, pecuniary accommodations were obtained with the great¬ est difficulty, and the rate of interest rose to an extraordinary height. Instead, however, of being increased by the act of 1844, it is abundantly certain that the operation of the latter contributed to alleviate the severity of the crisis. The restraints it imposed on the issues of the country banks had hindered them from embarking to any great extent in rail¬ way adventures, so that they were better able to assist their customers ; and it also prevented the Bank of England from attempting to meet the exigencies of the case, otherwise than by raising the rate of interest, and restricting her issues. And besides being the natural and proper, these were, in fact, the only means by which the value of bullion could be raised in this country, its demand for foreign remittance checked, and the exchange turned in our favour. A great many mercantile houses that had been trading upon very insufficient capi¬ tals, or which had previously been virtually insolvent, were, of course, swept off during the crisis ; and the alarm that was thereby occasioned, though for the most part without any good foundation, gave rise to a species of panic. During the prevalence of the latter, government consented (25th October 1847) to a temporary suspension of the act of 1844 ; but there is, we believe, little doubt that this was an unwise proceeding. AV hen it took place the violence of the crisis had abated. The drain for gold for exportation had not only ceased, but it had begun to set in our fa¬ vour ; and the probability is, that in a few days all alarm would have passed off, without the dangerous precedent which was set by the interference of ministers. Hence, in our view of the matter, the experience afforded by the crisis of 1847 tells strongly in favour of the act of 1844. But for its influence, it is most probable that the Bank would have attempted to meet the demand for bullion without raising the rate of interest, at least to the extent to which she did raise it; and if so, we should have been exposed to the imminent risk of a suspension of cash payments. 11, therefore, the act of 1844 should be subjected to any modifications, it is to be hoped that they may be such as may tend to carry out and strengthen the principles on which it is founded. The act of 1708, preventing more than six individuals from entering into a partnership for carrying on the business of banking, did not extend to Scotland. In consequence of 508 MONEY. this exemption, several banking companies, with numerous bodies of partners, have al- > ways existed in that part of the empire. The Bank of Scotland was established by act of Parliament in 1695. By the terms of its charter it enjoyed, for twenty-one years, the exclusive privilege of issuing notes in Scot¬ land.. Its original capital was only 100,000/.; but it was increased to 200,000/. in 1744, and now amounts to 1,500,000/., of which 1,000,000/. has been paid up. The Royal Bank of Scotland was establish¬ ed in 17 2 7. Its original capital was 151,000/.; at present it amounts to 2,000,000/., which has been all paid up. The British Linen Company was incorpor¬ ated, in 1746, for the purpose, as its name implies, of undertaking the manufacture of linen. But the views in which it originated were, speedily abandoned, and it became a banking company only. Its paid up capital amounts to 500,000/. Exclusive of the above, there are two other chartered banks in Scotland: the Com¬ mercial Bank, established in 1810; and the National Bank of Scotland, established in 1825. The former has a paid up capital of 600,000/., and the latter of 500,000. None.of the other banking companies esta¬ blished in Scotland are chartered associations; and the partners are jointly and individually liable to the whole extent of their fortunes for the debts of the firms. Almost all the private banks have been merged in joint-stock associations, the greater number of which have numerous branches; so that there is hardly a town or village of any consequence without two or more banks. The Bank of Scotland began to issue one- pound notes as early as 1704, and their issue has since been continued without interrup¬ tion. All the Scotch banks issue notes ; and taking their aggregate authorised circulation at 3,000,000/., it is supposed that above 2,000,000/. consists of notes for 11. In 1826 it was proposed to suppress one-pound notes in Scotland as well as in England; but the measure having been strongly objected to by the people of Scotland, as being at once op¬ pressive and unnecessary, it was abandoned. There have been very few bankruptcies amongst the Scotch banks. This superior stability is to be ascribed to a variety of causes; partly to the great wealth of the early established banks, which had a consi¬ derable influence in preventing an inferior class of banks from acquiring any hold on the pub¬ lic confidence; partly to the comparatively little risk attending the business of banking in Scotland; partly to the facilities afforded by the Scotch law for attaching a debtor’s property, whether it consist of land or move¬ ables ; and partly and principally, perhaps, to the fact of the Scotch banks being but indi- Note IX. rectly and slightly affected by a depression ol the exchange and an efflux of bullion. The circumstances now mentioned rendei it unnecessary to enforce that suppression oi local issues in Scotland which is so indispen¬ sable in England, where the system of pro vmual banking is of a very inferior descrip¬ tion, the risk attending the business mucli greater, and where any excess in the amount of the currency necessarily occasions a fall of the exchange and a demand for bullion. . The commerce and population of Scotland are too limited, and that country is too remote from the metropolis, or from the centre of the' moneyed world, the pivot on which the ex¬ changes turn, to make it of importance that her currency should be identical with that of England. We believe that the Scotch attach far more importance than it deserves to the issue of paper, and especially to the issue of one-pound notes; still, however, we do not think that the circumstances are at present such as to call for or warrant any attempt to introduce any material changes in their bank¬ ing system. All the Scotch banks receive deposits of the low amount of 10/., and allow interest on them at from one to two per cent, below the market rate. But should a deposit be un¬ usually large, as from 5,000/. to 10,000/., a special agreement is usually made with regard to it. This part of the system has been par¬ ticularly advantageous. It, in fact, renders the Scotch banks a sort of savings’ banks for all classes ; and their readily receiving all sorts of deposits at a reasonable rate of interest, has tended to diffuse a spirit of economy and parsimony among the people that would not otherwise have existed. The total deposits in the hands of the Scotch banks are believed, as previously stated, to amount at present (1849) to above 30,000,000/., of which fully a halt is understood to be in sums varying from 10/. to 300/. The system of cash-credits in Scotland has been already described, see ante , p. 130. ~?? e k an k of Ireland was established in 1783, and the same restriction as to the num¬ ber of partners in other banks that formerly pie’v ailed m England was enacted in its favour. Owing to that and other causes the bankrupt¬ cies of private banks has been more frequent in Ireland than in England. In 1821 this restriction was repealed, as respects all parts or the country more than 50 Irish miles from Dublin.. Since that period several banking companies, with large bodies of partners, have been set on foot in different parts of the country: of these the Provincial Bank, found¬ ed on the Scotch model, is among the most flourishing. The charter of the Bank of Ire¬ land has been prolonged till 1855. The Irish banks, like the Scotch, issue notes for 1/. MONEY. 509 CT. V. bles of Bank Notes in Circulation, and of the Amount of Bullion, Securities, &C. HELD BY THE BANK OF ENGLAND. -Account of the Amount of the Notes of the Bank of England in Circulation, of the Deposits in the Hands of the Bank, of all Securities held by the Bank, of Bullion in her Joffers, and of the Rest, or Surplus Capital of the Bank, on the last Day of February in iach of the following Years. Years. Notes in Circulation. Deposits. . 1 Public Securities. Private Securities. Bullion. Rest, or Sur¬ plus Capital 1778 7,440,330 4,662,150 7,898,292 3,322,228 2,010,690 1,128,730 1779 9,012,610 4,358,160 8,862,242 2,073.668 3,711,150 1,276,290 1780 8,410,790 4,723,890 9’, 145,659 1,755,371 3,581,060 1,347,410 1781 7,092,450 5,796,830 8,640,073 2,546,067 3,279,940 1,576,800 1782 8,028,880 6,130,300 10,346,055 3,448,015 2,157,860 1.792,750 1783 7,675,090 4,465,000 10.016,349 2,779,431 1,321,190 1,976,880 1784 6,202,760 3.903,920 7,789,291 3,829,929 655,840 2,168,380 1785 5,923,090 6,669,160 7,198,564 4,973,926 2,740,820 2,321,060 1786 7,581,960 6,151,660 6,836,459 3,516,781 5,979,090 2,598,710 1787 8,329,840 5,902,080 7,642,587 3,716,463 5,626,690 2,753,820 1788 9,561,120 5,177,050 7,833,857 4,030,653 5,743,440 2,869,780 1789 9,807,210 5,537,370 8,249.582 2,711,108 7,228,730 2,844,840 1790 10,040,540 6,223,270 8,347,387 1,984,733 8,633,000 2,701,310 1791 11,439,200 6,364,550 10,380,358 2,222,282 7,869,410 2,668,300 1792 11,307,380 5,523,370 9,938,799 3,129,761 6,468,060 2,705,870 1793 11,888,910 5,346,450 9,549,209 6,456,041 4,010,680 2,780,570 1794 10,744,020 7,891,810 9,950,756 4,573,794 6,987.110 2,875,830 1795 14,017,510 5,973,020 13,164,172 3,647,168 6,127,720 2,948,530 1796 10,729,520 5,702,360 12,951,812 4,188,028 2,539,630 3,247,590 1797 9,674,780 4,891,530 11,714,431 5,123,319 1.086,170 3,357,610 1798 13,095,830 6,148,900 11,241,333 5,558,167 5,828,940 3,383,710 1799 12,959,800 8,131,820 11,510,677 5,528,353 7,563,900 3,511,310 1800 16,844,470 7,062,680 13,975,663 7,448,387 6,144,250 3,661,150 1801 16,213,280 10,745,840 15,958,011 10,466,719 4,640,120 4,105,730 1802 15,186,880 6,858,210 14,199,094 7,760,726 4,152,950 4,067,680 1803 15,319,930 8,050,240 9,417,887 14,497,013 3,776,750 4,321,480 1804 17,077,830 8,676,830 14,684,686 12,314,284 3,372,140 4,616,450 1805 17,871,170 12,083,620 16,889,501 11,771,889 5,883,800 4,590,400 1806 17,730,120 9.980,790 14,813,599 11,777,471 5,987,190 4,867,350 1807 16,950,680 11,829,320 13,452,871 13,955,589 6,142,840 4,771,300 1808 18,188,860 11,961,960 14,149,501 13,234,579 7,855,470 5.088,730 1809 18,542,860 9,982,950 14,743,425 14,374,775 4,488,700 5,081,090 1810 21,019,600 12,457,310 11,322,634 21,055,946 3,501,410 5,403.080 1811 23,360,220 11,445,650 17,201,800 19,920,550 3,350,940 5,667,420 1812 23,408,320 11,595,200 22,127,253 15,899,037 2,983,190 6,005,960 1813 23,210,930 11,268,180 25,036,62 6 12,894,324 2,884,500 6,336,340 1814 24,801,080 12,445,460 23,630,317 18,359,593 2,201,430 6,937,800 1815 27,261,650 11,702,250 27,512,804 17,045,696 2,036,910 7,631,510 1816 27,013.620 12,388,890 19,425,780 23,975,530 4,640,880 8,639,680 1817 27,397,900 10,825,610 25,538,808 8,739,822 9,680,970 5,736,090 1818 27,770,970 7,997,550 26,913,360 3,991,970 10,055,460 5,192,270 1819 25,126,700 6,413,370 22,355,115 9,099,885 4,184,620 4,099,550 1820 23,484,110 4,093,550 21,715,168 4,472,322 4,911,050 3,520,880 1821 23,884,920 5,622,890 16,010,990 4,785,280 11,869,900 3,158,360 1822 18,665,350 4,689,940 12,478,133 3,494,947 11,057,150 3,674,940 1823 18,592,240 7,181,100 13,658,829 4,660,901 10,384,230 3,130,620 1824 19,736,990 10,097.850 14,341,127 4,530,873 13,810,060 2,847,220 1825 20,753,760 10,168,780 19,447,588 5,503,742 8,779,100 2,807,890 1826 25,467,910 6,935,940 20,573,258 12,345,322 2,459,510 2,974,240 1827 21,890,610 8,801,660 18,685,015 4,844,515 10,159,020 2,996,280 1828 21,980,710 9,198,410 19,818,777 3,762,493 10,347,290 2,749,710 1829 19,870,850 9,553,960 19,736,665 5,648,085 6,835,020 2,794,960 1830 20,050,730 10,763,150 20,038,890 4,165,500 9,171,000 2,561,510 1831 19,600,140 11,213,530 19,927,572 5,281,108 8,217,050 2,612,360 1832 18,Q51,710 8,937,170 18,497,44-8 5,836,042 5,293,150 2,637,760 1 510 Note 13 MONEY. II. Account of the Liabilities, Assets, and Surplus, or Rest, of the Bank of England • ordered by the Act 3 and 4 Will. IY. c. 98. 1834. Notes in Circulation. Deposits. Securities. Bullion. Best, or Sur¬ plus Capital. -— January March May July August October December 1 4 6 1 26 21 18 18.216.000 18,700,000 18,978,000 18,895.000 19,147,000 18,914,000 18,304,000 13,101,000 14,418,000 14.081.000 15,096.000 15,384.000 13,514.000 12,256,000 23.596,000 25.547,000 26.691,000 27,593.000 28.679.fXX) 27,840,000 26,362,000 9,948,000 9,529,000 6.884.000 8.695,000 6.272,000 7,123.000 6,720,000 2,207.000 2.258,000 2,516,000 2,261.000 2,420.000 2,535,000 2,522,000 1835. January March May June August October December 15 10 5 30 25 20 15 18.012,000 18,? 11.000 18.542.000 18,315.000 18.340.000 17.930,000 17,821,000 12^5.000 12.261.000 10,726.000 10.954,000 12.308.000 14.227.0u0 17,729,000 26.390.000 26.657,000 25,764,000 25.678.000 26,964.000 28.661,000 31,048,000 6.741.000 6.536.(XX) 6.197.000 6.219,000 6,326,0(X) 6.186.0nsider the liberty of importation, granted v the act of 1773, as injurious to their inte¬ nts, inasmuch as it prevented prices from sing with the increased demand. A cla- our, therefore, was raised against that law ; id, in addition to this interested feeling, a •ead of becoming habitually dependent on reign supplies of corn operated on many, id produced a pretty general acquiescence the act of 1791. By this act the price, hen importation could take place from iroad at the low duty of 6c/., was raised to Is., under 54s. and above 50s. a middle utv of 2s. 6c/., and under 50s. a prohibi- >ry duty of 24s. 3c/. was charged. The ountv continued as before, and exportation ithout bounty was allowed to 46s. It was Iso enacted, that foreign wheat might be im- orted, stored under the king’s lock, and again xported free of duty; but if sold for home onsumption, it became liable to a warehouse uty of 2s. 6c/. in addition to the ordinary du¬ es payable at the time of sale. In 1797 the Bank of England obtained n exemption from paying in specie; and le consequent facility of obtaining discounts nd getting a command of capital, which : iis measure occasioned, gave a fresh stimu- is to agriculture ; the efficacy of which was lost powerfully assisted by the scarcity and igh prices of 1800 and 1801. An agricul- ural mania now seized the nation; and as he prices of 1803 would not allow the cul- ivation of the poor soils, which had been roken up in the dear years, to be continued, new corn law, being loudly called for by he farmers, was passed in 1804. r I his law mposed a prohibitory duty of 24$. 3 d. per uarter on all wheat imported when the home •rice was at or below 63$.; between 63$. and 16$. a middle duty of 2$. 6 d. was paid ; and bove 66$. a nominal duty of 6c/. The price t which the bounty was allowed on exporta- ion was extended to 50$.; and exportation vithout bounty to 54$. By the act of 1791, he maritime counties of England had been ilivided into 12 districts, and importation and xportation had been regulated by the parti- ■ular prices of each ; but by the act of 1804 hey were regulated in England by the aggre- 1 ;ate average of the twelve maritime districts, tnd in Scotland by the aggregate average of he four maritime districts. The averages, as at present, were taken at four periods of the year, and the ports could not remain open or shut for less than three months. This method of ascertaining prices was, however, modified in the following session, and it was then fixed that importation both in England and Scot¬ land should be regulated by the average price of the whole twelve maritime districts. In 1805 the crop was very considerably deficient, and the average price of that year was about 22$. per quarter above the nrica at which importation was allowed ^y the act of 1804. As the depreciation of paper, compared with bullion, was then only lour per cent., the high price of that year must have been owing to the new law, prevent¬ ing any importation of foreign grain till the home price had attained to a high elevation, and then cramping mercantile operations; and to the obstacles which the war threw generally in the way of commerce. In 1806, 1 1807, and 1808. the depreciation of paper, compared with bullion, continued at nearly three per cent. But though the price of wheat in those years was nearly 80s. a quarter, only a small importation took place. From autumn 1808 to spring 1814, the deprecia¬ tion of the currency was unusually great; and several crops in that interval being likewise deficient, the price of corn, in¬ fluenced by both causes, rose to a surpris¬ ing height. At that time no vessel could be laden in any continental port for Eng¬ land, without purchasing a license ; and the freight and insurance were at least four times as high as during peace. But, in the autumn of 1813, the destruction of Napo¬ leon’s anti-commercial system having in¬ creased the facilities of importation, a large quantity of corn was poured into the king¬ dom; and in 1814 its bullion price was re¬ duced below the limit at which importation was allowed. Before this fall of price, a committee of the House of Commons had been appointed to inquire into the state of the laws affecting the corn trade ; and recommended in their Report (dated 11th May 1813) a very great extension of the rates at which exportation was formerly allowable, and when import¬ ation free of duty could take place. The recommendation of this committee was not adopted by the House ; but the fact of its having been made when the home price was at least 112$. per quarter, displays a sur¬ prising degree of solicitude to exclude lo- l Several impolitic restraints had been for a long time imposed on the free importation and expoitation of corn between Great Britain and Ireland, but they were wholly abolished in 1806 ; and the act of that year (46 Geo. III. c. 97j esta¬ blishing a free trade in corn between the two great divisions of the empire, was not only a wise and proper measure in itself, but has powerfully contributed to promote the gcncial advantage. L 1 511 CORN LAWS AND CORN TRADE. Note a reigners from all competition with the home growers. The lessening of the dependence of the country on foreign supplies formed the sole ostensible ground on which the committee of 1813 proposed an alteration in the act of 1804. But after the fall of price in 1813, and in the early part of 1814, it became ob¬ vious, on comparing our previous prices with those of the continent, that without an al¬ teration of the existing law, this dependence would be a good deal increased: that a con¬ siderable extent of such poor lands as the previous high prices had forced into cultivation would be again thrown into pasturage, and that a corresponding reduction of rent would most likely be experienced. These con¬ sequences alarmed the landlords and occu¬ piers, and in the early part of the session of 1814, a new set of resolutions were voted by the House of Commons, declaring that it was expedient to repeal the bounty, to per¬ mit the free exportation of corn, whatever might be the home price, and to impose a graduated scale of duties on the importation of foreign corn. Thus, foreign wheat im¬ ported when the home price was at or under 64s. was to pay a duty of 24s.; when at or under 65s. a duty of 23s., and so on till the home price should reach 86s., \vhen the duty was reduced to Is., at which sum it became stationary. Corn imported from Canada, or the other British colonies in North Ame¬ rica, was to pay half the duties on other corn. As soon as these resolutions had been agreed to, two bills founded on them, one for regulating the importation of foreign corn, and another for the repeal of the bounty, and for permitting unrestricted exportation, were introduced. Little atten¬ tion was paid to the last of these bills, but the one imposing fresh duties on im¬ portation encountered a very keen oppo¬ sition. The manufacturers, and every class not directly supported by agriculture, stig¬ matised it as an unjustifiable attempt arti¬ ficially to keep up the price of food, and to secure excessive rents and large profits to the landlords and farmers, at the expense of the consumers. Meetings were very gene¬ rally held, and resolutions entered into, strongly expressive of this sentiment, and dwelling on the fatal consequences which, it was affirmed, a continuance of the high prices would have on our manufactures, in a season of peace, and when we could no longer monopolise the commerce of the world. This opposition, coupled with the indecision of ministers, and perhaps, too, with an ex¬ pectation, on the part of the landlords, that prices would again rise, without any legis¬ lative interference, caused the miscarriage of this bill. The other bill, repealing the bounty, and allowing an unlimited freedom ot exportation, was passed into a law. Committees were appointed, in 1814, D both houses of parliament, to examine evi dence and report on the state of agriculture and in consequence a number of the mos eminent agriculturists were examined. Th witnesses were unanimous in this only, thd the protecting prices, fixed in 1804, wer insufficient to enable the farmers to mak good the engagements into which they ha* subsequently entered, and to continue th cultivation of the inferior lands lately brougli under tillage. Some of them thought tha 120s. ought to be fixed as the limit whe: the importation of wheat free of duty shoul be allowed : others varied from 90s. to 100i —from 80s. to 90s.—and a few from 70s. t 80s. The general opinion, how r ever, seeme to be, that 80s. w^ould suffice ; and as price continued to decline, a set of resolutions founded on this assumption, were submitte to the House of Commons by Mr Robinso: of the Board of Trade (now Lord Ripon and having been agreed to, a bill founded o them was, notwithstanding a vigorous oj position, carried in both Houses by larg majorities, and finally passed into a lav (55th Geo. III. c. 26.) According to this act all sorts of foreig: corn, meal or flour, might at all times be iir ported free of duty, into any port of th United Kingdom, for warehousing; bu foreign corn was not permitted to be take: out of the warehouse for home consumptior except when the average prices of British corn were as follows, viz. wheat 80s. pe quarter; rye, pease, and beans, 53s.; barle} bear or bigg, 40s.; and oats 26s.: And al importations of corn from the British planl ations in North America were forbidden except when the average home prices wer at or under, wheat 67s. per quarter ; rye pease, and beans, 44s.; barley, bear, or big 2 33s. and oats 22s.: And it v’as also enactec that “ if it shall at any time appear that th average price of British corn, in the si:j weeks immediately succeeding the 15th Fe bruary, 15th May, 15th August, aud lot^ November in each year, shall have failed below the prices at which foreign corn! meal or flour, are by law allowed to be iiq ported for home consumption, no sucl foreign corn, meal, or flour shall be allowed to be imported into the United Kingdom for home consumption, from any place ba tween the rivers Eyder and Garonne, botfl inclusive, until a new average shall be madi up and published in the London Gazette for regulating the importation into th*j Lhiited Kingdom for the succeeding quar ter.” The agriculturists confidently expected that this act would immediately raise prices*, and render them steady at about eighni shillings. But for reasons which will b«! afterwards stated, these expectations were en COEN LAWS AND COEN TRADE. 515 ; ART I. rely disappointed. In 1821, when prices id sunk very low, the House of Commons ipointed a committee to inquire into the mses of the depressed state of agriculture , nd to report their observations thereupon. 'his committee examined a number of I itnesses, and drew up a Report, which, I tough not free from error, may be referred j . with advantage. It contains a forcible ^position of the pernicious effects arising I ora the provisions of the law of 1815, i * which it suggested several important odifications. These, however, were not lopted; and as the low prices and conse- | lent distress of the agriculturists still >ntinued, the subject was again brought ; ider the consideration of parliament in the l llowing year. After a good deal of dis- lssion, a new act was then passed, (3 Geo. i V. cap, 60,) by which it was enacted, that : r lcr prices had risen to the limit of free im¬ itation fixed by the act of 1815, that act as to cease, and the new statute to come to operation. This statute lowered the i dees fixed by the act of 1815, at which im¬ itation was permitted for home consump- on, to the following sums, viz.: For corn not of the British pos¬ sessions in Horth America. Wheat, - - - 70s. per qr. Rye, pease, and beans, 46 s. — Barley, bear, or bigg, 35s. — 25s. ’ For corn of the British posses¬ sions in North America. 56s. per qr. 39s. — 30s. — 20s. — To prevent any violent oscillation of prices om suddenly throwing a large supply of reign grain upon the market, it was en- i ;ted that a duty of seventeen shillings a larter should be laid on the wheat im- i-orted from foreign countries during the ;st three months after the opening of the 13rts, if the price was between seventy i id eighty shillings a quarter, and of twelve idlings afterwards; that if the price was 3 tween eighty and eighty-five shillings, the uty should be ten shillings for the first iree months, and five shillings afterwards; id that if the price should exceed eighty- ve shillings, the duty should be constant at ! ae shilling, and proportionally for other sorts j f grain. i This act, by preventing importation until ! le home price rose to severity shillings, id then loading the imports which took ' lace between that limit and the limit of ighty-five shillings, with heavy duties, was jrtainly more favourable to the views of the ^riculturists than the act of 1815. But, uluckily for them, the price of no variety i f corn, except barley, was sufficiently high ! hile this act was in force to bring it into I peration; so that it remained, with the bove exception, a dead letter. In 1825, an approach was made to a bet- 1 it system, by permitting the importation of i 'heat from the British possessions in North America without reference to the price at home, on payment of a duty of five shillings a quarter. But the act was passed with dif¬ ficulty, and was limited to one year’s dura¬ tion. Owing to the drought that prevailed dur¬ ing the summer of 1826, there was every prospect that there would be a great defi¬ ciency in the crops of that year ; and, to prevent the disastrous consequences that might have taken place, had importation been prevented until the season was too far advan¬ ced for bringing supplies from the great corn markets in the north of Europe, his Majesty was authorised to admit 500,000 quarters of foreign wheat, on payment of such duties as the order in council for its importation should declare. And when it was ascertained that the crops of oats, pease, &c., were greatly below an average, ministers issued an order in council, on the 1st of September, autho¬ rising the importation of oats on payment of a duty of two shillings a quarter, of oatmeal on payment of two shillings and twopence a boll, and of rye, pease, and beans, on payment of a duty of three shillings and sixpence a quarter. A considerable quantity of oats was imported under this order ; the timely appearance of which had undoubtedly a very considerable effect in mitigating the pernicious consequen¬ ces arising from the deficiency of that variety of grain. Ministers obtained an indemnity for this order on the subsequent meeting of parliament. Nothing could more strikingly evince the impolicy of the acts of 1815 and 1822, than the necessity under which the legislature and government had been placed, of passing the temporary acts, and issuing the orders alluded to. The more intelligent portion of the agriculturists began also to perceive that the corn laws were not really productive of the advantages they had anticipated ; and the conviction that increased facilities should be given to importation became general throughout the country. The same convic¬ tion made considerable progress in the House of Commons ; and several members who had supported the measures adopted in 1815 and 1822, expressed themselves satisfied that the principle of exclusion had been carried too far, and that a more liberal system should be adopted. Ministers having participated in these sentiments, Mr Canning moved a series of resolutions, as the foundation of a new corn law, on the 1st of March 1827. These resolutions bore that foreign corn might al¬ ways be imported, free of duty, for ware¬ housing, and that it should always be admis¬ sible for home consumption on payment of certain duties. Thus, in the instance of wheat, it was resolved that when the home price was at or above 70s. a quarter, the duty should 1)C a fixed one of Is. ; and that for every shilling that the price fell below 70s. 516 CORN LAWS AND CORN TRADE. Note X a duty of 2s. should be imposed ; so that when the price was at 69s., the duty on importation was to be 2s. ; when at 68s. the duty was to be 4s v and so on. The limit at which the constant duty of Is. a quarter was to take place in the case of barley, was originally fixed at 37s., but it was subsequently raised to 40s., the duty increasing by Is. 6d. for every Is. that the price fell below that limit. The limit at which the constant duty of Is. a quarter was to take place in the case of oats, was originally fixed at 28s., but it was sub¬ sequently raised to 33s., the duty increasing at the rate of Is. a quarter for every shilling that the price fell below that limit. The duty on colonial wheat was fixed at 6c/. the quarter when the home price was below 65s. the quarter ; and when the price was under that sum, the duty was constant at 5s. ; the duties on other descriptions of colonial grain were similar. These resolutions were agreed to by a large majority ; and a bill founded on them was subsequently carried through the House of Commons. Owing, however, to a change of ministers which took place in the interim, it miscarried in the Lords. A new set of resolutions with respect to the corn trade was brought forward, in 1828, by Mr Charles Grant (now Lord Glenclg). They were founded on the same principles as those proposed by Mr Canning ; but the duty was not made to vary equally, as in the re¬ solutions of the latter, with every equal va¬ riation of price ; it being 23s. 8d. when the home price was 64s. per imperial quarter; 16s. 8d. when it was 69s. ; and Is. only when it was at or above 73s. After a good deal of debate, these resolutions were carried in both Houses ; and embodied in the act 9th Geo. IV. c. 60. The prices which governed the duties in this act were ascertained from the sales of corn in the principal towns of England. The dealers were bound, under a penalty for each omission, to make weekly returns of these sales to the corn inspectors resident in the different towns, by whom they were reported to the comptroller of corn returns in London, who deduced from them a general average price, published weekly in the Gazette. At¬ tempts have sometimes been made to falsify the average, by making reports of fictitious sales; but it is generally believed that the prices as reported have corresponded very closely with the real prices at the time. Besides the objections which, it will be immediately shown, may be made to all pro¬ tecting duties, from their tendency to force up average prices, and to render exportation in abundant years impossible, the duty im¬ posed by the 9th Geo. IV. cap. 60, was liable to some weighty objections, which may be looked upon as peculiar to itself. From the way in which it was graduated, it introduced a new element of uncertainty into every trans¬ action connected with the corn trade, pro ducing a disinclination on the part of th merchant to import, and of the foreigner t raise, corn for our markets. Suppose that cargo of wheat had been commissioned whe] the price was 71s. a quarter, in the event c the price declining only 3s. or to 68s., th duty rose from 6s. 8 d. to 16s. 8 cl .; so that i the grain were brought to market the mer chant realised 13s. a quarter less than he ex pected, and 10s. less than he would have don had there been no duty, or had the duty beci constant! It may perhaps be said, that if, on the on hand, the late scale of duties was peculiar! injurious to the merchant when prices wer falling, and when importation was consequent ly either unnecessary or of less advantage, i was, on the other hand, peculiarly advanta geous to him when prices were rising, am when the public interests required that im portation should be encouraged. But th prices in the view of the merchant when hi gives an order are usually such as he sup poses will yield a fair profit; and if they rise this rise would, supposing the duty to b constant, yield such an extra profit as wouli of itself encourage him to increase his impor tations to the utmost. If it were possible t< devise a system that should diminish th losses of the merchants who have engaged i) what have proved to be unfavourable specu lations, by making a proportional deductioi from the extraordinary gains of those whoa speculations turn out to be unusually success fill, something perhaps might be found to saj in its favour. But the system we have beci considering proceeded upon quite opposit- principles: its effect was not to diminisl risks, but to increase them; it added to tin loss resulting from an unsuccessful, and to tin profit resulting from a successful specula tion ! It is plain, therefore, that if a duty be in* posed on importation, one that is constant i preferable to one that fluctuates. When th duty is constant, all classes, farmers as we! as merchants, are aware of its amount, anti can previously calculate the extent of its in' fluence. But the effect of a duty that flue tuates with the fluctuations of prices can never be appreciated beforehand. Its magnfi tude depends on contingent and accidenta. circumstances, and it must therefore, of ne 1 cessity, prejudice alike the interests of th* farmer and of the corn-dealer. The crops having been deficient in 1821 and 1830, there was a large importation o: corn in these years, its average price beinj; at the same time about 65s. a quarter. Bu the crops from 1831 to 1836 having been mor< than usually abundant, importation almos wholly ceased, and the price of wheat sunk ii 1835 to 39s. 4 cl. a quarter, being less than i had been in any previous year since 1776 CORN LAWS AND CORN TRADE. 517 t ’art I. J consequence of this succession of good irvests and low prices, the corn laws ceased r a while to attract any considerable portion * the public attention, and an impression be- in to gain ground that the improvement of ^riculture was so rapid that, despite the in* •ease of population and the existence of the )rn laws, our prices would fall to about the vel of those of the continent. But the rcle of favourable seasons having terminated i 1837, the crops of that and the succeeding ve years were considerably deficient; so -uch so, that prices rose in 1839 to 705. 8 d. quarter, the imports in that and the three Rowing years being also very large. This icrease in the price of corn, combined with ! le depressed state of commerce, originating ; i the pecuniary revulsion in the U. States, Kid other causes, again drew a great deal of .tention to the corn laws ; and the oppres- ve magnitude and injurious operation of le duties were very strongly animadverted ■ pon at public meetings in the manufacturing iwns and elsewhere. An association deno- | dnated the Anti-Corn-Law-League, original- r founded in Lancashire, but which subse- uently extended its ramifications to most arts of the country, was set on foot for the xpress purpose of keeping up an incessant gitation against the corn laws, which, in 1 onsequence of these concurring circum- tances, were assailed with greater bitterness aan ever. The importance of the subject at length forced it on the attention of govern¬ ment; and in 1841, ministers, actuated artly by a sense of the mischievous influence f the sliding-scale, and partly also by a wish 5 strengthen their declining popularity, rought forward a plan for remodelling the orn laws, by repealing the sliding duties, nd imposing in their stead a constant duty f 8s. a quarter on wheat, and in proportion n other grain. But, having no majority in parliament, ministers were obliged to resort o a dissolution ; and, notwithstanding its aoderation, their proposal having excited the jeatest apprehensions among the agricul- urists, without being very warmly supported »y the other classes, who now began to anti- ipate the total abolition of the duties, a new parliament was returned, which gave a de- ided majority to the opposition. It was, lowever, felt on all hands to be necessary to nake some considerable change in the exist- ng law, and in 1842 a measure was intro- i luced in that view by Sir Robert Reel, i vhich was subsequently passed into a law, >th Viet. 2d Sess. cap. 14. Unfortunately, however, this act, like that )y which it was preceded, was bottomed on he principle of making the duties vary with he variations in the price of corn ; and though he duties which it imposed were much ; ess oppressive than those imposed by the 9th i 4eo. IV. cap. 60, still they were in no ordi¬ nary degree objectionable, as well from their too great magnitude as from their adding to the natural insecurity of the corn trade, and increasing the chances and severity of fluc¬ tuations. It is not, therefore, to be wonder¬ ed at that the new measure gave but little sa¬ tisfaction. Instead of being abated, the agitation and clamour against the corn laws continued progressively to gain strength ; and the conviction began at the same time gra¬ dually to extend itself among many of those by whom these laws had hitherto been sup¬ ported, that farther modifications would have to be made in them, and that they might be made without any serious injury to agricul¬ ture. This conviction was greatly strengthened by the result of the important changes which were made in the tariff in 1842, and more especially by those which had reference to the importation of live cattle and fresh provisions. These had previously been prohibited; but Sir Robert Peel proposed that this prohibi¬ tion should be repealed, and that their impor¬ tation should be permitted under reasonable duties. This proposal, when first brought forward, excited the greatest apprehensions among the farmers and graziers, and was fol¬ lowed by an immediate fall in the price of cattle. Happily, however, the measure was carried, and it was speedily discovered that there was no such difference between the prices of cattle here and in the adjacent parts of the continent as had been supposed, and that the fears entertained by the agriculturists of the approaching ruin of the businesses of breeding and grazing were wholly unfounded. The experience afforded by the reduction and subsequent abolition of the duty on wool was similar. Instead of being injured, the in¬ terests of the British sheep farmers were pro¬ moted by these measures, the demand for home-grown wool having been rendered com¬ paratively steady, and its price considerably increased by the stimulus which the change in the duty on foreign wool gave to the woolen manufacture. 1 In the following year, that is in 1843, a measure was adopted, which made a wide breach in the corn laws. In 1842 the le¬ gislature of Canada passed a law, imposing a duty of 35 . a quarter on all wheat imported into the province, unless from the U. King¬ dom, stating, in the preamble to this act, that it was passed in the expectation and be¬ lief that a corresponding reduction would be 1 The fall in the price of wool in 184 6 and 1847 had nothing to do with these measures, but was a consequence of the vast and rapidly in¬ creasing importations from our Australian co¬ lonies which reduced the price of wool, not in this country only, but generally throughout the commercial world. Latterly, however, the pri¬ ces of wool have been again considerably aug¬ mented. 51S CORN LAWS AND CORN TRADE. made in the duties on wheat and wheat- flower imported into the U. Kingdom from Canada. And conformably to this anticipa¬ tion, the act Gth and 7th Viet. cap. 29, passed in 1843, reduced the duty on wheat imported from Canada to Is. a quarter, and proportion¬ ally on wheat-flour. This act met with much opposition from a part of the agricultural in¬ terest in this country, who contended that it would lead to the introduction of unlimited supplies of corn from the U. States, at a duty of only 4s. a quarter, or, allowing for smuggling, at perhaps only half that amount. But ex¬ perience showed that these anticipations were not likely to be realised ; for, though the im¬ ports from Canada were materially increased, the obstacles in the way of the importation of corn from the U. States into Canada, and the danger and expense of the voyage from Montreal or Quebec to England, necessarily prevented the importation through this chan¬ nel fi ’om becoming of much importance. Still, however, the measure was in so far an aban¬ donment of the corn laws, and if we were jus¬ tified in admitting the produce of the U. States to our markets in this indirect way, it was not easy to discover satisfactory grounds on which to exclude the produce of other States. The success of the measures adopted in 1842 encouraged Sir Robert Peel to attempt still more considerable changes in 1845, when, in addition to numerous reductions, he abolished the customs’ duties on about 420 articles, some of which were of very considerable im¬ portance. The measures then adopted were equivalent, in fact, to the virtual abandonment of the protective system ; and under such cir¬ cumstances it could not be expected that the corn laws, which were so very unpopular, and on which so serious an inroad had been made by the Canada act, would be able to maintain their place on the statute book for any very lengthened period. They might, however, have been continued for some time longer, had not the unsatisfac¬ tory corn harvest, and the failure of the potato crop of 1845, made it necessary to adopt measures for obviating the deficiency in the supplies of food. Under the critical cir¬ cumstances in which the population was then placed, the suspension of the corn laws could hardly have been avoided. But, if once sus¬ pended, their re-enactment would have been all but impossible ; and it was better, perhaps, by at once providing for their repeal, to make an end of the system, and of the dissatisfaction and agitation to which it had given birth, than to endeavour to continue it in any modified shape. Such was the view of the matter taken by Sir Robert Peel; and he fortunately succeeded, despite difficulties that none else could have overcome, and at the cost of sac¬ rifices which very few would have bad the magnanimity to make, in carrying the act 9th j Note X. I an d 10th 4 ict. cap. 22, for the immediate modification of the corn laws, and for their total repeal at the end of three years, or on the 1st February 1849. From that date wheat and the other varieties of corn have been subjected, on importation, to a fixed duty of Is. a quarter ; and flour and meal, of all sorts, to a fixed duty of 4 \d. a cwt. Part II. Principles of the Corn Laws. It would be idle to attempt to add any thing to the clear and conclusive reasonings by which Dr. Smith has established the advan¬ tage of allowing the most perfect liberty of exportation to other countries. It is suffi¬ cient to remark, that no market can ever be steadily and plentifully supplied with corn, unless liberty be given to export the surplus supplies with which it may occasionally be furnished. Wherever the freedom of export¬ ation is fettered, a plentiful crop, by over¬ loading the market, and causing a heavy fall of prices, is as injurious to the farmer as a scarcity, which, indeed, by its destroying his capital, and paralysing his exertions, it seldom fails to occasion. But it is unnecessary to dwell on this part of the subject. Exportation in England has been, for a very long period, perfectly free; and from the sera of the revolution in 1689 down to 1815, it was encouraged by the pay¬ ment of a bounty whenever the home prices fell below r a certain limit. But this policy errs as much on the one hand as a restriction on exportation errs on the other. Freedom is the only thing that is required to place the trade in corn on the best possible basis ; and every interference which has not for its ob¬ ject to remove such obstacles as may pre¬ vent the establishment of a perfectly free system of exportation and importation, is sure to be prejudicial. A very few observations will suffice to show that this is the case with respect to a bounty on exportation. SECTION i. Inquiry into the Policy and Effect of grant¬ ing a Bounty on the Exportation of Corn. By extending the market for corn, when a bounty is first granted, the price of raw pro¬ duce is raised, and agricultural profits being elevated above the general level, there is an influx of capital from other departments, until they are again reduced. Thus far a bounty accomplishes its object, and gives at least a temporary stimulus to cultivation. If the newly-employed capital rendered the same returns as that previously employed in raising corn, the cost of the latter would not be in¬ creased. But, as has been already shown, this cannot be the case for any very lengthened period. Discoveries in agriculture may, for CORX LAWS AND CORN TRADE. 519 I 'art II. while, prevent recourse being had to poorer )ils, but the constant increase of population ill, in the end, force their cultivation. Now, ie bounty has, in this respect, precisely the ime effect as an increase of population, ioth extend the demand for corn ; and as, by lis extension of the demand, we are at length >rced to employ inferior machinery, or worse md, in order to raise the additional supplies, aeir value must be augmented. Were the prices of corn in Britain and •Vance nearly on a level, no exportation *om the one to the other would take place, hit if, when prices were in this situation, a ounty, say of 10s. per quarter, were granted y our government, corn would be immediate- y exported from England to France. Li- nits would, it is true, be soon set to this ex¬ portation. The competition which takes •lace among exporters, as among every other lass of traders, prevents their realising more ban the common and ordinary rate of profit; nd hence grain would be exported to France, lot in the expectation of realising the whole >ounty as profit, but in the view merely of ecuring the usual profits of stock on the capi- al employed in its transfer. A rise of prices, hough not to the whole extent of the bounty, vould therefore be immediately felt in this jountry, and a corresponding fall in France. Sor would this rise and fall be temporary. Jorn would be permanently reduced in France, 3 ecause the unusual cheapness of the foreign supplies would throw the poorest cultivated ands of that country out of tillage ; and it .vould be permanently raised in England, be¬ cause the increased demand would stimulate ;he bringing of poor lands under cultivation. A bounty to the extent supposed, would per¬ haps depress prices os. a quarter in France, and raise them as much in Britain. To the French it would be advantageous, by its en¬ abling them to purchase an indispensable ne¬ cessary at so much less than it would other¬ wise cost: here, however, its effects would be directly opposite. A few more of our heaths and bogs would indeed be cultivated, but all classes would find it more difficult to procure food than before. The higher price of our corn, supposing it to have no influence over wages and profits, which however would be the case, would obviously be of no public advantage; since it would in the end be proportioned to the greater difficulty expe¬ rienced in raising the additional quantity. Every bounty is also objectionable by its occasioning an artificial distribution of the na¬ tional capital; but a bounty on manufactured commodities does not increase the quantity of labour required for their production, and of course does not permanently raise their ex¬ changeable value. In this respect, a bounty on raw produce is the most impolitic of any, inasmuch as it not only occasions a faulty dis¬ tribution of capital, but also raises the cost of production, and consequently the price of the articles produced. The argument that Smith has brought for¬ ward against granting a bounty is, therefore, untenable. The nature of things has not, as he imagined, stamped upon corn an unalter¬ able value. The variations in its value, ex¬ clusive of the effects of scarcity, and of ex¬ traordinarily luxuriant crops, are sufficiently perceptible at distant periods. The wheat raised at an immense expense from bogs or morasses, must plainly have a greater value than that which is raised from rich alluvial or other superior lands. “ It is natural,” as Smith has observed, “ 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.” It has been contended that as rent is the difference, or the value of the difference, be¬ tween the produce obtained, from the best and the worst lands under cultivation, a boun¬ ty on exportation must, by forcing recourse to inferior lands, raise rents, and be at all events advantageous to the landlords. But this inference is not correct. The difference between the produce obtained from the best and the worst lands under tillage, abstract¬ ing from the influence of improvements, merely constitutes what is called rent in the strict and scientific sense of the term ( ante , p. 448). Practically, however, the profits ot the capital laid out upon the land and incor¬ porated with it, are also included under the term rent, and form in countries like this by far the largest portion of its gross amount; and it is by the aggregate of these two por¬ tions, and not by the magnitude of either taken separately, that the rents paid to the landlords are determined. Now admitting that a bounty extends tillage over inferior land, it must also at the same time, and by the same act, increase the difficulty and cost of cultivation, and by consequence, for they are necessarily connected, lower the profits ac¬ cruing thereon ; so that whatever advantage a bounty may, on the one hand, give to the landlords by extending tillage, it will most probably take as much, or perhaps more, from them on the other by reducing profits. To all the other classes the injurious ope¬ ration of a bounty is manifest. Farmers are capitalists employing their stock in the culti¬ vation of the land ; and though they might reap some little advantage at the first grant¬ ing of a bounty, from the rise of price it would probably occasion, they would speeddy find, supposing the rise to be maintained, that it would be proportioned in the end to the great¬ er cost of production occasioned by tbe bounty forcing recourse to inferior lands, and that their stock was rendered less productive than formerly. “ It is the interest of all ca¬ pitalists to have the necessaries of life, and consequently corn, amongst the rest, cheap 5 20 Note X. CORN LAWS AND CORN TRADE. because their labourers will then be content¬ ed with lower wages. A farmer’s gain can¬ not be permanently greater than that of other capitalists. Even during the currency of a lease, a rise in the price of corn is not always an advantage to him ; for, if there be a gene¬ ral rise in the price ot all other commodities also at the same time, he must give a corre¬ sponding increased price for his coats, hats, horses, sheep, cattle, &c. ; and unless during the currency of a lease, he has no interest whatever in high prices, because competition e ectually prevent him from deriving more than a very temporary advantage from them. He has, however, in common with all other capitalists, a very strong interest in high profits ; and L is not possible that pro¬ fits should be high for a long period together, when the necessaries of life are dear. A high price of com, therefore, not only is not bene¬ ficial to the farmer as such, but it is positive¬ ly injurious to him. He is injured in two ways : first as a consumer of corn in common with the rest of the community, by having to consume a dear instead of a cheap commodity; and secondly, he is injured in a still greater degree, as an owner of capital, by being com¬ pelled to give high wages to all the labourers he employs.” 1 It is nugatory, indeed, to sup¬ pose that a measure which tends to increase the cost of production can be advantageous to any class. All improvements have the di¬ minution of cost and price for their object; and if such be not their effect, they have no claim to be called improvements. We have already sufficiently shown the influence of im¬ provements in increasing rent (ante, p. 451.) But supposing the accuracy of these state¬ ments to be admitted, it may nevertheless be contended, that a nation which exports an extra quantity of corn by means of a bounty, has a proportionally greater resource in years of scarcity, and that the security thence aris¬ ing may be more than sufficient to counter¬ vail the mischievous influence of the bounty over prices and profits. This idea, however, though plausible, and to a certain extent cor¬ rect, is in the main fallacious. If the defi¬ ciency of the crop did not exceed the ordinary quantity of corn exported, there would not certainly be any considerable rise of price ; but if the deficiency exceed that quantity, the situation of an exporting country must evi¬ dently be a good deal worse than that of one which regularly imports. In the latter, a slight rise of prices occasions a greater im¬ portation than ordinary ; but in an exporting country, prices must not only be raised by the whole cost of the carriage from foreign ports, but by an additional sum, sufficient to determine importation into new channels. Thus a deficiency in the crop of Poland, not exceeding the quantity of corn which she 1 “ Cheap corn best for farmers, ” p. 23, 2d edition. This tract is ascribed to Henry Drum- ordinarily exports, would not have any ma¬ terial effect over her prices ; but no importa¬ tion to make up for a larger deficiency could take place into Poland until her prices had risen, not merely higher than ordinary, but decidedly higher than the prices of the coun¬ tries to which she is in the habit of exporting. Again, in seasons when there is a luxuriant crop in a country exporting by means of a bounty, it operates with double effect, and very little of the surplus is stored up to an¬ swer the home consumption in case of future exigencies. By forcing exportation, it hin¬ ders, as Dr. Smith has observed, the plenty of one year from relieving the distresses of ano¬ ther, and consequently occasions, in seasons ot scarcity, a greater importation than would otherwise be necessary. Those who compare the prices of corn in tms country trom 1688 to 1766, during what may be called the period of the bounty, with the prices from 1 < 66 to 1792, when the corn trade was comparatively free, will see that the foregoing conclusions do not depend on theory only, but are consistent with experience. Assuming, therefore, that the exportation of raw produce should be rendered perfectly free, but that it should not be encouraged by a bounty, we have next to inquire into the policy of restrictions on importation. SECTION II. Fluctuations caused by a Restriction on the Importation of Foreign Corn. — Burden imposed by the Corn Laws. — Diminution effected therein by Improvements. — Indefi¬ nite extent to which the latter may be carried. The effect of a restriction on the import¬ ation of corn necessarily varies according to the varying situation of different coun¬ tries. Wherever the soil is good, and the thinness of the population renders it un¬ necessary to cultivate any but lands of the highest degree of fertility, as in the United States, Poland, Russia &c., a restriction on importation would, in all ordinary cases, be a mere dead letter. But when a restriction is laid on the importation of corn into a country whose population cannot be fed on produce derived from its own soil, without the cultivation of lands inferior in fertility to those cultivated amongst its neighbours, the restriction has a powerful influence over tlie condition of every class of society. It would be inexcusable to waste the reader’s time by endeavouring to prove, by argument, the advantage of having sup¬ plies of food at a low price. To facilitate production, and to make commodities cheaper and more easily obtained, are the principal motives which stimulate the inventive pow¬ ers, and which lead to the discovery and im- mond, Esq., M.P. founder of the Chair of Politi¬ cal Economy in the University of Oxford. CORN LAWS AND CORN TRADE, 521 Part TL provements of machines, and processes for saving labour and diminishing cost; and it is plain that no system of commercial legis¬ lation deserves to be supported which does not conspire to promote the same objects. But a restriction on the importation of corn into a country which, like England, has made a great comparative advance in population and manufacturing industry, is diametrically opposed to these principles. In consequence of this restriction, and of the density ot our population, we have been forced to resort to less fertile soils than those under cultivation in most surrounding countries; so that the average prices of British corn have been comparatively high. But sup¬ pose that by exporting 1,000/. worth of cotton goods or hardware to Poland or Russia, we may obtain in exchange as much corn as it would require an expen¬ diture of l,o00Z. to produce on the land last cultivated in this country, what should be said of a law which, by preventing this ex¬ change from being made, should compel 11 s to pay this increased price for our food ? In¬ stead of being publicly advantageous, high prices are in every case distinctly and com¬ pletely the reverse. The smaller the sacri¬ fice for which any commodity can be obtained, so much the better. TV hen the labour re¬ quired to produce, or the money required to purchase, a sufficient supply of corn is. dimi¬ nished, more labour or money remains to produce or purchase other necessaries, con¬ veniences, or amusements, and the sum of national wealth and comforts is propor¬ tionally augmented. Those who suppose that high prices can be a means of really improving the condition of a country, might, with equal reason, suppose that it would be improved by throwing its best soils out of cultivation, and destroying its most powerful machines! The opinions of such persons are not only opposed to the plainest principles of economical science, but they are opposed to the obvious suggestions of common sense, and the universal experi¬ ence of mankind. But the increase of prices is not the worst consequence of restricting the importation of corn. The fluctuations it occasions are still more injurious than their enhancement. Now that the freedom of the corn trade is established, our prices can hardly ever dif¬ fer more than 10s. or 12s. a quarter from the prices of corn of equal quality in the surrounding countries ; for the expense of conveying a quarter of wheat from the United States, Dantzic, Hamburgh, &c. to London, does not exceed that amount. And when prices in one country are governed by the average prices of the surrounding countries, they must necessarily approach much more nearly to a common level than under the re¬ strictive system. The larger the surface from which a country draws its supplies ot food, the less likely is it to be injuriously af¬ fected by variations of harvests. The weather that is unfavourable to the crops raised in a particular district is most commonly favour¬ able to those raised in districts having a dif¬ ferent soil or climate. A failure of the crops throughout an extensive kingdom is a cala¬ mity of rare occurrence ; and there is no in¬ stance of a simultaneous failure of the crops throughout the commercial world. It is ob¬ served by Gibbon, that “ those famines which so frequently afflicted the infant republic, were seldom or never experienced by the extensive empire of Rome. The accidental scarcity of any single province was immedi¬ ately relieved by the plenty of its more for¬ tunate neighbour.” 1 Holland, during the days of her greatest prosperity, was chiefly fed on imported corn ; and prices in Amster¬ dam were comparatively moderate, and fluc¬ tuated less than in any other market of Eu¬ rope. The experience, in a word, of all ages and nations proves that freedom is the best antidote to those sudden fluctuations in the price of corn that are so exceedingly ruin¬ ous to all classes of the community, and most of all to the farmer. But while the freedom of commerce is pro¬ ductive of plenty, cheapness, and what, per¬ haps, is of still more importance, steadiness of price, monopoly is “ the parent of scarcity, of dearness, and, above all, of uncertainty. ’ When a rich and highly populous country like England excludes foreign produce from her markets, the necessity under which she is placed of resorting to inferior soils for supplies of food, raises her average prices above those of the surrounding countries. Hence, when an unusually luxuriant crop occurs, no portion of the surplus produce can be exported until the home prices have fallen much below their common level. The real object of the corn law of 1815, which prevented the entry of foreign wheat for consumption until the home price reached 80s., was to keep the price steadily up to that level. But the slightest acquaintance with the principles of economical science would have taught the framers of that law that it could not effect the object in view. To maintain prices in any particular country at a forced elevation, it is necessary, not only that foreign corn should, under certain cir¬ cumstances, be excluded, but that its markets should never be overloaded with corn of its own growth. Eor, it is clear, according to the principle now explained, that it the sup¬ ply should, in ordinary years, be sufficient to support the population, it must, in an unusu¬ ally productive year, be more than sufficient for that purpose ; and it is equally clear that, in the event of such a case occurring, its mer- 1 Decline and Fall, i. 86. 522 CORN LAWS AND CORN TRADE. chants could not export any portion of its surplus produce until prices had fallen below the level of the surrounding countries. Now, this was the precise situation of this country at the return of peace in 1815. Agriculture had been so far extended previously to the opening of the ports of Holland in 1814, as to furnish a nearly adequate supply for our consumption. And such being the case, it was obvious that the first luxu¬ riant crop would sink prices ; and that the market could not be relieved by exporta¬ tion, until they had sunk about 50 per cent, under what was then reckoned the lowest growing price! This principle appears so self-evident and indisputable, that we have no hesitation in saying, there are no good grounds for thinking that the condition of the farmers would have been in any respect more pros¬ perous, had the importation of corn from 1813 down to the present moment been completely prevented. It is not the introduction but the exclusion of foreign corn that occasions re¬ vulsions. Nine-tenths of the agricultural distress, of which so much was said during the ten years ending with 1825, may be traced to the operation of the protecting law, as it was most improperly termed, of 1815. The average price of wheat in England and Wales in 1814 was 74s. 4 cl. a quarter, and in 1815 it fell to 65s. Id. But as these prices would not indemnify the occupiers of the inferior lands brought under tillage during the high prices in the latter years of the war, they were gradually relinquishing their cultivation. A considerable portion of these lands was converted into pasture; rents were generally reduced ; and wages had begun to decline : but the legislature having prohibited the im¬ portation of foreign corn, the operation of this natural principle of adjustment was un- 1 fortunately counteracted, and the price of 1816 rose to 78 s. 6d. And during the next two years the supply, influenced to some ex¬ tent by the throwing of land out of tillage, but more by bad harvests, was so much di¬ minished that, notwithstanding the increase in the value of money, prices rose in 1817 to 96s. Ilf/., and were, in 1818, 865 . 3 d. These high prices, though ruinous to the rest of the community, revived the drooping spirits of the farmers, who imagined that the corn law was at length beginning to produce the effects anticipated from it ; and that the halcyon days of 1812, when wheat sold for 126s. a quarter, were about to return ! But this pros¬ perity carried in its bosom the seeds of future mischief. The increased prices occasioned a fresh extension of tillage ; capital was again applied to the improvement of the soil; and this increase of tillage, conspiring with fa¬ vourable seasons, and the impossibility of exportation, affected prices to such a degree, that they fell in October 1822 to 38s. 1 d., T T iNOTF. X. the average price of that year being only 44s. Id. ! 7 It is nugatory, therefore, to attempt to ob¬ viate the recurrence of periods of low prices and agricultural distress by imposing severe restric¬ tions on importation. Freedom is, speaking generally, the only effectual security againsl injurious vicissitudes. Restrictions, unless they be of the most moderate description, and contrived with great care, occasion the very evils they are said to remove or palliate. If they prevent importation in ordinary years, and raise average prices above the common level, they make exportation in favourable seasons impracticable, till prices have sunk unnaturally low. This is a defect inherent in the exclusive system, which nothing but the adoption of the Dutch plan of destroying a portion of the produce of a plentiful har¬ vest can possibly get rid of! Protection cannot be carried further than monopoly ; and monopoly cannot sustain prices in abundant years in countries where the supply and the consumption are nearly balanced, nor prevent the consequent destruction of agricultura 1 ca¬ pital, and the ruin of great numbers of the agriculturists. It may therefore, we think, be concluded on unassailable grounds, 1st, That a prohibi¬ tion of importation into a country that would generally or occasionally import, occasions an increased cultivation of bad land, and, by so doing, tends to raise prices and depress pro¬ fits ; 2d, That such prohibition tends in so far to throw a country on her own resources, and lessens her ability to profit by the pro¬ vision made by Providence for equalizing the deficiencies in the harvests of particular coun¬ tries by a corresponding surplus in others ; 3d, That the prohibition of importation in ordi¬ nary years, by raising the average price of corn to a comparatively high level, renders exportation in a peculiarly abundant year im¬ possible, till prices sink so as to be productive of great agricultural distress ; and 4th, That this distress, by defeating the plans of the cultivators, discouraging improvements, and lessening the quantity of land sown, tends materially to diminish the home supply ; and when the produce of a year, diminished by these causes, happens also to be diminished by a bad season, the combined influence of the two is most disastrous, and there is both an enormous increase of price, and the se¬ verest pressure upon the industrious classes. Although the corn laws were long, and perhaps still continue to be, approved by the majority of the landlords, it would be unjust not to mention that there has always been a lai ’ge and respectable party amongst them opposed to all restraints on the trade in corn ; and who have uniformly thought that their interests, being identified with those of the public, would be best promoted by the I Part IL CORN LAWS AND CORN TRADE. 523 abolition of restrictions on importation. A protest expressive of this opinion, subscribed by 10 peers, was entered on the Journals of I the House of Lords, against the corn law of 1815. It is said to have been drawn up by the late Lord Grenville, an enlightened advo- ! cate of sound commercial principles ; and its ^reasoning is so clear and satisfactory, th.it we believe we shall gratify our readers, as well as strengthen the statements previously made, by laying it before them. “ Dissentient. —I. Because we are adverse on principle to all new restraints on commerce. We think it certain that public prosperity is best promoted by leaving uncontrolled the free current of national industry ; and we wish rather, by well considered steps, to bring back our commercial legislation to the straight and simple line of wisdom, than to increase the deviation by subjecting addi¬ tional and extensive branches of the public interest to fresh systems of artificial and in¬ jurious restrictions. “ II. Because we think that the great prac¬ tical rule, of leaving all commerce unfettered, applies more peculiarly, and on still stronger grounds of justice as well as policy, to the corn trade than to any other. Irresistible, indeed, must be that necessity which could, in our judgment, authorise the legislature to tamper with the sustenance of the people, and to impede the free purchase of that ar¬ ticle on which depends the existence of so large a portion of the community. “ III. Because we think that the expecta tions of ultimate benefit from this measure are founded on a delusive theory. W e can¬ not persuade ourselves that this law will ever contribute to produce plenty, cheapness, or steadiness of price. So long as it operates at all, its effects must be the opposite of these. Monopoly is the parent of scarcity, of dear¬ ness, and of uncertainty. To cut off any of the sources of supply, can only tend to lessen its abundance; to close against ourselves the cheapest market for any commodity must en¬ hance the price at which we purchase it; and to confine the consumer of corn to the pro¬ duce of his own country, is to refuse to our¬ selves the benefit of that provision which Providence itself has made for equalising to man the variations of climate and of seasons. “ IV. But whatever may be the future con¬ sequences of this law at some distant and un¬ certain period, we see with pain that these hopes must be purchased at the expense of a great and present evil. To compel the consumer to purchase corn dearer at home than it .might be imported from abroad, is the immediate practical effect of this law. In this way alone can it operate. Its present protection, its promised extension of agricul¬ ture, must result (if at all) from the profits I which it creates by keeping up the price of corn to an artificial level. These future bene¬ fits the consequences are expected, but as we confidently believe, erroneously expected, from giving a bounty to the grower of corn, by a tax levied on its consumer. “ V. Because we think the adoption of any permanent law for such a purpose, required the fullest and most laborious investigation. Nor would it have been sufficient for our satisfaction, could we have been convinced of the general policy of a hazardous experi¬ ment. A still further inquiry would have been necessary to persuade us that the pre¬ sent moment is fit for its adoption. In such an inquiry, we must have had the means of satisfying ourselves what its immediate opera¬ tion will be, as connected with the various and pressing circumstances of public difficulty and distress with which the country is sur¬ rounded ; with the state of our circulation and currency, of our agriculture and manufac¬ tures, of our internal and external commerce, and, above all, with the condition and reward of the industrious and labouring classes of our community. “ On all these particulars, as they respect this question, we think that parliament is al¬ most wholly uninformed : on all we see reason for the utmost anxiety and alarm from the operation of this law. “ Lastly, Because, if we could approve of the principle and purpose of this law, we think that no sufficient foundation has been laid for its details. The evidence before us, unsatisfactory and imperfect as it is, seems to us rather to disprove than to support the propriety of the high price adopted as the standard of importation, and the fallacious mode by which that price is to be ascertained. And on all these grounds we are anxious to record our dissent from a measure so pre¬ cipitate in its course, and, as we fear, so in¬ jurious in its consequences. ’ Attempts have some times been made to estimate the pecuniary burden which the re¬ strictions on importation entailed in ordinary years upon the country. This, however, is a subject with respect to which it was not pos¬ sible to arrive at any conclusions on which much reliance could be safely placed. I he burden differed in different years with the different productiveness of our harvests, and the consequent greater or less excess of our prices over those of the contiguous coun¬ tries. On the whole, however, the corn laws had of late years become, through the influ¬ ence of improvements, iar less oppiessive than formerly; and some of the statements in regard to their influence, made in the first edition of this work, in 1828, though war¬ ranted at the time, would now appear to be not a little extravagant. But supposing the CORN Note X. 524 LAWS AND CORN TRADE. total quantity of corn produced in the United Kingdom to have amounted, during the half dozen years ending with 1848, to about 60,000,000 quarters, it is plain that every shilling added to its price by the corn laws was equivalent to a tax on corn of 3,000,000/.; and estimating the average rise on all sorts of grain at 6s. a quarter, the total sum will be 18,000,000/. So great a quantity of corn is, however, consumed by the agriculturists themselves in food, seed, the keep of horses, &c., that not more than the half, perhaps, of the whole quantity produced is brought to market. And if we be nearly right in this hypothesis, and in the previous estimate, it will follow that the restrictions have cost the classes not engaged in agriculture no less than 9,000,000/., exclusive of their other pernicious consequences. Of this sum from a fourth to a fifth part, or from 2,250,000/. to 1,800,000/. may have gone to the landlords,.as rent; and this is all that the agriculturists can be said to have gained by the system, for the addi¬ tional price received by the farmers for that portion of the produce that is exclusive of rent was no more than the ordinary return for the greater capital and labour expended on the cultivation of inferior lands. Their profits, indeed, instead of being increased by this system, were, as already seen, really diminished by it; and though it added nomi¬ nally to the rent of the landlords, the fluctua¬ tions it occasioned, rendered it as injurious to them as to the other classes. Such being the inevitable consequences of the late restrictions on the corn trade, it was surely high time that they should be abolished, and a return made to a free system. JBut we must guard the reader against supposing that this or any other sys¬ tem will suffice to prevent the public feeling the injurious effects of deficient harvests. It will palliate their influence, but it will do no more. Should the home supplies of corn under the new system be in ordinary years nearly or about equal to our consumption, we may expect prices to be comparatively steady ; for, under such circumstances, we shall have little difficulty in procuring supplies from abroad, to meet any deficiency (unless it be of an extraordinary character, as in 1847) in our produce ; and we shall also be able, without any very extraordinary sacrifice, to export the surplus of our crops in unusually productive years. But if we should in ordi¬ nary years import any considerable portion of our supplies, the result of the new system will be less favourable. In that case an un¬ usually luxuriant harvest, and still more a cycle of such harvests, would, by occasioning a glut of the market, and a heavy fall of price, be injurious at once to the agricultu¬ rists, and to those depending on them for em¬ ployment ; for, under such circumstances, they would not be able to export till prices had fallen from 125. or 14s. to 15s. or 20s. a quarter below their usual level. And hence, as this contingency is neither impos¬ sible nor improbable, the advantage (as will be immediately shown) of imposing a mode¬ rate duty on importation, accompanied with a corresponding drawback on exportation. The comparatively reasonable prices of corn during the fifteen years ending with 1845, and the consequently modified action of the corn laws, were attributable, ls£. To the extraordinary improvement that has taken place in agriculture in Great Britain since the peace of 1815; and 2d. though in a very inferior degree, to the increase in the imports of corn from Ireland. 1. Owing to the heavy fall of prices, the progress. of agricultural improvement was checked in 1815, and the subsequent five or seven years. But though, in some districts, particularly in the southern parts of the island, there was a pretty general decline, yet, on the whole, the influence of the fall seems to have been a good deal exaggerated; and, however severe at the time, it was not long in being overcome. There has been, in fact, an all but unparalleled improvement in agriculture since 1820 or 1825. How else could the ex¬ traordinary increase of population that has taken place in the interval have been pro¬ vided for? and how else could the rental of England and ales in 1842—3 have exceeded by 5,836,627/. its rental in 1814—15 ? 1 I here was no increase, or none worth men¬ tioning in a question of this sort, in the quantity of foreign corn retained for home consumption during the twenty years ending with 1840, as compared with the previous twenty years ; and yet the population of Great Britain increased during that interval from 14,481,139 to 18,844,434! It is impossible that a result of this sort could have taken place without either a very great increase of agricultural produce, or a signal and almost unprecedented falling off in the demand for corn. But the latter supposition is out of the question. Instead of there being any decline in the consumption, there can be no manner of doubt, notwithstanding the too great de- pendance on the potato, that the bulk of the population consume, at this moment, more corn, particularly wheat, than at any former period. Wheaten bread has now almost en¬ tirely superseded every other sort of bread. The consumption of rye, barley, and oats, in the northern and south western parts of Eng¬ land, and in Wales, where it was formerly so very considerable, is now reduced to a mere trifle. All classes, not dependant on potatoes, subsist mainly on wheaten bread ; and during the last twenty years, there has been a grow- i Descriptive and Statistical Account of the British Empire, 3d ed, i. 553. CORN LAWS AND CORN TRADE. 525 improvement of Great Britain, they are far exceeded by those of Ireland. The latter, u ing indisposition to use even the inferior sorts oAuch bread. In Scotland, the change has been still more decided than in England ; and we believe we are quite within bounds, when we express our conviction, that fully j ten times more wheat is consumed in Scot¬ land at present (1848) than in 1790. 2. A part of the extraordinary increase in the home supplies of corn since 1820, has been derived, as stated above, from Ireland; but this part is not nearly so great as is usually supposed. Previously to the failures of the potato crop in 1845 and 1846, we imported about 3,000,000 quarters of corn (principally oats) from Ireland, being about double the quantity she sent us in 1820. But we doubt whether this increase has been sufficient to feed the greatly increased number of pleasure and other horses that are now kept in this part of the empire. At all events, it can have done very little mere than meet this in- • creased demand, so that it may be safely con¬ cluded that the 5,400,000 individuals added to the population of Great Britain between ' 1820 and 1845, have been wholly, or almost wholly, subsisted upon the increased produce of its soil. And taking the cost of the food annually consumed by these individuals at 7/. I each at an average, it will follow, notwith- : standing prices rather declined in the inter¬ val, that the value of the agricultural produce of Great Britain in 1845 exceeded by no less than 37,800,000/. the value of its produce in 1820! This astonishing result is a conse¬ quence principally of improved drainage, im¬ proved modes of management, and of the adoption of improved manures, processes, and implements. In proof of the extraordinary change that has taken place, we may mention that in the wolds of Lincolnshire, the crops of turnips have become from five to ten times heavier within the last few years, from the ap¬ plication of bone manure and guano to their culture; at the same time that there has been a proportional increase in the productiveness of other crops ! Similar improvements, and in some instances quite as great, have been made in other parts of the country. It is gratify- . ing, too, to know that the capacities of im¬ provement are far from being any where ex¬ hausted. But what has been effected shows what may be done, were the productive ener¬ gies of the more backward districts better de¬ veloped by the extension to them of the improved practices of Norfolk, Northum¬ berland, Lincoln, &c. The granting of leases of a reasonable length, and the enforc¬ ing of proper conditions as to management, would be the most likely means to bring about i so desirable a result. It is impossible, in¬ deed, to say to what extent, under such cir¬ cumstances, improvement might be carried. Lnmense, however, as arc the capacities of - indeed, owing to the humidity of the climate, is better suited for pasturage than for tillage. But any one who has ever been in Ireland, or is aware of the wretched state of its agri¬ culture, and of the amazing fertility of its soil, must be satisfied that were an improved system of husbandry generally introduced, its exports could not fail to be vastly increased. And this result may now, perhaps, be fairly expected. The mendicant agitation by which Ireland has been so long distracted and dis¬ graced has received a severe check; and it is to be hoped that measures may be adopted for the permanent abatement of the nuisance. Till this be done, and till confidence be esta¬ blished, and a complete stop put to the subdivi¬ sion of the land, the resources of the country cannot be developed. So long as the Catholics were treated as an inferior and degraded caste , neither tranquillity nor improvement of any kind could rationally be expected to grow up. Happily, however, this vicious policy has been wholly abandoned; and were adequate provision made for the Catholic clergy, every just ground of complaint on the part of the Irish would be removed. AVhat Ireland now wants is a firm and consistent system of go¬ vernment, which, while it does justice to all classes, without either flattering or irritating popular prejudices, shall, with a strong hand, suppress all attempts at agitation, enforce the empire of the law, and give confidence to the capitalist, and to the landlord anxious to im¬ prove his estate. Under such a government, Ireland might yet, perhaps, assume a respec¬ table place among civilized nations, be dis¬ tinguished for her agriculture, and be a stay and support, instead of a burden upon and a disgrace, to England. Section III. Question respecting the peculiar Burdens af¬ fecting the Land—A Duty on Importation slioidd he accompanied by a corresponding Draicback—Probable effect of the Abolition of the Corn Laics—Remarks on that Mea¬ sure. Heavy taxes, provided they be equally imposed, furnish no apology for restrictions on importation. Such taxes afiect, like wages, every part of the community, and do not fall heavier on the agriculturists than on any other class. It is only in the event of taxation being unequal, or of its pressing with greater severity on those engaged in a particular business than on their neighbours, that it affords an ade¬ quate ground for laying a duty on the im¬ portation of the produce of the overtaxed class, though it can never be a reason why it \ 526 Note X. CORN LAWti AJ should be prohibited. Now, it is contended that the agriculturists are in tlris predicament that is, that the burdens laid on them ex¬ ceed those laid on the manufacturing and commercial classes, and that they are in con¬ sequence entitled to have duties laid on foreign corn and other agricultural produce, when im¬ ported, sufficient to countervail the excess of taxes to which they are subject. This, how¬ ever, has been strenuously denied ; and it must be admitted that the question is not quite free from difficulty. But were this a proper place for entering upon such inquiries, it might, we think, be conclusively shown, that, owing to the various local and other di¬ rect and indirect burdens laid on the land, those occupying it are really subjected to heavier taxes than any other class. It is difficult, or rather, perhaps, impossible, to estimate with any degree of precision, what the excess of taxes laid on the agriculturists beyond those laid on manufacturers and merchants may amount to ; but we have elsewhere shown that if we estimate it as making an addition of from os. to 7s. to the quarter of wheat, we shall not be far from the mark . 1 hen a duty is laid on the importation of foi eign corn, for the equitable purpose of countervailing the peculiar duties laid on corn raised at home, an equivalent drawback should be allowed on its exportation. “ In allowing this drawback, we are merely return¬ ing to the farmer a tax which he has already paid, and wdiich he must have, to place him in a fair state of competition in the foreign market, not only with the foreign producer, but with his own countrymen who are pro¬ ducing other commodities. It is essentially different from a bounty on exportation, in the sense in wdiich the word bounty is usually understood (and as we have previously con¬ sidered it); for by a bounty is generally meant a tax levied on the people for the purpose of rendering corn unnaturally cheap to the fo- leign consumer ; whereas, what I propose is, to sell our corn at the price at which w r e can really afford to produce it; and not to add to its price a tax which shall induce the foreigner rather to purchase it from some other country, and deprive us of a trade which, under a system of free competition, we mi take place in prices in the course of a few years. But looking at the rapid increase of wealth and population in the countries in the north of Europe, in those round the Black Sea, and in the Lnited States, the presumption is not that prices will fall, but that they will rise. But supposing that, under the new system, they are pretty constant at from 40s. or 45s. to 48s., it is quite clear its introduction can have no very serious influence over agriculture. The average prices of corn in England and W ales during the five years ending with 1835, were 52s. 8<7. and during the five years ending with 1845, they were 54s. 0 d. a quarter, being only from 6s. to 14s. a quarter above their future pro¬ bable average range under a perfectly free system. Prices, indeed, were decidedly lower in 1834, 1835, and 1836, years of great agri¬ cultural improvement, than there is much probability of their being under the new system. But suppose that prices should fall 10s. or 14s. a quarter, it is the greatest error to sup¬ pose that this fall will be productive of any material injury to agriculture. Prices, after allowing for the depreciation of the currency, were, during the five years ending with 1810, 83s. 3d. a quarter; they have since fallen so, that during the five years ending with 1845, they were only 54s. 9 d. a quarter, being a fall of no less than 28s. 6d. a quarter in the inter¬ val. And yet, as already seen, there has been in the teeth of this immense fall, and coin¬ cident with it, an extraordinary improvement in agriculture, accompanied with a vast in¬ crease of production, and a very great rise of rent. And such being the case, despite a fall of 28s. 6d. a quarter, it would be contradic¬ tory to suppose that agriculture should sus¬ tain any very serious or, indeed, sensible in¬ jury from a farther fall of 8s., 10s. or even 14s. a quarter. 1 At the same time, we are ready to admit that we should have preferred seeing this question settled, by the imposition of a low fixed duty of 6s. or 7s. a quarter on wheat, and other gram in proportion, accompanied with a corresponding drawback. We make this statement on general grounds, and with¬ out any reference to the peculiar burdens which affect the agriculturists, though these should neither be forgotten nor overlooked. In scarce years, a duty of this description would fall on the foreigner without either affecting prices or narrowing importation; for in such years the prices of corn rise far above the level of its cost, duty included, being wholly determined by the intensity of the demand as compared with the supply. Suppose that the customary price of wheat in this country, under a fixed duty of 7s. amounted to 52 s. a quarter ; in the event of a bad harvest occurring, the price would no doubt rise to 70s. or 80s. a quarter, or more. But to whatever extent it might rise, the duty would have no perceptible influence upon it. We offer 70s. or 80s. for wheat, because it is deficient, and because we cannot otherwise obtain the required supply. But this price yields such an extraordinary profit to the foreigner that he sends us all he can spare ; and there is no probability that he either would or could send us another bushel were the duty struck off. It is too small to have, under the supposed circumstances, any 1 Descriptive and Statistical Account of the British Empire, i. 582. 528 Note X. COHN LAWS AND CORN TRADE. sensible influence one way or another. Though it were repealed, we should have to pay, as before, 70s. or 80s. for our wheat; but instead of going into the coffers of the Treasury, the produce of the duty would then go into the pockets of the foreigner, from whose extravagant profits it would other¬ wise be deducted. Hence, in scarce years, when importation is necessary, a low duty is not merely inno¬ cuous but advantageous ; and it is equally so in abundant years, or when the home supply is sufficient. In such seasons, the duty would either lessen or wholly prevent importation. The drawback by which it is supposed to be accompanied would then also probably come into action; their conjoined effect being to obstruct the overloading of the market; and consequently to prevent prices falling so low as to be injurious to the agriculturists and those dependent on them. And it must be borne in mind that the distress of the agri¬ culturists never fails to react on the other classes. When the former are involved in difficulties, their demands for the products of the loom and of our colonial possessions be¬ ing proportionally diminished, the market is glutted with manufactured goods, sugar, &c. as well as with corn. It is, indeed, uniform¬ ly found that the injury that is thus inflicted upon the manufacturing and trading part of the community, very much exceeds all that they gain by the temporary fall in the price of raw produce, occasioned by a glut of the home market. It is plainly, therefore, a ca¬ pital mistake to suppose that the duty and drawback now referred to would be advanta¬ geous only to the agriculturists. They would redound quite as much to the benefit of the other classes. And though this were less certain than it appears to be, still, in a matter of such importance as the welfare of agricul¬ ture, and of those dependent thereon, a wise government should be extremely cautious about adopting any system of policy of the consequences of which it is not fully assured. But even if our limits permitted, it would be to little purpose to insist on these or any similar considerations. The pertinacity with which the agriculturists opposed every ap¬ proach to a more liberal system, roused a spirit which would not be satisfied with any thing short of a complete abandonment of all restrictions. The time for compromise and arrangement having been allowed to go by, government had to deal with an irritated and an unreasoning populace. Cum ventre hu - mano tibi negotium est nec rationem patitur , nec cequitate miiigatur , nec ulla prece Jlectitur populus. (Seneca de Brev. Vitae , c. 18.) It must also be conceded that how beneficial soever in other respects, the real influence of a moderate fixed duty is not very easily appre¬ ciated ; and there can be no question that had it been imposed, it would have been eagerly laid hold of as a convenient handle for the diffusion of all sorts of misrepresentation and abuse. And, such being the case, it was bet¬ ter. perhaps, to abolish all regulations, than by introducing any intermediate system, however well devised, to prolong, as it would have done, a sense of insecurity and the per¬ nicious trade of agitation. The agriculturists need not, however, despond ; they have little to fear from the downfal of the protective system. There is not, in as far as can at present be seen, any real room or ground for thinking that it will occasion such a fall of average prices as will do them any material injury ; and should there be at any time so very abundant a season or cycle of seasons in this country and in the north of Europe, as to threaten such a fall of prices as might give a serious shock to agricultural industry, the crisis may be averted by some temporary ex¬ pedient. It is seldom, indeed, that a law enacted under the influence of popular excite¬ ment and agitation can be advantageously maintained as a rule of national policy. T’he practical merits and defects of the arrange¬ ment made in 1846, which can at present be only guessed at, will be gradually disclos¬ ed ; and it will be the business of parliament to adopt such measures as may be required to secure the former, and in as far as practi¬ cable, to obviate the latter. And though we should not wish to speak confidently respect¬ ing any measure, the working of which must necessarily depend on many contingencies, our impression is that the imposition of a reasonable fixed duty on corn, accompanied with an equivalent drawback, will, if ef¬ fected, be found to be possessed of the double advantage of yielding a consider¬ able revenue, raised in the least burden¬ some manner, and of giving, at the same time, increased steadiness to prices and se¬ curity to industry. But without farther indulging in specu¬ lations, the correctness of which it must be left to time to decide, it appears to be abundantly certain that the notions current among us respecting the extreme cheapness of corn in foreign ports, have no solid founda¬ tion. Though generally sound in principle, and most likely also, beneficial in its opera¬ tion, there seem to be good reasons for thinking that the late measure will disappoint alike the unreasonable fears of the one party, and the unfounded expectations of the other. Indeed the chances are that the agriculturists will gain by the change. It will teach them to depend for success on practical skill, science, and industry, and to cease to rely on custom-house regulations and parliamentary majorities ; and it will give them increased se¬ curity by identifying their interests in opinion, as well as in fact, with those of the public. Part II. CORN LAWS AND CORN TRADE. 529 TABLES OF THE TRICES, IMPORTS, EXPORTS, &c. OF CORN. No. f.—Account of the Prices of Middling or Mealing Wheat per Quarter, at Windsor Market, as ascertained by the Audit Books of Eton College, from 1726 to 1820, both inclusive.* 1 Years. 1 Prices of Wheat at Windsor, Nine Gallons to the Bushel. Prices of Wheat reduced to the Winchester Bushel of Eight Gallons. Average of Ten Years accord¬ ing to the Win¬ chester Bushel Of Eight Gal¬ lons. Years. Prices of Wheat at Windsor, Nine Gallons to the Bushel. I Prices of Wheat reduced to the ; Winchester , Bushel of Eight i Gallons. Average of Ten Years accord¬ ing to the Win¬ chester Bushel of Eight. Gal¬ lons. £ s. d. £ 5. d. £ s. d. £ s. rf. £ s. d. £ 5. d . 1726 2 6 0 2 0 lOf 1774 3 2 0 2 15 i} 1727 2 2 0 1 17 4 1775 2 17 8 2 11 2 11 3} 1728 2 11 6 2 8 5J 1776 2 8 0 2 2 8 1729 2 6 10 2 1 71 1777 2 15 0 2 8 10J 1730 1 16 6 1 12 51 1778 2 9 6 2 4 0 1731 1 12 10 1 9 21 1779 2 0 8 1 16 1} 1732 16 8 1 3 81 1780 2 8 6 2 3 11 17 33 18 4 1 5 21 1781 2 19 0 2 12 5} 1731 1 18 10 1 14 61 1782 3 0 6 2 13 9f 1735 2 3 0 1 18 2f 1 15 2 1783 3 1 0 2 14 2| 1738 2 0 1 1 15 101 1784 3 0 6 2 13 9} 1737 1 18 0 1 13 91 1785 2 14 0 2 8 0 2 7 8^ 1738 1 15 6 1 11 6f 1786 2 7 6 2 2 2f 1739 1 18 6 1 14 2f 1787 2 11 6 2 5 9} 1710 2 10 8 2 5 11 1788 2 15 6 i 2 9 4 1711 2 6 8 2 15} 1789 3 3 2 2 16 If 1712 1 11 0 1 10 2? 1790 3 3 2 2 16 If 1713 1 4 10 12 1 | 1791 2 15 6 2 9 4 1711 1 1 10 12 1 1792f 2 13 0 1715 1 7 6 1 4 51 1 12 1 1793 2 15 8 1743 1 19 0 1 14 8 1794 2 14 0 1717 1 11 10 1 10 111 1795 4 1 6 2 14 3f 1718 1 17 0 1 12 lOf 1796 4 0 2 1749 1 17 0 1 12 lOf 1797 3 2 0 1750 1 12 6 1 8 lOf 1798 2 14 0‘ 1751 1 18 6 1 14 2} 1799 3 15 8 1752 2 1 10 1 17 21 1800 6 7 0 1753 2 4 8 1 19 81 1801 6 8 6 1751 1 14 8 1 10 9f 1802 3 7 2 1755 1 13 10 1 10 1 1 13 2f 1803 3 0 0 fel756 2 5 2 2 0 1} 1804 3 9 6 1757 3 0 0 2 13 4 1805 4 8 0 4 1 21- 1758 2 10 0 2 4 51 1806 4 3 0 1759 1 19 8 1 15 3 1807 3 18 0 1 1760 1 16 6 1 12 51 1808 3 19 2 1761 1 10 2 1 6 9§ 1809 5 6 0 1762 1 19 0 1 14 8 1810 5 12 0 1763 2 0 8 1 16 If 1811 5 8 0 1764 2 6 8 2 1 5f 1812 6 8 0 1765 2 14 0 12 8 0 1 19 3} 1813 6 0 0 1766 2 8 6 2 3 1} 1814 4 5 0 1 1767 3 4 6 2 17 4 1815 3 16 0 4 17 6 1768 3 0 6 2 13 91 1816 4 2 0 1759 2 5 8 2 0 7 1817 5 16 0 1770 2 9 0 2 3 6f • 1818 4 18 0 Average of 1771 2 17 0 2 10 8 1819 3 18 0 5 Years, 1772 3 6 0 2 18 8 1820 3 16 0 4 10 0 1773 3 6 6 2 19 1} * Co’lcgc lias been kept according to the bushel of eight Ballons. uuJer the provision of the act oi 31st Geo. 111. c. 30, sect. b2. M m 530 COHN LAWS AND COHN TRADE. Note X II.- - Accountof the Average Prices of British Corn per Imperial Quarter, in England and \\ ales, since 1771, as ascertained by the Receiver of Corn Returns. ° Years. j Wheat. i Barley. Oats. Rye. £ s. d. £ s. d. £ s. d. £ S. d. 1771 2 8 7 16 5 0 17 2 1 15 4 1772 2 12 3 16 1 0 16 8 1 17 9 1773 2 12 7 19 2 0 17 8 1 14 4 1774 2 14 3 19 4 0 18 4 1 15 4 1775 2 9 10 16 9 0 17 0 1 13 10 1776 1 19 4 10 9 0 15 5 17 8 1777 2 6 11 111 0 16 1 1 8 10 1778 2 3 3 13 4 0 15 7 19 2 1779 1 14 8 10 1 0 14 5 14 0 1780 1 16 9 0 17 6 0 13 2 1 2 10 1781 2 6 0 0 17 8 0 14 1 17 8 1782 2 9 3 13 2 0 15 7 19 8 1783 2 14 3 1 11 3 1 0 5 1 16 9 1784 2 10 4 18 8 0 18 10 1 13 2 1785 2 3 1 14 9 0 17 8 1 8 10 1786 2 0 0 15 1 0 18 6 18 0 1787 2 2 5 13 4 0 17 2 18 6 1788 2 6 4 12 8 0 16 1 1 8 6 1789 2 12 9 13 6 0 16 6 1 10 9 1790 2 14 9 16 3 0 19 5 1 15 0 1791 2 8 7 1 6 10 0 18 1 1 12 7 1792 2 3 0 « • • 0 16 9 1 9 10 1793 2 9 3 1 11 1 1 0 6 1 16 2 1794 2 12 3 1 11 9 1 1 o O 1 17 5 1795 3 15 2 1 17 5 1 4 5 1796 3 13 7 1 15 4 1 1 10 1797 2 13 9 17 2 0 16 3 1798 2 11 10 19 0 0 19 5 1799 3 9 0 1 16 2 1 7 6 1800 5 13 10 2 19 10 1 19 4 1801 5 19 6 3 8 6 1 17 0 1802 3 9 10 1 13 4 1 0 4 1803 2 13 10 15 4 1 1 6 1804 3 2 3 1 11 0 1 4 3 1805 4 9 9 2 4 6 1 8 4 1806 3 19 1 1 18 8 1 7 7 1807 3 15 4 1 19 4 1 8 4 .1808 4 1 4 1 13 4 1809 4 17 4 2 7 0 1 11 5 1810 5 6 5 2 8 1 1 8 7 2 19 5 1811 4 15 3 2 2 3 1 7 7 2 8 4 1812 6 6 6 3 6 9 2 4 6 3 18 7 1813 5 9 9 2 18 6 1 18 6 3 11 11 1814 3 14 4 1 17 4 1 5 8 2 4. 8 1815 3 5 7 1 10 3 1 3 7 1 18 I 1816 3 18 6 1 13 11 1 7 2 2 5 1 1817 4 15 11 2 9 4 1 12 5 2 18 3 18.18 4 6 3 2 13 10 1 12 5 2 15 4 1819 3 14 6 2 5 9 1 8 2 2 9 6 1820 3 7 10 1 13 10 1 4 2 2 2 0 1821 2 16 1 16 0 0 19 6 1 12 0 1822 2 4 7 1 1 10 0 18 1 1 0 10 1823 2 13 4 1 11 6 1 2 11 1 11 10 1824 3 3 11 1 16 4 1 4 10 2 1 f, 1825 3 8 6 2 0 0 1 5 8 2 2 3 1826 2 18 8 1 14 4 1 6 8 2 1 1 1827 2 18 6 1 17 7 1 8 2 2 0 2 1828 3 0 5 1 12 10 1 2 6 1 14 2 1829 3 6 3 1 12 6 1 2 9 1 14 10 1830 3 4 3 1 12 7 1 4 5 1 15 10 1831 3 6 4 1 18 0 1 5 4 2 0 0 1832 2 18 8 1 13 1 1 0 5 1 14 7 1833 2 12 11 17 6 0 18 5 1 12 11 Beans. Teas. £ s. d. Usd. 19 4 1 10 11 1 14 0 1 12 1 19 6 17 3 19 4 18 6 1 4 11 1 2 10 13 8 16 9 1 15 11 1-13 2 1 11 7 1 14 2 • • • 1 12 9 • • • 18 0 • • • 18 0 • • • 1 11 11 • • • 1 11 5 1 13 2 1 11 7 1 12 4 1 17 6 1 19 11 1 19 3 « • * 2 8 5 • • • • • • • • • • • • • • • • • • 2 14 4 • • • • • • ! ... | ... • • • • • • 2 16 11 2 9 4 2 13 11 3 14 7 3 16 10 3 16 4 4 1 11 2 6 2 2 11 10 1 16 2 1 19 4 1 1 19 4 1 19 10 2 11 7 2 13 4 3 3 7 3 19 2 14 1 2 16 1 2 3 3 2 5 10 1 10 11 1 12 8 14 5 16 4 1 13 1 1 14 11 2 0 0 2 0 7 2 2 9 2 5 4 2 4 3 2 7 7 2 9 0 2 9 0 1 18 4 2 0 6 1 16 8 1 16 8 1 16 1 1 19 2 1 19 10 2 1 11 1 15 4 1 17 0 1 13 2 1 16 5 Paiit II. 531 COHN LAWS AND COHN TRADE. Years. Wheat. Barley. Oats. Rye. Beans. Peas. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d- £ s. d. 1834 2 6 2 1 9 0 1 0 11 1 12 9 1 15 3 1 19 4 1835 1 19 4 1 9 11 1 2 0 1 10 4 1 16 11 1 16 6 1836 2 8 6 1 12 10 1 3 1 1 13 4 1 19 1 1 18 4 1837 2 15 10 1 10 4 1 3 1 1 14 9 1 18 7 1 17 6 1838 3 4 7 1 11 5 1 2 5 1 15 1 1 16 8 1 17 2 1839 3 10 8 1 19 6 1 5 11 2 2 0 2 13 2 1 2 1840 3 6 4 1 16 5 1 5 8 1 17 0 2 3 5 2 2 5 1841 3 4 4 1 12 10 1 2 5 1 16 9 1 19 10 2 0 4 1842 2 17 3 1 7 6 0 19 3 1 13 0 1 12 5 1 12 11 1813 2 10 1 1 9 6 0 18 4 1 10 7 19 2 1 11 1 1844 2 11 3 1 13 8 1 0 7 1 13 11 1 14 5 1 13 5 1845 2 10 10 1 11 8 1 2 6 1 12 6 1 18 11 1 18 8 1846 2 14 8 1 12 8 1 3 8 1 15 0 1 19 0 1 19 0 1847 3 9 9 2 4 2 1 8 8 2 9 0 2 10 6 2 11 6 1848 2 10 6 1 11 6 i 0 6 1 10 5 1 16 9 1 19 1 N B— The Imperial Bushel contains 2218U92 cubic inches, the Winchester bushel 2150‘42 do., the former being about one-thirty-secondth part larger than the latter —See Bushel, and Weights and Measures. III.—Account of the Quantity of Wheat and Wheat Flour exported, and of Foreign Wheat and Wheat Flour imported, in the following Years.— N.B. This account includes the trade with Ireland. Years. Wheat and Flour exported. Foreign Wheat and Flour imported. Years. Wheat and Flour exported. Foreign Wheat and Flour imported. Years. Wheat and Flour exported. Foreign Wheat and Flour imported. -. England. Qrs. Qrs. England. Qrs. Qrs. Gt. Brit. Qrs. Qrs. 1697 14,699 400 1731 130,025 4 1764 396,857 1 1698 6,857 845 1732 202,058 1765 167,126 104,547 1699 557 486 1733 427,199 / 1766 164,939 11,020 | 1700 49,056 5 1734 498,196 6 1767 5,071 497,905 1701 98,324 1 1735 153,343 9 1768 7,433 349,268 1702 90,230 1736 118,170 16 1769 49,892 4,378 1703 166,615 50 1737 461,602 32 1770 75,449 34 1704 90,313 2 1738 580,596 2 1771 10,089 2,510 1705 96,185 1739 279,542 5,423 1772 6,959 25,474 1706 188,332 77 1740 54,390 7,568 1773 7,637 56,857 1707 74,155 1741 45,417 40 1774 15,928 289,149 1708 83,406 86 1742 293,260 1 1775 91,037 560,988 1709 169,680 1,552 1743 371,431 2 1776 210,664 20,578 1710 13,924 400 1744 231,984 2 1777 87,686 233,323 1711 76,949 1745 324,839 6 1778 141,070 106,394 1712 145,191 1746 130,646 • • • 1779 222,261 5,039 1713 176,227 1747 266,907 ... 1780 224,059 3,915 1714 174,821 16 1748 543,387 385 1781 103,021 159,866 1715 166,490 1749 629,049 382 1782 145,152 80,695 1716 74,926 1750 947,602 279 1783 51,943 584,183 1717 22,954 1751 661,416 3 1784 89,288 216,947 1718 71,800 1752 429,279 • • • 1785 132,685 110,863 1719 127,762 20 1753 299,609 • • • 1786 205,466 51,463 1720 83,084 1754 356,270 201 1787 120,536 59,339 1721 81,633 Gt. Brit. * • • • • • 1788 82,971 148,710 1722 178,880 1755 237.466 ... 1789 140,014 112,653 1723 157,720 1756 102,752 5 1790 30,892 222,557 1724 245,865 i48 1757 11,545 141,562 1791 70,626 469,056 1725 204,413 12 1758 9.234 20,353 1792 300,278 622,417 1726 142,183 1759 227,641 162 1793 76,629 490,398 1727 30,315 1760 393,614 3 1794 155,048 327,902 1728 3,817 74,574 1761 441,956 • • • 1795 18,839 313,793 1729 18,993 40,315 1762 295,385 56 1796 24,679 879*200 1730 93,971 A - - 76 Ju--.—. - 1763 429,538 72 1797 54,525 461,767 532 CORN LAWS AND CORN TRADE Note X Years. Wheat and Flour exported. Foreign Wheat and Flour imported. Years. Wheat and Flour exported. Foreign Wheat and Flour imported. Years. | Wlieat and Flour exported. Foreign Wheat and Flour imported. 1 Gt. Brit. 1798 1799 1800 1801 1802 1803 1804 i 1805 1806 1807 1808 1809 1810 1811 1812 1813 Qrs. 59,782 39,362 22,013 28,406 149,304 76,580 63,073 77,955 29,566 25,113 98,005 31,278 75,785 97,765 46,325 f Records l ldestroyed 1 Qrs. 396,721 463,185 1,264,520 1,424,765 647,663 373,725 461,140 920,834 310,342 404,946 84,889 455,987 1,567,126 336,131 290,710 559,000 Gt. Brit. 1814 1815 1816 1817 1818 1819 1820 1821 1822 1823 1824 1825 1826 1827 1828 Qrs. 111,477 227,947 121,611 317,524 58,668 44,689 94,657 199,846 160,499 145,951 61,680 38,798 20,054 57,323 76,489 Qrs. 852,567 384,475 332,491 1,089,855 1,694,261 625,638 996,479 707,384 510,602 424,019 441,591 787,606 897,127 711.868 1,410,300 Gt. Brit. 1829 1830 1831 1832 1833 1834 1835 1836 1837 1838 1839 1840 1841 1842 Qrs. 75,097 37,149 65,875 289,558 96,212 159,482 134,076 256,978 308,420 158,621 42,512 87,242 30,390 68,047 Qrs. 2,190,095 2,205,751 2,867,860 1,254,351 1,166,457 981,486 750,808 861,156 ], 109,492 1,923,400 3,110,729 2,526,645 2,910,263 3,111,290 n ;J~ t t C Z n v of the Quantities of Wheat imported into the United Kingdom during eaeh the nv® e , nd!n C w “ h 1846 > exhibiting the Quantities brought from e^chColnt^ and exhibiting, also, the Total Imports of Wheat Flour during each of the above Years/ ’ Countries. Russia Sweden . Norway Denmark Prussia Germany Holland . Belgium . France Portugal, Proper Azores Madeira Spain and the Ba¬ learic Islands Gibraltar . Italy and the Ita¬ lian Islands . Malta Ionian Islands . Morea Turkey Egypt . Barbary States, and W. C. of Africa . Cape of Good Hope Past TnHia. f'Am East India Com panys Territo¬ ries and Ceylon British Settle¬ ments in Aus¬ tralia British North American Co¬ lonies . United States of America Chili Peru . >» allachia and Moldavia . Channel Islands and Man (fo¬ reign goods) . 1535. Qrs. 9,758 3,236 11,577 8 111 2,158 1,107 336 1 14.32S 1 1836. 1,593 Tot al 42,628 Tot vl of flour”) and wheat) 84,969 meal in cwts. ) , 1837. 1838. 1839. 1840. 1841. Qrs. Qrs. Qrs. Qrs. Qrs. 56 11.244 41,339 371,693 266,263 99,599 251 '- - 392 2 8o7 --* - - 360 ._ •-- >8 18,240 111,499 | 196,730 150,351 236,250 9 315.121 550,826 740,203 600,508 681,9«2 2 87,665 312,442 | 409.729 364,553 656,036 4 10,741 62,010 116,4^0 50,612 101,9*3 420 746 17,396 23.141 7,627 23,670 53,190 | 278,182 46,350 147,966 3 — 15 26,382 1,396 1,049 *— • — 1,561 —- wmmm — 616 — — 1 421 17,741 46,939 35,293 4,573 1 570 t 4,483 1 30,264 1 335,612 149,328 112,700 6,390 11,647 | 16,370 1,544 9,855 ——* 5,370 13,928 1,960 2,923 - —• —- .__ . 257 3,150 43,740 4,802 1,337 800 1,729 2,874 6,729 — — 3,360 - . i 3 310 — 2 — 1 — — — 2 — — — 27 8,192 70,299 — 555 3,766 73,755 10,553 —- -- -• 1 91 — ' ’ ' 12,233 — 20,531 1 28,236 10,147 1 455,871 1 ,241,460 2 ,634,556 1 ,993,383 5 !,409,754 2, 1842. Qrs. 288,087 12 89,683 739,617 201,589 9,067 696 469,116 2,641 68,451 714 608,394 114,7.50 7,400 2,017 15,060 37,658 176 5,431 33,656 255,831 364,248 456,739 843,046 1,537,818 16,111 2,840 9,180 1,263,126 1,130,753 1843. 599 621 1,295 20,367 2,383 1,203 941,902 439,761 1844. 1845. Qrs. 6 104,458 o 10,661 7 94,289 1 551,748 5 107,200 6 11,772 2 1,101 i 45,044 ' Qrs. 33,76S 313 578 j 73 076 424,395 151,882 1,614 963 32.133 1,204 | — 210 1 11 4,000 i 80,300 ' 6,163 57.353 4,120 | 18,221 26,564 3,240 5,842 1,187 ... 79 1 4 42 4,150 13,092 36,174 38,645 2,421 1 23,578 — I • 1,100,361 871,256 1,‘ 985,717 950,196 3,] 1846. Qrs. 203,2 tf 60,999 362,542 123,31) 9Tf 3,0. S 71,615 16,4-5 1.18 66,1811 103.613-J 11,04 4 ] 3,2 4 11,5951 21,9.1 7,852 1,291 86 232 1,652 1,436,686 CORN LAWS AND CORN TRADE. 533 Part II. y_Account shewing the Quantities of the different Varieties of Foreign and Colon¬ ial Grain entered for Consumption in the United Kingdom in each of the 18 Years ending with 1847, with the Total Quantities so entered, and the Annual Entries at an Average of the above Period, with a similar Account for Indian corn and Meal for the 5 Years ending with 1847.—(Compiled from various Parliamentary Papers.) Years. Wheat and flour. Barley. Oats and Oatmeal. Bye. Peas. Beans. Total Entered. Indian Corn and Meal. 1830 1831 1832 1833 1834 1835 1836 1837 1838 1839 1840 1841 1842 1843 1844 1845 1846 1847 Totals... Average an-^ nual entries \ for con-j sumption J Qrs. 1,727,847 1,506,740 376,755 84,036 64,974 28,554 30,107 244,272 1,848,475 2,711,723 2,401,436 2,647,808 2,989,645 990,523 988,515 315,615 2,962.928 4,612,110 Qrs. 48,505 514,610 77.988 1,226 11,071 136,853 110,021 47,475 8,192 594,301 619,801 222,837 49,969 223,543 1,020,766 299,430 404,644 782,686 Qrs. 904,472 355,492 3,082 975 55,620 176,142 97,197 334,024 11,072 862,789 517,052 27,918 295,437 45,254 258,235 587,434 779,442 1,788,057 Qrs. 19,189 56,203 60 1 22 3 18 19,576 2,517 152,182 1,857 518 28,516 2,724 28,779 23 1,710 253,510 Qrs. 44,507 57,977 16,595 18,092 57,702 25,184 80,928 87,615 11,618 170,270 159,457 132,857 80,450 45,383 106,375 81,735 181,801 193,078 Qrs. 18,697 17,678 7,439 6,028 44,566 69,824 87,796 109,076 54,240 123,597 129,517 267,697 43,279 45,702 225,680 197,919 209,874 476,253 Qrs. 2,763,217 2,508,700 481,919 110,358 233,955 436,560 406,067 842,038 1,936,114 4,615,262 3,829,120 3,299,635 3,487,298 1,353,129 2,628,350 1,492,156 4,540,399 8,105,694 Qrs. • • • • • • • • • • • • • • • • • • • • • • • • • • • 10,225 38,711 42,295 757,609 4,023,918 26,532,083 5,173,918 7,099,694 567,808 1,551,624 2,134,862 43,059,969 4,872,758 1,474,0031 287,4391 394,427| 81,5441 86,201^ 118,603$ 2,392,2201 974,551 § 1 J VI.—Account of the Quantities of Grain, Flour, Meal, and Malt of Irish Growth, an¬ nually imported into Great Britain from Ireland, from 1802 to 1848, both inclusive. Years. Wheat and Wheat Flour. Barley, in¬ cluding Bear or Bigg. Oats and Oatmeal. Bye. Peas. Beans. alt. 1 i Total. Qrs. Qrs. Qrs. Qrs. Qrs. Qrs. Qrs. Qrs. 1802 108,751 7.116 341,151 282 113 l,65o 2,303 461,3/1 1805 84,087 15,656 203,302 235 1,634 2,010 • • • 306,924 1808 102,276 3,237 357,077 330 1,389 2,361 • • • 466,760 1807 44,900 23,048 389,649 431 1,390 3,777 • • • 463,195 1S03 1809 43,497 66,944 30,586 ■ 15,619 579,974 845,783 573 425 75 38 2,065 2,669 • • • • • • 656,770 932,478 1810 126,388 8,321 492,741 20 216 3,541 ... 631,227 1811 i 1812 147,245 158,352 2,713 43,138 275,757 390,629 21 178 50 51 4,081 5,008 • • • • • • 429,867 597,356 , 1813 217,154 63,560 691.498 420 77 4,4o5 • • • 9/7,164 1814 225,478 16,779 564,010 4 460 5,731 • • • 812,462 1815 189,544 27,108 597,537 207 425 6,371 • • • 821,192 IblS 121,631 62,254 683,714 43 239 5,984 • • • 873,865 1817 55,481 26,766 611,117 • • • 12 2,275 • • • 695,651 1818 105,179 25,387 1,069,385 4 10 4,768 • • • 1,204, / 33 1819 153,850 20,311 789,613 2 • • • 3,904 • • • 967,680 1820 403,407 87,095 916,251 134 439 8,396 • • • 1,415,722 1821 569,700 82,881 1,162,249 550 2,474 4,959 • • • 1,822,816 1822 463,004 22,532 569.237 353 728 7,235 • • • 1,063,089 1823 400,068 19,274 1,102,487 198 586 5,540 • • • 1,528,153 1824 356,384 44,699 1,225,085 112 756 5,791 1,173 1,634,000 1825 396,018 154,256 1,629,856 220 1,431 11,355 10,826 2,203,962 1826 314,851 64,885 1,303,734 77 1,452 7,190 1,203 1,093,392 J 534 NAVIGATION LAWS. Note XL Years. Wheat and Wheat Flour. Barley, in- eluding Bear or Bigg. Oats and Oatmeal. Qrs. Qrs. Qrs. 1827 405,255 67,791 1,343,267 1828 652,584 84,204 2,075,631 1829 519,017 97,140 1,673,628 1830 529,717 189,745 1,471,252 1831 557,498 185,409 1,655,701 1832 790,293 123,639 2,051,867 1833 844,211 101,767 1,762,520 1834 779,505 217,855 1,769,503 1835 661,776 156.242 1,822,767 1836 598,757 184,156 2,132,138 1837 534,465 187,473 2,274,675 1838 542,583 156,467 2,742,807 1839 258,331 61,676 1,904,933 1840 174,439 95,954 2,037,835 1841 218,708 75,568 2,539,380 1842 201,998 50,297 2,261,435 1843 413,466 110,449 2,648,032 1844 440,152 90,656 2,242,308 1845 779,113 93,095 2,353,985 1846 393,462 92,854 1,311,592 1847 184,024 47,527 703,468 1848 304,873 | 80,077 1,676,659 Rye. Peas. i Beans. Malt. Total. Qrs. Qrs. Qrs. Qrs. Qrs. 256 1,282 10,037 572 1,828,460 1,424 4,826 7,068 853 2,826,590 568 4,435 10,445 2,011 2,307,244 414 2,520 19,053 2,820 2,215,521 515 4,142 15,029 10,888 2,429,182 294 1,915 14,530 8,229 2,990,767 166 2,646 19,114 7,017 2,737,441 983 2,176 18,771 3,865 2,792,658 614 3,447 24,235 10,357 2,679,438 483 2,920 17,604 22,214 2,958,272 1,016 60 25,630 4,174 3,030,293 628 5,232 21,584 5,001 3,474,302 2,331 1,484 11,535 2,861 2,243,151 122 1,403 14,573 3,456 2,327,782 ! 172 855 15,907 4,935 2,855,525 76 1,551 19,831 3,046 2,538.234 3/1 1,192 24,329 8,643 3,206,182 264 1,091 18,580 8,153 2,801,204 165 1,644 12,745 11,144 3,251,901 • • • 2,227 14,668 11.329 1,826,132 1,498 4,659 22,361 5,956 969,490 15 2,572 12,314 6,365 2,082,875 NOTE XI. NAVIGATION LAWS. Rise of the Navigation Laws. — Influence ascribed to them . — ^Modification of these Laws in 1825.— Abolition , in 1849, of that portion of the Navigation Laws which re¬ lates to the Foreign Trade of the Empire . The origin of the Navigation Laws of Eng¬ land may be traced to the reign of Richard II., or perhaps to a still more remote period. But as no intelligible account of the varying and contradictory enactments framed at so distant an epoch could be compressed within any reasonable space, it is sufficient to ob¬ serve, that, in the reign of IJenry VII., two of the leading principles of the navigation law were distinctly recognised, in the prohibition of the importation of certain commodities, unless imported in English ships manned by English seamen. In the early part of the reign of Elizabeth (5 Eliz. cap. 5.) foreign ships were excluded from the fisheries and coasting trade. The republican parliament gave a great extension to the navigation laws, by the act of 1650, which prohibited all ships, of all foreign nations whatever, from trading with the plantations in America, without having previously obtained a license. These acts, however, were rather intended to regu¬ late the trade between the different ports and dependencies of the empire than that carried on with foreigners. But in the following year (9th of October 1651,) the republican par¬ liament passed the famous Act of Navigation. 4 his act had a double object. It was intend¬ ed not only to promote our own navigation, but also to strike a decisive blow at the naval power of the Dutch, who then engrossed almost the whole carrying trade of the world, and against whom various circumstances had conspired to incense the English. The act in question declared, that no goods or com¬ modities whatever, of the growth, produce, or manufacture of Asia, Africa, or America, should be imported into England or Ireland, or any of the plantations, except directly in ships belonging to English subjects, and of which the master and the greater number of the crew were Englishmen. Having thus secured the import trade of Asia, Africa, and America, to the English shipowners, the act went on to secure to them, as far as that was possible, the import trade of Europe. For this purpose, it enacted, that no goods of the growth, produce, or manufacture of any country in Europe should be imported into Great Britain, except in British ships, or in such ships as were the real property of the people of the country or place in which the goods were produced, or from which they could only be, or most usually were, export¬ ed. The latter part of the clause was entirely levelled against the Dutch, who had but little native produce to export, and whose ships were principally employed in carrying the produce of other countries to foreign markets. Such were the leading provisions of this famous act. They were adopted by the regal government which succeeded Cromwell, and form the basis of the act 12 Charles II., cap. 18, which continued to a recent period to be the rule by which our naval intercourse Note XI. NAVIGATION LAWS. 535 with other countries was mainly regulated ; and which has been pompously designated the Charta Maritirna of England ! In the statute 12 Charles II. cap. 18, the clause against importing foreign commodities, except in British ships, or in ships of the country or place where the goods were pro¬ duced, or from which they were exported, was so far modified that the prohibition was made to apply only to the goods ot Russia and Turkey, and to certain articles, since well known in commerce by the name of enumerated articles, leave being at the same time given to import all other articles in ships of any description. But this modification was of very little importance, inasmuch as the enumerated articles comprised all that were of most importance in commerce, as timber, grain, tar, hemp and flax, potashes, vines, spirits, sugar, &c. Parliament seems, how¬ ever, to have very speedily come round to the opinion that too much had been done in the way of relaxation; and in the 14th Charles II. a supplemental statute was passed, avow¬ edly with the intention of obviating some evasions of the statute of the preceding year, practised, as was alleged, by the Hollanders and Germans. This, however, seems to have been a mere pretence, to excuse the desire to follow up the blow aimed by the former sta¬ tute at the carrying trade of Holland. And such was our jealousy of the naval and com¬ mercial greatness of the Dutch, that, in oidei to cripple it, we did not hesitate totally to proscribe all trade with them ; and, to prevent the possibility of fraud, or of clandestine or indirect intercourse with Holland, we went so far as to include the commerce with the Netherlands and Germany in the same pro¬ scription. The statute of the 14th of Chailes II. prohibited all importation from these countries, of a long list of enumerated com¬ modities, under any circumstances, or in any vessels, whether British or foreign, under penalty of seizure and confiscation of the ships and goods. So far as it depended on us, Holland, the Netherlands, and Germany, were virtually placed without the paie of the commercial world ! And though the extreme | rigour of this statute was subsequently modi¬ fied, its principal provisions remained in full force until the late alterations. The policy if not the motives which dic¬ tated these statutes has met with very general eulogy. Dr Smith has not hesitated to say, that national animosity did, in this instance, that which the most deliberate wisdom would have recommended. “ When the act of na¬ vigation was made,” says he, “ though Eng¬ land and Holland were not actually at war, the most violent animosity subsisted between the two nations. It had begun during the government of the long parliament, which first framed this act, and it broke out soon after in the Dutch wars during that of the protector and of Charles II. It is not impos¬ sible, therefore, that some of the regulations of this famous act ma} r haye proceeded from national animosity. They are as wise, how¬ ever, as if they had all been dictated by the most deliberate wisdom. National animosity at that particular time aimed at the very same object which the most deliberate wisdom would have recommended, the diminution of the naval power of Holland, the only naval power which could endanger the security of England. The act of navigation is not fa¬ vourable to foreign commerce, or to the growth of that opulence which can arise fiorn it. The interest of a nation in its commercial relations to foreign nations is, like that of a merchant with regard to the different people with whom he deals, to buy as cheap and sell as dear as possible. But the act of naviga¬ tion, by diminishing the number of sellers, must necessarily diminish that of buyers, and we are thus likely not only to buy foreign goods dearer, but to sell our own cheaper, than if there was a more perfect freedom of trade. As defence, however, is of much more importance than opulence, the act of naviga¬ tion is, perhaps, the wisest of all the commer¬ cial regulations ot England.” p. 204.) It may, however, be very fairly doubted, whether, in point of fact, the navigation law really weakened the naval power of the Dutch, and increased that of this kingdom. The Dutch were very powerful at sea long after the passing of this act •, and it seems natural to conclude, that the decline of their maritime preponderance was owing rather to the gra¬ dual increase of commerce and navigation in other countries, and to the disasters and bur¬ dens occasioned by the ruinous contests the republic had to sustain with Cromwell, Charles II., and Louis XIV.-, than to the exclusion of their merchant vessels from the ports of England. It is not, however, meant to say, that this exclusion was altogether without effect. The efforts of the Dutch to procure a repeal of the English navigation law, show that, in their apprehension, it operated inju¬ riously on their commerce. 1 But it is cer¬ tain, that its influence in this respect has been greatly overrated. Excessive taxation, and not our navigation law, was the principal cause of the fall of profits, and of the decline of manufactures, commerce, and navigation in Holland. “ Les guerres,” says the well- informed author of the Commerce de la Hol¬ lander “ terminees par les traites de Nimegue, de Ryswick, d’Utrccht, et enfin la dermere par le traite d’Aix la Chapelle, ont succes- sivement oblige la Eepnblique de faire usage d’un grand credit, et de faire des emprunts 1 In the treaty of Breda, agreed upon in 1667, between the States General and Charles II., the latter undertook to procure the repeal of the na¬ vigation law. But the subject was never agitated in either house ot parliament. 53(> navigation laws enormes pour en soutenir les fraix. Les dettes ont surcharge 1’etat d’une somme im¬ mense d’mterets, qui ne pouvoient etre payes que par uue augmentation excessive d'impots dont il a fallu faire porter la plus forte partie par les consummations dans un pays qui n’a qu’un territoire extremement borne, et par consequent par Industrie. II a done fallu faire encherir mfiniment la main-d’oeuvre. Lette cherte de la main-d’oeuvre a non-seule- ment restraint presque toute sorte de fabrique et a Industrie a la consommation interieure mais elle a encore porte un coup bien sensible au commerce de fret, partie accessoire et la plus precieuse du commerce d’economie : car cette cherte a rendu la construction plus chere, et augmente le prix de tous les ouvrages qui tiennent a la navigation, meme de tons les ouvrages de ports et des magasins. II n’Stoit pas possible que l’augmentation du prix de la mam-dWre ne donnat, malgre tous les efforts de leconomie Hollandoise, un avan- tage sensible aux autres nations qui voudroi- ent se livrer au commerce d’^conomie et k celui de fret.” 1 It would be easy to corroborate this state¬ ment by extracts from Dutch writers of au¬ thority, But it is unnecessary to do more tkan if er t0 a vei T Yalu able Memoir on the .best Means of Amending and Redressinq the Commerce of the Republic, compiled by some of the best informed merchants of Holland and published m 1751, by order of the Stadt- Jiolder, William IV., Prince of Orange. It is there stated, that “ the oppressive taxes , which have, under various denominations, been imposed on trade, must be placed at the head of all the causes. that have co-operated to the prejudice and discouragement of com¬ merce; and it may justly be said, that it can only be attributed to these taxes that the trade of this country has been diverted out of its channel, and transferred to our neighbours and must daily be still more and more alien¬ ated and shut out from us, unless the progress thereof be stopt by some quick and effectual remedy.. Nor is it difficult to see, from these observations, that the same can be effected by no other means than a diminution of all duties.” 3 These extracts show, that it is not to our navigation law, nor to the restrictive regu¬ lations of other powers, but to the abuse°of the funding system, and the excess of taxa¬ tion, that the decline of the commercial greatness and maritime power of Holland is really to be ascribed. _ Neither does it appear tnat the opinion maintained by Smith and others, that the navigation law had a power¬ ful influence in augmenting the naval power \ Tome ii. p. 211. t.i. p e p e 3 Tm!&c he Richessc de la HolIande > p. 2 7 Wem ° :r °" the Best JIeans > Eng. trails. Note XI. of this country, rests on any better founda- tion. I he taste of the nation for naval enter¬ prise had been awakened ; the navy had be¬ come exceedingly formidable; and Blake had achieved his victories before the passing of this famous law. So far, indeed, is it from being certain that the navigation act had, in this lespect, the effect commonly ascribed to it, that there are pretty good grounds for linking it had a precisely opposite effect, and that it operated rather to diminish than to increase our mercantile navy. It is stated • n Eoke ’ s Treatise on Trade, published in 1671, that this act, by lessening the resort of strangers to our ports, had a most injurious effect on our commerce; and he further states that we lost, within two years of its passing the greater part of the Baltic and Greenland trades.- Sir Josiah Child, whose treatise was published in 1691, corroborates Coke’s state¬ ment ; for, while he decidedly approves of the navigation law, he admits that the En^- hsn shipping employed in the eastland and Baltic trades had decreased at least two thirds since its enactment, and that the foreign ship¬ ping employed in these trades had proportion¬ ally increased. 3 Exclusive of these contem¬ porary authorities, it may be worth while to mention, that Mr. Richardson, in his treatise published about the middle of last century condemns the principle of the navigation act • and contends, that instead of increasing our shipping and seamen, it had diminished both • and that, by rendering the freight of ships higher than it would otherwise have been, it entailed a heavy burden on the public, and was one of the main causes that prevented our carrying on the herring fishery so successfully as the Dutch. 4 J There do not seem to he any very good giounds on which to question these state¬ ments ; and they are at all events sufficient to show, that the assertions of those who con¬ tend that the navigation laws prodigiously increased the number of our ships and sailors must be received with very great modifica¬ tion But, suppose that all that has been said by the apologists of these laws were true to i-he letter ; suppose it were conceded, that when first framed, the Act of Navigation was alike politic and judicious, that would be but a slender presumption in favour of the policy of supporting it at present. Human institutions are not made for immortality. I hey must be accommodated to the varvina- circumstances and exigencies of society. "But the situation of Great Britain and the other Eur °P e 1 has totally changed since -ibtiU. I he envied wealth and commercial greatness of Holland have passed away. We 1 Pa ? e 36 « 2 Ibid. 48. 3 Child’s Treatise on Trade, p. 89. Glasg. edit. Essay on the Causes of the Decline of Fo¬ reign Trade, p. GO, ed. 1756 ; See also Introduc¬ tory Discourse, p. xxxv. Vote XI. NAVIGATION LAWS. 537 lave no longer any thing to fear from her lostility ; and “ he must be indeed strangely nfiuenced by antiquated prejudices and by¬ gone apprehensions, who can entertain any of hat jealousy from which the severity of this aw principally originated.” London has be- 3 ome, what Amsterdam formerly was, the rrand emporium of the commercial world— miversi orbis terrarum emporium. And the •eal question which now presents itself for our consideration is, not what are the best means 3 y which we may rise to naval greatness, 3a t—what are the best means of preserving :hat undisputed pre-eminence in maritime iffairs to which we have attained ? Now, it does not really seem that there 3 an be much difficulty in deciding this ques- .ion. Navigation and naval power are the children, not the parents—the effect, not the :ause — of commerce. If the latter be in¬ creased, the increase of the former will follow is a matter of course. More ships and more sailors become necessary, according as the commerce between different and distant coun¬ tries is extended. A country, situated like Great Britain in the reign of Charles II., when her shipping was comparatively limited, might perhaps be warranted in endeavouring to increase its amount, by excluding foreign ships from her harbours. But it is almost superfluous to add, that it is not by any such regulations, but solely by the aid of a flourish¬ ing and widely extended commerce, that the immense mercantile navy we have accumu¬ lated can be supported. It may be easily shown, that to have con¬ tinued, in the present state of the world, to enforce the provisions of the old navigation law, would have been among the most efficient means that could have been devised for the destruction of our commerce. The wealth and power to which Britain has attained, have in¬ spired other nations with the same feelings of envy and jealousy, that the wealth of Holland formerly generated in our minds. Instead of ascribing our commercial and manufacturing superiority to its true causes, that is, to the comparative freedom of our constitution, the absence of all oppressive feudal privileges, the security of property, and the fairness of our system of taxation, our foreign rivals contend that it has been entirely owing to our exclu¬ sive system, and appeal to our example to stimulate their respective governments to adopt retaliatory measures, and to protect them against British competition. These re¬ presentations have had the most injurious operation. In 1817, the American legislature passed an act, copied to the very letter from our statute book, with the avowed intention of its operating as a retaliatory measure against this country. The northern powers threat¬ ened to act on the same principle ; and would have carried their threats into effect but for timely concessions on our part. The same engines by which we laboured to destroy the trade of Holland were thus about to be brought, by what we could not have called an unjust retribution, to operate against our¬ selves. Nor can there be a doubt that, had we continued to maintain our exclusive sys¬ tem, and refused to set a better example to others, and to teach them the advantage of recurring to more liberal principles, we should have run a very great risk of falling a victim to the vindictive spirit which such short¬ sighted and selfish policy would have gene¬ rated. These statements are sufficient to show that a considerable relaxation of our navigation laws had become indispensable ; and this was partly effected in 1821 and 1825, but princi¬ pally in the latter, by the measures introduced with that view into parliament by Mr Wallace (afterwards Lord Wallace) and Mr Huskis- son. The effect of these was to place the intercourse of all European countries at amity with the U. Kingdom on the same footing. The memorials of our former animosity, and of our jealousy of the prosperity of certain neighbouring states, being thus abolished, the same law has since continued to regulate our commerce with the continent. This uniform¬ ity, besides giving greater scope to mercantile operations, and facilitating our traffic with some of our most opulent neighbours, re¬ moved a prolific source of embarrassment and litigation, at the same time that it detracted considerably from that selfish character which had been believed on the continent, and not without considerable reason, to be the ani¬ mating principle of our commercial policy. The changes that were also made in 1821 and 1825, in regard to the importation of enumerated goods, 1 and of articles, the pro¬ duce of Asia, Africa, and America, though of considerable importance, were very far from obviating the hardships arising out of the previous rules. The importation of Eu¬ ropean goods continued to be practicable only in British ships, or in ships of the country of which the goods were the produce, or of the country from which they were shipped. This regulation was kept up to hinder the Dutch, the Danes, or any other people from becoming the carriers of the produce of other nations to our ports. But while this result was not very likely to occur, the rule imposed a serious hardship on foreigners, and also on ourselves. Suppose that a Dutch ship took in part of a cargo of Dutch pro¬ duce, such as cheese, butter, and geneva at Rotterdam for England, what could be more vexatious, in the event of her not being able to complete her cargo with Dutch goods suitable for our markets, than to hinder her 1 These changes ore specified in the former edition of this work. 538 NAVIGATION LAWS. Note Nl from making it up with the foreign goods suitable for them warehoused at Rotterdam, such as the wines and brandies of France the corn of Poland, the hemp and tallow of Russia, &c. ? But its vexatious character was not the only thing to be objected to in a regulation of this sort. It really increased the cost of the butter, cheese, &c. sent to us ; for as these had to bear the whole charge on account of freight which, but for the regulation, would have been in part borne by other articles, their price was proportionally enhanced, at the same time that the Dutch were tempted to resort to retaliatory measures. And how injurious soever in other respects, it is sufficiently plain that this regulation could never, as has been alleged, occasion an increased de¬ mand for British shipping. It no doubt com¬ pelled the foreigners to sort their cargoes less advantageously than they might other¬ wise have done. But the burden of this fell upon the employers of the carriers, and not on the carriers themselves ; that is, it fell upon us and not on the foreigners; while, in the event of their retaliating, our trade was subjected to the same difficulties. It is visionary to pretend that a system so pre¬ judicial to commerce could be advantageous to shipping and navigation. The measures introduced in 1825, left also untouched the regulation by which goods, the produce of Asia, Africa, and America, were prohibited from being imported from any European port, 1 and could not be im¬ ported on foreign bottoms, except when they were imported direct in ships of the coun¬ try of which the goods were the produce. It was proposed in 1821 to authorize British ships to import all non-prohibited articles from wherever they might find them; and though nothing apparently could be more reasonable than such a regulation, it was objected to on the pretence that foreign ships being more cheaply navigated than ours, would take advantage of this cir¬ cumstance to import Asiatic, African, and American products into the contiguous con¬ tinental ports, and would thus confine the employment of our ships to their carriage thence ! And upon this futile pretence, -for which there was not so much as the shadow of a foundation in fact, the old rule was main¬ tained ; and, in consequence, though the ports along the English channel might have been glutted with the corn and cotton of Ame¬ rica, the sugar of Brazil and Cuba, the coffee of Java, and the tea of China, and though all or some of these articles might at the time have been deficient here, not one of them could be imported in a foreign ship, un¬ less, as was sometimes the case, it were car- The only exception to this rule were articles f)"m Asiatic and African Turkey imported from the Levant, and bullion. ried back to the country whence it had bee originally shipped, nor even in a British shir unless it were first carried from Europe t some other continent! It is hardly possible t imagine any rule or regulation more extrava gantly oppressive and absurd, and it is reali astonishing it should have been able to kee' its place on the statute book for about tw- centuiies. Luckily, however, this prepoa terous system, as well as the regulations af fectmg importation from Europe, ceased oi the 1st of January 1850. The act for thei repeal, the 12th and 13th Viet. c. 29, ma- be regarded as the completion of the fre« trade measures adopted in 1842 and 1846 and will, we have little doubt, have the mos favourable influence over the commerce am navigation of the empire. The monopoly ot the coasting trade ij still secured to British ships, and it is verd doubtful, whether it would have been expel dient to interfere with it. Speaking generally] the coasting trade of a country may be al¬ ways most cheaply and efficiently carried or] by the agency of its own ships, while, byl confining it to them, the risk of smuggling is materially diminished. The relaxations made in 1825 and 1826 in the regulations embodied in our old naviga¬ tion laws in regard to the colonial trade, were perhaps the most valuable portion of the changes introduced by Mr. Huskisson. But though they did much to obviate the hard¬ ships growing out of the previous rules, and to give freedom to the colonial trade, they did not entirely effect that object; and some re¬ gulations were subsequently continued in force which, though irritating and mischiev- ous in their bearing on the colonies, were of no real advantage to ourselves. These, how ever, wholly ceased on the 1st of Januarv 1850. All varieties of goods may now be! imported into the colonies from all countries | at peace with Great Britain, and exported | from the colonies to them, wdiether in British, I colonial, or foreign shipping. The complaints i of the colonists, in regard to the injuries they have sustained from the rules enforced by our navigation laws, are thus completely ob- ■ viated, and on that ground, at all events, they ‘ have no farther claim to prohibitory duties. Besides the restrictive regulations already alluded to, it was a part of our former policy to encourage the employment of Bri¬ tish shipping by imposing higher duties on commodities imported in foreign vessels, than were imposed on them "when imported in British vessels; and it was also customary to charge foreign vessels wfith higher port and lighthouse duties, &c. This practice was always loudly complained of by foreigners; but we had little difficulty in maintaining it, so long as w r e could afford to disregard the retaliatory measures of other powers. But NAVIGATION LAWS. 539 OTE XL ie extraordinary increase that took place, nee the commencement of the late war, in ir manufactures for foreign consumption, id the necessity under which we were, in ^sequence, placed, of conciliating our cus- )iners abroad, led to the adoption of the reel - rocky system . The latter was first intro- uced into the trade with the United States, .fter the North American colonies had suc- eeded in establishing their independence, ley set about framing rules for their naviga- on on the model of those of this country. Linong other regulations of a restrictive cha- acter,°it was enacted that all foreign vessels rading to the United States should pay 44 ents, which was afterwards raised to 94 cents nearly a dollar) per ton duty, beyond what ras paid by American ships ; and further, hat goods imported in foreign vessels should .ay a duty of 10 per cent, over and above the uty payable on them .when imported in American vessels. This law was avowedly directed against the hipping of this country, though, as it was jottomed on the same principles as our navi- ration laws, we could not openly complain of ts operation. Under these circumstances it vould have been sound policy to have at once proposed an accommodation; and instead of attempting to meet retaliation by retalia- ion, to have offered to modify our naviga- :ion law, in so far as American shipping was concerned, on the Americans making reci¬ procal modifications in our favour. A diffe¬ rent course was, however, followed. V arious devices were fallen upon to counteract the navigation system of the Americans, without in any degree relaxing our own : but they all failed of their object; and at length it be¬ came obvious to every one that we had en¬ gaged in an unequal struggle, and that the real effect of our policy was, to give a bounty on the importation of the manufactured goods of other countries into the United States, and thus gradually to exclude both our manufac¬ tures and ships from the ports of the republic. In consequence, a conviction of the necessity of making concessions gained ground progres¬ sively ; and it was ultimately fixed, by the commercial treaty agreed upon between Great Britain and the United States, in 1815, that in future equal charges should be imposed on the ships of either country in the ports of the other, and that equal duties should be laid upon all articles, the produce of the one coun¬ try imported into the other, whether such importation were effected in the ships of the one or the other. Brazil and the other states of South Ame¬ rica were naturally anxious to establish a commercial marine ; and, to forward their views in this respect, they contemplated enacting navigation laws. But this intention was frustrated by the interference of the British government, who, without stipulating for any peculiar advantage, wisely offered to admit their ships into our ports on a prin¬ ciple of reciprocity, or on their paying the same charges as our own ships, on condition of their admitting British ships into their ports on a similar footing. Commercial treaties, framed on this sound principle, were after¬ wards entered into with most of these states. The reciprocity system having been thus adopted as the basis of the intercourse with the United States, whose commercial marine was second only to that of Great Britain, it was not possible to refuse adopting it in the case of such European countries as might choose to admit our ships into their ports on a footing of equality. 1 The first demand of this sort was made on the part of the Prussian govern¬ ment, which, on the 20th of June 1822, issued an order in council, making large additions to the port dues previously charged on all ships belonging to those nations which did not admit Prussian ships on a principle of re¬ ciprocity. The real object of this order was to injure the navigation of this country; and it was speedily found that it had the desired effect, and that its operation on British ship¬ ping was most mischievous. Under these circumstances, the British merchants and shipowners applied to our go¬ vernment for relief. “We were assailed,” said Mr. Huskisson, “with representations from all quarters connected with the shipping and trade of the country, against the heavy charges imposed upon British ships in the ports of Prussia. In such circumstances, what course did his majesty’s government take ? We felt it to be our duty, in the first instance, to communicate with the Prussian minister in this country ; and our minister at Berlin was, I believe, also directed to confer with the Prussian government on the subject. I myself had a conference with the Prussian minister at this court, and I well recollect the substance of his reply to me: ‘You have,’ he said, ‘ set us the example, by your port and light charges, and your discriminating duties on Prussian ships; and we have not gone beyond the limits of that example. Hi¬ therto, we have confined the increase of our port and tonnage charges to ships only ; but it is the intention of my government next year,’ (and of this he shewed me the written proof) ‘ to imitate you still more closely, by imposing discriminating duties on the goods imported in your ships. Our object is a just protection to our own navigation; and so long as t By the fourth section of the act 6 Geo. IV. c. 1, it is enacted, that his majesty may, by an order in council, admit the ships of foreign states into our ports, on payment of the like duties that are charged on British vessels, provided that Bri¬ tish ships are admitted into the ports of such fo¬ reign states, on payment of the like duties that are charged on their vessels. 540 navigation laws. the measure of our protection does not exceed that which is afforded in your ports to British ships, we cannot see with what reason you can complain.’ Against such a reply what remonstrance could we, in fairness, make to the Prussian gov ernment? W e might have addressed our¬ selves, it may be said by some, to the friendly feelings of that government;—we might have pleaded long usage in support of our discri¬ minating duties ; we might have urged the adv antages which Prussia derived from her trade with England. Appeals like these were not foi gotten in the discussion, but they were of little avail against the fact stated by the consul at Dantzic—that ‘ the Prussian ship¬ owners were all going to ruin.’ By others it may be said, ‘ Your duty was to retaliate by increasing your own port charges and discriminating duties, on Prussian s upping. I have already stated generally my reasons^against the policy of this latter course. We were not prepared to begin a system of commercial hostility, which, if fol¬ lowed up on both sides to its legitimate con- sequences, could only tend to reciprocal pro- hiuition. In this state of things, more pru¬ dently, as I contend, we entered upon an amicable negotiation w’ith the Prussian go¬ vernment, upon the principle of our treaty with the United States,—that of abolishing, on both sides, all discriminating duties on the ships and goods of the respective countries in the ports of the other. “ Having concluded an arrangement with 1 russia upon this basis, we soon found it necessary to do the same with some other of tie noithern states. Similar conventions were accordingly entered into with Denmark and Sweden. Eeciprocity is the foundation ot all those conventions; but it is only fair to add,, that they contain other stipulations tor giving facility to trade, and from vdiich the commerce of this country, I am confident, will, m the result, derive considerable advan Note X tage. This statement shows that the establish¬ ment of the reciprocity system with respect to which so violent a clamour was after¬ wards raised, was not a measure of choice but of necessity. We could not afford to azard the exclusion of our manufactures trom countries into which they were annually imported to a very large amount. So long as the 1 russians, Swedes, Danes, and other na¬ tions, chose to submit, without attempting to retaliate, to our system of discriminating du¬ ties on foreign ships, and on the goods im¬ ported in them, it was no business of ours i tell them that that system was illiberal an unjust. But when they discovered that sue was really the case, and declared that unles we modified our restrictions, they would n taliate on our commerce, and either entire! exclude our commodities from their market* or load those that were imported in Briti.s ships with prohibitory duties, should we hav been justified in refusing to come to an accoia modation ? V ere we to sacrifice the siK stance to the shadow ? To turn aw x ay som of our best customers because they chose Ft stipulate that the intercourse between then and us should be conducted either in thei ships or in ours, as the merchants might thin] best ? Government had only a choice of dii nculties ; and they wisely preferred adoptin: a system which has preserved the access t< foreign markets for English goods, and hai iaither secured an ..equal chance to EnglisI snips, with those of foreigners, of being em ployed in the trade with other countries More could not have been obtained ; no would it have been really desirable. Had w endeavoured to enforce in the nineteenth century the rules and regulations that ha* been justly objected to and regarded as oi piessive in the sixteenth and seventeentl centuries, we should have provoked a spiri of hostility and retaliation that must even tually, and at no distant period, have cripplei a i . manufactures, the trade, and the navigation of the empire. The reciprocity system is still wisely main tamed, and is, indeed, embodied in the acl U and 13 1 ict. c. 29. But we do not make Us previously agreeing to this system a condition, of a foreign country being entitled to participate in the advantages conferred by this act. Such preliminary arrange¬ ments would have occasioned much embar¬ rassment and difficulty, and we, therefore have contented ourselves with reserving power to her majesty in council, in the event of her thinking it expedient to interfere, to impose. such prohibitions, restrictions, and discriminating duties on the ships of any fo¬ reign power frequenting our ports, as may be required to. countervail any peculiar prohibi¬ tions, restrictions, or duties laid upon British ships in the ports of such foreign power 'Huskisson’s Speech, May 12, 1826, on the o^ate of the Shipping Interest. Much difference of opinion has existed a: to the practical effect on onr shipping am navigation, of the changes in the navigatioi law introduced by Mr. Husldsson. But then -Tic 0 gr0Und for an ysueh difference 1 his will be apparent from the following com¬ parison between the shipping belonging to the empire m 1825, when Mr. Huskisson’s re- forms began, and in 1848 :_ OTE XI. NAVIGATION LAWS. 541 ccount of the Ships, their Tonnage, and their Crews, belonging to the British Empire, in 1825 and 1848. Years. United Kingdom and Possessions in Europe. Colonies. Total. — Crews. 1825 1848 Ships. 20,701 25,638 Tons. 2,328,807 3,400,809 Ships. 3,579 8,034 Tons. 214,875 651,351 Ships. 24,280 33,672 Tons. 2,553.682 4,052,160 166,183 236,069 Excess in 1848 4,937 1,072,002 4,455 436,476 9,392 1,498,478 69,886 It is plain from this statement that the umber of our ships, the amount of their onnage, and the number of our sailors, have 11 been vastly increased since 1825. And f this be not, we should like to know what an be, a conclusive proof of the wisdom of he changes effected in 1825. They have, in act, been successful to a degree which the nost sanguine could not previously have sup- )osed possible. Although, however, the fact of a vast in- ;rease of our mercantile marine having taken dace since 1825, be too well established to idmit of any doubt, it is contended by the ipologists of the old restrictive system, that he share which foreigners have in the trade )f the United Kingdom is notwithstanding greater now than in 1825. But this greater preponderance of foreign vessels in our trade, if such really be the case, (which is doubtful,) is admitted to be but inconsiderable ; though, were it incomparably greater than it is alleged to be, it would afford no room or ground for objecting to the measures of 1825 and 1849. The shipping and foreign trade of most con¬ tinental states were all but wholly destroyed during the war terminated in 1815, while our shipping and trade were then proportionally increased : And the influence of this depres¬ sion on the one side, and of the unnatural stimulus on the other, was far from being exhausted in 1825. But in the lengthened interval that has since elapsed, the mercantile navies of the continental states have attained to their ordinary state. And while we have no longer had any peculiar advantages on our side, we have had to contend with them, and with the rapidly increasing marine of the U. States. As respects tho latter, we may observe, that while in 1825 our imports of cotton, principally from America, amount¬ ed to about 222,500,000 lbs., they amounted in 1848, to about 670,000,000 lbs. ; at the same time that the imports of corn and flour from the U. States in the latter year bore a still greater proportion to their amount in the former. Our intercourse with Hol¬ land, France, the Elbe, &c., which was all but wholly suppressed during the war, is now become very extensive : and are we, under such circumstances, to be surprised that the proportion of foreign shipping fre¬ quenting our ports has increased ? Had such increase been ten times greater, it could not have surprised any reasonable person; and the fair presumption is, that but for the re¬ forms effected in 1825, such would have been the case. And there is every reason to anti¬ cipate that the farther reforms effected in 1849, which, like those of 1825, were impe¬ ratively required by the exigencies of the commercial world, will be equally beneficial. No evidence has been, or, we believe, can be produced, to warrant the often repeated assertion, that foreigners man and navigate ships cheaper than ourselves. There is not at present any trade open to British ships in which they do not, without difficulty, main¬ tain their ground against every other com¬ petitor. The wages of seamen in the U. States are higher than here; and this, indeed, is a principal cause of our seamen engaging so very extensively as they are known to do in the American service. And while the wages paid by the northern shipowners dif¬ fer but little from ours, their qrews are larger, compared with the burden of their ships. The difference in the cost of victualling must be inconsiderable ; for in all distant voyages our ships procure provisions and stores oi all sorts at the same rates as the foreigner. Hence, as it appears to us, nothing can be more futile and unfounded than the fears, whether real or pretended, that our shipowners will not be able to withstand any competition to which they may be exposed. I he late changes uill be more advantageous to ourseh es than to any other nation. Being the greatest com¬ mercial and naval people in the world, we must necessarily gain most by whatever gives increased facilities to commerce and naviga- In estimating the capacity of the British shipowners to maintain their ground against their competitors in other parts of the world, it must be remembered that they are not now, as heretofore, obliged to use only ships of the 54 2 IMPRESSMENT. built of the U. Kingdom or the colonies, i his restriction has been repealed by the 12 and 13 Viet. c. 29 ; and the fact of a ship being Lritish, and entitled to all the privileges peculiar thereto, no longer depends on her having been constructed in our dominions, but on her being registered and manned ac¬ cording to the provisions in the statute now referred to The building yards of all the countues of the world are thus laid open to our merchants, or others wishing to buv ships, who may purchase them as they do corn and wine, wherever they may be had cheapest. He, however, incline to think that the power to buy foreign ships is one that will be rarely exercised. At present, taking their quality and durability into account, English- built ships are as cheap as those of any other country, or cheaper. But we are ready to admit the superior importance of the ship¬ building business, and that it is right and pioper to adopt any measure not injurious to others, by which its safety, and the well¬ being of our commercial marine, may be most effectually secured. And hence we think it would be good policy to remit the duty on the timber used in the building of ships, or, if that cannot be conveniently done, to allow them to be built and fitted out in bond. Even as it is, our shipbuilders have little or nothing to fear from foreign compe¬ tition but with the concession now referred to, which might be made with very little loss to the revenue, there can be no manner of doubt that ships would be built cheaper here than anywheie else 5 and, under the circum¬ stances supposed, the probability is, that be¬ sides supplying our own demand, we should export them in large numbers. Among the drawbacks to which our com¬ mercial marine has been, and continues to be subject, the most formidable appears to be the frequent incompetence of the masters, and the prevalence of intemperance among them and the crews. To obviate the first of these evils, it is proposed, conformably to the policy adopt¬ ed in some other countries , 1 to subject all par¬ ties seeking to be employed as masters of ships to a previous examination, in the view of ascertaining their capacity properly to dis¬ charge the important duties incident to such employment. And provided the examination were conducted by thoroughly qualified par¬ ties, and made sufficiently stringent, it would raise alike the character and the skill of the masters ; and were some better system also introduced for the maintenance of discipline and good order on board merchant ships, and for the prevention or discouragement of in¬ temperance, the result could not fail to be in the highest degree beneficial. For an account of the regulations adopted in France in regard to this matter, s«e Commer¬ cial Dictionary, Art. Master. Note XT NOTE XII. IMPRESSMENT.—PLAN FOR ITS ABOLITION. The cruelty and oppressiveness of impress ment being admitted on all hands, it is un necessary to dilate on these topics ; we sha]j therefore proceed briefly to inquire whethd the existence of this practice be really de fensible, on the ground alleged by its apol logists, of its being indispensable for till manning of the fleet at the breaking out of ; l war, or in cases of emergency. -The argument for the necessity of impress ment may be stated as follows :—- It is obvious, on the ordinary principle bj which the supply of any description of artl! sano is proportioned to the effective demanrl for their services, that, generally speaking, a country will not possess more sailors than id required to man the vessels of her govern ment and her merchants. The number oi sailors employed in the merchant service oil Great Britain amounts, according to the offi cial returns, to about 236,000, and there are. besides, 29,500 sailors employed in the navy I making in all 265,500, exclusive of fisher¬ men, watermen, &c., many of whom, how¬ ever, are protected from impressment. At I the conclusion of a war, a considerable num¬ ber of sailors are usually discharged from) the fleet for whose services there is no de-! mand; and at such periods their total num¬ ber proportionally exceeds the number re-1 quired for the queen’s and the merchant-] sei vice. But in the lapse of a few year 3 this surplus disappears ; and the total num¬ ber of sailors, like that of any other descrip-1 tion of workmen, is proportioned to the de¬ mand. Now, it is contended, on the principle here stated, that if the number of sailors required to man the fleet, on the breaking out of a I war, should considerably exceed the number of those maintained on the peace establish¬ ment, recourse must be had to impressment. ! And such is the situation in which we should be placed were a war to break out at present. Instead of 29,500, at least 40,000 or 50,000 seamen would be wanted for the fleet. And it must also be kept in mind that war, instead 1 of diminishing our foreign commerce, may : throw a greater share of the trade of the world into our hands, and increase the de- j mand for merchant ships ; nor, so long as we retain our naval superiority, is there any considerable probability that the demand for them will be materially diminished in conse¬ quence of hostilities. Unless, however, a war were to throw a large proportion of our mer¬ chant ships out of employment, it is evident we should not be able to man the fleet with¬ out either resorting to impressment, or offer¬ ing such high wages as might tempt the re- OTE XII. IMPRESSMENT. 543 ired number of hands to leave the merchant rvice for the queen’s. The ten or twenty ousand additional seamen wanted for the je t cannot be created by a declaration of ar. They can only be got from the mer- iant service; and if the merchants have Bed of them, and are willing to offer as high ages as government, recourse must unavoid- )ly be had to impressment. This necessity is not, however, natural but rtificial ; it is of our own making, and may e easily obviated. So far, indeed, is it from eing true that impressment is indispensable )r the manning of the fleet, that it is ot even necessary we should have mer- hant ships from which to impress men. It as been usually supposed that no nation an have a great warlike navy, unless it have t the same time a great mercantile navy; nd in consequence, as already seen, of the revalence of this opinion, oppressive re- traints have been laid on commerce in the dew of forcing the employment of ships and ailors. All, however, that is really re¬ quired for the attainment of naval power, is, he possession of convenient harbours, and of vealth sufficient to build ships, and to pay he wages of their crews. How paradoxical soever the proposition may at first sight ap¬ pear, it will notwithstanding be found, on examination, that the navy might be as ormidable as it really is, or, if that were desirable, infinitely more so, though we did not possess a tithe of our merchant ships. It is admitted, on all hands, that the only use of the latter, in respect of national defence, is the means they afford of breeding up and training sailors, who may afterwards be made available, by impressment or otherwise, for the manning of the fleet. But the question is, are there any good reasons for preferring this circuitous method of procuring men for the navy ? Sailors may, undoubtedly, be brought up in ships of war as well as in mei- chantmen ; and some very high authorities in naval matters have declared, what indeed it was only natural to suppose, that a sailor who has been brought up from infancy on board a ship of war is better fitted for the peculiar duty required of her crew than if he had been bred in a merchantman. A sailor bred in the latter is ignorant of many things that are indispensable to a good man- of-war’s man. He has to be trained to the management of guns, to the sword exercise, &c.; and has to learn to submit himself, to that regular routine duty and strict discipline essential in a fleet. Sound policy would, therefore, seem to suggest that, instead of only keeping from twenty-five to thirty thousand seamen afloat during peace, and trusting to impressment to man the fleet on the breaking out of a war, our peace establishment should be fixed at forty or fifty thousand able-bodied seamen. According to the admiralty regula¬ tions, a fourth part of the crew of a man-of- war may, exclusive of marines, consist of landsmen and boys ; and it has been repeat¬ edly stated, that this description of persons formed, at the close of last ^var, at an ave¬ rage, a full third of the crews of almost all our ships. Suppose, then, that we had 40,000 able-bodied and thorough-bred seamen on board our ships of war in time of peace, we should be able, on the breaking out of a war, by enlisting the ordinary proportion of lands¬ men and boys, instantly to man such a power¬ ful fleet as would crush all that could be op¬ posed to it: and on this system, it is obvious that the supply of sailors for the fleet might be constantly kept up without ever abstract¬ ing a single individual from the merchant service, and, consequently, without either re¬ sorting to impressment, or giving the least shock to commerce : at the same time that the crews being thoroughly trained, would attain to a state of discipline to which they have hitherto been generally strangers. To facilitate the obtaining of volunteers, sailors might be enlisted for limited periods only. At the end of the first period of three, five, or seven years, as might be fixed upon, they might be entitled to a discharge, and liberty might be allowed them to practise any trade in any town or place in the country, without acquiring the freedom of any corpo¬ rate body or association. If they enlisted for a second period, they might be entitled to a pension on its termination; and if they en¬ listed for a third period, they might be en¬ titled, over and above the wages paid to other seamen, to the pension due to them at the termination of their second period of service, and to have that pension doubled on the ex¬ piration of the third period. And these pen¬ sions should be exclusive of allowances lor wounds, &c., which might be continued as at present. It was formerly customary for individuals to be sent to the navy as a place of punish¬ ment ; the sentence of various descriptions of criminals being commuted on their consent¬ ing' to go on board one of her majesty’s ships. But this practice, which degraded our men- of-war into gaols, has been most properly abandoned. The only objection worth notice, that can be made to the plan for abolishing impress¬ ment by keeping a greater number of sailors afloat during peace, is founded on the ground of expense. But though it were to cost a few hundred thousand pounds a year more i than the present system, we cannot doubt, l inasmuch as it is evident that without incur- i ring this expense the injustice and misery t caused by impressment must be perpetual, that i it would be cheerfully submitted to by the i public. In point of fact, however, the pro- l bability seems to be, that the plan now sug- 544 IMPRESSMENT. Note XI] gested would be really cheaper than that hitherto acted upon. According to the navy estimates for 1848, the total charge on ac¬ count of wages and victuals for 43,000 men, including 13,500 marines, to serve in the fleet for thirteen lunar months, amounted to 2,179,0637. ; from which, by deducting the pi oportional charge on account of the marines, we have 1,500,000/. nearly as the total charge on account of the 29,500 seamen. Supposing now that the number of seamen on the peace establishment were increased, as it should be, to 40,000 men, exclusive of marines, the whole additional cost would only amount to about 500,000/. It should, however, be ob¬ served, that the crews of most part of the ships now at sea are below their full complement, so that the number of seamen might be doubled without causing anything like a pro- poitional increase in the charge for wear and tear, which forms an item in the navy esti¬ mates that is seldom less, and often more than 300,000/. But without taking this circum¬ stance into account, there can be no doubt that the abolition of impressment would be advantageously purchased by an addition of 500,000/. a year to the peace establishment. It is. really an error to suppose that this practice is recommended by its cheapness. Every one knows that if any employment be particularly disagreeable or hazardous, or if those engaged in it be peculiarly ex¬ posed to oppression or ill treatment, young men will be disinclined to enter it; and it would be impossible to carry it on, unless " ages rose so as* to afford those engaged therein a reasonable compensation for the un¬ favourable circumstances attending it. Now, this is most especially the case with the sea service. The violence and injustice to which sailors are exposed deter many from sea-go¬ ing ; and thus, by artificially lessening their number, raise wages above their natural level, to the extreme injury as well of the queen’s as of the merchant service. It is impossible to form any accurate esti¬ mate of the addition made, in this way, to the v ages of our seamen, inasmuch as it varies with the supposed probability of a war alid other contingencies ; but taking it at only 2s. a lunar month, or 1/. 6s. a year, it would make on the yearly wages of 236,000 seamen employed in the merchant service 306,000/. : so that, assuming this estimate to be well founded,, the reduction in the wages of sea¬ men in time of peace, consequent to the abo¬ lition of impressment, would amount to consi¬ derably more than half the sum that would be required to maintain such a number of sailors on the peace establishment as would enable that measure to be accomplished. But it is in war that the superior cheapness of the plan now proposed would chiefly mani¬ fest itself. It has been repeatedly stated that there were above 20,000 British sailors in the American service at the close of last war and the wages of our seamen, which in tiin of peace rarely exceed 50s. or 60s. a month had then risen to 100s. or 120s. ! imposing burden on the commerce of the country, ex elusive of its other pernicious consequences infinitely outweighing a dozen years’ cost of ; peace establishment three times as creat a] that suggested in this note. 8 ' Our merchants are every now and the! loudly complaining of the high wages de manded by the sailors. But it is against tin source of the evil, and not against its consd quences, that they should raise an outcrv Impressment is the principal cause of the de ficient numbers, and consequent high wage] of our seamen ; and it is idle to suppose thal they should be materially diminished whild this practice is maintained. If we will havd injustice, it is childish to clamour about its expense. “ The custom of impressment) puts a free-born British sailor on the same; footing as a Turkish slave. The grand seignion cannot do a more absolute act than to order al man to be dragged away from his family, am} against his will run his head before the mouth] of a cannon ; and if such acts should be fre¬ quent in Turkey upon anyone set ofusefiff men, "vvould it not drive them away to other countries, and thin their numbers yearly ? and would, not the remaining few double or treble. their wages ? which is the case with] our sailors in time of war, to the great detri¬ ment of our trade and manufactures.” 1 The increase of wages caused at all times, but especially during war, by the practice of impressment, is not, however, its worst effect. The wish to lessen this expense leads, in nu¬ merous cases, to the sending of ships to sea with insufficient crews ; and consequently to I the loss of many lives and much valuable pioperty.. It is difficult to say how much the rate of insurance is affected by this circum- I stance, but that it is raised by it is a fact of I which there is no doubt. M ere there nothing else to recommend the I abolition ot impressment, the circumstances under which the rise of the U. States has placed this country, will, most likely, bring it about. The practice has been abandoned by the Americans. Being desirous of be¬ coming a great naval power, they have wisely renounced a system that would have dn\en their best sailors from their service, and compelled them, in periods of difficulty, to man their ships of war with felons and the ofiscourings of society. In former times our seamen were in the habit, on the breaking out of a war, of deserting to Hol¬ land ; but the difference of language was an insup.eiable obstacle to their carrying this practice to any great extent. With Ameri- 1 Richardson’s Essay on the Causes of the De¬ cline of Foreign Trade, ed. 1756, p. 24. TREATY WITH FRANCE. 545 OTE XIII. however, it is altogether different. Our amen are there sure to find a safe asylum nong their kindred and friends,—among j iose whose language, customs, and habits >e identical with their own, and who do not il to hold out every inducement to draw tern to their service. If, therefore, the 1 /erpowering temptations which our sailors ill have, at the breaking out of a war, to dc- j ;rt to America, be not effectually counter¬ ed—and that can only be done by the un- mditional abandonment of impressment— is not difficult to see that the ultimate jiumph of the American navy will be secured i y our obstinately clinging to a system fraught .ith injustice and cruelty. Although, therefore, it might perhaps cost Lf little more to man the fleet during peace on le proposed system, than on that which is in se, that increased cost would be more than alanced by other savings ; for, as has been [ready shown, by permitting the abolition of npressment, it would occasion a reduction in le wages of seamen, and consequently in the ast of manning merchant ships even in time f peace ; while it would effectually prevent 'ages from rising to the oppressive height to 'hich they have hitherto risen during periods f war. But though impressment were as cheap as ; is really dear, and though it were as equi- ible and humane as it is unjust and cruel, it /ill be found to be impossible, for the reasons reviously stated, and many more that will eadily suggest themselves, to continue to ct upon it without endangering our naval uperiority. Many distinguished naval oth¬ ers concur in this opinion ; and are con- inced of the necessity of some radical change eing effected in the present system. (i ►t j t NOTE XIII. COMMERCIAL TREATY WITH FRANCE IN 1786. IVV IXII very few exceptions, the commercial reaties negociated down to a late period, were : lot bottomed on any fair principle of recipro- ity, but were entered into because each of he contracting parties believed they had ecured an advantage at the expense of the •ther. It is almost superfluous to add, that hese supposed advantages have most com- nonly proved to be either imaginary or posi- ively pernicious. When one country obtains, j >y treaty or otherwise, the exclusive privi- ege of supplying the markets of another with come species of produce she had not previous- y been in the habit of exporting to them, ihe is almost invariably obliged, in order to mable the trade to be carried on, to give hat other a similar monopoly in her markets. Thus, in the case of the famous commercial treaty between this country and Portugal, negotiated by Mr Methuen in 1703, we obtained the exclusive privilege of supplying the Portuguese markets with woollens : but the Portuguese could not have given effect to the treaty, that is, they could not have supplied us with equivalents for our wool¬ lens, had we not, at the same time, given them the monopoly of the British market for wine. The treaty was thus obviously pro¬ ductive of a double mischief : it was inju¬ rious to the Portuguese, by narrowing their market for woollens, and attracting too great a proportion of their scanty capital to the production of wine; and it was injurious to ourselves, by obliging our government to impose heavy discriminating duties on the wines of France and other countries, which compelled us to buy much worse liquor at a much higher price, w r hile it, also, stimu¬ lated the French, Spaniards, &c. to retaliate on our commerce by excluding several of our most valuable commodities from their markets. It is visionary indeed to imagine that any nation should willingly continue to give ano¬ ther an exclusive advantage in her markets, unless she obtain what she reckons an equi¬ valent advantage in the markets of the fa¬ voured people. And if a commercial treaty, stipulating for an exclusive privilege, be really observed on the part of the country grant¬ ing the privilege, we may be assured that the concessions made by the country in whose favour it is granted are sufficient fully to countervail it. Those who grasp at ex¬ clusive advantages in matters of this sort, or who attempt to extort valuable privileges from the weakness or ignorance of their neigh¬ bours, are sure to be defeated in their object. All really beneficial commercial transactions are mutually advantageous to the parties who carry them on; and that nation will always flourish most, and have the foundations of her prosperity best secured, that is a universal merchant, and deals with all the world on just and liberal principles. The doctrines laid dovm by the best writers on public law correspond, in this instance, with those deduced from the principles of commercial science. “All men ought,” says Yattel, “ to find on earth the. things they stand in need of. In the primitive state of communion, they took them wherever they happened to meet with them, if another had not before appropriated them to his owm use. The introduction of dominion and property could not deprive men of so essential a right, and consequently it cannot take place without leaving them, in general, some means of pro¬ curing what is useful or necessary to them. That mean is commerce; by it every man may still supply his wants. Things being now become property, there are no means of N n 546 TREATY WITH FRANCE. Note XIII obtaining them without the owner’s consent; nor are they usually to be had for nothing ; but they may be bought or exchanged for other things of equal value. Men are there¬ fore under an obligation to carry on that com¬ merce with each other, if they wish not to deviate from the views of nature ; and this obligation extends also to whole nations or states. It is seldom that nature is seen in one place to produce every thing necessary for the use of man ; one country abounds in corn, another in pastures and cattle, a third in timber and metals, &c. If all these coun- | tries trade together, as is agreeable to human nature, none of them will be without such things as are useful and necessary ; and the views of nature, our common mother, will be fulfilled. Further, one country is fitter for some kind of products than another, as, for instance, fitter for the vine than for tillage. If trade and barter take place, every nation, on the certainty of procuring what it wants, will employ its land and industry in the most advantageous manner ; and mankind in ge¬ neral prove gainers by it. Such are the foundations of the general obligation incum¬ bent on nations reciprocally to cultivate com¬ merce.” 1 The commercial treaty concluded between this country and France, in 1786, was one of the first and most memorable instances of two great nations agreeing to carry on a friendly intercourse, without stipulating for any peculiar advantages. It is true, in¬ deed, that in doing so, they took the most enlightened view of their real interests. Great Britain and France are near each other, and each possesses much that the other wants: the one abounding in all the products that a fertile soil and a genial cli¬ mate can supply, and the other in those that are the fruit of superior excellence in manu¬ facturing and commercial industry. Hence, were there no restrictions on the commerce between them, the one would form the greatest and best market for the produce of the other. But their jealousies, though now much abated, have so fettered their inter¬ course, that we still derive more advantage from our trade with China than from that with our nearest, most opulent, and most po¬ pulous neighbour. The object of the treaty alluded to was to introduce a more friendly system ; to moderate the severity of the re¬ strictions on commerce ; and, by familiarising both parties with the advantages resulting from an extensive intercourse, to teach them to forget their animosities, and to feel inte¬ rested in each other’s welfare. The speech of Mr. Pitt, by whom this treaty was negociated, on laying it before the House of Commons, is highly deserving of attention ; and whether we refer to the 1 Book ii. cli. ii. sect. 21. soundness and liberality of its general prin¬ ciples, or the eloquence and ability with which they are enforced, it cannot be too highly praised. “ France,” said he, “ was, by the peculiar dispensation of Providence, gifted perhaps, more than any other country upon earth, with what made life desirable, in point of soil, climate, and natural productions. It had the most fertile vineyards, and the riches harvests. The greatest luxuries of life weri produced in it with little cost, and with mo¬ derate labour. Britain was not thus blessec by nature; but, on the other hand, it pos sessed, through the happy freedom of its con stitution, and the equal security of its laws an energy in its enterprise, and a stability ii its exertions, which had gradually raised i to a high state of commercial grandeur ; anc not being so bountifully gifted by Heaven, ii had recourse to labour and art, by which i had acquired the ability of supplying its neigh hours with all the artificial embellishments o life, in exchange for their natural luxuries Thus standing with regard to each other, i friendly connection seemed to be pointed on between them, instead of that state of unalter able enmity which was falsely said to be then true political feelings towards one another.’ Having triumphantly refuted the commercin' arguments against the treaty, Mr. Pitt in quired, in answer to an argument inculcating constant jealousy of France, u whether, in using the word jealousy, it w r as meant to re commend to this country such a species oj jealousy as should be either mad or blind such a species of jealousy as should induct her either madly to throw away what was tc make her happy, or blindly grasp at wha* must end in her ruin. Was the necessity e a perpetual animosity with France so evideir and pressing, that for it we were to sacrifice every commercial advantage we might expeci from a friendly intercourse with that country j or was a pacific connection between the twe kingdoms so highly offensive, that even ai extension of commerce could not counterpoise it? The quarrels between France andBri! tain had too long continued to harass not only those two great nations themselves, but hail frequently embroiled the peace of Europe,—I nay, they had disturbed the tranquillity of the most remote parts of the world. They had bj their past conduct acted as if they were in¬ tended for the destruction of each other ; bid he hoped the time was now come -when the;y would justify the order of the universe, and show that they were better calculated for the more amiable purposes of friendly intercourse and mutual benevolence.”-“ Considering the treaty,” he continued, “ in a political point of view, he should not hesitate to contend against the too frequently advanced doctrine that France was and must be the unalterable enemy of Britain. To suppose that any na¬ tion was unalterably the enemy of another, PETITION FOE A FEEE TKADE. 547 Note XIV. was weak and childish. It had neither its foundation in the experience of nations nor in the history of man. It was a libel on the ^constitution of political societies, and sup¬ posed diabolical malice in the original frame of man.” It is unnecessary to specify the regulations in this treaty. 1 The war that unfortunately broke out in 1793 put a total stop to the growing intercourse between the two coun¬ tries ; and no commercial treaty has been entered into since the peace. But the prin¬ ciples on which the treaty of 1786 was found¬ ed are as applicable at this moment as they were then ; and the statesman who shall carry them into effect a second time, by procuring the repeal or diminution of the existing pro¬ hibitions and duties on the trade between the two countries, will confer the greatest boon on them both. The disinclination of foreign governments to enter into commercial treaties on a footing of reciprocity has sometimes been urged as a reason why we should not admit the commo¬ dities of their subjects into our markets. But a regard to their own interest will always lead those who consider the matter dispassionately to purchase such commodities as they want wherever they may be had cheapest and best. The French government, by an unwise and impolitic regulation, prevent the introduction of the cheap and superior cottons and hard¬ ware of England into France ; and conse¬ quently force their subjects to misemploy a large proportion of their capital, and to pur¬ chase inferior articles at a comparatively high price. But need it be said, that this is a line of conduct to be avoided, not followed ? The fact that a foreign government does an injury to its subjects by making them pay an artifi¬ cially enhanced price for cottons and hard¬ ware, can be no apology for the government of England injuring those entitled to its pro¬ tection, by excluding them from the cheapest market for wines, brandies, and silks. To act thus, is not to retaliate on the French, but on ourselves. It is erecting the blind and brutal impulses of revenge into maxims of state po¬ licy. Our business is not to inquire where others buy the produce they consume, but to buy that for which we have a demand wher¬ ever it can be had cheapest. No nation ever refuses to sell; and as there can be no selling without an equal buying, no exportation with¬ out an equal importation, by acting on a libe¬ ral system ourselves we shall not only reap a great immediate advantage, but will ulti¬ mately teach others to abandon their restric¬ tions. 1 This treaty has been repeatedly published. An account of its principal provisions is given in Macpherson’s Annals of Commerce, vol. iv. pp. 112-116. 2 This petition was written by Thomas Tooke, The equalisation of the duties on French and other foreign wines, the repeal of the prohibition against importing silk goods, and the reduction of the late oppressive duties on brandy, show that a better spirit has gained an ascendancy in our councils. Besides the many direct advantages that have resulted from these measures, they will serve to con¬ vince the foreigner that we no longer endea¬ vour to extend our trade, by attempting to gain advantages at the expense of others, but that our object is to give facilities to an inter¬ course productive of mutual benefit. NOTE XIY. PETITION OF THE MERCHANTS OF LONDON FOR A FREE TRADE. "YY e have already referred to the subjoined petition, as forming an important sera in the commercial history of the country (p. 218.) After being subscribed by the principal merchants of London, it was laid before the House of Commons on the 8th of May, 1820. 2 Similar petitions were subsequently presented from all the great trading and manufacturing towns. “ To the Honourable the Commons , Sfc. the Petition of the Merchants of the City of London , “ Sheweth, “ That foreign commerce is eminently conducive to the wealth and prosperity of a country, by enabling it to import the com¬ modities for the production of which the soil, climate, capital, and industry of other coun¬ tries are best calculated, and to export in payment those articles for which its own situ¬ ation is better adapted. “ That freedom from restraint is calculated to give the utmost extension to foreign trade, and the best direction to the capital and in¬ dustry of the country. “ That the maxim of buying in the cheap¬ est market, and selling in the dearest, which regulates every merchant in his individual dealings, is strictly applicable, as the best rule for the trade of the whole nation. “ That a policy founded on these prin¬ ciples would render the commerce of the world an interchange of mutual advantages, and diffuse an increase of wealth and enjoy¬ ments among the inhabitants of each state. “ That, unfortunately, a policy the very Esq., whose elaborate work on Prices evinces a knowledge of principle and a degree of experience and ability, as a practical merchant, rarely united in the same individual. 548 PETITION FOR A FIIEE TRADE. Note XIV. reverse of this has been, and is, more or less, adopted and acted upon by the government of this and every other country; each trying to exclude the production of other countries, with the specious and well-meant design of encouraging its own productions : thus in¬ flicting on the bulk of its subjects who are consumers, the necessity of submitting to privations in the quantity or quality of com¬ modities ; and thus rendering what ought to be the source of mutual benefit and of har¬ mony among states a constantly recurring occasion of jealousy and hostility. “ That the prevailing prejudices in favour of the protective or restrictive system may be traced to the erroneous supposition that every importation of foreign commodities occasions a diminution or discouragement of our own productions to the same extent : whereas it may be clearly shown, that al¬ though the particular description of produce which could not stand against unrestrained foreign competition would be discouraged, yet as no importation could be continued for any length of time without a corresponding ex¬ portation, direct or indirect, there would be an encouragement, for the purpose of that ex¬ portation, of some other production to which our situation might be better suited : thus affording at least an equal, and probably a greater, and certainly a more beneficial, em¬ ployment to our own capital and labour. “ That of the numerous protective and prohibitory duties of our commercial code, it may be proved, that while all operate as a very heavy tax on the community at large, very few are of any ultimate benefit to the classes in whose favour they were originally instituted, and none to the extent of the loss occasioned by them to other classes. “ That among the other evils of the re¬ strictive or protective system, not the least is, that the artificial protection of one branch of industry, or source of production, against foreign competition, is set up as a ground of claim by other branches for similar protec¬ tion ; so that if the reasoning upon which these restrictive or prohibitory regulations are founded were followed out consistently, it would not stop short of excluding us from all foreign commerce whatsoever. And the same train of argument, which, with corres¬ ponding prohibitions and protective duties, should exclude us from foreign trade, might be brought forward to justify the re-enact¬ ment of restrictions upon the interchange of productions (unconnected with public reve¬ nue) among the kingdoms composing the Union, or among the counties of the same kingdom. “ That an investigation of the effects of the restrictive system, at this time, is pecu¬ liarly called for, as it may, in the opinion of your petitioners, lead to a strong presumption, that the distress which now so generally pre¬ vails is considerably aggravated by that sys¬ tem ; and that some relief may be obtained by the earliest practicable removal of such of the restraints as may be shewn to be most injurious to the capital and industry of the community, and to be attended with no com¬ pensating benefit to the public revenue. “ That a declaration against the anti-com¬ mercial principles of our restrictive system is of the more importance at the present junc¬ ture, inasmuch as in several instances of re¬ cent occurrence the merchants and manufac¬ turers in foreign states have assailed their respective governments with applications for further protective or prohibitory duties and regulations, urging the example and au¬ thority of this country, against which they are almost exclusively directed, as a sanction for the policy of such measures. And cer¬ tainly if the reasoning upon which our re¬ strictions have been defended is worth any¬ thing, it will apply in behalf of the regulations of foreign states against us. They insist upon our superiority in capital and machinery, as we do upon their comparative exemption from taxation, and with equal foundation. “ That nothing would more tend to coun¬ teract the commercial hostility of foreign states, than the adoption of a more enlighten¬ ed and more conciliatory policy on the part of this country. “ That although, as a matter of mere diplo¬ macy, it may sometimes answer to hold out the removal of particular prohibitions, or high duties, as depending upon corresponding concessions by other states in our favour, it does not follow that we should maintain our restrictions, in cases where the desired con¬ cessions on their part cannot be obtained. Our restrictions would not be the less preju¬ dicial to our own capital and industry, because other governments persisted in preserving impolitic regulations. “ That, upon the whole, the most liberal would prove to be the most politic course, on such occasions. “ That, independent of the direct benefit to be derived by this country on every occasion of such concession or relaxation, a great inci¬ dental object would be gained, by the recog¬ nition of a sound principle or standard, to which all subsequent arrangements might be referred ; and by the salutary influence which a promulgation of such just views, by the le¬ gislature and by the nation at large, could not fail to have on the policy of other states. “ That, in thus declaring, as your petition¬ ers do, their conviction of the impolicy and injustice of the restrictive system, and in de¬ siring every practicable relaxation of it, they have in view only such parts of' it as are not Note XV. COMMERCIAL REVULSIONS. 549 connected, or are only subordinately so, with the public revenue. As long as the necessity for the present amount of revenue subsists, your petitioners cannot expect so important a branch of it as the customs to be given up, nor to be materially diminished, unless some substitute less objectionable be suggested. But it is against every restrictive regulation of trade, not essential to the revenue, against all duties merely protective from foreign com¬ petition, and against the excess of such duties as are partly for the purpose of revenue, and partly for that of protection, that the prayer of the present petition is respectfully submit¬ ted to the wisdom of parliament. “ May it therefore,” &c. NOTE XV. COMMERCIAL REVULSIONS. A revulsion may take place in any branch of industry, from political changes, such as the breaking out of a war, the imposition of a new tax, &c., or it may take place from mis¬ calculation on the part of those engaged in the business, from variations in the value of money, &c. The former class of revulsions obviously depend on contingencies that can neither be foreseen nor provided against, and are therefore beyond the sphere of the politi¬ cal economist. But it is otherwise with re¬ spect to the latter class, or those occasioned by the miscalculation of the parties, and changes of the currency. Miscalculations most commonly originate in some derange¬ ment of the usual proportion between the supply and demand of some species of produce. Suppose, for example, that owing to the open¬ ing of new markets, to a change of fashion, or to any other cause, the demand for cotton goods were considerably increased: under such circumstances their price would imme¬ diately rise, and the manufacturers would realise comparatively high profits. But the rate of profit in different employments has a constant tendency to equality, and it cannot, unless the principle of competition be counte¬ racted by a monoply of some sort or other, continue for any considerable period higher or lower in one than in the rest. As soon, therefore, as this rise in the price of cottons took place, additional capital would begin to be employed in their production. The cotton manufacturers would endeavour to borrow fresh capital and extend their business ; while a number of those engaged in other depart¬ ments would withdraw from them, and enter into the cotton trade. Unluckily, however, it is next to certain that this transference of capital would not stop at the point when it would suffice to supply the additional demand for cottons at the old prices, but that it would be carried so much farther as to produce a glut of the market, and a revulsion. A num¬ ber of causes conspire to produce this effect: —The advantages accruing to a particular class from an increased demand for their pe¬ culiar products are uniformly exaggerated, as well by that portion of themselves who, from anxiety to improve their credit, magnify their gains, as by most of those engaged in other businesses. The adventurous and sanguine —those who are particularly disposed to take ovine ignotum pro magnifico —crowd into a business which they readily believe presents the shortest and safest road to wealth and consideration ; at the same time that many of that generally numerous class, who have their capitals lent to others, and are waiting until a favourable opportunity occurs for vesting them in some industrious undertaking, are tempted to follow a similar course. It occurs to few, that the same causes which impel one to enter into a department that is yielding comparatively high profits are most probably impelling thousands. Confident in his own good fortune, the adventurer leaves a business to which he had been bred, and with which he was well acquainted, to enter as a compe¬ titor on a new and untried arena ; while those already engaged in the advantageous business stretch their credit to the utmost, that they may acquire the means of extending their concerns, and of increasing the supply of the commoditv in unusual demand. The result that every unprejudiced observer would anti¬ cipate almost invariably takes place. A dis¬ proportionate quantity of capital being at¬ tracted to the lucrative business, a glut of the market and a ruinous depression of prices un¬ avoidably follow. In an article in the Edinburgh Review, 1 some rather striking instances are collected of the working of this principle ; and means are suggested by which those fluctuations that most frequently lead to miscalculation might be best avoided. Of these, the most efficient will, probably, be the establishment of the system of free trade. By preventing busi¬ nesses from being carried on unsuitable for a country, and by preventing those that may be advantageously carried on from attracting more of the national capital than what properly belongs to them, this system will tend powerfully to lessen the frequency of revulsions, and to mitigate their violence when they do occur. The revulsion that took place in agricultural industry, in the latter part of 1813, was almost wholly owing to the artificial system on which we had pre- 1 Number 87, art. 3. 550 COMMERCIAL REVULSIONS. Note XV. viously proceeded. In consequence of the laws, restricting importation in 1791 and 1804, and of the obstacles which the war threw in the way of importation, the prices of all sorts of corn in this country rose very far above the prices of the Continent. There was, therefore, no opportunity of exporting any excess of produce to a foreign market; so that the moment cultivation became so far extended that we raised, in ordinary years, a supply of corn adequate for our own consump¬ tion, the surplus of the first luxuriant crop being thrown wholly on the home markets, necessarily sunk prices far below the cost of production, and involved many farmers in bankruptcy and ruin. And their distress in some subsequent years was principally caused, as already seen, by the efforts made to keep up prices at an artificial elevation . 1 The true line of policy that governments should follow, as respects commercial affairs, has been distinctly traced by Mr. Alexander Baring (afterwards Lord Ashburton). “ The only beneficial care,” says he, “agovernment can take of commerce, is to afford it general protection in time of war, to remove by treaties the restrictions of foreign governments in time of peace, and cautiously to abstain from any, however plausible, of its own creating. If every law of regulation, either of our internal or external trade, were repealed, with the exception of those necessary for the collection of revenue, it would be an undoubted benefit to commerce, as well as to the community at large. An avowed system of leaving things to take their own course, and of not listening to the interested solicitations of one class or another for relief, whenever the imprudence of speculation has occasioned losses, would, sooner than any artificial remedy, reproduce that equilibrium of demand and supply which the ardour of gain will frequently derange, but which the same cause when let alone, will as infallibly restore. “ The interference of the political regulator in these cases is not only a certain injury to the other classes of the community, but generally to that in whose favour it is exer¬ cised. If too much sugar be manufactured in Jamaica, or too much cotton in Manchester, the loss of those concerned will soon correct the mischief; but if forced means are devised to provide for the former a temporary increase of demand, which cannot be permanently se¬ cured, a recurrence to that natural state of fair profit, which is most to be desired by the planter, is artificially prevented by the very means intended for his relief. And if the cotton manufacturer, on the other hand is to have his imprudences relieved at the expense 1 See note on the Corn Laws and Corn Trade, ante , p. 522. of those employed on linen, silk, wool, or other materials, the injustice as well as the impolicy of such a remedy need no illustra¬ tion. “ Whenever the assistance of government is called for by any class of traders or manu¬ facturers, it is usual to make the most splen¬ did display of the importance of that particu¬ lar branch to the nation at large. The West and East India interests, the shipowners, the manufacturers, the American merchants, have all the means of making these brilliant repre¬ sentations ; but it should be recollected that the interest of the state consists in the pros¬ perity of the whole; that it is contrary to sound policy to advance one beyond its natu¬ ral means, and still more to do so at the ex¬ pense of others : and that the only mode of ascertaining the natural limits of each is to leave them all alone.” 2 Nothing, however, tends so much to gene¬ rate a spirit of overtrading, and to occasion commercial revulsions, as sudden changes in the amount and value of money. Those who embark most readily and eagerly in time- bargains, and other speculative adventures, are not, generally speaking, of the class of rich. and old-established merchants. They consist principally of those who have but re¬ cently entered into business, and who are tempted, by the chance of speedily making a fortune, to engage in such hazardous transac¬ tions. And while any unusual facilities in the obtaining of discounts act as powerful in¬ centives to such persons to speculate, it is at the same time obvious that the rise of prices, consequent to an increase of the currency, will not only lead them to believe that their anticipations are being realised, but will, most probably, make even the most considerate merchants withhold their produce from mar¬ ket, in the expectation of a further advance. The miscalculations of particular classes, merely affect themselves, or, at most, exert only a slight influence over the rest of the community ; but a revulsion occasioned by a sudden change in the amount and value of money affects every individual, and is always productive of the most extensively pernicious results. The discount of bills at long dates is also a great stimulus to unsafe speculation. When individuals obtain money which they are not to pay for six, twelve, or perhaps eighteen months, they are frequently tempted to ad¬ venture in some sort of undertaking that is not to determine until some distant period; and the consequence is, that when the bills become due, they are most commonly unable to pay them, or can only do so by withdraw- 2 An Inquiry into the Causes and Consequences of the Orders in Council, 1st edit. p. 1 33. S t ote XVI. HERRING FISHERY. 551 ■ng capital at a great loss from businesses in A^hich it is employed. It is unnecesary to repeat what has been ilready stated at so much length in the note m Money, as to revulsions occasioned by the overissue and bankruptcy of country bankers, md the prevalence of panics. The total sup¬ pression of all local issues would be the best neans of obviating this source of mischief. But, in the meantime, the act of 1844 will do aiuch to mitigate the influence of such revul¬ sions as may either have originated in, or been aggravated by, the misconduct of banking companies. r NOTE XVI. HERRING FISHERY. A.N all but entire change has been effected in the laws under which the British herring fishery was conducted when the Wealth of Nations was published, by the acts of 1808 and 1815, and still more by the 5 Geo. IV. cap. 64. Dr. Smith has justly observed of the ton¬ nage bounty, that as it was proportioned to the burden of the ship, and not to her skill and success in fishing, its real effect was to make ships be fitted out not to catcli her¬ rings, but to catch the bounty, (p. 231.) It might have been supposed, that after the public attention had been called to so pre¬ posterous a system, it would have been aban¬ doned. This was not, however, the case. A bounty of 3/. per ton, on all vessels em¬ ployed in the deep sea herring fishery of above sixty tons burden, but payable only on one hundred tons, was granted in the year 1809; and in 1820 a bounty of 20s. per ton, which under certain specified circumstances might be increased to 50s., was granted on all ves¬ sels of from fifteen to sixty tons fitted out for the shore herring fishery. And exclusive of these bounties on the tonnage, a bounty of 4 s. per barrel was allowed on herrings cured gutted. A board of commissioners for super¬ intending all matters connected with the fishery was appointed in 1808. This board was bound to lay an annual report of its pro¬ ceedings and of the state of the fishery before parliament. It distributed the bounties, and had the control of the officers placed at the different fishing stations, to see that the ves¬ sels were fitted out and that the herrings were gutted, packed, and the barrels branded, in terms of the statutes. By comparing the subjoined table with the tables given by Smith, it w T ill be seen that the fishery has made a very great progress, and that its extension during the last ten or twelve years has been particularly rapid. The character of British herrings now stands deservedly high ; and the fishery is become a source of profit and employment to a consi¬ derable number of people. Abstract of the Total Quantity of White Herrings cured, branded for Bounty, and Export¬ ed, in so far as the same has been brought under the cognizance of the Officers of the Fishery, from the 5tli of April 1815, to the 5th of April 1844, and during each of the three years ended with the 5tli of January 1848; distinguishing each year, and the Herrings cured gutted from those cured ungutted. Years ending Total of Herrings cured. Total Of Herrings l Total of Herrings exported. 5th of April, j Gutted. Ungutted. Total. BRANDED FOR Bounty. Gutted. Ungutted. Total. 1815 1816 1817 1818 1819 1820 1821 1822 1823 1824 1825 1826 1827 1828 1829 Barrels. 105,372} 135,981 155,776 204,2704 303,7774 347,1904 413,308" 291,6264 225,037 335,450 303,397 340,118 259,1714 339,360 300,2424 Barrels. 54,767 26,670f 36,5674 23,420f 37,1164 35,301 28,887f 24,897} 23,832 56,740} 44,2634 39,115} 29,324 60,418 55,737 Barrels, 160,1394 162,651} 192,3434 227,691" 340,894 382,4914 442,195} 316,524} 248,869 392,190f 347,6654 379,233} 288,495} 399,778 355,9794 83,376 116,436 140,0184 183,0894 270,0224 309,700} 363,872 263,2054 203,110" 299,631 270,8444 294,4224 223,606 279,3174 234,827" Barrels. 68,938 81,5444 115,4804 148,1474 212,3014 244,096 289,4454 212,8904 169,4594 238,5054 201,8824 217,053} 165.741 210,766 202,8134 Barrels. 72,367} 26,1434 23,148 14,192 14,8604 9,420 5,360 2,0654 985} 1,125 134 20 665 893 3,062 Barrels. 141,305} 107,688 138,628} 162,339| 227,162 253,516 294,8054 214,956 170,445 239,6304 202,0164 217,073} 166,406 211,659 205,875} 552 HERRING FISHERY. Note XVII I Years ending 5th of April Total of Herrings I-- -- CURED. Total of Herrings J Total of Herrings exported. Gutted. Ungutted. Total. l BRANDED FOI Bounty. -- Gutted. Ungutted. Total. 1830 1831 1832 1833 1834 1835 183 j 183/ 1838 1839 1840 1841 1842 1843 1844 Years ending 5th of Jan- uary. Barrels. 280,933* 371,096“ 313,1133 £53,684* 382,677* 217,242 397,334 290,077 382,400 382,229 405,379* 431,157 489,620* 442,290 473,556| Barrels. 48,623* 68,274+ 49,547 63,279} 68,853} 60,075 98,281 107,660+ 125,374} 173,330} 138,565+ 126,105+ 177,624} 181,1294 191,803' Barrels. 329,557 439,3704 362,6603 416,964* 451,531* 277,317 497,615 397,7374 507,774f 555,5593 543,945 557,2624 667,2454 623,4193 665,359f 218,418* 237,085 157,839* 168,259* 178,000* 185,079 192,317 114,192 141,552 153,659* 152,231“ 154,189 190,922* 162,713“ 182,988 Barrels. 177,776 260,976 214,8204 218,429* 269,133* 156,225 270,846 187,238 229,160* 233,690* 250,554 246,851 283,530 287,043* 311,167* j Barrels. 3,878* 3,927 2,679* 2,255 2,960 2,580 2,547 2,027 5,997* 6,040 1,968 3,286 1,206 4,757 2,349 Barrels. 181,654* 264,903“ 217,499| 220,684* 272,093* 158,805 273,393 189,265 235,158 239,730* 252,522“ 250,137 284,736 291,800* 313,516* 1846 1847 1848 411,271 414,915+ 372,9891 121,375 192,5353 189,754 532,648 607,451 562,743+ 142,4731 156,278+ 146,500+ 240,008 250,857* 245,842 3,186 4,856* 4,339 243,194 255,714 250,181 It uas not possible that any branch of in- dustry should he in a healthy or really flou- rishing state, while it was bolstered up by a system of bounties, and subjected to the trammels of custom-house regulations, and the interference, of government officers. If, as there w eie little doubt, the fishery afforded an advantageous field for the employment of ca¬ pital, it w as clear it would flow to it without artificial encouragement, as naturally as it flowed to any other department of industry; while, if it were not a business of this de¬ scription, and could not support itself with¬ out the aid of. bounties, it was obviously of no leal or lasting advantage. For these rea¬ sons government withdrew the bounty, which ceased on the 5th April 1830. This proceeding was much objected to at the time ; and it was confidently affirmed that it would occasion the ruin of the fish¬ ery. But the above table shows how com¬ pletely these sinister auguries have been confuted, the quantities of herring taken and exported having both largely increased since the abolition of the duty. This result is the more remarkable, inasmuch as the sup¬ ply of herrings, which is now proportioned to the real demand, was formerly artificially in¬ creased. And it is farther to be borne in mind, that the genuine fishermen, and those curers who trade on their own capitals, are no longer injured, as was the case under the old system, by the competition of landsmen attracted to the business by the bounty, and of pei sons trading on capital furnished by government. J The repeal of the salt laws, and of the duty on salt, which preceded the repeal of the bounty, have been of signal service to the fishery. It is true that the salt used in the fisheries was always exempted from the duty. But, in order to prevent the revenue from being defrauded through this exemption, so many regulations were enacted, and the dif- culties and penalties to which the fishermen were subjected, before they could obtain salt duty free, were so very great, that some of them chose rather to pay the duty than un¬ dertake compliance with the regulations. 1 NOTE XYII.2 NAVIGATION OF THE EGYPTIANS. (1 The unqualified assertion of Dr Smith, that the ancient Egyptians had a superstitious antipathy to the sea,” (p. 163.) embodies one of those common errors which when once re¬ ceived, pass from hand to hand unchallenged, 1 For further details, see the art. Herring Fishery, in Commercial Dictionary. 2 We were furnished with this note by the late Dr Browne, of Edinburgh; who raised himself, by his articles on Hieroglyphics and the History of Roman Literature, in the Edinburgh Review, to a prominent place in the first class of critics and scholars. NAVIGATION OF THE EGYPTIANS. 553 Note XVII. and for a time impose even on the most scrupulous ; like a counterfeit coin tolerably lackered, which, thrown into the general currency of the country, continues to circu¬ late till suspicion or accident lead to the application of a decisive test, by which the false gloss is washed off and the worthless imitation exposed. At the period when Dr. Smith wrote, and for a considerable space thereafter, few accurate notions were entertained respecting the history, literature, antiquities, and political condition of Egypt, under the different dynasties of its native princes. A dense, if not impenetrable cloud overshadowed the annals of the most inter¬ esting kingdom of the ancient world ; and it was not till fecent discoveries had pro¬ mised to furnish a key for deciphering the sculptures on its monuments and the hitherto mysterious writings on its papyri, that the learned began to examine with sufficient care the statements of the Greek and Ro¬ man writers, and to compare them with the facts which accident, ingenuity, or investi¬ gation had brought to light. Prior to this aera, (for such it unquestionably is,) the an¬ cient Egyptians were almost universally sup¬ posed to have held the sea in abhorrence, and to have been utter strangers to navigation ; and so inveterate had the error become, that a late distinguished writer on geography, M. Malte-Brun, adopts the statement in question as one of that class of truths which admit of no dispute, and are acquiesced ii as soon as they are enunciated. * But there seems to be the strongest reason for dis¬ senting from a statement founded upon an impression incautiously received from the Greek writers who visited Egypt in the days of her adversity, and inconsistent with many of the facts disclosed by the very authorities from which it has been derived. Such, according to Plutarch 2 , was the detestation of the ancient Egyptians for the sea that they symbolised it by Typhon, or the evil demon. The priests, too, abstained from fish, and never made use of marine salt \ which they denominated the froth of Typhon. But these miserable superstitions had probably only a partial existence, and were not observed beyond the precincts of the sacred college. Besides, the worship of Osiris seems to have been often confounded with that of the Nile. The god was feigned to have been destroyed by Typhon, and the waters of the river were lost in the sea of which Typhon was the emblem or symbol . 4 u 1 Precis de la Geographic Universelle, tome i. p. 13. Paris, 1812. 2 De Iside et Osiride, p. 363. et seq. 3 Except during the seasons of fasting and purifi¬ cation, they appear to have used fossil salt. Tlut. Sump- lib. v. c. 10. 4 Plutarch (De Iside , S(C. ubi supra) expressly says that Typhon was held to represent the sea into Hence the mythologists naturally repre¬ sented the sea as hostile to the stream, and identified it with the malignant demon, the enemy of Osiris. But among a grave and learned nation these allegorical vagaries can scarcely be supposed to have had much po¬ litical influence ; and we shall find in the sequel that they had none whatever before the period when Egypt was compelled to submit to her Persian conquerors. Naucratis, we are told by Herodotus S was the only Egyptian seaport open to the navigators of the Mediterranean until the reign of Psammeticus; and there all the commerce of Egypt was concentrated. A foreign vessel entering any other harbour, unless compelled to do so by stress of wea¬ ther, was condemned; and strangers, who landed on any other part of the coast, were considered as enemies and expelled as in¬ vaders, except under the circumstances just mentioned. Ameilhon 6 considers this re¬ gulation merely in the light of “ une mesure financiere pour faciliter la perception des droits de douanes; ” but Reynier ' and most others suppose it to have proceeded from the dislike entertained by the Egyptians for foreigners, especially navigators ; and it is advanced as a proof of their indifference to commerce, and their peculiar prejudices against all naval enterprises. The Phoe¬ nicians, however, were the only people on the shores of the Mediterranean with whom the Egyptians traded in remoter times: and being a nation of kindred origin and descent, it may well be doubted whether the regu¬ lation mentioned by the Greek historian was ever meant to be enforced against them , or whether it was not intended to apply to a case of a totally different description. Vari¬ ous considerations, indeed, unite to support the latter opinion. It is obvious, from events which occurred during the reign of Psammeticus himself, that Greek pirates were in the habit of making frequent de¬ scents on the coast of Egypt, for purposes of plunder. “ The ancient kings cf Egypt,” says Strabo 8 , “ were satisfied with the productions of their own country, hating (SiageSA^eVot) all navigators, but especially the Greeks.” But if the Greek navigators who landed in Egypt plundered the country whenever they found an opportunity of doing so, the antipathy shown to them by the Pharaohs was not very wonderful ; and surely this of itself is sufficient to account for all that Herodotus, Diodorus, and Strabo which the waters of the Kile flow and are uwallowed up. 5 Lib.ii. c. 179. 6 Commerce des Ptolemees, p. *277. ^ De l’Economie Publique et Rurale des Egyptiens et des Carthaginois, p. 251. 8 Geogr. lib. xvii. 554 NAVIGATION OF THE EGYPTIANS. Note XVII. have said of the “ superstitious aversion to the sea,” alleged to have been entertained by the ancient Egyptians. The monarchs of Egypt established the regulation in question, not to preclude the intercourse of their sub¬ jects with foreigners, but to prevent the intrusion of pirates; not to coniine fo¬ reign commerce with the narrowest pos¬ sible limits, but to protect their dominions against the buccaneering expeditions of the Greeks, who in ancient as in modern times infested the shores of the Mediterranean, and committed the greatest atrocities. It seems unreasonable, therefore, to attribute to an absurd prejudice what can be accounted for on obvious principles of prudence and policy, or to judge of the statements of the Greek writers apart from the considerations by which they are reconciled and explained. If the horror of the sea ascribed to the anci¬ ent Egyptians had been as great as has been pretended, the total extinction of all com¬ merce and navigation would have been the consequence ; and if this sentiment had been the offspring of religion, no trace of naval enterprise would be discernible while that religion or superstition maintained its full ascendency. The Hindoos at this day are under the dominion of a creed similar in this respect to that attributed gratuitously to the ancient Egyptians ; and we will venture to affirm, that among all their numerous legends and traditions there is not one from which it can be inferred that the followers of Brahma ever committed themselves truci pelago , far less constructed fleets and undertook distant and dangerous expeditions. Had the super¬ stitious prejudices of the Egyptians been analogous to those of the Hindoos, would not their annals have been equally barren of naval achievements ? It ought to be kept in view, however, that when the Greeks began to acquire the rudiments of civilisation, to settle down into regular communities, and to abandon their piratical and predatory courses, the regulation above referred to was relaxed, even in regard to them; and after the reign of Psammeticus, no obstruction whatever was offered to their maritime in¬ tercourse with Egypt, — a striking proof, as 1 Vide Jablonski, 'Pantheon JEgyptiorum, lib. ii. c. 1. Origines, b. iv. c. 4. 2 Jameson ( Spicilegia Antiq. JEgypti , c. xiv. p. 328. Glasg. 1720) maintains, “ Sesostrim , ut a vulgo scrip- tor um descrihitur , nunquam spirasse ; ” and others have adopted and defended the same hypothesis. The recent discoveries in hieroglyphics, however, have furnished new and unexpected proofs of the real existence of this renowned conqueror, and sup¬ plied a conclusive answer to all the quibbles of Jameson and others who have espoused the sceptical side of the question. From a copious deduction of facts equally obvious and indisputable, it has been demonstrated, that the Egyptian sovereign, described in his royal hieroglyphic legend, as “ Approved by the Sun , Beloved of Ammon , Son of the Sun , Ramses,” is the same prince with the Rhamses of Tacitus, the Harnesses or Rampses of Manetho, the Scthos or Sethosis of the same historian, (who ex- appears to us, of the soundness of the inter¬ pretation which has been now given. But the very writers upon whose authority it has been rashly alleged that “ the ancient Egyptians had a superstitious aversion to the sea,” afford sufficient evidence to induce us to draw a different conclusion. When Plutarch and Diodorus, for example, relate, without animadversion, the voyages of Osiris i, they at the same time tacitly admit the Egyptians to have been a maritime peo¬ ple from the earliest period of their history. Osiris, according to them, was a great navi¬ gator ; and hence the figure of a ship or boat is one of the emblems accompanying the re¬ presentation of this deified prince, as well as that of his sister-spouse Isis, on the monu¬ ments. But a great navigator can scarcely be supposed to have been the king of a peo¬ ple who were utter strangers to, and filled with a religious hatred of, navigation. It may be said, indeed, that the voyages of Osiris are entirely fabulous, and that no safe conclusions can be drawn from the mytho¬ logical legends of so remote an antiquity. The writers above named, however, do not contest the truth of these voyages, which they ought to have deemed impossible, if the sea had always been an object of abhorrence to the Egyptians, and if that people had been always totally unacquainted with the art of navigation. Again, Sesostris, who is gene¬ rally supposed by chronologists to have flou¬ rished about seventeen centuries before our era, fitted out a fleet of 400 sail, with which he navigated the Erythraean Sea and the Indian Ocean; while a powerful army marched through Syria, Persia, and India, as far as the sea which separates China from Japan; whence returning by a northern route, with the king at its head, it traversed Scythia, as far as the Tanais, and having established a colony at Colchis, on the eastern shore of the Euxine, penetrated into Europe and con¬ quered Thrace, where the expedition termi¬ nated. 2 Such is the account given by Dio¬ dorus in his seventh book; and Pliny, who refers to it, adds, that many of the ships com¬ posing the fleet were of large dimensions. Is it probable, then, that a fleet of 400 large pressly says, apud Josephum , lib. i. p. 1053. that Sethos also bore the name of Ramesses,) the Sesoosis of Diodorus, and the Sesostris of Herodotus and Strabo. (Champollion, Precis du Systhne Hiero- glyphique, p. 226.) His name occurs also in the Royal Canon of Manetho ; and in the Chronological Table of Abydos, discovered by Mr. Bankes; it is found, with its appropriate legend, on all the monu¬ ments of the age to which it belongs ; and every notice which history has preserved, is confirmed by the inscriptions that have already been deciphered. If all this concurrent evidence is to be rejected, and if Sesostris and his exploits are to be considered as fabulous, the whole history of ancient Egypt, which rests on no better foundation, must, at the same time, crumble down, and be abandoned as unworthy of attention or examination. On the subject of Rhamses or Sesostris , see the remarkable passage of Tacitus, Annalium , lib. ii. p. 78. Amstelod. 1649. NAVIGATION OF THE EGYPTIANS. 555 Note XVII. ships would be created in the very infancy Df navigation ? Nay, does not its very exist¬ ence presuppose a long acquaintance with naval affairs, and much experience both in the construction and management of ships ? The voyages of Cecrops, of Cadmus, and of Danaus, all of which took place more than 1400 years before Christ, equally announce the ancient Egyptians to have been a people accustomed to undertake distant naval expe¬ ditions. For if they had possessed neither ships nor mariners, as has been generally alleged, they could not have founded colonies either in Greece or on the shores of the Euxine; yet the Cecropian towers were built by one Egyptian colony, and the plains of Colchis peopled by another . 1 Prior to the reign of Psammeticus, the Greeks, as is clear from the joint testimony of Herodotus and Diodorus, had but little commercial intercourse with the Egyptians ; and they appear to have derived whatever knowledge they possessed of the history of Egypt, antecedently to that period, from the doubtful and discordant communications of the priests. We cannot, therefore, be sur¬ prised if they have furnished us with no dis¬ tinct or continuous history of the naval en¬ terprises of the Egyptians from the age of Sesostris to that of Nechos, the son of Psam¬ meticus — a period in regard to which they were evidently destitute of any accurate or even probable information. No sooner, how¬ ever, could they speak from their own observ¬ ation, than they announced the naval enter¬ prises of the Egyptians. Nechos sent a fleet from the Red Sea, which is asserted by the concurrent testimony of antiquity to have circumnavigated Africa, and returned to Egypt by the Mediterranean — at least to have sailed from the Red Sea and returned by the Mediterranean, which necessarily im¬ plies the circumnavigation of Africa, and of course the doubling of the Cape, which is commonly supposed to have been first achieved in modern times. It is true Hero¬ dotus states, in his fourth book, that Nechos employed in this celebrated expedition Phoe¬ nician ships and Phoenician mariners ; but he had said before in his second, that the 1 Origines, ubi supra. . 2 The Greeks, who erected temples to Isis, as the protectress of mariners, must have borrowed their notions of that goddess from the Egyptians. She was represented by different deities among the Greeks and Romans, but her identity can never be mistaken. According to Plutarch, she was the same with Thetis ; she is addressed in Apuleius as Regina Cceli, sive tu Ceres , sen tu ccelestis Venus ; Homer, Hesiod, and Plato point out the same divinity, under the name of Aphrodite. But if Venus was the patroness of navigation, Isis was adored under the same character, and was therefore identical with the sea-born Venus. The Corinthians built temples to her under the names of the Egyptian and Pelagian Isis ; and Juvenal, in speaking of the votive tablets hung up by mariners, savs, Pictores quis ncscit ao I side pasci? Many temples were consecrated to same Egyptian monarch built ships of three banks of oars both on the Red Sea and the Mediterranean. Now, if this were true, there could be no reason why Nechos should have hired vessels from the Phoenicians. The Egyptians had a navy of their own, and a navy, too, superior to that of the Phoeni¬ cians ; for no fact of ancient history is better authenticated than that Apries, the grandson of Nechos, defeated the king of Tyre in a great and decisive naval battle. How then is it possible to believe that the Egyptians were a people who detested the sea, symbolising it as Typhon, or the evil demon, and that they 7 were utter strangers to the art of navigation ? Is it conceivable that a people who had once 400 large ships should suddenly abandon all naval enter¬ prises, and give themselves up to the super¬ stitious and absurd prejudices which have been ascribed to them ? The fleets of Sesos¬ tris, as we have seen, navigated the Ery 7 - tliraean Sea and the Indian Ocean. After the time of that monarch, Egyptian colonies passed into Europe, and established them¬ selves in Attica, Bceotia, and Argos. The vessel in which Armais, whom the Greeks call Danaus, arrived in Greece, is said to have had fifty 7 banks of oars. The fleet of Nechos sailed from Suez, on the Red Sea, and, after circumnavigating Africa, returned to the Canopic mouth of the Nile. In the time of Apries, the Egyptians disputed the empire of the sea with the Phoenicians. Such is the information given us by the Greeks 2 * * * * , who, at the same time allege that the Egyptians hated the sea, and were igno¬ rant of the art of navigation ! This apparent contradiction may, however, be explained and reconciled with facts known and admit¬ ted on all hands. When the Greek writers above named visited Egypt, the Egyptians were a conquered people; the religious frenzv and iconoclastic madness of the Per¬ sian invasion had passed over them, over¬ turning the temples of their gods, and the monuments and palaces of their kings; de¬ solating, oppressing, and destroying. Hero¬ dotus sojourned in Egypt after this dreadful tempest had expended its fury, leaving every- Isis in the seaport towns, not only of Greece but of Italy and Gaul. The Egyptians celebrated a festival in her honour, which was called the festival of the ship ; and hence a ship became the symbol of the goddess, under which form she was worshipped from a very remote antiQuitj 7 . 1 acitus has this remark¬ able passage: Pa/s Suevorum et Isidi sacrificat; unde causa et origo peregrino sacro , parum comperi % nisi quod signum, in modum liburnae figuratum , docet advectam religionem. That the worship of Isis under the form of a ship was of Egyptian origin, no one will doubt ; but how this superstition found its way among the Suevi, it will be difficult to conjecture, unless we suppose the ancient Egyptians to have been less hostile to strangers, and more ac¬ customed to navigation, than some modern authors seem willing to allow. Origines, ubi suprfc. NAVIGATION OF THE EGYPTIANS. Note XVIII. 556 where the wrecks and traces of its terrible course, and after the people had suffered the most cruel and continued persecution of which history affords us any example. Dio¬ dorus Siculus, Strabo, and Plutarch, knew them after they had been long humbled un¬ der the authority of their Greek and Roman masters. The spirit, the energy, the inde¬ pendence of the nation were gone; its su¬ perstitions only remained. After the inva¬ sion of Cambyses and his fire-worshippers, the Egyptians had neither ships nor mari¬ ners ; but that this was not the case in the time of the Pharaohs, has, we think, been clearly shown from the writings of those very authors who ascribe to them “ a supersti¬ tious aversion to the sea.’* Finally, this conclusion will derive addi¬ tional probability, or, rather, it will attain to almost perfect certainty, if we attend to the physical configuration of the country. Egypt consists principally of a valley watered by the Nile, by which indeed it is partly formed, and confined on the right and left by a barren expanse of deserts; and the greater part of this valley is annually sub¬ merged by the overflowings of the river, which impart to the soil the requisite moist¬ ure, and cover it with a fertilising mud. The rise of the Nile commences with the summer solstice; it attains its greatest height at the autumnal equinox, when the whole of Lower Egypt is in fact a lake or sea; and after continuing stationary for some days, it diminishes at a less rapid rate than it rose . 1 It is plain, therefore, that the inhabitants of Egypt must from the earliest times have been accustomed to navigation ; and for this obvious reason, that in the ordinary state of the river it afforded the easiest and readiest communication between the different parts of the country, and during the period of the inundation it was equally indispensable to the existence of the people, and the pre¬ servation of the animals which they reared, either for domestic uses or from motives of superstition. The Nile is not only a source of fertility but a great natural channel of communication; and the very circumstance which renders it the one must necessarily have converted it into the other. But as the tendency of mankind is to advance and improve their condition, by cultivating the arts to which their attention has from natu¬ ral or other causes been directed, it is not consistent with experience to suppose that the Egyptians, who inhabited a country traversed longitudinally by a great river, and were annually compelled to navigate an inland sea, should not, at a very early pe¬ riod, have ventured beyond these limits, and tempted the hazards and perils of the ocean. 1 Malte* Brun, vol. iv. pp. 19 and 25. Eng. trans. NOTE XVIII. DISPOSAL OF PROPERTY BY WILL. History , Advantages, and Disadvantages of En tails. — Primogeniture. — Law of Equal Succession. — Effects of that Law in\ France. — Law of Landlord arid Tenantl in Ireland. — Ditto in Scotland. — Effects of these Laws. The history of entails is involved in a good deal of obscurity. Dr. Smith contends that they were altogether unknown to the an¬ cients, and that they were orignally intro¬ duced, during the middle ages, to preserve that lineal succession, of which the law or custom of primogeniture first gave the idea. ( Ante p. 170.) There seem, however, to I be good grounds for doubting the perfect! accuracy of this opinion. In the more early j ages, the power of devising property by will is confined within very narrow limits. A man’s children, or, in their default, his rela- ji tions, are then exclusively his heirs ; and it is only in a comparatively advanced and re- ji fined period that the advantages derivable jl from allowing individuals to bequeath their property to strangers, in preference to the heirs of their own body or their immediate 1 connections, are fully perceived and admitted. |; But when the right to bequeath property to j any particular heir has been recognised, it !: seems easy and natural further to recognise the right of the devisor to name an indefinite i series of heirs, and to prescribe the condi- j tions on which they shall be entitled to hold i the property. The fideicommisses , or trust i settlements of the Romans, were devised for ! the express purpose of retaining the estates j of the individual, making the settlement, in the line of succession he had pointed out. i In the latter ages of the empire, it was cus- tomary to insert prohibitive and irritant [ clauses in the commisses, similar to those in- j serted in modern entails; and, as such set¬ tlements were sanctioned by law, they ! entailed property for the four generations to l which their duration was limited. 2 The succession to landed estates in mo- | dern Europe has been generally regulated | by the custom of primogeniture. During i the violence and confusion of the middle ages, land was the only species of property that had any thing like even tolerable secur¬ ity ; and deficient as it was, that security could be enjoyed only by the possessors of large estates, who could arm and bring to¬ gether a considerable number of vassals and retainers to support and defend their rights. It was plainly, therefore, for the interest of the landed proprietors to prevent their es¬ tates from being split into small portions, and to transmit them entire to their successors. And as the military and other feudal ser- 2 Sandfcrd on Entails, p. 13 DISPOSAL OF PROPERTY BY WILL. oo 7 NOTE XVIII. I - ices, due by the possessors of fiefs to the rown could be more easily and conveniently ,aid by one than by many feudatories, both >arties found it for their advantage to prevent he subdivision of estates, by introducing and Establishing the laws of entail and primoge- uture. It was customary in England, from a pretty emote epoch, to settle estates upon indivi- luals under certain conditions and stipula- ions. Modes, however, were speedily found >f eluding these; and in order to obviate such ■.vasions, the statute of the 13th Edward I. ■ap. 1. ( de donis conditionalibus) was enacted. This statute, which established a system of >erpetual entail, was planned by the greater >arons to prevent, not the alienation merely, jut also the forfeiture of their estates. An ittainder could only occasion the forfeiture >f the property belonging to the person at- ainted, or such as he was entitled to alien- ite; but the moment that effect was given o the clauses against alienation and the con- raction of debt, the person in possession of m estate was reduced to the condition of a iferenter, and the estate went to the next leir notwithstanding his attainder. This statute continued in force for about two hun- ired years. It was, however, productive of :he most injurious consequences. “Children,” says Mr. Justice Blackstone, speaking of this law, w grew disobedient when they knew they ?ould not be set aside; farmers were ousted Df their leases made by tenants in tail; for, if such leases had been valid, then, under colour of long leases, the issue might have been vir¬ tually disinherited : creditors were defrauded of their debts ; for, if a tenant in tail could have charged his estate with their payment, he might also have defeated his issue by mortgaging it for as much as it was worth : innumerable latent entails were produced to deprive purchasers of the lands they had fairly bought ; of suits in consequence of which our ancient books are full : and trea¬ sons were encouraged, as estates-tail were not liable to forfeiture, longer than for the tenant’s life. So that they were justly branded as the source of new contentions, and mischiefs un¬ known to the common law ; and almost uni¬ versally considered as the common grievance of the realm .” 1 Owing, however, to the security which the statute of Edward I. gave to the estates of the nobility against forfeiture, they could not be brought to consent to its repeal or modi¬ fication. But what it was thus impossible to accomplish by the direct interference of the t legislature was at length effected by a con¬ trivance, or, as Blackstone has termed it, a pia fraus of the lawyers. Edward IV. ob¬ serving the little effect that attainders for high treason had in securing the allegiance 1 Commentaries, book ii. chap. 7. 9 It was ruled by these acts, that an heir of entail, attainted of high treason, forfeited the of families whose property was protected from forfeiture by entails, instigated the lawyers to fall upon a device for breaking them by a judgment in a feigned suit called a recovei'y. The inroad that was thus successfully made on the inviolability of entails led to others ; and in the reigns of Henry VII. and Henry VIII. various acts were passed, circumscrib¬ ing the power of entail, and placing it nearly on the footing on which it stands at this day . 2 If we might be allowed to hazard an opi¬ nion on such a point, we should say, that in its present state the English law of entail has come very near perfection. It seems to have hit the precise medium most desirable to be attained, by giving every individual that de¬ gree of power over the disposal of his pro¬ perty which is necessary to inspire him with the desire of accumulating a fortune ; at the same time that it takes from him the power of naming an indefinite series of heirs, and of fixing the conditions under which his pro¬ perty shall be always enjoyed. An English gentleman may entail an estate on such heirs as are in existence when the deed is executed and until the first unborn heir of entail attain the age of twenty-one : But at this point the destination stops ; and such heir is then emancipated from the restrictions imposed by the entail, and holds the estate in fee-simple. The heirs named in the entail, though they cannot alienate the estate, or encumber it with debt, are allowed to grant leases which are good against their successors for three lives, or twenty-one years. The practice of entailing originated in Scotland at a comparatively recent period. The earliest entail on record is that of the estate of Roxburgh, dated in 16-18 ; and the practice was first established on a solid found¬ ation by the statute of 1685, which reduced heirs of entail to the condition of mere tenants for life, and gave the entailer the power of regulating the perpetual destination of the property. This act seems to have been in¬ tended, like the English act of Edward I., not merely to prevent the alienation of the pro¬ perty of those executing an entail, but also to protect it from forfeiture. At the period when it was passed, Scotland was subject to the most revolting despotism. Acts that had previously been considered either as in¬ nocent or as constituting only a very ve¬ nial offence, were declared treasonable; sta¬ tutes were enacted with clauses having a retrospective operation, and intended to strike at individuals who had done nothing cognisable by any existing law; while, had the other engines of tyranny been insuffi¬ cient, the servility of the judges rendered it impossible for any one to escape, against whom the crown lawyers instituted a prose¬ cution. Under these distressing circum- estate for himself and his issue; hut the rights of third parties, or of remainder men , as they are styled, were not affected by the forfeiture. 558 DISPOSAL OF PROPERTY BY WILL. Note XYII stances, the estates were glad to adopt any device that promised to give any greater se¬ curity that their properties would escape the forfeitures to which they were so much ex¬ posed : and in this view, as well as in the view of preventing their alienation, they passed the act of 1685, authorising the esta¬ blishment of entails, with a tacit belief that a forfeiture would affect only the life interest of the possessor, and that, on his death, the pro¬ perty would descend to the next heir. 1 This principle was indeed expressly sanctioned by an act passed in 1690, after the expulsion of the Stuart dynasty. But in the reign of Queen Anne the Scotch law of forfeiture was placed on the same footing as the English. The system of entail, established by the act of 1685, has been acted upon ever since, and has been carried to a very great extent. It appears from the register, that previously to that date, only twenty-four entails had been executed in Scotland, but the practice has since been progressively and rapidly ex¬ tended. There were recorded between 1685 and 1705, 79 entails. 1705 — 1725, 125 —- 1725 — 1745, 158 — 1745 — 1765, 138 — 1765 — 1785, 272 — 1785 — 1805, 360 — 1805 — 1825, 459 — 1825 — 1845, 420 — in 1845, 25 — — 1846, 30 — It is not easy to learn the exact proportion of the landed property of Scotland subject to entail. Dr. Smith, aud, previously to him, Sir John Dalrymple, estimated the entailed lands at about a fifth part of the whole. But the foregoing table shows that the number of entails has been nearly doubled since 1785 ; and it is most probable that at present (1849) a full half or more of the landed property of Scotland is entailed. In corroboration of this estimate it may be mentioned, that it is stated in the General Report of Scotland, published in 1814, that while the valued rent of Scot¬ land amounts to 3,804,221/. Scotch, the va¬ lued rent of the estates under entail amounts to 1,213,279/. Scotch. According, therefore, to this statement, it would appear that in 1811, the period to which the estimate refers, about a third part of the landed property of Scotland was entailed ; and as a very great number of entails have been executed since 1811, it may be fairly concluded that the lands under entail exceed at this moment (1849) a half of the whole. Attempts have been made, at different times, to effect some modification of the law of entail. In 1764, the Faculty of Advo- 1 Laing’s History of Scotland, vol. iv. p. 166, 3d cd. 2 Digest, lib. xxviii. tit. 1. § 3; Montesquieu cates, after agreeing by a large majorif (forty-three to four) to resolutions against i drew up the heads of a bill for restrain™ entails, on a plan suggested by Lord Karnes which, had they been embodied in a statut< would have placed the Scotch system of e; tail nearly on the same footing as the Englis) The project excited a good deal of discussio at the time ; ultimately, however, it fell tj the ground, and, till last year (1848), d vigorous effort was afterwards made to chec the practice. Additions were daily made r the lands in tail ; and in many extensive an populous districts hardly an acre is now to 1 found not burdened with its fetters. The law of entail is said by lawyers to 1 founded on the maxim of the civil law, thd every one has a natural right absolutely 1 dispose of his own property, unusqvisque e rei suce moderator et arbiter. But natur, rights may safely be left out of view in tl discussion of this question. The power c making settlements and testamentary disp sitions of property after death, is a purely civ right, and is everywhere conceded, regulates and limited by law. 2 We are not, therefori to decide in regard to the policy or impolic of entails, by a reference to abstract or inn ginary principles, but by an examination < their real operation and practical influent In this, as in all similar cases, we must deft to the test of utility, that is, we must institut a comparison between the advantages an disadvantages resulting from the practice c entailing, and decide for or against it as w find the one or the other predominate. Thl following seem to be amongst the principa topics to be attended to in forming a corree conclusion as to the effect of entails. In the first place, it is alleged in their fa vour, that they stimulate exertion and econo) my, that they hold out to honest industry am ambition the strongest and safest excitement in the prospect of founding an imperishabl name and a powerful family, and of being re membered and venerated by endless genera tions, as their chief and benefactor; and, H the second place, it is said that entails forra the only solid bulwark of a respectable aris tocracy, and prevent generations from beim ruined by the folly or misfortunes of an indi vidual. That the prospect of founding a powerfu family, and of securing property accumulatec in a long course of laborious and successfu exertion, from the risk of being squanderec by the inconsiderate projects or extravagance of any future individual, must act as a power) ful spur to the industry and ambition o the founder of a family, is unquestionable But here the beneficial influence of the sys Esprit des Loix, liv. xxvi. c, 1 ; Blackstone, Booli ii. c. 32, &c. ' — I Note XVIII. DISPOSAL OF PROPERTY BY WILL. 559 tem stops. The operation on the subsequent holders of the property is entirely differ¬ ent. An heir of entail is in great mea¬ sure emancipated from the influence of that parental authority which, though occasion¬ ally abused, is yet, in the vast majority of instances, exerted in the most indulgent manner, and with the best effects. His chance of succeeding to the property of his ancestors does not depend on his having de¬ served it—on his being industrious or idle, dissipated or sober. The succession to en- [. tailed estates is not regulated by the principle of detur digniori. Their occupiers have no power to change the established order of suc¬ cession ; they cannot exclude the worst to make room for the best of their sons ; but must submit to see the properties of which they are in possession descend, as in fact they not unfrequently do, to the most worth¬ less and depraved of their children or rela¬ tions. Granting, therefore, that the institu¬ tion of entails has a tendency, as it undoubt¬ edly has, to make one generation active, fru- i gal, and industrious, it is demonstrably clear, that it must exempt every succeeding gener¬ ation—that is, every succeeding heir of en¬ tail—from feeling the full force of some of the most powerful motives to such conduct. A system of perpetual entail makes the succes¬ sion to property depend, not on the good or bad conduct of the individual, but on the terms of a deed, written a century, perhaps, before he was in existence. It consequently substitutes a species of fatalism for an en¬ lightened discrimination, throwing property indifferently into the hands of the undeserving o and the deserving: and it cannot do this without weakening the motives which stimu¬ late men to act the part of good citizens, and strengthening those of an opposite descrip¬ tion. Hence, on referring to the criterion of M utility, it is immediately seen that the indus- I; try of one generation is not to be purchased by the idleness of all that are to come after it it; and that it is hardly less injurious to allow an individual to .appoint his remotest heirs than it would be to deprive him of the power of nominating his immediate successors. As to the second point, there can be no doubt that a system of entail affords the best attainable security for the permanence of pro¬ perty in particular families. And as indivi¬ duals possessed of property act, generally , speaking, with more independence, and are less liable to be biassed by purely selfish con¬ siderations than those who are comparatively i poor, it would seem that the privilege of exe¬ cuting a perpetual entail of a certain amount I of property might be advantageously allowed , to noble families. We should, indeed, be dis- • posed to think that in the case of such fa¬ milies it would be beneficial to carry this ; principle a little farther, and to enact that no individual should be advanced to the peerage, unless he were able to establish a majorat , or to entail such an extent of landed property on the heirs of the title as might be deemed sufficient to secure them, supposing they acted with ordinary prudence, from falling into a state of poverty, and becoming mere dependents on the crown. But though the power of entailing property were conceded to noble families, vested wuth the hereditary pre¬ rogative of legislation, it might be confined within certain limits, and made to vary with the entailer’s rank in the peerage. And there is no reason, on political grounds, for conced¬ ing such power to others. A system of per¬ petual entail is, in a general point of view, certainly injurious ; and though constitutional considerations may require that the privilege should be granted, under proper modifications, to a particular class, they can never require that it should be granted to all. It is not pos¬ sible to interfere to protect the families of the commons, from the casualties to which they are naturally subject, by sanctioning a sys¬ tem of perpetual entail, without producing injurious results. It is the duty of govern¬ ment to adopt such regulations as may most effectually call forth industry and economy among all classes of its subjects, and give sta¬ bility to our institutions ; but it is no part of its duty to inquire whether the frugality of those on the box of a county members coach, and the extravagance of those inside, bid fair to make them change places; and still less to attempt preventing such change by raising artificial ramparts round the property of the latter. By preventing the sale of land, or placing it, as the lawyers say, extra commercium, entails are obviously adverse to the spread of agricultural improvement. Should an indi¬ vidual who has no taste for rural pursuits, or who is ignorant of the best mode of managing land, succeed to an entailed estate, he cannot dispose of it to another ; so that property is thus frequently hindered from coming into the hands of those who w’ould turn it to the best account. Under the system of entail, as it existed in Scotland previously to 1770, an entailer might insert clauses in the deed of entail, prohibiting the granting of leases for any term of years, however short, and the burdening the estate with any debts, though they had been con¬ tracted to effect the most indispensable im¬ provements. Such a system was hostile to every sort of melioration ; and the wish to remedy its evils occasioned the passing of the statute, 10 Geo. III., cap. 51, entitled, “ An act for the improvement of lands in Scotland held under strict entail.” This act effected some very important alterations. It autho¬ rised the holders of entailed estates, notwith¬ standing any stipulations to the contrary in the deeds of entail, to grant leases of ninety- nine years of patches of ground, not exceed- 560 DISPOSAL OF PROP in^ fi\ e acres to one person, for the purpose ot building ; it also authorised them to grant leases oi iarms for nineteen years, and under certain stipulations for thirty-one years ; and it gave the heir in possession power to burden the estate to the extent of four years’ rent for agricultural improvements, and of two years’ rent tor the erection of a mansion house, be¬ ing in all six years’ rent, provided he contri¬ buted towards these objects a fourth part of the total outlay, or a third part of what might be charged upon the estate. .In so far as respects the granting of leases, this act left little to be desired. And the de¬ cisions in the courts of law prohibiting the pernicious practice of taking fines (Scotice grassums ) at the commencement of a lease, 1 placed the letting of entailed estates on a very advantageous tooting. But with respect to improvements the case was different. From a laudable wish to protect heirs of entail from the risk of being burdened with col¬ lusive debts, not really contracted on ac¬ count of improvements, the framers of the act of 1770 rendered it necessary, in order properly to constitute a debt against an en¬ tailed e&tate, that the strictest attention should be paid to a variety of formalities, with re¬ spect to the intimation of the improvements, the registration of the accounts, &c. ; and in consequence of the difficulty of complying with its provisions, this part of the statute has not been very extensively acted upon. Indi\ iduals were but little inclined to advance money upon a security that might, at any time, be cancelled, should it be discovered that the formalities required by the statute had not been literally complied with. Seve- lal cases of this sort, productive of great hardship to the parties, have occurred. And to obviate these .inconveniences, and at the same time to facilitate improvements, the act an< l 12 } ipt. cap. 36, empowers the Court of Session, if it shall appear to them that im¬ provements executed upon an entailed estate are of the nature of those contemplated in the act of 1770, and that the expenditure on their account has been made bonci Jxda^ to consti¬ tute it a burden upon the estate, in the same manner as if the provisions in the statute had been fully complied with. This act, also, authorises the heir in possession of an entailed estate to convert the debts secured upon it for improvements, into an annual rent- cbaige on the estate, at the rate of 5 per cent, per annum on the amount of such debts dur- his own lite, and of 7 -jV per cent, per annum during the 25 years immediately thereafter, when the rent ceases and the 'debt is dis¬ charged. The act of 1770 is not to apply to any entail dated on or after the 1st of August 1 For some observations on this practice, see ante, p. 174, note. i.RT\ Bh ILL. Note XVIII. It has, however, been said, that whatever facilities tor the execution of improvements may be given to the holder of an entail¬ ed estate, it is not to be supposed that he will undertake such as do not promise an immediate return, or that he will either build or plant with the same spirit that he would do did he possess the estate in fee simple, and had power to dispose of it as he pleased. But though this statement be in the main well founded, it will be found, on examination, that entails are not in these respects so injurious as might at first be supposed. There are com¬ paratively few cases in which an entailed pro¬ prietor would choose, supposing he had the power, to alter the order of succession point¬ ed out in the entail. And though his zeal for improvement may in many instances be very considerably abated, it should be ob- ser^ ea, that, with the exception of farm build¬ ings and roads, the greater number of im¬ provements usually effected by landlords go i rather to beautify and embellish than to add j to the real utility or productive power of an estate. Most meliorations of the soil are ef¬ fected by tenants. And now that leases of entailed estates may be granted of a sufficient length, and that the capital of the tenant is not sv allowed up by a fine on his entering into the farm, the injurious influence of eu- tails, though still sensibly felt, has been ma¬ terially diminished ; and very many estates held under entail are at this moment in the highest state ot cultivation and improvement. Except in so far as entails weaken parental v, and are apt to render heirs unduti- ful or dissolute, we are not disposed to attach much weight to the complaints of the hard¬ ships they are said to impose on the holders of estates subject to their fetters. The prin¬ cipal is, that they prevent them from mak¬ ing adequate provision for their widows and younger children. A recent statute (5 Geo. n . cap. 87.) did, however, a good deal to obviate this complaint; though, supposing it not to have been enacted, the complaint does not seem to be entitled to much attention. Ihe want of power to burden an entailed estate with provisions for younger children, acts as an incentive to the heir in pos¬ session to accumulate a monied fortune. A landed gentleman possessed of an estate in fee simple has no particular inducement to save a portion of his revenue, inasmuch as by burdening his estate he may without difficulty provide for all his children. But the posses¬ sor ot an entailed estate has no such resource, hie Cannot throw the burden of providing for his younger children on their elder brother ; and is thus laid under the most sacred obliga¬ tion to endeavour, by saving a portion of his income or otherwise, to provide for the decent outfit of his younger sons, and the comfort¬ able subsistence of his daughters. In this point of view, therefore, a system of entail Note XVIII. DISPOSAL OF PROPERTY BY WILL. 561 loes not seem to be pernicious. It is diffi¬ cult to discover any such powerful motive to industry and economy as the desire to pro¬ vide for children, who must otherwise be left cither destitute or wholly dependent on others. It is commonly said, that entails enable the heirs in possession to cheat and deceive their creditors. But though this be partly true of entails in England, 1 where they are not inserted in a public register, it is other¬ wise in Scotland. It is ordered by the act of 1685, that every entail shall be inserted, with all its provisions and clauses, in a public register ; and it is ineffectual unless this en¬ actment be literally complied with. This register is open to public inspection ; and as any one may satisfy himself, by referring to it, as to the peculiar conditions under which any given property is held, it is not easy to discover what facility the formation of an en¬ tail can give for imposing on creditors. On the whole, therefore, it is sufficiently clear that the system of perpetual entail esta¬ blished in Scotland has not been so injurious as is commonly represented. But every un¬ prejudiced observer must at the same time 5 admit, that by fostering the growth of disso¬ lute habits in the heirs of entail, by locking up property in the hands of those who would be glad to dispose of it, by fettering the ap¬ plication of capital to land, and multiplying the sources of litigation, it must have been very decidedly prejudicial. It was plainly, therefore, for the public interest that the system should be amended, and placed on some such footing as the law of entail in England. And this has been effected by the act of 1848, the lltli and 12th Viet., c. 36. It was easy, of course, to deal with future entails ; but it was not so easy to deal with those in exis¬ tence, as they had secured certain rights not merely to the heirs in possession, but also to the various parties in the line of succession. In dealing with the former class, or with deeds of entail executed on or after the 1st of August 1848, the act authorises heirs in pos¬ session of estates held under such deeds, pro¬ vided they be born after this date, and are of full age, to disentail them on making applica¬ tion to the Court of Session to that effect; but in the event of the heirs in possession be¬ ing born after the date of the deeds, they must, in order to disentail, obtain the previous con¬ sent of the heir next in succession, he being twenty-five years of age at the time of grant¬ ing such consent. Entails in existence when the act of 1848 was passed may be voided by 1 It is mentioned by Blackstone, as one of the injurious consequences of the statute de donis , that it enabled latent entails, &c. to be produced on purpose to defraud creditors. See ante , p. 557. 2 This Act was prepared and carried through Parliament by the Right Honourable Andrew Rutherfurd, M.P., Lord Advocate of Scotland. ¥ 3 C’est un esprit de vanite qui aetabli chez les Europeens l’injuste droit d’ ainesse, si dofavorable the heirs in possession, provided they have been born since that date, when they become of full age ; but heirs in possession, born be¬ fore the passing of the act in question, cannot disentail the estates held by them without the consent of certain heirs or parties interested in the succession, specified in the statute.* 2 These changes have put the law of entail in Scotland nearly on the same footing as the law of entail in England ; and will conse¬ quently, it may be presumed, be productive of very considerable advantage. But we re¬ gret that in dealing with this important sub¬ ject, some peculiar arrangements were not made in regard to the entails of the estates of noble families. The difficulties in the way of their disentailment might, we think, have been advantageously increased. In this country it is, we believe, pretty generally admitted that all attempts to enforce a compulsory distribution of property, by in¬ terfering with the freedom of bequeathing, and forcing individuals to leave, for example, a greater portion of their fortunes to their eld¬ est sons, or to divide them equally among all their children, are adverse to the increase of opulence and to the best interests of society. But however unnecessary the interference of the legislature may be in such cases, there seem to be good grounds for believing in the advantageousness of the custom of primoge¬ niture, that is, in the custom of leaving the whole, or the greater part of the paternal es¬ tate, to the eldest son, to the exclusion of his brothers and sisters. The prejudices of most political philosophers against primogeni¬ ture appear to rest on no solid foundation. 3 Dr. Smith says, that it is a custom which, “ in order to enrich one, beggars all the rest of the children.” But, notwithstanding the apparent reasonableness of this opinion, and the authority by which it is supported, we do not think it has any really good foundation. On the contrary, we are well convinced that much of the industry, freedom, and civilisation of modern Europe may be ascribed to the in¬ fluence of this custom in determining the suc¬ cession to estates ; and that were it abolished, and the custom of equally dividing landed property established in its stead, all the chil¬ dren of landlords, the youngest as well as the eldest, would be reduced to a state of compa¬ rative poverty, at the same time that the prosperity of the other classes would be greatly impaired. The custom of primogeniture, by giving a la propagation, en ce qu’il porte l’attention d* un pere sur un seul de ses enfants, et detourne ses yeux de tous les autres; en ce qu’il l’oblige, pour rendre solide la fortune d’un seul, de s’op- poser a Establishment de plusieurs ; enfin en ce qu’il detruit l’egalite des citoyens, qui en fait toute l’opulence. Montesquieu, Lettres Pcrsanes , let. 119. OO 562 DISPOSAL OF PROPERTY BY WILL. the estate to the eldest son, forces the others to quit their paternal home, and makes them depend for success in the world on the ex¬ ercise of their talents and industry. Nei¬ ther has it, like the law of entail, any tendency to generate idle or dissipated habits in the eldest sons. They have no indefeasible right to the estates held by their fathers ; the lat¬ ter may leave them to whomsoever they please ; and the sons know that they will run a very great risk of being disinherited should they misconduct themselves. It is obvious, too, that the desire to leave an estate unencumbered to the eldest son, with¬ out throwing the other children destitute upon the world, is a stimulus to industry and eco¬ nomy. It is not indeed to be expected, nor is it to be wished, that the monied fortunes accu¬ mulated for the younger children should equal those of the elder. If they be furnished with capitals sufficient for their establishment in a profession, or in business, it is enough. The means of rising in the world, and making a fortune, are, in that case, put into their hands ; and the sense of their inferiority in point of wealth, as compared with the head of their family, will be a motive to them to make extraordinary exertions, which they could not have felt had their patrimonies been equal to his. If you would develop the native resources of a man’s mind, if you would bring all his faculties and powers into full activity, you must render him sensible of his inferiority in relation to others, and inspire him with a desire to rise to the same or a higher level. It is not to those placed by their fortunes at the head of society, but to those in inferior situations, who have raised themselves to eminence, that mankind are indebted for most of those inventions and im¬ provements which have so greatly extended the empire of mind over matter, and made such vast additions to the sum of human hap¬ piness. But were all fortunes reduced to the same level, the stimulus of inequality being wanting, there would be infinitely less indus¬ try, and society would approach much nearer to the stationary state. It is not because a man is absolutely poor that he is laborious, inventive, and economical; but because he desires to place himself on an equality with those who have a greater command over the necessaries, luxuries, and amusements of hu¬ man life. If that richer class did not exist, he would not have this motive to exertion. And on the same principle it is fair to con¬ clude, that were the custom of primogeniture abolished, and the estates and properties of landed gentlemen equally divided, there would, on the whole, be fewer motives to stimulate that class to enter with vigour and energy on the arena of ambition and enterprise. It has been said in favour of the equal par¬ tition of landed property amongst the diffe¬ rent members of a family, that such is the way in which the fortunes of merchants and Note XVIIL manufacturers, and of the commercial and monied classes generally, are actually distri¬ buted, and that no bad effects have resulted fiom it. But there is hardly any analogy between the cases. The children of a mer¬ chant or banker, who have shared equally in the paternal property, may, if they form them¬ selves into a company, carry on the business as advantageously as their father. The fa¬ mily of a landed proprietor can hardly do this. I arming cannot be advantageously carried on by joint stock companies. When an estate is divided in equal portions to each child, the probability is, that the paternal home will, in most cases, be deserted by all but the eldest son; and there will, generally' speaking, be as many private mansions and families as there are children; at the same time that the younger children will be de¬ prived of the peculiar stimulus to industry that would have influenced them had the estate descended to the elder brother, and their fortunes been less than his. But the lower¬ ing of the ideas of all classes in regard to the I style in which gentlemen should live, and the magnitude of an adequate fortune, would pro-| bably be the worst effect of the establishment of a system of equal inheritance. Our great landed proprietors are at the head cf society. They give the tone in matters of fashion and expense ; and the state and magnificence in which they live act as powerful incentives to the industry and enterprise of the mercan¬ tile and manufacturing classes, who never think they have acquired sufficiently ample fortunes until they are able to emulate the splendour of the richest landlords. But were the great properties of the latter frittered down by a system of equal division among children, the standard of competence would be lowered universally; and there would be' less industry and enterprise, not among the younger children of the landlords only, but among all classes. It has sometimes been contended, that the custom of primogeniture is injurious, because it interests the leading families of the country in the support of expensive public establish¬ ments, in which their younger branches are most commonly placed. There is, however, \ no institution that may not justly be charged with some defects ; and admitting that the custom of primogeniture gives the nobility and landed gentry the bias in question, that would form but a very small deduction from its many advantages. But this bias, if it [ really exist, seems very slight. In so far as the administration of justice is concerned, the younger branches of great families have evinced no very particular anxiety to en¬ croach upon the many lucrative situations which it affords. These have always been wholly, or almost wholly, filled by individuals from the middle and lower ranks of society. And yet there can, we apprehend, be little doubt, that the administration of justice Note X\ III. DISPOSAL OF PROPERTY BY WILL. 563 lS more encumbered with useless forms, unnecessary places, and overgrown salaries, than any other branch of the public service; and that these abuses are the most difficult to eradicate. The advantages held out by the army and navy are certainly, in a pecuniary point of view, far from alluring. The retir¬ ing pension of some unknown legal function¬ ary frequently amounts to more than half the full pay of the officers of a regiment, or of a line-of-battle ship. And had the bias alluded to above been so strong as has been repre¬ sented, it is rather singular that some more strenuous efforts should not have been made by the higher classes, to augment the scanty and inadequate pay of the officers in the mili¬ tary and naval service. Much has been said about situations in the colonies ; these, how¬ ever, were not originally acquired in order to provide situations for any particular class, but to extend commerce ; and at this moment, if we except a few of the higher appointments, the others are as commonly filled by the sons of manufacturers and merchants as by those of landed gentlemen. And supposing that the ex¬ isting outlets for the latter in the army, navy, and church were narrowed, it would merely oblige a greater number of them to enter upon the more lucrative pursuits of commerce and manufactures ; a change which, whether advantageous or not to others, would be any thing but injurious to themselves. According to the rule of the Roman law, the inheritance of a person dying intestate was equally divided amongst his sons and daughters. This rule has been adopted in several continental states ; and when thus modified, the principle of equal succession is not, perhaps, very objectionable, though, for the reasons already stated, it does not seem to be in any case an eligible rule. The prin¬ ciple of the Roman law has recently, how¬ ever, received a very great extension in France. Instead of following the example of other nations, which have uniformly re¬ laxed the restraints imposed in early and less enlightened ages on the power of bequeathing property by will, modern French legislators p have followed a different course, and have enacted a law which establishes a nearly equal system of succession, and restricts the power to devise property by will within the narrowest limits. According to this law a person with one child may dispose, at pleasure, of a moiety of his property, the child inheriting the other moiety as matter of right; a person having two children is only allowed the absolute disposal of a third part of his property; and those having more than tw'O, must di¬ vide three-fourths of their property equally amongst them, one-fourth part only being left at their ow r n disposal. When the father dies intestate, the property is equally divided amongst his children without respect to sex or seniority. This law was intended to subvert the foundations of that feudal aristocracy whose ascendency had been very prejudicial to France ; and as the influence of an aristo¬ cracy is always mainly dependent on the extent of their property, it was certainly well fitted to accomplish its object. It is seldom, however, that a law adapted to a parti¬ cular emergency may be maintained with advantage as a general rule of national policy; and it would be singular were a device ori¬ ginally fallen upon for the express purpose of splitting estates, found beneficial for regu¬ lating the succession to property in a great kingdom. Considered in a general point of view, this law seems infinitely more ob¬ jectionable than a system of perpetual entail. By interfering to so extreme an extent in the disposal of a man’s property, it lessens the motives to accumulation ; while, by render¬ ing the children in a great measure independ¬ ent, it weakens the parental authority, and has the same mischievous operation, over an entire family, that the law of entail has over a single child. When the property of the father must be divided, all his descendants are aware, from their earliest infancy, that they are, -without any peculiar merit or exer¬ tion on their part, to obtain a certain provision; and can any one doubt that this sort of cer¬ tainty tends to paralyse their efforts, and to render the younger children at least less en¬ terprising than they would have been, had they known that their condition in society was to depend principally on themselves, and that they had no security, other than their own de¬ serts, for obtaining any thing from their pa¬ rents ? These, however, are not its worst ef¬ fects. This, and every similar system, inevit¬ ably tends to occasion too great an increase of agricultural population, and to reduce land¬ ed property into portions so minute that they neither afford sufficient employment to the families occupying them, nor allow of their being cultivated and improved in the best and most efficient manner. The strong predilection entertained by the children of agriculturists for the pursuits of their fa¬ thers has been remarked by every one in any degree familiar with rural affairs; and it is obvious that the existence of a law making the division of property compul¬ sory, affords unusual facilities for grati¬ fying this predilection. It gives to many who might otherwise be obliged to emi¬ grate or to resort to some other employ¬ ment, the pow r er of continuing in the line of life in which they have been educated, and which is endeared to them by those early as¬ sociations that exert so strong an influence over future conduct. Should a family be unusually large, or the paternal property to be divided among the children be insufficient 564 DISPOSAL OF PROPERTY BY WILL. Note XVIII. to maintain them in nearly the same class as their father, some of the more adventurous spirits will probably be disposed to sell their portions and engage in other pursuits. But, in the great majority of cases, they will continue to reside on the little properties ob¬ tained from their ancestors; and the fair presumption seems to be that the process of division and subdivision will continue, until the whole land has been parcelled out into patches, and filled with an agricultural popu¬ lation, destitute alike of the means and the de¬ sire of rising in the world. It is, however, alleged by those who argue in favour of the principle of equal division, that it cannot be carried to an im¬ proper extent ; that the loss that would arise from the division of an estate into lots so small that they could not be farmed in the best manner, would make the coheirs sell the property en masse and divide the price, or farm it in partnership. But this statement proceeds on the assumption, which is as false as it is gratuitous, that the conduct of coheirs is in all cases regulated exclu¬ sively with a view to their pecuniary inter¬ ests ! There can be no doubt, however, that their conduct will be determined by a va¬ riety of considerations. They have not mere¬ ly to consider what rate of nett profit they might under certain circumstances derive from their patrimony, but they have further to consider whether, were it converted into money, they should be able to employ it so as to enable them to subsist; whether, sup¬ posing they were assured of making larger pecuniary profits in another business, they would choose to leave that to which they have been accustomed ; and whether they could turn their hand to anything else : and it is further plain that, though their revenues were somewhat greater, in the event of the property being farmed in common, than if it were split into separate lots, they would not be so independent, and each would be prevented from entering into adventures on his own account, and of availing himself of, what he would doubtless consider, his superior saga¬ city. Such being the case, it is absurd to suppose that the mere amount of profit deriv¬ able by coheirs from employing their capital in a particular way is the only, or even the principal circumstance they would attend to in deciding upon the disposal of the paternal inheritance; and it appears reasonable to conclude, that in the great majority of cases the motives in favour of parcelling the pro¬ perty would be much stronger than those in favour of retaining it entire. It should always be remembered, in spe¬ culating upon the effects of any measure or rule of law upon the occupancy of landed pro¬ perty, that the possession of a piece of ground, however small, gives a feeling of independence to a poor man that he cannot otherwise en¬ joy. It is true, indeed, that those who have possessions of this sort are rarely half-em¬ ployed, or comfortable in their circumstances; but they have a security against want. They have a cottage; and unless the patch of ground they occupy be unusually small, it will furnish such a supply of potatoes as may go far to support a family. In no way, therefore, can a poor man be so indepen¬ dent. Those who hold land are, in some measure, their own masters. They are ex¬ empted from the necessity of constant la¬ bour ; and though condemned to perpetual poverty, and without any hope of rising in the world, they have so many countervailing circumstances in their favour, that, though uniformly almost in a much less comfort¬ able situation than journeymen tradesmen, they are everywhere the object of their envy.; The law of equal succession is, no doubt, j exceedingly popular in France. Certainly, however,, it is not indebted for the estimation in which it is held to any experience of its bene- ( ficial influence in an economical point of view, but to its being considered as the great security I for the permanence of the revolutionary esta¬ blishment. Every proposal for an increase of the portion of the eldest son, or even for an in¬ crease of the power of the testator over his for¬ tune, is associated in the minds of the French I people with ideas of feudal superiority ; and seems to be only the first of a series of efforts by which the aristocracy hope gradually to recover their wealth and privileges. Time only can efface these prejudices; and there is too much reason to fear that before they have been obliterated, and the pernicious consequences of the present law fully dis¬ closed, so great a change in the mode of oc cupying land, and in the habits of the people, will have been effected, as to render it very i difficult indeed to revert to a better order of things. It is said by the admirers of the French law of succession, that it has introduced peace into families ; that the “ insolent prero¬ gative.” of primogeniture being abolished, the children look upon each other as brothers, and entertain the warmest affection for their parents. In point of fact, however, it has had a precisely opposite effect. It has ren¬ dered the children jealous of each other, and of their father. The law might be defeated were the latter allowed to dispose of his es¬ tate during his lifetime ; and, therefore, if he either establish any one of his sons in busi¬ ness, or give him any property, the law au¬ thorises an examination into the circumstan¬ ces ; and the courts have, in certain cases, ordered the equivalent of the expense so laid out, or the property so bestowed, to be re¬ stored to the common fund, and divided ac¬ cording to the provisions of the law. It is easy to see what a wide door is thus opened to fraud, perjury, and litigation. Nor need Note XVIII. DISPOSAL OF PROPERTY BY WILL. 565 we wonder at the fact, that innumerable ac¬ tions, arising out of alleged preferences have been brought into the courts of law; and that their decisions have been conflicting in the extreme. The condition of the agriculturists of France has been materially improved since the Revolution. But it is false to affirm that this improvement has been in any re¬ spect owing to the law of equal inheritance. It has taken place, not in consequence but in despite of that law. The abolition of the feudal privileges of the nobility and clergy, and of the gabelle, corvees, and other oppres¬ sive and partial burdens and imposts, was of the greatest service to proprietors and farm¬ ers ; and, in addition to these advantages, a large extent of common lands was divided, and a great part of the property of the church and of the emigrants came into their hands at extremely low prices ; so that small properties were augmented, and fresh energy given to agricultural pursuits. Still, however, it is certain that the rapid division of landed property, and the continually in¬ creasing excess of the agricultural population, caused by the existing law of succession, have gone far to neutralise the influence of these advantageous circumstances, and form at this moment the prominent evils in the social con¬ dition of the people of France. “ The popu¬ lation of that country,” says Mr. Birkbeck, “ seems to be arranged thus : a town depends for subsistence on the lands immediately around it. The cultivators individually have not much to spare ; because, as their hus¬ bandry is a sort of gardening , it requires a large country population, and has, in propor¬ tion. less superfluity of produce. Thus is formed a numerous but poor country popula¬ tion. The cultivator receives payment for his surplus produce in sous, and he expends only sous. The tradesman is on a par with the farmer; as they receive, so they expend; and thus 50,000 persons may inhabit a dis¬ trict, with a town of 10,000 inhabitants in the centre of it, bartering the superfluity of the country for the arts and manufactures of the town. Poor from generation to generation, and growing continually poorer as they in¬ crease in numbers; in the country by the di¬ vision and subdivision of property, in the town by the division and subdivision of trades and professions; such a people, instead of proceeding from the necessaries to the com¬ forts of life, and then to the luxuries, as is the order of things in England, are rather re- trogade than progressive. There is no ad¬ vancement in French society, no improve¬ ment, nor hope of it.” 1 The account given of the condition of the agricultural population of France by M. La- fitte, who will be admitted by every one to 1 Tour in France, 4th ed. p 34. 2 Reflexions sur la Reduction de la Rente, pp. 161 , 162 . be an unexceptionable authority, is not more favourable. “ Si en effet,” he observes, “ le manufacturer des nos grandes villes est aussi avise, aussi adroit que Phomme doit etre au- jourd’hui, notre agriculteur est aussi ignorant, aussi pauvre que dans les siecles de la feoda- lite, et nous avons l’indigente France du qua- torzieme siecle, pour consommer les produits de l'ingenieuse et riche France du dix-neu- vieme siecle. Une partie considerable de la population ne mange ni pain ni viande, ne se nourrit que de quelques grossiers legumes, et se couvre a peine de quelques, miserables haillons! ” 2 M. Gamier, when arguing in favour of the law of equal succession, contends that the passion which impels every rich man to ex¬ tend his possessions, and to add field to field, is an effectual counterpoise to the principle of subdivision. But the compulsory division of the estates of individuals having families, at their death, naturally tempts the greater number of French capitalists to amass monied fortunes in preference to land. The facts, too, that Gamier has stated prove the very opposite of his theory ; for they show that while there is a keen demand in France for small patches of ground, there is but little demand for moderate-sized farms. Thus, he informs us, that a farm which would bring a yearly rent of 4,000 or 5,000 francs, (160/. or 200/.) will not sell as a whole for above five and twenty years’ purchase; whereas, were it divided into a number of small lots, it would most probably sell for forty years’ purchase. 3 This fact is pregnant with information that gives the most unfavourable view of the state of France; inasmuch as it proves that agri¬ culture is not prosecuted in it as in England, to realise a profit on the capital employed in carrying it on, but to acquire the means of existence. But the effect of the law of equal succession, in occasioning the endless subdivision of landed property, and depressing the condition of the rural population, is not matter of theory or inference—it has been distinctly pointed out by the most distinguished French agri¬ culturists. “J’aivu,” says M. Bose, “dans la ci-devant Lorraine principalement, et en grand nombre, des champs qui n’avaient qu’un metre de large sur deux de long, et ceux du double de cette superficie etaient extrement communs, pareeque partout les co-heritiers veulent partager toutes les pieces, quelques petites qu’elles soient.” 4 M. Raineville, one of the best practical agriculturists in the north of h ranee, in a tract published in 1824, after giving a brief but striking account of the miserable condition of the occupiers of small patches, and of the waste of labour they occasion, concludes as follows “ Telle est (et ce ne sont pas les 3 Richesse des Nations,tome vi. p. 179,ed. 1822 4 Dictionnaire d Agriculture, art. Subdivision des terres, tome xiv. 5CG DISPOSAL OF PR hommes qui out acquis une veritable connois- sance de l’etat des nos campagnes qui nous dementiront) telle est la somme des inconve¬ niens attaches a cette division dont l’action funeste devore le sol de nos campagnes avec une affiigeante rapidite.” The Duke of Rochefoucault-Liancourt, so celebrated for his virtues and misfortunes, gave, in a memoir written in 1814, an account of the morcellement of the estate of Liancourt, well known, previously to the Revolution, as one of the best cultivated in Europe.—“ Une grande partie du canton de Liancourt que j’habite, a un genre de culture plus petit en¬ core que ce qu’on appelle la petite culture. Ce sont de petites proprietes tellement divi¬ des que dans ce qui est vallon et surtout co- teau, on trouvera difficilement des proprietes d un arpent, et que beaucoup n’ont que dix, douze verges, et quelquefois deux. L’arbre d’une propriety couvre une partie de la pro¬ priety voisine, dont les arbres couvrent, a leur tour, celle d un autre voisin. Le nombre des corps de ferme dans ce canton, compose de vingt-six communes, n’est peut-etre pas au- jourd’hui de douze, dont aucune n’est d’une considerable etendue. “ Les proprietes deja bien petites, se sont plus divisees encore par l’heritage des enfans, a la mort des premiers partageans. . u Mes clotures, mes fosses faits avec soin, diminuant la. part de l’acquereur de la partie qui les avoisinait, ont ete detruits et combles ; et cette destruction, toute naturelle pour de petits proprietaires, atteste combien la petite culture est incompatible avec les clotures. Elle s’est considerablement multiplied au de¬ triment de la grande. Mais, encore une fois, elle a ete presque partout mal entendue. C’est toujours des grains qu’on a demande a des terres qui n’en ont pas produit.” Ihe duke then subjoins the following ob¬ servations on the condition and character of the small proprietors. “ Le petit proprietaire veut avoir son grain, et ne calcule pas qu’il en aurait sfire- ment deux sacs au marche pour le prix de semence, de travail et de soms que lui donne la recolte d’un seul sac sur sa propriety, et par le salaire des journees qu’il aurait em¬ ployees chez un proprietaire plus aise. L’amour de la propriety, si naturel, si avantageux pour le bien d un etat, a tourne, exalte toutes les tetes. Dans les momens d’ivresse de la re vo¬ lition chacun a voulu etre proprietaire, et la plupart courant apres l’independance et le bonheur, abandonnant le gain sur que leur procurait leur travail chez les fermiers, n’ont trouve que de la misere. Trompds dans leurs calculs, ils sont devenus des voisins incom¬ modes et dangereux, et, pour me servir de l’expression energique de l’un de mes corre- spondans, ne sont a l egard du bonheur de leur canton, que de vrais deserteurs qui ma- raudent pour soutenir leur existence.” In a well-written tract published at Mont- 5 ERTY BY WILL. Note XVIII. pellier in 1826, it is stated, “La subdivision toujours graduelle et infinie des heritages me¬ nace l’ordre social; et porte deja, notamment dans les pays de grande culture, une atteinte grave a la prosperity agricole.—Nul doute que l’agriculture est blessed de l’infinie divi¬ sion des proprietes rurales : par cette division dispaiaissent ces ameliorations a operer en grand, qui, exigeant de fortes depenses, nej peuvent etre entreprises que pour de grands | mterets : par elle se perd la possibility d’ele- ver des troupeaux, source de toute fecondite : par elle les forets se depeuplent; parcequej celui-la seul qui possede beaucoup, pouvant j attendre les revenus qu’elles donnent, lui seul les. respecte; tandis que, au contraire, la mediocrite de fortune, pressee de jouir, les transforme, pour avoir des produits annuels, en champs, qu’une generation voit creer et: s aneantir ; par elle deviennent enfin impossi¬ bles ces reserves des recoltes qui mettent en mesure de lutter contre les mauvaises annees, et contre le bas prix des produits de la terre. ——Les funestes effets du morcellement continu des pi oprietes rurales ne sauraient etre me- connus ; le mal est certain ; la plaie de l’etat est ouverte ; il s’agit de trouver le baume et les moyens de la cicatriser.” In Corsica, the system would seem to be as bad, or, if possible, worse even than in France. Among the answers made by the British consul in that island to queries as to the state of agriculture, transmitted from the foi eign office in 1833, we find the following: An ordinary landowner in Corsica, where the division of labour is in its infancy and ca¬ pital scarce, will at once possess lands produc¬ ing corn and other grains, wine, oil, chestnuts, vegetables, fruits, &c., and soils of such fitness cannot well be contiguous. This natural se- paiation is still more, and to a highly detrimen¬ tal degree, enhanced by the following causes : for centuries the laws have protected an equal succession among children; the Genoese, when rulers, abetted this system, and the French law on heirdom, which found Corsica in an extravagantly parcelled state, has confirmed and aggravated it. These ancient and modern agrarian isms unaccompanied by the remedies of capital and of various roads to industry, have made a proprietor of almost every Cor¬ sican, and have, it is true, averted mendicity, but also generally created a narrow situation, without resources, pregnant of family in¬ trigues, and not unbloody dissensions, liti¬ gious propensities, and various checks on population; and combining with these in¬ cidents they have fostered maxims which again serve to the same end of disconnecting all landed property. It is a distinctive trait that the Corsican rather starves than sells land ; that inheritances, which lose in value by division, still must submit to it; that advantageous offers are the more readily refused, the more such land would aggrandise and connect the purchaser’s estate. These J lU'U li Ij lUl h HI ^ IL LU 1 -l .1 J .,. J. -—-■*. 11 - 567 DISPOSAL OF PROPERTY BY WILL. (; Note XYIII. I causes serve to explain how it comes that almost every one is a landowner; and that an ordinary proprietor of the second class worth 20,000 fr. (800Z.) will have his little estates at ten or more unconnected places in a circle of many miles.” These authorities which might, were it necessary, be multiplied to any extent, show that the evils apprehended from the law of equal succession are not imaginary, but real; that its operation is most destruc¬ tive ; that the mischief is proceeding in an increased ratio ; and they warrant the conclusion, that unless the law be repealed, or some means of evading it discovered, the whole kingdom will most probably, at no very distant period, be parcelled into miser¬ able patches, occupied by a redundant and beggarly population. 1 The official returns published by the French government strikingly illustrate the extreme subdivision of landed property in France. In 1816, for example, there were 10,414,121 properties, great and small, charged sepa¬ rately to the land-tax or Contribution Fon- ciere. In 1842 this number had increased to 11,514,841, being an increase of 1,097,720 properties in the interval 1 This statement does not, however, show the number of pro¬ prietors, for many of them hold properties in different communes, and pay taxes in each. In 1816 the number of proprietors was esti¬ mated at 4,500,000; and as this estimate is believed to have been pretty near the mark, the number of proprietors may now be sately^ estimated at above 5,000,000, of which from 4,000,000 to 4,500,000, or 4,250,000 at a medium, are supposed to be proprietors of land. Hence, as the greater number of these are heads of families, consisting of about 5 per¬ sons each, the proprietary class in France pro¬ bably comprises upwards of 21,000,000 indi¬ viduals ! And exclusive of this class, the per¬ sons occupying land as tenants, and the class of agricultural labourers, are supposed to amount together to about a sixth part of the population of the country, or to about 6,000,000 individuals. Hence, of the entire population of France, amounting, in 1846, to 35,400,000, about 4-7ths belong to the class of proprietors, and nearly three-fourths are either engaged in the business of agriculture, or depend directly on it for support. In no i Some of those who argue in favour of the law of equal succession, say that a similar system has been adopted in Switzerland, Tuscany, &c. without having the effects now ascribed to it. But, though this statement were true, which it is not, it would not show that the system is not fully as injurious as has been represented; but merely that there were circumstances peculiar to those countries which countervail its destruc¬ tive operation. Sir Francis D’lvernois, in his tract on the Morcellement de la Propriete Fon- exere en France , has pointed out some of those circumstances in the case of Switzerland; and other European country is there such a vast body of proprietors ; and, except where agri¬ culture is the only employment, there is none where so large a portion of the population is immediately dependent on the soil. People in England being accustomed to associate ideas of wealth and respectability with the possession of landed property, are apt to conclude that a country where almost every second person you meet is a proprietor, must be in a peculiarly prosperous condition. But the reverse is the fact. A ery many of the so-called proprietors do not possess above , one or two acres, and great numbers not so much ; and in most departments the majority of properties vary from 2 to 5, 10, 30 and 40 acres. The single department of the Bouches du Rhone contains three times as many pro¬ prietors as are to be found in Scotland. The contribution fonciere, though there are great inequalities in its pressure, amounts, at an average, to about a fifth or a sixth part of the rent of the land ; and it is estimated that nine-tenths of the whole number of individuals assessed to it pay less than 51 fr. a year ; which, taking the tax at only a tenth part of the rent, shows that nine in every ten of the existing landed properties in France are not worth more than 510 fr., or 20 1. 8s. a- year. 2 Such being the case, we need not be sur¬ prised to learn that though, speaking gene¬ rally, the small proprietors are industrious and economical; they are, at the same time, miserably poor, overwhelmed with debts, and strongly attached to routine practices ; and that, even if they were acquainted with im¬ proved processes, the want of capital would be an insuperable obstacle to their carrying them into practice. It is customary at this moment, in several of the southern depart¬ ments, as it was 3,000 years ago, to thrash corn by treading it with horses ! And in some districts the ploughs now in use are said to be the same as those described by irgil ! 3 The small proprietors rarely taste butcher’s meat; and are too happy when they find an opportunity of eking out their narrow means by working at day wages on the larger properties, if there be any such, in their vici¬ nity. Such proprietors are not nearly so well off as common labourers in England. And yet the system of compulsory division is only, as notwithstanding their counteracting influence, it is even there productive of the most pernicious results. ** Le Suisse,” says Sir Francis, est aujourd’hui apres l’lrlandais, le peuple qui con¬ somme le plus des pommes de terve. For an account of the working of the small farming system in Germany, see Mr Jacobs ^ iew of the Agriculture, &c. of that country. 2 For further information on this subject, se* the Treatise on the Succession to Property, by the author of this note, pp. 96-99. 3 Travels in France, vol. i. pp. 41", 414. 568 DISPOSAL OP PROPERTY BY WILL. it were, in its infancy. If it be suffered to run its full length, it appears pretty certain that properties will be perpetually lessening, until to use the words of Arthur Young, “ you arrive at the limit, beyond which the earth cultivate it as you please, will feed no more mouths ; yet those simple manners, which instigate to marriage, still continue. What then is the consequence but the most dread¬ ful imaginable ! By persevering in this sys- tem you soon would exceed the populousness ot China, where the putrid carcasses of dogs cats, rats, and every species of filth and ver¬ min, are sought with avidity, to sustain the life of wretches born only to be starved, bmall properties much divided prove the greatest source of misery that can be con¬ ceived ; and this has operated to such an ex¬ tent and degree in France, that a law ought undoubtedly to be passed, to render all divi¬ sion below a certain number of arpents il¬ legal.” Such was Mr Young’s opinion in 1789 • and how much more reason is there for com¬ ing to the same conclusion now, when most of the large estates formerly existing in the country have been broken to pieces, and the succession to the smallest patches regulated by the principle of equal division ! Had an assembly been held for the express purpose of devising means by which France might be most effectually depressed and brought into the same hopeless situation as Ireland, it is not easy to see how they could have hit upon any scheme better calculated to effect their object, and to extinguish every germ of future improvement! . In some departments the process of divi¬ sion and subdivision has not been carried so far as in others ; but generally if a property exceed 100 or 200 acres, and in many in¬ stances if it exceed 50, it is divided, and a portion let to a tenant. Unhappily, too, the mode of letting land in France prevalent in most departments is exceedingly objection¬ able. Leases when granted are in general much too short; and in more than half the lepublic land is let on the metayer prin¬ ciple, the landlord usually furnishing, besides the land, the stock or cattle, and the seed for the first crop, and receiving as rent a cer¬ tain proportion, varying from a third to a half (generally the latter) of the gross produce of the farm. This system is subversive alike of industry and enterprise; and wherever it pi evails, agriculture is not stationary merely, but is in the most wretched state. The fol¬ lowing extract from an able article on the Agriculture of France, in the Revue Tri- mestrielle (No. 2. art 1.) shows the extent and influence of this system. “ Quand les propridtaires ne cultivent pas eiix-memes leurs terres, le mode de leur Note XVIII. 1 Hugo France Pittoresque. &c. ait. Correze etc. 1 loyer est la circonstance la plus influente sur l etat de leur culture. Ce mode en France est generalement detestable. A l’exception de la Flandre et de ce tres-petit nombre de provinces oh le systeme de la culture alterne est suivi depuis tres-long-temps, la durde des baux est. beaucoup trop courte, pour que le ernner ait le temps de recouvrer les ddpenses que necessite l’etablissement d’une nouvelle methode de culture, et pour retirer quelques avantages de ce changement. Enfin, dans une tres-grande partie du royaume, dans toutes les provinces du centre, les fermiers sont a peine connus. Les terres sont culti- v es P" his interest in it. He can neither sublei nor subdivide his farm ; and, at his death it descends entire to his heir at law. Th. younger children are not taught from infancj to trust to the land for support. On the coil trary, they are early made aware that farm ing is not a profession on which they can enter, and that it is indispensable thej should apply themselves to something else In consequence, they either establish them selves in towns, or emigrate to other coun tries ; and perhaps there is no one circum stance that has contributed so much as thi to inspire Scotchmen with the adventurous enterprising spirit for which they are cele brated. The agricultural population is, ii this way, kept down to its proper level; am prudential habits are very generally diffused Instead of becoming less, farms in Scotlanc have become larger, according to the increast of the capital of the farmers. Agricultim is not prosecuted as a means of acquiring miserable subsistence, but as a means of era ploying capital with advantage. 2 There is however, great reason to fear that the en franchising of the tenants will have a mos they have not been altogether unknown. In d district in the south-west of Scotland, where the farms are almost all large, and the tenants re j spectable, the late proprietor of a pretty consi derable estate granted leases to some of his te i ^OTE XVIII. DISPOSAL OF PROPERTY BY WILL. 571 ajurious influence over agriculture. See ante, >. 174, note. The landed gentlemen of Ireland have at ength begun to open their eyes to the defects ,f the system under which their estates have ong been occupied. The act of 1826, the r th Geo. IV. c. 29, for preventing the assign- nent, subdivision, and subletting of farms, vas pretty generally approved by the land- ords. Had it been passed fifty years sooner, ind been properly enforced, it would have jrevented much of the bad husbandry, po¬ verty, and misery which now prevail in that mhappy country. And notwithstanding the extent to which the evil had been carried, md the difficulty, in consequence of the root¬ ed prejudices of the people, of preventing un- . lerhand subdivision, the subletting act has been eminently beneficial. The comparative¬ ly slow increase of population in Ireland, be- ( tween 1830 and 1840, is principally ascribable to its influence. It has done more to improve the condition of Ireland than any act that has r hitherto received the sanction of the legisla¬ ture. The subdivision of farms has been both a cause and a consequence of the use of the po- F tato as a principal article of food. A small farmer, or even proprietor, with five, ten, or fifteen acres of land, cannot afford to feed fihimself and his family on bread and beef. He lis compelled to resort to some inferior species of food ; and as the potato, except when it fails altogether, as in 1846, affords the greatest quantity of nourishment on a given extent of land, it is to it that he naturally resorts ; while the facility of obtaining supplies of food tempts to fresh divisions. Such has been the baleful influence of the extreme subdivi- rsion of landed property in Ireland ; and such, too, is its baleful influence in France. The latter is not only threatened to be over- E spread with a redundant but with a potato¬ feeding population. “ Get aliment preci- eux,” says Count Chaptal, “ qui rejettoit le pauvre, est admis aujourd’hui sur la table du riche, et on le regarde, avec raison, comme le plus puissant auxiliarie du fro- ij ment.” 1 There seems to be little doubt that it is to the increased cultivation of the potato that the increase of towns in France during the last thirty years is to be ascribed, not¬ withstanding the low state of agriculture. “La consommation croissante,”says Sir Fran¬ cis D’lvernois, “ des pommes de terre a jus- qu’ici cache (tout en raugmeruant neanmoins) le deficit des autres productions rurales que le sol de France pourrait fournir, devrait four- nir, et ne fournit point.” And an experi¬ enced agriculturist, M. Strafforello, in a tract published in 1824, observes, “ Pourquoi ne trouveriez-vous pas la cause de cette surabon- dance qui nuit si fort a notre agriculture, dans cette serie des bonnes recoltes dont la provi¬ dence nous favorise depuis sept annees ; dans ce systeme desastreux de prohibitions qui ferme peu a peu le debouche de nos produits agricoles et manufactures ; et dans cette plante exotique, tellement multipliee qu’elle sert au¬ jourd'hui d’auxiliaire d toutes nos cereales ?” 2 Being desirous, on a matter of such importance, to learn whether the previous statements with respect to the most advanta¬ geous method of letting land were approved by those engaged in the business of farm¬ ing, we submitted two queries on the subject to Mr Oliver, late tenant of Lochend and Millrig, farms in the vicinity of Edinburgh, well known as a very intelligent and success¬ ful practical farmer ; and he obligingly per¬ mitted that the queries, with his observations upon them, should be printed. Query 1.— Would it be advantageous to the agricultural interest of Scotland were the tenants, especially those in the best-cultivated districts, vested with the power of subletting their farms ? 2.—Supposing that the tenants in the dis¬ tricts referred to had power to divide their farms, and to devise them by will, what would be the probable influence of such power on the agriculture of the country, and the condi¬ tion of the tenants ? Answers , by Mr Oliver , to the above Queries. “ I. With respect to the first of these queries, it appears to me, that though the tenantry were vested with the power of sub¬ letting, no great change in the present mode of managing and occupying land in Scot¬ land would be likely to take place for some considerable time. The practice of letting land in this country on leases of nineteen nants for twenty-one years, with a power to sub¬ divide and sublet. These leases expired a few years since; and one of the farms, consisting of about 4 00 acres, had, when it reverted to the present proprietor, upwards of fifty tenants set¬ tled upon it! As no other estate in the county had been let in the same way, the tenants were easily ejected ; but it is evident that it would have been very difficult indeed to get rid of them, had the system acquired any considerable footing. This shows pretty clearly that little more than the power to assign and subdivide farms is want¬ ed to reduce the tenants of Scotland to the same level as those of Ireland. 1 De l’Industrie Frangoise, tome i. p. 147. 2 We have discussed the various questions in¬ cident to the devising of property by will, in¬ cluding those respecting primogeniture, entails, compulsory succession, foundations, &c., in a se¬ parate treatise on “The Succession to Property vacant by Death,” published in 1848 ; and we beg to refer the reader to it for more ample in¬ formation with respect to the subjects treated of in this note. 572 DISPOSAL OF PROPERTY BY WILL. fears having been quite general for nearly a century, and the power of subletting having been very rarely conceded, the lands have naturally fallen into the occupancy of that class of persons who engage in the business of agriculture with the full purpose of de¬ voting their lives to it. Persons of this description would not be very likely imme¬ diately to avail themselves of the privilege of subletting. A considerable time would be necessary to produce so great a change in their habits and views; but that it would be gradually produced, were the privilege granted, is, I think, certain. Much of the superiority of Scotch agriculture is ascrib- able to the steady, enterprising character of the cultivators; and the system of letting lands upon leases for a definite number of years, with the prohibition of assigning or subletting, has contributed largely to the formation of that character and enterprise. A man entering upon a lease for nineteen or twenty-one years with the knowledge that it is not in his power to transfer it to an¬ other ; and that his interest in the farm will terminate at the expiration of the stipulated period, is stimulated to a vigorous and early execution of the necessary improvements, as he knows that the longer they are delayed the more will the profits derivable from them be diminished. To produce this effect, it is indispensable that the lessee or his heir at law should possess the farm during the con¬ tinuance of the lease ; and consequently that there should be no power to assign or sublet. Many persons who probably would not avail themselves of such a power, might notwith¬ standing, were it granted, hesitate about subletting; and the effects of this hesita¬ tion would very soon appear on the manage¬ ment of the farm. It may, perhaps, be supposed that the power to sublet would not make a farmer lessen his exertions, as the more the lands were improved, the more would they be worth. This would no doubt be the case to a certain extent; but it must be recollected, that a tenant resolved to oc¬ cupy a farm, has only to satisfy himself that an improvement will be profitable; whereas if he intend to sublet, or is hesitating about it, he must feel that his remuneration is to depend upon his being able to satisfy those who are to be his sub-tenants that the money expended will be returned with a profit. Tenants so situated are, therefore, naturally led to execute such improvements as most readily strike the eye, and appear advanta¬ geous ; while those really beneficial ones that they would have executed, had they been certain from the beginning that they would have to occupy the farms to the close of their leases, are either not thought of at all, or are postponed. For these and other reasons which it is needless to state, it ap¬ pears to me that the mode of letting lands Note XVIII, upon leases for fixed and definite periods] without the power of subletting or assign-! ing, is the best, and promotes in the greatesi degree the interests of the proprietors anc; tenants. Nor do I think that any othei term could be advantageously substituted for the one almost universally adopted ir Scotland, viz. nineteen years. Nineteen oi twenty-one years afford ample space for ad¬ vantageously executing most strictly agri¬ cultural improvements, while the term is not so extended as to encourage either dila¬ toriness or sloth in the tenant. Being thus clearly of opinion that the system of letting farms on leases of nineteen years, excluding the power to assign or sublet, has been one of the principal means of creating a class of cultivators in this country superior, I may venture to say, to those in most others, and indeed the only class in whose hands agri¬ culture can permanently flourish, I should consider any thing that had any tendency,) however slight, to introduce any lower de- j scription of tenants as injurious. But the granting of a power to sublet would not have a slight effect. It would slowly, per- j haps, but, as I think, certainly, bring about a change for the worse in our views and ha¬ bits ; and would most probably draw into j the profession, especially in periods of agri-! cultural prosperity, persons disposed rather j to speculate on subletting their farms at an additional rent, than to occupy them during the currency of the lease. “ I know that many well-informed per- ] sons have thought that the privilege of sub- j letting is reasonable and would prove bene¬ ficial to agriculture. They contend that t enterprising tenants, possessed of adequate skill and capital, would be of essential ser- ; vice to agriculture, and would, at the same | time, add largely to their own profits, by j hiring farms that require improvement, pro- I; vided they could sublet them, after they had | been improved, to tenants of less capital; so that, by granting power to sublet, the coun- | try would be more rapidly improved, while I an extensive field would be laid open for ; the operations of the superior class of te¬ nants. If any such division of agricultural skill and capital could be really effected, it | would no doubt prove beneficial; but 1 lock upon it as altogether impracticable. No pru¬ dent tenant will ever trust, for the repayment of money laid out on improvements, to the management of a person of inferior skill and means : if he do, he will, when too late, discover his error. Among tenants, as in every other class, skill and the command of capital are much oftener found united in the same individual with caution, than with that sort of speculative enterprise which would lead to the contemplated division. Instead then of the privilege of subletting farms entire and undivided (for I have hitherto DISPOSAL OF PROPERTY BY WILL. 573 1 Cote XVIII. onsidered it only in that point of view) •eing a thing likely to prove advantageous ither to agriculture or to the tenantry in general, I feel satisfied that it would be in- urious to both. The injury, however, vould be aggravated in a tenfold degree, vere the power to subdivide farms conferred dong with the power to sublet. W ith this I 1 idditional impulse, the system of subletting, md the annihilation of the existing race of cultivators, would proceed at a greatly ac¬ celerated rate. Such a state of things could scarcely fail of ultimately reducing agricul- ure to the lowest state of degradation, by introducing a class of tenants, possessing neither skill nor capital adequate to the proper cultivation of the soil. “ The strong desire of the majority of those, a single remove or two above the I condition of labourers, to possess a piece ol land, has been unequivocally established by the experience of every country where faci¬ lities for its gratification have been afforded. And that this desire should exist and be exceedingly powerful, is not matter of sur¬ prise. Every one wishes to be independ¬ ent ; and many are but too apt to consider that when they have got a lease of as much land as will furnish them with milk, meal, potatoes, and other articles forming the chief part of their sustenance, and a house, (^to which, in their estimation, no part of the rent is ever charged,) they have attained, or at least made a great advance on the road to independence. They seldom consider that the same articles might be procured at a smaller cost from those who make agricul¬ ture their business, and who possess the means of calling forth all the energies of the soil. But even if they considered this it is not very likely it would make them alter their mind. There is a pleasure, in¬ dependently altogether of considerations of profit or loss, in being supplied with com¬ modities produced on our own farm, and under our own superintendence. They are distributed with a more liberal hand, and t are more freely consumed, than articles procured by a direct outlay of money, and which can only be replaced by a repetition of the same unpalatable application to the pocket. But there are other considerations which exercise, perhaps, a still greater in¬ fluence in leading people in inferior circum¬ stances to take farms. The additional local influence and importance they acquire bv becoming farmers, stimulates them to offer for land. But it is obvious that they could not obtain possession of lands except by offering exorbitant rents. No tenant will divest himself of a portion of his farm, unless he receive not only the rent payable to the landlord, but also all, or nearly all, the profit he made by it ; and if i. the farm were fully rented when undi\ided, it follows that, though it were let without any additional rent, it must be too high when split down into a number of small farms ; for agricultural operations, supposing an equality of skill, can never be so well executed on a small scale, as on a large one; admitting of a proper subdivision of labour and of the employment of machinery. No doubt a considerable length of time would be required, as formerly stated, to bring the system of subletting and subdividing into full operation in a country occupied like Scotland, by tenants whose views and habits are at present so little congenial to such practices. Still, however, there appear to be sufficient grounds for thinking, that the strong desire of a very large class of persons to possess themselves, on almost any terms, of a piece of land, would lead them to offer rents greatly beyond its real worth, for purely agricultural purposes. And there can be no* doubt that the offer of this additional rent would operate powerfully, in the long run, to induce farmers to split down and sublet their farms. For, although the ad¬ ditional rent promised would, in the major¬ ity of instances, be ill paid, still the tempt¬ ation, especially after the system had once been introduced, would in numberless in¬ stances prove too great for the farmer to resist. That matters would sooner or later reach this state, were the power of sublet¬ ting and dividing their farms conferred upon the tenantry, is, in my apprehension, quite certain; and under such a state of things, agriculture would retrograde almost as ra¬ pidly as it has advanced during the last century. The agriculture of every country in Europe, in ancient and in modern times, has been prosperous or the reverse in proportion to the capital and skill of the actual cultivators of the soil. To this rule, the history of agriculture, so far as I know, affords no exception. Indeed so inseparably is bad cultivation linked with tenants of an inferior description, that even in Scotland, where the business of husbandry is now so well understood, it is still the rarest thing imaginable to find a small farm, of from twenty to fifty acres, that would not be a disgrace to the cultivators of a century ago. It seems to me quite as unreasonable to sup¬ pose that agriculture should not be injured by the introduction of the species of tenants that would gradually overspread the coun¬ try, were the power of subletting and splitting farms granted, as that the speed of her Majesty's mails should not be re¬ tarded, were London dray-horses made to supplant the high-mettled breed at present in use. “II. With respect to the second query: — Supposing, in the first place, that the tenants were vested with the privilege of dividing and devising their farms by will to heirs 574 DISPOSAL OF PROPERTY BY WILL. Note XVIII male, but were debarred from assigning or subletting to any other description of per¬ sons, I am disposed to think that great injury would ultimately ensue to agriculture from such a privilege. The operation of this measure would, however, be for some time not very obvious, at least to those un¬ acquainted with the practical details of agri¬ culture ; and for a considerable time, perhaps, its effects would be little felt. Since the American war, Scotch cultivators have had the utmost desire to enlarge their farming concerns; and where that could not be done by obtaining leases of contiguous lands, ad¬ ditional farms at the distance of live, ten, or even twenty miles from the tenant’s place of residence, have frequently been had recourse to. So general, indeed, has been the desire for some time past for large farms, and so deeply are the tenants impressed with the idea that respectability depends in a great degree on the possession of a considerable extent of land, that a small farmer is in their opinion deserving of little more consider¬ ation than a journeyman tradesman. It is in this feeling, I apprehend, that an explan¬ ation is partly to be found of the fact, that secondary lands have fetched, for a long time past, higher rents in proportion to their worth than the best lands; large farms of the former being easily obtainable, while it has been comparatively difficult to procure them of the latter description. The same feeling operates with small capitalists in the purchase of land. Most men would rather choose to pay the same sum for 1000 acres than for 200 or 300, though the revenue derived from the former should be somewhat less than that derived from the latter. Such being the feelings and habits that at present actuate the Scotch farmers, it is not at all likely that they should very readily diminish the size of their farms. They would think that they had not put down , as they express it, their sons respectably, were each of them to get only a portion of his father’s farm ; and in consequence, the process of splitting would for a time proceed at a comparatively slow rate. Great, however, as the obstacle to splitting, from old habits, undoubtedly is, there is but too much reason to fear that it would be gradually overcome. The sons of farmers have an almost unconquerable de¬ sire to follow the profession of their fathers. Nor will this seem wonderful to any one acquainted with the way in which they are brought up. I have seen it somewhere stated, that boys, at a very early age, show a predilection for whips, and girls for dolls. But however this may be, I am sure that a farmer’s son is no sooner able to use his legs than he wishes to be master of a whip, and to be permitted to exercise it on the cattle cf the farm. He is then desirous of getting on horseback ; and this gratification, through the indulgence of servants, he frequently enjoys at a very early age. As he advance: in life, the scene becomes more captivating. He sees his father master of every thing upori the farm. All give way to his pleasure, anc yield obedience to his commands. He seem* the only being who has every wish gratified, and who possesses an undisputed power over every other person within his reach. At scarcely any period of the year do the calls of business seem to make any serious inroad either on his time or wishes. It is true he must frequently be in the fields superintend¬ ing the operations going on there; but this, in most cases, appears a pleasure to a youth. Then there is the command of horses, dogs, guns, and sometimes of foxhounds; the enjoy¬ ment of which, the young men see, or think they see, is perfectly compatible with the proper management of a farm. In this manner, every thing most desirable is asso- I ciated in th°ir estimation with rural affairs, at a time, too, when the mind is most capable of receiving impressions of a deep and last¬ ing nature ; and when it is considered that in all probability they have never had an op¬ portunity of contrasting this mode of life with any thing half so captivating, can it excite any surprise that they are almost all bent on becoming farmers ? Unless, in¬ deed, a boy’s parents determine at an early period to make him choose one or other of the liberal professions, or send him abroad, and have taken care to educate him with that view, he has only a choice between the business of a farmer and that of a grocer, silk-mercer, spirit-merchant, or something similar. But to learn any one of these, a three or five years’ apprenticeship must be served; during which time the country youth, who used to be from morn to night in the j fields, is doomed to stand twelve hours a day behind a counter, weighing pounds of tea, j or measuring gallons of whisky, or yards of ribbon ; and even after his apprenticeship is served, he must, if he expect to get on, ap- i ply with unremitting assiduity to business. These are some of the circumstances that | render it so difficult, even as matters now stand, to get the sons of farmers to choose another profession : but they have no choice, and they know it. The large amount of capital required to stock and improve a farm of the extent necessary to insure respect¬ ability, together with the prohibition of di¬ viding the farm among two or more sons, at the father’s decease, makes it all but imper¬ ative on a farmer having three or four sons, to direct the views of two or three of them to some other profession ; and this is accom¬ plished by impressing upon their minds, from their earliest age, the utter impossi- bilitv of their ever becoming farmers. But * CJ if the latter had the power of dividing and devising their farms to their heirs, there DISPOSAL OF PROPERTY BY WILL. 575 OTE XVIII. i tnnot, as it appears to me, be a doubt, that ie anxiety of the sons to become farmers, rengthened as their chance of attaining |jieir object would be, by the change in the ^ nure under which the lands were held, ould gradually and not very slowly reduce ie size of farms ; ultimately leading to such division as would render them too small > be economically and profitably occupied, it first, as farms would descend to sons of xperienced farmers, there would not be any tiling off in the skill of the occupiers ; but r hen the process of subdividing and splitting ad proceeded to a considerable extent, a corresponding diminution would necessarily rke place in their capital and qualifications, imall farms must of necessity leave smaller ■rofits in proportion than large ones. It 5, therefore, clear that every succeeding ge- leration, under such a system, would be ,-rorse and worse qualified for the business of .usbandry. Agricultural capital can neither be brought into existence nor preserved with¬ out a large disposable produce, furnishing ent and profit; but this produce must be 1 ;omparatively small in every country where he lands are split into small portions. The ittle farm must support a family as well as he large one ; and if we may trust to Irish experience, it would appear that the number >f children instead of diminishing with the liminution of farms, rather increases in an nverse ratio. At all events, the expense of cultivation cannot fail of being increased vhen farms are reduced below the proper iize, and there must of course be either a reduction of rents, or a diminution of profits. For a considerable time, perhaps, the in¬ creased demand for farms would cause the greater part of this reduction to fall upon profits, but it would, in the end, affect rents 'also. As profits became less, so would the means of cultivation; and, what is perhaps of still more importance, the means of cul¬ tivating the minds of the succeeding race of farmers, without which even capital will be of as little avail as a sword in the hands of a ploughman if opposed to an expert fencer. “ In the foregoing remarks, I have con¬ sidered the effects of dividing farms and de¬ vising them to heirs, on the supposition that heirs-male only were to be the inheritors. Were heirs-female, and collateral heirs, to succeed in the same way, the interests of agriculture would suffer vastly more. It cannot be supposed that farmers’ daughters should always form matrimonial connections with the sons of farmers. This, of course, frequently happens; but if farmers could leave their daughters a portion of their farms, such dowries would tempt persons belonging to less agreeable professions to seek an alliance with young women of their caste. This, in so far as it had any influ¬ ence, would obviously tend to introduce a race of cultivators totally ignorant of agri¬ culture ; which, with the smallness of their farms, would assist in reducing the business of farming to the lowest ebb. “ Upon the whole, therefore, it appears to me that the present mode of letting land in Scotland upon leases of 19 or 21 years, strictly prohibiting the assigning, subletting, and dividing of farms, has materially contri¬ buted to the improvement of agriculture, and to the respectability of the farmers. The tenure under which we hold our lands gives us perfect security that we shall reap the full benefit of our outlays, at the same time that the certainty that our interest in the land will cease at the expiration of 19 years, prompts to a vigorous and instant execution of the necessary improvements ; while the prohi¬ bition of subletting, subdividing, and as¬ signing, effectually prevents the splitting of farms, and the introduction of a less wealthy and less intelligent class of cultivators. I should, therefore, look upon any change in the existing law of landlord and tenant, or in the custom of letting, that allowed sub¬ letting or subdivision in any form, or devis¬ ing by will to heirs, as likely to prove highly injurious to the tenants and landlords.” NOTE XIX. GOVERNMENT, REVENUE, AND COMMERCE, OF INDIA. Previously to the publication of the fourth edition of the Wealth of Nations, in 1784, the affairs of the East India Company had fallen into a state of great disorder ; and ministers were loudly called upon to bring forward some plan of reform. In compliance with this call, Mr. Fox brought forward his famous India bill, intended to abolish the courts of directors and proprietors, as totally unfit for any useful purpose, and to vest the govern¬ ment of India in seven commissioners ap¬ pointed by parliament. The introduction of this bill excited an extraordinary ferment. The coalition between Lord North and Mr. Fox had rendered the ministry exceedingly unpopular ; and advantage was taken of this circumstance to occasion the most violent opposition to the measure. The East India company called upon the public to protect their chartered rights, though it is obvious that, from their acknowledged inability to give effect to the stipulations on which their charter had been renewed in 1781, it was open to parliament to legislate upon the subject. The Opposition represented the proposal for vesting the nomination of the commissioners in the legislature, as a daring invasion of the prerogative of the crown, 576 GOVERNMENT, &c. OF INDIA. and as an insidious attempt of the mi¬ nister to render himself all-powerful, by adding the patronage of India to that already in his possession. The bill was, however, carried through the House of Commons; but in consequence of the ferment it had ex¬ cited, and the avowed opposition of his Majesty, it was thrown out in the House of Lords. This event proved fatal to the coal¬ ition ministry. A new one was formed with Mr. Pitt at its head ; and parliament being soon after dissolved, the new minister ac¬ quired a decisive majority in both houses. When thus secure of parliamentary support, Mr. Pitt brought forward his India bill, which was successfully carried through all its stages. It instituted a board of control, consisting of six members of the privy coun¬ cil, whose duty it was “ to check, superin¬ tend, and control all acts, operations, and concerns, which in any wise relate to the civil or military government, or revenues of the territories and possessions of the East India Company.” All communications to or from India, touching any of the above mat¬ ters, were to be submitted to this board ; the directors being ordered to yield obedience to its commands, and to alter or amend all instructions sent to India as directed by it. A secret committee of three directors was formed, with which the board of control might transact any business which it did not choose to submit to the court of directors. Persons returning from India were obliged, under severe penalties, to declare the amount of their fortunes; and a tribunal was ap¬ pointed for the trial of all individuals accused of misconduct in India, consisting of a judge from each of the courts of King’s Bench, Common Pleas, and Exchequer ; five mem¬ bers of the House of Lords, and seven members of the House of Commons ; the last being chosen by lot at the commence¬ ment of each session. The superintendence of all commercial matters was continued as formerly in the hands of the directors. Since the institution of the board of con¬ trol, its functions have been principally dis¬ charged by the president, who is, in fact, a secretary of state for India. Much, it is ob¬ vious, of the success of this system of govern¬ ment must depend on the character and acquirements of the president. By establish¬ ing a sort of apparently divided responsibility between the board of control and the court of directors, neither of these bodies has the same motives to exert itself to repress abuses and to improve the system of administration that it would have, were the other not in existence. The monopoly of the trade of Great Bri¬ tain with all the countries eastward of the Cape of Good Hope, continued to be pos¬ sessed by the East India company, with some trifling modifications, introduced in Note XI } 1793, till 1813, when the trade to India w> opened to the British public. The con pany continued to enjoy the monopoly ( the trade to China till 1834 ; but the act ( the previous year, (3 & 4 William I\ cap. 85.), for continuing the charter til 1854, put an end not merely to the mono poly in question, but to the company’ original character of a commercial associa tion. (See post .) Under this act the function of the East India Company have been ren dered wholly political. She is to ct ntiniu to govern India, with the concurrence anc under the supervision of the board of con¬ trol, nearly on the plan laid down in Mrj Pitt’s act, till the 30th of April, 1854. Ai the real and personal property belonging tc the company on the 22d of April, 1834, ha« been vested in the Crown, and is held oi managed by the company in trust for the same, subject of course to all claims, debts, contracts, &c. already in existence, or that may hereafter be brought into existence by competent authority. The company’s debts and liabilities are all charged on India. The dividend, which is to continue at 101 per cent., is to be paid in England out of the revenues of India; and provision is made foi tne establishment of a security fund fori its discharge. The dividend may be re-1 deemed by parliament, on payment of 200/. for 100/. stock, any time after April, 1874; but it is provided, in the event of the com¬ pany being deprived of the government of India in 1854, that they may claim redemp¬ tion of the dividend any time thereafter upon three years’ notice. The following are the principal features in the constitution of the company as it now exists : — 1. The company’s stock forms a capital | of 6,000,000/., into which all persons, na¬ tives or foreigners, males or females, bodies politic or corporate (the Governor and Com¬ pany of the Bank of England only excepted) I are at liberty to purchase, without limit- ation of amount. Since 1793, the dividends [ have been 10| per cent., to which they are ! limited by the late act. 2. The proprietors in general court as- | sembled are empowered to enact by-laws, j and m other respects are competent to the | complete investigation, regulation, and con- | trol of every branch of the company’s con¬ cerns ; but, for the more prompt despatch i of business, the executive detail is vested in ■ a court of directors. A general court is I required to be held once in the months oi I March, June, September, and December, in ■ each year. No one can be present at a gene¬ ral court unless possessed of 500/. stock; 1 nor can any person vote upon the determin* i ation of any question, who has not been in 1 possession of 1,000/. stock for the preceding I twelve months, unless such stock have been j OTE xix. GOVERNMENT, &c. OF INDIA. 577 stained by bequest or marriage. Persons assessed of 1,000/. stock are empowered > give a single vote ; 3,000/. are a qualifi- ition for two votes ; 6,000/. for three votes ; id 10,000/. and upwards for four votes, liere were 2,003 proprietors on the com¬ an v’s books in 1825 ; of these, 1,494 were ualified to give single votes; 392, two ites; 69, three votes; and 48, four votes. Jpon any special occasion, nine proprietors, ulv qualified by the possession of 1,000/. ock, may by a requisition in writing to le court of directors, call a general court; -hich the directors are required to summon fithin ten days, or, in default, the proprie- irs may call such court by notice affixed pon the Royal Exchange. In all such Courts the questions are decided by a ma- iritv of voices; in case of an equality, the etermination must be by the treasurer draw- fig a lot. Nine proprietors may, by a re- uisition in writing, demand a ballot upon ny question, which shall not be taken with- n' twenty-four hours after the breaking up .f the general court. 3. The court of directors is composed of wenty-four members, chosen from among he proprietors, each of whom must be assessed of 2,000/. stock: nor can any lirector, after being chosen, act longer than vhile he continues to hold stock. Of these, ix are chosen on the second Wednesday n April in each year, to serve for four rears, in the room of six who have com¬ peted such service. After an interval of I welve months, those who had gone out >y rotation are eligible to be re-elected or the ensuing four years. Formerly, no Derson who had been in the company’s civil )r military service was eligible to be elected t director until he had been a resident in England two years after quitting the ser- rice: but this condition no longer exists; md all civil or military servants of the com- jany in India, supposing they are otherwise ?ligible, may be chosen directors immediate- y on their return to England, provided they lave no unsettled accounts with the com¬ pany; if so, they are ineligible for two /ears after their return, unless their accounts >e sooner settled. (3 & 4 WilL 4. c. 85. ;. 28.) The directors choose annually, from [imongst themselves, a chairman and a deputy ihairman. They are required by by laws o meet once in every week at least; but hey frequently meet oftener, as occasion re¬ quires. Not less than thirteen can form a :ourt. Their determinations are guided jy a majority ; in case of an equality, the question must be decided by the drawing of i lot by the treasurer ; uqion all questions of 1 In the first place, 500,000/. a year were set aside 'or reducing the debt in India to 2,000,000/. Second , >00.000/. a year were to be paid into the exchequer, o be appropriated for the benefit of the public, as >arliament should think fit to order Third, When the imqiortance, the sense of the court is taken by ballot. The company’s officers, both at home and abroad, receive their appointments immediately from the court; to whom they are responsible for the due and faithful dis¬ charge of the trust reposed in them. The patronage is, nevertheless, so arranged, as that each member of the court separately participates therein. 4. The principal powers of the court of directors are vested in a secret com¬ mittee, forming a sort of cabinet or privy council. All communications of a con¬ fidential or delicate nature between the board of control and the comq^any are sub¬ mitted, in the first instance at least, to the consideration of this committee; and the directions of the board, as to political affairs, may be transmitted direct to India, through the committee, without being seen by the other directors. The secret commit¬ tee is aqDpointed by the court of directors, and its members are sworn to secrecy. The financial difficulties of the East India Company led to the revolution which took place in the government of India, in 1784. But notwithstanding the superintendence of the board of control, the company’s finances have continued nearly in the same unpros- perous state as before. W e have been fa¬ voured, from time to time, with dazzling accounts of revenue to be immediately de¬ rived from India; and numberless acts of parliament have been passed for the appro¬ priation of surpluses that never had any ex¬ istence except in the imagination of their framers. The proceedings that took place at the renewal of the charter in 1793, afford a striking example of this. Lord Corn¬ wallis had just concluded the war with Tippoo Saib, which stripped the latter of half his dominions; the q^erpetual settle¬ ment, from which so many benefits were ex¬ pected to arise, had been adopted in Bengal; and the company’s receipts were increased, in consequence of accessions of territory, and subsidies from native princes, &c., to up¬ wards of eight millions a year, which it was calculated would afford a future annual sur- qDlus, after every description of charge had been deducted, of 1,240,000/. Mr. Dundas, (afterwards Lord Melville,) then president of the board of control, availed himself of these favourable appearances, to give the most flattering representation of the com¬ pany’s affairs. There could be no question, lie affirmed, of the permanence and regular increase of the surqffus revenue; and he entered into a minute specification of the mode in which it was to be appropriated. 1 India debt was reduced to 2,000,000/., and the bonded debt to 1,500,000/., one-sirth part of the surplus was to be applied to augment the dividends ; and the other Jive-sixths w’ere to be paid into the Bank, in the name of the commissioners of the natiomil debt, to rp 578 GOVERNMENT, &c. OF INDIA. Note XI ' He assured the house and the country that the estimates had been framed with the greatest care: that the company’s posses¬ sions were in a state of prosperity till then unknown in India ; that the abuses that had formerly insinuated themselves into some departments were effectually repressed; and that the period was at length arrived when India was to pour her treasures into the lap of England ! Unluckily Mr. Dundas’s magnificent pro¬ mises had the same fate as those of his pre¬ decessors. Instead of being diminished, the company’s debts began immediately to in¬ crease. In 1795 they were authorised to add to the amount of their floating debt. In 1796 a new device to obtain money was fallen upon. Mr. Dundas represented, that as all competition was destroyed in conse¬ quence of the war, the company’s commerce had been greatly increased, and that their capital had become insufficient for the extent of their transactions. In consequence of this representation, leave was given to the com¬ pany to add two millions to their capital stock by creating twenty thousand new shares; but as these shares sold at the rate of 173/. each, they produced a sum of 3,460,000/. In 1797, the company issue additional bonds to the extent of 1,417,000/. and, notwithstanding all this, on the 131 March 1799, Mr. Dundas stated in tb House of Commons, that there had been deficit in the previous year of 1,319,000/. ! During the belligerent administration c Marquis Wellesley, which began in 1797-E and terminated in 1805-6, the British era pire in India was vastly augmented; an the revenue, which amounted to 8,059,000. in 1797, was increased to 15,403,000/. L 1805. But the expenses of governmen* and the interest of the debt, increased in still greater proportion than the revenue having amounted in 1805 to 17,672,000/. leaving a deficit of 2,269,000/. In the fol lowing vear, the revenue fell off nearly | million, but the expenses continued nearl < the same ; and there was, at an average, . continued excess of expenditure, including commercial charges, and a contraction o fresh debt down to 1811-12. The following statements contain the subl stance of the information that has beeij published with respect to the revenue an(| expenditure of British India, down to a re] cent period: — An Account of the total Annual Revenues and Charges of the British Possessions irl India, under the East India Company, from 1809-10 to 1829-30 ; showing also the net Charge of Bencoolen, Prince of Wales Island, and St. Helena, the Interest paid or account of Debts in India, and the Amount of territorial Charges paid in England. - (Par/. Papers, No. 22. Sess. 1830. and No. 306. Sess. 1833). Years. 1809— 10 1810— 11 1811—12 1812— 13 1813— 14 1814— 15 1815— 16 1816— 17 1817— 18 1818— 19 1819— 20 1820— 21 1821—22 1822— 23 1823— 24 1824— 25 1825— 26 1826— 27 1827— 28 1828— 29 1829— 30 Total Gross Revenues of India. Total Charges in India. Nett Charge of Ben¬ coolen, &c. Interest on Debts. Territorial Charges paid in England. General Result. Cost of Political Stores. Payments, Pensions, &c. Total. Surplus Revenue. ' Surplus Charge. ! I £ £ £ £ £ £ £ £ — £ 16,464,391 13,775,577 203,361 2,159,019 190,128 867,097 1,057,225 730.791 1 16,679,198 13,909,983 199,663 2,196,691 217,703 901,688 1,119,391 736,530 1 16,605,616 13,220,967 168,288 1,457,077 154,998 922,770 1,077,768 681,516 16,459,774 13,659,429 201,349 1,491,870 193,784 1,184,976 1,378,768 271,634 17,228,711 13,6:7,725 209,957 1,537,434 64,257 1.148,156 1.212,413 651,182 17.231,191 14,182,454 204,250 1,502,217 129,873 1,064,223 1,194,596 147,677 17,168,196 15,081,587 225,558 1,584,157 81,903 1,199,952 1,281,885 1,004,992 18,010,135 15,129,839 205,372 1,719,470 194,374 1,071,176 1,265,550 310,096 1 18,305,265 15,844,964 219,793 1,753,018 81,941 1,094,701 1,176,642 689,152 19,392,002 17,558,615 210,224 1,665,921 133,162 1,150,378 1,280,540 _ _ 1,323,305 19,172,506 17,040,848 142,049 1,940,327 265,055 1,150,391 1,415,446 1,466,164 21,292,036 17,520,612 220,043 1,902,585 228,058 1,072,106 1.300,164 348,632 21,753,271 17,555,668 207,816 1,932,835 202,735 1,175,149 1,377,884 679,068 23,120,934 18,083,482 154,761 1,694.731 204,147 1,354,960 1,559,107 1,528,853 21,238,623 18,902,511 257,276 1,652,449 395,276 758,590 1,153,866 * _ 727,479 20,705,152 20,410,929 279,277 1,460,433 414,181 1,166,078 1,580,259 _ 3,025,746 21,096,960 22,346,365 214,285 1,575,941 740,728 1,076,504 1,817,232 4,856,857 ! 23,327,753' 21,424,894j 207,973 1,749,068 1,111,792 1,318,102 2.429,894 2,484.076 ! 22,818,184 j 41,778,431 272,014 1,958,313 805,016 1,255,125 2,060,141 3,250,715 22,692,711 1 19.298,622 250,794 2,121,165 449,603 1,517,802 1,967,405 • • 945,275 21,662,310 18,300,715j 213,304 2,007,693 293,873 1,454,867 1,748,740 - 608,142 i make up the dividends on the capital stock of the company to ten per cent., &c. &-c. be accumulated as a guarantee fund, until it amounted to 12,000,000/.; and, when it reached that sum, the dividends upon it were to be applied to 1)TE XIX. GOVERNMENT, &c. OF INDIA. 579 w < bstract View of the Revenues and Charges of India for the Years 1844-45, 1845-46, 1846-47, and (partly by Estimate) 1847-48. It REVENUE. CHARGE. t » 1844-45. 1845-46. 1846-47. 1847-48. 1844-45. 1845-46. 1846-47. 1847-48. : • J • • y Co.’s Rup. 8,09,75,600 4,55,49,557 3,74,65,778 2,04,65,137 Co.'s Rup. 8,42,30,816 4,56,28,788 3,82,84,936 2,18,38,719 Co.’s Rup. 6,80,81,004 4,95,21,708 3,87,40,499 2,26,22,119 Co.’s Rup. 7,83,91,826 5,01,00,400 3,88,11,613 2,06,35,382 Bengal Agra Madras Bombay . Co.’s Rup. 9,31,64,034 69,76,591 3,71,15,528 2,66,25,848 Co.’s Rup. 9,92,21,365 92,60,984 3,75,85,048 2,74,12,370 Co.’s Rup. 10,22,36,457 91,87,214 3,67,95,925 2,83,95,731 Co.’s Rup. 9,29,(-9,053 1,02,01,800 3,59,83,417 2,74,31,133 Revenues') 1 dia Co.’s > es . ) 18,44,56,072 18,99,83,259 19,89,65,330 18,79,39,221 Total, including,. War Charges,) of India Co.’s j Rupees . . J At, 2s. per Siccal Rupee . . / 16,58,82,001 17,34,79,767 17,66,15,327 16,66.05,403 per Sicca) e . . / £17,292,756 £17,810,930 £18,653,000 £17,619,302 £15,551,437 £16,263,728 £16,557,687 £15,619,257 ( Charges on ac-~) count of India > in England . ) 2,485,212 3,044,06*’ 3,066,635 3,016,072 ncyofOr-1 Revenue/ 743,893 1,496,865 971,322 1,019,027 Total Charges') of India . J £18,036,649 £19,307,795 £19,624,322 £18,635,329 1 £18,036,649 £19,307,795 £19,624,322 £18,638,329 £18,036,649 [ £19,307,795 £19,624,322 £18,635,329 B —The Company realised in 1834-35 the sum of 10,679,223*. by the sale of commercial assets. The debts of the pany in India on the 30th of April 1847, amounted to 41,798,087*., bearing an interest of 1,980,050*. a year. (Pari. Paper , 152, Sess. 1849.) That this account of the financial condi- on of our eastern empire should be so much ; variance with the exaggerated ideas that ere long entertained respecting it, will xcite no surprise in the mind of any one ho has ever reflected on the subject. It is ue, indeed, to the East India company to ;ate, that though they have occasionally cted on erroneous principles, they have (ways exerted themselves to enforce eco- omy in every branch of their expenditure ; nd to impose and collect their revenues in le best and cheapest manner. But though ley have succeeded in repressing many buses, it would be absurd to suppose that they .iould have been able entirely to root them ut. How can it be imagined that strangers ?nt to India, conscious that they are armed i dth all the strength of government, placed nder no real responsibility, exempted from le salutary influence of public opinion, and in reat measure also from the fear of exposure lrough the medium of the press, and anxious nly to accumulate a fortune, should not ocea- onally abuse their authority ? or, that they (hould manage the complicated and difficult al¬ ii rs of a vast empire, inhabited by a race of eople of whose language, manners, and habits, j hey are almost wholly ignorant, with that pru- ence, economy, and vigilance, without which J,; is idle to expect that any great surplus re- enue can ever be realised ? There is reason, owever, to think, should peace be pre- srved, that the revenue of India will gra- ually increase in amount; and as it is, ndia is the only considerable foreign pos- ession belonging to the British crown, that has generally paid the expenses of its go¬ vernment, and produced in some years a considerable surplus. The collection of a greater revenue in India than is sufficient to defray the expense of its government, and the remittal of the surplus to England, has been stigmatised by Mr. Burke and others as unjust and op¬ pressive. But these censures are totally inapplicable to the East India company. Whatever other charges may be justly made against them, they certainly have not drained India of her wealth, to remit it to England. If the accounts between the two countries were fairly balanced, it would, we apprehend, be found that India is quite as much indebted to England as England to India. But the principle on which the objection is founded is fallacious. The revenue of India is derived from a portion of the produce of the land, which the sove¬ reign has uniformly been in the habit of collecting. If, therefore, it were not col¬ lected by the agents of the East India com¬ pany, it would be collected by others ; and, provided the sums taken from the cultivators be equal, it is immaterial to them to whom they are paid. Nothing, therefore, can be more entirely destitute of foundation than the invectives of those who denounce what they are pleased to call tribute ; for, in the first place, no such tribute has ever been exacted ; and, in the second place, though it were exacted, it would be no injury to the natives. What is it to them whether the government, by whose authority taxes are imposed and collected, be resident in Delhi 580 GOVERNMENT, &c. OE INDIA. or in London ? The merit of the company’s government must be determined by the con¬ dition of the people subject to their author¬ ity, and by the nature and extent of the burdens imposed on them, and not by vision¬ ary notions about absentee expenditure. To enter at any considerable length on the much disputed subject of Indian taxa¬ tion, would far exceed the narrow limits within which this note must be confined. It is sufficient to observe, that from the remot¬ est Eera to the present time, the principal part of the public revenue of eastern coun¬ tries has been derived from the soil. The land has been held by its immediate cultiva¬ tors generally in small portions, with a per¬ petual and transferable title ; but they have been under the obligation of making an annual payment to government of a certain portion of the produce of their farms, which might be increased or diminished at the pleasure of the sovereign, the real proprietor of the land, and which has, in almost all cases, been so large as seldom to leave the cultivators more than a bare subsistence. The far greater part of the revenue of our Indian dominions is derived from this source. In Bengal, and generally through¬ out the Mogul empire, the gross produce of the soil was divided into equal, or nearly equal shares, between the ryots, or cultiva¬ tors, and the government. The agents em¬ ployed by government to collect this revenue were denominated zemindars; and their office seems gradually to have become here¬ ditary. That the zemindars were not proprietors of the ground, at least in the sense attached to this phrase in Europe, seems clear from the circumstance, that they could not legally demand more from the ryot than half the produce he had raised ; and that, so long as he paid this portion, he could not be dispossessed of his farm, but might dispose of it as he pleased. The ze¬ mindars were obliged to pay nine tenths of the rents they collected from the ryots to government; the other tenth being their compensation for the trouble and expense of collection. When the English obtained possession of Bengal, the vitally important question came to be considered, how they were to deal with the cultivators, and how the revenue was in future to be collected. As was to be expected, various plans were proposed for the regulation of the company’s conduct in this difficult and delicate undertaking ; but of these, only two attracted any considerable degree of atten- 1 Mill’s India, vol. v. p. 411, 8vo. ed. “ He is to levy his rents,” says the author of Observations on the Law and Constitution of India, “ according to the custom of the Pergunnah rates ; which custom, being different in every different place, was necessa¬ rily left for the owner to dictate. The dictum , there- Note XIX tion; and their principal features may b stated with sufficient distinctness as follows The first plan was to supersede, or abolish the class of middlemen or zemindars, o paying them a fair equivalent for the loss c the rights they enjoyed, and to appoin agents, removable at pleasure, to collect tli rents payable by the cultivators on accoun of government, to whom the land rcall belonged, and by whom the rents might b increased, in the event of the country bs coming more prosperous. The second plai was to make the assessment perpetual at till former rate ; and to continue the zemindar in their former situation, making them di rectly responsible to government for tli] rents or assessment payable by the cultiva] tors in their district, and leaving them, a before, 10 per cent, of the gross amount c| the assessment, to indemnify them for tli trouble and expense of collection. After j great deal of discussion, the latter plan waj carried into effect under Lord Cornwallis The zemindars were authorised to make nev settlements with the ryots, without, howevei being expressly bound, as they should in jus tice have been, to confine their demand upon them to what they had previously paid. In dealing with them, they werJ merely recommended to conform to the cus tom of the place; but after the rent wa [ once fixed, the zemindar was to give the rvo a pottah , or lease ; and so long as he Till | filled the conditions of that lease, neither In nor his disponees could be deprived of thei [ possession. 1 Lord Cornwallis supposed tha by thus fixing the assessment, and rendering both it and the rents payable by the cultiva tors unsusceptible of future increase, ; powerful stimulus would be given to tin j progress of improvement. But it may be a matter of indifference to him. Since, herefore, the rights of the ryots did not )ermit that the zemindars should be invested cith the full control of the estates of which hey were made superiors, the better course vould appear to have been to have adopted he first of the plans previously mentioned ; o have superseded the class of middlemen or :emindars altogether ; and to have declared, iither that the ryots were the absolute pro¬ prietors of the soil, on condition of their paying a certain share of the produce to jollectors appointed by government; or that he ryots were to continue as tenants only, Government reserving to itself the right to *evise the assessment payable by them once jvery twenty or thirty years. Either of :hese plans seems preferable to that which was actually adopted; and there can be ittle doubt, had the share of the produce to 3e paid to government not been too great, .hat the first would have been the best of the two. The facility with which the revenue is Collected from the zemindars has been urged is a powerful argument in favour of their establishment. It is said that, under the present system, one individual is generally accountable to government for the revenues of a large district. And a sum is thus ob¬ tained from him without difficulty, which could not have been levied from the cultiva¬ tors without employing a host of collectors, and consequently opening a door to every species of fraud and abuse. But admitting the force of this statement, still it does not follow that the rights grant¬ ed to the zemindars should have been made hereditary. According to the theory of the 1 Mr. White states that this is in fact the case in ilmost event instance . Considerations on India, ?. 289. 2 A considerable portion of waste land or jungle *as attached to each zemindarry. And it cannot be loubted, that had the assessment been so low as to ?nable the zemindars to amass capital, the rendering pf t perpetual must have been a powerful stimulus :o the cultivation of these waste lands. 3 It is stated in some late works on India, that the perpetual settlement, they do not seem to be really landlords, but hereditary collectors of the revenue derived from particular districts; enjoying only the contingent advantages to be derived from the extension of cultivation over the waste lands attached to these dis¬ tricts^ Now, it is not easy to see why the revenue might not have been collected with equal facility and advantage to all parties, had the districts been merely let in farm to the zemindars for a given number of years. Had this been done, government might have participated in the future improvement of the country ; and it would have been in its power to interfere with infinitely more faci¬ lity and effect than at present, to protect the ryots from the illegal exactions of the zemin¬ dars. Most of the recent writers on India seem to be of opinion, that the regulations intended to secure the rights of the ryots are trampled upon with impunity. 4 And if this be really the case, and there does not seem to be any ground for calling it in question, it will follow that the effect of the perpetual settlement is merely to protect the farmers of the revenue from any farther demands upon them by government, and to leave the whole population of the country a prey to their depredations. But, although the system adopted by Lord Cornwallis had been in other respects unobjectionable, the amount of the assess¬ ment, or of the payment to be made to go¬ vernment, was so exorbitant, as to render it productive, in the first instance, of ruin to all parties. In those European countries in which the metayer principle of letting land is adopted, the landlord never receives half the produce unless, in addition to the land, he supply the occupier with the cattle necessary to work and stock it, and most commonly, also, with the seed required to sow the first crop. If the landlord furnish nothing but the land, he receives only a third part of the produce. The claim upon occu¬ piers who have to furnish themselves with stock, as is the case with the Hindoos, of half the gross produce of the land, is so excessive, that it seems unnecessary to seek elsewhere for a satisfactory explanation of the extreme poverty and wretchedness in which the cultivators of land in India are involved. They are commonly obliged to borrow money to buy their seed and to carry on their operations, at a high interest, on a species of mortgage over the ensuing crop. Their only object is to get subsist- zemindar is authorised to demand an increased share of the produce from the ryot, in the event of the latter making any improvement. This, however, is a complete subversion of the principles of the per¬ petual system. Thas it will improve the condition of the zemindar cannot be doubted ; but it will proportionally depress that of the cultivators, or of the great mass of the population. 4 Observations on the Law and Constitution of India, p. 1G6. 5S2 GOVERNMENT, &c. OF INDIA. ence — to exist in the same obscure poverty as their forefathers. If they succeed in this, they are satisfied. Mr. Colebrooke mentions that the quantity of land occupied by each ryot or cultivator, in Bengal, is commonly about six acres, and rarely amounts to twen¬ ty-four ; and it is obvious that the abstrac¬ tion of half the produce raised on such patches must leave their occupiers nothing more than the barest subsistence for them¬ selves and families. Indeed, Mr. Colebrooke states distinctly, that the condition of ryots subject to this tax is generally inferior to that of a hired labourer, who receives the miserable pittance of two annas, or about threepence a day of wages! It might have been easily foreseen how such a system would operate upon the ze¬ mindars, who were responsible to govern¬ ment for the amount of the assessment charged upon their districts or estates. Had every imaginable facility been given to the zemindar to recover payment from the ryots, it is plain that he must, notwithstanding, in the vast majority of cases, have encountered the greatest difficulty in squeezing out of them so enormous a demand as th«*t of half their produce. But, instead of having faci¬ lities allowed him, the zemindar was obliged to prosecute the ryots who fell in arrear, in courts where the proceedings were necessa¬ rily slow, and which were speedily choked up by an overwhelming mass of cases. He, however, was not permitted to fight the government with the same sort of wea¬ pons that the ryots were authorised to em¬ ploy against himself. The process fol¬ lowed by the revenue collectors was compa¬ ratively brief and compendious. If the ze¬ mindar could not pay the full amount of the assessment charged on his estate, summary proceedings were instituted against him. In vain did he represent that, to enable him to discharge his engagements, he must have the same summary powers to enforce payment from the ryots, that were used by govern¬ ment to enforce payment from himself. A deaf ear was turned to every remonstrance ; and, in consequence, the estates of the ze¬ mindars were everywhere exposed to sale ; the oldest and most opulent families in the country were reduced to a state of beggary and destitution; and so general was the de¬ struction, that the whole landed property of Bengal is said to have changed hands since the establishment of the perpetual system ! After the ruin of the old zemindars had been completed, the system was so far modi¬ fied, that power was given to the new ze¬ mindars to recover, by a summary process, the arrears of rent due by the ryots. But it is stated by Mr. Rickards, who saw and ably pointed out the destructive operation of this system, that the present zemindars are mostly monied men of Calcutta, who employ agents Note XI X or stewards to manage their estates, from whom the ryots are not very likely to expe rience as much lenity as they did from thJ old zemindars, who had. an interest in secun ing the attachment of their dependents. “ 1j is also,” say^s Mr. Rickards, “ as far as thJ regulation admits, a recurrence to the forme] system of arbitrary punishment and impri sonment, which Lord Cornwallis so anxii ously endeavoured to avert from the ryots and the only advantage of the regulation, ir.J a public point of view, is, that it may cause the taxes to be paid with greater regula-l ritv.” 1 If any doubt remain in the mind of any one as to the pernicious influence of this system of taxation, let him read Mr. Mill’s review of Lord Cornwallis’ financial and ju¬ dicial reforms, and he will be satisfied. The fault, however, must not be wholly ascribed to his lordship. That he acted with undue) precipitation seems certain. But had he supposed that it was in his power to reduceji the burden imposed on the cultivators, or toj obtain any better security for their rights, he would have done so. Lord Cornwallis was, beyond all doubt, a sincere friend to the people of India; and, how much soever) he may have been mistaken in some points) of his policy, his moderation, love of justice,) and desire to promote the welfare of the Ha¬ th es, are unquestionable; and nothing but) the want of sufficient information, as to the) effects of the system he was projecting, and) the wish to provide a revenue to meet the increasing demands upon the companv’s 3 treasury”, could have led him to propose) giving perpetuity to a tax which strips every || occupier of a few acres of half their produce. | It is hardly possible to conceive that any 3 considerable improvement should take place, while such a system is maintained. Unless ! w e mean to render the poverty and misery ! of the ry r ots coeval with our ascendency in Bengal, we must revise the settlement made by Lord Cornwallis, and consent to a tem¬ porary sacrifice, which will be amply com¬ pensated by the future increase of revenue of which it will be productive. It was represented to the company, at the time when Lord Cornwallis was arranging the perpetual settlement, that the assess- ! ment was too low ; and that, in consenting to it, they were making an unnecessary sa¬ crifice of income ! The company replied, j “ That an assessment below what the coun- i try could bear was no detriment, in the long run, to the government itself; because, the riches of the people were the riches of the i state. ’ This sentiment does honour to the company”. But should they, acting upon this sound principle, be inclined to revise i the perpetual settlement, and to restrict the 1 Speeches of Robert Rickards, Esq.,in the House j of Commons, on the Affairs of India, p. 18 . 583 0TE XIX GOVERNMENT j es ent oppressive demands upon the soil, it ould be necessary for them to proceed with •eat caution, and to adopt such mea- ■ ■ ires as might prevent the boon which i l0U ld be granted chiefly to the ryots, from j iing intercepted by the zemindars. Ac¬ ting to the existing regulations, when a jmindarry is sold by government for arrears i f revenue, all the leases under which the ;ots hold are set aside ; and it is affirmed lat arrears have been allowed to accumu- ite, on many improved and improvable es- ites, in order that, by being sold, the leases light be cancelled; and that these estates ave invariably been repurchased by their irmer owners, i This is evidently a gross buse. If the rent or assessment is to be erpetual to the class of zemindars, justice . equires that it should also be perpetual to le other and infinitely more numerous class f ryots . 2 But it is not indispensable, ’hen an estate falls into arrears, that it tiould be sold in perpetuity. The rights njoyed by the zemindars have then lapsed o government, who may, if it be thought it, let it under any conditions, at a given ent, for a definite number of years. Were 'overnment to proceed in this way, they night gradually, and without either en- roaching on the rights, or shocking the irejudices of any class, regain the superi¬ ority of the land, and might dispose of it as vas judged best, for the interest of the cul- ivators and the revenue. It seems, however, as if there were some itrange fatality attending the government of fndia; and that the greatest talents and jest intentions should, when applied to le- i pslate for that country, produce only the nost pernicious projects. The perpetual settlement carried into effect by Lord Corn¬ wallis, in Bengal, was keenly opposed by Lord Teignmouth, Colonel Wilkes, Mr. Thackeray, Sir Thomas Monro, and others, whose opinions on such subjects are cer- :ainly entitled to very great respect; and it 1 would seem that the court of directors and :he board of control became, at length, I favourable to their views. In consequence )f this change of opinion, it was resolved to introduce a different system, under the su¬ perintendence of its zealous and intelligent advocate, Sir Thomas Monro, into the pre- E sidency of Madras, or Fort St. George. This new system has received the name of the ryotwar settlement. It proceeds on the * Observations on the Law and Constitution of ; India, p. 167. . _ . T j 2 That such was the opinion entertained by Eord Cornwallis, is evident from his minute of the 3d of February, 1790. “ Every abwab or tax, his lordship abserves, imposed by the zemindar, over and above that sum (the rent fixed upon originally either by an expressed or implied agreement with the ryot)* is not only a breach of that agreement, but a direct violation of the established laws ot the country. I &c. OF INDIA. assumption that government possesses the entire property of the soil, and may dispose of it at pleasure; no middlemen are inter¬ posed between the sovereign and the culti¬ vators ; the ryots being brought into imme¬ diate contact with the collectors appointed by government to receive their rents. Ihus far the ryotwar settlement has some analogy to one of the plans previously alluded to ; but it is, notwithstanding, essentially and completely different. It is impossible, how¬ ever, to enter fully into the details of this system. They are in the last degree com¬ plicated—which is of itself a strong pre¬ sumption of their inexpediency. But the radical vice of the system is, that the lands are not let at a moderate rent to the ryots, for a certain number of years. On the con¬ trary, there is a constant tampering and in¬ terference with their concerns. “ At the end of each year every ryot shall be at liberty either to throw up a part of his land, or to occupy more according to his circumstances. When, owing to bad crops, or other unfore¬ seen accidents, a ryot becomes unable to pay his rent or assessment, w r hich is fixed at a third of the gross produce, it is declared that “ the village to which he belongs shall be liable for him to the extent of ten per cent, additional on the rent of the remain¬ ing ryots, but no more. ’ And to ciown the whole, the tehsildars, or native officers employed in collecting the land-rents or revenue, have been vested with powers to act as officers of police, to impose fines, and even to inflict corporal punishment at dis¬ cretion ! It is really astonishing how acute and able men should have dreamed of establish¬ ing a system in an extensive and only half civilised country, that every one must see would be destructive of the industry of the tenants, and would lead to the grossest abuses, were an attempt made to introduce it into the management even of a single es¬ tate in Great Britain. Mr. Tucker, a gen¬ tleman who resided long in India, and has since occupied a place in the Direction, has animadverted on this plan as follows; “ My wish,” says he, “ is not to exagge¬ rate ; but when I find a system requiring a multiplicity of instruments, surveyors, and inspectors; assessors, ordinary and extraor¬ dinary ; potails, curnums, tehsildars, and cutcherry servants; and when I read the description given of these officers by the most zealous advocates of the system, their do not hesitate to give it as my opinion, that the ze¬ mindars, neither now, nor ever, could possess a right to impose new taxes, or abwabs, on the ryots ; arid that government has an undoubted right to abolish every such tax, and to establish such regula¬ tions as may prevent the practice of the like abuses in future.” It is clear, therefore, that the principles of the perpetual settlement do not really prevent, but warrant our interfering to prevent the ryots from being illegally assessed by the zemindars. Note XIj "84 GOVERNMENT periodical visitations tire pictured in niv imagination as the passage of a flight of locusts, devouring in their course the fruits of the earth. For such complicated details, the most select agency would be required; whereas the agency which we can com¬ mand is represented to be of the most questionable character. We do not merely require experience and honesty to execute one great undertaking; the work is ever beginning and never ending, and calls for a perennial stream of intelligence and inte- grity. And can it be doubted, that the peo¬ ple are oppressed and plundered by these multiform agents ? The principle of the settlement is to take one third of the gross produce on account of government; and, in order to render the assessment moderate, Sir 1 . Monro proposed to grant a consider¬ able deduction from the rates deducible from the survey reports. But if it be mo¬ derate, how does it happen that the people continue in the same uniform condition of labouring peasants ? Why do not the same changes take place here as in other commu¬ nities ? One man is industrious, economi¬ cal, prudent, or fortunate; another is idle, wasteful, improvident, or unlucky. In the ordinary course of things, one should rise and the other fall : the former should, by degrees, absorb the possessions of the latter; should become rich while his neighbour remained poor ; gradations in society should take place ; and, in the course of time, we might naturally expect to see the landlord, the yeoman, and the labourer. And what prevents this natural progression? I should answer, the officers of government. The fruits of industry are nipt in the bud. If one man produce more than his fellows, there is a public servant at hand, always ready to snatch the superfluity. And where¬ fore, then, should the husbandman toil that a stranger may reap the produce ? “ There are two other circumstances which tend to perpetuate this uniform condition. The ryots have no fixed possession ; they are liable to be moved from field to field : this they sometimes do of their own accord, lor the purpose of obtaining land, supposed to be more lightly assessed ; at other times, the land is assigned by lot, with a view to a more equal and impartial distribution of the good and the bad, among the different cul¬ tivators. But these revolutions tend to de¬ stroy all local attachments, and are evidently calculated to take away one great incentive to exertion. The other levelling principle is to be found in the rule, which requires that the ryot shall make good the deficiencies of his neighbour to the extent of ten per cent. ; that is to the extent, probably, of his whole surplus earnings. Of what avail is it that the husbandman be diligent, skilful, and . &c. OF INDIA. successful, if he is to be mulcted for his neigl hour’s negligence or misfortune ? A. mu pay the debt of B. If a village be prospe ous, it matters little, for the next villa' may have been exposed to some ealamit\ and, from the abundance of the one, v exact wherewithal to supply the deficient of the other. Is it possible to fancy a sy tern better calculated to baffle the efforts* the individual, to repress industry, to e? tinguish hope, and to reduce all to one con mon state of universal pauperism? 1 It is almost unnecessary to add any thin to these unanswerable remarks; but as th is a subject which involves the interests! millions, we subjoin a statement respectin it, taken from a memoir drawn up in 1 S£? by Mr. Fullerton, one of the company' servants, at Fort St. George, who was pe; sonally familiar with the details and work ing of the system. “ To convey,” says Mr. Fullerton, “ t the mind of an English reader even a sligh impression of the nature, operation, and rej suits of the ryotwar system of revenue, con nected with the judicial arrangements cl 1816, must be a matter of some difficulty Let him, in the first place, imagine tin whole landed interest, that is, all the land lords of Great Britain, and even the capita farmers, at once swept away from off tin earth; let him imagine a cess or rent fixeq on every field in the kingdom, seldom under generally above, its means of payment; le him imagine the land so assessed lotted ou to the villagers, according to the number o: their cattle and ploughs, to the extent o forty or fifty acres each. Let him imagine the revenue, rated as above, leviable througl the agency of a hundred thousand revenue officers, collected or remitted at their discre-j tion, according to their idea of the occu-j pant’s means of paying, whether from thJ produce of his land or his separate property.] And in order to encourage every man tel act as a spy on his neighbour, and report his means of paying, that he may eventually save himself from extra demand, let hint imagine all the cultivators of a village liable at all times to a separate demand, in order! to make up for the failure of one or morej individuals of their parish. Let him imagine! collectors to every county acting under the! orders of a board, on the avowed principle] of destroying all competition for labour by a general equalisation of assessment; seiz¬ ing and sending back runaways to each other. And lastly, let him imagine the col¬ lector the sole magistrate or justice of the! peace of the county, through the medium and instrumentality of whom alone any! criminal complaint of personal grievance, suffered by the subject, can reach the supe- 1 Financial Situation ot the East India Company pp. 134, 135. GOVERNMENT, &c. OF INDIA. 585 Note XIX. nor courts. Let him imagine at the same time every subordinate officer, employed in h the collection of the land revenue, to be a is - police officer, vested with power to fine, , ] confine, put in the stocks, and flog, any in¬ habitant within his range, on any charge, without oath of the accuser, or sworn re¬ corded evidence on the case. If the reader can bring his mind to contemplate such a course, he may then form some judgment of the civil administration in progress of re- introduction into the territories under the presidency of Madras, containing 125,000 square miles, and a population of twelve millions.” It is hardly necessary to add, that the land revenues of Madras have fallen off con¬ siderably under the operation of this system, and that the condition of the people has been greatly deteriorated. 1 Under these circumstances, no certain conclusions can be drawn with respect to the probable future revenue derivable from India. Mr. Tucker says it may be relied upon generally as a firm and legitimate re¬ source : and we should be inclined to concur in this opinion, provided the reforms which are so obviously necessary, were adopted. ' Whatever modifications may be made in the assessment imposed on Bengal, it seems in¬ dispensable that the rvotwar system, as at present established in Madras, should be al¬ together changed. We should either make the ryots the proprietors of the soil, under payment of a moderate quit-rent to govern¬ ment, or we should let the land to them for a period of years certain, at such a reduced rent as they maybe able to pay without diffi¬ culty. Under either of these systems industry would revive, and the peasantry would be¬ come attached to government. But so long as we compel the ryots to cultivate land that is over-assessed—so long, in short, as we compel them to raise crops, not for their own advantage, but for that of government and of the host of harpies it is obliged to employ, so long will the scourge of universal poverty continue to afflict the country ; so long will the benevolent intentions of the company be frustrated; and their government be looked upon as the prolific source of Indian degradation and misery. But notwithstanding the company’s go¬ vernment has been thus unsuccessful in pro¬ viding for the prosperity of the natives, there is no reason to suppose that their condition would have been in any degree improved, had the company been annihilated in 1784, and the administration of Indian affairs 1 For a singular opinion of Sir Thomas Monro, with respect to the effect of heavy taxation on the industry of the ryots, see Mr. Tucker’s work, placed entirely in the hands of ministers. The company’s measures have all been sanc¬ tioned by government; and how different soever they may have proved in their ef¬ fects, were honestly intended to promote the welfare of the natives. Mr. Mill has observed, “ that there is no government which has on all occasions shown so much of a disposition to make sacrifices of its own interests to the interests of the people whom it governed, and which has in fact made so many and important sacrifices as the East India Company.” Whether, therefore, India would gain any thing by the abolition of the company’s territorial rights and jurisdiction, is a point respecting which there is room for doubt. But it may be very easily shown, that India and Great Britain have each gained a great deal, and the company lost nothing by the abolition of her commercial monopoly. It would be difficult indeed to exaggerate the loss which that monopoly occasioned to the commerce of the empire. We take it for granted that the company conducted its affairs as well as any similar association, placed under the same circumstances, would have done. But whatever may be the com¬ pany’s merits, its affairs were, of necessity, conducted, like those of other great com¬ panies, according to a system of routine, and with an abundant alloy of carelessness and abuse. It is indeed quite visionary to sup¬ pose that the servants of such bodies should exert all their energies, or conduct the busi¬ ness intrusted to their charge, in the same frugal and parsimonious manner as private individuals, trading on their own account, and reaping all the advantages of superior industry, economy, and enterprise. Branches of commerce, productive only of loss when managed by the former, have, in innumerable instances, become extremely lucrative when in the hands of the latter. Monopoly has always been, and must ever continue to be, the parent of indolence and profusion. “ The spirit of monopolists is narrow, lazy, and oppressive : their work is more costly and less productive than that of independent artists ; and the new improvements, so eager¬ ly grasped by the competition of freedom, are admitted with slow and sullen reluctance in those proud corporations above the fear of a rival, and below the confession of an error. » 2 p. 1G7, or the Edinburgh Review, No. 90, p. 357. 2 Gibbon’s Miscellaneous Works, i. 49, 8vo edit. 58 6 Note XIX, GOVERNMENT, &c. OF INDIA. But in point of fact, the company, instead of making a profit, lost considerably by their trade with India, and it was, in consequence, confined within the narrowest limits. Dur¬ ing the five years ending with 1811, the total amount of exports by British subjects to India did not exceed 2,000,000/. a year; and of these a very considerable portion con¬ sisted of military stores. The legitimate trade with India, and its hundred millions of inhabitants, was really, therefore, of hardly more importance than that with Jersey and the Isle of Man ! Such being the case, we need not wonder that for some years previously to the ter¬ mination of the company’s charter in 1813, the conviction had been gaining ground among all classes, that the trade to the East was capable of being very greatly extended ; and that it was solely owing to the want of enterprise and competition, occasioned by its being subject to a monopoly, that it was confined within such narrow limits. Very great efforts were, consequently, made by the manufacturing and commercial interests to have the monopoly set aside, and the trade to the East thrown open. The company vigorously resisted these pretensions ; and had interest enough to procure a prolong¬ ation of the privilege of carrying on an ex¬ clusive trade to China to the 10th of April, 1831, with three years’ notice; the govern¬ ment of India being continued in their hands for the same period. Fortunately, however, the trade to India was opened, under certain conditions, to the public ; the principal being, that private indivi¬ duals should trade, direct only, with the presidencies of Calcutta, Madras, and Bom¬ bay, and the port of Penang : that the ves¬ sels fitted out by them should not be under 350 tons burden: and that they should abstain, unless permitted by the company, or the board of control, from engaging in the carrying trade of India, or in the trade be¬ tween India and China. And yet, despite these disadvantages, such is the energy of individual enterprise as compared with mo- nopoly, that the private traders gained an almost immediate ascendency over the East India Company, and in a very short time more than trebled our trade with India ! In the Report of the committee of the House of Lords on the foreign trade of the country, printed in May, 1821, it is stated, that “ the greatly increased consumption of British goods in the East, since the com¬ mencement of the free trade, cannot be ac¬ counted for by the demand of European residents, the number of whom does not materially vary ; and it appears to have been much the greatest in articles calculated for 1 This, however, is the amount of the company’s exports only. 2 These restraints were l good deal modified by the general use of the natives. That of the cotton manufactures of this country alone is stated, since the first opening of the trade, to have been augmented from four to Jive fold (it is now augmented from fifty to sixty fold). The value of the merchandise ex¬ ported from Great Britain to India, which amounted in 1814 to 870,177/., amounted i, in 1819, to 3,052,741/. ; and although the market appears then to have been so far overstocked as to occasion a diminution of nearly one half in the exports of the follow¬ ing year, that diminution appears to have taken place more in the articles intended for the consumption of Europeans than of na¬ tives ; and the trade is now stated to the committee, by the best informed persons to be reviving. When the amount of popula¬ tion, and the extent of the country over which the consumption of these articles is spread are considered, it is obvious that any facility which can, consistently with the po¬ litical interest and security of the company’s dominions, be given to the private trader, for the distribution of his exports, by in¬ creasing the number of ports at which he may have the option of touching in pursuit of a market, cannot fail to promote a more ready and extensive demand.” Besides the restraints imposed by the act of 1813 on the proceedings of the free traders 2, they frequently experienced very great loss and inconvenience from the com¬ mercial speculations of the East India Company. The latter had commercial residents, with large establishments of ser¬ vants, some of them intended for coercive purposes, stationed in all the considerable towns; and the Marquis Wellesley has stated, “ that the intimation of a wish from the company’s resident is always received as a command by the native manufacturers and producers.” It was obviously impossible for a private trader to come fairly into compe¬ tition with persons possessing such authority, and who were often instructed to make their purchases on any terms. Mr. Tucker, in his work on Indian finance, already referred to, states that the company’s investments (purchases) in India during the last ten years may in some instances be said to have been forced; meaning by this, that the goods ex¬ ported by them from India have sometimes been compulsorily obtained from the natives, and sometimes bought at a higher price than they would have brought in a market frequented only by regular merchants. But the truth is, that it was not in the nature of things that the company’s purchases could be fairly made ; the natives could not deal with their servants as they would have dealt with private individuals; and it would be absurd the 3 Geo. IV. c. 80., passed in pursuance of the re¬ commendation of the committee quoted above. 587 GOVERNMENT, &c. OF INDIA. Note XIX. to suppose that agents authorised to buy on account of government, and to draw on the public treasury for the means of payment, should generally evince the prudence and discretion of individuals directly responsible in their own private fortunes for their trans¬ actions. The interference of such persons would, under any circumstances, have ren¬ dered the East India trade peculiarly hazard¬ ous. But their influence in this respect was materially aggravated by the irregularity of their appearances. No individual, not belong¬ ing to the court of directors, could foresee whether the company’s agents would be in the market at all; or, if there,, to what ex¬ tent they would either purchase or sell. So capricious were their proceedings, that in some years they have laid out 700,000/. on indigo, while in others they have not laid out a single shilling; and so with other things. A fluctuating demand of this sort necessarily occasioned great and sudden va¬ riations of price, and was injurious alike to the producers and the private merchants. Mr. Mackenzie, late secretary to the govern¬ ment of Bengal, set the mischievous influ¬ ence of the circumstances now alluded to in the clearest point of view, in his evidence before the select committee of 1832 on the affairs of India ; and he further showed, that it was not possible, by any sort of contriv¬ ance, to obviate the inconveniences com¬ plained of, and that they would unavoidably continue till the company ceased to have any thing to do with commerce. But besides being injurious to the private trader, and to the public generally, both in India and England, this trade was of no ad¬ vantage to the East India Company. How indeed could it be ? A company that main¬ tained armies and retailed tea, that carried a sword in the one hand and a ledger in the other, was a contradiction ; and, had she traded with success, would have been a pro¬ digy. It was impossible for her to pay that attention to details that is indispensable to the carrying on of commerce with ad¬ vantage. She may have gained something by her monopoly of the tea trade, though even that is questionable ; but it is admitted on all hands that she lost heavily by her trade to India. 1 When, therefore, the ques¬ tion as to the renewal of the charter came to be discussed in 1832 and 1833, the com¬ pany had no reasonable objection to urge against their being deprived of the privilege of trading. And the act 3 & 4 Will. 4, c. 85, for continuing the charter till 1854, ^ It is needless now to enter upon the contro¬ versy as to the origin of the company's debt. It is probable that those who contend that this debt is wholly attributable to the company s commer¬ cial operations, may have somewhat exaggerated their injurious influence. But we do not think that there is any room for doubting, notwith- termincited the company's commercial cnarde¬ ter ; by enacting, that the company’s trade to China should cease on the 22d of April 1834, and that the company should as soon as possible after that date, dispose of their stocks on hand, and close their commercial business. The trade to* India, China, and the East generally, has, consequently, been open since 1834 to free and unfettered mercantile enter¬ prise. And since the incubus of monopoly has been removed, it has attained to a mag¬ nitude and importance of which no definite idea could previously have been formed. In proof of what has now been stated, we may mention that previously to 1814 no Bri¬ tish cottons had been exported to India, while the importation of Indian cottons was consi¬ derable. No sooner, however, had the trade been opened to private adventurers than this channel of enterprise was explored ; and the result has been, that instead of bringing cot¬ tons from India to England, the former has become one of the best and most extensive markets for the cottons of the latter ! The progress of the trade has been quite extraor¬ dinary. In 1814, the first year of the free trade, the value of the cottons exported to India amounted to only about 110,000/.; whereas in 1835 it amounted to 1,801,775/., and in 1845 to no less than 4,210,423/. ! We question whether another equally strik¬ ing example can be produced in the history of commerce of the powerful influence of com¬ petition in opening new and almost boundless fields for the successful prosecution of com¬ mercial enterprise. 2 NOTE XX. ON THE VALUE AND PROPER MODE OF CONFER¬ RING LITERARY AND SCIENTIFIC DEGREES. A good deal of difference of opinion has existed with respect to the expediency of government interfering to regulate or ascer¬ tain the qualifications of persons entering on the professions of law, physic, and di¬ vinity. The readers of the Wealth of Na¬ tions will have seen that Dr. Smith enter¬ tained a very low opinion of the value of degrees or academical distinctions conferred by universities ( ante , pp. 341—352) ; and consequently, of the policy pursued in this and other countries, of reserving the right to exercise the learned professions to those who have obtained such distinctions. But we are fortunately able to lay before the reader a more detailed statement of Dr. Smiths standing the enormous prices charged on tea, that, for many years, previously to IS > 4 , the company’s trade was, on the whole, productive of nothing but loss. 2 For details as to the trade with India, see Commercial Dictionary, arts. Fast Indies, Cal¬ cutta, &c. 588 VALUE, &c. OF DEGREES. Note XX, views on this interesting subject, than is to be found in the Wealth of Nations. Down to a comparatively late period the universi¬ ties of St. Andrew’s and Aberdeen were in the custom of granting degrees “ in absence,” on the mere certificate of any two physicians that the individual they recommended was worthy the degree of M. D.! Some circum¬ stances occurred in 1773 which drew the attention of the medical profession to this disgraceful practice; and, in 1774, the cele¬ brated Dr. Cullen, then a professor in the uni¬ versity of Edinburgh, endeavoured, through the influence of the Duke of Buccleugh, to get a royal commission appointed for the visitation of the Scotch universities, with a view to the correcting of these and other abuses, in their constitution and discipline. Before taking any steps in the matter, the Duke of Buccleugh requested Dr. Cullen to submit his memorial to Dr. Smith for his opinion. This having been done, the latter sent Dr. Cullen the following letter, which, whatever may be thought of the soundness of its views, must be admired for its ability, and ingenuity. “ My dear Doctor, “ I have been very much in the wrong both to you and to the Duke of Buccleugh, to whom I certainly promised to write you in a post or two, for having delayed so long to fulfil my promise. The truth is, some occurrences which interested me a good deal, and which happened here immediately after the duke’s departure, made me forget alto¬ gether a business which I do acknowledge interested me very little. “ In the present state of the Scotch univer¬ sities, I do most sincerely look upon them as, in spite of ail their faults, without excep¬ tion the best seminaries of learning that are to be found any where in Europe. They are, perhaps, upon the whole, as unexcep¬ tionable as any public institutions of that kind, which all contain in their very nature the seeds and causes of negligencies and cor¬ ruption, have ever been, or are ever likely to be. That, however, they are still capable of amendment, and even of considerable amend¬ ment, I know very well, and a visitation is, I believe, the only proper means of procur¬ ing them this amendment. Before any wise man, however, would apply for the appoint¬ ment of so arbitrary a tribunal, in order to improve what is already, upon the whole, very well, he ought certainly to know with some degree of certainty, first, who are likely to be appointed visitors ; and, secondly, what plan of reformation those visitors are likely to follow. But in the present multiplicity of pretenders to some share in the provincial management of Scotch affairs, these are two points which I apprehend neither you nor I, nor the Solicitor-General, nor the Duke of Buccleugh, can possibly know any thing about. In the present state of our affairs, I therefore, to apply for a visitation in order to remedy an abuse, which is not perhaps of great consequence to the public, would ap- j pear to me to be extremely unwise. Here¬ after, perhaps, an opportunity may present itself for making such an application with more safety. “With regard to any admonition or threat¬ ening, or any other method of interfering in the affairs of a body corporate, which is not perfectly and strictly regular and legal, these are expedients which I am convinced neither his majesty, nor any of his present ministers would choose to employ either now or at any time hereafter, in order to obtain an ob¬ ject even of much greater consequence than this reformation of Scotch degrees. “ You propose, I observe, that no person should be admitted to examination for his degrees, unless he brought a certificate of his having studied at least two years in some university. Would not such a regulation be oppressive upon all private teachers, such as the Hunters, Hewson, Fordyce, &c. ? The scholars of such teachers surely merit what¬ ever honour or advantage a degree can con¬ fer, much more than the greater part of those who have spent many years in some universities, where the different branches of medical knowledge are either not taught at all, or taught so superficially that they had as well not be taught at all. When a man has learned his lesson very well, it surely can be of little importance where or from whom he has learnt it. “ The monopoly of medical education which this regulation would establish in favour of universities would, I apprehend, be hurtful to the lasting prosperity of such bodies-cor- porate. Monopolists very seldom make good work, and a lecture which a certain number of students must attend, whether they profit by it or no, is certainly not very likely to be a good one. I have thought a great deal upon this subject, and have inquired very carefully into the constitution and history of several of the principal universities of Eu¬ rope. I have satisfied myself, that the pre¬ sent state of degradation and contempt into which the greater part of those societies have fallen in almost every part of Europe arises principally, first, from the large salaries which in some universities are given to professors, and which render them altogether independ¬ ent of their diligence and success in their professions; and, secondly, from the great number of students, who, in order to get degrees, or to be admitted to exercise cer¬ tain professions, or who, for the sake of bur¬ saries, exhibitions, scholarships, fellowships, &c., are obliged to resort to certain societies of this kind, whether the instructions which they are likely to receive there are or are 589 Note XX. VALUE, &c. OF DEGREES. not worth receiving. All those different causes of negligence and corruption, no doubt take place, in some degree, in all our Scotch universities. In the best of them, however, those causes take place in a much less degree than in the greater part of other considerable societies of the same kind ; and I look upon this circumstance as the real cause of their present excellence. In the medical college of Edinburgh in particular, the salaries of the professors are insignificant. There are few or no bursaries or exhibitions, and their monopoly of degrees is broken in upon by all other universities, foreign and do¬ mestic. I require no other explication of its present acknowledged superiority over every other society of the same kind in Europe. “To sign a certificate in favour of any man whom we know little or nothing about, is most certainly a practice which cannot be strictly vindicated. It is a practice, how¬ ever, which, from mere good nature, and with¬ out interest of any kind, the most scrupu¬ lous men in the world are sometimes guilty cf. I certainly do not mean to defend it. Bating the unhandsomeness of the practice, however, I would ask in what manner does the public suffer by it? The title of Doc¬ tor, such as it is, you will say, gives some credit and authority to the man upon whom it is bestowed; it extends his practice, and consequently his field for doing mischief. It is not improbable, too, that it may increase his presumption, and consequently his dispo¬ sition to do mischief. That a degree inju¬ diciously conferred may sometimes have some little effect of this kind, it would surely be absurd to deny ; but that this effect should be very considerable, I cannot bring myself to believe. That doctors are sometimes fools as well as other people, is not, in the present times, one of those profound secrets which is known only to the learned. The title is not so very imposing, and it very seldom happens that a man trusts his health to another merely because that other is a doctor. The person so trusted has almost always either some know¬ ledge or some craft which would procure him nearly the same trust, though he was not decorated with any such title. In fact, the persons who apply for degrees in the irregular manner complained of, are, the greater part of them, surgeons or apotheca¬ ries, who are in the custom of advising and prescribing, that is, of practising as physi¬ cians; but who, being only surgeons and apothecaries, are not feed as physicians. It is not so much to extend their practice as to increase their fees that they are desirous of being made doctors. Degrees conferred, even undeservedly, upon such persons can surely do very little harm to the public. When the university of St. Andrew’s very rashly and imprudently conferred a degree upon Green, who happened to be a stage- doctor, they no doubt brought much ridicule and discredit upon themselves ; but in what respect did they hurt the public? Green still continued to be what he was before, a stage-doctor, and probably never poisoned a single man more than he would have done though the honours of graduation had never been conferred upon him. Stage-doctors, I must observe, do not much excite the indig¬ nation of the Faculty ; more reputable quacks do. The former are too contemptible to be considered as rivals. They only poison the poor people ; and the copper-pence which are thrown up to them in handkerchiefs could never find their way into the pocket of a regular physician. It is otherwise with the latter. They sometimes intercept a part of what perhaps would have been better be¬ stowed in another place. Do not all the old women in the country practise physic with¬ out exciting murmur or complaint ? And if here and there a graduated doctor should be as ignorant as an old woman, where can be the great harm ? The beardless old woman, indeed, takes no fees—the bearded one does ; and it is this circumstance, I strongly suspect, w'hich exasperates his brethren so much against him. “ There never w-as, and, I will venture to say, there never will be, a university from which a degree could give any tolerable se¬ curity, that the person upon whom it had been conferred was fit to practise physic. The strictest universities confer degrees only upon students of a certain standing. Their real motive for requiring this standing is, that the student may spend more money among them, and that they may make more profit by him. When he has attained this standing, therefore, though he still undergoes what they call an examination, it scarce ever happens that he is refused his degree. Your examination at Edinburgh, I have all reason to believe, is as serious, and perhaps more so than that of any other university in Europe. But when a student has resided a few years among you, has behaved dutifully to all his professors, and has attended regularly all their lectures, when he comes to his examin¬ ation, I suspect you are disposed to be as good-natured as other people. Several of your graduates, upon applying for a licence to the College of Physicians here, have had it recommended to them to continue their studies. From a particular knowledge of some of the cases, I am satisfied that the decision of the college, in refusing them their licence, was perfectly just; that is, was perfectly agreeable to the principles which ought to regulate all such decisions, and that the candidates w^ere really very ignorant of their profession. “ A degree can pretend to give security for nothing but the science of the graduate ; and even for that it can give but a very 590 VALUE, &c. OF DEGREES. Note XX. slender security. For his good sense and discretion, qualities not discoverable by an academical examination, it can give no se¬ curity at all for. But without these, the presumption which commonly attends sci¬ ence must render it, in the practice of physic, ten times more dangerous than the grossest ignorance, when accompanied, as it some¬ times is, with some degree of modesty and diffidence. “ If a degree, in short, always has been, and in spite of all the regulations which can be made, always must be, a mere piece of quackery, it is certainly for the advantage of the public that it should be understood to be so. It is in a particular manner for the advantage of the universities that, for the resort of students, they should be obliged to depend, not upon their privileges, but upon their merit, — upon their abilities to teach, and their diligence in teaching ; and that they should not have it in their power to use any of those quackish arts which have disgraced and degraded the half of them. “ A degree which can be conferred only upon students of a certain standing is a statute of apprenticeship which is likely to contribute to the advancement of science, just as other statutes of apprenticeship have contributed to that of arts and manufactures. Those statutes of apprenticeship, assisted by other corporation laws, have banished arts and manufactures from the greater part of towns-corporate. Such degrees, assisted by some other regulations of a similar tendency, have banished almost all useful and solid education from the greater part of univer¬ sities. Bad work and high price have been the effects of the monopoly introduced by the former. Quackery, imposture, and ex¬ orbitant fees, have been the consequences of that established by the latter. The in¬ dustry of manufacturing villages has reme¬ died in part the inconveniences which the monopolies established by towns-corporate had occasioned. The private interest of some poor professors of physic in some poor universities, inconveniently situated for the resort of students, has in part remedied the inconveniences which would certainly have resulted from that sort of monopoly which the great and rich universities had attempted to establish. The great and rich universities seldom graduated any body but their own students, and not even them till after a long and tedious standing: five and seven years for a master of arts ; eleven and sixteen for a doctor of law, physic, or divinity. The poor universities, on account of the incon- veniency of their situation, not being able to get many students, endeavoured to turn the penny in the only way in which they could turn it, and sold their degrees to who¬ ever would buy them, generally without requiring any residence or standing, and I frequently without subjecting the candidate even to decent examination. The less trou¬ ble they gave the more money they got; and I certainly do not pretend to vindicate so dirty a practice. All universities beincr ecclesiastical establishments, under the in£ mediate protection of the pope, a degree from any one of them gave, all over Christ¬ endom, very nearly the same privileges which a degree fiom any other could have given ; and the respect which is at this day paid to foreign degrees, even in protestant countries, must be considered as a remnant of popery. The facility of obtaining degrees, particularly in physic, from those poor universities, had two effects, both extremely advantageous to the public, but extremely disagreeable to the graduates of other universities, whose de¬ grees had cost them much time and expense. First, it multiplied very much the number or doctors, and thereby no doubt sunk their fees, or at least hindered them from rising so very high as they otherwise would have done. Had the universities of Oxford and Cam¬ bridge been able to maintain themselves in the exclusive privilege of graduating all the doctors who could practise in England, the price of feeling a pulse might by this time have risen from two and three guineas, the price which it has now happily arrived at, to double or treble that sum; and English physicians might, and probably would, have been at the same time the most ignorant and quackish in the world. Secondly, it reduced a good deal the rank and dignity of a doctor. But if the physician was a man of sense and science, it would not surely prevent his being respected and employed as a man of sense and science. If he was nei¬ ther the one nor the other, indeed, his doctor- ship would no doubt avail him the less. But ought it in this case to avail him at all ? Had the hopeful project of the rich and great universities succeeded, there would have been no occasion for sense or science. To have been a doctor would alone have been suffici¬ ent to give any man rank, dignity, and for¬ tune enough. That in every profession the fortune of every individual should depend as much as possible upon his merit, and as little as possible upon his privilege, is cer¬ tainly for the interest of the public. It is even for the interest of every particular pro¬ fession, which can never so effectually support the general merit and real honour of the greater part of those who exercise it, as b y resting upon such liberal principles. Those principles are even most effectual for procur¬ ing them all the employment which the country can afford. The great success of quacks in England has been altogether owing to the real quackery of the regular phy¬ sicians. Our regular physicians in Scotland have little quackery, and no quack accord¬ ingly has ever made his fortune among us. | 'Jute XX. VALUE, &c. OF DEGREES. 591 “ After all, this trade in degrees I acknow- [ e dge to be a most disgraceful trade to those vho exercise it; and I am extremely sorry hat it should be exercised by such respect¬ ive bodies as any of our Scotch universities. 8ut as it serves as a corrective to what would >therwise soon grow up to be an intolerable luisance, the exclusive and corporation spirit >f all thriving professions and of all great miversities, I deny that it is hurtful to the public. “What the physicians of Edinburgh at )resent feel as a hardship is, perhaps, the real ;ause of their acknowledged superiority over he greater part of other physicians. The Royal College of Physicians there, you say, ire" obliged by their charter to grant a li¬ cense, without examination, to all the gra- luates of Scotch universities. You are all obliged, I suppose, in consequence of this, o consult sometimes with very unworthy brethren. You are all made to feel that you must rest no part of your dignity upon your degree — a distinction which you share with the men in the world, perhaps, whom you despise the most; but that you must found the whole of it on your merit. Not being able to derive much consequence from the character of Doctor, you are obliged, per¬ haps, to attend more to your characters as men, as gentlemen, and as men of letters. The unworthiness of some of your brethren mav, perhaps, in this manner be in part the cause of the very eminent and superior worth of many of the rest. The very abuse which you complain of may in this manner, per¬ haps, be the real source of your present ex¬ cellence. You are at present well, wonder¬ fully well; and when you are so, be assured there is always some danger, in attempting to be better. “ Adieu, my dear Doctor; after having delayed so long to write to you, I am afraid I shall get my lug (ear) in my lufe (hand), as we say, for what I have written. But I ever am most affectionately yours, “ Adam Smith . 1 “ London , 20 th Sept . 1774.” This letter was written two years before the publication of the W ealth of Nations, and, being a private communication, not in¬ tended ever to see the light, the author has expressed himself in stronger terms than he might have thought suitable in a grave sci¬ entific work. But the sentiments in the Wealth of Nations, and in the letter, are identical; and there can be no doubt that Dr. Smith was deliberately of opinion that degrees always have been, and must necessa¬ rily continue to be, utterly worthless; or, as he has it, “mere pieces of quackery.” But whether the granting of degrees be i See Dr. Thomson’s elaborate and valuable Life Dr Cullen, vol. i. pp. 473—481. advisable or not, there seems little doubt that Dr. Smith is mistaken in supposing that they cannot be made to afford a pretty good security for the science of the candidates, and to some extent also for their good sense. He has shown, indeed, that the way in which they have hitherto been con¬ ferred necessarily renders them nearly, if not entirely, worthless. It is idle to suppose that the professors who have educated the candidates for degrees, and who cannot re¬ ject them, except in a few rare cases, w ithout prejudicing their own ability as teachers quite as much in the public estimation as the capacity or industry of their pupils, should be very rigid in their examinations. If the professors derive, as is the case in Scotland, the principal part of their emolu¬ ment from the fees of their pupils, each university must naturally fear, w^ere its ex¬ aminations really searching and efficient, that its pupils wrnuld be tempted to resort to some rival and less scrupulous establish¬ ment. They are, consequently, of a very inefficient description ; and latterly the ob¬ ject of the universities has apparently been rather to increase the emoluments of the professors by adding to the curriculum, that is, by compelling candidates for degrees to attend an increased number of classes, than to improve the lectures or examinations. Where, on the other hand, the incomes of the professors are independent of the fees of the pupils, though they have no pecuniary motive to compel the attendance of the latter, they are anxious, for the sake of their ow-n reputation, to deal gently with such as at¬ tend their lectures ; and rarely reject them, unless their defects be glaring and obvious. Nothing, in fact, can be a greater abuse than to let such persons have anything to do w ith the granting of degrees. The teachers of the candidates for academical distinctions are not the parlies to judge whether they are really deserved. They are themselves in¬ terested in the result of the examination ; and it w'ould be as absurd to suppose that they should form an unbiassed judgment, upon the merits of their pupils, as that an architect or a painter, a hatter or a shoemaker, should make a correct esti¬ mate of his own works. The business cf instructing and of ascertaining whether that instruction be adequate to the end in view, are totally different things; and to combine them in one party is the most likely way to render them both good for little or nothing. The teachers and the pupils would both be anxious to exert themselves were the proficiency of the latter inquired into by independent and competent judges. But when the same individuals are teachers and examiners, they may, having power to incul¬ cate whatever doctrines they please, in a great measure neglect their duties; and w ill 592 VALUE, &c. OF DEGREES. Note XX. be little disposed to deal severely by their pupils, even though the latter should not be very well versed in their favourite theories and dogmas, provided they profess to hold them in due respect. Nothing, therefore, can be more correct than the estimate formed by Dr. Smith of the value of degrees conferred by teachers, that is, of the value of their estimate of their own handiwork. Such degrees must neces¬ sarily be, in general, worse than useless, and are frequently, indeed, coveted merely as convenient cloaks, under which quackery and ignorance may best prey on the public. But it is not of the essence of the thing that degrees should be granted on this ab¬ surd principle. Competent judges, uncon¬ nected with the business of education, may be found to ascertain the qualifications of the candidates for literary and scientific dis¬ tinctions ; and supposing this to be done, the question as to the value of degrees will be very different. The recently established university of London is, we believe, the first institution founded in Europe for the examination of the candidates for degrees, whose members have no connection with the education of the aspirants to honours; and if we mistake not its formation will mark the commencement of a new and important asra in the history of education. It consists not of a body of pro¬ fessors, but of a board of gentlemen, distin¬ guished by their proficiency in literature, science, and philosophy, appointed by Go¬ vernment for the examination of candidates for degrees. It is, however, in one import¬ ant respect, improperly constituted. No candidate is allowed to go before the board for examination unless he have been educated at such schools as may from time to time be specified by her Majesty in council. This limitation savours too much of the narrow, sel¬ fish principles on which universities were ori¬ ginally established. There is no room or ground for thinking that that freedom of com¬ petition found to be so advantageous in other things should not be equally so in education. The question should never be, how or where have you been educated, but have you learning and science sufficient to entitle you to the distinction to which you aspire? Provided a physician be thoroughly conversant with the principles and practice of medicine, of what consequence is it whether he have been educated at London or Liverpool, Edinburgh or Exeter, Dublin or Dundee ? The limit¬ ation in question can have no effect but to establish a monopoly in favour of such es¬ tablishments as may have sufficient inte¬ rest with the ministry of the day to be put on the favoured list. It is needless to dwell on the mischievous consequences of such an unfair distinction. All individuals, whether educated at public or private schools, or self- instructed, should be entitled to come before the board. No questions should ever be put to them as to how they came by the required knowledge; but the'most efficient means should be adopted to make sure that they possess it. A plan of this sort would intro'- duce a system of unfettered competition into 1 the higher departments of education ; and all!; sorts of artificial distinctions being put an ; end to, the teachers and the institutions which succeeded best in educating pupils, would, as they ought, enjoy the largest share of the public patronage. It is said by the advocates of the limita- ; tion complained of, that it is impossible by | any examination to ascertain the qualifica'- j tions of a candidate for a degree in medicine I or surgery, the professions most concerned | in this matter, and that it is necessary in f addition to know the way in which thev j have been educated. But we have been j assured by excellent judges that this is an entire misstatement; and it is pretty obvious, ! on general principles, that such must be the I fact. Suppose you know what classes an ! individual has attended, does that afford any information as to whether he profited bv them, or whether the doctrines taught were correct ? Even if he bring a certificate of attendance, and another of proficiency, what is their value ? Are they not the evidence : of interested parties? If these certifi- i cates are to be esteemed valid in this case, I why should not degrees granted by those granting the certificates be also esteemed valid ? And if so where is the use of the j new establishment ? There cannot he a doubt that an examin- j ation if properly conducted by competent parties, may afford the surest grounds for forming a fair estimate of the acquirements and character of the candidates. And it is, in fact, the only test that in such matters is worth a pinch of snuff. Certificates and testimonials may be, and are every day ob¬ tained, by the most incompetent and un¬ worthy persons. But a frequently resumed, searching, and judicious examination is a test which cannot be shirked, and to wffiich those who are conscious of inability to come out of it with credit will not choose to sub¬ mit. The acquirements and sagacity of the individual are manifested by such an ordeal; and the ascertainment of these are the only matters as to wdiich the public have the slightest interest. But supposing education were put on the footing suggested, and that no incom¬ petent person received a degree, still the questions remain, — Why take all this trou¬ ble ? Would it not be better to abolish de¬ grees altogether, and to leave the public to employ the physicians and lawyers in whom they have confidence, it being abundantly certain, that a regard to their own interest VALUE, &c. OF DEGREES. o93 Tote XX. rill stimulate such persons to acquire pro- ciency in their respective professions ? )r. Smith would have answered this ques- I ion in the affirmative ; and in so far as aspects lawyers, he would probably have een right, but with respect to medical men he case is different. There is a wide dis- repancy between the employments of those /ho exercise their art on the bodies of men, nd those who exercise it on some sort of aw or manufactured produce. If an indi¬ vidual employ a tailor to make him a coat, le will not employ him again unless it be nade to his mind ; nor, though the cloth /ere spoiled, would the loss be considerable; mt if an individual employ a physician, urgeon, or apothecary to prescribe for him, le may, in the event of the person so em- iloyed being ignorant of his art, lose his ife ; while, owing to the difficulty of ascer- aining when death is occasioned by the latural progress of disease, or by the un* kilfulness of the practitioner, the business >r the latter may not be materially dimi- lished; and he may continue for an indefi- lite period to prosecute his destructive ca¬ reer. It does, therefore, seem quite clear, hat government is bound to take such mea- aires as may be effectual to secure adequate .kill in medical men ; and that no individual hould be permitted to practise, whose qua- ifications have not been ascertained by the examination of a competent board, ap¬ pointed for that purpose, and pronounced .ufficient by their certificate. All indivi- luals, though very many are nowise fitted to udgeas to their qualifications, must occasion- dly resort to medical men; and it is the luty of government to provide that the lives )f its subjects be not sacrificed to ignorance, cupidity, or quackery. It is not known whether Dr. Cullen re¬ plied directly to Dr. Smith’s letter ; but in i Latin discourse which he pronounced two 'ears afterwards, previously to the ceremony >f graduation in the university, he took oc- asion to notice some of the arguments ad- f anced by Dr. Smith, and to state his own dews as to degrees. This part of the dis¬ course has been translated and published by Or. Thomson ; and we believe our readers vill be glad to learn the opinions of so emi- lent a physician as Dr. Cullen on this inte- esting question. “ As the life and health,” says he, “ of heir fellow creatures are often intrusted to hose practising medicine, and depend so nuch upon their skill, it seems a matter of 10 small importance for the public interest, hat care should be taken to prevent any ineducated or unskilful persons from prac- ising this art. There are some, however, /ho doubt whether it is necessary for the nterests of society, or in any way proper, to make laws or regulations for preventing per¬ sons of this description from engaging in the practice of medicine ; and it is very obvious, that neither in this nor in most other coun¬ tries are effectual measures adopted for that purpose. Those v/ho approve of this neg¬ lect seem to me to trust to certain principles too generally applied. They, with justice, indeed observe, that many regulations which seem adapted for putting down unskilful workmen have not only been fruitless and useless, but even extremely injurious in their operation. For there is no need, say they, that the skill of a carpenter should be deter¬ mined by the opinion of other carpenters only, as everyone receiving work from a carpenter can judge well enough of its execution, and of the skill of the workman ; and certainly, if an opportunity is afforded of comparing the workmanship of several artificers with one another, he who makes this comparison will always be able, with sufficient ease, to determine which is best. An unskilful car¬ penter, therefore, will be intrusted with work only proportioned to his skill; and if he should, perhaps, pass himself off on some incautious individuals, as a person of skill, no very great nor permanent mischief will result from this. They likewise urge, that many regulations which have been esta¬ blished against the unskilfulness of workmen, have not only been little required, but have often been hurtful, by affording a pretext for driving away the most skilful and by fa¬ vouring those of least merit. What has been said of the carpenter may be said of several other artificers ; indeed, of all those whose want of skill is not calculated to do much mischief, and whose degree of skill all are able easily to ascertain. But in the prac¬ tice of medicine none of these reasons for unfettered competition are of any force. The physician employs remedies, which, unless they be employed cautiously and skilfully, may do much harm; and those ignorant of the art cannot judge of his skill merely by the consideration of the effects that result from the employment of his art. Many dis¬ eases being utterly incurable by any art, physicians have a ready excuse when at any time they treat diseases unskilfully; and as death is to all at last inevitable, fate, and not the ignorance of the physician, is generally blamed. Success in the cure of diseases does indeed afford some means of judging of the skill of the physician ; but he who knows that many diseases are cured, not only with¬ out the aid of the physician, but even in de¬ fiance of his measures, will not always regard a return to health as sufficient proof of medical skill. “ Lastly, We contend, that the bulk of the community are scarcely able to judge, and, in fact, scarcely ever judge correctly, of the merits of medical men. Those who are well acquainted with the medical art, Q q 594 VALUE, &c. OF DEGREES. Note XX- and they alone, perhaps, have any proper no¬ tion how many things are required to form a skilful physician, — are aware how much experience is necessary for the proper dis¬ crimination and accurate distinction of dis¬ eases, — with how much labour almost all the works of nature must be examined, in order that the animal economy may be tho¬ roughly understood, by the knowledge of which alone the various characters and mo¬ difications of diseases can be understood, — and, lastly, how much labour is necessary to acquire an accurate knowledge, not only of the medicines, but also of all the agents which are capable of acting on the human body, by which kind of knowledge alone we can be enabled to adapt appropriate and efficacious remedies to the various forms of disease. For obtaining a knowledge of all these things, bow many branches of information must previously be acquired; how much acuteness of intellect should the student of medicine be possessed of, to prevent him from being deluded by hypothesis; how much sagacity, to prevent him from being the dupe even of experience, which has justly been said to be most deceitful! It would be easy to prove to any one of moderate ca¬ pacity and attentiveness, that all these things are absolutely necessary for the proper educa¬ tion of a medical man ; but the greater part of mankind, either from their ignorance of medicine are unable to understand these things, or from negligence do not choose to understand them ; and hence almost all form either no judgment at all on the qualifica¬ tions necessary for medical men, or an erro¬ neous one. At the present time, we see men of a very dull intellect, and of no learn¬ ing, received and treated as physicians. Do not we every day observe men not altogether destitute of sense, swallowing the frivolous drugs of some old woman or other, and shamefully deluded by the tricks of quacks and ignorant pretenders? From this cir¬ cumstance in particular, we may infer how erroneously the public judge of this matter, that so many persons who have received no education, rashly engage in the practice of medicine, or at least in the administration of drugs. In these countries, indeed, any one can set up for a physician; and nothing is more obvious than, that the public are in the use of making scarcely any choice amongst those who profess medicine. The thing has gone so far, that the life and health of a great portion of mankind are in the hands of ignorant people, or of rogues ; and to me it appears probable, that from the practice of medicine, as it is at present exer¬ cised, there arises much more mischief than advantage, and that it would perhaps be better for mankind if no medical practice ex¬ isted at all. But it is impossible wholly to suppress this art, for as long as men shall be liable to pain and sickness, so long some art of medicine will be required and will exist, amongst them. Nothing therefore remains, but that the legislature should take especial care that this necessary art should, as far as possible, be rendered both safe and useful to society. Something seems to have been at¬ tempted towards the accomplishment of this \ object in this and other countries of Europe, j by the institution of universities, in which students of medicine may be instructed in medical science, and by the appointment of fit judges to license those who are thoroughly ! instructed in medicine. The functions of i these individuals seem well calculated to j promote the object in view. But in some universities, unfortunately, these excellent I regulations are ill-observed, and the title of ! Doctor of Medicine does not always prove ! that the bearer possesses either learning or i skill. This unfortunate abuse cannot in all instances be easily prevented or corrected. But in the mean time, we hope that all are sufficiently aware, that, in this university, | the best regulations are faithfully observed, and that the title of Doctor acquired here, more certainly than in several other uni¬ versities, proves its possessor to be both learned and skilful.” M ith the exception, perhaps, of the allu¬ sion in the end to the university of which the speaker was so great an ornament, this rea¬ soning seems quite conclusive; and it is to j be hoped that the principles laid down by Dr. Cullen may be carried to their full ex- j tent, by prohibiting all individuals from j practising as physicians, surgeons, or apothe¬ caries, who have not a decree and license after examination by a public board, * NOTE XXI. SCOTCH SYSTEM OF PAROCHIAL EDUCATION. So early as the reign of James IV. the legislature of Scotland began to evince a laudable anxiety about the education of I youth. It was enacted in 1494, that all barons and substantial freeholders through¬ out the realm should send their children to school from the age of six to nine years, and then to other seminaries, to be instructed in the laws, that the country might be pos¬ sessed of persons properly qualified to dis¬ charge the duties of sheriffs, and to fill other civil offices. Those who neglected to comply with the provisions of this statute were subjected to a penalty of 207. Scotch; and it has been remarked, that soon after the passing of this act, several individuals began to be distinguished for their classical acquirements, and that learning was more generally diffused throughout the country. 1 Thomson’s Cullen, vol. i. p. 482. SCOTCH SYSTEM OF EDUCATION. 595 Note XXI. In 1615, an act of the privy council of Scotland empowered the bishops, along with a majority of the landlords or heritors, to establish a school in every parish in their respective dioceses, and to assess the lands for that purpose. This act was confirmed by an act of the Scotch parliament in 1 633; and under its authority schools were estab¬ lished in the lower and more cultivated dis¬ tricts of the country. But the system was still far from being complete; and the means of obtaining elementary instruction continued so very deficient, that it became necessary to make a more complete and cer¬ tain provision for its supply. This was done in 1696, when an act was passed for the establishment of a school in every pa¬ rish, providing at the same time that the landlords should build a school-house, and a dwelling-house for the use of the master, and that they should pay him a salary which should not fall short of 51. 11s. Id. a year, nor exceed 11/. 2s. 2d. The power of no¬ minating and appointing the schoolmaster was vested in the landlords and the minister of the parish ; who were farther vested, with the privilege of fixing the fees to be paid him by the scholars. The general supervision of the schools is entrusted to the presbyte¬ ries in which they are situated ; and to them also is assigned the power of censuring, sus¬ pending, and depriving the masters, without their sentence being subject to the review of any other tribunal. It has been usually expected that a Scotch parish schoolmaster, besides being of unex¬ ceptionable character, should be able to in¬ struct his pupils in the reading of English, the arts of writing and arithmetic, and the more useful branches of practical mathe¬ matics, and be possessed of such classical attainments as might qualify him for teach¬ ing Latin, and the rudiments of Greek. The General Assembly of the Church of Scotland recommended, in 1706, “ to such as have the power of settling schoolmasters in parishes, to prefer those who have passed their course at colleges or universities, and taken their degrees, before others who have not, cceteris paribus.” And everyone knows that this recommendation has been attended to; and that many parish schoolmasters have had the advantage of a university edu- cation. It may, perhaps, excite surprise that any tolerably well educated person should think of becoming a candidate for a situation, the emoluments of which are so trifling as those of a parish schoolmaster. But for a long period after the passing of the act of 1696, a salary of 11/. a year, exclusive of a house and garden, was, in Scotland, no inconsider¬ able object; and, added to the school fees, served to place the master nearly on a level with the bulk of the respectable inhabitants of country parishes. Subsequently, how¬ ever, to the introduction of manufactures and commerce, and to the improved and vastly more expensive mode of living to ■which they gave rise, the comparative situ¬ ation of the schoolmasters was changed very much for the worse, and their character, as a body, was a good deal deteriorated. Their depressed condition at length attracted the attention of government; and in 1802 an act was passed, raising the maximum statutory salary payable to the masters to 22/. 4s. 5d., and the minimum to 16/. 135. 4 d. t both exclusive of school fees. And suppos¬ ing the number of established schoolmasters to be nine hundred, and their statutory sa¬ laries to amount to 20/. a year at an aver¬ age—both of which suppositions are proba¬ bly near the truth—it wfill be seen that the whole cost of this excellent establishment, exclusive of houses, gardens, and fees, does not exceed 18,000/. a year. It is doubtful, how r ever, whether the coun¬ try can continue to reap the full benefit it has hitherto derived from this establishment, by commanding the services of a sufficient supply of properly qualified teachers, with¬ out a farther increase of the fixed salaries. But this, it must be acknowledged, is a sub¬ ject surrounded with difficulties, and which deserves mature consideration. It should always be borne in mind that the object of the fixed salary, payable by the landlords, is not to render the master independent on the fees of his scholars, or to furnish him with the greater part of his subsistence, but to serve as a species of retaining fee or pre¬ mium, to secure the constant attendance of a person able to instruct the young, and in¬ fluenced, by the strongest motives, to perfect himself in his business, and to attract the greatest number of scholars to his school. If the master derived any thing like a toler¬ ably comfortable income from his fixed sa¬ lary, he would not have the same motives to exert himself as at present; and like other functionaries, placed in similar situations, he would soon learn to neglect his business, and to consider it as a drudgery to be avoided. Hence in increasing the emoluments of the schoolmasters, some plan should, if pos¬ sible, be devised, that might make the in¬ crease dependent on, and proportioned to, the exertion and skill of the teacher. And it has been suggested, in order to strengthen the motives to exertion, and at the same time to improve the condition of the mas¬ ters, that their fixed salaries should remain as at present, but that the landlords should be bound to pay them a higher salary (which should not, however, in any case exceed 601. or 70/.) according to the proportion of chil¬ dren, or of persons under fourteen years of age, belonging to the parish, or living within 596 SCOTCH SYSTEM OF EDUCATION. Note XXI a circle of three or four miles round the school, which regularly attend it; it being enacted that if the proportion of the chil¬ dren attending the school, within the speci¬ fied boundaries, fall below a certain assigned limit, the master shall not be entitled to any additional salary ; and that his allowance shall increase according to the increase in the proportion of the children, above that limit, attending the school. The principle here laid down seems unexceptionable. An increase of salary, made in the way now suggested, would form an additional mo¬ tive to exertion; and it would be easy, by taking a census of the parish once every five or seven years, to carry the plan into effect. To secure an adequate degree of know¬ ledge on the part of the schoolmasters, and to defeat those local partialities and influ¬ ences that are so apt to bias the judgment of the best-intentioned persons, it would be good policy to enact, that no individual should be eligible to, or entitled to appear as candidate for any parochial school, unless he have previously obtained a certificate of his ability properly to discharge the duties of master from the professors of Latin and Mathematics, in one or other of the univer¬ sities of Glasgow, Edinburgh, or Aberdeen; instructions being given to these function¬ aries respecting the subjects on which they should examine the candidates, and a salary paid them for their trouble. The adoption of this, or of some similar plan, would put an end to that system of favouriteism which has done great injury to the establishment, and would contribute greatly to improve the character of the masters. But in so far as respects the qualifications of teachers, their principal deficiency con¬ sists not so much in a want of knowledge, as in a want of acquaintance with the most approved methods of teaching. The reign of terror is still upheld in most Scotch country schools. The master seldom at¬ tempts to smooth the difficulties in the way of the learner, to interest him in the busi¬ ness of the school, or to make him under¬ stand what he is about. The energies of the youths are not excited; reAvards are not held out to stimulate them to excel each other; the fear of punishment is the only engine brought into the field. The mas¬ ters adopt this system, not because it is the most agreeable, but because it is most level to all capacities, and is the only one with which they are familiar. In this country no public provision has hitherto been made, for the most important, and perhaps the most difficult of all arts — that of instruct¬ ing the young. This is committed with¬ out scruple or hesitation to persons without the least experience; so that the money of the parents, and, what is of incomparably more importance, the time, and not unfre- quently the talents of the children, may be lost or injured from the inexperience and ignorance of those to whose care they are intrusted. Any one who has compared the mode of teaching in the High School, and in some of the other Edinburgh schools, with the mode generally adopted in country parishes, must be satisfied of the truth of this statement; and will be disposed to admit, that it is not only necessary that mea¬ sures should be adopted to make sure that schoolmasters possess adequate knowledge, but also that they are acquainted with the most approved methods of communicating it to others. This desirable object might be accom¬ plished by establishing pattern schools at Edinburgh, Glasgow, Dumfries, and Aber¬ deen, to which such persons as intended to become candidates for, or had been appointed to, a parish school, might either resort of their own accord, or be sent by others to be instructed in the best method of teach¬ ing. A small sum would suffice for the establishment of such schools. And it is difficult to discover how the public money could be laid out to greater advantage than in improving and perfecting a system of na¬ tional education, to which, notwithstanding its defects, Scotland has been mainly, per¬ haps, indebted for the superior intelligence, and the prudential, orderly habits of her people. NOTE XXII. POOR LAWS-POLICY, AND PROBABLE OPERA¬ TION OF THE POOR LAW AMENDMENT ACT.— LATE SCOTCH ACT. It is unnecessary on this occasion to enter into any lengthened discussions with re¬ spect to the expediency of a compulsory provision for the support of the poor. Every one admits that the really necessitous poor should be provided for one way or another, and not be allowed to die in the streets; but it is pretty clear that a public duty of this sort should be performed equally by all classes, in proportion to their means; for were it otherwise, the burden of providing for the poor would fall wholly on the humane and charitably disposed portion of society, who should only be called upon to bear their own fair share of its pressure. It is obvious, too, that where the poor are not provided for by a compulsory rate, they must be permitted to beg or to solicit alms from the charitable and affluent. But it is needless to dwell on the mischievous conse¬ quences resulting from the practice of men¬ dicancy. Wherever it has prevailed, these have been found to be so intolerable as to compel recourse to various means, some of POOR LAWS. 597 Note XXII. i 1 L them of a very oppressive description, for its suppression. These, however, have all ne¬ cessarily failed, unless when provision was made, whether by a compulsory assessment or otherwise, for the support of the really indigent poor. It would be abhorrent to all the feelings of humanity to allow paupers to suffer the extreme of want; but unless some fund be provided for their subsistence, or they be allowed to beg, how can they escape being starved outright ? The compulsory provision for the poor of England grew out of the impotent attempts made in the reigns of Henry VIII., Ed¬ ward VI., and the earlier part of that of Elizabeth, to suppress mendicancy, and at the same time to provide for the poor by voluntary contributions. At length, the earlier statutes on the subject were consoli¬ dated, and the principle of compulsory pro¬ vision carried to the fullest extent by the famous 43 Eliz. cap. 2., which enacted that all maimed and impotent persons should be provided for at the expense of their respective parishes, and that employment should be found for the unemployed able-bodied poor. From this remote period, the law of Eng¬ land has regarded every parish in the light of a family, the richer members of which were bound to provide for those who, through inability, misfortune, or the want of work, could not provide for themselves. This, also, is the principle embodied in the law of Scotland with respect to the poor ; and pro¬ vided the means for carrying it into effect be so contrived that indigence and suffering may be relieved without, at the same time, encouraging indolence and vice, the system would seem to be quite unexceptionable. Practically, however, this has been found to be a problem of exceedingly difficult solu¬ tion, and not a few have concluded that, however administered, all systematic at¬ tempts to relieve the poor are necessarily, in the end, productive of increased want and misery. But how difficult soever, it would seem, as well from the nature of the thing as from the experience of Scotland and some other countries, that poverty may be relieved without lessening industry and frugality. Those who contend that this last is the ne¬ cessary effect of every compulsory system for the relief of the poor, take a one-sided view of the question, and look only to the operation of the system on the poorest classes. It is plain, however, that there are two parties interested in all questions of this sort — the payers and the receivers of rates — and that no sound conclusion can be come to with respect to the influence of a com¬ pulsory provision, without looking at the way in which it affects the former class as well as the latter. If the object of the one party be, speaking generally, to raise the rates to a high level, and to eat the bread of idleness, that of the other is to keep the rates as low as possible, and to refuse relief to all but the really necessitous ; and it not unfrequently happens that the latter is the more powerful of the two. The capital defect of the English legisla¬ tion in reference to the poor has been, that it has not established any proper tribunal or board in parishes for the administration of matters respecting the poor, and that it has allowed infinitely too much power to justices of the peace. Had a body been established in every country parish, con¬ sisting principally of the chief landlords and occupiers of land ; and had their decisions on all matters touching the poor, been reviewable only by the Court of King’s Bench, we are bold to say’ that the abuses of the poor laws would never have been heard of. Though most improperly limited and in¬ terfered with by T the powers unwisely con¬ ceded to the justices the interest that the landlords and occupiers of the soil had in keeping the rates low, and in hindering the too rapid increase of the labouring popula¬ tion, has had a very powerful influence. The landlords and farmers saw that if by the erec- w tionof cottages,the splitting of farms,or other¬ wise the population upon their estates and farms was augmented, they would, through the operation of the poor laws, be burdened with the support of all who, from old age, sickness, want of employment, or any’ other cause, might become, at any’ future period, unable to provide for themselves. The wish to avoid incurring such an indefinite respon¬ sibility, not only r rendered landlords and far¬ mers exceedingly’ cautious about admitting new settlers upon their estates and farms, but stimulated them to take vigorous mea¬ sures for the diminution of the population, wherever the demand for labour was not pretty' brisk and constant. It is to the operation of this principle that the compli¬ cated system of laws with respect to settle¬ ments owes its origin, and until relaxed, it opposed a formidable barrier to the increase of the agricultural population. There is, indeed, great reason to doubt whether the purely agricultural population of England ! was not rather diminished than increased in the interval between the Revolution and 1770 ; and it is to the operation of' the poor laws more, perhaps, than to any thing else, that we find so few small occupancies in Eng¬ land, and that this country has been saved from that excessive subdivision of the land, that has been and is the curse of Ireland. If, indeed, we reflect upon the high rents that cottagers will offer for slips of land, and that the law of England, by granting the elective franchise to all persons possessed of , a cottage and a piece of land, valued at forty I 598 POOR LAWS. Note XXII. shillings a year, gave a very strong stimulus to the increase of cottages, we must be satis¬ fied that it required some powerful counter¬ vailing principle to render their multiplica¬ tion so inconsiderable. Political influence is as dear to an English as an Irish gentle¬ man ; but the former, had he manufactured voters by the hundred or the thousand, would have made himself directly responsi¬ ble for their maintenance; and he has been consequently determined by a motive which had no influence over the latter, to abstain from so ruinous a practice. Most landlords early saw the consequences that would in¬ fallibly result unless they adopted the neces¬ sary precautions, from their being bound to provide for all who, through misfortune, misconduct, or profligacy, could not provide for themselves ; and since they could not subvert the principle of the compulsory sys¬ tem, they exerted themselves to counteract it in practice, by adopting every possible device for checking the undue increase of population, and by administering relief in such a mode as might prevent any but the really indigent from having recourse to it. The truth is, that down to 1795 , the uni¬ versal complaint was, not that the poor laws had increased population and lowered wages, but that they had diminished it and raised wages. A host of authorities, some of which are referred to below 1 , might be quoted in proof of this statement, and explanatory of the means by which so singular a result was brought about; but the following passage from Mr. Young’s “ Farmer’s Letters,” will probably be deemed sufficient: — “ The law of settlement,” says Mr. Young, “ is attended with nearly as many ill conse¬ quences as that of maintenance. I have said enough to prove of how great import¬ ance our labouring poor are to the public welfare ; the strength of the state lies in their numbers, but the prodigious restrictions thrown on their settlements tend strongly to prevent an increase. One great inducement to marriage is the finding, without difficulty, a comfortable habitation; and another, nearly as material, when such requisite is found, to be able to exercise in it whatever business a man has been educated to, or brought up in. The first of these points is no easy matter to be accomplished : for it is too much the interest of a parish, both landlords and tenants, to decrease the cottages in it, and, above all, to prevent their increase, so that, in process of time, habitations are extremely difficult to be procured. There is no pa¬ rish but had much rather that its young labourers would continue single : in that state, they are not in danger of becoming 1 Britannia Languens, or a Discourse of Trade, Sec. p. 155, Lend. 1680; Alcock’s Observations on the Effects of the Poor Laws, pp. 19. 20, Lond. 1752 ; Dr. Burn’s History of the Poor Laws, p. Ill, Lond. 1764 •, Mr. Young’s work quoted in the text; chargeable, but when married the case alters : all obstructions are, therefore, thrown in the way of their marrying, and none more im¬ mediately than that of rendering it as diffi¬ cult as possible for the men, when married, to procure a house to live in ; and this con¬ duct is found so conducive to easing the rates, that it universally gives rise to an open war against cottages. How often do gentlemen, who have possessions in a parish, when cottages come to sale, purchase them, and immediately rase them to the found¬ ation, that they may never become the nests, as they are called, of beggars’ brats 1 by which means their tenants are not so bur¬ dened in their rates, and their farms let better ; for the rates are considered as much by tenants as the rent. In this manner, cottages are the perpetual objects of jealousy, the young inhabitants are prevented from marrying, and population is obstructed. ” 2 It may perhaps be said, that had the poor law r s never existed—had the poor not been tempted to place a deceitful trust in parish assistance—their natural sagacity would have led them to act with prudence and consider¬ ation, and prevented their being multiplied beyond the demand. That this would have been, in some measure, the case, is true ; but considering the state of depression in which the poor have usually been involved, and their total ignorance of the most efficient causes of poverty, there are but slender grounds for thinking that this influence would have been very sensibly felt. A man must be in toler¬ ably comfortable circumstances before he is at all likely to be much influenced by pro¬ spective considerations. It is the pressure of actual, not the fear of future want, that is the great incentive to the industry of the poor. Those who have speculated with re¬ spect to the operation of the poor laws on the prudential virtues, have usually belonged to the upper classes, and have supposed that the lower classes were actuated by the same motives as those with whom they associate. But the circumstances under which these classes are placed are so very different, as to render it exceedingly difficult to draw any accurate conclusion as to the conduct of the one, in respect of such matters, from observ¬ ations made upon the conduct of the other. A man who is comfortable in his circum¬ stances, must, in order not to lose caste, and to secure a continuance of the advantages he enjoys, exercise a certain degree of pru¬ dence ; but those who possess few comforts, who are near the verge of human society, and have but little to lose, do not act under any such serious responsibility. A want of caution, and a recklessness of consequences, Brown’s Agricultural Survey of the West Riding of Yorkshire, p. 13, Lond. 1793, &c.; Debates in the House of Commons, 28th of April, 1773. 2 Farmer’s Letters to the People oi England ” 3d ed. vol. i. pp. 300—302. POOR LAWS. 599 Mote XXII. are in their case productive of comparatively little injury, and are less guarded against. The most comprehensive experience proves lhat this is the case. The lower we descend in the scale of society, the less consideration and forethought do we find to prevail. When we either compare the different classes of the same country, or of different countries, we invariably find that poverty is never so little dreaded as by those who are most likely to become its victims. The nearer they ap¬ proach to it, the less is it feared by them. And that generally numerous class who are already so low that they can fall no lower, scruple not to plunge into excesses that would be shunned by others, and often indulge in gratifications productive of the most injurious consequences. Among the devices which have been fallen upon for relieving the able-bodied poor with¬ out encouraging sloth, the institution of workhouses seems to be one of the most effectual. The strict discipline and constant labour enforced in all well-conducted work- houses, and the moderate diet of their in¬ mates, make them objects of disgust and aversion to the idle and disorderly; and many persons who would be eager to obtain assistance from the public, could it be pro¬ cured at their own houses, would reject it if coupled with the condition of residence in a workhouse. In 1723 the workhouse system was placed on an improved footing, and received a great extension by the act 9 Geo. I. cap. 7., which enabled parishes to unite for building work- houses, and conferred on them the important privilege, if they saw cause, of refusing relief except in a workhouse. I his formed the principal bulwark, during the next half cen¬ tury, against the progress of pauperism. Sir F. M. Eden states that on work- houses being erected after the passing of this act, great numbers of persons who had pre¬ viously received pensions from parishes pre¬ ferred depending upon their own exertions rather than take up their abode in them ; and he farther states that the aversion of the poor to these establishments was so great, that some whose humanity seems to have exceeded their good sense, proposed, by way of weakening this feeling, ii to call workhouses by some softer and more in¬ offensive name.” 1 A still more distinguished though not a better authority, Lord Mansfield, expressed himself as follows respecting workhouses in a case that came before him in 1*782 : — “ If well regulated, workhouses are a most desirable mode of relief; they supply comfort and accommodation for those who cannot work, and employment for those who can. In many instances which have chanced to i State of the Toor, vol. i. p- 285. fall within my knowledge, particularly in the Midland circuit, they have reduced the annual amount of the poor rates a half. It may be inferred, from the statements of contemporary writers, that the poor’s rates amounted to about a million at the commencement of last century. 2 In 1776 they amounted, according to the official re¬ turns, to 1,720,316/., and at an average of the years 1783-4 and 1785, being those im¬ mediately subsequent to the American war, they amounted to 2,167,748/. This, when we consider the rise in the price of food, the great increase of population, and the dis¬ tressed situation of the country at the ter¬ mination of a disastrous contest, if it be really an increase, is certainly a very small one, and shows that the checks that had grown out of the system were sufficient effectually to hinder the growth of pauper¬ ism. During the period between the termina¬ tion of the American war and the com¬ mencement of the late French war, the rates were again considerably reduced. In 1782, however, the principle of the system under which these advantageous results had been obtained was subverted by the passing of Gilbert’s act, 22 Geo. III. cap. 83., so called from the name of its author. This act repealed the salutary and powerful check imposed by the statute of 1723, on the per¬ version of the rates to the encouragement of idleness and imposture, in the option given to parishes of refusing relief except in a work- house ; and enacted that no able-bodied pau¬ per should be obliged to resort to these esta¬ blishments, but that work should be provided for them at or near their own houses ! This throwing down of the principal barrier that had hitherto prevented the spread of facti¬ tious pauperism could not have failed, under any circumstances, to be in the end produc¬ tive of the most mischievous results ; but its injurious operation was accelerated by acci¬ dental circumstances, and the folly ot the magistrates. The price of corn, which had, at a me¬ dium of the three preceding years, aver¬ aged 54s., rose in 1795, to 75s. As wages continued stationary at their former eleva¬ tion, the distress of the poor was very great, and many able bodied labourers, who had rarely before applied for parish assistance, became claimants for relief. Rut, instead of meeting this emergency as it should have been met, by temporary expedients, and by grants of relief proportioned to the exigency of any given case, one uniform system was adopted. The magistrates of Berks, and some other southern counties, issued tables, showing the wages which, as they affirmed, I every labouring man should receive, accord- ) 2 sir F. M. Eden on the State of the Poor. vol. 1. p. 408. 600 POOR LAWS. Note XXI f. ing to the variations in the number ot his family, and the price of bread; and they accompanied these tables with an order, di¬ recting the parish officers to make up the deficit to the labourer, in the event of the wages paid him by his employers falling short of the tabular allowance ! As might have been expected, this sys¬ tem did not cease with the temporary cir¬ cumstances which gave it birth, but con¬ tinued to be acted upon down to the passing of the Poor Law Amendment Act. It was in fact almost universally established in the southern half of England, in large districts of which there were no longer any independent labourers to be found; and produced an extent of artificial pauperism and moral de¬ gradation that could hardly have been con¬ ceived possible. It was obviously necessary that a vigor¬ ous effort should be made for the eradication of so baneful a system; and those who have attended to the previous statements will, perhaps, be inclined to think that this might have been most easily and naturally effected, by reverting to the fundamental principles of the poor laws. We have already seen that the law of England regards all parishes as families bound respectively to provide for their own poor. Now all that was necessary to obviate the abuses complained of, was to assimilate the administration of the poor laws, as well as their principle, as nearly as circumstances would admit, to that of fami¬ lies. Those on whom the burden of provid¬ ing for the poor principally fell, and who had, therefore, a direct, tangible interest in the prevention of all abuse, should have had the sole management—along with the clergy¬ man of the parish, if there were one—of their affairs; and their decisions should not, as already stated, have been reviewable except by the highest judicial tribunals. But the English system was the reverse of all this. There was no selection of individuals in parishes to whom either the affairs of the poor, or any other matter of public importance, could be safely committed. All the inhabit¬ ants, or at least all the householders, were entitled to appear at parish meetings; and the vote of an individual barely above the condition of a pauper, and expecting, per¬ haps, to be very speedily enrolled in that class, was held to be equivalent to the vote of the principal landholder or manufacturer in the parish ! It is not, therefore, to be regretted, as being the least of two evils, that the overseers of the poor, to whom were intrusted all the details with re¬ spect to their management and the impo¬ sition and collection of the rates, instead of being appointed by a parish meeting, should have been selected by two justices of the peace 1 But it might happen, and, in point of fact, frequently did happen, that these justices, having themselves little or no in¬ terest in the economical administration of the parish funds, appointed persons to the important situation of overseer who were not sufficiently careful in the selection of the objects of charity, and in the prevention of fraud and imposition. Supposing, however, that the overseers had been inclined faith¬ fully to do their duty, and to reject all doubtful claims for relief, they could not, after the passing of Gilbert’s act, order able- bodied paupers whom they might suspect of counterfeiting poverty, to be sent to a work- house ; their decisions were also every now and then overturned by the justices, who, at all times, had great power, and could lat¬ terly order relief to any individuals, and to any amount they pleased ! Such being the system under which the poor laws of England were managed, the wonder is not that abuses crept into their administration, but that they did not attain to a baleful maturity at an earlier period; and that the efforts of the landlords and oc¬ cupiers, supported by the 9 Geo. I. cap. 7., to preserve their estates from oppressive rates, were able to countervail to the extent that they did, the noxious influence of the system. The necessity of effecting some change in the constitution of parish meetings or ves¬ tries, the clamour and disorder incident to which frequently prevented their being at¬ tended by people of property, had long forced itself on the attention of every one at all acquainted with such subjects. In populous parishes it had, indeed, been usual to appoint select vestries , that is, committees chosen by the inhabitants assembled in a ge¬ neral vestry, on whom were devolved various duties with respect to the poor. In some instances these select vestries had become self-elected; and a great number were ap¬ pointed under local acts. In 1818 the act 58 Geo. III. cap. 69., introduced the sound principle of allowing rate payers to vote in the election of guardians of the poor in some proportion to their property, giving a vote for every 2 51. of the annual value of the property assessed, until the number of votes amounted to six—the most one indi¬ vidual could exercise. But it seems difficult to see on what ground this limitation was made ; and the act was defective in another material respect, inasmuch as it gave the votes, not to the owner of the property, but to the occupier, who might, perhaps, hold it only from year to year, and could not have the same interest in repressing abuse, and keeping the rates low as the proprie¬ tor. But notwithstanding the signal improve¬ ments effected in particular parishes and districts by the establishment of select ves¬ tries and an improved method of managing POOR LAWS. 601 i OTE XXII. e affairs of the poor, these were but very irtially introduced, and the greatest abuses >ntinued to prevail in most parts of the , ngdom, particularly, as already stated, in * re southern counties. Under these circum- ances government became impressed with a eviction of the urgent necessity of intro- i icing vigorous measures to avert the further , -ogress of the evil; and with this view' a miraission was appointed in order to collect fidence as to the influence and operation of ie poor laws, and to suggest measures for leir amendment. This commission having collected a vast ass of evidence, drew up an able and com- •ehensive report, which paved the way for ie introduction of the Poor Law Amend- ent Act, the most important statute in re- ird to the poor that has been passed since ie reign of Queen Elizabeth. It has effected total change in the mode of relieving the )or. Parishes or unions of parishes are no pnger intrusted with the administration of •lief, but are controled and directed by a intral board of three commissioners, resident 1 London, w r ho are empowered to decide as > the kind and amount of relief to be given > the poor ; to issue rules and regulations ith respect to their government w r hich all iferior officers are bound to obey ; to deter- dne as to the erection and government of orkhouses, and the education of parish chil- ren ; to unite several parishes into unions >r the economical administration of the law, :c. Boards of guardians are chosen in the ifferent unions for superintending the work- ouses and administering relief; the mem- ers being selected on the sound principle of iving a preponderating influence in their hoice to those whose property is most likely ) be affected by the assessment for the poor, ustices of the peace have no power to inter- ire with the rules laid down by the central oard, or with the conduct of the guardians r officers acting under its orders. Such, in a few words, are the leading fea- jres of the Poor Law Amendment Act. It ^as a measure of a bold and decided charac- 2 r ; and we need not wonder that the changes : has been the means of introducing should ave occasioned a great deal of dissatisfaction, nd that very conflicting opinions should be ntertained with respect to it. But though 1 auch of the clamour raised against this law as been most unfounded, and though some . aiportant practical reforms have been effected hrongh its instrumentality, still w T e cannot 1 lelp thinking that it is a measure of very : uestionable policy. That a great and radi¬ al change w r as necessary in the administra- ion of the poor law r s, no one doubts ; but it i eems pretty evident that it might and should tave been accomplished by establishing pro- >erly constituted vestries, or other parochial bodies, to w r hich to commit the management of the poor, and by putting an end to all in¬ terference on the part of the justices. The radical defect of the poor laws has been that their administration was not vested exclusive¬ ly or principally in those on whom me burden of the rates really fall; but that it w r as con¬ ceded to justices, or rate-payers who might be, and in fact, generally were occupiers only and not owners. Had the latter had the en¬ tire administration of the law, no abuse of any considerable magnitude could have crept into it, or, at all events, it could not have long escaped detection. To suppose that it should be otherwise, is to suppose what is contradictory and absurd : it is equivalent to supposing that the self-interest of the parties is not, of all means that can be devised, the most likely to secure vigilance and to prevent abuse. Landlords'and people of property in England have made extraordinary efforts to keep down the rates on their estates, and to prevent the splitting of farms, and the building of cottages. That they did not at¬ tend parish meetings is no proof of their in¬ attention to their interests ; but of the vicious constitution of these bodies, where the vote of any individual though steeped in poverty, provided he were a rate-payer, countervailed that of the proprietor of the entire parish ! The remedy for the abuses of the poor laws was extremely simple, and, one should think, obvious. Reform or, if necessary, suppress vestries—give property its proper influence— take from justices all power to interfere in the concerns of the poor, and leave the rest to the self-interest of the parties. This system has been found to be completely successful in Scotland, and there is no room or ground for thinking that it would be less so in England. In Scotland the affairs of the poor have been managed by the heritors (proprietors), and kirk sessions. The latter, to which the ad¬ ministrative details have always been confid¬ ed, consist of the ministers and elders of the different parishes ; the elders uniformly almost comprising some of the leading proprietors and most respectable inhabitants. The deci¬ sions of the heritors and kirk sessions have not been interfered with by justices, nor even by sheriffs, and have been reviewable only by the Court of Session, which is very chary of interference. 1 In consequence of this ar¬ rangement the most vigilant economy has prevailed in all that relates to the treatment of the poor ; and while real want has been very sparingly relieved, no encouragement has been afforded to sloth, imposture, or mis¬ conduct. But had parish meetings and justices of the peace had the same influence in Scotland that they have had in England, does any one suppose that the principle of 1 For some remarks on this system, see post. 602 POOR LAWS. compulsory provision would not have been as much abused there as here? It is not owing to any superior discernment or 44 hard heartedness” on the part of the Scotch, but to the different mode in which relief has been administered, that the abuses so preva¬ lent on one side the Tweed are unknown on the other. Hence, though the reason of the tiling had not been sufficient to prove that the committing the administration of the poor laws to a properly constituted parochial body, would suffice to eradicate every abuse, the example of Scotland should have been held as decisive. And truly it is not a little singular, that in the teeth alike of the most obvious principles and the most conclusive experience parliament should have supposed that a system that had answered so well in one end of the island was quite unsuitable for the other ; and that stipend¬ iary offieeis would be mere likely to keep the rates low, or, which is the same thing, to take better care of the estates and proper¬ ties of the gentlemen of England than they could do themselves! This was carrying the rage for interference to an extent which Dr. Smith would not have believed possible. It is said, that without the establishment of a superintending board the same system could not have been introduced for the ma¬ nagement of the poor into all parts of the country. But suppose there had been a dozen or fifty different systems in use in different parts of the country, where would have been the loss or inconvenience ? Perfect uniformity of plan in a matter of this sort is unattainable, and would be ab¬ surd were it attained. Why should the paupers of Penzance and Morpeth be treated in the same way ? or those of country parishes like those of the metropo¬ lis ? It would be quite as judicious to establish a board to compel all the labour¬ ing classes to feed and clothe themselves after the same model, as it is to compel parishes and unions to follow the same plan in the management of the poor. In such matters, people on the spot, acquainted with the peculiar circumstances of the case, and interested (as all properly constituted paro¬ chial bodies would be) in the economical administration of the parish affairs, will al¬ ways be incomparably better judges of the best way of maintaining and employing the poor than persons resident at a distance. r Ihe pretension of the central board in Lon¬ don to regulate the diet and employment of the poor in Cornwall, Northumberland, and Lancashire, better than the respectable classes in those parts, throws into the shade all the pretensions so justly contemned by Dr. Smith of the founders and supporters of the mercantile system. The central board act on the principle of refusing relief in all ordinary cases to able- Note XXI. bodied labourers, unless in a workhouse and as a general rule we should think thj the best that could be ia;d down. But c such a subject general rules are good fq little or nothing. The judicious treatmei of the poor in one parish and in one seascJ might be absurd in anothej parish and at another season ; and it shoulc, also, vary with the varying demand for Jd hour, the variations in the cost of food, an a thousand other circumstances liable t] perpetual fluctuation. Parishes and unior might and should have been reinvestel with the privileges they enjoyed under thj 9 Geo. I. cap. 7., of refusing relief to any onj claiming it, except under condition of hi accepting it in a workhouse ; leaving it tl the local authorities acquainted with eac particular case to determine when the con] dition should be enforced. A regulation ci this sort was formerly and would have bee again perfectly sufficient for the preventio: of abuse. A severe frost throws large nunx bers of people out of employment ; am those who have large families may, in such case, be compelled to solicit aid from thj parish. To say to an industrious work man in such a situation that he shall not b< relieved unless he resort to a workhouse, i to add insult to misfortune, and can have n« effect except to make the law odious, and tej embroil the different orders of society. I is quite proper that all idle and disorderly persons should be compelled, before beinj: relieved, to go to a workhouse ; but to enj force this rule in cases like that now sup-j posed, and in thousands of others thar will readily suggest themselves, is to bur-| lesque alike principle and common sense. It has been said, that it would have been difficult in all cases, and in not a few im¬ practicable, to have found persons capable olj forming a vestry or parish board to which the administration of the affairs of the poor might have been safely confided. But nc such difficulty has hitherto been experienced] in Scotland, and it is not very easy to believe] that what is never seen in Dumfrieshire or ! Berwickshire, should meet us at every turn] in Cumberland and Northumberland. Pro¬ vided those who are to administer the rates be those on whom, in the end, they are sure! principally, to fall, nothing more is required! to insure their judicious management. Most persons become extremely considerate, and little inclined to be lavish and absurd, wdieix they have to put their hands into their own pockets. W e have not yet heard of any Scotch gentleman ruining himself by excess of charity to the poor; and w r e believe that i this species of extravagance is about as rarej in England. It is not at ail necessary thatil an administrator of the poor’s funds should i, be versed in the theories of Malthus, or that he should have read one per cent, of ths POOR LAWS. 603 SoTE XXII. nterminable volumes published by the poor aw commissioners. It is enough that he :n ows he is bound to relieve real want rith his own money, or that of his em¬ ployer. His native sagacity will instruct iim in his other duties. Where are the 'unds for the support of the poor better idministered than in Scotland ? and how -nany of the thousands engaged in their ad- ninistration ever heard of the workhouse pein 2 ; a “ test of destitution,” or of the j argon fashionable among those who speak ind write on this subject ? It is believed that some of the leading members of the commission of inquiry were in favour of a project for abolishing, in so far at least as the poor are concerned, paro¬ chial divisions, and raising the funds for their support by a tax levied from the countiy at large ; and the reports and statements they fiput forth, as well as those that have ema¬ nated from the present commissioners and their organs, have dwelt strongly on the ad¬ vantages of large administrative divisions in matters relating to the poor. But though we do not presume to say, that some of the existing parishes may not be too small for the right administration of the poor laws, or that they might not be advantageously united with others, we do not believe that this is very generally the case ; and on the w’hole, small seem decidedly preferable to large di- Hvisions. It is essential to the right working of the poor laws, that their administrators should be intimately acquainted with the i T condition and history of all parties claiming relief; and the smaller the divisions, the more likely is this to be the case, and the more will every increase of the rates be likely to attract the notice of those con¬ cerned, and make them inquire whether it be indispensable. Had the project for sup¬ porting the poor by a general tax been adopted, each individual conscious of the impotency of his own efforts to reduce the amount of national poverty, would have thought as little of its reduction as of that of the national debt; and, in consequence, abuses of every sort would have prevailed. It is only by bringing the burden home, as it were, to the door of individuals, and mak¬ ing them feel that unless it be confined within the narrowest possible limits, it will make a serious inroad on their estates and ! properties, that a compulsory provision has been, or can be, kept from degenerating into E an incentive to sloth ; and it is plain that this principle will operate more effectually in a moderate sized parish than in a union ; and in the latter than in the kingdom at large, where, indeed, it would not operate at all. We are supported in this view of the matter not merely by the most obvious prin¬ ciples, but by the authority of the ablest philosophers. “It would,” says Mr. Ri¬ cardo, “ be not only no improvement, but it would be an aggravation of the distress which we wish to see removed, if the fund for the support of the poor were levied, ac¬ cording to some late proposals, as a general fund from the country at large. The present mode of its collection and application has tended to mitigate its pernicious effect. Each parish raises a separate fund for the support of its own poor. Hence it becomes an object of more interest and more practi¬ cability to keep the rates low, than if one general fund were raised for the relief of the poor of the whole kingdom. A parish is much more interested in an economical col¬ lection of the rates, and a sparing distribu¬ tion of relief, when the whole saving will be for its own benefit, than if hundreds of other parishes were to partake of it.” 1 It is proper that such small parishes as do not cf themselves require an entire work- house, should- provided they think fit, be allowed to unite with others to erect one for their common use; and this they were au¬ thorised to do by the 9 Geo. I. cap. 7. Many parishes did associate under the sanction of this statute, and built workhouses in common; and it would have been advisable that every ne¬ cessary facility should have been given for the formation of such voluntary unions. But the poor law amendment proceeds on the principle that individuals have ceased to know where the shoe pinches ; that the country gentlemen and farmers of England are unable to decide whether a union with another parish for the erection of a work¬ house would be advantageous or not; and that this knowledge, and every other sort of knowledge touching the concerns of the poor, is monopolised by the central board at Somerset House ! It is said that very great reforms have been effected under the new act, much greater than it is probable would have been effected had the plan of reform suggested above been adopted. This is, perhaps, true; but whe¬ ther it be so or not is of very little import¬ ance. Sudden changes in the public economy of a great nation are almost universally to be deprecated ; and those are commonly most beneficial that are slowly introduced without giving any violent shock to existing habits and prejudices. Believing with Dr. Smith that individuals may always be safely left to pursue their own interest in their own way, we should have been little disposed, had the levy and the disposal of the rates and every thing relating to the management of the poor been committed to the landlords and princi¬ pal occupiers, to find fault with their con¬ duct; and should have been disposed to conclude, had they tolerated an abuse longer than seemed necessary, that, being the grcat- i Principles of Political Economy and Taxation, 1st ed. p. 113. 604 POOR LAWS. est losers by its existence, they had very good reasons for their forbearance. Sanguine in¬ novators are always anxious to have their schemes enforced by the power of govern¬ ment ; but the prudent statesman is satisfied if his projects of reform harmonise with the interests oi any great class, and be entrusted to it to be carried into execution. The for¬ mer usually become objects of disgust and aversion, while the latter make their way slowly and surely, and are, in the end, brought into complete operation. The influence of the poor law amendment act, irr a political point of view, seems to be of the most unfavourable description. For¬ merly the. poor of England were split into as many distinct divisions as there were parishes in the kingdom. In regard to all matters re¬ lating to the poor, each parish was a separate and independent community, so that if the poor in any particular parish believed them¬ selves to be aggrieved, it was their own affair ; it interested no one els?; and they were left to settle it as they best could with their own parochial authorities. But now the case is altogether different. Local divisions have been substantially obliterated ; the poor have been reduced into one huge mass ; and are treated on a uniform plan digested by the central board, and approved by the Secretary of State. W hatever, therefore, may in future concern the poor of one district, must equally concern those of every other district. Go¬ vernment has made itself their dry-nurse and foster-mother ; it is responsible for every real or fancied abuse that may anywhere exist in their treatment; and it must stoop to interfere in every workhouse squabble. It is not easy to exaggerate the mischievous consequences of such a state of things. Certainly, how¬ ever, it required no peculiar sagacity to fore¬ see what the experience of the last half dozen years has sufficiently established, that no go¬ vernment would willingly encounter the wide¬ spread unpopularity that must be the conse¬ quence of its invariably opposing the preten¬ sions of the pauper-class, and that the severity of the law would be gradually weakened. Its eulogists were absurd enough to talk, on its being introduced, of its extirpating pauperism. But we may be pretty well assured that the poor will never cease out of the land ; and the fair presumption is, that the existing law will, in the end, increase the rates in no ordi¬ nary degree. Suppose we were visited with a season like 1799 or 1800, or that prices were as high, and manufactures as depressed as in 1812, and reflect what a state we should be in under the present law ! It may answer tolerably well with low prices, and a brisk i demand for labour. But how is government to deal with a million of paupers in a year of scarcity, all ascribing their misery to its re¬ gulations, and charging it with inhumanity, and everything most hostile to the sympathies Note XXE and feelings of the public ? It is idle to dt pend on the middle and wealthier classes fo support in an emergency of this sort. Th! Poor Law Amendment Act wa 3 , no doubij passed mainly in the view of promoting thei interests ; but the chances are that they wil gradually become more and more disguste-l with it. Few men like to be treated as sira pletons incapable of managing their own ai fairs ; yet this is the precise point of view ijj which the Poor Law Amendment Act regard] the landlords and the respectable classes? I! proceeds on the principle that they are inc-a pable of doing that which every Kirk sessiol in Scotland is admitted to have done admiri ably well. Even the boards of guardian! it has created have no real power, and ard in fact, mere tools employed to carry intd effect the orders of the central board. W»; do not think so ill of the people of England as to suppose that a law founded on suelj false and insulting assumptions can be per' manently popular with any considerable clasJ of persons. The large majorities which supported thd Poor Law Amendment Act in parliament prove, it has been said, that its provisions were well considered and judicious ! Suet! majorities, form, however, but a slender prel sumption m favour of the policy of any mea¬ sure. The collective wisdom of the nation has always had a marvellous sympathy with] its collective folly. There is, hardly, in fact] any nostrum so pernicious, or delusion oil quackery so gross, as not to have met with! the approval of parliament. Take an instance! in our own times—that of the sinking fund] To attempt to pay off debt by borrowing mo¬ ney is now admitted on all hands to be a con¬ tradiction and an absurdity; and yet the sinking fund was maintained for more thanl twenty years on this so-called principle ; and) during this lengthened period every publics man, of every political party, was eulogisingl this wretched juggle, and both houses of par^ liament passed laws, without so much as a dissentient voice, to secure its inviolability 11 Y\ hether a change of opinion similar to what: has taken place respecting the sinking fund!' will take place respecting the Poor Lawi Amendment Act, remains to be seen. But i public opinion, how wrong soever in its first estimate of a measure, gets generally sound! in the end. And if we be right in con¬ sidering the measure as founded on entirely false principles, and as being pregnant with the most mischievous consequences, we mav| anticipate that its fate will not differ mate¬ rially from that of the sinking fund. The too liberal allowances made to the poor were, as we have now seen, the grand source of the complaints made against the old English poor laws. In Scotland, on the contrary, the main objection to the poor laws ! >te XXIII. S been, not that they gave the poor too ich, hut that they gave them too little ; that sy carried economy to an extreme ; and that, numerous instances, the poor were sub' •ted to privations and sufferings disgraceful a civilised country. This state of things is a consequence of the nearly absolute wer with which the landlords and kirk ssions were vested in regard to the subsist- ce and treatment of the poor, who had no ap- I al from their decisions except to the Court Session. The abuses to which this system icessarily led having of late years attracted a >od deal of attention, and been strongly ani- adverted upon, it was felt to be indispensable ,at it should be modified, so far, at least, as protect the poor against the exaggerated ionomy of the parochial authorities. And lis necessary reform might have been effected ithout touching any of the fundamental or distinctive principles of the system, by merely , lying the poor a right of appeal from the ecrees of the kirk session to the sheriffs, 'his, however, was not done, but the prece- ent set by the English Poor Law Amend- ient Act, though little worthy of that dis- nction, was so far imitated, that a central oard for the supervision of matters connected nth the poor, was established at Edinburgh, y the stat. 8 and 9 Viet. c. 83. It is directed y this statute, that all complaints made by the oor of the proceedings of kirk sessions, shall fie referred, in the first instance, to this board; nd its approval is necessary to enable an ap- eal to be made from the decision of a kirk ession to the Court of Session. But though his sort of intermediate check tends to quash mproper claims, they would have been as ikely to have been quashed had an appeal >een allowed to the sheriffs ; and while the lecisions of the latter would have been more •asily obtained, there are no grounds for hinking that they would have had less weight han those of the central board, or that they vould have been more frequently appealed igainst. The central board is authorised to inquire nto the condition and management of the )oor in all boroughs and parishes, to order 'eturns from them, to make suggestions in •egard to the management of the poor, &c. But in the event of these suggestions not be- .ng adopted, it has no power to carry its recom¬ mendations into effect. Although, however, ’his inquiry and the publicity to which it has led, have obviated sundry abuses, the general Dpinion seems to be that this advantage might have been realised by other and less expensive means; and that the abolition oi the central board would be a beneficial measure, pro¬ vided a power of appeal to the sheriffs were at the same time given to the poor. 605 NOTE XXIII. COLONIAL POLICY. The Monopoly of the Colony Trade does not augment the Rate of Profit—Bad effects of the Monopoly, and of the Forced Sub¬ mission of Colonies able and willing to go¬ vern themselves — Causes of the usually rapid growth of Colonies—Impolicy of ex¬ acting a High Price for unoccupied Colo¬ nial Bands—Probable Influence of the Abolition of Slavery on the Growth oj Sugar in the West Indies — Population , Trade, Spc. of our Colonies . The policy of the restrictions which Great Britain and other nations have imposed on the trade of their colonies has been so 1 ully and ably examined by Dr. Smith, that it would have been unnecessary to add another word on the subject, but for the effect which he ascribes to the monopoly in elevating the rate of profit. He supposed that the mono¬ poly increased the field for the employment of capital; and as he supposed that the rate ot profit depended on the extent of the demand for capital, compared with its amount, he naturally concluded that it increased the late of profit. But it is not difficult to see that this is an error. The rate of profit is not, as already seen, dependent on the magnitude oi the field for the employment of capital; but on the productiveness of industry at the time. Profits consist of the excess, or of the value of the excess, of the products obtained by an outlay of capital and labour, after the capital and the value of the labour have been replaced. It is, therefore, plain that their relation to ca¬ pital, or the rate of profit, cannot be affected by the mere extension of the field for the em¬ ployment of capital, how great soever that ex¬ tension may be. Suppose, to illustrate this principle, that a million acres of land are added, by a fiat of Providence, to Great Biitain -. the influence of this addition to the existing field for the employment of capital over the rate of profit, would wholly depend on the fer¬ tility of the new land. If it were of the same degree of productiveness as the poorest soils now under cultivation, we might lay out 500 or 1000 millions in its cultivation, but it is obvious that no addition would thereby be made to the rate of profit. If the farmers of the worst land now cultivated get a retifrn of ten quarters or of 10/. on a specified outlay of capital, they will evidently get the same re¬ turn if they lay out the same capital on any other equally poor land. But it the new land added to the country were more fertile, or of greater productive power than the worst qualities now cultivated, the rate of profit would rise : it is clear, however, that it would COLONIAL POLICY. 606 COLONIAL POLICY. rise, not because the field for the investment of capital had been enlarged, but because it had become more productive—because the same outlay of capital that yields only a re¬ turn of ten quarters or of 10/. on the worst land now in tillage, would then perhaps yield a return of twelve or fifteen quarters or of 12/. or 15/. But it is said that the monopoly of the colony trade has this effect—that it renders the field fjr the employment of capital more productive as well as more extensive. Ac¬ cording to the theory of Smith, when new and unusually advantageous channels of fo¬ reign commerce are discovered, the merchants who first engage in them realise larger profits than ordinary, and these larger profits tempt capitalists to withdraw their stocks from less lucrative employments, so that the supply of commodities produced for the home market is diminished ; which, as the demand continues the same, necessarily occasions a general rise of prices and profits. Mr. Kicardo has shown the fallacy of this statement. A certain amount of national revenue has been expend¬ ed on foreign commodities; and, after new channels of commerce are opened, whether by means of a monopoly or otherwise, the same, a greater, or a less amount of such revenue will continue to be so expended. If, in the first place, the same amount of revenue con¬ tinue to be laid out on foreign commodities, there will be the same amount of revenue to lay out on articles produced at home, and no change whatever will be occasioned. If, in the second place, a greater amount of re¬ venue be laid out on foreign articles ; then, as there must be a proportionally less demand for articles produced at home, a corresponding portion of the capital and labour previously employed in producing commodities for the home market will be set free, and will hence¬ forth be employed in the production of the commodities sent abroad to pay the greater amount of goods imported; and hence it appears, inasmuch as every increased demand for foreign produce necessarily brings along with it the means of procuring the aug¬ mented supply without requiring any addi¬ tional capital, that neither prices nor profits would be affected by such an increase : and if. in the third and last place, owing to the greater cheapness of foreign produce, a less proportion of the revenue of the country should be devoted to their purchase, a less amount of capital would be required to pro¬ duce the commodities exported to pay them ; and the capital thus set free would, of course, be employed in producing the increased sup¬ ply of commodities for the home market, on j which the portion of revenue saved in the pur¬ chase of foreign commodities will, in future, be expended. And thus it appears, that in ei y case—whether the same, a greater, or a less proportion of the national revenue be Note XXIII laid out on foreign commodities— the disco 1 very or formation of new channels of comi merce cannot have any effect on the rate o profit. 1 It is true, indeed, that if by means of f 0 reign commerce we obtain corn, or any othe ai tide which enters into the consumption o ; the labourer, cheaper than it can be produced at home, it will most probably, in the end I lover vages and raise profits. It is obvious! hove\ er, that this result could not be brough 1 about by the monopoly of the supply of al the colonies and countries in the world. I j does not depend on exportation, but on im portation—on liberty being granted to imporj corn from those who can furnish it at the low est price, whether colonists or foreigners.! A country which founds a colony on the liberal principle of allowing it to trade freelj with all the world, necessarily possesses con¬ siderable advantages in its markets from) identity of language, religion, customs, &c. These are natural and legitimate sources of pieference, ot which it cannot be deprived: 1 and these, combined with equal or greater) cheapness of the products suitable for them,) will give its merchants the complete com- 1 mand of the colonial markets. But all at-j tempts at forcing a trade with colonies arei sure to be pernicious alike to them and to the mother countries ; and make that iu-i tercourse a source of poverty and ill will, which, il let alone, would be a source of re¬ ciprocal advantage. The trade with Canada may be referred to in prool of what has now been stated. It employs a large number of ships and sea¬ men, and seems, to a superficial observer, 1 highly valuable. In truth and reality, how¬ ever, it is very much the reverse. A half! or more of this trade, is forced and factitious,] having originated in the excess of 40a. a load of duty which was formerly charged on Baltic and other foreign timber, over and above the duty charged on timber from British ! North America. And though this excess has j been materially reduced during the last few ! years, it still (1849) amounts, at an average, l to about 13a. or 14a. a load. This higher duty on foreign timber tempts the merchants to resort to Canada, New Brunswick, &c., whence they import an inferior article at a higher price. The disadvantages of this I system are numerous and glaring. To a I manufacturing country, having a great mer¬ cantile and warlike navy, timber is in- ! dispensable ; and yet instead of supplying ourselves with it where it may be found best and cheapest, we load the superior I and cheaper article with an exorbitant duty, | and do the most we can to make our houses j 1 Ricardo's Principles of Political Economy* | p. 14 9. 1st ed. COLONIAL POLICY. 607 ioTE XXIII. id ships be built, and our machinery con¬ nected, of what is inferior and dear ! But ie mischief does not stop here. By refus¬ er to import the timber of the north of urope, we proportionally limit the power of ie Russians, Prussians, Swedes, and Nor- egians, to buy our manufactured goods ; bile, by forcing the importation of timber om Canada, we withdraw the attention of s inhabitants from the most profitable em- loyment they can carry on ; that is, from ie cultivation of the soil, and make them aste their energies in comparatively disad- antageous pursuits ! Such, either in a less r a greater degree, is the uniform result of il attempts to interfere with the natural order f things, and to force a trade—whether with colony or a foreign country, matters not— lat would not otherwise be carried on. p If a colony enjoy a natural monopoly of ny product or article in extensive demand, ; is supposed that, by laying a heavy duty on ;s exportation, a considerable advantage may e made to accrue to the mother country; ut this does not really appear to be the case. Ceylon possesses a monopoly of the trade in innamon ; but the high duty (Is. per lb. 1 ) aid on the article when exported, restricts he demand for it within very narrow limits ; nd has reduced its culture and the revenue de- ivedfrom it to a comparatively trifling extent. The immense profits made by the Dutch on he spices of the Moluccas, were wholly a con- equence of the limitation of the quantity , old; and to prevent a fall of price by an in- rease of the supply brought to market, they iccasionally destroyed a portion of the pro- iuce. There is no longer, however, a doubt j hat they were heavy losers by this oppressive md short-sighted policy. The sales were con- ined to an amount hardly sufficient to employ he capital even of a single merchant; and ;he total sum realised by the government is lot supposed to have amounted to a tenth oart of what it would have risen to had the . trade been left free, under a moderate duty, j When a nation derives the whole or any 13 onsiderable portion of an important article | from abroad, it is necessarily exposed, espe- j cially if the supply come from only one fo¬ reign country, or but a few, to the risk of more or less inconvenience, from any inter¬ ruption of the friendly intercourse subsisting with it or them. When such important ar¬ ticles are furnished by a colony, their supply is, of course, comparatively secure; and, in i such cases, colonial possessions may be of more than ordinary value. At this moment, any interruption of the trade with the United : States might, by interfering with the supply I of raw cotton required by our manufacturers, 1 Till very recently this duty was 3 s. per lb.! I It is still, however, three times as much as it should be. lay us under very serious difficulties; and if the whole, or any considerable part, of the supply of cotton were derived from a colony, it would be an important advantage. This, however, is not the case. It is, perhaps, pro¬ bable that at some future period India may furnish abundant supplies of cotton ; but at present the cotton she sends to Europe is neither considerable in quantity nor of good quality. It is said that the West Indian colonies are advantageous, because they supply us with sugar which yields a large amount of revenue. But every one knows that it is the people of Britain, and not the West Indians, who pay the sugar duties. And as sugar might be imported from Java, Brazil, and Cuba, at the same duty, quite as cheaply as it can be im¬ ported from the British West Indies, it is difficult to perceive how the emancipation of the latter could, in this respect, occasion any very material public loss. 2 It must not, however, be supposed, from any thing now stated, that we regard the foundation of colonies as inexpedient. On the contrary, colonies have been, in their consequences, highly advantageous to this, as they have been to most old settled countries in all ages. It is not to their establishment, provided they be placed in proper situations and properly managed, that we object, but to the needless interference with their internal and foreign policy, the trammels imposed on their industry, the prevention of their free intercourse with other people, and the at¬ tempt to govern them after they are able and anxious to govern themselves. A nation that founds a colony in an unoccupied territory, or in a territory occupied only by savages, makes it subservient to the benevolent pur¬ poses for which it was destined by Providence, and extends the empire of civilization to, it may be, an indefinite extent. In proof of this, we need only refer to the discovery and colonization of America. W hen first visited by Columbus, the far greater portion of that immense continent was occupied by the scanty population of savage tribes, ignorant of almost every useful art, making war on each other with a deadly and implacable ferocity, sub¬ sisting only on the precarious produce of the chase, and often involved in the most dread¬ ful privations. Even in Mexico and Peru, where some advances had been made, the state of the people was abject in the extreme. But now, where little more than two centu¬ ries ago a few half-starved hunters were the only inhabitants, cities are built, filled with an intelligent, a refined, and a wealthy popu¬ lation. Agriculture and its subsidiary arts have been widely diffused over what were 2 As the law now stands, the duties on foreign and British colonial sugars will be equalized oa ilie Gtli of July 1854. 1 608 COLONIAL POLICY. then primaeval forests ; and rivers that were crossed only by some wandering savage in his rude canoe, are crowded with ships laden with the produce of every country and of every climate. And, besides the direct gain to hu¬ manity by the introduction of religion, of li¬ terature, of science, and of arts, into the vast wilderness of America, her settlement has, at the same time, conferred incalculable advan¬ tages on Europe, and especially on England, —by the infinite variety of new and desirable products she has supplied to stimulate and reward the industry and invention of our manufacturers and merchants ; and by the all but unlimited field she has afforded" for the profitable employment of the idle, the discon¬ tented, and the rejected population of the old world. To these America has truly been “ a city of refuge.” The hosts of paupers and of outcasts who have fled or been driven to her hospitable shores, have mostly risen frbrn poverty to affluence, and have be¬ come industrious and deserving citizens of free and flourishing communities. But how great soever the advantages resulting to England and the world from the genius of Columbus, and the perseverance and enter¬ prise of the founders of the American colo¬ nies, these advantages would have been still greater but for the impolitic restraints laid on them by the parent states. The colonies of Great Britain, though fettered in various ways, enjoyed a much greater degree of free¬ dom than those of other nations, and hence their rapid progress in wealth and civilization, both before and since the American war. The colonies of Spain, on the other hand, though planted in the finest provinces, were so tram¬ melled and oppressed by the blind jealousy of the mother country, that the superior ad¬ vantages of their situation have been more than neutralized. Their government was en¬ tirely administered by natives of Old Spain ; the colonists were carefully excluded from every office of power and emolument; one colony was prohibited from trading with an¬ other ; and had foreigners presumed to settle amongst them, they would have been liable to capital punishment! In consequence, their progress was, in all respects, comparatively slow; and when at length they succeeded in throwing off the galling yoke of the mother country, they became, and have continued, from their inexperience in self-government, a prey to all sorts of disorders. It is question¬ able, indeed, whether her South American co¬ lonies were of any substantial service to Old Spain; and it is, at all events, certain that they have not conferred either on her or on others, a fiftieth part of the benefit they would have done had they been treated with more libera¬ lity, and permitted freely to avail themselves of the various advantages of their situation. The American war seems to have decided, in as far as experience can decide any thing, Note XXIII. the question in regard to the policy of retain¬ ing colonies in a state of dependency that! are determined to govern themselves. No I colonies were ever considered half so valuable as those which now form the republic of the! United States ; and it was generally supposed that their emancipation would be decisive of! the fate of England, that the sun of her glory would then set, and for ever ! But have we really lost any thing by that event? Has! our trade, our wealth, or our power, been in i any degree impaired by the independence of the United States ? The reverse is distinctly! the case. The notion that we could have continued for any length of time to retain such rapidly growing countries in a state of | unwilling dependence, or that we could have! been advantageously united in a federal union I with vast regions situated in another hemi¬ sphere, is too wild and extravagant to require | examination. But notwithstanding its inde¬ pendence, we have continued, and will con-| tinue in time to come, to reap all the advan- j tage we can reasonably claim as the founders | of this mighty empire. Englishmen will necessarily always command a preference in I the American markets. And while we are I disencumbered of the impossible task and enormous expense attending the government and defence of all but boundless territories 3000 miles distant, our intercourse with them ! grows with their grow r th ; and we are as much benefited and enriched by them as we should have been had they continued in the same state of dependence upon us as Malta or the Cape of Good Hope. The colonization of Australia "will contri¬ bute in no ordinary degree to extend the blessings of civilization. This newly occupied quarter of the globe, the native inhabitants of which were still fewer in number and more I barbarous than those of America, is no doubt I destined, at no very remote period, to be the I seat of flourishing communities : and while I they preserve the language and literature, it is to be hoped they may also pursue the mild, liberal, and tolerant policy, of the illustrious * people from whom it should ever be their proudest boast to have descended. Nothing, therefore, can be a greater error I than to suppose that we are indebted for any i very considerable portion of our national ! greatness to the extent of our colonial domi- i nions. In all those cases in which we carry on a really beneficial trade with a colony, the chances are ten to one we should carry it ou to an equal extent were it independent: while the number of our colonies, their distance from the United Kingdom, the ease with which some of them may be attacked during war, and the difficulty and expense of de¬ fending them, are very grave considerations. On the whole, it will probably be found, if rightly examined, that the retention of dis¬ tant territories as colonies, that have over- ( ■) T k XXIII, COLONIAL POLICY. 609 me the difficulties incident to their esta- ishment, and are in a condition to defend d govern themselves, is a source of weak- ss rather than of strength. We derive our perior wealth and civilization from totally fferent sources—from the moral and physi- 1 advantages, which have made the United ingdom the head-quarters, as it were, of jedom, civilization, and manufacturing in- istry ; and while we possess these, we need t fear that any serious injury will result mi circumscribing the extent of our colonial ■minion. The principles now stated, though in re¬ nt times they have been pretty generally mitted in theory, have acquired very little actical influence. History affords very few .amples of countries that have voluntarily -andoned any remote province or colony, en though its possession entailed a positive ss on the governing or mother state. When colony is tolerably well satisfied with the nnection subsisting between it and the pa¬ nt state, any proposal for its dissolution iuld be reckoned not ill-timed merely, but | isurd. Were any one bold enough to make l ch a proposal, he would be taunted with iti-national feelings, and with a w’ish to stir ) dissension ; wmuld be told to “ let well one and that it was quite time enough to ;itate such a delicate question when the co¬ ny wished to become independent; but sup- >se that the colonists are animated by such wish, unless it were very generally and un- [uivocally manifested, it would be said to be irticipated in by a small part only of the >pulation ; and it w r ould be contended that i e mother country could not in justice ex- j >se those colonists who had not expressed l ly wish for separation to the maltreatment ey would most probably meet at the hands i' their revolutionary brethren, were she to ithdraw her protection. Should the wish r a separation become general, and be loud- expressed, the pride of the mother country ould be offended ; it would be said to be de- >gatory to her honour and her best interests yield to dictation, clamour, and menace ; at if she gave way in this instance, her her dependencies, and even foreign states, icouraged by her pusillanimity, would put claims for separation, or be tempted to set ) pretensions injurious to her rights and dependence. Should the colony resort to ms to compel a separation, a war would be e inevitable consequence ; for all classes in i e mother country would cry out, “ What- er we might be disposed to concede in a ason of tranquillity to humble petitioners, 3 can never yield anything to the insolent ; 1 Dean of Bristol, and author of several valu- •le political and commercial tracts, in some of lick kc strenuously recommended the abandon- demands of rebels !” It is idle, therefore, ever to expect the emancipation of a colony of any importance from considerations of policy or expediency. The God Terminus is immove¬ able except by force — Jovi ipsi regi noluit concedere. He is never willingly brought nearer home. All concessions of independence to colonies must be compulsory; and are invariably ob¬ tained from the weakness or inability, not from the good sense or justice of the mother country. The recent history of our connection with Canada affords abundant evidence of the truth of what has now been stated. It is difficult to imagine a less serviceable colony. Our as¬ cendancy in it at this moment, though of the least valuable description, being little, if at all, better than nominal, depends wholly on the presence of a large military force maintained at the cost of this country. And we doubt whether it possesses a single article that might not be more cheaply and profitably imported from elsewhere. If it were said that Canada cost Great Britain, directly and indirectly, 2,500,000Z. a year, over and above every countervailing advantage, the statement would not be beyond, but within the mark. And yet so little are the opinions of nations sway¬ ed in these matters by considerations of profit and loss, that the vast majority of the British people would not hesitate about engaging in a war of which neither the extent nor the termination could be foreseen, rather than relinquish the nominal sovereignty we now hold over Canada ! We are ready, in a season of tranquillity, to eulogise the sagacity of Smith and Tucker, 1 and to express regret that their plans had not been carried into effect at the commencement of the American war. But the moment any¬ thing occurs to give us an opportunity of bringing our theory into practice, we reject it as visionary and inapplicable to the exist¬ ing state of things. We then think only of the dignity of the crown, and the integrity of the empire ; and would rather expend millions of money, and thousands upon thou¬ sands of lives, than voluntarily abandon what is confessedly worthless! A principal advantage of extensive colonial dominions consists, as already seen, in the ample field which they afford for the settle¬ ment of the surplus or unemployed population of the mother countries. In this respect our colonies, from the great variety of their cli¬ mate, soil, and products, enjoy every advan¬ tage ; and the industrious emigrant, who might be unable to maintain himself at home. ing of all attempts to obtain by force the govern¬ ment of the American colonies. k r 610 COLONIAL POLICY. or be a burden on the parish or on his friends, may attain to independence in British North America, the Cape, or Australia. The United States also present great attractions to emi¬ grants from this country, resulting in part from the common origin of the people, the identity of their language, and their free sys¬ tem of government; and in part also, or per¬ Note XXIII haps principally, from the greater facilip with which tracts of unoccupied land may b j acquired in them. The latter, however, i not a natural advantage on the side of th Americans, but is wholly a consequence c regulations which we have enacted, and o which the impolicy will be immediate! shown. Account of the Emigration from the United Kingdom, during the Twenty-four Years froi: 1825 to 1848 inclusive, specifying the Countries to which the Emigrants have gone, au the Numbers that sailed for each Country. Years. North American Colonies. United States. Australian Colonies and New Zealand. All other Places. Total. 1825 8,741 5,551 485 114 14,891 1826 12,818 7,063 903 116 20,900 1827 12,648 14,526 715 114 28,003 1828 12,084 12,817 1,056 135 26,092 1829 13,307 15,678 2,016 197 31,198 1830 30,574 24,887 1,242 204 56,907 1831 58,067 23,418 1,561 114 83,160 1832 66,339 32,872 3,733 196 103,140 1833 28,808 29,109 4,093 517 62,527 1834 40,060 33,074 2,800 288 76,222 1835 15,573 26,720 1,860 325 44,478 1836 34,226 37,774 3,124 293 75,417 1837 29,884 36,770 5,054 326 72.034 1838 4,577 14,332 14,021 292 33,222 1839 12,658 33,536 15,786 227 62,207 1840 32,293 40,642 15,850 1,958 90,748 1841 38,164 45,017 32,625 2,786 118,592 1842 54,123 63,852 8,534 1,835 128,344 1843 23,518 28,335 3,478 1,881 57,212 1844 22,924 43,660 2,229 1,873 70,686 1845 31,803 58,538 830 2,330 93,501 1846 43,439 82,239 2,347 1,826 129,851 1847 109,680 142,154 4,949 1,487 258,270 1848 31,065 188,233 23,904 4,887 248,089 Total, 767,373 1,040,797 153,195 1 24,321 i 1,985,686 The explanation which Dr. Smith has given of the causes of the rapid growth and prosperity of colonies founded in advanta¬ geous situations, though impugned by Sis- mondi 1 and others, seems to be consistent alike with principle and historical evidence. When a colony is founded in an uninhabited or but thinly peopled district, each colonist gets a large extent of the best land; he has no rent, and but few, if any, taxes to pay; and being able to procure supplies of manu¬ factured articles from the mother country, or one equally advanced, he applies all his ener¬ gies to agriculture, which, under the circum¬ stances, is most productive. The demand for labour in such colonies is very great; for 1 Etudes sur P Economie Politique, ii. cap. Colonies. the high rate of wages, combined with th cheapness of the land, speedily change th labourers into landlords, who in their tur become the employers of fresh labourer: In consequence, population and wealth ao vance with unusual rapidity; and in soit, instances, as in that of the United State: they have continued, for a lengthened period to go on doubling their numbers every twent or five and twenty years ! But in stating that the facility of obtainin; supplies of fertile and unoccupied land wa the principal cause of the rapid progress c new colonies, Smith did not mean to say the it was the only cause. An advantageon situation for the prosecution of commercui pursuits, and great superiority in navigation may enable a colony to advance at its outsei though without any considerable extent c COLONIAL POLICY. | ' OTB XXIII. rritory, with even more rapidity than if it id enjoyed an unlimited command of fertile nd. This seems to have been the principal use of the speedy extension of the Greek jonies alluded to by Smith. The most mous of these, as Syracuse and Agrigentum Sicily, Tarentum and Locri in Italy, and phesus and Miletus 1 in Asia Minor, were Qongst the principal emporiums of the an- ent world. They were all seaport towns -were founded in the most advantageous si- ations for carrying on an extensive com- erce, and owed, in fact, their wealth and •eatness mainly to trade and navigation, wing, however, to the limited extent of eir territorial acquisitions, a consequence irtly of the difficulty of subduing the indi- mous population, and partly of the neigh- mrhood of other colonies founded by rival ates, their power rested on no very broad or lid foundation ; so that the fall of the capi- 1 city and the annihilation of the state were 1 but synonymous. 2 The colonies founded in modern times have >en placed under very different circumstances, he countries in which they were planted were ther so very thinly inhabited as to be almost iserts, or they were occupied by a feeble id inferior race unable to oppose any effec- lal obstacle to the diffusion of the colonists ; . that the latter easily spread themselves 7er a large extent of country, and have had . general more of an agricultural than of a mimercial character. But while this has ven *hem greater strength, it has not, after te difficulties attendant on their first esta- ishment were got over, in any degree im- >ded their progress, but the contrary. The ost flourishing of the colonies of antiquity ill not bear to be compared in respect of ipidity of growth, magnitude and power, ith the United States; and the slower pro- ’ess of the Spanish and Portuguese colonies not owing to the colonists having distributed lemselves over a wide extent of country, but > the interference of the mother country with | ieir domestic arrangements, and the vexa- ous restrictions laid on their intercourse ith foreigners. A very great degree of equality prevailed nong the free settlers in the Greek colonies ; id in consequence the lands acquired by le colonists were distributed amongst them i nearly equal portions. But in modern times is very different. Owing to the vast ex- nt and almost desert state of the countries which they have been principally planted, ie poorest individuals have generally suc- jeded in acquiring slips of land; while the , iperior class of colonists or others who had 1 Miletus founded an immense number of Monies on the shores of the Euxine, and had a ry extensive commerce. CM influence with the colonial government, or with that of the mother country, frequently succeeded in getting grants of vast tracts of land, not in the view of cultivating, but of holding them till, in consequence of the in¬ crease of population in the vicinity, they had acquired a considerable value. These large reserves, by interrupting the communications between different parts of the colony, and in¬ creasing the difficulty and cost of conveyance, have frequently proved not a little injurious to its interests. But there are various ways in which an abuse of this sort might be obvi¬ ated ; and, perhaps, the best would be to ap¬ portion the land according to the available capital of the settlers, it being stipulated that no individual should receive above a certain number of acres, and that it should revert back to the public unless certain improve¬ ments were effected upon it within a specified time after the grant was made. But not satisfied with attempting to put down an abuse of this sort, we are now told that all the difficulties incident to colonization have originated in the too great dispersion of the colonists, and that to obviate them, and to insure to all new colonies the acme of pros¬ perity, we have merely to compel the colo¬ nists to keep close together by exacting a high price for the surrounding waste or un¬ occupied land, that is, by making the colony as like an old settled country as possible ! But for the fact of its having been adopted into our colonial policy, such a crude project would not have been worthy of notice. If, on the one hand, the price set on the waste land be inconsiderable, it dhes not prevent the purchase of large tracts of land on specu¬ lation, and the entailing on the colony all the disadvantages that have resulted from the making of injudicious grants; and if, on the other hand, the price demanded for the land be too high, it opposes a formidable obstacle to the progress of the colony. Rich men do not leave their native country' to expose them¬ selves to the inconveniences and hardships attending the establishment of new settlements in the wilderness. This, if it be done at all, must be done in time to come as in time past by individuals in straitened circumstances, and anxious to improve their fortunes. But to exact a high or full price for land from such persons must, by sweeping away the whole or a considerable portion of their capi¬ tal, deprive them of the means of clearing and cultivating the land, and proportionally retard their progress and that of the colony. The plan of letting lands by fine is admitted by every one who knows anything of agricul¬ ture, to be one of the worst that can be de¬ vised ; and this colonization project is bot- 2 See the excellent chapter in Heeren’s An¬ cient History, on the Greek Colonics; *St. Croix de l’Elat et du sort dcs Anciennes Colonies, &e. 612 COLONIAL POLICY. Note XXII I. tomed on the same principle, and is quite as pernicious. It is said that, through the exaction of a price for the land, and the consequent con¬ centration of the colonists, their employments being more combined and divided, will be pro¬ secuted with a great deal more success than hitherto. All this, however, proceeds on the false and exploded assumption that the colo¬ nists are not, like other individuals, the best judges of what is for their own advantage. Dr. Smith says truly that it is the highest impertinence for kings and ministers to at¬ tempt to direct private people how they shall employ their capital. But it is, if possible, a still greater impertinence to attempt to direct them where they shall employ it. A regard to their own interest will draw people suffi¬ ciently together. And to enact regulations in the view of concentrating them still more, is in every respect as contradictory and absurd as it would be to set about increasing the public wealth by regulating the sort of em¬ ployments to be carried on, and the countries with which, and the commodities in which, to deal. It is a part of this new scheme, on the supposed excellence of which much stress is laid, that the sums got by the sale of lands in the colony are to be expended in defray¬ ing the expense attending the conveyance thither of labourers. This is a species of bait held out to tempt capitalists to buy land, by making them believe that though land be artificially dear, labour will be artificially cheap, and that, on the whole, they will be very well off! This, however, is merely at¬ tempting to repair an injury done the capi¬ talists, by inflicting a still more serious injury on the labourers. In a colony where a large portion of the capital is swallowed up in the purchase of land, the capacity to make improvements, and the demand for labour must be comparatively limited ; and this limited market is to be glutted by throw¬ ing upon it crowds of paupers, transported gratis, from England ! We say crowds of paupers, for few labourers aware of the facts of the case, who can afford to pay for a pas¬ sage to the United States, will voluntarily go to a colony where land is to be artificially raised to a high price, and labour artificially cheapened. And hence it is that the capitalists who have bought lands in Australia and our other colonies have been entirely disappoint¬ ed in their anticipations of being supplied with cheap labour. The exorbitant price set on the land, by preventing the immigration of independent labourers, has rendered wages as high in them as in the most flourishing parts of the U. States. It is farther to be observed, that the most desirable class of immigrants does not consist of capitalists, the number of whom must al¬ ways be very limited, nor of paupers, but of small farmers, tradesmen, and others, with sums varying from 50/., 100/. or 200/., up to ; 1000/. Such persons form the stamina of modern immigrants ; and of these nine out of every ten emigrate in the hope of acquir- \ ing the property of a less or greater piece of land, the culture of which is to be carried on wholly or almost wholly by themselves and: their families, and which is to engage all or a large portion of their attention. But the ex¬ travagant price demanded for land in our co- j lonies makes the class now referred to resort j in preference to the U. States : and, there is ; no doubt of the fact, that for the last eight! or ten years, nine-tenths of the most valuable I emigrants from this country, that is, of indus¬ trious individuals, possessed of capital, have] established themselves in some part of thei Union. And how could any other result be antici -1 pated ? The Americans sell the richest andj finest wheat lands in the Valley of the Mis-i sissippi for about a dollar an acre ; whereas j we exact a minimum price of 6s. Id. sterling! (8s. currency) an acre for the worst lands in: Upper Canada, and 20s. an acre for the worst j in Australia, from 4 to 6 acres of which are; required to depasture a single sheep ! Hadi such extraordinary regulations been devised! to divert the current of voluntary emigration j from our colonies to the U. States, they would have done honour to the sagacity oi those by whom they were contrived, and! there would not have been a word to say j against them. But as it is, they are repug-1 nant alike to the plainest dictates of common| sense, and to the best interests of the colonies and of the mother country ; and we leave it to others to decide whether their impolicy oi j the tenacity with which they have been sup-! ported by the home government be the morel remarkable. Instead of concentrating the population.! and providing for the proper subdivision oi j employments, this system has had a precisely opposite effect, and while it has dispersed it over a comparatively wide surface, it has im¬ properly congregated it in a few localities. ii In Australia, where the system has been car¬ ried to the greatest extent, very little land has been sold since the price was raised to 205. an acre. The capitalists who emigratejj to that continent, or who carry on speculations in it, no longer think of becoming proprietors ] and cultivators, but become squatters or lea-1 sees of vast tracts which they devote to pa- - sturage. Hence the rural population is spread over an immense surface; and while there is little demand in the country except for shep¬ herds and herdsmen, the towns are swelled to a disproportionate size by the forced resi¬ dence of those who, under a rational system, I would have been distributed over the colony!! as labourers and artizans. Such are some of the consequences of tins COLONIAL POLICY. 613 m I. -OTE XXIII. ' 3 W colonization scheme. And, despite the ^deserved support it has met with, we in- ine to think the reader will have little dif- 2 ulty in concluding with us, that it has not single redeeming quality; and that it is iroughout a tissue of delusions and contra¬ ctions. The production of sugar has greatly fallen ff in our West Indian colonies since the bolition of slavery; and the colonists have >udly complained of the difficulty of obtain- lg a sufficient supply of labour, and of its igh price. But it is believed by many that bis state of things will be temporary only ; hat free is always in the end cheaper than lave labour; and that in no very lengthened eriod, wages will be lower and labour more bundant in our islands than in those where lavery is maintained. This, however, though popular is a very doubtful conclusion ; and ve are inclined to agree with those who hold hat a supply of some sort of compulsory la- )our is indispensable to the profitable raising »f sugar in the New W orld. Free labour is, we believe, uniformly found o be cheaper than slave labour in all those lases in which freemen and slaves engage in- liscriminately in the same employments, and ire equally well fitted for carrying them on. But in the West Indies this is not the case, rhe climate there is such as to render severe leld labour unsuitable to the constitution of Europeans ; and there are but slender grounds -’or thinking that the culture of sugar will 3 ver be voluntarily undertaken by the blacks. The latter have few wants. Many articles which are indispensable in cold or temperate olimates would be an encumbrance in Jamaica and Demerara. Hence, the curis acuens mortalia corda , so powerful among the nations of Europe, is but feebly felt by the blacks of the West Indies. Their necessities and de¬ sires are of a very limited description, and are generally, indeed, fully supplied by the pro¬ duce of a small patch of land requiring but little labour in its cultivation. And such be¬ ing the case, it would be contradictory to suppose that they should voluntarily employ themselves in the hard labour necessary to produce sugar. Consistently with what is now stated, we find that Hayti or St Domingo, though the most fruitful of the West Indian Islands, and though it furnished, when a co¬ lony of France, immense quantities of sugar, no longer furnishes a single ton ! And what ground is there for supposing that the result would be different in Brazil and Cuba were the blacks emancipated, and were they able easily (which is not the case in Jamaica and most of our islands) to obtain patches of land? i The possession of such patches is requisite to enable them to subsist without engaging in laborious service ; and in the event of their not being able to obtain land, they may be forced to employ themselves in the culture of sugar ; though, as it is against their inclina¬ tion, they will withdraw from their work on the first opportunity, and will, while employ¬ ed, be as idle as possible. It, consequently, appears that the question with respect to the cheapness and efficiency of free and slave la¬ bour is one that depends in great measure on circumstances—that is, on the locality where, and the parties by whom, it is to be carried on ; and whether the labour be of that de¬ scription in which freemen would be disposed voluntarily to engage. It is impossible to bring whites into competition with blacks in out-of-doors labour in tropical countries ; and, as there are no grounds for thinking that really free blacks will ever, of their own ac¬ cord, undertake the drudgery of sugar plant¬ ing, it would seem that compulsory or slave labour is not merely the cheapest that can be so employed, but that it is all but indis¬ pensable to the prosecution of the business. We do not state this as any vindication of slavery, but as being apparently the only conclusion which can be legitimately deduced from the facts of the case. We are, indeed, strongly impressed with the conviction that, in the end, the culture of the sugar-cane, on a large scale, will have to be abandoned in all those parts of the New World in which sla¬ very is suppressed. (See Return on next page.) NOTE XXIY. TAXES ON THE RENT OF LAND. The view taken by Dr. Smith of the opera¬ tion of taxes on the rent of land is at once incomplete and erroneous. This has resulted principally from his having made no distinc¬ tion between taxes on rent properly so called, or on the sum paid for the use of the natural and inherent powers of the soil, and taxes on rent in the popular sense of the term, or on the total sum paid for the use not merely of the land, but also, of the buildings, if any, and the drains, fences, and improvements of all sorts effected upon it. He held that taxes on the rent of land, taking the term in its popular and broadest sense, fell wholly on the landlords. No doubt, however, this is an error. The sum paid to the landlords for the use of the natural powers of the soil might be entirely swept away by a tax, without their having it in their power to throw any por¬ tion of the burden on any one else ; but in so far as the rent of land consists of the inte¬ rest of capital expended on improvements or buildings, it could not be taken from the land¬ lord by a tax on rent. 1. 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'O 3 3 a .«1 %-• © O > o o O O r © o o OO 3 © cn m o * 5- S 03 ©) ©M O O © 3 Q © © to co S t-1- w .3 © © 00 00 I? rH ei Ck © © “ CO co >> - ^5 3 ft ° ft £ S © O4tOC0C0tOO4G0C0©C0C0C0©t^05© CO © © © to CO 04 04 © © © © GO © 04 © ©©t^l^©©©©©C04^t^©t^©© hhhhhhhhhhhhhhhh +> cz H ft O © © © .22 © ro £ ° Q Ph O 4^ 3 © © © 3 3 H PH 35 © PH © s © >» 35 *43 3 3 © 3 >» 35 © 3 o *T 3 © H> © CO 33 © © o © Qj 3 tu O co 3, 3 o 33 © 33 © o © 3 3 a © •h> a, H © H> © ,?“ © co O co w ti O 31 O S © o *2 g 3 3 3 h< bX5H5 P> 5 +j +> <; co co fcp o ra 4 _j S3 H O © Eh H 33 3 33 cn 3 a 3 S3 3 © 3 33 3 a H © H « PP Note XXII1 COLONIAL POLICY © '-i X CO r— ci © Hi X r» ** I—i b* © X r—i CO CM 0> CO X Cl 00 CM CO X CO CO’ WCfH •» r •» co b. b- b» r—1 00 X © Hi X O'—— 1 X l- X Cl X rf X 'H X cc «-H • 0 • • • X X Cl r-H 00 rH • <^1 • • 0 • 0 Vi 0 0 0 0 r-H CM Cl X H< O X X Cl CM own; x © © CM X ■H X 00 I—I CO CM © CM Cl b- X 1- 0k CO o HP o CM 05 x x to H< x 05 CO- o to COH Cl r—I —l X Cl X Cl X © X CO X 0k 0> o CO Cl X CM X X X r\ O Cl Cl rH o o Cl to CO (MC-t “• #\ © X 09 Hi t>- rH X X X Hi r-H X rH r— r-i X © X H< © X — 05 to X CM © b f-H H • ci X f”H b- X r—1 l rH rH Cl X X 05 X X tP X O to 05 to 05 X CM to to X r Hi O , r—( : ci 05 © X hXO CM X -P CM to 00 05 o -P X Cl © Cl I—i X o CO 0> -p X H 1 rP Cl b~ X t- 05 X X Cl rH to Cl X b- b- to -H -h b- rp X 05 05 05 05 05 0k o rH H< X o t- X to to cfco co co Cl Cl 0k 05 X Cl X X Cl 05 05 to Cl CO -p X Cl 0k 0k Hi Tp X b» Cl b- X X Cl x" Cl Hi 0k x <4 X CO 0k r-H CM CO X o o to o 0k X 05 u c 3 o o a a o 75 J- y © C © s 3 y 3 3 O U > o U 3 ◄ H X o X o • : cp x x I—i CM ct V m s o 3k 3 O 3 o s- H H< U5 05 'P l-H X X O X X 0k X X rH x_ tP* X X 05 to X -P to OlON b- 0> 0> 0k 0 XXX Cl X X -p Cl b- rH CO rH 05X05rHXXt0 05'HClCl C^iONXNOXHOU ^-r^OXCltOXr-XtOX r 0, r 0 r 0 0 0 *k ^ CONCOH^r-NO) X X X X H b- ©i—i X Cl Cl HdCCNW 05 X H< 0k X o 0* X 00HO5 I—I I—I X © Cl H^ © 05 to" 05 X O H N b- 0k 0> 0k X Cl X X X 0k X 05 05" U5XS r— X © X C to 0» 0» 0\ X X 05 X X b- iH b» X Hi H 0k 05 r ->I 05 05 05 rH rH X X 0* CM X c X H X C N H —i Cl t- © b- tO X © riH ci to >— ci 3 X rH CO © © o t-Se^ci cm© . Si o^jt* log : bt © Cl 0k Cl © © Cl to © l— © rH ^ 0k 0k X I—I -p © X Cl © © b- 0k 0» r-H Cl r- ci x -p X to" • o 3 3 •rt o 3 U O C u . r O .S a H • s ■3 a «k-l u H-H CQ a 2 ■5b : 2 =1 •a 05 — ^2 © 3 3 0 § -M 3 y c *H :■§ © 3 • y *T 3 H-> O 3 3 3 O u s- ^ y y r : a > b • 3 0 0 72 • e u e =S 3 o 2 3 £ S o X u u c2 — «k- « o « cc a « «M *< O - M ' E Sh : © 4 ' k p- O rd -g 3 S ci ® C5 3 3 O U -u 3 CJ s c3 • H rH t. 3 Ph o 75 -t-> y < A ■d 3 a © y O 3 0 • H 3 0 0 3 O O O O 0 0 .2 .£ 3 # < a • • H »-h 0 • O HH rH a H 3 a «M O C3 rH X X 3 O 3 v : £ • y CJ X b- X 0 D- 3 ° n X (H 0k 9 O HJ © 3 3 : a O • OJ o* 3 u CJ in CO Cl s . TP : x x x •d 3 3 r^ rH o a - o* " • 3 • 03 *-• cj ■d cj © y t- o O H cc X 3k y w 0k 3 O • rH 3 rH d • rH 3k 3 O O H O . O . *d 2 3 Ifl X cS •jr m O Hi y . 3k o a O § © o a y *-4- o -- y 'C 3- h 3 U x 75 3 O I O £ 2 3 O u u O b r-H —* £» 3 k-< U Hi 'd 3 ® 3 •i J ^-c X « 3 S 2 10 O »H c/3 Q ^ 3 y 3 a k 3 • H 3 - *-■ 73 3 *< 3 u y 73 y 3 • rH 2 u -*-> 75 3 < •d 3 3 3 y S5 y a 75 *d 3 3 3 3 y x c y •d 3 3 3 >H 3 O • — X 3 y o 05 72 to 3 O ^ 3 to 2 c x £ >S ■d 3 3 rH O © to 3| 55 * GIG taxes ox the rent of land. separate the gross rent of land in an old, set¬ tled, and highly-improved country into its component, parts, or to distinguish between the sum paid for the use of the soil, and that paid on account of the capital expended upon it. But supposing this separation to be ef¬ fected ; then as the former portion, or that paid for the use of the natural and inherent powers of the soil, is a surplus over and above the cost of production, (see ante, p.446,) it might, it is clear, be entirely carried off by a tax without affecting the interests of any class, other than landlords. The heaviest tax on it would not raise the price of raw pro¬ duce ; for nothing can affect its price which does not affect the cost of its production. But the real rent of land is extrinsic to and inde¬ pendent on that cost; and cannot, indeed, have any existence until the cultivators have been fully indemnified for the expense incur¬ red in bringing produce to market, and have obtained the common and ordinary rate of profit on the capital vested in buildings, fences, &c., and in seed, labour, and implements. The prices of all sorts of farm produce would, consequently, continue unaffected, though a tax were imposed absorbing all the real rent of land, or the sum paid for the soil only. 2. It would not, however, be possible for government, even if it were disposed to make the attempt, to abstract by means of direct taxes the gross rent of the landlords, or the total sum paid them, not only for the use of the inherent powers of the soil, but for build- ings, &c. In whatever degree the rent of land may consist of interest of capital laid out upon it, in that degree would a tax upon rent operate to raise the price of raw produce ; and would, in consequence, fall ul¬ timately on the consumer. In so far as the gross rental of landlords consists of sums paid them for the use of the natural and in¬ herent powers of the soil, it results not from their being producers, but from their being owners of land; but it is otherwise with the portion of the gross rental paid them on account of improvements. This results from their being producers, or from their having capital vested in agricultural meliorations ; and it is plain that a tax affecting the profits of this capital must necessarily affect the cost of the produce raised by its agency. Sup¬ pose, for example, that the gross rental of a farm is 500/. a-year, a half, or 250/. thereof, being really paid as interest of capital laid out on its improvement. If, in such a case a tax of ten per cent, were laid on rent, only a half or 25/. of this tax would be per¬ manently paid by the landlord. In the first instance, no doubt, the whole 50/. would fall upon him; but 25/. of this payment would, it is plain, be a deduction from the profits of the capital expended on improvements, and not from rent properly so called. And Note XXIV. the landlords, being thus placed in a compa- rati\ ely unfavourable situation, no more ca¬ pital would be laid out on the soil, until the price of corn, and other raw produce, had been raised, by the gradual diminution of its quantity or the increase of demand, so as to place them in the same situation as other pro¬ ducers ; that, is, until they obtained the com¬ mon and ordinary rate of profit from the ca¬ pital vested in improvements. It appears, therefore, that although it may be supposed possible to draw into the coffers of the treasury, by an exclusive tax, all that portion of the rent of land which is paid for the use of the natural and inherent powers of the soil, the other portion, or that which is paid for the improvements made on it, would not be permanently affected by an exclusive tax ; and would, speaking generally, be taxed to only the same extent that the profits of ca¬ pital employed in other departments are taxed. In a practical point of view taxes on the rent of . land are among the most unjust and impolitic that can be imagined. It is, as al¬ ready stated, quite impossible to separate rent into its elements, or to say how much is paid for the soil and how much for improvements. No two agriculturists ever arrive, in any case of this kind, unless by accident, at the same conclusion ; and the best judges sfnrin that, generally speaking, the distinction is impracticable. When, therefore, a tax is laid on rent it is necessarily proportion¬ ed, to its gross amount, or to the total sum paid to the landlords, without regard to the sources whence it is derived. But a tax of this, description has always been, and will un¬ avoidably continue to be, a formidable bar¬ rier to improvements ; for, the return paid to a landlord for capital expended on the soil being included in the rent, the tax discourages or prevents fresh outlays of capital, inasmuch as they occasion a corresponding increase of its amount. The injustice of this impost is not less obvious. Two landlords are each in the receipt of an equal sum, say 1,000/. a-year; the estate of one consisting of naturally fine soil on which little capital has been laid out, and that of the other of inferior land on which a great deal of capital has been expended. A tax on the former merely abstracts a portion of what is principally a consequence of the bounty of Providence, whereas a tax on the latter abstracts a portion of what has been mainly produced by the labour and industry of man. Hence the obvious injustice and oppressiveness of a tax on rent. We doubt, indeed, whether it be possible to suggest any tax more decidedly at variance with every sound principle, or more adverse to the pro¬ gress of improvement. The contribution fon¬ der e in France is a tax of this sort ; and its unequal and injurious operation is the theme of every writer on French agriculture. TAXES ON PROFITS. 617 Note XXV. NOTE XXY. TAXES ON PROFITS. Dr. Smith’s opinions with respect to the in¬ fluence of taxes on the profits of different bu¬ sinesses seem to be still more erroneous than his opinions in regard to the influence of taxes on rent. He supposes that whether the tax be made to affect the profits of all employ¬ ments, or be confined to one or a few only, it is not in any case permanently paid by those on whom it falls in the first instance ; that the producers and dealers uniformly raise the price of their goods proportionally to the tax; so that, speaking generally, it never falls upon them, but always on the consumer. A brief discussion only will be required to show the fallacy of this statement. To give additional clearness to what we have to say on the subject, we shall divide our remarks upon it into two parts : in the first we shall suppose that the tax is laid equally on the profits derived from the capital employed in every sort of business : and, in the second, we shall suppose that the tax is not universal, and that it affects only the pro¬ fits derived from the capital vested in one or a few branches of industry. 1. If the tax be universal, it must obvious¬ ly fall wholly on profits, and can neither af¬ fect the prices of commodities nor the distri¬ bution of capital. It was shown in the note on the effect of variations in the rates of wages and profits on the value of commodities, that whatever affected different classes of produ¬ cers to the same extent, could neither change their relative condition nor the value of the articles they produced. Now this, it is evi¬ dent, is the case with the tax in question. A linen or cotton manufacturer charged with a tax of five or ten per cent, on his profits would not be, in any respect, in a worse si¬ tuation than his neighbours, it being assumed that they are all taxed to the same extent. Under these circumstances, no one could expect to evade the tax by changing his business; and it would not, consequently, occasion any transfer of capital from one employment to another. As the tax does not increase the quantity of labour required for the production of commodities, it could not increase their cost; neither could it oc¬ casion any variation in their supply, or in the demand for them ; for, as it does not fall on capital but on profits, the means of producing would not be impaired by its im¬ position. The means of purchasing possessed by those who live on profits, would, no doubt, be diminished by the tax; but, as the means of purchasing possessed by the government, or its agents who receive the tax, would be augmented to the same extent that those of the contributors were reduced, the aggregate demand of the society would continue the same; and hence, as the tax could neither lessen the amount of capital, nor affect its distribution, nor lessen the power of purchas¬ ing its produce, it is obvious it could not oc¬ casion any variation in the prices of commo¬ dities. The immediate effect of an equal and uni¬ versal tax on profits would, therefore, be to sink them in the same proportion. And as the power to accumulate capital is always pro¬ portioned to the rate of profit, it follows that a tax of this sort, if it be so high as to hinder its being balanced by increased exertion and economy, checks the accumulation of capital and the progress of population. 2. But if the tax were not universal, and were laid only on the profits realized in one or a few businesses, the effect would be different. In this case it would raise prices, and would not, therefore, fall on the capitalists, except in so far as they con¬ sumed their own produce. Suppose, for ex¬ ample, that a tax of ten per cent, is laid ex¬ clusively on the profits of the hatters; the least consideration will serve to show that it must make an equivalent addition to the price of hats ; for, if it did not, the hatters would gain less profit than is gained by those en¬ gaged in other businesses, and they would, in consequence, begin to withdraw from their employment; nor can it be doubted that they would continue to withdraw, until by dimi¬ nishing the supply of hats, their price had risen to such a height as would afford them the common and ordinary rate of profit, over and above the tax. For the same reason, an exclusive tax on the profits of the clothier, the farmer, the shoemaker, &c. would make a proportional addition to the prices of the articles they bring to market. In these cases the producers have the power to raise prices, and, consequently, to throw the burden of the tax on the consumer ; because they have the power to withdraw from the employments in which profits are taxed, and to engage in those in which they are not taxed. But when the profits of all businesses are equally taxed, capitalists are deprived of this re¬ source, and have no means either of raising prices or of evading the tax. G18 TAXES ON WAGES. Note XXYI. NOTE XXYI. TAXES ON WAGES. 1. Direct Taxes on Wages —2. Taxes on the Articles consumed by the Labourers . I. Db. Smith lays it clown, in his article on taxes on the wages of labour, that u while the demand for labour and the price of provi¬ sions 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.” (p. 390.) And he further supposes that to whatever extent the wages of manufacturing labour may be increased by a tax, the burden will ultimately fall, not on the manufacturers and merchants, but on the consumers, by an increase in the price of commodities ; and that to whatever extent the tax may raise the wages of agricultural labour, it will really fall, not on the farmer or the consumer, but on the landlord. None of these conclusions is correct. The immediate effect of a direct tax on wages, does not depend on the demand for labour continu¬ ing stationary, but on the mode in which the produce of the tax is expended. And the principles established in the previous notes show that when wages rise, whether by their being taxed, or by any other cause, that rise does not go to raise the price of commodities or to lower rent, but is deducted from the profits of the capitalists and other employers of labour. Suppose, to illustrate its operation, that a tax of 10 per cent, is imposed on the wages of labour, or that all labourers are made to hand over 10 per cent, of their earnings to collectors appointed by government. Seeing that no part of this tax is taken from the ca¬ pitalists, it is clear it cannot in any way dimi¬ nish their means of employing labour. Its effect must, therefore, depend on the mode in which it is expended. If the produce of the tax were laid out on additional troops or sail¬ ors, it is easy to see that it could occasion little or no immediate injury to the labourer; for were such the case, the agents of go¬ vernment would enter the market for labour with means of purchasing, derived from the labourers themselves, and not from their em¬ ployers, and in consequence of this greater competition, wages would be raised in propor¬ tion to the additional means in the hands of government, or, in other words, to the amount of the tax. An example will render this ap¬ parent. Suppose that the labourers in a par¬ ticular country receive as wages 2,000,000/. a-year; and suppose further that government wish to increase the military force, and that I to get the means of doing so, a tax of 10 per i cent, or of 200,000/., is laid on wages. It will unavoidably follow, inasmuch as the ca- l| pitalists will still come into the market for | labour with the 2,000,000/. formerly employed by them in the payment of wages, while the agents of government will also come into the same market with the 200,000/. derived from the tax, that wages will be raised in exact proportion to the latter. But if the tax were laid out, not as has been supposed, in paying the wages of addi¬ tional troops, but in increasing the pay of those already embodied, or of other func¬ tionaries employed by government, its effect would be different. In this case there would be no additional demand for labour. The individuals receiving the tax would, indeed, j have a greater demand for the produce of labour; but their greater demand, being merely equivalent to the diminished demand of the labourers by whom the tax had been paid, would make no real addition to the total demand of the country. And thus it appears that when the produce of a tax on wages is employed to hire fresh individuals for the service of government, it raises, by taking so much labour out of the market, the price of the remainder in proportion to its amount: but when its produce is employed to increase the wages of public functionaries, or of troops already embodied, the quantity of labour in the market is not lessened, and the tax con¬ sequently falls, in the first instance, wholly on the labourers. But, even in this last case, a tax on wages might not, and it is most probable would not, continue to be paid entirely out of wages. Such tax when first imposed could hardly fail, unless the country were peculiarly prospe¬ rous, by lessening the comforts, and perhaps also the necessaries of the labourer, to check the progress of population, as well by retard¬ ing the period of marriage as by increasing the rate of mortality; and the diminution of labourers thence arising might raise wages so as to throw the tax either wholly or partially on the capitalists. There are, however, very considerable ob¬ stacles to a rise of wages in the way now pointed out. Whether it be brought about by a decrease in the number of marriages, or by an increase in the rate of mortality, or both, it is never the work of an instant. A considerable time is always required before it can be effected ; and there is, in consequence, an obvious risk lest the habits of the labour¬ ing classes should be degraded in the interim. When wages are considerably reduced, whe¬ ther by a tax or otherwise, the poor are ob¬ liged to economise ; and should the coarse and scanty fare that is thus, in the first in¬ stance, forced upon them by necessity, become congenial from habit, no check would be given TAXES OX WAGES. G19 Note XXVL to population; the rate of wages would be permanently reduced, and the condition of the great mass of society be changed in so far for the worse. Inasmuch, however, as any thing that tends to lower the habits of the bulk of the people, or to reconcile them to a lower standard of com¬ fort, should be carefully guarded against, taxes on wages would seem to be highly objectionable, unless their produce were expended in hiring additional troops, or in removing labour from the market. And though expended in this way, it is very questionable whether they should be resorted to. It would be exceed¬ ingly difficult to convince any considerable number of labourers that the produce of a tax on wages, however laid out, ever reverted to them. They would see the immediate sa¬ crifice they were called upon to make, but they would see no more. I he rise of wages would be ascribed to causes which the tax would not be considered as promoting, but as counteracting. Such taxes would, therefore, be in no ordinary degree unpopular. And, besides, it is clear that if they are expended so as to raise wages—and otherwise they ought on no account to be imposed—they may as well be laid directly on the capitalists. If the latter do not pay such taxes at first, they must pay them at second hand. And though their effects were in other respects somewhat different, a prudent administration would rather choose to lay a direct tax on the em¬ ployers of labour than to tax them indirectly, by laying it in the first instance on the la¬ bourers. It is true that this direct mode of taxing capitalists is productive of no real advantage to the labourer ; but neither is it productive of any real injury to his employer; and the circumstance of its tending to lessen popular irritation, and to facilitate the impo¬ sition of the tax, is sufficient to make it be preferred. It is obvious, from these statements, that the real injury inflicted on the labourers by a direct tax on wages, expended in the way now supposed, consists not in its im¬ mediate but in its remote effects. By fall¬ ing on profits, its tendency is to diminish the power to accumulate capital; and when carried so far as to have this effect, it cannot fail, unless the stimulus previously given to population be at the same time diminished by the more powerful operation of the principle of moral restraint, to depress the condition of the labourers, and lower the natural rate of wages. II. The question respecting the influence of direct taxes on wages, is one rather of a theoretical than of a practical description ; for the unpopularity that would unavoidably at¬ tend such taxes will always, except under very peculiar circumstances, suffice to hinder their being imposed. But it is otherwise with indirect taxes on wages, that is, with taxes laid on the articles usually consumed by the labourers. These are imposed with compa¬ rative facility; and the extent to which they have been and may be carried, makes the question in regard to their influence over the condition of the labouring classes of primary importance. According to Adam Smith, with whom Mr. Bicardo concurs, the labouring classes can never be made to contribute any thing of im¬ portance to the public revenue. But despite the deference due to their authority, this opi¬ nion cannot be received without much modi¬ fication. The effect of taxes on necessaries is different according to the different situation of the labourers. It is plain, for example, that domestic servants, which are so very numerous in this and most other countries, contribute little or no portion of the taxes laid on the articles they principally make use of. Such taxes do not fall on them, but on their masters. Probably, indeed, were they carried to an improper height, they might make fewer servants be employed ; but except in so far as they operate in this way, the duties on sugar, tea, beer, soap, and other articles used by household servants, are wholly paid by those with whom they live.. Taxes on necessaries operate difterently in the case of the labourers who provide them¬ selves with lodging and subsistence. It is pretty certain, provided the country were in a prosperous state, that wages would in the end be raised proportionally to the amount of such taxes falling on the articles consumed by the labourers. But, for the reasons already stated, this rise is usually brought about by a slow and a difficult process. And there is in most cases a great risk in imposing or in¬ creasing taxes on necessaries, lest the wages of labour should not sustain a corresponding rise, and the condition of the labourers be in consequence depressed. A farther distinction must be made in esti¬ mating the influence of indirect, and also of direct taxes on wages, between labourers en¬ gaged by the day, the week, or other term, and labourers engaged by the piece, or at job-work. Taxes laid on necessaries or on wages make the latter endeavour to defeat their influence by increased exertions; where¬ as the former must principally or wholly trust to increased economy: and it frequently hap¬ pens that labourers by the piece are thus en¬ abled to meet, and even more than meet, the burdens imposed by the tax, without mate¬ rially, or indeed sensibly, diminishing their demand for necessaries and conveniences. Hence, in cases of this sort, a tax on wages, or on the necessaries consumed by the labour¬ ers, is wholly defrayed by them, its real eflect being to give more vigour to their industry. It therefore appears that the influence of taxes on wages, and of taxes on the necessa- G20 TAXES ON RAW PRODUCE — TITHES. Note XXVII. ries used by the labourers, differs very mate¬ rially under different circumstances. On the whole, however, we are inclined to think that it may, generally speaking, be concluded, that in Great Britain at least, taxes on ne¬ cessaries have not sensibly depressed the con¬ dition of the labouring classes ; and that while they have been partially countervailed by the increase of moral restraint, they have been in a far greater degree countervailed by the increased industry and frugality they have occasioned. NOTE XXVII. TAXES ON RAW PRODUCE-TITHES. m X he question respecting the ultimate inci¬ dence of taxes on the raw produce of the soil is one of .considerable nicety and difficulty. If land yielded no surplus to its possessors above the common and ordinary profit of the capital employed in its cultivation, the impo¬ sition of a tax on its produce, such, for ex¬ ample, as a tithe, would occasion an equiva¬ lent increase of price. The level of profit may be temporarily, but it cannot be perma¬ nently elevated or depressed in any particular branch of industry. And as there is no rea¬ son why agriculturists should content them¬ selves with a reduced rate of profit, when those engaged in other employments obtain a higher rate, as soon as a tithe was imposed they would set about transferring a portion of their stock to some more lucrative business; and this transference would continue until the diminution of supply raised prices to their proper level, and restored the equilibrium of profit. In such a state of things, tithe would certainly make an equivalent addition to the price of raw produce. But after various qua¬ lities of soil have been brought under culti¬ vation, and rents have been generally intro¬ duced, it is not so easy to trace the remote effect of tithes. They then appear to occa¬ sion a diminution of rent rather than a rise of prices, b arms which are free of tithe always bring a higher rent than such as are subject to that charge ; and it is naturally concluded that, were tithes abolished, the depressed rents would be raised to the level of the others. For this reason, in an advanced stage of so¬ ciety, tithe has not been considered as in¬ creasing the price of raw produce to the con¬ sumer., but as falling on rent, and diverting a portion of it into the pockets of its rightful owners, the clergy and lay impropriators. “ Taxes upon the produce of land,” says Dr. Smith, “ are in reality taxes upon rent, and, though they may be originally advanced by the farmer, are finally paid by the landlord. When a certain portion of the produce.is to | be paid away for a tax, the farmer computes, as well as he can, what the value of this por¬ tion is, one year with another, likely to amount to, and he makes a proportional abatement in the rent which he agrees to pay to the landlord. There is no farmer who does not compute, beforehand, what the church tithe, which is a land-tax of this kind, is, one year with another, likely to amount to.” (Ante, p. 377.) Clear, however, and conclusive as this statement appears on a first view, it is only under certain conditions and limitations that it holds good. It has been repeatedly shown that a very large proportion of the farm pro¬ duce grown in every extensive country, is raised, by means of capital laid out on the land in the view merely of obtaining the or¬ dinary rate of profit at the time, and without its yielding any rent. It must also be ob¬ served, that the cost of this portion of the required supply of farm produce determines the price of the rest: for this portion is raised under the most unfavourable circumstances ; and unless its producers were repaid their expenses and profits, it would not be brought to market, and a scarcity would ensue. But when a tithe is imposed, it affects, of course, in common with others, the growers of this portion of the required supply. Inasmuch, however, as they pay no rent, it is clear they cannot throw the burden of tithe on a landlord ; and as they would not conti¬ nue in their business unless they obtained the same rate of profit as their neighbours, it appears unavoidably to follow, that either the price of corn must rise proportionally to the tithe, or that the former supply will n^ longer be brought to market. This last is Mr. Ricardo’s theory of the operation of tithe. But though exceedingly ingenious, the same remark is applicable to it as to Smith’s, that it is only under certain conditions and restrictions that it is correct. It is clear, for example, that the effect ascribed by Ricardo to the levy of a tithe depends, 1st, on the demand for corn, or its consump¬ tion,, remaining about the same after the im¬ position of the tithe as before ; 2d, on the tithe being made to affect all, or nearly all, the land of a country; and, 3d, on its being exacted from such foreign corn as may be imported. If any one of these conditions be wanting, Ricardo’s conclusions will be more or less vitiated ; the tithe will not then occa¬ sion an equivalent increase of prices, nor fall wholly on the consumers. 1. Suppose, for the sake of illustration, that the mean price of corn in a country not affected by tithe, and which imports none from the foreigner, is 50s. a quarter ; and suppose that a tithe, or duty of 10 per cent, is imposed on the corn raised in that country: were the demand for corn the same after the levy of the tithe as before, it is clear, on the 621 TAXES ON RAW PRODUCE—TITHES. Note XX t \ II. principle already laid down, that its price would rise to 55s. But unless the consump¬ tion had been previously reduced to a mini¬ mum, it is not reasonable to suppose that the demand should continue the same j it might not, indeed, and, it is most probable, it would not be reduced in proportion to the tithe, but | in some less proportion, as, perhaps, a twen- | tieth part. Instead, therefore, of prices rising in exact proportion to the tithe, or 5s. a quarter, they would most likely rise to only half that amount, or 2s. 6d. But as this rise would not sufficiently indemnify the cultiva¬ tors, they would relinquish, in some degree, the cultivation of inferior lands; and as rent is determined by the extent of land under cul¬ tivation, the result, on the whole, would be, that half the tithe would fall on the consum¬ ers, by a rise of prices, and the other half on the landlords, by a reduction of rents. 2. But suppose that the half only instead of the whole of a country is subject to tithe, and let us endeavour to trace the effects it would then have. In this case, it is plain, inasmuch as only half the cultivators are af¬ fected by the tithe, that though, to escape its pressure, they should restrict their cultiva¬ tion a tenth, the supply of corn would only be reduced a twentieth part; and prices, sup¬ posing the demand to continue stationary, would only rise in that proportion, or 5 per cent. They would not, however,, rise to that extent; for every increase of price, how¬ ever slight, has always some effect in les¬ sening consumption. But to "whatever ex¬ tent prices might rise under the circum¬ stances supposed, whether to a fourth or to a third part of the tithe, for they could not rise to half its amount, it is contended that this rise would, by extending cultivation over the untithed lands to the same extent that it is contracted on those that are tithed, raise the rents of the former proportionally to the diminution of those of the latter, so that the , burden of the tithe would still principally fall on the public. But the truth is, that in a case of this sort, it would be next to impossible to determine the practical operation and influ¬ ence of tithe w r ith any degree of precision. If the various qualities of land were ot limited extent, and each differed by a well-defined outline from the immediately contiguous qua¬ lities, the previous conclusion would hold good. Such, however, is not really the case. Lands of different qualities differ from each other, like the colours in the rainbow, by im¬ perceptible degrees. W hatever, therefore, may be the limit to which tillage is carried at any given moment in an extensive country, the least rise of price is sufficient to make lands of the next degree of fertility be brought under tillage, or to make additional capital be laid out on the cld land, or both. But it is extremely doubtful whether so trifling a rise of prices as would be caused by the im¬ position of a tithe, would, under the circum¬ stances supposed, have any sensible effect on the rent of the untithed land. It is needless to waste the reader’s time by endeavouring to prove, that if a country sub¬ ject to a tithe be in the habit of importing a considerable supply of foreign corn duty-free,^ such importation will throw the burden oi the tithe wholly on the landlords. Every one must see that in such case, the home cultiva¬ tors being unable to limit the quantitv of pro¬ duce brought to market, the tithe will have no influence over prices. According to the returns obtained under the income tax act, the total annual value of all the land of England and W ales, in 1815, is estimated at 29,476,840/.; of which lands of the annual value of 9,904,378/. were wholly tithe-free, while lands of the annual value of 856,183/. were tithe-free in part, and other lands of the annual value of 498,843/. paid only a low modus. So far, therefore, is it from being true that all, or nearly all, the land of England and Wales pays tithe, that it appears that about a third part is exempted from this burden : and if to the tithe free land of England and Wales we add the whole of Scotland, it may be safely affirmed that more than half the cultivated land of Great Britain is unaffected by tithe. It is obvious, therefore, for the reasons already stated, that tithe in England, supposing it had no influence over consumption, and that foreign corn was excluded, or charged with a duty, could only raise prices a twentieth part, or 5 per cent. But, inasmuch as it would somewhat lessen consumption, it would, under the circum¬ stances, most probably fall, in about equal portions, on the landlords and the public ; and were it not for the mode in which it is imposed, it would not have been sensibly felt by either. The truth is, that tithe is much more in¬ jurious from its indirect operation, and more unpopular from the mode in which it is as¬ sessed, than from the magnitude ot the bur¬ den it really lays on the public. It is imposed and collected in the most vexatious and irri¬ tating manner ; and has, in consequence, an incomparably greater effect in discouraging industry and exciting discontent than many heavier, but more judiciously assessed, taxes. It is said, by its apologists, to have the same effect, in as far as the interests of the farmers are concerned, as an equivalent amount of rent. But this is a most fallacious statement. Rent, when once fixed, continues the same during the currency of the lease. 1 hough an industrious and enterprising farmer should raise ten times the quantity of produce raised by a sluggard, his rent -would not thereiore be increased ; and he would reap, as he ought, all the advantage of his greater industry and intelligence. Such, however, is not the case with tithes. To the sluggard they are inva¬ riable, to the industrious man they become more and more oppressive, and increase with 622 EFFECT OF TAXES every fresh outlay of capital and labour. It is indisputable, therefore, that tithes operate practically as a premium on idleness, and as a heavy and constantly increasing tax on in¬ dustry. By preventing the cultivator from reaping the entire advantage of superior skill and increased exertion, they discourage his efforts, and contribute to render him indolent and indifferent. A farmer pays his rent wil¬ lingly to the landlord; but he considers the clergyman as an interloper, who, without having contributed in any way to raise the crop, claims a tenth part of its gross amount. The occupier of a farm, subject to this vexa¬ tious charge, never considers himself as real¬ ising the same rate of profit on his capital, as his neighbours in tithe-free farms; and so strong is this feeling, that Mr Stevenson, the well-informed author of the Survey of Surrey, states it is the common opinion in that county that a farm tithe-free is better worth 205 . an acre, than a tithed farm, equally favoured in soil and situation, is worth 13s. In this way tithes contribute indirectly and directly to raise prices—indirectly, by generating an in¬ disposition to apply fresh capital to the im¬ provement of the soil—and directly, by the positive addition they make to the expense of cultivating bad land. Dr. Paley, who cannot certainly be reck¬ oned unfavourable to the real interests of the church, says, that “ of all institutions adverse to cultivation and improvement, none is so noxious as that of tithes. A claimant here enters into the produce, who contributed no assistance whatever to the production. When years, perhaps, of care and toil have matured an improvement; when the husbandman sees new crops ripening to his skill and industry ; the moment he is ready to put his sickle to the grain, he finds himself compelled to divide his harvest with a stranger. Tithes are a tax not only upon industry, but upon that indus¬ try which feeds mankind; upon that species of exertion which it is the aim of all wise laws to cherish and promote.” 1 A just sense of the injurious influence of tithes in obstructing agricultural improve¬ ment, and involving the clergy in unseemly contests with their parishioners, had long excited a general wish among ay ell-informed parties for their commutation ; and this is now in the way of being effected under the provisions of the stat. 6 and 7 Will. IV. cap. 71. This act directs that the average value of the tithes in each parish during the seven years ending with 1835 should be ascertained, and distributed into equivalent quantities of wheat, barley, and oats, which are made a fixed and invariable rent charge upon the land; and the clergy are to receive the value of these quantities in all time to come, ac¬ cording to the current prices of the day. By this means the clergy are liable only to fluc¬ tuations in the value of corn ; and to these 1 Moral and Political Philosophy, chap. xi. in Jin. ON COMMODITIES. Note XXVIII. they would have been liable though no com¬ mutation had been effected. Commissioners were appointed to carry the act into execu¬ tion, and the tithes in a great number of pa¬ rishes have been commuted, conformably to its stipulations. M hen the commutation has been com¬ pleted, the invariable corn rent that will then be laid on the land, will be a new and strongly marked feature in our domestic economy. Had tithe been commuted a centurv, or even half a century since, it would have been a dif- fei ent matter. But considering the very ad¬ vanced and peculiar situation of the country at the aera of the commutation, and the fact that our average prices had been for many years considerably above those of the conti¬ guous continental states, it is pretty evident, in the event of our prices falling under the system of free importation to a greater extent than has been anticipated, that the fixed corn rent due to the tithe owners may have a very injurious influence over the interests of agriculture, and consequently over those of the public. We do not, however, think that there is much chance of these unfavourable anticipations being realised. But if they should, the commutation charge may be re¬ duced, or an adequate countervailing duty be laid on foreign corn. NOTE XXVIII. INCIDENCE AND EFFECT OF TAXES ON PAR¬ TICULAR COMMODITIES, AND OF AN AD VALOREM DUTY ON ALL COMMODITIES. ^ een prodigiously augmented ; and Smith’s emark, that “ Man is the least transportable pecies of luggage,” would now be singularly napplicable. The principal railways, such as hose leading from the metropolis to Manches- er and Glasgow, York and Edinburgh, Bris- ol and Exeter, Portsmouth, &c., are gigan- ic undertakings, and are not more remark- ible for the science and practical skill dis¬ mayed in their construction and working, lan for the vast sums expended upon them. This facility of communication has nearly *qualised the prices of similar articles in all )arts of the country. Local habits, preju- lices, and peculiarities of all sorts, are fast lisappearing. The race of originals is all but ixtinct. A respectable family in Penzance >r Inverness live almost exactly in the same ;tyle as a respectable family in London. Every thing is brought to a level. The ashions and the opinions of the metropolis 1 ire immediately diffused over the coun- :ry; while those that originate in the latter powerfully influence the former. And as the acilities of intercourse are extended with fo¬ reign countries, national prejudices and antipa¬ thies will be softened, and the securities for the 20 ntinuar.ce of peace and the progress of com¬ merce will be proportionally increased. But -“ medio de fonte leporum Surgit amari aliquid,”- The construction of railways has occasioned, or, at all events, has been accompanied with an amount of gambling, fraud, and embezzle¬ ment, unparalleled in the annals of industry, and highly disgraceful to the national charac¬ ter. No doubt, however, these odious prac¬ tices, which happily have been in most in¬ is stances ruinous to the parties engaged in them, will be eventually put down; and, when | this desirable consummation has been effected, the country will enjoy the advantages of the railway-system, without the corruption and villany with which it has been so largely al¬ loyed. - ( NOTE XXX. ADVANTAGES AND DISADVANTAGES OF THE FUNDING SYSTEM, COMPARED TVITII THE PLAN FOR RAISING THE SUPPLIES FOR A WAR, WITHIN THE YEAR, BY A CORRE¬ SPONDING INCREASE OF TAXATION. — SINK¬ ING FUND. ! The expenses necessarily incurred in con¬ ducting the government of a civilised nation in time of peace, rarely exceed its ordi¬ nary revenue. In time of war, however, the case is usually very different. When the independence and honour of a nation are at stake, proportional sacrifices must be made to maintain them. Hostile aggression and insult must be opposed and avenged ; but to do this, extraordinary funds are neces¬ sary ; and the inquiry, how they may be most advantageously provided, is plainly one of the highest importance. It was the common practice of antiquity to make provision in times of peace for the ne¬ cessities of war, and to hoard up treasure be¬ forehand, as the instrument either of conquest or defence, without trusting to extraordinary imposts, much less to borrowing, in periods of disorder and confusion. In modern times, this practice has been followed by the Canton of Berne, by Frederick the Great of Prussia, and a few other princes; and its policy has been commended by Hume. But Hume overlooked the fact of its being necessary, in order to form such a treasure, to with¬ draw capital from productive employments. And such being the case, its accumulation, by diminishing the industry, and, consequent¬ ly, the wealth and population of the accu¬ mulating country, evidently tends to render it less powerful. For these and other rea¬ sons, this practice is now generally admitted to have been founded on erroneous principles; and modern politicians and economists seem to be universally of opinion, that the increased ex¬ penditure occasioned by a war should be de¬ frayed either by a proportional increase of tax¬ ation, or partly by that means and partly by loans. The question, which of these modes should be adopted, has been long and warmly dis¬ cussed, and has given rise to the most con¬ tradictory statements. But this has arisen more from the partisan spirit displayed by those who have carried on the discussion, than from any real difficulty inherent in the subject. Neither party seems to have taken any very comprehensive view of the different bearings and incidences of the question. Proceeding on some general principle, which was perhaps doubtful in itself, and which, at all events, did not admit, in such a case, of being carried to an ex¬ treme, they have established either that the one or the other mode of providing for any extraordinary expenditure should be exclu¬ sively adopted. But it will be found that this is a question of balanced difficulties, and ! in which much depends on circumstances. At one time an increase of taxation may be the preferable mode of raising the supplies, while at another they should be raised by loan. On occasions when either plan may | be adopted with tolerable facility and with- i out danger, it would seem, for the reasons J 8 s 626 FUNDING SYSTEM. Note XXX. that will be immediately stated, that an in¬ crease of taxation should be preferred. It must, however, be acknowledged, that taxa¬ tion cannot be safely increased except by the well established government of a country cap¬ able of bearing a sudden and considerable augmentation of its burdens. When the go¬ vernment is insecure, or the country is already heavily burdened, a loan would seem to be the least hazardous way in which an emergency may be met. * If the facility with which money may be ob¬ tained were the only circumstance to be attend¬ ed to in comparing the borrowing system with the plan for raising the supplies within the year by a corresponding increase of taxation, the preference would, in every case, have to be given to the former. The regularity with which the interest is paid, the facility with which the right to receive it may be disposed of, and the hope which every one’s confidence in his own good fortune leads him to enter¬ tain of profiting by fluctuations in the price of the funds, make capitalists eager to ac¬ commodate governments with loans, and en¬ able them to obtain the largest supplies on the shortest notice, and with very little difficul¬ ty. The public, on their part, are equally well pleased with this system. Instead of being called upon to advance a large sum in taxes, they are only taxed to pay the interest of that sum. A burden of this limited extent, as it obliges no one to make any considerable addi¬ tional exertion, or sensibly to reduce his ex¬ penditure, is generally submitted to without a murmur. Such a mode of providing for the expenses of a war, seems to divest it of half its privations and hardships ; and we cease to be surprised that governments should have so universally resorted to a system which, while it furnishes them with the largest supplies, is so popular with their subjects. But the merits of the funding system are not to be determined merely by the facility which it affords for raising supplies. This certainly is a consideration wdiich should not be overlooked; but there are others of yet greater importance. The real in¬ fluence of a financial operation can never be ascertained by looking only to its immediate effects. We must extend our observations to those that are more remote, and endea¬ vour, if possible, to trace its permanent and ul¬ timate influence. Now, if we do this—if we attend, not to the transitory only, but also to the lasting effects of the funding system, we shall find that the facility which it affords of raising supplies, though sometimes an ad¬ vantage, is, sometimes also, one of its principal defects. It is visionary to suppose that any scheme for defraying war expenditure should ever be proposed, capable of protecting indivi¬ duals from the losses and privations inseparable from national struggles. However just and necessary, a war is always in itself an evil of the first magnitude ; and every nation which has the misfortune to be involved in it, must sooner or later experience the pernicious ef¬ fects of the destruction of capital, or of the means of future production, which it rarely fails to occasion. Now, it is clear that no scheme of finance can be bottomed on sound principles, which disguises these necessary consequences of war, and deceives the pub¬ lic with regard to their real situation. This, however, is notoriously the case with the fund- ing system. It is truly said, to require no extraordinary sacrifices at any particular pe¬ riod ; and in this respect it bears a close re¬ semblance to those most dangerous diseases which steal slowly and imperceptibly on the human constitution, and do not discover their malignant symptoms until they have fastened on the vitals, and vitiated the whole animal economy. There are no means by which the profusion and waste occasioned by a war can be countervailed, except by a greater degree of industry, and the prevalence of a severer spirit of economy among indi¬ viduals ; and these will be more likely to be practised, according as every one is made better aware of the real influence of war ex¬ penditure on his private fortune. The radi¬ cal defect of the borrowing system consists in its deceiving the public on this point, and in its making no sudden encroachments on their comforts. Its approaches are gra¬ dual, and almost unperceived. It requires only small immediate sacrifices. But it never relinquishes what it has once gained; while the necessity for fresh sacrifices, arising as well from their own, as from the ambition, injustice, and folly of their neighbours, con¬ tinues as great as ever. Such a system is essentially delusive and treacherous. It re¬ quires the continued increase of taxes; and before the public are awakened from their trance, and become aware of their actual condition, their property and industry are probably encumbered with a much larger permanent payment, on account of the in¬ terest of the public debt, than would have been required had they submitted to it at once, to defray the whole expenses of the war. Should a war cost twenty millions a-year, it may perhaps be said that it is indifferent, provided the rate of interest be 5 per cent., whether we pay the twenty millions at once by a proportional increase of taxation, or borrow them, and pay the lenders an interminable annuity of a million a-year; inasmuch as when interest is at 5 per cent., twenty millions in one payment, and an interminable annuity of a million, are of precisely the same value. But it is because these two modes of defraying war expenditure never have been, and never will be, considered equally Note XXX. FUNDING SYSTEM. 627 •expensive by the public, that the funding system is injurious. Suppose that the sup¬ plies are raised within the year, and that the share falling to a particular individual is 1,000/.: the wish to maintain himself in his former station, and to preserve his fortune unimpaired, would most probably stimulate him, on being called upon for this sum, to endeavour to discharge it, partly by an increase of exertion, and part¬ ly by a saving from expenditure, without suffering it to continue to encumber his property. But, by the system of loans, he is called upon to pay only the interest of this 1,000/., or 50/. a year; and instead of endeavouring to save the whole 1,000/., he is satisfied if he save the interest. The whole nation, acting in this way, save only the interest of the loan, or one million, and allow the principal sum of twenty millions, which i they would have either wholly or partly saved had they been called upon to pay it immediately, to remain as a mortgage on their property and industry. Men act thus, because they invariably reckon a war burdensome in proportion only to what they are at the moment called upon to pay for it in taxes, without reflecting on their pro¬ bable duration. It would be a hopeless un¬ dertaking to attempt to convince any one that a perpetual payment of 50/. a-year is as burdensome as a single payment of 1,000/. We entertain a vague idea that some future accident or revolution will relieve our properties from the burden of the perpetual payment; and, at all events, we consider it as certain that the greater por¬ tion of it will have to be defrayed by posterity. Indeed, this very circumstance of its throw¬ ing a portion of the expense of every contest on posterity, or its distributing, as it is called, its expense equally over a lengthened period, is one of the arguments principally relied on by the advocates of the funding system. But it is easy to see that it is wholly falla¬ cious ; and that the more the interests of posterity are protected, without injuring those of the present generation, so much the better. The plan for raising the supplies within the year would be advantageous to all parties, by generating an additional spirit of industiy and economy. And though it had no such influence, its adoption could do no possible harm either to the present or the future generation. It is obviously indif¬ ferent whether an individual whose share of the expenses of a war amounts to 1,000/., pays it at once, and leaves his heir 1,000/. less, or does not pay it, and leaves him 1,000/. more, subject to a constant charge of 50/. a year. Hence the peculiar advan¬ tage of the plan for raising the supplies within the year, consists in this, that while it entails no greater burden on individuals than the system of borrowing, and gives full liberty to every one who is so disposed, to remove a part of that burden from his own shoulders to those of his successors, it tends to make the public less inclined to avail them¬ selves of this power, and more disposed to make immediate sacrifices, and to become industrious and parsimonious. It is an error to suppose that it protects the interests of posterity, by laying any heavier burden on the existing generation; it protects them only by giving additional force to the ac¬ cumulating principle, and by stimulating individuals to maintain themselves in their station, and to preserve their capital undi¬ minished. Here, then, is the distinguishing criterion of the two systems. The funding system occasions only so much additional exertion and economy as may be required to produce and save the interest of the capital spent in warlike operations; whereas the system of raising the supplies within the year gives greater force and activity to this spirit, by stimulating the public to produce and save a sum equivalent, not to the interest only, but to the entire capital that has been spent. If, therefore, the question, with regard to the merits of the two systems, be decided by a comparison of their respective influence over national wealth—and this is admitted by Gentz, the ablest defender of the funding- system, to be the first consideration, and that which should always have most weight—there can be no manner of doubt that the preference must be given to the plan for raising the supplies within the year. Not only, however, would the raising the supplies for a w r ar w'ithin the year by means of additional taxes, add increased efficacy to industry and economy, but it would also, by making the public feel its whole pressure at once, render them less disposed wantonly to engage in expensive contests, and more dis¬ posed to embrace the earliest opportunity of making peace on fair and honourable terras. To a nation who defrayed all her extraordinary ex¬ penses by a corresponding increase of taxation, peace might be emphatically said to bring “ healing under her ■wings.” As soon as the period of extraordinary exertion had ceased, the taxes imposed to meet it would also cease. Prices would fall back to their natural level; and industry, relieved from the burdens of the war, would spring forward with renewed ener¬ gy. Had we always acted on this system, our taxes could hardly at this moment have exceeded ten or twelve millions a-year. And it is reasonable to suppose, had such been the case, that we should have been more power¬ ful ; more able to resist any attacks on our own freedom and independence ; and to inter¬ pose with more effect in defence of the liber¬ ties of others. 628 FUNDING SYSTEM. But how conclusive soever these statements and reasonings may appear, it is yet true that some very weighty objections may be made to the plan for raising the supplies with¬ in the year; and that its superiority to the funding system is not by any means so decid¬ ed as we might be at first disposed to con¬ clude. Among other objections to this plan, it has been said that it would be extremely oppressive on landlords and manufacturers, who are not generally possessed of large sums of ready money, were they obliged to make an immediate contribution of their entire share of the expenses of a war. Suppose, for example, that a manufacturer’s share of this expense amounts to 500/., and suppose further, that he can neither save this sum from his expenditure, nor withdraw it with¬ out great loss from his business ; the advan¬ tage of the funding system consists, we are told, in its relieving him from the necessity of making this payment, and enabling him to carry on his business as before, subject only to a deduction of 25/. a-year from his profits. But a little consideration will serve to show that this advantage, though not inconsiderable, has been overrated. If it be asked, how does the practice of funding relieve the manufac¬ turer from the necessity of making an immedi¬ ate payment of 500/. ? the answer is, by go¬ vernment or its agents going into the money market, and borrowing 500/. on his account, with the interest of which he is charged. And it may, therefore, be inferred that, had this practice been abolished, the manufacturer would have done that directly which he has done by deputy—that he would have gone into the market himself and borrowed the same sum. “ That there are persons disposed to lend to individuals,” says Mr. Bicardo, who has laid great stress on this argument, “ is evident from the facility with which go¬ vernment raises its loans. Withdraw this great borrower from the market, and private borrowers would be readily accommodated. By wise regulations, and good laws, the greatest facilities and security might be afford¬ ed to individuals in such transactions. In the case of a loan, A. advances the money, and B. pays the interest, and every thing else remains as before. In the case of war taxes, A. would still advance the money, and B. pays the interest, only with this difference, he would pay it directly to A. ; now he pays it to government, and government pays it to A.” 1 We cannot, however, help thinking that Mr. Bicardo has in this instance pushed an argument, good within certain limits, to an extent that will not hold. When govern¬ ment goes into the money market, and con- Art. Funding System , Supplement to the En¬ cyclopaedia Britannica, vol. iv. p. 422. Note XXX. tracts for a loan, it borrows, it is true, for those who would otherwise have to borrow for themselves ; but it does not negotiate a separate loan on account of each individual— it borrows for them in a mass, and pledges i the national credit in security for the entire loan. The sums raised on account of those whose security is comparatively indifferent, are consequently obtained on the best terms; and the total payment for interest is consider¬ ably less than it would have been had a series of loans been contracted by private indivi¬ duals. . In this respect, therefore, the system of funding is preferable to the plan for raising the supplies within the year. Undoubtedly, however, the principal ar- i gument against the plan for raising the sup- I plies within the year, and in favour of the funding system, is to be found in its ob- ! viating the necessity of making any sudden j or oppressive addition to the weight of taxation. It is difficult to say how much i the taxes imposed on a country may be ! augmented, provided due care be taken in j their selection and assessment, without their j operating injuriously on industry; but a| great and immediate increase of taxation j would, most likely, produce a dangerous re¬ vulsion, and give a serious shock to industry. | To fit a country for bearing a heavy load of < taxes, they should be gradually, and, if possi- I ble, slowly increased. A moderate increase j of taxation infuses a greater spirit of economy : into the people, and becomes a spur to in- j dustry and invention; whereas its sudden j and great increase has generally an opposite effect, and instead of producing increased j exertion and frugality, occasions the decline | of both. It is obvious, therefore, that the | policy of raising the supplies for a war by j means of a loan, or by an equivalent increase . of taxation, cannot be decided on general principles, but must always be determined j by reference to the state of the country at the I time. Whenever there is no risk of'preju¬ dicing industry, by increasing taxation, that plan should be preferred : and though a loan j should be required, to obviate too rapid an in- I; crease of taxation, the inconveniences attend- j| ing the accumulation of debt are so very great, ! that every practicable effort should be made | to raise the revenue to the highest limit to | which it can be safely carried; and to make it defray a part at least, if not the whole, of | the extraordinary expenditure. All wars oc¬ casion the destruction of capital: and the j question is, whether will this destruction be j sooner repaired by a corresponding increase of j taxation, or by resorting to loans ? Now, it is plain, that if taxation may be increased to j the level of war expenditure, without pro- voking discontent, or inflicting any mate¬ rial injury upon industry, the serious dis¬ advantages that result, as already seen, from FUNDING SYSTEM. 629 Note XXX. .he borrowing or funding system, will be ob¬ viated without any countervailing drawback, i The expenses of the war would, in such case, | oe directly distributed among the inhabitants, in proportion to their respective abilities. Of these the great majority would have little | difficulty in at once paying off their shares; while the loans contracted by those who might [ require to borrow, would be the private debts of the parties, and would, consequently, in the great majority of cases, be forthwith put into a state of liquidation. In a case of this sort, the real influence of war expendi¬ ture over the means and well-being of indivi¬ duals, would be made obvious. The decep¬ tion caused by funding would be avoided. What is, a national burden being distribut¬ ed among the individuals comprised in the | nation, each would have a plain and distinct I motive to exert himself to preserve his pro¬ perty or industry, or both, unimpaired and^ unencumbered. But by adopting the system of national loans, the debt is made an aggregate burden, affecting the public only. And indi¬ viduals looking only to the enormous mass of 700 or 800 millions, and ignorant of the portion peculiar to themselves, never once dream of its payment, except perhaps through the delusive agency of sham sinking funds. The fact that two such able and ingenious inquirers as Hume and Smith, should have entertained the strongest apprehensions of the mischievous influence of the public debt, when it was hardly a tenth part of what it now amounts to ; and that, notwithstanding its vast increase in the interval, the wealth and population of the country should have in¬ creased still more rapidly, has naturally enough generated a disposition to look w ith distrust on all such sinister auguries. It does not, however, appear, that Hume and Smith formed any false estimate of the in¬ fluence of a large public debt, but only that they did not lay sufficient stress on the cir¬ cumstances by which that influence might be (and by which, in the case of England, it has been) countervailed. None of them made sufficient allowance for the possible ef¬ fects of new inventions, and improved me¬ thods of production, in enabling a nation to support additional taxes 5 and none ot them, though in this respect Hume was the clearer sighted of the two, was suffi¬ ciently alive to the powerful influence which an increase of taxation has in adding new strength to enterprise and economy. The stupendous inventions and discoveries of Watt, Arkwright, Crompton, Wedgwood, and others, have hitherto falsified all the predic¬ tions of those who anticipated national ruin and bankruptcy from the increase of the public debt; but these inventions and dis¬ coveries might never have been made, but for the stimulus given to the public energies by the increase of taxation that, grew out of the funding system ; and though they had been made, there is no reason to suppose that they would have been so rapidly introduced, or that they w’ould have been so much per¬ fected and improved in so short a period in the absence of this stimulus. It is impossible, perhaps, in estimating the progress of this country since 1760, to say how much is to be ascribed to the desire of rising in the world, and how much to the fear of being thrown down to a low r er station by the increase of taxes. But it would not, we believe, be dif¬ ficult to show that the latter has had the greater influence of the two. But, despite the powerful countervailing influences now alluded to, there can, we ap¬ prehend, be little doubt, that we have carried the practice of funding to a vicious excess; and that a much larger portion of the sums required to carry on the American war, and the first half of the late French war, should have been raised by taxation. Probably, in¬ deed, the facility of defraying any extraordi¬ nary expense by means of funding, and the temptations which it consequently holds out to ministers to resort to it, rather than en¬ counter the clamour usually occasioned by the imposition of any considerable amount of taxes, is the greatest drawback on the practice. It is, in fact, almost sure to be abused. ‘‘ It would scarcely, ” says Hume, “ be more im¬ prudent to give a prodigal son a credit in every banking shop in London, than to em¬ power a statesman to draw bills in this man¬ ner upon posterity. 1 When, however, there are reasonable grounds for fearing that such an increase of taxation as would be required to defray the vffiole or any considerable portion of the war expenditure, would be injurious to industry, loans should be resorted to. Political con¬ siderations may also force recourse to be had to them. An increase of taxation is always unpopular ; and a w*eak or insecure govern¬ ment might not have power to levy any con¬ siderable additional amount of taxes, however able a country might be to bear their pres¬ sure. The rise of the funding system in Great Britain was mainly ascribable to circum¬ stances of the kind now r mentioned. It began under A\ illiam III., who, in this re¬ spect, was said to have imitated the practice of the Dutch. But the contraction of debt was not at that period a matter of choice but of necessity. Our great deliverer might truly have said, “ Res dura, et regni novitas me taiia eogunt Moliri.”- j Louis XIV., then in the zenith of his power, 1 Essay on Public Credit. 630 FUNDING SYSTEM. Note XXX. espoused the cause of the exiled family of Stuart, which was also abetted by a powerful party at home. To have imposed, in this state of things, fresh taxes, sufficient to defray the heavy expense of the contest in which we were soon after involved, would have been most impolitic ; inasmuch as it would have given the Jacobites an opportunity of traduc¬ ing the new government, of inflaming popular discontents, and perhaps of overturning the revolutionary establishment. The error did not consist in funding during the reigns of William III., Anne, and George I., but in continuing the practice, without any material abatement, after the revolutionary government had been firmly established; and when, there is every reason to think, a considerably larger portion of the war ex¬ penditure might have been provided for by increased taxation. During the .infancy of the funding system the interest stipulated for loans was very va¬ rious; but in the reign of George II., a different practice was adopted. Instead of varying the interest to be paid upon loans according to the state of the money market at the time, government generally borrowed at a uniform rate of interest and made the variations in the amount of the stock funded. Thus, supposing the market rate of interest to be 4J per cent., and that go¬ vernment wished to borrow in a 3 per cent, stock, they effected their object by giving the lender 150/. 3 per cent, stock for every 100/. advanced. Had the uniform rate of interest fixed upon by the government been about equal to or rather above the market rate of interest when the loans were con¬ tracted, this practice would not have been at all objectionable. But it was quite the re¬ verse ; the rate at which loans were usually funded being 3 per cent., while the market rate of interest during the American and last French wars, when the great bulk of the debt was contracted, varied from 4J to 5J and 6 per cent. This occasioned a corresponding in¬ crease of the capital of the funded debt, and j has been in all respects most injurious. The ! rate of interest has so fallen since the peace, that the interest on the 5 per cent. 4\ and 4 per cent, stocks has been universally reduced, the highest being now only 3J per cent. 1 2 But though the interest paid on 3 per cent, stock since 1776 be really as high, in consequence of the factitious increase of the sums funded, as any of the stocks now mentioned, the mar¬ ket rate of interest has not yet been so low as to enable it to be reduced. Unless, in¬ deed, the market rate were decidedly under 3 per cent., it is most probable, were an at¬ tempt made to reduce the interest upon the 3 per cent, stock, that government would be called upon to pay off a large body of dissen¬ tients ; that is, to pay them the principal sum funded, or from 130/. to 200/. for every 100/. originally received ! This funding at a low rate of interest by means of an artificial in¬ crease of capital has been by far the greatest error committed in the management of the financial affairs of the empire since the Re¬ volution. We believe we shall be decidedly within bounds if we estimate the present amount of the burden it has entailed on the country at from 7,000,000/. to 8,000,000/. a-year! Besides affording a ready means of pro¬ viding for the public expenditure on any emergency, the funding system is also of considerable use at all times. The pur¬ chase of funded property affords a ready me¬ thod of investment; and the ease with which it may be sold or transferred from one indi¬ vidual to another, gives great facilities for the successful prosecution of banking and other businesses, in which it is of importance to have ready methods of procuring the command of capital. The regularity, too, with which the. interest is paid makes it a desirable se¬ curity for individuals retired from or unac¬ quainted with business to be possessed of; so that, how injurious soever in various respects, it is not to be denied that a moderate amount of national debt is useful to a very consider* able number of persons. Some of those w’ho have argued against the practice of funding, have particularly de¬ precated borrowing from foreigners. Raynal contends that bargaining for loans from fo¬ reigners is, in effect, selling to them one or more provinces ; and he doubts whether it would not be a more rational practice to deli¬ ver up the soil, than to cultivate it for their 2 ~ — use.* Blackstone, 3 Hume, 4 and Montes 1 On the 10th October 1854 the 3j per cents are to be reduced to 3 per cents. 2 Histoire Phiiosophiquc, tome iv. p. G63. ed. 1780. quieu,° though they do not carry their objec¬ tions to this ridiculous extreme, join, notwith¬ standing, in condemning the practice. But a more unprejudiced inquiry has shown the fal¬ lacy of these objections. If a loan be decided upon, and if it may be negotiated with foreign¬ ers, on more profitable terms than at home, it is certainly most advantageous to transact with them. It is to no purpose to contend that, as the money borrowed is spent in war¬ like operations, it yields no revenue, while the national income is burdened with the pay¬ ment of the interest. Had the loan not been obtained from abroad, it must have been raised at home : and, therefore, it is obvious that though a transaction of this sort may force an annual payment to be made to a foreign coun¬ try, it saves, at the same time, an equivalent 3 Commentaries, vol. i, p. 329. 4 Essay on Public Credit, 5 Esprit des Lois, liv. xxii. cln 17. 9 Note XXX. FUNDING SYSTEM. 631 £ i \i portion of our capital, and gives us the means of making the payment. The objection in question, is therefore quite untenable. And, in the event of government resolving to raise a loan, sound policy will dictate that it be ne¬ gotiated wherever it can be had on the lowest terms, whether at home or abroad. These observations will perhaps be suffi¬ cient to enable an estimate to be formed of the advantages and defects of the plans we have been considering. The radical de¬ fect of the funding system consists in its making the loss occasioned by war expen¬ diture seem less than it really is, and in its not giving a sufficient stimulus to industry and economy. The plan for raising the sup¬ plies within the year, by a corresponding increase of taxation, is free from this defect; it makes every one immediately furnish his share of the public outgoings ; and thus, by making what would otherwise be a national burden, which no one would feel any parti¬ cular interest in discharging, a debt affect¬ ing individuals, it tends to infuse a more powerful spirit of industry, invention, and economy, into all classes. On the other hand, however, the system of funding gives no sud¬ den shock to industry. It habituates the public to bear their burdens; and by not call¬ ing on them to do too much at once, it per¬ haps enables them to do more in the end. Here, therefore, the advantage is on the side of the funding system. But when the govern¬ ment is powerful and firmly established, and the country wealthy, this advantage is not very material. One would not wish to speak with undue confidence on such a point, but there does not seem to be much doubt that an income tax of 8 or 10 per cent, might have been levied during the American war. And had an income tax of the same amount been imposed in 1793, it would have done far less injury to the manufactures and commerce of the country than was done by the great addi¬ tions that were then made to the duties of customs and excise ; while, by providing a con¬ siderable additional revenue, it would have obviated the necessity of funding largely, and on very disadvantageous terms, at the com¬ mencement of the war. The payment of the national debt can be effected only by applying to that purpose such surplus revenue as the treasury may have to dispose of. But it was contended by the founders of the sinking fund, established in 1716, and still more strongly by Dr. Brice and Mr. Pitt, the founders of the sinking fund of 1786, that if a certain amount of re¬ venue be applied to buy up stock, and the dividends on that stock be afterwards uni¬ formly applied to the same object, the sinking fund so formed will increase, at compound interest, so that the largest amount of debt may be defrayed almost without an effort. Dr. Price illustrated the operation of this principle by calculating the number of globes of gold, to which a penny laid out at com¬ pound interest at the commencement of our aera would now amount to. But though a cal¬ culation of this sort be theoretically true, it is practically false and absurd. The fact is that no sinking fund, even though it con¬ sist of a clear surplus revenue, ever ope¬ rates at compound interest. It is true, that, by constantly applying any amount of free or surplus revenue, with the dividends accruing on the stock purchased, to buy up additional stock, the reduction of the funded debt, is effected in the same way as if the surplus revenue were increasing, by an inherent energy of its own, at compound interest. But it is essential to know that, though the modus operandi be the same, the means are radically and totally different. The debt is reduced because a portion of the produce of the taxes is systematically applied to pay it off, and it cannot be otherwise reduced. To make capital increase at compound interest, it must be employed in some sort of produc¬ tive industry; and the profits, instead of being consumed as income, must be regularly added to the principal to form a new capital. It is unnecessary to say that no such sinking fund has ever existed. Those that have been set on foot in this and other countries, have all been supported either by loans or by the produce of taxes, and have never paid off a single farthing of debt by their own agency. It is clear, from this statement, that when there is no surplus revenue, there can be no sinking fund. Dr. Price, however, did not scruple to lay it down broadly, that to sus¬ pend the sinking fund during war, though the expenditure might then greatly exceed the income, would be the greatest imaginable folly. 1 And inconceivable as it may now appear, all parties in parliament concurred in the soundness of this opinion, and approved the policy of keeping up the sinking fund machinery throughout the whole of last war ! Hence, the loans for the service of the year had to be increased by the entire amount of the sums placed at the disposal of the sinking fund commissioners ; so that for every shilling’s worth of stock transferred to them by this futile proceeding, an equal amount of new debt had to be contracted, exclusive of the loss incurred through the expense of management, &c. For upwards of twenty years this pitiful juggle was kept up; parliament and the nation believing, notwithstanding the most decisive experience to the contrary, that it was rapidly diminishing the public deb. ! Dr. Hamilton, of Aberdeen, had the merit of dissipating this delusion, the grossest, certainly, that ever imposed on any peo¬ ple. He showed, in his work on the Na- 1 Appeal to the Public on the Subject of the National Debt, p. 17. ed. 1774. 632 FUNDING SYSTEM. Note XXX tional Debt, published in 1813, that the sinking fund, instead of diminishing, had really added to the debt; and he proved to demonstration, that the excess of revenue above expenditure is the only sinking fund by which any part of the national debt can ever be discharged. “ The increase of reve¬ nue,” he observes, “or the diminution of ex¬ pense, are the only means by which the sinking fund can be enlarged, and its oper¬ ations rendered more effectual ; and all schemes for discharging the national debt, by sinking funds operating at compound inter¬ est, or in any other manner, unless in so far as they are founded upon this principle, are completely illusory.” The loss that this de¬ lusive piece of quackery entailed on the coun¬ try during last war, has been estimated, ap¬ parently on good grounds, at about 600,000/.! j At length the folly of contracting debt, for no purpose other than to pay it off, became obvious to every one ; and the nominal i amount of the sinking fund began to be dimin¬ ished after the close of the war. In 1819, it was attempted to form a real sinking fund | of 5,000,000/., that is, to maintain a real sur¬ plus revenue of that extent. But as this j could not always be done, after various modi- I fications, an end was put to the entire system in 1829, the stat. 10 Geo. IV. c. 27. having enacted, that the sum applicable in future to the reduction of the national debt should be the surplus, if any, of the total revenue be¬ yond the total expenditure of the kingdom.* Account of the Principal and Annual Charge of the Public Debt at Different Periods since the Revolution.f . Debt at the Revolution in 1689. Principal, Funded and Unfunded. Interest and Management. £ 664,263 15,730,439 £ 39,855 1,271,087 Excess of debt contracted during the reign of Will. III. above debt paid off. Debt at the accession of Queen Anne in 1702. 16,394,702 37,750,661 1,310.942 2,040,416 , Debt contracted during Queen Anne’s reign. Debt at the accession of George I. in 1714. 54,145,363 2,053,125 3,351,358 1,133,807 Debt paid off during the reign of George I. above debt contracted. Debt at the accession of George II. in 1727. 52,092,238 86,773,192 2,217,551 2,634,500 Debt contracted from the accession of George II. till the peace of Paris in 1763, three Years after the accession of George III. Debt in 1763. 138.865,430 10,281,795 4,852,051 380,480 Paid during peace, from 1763 to i775... Debt at the commencement of the American war in 1775 Debt contracted during the American war. 128,583.635 121,267,993 4,471,571 5,088,336 ! Debt at the conclusion of the American war in 1784. Paid during peace, from 1784 to 1793. 249,851,628 10,501,380 9,500,907 249,277 Debt at the commencement of the French war in 1793. Debt contracted during the French war. 239,350,148 601,500,343 9,311,630 22,704,311 TotaJ funded and unfunded debt on the 1st of February 1817, when the English and Irish Exchequers were con¬ solidated ... 840,850,491 59,033,152 32,015,941 3,894,319 Debt cancelled from 1st Februarv 1817 to 5th Januarv 1849. Debt and charge thereon, 5th January 1849. 791,817,339 28,121,622 * F° r farther and more ample information in regard to the taxes mentioned in these notes, the Income-tax, the Funding system, &c., we beg to refer the reader to our treatise on “ Taxation and the Funding System,” published iu 1845. t This account has been made up partly from the table in Dr. Hamilton : s work on the National Debt, (3d ed. p. 100.): partly from the Pari. Paper, No. 165, sess. 1834 ; and partly from the An¬ nual linance Book for the year ending 5th of January, 1849, pp. 101, and 104. Note XXX. FUNDING SYSTEM. 633 T V Public Income and Expenditure of the United Kingdom, in 1846, 1847, and 1848. INCOME. HEADS OF INCOME. 1846. 1847. 1843. Customs and Excise— £ l £ £ £ £ £ (Foreign 1,207,392 » • 1,183,670 • • 1,233,438 Spirits < Hum 1,219,535 • • 1,316,140 • • 1,154,156 (British 5,949,151 • • 5,235,480 • • 5,4 oo,47 o Malt • • • • • 5,084,650 • • 4,456,738 • • 5,225,072 Hops . Wine . 286,265 • • 440,403 • • 392£38l 1,892,242 • • 1,704,319 • • 1,732,295 Sugar and Molasses 4,050,418 • • 4,594,650 • • 4,741,272 Ted •••••• 5,112,005 • • 5,066,494 • • 5,329,992 Coffee . 756,838 • • 746,436 • • 709,632 Tobacco and Snuff 4,319,088 29,877,584 4,263,702 29,008,041 4,350,733 30,324,446 Butter .... 136,543 • • 152,984 • • 140,105 Cheese . 88,2&9 • • 9U.207 • • 106,089 Currants and Raisins 470,263 • • 427,889 • • 478,662 Corn. 723,600 • • 13,912 • • 767,668 Silks. 235.377 • • 217,613 • • 274,506 Paper . 798,814 • • 768,934 • • 750,364 Soap. 965,836 • • 897,406 • • 991,523 Candles and Tallow 89,888 • • 77,236 • • 99,330 Coals, sea borne 1,659 • • 4,053 • • 4,193 Glass . 18,822 • • 11,448 • • 8,002 Bricks, Tiles, and Slates . 638,422 • • 681,329 • • 455,846 Timber . 1,133,672 • • 993,465 • • 737,235 Excise Licenses 1,086,155 • • 1,091,563 • • 1,103,436 Post-horse Duties 179,832 • • 167,951 • • 152,605 Hackney Carriages . • • • • 21,644 • • 70,409 Stage Carriages • • ' 83,223 • • 196,874 Railways .... Miscellaneous of Customs • • • • 61,948 804,468 • • 232,270 743,060 and Excise 845,706 7,412,677 6,567,273 7,312,737 Total Customs and Excise 1 37,290,461 • • 35,575,314 • • 37,637,183 Stamps— Deeds and other Instruments 1,962,101 • • 1,964,639 • • 1,754,883 Probates and Legacies 2,210,502 • • 2,364,273 • • 2,157,608 Insurance {*"">• • . • . 150,025 1,056,420 • • • • 180,4S0 1,077,012 • • • • 163,630 1,064,190 Bills of Exchange, Bankers’ 606,473 559,464 Notes .... 670,536 • • • • Newspapers and Advertise¬ ments . 349,950 • • 347,489 • • 363,353 Stage Coaches . 440,820 • • 272,983 — — Receipts .... 184,369 • • 191,969 • • lb5,2Sl Other Stamp Duties . 651,198 7,675,921 606,007 • • 7,671,325 536,641 6,785,050 Assessed and Land Taxes — Land Taxes .... 1,165,659 1,154,745 • • 1,158.245 Windows .... 1,626,060 • • 1,663,320 • • 1,659,676 Servants .... 203,105 209,164 • • 205 754 Horses. 305,680 • • 313,378 • • 304,380 Carriages .... 419,623 • • 428,739 • • 416,491 Dogs . 148,413 • • 150,629 • • 147,749 Additional 10 per cent. 284,262 • • 292,047 • • 289,041 Other Assessed Taxes 321,460 4,474,462 341,840 4,55*3,862 32/ fl2 o 4,509,461 Property and Income Tax . • • 5,543,682 • • 5,612,654 -• 5,485,164 Post Office .... • ■ 1,963,857 • • 2,181,017 • • 2,143,680 Crown Lands .... • • 394,492 • • 430,763 • • 362,501 Other Ordinary Revenue and 325,342 494,471 other Resources . • • 427,382 • • • • Money from China, under 539,305 Treaty of August 1842 • • 667,644 • • • • • • Excess of Expenditure over 1,034,919 Income. • • • • • • 2,880,138 • • Total Income, • • £58,437,891 • • £59,230,415 i • • £58.990.734 9 l G34 FUNDING SYSTEM. Note XXX HEADS OF EXPENDITURE. Revenue—Charges of Collection- ’Civil (Customs .... Departments \ Excise. Preventive Service, Land Guard, Revenue, Police Cruisers and Harbour Vessels . Stamps.. Assessed Taxes ......* Other Ordinary Revenues .... Superannuation and other Allowances . Total Charges of Collection on the Revenue Public Debt— Interest on Permanent Debt . . . Terminable Annuities .... Management. Interest on Exchequer Bills Total Debt .... Civil Government— Civil List—Privy Purse; Salaries of the Household and Tradesmen’s Bills The Allowances to the several Branches of the Royal Family, and the King of the Belgians-. The Lord Lieutenant of Ireland’s Establish. nient. The Salaries and Expenses of the Houses of Parliament (including Printing) Civil Departments, including Superannua¬ tion Allowances. Other Annuities, Pensions, and Superannu¬ ation Allowances on the Consolidated Fund and on the Gross Revenue Pensions, Civil List. Total Civil Government Justice— Courts of Justice . Police and Criminal Prosecutions Correction. Total Justice Diplomatic— Foreign Ministers’ Salaries and Pensions Consuls’ Salaries and Superannuation Al¬ lowances . Disbursements, Outfit. Total Diplomatic Forces— Armv XEffective; Charge y • i Non-effective; Charge . Total Army Navv fEffective; Charge y ' l Non-effective; Charge Total Navy .... Ordnance f Eff ect jJ e ; Charge . . . I Non-effective; Charge Total Ordnance . Total Forces .... Kaffir War. Opium Compensation. Bounties, Bank of England, drains for gold 01 \ p ™ vl0l '* 1y to 1772; causes of, 132, n. Sketch of its his¬ tory, 139, 141. Amount of its actual advances to government, 140, n. Extension of its charter in 1844, 140, n. Statement of dividends on its i stock from 1767 to the present time, 140, n. Sum received by, for management of the pun- 638 INDEX. lie debt, 140, n. Progressive issues of small notes by, 142, w. M hat its divided capital vas, 334. Its only exclusive privilege restrict¬ ed the number of partners in other establish¬ ments, 340 ; this privilege modified in 1826, 340, n. A revenue to be had from its manage¬ ment, suggested to government, 367, 368. Al¬ lows no interest on deposits, 489. Should re¬ ceive, and allow interest on, small deposits, 489. Paper of, bore a small premium over gold, for three years after the restriction on cash-pay¬ ments, 4b9, 490; consequences of renewing this restriction, were it thought of now, 491. °Her issues were, for more than a century, limited on the principle of their being liable to conver¬ sion into a given quantity of gold and silver, 492. Often misled by not attending to the fact that the absolute amount of currency affords no criterion of its excess, 4 93. Resumption of cash payments in 1821 prevented forgery, 493. Issues of, governed by the state of exchange ; ' iciousness of too many issuers of currency ; Bank of England exceedingly hampered in contracting issues by the present system of country banking, 494 ; this exemplified in the catastrophe of 1793, 495; which was not occasioned by the war, but simply by over issues, 495. Had, previously to 1793, no notes of less than 10Z. in circulation, 495. Events under which the crisis of her affairs in 1797 occurred, 496. Suspension of cash payments by, de¬ fended, 496. First fall of the value of her pa¬ per, compared with gold, began in 1800, 497. History of her affairs down to 1825, 497, 499. Great drain on her for gold, and catastrophe of 1825, 499. Since 1829 has issued no notes for less than 51 .; but this affords no security against overissue, panics, and bankruptcy, 500". Policy of establishing a single National" Bank of issue merely to exchange gold for notes, and notes for gold, and so to regulate the currency, 501. Extraordinary drain on her coffers in 1 So 9, another proof of the defective nature of our banking system, 505. Skilful measures of Sir R. Peel in 1844-5 for remedying these evils, 505. The Issuing and Banking Depart¬ ments of the Bank completely separated by his measure, 505. The close identification of her notes with the standard realizes the beau ideal of a paper currency, so far as she is con¬ cerned, 505. Answers to objections to new system, 505, 506, 507. More circumspection on the part of the Directors now necessary, 506. Weekly returns of her issues published, and her charter continued till twelve months’ notice after 1st August 1855, 506. Account of hei notes in circulation ; amount of bullion, securities, &c., from 1778 to 1832, 509. Her liabilities, assets, and surplus, 510. Accounts of her notes in circulation from January 1834 to August 1848, 510, 511. Bank of Ireland, Sketch of its history, 508. Its charter prolonged till 1855, 508. " Bank of Scotland. Its origin and capital, 508. Bankruptcy. Large number of Commissions of Bankruptcy issued against Country Banks in 1814, 1815, and 1816, 497. Bankruptcies of private banks more frequent in Ireland than in England, 508. Banks, joint stock and private, aggregate amount ' of notes in circulation by, from July 1841 to August 1848, 510. Number of Private, from 1776 to 1S14, 488. Amount of issues of joint stock and private, in August 1849, 494. Act I of 1708, prohibiting more than six partners, repealed, 499. Defects in the system of, 499 . Joint stock, established in London, for depo- I sits, 499. Progress and speculations of joint i stock banking, 500, 504, 505. Great number i of joint stock banks, and shares in very small, j 500,504, 505. Great danger of, 500. Banks of Manchester and Liverpool and Union Bank of Calcutta cited as fatal examples, 500. All issues of local notes from, should be suppressed, 501. Propriety of the establishment of one bank simply to exchange notes for gold and , gold for notes, 501. Fictitious importance 1 attached to the power to make local issues, i 501. Profits of local issues in Scotland seri- ! ously reduced by expense attendant thereon. 501. oluntary abandonment of the right fre¬ quent ^ in England, 501, 502. System of, in I America, the bane of the country, 502. All banks of issue should give security, 502, 503. Not being speedily affected by variations of ex¬ change, they pay little or no attention to them, 501. Scotch, amount of deposits in, in 18 48 about b0 millions, 489. Admirable measure of 1844- 5 for the regulation of, in the United Kingdom, 505. Their nature explained, 506. Returns and publication of the names of partners now periodically required, 506. Accounts, shew¬ ing the Paper Circulation of, from 1841 to 1848, 510-1. Banks of Deposit, 211. Those of Venice, Genoa, Amsteidam, Hamburg, and Nuremburg, ori¬ ginally of this description, 211. Public, are devices for economising the use of money, 486. Two classes of, 486. That of Hamburg, 486, 487. What they should be, 487. Private , security of, uncertain, 487. In what respect they have an advantage over public ones, 487. Banks for Savings. See Banks. Baptisms, burials, and marriages, number of, in England and Wales, from 1796 to 1830,inclu^ sive, 460. Barbarism and refinement of nations depend more on their wealth than on any other circumstance, xvi. No people ever distinguished in philo¬ sophy or the fine arts without at same time being celebrated for wealth and industry, xvi. Barbon, Mr., in his Discourse concerning coining the new Money lighter, 1696, detects several of the errors of Locke, xxxiii. Baretti, Mr., his estimate of the gold sent weekly from Lisbon to England; inferences from this, 244, 245. Bai ley. Amount of bounty on its exportation, as fixed by act of 1773, 512, n. (See also Coen and Grain.) Baring, Mr Alexander (afterwards Lord Ashbur¬ ton), his Inquiry into the Causes and Conse¬ quences of the Orders in Council, 1808, quoted, 550. Ban on, Professor, his History of the Colonisation of the Free States of Antiquity, 1777, referred to, 250, n. Barter. To buy or sell is merely to barter one commodity for another; gold or silver for corn, cloth, or any other article, xix. Basle, principal revenue of the state there arose from a custom on goods exported, 384. Baudeau, l’Abbe, his “ Lettres d’un Citoyen,” &c. INDEX. 639 cited, xliv. n. The Epliemerides first conducted by him, xliv. 3azinghen, M., his error as to the seignorage of France, 21, n. His Dictionnaire des Monnoies cited, 247. 3eaver wool, duty on exportation of, settled, at the instance of the manufacturers, in 1764, 297. Present duty on importation of, 297, n. Becket, Thomas, singular style of magnificence noted in, 182. Beckmann, his History of Inventions , quoted, [ 389, n. Belloni, Signer, his Essay on Commerce, 1750, xxxviii. Bell’s Travels referred to for the Journal of M. I de Lange , 307, n. i Belles Lettres, Adam Smith’s Lectures on, never published, iii. Bengal, low rate of wages in, 473. Colebrooke’s Treatise on the Husbandry of, referred to, 473. Bentham, Mr., his Defence of Usury , referred to, 158, n. Bequests. (See Wills.) Berne, flourishing situation of the farmers of, 176. Short theory of its republican institu¬ tions, 178. Derived a revenue from lending its treasures to foreign states, 368. Bexley, Lord. (See Vansittart, Mr.) Bills of exchange, extraordinary privileges of, 135. Their origin and use in commercial countries, 485. May be employed nearly in the same way as bank notes, 504. Points of difference and resemblance between notes and bills of exchange, 504. Illustration of their use given by Mr. Thornton, 504. The discount of bills at long dates a great stimulus to unsafe speculation, 550. Bindon, Mr., his translation, 1739, of the Essai Politique of M. Melon, xl. n. Birkbeck, Mr., his Tour in France quoted, 565. Birth, superiority of, cause of distinction of rank, 320. Births, their number to a marriage almost the same in England as in France, 467, n. Bishops, anciently chosen by the joint votes of clergy and people, 359. Blacks. Those that are free will never voluntarily undertake the drudgery of sugar planting, 613. Insufficient supply of labour in the West Indies since the emancipation, 613. Blackstone, Mr. Justice, his opinion of the nature and effects of the national debt, 421, n. His remarks on the evil effects of the statute de Donis, in establishing perpetual entails, quoted 557, cited 558, n. 561, n. cited 630, n. Blair, Dr., a pupil of Adam Smith’s, ii. Blake, Mr., his Observations on Exchange , 1810, referred to, 211. Board of Control. (See India Board.) Board of Guardians. (See Guardians and Poor Laws.) Bohemia, survey and valuation of, said to have been the work of more than a century, 376. Heavy tax on artificers in, 391. Bone manure, astonishing results of its applica¬ tion to the culture of turnips, 525. Bordeaux, trade of, the effect of its situation, 148. Borrowing, how governments are brought into the necessity of, 413. Security of property lends facilities to, 413. Methods of, in Britain, 413, 414, 415, 416. How effected in France and England, 417. Bose, M., his Dictionnaire d' Agriculture quoted, 565. Bouchaud, M., his work, De Vlmpot du Vingtieme sur les Successions, 1766, referred to, 388, n. Bougainville, his Dissertation on the Colonies of the Ancients , 1745, referred to, 250, n. Boulter, Primate, law passed during his admini¬ stration in Ireland to compel cultivation, 463. Bounties, origin of, in feudal times, xxiii. Bounty on the exportation of corn, 1688, its effect on the price thereof, 89, 90. Amount of, from 1741 to 1750, 91. Of bounties in general, 224. Trade carried on by, a losing one to the na¬ tion, 224, On corn, its effects, 224. Does not raise average prices perhaps to more than half its amount, 225, n. On production, might be more operative than on exportation, 229 ; instanced in the case of the herring and whale fisheries, 230. Relation of, to drawbacks, 232. On exportation of British and Irish linen, 290 ; ceased in 1834, 291, n. On the importation of materials of manufactures, first instance of, about 1700, on naval stores from America, 291; the second, on the importation of indigo from the Plantations, 291 ; others in succes¬ sion, 291, 292. On exportation of corn , bad effect of, 395. Amount of on different sorts of grain, as fixed by Act of 1773, 512, n. ; has the same effect in forcing the cultivation of poor soils as an increase of population, 519; why the most impolitic of any, 519 ; tends to dimi¬ nish the profits of stock, 519. What advantage a bounty gives to the landlords on the one hand, by extending tillage, it takes from them on the other by reducing profits, 519. To all other classes its injurious tendency is mani¬ fest, 519. By forcing exportation it hinders the plenty of one year from relieving the dis¬ tresses of another, 520. Herring fishery bounty withdrawn in 1830, 552. Brady’s Historical Treatise of Cities and Boroughs cited, 177, n. Brass unmanufactured prohibited from exporta¬ tion, 296. Now exportable, 296, n. Brazil and other South American States would have enacted navigation laws but for the wise offer of reciprocity on our part, 539. Bread, laws relative to assize of, in London and its environs, repealed by a local act (1815), 55 Geo. III. cap. 19, 66, n. Old statute called “ Assize of Bread and Ale *» referred to, regard¬ ing the price of wheat in 1262, 82. A tax on, proposed by le Beformateur, an anonymous writer, 396. Breda, treaty of, slighted by Charles II. in regard to the navigation laws, 535, n. Britain, increase of population of, greatly accele¬ rated since 1776, 32,n. Grain higher pricedfrom 1765 to 1820, than formerly, 34,n. Public debts of, sum paid yearly to the Bank of England for the management of, 140, n. Heavy taxation borne by, during the last fifty years, how far it has tended to impoverish, 153, ». \ alue, exclusive of the raw material, of manufactured goods annually produced in, 201, n. Employs, according to the census of 1821, nearly a third of her people in agriculture, 309, n. Abuses in the management of the roads of, 326. Revenue of, in 1784, 369; and in 1837, 369, 370, n. Land¬ lords of, how they gained by the land-tax, 373. Rent of houses and of land in, supposed to be equally taxed, 381. Rise of rents of houses in, 640 INDEX. 382. Stamp duties of, in 1784, 388; and in 1838, 388, ft. Beer and ale in, reckoned luxu¬ ries, 393. Taxes on necessaries in, 395. Lea¬ ther and soap, how taxed in, 395, and n. Manu¬ factures guided in, by the vicinity of fuel, 395. Was the policy of, to discourage spirituous li¬ quors, 403. Consequence of turnpike tolls becoming a resource of government, 404. Ex¬ pense of collecting the revenue in, more mode¬ rate than in most countries, 405. Her uniform system of taxation leaves the inland and coast¬ ing trade almost free, 407. Trade of, with Ireland, now almost on the footing of a coast¬ ing trade, 408, n. How her unfunded debt is contracted, 413. Mortgage of taxes in, 414. Debts contracted in, on annuities, 416. Growth of her debt, 418, 419 ; this debt not to be discharged by savings from ordinary revenue, 420. Her peace revenue in 1775, 420. The same, exclusive of Ireland, January 1837, 420, n. Her debt seems a fallacious kind of wealth, 421, ft. Her capacity to bear prospective bur¬ thens questioned, 423. Plan for extending her system of taxation to Ireland and all her colo¬ nies, 425, 426. Revenue which she might have thus raised, and the means of realising it, 426, 427, 4 30. Might derive a revenue from pos¬ sessions of the East India Company, 431. Prospects of in regard to her colonies, 431. Has not enjoyed the empire of these colonies, “but the project of an empire,” 431. Diffe¬ rent quantities of produce obtained in, from the best and worst lands in cultivation, 454, 455. Si¬ tuation of, as regards the means of increasing her people, compared with that of the United States, 455. Population of, in 1801, 1811, 1821, 1831, 1841, 463. Threatened with misery by immigra¬ tion from Ireland, 463 ; remedy proposed to meet this evil, 464. Labourers of, supposed to expend nearly three-fifths of their earnings on food, 472. Great expense of her metallic currency, 484. Banking system of, 485, 489. Number of seamen necessary foi’, on the break¬ ing out of a war, 542. Navy of, might be as formidable as at present though she did not possess a single merchant ship, 543. Should not follow but avoid the blind policy of France in prohibiting her commodities, and why, 547. Late reduction of duties in, on French wines, highly politic, 547. (See England.) Britannia Languens , or a Discourse on Trade cited, xxxvii. n. 598, n. British Linen Company’s Bank, stock of, below par in 1784, 341. Origin of, and amount of its capital, 508. British Merchant, authors of this work, who were merchants themselves, furnish the fullest expo¬ sition of the peculiar doctrines of the mercan¬ tile system, xxiv, n. xxxv, n. British shipping, how likely to be affected by the repeal of the navigation laws, 538, 539, 540, 541, 542. Brougham, Mr. (now Lord), his Inquiry into the Colonial Policy of the different European Powers, 1803, referred to, 250, n. Brown, Dr., his Lectures quoted as to the merits of Smith’s Theory of Moral Sentiments, v. Brown’s Agricultural Survey of Yorkshire cited, 598, n. Biowne, Dr. James, his note on the Navigation of the Egyptians , 552. Brutus lent money at 48 per cent., 43. Buchanan, Mr., his striking observations on the means by which subsistence is duly measured out in proportion to the supply of the year, 233, n. Buckingham, Duke of. (See Villiers, Sir Geo.) Buenos Ayres, price of an ox at, as stated by Ul- loa, 85. Bullion, Sir J. Child’s excellent observations on the laws preventing the exportation of, referred to, xxvii. Considerable quantities of, imported from the East Indies, 95, n .; instability of re¬ volutionary governments prevents any material additions to supply of, from South America, 96, n.; increase of from Russian mines and Califor¬ nia, 96, n. Drains on the Bank for, 132, n. De¬ posits of, 212. \ alue added to a piece of, by coin- age, 483. Its value in London, Amsterdam, or Hamburg, cannot, in time of peace, differ, in either, more than one-eight per cent, without causing its immediate transit, 490. Relation of, to paper, as indicated in a currency of that mate¬ rial, if properly attended to, sufficient to main¬ tain its level, 491. Convertibility of bank notes, as legal tender, into, proposed in 1817, by Mr. Ricardo, 492. Price of, the only safe test of the level of currency, 493. In the coffers of the Bank of England, how reduced in Febru¬ ary 1797, 496. High price of, (in bank notes) in 1809, 1810, caused the appointment of a com¬ mittee of the House of Commons, specially to inquire into its cause, 497. Efflux and influx of, to and from London, the only criterion of the amount of paper afloat, 501. Drain for gold and catastrophe of 1825, 499. Extraor¬ dinary drain in 1839, 505. Periodical returns of the gold and silver coins held by the Bank now required under Sir R. Peel’s currency measures, 506. Average yearly market price of, from 1800 to 1821, 511. Burials in England and Wales at various periods, 460. Burke, Edmund, stigmatized the collection of a surplus revenue from India as unjust and op¬ pressive, 579. No ground for censuring the East India Company on this head, 579. Burman, his Essay de Vectigalibus cited, 388, n. Burn, Dr., his History of the Poor Laws cited with approbation, 63, 64, 65, 598, n. Butchers’ meat, prices of, in England, in the reign of James I., 69 ; in 1763 and 1764, 70. C Cadiz, exorbitant profits of the merchants of, 276; correction as to this, 276, n. Mercantile manners of, compared with those of Amster¬ dam, 276. California, the accounts of the productiveness of the w r ashings there too conflicting (in 1849) to permit of any accurate opinion regarding them, 96, 97, n. Calvin, line taken by his followers on the subject of church government, 363. Cambrics, French, English duties on, 208, ft. Cameron of Locliiel, with a rental of 5001., went out, in 1745, at the head of 800 men of his own people, 183. Campbell, Dr., his Political Survey of Britain cited, 470, ft. Canada. (See America, British, and Colonies.) Canals, instruments of commerce, 325. If main- INDEX. 641 tained by tolls, or lock duties, will only be made where commerce requires them, 326. andles, duty on, 395; n. Repealed, 395. aiming, Mr., his resolutions respecting the trade in coin, 1st March 1827, 515, 516. They involv¬ ed a decided improvement in the laws of 1815 and 1822, but the bill founded on them miscar¬ ried in the Lords, 515, 516. Principal objec¬ tion to his graduated scale of duties, 516. This scale introduced a new element of uncertainty into every transaction connected with the corn trade, 516. ape of Good Hope, importance to commerce of the discovery of the passage to India by this way, 196. apital. Prodigious additions to the powers of la¬ bour by the application of capital to industrious undertakings, xlv. Influence on the value of commodities caused by the differences in the durability of the capitals producing them, xlvii, n. Gluts produced by capital being diverted into unprofitable channels, liii; not necessary in the rude state of society, 118, 119. Accumulation of, increases the quantity of in¬ dustry, 119. Definition of, 120, n. Two different ways in which it may be employed to yield a revenue, 120. Fixed, how it exists, and what it is, 121, 124. Circulating , of what it is com¬ posed, 122. Security of, great inducement to employ it, 123. Fixed , and that part of the circulating which consists in money, very like each other, 125. Of a country, not aug¬ mented by banking operations, 141. Of the accumulation of, 145. Proportion of to re¬ venue, regulates that of industry and idleness, 149. Increase of, immediately caused by par¬ simony, 149. Lent at interest, 155 ; quantity of this not regulated by the money which serves as the instrument of exchange, but by the annual disposable stock, 156. Different employments of, 159. Rate of projit , sole criterion of their comparative advantageous¬ ness, 159, n. Question stated as to its compa¬ rative productiveness when employed in manu¬ factures, or applied to the land, 162, n. Tax on, falls wholly on capitalists, 385, n. Applied to the land, may increase raw r produce, but not always in proportion to itself, 445 and n.; at what time, in spite of this, it is attracted to force additional produce, 446 ; how rewarded, under these circumstances, by the average rate of profit, 446. Least productive, of all which supply the same market, pays no rent, 4 47, 448. Its relation to wages, 470; to profits, 475. Account showing the rest or surplus capital of the Bank of England from 1778 to to 1840, 509, 510. Every bounty objection¬ able, as occasioning an artificial distribution of national capital, 519. The pro peritv of agri¬ culture depends on the capital and skill of the actual cultivators of the soil, 573. Capital of the East India Company, 576. Rate of profit not affected by the magnitude of the field for its employment, 605. apitalists, fall of profits erroneously attributed to the competition of, lvi. The wages of a capi¬ talist who superintends the employment of his stock, quite distinct from, though often con¬ founded with, his profits on it, 22, n. Interest of, not so clearly connected with the general interest as that of landlords and labourers, 116. It is the interest of them all to have the neces¬ saries of life cheap, as their labourers will then be contented with lower wages, 519, 520. An equal lax on profits must fall on them, 617. Carneades, a Babylonian and a teacher, sent by the Athenians on a solemn embassy to Rome, 62. Carriages, duties on, 396, and n. Carrying trade, Adam Smith’s distinction between it and the home and foreign trades imaginary, xlvi. Investigation of its advantages, 165,166, and n. Carthaginians, Reynier de l’Economie Publique et Rurale des Egyptiens, &c. cited, 553. Cash credits with bankers in Scotland, system of, 130. 508. What their real advantage to traders, 130, n. Occasionally granted by Scotch pri¬ vate bankers, 489, n. Cash payments, causes and effects of the suspen¬ sion and restriction of, in 1797, 496, 497. Causes and effects of the resumption of, 498. Catholic clergy, adequate provision should be made for them in Ireland, 525. Cato, his maxims on feeding cattle, 69. Cattle, the £>rohibition in 1664 of the importation of, from Ireland, denounced by Sir W. Petty, xxix. L T sed as money in early ages, 11. Cor¬ roboration of Dr. Smith’s statement on this point, 11, n. Of-the European colonies in America, their rapid and extensive multipli¬ cation, 103. It is late in improvement ere it be profitable to cultivate land for the sake of feed¬ ing them, 103. Trade in, might be rendered free with perfect impunity, 201; this effected as regards Ireland, 201, n. Prohibition of the im¬ portation of foreign cattle repealed by Sir R. Peel in 1842, 517. Groundless fears enter¬ tained at the time of the effects of this measure, 517. Census of Britain in 1831 cited, 461. Ceylon, the high duty on cinnamon limits the trade in it, 607. Chalmers’s Comparative Estimate of the Wealth of Britain cited, 495, n. Chamberlayne, Dr., his proposal to establish a Land Bank referred to, xlii. n. Champollion, his Precis du Sysieme Ilierogly- phique cited, 554, n. Chancellour, C’apt. Richard. (See Willoughby, Sir Hugh.) Chaptal, le Compte, his work, De rIndustrie Fran^oise, quoted, 571. Charles V. emperor, his remark on the compara¬ tive wealth of France and Spain, 92. Charta, maritima. (See Navigation Laws.) Charter, the great. (See Magna Charta.) Chartered banks, description of those in Scotland, 508. Notes in circulation, 510, 511. Chateauneuf, M. de, his account of the improve¬ ment in the health of France, and the retarda¬ tion of marriage there since 1775, 465. Cliateauvieux, M., the preface to Rigby’s transla¬ tion of, quoted, 451, and n. “ Cheap corn the best for farmers,” quoted, 519, 520. Cheques. (See Paper Money.) Child, Sir Josiah, one of the ablest writers in fa¬ vour of the mercantile system, xxiv. n. His New Discourse of Trade, 1668 ; greatly en¬ larged, 1690, xxvii, cited, 536. His excellent observations on various subjects specified, xxvi. xxvii. Mistakes the real cause of a low rate of interest in Holland, xxvii. The author of se¬ veral tracts in defence of the East India trade, T T 642 INDEX. xxvii. n. His treatise translated into French by M. de Gournay, in 1752, xl. His evi¬ dence as to the early pernicious effects of the Navigation Laws, 536. Chili, price of a good horse in, as mentioned by Mr Byron, 85. Horned cattle killed in, for the sake of the hide and tallow, 106. China, a rich, fertile, and populous, though sta¬ tionary country, 32. One of the causes of its stationary state, its despising commerce and limiting its intercourse with foreigners, 43. Interest of money in, is said to be 12 per cent., 43. Rank and wages of country labourers in, superior to those of artificers, 58. Cochin , state of agriculture in, 72. Dr. Smith’s erro¬ neous opinion of the wealth of, 87, n. Police of its roads, 328. Revenue of the sovereign of, arises from a land-tax or rent, 328. The East India Company enjoyed the monopoly of the trade to, down to 1834, 576. Doubtful whether this monopoly was profitable to the Company, 587, and n. Chinese, their contempt of commerce, 307. Are a nation eminently commercial, 219, n. Choiseul, Due de, tried the English method of ma¬ nagement on the parliament of Paris, and found it succeed, 359. Church of England. (See Clergy.) Church of Rome, industry and zeal of her inferior clergy, 354. Church of Scotland, recommendation of the Ge¬ neral Assembly in 1706 as to qualifications of parish schoolmasters, quoted, 595. Cicero, his mean opinion of commerce, xvii. Men¬ tions the prohibition of the exportation of the precious metals from Rome, xx. n. Cited re¬ garding the rate of interest at which Brutus lent money, 43. His report of Cato’s maxims on feeding cattle, 69. Cinnamon. (See Ceylon.) Circulation, account of the notes of the Bank of England in circulation from 1778 to 1840, 509, 510. Account of the notes of the Bank of Eng¬ land and of other banks of issue in the United Kingdom from 1841 to 1848, 510, 51 1. Total authorized maximum circulation of the United j Kingdom, 511. Cities, importance of, under the early feudal go¬ vernments, xxii, xxiii. Their progress after the fall of the Roman empire, 176. Inhabitants of, their servile state in ancient Europe, 177. Government of, in the middle ages, 177. In the Italian republics, 178. Power of the inha¬ bitants of, when near the sea or a navigable river, 179. Of Venice, Genoa, and Pisa, ag¬ grandised by the Crusades, 179. How their commerce contributed to improve the country, 181. Civil Government, Locke’s Essay on, quoted, xxxi, xxxii. Civil war in England raised the price of corn for a time, 89. Civilization, the principles of population the great cause of the advancement of the human race in, lii. Classes. M. Q tesnay's division of societyinto three classes, the productive, proprietary, and unpro¬ ductive, xl. Clearing House in Lombard Street, London, adopted by bankers for economising the use of money, 435, 466, and n. Compared to a pure deposit bank as resorted to by merchants, 486. Clergy. They having the direction of education in the middle ages, naturally excluded the princi¬ ples of commerce from the course of study, xvii. The unjust exemption of the French clergy from taxation vigorously attacked by Guilbert and Marshal Vauban in 1695 and 1707, xxxviii, xxxix. In all Christian countries, mostly educated from foundations, 60. Those of an Established church frequently highly re¬ spectable, though not popular, 354. Inferior, of the church of Rome, their industry and zeal. 354. Progress of, to power and influence in factious times. 355. Zealand exactions of, in- nocent where there are many sects, 356. Of every established church, a great corporation, 358. Their benefices necessarily held ad tv-; tarn aut culpam, 358. Must be managed by influence not force, 359, Assumed to them¬ selves the disposal of church preferments, 359. Growth of their power, 359, 360. Their tem¬ poral power destroyed by the same causes which affected the great Barons, 361. Of France rendered independent of Rome by the Prag¬ matic Sanction, 361. Lutheran, respectable, 363. Calvinistic, equality of, 363. Of Scot¬ land, circumstances under which they fan the spirit of fanaticism, 364. Usefulness and respectability of those of Holland, Geneva. Switzerland, and Scotland, 364, 365, 366. Pay of, should be proportioned to the nature of the service, 364, 365, 366, n. Of England; involved in unseemly contests with their pa¬ rishioners about tithes, 622. Climate. From the humidity of its climate, Ire¬ land is better suited for pasturage than tillage, 525. Clock cases, exportation of, prohibited, 296. Pro¬ hibition of their importation still in force, 296, n. Cloth, broad, prices of, in ancient and modern times, 113. Quality of, to be worn by labour¬ ers and servants, regulated by statute 3 Edward IV., 113. Coals, wood, and mineral, relative expense of, 77 ,n. Duty on their exportation in 1783, 297. Actual duties on them, 297, n. Coal-heavers in London, their high wages, 47. Coal mines, rent had from, 76. The least fertile, determine the price in others, 77, and n. Coasting trade. (See Trade.) Coin, various works on coin and coinage referred to, xxxiii, xxxvi, xxxviii, n. Origin and first! denominations of, 12. Debasement of, by low¬ ering the standard, 12. Arrangements of, in England, down to 1816, 18, n. Prohibition of exporting repealed in 1819, 20, n. Seignorage on, in France, 21, n.; in England at present,! 210, n. Debasement of, as estimated by Mr. Lowndes, in 1695, 210. In what circumstances it is melted, 246. Advantage of a seignorage on, 247 ; consequences of this to the Bank of I England, 247. An institution for facilitating commerce, 325. Of all nations, degraded by bankrupt and fraudulent expedients to pay the public debts, 424. Reasons for a seignorage on, 4S3. Of any country, when out of it, only | worth so much bullion, 484. No reason why I paper money, as legal tender, should be con¬ vertible into it, 492. Circulating with paper, may be depreciated, in relation to that of other countries, as well as the paper, 503. Coke, Lord, advocates freedom of trade, xxiii. n. INDEX. 643 Coke, Roger, his tracts refeired to, xxxvii, n. His Treatise on Trade cited, 536. Colbert, M., espouses the interests of the manu¬ facturers, xxiv. The year 1644, the date of the promulgation of his tariff, considered, though erroneously, by continental writers as the real era of the mercantile system, xxiv. His re¬ straint on importation not politic, 205. Cha¬ racter of him, and of his system, 299, 300. Colebrooke, Mr., his Treatise on the Husbandry of Bengal referred to, 473 ; cited, 582. Collection of the revenue, expense of, 406, and n. Colonial policy, examination of, 605. Dr. Smith on, cited as to effect of monopoly on, 605. Colonies do not depopulate the mother country: this argument conclusively stated by Child, xxvii. English North American, principal cause of their rapid progress, 163. Comparison of the circumstances which directed those of Greece and Rome, with those which occasioned the first European settlements in America and the West Indies, 249. Of Spain, 251, 254. Causes of the prosperity of new ones, 253. Those of the Greeks and Romans, their pro¬ gress, 254. Of the Portuguese, 255. Of the Swedes, 255. Of the Danes, 255. Of the Dutch, 256. Of the French, 256. Of the English in North America, and causes of their rapid progress, 256. Particular advantages which each colonising country derives from them, 266. Evil effects to Britain of the mo¬ nopoly of the trade of, 272; these effects and those of the colony trade simply, to be care¬ fully distinguished, 273, 274. Good effects of the natural trade of, to England, 275. Do¬ minion of, productive hitherto of nothing but loss to Britain, 277. Question as to relinquishment of authority over them dis¬ cussed, 277, 278. Question as to their tax¬ ation, 278. Authority of the Parliament over them, 279, 280. Roman, revolt of, 280. Show and splendour of commerce en¬ joyed by those countries which had settle¬ ments in America, and traded directly to the East Indies, 282. Exclusive trade with, how imperfectly effected, 282. Progress of those of Greece, in Sicily, Italy, and Asia Minor, cited as a proof of the principle of population, 4 54. Those of Spain and England have not in any way depopulated these countries, 457. The complaints of the colonists of injuries they have sustained from our navigation laws, now obviated by their abolition, 538 ; on that ground they have no farth°r claim to pro¬ hibitory duties, 538. Table showing the ship¬ ping and tonnage belonging to our colonies in 1825 and 1848, 541. Free trade with, advan¬ tageous to the mother country, 606. That with Canada forced and factitious, 606. It would be more advantageous could we obtain our cotton lrom one of our colonies, as any stoppage of our trade with the United States would lay us under serious difficulties, 607. Colonies have been highly advantageous to this, as to most old settled countries, 607. Speedy extension of, 607. Impolitic restraints laid on them, 608. No colonies should be retained in a state of dependence which are determined to govern themselves, 608. Much good to be expected from the colonization of Australia, 608. Se¬ paration from the mother country considered, 608, 609. Difficulties of effecting this without a rupture, 609. The God Terminus immove¬ able except by force, 609. The field they af¬ ford for the settlement of the surplus popula¬ tion of the mother country, their chief ad¬ vantage, 609. Account of the emigration to, from 1825 to 1848, 610. Causes of the rapid growth and prosperity of, 610. Great degree of equality among settlers in the Greek colonies, 611. Land in ours should be apportioned under certain conditions according to the capi¬ tal of the settlers, 611. Absurdly high prices of land in our colonies, and evils consequent thereon, 611, 612. The surplus price spent in conveying paupers thither, 612. Contrast be¬ tween our exorbitant prices and the moderate prices of land in the United States, 612. Ef¬ fect of this to carry all emigrants with capital to the latter, 612. Table shewing the extent, trade, population, &c. of our colonies, 614, 615. Colonists, English, in North America, their slo¬ venly management of their farms, as noticed by Kalm in 1749, 103. Columbus, his discoveries, 251. His triumphal return to Spain, 251, and resolution of the government in consequence, 252. State of America when first visited by him, 607. Columella, de Re Rustica, (quoted xlviii.) his di¬ rections for a cheap enclosure, 70. Recom¬ mends the planting of vineyards, 71. States that the feeding of Turdi was common, 103. Cited on the unprofitableness of the labour of slaves, 172. Comber, Mr., his treatise on national subsistence quoted, 512. Combination of Employments. (See Labour.) Combinations of masters ; combinations of work¬ men, 30. Laws against voluntary , among workmen, repealed by stat. 5 Geo. IV. cap. 95, 30, «. 472. A just and wise measure, 30, «. 472. No workman has any right to dictate to others, 30, 472. Not generally attended with vio¬ lence, 30. More frequently occur in towns than in the country, 203. Commerce flourished in Greece under Pericles, xvi. Freedom of, powerfully urged by Sir Dudley North, in 1691, xxix. Addison’s admi¬ rable paper on, referred to, xxxiv. n. Treaties of, 24 3. Of works and institutions for facili¬ tating, 325 ; such as facilitate particular branches of, 329. Facility which it derives from the use of bills of exchange, 485. Rapid advance of, after the peace of 1763, 495, 512. The interests of agriculture, and of commerce and manufactures inseparable, 526. The true line of a government with respect to, most ably pointed out by Mr. Baring, (Lord Ash¬ burton) 550. The discovery of new channels of, has no effect on the rate of profit, 606. Commerce de la Hollande , quoted, 535. Commerce dcs Ptolemees (Ameilhon’s) quoted, 553. Commercial Bank of Scotland,—its origin and capital, 408. Commercial Dictionary (M‘Culloch’s) cited 94, n. 115, n. 403, n. 542, n. 552, n. 587, n. Commercial treaty with France in 1786. Pre¬ liminary reflections suggested by, 545. Prin¬ ciples of, as applicable now as then, 547 and n. (See also Treaties.) Commodities, mistaken views of Paeon, Mun, Child, Locke, Harris, &c. as to the policy of importing durable in preference to rapidly 644 INDEX. perishable commodities, xxvii. Sir. W. Petty, one of the first to lay down the doctrine, though but incidentally, that their value is de¬ termined by the labour required for their production, xxviii. Smith’s erroneous doc¬ trine as to the circumstances which determine the value of, xlvi. Price of, in ancient times, writers regarding, frequently misled by three different circumstances, 83 ; it varies, recipro¬ cally, with the real value of the metallic money by which they are measured, 482. Quantity of brought to market, its effect on the value of money when supply is limited, 482. Effect of Taxes on particular ones considered, 622 ; and of an ad valorem duty on all, 623. Commonwealth, Hobbes on the Nutrition and Procreation of a, quoted, xxxi. Commutation of tithes. (See Tithes.) Companies of merchants, origin of, 329. Ruled by the corporation spirit, 330. Enumeration of those existing in Britain when Dr. Smith wrote, 330. Regulated companies, remarks of Sir Josiah Child on them, 331. Joint Stock, how they differ from regulated, 333. Considerations on the East India trade, quoted, xxxiii, xxxiv. Constitution. The freedom of the British, one reason of our commercial and manufacturing superiority, 537. Consumers.—They pay the tax laid on the pro¬ fits of a particular business, 617. Taxes on luxuries fall wholly on consumers, 623. Consumption of commodities, tax proposed by Sir Matthew Decker, by way of licence for, 396. By the inferior, greater than that of the superior ranks, 401. Taxes on, fall as light on the people of Britain as on those of any other country, 407. Effect of increase of price in lessening consumption, 621. Contracts. Law of, loose among barbarians, 43. Contribution Fonciere. Number of properties in France charged to it at different periods, 567. Its unequal and injurious operation, 616. Controle, the, a registration tax in France which was much complained of for its abuses, 390. Controversy. A violent one carried on some years previously to 1700 as to the importation of East Indian silks and cotton goods, xxxiii. Conveniences. Smith shewed that wealth con¬ sists not of gold and silver, but of the various necessaries, conveniences, and enjoyments of human life, xlv. Copartneries, private, in what they differ from regulated and joint stock companies, 333. Copenhagen, one of three cities in Europe which may be considered as at once court residences and trading towns, 149. Copper coin, how far a legal tender in Britain, 18. Its price in Japan influences its price in Europe, 77. Corn, bounty on the exportation of, 1688, its ef¬ fects on prices, 89. Fall in the value of, in France, in proportion to silver, noticed by Dupre de St. Maur, Messance, &c., 91. A- mount of bounty on, from 1741 to 1750, 91. Price of, may fall in certain circumstances, though it has a natural tendency to rise in the progress of improvement, 105, and n. Not a measure of real value, 107, n. Money price of, has risen in Poland, though a country as beggarly as it was before the discovery of America, 110. Enhancement of its price in times of moderate plenty, perhaps affects the poor less than the artificial rise in other arti¬ cles caused by taxation, 112. Trade, freedom of, can little affect the interest of the farmer. 202, 528. Never raised in price to the whole amount of a bounty on exportation, 225, n. 521. Money price of, does not regulate that of other things, 226, n. Bounty on the ex¬ portation of, compared to the restrictions on exporting gold and silver in Spain and Portu¬ gal, 228. This bounty tended to lower profits, 228, w. Branches of trade in, 233. Interest of the inland dealer in, and that of the consumers of, exactly the same, 233 ; striking remark of Mr. Buchanan on the consolatory truth of this view r , 233, n. Scarcities of, not caused by com¬ binations among the dealers, 234. Popular odium in years of dearth, against the dealers in, tends to degrade their profession, 235 ; an¬ cient legislation of Europe seems to have en¬ couraged this odium, 235. Importer of foreign for home consumption, what, 239. Exporter of, for foreign consumption, what, 240. Laws concerning, compared to those which regard religion, 241. Carrying trade in, what, 241. System of bounty laws, deserves none of the praises bestow'ed on it, 241. Bounty on expor¬ tation of, bad effects of, 395. Increased supply of, obtained by gradually increasing applica¬ tion of capital with a gradually diminishing return, 445. Its exchangeable value rises by increased demand from increase of population, 446. Average quantity of, raised per acre, 447. Importations of foreign, between 1773 and 1791, caused by a rapid increase of manu¬ facturing population, 512. Trade to Ireland made free in 1806, 513. From Canada to pay half duties by the laws of 1814, 514. Admitted in 1826 on the responsibility of ministers, at low' duties, 515. Consequences of its artificial dearth, 520, 521. Quantity of, annually con¬ sumed in the United Kingdom, 512, 524. In many populous districts has become less im¬ portant than potatoes in the subsistence of the labouring classes, 571. Varying quantity of, produced on lands under cultivation in England, 519. “ Cheap best for farmers,” 520. Abolition of restrictions on importation of, by Sir R. Peel, 518. Estimate of the burden of restrictions on importation of, 523, 524. Remarks on the prices of, 522, 524. Imports of, from Ireland, great increase of, 524, 525. Duty which ought to be laid on foreign, 524, 526. Drawback ought to be allowed on ex¬ ports of, 524, 526 ; w’ould be the only equitable arrangement, 526. Taxes affecting the producers of, 525. Tables of prices, im¬ ports, and exports of, 529, 530, 531, 532, 533, 534. Immense increase in the imports of corn and flour from the L T nited States since 1825, 541. Average price of, in 1795, and three preceding years, 599. Fixed corn rent to which tithes may be commuted likely to be too high, 622. Corn Law's, proceedings which have taken place regarding them since 1791, w’ould have pro¬ bably induced Dr. Smith to modify his opinion as to the disinclination and unfitness of land¬ lords and farmers to enter into combinations, 59, n. Historical sketch of them from 1773 to their extinction in 1849, 511-518 ; idea that the act of 1773 was injurious to agriculture, INDEX. 645 I. . * J *. .1 illusory, 511, 512; clamour raised by the landholders against it, 513. That of 1791 produced by it, 513. That of 1804 the result of an agricultural mania, 513; produced the high prices of 1805, 513. Restraint on free trade in corn between Great Britain and Ire¬ land abolished in 1806, 513, n. Report in 1813 of a Committee of the House of Com¬ mons, appointed to inquire into the state of them, not adopted, 513, 514. That of 1814, imposing duties on importation, aban¬ doned, 514. Of 55 Geo. III. c. 26, its pro¬ visions, 514. Its pernicious effects, 515. The act of 3 Geo. IV. c. 60, its provi¬ sions, 515. Subsequent operations on, in 1825, 1826, 1827, 515. Act of 9 Geo. IV. c. 60, founded on Mr. Grant’s resolu¬ tions, 516. Mode of ascertaining and pub¬ lishing the average prices of grain under this act, 516. Peculiar evils attending a graduated scale of duties on corn, 516. Fixed, preferable to a fluctuating duty, 516. Origin of the Anti- Corn-Law League in Lancashire, 517. Fixed duty of 8s. proposed in 1841 but rejected, 517. Increased clamour against these laws, 517. Blow given to them by the Legislature of Canada, 517, 518. Success of Sir R. Peel’s measures of 1842 and 1845, virtually sub¬ verting the protective system, 517, 518. Their modification and eventual repeal provided for by 9 and 10 Vic. c. 22, 518. Their principles, 518 ; as offering bounties on exportation, 518 ; ns restricting importation, 520. Influence of, in enhancing prices not so injurious as the fluc¬ tuations occasioned thereby, 521, 522. Protest of ten peers against the law of 1815 ; drawn up by Lord Grenville, 523. Latterly their burden diminished by improvements, 523. Advantage to be derived from a moderate duty on importation accompanied by a correspond¬ ing drawback, 524, 526, 528. Probable effect of their abolition in 1849, 526, 527, 528. Their total repeal perhaps the most politic under the circumstances, 528. Cornwallis, Marquis, his arrangement for the Zemindars or collectors of the territorial reve¬ nue in India, 580. His plans examined, 580, 581, 582, 583. His opinion on the taxation of India, quoted, 583, n. Corporate Bodies, representatives of, the most determined supporters of the monopoly system in Parliament, xxiv. Corporation Privileges. Excellent observations of Sir J. Child on, referred to, xxvii. Their effect overrated by Dr. Smith, 28, n. Laws, their effects on the workmen, 28. Principle of competition modifies even them, 54, n. Of towns, their origin, 177. Corsica, state of agriculture in, 566. A Corsican rather starves than sells land, 566. Statement by the British Consul on this subject, 566, 567. Corvees. Abolition of this and other oppressive imposts of the greatest service to agriculture, 565. Cost of Production. (See Price.) Cottagers. Their anxiety to possess slips of land, 573, 597. Cotters, a set of out servants or agricultural labourers in Scotland, 53. Cotton,immense increase in the imports of, since ! 1825, 541. Cotton manufacture, controversy as to the im¬ portation of East India cotton stuffs previously to 1700, xxxiii; not alluded to by Dr. Smith, 114, n. Mr. Baines’ History of, referred to, 115, n. Exports of, to India, in 1814 and 1845, shewing the vast increase, 586, 587. It would be most desirable, to prevent the chance of its interruption, that we should derive our cotton from one of our own colonies, 607. Cotton, Sir Robert, his speech at the council table y 1641, admirably exposes the injustice of de¬ basing the standards of coin, xxxviii. Country, the inhabitants of, cannot easily com¬ bine together, 57. Their intelligence, 58, and n. Country banks, many of them partly banks of deposit, and partly trading concerns, 487. Their mode of doing business, and the security they afford, 487, 488. Their vicious and de¬ fective system aggravate the inconvenience re¬ sulting from any contraction of the currency, 499. First great reduction of the paper of, took place in 1793, 494, 495. Rapid and ex¬ tensive growth of, after the American war, 495. Wide destruction of, in 1793, and its disastrous consequences, 495; previously to this crisis, had no notes of less than 5 1. in cir¬ culation, 495; this shock caused by the un¬ substantial foundations on which many of them rested, 495. Issues of, rapidly increased subsequently to Mr. Vansittart’s (now Lord Bexley) famous resolutions, 497. Number of, which stopped payment in 1814, 1815, and 1816, 497 ; causes of their destruction, 498. Conduct of, in 1825, 499. Account of their notes in circulation from 1841 to 1848, 510, 511. Measures of 1844 with regard to, valu¬ able, 505 ; these measures stated and examin¬ ed, 506, 507, 508. Cours d ’ Economic Politique (Storeh’s), quoted, xxiv, xxv; cited 172, n. 487, n. 490, n. Court of Session. Decisions of heritors and Kirk-session, as to poor in Scotland, review- able by this Court only, 601. The Board of Supervision in Edinburgh now forms an intermediate check, 605. Cragius de Bepublica Lacedoemoniorum , cited xvi, n. Credits. (See Cash Credits.) Crews. Table shewing those belonging to our shipping in 1825 and 1848, 541, Those of the northern ship-owners larger compared to the burthen of their ships, 541. Crisis of 1847 , a consequence partly of the railway mania, and partly of the failure of two potato crops, 507. Its pressure alleviated by the ope¬ ration of Sir R. Peel’s currency measures, 507. Croix, M. de St., his work, Be VEtat et du Sort des Anciennes Colonies , 1779, referred to, 250, n., cited, 611, n. Crops of wheat and potatoes, comparative varia¬ tions of, 469. Rotation of, impossible on French or Irish farms, 569. Crown. (See Sovereign.) Cruelty. Augustus Caesar’s prompt punishment of Yedius Pollio for cruelty to a slave, 264. Cuba, inhabitants of, their ignorance of the value of gold, when first visited by the Spaniards, 80. Cullen, Dr. Adam Smith's letter to him on the mode of granting literary and scientific ^de¬ grees in universities, quoted, 588, 589, 590, 591. Thomson’s Life of Cullen referred to, 588, 646 INDEX, 591, ft. Extract from translation of his Latin discourse, with regard to degrees, 593 , 594 . Cultivation. (See Agriculture.) Curates, their situation in England in the 14th century, 60. Act 57 Geo. III. c. 99, (1817) fixes the minimum of their pay at 80?. per an¬ num, 60, n. Currency. Account shewing the average value per cent, of the currency estimated by the price of gold in each year from 1800 to 1801, and of the average depreciation per cent., 511, 518. (See Money, Banks, and Paper.) Customs, consolidation of, acts relative to, in 1787, and, lastly, in 1834, 221, n. Duties of, what they are, 397. In ancient times in Eng¬ land, 397. How they came to be laid on im¬ portation, 398. How modified by drawbacks and bounties, 398. High duties of, encouraged smuggling, 398. Gross and net produce of, in 1755, 398. Warehousing system pointed at, 400 ; its advantages, 400; subsequent adoption of this system commended, 401, n. Net produce of, at January 1837, 406, n. Laws, if extended to the colonies, ought to be accompanied with an extension of the free¬ dom of trade, 425. Duties on about 420 ar¬ ticles abolished by Sir R. Peel, in 1845, 518. Cyder, duty on repealed, 402, n. D. Dairy, the business of, when and how prosecuted as profitable, 104. Dalrymple, Sir John, his estimate of the entailed lands in Scotland in his time, 558. Davanzati, his works referred to and characterized, xxxvii. xxxviii. Davenant, Dr., one of the ablest partisans of the mercantile system, n. xxiv, xxxiv, xxxv. Charac¬ ter of his writings, xxxv. Davies, Sir John, his Discoverie of the Causes why Ireland was never entirely subdued by the English, quoted, 570. Dealers, operations of the capital of wholesale and retail dealers, 161. Dearness, monopoly the parent of, 521. Dearths not caused by combination among dealers in corn, 234. Deaths, their proportion to births in various countries of Europe, as estimated by M. de Chateauneuf, 465. Debates in the House of Commons, cited, 598. Debts, public, how they originate, 413. Tempta¬ tions to contract them by which governments are actuated, 417, 418. Have been absurdly represented as benefits, 419. Represent only capital spent, 421, and n. Expedients for pay¬ ing them— by raising the denomination of the coin , 423 5 by adulterating or lowering its standard, 424; fraudulent and bankrupt na¬ ture of these operations, 4 24. National debt, amount of the principal and annual charge of, from 1689 to 1848, 632, 633, 634. Decker, Sir Matthew, Mr. Richardson’s Essay on the Causes of the Decline of Foreign Trade, erroneously ascribed to Sir Matthew, by Smith and others, xxxv. n. Referred to respecting the effects of bounties on the exportation of corn, 228. His observation, that certain taxes were repeated and accumulated four or five times in the price of goods, 395. His proposal of a tax, by license, on consumption, 396, 426. Deeds, necessity for the registration of all those affecting immoveable property, 390. Defence, public, means and footing of, in indus¬ trious and wealthy nations, 314, 318. De Gournay, M., his enlightened views on com¬ mercial subjects, xl. His translation of Sir J. Child’s treatise referred to, xl. Degrees, academical, value and proper mode of conferring, literary and scientific, 587. Loose mode of granting them, adopted till lately at St. Andrew’s and Aberdeen, 588. Dr. Smith’s letter to Dr. Cullen on, in 1774 ; his correct estimate of, 588, 589, 590, 591. Professors should have nothing to do with the granting of degrees, 591. University of London founded for the examina¬ tion of candidates for, 592. Its formation, a new and important era in the history of Edu¬ cation, 592. Dr. Cullen’s oration on, quoted, 593, 594. De Lange, M., Journal of, cited, 307. Demand. The power as well as the will to pur¬ chase necessary to create a real demand, liii. Definition of, effectual , 25. Demand and supply, under what circumstances the value of money depends on them, 483. Democritus, one of the fathers of husbandry, his opinion on the enclosing of kitchen gardens, 70. Denisart sur le Taux des Jnterets cited, 41, n. Denmark, her possessions in the new world, 255. Would probably never have sent a ship to the East Indies, had not the trade been subjected to an exclusive company, 285. King of, levies the most important transit duty in the world at the Sound, 405. Deposits, amount of, in Scotch banks, supposed tc be 30,000,000?. in 1848, 489,508. TheScotch banks allow interest on deposits of 10 ?. and up¬ wards, 508. AcQOunts shewing the amount of, in the bank of England, from 1778 to 1840, 509, 510. Depreciation of the currency. (See Currency.J Despotic governments drive their subjects to con¬ ceal their capitals, 123. De Verii, Count. (See Yerri.) Diet of workhouses, not attractive to the idle an 1 disorderly, 599. Digest of civil law cited, 558, n. Diodorus Siculus cited, 553, 554 . Discounts at long dates pernicious, as a great stimulus to unsafe speculation, 550. “ Discoverie of the Causes why Ireland was never entirely subdued by the English,” (Sir J. Davies), quoted, 570. Discoveries, extraordinary influence of, in promot¬ ing the progress of the nation, 525, 629. Diseases. Effect of plagues and epidemics on popu¬ lation, 45G. Dissertation, (a critical ) on the Nature, Measures, and Causes of Value, 1825, referred to, 439 . D’lvernois, Sir Francis, his tract, Sur le morcelle- ment de la Propriete Fondere en France, quoted, 567, 571. Diversions, public, afford a remedy for enthu¬ siasm and superstition, 357. Dividends on East India Stock limited to 10^ per cent, since 1793, 576. Dobbs, Mr., in his Account of the Hudson's Bay — Company, overrated its profits 335. Doctors. (See Degrees.) INDEX. 647 mmingo, Island of St., discovery of, by Colum¬ bus, 251. Natives of, stripped of all they had in gold and silver, in six or eight years, 252. French colony of, established by pirates and freebooters, 256. Exports of sugar from it, at present, comparatively trifling, 256, n. Stock of, was raised from its gradual improvement, 264. )ouglas and Heron Bank at Ayr, history of, 137. )rain of gold from the Bank of England previ¬ ously to 1772, causes of, lo2, w. Drainage, wonderful results from the application of improved drainage to agriculture, 525. Dramatic representations held in abhoiience by fanatics, 357. Drawbacks, as encouragements to trade, 221. Perhaps originally granted to encourage the carrying trade, 223. How far they seem to be justifiable, 223. Their relation to bounties, 232. On exportation of foreign goods to the English colonies, 262. The imposition of a I moderate fixed duty on the importat ion of corn, should be accompanied by a corresponding drawback on its exportation, 524, 526. Drawing and re-drawing bills of exchange, ex¬ planation of, 135. Drummond, Mr., his tract, Cheap Corn best fon Farmer quoted, 519, 520. Du Cange, his Glossary cited, 424. Dues. (See Pout Dues.) Dundas, Mr., (Lord Melville) his fallacious re¬ presentations of a large surplus revenue fiom India, 577, 578. Dupin, the Baron, correctness of his views on the relative administration of roads in France and Britain, 624. Dupont de Nemours, M., a zealous disciple of Quesnay, but too much of a partisan, xliii. His treatise “ Sur l'origine et progres d’une science nouvelle ” cited, xliv, n. The Epliemerides conducted by him for a time, xliv, n. Dupre de St. Maur, his account of prices in France cited, 83. Agreements of his tacts, and disagreement of his opinions, with those of Bishop Fleetwood, 85. Durability of Capital. (See Capital.) Dutch. (See Holland) : Duties, prohibitory, how modified by enactments of Parliament since 1820, 198, n. Retaliatory, when good policy, 206. At present levied on wine, 222, n. On sale of land, often op¬ pressive, 389. High on commodities, present many inducements to smuggling, 4 06. Protec¬ tive on importation of corn, what rate of, ad\is- able, 524, 525, 526 ; should be fixed, 524, 525, 526 ; should be accompanied by a correspond¬ ing drawback on exportation, 524, 526. The duty on timber used in ship building should be re¬ pealed, or the ships allowed to be built and fitted out in bond, 542. The repeal of the salt duty of essential service to the herring fishery, 552. High differential duty imposed on foreign tim¬ ber, to favour our North American colonies, 607. The duties on Foreign and British colo¬ nial sugars will be equalized in 1854, 607. Effect of an ad valorem duty on all comrao- | dites, 623. Dutot, M., his Reflexions Politiques sur les Finances et le Commerce, 1738, an acute work, in reply to M. Melon, xl, n. Duverney, M., his Examen dcs Reflexions Politi¬ ques sur les Finances, 1740, a curious work, , occasioned by that of M. Dutot, xl, n. Account of the Mississipi scheme contained in it, xl, n. 139; cited, 414. Dwelling house, indirectly a source of revenue, 121 , n. Dyed cloths, high price, in antiquity, of particu¬ lar kinds of, 310. E. Earnings. (See Wages.) Earth, the, according to M. Quesnay the only source of wealth, xli. East India Company, leave to export bullion first granted to this Company, xx. This leave granted on its establishment in 1600, xx. Mun’s defence of the East India trade referred to, xx, xxi, and notes. Advocates of, contend¬ ed, early in the 17tli century, that bullion is nothing but a commodity , xxv. Procured fiom Parliament, in 1663, liberty to export the pre¬ cious metals in unlimited quantities, xxv. Its trade defended by Child, xxvii. Profits of trade carried on by its servants in Bengal, 44. Old English, its establishment, 336; its distresses, 336; continued to exist after the commence¬ ment of a new one, 336 ; nearly ruined by com¬ petition, 336 ; consolidated with its rival, in 1708, under the name of the United Company of Merchants trading to the East Indies, 337. Present, when formed, 336,337. History of, 337. Embarrassed by the augmentation of its divi¬ dends, 337. State of its debts in 1773, 338. Submits to receive a governor-general, 338. Proprietors of its stock little fitted to gi'e at¬ tention to the interests of its empire, 338, 339. Affairs of, till 1784, 338, 339. Not likely to exist as a mere corporation, opposed to the supe¬ rior vigilance of private adventurers, 340. Ter¬ ritorial acquisitions of, probable sources of re¬ venue to Britain, 431. Mr. Fox’s bill and Mr. Pitt’s measures concerning it, 575, 5/6. Principal features in its present constitution, 576, 577. Monopoly of, from 1793 to 1813, 576; its monopoly of the trade to China ceased in 1834, 576 ; Act of William IV. for continu¬ ing the charter till 1854 cited, 576. Monopoly of, terminated, 576 ; constitution of, 57 6, 577 ; number of proprietors in 1825, 5/7. Secret committee of, 577. Financial difficulties of, led to the change in its government in 1784. 577. Annual revenues and charges of, from 18<>9 to 1830 ; net charge of Bencoolen, &c„ 578; irom 1844-45 to 1846-47, and by estimate to 1847- 48, 579- Produce of the sale of the Com¬ pany’s commercial assets in 1834-35, 5/9. Instance of the liberal spirit of the Company, 582. Injustice and absurdity of the Ryotwar system of revenue in Madras exposed, 583, 584, 585. India and Great Britain have gained while the Company has lost nothing by the abolition of its monoply, 585. Derived no profit from the traffic with its Indian dominions, 586. Its trade from India examined, 586. Conces¬ sions made by, on the renewal oi its charter in 1813, 586. Origin of the debt of, 587, n. Evidence of Mr. Mackenzie on the mischievous influence of speculations of, cited, 587. East India Trade, Considerations on, published in 1701, an anonymous tract of great merit, XXX111* East Indies, a market for the produce of the mines 648 INDEX. of America, 93. Drain of bullion to, ceased, within the last few years, and subsequently re¬ turned to its old channel, 95, n. A project of commerce to, gave occasion to the discovery of the West, 253. Eastland Company of merchants of England,— fine of admission into, and limitation of its charter, 330. Does not now exist, 330, n. Economie Publique, et Rurale des Egyptiens et des Carthaginois,” (Reynier's) cited, 553. Economists, M. Mercier de la Riviere ably ex¬ pounds their system in his work entitled, IS Or dre Naturel et Essentiel des Societes Politi- ques, xlii, xliii. Their ignorance of the nature of production, xliii. List of their principal works, xliv, n. The sect known by this name, or that of Physiocrats, xliv. Adam Smith’s lean¬ ing to their system, xlvi. Account of their doctrines, 300 ; as to unproductive labourers, 301 ; as to mercantile stock, 301; as to the power and wealth of nations, 302. Friendly to perfect freedom of trade, 303. Capital error of, 305, and n. Observations on their doctrine as to unproductive labourers, 305. Merits and importance of their system, 307. All followers of M. Quesnay, 307. Recommend a tax on rent, 373. Economy. (See Political Economy). Eden, Sir F. M. his work, The state of the Poor, 1797, cited, 470, quoted, 599. Edinburgh, New Town of, perhaps no Scotch timber employed in its construction, 77. Ex¬ amination in the University of, for medical de¬ grees, pronounced by Smith to be as serious, if not more so, than in any University in Europe, Edinburgh Review, 71st No. of, quoted, vii, viii, n. No. 87, for instances of the effects of re¬ vulsions of trade arising from miscalculation, 549, n. For articles on Hieroglyphics , and the History of Homan Literature , by Dr. Browne, 552, n. For Sir Thomas Munro’s view of the effects of heavy taxation on the industry of the Ryots or farmers of India, 585, n. Education, the system of, in the middle ages, estab¬ lished by the Clergy, of course excluded the study of the principles of commerce, xvii. Of youth, institutions for, their expense, 341. Endowments for, three questions as to their utility, 341. Those parts of, for which there are no public institutions, best taught, 344. How drawn to universities, 347. Institutions for, in Greece and Rome, 347, 348, 349. Ques¬ tions on what the public ought to do regard¬ ing, 350. Among the common people, per¬ haps requires more the attention of the public, than among those of some rank and fortune 351; and why, 352. How it might be im¬ proved among the poorer classes, 352. Brilliant reputation of those engaged in it, in Greece and Rome, 365. Expense of institutions for, may without injustice be defrayed by a general contribution, 367. Should be made'a means of explaining the constitution of society, 471. Dr. Smith’s opinion as to the education of medical men, quoted from a letter to Dr. Cullen, 588, 589. The establishment of the University of London, to examine for degrees, a new era in the his¬ tory of education, 592. The origin and opera¬ tion of the Scotch system of parochial educa¬ tion described, 594, 595, 596. The establish¬ ment of pattern schools suggested, 596. Edward III. incurred odium by protecting foreign manufactures in England, xxv. Edwards, Bryan, his History of the West Indies cited, 250, n. Eg\ pt, Ancient, favoured agriculture more tliaa all other employments, 308. Inhabitants of, had a superstitious aversion to the sea, 308, and n. Long the granary of the Roman empire, 309. Egyptians, Dr. Browne’s article on Hieroglyphics lefeired to, 552, n. Recent discoveries amomr their sculptures and writings have led to a ciitical investigation of the statements of the Gi eek and Roman writers regarding them, 553. Aversion of, to the sea, such, accordin ' to Plutarch, that they symbolised it by Typhon, or the evil demon, 553. Their hatred of nauti¬ cal strangers, as stated by Herodotus and by Strabo, 553. Reason suggested for this, 553. Their aversion to the sea disproved by the very accounts given by Plutarch and Diodorus Siculus, of Osiris and Sesostris, accredited by i the subsequent reference of Pliny, 554. Know- i ledge of, possessed by the Greeks before Psam- i meticus, imperfect, 555. Had a navy superior i to that of the Phoenicians, 555. Transmitted j to the Greeks themselves their notions of Isis, ! goddess of mariners, 555, n. Their energy j and habits destroyed and perverted by the | Persian iniasion, 555, 556. Physical surface | and situation of their country induced nautical ^ ideas and habits, 556. Elbeuf, manufactories at, work done in them stated, by M. Messance, to have been greater in cheap than in dear years, 38. Elective franchise, not beneficial to the Scotch tenantry, 174, n. Led to change in mode of granting leases, and to subdivisions of farms; injurious to independence and prosperity of agi iculture; should be conferred only on those who possess a certain amount of independent property. 174, n. Elizabeth, Queen, abuse of patents under, xxiii. Famous act in her reign, settling a compulsory provision for the poor, 597. Emigration has not depopulated the countries from which it has proceeded, 457. Voluntary, never carried so far as to occasion any sensible diminution of the population, 457. Reasons for promoting it in Ireland, 4 64. On a large scale, with a poor law, beneficial to Ireland, 464. Account of the emigration from the* United Kingdom from 1825 to 1848, 610. Empire, to found a great one for raising a people of customers, looks like a project fit only for a nation of shopkeepers, 276. Employments, advantages and disadvantages of, always tending to equality, 45. Five circum¬ stances which contribute to this tendency, 4 5. The division of, adds immensely to the wealth and comforts of all classes, 569. Enclosures, Mr Fortrey offers a good argument in favour of, xxviii, n. Encyclopaedia Britannica, its supplement referred to on the subject of Exchange, 211, n. For a Life of Quesnay, 304, n. For the article Fund¬ ing System, 628, n. England, the exportation of gold and silver said to have been interdicted by the law of, pre¬ viously to the Conquest, xx. The 3d of Hen. VIII. c. 1, on this subject, xx. Little gold coin till Edward III., and no copper till James I., 17. Arrangements successively adopted in, INDEX. 049 from 1257 till 1816, regarding gold and silver coins as legal tenders, 18, n. Over-valuation of gold, with respect to silver, in 1717, esti¬ mated by Lord Liverpool at 1^ per cent., 19, n. Compared with North America, as to wages and population, 32. Rate of interest, how legally restrained in, by various sove¬ reigns, 40." Property held by foreigners in the funds of, statements respecting, 42, n. Wages lower in, than in the colonies, 42. Common people of, who are fed on wheaten bread, stronger and more handsome than those of the same rank in Scotland, 74. Anciently export¬ ed wool to Flanders, 75. Prices in, little af¬ fected by supplies from the American mines till after 1570, 88. Civil war in, its effect on the price of corn, 89. Exceeded by the lower districts of Scotland in husbandry, 102, n. Price of wool in, has fallen since Edward III., 106, 107. Stockings first worn in, by Queen Elizabeth, 114. Wind and water mills unknown in, at the commencement of the sixteenth cen¬ tury, 114. Bank of, sketch of its history, 139. Progressive issue of small notes in, 142, n. Increase of national wealth in, at different pe- S riods, in spite of many calamitous hindrances, 152, 153. Perhaps the second richest country of Europe, 167. Common law of, abhors per¬ petuities, 171. Ancient tenants in, described by Gilbert and Blackstone, probably a species of metayers , 17 3. The country of Europe where the yeomanry has always been most re¬ spected, 173. Action of ejectment in, originat¬ ed under Henry VII., 173,174. Rich farmers of, great improvers, 176. Privileges of mem¬ bers of early corporations in, 177. King John, a munificent benefactor to the towns of, 178. Manufacture of fine cloths, when introduced into, 180; early noted for the fabrication of these from Spanish wool, 181. Feudal law not common in, till after the Conquest, 183. Well fitted to be the seat of manufactures and of foreign commerce, 18 6. Ancient prohibi¬ tions in, against transporting the precious me¬ tals, 188. Forced to admit Flanders bone-lace to procure the admission of her woollens into that country, 206. Facilities and importance of free commerce with France, as regards her, 220. Her North American colonies, causes of ' # their rapid progress, 256 ; expenses of the civil government of these colonies, 257. Limited the exportation of the surplus produce of her colonies by several acts, in which the commo¬ dities subject to limitation were enumerated, hence the term enumerated commodities , 259, 260 ; injustice of these limitations, 261. Dealt more liberally with her colonies, in regard to importation from Europe, 261. Enriched her sugar colonies by stock sent from home, 264. Sectaries of, founded her North American co¬ lonies, 264. Supposed advantages which she derived from her exclusive trade in the enu- ( merated commodities of her American colo¬ nies, 266. Wealth of, had not increased since the act of navigation, in the same proportion as that of the colonies, 268. Her navy under Charles II. equal to the united fleets of France and Holland, 268. Good effects of her colony trade had in a great measure conquered the bad effects of the monopoly, 275. In founding her colonies, purchased for some of her sub¬ jects a great estate in a distant country, 277. Maintenance of monopoly was the sole end and purpose of that dominion which she assumed over her colonies, 277. Price paid by the in¬ habitants of, for the monopoly of the East India Company, 284. Valour of her soldiers in 1739, after a peace of twenty-eight years, 318. Administration of justice in, originally supported by fees of Court, 324. Present con¬ stitution of her courts perhaps owing to emu¬ lation among the different judges, 324. Dis¬ memberment by, of Gibraltar and Minorca, from Spain, strengthened the family union of the House of Bourbon, 333. Public schools of, said to be more efficient than the universities, 344. Her custom of sending young men to travel, immediately on leaving school, 347. Benefit of clergy in, state of things of which it was the result, 360. Power of the Pope, as to collation of benefices, restrained in, 361. Church reformation in, was incidental to the humour of Henry VIII., 362. Loyal princi¬ ples of her churchmen, 363. Her church, next to that of Rome, the richest in Christen¬ dom, 365. Effect of this cn her universi¬ ties, 365. Land-tax of, less equal than that levied in the Venetian territories, 373. Dooms¬ day-book, the result probably of an actual sur¬ vey and valuation of the lands in, 375. Culti¬ vation of madder introduced into, through a composition for tithe, 377. Several taxes on houses, how contrived in, 381. Land-tax in, intended to be coequal with one on property, 383. Character of the property-tax in, 384. Land-tax of, like the Vingtieme in France, 387. Miscellaneous stamp duties in, 390. History of the custom-duties in, 397. Mer¬ chants of, generally lend to the government, 417. Fraudulent expedients tried to pay her public debt, 424. And Wales, population of, as enumerated every ten years, from 1700 to 1840, 462 ; of ditto, by Census, in 1801, 1811, 1821, 1831, and 1841, 463. Rise of her naval power not attributable to the navigation law. Her ships, taking quality and durability into ac¬ count, as cheap or cheaper than those of any other country, 542. Pier situation, as to agri¬ cultural capital and industry, compared with that of France, 569. Annual value of the land of, and of tithe free land in 1815, 621. Ex¬ tent and expense of roads of, in 1843, 624. “ England’s Great Happiness,” &c., cited, xxvii. Quoted as subversive of the mercantile system, xxviii. English Parliament, how managed under the Stuarts, and now, 359. English people, great change which, since the 16th century, has taken place in the dress, manners, and diet of, 458, n. Enjoyments. Smith shewed that wealth does not consist of gold and silver, but of the various necessaries, conveniencies, and enjoyments of human life, xlv. Enlistment. Plan of enlisting for a limited pe¬ riod preferable to impressment for the navy, 543. Entails, a natural consequence of the law of pri¬ mogeniture, 171. Circumstances in which they originated, 171. Press on Scotch far¬ mers, 174. Present state of the law of, as re¬ gards leases, 174, n. History of, obscure, 556. 650 INDEX. Sandford on Entails cited, 556. Statute of 13 Edward I. cap. 1., de donis conditionalibus, plan¬ ned by the barons, its effects, 557. The Eng¬ lish system gradually circumscribed by reco¬ very and otherwise, 557. Law of, in England, very near perfection, 557. Origin of, in Scot¬ land, in 1648, 557. Law' of, founded on a maxim of the civil law, 558. Arguments al¬ leged in favour of the practice of, 553 ; re¬ marks on them, 558, 559. Are adverse to agricultural improvement, 559. The Faculty of Advocates prepared a bill to restrain Scotch entails in 1764, but it fell to the ground, 558. Act 10 Geo. III. c. 51, for the improvement of entailed lands in Scotland, 559. Act 11 and 12 Viet, to the same effect, 560. Advantages arising from the system of registration of entails in Scotland, 56i. The Scotch law of entail now nearly on tsame footing as that of England, 561. Act prepared and carried through Parliament by Right Hon. Andrew Rutherfurd, M.P., 561, ». Enthusiasm. Value of amusements as a check on popular superstition and enthusiasm, 357. Enumerated Commodities, origin of this term, 259. What they were, 260. Application of the term greatly modified in 1821 and 1825, 537. Re¬ gulations concerning them ceased their opera¬ tion on 1st January 1850, 538. “ Ephemerides du Citoyen,” cited, xliv, n. First conducted by the Abbe Baudeau, and then by Dupont, xliv, n. Epidemic diseases, their effect on population, strikingly exhibits the operation of its prin¬ ciple, 456. Equality of advantages and disadvantages of employments,—three requisites which tend to, 52. Erasmus, his striking account of the filthy do¬ mestic accommodation of the English cited, 458, n. Established Church. (See Clergy.) Estates, landed, succession to, in modern Europe, regulated generally by primogeniture, 556. Settled by the custom of England, from a re¬ mote epoch, under conditions, 557. Equal partition of, not justifiable from the example of the monied classes, 562; sanctioned by the Roman law among the families of those who died intestate, 563 ; examination of it as exercised in France, 563 ; has long subsisted in Ireland, 569, 570. Estimates, Navy, for 1848, referred to for the total charges of wages and victuals for our seamen, 544. Eton College. Prices of corn at Windsor market from 1726 to 1820, as ascertained by the Col¬ lege audit-book, 529. Europe, policy of, regards mechanics, artificers, and manufacturers as skilled, and agricultu¬ rists as common labourers, 46. Inequalities of wages and profit occasioned by its policy, 54 ; this policy obstructs the free circulation of labour and stock, from employment to em¬ ployment, and from place to place, 62; this obstruction, as it affects labour, by means of poor laws, is peculiar to England, 63. Ex¬ pense of land carriage in, enhances the price of manufactures, 95. Import of gold and sil¬ ver into, from America, and export thereof to Asia, as computed by Baron Humboldt, 95, n. His estimate of the produce of the mines of, 96, n. North of the Alps seems to have been, up to the beginning of the 16th century, ignorant of the use of wind and water mills, 114. Occupiers of land in, anciently tenants at will, 172. What its progress would have been under a system different from that of the middle ages, cannot be inferred from what has taken place in English America, 185, n. Na¬ tions of, induced by the mercantile system to accumulate gold and silver, 188. No great nation of, ever enjoyed a free commerce to the East Indies, 196. Ancient policy of, encou¬ raged the popular odium against corn dealers, 235; this policy as it regarded shop-keepers, 235. Circumstances which occasioned the first settlements from, in America, and the West Indies, compared with those which directed the colonial establishments of Greece and Rome, 249. Culture of the sugar-cane in all the colonies of, carried on by negro slaves, 263. Policy of, has little to boast in regard to the colonies of America, 264; sum of what it did for them, 265. Advantages which it has de¬ rived from the colonisation of America, 265. Agriculture of, indirectly encouraged by the demand which the colony trade causes for its manufactures, 274. Prospects of, as to an equalisation of force with the New World, 282. Commercial towns of, how aggrandised by the discovery of America, and of a passage to India by the Cape of Good Hope, 282. Attempts of, to engross the trade of its colonies, have sub¬ jected it to the expense of supporting in time of peace, and defending in time of war, an op¬ pressive authority over them, 283. Conduct of the nations of, to one another, with respect to their monopolies of commerce, 284. Has not established such numerous and thriving colo¬ nies in Africa and the East Indies as in Ame¬ rica, and why, 286. Ancient history of, bears witness to great abuses of justice, 322. Its law language corrupted by attornies, 324. Com¬ mercial interests of, probably introduced the custom of keeping in neighbouring countries ordinary ambassadors, 329. List of joint stock companies ruined in, by mismanagement, given by Abbe Morellet, 340. Principal banks of, are joint stock companies, 340. Endowment of schools in, makes no charge on the general revenues of its several states, 341. Universi¬ ties of, were mostly at first ecclesiastical cor¬ porations, 344. Ancient division of philo¬ sophy into three parts changed into one of five by the greater part of the universities of, 346. Immense power of the church of Rome in, dur¬ ing the 10th, 11th, 12th, and 13th centuries, 360. Decline of the temporal power of the clergy in, 361, Rent of crown lauds, long the greater part of the revenue of its sovereigns, 369. Ancient manners of, sufficiently prepared the people for war, 369. Sale of crown lands in the monarchies of, might produce a fund available to reduce the public debt, 370. Occu¬ piers of land in, how originally taxed, 385. Cannot augment her population in any thing near the same ratio of increase which has pre¬ vailed in the United States, 454. Increased healthiness of, during the last half century, 45 3, n. No country of, so densely peopled as Ireland, 463. The situation of Great Britain and the other countries of, totally changed since 1650, 536. INDEX. 651 jxine, colonies of Miletus, on the shores of, 611, n. vasion of taxes by smuggling —peculiar state of the opinions of society regarding it, 40G, 407. Sanguinary consequence of, in France, under the old salt and tobacco laws, 409. xarn ination, system of, recommended for mas¬ ters of ships, 542. For medical men, 592, 593, 594. For parish schoolmasters, 596. xchange, ordinary course of, between any two places, indicates that of their exports and im¬ ports, 209. Difficulties in judging of this, 210. The state of, a mark for sustaining the value of paper money, 491. Depression ol, for any considerable period, along with an exportation of gold, proof that the currency is relatively redundant, 493. Extraordinary fall of, in 1809 and 1810, a cause of the appointment of the bullion committee, 497. Decline of, in 1824, not countervailed by the Bank directois till 1825, 499. Joint stock and private banks of issue not being speedily affected by variations of the exchange, pay little attention to them, 501. Exchanging, the power of, the vivifying principle of industry, 569. Excise, duties of, what they are, 397. Judiciously fixed, 399. Obstruct the smuggler, 399. Gross produce of, on liquors, in 1775, 401 ; and in Ja- nuary 1837, 401, n. On malt, now levied on that used by private families, 402, n. Existing on malt, 402, n. Gross produce of, in Britain, in Jan. 1837, 406, n. Are more unpopular, as well as the officers who levy them, than those of the customs, 407. System of, in Britain, would have required modification if applied to the colonies, 426. Executive power, how originally separated fiom the judicial, 324. Expenditure, account of the public, for 1^4o, 1847, and 1848, 633, 634. Expense, of the wealthy, different characters of, 155. Experience. The extraordinary changes caused by the late Mar, crowded the experience of cen¬ turies into thirty years, liii. Exports. Exportation of the precious metals frequently prohibited in ancient Rome, xx. Interdicted in England by various earl} sta¬ tutes, xx. Under the mercantile system the “ exports” were required to exceed the “ im¬ ports,” to give a favourable balance, xxiv. Policy of a bounty on the exportation of corn considered, 515, 518, 519, 520. Amount of bounty on exports of different sorts of grain under act of 1773, stated, 512, n. Of wheat and wheat flour from 1697 to 1846, 531, 532. Of cottons to India in 1814 and 1845, contrast¬ ed, 587. Amount of, to our Colonies, 614, 615. F. Fail-man, on the Funds, cited, 42, n. Families, old ones rare in commercial countries, 184. Famines, the famine in Ireland in 1845-46 one of the causes of the crisis of 1847, 507. Farmers, included in M. Quesnay’s producti\c class xli. Gentlemen farmers should gain both rent and profit, 24. Domestic circumstances, and progress of improvement, lead them to rear poultry and hogs, and to have recourse to the dairy as sources of profit, 103. Action of their capitals, 161. Origin of, in Europe, 17 3. Security of, in England, 174. Rich, great im¬ provers in England, 176. Loudly called for a new corn law in 1804, 513. "Witnesses exa¬ mined before committee of Parliament in 1814, unanimous that the protecting prices of 1804 were insufficient, 514. Derive only a very temporary benefit from a bounty, 518. How they have suffered from luxuriant crops by the want of exportation, 522. Would have profited nothing from a complete exclusion of foreign corn since 1813, 522 ; this evinced by the ruinous fluctuations they have been exposed to,, 522. Reap no advantage from the rise of price occasioned by restriction, 524. Their interest identical with that of other classes, 524. Taxes which affect them, 52 5,52 6. Amount of protection which they really need, 526. Better with a constant than a graduated duty, 526 ; would then be entitled to a drawback on their exports, 526 ; their fears of the effects ot the Repeal of the Corn Law exaggerated, 528. They have little to fear from the downfal of the protective system, 528. Anxiety ot the sons of, to follow the occupation of their fathers, 574, 575. Farms, evils inseparable from small farms, 569, 570. Mr Oliver’s observations on this subject, quoted, 571, 572, 573, 574, 575. Fashions, changes of, their influence in pi educing commercial revulsions, 549. Favourable balance. (See Balance of Trade.) Fees of Court might defray the whole charge of the administration of justice, 323. "Made up the far greater part of the emoluments of the judges in the parliaments of France, 323. Originally the principal support of courts of justice in England, 324. Fertility of the soil, its different decrees in dif.e- rent countries, and in the same, as connected with the principle of population, 454. Feudal Barons, kept in check by the inhabitants of cities and towns, 178. Feudal Governments , treasure-trove part of the revenue of, 123. Law, introduction of, to be regarded perhaps as an attempt to restrict the authority of allodial Lords, 18o. Feudal privileges, the absence of all oppressive privileges of this kind, one of the causes of our commercial and manufacturing superiority, 537. Fiars’ prices, account of those of Scotland referred to for the price of corn, 111- Finances, disordered state ot those of Fiance in Louis XIV. ’s time, xxxix; memoirs on those of France, by a Committee of the Council of State, and by Law of Lauriston, referred to, xxxix, and n. Fine Arts, no people ever distinguished in philo¬ sophy or the fine arts without being at same time celebrated for their riches and industry, xvi« Fines', the plan of letting lands by Fine, one of the worst that can be devised, 611. Fire-arms, invention of, changed the art of war, and has favoured civilisation, 319. Fish, rent paid in the Shetland Isles for the faci¬ lity of catching and storing, 67. Quantity of, brought to market, now limited, 109. Fisheries, the herring fishery much benefited by the repeal of the Salt Laws, and dut>, 552. 652 INDEX. Board of commissioners appointed for their management in 1808, 551. Progress of, as evinced by table containing abstract of her¬ rings cured, &c. from 1 815 to 1848, 551, 552. Bounty properly withdrawn in 1830, 552. Fishermen have been poor since the time of Theocritus, 45. Fixed Capital. (See Capital.) Flanders manufactured the finer sorts of broad cloth exclusively, until the use of the fulling mill was introduced into England, 114. Still one of the richest and most populous provinces of Europe, from its agriculture as well as com¬ merce, 187. Ileet, plan for efficiently manning the, 543. Im¬ provement on its character by abolition of im¬ pressment, 544. Fleetwood, Bishop, error repeated by, in his Chronicon Pretiosum , 84. Incredible price of wheat in 1270, given by, 84, 85. His general diligence and fidelity, 85. His extract from an account between the Prior and one of the Canons of Burcester, Oxford, in 1425, 107. Florence, republic of, obliged to pay debts in¬ curred by the extravagance of the agents of Lorenzo de’Medici, when a merchant, 368. Flour, accounts of wheat flour exported, and of foreign wheat flour imported, from 1697 to 1848, 531, 532, 533, 534. Fluctuations caused by a restriction on the impor¬ tation of foreign corn, 520, Monopoly, the parent of uncertainty, 521. Food, the quantities of, obtained by equal out- lays of labour, has a constant tendency to diminish in the progress of society, lv. True sense of Dr. Smith’s proposition regarding constant relation of its price to capital, profit, and a suiplus to the landlord, 447. Evil con¬ sequences of the potato becoming the chief article of food in any population, 571. Foi bonnais, M., espoused the leading principles of the mercantile system, xxiv, n. Law’s Memoire on the French finances, printed in the last vol. of Forbonnais' “ Recherches, §c.,sur les Finances de France” xxxix. n. Foreigners, property in the English funds held b\, at 'v ai ious periods,—statements respecting, 41, 4 2, n. ; in the British funds really very in¬ considerable, 421, n.; cannot man and navigate ships cheaper than we can, 541. Foieign shipping, regulations regarding, under Mr. Wallace’s and Mr. Huskisson’s Bills of 1821 and 1825, 537. Remarks on the com¬ plaints of the English shipowners regarding the competition of, 540, 541, 542. Foreign Trade, Adam Smith’s assertion that this is less productive than the home, and more productive than the carrying trade, unfounded, xlvi. Abandonment of our navigation laws as regards foreign trade. 538. Foreign travel, misuse of, as regards the younf men of England, 347. Forestalling and regrating; laws against, ex¬ posed by Child, xxvii. Laws regarding, 235, ^3/, n. Common Law of, how it stands, 237, 238, n. Lord Kenyon was thoroughly imbued with the popular prejudices as to regrating, 2 o8, n. Public much enlightened regarding this imaginary offence, 238, n. Popular fears of, compared to the terrors of witchcraft, 238. Forfeiture. Entails originated in a desire on the part of the greater barons to prevent the for¬ feiture as well as the alienation of their estates. 557. Fortrey, Mr., impugns the French trade in 1663, xxviii. Offers a good argument in favour of enclosures, xxviii, n. Forts, necessary in certain foreign settlements as instruments to facilitate particular branches of commerce, 329. Fortune, superiority of, cause of distinction of rank, 320. Fox, Mr., fate of his measures regarding India, 57o, 576. France. In 1678, the importation of French commodities, prohibited for three years, xxviii. Prohibition declared perpetual, and trade with her declared a nuisance under William III., xxviii. Commercial treaty with, in 1713* fiercely attacked by the British Merchant , xxx\\ \ n. Restraints on trade with, ridiculed and contemned by Mr. Richardson, xxxvi. Louis d’or rated in, down to 1785, at only 24 livres, 19, n. Legal rate of interest in, statements re¬ specting, 41. Dwelling houses in, 54. Dura- tion of apprenticeships in, 55. Proprietors of old vineyards in, obtained, in 17 31, an order of council prohibiting the planting of new ones, i 1 1. Corn and wine both carefully cultivated in her provinces of Burgundy, Guienne, and Languedoc, 71. Average price of grain in, during the 15th and 16th centuries, 83. La¬ bouring poor of, eat little butcher’s meat, 86. Rise of the value of silver in proportion to corn in, remarked by Messrs. Duprd de St Maur, Messance, and the author of the Essay on the Police of Grain, 91. Exportation of grain from, prohibited by law till 1764, 91. Money price of labour in, sunk from 1650 to 1750, 92. Remark by the Emperor Charles V. on the com¬ parative wealth of, in relation to Spain, 92, 93. i Silver coin of, greatly exceeds in value the gold, 98. Fattening of ortolans said to be common in some parts of, 103. Feeding of poultry con¬ sidered, in several provinces of, as a very im¬ portant article in rural economy, 104. Price of pork in, according to Buffon, was nearly equal to that ot beef, 104. Metayers , their con- j dition in, 173. Short protection to tenants against heirs and purchasers anciently allowed there, 175. Taille of, what it was, 175 ; con¬ tribution fonder e now levied in its place, 175, n. Origin of magistrates and councils of cities in, 178. Cultivation of mulberries, when intro¬ duced into, 180. Great Lords of, had exten¬ sive power, allodially, before the introduction of the feudal law, 183. Had much foreign com¬ merce a century before England, 186. Ancient prohibition in, against transporting the precious metals, 188. Particularly forward to favour her own manufactures by restraining importa¬ tion, 205. Causes of her war of 1672 with the Dutch, partly commercial, 205. Set the first example of prohibition, in her commerce with England, 205. High duties on the wines of, in England, 208 ; also on cambrics from, 208, n. Arguments for a free trade with, 208,209; Effect of invasion from, in 1672, on the Bank of Amsterdam, 214. Facilities which she pos¬ sesses for a perfectly free intercourse with Eng¬ land, 220. Her population in 1836 above 33,500,000, 220, n. Her attempt to settle in Florida, 255. Her colonies, 256; origin and fate of that of St. Domingo, 256, and n. Co- INDEX. 653 lonies of, were subject, in respect of the law of succession, to the Custom of Paris, 257. Never drew any considerable revenue from her colo¬ nies, 257. Progress of her sugar colonies equal, if not superior, to those of England, 263. Plant¬ ers of, superior in the management of their slaves to the English, 263. Unequal system of taxation in the provinces of, 279. Enjoyed an exclusive trade to Senegal, 296. Influence exercised on her internal commerce and indus¬ try, by Colbert, 299, 300. On the system of j the Economists, is a country which can be en¬ riched by industry and enjoyment, 302. Greater part of the produce of her agriculture con¬ sumed at home, 309. Emoluments of her Judges, in the parliaments, made up mostly of fees of Court, 323. Funds for the reparation of roads in, are under the direction of the exe¬ cutive government, 327. Partiality in the management of the roads of, 328. Corvees, in¬ struments of tyranny in, 329. Ambition of M. Dupleix,her governor of Pondicherry, 337. Old administration of her universities referred to, 343. Violence of the government of, towards the parliaments, seldom succeeded, 358,359. Pow'er of the Pope, as to collation of benefices, re¬ strained in, 361. Pragmatic Sanction made the clergy of, more independent of the papal court, 361. Lands of, held by noble tenure, exempted from the predial taille, 376. Details respecting the imposition of the taille in, 385. Taille abolished in, at the Revolution, 386, n. The Vingtieme of, 387. Her stamp duties, 389. Did not complain of them, 390. Her taille partly a tax on wages, 390. Capitation tax in, was oppressive and unequal, 392. Shoes were not considered as a necessary of life by the lower ranks in, 393. Duties levied there called peages , 404. Complexity of her revenue laws in former times, 408. These abolished at the Revolution, 408, n. Her internal trade now quite free, 408, n. Her taxes on tobacco and salt were farmed, 409. Reformations, of which her financial system was susceptible, 410; these suggestions have been attended to, 410, n. Tontines invented in, 416. More of her debt was raised by annuity than in Eng¬ land, 417. Amount of her public debt in 1764, 417. Character of those who lent to the government of, 417. King John of, adulte¬ rated the coin, and swore the officers of his mint to secrecy, 424. Her population cannot be augmented nearly in any thing like the same ratio with that of the United States, 454. Ra¬ vages caused by the massacres and wars of the Revolution, did not sensibly retard the increase of her population, 456. Improvement in the health of the people there since 1775, 4G5. Diminution of marriages in, 466. Population of, in 1780, 1825, 1826, and 1846, 467, and n., 567. Increase of illegitimate births in, to what ascribed, 467, n. Proportion of births to a marriage in, almost the same as in England, 467, n. Great expense of her metallic cur¬ rency, 485. Commercial treaty with, in 1786, considered, 545; Vattel quoted, 545, 546 ; was a memorable instance of good faith regulating the intercourse of nations, 546. Her mutual interest with Britain beautifully and forcibly pointed out by Mr Pitt in the House of Com¬ mons, 543. Unwise policy of the government of, in preventing the introduction of English hardware and cotton goods, 547. New law of succession in, 563 ; its motive casual, but its evils permanent, 563; how it is defended, 564. Agricultural state and population of, how af¬ fected by the law of equal partition, 565. Mr Birkbeck’s tour in, quoted, 565. Ef¬ fects of the almost infinitesimal division of land in, as noticed and predicted by Mr. "ioung in 1789, 567, 568. Number of landed proprie¬ tors in 1816, 561; at the present time, 567. Division and subdivision of land, 568. Leases granted on the metayer principle, 568. Agri¬ cultural industry of, as compared, in its eco¬ nomy, with England, 569. Increase of towns in, owing to the increasing cultivation ot the potato, 571. Unjust operation of the contri¬ bution fonciere, 616. Baron Dupin’s view of the administration of the roads in, correct, 624. Franchise. Injury done to agriculture in Scot¬ land by conferring the elective franchise on the farmers, 174, n. Frauds. Government bound to take steps to pre¬ vent such as may be easily practised, 503. Frederick II. and III., Kings of Prussia, amassed considerable treasures, 412. Freedom of industry, primary circumstances which led to enactments restricting it, xxii. Freedom of trade congenial to the system of the Economists, 303. Petition of the merchants of London in 1820 for, recited, 547. The esta¬ blishment of, would prevent fluctuations and revulsions, 549. Free labour. (See Labour and Slavery.) Freight, expense of, four times as high during the war as during peace, 513. Evil effects of the Navigation Act in rendering the freight of ships higher than it otherwise would be, 536. French commodities prohibited for three years in 1678, xxviii. The prohibition made permanent under William HI., xxviii. Frezier, his estimate of the population of Lima in 1713, 93. Frugality of individuals, how it has lessened the effects of public waste, 153, and n. Fuller’s earth, penalties on the exportation of, 295. May now be exported on paying a half per cent, ad valorem , 295, n. Fullerton, Mr., his view of the Ryotwar system of territorial revenue in India, quoted, 584, 585. Funding system, origin of, in Britain, 414. Its subsequent progress, 414, 415, 416, 418, 419. Absurd panegyric of, which had been urged, 419. Delusive character of, 420. Multiplica¬ tion of taxes which it brings along with it, 4 20. Its effects on national and individual wealth, 421, 422 ; this further illustrated, 421, n. Gra¬ dually enfeebled the states which adopted it, 422. To the abuse of this system, and excessive tax¬ ation, is to be ascribed the decline ot the com¬ mercial greatness of Holland, 536. Compared with raising extra supplies within the year by increase of taxation, 625, 626. Its facility, though a temporary advantage, is one of its greatest defects, 626. Compared with the plan of raising directly from the subject the supplies wanted, 627. When to be resorted to, 629. Began under William III., 629. Error in con¬ tinuing the practice, 630. Rate of interest va¬ riable at first, 630. Amount of the burden of, from borrowing at a fixed rate of interest lower 654 INDEX. than the market rate, G30. Principal anil an¬ nual charge of, from 1689 to 1849, 632. Reve¬ nue and Expenditure in 1846, 1847, and 1848, 633, 634. By borrowing from foreigners, er¬ roneously stigmatised by Raynal, Blackstone, Hume, and Montesquieu, 630. Funerals. (See Buhials.) Furniture, vicissitudes in its changes of masters, from changes of fashion and fortune, 154. G. Gabelle, abolition of this and other partial and oppressive imposts in France, of great service to agriculture. 565. Gain. (See Profit.) Galiani, Abate, asserts, in bis Trattato della 3Io- neta, 1750, that labour is the only source of wealth, xxxii, n. Gambling, Sir Robert Peel's currency measures a material check to over-speculation and gam¬ bling, 506, 507. Railway mania of 1846 the chief cause of the crisis of 1847, 507. Garnier, Marquis, proposes to exclude the high and low prices of wheat during the 13th century, in order to obtain a more accurate medium, 117,n. His remarks on natural price, 440. Conclusion drawn from his statements in favour of the law of equal succession in France, 565. Gassendi seduced, by love of ease, from a profes¬ sor’s chair at Aix, into the church, 364, 365. Gavelkind, mischievous effects of the custom of, 570. General Assembly. (See Church of Scotland.) Geneva, church of, value of livings in, compared with that of England, 60, 61, 364, 365. Genoa, corn why dear at, 88. Enfeebled by the funding system, 422. Genovesi, one of the ablest adherents of the mer¬ cantile system, xxiv, n. His Lezioni di Com- mercio, 1764, superior to Sir James Steuart’s Principles of Political Economy, xxxvii. Gentlemen, country, round London, petitioned Parliament, about 1726, against the extension of turnpike roads, 68. Gentz, M., the ablest defender of the funding sys¬ tem, 627. Germany, account of the working of the small farming system in, referred to, 567, n. Gibbon, his Roman History cited, iu proof that plenty in one province relieves scarcity in an¬ other, 521. His Miscellaneous Works quoted on the evils of monopoly, 585. Gibraltar, originally garrisoned for protecting the Mediterranean trade, 333. Gilbart, Mr., his Practical Treatise on Banking cited, 486, n. Gilbert’s Act of 22 Geo. III. cited, 599. Glasgow, Smith partly educated at the University of, i. Held successively the chair of Logic and Moral Philosophy therein, iii. His address to the University on his election as Lord Rector, quoted, ix. Glenelg, Lord, resolutions of, on the corn laws, 515, 516 ; carried into effect by act of 9 Geo. IV., 516. Gluts, M. Say’s able disquisition on the nature and causes of, referred to, lii. He shows that a general glut of the market is impossible, lii. i They do not originate in over-production, liii. Are attributable to miscalculation and over- i speculation, liii. (See also Revulsions.) Gold. Wealth at one time thought to consist ex- I clusively of gold and silver, xix. Hence the policy of forbidding their exportation, and en¬ couraging their importation, xix, xx. Export¬ ation of gold and silver prohibited in ancient Rome, and at some time by every state of mo¬ dern Europe, xx. The commencement of our I intercourse with India first relaxed this prohi- J bition, xx. Circumstances in which it is found, j facilitate the evasion of tax on, 79. Ignorance i of the inhabitants of Cuba as to its value when first visited by the Spaniards, 80. Relative j proportions of, to silver, before and since the i discovery of American mines, 97. Drain of, from the Bank of England previously to 1772, 132, and n. Obtained from washings in North America, 96, n. The accounts of that found i in California so conflicting in 1849, that no accurate opinion can be formed, 96, 97, n. ; Comparative productiveness of, in America and Europe, 96, 97, n. Little used in Scotland for payments, 501. Drains in 1825 and 1839, 499, j 505. (See Bullion and Metals, Precious.) Gorgias, an Athenian teacher, his wealth and ; splendour, 61. Government, sound policy to leave individuals to pursue their own interest in their own way, xlv. I Impolicy of all regulations intended to force industry into particular channels, xlv, liii. The duty of, to take care that the value of the currency be as invariable as possible, 503. i Bound to take steps for preventing such frauds as are easily practised, 503. Therefore it is | justified in demanding security from all banks of issue, 503. Their suspension, in 1847, of the currency act of 1844, a dangerous prece¬ dent, 507. Firm and consistent system of, requisite for Ireland, 525. In the case of the corn laws, government had to deal with an ir¬ ritated and unreasoning populace, 528. Should take measures to secure adequate skill in me¬ dical men, 593, 594. Governments, expert in mutually copying the art of draining money from their people, 3S9. Of cur colonies, 614, 615. Grain, generally dearer in England than in Scot¬ land, 34, n. All sorts of, dearer from 1765 to 1820, in Britain, than formerly, 34, n. State¬ ment of the bounties fixed bv the act of 1773 %t on the exportation of various sorts, 512, n. Ac¬ counts of the exports and imports of different sorts of, from 1697 to 1848, 531, 534. Grant, Mr. (See Glenelg, Lord.) Grass, high value of, in the neighbourhood of large towns, 69. Grassums. (See Fines.) Graunt’s Tracts referred to, xxxvii. Greece, Ancient, many branches of manufacturing aDd commercial iudustry regarded as degrading in, xvi. In several states of, foreign trade was prohibited, 309. Circumstances of, in respect to the warlike habits of her people, 313, 314, 315. Plan of education in the republics of, 347, 343. Law seems not to have grown up to be a science there, 349. Her encouragement of military exercises in, 352 ; effects of this, 353. The eminent among her mere literati, almost all either public or private teachers, INDEX. 655 f i 1 365. Every citizen of, wr.s a soldier, 369. Linen not used in, 393. Pirates of, excited the precaution of the Egyptians, 553, 554. Plad little knowledge of Egypt, or intercourse with it, prior to Psamraeticus, 555. Her writers knew Egypt only as a conquered country, 555; from thence she borrowed the worship of Isis, 555, w. Greek colonies sometimes furnished a military force, but seldom any revenue, 266. Progress of, an early proof of the principle of popula¬ tion, 454. Heeren’s History of the Greek Colonies cited, 611, n. Extent and situation of, 611. Greek language, study of, came into fashion with the Reformation, 345. Grenville, Lord, drew up the protest of ten Peers against the Corn Law of 1815, 523. Grotius, the effect of his treatise De Jure , &c., on Public Law, compared with that of Adam Smith's great work on Political Economy, xlv. Ground expenses ( depenses foncieres ), what, ac¬ cording to the Economists, 300. Ground-rent, as affected by a tax on the rent of houses, 378, 379. A proper subject of taxa¬ tion, 380. More so than even the rent of land, 380. Guanaxuato, mines of, more productive than those of Potosi, 92, n. Guano. Astonishing results from the application of hone manure and guano to the culture of turnips, 525. Guardians, boards of, mere tools to carry out the orders of the Central Poor Law Board, 604. Guernsey, island of, more lightly taxed than any part of Britain, 279. Guilbert, Pierre le P§sant Seigneur de Bois, his Detail de la France , 1695, remarkable for its assertion of the freedom of commerce and equality of taxation, xxxviii. His persecution in consequence of its publication, xxxviii. Gums, as enumerated commodities , were free from duty under the statute 8 Geo. I. cap. 15, 296. Afterwards subjected to duty, 297, n. Present duty on, 297, n. Gustavus Vasa, how led to favour the Reforma¬ tion in Sweden, 362. II. Habit, its power over our ideas as to necessaries and luxuries, 393. Hakluyt, curious letter of the English Sovereign preserved by, addressed to all kings, &c. written in 1553 concerning Sir Hugh Wil¬ loughby’s voyage of discovery, xxv. Hale, Chief Justice under Charles II., his com¬ putation of the expense of a labourer s family, 35. Hamburgh, the bank of, its agio, 211. Purely one of deposit, and carried on for the accom¬ modation of subscribers to it, 486. Receives no deposits in coin, but only in assayed bul¬ lion, 486. Warehouse rent charged by, on the rate of issue, 487. Its constitution commended, 487. Hamburgh, city of, derived a revenue from keep¬ ing a pawn-shop, 368. Hamburgh Company of merchants of England, its institution, 330. Has in effect ceased, 330, n. Hamilton, Dr., his work on the national debt quoted, 632. Hanseatic league became formidable under the emperors of the Suabian dynasty, 178. Fate of manv of the towns of, has become histori- cally uncertain, 187. Harris, Mr., not free from the error of thinking that the importation of durable, is more ad¬ vantageous than that of rapidly perishable, commodities, xxvii. His Essay upon Money and Coins, 1757, commended, xxxvi; the mis¬ take into which he fell noticed, xxxvi, xxxvii. Hawkesbury, Lord. His estimate of the con¬ sumption of corn in this country in 1796, 512. Hay garth, Dr., his estimate of the ravages of small-pox noticed, 457. Heberden, Dr., his Tract on the Increase and Decrease of Diseases referred to, 458, n. Heeren’s Ancient History of the Greek Colonies cited, 611, n. Heirs. (See Entails and Primogeniture.) Henault, President, his remark on the features which the self-importance of the memoir writers of the League has given to history, 281. Hentzner, Paul, his notice of the simple fashion of the presence chamber of Queen Elizabeth, 458, n. Herbert, M., his Essai sur la Police des Grains , 1754, a very able treatise, xl. Heritors. (See Landlords.) Herodotus cited, 553, 555. Herring fishery, change effected on laws regarding since Dr. Smith wrote, 551. The character of British herrings now stands deservedly high, 551. Has recently made great progress, 551. Table of quantity of herrings cured, &c. from 1815 to 1849, 551, 552. Commissioners of, ap¬ pointed in 1808, 551. Bounty most properly withdrawn in 1830, 552. The fishery much benefited by the repeal of the salt law and duty, 552. Heyne, Professor, his Disquisitions on Colonies in his Opuscula Academica, referred to, 250, n. Hides, price of, in 1425, 107 ; in 1773, 107. Exportation of raw, declared a nuisance, 108. Exportation of, prohibited, 295. Hieroglyphics, Dr. Browne’s article on, referred to, 552, n. Highlands of Scotland, the women of, prolific, 36. Highways, instruments of commerce, and sup¬ ported by it, 325, 326. Management of, in Bri¬ tain, its abuses, 326. Question as to where the control of, should be vested, 624. Extent and expenditure of, in England and Wales, in 1841, 624. Hindostan, origin and functions of the Zemindars of, 580, 581. Defects in the system of collect¬ ing the territorial revenues of, 580, 581. (See also India.) Historians, neglectful of useful facts relative to the economical state of ancient nations, and of Europe during the middle ages, xix. Hoarding treasure, causes of its frequency in feu¬ dal times, 412. Hobbes, duly aware of the vast importance of labour in the production of wealth, xxxi. Holland, low rote of profit in, solely owing to taxation, 41, n. Rate of wages in, said to have been higher than in England, 41. Unfashion¬ able in, not to be a man of business, 44. Lands in, chiefly devoted to the production of grass, 69. Corn, why dear in, 87. Richest country IXDEX. nr'd bao in Europe, for the extent of its land, 167. Imported rather than bred its lean cattle, 202. Retaliated, in 1671, the prohibitory system of France, 205. One most important branch of her trade was the carriage of French goods to other countries, 209. State of her exchange with England under King William, 210. Mar¬ ket price of bullion in, was generally above the mint price, 212. Good faith of her inhabitants, 214. Invasion of, by the French, in 1795, ac¬ celerated the fall of the Bank of Amsterdam, 215, 216, n. Was nearer the character of a free port than any other country in Europe, 220. Her early conquests in Brazil, 255. Her settlements in the West and East Indies put originally under an exclusive company, 256. Her navy during the war in Cromwell’s time inferior to that of England, 268. Her conduct respecting the spice trade, 284. Great¬ ness of her mercantile capital, 285. Her settle¬ ments in Africa the most considerable of any European country, 286. Burnt the spiceries produced by a fertile season, if beyond what she expected to dispose of in Europe, 286. Is, on the system of the Economists, a country which can grow rich only through parsimony and privation, 302. Draws her cattle from Holstein and Jutland, and her corn from all the countries of Europe, 306. Her East India Company maliciously annoyed that of England, 336. Spirit of faction fostered in, by the po¬ pular election of pastors, 363. Long enjoyed a monopoly of the cultivation of madder from the absence of tithe, 377. Houses, how taxed in the provinces of, 381. Temporary property tax in, how paid, 384. Tax on servants in, 387. Tax on successions in, 388. Taxes on stamps and on registration in, 389. Was the first country in which stamp duties were levied, 389, n. Suffered from a tax on bread, 396. Inhabitants of, paid a tax for a license to drink tea, 397. Reflections on her system of taxa¬ tion, 411. Her republican institutions the sup¬ port of her grandeur, 411. Her sinking fund of 1655 arose from a reduction of interest, 418. Her capitalists said to have had large sums invested in the British funds, 421. Much enfeebled by debts, 422. Her system of tax¬ ation inconvenient and oppressive, 422. En¬ mity to her, the cause of the English act of navigation, 1651, 534, 535 ; this enmity equal¬ ly actuated the restored government under Charles II., 534, 535. Was very powerful at sea long after the passing of the English na¬ vigation laws, 535. Tier wars the cause of her decline, 535. Oppressive taxation, how felt in 1751, 536. Quotations from various authors as to the cause of the fall of profits, and the general decline of commerce, &c. in, 535, 536. Her envied wealth and greatness have passed away, 536. Home trade, Smith’s assertion that it is more productive than either the foreign or carrying trade unfounded, xlvi. Horne, Dr. (Bishop of Norwich), his anonymous attack on Adam Smith, viii. Horner, Mr. F., employed on the bullion report, 497. His testimony in the House of Commons, to the immense destruction of bank paper in 1815, 1816, 498. Horns of cattle prohibited to be exported. 296. May now be freely exported, 296, n. Horse, price of a good one in Chili, as stated by Mr. Byron, 85. "Yoked to a gentleman’s coach may be as productively employed, for any thing a priori known to the contrary, as if workin* in a brewer’s dray, 120, n. Hospitality seems not to have been ruinous in feudal times, 412. House rent in London, how rendered tolerable to some of the middle class, 53. House tax in England, history of, 381. Repealed in 1835, 381, n. Houses insured, number of, increased greatly since Dr. Smith wrote, 49, n. Spacious, a striking evidence of former wealth and greatness in some countries, 154. Hudson’s Bay Company, account of, 334. Pro¬ fits of, did not seem to exceed the average rate 335. Hugo’s France Pittoresque cited, 568, n. Human Race. (See Man.) Humboldt, the Baron, his Essai Politique sur la Kouvelle Espagne cited, 92, n. His estimate of the imports of gold and silver from America into Europe, and of the subsequent exports thereot from it, 95, n. His table of the annual produce of the mines of America at the com¬ mencement of the 19th century, 96, n. His estimate of the different capacity of the soil to furnish food when planted with bananas and sown with wheat, 467. His statement of the different wages paid in the hot and temperate districts of Mexico, 472. Hume, David, sketch of his character by Adam Smith, published in a supplement to Hume’s Autobiography,viii. His Political Essays, 1752, characterised, xxxvi. His statement of the va¬ lue of a fleece in relation to the sheep in Saxon times, 106. His Political Discourses, 1751, 17 52,—their publication referred to, 143. No¬ ticed the tendency of commerce and manufac¬ tures to introduce order and good government, 181, 182. Frequently notices the inability of the ancient kings of England to carry on long foreign wars, 195. His Essay on Public Credit quoted, 629 ; cited, 630, n. Hungary, estimated produce of the mines of, 97, n. Hu-kisson, Mr., his changes in the navigation laws, in 1825 and 1826, valuable, 538. His speech on the state of the shipping interest, 12 th May 1826, quoted, 539, 540. Hutchinson’s History of Jfassachusett’s Bay cited, 428, n. M I. Illegitimate children, increase of their number in France, and to what attributed, 467, n. Immigration, allowance made for its effect in cal¬ culating the population of North America, 454. Implements, astonishing effect on agriculture pro¬ duced by the improvement of, 525. Importation of durable rather than of rapidly perishing commodities erroneously preferred by Bacon, Mun, Child, and others, xxvii. Of French commodities prohibited for three years in 1678, and the prohibition declared perpetual in William the Third’s reign, xxviii. Of cattle, &c., from Ireland, prohibited, 1664 ; this mea- INDEX. 057 f sure properly censured by Sir W. Petty, xxix. Violent controversy previously to 1700, as to the importation of East Indian silks and cotton goods, xxxiii. Restraints on, from a regard to the balance of trade, 208; their unreason¬ ableness further shown, 216. Encouragement of, by exemption from duties, 290 ; by bounties, 291. Restraints on, their true character, 298. nports, accounts of the imports of corn into this country at different times, 512, 529, 530, 531, 532, 533, 534. Immense increase in the im- , ports of cotton, corn, and flour since 1825, 541. Account of, to our colonies, 614, 615. nposture, a gross one by the clergy, facilitated the establishment of the reformation in Berne and Zurich, 362. npotent Poor. (See Poob and Pook Laws.) npressment, its cruelty, 542. Arguments used in its favour, 542, 543. Not necessary for the manning of the fleet, 543. Suggestions for the practical abolition of, 54 3 ; objections to this plan answered, 54 3, 544. Rising power of America, and her relative situation to us, will compel the complete abolition of, 544, 545. At once costly and cruel, 545. improvement, different effects of its progress on three different sorts of rude produce, 100. Diminishes gradually the real price of almost all manufactures, 112. Effects of, on rent, 450, 451, 520. Burden imposed by the Corn Laws diminished by improvements, 523. In¬ definite extent to which they may be carried, 524, 525. lclosures, Mr. Fortrey’s pamphlet of 1663 con¬ tains a good argument in favour of, xxviii. icome. (See Revenue.) icome Tax, value of land in England and Wales returned in 1815, under the act, 621. ’.crease, principle of. (See Population.) alia, intercourse with, by the Cape of Good Hope, influenced the change in the system of dealing with the precious metals, xx; discovery of this passage more favourable to commerce than even that of America, 196. Quantities of silver annually carried to, had, in some of the English settlements, gradually reduced its va¬ lue in relation to gold, 97. British, faulty character and genius of its local administra¬ tion, 2S8. Local councils of, have acted on occasions with resolution and decisive wisdom, 289. Ancient, favoured agriculture above all other employments, 308. British, the affairs of, in great disorder previously to 1784, bib. Fate of Mr Fox’s bill on the affairs of, 576. Mr Pitt’s measures regarding the home super¬ intendence of the government of, 576. Insti¬ tution of the Board of Control, and its func¬ tions, 576. Principal features of the constitu¬ tion of the East India Company as it now exists, 576. Additions to our territory under Lord Cornwallis, 577. Revenue of, in 1793, 577. j Great additions made to our territory therein ' under Lord Wellesley, 578; in 1797, 578. Annual revenue and charges of 1809, up to 1830 inclusive, 578 ; from 1844-45 to 1847-48, 579. Question as to the collection of a surplus revenue from, 579. Revenue of, its source, 579. Zemindars in, their functions, 580. Ryots of, their condition as settled by Lord Cornwal¬ lis, 580. Mill’s, and other works on India, cited, 580, 581, 582, 583, 584, 585, notes. Liberality of the Company in England towards it, 582. Ryotwar system of taxation in Madras, 583, 584, 585. Effects of partial opening of the trade to, 586. Exports in 1814 and 1819, 586. Financial condition of, 573. Revenue of, will gradually increase—trade to, capable of being very much extended, 586. Efforts made to set aside the monopoly of, 586. Resisted by the Company, 586. Trade of, opened to the public, under certain conditions, 586. Pri¬ vate traders have more than trebled our trade with, 586. Consumption of British goods in, greatly increased, 586. Trade with free since 1834 i previous to 1814, no British cottons ex¬ ported to ; amount of exports in 1814, 1835, and 1845, 587. Indies, West. (See West Indies.) Industry. All industrial operations resolve into modifications of matter already in existence, xliv. Prodigious additions to the power of labour by the employment of capital in in¬ dustrious undertakings, xliv. When indivi¬ duals prosecute branches of industry advanta¬ geous to themselves, these branches must be advantageous to the public, xlv. Impolicy of regulations intended to force industry into par¬ ticular channels, xlv. The diminished produc¬ tiveness of, one of the causes of permanent re¬ ductions in the rate of profits, lvi. Not, on ail average, better rewarded in towns than in the country, 57, n. When Foreign, may be advan¬ tageously burtliened for the encouragement of domestic, 203; sometimes taxed to allay the clamours of the home manufacturers, 204. Its vivifying principle the power of exchange, 569. Inhabitants, number of, to a square mile in Ire¬ land, England, and Wales, and the Netherlands, 462. Inland navigation of the Delta of the Nile, chief cause of the early improvement of Lower Egypt, 10. Institutions. Human institutions not made for immortality, but must be accommodated to the varying circumstances and exigencies of society, 536. Instruction of the inferior ranks of the people, its importance, 353. (See also Education ) Instruments of trade, enumeration of several of which the exportation was hampered by duties, 296. These, as regulated by statute 6 Geo. IV. cap. Ill, either wholly free, or subject to only small duties, 296, n. Insurance, marine, four times as high during the war as during peace, 513. Intellectual character, how affected by the division of labour, 350. In rude societies, 351. Intemperance, prevalence of this evil among the crews of our merchant vessels, 542. Some bet¬ ter system for the maintenance of discipline would be very beneficial, 542. Interest, Sir J. Child’s erroneous view 7 of the low rate of, in Holland, xxvii. Mr. Massie’s tract on, xxvii, n. Law's regulating the rate of, justly condemned by Sir William Petty, xxix. Rate of, regulated by various sovereigns of England, 40. Decline of, caused by a decline of profits, 42, n. Rate of, in Bengal, 43. Sometimes raised by defects in the law, 43. Capital lent at, how regulated, 156. High rate of, before the discovery of the Spanish U u i I 65S INDEX. West Indies, to what cause really owing, 157, n. No law can reduce its common rate, 159. Tax on, 382. Less a proper subject of taxation than the rent of land, 382. Rate of, its effects on the issue of paper money, 492. Extraordinary height to which the rate of in¬ terest rose in 1847, 507. The Scotch Banks allow 7 interest on deposits of 107. and upwards, 508. Difference between interest on capital laid out in improving land and rent-proper, 616. “ Interest of Money Mistaken,” See., an anony¬ mous tract referred to, xxvii. Internal navigation. (See Canals.) Inventions, extraordinary influence of, in ad¬ vancing the interests of the nation, lii, 495, 624, 625, 629. Beckman’s History of, quoted, 389, n. Ireland, Political Anatomy of , perhaps the best of all Sir William Petty’s works, xxix. The pro¬ hibition in 1664 of the importation into Eng¬ land of cattle and beef from, denounced by Sir William Petty, xxix. Strong men and hand¬ some women of, fed on potatoes, 74. All restraints on the commerce between, and Bri¬ tain repealed, 202, n. Her commercial inter¬ course with Great Britain, since 1826, on the footing of a coasting trade, 408, n. Expense of the government of, 1775, 427. Was bound, in justice, to contribute to pay the debt of Bri¬ tain, 430. What she had to expect from a union with Britain, 430 ; how far these expecta¬ tions have been realized, 430, n. Population of, in 1762, as reported by Sir William Petty, 462 ; by a census in 1731, 462, 463 ; by the estimate of Mr Newenham in 1805, 463 ; by a partial census in 1812, 463 ; by census of 1821, 463 ; in 1831, 463; and in 1841, 463. Perhaps the most densely peopled country in the world, 463. Number of people in, 463. Misery and desti¬ tution, which are the consequences of her ex¬ cessive population, 463. Emigration on a large scale, with a-poor law, would be beneficial to, 484. Comparative produce of an acre of land in, planted with potatoes or sown with wheat, 467. Butcher’s meat little used in, 468. Wages of labourers in, regulated by the lowest possible standard, 468. Potatoes not intro¬ duced into, till 1610, 469, n. Policy of Sir Ro¬ bert Peel’s measures of 1845, referring to banks in, 505. Nature of these regulations, 506. Sketch of the system of banking in, 508. Re¬ straints on free trade in corn between Great Britain and Ireland abolished in 1806, 513, n. Effect of the increase on the imports of corn from, on prices for the last fifteen years, 524, 525. From the humidity of its climate is bet¬ ter suited for pasturage than tillage, 525. Table shewing imports of grain, &c., from Ire¬ land, from 1802 to 1848, 533, 534. All just ground of complaint on the part of the Irish would be removed, if an adequate provision were made for the Catholic clergy, 525. Cus¬ tom of equal partition of inheritance has long prevailed in, 570. Pier circumstances, how degraded by this custom, 570, 571. Isis, worship of, by the Greeks and Romans, as Aphrodite, Thetis, Venus, 555, n« Isocrates, large sum received by him for a course of lectures, 61. Issues, amount of, by joint-stock and private banks of England and Wales, in 1849, nearly six millions. 494. Italian writers on Political Economy, thecollec-! tion of ( Scrittori Classici Italiani di Economic Politico'), commended, xxxviii, n. Italy, Ancient, much of its land devoted to the production of grass, 69. Tillage discouraged in that part of it which lay near Rome, and how, 69. Only country of Europe cultivated and improved by foreign commerce, 186. Greek colonies in, their extent and situation, 611. Jablonski, his Pantheon AEgyptiorum cited, 554,! His Origines cited, 554, 555, n. Jacob, Mr., on Mexico, in Supplement to Ency- 1 clopsedia Britannica, cited for the annual pro-j duce of the American mines, 96, n. His view of the agriculture of Germany referred to, 567. n. James I, act of Parliament, 21 Jac. I. cap. 3 abolishing monopolies, cited, xxiii. Jameson, his Spicilegia Antiq. JEgypti quoted 554, n. Jersey, island of, more lightly taxed than any part of Britain, 279. Jews, Sir J. Child’s reasoning in defence of the naturalisation of, most creditable to him xxvii. Job-work. (See Labourers.) Johnson’s Dictionary reviewed by Adam Smith j in 1755, iv. Joint Stock Companies, how r they differ from re I gulated companies, 333, 334. Cruelly abusec their right of making war, 339. Circumstance: under which, in establishing a new trade, i may be reasonable to grant a monopoly to 339. List of 55 w r hich had failed from mis-1 management, given by the Abbe Morellet, 3401 Enumeration of trades which they may carry on successfully, 340. Limits to their formal tion from reasons which ought to be assignee for their proposal, 341. Their utility in bank ing and insurance, 341. Joint Stock Banks. Amount of the issues o joint stock and private banks of England anti Wales, in 1849, neavly 6,000,0007., 494. Mo dification, in 1826, of the law of 1708, regardj ing their formation, examined, 499. Rapid ini crease and insecurity of, 500. Sir R. Peel’ll measures of 1844-45, their policy and nature 505, 506. Periodical returns of the names and at some time by every state in modern Europe, xx. A fall in their value certain, if the Russian supply continue undiminished, and the expectations as to Cali¬ fornia be not in great measure disappointed, 97, n. (See also Bullion, Gold, and Silver.) Prejudices of the Greeks and Romans in regard to trade and commerce, xvi, xvii. These an¬ cient prejudices retained a powerful influence during the middle ages, xvii. Premiums to artists, not objectionable like boun¬ ties, 232. Prentice, Thomas, first cultivated the potato in Scotland in the open fields, 469, 470, n. Prerogative. The right to grant patents for the sole making, buying or selling of commodities, considered part of the prerogative in the time of the Tudors, xxiii. Abuse of it in Elizabeth’s reign, xxiii. Presbyterian Church Government, its character¬ istics, 364. Its effects on the character of the clergy, ob4. Does not entice learned men from secular studies, 365. Its economy exemplified in the revenue of the Scotch clergy, 366, andn. Presbyteries, have the general supervision of pa¬ rish schools in Scotland, 595. Price, not regulated by rent, 24. Of commodi¬ ties at market governed by natural price, or by the cost of production , 25, n. Fluctuations of, 27. Market seldom long below natural , 28. Of commodities more equal throughout Great Britain now than when Dr. Smith wrote, 34, n. Generally speaking, the same whether profits or wages are high or low, 44, n. Of commo¬ dities in ancient times, three different circum¬ stances which have frequently misled writers on, 83. Accounts of, in the 13th century, in England, little dependence to be placed on them, 85, n. Of wheat from 1202 to 1750, 117, 118; little reliance to be placed on accounts of, during the 13th century, 117, n. Remarks on real (prix nature!), by the Marquis Gamier, 440. Dr. Smith’s limited view of, the point at which he stopped in inquiry on rent, 444. High, not sufficiently accounted for by the ex¬ istence of a great demand, 444. Variations of, the cause of variations in the amount of rent, 478. Of corn, did not rise from 1771 to 1791, a period of prodigious improvement, 513 ; mode of ascertaining, fixed by the law of 1804, 513; enhanced from 1808 to 1814, by depre¬ ciation of the currency, and by deficient crops, 513 ; various prices suggested by the witnesses before the Committees of 1814, as the limit when free importation should take place, 514. Ruinous depression and fluctuations of, after the act of 1815 passed, 514, 515. Would have been liable to fluctuation under Mr. Canning’s Bill, 516. Mode of ascertaining prices of corn under 9 Geo. IV. c. 60, 516. New element of uncertainty introduced by this measure, 516. Fluctuations of, between 1829 and 1842, 516, 517. The act of 1842 did not remedy the ten¬ dency to fluctuation, 517. Effect of the bounty on, 519. The advantage conferred on landlords by extension of tillage consequent on a bounty, counterbalanced by reduction of profits, 519 . Fluctuations of, their pernicious consequences to farmers, and all other classes, 520, 521, 522. Uselessly and wastefully enhanced by the corn laws, 524. High, really not advantageous to the farmer, 524. As it would be affected by a moderate duty on importation, and correspond¬ ing drawback, 524, 525, 526. Reasonable prices of corn for 15 years, to 1845, attributable to extraordinary agricultural improvements, and increased imports from Ireland, 524, 525. Effect of a tax on a particular business, 617. Tables of those of corn, 529. Exorbitant price of land in our colonies, compared with those of the United States, and evils flowing therefrom, 611, 612. Effect of increase of price in limit¬ ing consumption, 621. Price, Dr., one of the founders of the sinking- fund of 1786, 631 ; his illustration of it; his Appeal to the Public cited, 631. Pi imogeniturc, Smith and Montesquieu quoted on, 561, andn. Their prejudice against it un¬ founded, 561. Custom of, has been most bene¬ ficial to modern Europe, o61. Useful opera¬ tion of, on the character of families, traced, 562. Its usefulness as a stimulus to the am- bition of the younger members of a family, 562. | Bias said to be given by it to the nobility and gentry, 562. Evils of the system of equal division in France, 563; and in Corsica, 566. Beneficial consequences of, in Scotland, 570. The succession to leases of farms, as well as to estates, in Scotland, regulated by, 570. Principes de tout Gouvernement quoted, as to the j real origin of rent, lv, n. Principle of increase. (See Population.) Private banks. Amount of issues of the private and joint-stock banks of England and Wales in 1849, nearly six millions, 494. Pri\Leges early granted to citizens of corporate towms, xxii, xxiii. Ihe absence of all oppres¬ sive feudal privileges a cause of our commer¬ cial and manufacturing superiority, 537. Prodigality, consequences of, 150. Private, never i impoverishes great nations, 151. Produce, annual, of the American mines in the beginning of the present century, 96, n. Produce and consumption, annual balance of 220 . Productive class, one of M. Quesnay’s three classes of society, xli. Productive and unproductive labour, definitions of, 145 ; reasons why this division seems un¬ founded, 146, n. Professional men, their wages higher on account of the uncertainty of success, 47. Professors, evils of appointing those of Oxford and Cambridge with handsome salaries, and no fees from their pupils, ii. Should have nothing to do with granting degrees, 592. Profits, cause of high profits in a particular trade, xlix. Fall of, erroneously attributed to the competition of capitalists, lvi. Three causes of all permanent reductions in the rate of, lvi. Rate of, the same on small as on large capitals, ^2, n., 605. Fall in the rate of, during the progress of society, caused by a diminished power to employ capital with equal advantage , arising from three leading circumstances, 40, n. Of trade carried on by servants of the East INDEX. 671 3 I « * t 'j l i i i s i %' I i B a f: i i i u . India Company in Bengal, 44. Inequalities in, occasioned by the policy of Europe, 54. A most erroneous position of Dr. Smith regarding, pointed out, 116, n. Of taxes on, 382, 384. Effect of taxes on, 386. Do not affect the interest of money, 387. Sources of, in a free and equal market, the proportions in which commodities will exchange for each other, and for labour, 442, 443. Circumstances which de¬ termine the rate of, 475 ; what is meant by rate of, 475. Laws which regulate them, the same whether rent is paid or not, 475. Reciprocal action of, on wages, 476. Rate of, can be raised only in three ways, 475; this theory totally different from that of Dr. Smith. 476. How modified in old countries, and affected by taxation, 476, 477. Effect of fluctuations in the rate of, on the value of commodities, 477. Under what circumstances they vary inversely as wages, 478; these variations can have no effect on real value, 478. Kept at a level in all businesses by competition, 479. Circumstances under which variations in the rate of, would have no influence on exchangeable value, 47 9 ; how these valuations affect commodities pro¬ duced by unequal, fixed, or circulating capitals, 479, 480. Difficult to distinguish between the profits of capital laid out on, and incorporated with land and rent proper, 519, 616. The profits of farmers, instead of being increased were really diminished by the protective system, 524. Smith’s error in supposing that the monopoly of the colony trade increased the rate of, 605. An equal tax on, would fall on capitalists, 617. A tax on a particular business would raise prices, and fall on consumers, 617. Prohibitions will destroy trade, xxxvi. That against exporting gold and silver coins from Great Britain repealed in 1819, 20, n. Prohibitory duties, notice of such as, since 1820, have been modified, 198, n. Property, which a man has in his labour, a most sacred right, 55. Security of, in England, one of the causes of our commercial and manufac¬ turing inferiority, 537. Disposal of, by will, how regulated, 556, 575. Property Tax in England was held coequal with that on land, 383. At Hamburgh, 383. In Switzerland, 383, 384. In Holland, 384. (See Income Tax.) Proprietary class, one of M. Quesnay’s three classes of society, xli. Protection, Edw. III. and others of our princes, incurred, odium by the judicious protection afforded by them to foreign manufacturers who took refuge here, xxv. Ricardo on Protection to Agriculture, quoted, 526. The farmers have nothing to fear from the downfal of the pro¬ tective system, 528. Provident Banks, not universal, and much re¬ stricted, 489. Provincial Bank of Ireland, one of the most flourishing in it, 508. Provisions, the prohibition of the importation of fresh, repealed by Sir Robert Peel in 1842, 517. Prussia, her retaliatory measures obliged us to conclude commercial treaties on the reciprocity system with her and the other northern powers, 539, 540. Public Debt. (See National Debt.) Public Institutions and Public Works, into what they seem naturally to be divided, 325. Q. Quarterly Review, referred to, xl, n. Quesnay, M. The first who gave Political Economy a systematic form, and raised it to the rank of a science, xl. His partiality to agriculture, xl. His division of society into three classes, productive, proprietary, and unproductive, xli. That the earth is the only source of wealth, the basis of his system, xli. His “ Physiocratie,” quoted, in the advantages of entire freedom of trade, xlii. Character of his Tableau Economique, xliii. His works enu¬ merated, xliv, n. Represents the distribution of the sum-total of the annual produce of the land among, 1st, Proprietors; 2d, Cultivators; and 3d, Artificers, Manufacturers , and Mer¬ chants, in some arithmetical formularies, 304. Life of, in the Encyclopaedia Britannica, re¬ ferred to, 304, n. Seems, like some speculative physicians, to have imagined that the political body could only be preserved by a certain pre¬ cise regimen, 304. Capital error of his system was representing the third class of consumers as altogether barren and unproductive, 305 ; this seems to have originated in his view of the nature and causes of rent, 305, n. R. Railways. The railway mania one of the chief causes of the crisis in 1847, 507. Wonderful facilities in travelling afforded by, 624, 625. The gambling consequent on their formation disgraceful to the nation, 625. Raineville, M., quoted as to the indigent state of the agricultural population of France, 565, 566. Raising money by circulation, explanation of the practice of, 135. The most expensive mode of this operation stated, 136. Raleigh, Sir Walter, his dreams of a golden city, 252. Said to have first introduced p otatoes into Europe, 469, n. Ramazzini wrote a treatise on the Diseases of Artificers, caused by excessive application, 37. Ranks, inequality of, its various causes, 320, 321 ; the consumption of the inferior, greater than that of the superior, 401; how this applies to taxation, 401. Raw material,as such,'no constituent of value, 443. Raw silk, duty on, reduced to nearly nominal amount, 201, n.; beneficial effects consequent thereon, 201, n. Raw produce, as food, how it has two costs of production, 444. Ultimate incidence of, of taxes on, 620, 621, 622. Raynal, the Abbe, his Histoire Philo sophique, cited, 630, n. “ Reasons for a limited Exportation of Wool,” referred to as setting forth in 1677 the funda¬ mental principles of the economical system, xlii, n. Reciprocity-system,—a salutary change in the Navigation Laws, and other regulations af¬ fecting commerce, 539. First introduced into the trade with the United States, 539 ; subse¬ quently with South America, 539; with Prus¬ sia, 539; with other northern powers, 540. Arrangements under, made with Prussia, &c. defensible on the soundest policy, 540. This 672 INDEX. system still wisely maintained and embodied in 12 and 13 Vic. c. 29, 540. Refinement. The refinement and barbarism of nations depend more on their wealth than on any other circumstance, xvi. No people ever distinguished in philosophy or the fine arts without at sametime being celebrated for riches and industry, xvi. Reform Act, evil effects of, in conferring the elective franchise on farmers in Scotland 174 n. Reformation, the, a consequence of the lessened ?T' er the J Cathol ic clergy in state affairs, 06 .. Fanned by the popular manners of its teachers, 362. Fell in with the leanings of those princes in the north of Europe, who lad taken umbrage at the court of Rome, 36_. Incidentally favoured by Henry VIII of England, 362. Sects of Luther and Calvin,' 363. Regiam Majestatem, statute of assize in, referred to, 84. Register of entails kept in Scotland, open to the inspection of the public, 561. Registration of mortgages extremely useful, 390. Regrating. (See Forestalling.) Regulation of industry, mania for, 3VI. Storch’s impressive view of the pernicious consequences of, xxiv. Relief. (See Poor Laws.) Religious instruction, the chief object cf institu- tions which profess to instruct those of all ages, 3 o3. . Expense of institutions for, may, without injustice, be defrayed by general con¬ tribution, 3 oo. Religious sects. (See Sects.) Rent, theory founded by Quesnay, on the fact that cultivators of the soil alone pay rent for the use of natural agents, xli. Smith’s errone- ous doctrine as to the rise and progress of, xlvi, Xrin, XxViii. Real origin of, luminously stated by Dr. James Anderson, in 1777, p. xlviii, n . hv. Forms no element of price, 25, n. Of houses m London, 54. Statement of its na- ture, 66, and n. Paid for cutting kelp and fish mg, 66, 6/. High or low, the effect of high or low price, 67, and n. Produce of land which aluays affords it, 68. Gross and net, what, 124. Of taxes on, 372. Tax on, recommended by the Economists, 373. Tax on, in the Venetian territories, more equitable than that of Eng¬ land, 3, 3. Tax on, how practicable, 374 ; diffi¬ culties of it, 376. Of houses, as an object of taxation, 3/8. Of a house, as a tax on it affects the tenant, 379. Of houses, how it differs from t iat of land, 379 ; how this is supposed to be taxed m Great Britain, 331. Of land, a more proper subject of taxation than interest of money 382. Of its nature, origin, and pro¬ gress, 444. Xo explanation of, to call it a sur¬ plus above ordinary profits, 444. Origin of, explained by a commodity with two costs of production, 444, 445. Enhanced by increase of population and decreasing fertility of soils cultivated, 445. Recapitulation of fundamental principles concerning, 447. Vicinity to a town or to peculiar facilities of communication, a cause ot, 447. Cases in which it is enhanced by a natural monopoly, 447. Cause of objec- tlT t he ° Vy ° f ’ 447 ’ 448 ’ restriction at¬ tempted to be urged to this theory, a proof of * 448 5 tech nical objection to, ? stated, and, for the first time, answered, 449. How affected by the retrograde, stationary, and pro¬ gressive states of society, 449. True theory o ,^ pointed out by Dr. James Anderson, 452, 453. Wholly depends on the extent of culti¬ vation, 448. Influence of, improvement on: calculation of produce to obtain, 450. 451 Strict and scientific sense of the term, 519. Difficult to distinguish between the profits of capital laid out on, and incorporated with the land, and rent proper, 519, 616. Rapid increase of the rental of England and Wales, 5?4 Dr. Smith’s erroneous views of the operation of taxes on the rent of land, 613, 614, 615 618. Their unequal and injurious influence' 613. The fixed corn rent to which tithes are’ and will be commuted, likely to be too high, 622 Representation, government by, unknown in an¬ cient times, 281. Rest, account of the rest or surplus capital of the Bank of England, from 1778 to 1840, 509, 510. Restrictions on importation of corn, effect of varies with the situation of different countries’ 520. Nugatory in a new and fertile country, they exercise a powerful influence in an old and thickly populated one, 520. Opposed to e^ery proper principle of commercial legisla¬ tion, 521 ; and must prove ultimately destruc¬ tive to a country, 521. Their disastrous con¬ sequences, 522. Protest against, signed by ten peers, 1815, 523. Impossible to ascertain correctly, the pecuniary burden which those restrictions in ordinary years entailed on the country, 523. Estimate, 524. Retail dealers, action of their capitals, 161. Revenue of a country, gross and net, what. 124. Consists in goods produced, and not in the money by which they are estimated, 125. Gross, increased by the whole value which the labour of the workmen adds to the materials upon which they are employed, 128. Of the church, as it derogates from that of the state, 335; la; ge sum accumulated from, by the canton of Berne, 365. Civil, of a country, its sources, 367, 369, 370. Civil, of France, statement of its amount, and sources, since 1830, 410. 411, n . Civil, of Britain, in 1775, 420; at 5th January 1837 (exclusive of Ireland), 420, n. Account of, that or the United Kingdom, in 1846, 1S47 and 1843, 633, 634. Revue Trimestrielle , quoted, 568. Revulsions of commerce. Tendency of Sir R. Peel's currency measures of 1S44, 1845, to re¬ duce their number and violence, 506, 551. Not tne inti oduction but exclusion of foreign corn that occasions revulsions, 522. Their causes, 549. Some of the causes of, such as war, &c., Can neither be foreseen nor provided against, 549. Those arising from miscalculation ex¬ emplified, 549. Article in the Edinburgh Re¬ view on this subject, referred to, 549. That ot agriculture, in 1813, almost uholly owing to the artificial system on which we have acted, 549, 550. Caused by nothing so much as by sudden changes in the quantity and value of money. 550. Reynier, his work, de VEconomic Publique ct Rurale des Egyptiens et des Carthaginois, cited 553. Ricardo, Mr., the appearance of his great work, Principles of Political Economy and Taxation , 1817, forms an era in the history of the science, INDEX. 673 n liv; principles traced, elucidated, and esta¬ blished therein, liv, Iv, hi. Controverts a state¬ ment of Dr. Smith concerning the nature of cash credits in Scotland, 130, n. His protec- f' tion to agriculture, quoted, 52G. His remarks on the fallacy of Dr. Smith’s doctrine respect¬ ing the superior productiveness of capital em¬ ployed on land, 162, n. His inquiry into the operation of bounties on production referred to, 230, n. His views on proportional wages explained, 477. His Principles of Political Economy and Taxation referred to, 452, 477. } His view of the sources of bankers’ profits, 488. His plan for keeping the value of paper constantly on a par with that of gold, vrithout the circulation of a single gold coin, 492. His works referred to on the necessity for security from the issuers of country bank notes, 503, n. Recommended a drawback to the farmer on such corn as he might export, under a system of fixed duty on importation, 526. Quoted on the impolicy of a general tax for relief of the poor, 603. Showed the fallacy of Dr. Smith’s statement, that a lucrative foreign commerce diminishes the supply of commodi- f ties produced for the home market, and occa¬ sions a general rise of prices and profits, 606. Wrong in supposing that the labouring class never can contribute any thing of importance to the revenue, 619. Criticism on his view of the operation of tithes, 620 5 of the effect of an ad valorem duty on all commodities, 623 ; of the facility of raising, by individual credit, large sums to meet the extraordinary wants of government, 628. Rice, cultivation of, in Carolina, 73. Scarcity of, in Bengal, aggravated into a famine by in¬ judicious interference of servants of the East India Company, 234. Richardson, Mr. William. His essay on the causes of the decline of foreign trade com¬ mended and quoted, xxxv, xxxvi. His essay erroneously ascribed by Smith to Sir M. Decker, xxxv, n. ; cited, 268, n., 536, and n .; quoted on impressment, 544. Riches. (See Wealth.) Richesse de la Hollande cited, 536, n. Rickards, Mr. His Speeches in the House of Commons on the Affairs of India quoted, 582. Rigby’s preface to Chateauvieux cited, 451, n. Ripon, Earl of. (See Robinson, Mr.) Riviere. (See Mercier de la Riviere.) Roads, good ones equalise the advantages of dif¬ ferent districts of a country, 68 . Country gentlemen round London petitioned parliament against the extension of, into the remoter counties,—and why, 68 . Remarks on the ad¬ ministration of, in Great Britain, 326, 327. Administration andstate of,in France,327,328. Maintained in China by the government, 328. Partiality in the management of, in France, 328. Reasons why they should remain under local management in Britain, 329. Expense of maintaining, might, without injustice, be defrayed by general contribution, 367. Fur¬ ther remarks on tbe comparative system of management of, in France and England, 612. Estimated length, and expense of maintenance of, in England and Wales, in 1818 and 1834, 612. Roberts, Lewis, his tracts referred to, xxxvii, n. Robinson, Mr. (now Earl of Ripon) his resolu- L , tions relative to the importation of foreign corn, &c. The groundwork of the act 55 Geo. III. c. 26, 514. Rochefoucault-Liancourt, the Duke of, quoted as to the poor condition of the small proprietors in France, 566. Rochette, M. Raoul, his work Sur les Colonies Grecgues, referred to, 250, n. Rome, citizens of, considered it as degrading to follow many branches of commercial industry, xvi. Republic and emperors of, prohibited the exportation of gold and silver, xx. Accounts kept at, in Asses and Sestertii, 17. Money of, only copper till five years before the first Punic war, 17. Law of, perfectly silent with regard to apprenticeships, 56. Value of sil¬ ver in, was higher before and after the fall of the Republic, than generally in modern Eu¬ rope, 100. Custom of primogeniture was un¬ known in, 170. Her law of succession sanc¬ tioned no arrangement similar to entails, 171. Originally founded on an Agrarian law, 249. First motives of the institution of her colonies, 249 ; which colonies occasionally furnished both revenue and troops, 266. Grounds of her social war with her allies, 280. Ruined by admitting the Italians to the privileges of citizens, 281. Long drew her corn from Egypt, 309. Honoured agriculture more than manufactures or foreign trade, xvii., 309. Composition of the armies she sent to oppose Hannibal, 316. When she employed standing armies, 317. Causes wdiich relaxed her mili¬ tary discipline, 317. Plan of education in ancient, 347, 348. Courts of justice at, how constituted after law became a science, 349. Superiority of character in the inhabitants of, over the Greeks, probably owing to the better constitution of their courts of justice, 349. Seems to have been at no pains, beyond the encouragement of military exercises, to form warlike abilities, 349. How military exercises were encouraged in, 352; effects of this, 353. The eminent among her mere literati almost all either public or private teachers, 365. Burman de Vectigalibus Pop . Rom» cited, 388, n. Linen not used in, 393. Her coin de¬ graded, at the end of the first Punic war, by the reduction of the As, 423 ; this opinion con¬ troverted by M. Garnier, 423, n. ; conse¬ quences of the operation, as it affected the debtors, 423, 424. Law of, regulating succes¬ sion to property of one dying intestate, 563. Rotation of crops. (See Crops.) Rouen, M. Messance’s statement respecting work done by the poor in cheap years at, 38. Its great trade the effect of situation, 148. Rowe, Sir Thos. Sir Robert Cotton’s speech be¬ fore the Privy Council in 1626 on a project for enfeebling the standard of the coin, erroneously attributed to Sir Tlios., xxxviii, > 1 . Royal Bank of Scotlaud. Its origin and capital, 508. _ Ruble of Russia, different values of, in paper and in silver, 490. Ruddiman, his preface to Anderson’s Diplomats Scotise cited, 84, 98, 129. Ruff head, Mr., his edition of the Statutes at large noticed, 84. Russia. Large quantities of gold found in the Siberian rivers, &c., 96, 97, n. First embassies to, from England, arose from commercial in- X x 674 INDEX. terests, 329. Company of merchants of Eng¬ land, its institution, 330 ; has, in effect, ceased to exist, 330, n. History of her currency con¬ firms the doctrine that by limitations of pure paper money, its value may be indefinitely raised, 490. Rutherfurd, Right Hon. Andrew. His measures for assimilating the Scotch to the English law of entail, 561. Rye. Bounty on its exportation, as fixed by Act of 1773, 512, n. (See also Corn and Grain.) Ryots, the cultivators of the soil in Bengal, 580. Clashing interests of the Ryot and Zemindar under Lord Cornwallis’ settlement, 580, 581. Small extent of their holdings, 582. Ryotwar system in Madras, carried out under the superintendence of Sir Thos. Munro, 583. Opposed to all progress and improvement, 583, 584, 585. Ryswick, war concluded by the treaty of, laid the foundation of the British national debt, 418. S. Sailors, circumstances which compensate their small pay, 49. Rate of their wages when Dr. Smith wrote, and at present (1837), 50, and n. Account, shewing the crews employed in ship¬ ping belonging to the British empire in 1825 and 1848, 541. The prevalence of intemper¬ ance among them a great evil, 542. Number of, now in the merchant service of Great Bri¬ tain, 542 ; in the navy, 542. Plan for keeping up a supply of, without impressment, 537, 538. Addition which impressment makes to their wages, 538. Wages of, in America, higher than in England, 541. St. Andrew’s University. Disgraceful practice of granting degrees in absence formerly preva¬ lent in, 588. St. Croix. (See Croix.) St. Domingo. (See Domingo.) St. Peravy, a zealous disciple of Quesnay, but too much of a partizan, xliii, xliv. His Memoire sur les EJfets de C Impot indirect , &c., cited, xliv, n. Salaries; of office, tax on, 391, 392. Those of parish schoolmasters in Scotland very small, 595. Proposal to augment them, 595. Salt, trade in provisions cured by, might be ren¬ dered free with impunity, 202. An ancient subject of taxation, 395. How taxed in Eng¬ land in 1784, 395. Tax on, now repealed, 395, n. Tax on, in France, was farmed, 409; af¬ forded a constant temptation to smuggling, and was a source of much demoralization and mi¬ sery to the poor, 409; similar taxes noticed in Austria, Prussia, and Italy, 409. The repeal of our salt laws and the duty on salt, of essen¬ tial service to the herring fishery, 552. Sanction, the Pragmatic, in the 15th century, favourable to the independence of the Gallic-an church, 361. Saudi, his Storia Civile di Venezia cited, 180. Savage and civilized nations, unequal shares of necessaries and conveniences acquired and en¬ joyed in, 1. Savings Banks. (See Provident Banks.) Saxony. Estimated produce of the mines of ! Saxony, 97, n. Say, M,, wrong in asserting that Galiani was the first to shew that labour is the only source of wealth, xxxii, n. Erroneously contends that the Italians and French first discovered the true principles of commercial intercourse, xxxvii. His Traite d*Economic Politique, 1802, valuable for its able and partly original account: of the nature and causes of gluts, lii. Scarcity. Effects on agriculture, of the scarcity and high prices of 1800 and IS01, 513. Mo¬ nopoly the parent of, 521. Scaruffi. His works referred to and character¬ ized, xxxvii. Schoolmasters. (See Teachers.) Schools. Establishment and supervision of pa¬ rish schools in Scotland, 595. Institution of pattern schools in Scotland for instructing pa¬ rish schoolmasters in the best mode of teaching and communicating their knowledge to chil¬ dren, 596. Science, the great antidote to enthusiasm and superstition, 357. Sciences. None of them instantaneously carried to perfection, and Political Economy has shared the fate of the rest, xviii. Scientific degrees. (See Degrees.) Scotland, grain generally not so dear in, as in England, 34, n. Market rate of interest in, 41. Progress of improvement in, since the Ameri- ! can war, more rapid thau in England, 41, n. Cotters, a set of people in, 53. Stocking-knit- i ting and spinning of yarn in, 53. Moderation of the livings and respectability of the clergy there, 60; by act of parliament 1812, the mi . nimum of their stipends fixed at 150L, 60, n. Price of butcher’s meat in, 68. Common people of, who are fed on oatmeal, neither so strong nor so handsome as those of the same rank in England, 74. Highlands of, trade in bark from, 75. Stones sent from, to pave the streets of London, 75. Fertile lead mines in, give a sixth part of the gross produce as rent, 78. Labouring poor of, eat little butcher's meat, 86. Exports of corn from, to England, greater than her imports, 87, n. Coin of, before the Union, contained only a small preponderance of gold, 98. Market for her cattle, effects of its extension, 101. System of husbandry in, vastly improved since the close of the Ame¬ rican war, 103, n. Wool of, fell in price in consequence of the union with England, 108. Erection of banking companies in, effects of, 129. Gold coin in, previously to the Union, exceeded in value the silver, 129. Amount of paper currency in, in 1825, 129, n. Cash ere- | dits with bankers, explanation of the system of, I in, 130. Difficulties of the banks there during the drain for gold, previously to 1772, on the Bank of England, 132, n. Bankers of, had over¬ traded 25 years before the publication of the Wealth of Nations, 135. Ayr, bank in, prin¬ ciples on which it was established and conduct¬ ed, 137. Paper money of, banishes gold and silver, 142. Optional clause inserted into bank¬ notes there, 143. Nearly a third part of the lands of, under strict entail, 171. Steel~bow tenants in. a species of Metayers, 173. Law of James II. respecting leases, the Magna Charta of agriculturists in, 174, and n. Law of entail in, its present aspect, 174. Evil effects on Scotch agriculture produced by the Reform act in conferring the franchise on SOL tenants of land, 174, n. Princely hospitality exercised INDEX. 675 down to a recent period in the Highlands of, 182 ; incredibly small rent, in this district, of a tenement of land fit to maintain a family, 182. Exercise of allodial r ights in, by Mr. Cameron of Lochiel, so late as the middle of the 18tli century, 183. Ancient prohibition in, against transporting the precious metals, 188. Moun¬ tains of, destined to be cattle-breeding districts for Britain, 202. Herring fisheries of, 230 ; view of the bounties on them, 231 ; accounts of them, 242, 243, n. Part of the salary of the judges of the Court of Session in, arose from the interest of a sum of money, 324. Her banks mint-stock companies without any exclusive vilege, 340, and n. Her establishment of uish schools, how beneficial, 352. Catholic hurch was easily overturned in, 362. Law of >atronage to church benefices in, 363, 364. Equality of her clergy favourable to the charac¬ ter and usefulness of the order, 364. Eminent men of letters of, have been mostly professors in Universities, 365. Revenue of the clergy of, in 1755, 365 ; estimate of this revenue as at pre¬ sent (1837), 366, n. Tax on windows in, 1775, 381. Law of, how, like that of Rome, it dis¬ tinguishes children who have received their portion and are married, 388. Consump¬ tion of malt liquor among the inferior ranks of, small, 427. Duty on the distillery in, pro¬ duced less than that of England in proportion, 427. People of, by the Union, delivered from an oppressive aristocracy, 430. Spirit of party less prevalent there than in England, 430. Po¬ pulation of, in 1700, 1755, 1801, and 1831, 462. Ditto in 1811, 1821, 1831, and 1841, 463. Po¬ tatoes first raised in the open fields of, in 1728, 469, 470, n. Banking companies in, mostly banks for the issue of notes, and for deposits, 489 ; estimate of amount of deposits with, in 1848, 489 ; their reception of small deposits, on interest, commended, 489. Use of gold coins in, all but wholly unknown for a century, 501. Policy of Sir R. Peel’s measures of 1845 for re¬ gulating banks in, 505. Nature of the regula¬ tions therein, 506. Description of her charter¬ ed and other banks, 508. The consumption of wheat in, increased tenfold since 1790, 525. Origin of entails in, 557. Act of the Parlia¬ ment of, settling entails, 557. Revolting des¬ potism to which she was subject at the date of their introduction, 557. Laing’s History of, cited, 558. Valued rent of, in 1814, 553. Num¬ ber of entails recorded in, from 1685 to 1846, 553. Proportions of the lands of, under entail in 1785, 1811, and, by estimate, now (1849), 558. Attempts in, to modify the law of entail, 558. Powers of entaileis in, beneficially limited by statute 10 Geo. III. cap. 51, 559. System of perpetual entail in, has not proved so injurious as is commonly thought, 561. Lord Advocate Rutherfurd’s measures for assimilating the i Scotch to the English system of entails, likely to prove very advantageous, 561, and n. Suc¬ cession to farms as well as to estates in, regu¬ lated by primogeniture, 570. Contrast be¬ tween the agricultural populations of Scotland and Ireland, inconsequence of subletting being almost unknown in the former, 570. One in¬ stance in the former cited to show its disas¬ trous effects, 571, n. Mr. Oliver’s views of the consequences of a different course,— with a power of subletting and subdividing farms by the tenants, 571, 572, 573, 574, 575. Dis¬ graceful custom of granting degrees “in ab¬ sence” formerly prevalent in two of her Uni¬ versities, 588. Rise and characteristics of its system of parochial education, 594, 595 ; pro¬ posals for the improvement of this system, 595, 596. Comparison of her poor laws with those of England, 597, 601, 602, 603. Esta¬ blishment of central board at Edinburgh, 605. “ Scrittori Classici Italiani di Economia Politic.!.” This collection of the works of her economical writers does honour to Italy, xxxviii, n. Sea, inquiry into the alleged antipathy of the an¬ cient Egyptians to it, 552, 553. Seamen. The increase of our shipping and sea¬ men not attributable to the Navigation Laws, 536. Seasons, their inequality obviated by a free trade in corn, 521. Secrets in manufactures more easily kept than those in trade, 27. Sects in religion, 353, 354, 355. Their reciprocal influence, in periods of excitement, on political parties, 355. Multiplicity of, under the wise indifference of an enlightened government, neutralises their importance, 356. Have ge¬ nerally begun among the common people, 356 ; reasons of this, 357. Effectual remedies to their unsociality and rigour, 357. Securities, return showing the amount of those held by the Bank of England from 1778 to 1840, 509, 510. Security. Profits, how affected by the security or insecurity of a particular trade, xlix. Security should be given for their notes by all banks of issue, 502, 503. Of property in England one of the causes of her commercial and manufac¬ turing superiority, 537. Seignorage, enlightened opinions of Sir Dudley North on this subject referred to, xxix. Dr. Smith’s mistake as to the amount of seignor¬ age in France occasioned by his trusting to Bazinghen, 21, n . Select vestries, constitution and functions of, 600. Selfish pleasures ruinous, 411. Seneca quoted, 528. Senior, Mr., of Oxford, his criticism on the word labour obviated, 435, and n . Serra, his work on Political Economy, published in 1613, cited, xxxvii, n. ; its liberality and cor¬ rectness, xxxvii, n. Servants. Quesnay includes menial servants in his unproductive class, xli. Domestic servants contribute but little to taxes on articles which they use or consume, 619. Settlements in parishes, law of, remarks on, at various periods, 63. Act of William III. re¬ quiring certificates of, repealed in 1795, 64, n. Enormous expenses of actions at law regarding them, and Removals, 65, n. Origin of, 597. Their operation described, 598. Sheep, in some provinces of Spain killed for the sake of fleece and tallow, 106. Shipowners, their fears of foreign competition unfounded, 541. Ships. The prodigious increase of our shipping not attributable to the Navigation Laws, 536. Account of their number in 1821 and 1848, 541. They cannot be manned and navigated cheaper by foreigners, 541. Taking quality and durability into account, English ships are as cheap or cheaper than those of any other 676 INDEX. country, 542. Proposal to subject the masters of, to a strict examination, approved, 542. Shopkeepers, their usefulness, 160. A nation of,—what appears, at first sight, like its policy, 276. Short, Dr., calls war, the plague, and epidemics, correctives of the redundance of mankind, 456. Siberian rivers, extraordinary increase in the produce of gold from them, 96, n. Sicily, Greek colonies in, their extent and situa¬ tion, 611. Silk manufacture. Violent controversy previous¬ ly to 1700 as to the importation of East Indian silks, xxxiii. Introduction of silk worms into Italy and France, 180. Present prospects of, 201, n. Articles of, sold in ancient Greece and Rome for their weight in gold, 310. Silver, Dr. Smith’s error respecting the value of, in relation to gold, pointed out, and illustrated from the histories of the coinages of France and England, 18, 19, n. A pound of standard coin¬ ed, since 1816, into 66 shillings, 19, n. Prohibi¬ tion to export, in coin, repealed 1819, 20, n. A legal tender only to the extent of 40$., 18, n., 20, n. Seignorage on, in France, 21, n. Fluc¬ tuations in the market price of, arise from the same causes which, in that way, affect all other commodities, 21. Mines of, in Peru, 78. Va¬ riations in the value of, during the last four centuries, 81. "Why cheaper in Spanish Ame¬ rica than in Europe, 85. Rise in the value of, in relation to corn, in England and France, from 1700 to 1764, 90, 91. Market of Europe for, from America, greatly extended, 92. America Herself an extensive market for the produce of the mines of, 93. Drain of, to the East Indies, nearly ceased within the last six or seven years, 95, ft. Proportions of, to gold, before and since the discovery of the American mines, 97. Any rise in money prices, proceeding from a degradation of the value of, would affect all sorts of goods equally, 111. (See also Bul¬ lion, Gold, and Metals.) Sinking fund, its origin, 415. Its fallacy, 604, 631, 632. Dr. Hamilton had the merit of dis¬ sipating this delusion, 631. Sismondi, M. de, degree of credit which may be attached to his account of the extreme prudence, displayed in the married state, in France, 467, n. His Etudes sur VEconomic Politique cited, 610. Skill. The quantity of, required in an employ¬ ment, how it affects wages, xlix. The prospe¬ rity of agriculture depends on the skill and capital of the actual cultivators of the soil, 571. Government bound to take measures to secure adequate skill of medical profession, 593. Skins of larger animals the original materials of clothing, 74. Slavery among tenants of the soil in ancient Europe, 172. Among workmen in Scotland, last remnant of, when abolished, 172, n. In¬ sufficient supply of labour in our West Indian colonies, since the abolition of, 613. Compul¬ sory labour indispensable to the cultivation of sugar in tropical countries, 613. Slaves. Commerce and manufactures in ancient Greece and Rome, carried on entirely either by slaves or the very dregs of the people, xvi. Earnings of an able-bodied slave compared by Mr. Cantillon with those of afree labourer, 31. Condition of, under an arbitrary, said to be better than under a free, government, 263; this illustrated from the punishment inflictec by Augustus on Vedius Pollio for meditatei cruelty to a slave, 264. Very seldom inventive 309. Smellie’s Lives quoted as to Adam Smith’s lov, of fine books, x. Smith, Dr. Sketch of his life. i. Commence ment of his studies at Glasgow University, j His removal to Oxford, i. His lectures or belles lettres, ii. His appointment to the chair of logic at Glasgow', iii. His elevation to tha of moral philosophy, iii. Publication of hi; Theory of Moral Sentiments, iv. Travels or the Continent, vi, vii. Appearance of hi; Wealth of Nations, vii. His character, x, xi xii. List of his works, xii, xiii. Genera character of his Wealth of Nations , xlv. I has done for Political Economy what Grotius Treatise De Jure, &c. did for public law, xlv His distinction of home trade as most produc¬ tive, and of foreign trade as more productive than carrying, imaginary, xlvi. His theory o. productive and unproductive labour defective xlvi. His view of what determines the value of commodities, and of the progress of rent how erroneous, xlvi, xlvii. These errors influ-i ence his opinions on w'ages and profit, and ou the ultimate incidence of various taxes, xlviii His errors as to rent the more remarkable, at its true theory was most clearly explained by Dr. James Anderson in 1777, seven years be¬ fore the third edition of the Wealth of Nations appeared, xlviii, n. Though the objections tc the arrangement of the Wealth of Nations, as perplexed and illogical, are in some degree weL founded, his collateral discussions are verj attractive, xlix. Arrangement of the w r ork de¬ scribed, xlix, 1. Has not explicitly stated his understanding of the term wealth , 1. His over¬ sight of the circumstance which determines the price of corn in different countries, 4, ft. Speculations of, respecting the origin of the divi¬ sion of labour, though ingenious, not solid, 8, n. His statement that cattle, in early ages, were used as money, substantially founded, notwith¬ standing the criticism of Marquis Garnier, 11, n. Modification of his views of the circum- j stances which regulate the value of commodi- j ties, not to be accomplished in notes, 13, ftj Mistook the reason why corn rents have pre¬ served their value better than those in money. 15, n. His error in asserting that gold regu¬ lates the value of silver, 18, n. His account of fluctuations in the market price of bullion at different periods, inaccurate, 19, n. Erro¬ neously rates the seignorage on coin in France, j 21, n. Wrong in stating that monopoly price j is on every occasion the highest that can be got, 28, n. Rather overrated the effect of cor¬ poration privileges, 28, n. His statements regarding the wages of labour in chap. viii. book i. accurate, liberal, and conclusive, 29, n. Wrong in asserting that combinations of work¬ men are always attended by clamour, and gene¬ rally by outrage, 30, n. Statements of, on causes influencing population, commonly accu¬ rate, 36, n. Does not assign the true cause of the progressive fall in the rate of profit, 40, ■ n. Seems to have mistaken the true cause of the fall of profits in Holland, 41, ft, Over¬ stated the real amount of stock held in Eng¬ land, by foreigners, at the time he wrote, 41 , n. Chap. x. of book i. one of the most valuable in his Wealth of Nations, 45, n. Sin¬ gularly overlooked the evils of impressment, 50, n. Mistaken in asserting that agricultu¬ ral labourers are more intelligent than those employed in manufactures and commerce, 5% n. Wrong in stating that corporation privi¬ leges ultimately cover those protected by them from the principle of competition, 58, n., 59, n. Had he lived till now, would not, perhaps, have been of opinion that landlords and farmers have no desire to enter into combinations, 59, n. Misled in following Dr. Arbuthnot’s esti¬ mate of the value of the Attic mina , 61, n. Accused of exaggerating the effects of the laws respecting settlements of the poor, 65, n. His exposition of the nature, origin, and causes of rent, defective, 66, n. Erroneously asserts I that in rice countries a greater share of the produce should belong to the landlord than in corn countries, 73, n. His fallacious doctrine respecting the circumstances which, in dif- * ferent states of society, regulate the cost and produce of corn, 86, n. Formed his opinion j of the riches of China after the earlier travel¬ lers and the Jesuits, 87, n. His estimate of the importation of gold and silver from Ame¬ rica a low one, 96, n. States the doctrine that the proportion between the values is not the same as between the quantities of commodities at market, 97 , n. ; this distinctly illustrated, 97, »i., 98, n. Probably exaggerated the effect of the restrictions on the trade in wool, 107, n. Made : no allusion to the cotton manufacture, 114, n. In saying that landlords never mislead public deliberation with a view to the interest of then- own order, had forgot two important legisla¬ tive acts, 115, n. Most erroneously asserts that profit is high in poor, and low in rich countries, 116, n. Divided the stock of a country into capital and revenue, on grounds which lead to erroneous conclusions, 120, n. A restrictive condition added to his de¬ finition of the circumstances in which the channel of circulation would be o^rflowed, 127, n. Wrong in characterising as waste, the expenditure of the idle classes, 128, n. Ilis opinion on the nature of cash credits in Scot¬ land, controverted by Mr. Ricardo, 130, n. His estimate of the expense of raising money by drawing and redrawing, shown by Mr. H. Thornton to be overrated, 136, n. Wrong in asserting that gold and silver, used as money, produce nothing to the country, 141, n.; and in stating, that banking operations convert dead, into active and productive stock, 141, n. Erroneously stated that convertibility, into gold and silver, is necessary to sustain the value of paper money as legal tender, 14o, n. Makes an unfounded distinction between pio- ductive and unproductive labour, 146, n.; further remarks on this distinction as it ie- lates to public functionaries, 151, n. Unten¬ able proposition advanced by, on the subject of the usury laws, 158, n. His fallacies re¬ specting comparative advantageousness of dif¬ ferent employments of capital further illustrat¬ ed, 159, n. His most objectionable doctrine that farming is of all possible ways the most advantageous for employing a capital, 162, n. Inconsistent in stating that capital employed in the foreign trade of consumption gives a diminished impulse to the industry of the country from which it issues, 164, n. ; his further error on this point, 164, n. Note on bis view- of the advantageousness of the carry¬ ing trade, 166, n. Correction of his remark that the home trade, with an equal capital, af¬ fords the greatest revenue , 190, n. Ilis state¬ ment, that merchants and manufacturers derive the greatest advantage from a monopoly of the home market, contested, 201, n. Overstates the loss to be apprehended from the change to a free commercial system, 201, n. Wrong in concluding that as taxes on necessaries raise the wages of labour, a rise in wages affects the price of commodities generally, 204, n. Mis¬ taken in his conclusion from a case supposed, of England taking exclusively native commodi¬ ties from France, and paying them in colonial or tropical products, 217, ».; also in his inte- rence drawn from the same case, with this variation, that England paid with gold and sil¬ ver, 217, n. In discussing the rise of price, effected by bounties on exportation, confounds the utility of corn with its value in exchange* 226, n. ; in prosecuting this view-, erroneously asserts that “ the money price of corn regu¬ lates that of all other home-made commodi¬ ties,” 226, n. Wrong in asserting that the restrictions on exportation of gold and silver from Spain and Portugal destroyed their manufactures by attracting supplies from other countries, 227, n. Exaggerates greatly the effects of a bounty on the exportation of manufactured goods, 228, n . Fallaciously states that the real value of corn does not vary with its average money price, 229, n. Mistaken in asserting that the landlords of Britain, by demanding the bounty which long obtained, retarded the improvement of their lands, 229, n. Mistaken in asserting that the statute of 12 Geo. III. cap. 71, did not repeal that of 15 Cha. II. cap. 7, 237, n. Attributes to treaties of commerce, advantageous results which can hardly be said to flow from them, 243, n. The doctrine which he advances, in his chapter on Colonial Policy, that the monopoly of the colo¬ ny trade increased the rate of profit, erroneous, 267, n., 268, n. Asserts, without proof, that, since the Act of Navigation, the foreign trade of Britain had decayed, while her colony trade was continually increasing, 268, n. Correction of what he states of the high profits of British stock raising the price of manufactures as much as, and sometimes more than, the high wages of British labour, 269, n. Repeats his state¬ ment that the monopoly of the colony trade drove Britain from some of the most produc¬ tive branches of her European trade, 270, n. W r rong in measuring the advantageousness of a particular employment of capital, from the frequency of its return, 270, n. Overrated the danger, to our manufactures and trade, Irom a separation of political connection with our colonies, 272, n. Attributes throughout, to the monopoly of the colony trade, effects on the rate of profit which, had they really existed, it would have been difficult to show that they were injurious, 275, n., 276, n. Asserts, seem¬ ingly without foundation, that high profits de¬ stroy parsimony, 276, n. Attributes, question¬ ably, exorbitant profits to the merchants of Ca¬ diz "and Lisbon, 276, n. Incorrectly states that 67 8 INDEX. the Portuguese enjoyed almost the whole of the East India trade for more than a century, with¬ out any exclusive company, 285, n., 286, n. Not being aware of the principle which determines rent, his refutation of the Economists is incom¬ plete and unsatisfactory, 305, n. Distinction which he attempts to make between the labour of menial servants and that of artificers, imagi¬ nary, 305, n. His statements of the price of articles in antiquity are taken from Dr. Ar- buthnot’s tables, which are of very doubtful authority, 310, n. His censure of the condi¬ tions in leases questioned, 374, n. His view of the effect of taxes on rent incomplete,—and 'why, 376, n. Did not see the nicety of ques¬ tions with respect to the effect of taxes on the gross produce of the land, 378, n. His assertion, that the rent of houses is paid for the use of an unproductive subject, why erroneous, 379, n., 380, n. Mistaken in his statement respecting the effect of a tax on the profits of stock em¬ ployed in agriculture, 386, n. His speculations, with respect to the effect of taxes on wages, re¬ quire very great modification, 39l,n. Reference to the refutation of his erroneous notion, that taxes on necessaries, by raising wages, enhance the price of manufactures, 394, n. His account of the reduction of the Roman As, at the end of the first Punic war, controverted by the Mar¬ quis Gamier, 423, n. Nowhere states the pre¬ cise meaning he attached to the term labour, 435. His chapter on Rent unsatisfactory, 444. Sense in which to take his proposition, that the price of food is always sufficient to leave, after replacing capital and realising average profit, a surplus to the landlord, 446. From his statement that the market rate of wages depends on the contract between work¬ men and their employers, we must not infer that the terms of this contract are adjusted on any arbitrary principle, 470. Fallacy of his inference from the imagined possible continu¬ ation of that state of things in which the whole produce of industry belongs to the labourer, 474. His theory as to the rate of Profit plausible, but unsound, 476. His theory of Money, in many respects, incomplete, 480. His Digres¬ sion on the Corn Laws continued to their ex¬ tinction in 1849, 511—518. His argument for a free exportation of corn, complete, 518. His argument against a bounty on exportation, untenable, 519. His view of the effects of the Navigation Law very doubtful, 535. Formed a just opinion of the injudicious arrangement of the tonnage bounty for the fisheries, 551. His statement respecting the aversion of the an¬ cient Egyptians to the sea a repetition of a common error, 552. Partial inaccuracy of his opinion that entails were unknown to the ancients, 556. His estimate of the extent of land in Scotland under entail, 558. His view of primogeniture dissented from, 561. His letter to Dr. Cullen on degrees in universities quoted, 588, 589, 590, 591. His error in sup¬ posing that the monopoly of the colony trade increased the rate of profit, 605. His opinion as to the causes of the rapid growth of colonies well founded, though impugned by Sismondi, 610, 611. His estimate of the operation of taxes on rent of land incomplete and inaccu¬ rate, 613 ; and still more so as respects those on profits, 617. Incorrect in his view of the incidence of taxes on wages, 618. His defini¬ tion of taxes on raw produce only conclusive to a certain extent, 620. Remarks on the ap. parent bias of his opinions respecting the con¬ trol of highways, 624, n. Great changes in the mode of travelling since his time, 624, 625. Smith’s Ancient and Present State of the County and City of Cork, cited, 470, n. Smith s Memoirs of Wool referred to, 106, n. Commended, 294, n. Smith’s Tracts on the Corn Trade , 1766, cited 224, and n. Smuggler, the, his common character and fate 406, 407. Smuggling, the risk of, materially diminished by reserving the monopoly of the coasting trade to British ships, 538. Soap, duty on, 395, and n. Society. The Economist should resort to the his¬ tory of, and study man in every different situ¬ ation, xviii. Quesnay’s division of, into three classes, the productive, proprietary, and un¬ productive, xli. Ricardo one of those who has done most to unfold its mechanism, liv. The lower we descend in the scale of, the less pru¬ dence and forethought we find, 599. Soils of diminished fertility, when resorted to, cause a fall in the rate of profit, lv, 40, n. Soldiers, private, pay of, in 1614, 1775 and 1837, 35, and n. When employed to work by the piece, hurt their health by excessive labour, 37. Circumstances which seem to compensate their small pay, 49. Solorzano cited as to the tax on Peruvian silver in 1504, 92, n. South Sea Company,—what its trading stock amounted to, 334. Circumstances of, as to expense, favourable, 335. Stock-jobbing and mercantile projects of, extravagantly conduct- ! ed, 335. In 1724, undertook the whale fishery, 335. History and close of, 335, 336. Sovereign, the,— his first duty, to protect the so¬ ciety from the violence of other independent societies, 311. How supported by a standing army, 318. His second, to establish an exact administration of justice, 319. His judicial j authority long a source of revenue, 321. What he is in nations of shepherds and husbandmen, 322. Third and last duty of, to erect and maintain such public w r orks as individuals or bodies of them cannot undertake, 325. In a country with an established religion, can only be secure by influencing the greater part of its I teachers, 358 ; his difficulties in managing this influence, 359. Power of, how affected in an¬ cient Europe by the encroachments of the Pope, 859. Confederacy of the clergy was more for¬ midable to, than that of the great nobility, 360. How liis influence revived, on the decay of the temporal power of the clergy, 361. Of the ex¬ pense of supporting his dignity, 366. Sources of revenue which may belong to him, 367. Character of, does not agree with that of a trader, 368. His expenses in feudal times, 369. In feudal times hoarded treasure, 412. In commercial countries is led to spend his per¬ sonal revenue on fineries and luxuries, 412. Spain, King of, his tax on the mines of Peru ill paid, 78. Poverty of, as compared with France by the Emperor Charles V., 92. In some pro¬ vinces of, sheep killed for the sake of the fleec and the tallow, 106. A beggarly country not- INDEX. 679 withstanding its possession of mines, 110. Its maritime discoveries, 250 ; was attracted to attempt them by the thirst of gold, 252. De¬ rived a revenue from its colonies from the moment of their first establishment, 254. Was a manufacturing country before it had any considerable colonies, 274. Bad effects of the monopoly of its colony trade, 274, 608, 611. Its wretched institutions and policy would have prevented accumulation, though the profits ot its merchants had been exorbitant, 27 6, n. Colonies of, gave more real encouragement to the industry of other countries than to its own, 282. Driven from its alliance with England by the dismemberment of Gibraltar and Minorca, 333. Some Universities of, are said never to have made the study of Greek part of their course of education, 344. Depopulation of, not caused by emigration, 457. Doubtful whether old Spain derived any substantial benefit from her colonies, 608. Causes of their slow pro¬ gress, 608, 611. Specie. (See Bullion, Gold, Metals, and Silver.) Spectator, No. 69, referred to, xxxiv, n. Speculation. Over speculation, by diverting capi¬ tal into unprofitable channels, one of the chief causes of gluts, liii. The speculative merchant described, 51, 52. Extraordinary rage for, in 1824 and 1825, and disastrous results, 499. Sir Robert Peel’s currency measures a material check to over-speculation and gambling, 506, 507. Discounts at long dates most pernicious, being a great stimulus to unsafe speculation, 550.° Evil effects of the speculations of the East India Company, 586, 587. Spirits. Duties on, 403, and n. Splitting. (See Subdivision and Subletting of Land.) Stamp duty, on law proceedings, might be made available towards the maintenance of the courts, 324. How regulated in Britain in 1784, 388. I How levied at present (1837), 388, n. How managed in Holland, 388; in France, 388. First contrived in Holland, 388, n. Not much complained of in France, 390. Further re¬ marks on, in England, 390. i Stamps. Banks of issue should be called on to give securities in proportion to the stamps used by them, 502, 503. Standard. Locke’s Tracts on money powerfully contributed to prevent Mr. Lownde’s proposal for degrading the standard from being carried into effect, xxxiii. The attention of early Ita¬ lian economists principally occupied as to the influence of a reduction of the standard of money, xxxvii. Sound policy of the act oi 1819 for restoring the standard asserted, 498. Go¬ vernment bound to see that every coin tiuly corresponds with that denomination of the standard which it represents, 503. Standing army, one of the first disiinctlv marked by history, that of Philip of Macedon, 316. Bravery of the soldiers of, not lessened bv peace, 318. The best defence of a civilised country, 318. Jealousy of, by men of repub¬ lican principles, ill founded, 318. States General. (See Holland.) Statesmen, peculiar claims of Political Economy on their attention, xv. Statutes at large,—error in the relative scale of bread to wheat (stat. 51 Hen. III.) continued, in transcribing them, down to Mr. Ruffhead, 84. Steam, revolution in travelling caused by the ap¬ plication of, to the propelling of vessels, and of carriages on railways, 624, 625. Steam-engine, great improvement in, tile work of an idle boy, 5. Steel-bow tenants, in Scotland, like the Metayeis in France, 173. Steuart, Sir James, one of the ablest adherents of the mercantile system, xxiv, n. His Inquiry into the Principles of Political Economy , 17 67, characterised, xxxvii. Not once referred to by Dr. Smith, xxxvii. Strikingly illustrated the principle of population, li. Stevenson’s survey of Surrey, cited, 622. Stewart, Dugald. His Life of Adam Smith, quoted, vi, ix, x, xi, xii, xxxv; referred to, xlii, n. Stock. (See Capital.) Stones, precious, whence the demand for them, 79, 80. Storch, M., his view of the mischievous conse¬ quences of the mercantile system, xxiv, xxv. His Cours d'Economie Politique , Paris, 1823, cited, 172, n. His account of the fall of the Bank of Amsterdam referred to, 215, n. His able account of the government currency and paper-money of different countries in Europe, cited, 216, n. His Economie Politique, cited, 487, n., 490, w. Strabo quoted, 553. Strafforello, M„ his tract on French agriculture quoted, 571. Stuarts. The English Parliaments intractable un¬ der the violent system of these princes, 359. Study, course of, during the middle ages, xvii. Subdivision of Land. Pernicious influence of the Reform Act in encouraging the subdivision of land in Scotland, 174, n. Evil effects of the practice of, prevalent in France and Ireland, 569, 570. Ruinous consequences that would follow its introduction into Scotland, as stated by Mr. Oliver, 57 3. Influence of the Poor Laws in preventing this subdivision in England, 597. Subletting Act. Effect of, in checking the ruin¬ ous subdivision of land in Ireland, 570, 571. Succession, law of, among the Romans, 563. To landed estates, generally regulated in^ modern Europe by primogeniture, 561, 562, 563. As presently settled in France, most injurious, 563. Sugar, the price of, was never a monopoly one, n. It cannot be cultivated in tropical climates without compulsory labour, 613. Sugar colonies in the West Indies compared to the most precious vineyards, 72. Their pre¬ sent unprosperous state owing to over-cultiva¬ tion, 72, n. So far as sugar is concerned, we would suffer but little by the emancipation of the West India colonies, 607. Sugar planters, their condition greatly altered for the worse since Dr. Smith wrote, 72, n. Those of France superior to the English in the treat¬ ment of their slaves, 263. Sumner’s, Arch-Bishop, Records of the Creation , cited, 460. Sumptuary Laws. Enlightened opinions of Sir Dudley North on this subject, xxix. Superstition. Science the great antidote to the poism of, 357. Public diversions another re¬ medy, 357. 6S0 INDEX. Supply and demand, their effects on the tempo¬ rary price of commodities, 25. Surgeons. (See Medical Profession.) Sussmilch, M., his statement of the number of marriages in Prussia, before and after the plague of 1710-11, cited, 459. Sweden, her early establishment in North Ame¬ rica, 255. Would probably have never sent a ship to the East Indies but for the monopoly, 285. Swift, Dean, his saying about the arithmetic of the customs quoted, 398. Switzerland, a spirit of faction was fostered in the considerable cities of, by popular elections of their clergy, 364. Her Presbyterian clergy use¬ ful and respectable, 365. Her eminent men of letters mostly professors in Universities, 365. Her Protestant cantons found, in the revenue of the Roman catholic church, a fund for the maintenance of their clergy, and also nearly to defray all the public expenses, 365. Economi¬ cal motives have led her, in some instances, not merely to tolerate but to establish both the Roman and Reformed churches, 366. Pro¬ perty-tax, how levied in several parts of, 384. In some cantons of, a tax on the alienation of land was levied, 388. System of succession to property in, 567, n. Symonds, Dr., his Remarks on a History of the Colonisation of the Free States of Antiquity , 1778, referred to, 250, n. T. Tacitus cited, 554, n.; quoted, 555, n. Taille, the, an old tax in France,—its inequality and injurious operation exposed by Seigneur de Bois Guilbert, in 1695, xxxviii. Details respecting, 376, 385. Abolished at the Revolu¬ tion, 386, n. Tariff, that of 1664 compiled by Colbert, xxiii. Important changes made in our tariff, by Sir R. Peel, in 1842, 517. Still more considerable changes made by him, in 184-5, 518. Success of these measures and other causes led to the repeal of the Corn Laws, 518. Tartary, militia of, excellent, 316. Governments of, in Asia, made the administration of justice a source of revenue, 321, 322. Task-work. (See Labourers.) Taxes, Sir W. Petty’s treatise on taxes and con¬ tributions, referred to and commended, xxviii. Quesnay’s proposal of a single tax on land, xli, xlii. Smith's incorrect views as to value and rent, particularly observable when he traces the incidence and practical operation of taxes, xlviii. An increase of those affecting persons engaged in industrious undertakings, one of the causes of permanent reductions in the rate of profit, lvi. Their incidence and effect on rent, profit, wages, and raw’ produce, practically in¬ vestigated by Mr. Ricardo, lvi. Increase of, one of the main causes of a fall of profits, 40, n. Perhaps distress the poor more, in times of moderate plenty, than the high price of corn, 112. Of France, 175, and n. 565. On neces¬ saries, their effects, 205. From what sources they must be paid, 371. Four fundamental maxims or conditions with regard to them, 371. On the rent of land, 372. One on land becomes unequal, 372. Land-tax recommend¬ ed by the Economists as the most equitable of all, 37 3. How one on rent might be organised, 373, 375. Discouragement to improvement from a variable one on land considered, 375 On produce, what, 377 ; these may be levied in kind or by valuation, 377, 378. On ther-ntof houses, 378; considered as payable by the tenant, 379. Effect of, on ground rents, 379. One on house rent proposed, 380. On houses in England, history of, 381. On houses in Britain, present rate of, 381, n. On profit, 382. On interest of money, 382. On income in England, coequal with those on land, 383. On property, at Ham¬ burgh, 383 ; in Switzerland, 384; in Holland, 384, 536. Object of that on property, 384. On the profits of particular employments, 384; their effect, 385. On profits, fall wholly on capitalists, 385, n. Effect of one on the profits of stock in agriculture, 38.6; fundamental error of this representation, 386, n. Poll-tax, 386, 3&7. On profit, do not affect the interest of money, 387. On capital, 387. On all trans¬ ferences of land under the feudal law, 388. Stamp-tax as levied in Britain in 1784, 388 ; and at present (1837), 388, n. Various,—their incidence, 388. On wages, 390; their effects, 391. On salaries of ofiice, 391. Capitation, levied according to rank under William HI., 392 ; these never produced the sum expected, 392. On consumable commodities, 393. On necessaries, and on luxuries, their respective effects, 393, 394. On salt, leather, soap, and candles, 395. On coal, 395. On bread in Holland and other states, 395. On carriages, 396, and n. Proposed by Sir Matthew Decker, by license, on consumption, 396. On drinking tea in Holland, 397. Of excise, 397. Of cus¬ toms, 397. On importation, have encouraged smuggling, 398. On wines, brandies, &c., 399. On malt, 402, 403. Cannot reduce the rate of profit in any particular trade, 403, 404. On luxuries, do not fall equally on the revenue of every individual, 405 ; how far conformable to the four general maxims on taxation, 405 ; how they obstruct some branches of industry, 406 ; objectionable, so far as they hold out a hope of evasion by smuggling, 406. Felt as lightly in Britain as in any other country with an expen¬ sive government, 407. Uniform system of, there, 407. Inexpediency of farming them, 408, 409. Perpetual, when commenced in Britain, 415. Expenses of government by im¬ mediately levying, compared with the opera¬ tion of funding, 420. Cause the efflux of ca¬ pital, 422. Breaches made by, in Britain, re¬ paired by the frugality and good conduct of individuals, 422. Of India, how raised, 580. On the rent of land, view of their nature and evil operation, 613, 616. On profits, equal, would fall on capitalists, 617. Direct taxes on wages, would diminish accumulation, 619. Influence of indirect taxes on wages, 619. On raw produce, difficult to estimate, 620 ; Mr. Ricardo’s view of them criticised, .620. Vexatious nature of tithes, 621. On particular commodities, 622. An equal ad valorem duty on all commodities, impracti¬ cable, 623. Their increase, to raise supplies within the year, compared with funding, 625, 632. Tea, great increase in the consumption of, since Dr. Smith wrote, 94, n. Doubtful wdiether the INDEX. 681 East India Co. gained by her monopoly of this t r ade, 587, n. Teachers, large sums made by those at Athen?, in their profession, 61. Their application les¬ sened by endowments, 342. Regulations re¬ specting them, in colleges, extinguish emula¬ tion, 343. Lectures of, how influenced by re¬ gulations, 343. Are never undeservedly dis- esteemed by young men, 343. Course they gave, on the scholastic system, in the univer¬ sities, 347. Diligence of, how corrupted in modern times, 349. Private and public, their different situation and motives, 350. Recom¬ mendation of the General Assembly of the Church of Scotland in 1706 as to the necessary qualifications of parish schoolmasters, quoted, 595. Small salaries of parish teachers in Scot¬ land, 595. Proposal to improve their condi¬ tion, 595, 596. Certificates of adequate know¬ ledge, signed by professors of one of the Uni¬ versities, should be produced by these school¬ masters, 596. The establishment of pattern schools suggested, where their schoolmasters could be taught the best means of communi¬ cating their knowledge, 596. Tehsildars, collectors of revenue in India, op¬ pressive powers vested in them, 583. Tenancy of land. (See Agriculture, Corn Laws, Land, Farming, and Rent.) Tenants. (See Farmers.) Tender. (See Legal Tender.) Terminus, the god, immoveable except by force, 609. Territory, acquisition of, how it enriches a coun¬ try, 42, n. Testators. (See Wills.) Theocritus cited, 45. Theology, influence of the study of, on the frame and character of the Universities of Europe, 344, 345, 346. Theorists, their effectual demand occasions the production of facts as raw materials, xix. Theory of rent, the true theory first pointed out by Dr. James Anderson, xlvii, n., 452, 453. Theory of Moral Sentiments (Adam Smith’s), publication of, in 1759, iv, quoted, v. Thomson’s, Dr., Life of Dr. Cullen cited, 591, ?i., 594. Thornton, Mr. II., his Essay on Paper Credit cited, 136, n., 504, and n. Thucydides, his judgment of the power of the Scythians verified, 312. His account of the agricultural habits of the Peloponnesians, 313. Tillage discouraged in ancient Italy, round Rome, —and why, 69. (See also Agriculture.) Timber, the duty on that used in building ships should be repealed, or if this cannot be done, they might be built and fitted out in bond, 542. High differential duty on foreign timber to favour our North American colonies, 606. Tithes, their inequality and injurious operation in France, exposed by Seigneur de Bois Guil- bert, in 1695, xxxviii. What they are as taxes, 377. Commutation of, on madder in England, permitted the cultivation of that plant, 377. Their alleged effect on the landlord’s capacity to pay taxes, 425. Estimate of, in Britain and Ireland, 425. Examination of the views of Dr. Smith and Mr. Ricardo respecting them, 608, 620. Total value of land in England and Wales tithe free, and but partially liable to, 621. Injurious to agricultural improvement, 621, 622. Vexatious mode of collecting it one of its worst features, 621. ‘Dr. Paley quoted on the noxious influence of, 622. Their commutation wisely provided for under 6 and 7 William IV. 622. Should have been com¬ muted a century ago, 622. Tobacco, cultivation of, in Virginia and Mary¬ land, 72. Planters of, evinced the same fear of superabundance as the proprietors of old vineyards in France, 73. Trade of, cited in illustration of the supposed effects of the colo¬ nial monopoly, 271. Importance of the Bri¬ tish tonnage employed in the trade of, 273, 274. Tolls,—their use, 325; and equitableness, 326. Abuses committed by trustees of, in Britain, 226. Amount of money levied by, 326, 327. Reasons why they should not be placed under the control of government, 327. Amount of, levied in England and Wales, 1841, 624. Tontines invented in France, 416. Tonnage. Accounts of the tonnage of vessels be¬ longing to the British Empire in 1825 and 1848, 541. Account of the tonnage of those engaged in the Colonial Trade, 614, 615. Tooke, Mr., his work, on High and Low Prices , commended, 547, n. Was author of the mer¬ chant’s petition in 1820, 547, n. Towns. Circumstances which gave their inhabi¬ tants in feudal times a marked superiority over cultivators of the soil, xxii, xxiii. Corporate , their government w r as altogether in the hands of traders and artificers, 56. Draw their subsistence, and the materials of their industry, from the country, 57. Inhabitants of, can easily combine together, 57. Townsend, Mr., his Dissertation on the Poor Laws, 1786, exhibits a clear statement of the leading doctrines of population, li. Tracts (Political), unusual proportion on com¬ mercial and economical subjects, published in the 17th century, xxvi. “ Interest of money mistaken,” &c. referred to, xxvii. Sir J. Child, the author of several on the East India Trade, xxvii, n. “ England’s Great Happiness,” &c., quoted, xxvii, xxviii. Sir W. Petty’s, the best of the 17th century, xxviii. Sir Dudley North's admirable tract, quoted, xxix, xxx. Locke’s Tracts on Money referred to, xxxii, n, xxxiii. Barbon’s tract on the New Coinage, xxxiii. Anonymous tract on the East India Trade quoted, xxxiii, xxxiv. Vanderlint’s cited, xxxv. Various others referred to, xxxvii, n. None of the French tracts of the time of Louis XIV. deserve any particular notice, xxxix. Sir E. West and Mr. Malthus’ pamphlets on Rent cited, liv, n. On the French laws of succession, referred to, 565, 566. Trade. That with France declared a nuisance by our legislature in Wm. 11 Id’s time, xxviii. Smith wrong in assigning different rates of pro¬ ductiveness to the home, foreign, and carrying trades, xlvi. People of the same trade seldom meet together without a conspiracy against the public, 59. Wholesale , what it consists of, 164. Foreign , discussion of its productive¬ ness, 164, and n. Carrying , its profits, 166, and n. All the different branches of, advan¬ tageous and necessary in the natural course of things, 166. In tobacco, with Virginia and Maryland, 166. Home, how limited, 167. Full freedom of, seems now much more attainable than it did in 1775, 207, n. Free with 682 INDEX. France, arguments in favour of, 208. Be¬ tween any two countries, never formed of an exclusive exchange of native or of foreign com¬ modities, 217. With our nearest neighbours, bating the expenses of conveyance, exactly the same as with those at the furthest part of the globe, 217, n. Restraints on, in wine, do not encourage sobriety, 218. Between France and England, great facilities for, 219. With Por¬ tugal, overrated, 245. Of the Venetians, 250. Protection of, held to be a necessary part of the duty of the executive, 329 ; this was the purpose, or pretence, of the garrisons of Gib¬ raltar and Minorca, 333. Extent of our colonial, C14, 615. Travellers. The Economist should study the works of, xviii. Treasure, provisions respecting that found con¬ cealed under the feudal system of law and government, 123. The amassing of, common among barbarous princes, 195. Treaties of Commerce, 243. Advantages of, enumerated by Dr. Smith, are of small im¬ portance, 243, n. That between England and Portugal in 1703, its provisions, 244. Hollow designs and principles on which they have been hitherto negotiated, 545 ; reasons of this, 545. That with France in 1786 an exception, 546. Tribute, none ever exacted from the natives of our Indian Empire, 579. Tropical countries. Compulsory labour indis¬ pensable to the cultivation of sugar in tropical countries, 613. Tucker, Mr., his work, on the Finances of India quoted, 583, 584, cited, 584, 585, n. His animadversions on the Hyotwar territorial system quoted, 583. Tucker, Dean, of Bristol, his tracts, on the American Colonies , cited, 609, n. Tudor. During the arbitrary reigns of the princes of this house, the right to grant patents for the sole manufacture, sale, or purchase of commodities, was looked on as part of the pre¬ rogative, xxiii, n. Turbulo, his works, referred to, and characterized, xxxvii. Turgot, a zealous disciple of Quesnay, but too much of the partisan, xliii, xliv. His “ Re¬ flexions sur la Formation, et la Distribution des Richesses,” cited, and highly commended, xliv, n. Turkey Company, its commerce first occasioned the establishment of an ordinary ambassador at Constantinople, 329. Its institutions, 331. Regulated by statute 26 Geo. II. cap. 18., 331. Its influence over the trade with that country, 331. Surrendered, in 1825, all its privileges into the hands of government, 331, n. Turks draw little or no profit from their mines, preferring to work them by slaves, 309. Their oppressive government depopulates the coun¬ tries subject to them, 457. Turnips, extraordinarily increased crops of, from the use of guano and bone manure, 525. Tuscany, operation of the law of equal succession in, 567, n. Typhon, the evil demon,— the sea, according to Plutarch, symbolised by the Egyptians as, 553 ; grounds on which this is questioned, 553. Tyrrel’s History of England referred to, 322, U. Unions of parishes for building workhouses, au¬ thorized in 1823, 599. United Kingdom. Account of the emigration from, to the colonies, from 1825 to 1848, 610. United States, their population in 1830, 220, n. (See also America.) Universities, situation of teachers in, as to emolu¬ ment, ii, 342. Obligation to teach in, what reduced to, where the professor is prohibited from taking fees, 342. Privileges and foun¬ dations of, 343. Discipline of, contrived more for the interest and ease of the masters than for the benefit of the students, 343. Were, for the most part, originally ecclesiastical corporations, 344. When they adopted the study of the Greek language and philosophy, 345. Ancient division of philosophy changed in, 346. Their course of philosophical education, what it was, 346; greater part of them in Eu¬ rope still continue this course, 347. Rich, slowly admit improvement, 347. Are better served in countries W'here economical church establishments leave men of letters to secular pursuits, 364. In all Protestant countries, ex¬ cept England, draw men of eminent learning from the church, 365. Improper mode of granting degrees formerly prevalent in those of St. Andrews and Aberdeen, 588. Unproductive class. One of M. Quesnay’s three classes of society, xli. Use. (See Utility and Value.) Ustariz imputes the ruin of manufactures in Spain to the Alcavala, 407. His Theory and Practice of Commerce cited, 457. Usury. The high rate of interest in Mohamme¬ dan countries attributed by Montesquieu to their prohibition of usury, 44. Bentham’s de¬ fence of, cited, 158, n. Utility. An object adapted to our use without any voluntary labour on our part, may be of the greatest utility, but being the free gift of nature, it has not the smallest value, xxxii. Of commodities confounded with their ex¬ changeable value by M. Say, 437; this error set in a striking point of view by Mr. Ricardo, 437. Utrecht, treaty of, granted the Assiento contract to the South Sea Company, 335. V. Value, determined by quantity of labour required for production,—this first laid down, though only incidentally, by Sir Wm. Petty, xxviii. Locke quoted on this subject, xxxi, xxxii. The spontaneous productions of nature have no va¬ lue but what they owe to the labour required for their appropriation, xxxii. Any object adapted to our use, without any voluntary la¬ bour on our part, may be of the highest utility, but is of not the smallest value, xxxii. Smith’s erroneous doctrine as to the circumstances which determine the value of commodities, xlvi, xlvii, xlviii. The principle which deter¬ mines the cost or real value of all freely pro¬ duced commodities first traced by Ricardo, liv. In exchange , essential to the definition of wealth, 1, n. Proportions of, in two different commo- INDEX. 633 dities, not regulated by the quantities of these , commodities at market, 97. On what the pro¬ portion of average, of freely produced commo¬ dities, really depends, 97, 98, n. Of manufac¬ tured goods, a decline in, improves the condi¬ tion of all other classes, as well as that of land¬ lords, 115, n. Definition of, 4o7. Does not attach to simple utility, 438. Labour the most abundant source of, 438. Rarity a cause of, 438. Of monopolized products, does not al¬ ways, or chiefly, arise from labour, 438. Pro¬ posed practical separation of the term utility from, 438. Of unmonopolized commodities, determined by the quantities of labour which produce them, 439. Nature of cost and value, to be distinguished, 439. Exchangeable , of no commodity invariable, 439. Sources of, fur¬ ther explored, 440. How far affected by vari¬ ations of supply and demand, 440. Cost, not affected by quantities produced, but measured by labour expended in producing, 441. Cost, of a commodity may increase, while its ex¬ changeable diminishes, and vice versa , 441; hence, is never invariable, 442. No standard of,—because the value and cost are only very seldom identical, 442. Real, not affected by the various reward of labour, 443. The raw material of commodities not possessed of, 443. Results of this definition of the sources and re¬ gulating principles of, 443. Cost, of commodi¬ ties cannot be affected by fluctuations in the rate of wages and profits, 478; exchangeable, circumstances in which it would not be influ¬ enced by these fluctuations, 479. Of bullion, fell, not because of the increase in its quantity, but from the diminished cost of its production, 481. Of money, in exchange, may be indefi¬ nitely raised by limiting its quantity, 482. Variable, of the precious metals, its effect on contracts estimated in money made of them, 484. Of produce, paid to the landlord and farmer, how increased by restrictions on im¬ portation, 519. Value of agricultural produce, 525. Total annual value of all the land in England and Wales, 621. Vanderlint, Mr., his tract. Money answers all Things, published in 1734, ably advocates com¬ mercial freedom, and proposes a territorial tax in lieu of every other, xxxv. Vansittart, Mr., his famous resolutions, of 1811, asserting the non-depreciation ot Bank notes, 497; adopted by the House of Commons, 497 ; characterized, 497. Vattel, his clear statement of the general obli¬ gation among nations to cultivate commerce, 545, 546. Vauban, Marshal, his Dixme Royale, 1707, con¬ tains a bold denunciation of abuses in the fiscal •• government of Louis XIV., xxxviii, xxxix. Vaughan, Mr., his Discourse of Coin and Coinage, 1675, a work of high merit, xxxviii, n. Venetians, their trade in the 14th and 15th cen¬ turies, 250. Their state enfeebled by the funding system, 422. Verri, Count di, his work, Meditazioni Sulla Eco- nomia Politica, exhibits a just view of the na¬ ture of production, xliv. Vessels, number and tonnage of, engaged in trade with our colonies, 614, 615. (See also Ships.) Vestries, select. (See Select Vestries.) Vicesima Hereditatum, a legacy duty imposed by Augustus in Rome, 387, 388. Victualling. The difference in the cost of victual¬ ling our ships and those of foreign nations in¬ considerable, 541. View of the Agriculture, &c., of Germany (Ja¬ cob’s), referred to, 567, n. Villanage, time and manner of the decay of, form an obscure point in modern history, 173. Villiers, Sir George (Duke of Buckingham), Lord Bacon’s Advice to, quoted, xxi, xxiii, n., xxvii, n. Vine, more affected by difference of soils than any other fruit tree, 71. Vingtieme, a land-tax in France, what it was, 387. Virginia and Maryland, the sort of monopoly of the culture of tobacco which they enjoy, 72. Quantity of tobacco annually purchased from, 166, 271. Voltaire remarks that Poree, a mediocre Jesuit, was the only professor in France whose works were w*orth reading, 364 ; this observation ap¬ plied to Catholic countries in general, 365. Voyages. In distant ones our ships procure pro¬ visions and stores at the same rates as foreign¬ ers, 541. W. Wages. Adam Smith’s opinion on wages and profit influenced by his errors with regard to rent and the value of commodities, xlviii. How affected by the healthiness, agreeableness, or steadiness of an employment or the quantity of skill required in it, xlix. Their influence on the rate of profit pointed out by Mr. Ricardo, lv. An increase in the rate of, one of the causes of permanent reductions in the rate of profit, lvi. Of a capitalist, superintending, are distinct from his profits, 22, n. Cases in which they are vulgarly confounded with pro¬ fit, 25. Ordinary rate of, on what it depends, 130, n. Rate of, in Britain, 33 ; and of prices, generally nearer a level now*, than when Dr. Smith w'rote, 34, n. Rise of, a principal cause of a fall in the rate of profit, 40, n. Said to have been higher in Holland than in England, 41. Higher in the colonies than in England, 42. Do not sink with the profits of stock, 42. Fall of, raises profits, without, in general, af¬ fecting prices, 43, n. Of London coalheavers high, 47. Of professional men, why high, 48 ; this illustrated by the principle of a lottery, 48. Particular acts of Parliament attempting to regulate, 65; repealed by statute 5 Geo. IV. cap. 95, 65. n. How affected by taxes on ne¬ cessaries, 393. Their tendency, all things con¬ sidered, to an equality in different employments, 470. Of market wages, 470. Not always in¬ creased by increase of capital, 471. Low average rate of, exclusively occasioned by excess of population, 471. Principles which regard them, should be explained to the young of all classes, 471. Directly influenced, in England, by no other institution than the poor laws, 471. Of natural wages, 472 ; affected by varieties in the climate of different countries, 472; very low rate of, in Bengal, 473 ; different rates of in England and in Ireland, 473. Can be raised only in three ways, 473. Cause of the dis¬ tinction between absolute and proportional , 474. How regulated, if taxation were un- 684 INDEX. known or constant, 475. Their incidence on profits, 475. How affected under actual cir¬ cumstances of society, in old countries, 476. Reciprocal action of, on profits, further stated, 477. Explanation of Mr. Ricardo’s views on the action of proportional, on profit, 477. Ef¬ fect of variations in the rate of, on the value of commodities, 477 ; reciprocal action of these variations, 478. Under what circumstances they vary inversely as profits, 478 ; this varia¬ tion can have no effect on real value, 478. Kept at a level, in all employments, by compe¬ tition, 479. Circumstances in which variations in the rate of, would have no influence on ex¬ changeable value, 479. How a rise or fall of, affects the exchangeable value of two sets of commodities produced by unequal fixed capi¬ tals, 479. Change in the rate of proportional, only can vary the relation of commodities, 479. Of seamen higher in the United States than w ith us, 541. The wages paid by north¬ ern ship-owners differ little from ours, 541. Impressment one cause of the high wages of seamen, 544. Down to 1795 the effect of the poor laws was to check population and raise wages, 598. Direct taxes on, w’ould operate on profits to diminish accumulation, 619. The unpopularity of such taxes will always hinder their being imposed, except under very peculiar circumstances, 619. Evils of a low rate of, on the habits of labourers, 618, 619. Influence of indirect taxes on, 619. Wakefield, Mr., his Account of Ireland, Statistical and Political, 1812, cited, 470, n. His testi¬ mony to the efforts used, down to 1813, by the country banks, to force their paper into circu¬ lation, 497. Wallace, Lord, great merits of his changes on the Navigation Laws, 537. Walpole, Sir Robert, his proposal of a warehous¬ ing system defeated by faction and interest, 400, 401. Want. (See Famine.) War. Extraordinary changes occasioned by the late war in every department of our public economy, liii. Ways in which a country may provide the means of carrying it on offensively abroad, 193. Expenses of, to Britain, 193; defrayed by the exportation of commodities, 193; this illustrated by public accounts rela¬ tive to operations in Portugal and Spain, in 1812, 1813,194, n. Ancient kings of England unable to carry on those of long duration,—and why, 195. Effect of, on population, strikingly exhibits the operation of the principle by which population is generally regulated, 456. Number of seamen required by Britain on the breaking out of, 542. Increase of the wages of our seamen during war consequent on impress¬ ment, 544. Best mode of meeting increased expenditure consequent on, 626, 627, 628. Warehousing system pointed at, 400. Sir Robert Walpole’s scheme defeated by faction and in¬ terest, 400, 401. As subsequently put in ope¬ ration, highly commended, 401, n. Warlike habits, those of men in different stages of society, 311, 312. Warlike implements, great changes in them since the invention of fire-arms, 319. W arlike virtues. Luxury thought by the ancients to be subversive of, xvii. Warwick, Earl of, vast number of people said to have been daily entertained by, 182. Vv askings. Produce of gold from washings in California quite uncertain, 96, n. Waste lands, number of acts for enclosing, in four several reigns, 513. Waste. (See Consumption.) Watch-cases prohibited from exportation, 296; this prohibition still continues, 296, n. Wealth, importance of the science of, ii. Influ¬ ence of, in advancing refinement, xvi. Opinion once prevalent that it consisted exclusively of gold and silver, xix. Hobbes one of the first fully impressed with the importance of labour in the production of, xxx, xxxi. The earth the only source of, according to Quesnay, xli. Smith has shewn that labour is the real source of, xlv. Cause of its being saved and accumulated, xlv. Labour as productive of it in manufactures and commerce, as in agri¬ culture, xlv. Smith has shewn that wealth does not consist of gold and silver, but of the various necessaries, conveniencies, and enjoy¬ ments of human life, xlv. And how labour may be rendered more effective by the employ¬ ment of accumulated wealth or capital in in¬ dustrious undertakings, xlv. The term not explicitly defined by Dr. Smith, 1, n. Science of, the science of values , 1, n. Progress of Great Britain in, notwithstanding the wars of the last 50 years, 153, n. Different ideas of, entertained by Tartars and Spaniards, 187, 188. Wedderburn, Mr. (See Loughborough, Lord.) Weights and measures. Expediency of the regu¬ lations by which those of the same denomina¬ tions are rendered equal, 503. Wellesley, Marquis, British empire in India vastly augmented under, 578, quoted, 586. West, Sir Edward, his Essay on the Application of Capital to Land , 1815, cited, liv, and n. West Indies. Circumstances which gave rise to the first European settlement in, 249. Our colonies there of but little consequence so far as sugar is concerned, 607. Our colonies there inadequately supplied with labour since the abolition of slavery, 613. Compulsory labour indispensable to the cultivation of sugar in tropical countides, 613. Westminster Hall, served as the dining-room of William Rufus, 182. Wheat, price of, in 1309, and how vouched, 82. Average cost of, to the growler, in years of moderate plenty, as estimated by Mr. Gregory King, in 1688, 90. Tables of prices of, from 1202 to 1760, 117. Produce of, in Britain, in 1773, 512. Bounty on its exportation as fixed by act of 1773, 512. Consumption of, as stated by Lord Haw'kesbury, in 1796, 512. Consumption of, in Scotland increased tenfold since 1790, 525. Prices of, from 1726 to 1848, 529, 530, 531. Imports and exports of wheat and wheat flour from 1697 to 1846 inclusive, 531, 532. White, Mr., his Considerations on India cited, 581, n. Wholesale dealers, action of their capitals, 161. Will, disposal of property by, 556. Pow’er of, in early ages, narrow r ed, 556, 557. Equal divi¬ sion the rule applied by the Roman law to in¬ testate estates, 563. How regulated at pre- INDEX. 685 sent in France, 563. System of, in Corsica, as bad as in France, 566. William III. The Legislature in his reign de¬ clared trade with France a nuisance , xxviii. Willoughby, Sir Hugh. Letter given to him and Captain Richard Cliancellour, when they set out on their famous voyage of discovery in 1553, quoted, xxv. Window-tax in England, 381. Inequality and general tendency of, 381, 382. Present rate of, in Britain, 381, n. Windsor market, account of prices in, as well as of the public bars of Scotland, and of markets in France, collected by Messance and Dupre de St. Maur,—conjoin to evince a fall in price of corn, in the period from 1701 to 1765, as compared with that from 1636 to 1700, 111; account of prices in, from 1726 to 1820, 529. Wine, present duties on, 222, n. Of Madeira, pro¬ bable origin of the taste for, 222,223. Old re¬ straints on the internal commerce of, in France, 222, 408, n.; these now removed, 222, n. Wine countries, inhabitants of, the soberest peo¬ ple in Europe, 218. Wool, Reasons for a limited Exportation of , 1667, —principles of the Economists clearly stated in, xlii, n. Causes of the fall of the price of, in England, 107. Laws with respect to, repealed, 107, n. Of Scotland, fell in price after the union with England, 108. Cards, importation of, anciently prohibited, 290 ; but now free, 290, n. Burdensome restrictions under which the inward commerce of, was laid, 293. Manu¬ facturers of, how they justified their de¬ mand for the extraordinary regulations by which the internal commerce in, was hamper¬ ed, 293, 294. Exportation and importation of, have for some years been quite free, 293, n. Effects of the old laws regarding, 294, 295. Demaud for home-grow n wool rendered com¬ paratively steady by Sir R. Peel’s changes in the tariff of 1842, 517. The price of home¬ grown, considerably increased by the stimulus thus given to the w'oollen manufacture, 517. Fall in the price of, in 1846 and 1847, caused by the vast importations from our Australian colonies, 517, n. Woollen manufacture. Act of 1678 for its en¬ couragement orders all dead bodies to be wrapt in woollen shrouds, xxiii. Work, increased quantity of, by division of labour, to what circumstance ow r ing, 4. Workhouses, one of the most effectual devices for relieving the able-bodied poor, 599 ; im¬ provement of, 599 ; Lord Mansfield’s opinion on, 599. Workmen, in manufactures and commerce, more intelligent and acute than those in agriculture, 58, n. (See also Labourers and Combina¬ tions.) Works. (See Public Works.) y. Yarn, ( woollen ) prohibited from exportation, equally with w r ool, 296. Now (1837) export¬ able on a duty of a penny per pound, 296, n. Yorkshire, paper money issued in, so low r as for sixpence, 142. Absurd condition in its local notes, on which their payment w r as sometimes made to depend, 144. Young, Mr Arthur, his estimate of the nutritive powers of wheat and of potatoes, 467. His statement of the average produce of wheat and of potatoes per acre respectively, in Ireland, 467, 468. His Travels in France quoted, 568. His Farmer’s Letters quoted, 598. Z. Zeal, without learning, its popular weight among sectarians, 354, 355. Zemindars, in Hindostan, their origin and func¬ tions, 580, 581. Clashing interests of the Ryots and Zemindars, 580, 581. THE END. PRINTED BY STEVENSON AND COMPANY, 32 THISTLE STREET, EDINBURGH.