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diff --git a/old/60411-0.txt b/old/60411-0.txt deleted file mode 100644 index 94f88a5..0000000 --- a/old/60411-0.txt +++ /dev/null @@ -1,24483 +0,0 @@ -The Project Gutenberg eBook of An Inquiry into the Principles of Political oeconomy (Vol. 1 of 2), by James Steuart - -This eBook is for the use of anyone anywhere in the United States and -most other parts of the world at no cost and with almost no restrictions -whatsoever. You may copy it, give it away or re-use it under the terms -of the Project Gutenberg License included with this eBook or online at -www.gutenberg.org. If you are not located in the United States, you -will have to check the laws of the country where you are located before -using this eBook. - -Title: An Inquiry into the Principles of Political oeconomy (Vol. 1 of 2) -Being an essay on the science of domestic policy in free nations. In which are particularly considered population, agriculture. - -Author: James Steuart - -Release Date: October 3, 2019 [eBook #60411] -[Most recently updated: August 18, 2021] - -Language: English - -Character set encoding: UTF-8 - -Produced by: KD Weeks, MFR and the Online Distributed Proofreading Team - -*** START OF THE PROJECT GUTENBERG EBOOK PRINCIPLES OF POLITICAL OECONOMY *** - - - - ------------------------------------------------------------------------- - - Transcriber’s Note: - -This version of the text cannot represent certain typographical effects. -Italics are delimited with the ‘_’ character as _italic_. - -Footnotes have been moved to follow the paragraphs in which they are -referenced. - -The table of contents includes references in Book III to sections -printed in the text as marginal notes (sidenotes). Each has been linked -for ease of reference. - -[Sidenote: Marginal Notes.] - -All marginal notes will appear prior to the paragraph they annotated as, -prefixed with ‘Sidenote:’ - -There was an Errata included in the text. The corrections listed there -were made. - -Minor errors, attributable to the printer, have been corrected. Please -see the transcriber’s note at the end of this text for details regarding -the handling of any textual issues encountered during its preparation. - - AN - INQUIRY - INTO THE - PRINCIPLES OF POLITICAL OECONOMY: - BEING AN - ESSAY ON THE SCIENCE - OF - Domestic Policy in Free Nations. - - IN WHICH ARE PARTICULARLY CONSIDERED - - POPULATION, AGRICULTURE, TRADE, INDUSTRY, - MONEY, COIN, INTEREST, CIRCULATION, BANKS, - EXCHANGE, PUBLIC CREDIT, AND TAXES. - ------------------------------------------------------------------------- - - By Sir JAMES STEUART, Bart. - ------------------------------------------------------------------------- - - _Ore trahit quodcumque potest atque addit acervo._ HOR. Lib. I. Sat. 1. - - IN TWO VOLUMES. - ------------------------------------------------------------------------- - - VOL. I. - - LONDON: - Printed for A. MILLAR, and T. CADELL, in the Strand. - MDCCLXVII. - ------------------------------------------------------------------------- - - - - - _PREFACE._ - - -It is with the greatest diffidence that I present to the public this -attempt towards reducing to principles, and forming into a regular -science, the complicated interests of domestic policy. When I consider -the time and labour employed in the composition, I am apt to value it -from selfish considerations. When I compare it even with my own -abilities, I still think favourably of it, for a better reason; because -it contains a summary of the most valuable part of all my knowledge. But -when I consider the greatness of my subject, how small does the result -of my application appear! - -The imperfections, therefore, discovered in this work, will, I hope, be -ascribed to the disproportion between the extent of the undertaking, and -that of my capacity. This has been exerted to the utmost: and if I have -failed, it may, at least, with justice, be said, that I have miscarried -in an attempt of the greatest importance to mankind. - -I no where shew the least desire to make my court to any particular -statesman whose administration might have been hinted at. I freely -follow the thread of my reasoning without a biass, either in favour of -popular opinions, or of any of the numberless systems which have been -formed by those who have written upon particular parts of my subject. -The warmth of my temper has led me often into commendations, when I was -pleased; but when I felt the effects of ill humour on being dissatisfied -with particular circumstances, relating to countries, to men, and to -things, which I had in view at the time I was writing, I seldom thought -it proper to be particular. I have, in general, considered the danger of -error, either in blaming or commending the steps of any administration, -without being well informed of the whole combination of circumstances -which the statesman had before him at the time. - -This composition being the successive labour of many years spent in -travelling, the reader will find some passages in which the unities of -time and place have not been observed. These I could have corrected with -ease, had I not been advised to leave them as characters to point out -the circumstances under which I wrote, and thereby to confirm the -authenticity of certain facts. - -The modes of thinking, also, peculiar to the several countries where I -have lived, have, no doubt, had an influence on what I have writ -concerning their customs: the work, therefore, will not, in general, -correspond to the meridian of national opinions any where; and of this -it is proper the reader should be apprised, that he may not apply to the -domestic circumstances of his own country what was intended to refer to -those of other nations; nor impute what was the irresistible effect of -my experience and conviction, to wilful prejudice. - -I have read many authors on the subject of political oeconomy; and I -have endeavoured to draw from them all the instruction I could. I have -travelled, for many years, through different countries, and have -examined them, constantly, with an eye to my own subject. I have -attempted to draw information from every one with whom I have been -acquainted: this, however, I found to be very difficult before I had -attained to some previous knowledge of my subject. Such difficulties -confirmed to me the justness of Lord Bacon’s remark, that he who knows -how to draw information by forming proper questions, is already -possessed of half the science[A]. - -Footnote A: - - _Prudens interrogatio, dimidium scientiæ._ - -I could form no consistent plan from the various opinions I met with: -hence I was engaged to compile the observations I had casually made, in -the course of my travels, reading, and experience. From these I formed -the following work, after expunging the numberless inconsistencies and -contradictions which I found had arisen from my separate inquiries into -every particular branch. - -I had observed so many persons declining in knowledge as they advanced -in years, that I resolved early to throw upon paper whatever I had -learned; and to this I used to have recourse, as others have to their -memories. The unity of the object of all my speculations, rendred this -practice more useful to me than it would be to one whose researches are -more extended. - -Whoever is much accustomed to write for his own use merely, must -contract a more careless stile than another who has made language his -study, and who writes in hopes of acquiring a literary reputation. I -never, till very lately, thought of appearing as an author; and in the -frequent perusals of what I had writ, my corrections were chiefly in -favour of perspicuity: add to this, that the language in which I now -write was, for many years, foreign to those with whom I lived and -conversed. When these circumstances are combined with the intricacy of -my subject, which constantly carried off my attention from every -ornament of language, I flatter myself that those of my readers, at -least, who enter as heartily as I have done into the spirit of this -work, will candidly overlook the want of that elegance which adorns the -stile of some celebrated authors in this Augustan age. I present this -inquiry to the public as nothing more than an essay which may serve as a -canvass for better hands than mine to work upon. - -It contains such observations only as the general view of the domestic -policy of the countries I have seen, has suggested. It is a speculation, -and no more. It is a rough drawing of a mighty plan, proportioned in -correctness to my own sagacity, to my knowledge of the subject and to -the extent of my combinations. - -It goes little farther than to collect and arrange some elements upon -the most interesting branches of modern policy, such as _population, -agriculture, trade, industry, money, coin, interest, circulation, banks, -exchange, public credit, and taxes_. The principles deduced from all -these topics, appear tolerably consistent; and the whole is a train of -reasoning, through which I have adhered to the connection of subjects as -faithfully as I could: but the nature of the work being a deduction of -principles, not a collection of institutions, I seized the opportunities -which my reasoning threw in my way, to connect every principle, as I -went along, with every part of the inquiry to which it could refer; and -when I found the connexion sufficiently shewn, I broke off such -disquisitions as would have led me from the object then present. - -When principles thus casually applied in one part to matters intended to -be afterwards treated of in another, came to be taken up a-new, they -involved me in what may appear prolixity. This I found most unavoidable, -when I was led to thoughts which were new to myself, and consequently -such as must cost me the greatest labour to set in a clear and distinct -point of view. Had I been master of my subject on setting out, the -arrangement of the whole would have been rendered more concise: but had -this been the case, I should never have been able to go through the -painful deduction which forms the whole chain of my reasoning, and upon -which, to many readers, slow in forming combinations, the conviction it -carries along with it in a great measure depends: to the few, again, of -a more penetrating genius, to whom the slightest hint is sufficient to -lay open every consequence before it be drawn, in allusion to Horace, I -offer this apology, _Clarus esse laboro, prolixus fio_. - -The path I have taken was new to me, after all I had read on the -subject. I examined what I had gathered from others by my own -principles; and according as I found it tally with collateral -circumstances, I concluded in its favour. When, on the other hand, I -found a disagreement, I was apprized immediately of some mistake: and -this I found constantly owing to the narrowness of the combinations upon -which it had been founded. - -The great danger of running into error upon particular points relating -to this subject, proceeds from our viewing them in a light too confined, -and to our not attending to the influence of concomitant circumstances, -which render general rules of little use. Men of parts and knowledge -seldom fail to reason consequentially on every subject; but when their -inquiries are connected with the complicated interests of society, the -vivacity of an author’s genius is apt to prevent him from attending to -the variety of circumstances which render every consequence, almost, -which he can draw, uncertain. To this I ascribe the habit of running -into what the French call _Systemes_. These are no more than a chain of -contingent consequences, drawn from a few fundamental maxims, adopted, -perhaps, rashly. Such systems are mere conceits; they mislead the -understanding, and efface the path to truth. An induction is formed, -from whence a conclusion, called a principle, is drawn; but this is no -sooner done, than the author extends its influence far beyond the limits -of the ideas present to his understanding, when he made his deduction. - -The imperfection of language engages us frequently in disputes merely -verbal; and instead of being on our guard against the many unavoidable -ambiguities attending the most careful speech, we place a great part of -our learning when at school, and of our wit when we appear on the stage -of the world, in the prostitution of language. The learned delight in -vague, and the witty in equivocal terms. In general, we familiarize -ourselves so much with words, and think so little, when we speak and -write, that the signs of our ideas take the place of the images which -they were intended to represent. - -Every true proposition, when understood, must be assented to -_universally_. This is the case always, when simple ideas are affirmed -or denied of each other. No body ever doubted that sound is the object -of hearing, or colour that of sight, or that black is not white. But -whenever a dispute arises concerning a proposition, wherein complex -ideas are compared, we may often rest assured, that the parties do not -understand each other. Luxury, says one, is incompatible with the -prosperity of a state. Luxury is the fountain of a nation’s welfare and -happiness, says another. There may, in reality, be no difference in the -sentiments of these two persons. The first may consider luxury as -prejudicial to foreign trade, and as corrupting the morals of a people. -The other may consider luxury as the means of providing employment for -such as must live by their industry, and of promoting an equable -circulation of wealth and subsistence, through all the classes of -inhabitants. If each of them had attended to the combination of the -other’s complex idea of luxury, with all its consequences, they would -have rendered their propositions less general. - -The difference, therefore, of opinion between men is frequently more -apparent than real. When we compare our own ideas, we constantly see -their relations with perspicuity; but when we come to communicate those -relations to other people, it is often impossible to put them into words -sufficiently expressive of the precise combination we have made in our -own minds. - -This being the case, I have avoided, as much as possible, condemning -such opinions as I have taken the liberty to review; because I have -examined such only as have been advanced by men of genius and -reputation: and since all matters of controversy regard the comparison of -our _ideas_, if the terms we use to express them were sufficiently -understood by both parties, most political disputes would, I am -persuaded, be soon at an end. - -Here it may be objected, that we frequently adopt an opinion, without -being able to give a sufficient reason for it, and yet we cannot gain -upon ourselves to give it up, though we find it combated by the -strongest arguments. - -To this I answer, that in such cases we do not adhere to our own -opinions, but to those of others, received upon trust. It is our regard -for the authority, and not for the opinion, which makes us tenacious: -for if the opinion were truly our own, we could not fail of seeing, or -at least we should not long be at a loss in recollecting the ground upon -which it is built. But when we assent implicitly to any political -doctrine, there is no room for reason: we then satisfy ourselves with -the persuasion that those whom we trust have sufficient reasons for what -they advance. While our assent therefore is implicit, we are beyond -conviction; not because we do not perceive the force of the arguments -brought against our opinion, but because we are ignorant of the force of -those which can be brought to support it: and as no body will sell what -belongs to him, without being previously informed of its value, so no -body will give up an implicit opinion, without knowing all that can be -said for it. To this class of men I do not address myself in my -inquiries. - -But I insensibly run into a metaphysical speculation, to prove, that in -political questions it is better for people to judge from experience and -reason, than from authority; to explain their terms, than to dispute -about words; and to extend their combinations, than to follow conceits, -however decorated with the name of systems. How far I have avoided such -defects, the reader will determine. - -Every writer values himself upon his impartiality; because he is not -sensible of his fetters. The wandering and independent life I have led -may naturally have set me free, in some measure, from strong attachments -to popular opinions. This may be called impartiality. But as no man can -be deemed impartial, who leans to any side whatever, I have been -particularly on my guard against the consequences of this sort of -negative impartiality, as I have found it sometimes carrying me too far -from that to which a national prejudice might have led me. - -In discussing general points, the best method I found to maintain a just -balance in that respect, was to avert my eye from the country in which I -lived at the time; and to judge of absent things by the absent. Objects -which are present, are apt to produce perceptions too strong to be -impartially compared with those recalled only by memory. - -When I have had occasion to dip into any question concerning the -preference to be given to certain forms of government above others, and -to touch upon points which have been the object of sharp disputes, I -have given my opinion with freedom, when it seemed proper: and in -stating the question, I have endeavoured to avoid all trite, and, as I -may call them, technical terms of party, which are of no other use than -to assist the disputants in their attempts to blacken each other, and to -throw dust in the eyes of their readers. - -I have sometimes entred so heartily into the spirit of the statesman, -that I have been apt to forget my situation in the society in which I -live; and when the private man reads over the politician, his natural -partiality in favour of individuals, leads him to condemn, as -Machiavellian principles, every sentiment approving the sacrifice of -private concerns, in favour of a general plan. - -In order, therefore, to reconcile me to myself in this particular, and -to prevent certain expressions, here and there interspersed, from making -the slightest impression upon a reader of delicate sentiments, I must -observe, that nothing would have been so easy as to soften many -passages, where the politician appears to have snatched the pen out of -the hand of the private citizen: but as I write for such only who can -follow a close reasoning, and attend to the general scope of the whole -inquiry, I have, purposely, made no correction; but continued painting -in the strongest colours, every inconvenience which must affect certain -individuals living under our free modern governments, whenever a wise -statesman sets about correcting old abuses, proceeding from idleness, -sloth or fraud in the lower classes, arbitrary jurisdictions in the -higher, and neglects in administrations, with respect to the interests -of both. The more any cure is painful and dangerous, the more ought men -to be careful in avoiding the disease. This leads me to say a word -concerning the connection between the theory of morals and that of -politics. - -I lay it down as a general maxim, that the characteristic of a good -action consists in the conformity between the motive, and the duty of -the agent. If there were but one man upon earth, his duty would contain -no other precepts than those dictated by self-love. If he comes to be a -father, a husband, a friend, his self-love falls immediately under -limitations: he must withhold from himself, and give to his children; he -must know how to sacrifice some of his fancies, in order to gratify, now -and then, those of his wife, or of his friend. If he comes to be a -judge, a magistrate, he must frequently forget that he is a friend, or a -father: and if he rises to be a statesman, he must disregard many other -attachments more comprehensive, such as family, place of birth, and -even, in certain cases, his native country. His duty here becomes -relative to the general good of that society of which he is the head: -and as the death of a criminal cannot be imputed to the judge who -condemns him, neither can a particular inconvenience resulting to an -individual, in consequence of a step taken for a general reformation, be -imputed to him who sits at the helm of government. - -If it should be asked, of what utility a speculation such as this can be -to a statesman, to whom it is in a manner addressed from the beginning -to the end: I answer, that although it seems addressed to a statesman, -the real object of the inquiry is to influence the spirit of those whom -he governs; and the variety of matter contained in it, may even suggest -useful hints to himself. But his own genius and experience will enable -him to carry such notions far beyond the reach of my combinations. - -I have already said that I considered my work as no more than a canvass -prepared for more able hands than mine to work upon. Now although the -sketch it contains be not sufficiently correct, I have still made some -progress, I think, in preparing the way for others to improve upon my -plan, by contriving proper questions to be resolved by men of experience -in the practical part of government. - -I leave it therefore to masters in the science to correct and extend my -ideas: and those who have not made the principles of policy their -particular study, may have an opportunity of comparing the exposition I -have given of them with the commonly received opinions concerning many -questions of great importance to society. They will, for instance, be -able to judge how far population can be increased usefully, by -multiplying marriages, and by dividing lands: how far the swelling of -capitals, cities and towns, tends to depopulate a country: how far the -progress of luxury brings distress upon the poor industrious man: how -far restrictions laid upon the corn trade, tend to promote an ample -supply of subsistence in all our markets: how far the increase of public -debts tends to involve us in a general bankruptcy: how far the abolition -of paper currency would have the effect of reducing the price of all -commodities: how far a tax tends to enhance their value: and how far the -diminution of duties is an essential requisite for securing the liberty, -and promoting the prosperity and happiness of a people. - -Is it not of the greatest importance to examine, with candour, the -operations by which all Europe has been engaged in a system of policy so -generally declaimed against, and so contrary to that which we hear daily -recommended as the best? And to shew, from the plain principles of -common sense, that our present situation is the unavoidable consequence -of the spirit and manners of the present times, and that it is quite -compatible with all the liberty, affluence, and prosperity, which any -human society ever enjoyed in any age, or under any form of government? -A people taught to expect from a statesman the execution of plans, big -with impossibility and contradiction, will remain discontented under the -government of the best of Kings. - -The reader is desired to correct the following errors, especially such -as are distinguished by an asterisk *, which pervert the sense entirely. - - - - - ERRATA. - - Page. Line. - 3. 32. * advantages, r. disadvantages - 73. 27. were, r. from - 85. 28. * This is the, r. This is not the - 89. 12. * supposed to come, r. subsisted - 116. 12. productions, r. spontaneous productions - 145. 9. * trial, r. Tirol - 147. 30. its, r. their - 172. 1. * earth, r. cart - 208. 29. third, r. fourth - 210. 6. lands, r. hands - 214. 4. moving, r. removing. - 217. 2. turns, r. terms - 229. 8. * usefulness, r. uselesness - 236. 19. * management, r. mismanagement - 266. 21, 22. they correspond, r. it corresponds - 290. 2. easily bred, r. bred early - 339. 21. * preventing, r. promoting - 382. 10. * work, r. worth - 391. 8. * next, r. net - 425. 27. discovering, r. discoursing - 430. 29. _eiò_, r. _ciò_ - Ditto 30. _misuro_, r. _misura_ - 501. 3. * physical, r. political - Ditto 27. competition, r. composition. - 515. 17. proportions, r. propositions - 552. 12. * bringing, r. coining - 601. 9. * diminution, r. denomination - 626. 31. * revolution, r. institution - 637. ult. } - 638. prim. } formally, r. formerly - - - - ------------------------------------------------------------------------- - - CONTENTS - OF THE - FIRST VOLUME. - ------------------------------------------------------------------------- - - BOOK I. - - Of Population and Agriculture. - - INTRODUCTION, Page 1 - - CHAP. I. Of the government of mankind, 6 - - CHAP. II. Of the spirit of a people, 8 - - CHAP. III. Upon what principles, and from what _natural 17 - causes_, do mankind multiply; and what are the effects of - procreation in countries where numbers are not found to - increase? - - CHAP. IV. Continuation of the same subject, with regard to 21 - the natural and immediate effects of agriculture, as to - population, - - CHAP. V. In what manner, and according to what principles 26 - and _political causes_ does agriculture augment - population? - - CHAP. VI. How the wants of mankind promote their 31 - multiplication, - - CHAP. VII. The effects of slavery upon the multiplication 36 - and employment of mankind, - - CHAP. VIII. What proportion of inhabitants is necessary for 41 - agriculture, and what proportion may be usefully employed - in every other occupation? - - CHAP. IX. What are the principles which regulate the 46 - distribution of inhabitants into farms, hamlets, villages, - towns, and cities? - - CHAP. X. Of the consequences which result from the 50 - reparation of the two principal classes of a people, the - farmers and the free hands, with regard to their dwelling, - - CHAP. XI. Of the distribution of inhabitants into classes; 59 - of the employments, and multiplication of them, - - CHAP. XII. Of the great advantage of combining a well 67 - digested theory, and a perfect knowledge of facts, with - the practical part of government, in order to make a - people multiply, - - CHAP. XIII. Continuation of the same subject, with regard to 75 - the necessity of having exact lists of births, deaths, and - marriages, for every class of inhabitants in a modern - society, - - CHAP. XIV. Of the abuse of agriculture and population, 82 - - CHAP. XV. Application of the above principles to the state 95 - of population in _Great Britain_, - - CHAP. XVI. Why are some countries found very populous, in 101 - respect of others, equally well calculated for - improvement? - - CHAP. XVII. In what manner, and according to what 109 - proportion, do plenty and scarcity affect a people? - - CHAP. XVIII. Of the causes and consequences of a country 114 - being fully peopled, - - CHAP. XIX. Is the introduction of machines into manufactures 119 - prejudicial to the interest of a state, or hurtful to - population? - - CHAP. XX. Miscellaneous observations upon agriculture and 124 - population, - - CHAP. XXI. Recapitulation of the first book, 149 - ------------------------------------------------------------------------- - - BOOK II. - - Of Trade and Industry. - - INTRODUCTION, 161 - - CHAP. I. Of the reciprocal connections between trade and 166 - industry, - - CHAP. II. Of Demand, 172 - - CHAP. III. Of the first principles of bartering, and how 175 - this grows into trade, - - CHAP. IV. How the prices of goods come to be determined by 181 - trade, - - CHAP. V. How foreign trade opens to an industrious people, 184 - and the consequences of it to _the merchants_ who set it on - foot, - - CHAP. VI. Consequences of the introduction of a passive 190 - foreign trade among a people who live in simplicity and - idleness, - - CHAP. VII. Of double competition, 196 - - CHAP. VIII. Of what is called expence, profit, and loss, 205 - - CHAP. IX. The general consequences resulting to a trading 206 - nation, upon the opening of an active foreign commerce, - - CHAP. X. Of the balance of work and demand, 216 - - CHAP. XI. Why in time this balance is destroyed, 225 - - CHAP. XII. Of the competition between nations, 232 - - CHAP. XIII. How far the form of government of a particular 237 - country may be favourable or unfavourable to a competition - with other nations, in matters of commerce, - - CHAP. XIV. Security, ease, and happiness, no inseparable 250 - concomitants of trade and industry, - - CHAP. XV. A general view of the principles to be attended to 261 - by a statesman, who resolves to establish trade and industry - upon a lasting footing, - - CHAP. XVI. Illustration of some principles laid down in the 272 - former chapter, relative to the advancement and support of - foreign trade, - - CHAP. XVII. Symptoms of decay in foreign trade, 278 - - CHAP. XVIII. Methods of lowering the price of manufactures, 283 - in order to make them vendible in foreign markets, - - CHAP. XIX. Of infant, foreign and domestic trade, with 301 - respect to the several principles which influence them, - - CHAP. XX. Of luxury, 306 - - CHAP. XXI. Of physical and political necessaries, 311 - - CHAP. XXII. Preliminary reflections upon inland commerce, 319 - - CHAP. XXIII. When a nation, which has enriched herself by a 328 - reciprocal commerce in manufactures with other nations, - finds the balance of trade turn against her, it is her - interest to put a stop to it altogether, - - CHAP. XXIV. What is the proper method to put a stop to a 336 - foreign trade in manufactures, when the balance of it turns - against a nation? - - CHAP. XXV. When a rich nation finds her foreign trade 343 - reduced to the articles of natural produce, what is the best - plan to be followed? And what are the consequences of such a - change of circumstances? - - CHAP. XXVI. Of the vibration of the balance of wealth 359 - between the subjects of a modern state, - - CHAP. XXVII. Circulation, and the balance of wealth, objects 374 - worthy of the attention of a modern statesman, - - CHAP. XXVIII. Circulation considered with regard to the rise 394 - and fall of the price of subsistence and manufactures, - - CHAP. XXIX. Circulation with foreign nations, the same thing 414 - as the balance of trade, - - CHAP. XXX. Miscellaneous questions and observations relative 426 - to trade and industry, - - CHAP. XXXI. Recapitulation of the second book, 482 - ------------------------------------------------------------------------- - - BOOK III. - OF MONEY AND COIN. - - PART I. - - The principles of money deduced, and applied to the coin of Great - Britain. - - INTRODUCTION, 523 - - CHAP. I. Of money of accompt, 526 - What money is —— - Definitions —— - Money a scale for measuring value, —— - Principles which determine the value of things 527 - Prices not regulated by the quantity of money, —— - But by the relative proportion between commodities and 528 - the wants of mankind, - Necessity of distinguishing between money and price, 529 - Money of accompt what, and how contrived, —— - Examples of it, 531 - Bank money, —— - Angola money, —— - - CHAP. II. Of artificial or material money, —— - Usefulness of the precious metals for the making money, 532 - Adjusting a standard, what? 533 - Debasing and raising a standard, what? 534 - The alteration of a standard, how to be discovered? —— - Of alloy, —— - - CHAP. III. Incapacities of the metals to perform the office 535 - of an invariable measure of value, - - 1. They vary in their relative value to one another, —— - All measures ought to be invariable, —— - Consequences when they vary, 536 - Defects of a silver standard, 537 - Arguments in favour of it, —— - Answers to these arguments, 538 - Usefulness of an universal measure, 539 - They have two values, one as coin, and one as metals, 540 - Smaller inconveniences attending material money, —— - It wears in circulation, —— - It is inaccurately coined, 541 - The coinage adds to its value, without adding to its —— - weight, - The value of it may be arbitrarily changed, —— - Trade profits of the smallest defects in the coin, —— - - CHAP. IV. Methods which may be proposed for lessening the 542 - several inconveniences to which material money is liable, - Use of theory in political matters, —— - Five remedies against the effects of the variation —— - between the value of the metals, - Remedies against the other inconveniences, 544 - Against the wearing of the coin, —— - Against inaccuracy of coinage, —— - Against the expence of coinage, —— - Against arbitrary changes in the value of coin, 545 - - CHAP. V. Variations to which the value of the money-unit is —— - exposed from every disorder in the coin, - How the market price of the metals is made to vary, —— - The variation ought to be referred to the _rising_ 546 - metal, and never to the _sinking_, - How the money-unit of accompt is made to vary in its 547 - value from the variation of the metals, - Consequences of this, —— - The true unit is the mean proportional between the —— - value of the metals, - The unit to be attached to the mean proportion upon a 548 - new coinage, not after the metals have varied, - It is better to affix the unit to one, than to both 549 - metals, - Variation to which the money-unit is exposed from the —— - wearing of the coin, - Variations to which the money-unit is exposed, from the 550 - inaccuracy in the fabrication of the money, - Variation to which the money-unit is exposed from the 551 - imposition of coinage, - When coinage is imposed, bullion must be cheaper than —— - coin, - Exception from this rule, 552 - Variation to which the money-unit is exposed by the —— - arbitrary operations of Princes in raising and - debasing the coin, - - CHAP. VI. How the variations in the intrinsic value of the 553 - unit of money must affect all the domestic interests of a - nation, - How this variation affects the interests of debtors and —— - creditors, - A mistake of Mr. Locke, 555 - When the value of the unit is diminished, creditors 556 - lose; when it is augmented, debtors lose, - - CHAP. VII. Of the disorder in the British coin, so far as it 558 - occasions the melting down or the exporting of the specie, - Defects in the British coin, —— - Of the standard of the English coin and money-unit, —— - A pound sterling by statute contains 1718.7 grains troy 559 - fine silver, - The guinea 118.644 grains fine gold, —— - Coinage in England free, —— - The standard not attached to the gold coin till the 560 - year 1728, - Consequences of this regulation to debase the standard, —— - That debtors will not pay in silver but in gold, —— - That some people consider coin as money of accompt, 561 - Others consider it as a metal, —— - Operations of money-jobbers, when the coin deviates 562 - from the market proportion of the metals, or from the - legal weight, - They melt down when the metals in it are wrong —— - proportioned, - And when the coin is of unequal weight, —— - Why silver bullion is dearer than coin, —— - Because that species has risen in the market price as 563 - bullion, and not as coin, - What regulates the price of bullion? 564 - 1. The intrinsic value of the currency, —— - 2. A demand for exporting bullion, 565 - 3. Or for making of plate, —— - Exchange _raises_, and the mint price _brings down_ —— - bullion, - Continuation of the operations of money-jobbers: their 566 - rule for melting the coin, - The price in guineas equal to the price of shillings of —— - 65 in the pound troy, - When guineas may be melted down with profit, —— - Silver is exported preferably to gold, 567 - This hurtful, when done by foreigners, —— - - CHAP. VIII. Of the disorder in the British coin, so far as it 568 - affects the value of the pound sterling currency, - Two legal pounds sterling in England, —— - And several others, in consequence of the wearing of 569 - the coin, - Why any silver coin remains in England, —— - Value of a pound sterling current determined by the —— - operations of trade, - To the mean value of all the currencies, 570 - Exchange a good measure for the value of a pound —— - sterling, - The use of paper money not hurtful in debasing the 571 - standard, - The pound sterling not regulated by statute, but by the —— - mean value of the current money, - Why exchange appears so commonly against England, —— - How the market price of bullion shews the value of the —— - pound sterling, - Shillings at present weigh no more than 1⁄65 of a pound 572 - troy, - And are worn 4.29 troy grains lighter than their —— - standard weight, - A pound sterling worth, at present, no more than 1638 573 - grains troy fine silver, according to the price of - bullion, - And according to the course of exchange, —— - Shillings coined at 65 in the pound troy, would be in 574 - proportion with the gold, - Which shews that the standard has been debased, —— - And that the preserving it where it is, is no new —— - debasement, - Proof that the standard has been debased by law, 575 - And is at present reduced to the value of the gold, —— - - CHAP. IX. Historical account of the variations of the British 576 - coin, - Purport of this treatise not to dictate, but to —— - inquire, - How the disorder in the coin may be remedied without —— - inconveniences, - By making the nation itself choose the remedy, 577 - If the present standard is departed from, every other —— - that might be pitched on is arbitrary, - People imagine the present standard is the same with 578 - that of Queen Elizabeth, - Debasements of the standard during the reformation, —— - Raised by Edward VI. —— - Debased by Elizabeth, —— - Supported by her successors, —— - Until it was debased by the clipping, after the 579 - revolution, - Lowndes’s scheme refuted by Locke: the standard raised 580 - to that of Elizabeth, and the consequences of that - measure, - Silver has been rising from the beginning of this —— - century, - The English standard has been debased by law, since —— - 1726, - The trading interest chiefly to be blamed for this 581 - neglect, - Debasing the standard chiefly affects permanent —— - contracts, - And prevents prices from rising as they should do, —— - - CHAP. X. Of the disorder of the British coin, so far as it 582 - affects the circulation of gold and silver coin, and of the - consequences of reducing guineas to twenty shillings, - Why silver coin is so scarce, 583 - Consequences of fixing the guineas at 20 shillings, —— - with regard to circulation, - Will make coin disappear altogether, 584 - How light shillings are bought by weight, —— - Consequences as to the circulation with merchants and 585 - bankers, - That guineas would still pass current for 21 shillings, —— - That the standard would be affixed to the light silver, —— - as it was in the year 1695, - That merchants would gain by it, 586 - Debtors would be ruined, —— - Consequences as to the bank, —— - Reducing guineas to 20 shillings is the same as making 587 - them a commodity, - - CHAP. XI. Method of restoring the money-unit to the standard —— - of Elizabeth, and the consequences of that revolution, - How to fix the pound sterling at the standard of Queen —— - Elizabeth, - The consequences of this reformation will be to raise 588 - the standard _5 per cent._ - Every interest in a nation equally intitled to 589 - protection, - Those who suffer by the debasement of the standard, —— - Ought only to benefit by the restitution, 590 - And not the whole class of creditors, —— - Whose claim ought to be liable to a conversion, 591 - According to justice and impartiality, —— - - CHAP. XII. _Objections_ stated against the principles laid 592 - down in this inquiry, and answers to _them_, - That a pound will always be considered as a pound, 593 - That the standard is not debased at present, being —— - fixed to the statute, not to the coin, - That the pound sterling is virtually worth 1718.7 —— - grains fine silver, - That these principles imply a progressive debasement of 594 - the standard every new coinage, - That the same argument holds for debasing the standard —— - measures of weights, capacity, &c. - That the wearing of the coin falls on them who possess —— - it at the crying down, but does not debase the - standard, - That inland dealings, not the price of bullion, or —— - course of exchange, regulate the standard, - That public currency supports the value of the coin, —— - That this scheme is the same with that of Lowndes, —— - Answers to these objections, 595 - That a pound will be considered at its worth by all —— - debtors, and by those who buy, - If the standard was affixed to the statute, people —— - would be obliged to pay by weight, - No body can be obliged to pay 1718.7 grains fine silver 596 - for a pound sterling, - That it is not the regulation of the mint, but the —— - disorder of the coin which must debase the standard, - That people are obliged to measure by the standard 597 - weight, but are not obliged to pay by the standard - pound, - That the loss upon light money when called in, does not —— - fall upon the possessors, - That inland dealings cannot support the standard where 599 - there are money-jobbers or foreign commerce, - That public currency supports the authority of the 601 - coin, not the value of the pound sterling, - That the scheme is similar, though not the same with 602 - that of Lowndes, - Lowndes reasoned upon wrong principles, —— - Locke attended to supporting the standard, without —— - attending to the consequences, - Political circumstances are greatly changed, 604 - Reconciliation of the two opinions, 606 - The question in dispute is not understood, 607 - The true characteristic of a change upon the standard —— - is not attended to, - Principles will not operate their effects without the 608 - assistance of the state, - When people understand one another, they soon agree, —— - Permanent contracts are confounded with sale in the 609 - dispute, - The interest of creditors is always the predominant, 611 - and determines the opinion of a nation, - Application of principles to the operation the Dutch 612 - have lately made upon their coin, - All decisions in political questions depend upon 613 - circumstances, - - CHAP. XIII. In what sense the standard may be said to have 614 - been debased by law; and in what sense it may be said to - have suffered a gradual debasement by the operation of - political causes, - These proportions appear contradictory, —— - Debased by law, when affixed to the gold, 615 - Effects which the changing the proportion of the metals —— - has upon melting the coin, and regulating payments, - Payments made by bankers regulate all others, —— - The standard gradually debased by the rising of the 616 - silver, - The proportion of the metals in 1728, supposed to have —— - been as 15.21 is to 1., - By what progression the silver standard has been —— - debased, - The standard of Elizabeth, for the pound sterling, was 617 - 1718.7 grains silver, and 157.6 ditto gold, both - fine, - The gold standard of her pound worth, at present, —— - 2285.5 grains fine silver, - The variation of the metals has produced three —— - different standards of Elizabeth, - One worth £ 1 0 11⅜ present currency, 618 - Another worth £ 1 7 10⅞ ditto, —— - And a third worth £ 1 4 5⅛ ditto, —— - The last is the true standard of Elizabeth for the —— - pound sterling, and worth at present 2002 grains fine - silver, and 138 ditto gold, - But may vary at every moment, 619 - Gold rose during the whole 17th century, —— - And silver has risen since the beginning of this —— - century, - Some positions recapitulated, 620 - - CHAP. XIV. Circumstances to be attended to in a new 621 - regulation of the British coin, - The adopting of the standard of Elizabeth, has an air —— - of justice, - Advantages of that of Mary I., —— - Conversions necessary in every case, 622 - Every interest within the state to be examined, —— - Landed interest examined, —— - Interest of the public creditors examined, 625 - Interest of trade examined, 628 - Interest of buyers and sellers examined, —— - Interest of the bank examined, 629 - Inconveniences attending all innovations, 632 - Argument for preserving the standard at the present —— - value, - That every change must either hurt the bank, or the —— - public creditors, - A more easy method of making a change upon the 633 - standard, - - CHAP. XV. Regulations which the principles of this inquiry 634 - point out as expedient to be made, by a new statute for - regulating the British coin, - 1. Regulation as to the standard, —— - 2. As to the weight, —— - 3. Mint price, —— - 4. Denominations, 635 - 5. Marking the weight on the coins, —— - 6. Liberty to stipulate payment in gold or silver, —— - 7. Creditors may demand payment, half in gold, and half —— - in silver, - 8. Regulations as to sale, —— - 9. Ditto as to payments to and from banks, &c., —— - 10. All coin to be of full weight, when paid away, —— - 11. Liberty to melt or export coin, but death to clip —— - or wash, - 12. Rule for changing the mint price of the metals, 636 - 13. When to change the mint price, —— - 14. Rule for changing the denomination of the coins, —— - 15. How contracts are to be acquitted, after a change —— - of the denomination has taken place, - 16. The weight of the several coins never to be 638 - changed, except upon a general recoinage of one - denomination at least, - How these regulations will preserve the same value to —— - the pound sterling at all times, and how fractions in - the denomination of coin may be avoided, - 17. Small coins to be current only for 20 years, and 639 - large coins for 40 years, or more, - 18. All foreign coins to pass for bullion only, —— - Consequences of these regulations, —— - ------------------------------------------------------------------------- - - - - - AN - INQUIRY - INTO THE - PRINCIPLES OF POLITICAL OECONOMY. - ------------------------------------------------------------------------- - - - BOOK I. - OF POPULATION AND AGRICULTURE. - ------------------------------------------------------------------------- - - - - - INTRODUCTION. - - -Oeconomy in general is the art of providing for all the wants of a -family, with prudence and frugality. - -If any thing necessary or useful is found wanting, if any thing provided -is lost or misapplied, if any servant, any animal, is supernumerary or -useless, if any one sick or infirm is neglected, we immediately perceive -a want of oeconomy. The object of it, in a private family, is therefore -to provide for the nourishment, the other wants, and the employment of -every individual. In the first place, for the master, who is the head, -and who directs the whole; next for the children, who interest him above -all other things; and last for the servants, who being useful to the -head, and essential to the well-being of the family, have therefore a -title to become an object of the master’s care and concern. - -The whole oeconomy must be directed by the head, who is both lord and -steward of the family. It is however necessary, that these two offices -be not confounded with one another. As lord, he establishes the laws of -his oeconomy; as steward, he puts them in execution. As lord, he may -restrain and give his commands to all within the house as he thinks -proper; as steward, he must conduct with gentleness and address, and is -bound by his own regulations. The better the oeconomist, the more -uniformity is perceived in all his actions, and the less liberties are -taken to depart from stated rules. He is no ways master to break through -the laws of his oeconomy, although in every respect he may keep each -individual within the house, in the most exact subordination to his -commands. Oeconomy and government, even in a private family, present -therefore two different ideas, and have also two different objects. - -What oeconomy is in a family, political oeconomy is in a state: with -these essential differences however, that in a state there are no -servants, all are children: that a family may be formed when and how a -man pleases, and he may establish what plan of oeconomy he thinks fit; -but states are found formed, and the oeconomy of these depends upon a -thousand circumstances. The statesman (this is a general term to signify -the head, according to the form of government) is neither master to -establish what oeconomy he pleases, or in the exercise of his sublime -authority to overturn at will the established laws of it, let him be the -most despotic monarch upon earth. - -The great art therefore of political oeconomy is, first to adapt the -different operations of it to the spirit, manners, habits, and customs -of the people, and afterwards to model these circumstances so, as to be -able to introduce a set of new and more useful institutions. - -The principal object of this science is to secure a certain fund of -subsistence for all the inhabitants, to obviate every circumstance which -may render it precarious; to provide every thing necessary for supplying -the wants of the society, and to employ the inhabitants (supposing them -to be freemen) in such a manner as naturally to create reciprocal -relations and dependencies between them, so as to make their several -interests lead them to supply one another with their reciprocal wants. - -If one considers the variety which is found in different countries, in -the distribution of property, subordination of classes, genius of -people, proceeding from the variety of forms of government, laws, and -manners, one may conclude, that the political oeconomy in each must -necessarily be different, and that principles, however universally true, -may become quite ineffectual in practice, without a sufficient -preparation of the spirit of a people. - -It is the business of a statesman to judge of the expediency of -different schemes of oeconomy, and by degrees to model the minds of his -subjects so as to induce them, from the allurement of private interest, -to concur in the execution of his plan. - -The speculative person, who removed from the practice, extracts the -principles of this science from _observation_ and _reflection_, should -divest himself, as far as possible, of every prejudice, in favour of -established opinions, however reasonable, when examined relatively to -particular nations: he must do his utmost to become a citizen of the -world, comparing customs, examining minutely institutions which appear -alike, when in different countries they are found to produce different -effects: he should examine the cause of such differences with the utmost -diligence and attention. It is from such inquiries that the true -principles are discovered. - -He who takes up the pen upon this subject, keeping in his eye the -customs of his own or any other country, will fall more naturally into a -description of one particular system of it, than into an examination of -the principles of the science in general: he will applaud such -institutions as he finds rightly administred at home; he will condemn -those which are administred with abuse; but, without comparing different -methods of executing the same plan in different countries, he will not -easily distinguish the disadvantages which are essential to the -institution, from those which proceed from the abuse. For this reason a -land tax excites the indignation of a Frenchman, an excise that of an -Englishman. One who looks into the execution of both, in each country, -and in every branch of management, will discover the real effects of -these impositions, and be able to distinguish what proceeds from abuse, -from what is essential to the burden. - -Nothing is more effectual towards preparing the spirit of a people to -receive a good plan of oeconomy, than a proper representation of it. On -the other hand, nothing is better calculated to keep the statesman, who -is at the head of affairs, in awe. - -When principles are well understood, the real consequences of burdensome -institutions are clearly seen: when the purposes they are intended for, -are not obtained, the abuse of the statesman’s administration appears -palpable. People then will not so much cry out against the imposition, -as against the misapplication. It will not be a land tax of four -shillings in the pound, nor an excise upon wines and tobacco, which will -excite the murmurs of a nation; it will be the prodigal dissipation and -misapplication of the amount of these taxes after they are laid on. But -when principles are not known, all inquiry is at an end, the moment a -nation can be engaged to submit to the burden. It is the same with -regard to every other part of this science. - -Having pointed out the object of my pursuit, I shall only add, that my -intention is to attach myself principally to a clear deduction of -principles, and a short application of them to familiar examples, in -order to avoid abstraction as much as possible. I farther intend to -confine myself to such parts of this extensive subject, as shall appear -the most interesting in the general system of modern politics, of which -I shall treat with that spirit of liberty, which reigns more and more -every day, throughout all the polite and flourishing nations of Europe. - -When I compare the elegant performances which have appeared in Great -Britain and in France with my dry and abstracted manner of treating the -same subject, in a plain language void of ornament, I own I am -discouraged on many accounts. If I am obliged to set out by laying down -as fundamental principles the most obvious truths, I dread the -imputation of pedantry, and of pretending to turn common sense into -science. If I follow these principles through a minute detail, I may -appear trifling. I therefore hope the reader will believe me, when I -tell him, that these defects have not escaped my discernment, but that -my genius, the nature of the work, and the connection of the subject, -have obliged me to write in an order and in a stile where every thing -has been sacrificed to perspicuity. - -My principal aim shall be to discover truth, and to enable my reader to -touch the very link of the chain where I may at any time go astray. - -My business shall not be to seek for new thoughts, but to reason -consequentially; and if any thing new be found, it will be in the -conclusions. - -Long steps in political reasoning lead to error; close reasoning is -tedious, and to many appears trivial: this however must be my plan, and -my consolation is, that the further I advance, I shall become the more -interesting. - -Every supposition must be considered as strictly relative to the -circumstances presupposed; and though, in order to prevent -misapplication, and to avoid abstraction as much as possible, I -frequently make use of examples for illustrating every principle; yet -these, which are taken from matters of fact, must be supposed divested -of every foreign circumstance inconsistent with the supposition. - -I shall combat no particular opinion in such intricate matters; though -sometimes I may pass them in review, in order to point out how I am led -to differ from them. - -I pretend to form no system, but by following out a succession of -principles, consistent with the nature of man and with one another, I -shall endeavour to furnish some materials towards the forming of a good -one. - - - - - CHAP. I. - _Of the Government of Mankind._ - - -Man we find acting uniformly in all ages, in all countries, and in all -climates, from the principles of self-interest, expediency, duty, or -passion. In this he is alike, in nothing else. - -These motives of human actions produce such a variety of combinations, -that if we consider the several species of animals in the creation, we -shall find the individuals in no class so unlike to one another, as man -to man. No wonder then if people differ in opinion with regard to every -thing which relates to man. - -As this noble animal is a sociable creature, both from necessity and -inclination, we also find, in all ages, climates and countries, a -certain modification of government and subordination established among -them. Here again we are presented with as great variety as there are -different societies; all however agreeing in this, that the end of a -_voluntary_ subordination to authority is with a view to promote the -general good. - -Constant and uninterrupted experience has proved to man, that virtue and -justice in those who govern, are sufficient to render the society happy, -under any form of government. Virtue and justice when applied to -government mean no more than a tender affection for the whole society, -and an exact and impartial regard for the interest of every class. - -All actions, and indeed all things, are good or bad only by relation. -Nothing is so complex as relations when considered with regard to a -society, and nothing is so difficult as to discover truth when involved -and blended with these relations. - -We must not conclude from this, that every operation of government -becomes problematical and uncertain as to its consequences: some are -evidently good; others are notoriously bad: the middle terms are always -the least essential, and the more complex they appear to a discerning -eye, the more trivial they are found to be in their immediate -consequences. - -A government must be continually in action, and one principal object of -its attention must be, the consequences and effects of new institutions. - -Experience alone will shew, what human prudence could not foresee; and -mistakes must be corrected as often as expediency requires. - -All governments have what they call their fundamental laws; but -fundamental, that is, invariable laws, can never subsist among men, the -most variable thing we know: the only fundamental law, _salus populi_, -must ever be relative, like every other thing. But this is rather a -maxim than a law. - -It is however expedient, nay absolutely necessary, that in every state, -certain laws be supposed fundamental and invariable: both to serve as a -curb to the ambition of individuals, and to point out to the statesman -the out-lines, or sketch of that plan of government, which experience -has proved to be the best adapted to the spirit of his people. - -Such laws may even be considered as actually invariable, while a state -subsists without convulsions or revolutions: because then the -alterations are so gradual, that they become imperceptible to all, but -the most discerning, who compare the customs and manners of the same -people in different periods of time and under different combinations of -circumstances. - -As we have taken for granted the fundamental maxim, that every operation -of government should be calculated for the good of the people, so we may -with equal certainty decide, that in order to make a people happy, they -must be governed according to the spirit which prevails among them. - -I am next to explain what I mean by the spirit of a people, and to shew -how far this spirit must be made to influence the government of every -society. - ------------------------------------------------------------------------- - - - - - CHAP. II. - _Of the Spirit of a People._ - - -The spirit of a people is formed upon a set of received opinions -relative to three objects; morals, government, and manners: these once -generally adopted by any society, confirmed by long and constant habit, -and never called in question, form the basis of all laws, regulate the -form of every government, and determine what is commonly called the -customs of a country. - -To know a people we must examine them under those general heads. We -acquire the knowledge of their morals with ease, by consulting the -tenets of their religion, and from what is taught among them by -authority and under direction. - -The second, or government, is more disguised, as it is constantly -changing from circumstances, partly resulting from domestic and partly -from foreign considerations. A thorough knowledge of their history, and -conversation with their statesmen, may give one, who has access to these -helps, a very competent knowledge of this branch. - -The last, or the knowledge of the manners of a people, is by far the -most difficult to acquire, and yet is the most open to every person’s -observation. Certain circumstances with regard to manners are supposed -by every one in the country to be so well known, so generally followed -and observed, that it seldom occurs to any body to inform a stranger -concerning them. In one country nothing is so injurious as a stroke with -a stick, or even a gesture which implies a design or a desire to -strike[B]: in another a stroke is nothing, but an opprobrious expression -is not to be borne[C]. An innocent liberty with the fair sex, which in -one country passes without censure, is looked upon in another as the -highest indignity[D]. - -Footnote B: - - France. - -Footnote C: - - Germany. - -Footnote D: - - Spain. - -In general, the opinion of a people with regard to injuries is -established by custom only, and nothing is more necessary in government, -than an exact attention to every circumstance peculiar to the people to -be governed. - -The kingdom of Spain was lost for a violence committed upon chastity[E]; -the city of Genoa for a blow[F]; the kingdoms of Naples and Sicily have -ever been ready to revolt; because having been for many ages under the -dominion of strangers, the people have never been governed according to -the true spirit of their manners. Let us consult the revolutions of all -countries, and we shall find, that the most trivial circumstances have -had a greater influence on the event, than the more weighty reasons, -which are always set forth as the real motives. I need not enlarge upon -this subject, my intention is only to suggest an idea which any one may -pursue, and which will be applied upon many occasions as we go along; -for there is no treating any point which regards the political oeconomy -of a nation, without accompanying the example with some supposition -relative to the spirit of the people. I return. - -Footnote E: - - By Roderigo, the last king of the Gothic line. - -Footnote F: - - Given by an Austrian officer to a Genoese, which occasioned the revolt - in 1747, by which the Germans were expelled the city. - -I have said, that the most difficult thing to learn concerning a people, -is the spirit of their manners. Consequently, the most difficult thing -for a stranger to adopt, is their manner. Men acquire the language, nay -even lose the foreign accent, before they lose the oddity of their -manner. The reason is plain. The inclinations must be changed, the taste -of amusement must be new modelled; established maxims upon government, -manners, nay even upon some moral actions, must undergo certain new -modifications, before the stranger’s conversation and behaviour becomes -consistent with the spirit of the people with whom he lives. - -From these considerations, we may find the reason, why nothing is more -heavy to bear than the government of conquerors, in spite of all their -endeavours to render themselves agreeable to the conquered. Of this -experience has ever proved the truth, and princes are so much persuaded -of it, that when a country is subdued in our days, or when it otherwise -changes masters, there is seldom any question of altering, but by very -slow degrees and length of time, the established laws and customs of the -inhabitants. I might safely say, there is no form of government upon -earth so excellent in itself, as, necessarily, to make the people happy -under it. Freedom itself, _imposed_ upon a people groaning under the -greatest slavery, will not make them happy, unless it is made to undergo -certain modifications, relative to their established habits. - -Having explained what I mean by the spirit of a people, I come next to -consider, how far this spirit must influence government. - -If governments be taken in general, we shall find them analogous to the -spirit of the people. But the point under consideration is, how a -statesman is to proceed, when expediency and refinement require a change -of administration, or when it becomes necessary from a change of -circumstances. - -The great alteration in the affairs of Europe within these three -centuries, by the discovery of America and the Indies, the springing up -of industry and learning, the introduction of trade and the luxurious -arts, the establishment of public credit, and a general system of -taxation, have entirely altered the plan of government every where. - -From feudal and military, it is become free and commercial. I oppose -freedom in government to the feudal system, only to mark that there is -not found now, that chain of subordination among the subjects, which -made the essential part of the feudal form. The head there had little -power, and the lower classes of the people little liberty. Now every -industrious man, who lives with oeconomy, is free and independent, under -most forms of government. Formerly, the power of the barons swallowed up -the independency of all inferior classes. I oppose commercial to -military, only because the military governments now are made to subsist -from the consequences and effects of commerce: that is, from the revenue -of the state, proceeding from taxes. Formerly, every thing was brought -about by numbers; now, numbers of men cannot be kept together without -money. - -This is sufficient to point out the nature of the revolution in the -political state, and of consequence in the manners of Europe. - -The spirit of a people changes no doubt of itself, but by slow degrees. -The same generation commonly adheres to the same principles, and retains -the same spirit. In every country we find two generations upon the stage -at a time; that is to say, we may distribute into two classes the spirit -which prevails; the one amongst men between twenty and thirty, when -opinions are forming; the other of those who are past fifty, when -opinions and habits are formed and confirmed. A person of judgment and -observation may foresee many things relative to government, from an -exact application to the rise and progress of new customs and opinions, -provided he preserve his mind free from all attachments and prejudices, -in favour of those which he himself has adopted, and in that delicacy of -sensation necessary to perceive the influence of a change of -circumstances. This is the genius proper to form a great statesman. - -In every new step the spirit of the people should be first examined, and -if that be not found ripe for the execution of the plan, it ought to be -put off, kept entirely secret, and every method used to prepare the -people to relish the innovation. - -The project of introducing popery into England was blown before it was -put in practice, and so misgave. Queen Elizabeth kept her own secret, -and succeeded in a similar attempt. The scheme of a general excise was -pushed with too much vivacity, was made a matter of party, ill-timed, -and the people nowise prepared for it; hence it will be the more -difficult to bring about at another time, without the greatest -precautions. - -In turning and working upon the spirit of a people, nothing is -impossible to an able statesman. When a people can be engaged to murder -their wives and children, and to burn themselves, rather than submit to -a foreign enemy, when they can be brought to give their most precious -effects, their ornaments of gold and silver, for the support of a common -cause; when women are brought to give their hair to make ropes, and the -most decrepit old men to mount the walls of a town for its defence; I -think I may say, that by properly conducting and managing the spirit of -a people, nothing is impossible to be accomplished. But when I say, -nothing is impossible, I must be understood to mean, that nothing -essentially necessary for the good of the people is impossible; and this -is all that is required in government. - -That it requires a particular talent in a statesman to dispose the minds -of a people to approve even of the scheme which is the most conducive to -their interest and prosperity, appears from this; that we see examples -of wise, rich and powerful nations languishing in inactivity, at a time -when every individual is animated with a quite contrary spirit; becoming -a prey to their enemies, like the city of Jerusalem, while they are -taken up with their domestic animosities, only because the remedies -proposed against these evils contradict the spirit of the times[G]. - -Footnote G: - - This was writ in the year 1756, about the time the island of Minorca - was taken by the French. - -The great art of governing is to divest one’s self of prejudices and -attachments to particular opinions, particular classes, and above all to -particular persons; to consult the spirit of the people, to give way to -it in appearance, and in so doing to give it a turn capable of inspiring -those sentiments which may induce them to relish the change, which an -alteration of circumstances has rendered necessary. - -Can any change be greater among free men, than from a state of absolute -liberty and independency to become subject to constraint in the most -trivial actions? This change has however taken place over all Europe -within these three hundred years, and yet we think ourselves more free -than ever our fathers were. Formerly a gentleman who enjoyed a bit of -land knew not what it was to have any demand made upon him, but in -virtue of obligations by himself contracted. He disposed of the fruits -of the earth, and of the labour of his servants or vassals, as he -thought fit. Every thing was bought, sold, transferred, transported, -modified, and composed, for private consumption, or for public use, -without ever the state’s being once found interested in what was doing. -This, I say, was formerly the general situation of Europe, among free -nations under a regular administration; and the only impositions -commonly known to affect landed men were made in consequence of a -contract of subordination, feudal or other, which had certain -limitations; and the impositions were appropriated for certain purposes. - -Daily experience shews, that nothing is more against the inclinations of -a people, than the imposition of taxes; and the less they are accustomed -to them, the more difficult it is to get them established. - -The great abuse of governors in the application of taxes contributes not -a little to augment and entertain this repugnancy in the governed: but -besides abuse, there is often too little management used to prepare the -spirits of the people for such innovations: for we see them upon many -occasions submitting with chearfulness to very heavy impositions, -provided they be well-timed, and consistent with their manners and -disposition. A French gentleman, who cannot bear the thought of being -put upon a level with a peasant in paying a land tax, pays contentedly, -in time of war, a general tax upon all his effects, under a different -name. To pay for your head is terrible in one country; to pay for light -appears as terrible in another. - -It often happens, that statesmen take the hint of new impositions from -the example of other nations, and not from a nice examination of their -own domestic circumstances. But when these are rightly attended to, it -becomes easy to discover the means of executing the same plan, in a way -quite adapted to the spirit, temper, and circumstances of the people. -When strangers are employed as statesmen, the disorder is still greater, -unless in cases of most extraordinary penetration, temper, and above all -flexibility and discretion. - -Statesmen have sometimes recourse to artifice instead of reason, because -their intentions often are not upright. This destroys all confidence -between them and the people; and confidence is necessary when you are in -a manner obliged to ask a favor, or when at least what you demand is not -indisputably your right. A people thus tricked into an imposition, -though expedient for their prosperity, will oppose violently, at another -time, a like measure, even when essential to their preservation. - -At other times, we see statesmen presenting the allurement of present -ease, precisely at the time when people’s minds are best disposed to -receive a burden. I mean when war threatens, and when the mind is heated -with a resentment of injuries. Is it not wonderful, at such a time as -this, to increase taxes only in proportion to the interest of money -wanted; does not this imply a shortsightedness, or at least an -indifference as to what is to come? Is it not more natural, that a -people should consent to come under burdens to gratify revenge, than -submit to repay a large debt when their minds are in a state of -tranquillity. - -From the examples I have given, I hope what I mean by the spirit of a -people is sufficiently understood, and I think I have abundantly shewn -the necessity of its being properly disposed, in order to establish a -right plan of oeconomy. This is so true, that many examples may be -found, of a people’s rejecting the most beneficial institutions, and -even the greatest favors, only because some circumstance had shocked -their established customs. No wonder then, if we see them refuse to come -under limitations, restraints and burdens, when the utmost they can be -flattered with from them, is a distant prospect of national good. - -I have found it necessary to premise these general reflections, in order -to obviate many objections which might naturally enough occur in the -perusal of this inquiry. I shall have occasion to make a number of -suppositions, and to draw consequences from them, which are abundantly -natural, if a proper spirit in the people be presupposed, but which -would be far from being natural without this supposition. I suppose, for -example, that a poor man, loaded with many children, would be glad to -have the state maintain them; that another, who has wasted lands, would -be obliged to one who would gratuitously build him a farm-house upon it. -Yet in both suppositions I may prove mistaken; for fathers there are, -who would rather see their children dead than out of their hands; and -proprietors are to be found, who, for the sake of hunting, would lay the -finest country in Europe into a waste. - -In order to communicate an adequate idea of what I understand by -political oeconomy, I have explained the term, by pointing out the -object of the art; which is, to provide food, other necessaries, and -employment to every one of the society. - -This is a very simple and a very general method of defining a most -complicated operation. - -To provide a proper employment for all the members of a society, is the -same as to model and conduct every branch of their concerns. - -Upon this idea, I think, may be formed the most extensive basis for an -inquiry into the principles of political oeconomy. - -The next thing to be done, is to fall upon a distinct method of -analysing so extensive a subject, by contriving a train of ideas, which -may be directed towards every part of the plan, and which, at the same -time, may be made to arise methodically from one another. - -For this purpose I have taken a hint from what the late revolutions in -the politics of Europe have pointed out to be the regular progress of -mankind, from great simplicity to complicated refinement. - -This first book shall then set out by taking up society in the cradle, -as I may say. I shall then examine the principles which influence their -multiplication, the method of providing for their subsistence, the -origin of their labour, the effects of their liberty and slavery, the -distribution of them into classes, with some other topics which relate -to mankind in general. - -Here we shall find the principles of industry influencing the -multiplication of mankind, and the cultivation of the soil. This I have -thrown in on purpose to prepare my reader for the subject of the second -book; where he will find the same principle (under the wings of liberty) -providing an easy subsistence for a numerous populace, by the means of -trade, which sends the labour of an industrious people over the whole -world. - -From the experience of what has happened these last two hundred years, -we find to what a pitch the trade and industry of Europe has increased -alienations, and the circulation of money. I shall, therefore, closely -adhere to these, as the most immediate consequences of the preceding -improvement; and, by analysing them, I shall form my third book, in -which I intend to treat of credit. - -We see also how credit has engaged nations to avail themselves of it in -their wars, and how, by the use of it, they have been led to contract -debts; which they never can satisfy and pay, without imposing taxes. The -doctrine then of debts and taxes will very naturally follow that of -credit in this great chain of political consequences. - -By this kind of historical clue, I shall conduct myself through the -great avenues of this extensive labyrinth; and in my review of every -particular district, I shall step from consequence to consequence, until -I have penetrated into the utmost recesses of my own understanding. - -When a subject is broken off, I shall render my transitions as gradual -as I can, by still preserving some chain of connexion; and although I -cannot flatter myself (in such infinite variety of choice, as to order -and distribution) to hit off, at all times, that method, which may -appear to every reader the most natural and the most correct, yet I -shall spare no pains in casting the materials into different forms, so -as to make the best distribution of them in my power. - ------------------------------------------------------------------------- - - - - - CHAP. III. - _Upon what Principles, and from what_ natural Causes _do Mankind - multiply? And what are the effects of Procreation in Countries where - Numbers are not found to increase?_ - - -The multiplication of mankind has been treated of in different ways; -some have made out tables to shew the progression of multiplications, -others have treated the question historically. The state of numbers in -different ages of the world, or in different countries at different -times, has been made the object of inquiry; and the most exact scrutiny -into antient authors, the means of investigating the truth of this -matter. All passages relative to the subject have been laid together, -and accompanied with glosses and interpretations the most plausible, in -order to determine the main question. The elaborate performances of Mr. -Hume, and Mr. Wallace, who have adopted opposite opinions in regard to -the populousness of the antient world, have left nothing new to be said -upon this subject; at least the application they appear to have given in -examining the antients, is a great discouragement to any one who might -otherwise still flatter himself, there, to find out circumstances proper -to cast a new light upon the question. - -My intention in this chapter is not to decide, nor even to give my -opinion upon that matter, far less to combat the arguments advanced on -either side. I am to consider the question under a different point of -view; not to enquire what numbers of people were found upon the earth at -a certain time, but to examine the natural and rational causes of -multiplication. If we can discover these, we may perhaps be led to judge -how far they might have operated in different ages and in different -countries. - -The fundamental principle of the multiplication of all animals, and -consequently of man, is generation; the next is food: generation gives -existence, food preserves it. Did the earth produce of itself the proper -nourishment for man, with unlimited abundance, we should find no -occasion to labour in order to procure it. Now in all countries found -inhabited, as in those which have been found desolate, if the state of -animals be inquired into, the number of them will be found in proportion -to the quantity of food produced by the earth, _regularly throughout the -year_, for their subsistence. I say, regularly throughout the year, -because we perceive in those animals which produce in great abundance, -such as all the feathered genus, that vast multitudes are destroyed in -winter; they are brought forth with the fruits of the earth, and fall in -proportion. This principle is so natural, that I think it can hardly be -controverted. - -As to man, the earth does not spontaneously produce nourishment for him -in any considerable degree. I allow that as some species of animals -support life by devouring others, so may man; but it must be observed, -that the species feeding must always be much inferior in number to the -species fed upon. This is evident in reason and in fact. - -Were the earth therefore uncultivated, the numbers of mankind would not -exceed the proportion of the spontaneous fruits which she offers for -their immediate use, or for that of the animals which might be the -proper nourishment of man. - -There is therefore a certain number of mankind which the earth would be -able to maintain without any labour: allow me to call this quantity (A). -Does it not, from this exposition of the matter, appear plain, that -without labour (A) never can increase any more than animals, which do -not work for themselves, can increase beyond the proportion of food -provided for them by nature? Let it be however observed, that I do not -pretend to limit (A) to a determined number. The seasons will no doubt -influence the numbers of mankind, as we see they influence the plenty of -other animals; but I say (A) will never increase beyond the fixed -proportion above-mentioned. - -Having resolved one question with regard to multiplication, and shewn -that numbers must become greater or smaller according to the productions -of nature, I come to the second thing proposed to be treated of in the -chapter: to wit, what will become of the generative faculty after it has -produced the full proportion of (A), and what effects will afterwards -follow. - -We see how beneficent, I might have said prodigal, nature is, in -bestowing life by generation. Several kinds of animals, especially -insects, multiply by thousands, and yet the species does not appear -annually to increase. No body can pretend that particular individuals of -any species have a privilege to live, and that others die from a -difference in their nature. It is therefore reasonable to conclude, that -what destroys such vast quantities of those produced, must be, among -other causes, the want of food. Let us apply this to man. - -Those who are supposed to be fed with the spontaneous fruits of the -earth, cannot, from what has been said, multiply beyond that proportion; -at the same time the generative faculty will work its natural effects in -augmenting numbers. The consequence will be, that certain individuals -must become worse fed, consequently weaker; consequently, if in that -weakly state, nature should withold a part of her usual plenty, the -whole multitude will be affected by it; a disease may take place, and -sweep off a far greater number than that proportioned to the deficiency -of the season. What results from this? That those who have escaped, -finding food more plentiful, become vigorous and strong; generation -gives life to additional numbers, food preserves it, until they rise up -to the former standard. - -Thus the generative faculty resembles a spring loaded with a weight, -which always exerts itself in proportion to the diminution of -resistance: when food has remained some time without augmentation or -diminution, generation will carry numbers as high as possible; if then -food come to be diminished, the spring is overpowered; the force of it -becomes less than nothing. Inhabitants will diminish, at least, in -proportion to the overcharge. If upon the other hand, food be increased, -the spring which stood at 0, will begin to exert itself in proportion as -the resistance diminishes; people will begin to be better fed; they will -multiply, and in proportion as they increase in numbers, the food will -become scarce again. - -I must here subjoin a remark very analogous to this subject. That the -generative faculty in man (which we have compared to a spring) and the -care and love we have for our children, first prompt us to multiply, and -then engage us to divide what we have with our little ones. Thus from -dividing and subdividing it happens, that in every country where food is -limited to a certain quantity, the inhabitants must be subsisted in a -regular progression, descending down from plenty and ample subsistence, -to the last periods of want, and even sometimes starving for hunger. - -Although the examples of this last extremity are not common in some -countries, yet I believe they are more so than is generally imagined; -and the other stages of want are productive of many diseases, and of a -decay which extinguishes the faculty of generation, or which weakens it, -so as to produce children less vigorous and less healthy. I appeal to -experience, if this reasoning be not just. - -Put two or three pairs of rabbits into a field proper for them, the -multiplication will be rapid; and in a few years the warren will be -stocked: you may take yearly from it a hundred pairs, I shall suppose, -and keep your warren in good order: give over taking any for some years, -you will perhaps find your original stock rather diminished than -increased, for the reasons above mentioned. Africa yearly furnishes many -thousands for the cultivation of America; in this she resembles the -warren. I have little doubt but that if all her sons were returned to -her, by far the greater part would die of hunger. - ------------------------------------------------------------------------- - - - - - CHAP. IV. - _Continuation of the same Subject, with regard to the natural and - immediate effects of Agriculture, as to Population._ - - -I proceed in my examination. I now suppose man to add his labour and -industry to the natural activity of the soil: in so far, as by this he -produces an additional quantity of food, in so far he lays a foundation -for the maintenance of an additional number. This number I shall call -(B). From this I conclude, that as (A) is in a constant proportion to -the spontaneous fruits, so (B) must be in proportion to agriculture (by -this term I understand at present every method of augmenting food by -labour) consequently the number maintained by the labour of mankind must -be to the whole number of mankind as (B) is to (A + B), or as (B) is to -(A) and (B) jointly. - -By this operation we find mankind immediately divided into two classes; -those who, without working, live upon the spontaneous fruits of the -earth; that is, upon milk, cattle, hunting, &c. The other part, those -who are obliged to labour the soil. It is proper next to inquire what -should naturally oblige a man to labour; and what are the natural -consequences of it as to multiplication. - -We have already said, that the principle of generation is inherent in -man, and prompts him to multiply. Another principle, as naturally -inherent in the mind, as the first is in the body, is self-love, or a -desire of ease and happiness, which prompts those who find in themselves -any superiority; whether personal, or political, to make use of every -natural advantage. Consequently, such will multiply proportionably: -because by appropriating to themselves the fruits of the earth, they -have the means of subsisting their offspring. The others, I think, will -very naturally become their servants; as this method is of all others -the most easy to procure subsistence. This is so analogous to the nature -of man, that we see every where, even among children, that the smallest -superiority in any one over the rest, constantly draws along with it a -tribute of service in one way or other. Those who become servants for -the sake of food, will soon become slaves: for slavery is but the abuse -of service, established by a civil institution; and men who find no -possibility of subsisting otherwise, will be obliged to serve upon the -conditions prescribed to them. - -This seems a consequence not unnatural in the infancy of the world: yet -I do not pretend to affirm that this was the origin of slavery. -Servants, however, there have always been; and the abuse of service is -what we understand by slavery. The subordination of children to their -parents, and of servants to their masters, seems to be the most rational -origin of society and government. The first of these is natural, and -follows as the unavoidable consequence of an entire dependence: the -second is political, and may very naturally take place as to those who -cannot otherwise procure subsistence. This last species of subordination -may, I think, have taken place, the moment man became obliged to labour -for subsistence, but no sooner. - -The wants of man are not confined to food, merely. When food is to be -produced from the rude surface of the earth, a great part of his time -must be taken up with this object, even supposing him to be provided -with every utensil proper for the exercise of his industry: he must -therefore be in a worse condition to provide for his other wants: -consequently, he may be willing to serve any one who will do it for him. -Whereas on the other hand, if we suppose all mankind idle and fed, -living upon the spontaneous fruits of the earth, the plan of universal -liberty becomes quite natural: because under such circumstances they -find no inducement to come under a voluntary subordination. - -Let us now borrow the idea of a primitive society, of a government, of a -king, from the most antient history we have, the better to point out the -effects of agriculture and multiplication. The society is the whole -taken together; it is Jacob, his sons, their wives, their children, and -all the servants. The government regards the institutions prescribed by -Jacob, to every one of the family, concerning their respective -subordination and duty. Multiplication will here go forward, not in -proportion to the generative faculty, but according to the employment of -the persons already generated. If Jacob continue pasturing his herds, he -must extend the limits of his right of pasture; he must multiply his -stock of cattle, in proportion as the mouths of his family augment. He -is charged with all this detail: for he is master, and director, and -statesman, and general provider. His servants will work as they are -ordered; but if he has not had the proper foresight, to break up lands -so soon as his family comes nearly up to that proportion which his -flocks can easily feed; if in this case, a dry season should burn up the -grass in Palestine, he will be obliged to send some of his stock of -cattle, with some of his family, to market, there to be sold; and with -the price he must buy corn. For in this early age, there was money, -there were manufacturers of sackcloth, of common rayment, and of -party-coloured garments; there was a trade in corn, in spicery, balm, -and myrrh. Jacob and his family were shepherds, but they lived not -entirely on flesh; they eat bread: consequently there was tillage in -those days, though they exercised none. The famine however was ready to -destroy them, and probably would have done it, but for the providential -circumstance of Joseph’s being governor of Egypt. He relieved their -distress, he gave to his family the best country in the whole kingdom -for pasture; and they had a gratuitous supply of bread. - -No doubt, so long as these favourable circumstances subsisted, -multiplication would go on apace. What supernatural assistance God was -pleased to grant for the increase of his chosen people, does not concern -my inquiry. - -I have mentioned transiently this example of the patriarch, only to -point out how antient the use of money, the invention of trade and -manufactures appear to have been. Without such previous establishments, -I consider mankind as savages, living on the spontaneous fruits of the -earth, as in the first supposition; and confined, as to numbers, to the -actual extent of these productions. - -From what has been said, we may conclude, that the numbers of mankind -must depend upon the quantity of food produced by the earth for their -nourishment; from which, as a corollary, may be drawn, - -That mankind have been, as to numbers, and must ever be, in proportion -to the food produced; and that the food produced will be in the compound -proportion of the fertility of the climate, and the industry of the -inhabitants. - -From this last proposition it appears plain, that there can be no -general rule for determining the number of inhabitants necessary for -agriculture, not even in the same country. The fertility of the soil -when laboured; the ease of labouring it; the quantity of good -spontaneous fruits; the plenty of fish in the rivers and sea; the -abundance of wild birds and beasts; have in all ages, and ever must -influence greatly the nourishment, and, consequently, regulate the -multiplication of man, and determine his employment. - -To make an establishment in a country not before inhabited, to root out -woods, destroy wild and venomous animals, drain marshy grounds, give a -free course to water, and to lay down the surface into corn fields, must -surely require more hands than to cultivate the same after it is -improved. For the truth of this, I appeal to our American brethren. - -We may therefore conclude, that the most essential requisite for -population, is that of agriculture, or the providing of subsistence. -Upon this all the rest depends: while subsistence is upon a precarious -footing, no statesman can turn his attention to any thing else. - -The great importance of this object has engaged some to imagine, that -the luxurious arts, in our days, are prejudicial both to agriculture and -multiplication. It is sometimes a loss to fix one’s attention too much -upon any one object, however important. No body can dispute that -agriculture is the foundation of multiplication, and the most essential -requisite for the prosperity of a state. But it does not follow from -this, that almost every body in the state should be employed in it; that -would be inverting the order of things, and turning the servant into the -master. The duty and business of man is not to feed; he is fed, in order -to do his duty, and to become useful. - -It is not sufficient for my purpose to know, that the introduction of -agriculture, by multiplying the quantity of the earth’s productions, -does evidently tend to increase the numbers of mankind. I must examine -the _political causes_ which must concur, in order to operate this -effect. - -For this purpose, my next inquiry shall be directed towards discovering -the true principles which influence the employment of man, with respect -to agriculture. I shall spare no pains in examining this point to the -bottom, even though it should lead me to anticipate some branches of my -subject. - -I shall endeavour to lay down principles consistent with the nature of -man, with agriculture, and with multiplication, in order, by their -means, to discover both the use and abuse of the two last. When these -parts are well understood, the rest will go on more smoothly, and I -shall find the less occasion to interrupt my subject, in order to -explain the topics upon which the whole depends. - ------------------------------------------------------------------------- - - - - - CHAP. V. - _In what Manner, and according to what Principles, and_ political - Causes, _does Agriculture augment Population_? - - -I have already shewn, how the spontaneous fruits of the earth provide a -fund of nourishment for a determined number of men, and I have slightly -touched upon the consequences of adding labour to the natural activity -of the soil. - -Let me now carry this inquiry a little farther. Let me suppose a country -fertile in spontaneous productions, capable of improvements of every -kind, inhabited by a people living under a free government, and in the -most refined simplicity, without trade, without the luxurious arts, and -without ambition. Let me here suppose a statesman, who shall inspire a -taste for agriculture and for labour into those who formerly consumed -the spontaneous fruits of the earth in ease and idleness. What will -become of this augmentation of food produced by this additional labour? - -The sudden increase of food, such as that here supposed, will -immediately diffuse vigour into all; and if the additional quantity be -not very great, no superfluity will be found. No sooner will the -inhabitants be fully nourished, but they will begin to multiply a-new; -then they will come to divide with their children, and food will become -scarce again. - -Thus much is necessary for the illustration of one principle; but the -effects, which we have been pointing out, will not be produced barely by -engaging those who lived by hunting (I suppose) to quit that trade, and -turn farmers. The statesman must also find out a method to make the -produce of this new branch of industry circulate downwards, so as to -relieve the wants of the most necessitous. Otherwise, the plenty -produced, remaining in the hands of those who produced it, will become -to them an absolute superfluity; which, had they any trade with a -neighbouring state, they would sell, or exchange, and leave their fellow -citizens to starve. And as we suppose no trade at all, this superfluity -will perish like their cherries, in a year of plenty; and consequently -the farmers will immediately give over working. - -If, to prevent this inconveniency, the statesman forces certain classes -to labour the soil, and, with discretion, distributes the produce of it -to all that have occasion for subsistence, taking in return their -services for the public benefit; this will prove an infallible way of -multiplying inhabitants, of making them laborious, and of preserving a -simplicity of manners; but it is also the picture of antient slavery, -and is therefore excluded from the supposition. - -If he acts consistently with that spirit of liberty, which we have -supposed to animate his subjects, he has no method left, but to contrive -different employments for the hands of the necessitous, that, by their -labour, they may produce an equivalent which may be acceptable to the -farmers, in lieu of this superfluity; for these last will certainly not -raise it, if they cannot dispose of it; nor will they dispose of it, but -for a proper equivalent. This is the only method (in a free state) of -procuring additional food, and of distributing it through the society, -as the price of those hours which before were spent in idleness: and, as -this will prove a more certain and more extensive fund of subsistence, -than the precarious productions of spontaneous fruits, which cannot be -increased at discretion, and in proportion to demand, it will greatly -increase numbers; but, on the other hand, it must evidently destroy that -simplicity of manners which naturally reigns among nations who do not -labour. - -A people, therefore, who have an industrious turn, will multiply in -proportion to the superfluity of their farmers; because the labour of -the necessitous will prove an equivalent for it. - -Now this additional number of inhabitants being raised and fed with the -superfluity _actually_ produced by the farmers, can never be supposed -necessary for providing that quantity, which (though relatively to the -farmers it be called a superfluity) is only a sufficiency relatively to -the whole society; and, therefore, if it be found necessary to employ -the new inhabitants also in farming, it must only be with a view to a -still greater multiplication. - -Farther, we may lay it down as a principle, that a farmer will not -labour to produce a superfluity of grain relatively to his own -consumption, unless he finds some want which may be supplied by means of -that superfluity; neither will other industrious persons work to supply -the wants of the farmer for any other reason than to procure -subsistence, which they cannot otherwise so easily obtain. These are the -reciprocal wants which the statesman must create, in order to bind the -society together. Here then is one principle: _Agriculture among a free -people will augment population, only in proportion as the necessitous -are put in a situation to purchase subsistence with their labour_. I -proceed. - -If in any country which actually produces nourishment for its -inhabitants, according to the progression above-mentioned, (p. 27.) a -plan is set on foot for the extension of agriculture; the augmentation -must be made to bear a due proportion to the progress of industry and -wants of the people, or else an outlet must be provided for disposing of -the superfluity. And if, at setting out, a foreign consumption cannot be -procured for the produce of husbandry, the greatest caution must be had -to keep the improvement of the soil within proper bounds: for, without -this, the plan intended for an improvement will, by over-doing, turn out -to the detriment of agriculture. This will be the case, if the fruits of -the earth be made to increase faster than the numbers and the industry -of those who are to consume them. For if the whole be not consumed, the -regorging plenty will discourage the industry of the farmer. - -But if, together with an encouragement to agriculture, a proper outlet -be found for the superfluity, until the numbers and industry of the -people, by increasing, shall augment the home-consumption, which again -by degrees will diminish the quantity of exportation, then the spring -will easily overcome the resistance; it will dilate; that is, numbers -will continue to increase. - -From this may be derived another principle: _That agriculture, when -encouraged for the sake of multiplying inhabitants, must keep pace with -the progress of industry; or an out-let must be provided for all -superfluity_. - -In the foregoing example, I have supposed no exportation, the more to -simplify the supposition: I was, therefore, obliged to throw in a -circumstance, in order to supply the want of it; to wit, an augmentation -of inland demand from the suspension of hunting; and I have supposed -those who formerly supported themselves by this, to consume the -superfluous food of the farmers for the price of their labour. This may -do well enough as a supposition, and has been made use of only to -explain principles; but the manners of a people are not so easily -changed; and therefore I have anticipated a little the supposition of -trade, only to shew how it must concur with industry, in the advancement -of agriculture and multiplication. - -Let me next consider the consequences of an augmentation of agriculture -in a country where the inhabitants are lazy; or where they live in such -simplicity of manners, as to have few wants which labour and industry -can supply. In this case, I say, the scheme of agriculture will not -succeed; and, if set on foot, part of the grounds will soon become -uncultivated again. - -The laziest part of the farmers, disgusted with a labour which produces -a plenty superfluous to themselves, which they cannot dispose of for any -equivalent, will give over working, and return to their antient -simplicity. The more laborious will not furnish food to the necessitous -for nothing: such therefore who cannot otherwise subsist, will naturally -serve the industrious, and thereby sell their service for food. Thus by -the diminution of labour, a part of the country, proportional to the -quantity of food which the farmers formerly found superfluous, will -again become uncultivated. - -Here then will be found a country, the population of which must stop for -want of food; and which, by the supposition, is abundantly able to -produce more. Experience every where shews the possible existence of -such a case, since no country in Europe is cultivated to the utmost; and -that there are many still, where cultivation, and consequently -multiplication, is at a stop. These nations I consider as in a _moral -incapacity_ of multiplying: the incapacity would be _physical_, if there -was an actual impossibility of their procuring an augmentation of food -by any means whatsoever. - -These principles seem to be confirmed by experience, whether we compare -them with the manner of living among the free American savages, or among -the free, industrious, and laborious Europeans. We find the productions -of all countries, generally speaking, in proportion to the number of -their inhabitants; and, on the other hand, the inhabitants are most -commonly in proportion to the food. - -I beg that this may not be looked upon as a quibble, or what is called a -vicious circle. I have qualified the general proposition by subjoining -that it is found true most commonly; and from what is to follow, we -shall better discover both the truth and meaning of what is here -advanced. While certain causes operate, food will augment, and mankind -will increase in proportion; when these causes cease, _procreation_ will -not augment numbers; then the general proposition will take place; -numbers and food will remain the same, and balance one another. This I -imagine to be so in fact; and I hope to shew that it is rational also. -Let me now put an end to this chapter, by drawing some conclusions from -what has been laid down, in order to enlarge our ideas, and to enable us -to extend our plan. - -I. One consequence of a fruitful soil, possessed by a free people, given -to agriculture, and inclined to industry, will be the production of a -superfluous quantity of food, over and above what is necessary to feed -the farmers. Inhabitants will multiply; and according to their increase, -a certain number of the whole, proportional to such superfluity of -nourishment produced, will apply themselves to industry and to the -supplying of other wants. - -II. From this operation produced by industry, we find the people -distributed into two classes. The first is that of the farmers who -produce the subsistence, and who are necessarily employed in this branch -of business; the other I shall call _free hands_; because their -occupation being to procure themselves subsistence out of the -superfluity of the farmers, and by a labour adapted to the wants of the -society, may vary according to these wants, and these again according to -the spirit of the times. - -III. If in the country we are treating of, both money and the luxurious -arts are supposed unknown, then the superfluity of the farmers will be -in proportion to the number of those whose labour will be found -sufficient to provide for all the other necessities of the inhabitants; -and so soon as this is accomplished, the consumption and produce -becoming equally balanced, the inhabitants will increase no more, or at -least very precariously, unless their wants be multiplied. - ------------------------------------------------------------------------- - - - - - CHAP. VI. - _How the Wants of Mankind promote their Multiplication._ - - -If the country we were treating of in the former chapter be supposed of -a considerable extent and fruitfulness, and if the inhabitants have a -turn for industry; in a short time, _luxury_ and the use of _money_ (or -of something participating of the nature of money) will infallibly be -introduced. - -By LUXURY, I understand _the consumption of any thing produced by the -labour or ingenuity of man, which flatters our senses or taste of -living, and which is neither necessary for our being well fed, well -clothed, well defended against the injuries of the weather, nor for -securing us against every thing which can hurt us_[H]. - -Footnote H: - - As my subject is different from that of morals, I have no occasion to - consider the term luxury in any other than a political sense, to wit, - as a principle which produces employment, and gives bread to those who - supply the demands of the rich. For this reason I have chosen the - above definition of it, which conveys no idea, either of abuse, - sensuality, or excess; nor do I, at present, even consider the hurtful - consequences of it as to foreign trade. Principles here are treated of - with regard to mankind in general, and the effects of luxury are only - considered relatively to multiplication and agriculture. Our reasoning - will take a different turn, when we come to examine the separate - interest of nations, and the principles of trade. - - I beg therefore, that at present my reasoning be carried no further - (from inductions and suppositions) than my intention is that it should - be. I am no patron, either of vice, profusion, or the dissipation of - private fortunes; although _I may now and then reason very cooly upon - the political consequences of such diseases in a state, when I only - consider the influence they have as to feeding and multiplying a - people_. My subject is too extensive of itself to admit of being - confounded with the doctrine either of morals, or of government, - however closely these may appear connected with it; and did I not - begin by simplifying ideas as much as possible, and by banishing - combinations, I should quickly lose my way, and involve myself in - perplexities inextricable. - -By MONEY, I understand _any commodity, which purely in itself is of no -material use to man for the purposes above-mentioned, but which acquires -such an estimation from his opinion of it, as to become the universal -measure of what is called value, and an adequate equivalent for any -thing alienable_. - -Here a new scene opens. This money must be found in the hands of some of -the inhabitants; naturally, of such as have had the wit to invent it, -and the address to make their countrymen fond of it, by representing it -as an equivalent value for food and necessaries; that is to say, the -means of procuring, without work or toil, not only the labour of others, -but food itself. - -Here then is produced a new object of want. Every person becomes fond of -having money; but how to get it is the question. The proprietors will -not give it for nothing, and by our former supposition every one within -the society was understood to be abundantly supplied with food and -necessaries; the farmers, from their labouring the ground; the free -hands, by the return of their own ingenuity, in furnishing necessaries. -The proprietors therefore of this money have all their wants supplied, -and still are possessors of this new kind of riches, which we now -suppose to be coveted by all. - -The natural consequence here will be, that those who have the money will -cease to labour, and yet will consume; and they will not consume for -nothing, for they will pay with money. - -Here then is a number of inhabitants, who live and consume the produce -of the earth without labouring: food will soon become scarce; demand for -it will rise, and that will be paid with money; this is the best -equivalent of all; many will run to the plough; the superfluity of the -farmers will augment; the rich will call for superfluities; the free -hands will supply them, and demand food in their turn. These will not be -found a burden on the husbandmen, as formerly; the rich, who hired of -them their labour or service, must pay them with money, and this money -in their hands will serve as an equivalent for the superfluity of -nourishment produced by additional agriculture. - -When once this imaginary wealth, money, becomes well introduced into a -country, luxury will very naturally follow; and when money becomes the -object of our wants, mankind become industrious, in turning their labour -towards every object which may engage the rich to part with it; and thus -the inhabitants of any country may increase in numbers, until the ground -refuses farther nourishment. The consequences of this will make the -subject of another chapter. - -Before we proceed, something must be said, in order to restrain these -general assertions a little. - -We have supposed a very rapid progress of industry, and a very sudden -augmentation of inhabitants, from the introduction of money. But it must -be observed, that many circumstances have concurred with the money, to -produce this effect. - -We have supposed a country capable of improvement, a laborious people, a -taste of refinement and luxury in the rich, an ambition to become so, -and an application to labour and ingenuity in the lower classes of men. -According to the greater or less degree of force, or concurrence of -these and like circumstances, will the country in question become more -or less cultivated, and consequently peopled. - -If the soil be vastly rich, situated in a warm climate, and naturally -watered, the productions of the earth will be almost spontaneous: this -will make the inhabitants lazy. Laziness is the greatest of all -obstacles to labour and industry. Manufactures will never flourish here. -The rich, with all their money, will not become luxurious with delicacy -and refinement; for I do not mean by luxury the gratification of the -animal appetites, nor the abuse of riches, but _an elegance of taste and -in living, which has for its object the labour and ingenuity of man_; -and as the ingenuity of workmen begets a taste in the rich, so the -allurement of riches kindles an ambition, and encourages an application -to works of ingenuity in the poor. - -Riches therefore will here be adored as a god, but not made subservient -to the uses of man; and it is only by the means of swift circulation -from hand to hand, (as shall be observed in its proper place) that they -become productive of the effects mentioned above[I]. - -Footnote I: - - Every transition of money from hand to hand, for a valuable - consideration, implies some service done, something wrought by man, or - performed by his ingenuity, or some consumption of something produced - by his labour. The quicker therefore the circulation of money is in - any country, the more strongly it may be inferred, that the - inhabitants are laborious; and _vice versa_: but of this more - hereafter. - -When money does not circulate, it is the same thing as if it did not -exist; and as the treasures found in countries where the inhabitants are -lazy do not circulate, they are rather ornamental than useful. - -It is not therefore in the most fruitful countries of the world, nor in -those which are the best calculated for nourishing great multitudes, -that we find the most inhabitants. It is in climates less favoured by -nature, and where the soil only produces to those who labour, and in -proportion to the industry of every one, where we may expect to find -great multitudes; and even these will be found greater or less, in -proportion as the turn of the inhabitants is directed to ingenuity and -industry. - -In such countries where these are made to flourish, the free hands (of -whom we have spoken above) will be employed in useful manufactures, -which, being refined upon by the ingenious, will determine what is -called the standard of taste; this taste will increase consumption, -which again will multiply workmen, and these will encourage the -production of food for their nourishment. - -Let it therefore never be said, that there are too many manufacturers -employed in a country; it is the same as if it were said, there are too -few idle persons, too few beggars, and too many husbandmen. - -We have more than once endeavoured to shew, that these manufacturers -never can be fed but out of the superfluity of nourishment produced by -the farmers. It is a contradiction, I think, to say, that those who are -fed upon the surplus of those who cultivate the soil are necessary for -producing a sufficiency to themselves. For if even this surplus were to -diminish, the manufactures, not the labourers, would be the first to be -extinguished for want of nourishment. - -The importance of the distributive proportion of mankind into labourers -and free hands appears so great, and has so intimate a connection with -this subject, that it engages me to seek for an illustration of the -principles I have been laying down, in an example drawn from facts, as -it is found to stand in one of the greatest and most flourishing nations -in Europe. But before I proceed farther in this part of my subject, I -must examine the consequences of slavery with regard to the subject we -are now upon. Relations here are so many and so various, that it is -necessary to have sometimes recourse to transitions, of which I give -notice to my reader, that he may not lose the connection. - ------------------------------------------------------------------------- - - - - - CHAP. VII. - _The Effects of Slavery upon the Multiplication and Employment of - Mankind._ - - -Before I go on to follow the consequences of the above reasoning, I must -stop, to consider a difference, of no small importance, between antient -and modern times, which will serve to illustrate the nature of slavery, -with regard to population and the employment of mankind. - -We have endeavoured to lay down the principles which seem to influence -these two objects, supposing all to be free. In that case I imagine the -human species will multiply pretty much in proportion to their industry; -their industry will increase according to their wants, and these again -will be diversified according to the spirit of the times. - -From this I conclude, that the more free and simple the manners of a -country are, _cæteris paribus_, the fewer inhabitants will be found in -it. This is proved by experience every where. The Tartars, who freely -wander up and down a country of vast extent, multiply but little; the -savages in America, who live upon hunting, in a state of great -independence; the inhabitants of several mountainous countries in -Europe, where there are few manufactures, and where the inhabitants do -not leave the country; in all such places mankind do not multiply. What -is the reason of this? One would imagine, where there is a great extent -of ground capable of producing food, that mankind should multiply until -the soil refused to give more. I imagine the answer may be easily -discovered from the principles above laid down. - -Where mankind have few wants, the number of free hands necessary to -supply them is very small, consequently very little surplus from the -farmers is sufficient to maintain them. When therefore it happens, that -any poor family in the class of free hands is very numerous, division -there comes to be carried to its utmost extent, and the greatest part -become quite idle, because there is no demand for their work. As long as -they can be fed by the division of the emoluments arising from the -labour of their parents, or by the charity of others, they live; when -these resources fail, they become miserable. In so wretched a situation -it is not easy to find bread. The farmers will not double their -diligence from a charitable disposition. Those who have land will not -allow those indigent people a liberty to raise grain in it for nothing; -and although they should, the poor are not in a capacity to provide what -is necessary for doing it. All other work is fully stocked, the wretched -die, or extinguish without multiplying. - -To make this more evident, let us suppose the wants of mankind, in any -polite nation of Europe, which lives and flourishes in our days upon the -produce of its own soil, reduced all at once to the simplicity of the -antient patriarchs, or even to that of the old Romans. Suppose all the -hands now employed in the luxurious arts, and in every branch of modern -manufactures, to become quite idle, how could they be subsisted? What -oeconomy could be set on foot able to preserve so many lives useful to -the state? Yet it is plain by the supposition, that the farmers of the -country are capable of maintaining them, since they do so actually. It -would be absurd to propose to employ them in agriculture, seeing there -are enough employed in this, to provide food for the whole. - -If it be certain, that such people would die for want without any -resource, must it not follow, that unless their parents had found the -means of maintaining them when children, and they themselves the means -of subsisting by their industry in supplying wants, they could not have -existed beyond their first infancy. - -This seems to strike deep against the populousness of the old world, -where we know that the wants of mankind, with regard to trades and -manufactures, were so few. - -But in those days the wants of mankind were of a different nature. At -present there is a demand for the ingenuity of man; then there was a -demand for his person and service. Now provided there be a demand for -man, whatever use he be put to, the species will multiply; for those who -stand in need of them will always feed them, and as long as food is to -be found, numbers will increase. - -In the present times food cannot, in general, be found, but by labour, -and that cannot be found but to supply wants. Nobody will feed a free -man, more than he will feed the wild birds or beasts of the field, -unless he has occasion for the labour of the one or the flesh of the -other. - -In the old world the principles were the same, but the spirit of nations -was different. Princes wanted to have numerous armies. Free states -sought for power in the number of their citizens. The wants of mankind -being few, and a simplicity of manners established, to have encouraged -industry, excepting in agriculture, which in all ages has been the -foundation of population, would have been an inconsistency. To make -mankind labour beyond their wants, to make one part of a state work to -maintain the other gratuitously, could only be brought about by slavery, -and slavery was therefore introduced universally. Slavery was then as -necessary towards multiplication, as it would now be destructive of it. -The reason is plain. If mankind be not forced to labour, they will only -labour for themselves; and if they have few wants, there will be little -labour. But when states come to be formed, and have occasion for idle -hands to defend them against the violence of their enemies, food at any -rate must be procured for those who do not labour; and as, by the -supposition, the wants of the labourers are small, a method must be -found to increase their labour above the proportion of their wants. - -For this purpose slavery was calculated: it had two excellent effects -with respect to population. The first, that, in unpolished nations, -living upon the spontaneous fruits of the earth, and almost continually -in war, lives were preserved for the sake of making slaves of the -captives. These sold to private people, or different states, were sure -of being fed; whereas remaining in their own country, they only occupied -a place, which, by the force of the generative faculty, as has been -observed, was soon to be filled up by propagation: for it must not be -forgot, that when numbers are swept off, by any sudden calamity, which -does not proportionally diminish subsistence, a new multiplication -immediately takes place. Thus we perceive the hurt done by plagues, by -war, and by other devastations, either among men, or cattle, repaired in -a few years, even in those countries where the standard number of both -is seldom found to increase. What immense quantities of cattle are -yearly slaughtered! Does any body imagine that if all were allowed to -live, numbers would increase in proportion? The same is true of men. - -The second advantage of slavery was, that in countries where a good -police prevailed, and where the people had fewer wants by far than are -felt in modern times, the slaves were forced to labour the soil which -fed both them and the idle freemen, as was the case in Sparta; or they -filled all the servile places which freemen fill now, and they were -likewise employed, as in Greece and in Rome, in supplying with -manufactures those whose service was necessary for the state. - -Here then was a violent method of making mankind laborious in raising -food; and providing this be accomplished, (by any means whatever) -numbers will increase. - -Trade, industry, and manufactures, only tend to multiply the numbers of -men, by encouraging agriculture. If it be therefore supposed, that two -states are equally extended, equally fruitful, and equally cultivated, -and the produce consumed at home, I believe they will be found equally -peopled. But suppose the one laboured by free men, the other by slaves, -what difference will be found in making war? In the first, the free -hands must, by their industry and labour, purchase their food, and a day -lost in labour is in a manner a day of fasting: in the last, the slaves -produce the food, they are first fed, and the rest costs nothing to the -body of free men, who may be all employed in war, without the smallest -prejudice to industry. - -From these principles it appears, that slavery in former times had the -same effect in peopling the world that trade and industry have now. Men -were then forced to labour because they were slaves to others; men are -now forced to labour because they are slaves to their own wants. - -I only add, that I do not pretend that in fact slavery in antient times -did every where contribute to population, any more than I can affirm -that the spirit of industry in the Dutch is common to all free nations -in our days. All that is necessary for my purpose is, to set forth the -two principles, and to shew the natural effects of the one and the -other, with respect to the multiplication of mankind and advancement of -agriculture, the principal objects of our attention throughout this -book. - -I shall at present enlarge no farther upon this matter, but return to -where I left off in the preceeding chapter, and take up the farther -examination of the fundamental distribution of inhabitants into -labourers and free hands. - ------------------------------------------------------------------------- - - - - - CHAP. VIII. - _What Proportion of Inhabitants is necessary for Agriculture, and what - Proportion may be usefully employed in every other Occupation?_ - - -I have proposed this question, not with an intention to answer it fully, -but to point out how, with the proper lights given, it may be answered. - -As I write under circumstances not the most favourable for having -recourse to books, I must employ those I have. The article _Political -Arithmetic_, of Mr. Chambers’s Cyclopedia, furnishes me with some -extracts from Sir William Petty, and Dr. Davenant, which I here intend -to employ, towards pointing out a solution of the question proposed. -These authors consider the state of England as it appeared to them, and -what they say is conclusive only with respect to that state. - -Sir William Petty supposes the inhabitants of England to be six -millions, the value of grain yearly consumed by them ten millions -sterling, the bushel of wheat reckoned at 5_s._ and that of barley at -2_s._ 6_d._ If we cast the two together, and reckon upon an average, -this will make the quarter, or eight bushels of grain, worth 1_l._ -10_s._ but in regard, the barley cannot amount to one half of all the -grain consumed, especially as there is a good quantity of rye made use -of, which is worth more than the barley, though less than the wheat; let -us suppose the grain worth 32_s._ _per_ quarter, at a medium; then ten -millions sterling will purchase six millions of quarters of grain, or -thereabouts: which used for nourishment, in bread and beer, gives the -mean quantity of one quarter, or 512 pounds of grain for every -inhabitant, including the nourishment of his proportional part of -animals; supposing that Sir William attended to this circumstance, for -it is not mentioned by Chambers. And I must observe, by the by, that -this computation may hold good as to England, where people eat so little -bread; but would not answer in France, nor in almost any other country I -have seen. - -Dr. Davenant, correcting Sir William’s calculation, makes the -inhabitants 5,545,000. These, according to Sir William’s prices and -proportions, would consume to the amount of 8,872,000_l._ sterling; but -the Dr. carries it, with reason, a little higher, and states it at -9,075,000_l._ sterling; the difference, however, is inconsiderable. From -this he concludes, the gross produce of the corn fields to be about -9,075,000_l._ sterling. I make no criticism upon this computation. - -Next, as to the value of other lands; I find Sir William reckons the -gross produce of them in butter, cheese, milk, wool, horses yearly bred, -flesh for food, tallow, hides, hay, and timber, to amount to -12,000,000_l._ sterling: The amount therefore of the gross produce of -all the lands in England must be equal to these two sums added together, -that is to 21,075,000_l._ sterling. - -From these data, the Dr. values the yearly rent of corn lands at two -millions sterling, and those of pasture, &c. at seven millions, in all -nine millions. - -From this it appears, that the land rents of England are to the gross -produce, as nine is to twenty one, or thereabouts. - -Let me now examine some other proportions. - -The rents of the corn lands are to the gross produce of them, as two is -to nine; those of pasture, as seven to twelve. - -Now it is very certain, that all rents are in a pretty just proportion -to the gross produce, after deducting three principal articles. - -1. The nourishment of the farmer, his family and servants. - -2. The necessary expences of his family, for manufactures, and -instruments for cultivating the ground. - -3. His reasonable profits, according to the custom of every country. - -Of these three articles, let us distinguish what part implies the direct -consumption of the pure produce, from what does not. - -Of the first sort are the nourishment of men and cattle, wool and flax -for cloathing, firing, and other smaller articles. - -Of the second are all manufactures bought, servants wages, the hire of -labourers occasionally, and profits, either spent in luxury, (that is -superfluity) lent, or laid up. - -The three articles above mentioned (which we have distributed under two -heads) being deduced from the gross produce, the remaining value shews -the land rent. - -This being the case, I am next to examine the cause of the great -disproportion between the rents of corn lands, and those of pasture, -when compared with the gross produce, in order to draw some conclusion, -which may lead to the solution of the question here proposed. - -This difference must proceed from the greater proportion of labouring -and other inhabitants employed in consequence of tillage; which makes -the expence of it far greater than that of pasture. And since, in the -one and the other, every article of necessary expence or consumption, -appears to be proportionally equal among those concerned in both, that -is, proportional to the number of labouring inhabitants; it follows, -that the proportion of people employed in agriculture, and upon the -account of it, in different countries, is nearly in the ratio of the -gross produce to the land-rent; or in other words, in the proportion of -the consumption made by the farmers, and by those employed necessarily -by them, to the net produce; which is the same thing. - -Now as the consumption upon corn farms is 7⁄9, and that upon pasture -5⁄12, the proportion of these two fractions must mark the ratio between -the populousness of pasture lands, and those in tillage; that is to say, -tillage lands in England were, at that time, peopled in proportion to -pasture lands, as 84 is to 45, or as 28 to 15. - -This point being settled, I proceed to another; to wit, the application -of this net produce or surplus of the quantity of food and necessaries -remaining over and above the nourishment, consumption and expence, of -the inhabitants employed in agriculture; and which we have observed -above, to be equal to the land-rents of England, that is to say, to nine -millions yearly. - -Must not this of necessity be employed in the nourishment, and for the -use of those whom we have called the _free hands_; who may be employed -in manufactures, trades, or in any way the state pleases. - -Now the number of people, I take to be very nearly in the proportion of -the quantity of food they consume; especially when a society is taken -thus, in such accumulative proportion, and when all are found under the -same circumstances as to the plenty of the year. - -The whole gross produce of England we have said to be 21,000,000_l._ -sterling, of which 9 millions have remained for those not employed in -agriculture; the farmers, therefore, and their attendants, must annually -consume 12 millions; consequently the last class is to the first as 12 -is to 9. If therefore, according to Dr. Davenant, there be 5,545,000 -people in that kingdom, there must be about 3,168,571 employed or -dependent upon agriculture, and 2,376,429 free hands for every other -occupation. But this proportion of farmers will be found far less, if we -reflect, that we have reckoned for them the total amount of the three -articles above mentioned, that is to say, the total consumption they -make, as well in manufactures, profits upon their labour, &c. as for -food and necessaries; whereas there has been nothing reckoned for the -free hands, but the land-rent: consequently there should be added to the -number of the latter as many as are employed in supplying with all sorts -of manufactures the whole of the farmers of England, and all those who -depend upon them; and this number must be taken from one and added to -the other class. - -If this number be supposed to amount to four hundred thousand, it will -do more than cast the balance upon the opposite side. - -From these matters of fact (in so far as they are so) we may conclude: - -I. That the raising of the rents of lands shews the increase of -industry, as it swells the fund of subsistence consumed by the -industrious; that is, by those who buy it. - -II. That it may denote either an increase of inhabitants, or the -depopulation of the land, in order to assemble the superfluous mouths in -villages, towns, &c. where they may exercise their industry with greater -conveniency. - -While the land-rents of Europe were very low, numbers of the inhabitants -appeared to be employed in agriculture; but were really no more than -idle consumers of the produce of it. This shall be farther illustrated -in the subsequent chapters. - -III. The more a country is in tillage, the _more_ it is inhabited, and -the smaller is the proportion of _free hands_ for all the services of -the state. The more a country is in pasture, the _less_ it is inhabited, -but the greater is the proportion of _free hands_. - -I do not pretend, as I have said above, that there is any calculation to -be depended on in this chapter; I have only endeavoured to point out how -a calculation might be made, when the true state of England comes to be -known. - -This question not being of a nature to enter into the chain of our -reasoning, may be considered rather as incidental than essential; I have -therefore treated it superficially, and chiefly for the sake of the -conclusions. - -Our next inquiry will naturally be into the principles which determine -the residence of inhabitants, in order to discover why, in all -flourishing states, cities are now found to be every where increasing. - ------------------------------------------------------------------------- - - - - - CHAP. IX. -_What are the Principles which regulate the Distribution of Inhabitants - into Farms, Villages, Hamlets, Towns, and Cities?_ - - -Having pointed out the natural distribution of inhabitants into the two -capital classes of which we have been treating, I am now going to -examine how far their employment must decide as to their place of -residence. - -I. When mankind is fed upon the spontaneous fruits of the earth, the -distribution of their residence depends upon the division of the lands. -If these are in common to all, then the inhabitants will be scattered -abroad, or gathered together, according as the productions of the earth -are equally distributed over the face of the country, or confined to -some fruitful spots. - -Hence the Tartars wander with their flocks and feed upon them: hence the -hunting Indians are scattered in small societies, through the woods, and -live upon game: hence others, who feed upon the fruits of the earth, are -collected in greater numbers upon the sides of rivers, and in watered -vallies. - -Where therefore the surface of the earth is not appropriated, _there_ -the place producing food determines the place of residence of every one -of the society, and _there_ mankind may live in idleness, and remain -free from every constraint. - -II. When the earth is not in common to those who live upon her -spontaneous fruits, but appropriated by a few, _there_ either slavery or -industry must be introduced among those who consume the surplus of the -proprietors; because they will expect either service or work in return -for their superfluity. In that case, the residence of the inhabitants -will depend upon the circumstances we are going to consider; and the -object of agriculture (in countries where the surface of the earth is -not broken up, being solely directed towards the gathering in of fruits) -will only determine the residence of these who are necessary for that -purpose: consequently it will follow, that in climates where the earth -produces spontaneously, and in vast abundance, there _may_ be found -large cities; because the number of those who are necessary for -gathering in the fruits, is small in proportion to their quantity; -whereas in other countries, where the earth’s productions are scanty, -and where the climate refuses those of the copious and luxuriant kind, -there will hardly be found any considerable town, as the number of those -who are necessary for collecting the subsistence, bear a great -proportion to the fruits themselves. I do not say, that in the first -case there _must_ be large towns, or that in the other there _can_ be -none; but I say, that in the first case, those who _may_ be gathered -into towns, bear a great proportion to the whole society; and that in -the second, they bear a small one. - -I think I have found this principle confirmed by experience. When I -compare the bulk and populousness of the cities of Lombardy, and still -more, those of the watered provinces of Spain, with the inhabitants of -the territory which maintains them, I find the proportion of the first -vastly greater than in those of France and England; and still more again -in these two last mentioned kingdoms, than in the more northern -countries and provinces, where the earth’s productions bear a less -proportion to the labour bestowed in producing them. Now, although I -allow that neither the one or the other to be fed by spontaneous -productions, yet still it may be inferred, that the more the climate -contributes to favour the labour of man, the more the productions -participate of the spontaneous nature[J]. - -Footnote J: - - Hence we may conclude, that in those countries where the people live - upon the spontaneous fruits, the whole society (considered in a - political light) is found composed of free hands. Nature there - supplies the place of the whole class of farmers. - - We have said that industry and manufactures are the occupation of the - free hands of a state; consequently, where the proportion of them is - the largest, industry should flourish to the greatest advantage; that - is to say, in countries where the inhabitants live upon the - spontaneous fruits: but that is not the case. Why? Because there is - another circumstance of equal weight which prevents it. These people - are unacquainted with want, and want is the spur to industry. Let this - suffice, in general, as to the distribution of inhabitants in - countries unacquainted with labour. - -Again, in countries where labour is required for feeding a society, the -smaller the proportion of labourers, the greater will be that of the -free hands. Fruits which are produced by annual labour, and still more, -such as are the consequence of a thorough cultivation, (such as -luxuriant pasture) give returns far superior to the nourishment of those -employed in the cultivation; consequently, all the surplus is consumed -by people not employed in agriculture; consequently, by those who are -not bound to reside upon the spot which feeds them, and who may choose -the habitation best adapted for the exercise of that industry which is -most proper to produce an equivalent to the farmers for their -superfluities. - -From this it is plain that the residence of the farmers only, is -essentially attached to the place of cultivation. Hence, farms in some -provinces, villages in others. - -I now proceed to the other class of inhabitants; the free hands who live -upon the surplus of the farmers. - -These I must subdivide into two conditions. The first, those to whom -this surplus directly belongs, or who, with a revenue in money already -acquired, can purchase it. The second, those who purchase it with their -daily labour or personal service. - -Those of the first condition may live where they please; those of the -second, must live where they can. The residence of the consumers, in -many cases, determines that of the suppliers. In proportion, therefore, -as those who live where they please choose to live together, in that -proportion the others must follow them. And in proportion as the state -thinks fit to place the administration of government in one place, in -that proportion must the administrators, and every one depending upon -them, be gathered together. These I take to be principles which -influence the swelling of the bulk of capitals, and smaller cities. - -When the residence of the consumer does not determine that of him who -supplies it, other considerations are allowed to operate. This is the -case in what may properly be called manufactures, distinguished from -trades, whether they be for home consumption, or foreign exportation. -These considerations are, - -I. Relative to the place and situation of the establishment, which gives -a preference to the sides of rivers and rivulets, when machines wrought -by water are necessary; to the proximity of forests when fire is -employed; to the place which produces the substance of the manufacture; -as in mines, collieries, brick-works, &c. - -II. Relative to the conveniency of transportation, as upon navigable -rivers, or by great roads. - -III. Relative to the cheapness of living, consequently not (frequently) -in great cities, except for their own consumption. But it must be -observed, that this last consideration can hardly ever be permanent: for -the very establishment being the means of raising prices, the advantage -must diminish in proportion as the undertaking comes to succeed. The -best rule therefore is, to set down such manufactures upon the banks of -navigable rivers, where all necessary provisions may be brought from a -distance at a small cost. This advantage is permanent, the others are -not; and may prove in time hurtful, by a change in these very -circumstances which decided as to the choice of the situation. From the -establishment of manufactures we see hamlets swell into villages, and -villages into towns. - -Sea-ports owe their establishment to foreign trade. From one or other of -these and similar principles, are mankind gathered into hamlets, -villages, towns, and cities. - ------------------------------------------------------------------------- - - - - - CHAP. X. - _Of the Consequences which result from the Separation of the two - principal Classes of a People, the Farmers and the Free Hands, with - regard to their Dwelling._ - - -I am next going to examine the consequences resulting to the state, to -the citizens, and to the landed interest, from this kind of separation, -as I may call it, between the parent earth and her laborious children, -which I suppose to take place every where in proportion to the progress -of industry, luxury, and the swift circulation of money. - -As to the state, it is, I think, very plain, that, without such a -distribution of inhabitants, it would be impossible to levy taxes. For -as long as the earth nourishes directly those who are upon her surface, -as long as she delivers her fruits into the very hand of him who -consumes them, there is no alienation, no occasion for money, -consequently no possibility of establishing an extensive taxation, as -shall in its place be fully explained, and from this principle is, I -imagine, to be deduced the reason, why we find taxation so little known -under the feudal form of government. - -The personal service of the vassals, with their cattle and servants, -upon all occasions made the power and wealth of the lords, and their -rents were mostly paid in kind. They lived upon their lands, were -commonly jealous of one another, and had constant disputes. This was a -very good reason to keep them from coming together. Towns were situated -round their habitations. These were mostly composed of the few tradesmen -and manufacturers that were in the country. The lord’s judge, his -fiscal, and his court of record, added to these numbers; law-suits, and -the lord’s attendance, brought the vassals frequently together; this -gave encouragement to houses of entertainment; and this I take to be the -picture of the greatest part of small towns, if we ascend three or four -hundred years from the present time. - -Cities were the residence of bishops. These lords were very independent -of the civil government, and had at the same time the principal -direction in it. They procured privileges to their cities, and these -communities formed themselves by degrees into small republics: taxes -here have ever been familiar. The feudal lords seldom appeared there, -and the inferior classes of the people enjoyed liberty and ease in these -cities only. - -In some countries of Europe, as in Germany, the principal citizens, in -time, became patricians. In France certain offices of public trust -sometimes procured nobility to those who bore them, and always -consideration. The representatives of the citizens were even admitted -into the states, and formed the _tiers êtat_. Elsewhere they received -casual marks of distinction from the sovereign, as the Lord Mayor of -London does to this day usually receive knighthood. In short, the only -dawning of public liberty to be met with during the feudal government, -was in the cities; no wonder then if they increased. - -Upon the discovery of America and the East-Indies, industry, trade, and -luxury, were soon introduced in the kingdoms of Spain, France, and -England: the grandeur and power of the Hans towns had already pointed -out to sovereigns the importance of those objects. - -The courts of princes then became magnificent; the feudal lords -insensibly began to frequent them with more assiduity than formerly. The -splendor of the prince soon eclipsed those rays which shone around them -upon their own lands. They now no more appeared to one another as -objects of jealousy, but of emulation. They became acquainted, began to -relish a court life, and every one proposed to have a house in the -capital. A change of habitation made a change of circumstances, both as -to city and country. As to the city; in so far as inhabitants were -increased, by the addition of the great lords, and of those who followed -their example, demand increased for every sort of provision and labour; -and this quickly drew more inhabitants together. Every one vied with -another in magnificence of palaces, clothes, equipages. Modes changed, -and by turns enlivened the different branches of ingenuity. Whence came -so great a number of inhabitants all of a sudden? He who would have cast -his eyes on the deserted residences of the nobility, would have seen the -old people weeping and wailing, and nothing heard among them but -complaints of desolation: the youth were retired to the city; there was -no change as to them. - -This is no doubt a plain consequence of a sudden revolution, which never -can happen without being attended with great inconveniencies. Many of -the numerous attendants of the nobility who uselesly filled every house -and habitation belonging to the great man, were starving for want. He -was at court, and calling aloud for money, a thing he was seldom -accustomed to have occasion for, except to lock up in his chest. In -order to procure this money, he found it expedient to convert a portion -of the personal services of his vassals into cash: by this he lost his -authority. He then looked out for a farmer (not a husbandman) for an -estate which he formerly consumed in its fruits. This undertaker, as I -may call him, began by dismissing idle mouths. Still greater complaints -ensued. At last, the money spent in the city began to flow into the -hands of the industrious: this raised an emulation, and the children of -the miserable, who had felt the sad effects of the revolution, but who -could not foresee the consequences, began to profit by it. They became -easy and independent in the great city, by furnishing to the -extravagance of those under whose dominion they were born. - -This progression is perhaps too minutely traced to be exact; I therefore -stop, to consider the situation of affairs at that period, when all the -inconveniences of the sudden revolution had ceased, and when things were -come to the state in which we now find them. Capitals swelled to a great -extent. Paris and London appear monstrous to some, and are said to be a -load upon the rest of the country. This must be examined. - -We agree, I suppose, that the inhabitants of cities are not employed in -agriculture, and we may agree that they are fed by it: we have examined -into the causes of the increase of cities, and we have seen the fund -provided for their subsistence, to wit, the surplus of fruits produced -by husbandmen. - -What are then the advantages resulting to the citizens from this great -increase of their city? I cannot find any great benefit resulting to -individuals from that circumstance; but I conclude, that the same -advantages which many find in particular, must be common to great -numbers, consequently great numbers are gathered together. - -The principal objections against great cities are, that health there is -not so good, that marriages are not so frequent as in the country, that -debauchery prevails, and that abuses are multiplied. - -To this I answer, that these objections lie equally against all cities, -and are not peculiar to those complained of for their bulk; and that the -evils proceed more from the spirit of the inhabitants, than from the -size of the capital. As for the prolongation of life, it is more a -private than a public concern. - -It is farther urged, that the number of deaths exceeds the number of -births in great cities; consequently smaller towns, and even the -country, is stripped of its inhabitants, in order to recruit these -capitals. - -Here I deny, first, that in all capitals the number of deaths exceeds -the number of births; for in Paris it is otherwise. But supposing the -assertion to be true, what conclusion can be drawn from it, except that -many people who are born in the country die in town. That the country -should furnish cities with inhabitants is no evil. What occasion has the -country for supernumerary hands? If it has enough for the supply of its -own wants, and of the demands of cities, has it not enough? Had it more, -the supernumeraries would either consume without working, or, if added -to the class of labourers, instead of being added to the number of free -hands, would overturn the balance between the two classes; grain would -become too plentiful, and that would cast a general discouragement upon -agriculture: whereas, by going to cities, they acquire money, and -therewith purchase the grain they would have consumed, had they remained -in the country; and this money, which their additional labour in cities -will force into circulation, would otherwise have remained locked up, or -at least would never have gone into the country, but in consequence of -the desertion of the supernumeraries. The proper and only right -encouragement for agriculture, is a moderate and gradual increase of -demand for the productions of the earth: this works a natural and -beneficial increase of inhabitants; and this demand must come from -cities, for the husbandmen never have occasion to demand; it is they who -offer to sale. - -The high prices of most things in large cities is surely a benefit, not -a loss to the country. But I must observe, that the great expence of -living in capitals does not affect the lower classes, nor the moderate -and frugal, in any proportion to what it does the rich. If you live on -beef, mutton, bread, and beer, you may live as cheap in London and in -Paris as in most cities I know. These articles abound, and though the -demand be great, the provision made for supplying it is in proportion. -But when you come to fish, fowl, and game; delicacies of every kind -brought from far, by the post, by ships, and messengers; when you have -fine equipages, large houses, expensive servants, and abundance of waste -in every article, without one grain of oeconomy in any, it is no wonder -that money should run away so fast. - -I do not, from what has been said, conclude, that there is any evident -advantage in having so overgrown a capital as London in such a kingdom -as England; but only that I do not find great force in the objections I -have met with against it. That there may be others which I do not know, -I will not deny, because I am not sufficiently acquainted with that -kingdom to be a competent judge of the matter. - -Let me now conclude this chapter, by mentioning in what respects I think -cities an advantage, in general, to a country; and, as I go along, I -shall point out wherein they prove a disadvantage, in particular, to -some parts of it. - -The general advantages of them are; - -I. To remove the unnecessary load upon the land; those idle people, who -eat up a part of the produce of labour without contributing to it. - -II. The opportunity of levying taxes, and of making these affect the -rich, in proportion to the consumption they make, without hurting -industry or exportation. - -III. The advantages resulting to the landed interest are no less -considerable. This is proved by universal experience: for we see every -where, that the moment any city, town, or village, begins to increase, -by the establishment of trade or manufactures, the lands round about -immediately rise in their value. The reason of this seems easily deduced -from the above principles. - -When a farmer has got his oeconomy under right regulations, not one -supernumerary, nor useless mouth, but abundance of hands for every kind -of labour, which is generally the case near towns and cities, the -proximity of them discharges him of every superfluity. His cattle -consume the exact quantity of grain and of forage necessary; what -remains is money; a superfluous egg is money; a superfluous day of a -cart, of a horse, a superfluous hour of a servant, is all money to the -farmer. There is a constant demand for every thing he can do or furnish. -To make this the more sensibly perceived, remove into a province, far -from a town, and compare situations. There you find abundance of things -superfluous, which cannot be turned into money, which therefore are -consumed without much necessity, and with no profit. It is good to have -an estate there, when you want to live upon it; it is better to have one -near the great town, when you do not. - -It may be alledged, that the disadvantages felt by the distant farmer -and proprietor, when they compare situations with those situated near -the town, proceed from the town: this must be examined. - -If the town consume the produce of this distant farm, it must consume it -in competition with every place at a smaller distance; consequently this -competition must do more good than harm to the distant farm. If the city -consumes none of the produce, wherein does it affect it? It may be -answered, that, by entering into competition with the distant farmer for -the labouring inhabitants, these desert agriculture, in favour of a more -lucrative occupation, to be found in the city. Scarcity of hands in the -country raises the price of labour on one hand, while it diminishes the -demand on the other; consequently the farmer suffers a double -disadvantage. Of this there can be no doubt; but as these revolutions -cannot by their nature be sudden, it becomes the duty of the statesman, -whom I suppose constantly awake, to set on foot directly some branch of -industry in every such distant part of the country; and as prices will -diminish for a while, for the reasons above-mentioned, this will prove -an encouragement to the establishment; this again will accelerate -propagation, as it will prove an outlet for children, and, in a short -time, the farmer will find himself in a better situation than ever. But -even without this assistance from the state, a few years will set all to -rights, providing the spirit of industry is kept up: for cities, by -swelling, extend their demand to the most distant corners of a country; -the inhabitants who desert do not cease to consume, and thereby they -repair the hurt they did by their desertion. I appeal to experience for -the truth of this. Do we not perceive demand extending every year -farther and farther from great capitals? I know places in France which, -twenty years ago, never knew what it was to send even a delicacy to -Paris, but by the post, and which now send thither every week loaded -waggons, with many thousand weight of provisions; in so much that I may -almost say, that a fatted chicken in the most distant province of that -country can be sold with great profit in the Paris market during all the -winter season; and cattle carry thither their own flesh cheaper than any -waggon can. What distant farm then can complain of the greatness of that -noble city? There is however a case, where a distant part of a country -may suffer in every respect, to wit, when the revolution is sudden; as -when a rich man, used to spend his income in his province, for the -encouragement of industry, goes to Paris or London, and stays away for a -year or two, without minding the interest of the estate he abandons. No -doubt that must affect his province in proportion; but in every -revolution which comes on gradually by the desertion of such as only -lived by their industry, new mouths are born and supply the old. The -only question is about employing them well: while you have superfluous -food and good oeconomy, a country will always reap the same benefit from -her natural advantages. - -IV. Another advantage of cities is, the necessity arising from thence of -having great roads, and these again prove a considerable encouragement -to agriculture. - -The miserable condition of roads over all Europe almost, till within -these hundred years, is a plain proof of the scanty condition of the -cities, and of the small encouragement formerly given towards extending -the improvement of the soil. - -Let any one examine the situation of the landed interest before the -making of great roads in several provinces in France, and compare it -with what it is at present. If this be found a difficult inquiry, let -him compare the appearance of young gentlemen of middling fortune, as he -finds them at Paris, or in their regiment, with that of their fathers, -who live in their province in the old way, and he will have a very good -opportunity of perceiving the progress of ease and refinement in that -class, which has proceeded from no other cause than the improvement of -the soil. People complain that prices are risen; of this there is no -doubt with regard to many articles. Is it not quite consistent with our -principles? It is not because there is now a larger mass of money in the -kingdom, though I allow this to be true, and also that this circumstance -may have contributed to raise prices; but the direct principle which has -influenced them, and which will always regulate their rise and fall, is -the increase of demand. Now the great roads in a manner carry the goods -to market; they seem to shorten distances, they augment the number of -carriages of all sorts, they remove the inconveniencies above-mentioned -resulting from the distance of the city. The more distant parts of the -country come to market, in competition with the farmers in the -neighbourhood of the cities. This competition might make the rents of -lands lying round such as were the first to encourage industry, sink in -their value. But the hurt in this respect done to the proprietors of -these lands would soon be repaired. The cities would increase in bulk, -demand would increase also, and prices would rise a-new. Every thing -which employs inhabitants usefully promotes consumption; and this again -is an advantage to the state, as it draws money from the treasures of -the rich into the hands of the industrious. The easy transportation of -fruits produces this effect: the distant farmer can employ his idle -hours in providing, and the idle days of his servants and cattle in -sending things to market, from farms which formerly never knew what it -was to sell such productions. - -I shall carry these speculations no farther, but conclude by observing, -that the making of roads must advance population, as they contribute to -the advancement of agriculture. - ------------------------------------------------------------------------- - - - - - CHAP. XI. -_Of the Distribution of Inhabitants into Classes; of the Employment and - Multiplication of them._ - - -Having deduced the effects of modern policy, in assembling so large a -proportion of inhabitants into cities, it is proper to point out the -principles which should direct the statesman to the proper means of -providing, supporting, and employing them. Without this they neither can -live nor multiply. Their parent, Earth, has in a manner banished them -from her bosom; they have her no more to suckle them in idleness; -industry has gathered them together, labour must support them, and that -must produce a surplus for bringing up children. If this resource should -fail, misery will ensue: the depopulation of the cities will be followed -by the ruin of the lands, and all will go to wreck together. - -We have already laid down the principles which appear the most natural -to engage mankind to labour, supposing all to be free; and we have -observed how slavery, in former times, might work the same effect, as to -peopling the world, that trade and industry do now; men were then forced -to labour because they were slaves to others, men are forced to labour -now because they are slaves to their own wants: provided man be made to -labour, and make the earth produce abundantly, and providing that either -authority, industry or charity, can make the produce circulate for the -nourishment of the free hands, the principle of a great population is -brought to a full activity. - -I shall now suppose these principles to be well understood. Wants -promote industry, industry gives food, food increases numbers: the next -question is, how numbers are to be well employed? - -It is a general maxim in the mouth of every body; increase the -inhabitants of the state: the strength and power of a state is in -proportion to the number of its inhabitants. - -I am not fond of condemning opinions; but I am very much for limiting -general propositions. I have hardly ever escaped being led into error by -every one I have laid down. Nothing is so systematical, nothing so -pretty in a treatise as general maxims; they facilitate the distribution -of our ideas, and I have never been able to dash them out but with a -certain regret. - -As I often recur to private oeconomics for clearing up my ideas -concerning the political, I have asked myself, if it be a general rule, -that the master of a family should increase the mouths of it, to the -full proportion of all he can feed? Now it is my opinion, that in a -small family well composed, and where every one is properly employed, -both master and servants are much happier than in others vastly more -numerous, where the same order and regularity is not kept up; and that a -small number of well disciplined soldiers is more formidable, and really -stronger, than the numerous populace of a large city. - -The use of inhabitants is to be mutually serviceable one to another in -particular, and to the society in general. Consequently, every state -should, in good policy, first apply itself to make the inhabitants they -have answer that purpose, before they carry their views towards -augmenting their numbers. I think it is absurd to wish for new -inhabitants, without first knowing how to employ the old; and it is -ignorance of the real effects of population, to imagine that an increase -of numbers will infallibly remove inconveniencies which proceed from the -abuses of those already existing. - -I shall then begin by supposing that inhabitants require rather to be -well employed than increased in numbers. - -If I know the number of inhabitants, I may know the proportion which die -every year: consequently, I know how many pairs of breeders are -necessary to keep up the stock. If I want to raise twenty bushels of -grain only, I do not sow my lands with twenty bushels. If I have as many -children born as there are people who die, I have enough by the -supposition. But these children must be raised proportionally, from the -different classes of inhabitants, which I here consider as distributed -into two conditions; those who do not labour, and those who do. May I -not venture to say, that there is no absolute necessity that those of -the first class should multiply in order to recruit the second. If then -the second class is kept up to its proper standard by its own -multiplication, and if their work be all consumed, will it not be found -that the diminution of those mouths who do not work, and which appear -only useful in consideration of the consumption they make, is no real -loss to the nation? But to this it is objected, that if the number of -the first class be diminished, the work of the second will lie upon -hand. - -Here I look for my answer from what daily experience points out. Two -persons (A) and (B) have each 1000_l._ a year; (A) has many children, -(B) has none: they both spend their income; (A) upon the necessaries of -life for his family, and for the education of his children; for the -supplying of which, those of the working class are only employed, for -who ever does or gives any thing for money, I consider as a worker: (B) -spends his income as a fashionable young gentleman; he has a fine -chariot, abundance of footmen in laced liveries; in short, without -examining into the particulars of his expence, I find the whole 1000_l._ -spent at the end of the year. Neither (A) nor (B) do any work; nor are -any of (A’s) children necessary as a supply to the working hands, by the -supposition. Is it not true then, that (B) has consumed as much work or -service, for these I consider as the same thing, as (A) with his family? -Nay, I may still go farther, and affirm, that (B) has contributed as -much, if not more, to population than (A). For if it be true, that he -who gives food gives numbers, I say, that the expence of (B) has given -food to the children of the industrious employed by him: consequently, -in place of having directly contributed to the increase of the idle of -the state, which is the case with (A), he has indirectly contributed to -the multiplication of the industrious. What good then does the state -reap from (A’s) children, from his marriage, from his multiplication? -Indeed, I see no harm although he had remained a batchelor: for those -who produce only idle consumers, certainly add neither riches, strength, -or ease to a state. And it is of such people alone that there is any -question here. - -From this I conclude, that there can be no determined number of rich -idle consumers necessary to employ a determined number of industrious -people, no more than of masters to employ a fixt number of menial -servants. Do we not see a single man frequently attended by more -servants than are necessary when he gets a wife and family: nay, it many -times happens, that a young man, upon his marriage, diminishes the -number of his domestics, in order to give bread to his children. - -If riches are calculated, as I hope to be able to shew, for the -encouragement of industry; if circulation is to be accelerated by every -method, in order to give bread to those who are disposed to work, or, in -other words, who are disposed to become vigorous members of the -commonwealth, by contributing with their strength, their ingenuity, or -their talents, to supply her wants, to augment their riches, to promote -and administer a good government at home, or to serve it abroad: then, I -say, the too great multiplication of those, who come under none of these -classes, the idle consumers as I have called them, contribute directly -to make the other part languish. - -There is no governing a state in perfection, and consequently no -executing the plan of a right distribution of the inhabitants, without -exactly knowing their situation as to numbers, their employment, the -gains upon every species of industry, the numbers produced from each -class. These are the means of judging how far those of a particular -trade or occupation are in a situation to bring up a family. To examine, -on the other hand, the state of the higher classes who do not labour, -the ease of their circumstances, and the use the state has for their -service, may appear superfluous. Since those who do not work, must be -supposed to have wherewithal to live; and consequently, not to stand in -need of assistance. But this is not every where, nor always the case: -many excellent subjects are lost to a state, for want of a proper -attention in the statesman to this object. - -I have observed how necessary a thing it was to govern a people -according to their spirit: now by governing I understand, protecting, -cherishing, and supporting, as well as punishing, restraining, and -exacting. If, therefore, there be found in any country, a very numerous -nobility, who look upon trade and the inferior arts, as unbecoming their -birth; a good statesman must reflect upon the spirit of former times, -and compare it with that of the present. He will then perceive, that -these sentiments have been transmitted from father to son, and that six -generations are not elapsed since, over all Europe, they were -universally adopted: that although the revolution we talked of in the -10th chap. has in effect rendered them less adapted to the spirit of the -present times, they are however productive of excellent consequences; -they serve as a bulwark to virtue, against the allurements of riches; -and it is dangerous to force a set of men who form a considerable body -in a state, from necessity, to trample under foot, what they have been -persuaded from their infancy to be the test of a noble and generous -mind. - -About 200 years ago, the nobility of several nations, I mean, by this -term, all people well born, whether adorned with particular marks of -royal favour or not, used to live upon the produce of their lands. In -those days there was little luxury, little circulation; the lands fed -numbers of useless mouths, in the modern acceptation of useless, -consequently produced a very moderate income in money to the -proprietors, who were, notwithstanding, the most considerable persons in -the state. This class of inhabitants remaining inactive in the country, -during the revolution above mentioned, have, in consequence of the -introduction of industry, trade and luxury, insensibly had the balance -of wealth, and consequently of consideration turned against them. Of -this there is no doubt. This class however has retained the military -spirit, the lofty sentiments; and notwithstanding of their depression in -point of fortune, are found calculated to shine the brightest, when set -in a proper elevation. In times of peace, when trade flourishes, the -lustre of those who wallow in public money, the weight and consideration -of the wealthy merchant, and even the ease and affluence of the -industrious tradesman, eclipse the poor nobility: they become an object -of contempt to bad citizens, an object of compassion to the good; and -political writers imagine they render them an important service, when -they propose to receive them into the lower classes of the people. But -when danger threatens from abroad, and when armies are brought into the -field, compare the behaviour of those conducted by a warlike nobility, -with those conducted by the sons of labour and industry; those who have -glory, with those who have gain for their point of view. Let the state -only suffer this nobility to languish without a proper encouragement, -there is no fear but they will soon disappear; their lands will become -possessed by people of a way of thinking more a la mode, and the army -will quickly adopt new sentiments, more analogous to the spirit of a -moneyed interest. - -I find nothing more affecting to a good mind, than to see the distress -of a poor nobility in both sexes. Some have proposed trade for this -class. Why do you not trade? I answer, for the nobility; Because, in -order to trade, I must have money. This objection is unanswerable. Why -then do you not apply to other branches of industry? If it is the state -who is supposed to ask the question, I ask, in my turn, What advantage -she can reap from their industry? What profit from their becoming -shop-keepers, weavers, or taylors? Are not, or ought not all these -classes to be provided with hands from their own multiplication? What -advantage can she reap by the children of one class taking the bread out -of the mouths of another? - -If the sentiments in which the nobility have been educated, prove -detrimental to the state, throw a discouragement upon them. If birth is -to be no mark of distinction, let it not be distinguished by any -particular privilege, which in appearance sets that class above the -level of those with whom the state intends they should be incorporated. -You do not make your valet de chambre get behind your coach, though upon -an occasion it might be convenient, and though perhaps he had been your -footman the day before; you would even turn him out of doors, did he not -change his company with his rank. - -If you cannot afford to have a nobility, let it die away: grant, as in -England, the title of noble to one of a family, and let all the rest be -commoners; that is to say, distinguished by no personal privilege -whatsoever from the lowest classes of the people. But if you want them -to serve you as soldiers, and that they should preserve those sentiments -you approve of in a soldier, take care at least of their children. If -these appear to you poor and ragged, while they are wandering up and -down their fathers lands, chasing a wretched hare or a partridge, -compare them, when in the troops, with those of your wealthy neighbours, -if any such you have. - -The establishment of an _hôtel militaire_ shews at least that there are -people who lend an ear to such representations. I do not propose that a -prince should divert into that channel those streams of wealth which -flow from every part of the state, though nothing is more reasonable -than for men to pay in order to protect their gains, but let a tax be -imposed upon noble property, and let that be applied for the education -of the generous youth from their earliest years. There the state will -have all under her eye, they are her children, her subjects, and they -ask no more than to be taken from the obscurity of their habitations, -and rendered capable of being employed while young and vigorous. When -they have done their task, the country which produced them will receive -them back into her warm bosom; there they will produce others like -themselves, and support the spirit and propagation of their own class, -without becoming any charge upon others. - -A statesman should make it his endeavour to employ as many of every -class as possible, and when employment fails in the common run of -affairs, to contrive new outlets for young people of every denomination. -The old and idle are lost beyond recovery in many particulars. - -The mutual relations likewise, through industry, between class and class -should be multiplied and encouraged to the utmost. Relations by -marriage, I am apt to believe, prove here more hurtful than beneficial. -That is to say, I would rather discourage the intermarriage of the -persons of different classes; but I would encourage, as much as -possible, all sorts of mutual dependencies between them, in the way of -their trades. The last tends to keep every one employed, according to -the wants and spirit of his class; the first is productive in general of -no good effect that I can perceive; which is reason sufficient for a -state to give at least no encouragement to such marriages, and this is -all the restraint proper to be imposed. - -Such members of the society as remain unemployed, either from natural -infirmities or misfortunes, and who thereby become a load upon others, -are really a load upon the state. This is a disease which must be -endured. There is no body, no thing, without diseases. A state should -provide retreats of all sorts, for the different conditions of her -decayed inhabitants: humanity, good policy, and christianity, require -it. Thus much may be said in general upon the principles which direct -the employment and distribution of inhabitants, which in every state -must be different, according to circumstances relating to the extension, -situation and soil of the country, and above all, to the spirit of the -people. I am next to offer some considerations with regard to the proper -methods of augmenting numbers. - ------------------------------------------------------------------------- - - - - - CHAP. XII. - _Of the great Advantage of combining a well digested Theory and a - perfect Knowledge of Facts with the practical Part of Government, in - order to make a People multiply._ - - -We have the happiness to live in an age where daily opportunities offer, -of perceiving the difference between exercising an art according to the -mechanical received practice, and according to the principles which -study and refinement have introduced for bringing it to perfection. This -will appear in the strongest light to one who compares the operation of -building an ordinary house, with that of executing a great public work, -where the most able architects are employed; the making a common parish -road, with that of a military way, through mountains, forests, and -marshes. In the first, every difficulty appears unsurmountable: in the -second, the greatest obstacles are made to vanish. By comparing these -things, we distinguish between the artist, who proceeds by the rules of -the science, and the ordinary tradesman, who has no other resource than -common practice, aided by his own ingenuity. - -Every branch of science must be carried to perfection by a master in it, -formed by the hand of nature, and improved by application and -experience. The great genius of Mr. de Colbert saw through the confusion -and perplexity of the administration of the French finances; he invented -resources for swelling the public treasure, which never would have been -liable to so many inconveniencies as are complained of, had the -administration been conducted with as much disinterestedness, as it was -set on foot with ability. The genius of Mr. Law was original as to -figures and paper credit. Sir Robert Walpole discovered new principles -of taxation, he extended the plan of public credit, and reduced the -application of it to a science. These were born statesmen, they were -creators of new ideas, they found out new principles for the government -of men, and led them by their interest to concur in the execution of -their plans. Men of a speculative disposition may broach hints, although -the force of theory, destitute of practice, and unassisted by -experiment, be not sufficient to carry them the length of forming a -plan. A great genius, with power and authority, has occasion for no more -than a hint to strike out the system, and to carry it, with success, -into execution. - -No problems of political oeconomy seem more obscure than those which -influence the multiplication of the human species, and which determine -the distribution and employment of them, so as best to advance the -prosperity of each particular society. - -I have no where found these matters treated to my wish, nor have I ever -been able to satisfy myself concerning them. There are many clouds which -still cover the fruitful fields of this science; and until these be -dissipated, the political eye cannot take in the whole landscape, nor -judge of the deformities which appear in the many representations which -our modern painters are daily giving of it. - -I may here, without an imputation of vanity, put myself so far upon a -level with the great Montesquieu, as to adopt the saying of Correggio, -_Io anche son pittore_; I am also a dawber; for I frankly acknowledge my -own insufficiency to treat this subject with perspicuity: my frequent -repetitions, and my often returning to it at different times, in order -to clear up my ideas and those of my readers, shews plainly, that I am -sensible of my own insufficiency. By setting it in different lights, and -viewing it as it were from different stations, perhaps both my reader -and I may come at last to see a little clearer. - -In a former chapter, I have endeavoured to lay down the principles which -influence multiplication; but alas! they are all so general, that they -can be considered only as the most remote. They may satisfy a slight -speculation, but can be of little use in practice. I have principally -insisted upon those which are found to operate at all times among -societies where primitive simplicity prevails. Now this matter comes to -be examined in a more complex light, as relative to the modern manners -of mankind, which no statesman, however able, can change, where trade, -industry, luxury, credit, taxes, and debts, are introduced. In these the -most polite nations of Europe are involved. This is a chain of adamant, -it hangs together by a cohesion, which the successive revolutions of -three centuries have so cemented with the spirit of nations, that it -appears to be indissoluble. It is not my business to examine how far the -modern system is to be preferred to the antient; my point of view is, to -investigate how a statesman may turn the circumstances which have -produced this new plan of oeconomy to the best advantage for mankind, -leaving the reformation of such plan to time and events, of which I am -not the master. Schemes of recalling antient simplicity, and of making -mankind honest and virtuous, are beautiful speculations: I admire them -as much as any body, but not enough to believe them practicable in our -degenerate age. - -If therefore the principles I here lay down appear contradictory to so -amiable a system of policy, let no man thence conclude any thing to my -disadvantage upon the account of my particular opinion of it, which is a -matter of no importance whatsoever. My object is to examine the -consequences of what we feel and see daily passing, and to point out how -far the bad may be avoided, and the good turned to the best advantage. - -The loss of antient simplicity, and the introduction of this complicated -scheme of living, has rendered the mechanism of government infinitely -more difficult, and almost every disorder in the political body affects -multiplication. Depopulation is as certain a mark of political diseases, -as wasting is of those in the human body. The increase of numbers in a -state shews youth and vigour; when numbers do not diminish, we have an -idea of manhood, and of age when they decline. - -The importance of the subject therefore requires me to bring it once -more upon the carpet, in order to inquire into the proper methods of -restoring and preferring youth, and of diffusing vigour into every -articulation, into every vein, into every nerve, as I may say, of a -modern society. - -In the republic of Lycurgus an unmarried man met with no respect; -because no reason but debauchery could prevent his marrying. Marriage -was no load in a state where all were fed and taken care of at the -public charge. A Spartan who did not marry, was considered as one who -refused to contribute towards recruiting of the army, only to gratify a -vicious habit. - -The _jus trium liberorum_, and the other encouragements given by -Augustus Cæsar to engage the Romans to marry, were calculated chiefly -for the nobility, and only for the citizens, but not at all for the -inferior class (the slaves) bound to labour. The vice to be corrected, -and that which the emperor had in his eye in those institutions, was the -prodigal and dissolute life of rich men who lived in celibacy. This -affected the Roman state, and deprived it of its principal force, the -military power, the equites. Judge of the force of this class by the -numbers of them destroyed at Cannæ. In those days, the chief -encouragement to multiplication was to be directed towards the higher -classes; the lower classes of the people (by far the most numerous in -all countries and in all ages) were easily recruited, by the importation -of slaves, as they are now in the West-Indies, where, consequently, the -same principle must naturally operate, which fixed the attention of the -wise emperor. The state of affairs in Europe, and in England -particularly, is changed entirely, by the establishment of universal -liberty. Our lowest classes are absolutely free; they belong to -themselves, and must bring up their own children, else the state becomes -depopulated. There is no resource to us from importation, whether by -ships, or acts of parliament for naturalization. We shall always have a -numerous and free common people, and shall constantly have the same -inconveniencies to struggle with, as long as the lowest classes remain -in such depression as not to be able to support their own numbers. Here -then lies the difficulty. In order to have a flourishing state, which -Sir William Temple beautifully compared to a pyramid, we must form a -large and solid basis of the lowest classes of mankind. As the classes -mount in wealth, the pyramid draws narrower until it terminate in a -point, (as in monarchy) or in a small square, as in the aristocratical -and mixed governments. This lowest class therefore must be kept up, and, -as we have said, by its own multiplication. But where every one lives by -his own industry, a competition comes in, and he who works cheapest -gains the preference. How can a married man, who has children to -maintain, dispute this preference with one that is single? The unmarried -therefore force the others to starve; and the basis of the pyramid is -contracted. Let this short sketch of a most important part of our -subject suffice at present; it shall be taken up and examined at more -length, in the chapter of physical necessaries, or natural wants. - -From this results the principal cause of decay in modern states: it -results from liberty, and is inseparably connected with it. - -Several modern writers upon this subject, recommend marriage, in the -strongest manner, to all classes of inhabitants; yet a parish priest -might, properly enough, not be warranted to join a couple unless they -could make it appear that their children were not likely to become a -burden to the parish. Could any fault be found, reasonably, with such a -regulation? Those who are gratuitously fed by others are a load upon the -state, and no acquisition, certainly, so long as they continue so. -Nothing is so easy as to marry; nothing so natural, especially among the -lower sort. But as in order to reap, it is not sufficient to plow and to -sow, so in order to bring up children, it is not sufficient to marry. A -nest is necessary for every animal which produces a helpless brood: a -house is the nest for children; but every man who can beget a child -cannot build or rent a house. - -These reflections lead me to make a distinction which I apprehend may be -of use in clearing up our ideas concerning population. Let me therefore -consider the generation of man in a political light, and it will present -itself under two forms. The one as a real multiplication; the other only -as procreation. - -Children produced from parents who are able to maintain them, and bring -them up to a way of getting bread for themselves, do really multiply and -serve the state. Those born of parents whose subsistence is precarious, -or which is proportioned only to their own physical necessary, have a -precarious existence, and will undoubtedly begin their life by being -beggars. Many such will perish for want of food, but many more for want -of ease; their mendicity will be accompanied with that of their parents, -and the whole will go to ruin; according to the admirable expression of -the Marechal de Vauban, in his Dixme Royale. _La mendicité_, says he, -_est un mal qui tue bientot son homme_. He had many examples of the -truth of it before his eyes; whoever has not, must have seen little of -the world. - -When marriage is contracted without the requisites for multiplication, -it produces a procreation, attended with the above mentioned -inconveniencies; and as by far the greater part of inhabitants are in -the lower classes, it becomes the duty of a statesman to provide against -such evils, if he intends, usefully, to increase the number of his -people. - -Every plan proposed for this purpose, which does not proceed upon an -exact recapitulation of the inhabitants of a country, parish by parish, -will prove nothing more than an expedient for walking in the dark. Among -such recapitulations or lists I would recommend, as an improvement upon -those I have seen in the Marechal de Vauban’s excellent performance -above cited, and in the states of his Prussian Majesty, or elsewhere, to -have one made out, classing all the inhabitants, not only by the trades -they exercise, but by those of their fathers, with a view to distinguish -those classes which multiply, from those which only procreate. I should -be glad also to see bills of mortality made out for every class, -principally to compare the births and deaths of the children in them. - -Let me take an example. Suppose then, that I have before me a general -recapitulation of all the inhabitants of a country, parish by parish, -where they may appear distributed under the respective denominations of -their fathers’ employment. I shall immediately find a considerable -number produced from the higher classes, from those who live upon an -income already provided, and upon branches of industry which produce an -easy and ample subsistence. These have no occasion for the assistance of -the state in bringing up their children, and you may encourage marriage, -or permit celibacy in such classes, in proportion to the use you find -for their offspring when they are brought up. When I come to the lower -classes, I examine, for example, that of shoemakers, where I find a -certain number produced. This number I first compare with the number of -shoemakers actually existing, and then with the number of marriages -subsisting among them, (for I suppose recapitulations of every kind) -from which I discover the fertility of marriage, and the success of -multiplication in that part. When the state of the question is examined, -class by class, I can decide where marriage succeeds, and where it does -not. I have said, that I imagine it an advantage that every class should -support at least its own numbers; and when it does more, I should wish -(were it possible) that the higher classes might be recruited from the -lower, rather than the lower from the higher; the one seems a mark of -prosperity, the other of decay: but I must confess that the first is by -far the most difficult to be obtained. - -According therefore to circumstances, and in consistence with these -principles, I would encourage marriage by taking the children off the -hands of their parents. Where marriage succeeds the worst, if it happens -to be in a very low class, great encouragement should be given to it: -perhaps the whole should be taken care of. Certain trades may be loaded -with one child, others with two, and so progressively. But of this, more -in another place. I beg it may not here be imagined that I propose, that -the whole of the lower classes of people are to marry and propagate, and -that the state is to feed all their offspring. My view extends no -farther, than to be assured of having such a number of children yearly -taken care of as shall answer the multiplication proposed, and that -these be proportionally raised from each class, and from each part of -the country, and produced from marriages protected by the state, -distinguished from the others, which under a free government must always -be found exposed to the inconveniencies of want and misery. To guard -against such evils ought to be another object of public care. Hospitals -for foundlings are an admirable institution; and colonies are an outlet -for superfluous inhabitants. But I insensibly enter into a detail which -exceeds my plan. To lay down a scheme, you must suppose a particular -state perfectly known. This lies beyond my reach, and therefore I shall -go no farther, but illustrate what I have said, by some observations and -reflections which seem analogous to the subject. - -I have not here proposed plans of multiplication inconsistent with the -spirit of the nations with which I am a little acquainted; nor with the -religion professed in Europe, for many reasons, obvious to any rational -man. But principally, because, I believe, it will be found, that a -sufficient abundance of children are born already; and that we have -neither occasion for concubinage, nor polygamy, to increase their -numbers. But we want a right method of taking care of those we have, in -order to produce a multiplication proportioned to the possibility of our -providing nourishment and employment. I have therefore proposed, that a -statesman, well informed of the situation of his people, the state of -every class, the number of marriages found in each, should say, let -there be so many marriages authorised in every class, distributed in a -certain proportion for every parish, city, burrow, &c. in the country; -let rules be laid down to direct a preference, in case of a competition, -between different couples; and let the consequence of this approbation -be, to relieve the parents of all children above a certain number, as -has been said. I propose no new limitations upon marriage, because I am -a friend to liberty, and because such limitations would shock the spirit -of the times. I therefore would strongly recommend hospitals for -foundlings over all the country; and still more strongly the frugal -maintenance of children in such hospitals, and their being bred up early -to fill and recruit the lowest classes of the people. - ------------------------------------------------------------------------- - - - - - CHAP. XIII. - _Continuation of the same Subject, with regard to the Necessity of -having exact Lists of Births, Deaths, and Marriages, for every Class of - Inhabitants in a modern Society._ - - -Mr. Derham has furnished some tables which shew the proportion between -marriages and births in England, to be as 1 to 4; that of births to -burials as 1 12⁄100to 1: from which it appears that multiplication there -goes on, though slowly: a mark of youth and vigour. Dr. Davenant values -the augmentation at 9000 a year. Could matters be kept at that standard, -I should prefer it by far to a more rapid multiplication: it amounts to -about a million in a century (without entering into accumulations or -exact calculations) and the longer youth is preserved so much the -better. A rapid multiplication will stop at some period, and that stop, -which marks distress, must produce great inconveniencies. - -These calculations extracted from very lame vouchers, shew how necessary -it is to have authentic recapitulations: since, lame as they are, it is -from these and the like, that Dr. Halley, and others, have calculated -the value of annuities, which (at a time when all the states of Europe -are borrowing money at the expence of every man’s private industry or -property) ought to be valued at their real worth. Now, in all these -calculations of mortality, it appears that what we have called the abuse -of marriage or procreation is included. - -If it be true, as I think it is, from what I have seen and observed, -that numbers, especially of children, among the lower classes, perish -from the effects of indigence; either directly by want of food, or by -diseases contracted gradually from the want of convenient ease; and that -others perish for want of care, when the slightest assistance of a -surgeon to let them blood, would be sufficient to preserve them against -the inflammatory distempers to which they are chiefly exposed. - -If these things are so, must we not infer, that calculations formed upon -a conclusion drawn from the births and deaths of mankind in general, -cannot possibly be so exact as if the like were drawn from those of -every class of inhabitants taken separately. - -It may here be answered, that among the rich and easy, there are found -diseases which sweep off numbers, in as great a proportion as other -distempers do of the poor: that we see very large families brought up -among the lowest classes, while a great man has all the pains in the -world to preserve a young boy from the wreck of a number of children. - -All this I agree may be true; but I should be glad to see in what -proportion it _is_ so, and to be certain of the fact. I want to know the -diseases of the rich and of the poor; I want to have as particular -details of the births and deaths of every class, as I can have of those -of the cities of Paris, London, or Breslaw. I want to know from what -parents those multitudes of poor which I find every where are sprung; -and most of all to have such accounts from different countries, where -different manners prevail. For no just conclusion can be drawn from the -comparison of facts, without examining circumstances. The most barren -class in one country, may be the most fruitful in another. As an example -of this, let any one compare the state of marriage among the footmen of -London and of Paris. - -I find error concealed every where under general propositions. The -children of the poor, says one, thrive better than those of the rich. If -it be so, it ought not to be so in common reason. But the same person -will tell you, I have made my son a merchant; he will be a rich man. -Why? Because (A B) was a merchant, who, from nothing, died worth a -hundred thousand pounds. But if you go through all the letters of the -alphabet following (A B), among those who set out as he did, you will -find, that perhaps every one of them died a bankrupt. Those who prove -successful are remarkable: those who miscarry are never heard of. It is -just so with respect to the question before us. But to return to our -tables, and what are called calculations. - -One marriage produces four children at a medium in England. If you -reckon 6,000,000 of people in that country, and that 1⁄30 part dies -annually, then to keep up the stock it is sufficient that 200,000 be -annually born; add to this the yearly increase of 9000, the total of -births will then be 209,000: for if 200,000 die this year, and if -209,000 be born, this must certainly imply an increase of 9000, -providing we suppose the acquisition of foreigners to be equal to the -exportation of the natives. As this is only meant as an illustration, I -need not examine the matter of fact. The next question is, how many -marriages, properly contracted or encouraged as above, will give this -increase? For we may know that these subsisting in that kingdom, joined -with the effects of extramatrimonial conjunctions, is just sufficient to -produce it. I imagine that nothing but experiment can give the solution -of this question. Mr. King supposes every 104th person in England to -marry yearly, that is 57,682 persons, or 28,841 couples. If this number -of marriages be supposed to subsist with fertility for seven years, -producing a child every year, the number of 200,000 births would be -procured; but I apprehend that marriages, rightly contracted, subsist -much longer in general than seven years, even with fertility, though not -in proportion to a child every year: consequently, the number of -marriages constantly subsisting with fertility in England, where it is -supposed that 28,841 are yearly contracted, must be much greater than -seven times that number, or than 201,887. If we suppose the whole of the -209,000 births to be produced by marriages, at three marriages to every -child annually produced, then the number of marriages subsisting will be -627,000. From these speculations (for I do not pretend to call them -calculations) I conclude, that the more fruitful marriages are rendered -(not with regard to procreation, merely, but multiplication, which I -have above distinguished) the fewer become necessary; and the fewer -unnecessary marriages are contracted, the better for the state, and the -less misery for those who contract them. I shall here stop, and leave to -the reader to draw his conclusions, putting him in mind of the wide -difference that is always found between theory and practice. - -From this reasoning I infer, that no exact judgment can be formed, as to -the numbers in any society, from the single datum of the annual number -of deaths among them; and although the just proportion between numbers -and deaths may exactly be determined in one particular place, yet that -proportion will not serve as a general standard, and being taken for -granted may lead to error. - -Here are the reasons for my opinion. - -Were no body to marry but such as could maintain their children, the -bills of births and burials would, I apprehend, diminish, and yet -numbers might remain as before; and were every body to marry who could -procreate, they certainly would increase, but still numbers would never -exceed the proportion of subsistence. Could we but see bills of births -and deaths for the city of Rome, while in all its glory; or indeed for -the sugar colonies in America, where slaves are imported, adding the -number of those imported to that of births, and supposing the colony -neither upon the growing nor the declining hand, then the deaths and -births would be equal; but the proportion of them to all in the colony, -I apprehend, would be far less than in any state in Europe, where -slavery does not prevail. - -It may be alledged, that were all to marry, the consequence would be a -great multiplication. I say not; or if it were, what sort of -multiplication would it be? A multitude of children who never could come -to manhood; or who would starve their parents, and increase misery -beyond expression. All therefore that can be learned from bills of -mortality, &c. is, that if the births exceed the deaths, and that all -remain in the country, numbers will increase; that if the deaths exceed -the births, numbers will diminish; but while they stand at par, no -conclusion can be drawn as to numbers in general: these will be in a -less proportion as abusive procreation goes forward; and, _vice versa_, -they will be in a greater. There still hangs a cloud upon this subject: -let me therefore reason upon an example. Suppose the inhabitants of a -country to stand at 6,000,000, one thirtieth to die every year, and as -many to be born, that is, the births and burials to stand at 200,000; -that every three marriages subsisting produce a child every year, that -is 600,000 marriages; let the quantity of food be supposed the same, -without a possibility of being augmented. Would not the consequence be, -that numbers could not increase? Now let me suppose marriages carried to -1,000,000, I say the effect would be, either that they would become in -general less fruitful, or if they suffered no diminution in this -particular, that the bills of births and deaths would rise to 333,333; -that is to say, they would be to the number of inhabitants as 1 to 18, -instead of being as 1 to 30. Now this increase of mortality proceeding -from want of food, either the old would starve the young, or the young -would starve the old; or a third case, more probable than either, would -happen, the rich would starve the poor. What would be the consequences -in all these three suppositions? In the first, the number of 6,000,000 -would be found to diminish; because the proportion of large consumers -would rise, and mortality would increase among the children. In the -second, the standard number would augment, because the proportion of -small consumers would rise, and mortality would increase among the -parents. In the third, numbers would remain pretty much the same, but -misery and distress would lay all the lower classes waste. It is -computed that one half of mankind die before the age of puberty in -countries where numbers do not augment; from this I conclude, that too -many are born. If methods therefore are fallen upon to render certain -diseases less mortal to children, all the good that will be got by it, -in general, will be to render old people of the lower classes more -wretched; for if the first are brought to live, the last must die. - -From these speculations I cannot help wishing to see bills of mortality -made out for different classes, as well as for different ages. Were this -executed it would be an easy matter to perceive, whether the mortality -among children proceeds from diseases to which infancy is necessarily -exposed, or from abusive procreation. I am pretty much convinced before -I see the experiment, that it proceeds from the latter; but should -experience prove it, the principles I have laid down would acquire an -additional force. In the mean time, I must conclude, that it is not for -want of marrying that a people does not increase, but from the want of -subsistence; and it is miserable and abusive procreation which starves -one half of the whole, and is the fountain of so much wretchedness. - -Upon the whole, I may say, that were it possible to get a view of the -general state of births and burials in every class of the inhabitants of -a country, marriage might surely be put upon a better footing than ever -it has been, for providing a determined number of good and wholesome -recruits every year towards national multiplication. This is walking in -the light, and is a means of procuring whatever augmentation of hands -you wish for. What difficulties may be found in the execution, nothing -but experience can shew; and this, to a judicious eye, will point out -the remedy. In my opinion, this will be far better than a general -naturalization, which I take to be a leap in the dark. For however easy -it may be to naturalize men, I believe nothing is so difficult as to -naturalize customs and foreign habits; and the greatest blessing any -nation can enjoy, is an uniformity of opinion upon every point which -concerns public affairs and the administration of them. When God blesses -a people, he makes them unanimous, and bestows upon them a governor who -loves them, and who is beloved, honoured and respected by them; this, -and this only, can create unanimity. - -Let this suffice at present, as to the distribution, employment, and -increase of a people. Upon the proper employment of the free hands, the -prosperity of every state must depend: consequently the principal care -of a statesman should be, to keep all employed, and for this purpose he -must acquire an exact knowledge of the state of every denomination, in -order to prevent any one from rising above, or sinking below that -standard which is best proportioned to the demand made for their -particular industry. As the bad consequences resulting from the loss of -this exact balance are not immediate, a moderate attention, with the -help of the proper recapitulations, will be sufficient to direct him. - -This and the two preceding chapters have in a manner wholly treated of -the employment of the free hands: I must now consider the effects of an -overcharge of those employed in agriculture. Here we shall still -discover inconveniencies, resulting from the want of that just -proportion in the distribution of classes, which gives health and vigour -to a state; and we shall see how it may happen, that even an overcharge -of inhabitants in general may become a political disease; as an -abundance of blood, however rich and good, may affect the health of the -human body. - ------------------------------------------------------------------------- - - - - - CHAP. XIV. - _Of the Abuse of Agriculture and Population._ - - -I have taken notice above of two performances, wherein the authors, with -equal ability, have treated of the numbers of mankind; a subject which -has a very close connection with political oeconomy. - -Although (as I have said) I do not pretend to decide between them as to -the point in dispute, I find that in this chapter I shall be naturally -led into a chain of reasoning very contrary to that of Mr. Wallace, -which is a thing I should have dispensed with, did not the merit of his -performance in the eyes of the learned world appear sufficient to draw -my attention. - -Agriculture is without all doubt the foundation of multiplication, which -must ever be in proportion to it; that is, to the earth’s productions, -as has been said. But it does not follow, that in proportion to -multiplication those produced must of course become useful to one -another, and useful to the society in general. Now I consider -multiplication as no otherwise useful to a state, than in so far as the -additional number becomes so, to those who are already existing, whom I -consider as the body-politic of the society. If it therefore happens, -that an additional number produced do no more than feed themselves, then -I perceive no advantage gained to the society by their production. If, -without rendering any equivalent service, they are fed by others, there -is a loss. - -Agriculture may be said to be carried to its utmost extent, when the -earth is so laboured as to produce the greatest quantity of fruits -possible for the use of man; and in judging of the improvement of two -spots of ground of the same extent, that may be said to be most improved -which produces the greatest quantity of food: but as to population, the -question does not stop there; for let the quantity be equal on both, yet -if the inhabitants of the one be more frugal livers than those of the -other, this circumstance alone will make an inequality. If agriculture -therefore be considered only with respect to population, we must -consider that country as the best peopled, where productions are the -most abundant, and where the inhabitants are the most sober. Thus much -with regard to the extent of agriculture and population: we come now to -consider the inconveniencies which may result to a society from an -over-stretch, or from what I call an abuse of either the one or the -other. - -I call every thing an abuse in society which implies a contradiction to -the spirit of it, or which draws along with it an inconveniency to -certain classes, which is not compensated by the general welfare. - -The political oeconomy of government is brought to perfection, when -every class in general, and every individual in particular, is made to -be aiding and assisting to the community, in proportion to the -assistance he receives from it. This conveys my idea of a free and -perfect society, which is, _a general tacit contract, from which -reciprocal and proportional services result universally between all -those who compose it_. - -Whenever therefore any one is found, upon whom nobody depends, and who -depends upon every one, as is the case with him who is willing to work -for his bread, but who can find no employment, there is a breach of the -contract, and an abuse. For the same reason, if we can suppose any -person entirely taken up in feeding himself, depending upon no one, and -having nobody depending on him, we lose the idea of society, because -there are no reciprocal obligations between such a person and the other -members of the society. - -Those who are for employing the whole of a people in agriculture may -answer, that all their time cannot be employed in this occupation, and -that in the intervals they may apply themselves to supply reciprocal -wants. - -I very readily agree, that any person, who would calculate his labour in -agriculture, purely for his own subsistence, would find abundance of -idle hours. But the question is, whether in good oeconomy such a person -would not be better employed in providing _nourishment_ for others, than -in providing for any other want. When he provides food, he surely -provides for a want; and experience shews, that it is better for a man -to apply close to one trade, than to turn himself to several. - -Hence I conclude, that the best way of binding a free society together, -is by multiplying reciprocal obligations, and creating a general -dependence between all its members. This cannot be better effected, than -by appropriating a certain number of inhabitants, for the production of -the quantity of food required for all, and by distributing the remainder -into proper classes for supplying every other want. I say farther, that -this distribution is not only the most rational, but that mankind fall -naturally into it; and misery attends and has ever attended those who -have been found without a particular employment. - -It must not be concluded from this reasoning, that abuse is always -implied when we find any of the classes of the free hands of a state -casually employed in agriculture. - -There is such a variety of circumstances in every country, that without -a peculiar talent of laying principles together, so as to answer every -combination, the most perfect theory which can be proposed must appear -defective. - -In countries ill-improved, where industry begins to take root, we are -not to conclude, that good policy requires a sudden and immediate -separation between the dwellings of the husbandmen and free hands. -Sudden revolutions are constantly hurtful, and a good statesman ought to -lay down his plan of arriving at perfection by gradual steps. - -If he finds, as is the case of rude and uncivilized societies, that many -are occupied, partly, in providing subsistence for their own family, -partly, in other useful pursuits, he may by degrees detach as many as he -can from every other branch of industry, except that of agriculture. The -most wealthy are the most proper to carry this branch to any degree of -perfection. The landed men ought to be encouraged by every means to -apply to the study of farming. This employment has been considered as -honourable in all ages of the world, and very well suits the rank, the -interest, and the amusement of gentlemen. - -The next step is to introduce manufactures into the country, and to -provide a ready market abroad for every superfluous part of them. The -allurement of gain will soon engage every one to pursue that branch of -industry which succeeds best in his hands. By these means many will -follow manufactures and abandon agriculture; others will prosecute their -manufactures in the country, and avail themselves at the same time, of -small portions of land, proper for gardens, grass for cows, and even for -producing certain kinds of fruit necessary for their own maintenance. - -This I do not consider as a species of farming. It is more properly, in -a political light, a sort of village life, only the village here appears -dispersed over a large extent; and I call it a village life, because -here the occupation of the inhabitants is principally directed towards -the prosecution of their trades: agriculture is but a subaltern -consideration, and will be carried on so far only, as it occasions no -great avocation from the main object. It will however have the effect to -parcel out the lands into small possessions: a system admirably -calculated for the improvement of the soil, and advantageous to -population, when the spirit of industry is not thereby checked. This is -not the case when such possessors apply totally to agriculture, and -content themselves with a bare subsistence from it, without prosecuting -any other branch of industry, or forming any plan of ambition for -themselves, or for their children’s emerging from so circumscribed a -sphere of life: from this alone proceeds, in most countries, the -inconveniency of a minute subdivision of land property. - -We shall presently see, by various examples, the truth of this -proposition; and from what observations I have been able to make, it -appears, that a great inconvenience flows from it; the _property_ of the -lands, and not the _bare possession_ of them, is vested in the lower -classes. While they only remain as tenants, the interest of the -proprietor, on one hand, will lead him to incorporate these small -possessions into larger farms, the moment the possessors, by relaxing -from their principal occupation, (industry) are no longer able to pay a -rent above the value of the grounds when let in farms; and the interest -of these tenants, on the other hand, will frequently lead them to -abandon such small possessions, when the prosecution of their industry -demands a change of habitation. Thus the interest of agriculture will go -hand in hand with that of industry, and classes will separate their -habitations, according as their respective interests require. - -It is certainly the interest of every landlord, whose land is ill -improved, to multiply habitations upon it, providing he makes choice of -such people as can live by some other branch of industry than bare -agriculture: and, in many cases, it may be his advantage to incorporate -his lands into farms as soon as they are fully cultivated. By this plan -he will advance the improvement of his land; he will multiply the useful -inhabitants; and he will at the same time share the profits of their -industry beyond the value of the land rent. - -By these means has the woollen manufacture in England, and the linen in -Ireland and Scotland been greatly augmented. But as the improvement of -land goes on, this oeconomy will decline: towns will swell in -consequence of the principles we are now going to deduce; the lands will -become more thinly inhabited; and farms will by degrees grow more -extensive. I appeal to experience for the justness of this opinion. - -Hence it plainly appears, that, in every light this matter can be -represented, we still find it impossible to employ usefully above a -certain part of a people in agriculture. The next question is, how to -determine the just proportion. For this purpose we must have recourse to -facts, not to theory. We have, in a former chapter, examined the state -of this question with regard to one country. I shall here only add, -that, in proportion to the culture of the soil, and to the number of -crops it is made to produce, a greater or less number will be required; -and in proportion to the surplus of food above what is necessary to -maintain the labourers, will a number of free hands be provided for. If -therefore a species of agriculture can be found established, which -produces little or no surplus, _there_ little or no industry can be -exercised; few wants can be supplied: this will produce a wonderful -simplicity of manners, will ruin the system of modern policy, and -produce what I must call an abuse. Let me look for some examples, in -order to set this question in a clearer light. - -In the wine-provinces of France, we find the lands which lie round the -villages divided into very small lots, and there cultivation is carried -to a very extraordinary height. These belong _in property_ to the -peasants, who cultivate the vines. No frugality can be greater than in -the consumption of this produce, and the smallest weed which comes up -among the grain, is turned to account, for the food of animals. The -produce of such lands, I may say, is intirely consumed by the proprietor -and his family, who are all employed in the cultivation, and there is no -superfluous quantity here produced for the maintenance of others. Does -not this resemble the distribution of lands made by the Romans in favour -of 5000 Sabine families, where each received two _plethra_ of ground. -[See Numbers of Mankind, p. 117.] Now let me examine the political state -of agriculture, and of other labour performed by my French vine-dresser. - -By the supposition we imply, that the bit of land is sufficient for -maintaining the man and his family, and nothing more; he has no grain to -sell, no food can by him be supplied to any other person whatever; but -the state of other lands capable of yielding a surplus, such as the -vineyard, produces a demand for his labour. This labour, considered with -respect to the vine-dresser, is a fund for providing all his wants in -manufactures, salt, &c. and what is over must be considered as his -profits, out of which he pays the royal impositions. The same labour, -considered with regard to the proprietor of the vineyard, enters into -that necessary deduction out of the fruits, which, when deducted, leaves -the remainder, which we call surplus, or what answers to the land rent. -This belongs to the proprietor, and becomes a fund for supplying all his -wants. - -Here we have an idea of society. The vine-dresser depends upon the -proprietor for the price of his labour; the proprietor upon the -vine-dresser for his surplus. But did we suppose all the kingdom -parcelled out, and laboured, as the spot which lies round the village, -what would become of the vine-dresser with regard to all his other -wants; there would be no vines to dress, no surplus nourishment any -where found, consequently no employment, not even life, for those who -had no land. From this example we discover the difference between -agriculture exercised _as a trade_ and _as a direct means of -subsisting_, a distinction to be attended to, as it will very frequently -occur in the prosecution of our subject. We have the two species in the -vine-dresser: he labours the vineyard as a trade, and his spot of ground -for subsistence. We may farther conclude, that, as to the last part, he -is only useful to himself; but, as to the first, he is useful to the -society, and becomes a member of it; consequently, were it not for his -trade, the state would lose nothing, though the vine-dresser and his -land were both swallowed up by an earthquake. The food and the consumers -would both disappear together, without the least political harm to any -body: consequently, such a species of agriculture is no benefit to a -state; and consequently, neither is that species of multiplication, -implied by such a distribution of property, any benefit. Thus an -over-extension of agriculture and division of lands becomes an abuse, -and so, consequently, does an over-multiplication. - -Here I am obliged to conclude, that those passages of Roman authors -which mention the frugality of that people, and the small extent of -their possessions cannot be rightly understood, without the knowledge of -many circumstances relative to the manners of those times. For if you -understand such a distribution of lands to have extended over all the -Roman territory, the number of the citizens would have far exceeded what -they appear to have been by the Census, and even surpass all belief. But -farther, I may be allowed to ask, whether or no it be supposed that -these frugal Romans laboured this small portion of lands with their own -hands and consumed the produce of it? If I am answered in the -affirmative, (which is necessary to prove the advantages of -agriculture’s being exercised by all the classes of a people) then I -ask, from whence were the inhabitants of Rome, and other cities, -subsisted; who fed the armies when in the field? If these were fed by -foreign grain imported, or plundered from their neighbours, where was -the advantage of this subdivision of lands, and of this extensive -agriculture, which could not feed the inhabitants of the state? If it be -said, that notwithstanding this frugal distribution of property among -the citizens, there was still found surplus enough to supply both Rome -and the armies, will it not then follow, that there was no necessity for -employing all the people in agriculture, since the labour of a part -might have sufficed. - -_That number of husbandmen_, therefore, _is the best, which can provide -food for all the state; and that number of inhabitants is the best, -which is compatible with the full employment of every one of them_. - -Idle mouths are only useful to themselves, not to the state; -consequently, are not an object of the care of the state, any farther -than to provide employment for them; and their welfare (while they -remain useless to others) is, in a free country, purely a matter of -private concern. Let me take another example for the farther -illustration of this matter. - -Those who travel into the southern provinces of Spain, find large tracts -of land quite uncultivated, producing only a scanty pasture for herds of -the lesser cattle. Here and there are found interspersed some spots of -watered lands, which, from the profusion of every gift which nature can -bestow, strike a northern traveller with an idea of paradise. In such -places villages are found, and numbers of inhabitants. It must be -allowed that industry and labour do not here go forward as in other -countries; but to supply this want charity steps in. Charity in Spain -(in proportion to its extent) is as powerful a principle towards -multiplication as industry and labour. _Whatever gives food gives -numbers_: but charity cannot extend beyond superfluity, and this must -ever be in proportion to industry. These watered lands are well laboured -and improved. The value of them in one sense, is in proportion to their -fertility, and the surplus of the labourers should naturally be given -for an equivalent in money or work: but this equivalent cannot be found, -because the consumers have neither the one nor the other. If the -Spaniards, therefore, were not the most charitable people upon earth, it -is very plain that the labouring of these watered lands would diminish, -until it came upon a level with the wealth and industry of the -consumers. But here it is otherwise: labour goes on mechanically, and -without combination of circumstances, and the poor live in ease, in -proportion to the plenty of the year. - -Here then is a third principle of multiplication. The first is slavery, -or a violent method of making mankind labour; the second is industry, -which is a rational excitement to it; the third is charity, which -resembles the manna in the desert, the gift of God upon a very -extraordinary occasion, and when nothing else could have preserved the -lives of his people. Whether, in all cases, this principle of -christianity advances the prosperity of a modern society (when complied -with from obedience to precept, without consulting reason as to the -circumstances of times and situations) is a question which lies out of -my road to examine. The action, considered in the intention of the -agent, must in every case appear highly beautiful, and we plainly see -how far it contributes to multiplication, though we do not so plainly -perceive how this again is advantageous to society. - -Now if we examine the state of agriculture in the territory of this -Spanish village, we find, upon the whole, no more surplus of fruits than -upon the French vine dresser’s portion of land; consequently, if all -Spain was laboured and inhabited like this village and its small garden, -as it is called, it would be the most populous country in the world, the -most simple in the manner of living; but it never could communicate the -idea of a vigorous or a flourishing state. It is the employment alone of -the inhabitants which can impress that character. - -Now in this last example, what a number of free hands do we find! are -not all the poor of this class? Would it not be better if all these by -their labour could purchase their subsistence, than be obliged to -receive it in the precarious manner they do? Can one suppose all these -people industrious, without implying what I call superfluity of labour? -Is not this luxury, according to my definition of it? Where would be the -harm if the Spanish farmer, who gives a third of his crop in charity, -should in return receive some changes of raiment, some convenient -furniture for his house, some embellishment to his habitation; these -things would cost him nothing; he would receive them in exchange for -what he now gives from a principle of charity, and those who have a -precarious, would have a certain livelihood. Let us travel a little -farther in search of the abuse of population. - -In Germany, we find many small towns, formed into corporations, which -enjoy certain privileges. The freedom of such towns is not easily -purchased; and one, upon considering outward circumstances, must be not -a little surprized to hear of the sums refused, when offered, to obtain -it. Round these towns there is a small territory divided into very small -portions, and not able to maintain the inhabitants: these lands -therefore are infinitely overstocked with husbandmen; for every -proprietor, less or more, concerns himself with the cultivation. Here, -one who would aspire to extend his possession would, according to the -sentiment of Manius Curius Dentatus, certainly be considered as a -dangerous citizen, and a hurtful member of the society. Those lots are -divided among the children of the proprietors, who are free of the town, -by which means they are constantly splitting by multiplication, and -consolidating by death, and by marriage: these nearly balance one -another, and property remains divided as before. A stranger is at a loss -to find out the reason why the liberty of so poor a little town should -be so valuable. Here it is; first there are certain advantages enjoyed -in common, such as the privilege of pasture on the town lands, and -others of a like nature; but I find the charges which the burgesses are -obliged to pay, may more than compensate them. The principal reason -appears to be, that no one who has not the liberty of the town, can -settle in a way of industry so as to marry and have a family: because -without this his labour can only be directed towards furnishing the -wants of peasants who live in villages; these are few, and little -ingenuity is required for it. In towns there is found a greater -diversity of wants, and the people there have found out mechanically, -that if strangers were allowed to step in and supply them, their own -children would starve; therefore the heads of the corporation, who have -an interest to keep up the price of work, have also an interest to hold -the liberty of their town at a high value. This appears to me a pretty -just representation of the present state of some towns I have seen, -relative to the present object of inquiry. - -But as industry becomes extended, and trade and manufactures are -established, this political oeconomy must disappear. - -Such a change, however, will not probably happen without the -interposition of the sovereign, and a new plan of administration; what -else can give a turn to this spirit of idleness, or rather, as I may -call it, of this trifling industry? Agriculture can never be a proper -occupation for those who live in towns: this therefore is an abuse of -it, or rather indeed an abuse of employment. - -Ease and plenty can never enter a little town, but by the means of -wealth; wealth can never come in but by the produce of labour going out; -and when people labour purely for their own subsistence, they only make -the little money they have circulate, but can acquire nothing new; and -those who with difficulty can maintain themselves, can never hope to -increase their numbers. - -If in spite of the little industry set on foot in such towns, the -generative faculty shall work its effect and increase numbers, this will -make the poor parents still divide, and misery will ensue; this again -may excite compassion, and that will open the chests of those who have a -charitable disposition: hospitals are founded for the relief of the -poor, they are quickly filled, and as many necessitous remain as ever. -The reason is plain; the hospital applies a palliative for the abuse, -but offers no cure. A tree is no sooner discharged of its branches than -it pushes new ones. It has been said, that numbers are in proportion to -food; consequently, poor are in proportion to charity. Let the King give -his revenue in charity, he will soon find poor enough to consume it. Let -a rich man spend 100,000_l._ a year upon a table, he will find guests -(the best in the kingdom) for every cover. These things, in my way of -considering them, are all analogous, and flow from the same principle. -And the misery found in these little German towns, is another -modification of the abuse of population. These examples shew the -inconveniencies and abuses which result from a misapplication of -inhabitants to agriculture, which produces a population more burthensome -than beneficial to a modern state. - -If the simplicity of the antients is worthy of imitation, or if it -appears preferable to the present system, which it is not my business to -decide, then either slavery must be introduced to make those subsist who -do not labour, or they must be fed upon charity. Labour and industry can -never, I think, be recommended on one hand, and the effects of them -proscribed on the other. If a great body of warlike men (as was the case -in Sparta) be considered as essential to the well being of the state; if -all trade and all superfluity be forbid amongst them, and no employment -but military exercises allowed; if all these warriors be fed at public -tables, must you not either have a set of helotes to plow the ground for -them, or a parcel of charitable Spanish farmers to feed them gratis. - -Thus much I have thought might be of use to say to illustrate the -principles I have laid down. I find these very contrary to the reasoning -which runs through the whole of the performance which I mentioned above, -and which I have had in my eye. A more particular examination of it -might be useful, and even amusing; but it would engage me in too long a -disquisition for the nature of this work. I cannot however help, in this -place, adding one observation more, in consequence of our principles, -which _seems_ contrary to the strain of our ingenious author’s -reasoning. I say _seems_, because almost all difference of opinion upon -such subjects proceeds from the defect of language in transmitting our -ideas when complex or abstract. - -The effect of diseases which sweep off numbers of people does not -essentially diminish population, except when they come suddenly or -irregularly, any more than it would necessarily dispeople the world if -all mankind were to be swept off the stage at the age of forty six -years. I apprehend that in man, as in every other animal, the generative -faculty is more than able to repair all losses occasioned by regular -diseases; and I have shewn, I think, more than once, that multiplication -never can stop but for want of food. As long then as the labour of man -can continue annually to produce the same quantity of food as at -present, and that motives are found to make him labour, the same numbers -may be fed, and the generative faculty, which from one pair has produced -so many millions, would certainly do more than keep up the stock, -although no person were to pass the age above mentioned. Here is the -proof: was the life of man confined to forty six years, the state of -mortality would be increased in the proportion which those who die above -forty six bear to those who die under this age. This proportion is, I -believe, as 1 to 10, consequently, mortality would increase 1⁄10, -consequently, numbers would be kept up by 1⁄10 increase upon births; and -surely the generative faculty of man far exceeds this proportion, when -the other requisites for propagation, to wit, food, &c. are to be found, -as by the supposition. - ------------------------------------------------------------------------- - - - - - CHAP. XV. - _Application of the above Principles to the State of Population in_ - Great-Britain. - - -A letter from Dr. Brakenridge, F. R. S. addressed to George Lewis Scott, -Esq; which I found in the Danish Mercury for March 1758, furnishes me -with a very good opportunity of applying the principles we have been -laying down to the state of population in Great-Britain. I shall -therefore, according to my plan, pass in review that gentleman’s -opinion, without entring upon any refutation of it. I shall extract the -propositions he lays down, examine the conclusions he draws from them, -and then shew wherein they differ from those which result from the -theory established in this inquiry. - -The author’s calculations and suppositions as to matters of fact shall -be taken for granted, as I believe the first are as good as any that can -be made, upon a subject where all the data required for solving the -problem are quite a piece of guess-work. - -I must follow the Mercury, not having the original. - -PROP. I. After a very close examination, says our author, I find, that -our islands gain, as to population, absolutely no more than what is -requisite for repairing their losses, and that, in England itself, -numbers would diminish, were they not recruited from Ireland and -Scotland. - -PROP. II. Men, able to carry arms, that is from 18 to 56 years, make, -according to Dr. Halley, the fourth part of a people; and when a people -increase in numbers, every denomination, as to age, increases in that -proportion: consequently in England, where the number of inhabitants -does not exceed six millions, if the annual augmentation upon the whole -do not exceed 18,000, as I am pretty sure it does not, the yearly -augmentation of those fit to carry arms will be only 4,500. - -PROP. III. In England, burials are to births, as 100 is to 113. I -suppose that, in Scotland and Ireland, they may be as 100 is to 124. And -as there may be, in these two last kingdoms, about two millions and a -half of inhabitants, the whole augmentation may be stated at 15,000; and -consequently that, of such as are fit to carry arms, at 3,750. Add this -number to those annually produced in England, and the sum total of the -whole augmentation in the British isles will be about 8,250. - -PROP. IV. The strangers, who arrive in England, in order to settle, are -supposed to compensate those who leave the country with the same intent. - -PROP. V. It is out of this number of 8,250, that all our losses are to -be deduced. If the colonies, wars, and navigation, carry off from us -annually 8,000 men, the British isles cannot augment in people: if we -lose more, numbers must diminish. - -PROP. VI. By calculations, such as they are, our author finds, that, -upon an average of 66 years, from 1690 to 1756, this number of 8000 have -been annually lost, that is, have died abroad in the colonies, in war, -or on the account of navigation. - -PROP. VII. That, since the inhabitants of Britain and Ireland are about -8,000,000, and that the augmentation is annually about 8000, we may -conclude in general for all Europe, that, for every million of -inhabitants, there is an annual augmentation of 1000; consequently, -every thousand men slain in war must destroy all the augmentation of a -million of inhabitants during a year. Consequently France, which -contains 14 millions, according to Sir William Petty, having lost above -14,000 men a-year, during the same 66 years, cannot have augmented in -population. - -PROP. VIII. That the progress of trade and navigation augmenting the -loss of people by sea, must consequently have diminished population over -all Europe. - -PROP. IX. The exportation of our corn proves what the above propositions -have demonstrated. For supposing the progress of agriculture to -compensate the additional quantity distilled of late years, there is -still 1⁄6 of the crop exported, which proves that our numbers are small, -and that they do not augment. - -From these propositions our author concludes, that what stops -multiplication in the British isles is, 1st, That living in celibacy is -become a-la-mode: 2dly, That wars have been carried on beyond the -nation’s force: 3dly, That the use of spirituous liquors destroys great -numbers of inhabitants. - -I shall now shortly apply the principles I have been laying down, in -order to resolve every phenomenon here described, as to the population -of Great Britain. These I shall willingly take for granted, as it is of -no consequence to my reasoning, whether they be exact or not: it is -enough that they may be so; and the question here is only to account for -them. - -England, says he, would diminish in numbers, were it not recruited from -Scotland and Ireland. This, I say, is a contingent, not a certain -consequence: for did those grown-up adventurers cease to come in, the -inhabitants of England themselves would undoubtedly multiply, provided -an additional number of breeders could be found, able to bring up their -children. Now the importation of grown men into a country in so far -resembles the importation of slaves into our colonies, that the one and -the other diminishes the price of labour, and thereby prevents marriage -among certain classes of the natives, whose profits are not sufficient -for bringing up a family: and when any such do marry notwithstanding, -they do not multiply, as has been said. Now were the Scots and Irish to -come no more into England, the price of labour would rise; those who now -cannot bring up children, might then be enabled to do it, and this would -make the English multiply themselves; that is, it would augment the -number of their own breeders. On the other hand, did the price of labour -continue too low to prove a sufficient encouragement for an additional -number of English breeders, the contingent consequence would take place; -that is, numbers would diminish, according to our author’s supposition, -and the exportation of grain would increase, in proportion to that -diminution; and did foreign demand for grain also diminish, then -agriculture would suffer, and every thing would decline: but of this -more as we go along. - -The representation he gives of the state of population in these -countries, is one modification of what I have called a moral incapacity -of a people’s increasing in numbers. It is just so in Africa, where the -inhabitants are sold; just so in Switzerland, and in many mountainous -countries, where inhabitants desert, in order to seek their fortunes -elsewhere. The national stock remains at an equal standard, and the -augmentation upon births above burials is constantly in proportion to -the exportation of inhabitants. Let this proportion rise ever so high, -an increase of national population is noways essentially to be implied -from this phenomenon alone, but must proceed from other causes. - -I can find nothing advanced by our author to prove, or even to induce -one to believe, that had the lives of those eight thousands been yearly -preserved from extraordinary dangers, numbers would have augmented. -England enjoyed in a manner 26 years peace after the treaty of Utrecht. -For many years before, a very destructive war had been carried on. Had -the bills of births been produced from 1701 to 1713, had they been -compared with those from this last period to 1739, when the Spanish war -began, had we seen a gradual augmentation from year to year during those -last 26 years, such as might be expected from the preservation of a -considerable number at least of the 8,250 able healthy men, just in the -period of life fit for propagation, one might be tempted to conclude, -that the preceding war had done hurt to population, by interrupting the -propagation of the species. But if, by comparing the bills of births for -a considerable number of years, in war and in peace, one can discover no -sensible difference, it is very natural to conclude, either that those -wars did not destroy many breeders, or that others must have slipt in -directly, and bred in the place of those who had been killed. What -otherwise can be the reason why the number which our author supposes to -have been destroyed abroad, should so exactly compensate the annual -augmentation, but only that those nations are stocked to the full -proportion of their subsistence: and what is the reason why, after a -destructive war, which, by the suddenness of the revolution, sweeps off -numbers of the grown men, and diminishes the original stock, numbers -should in a few years get up to the former standard, and then stop -a-new. - -From our author’s representation of the bills of births and deaths, I -should be apt to suspect, in consequence of my principles, that upon a -proper examination it would be found, that, in those years of war, the -proportion of births to deaths had been higher than in years of peace, -because more had died abroad. And, had the slaughter of the inhabitants -gone gradually on, increasing every year beyond the 8,250, I am of -opinion, that the proportion of births might very possibly have kept -pace with it. On the contrary, during the years of peace, the proportion -should have diminished, and had nobody died out of the country at all, -the births and deaths would have become exactly equal. - -From what I have here said, the reader may perceive, that it is not -without reason that I have treated the principles relating to my subject -in general, and that I avoid as much as possible to reason from facts -alledged as to the state of particular countries. Those our author -builds upon may be true, and may be false: the proportion of births and -deaths in one place is no rule for another; we know nothing exactly -about the state of this question in the British isles; and it may even -daily vary, from a thousand circumstances. War _may_ destroy population -as well as agriculture, and it _may not_, according to circumstances. -When the calamity falls upon the breeders, and when these are supposed -the only people in the country in a capacity of bringing up their -children, births will soon diminish. When it destroys the indigent, who -cannot bring up their children, or who do not marry, births will remain -the same. The killing the wethers of a flock of sheep does not diminish -the brood of lambs next year; the killing of old pigeons makes a -pigeon-house thrive. When the calamity falls upon the farmers, who make -our lands produce, agriculture is hurt, no doubt: does it fall upon the -superfluities of cities, and other classes of the free hands, it may -diminish manufacturers, but agriculture will go on, while there is a -demand for its produce; and if a diminution of consumption at home be a -consequence of the war, the augmentation upon exportation will more than -compensate it. I do not find that war _diminishes_ the demand for -subsistence. - -The long wars in Flanders in the beginning of this century interrupted -agriculture now and then, but did not destroy it. That in the Palatinate -in the end of the last ruined the country so, that it has hardly as yet -recovered it. War has different effects, according to circumstances. - -OBJ. The population of the British isles is not stopt for want of food, -because one-sixth part of the crop is annually exported. I answer, That -it is still stopt for want of food, for the exportation only marks that -the home demand is satisfied; but this does not prove that the -inhabitants are full fed, although they can buy no more at the -exportation-price. Those who cannot buy, are exactly those who I say die -for want of subsistence: could they buy, they would live and multiply, -and no grain perhaps would be exported. This is a plain consequence of -my reasoning; and my principal point in view throughout this whole book, -is to find out a method for enabling those to buy who at present cannot, -and who therefore do not multiply; because they can give no equivalent -to the farmers for their superfluity, which consequently they export. By -this application of our principles, I have no occasion to call in -question our author’s facts. It is no matter what be the state of the -case: if the principles I lay down be just, they must resolve every -phenomenon. - ------------------------------------------------------------------------- - - - - - CHAP. XVI. - _Why are some Countries found very populous in respect of others, - equally well calculated for Improvement?_ - - -This question comes immediately under the influence of the principles -already laid down, and must be resolved in consequence of them. It is -with a view to make the application of these, that I have proposed it; -and, in the examination, we shall prove their justness, or discover -their defects. - -It may be answered in general, that every such difference must proceed -from what I call the spirit of the government and of the people, which -will not only decide as to numbers, but as to many other things. I must -however observe, that the question in itself is of little importance, if -nothing but numbers be considered; for of what consequence is it to know -how many people are in a country, when the employment of them does not -enter into the inquiry? Besides, it is only by examining the employment -of a people, that I can form any judgment as to this particular. But as -the numbers of mankind have been thought a point worthy of examination, -I have chosen this title for a chapter, which might perhaps have more -properly stood under another. - -While slavery prevailed, I see no reason to conclude against the numbers -of mankind, as I have said already: when slavery was abolished, and -before industry took place, if my principles be true that period I think -should mark the time of the thinnest population in Europe; for I believe -it will be found, that there never was an example of a country, however -fertile by nature, where every one was absolutely free; where there was -little or no industry, nor labour, but in agriculture; and where, at the -same time, there were many inhabitants, not beggars, nor living upon -charity. I have mentioned this so often, that I am afraid of tiring my -reader with useless repetitions. I have brought it in here, only to give -him an opportunity of applying this principle to the solution of the -question before us. - -I shall begin my inquiry by asking what is understood by a country’s -being populous; for that term presents different ideas, if circumstances -are not attended to. I have heard it said, that France was a desert, and -that there was nobody found in it but in towns; while in England one -cannot travel half a mile without finding a farm, perhaps two together; -and in looking round, one sees the whole country divided into small -possessions. The difference here found, I apprehend, decides nothing in -favour of, or against the real populousness of the one or the other, but -proceeds entirely from circumstances relative to agriculture, and to the -distribution of free hands. These circumstances will be better -understood from the examination of facts, than from the best theory in -the world. Let one consider the state of agriculture in Picardy and in -Beauce, and then compare it with the practice in many provinces in -England, and the contrast will appear striking. Were there more forest -in England, to supply the inhabitants with fuel, I imagine many -inclosures, useful at first for improving the grounds, would be taken -away, and the country laid more open; were wolves less common in France, -there would be found more scattered farms. Cattle there must be shut up -in the night, and cannot be left in the fields; this is a great -discouragement to inclosing. Where there are no inclosures, there are -few advantages to be found from establishing the farm-house exactly upon -the spot of ground to be laboured; and then the advantages which result -to certain classes of inhabitants, from being gathered together, the -farmers with the tradesmen, are found to preponderate. Thus the French -farmers are gathered into villages, and the English remain upon their -fields. But farther, in Picardy and Beauce agriculture has been long -established, and, I imagine, that, at the time when lands were first -broken up, or rather improved, their habitations must have been closer -together. - -This drawing together of inhabitants must leave many ruinous -possessions, and this, by the by, is one reason why people cry out upon -the desolation of France, because ruinous houses (which may often times -be a mark of improvement, not of desertion) are found in different -places in the country. Paris has grown considerably in bulk, and from -this it naturally happens, that the country round is purged of idle -mouths. If this makes labour dear in the country, it is the city alone -which suffers by it, the country must certainly be the gainers. So much -for two species of population in two of the best inhabited countries of -Europe. I now come to another in one of the worst. - -In some countries you find every farm-house surrounded with small huts, -possessed by numbers of people, supposed to be useful to the farmer. -These in Scotland are called cottars, (cottagers) because they live in -cottages. If you consider them in a political light, they will appear to -be inhabitants appropriated for agriculture. In one sense they are so, -if by that you understand the gathering in of the fruits; in another -they are not, if by agriculture you understand the turning up the -surface. I bring in this example, and shall enlarge a little upon it, -because I imagine it to be, less or more, the picture of Europe 400 -years ago. - -The Scotch farmer must have hands to gather in a scanty produce, spread -over a large extent of ground. He has six cottars, I shall suppose; but -these cottars must have wives, and these wives will have children, and -all must be fed before the master’s rent can be paid. It never comes -into the cottar’s head to suppose that his children can gain money by -their labour; the farmer never supposes that it is possible for him to -pay his rent without the assistance of his cottars to tend his cattle, -and gather in his crop; and the master cannot go against the custom of -the country, without laying his land waste. All these children are ready -at the farmer’s disposal; he can, without any expence, send what parcels -of sheep he pleases, to different distances of half a mile or more, to -feed upon spots of ground which, without the conveniency of these -children, would be entirely lost. By this plan of farming, landlords who -have a great extent of country which they are not able to improve, can -let the whole in a very few farms, and at the same time all the -spontaneous produce of the earth is gathered in and consumed. If you -compare the rent of these lands with the extent, it appears very small; -if you compare it with the numbers fed upon the farm, you will find that -an estate in the highlands maintains, perhaps, ten times as many people -as another of the same value in a good and fertile province. Thus it is -in some estates as in some convents of the begging order, the more -mouths the better cheer. - -I shall now suppose our modern policy to inspire an ingenious or public -spirited lady to set up a weaver or two at a farm-house. The cottars -begin to spin; they will be a long time in attaining to a dexterity -sufficient to appear at the weaver’s house, in competition with others -who are accustomed to the trade; consequently this manufacture will be -long in a languishing condition; but if the undertaking is supported -with patience, these obstacles will be got the better of. Those who -tended herds of cattle for a poor maintenance, will turn themselves to a -more profitable occupation; the farmer will find more difficulty in -getting hands, he will complain, perhaps give way; the master will lose -a year’s rent, and no body will take so extensive a farm; it must be -divided, then it must be improved, and then it produces more grain upon -one tenth, than perhaps formerly was produced upon the whole. This grain -is bought with the price of spinning; the parents divide with the -children, who are fed, and spin in their turn. When this is -accomplished, what is the revolution? Why, formerly the earth fed all -the inhabitants with her spontaneous productions, as I may call them; -now more labour is exercised upon turning up her surface, this she pays -in grain, which belongs to the strong man for his labour and toil; women -and children have no direct share, because they have not contributed -thereto, as they did in feeding cattle. But they spin, and have money to -buy what they have not force to produce; consequently they live; but as -they become useless as cottars, they remove from their mother earth, and -gather into villages. When this change is effected the lands appear less -inhabited; ruinous huts (nay, villages I may call them) are found -frequently, and many would be apt to conclude, that the country is -depopulated; but this is by no means found to be the case, when the -whole is taken together. - -The spirit therefore of the principal people of a country determines the -employment of the lower classes; the employment of these determines -their usefulness to the state, and their usefulness, their -multiplication. The more they are useful, the more they gain, according -to the definition of the contract of society; the more they gain, the -more they can feed; and consequently the more they will marry and divide -with their children. This increases useful population, and encourages -agriculture. Compare the former with the present situation, as to -numbers, as to ease, as to happiness! - -Is it not plain, that when the earth is not improved it cannot produce -so much nourishment for man as when it is? On the other hand, if -industry does not draw into the hands of the indigent, wherewith to -purchase this additional nourishment, no body will be at a considerable -first expence to break up grounds in order to produce it. The -withdrawing therefore a number of hands from a trifling agriculture -forces, in a manner, the husbandman to work the harder; and by hard -labour upon a small spot, the same effect is produced as with slight -labour upon a great extent. - -I have said, that I imagined the state of agriculture in the Scotch -farm, was a pretty just representation of the general state of Europe -about 400 years ago: if not in every province of every country, at least -in every country for the most part. Several reasons induce me to think -so: first, where there is no industry, nothing but the earth directly -can feed her children, little alienation of her fruits can take place. -Next, because I find a wonderful analogy between the way of living in -some provinces of different countries with what I have been describing. -Pipers, blue bonnets, and oat meal, are known in Swabia, Auvergne, -Limousin, and Catalonia, as well as in Lochaber: numbers of idle, poor, -useless hands, multitudes of children, whom I have found to be fed, no -body knows how, doing nothing at the age of fourteen, keeping of cattle -and going to school, the only occupations supposed possible for them. If -you ask why they are not employed, they tell you because commerce is not -in the country: they talk of commerce as if it was a man, who comes to -reside in some countries in order to feed the inhabitants. The truth is, -it is not the fault of these poor people, but of those whose business it -is to find out employment for them. - -Another reason I derive from the nature of the old tenures, where we -find lands which now produce large quantities of grain, granted for a -mere trifle, when at the same time others in the neighbourhood of cities -and abbies are found charged with considerable prestations. This I -attribute to the bad cultivation of lands at that time, From which I -infer, a small population. In those days of trouble and confusion, -confiscations were very frequent, large tracts of lands were granted to -the great lords upon different revolutions, and these finding them often -deserted, as is mentioned in history, (the vassals of the former, being -either destroyed or driven out to make place for the new comers) used to -parcel them out for small returns in every thing but personal service. -Such sudden and violent revolutions must dispeople a country; and -nothing but tranquillity, security, order and industry, for ages -together, can render it populous. - -Besides these natural causes of population and depopulation (which -proceed, as we have observed, from a certain turn given to the spirit of -a people) there are others which operate with irresistible force, by -sudden and violent revolutions. The King of Prussia, for example, -attempted to people a country all at once, by profiting of the desertion -of the Saltzburgers. America is become very poorly peopled in some spots -upon the coast, and in some islands, at the expence of the exportation -of millions from Europe and from Africa; such methods never can succeed -in proportion to the attempt. Spain, on the other hand, was depopulated -by the expulsion of its anti-christian inhabitants. These causes work -evident effects, which there is little occasion to explain, although the -more remote consequences of them may deserve observation. I shall, in -another place, have occasion to examine the manner of our peopling -America. In this place, I shall make a few observations upon the -depopulation of Spain, and finish my chapter. - -That country is said to have been antiently very populous under the -government of the Moors. I am not sufficiently versed in the politics, -oeconomy and manners of that people, to judge how far these might be -favourable to population: what seems, however, to confirm what we are -told, is, the large repositories they used for preserving grain, which -still remain entire, though never once made use of. They watered the -kingdoms of Valencia, Murcia and Granada. They gathered themselves into -cities of which we still can discover the extent. The country which they -now possess (though drier than Spain) furnishes Europe with considerable -quantities of grain. The palace of the Moorish King at Granada, shews a -taste for luxury. The mosque of Cordoua speaks a larger capital. All -these are symptoms of population, but they only help one to guess. The -numbers which history mentions to have been driven out, is a better way -still of judging, if the fidelity of historians could be depended upon, -when there is any question about numbers. - -Here was an example of a country depopulated in a very extraordinary -manner: yet I am of opinion, that the scarcity of inhabitants complained -of in that country, for a long time after the expulsion, did not so much -proceed from the effects of the loss sustained, as from the contract -between the spirit of those christians who remained after the expulsion, -and their catholic deliverers. The christians who lived among the Moors, -were really Moors as to manners, though not as to religion. Had they -adopted the spirit of the subjects of Castile, or had they been governed -according to their own, numbers would soon have risen to the former -standard. But as the christian lord governed his Murcian, Andalousian, -and Granada subjects, according to the principles of christian policy, -was it any wonder that in such an age of ignorance, prejudice, and -superstition, the country (one of the finest in the world) should be -long in recovering? Recover, however, it did; and sooner perhaps than is -commonly believed: for I say it was recovered so soon as all the flat -and watered lands were brought into cultivation; because I have reason -to believe that the Moors never carried their agriculture farther in -these southern provinces. - -From this I still conclude, that no destruction of inhabitants by -expulsion, captivity, war, pestilence or famine, is so permanently -hurtful to population, as a revolution in that spirit which is necessary -for the increase and support of numbers. Let that spirit be kept up, and -let mankind be well governed, numbers will quickly increase to their -former standard, after the greatest reduction possible: and while they -are upon the augmenting hand, the state will be found in more heart and -more vigour, than when arrived even at the former height; for so soon as -a state ceases to grow in prosperity, I apprehend it begins to decay -both in health and vigour. - ------------------------------------------------------------------------- - - - - - CHAP. XVII. -_In what Manner and according to what Proportion do Plenty and Scarcity - affect a People?_ - - -In a former chapter I have examined this question, relatively to mankind -fed by the hand of nature: I now come nearer home, and shall keep close -to modern times, considering circumstances and effects which by daily -experience we see and feel. - -I have often said, that numbers are in proportion to the produce of the -earth. I now say, that in most countries of Europe, the food produced in -the country is _nearly_ consumed by the inhabitants: and by _nearly_ I -understand, that the part exported bears a small proportion to the -home-consumption. I do by no means establish this as an universal -proposition; but I say it is true _for the most part_: and the intention -of this chapter is to enable us to judge how far these limitations -should extend. I allow, for example, that Holland, not producing food -for its inhabitants, must draw it from some country which produces a -superfluity, regularly: but let it be observed that Poland, Germany, -Flanders, and England, with many other countries, contribute their -contingents to supply the demand of the Dutch; and of several large -trading towns which have small territories. This being the case, the -quota furnished by each country, must be in a small proportion to the -respective quantity growing in it. But these are general conclusions -upon vague suppositions, which throw no light on the question. I shall -therefore endeavour to apply our reasoning to facts, and then examine -consequences. - -There are few countries, I believe, in Europe more abounding in grain -than England: I shall therefore keep that kingdom in my eye while I -examine this matter. Nothing is more common than to hear that an -abundant crop furnishes more than three years subsistence: nay, I have -found it advanced by an author of consideration, (Advantages and -disadvantages of France and Great Britain, &c. article Grain) that a -plentiful year produces five years nourishment for the inhabitants. If -this be a mistake, it may prove a very hurtful one in many respects. I -am, on the contrary, apt to believe, that no annual produce of grain -ever was so great in England as to supply its inhabitants fifteen -months, _in that abundance with which they feed themselves in a year of -plenty_. If this be the case, at what may we compute the surplus in -ordinary good years? I believe it will be thought a very good year which -produces _full_ subsistence for fifteen months; and crops which much -exceed this are, I believe, very rare. Here follow my reasons for -differing so widely from the gentleman whom I have cited. If I am in the -wrong, I shall have the most sensible pleasure in being set right; and -nothing will be so easy to any one who has access to be better informed -as to facts than I can pretend to be. - -I consider all the yearly crop of grain in England as consumed at home, -except what is exported; for I cannot admit that any considerable -quantity is lost: that it may be abused, misapplied, drank when it -should be eat, I do not deny. These are questions which do not regard -the present inquiry. Whether therefore it be consumed in bread, beer, -spirits, or by animals, I reckon it consumed; and in a year when the -greatest consumption is made at home, this I call _the abundance with -which the inhabitants feed themselves in years of plenty_. Now I find in -the performance above cited, a state of exportations for five years, -from 1746 to 1750 inclusive, where the quantity exported amounts in all -to 5,289,847 quarters of all sorts of grain. This is not one year’s -provision, according to Sir William Petty’s calculation, of which we -have made mention above. The bounties upon corn (continues the author -abovementioned) have amounted in one year to 500,000_l._ sterling. He -does not mention the year, and I am little able to dispute that matter -with him. I suppose it to be true; and still farther, let it be -understood that the whole exportation was made out of the produce of one -crop. I do not find that this sum answers to the bounty upon 3,000,000 -of quarters, which, according to Sir William Petty, make six months -provision. I calculate thus. The bounty upon wheat is 5_s._ a quarter, -that upon rye 3_s._ 6_d._ that upon barley 2_s._ 6_d._ these are the -species of grain commonly exported: cast the three premiums together, -and divide by three, the bounty will come to 3_s._ 8_d._ at a medium; at -which rate 500,000_l._ sterling will pay the bounty of 2,727,272 -quarters of grain. An immense quantity to be exported! but a very -inconsiderable part of a crop supposed capable to maintain England for -five years. It may be answered, that the great abundance of a plentiful -year is considerably diminished when a scanty crop happens to preceed -it, or to follow upon it. In the first case, it is sooner begun upon; in -the last, it supplies the consumption in the year of scarcity, -considerably. This I allow to be just; but as it is not uncommon to see -a course of good years follow one another, the state of exportation at -such times must certainly be the best, nay, the only method of judging -of the real extent of superfluity. - -On the other hand, I am apt to believe, that there never was a year of -such scarcity as that the lands of England did not produce greatly above -six months subsistence, _such as the people are used to take in years of -scarcity_. Were six months of the most slender subsistence to fail, I -imagine all Europe together might perhaps be at a loss to supply a -quantity sufficient to prevent the greatest desolation by famine. - -As I have no access to look into records, I content myself with less -authentic documents. I find then by the London news-papers, that, from -the 9th of April to the 13th of August 1757, while great scarcity was -felt in England, there were declared in the port of London no more than -71,728 quarters of wheat, of which 15,529 were not then arrived. So that -the whole quantity there imported to relieve the scarcity, was 56,199 -quarters. Not one month’s provision for the inhabitants of that city, -reckoning them at 800,000 souls! One who has access to look into the -registers of the trade in grain, might in a moment determine this -question. - -Another reason which induces me to believe what the above arguments seem -to prove, I draw from what I see at present passing in Germany; I mean -the universal complaints of scarcity in those armies which are now -assembled, [1757] When we compare the numbers of an army, let it be of a -hundred thousand men, suppose the suite of it to be as many more, and -forty thousand horses, all strangers, (for the others I reckon nothing -extraordinary) what an inconsiderable number does this appear, in -proportion to the inhabitants of this vast country of Germany! Yet let -us observe the quantity of provisions of all sorts constantly coming -down the Rhine, the Moselle, and many other rivers, collected from -foreign provinces on all hands; the numbers of cattle coming from -Hungary; the loads of corn from Poland; and all this in a year which has -produced what at any other time would have been called an excellent -crop. After these foreign supplies, must not one be astonished to find -scarcity complained of in the provinces where the war is carried on, and -high prices every where else. From such circumstances I must conclude, -that people are generally very much deceived in their estimation of -plenty and scarcity, when they talk of two or three years subsistence -for a country being found upon their lands at once. I may indeed be -mistaken in my conclusions; but the more I have reflected upon this -subject, the more I find myself confirmed in them, even from the -familiar examples of the sudden rise of markets from very inconsiderable -monopolies, and of their sudden fall by inconsiderable quantities -imported. I could cite many examples of these vicissitudes, were it -necessary, to prove what every one must observe. - -I come now to resolve a difficulty which naturally results from this -doctrine, and with which I shall close the chapter. - -If it be true, that a crop in the most plentiful year is nearly consumed -by the inhabitants, what becomes of them in years of scarcity; for -nobody can deny, that there is a great difference between one crop and -another. To this I answer, first, That I believe there is also a very -great deceit, or common mistake, as to the difference between crops: a -good year for one soil, is a bad one for another. But I shall not -enlarge on this; because I have no sufficient proof of my opinion. The -principal reason upon which I found it, is, that it is far from being -true, that the same number of people consume always the same quantity of -food. In years of plenty every one is well fed; the price of the lowest -industry can procure subsistence sufficient to bear a division; food is -not so frugally managed; a quantity of animals are fatted for use; all -sorts of cattle are kept in good heart; and people drink more largely, -because all is cheap. A year of scarcity comes, the people are ill fed, -and when the lower classes come to divide with their children, the -portions are brought to be very small; there is great oeconomy upon -consumption, few animals are fatted for use, cattle look miserably, and -a poor man cannot indulge himself with a cup of generous ale. Add to all -these circumstances, that in England the produce of pasture is very -considerable, and it commonly happens, that a bad year for grain, which -proceeds from rains, is for the same reason a good year for pasture; and -in the estimation of a crop, every circumstance must be allowed to -enter. - -From what has been said I must conclude in general, that the best corn -country in the world, provided slavery be not established, does not -produce wherewithal fully to maintain, as in years of plenty, one third -more than its own inhabitants; for if this should be the case, all the -policy of man would not be able to prevent the multiplication of them, -until they arose nearly up to the mean proportion of the produce in -ordinary years, and it is only what exceeds this standard, and proceeds -from unusual plenty, which can be exported. Were plentiful years more -common, mankind would be more numerous; were scarcity more frequent, -numbers would be less. Numbers therefore must ever be, in my humble -opinion, in the ratio of food, and multiplication will never stop until -the balance comes to be nearly even. - ------------------------------------------------------------------------- - - - - - CHAP. XVIII. - _Of the Causes and Consequences of a Country’s being fully peopled._ - - -In the titles of my chapters, I rather seek to communicate a rough idea -of the subject than a correct one. In truth and in reason, there is no -such thing as a country actually peopled to the full, if by this term -numbers only are meant, without considering the proportion they bear to -the consumption they make of the productions of their country. I have in -a former chapter established a distinction between the physical and -moral impossibility of increasing numbers. As to the physical -impossibility, the case can hardly exist, because means of procuring -subsistence from other countries, when the soil refuses to give more, -seem, if not inexhaustible, at least very extensive. A country therefore -fully peopled, that is, in a physical impossibility of increasing their -numbers, is a chimerical and useless supposition. The subject here under -consideration is, the situation of a people, who find it their interest -to seek for subsistence from abroad. This may happen, and commonly does, -long before the country itself is fully improved: it decides nothing as -to the intrinsic fertility of the soil, and proves no more, than that -the industry of the free hands has made a quicker progress in -multiplying mouths, than that of the farmers in providing subsistence. -To illustrate this idea, let me propose the following question. - -Is multiplication the efficient cause of agriculture, or is agriculture -that of multiplication? - -I answer, that multiplication is the efficient cause of agriculture, -though I allow, that, in the infancy of society, the spontaneous fruits -of the earth, which are free to all, are the efficient cause of a -multiplication, which may rise to the exact proportion of them; as has -been said above. This must be explained. - -I have already distinguished the fruits of agriculture from the earth’s -spontaneous production: I must farther take notice, that when I employ -the term agriculture in treating of modern policy, I always consider it -to be exercised as a trade, and producing a surplus, and not as the -direct means of subsisting, where all is consumed by the husbandman, as -has been fully explained above. We have said, that it is the surplus -produced from it, which proves a fund for multiplying inhabitants. Now -there must be a demand for this surplus. Every person who is hungry will -make a demand, but every such demand will not be answered, and will -consequently have no effect. The demander must have an equivalent to -give: it is this equivalent which is the spring of the whole machine; -for without _that_ the farmer will not produce any surplus, and -consequently he will dwindle down to the class of those who labour for -actual subsistence. The poor, who produce children, make an ineffectual -demand, and when they cannot increase the equivalent, they divide the -food they have with the new comers, and prove no encouragement to -agriculture. By dividing, the whole become ill fed, miserable, and thus -extinguish. Now because it is the _effectual_ demand, as I may call it, -which makes the husbandman labour for the sake of the equivalent, and -because this demand increases, by the multiplication of those who have -an equivalent to give, therefore I say that multiplication is the cause, -and agriculture the effect. On the other hand, I think the spontaneous -fruits of the earth, as in the supposition, may be considered as the -cause of a certain limited multiplication; because in that case there is -no equivalent demanded. The earth produces, whether her fruits be -consumed or not: mankind are fed upon these gratuitously, and without -labour, and the existence of the fruits is anterior to the production of -those who are to consume them. Those who are first fed, draw their -vigour from their food, and their multiplication from their vigour. -Those who are produced, live freely upon their parent earth, and -multiply until all the produce be consumed: then multiplication stops, -as we have said; _but establish agriculture_, and multiplication will go -on a-new. Consequently, my reader will say, agriculture is as much the -cause of this new multiplication, as the spontaneous fruits were of the -first. Here is a very natural conclusion, which seems directly to -contradict what we have been endeavouring to prove; but the knot is -easily untied. We have seen how the existence of agriculture must depend -upon the industry of man; that is, on the only means _of establishing -agriculture_: now, as this industry is chiefly promoted by the motive of -providing for our children, the procreation of them must be considered -as the first, or at least the most palpable political cause of setting -mankind to work, and therefore may be considered as anterior to -agriculture; whereas, on the other hand, the earth’s spontaneous -productions being in small quantity, and quite independent of man, -appear, as it were, to be furnished by nature, in the same way as a -small sum is given to a young man, in order to put him in a way of -industry, and of making his fortune. The small sum sets him a-going, but -it is his industry which makes the fortune. From this illustration it -appears, that if the demand for food can be more readily supplied from -abroad than from home, it will be the foreign subsistence, which will -preserve numbers, produced from _industry_, not from _domestic -agriculture_; and these numbers will, in their turn, produce an -advancement of it at home, by inspiring a desire in the husbandman to -acquire the equivalent which their countrymen give to strangers. - -Such nations, whose statesmen have not the talent to engage the -husbandmen to wish for the equivalent, which the labour of their -fellow-citizens can produce; or, in other words, who cannot create -reciprocal wants and dependencies among their subjects, must stand in a -moral incapacity of augmenting in numbers. Of such states we have no -occasion to treat in this chapter, any more than of those who are -supposed to be in the physical incapacity of multiplying: our point of -view is, to examine the natural consequences resulting from a demand for -subsistence extending itself to foreign countries. This I take to be the -mother of industry at home, as well as of trade abroad; two objects -which come to be treated of in the second book. - -A country may be fully peopled (in the sense we understand this term) in -several different ways. It may be fully stocked at one time with six -millions, and at another may maintain perhaps eight or even nine -millions with ease, without the soil’s being better cultivated or -improved. On the other hand, a country may maintain twenty millions with -ease, and by being improved as to the soil, become overstocked with -fifteen millions. These two assertions must be explained. - -The more frugal a people are, and the more they feed upon the plentiful -productions of the earth, the more they may increase in numbers. - -Were the people of England to come more into the use of living upon -bread, and give over consuming so much animal food, inhabitants would -certainly increase, and many rich grass fields would be thrown into -tillage. Were the French to give over eating so much bread, the Dutch so -much fish, the Flemish so much garden stuff, and the Germans so much -sourkraut, and all take to the English diet of pork, beef, and mutton, -their respective numbers would soon decay, let them improve their -grounds to the utmost. These are but reflections, by the by, which the -reader may enlarge upon at pleasure. The point in hand is, to know what -are the consequences of a country’s being so peopled, no matter from -what cause, that the soil, in its actual state of fertility, refuses to -supply a sufficient quantity of such food as the inhabitants incline to -live upon. These are different according to the diversity of spirit in -the people. - -If they be of an indolent disposition, directed in their political -oeconomy by established habits and old prejudices, which prevent -innovations, although a change of circumstances may demand them, the -effect will be to put a stop to population; which cannot augment without -an increase of food on one hand, and of industry on the other, to make -the first circulate. These must go hand in hand: the precedence between -them is a matter of mere curiosity and speculation. - -If, on the contrary, a spirit of industry has brought the country to a -certain degree of population, this spirit will not be stopt by the want -of food; it will be brought from foreign countries, and this new demand, -by diminishing among them the quantity usually produced for their own -subsistence, will prompt the industrious to improve their lands, in -order to supply the new demand without any hurt to themselves. Thus -trade has an evident tendency towards the improvement of the world in -general, by rendering the inhabitants of one country industrious, in -order to supply the wants of another, without any prejudice to -themselves. Let us make a step further. - -The country fully stocked can offer in exchange for this food, nothing -but the superfluity of the industry of the free hands, for that of the -farmers is supposed to be consumed by the society; except indeed some -species of nourishment or productions, which, being esteemed at a higher -value in other countries than in those which produce them, bring a more -considerable return than the value of what is exported, as when raw silk -and delicate wines, &c. are given in exchange for grain and other -provisions. - -The superfluity of industry must, therefore, form the principal part of -exportation, and if the nation fully stocked be surrounded by others -which abound in grain and articles of subsistence, where the inhabitants -have a taste for elegance, and are eager of acquiring the manufactures -and improvements of their industrious neighbours; it is certain, that a -trade with such nations will very considerably increase the inhabitants -of the other, though fully stocked, relatively to the production of -their own soil; and the additional numbers will only increase that of -manufacturers, not of husbandmen. This is the case with Holland, and -with many large trading cities which are free and have but a small -territory. - -If, on the contrary, the nation fully stocked be in the neighbourhood of -others who take the same spirit as itself, this supply of food will -become in time more difficult to be had, in proportion as their -neighbours come to supply their own wants. They must therefore seek for -it at a greater distance, and as soon as the expence of procuring it -comes to exceed the value of the labour of the free hands employed in -producing the equivalent, their work will cease to be exported, and the -number of inhabitants will be diminished to the proportion of the -remaining food. - -I do not say that trade will cease on this account; by no means. Trade -may still go on, and even be more considerable than before; but it will -be a trade which never can increase inhabitants, because for this -purpose there must be subsistence. It may have however numberless and -great advantages: it may greatly advance the wealth of the state, and -this will purchase even power and strength. A trading nation may live in -profound peace at home, and send war and confusion among her enemies, -without even employing her own subjects. Thus trade without increasing -the inhabitants of a country can greatly add to its force, by arming -those hands which she has not fed, and employing them for her service. - ------------------------------------------------------------------------- - - - - - CHAP. XIX. - _Is the Introduction of Machines into Manufactures prejudicial to the - Interest of a State, or hurtful to Population?_ - - -This I find has been made a question in modern times. The antients held -in great veneration the inventors of the saw, of the lathe, of the -wimble, of the potters wheel; but some moderns find an abuse in bringing -mechanism to perfection: (see _Les Interets de la France mal entendus_, -p. 272. 313.) the great Montesquieu finds fault with water mills, though -I do not find that he has made any objection against the use of the -plow. - -Did people understand one another, it would be impossible that such -points could suffer a dispute among men of sense; but the circumstances -referred to, or presupposed, which authors almost always keep in their -eye, though they seldom express them, render the most evident truths -susceptible of opposition. - -It is hardly possible suddenly to introduce the smallest innovation into -the political oeconomy of a state, let it be ever so reasonable, nay -ever so profitable, without incurring some inconveniencies. A room -cannot be swept without raising dust, one cannot walk abroad without -dirtying one’s shoes; neither can a machine, which abridges the labour -of men, be introduced _all at once_ into an extensive manufacture, -without throwing many people into idleness. - -In treating every question of political oeconomy, I constantly suppose a -statesman at the head of government, systematically conducting every -part of it, so as to prevent the vicissitudes of manners, and -innovations, from hurting any interest within the commonwealth, by their -natural and immediate effects or consequences. When a house within a -city becomes crazy, it is taken down; this I call systematical ruin: -were it allowed to fall, the consequences might be fatal in many -respects. In like manner, if a number of machines are all at once -introduced into the manufactures of an industrious nation, (in -consequence of that freedom which must necessarily be indulged to all -sorts of improvement, and without which a state cannot thrive) it -becomes the business of the statesman to interest himself so far in the -consequences, as to provide a remedy for the inconveniencies resulting -from the sudden alteration. It is farther his duty to make every -exercise even of liberty and refinement an object of government and -administration; not so as to discourage or to check them, but to prevent -the revolution from affecting the interests of the different classes of -the people, whose welfare he is particularly bound to take care of. - -The introduction of machines can, I think, in no other way prove hurtful -by making people idle, than by the suddenness of it: and I have -frequently observed, that all sudden revolutions, let them be ever so -advantageous, must be accompanied with inconveniencies. A safe, -honourable, and lasting peace, after a long, dangerous, and expensive -war, forces a number of hands to be idle, and deprives them of bread. -Peace then may be considered as a machine for defending a nation, at the -political loss of making an army idle; yet no body, I believe, will -alledge that in order to give bread to soldiers, sutlers, and -undertakers, the war should be continued. But here I must observe, that -it seems to be a palpable defect in policy, if a statesman shall neglect -to find out a proper expedient (at whatever first expence it may be -procured) for giving bread to those who, at the risk of their lives, -have gone through so many fatigues for the service of their country. -This expence should be charged to the account of the war, and a state -ought to consider, that as their safety required that numbers should be -taken out of the way of securing to themselves a lasting fund of -subsistence, which would have rendered them independent of every body, -(supposing that to have been the case) she becomes bound by the contract -of society, which ties all together, to find them employment. Let me -seek for another illustration concerning this matter. - -I want to make a rampart cross a river, in order to establish a bridge, -a mill, a sluice, &c. For this purpose, I must turn off the water, that -is, stop the river; would it be a good objection against my improvement -to say, that the water would overflow the neighbouring lands, as if I -could be supposed so improvident as not to have prepared a new channel -for it? Machines stop the river; it is the business of the state to make -the new channel, as it is the public which is to reap the benefit of the -sluice: I imagine what I have said will naturally suggest an answer to -all possible objections against the introduction of machines; as for the -advantages of them, they are so palpable that I need not insist upon -them. There is however one case in which I think they may be disapproved -of; but it seems a chimerical supposition, and is brought in here for no -other purpose than to point out and illustrate the principle which, -influences this branch of our subject. - -If you can imagine a country peopled to the utmost extent of the -fertility of the soil, and absolutely cut off from any communication -with other nations; all the inhabitants fully employed in supplying the -wants of one another, the circulation of money going forward regularly, -proportionally, and uniformly through every vein, as I may call it, of -the political body; no hidden or extraordinary demand at any time for -any branch of industry; no redundancy of any employment; no possibility -of increasing either circulation, industry, or consumption. In such a -situation as that I should disapprove of the introduction of machines, -as I disapprove of taking physic in an established state of perfect -health. I disapprove of a machine only because it is an innovation in a -state absolutely perfect in these branches of its political oeconomy; -and where there is perfection there can be no improvement. I farther -disapprove of it because it might force a man to be idle, who would be -found thereby in a physical impossibility of getting his bread, in any -other way than that in which he is supposed to be actually employed. - -The present situation of every country in Europe, is so infinitely -distant from this degree of perfection, that I must consider the -introduction of machines, and of every method of augmenting the produce -or facilitating the labour and ingenuity of man, as of the greatest -utility. Why do people wish to augment population, but in order to -compass these ends? Wherein does the effect of a machine differ from -that of new inhabitants? - -As agriculture, exercised as a trade, purges the land of idle mouths, -and pushes them to a new industry which the state may turn to her own -advantage; so does a machine introduced into a manufacture, purge off -hands which then become superfluous _in that branch_, and which may -quickly be employed in another. - -If therefore the machine proves hurtful, it can only be because it -presents the state with an additional number of hands bred to labour; -consequently, if these are afterwards found without bread, it must -proceed from a want of attention in the statesman: for an industrious -man made idle, may constantly be employed to advantage, and with profit -to him who employs him. What could an act of naturalization do more, -than furnish industrious hands forced to be idle, and demanding -employment? Machines therefore I consider as a method of augmenting -(virtually) the number of the industrious, without the expence of -feeding an additional number: this by no means obstructs natural and -useful population, for the most obvious reasons. - -We have shewn how population must go on, in proportion to subsistence, -and in proportion to industry: now the machine eats nothing, so does not -diminish subsistence, and industry (in our age at least) is in no danger -of being overstocked in any well governed state; for let all the world -copy your improvements, they still will be the scholars. And if, on the -contrary, in the introduction of machines you are found to be the -scholars of other nations, in that case you are brought to the dilemma -of accepting the invention with all its inconveniencies, or of -renouncing every foreign communication. - -In speculations of this kind, one ought not, I think, to conclude, that -experience _must_ of necessity prove what we imagine our reasoning has -pointed out. - -The consequences of innovations in political oeconomy, admit of an -infinite variety, because of the infinite variety of circumstances which -attend them: no reasoning, therefore, however refined, can point out a -priori, what upon such occasions must indispensably follow. The -experiment must be made, circumstances must be allowed to operate; -inconveniencies must be prevented or rectified as far as possible; and -when these prove too many, or too great to be removed, the most -rational, the best concerted scheme in theory must be laid aside, until -preparatory steps be taken for rendring it practicable. - -Upon the whole, daily experience shews the advantage and improvement -acquired by the introduction of machines. Let the inconveniencies -complained of be ever so sensibly felt, let a statesman be ever so -careless in relieving those who are forced to be idle, all these -inconveniencies are only temporary; the advantage is permanent, and the -necessity of introducing every method of abridging labour and expence, -in order to supply the wants of luxurious mankind, is absolutely -indispensable, according to modern policy, according to experience, and -according to reason. - ------------------------------------------------------------------------- - - - - - CHAP. XX. - _Miscellaneous Observations upon Agriculture and Population._ - - -I have hitherto considered the object of agriculture, as no more than -the raising of grain; the food of mankind has been estimated by the -quantity they consume of that production; and husbandmen have been -supposed to have their residence in the country. As my subject has but -an indirect connection with the science of agriculture, I have -simplified many things complex in themselves, the better to adapt them -to the principal object of my inquiry, and the better to keep my -attention fixed upon one idea at a time. I am now going to return to -some parts of my subject, which I think I have treated too -superficially; and to examine, as I go along, some miscellaneous -questions which will naturally arise from what is to be said. - -[Sidenote: QUEST. I.] - -Almost every one who has writ upon population, and upon agriculture, -considered as an essential concomitant of it, has recommended the equal -distribution of the property of lands as useful to both: a few -reflections upon this question, after what has been thrown out in the -course of the foregoing chapters, may not be improper; more in order to -examine and apply the principles laid down, than with a view to combat -the opinion of others. - -I have already, upon several occasions, taken notice of the great -difference between the political oeconomy of the antients, and that of -modern times; for this reason, among others, that I perceive the -sentiments of the antients, which were founded upon reason and common -sense, relative to their situation, have been adopted by some moderns, -who have not perhaps sufficiently attended to the change of our manners, -and to the effects which this change must operate upon every thing -relative to our oeconomy. The antients recommended strongly an equal -distribution of lands as the best security for liberty, and the best -method, not only to preserve an equality among the citizens, but also to -increase their number. - -In those days, the citizens did not compose one half of the state -relatively to numbers; and there was almost no such thing as an -established monied interest, which can no where be founded but upon -trade, and an extensive industry. In those days there was no solid -income but in land: and that being equally divided among the citizens, -was favourable to their multiplication and produced equality. But in our -days, riches do not consist in lands only; nay we sometimes find the -most considerable proprietor of these in very indifferent circumstances; -loaded with debts, and depending upon the indulgence of men who have not -an acre, and who are their creditors. Let us therefore divide our lands -as we please, we shall never produce equality by it. This is an -essential difference between us and the antients, with respect to one -point. Now as to the other, population. - -The equal division of lands, no doubt, greatly tends to increase the -numbers of one class of inhabitants, to wit, the landlords. In antient -times, as has been observed, the chief attention was to increase the -citizens, that is the higher classes of the state; and the equal -division of property so effectually produced this effect, that the Greek -states were obliged to allow the exposition of children; and Aristotle -looked upon it as a thing indispensably necessary, as M. de Montesquieu -has very judiciously observed. The multiplication of the lowest classes, -that is of the slaves, never entered into the consideration of the -public, but remained purely a matter of private concern; and we find it -was a question with some, whether or not it was worth while to breed -from them at all. But in our days the principal object is to support the -lower classes from their own multiplication, and for this purpose, an -unequal division of property seems to me the more favourable scheme; -because the wealth of the rich falls naturally into the pockets of the -industrious poor; whereas the produce of a very middling fortune, does -no more than feed the children of the proprietor, who in course become -very commonly and very naturally an useless burthen upon the land. Let -me apply this to an example. Do we not familiarly observe, that the -consolidation of small estates, and the diminution of gentlemens -families of middling fortunes, do little harm to a modern state. There -are always abundance of this class of inhabitants to be found whenever -there is occasion for them. When a great man buys up the lands of the -neighbouring gentry, or small proprietors, all the complaints which are -heard, turn upon the distress which thence result to the lower classes, -from the loss of their masters and protectors; but never one word is -heard of that made by the state, from the extinction of the former -proprietor’s family. This abundantly shews that the object of modern -attention is the multiplication of the lower classes, consequently it -must be an inconsistency to adopt the practice of the antients, when our -oeconomy is entirely opposite to theirs. - -[Sidenote: QUEST. II.] - -Let this suffice to point out how far the difference of our manners -should influence the division of our lands. I shall now examine a -question relative to the science of agriculture, not considered as a -method of improving the soil, (this will come in more naturally -afterwards) but of making it produce to the best advantage, supposing it -to be already improved. - -In treating of the productions of the earth, in consequence of -agriculture, I have all along distinguished them from those which -spontaneously proceed from the force of nature: these are the immediate -gift of God, those are the return of the labour of his creatures. Every -one knows that the labour of mankind is not in proportion to their -numbers, but to their industry. The produce therefore of agriculture -must be estimated, not according to the quantity of fruits only, but -also according to the labour employed to produce them. These things -premised, the question here proposed to be examined arises, viz. Which -species of agriculture is the most advantageous to a modern society, -that which produces the greatest quantity of fruits _absolutely_ taken, -or that which produces the greatest quantity _relatively_ taken, I mean -to the labour employed? - -This question might easily be resolved, in general, by the application -of principles already deduced; although it cannot admit of a direct -answer, in the manner I have put it. One, therefore, may say -indeterminately, that species is the best which produces a surplus the -best proportioned to the industry, and to the demands of all the free -hands of the state. But as this solution would not lead me to the object -I have in view, I have thrown in an alternative in order to gain -attention to the principles which I am going to examine, and which -influence and determine the establishment of the one or the other -species of agriculture. - -The principal difficulty I find in the examination of this question, is -to distinguish the effects of agriculture from those of the spontaneous -production of the earth. The returns from pasture, for example, -relatively taken, are, as we have observed, both from reason and from -experience, far greater than those of corn fields, (vid. supra, chap. -8.) though I little doubt but that, absolutely taken, the case is quite -otherwise; that is to say, that an acre of the finest corn land will -produce more nourishment for man, than an equal portion of the finest -pasture: but here we are following the proportion of space and produce, -not of labour; for if the produce of both acres be considered relatively -to the _labour_ necessary for the cultivation, as well as to the extent; -the produce of pasture will be found far greater: this however I ascribe -to the spontaneous operation of nature, and not to the superior utility -of this kind of agriculture. - -Since therefore it is impossible, rightly to separate the effects of -nature from those of art and industry, in this species of improvement, -let us confine our speculations to those only which have for their -object the turning up the surface, and the sowing or cultivating annual -vegetables. For the better conveying our ideas, let us take an example, -and reason from a supposition. - -Let me suppose an island of a small extent and fruitful soil, -sufficiently improved, and cultivated after the manner of the best lands -of England, in the ordinary method of farming. - -In that case we may infer, from what was laid down in the 8th chapter, -that the number of people employed about farming may be nearly about one -half of the whole society. Let the whole inhabitants of the island be -called 1000, that is 500 farmers, and as many free hands. The 500 -farmers must then feed 1000; the 500 free hands must provide for all the -other wants of 1000. By this supposition, and allowing that there is an -equal degree of industry in these two classes, the providing of food -will appear to be an occupation just equal to that of providing for all -other wants. From this let me draw a few consequences, by the by, before -I proceed. - -Experience shews that in all countries there are found many who are here -understood to be included in the class of free hands, who consumed -infinitely more of other things than of food; consequently we must -conclude, that as the wants of some do far exceed the proportion of -their food, so in order to bring the balance even, the wants of others -must fall far below it. That this is the case, I believe, will be found -by experience. Let me follow this thought a little farther. - -In proportion as a greater number than one half of the people becomes -employed in agriculture, must it not follow, that all other work must -come to bear a smaller proportion than formerly to the food consumed; -consequently the manner of living must become more simple. Now we have -shewn that what we call wants, in contradistinction to food, can only be -supplied by the free hands, and that these again can only be fed from -the surplus of the farmers; consequently the fewer wants, and the fewer -free hands, the less surplus, which of course infers an agriculture less -productive, relatively to the number of farmers. Were, therefore, a -whole society employed in agriculture, carried on as a direct method of -subsisting, there would be no surplus, consequently no free hands; -consequently no work for supplying any want but food. This may be -thought an impossible supposition. If you suppose agriculture exercised -as a trade, I allow it to be so, but not if it be carried on as a method -of subsisting only; and if you throw away the idea of labour altogether, -and suppose mankind in its infancy, that is in paradise, living upon the -spontaneous fruits of the earth, and quite naked, you will find the case -not only supposable, but exactly so. It is exactly so among the cattle: -every one of them may be considered in a parallel situation with a -husbandman who works for his own nourishment. They feed upon the -spontaneous fruits of the earth, and have no surplus; and having no -other want, they are freed from every other care. Let me return now to -the island. - -The 500 farmers feed 1000; and we suppose the lands laboured as in a -good English farm. One of the society proposes to augment the number of -inhabitants by introducing a more operose species of agriculture, the -produce of which may be _absolutely_ greater, though relatively less. - -The first question the statesman would naturally put to this reformer -would be, What is your view in increasing the number of our inhabitants, -is it to defend us against our enemies, is it to supply the wants of -strangers, and thereby to enrich ourselves, is it to supply our own -_wants_ with more abundance, or is it to provide us more abundantly with -_food_? I can hardly find out any other rational view in wishing for an -additional number of people in any country whatsoever. Let it be -answered, that all these ends may be thereby obtained: and now let us -examine how far this reformation upon agriculture will have the effect -of increasing inhabitants, how far such increase will procure the ends -proposed, and how far the execution of such a plan is a practicable -scheme to an industrious people. - -If the inhabitants be not sufficiently fed, which is the only thing that -can prevent their multiplication, it must proceed from one of two -causes. Either _first_, that those do procreate who cannot produce an -equivalent for the food of their children; or _secondly_, that industry -making a quicker progress than agriculture, the industrious come too -strongly in competition with one another, for the surplus of food to be -found; which has the effect of raising the prices of it, and reducing -the portions too low to suffer a division; and thereby of preventing -marriage and multiplication in the lower classes of the free hands. - -In the first case, it is to no purpose to increase the produce of -agriculture, by rendering it more expensive; for those who have no -equivalent to give when food is cheap, will still be in greater -necessity when it rises in the price. In the second case, it is to no -purpose to diminish the surplus of the farmers, because the supposition -proves that the balance is already too heavy upon the side of the free -hands, that is, that the surplus of the farmers is already become -insufficient fully to feed them. - -Two remedies may be proposed for this inconveniency, the one tending to -population, the other to depopulation; and as the end to be compassed is -to set the balance even between husbandmen and free hands, I shall -explain both, and point out _how far_ from principles it appears, that -in either way the end may be attained. - -That tending to increase population is the remedy proposed, and, no -doubt, was it possible to introduce a new system of agriculture of a -larger absolute production, although the relative production should be -less, the inhabitants of the state becoming thereby better fed, though -at a greater cost, would infallibly multiply. Let me therefore examine -this first part before I say any thing of the other; and for the greater -distinctness I shall return to my example, and examine both the -consequences and the possibility of putting such a plan in execution. - -Let me suppose, that by using the spade and rake, instead of the plow -and harrow, the lands of our island might be brought to produce with -more abundance; this is a method of increasing the expence of -agriculture, which would require an additional number of husbandmen. - -Now, by the supposition, 500 farmers fed, though scantily, the whole of -the inhabitants, that is 1000 persons. If therefore 100 of the free -hands can be engaged to become farmers, the end may be attained: more -nourishment will be produced; the people will be better fed; they will -multiply; that is, their number will rise above 1000. Let us next -endeavour to form a judgment of this increase, and of the consequence of -the revolution. - -The society will now be composed of 600 farmers and 400 free hands. The -600 will certainly produce more fruits than formerly; but as their -labour is relatively less productive by the supposition, it will be -impossible for them to furnish surplus equal to their own consumption; -consequently, the free hands never will be able to rise to a number -equal to theirs; that is, the society will never get up to 1200. But we -supposed, that the other wants of the society required the industry of -one half of the inhabitants to supply them; that is, of all the 500 free -hands; and, as the number of these has been already reduced, and can -never more rise to that proportion, as has been said, must not either -the people voluntarily adopt a more simple way of living; or must not -the demand for work rise very considerably? Let me consider the -consequences in both cases. In the first, you perceive, that if the -inhabitants themselves are obliged to simplify their way of living, for -want of hands to supply what they formerly consumed, three of the four -objects proposed by the reformation become impossible to be attained; to -wit, the defending themselves against their enemies, the supplying the -wants of strangers, and the supplying their own with more abundance. And -with regard to the fourth, the being better fed, that must cease to be -the case, the moment the end is obtained; that is, the moment the -inhabitants are multiplied up to the proportion of additional food. -Consequently, by simplifying their way of life, and allowing farming to -stand upon the new footing, they compass not any one of the ends they -proposed. - -Next, if we suppose, that the inhabitants do not incline to simplify -their way of life, but that the wealthy among them insist upon -purchasing all the instruments of luxury which they formerly were used -to enjoy, must not demand for work greatly rise, and must not, of -consequence, an additional encouragement be given to that species of -labour which had been diminished, in taking 100 persons from industry, -to throw them into the class of farmers? Will not this make them quickly -desert their spade, and the rather, as they have taken to an employment -less lucrative than that of farming, according to the former systems? - -So much for the consequences which would follow, in case the plan -proposed was found practicable; that is, supposing it to be a thing -possible to transport into agriculture a part of an industrious society, -already otherwise employed, and to change _all at once_ the relative -proportion between those who supply food, and those who purchase it with -their industry. We have begun, by taking that first step for granted; -and now I am to shew what obstacles will be found in the execution. - -We have said, that it is the multiplicity and complexity of wants which -give an encouragement to agriculture, and not agriculture, or an -abundance of food, which inspires mankind with a disposition to labour. -Now, if this principle be true, the supposition we have proceeded upon -is absurd. I am afraid, both reason and experience will abundantly prove -that it is so. - -The natural and necessary effect of industry, in trades and -manufactures, is to promote the increase of relative husbandry; which, -by augmenting the surplus, tends of course to increase the proportion of -the free hands relatively to the farmers. A river may as easily ascend -to its source, as a people voluntarily adopt a more operose agriculture -than that already established, supposing the lands to be fully improved, -the spirit of industry to prevail on one hand, and the farmers to have -profit only in view on the other. - -What farmer could sell the surplus of an expensive agriculture in -competition with another who exercised a species relatively more -productive? - -When lands are improved, the simplification of agriculture is a -necessary concomitant of industry, because diminishing expence is the -only method of gaining a preference at market. - -[Sidenote: QUEST. III.] - -Whether industry has done hurt to population, by augmenting the -relative, and diminishing the absolute produce of agriculture; or -whether it has done good to it, by encouraging the science in general, -and extending the exercise of it over the face of the earth, is a matter -of fact which I shall leave to others, better informed than I am, to -determine. For my own part, I believe that thousands of examples may be -found of the one and the other. I know corn fields, where villages -formerly stood, the inhabitants of which fed themselves with the pure -produce of absolute agriculture; that is, with a bit of garden ground, -and the milk of a cow: there surely is depopulation: but, at a small -distance from the place where those villages stood, I see corn fields, -where nothing but heath was to be met with; this marks population. I -seek no more than to explain from facts the principles I am endeavouring -to discover, and shall leave general conclusions to others, as I have -already said. - -There is a maxim in law, which may be extended almost to every thing in -this world, _unum quodque eodem modo solvitur quo colligatum est_. -Industry forms this species of absolute agriculture; industry destroys -it. A military force raised the Roman greatness; a military force -destroyed it. A spirit of liberty may form a noble constitution, and a -spirit of liberty may break the same to pieces. The States of Denmark -restrained the royal power and established a free government; the same -States rendered that very power unlimited, and established there the -purest monarchy in Christendom. But these reflections are foreign to our -subject: _Ne sutor ultra crepidam_. I return. - -When industry is set on foot, it gives encouragement to agriculture -exercised as a trade: and by the allurements of ease, which a large -surplus procures to the farmers, it does hurt to that species which is -exercised as a method of subsistence. Lands become more generally and -less thoroughly laboured. In some countries tillage is set on foot and -encouraged; this is an operose agriculture. While industry goes forward, -and while a people can remain satisfied with a nourishment consisting -chiefly of bread, this system of agriculture will subsist, and will -carry numbers very high. If wealth increases, and if those who have it -begin to demand a much greater proportion of work than formerly, while -they consume no more food, then I believe numbers may diminish from the -principles I am now going in quest of. - -I return to the council of the island where the proposition laid down -upon the carpet is, _The scanty subsistence of the inhabitants requires -redress_. - -A Machiavelian stands up (of such there are some in every country) and -proposes, in place of multiplying the inhabitants, by rendering -agriculture more operose, to diminish their number, by throwing a -quantity of corn fields into grass. What is the intention of -agriculture, says he, but to nourish a state? By our operose method of -plowing and sowing, one half of the whole produce is consumed by those -who raise it; whereas by having a great part of our island in pasture, -one half of the husbandmen may be saved. Pray what do you propose to do -with those whom you intend to make idle? replies a citizen. Let them -betake themselves to industry. But industry is sufficiently, nay more -than sufficiently stocked already. If, says Machiavel, the supernumerary -husbandmen be thrown out of a way of living, they may go where they -please; we have no occasion for them, nor for any one who lives only to -feed himself. But you diminish the number of your people, replies the -citizen, and consequently your strength; and if afterwards you come to -be attacked by your enemies, you will wish to have those back again for -your defence, whom in your security you despised. To this the other -makes answer: there you trust to the Egyptian reed. If they be necessary -for feeding us at present, how shall we be able to live while we employ -them as soldiers? We may live without many things, but not without the -labour of our husbandmen. Whether we have our grounds in tillage or in -pasture, if that class be rightly proportioned to the labour required, -we never can take any from it. In those countries where we see princes -have recourse to the land to recruit their armies, we may safely -conclude, that there the land is overstocked; and that industry has not -as yet been able to purge off all the superfluous mouths: but with us -the case is different, where agriculture is justly proportioned to the -number of husbandmen. If I propose a reform, it is only to augment the -surplus, upon which all the state, except the husbandmen, are fed; if -the surplus after the reform is greater than at present, the plan is -good, although 250 of our farmers should thereby be forced to starve for -hunger. - -Though no man is, I believe, capable to reason in so inhuman a style, -and though the revolution here proposed be an impossible supposition, if -meant to be executed all at once, the same effects however must be -produced, in every country where we see corn fields by degrees turned -into pasture; only the change is gradual, industry is not overstocked -any where, and subsistence may be drawn from other countries, where the -operose species of agriculture can be carried on with profit. - -Familiar experience proves the truth of this. I have a corn farm, where -I maintain ten horses and four servants for the cultivation alone: at -the end of the year I find my surplus equal to 40_l._ sterling. If, by -throwing my grounds into grass, I can dismiss three servants and eight -horses, and at the end of the year raise my surplus to 50_l._ sterling, -who doubts of my doing it? Is not this following the doctrine above laid -down? But there is nothing odious in this; because I do not see these -three servants die for hunger, nor is it a consequence they should, as -states are formed. They turn themselves to industry, and food comes from -abroad, in proportion as the country itself produces a less quantity. -Fact and experience prove this assertion, and I cite Holland as an -example, where every branch of operose agriculture is exploded, except -for such productions as cannot be brought from other countries. I -introduced the rough Machiavelian only to set principles in a strong -light, and particularly that concerning the recruiting of armies from -the land, which I take to be both a true one, and one necessary to be -attended to, to wit, that those who must labour for the subsistence of -the society, can be of little use for the defence of a state, in case of -any emergency. Princes have found out the truth of this, and in -proportion as industry has extended itself, regular armies have been -found necessary to be kept up in times of peace, in order to be had in -times of war. A militia composed of people truly industrious, I take to -be far better in speculation than in practice. How would a militia do in -Holland? how admirable was it not formerly in Scotland, Poland, and -Catalonia? And how admirably does it still succeed in the armies of the -house of Austria? I may however be mistaken; for a military and an -industrious spirit may be found compatible with one another in some -particular nations: time perhaps will clear up this matter. Thus much -with regard to a militia. Now as to recruiting a regular army. - -The more they are recruited from the land, the less they desert. The -army of the Russians, for example, now assembled (1758) hardly knows -desertion, those of the house of Austria, taken from certain provinces -where there is almost no industry, are in the same case, also the -militia of France which I consider as regular troops. On the other hand, -those armies which are raised in the countries where industry has taken -root are chiefly composed of loose fellows, the excrements of populous -cities, the sons of vice and idleness, who have neither domicil nor -attachment. These are soldiers truly by trade, and make a trade of it; -how many thousands of such are now to be found? they come to market -every season, and the best bidder has them while he can hold them. Some -princes make a point not to receive their own deserters back, but accept -of those who have committed the same infidelity to others; while others -content themselves with punishing those who fail in their attempt to -desert, but receive them back when they return of their own accord, -after having accomplished their desertion. All is now become commerce, -and seems to be regulated by the principles of it. I return to our -agriculture. - -Does not the exposition we have now given of these principles tend to -cast a light upon the first question dismissed in this chapter, to wit, -the effects of an equal and an unequal distribution of the property of -lands? - -When these are once well cultivated and improved, it is of no -consequence to whom the property belongs; for by the property of such -lands I only can mean the surplus, as we have abundantly explained -elsewhere. Let therefore the property of all the lands of a kingdom, -fully improved, belong to the state, or to any number of individuals, -however few, there is no question of improvement; no difference as to -agriculture, no difference as to population, according to modern policy. -So long as the whole is well cultivated and made to produce, by a set of -men I call farmers, the end is fully obtained; and according to the -nature of the agriculture, which many different circumstances of taste -and manner of living has introduced, larger or smaller portions of land -must be allotted to each of them. - -If you suppose a country not as yet improved, as many are, then, the -case becomes quite different, and small possessions are necessary, both -for multiplying the inhabitants and for improving the soil. In this -supposition the most operose agriculture may be carried on in -competition with the most lucrative; because when there is a question of -improvement, there is frequently a considerable outgoing instead of any -surplus after paying the labour. - -Agriculture for improvement can be carried on by none but those who have -wealth and superfluity, and is prosecuted with a view to future, not to -present advantage: of this we shall treat in another place. For I -consider it as a quite different operation, influenced by different -principles, and no ways to be confounded with the present subject of -inquiry. But I have insensibly been wandering through an extensive -subject, and it is now time to return. - -I have said above that a river might as easily ascend to its source, as -an industrious people voluntarily adopt a more operose system of -agriculture than that already established, while the spirit of industry -prevails on one hand, and while farmers have profit only in view on the -other. In consequence of this position, I have treated the plan proposed -for augmenting the inhabitants of the island, by the introduction of a -more operose agriculture as absurd, and so it certainly is: but let me -throw in a circumstance which affects the spirit of that people, and the -plan becomes plausible and easy. - -Let a part of the wealthy proprietors of the lands take a taste for -agriculture. Let a Tull, a Du Hamel turn agriculture into an object of -luxury, of amusement. Let this science be turned into a Missisippi, or -South Sea scheme. Let the rich be made to believe that treasures are to -be found at a small expence, laid at first out upon farming, and you -will soon see the most operose species of the science go forward, and -the produce of it come to market and be sold, in spite of all -competition. My Lady Duchess’s knotting may be sold at so much a pound, -as well as that performed by a girl who does not spend six pence a day; -but if the one and the other be considered relatively to the expence of -the manufacturer, every knot of my Lady’s will be found to have cost as -much as a pound of the other. The Duchess’s pound, however, increases -the quantity of knots; and so does my Lord’s farm the mass of -subsistence for the whole society. The nation also gains by his -extravagance having taken a turn, which may produce the permanent good -effect of improving a part of the country, though at an expence -infinitely beyond the value of it. I must now again touch upon another -part of my subject, which I think has been treated too superficially. - -In a former chapter I have shewn how industry has the natural effect of -collecting into towns and cities the free hands of a state, leaving the -farmers in their farms and villages. This distribution served the -purpose of explaining certain principles; but when examined relatively -to other circumstances which at that time I had not in my eye, it will -be found by far too general. Let me therefore add some farther -observations upon that matter. - -The extensive agriculture of plowing and sowing, is the proper -employment of the country, and is the foundation of population in every -nation fed upon its own produce. Cities are commonly surrounded by -kitchen gardens, and rich grass fields; these are the proper objects of -agriculture for those who live in suburbs, or who are shut up within the -walls of small towns. The gardens produce various kinds of nourishment, -which cannot easily be brought from a distance, in that fresh and -luxuriant state which pleases the eye, and conduces to health. They -offer a continual occupation to man, and very little for cattle, -therefore are properly situated in the proximity of towns and cities. -The grass fields again are commonly either grazed by cows, for the -production of milk, butter, cream, &c. which suffer by long carriage; or -kept in pasture for preserving fatted animals in good order until the -markets demand them; or they are cut in grass for the cattle of the -city. They may also be turned into hay with profit; because the carriage -of a bulky commodity from a great distance is sometimes too expensive. -Thus we commonly find agriculture disposed in the following manner. In -the center stands the city surrounded by kitchen gardens; beyond these -lies a belt of fine luxuriant pasture or hay fields; stretch beyond this -and you find the beginning of what I call operose farming, plowing and -sowing; beyond this lie grazing farms for the fattening of cattle; and -last of all come the mountainous and large extents of unimproved or ill -improved grounds, where animals are bred. This seems the natural -distribution, and such I have found it almost every where established, -when particular circumstances do not invert the order. - -The poorness of the soil near Paris, for example, presents you with -fields of rye corn at the very gates, and with the most extensive -kitchen gardens and orchards, even for cherries and peaches, at a -considerable distance from town. Other cities I have found, and I can -cite the example of that which I at present inhabit, Padoua, where no -kitchen garden is to be found near it, but every spot is covered with -the richest grain; two thirds with wheat, and the remaining third with -Indian corn. The reason of this is palpable. The town is of a vast -extent, in proportion to the inhabitants; the gardens are all within the -walls, and the dung of the city enables the soil to produce constantly. -Hay is brought from a greater distance, because the expence of -distributing the dung over a distant field, would be greater than that -of transporting the hay by water-carriage. The farm houses here appear -no larger than huts, as they really are, built by the farmers, because -the space to be laboured is very small, in proportion to the produce; -hence it is, that a farmer here pays the value of the full half of the -crop to the landlord, and out of the remaining half, not only sows the -ground and buys the dung, but furnishes the cattle and labouring -instruments, nay even rebuilds his house, when occasion requires. - -When first I examined these fertile plains, I began to lament the -prodigal consumption of such valuable lands, in a multitude of very -broad high-ways, issuing to all quarters; many of which I thought might -be saved, in consideration of the vast advantage accruing upon such -oeconomy: but upon farther reflection I perceived, that the loss was -inconsiderable; for the fertility of the soil proceeding chiefly from -the manure laid upon it, the loss sustained from the roads ought to be -computed at no more than the value of the land when uncultivated. The -case would be very different, were roads now to be changed, or new ones -carried through the corn fields; the loss then would be considerable, -though even that would be temporary, and only affect particular persons: -for the same dung, which now supports these lands in their fertility, -would quickly fertilize others in their places and in a few years -matters would stand as at present. - -These last reflections lead me naturally to examine a question which has -been treated by a very polite French writer, the author of _l’Ami de -l’homme_, and which comes in here naturally enough, before I put an end -to this first book. Here it is. - -[Sidenote: QUEST. IV.] - -Does an unnecessary consumption of the earth’s productions, either in -food, cloathing, or other wants; and a prodigal employment of fine rich -fields, in gardens, avenues, great roads, and other uses which give -small returns, _hurt population_, by rendering food and necessaries less -abundant, in a kingdom such as France, in its present situation? - -My answer is, That if France were fully cultivated and peopled, the -introduction of superfluous consumption would be an abuse, and would -diminish the number of inhabitants; as the contrary is the case, it -proves an advantage. I shall now give my reasons for differing in -opinion from the gentleman whose performance I have cited. - -As the question is put, you perceive the end to be compassed is, to -render food and necessaries abundant; because the abuse is considered in -no other light, than relatively to the particular effect of diminishing -the proper quantity of subsistence, which the king would incline to -preserve, for the nourishment and uses of his people. I shall therefore -confine myself chiefly to this object, and if I shew, that these -superfluous employments of the surface of the earth, and prodigal -consumptions of her fruits, are really no harm, but an encouragement to -the improvement of the lands of France _in her present state_, I shall -consider the question as sufficiently resolved: because if the abuse, as -it is called, proves favourable to agriculture, it can never prove -hurtful to population. However, from the inattention of the government, -it may affect foreign trade, but this is an object entirely foreign to -the question. But before I enter upon the subject, it is proper to -observe, that I am of opinion, that any system of oeconomy which -necessarily tends to corrupt the manners of a people, ought by every -possible means to be discouraged, although no particular prejudice -should result from it, either to population, or to plentiful -subsistence. - -Now, in the question before us, the only abuse I can find in these -habits of extraordinary consumption, appears relative to the character -of the consumers, and seems in no way to proceed from the effects of the -consumption. The vices of men may no doubt prove the cause of their -making a superfluous consumption, but the consumption they make can -hardly ever be the cause of this vice. The most virtuous man in France -may have the most splendid table, the richest clothes, the most -magnificent equipages, the greatest number of useless horses, the most -pompous palace, and most extensive gardens. The most enormous luxury to -be conceived, in our acceptation of the term, so long as it is directed -to no other object than the consumption of the labour and ingenuity of -man, is compatible with virtue as well as with vice. This being -premised, I come to the point in hand. - -France, at present, is in her infancy as to improvement, although the -advances she has made within a century excite the admiration of the -world. I shall not go far in search of the proof of this assertion. -Great tracts of her lands are still uncultivated, millions of her -inhabitants are idle. When all comes to be cultivated, and all are -employed, then she will be in a state of perfection, relatively to the -moral possibility of being improved. The people are free, slavery is -unknown, and every man is charged with feeding himself, and bringing up -his children. The ports of the country are open to receive subsistence, -and that nation, as much as any other, may be considered as an -individual in the great society of the world; that is, may increase in -power, wealth, and ease, relatively to others, in proportion to the -industry of her inhabitants. This being the case, all the principles of -political oeconomy, which we have been inquiring after, may freely -operate in this kingdom. - -France has arrived at her present pitch of luxury, relatively to -consumption, by slow degrees. As she has grown in wealth, her desire of -employing it has grown also. In proportion as her demands have -increased, more hands have been employed to supply them; for no article -of expence can be increased, without increasing the work of those who -supply it. If the same number of inhabitants in the city of Paris -consume four times as much of any necessary article as formerly, I hope -it will be allowed, that the production of such necessaries must be four -times as abundant, and consequently, that many more people must be -employed in providing them. - -What is it that encourages agriculture, but a great demand for its -productions? What encourages multiplication, but a great demand for -people; that is, for their work? Would any one complain of the -extravagant people in Paris, if, instead of consuming those vast -superfluities, they were to send them over to Dover, for a return in -English gold? What is the difference between the prodigal consumption, -and the sale? The one brings in money, the other brings in none: but as -to food and necessaries, for providing the poor and frugal, their -contingent, in either case, stands exactly the same. - -But, says one, were it not for this extraordinary consumption, every -thing would be cheaper. This I readily allow; but will any body say, -that reducing the price of the earth’s productions is a method to -encourage agriculture, especially in a country where grounds are not -improved, and where they cannot be improved; chiefly, because the -expence surpasses all the profits which possibly can be drawn from the -returns? High prices therefore, the effect of great consumption, are -certainly advantageous to the extension of agriculture. If I throw my -rich corn fields into gravel-walks and gardens, I suppose they will no -more come into competition with those of my neighbour, the laborious -husbandman. Who will then lose by my extravagance? Not the husbandman. -It will perhaps be said, the nation in general will lose; because you -deprive them of their food. This might be true, were the laying waste -the corn fields a sudden revolution, and extensive enough to affect the -whole society; and were the sea-ports and barriers of the kingdom shut: -but that not being the case, the nation, upon the smallest deficiency, -goes to market with her money, and loses none of her inhabitants. - -OBJ. But if living is made dear, manufacturers must starve, for want of -employment. - -ANSW. Not those who supply home consumption, but only those who supply -foreigners living more cheaply; and of such I know but few. The interest -of this class shall be fully examined in another place. At present I -shall only observe, that the laying waste corn fields in an industrious -country, where refinement has set on foot a plan of useful husbandry, -will have no other effect, than that of rendring grain for a while -proportionally dearer: consequently, agriculture will be thereby -encouraged; and in a few years the loss will be repaired, by a farther -extension of improvement. This will make food plentiful and cheap: then -numbers will increase, until it become scarce again. It is by such -alternate vicissitudes, that improvement and population are carried to -their height. While the improvement of lands goes forward, I must -conclude, that demand for subsistence is increasing; and if this be not -a proof of population, I am much mistaken. - -I can very easily suppose, that a demand for _work_ may increase -considerably, in consequence of an augmentation of riches only; because -there is no bounds to the consumption of _work_; but as for articles of -nourishment the case is quite different. The most delicate liver in -Paris will not put more of the earth’s productions into his belly, than -another: he may pick and choose, but he will always find, that what he -leaves will go to feed another: victuals are not thrown away in any -country I have ever been in. It is not in the most expensive kitchens -where there is found the most prodigal dissipation of the abundant -fruits of the earth; and it is with such that a people is fed, not with -ortolans, truffles, and oysters, sent from Marenne. - -OBJ. Roads of a superfluous breadth are carried many times through the -finest fields, belonging to the poor and industrious, without a proper -indemnity being given. - -ANSW. The with-holding the indemnity is an abuse; the loss of the fields -is none _to the state_, except in such countries where the quantity of -arable lands is small, as in mountainous provinces; there a proper -consideration should be had to the breadth, because the loss cannot be -made up. In such countries as I here describe, and I cite the Tirol for -an example, I have found all the inhabitants in a manner employed in -that species of agriculture, which is exercised as a method of -subsisting. The little ground that is arable, is divided into very small -lots; the people multiply very much, and leave the country. Those who -remain are usually employed in cutting wood, for building and burning, -which they send down the rivers, and in return buy corn, which comes -from the south and from the north. This is the best plan of industry -they can follow, without the assistance of their sovereign. Roads here -are executed to great perfection, with abundance of solidity, and with a -tender regard for the little ground there is. I return to France. - -OBJ. A multitude of superfluous horses are kept in Paris, which consume -what would feed many more inhabitants. - -ANSW. True: but he who feeds the horses, because _he thinks_ he has use -for them, would not feed those inhabitants, because _he is sure_ he has -no use for them: and did he, in complaisance for the public, dismiss his -cattle, the farmer, who furnishes the hay and oats, would lose a -customer, and nobody would gain. These articles are produced, because -they are demanded: when additional inhabitants are produced, who will -demand and can pay, their demand will be answered also, as long as there -is an unemployed acre in France. - -OBJ. The increase of the consumption of wood for firing is hurtful to -population, because it marks the extension of forests. - -ANSW. This consequence I deny; both from fact and reason. From fact, -because forests are not extended, and that nothing but the hand of -nature, in an ill-inhabited country, seems capable of forming them. In -France, forests are diminishing daily; and were it not for the -jurisdiction of the _Table de marbre_, they would have been more -diminished than they are. I agree, that the consumption of wood is at -present infinitely greater than formerly, and likewise, that the price -of it is greatly risen every where. These two circumstances rather seem -to mark the contraction, than the extension of forests. But the increase -of consumption and price proceed from other causes, as I shall shew, in -order to point out some new principles relative to this extensive -subject. 1. The increase of consumption proceeds from the increase of -wealth. 2. The increase of price proceeds from the increase upon the -value of labour, and not from the scarcity of forest, nor the height of -the demand for firing. As to the first, I believe the fact will not be -called in question, as it is one of the superfluities of consumption -complained of, and put down to the account of luxury and extravagance. -As to the second, the true cause of the rise of the price of that -commodity demands a little more attention, and in order to point it out -with some distinctness, I must first shew the political impossibility of -forests becoming extended over the _arable_ lands of France in her -present situation. - -The best proof I can offer to support my opinion is, to compare the -inconsiderable value of an acre of standing forest in the king’s -adjudications, where thousands are sold at a time, with the value of an -acre of tolerable corn lands, and then ask, if the present value of -forests is so considerable, as to engage any proprietor to sow such a -field for raising wood, when he must wait, perhaps 40 years, before it -be fit for cutting? Add to this, that whoever plants a tree in France, -comes under the jurisdiction above-mentioned, and is not at liberty to -cut it down, and dispose of it, without their permission. It is in a -great measure for this reason, that so few trees are seen about French -villages; and I never heard of one example, of corn lands being sown -with the seeds of forest-trees, with a view to improvement. That -forests, which are well kept, may extend themselves over grounds not -worth the cultivation, I do not deny; but this surely can do no harm to -agriculture; and it is only in that respect, I pretend that forests in -France are not at present in a way of gaining ground. - -Now as to the rise in the price of wood for burning, I say, it proceeds -not from the rise of the price of timber growing in forests, so much as -from the increase of the price of labour, and principally of the price -of transportation. This is not peculiar to France alone, but is common -to all Europe almost, for the reasons I shall presently give. But in the -first place, as to the matter of fact, that the rise in the price -proceeds from the cause assigned, may be seen, by comparing the low -price of an acre of standing forest, with the great value of the timber -when brought to market: the first is the neat value of the wood; the -last includes that of the labour. - -Next as to the price of labour; the rise here is universal in all -industrious nations, from a very plain reason, easily deducible from the -principles above laid down. - -While the land remained loaded with a number of superfluous mouths, -while numbers were found in every province employed in agriculture, for -the sake of subsistence, merely, such people were always ready to employ -their idle hours and days, for a very small consideration from those who -employed them. They did not then depend upon this employment for their -subsistence; and a penny in their pocket purchased some superfluity for -them. But when modern policy has by degrees drawn numbers from the -country, the few that remain for the service of the public must now -labour for their subsistence; and he who employs them, must feed them, -clothe them, and provide for all their other wants. No wonder then, if -labour be dearer: there is a palpable reason for the augmentation. - -The price of all necessaries has risen, no doubt, partly for the same -reason, and this circumstance certainly enters into the combination: but -work, in the country especially, has risen far beyond the proportion of -the price of necessaries, and will rise still more as the lands become -better purged of superfluous mouths. - -Notwithstanding what I have said, I readily allow, that the great -consumption of wood for burning, but more particularly for forges, has -considerably raised the intrinsic value of forest lands; but the -consequence has not been, to extend the forests, as we have shewn, but -to produce a general revenue from them all over the kingdom; whereas -formerly, in many provinces, they produced almost nothing. When they -were cut, cattle were turned in, and by eating up the tender shoots from -year to year, the forest ran into a wild, neither producing timber, nor -pasture. This practice was established upon the ruling principle of -private interest. The land was not worth the expence of grubbing up the -timber; the timber when grown, did not compensate the loss of a few -years pasture. No jurisdiction, however well administred, can check the -operation of that principle; and a statesman who would attempt it, would -be called a tyrant: he would distress the husbandman, and do no service -to the state. - -From what has been said, I must conclude, that while the consumption of -the earth’s produce, and of the work of man tend to excite industry, in -providing for extraordinary demands; when the interest of foreign trade -does not enter into the question; and while there are lands enough -remaining unimproved, to furnish _the first matter_; there can be no -political abuse from the misapplication or unnecessary destruction of -either fruits or labour. The misapplier, or dissipator, is punished by -the loss of his money; the industrious man is rewarded by the -acquisition of it. We have said, that vice is not more essentially -connected with superfluity, than virtue with industry and frugality. But -such questions are foreign to my subject. I would however recommend it -to moralists, to study circumstances well, before they carry reformation -so far, as to interrupt an established system in the political oeconomy -of their country. - ------------------------------------------------------------------------- - - - - - CHAP. XXI. - _Recapitulation of the First Book._ - - -[Sidenote: INTROD.] - -I set out by distinguishing government from political oeconomy; calling, -the first the power to command, the second the talent to execute. Thus -the governor may restrain, but the steward must lead, and, by direct -motives of self-interest, gently conduct free and independent men to -concur in certain schemes ultimately calculated for their own proper -benefit. - -The object is, to provide food, other necessaries and employment, not -only for those who actually exist, but also for those who are to be -brought into existence. This is accomplished, by engaging every one of -the society to contribute to the service of others, in proportion only -as he is to reap a benefit from reciprocal services. To render this -practicable, the spirit of the people must be studied, the different -occupations prescribed to each must first be adapted to their -inclinations, and when once they have taken a taste for labour, these -inclinations must be worked upon by degrees, so as to be bent towards -such pursuits as are most proper for attaining the end desired. - -[Sidenote: CHAP. I.] - -He who sits at the head of this operation, is called the statesman. I -suppose him to be constantly awake, attentive to his employment, able -and uncorrupted, tender in his love for the society he governs, -impartially just in his indulgence for every class of inhabitants, and -disregardful of the interest of individuals, when that regard is -inconsistent with the general welfare. - -Did I propose a plan of execution, I confess this supposition would be -absurd; but as I mean nothing farther than the investigation of -principles, it is no more so, than to suppose a point, a straight line, -a circle, or an infinite, in treating of geometry. - -[Sidenote: CHAP. II.] - -To prepare the way for treating this subject, in that order which the -revolutions of the last centuries have pointed out as the most natural, -I have made the distribution of my plan in the following order. -Population and agriculture are the foundations of the whole. Civil and -domestic liberty, introduced into Europe by the dissolution of the -feudal form of government, set trade and industry on foot; these -produced wealth and credit; these again debts and taxes; and all -together established a perfectly new system of political oeconomy, the -principles of which it is my intention to deduce and examine. - -Population and agriculture, as I have said, must be the basis of the -whole, in all ages of the world; and as they are so blended together in -their connections and relations, as to make the separation of them quite -incompatible with perspicuity and order, they have naturally been made -the subject of the first book. - -[Sidenote: CHAP. III.] - -I have shewn, that the first principle of multiplication is generation; -the second is food: the one gives existence and life; the other -preserves them. - -The earth’s spontaneous fruits being of a determined quantity, never can -feed above a determined number. Labour is a method of augmenting the -productions of nature, and in proportion to the augmentation, numbers -may increase. From these positions, I conclude, - -[Sidenote: CHAP. IV.] - -That the numbers of mankind must ever have been in proportion to the -produce of the earth; and this produce must constantly be in the -compound ratio of the fertility of the soil, and labour of the -inhabitants. Consequently, there can be no determined universal -proportion over the world, between the number of those necessary for -labouring the soil, and of those who may be maintained by its produce. -Here I am led to examine the motives which may induce one part of a free -people to labour, in order to feed the other. - -This I shew to proceed from the different wants to which mankind are -liable. - -[Sidenote: CHAP. V.] - -Here I introduce a statesman, as being necessary to model the spirit of -a society. He contrives and encourages reciprocal objects of want, which -have each their allurement. This engages every one in a different -occupation, and must hurt the former simplicity of manners. I shew how -essential it is, to keep a just balance throughout every part of -industry, that no discouragement may be cast upon any branch of it, -either from superfluity, or want; and I have pointed out, how the -dividing of food between parents and children, is the means of bringing -on scarcity, which inconveniency can only be removed by an augmentation -of labour. - -If a society does not concur in this plan of reciprocal industry, their -numbers will cease to increase; because the industrious will not feed -the idle. This I call a state of a moral impossibility of increase in -numbers, and I distinguish it from the physical impossibility, which can -take place only when nature itself, not man, refuses to produce -subsistence. From this I apply to each particular society what I had -before found applicable to mankind in general; to wit, - -That the inhabitants of every country must be in the compound proportion -of the quantity of food produced in it, and of the industry of the lower -classes. If the food produced surpass the proportion of industry, the -balance of food will be exported; if the industry surpasses the -proportion of food, its deficiency must be supplied by imports. - -Reciprocal wants excite to labour; consequently, those whose labour is -not directed towards the cultivation of the soil, must live upon a -surplus produced by those who do. This divides the society into two -classes. The one I call farmers, the other free hands. - -As the creating these reciprocal wants was what set the society to work, -and distributed them naturally into the two classes we have mentioned; -so the augmentation of wants will require an augmentation of free hands, -and their demand for food will increase agriculture. - -[Sidenote: CHAP. VI.] - -Here I define luxury to mean no more than the consumption of -superfluity, or the supplying of wants not essentially necessary to -life; and, I say, that a taste for superfluity will introduce the use of -money, which I represent as the general object of want, that is of -desire, among mankind; and I shew how an eagerness to acquire it becomes -an universal passion, a means of increasing industry among the free -hands; consequently, of augmenting their numbers; consequently, of -promoting agriculture for their subsistence. - -The whole operation I have been describing proceeds upon one -supposition, to wit, that the people have a taste for labour, and the -rich for superfluity. If these be covetous and admirers of simplicity; -or those be lazy and void of ambition, the principles laid down will -have no effect: and so in fact we find, that it is not in the finest -countries in the world where most inhabitants are found, but in the most -industrious. - -Let it therefore never be said, there are too many manufacturers in a -free country. It is the same thing as if it was said, there are too few -idle persons, too few beggars, and too many husbandmen. - -[Sidenote: CHAP. VII.] - -Here I break off my subject, to answer an objection arising from these -principles. - -OBJ. How could the simplicity of the antients be compatible with a great -multiplication? - -ANSW. In antient times men were forced to labour the ground because they -were slaves to others. In modern times the operation is more complex, -and as a statesman cannot make slaves of his subjects, he must engage -them to become slaves to their own passions and desires; this is the -only method to make them labour the ground, and provided this be -accomplished, by whatever means it is brought about, mankind will -increase. - -[Sidenote: CHAP. VIII.] - -This question being dismissed, I point out a method of estimating the -proportion of numbers between the farmers and free hands of a country, -only as an illustration of the principle already laid down, to wit, that -it is the surplus of the farmers which goes for the subsistence of the -others. - -This surplus I shew to be the same thing as the value of the land rents; -and hence I conclude, - -1st, That the rising of the rents of lands proves the augmentation of -industry, and the multiplication of free hands; but as rents may rise, -and yet the number of inhabitants continue the same as before, I infer, - -2dly, That the revolution must then mark the purging of the lands of -superfluous mouths, and forcing these to quit their mother earth, in -order to retire to towns and villages, where they may usefully swell the -number of the free hands and apply to industry. - -3dly, That the more a country is in tillage, the more it is inhabited, -and the fewer free hands are to be found: that the more it is laid into -pasture, the less it is inhabited, and the greater is the proportion of -free hands. - -[Sidenote: CHAP. IX.] - -Next I consider the principles which determine the place of residence. - -The farmers must live upon, or near the spot they labour; that is, -either upon their farms or in their villages. - -The free hands I divide into two conditions. The first composed of the -proprietors of the surplus of food, that is the landlords; together with -those who can purchase it with a revenue already acquired, that is, the -monied interest. The second condition is composed of those who must -purchase some of this surplus with their daily labour. - -Those of the first condition may live where they please; those of the -second must live where they can. - -When those of the first choose to live together, a considerable number -of those of the second must follow them, in order to supply their -consumption. This forms towns and cities. - -When a statesman places the whole administration of public affairs in -the same city, this swells a capital. - -When manufacturers get together in bodies, they depend not directly upon -consumers, but upon merchants. The situation of their residence depends -upon circumstances relative to their occupation, provision and -transportation of their work. From this hamlets swell into villages, and -villages into towns. Sea ports owe their establishment to the increase -of foreign trade. - -[Sidenote: CHAP. X.] - -As the collecting such numbers of inhabitants together is a late -revolution in the political oeconomy of Europe, I endeavour to give a -short historical representation of it, and examine the consequences -which result from it, both to the state from the growth of cities, and -to the land proprietors from the desertion, as I may call it, of so many -vassals and dependents. One principal effect I observe to be, the -additional occupation it has given to statesmen; that is to say, -political oeconomy is thereby become more complex. - -[Sidenote: CHAP. XI.] - -Formerly the inhabitants were dispersed, and by sucking, as it were, -their mother earth, were more easily subsisted: now industry has -gathered them together, and industry must support them. The failing of -industry, is like the cutting off the subsistence of an army. This is -the care of a general to prevent, that the care of a statesman. - -The supporting industry means no more than employing those who must live -by it; and keeping their numbers in proportion to their work. The first -point, therefore, is to find work for the present inhabitants; the -second is, to make them multiply, if the demand for their labour -increases. - -Increasing numbers will never remove, but rather augment such -inconveniencies, as proceed from the abuses of those already existing. - -In order to employ a people rightly, it is proper to know the exact -state of numbers necessary for supplying the demand for every -occupation; to distribute those who must live by their industry into -proper classes; and to make every class (as far as possible) at least, -support their own numbers by propagation. - -[Sidenote: CHAP. XII.] - -Where the value of any species of industry is not sufficient for that -purpose, a proper remedy must be applied. When any are found incapable, -from age or infirmities, to gain their livelihood, they must be -maintained. Infants exposed by their parents must be taken care of, and -thrown back into the lowest classes of the people; the most numerous -always, and the most difficult to be supported by their own propagation. -Marriage, without assistance, will not succeed in a class who gain no -more by their industry than a personal physical necessary. Here our -oeconomy differs widely from that of the antients. Among them marriage -was encouraged in many ways; but it was only for the free. These did not -amount to one half of the people. The slaves who represented our lower -classes were recruited from other countries, as they are at present in -America. - -If, therefore, according to modern oeconomy, the lowest species of -labour must be kept cheap, in order to make manufactures flourish, the -state must be at the expence of the children; for as matters stand, -either the unmarried gain as much as the married should do, and become -extravagant; or the married gain no more than the unmarried can do, and -become miserable. An unequal competition between people of the same -class, always implies one of these inconveniencies; and from these -principally proceeds the decay and misery of such numbers in all modern -states, as well as the constant complaints of the augmentation of the -price of labour. - -Every individual is equally inspired with a desire to propagate. A -people can no more remain without propagating, than a tree without -growing: but no more can live than can be fed; and as all augmentations -of food must come at last to a stop, so soon as this happens, a people -increase no more; that is to say, the proportion of those who die -annually increases. This insensibly deters from propagation, because we -are rational creatures. But still there are some who, though rational, -are not provident; these marry and produce. This I call vicious -propagation. Hence I distinguish propagation into two branches, to wit, -multiplication, which goes on among these who can feed what they breed, -and mere procreation, which takes place among those who cannot maintain -their offspring. - -This last produces a political disease, which mortality cures at the -expence of much misery; as forest trees which are not pruned, dress -themselves and become vigorous at the expence of numbers which die all -around. How to propose a remedy for this inconveniency, without laying -some restraint upon marriage; how to lay a restraint upon marriage -without shocking the spirit of the times, I own I cannot find out; so I -leave every one to conjecture. - -[Sidenote: CHAP. XIII.] - -Although a complete remedy cannot be obtained against the effects of -abusive procreation; yet with the help of accurate lists of births and -deaths for every class of people, many expedients may be fallen upon to -preserve the few who escape the dangers of their infancy, from falling -back into the unhappy class which produced them. From these lists the -degree of mortality and nature of diseases, as well as the difference -between the propagation of the easy and of the miserable, will plainly -appear; and if it be the duty of a statesman to keep all his people -busy, he certainly should acquire the most exact knowledge possible of -the numbers and propagation of those of every denomination, that he may -prevent any class from rising above or sinking below the standard, which -is best proportioned to the demand for their respective industry. - -[Sidenote: CHAP. XIV.] - -Population and agriculture have so close a connexion with one another, -that I find even the abuses to which they are severally liable, -perfectly similar. I have observed how naturally it must happen, that -when too many of a society propagate, a part must starve; when too many -cultivate, a part must starve also. Here is the reason: - -The more of a people cultivate a country, the smaller portion of it must -fall to every man’s share; and when these portions are reduced so low as -to produce no more than what is necessary to feed the labourers, then -agriculture is stocked to the utmost. - -From this I divide agriculture into two branches; the one useful, the -other abusive. The first is a trade, that is, a method of producing not -only subsistence for the labourers, but also a surplus to be provided -for the free hands of the state, for their subsistence, and for an -equivalent either in work itself, or for the produce of it. The second -is no trade, because it implies no alienation, but is purely a method of -subsisting. If, therefore, in any country where agriculture is exercised -as a trade, and where there are many free hands, the farmers should be -allowed to multiply up to the proportion of the whole produce; would not -all the free hands be forced to starve? What would be the advantage of -having so many farmers; for there is one evident loss? Every one would -be entirely taken up in feeding himself, wants would disappear; life -indeed would be simplified to the last degree, but the bond of society, -mutual dependence, would be dissolved: therefore I call this species -abusive, in proportion as these effects are produced. I cite several -examples of this abusive agriculture in different countries, where I -take occasion to observe, that the christian virtue, charity, in -proportion to its extent, is as conducive to multiplication as either -slavery, or industry: whatever gives food must give numbers. I do not -say that charity is conducive to industry. - -[Sidenote: CHAP. XV.] - -I next apply these general principles to a particular representation -given of the state of population in the British isles; from which I -conclude, that population there is not obstructed, either by losses -sustained from war and commerce, or from the exportation of their -subsistence, but from the political situation of that country, which -throws it at present into a moral incapacity of augmenting in numbers. - -[Sidenote: CHAP. XVI.] - -The establishment of trade and industry naturally rectifies this -misapplication of agriculture, by purging the land of superfluous -mouths, and thereby reduces it, as it ought to be, to a trade calculated -to furnish a surplus, which comes to be sold for the labour of all the -industrious. It is this alone which can rivet the bond of general -dependence among free men who must live by their industry; by making one -part laborious farmers, and the other ingenious tradesmen and -manufacturers. It is by the vibration of the balance between these two -classes, that multiplication and agriculture are carried to their -height. When industry goes on too fast, free hands multiply above the -standard, that is, their scale sinks; this raises the price of food, and -gives an additional encouragement to agriculture: when this again -becomes the more weighty, food becomes plentiful and cheap, then numbers -augment a-new. These reflections lead me to consider the effects of -plentiful and scarce years in modern times, when famines are almost -things unknown; and I conclude, - -[Sidenote: CHAP. XVII.] - -That were plentiful years more common, mankind would be more numerous; -that were scarce years more frequent, numbers would diminish. Then -applying this observation to the state of exportations of grain from -England, I am tempted to infer, that this kingdom, the most fertile -perhaps in Europe, has never been found to produce, in one year, -eighteen months full subsistence for all its inhabitants; nor ever less -than ten months scanty provision in the years of the greatest sterility. - -[Sidenote: CHAP. XVIII.] - -When a country is fully peopled and continues to be industrious, food -will come from abroad. When a loaf is to be had, the rich will eat it, -though at the distance of a mile; and the poor may starve, though at the -next door. It is the demand of the rich, who multiply as much as they -incline, which encourages agriculture even in foreign nations; therefore -I conclude, that this multiplication is the cause, and that the progress -of agriculture is but the effect of it. - -A country once fully stocked may diminish in numbers, and still remain -stocked. This must proceed from a change in the manner of living; as -when an indolent people quit the consumption of the more abundant -productions of the earth, to seek after delicacies. On the other hand, -the industrious bring an additional supply from abroad, and by -furnishing strangers with the produce of their labour, they still go on -and increase in numbers. This is the case of Holland: and this scheme -will go on, until abuses at home raise the price of labour; and -experience abroad, that universal school mistress, teaches foreigners to -profit of their own advantages. - -When food ceases to be augmented, numbers come to a stand; but trade may -still go on and increase wealth: this will hire armies of foreigners; so -the traders may read of their own battles, victories, and trophies, and -by spending their money, never smell gunpowder. - -[Sidenote: CHAP. XIX.] - -When they cannot augment their numbers, they will introduce machines -into many manufactures; and these will supply the want, without adding -to the consumption of their food. Foreigners, astonished at a novelty -which lowers prices, and checks their growing industry, will copy the -inventions; but being no more than scholars, who go aukwardly to work, -this improvement will throw many of their hands into idleness: the -machines will be cried down, and the traders will laugh in their -sleeves, well knowing that nothing is more easy than to put work into -the hands of an industrious man made idle. Wit and genius, in short, -will always set him who possesses them above the level of his fellows, -and when one resource fails him, he will contrive another. - -[Sidenote: CHAP. XX.] - -The wit I here mention is not that acquired in the closet; for there one -may learn, that an equal distribution of lands was so favourable to -multiplication in antient times, that it must be owing to a contrary -practice, that our numbers now are so much smaller. But he who walks -abroad, and sees millions who have not one moment’s time to put a spade -in the ground, so busily are they employed in that branch of industry -which is put into their hands, must readily conclude, that circumstances -are changed, and that the fewer people are necessary for feeding the -whole society, the more must remain free to be employed in providing -every other thing that can make life agreeable, both to themselves and -to strangers; who in return deliver into the hands of their industrious -servants, the ensigns of superiority and dominion, money. Who is best -employed, he who works to feed himself, or he who works to be fed, -cloathed, and supplied, disposing only of his superfluities to those -whom, consequently, he shortly must command. This is obtained by the -introduction of the useful species of agriculture, and by the explosion -of the abusive. And when strangers are so kind as to allow their -neighbours the privilege of clothing and adorning them, good nature, not -to say self-interest, demands, in return, that the first be indulged in -a permission to exercise those branches of toil and labour which are the -least profitable, though the most necessary for the subsistence of the -latter. - -When the eye of humanity considers the toil of the farmer, and the -indifference of his rich countryman in squandering, the abuse appears -offensive. The rich man is advised to consider of the pain incurred by -the poor husbandman, in consequence of his dissipation. Upon this the -rich, touched with compassion, simplifies his way of life. The -husbandman in a fury falls upon the reformer, and, in his rough way, -gives him to understand, that he by no means looks upon him as his -friend: for, says he, do you take me for the rich man’s slave; or do you -imagine that I toil as I do, either by his command, or for any -consideration for him? Not in the least, it is purely for his money; and -from the time you persuaded him to become an oeconomist, here am I, and -my poor family, starving. We are not the only people in this situation; -there is my neighbour who has all his hay and oats upon hand, since, by -your instigation, likewise, he dismissed his useless horses. Do you -think he will give his oats in charity to feed the poor? He is poor -enough himself, and all those who have been working to get this -provision together are in no better humour than I am. Hold your tongue, -says the reformer, you are a parcel of extravagant fellows, you -labourers. A hundred years ago, one could have got as many of you as one -pleased, for the half of what you cost us at present. Give us back our -lands, says the other, at the rate we had them; and let us all be well -fed before we give you a farthing, and you shall have us as cheap as -ever. But do you think that after you have chased one half of us into -towns, and raised your rents with the price of their food, that we can -work twice as hard, and serve you as formerly? No, Sir! you ought to -have more sense than to expect it. - -This is a sketch of the first book; I thought a short abridgment of it -might be of service for recollecting ideas, and ranging them in order -before I proceed. - - END OF THE FIRST BOOK. - ------------------------------------------------------------------------ - - - - - AN - INQUIRY - INTO THE - PRINCIPLES OF POLITICAL OECONOMY. - ------------------------------------------------------------------------- - - - - - BOOK II. - OF TRADE AND INDUSTRY. - - - - - INTRODUCTION. - - -Before I enter upon this second book, I must premise a word of -connexion, in order to conduct the ideas of my reader by the same way -through which the chain of my own thoughts, and the distribution of my -plan have naturally led me. - -My principal view hitherto has been to prepare the way for an -examination of the principles of modern politics, by inquiring into -those which have, less or more, operated regular effects in all the ages -of the world. - -In doing this, I confess, it has been impossible for me not to -anticipate many things which, according to the plan I have laid down, -will in some measure involve me in repetitions. - -I propose to investigate principles which are all relative and depending -upon one another. It is impossible to treat of these with distinctness, -without applying them to the objects on which they have an influence; -and as the same principles extend their influence to several branches of -my subject, those of my readers who keep them chiefly in their eye, will -not find great variety in the different applications of them. - -In all compositions of this kind, two things are principally requisite. -The first is, to represent such ideas as are abstract, clearly, simply, -and uncompounded. This part resembles the forging out the links of a -chain. The second is, to dispose those ideas in a proper order; that is, -according to their most immediate relations. When such a composition is -laid before a good understanding, memory finishes the work, by cementing -the links together; and providing any one of them can be retained, the -whole will follow of course. - -Now the relations between the different principles of which I treat, are -indeed striking to such as are accustomed to abstract reasoning, but not -near so much so, as when the application of them is made to different -examples. - -The principle of self-interest will serve as a general key to this -inquiry; and it may, in one sense, be considered as the ruling principle -of my subject, and may therefore be traced throughout the whole. This is -the main spring, and only motive which a statesman should make use of, -to engage a free people to concur in the plans which he lays down for -their government. - -I beg I may not here be understood to mean, that self-interest should -conduct the statesman: by no means. Self-interest, when considered with -regard to him, is public spirit; and it can only be called -self-interest, when it is applied to those who are to be governed by it. - -From this principle men are engaged to act in a thousand different ways, -and every action draws after it certain necessary consequences. The -question therefore constantly under consideration comes to be, what will -mankind find it their interest to do, under such and such circumstances? - -In order to exhaust the subject of political oeconomy, I have proposed -to treat the principles of it in relation to circumstances; and as these -are infinite, I have taken them by categories; that is, by the more -general combinations, which modern policy has formed. These, for the -sake of order, I have represented as all hanging in a chain of -consequences, and depending on one another. See Book I. Chap. ii. - -I found this the best method for extending my plan, from which it is -natural to infer, that it will also prove the best for enabling my -readers to retain it. - -I shall do what I can to diversify, by various circumstances, the -repetitions which this disposition must lead me into. There is no seeing -a whole kingdom, without passing now and then through a town which one -has seen before. I shall therefore imitate the traveller, who, upon such -occasions, makes his stay very short, unless some new curiosity should -happen to engage his attention. - -I have said, that self-interest is the ruling principle of my subject, -and I have so explained myself, as to prevent any one from supposing, -that I consider it as the universal spring of human actions. Here is the -light in which I want to represent this matter. - -The best way to govern a society, and to engage every one to conduct -himself according to a plan, is for the statesman to form a system of -administration, the most consistent possible with the interest of every -individual, and never to flatter himself that his people will be brought -to act in general, and in matters which purely regard the public, from -any other principle than private interest. This is the utmost length to -which I pretend to carry my position. As to what regards the merit and -demerit of actions in general, I think it fully as absurd to say, that -no action is truly virtuous, as to affirm, that none is really vitious. - -It might perhaps be expected, that, in treating of politics, I should -have brought in public spirit also, as a principle of action; whereas -all I require with respect to this principle is, only a restraint from -it; and even this is, perhaps, too much to be taken for granted. Were -public spirit, instead of private utility, to become the spring of -action in the individuals of a well-governed state, I apprehend, it -would spoil all. I explain myself. - -Public spirit, in my way of treating this subject, is as superfluous in -the governed, as it ought to be all-powerful in the statesman; at least, -if it is not altogether superfluous, it is fully as much so, as miracles -are in a religion once fully established. Both are admirable at setting -out, but would shake every thing loose were they to continue to be -common and familiar. Were miracles wrought every day, the laws of nature -would no longer be laws: and were every one to act for the public, and -neglect himself, the statesman would be bewildered, and the supposition -is ridiculous. - -I expect, therefore, that every man is to act for his own interest in -what regards the public; and, politically speaking, every one ought to -do so. It is the combination of every private interest which forms the -public good, and of this the public, that is, the statesman, only can -judge. You must love your country. Why? Because it is yours. But you -must not prefer your own interest to that of your country. This, I -agree, is perfectly just and right: but this means no more, than that -you are to abstain from acting to its prejudice, even though your own -private interest should demand it; that is, you should abstain from -unlawful gain. Count Julian, for example, who, from private resentment, -it is said, brought the Moors into Spain, and ruined his country, -transgressed this maxim. A spy in an army, or in a cabinet, who betrays -the secrets of his country, and he who sells his trust, are in the same -case: defrauding the state is, among many others, a notorious example of -this. To suppose men, in general, honest in such matters, would be -absurd. The legislature therefore ought to make good laws, and those who -transgress them ought to be speedily, severely, and most certainly -punished. This belongs to the coercive part of government, and falling -beyond the limits of my subject, is ever taken for granted. - -Were the principle of public spirit carried farther; were a people to -become quite disinterested, there would be no possibility of governing -them. Every one might consider the interest of his country in a -different light, and many might join in the ruin of it, by endeavouring -to promote its advantages. Were a rich merchant to begin and sell his -goods without profit, what would become of trade? Were another to defray -the extraordinary expence of some workmen in a hard year, in order to -enable them to carry on their industry, without raising their price, -what would become of others, who had not the like advantages? Were a man -of a large landed estate to distribute his corn rents at a low price in -a year of scarcity, what would become of the poor farmers? Were people -to feed all who would ask charity, what would become of industry? These -operations of public spirit ought to be left to the public, and all that -is required of individuals is, not to endeavour to defeat them. - -This is the regular distribution of things, and it is only this which -comes under my consideration. - -In ill-administred governments I admire as much as any one every act of -public spirit, every sentiment of disinterestedness, and nobody can have -a higher esteem for every person remarkable for them. - -The less attentive any government is to do their duty, the more -essential it is that every individual be animated by _that_ spirit, -which then languishes in the very part where it ought to flourish with -the greatest strength and vigour; and on the other hand, the more public -spirit is shewn in the administration of public affairs, the less -occasion has the state for assistance from individuals. - -Now as I suppose my statesman to do his duty in the most minute -particulars, so I allow every one of his subjects to follow the dictates -of his private interest. All I require is an exact obedience to the -laws. This also is the interest of every one; for he who transgresses -ought most undoubtedly to be punished: and this is all the public spirit -which any perfect government has occasion for. - ------------------------------------------------------------------------- - - - - - CHAP. I. - _Of the reciprocal Connections between Trade and Industry._ - - -I am now going to treat of trade and industry, two different subjects, -but which are as thoroughly blended together, as those we have discussed -in the first book. Similar to these in their mutual operations, they are -reciprocally aiding and assisting to each other, and it is by the -constant vibration of the balance between them, that both are carried to -their height of perfection and refinement. - -_TRADE_ _is an operation, by which the wealth, or work, either of -individuals, or of societies, may be exchanged, by a set of men called -merchants, for an equivalent, proper for supplying every want, without -any interruption to industry, or any check upon consumption_. - -_INDUSTRY_ _is the application to ingenious labour in a free man, in -order to procure, by the means of trade, an equivalent, fit for the -supplying every want_. - -I must observe, that these definitions are only just, relatively to my -subject, and to one another: for _trade_ may exist without _industry_, -because things produced partly by nature may be exchanged between men; -_industry_ may be exercised without _trade_, because a man may be very -ingenious in working to supply his own consumption, and where there is -no exchange, there can be no _trade_. _Industry_ likewise is different -from _labour_. _Industry_, as I understand the term, must be voluntary; -_labour_ may be forced: the one and the other may produce the same -effect, but the political consequences are vastly different. - -_Industry_, therefore, is only applicable to free men; _labour_ may be -performed by slaves. - -Let me examine this last distinction a little more closely, the better -to try whether it be just, and to point out the consequences which -result from it. - -I have said, that without the assistance of one of the three principles -of multiplication, to wit, slavery, industry, or charity, there was no -possibility of making mankind subsist, so as to be serviceable to one -another, in greater numbers than those proportioned to the spontaneous -fruits of the earth. Slavery and industry are quite compatible with the -selfish nature of man, and may therefore be generally established in any -society: charity again is a refinement upon humanity, and therefore, I -apprehend, it must ever be precarious. - -Now I take slavery and industry to be equally compatible with great -multiplication, but incompatible with one another, without great -restrictions laid upon the first. It is a very hard matter to introduce -industry into a country where slavery is established; because of the -unequal competition between the work of slaves and that of free men, -supposing both equally admitted to market. Here is the reason: - -The slaves have all their particular masters, who can take better care -of _them_, than any statesman can take of the industrious freemen; -because their liberty is an obstacle to his care. The slaves have all -their wants supplied by the master, who may keep them within the limits -of sobriety. He may either recruit their numbers from abroad, or take -care of the children, just as he finds it his advantage. If the latter -should prove unprofitable, either the children die for want of care, or -by promiscuous living few are born, or by keeping the sexes asunder, -they are prevented from breeding at all. A troop of manufacturing -slaves, considered in a political light, will be found all employed, all -provided for, and their work, when brought to market by the master, may -be afforded much cheaper, than the like performed by freemen, who must -every one provide for himself, and who may perhaps have a separate -house, a wife, and children, to maintain, and all this from an industry, -which produces no more, nay not so much, as that of a single slave, who -has no avocation from labour. Why do large undertakings in the -manufacturing way ruin private industry, but by coming nearer to the -simplicity of slaves. Could the sugar islands be cultivated to any -advantage by hired labour? Were not the expences of rearing children -supposed to be great, would slaves ever be imported? Certainly not: and -yet it is still a doubt with me, whether or not a proper regulation for -bringing up the children of slaves might not turn this expedient to a -better account, than the constant importation of them. But this is -foreign to the present purpose. All I intend here to observe is, the -consequences of a _competition_ between the work of slaves and of free -men; from which competition I infer, that, without judicious -regulations, it must be impossible for industry ever to get the better -of the disadvantages to which it will necessarily be exposed at first, -in a state where slavery is already introduced. - -These regulations ought to prevent the competition between the -industrious freemen and the masters of slaves, by appropriating the -occupation of each to different objects: to confine slavery, for -example, to the country; that is, to set the slaves apart for -agriculture, and to exclude them from every other service of work. With -such a regulation _perhaps_ industry might succeed. This was not the -case of old; industry did not succeed as at present: and to this I -attribute the simplicity of those times. - -It is not so difficult to introduce slavery into a state where liberty -is established; because such a revolution might be brought about by -force and violence, which make every thing give way; and, for the -reasons above-mentioned, I must conclude, that the consequences of such -a revolution would tend to extinguish, or at least, without the greatest -precaution, greatly check the progress of industry: but were such -precautions properly taken; were slavery reduced to a temporary and -conditional service, and put under proper regulations; it might prove, -of all others, the most excellent expedient for rendering the lower -classes of a people happy and flourishing; and for preventing that -vitious procreation, from which the great misery to which they are -exposed at present chiefly proceeds. But as every modification of -slavery is quite contrary to the spirit of modern times, I shall carry -such speculations no farther. Thus much I have thought it necessary to -observe, only by the way, for the sake of some principles which I shall -have occasion afterwards to apply to our own oeconomy; for wherever any -notable advantage is found accompanying slavery, it is the duty of a -modern statesman to fall upon a method of profiting by it, without -wounding the spirit of European liberty. And this he may accomplish in a -thousand ways, by the aid of good laws, calculated to cut off from the -lower classes of a people any interest they can have in involving -themselves in want and misery, opening to them at the same time an easy -progress towards prosperity and ease. - -Here follows an exposition of the principles, from which I was led to -say, in a former chapter, that the failure of the slavish form of feudal -government, and the extension thereby given to civil and domestic -liberty, were the source from which the whole system of modern polity -has sprung. - -Under the feudal form, the higher classes were perhaps more free than at -present, but the lower classes were either slaves, or under a most -servile dependence, which is entirely the same thing as to the -consequence of interrupting the progress of private industry. - -I cannot pretend to advance, as a confirmation of this doctrine, that -the establishment of slavery in our colonies in America was made with a -view to promote agriculture, and to curb manufactures in the new world, -because I do not know much of the sentiments of politicians at that -time: but if it be true, that slavery has the effect of advancing -agriculture, and other laborious operations which are of a simple -nature, and at the same time of discouraging invention and ingenuity; -and if the mother-country has occasion for the produce of the first, in -order to provide or to employ those who are taken up at home in the -prosecution of the latter; then I must conclude, that slavery _has been_ -very _luckily_, if not _politically_, established to compass such an -end: and therefore, if any colony, where slavery is not common, shall -ever begin to rival the industry of the mother-country, a very good way -of frustrating the attempt will be, to encourage the introduction of -slaves into such colonies without any restrictions, and allow it to work -its natural effect. - -Having given the definition of trade and industry, as relative to my -inquiry, I come now to examine their immediate connections, the better -to cement the subject of this book, with the principles deduced in the -former. - -In treating of the reciprocal wants of a society, and in shewing how -their being supplied by labour and ingenuity naturally tends to increase -population on one hand, and agriculture on the other, the better to -simplify our ideas, we supposed the transition to be direct from the -manufacturer to the consumer, and both to be members of the same -society. Matters now become more complex, by the introduction of trade -among different nations, which is a method of collecting and -distributing the produce of industry, by the interposition of a third -principle. Trade receives from a thousand hands, and distributes to as -many. - -To ask, whether trade owes its beginning to industry, or industry to -trade, is like asking, whether the motion of the heart is owing to the -blood, or the motion of the blood to the heart. Both the one and the -other, I suppose, are formed by such insensible degrees, that it is -impossible to determine where the motion begins. But so soon as the body -comes to be perfectly formed, I have little doubt of the heart’s being -the principle of circulation. Let me apply this to the present question. - -A man must first exist, before he can feel want; he must want, that is, -desire, before he will demand; and he must demand, before he can -receive. This is a natural chain, and from it we have concluded in Book -I. that population is the cause, and agriculture the effect. - -By a parallel reason it may be alledged, that as wants excite to -industry, and are considered as the cause of it; and as the produce of -industry cannot be exchanged without trade; so trade must be an effect -of industry. To this I agree: but I must observe, that this exchange -does not convey my idea of trade, although I admit, that it is the root -from which the other springs; it is the seed, but not the plant; and -trade, as we have defined it, conveys another idea. The workman must not -be interrupted, in order to seek for an exchange, nor the consumer put -to the trouble of finding out the manufacturer. The object of trade -therefore is no more than a new want, which calls for a set of men to -supply it; and trade has a powerful effect in promoting industry, by -facilitating the consumption of its produce. - -While wants continue simple and few, a workman finds time enough to -distribute all his work: when wants become more multiplied, men must -work harder; time becomes precious; hence trade is introduced. They who -want to consume, send the merchant, in a manner, to the workman, for his -labour, and do not go themselves; the workman sells to this interposed -person, and does not look out for a consumer. Let me now take a familiar -instance of infant trade, in order to shew how it grows and refines: -this will illustrate what I have been saying. - -I walk out of the gates of a city in a morning, and meet with five -hundred persons, men and women, every one bringing to market a small -parcel of herbs, chickens, eggs, fruit, &c. It occurs to me immediately, -that these people must have little to do at home, since they come to -market for so small a value. Some years afterwards, I find nothing but -horses, carts, and waggons, carrying the same provisions. I must then -conclude, that either those I met before are no more in the country, but -purged off, as being found useless, after a method has been found of -collecting all their burdens into a few carts; or that they have found -out a more profitable employment than carrying eggs and greens to -market. Which ever happens to be the case, there will be the -introduction of what I call trade; to wit, this collecting of eggs, -fruit, fowl, &c. from twenty hands, in order to distribute it to as many -more within the walls. The consequence is, that a great deal of labour -is saved; that is to say, the cart gives time to twenty people to -labour, if they incline; and when wants increase, they will be ready to -supply them. - -We cannot therefore say, that trade will force industry, or that -industry will force trade; but we may say, that trade will facilitate -industry, and that industry will support trade. Both the one and the -other however depend upon a third principle; to wit, a taste for -superfluity, in those who have an equivalent to give for it. This taste -will produce demand, and this again will become the main spring of the -whole operation. - ------------------------------------------------------------------------- - - - - - CHAP. II. - _Of Demand._ - - -This is no new subject; it is only going over what has been treated of -very extensively in the first book under another name, and relatively to -other circumstances. _These_ ideas were there kept as simple as -possible; _here_ they take on a more complex form, and appear in a new -dress. - -The wants of mankind were said to promote their multiplication, by -augmenting the demand for the food of the free hands, who, by supplying -those wants, are enabled to offer an equivalent for their food, to the -farmers who produced it; and as this way of bartering is a -representation of trade in its infancy, it is no wonder that trade, when -grown up, should still preserve a resemblance to it. - -_Demand_, considered as a term appropriated to trade, will now be used -in place of _wants_, the term used in the first book relatively to -bartering; we must therefore expect, that the operations of the same -principle, under different appellations, will constantly appear similar, -in every application we can make of it, to different circumstances and -combinations. - -Whether this term be applied to bartering or to trade, it must -constantly appear reciprocal. If I demand a pair of shoes, the shoemaker -either demands money, or something else for his own use. To prevent -therefore the ambiguity of a term, which, from the sterility of -language, is taken in different acceptations, according to the -circumstances which are supposed to accompany it, I shall endeavour -shortly to analyze it. - -_1mo._ Demand is ever understood to be relative to merchandize. A demand -for money, except in bills of exchange, is never called demand. When -those who have merchandize upon hand, are desirous of converting them -into money, they are said to offer to sale; and if, in order to find a -buyer, they lower their price, then, in place of saying the demand for -money is high, we say the demand for goods is low. - -_2do._ Suppose a ship to arrive at a port loaded with goods, with an -intention to purchase others in return, the operation only becomes -double. The ship offers to sale, and the demand of the port is said to -be high or low, according to the height of the price offered, not -according to the quantity demanded, or number of demanders. When all is -sold, then the ship becomes demander; and if his demand be -proportionally higher than the former, we say upon the whole, that the -demand is for the commodities of the port; that is, the port offers, and -the ship demands. This I call reciprocal demand. - -_3tio._ Demand is either simple or compound. Simple, when the demander -is but _one_, compound, when _they are more_. But this is not so much -relative to persons as to interests. Twenty people demanding from the -same determined interest form but a simple demand; it becomes compound -or high, when different interests produce a competition. It may -therefore be said, that when there is no competition among buyers, -demand is simple, let the quantity demanded be great or small, let the -buyers be few or many. When therefore in the contract of barter the -demand upon one side is simple, upon the other compound, that which is -compound is constantly called the demand, the other not. - -_4to._ Demand is either great or small: great, when the _quantity_ -demanded is great; small, when the _quantity_ demanded is small. - -_5to._ Demand is either high or low: high, when the competition among -the _buyers_ is great; low, when the competition among the _sellers_ is -great. From these definitions it follows, that the consequence of a -great demand, is a great sale; the consequence of a high demand, is a -great price. The consequence of a small demand, is a small sale; the -consequence of a low demand, is a small price. - -_6to._ The nature of demand is to encourage industry; and when it is -regularly made, the effect of it is, that the supply for the most part -is found to be in proportion to it, and then the demand is commonly -simple. It becomes compound from other circumstances. As when it is -irregular, that is, unexpected, or when the usual supply fails; the -consequence of which is, that the provision made for the demand, falling -short of the just proportion, occasions a competition among the buyers, -and raises the current, that is, the ordinary prices. From this it is, -that we commonly say, demand raises prices. Prices are high or low -according to demand. These expressions are just; because the sterility -of language obliges us there to attend to circumstances which are only -implied. - -Demand is understood to be _high_ or _low_, relatively to the common -rate of it, or to the competition of buyers, to obtain the provision -made for it. When demand is relative to the quantity demanded, it must -be called great or small, as has been said. - -_7mo._ Demand has not always the same effect in raising prices: we must -therefore carefully attend to the difference between a demand for things -of the first necessity for life, and for things indifferent; also -between a demand made by the immediate consumers, and one made by -merchants, who buy in order to sell again. In both cases the competition -will have different effects. Things of absolute necessity must be -procured, let the price be ever so great: consumers who have no view to -profit, but to satisfy their desires, will enter into a stronger -competition than merchants, who are animated by no passion, and who are -regulated in what they offer by their prospect of gain. Hence the great -difference in the price of grain in different years; hence the uniform -standard of the price of merchandize, in fairs of distribution, such as -Frankfort, Beaucaire, &c. hence, also, the advantage which consumers -find in making their provision at the same time that merchants make -theirs; hence the sudden rise and fall in the price of labouring cattle -in country markets, where every one provides for himself. - -Let what has been said suffice at setting out: this principle will be -much better explained by its application as we advance, than by all the -abstract distinctions I am capable to give of it. - ------------------------------------------------------------------------- - - - - - CHAP. III. - _Of the first Principles of bartering, and how this grows into Trade._ - - -I must now begin by tracing trade to its source, in order to reduce it -to its first principles. - -The most simple of all trade, is that which is carried on by bartering -the necessary articles of subsistence. If we suppose the earth free to -the first possessor, this person who cultivates it will first draw from -it his food, and the surplus will be the object of barter: he will give -this in exchange to any one who will supply his other wants. This (as -has been said) naturally supposes both a surplus quantity of food -produced by labour, and also free hands; for he who makes a trade of -agriculture cannot supply himself with all other necessaries, as well as -food; and he who makes a trade of supplying the farmers with such -necessaries, in exchange for his surplus of food, cannot be employed in -producing that food. The more the necessities of man increase, _cæteris -paribus_, the more free hands are required to supply them; and the more -free hands are required, the more surplus food must be produced by -additional labour, to supply their demand. - -This is the least complex kind of trade, and may be carried on to a -greater or less extent, in different countries, according to the -different degrees of the wants to be supplied. In a country where there -is no money, nor any thing equivalent to it, I imagine the wants of -mankind will be confined to few objects; to wit, the removing the -inconveniencies of hunger, thirst, cold, heat, danger, and the like. A -free man who by his industry can procure all the comforts of a simple -life, will enjoy his rest, and work no more: And, in general, all -increase of work will cease, so soon as the demand for the purposes -mentioned comes to be satisfied. There is a plain reason for this. When -the free hands have procured, by their labour, wherewithal to supply -their wants, their ambition is satisfied: so soon as the husbandmen have -produced the necessary surplus for relieving theirs, they work no more. -Here then is a natural stop put to industry, consequently to bartering. -This, in the first book, we have called _the moral impossibility of -augmenting numbers._ - -The next thing to be examined, is, how bartering grows into trade, -properly so called and understood, according to the definition given of -it above; how trade comes to be extended among men; how manufactures, -more ornamental than useful, come to be established; and how men come to -submit to labour, in order to acquire what is not absolutely necessary -for them. - -This, in a free society, I take to be chiefly owing to the introduction -of money, and a taste for superfluities in those who possess it. - -In antient times, money was not wanting; but the taste for superfluities -not being in proportion to it, the specie was locked up. This was the -case in Europe four hundred years ago. A new taste for superfluity has -drawn, perhaps, more money into circulation, from our own treasures, -than from the mines of the new world. The poor opinion we entertain of -the riches of our forefathers, is founded upon the modern way of -estimating wealth, by the quantity of coin in circulation, from which we -conclude, that the greatest part of the specie now in our hands must -have come from America. - -It is more, therefore, through the taste of superfluity, than in -consequence of the quantity of coin, that trade comes to be established; -and it is only in consequence of trade that we see industry carry things -in our days to so high a pitch of refinement and delicacy. Let me -illustrate this by comparing together the different operations of -barter, sale, and commerce. - -When reciprocal wants are supplied by barter, there is not the smallest -occasion for money: this is the most simple of all combinations. - -When wants are multiplied, bartering becomes (for obvious reasons) more -difficult; upon this money is introduced. This is the common price of -all things: it is a proper equivalent in the hands of those who want, -perfectly calculated to supply the occasions of those who, by industry, -can relieve them. This operation of buying and selling is a little more -complex than the former; but still we have here no idea of trade, -because we have not introduced the merchant, by whose industry it is -carried on. - -Let this third person be brought into play, and the whole operation -becomes clear. What before we called wants, is here represented by the -consumer; what we called industry, by the manufacturer; what we called -money, by the merchant. The merchant here represents the money, by -substituting credit in its place; and as the money was invented to -facilitate barter, so the merchant, with his credit, is a new refinement -upon the use of money. This renders it still more effectual in -performing the operations of buying and selling. This operation is -trade: it relieves both parties of the whole trouble of transportation, -and adjusting wants to wants, or wants to money; the merchant represents -by turns both the consumer, the manufacturer, and the money. To the -consumer he appears as the whole body of manufacturers; to the -manufacturers as the whole body of consumers; and to the one and the -other class his credit supplies the use of money. This is sufficient at -present for an illustration. I must now return to the simple operations -of money in the hands of the two contracting parties, the buyer and the -seller, in order to show how men come to submit to labour in order to -acquire superfluities. - -So soon as money is introduced into a country it becomes, as we have -said above, an universal object of want to all the inhabitants. The -consequence is, that the free hands of the state, who before stopt -working, because all their wants were provided for, having this new -object of ambition before their eyes, endeavour, by refinements upon -their labour, to remove the smaller inconveniencies which result from a -simplicity of manners. People, I shall suppose, who formerly knew but -one sort of cloathing for all seasons, willingly part with a little -money to procure for themselves different sorts of apparel properly -adapted to summer and winter, which the ingenuity of manufacturers, and -their desire of getting money, may have suggested to their invention. - -I shall not here pursue the gradual progress of industry, in bringing -manufactures to perfection; nor interrupt my subject with any further -observations upon the advantages resulting to industry, from the -establishment of civil and domestic liberty, but shall only suggest, -that these refinements seem more generally owing to the industry and -invention of the manufacturers (who by their ingenuity daily contrive -means of softening or relieving inconveniencies, which mankind seldom -perceive to be such, till the way of removing them is contrived) than to -the taste for luxury in the rich, who, to indulge their ease, engage the -poor to become industrious. - -Let any man make an experiment of this nature upon himself, by entring -into the first shop. He will no where so quickly discover his wants as -there. Every thing he sees appears either necessary, or at least highly -convenient; and he begins to wonder (especially if he be rich) how he -could have been so long without that which the ingenuity of the workman -alone had invented, in order that from the novelty it might excite his -desire; for perhaps when it is bought, he will never once think of it -more, nor ever apply it to the use for which it at first appeared so -necessary. - -Here then is a reason why mankind labour though not in want. They become -desirous of possessing the very instruments of luxury, which their -avarice or ambition prompted them to invent for the use of others. - -What has been said represents trade in its infancy, or rather the -materials with which that great fabric is built. - -We have formed an idea of the wants of mankind multiplied even to -luxury, and abundantly supplied by the employment of all the free hands -set apart for that purpose. But if we suppose the workman himself -disposing of his work, and purchasing, with it, food from the farmer, -cloaths from the clothier, and in general seeking for the supply of -every want from the hands of the person directly employed for the -purpose of relieving it; this will not convey an idea of trade, -according to our definition. - -Trade and commerce are an abbreviation of this long process; a scheme -invented and set on foot by merchants, from a principle of gain, -supported and extended among men, from a principle of general utility to -every individual, rich or poor, to every society, great or small. - -Instead of a pin-maker exchanging his pins with fifty different persons, -for whose labour he has occasion, he sells all to the merchant for money -or for credit; and, as occasion offers, he purchases all his wants, -either directly from those who supply them, or from other merchants who -deal with manufacturers in the same way his merchant dealt with him. - -Another advantage of trade is, that industrious people in one part of -the country, may supply customers in another, though distant. They may -establish themselves in the most commodious places for their respective -business, and help one another reciprocally, without making the distant -parts of the country suffer for want of their labour. They are likewise -exposed to no avocation from their work, by seeking for customers. - -Trade produces many excellent advantages; it marks out to the -manufacturers when their branch is under or overstocked with hands. If -it is understocked, they will find more demand than they can answer: if -it is overstocked, the sale will be slow. - -Intelligent men, in every profession, will easily discover when these -appearances are accidental, and when they proceed from the real -principles of trade; which are here the object of our inquiry. - -Posts, and correspondence by letters, are a consequence of trade, by the -means of which merchants are regularly informed of every augmentation or -diminution of industry in every branch, in every part of the country. -From this knowledge they regulate the prices they offer; and as they are -many, they serve as a check upon one another, from the principles of -competition which we shall hereafter examine. - -From the current prices the manufacturers are as well informed as if -they kept the correspondence themselves: the statesman feels perfectly -where hands are wanting, and young people destined to industry, obey, in -a manner, the call of the public, and fall naturally in to supply the -demand. - -Two great assistances to merchants, especially in the infancy of trade, -are public markets for collecting the work of small dealers, and large -undertakings in the manufacturing way by private hands. By these means -the merchants come at the knowledge of the quantity of work in the -market, as on the other hand the manufacturers learn, by the sale of the -goods, the extent of the demand for them. These two things being justly -known, the price of goods is easily fixt, as we shall presently see. - -Public sales serve to correct the small inconveniencies which proceed -from the operations of trade. A set of manufacturers got all together -into one town, and entirely taken up with their industry, are thereby as -well informed of the rate of the market as if every one of them carried -thither his work, and upon the arrival of the merchant, who readily -takes it off their hands, he has not the least advantage over them from -his knowledge of the state of demand. This man both buys and sells in -what is called wholesale (that is by large parcels) and from him -retailers purchase, who distribute the goods to every consumer -throughout the country. These last buy from wholesale merchants in every -branch, that proportion of every kind of merchandize which is suitable -to the demand of their borough, city, or province. - -Thus all inconveniencies are prevented, at some additional cost to the -consumer, who, for reasons we shall afterwards point out, must naturally -reimburse the whole expence. The distance of the manufacturer, the -obscurity of his dwelling, the caprice in selling his work, are quite -removed; the retailer has all in his shop, and the public buys at a -current price. - ------------------------------------------------------------------------- - - - - - CHAP. IV. - _How the Prices of Goods are determined by Trade._ - - -In the price of goods, I consider two things as really existing, and -quite different from one another; to wit, the real value of the -commodity, and the profit upon alienation. The intention of this chapter -is to establish this distinction, and to shew how the operation of trade -severally influences the standard of the one and the other; that is to -say, how trade has the effect of rendering fixt and determined, two -things which would otherwise be quite vague and uncertain. - -I. The first thing to be known of any manufacture when it comes to be -sold, is, how much of it a person can perform in a day, a week, a month, -according to the nature of the work, which may require more or less time -to bring it to perfection. In making such estimates, regard is to be had -only to what, upon an average, a workman of the country in general may -perform, without supposing him the best or the worst in his profession; -or having any peculiar advantage or disadvantage as to the place where -he works. - -Hence the reason why some people thrive by their industry, and others -not; why some manufactures flourish in one place and not in another. - -II. The second thing to be known, is the value of the workman’s -subsistence and necessary expence, both for supplying his personal -wants, and providing the instruments belonging to his profession, which -must be taken upon an average as above; except when the nature of the -work requires the presence of the workman in the place of consumption: -for although some trades, and almost every manufacture, may be carried -on in places at a distance, and therefore may fall under one general -regulation as to prices, yet others there are which, by their nature, -require the presence of the workman in the place of consumption; and in -that case the prices must be regulated by circumstances relative to -every particular place. - -III. The third and last thing to be known, is the value of the -materials, that is the first matter employed by the workman; and if the -object of his industry be the manufacture of another, the same process -of inquiry must be gone through with regard to the first, as with regard -to the second: and thus the most complex manufactures may be at last -reduced to the greatest simplicity. I have been more particular in this -analysis of manufactures than was absolutely necessary in this place, -that I might afterwards with the greater ease point out the methods of -diminishing the prices of them. - -These three articles being known, the price of manufacture is -determined. It cannot be lower than the amount of all the three, that -is, than the real value; whatever it is higher, is the manufacturer’s -profit. This will ever be in proportion to demand, and therefore will -fluctuate according to circumstances. - -Hence appears the necessity of a great demand, in order to promote -flourishing manufactures. - -By the extensive dealings of merchants, and their constant application -to the study of the balance of work and demand, all the above -circumstances are known to them, and are made known to the industrious, -who regulate their living and expence according to their certain profit. -I call it certain, because under these circumstances they seldom -overvalue their work, and by not overvaluing it, they are sure of a -sale: a proof of this may be had from daily experience. - -Employ a workman in a country where there is little trade or industry, -he proportions his price always to the urgency of your want, or your -capacity to pay; but seldom to his own labour. Employ another in a -country of trade, he will not impose upon you, unless perhaps you be a -stranger, which supposes your being ignorant of the value; but employ -the same workman in a work not usual in the country, consequently not -demanded, consequently not regulated as to the value, he will proportion -his price as in the first supposition. - -We may therefore conclude from what has been said, that in a country -where trade is established, manufactures must flourish, from the ready -sale, the regulated price of work, and certain profit resulting from -industry. Let us next inquire into the consequences of such a situation. - ------------------------------------------------------------------------- - - - - - CHAP. V. -_How foreign Trade opens to an industrious People, and the consequences - of it to_ the Merchants _who set it on foot_. - - -The first consequence of the situation described in the preceding -chapter, is, that wants are easily supplied, for the adequate value of -the thing wanted. - -The next consequence is, the opening of foreign trade under its two -denominations of passive and active. Strangers and people of distant -countries finding the difficulty of having their wants supplied at home, -and the ease of having them supplied from this country, immediately have -recourse to it. This is passive trade. The active is when merchants, who -have executed this plan at home with success, begin to transport the -labour of their countrymen into other regions, which either produce, or -are capable of producing such articles of consumption, proper to be -manufactured, as are most demanded at home; and consequently will meet -with the readiest sale, and fetch the largest profits. - -Here then is the opening of foreign trade, under its two denominations -of active and passive: but as our present point of view is the -consequences of this revolution to the merchants, we shall take no -farther notice, in this place, of that division: it will naturally come -in afterwards. - -What then are the consequences of this new commerce to our merchants, -who have left their homes in quest of gain abroad? - -The first is, that arriving in any new country, they find themselves in -the same situation, with regard to the inhabitants, as the workman in -the country of no trade, with regard to those who employed him; that is, -they proportion the price of their goods to the eagerness of acquiring, -or the capacity of paying, in the inhabitants, but never to their real -value. - -The first profits then, upon this trade, must be very considerable; and -the demand from such a country will be _high_ or _low_, _great_ or -_small_, according to the spirit, not the real wants of the people: for -these in all countries, as has been said, must first be supplied by the -inhabitants themselves, before they cease to labour. - -If the people of this not-trading country (as we shall now call it) be -abundantly furnished with commodities useful to the traders, they will -easily part with them, at first, for the instruments of luxury and ease; -but the great profit of the traders will insensibly increase the demand -for the productions of their new correspondents; this will have the -effect of producing a competition between themselves, and thereby of -throwing the demand on their side, from the principles I shall -afterwards explain. This is perpetually a disadvantage in traffic: the -most unpolished nations in the world quickly perceive the effects of it; -and are taught to profit of the discovery, in spite of the address of -those who are the most expert in commerce. - -The traders will, therefore, be very fond of falling upon every method -and contrivance to inspire this people with a taste of refinement and -delicacy. Abundance of fine presents, consisting of every instrument of -luxury and superfluity, the best adapted to the genius of the people, -will be given to the prince and leading men among them. Workmen will -even be employed at home to study the taste of the strangers, and to -captivate their desires by every possible means. The more eager they are -of presents, the more lavish the traders will be in bestowing and -diversifying them. It is an animal put up to fatten, the more he eats -the sooner he is fit for slaughter. When their taste for superfluity is -fully formed, when the relish for their former simplicity is -sophisticated, poisoned, and obliterated, then they are surely in the -fetters of the traders, and the deeper they go, the less possibility -there is of their getting out. The presents then will die away, having -served their purpose; and if afterwards they are found to be continued, -it will probably be to support the competition against other nations, -who will incline to share of the profits. - -If, on the contrary, this not-trading nation does not abound with -commodities useful to the traders, these will make little account of -trading with them, whatever their turn may be; but if we suppose this -country inhabited by a laborious people, who, having taken a taste for -refinement from the traders, apply themselves to agriculture, in order -to produce articles of subsistence, they will sollicit the merchants to -give them part of their manufactures in exchange for those; and this -trade will undoubtedly have the effect of multiplying numbers in the -trading nation. But if food cannot be furnished, nor any other branch of -production found out to support the correspondence, the taste for -refinement will soon die away, and trade will stop in this quarter. - -Had it not been for the furs in those countries adjacent to Hudson’s -Bay, and in Canada, the Europeans never would have thought of supplying -instruments of luxury to those nations; and if the inhabitants of those -regions had not taken a taste for the instruments of luxury furnished to -them by the Europeans, they never would have become so indefatigable nor -so dexterous hunters. At the same time we are not to suppose, that ever -these Americans would have come to Europe in quest of our manufactures. -It is therefore owing to our merchants, that these nations are become in -any degree fond of refinement; and this taste, in all probability, will -not soon exceed the proportion of the productions of their country. From -these beginnings of foreign trade it is easy to trace its increase. - -One step towards this, is the establishing correspondences in foreign -countries; and these are more or less necessary in proportion as the -country where they are established is more or less polished or -acquainted with trade. They supply the want of posts, and point out to -the merchants what proportion the productions of the country bear to the -demand of the inhabitants for manufactures. This communicates an idea of -commerce to the not-trading nation, and they insensibly begin to fix a -determined value upon their own productions, which perhaps bore no -determined value at all before. - -Let me trace a little the progress of this refinement in the savages, in -order to shew how it has the effect of throwing the demand upon the -traders, and of creating a competition among them, for the productions -of the new country. - -Experience shews, that in a new discovered country, merchants constantly -find some article or other of its productions, which turns out to a -great account in commerce; and we see that the longer such a trade -subsists, and the more the inhabitants take a taste for European -manufactures, the more their own productions rise in their value, and -the less profit is made by trading with them, even in cases where the -trade is carried on by companies; which is a very wise institution for -one reason, that it cuts off a competition between our merchants. - -This we shall shew, in its proper place, to be the best means of keeping -prices low in favour of the nation; however it may work a contrary -effect with respect to individuals who must buy from these monopolies. - -When companies are not established, and when trade is open, our -merchants, by their eagerness to profit of the new trade, betray the -secrets of it, they enter into competition for the purchase of the -foreign produce, and this raises prices and favours the commerce of the -most ignorant savages. - -Some account for this in a different manner. They alledge that it is not -this competition which raises prices; because there is also a -competition among the savages as to which of them shall get the -merchandize; and this may be sufficient to counterbalance the other, and -in proportion as the quantity of goods demanded by the savages, as an -exchange for the produce of their country, becomes greater, a less -quantity of this produce must be given for every parcel of the goods. - -To this I answer, That I cannot admit this apparent reason to be -consistent with the principles of trade, however ingenious the conceit -may be. - -The merchant constantly considers his own profit in parting with his -goods, and is not influenced by the reasons of expediency which the -savages may find, to offer him less than formerly; for were this -principle of proportion admitted generally, the price of merchandize -would always be at the discretion of the buyers. - -The objection here stated is abundantly plain; but it must be resolved -in a very different manner. Here are two solutions: - -1. Prices, I have said, are made to rise, according as demand is _high_, -not according as it is _great_. Now, in the objection, it is said, that, -in proportion as the demand is _great_, a less proportion of the -equivalent must go to every parcel of the merchandize; which I apprehend -to be false: and this shews the necessity of making a distinction -between the _high_ and the _great_ demand, which things are different in -trade, and communicate quite different ideas. - -2. In all trade there is an exchange, and in all exchange, we have said, -there is a reciprocal demand implied: it must therefore be exactly -inquired into, on which hand the competition between the demanders is -found; that is to say, on which hand it is _strongest_; according to the -distinction in the second chapter. - -If the inhabitants of the country be in competition for the -manufactures, goods will rise in their price most undoubtedly, let the -quantity of the produce they have to offer be large or small; but so -soon as these prices rise above the faculties, or desire of buying, in -certain individuals, their demand will stop, and their equivalent will -be prevented from coming into commerce. This will disappoint the -traders; and therefore, as their gains are supposed to be great, either -a competition will take place among themselves, who shall carry off the -quantity remaining, supposing them to have separate interests; or, if -they are united, they may, from a view of expediency, voluntarily sink -their price, in order to bring it within the compass of the faculties, -or intention, to buy in those who are still possessed of a portion of -what they want. - -It is from the effects of competition among sellers that I apprehend -prices are brought down, not from any imaginary proportion of quantity -to quantity in the market. But of this more afterwards, in its proper -place. - -So soon as the price of manufactures is brought as low as possible, in -the new nation; if the surplus of their commodities does not suffice to -purchase a quantity of manufactures proportioned to their wants, this -people must begin to labour: for labour is the necessary consequence of -want, real or imaginary; and by labour it will be supplied. - -When this comes to be the case, we immediately find two trading nations -in place of one; the balance of which trade will always be in favour of -the most industrious and frugal; as shall be fully explained in another -place. - -Let me now direct my inquiry more particularly towards the consequences -of this new revolution produced by commerce, relative to the not-trading -nation, in order to shew the effect of a passive foreign trade. I shall -spare no pains in illustrating, upon every occasion, as I go along, the -fundamental principles of commerce, demand, and competition, even -perhaps at the expence of appearing tiresome to some of my readers. - ------------------------------------------------------------------------- - - - - - CHAP. VI. - _Consequences of the introduction of a passive foreign Trade among a - People who live in Simplicity and Idleness._ - - -We now suppose the arrival of traders, all in one interest, with -instruments of luxury and refinement, at a port in a country of great -simplicity of manners, abundantly provided by nature with great -advantages for commerce, and peopled by a nation capable of adopting a -taste for superfluities. - -The first thing the merchants do, is to expose their goods, and point -out the advantages of many things, either agreeable or useful to mankind -in general, such as wines, spirits, instruments of agriculture, arms, -and ammunition for hunting, nets for fishing, manufactures for clothing, -and the like. The advantages of these are presently perceived, and such -commodities are eagerly sought after. - -The natives on their side produce what they most esteem, generally -something superfluous or ornamental. The traders, after examining all -circumstances, determine the object of their demand, giving the least -quantity possible in return for this superfluity, in order to impress -the inhabitants with a high notion of the value of their own -commodities; but as this parsimony may do more hurt than good to their -interest, they are very generous in making presents, from the principles -mentioned above. - -When the exchange is completed, and the traders depart, regret is -commonly mutual; the one and the other are sorry that the superfluities -of the country fall short. A return is promised by the traders, and -assurances are given by the natives, of a better provision another time. - -What are the first consequences of this revolution? - -It is not evident, that, in order to supply an equivalent for this new -want, more hands must be set to work than formerly. And it is evident -also, that this augmentation of industry will not essentially increase -numbers, as was supposed to be the effect of it through the whole train -of our reasoning in the first book. Why? Because _there_ the produce of -the industry was supposed to be consumed at home; and _here_ it is -intended to be exported. But if we can find out any additional -consumption at home even implied by this new trade, I think it will have -the effect of augmenting numbers. An example will make this plain. - -Let me suppose the superfluity of this country to be the skins of wild -beasts, not proper for food; the manufacture sought for, brandy. The -brandy is sold for furs. He who has furs, or he who can spare time to -hunt for them, will drink brandy in proportion: but I cannot find out -any reason to conclude from this simple operation, that one man more in -the country must necessarily be fed, (for I have taken care to suppose, -that the flesh of the animals is not proper for food) or that any -augmentation of agriculture must of consequence ensue from this new -traffic. - -But let me throw in a circumstance which may imply an additional -consumption at home, and then examine the consequences. - -A poor creature, who has no equivalent to offer for food, who is -miserable, and ready to perish for want of subsistence, goes a-hunting, -and kills a wolf; he comes to a farmer with the skin, and says; You are -well fed, but you have no brandy; if you will give me a loaf, I will -give you this skin, which the strangers are so fond of, and they will -give you brandy. But, says the farmer, I have no more bread than what is -sufficient for my own family. As for that, replies the other, I will -come and dig in your ground, and you and I will settle our account as to -the small quantity I desire of you. The bargain is made; the poor fellow -gets his loaf, and lives at least; perhaps he marries, and the farmer -gets a dram. But had it not been for this dram, (that is, this new want) -which was purchased by the industry of this poor fellow, by what -argument could he have induced the farmer, to part with a loaf. - -I here exclude the sentiment of charity. This alone, as I have often -observed, is a principle of multiplication, and if it was admitted here, -it would ruin all my supposition; but as true it is, on the other hand, -that could the poor fellow have got bread by begging, he would not -probably have gone a-hunting. - -Here then it appears, that the very dawning of trade, in the most -unpolished countries, implies a multiplication. This is enough to point -out the first step, and to connect the subject of our present inquiries -with what has been already discussed in relation to other circumstances. -I proceed. - -So soon as all the furs are disposed of, and a taste for superfluity -introduced, both the traders and the natives will be equally interested -in the advancement of industry in this country. Many new objects of -profit for the first will be discovered, which the proper employment of -the inhabitants, in reaping the natural advantages of their soil and -climate, will make effectual. The traders will therefore endeavour to -set on foot many branches of industry among the savages, and the -allurements of brandy, arms, and clothing, will animate these in the -pursuit of them. Let me here digress for a few lines. - -If we suppose slavery to be established in this country, then all the -slaves will be set to work, in order to provide furs and other things -demanded by the traders, that the masters may thereby be enabled to -indulge themselves in the superfluities brought to them by the -merchants. When liberty is the system, every one, according to his -disposition, becomes industrious, in order to procure such enjoyments -for himself. - -In the first supposition, it is the head of the master which conducts -the labour of the slave, and turns it towards ingenuity: in the second, -every head is at work, and every hand is improving in dexterity. Where -hands therefore are principally necessary, the slaves have the -advantage; where heads are principally necessary, the advantage lies in -favour of the free. Set a man to labour at so much a day, he will go on -at a regular rate, and never seek to improve his method: let him be -hired by the piece, he will find a thousand expedients to extend his -industry. This is exactly the difference between the slave and the free -man. From this I account for the difference between the progress of -industry in antient and modern times. Why was a _peculium_ given to -slaves, but to engage them to become dextrous? Had there been no -_peculium_ and no _libertini_, or free men, who had been trained to -labour, there would have been little more industry any where, than there -was in the republic of Lycurgus, where, I apprehend, neither the one or -the other was to be found. I return. - -When once this revolution is brought about; when those who formerly -lived in simplicity become industrious; matters put on a new face. Is -not this operation quite similar to that represented in the fifth -chapter of the first book? There I found the greatest difficulty, in -shewing how the mutual operations of supplying food and other wants -could have the effect of promoting population and agriculture, among a -people who were supposed to have no idea of the system proposed to be -put in execution. Here the plan appears familiar and easy. The -difference between them seems to resemble that of a child’s learning a -language by grammar, or learning it by the ear in the country where it -is spoken. In the first case, many throw the book aside, but in the -other none ever fail of success. - -I have said, that matters put on a new face; that is to say, we now find -two trading nations instead of one, with this difference, however, that -as hitherto we have supposed the merchants all in one interest, the -compound demand, that is, the competition of the buyers, has been, and -must still continue on the side of the natives. This is a great -prejudice to their interest, but as it is not supposed sufficient to -check their industry, nor to restrain their consumption of the -manufactures, let me here examine a little more particularly the -consequences of the principle of demand in such a situation; for -although I allow, that it can never change sides, yet it may admit of -different modifications, and produce different effects, as we shall -presently perceive. - -The merchants we suppose all in one interest, consequently there can be -no competition among them; consequently no check can be put upon their -raising their prices, as long as the prices they demand are complied -with. So soon as they are raised to the full extent of the abilities of -the natives, or of their inclination to buy, the merchants have the -choice of three things, which are all perfectly in their option, and the -preference to be given to the one or the other depends intirely upon -themselves, and upon the circumstances I am going to point out. - -First, they may support the _high_ demand; that is, not lower their -price; which will preserve a high estimation of the manufactures in the -opinion of the inhabitants, and render the profits upon their trade the -greatest possible. This part they may possibly take, if they perceive -the natives doubling their diligence, in order to become able, in time, -to purchase considerable cargoes at a high value; from which supposition -is implied a strong disposition in the people to become luxurious, since -nothing but want of ability prevents them from complying with the -highest demand: but still another circumstance must concur, to engage -the merchants not to lower their price. The great proportion of the -goods they seek for, in return, must be found in the hands of a few. -This will be the case if slavery be established; for then there must be -many poor, and few rich: and they are commonly the rich consumers who -proportion the price they offer, rather to their desires, than to the -value of the thing. - -The second thing which may be done is, to open the door to a _great_ -demand; that is, to lower their prices. This will sink the value of the -manufactures in the opinion of the inhabitants, and render profits less -in proportion, although indeed, upon the voyage, the profits may be -greater. - -This part they will take, if they perceive the inhabitants do not -incline to consume great quantities of the merchandize at a high value, -either from want of abilities or inclination; and also, if the profits -upon the trade depend upon a large consumption, as is the case in -merchandize of a low value, and suited chiefly to the occasions of the -lower sort. Such motives of expediency will be sufficient to make them -neglect a _high_ demand, and prefer a _great_ one; and the more, when -there is a likelihood that the consumption of low-priced goods in the -beginning may beget a taste for others of a higher value, and thus -extend in general the taste of superfluity. - -A third part to be taken, is the least politic, and perhaps the most -familiar. It is to profit by the competition between the buyers, and -encourage the rising of demand as long as possible; when this comes to a -stop, to make a kind of auction, by first bringing down the prices to -the level of the highest bidders, and so to descend by degrees, in -proportion as demand sinks. Thus we may say with propriety, according to -our definitions of demand, that it commonly becomes _great_, in -proportion as prices sink. By this operation, the traders will profit as -much as possible, and sell off as much of their goods as the profits -will permit. - -I say, this plan, in a new discovered country, is not politic, as it -both discovers a covetousness and a want of faith in the merchants, and -also throws open the secrets of their trade to those who ought to be -kept ignorant of them. - -Let me next suppose, that the large profits of our merchants shall be -discovered by others, who arrive at the same ports in a separate -interest, and who enter into no combination which might prevent the -natural effects of competition. - -Let the state of demand among the natives be supposed the same as -formerly, both as to _height_ and _greatness_, in consequence of the -operation of the different principles, which might have induced our -merchants to follow one or other of the plans we have been describing; -we must however still suppose, that they have been careful to preserve -considerable profits upon every branch. - -If we suppose the inhabitants to have increased in numbers, wealth, and -taste for superfluity, since the last voyage, demand will be found -rather on the rising hand. Upon the arrival of the merchants in -competition with the former, both will offer to sale; but if both stand -to the same prices, it is very natural to suppose, that the former -dealers will obtain a preference; as _cæteris paribus_, it is always an -advantage to know and to be known. The last comers, therefore, have no -other way left to counterbalance this advantage, but to lower their -prices. - -This is a new phoenomenon: here the fall of prices is not voluntary as -formerly; not consented to from expediency; not owing to a failure of -demand, but to the influence of a new principle of commerce, to wit, a -double competition. This I shall now examine with all the care I am -capable of. - ------------------------------------------------------------------------- - - - - - CHAP. VII. - _Of double Competition._ - - -When _competition_ is much stronger on one side of the contract than on -the other, I call it _simple_, and then it is a term synonimous with -what I have called _compound demand_. This is the species of competition -which is implied in the term _high demand_, or when it is said, that -_demand raises prices_. - -_Double competition_ is, when, in a certain degree, it takes place on -both sides of the contract at once, or vibrates alternately from one to -the other. This is what restrains prices to the adequate value of the -merchandize. - -I frankly confess I feel a great want of language to express my ideas, -and it is for this reason I employ so many examples, the better to -communicate certain combinations of them, which otherwise would be -inextricable. - -The great difficulty is to distinguish clearly between the principles of -_demand_, and those of _competition_: here then follows the principal -differences between the two, relatively to the effects they produce -severally in the mercantile contract of buying and selling, which I here -express shortly by the word _contract_. - -_Simple demand_ is what brings the quantity of a commodity to market. -Many demand, who do not buy; many offer, who do not sell. This demand is -called _great_ or _small_; it is said to _increase_, to _augment_, to -_swell_; and is expressed by these and other synonimous terms, which -mark an augmentation or diminution of quantity. In this species, two -people never demand the same thing, but a part of the same thing, or -things quite alike. - -_Compound demand_ is the principle which raises prices, and never can -make them sink; because in this case more than one demands the very same -thing. It is solely applicable to the buyers, in relation to the price -they offer. This demand is called _high_ or _low_, and is said to -_rise_, to _fall_, to _mount_, to _sink_, and is expressed by these and -other synonimous terms. - -_Simple competition_, when between buyers, is the same as _compound_ or -_high demand_, but differs from it in so far, as this may equally take -place among sellers, which _compound demand_ cannot, and then it works a -contrary effect: it makes prices _sink_, and is synonimous with _low -demand_: it is this competition which overturns the balance of work and -demand; of which afterwards. - -_Double competition_ is what is understood to take place in almost every -operation of trade; it is this which prevents the excessive rise of -prices; it is this which prevents their excessive fall. While _double -competition_ prevails, the balance is perfect, trade and industry -flourish. - -The capital distinction, therefore, between the terms _demand_ and -_competition_ is, that _demand_ is constantly relative to the buyers, -and when money is not the price, as in barter, then it is relative to -that side upon which the greatest _competition_ is found. - -We therefore say, with regard to _prices_, demand is _high_ or _low_. -With regard _to the quantity of merchandize_, demand is _great_ or -_small_. With regard _to competition_, it is always called _great_ or -_small_, _strong_ or _weak_. - -_Competition_, I have said, is, with equal propriety, applicable to both -parties in the contract. A _competition_ among buyers is a proper -expression; a _competition_ among sellers, who have the merchandize, is -fully as easily understood, though it be not quite so striking, for -reasons which an example will make plain. - -You come to a fair, where you find a great variety of every kind of -merchandize, in the possession of different merchants. These, by -offering their goods to sale, constitute a tacit competition; every one -of them wishes to sell in preference to another, and at the same time -with the best advantage to himself. - -The buyers begin, by cheapning at every shop. The first price asked -marks the covetousness of the seller; the first price offered, the -avarice of the buyer. From this operation, I say, competition begins to -work its effects on both sides, and so becomes double. The principles -which influence this operation are now to be deduced. - -It is impossible to suppose the same degree of eagerness, either to buy -or to sell, among several merchants; because the degree of eagerness I -take to be exactly in proportion to their view of profit; and as these -must necessarily be influenced and regulated by different circumstances, -that buyer, who has the best prospect of selling again with profit, -obliges him, whose prospect is not so good, to content himself with -less; and that seller, who has bought to the best advantage, obliges -him, who has paid dearer for the merchandize, to moderate his desire of -gain. - -It is from these principles, that competition among buyers and sellers -must take place. This is what confines the fluctuation of prices within -limits which are compatible with the reasonable profits of both buyers -and sellers; for, as has been said, in treating of trade, we must -constantly suppose the whole operation of buying and selling to be -performed by merchants; the buyer cannot be supposed to give so high a -price as that which he expects to receive, when he distributes to the -consumers, nor can the seller be supposed to accept of a lower than that -which he paid to the manufacturer. This competition is properly called -double, because of the difficulty to determine upon which side it -stands; the same merchant may have it in his favour upon certain -articles, and against him upon others; it is continually in vibration, -and the arrival of every post may less or more pull down the heavy -scale. - -In every transaction between merchants, the profit resulting from the -sale must be exactly distinguished from the value of the merchandize. -The first _may_ vary, the last never _can_. It is this profit alone -which can be influenced by competition; and it is for that reason we -find such uniformity every where in the prices of goods of the same -quality. - -The competition between sellers does not appear so striking, as that -between buyers; because he who offers to sale, appears only passive in -the first operation; whereas the buyers present themselves one after -another; they make a demand, and when the merchandize is refused to one -at a certain price, a second either offers more, or does not offer at -all: but so soon as another seller finds his account in accepting the -price the first had refused, then the first enters into competition, -providing his profits will admit his lowering the first price, and thus -competition takes place among the sellers, until the profits upon their -trade prevent prices from falling lower. - -In all markets, I have said, this competition is varying, though -insensibly, on many occasions; but in others, the vibrations are very -perceptible. Sometimes it is found strongest on the side of the buyers, -and in proportion as this grows, the competition between the sellers -diminishes. When the competition between the former has raised prices to -a certain standard, it comes to a stop; then the competition changes -sides, and takes place among the sellers, eager to profit of the highest -price. This makes prices fall, and according as they fall, the -competition among the buyers diminishes. They still wait for the lowest -period. At last it comes; and then perhaps some new circumstance, by -giving the balance a kick, disappoints their hopes. If therefore it ever -happens, that there is but one interest upon one side of the contract, -as in the example in the former chapter, where we supposed the sellers -united, you perceive, that the rise of the price, occasioned by the -competition of the buyers, and even its coming to a stop, could not -possibly have the effect of producing any competition on the other side; -and therefore, if prices come afterwards to sink, the fall must have -proceeded from the prudential considerations of adapting the price to -the faculties of those, who, from the height of it, had withdrawn their -demand. - -From these principles of competition, the forestalling of markets is -made a crime, because it diminishes the competition which ought to take -place between different people, who have the same merchandize to offer -to sale. The forestaller buys all up, with an intention to sell with -more profit, as he has by that means taken other competitors out of the -way, and appears with a single interest on one side of the contract, in -the face of many competitors on the other. This person is punished by -the state, because he has prevented the price of the merchandize from -becoming justly proportioned to the real value; he has robbed the -public, and enriched himself; and in the punishment, he makes -restitution. Here occur two questions to be resolved, for the sake of -illustration. - -Can competition among buyers possibly take place, when the provision -made is more than sufficient to supply the quantity demanded? On the -other hand, can competition take place among the sellers, when the -quantity demanded exceeds the total provision made for it? - -I think it may in both cases; because in the one and the other, there is -a competition implied on one side of the contract, and the very nature -of this competition implies a possibility of its coming on the other, -provided separate interests be found upon both sides. But to be more -particular. - -1. Experience shews, that however justly the proportion between the -demand and the supply may be determined in fact, it is still next to -impossible to discover it exactly, and therefore buyers can only -regulate the prices they offer, by what they may reasonably expect to -sell for again. The sellers, on the other hand, can only regulate the -prices they expect, by what the merchandize has cost them when brought -to market. We have already shewn, how, under such circumstances, the -several interests of individuals affect each other, and make the balance -vibrate. - -2. The proportion between the supply and the demand is seldom other than -_relative_ among merchants, who are supposed to buy and sell, not from -necessity, but from a view to profit. What I mean by _relative_ is, that -their demand is _great_ or _small_, according to prices: there may be a -great demand for grain at 35 shillings _per_ quarter, and no demand at -all for it at 40 shillings; I say, among merchants. - -Here I must observe, how essential it is, to attend to the smallest -circumstance in matters of this kind. The circumstance I here have in my -eye, is the difference I find in the effect of competition, when it -takes place purely among merchants on both sides of the contract, and -when it happens, that either the consumers mingle themselves with the -merchant-buyers, or the manufacturers, that is, the furnishers, mingle -themselves with the merchant-sellers. This combination I shall -illustrate, by the solution of another question, and then conclude my -chapter with a few reflections upon the whole. - -Can there be no case formed, where the competition upon one side may -subsist, without a possibility of its taking place on the other, -although there should be separate interests upon both? - -I answer. The case is hardly supposable among merchants, who buy and -sell with a view to profit; but it is absolutely supposable, and that is -all, when the direct consumers are the buyers; when the circumstances of -one of the parties is perfectly known; and when the competition is so -strong upon one side, as to prevent a possibility of its becoming -double, before the whole provision is sold off, or the demand satisfied. -Let me have recourse to examples. - -Grain arriving in a small quantity, at a port where the inhabitants are -starving, produces so great a competition among the consumers, who are -the buyers, that their necessity becomes evident; all the grain is -generally bought up before prices can rise so high as to come to a stop; -because nothing but want of money, that is, an impossibility of -complying with the prices demanded by the merchants, can restrain them: -but if you suppose, even here, that prices come naturally to a stop; or -that, after some time, they fall lower, from prudential considerations, -then there is a possibility of a competition taking place among the -sellers, from the principles above deduced. If, on the contrary, the -stop is not natural, but occasioned by the interposition of the -magistrate, from humanity, or the like, there will be no competition, -because then the principles of commerce are suspended; the sellers are -restrained on one side, and they restrain the buyers on the other. Or -rather, indeed, it is the magistrate, or compassion, who in a manner -fixes the price, and performs the office of both buyer and seller. - -A better example still may be found, in a competition among sellers; -where it may be so strong, as to render a commodity in a manner of no -value at all, as in the case of an uncommon and unexpected draught of -fish, in a place of small consumption, when no preparations have been -made for salting them. There can be then no competition among the -buyers; because the market cannot last, and they find themselves -entirely masters, to give what price they please, being sure the sellers -must accept of it, or lose their merchandize. In the first example, -humanity commonly stops the activity of the principle of competition; in -the other it is stopt by a certain degree of fair-dealing, which forbids -the accepting of a merchandize for nothing. - -In proportion therefore as the rising of prices can stop demand, or the -sinking of prices can increase it, in the same proportion will -competition prevent either the rise or the fall from being carried -beyond a certain length: and if such a case can be put, where the rising -of prices cannot stop demand, nor the lowering of prices augment it, in -such cases double competition has no effect; because these circumstances -unite the most separate interests of buyers and sellers in the -mercantile contract, and when upon one side there is no separate -interest, there can then be no competition. - -From what has been said, we may form a judgment of the various degrees -of competition. A book not worth a shilling, a fish of a few pounds -weight, are often sold for considerable sums. The buyers here are not -merchants. When an ambassador leaves a court in a hurry, things are sold -for less than the half of their value: he is no merchant, and his -situation is known. When, at a public market, there are found consumers, -who make their provision; or manufacturers, who dispose of their goods -for present subsistence; the merchants, who are respectively upon the -opposite side of the contract to these, profit of their competition; and -those who are respectively upon the same side with them, stand by with -patience, until they have finished their business. Then matters come to -be carried on between merchant and merchant, and then, I allow, that -profits may rise and fall, in the proportion of quantity to demand; that -is to say, if the provision is less than the demand, the competition -among the demanders, or the rise of the price, will be in the compound -proportion of the falling short of the commodity, and of the prospect of -selling again with profit. It is this combination which regulates the -competition, and keeps it within bounds. It can affect but the profits -upon the transaction; the intrinsic value of the commodity stands -immoveable: nothing is ever sold below the real value; nothing is ever -bought for more than it may probably bring. I mean in general. Whereas -so soon as consumers and needy manufacturers mingle in the operation, -all proportion is lost. The competition between them is too strong for -the merchants; the balance vibrates by jerks. In such markets merchants -seldom appear: the principal objects there, are the fruits and -productions of the earth, and articles of the first necessity for life, -not manufactures strictly so called. A poor fellow often sells, to -purchase bread to eat; not to pay what he did eat, while he was employed -in the work he disposes of. The consumer often measures the value of -what he is about to purchase, by the weight of his purse, and his desire -to consume. - -As these distinctions cannot be conveyed in the terms by which we are -obliged to express them, and as they must frequently be implied, in -treating of matters relating to trade and industry, I thought the best -way was, to clear up my own ideas concerning them, and to lay them in -order before my reader, before I entred farther into my subject. - -All difference of opinion upon matters of this nature proceeds, as I -believe, from our language being inadequate to express our ideas, from -our inattention, in using terms which appear synonimous, and from our -natural propensity to include, under general rules, things which, upon -some occasions, common reason requires to be set asunder. - ------------------------------------------------------------------------- - - - - - CHAP. VIII. - _Of what is called Expence, Profit, and Loss._ - - -As we have been employed in explaining of terms, it will not be amiss to -say a word concerning those which stand in the title of this chapter. - -The term _expence_, when simply expressed, without any particular -relation, is always understood to be relative to money. This kind I -distinguish under the three heads, of _private_, _public_, and -_national_. - -1. _Private_ expence is, what a private person, or private society, lays -out, either to provide articles of consumption, or something more -permanent, which may be conducive to their ease, convenience, or -advantage. Thus we say, _a large domestic expence_, relative to one who -spends a great income. We say, a merchant has been at _great expence_ -for magazines, for living, for clerks, &c. but never that he has been at -any in buying goods. In the same way a manufacturer may expend for -building, machines, horses, and carriages, but never for the matter he -manufactures. When a thing is bought, in order to be sold again, the sum -employed is called money _advanced_; when it is bought not to be sold, -it may be said to be _expended_. - -2. _Public expence_ is, the employment of that money, which has been -contributed by individuals, for the current service of the state. The -contribution, or gathering it together, represents the effects of many -articles of _private expence_; the laying it out when collected, is -_public expence_. - -3. _National expence_, is what is expended out of the country: this is -what diminishes national wealth. The principal distinction to be here -attended to, is between _public expence_, or the laying out of public -money, and _national expence_, which is the alienating the nation’s -wealth in favour of strangers. Thus the greatest _public expence_ -imaginable, may be no national expence; because the money may remain at -home. On the other hand, the smallest _public_, or even _private -expence_, may be a national expence; because the money may go abroad. - -_Profit_, and _loss_, I divide into _positive_, _relative_, and -_compound_. _Positive profit_, implies no loss to any body; it results -from an augmentation of labour, industry, or ingenuity, and has the -effect of swelling or augmenting the public good. - -_Positive loss_, implies no profit to any body; it is what results from -the cessation of the former, or of the effects resulting from it, and -may be said to diminish the public good. - -_Relative profit_, is what implies a loss to some body; it marks a -vibration of the balance of wealth between parties, but implies no -addition to the general stock. - -_Relative loss_, is what, on the contrary, implies a profit to some -body; it also marks a vibration of the balance, but takes nothing from -the general stock. - -The _compound_ is easily understood; it is that species of profit and -loss which is partly _relative_, and partly _positive_. I call it -compound, because both kinds may subsist inseparably in the same -transaction. - ------------------------------------------------------------------------- - - - - - CHAP. IX. - _The general consequences resulting to a trading Nation, upon the - opening of an active foreign Commerce._ - - -Did I not intend to confine myself to very general topics in this -chapter, I might in a manner exhaust the whole subject of modern -oeconomy under this title; for I apprehend that the whole system of -modern politics is founded upon the basis of an active foreign trade. - -A nation which remains passive in her commerce, is at the mercy of those -who are active, and must be greatly favoured, indeed, by natural -advantages, or by a constant flux of gold and silver from her mines, to -be able to support a correspondence, not entirely hurtful to the -augmentation of her wealth. - -These things shall be more enlarged upon as we go along: the point in -hand, is, to consider the consequences of this trade, relatively to -those who are the actors in the operation. - -When I look upon the wide field which here opens to my view, I am -perplexed with too great a variety of objects. In one part, I see a -decent and comely beginning of industry; wealth flowing gently in, to -recompence ingenuity; numbers both augmenting, and every one becoming -daily more useful to another; agriculture proportionally extending -itself; no violent revolutions; no exorbitant profits; no insolence -among the rich; no excessive misery among the poor; multitudes employed -in producing; great oeconomy upon consumption; and all the instruments -of luxury, daily produced by the hands of the diligent, going out of the -country for the service of strangers; not remaining at home for the -gratification of sensuality. At last the augmentations come insensibly -to a stop. Then these rivers of wealth, which were in brisk circulation -through the whole world, and which returned to this trading nation as -blood returns to the heart, only to be thrown out again by new -pulsations, begin to be obstructed in their course; and flowing abroad -more slowly than before, come to form stagnations at home. These, -impatient of restraint, soon burst out into domestic circulation. Upon -this cities swell in magnificence of buildings; the face of the country -is adorned with palaces, and becomes covered with groves; luxury shines -triumphant in every part; inequality becomes more striking to the eye; -and want and misery appear more deformed, from the contrast: even -fortune grows more whimsical in her inconstancy; the beggar of the other -day, now rides in his coach; and he who was born in a bed of state, is -seen to die in a gaol, or in an alms-house. Such are the effects of -great domestic circulation. - -The statesman looks about with amazement; he, who was wont to consider -himself as the first man in the society in every respect, perceives -himself, perhaps, eclipsed by the lustre of private wealth, which avoids -his grasp when he attempts to seize it. This makes his government more -complex and more difficult to be carried on; he must now avail himself -of art and address as well as of power and force. By the help of -cajoling and intrigues, he gets a little into debt; this lays a -foundation for public credit, which, growing by degrees, and in its -progress assuming many new forms, becomes, from the most tender -beginnings, a most formidable monster, striking terror into those who -cherished it in its infancy. Upon this, as upon a triumphant war-horse, -the statesman gets a-stride, he then appears formidable a-new; his head -turns giddy; he is choaked with the dust he has raised; and at the -moment he is ready to fall, to his utter astonishment and surprize, he -finds a strong monied interest, of his own creating, which, instead of -swallowing him up as he apprehended, flies to his support. Through this -he gets the better of all opposition, he establishes taxes, multiplies -them, mortgages his fund of subsistence, either becomes a bankrupt, and -rises again from his ashes; or if he be less audacious, he stands -trembling and tottering for a while on the brink of the political -precipice. From one or the other of these perilous situations, he begins -to discover an endless path which, after a multitude of windings, still -returns into its self, and continues an equal course through this vast -labyrinth: but of this last part, more in the fourth book. - -It is now full time to leave off rhapsody, and return to reasoning and -cool inquiry, concerning the more immediate and more general effects and -revolutions produced by the opening of a foreign trade in a nation of -industry. - -The first and most sensible alteration will be an increase of demand for -manufacturers, because by supplying the wants of strangers, the number -of consumers will now be considerably augmented. What again will follow -upon this, must depend upon circumstances. - -If this revolution in the state of demand should prove too violent, the -consequence of it will be to _raise_ demand; if it should prove gradual, -it will _increase_ it. I hope this distinction is well understood, and -that the consequence appears just: for, if the supply do not increase in -proportion to the demand, a competition will ensue among the demanders; -which is the common effect of such sudden revolutions. If, on the other -hand, a gentle increase of demand should be accompanied with a -proportional supply, the whole industrious society will grow in vigour, -and in wholsome stature, without being sensible of any great advantage -or inconveniency; the change of their circumstances will even be -imperceptible. - -The immediate effects of the violent revolution will, in this example, -be flattering to some, and disagreeable to others. Wealth will be found -daily to augment, from the rising of prices, in many branches of -industry. This will encourage the industrious classes, and the idle -consumers at home will complain. I have already dwelt abundantly long -upon the effects resulting from this to the lower classes of the people, -in providing them with a certain means of subsistence. Let me now -examine in what respect even the higher classes will be made likewise to -feel the good effects of this general change, although at first they may -suffer a temporary inconveniency from it. - -Farmers, as has been observed, will have a greater difficulty in finding -servants, who, instead of labouring the ground, will choose to turn -themselves to manufactures. This we have considered in the light of -purging the lands of superfluous mouths; but every consequence in this -great chain of politics draws other consequences after it, and as they -follow one another, things put on different faces, which affect classes -differently. The purging of the land is but one of the first; here -follows another. - -The desertion of the hands employed in a trifling agriculture will at -first, no doubt, embarrass the farmers; but in a little time every thing -becomes balanced in a trading nation, because _here_ every _industrious_ -man must advance in prosperity, in spite of all general combinations of -circumstances. - -In the case before us, the relative profits upon farming must soon -become greater than formerly, because of this additional expence which -must affect the whole class of farmers; consequently, this additional -expence, instead of turning out to be a loss to either landlord or -farmer, will, after some little time, turn out to the advantage of both: -because the produce of the ground, being indispensably necessary to -every body, must in every article increase in its value. Thus in a short -time accounts will be nearly balanced on all hands; that is to say, the -same proportion of wealth will, _cæteris paribus_, continue the same -among the industrious. I say among the industrious; for those who are -either idle, or even negligent, will be great losers. - -A proprietor of land, inattentive to the causes of his farmer’s -additional expence, may very imprudently suffer his rents to fall, -instead of assisting him on a proper occasion, in order to make them -afterwards rise the higher. - -Those who live upon a determined income in money, and who are nowise -employed in traffic, nor in any scheme of industry, will, by the -augmentation of prices, be found in worse circumstances than before. - -In a trading nation every man must turn his talents to account, or he -will undoubtedly be left behind in this universal emulation, in which -the most industrious, the most ingenious, and the most frugal will -constantly carry off the prize. - -This consideration ought to be a spur to every body. The richest men in -a trading nation have no security against poverty, I mean proportional -poverty; for though they diminish nothing of their income, yet by not -increasing it in proportion to others, they lose their rank in wealth, -and from the first class in which they stood, they will slide insensibly -down to a lower. - -There is one consequence of an additional beneficial trade, which raises -demand and increases wealth; but if we suppose no proportional -augmentation of supply, it will prove at best but an airy dream which -lasts for a moment, and when the gilded scene is passed away, numberless -are the inconveniencies which are seen to follow. - -I shall now point out the natural consequences of this augmentation of -wealth drawn from foreign nations, when the statesman remains -inattentive to increase the supply both of food and manufactures, in -proportion to the augmentation of mouths, and of the demand for the -produce of industry. - -In such a situation profits will daily swell, and every scheme for -reducing them within the bounds of moderation, will be looked upon as a -hurtful and unpopular measure: be it so; but let us examine the -consequences. - -We have said, that the rise of demand for manufactures naturally -increases the value of work: now I must add, that under such -circumstances, the augmentation of riches, _in a country, either not -capable of improvement as to the soil, or where precautions have not -been taken for facilitating a multiplication of inhabitants, by the -importation of subsistence_, will be productive of the most calamitous -consequences. - -On one side, this wealth will effectually diminish the mass of the food -before produced; and on the other, will increase the number of useless -consumers. The first of these circumstances will raise the demand for -food; and the second will diminish the number of useful free hands, and -consequently raise the price of manufactures: here are shortly the -outlines of this progress. - -The more rich and luxurious a people are, the more delicate they become -in their manner of living; if they fed on bread formerly, they will now -feed on meat; if they fed on meat, they will now feed on fowl. The same -ground which feeds a hundred with bread, and a proportional quantity of -animal food, will not maintain an equal number of delicate livers. Food -must then become more scarce; demand for it rises; the rich are always -the strongest in the market; they consume the food, and the poor are -forced to starve. Here the wide door to modern distress opens; to wit, a -hurtful competition for subsistence. Farther, when a people become rich, -they think less of oeconomy; a number of useless servants are hired, to -become an additional dead weight on consumption; and when their starving -countrymen cannot supply the extravagance of the rich so cheaply as -other nations, they either import instruments of foreign luxury, or seek -to enjoy them out of their own country, and thereby make restitution of -their gains. - -Is it not therefore evident, that if, before things come to this pass, -additional subsistence be not provided by one method or other, the -number of inhabitants must diminish; although riches may daily increase -by a balance of additional matter, supposed to be brought into the -country in consequence of the hitherto beneficial foreign trade. This is -not all. I say farther, that the beneficial trade will last for a time -only. For the infallible consequence of the rise of prices at home will -be, that those nations which at first consumed your manufactures, -perceiving the gradual increase of their price, will begin to work for -themselves; or finding out your rivals who can supply them cheaper, will -open their doors to them. These again, perceiving the great advantages -gained by your traders, will begin to supply the market; and since every -thing must be cheaper in countries where we do not suppose the -concurrence of all the circumstances mentioned above, these nations will -supplant you, and be enriched in their turn. - -Here comes a new revolution. Trade is come to a stop: what then becomes -of all the hands which were formerly employed in supplying the foreign -demands? - -Were revolutions so sudden as we are obliged to represent them, all -would go to wreck; in proportion as they happen by quicker or slower -degrees, the inconveniencies are greater or smaller. - -Prices, we have said, are made to rise by competition. If the -competition of the strangers was what raised them, the distress upon the -manufacturers will be in proportion to the suddenness of their deserting -the market. If the competition was divided between the strangers and the -home consumers, the inconveniencies which ensue will be less; because -the desertion of the strangers will be in some measure made up by an -increase of home consumption which will follow upon the fall of prices. -And if, in the third case, the natives have been so imprudent as not -only to support a competition with the strangers, and thereby disgust -them from coming any more to market, but even to continue the -competition between themselves, the whole _loss_ sustained by the -revolution will be national. Wealth will cease to augment, but the -inconveniencies, in place of being felt by the manufacturers, will only -affect the state; those will continue in affluence, extolling the -generosity of their countrymen, and despising the poverty of the -strangers who had enriched them. - -Domestic luxury will here prove an expedient for preserving from ruin -the industrious part of a people, who, in subsisting themselves, had -enriched their country. No change will follow in their condition; they -will go on with a painful assiduity to labour, and if the consequences -of it become now hurtful to one part of the state, they must, at least, -be allowed to be essentially necessary for the support of the other. - -But that luxury is no necessary concomitant of foreign trade, in a -nation where the true principles of it are understood, will appear very -plain, from a contrast I am now going to point out, in the example of a -modern state, renowned for its commerce and frugality. The country I -mean, is Holland. - -A set of industrious and frugal people were assembled in a country, by -nature subject to many inconveniencies, the removing of which -necessarily employed abundance of hands. Their situation upon the -continent, the power of their former masters, and the ambition of their -neighbours, obliged them to keep great bodies of troops. These two -articles added to the numbers of the community, without either enriching -the state by their labour exported, or producing food for themselves or -countrymen. - -The scheme of a commonwealth was calculated to draw together the -industrious; but it has been still more useful in subsisting them: the -republican form of government, being there greatly subdivided, vests -authority sufficient in every part of it, to make suitable provision for -their own subsistence; and the tye which unites them, regards only -matters of public concern. Had the whole been governed by one sovereign, -or by one council, this important matter never could have been -effectuated. - -I imagine it would be impossible for the most able minister that ever -lived, to provide nourishment for a country so extended as France, or -even as England, supposing these as fully peopled as Holland is: even -although it should be admitted that a sufficient quantity of food might -be found in other countries for their subsistence. The enterprise would -be too great, abuses would multiply; the consequence would be, that the -inhabitants would die for want. But in Holland the case is different, -every little town takes care of its own inhabitants; and this care, -being the object of application and profit to so many persons, is -accomplished with success. - -When once it is laid down as a maxim in a country, that food must of -necessity be got from abroad, in order to feed the inhabitants at home, -the corn trade becomes considerable, and at the same time certain, -regular, and permanent. This was the case in Holland: as the inhabitants -were industrious, the necessary consequence has been, a very -extraordinary multiplication; and at the same time such an abundance of -grain, that instead of being in want themselves, they often supply their -neighbours. There are many examples of England’s being supplied with -grain from thence, and, which is still more extraordinary, from the -re-exportation of the very produce of its own fruitful soil. - -It is therefore evident, that the only way to support industry, is to -provide a supply of subsistence, constantly proportional to the demand -that may be made for it. This is a precaution indispensably necessary -for preventing hurtful competition. This is the particular care of the -Dutch: so long as it can be effectual, their state can fear no decline; -but whenever they come to be distressed in the markets, upon which they -depend for subsistence, they will sink into ruin. It is by mere dint of -frugality, cheap and parsimonious living, that the navigation of this -industrious people is supported. Constant employment, and an -accumulation of almost imperceptible gains, fills their coffers with -wealth, in spight of the large outgoings to which their own proper -nourishment yearly forces them. The large profits upon industry in other -countries, which are no proof of generosity, but a fatal effect of a -scanty subsistence, is far from dazzling their eyes. They seldom are -found in the list of competitors at any foreign port; if they have their -cargo to dispose of, they wait with pleasure in their own vessels, -consuming their own provisions, and at last accept of what others have -left. It may be said, that many other circumstances concur in favour of -the Dutch, besides the article of subsistence. I shall not dispute this -matter; but only remind my reader of what was said in the first book; to -wit, that if a computation be made of the hands employed in providing -subsistence, and of those who are severally taken up in supplying every -other want, their numbers will be found nearly to balance one another in -the most luxurious countries. From this I conclude, that the article of -food, among the lower classes, must bear a very high proportion to all -the other articles of their consumption; and therefore a diminution upon -the price of subsistence, must be of infinite consequence to -manufacturers, who are obliged to buy it. From this consideration, let -us judge of the consequence of such augmentations upon the price of -grain, as are familiar to us; 30 or 40 _per cent._ seems nothing. Now -this augmentation operates upon two thirds, at least, of the whole -expence of a labouring man: let any one who lives in tolerable affluence -make the application of this to himself, and examine how he would manage -his affairs if, by accidents of rains or winds, his expences were to -rise 30 _per cent._ without a possibility of restraining them; for this -is unfortunately the case with all the lower classes. From whence I -conclude, that the keeping food cheap, and still more the preserving it -at all times at an equal standard, is the fountain of the wealth of -Holland; and that any hurtful competition in this article must beget a -disorder which will affect the whole of the manufacturers of a state. - ------------------------------------------------------------------------- - - - - - CHAP. X. - _Of the Balance of Work and Demand._ - - -It is quite impossible to go methodically through the subject of -political oeconomy, without being led into anticipations. We have -frequently mentioned this balance of work and demand, and shewed how -important a matter it is for a statesman to attend to it. The thing, -therefore, in general is well understood; and all that remains to be -done, is to render our ideas more determined concerning it, and more -adequate, if possible, to the principles we have been laying down. - -We have treated fully of demand, and likewise of competition. We have -observed how different circumstances influence these terms, so as to -make them represent ideas entirely different; and we have said that -double competition supports the balance we are now to speak of, and that -single competition overturns it. - -The word demand in this chapter is taken in the most simple acceptation; -and when we say that the balance between work and demand is to be -sustained in equilibrio, as far as possible, we mean that the quantity -supplied should be in proportion to the quantity _demanded_, that is, -_wanted_. While the balance stands justly poised, prices are found in -the adequate proportion of the real expence of making the goods, with a -small addition for profit to the manufacturer and merchant. - -I have, in the fourth chapter, observed how necessary a thing it is to -distinguish the two constituent parts of every price; the value, and the -profit. Let the number of persons be ever so great, who, upon the sale -of a piece of goods, share in the profits; it is still essential, in -such enquiries as these, to suppose them distinctly separate from the -real value of the commodity; and the best way possible to discover -exactly the proportion between the one and the other, is by a scrupulous -watchfulness over the balance we are now treating of, as we shall -presently see. - -The value and profits, combined in the price of a manufacture produced -by one man, are easily distinguished, by means of the analysis we have -laid down in the fourth chapter. As long as any market is _fully_ -supplied with this sort of work, and _no more_; those who are employed -in it live by their trade, and gain no unreasonable profit: because -there is then no violent competition upon one side only, neither between -the workmen, nor between those who buy from them, and the balance gently -vibrates under the influence of a double competition. This is the -representation of a perfect balance. - -This balance is overturned in four different ways. - -Either the demand diminishes, and the work remains the same: - -Or the work diminishes, and the demand remains: - -Or the demand increases, and the work remains: - -Or the work increases, and the demand remains. - -Now each of these four combinations may, or may not, produce a -competition upon one side of the contract only. This must be explained. - -If demand diminishes, and work remains the same, which is the first -case, either those who furnish the work will enter into competition, in -which case they will hurt each other, and prices will fall below the -reasonable standard of the even balance; or they will not enter into -competition, and then prices continuing as formerly, the whole demand -will be supplied, and the remainder of the work will lie upon hand. - -This is a symptom of decaying trade. - -Let us now, on the other hand, suppose demand to increase, and work to -remain as before. - -This example points out no diminution on either side, as was the case -before, but an augmentation upon one; and is either a symptom of growing -luxury at home, or of an increase in foreign trade. - -Here the same alternation of circumstances occurs. The demanders will -either enter into competition and raise the price of work, or they will -enter into no competition; but being determined not to exceed the -ordinary standard of the perfect balance, will defer making their -provision till another time, or supply themselves in another market; -that is to say, the new demand will cease as soon as it is made, for -want of a supply. - -Whenever, therefore, this perfect balance of work and demand is -overturned by the force of a simple competition, or by one of the scales -preponderating, one of two things must happen; either a part of the -demand is not answered, or a part of the goods is not sold. - -These are the immediate effects of the overturning of the balance. - -Let me next point out the object of the statesman’s care, relatively to -such effects, and shew the consequences of their being neglected. - -We may now simplify our ideas, and instead of the former combinations, -make use of other expressions which may convey them. - -Let us therefore say, that the _fall_ or _rise_ upon either side of the -balance, is _positive_, or _relative_. _Positive_, when the side we talk -of really augments beyond, or diminishes below the usual standard. -_Relative_, when there is no alteration upon the side we speak of, and -that the subversion of the balance is owing to an alteration on the -other side. As for example: - -Instead of saying demand diminishes, and work remains the same, let us -say, demand diminishes _positively_, or work increases _relatively_; -according as the subject may lead us to speak either of the one or of -the other. This being premised, - -If the scale of work shall preponderate _positively_, it should be -inquired, whether the quantity furnished has really swelled, in all -respects, beyond the proportion of the consumption, (in which case the -statesman should diminish the number of hands, by throwing a part of -them into a new channel) or whether the imprudence of the workmen has -only made them produce their work unseasonably; in which case, proper -information, and even assistance should be given them, to prevent -merchants from taking the advantage of their want of experience: but -these last precautions are necessary only in the infancy of industry. - -If a statesman should be negligent on this occasion; if he should allow -natural consequences to follow upon one another; just as circumstances -shall determine; then it may happen, that workmen will keep upon hand -that part of their goods which exceeds the demand, until necessity -forces them to enter into competition with one another, and sell for -what they can get. Now this competition is hurtful, because it is all on -one side, and because we have supposed the preponderating of the scale -of work to be an overturning of a perfect balance, which can by no means -be set right, consistently with a scheme of thriving, but by the scale -of demand becoming heavier, and re-establishing a double competition. -Were this to happen before the workmen come to sell in competition, then -the balance would again be even, after what I call _a short vibration_, -which is no _subversion_; but when the scale of work remains too long in -the same position, and occasions a strong, hurtful, and lasting -competition, upon one side only, then, I say, the balance is -_overturned_; because this diminishes the reasonable profits, or -perhaps, indeed, obliges the workmen to sell below prime cost. The -effect of this is, that the workmen fall into distress, and that -industry suffers a discouragement; and this effect is certain. - -But it may be asked, Whether, by this fall of prices, demand will not be -increased? That is to say, will not the whole of the goods be sold off? - -I answer, That this may, or may not, be the effect of the fall, -according to circumstances: it is a contingent consequence of the -simple, but not the effect of the double competition: the distress of -the workmen is a certain and unavoidable consequence of the first. - -But supposing this contingent consequence to happen, will it not set the -balance even, by increasing the demand? I answer, the balance is then -made even by a violent shock given to industry, but it is not set even -from any principle which can support it, or make it flourish. Here is -the criterion of a perfect balance: _A positive moderate profit must -balance a positive moderate profit; the balance must vibrate, and no -loss must be found on either side_. In the example before us, the -balance stands even, it is true; the work and the demand are equally -poised as to quantity; but it is a _relative profit_, which hangs in the -scale, opposite to a _relative loss_. I wish this may be well -understood; farther illustrations will make it clear. - -Next, let me suppose the scale of _demand_ to preponderate positively. -In this case, the statesman should be still more upon his guard, to -provide a proportional supply; because the danger here may at first put -on a shew of profit, and deceive him. - -The consequences of this subversion of the balance are either, - -1st, That a competition will take place among the demanders only, which -will raise profits. Now if, after a short vibration, the supply comes to -be increased by the statesman’s care, no harm will ensue; competition -will change sides, and profits will come down again to the perfect -standard. But if the scale of demand remains preponderating, and so -keeps profits high, the consequence will be, that, in a little time, not -only the immediate seller of the goods, but also every one who has -contributed to the manufacture, will insist upon sharing these new -profits. Now the evil is not, that every one should share, or that the -profits should swell, as long as they are supported by demand, and as -long as they can truly be considered as precarious; but the mischief is, -that, in consequence of this wide repartition, and by such profits -subsisting for a long time, they insensibly become _consolidated_, or, -as it were, transformed into the intrinsic value of the goods. This, I -say, is brought about by time; because the habitual extraordinary gains -of every one employed induce the more luxurious among them to change -their way of life insensibly, and fall into the habit of making greater -consumptions, and engage the more slothful to remain idle, till they are -exhausted. When therefore it happens, that large profits have been made -for a considerable time, and that they have had the effect of forming a -taste for a more expensive way of living among the industrious, it will -not be the cessation of the demand, nor the swelling of the supply, -which will engage them to part with their gains. Nothing will operate -this effect but sharp necessity; and the bringing down of their profits, -and the throwing the workmen into distress, are then simultaneous; which -proves the truth of what I have said, that these profits become, by long -habit, virtually _consolidated_ with the real value of the merchandize. -These are the consequences of a neglected simple competition, which -raises the profits upon industry, and keeps the balance overturned for a -considerable time. - -2dly, Let me examine the consequences of this overturn in the actual -preponderancy of demand, when it does not occasion a competition among -the demanders, and consequently, when it does not increase the profits -upon industry. - -This case can only happen, when the commodity is not a matter of great -necessity, or even of great use; since the desire of procuring it is not -sufficient to engage the buyers to raise their price; unless, indeed, -this difference should proceed from the ease of providing the same, in -other markets, as cheap as formerly. This last is a dangerous -circumstance, and loudly calls for the attention of the statesman. He -must prevent, by all possible means, the desertion of the market, by a -speedy supply for all the demand, and must even perhaps give -encouragements to manufacturers, to enable them to diminish the prices -fixed by the regular standard. This is the situation of a nation which -is in the way of losing branches of her foreign trade; of which -afterwards. - -Whatever therefore be the consequence of the actual preponderancy of the -scale of demand; that is, whether it tend to raise profits, or to -discredit the market; the statesman’s care should be directed -immediately towards making the balance come even of itself, without any -shock, and that as soon as possible, by increasing the supply. For if it -be allowed to stand long in this overturned state, natural consequences -will operate a forced restitution; that is, the rise in the price, or -the call of a foreign market, will effectually cut off a proportional -part of the demand, and leave the balance in an equilibrium, -disadvantageous to trade and industry. - -In the former case, the manufacturers were forced to starve, by an -unnatural restitution, when the relative profit and loss of individuals -balanced one another. Here the manufacturers are inriched for a little -time, by a rise of profits, relative to the loss the nation sustains, by -not supplying the whole demand. This results from the competition of -their customers; but so soon as these profits become _consolidated_ with -the intrinsic value, they will cease to have the advantage of profits, -and, becoming in a manner necessary to the existence of the goods, will -cease to be considered as advantageous. These forced restitutions then, -brought about, as we have said, by selling goods below their value, by -cutting off a part of the demand, or by sending it to another market, -resembles the operation of a carrier, who sets his ass’s burden even, by -laying a stone upon the lightest end of it. He however loses none of his -merchandize; but the absurdity of the statesman is still greater, for he -appears willingly to open the heavy end of the load, and to throw part -of his merchandize into the high-way. - -I hope, by this time, I have sufficiently shewn the difference in effect -between the _simple_ and the _double_ competition; between the -_vibrations_ of this balance of work and demand, and the _overturning_ -of it. When it vibrates in moderation, and by short alternate risings -and sinkings, then industry and trade go on prosperously, and are in -harmony with each other; because both parties gain. The industrious man -is recompenced in proportion to his ingenuity; the intrinsic value of -goods does not vary, nor deceive the merchant; profits on both sides -fluctuate according to demand, but never get time to consolidate with, -and swell the real value, and never altogether disappear, and starve the -workman. - -This happy state cannot be supported but by the care of the statesman; -and when he is found negligent in the discharge of this part of his -duty, the consequence is, that either the spirit of industry, which, it -is supposed, has cost him much pains to cultivate, is extinguished, or -the produce of it rises to so high a value, as to be out of the reach of -a multitude of purchasers. - -The progress towards the one or the other of these extremes is easily -perceived, by attending to the successive overturnings of the balance. -When these are often repeated on the same side, and the balance set -right, by a succession of forced restitutions only, the same scale -preponderating a-new, then is the last period soon accomplished. When, -on the contrary, the overturnings are alternate, sometimes the scale of -demand overturning the balance, sometimes the scale of work, the last -period is more distant. Trade and industry subsist longer, but they -remain in a state of perpetual convulsion. On the other hand, when the -balance gently vibrates, then work and demand, that is, trade and -industry, like agriculture and population, prove mutually assisting to -each other, in promoting their reciprocal augmentation. - -In order therefore to preserve a trading state from decline, the -greatest care must be taken, to support a perfect balance between the -hands employed in work and the demand for their labour. That is to say, -according to former definitions, to prevent demand from ever standing -long at an immoderate height, by providing at all times a supply, -sufficient to answer the greatest that ever can be made: or, in other -words, still, in order to accustom my readers to certain expressions, to -encourage the _great_, and to discourage the _high_ demand. In this -case, competition will never be found too strong on either side of the -contract, and profits will be moderate, but sure, on both. - -If, on the contrary, there be found too many hands for the demand, work -will fall too low for workmen to be able to live; or, if there be too -few, work will rise, and manufactures will not be exported. - -For want of this just balance, no trading state has ever been of long -duration, after arriving at a certain height of prosperity. We perceive -in history the rise, progress, grandeur, and decline of Sydon, Tyre, -Carthage, Alexandria, and Venice, not to come nearer home. While these -states were on the growing hand, they were powerful; when once they came -to their height, they immediately found themselves labouring under their -own greatness. The reason of this appears from what has been said. - -While there is a demand for the trade of any country, inhabitants are -always on the increasing hand. This is evident from what has been so -often repeated in the first book, and confirmed by thousands of -examples. There never was any branch of trade established in any -kingdom, province, city, or even village; but such kingdom, province, -&c. increased in inhabitants. While this gradual increase of people is -in proportion to the growing demand for hands, the balance between work -and demand is exactly kept up: but as all augmentations must at last -come to a stop, when this happens, inconveniencies must ensue, greater -or less, according to the negligence of the statesman, and the violence -or suddenness of the revolution. - ------------------------------------------------------------------------- - - - - - CHAP. XI. - _Why in Time this Balance is destroyed._ - - -Now let us examine what may be the reason why, in a trading and -industrious nation, time necessarily destroys the perfect balance -between work and demand. - -We have already pointed out one general cause, to wit, the natural stop -which must at last be put to augmentations of every kind. - -Let us now apply this to circumstances, in order to discover in what -manner natural causes operate this stop, either by preventing the -increase of work, on one side of the balance, or the increase of demand, -on the other. When once we discover how the stop is put to -augmentations, we may safely conclude, that the continuation of the -same, or similar causes, will soon produce a diminution, and operate a -decline. - -We have traced the progress of industry, and shewn how it goes hand in -hand with the augmentation of subsistence, which is the principal -allurement to labour. Now the augmentation of food is relative to the -soil, and as long as this can be brought to produce, at an expence -proportioned to the value of the returns, agriculture, without any -doubt, will go forward in every country of industry. But so soon as the -progress of agriculture demands an additional expence, which the natural -return, at the stated prices of subsistence, will not defray, -agriculture comes to a stop, and so would numbers, did not the -consequences of industry push them forward, in spite of small -difficulties. The industrious then, I say, continue to multiply, and the -consequence is, that food becomes scarce, and that the inhabitants enter -into competition for it. - -This is no contingent consequence, it is an infallible one; because food -is an article of the first necessity, and here the provision is supposed -to fall short of the demand. This raises the profits of those who have -food ready to sell; and as the balance upon this article must remain -overturned for some time, without the interposition of the statesman, -these profits will be consolidated with the price, and give -encouragement to a more expensive improvement of the soil. I shall here -interrupt the examination of the consequences of this revolution as to -agriculture, until I have examined the effects which the rise of the -price of food produces on industry, and on the demand for it. - -This augmentation on the value of subsistence must necessarily raise the -price of all work, because we are here speaking of an industrious people -fully employed, and because subsistence is one of the three articles -which compose the intrinsic value of their work, as has been said. - -The rise therefore, upon the price of work, not being any augmentation -of that part of the price which we call profits, as happens to be the -case when a rise in demand has produced a competition among the buyers, -cannot be brought down but by increasing the supply of subsistence; and -were a statesman to mistake the real cause of the rise, and apply the -remedy of increasing the quantity of work, in order to bring down the -market, instead of augmenting the subsistence, he would occasion a great -disorder; he would introduce the hurtful simple competition between -people who labour for moderate profits, mentioned in the last chapter, -and would throw such a discouragement upon their industry, as would -quickly extinguish it altogether. - -On the other hand, did he imprudently augment the subsistence, by large -importations, he would put an end to the expensive improvements of the -soil, and this whole enterprize would fall to nothing. Here then is a -dilemma, out of which he can extricate himself by a right application of -public money, only. - -Such a necessary rise in the price of labour may either affect foreign -exportation, or it may not, according to circumstances. If it does, the -price of subsistence, at any rate, must be brought down at least to -those who supply the foreign demand; if it does not affect foreign -exportation, matters may be allowed to go on; but still the remedy must -be ready at hand, to be applied the moment it becomes expedient. - -There is one necessary augmentation upon the prices of industry, brought -about by a very natural cause, viz. the increase of population, which -may imply a more expensive improvement of the soil; that is, an -extension of agriculture. This augmentation may very probably put a stop -to the augmentation of demand for many branches of manufactures, -consequently may stop the progress of industry; and if the same causes -continue to operate in a greater degree, it may also cut off a part of -the former demand, may discredit the market, open a door to foreign -consumption, and produce the inconveniencies of poverty and distress, in -proportion to the degree of negligence in the statesman. - -I shall now give another example, of a very natural augmentation upon -the intrinsic value of work, which does not proceed from the increase of -population, but from the progress of industry itself; which implies no -internal vice in a state, but which is the necessary consequence of the -reformation of a very great one. This augmentation must be felt less or -more in every country, in proportion as industry becomes extended. - -We have said, that the introduction of manufactures naturally tends to -purge the lands of superfluous mouths: now this is a very slow and -gradual operation. A consequence of it was said to be (Book I. Chap. -xx.) an augmentation of the price of labour, because those who have been -purged off, must begin to gain their whole subsistence at the expence of -those who employ them. - -If therefore, in the infancy of industry, any branch of it shall find -itself assisted in a particular province, by the cheap labour of those -mouths superfluously fed by the land, examples of which are very -frequent, this advantage must diminish, in proportion as the cause of it -ceases; that is, in proportion as industry is extended, and as the -superfluous mouths are of consequence purged off. - -This circumstance is of the last importance to be attended to by a -statesman. Perhaps it was entirely owing to it, that industry was -enabled to set up its head in this corner. How many examples could I -give, of this assistance given to manufactures in different provinces, -where I have found the value of a day’s work, of spinning, for example, -not equal to half the nourishment of the person. This is a great -encouragement to the making of cloths; and accordingly we see some -infant manufactures dispute the market with the produce of the greatest -dexterity; the distaff dispute prices with the wheel. But when these -provinces come to be purged of their superfluous mouths, spinning -becomes a trade, and the spinners must live by it. Must not then prices -naturally rise? And if these are not supported by the statesman, or if -assistance is not given to these poor manufacturers, to enable them to -increase their dexterity, in order to compensate what they are losing in -cheapness, will not their industry fail? Will not the poor spinners be -extinguished? For it is not to be expected, that the landlord will -receive them back again from a principle of charity, after he has -discovered their former uselesness. - -A third cause of a necessary augmentation upon the intrinsic value of -goods proceeds from taxes. A statesman must be very negligent indeed, if -he does not attend to the immediate consequences of his own proper -operations. I shall not enlarge on this at present, as it would be an -unnecessary anticipation; but I shall return, to resume the part of my -reasoning which I broke off abruptly. - -I have observed, how the same cause which stops the progress of -industry, gives an encouragement to agriculture: how the rise in the -price of subsistence necessarily increases the price of work to an -industrious and well-employed people: how this cuts off a part of the -demand for work, or sends it to a foreign market. - -Now all these consequences are entirely just, and yet they seem -contradictory to another part of my reasoning, (Book I. Chap. xvi.) -where I set forth the advantages of a prodigal consumption of the -earth’s produce as advantageous to agriculture, by increasing the price -of subsistence, without taking notice, on the other hand, of the hurt -thereby done to industry, which supports the consumption of that -produce. - -The one and the other chain of consequences is equally just, and they -appear contradictory only upon the supposition, that there is no -statesman at the helm. These contradictions represent the alternate -overturn of the balance. The duty of the statesman is, to support the -double competition every where, and to permit only the gentle alternate -vibrations of the two scales. - -When the progress of industry has augmented numbers, and made -subsistence scarce, he must estimate to what height it is expedient that -the price of subsistence should rise. If he finds, that, in order to -encourage the breaking up of new lands, the price of it must rise too -high, and stand high too long, to preserve the intrinsic value of goods -at the same standard as formerly; then he must assist agriculture with -his purse, in order that exportation may not be discouraged. This will -have the effect of increasing subsistence, according to the true -proportion of the augmentation required, without raising the price of it -too high. And if that operation be the work of time, and the demand for -the augmentation be pressing, he must have subsistence imported, or -brought from abroad, during that interval. This supply he may cut off -whenever he pleases, that is, whenever it ceases to be necessary. - -If the supply comes from a sister country, it must be so taken, as to -occasion no violent revolution when it comes to be interrupted a-new. As -for example: One province demands a supply of grain from another, only -for a few years, until their own soil can be improved, so as to provide -them sufficiently. The statesman should encourage agriculture, no doubt, -in the province furnishing, and let the farmers know the extent of the -demand, and the time it may probably last, as near as possible; but he -must discourage the plucking up of vineyards, and even perhaps the -breaking up of great quantities of old pasture; because, upon the -ceasing of the demand, such changes upon the agriculture of the province -furnishing, may occasion a hurtful revolution. - -While this foreign supply is allowed to come in, the statesman should be -closely employed in giving such encouragement to agriculture at home, -according to the principles hereafter to be deduced, as may nearly -balance the discouragement given to it by this newly permitted -importation. If this step be neglected, the consequence may be, that the -foreign supply will go on increasing every year, and will extinguish the -agriculture already established in the country, in place of supplying a -temporary exigency, which is within the power of the country itself to -furnish. These, I suppose, were the principles attended to by the -government of England, upon opening their ports for the importation of -provisions from Ireland. - -The principle, therefore, being to support a gentle increase of food, -inhabitants, work, and demand, the statesman must suffer small -vibrations in the balance, which, by alternate competition, may favour -both sides of the contract; but whenever the competition stands too long -upon either side, and threatens a subversion of the balance, then, with -an artful hand, he must endeavour to load the lighter scale, and never, -but in cases of the greatest necessity, have recourse to the expedient -of taking any thing from the heaviest. - -In treating of the present state of France, we observed, in the chapter -above-cited, how the vibration of the balance of agriculture and -population may carry food and numbers to their height; but as foreign -trade was not there the direct object of inquiry, I did not care to -introduce this second balance of work and demand, for fear of perplexing -my subject. I hope I have now abundantly shewn the force of the -different principles, and it must depend upon the judgment of the -statesman to combine them together, and adapt them to his plan: a thing -impossible to be even chalked out by any person who is not immediately -at the head of the affairs of a nation. My work resembles the formation -of the pure colours for painting, it is the artist’s business to mix -them: all I can pretend to, is to reason consequentially from -suppositions. If I go at any time farther, I exceed my plan, and I -confess the fault. - -I shall now conclude my chapter by introducing a new subject. I have -been at pains to shew how the continued neglect of a statesman, in -watching over the vibrations of the balance of work and demand, -naturally produces a total subversion of it; but this is not, of itself, -sufficient to undo an industrious people. Other nations must be taught -to profit of the disorder; and this is what I call the competition -between nations. - ------------------------------------------------------------------------- - - - - - CHAP. XII. - _Of the Competition between Nations._ - - -Mankind daily profit by experience, and acquire knowledge at their own -cost. - -We have said that what lays the foundation of foreign trade, is the ease -and conveniency which strangers find in having their wants supplied by -those who have set industry on foot. The natural consequence of this -foreign demand is to bring in wealth, and to promote augmentations of -every kind. As long as these go on, it will be impossible for other -nations to rival the traders, because their situation is every day -growing better: dexterity increasing, diminishes the price of work; -every circumstance, in short, becomes more favourable; the balance never -vibrates, but by one of the scales growing positively heavier, and it is -constantly coming even by an increase of weight on the other side. We -have seen how these revolutions never can raise the intrinsic value of -goods, and have observed that this is the road to greatness. - -The slower any man travels, the longer he is in coming to his journey’s -end; and when his health requires travelling, and that he cannot go far -from home, he rides out in a morning and comes home to dinner. - -This represents another kind of vibration of the balance, and when -things are come to such a height as to render a train of augmentations -impossible, the next best expedient is, to permit alternate vibrations -of diminution and augmentation. - -Work augments, I shall suppose, and no more demand can be procured; it -may then be a good expedient to diminish hands, by making soldiers of -them; by employing them in public works; or by sending them out of the -country to become useful in its colonies. These operations give a -relative weight to the scale of demand, and revive a competition on that -side. Then the industrious hands must be gently increased a-new, and the -balance kept in vibration as long as possible. By these alternate -augmentations and diminutions, hurtful revolutions, and the subversion -of the balance, may be prevented. This is an expedient for standing -still without harm, when one cannot go forward to advantage. - -If such a plan be followed, an industrious nation will continue in a -situation to profit of the smallest advantage from revolutions in other -countries, occasioned by the subversion of _their_ balance; which may -present an opportunity of new vibrations by alternate augmentations. - -On such occasions, the abilities of a statesman are discovered, in -directing and conducting what I call the delicacy of national -competition. We shall then observe him imitating the mariners, who do -not take in their sails when the wind falls calm, but keep them trimmed -and ready to profit of the least breath of a favourable gale. Let me -follow my comparison. The trading nations of Europe represent a fleet of -ships, every one striving who shall get first to a certain port. The -statesman of each is the master. The same wind blows upon all; and this -wind is the principle of self-interest, which engages every consumer to -seek the cheapest and the best market. No trade wind can be more -general, or more constant than this; the natural advantages of each -country represent the degree of goodness of each vessel; but the master -who sails his ship with the greatest dexterity, and he who can lay his -rivals under the lee of his sails, will, _cæteris paribus_, undoubtedly -get before them, and maintain his advantage. - -While a trading nation, which has got an established advantage over her -rivals, can be kept from declining, it will be very difficult, if not -impossible, for any other to enter into competition with her: but when -the balance begins to vibrate by alternate diminutions; when a decrease -of demand operates a failure of supply; when this again is kept low, in -order to raise the competition of consumers; and when, instead of -restoring the balance by a gentle augmentation, a people are engaged, -from the allurements of high profits, to discourage every attempt to -bring down the market; then the cissars of foreign rivalship will fairly -trim off the superfluity of demand; the simple competition will cease; -prices will fall, and a return of the same circumstances will prepare -the way for another vibration downwards. - -Such operations as these, are just what is requisite for facilitating -the competition of rival nations; and the only means possible to engage -those who did not formerly work, to begin and supply themselves. - -Did matters stand so, the evil would be supportable; strangers would -only supply the superfluities of demand, and the balance would still be -found in a kind of equilibrium at home. But, alas! even this happy state -can only be of short duration. The beginnings of trade with the -strangers will prove just as favourable to the vibration of their -balance, by augmentations, as it was formerly to the home-traders; and -now every augmentation to those, must imply a diminution to the others. -What will then become of those hands, in the trading nation, who subsist -only by supplying the foreign market? Will not this revolution work the -same effect, as to them, as if an additional number of hands had been -employed to supply the same consumption? And will not this utterly -destroy the balance among the traders, by throwing an unsurmountable -competition on the side of the supply? It will however have a different -effect from what might have happened, if the same number of hands had -been thrown into the trading nation; for, in this case, they might only -destroy the consolidated profits upon labour, and perhaps restore the -balance: the inconveniency would be equally felt by every workman, but -profit would result to the public. But in the other case, the old -traders will find no foreign sale for their work; these branches of -industry will fall below the price of subsistence, and the new beginners -will have _reasonable_ profits in supplying their own wants. I say -_reasonable_, because this transition of trade from one nation to -another, never can be sudden or easy; and can only take place in -proportion to the rise in the intrinsic value of goods in that which is -upon the decline, not in proportion to the rise in their profits upon -the sale of them: for as long as the most extravagant profits do not -become consolidated, as we have said, with the value of the work, a -diminution of competition among the consumers, which may be occasioned -by a beginning of foreign industry, will quickly make them disappear; -and this will prove a fatal blow to the first undertakings of the rival -nations. But when once they are fairly so consolidated, that prices can -no more come down of themselves, and that the statesman will not lend -his helping hand, then the new beginners pluck up courage, and set out -by making small profits: because in all new undertakings there is -mismanagement and considerable loss; and nothing discourages mankind -from new undertakings more than difficult beginnings. - -As long, therefore, as a trading state is upon the rising hand, or even -not upon the decline, and while the balance is kept right without the -expedient of alternate diminutions, work will always be supplied from -that quarter, cheaper than it possibly can be furnished from any other, -where the same dexterity does not prevail. But when a nation begins to -lose ground, then the very columns which supported her grandeur, begin, -by their weight, to precipitate her decline. The wealth of her citizens -will support and augment home demand, and encourage that blind fondness -for high profits, which it is impossible to preserve. The moment these -consolidate to a certain degree, they have the effect of banishing from -the market the demand of strangers, who only can enrich her. It is in -vain to look for their return after the nation has discovered her -mistake, although she should be able to correct it; because, before this -can happen, her rivals will have profited of the golden opportunity, and -during the infatuation of the traders, will, even by their assistance, -have got fairly over the painful struggle against their superior -dexterity. - -Thus it happens, that so soon as matters begin to go backward in a -trading nation, and that by the increase of their riches, luxury and -extravagance take place of oeconomy and frugality among the industrious; -when the inhabitants themselves foolishly enter into competition with -strangers for their own commodities; and when a statesman looks cooly -on, with his arms across, or takes it into his head, that it is not his -business to interpose, the prices of the dextrous workman will rise -above the amount of the mismanagement, loss, and reasonable profits, of -the new beginners; and when this comes to be the case, trade will decay -where it flourished most, and take root in a new soil. This I call a -competition between nations. - ------------------------------------------------------------------------- - - - - - CHAP. XIII. - _How far the Form of Government of a particular Country may be - favourable or unfavourable to a Competition with other Nations, in - matters of Commerce._ - - -The question before us, though relative to another science, is not -altogether foreign to this. I introduce it in this place, not so much -for the sake of connexion, as by way of digression, which at the same -time that it has a relation to general principles, may also prove a -relaxation to the mind, after so long a chain of close reasoning. - -In setting out, I informed my readers that I intended to treat of the -political oeconomy of free nations only; and upon every occasion where I -have mentioned slavery, I have pointed out how far the nature of it is -contrary to the advancement of private industry, the inseparable -concomitant of foreign and domestic trade. - -No term is less understood than that of _liberty_, and it is not my -intention, at present, to enter into a particular inquiry into all the -different acceptations of it. - -By a people’s being free, I understand no more than their being governed -by general laws, well known, not depending upon the ambulatory will of -any man, or any set of men, and established so as not to be changed, but -in a regular and uniform way; for reasons which regard the body of the -society, and not through favour or prejudice to particular persons, or -particular classes. In so far as a power of dispensing with, restraining -or extending general laws, is left in the hands of any governor, in so -far, I consider public liberty as precarious. I do not say it is hereby -hurt; this will depend upon the use made of such prerogatives. According -to this definition of liberty, a people may be found to enjoy freedom -under the most despotic forms of government; and perpetual service -itself, where the master’s power is limited according to natural equity, -is not altogether incompatible with liberty in the servant. - -Here new ideas present themselves concerning the general principles of -_subordination_ and _dependence_ among mankind; which I shall lay before -my reader before I proceed, submitting the justness of them to his -decision. - -As these terms are both relative, it is proper to observe, that by -_subordination_ is implied an authority which superiors have over -inferiors; and by _dependence_, is implied certain advantages which the -inferiors draw from their subordination: a servant is under -_subordination_ to his master, and _depends_ upon him for his -subsistence. - -Dependence is the only bond of society; and I have observed, in the -fourth chapter of the first book, that the dependence of one man upon -another for food, is a very natural introduction to slavery. This was -the first contrivance mankind fell upon, in order to become useful to -one another. - -Upon the abolishing of slavery, from a principle of christianity, the -next step taken, was the establishment of an extraordinary subordination -between the different classes of the people; this was the principle of -the feudal government. - -The last refinement, and that which has brought liberty to be generally -extended to the lowest denominations of a people, without destroying -that dependence necessary to serve as a band of society, was the -introduction of industry: by this is implied, the circulation of an -adequate equivalent for every service, which procures to the rich, every -advantage they could expect to reap, either from the servitude or -dependence of the poor; and to these again, every comfort they could -wish to enjoy under the mildest slavery, or most gentle subordination. - -From this exposition, I divide dependence into three kinds. The first -natural, between parents and children; the second political, between -masters and servants, lords and vassals, Princes and subjects; the third -commercial, between the rich and the industrious. - -May I be allowed to transgress the limits of my subject for a few lines, -and to dip so far into the principles of the law of nature, as to -enquire, how far subordination among men is thereby authorized? I think -I may decide, _that in so far as the subordination is in proportion to -the dependence, in so far it is reasonable and just_. This represents an -even balance. If the scale of subordination is found too weighty, -tyranny ensues, and licentiousness is implied, in proportion as it rises -above the level. From this let me draw some conclusions. - -_1mo._ He who depended upon another, for the preservation of a life -justly forfeited, and at all times in the power of him who spared it, -was, by the civil law, called a slave. This surely is the highest degree -of dependence. - -_2do._ He who depends upon another for every thing necessary for his -subsistence, seems to be in the second degree; this is the dependence of -children upon their parents. - -_3tio._ He who depends upon another for the means of procuring -subsistence to himself by his own labour, stands in the third degree: -this I take to have been the case between the feudal lords, and the -lowest classes of their vassals, the labourers of the ground. - -_4to._ He who depends totally upon the sale of his own industry, stands -in the fourth degree: this is the case of tradesmen and manufacturers, -with respect to those who employ them. - -These I take to be the different degrees of subordination between man -and man, considered as members of the same society. - -In proportion, therefore, as certain classes, or certain individuals -become more dependent than formerly, in the same proportion ought their -just subordination to increase: and in proportion as they become less -dependent than formerly, in the same proportion ought this just -subordination to diminish. This seems to be a rational principle: next -for the application. - -I deduce the origin of the great subordination under the feudal -government, from the necessary dependence of the lower classes for their -subsistence. They consumed the produce of the land, as the price of -their subordination, not as the reward of their industry in making it -produce. - -I deduce modern liberty from the independence of the same classes, by -the introduction of industry, and circulation of an adequate equivalent -for every service. - -If this doctrine be applied in order to resolve the famous question so -much debated, concerning the origin of supreme authority, in so far as -it is a question of the law of nature, I do not find the decision so -very difficult: _All authority is in proportion to dependence, and must -vary according to circumstances_. - -I think it is as rational to say, that the fatherly power proceeded -originally from the act of the children, as to say, that the great body -of the people who were fed, and protected by a few great lords, was the -fountain of power, and creator of subordination. Those who have no other -equivalent to give for their food and protection, must pay in personal -service, respect, and submission; and so soon as they come to be in a -situation to pay a proper equivalent for these dependencies, in so far -they acquire a title to liberty and independence. The feudal lords, -therefore, who, with reason, had an entire authority over many of their -vassals, being subdued by their King; the usurpation was upon _their_ -rights, not upon the rights of the lower classes: but when a King came -to extend the power he had over the vassals of the lords, to the -inhabitants of cities, who had been independent of that subordination, -his usurpation became evident. - -The rights of Kings, therefore, are to be sought for in history; and not -founded upon the supposition of tacit contracts between them and their -people, inferred from the principles of an imaginary law of nature, -_which makes all mankind equal_: nature can never be in opposition to -common reason. - -The general principle I have laid down, appears, in my humble opinion, -more rational than that imaginary contract; and as consonant to the full -with the spirit of free government. If the original tacit contract of -government between Prince and people is admitted universally, then all -governments ought to be similar; and every subordination, which appears -contrary to the entire liberty and independence of the lowest classes, -ought to be construed as tyrannical: whereas, according to my principle, -the subordination of classes may, in different countries, be vastly -different; the prerogative of one sovereign may, from different -circumstances, be far more extended than that of another. - -May not one have attained the sovereignty (by the free election of the -people, I suppose) because of the great extent of his possessions, -number of his vassals and dependents, quantity of wealth, alliances and -connexions with neighbouring sovereigns? Had not, for example, such a -person as Hugh Capet, the greatest feudal Lord of his time, a right to a -much more extensive jurisdiction over his subjects, than could -reasonably be aspired to by a King of Poland, sent from France, or from -Germany, and set at the head of a republic, where he has not one person -depending upon him for any thing? - -The power of Princes, as _Princes_, must then be distinguished from the -power they derive from other circumstances, which do not necessarily -follow in consequence of their elevation to the throne. It would, I -think, be the greatest absurdity to advance, that the title of King -abolishes, of itself, the subordination due to the person who exercises -the office of that high magistracy. - -Matter of fact, which is stronger than all reasoning, demonstrates the -force of the principle here laid down. Do we not see how subordination -rises and falls under different reigns, under a rich Elizabeth, and a -necessitous Charles, under a powerful Austrian, and a distressed -Bavarian Emperor? I proceed no farther in the examination of this -matter: perhaps my reader has decided that I have gone too far already. - -From these principles may be deduced the boundaries of subordination. A -people who depend upon nothing but their own industry for their -subsistence, ought to be under no farther subordination than what is -necessary for their protection. And as the protection of the whole body -of such a people implies the protection of every individual, so every -political subordination should there be general and equal: no person, no -class should be under a greater subordination than another. This is the -subordination of the laws; and whenever laws establish a subordination -more than what is proportionate to the dependence of those who are -subordinate, in so far such laws may be considered as contrary to -natural equity, and arbitrary. - -These things premised, I come to the question proposed, namely, How far -particular forms of government are favourable or unfavourable to a -competition with other nations, in point of commerce? - -If we reason from facts, and from experience, we shall find, that trade -and industry have been found mostly to flourish under the republican -form, and under those which have come the nearest to it. May I be -allowed to say, that, perhaps, one principal reason for this has been, -that under these forms the administration of the laws has been the most -uniform, and consequently, that most liberty has _actually_ been there -enjoyed: I say actually, because I have said above, that in my -acceptation of the term, liberty is equally compatible with monarchy as -with democracy; I do not say the enjoyment of it is equally secure under -both; because under the first it is much more liable to be destroyed. - -The life of the democratical system is equality. Monarchy conveys the -idea of the greatest inequality possible. Now if, on one side, the -equality of the democracy secures liberty; on the other, the moderation -in expence discourages industry; and if, on one side, the inequality of -the monarchy endangers liberty, the progress of luxury encourages -industry on the other. From whence we may conclude, that the -democratical system is naturally the best for giving birth to foreign -trade; the monarchical, for the refinement of the luxurious arts, and -for promoting a rapid circulation of inland commerce. - -The danger which liberty is exposed to under monarchy, and the -discouragement to industry, from the frugality of the democracy, are -only the natural and immediate effects of the two forms of government; -and these inconveniencies will only take place while statesmen neglect -the interest of commerce, so far as not to make it an object of -administration. - -The disadvantage, therefore, of the monarchical form, in point of trade -and industry, does not proceed from the inequality it establishes among -the citizens, but from the consequence of this inequality, which is very -often accompanied with an arbitrary and undetermined subordination -between the individuals of the higher classes, and those of the lower; -or between those vested with the execution of the laws, and the body of -the people. The moment it is found that any subordination within the -monarchy, between subject and subject, is left without proper bounds -prescribed, liberty is so far at an end. Nay monarchy itself is thereby -hurt, as this undetermined subordination implies an arbitrary power in -the state, not vested in the monarch. _Arbitrary_ power never can be -delegated; for if it be _arbitrary_, it may be turned against the -monarch, as well as against the subject. - -I might therefore say, that when such a power in individuals is -constitutional in the monarchy, such monarchy is not a government, but a -tyranny, and therefore falls without the limits of our subject; and when -such a power is anti-constitutional, and yet is exercised, that it is an -abuse, and should be overlooked. But as the plan of this inquiry engages -me to investigate the operations of general principles, and the -consequences they produce, I cannot omit, in this place, to point out -those which flow from an undetermined subordination, from whatever cause -it may proceed. - -Whether this undetermined subordination between individuals, be a _vice_ -in the constitution of the government, or an _abuse_, it is the same -thing as to the consequences which result from it. It is this which -checks and destroys industry, and which in a great measure prevents its -progress from being equal in all countries. This difference in the form -or administration of governments, is the only one which it is -essentially necessary to examine in this inquiry; and so essential it -is, in my opinion, that I imagine it would be less hurtful, in a plan -for the establishment of commerce, fairly, and at once, to enslave the -lower classes of the inhabitants, and to make them vendible like other -commodities, than to leave them nominally free, burthened with their own -maintenance, charged with the education of their children, and at the -same time under an irregular subordination; that is, liable at every -moment to be loaded with new prestations or impositions, either in work -or otherwise, and to be fined or imprisoned at will by their superiors. - -It produces no difference, whether these irregularities be exercised by -those of the superior classes, or by the statesman and his substitutes. -It is the irregularity of the exactions more than the extent of them -which ruins industry. It renders living precarious, and the very idea of -industry should carry along with it, not only an assured livelihood, but -a certain profit over and above. - -Let impositions be ever so high, provided they be proportional, general, -gradually augmented, and permanent, they may have indeed the effect of -stopping foreign trade, and of starving the idle, but they never will -ruin the industrious, as we shall have occasion to shew in treating of -taxation. Whereas, when they are arbitrary, falling unequally upon -individuals of the same condition, sudden, and frequently changing their -object, it is impossible for industry to stand its ground. Such a system -of oeconomy introduces an unequal competition among those of the same -class, it stops industrious people in the middle of their career, -discourages others from exposing to the eyes of the public _the ease of -their circumstances_, consequently encourages hoarding; this again -excites rapaciousness upon the side of the statesman, who sees himself -frustrated in his schemes of laying hold of private wealth. - -From this a new set of inconveniencies follow. He turns his views upon -solid property. This inspires the landlords with _indignation_ against -_him_ who can load _them_ at will; and with _envy_ against the _monied -interest_, who can baffle his attempts. This class again is constantly -upon the catch to profit of the public distress for want of money. What -is the consequence of all this? It is, that the lowest classes of the -people, who ought by industry to enrich the state, find on one hand the -monied interest constantly amassing, in order to lend to the state, -instead of distributing among _them_, by seasonable loans, their -superfluous income, with a view to share the reasonable profits of their -ingenuity; and on the other hand, they find the emissaries of taxation -robbing them of the seed before it is sown, instead of waiting for a -share in the harvest. - -Under the feudal form of government, liberty and independence were -confined to the nobility. Birth opened the door of preferment to some, -and birth as effectually shut it against others. I have often observed -how, by reason and from experience, such a form of government must be -unfavourable both to trade and industry. - -From reason it is plain, that industry must give wealth, and wealth -_will_ give power, if he who possesses it be left the master to employ -it as he pleases. A government could not therefore encourage a system -which tended to throw power into the hands of those who were only made -to obey. It was consequently very natural for the nobility to be jealous -of wealthy merchants, and of every one who became easy and independent -by means of their own industry; experience proved how exactly this -principle regulated their administration. - -A statesman ought, therefore, to consider attentively every circumstance -of the constitution of his country, before he sets on foot the modern -system of trade and industry. I am far from being of opinion that this -is the only road to happiness, security, and ease; though, from the -general taste of the times I live in, it be the system I am principally -employed to examine. A country may be abundantly happy, and sufficiently -formidable to those who come to attack it, without being extremely rich. -Riches indeed are forbid to all who have not mines, or foreign trade. - -If a country be found labouring under many natural disadvantages from -inland situation, barren soil, distant carriage, it would be in vain to -attempt a competition with other nations in foreign markets. All that -can be then undertaken is a passive trade, and that only in so far as it -can bring in additional wealth. When little money can be acquired, the -statesman’s application must be, to make that already acquired to -circulate as much as possible, in order to give bread to every one in -the society. - -In countries where the government is vested in the hands of the great -lords, as is the case in all aristocracies, as was the case under the -feudal government, and as it still is the case in many countries in -Europe, where trade, however, and industry are daily gaining ground; the -statesman who sets the new system of political oeconomy on foot, may -depend upon it, that either his attempt will fail, or the constitution -of the government will change. If he destroys all arbitrary dependence -between individuals, the wealth of the industrious will share, if not -totally root out the power of the grandees. If he allows such a -dependence to subsist, his project will fail. - -While Venice and Genoa flourished, they were obliged to open the doors -of their senate to the wealthy citizens, in order to prevent their being -broken down. What is venal nobility? The child of commerce, the -indispensible consequence of industry, and a middle term, which our -Gothic ancestors found themselves obliged to adopt, in order not -entirely to lose their own rank in the state. Money, they found, must -carry off the fasces, so they chose rather to adopt the wealthy -plebeians, and to clothe ignoble shoulders with their purple mantle, -than to allow these to wrest all authority out of the hands of the -higher class. By this expedient, a sudden revolution has often been -prevented. Some kingdoms have been quit for a bloody rebellion, or a -long civil war. Other countries have likewise demonstrated the force of -the principles here laid down: a wealthy populace has broken their -chains to pieces, and overturned the very foundations of the feudal -system. - -All these violent convulsions have been owing to the short-sightedness -of statesmen; who, inattentive to the consequences of growing wealth and -industry, foolishly imagined that hereditary subordination was to -subsist among classes, whose situation, with respect to each other, was -entirely changed. - -The pretorian cohorts were at first subordinate to the orders of the -Emperors, and were the guards of the city of Rome. The Janissaries are -understood to be under the command of the principal officers of the -Port. So soon as the leading men of Rome and Constantinople, who -naturally were entitled to govern the state, applied to these tumultuous -bodies for their protection and assistance, they in their turn, made -sensible of their own importance, changed the constitution, and shared -in the government. - -A milder revolution, entirely similar, is taking place in modern times; -and an attentive spectator may find amusement in viewing the progress of -it in many states of Europe. _Trade_ and _industry_ are in vogue; and -their establishment is occasioning a wonderful fermentation with the -remaining fierceness of the feudal constitution. - -Trade and industry owed their establishment to _war_ and to _ambition_; -and perhaps mankind may hope to see the day when they will put an end to -the first, by exposing the expensive folly of the latter. - -Trade and industry, I say, owed their establishment to the ambition of -princes, who supported and favoured the plan in the beginning, -principally with a view to enrich themselves, and thereby to become -formidable to their neighbours. But they did not discover, until -experience taught them, that the wealth they drew from such fountains -was but the overflowing of the spring; and that an opulent, bold, and -spirited people, having the fund of the prince’s wealth in their own -hands, have it also in their own power, when it becomes strongly their -inclination, to shake off his authority. The consequence of this change -has been the introduction of a more mild, and a more regular plan of -administration. The money gatherers are become more useful to princes, -than the great lords; and those who are fertile in expedients for -establishing public credit, and for drawing money from the coffers of -the rich, by the imposition of taxes, have been preferred to the most -wise and most learned counsellors. - -As this system is new, no wonder if it has produced phenomena both new -and surprizing. Formerly, the power of Princes was employed to destroy -liberty, and to establish arbitrary subordination; but in our days, we -have seen those who have best comprehended the true principles of the -new plan of politics, arbitrarily limiting the power of the higher -classes, and thereby applying their authority towards the extension of -public liberty, by extinguishing every subordination, other than that -due to the established laws. - -The fundamental maxim of some of the greatest ministers, has been to -restrain the power of the great lords. The natural inference that people -drew from such a step, was, that the minister thereby intended to make -every thing depend on the prince’s will only. This I do not deny. But -what use have we seen made of this new acquisition of power? Those who -look into events with a political eye, may perceive several acts of the -most arbitrary authority exercised by some late European sovereigns, -with no other view than to establish public liberty upon a more -extensive bottom. And although the prerogative of some princes be -increased considerably beyond the bounds of the antient constitution, -even to such a degree as perhaps justly to deserve the name of -usurpation; yet the consequences resulting from the revolution, cannot -every where be said, upon the whole, to have impaired what I call -_public liberty_. I should be at no loss to prove this assertion from -matters of fact, and by examples, did I think it proper: it seems better -to prove it from reason. - -When once a state begins to subsist by the consequences of industry, -there is less danger to be apprehended from the power of the sovereign. -The mechanism of his administration becomes more complex, and, as was -observed in the introduction to the first book, he finds himself so -bound up by the laws of his political oeconomy, that every transgression -of them runs him into new difficulties. - -I only speak of governments which are conducted systematically, -constitutionally, and by general laws; and when I mention princes, I -mean their councils. The principles I am enquiring into, regard the cool -administration of their government; it belongs to another branch of -politics, to contrive bulwarks against their passions, vices and -weaknesses, as men. - -I say, therefore, that from the time states have begun to be supported -by the consequences of industry, the plan of administration has become -more moderate; has been changing and refining by degrees; and every -change, as has been often observed, must be accompanied with -inconveniencies. - -It is of governments as of machines, the more they are simple, the more -they are solid and lasting; the more they are artfully composed, the -more they become useful; but the more apt they are to be out of order. - -The Lacedemonian form may be compared to the wedge, the most solid and -compact of all the mechanical powers. Those of modern states to watches, -which are continually going wrong; sometimes the spring is found too -weak, at other times too strong for the machine: and when the wheels are -not made according to a determined proportion, by the able hands of a -Graham, or a Julien le Roy, they do not tally well with one another; -then the machine stops, and if it be forced, some part gives way; and -the workman’s hand becomes necessary to set it right. - ------------------------------------------------------------------------- - - - - - CHAP. XIV. -_Security, Ease and Happiness, no inseparable Concomitants of Trade and - Industry._ - - -The republic of Lycurgus represents the most perfect plan of political -oeconomy, in my humble opinion, anywhere to be met with, either in -antient or modern times. That it existed cannot be called in question, -any more than that it proved the most durable of all those established -among the Greeks; and if at last it came to fail, it was more from the -abuses which gradually were introduced into it, than from any vice in -the form. - -The simplicity of the institution made the solidity of it; and had the -Lacedemonians at all times adhered to the principles of their -government, and spirit of their constitution, they might have perhaps -subsisted to this very day. - -My intention, in this chapter, is not to enter into a critical -disquisition concerning the mechanism of every part of the Spartan -republic; but to compare the general plan of Lycurgus’s political -oeconomy with the principles we have been laying down. - -Of this plan we have a description in the life of that legislator -written by Plutarch, one of the most judicious authors to be met with in -any age. - -This historian flourished at least 800 years after the institution of -the plan he describes. A plan never reduced into a system of written -laws, but stamped at first upon the minds of the Spartans by the -immediate authority of the gods, which made them submit to the most -violent revolution that perhaps ever took place in any nation, and which -they supported for so many ages by the force of education alone. - -As the whole of Lycurgus’s laws was transmitted by tradition only, it is -not to be supposed, that the description Plutarch, or indeed any of the -antients, have given us of this republic, can be depended on with -certainty as a just representation of every part of the system laid down -by that great statesman. But on the other hand, we may be very sure, -that as to the outlines of the institution, we have them transmitted to -us in all their purity; and, in what relates to my subject, I have no -occasion to launch out into any particulars which may imply the smallest -controversy, as to the matter of fact. - -Property among the Lacedemonians, at the time when Lycurgus planned his -institution, was very unequally divided: the consequence of which, says -our historian, was to draw many poor people into the city, where the -wealth was gathered into few hands; that is, according to our language, -_the luxury of the rich, who lived in the city, had purged the lands of -useless mouths, and the instability of the government had rendered -industry precarious, which must have opened the door to general distress -among all the lower classes_. - -The first step our legislator took, was to prepare the spirit of the -people, so as to engage them to submit to a total reform, which could -not fail of being attended with innumerable inconveniencies. - -For this purpose he went to Delphi, without having communicated his -design to any body. The Pythia declared him to be the darling of the -gods, and rather a god than a man; and publicly gave out, that Apollo -had delivered to him alone the plan of a republic which far exceeded -every other in perfection. - -What a powerful engine was this in the hands of a profound politician, -who had travelled over the world with a previous intention to explore -the mysteries of the science of government! and what advantages did such -an authentic recommendation, coming directly (as was believed) from the -voice of the Divinity, give him over a superstitious people, in -establishing whatever form of government he thought most proper! - -The sagacious Lacedemonian did not, however, entirely depend upon the -blind submission of his countrymen to the dictates of the oracle; but -wisely judged that some preparatory steps might still be necessary. He -communicated, therefore, his plan, first to his friends, and then by -degrees to the principal people of the state, who certainly never could -have been brought to relish an innovation so prejudicial to their -interest, had it not been from the deepest reverence and submission to -the will of the gods. Assured of their assistance, he appeared in the -market place, accompanied by his party, all in arms; and having imposed -respect, he laid the foundation of his government by the nomination of a -senate. - -Whatever regards any other object than his plan of political oeconomy, -shall be here passed over in silence. It is of no consequence to my -inquiry, where the supreme power was vested: it is sufficient to know -that there was an authority in the state sufficient to support the -execution of his plan. - -He destroyed all inequality at one stroke. The property of all the lands -of the state was thrown together, and became at the disposal of the -legislator. Every branch of industry was proscribed to the citizens. And -a monied interest was made to disappear, by the introduction of iron -coin. The lands he divided into equal lots, according to the number of -citizens. - -Thus all were rendred entirely equal in point of fortune, as neither -wealth, industry, or lands, could give a superiority to any body. From -this part of the plan I conclude, that Lycurgus discovered the utter -insufficiency of an agrarian law for establishing equality among the -individuals of a state, without proscribing, at the same time, both -wealth and industry. A circumstance which seems to have escaped every -other statesman in antient times, as well as the modern patrons of -equality and simplicity of manners. The lands were cultivated by the -Helotes, who were nourished from them, and who were obliged to deliver -the surplus, that is, a determined quantity of fruits, to the proprietor -of the lot. Every necessary mechanic art was likewise exercised by this -body of slaves. - -By this distribution, the produce of the earth (that is every article of -nourishment) came free and without cost to every individual of the -state. The Spartan landlords were rather overseers of the slaves, and -collectors of the public subsistence, than direct proprietors of the -soil which produced it. For although every man was fed from his own -lands, and provided his own portion, yet this portion was regulated, and -was to be consumed in public; and any one who pretended to eat alone, or -before he came to the public hall, was held in the utmost contempt. - -Their cloathing was the most simple possible, perfectly alike, and could -be purchased for a small value. This frugality produced no bad effect; -because no man lived by his industry. Arts, as has been said, were -exercised by the Helotes, the property of private citizens; and if such -masters as entertained manufacturing slaves gained by that traffic (as -some must do) every method of profiting of their superior riches was cut -off. - -The Spartans were continually together, they had nothing to do but to -divert themselves; and their amusements were mostly martial exercises. -The regulations of these numerous assemblies (which were compared, with -great elegance and justness, to swarms of bees) cut off all outward -marks of distinction. There was not a possibility for luxury to -introduce itself, either in eating, drinking, cloathing, furniture, or -any other expence. - -Here then was a whole nation fed and provided for gratuitously; there -was not the least occasion for industry; the usefulness of which we have -shewn principally to consist in its proving an expedient for procuring -for the necessitous, what the Spartans found provided for them without -labour. - -Under such circumstances we may conclude, from the principles we have -laid down, that a people thus abundantly nourished, must have multiplied -exceedingly. And so no doubt they did. But the regulation of the lots -permitted no more than a fixt number of citizens. Whenever, therefore, -numbers were found to exceed this standard, the supernumeraries were -dismissed, and sent to form colonies. And when the Helotes increased too -much, and thereby began to rise above the proportion of the labour -required of them, in order to prevent the consuming the food of their -masters, which they had among their hands, and thereby becoming idle, -licentious, and consequently dangerous to the state, it was permitted to -destroy them by way of a military exercise, conducted by stratagem and -address; arts which this people constantly preferred in war, to labour, -strength, and intrepidity. - -This appears a very barbarous custom, and I shall not offer any thing as -an apology for it, but the ferocity of the manners of those times. -Abstracting from the cruelty, the restraining the numbers of that class -within certain limits, was absolutely necessary. The Lacedemonian slaves -were in many respects far happier than those of other nations. They were -in reality a body of farmers, which paid a certain quantity of fruits -out of every lot; to wit, 70 medimni of barley: their numbers were not -recruited from abroad, as elsewhere, but supported by their own -propagation; consequently there was an absolute necessity either to -prevent the over multiplication of them, or to diminish an income -proportioned exactly to the necessities of the state: and what expedient -could be fallen upon? They were slaves, and therefore could not be -inrolled in the number of citizens; they could not be sold to strangers, -for money which was forbid; and they were of no use to industry. No -wonder then if the fierceness of the manners of those days permitted the -inhuman treatment they received; which, however, Plutarch is far from -attributing to the primitive institution of Lycurgus. Besides, when we -see that the freemen themselves were obliged to quit the country the -moment their numbers exceeded a certain standard, it was not to be -expected, that useless slaves should be permitted to multiply at -discretion. - -From this sketch of Lycurgus’s political oeconomy, we find the state -abundantly provided with every necessary article; an effectual stop put -to vicious procreation among the citizens; and a corrective for the over -multiplication of the slaves. The next care of a statesman is to -regulate the employment of a people. - -Every freeman in the state was bred up from his infancy to arms. No -family care could prevent him from serving the state as a soldier; his -children were no load upon him; it was the business of the Helotes to -supply them with provisions; of the servants in town to prepare these, -and the public tables were always ready furnished. The whole youth of -Sparta was educated not as the children of their parents, but of the -state. They imbibed the same sentiments of frugality, temperance, and -love of simplicity. They exercised the same employment, and were -occupied in the same way in every respect. The simplicity of Lycurgus’s -plan, rendered this a practicable scheme. The multiplicity and variety -of employments among us, makes it absolutely necessary to trust the -parents with the education of their children; whereas in Sparta, there -were not two employments for a free man; there was neither orator, -lawyer, physician, or politician, by profession to be found. The -institutions of their lawgiver were constantly inculcated by the old -upon the minds of the young; every thing they heard or saw, was relative -to war. The very gods were represented in armour, and every precept they -were taught, tended to banish superfluity, and to establish moderation -and hard living. - -The youth were continually striving together in all military exercises; -such as boxing and wrestling. To keep up, therefore, a spirit of -emulation, and to banish animosity at the same time, sharp, satirical -expressions were much encouraged; but these were always to be seasoned -with something gracious or polite. The grave demeanour likewise, and -down-cast look which they were ordered to observe in the streets, and -the injunction of keeping their hands within their robes, might very -naturally be calculated to prevent quarrels, and especially blows, at -times when the authority of a public assembly could not moderate the -vivacity of their passions. By these arts, the Spartans lived in great -harmony in the midst of a continual war. - -Under such regulations a people must enjoy security from foreign -attacks; and certainly the intention of the legislator never was to -extend the limits of Laconia by conquest. What people could ever think -of attacking the Lacedemonians, where nothing but blows could be -expected? - -They enjoyed ease in the most supreme degree; they were abundantly -provided with every necessary of life; although, I confess, the -enjoyment of them in so austere a manner, would not be relished by any -modern society. But habit is all in things of this kind. A course meal -to a good stomach, has more relish than all the delicacies of the most -exquisite preparation to a depraved appetite; and if sensuality be -reckoned among the pleasures of life, enough of it might have been met -with in the manners of that people. It does not belong to my subject to -enter into particular details on this head. But the most rational -pleasure among men, the delightful communication of society, was here -enjoyed to the utmost extent. The whole republic was continually -gathered together in bodies, and their studies, their occupations, and -their amusements, were the same. One taste was universal; and the young -and the old being constantly together, the first under the immediate -inspection and authority of the latter, the same sentiments were -transmitted from generation to generation. The Spartans were so pleased, -and so satisfied with their situation, that they despised the manners of -every other nation. If this does not transmit an idea of happiness, I am -at a loss to form one. Security, ease, and happiness, therefore, are not -inseparable concomitants of trade and industry. - -Lycurgus had penetration enough to perceive the weak side of his -institution. He was no stranger to the seducing influence of luxury; and -plainly foresaw, that the consequences of industry, which procures to -mankind a great variety of new objects of desire, and a wonderful -facility in satisfying them, would easily root out the principles he had -endeavoured to instil into his countrymen, if the state of simplicity -should ever come to be sophisticated by foreign communications. He -affected, therefore, to introduce several customs which could not fail -of disgusting and shocking the delicacy of neighbouring states. He -permitted the dead to be buried within the walls; the handling of dead -bodies was not reckoned pollution among the Lacedemonians. He forbade -bathing, so necessary for cleanliness in a hot country: and the -coarseness and dirtiness of their cloaths, and sweat from their hard -exercises, could not fail to disgust strangers from coming among them. -On the other hand, nothing was found at Sparta which could engage a -stranger to wish to become one of their number. And to prevent the -contagion of foreign customs from getting in, by means of the citizens -themselves, he forbade the Spartans to travel; and excluded from any -employment in the state, those who had got a foreign education. Nothing -but a Spartan breeding could have fitted a person to live among them. - -The theft encouraged among the Lacedemonians was calculated to make them -artful and dextrous; and contained not the smallest tincture of vice. It -was generally of something eatable, and the frugality of their table, -prompted them to it; while on the other hand, their being exposed to the -like reprisals, made them watchful and careful of what belonged to -themselves; and the pleasure of punishing an unsuccessful attempt, in -part indemnified them for the trouble of being constantly upon their -guard. A Lacedemonian had nothing of any value that could be stolen; and -it is the desire and intention of making unlawful gain, which renders -theft either criminal or scandalous. - -The hidden intercourse between the Spartans and their young wives was, -no doubt, calculated to impress upon the minds of the fair sex, the wide -difference there is between an act of immodesty, and that of simply -appearing naked in the public exercises; two things which we are apt to -confound, only from the impression of our own customs. I am persuaded -that many a young person has felt her modesty as much hurt by taking off -her handkerchief, the first time she appeared at court, as any -Lacedemonian girl could have done by stripping before a thousand people; -yet both her reason and common sense, must make her sensible of the -difference between a compliance with a custom in a matter of dress, and -a palpable transgression against the laws of her honour, and the modesty -of her sex. - -I have called this Lacedemonian republic a perfect plan of political -oeconomy; because it was a system, uniform and consistent in all its -parts. _There_, no superfluity was necessary, because there was no -occasion for industry, to give bread to any body. _There_, no -superfluity was permitted, because the moment the limits of the -absolutely necessary are transgressed, the degrees of excess are quite -indeterminate, and become purely relative. The same thing which appears -superfluity to a peasant, appears necessary to a citizen; and the utmost -luxury of this class, frequently does not come up to what is thought the -mere necessary for one in a higher rank. Lycurgus stopt at the only -determined frontier, the pure physical necessary. All beyond this was -considered as abusive. - -The only things in commerce among the Spartans were, - -_1mo._ What might remain to them of the fruits of their lot, over their -own consumption; and _2do._ The work of the slaves employed in trades. -The numbers of these could not be many, as the timber of their houses -was worked only with the saw and ax; and every utensil was made with the -greatest simplicity. A small quantity, therefore, of iron coin, as I -imagine, must have been sufficient for carrying on the circulation at -Sparta. The very nature of their wants must, as I have said, terminate -all their commerce, in the exchange of their surplus-food of their -portions of land, with the work of the manufacturing slaves, who must -have been fed from it. - -As the Lacedemonians had no mercantile communication with other nations, -the iron coin was no more than a bank note of no intrinsic value, as I -suppose, but a middle term introduced for keeping accounts, and for -facilitating barter. An additional argument for this opinion of the coin -being of no intrinsic value, is, that it is said to have been rendred -unserviceable for other uses, by being slaked in vinegar. In order -consequently to destroy, as they imagined, any intrinsic value which -might therein otherwise remain. If this coin, therefore, was made of an -extraordinary weight, it must have been entirely with a political view -of discouraging commerce and circulation, an institution quite -consistent with the general plan, and nowise a consequence of the -baseness of the metal of which it was made: a small quantity of this, -with the stamp of public authority for its currency and value, would -have answered every purpose equally well. - -Let me now conclude this chapter by an illustration of the subject, -which will still more clearly point out the force of the principles upon -which this Lacedemonian republic was established. - -Were any Prince in Europe, whose subjects, I shall suppose, may amount -to six millions of inhabitants, one half employed in agriculture, the -other half employed in trade and industry, or living upon a revenue -already acquired; were such a Prince, I say, supposed to have authority -sufficient to engage his people to adopt a new plan of oeconomy, -calculated to secure them against the designs of a powerful neighbour, -who, I shall suppose, has formed schemes of invading and subduing them. - -Let him engage the whole proprietors of land to renounce their several -possessions: or if that supposition should appear too absurd, let him -contract debts to the value of the whole property of the nation; let the -land-tax be imposed at twenty shillings in the pound, and then let him -become bankrupt to the creditors. Let the income of all the lands be -collected throughout the country for the use of the state; let all the -luxurious arts be proscribed; and let those employed in them be formed, -under the command of the former land proprietors, into a body of regular -troops, officers and soldiers, provided with every thing necessary for -their maintenance, and that of their wives and families at the public -expence. Let me carry the supposition farther. Let every superfluity be -cut off; let the peasants be enslaved, and obliged to labour the ground -with no view of profit to themselves, but for simple subsistence; let -the use of gold and silver be proscribed; and let all these metals be -shut up in a public treasure. Let no foreign trade, and very little -domestic be encouraged, but let every man, willing to serve as a -soldier, be received and taken care of; and those who either incline to -be idle, or who are found superfluous, be sent out of the country. I -ask, what combination, among the modern European Princes, would carry on -a successful war against such a people? What article would be wanting to -their ease, that is, to their ample subsistence? Their happiness would -depend upon the temper of their mind. And what country could defend -themselves against the attack of such an enemy? Such a system of -political oeconomy, I readily grant, is not likely to take place: but if -ever it did, would it not effectually dash to pieces the whole fabric of -trade and industry, which has been forming for so many years? And would -it not quickly oblige every other nation to adopt, as far as possible, a -similar conduct, from a principle of self-preservation. - ------------------------------------------------------------------------- - - - - - CHAP. XV. -_A general View of the Principles to be attended to by a Statesman, who - resolves to establish Trade and Industry upon a lasting footing._ - - -The two preceding chapters I have introduced purposely to serve as a -relaxation to the mind, like a farce between the acts of a serious -opera. I now return to the place where I broke off my subject, at the -end of the twelfth chapter. - -It is a great assistance to memory, now and then to assemble our ideas, -after certain intervals, in going through an extensive subject. No part -of it can be treated of with distinctness, without banishing -combinations; and no part of it can be applied to practice, or adapted -to any plan, without attending to combinations almost infinite. - -For this reason nothing can appear more inconsistent than the spirit -which runs through some parts of this book, if compared with that which -prevailed in the first. _There_ luxury was looked on with a favourable -eye, and every augmentation of superfluity was considered as a method of -advancing population. We were then employed in drawing mankind, as it -were, out of a state of idleness, in order to increase their numbers, -and engage them to cultivate the earth. We had no occasion to divide -them into societies having separate interests, because the principles we -treated of were common to all. We therefore considered the industrious, -who are the providers, and the luxurious, who are the consumers, as -children of the same family, and as being under the care of the same -father. - -We are now engaged in a more complex operation; we represent different -societies animated with a different spirit; some given to industry and -frugality, others to dissipation and luxury. This creates separate -interests among nations, and every one must be supposed under the -government of a statesman, who is wholly taken up in advancing the good -of those he governs, though at the expence of other societies which lie -round him. - -This presents a new idea, and gives birth to new principles. The general -society of mankind treated of in the first book, is here in a manner -divided into two. The industrious providers are supposed to live in one -country, the luxurious consumers in another. The principles of the first -book remain here in full vigour. Luxury still tends as much as ever to -the advancement of industry; the statesman’s business is only to remove -the seat of it from his own country. When that can be accomplished -without detriment to industry at home, he has an opportunity of joining -all the advantages of antient simplicity, to the wealth and power which -attend upon the luxury of modern states. He may preserve his people in -sobriety, and moderation as to every expence, as to every consumption, -and make them enjoy, at the same time, riches and superiority over all -their neighbours. - -Such would be the state of trading nations, were they only employed in -supplying the wants or extravagant consumption of strangers; and did -they not insensibly adopt the very manners with which they strive to -inspire others. - -As often, therefore, as we suppose a people applying themselves to the -advancement of foreign trade, we must simplify our ideas, by dismissing -all political combinations of other circumstances; that is to say, we -must suppose the spirit universal, and then point out the principles -which influence the success of it. - -We must encourage oeconomy, frugality, and a simplicity of manners, -discourage the consumption of every thing that can be sold out of the -country, and excite a taste for superfluity in neighbouring nations. -When such a system can no more be supported to its full extent, by the -scale of foreign demand becoming positively lighter; then in order to -set the balance even again, without taking any thing out of the heavy -scale, and to preserve and give bread to those who have enriched the -state, an additional home consumption, proportioned to the deficiency of -foreign demand, must be encouraged. For were the same simplicity of -manners still kept up, the infallible consequence would be a forced -restitution of the balance, by the distress, misery, and at last -extinction of the supernumerary workmen. - -I must therefore, upon such occasions, consider the introduction of -luxury, or superfluous consumption, as a rational and moral consequence -of the deficiency of foreign trade. - -I am, however, far from thinking that the luxury of every modern state, -is only in proportion to such failure; and I readily admit, that many -examples may be produced where the progress of luxury, and the domestic -competitions with strangers who come to market, have been the cause both -of the decline and extinction of their foreign trade; but as my business -is chiefly to point out principles, and to shew their effects, it is -sufficient to observe, that in proportion as foreign trade declines, -either a proportional augmentation upon home consumption must take -place, or a number of the industrious, proportioned to the diminution of -former consumption, must decrease. By the first, what I call a natural -restitution of the balance is brought about, from the principles above -deduced; by the second, what I call a forced one. - -Here then is an example, where the introduction of luxury may be a -rational and prudent step of administration; and as long as the progress -of it is not accelerated from any other principle, but that of -preserving the industrious, by giving them employment, the same spirit, -under the direction of an able statesman, will soon throw industry into -a new channel, better calculated for reviving foreign trade, and for -promoting the public good, by substituting the call of foreigners in -place of that of domestic luxury. - -I hope, from what I have said, the political effects of luxury, or the -consumption of superfluity, are sufficiently understood. These I have -hitherto considered as advantageous only to those classes who are made -to subsist by them; I reserve for another occasion the pointing out how -they influence the imposition of taxes, and how the abuse of consumption -in the rich may affect the prosperity of a state. - -So soon as all foreign trade comes to a stop, without a scheme for -recalling it, and that domestic consumption has filled up its place in -consuming the work, and giving bread to the industrious, we find -ourselves obliged to reason again upon the principles of the first book. -The statesman has once more both the producers and the consumers under -his care. The consumers can live without employment, the producers -cannot. The first seldom have occasion for the statesman’s protection; -the last constantly stand in need of it. There is a perpetual -fluctuation in the balance between these two classes, from which a -multitude of new principles arise; and these render the administration -of government infinitely more difficult, and require superior talents in -the person who is at the helm. I shall here only point out the most -striking effects of the fluctuation and overturn of this new balance, -which in the subsequent chapters shall be more fully illustrated. - -_1mo._ In proportion as the consumers become extravagant, the producers -become wealthy; and when the former become bankrupts, the latter fill -their place. - -_2do._ As the former become frugal and oeconomical, the latter languish; -when those begin to hoard, and to adopt a simple life, these are -extinguished: all extremes are vicious. - -_3tio._ If the produce of industry consumed in a country, surpass the -income of those who do not work, the balance due by the consumers must -be paid to the suppliers by a proportional alienation of their funds. -This vibration of the balance, gives a very correct idea of what is -meant by _relative profit and loss_. The nation here loses nothing by -the change produced. - -_4to._ When, on the other hand, the annual produce of industry consumed -in a country, does not amount to the value of the income of those who do -not work, the balance of income saved, must either be locked up in -chests, made into plate, lent to foreigners, or fairly exported as the -price of foreign consumption. - -_5to._ The scales stand even when there is no balance on either side; -that is, when the domestic consumption is just equivalent to the annual -income of the funds. I do not pretend to decide at present whether this -exact equilibrium marks the state of perfection in a country where there -is no foreign trade, (of which we are now treating) or whether it be -better to have small vibrations between the two scales; but I think I -may say, that all subversions of the balance on either side cannot fail -to be hurtful, and therefore should be prevented. - -Let this suffice at present, upon a subject which shall be more fully -treated of afterwards. Let us now fix our attention upon the interests -of a people entirely taken up in the prosecution of foreign trade. So -long as this spirit prevails, I say, it is the duty of a statesman to -encourage frugality, sobriety, and an application to labour in his own -people, and to excite in foreign nations a taste for superfluities as -much as possible. - -While a people are occupied in the prosecution of foreign trade, the -mutual relations between the individuals of the state, will not be so -intimate as when the producers and consumers live in the same society; -such trade implies, and even necessarily creates a chain of foreign -dependencies; which work the same effect, as when the mutual dependence -subsisted among the citizens. Now the use of dependencies, I have said, -is to form a band of society, capable of making the necessitous subsist -out of the superfluities of the rich, and to keep mankind in peace and -harmony with one another. - -Trade, therefore, and foreign communications, form a new kind of society -among nations; and consequently render the occupation of a statesman -more complex. He must, as before, be attentive to provide food, other -necessaries and employment for all his people; but as the foreign -connections make these very circumstances depend upon the entertaining a -good correspondence with neighbouring nations, he must acquire a proper -knowledge of their domestic situation, so as to reconcile, as much as -may be, the interests of both parties, by engaging the strangers to -furnish articles of the first necessity, when the precious metals cannot -be procured; and to accept, in return, the most consumable superfluities -which industry can invent. And, last of all, he must inspire his own -people with a spirit of emulation in the exercise of frugality, -temperance, oeconomy, and an application to labour and ingenuity. If -this spirit of emulation is not kept up, another will take place; for -emulation is inseparable from the nature of man; and if the citizens are -not made to vie with one another, in the practice of moderation, the -wealth they must acquire, will soon make them vie with strangers, in -luxury and dissipation. - -While a spirit of moderation prevails in a trading nation, it may rest -assured, that in as far as it excels the nations with whom it -corresponds in this particular, so far will it increase the proportion -of its wealth, power, and superiority, over them. These are lawful -pursuits among men, when purchased by success in so laudable an -emulation. - -If it be said, that superfluity, intemperance, prodigality, and -idleness, qualities diametrically opposite to the former, corrupt the -human mind, and lead to violence and injustice; is it not very wisely -calculated by the Author of all things, that a sober people, living -under a good government, should by industry and moderation, necessarily -acquire wealth, which is the best means of warding off the violence of -those with whom they are bound in the great society of mankind? And is -it not also most wisely ordained, that in proportion as a people -contract vicious habits, which may lead to excess and injustice, the -very consequence of their dissipation (poverty) should deprive them of -the power of doing harm? But such reflections seem rather to be too -great a refinement on my subject, and exceed the bounds of political -oeconomy. - -When we treat of a virtuous people applying to trade and industry, let -us consider their _interest_ only, in preserving those sentiments; and -examine the political evil of their falling off from them. When we treat -of a luxurious nation, where the not-working part is given to excesses -in all kinds of consumption, and the working part to labour and -ingenuity, in order to supply them, let us examine the consequences of -such a spirit, with respect to foreign trade: and if we find, that a -luxurious turn in the rich is prejudicial thereto, let us try to -discover the methods of engaging the inhabitants to correct their -manners from a motive of self-interest. These things premised, - -I shall now give a short sketch of the general principles upon which a -system of foreign trade may be established and preserved as long as -possible, and of the methods by which it may be again recovered, when, -from the natural advantages and superior ability of administration in -rival nations, (not from vices at home) a people have lost for a time -every advantage they used to draw from their foreign commerce. - -The first general principle is to employ, as usefully as possible, a -certain number of the society, in producing objects of the first -necessity, always more than sufficient to supply the inhabitants; and to -contrive means of enabling every one of the free hands to procure -subsistence for himself, by the exercise of some species of industry. - -These first objects compassed, I consider the people as abundantly -provided with what is purely necessary; and also with a surplus prepared -for an additional number of free hands, so soon as a demand can be -procured for their labour. In the mean time, the surplus will be an -article of exportation; but no sooner will demand come from abroad, for -a greater quantity of manufactures than formerly, than such demand will -have the effect of gradually multiplying the inhabitants up to the -proportion of the surplus above mentioned, provided the statesman be all -along careful to employ these additional numbers, which an useful -multiplication must produce, in supplying the additional demand: then -with the equivalent they receive from strangers, they will at the same -time enrich the country, and purchase for themselves that part of the -national productions which had been permitted to be exported, only for -want of a demand for it at home. - -He must, at the same time, continue to give proper encouragement to the -advancement of agriculture, that there may be constantly found a surplus -of subsistence (for without a surplus there can never be enough) this -must be allowed to go abroad, and ought to be considered as the -provision of those industrious hands which are yet unborn. - -He must cut off all foreign competition, beyond a certain standard, for -that quantity of subsistence which is necessary for home consumption; -and, by premiums upon exportation, he must discharge the farmers of any -superfluous load, which may remain upon their hands when prices fall too -low. This important matter shall be explained at large in another place, -when we come to treat of the policy of grain. - -If natural causes should produce a rise in the price of subsistence, -which cannot be brought down by extending agriculture, he must then lay -the whole community under contribution, in order to indemnify those who -work for strangers, for the advance upon the price of their food; or he -must indemnify the strangers in another way, for the advance in the -price of manufactures. - -He must consider the manufactures of superfluity, as worked up for the -use of strangers, and discourage all domestic competition for them, by -every possible means. - -He must do what he can, constantly to proportion the supply to the -demand made for them; and when the first necessarily comes to exceed the -latter, in spight of all his care, he must then consider what remains -over the demand, as a superfluity of the strangers; and for the support -of the equal balance between work and demand, he must promote the sale -of them even within the country, under certain restrictions, until the -hands employed in such branches where a redundancy is found, can be more -usefully set to work in another way. - -He must consider the advancement of the common good as a direct object -of private interest to every individual, and by a disinterested -administration of the public money, he must plainly make it appear that -it is so. - -From this principle flows the authority, vested in all governments, to -load the community with taxes, in order to advance the prosperity of the -state. And this object can be nowise better obtained than by applying -the amount of them to the keeping an even balance between work and -demand. Upon this the health of a trading state principally depends. - -If the failure of foreign demand be found to proceed from the superior -natural advantages of other countries, he must double his diligence to -promote luxury among his neighbours; he must support simplicity at home; -he must increase his bounties upon exportation; and his expence in -relieving manufactures, when the price of their industry falls below the -expence of their subsistence. - -While these operations are conducted with coolness and perseverance, -while the allurements of the wealth acquired do not frustrate the -execution, the statesman may depend upon seeing foreigners return to his -ports, so soon as their own dissipation, and want of frugality, come to -compensate the advantages which nature had given them over their frugal -and industrious neighbours. - -If this plan be pursued, foreign trade will increase in proportion to -the number of inhabitants; and domestic luxury will serve only as an -instrument in the hands of the statesman to increase demand when the -home supply becomes too great for foreign consumption. In other words, -the rich citizens will be engaged to consume what is superfluous, in -order to keep the balance even in favour of the industrious, and in -favour of the nation. - -The whole purport of this plan is to point out the operation of three -very easy principles. - -The first, That in a country entirely taken up with the object of -promoting foreign trade, no competition should be allowed to come from -abroad for articles of the first necessity, and principally for food, so -as to raise prices beyond a certain standard. - -The second, That no domestic competition should be allowed upon articles -of superfluity, so as to raise prices beyond a certain standard. - -The third, That when these standards cannot be preserved, and that from -natural causes, prices get above them, public money must be thrown into -the scale to bring prices to the level of those of exportation. - -The greater the extent of foreign trade in any nation, the lower these -standards _must_ be kept; the less the extent of it, the higher they -_may_ be allowed to rise. Consequently, - -Were no man in a nation employed in producing the necessaries of life, -but every man in supplying articles of foreign consumption, the prices -of necessaries might be allowed to fall as low as possible. There would -be no occasion for a standard in favour of those who live by producing -them. - -Were no man in the state employed in supplying strangers, the prices of -superfluities might be allowed to rise as high as possible, and a -standard would also become useless, as the sole design of it is to -favour exportation. - -But as neither of these suppositions can ever take place, and as in -every nation there is a part employed in producing, and a part in -consuming, and that it is only the surplus of industry which can be -exported; a standard is necessary for the support of the reciprocal -interests of both parties at home; and the public money must be made to -operate only upon the price of _the surplus_ of industry so as to make -it exportable, even in cases where the national prices upon home -consumption have got up beyond the standard. Let me set this matter in -another light, the better to communicate an idea which I think a little -obscure. - -Were food and other necessaries the pure gift of nature in any country, -I should have laid it down as a principle to discourage all foreign -competition for them, either below or above any certain standard; -because in this case the lower the price the better, since no -inconveniency could result from thence to any industrious person. But -when the production of these is in itself a manufacture, or an object of -industry, a certain standard must be kept up in favour of those who live -by producing them. - -On the other hand, as to the manufactures of superfluity, domestic -competition should be discouraged, beyond a certain standard, in order -that prices may not rise above those offered by foreigners; but it might -be encouraged below the standard, in order to promote consumption and -give bread to manufacturers. But were there no foreign demand at all, -there would be no occasion for any standard, and the nation’s wealth -would thereby only circulate in greater or less rapidity in proportion -as prices would rise or fall. The study of the balance between work and -demand, would then become a principal object of attention in the -statesman, not with a view to enrich the state, but in order to preserve -every member of it in health and vigour. On the other hand, the object -of a standard regards foreign trade, and the acquisition of new wealth, -at the expence of other nations. The rich, therefore, at home must not -be allowed to increase their consumption of superfluities beyond the -proportion of the constant supply; because these being intended for -strangers, the only way of preventing them from supplying themselves, is -to prevent prices from getting up beyond the standard, at which -strangers can produce them. - -Farther, were every one of the society in the same pursuit of industry, -there would be no occasion for the public to be laid under contribution -for advancing the general welfare; but as there is a part employed in -enriching the state, by the sale of their work to strangers, and a part -employed in making these riches circulate at home, by the consumption of -superfluities, I think it is a good expedient to throw a part of -domestic circulation into the public coffers; that when the consequences -of private wealth come necessarily to raise prices, a statesman may be -enabled to defray the expence of bounties upon that part which can be -exported, and thereby enable the nation to continue to supply foreigners -at the same price as formerly. - -The farther these principles can be carried into execution, the longer a -state will flourish; and the longer she will support her superiority. -When foreign demand begins to fail, so as not to be recalled, either -industry must decline, or domestic luxury must begin. The consequences -of both may be easily guessed at, and the principles which influence -them shall be particularly examined in the following chapter. - ------------------------------------------------------------------------- - - - - - CHAP. XVI. - _Illustration of some Principles laid down in the former Chapter, - relative to the advancement and support of foreign Trade._ - - -I am now to give an illustration of some things laid down, I think, in -too general terms in the former chapter, relating to that species of -trade which is carried on with other nations. - -I have constantly in view to separate and distinguish the principles of -foreign trade, from those which only influence the advancement of an -inland commerce, and a brisk circulation: operations which produce very -different effects, equally meriting the attention of a statesman. - -The very existence of foreign trade, implies a separate interest between -those nations who are found on the opposite side of the mercantile -contract, as both endeavour to make the best bargain possible for -themselves. These transactions imply a mutual dependence upon one -another, which may either be necessary or contingent. It is necessary, -when one of the nations cannot subsist without the assistance of the -other, as is the case between the province of Holland, and those -countries which supply it with grain; or contingent, when the wants of a -particular nation cannot be supplied by their own inhabitants, from a -want of skill and dexterity, only. - -Wherever, therefore, one nation finds another necessarily depending upon -her for particular branches of traffic, there is a certain foundation -for foreign trade; where the dependence is contingent, there is occasion -for management, and for the hand of an able statesman. - -The best way to preserve every advantage, is, to examine in how far they -are necessary, and in how far they are only contingent, to consider in -what respect the nation may be most easily rivalled by her neighbours, -and in what respect she has natural advantages which cannot be taken -from her. - -The natural advantages are chiefly to be depended on: France, for -example, can never be rivalled in her wines. Other countries may enjoy -great advantages from their situation, mines, rivers, sea ports, -fishing, timber, and certain productions proper to the soil. If you -abstract from these natural advantages, all nations are upon an equal -footing as to trade. Industry and labour are no properties attached to -place, any more than oeconomy and sobriety. - -This proposition may be called in question, upon the principles of M. de -Montesquieu, who deduces the origin of many laws, customs, and even -religions, from the influence of the climate. That great man reasoned -from fact and from experience, and from the power and tendency of -natural causes, to produce certain effects when not checked by other -circumstances; but in my method of treating this subject, I suppose -these causes never to be allowed to produce their natural and immediate -effects, when such effects would be followed by a political -inconvenience: because I constantly suppose a statesman at the head of -government, who makes every circumstance concur in promoting the -execution of the plan he has laid down. - -_1mo._ If a nation then has formed a scheme of being long great and -powerful by trade, she must first apply closely to the manufacturing -every natural produce of the country. For this purpose a sufficient -number of hands must be employed: for if hands be found wanting, the -natural produce will be exported without receiving any additional value -from labour; and so the consequences of this natural advantage will be -lost. - -The price of food, and all necessaries for manufacturers, must be found -at an easy rate. - -And, in the last place, if oeconomy and sobriety in the workmen, and -good regulations on the part of the statesman, are not kept up, the end -will not be obtained: for if the manufacture, when brought to its -perfection, does not retain the advantages which the manufacturer had in -the beginning, by employing the natural produce of the country; it is -the same thing as if the advantage had not existed. I shall illustrate -this by an example. - -I shall suppose wool to be better, more plentiful, and cheaper, in one -country than in another, and two nations rivals in that trade. It is -natural that the last should desire to buy wool of the first, and that -the other should desire to keep it at home, in order to manufacture it. -Here then is a natural advantage which the first country has over the -latter, and which cannot be taken from her. I shall suppose that -subsistence is as cheap in one country as in the other; that is to say, -that bread and every other necessary of life is at the same price. If -the workmen of the first country (by having been the founders of the -cloth manufacture, and by having had, for a long tract of years, so -great a superiority over other nations, as to make them, in a manner, -absolutely dependent upon them for cloths) shall have raised their -prices from time to time; and if, in consequence of large profits, long -enjoyed without rivalship, these have been so consolidated with the real -value, by an habitual greater expence in living, which implies an -augmentation of wages; that country may thereby lose all the advantages -it had from the low price and superior quality of its wool. But if, on -the other hand, the workmen in the last country work less, be less -dextrous, pay extravagant prices for wool at prime cost, and be at great -expence in carriage; if manufactures cannot be carried on successfully, -but by public authority, and if private workmen be crushed with -excessive taxes upon their industry; all the accidental advantages which -the last country had over the first, may come to be more than balanced, -and the first may regain those which nature first had given her. But -this should by no means make the first country rest secure. These -accidental inconveniencies found in the last may come to cease; and -therefore the only real security of the first for that branch, is the -cheapness of the workmanship. - -_2do._ In speaking of a standard, in the last chapter, I established a -distinction between one regulated by the height of foreign demand, and -another kept as low as the possibility of supplying the manufacture can -admit. This requires a little explanation. - -It must not here be supposed that a people will ever be brought from a -principle of public spirit, not to profit of a rise in foreign demand; -and as this may proceed from circumstances and events which are entirely -hid from the manufacturers, such revolutions are unavoidable. We must -therefore restrain the generality of our proposition, and observe, that -the indispensible _vibrations_ of this foreign demand do no harm; but -that the statesman should be constantly on his guard to prevent the -_subversion of the balance, or the smallest consolidation of -extraordinary profits with the real value_. This he will accomplish, as -has been observed, by multiplying hands in those branches of -exportation, upon which profits have risen. This will increase the -supply, and even frustrate his own people of extraordinary gains, which -would otherwise terminate in a prejudice to foreign trade. - -A statesman may sometimes, out of a principle of benevolence, perhaps of -natural equity towards the classes of the industrious, as well as from -sound policy, permit larger profits, as an encouragement to some of the -more elegant arts, which serve as an ornament to a country, establish a -reputation for taste and refinement in favour of a people, and thereby -make strangers prefer articles of their production, which have no other -superior merit than the name of the country they come from: but even as -to these, he ought to be upon his guard, never to allow them to rise so -high, as to prove an encouragement to other nations, to establish a -successful rivalship. - -_3tio._ The encouragement recommended to be given to the domestic -consumption of superfluities, when foreign demand for them happens to -fall so low as to be followed with distress in the workmen, requires a -little farther explanation. - -If what I laid down in the last chapter be taken literally, I own it -appears an absurd supposition, because it implies a degree of public -spirit in those who are in a capacity to purchase the superfluities, no -where to be met with, and at the same time a self-denial, in -discontinuing the demand, so soon as another branch of foreign trade is -opened for the employment of the industrious, which contradicts the -principles upon which we have founded the whole scheme of our political -oeconomy. - -I have elsewhere observed, that were revolutions to happen as suddenly -as I am obliged to represent them, all would go into confusion. - -What, therefore, is meant in this operation comes to this, that when a -statesman finds, that the natural taste of his people does not lead them -to profit of the surplus of commodities which lie upon hand, and which -were usually exported, he should interpose his authority and management -in such a way as to prevent the distress of the workmen, and when, by a -sudden fall in a foreign demand, this distress becomes unavoidable, -without a more powerful interposition, he should then himself become the -purchaser, if others will not; or, by premiums or bounties on the -surplus which lies upon hand, promote the sale of it at any rate, until -the supernumerary hands can be otherwise provided for. And although I -allow that the rich people of a state are not naturally led, from a -principle either of public spirit or self-denial, to render such -political operations effectual to promote the end proposed, yet we -cannot deny, that it is in the power of a good governor, by exposing the -political state of certain classes of the people, to gain upon men of -substance to concur in schemes for their relief; and this is all I -intend to recommend in practice. My point of view is to lay down the -principles, and I never recommend them farther than they are rendered -possible in execution, by preparatory steps, and by properly working on -the spirit of the people. - ------------------------------------------------------------------------- - - - - - CHAP. XVII. - _Symptoms of Decay in foreign Trade._ - - -If manufacturers are found to be without employment, we are not -immediately to accuse the statesman, or conclude this to proceed from a -decay of trade, until the cause of it be inquired into. If upon -examination it be found, that for some years past food has been at a -higher rate than in neighbouring countries, the statesman may be to -blame: for it is certain, that a trading nation, by turning part of her -commerce into a proper channel, may always be able to establish a just -balance in this particular. And though it be not expedient in years of -scarcity to bring the price of grain very low, yet it is generally -possible to raise the price of it in all rival nations, which, with -regard to the present point, is the same thing. - -If this want of employment for manufacturers do not proceed from the -high prices of living, but for want of commissions from the merchants, -the causes of this diminution of demand must be examined into. It may be -accidental, and happen from causes which may cease in a little time, and -trade return to flourish as before. It may also happen upon the -establishment of new undertakings in different places of the country, -from which, by reason of some natural advantage, or a more frugal -disposition in the workmen, or from the proximity of place, markets may -be supplied, which formerly were furnished by those industrious people -who are found without employment. In these last suppositions, the -distress of the manufacturers does not prove any decay of trade in -general, but, on the contrary, may contribute to destroy the bad effects -of consolidated profits, by obliging those who formerly shared them, to -abandon the ease of their circumstances, and submit a-new to a painful -industry, in order to procure subsistence. When such revolutions are -sudden, they prove hard to bear, and throw people into great distress. -It is partly to prevent such inconveniencies, that we have recommended -the lowest standard possible, upon articles of exportation. - -Two causes there are, which very commonly mark a decline of trade, to -wit; 1. When foreign markets, usually supplied by a trading nation, -begin to be furnished, let it be in the most trifling article, by -others, not in use to supply them. Or, 2. When the country itself is -furnished from abroad with such manufactures as were formerly made at -home. - -These circumstances prove one of two things, either that there are -workmen in other countries, who, from advantages which they have -acquired by nature, or by industry and frugality, finding a demand for -their work, take the bread out of the mouths of those formerly employed, -and deprive them of certain branches of their foreign trade: or, that -these foreign workmen, having profited of the increased luxury and -dissipation of the former traders, have begun to supply the markets with -certain articles of consumption, the profits upon which being small, -are, without much rivalship, insensibly yielded up to them by the -workmen of the other trading nation, who find better bread in serving -their own wealthy countrymen. - -Against the first cause of decline, I see no better remedy than -patience, as I have said already, and a perseverance in frugality and -oeconomy, until the unwary beginners shall fall into the inconveniencies -generally attending upon wealth and ease. - -The second cause of decline is far more difficult to be removed. The -root of it lies deep, and is ingrafted with the spirit and manners of -the whole people, high and low. The lower classes have contracted a -taste for superfluity and expence, which they are enabled to gratify, by -working for their countrymen; while they despise the branches of foreign -trade as low and unprofitable. The higher classes again depend upon the -lower classes, for the gratification of a thousand little trifling -desires, formed by the taste of dissipation, and supported by habit, -fashion, and a love of expence. - -Here then is a system set on foot, whereby the poor are made rich, and -the rich are made happy, in the enjoyment of a perpetual variety of -every thing which can remove the inconveniencies to which human nature -is exposed. Thus both parties become interested to support it, and vie -with one another in the ingenuity of contriving new wants; the one from -the immediate satisfaction of removing them; the other from the profit -of furnishing the means, and the hopes of one day sharing in them. - -But even for this great evil, the very nature of man points out a -remedy. It is the business of a statesman to lay hold of it. The remedy -flows from the instability of every taste not founded upon rational -desires. - -In every country of luxury, we constantly find certain classes of -workmen in distress, from the change of modes. Were a statesman upon his -guard to employ such as are forced to be idle, before they betake -themselves to new inventions, for the support of the old plan, or before -they contract an abandoned and vitious life, he would get them cheap, -and might turn their labour both to the advantage of the state and to -the discouragement of luxury. - -I confess, however, that while a luxurious taste in the rich subsists, -industrious people will always be found to supply the instruments of it -to the utmost extent; and I also allow, that such a taste has infinite -allurements, especially while youth and health enable a rich man to -indulge in it. Those, however, who are systematically luxurious, that -is, from a formed taste and confirmed habit, are but few, in comparison -of those who become so from levity, vanity, and the imitation of others. -The last are those who principally support and extend the system; but -they are not the most incorrigible. Were it not for imitation, every age -would seek after, and be satisfied with the gratification of natural -desires. Twenty-five might think of dress, horses, hunting, dogs, and -generous wines: forty, of a plentiful table, and the pleasures of -society: sixty, of coaches, elbow-chairs, soft carpets, and instruments -of ease. But the taste for imitation blends all ages together. The old -fellow delights in horses and fine clothes; the youth rides in his -chariot on springs, and lolls in an easy chair, large enough to serve -him for a bed. All this proceeds from the superfluity of riches and -taste of imitation, not from the real allurements of ease and taste of -luxury, as every one must feel, who has conversed at all with the great -and rich. Fashion, which I understand here to be a synonimous term for -imitation, leads most people into superfluous expence, which is so far -from being an article of luxury, that it is frequently a load upon the -person who incurs it. All such branches of expence, it is in the power -of a statesman to cut off, by setting his own example, and that of his -favourites and servants, above the caprice of fashion. - -The levity and changeableness of mankind, as I have said, will even -assist him. A generation of oeconomists is sometimes found to succeed a -generation of spendthrifts; and we now see, almost over all Europe, a -system of sobriety succeeding an habitual system of drunkenness. -Drunkenness, and a multitude of useless servants, were the luxury of -former times. - -Every such revolution may be profited of by an able statesman, who must -set a good example on one hand, while, on the other, he must profit of -every change of taste, in order to re-establish the foreign trade of his -subjects. An example of frugality, in the head of a luxurious people, -would do infinite harm, were it only intended to reform the morals of -the rich, without indemnifying the poor for the diminution upon their -consumption. - -At the same time, therefore, that luxury comes to lose ground at home, a -door must be opened, to serve as an out-let for the work of those hands -which must be thereby made idle; and which, consequently, must fall into -distress. - -This is no more than the principle before laid down, in the fifteenth -chapter, reversed: there we said, that when foreign demand begins to -decline, domestic luxury must be made to increase, in order to soften -the shock of the sudden revolution in favour of the industrious. For the -same reason here we say, that foreign trade must be opened upon every -diminution of domestic luxury. - -How few Princes do we find either frugal or magnificent from political -considerations! And, this being the case, is it not necessary to lay -before them the natural consequences of the one and the other? And it is -still more necessary to point out the methods to be taken in order to -avoid the inconveniencies which may proceed from either. - -Under a prodigal administration, the number of people will increase. The -statesman therefore should keep a watchful eye upon the supplying of -subsistence. Under a frugal reign, numbers will diminish, if the -statesman does not open every channel which may carry off the -superfluous productions of industry. Here is the reason: a diminution of -expence at home, is a diminution of employment; and this again implies a -diminution of people; because it interrupts the circulation of the -subsistence which made them live; but if employment is sent far from -abroad, the nation will preserve its people, and the savings of the -Prince may be compensated by the balance coming in from strangers. - -These topics are delivered only as hints; and the amplification of them -might not improperly have a place here; but I expect to bring them in -elsewhere to greater advantage, after examining the principles of -taxation, and pointing out those which direct the application of public -money. - ------------------------------------------------------------------------- - - - - - CHAP. XVIII. - _Methods of lowering the Price of Manufactures, in order to make them - vendible in foreign Markets._ - - -The multiplicity of relations between the several parts of political -oeconomy, forces me to a frequent repetition of principles. I have no -other rule to judge whether such relations be superfluous, or necessary, -but by the tendency they have to give me a more distinct view of my -subject. This is the case when the same principles are applied to -different combinations of circumstances. - -Almost every thing to be said on the head mentioned in the title of this -chapter, has been taken notice of elsewhere; and my present intention is -only to lay together ideas which appear scattered, because they have -been occasionally brought in by their relations to other matters. - -The methods of lowering the price of manufactures, so as to render them -exportable, are of two kinds. - -The first, such as proceed from a good administration, and which bring -down prices within the country, in consequence of natural causes. - -The second, such as operate only upon that part which comes to be -exported, in consequence of a proper application of public money. - -As I have not yet inquired into the methods of providing a public fund, -it would, I think, be contrary to order to enter on the disposal of it, -for bringing down the price of manufactures. This operation will come in -more naturally afterwards, and the general distinction here mentioned, -is only introduced by the by, that my readers may retain it and apply it -as we go along. - -The end proposed is to lower the price of manufactures, so that they may -be exported. The first thing therefore to be known, is the cause from -whence it happens, that certain manufactures cannot be furnished at home -so cheap as in other countries; the second, how to apply the proper -remedy for lowering the price of them. - -The causes of high prices, that is, of prices relatively high to what -they are found to be in other nations, are reducible to four heads; -which I shall lay down in their order, and then point out the methods of -removing them likewise, in their order. - -_1mo._ The consolidation of high profits with the real value of the -manufacture. This cause operates in countries where luxury has gained -ground, and when domestic competition has called off too many of the -hands, which were formerly content to serve at a low price, and for -small gains. - -_2do._ The rise in the price of articles of the first necessity. This -cause operates when the progress of industry has been more rapid than -that of agriculture. The progress of industry we have shewn necessarily -implies an augmentation of _useful inhabitants_; and as these have -commonly wherewithal to purchase subsistence, the moment their numbers -swell above the proportion of the quantity of it produced by -agriculture, or above what is found in the markets of the country, or -brought from abroad, they enter into competition and raise the price of -it. Here then let it be observed, by the by, that what raises the price -of subsistence is the augmentation of the numbers of useful inhabitants, -that is, of such as are easy in their circumstances. Let the wretched be -ever so many, let the vicious procreation go on ever so far, such -inhabitants will have little effect in raising price, but a very great -one in increasing misery. A proof of this is to be met with in many -provinces where the number of poor is very great, and where at the same -time the price of necessaries is very low; whereas no instance can be -found where a number of the industrious being got together, do not -occasion an immediate rise on most of the articles of subsistence. - -_3tio._ The natural advantages of other countries. This operates in -spight of all the precautions of the most frugal and laborious people. -Let them deprive themselves of every superfluity; let them be ever so -diligent and ingenious; let every circumstance be improved by the -statesman to the utmost for the establishment of foreign trade; the -advantage of climate and situation may give such a superiority to the -people of another country, as to render a direct competition with them -impossible. - -_4to._ The superior dexterity of other nations in working up their -manufactures, their knowledge in the science of trade, the advantage -they have in turning their money to account in the intervals of their -own direct circulation, the superior abilities of their statesman, the -application of their public money, in one word, the perfection of their -political oeconomy. - -Before I enter upon the method of removing these several -inconveniencies, I must observe, that as we are at present treating of -the _relative_ height of the price of manufactures, a competition -between nations is constantly implied. It is this which obliges a -statesman to be principally attentive to the rise of prices. The term -_competition_ is relative to, and conveys the idea of emulation between -two parties striving to compass the same end. I must therefore -distinguish between the endeavours which a nation makes to _retain_ a -superiority already got, and those of another which strives to get the -better of it. The first I shall call a competition to _retain_; the -second, a competition to _acquire_. - -The first three heads represent the inconveniencies to which the -competitors to _retain_ are liable; and the fourth comprehends those to -which the competitors to _acquire_ are most commonly exposed. - -Having digested our subject into order, I shall run through the -principles which severally influence the removing of every -inconvenience, whether incident to a nation whose foreign trade is -already well established, or to another naturally calculated for entring -into a competition for the acquisition of it. - -In proposing a remedy for the particular causes of augmentation here set -down, we must suppose every one entirely simple, and uncompounded with -the others; a thing which in fact seldom happens. This I do for the sake -of distinctness; and the principal difficulty in practice is to combine -the remedies in proportion to the complication of the disease. I now -come to the first of the four causes of high prices, to wit, -consolidated profits. - -The whole doctrine of these has been abundantly set forth in the 10th -chapter. We there explained the nature of them, shewed how the -subversion of the balance, by a long preponderancy of the scale of -demand, had the effect of consolidating profits in a country of luxury; -and observed, that the reducing them to the proper standard could never -fail of bringing those who had long enjoyed them, into distress. - -The question here is to reduce them, when foreign trade cannot otherwise -be retained, let the consequences be ever so hurtful to certain -individuals. When the well being of a nation comes in competition with a -temporary inconvenience to some of the inhabitants, the general good -must be preferred to particular considerations. - -I have observed above, that domestic luxury, by offering high prices -upon certain species of industry, calls off many hands employed to -supply the articles of exportation, upon which profits are generally -very moderate. The first natural and immediate effect of this, is, to -diminish the hands employed in furnishing the foreign demand; -consequently, to diminish the supply; consequently, to occasion a -_simple competition_ on the side of the strangers, who are the -purchasers; consequently, to augment profits, until by their rise and -consolidation the market is deserted. - -The very progress here laid down, points out the remedy. The number of -hands employed in these particular branches must be multiplied; and if -the luxurious taste and wealth of the country prevent any one who can do -better, from betaking himself to a species of industry lucrative to the -nation, but ungrateful to those who exercise it, the statesman must -collect the children of the wretched into workhouses, and breed them to -this employment, under the best regulations possible for saving every -article of unnecessary expence; here likewise may be employed -occasionally those above mentioned, whom the change of modes may have -cast out of employment, until they can be better provided for. This is -also an outlet for foundlings, since many of those who work for foreign -exportation, are justly to be ranked in the lowest classes of the -people; and in the first book we proposed, that every one brought up at -the expence of public charity, should be thrown in for recruiting these -classes, which can with greatest difficulty support their own -propagation. - -Here let me observe, that although it be true in general, that the -greatest part of exportable manufactures do yield but very middling -profits, from the extension of industry in different countries, yet -sundry exceptions may be found; especially in nations renowned for their -elegance of taste. But how quickly do we see these lucrative branches of -foreign trade cut off, from the very inconvenience we here seek a remedy -for. The reason is plain. When strangers demand such manufactures, they -only share in the instruments of foreign luxury, which bring every where -considerable profits to the manufacturer. These high profits easily -establish a rivalship in favour of the nation to whom they are supplied; -because a hint is sufficient to enable such as exercise a similar -profession in that country, to supply their own inhabitants. This being -the case, an able statesman should be constantly attentive to every -growing taste in foreign nations for the inventions of his people; and -so soon as his luxurious workmen have set any one on foot, he may throw -that branch into the hands of the most frugal, in order to support it, -and give them such encouragement as to prevent, at least, the rivalship -of those strangers who are accustomed to work for large profits. This is -one method of turning a branch of luxury into an article of foreign -trade. Let me illustrate this by an example. - -What great advantages do not the French reap from the exportation of -their modes? But we quickly find their varnishes, gauzes, ribbands, and -colifichets, imitated by other nations, for no other reason but because -of the large, or at least consolidated profits enjoyed by the French -workmen themselves, who, fertile in new inventions, and supported by -their reputation for elegance of dress, have got into possession of the -right of prescribing to all Europe the standard of taste in articles of -mere superfluity. This however is no permanent prerogative; and that -elegant people, by long setting the example, and determining the -standard of refinement in some luxurious arts, will at last inspire a -similar taste into their scholars, who will thereby be enabled to -supplant them. Whereas were they careful to supply all their inventions -at the lowest prices possible, they would ever continue to be the only -furnishers. - -The method therefore of reducing consolidated profits, whether upon -articles of exportation, or home consumption, is to increase the number -of hands employed in supplying them; and the more gradually this -revolution is made to take place, the fewer inconveniencies will result -to those who will thereby be forced to renounce them. - -A country which has an extensive territory, and great opportunities of -extending her agriculture (such as I supposed the present situation of -France to be) may, under a good administration, find the progress of -luxury very compatible with the prosperity of her foreign trade; because -inhabitants may be multiplied at discretion. But so soon as subsistence -becomes hard to be obtained, this expedient is cut off. A statesman must -then make the best of the inhabitants he has, luxury must suffer a -check; and those who are employed in supplying home consumption at high -prices, must be made to reduce their consolidated profits, in order to -bring the total amount of their manufactures within such bounds as to -make them vendible in foreign markets. - -If manufacturers become luxurious in their way of living, it must -proceed from their extraordinary profits. These they may still continue -to have, as long as the produce of their work is consumed at home. But -no merchant will pretend to sell it out of the country; because, in this -case, he will find the labour of other people who are less luxurious, -and consequently work cheaper, in competition with him. - -To re-establish then the foreign trade, these consolidated profits must -be put an end to, by attacking luxury when circumstances render an -augmentation of people inconvenient, and prices will fall of course. - -This will occasion great complaints among all sorts of tradesmen. The -cry will be, that trade is ruined, manufacturers are starving, and the -state is undone: but the truth will be, that manufacturers will, by -their labour, begin to enrich their own nation, at the expence of all -those who trade with her, instead of being enriched at the expence of -their own countrymen; and only by a revolution in the balance of wealth -at home. - -It will prove very discouraging to any statesman to attempt a sudden -reform of this abuse of consolidated profits, when he is obliged to -attack the luxury of his own people. The best way therefore is to -prevent matters from coming to such a pass, as to demand so dangerous -and difficult a remedy. - -There is hardly a possibility of changing the manners of a people, but -by a proper attention to the education of the youth. All methods, -therefore, should be fallen upon to supply manufactures with new hands; -and lest the corruption of example should get the better of all -precautions, the seat of manufactures might be changed; especially when -they are found in great and populous cities, where living is dear: in -this case, others should be erected in the provinces where living is -cheap. The state must encourage these new undertakings, numbers of -children must be taken in, in order to be bred early to industry and -frugality; this again will encourage people to marry and propagate, as -it will contribute towards discharging them of the load of a numerous -family. If such a plan as this be followed, how inconsiderable will the -number of poor people become in a little time; and as it will insensibly -multiply the useful inhabitants, out of that youth which recruited and -supported the numbers of the poor, so the taxes appropriated for the -relief of poverty may be wholly applied, in order to prevent it. - -Laws of naturalization have been often proposed in a nation where -consolidated profits have occasioned the inconveniencies for which we -have here been proposing a remedy. By this expedient many flatter -themselves to draw industrious strangers into the country, who being -accustomed to live more frugally, and upon less profits, may, by their -example and competition, beat down the price of work among the -inhabitants. - -Several circumstances concur to defeat the success of this scheme. The -first is, that consolidated profits are not the only inconvenience to be -removed: there is also a complication of high prices upon many -necessaries. The second, as no real change is supposed to be made within -the country, either as to the increase of subsistence, or the regulation -of its price, or manner of living, these strangers, who, as such, must -be exposed to extraordinary expence, are not able to subsist, nor -consequently to work so cheap as they did at home. Besides, what can be -supposed to be their motive of coming, if it be not to have higher -wages, and to live better? - -Here then is a nation sending for strangers, in order that they may work -cheaper; and strangers flocking into the country in hopes of selling -their work dearer. This is just the case with two friends who are about -making a bargain; the seller imagines that _his friend_ will not grudge -a good price. The buyer, on the other hand, flatters himself that _his -friend_ will sell to him cheaper than to another. This seldom fails to -produce discontent on both sides. - -Besides, unless the quantity of food be increased, if strangers are -imported to eat part of it, natives must in some degree starve; and if -you augment the quantity of food, and keep it at a little lower price -than in neighbouring nations, your own inhabitants will multiply; the -state may take great numbers of them into their service when young; they -soon come to be able to do something in the manufacturing way; they may -be bound for a number of years, sufficient to indemnify the public for -the first expence; and the encouragement alone of having bread cheaper -than elsewhere, will bring you as many strangers as you incline to -receive, provided a continual supply of food can be procured in -proportion to the increase of the people. - -But I imagine that it is always better for a state to multiply by means -of its own inhabitants, than by that of strangers; for many reasons -which to me appear obvious. - -We come now to the second cause of high prices, to wit, a rise in the -value of the articles of the first necessity, which we have said -proceeds from the progress of industry having outstripped the progress -of agriculture. Let me set this idea in a clearer light; for here it is -shut up in too general terms to be rightly viewed on all sides. - -The idea of inhabitants being multiplied beyond the proportion of -subsistence, seems to imply that there are too many already; and the -demand for their industry having been the cause of their multiplication, -proves that formerly there were too few. Add to this, that if, -notwithstanding the rise upon the price of work proceeding from the -scarcity of subsistence, the scale of home demand is found to -preponderate, at the expence of foreign trade, this circumstance proves -farther, that however the inhabitants may be already multiplied above -the proportion of subsistence, their numbers are still too few for what -is demanded of them at home; and for what is required of them towards -promoting the prosperity of their country, in supporting their trade -abroad. - -From this exposition of the matter, the remedy appears evident: both -inhabitants and subsistence must be augmented. The question comes to be, -in what manner, and with what precautions, must these operations be -performed? - -Inhabitants are multiplied by reducing the price of subsistence, to the -value which demand has fixed upon the work of those who are to consume -it. This is only to be accomplished by augmenting the quantity, by -importation from foreign parts, when the country cannot be made to -produce more of itself. - -Here the interposition of a statesman is absolutely necessary; since -great loss may often be incurred by bringing down the price of grain in -a year of scarcity. Premiums, therefore, must be given upon importation, -until a plan can be executed for the extending of agriculture; of which -in another place. This must be gone about with the greatest -circumspection; for if grain be thereby made to fall too low, you ruin -the landed interest, and although (as we have said above) all things -soon become balanced in a trading nation, yet sudden and violent -revolutions, such as this must be, are always to be apprehended. They -are ever dangerous; and the spirit of every class of inhabitants must be -kept up. - -By a discredit call upon any branch of industry, the hands employed in -it may be made to abandon it, to the great detriment of the whole. This -will infallibly happen, when violent transitions do not proceed from -natural causes, as in the example here before us, when the price of -grain is supposed to be brought down, from the increase of its quantity -by importation, and not by plenty. Because, upon the falling of the -market by importation, the poor farmer has nothing to make up for the -low price he gets for his grain; whereas, when it proceeds from plenty, -he has an additional quantity. - -In years, therefore, of general scarcity, a statesman should not, by -premiums given, reduce the price of grain, but in a reciprocal -proportion to the quantity wanted: that is to say, the more grain is -wanted, the less the price should be diminished. - -It may appear a very extensive project for any government to undertake -to keep down the prices of grain, in years of general scarcity. I allow -it to be politically impossible to keep prices low; because if all -Europe be taken together, the produce of the whole is consumed one year -with another, by the inhabitants; and in a year when there is a general -scarcity, it would be very hard, if not impossible, (without having -previously established a plan for this purpose) to make any nation live -in plenty while others are starving. All therefore that is proposed, is -to keep the prices of grain in as just a proportion as possible to the -plenty of the year. - -Now if a government does not interpose, this never is the case. I shall -suppose the inhabitants of a country to consume, in a year of moderate -plenty, six millions of quarters of grain; if in a year of scarcity it -shall be found, that one million of quarters, or indeed a far less -quantity, be wanting, the five millions of quarters produced, will rise -in their price to perhaps double the ordinary value, instead of being -increased only by one fifth. But if you examine the case in countries -where trade is not well established, as in some inland provinces on the -continent, it is no extraordinary thing to see grain bearing three times -the price it is worth in ordinary years of plenty, and yet if in such a -year there were wanting six months provisions for the inhabitants of a -great kingdom, all the rest of Europe would perhaps hardly be able to -keep them from starving. - -It is the fear of want, and not real want, which makes grain rise to -immoderate prices. Now as this extraordinary revolution in the rise of -it, does not proceed from a natural cause, to wit, the degree of -scarcity, but to the avarice and evil designs of men who hoard it up, it -produces as bad consequences to that part of the inhabitants of a -country employed in manufactures, as the fall of grain would produce to -the farmers, in case the prices should be, by importation, brought below -the just proportion of the quantity produced in the nation. - -Besides the importation of grain, there is another way of increasing the -quantity of it very considerably, in some countries of Europe. In a year -of scarcity, could not the quantity of food be considerably augmented by -a prohibition to make malt liquors, allowing the importation of wines -and brandies; or indeed without laying any restraint upon the liberty of -the inhabitants as to malt liquors, I am persuaded that the liberty of -importing wines duty free, would, in years of scarcity, considerably -augment the quantity of subsistence. - -This is not a proper place to examine the inconvenience which might -result to the revenue by such a scheme; because we are here only talking -of those expedients which might be fallen upon to preserve a balance on -foreign trade. An exchequer which is filled at the expence of this, will -not continue long in a flourishing condition. - -These appear to be the most rational temporary expedients to diminish -the price of grain in years of scarcity; we shall afterwards examine the -principles upon which a plan may be laid down to destroy all -precariousness in the price of subsistence. - -Precautions of another kind must be taken in years of plenty; for high -prices occasioned by exportation are as hurtful to the poor tradesman as -if they were occasioned by scarcity. And low prices occasioned by -superfluity are as hurtful to the poor husbandman as if his crop had -failed him. - -A statesman therefore, should be very attentive to put the inland trade -in grain upon the best footing possible, to prevent the frauds of -merchants, and to promote an equal distribution of food in all corners -of the country: and by the means of importation and exportation, -according to plenty and scarcity, to regulate a just proportion between -the general plenty of the year in Europe, and the price of subsistence; -always observing to keep it somewhat lower at home, than it can be found -in any rival nation in trade. If this method be well observed, -inhabitants will multiply; and this is a principal step towards reducing -the expence of manufactures; because you increase the number of hands, -and consequently diminish the price of labour. - -Another expedient found to operate most admirable effects in reducing -the price of manufactures (in those countries where living is rendred -dear, by a hurtful competition among the inhabitants for the subsistence -produced) is the invention and introduction of machines. We have, in a -former chapter, answered the principal objections which have been made -against them, in countries where the numbers of the idle, or trifling -industrious, are so great, that every expedient which can abridge -labour, is looked upon as a scheme for starving the poor. There is no -solidity in this objection; and if there were, we are not at present in -quest of plans for feeding the poor; but for accumulating the wealth of -a trading nation, by enabling the industrious to feed themselves at the -expence of foreigners. The introduction of machines is found to reduce -prices in a surprizing manner. And if they have the effect of taking -bread from hundreds, formerly employed in performing their simple -operations, they have that also of giving bread to thousands, by -extending numberless branches of ingenuity, which, without the machines, -would have remained circumscribed within very narrow limits. What -progress has not building made within these hundred years? Who doubts -that the conveniency of great iron works, and saw mills, prompts many to -build? And this taste has greatly contributed to increase, not diminish, -the number both of smiths and carpenters, as well as to extend -navigation. I shall only add in favour of such expedients, that -experience shews the advantage gained by certain machines, is more than -enough to compensate every inconvenience arising from consolidated -profits, and expensive living; and that the first inventors gain thereby -a superiority which nothing but adopting the same invention can -counterbalance. - -The third cause of high prices we have said to be owing to the natural -advantages which neighbouring nations reap from their climate, soil, or -situation. - -Here no rise of prices is implied in the country in question, they are -only supposed to have become relatively high by the opportunity other -nations have had to furnish the same articles at a lower rate, in -consequence of their natural advantages. - -There are two expedients to be used, in order to defeat the bad effects -of a competition which cannot be got the better of in the ordinary way. -The first to be made use of, is, to assist the branches in distress with -the public money. The other is patience, and perseverance in frugality, -as has been already observed. A short example of the first will be -sufficient in this place to make the thing fully understood. I have -already said, that I purposely postpone an ample dissertation upon the -principles which influence such operations. - -Let me suppose a nation accustomed to export to the value of a million -sterling of fish every year, undersold in this article by another which -has found a fishery on its own coasts, so abundant as to enable it to -undersell the first by 20 _per cent._ This being the case, the statesman -may buy up all the fish of his subjects, and undersell his competitors -at every foreign market, at the loss of perhaps 250,000_l._ What is the -consequence? That the million he paid for the fish remains at home, and -that 750,000_l._ comes in from abroad for the price of them. How is the -250,000_l._ to be made up? By a general imposition upon all the -inhabitants. This returns into the public coffers, and all stands as it -was. If this expedient be not followed, what are the consequences? That -those employed in the fishery are forced to starve; that the fish taken -either remain upon hand, or if sold by the proprietors, at a great loss; -these are undone, and the nation for the future loses the acquisition of -750,000_l._ a year. - -To abridge this operation, premiums are given upon exportation, which -comes to the same thing, and is a refinement on the application of this -very principle: but premiums are often abused. It belongs to the -department of the coercive power of government to put a stop to such -abuse. All I shall say upon the matter is, that if there be crimes -called high treason, which are punished with greater severity than -highway robbery, and assassination, I should be apt (were I a statesman) -to put at the head of that bloody list, every attempt to defeat the -application of public money, for the purposes here mentioned. The -multiplicity of frauds alone, discourages a wise government from -proceeding upon this principle, and disappoints the scheme. If severe -punishment can in its turn put a stop to frauds, I believe it will be -thought very well applied. - -While a statesman is thus defending the foreign trade of his country, by -an extraordinary operation performed upon the circulation of its wealth, -he must at the same time employ the second expedient with equal address. -He must be attentive to support sobriety at home, and wait patiently -until abuses among his neighbours shall produce some of the -inconveniencies we have already mentioned. So soon as this comes to be -the case, he has gained his point; the premiums then may cease; the -public money may be turned into another channel; or the tax may be -suppressed altogether, according as circumstances may require. - -I need not add, that the more management and discretion is used in such -operations, the less jealousy will be conceived by other rival nations. -And as we are proposing this plan for a state already in possession of a -branch of foreign trade, ready to be disputed by others, having superior -natural advantages, it is to be supposed that the weight of money, at -least, is on her side. This, if rightly employed, will prove an -advantage, more than equal to any thing which can be brought against it; -and if such an operation comes to raise the indignation of her rival, it -will, on the other hand, reconcile the favour of every neutral state, -who will find a palpable benefit from the competition, and will never -fail giving their money to those who sell the cheapest. In a word, no -private trader can stand in competition with a nation’s wealth. Premiums -are an engine in commerce, which nothing can resist but a similar -operation. - -Hitherto we have been proposing methods for removing the inconveniencies -which accompany wealth and superiority, and for preserving the -advantages which result from foreign trade already established: we must -now change sides, and adopt the interest of those nations who labour -under the weight of a heavy competition with their rich neighbours, -versed in commerce, dextrous in every art and manufacture, and conducted -by a statesman of superior abilities, who sets all engines to work, in -order to make the most of every favourable circumstance. - -It is no easy matter for a state unacquainted with trade and industry, -even to form a distant prospect of rivalship with such a nation, while -the abuses attending upon their wealth are not supposed to have crept in -among them. Consequently, it would be the highest imprudence to attempt -(at first setting out) any thing that could excite their jealousy. - -The first thing to be inquired into, is the state of natural advantages. -If any branch of natural produce, such as grain, cattle, wines, fruits, -timber, or the like, are here found of so great importance to the rival -nation, that they will purchase them with money, not with an exchange of -their manufactures, such branches of trade may be kept open with them. -If none such can be found, the first step is to cut off all -communication of trade by exchange with such a people; and to apply -closely to the supply of every want at home, without having recourse to -foreigners. - -So soon as these wants begin to be supplied, and that a surplus is -found, other nations must be fought for, who enjoy less advantages; and -trade may be carried on with them in a subaltern way. People here must -glean before they can expect to reap. But by gleaning every year they -will add to their stock of wealth, and the more it is made subservient -to public uses, the faster it will increase. - -The beginners will have certain advantages inseparable from their infant -state; to wit, a series of augmentations of all kinds, of which we have -so frequently made mention. If these can be preserved in an equable -progression; if the balance of work and demand, and that of population -and agriculture, can be kept in a gentle vibration, by alternate -augmentations; and if a plan of oeconomy, equally good with that of the -rivals, be set on foot and pursued; time will bring every natural -advantage of climate, soil, situation, and extent, to work their full -effects; and in the end they will decide the superiority. - -I shall now conclude my chapter, with some observations on the -difference between theory and practice, so far as regards the present -subject. - -In theory, we have considered every one of the causes which produce high -prices, and prevent exportation, as simple and uncompounded: in practice -they are seldom ever so. This circumstance makes the remedies difficult, -and sometimes dangerous. Difficult, from the complication of the -disease; dangerous, because the remedy against consolidated profits will -do infinite harm, if applied to remove that which proceeds from dear -subsistence, as has been said. - -Another great difference between theory and practice occurs in the -fourth case; where we suppose a nation unacquainted with trade, to set -out upon a competition with those who are in possession of it. When I -examine the situation of some countries of Europe (Spain perhaps) to -which the application of these principles may be made, I find that it is -precisely in such nations, where the other disadvantages of consolidated -profits, and even the high prices of living, are carried to the greatest -height; and that the only thing which keeps one shilling of specie among -them, is the infinite advantage they draw from the mines, and from the -sale of their pure and unmanufactured natural productions, added to -their simplicity of life, occasioned by the wretchedness of the lower -classes, which alone prevents these also from consuming foreign -commodities. Were money in these countries as equally distributed as in -those of trade and industry, it would quickly be exported. Every one -would extend his consumption of foreign commodities, and the wealth -would disappear. But this is not the case; the rich keep their money in -their coffers; because lending at interest, there, is very wisely laid -under numberless obstructions. The vice, therefore, is not that the -lending of money at interest is forbid, but that the people are not put -in a situation to have any pressing occasion for it, as a means of -advancing their industry. Were they taught to supply their own wants, -the state might encourage circulation by loan; but as they run to -strangers for that supply, money is better locked up. - -Upon a right use and application of these general principles, according -to the different combinations of circumstances, in a nation whose -principal object is an extensive and profitable foreign trade, I imagine -a statesman may both establish and preserve, for a very long time, a -great superiority in point of commerce; provided peace can be preserved: -for in time of war, every populous nation, if great and extended, will -find such difficulties in procuring food, and such numbers of hands to -maintain, that what formerly made its greatness, will hasten its ruin. - ------------------------------------------------------------------------- - - - - - CHAP. XIX. - _Of infant, foreign, and inland Trade, with respect to the several - Principles which influence them._ - - -I have always found the geography of a country easier to retain, from -the inspection of maps, after travelling over the regions there -represented, than before; as most prefaces are best understood, after -reading the book, which they are calculated to introduce. I intend this -as an apology for presenting my readers with a chapter of distribution -in the middle of my subject. - -My intention, at present, is to take a view of the whole region of -trade, divided into its different districts, in order to point out a -ruling principle in each, from which every other must naturally flow, or -may be deduced by an easy reasoning. These I shall lay before my reader, -that from them he may distribute his ideas in the same order I have -done. Hence the terms I shall be obliged to use will be rendred more -adequate, in expressing the combinations I may have occasion to convey -by them. - -I divide trade into infant, foreign, and inland. - -_1mo._ Infant trade, taken in a general acceptation, may be understood -to be that species, which has for its object the supplying the -necessities of the inhabitants of a country; because it is commonly -antecedent to the supplying the wants of strangers. This species has -been known in all ages, and in all countries, in a less, or greater -degree, in proportion to the multiplication of the wants of mankind, and -in proportion to the numbers of those who depend on their ingenuity for -procuring subsistence. - -The general principles which direct a statesman in the proper -encouragement of this commerce, relate to two objects. - -1. To promote the ease and happiness of the higher classes in making -their wealth subservient to their wants and inclinations. - -2. To promote the ease and happiness of the lower classes, by turning -their natural faculties to an infallible means of relieving their -necessities. - -This communicates the idea of a free society; because it implies the -circulation of a real equivalent for every service; to acquire which, -mankind submit with pleasure to the hardest labour. - -In the first book, I had little occasion to consider trade under -different denominations; or as influenced by any other principle than -that of promoting the multiplication of mankind, and the extension of -agriculture, _by drawing the wealth of the rich into the hands of the_ -industrious. This operation, when carried no farther, is a true -representation of infant trade. - -But now I must set the matter in a new light: and consider this infant -trade as a basis for establishing a foreign commerce. In itself it is -only a means of gratifying the desires of those who have the equivalent; -and of providing it for those who have it not. We are next to examine -how, by the care of a statesman, it may prove a method whereby one -society may be put in a situation to acquire a superiority over others; -by diminishing, on one hand, the quantity they have of that general -equivalent, and by increasing, on the other, the absolute quantity of it -at home; in such a manner as not only to promote the circulation of that -part of it which is necessary to supply the wants of all the citizens; -but by a surplus of it, to render other nations dependent upon them, in -most operations of their political oeconomy. - -The statesman who resolves to improve this infant trade into foreign -commerce, must examine the wants of other nations, and consider the -productions of his own country. He must then determine, what kinds of -manufactures are best adapted for supplying the first, and for consuming -the latter. He must introduce the use of such manufactures among his -subjects; and endeavour to extend his population, and his agriculture, -by encouragements given to these new branches of consumption. He must -provide his people with the best masters; he must supply them with every -useful machine; and above all, he must relieve them of their work, when -home demand is not sufficient for the consumption of it. - -A considerable time must of necessity be required to bring a people to a -dexterity in manufactures. The branches of these are many; and every one -requires a particular slight of hand, and a particular master, to point -out the rudiments of the art. People do not perceive this inconveniency, -in countries where they are already introduced; and many a projector has -been ruined for want of attention to it. - -In the more simple operations of manufacturing, where apprenticeships -are not in use, every one teaches another. The new beginners are put -among a number who are already perfect: all the instructions they get, -is, _do as you see others do before you_. This is an advantage which an -established industry has over another newly set on foot; and this I -apprehend to be the reason why we see certain manufactures, after -remaining long in a state of infancy, make in a few years a most -astonishing progress. What loss must be at first incurred! what numbers -of aspiring geniuses overpowered by unsuccessful beginnings, when a -statesman does not concern himself in the operation! If he assists his -subjects, by a prohibition upon foreign work, how often do we see this -expedient become a means of extending the most extravagant profits? -Because he neglects, at the same time, to extend the manufacture by -multiplying the hands employed in it. I allow, that as long as the gates -of a kingdom are kept shut, and that no foreign communication is -permitted, large profits do little harm; and tend to promote dexterity -and refinement. This is a very good method for laying a foundation for -manufactures: but so soon as the dexterity has been sufficiently -encouraged, and that abundance of excellent masters are provided, then -the statesman ought to multiply the number of scholars; and a new -generation must be brought up in frugality, and in the enjoyment of the -most moderate profits, in order to carry the plan into execution. - -The ruling principle, therefore, which ought to direct a statesman in -this first species of trade, is to encourage the manufacturing of every -branch of natural productions, by extending the home-consumption of -them; by excluding all competition with strangers; by permitting the -rise of profits, so far as to promote dexterity and emulation in -invention and improvement; by relieving the industrious of their work, -as often as demand for it falls short. And until it can be exported to -advantage, it may be exported with loss, at the expence of the public. -To spare no expence in procuring the ablest masters in every branch of -industry, nor any cost in making the first establishments; providing -machines, and every other thing necessary or useful to make the -undertaking succeed. To keep constantly an eye upon the profits made in -every branch of industry; and so soon as he finds, that the real value -of the manufacture comes so low as to render it exportable, to employ -the hands, as above, and to put an end to these profits he had permitted -only as a means of bringing the manufacture to its perfection. In -proportion as the prices of every species of industry are brought down -to the standard of exportation, in such proportion does this species of -trade lose its original character, and adopt the second. - -_2do._ _Foreign trade_ has been explained sufficiently: the ruling -principles of which are to banish luxury; to encourage frugality; to fix -the lowest standard of prices possible; and to watch, with the greatest -attention, over the vibrations of the balance between work and demand. -While this is preserved, no internal vice can affect the prosperity of -it. And when the natural advantages of other nations constitute a -rivalship, not otherwise to be overcome, the statesman must -counterbalance these advantages, by the weight and influence of public -money; and when this expedient also becomes ineffectual, foreign trade -is at an end; and out of its ashes arises the third species, which I -call inland commerce. - -_3tio._ The more general principles of _inland trade_ have been -occasionally considered in the first book, and more particularly hinted -at in the 15th chapter of this; but there are still many new relations -to be examined, which will produce new principles, to be illustrated in -the subsequent chapters of this book. I shall, here only point out the -general heads, which will serve to particularize and distinguish this -third species of trade, from the two preceding. - -Inland commerce, as here pointed out, is supposed to take place upon the -total extinction of foreign trade. The statesman must in such a case, as -in the other two species, attend to supplying the wants of the rich, in -relieving the necessities of the poor, by the circulation of the -equivalent as above; but as formerly he had it in his eye to watch over -the balance of work and demand, so now he must principally attend to the -balance of wealth, as it vibrates between consumers and manufacturers; -that is, between the rich and the industrious. The effects of this -vibration have been shortly pointed out, Chap. xv. - -In conducting a foreign trade, his business was to establish the lowest -standard possible as to prices; and to confine profits within the -narrowest bounds: but as now there is no question of exportation, this -object of his care in a great measure disappears; and high profits made -by the industrious will have then no other effect than to draw the -balance of wealth more speedily to their side. The higher the profits, -the more quickly will the industrious be enriched, the more quickly will -the consumers become poor, and the more necessary will it become to cut -off the nation from every foreign communication in the way of trade. - -From this political situation of a state arises the fundamental -principle of taxation; which is, _that, at the time of the vibration of -the balance between the consumer and the manufacturer, the state should -advance the dissipation of the first, and share in the profits of the -latter_. This branch of our subject I shall not here anticipate; but I -shall, in the remaining chapters of this book, make it sufficiently -evident, that so soon as the wealth of a state becomes considerable -enough to introduce luxury, to put an end to foreign trade, and from the -excessive rise of prices to extinguish all hopes of restoring it, then -taxes become necessary, both for preserving the government on the one -hand, and on the other, to serve as an expedient for recalling foreign -trade in spite of all the pernicious effects of luxury to extinguish it. - -I hope from this short recapitulation and exposition of principles, I -have sufficiently communicated to my reader the distinctions I wanted to -establish, between what I have called infant, foreign, and inland trade. -Such distinctions are very necessary to be retained; and it is proper -they should be applied in many places of this treatise, in order to -qualify general propositions: these cannot be avoided, and might lead -into error, without a perpetual repetition of such restrictions, which -would tire the reader, appear frivolous to him, perhaps, and divert his -attention. - -I only add, that we are not to suppose the commerce of any nation -restricted to any one of the three species. I have considered them -separately, according to custom, in order to point out their different -principles. It is the business of statesmen to compound them according -to circumstances. - ------------------------------------------------------------------------- - - - - - CHAP. XX. - _Of Luxury._ - - -My reader may perhaps be surprized to find this subject formally -introduced, after all I have said of it in the first book, under a -definition which renders the term sufficiently clear, by distinguishing -it from sensuality and excess; and by confining it to _the providing of -superfluities, in favour of a consumption_, which necessarily must -produce the good effects of giving employment and bread to the -industrious. - -The simple acceptation of the term, was the most proper for explaining -the political effects of extraordinary consumption. I cannot however -deny, that the word _luxury_ commonly conveys a more complex idea; and -did I take no notice of this circumstance, it might be thought that I -had purposely restrained a general term to a particular acceptation, in -order to lead to error, and to suppress the vicious influence of modern -oeconomy over the minds of mankind; which influence, if vicious, cannot -fail to affect even their political happiness. - -My intention therefore, in this chapter, is to amuse, and to set my -ideas concerning luxury (in the most extensive acceptation of the word) -in such an order, as first to vindicate the definition I have given of -it, by shewing that it is a proper one; and secondly, to reconcile the -sentiments of those who appear to combat one another, on a subject -wherein all must agree, when terms are fully understood. - -For this purpose I must distinguish _luxury_ as it affects our different -interests, by producing hurtful consequences; from _luxury_, as it -regards the moderate gratification of our natural or rational desires. I -must separate objects which are but too frequently confounded, and -analyze this complicated term, by specifying the ideas it contains, -under partial definitions. - -The interests affected by luxury, I take to be four; _1mo._ _the moral_, -in so far as it does hurt to the mind; _2do._ _the physical_, as it -hurts the body; the _domestic_, as it hurts the fortune; and the -_political_, as it hurts the state. - -The natural desires which proceed from our animal oeconomy, and which -are gratified by _luxury_, may be also reduced to four; viz. _hunger_, -_thirst_, _love_, and _ease_ or indolence. The moderate gratification of -these desires, and physical happiness, is the same thing. The immoderate -gratification of them is _excess_; and if this also be implied by -_luxury_, no man, I believe, ever seriously became its apologist. - -The first point to be explained, is what is to be understood by -_excess_. What appears an excess to one man, may appear moderation to -another. I therefore measure the _excess_ by the bad effects it produces -on the _mind_, the _body_, the _fortune_, and the _state_: and when we -speak of _luxury_ as a vice, it is requisite to point out the particular -bad effects it produces, to one, more, or all the interests which may be -affected by it: when this is neglected, ambiguities ensue, which involve -people in inextricable disputes. - -In order to communicate my thoughts upon this subject with the more -precision, I shall give an example of the harm resulting to the _mind_, -the _body_, the _fortune_, and the _state_, from the excessive -gratification of the several natural desires above-mentioned. - -_1mo._ As to the mind, _eating to excess_ produces the inconvenience of -rendring the perceptions dull, and of making a person unfit for study or -application. - -_Drinking_ confounds the understanding, and often prevents our -discovering the most palpable relations of things. - -_Love_ fixes our ideas too much upon the same object, makes all our -pursuits and pleasures analogous to it, and consequently renders them -trifling and superficial. - -_Ease_, that is, too great a fondness for it, destroys activity, damps -our resolutions, and misleads the decisions of our judgment on every -occasion, where one side of the question implies an obstacle to the -enjoyment of a favourite indolence. - -These are examples of the evils proceeding from _luxury_ in the most -general acceptation of the term. While the gratification of those -desires is accompanied by no such inconveniencies, I think it is a -proof, that there has been no _moral excess_, or that no moral evil has -been directly implied in the gratification. But I cannot equally -determine, that there has been no luxury in the enjoyment of -superfluity. - -_2do._ _The physical_ inconveniencies which follow from all the four, -terminate in the hurt they do the body, health or constitution. If no -such harm follows upon the gratification of our desires, I find no -_physical_ evil: but still _luxury_, I think, may be applied in every -acceptation in which the term can be taken. - -_3tio._ If the _domestic_ inconveniences of the four species be -examined, they all center in one, viz. the dissipation of fortune, upon -which depends the future ease of the proprietor, and the well-being of -his posterity. When _luxury_ is examined with respect to this object, -the idea we conceive of it admits of a new modification. An _excess_ -here, is compatible with a very moderate gratification of our most -natural desires. It is not _eating_, nor _drinking_, _love_, nor -_indolence_ which are hurtful to the fortune, but the expence attending -such gratifications. All these are frequently indulged even to _excess_, -in a _moral_ and _physical_ sense, by people who are daily becoming more -wealthy by these very means. - -_4to._ Some _political_ inconveniencies of _luxury_ have been already -pointed out. The extinction of foreign trade is the most striking. But -the loss of trade, conveys no ideas of any _moral_, _physical_, or -_domestic excess_; and still it is vicious in so far as it affects the -well-being of a state. Besides this particular evil, I very willingly -agree, that in as far as the good government of a state depends upon the -application and capacity, as well as the integrity of those who sit at -the helm, or who are employed in the administration, or direction of -public affairs, in so far may the moral inconveniencies of _luxury_ -mentioned above, affect the prosperity of a state. The consequences of -_excessive luxury_, _moral_ and _physical_, as well as the dissipation -of private fortunes, may render both the statesman, and those whom he -employs, negligent in their duty, unfit to discharge it, rapacious and -corrupt. These may, indirectly, be reckoned among the _political_ evils -attending _luxury_, in so far as they take place. But on the other hand, -as they cannot be called the _necessary effects_ of the _cause_ to which -they are here ascribed, that is, to _moral_, _physical_, and _domestic -luxury_, I do not think they can with propriety be implied in the -definition of the term. They are rather to be attributed to the -imperfection of the human mind, than to any other second cause, which -might occasionally contribute to their production. They may proceed from -_avarice_, as well as from _prodigality_. - -I hope this short exposition of a matter, not absolutely falling within -the limits of my subject, will suffice to prove that my definition of -_luxury_, describes at least the most essential requisite towards -determining it: _the providing of superfluity with a view to -consumption_. This is inseparable from our ideas of _luxury_; but -vicious _excess_ certainly is not. A sober man may have a most delicate -table, as well as a glutton; and a virtuous man may enjoy the pleasures -of love and ease with as much sensuality as Heliogabalus. But no man can -become luxurious, in our acceptation of the word, without giving bread -to the industrious, without encouraging emulation, industry, and -agriculture; and without producing the circulation of an adequate -equivalent for every service. This last is the palladium of liberty, the -fountain of gentle dependence, and the agreeable band of union among -free societies. - -Let me therefore conclude my chapter, with a metaphysical observation. -The use of words, is to express ideas; the more simple any idea is, the -more easy it is to convey it by a word. Whenever, therefore, language -furnishes several words, which are called _synonimous_, we may conclude, -that the idea conveyed by them is not simple. On every such occasion, it -is doing a service to learning, to render them as little synonimous as -possible, and to point out the particular differences between the ideas -they convey. - -Now as to the point under consideration. I find the three terms, -_luxury_, _sensuality_, and _excess_, generally considered in a -synonimous light, notwithstanding the characteristic differences which -distinguish them. _Luxury consists in providing the objects of -sensuality, in so far_ _as they are superfluous._ _Sensuality_ consists -_in the actual enjoyment of them_; and _excess_ implies _an abuse of -enjoyment_. A person, therefore, according to these definitions, may be -very _luxurious_ from vanity, pride, ostentation, or with a political -view of encouraging consumption, without having a turn for sensuality, -or a tendency to fall into excess. _Sensuality_, on the other hand, -might have been indulged in a Lacedemonian republic, as well as at the -court of Artaxerxes. _Excess_, indeed, seems more closely connected with -_sensuality_, than with _luxury_; but the difference is so great, that I -apprehend _sensuality_ must in a great measure be extinguished, before -_excess_ can begin. - ------------------------------------------------------------------------- - - - - - CHAP. XXI. - _Of Physical and Political Necessaries._ - - -After having cleared up our ideas concerning _luxury_, it comes very -naturally in, to examine what is meant by _physical necessary_. - -I have observed in the third chapter of the first book, that in most -countries where food is limited to a determined quantity, inhabitants -are fed in a regular progression down from plenty and ample subsistence, -to the last period of want, and dying from hunger. _It is ample -subsistence where no degree of superfluity is implied_, which -communicates an idea of the _physical-necessary_. It is the top of this -ladder; it is the first rank among men who enjoy no superfluity -whatsoever. A man enjoys the physical-necessary as to food, when he is -fully fed; if he is likewise sufficiently clothed, and well defended -against every thing which may hurt him, he enjoys his full -physical-necessary. The moment he begins to add to this, he may be -considered as moving upwards into another category, to wit, the class of -the _luxurious_, or consumers of superfluity; of which there are to be -found, in most countries, as many stages upward, as there are stages -downwards, from where he stood before. This is one general idea of the -question. Let me now look for another. - -If we examine the state of many animals which have no appetites leading -them to excess, we may form a very just idea of a _physical-necessary_ -for man. When they are free from labour, and have food at will, they -enjoy their full physical-necessary. They are then in the height of -beauty, and enjoy the greatest degree of happiness they are capable of. -Animals which are forced to labour, prove to us very plainly, that this -_physical-necessary_ is not fixed to a point, but that it may vary like -most other things: every one perceives the difference between labouring -cattle which are well fed, and those which are middling, or ill fed; all -however, I suppose to live in health, and to work according to their -strength. This represents the nature of a _physical-necessary_ for man. - -In many of the inferior classes in every nation, we find various degrees -of ease among the individuals; and yet upon the whole, it would be hard -to determine, which are those who enjoy superfluity; which are those who -possess the pure physical-necessary; and which are those who fall below -it. The cause of this ambiguity must here be explained. - -The nature of man furnishes him with some desires relative to his wants, -which do not proceed from his animal oeconomy, but which are entirely -similar to them in their effects. These proceed from the affections of -his mind, are formed by habit and education, and when once _regularly -established_, create another kind of necessary, which, for the sake of -distinction, I shall call _political_. The similitude between these two -species of _necessary_, is therefore the cause of ambiguity. - -This _political-necessary_ has for its object, certain articles of -_physical superfluity_, which distinguishes what we call _rank_ in -society. - -_Rank_ is determined by birth, education, or habit. A man with -difficulty submits to descend from a higher way of living to a lower; -and when an accidental circumstance has raised him for a while, above -the level of that _rank_ where his _birth_ or _education_ had placed -him, his ambition prompts him to support himself in his elevation. If -his attempt be a rational scheme, he is generally approved of; the -common consent of his fellow-citizens prescribes a certain -_political-necessary_ for him, proportioned to his ambition; and when at -any time _this_ comes to fail, he is considered to be in want. - -If on the other hand, a person either from vanity, or from no rational -prospect of success, forms a scheme of rising above the _rank_ where -_birth_ or _education_ had placed him, his fellow-citizens do not -consent to prescribe for him a political-necessary suitable to his -ambition; and when this fails him, he is only considered to fall back -into the class he properly belonged to. But if the political-necessary -suitable to this rank should come to fail, then he is supposed to be -deprived of his _political-necessary_. - -The measure of this last species of _necessary_, is determined only by -general opinion, and therefore can never be ascertained justly; and as -this opinion may have for its object even those who are below the level -of the _physical-necessary_; it often happens, that we find great -difficulties in determining its exact limits. - -It may appear absurd, to suppose that any one can enjoy _superfluity_ -(which we have called the characteristic of _political-necessary_) to -whom any part of the _physical-necessary_ is found wanting. However -absurd this may appear, nothing, however, is more common among men, and -the reason arises from what has been observed above. The desires which -proceed from the affections of his mind, are often so strong, as to make -him comply with them at the expence of becoming incapable of satisfying -that which his animal oeconomy necessarily demands. - -From this it happens, that however easy it may be to conceive an -accurate idea of a physical-necessary for _animals_, nothing is more -difficult, than to prescribe the proper limits for it with regard to -_man_. - -This being the case, let us suppose the condition of those who enjoy but -little superfluity, and who fill the lower classes of the people, to be -distinguished into three denominations; to wit, the highest, middle, and -lowest degree of physical-necessary; and then let us ask, how we may -come to form an estimation as to the respective value of the consumption -implied in each, in order to determine the minimum as to the profits -upon industry. This question is of great importance; because we have -shewn that the prosperity of foreign trade depends on the cheapness of -manufacturing; and this again depends on the price _of living_, that is -of the physical-necessary for manufacturers. - -One very good method of estimating the value of the total consumption -implied by this necessary quantity, is to compute the expence of those -who live in communities, such as in hospitals, workhouses, armies, -convents, according to the different degrees of ease, severally enjoyed -by those who compose them. In running over the few articles of expence -in such establishments, it will be easy to discern between those, which -relate to the supply of the physical, and those which relate to the -supply of the political-necessary: ammunition bread is an example of the -first; a Monk’s hood and long sleeves, are a species of the latter. - -When once the real value of a man’s subsistence is found, the statesman -may the better judge of the degree of ease, necessary or expedient for -him to allow to the several classes of the laborious and ingenious -inhabitants. - -As we have divided this physical-necessary into three degrees; the -_highest_, _middle_, and _lowest_; the next question is, which of the -three degrees is the most expedient to be established, as the standard -value of the industry of the very lowest class of a people. - -I answer, that in a society, it is requisite that the individual of the -most puny constitution for labour and industry, and of the most slender -genius for works of ingenuity, having no natural defect, and enjoying -health, should be able by a labour proportioned to his force, to gain -the _lowest_ degree of the physical-necessary; for in this case, by far -the greatest part of the industrious will be found in the second class, -and the strong and healthy all in the first. - -The difference between the highest class and the lowest, I do not -apprehend to be very great. A small quantity added to what is barely -sufficient, makes enough: but this _small quantity_ is the most -difficult to acquire, and this is the most powerful spur to industry. -The moment a person begins to live by his industry, let his livelihood -be ever so poor, he immediately forms little objects of ambition; -compares his situation with that of his fellows who are a degree above -him, and considers a shade more of ease, as I may call it, as an -advancement, not only of his happiness, but of his rank. - -There are still more varieties to be met with among those who are -confined to the sphere of the physical-necessary. The labour of a strong -man ought to be otherwise recompensed than that of a puny creature. But -in every state there is found labour of different kinds, some require -more, and some less strength, and all must be paid for; but as a weakly -person does not commonly require so much nourishment as the strong and -robust, the difference of his gains may be compensated by the smalness -of his consumption. - -What we mean by the _first class_ of the physical-necessary, is when a -person gains wherewithal to be well fed, well clothed, and well defended -against the injuries of heat and cold, without any superfluity. This I -say, a strong healthy person should be able to gain by the exercise of -the lowest denominations of industrious labour, and that without a -possibility of being deprived of it, by the competition of others of the -same profession. - -Could a method be fallen upon to prevent competition among industrious -people of the same profession, the moment they come to be reduced within -the limits of the _physical-necessary_, it would prove the best security -against decline, and the most solid basis of a lasting prosperity. - -But as we have observed in the first book, the thing is impossible, -while marriage subsists on the present footing. From this one -circumstance, the condition of the industrious of the same profession, -is rendred totally different. Some are loaded with a family, others are -not. The only expedient, therefore, for a statesman, is to keep the -general principles constantly in his eye, to destroy this competition as -much as he can, at least in branches of exportation; to avoid, in his -administration, every measure which may tend to promote it, by -constituting a particular advantage in favour of some individuals of the -same class; and if the management of public affairs, necessarily implies -such inconveniencies, he must find out a way of indemnifying those who -suffer by the competition. - -We may therefore, in this place, lay down two principles: First, that no -competition should be _encouraged_ among those who labour for a -_physical-necessary_; secondly, that in a state which flourishes by her -foreign trade, competition is to be encouraged in every branch of -exportation, until the competitors have reduced one another within the -limits of that necessary. - -Farther, I must observe, that this _physical-necessary_ ought to be the -highest degree of ease, which any one should be able to acquire with -labour and industry, where no peculiar ingenuity is required. This also -is a point deserving the attention of a statesman. How frequently do we -find, in great cities, different employments, such as carrying of water, -and other burthens, sawing of wood, &c. erected into confraternities, -which prevent competition, and raise profits beyond the standard of the -_physical-necessary_. This, I apprehend, is a discouragement to -ingenuity, and has the bad effect of rendring living dear, without -answering any one of the intentions of establishing corporations, as -shall be shewn in another place. The _physical-necessary_, therefore, -ought to be the reward of _labour_ and _industry_; whatever any workman -gains above this standard, ought to be in consequence of his superior -_ingenuity_. - -It is not at all necessary to prescribe the limits between these two -classes; they will sufficiently distinguish themselves by the simple -operation of competition. Let a particular person fall upon an ingenious -invention, he will profit by it, and rise above the lower classes which -are confined to the physical-necessary; but if the invention be such as -may be easily copied, he will quickly be rivalled to such a degree as to -reduce his profits within the bounds of that _physical-necessary_; so -soon as this comes to be the case, his _ingenuity_ disappears, because -it ceases to be _peculiar_ to him. - -Here arises a question: whence does it happen that certain workmen avoid -this competition, and make considerable gains by their employment, while -others are rivalled in their endeavours to retain a bare -physical-necessary? - -There is a combination of several causes to operate these effects, which -we shall examine separately; leaving to the reader to judge, how far the -combination of them may extend profits beyond the physical-necessary. - -I. We have said (chap. 9.) that the value of a workman’s labour is -determined from the quantity performed, in general, by those of his -profession, neither supposing them the best nor the worst, nor as having -any advantage or disadvantage, from the place of their abode. A workman -therefore, who, to an extraordinary dexterity, joins the advantages of -place, must gain more than another. - -II. We have often remarked, that competition between workmen of the same -profession, diminishes the profits upon labour. From this it follows, -that in such arts where the least competition is found, there must be -the largest profits. Now several circumstances prevent competition. -First. An extraordinary dexterity in any art, and especially in those -where the whole excellency depends upon great exactness, such as -watch-making, painting of all kinds, making mathematical instruments, -and the like; all which set a celebrated artist in a manner above a -possibility of rivalship, and make him the master of his price, as -experience shews. 2d. The difficulty of acquiring the dexterity -requisite, resulting both from the time and money necessary to be spent -in apprenticeship, proves a plain obstacle to a numerous competition. -Few there are, who having the stock sufficient to defray the loss of -several years fruitless application, have also the turn necessary to -lead them to that particular branch of ingenuity. 3d. Many there are, -who have skill and capacity sufficient to enter into competition, but -are obliged to work for others, because of the expensive apparatus of -instruments, machines, lodging, and many other things necessary for -setting out as a master in the art. These, and similar causes, prevent -competition, and support large profits. 4th. Masters increase their -profits greatly by sharing that of their journeymen: this share, the -first have a just title to from the constant employment they procure for -the latter; and the certainty these have of gaining their -_physical-necessary_, together with a profit proportional to their -dexterity, makes them willing to share with their master. The 5th cause -of considerable gains, and the last I shall mention, is the most -effectual of all, viz. great oeconomy, and parsimonious living. In -proportion to the concurrence and combination of these circumstances, -the fortune of the artist will increase, which is the answer to the -first part of the question proposed. - -We are next to enquire how it happens that many industrious people are -rivalled in an industry which brings no more than a bare -physical-necessary. This proceeds from some disadvantage either in their -personal or political situation. In their personal situation, when they -are loaded with a numerous family, interrupted by sickness, or other -accidental avocations. In their political situation, when they happen to -be under a particular subordination from which others are free, or -loaded with taxes which others do not pay. - -I shall only add, that in computing the value of the -_physical-necessary_ of the lowest denomination, a just allowance must -be made for all interruptions of labour: no person can be supposed to -work every free day; and the labour of the year must defray the expence -of the year. This is evident. Farther, neither humanity, or policy, that -is the interest of a state, can suggest a rigorous oeconomy upon this -essential quantity. If the great abuses upon the price of labour are -corrected, those which remain imperceptible to the public eye, will -prove no disadvantage to exportation; and as long as this goes on with -success, the state is in health and vigour. Exportation _of work_ is -another pulse of the political body. - ------------------------------------------------------------------------- - - - - - CHAP. XXII. - _Preliminary Reflections upon inland Commerce._ - - -I resume the subject, which, as a rest to the mind, I dropt at the end -of the 19th chapter. - -I am to treat directly of inland commerce, which has been sufficiently -distinguished from infant, and foreign trade. - -We are to consider ourselves now as transported into a new country. Here -foreign trade has been carried to the greatest height possible; but the -luxury of the inhabitants, the carelessness, perhaps, of the statesman, -and the natural advantages of other nations, added to the progress of -their industry and refinement, have concurred to cut this branch off, -and thereby to dry up the source which had constantly been augmenting -national opulence. - -We must examine the natural effects of this revolution; we must point -out how every inconvenience may be avoided, and how a statesman may -regulate his conduct, so as to prevent the exportation of any part of -that wealth which the nation may have heaped up within herself, during -the prosperity of her foreign trade. How he may keep the whole of his -people constantly employed, and by what means he may promote an equable -circulation of domestic wealth, as an adequate equivalent given by the -rich, for services rendred them by the industrious poor. How, by a -judicious imposition of taxes, he may draw together an equitable -proportion of every man’s annual income, without reducing any one below -the standard of a full physical-necessary. How he may, with this public -fund, preserve in vigour every branch of industry, and be enabled also, -by the means of it, to profit of the smallest revolution in the -situation of other nations, so as to re-establish the foreign trade of -his own people. And lastly, how the society may be thereby sufficiently -defended against foreign enemies, by a body of men regularly supported -and maintained at the public charge, without occasioning any sudden -revolution hurtful to industry, either when it becomes necessary to -increase their numbers, in order to carry on an unavoidable war, or to -diminish them, upon the return of peace and tranquility. This is, in few -words, the object of a statesman’s attention when he is at the head of a -people living upon their own wealth, without any mercantile connections -with strangers. - -However hurtful the natural and immediate effects of political causes -may have been formerly, when the mechanism of government was less -compounded than at present, they are now brought under such -restrictions, by the complicated system of modern oeconomy, that the -evil which might otherwise result, is guarded against with ease. - -As often, therefore, as we find a notable prejudice resulting to a -state, from a change of their circumstances, _gradually taking place_, -we may safely conclude, that negligence, or want of abilities, in those -who have the direction of public affairs, has more than any other cause -been the occasion of it. - -It was observed, in the third chapter of the first book, that before the -introduction of modern oeconomy, which is made to subsist by the means -of taxes, a state was seldom found to be interested in watching over the -actions of the people. They bought and sold, transferred, transported, -modified, and compounded productions and manufactures, for public use, -and private consumption, just as they thought fit. Now it is precisely -in these operations that a modern state is chiefly interested; because -proportional taxes are made to affect a people on every such occasion. - -The interest the state has in levying these impositions, gives a -statesman an opportunity of laying such operations under certain -restrictions; by the means of which, upon every change of circumstances, -he can produce the effect he thinks fit. Do the people buy from -foreigners what they can find at home, he imposes a duty upon -importation. Do they sell what they ought to manufacture, he shuts the -gates of the country. Do they transfer or transport at home, he -accelerates or retards the operation, as best suits the common interest. -Do they modify or compound what the public good requires to be consumed -in its simple state, he can either prevent it by a positive prohibition, -or he may permit such consumption to the more wealthy only, by -subjecting it to a duty. - -So powerful an influence over the operations of a whole people, vests an -authority in a modern statesman, which was unknown in former ages, under -the most absolute governments. We may discover the effects of this, by -reflecting on the force of some states, at present, in Europe, where the -sovereign power is extremely limited, as to every _arbitrary_ exercise -of it, and where, at the same time, that very power is found to operate -over the wealth of the inhabitants, in a manner far more efficacious -than the most despotic and arbitrary authority can possibly do. - -It is the order and regularity in the administration of the complicated -modern oeconomy, which alone can put a statesman in a capacity to exert -the whole force of his people. The more he has their actions under his -direction, the easier it is for him to make them concur in advancing the -general good. - -Here it is objected, that any free people who invest a statesman with a -power to control their most trivial actions, must be out of their wits, -and considered as submitting to a voluntary slavery of the worst nature, -as it must be the most difficult to be shaken off. This I agree to; -supposing the power vested to be of an arbitrary nature, such as we have -described in the thirteenth chapter of this book. But while the -legislative power is only exerted in acquiring an influence over the -actions of individuals, in order to promote a scheme of political -oeconomy, uniform and consistent in all its parts, the consequence will -be so far from introducing slavery among the people, that the execution -of the plan will prove absolutely inconsistent with every arbitrary or -irregular measure. - -The power of a modern Prince, let him be, by the constitution of his -kingdom, ever so absolute, becomes immediately limited so soon as he -establishes the plan of oeconomy which we are endeavouring to explain. -If his authority formerly resembled the solidity and force of the wedge, -which may indifferently be made use of, for splitting of timber, stones, -and other hard bodies, and which may be thrown aside and taken up again -at pleasure; it will, at length come to resemble the watch, which is -good for no other purpose than to mark the progression of time, and -which is immediately destroyed, if put to any other use, or touched by -any but the gentlest hand. - -As modern oeconomy, therefore, is the most effectual bridle ever -invented against the folly of despotism; so the wisdom of so great a -power shines no where with greater lustre, than when we see it exerted -in planning and establishing this oeconomy, as a bridle against the -wanton exercise of power in succeeding generations. I leave it to my -reader to seek for examples in the conduct of our modern Princes, which -may confirm what, I think, reason seems to point out: were they less -striking, I might be tempted to mention them. - -The part of our subject we are now to treat of, will present us with a -system of political oeconomy, still more complicated than any thing we -have hitherto met with. - -While foreign trade flourishes and is extended, the wealth of a nation -increases daily; but her force is not so easily exerted, as after this -wealth begins to circulate more at home, as we shall easily shew. But, -on the other hand, the force she exerts is much more easily recruited. -In the first case, her frugality enables her to draw new supplies out of -the coffers of her neighbours; in the last, her luxury affords a -resource from the wealth of her own citizens. - -In opening my chapter, I have introduced my reader into a new country; -or indeed I may say, that I have brought him back into the same which we -had under our consideration in the first book. - -Here luxury and superfluous consumption will strike his view almost at -every step. He will naturally compare the system of frugality, which we -have dismissed, with that of dissipation, which we are now to take up; -and we may very naturally conclude, that the introduction of the latter, -must prove a certain forerunner of destruction. The examples found in -history of the greatest monarchies being broken to pieces, so soon as -the taste of simplicity was lost, seem to justify this conjecture. It -is, therefore, necessary to examine circumstances a little, that we may -compare, in this particular also, the oeconomy of the antients with our -own; in order to discover whether the introduction of luxury be as -hurtful at present, as it formerly proved to those states which made so -great a figure in the world; and which now are only known from history, -and judged of, from the few scattered ruins which remain to bear -testimony of their former greatness. - -Luxury is the child of wealth; and wealth is acquired by states, as by -private people, either by a lucrative, or by an onerous title, as the -civilians speak. The lucrative title, by which a state acquires, is -either by rapine, or from her mines; the onerous title, or that for a -valuable consideration, is by industry. - -The wealth of the ancient monarchs of Babylon, Persia, Greece, and Rome, -was the effect of rapine; whereas industry enriched the cities of Sydon, -Tyre, Carthage, Athens, and Alexandria. The luxury of the first, proved -the ruin of the luxurious; the luxury of the last, advanced their -grandeur: because they had no rivals to take advantage of the natural -effects of this luxury, in cutting off the profits of foreign trade. -Peace was as hurtful to the plunderers, as war was destructive to the -industrious. - -When an empire was at war, its wealth was thereby made to circulate for -an equivalent in services performed. So soon as peace was restored, -every one returned, as it were, to a state of slavery. The monarch then -possessed himself of all the wealth, and distributed it by caprice. -Fortunes were made in an instant, and no body knew how: they were lost -again by transitions equally violent and sudden. The luxury of those -days was attended with the most excessive oppression. Extraordinary -consumption was no proof of the circulation of any adequate equivalent -in favour of the industrious: it had not the effect of giving bread to -the poor, nor of proportionally diminishing the wealth of the rich. The -great constantly remained great; and the more they were prodigal, the -more the small were brought into distress. In one word, luxury had -nothing to recommend it, but that quality which _solely_ constitutes the -abuse of it in modern times; to wit, the excessive gratification of the -passions of the great, which frequently brought on the corruption of -their manners. - -When such a state became luxurious, public affairs were neglected; -because it was not from a right administration that wealth was to be -procured. War, under such circumstances, worked effects almost similar -to the springing up of industry in modern times; it procured employment, -and this produced a more regular circulation, as has been said. - -On the other hand, the wealth and luxury of the trading cities -abovementioned, which was of the same species with that of modern times, -proceeded from the alienation of their work; that is, from their -industry. Nothing was gained for nothing, and when they were forced to -go to war, they found themselves obliged either to dissipate their -wealth, by hiring troops, or to abandon the resources of it, the labour -of their industrious citizens. Thus the punic wars exalted the grandeur -of plundering Rome, and blotted out the existence of industrious -Carthage. I do not here pretend to vindicate the justness of these -reflections in every circumstance, and it is foreign to my present -purpose to be more particular; all I seek for, is to point out the -different effects of luxury in antient and modern times. - -Antient luxury was quite _arbitrary_; consequently could be laid under -no limitations, but produced the worst effects, which _naturally_ and -_mechanically_ could proceed from it. - -Modern luxury is _systematical_; it cannot make one step, but at the -expence of an adequate equivalent, acquired by those who stand the most -in need of the protection and assistance of their fellow citizens; and -without producing a vibration in the balance of their wealth. This -balance is in the hands of the statesman, who may receive a contribution -upon every such vibration. He has the reins in his hand, and may turn, -restrain, and direct the luxury of his people, towards whatever object -he thinks fit. - -Luxury here is so far from drawing on a neglect of public affairs, that -it requires the closest application to the administration of them, in -order to support it. When these are neglected, the industrious will be -brought to starve, consumption will diminish; that is, luxury will -insensibly disappear, and hoarding will succeed it. These and similar -consequences will undoubtedly take place, and _mechanically_ follow one -another, when a skilful hand is not applied; to prevent them. - -It is impossible not to perceive the advantages of supporting a -flourishing inland trade, after the extinction of foreign commerce. By -such means elegance of taste, and the polite arts, may be carried to the -highest pitch. The whole of the inhabitants may be employed in working -and consuming; all may be made to live in plenty and in ease, by the -means of a swift circulation, which will produce a reasonable equality -of wealth among all the inhabitants. Luxury can never be the cause of -inequality. Hoarding and parcimony form great fortunes, luxury -dissipates them and restores equality. - -Such a situation would surely be of all others the most agreeable, and -the most advantageous, were all mankind collected into one society, or -were the country where it is established cut off from every -communication with other nations. - -The balance between work and demand would then only influence the -balance of wealth among individuals. If hands became scarce, the balance -would turn the quicker in favour of the laborious, and the idle would -grow poor. If hands became too plentiful (which indeed is hardly to be -expected) every thing would be bought the cheaper; but the same quantity -of wealth would still remain without any diminution. - -Where is, therefore, the great advantage of foreign trade? - -I answer by putting another question. Where is the great advantage of a -person’s making a large fortune in his own country? A man of a small -estate may, no doubt, be as happy as another with a great one; and the -same thing would be true of nations, were all equally inspired with a -spirit of peace and justice; or were they subordinate to a higher -temporal power, which could protect the weak against the violence and -injustice of the strong. - -It is, therefore, the separate interests of nations who incline to -communicate together, and consume of one another’s commodities, which -renders the consideration of the principles of trade, a matter of great -importance. - -While nations contented themselves with their own productions, while the -difference of their customs, and contrast of their prejudices were -great, the connections between them were not very intimate. - -From this proceeds the great diversity of languages and dialects. When a -traveller finds a sudden transition from one language to another, or -from one dialect to another, it is a proof that the manners of such -people have been long different, and that they have had little -communication with one another. On the contrary, when dialects change by -degrees, as in the provinces of the same country, it is a proof that -there has been no great repugnancy in their customs. In like manner, -when we find several languages, at present different, but plainly -deriving from the same source, we may conclude, that there was a time -when such nations were connected by correspondence, or that the language -has been transplanted from one to the other, by the migration of -colonies. But I insensibly wander from my subject. - -I have said, that when nations contented themselves with their own -productions, connections between them were not very intimate. While -trade was carried on by the exchange of consumable commodities, this -operation also little interested the state: consumption then was equal -on both sides; and no balance was found upon either. But so soon as the -precious metals became an object of commerce, and when, by being rendred -an universal equivalent for every thing, it became also the measure of -power between nations, then the acquisition, or at least the -preservation of a proportional quantity of it, became, to the more -prudent, an object of the last importance. - -We have seen how a foreign trade, well conducted, has the necessary -effect of drawing wealth from all other nations. We have seen in what -manner the benefit resulting from this trade may come to a stop, and how -the balance of it may come round to the other side. We are now to -examine how the same prudence which set foreign trade on foot, and -supported it as long as possible, may guard against a sudden revolution, -and at the same time put an effectual stop to it; to the end that a -nation enriched by commerce may not, by blindly or mechanically carrying -it on, when the balance is against her, fall into those inconveniencies -which other nations must have experienced during her prosperity. - ------------------------------------------------------------------------- - - - - - CHAP. XXIII. - -_When a Nation, which has enriched herself by a reciprocal Commerce in -Manufactures with other Nations, finds the Balance of Trade turn against -her, it is her Interest to put a Stop to it altogether._ - -Trade having subsisted long in the nation we are now to keep in our eye, -I shall suppose that, through length of time, her neighbours have -learned to supply one article of their own and other peoples wants -cheaper than she can do. What is to be done? No body will buy from her, -when they can be supplied from another quarter at a less price. I say, -what is to be done? For if there be no check put upon trade, and if the -statesman do not interpose with the greatest care, it is certain, that -merchants will import the produce, and even the manufactures of rival -nations; the inhabitants will buy them preferably to their own; the -wealth of the nation will be exported; and her industrious manufacturers -will be brought to starve. We may therefore look upon this, as a problem -in trade, to be resolved by the principles already established. - -First, then, it must be inquired, if, in the branch in which she is -undersold, her rivals enjoy a natural advantage above her, which no -superior industry, frugality, or address on her side, can -counterbalance? If this be the case, there are three different courses -to be pursued, according to circumstances. - -_1mo._ To renounce that branch of commerce entirely, and to take the -commodities wanted from foreigners, as they can furnish them cheaper. - -_2do._ To prohibit the importation of such commodities altogether. - -_3tio._ To impose a duty upon importation, in order to raise the price -of them so high as to make them dearer than the same kind of commodity -produced at home. - -The first course may be taken, if, upon examining how the hands employed -in a manufacture may be disposed of, it be found, that they may easily -be thrown into another branch of industry, in which the nation’s natural -advantages are as superior to her rivals, as their’s are superior to -her’s in the branch she intends to abandon; and providing her neighbours -will agree to open their ports to the free importation of the -commodities in question. For though there may be little profit in a -trade by exchange, I still think it adviseable to continue -correspondence, and to avoid every occasion of cutting off commerce with -other nations. A laborious, oeconomical, and sagacious nation, such as I -suppose our traders to be, will be able to profit of many circumstances, -which would infallibly turn to the disadvantage of others less expert in -commerce, with whom she trades; and in expectation of favourable -revolutions, she ought not rashly, nor because of small inconveniencies, -to renounce trading with them; especially if luxury should appear there -to be on the growing hand. - -But suppose the rival nation will not consent to receive the -manufactures which the traders may produce with great natural -advantages, what course then is the best to be taken? - -I think she ought to encourage the branch in which she is rivalled, for -her own consumption, though she must give over exporting it; and, in -this case, it must be examined, whether that trade with foreigners -should be prohibited altogether, (which is the second course mentioned -above) or whether it be more adviseable to prefer the last scheme, viz. -to allow the commodities to be imported, with a duty which may raise -their price to so just a height as neither to suffer them to be sold so -cheap as to discourage the domestic fabrication, nor dear enough to -raise the profits of manufactures above a reasonable standard, in case -of an augmentation of demand. - -The second course must be taken, when the natural advantages of the -foreign nations are so great, as to oblige the statesman to raise duties -to such a height as to give encouragement to smuggling. - -The third course seems the best, when the advantages of the rivals are -more inconsiderable; in which case, the traders, may, in time, and by -the progress of luxury among their neighbours, or from other -revolutions, which happen frequently in trading nations, regain their -former advantages. - -This may be a decision, in case a nation be rivalled in a branch where -she has not equal advantages with her neighbours; and when she cannot -compensate this inconvenience, either by her frugality or industry, or -by the means of a proper application of her national wealth. These -operations have been already fully explained, and are now considered as -laid aside; not that we suppose they can ever cease to operate their -effects in all nations, but in order to simplify our ideas, and to point -out the principles which ought to direct a statesman upon occasions -where he finds better expedients impracticable, from different -combinations of circumstances. - -Let me next suppose a nation to be rivalled, in her staple manufactures; -that is, in those where she has the greatest natural advantages in her -favour. - -Whenever such a case happens, it must proceed from some vice within the -state. Either from the progress of luxury in the workmen, which must -proceed from consolidated profits, or from accidental disadvantage; such -as dearness of subsistence, or from taxes injudiciously imposed. These -(I mean all, except the taxes, of which afterwards) must be removed upon -the principles above laid down: and if this cannot be compassed, no -matter why; then comes the fatal period, when all foreign reciprocal -commerce in manufactures must be given up. For if no profit can be made -upon branches where a nation has the greatest natural advantages, it is -more than probable, that every other branch will prove at least equally -disadvantageous. If upon this revolution the ports of the nation be not -shut against the importation of foreign manufactures, merchants will -introduce them, and this will drain off the nation’s wealth, and bring -the industrious to starve. - -It is upon this principle that incorporations are established. Of these -we shall say a word, and conclude our chapter. - -Cities and corporations, may be considered as nations, where luxury and -taxes have rendred living so expensive, that work cannot be furnished -but at a high rate. If labour, therefore, of all kinds, were permitted -to be brought from the provinces, or from the country, to supply the -demand of the capital and smaller corporations, what would become of -tradesmen and manufactures who have their residence there? If these, on -the other hand, were to remove beyond the liberties of such -corporations, what would become of the public revenue, collected in -these little states, as I may call them? - -By the establishment of corporations, a statesman is enabled to raise -high impositions upon all sorts of consumption; and notwithstanding that -these have the necessary consequence of increasing the price of labour, -yet by other regulations, of which afterwards, the bad consequences -thereby resulting to foreign trade may be avoided, and every article of -exportation be prevented from rising above the proper standard for -making it vendible, in spite of all foreign competition. - -The plan of modern taxation seems first to have been introduced into -cities, while the country was subject to the barons, and remained in a -manner quite free from them. Cities having obtained the privilege of -incorporation, began, in consequence of the power vested in their -magistrates, to levy taxes: and finding the inconveniences resulting -from external competition (foreign trade) they erected the different -classes of their industrious into confraternities, or corporations of a -lower denomination, with power to prevent the importation of work from -their fellow tradesmen not of the society. - -Here arises a question. - -Why are corporations complained of in many countries, as being a check -upon industry; if the establishment of them proceeds from so plain a -principle as that here laid down? - -Let me draw my answer from another question. Why are they not complained -of in all countries? - -The difference between the situation of one country and another, will -plainly point out the principle which ought to regulate the -establishment and government of corporations. When this is well -understood, all disputes concerning the general utility, or harm arising -from them will be at an end: and the question will be brought to the -proper issue; to wit, their relative utility considered with respect to -the actual situation of the country where they are established. In one -province a corporation will be found useful, in another just the -contrary. - -First then it must be agreed, on all hands, that the principle laid down -is just. No body ever advanced, that the industry carried on in _towns_, -where living is dear, ought to suffer a competition with that of the -_country_, where living is cheap; I mean for the direct consumption of -the citizens. But it may be advanced, that no subaltern corporation -should enjoy an exclusive privilege against those who share of every -burthen imposed by the great corporation from which they draw their -existence. That they have no right of exclusion against citizens; but -only against strangers who are not under the same jurisdiction, nor -liable to the same burthens. Here the dispute lies between the members -of the great corporation and those of the smaller. Now, I say, while no -other interest is concerned, the decision of this question ought to be -left to the corporation itself. But the moment the public good comes to -be affected by certain privileges enjoyed by individuals, such -privileges should either be abolished, or put under limitations. - -In countries where industry stands at a determined height, while the -consumption of cities neither augments nor diminishes; when those who -live upon an income acquired, live uniformly in the same way; when this -regular consumption is regularly supplied, by a certain number of -citizens sufficient to supply it; when the hands employed for this -purpose are in a perfect proportion to the demand made upon them; in -such countries, I say, any diminution of the privileges of corporations -would be a means of overturning the equal balance between work and -demand. - -We have said above, that when hands become too many for the work, -profits fall below the necessary standard of subsistence; that the -industrious enter into competition for the physical-necessary, and hurt -one another. Here then is the principle which the corporation ought to -keep in their eye: the profits upon every trade ought to be in -proportion to work. - -In order to come the better at the knowledge of this proportion, many -corporations in Germany have the subaltern corporations of trades -restrained to certain numbers. There is a determined number of -apothecaries, joiners, smiths, &c. allowed in every town, and no more; -according as employment is found for them. This seems a good regulation. -I do not say it may not be abused. But the power of administration must -be lodged somewhere; and if in a country where industry is making little -progress, corporations were laid open, the consequence would be, that -every one would starve another, and the consumers would be ill served. - -On the other hand, when industry springs up, when the manners of a -people change all of a sudden, or by quick degrees, as has been the case -in many countries in Europe within these threescore years: it is a mark -of a narrow capacity not to perceive that a change of administration -becomes necessary; and if on such revolutions those who are at the head -of corporations should profit of the increase of demand, and occasion -prices to rise in favour of the incorporated workmen, the infallible -consequence will be, to make the city become deserted, and deprived of a -trade, which otherwise would necessarily fall to her share, in -consequence of the advantage she must draw from establishments already -made for supplying every branch of consumption[K]. But let the principle -above mentioned be constantly followed; let profits be kept at a right -standard; let hands be increased according to demand; let the city -workmen gain no advantage over those of the country which may not be -compensated by the difference of the price of subsistence; let the -disadvantages again on the side of the town affect only their own -consumption, not the surplus of their industry; let every convenience -for carrying on foreign trade (every thing here is understood to be -foreign, which does not enter into the consumption of the town) be -provided for in the suburbs, or, if you please, in a place out of the -town walled in for that purpose; let markets there be held for every -kind of work coming from the country; and then the true intent of a -corporation will be answered. If it be found that the prosperity of -trade demands still more liberty, then the corporation may be thrown -open; but on the other hand, every burthen must be taken off, and every -incorporated member must be indemnified by the state, for the loss he is -thereby made to suffer. - -Footnote K: - - The cities of the Austrian Netherlands are, from these causes, at - present in a state of depopulation; and the industrious classes are - assembling in the villages, which are beginning to rival the - populousness of cities. In these villages, the privileges of the - cities are not established. Privileges which will in all probability - end in their bankruptcy as well as depopulation. The depopulation will - follow from the causes already mentioned; the bankruptcy from the sums - these corporations lend the sovereign, on the credit of new - impositions constantly laying upon every branch of consumption. This - is so true, that the acquisition of this country (one of the most - fertile and most populous in Europe) would hardly be worth the having, - if the debts owing by the corporations were to be fairly paid, and - their ruinous _privileges_ (as they are called) allowed to subsist - without alteration. - -The great change daily operating on the spirit of European nations, -where corporations have been long established, without any great -inconvenience having been found to arise from them, suggests these -reflections, which seem to flow naturally, from the principles we have -deduced. I shall only add, that from the practice of imposing taxes -within these little republics (as I have called them) Princes seem to -have taken the hint of extending that system; by first appropriating to -the public revenue, what the cities had established in favour of -themselves, and then by enlarging the plan as circumstances favoured -their design. That this is the true origin of the modern plan of -taxation (I mean that upon consumption) may be gathered from hence; that -the right of imposing taxes appears no where, almost, to have been -essentially attached to royalty, even in those kingdoms, where Princes -have long enjoyed an unlimited constitutional authority over the persons -of their subjects. This right I take to be the least equivocal -characteristic of an absolute and unlimited power. I know of no -christian monarchy (except, perhaps, Russia) where either the consent of -states, or the approbation or concurrence of some political body within -the state, has not been requisite to make the imposition of taxes -constitutional; and if more exceptions are found, I believe it will not -be difficult to trace the origin of such an exertion of sovereign -authority, without ascending to a very high antiquity. The prerogative -of Princes in former times, was measured by the power they could -constitutionally exercise over the _persons_ of their subjects; that of -modern princes, by the power they have over their _purse_. - -Having, therefore, shewn the necessity of putting a stop to foreign -reciprocal commerce in manufactures, so soon as in every branch this -trade becomes disadvantageous to a nation; the next question comes to -be, how to proceed in the execution, so as to avoid a sudden and violent -revolution in the oeconomy of the state, which is of all things the most -dangerous: the hurt, therefore, ought to be foreseen at a great -distance, in order to be methodically prevented. - ------------------------------------------------------------------------- - - - - - CHAP. XXIV. - _What is the proper Method to put a Stop to a foreign Trade in - Manufactures, when the Balance of it turns against a Nation?_ - - -It must not be understood, from what was said in the last chapter, that -so soon as the balance of foreign trade, either on the whole, or on any -branch of manufacture, is to be found against a nation, that a statesman -should then at once put a total stop to it. This is too violent a remedy -ever to be applied with success. - -It is hardly possible, that a considerable revolution in the trade of a -nation should happen suddenly, either to its advantage, or disadvantage, -unless in times of civil discord, or foreign wars, which at present do -not enter into the question. - -A sagacious statesman will, at all times, keep a watchful eye upon every -branch of foreign commerce, especially upon importations. These consist -either in the natural produce of other countries, or in such produce -increased in its value by manufacture. - -In all trade two things are to be considered in the commodity sold. The -first is the matter; the second is the labour employed to render this -matter useful. - -The matter exported from a country, is what the country loses; the price -of the labour exported, is what it gains. - -If the value of the matter imported, be greater than the value of what -is exported, the country gains. If a greater value of labour be -imported, than exported, the country loses. Why? Because in the first -case, strangers must have paid, _in matter_, the surplus of labour -exported; and in the second case, because the country must have paid to -strangers, _in matter_, the surplus of labour imported. - -It is therefore a general maxim, to discourage the importation of work, -and to encourage the exportation of it. - -When any manufacture begins to be imported, which was usually made at -home, it is a mark that either the price of it begins to rise within the -country, or that strangers are making a new progress in it. On the other -hand, when the importation of manufactures consumed within a country -comes to diminish, and when merchants begin to lose upon such branches -of trade, it is a proof that industry at home is gaining ground in those -articles. The statesman then must take the hint, and set out by clogging -gently the importation of those commodities, not so as to put a stop to -it all at once; because this might have the effect of carrying profits -too high upon the home fabrication of them. - -All sudden revolutions are to be avoided. A sudden stop upon a large -importation, raises the prices of domestic industry by jerks, as it -were; they do not rise gradually; and these sudden profits engage too -many people to endeavour to share in them. This occasions a desertion -from other branches of industry equally profitable to the state. Such -revolutions do great harm; because it is a long time before people come -to be informed of their true cause, and during the uncertainty, they -are, as it were, in a wilderness, surprized and delighted with the -consequences, according as their several interests are affected by them. -Every one accounts for the phenomena in a different way. Some are for -applying remedies against the inconveniencies; while others are totally -taken up in profiting to the utmost of every momentary advantage. In a -word, nothing is more hurtful than a sudden revolution, in so -complicated a body as that of the whole class of the industrious, in a -modern society. When therefore such changes happen, in spite of all a -statesman can do, the best way to prevent the inconveniencies which they -draw along with them, is to inform the public of the true causes of -every change, favourable or hurtful to the several classes of -inhabitants. This also seems to be the best method to engage every one -to concur in promoting the proper remedies, when the inconveniencies -themselves cannot be prevented. So much for a scheme of encouraging -growing manufactures, or of supporting them in their decline. I proceed -next to consider the methods of preventing the loss of others already -established. - -We have said, that the importation of any article of consumption usually -provided at home, was a proof by no means equivocal of a foreign -rivalship. I shall say nothing, at present, of the methods to be used as -a remedy for this inconvenience: these have been already discussed. We -must now suppose, every one that might be contrived for this purpose, to -become ineffectual; and that foreign industry is so far gaining ground, -as daily, more and more, to supply the several branches of domestic -consumption. - -Upon this, the statesman will begin by laying the importation of such -commodities under certain restrictions. If these do not prove -sufficient, they must be increased; and if the augmentation produces -frauds, difficult to be prevented, the articles must be prohibited -altogether. By this method of proceeding, it will be found, that without -any violent or sudden prohibition laid upon foreign trade, by little and -little, every pernicious branch of it will be cut off, till at last it -will cease altogether, as in the case mentioned above; to wit, when the -most advantageous branches cannot be carried on without loss. - -Something, however, must here be added, in order to restrain so general -a plan of administration. Nothing is more complex than the interests of -trade, considered with respect to a whole nation. It is hardly possible -for a people to have every branch of trade favourable for the increase -of her wealth: consequently, a statesman who, upon the single inspection -of one branch, would lay the importation of it under limitations, in -proportion as he found the balance upon it unfavourable to the nation, -might very possibly undo a flourishing commerce. - -He must first examine minutely every use to which the merchandize -imported is put: if a part is re-exported with profit, this profit must -be deduced from the balance of loss incurred by the consumption of the -remainder. If it be consumed upon the account of other branches of -industry, which are thereby advanced, the balance of loss may still be -more than compensated. If it be a means of supporting a correspondence -with a neighbouring nation, otherwise advantageous, the loss resulting -from it may be submitted to, in a certain degree. But if upon examining -the whole chain of consequences, he finds the nation’s wealth not at all -increased, nor her trade encouraged, in proportion to the damage at -first incurred by the importation, I believe he may decide, that such a -branch of trade is hurtful; and therefore that it ought to be cut off, -in the most prudent manner, according to the general rule. - -The first object of the care of a statesman, who conducts a nation, -which is upon the point of losing her foreign trade, without any -prospect or probability of recovering it, is to preserve her wealth -already acquired. No motive ought to engage him to sacrifice this -wealth, the safety alone of the whole society excepted, when suddenly -threatned by foreign enemies. The gratification of particular people’s -habitual desires, although the wealth they possess may enable them, -without the smallest hurt to their private fortunes, to consume the -productions of other nations; the motive of preventing hoards; that of -promoting a brisk circulation within the country; the advantages to be -made by merchants, who may enrich themselves by carrying on a trade -disadvantageous to the nation; even, to say all in one word, the -supporting of the same number of inhabitants, ought not to engage his -consent to the diminution of national wealth. - -Here follow my reasons for carrying this proposition so very far, even -to the length of sacrificing a part of the inhabitants of a country to -the preservation of its wealth; and I flatter myself, that when duly -examined, I may avoid the smallest imputation of Machiavellian -principles, in consequence of so bold an assertion. - -While a people are fed with the produce of their own lands, the -preservation of their numbers is quite consistent with the preservation -of their wealth. If, therefore, in such a case, their numbers should be -diminished upon a decay of foreign trade, either by their food’s being -exported, or by their lands becoming uncultivated, I should never -hesitate to lay the blame upon the statesman’s administration. - -But an industrious people may (as has been said) carry their numbers far -beyond the proportion of their own subsistence. The deficiency must be -supplied from abroad, and must be paid with the balance of the trade in -their favour. Now when this balance comes to turn against them, and -when, consequently, a stop is put to the disadvantageous foreign trade, -upon the principles we have been laying down, the statesman is reduced -to this alternative; either annually to allow a part of the wealth -already got, to be exported, in order to buy subsistence for the -_surplus_ of his people, as I may call them, or to reduce their numbers -by degrees, either by encouragements given to their leaving the country, -or by establishing colonies, &c. until they are brought down to the just -proportion of national subsistence. If he prefers the first, supposing -the execution of such a plan to be possible, the consequence will be, -that so soon as all the wealth is spent, the whole society, except the -proprietors of the lands, and these who cultivate them, must go to -destruction. If he prefers the second, he remains independent of all the -world with respect to the inhabitants he preserves. They remain in a -capacity of maintaining themselves, and he may alter the plan of his -political oeconomy as best suits his circumstances, relatively to other -nations. While all his subjects are employed and provided for, he will -remain at the head of a flourishing and happy people. - -It may be here objected, that the first alternative is an impossible -supposition. I allow it to be so, if you suppose it to be carried the -length to which I have traced it; because no power whatsoever in a -statesman, can go so far as to preserve numbers at the expence of the -whole riches of his people. But I can very easily suppose a case, where -numbers may be supported at an eminent loss to a state which finds -itself in the situation in which we have represented it in our -supposition. - -Suppose a prince, upon the failure of his foreign trade, to increase his -army, in proportion as he finds his industrious hands laid idle by a -deficiency of demand for their labour; and let him fill his magazines -for their subsistence by foreign importation, leaving the produce of his -country to feed the rest of his subjects. By such a plan, every body -will remain employed, and also provided for, and such a prince may be -looked upon as a most humane governor. This I willingly agree to. I -should love such a prince; but the more I loved him, the more I should -regret that his project must fail, from a physical impossibility of its -being long supported; and when it comes to fail by the exhausting of his -wealth, it will not be his regrets which will give bread to his -soldiers, nor employment to his industrious subjects, who will no longer -find an equivalent for their labour. - -Let this suffice at present, upon the general principles which influence -the stop necessary to be put to the importation of foreign commodities, -and to the diminution of national wealth, in the case we have had before -us. - -Next as to the articles of exportation. The most profitable branches of -exportation are those of work, the less profitable those of pure natural -produce. When work cannot be exported in all its perfection, because of -its high price, it is better to export it with a moderate degree of -perfection, than not at all; and if even this cannot be done to -advantage, then will a people be obliged to renounce working except for -themselves: and then, if domestic consumption does not increase in -proportion to the deficiency of foreign demand, a certain number of -hands will be idle, and a certain quantity of natural produce will -remain upon hand. The first must disappear in a short time; they will -starve or desert; the last will become an article of exportation. Here -then is a new species of trade which takes place upon the extinction of -the other. When a nation has been forced to reduce her exportations to -articles of pure natural produce, in conformity to the principles we -have been laying down, then the plan proposed in the title of this -chapter is executed. She is then brought as low in point of trade as she -can be, but at the same time, she may enjoy her natural advantages in -spite of fortune; and in proportion to them, she may, with a good -government and frugality, retain a balance of trade in her favour, which -will constantly go on in augmenting her national wealth. - -There is, therefore, a period at which foreign trade may stop in every -article, but in natural produce. I do not know whether this period be at -a great distance, when the state of trade is considered relatively to -certain nations of Europe. - -Were industry and frugality found to prevail equally in every part of -the great political bodies, or were luxury and superfluous consumption, -every where carried to the same height, trade might, without any hurt, -be thrown entirely open. It would then cease to be an object of a -statesman’s care and concern. On the other hand, were all nations -equally careful to check every branch of unprofitable commerce, a -general stagnation of trade would soon be brought about. Manufactures -would no more be the object of traffic; every nation would supply -itself, and nothing would be either exported or imported but natural -productions. - -But as industry and idleness, luxury and frugality, are constantly -changing their balance throughout the nations of Europe, able merchants -make it their business to inform themselves of these fluctuations, and -able statesmen profit of the discovery for the re-establishment of their -own commerce; and when they find that this can no more be carried on -with the manufactures or produce of their own country, they engage their -merchants to become carriers for their neighbours, and by these means, -form as it were a third and last entrenchment, which, while they can -defend it, will not suffer their foreign trade to be quite extinguished; -because, by this last expedient, it may continue for some time to -increase their national stock. It is in order to cut off even this -resource, that some nations lay not only importations under restraint, -but also the importers[L]. Let such precautions be carried to a certain -length on all hands, and we shall see an end to the whole system of -foreign trade, so much alamode, that it appears to become more and more -the object of the attention as well as of the imitation of all modern -statesmen. - -Footnote L: - - By the act of navigation in England. - ------------------------------------------------------------------------- - - - - - CHAP. XXV. - _When a rich Nation finds her Foreign Trade reduced to the Articles of -Natural Produce, what is the best plan to be followed? and what are the - Consequences of such a Change of Circumstances?_ - - -There is now no more question of a trading nation; this character is -lost, the moment there is a stop put to the export of the labour and -ingenuity of her people. - -The first objects of her care should be to increase, by every possible -means, the quantity of her natural produce; to be as frugal as possible -in the consumption of it, and to export the surplus to the best -advantage. - -If she finds her exportation of subsistence going forward, while some of -her people remain in want, she may rest assured that industry is made to -suffer by some internal vice; and the most probable cause of such an -effect will be found to be an unequal competition between those of the -lower classes, who work for a physical-necessary. This must be removed, -and the statesman should never rest, until he has set the balance of -work and demand so far right, as to prevent at least _the scale of work_ -from preponderating; for this is the door by which misery gets in among -the people. - -_The scale of demand_ preponderating, will not now be so hurtful, as -this alteration of the balance will only raise prices, and accelerate -circulation, and keep the other balance, to wit, that of wealth (of -which we shall treat in the following chapter) in a constant vibration, -without diminution of the public stock. - -Another object of a statesman’s care in these supposed circumstances, is -to suffer no work whatever, nor the natural produce of any other country -conducive to luxury, to be imported; for although I have said, that -superfluous consumption can do little harm when the interests of foreign -trade do not enter into the question so as to prevent exportation, by -raising prices at home; and though the importation of foreign produce, -in exchange for like commodities of national growth, does no hurt to a -state with respect to her wealth, yet if such importation be an article -of mere superfluity, I think a statesman should prudently discourage it; -because the search of superfluities is of itself a proof of a luxurious -turn, and I should wish to see this turn improved so as to promote -national purposes only, that is, to the augmentation and subsistence of -useful inhabitants. - -Let me illustrate this by an example. Foreign wines, I shall suppose, -become alamode, as a part of the luxury of an elegant table. A -statesman, by his example, may discourage this, and introduce many other -articles of expence in entertainments sufficient to compensate it. The -furniture of apartments may be rendred more magnificent, ornaments of -the side board, decoration of deserts, new amusements immediately after -dinner might be introduced, which would have an air of refinement and -delicacy. - -By such examples he might easily substitute one expence, which might -become a national improvement, in the place of another, where the luxury -produces no such effect. And when prodigality and expence have neither -the good effect of giving bread to the poor, nor of accelerating -circulation at home in favour of the public, I can see no reason why a -statesman should interest himself for their support; and much less, why -a speculative person, who examines only the methods of making mankind -happy by their mutual services to each other, should strain a subject, -in order to find arguments proper to make either the apology or -panegyric of the various schemes of dissipation. - -I need not add, as a restriction of this principle of discouraging the -importation of foreign commodities (which become articles of a greater -superfluous home-consumption) that when such a branch of trade becomes -necessary to be carried on, in order to engage a neighbouring nation to -consume of home-superfluities; in this case, the luxury of the consumers -of the foreign produce, has an evident tendency to national improvement. -If delicate wines, and raw silk, are imported as a return for salt -herrings and raw hides, the support of such a trade is only the means of -making the rich consume these articles of home-production, by converting -them into burgundy and velvet. - -These considerations regard the augmentation, or at least the -preservation of national wealth. If they are attended to, it is hardly -possible that any part of what is already acquired, can go abroad; and -in this case the whole balance of the exportation of natural produce -becomes clear gain. - -There are still several things to be observed with regard to the -exportation of natural produce. Such articles as are in great abundance, -and are not produced in other countries, as wines in the southern -countries of Europe, ought always to be exported by the inhabitants, -because considerable profits must be made upon a trade where there is no -rivalship; and on such occasions, a people ought to be wise enough to -keep such profits for themselves. - -But if other nations will not receive them, unless they be imported by -their own subjects, then the statesman may impose a duty upon -exportation, which is one way of sharing the profits with the carriers. -All the precaution necessary, in imposing this duty, is not to raise it -so high as to diminish the demand; nor to give an encouragement to a -neighbouring nation, to enter into competition for such a branch of -trade. - -Neighbouring states which furnish the same articles of natural produce, -regulate, commonly, the duties upon exportation, in such a manner as -nearly to compensate all differences which strangers may find, between -trading with the one or with the other. Or they grant particular -privileges in point of trade, to the nations with whom they find it most -for their advantage to trade. - -If the natural advantages upon such articles are less considerable, no -duty can be imposed. Exportation may then be encouraged by granting -still greater privileges to strangers or others, who may promote the -exportation at little cost to the state. - -If in the last place, the natural produce of a country be common to -others, where it is perhaps equally plentiful; it will be difficult to -procure the exportation of it; and yet it may happen, that too great an -abundance of it at home, may occasion inconveniencies. In this case, the -statesman must give a premium or bounty upon exportation, as the only -method of getting rid of a superfluity, which may influence so much the -whole mass of the commodity produced, as to sink the price of the -industry of those employed in it, below the standard of their -physical-necessary. By giving, therefore, this premium, he supports -industry in that branch; he takes nothing from the national wealth; and -the exportation, which takes place in consequence of the bounty, is all -clear gain. This is an uncommon operation in trade, but it has so -intimate a connection with the doctrine of taxes, and the proper -application of public money, that I will postpone the farther -consideration of it until I come to that branch of my subject; and the -rather, that this book is swelling beyond its due proportion. - -I have little occasion to speak of importations, into a country which -exports no manufactures. The ruling principle in such cases, is to -suffer no importation but what tends to encourage the exportation of the -surplus of natural produce, and which, at the same time, has no tendency -to rival any branch of domestic industry. Thus it is much better for a -northern country to pamper the taste of her rich inhabitants with wines -and spices, than to discourage agriculture by the importation of rice -and foreign grain; supposing the alternative quite optional, and the one -as well as the other to be the returns of her own superfluity. - -I come next to the consideration of her inland trade, and consumption of -her own manufactures. Here there is no question of either an increase or -diminution of her wealth, but only of making it circulate in the best -manner to keep every body employed. Several considerations must here -influence our statesman’s conduct, and a due regard must be had to every -one of them. I shall reduce them to three different heads, and pass them -in review very cursorily, as we have already explained sufficiently the -principles upon which they depend. - -_1mo._ To regulate consumption and the progress of luxury, in proportion -to the hands which are found to supply them. - -_2do._ To regulate the multiplication of inhabitants according to the -extent of the fertility of the soil. These two considerations must -constantly go hand in hand. - -In so far therefore, as the statesman finds his country still capable of -improvement, in so far he may encourage a demand for work, and even -countenance new branches of superfluous consumption; since the -equivalent to be given for them must of necessity prove an encouragement -to agriculture. But whenever the country becomes thoroughly cultivated -and peopled to the full proportion of its own produce, a check must be -put to multiplication, that is, to luxury, or misery and depopulation -will follow; unless indeed, we suppose that numbers are to be supported -at the expence of national wealth, the fatal consequences of which we -have already pointed out. - -_3tio._ He should regulate the distribution of the classes of his -people, according to the political situation of the country. - -This is the most complicated case of all. It would be imprudent, for -example, in a very small state situated on the continent, to distribute -all its inhabitants into producers and consumers, as we have called them -on several occasions; that is, into those who live upon a revenue -already acquired, and those who are constantly employed in acquiring one -by supplying the wants of the other. There must be a third class; to -wit, those who are maintained and taken care of at the expence of the -whole community, to serve as a defence. This set of men give no real -equivalent for what they receive; that is to say, none which can -circulate or pass from hand to hand; but still they are usefully -employed as members of a society mutually tied together by the band of -reciprocal dependence. Here is no vice implied; but at the same time, -the statesman must attend to the consequences of such a distribution of -classes. - -The richer any state is, the more it has to fear from its neighbours: -consequently, the greater proportion of the inhabitants must be -maintained for its defence, at the expence of the industry of the other -inhabitants. This must diminish the number of free hands employed in -manufactures, and in supplying articles of consumption: consequently, it -would be imprudent to encourage the progress of luxury, while public -safety calls for a diminution of the hands which must supply it. If in -such circumstances luxury do not suffer a check, demand will rise above -the proper standard; living will become dearer daily, prices will rise, -and they will prove an obstacle to the recovery of foreign trade; an -object of which a prudent statesman will never lose sight for a moment. - -It is for these and other such considerations, that many small states -are found to fortify their capital; to keep a body of soldiers in -constant pay, bearing a great proportion to the number of the -inhabitants; to form arsenals well stored with artillery, and to -institute sumptuary laws and other regulations proper to check luxury. -Nothing so wise in every respect! Their territory cannot be extended nor -improved, nor can their inhabitants be augmented, but at the expence of -their wealth; for such as gained their livelihood at the expence of -strangers, are at present out of the question. Were their own citizens -therefore permitted, out of the abundance of their wealth, to give bread -to as many as their extravagance could maintain, the public stock would -be constantly diminishing, in proportion to the foreign subsistence -imported for these supernumeraries, fed at the expence of the luxurious; -which would be just so much lost. - -In other states which are extended, powerful by means of wealth, and -strong by nature and situation, whose safety is connected with the -general system of European politicks, which secures them against -conquest; such as Spain, France, Great Britain, &c. the progress of -luxury does little harm (as these territories are still capable of -infinite improvements) provided it does not descend to the lower classes -of the people. - -It ought to be the particular care of a statesman to check its progress -there, otherwise there will be small hopes of ever recovering foreign -trade. Whereas, if the lower classes of a people continue frugal and -industrious, from these very circumstances trade may open anew, and be -recovered by degrees, in proportion as luxury comes to get footing in -other nations, where the common people are less laborious and frugal. - -Luxury, among those who live upon a revenue already got, and who, by -their rank in the state, are not calculated for industry, has the good -effect of affording bread to those who supply them; but there never can -be any advantage in having luxury introduced among the lower classes, -because it is then only a means of rendring their subsistence more -chargeable, and consequently more precarious. - -Having thus briefly laid together the principal objects of a statesman’s -care, upon the cessation of the foreign trade of his people, I shall -finish my chapter, by pointing out some general consequences which -reason and experience shew to be naturally connected with such a -revolution; not with regard to industry and inland trade, but as they -influence the spirit, government, and manners of a people. - -Nothing is more certain than that the spirit of a nation changes -according to circumstances. While foreign trade flourishes, the minds of -the monied people are turned to gain. Money, in such hands, is generally -employed to procure more, not to purchase instruments of luxury; except -for the consumption of those prodigal strangers who are thereby becoming -daily poorer. It is this desire of becoming rich, which produces -frugality. A man is always frugal while he is making a fortune; another -very commonly becomes extravagant in the enjoyment of it; just so would -it be with nations, were a wise statesman never to interpose. - -When, by the cessation of foreign trade, the mercantile part of a nation -find themselves cut off from the profits they used to draw from -strangers; and on the other hand, perceive the barriers of the nation -gradually shutting against every article of unprofitable correspondence, -they begin to withdraw their stocks from trade, and seek to place them -within the country. This money is often lent to landed men, hitherto -living within bounds, for two most substantial reasons. First, because -there was little money to be borrowed, from the high rate of interest, -owing to the great profits on foreign trade; and because the national -stock was then only forming. The second, because the taste of the times -was frugality. But when once the money which was formerly employed in -buying up loads of work for the foreign markets, falls into the hands of -landed men, they begin to acquire a taste for luxury. This taste is -improved and extended by an infinity of arts, which employ the hands -formerly taken up in furnishing branches of exportation. Thus by degrees -we see a rich, industrious, frugal, trading nation, transformed into a -rich, ingenious, luxurious, and polite nation. - -As the statesman formerly kept his attention fixed on the preservation -of an equal balance between work and demand, and on every branch of -commerce, in order to prevent the carrying off any part of the wealth -already acquired; he must now direct his attention towards the effects -of the domestic operations of that wealth. He was formerly interested in -its accumulation; he must now guard against the consequences of this. - -While the bulk of a nation’s riches is in foreign trade, they do not -circulate within the country; they circulate with strangers, against -whom the balance is constantly found. In this case, the richest man in a -state may appear among the poorest at home. In foreign countries you may -hear of the wealth of a merchant, who is your next door neighbour at -home, and who, from his way of living, you never knew to be worth a -shilling. The circulation of money for home-consumption will then be -very small; consequently, taxes must be very low; consequently, -government will be poor. - -So soon as all this load of money which formerly was continually going -backwards and forwards, without almost penetrating, as one may say, into -the country, is taken out of foreign trade, and thrown into domestic -circulation, a new scene opens. - -Every one now begins to appear rich. That wealth which formerly made the -admiration of foreigners, now astonishes the proprietors themselves. The -use of money, formerly, was to make more of it: the use of money now, is -to give it in exchange for those or such like commodities, which were -then consumed by strangers only. - -It is this revolution in the spirit of a people, which renders the -consideration of the balance of their wealth an object of the greatest -political concern; because the constant fluctuation of it, among the -several classes of inhabitants, is what lays the foundation of public -opulence. - -A government must always be respected, feared, and obeyed by the people -governed; consequently, it must be powerful, and its power must be of a -nature analogous to that of the subjects. If you suppose a great -authority vested in the grandees of a kingdom, in consequence of the -number and dependence of their vassals, the crown must have still a more -powerful vassalage at its command: if they are powerful by riches, the -crown must be rich. Without preserving this just balance, no government -can subsist. All power consists in men, or in money. - -If therefore we suppose a vast quantity of wealth thrown into domestic -circulation, the statesman must follow new maxims. He must promote the -circulation of it so as to fill up the blank of foreign consumption, and -preserve all the industrious who have enriched him. The quicker the -circulation is found to be, the better opportunity will the industrious -have of becoming rich speedily; and the idle and extravagant will become -the more quickly poor. Another consequence equally certain, is, that the -quicker the circulation, the sooner will wealth become equally divided; -and the more equality there is found in wealth, the more equality will -be found in power. From these principles it will follow, that upon such -a revolution of national circumstances, a popular government may very -probably take place, if the statesman do not take proper care to prevent -it. - -This is done by the imposition of taxes, and these are differently laid -on, according to the spirit of the government. - -By taxes a statesman is enriched, and by means of his wealth, he is -enabled to keep his subjects in awe, and to preserve his dignity and -consideration. - -By the distribution of taxes, and manner of levying them, the power is -thrown into such hands as the spirit of the constitution requires it -should be found in. Are they imposed in a monarchy where every man is -taught to tremble at the King’s name, the great men will be made rich by -his bounty, and the lower classes will be loaded and kept poor; that -they may, on easier terms, be engaged to fill those armies which the -Prince entertains to support his authority at home, and his influence -abroad. - -Here independent people will always be looked upon with an evil eye, and -considered as rivals to the Prince, who ought to be the only independent -person in the state. - -In limited governments, where the sovereign has not the sole power of -taxation, they will be laid on more equally, and less arbitrarily; -providing the theory of them in general be well understood. Here every -man must know _what_ he is to pay, and _when_; and the amount of the tax -must bear a proportion, on one hand, to the exigencies of the state; and -on the other, to the quantity of circulation which takes place upon the -payment of it: that is, a man must not be made to pay all the state can -demand of him for a year, upon his making a trifling, though most -essential acquisition of a necessary article of subsistence. - -I think I have observed one remarkable difference in the point of view -in levying taxes in countries where these two forms of government are -established. - -Under the pure monarchy, the Prince seems jealous, as it were, of -growing wealth, and therefore imposes taxes upon people, who are growing -richer. Under the limited government they are calculated chiefly to -affect those who are growing poorer. - -Thus the monarch imposes a tax upon industry; where every one is rated -in proportion to the gain _he is supposed_ to make by his profession. -The poll-tax and _taille_, are likewise proportioned to the _supposed_ -opulence of every one liable to them. These, with others of the same -nature, are calculated (as it is alledged) to establish an equality in -the load supported by the subjects; by making the industrious, and money -gatherers, contribute in proportion to their gains, although the capital -stock from which these profits arise be concealed from the eyes of the -public. - -In limited governments, impositions are more generally laid upon -consumption. They encourage industry, and leave the full profits of it -to make up a stock for the industrious person. When the stock is made, -that is, when it ceases to grow, it commonly begins to decrease: the -number of prudent people, who live precisely upon their income, is very -small. It is therefore upon the dissipation of wealth, in the hands of -private people, that the state is enriched. Thus the career towards -poverty is only a little abridged: he who is in the way of spending his -estate will get at the end of it, if his life be spared; and therefore -there is no harm done to him, and much good done to the state, in making -a part of his wealth circulate through the public coffers. - -The only precaution necessary to be taken in taxing consumption, is, to -render the impositions equal, and to prevent their affecting what is -purely necessary; or operating an unequal competition between people of -the same denomination. Such impositions have still a worse effect, than -those which fall upon growing wealth: they prevent the poor from being -able to subsist themselves. A fellow feeling excites compassion among -those of the lower classes; they endeavour to assist each other, and by -this operation, like a pack of cards, set up by children upon a table, -the first that is thrown down tumbles down another, until all are laid -flat; that is, misery invades the lower classes: more than one half of a -people. - -From these principles (which I have been obliged to anticipate) we may -gather the necessity of taxes, in states where foreign trade begins to -decay. Without them, there is no security for a government against the -power of domestic wealth. Formerly, Princes lived upon their domain, or -patrimonial estate. What domain would be sufficient, at present, to -support the expence of government? And if a government is not able to -hold the reins of every principle of action within the state, it is no -government, but an idol, that is, an object of a voluntary respect. The -statesman, therefore, must hold the reins; and not commit the management -of the horses to the discretion of those whom he is employed to conduct. - -Another consequence of taxes, is, that the more luxury prevails, the -more the state becomes rich: if luxury, therefore, breeds -licentiousness, it at the same time provides a curb against its bad -effects. - -This augmentation of wealth produces a double advantage to the -statesman: for besides the increase of the public revenue, the progress -of luxury changing the balance of wealth constantly, by removing it from -the rich and extravagant, to the poor and laborious, renders those who -were formerly rich, and consequently powerful, dependent upon him for -their support. By the acquisition of such persons, he gains additional -credit, and supports his authority. Thus wealth and power circulate, and -go hand in hand. - -It may be asked, how these principles can be reconciled with the vigour -and strength commonly found in the government of flourishing trading -nations; for in such we must suppose few taxes? consequently, a poor and -therefore a weak government; and a rich, consequently, a powerful -people? - -I answer, that under such circumstances, a people are commonly taken up -with their trade, and are therefore peaceable; and as their wealth does -not appear, being constantly in circulation with strangers, the -influence of it is not felt at home. While wealth is employed in pursuit -of farther gains, it cannot give power; consequently, as to all -political effects at home, it is as if it did not exist; and therefore -there is no occasion for the state to be possessed of a wealth they have -no occasion to employ. If such a nation be attacked by her enemies, she -becomes wealthy in an instant, every one contributes to ward off the -common danger: but if, on the contrary, her tranquillity is disturbed at -home, the rebellion generally proves successful; which is a confirmation -of the principles laid down. I might illustrate this by many historical -remarks. I shall only suggest to my reader, to examine the nature of the -Dutch revolutions, and to compare the success of rebellions in France -and England, during the last century, with others of a fresher date. -Here the reader may consult the learned Mr. Hume’s observation upon the -commencement of the civil war. _History of Great Britain_, Vol. I. p. -325. - -When, therefore, foreign trade has ceased for some time, and luxury has -filled up the void, a considerable part of national wealth begins to -circulate through the public treasury. It is natural then for great men -to resort to court, in order to partake of the profits of government; -and for the statesman to be fond of attaching such people to his -interest, in order to be a constant check upon the turbulent spirit, -which new gotten wealth may excite in the minds of one set of people, -and desperate fortunes in those of others. - -While there was little circulation of money in Europe, and few taxes, -there was small profit to be made in following of Kings. These were more -formidable to their enemies, than profitable to their friends. The great -men of the state lived upon their lands, and their grandeur resembled -that of the Prince; it consisted in the number and dependence of their -vassals; who got as little by their Lord, as he did by the King. The -poor in those days were plundered of the little money they had, by the -great; now the great are stripped of the largest sums, by the numbers of -poor, who demand from them on all hands, the just equivalent of their -industry. - -When Princes find their great men all about them, all asking, and all -depending for different marks of their favour, they may perceive the -great change of their situation, produced by luxury, and a swift -circulation. This revolution has not been sudden, it has been the work -of several centuries; and I think we may distinguish three different -stages during this period. - -The first during the grandeur of the feudal government: then the great -Barons were to be consulted, and engaged to concur in the King’s wars, -because it was they who paid the expence, and suffered the greatest -loss. These are called by some the days of liberty; because the states -of every country in Europe, almost, were then in all their glory: they -are called so with great reason, when we consider the condition of the -great only. - -In those days there were seldom any troubles or disturbances in the -state, seldom any civil wars levied against the King, but such as were -supported by the grandees; who, either jealous of their own just rights, -or ambitious of acquiring others at the expence of the crown, used to -compel their vassals, or engage them by the constitutional influence -they had over them, to disturb the public tranquillity. - -The second stage, I think, may be said to have begun with the times of -industry, and the springing up of trade. Such Princes, whose subjects -began to enrich themselves at the expence of other nations, found, on -one side, the means of limiting the power of the great lords, in favour -of the extension of public liberty. The lords, on the other side, when -they wanted to disturb the public tranquillity, did not, as formerly, -vindicate their own privileges, so much as they combined with the -people, and moved them to revolt, on popular considerations. - -This may be called the period of confusion, out of which has arisen -certain determined forms of government; some drawing nearer to the -monarchical, others nearer to the popular form, according as the power -of Princes has been more or less able to support itself, during the -shock of the revolution, and the overturn of the balance between public -and private opulence. - -The third and last stage, of which I shall speak at present, may be -fixed at that period when the proportion of the public revenue became -adequate to the mass of national wealth; when general laws were made to -govern, and not the arbitrary power of the great. The grandees now, from -being a bridle on royal authority, are often found dependent upon it for -their support. The extraordinary flux of money into the treasury, -enables Princes to keep splendid courts, where every kind of pleasure -and amusement is to be had. This draws together the rich men of the -state. The example of the sovereign prompts these to an imitation of his -expence, this imitation increases consumption, which in its turn -augments the King’s income, as it diminishes that of every other person. - -When the great men of a kingdom have exhausted their estates, in paying -a regular court to the Prince, they employ the credit they have acquired -with him during the time of their dissipation, to obtain marks of his -favour, in order to support them in their decline. By these they are -enabled to live in as much state as before. They find no difference in -their situation; unless perhaps they should accidentally reflect, that -the fund which produced their former opulence, was in their own -possession; whereas that of their present wealth is in the hands of -their master. - -To compensate this difference, they are made to acquire, by the favour -of the court, advantages which they never could have enjoyed from the -largest independent fortune. - -The luxurious system of living, every where introduced, draws the -wealthy together, either in the capital or in other great cities of the -kingdom; where every one compares the expence and figure he makes, with -that of others who are about him. A person honoured with the King’s -favour, of the same quality with another, acquires, by this -circumstance, a great superiority. He commands, I shall suppose, in a -place; he is the person to whom people must apply, in order to obtain -favours, perhaps justice; he is adorned with a title, or outward mark of -distinction, which procure him respect and consideration; and, which is -still more, he is on the road to a farther elevation. It requires a -great stock both of philosophy and good sense, not to be dazzled with -these advantages. Independency, compared with them, is but a negative -happiness. To be truly happy, we must have power, and have other people -to depend on us. - ------------------------------------------------------------------------- - - - - - CHAP. XXVI. - _Of the Vibration of the Balance of Wealth between the Subjects of a - modern State._ - - -We have frequently mentioned this balance, as an object of great -importance to a statesman who is at the head of a luxurious nation; -which having lost its foreign trade, has substituted, in the place of -it, an extensive inland commerce. This will supply the loss of the -former, so far, as equally to provide employment, and, consequently, -subsistence, to every one inclined to be industrious; although it must -prove quite ineffectual for augmenting the national wealth already -acquired. - -I shall first explain what I mean by the balance of wealth vibrating -between the members of a society, and from that will be seen why I rank -this also among the political balances of a modern state. - -It has been observed in the beginning of the nineteenth chapter, that -the great characteristic of what we call liberty, is the circulation of -an adequate equivalent for every service. - -By wealth, I understand this circulating adequate equivalent. - -The desires of the rich, and the means of gratifying them, make them -call for the services of the poor: the necessities of the poor, and -their desire of becoming rich, make them chearfully answer the summons; -they submit to the hardest labour, and comply with the inclinations of -the wealthy, for the sake of an equivalent in money. - -This permutation between the two classes, is what we call circulation; -and the effects produced by it, upon the political situation of the -parties at the precise time of the circulation, and the consequences -after it is compleatly effected, explains what is called the balance of -wealth. - -To render our ideas more correct, let us consider the money on one side, -and the prestations, as the civilians call them, or performances of any -kind, on the other, as _reciprocal_ equivalents for one another; and -then let us examine the nature of those prestations which tend to put -these equivalents into circulation; that is to say, what are the things -which money can purchase. - -These we may divide, with the lawyers, into corporeal and incorporeal. -The corporeal may again be divided into consumable and inconsumable; and -the incorporeal into personal service, and what the lawyers call _jura_, -rights in or to any thing whatever. I cannot fully explain myself -without the help of this distribution. - -Let us next consider the effects of the circulation of money, as it has -for its object, the acquisition of the four several species here laid -down. - -1. Of inconsumable things. 2. Of things consumable. 3. Of personal -service. 4. Of rights acquired in or to any thing whatever. - -I. The only thing inconsumable is the surface of the earth. This must -not be taken in a philosophical, and far less in a chemical sense. A -thing is consumed, so far as it concerns our inquiry, the moment it -becomes useless, or even when it is lost. - -The surface of the earth, therefore, is the only thing inconsumable; -because, generally speaking, it never can cease to be useful, and never -can be lost; it may be changed, but the earth must always have a -surface. What is said of the surface, may be understood likewise of that -small part of its body accessible to man, for supplying him with what he -finds useful there, as the produce of mines. - -Next to the earth itself, nothing is less consumable than her metals, -consequently coin may very properly be classed under the head of things -inconsumable; although it may be lost, and even worn out in circulation. - -Let us now consider the effects of circulation in the purchase of land. -(A), I shall suppose, has a piece of land, and (B) has one thousand -pounds weight of gold coin, which the laws of society have constituted -to be an adequate circulating equivalent for every thing vendible. They -agree to make an exchange. Before the exchange the balance of their -wealth is equal; the coin is worth the land, the land is worth the coin; -the exchange makes no alteration, nor has it the effect of making any -afterwards; the new landlord may apply himself to the improvement of the -soil, the monied man to the turning of his thousand weight of gold coin -to the best advantage; consequently, by this transaction, no vibration -of the balance seems to be affected. - -If coin itself be the object of sale, the consequences are much the -same. (A) has a guinea, (B) has twenty one shillings, the exchange they -make produces no alteration in their circumstances. The same holds good -in other species of circulation, such as the transmission of money by -inheritance. (A) dies and leaves his money to (B); here the possessor of -the money only changes his name, perhaps his inclinations, and that is -all. In like manner a person pays his debts, and withdraws his bond, or -other security; no balance is affected by this circulation, matters -stand between the parties just as before. - -The nature, therefore, of circulation, when one inconsumable commodity -is given for another, is, that it operates no vibration in the balance -of wealth between the parties; because, in order to produce this, one -must remain richer than he was before, and the other proportionally -poorer. - -II. Under the second head of alienation, to wit, that of consumable -commodities, is comprehended every thing corporeal, except money, and -land, which money may purchase. In these, two things deserve attention. -First, the simple substance, or the production of nature; the other, the -modification, or the work of man. The first I shall call the _intrinsic -worth_, the other, the _useful value_. The value of the first, must -always be estimated according to its usefulness after the modification -it has received is entirely destroyed, and when by the nature of the -thing both must be consumed together, then the total value is the sum of -both. The value of the second must be estimated according to the labour -it has cost to produce it. An example will make this plain. - -The intrinsic worth of any silk, woollen, or linnen manufacture, is less -than the primitive value employed, because it is rendred almost -unserviceable for any other use but that for which the manufacture is -intended. But the intrinsic substance of a loaf of bread loses nothing -by the modification, because the last cannot be consumed without the -first. In a piece of silver plate curiously wrought, the intrinsic worth -subsists entire, and independent of the useful value, because it loses -nothing by the modification. The intrinsic value, therefore, is -constantly something real in itself: the labour employed in the -modification represents a portion of a man’s time, which having been -usefully employed, has given a form to some substance which has rendred -it useful, ornamental, or in short, fit for man, mediately or -immediately. - -Let us now apply these distinctions to the different circumstances which -attend consumption, in order to perceive their effects. - -The consumption of the intrinsic value of any commodity, takes place the -moment the matter employed begins to diminish, and is compleated so soon -as it is consumed totally. The consumption of the useful value proceeds -in like manner, in proportion as the use it is put to makes the value of -it diminish, or disappear altogether. - -Let us next take an example, and examine the effects of circulation in -the purchase of things consumable, as to the vibration of the balance of -wealth. (A) has a piece of coin, (B) has something which his labour has -produced; they make an exchange. (A) hitherto has neither gained or -lost, neither has (B); but (A) begins to make use of what he had -purchased with his coin, and in using it a part disappears; that moment -the balance begins to turn against him. (B) on the other hand, exchanges -his piece of coin with another, whom we shall call (C), and gets in -return a piece of wood; if (B) puts this piece of wood into the fire, in -proportion as the wood consumes, the balance is returning to its level -between (A) and (B), and is changing in favour of (C). If (B), instead -of burning his wood, makes a beam of it for supporting his house, the -balance will turn more slowly, because the wood is then longer in -consuming: but if he makes some useful piece of furniture of one part of -his wood, he may warm himself with the remaining part of it, and with -the coin he gets for his work, may buy a beam for his house, and even -food to eat. If (B) stops at this period, and works no more, he will -find himself just upon a level with (A); so soon as his fire is burnt -out, his beam rotten, and his food consumed, and the whole balance will -be found in favour of (C), providing that by his industry he has been -able to procure for himself all necessaries, and preserve the piece of -coin entire. Here then is the spur to industry; to wit, the acquisition -of this balance, which gives a relative superiority even among those of -the lowest classes, and determines their rank as well as their -political-necessary, according to the principles laid down in the -twenty-first chapter. - -The essential characteristic of this vibration of the balance of wealth, -is the change in the relative proportion of riches between individuals. -But it must be observed, that under this second species we are to -consider the change of proportion no farther than as it is produced by -the circulation of a free adequate equivalent, of such a nature as to be -transferable to another hand without any diminution. The consumption, -therefore, is the only thing which makes the balance turn. While the -consumable commodity remains entire in the hands of the purchaser, he -still remains possessor of the value, and may, by inverting the -operation, return to the possession of the same species of wealth he had -before. - -Here it may he asked, if money be absolutely necessary for producing a -vibration of this balance by the means of consumption. We may easily -conceive the greatest inequality between the numbers of a state, without -supposing the existence of money. We may suppose the property of lands -unequally divided, and a great surplus of subsistence found in the hands -of one individual, which may by him be given in exchange for the produce -of industry. Under such circumstances then it may be asked, if without -money there can be no such thing as a vibration in the balance of -wealth; supposing in this case, the term _wealth_ to imply, in general, -the means of purchasing whatever man can perform or produce. - -I answer, that no doubt the balance may be susceptible of small -vibrations, because even in the exchange of consumable commodities, the -consumption may go on faster on one side than on the other; but I think, -unless the inconsumable fund of wealth (which is what gives the -superiority, and which in the example alledged, we supposed to be coin) -can be made to change hands according to the adequate proportion of the -consumption made, we cannot say properly, that a vibration can be -operated in any considerable degree. - -Let us suppose (A) to be a proprietor of a bit of land, and (B) an -industrious workman; in order that (B) may purchase the land of (A,) it -must be supposed that (A) is very extravagant, and that he inclines to -consume a much greater proportion of work than what is equivalent to all -the surplus-produce of his land. Now in order to supply (A) to the value -of the land itself, (B) must distribute his work to many different -persons, and take in exchange, not such things as he has use for -himself, but such as may be found useful to (A). But so soon as (A) has -paid to (B) the whole surplus of his land, what fund of credit will he -find in order to engage (B) to furnish more? He cannot pay him in land, -because this fund is not susceptible of circulation; and every expedient -that could be fallen upon to keep accounts clear between them, is -neither more or less than the introduction of _money_, either _real_ or -_symbolical_. These terms must be explained. - -By real money, is meant what we call coin, or a modification of the -precious metals, which by general agreement among men, and under the -authority of a state, carries along with it its own intrinsic value. - -By symbolical money, I understand what is commonly called credit, or an -expedient for keeping accounts of debt and credit between parties, -expressed in those denominations of money which are realized in the -coin. Bank notes, credit in bank, bills, bonds, and merchants books -(where credit is given and taken) are some of the many species of credit -included under the term _symbolical money_. - -In the example before us, we may suppose that (A) having no more -circulating equivalent to give (B) for his work, and being desirous to -consume of it to the value of his land, shall agree to issue notes of -hand, every one of which shall carry in it a right to an acre of land, -to a fruit tree, to ten yards of the course of a river, &c. and that -every such parcel of property, shall be esteemed at a certain proportion -of work. This agreement made, he goes on with his consumption, and pays -regularly, and adequately, the value of what he receives; and in -proportion as consumption proceeds on the side of (A), the balance of -wealth must turn in favour of (B); whereas while (A) kept his bit of -land, and (B) his faculty of working up an equivalent for the surplus of -it, the balance stood even; because the land on one hand, and the -industry on the other, produced adequate equivalents for each other. The -produce of both was consumable, and supposed to be consumed; which -operation being over, the land and the industry remained as before, -ready to produce anew. Here then is the effect of credit or symbolical -money; and here I ask, whether or not the notes of hand given by (A) to -(B), do not contain as real a value, as if he had given gold or silver? -and farther, whether or not it appears, that the country where they live -becomes any richer by this invention? does this note any more than -declare who is the proprietor of the value contained? - -Nothing is so easy as to invent a money which may make land circulate as -well as houses, and every other thing which is of a nature to preserve -the same value during the time of circulation. Whatever has a value, may -change hands for an equivalent, and whenever this value is determined, -and cannot vary, it may be made to circulate; and in the circulation to -produce a vibration in the balance of wealth, as well as a pound of gold -or silver made into coin. - -Those nations, therefore, who only circulate their metals, confine -industry to the proportion of the mass of them. Those who would -circulate their lands, their houses, their manufactures, nay their -personal service, even their hours, might produce an encouragement for -industry far beyond what could be done by metals only. And this may be -done, when the progress of industry demands a circulation beyond their -power. - -This anticipation of the subject of the following book, is here thrown -in, only to enable my reader to form to himself an idea of the extent of -the subject we are at present upon, and to help him to judge to what -length luxury, that is consumption, maybe carried. Since, by what we -have said, it appears that there is no impossibility for a people to -throw the whole intrinsic value of their country into circulation. All -may be cut into paper, as it were, or stamped upon copper, tin, or iron, -and made to pass current as an adequate equivalent for the produce of -industry; and as there is no bounds to be set to consumption and -prodigality, it might he possible, by such an invention, in the compass -of a year, to circulate an equivalent in consumable commodities produced -by industry, for the whole property of the most extended and most -wealthy kingdom. That this is no chimerical supposition, appears plain -by the activity of many modern geniuses, who, in an inconsiderable space -of time, find means to get through the greatest fortunes; that is to -say, in our language, they throw them into circulation by the means of -the symbolical money of bonds, mortgages, and accounts. But does this -species of circulation increase the riches of a state? surely no more -than it would increase the riches of France or England, to carry all the -plate in the two kingdoms to be coined at the mint. The use of -symbolical money is no more than to enable those who have effects, which -by their nature cannot circulate (and which, by the bye, are the -principal cause of inequality) to give an adequate circulating -equivalent for the services they demand, to the full extent of all their -worth. In other words, it is a method of melting down, as it were, the -very causes of inequality, and of rendring fortunes equal. - -The patrons therefore of Agrarian laws and of universal equality, -instead of crying down luxury and superfluous consumption, ought rather -to be contriving methods for rendring them more universal. If they blame -what is called perpetual substitutions of property or entails (made by -parents in favour of their posterity as yet unborn) because they are in -some respects prejudicial to industry; they should not, I think, find -fault with that charming leveler _dissipation_, that nurse of industry, -and the only thing intended to be prevented by such dispositions. - -Some have persuaded themselves, that an equality of fortune would banish -luxury and superfluous consumption. Among the rest, is M. de -Montesquieu, an author for whom I have the highest esteem, and who has, -in this respect, been copied by many others. But I never found his idea -set in a clear light. Equality of fortune would certainly change the -nature of luxury, it would diminish the consumption of some, and would -augment the consumption of others; but without making people idle, it -could never destroy industry itself, and while this subsists in an equal -degree, there must be the same quantity of what it produces regularly -consumed. Farther, this proposition never can be advanced, but on the -supposition that the luxurious person, that is the consumer, must be -richer than he who supplies him. This I cannot by any means admit to be -true. Must the carter who drinks a pot of beer be richer than the -alehouseman? Must a country girl who buys a bit of ribband, be richer -than the haberdasher who sells it? Must the beau be richer than his -taylor? the traveller than the banker who gives him his money? the -client than the lawyer? the sick than the physician? - -How then does it appear that equality must prevent luxury, unless we -suppose every one confined to an absolute physical-necessary, and either -deprived of the faculty of contriving, or of the power of acquiring any -thing beyond it. This principle Lycurgus alone laid down for the basis -of his republic; and yet riches were known in Sparta as well as poverty. - -Absolute equality, _de facto_, is an absurd supposition, if applied to -human society. Must not frugality amass, and prodigality dissipate? -These opposite dispositions, are of themselves sufficient to destroy at -once, the best regulations for supporting equality, and, when carried to -a certain length, must substitute in its place as great an inequality as -the quantity of circulation is capable to produce. Whatever circulates, -may stagnate. Why was there so great equality at Sparta? because there -was little circulation. Why are the Capucins in a state of perfect -equality? because among them there is no circulation at all. - -If therefore such variations in the balance of wealth depend on the -difference of _genius_ among men, what scheme can be laid down for -preserving equality, better than that of an unlimited industry -equivalent to an universal circulation of all property, whereby -dissipation may correct the effects of hoarding, and hoarding again -those of dissipation? This is the most effectual remedy both against -poverty and overgrown riches; because the rich and the poor are thereby -perpetually made to change conditions. In these alterations in their -respective situations, the parties who are changing by degrees, must -surely in their progress towards a total alteration, become, at one time -or other, upon a level, that is, to an equality; as the buckets in a -well meet, before they can pass one another. - -_3tio._ The first species of things incorporeal, which may be purchased -with money, is personal service; such as the attendance of a menial -servant, the advice of a physician, of a lawyer, the assistance of -skilful people in order to acquire knowledge, the service of those -employed in the administration of public affairs at home and abroad, or -for the defence of a kingdom by sea, or land; the residence of great men -at court, who do honour to princes, and make their authority respected; -and even when money is given to procure amusement, pleasure, or -dissipation, when no durable and transferable value is given in return. - -There is a kind of resemblance between the species here enumerated, and -what we called the _useful value_ in consumable commodities. In the one -and the other, there is an equivalent given for a man’s time usefully -employed; but the difference between them lies in this: that the _useful -value_ being supported, or having for a substratum, as the schoolmen -call it, the intrinsic substance, is thereby rendred permanent and -vendible; whereas here, for want of a permanent and transferable -substance, the personal services though producing advantages which are -sufficiently felt, cannot however be transferred for the adequate price -they cost. - -The circulation produced by this third species of acquisition, operates -an instantaneous vibration of the balance. The moment the personal -service is performed, it may be said to be consumed; and although the -purchaser has received a just equivalent for the money given, and in -some cases may even be thereby put in a situation to indemnify himself -of all his expence, by performing the like services to others, yet every -body must perceive that such services cannot properly be considered as a -circulation of the former. - -_4to._ The acquisition of the other species of things incorporeal, that -is, rights, produces little more balance, when an adequate circulating -equivalent is given for them, than the sale of land; because a right -implies no more than a power to use, that is, to consume; and by the -use, the right is not diminished: it is balanced by the use of the -money; the money therefore and the right being both permanent, there is -no vibration in the scales. Of this species are all servitudes; the -purchasing of privileges or immunities, even the lending of money at -interest, may here not improperly be classed. - -Here it will, perhaps, be alledged, that an example be given, where the -creation of such a right, though purchased with an adequate circulating -equivalent, produces the greatest vibration in the balance of wealth -possible. It is when a state contracts debts, and when the public -creditors acquire a right to general impositions on the people for the -payment of their interest. - -This objection requires a little explanation, and I have proposed it -chiefly for the sake of introducing an illustration of my subject. - -If it be said, that in this example a vibration in the balance of wealth -_within the state_ is implied, then I say that it must take place either -1st. between the creditors and the state, or 2d. between the state and -the people, or 3d. between the creditors and the people. But, - -_1mo._ The creditors acquire no balance against the state, because they -have given one inconsumable commodity for another; to wit, money for an -annual income. The money is worth the income, the income is worth the -money. If therefore any change in the balance comes afterwards to take -place, it must be in consequence of other operations quite independent -of this transaction. But let us suppose, which is but too frequently the -case, that here money must be considered as a consumable commodity, -because it is only borrowed to be spent. In this light does not the -creditor seem to acquire a balance in his favour against the state, so -soon as the money is actually spent. I answer in the negative: because a -state by expending the money borrowed, remains with respect to the -creditors just as wealthy as before. It is the people who pay the -interest, for which the state gives them in return no adequate -_transferable_ equivalent. - -_2do._ Here it is urged, that this being the case, the state has -acquired a balance against the people according to the principles above -laid down, where it was said, that upon occasions, where money is given -for personal service, and where nothing transferable is given in return, -the balance turns instantaneously in favour of him who received the -money. - -To this I answer, that as to the interest paid by the people, the state -does not receive it for herself, but for the creditors. The personal -services are then supposed to be already paid for, and the vibration has -taken place before the interest becomes due. Therefore the balance does -not turn between the state and the people. - -In levying of taxes which are destined to pay the interest of money -already spent, the public gives no adequate equivalent on one hand; and -on the other, it is not enriched with respect to the people, any more -than it was impoverished with respect to the creditors, by spending the -money borrowed; and since there is no reciprocal change in the situation -of the two parties, I do not see how we can infer any vibration in the -balance of wealth between them. We shall presently see between whom the -balance is made to vibrate. - -_3tio._ The balance between the creditors and the people is what at -first sight appears to be principally affected; because the first -receive a constant retribution from the latter, in consequence of the -loan. But neither is any true vibration found here, either adequate to -the loan, or to the money spent. _1mo._ Because the creditors themselves -are part of the people who contribute towards all impositions on -consumptions, which are commonly the most regular, the most permanent, -and the most familiarly appropriated for the payment of the interest. -_2do._ Because the money spent by the state, if spent at home, returns -to other hands indeed, but still returns to the people, of whom we are -here speaking. And _3tio._ because there is no transaction at all -between the creditors and the people. - -Objection. By this way of reasoning it would appear, that the exhausting -a people by taxes, makes no vibration in the balance of their wealth. - -Answer. If the people be exhausted, it must be by enriching strangers. -This case should at present be excluded, as we have laid aside the -consideration of foreign relations. But allowing this circumstance also -to be implied in the objections made, I agree that every penny of money -sent out of a country, for no real and permanent equivalent received in -return, operates a vibration in the wealth between nation and nation; -but none between subject and subject. To this it is answered, that when -taxes are high, many people are ruined while others are enriched. This -operates a vibration. I allow it; but then I reply, that by the very -supposition in every such case, the money must remain at home; whereas -in the former, it was supposed to be expended abroad. Now we are not at -present examining the effects of debts and taxes, in changing the -balance between man and man, but only between the three cumulative -interests above specified, the state, the people, and the creditors. - -Let me now ask, what is the effect of taxes on the vibration of the -balance of wealth between individuals? - -I answer, that whoever pays a tax, appears to pay for a personal -service. He receives no corporeal equivalent which can be alienated by -him for the same value; and he who is employed by the state, and is paid -with the produce of taxes, acquires a balance in his favour against -those who pay them. When the amount of taxes goes abroad for foreign -services, there can be no alteration upon the balance at home, as has -been said; neither is there any when it remains at home: the people and -the creditors are as rich as before. Let this suffice at present, as to -the effects of debts and taxes upon the balance of national wealth. - -Industry is the only method of making wealth circulate, so as to change -its balance between the parties; all kinds of circulation which operate -no such change, are foreign to the present purpose. - -A man dies and leaves his wealth to another, no body loses by this, but -he who is no more; a second pays his debts, neither debtor, or creditor -can be said to change circumstances by the operation. A merchant buys a -quantity of merchandize for ready money, he thereby loses no balance of -his wealth; it is true he has given money for consumable effects; but -the balance does not operate until the consumption takes place, and as -he is not supposed to buy in order to consume, I rank this branch of -circulation among those which do not influence the balance. - -Thus we find two different kinds of circulation in a state; one which -makes the balance turn, and one which does not. These objects are of no -small consequence to be attended to in the right imposition of taxes, as -shall, in its proper place, be more fully explained. At present it is -sufficient to observe, that the proper time of laying on taxes is at the -time of circulation: because the imposition may then be always exactly -proportioned to the sum circulating; consequently, to the faculties of -the persons severally interested. - -In all excises, or taxes upon consumption, it is the money of the -consumer which is taxed, in the instant of the payment; so that he -against whom the balance is to turn, has the additional load to pay. -This species of tax, imposed at the time of circulation, is what -produces the largest sums to a state. I never heard of a proper -expedient for taxing the person in whose favour the balance is to turn, -though from the principles which are afterwards to be laid down, we may -perhaps discover one. - -As for the other species of circulation, where the balance does not -turn, it is not so much the custom to impose very considerable taxes -upon it: there are however several examples to be met with which point -out how they may be imposed. The casualties paid upon the change of -vassals, or upon the fall of lives, in leases upon upon lands in -England; the confirmation of testaments in Scotland; investitures in -Germany; the _centiéme denier_, the _lods et ventes_, and the _control_ -upon the acts of notaries in France; the emoluments of the _Rota_ in -Spain, and in many Roman Catholic countries, are of this species. Upon -the same principle, taxes more or less considerable might be laid upon -every branch of this kind of circulation; for which purpose, it would be -highly necessary to find out all the ramifications of it, by analysing -it to the bottom, as we have hitherto run through it very superficially. - ------------------------------------------------------------------------- - - - - - CHAP. XXVII. -_Circulation and the Balance of Wealth, objects worthy of the attention - of a modern Statesman._ - - -Having explained the nature of circulation, and of this balance, we are -next to point out the objects of a statesman’s attention concerning -them. - -I. _He ought to form to himself a clear and distinct idea of the nature, -properties, and effects of circulation; a word frequently made use of -without much meaning, and in a vague and undetermined sense._ - -The term _circulation_ is, perhaps, one of the most expressive in any -language, and is therefore easily understood. It represents the -successive transition of money, or transferable commodities, from hand -to hand, and their return, as it were in a circle, to the point from -which they set out. This is the rough idea which every one, who -understands the word at all, must form of its meaning. But a statesman’s -perceptions must be more accurate as well as more complex. - -He must combine the consequences which result from this successive -transition, and attend to the effects produced by it. He must not only -consider the money, which is a permanent value, passing from hand to -hand, but weigh the consequences of the variety of consumption which it -draws along with it, in its progress. - -Before a guinea can travel from London to York, it may be the means of -consuming a thousand times its value, and as much more, before it can -return to London again. Every stop the guinea makes in its course, marks -a want of desire to consume, in him who possesses it. If, therefore, in -any country, there were but one guinea in circulation, all consumption -would stop (or barter would take place) the moment it fell into the -hands of a miser. This leads us to the second object of a statesman’s -attention. - -II. _He ought at all times to maintain a just proportion between the -produce of industry, and the quantity of circulating equivalent, in the -hands of his subjects, for the purchase of it; that, by a steady and -judicious administration, he may have it in his power at all times, -either to check prodigality and hurtful luxury, or to extend industry -and domestic consumption, according as the circumstances of his people -shall require the one or the other corrective, to be applied to the -natural bent and spirit of the times._ - -For this purpose, he must examine the situation of his country, -relatively to three objects, viz. the propensity of the rich to consume; -the disposition of the poor to be industrious; and the proportion of -circulating money, with respect to the one and the other. - -If the quantity of money in circulation is below the proportion of the -two first, industry will never be able to exert itself; because the -equivalent in the hands of the consumers, is then below the proportion -of their desires to consume, and of those of the industrious to produce. -Let me illustrate this by a familiar example taken from a party at -quadrille. - -When, on dealing the cards, every one puts in a fish into the stake, -according to the old English fashion, a very few are sufficient for the -circulation of the game: but when you play the aces, the consolation and -the multiplication of beasts according to the French custom, you must -have a box with contracts, fishes, and counters; so reducing all to the -lowest denomination, every player has occasion for above five hundred -marks. It is therefore plain, that the number of marks must be in -proportion to the circulation of the game. But at play, as in a state, -circumstances render this circulation very irregular. Fortune may run so -equally among the players, during a considerable time, that none of them -may have occasion to pay away above the value of a hundred counters, and -while this equality continues, there is not found the smallest -interruption in the circulation. But let one of the players have a run -of luck, you will soon see three of the boxes empty, and all the -circulating marks heaped up before the winner. Fortune at quadrille, -forms stagnations of the circulating equivalent, as industry and -frugality form them in a state. At this period of the game, must not the -players stop, or must they not fall upon a way of drawing back their -marks into circulation? If they borrow back from the winner, this -represents loan. If they buy back their marks with money from their -purses, it represents what I call throwing solid property into -circulation. - -From this familiar example, we may judge how necessary it is that the -circulating fund be constantly kept up to the proportion of the -occasions for it. It is impossible to determine the proportion of coin -necessary for carrying on the circulation of a country, especially of -one where neither loan, or paper credit, that is the melting down of -solid property, are familiarly known. Here is the reason: the solution -of the question does not depend upon the quantity of coin alone, but -also upon the disposition of those who are the possessors of it; and as -these are constantly changing, the question thereby becomes insoluble. - -It is, therefore, the business of a statesman, who intends to promote -circulation, to be upon his guard against every cause of stagnation; and -when he has it not in his power to remove these political obstructions, -as I may call them, by drawing the coin of the country out of its -repositories; he ought (in proportion as the other political interests -of his people are found to require it) to facilitate the introduction of -symbolical money to supply its place. - -A great political genius is better discovered by the extent of his -perceptions, than by the minute exactness of them in every part of the -detail. It is far better for a statesman to be able to discern (though -superficially) every object of government under all its relations, than -to be able to trace any one with the greatest accuracy. This is apt to -occupy him too much, and no one relation should ever engross his whole -attention. - -I cannot omit in this place taking notice of a very judicious remark of -M. de Melon, an eminent political French writer, who was employed by the -Duke of Orleans in state affairs, during his regency of the kingdom. - -“It belongs only (says he) to one who has had the direction of every -branch of government to lay down a general plan of administration, and -even then, one must not expert from such a person, very particular -details with respect to many objects, of which he himself is entirely -ignorant, and which he has been obliged to confide to the care of others -subordinate to him. A person who can stoop to a minute exactness in -small affairs, proves commonly very unequal to the administration of -great ones. It is enough for such a person to know principles by -experience and reflection, and to apply fundamental maxims as occasion -requires.” - -I apply this observation to the point in hand. A statesman who allows -himself to be entirely taken up in promoting circulation, and the -advancement of every species of luxurious consumption, may carry matters -too far, and destroy the industry he wishes to promote. This is the -case, when the consequences of domestic consumption raises prices, and -thereby hurts exportation. - -A principal object of his attention must therefore be, to judge when it -is proper to encourage consumption, in favour of industry; and when to -discourage it, in favour of a reformation upon the growth of luxury. - -If the country he governs be in a state of simplicity, and that he -wishes to awaken a taste for industry and refinement, he must, as has -been said, encourage domestic consumption, for the sake of multiplying, -and giving bread to the industrious; he must facilitate circulation, by -drawing into the hands of the public what coin there is in the country, -in case he finds any part of it locked up; and he must supply the actual -deficiency of the metals, by such a proportion of paper credit, as may -abundantly supply the deficiency. - -In every country where simplicity prevails, and where there is any -considerable quantity of coin, a great proportion of it must be locked -up: because the consumption there must be small; consequently, little -circulation; consequently, either little coin, or many treasures. In -such cases, therefore, a statesman must engage the possessors of these -riches to part with them, at the desire of those who can give security -for their worth: and he must establish the standard of an annual -retribution for the loan. If this be difficult to be brought about, from -the want of confidence in the monied men, he may, in their favour, -contrive expedients to become the borrower himself, at the expence of -the alienation of certain rights, or the creation of new privileges, in -lieu of interest; and when he has engaged them to part with their coin, -he may lend it out to such as have both solid property and a desire to -consume; but who, for want of a circulating fund to purchase -superfluities, have hitherto lived in simplicity. - -The introduction, therefore, of loans upon interest, is a very good -expedient to accelerate circulation, and give birth to industry. - -OBJ. But here it is objected, that such a plan is looked upon by some -nations to be contrary to the precepts of the christian religion, and -therefore a statesman cannot permit it. - -To this I can make no answer, because I am no casuist; but I can propose -an expedient which will supply the defect of borrowing at interest; and -as it may serve to illustrate the principles I am now upon, I shall here -introduce it. - -The intention of permitting loans upon interest, is not to provide a -revenue to those who have ready money locked up, but to obtain the use -of a circulating equivalent to those who have a sufficient security to -pledge for it. If the statesman, therefore, shall find himself withheld -by the canons of his church, from drawing the coin of his subjects into -circulation, by permitting the loan of it upon interest, nothing is more -easy than to invent another species of circulation, where no interest at -all is necessary. - -Let him open an office, where every proprietor of lands may receive, by -virtue of a mortgage thereon, a certain proportional value of -circulating paper of different denominations, the most proper for -circulation. He may therein specify a term of payment in favour of the -debtor, to give him an opportunity to call in his obligation, and -relieve the engagement of his property. But that term being elapsed, the -land is to belong to the creditor, or the paper to become payable by the -state, if required, which may in consequence become authorised either to -sell the land engaged, or to retain a proportional value of the income, -or of the property of the land itself, as shall be judged most -expedient. - -Farther, let him constitute a real security for all debts upon every -species of solid property, with the greatest facility in the liquidation -of them, in favour of those who shall have given credit to the -proprietors for merchandise of any kind. To compass this, let all -entails, substitutions, and _fidei commissa_, or trusts, restraining the -alienation of land-property, be dissolved; and let such property be -rendred as saleable as houshold furniture. Let such principles influence -the spirit of the government; let this sort of paper credit be modified -and extended according to circumstances, and a taste for consumption -will soon take place. - -The greatest of all obstacles to industry in its infancy, is the general -want of credit on both sides. The consumers having no circulating value, -the difficulty of liquidating what they owe by the alienation of their -lands, prevents their getting credit; and the many examples of -industrious people giving way, on account of bad payments, discourages -others from assisting them in the beginning of their undertaking. - -From these principles we may gather, that a statesman who intends to -increase industry and domestic consumption, should set out by providing -a circulating fund of one kind or other, which ought always to be ready, -and constantly at the command of those who have any sort of real -equivalent to give for the consumption they incline to make: for as -specie may often times be wanting, a contrivance must be fallen upon -immediately to supply that want. - -The utility of this kind of credit, or paper money, is principally at -the instant of its entring into circulation, because it is then only -that it supplies the want of real specie; and by this invention, the -desire to consume creates, as it were, the circulating equivalent, -without which the alienation of the produce of industry would not have -taken place; consequently, the industry itself would have suffered a -check. - -But in the after circulation of this paper money from hand to hand, this -utility comes to cease; because the subsequent consumer, who has another -man’s paper to give in exchange, is already provided with a circulating -equivalent, and therefore were it not for the wearing of the specie, or -difficulty of procuring it, it is quite indifferent both to the state, -as well as to circulation, whether this paper continues to pass current, -or whether it be taken up, and realized by the debtor, and gold and -silver be made to circulate in its place. - -Let me now endeavour, to make this whole doctrine still more plain, by -an example. - -Suppose a country where there is a million of pieces of gold employed -necessarily in carrying on the ordinary circulation, a million of pieces -of the same value locked up, because the proprietors have no desire to -spend them. Suppose the revenue of the solid property of the country to -be worth also a million a year; and that if the fund itself could be -sold, it might be worth twenty millions of the same specie. Suppose no -such thing as credit or paper money to be known, and that every man who -inclines to make any consumption, must be provided previously with a -part of the circulating million, before he can satisfy his inclination. - -Under these circumstances, the statesman resolves to establish industry, -and finding that by his people’s taking a taste for a greater -consumption, the million which was formerly sufficient for carrying on -circulation, is no longer so; he proposes to those who have the other -million locked up, to borrow it from them at _5 per cent._ and the -better to engage them to comply with his proposal, he offers to impose -duties upon the whole of the inhabitants to the annual amount of fifty -thousand pieces of gold, to be paid annually to the creditors, in return -for their treasure. If this scheme be adopted, he may lend out his -million in small sums, to every one who inclines to borrow, upon good -security; or by premiums and other encouragements given to his infant -manufactures, he may throw it into the hands of the public, that is, -into circulation. Here is one method of increasing the quantity of a -circulating fund, when an augmentation upon the consumption of the -produce of industry comes to demand it. - -But let us now suppose this regular plan of borrowing to be contrary to -what is called the constitution of the state, to religion, or to the -spirit of the people, what must be done to supply the place of such a -scheme? - -The statesman must then fall upon another contrivance, by extending the -use of pledges, and instead of moveables, accept of lands, houses, &c. -The _Monte pieta_ at Rome issues paper money upon moveable security -deposited in their hands. Let the statesman, without exacting interest, -do the same upon the lands of his subjects, the best of all securities. -While the lands subsist, this paper money must retain its value; because -I suppose the regulations to be such as to make it convey an -indisputable right to the lands engaged. The advantage of such an -establishment will be, that as formerly no man could purchase the -smallest produce of industry, without having a part of the circulating -million of pieces of gold; every body now who has an inclination to -consume, may immediately procure paper money in proportion to his worth, -and receive in return whatever he desires to possess. - -Now let me suppose that this paper money shall in time, and from the -growing taste for superfluities, amount to the value of five millions of -pieces of gold. I ask, whether the real value of this paper is any way -diminished, because it exceeds, by far, all the gold and silver in the -country, and consequently cannot all at once be liquidated by the means -of the coin? Certainly not: because it does not draw its value from any -representation of these metals, but from the lands to which it conveys a -right. Next, I ask, if the country is thereby become any richer? I -answer, also, in the negative: because the property of the lands, if -sold, being supposed worth twenty millions, the proprietors of the paper -are here supposed to have acquired, by their industry, five millions of -the twenty; and no more than the remaining fifteen millions belong to -the landlords. - -Let us now suppose a million of this paper money to fall into the hands -of those who have no inclination to spend it. This is the case of the -frugal, or money hoarding persons, and they will naturally chuse to -realize their paper, by taking possession of the lands represented by -it. The moment this operation takes place, the million of paper money is -annihilated, and the circulating capital is reduced to four millions of -paper, and one million of specie. Suppose, on the other hand, that those -who have treasures which they cannot lend at interest, seeing a paper -money in circulation, which conveys a right to solid property, shall -purchase it with their million of pieces of gold, and then lay hold of a -proportional part of the land: what effect will this double operation -produce upon the circulating fund? I answer, that instead of being -composed as formerly, of one million of coin and five millions of paper, -it will, at first, on the buying up of the paper, consist of two -millions of coin and five millions of paper; and so soon as the million -of paper bought up comes to be realized upon the land, and thereby -extinguished, the circulating coin will be two millions, and the paper -will be reduced to four. Here then is a very rational method of drawing -all the coin of the country from the treasures of the frugal, without -the help of interest. Let me take one step farther, and then I will -stop, that I may not too far anticipate the subject of the following -book. - -I suppose, that the statesman perceiving that the constant circulation -of the coin insensibly wears it away, and reflecting that the value of -it is entirely in proportion to its weight, and that the diminution of -the mass must be an effectual diminution of the real riches of his -country, shall call in the metals and deposit them in a treasure, and -shall deliver, in their place, a paper money having a security upon the -coin locked up. Is it not plain, that while the treasure remains, the -paper circulated will carry along with it as real (though not so -intrinsic) a value as the coin itself could have done? But if this -treasure comes to be spent, what will the case be then? It is evident, -that the paper conveying a right to the coin, will then as effectually -lose its value, as the other species of paper conveying a right to the -lands, and issued, as we have supposed, by the proprietors of them, -would have done, had an earthquake swallowed up, or a foreign conqueror -seized the solid property engaged as a security for this paper. - -The expedient, therefore, of symbolical money, which is no more than a -species of what is called credit, is principally useful to encourage -consumption, and to increase the demand for the produce of industry. And -the bringing the largest quantity of coin possible into a country, -cannot supply the want of it in this respect; because the credit is -constantly at hand to every one who has property, and the other may fail -them on a thousand occasions. A man who has credit may always purchase, -though he may be many times without a shilling in his pocket. - -Whenever, therefore, the interest of a state requires that the rich -inhabitants should increase their consumption, in favour of the -industrious poor; then the statesman should fall upon every method to -maintain a proportion between the progress of industry, and the gradual -augmentation of the circulating fund, by enabling the inhabitants to -throw with ease their solid property into circulation whenever coin is -found wanting. Here entails are pernicious. - -On the other hand, when luxury begins to make too great a progress, and -when it threatens to be prejudicial to foreign trade, then might solid -property be rendred more unwieldy; and entails might then become useful: -all moveable debts, except bills of exchange in foreign circulation, -might be stripped of their privileges, and particularly, as in France, -of the right of arresting the person of the debtor. Usury ought then to -be punished severely; even something like the _Senatus Consultum -Macedonianum_, which made the contract of loan void on the side of the -borrowers, while they remained under the power of their fathers, might -be introduced. Merchants accounts should no more be allowed to enjoy a -preference to other debts; but on the contrary, be made liable to a -short prescription. In a word, domestic circulation should be clogged, -and foreign circulation accelerated. When foreign trade again comes to a -stop, then the former plan may be taken up a-new, and domestic -circulation accelerated and facilitated, in proportion as the produce of -industry and taste of superfluity require it. - -III. _A statesman ought carefully to distinguish between those branches -of circulation which operate a vibration in the balance of wealth, and -those_ _which do not, in order to regulate the taxes which he may think -proper to lay upon his people._ - -In treating of this third object of a statesman’s attention, I shall -confine myself to the application of those principles which point out -the necessity of taxation among a luxurious people, become wealthy by -the means of trade, where the industrious can no longer be made to -subsist but by means of a great domestic circulation, which is the -object of our present inquiry. - -In every case where the balance of wealth is made to vibrate by -circulation, there is an opportunity of imposing a tax upon -consumptions, perfectly proportioned to the quantity of the circulation. -Now by the imposition of taxes, and the right employment of the amount -of them, a statesman has it in his power to retard or to promote the -consumption of any branch of industry. By the imposition of duties he -may either check luxury when he finds it calling off too many hands from -other more necessary occupations; or by granting premiums, he may -promote consumption or exportation upon branches where it is expedient -to increase the hands employed, which last is the reverse of taxation; -or in the third place, when foreign trade begins to bear a small -proportion to domestic consumption, he may profit of luxury, and draw a -part of the wealth of the luxurious into the public treasure, by -_gently_ augmenting the impositions upon it; for when taxes are gently -increased, consumption is not checked; consequently, this is the proper -method to be followed, when luxury does no harm. But when it proves -hurtful, the rise in the impositions should be sudden, that they may -operate the effects of violent revolutions which are always accompanied -with inconveniencies, and on such occasions every inconvenience will -mark the success of the operation. An example will make this plain. - -If you want to check the drinking of spirituous liquors, let every -alteration of your oeconomy concerning them, either as to the -impositions upon the consumption, or regulations in the retailing them, -proceed by jerks as it were; if you want to increase the revenue, from -the propensity people have to poison themselves with spirits, your -augmentations and alterations may be gentle and progressive. - -Here let me observe by the way, that the best method for a statesman to -curb any sort of vice among his people, is to set out by facilitating -the gratification of it, in order to bring it once upon a regular and -systematical footing, and then by sudden and violent revolutions in the -administration of the oeconomy of it, to destroy it and root it out. - -Were all the strumpets in London received into a large and convenient -building, whither the dissolute might repair for a while with secrecy -and security, in a short time, no loose women would be found in the -streets. And it cannot be doubted, but that by having them all together -under certain regulations, which might render their lives more easy than -they are at present, the progress of debauchery, and its hurtful -consequences, might in a great measure be prevented. At Paris, they are -to be found in their houses, because the police never troubles them -there while they commit no riot or disturbance. But when they are -persecuted in their habitations, they break forth into the streets, and -by the open exercise of their profession, the delicacy of modesty is -universally hurt and but too frequently blunted, and the example that -those prostitutes openly set to their own sex, debauches more women than -all the rakes in town do. - -I hope this digression will not be misconstructed into an apology for -public stews, where, in place of following good regulations for -suppressing the vices with which they are filled, the principal object -is frequently to encourage the abuses for the sake of making them turn -to account as a branch of revenue. Such a plan of administration -represents a statesman who turns against his people, those arms which he -had provided for their defence. My intention is very different, it is to -curb vice as much as possible, and to shut up what cannot be rooted out -within the bounds of order, and to remove it as a nusance from the eyes -of the public, and from the contagious imitation of the innocent. I now -come to the object of a statesman’s attention, relative to that branch -of circulation which implies no vibration of the balance of wealth -between the parties concerned. - -The more perfect and the more extended any statesman’s knowledge is of -the circumstances and situation of every individual in the state which -he governs, the more he has it in his power to do them good or harm. I -always suppose his inclinations to be virtuous and benevolent. - -The circulation of large sums of money brings riches to light for a -moment, which before and after are commonly hid from the eyes of the -public. Those branches of property therefore, which have once made their -appearance in this species of circulation, should not be lost sight of -until they come naturally to melt away, by returning into the other -branch of which we have been speaking; that is, until they are fairly -spent, and the balance be made to turn against the former proprietors of -them. After this revolution, they will circulate for a while in small -sums, and remain imperceptible, but in time they will come to form new -stagnations; then they will be lent out again, or employed in the -purchase of lands; and falling once more under the eyes of the state, -they will again become an object of the same attention as formerly. - -Nothing is more reasonable, than that all property which produces an -annual determined income, should be made to contribute to the common -burthens of a state. But those taxes which are intended to operate upon -so moveable a property as ready money, ought to be imposed with a most -gentle hand, and even so as not to appear directly to affect it. The -statesman here must load his wealthy citizens with duties, as Horace -loads his sovereign with adulation, never addressing his compliments -directly to the emperor, but conveying them to him in the most elegant -manner, through the channel of an interposed person. Thus people -possessing large capitals of ready money, which in a moment they can -transport beyond the reach of the most extended jurisdiction, may have -certain privileges granted them which may attach them to the country (in -England, for example, a vote in a county or burrow) and then in -consequence of their rank, not because of their money, be made to come -under a sort of capitation, or other similar imposition bearing another -name. Might not the creditors of that nation be represented in -parliament, and in consequence of so great a privilege, and the -additional security thereby granted to the funds, be made afterwards to -come under taxations as well as other proprietors of a determined -revenue. An admirable hint for the imposition of such taxes, is to be -met with in a certain great European monarchy, where the highest order -of knighthood is distinguished with a ribband, a star, and a pension of -about an hundred and thirty pounds sterling a year. But so soon as any -one is raised to that dignity, he pays exactly that very sum in lieu of -capitation. The pension was given by the prince who instituted the -order; the capitation followed in a subsequent reign, and now appears -rather a mark of distinction than a burthen. - -IV. _The next object of a statesman’s attention proper to be taken -notice of, is the different political considerations which must occur to -him when he compares the turning of the balance of wealth against the -industrious members of a state, with those vibrations which take place -against the not working part of the inhabitants. In other words, the -different effect of taxes, as they severally affect those who consume in -order to reproduce, and those who consume in order to gratify their -desires._ - -The one and the other consumption implies a vibration in the balance of -wealth, and whenever there is a vibration, there we have said that a -proportional tax may be imposed. - -But as the intention of taxes, as I understand them, is only to advance -the public good (by throwing a part of the wealth of the rich into the -hands of the industrious poor, and not to exhaust one part of a nation -to enrich another, no necessary article of consumption should be taxed -to an industrious person, but in such a way as to enable him to draw -back the full amount of it, from those who consume his work. By this -means, the whole load of taxes must fall upon the other category of -inhabitants, to wit, those who live upon the produce of a fund already -acquired. - -Let me here observe, by the way, that if taxes are rightly laid on, no -industrious person, any more than another who lives upon his income, -will ever be able to draw back one farthing of such impositions as he -has paid _upon his consumption of superfluity_. This shall in its proper -place be made sufficiently plain; at present it would be a superfluous -anticipation of the doctrine of taxation, to point out the methods of -compassing this end. My intention at present is only to recapitulate the -objects of a statesman’s attention, with regard to the consequences of -circulation, and the vibrations of the balance of wealth; and having -shewn how nearly those principles are connected with those of taxation, -this alone is sufficient to shew their importance. - -V. _A statesman ought to attend to the difference between the foreign -and domestic circulation of the national wealth._ - -This object, though in part relative to foreign commerce, must not be -passed over without observation. In fact, there is no nation entirely -deprived of foreign communications; therefore, although a statesman, who -is at the head of a luxurious people, may act in general as if there -were none at all, yet still he must be attentive to the consequences of -circulation with his neighbours, in so far as it takes place. - -Every commercial correspondence with foreign nations, not carried on by -the exchange of consumable commodities, must produce a vibration of the -balance of wealth, either in favour or prejudice of the interest we have -in our eye. But it does not follow, because there is a vibration, that -therefore a statesman has the same liberty of imposing taxes upon every -article of consumption, as if the two scales were vibrating within the -country subject to his administration. - -When the consumers are his subjects, he may safely impose the tax, and -if he raises it by degrees, so high as to diminish the consumption, and -reduce the amount of the imposition, he will probably gain on the other -hand, by discouraging the foreign importation, and by keeping the -nation’s wealth at home, more than he possibly could have got by the -amount of his tax, in consequence of the dissipation of it. - -When the foreigners are the consumers, the case is very different: for -you cannot oblige a man who is not your subject, to pay beyond the -advantage he gains by your correspondence. It is therefore, as has been -said, only upon the exportation of goods, where the nation has great -natural advantages over her neighbours, that any duty can be raised. - -VI. The last object I shall mention as worthy of a statesman’s -attention, is, _the rules of conduct he should prescribe to himself, as -to the extending or contracting taxation, according as he finds a -variation in the proportion between the_ _FOREIGN_ _and_ _DOMESTIC_ -_circulation of his country_. - -For this purpose he must know exactly the proportions of the one and the -other; he must compare the quantity of domestic consumption, with the -produce of industry and quantity of importations. - -If domestic consumption be equal to the sum of both, the country must -annually lose the value imported. In this case, taxes are to be raised -by sudden jerks, especially upon importations; not to increase the -produce of them, but to prevent the increase of luxury, and dissipation -of national wealth. - -If domestic consumption do not exceed the produce of industry, this will -prove that exportation is at least equal to importation. In this case -the exportation must be supported; and when that can no otherwise be -done, a part of the taxes levied upon home consumption must be -distributed in premiums upon the articles of exportation; and when this -also becomes ineffectual, then all importations for consumption must be -cut off, according to the principles above laid down. - -If the domestic consumption should really fall short of the produce of -industry, it marks a flourishing foreign trade. Prices then must be kept -low, as has been abundantly explained; consequently, there will be less -profit from taxes; because every penny imposed, which affects the price -of exportable goods, must be refunded out of the net produce of them, -and all the expence of collecting that part is entirely lost to the -public: the remainder, therefore, will be greater or less, according as -foreign trade is great or small. - -In proportion, therefore, as domestic circulation gains ground upon the -foreign, taxes become necessary; in order, with the amount of them, to -correct the bad effects of luxury, in raising prices, by giving larger -premiums to support exportation. And in proportion as a statesman’s -endeavours to support the trade of his country becomes ineffectual, from -the growing taste of dissipation in his subjects, the utility of an -opulent exchequer will be more and more discovered; as he will be -thereby enabled to support his authority against the influence of the -great load of riches thrown into domestic circulation, and to defend his -luxurious and wealthy subjects from the effects of the jealousy of those -nations which enriched them. - -To conclude, the exportation of work, and the supporting a superiority -in the competition of foreign markets (as has been said, and as shall be -farther explained) seem to be the most rational inducements to engage a -statesman to begin a scheme of imposing considerable taxes upon his -people, while they enjoy any share of foreign commerce. If such taxes -continue to subsist after the extinction of it, and are then found -necessary; this necessity is itself a consequence of the change made on -the spirit and manners of a people become rich and luxurious. - -The charge of government, under such circumstances, must greatly -increase, as well as the price of every thing. Is it not very natural, -that he who is employed by the state should receive an equivalent -proportioned to the value of his services? Is it to be supposed, that a -person born in a high rank, who, from this circumstance alone, acquires -an advantage, in most nations, hardly to be made up by any acquired -abilities, will dedicate his time and his attendance for the -remuneration which might satisfy his inferiors? The talents of great men -deserve reward as much as those of the lowest among the industrious; and -the state is with reason made to pay for every service she receives. -This circulation of an adequate equivalent, we have said to be the -palladium of liberty, the band of gentle dependence among freemen; and -the same spirit ought to animate every part of the political body. That -_nothing is to be done for nothing_, is a fundamental political maxim in -every free government, and obligations, not liquidated by a just -equivalent, form pretensions beyond their worth; and are constantly -accompanied with discontent at one time or other. - -Another use of taxes, after the extinction of foreign trade, is to -assist circulation, by performing, as it were, the function of the heart -of a child, when at its birth that of the mother can be of no farther -life to it. The public treasure, by receiving from the amount of taxes, -a continual flux of money, may throw it out into the most proper -channels, and thereby keep that industry alive, which formerly -flourished, and alone depended upon the prosperity of foreign commerce. - -In proportion, therefore, as a statesman perceives the rivers of wealth, -(as we have called them above) which were in brisk circulation with all -the world, begin to flow abroad more slowly, and to form stagnations, -which break out into domestic circulation, he ought to set a plan of -taxation on foot, as a fund for premiums to indemnify exportation for -the loss it must sustain from the rise of prices, occasioned by luxury; -and also for securing the state itself, against the influence of -domestic riches, as well as for recompensing those who are employed in -its service. - -This system ought to be carried on and extended, in proportion to the -decay of foreign trade; and when this comes in a manner to cease, then -the increase of taxes, and the judicious application of them, going hand -in hand, the state itself will support circulation, by receiving with -one hand, and giving out with the other; until by a prudent management -under the care and direction of an able statesman, through time and -perseverance, every internal vice be corrected, and foreign commerce be -made to flourish once more, from the principles we have been laying -down, and from what may be farther said to illustrate them in the -subsequent books of this inquiry. - -While industry is kept alive there is still ground for hope. Manners -change, and the same luxury which extinguished foreign trade, by calling -home the wealth employed in that species of circulation, may afterwards, -by keeping industry alive at home, and by throwing a sufficient power of -wealth into the hands of a good statesman, render the recovery of that -trade no difficult project, to one who has an instrument in his -possession, so irresistible in removing every obstacle in the way of his -undertaking. - -This represents a new circulation; to wit, that of the spirit and -manners of a people, who, under the government of able statesmen, may -prosper in every situation; and since, from the nature of man, no -prosperity can be permanent, the next best thing to be done, is, to -yield to the force which cannot be resisted; and, by address and -management, reconduct a people to the height of their former prosperity, -after having made them travel (as I may say) with as little -inconvenience as possible, through all the stages of decline. - ------------------------------------------------------------------------- - - - - - CHAP. XXVIII. -_Circulation considered with regard to the rise and fall of the Price of - Subsistence and Manufactures._ - - -The intention of this chapter is to apply the principles we have been in -search of, to the solution of some questions, which have been treated by -those great masters of political reasoning, Messrs. de Montesquieu and -Hume. The ideas they have broached are so pretty, and the theory they -have laid down for determining the rise and fall of prices so simple, -and so extensive, that it is no wonder to see it adopted by almost every -one who has writ after them. - -I have not forgot how much I was pleased when first I perused these -authors, from the easy distribution which a general theory enabled me to -make of certain classes of my ideas then lying without order, in that -great repository of human crudities, the memory; which frequently -retains more materials, than people, commonly, have either time, or -perhaps capacity rightly to digest. - -I am very far from pretending to any superiority of understanding over -those gentlemen whose opinions I intend to review: accident alone has -led me to a more minute examination of the particular circumstances, -upon which they have founded their general combinations; and in -consequence of my inquiries, I think I have discovered, that in this, as -in every other part of the science of political oeconomy, there is -hardly such a thing as a general rule to be laid down. - -There is no real or adequate proportion between the value of money and -of goods; and yet in every country we find one established. How is this -to be accounted for? - -We have, in the fourth chapter of this book, already inquired into the -principles which point out the influence of trade upon the variation of -the price of goods; but the question now comes to be, how to fix and -determine the fundamental price, which is the object of variation. It -has been said, that the price of a manufacture is to be known by the -expence of living of the workman, the sum it costs him to bring his work -to perfection, and his reasonable profit. We are now to examine what it -is, which in all countries must determine the standard prices of these -articles of the first necessity; since the value of them does -necessarily influence that of all others. - -The best way to come at truth, in all questions of this nature, is, to -simplify them as much as possible, that they may be first clearly -understood. - -Whenever a question arises about price, an alienation is necessarily -implied; and when we suppose a common standard in the price of any -thing, we must suppose the alienation of it to be frequent and familiar. -Now I must here observe, that in countries where simplicity reigns -(which are those where the decision of this question ought regularly to -be sought for, since it is there only where a complication of -circumstances do not concur to raise the prices of subsistence) it is -hardly possible to determine any standard for the price of articles of -the first necessity. - -Let us examine the state of those hunting Indians who live by their bow, -and of other nations where the inhabitants exercise, I may say -universally, that species of agriculture which I have called a direct -method of subsistence, and we shall find, that the articles of food and -necessaries are hardly found in commerce: no person purchases them; -because the principal occupation of every body is to procure them for -himself. What answer would a Scotch highlander have given any one, fifty -years ago, who would have asked him, for how much he sold a quart of his -milk, a dozen of his eggs, or a load of his turf? In many provinces, -unacquainted with trade and industry, there are many things which bear -no determined price; because they are seldom or never sold. - -Sale alone can determine prices, and frequent sale can only fix a -standard. Now the frequent sale of articles of the first necessity marks -a distribution of inhabitants into _labourers_, and what we have called -_free hands_. The first are those who produce the necessaries of life; -the last are those who must buy them: and as the fund with which they -purchase is produced from their industry, it follows, that without -industry there can be no sale of articles of subsistence; consequently, -no standard price determined. - -Another consequence of this reasoning, is, that the sale of subsistence -implies a superfluity of it in the hands of the seller, and a proper -equivalent for it in the hands of the buyer; and when the equivalent is -not money, it also implies a superfluity of the produce of some sort of -industry; consequently, by the exchange of superfluities upon certain -articles, a man procures to himself a sufficiency upon every one. This -represents that gentle dependence which unites the members of a free -society. - -Does it not follow from this analysis of the question, that the prices -of articles of the first necessity, depend rather upon the occupation -and distribution of the classes of inhabitants, than either upon the -abundance of those necessaries, or of the money to purchase them; since -many examples may be found, where these articles have borne little or no -price, even in countries where money was not wanting. The reason -therefore of low prices, is not the vast abundance of the things to be -sold, but the little occasion any body has to buy them; every one being -provided for them in one way or other, without being obliged to go to -market. - -How many familiar examples occur every where of this oeconomy! do we not -find in every country, even when the numbers of the industrious free are -multiplied exceedingly, more than one half of the inhabitants fed -directly from the earth? The whole class of farmers does not go to -market for subsistence. Ask a country gentleman the expence of his -living, he will tell you the sum of money he yearly spends, perhaps the -quantity of his rents in kind, which he consumes in his house, and the -rent of the lands he holds himself in farm; but it will never come into -his head to reckon the value of every chicken, sheep, or bullock, with -which his farm provides him, which he consumes without estimation, and -which in many countries he could not dispose of for any determined -value. - -From this I still conclude, that it is only in countries of industry -where the standard prices of articles of the first necessity can be -determined; and since in these, many circumstances concur to render them -either higher or lower than in other countries, it follows, that in -themselves they bear no determined proportion whatsoever, to the -quantity of gold and silver in the country, as I hope presently to make -still more evident. - -What is it then which determines the standard value of these articles, -in countries of industry? Here follows, in my humble opinion, the best -answer to this question. - -The standard price of subsistence is determined from two considerations. -The first from the number of those who are obliged to buy, that is to -say, of those who have them not of their own, and who are not provided -with them, in lieu of service, by those who have. The second is, from -the degree of employment found for those who are obliged to purchase -them. - -The _number_ of the buyers of subsistence, nearly determines the -_quantity_ sold; because it is a necessary article, and must be provided -in a determined proportion for every one: and the more the sale is -frequent, the more the price is determined. Next as to the standard: -this, I apprehend, must depend upon the faculties of the buyers; and -these again must be determined by the extent of those of the greatest -numbers of them; that is to say, by the extent of the faculties of the -lower classes of the people. This is the reason why bread, in the -greatest famine, never can rise above a certain price; for did it exceed -the faculties of the great classes of a people, their demand must be -withdrawn, which would leave the market overstocked for the consumption -of the rich; consequently, such persons, who in times of scarcity are -forced to starve, can only be such whose faculties fall, unfortunately, -below the standard of those of the great class: consequently, in -countries of industry, the price of subsistence never can rise beyond -the powers to purchase of that numerous class who enjoy -physical-necessaries; consequently, never to such an immoderate height -as to starve considerable numbers of the people; a thing which very -commonly happens in countries where industry is little known, where -multitudes depend merely upon the charity of others, and who have no -resource left, so soon as this comes to fail them. - -The faculties, therefore, of those who labour for a physical-necessary, -must, in industrious nations, determine the standard value of -subsistence, and the value in money which they receive for their work, -will determine the standard of their faculties, which must rise or fall -according to the proportion of the demand for their labour. - -By this exposition of the matter, I do not pretend to have dissipated -every obscurity. The question still remains complex, as the nature of it -requires it should do; and the solution of it depends upon farther -considerations, which now lead me to the examination of the doctrine of -Messrs. de Montesquieu and Hume, concerning the influence of riches upon -the increase of prices. I shall begin by shortly laying this doctrine -before my readers, in three propositions. - -_1mo._ The prices (say they) of commodities, are always proportioned to -the plenty of money in the country. So that the augmentation of wealth, -even fictitious, such as paper, affects the state of prices, _in -proportion_ to its quantity. - -_2do._ The coin and current money in a country, is the representation of -all the labour and commodities of it. So that _in proportion_ as there -is more or less of this representation, (money) there goes a greater of -less quantity of the thing represented (commodities, &c.) to the same -quantity of it. From this it follows, that - -_3tio._ Increase commodities, they become cheaper; increase money, they -rise in their value. - -Nothing can be more beautiful than these ideas. They appear at first -sight, sufficiently extensive to comprehend every variation of -circumstances which can happen. Who was the first author of this -doctrine, I cannot say. I find it in Mr. Locke, and in the Spectator for -the 19th of October, 1711; but they have been beautifully illustrated by -Monsr. de Montesquieu; and Mr. Hume has extended the theory, and -diversified it prettily in his political discourse; which have done much -honour to that gentleman, and drawn the approbation of the learned world -so much, that there is hardly a nation in Europe which has not the -pleasure of reading them in their own language. - -Upon examining this theory, when I came to treat of the matters it is -calculated to influence, I found I could not make answer to the -principles I had pursued, in the most natural order in which I had been -able to deduce them: and this consideration obliged me, with regret, to -lay it aside, and to follow another, much more complex. I have already -expressed the mortification I have always had upon finding myself forced -to strike out a general rule, and this, of all others, had at first hit -my fancy the most; but I am obliged to confess, that upon a close -examination of the three propositions, I am obliged to range this -ingenious exposition of a most interesting subject, among those general -and superficial maxims which never fail to lead to error. - -In order to set the matter in as clear a light as possible, I shall make -a short application of my own principles, relating to the decision of -the main question, the causes of the rise and fall of prices, and -conclude my chapter with some remarks upon the three propositions above -laid down, submitting the whole to the better judgment of my reader. - -I have laid it down as a principle, that it is the complicated -operations of demand and competition, which determines the standard -price of every thing. If there be many labourers, and little demand, -work will be cheap. If the increase of riches, therefore, have the -effect of _raising_ demand, work will increase in its value, because -_there_ competition is implied; but if it has only the effect of -_augmenting_ demand, prices will stand as formerly. What then will -become of the additional quantity of coin, or paper money? I answer, -that in both cases it will enter into circulation, in proportion to the -_rise_ or _augmentation_ of demand; with this difference, that in the -first case, it will have the effect of raising prices; because the -supply is not supposed to augment in proportion: in the second, prices -will stand as they were; because the supply is supposed to augment in -proportion. These are the consequences of the augmentation of wealth, -when it has the effect of either _raising_ or _augmenting_ demand. But -if upon this revolution it be found that the state of demand remains -without any variation, then _the additional coin_ will probably be -locked up, or converted into plate; because they who have it, not being -inspired with a desire of increasing their consumption, and far less -with the generous sentiment of giving their money away, their riches -will remain without producing more effect than if they had remained in -the mine. As for the paper money, so soon as it has served the first -purpose of supplying the demand of him who borrowed it, (because he had -at that time no coin) it will return upon the debtor in it, and become -realized; because of the little use found for it in carrying on -circulation. - -Let the specie of a country, therefore, be augmented or diminished, in -ever so great a proportion, commodities will still rise and fall -according to the principles of demand and competition, and these will -constantly depend upon the inclinations of those who have _property_ or -any kind of _equivalent_ whatsoever to give; but never upon the quantity -of _coin_ they are possessed of. - -Let the quantity of the coin be ever so much increased, it is the desire -of spending it alone, which will raise prices. Let it be diminished ever -so low, while there is real property of any denomination in the country, -and a competition to consume in those who possess it, prices will be -high, by the means of barter, symbolical money, mutual prestations, and -a thousand other inventions. Let me give an example. - -Suppose a country where prices are determined, and where the specie is -sufficient for the circulation: is it not plain, that if this country -has a communication with other nations, there must be a proportion -between the prices of many kinds of merchandize, there and elsewhere, -and that the sudden augmentation or diminution of the specie, supposing -it could _of itself_ operate the effects of raising or sinking prices, -would be restrained in its operation by foreign competition? But let us -suppose it cut off from every communication whatsoever, which seems the -only case, where this theory can operate with any appearance of -justness, will any body pretend, that the frugal or extravagant turn of -the inhabitants, will have no influence upon prices, and will it be -asserted, that no variation in the spirit of a people, as to frugality -and dissipation, can take place, except upon a variation in the quantity -of their gold and silver? - -It may be answered, that as to articles of superfluity, no doubt the -genius of a people may influence prices, in combination with the -quantity of the specie; but that in articles of indispensible necessity, -they must constantly remain in proportion to the mass of riches. This I -cannot by any means admit to be just. Let me take the example of grain, -which is the most familiar. Is it not plain, from what we have said -above, that the proportion of wealth, found in the hands of the lowest -class of the people, constantly regulates the price of it; consequently, -let the rich be ever so wealthy, the price of subsistence can never rise -above the faculties of the poor. And is it not also plain, that those of -the lowest class of the people, _who purchase subsistence_, must buy it -with the returns they receive from the rich for their industry? Now if -the quantity of the wealth of the latter, does not regulate their demand -for the service of the former, must it not follow, that the price of -grain, as well as of every other thing offered to sale, must depend upon -the degree of competition among the rich for the labour of the poor, -that is, upon the demand for industry, and not on the quantity of wealth -in the country? - -No body ever denied, that the extraordinary demand for a commodity had -the effect of raising the price of it: and certainly no body will deny, -that the demand for a particular commodity may be greater at one time -than at another, though the same quantity of that commodity be found at -both times in the country; and the same quantity of specie likewise not -only in the country, but also in circulation. - -I acknowledge that in a country where there is much coin, and where -credit is little known, a high and extraordinary demand for an article -of superfluity, may raise the price more than in another where the coin -is more scarce; because on certain occasions, the price of a thing has -no other bounds than the extent of the faculties of the buyer. In like -manner, in other countries where there is almost no coin, nor credit, it -may be impossible for the highest demand to raise the price of such -things even to the common standard established in those where there is -great wealth. But these instances appear to be too particular to serve -for the foundation of a general rule, with respect to the state of -prices in the present situation of the nations of Europe, which, less or -more, are all in communication with one another. - -I cannot here omit taking notice of two very remarkable circumstances -which we learn from undoubted historical authority, which seem to -contradict one another, and to throw a great obscurity upon the -principles I have been endeavouring to explain. I shall therefore -introduce them by way of illustration, and when they are examined, I -hope they will confirm my doctrine. - -The first is, that in Scotland, formerly, when coin and credit were -certainly very rare, the price of eight pounds weight of oat meal, which -is now commonly sold at eight pence sterling, was then valued at no more -than two thirds of one penny: and that a labouring man used to receive -one penny and one third of a penny sterling for his week’s subsistence; -that is to say, the value of sixteen pounds of oatmeal, which to this -day is the regulated quantity given for that purpose. - -There is a very curious confirmation of the authenticity of this -computation, in an hospital at old Aberdeen; where in former times, some -proprietors of lands had settled a certain quantity of oat meal in -favours of the poor of the hospital, with a liberty to the hospital to -accept the meal in kind, or the conversion at two thirds of a penny for -every eight pounds weight. They imprudently chose the last, and to this -very day they are paid according to this standard. Now it is certainly -impossible that any degree of plenty whatsoever, or any failing of -demand, could at present reduce the price of that commodity so very low; -consequently, it may be said that it is the augmentation of wealth, not -that of demand which raises prices. - -The second fact we learn from antiquity, that at the time when Greece -and Rome abounded in wealth, when every rarity, and the work of the -choicest artists was carried to an excessive price, an ox was bought for -a mere trifle, and grain was cheaper perhaps than ever it was in -Scotland. - -If the application of our principles to the circumstances of those -times, produce a solution of these apparent inconsistencies; and if we -thereby can discover that the low prices of grain, both in Scotland, -where there was little money, and at Rome where there was a great deal, -was entirely owing to the little demand for articles of subsistence; -will it not follow, that our principle is just, and that the other, -notwithstanding of the ingenuity of the thought, must fail in exactness; -since it will appear, that low prices may be equally compatible with -wealth, and with poverty. - -Now as to Scotland in former times, as in all countries where there is -little industry; where the inhabitants are mostly fed directly from the -earth, without any alienation of her fruits taking place; where -agriculture is exercised purely as a method of subsisting; where rents -are low, and where, consequently, the free hands, who live upon them for -the price of their industry, must be few; the demand for grain in the -public markets must be very small; consequently, prices will be very -low, whether there be little, or whether there be much money in the -country. The reason is plain. The demand is proportioned here, not to -the number of those who consume, but of those who buy: now those who -consume, are all the inhabitants, but those who buy, are only the few -industrious who are free, and who gain an independent livelihood by -their own labour and ingenuity: now the price of their week’s -subsistence was one penny one third, consequently the subsistence they -bought could not rise above this standard. - -Next as to the state of Greece and Rome, where slavery was established. -Those who were fed by the labour of their own slaves, by those of the -state, or by the grain gratuitously distributed to the people, had no -occasion to go to market; consequently, they did not enter into -competition with the buyers. Farther, the simplicity of manners, and the -few manufactures then known, made wants in general less extensive; -consequently, the number of the industrious free was small, and _they_ -were the only persons who _could_ have occasion to purchase food and -necessaries; consequently, the competition of the buyers must have been -small in proportion, and prices low. - -Add to this, the reflections which naturally present themselves upon -examining the nature of providing the markets. These were supplied -partly from the surplus produced upon the lands of the great men, -laboured by slaves; who being fed from the lands, the surplus cost in a -manner nothing to the proprietors; and as the number of those who had -occasion to buy, were very few, this surplus was sold cheap. Besides, -the grain distributed to the people gratis, must necessarily have kept -down the market, as a part of it would naturally, sometimes, be found -superfluous to those who received it; and consequently, come to be sold -in competition with that raised at private expence. - -But when a fine mullet was brought to market, or when an artist appeared -with a curious piece of work, the case was very different. There was -plenty of money in the country, in the hands of the rich, who all -appeared in competition for the preference; consequently, prices rose to -an extravagant height. The luxury of those times, though excessive, was -confined to a few, and as money, in general, circulated but slowly -through the hands of the multitude, it was constantly stagnating in -those of the rich, who found no measure, but their own caprice, in -regulating the prices of what they wished to possess, and had money to -purchase. - -From what has been said, it appears, that the riches of a country has no -determined influence upon prices; although, I allow, they may -accidentally affect them: and if we depart from the principles above -laid down, to wit, that prices are regulated by the complicated -operation of demand and competition, in order, to follow the other, we -must add a restriction (which I observe Mr. Hume has attended to on one -occasion, although he has lost sight of it on several others) to wit, -_that the price of every commodity is in proportion to the sum of money -circulating in the market for that commodity_; which is _almost_ my -proposition in other words: for the money to be employed in the purchase -of any commodity, is just the measure of the demand. But even here, the -money in the market _destined_ only for the purchase of a particular -commodity, does not regulate the price of it. Nothing but the finishing -of the transaction, that is, the convention between the buyer and -seller, can determine the price, and this must depend upon inclination, -not weight of money, as an example will make plain. - -I shall suppose grain to have been at forty shillings _per_ quarter, in -a country market, for several months together, where the ordinary demand -for the current consumption is twenty quarters every market day. If at -any time an extraordinary demand should happen, which may exceed all -that is to be found in the market, there will be a competition among the -buyers, which will have the effect of raising the market. Now, according -to the doctrine of our learned authors, it may be said, that the corn -rises in proportion to the quantity of the specie which is in the -market, and that it is because of this increase of specie, that the -grain rises in its price. I answer, first, allowing this to be true, can -it be said, that a particular temporary, or perhaps accidental demand -for a few quarters of corn, more than usual, implies any augmentation of -the quantity of money in the country, or indeed the smallest variation -either upon the total consumption, or quantity of grain contained in it? -For if the demand has risen in one market, it must probably have -diminished in another, as the same inhabitants cannot consume in two -places. This I think every person must be convinced of, without farther -illustration. But I say farther, that prices will not rise in proportion -to the money in the market; but in proportion to the desire of acquiring -grain in those who have that money. - -Suppose the whole quantity of grain in the market to be thirty quarters; -if there be no demand for more, these will be sold at forty shillings, -as the twenty quarters would have been. But suppose the demand to be for -sixty quarters, and that there is a hundred and twenty pounds sterling -ready to be employed for corn, does it follow, that grain will rise to -four pounds a quarter, because the money in the market bears this -proportion to the quantity of grain? Certainly not. - -We must therefore, I think, adopt the other principle, and follow the -proportions of demand and competition; and then we shall find, that if -the sellers want to raise their price up to the proportion of the -specie, all demand will cease, as effectually as if it had never been -made; and the sellers will afterwards be obliged to accept of such a -moderate augmentation as shall be in proportion _to the urgency of the -demand_, but never in proportion _to the money_ ready to be employed. - -The circulation of every country, as we have shewn above, must ever be -_in proportion to the industry of the inhabitants, producing the -commodities which come to market_: whatever part of these commodities is -consumed by the very people who produce them, enters not into -circulation, nor does it in anywise affect prices. If the coin of a -country, therefore, falls below the _proportion_[M] of the produce of -industry _offered to sale_, industry itself will come to a stop; or -inventions, such as symbolical money, will be fallen upon to provide an -equivalent for it. But if the specie be found above the proportion of -the industry, it will have no effect in raising prices, nor will it -enter into circulation: it will be hoarded up in treasures, where it -must wait not only the call of a desire in the proprietors to consume, -but of the industrious to satisfy this call. - -Footnote M: - - Let it be observed, that _proportion_, here, does not mean _value_. - -We may therefore conclude, in consequence of the principles we have laid -down, that whatever be the quantity of money in any nation, in -correspondence with the rest of the world, there never can remain, _in -circulation_, but a quantity nearly proportional to the consumption of -the rich, and to the labour and industry of the poor inhabitants. The -value of each particular species of which consumption is determined by a -complication of circumstances at home and abroad; consequently, the -proportion is not determined by the _quantity_ of money actually in the -country. - -If the contrary is maintained, and if it be affirmed that the proportion -between specie and manufactures is reciprocal and determined, then I am -authorised to draw this conclusion, to wit: That if the _greatest_ -produce of industry _must_ be sold for _what specie_ is found in the -country, _let the sum be ever so small_, so in like manner, the -_smallest_ produce of industry _must_ be sold for _all the specie_ found -in the country, _let the sum be ever so great_. Consequently, in the -first case, we must suppose, that the industrious will never seek for a -better price from abroad; and in the second, that the monied people -_must_ spend all they have in supplying their most moderate wants, and -never seek for cheaper merchandize than what they can find at home. -Consequently, there can be no foreign trade, nor can there ever be any -hoarding. - -I shall now conclude my chapter, with a few observations upon the three -propositions as they stand in their order. - -PROP. 1. Prices are in proportion to the plenty of money. And thus the -augmenting even of fictitious wealth, such as paper, affects the state -of prices, according to its quantity. - -From this Mr. Hume disapproves of the introduction of paper money, when -specie is wanting, and says, that if nothing were allowed to circulate -but gold and silver, the quantity being less, prices would be lower. - -This is neither more or less, in my humble opinion, than a project to -destroy credit, with a view to support trade and industry. Because it -would effectually prevent any person from making a consumption, except -at the time he happened to be provided with ready money. Does the paper -money in England, keep up the prices of grain at present, January 1759? -And will not every article of necessaries fall, in a short time, as low -in that country as in any other in Europe, if the same measures continue -to be followed? - -Were all paper money in that kingdom proscribed at once, no doubt the -prices of many things would fall very considerably; but such a fall -would neither be universal or equable. The reason of this fall would not -be, because the specie would become proportionally divided among all the -inhabitants, according to the value of their property; nor because of -the small quantity of it, since prices abroad would still regulate many -at home: but because of the sudden revolution, and the violent overturn -thereby produced on the balance of work and demand. The scale of the -first would preponderate to such a degree, that those classes of the -industrious, who work for daily subsistence in furnishing superfluities, -would enter into so strong a competition with one another, that their -work would fall to nothing, while subsistence would remain at the price -of exportation. If it be asked what could occasion this difference. I -answer, because the workmen who supply superfluities, adapted to the -state of their nation, would find no more demand for them, from the want -of credit, or of a circulating fund to buy with, and strangers would not -profit of the fall in the price of a superfluity not adapted to their -own taste; but they would very willingly become purchasers of every -bushel of grain become superfluous, by starving so many of the -inhabitants; and this would keep the price of subsistence upon a pretty -even level with that of other countries. - -But if we suppose all communication cut off with strangers, would this -proportion between money and prices then hold true? By no means. Here is -the reason: there are many ways of alienating goods or natural produce, -without the assistance of specie. Immense quantities of both may be -consumed by barter, or in lieu of service, where money is never heard -of: now all this portion alienated, enters into the mass of what is -called produce and manufactures which come to market; but can have no -influence upon the specie, nor can specie have any upon it, since the -money remains inactive during those operations. - -Another reason is, that there is no such thing as preserving specie in -an equal repartition, so as to serve the occasions of every body in -proportion to their worth. The reason is manifest: money, like every -other thing, will come into the hands of those who give the greatest -value for it, and when the quantity of it is small in any country, where -nothing can be procured without it, such proprietors of lands as have -the greatest desire to consume, will purchase the specie at a higher -interest, or with more of their lands than others. - -This alone is sufficient to prove that the repartition of specie can -never be in proportion to property; and this also destroys the -supposition of prices rising and falling, according to the proportion of -it, even in a country cut off from every foreign communication. Here is -the proof: any individual who has, by mortgaging his lands, got together -a large proportion of the specie of his country, will raise prices in -his neighbourhood, by making an extraordinary demand for work; and the -rest of the same country, drained of their circulating value, must -diminish their demand; consequently, prices will fall elsewhere. I now -come to the second proposition. - -The coin and current money of a country, is the _representation_ of all -its labour and commodities; so that in proportion as there is more or -less of this _representation_, a greater or less quantity of it will go -for the same quantity of the thing represented. - -To this _representation_ I cannot agree, and I apprehend it to be the -source of error. A proper equivalent for labour and manufactures, may, -in one sense, be called a _representation_; but there is no necessity -for this equivalent to consist in coin. Are not meat and clothes an -equivalent for personal service? Is not a free house and a bit of land, -a very good equivalent for all the manufactures a country weaver can -work up for me who am his landlord? If there were not one penny of coin -in a country, would it follow, that there could be no alienation, or -that every thing might there be got for nothing? - -Coin has an intrinsic value; and when it comes into a country, it adds -to the value of the country, as if a portion of territory were added to -it: but it has no title to represent any thing vendible, by preference, -or to be considered as the only equivalent for all things alienable. It -is made a common price, on no other account than because of its rarity, -its solidity, its being of a nature to circulate, and to suffer a -correct division without end, and to carry its value along with it, -which is a proper equivalent for every thing; and at the same time it is -by its nature little liable to vary. - -Were, indeed, a statesman to perform the operation of circulation and -commerce, by calling in, from time to time, all the proprietors of -specie in one body, and all those of alienable commodities, workmen, &c. -in another; and were he, after informing himself of the respective -quantities of each, to establish a general tariff of prices, according -to our author’s rule; this idea of _representation_ might easily be -admitted; because the parcels of manufactures would then seem to be -adapted to the pieces of the specie, as the rations of forage for the -horses of an army are made larger or smaller, according as the magazines -are well or ill provided at the time: but has this any resemblance to -the operations of commerce? - -The idea of coin being the _representation_ of all the industry and -manufactures of a country, is pretty; and has been invented for the sake -of making a general rule for operating an easy distribution of things -extremely complex in their nature. From this comes error. We substitute -a complex term, sometimes in one sense, and sometimes in another, and we -draw conclusions as if it expressed a fixed and determined idea. - -If in algebra, _x_, _y_, _z_, &c. ever stood for more than a single -idea, the science would become useless; but as they never represent but -the very same notion, they never change their nature through all manner -of transpositions. - -It is not the same of terms in any other science, as abundantly appears -from the question now before us: coin is called a _representation_, -because it is an equivalent; and because it is a _representation_, it -must bear an exact proportion to the thing represented. And since in -some particular examples, this representation _appears_ to hold; -therefore the rule is made general, although circumstances may be -different. If, for example, a merchant, or a private person, has upon -hand a thousand pounds worth of grain, no doubt that the thousandth part -of the merchandize is worth the thousandth part of the sum; because both -are determined in their quantity and quality: but the parcels of this -corn, though exactly proportioned to the price of the whole, do not draw -their value from this proportion, but from the total value of the whole -mass; which is determined from the complicated operations of demand and -competition, as has been said, and not from the specie of the country, -which can bear no proportion either to the quantity or quality of the -grain. - -There may be vast quantities of coin in a country of little industry; -and, _vice versa_, coin is constantly an _equivalent_, but never a -_representation_, more than any other equivalent which may be contrived. -Were the doctrine of this second proposition true, every commodity in a -country should be sold like a parcel of the grain in the foregoing -example, by the rule of three; as the property of all the labour and -manufactures of the country is to the part I intend to alienate, so is -all the gold and silver in the country to the part I am entitled to -receive. This way of regulating prices may be very ingenious, but it is -not very common. I now proceed to the third and last proposition. - -Increase the commodities, they become cheaper: increase the money, they -rise in their value. - -This proposition is much too general: the first part of it is commonly -true, the last part is more commonly false. - -What can increase commodities, but a demand for them? If the demand be -equal to the augmentation, there will be no alteration in the price. - -Let extraordinary plenty increase subsistence, it will naturally fall in -the price; but it may be hoarded up, and made to rise in spite of the -plenty; it may be demanded from abroad; this also will make it rise. - -Let the production of superfluities, not exportable, be produced by -workmen whose branch is overstocked, prices will undoubtedly fall. - -The same observations are true of a diminution in the quantity of -commodities. If this diminishes by degrees, from a diminution of demand, -the price of them will not rise. - -If the quantity of subsistence falls below the necessary consumption of -the inhabitants, prices will undoubtedly rise. - -If the articles of superfluity are diminished, prices will only rise in -proportion to the eagerness to buy, that is, to the competition, not to -the deficiency. On the other hand, as to coin or money, - -Increase the money, nothing can be concluded as to prices, because it is -not certain, that people will increase their expences in proportion to -their wealth; and although they should, the moment their additional -demand has the effect of producing a sufficient supply, prices will -return to the old standard. - -But diminish the quantity of specie _employed in circulation_, you both -retard this, and hurt the industrious; because we suppose the former -quantity exactly sufficient to preserve both in the just proportion to -the desires and wants of the inhabitants. - -These are but a few of the numberless modifications necessary to be -applied to this general rule; and I hope what I have said, will justify -the observation I have made on the whole doctrine; to wit, that it is -much more specious than solid, in every one of its three branches. - -Let me just propose one question more upon this subject, and then I -shall conclude. - -Suppose the specie of Europe to continue increasing in quantity every -year, until it amounts to ten times the present quantity, would prices -rise in proportion? - -I answer, that such an augmentation might happen, without the smallest -alteration upon prices, or that it might occasion a very great one, -according to circumstances. If industry increases to ten times what it -is at present, that is to say, were the produce of it increased to ten -times its present value, according to the actual standard of prices, the -value of every manufacture and produce might remain without alteration. -This supposition is possible; because no man can tell to what extent -demand may carry industry. If, on the other hand, the scale of demand -could be supposed to preponderate, so as to draw all the wealth into -circulation, without having the effect of augmenting the supply (which I -take to be impossible) then prices would rise to ten times the present -standard, at least in many articles. - -This solution is entirely consistent both with Mr. Hume’s principle and -mine; because nothing is so easy in an hypothesis, as to establish -proportions between things, which in themselves are beyond all the -powers of computation. - ------------------------------------------------------------------------- - - - - - CHAP. XXIX. - _Circulation with foreign Nations, the same thing as the Balance of - Trade._ - - -We have endeavoured to shew in a former chapter, how the circulation of -money, given in exchange for consumable commodities, produces a -vibration in the balance of domestic wealth: we are now to apply the -same principles to the circulation of foreign trade; in order to find -out, if there can really be such a thing as a balance upon it, which may -enrich one country, and impoverish another. - -It has been said, that when money is given for a consumable commodity, -the person who gets it acquires a balance in his favour, so soon as he -with whom he has exchanged, has begun to consume. - -That if two consumable commodities are exchanged, the balance comes to a -level, when both are consumed. That it is only the wealth which is found -in circulation, which can change its balance, and the remainder must be -found locked up, made into plate, or employed in foreign trade. And it -has been observed, that the quantity of money found in circulation, is -ever in proportion to the sale of the produce of industry and -manufactures; and that when the quantity of metals is not sufficient to -carry on a circulation, proportioned to the demands of those who have -any real equivalent to give, that symbolical money may be made to fill -up the void, when the interest of the state comes to require it. - -We have also laid it down as a kind of general rule, that while luxury -only tends to keep up demand to the reasonable proportion of power and -inclination in the industrious part of a people to supply it, that then -it is advantageous to a nation; and that so soon as it begins to make -the scale of home-demand preponderate, by forming a competition among -the natives, to consume what strangers seek for, that then it is -hurtful, and has an evident tendency to root out foreign trade. These -principles are all analogous to one another, and should be retained -while we examine the question before us. - -I must still add, that the fluctuation of the balance of wealth is -constantly inclining in favour of the industrious, and against the idle -consumer. This however admits of a restriction, viz. The industrious -must be supposed to be frugal; and the idle, extravagant. For if the -industrious man consumes the produce of his industry, he will only have -laboured to increase his consumption, not his wealth: and if the idle -person, by his frugality, keeps within the bounds of his yearly income, -he will thereby repair every disadvantage incurred by his sloth, the -balance then will stand even between them; the industry in one scale, -and the fund already provided in the other, will keep both parties on a -level as before. - -In order, therefore, to make the balance of domestic wealth turn in -favour of a poor man, he must be both industrious and frugal. - -Now let us apply these principles to a whole nation, considered as an -individual in the great society of mankind. A private person who -conducts his affairs with prudence, must either be in a way of growing -richer by his industry, or of spending his income with oeconomy and -discretion: so I must suppose a nation which is well governed, either to -be growing rich by foreign trade, or at least in a state of not becoming -poorer by it. - -It is the duty of every statesman to watch over the conduct of those who -hold the foreign correspondence, as it is the duty of the master of a -family to watch over those he sends to market. - -I find it is the opinion of the learned Mr. Hume, that there is no such -thing as a balance of trade, that money over all the world is like a -fluid, which must ever be upon a level, and that so soon as in any -nation that level is destroyed by any accident, while the nation -preserves the number of its inhabitants, and its industry, the wealth -must return to a level as before. - -To prove this, he supposes four fifths of all the money in Great Britain -annihilated in one night, the consequence of which he imagines would be, -that all labour and commodities would sink in their price, and that -foreign markets would be thereby entirely supplied by that industrious -people, who would immediately begin to draw back such a proportion of -wealth, as would put them again upon a level with their neighbours. - -This reasoning is consistent with the principles we have examined, and -humbly rejected in the preceding chapter; both stand upon the same -foundation, and lead to a chain of consequences totally different from -the whole plan of this inquiry. - -My intention is not so much to refute the opinions of others, as briefly -to pass them in review. General propositions, such as those we have been -treating of, are only true or false, according as they are understood to -be accompanied with certain restrictions, applications, and limitations: -I shall therefore say nothing as to the proposition itself, but only -examine how far the example he has taken of the sudden annihilation of a -great proportion of a nation’s wealth, can naturally be followed by the -consequences he supposes. - -For this purpose, let me suggest another consequence (different from -that of the author, and flowing from the doctrine we have established) -which possibly might happen, upon the annihilation of four fifths of all -the money in Great Britain. I shall take no notice of the effects which -so sudden a revolution might occasion; these have not been attended to -by the author, and therefore I shall consider them as out of the -question. I suppose the event to have happened, prices to have been -reduced, and every immediate inconvenience to have been prevented. My -only inquiry shall be directed towards the unavoidable consequences of -such a revolution, as to foreign trade, as to drawing back the money -annihilated, and as to the preserving the same number of inhabitants, -and the same degree of industry as before. If I can shew, that the event -alone of annihilating the specie, and reducing prices in proportion, -(which I shall allow to be the consequence of it) will have the effect -of annihilating both industry and the industrious, it cannot afterwards -be insisted on, that the revolution can have the effect of drawing back -a proportional part of the general wealth of Europe: because the -preservation of the industrious is considered as the requisite for this -purpose. - -Here then is the consequence, which, in my humble opinion, would very -probably happen upon so extraordinary an emergency; and I flatter myself -that my reader has already anticipated my decision. - -The inhabitants of Great Britain, who, upon such an occasion, would be -found in possession of all the exportable necessaries of life, and of -many other kinds of goods demanded in foreign markets, instead of -selling them to their poor countrymen, for a price proportioned to our -author’s tariff, and to the diminution of the specie, which he takes to -be the representation of them, would export them to France, to Holland, -or to any other country where they could get the best price, and the -inhabitants of Britain would starve. - -If it be replied, that the exportation would not be allowed. I answer, -that such a prohibition would be highly seasonable; but quite contrary -to the principle of laying trade open, and impossible to be effectual, -as that author justly observes, when he says, “Can one imagine, that all -commodities could be sold in France, for a tenth of the price they would -yield on the other side of the Pyrenees, without finding their way -thither, and drawing from that immense treasure?” Suppose this phrase to -run thus. Can any one imagine, that provisions could be sold in Britain, -for a fourth part of the price they would yield on the other side of the -water, without finding their way thither, and drawing from that immense -treasure? This is entirely consistent with our principles, and ruins the -whole of Mr. Hume’s former supposition: because the exportation of them -would annihilate the inhabitants. - -From this I conclude, that a nation, though industrious and populous, -may reduce itself to poverty in the midst of wealthy neighbours, as a -private person, though rich, may reduce himself to want, in the midst of -the amusements and luxury of London or of Paris. And that both the one -and the other, by following a different conduct, may amass great sums of -wealth, far above the proportion of it among their neighbours. - -This is not a matter of long discussion. It is not by the importation of -foreign commodities, and by the exportation of gold and silver, that a -nation becomes poor; it is by consuming those commodities when imported. -The moment the consumption begins, the balance turns; consequently, it -is evidently against the principles which we now examine, either to sell -at home, or destroy confiscated goods. The only way of repairing the -damage done by such frauds, is to export the merchandize, and by selling -them cheap in other countries, to hurt the trade of the country which -first had furnished them. From this also we may conclude, that those -nations which trade to India, by sending out gold and silver, for a -return in superfluities of the most consumable nature, the consumption -of which they prohibit at home, do not in effect spend their own specie, -but that of their neighbours who purchase the returns of it for their -own consumption. Consequently, a nation may become immensely rich by the -constant exportation of her specie, and importation of all sorts of -consumable commodities. But she would do well to beware of this trade, -when her inhabitants have taken a luxurious turn, lest she should come -to resemble the drunkard who commenced wine merchant, in order to make -excellent chear in wine with all his friends who came to see him; or the -millener, who took it into her head to wear the fine laces she used to -make up for her customers. - -If a rich nation, where luxury is carried to the highest pitch, where a -desire of gain serves as a spur to industry, where all the poor are at -work, in order to turn the balance of domestic wealth in their favour, -if such a nation, I say, is found to consume not only the whole work of -the inhabitants, but even that of other countries, it must have a -balance of trade against it, equivalent to the foreign consumption; and -this must be paid for in specie, or in an annual interest, to the -diminution of the former capital. Let this trade continue long, they -will not only come at the end of their metals, but they may even succeed -in exporting their lands. This last appears a paradox, and yet it is no -uncommon thing. The Corsicans have exported, that is sold, the best part -of their island to Genoa; and now, after having spent the price in -wearing damask and velvet, they want to bring it back, by confiscating -the property of the Genoese, who have both paid for the island, and -drawn back the price of it by the balance of their trade against these -islanders. It were to be wished that Corsica alone afforded an example -of this kind. - -Is it not, therefore, the duty of a statesman to prevent the consumption -of foreign produce? If tapestry or other elegant furniture, such as is -seen in a certain great capital in Europe, were allowed to be imported -into a neighbouring nation, who doubts but this article would carry -money out of that nation? - -It may be answered, that as much elegance of another kind may be sent in -return. True; and it would be very lucky if this could be the case; but -then you must suppose an equality of elegance in both countries, and -farther, you must suppose a reciprocal taste for the respective species -of elegance. Now the taste of one country may, indeed, be common to -both; but it may happen that the taste of the one may not be that of the -other, though nothing inferior, perhaps, in the opinion of a third -party. And the difference may proceed from this; that the young people -of one country travel into the other, where the inhabitants stay at -home: a circumstance which would prove very prejudicial to the country -of the travellers, if a wise statesman did not, by seasonable -prohibitions upon certain articles of foreign consumption, prevent the -bad consequences of adopting a taste for what his subjects cannot -produce. - -This furnishes a hint, that it might not be a bad maxim in a great -monarchy, to have houses built in the capital for every foreign -minister, where the general distribution of the apartments of each might -be, as much as possible, analogous to the taste of the country for whose -minister it is calculated: but as to the furniture, to have it made of -the most elegant domestic manufactures easily exportable, nicely adapted -also to the uses and fashions of every foreign country. Such a -regulation could never fail of being highly acceptable, as it would -prove a great saving to foreign ministers, and would insensibly give -them a taste for the manufactures and luxury of the country they reside -in. On the other hand, I would be so far from expecting a return of this -civility, that I would recommend a set of furniture, as a gratification, -to every minister sent abroad, who should regularly sell it off upon the -expiration of his commission. Such an expence would not cost one penny -to the nation, and would be a means of captivating unwary strangers, who -might be thereby made to pay dearly for such marks of politeness and -civility. I return. - -Without being expert in the computation of exports and imports, or very -accurate in combining the different courses of exchange between the -different cities of Europe, a statesman may lay it down as a maxim, that -whatever foreign commodity, of whatsoever kind it be, is found to be -consumed within the nation he governs, so far the balance of trade is -against her; and that so far as any commodity produced either by the -soil, or labour of the inhabitants, is consumed by foreigners, so far -the balance is for her. - -A nation may in some measure be compared to a country gentleman, who -lives upon his land. This I suppose to be his all. From it he draws -directly his nourishment, perhaps his clothes are worked up in his -family. If he be so very frugal as never to go to market for any thing, -any spare produce which he can sell, is clear money in his purse. If he -indulges now and then in a bottle of wine, which his farm does not -produce, he must go to market with his purse in his hand; and so soon as -his bottle is out, I think he is effectually so much poorer than he was -before. If he goes on, and increases his consumption of such things as -he is obliged to buy, he will run out the money he had in his purse, and -be reduced to the simple production of his farm. If then this country -gentleman be poorer, certainly some body is richer; and as it is no body -in his family, it must be some of his neighbours. - -Just so a nation which has no occasion to have recourse to foreign -markets, in order to supply her own consumption, must certainly grow -rich in proportion to her exportation. - -These riches again will not circulate at home, in proportion to the -domestic consumption of natural produce and manufactures, but in -proportion to the alienation of them for money: the surpluswealth will -stagnate in one way or other, in the hands of the money gatherers, who -are the small consumers. - -While there is found a sufficient quantity of money for carrying on -reciprocal alienations; those money gatherers will not be able to employ -their stagnated wealth within the nation; but so soon as this gathering -has the effect of diminishing the specie, below the proportion found -necessary to carry on the circulation, it will begin to be lent out, and -so return to circulate for a time, until by the operation of the same -causes it will fall back into its former repositories. - -Should it be here objected, that upon the augmentation of a nation’s -riches, no money can stagnate; because _prices rising in proportion to -the augmentation of them_, all the additional wealth must be thrown into -circulation: surely both reason and experience must point out the -weakness of such an objection. - -While a favourable balance, therefore, is preserved upon foreign trade, -a nation grows richer daily; and still prices remain regulated as -before, by the complicated operations of demand and competition; and -when one nation is grown richer, others must be growing poorer: this is -an example of a favourable balance of trade. - -When this superfluity of riches is only profited of by the luxurious -individuals, instead of being turned to profit by the state itself, with -a view to secure the advantages thereby acquired, then the balance takes -a contrary turn: this is the case whenever foreign importations for -consumption, are either permitted as a gratification to the luxurious -desires of the wealthy, or because of the rise in the price of goods at -home, in consequence of domestic competition. If it be permitted purely -in favour of the first, it marks a levity and want of attention unworthy -of a statesman: if on account of the second, it shews either an -ignorance of the real consequences of so temporary an expedient, or a -disregard for the welfare of the lower classes of the people. - -Every augmentation of prices at home, must be a necessary consequence of -many domestic circumstances, and must be removed by correcting them, as -has been, I think, made clear. But let it be supposed, that from the -augmentation of wealth _alone_, manufactures can no more produce work so -cheap as other nations; I think that both in humanity and prudence, a -people should submit to the inconvenience of paying dearer. In humanity, -because by the introduction of foreign manufactures, you starve those -very people, who by their labour have enriched you: in prudence, because -by opening your ports to such importation you deliberately throw away -that superiority of riches you have been at so much pains to acquire. - -I freely grant, that particular people do not regulate either their -expence or their schemes of getting money, with a view to promote the -public good. One who has a coat to buy, will be very glad to find a -piece of foreign manufacture at a cheap rate; another will wish to -smuggle a piece of goods on which there is a high duty. But the question -is, whether a statesman is to allow this foreign consumption? I think it -is much the same question, as if it were asked, whether the master of a -family should, in good oeconomy, allow his servants to invite their -friends to drink in his cellar, instead of carrying them to a public -house. - -But suppose it said, that “by laying trade open, you are sure that -wealth will naturally come to a balance, in all countries, and that all -fears of a wrong balance of trade are only the effect of a gloomy -imagination.” See Mr. Hume’s _Political Discourses_, Sect. v. - -Several answers may be made to this objection. The first, that it is in -order to prevent this kind of balance, that every nation gives -themselves disquiet: for by balance here, is understood an equality of -wealth; and it is rich nations only who are anxious, lest they should be -brought to such an equality. In the question here before us, it is the -loss of the superiority which is understood by a balance turning against -a nation. If, therefore, it be the interest of a nation, poor in respect -of its neighbours, to have trade laid open, that wealth may, like a -fluid, come to an equilibrium; I am sure it is the interest of a rich -nation, to cut off the communication of hurtful trade, by such -impediments as restrictions, duties, and prohibitions, upon importation; -that thereby, as by dykes, its wealth may be kept _above_ the level of -the surrounding element. - -Another answer is, that laying trade open would not have the effect -proposed; because it would destroy industry in some countries, at least, -if not every where. A manufacture must be very solidly established -indeed, not to suffer any prejudice by a permission to import the like -commodities from other countries. The very nature of luxury is such, -that it prompts people often to consume, from caprice and novelty, what -is really inferior to home-production. It may be answered, that this -argument cuts two ways: for if a nation from caprice consumes foreign -commodities, why may not other nations from caprice likewise, take off -those which are left on hand? This reasoning may appear good, in a -theory which does not take in every political consideration. But a poor -manufacturer who cannot find work, because the branch he works in is -supplied from abroad, cannot live till the caprice of foreigners makes -them demand his labour. If a certain number of inhabitants be employed -in a necessary branch of consumption, there must be a _certain_ demand -preserved for it; and whatever can render this precarious, will ruin the -undertaking, and those employed in it. - -A third answer is, that any nation who would open its ports to all -manner of foreign importation, without being assured of a reciprocal -permission from all its neighbours, would, I think, very soon be ruined; -and if this be true, it is a proof that a balance of trade is a possible -supposition, and that proper restrictions upon importation may turn to -the advantage of a state. - -In order to promote industry, a statesman must act, as well as permit -and protect. Could ever the woollen manufacture have been introduced -into France, from the consideration of the great advantage England had -drawn from it, if the King had not undertaken the support of it, by -granting many privileges to the undertakers, and by laying strict -prohibitions on all foreign cloths? Is there any other way of -establishing a new manufacture any where? - -Laying, therefore, trade quite open would have this effect, it would -destroy at first, at least, all the luxurious arts; consequently, it -would diminish consumption; consequently, diminish the quantity of -circulating cash; consequently, it would promote hoarding; and -consequently, would bring on poverty in all the _states_ of Europe. -Nothing, I imagine, but an universal monarchy, governed by the same -laws, and administred according to one plan well concerted, can be -compatible with an universally open trade. While there are different -states, there must be different interests; and when no one statesman is -found at the head of these interests, there can be no such thing as a -common good; and when there is no common good, every interest must be -considered separately. But as this scheme of laying trade quite open, is -not a thing likely to happen, we may save ourselves the trouble of -inquiring more particularly into what might be its consequences; it is -enough to observe, that they must, in their nature, be exceedingly -complex, and if we have mentioned some of them, it has only been to -apply principles, and shew how consequences _may_ follow one another: to -foretel what _must_ follow is exceedingly difficult, if not impossible. - -In discoursing of the balance of trade, I have hitherto considered it -only so far as the specie of a country is augmented by it. In the -subsequent book, when we shall have occasion to bring this subject once -more upon the carpet, I shall shew how a balance may be extremely -favourable without augmenting the mass of the precious metals; to wit, -by providing subsistence for an additional number of inhabitants; by -increasing the quantity of shipping, which is an article of wealth; by -constituting all other nations debtors to it; by the importation of many -durable commodities, which may be considered also as articles of wealth; -as a well furnished house, a well stored cellar, an ample wardrobe, and -a fine stable of horses, are articles which enhance the value of the -inheritance of a landed man. - -Then we shall have occasion to shew how industry heightens the permanent -value of a nation, as agriculture increases its annual produce. - ------------------------------------------------------------------------- - - - - - CHAP. XXX. - _Miscellaneous Questions and Observations relative to Trade and - Industry._ - - -It is now time to draw to a conclusion of this book. The subject of -trade and industry is inexhaustible, if considered in all its branches, -and traced through every consequence. My intention has been to inquire -into the original principles which influence general operations, and -which, less or more, enter into every combination. I have represented -trade in its infancy, manhood, and old age; and have endeavoured to -prescribe a general regimen of health for every period. It is sufficient -to be thoroughly master of the principles, to be able to apply them to -particular cases, providing every circumstance be exactly known. - -The intention of this chapter, is, to review some parts of our subject, -which I think have not received all the light necessary to be thrown -upon them, to suggest some remarkable differences between antient and -modern oeconomy, with regard to circulation and industry; and, in -general, to lay certain circumstances together, which may point out the -spirit of modern times, from which we are endeavouring to extract a set -of consistent principles. Every thing which points out relations is -useful; because we know nothing, but through this channel. Now certain -relations are too frequently taken for granted, and nothing is more -essential in political reasonings, than to point them out clearly, to -proceed by the shortest steps, and still to keep experience and matter -of fact before our eyes, when we draw a conclusion from a general -proposition. Let the conclusion appear ever so just, if, when compared -with experience, a disagreement appears, it is ten to one we have -overlooked some circumstance, which ought to have entred into the -combination. - -To illustrate this, let me cite a mistake of my own, which I purposely -left uncorrected, in the second chapter of the first book, where I very -confidently declare, that a statesman, who, upon certain occasions, -which seem favourable for raising great sums upon a people, increases -taxes only in proportion to the interest of the money borrowed, must be -shortsighted and regardless of futurity. This, I remember, appeared to -me at the time I wrote, so clear and evident, that I thought I ran no -risk in making it enter into a preliminary chapter. But when I came to -look a little more particularly into the matter, I found I had been -grosly mistaken; as I hope to shew evidently in its proper place. Had -every such mistake been treated with the same indulgence, I should have -been more employed in the correction of my own blunders, than in the -prosecution of my subject. People who reason with tolerable exactness on -such subjects, generally fall into mistakes, from the generality of -their propositions. These may commonly be true enough, within the -compass of the author’s combinations at the time, and yet may not be -true in every other case. From which I infer, that every one of my -readers, who can form combinations more extensive than mine, will find -sufficient matter for criticism in every page of this inquiry. So much -the better: it is by such criticisms and discussions, that particular -branches of knowledge are brought to the certainty of science. - -The more simple any plan of political oeconomy is, the more it is easy -to govern by general rules; the more complex it becomes, the more it is -necessary for a statesman to enter into combinations. But when general -rules have been long established, they gain such an authority over the -minds of a people, that any deviation from them appears like heresy in -religion: and how seldom does it happen, that a people is blessed with a -governor, who has both penetration to discover, art to persuade, and -power to execute a plan adapted to every combination of circumstances. - -No change can happen in a state, but what is advantageous to some class -or other, and when the public good requires that a stop should be put to -such advantages, numbers of discontented people will always be found. -Circumstances, therefore, ought to be well weighed before new plans of -administration are entred upon; and when once adopted, those who pretend -to criticise, must suppose themselves provided with superior talents and -better informations as to every circumstance, than the author of the -innovation. For this reason, there is little danger in censuring a -statesman’s opinion, when he delivers it; but a great deal in finding -fault with his conduct, when his motives are not known. - -In the former chapters, we have been treating of the nature and -consequences of circulation, the effects of augmentations and -diminutions of specie, and the doctrine of Mr. Hume concerning the -balance of trade. The perspicuity with which this author writes, renders -his ideas easy to conceive; and when people understand one another, most -disputes are soon at an end. - -In order, therefore, to throw a little more light upon the nature of the -balance of trade between nations, let me examine the following questions -while we have the subject of the last chapter fresh in our memory. - -QUEST. 1. Can any judgment be formed concerning the state of the balance -of trade of a nation, barely from the quantity of specie that is found -in it? - -I answer in the negative. A great proportion of all the specie of -Europe, may be found in a country against which the balance of trade has -stood regularly for many years. An inconsiderable proportion of it may -be found in another, which has had it as regularly in its favour for the -same time. - -The balance upon every article of trade, may be favourable to a nation -which squanders away more than the returns of it, upon foreign wars. - -The balance of every article of trade, may be against a country which -receives more than all the loss incurred, either from her mines, from -countries tributary to her, or who willingly furnish subsidies upon many -political considerations. - -Besides these varieties, there are still other combinations, relative to -the specie itself. The money found in a country, may either be said to -belong _absolutely_ to the country, when neither the state itself, or -the particular people of it, are in debt to foreigners; or only so _by -virtue of a loan_. Now, whether it is borrowed or not, the property of -it belongs to the country; but the difference consists in this, that -when it is borrowed, the acquisition of the metals adds nothing to the -national patrimony, that is to say, there is no acquisition of wealth -thereby made; but when it is gained by industry, the money adds to the -real value of the country, in consequence of the principles laid down in -the 26th chapter. - -May not a nation then, having very little gold and silver, open a -subscription for millions, at so much _per cent_? Will not strangers -lend to her; when her own subjects cannot? May she not yearly, by paying -away the interest of the money borrowed, and by a heavy balance of trade -against her, be constantly diminishing her specie, and yet by new -contracts, keep up, and even increase the mass of the circulating value, -to such a degree, as to be possessed of a greater proportion of specie -than any of her neighbours? Farther, - -Is it not certain, that all nations will endeavour to throw their ready -money, not necessary for their own circulation, into that country where -the interest of money is high with respect to their own, and where -consequently the value of property in land is low; since they may either -draw a high interest from it, or make the acquisition of solid property? -Forbidding therefore the acquisition of solid property to strangers, is, -in effect, a prohibition upon the gratuitous importation of specie. I -allow there may be examples of people who make such purchases, with a -view to draw the rents of the lands bought, out of the country; but -whatever be the intention at the time of purchase, such however is the -effect of an established fortune in a country, that, sooner or later, it -draws the proprietor to it; and when this does not happen, a subsequent -alienation commonly takes place. - -Were the purchase, therefore, of lands permitted universally, and were -it established, that property in land, to a certain value, should give a -right to naturalization, no doubt large sums would be brought into those -countries, where lands are found cheapest; and as no exportable -commodity is given in return, the specie of such countries might mark -the quantity of lands sold, as well as that of merchandize exported. For -want of a sufficient extension of these and many other combinations, -which it would be easy to contrive, Mr. Belloni, in his _Dissertation -upon Commerce_, Chap. I. Sect. 5. falls into several mistakes, when he -judges of the exportation of commodities of a particular country, by the -quantities of money found in it. - -_Essendo adunque da ciò venuto_ (says he) _che l’abondanza del danaro, -ovunque si ritrovi, significa l’abodanza stessa delle cose, delle quali -egli é misura: perciò diviziosi meritamente sono stati detti quegli -uomini, e ricco altersi quel regno, dove si ritrova gran copia di -danaro. Dal altro canto poi, se si considera lo stato di un regno, ed il -danaro, che è dentro di esso, tenendo sempre salda l’essenza della -moneta (che altro non sia, che misura di cose, e prezzo, che viene in -compenso di mercanzie) ovunque di essa vedrasi affluenza, ognuno ben -vede, doversi subito necessariamente arguire, un gran traffico di quel -dominio, con esito di merci, in uso degli esteri, e all’incontro ovunque -questa venga a mancare, doversene dedurre grande introito di merci, che -sieno subentrate nel luogo della moneta, e che l’abbiano fatta uscire._ - -These consequences are only just so far as money comes into, or goes out -of a country, as the price of merchandize exported or imported. But how -much money has not this author himself drawn into Rome from England, for -the exportation of nothing but the bills of travellers? - -On the other hand, may not a country, which is actually in possession of -great quantities of gold and silver, call in these metals, and -circulate, in their place, a symbolical money? May not a nation then, as -well as a private person, employ this specie in a profitable foreign -trade, and gain daily by it? May she not, after some time, withdraw her -stock, by calling in her debts? And may she not also call in her paper, -and remain with an additional acquisition of specie in her pocket? -Consequently, during the circulation of the paper, no judgment can be -formed as to the balance of her trade, by examining the state of her -specie; because I can suppose that at this time every shilling of it may -be in the hands of strangers. Consequently, the richest nation in Europe -may be the poorest in circulating specie. - -“The writings of Mr. Gee (says Mr. Hume, in his _Political Discourse -upon the Balance of Trade_) struck all the nation with a pannic fear, by -shewing from a long enumeration of particulars, that the balance -inclined so much against us, and for so considerable sums, that in the -space of five or six years, there would not remain one shilling in -England. But happily twenty years are elapsed since, we have supported a -long and expensive foreign war, and nevertheless, it is commonly -believed, that money is at present as plentiful in the kingdom as ever.” -I quote from the French translation. - -Mr. Gee was in the wrong to conclude, that the balance of trade would -have the effect of carrying off the coin: and Mr. Hume has been misled -by this mistake, to conclude, that Mr. Gee’s calculations were false. I -know nothing as to the matter of fact; nor whether Mr. Gee was a good or -a bad judge of the question he treated; but from what has been said, I -hope it appears, that the state of the coin in England, at the time Mr. -Hume wrote, was no proof on either side. - -To judge of the balance of trade is one thing; to judge of the wealth of -a nation as to specie is another. England may greatly increase her -specie by her trade, and greatly diminish it by her wars: perhaps this -may be the fact. She may also, at certain times, have a balance of trade -against her; and great sums laid out in foreign wars, may be the means -of making it return in her favour. Should that nation begin to pay off -her debts to strangers, in ready coin, might she not soon diminish, -perhaps exhaust, the specie she is now possessed of; yet surely none -ever became poorer by paying off their debts. Nothing is so easy as to -have specie, when one has solid property to pledge for it; and nothing -can be worse judged, than to purchase specie from strangers, at the -expence of paying an interest for it, when they can contrive a -circulating value in paper money, representing the solid value which -must have been pledged to strangers for the loan of their metals. - -But still it may be asked, how it happens, that notwithstanding of the -most unfavourable balance of trade, no nation is ever found to be -entirely drained of her specie; and since we have proved, that the -specie of a country may be diminished by a disadvantageous trade, what -are the principles which prevent the total dissipation of it? - -This is a very curious question, and opens a door to a multitude of new -ideas, which will furnish abundant matter of speculation, when we come -to treat more directly of credit. I shall here examine it in general, -only for the sake of applying the principles we have laid down. - -I. It may be said, that as common prudence prevents a private person -from spending to his last shilling; so the like prudence commonly -engages a people to put a stop to trade, before it has had time totally -to drain them. Although most people drink wine, there is no reason why -every body should be drunk. - -II. Nothing is so complicated as the balance of trade, considered among -many nations. The general wealth circulates from one to another, as the -money which the farmer gives the landlord circulates back to the farmer. -In the number of hands through which the money passes, some are of the -class of the luxurious, some of the frugal; the first represents those -nations who lose by the balance, the latter those who gain. But the most -industrious nations of all, and those who, considered abstractedly from -extraordinary accidents, appear in the way to swallow up the wealth of -the rest, are, by the means of such accidents, made liable to terrible -restitutions. How many millions, for example, has England restored to -the continent, in consequence of her wars and subsidies? She then lays a -foundation for many more years of favourable balance, and accordingly we -see it return to her, as the money which the state spends within the -nation, returns into the exchequer at the end of the year. - -III. It may be asked, how it happens that no nation has ever spent to -its last farthing, as many an individual has done? I answer, that I am -far from believing that this has never happened; nay, I believe there is -nothing more frequent or familiar than this very case, providing the -riches of a country be here supposed to mean no more than the specie -_absolutely_ belonging to herself, not borrowed from other nations. - -I have said above, that the acquisition of money by industry, increased -the real value of a country, as much as the addition of a portion of -territory: now what should hinder a people from spending their ready -money, and, at the same time, preserving their land? Because a young -gentleman, whose father has left him a fine estate in land, and ten -thousand pounds in ready money, has spent the ten thousand pounds, does -it follow, that he is without a shilling? Upon this view of the -question, it will, I believe, be granted, that Dr. Swift’s idea that all -the specie of Ireland would in a short time be exported, in consequence -of an unfavourable balance of trade, is very far from being chimerical, -and might be exactly true; although at this time there be six times more -in circulation than ever; just as a person who is running through his -fortune, has commonly more money in his hands than his father used to -have, when he was acquiring it. Let Ireland pay her debts to England, -and then count her specie. Let England pay her’s to all the world, and -then weigh her gold and silver. Suppose that on summing up the accounts, -there is not found one shilling in either country, is this any proof of -their being undone? By no means: _coin is one article of our wealth, but -never can be the measure of it_. - -I know little of the state of Ireland; but if it be true, that paper -money is increasing daily in that country, it is, I suppose, because the -specie is daily exported to England, as the returns of estates belonging -to people who reside there, and that the Irish, instead of buying it -back again for their own use in circulation, augment their paper, in -proportion to the progress of their industry; and only buy such -quantities of specie as are necessary for paying the balance of their -trade. Now by buying specie, I do not suppose, that they bring any over -to Ireland, in order to send it back to England; but that they send over -goods to the value, which the English merchants pay in specie, or in -English paper, to those who are creditors upon Ireland, for the value of -their rents, &c. - -Suppose then, for a farther illustration of some principles, that all -the lands of Ireland belonged to Englishmen residing in their own -country, and annually drawing from Ireland the income belonging to them, -what would the consequence be? As long as this portion of the produce of -lands, which goes for rent, (and which, as we have said, is the fund -provided for the subsistence of the free hands who purchase their own -necessaries) could be bought and consumed by the Irish themselves, that -is, in other words, while in Ireland there was a demand for this portion -of the fruits, it would be paid for, either in coin, to the diminution -of their specie, or in something which might be converted into money; -that is, by the produce of their industry, and thus, by the means of -trade, would come into the hands of the English proprietors, either in -specie, or in any other form they judged proper. - -That so soon as the demand for this portion of fruits came to fail, for -want of money, or industry, in Ireland to purchase it, what remained on -hand would be sent over to England in kind; or by the way of trade, be -made to circulate with other nations (in beef, butter, tallow, &c.) who -would give silver and gold for it, to the proprietors of the Irish -lands. By such a diminution of demand in the country, for the fruits of -the earth, the depopulation of Ireland would be implied; because they -who consumed them formerly, consume them no more; that is to say, they -either died, or left the country. - -To conclude, a great part of the value of a country is its produce and -manufactures; but it does not follow, as Mr. Belloni asserts, that these -should as necessarily draw a proportional sum of the gold and silver of -Europe into that country, as a shoal of small fishes draws water fowl, -or as charity draws the poor, or as beauty draws admiration. - -QUEST. 2. Can no rule be found to judge of the balance of trade from the -state of specie, or at least to perceive the effects of that balance in -augmenting or diminishing the mass of riches? - -Could it be supposed that specie never circulated between nations, but -in the way of trade, and in exchange for exportable commodities, this -would be a rule. - -In nations where the earth produces neither gold or silver, and where -these metals are imported as the returns of industry only, the balance -in their favour, from the introduction of specie, to this day, would be -measured by the quantity of it which they possess. Here Mr. Belloni’s -opinion is just. - -Farther, the consumption made by any nation for the same term of years, -is equal to the whole natural produce and labour of the inhabitants for -that time, _minus_ the quantity of such produce and labour, as is, or -has been equal in value to the actual national specie. - -On the other hand, in nations where gold and silver are produced by the -earth, the balance of trade against them, from the time these metals -became the object of trade, to this day, may be estimated by the -quantity of them which has been exported. - -And farther, the consumption made by such nations, for the same term of -years, is equal to the whole natural produce and labour of the -inhabitants for that time, _plus_ the quantity of such produce and -labour, as is, or has been equal to the quantity of these metals -exported. - -These positions are by much too general to be laid down as principles, -because trade is not concerned in every acquisition or alienation of -specie; but they may serve, in the mean time, to illustrate the doctrine -we have been considering, and even in many cases may be found pretty -exact. For example, - -If it be true, that in any nation of Europe, there be now just as much -silver and gold as there was ten years ago, and if that nation during -this period, has supported, without borrowing from strangers, an -expensive war which may have cost it, I suppose, five millions, it is -certain, that during this period, the home consumption must have been -the value of five millions less than the natural produce, labour, and -industry of the inhabitants; which sum of five millions must have come -from abroad, in return for a like value of the production, labour, &c. -remaining over and above their own consumption. - -In this supposition, the national wealth (the metals) remains as before, -the balance of it only is changed. How this change is performed, and -what are its consequences, may be discovered by an application of the -principles already laid down. - -QUEST. 3. What were the effects of riches before the introduction of -trade and industry? - -I never can sufficiently recommend to my readers to compare -circumstances, in the oeconomy of the antients, with that of modern -times; because I see a multitude of new doctrines laid down, which, I -think, never would have been broached, had such circumstances been -properly attended to. I have endeavoured to shew, that the price of -goods, but especially of articles of the first necessity, have little or -no connection with the quantities of specie in a country. The slightest -inspection into the state of circulation, in different ages, will -fortify our reasoning: but the general taste of dissipation which is -daily gaining ground, makes people now begin to imagine, that wealth and -circulation are synonimous terms; whereas nothing is more contrary both -to reason and matter of fact. A slight review of this matter, in -different ages, will set it in a clearer light than a more abstract -reasoning can. - -It is a question with me, whether the mines of Potosi and Brasil, have -produced more riches to Spain and Portugal, within these two hundred -years, than the treasures heaped up in Asia, Greece, and Egypt, after -the death of Alexander, furnished to the Romans, during the two hundred -years which followed the defeat of Perseus, and the conquest of -Macedonia. - -From the treasures mentioned by all the historians who have writ of the -conquest of those kingdoms by the Romans, I do not think I am far from -truth, when I compare the treasures of the frugal Greeks to the mines of -the new world. - -What effect, as to circulation, had the accumulation of these vast -treasures? Not any to accelerate it, surely: and no person, the least -conversant in antiquity, will pretend that the circulating specie in -those times, bore as great a proportion to their treasures, as what is -at present circulating among us, bears to the wealth of the most -oeconomising Prince in Europe. If any one doubt of this particular, let -him listen to Appian, who says, that the successors of Alexander, the -possessors of those immense riches, lived with the greatest frugality. -Those treasures were then, as I have said, a real addition to the value -of their kingdoms; but had not the smallest influence upon prices. In -those days of small circulation, the prices of every thing must have -been vastly low, not from the great abundance of them, but because of -the little demand; and as a proof of this, I cite the example of a -country, which, within the space of fifty years, possessed in _specie_ -at one time, considerably beyond the worth of the land, houses, slaves, -merchandize, natural produce, moveables, and ready money, at another. -The example is mentioned by Mr. Hume, and I am surprized the consequence -of it did not strike him. For if the money they possessed was greatly -above the worth of all their property, moveable and immoveable, surely -it never could be considered as a representation of their industry, -which made so small a part of the whole. Athens possessed, before the -Peloponesian war, a treasure of ten thousand talents; and fifty years -afterwards, all Athens, in the several articles above specified, did not -amount to the value of six thousand. Hume’s _Political Discourses upon -the Balance of Trade_. - -These treasures were spent in the war, and they had been laid up for no -other purpose. Therefore I was in the right, when I observed above, -Chap. 22. that war in antient times, had the effect that industry has -now: it was the only means of making wealth circulate. But peace -producing a general stagnation of circulation, people returned to the -antient simplicity of their manners, and the prices of subsistence -remained on the former footing; because there was no increase of -appetite, or rising of demand upon any necessary article. So much for -the state of wealth during the days of frugality. - -The Romans subdued all those kingdoms of the Greeks, and drew their -treasures to Rome. The republic went to destruction, and a succession of -the most prodigal Princes ever known in history succeeded one another -for about two hundred years. Those monstrous treasures were then thrown -into circulation, and I must now give an idea of the effects produced by -such a revolution. - -I have already observed (Chap. 28.) that in consequence of the great -prodigality of those times, the prices of superfluities rose to a -monstrous height; while those of necessaries kept excessively low. The -fact is indisputable, and any one who inclines to satisfy himself -farther, may look into that valuable collection of examples of antient -luxury, wealth, and at the same time of simplicity, found in Mr. -Wallace’s _Dissertation upon the Numbers of Mankind in antient and -modern Times_, p. 132. et seq. - -But how is it to be accounted for, that the prices of superfluities -should stand so high, while necessaries were so low? The reason is -plain, from the principles we have laid down. The circulation of money -had no resemblance to that of modern times: fortunes were made by -corruption, fraud, concussion, rapine, and penury; not by trade and -industry. Seneca amassed in four years 2,400,000 pounds sterling. An -augur was worth 3 millions sterling. M. Antony owed on the Ides of -March, 322,916 pounds sterling, and paid it before the calends of April. -We know of no such circulation. Every revolution was violent: the -powerful were rapacious and prodigal, the weak were poor and lived in -the greatest simplicity: consequently, the objects of the desires of the -rich were immensely dear; and the necessaries for the poor were -excessively cheap. This is a confirmation of the principles we have laid -down in Chap. 28. that the price of subsistence must ever be in -proportion to the faculties of the numerous classes of those who buy: -that the price of every thing must be in proportion to the demand made -for it; and that in every case, where the supply can naturally increase -in proportion to the demand, there must be a determined proportion -between the price of such articles and that of subsistence. Now in the -examples given by Mr. Wallace, of such articles as were found at -monstrous prices, we only find such as could not be increased according -to demand: here is the enumeration of them. Large asses brought from -Spain, peacocks, fine doves, mullets, lampreys, peaches, large -asparagus, purple, wool, jewels, carpets, _vestes Byssinæ_, slaves -skilled in the finer arts, pictures, statues, books, and rewards to -those who taught the sciences. By casting a glance upon the catalogue, -we may easily perceive that the extraordinary price must have proceeded -from the impossibility of augmenting the supply in proportion to the -demand; not from the abundance of the money, which had no effect in -raising the price of necessaries. The cheapness again of these, did not -proceed from vast plenty; but because the price must have remained in -proportion to the faculties of the numerous poor; and because the -augmentation of the wealth of the rich never could increase their -consumption of any necessary article. Had the Roman empire been governed -with order and tranquility, this taste of luxury, by precipitating money -into the hands of the numerous classes, would, in time, have wrought the -effects of multiplying the number of the industrious, by purging the -lands; consequently, of increasing the demand for vendible subsistence; -consequently, of raising the price of it. And on the other hand, the -adequate proportion between services and rewards given by the public, -would have checked the other branch of circulation which produced those -monstrous fortunes, to wit, rapine and corruption: and industry -receiving a regular encouragement, every article of extraordinary demand -for delicate aliments, birds, fishes, fruits, &c. would have been -supplied with sufficient abundance; and consequently, would have fallen -in its price. But when either despotism or slavery were the patrimonial -inheritance of every one on coming into the world, we are not to expect -to see the same principles operate, as in ages where the monarch and the -peasant are born equally free to enjoy the provision made for them by -their forefathers. - -I shall now come nearer home, and examine a very remarkable difference -between the oeconomy in practice some hundred years ago, and that of the -present time, with regard to the method of levying men and money. - -This change is a consequence of trade and industry, and as I have been -preparing the way for the introduction of other matters which equally -owe their existence to them, it may not be improper, in this last -chapter, to point out the natural causes of this change in modern -politics. When people consider effects only, without examining the -causes which produce them, they commonly blame rashly, or fall into an -idle admiration of fortune. It is only by tracing natural causes, that -we come at the means of forming a solid judgment of the nature of every -abuse, and of every advantage. - -The general taste for the extension of industry, is what has brought -such loads of money into circulation; not the discovery of America. We -read of treasures in antient times which appear to rival the wealth of -modern Europe. Appian, as cited by Mr. Hume, mentions a treasure of the -Kings of Egypt, of near two hundred millions sterling; and says, that -all the successors of Alexander were nearly as rich, and fully as -frugal. Frugality then is compatible with the greatest wealth. Therefore -the wealth of America, has not been the cause of European refinement; -but the extension of civil liberty has obliged the possessors of -treasures, which in all ages have been coveted by man, to open their -repositories, in order to procure the service of those who formerly made -a branch of the property of the most wealthy. This is the foundation of -trade and industry. - -Why, therefore, has trade and industry laid the foundation of taxes and -standing armies, which appear so contrary to the one and the other? - -I answer shortly, that very little change has been made as to things -themselves by that revolution; but with respect to the order of things, -the difference is great. Trade and industry cannot flourish without -method and regularity; taxes and standing armies are only a systematical -execution of the old plan, for preserving the power, safety, and -independence of the nations of Europe. - -Taxes are no more than the liquidation of those services which formerly -were performed in kind. Standing armies are become necessary, that the -call of the rich luxurious, who are insatiable in their demand for the -service of the poor, may not be able to engross also the hands necessary -for the defence of the state. Personal services were the taxes of former -times. Let no man imagine, that ever any state could subsist without the -contribution of its subjects. But a more authentic proof of this opinion -is, that in the year 1443, while Charles the VIIth was engaged in the -long war with the Kings of England, who disputed with him the monarchy -of France, the services of the vassals of that kingdom (by the edict of -Saumur of the 14th of September) were formally converted into the -perpetual _Taille_; and this may be considered, as the foundation of the -regular military force of the French nation. No body, in those days, -imagined such an imposition to be oppressive or unjust: and if those who -remain subject to it, appear under oppression at present, it is only -because they continue in their antient situation. Personal services are -the heaviest of all impositions. - -QUEST. 4. Why, therefore, are taxes so generally cried out against, why -do they appear so new an invention, and why do people flatter -themselves, that there is a possibility of putting an end to so general -an oppression? I answer, because people commonly attend to words, and -not to things. In former times, the great bulk of the inhabitants lived -upon the lands, and were bound to personal service. This kind of -imposition was familiar, general, and equal; every class of the people -was bound to services analogous to their rank in the state. The -industrious who lived without any dependence upon the lands, and who did -not enjoy the privileges of cities and corporations, were so few, that -they were not an object of public attention. Farther, most privileges -then known, were in consequence of land-property; consequently, those -independent people were in a manner without protection, they were -vassals to no body; consequently, had no body to interest themselves for -them; consequently, were a prey to every one who had power, and no body -was sorry to see a rich fellow, who had got plenty of ready money, and -who seemed to do nothing for it, plundered by a lord who appeared in the -service of his country. We see in the time of the croisades how odious -all those money gatherers were; these were what we now call traders, it -was principally in hatred to them, that the borrowing of money at -interest was declared antichristian; because the Jews were principally -in those days the merchants or the money lenders. - -In the beginning of the sixteenth century, when Princes began to take a -taste for magnificence, finding no body, almost, within their own -country capable to supply them, they used to send to Flanders and -Venice, the great trading states in those days, for many kinds of -manufactures. This is the fountain of foreign trade in Europe. These two -states perceiving the great benefit resulting to them from this new -taste of dissipation, gave great encouragement to the industrious. Had -they begun to impose high taxes upon them, they would have ruined all. -Industry, then, was encouraged at first, and little loaded with any -imposition. This is perfectly consistent with our doctrine. Some -Princes, perceiving the daily diminution of their wealth, made efforts -to restore this antient simplicity, by forbidding this hurtful trade; -others, such as Francis I. of France, and Henry VIII. of England, -endeavoured all they could to establish industry in their own states. -For this purpose, great privileges were granted to the industrious, who -thereby increased daily. But this revolution naturally purged the lands, -and by that operation diminished the number of personal service-men; or, -as in France, where personal service was at an end, the number of those -subject to the _taille_. I shall not trace this progress very minutely, -but come directly to the period of extensive taxation. When industry was -fairly established, and when nations began to be well clothed with the -produce of their own soil, wrought up in a thousand different forms, by -their own industrious subjects, Princes soon perceived their treasures -to melt away, and saw plainly, that without a method of drawing back the -money from this new class of inhabitants, the whole wealth of the state -would come to center in their hands; but the means of coming at money -was extremely difficult. The proprietors of the riches had no solid -property in proportion; and their money was inaccessible. Some betook -themselves to violence, and others to fraud: the one and the other -produced the worst effects. The violence destroyed industry, and rendred -the industrious miserable: for we have observed, that when inhabitants -are once purged from off the lands, they have no resource left them but -their industry; whereas let a peasant be robbed ever so often of his -money, he still has the earth to maintain him. The fraudulent corrupted -the great; the ministers of Princes became the terror of every man who -had money; they enriched themselves by accepting of compositions, and -the state remained constantly in want. At last, the scheme of -proportional taxes took place: but for this purpose it was necessary to -obtain the consent of the whole state; for no Prince’s power extended so -far, and they were not come to the time of being able to enlarge their -prerogative. Such impositions, therefore, were first introduced in -republics, and mixed governments. In monarchies they were established -with more difficulty; because the great were equally affected by them -with the small. But when long and expensive wars rendred supplies of -money absolutely necessary, then were taxes consented to; and the Prince -who had not power enough to _establish_ them, easily found means to -_keep them up_, when once introduced. - -From this progress we may easily discover the reason why taxes are cried -out against. The system appears new, because we remember, in a manner, -the doubling of the impositions, and we see them daily gaining ground; -but we never reflect on the change of circumstances, and seldom attend -to the consequences of that new species of circulation, which is carried -on between the public and those employed by it. The state now pays for -every service, because the people furnish it with money for this -purpose. - -If the blood therefore be let out, in modern times, at a thousand -orifices of the body politic, there are just as many absorbitories (if I -may be allowed such an expression) opened to receive it back. From this -last circumstance I imply the perpetuity of taxes, while this system of -political oeconomy prevails. We have not as yet seen an example of any -state abolishing them, though many indeed have had such a scheme in -view. But to resume my former comparison, I may suggest, that if all the -orifices through which the blood issues, should be bound up, all the -absorbitories which are fed with the returning blood, must be starved. -But more of this in its proper place. - -QUEST. 5. Why are standing armies a consequence of trade and industry? - -In the first place, armies in all ages, past, present, and to come, have -been, are, and will be calculated for offensive and defensive war; while -therefore war subsists among men, armies in one way or other, will be -necessary. - -The advantage of regular armies has been known in all ages; and yet we -find, that for many centuries they appeared in a manner discontinued; -that is to say, we read neither of legions, nor of regiments, nor of any -denomination of bodies of warlike men, kept up and exercised in time of -peace, as was the custom while the Roman empire subsisted: and now, -since trade has been established, we see the antient Roman military -oeconomy again revived. Let us therefore apply our principles, in order -to account for this revolution also. - -During the Roman empire, there was a very great flux of money into the -coffers of the state, which proceeded more from rapine than from taxes. -Consequently, it was an easy matter to keep up large bodies of regular -forces. - -With these they subdued the world, as I may call it, that is, all the -polite nations then known; the Carthaginians, Greeks, and Asiatics. Had -they remained satisfied, their empire might possibly have subsisted; -because people who are rich, luxurious, and polite, are commonly -peaceable. But nothing could satisfy their ambition: they conquered -Gaul, and stretched the boundary of their empire from the streights of -Gibraltar to the mouth of the Rhine. All was peaceable on that side, and -in two or three centuries, both Spain and Gaul had adopted the spirit, -language, and manners of the Roman people. But when they passed the -Rhine, the Danube, and the Euphrates, they found mankind still less -cultivated, and very little known. Their enemies fled before them, and -left a territory which was not worth possessing. This of all barriers is -the strongest. By carrying on war against such people, the match was -very unequal; those nations had every thing to gain, and nothing to -lose; the Romans had all to lose, and nothing to win. Those wars -continued until the Barbarians learned the Roman discipline, and became -warriors. It was the most profitable trade for them, as well as the only -means of safety. That this was the plan of their oeconomy appears -plainly from the form of government every where established by them. -Where every free man was a soldier, there was no occasion for a regular -militia. - -Men are governed by prejudice more than by reason: to this I attribute -the sudden change in the government of Europe. In place of one man -governing the world, as was the case of the Emperors, the new spirit -was, that all soldiers were equal, and a King was but _primus inter -pares_. The sudden revolution had the effect of ruining every thing: -learning, industry, politics, all went to wreck. _One hundred years of -barbarity must ruin the effects of a thousand centuries of politeness._ -This is the date of the annihilation of standing armies. A powerful -Prince, such as Charles the Great, who acted in a high sphere, and who -made the world his own, might, during his lifetime, establish the old -oeconomy. But the general establishment of the feudal form of -government, which, no doubt, was the best for preserving a great empire, -filled with barbarity every where, joined with the weakness of that -Prince’s successors, introduced a new form less barbarous than the -former, but equally compatible with a numerous standing militia. Every -Baron became a sovereign, and his vassals were bred to arms; but as they -were forced to attend the plough for subsistence, as well as the camp; -wars were carried on consistently with agriculture. Certain months of -the year were appropriated for war; others for peace. This was easily -accomplished: war was constantly at the door; a campaign was finished in -a week, because every man’s nearest neighbour was commonly his worst -enemy. - -Europe remained in this general state of confusion for some centuries. -Princes had, during that period, a most precarious authority, and when -any nation chanced to be under the government of one who had talents to -unite his subjects, he became so formidable that there was no -possibility of resisting him. In those days, it was a hard matter to -form an idea of a balance of power; because there was no rule to -determine the force of nations. Under the Otho’s, Germany threatned -Italy with chains; under Edward and Henry, England seemed on the road of -adding all France to her monarchy; Ferdinand the catholic, laid the -foundation of the Spanish greatness, and his successors bid fair for the -universal monarchy of Europe. In our days, the acquisition of a small -province, nay of a considerable town, is not to be made by conquest, -without a general convention between all the powers of Europe, and those -who are conversant in foreign affairs, can estimate, in a minute, the -force of Princes, by the troops they are able to maintain; nothing is so -easy as to lay down, on a sheet of paper, a state of all the armed men -in Europe. A Prince can hardly add a soldier to a company, but all the -world is informed of it. Excepting the extent of their credit, and the -talents of their generals and counsellors, every thing relative to power -is become the object of computation. Hence the balance of power, -formerly unknown, is now become familiar. So much is sufficient for the -matter of fact; let us now examine why _trade_ and _industry_ have given -rise to so regular a system of war. - -The reason is, because in a state where those are introduced, every -thing must be made regular, or all will go to wreck. The keeping up of -large armies, is the remains of that turbulent spirit which animated -royalty for so many centuries. All literature is filled with warlike -sentiments, from.the books of Moses to the news papers of this day. A -young person cannot learn to read without imbibing the fire of war. But -as nothing is so evident, from the consideration of the total revolution -in the spirit of the people of Europe, as that war is inconsistent with -the prosperity of a modern state, I sometimes allow my imagination to -carry me so far as to believe the time is at hand when war will come to -cease. But there is no such thing as predicting in political matters: -general peace is a contingent consequence which a thousand accidents may -prevent; and one among the rest is, that the whole plan of modern policy -may be broken to pieces, before Princes come to discover that it is -their interest to be quiet. The ambition of one, arms all the rest, and -when once they are at the head of their armies, want of money only -assembles a congress, not to make peace, but that the parties may have -some years to gather new force. - -It is not therefore trade and industry which have given birth to -standing armies, they have only rendred war impossible without them. It -is the ambition of Princes to extend their dominion, and even sometimes -to extend their commerce, which gives occasion to war. And we see daily -how difficult it becomes to provide troops for this purpose, from no -other reason so much as from the progress of trade and industry. Those -who have the money cannot have the men, those who have the men cannot -have the money. Do we not see how the greatest monarchy in Europe, the -Prince who has the most millions of subjects, cannot preserve the rank -of power he has prescribed to himself (_his political-necessary for -war_) without a body of above thirty thousand strangers, in the time of -the most profound peace, and after the greatest reduction judged -consistent with the safety of the country? These cost vastly more than -national troops, and brave men of all countries are alike; so that the -only reason for keeping up so large a body of foreigners, is to -facilitate augmentations when occasion requires it; and not to spare the -subjects who are willing to serve, but to spare agriculture and -industry, after the superfluities of these have fallen in, to compleat -that body of troops which experience has determined to be proportioned -to such superfluities. - -From this short exposition let me deduce a principle. That since every -state has occasion, according to the present system of Europe, for a -certain number of armed men for their defence, the first care of a -statesman, is, to discover to what number those of his subjects, who -willingly prefer the conditions offered for military service to the -occupations of industry, may amount. If he finds these exceed the number -wanted for recruiting the army, it is a good reason to diminish the pay; -until the encouragement comes upon a level with the supply demanded. If -on the contrary, the number of volunteers falls below the standard -required, he must examine the state of the balance of work and demand, -before he can give any farther encouragement. If this balance stands -even, he must take care that the pay given to soldiers be not carried so -high, as to engage those of the lowest class of profitable industry to -desert it. - -What measures, therefore, can be fallen upon? There are two. Either to -hire foreign troops, as many states do; and I suppose for good reasons, -only because it is done. But I should prefer another method, which is to -create a new class of inhabitants, appropriated for supplying the army, -upon the principle above laid down, that he who feeds may have as many -mouths as he pleases. - -I would therefore fix the military pay at a rate below the profits of -useful industry, and accept of such as should offer. For the -augmentation of this class, I would receive all male children who should -be given or exposed by their parents. These should be bred to every sort -of labour for which the state has occasion, and their numbers might be -carried to twenty _per cent._ above that which might be judged necessary -in time of the hottest war. Out of this class only, the standing forces -might be recruited: those who remained might be employed in every public -service; such as working in arsenals, docks, highways, public buildings, -&c. By taking care of the children of this whole class, their numbers -would rise to whatever height might be judged necessary. The same spirit -would be kept up; they might serve by turns, and all become disciplined. -This is a good scheme, in many cases, and is an improvement upon the -distribution of the inhabitants: the execution is gradual; therefore no -sudden revolution is implied. But it is fit only for a state which can -augment its numbers, without seeking for subsistence from without. It -would spare the land and manufactures, and be a ready outlet for all -supernumeraries in every class. - -This subject shall be resumed in the fifth book, when we come to the -application of the amount of taxes. At present it has found a place, -only because the support of a national force has been ranked among the -objects of attention of those statesmen who are at the head of rich and -luxurious nations which have lost their foreign trade. - -QUEST. 6. What are the principles upon which the relative force of -nations is to be estimated? - -Without some limitations, no question can be more difficult to resolve -than this; it must therefore be examined only in so far as it comes -under the influence of certain principles. It is as impossible to -estimate the real force of a nation, as it is to estimate that of any -considerable quantity of gun-powder, and for the same reason. The nation -cannot exert all its force at once, no more than the powder can be all -inflamed at once, and the successive efforts of a small power, are never -equally effectual with the momentous shock of a great one. In -proportion, therefore, as the spirit of individuals is moved to concur -with the public measure, a people become powerful; and as I know of no -principle which can regulate such affections of the mind, we must throw -them quite out of the question, and measure the power of nations by the -quantity of men and money at a statesman’s command, in consequence of -the oeconomy he has established. Let me then suppose two nations, where -the number of inhabitants, and weight of gold and silver are absolutely -the same, military genius and discipline quite equal. From what has been -said, we must determine that nation to be the strongest, which, without -disturbing the oeconomy of their state, can raise the greatest -proportion of men, and draw the greatest proportion of money into the -public coffers. - -When the number of inhabitants is given, the first thing to be known is -the nature of the produce of the country, whether mostly in corn, wine, -or pasture: the more the ground is laboured, and the more crops it -yearly produces, the fewer free hands it will maintain in proportion to -the whole, this computation must then proceed upon the principles laid -down above, Book I. Chap. 8. - -When once you come at the number of free hands, you must examine the -state of luxury. Luxury is justly said to effeminate a nation, because -the great multitude of hands taken up in supplying the instruments of it -to the rich, diminishes greatly the number of such as can be employed in -war. If manufacturers and folks accustomed to a sedentary life, are at a -certain age taken from trades, to compose armies, they will make bad -soldiers; and the strength of a nation lies chiefly in the valour and -strength of the soldiery. Luxury therefore effeminates a nation in -general; but it does not follow from hence, that the most luxurious are -the most effeminate, and most improper for war; on the contrary, they -are found to be the bravest and most proper. The effeminacy and baseness -of mind, in point of courage, are found in the sedentary multitude. The -truth of this might be proved from many examples in antient history, if -the present situation of Europe left the smallest room to doubt of it. - -The more therefore that luxury prevails in a country, the fewer good -troops can be raised in it, and _vice versa_. But it is not sufficient -to have men for war, the men must be enabled to subsist, and in the -modern way of making war, their subsistence and other expences require -large sums of money. We must then examine what proportion of the general -wealth may be applied to this purpose. - -If in any country the riches be found in few hands, the state will be -poor; because the opulence of the public treasure depends greatly upon a -right and proportional distribution of wealth among the inhabitants. -Riches are only acquired three ways. First, Gratuitously, as by -succession, gift, or the like; secondly, by industry; and lastly, by -penury. Those who are poor are seldom enriched gratuitously, never by -penury, and always by industry; when a poor man grows rich in any state, -he changes in so far the balance of wealth, for what is added to him is -taken from another. When a spirit of industry prevails, the balance is -always turning in favour of the industrious, and as it is a pretty -general rule, that the rich are not the most laborious, so the balance -is generally turning against them. This being the case, the more that -industry prevails, the quicker will this revolution be brought on. By -such revolutions, wealth becomes _equably distributed_; for by being -_equably distributed_, I do not mean, that every individual comes to -have an _equal_ share, but an equal chance, I may say a certainty, of -becoming rich in proportion to his industry. Riches which are acquired -by succession, or any other gratuitous means, do not in the least -contribute to circulation, the owner, as has been said, only changes his -name. Those made by penury or hoarding, instead of adding to, evidently -diminish circulation. It is, therefore, by industry alone that wealth is -made to circulate, and it is by its circulation only, that money is -useful. When large sums are locked up, they produce nothing; they are -therefore locked up not to be useful while they remain secreted; but -that they may be useful when brought out in order to be alienated. In a -state, therefore, where there are a few very rich and many very poor, -there must be much money locked up; for without money none can be rich, -and if it were not locked up it must fall into the hands of the poor. -Why? Because the rich will not give it to the rich, gratuitously, nor -will they labour to acquire it; either then the common people must be -lazy and unwilling to work, or the rich must be so penurious and -addicted to hoarding as to keep it out of the hands of the poor. In both -which cases, if there be money in the country, it must be found in -coffers. - -From these positions it may be concluded, that wealth which produces -nothing to its owner, cannot be supposed to produce any thing to the -state: consequently, that state in which there is the quickest -circulation of money, is, _cæteris paribus_, that in which the greatest -proportion of the general wealth may be raised for the public service. -This is all that is necessary to observe at present: when we have -examined the nature of credit and taxes, and the principles upon which -they may be levied in different countries, and under different forms of -government, we shall discover more rules for estimating the force of -different states. - -The principles of industry have been so interwoven with those of trade, -through all the chapters of this second book, that it is now proper, -before we dismiss the subject, to examine a little into the nature of -the first, considered more abstractedly, and more detached from its -relation to the equivalent given for it, which is the proper -characteristic of trade, and from which proceeds the intimate connection -between them. - -The object of our enquiry hitherto has been to discover the method of -engaging a free people in the advancement of the one and the other, as a -means of making their society live in ease, by reciprocally contributing -to the relief of each others wants. Let us next examine some farther -consequences. We are now to cast our eyes upon another view of this -extensive landscape, where the personal advantages, immediately felt -from this gentle band of mutual dependence, are not to fix our attention -so much as the effects produced by industry upon the face of things, and -manners of a people. - -The better to transmit this idea, which I find a little dark, let me -say, that hitherto we have treated our subject, according to the -principles which should direct a statesman, to advance trade and -industry, by engaging the rich to give bread to the poor. Now we are to -examine the consequences resulting from the execution of this plan; and -compare the difference between a country which has been inhabited by a -people abundantly provided for without industry and labour, and one -occupied by another who have subsisted by these means: and farther, we -are to examine industry as producing effects more or less hurtful to the -simplicity of manners, and more or less permanent and beneficial, -according as it has been directed towards different objects. - -I can easily suppose a nation living in the greatest simplicity, even -going naked, but abundantly fed, either with the spontaneous fruits of -the earth, or by an agriculture proportioned to the wants of every one, -and where very little alienation or exchange takes place. From this -primitive life, as I may call it, the degrees of industry, like -imperceptible shades, may be augmented; and the augmentation, as I -apprehend, is to be measured, not so much by the degree of occupation -which the inhabitants pursue, as by the quantity of permutation among -them; because I think permutation implies superfluity of something[N]. - -Footnote N: - - Our first parents, placed in Paradise, were fed from the hand of God, - and freed by the constitution of their nature, from every uneasy - animal desire. Since the fall, the whole human species have been - employed in contriving and executing methods for relieving the wants - which are the consequences of such desires. - - Hence I conclude, that had the fall never taken place, the pursuits of - man would have been totally different from what they are at present. - May I be allowed to suppose, that in such a happy state, he might have - been endowed with a faculty of transmitting his most complex ideas - with the same perspicuity with which we now transmit those relating to - geometry, numbers, colours, &c. From this I infer, there would have - been no difference of sentiment, no dispute, no competition between - man and man. The progress in acquiring useful knowledge, the pleasure - of communicating discoveries, would alone have provided a fund of - happiness, as inexhaustible as knowledge itself. - - Mankind, therefore, set out upon a system of living without labour, - without industry, without wants, without dependence, without - subordination; consequently, had they remained in that state, the - lapse of time would have produced no change upon any thing, but the - state of knowledge. Banished from Paradise, man began to plow the - ground, consequently to change her surface: he built houses, made - bridges, traced roads, and by degrees has come, in different ages, to - please and gratify his inclinations, by numberless occupations and - pursuits, constantly dictated to him by his wants; that is, by his - imperfections, and by the desires which they inspire. When these are - satisfied, his physical happiness is carried as far as possible; but - as mankind seldom remain in a state of contentment, and that our - nature constantly prompts us to add something new to our former - enjoyments, so it naturally happens, that societies once established, - and living in peace, pass from one degree of refinement to another, - that is to say, man daily becomes more laborious. - -A people then lives in the utmost simplicity, when the earth is so far -in common, as that none can acquire the property of it, but in virtue of -his possession as the means of subsistence; and when every one is -employed in providing necessaries for himself, and for those who belong -to him. The moment any one has occasion for the service of another, -independent of him, he must have an equivalent to give. This equivalent -must be something moveable, some fruit of the earth, pure or modified, -superfluous, not necessary, not the earth itself, because this is the -foundation of his subsistence; and he can never alienate what is -essential to his being, in order to procure a superfluity. From this we -may deduce a principle that the alienation of consumable commodities is -a consequence of superfluity alone, as this again is the bane of -simplicity. Consequently, he who would carry simplicity to the utmost -length, ought to proscribe all alienation; consequently, all dependence -among men; consequently, all subordination: every one ought to be -entirely dependent upon his own labour, and nothing else. - -Were man either restored to his primitive state of innocence, or reduced -to a state of brutality; were his pursuits either purely spiritual, or -did they extend no farther than to the gratification of his animal -desires, and acquisition of his physical-necessary; such an oeconomy -might be compatible with society. But as we stand in a middle state -between the two, and have certain desires which participate of the one -and of the other, the gratification of which constitute what we have -called our _political-necessary_ (which we cannot procure to ourselves, -because the very nature of it implies superiority and subordination, as -well as a mutual dependence among men) a total obstruction to alienation -becomes compatible with government, consequently with human society; and -this being the case, all simplicity of manners is only relative. Our -fathers looked upon the manners of their ancestors as simple, these -again admired the simplicity of the patriarchs; and perhaps the time may -come, when the manners of the eighteenth century may be called the noble -simplicity of the antients. - -As simplicity of manners is therefore relative, let us decide, that as -long as superfluity does more good in providing for the poor, than hurt -in corrupting the rich; so far it is to be approved of and no farther. - -Here it is urged, that since superfluity is only good, so far as it -provides subsistence for the poor, why may not the pursuits of industry -be turned towards objects which cannot corrupt the mind? Why, in place -of fine clothes, elegant entertainments, magnificent furniture, carving, -gildings, and embroidery, with all the splendor to be seen in palaces, -gardens, operas, balls, and masquerades, processions, shews, -horse-races, and diversions of every kind, why might not, I say, the -multitudes which are employed in supplying these transitory -gratifications of human weakness (not to call them by a worse name) be -employed in making highways, bridges, canals, fountains, fortifications, -harbours, public buildings, and a thousand other works, both useful to -society, and of good example to succeeding generations? Such employments -are eternal monuments of grandeur, they are of lasting utility, and are -no more to be compared to the trifling industry of our days, than an -Egyptian pyramid is to be compared with the luxury of Cleopatra, or the -_via appia_ with the suppers of Heliogabalus. This was the taste in the -virtuous days of antient simplicity: the greatness of a people appeared -in the magnificence of useful works, and as virtue disappeared, a luxury -resembling that of modern times took place. The aqueducts, common -sewers, temples, highways, and burying places were the ornaments of -consular Rome. The imperial grandeur of that city shone out in -amphitheatres and baths; and the turpitude of manners (say the patrons -of simplicity) which brought on the decline, ought to terrify those who -make the apology of modern luxury and dissipation. - -In order to set this question in a clear light, and to do justice both -to the antients and moderns, let us once more enter into an examination -of circumstances, and seek for effects in the causes which produce them. -These are uniform in all ages; and if manners are different, the -difference must be accounted for, without overturning the principles of -reason and common sense. - -QUEST. 7. In what manner, therefore, may a statesman establish industry, -so as not to destroy simplicity, nor occasion a sudden revolution in the -manners of his people, the great classes of which are supposed to live -secure in ease and happiness; and, at the same time, so as to provide -every one with necessaries who may be in want? - -The observations we are going to make will point out the answer to this -question: they will unfold still farther the political oeconomy of the -antients, and explain how manners remained so pure from vicious luxury, -notwithstanding the great and sumptuous works carried on, which strike -us with so lofty an idea of their useful magnificence and noble -simplicity. These observations will also confirm the justness of a -distinction made, in the first chapter of this book, between labour and -industry; by shewing that _labour_ may ever be procured, even by force, -at the expence of furnishing man with his physical-necessary, from which -no superfluity can proceed: whereas industry cannot be established, but -by an adequate equivalent, proportioned, not to the absolutely -necessary, but to the reasonable desire of the industrious; which -equivalent becomes afterwards the means of diffusing a luxurious -disposition among all the classes of a people. - -If a statesman finds certain individuals in want, he must either feed -them, in which case he may employ them as he thinks fit; or he must give -them a piece of land, as the means of feeding themselves. If he gives -the land, he can require no equivalent for it, because a person who has -nothing can give nothing but his labour; and if he be obliged to labour -for his food, he cannot purchase with labour the earth itself, which is -the object of it. If it be asked, whether a statesman does better to -give the food, or to give the land? I think it will appear very evident, -that the first is the better course, because he can then exact an -equivalent; and since in either way the person is fed, the produce of -his labour is always clear gain. But in order to give the food, he must -have it to give; in which case, it must either be a surplus-produce of -public lands, or a contribution from the people. In both which cases, is -implied a labour carried on beyond the personal wants of those who -labour the ground. If this fund be applied in giving bread to those whom -he employs in improving the soil of the country in general, it will have -no immediate effect of destroying the simplicity of their manners; it -will only extend the fund of their subsistence. If he employs them in -making highways, aqueducts, common sewers, bridges, and the like; it -will extend the correspondence between the different places of the -country, and render living in cities more easy and agreeable: and these -changes have an evident tendency towards destroying simplicity. But here -let it be remarked, that the simplicity of individuals is not hurt by -the industry carried on at the expence of the public. The superfluous -food at the statesman’s disposal, is given to people in necessity, who -are employed in relieving _the wants of the public, not of private -persons_. But if, in consequence of the roads made, any inhabitant shall -incline to remove from place to place in a chariot, instead of riding on -horseback, or walking, he must engage some body to make the machine: -this is a farther extension to occupation, on the side of those who -labour; but the consequence of the employment is very different, when -considered with regard to the simplicity of manners. The reason is -plain: the ingenuity here must be paid for; and this superfluity in the -hands of the workman is a fund for his becoming luxurious. - -Industry destroys simplicity of manners in him who gives an equivalent -for an article of superfluity; and the equivalent given frequently gives -rise to a subordinate species of luxury in the workman. When industry -therefore meets with encouragement from individuals, who give an -equivalent in order to satisfy growing desires, it is a proof that they -are quitting the simplicity of their manners. In this case, the wants -and desires of mankind prove the mother of industry, which was the -supposition in the first book; because, in fact, the industry of Europe -is owing to this cause alone. - -But the industry of antient times was very different, where the -multitude of slaves ready to execute whatever was demanded, either by -the state or by their masters, for the equivalent of simple maintenance -only, prevented wealth from ever falling into the hands of industrious -free men; and he who has no circulating equivalent to give for -satisfying a desire of superfluity, must remain in his former -simplicity. The labour therefore of those days producing no circulation, -could not corrupt the manners of the people; because, remaining -constantly poor, they never could increase their consumption of -superfluity. - -I must, in this place, insert the authority of an antient author, in -order both to illustrate and to prove the justness of this -representation of the political oeconomy of the antients. - -There remains a discourse of Xenophon upon the improvement of the -revenue of the state of Athens. Concerning the authenticity of this -work, I have not the smallest doubt. It is a _chef d’oeuvre_ of its -kind, and from it more light is to be had, in relation to the subject we -are here upon, than from any thing I have ever seen, antient or modern. - -From this antient monument we learn the sentiments of the author with -regard to the proper employment of the three principal classes of the -Athenian people, viz. the citizens, the strangers, and the slaves. From -the plan he lays down we plainly discover, that, in the state of Athens, -(more renowned than any other of antiquity for the arts of luxury and -refinement) it never entred into the imagination of any politician to -introduce industry even among the lowest classes of the _citizens_; and -Xenophon’s plan was to reap all the benefits we at present enjoy from -it, without producing any change upon the spirit of the Athenian people. - -The state at this time was in use to impose taxes upon their confederate -cities, in order to maintain their own common people, and Xenophon’s -intention in this discourse was, not to lay down a plan to make them -maintain themselves by industry, but to improve the revenue of the state -in such a manner as out of it to give every citizen a pension of three -oboli a day, or three pence three farthings of our money. - -I shall not here go through every branch of his plan, nor point out the -resources he had fallen upon to form a sufficient fund for that purpose; -but he says, that in case of any deficiency in the domestic revenue of -the state, people from all quarters, Princes and strangers of note, in -all countries, would be proud of contributing towards it, for the honour -of being recorded in the public monuments of Athens, and having their -names transmitted to posterity as benefactors to the state in the -execution of so grand a design. - -In our days, such an idea would appear ridiculous; in the days of -Xenophon, it was perfectly rational. At that time great quantities of -gold and silver were found locked up in the coffers of the rich: this -was in a great measure useless to them, in the common course of life, -and was the more easily parted with from a sentiment of vanity or -ostentation. - -In our days, the largest income is commonly found too small for the -current expence of the proprietor. From whence it happens, that -presents, great expence at funerals and marriages, godfathers gifts, &c. -so very familiar among ourselves in former times, are daily going out of -fashion. These are extraordinary and unforeseen expences which our -ancestors were fond of, because they flattered their vanity, without -diminishing the fund of their current expence: but as now we have no -full coffers to fly to, we find them excessively burthensome, and -endeavour to retrench them as soon as we can, not from frugality, God -knows, but in consequence o£ a change in our manners. - -Besides providing this daily pension of three pence three farthings a -day for every citizen of Athens, rich and poor, he proposed to build, at -the public charge, many trading vessels, a great many inns and houses of -entertainment for all strangers in the sea ports, to erect shops, -warehouses, exchanges, &c. the rents of which would increase the -revenue, and add great beauty and magnificence to the city. In short, -Xenophon recommends to the state to perform, by the hands of their -slaves and strangers, what a free people in our days are constantly -employed in doing in every country of industry. While the Athenian -citizens continued to receive their daily pensions, proportioned to the -value of their pure physical-necessary, their business being confined to -their service in the army in time of war, their attendance in public -assemblies, and the theatres in times of peace, clothed like a parcel of -capucins, they, as became freemen, were taught to despise industrious -labour, and to glory in the austerity and simplicity of their manners. -The pomp and magnificence of the Persian Emperors were a subject of -ridicule in Greece, and a proof of their barbarity, and of the slavery -of their subjects. From this plain representation of Xenophon’s plan, I -hope, the characteristic difference between antient and modern oeconomy -is manifest; and for such readers as take a particular delight in -comparing the systems of simplicity and luxury, I recommend the perusal -of this most valuable discourse. - -Combining, therefore, all these circumstances, and comparing them with -the contrast which is found as to every particular, in our times, I -think it is but doing justice to the moderns, to allow, that the -extensive luxury which daily diffuses itself through every class of a -people, is more owing to the abolishing of slavery, the equal -distribution of riches, and the circulation of an adequate equivalent -for every service, than to any greater corruption of our manners, than -what prevailed among the antients. - -In order to have industry directed towards the object of public utility, -the public, not individuals, must have the equivalent to give. Must not -the employment be adapted to the taste of him who purchases it? Now, in -antient times, most public works were performed either by slaves, or at -the price of the pure physical-necessary of free men. We find the price -of a pyramid, recorded to us by Herodotus, in the quantity of turnips, -onions, and garlic, consumed by the builders of it. Those who made the -_via appia_, I apprehend, were just as poor when it was finished as the -day it was begun; and this must always be the case, when the work -requires no peculiar dexterity in the workmen. If, on the other hand, -examples can be brought where workmen gained high wages, then the -consequences must have been the same as in our days. - -So long, therefore, as industry is not directed to such objects as -require a particular address, which, by the principles laid down in the -twenty first chapter, raise profits above the physical-necessary, the -industrious never can become rich; and if they are paid in money, this -money must return into the hands of those who feed them: and if no -superfluity be found any where, but in the hands of the state, such -industry may consume a surplus of subsistence, but never can draw one -penny into circulation. This I apprehend to be a just application of our -principles, to the state of industry under the Roman republic, and that -species of industry which we call _labour_. We are not therefore to -ascribe the taste for employment in those days to the virtue of the -times. A man who had riches, and who spent them, spent them no doubt -then, as at present, to gratify his desires; and if the simplicity of -the times furnished no assistance to his own invention, in diversifying -them, the consequence was, that the money was not spent, but locked up. -I have heard many a man say, had I so much money I should not know how -to spend it. The thing is certainly true; for people do not commonly -take it into their head to lay it out for the public. - -No body, I believe, will deny that money is better employed in building -a house, or in producing something useful and permanent, than in -providing articles of mere transitory superfluity. But what principle of -politics can influence the taste of the proprietors of wealth? This -being the case, a statesman is brought to a dilemma; either to allow -industry to run into a channel little beneficial to the state, little -permanent in its nature, or to deprive the poor of the advantage -resulting from it. May I not farther suggest, that a statesman, who is -at the head of a people, whose taste is directed towards a trifling -species of expence, does very well to diminish the fund of their -prodigality, by calling in, by means of taxes, a part of the circulating -equivalent which they gave for it? When once he is enriched by these -contributions, he comes to be in the same situation with antient -statesmen, with this difference, that they had their slaves at their -command, whom they fed and provided for; and that he has the free, for -the sake of an equivalent with which they feed and provide for -themselves. He then can set public works on foot, and inspire, by his -example, a taste for industry of a more rational kind, which may advance -the public good, and procure a lasting benefit to the nation. - -I have said above, that the acquisition of money, by the sale of -industry to strangers, or in return for consumable commodities, was a -way of augmenting the general worth of a nation. Now I say, that whoever -can transform the most consumable commodities of a country into the most -durable and most beneficial works, makes a high improvement. If -therefore meat and drink, which are of all things the most consumable, -can be turned into harbours, high roads, canals, and public buildings, -is not the improvement inexpressible? This is in the power of every -statesman to accomplish, who has subsistence at his disposal; and beyond -the power of all those who have it not. There is no occasion for money -to improve a country. All the magnificent buildings which ornament -Italy, are a much more proper representation of a scanty subsistence, -than of the gold and silver found in that country at the time they were -executed. Let me now conclude with a few miscellaneous observations on -what has been said. - -OBSER. 1. When I admire the magnificence and grandeur of publick works -in any country, such as stupendous churches, amphitheatres, roads, -dykes, canals; in a word, when I examine Holland, the greatest work -perhaps ever done by man, I am never struck with the expence. I compare -them with the numbers of men who have lived to perform them. When I see -another country well inhabited, where no such works appear, the contrast -suggests abundance of reflections. - -As to the first, I conclude, that while these works were carried on, -either slavery, or taxes must have been established; because it seldom -happens, that a Prince will, out of his own patrimony, launch out into -such expences, purely to serve the public. Public works are carried on -by the public; and for this purpose, either the persons or purses of -individuals, must be at its command. The first I call slavery; that is -service: the second taxes; that is public contributions in money or in -necessaries. - -OBSER. 2. I farther conclude, that nothing is to be gathered from those -works, which should engage us to entertain a high opinion of the wealth, -or other species of magnificence in the people who executed them. All -that can be determined positively concerning their oeconomy as to this -particular, is, that at the time they were performed, agriculture must -have been exercised as a trade, in order to furnish a surplus sufficient -to maintain the workmen; or that subsistence must have come from abroad, -either as a return for other species of industry, or gratuitously, that -is, by rapine, tribute, &c. - -OBSER. 3. That the consequence of such works, is, to make meat, drink, -and necessaries circulate, from the hands of those who have a -superfluity of them, into those who are employed to labour; or to oblige -those who formerly worked for themselves only, to work also in part for -others. To execute this, there must be a subordination: for who will -increase his labour, voluntarily, in order to feed people who do not -work for him, but for the public? This combination was neglected -throughout the first book; because we there left mankind at liberty to -follow the bent of their inclinations. This was necessary to give a -right idea of the subject we then intended to treat, and to point out -the different effects of slavery and liberty; but now, that we have -formed trading nations, and riveted a multitude of reciprocal -dependencies, which tie the members together, there is less danger of -introducing restraints; because the advantages which people find, from a -well ordered society, make them put up the better with the -inconveniencies of supporting and improving it. It is an universal -principle, that instruction must be given with gentleness. A young horse -is to be caressed when the saddle is first put upon his back: any thing -that appears harsh, let it be ever so useful or necessary, must be -suspended in the beginning, in order to captivate the inclination of the -creature which we incline to instruct. - -OBSER. 4. When a statesman knows the extent and quality of the territory -of his country, so as to be able to estimate what numbers it may feed; -he may lay down his plan of political oeconomy, and chalk out a -distribution of inhabitants, as if the number were already compleat. It -will depend upon his judgment alone, and upon the combination of -circumstances, foreign and domestic, to distribute, and to employ the -classes, at every period during this execution, in the best manner to -advance agriculture, so as to bring all the lands to a thorough -cultivation. A ruling principle here, is, to keep the husbandmen closely -employed, that their surplus may be carried as high as possible; because -this surplus is the main spring of all alienation and industry. The next -thing is to make this surplus circulate; no man must eat of it for -nothing. What a prodigious difference does a person find, when he -considers two countries, equally great, equally fertile, equally -cultivated, equally peopled, the one under the oeconomy here -represented; the other, where every one is employed in feeding and -providing for himself only. - -A statesman, therefore, under such circumstances, should reason thus: I -have a country which maintains a million of inhabitants, I suppose, and -which is capable of maintaining as many more; I find every one employed -in providing for himself, and considering the simplicity of their -manners, a far less number will be sufficient to do all the work: the -consequence is, that many are almost idle, while others, who have many -children, are starving. Let me call my people together, and shew them -the inconvenience of having no roads. He proposes that every one who -chooses to work at those shall be fed and taken care of by the -community, and his lands distributed to those who incline to take them. -The advantage is felt, the people are engaged to work a little harder, -so as to overtake the cultivations of the portions of those who have -abandoned them. Upon this revolution, labour is increased, the soil -continues cultivated as before, and the additional labour of the farmers -appears in a fine high road. Is this any more than a method to engage -one part of a people to labour, in order to maintain another? - -OBSER. 5. Here I ask, whether it be not better to feed a man, in order -to make him labour and be useful, than to feed him in order to make him -live and digest his victuals? This last was the case of multitudes -during the ages of antient slavery, as well as the consequence of ill -directed modern charity. One and the other being equally well calculated -for producing a simplicity of manners: and Horace has painted it to the -life, when he says, - - _Nos numerus sumus, et fruges consumere nati._ - -This I have heard humorously translated, though nastily I confess; We -add to the number of t—d-mills. A very just representation of many of -the human species! to their shame be it spoken, as it equally casts a -reflection on religion and on government. - -Consistently with these principles, we find no great or public work -carried on in countries of great liberty. Nothing of that kind is to be -seen among the Tartars, or hunting Indians. These I call free nations, -but not our European republics, where I have found just as much -subordination and constraint as any where else. - -I have, on several occasions, let drop some expressions with regard to -charity, which I am sensible might be misinterpreted. It will therefore -be proper to make some apology, which no body can suspect of -insincerity; because my reason for introducing it, is with a view to a -farther illustration of my subject. - -When I see a rich and magnificent monastery of begging friars, adorned -with profusion of sculpture, a stupendous pile of building, stately -towers, incrustations of marble, beautiful pavements; when I compare the -execution and the expence of all these, with the faculties of a person -of the largest fortune, I find there is no proportion between what the -beggars have executed with the produce of private charities, and what -any Lord has done with his overgrown estate. Nay monasteries there are -which, had they been executed by Princes, would have been cited by -historians, from generation to generation, as eternal monuments of the -greatest prodigality and dissipation. Here then is an effect of charity, -which I have heard condemned by many, and I think without much reason. -What prostitution of riches! say they: how usefully might all this money -have been employed, in establishing manufactures, building a navy, and -in many other good purposes? Whereas I am so entirely taken up with the -effects arising from the execution of the work, that I seldom give -myself time to reflect upon its intention. The building of this -monastery has fed the industrious poor, has encouraged the liberal arts, -has improved the taste of the inhabitants, has opened the door to the -curiosity of strangers: and when I examine my purse, I find that in -place of having contributed to the building of it from a charitable -disposition, my curiosity to see it has obliged me to contribute my -proportion of the expence. I spend my money in that country, and so do -other strangers, without bringing away any thing for it. No balance of -trade is clearer than this. The miraculous tongue of St. Anthony of -Padua, has brought more clear money into that city than the industry of -a thousand weavers could have done: the charity given is not to the -monks, but to the poor whom they employ. If young wits, therefore, make -a jest of such a devotion; I ask, who ought to be laughed at, those who -give, or those who receive money for the show? - -In a country where such works are usually carried on, they cease in a -great measure to be useful, whenever they are finished; and a new one -should be set on foot directly, or what will become of those who are -without work? It must not be concluded from this, that the usefulness of -public works is not a principal consideration. The more a work is useful -after it is done, so much the better; because it may then have the -effect of giving bread to those who have not built it. But whether -useful or not afterwards, it must be useful while it is going on; and -many, who with pleasure will give a thousand pounds to adorn a church, -would not give a shilling to build Westminster bridge, or the port of -Rochefort; and the poor live equally by the execution of either. -Expensive public works, are therefore a means of giving bread to the -poor, of advancing industry, without hurting the simplicity of manners; -which is an answer to the seventh question. - -OBSER. 6. Great works found in one country, and none found in another, -is no proof that the first have surpassed the second in labour and -industry: the contrast only marks the different division of property, or -taste of expence. Every undertaking marks a particular interest. Palaces -are a representation of rich individuals; snug boxes, in the -neighbourhood of cities, represent small but easy fortunes; hutts point -out poverty; aqueducts, highways, &c. testify an opulent common good: -and if these be found in a country where no vestige of private expence -appears, I then must conclude, they have been executed by slaves, or by -oppression; otherwise somebody, at least, would have gained by the -execution; and his gains would appear in one species of expence or -another. - -OBSER. 7. In countries where fortunes have been unequally divided, where -there have been few rich and many poor, it is common to find lasting -monuments of labour; because great fortunes only are capable of -producing them. As a proof of this let us compare the castles of antient -times (I mean four or five hundred years ago) with the houses built of -late. At that time fortunes were much more unequal than at present, and -accordingly we find the habitations of the great in most countries not -numerous, but of an extraordinary bulk and solidity. Now a building is -never to be judged of by the money it cost, but by the labour it -required. From the houses in a country I judge of the opulence of the -great, and of the proportion of fortunes among the inhabitants. The -taste in which these old castles are built, marks the power of those who -built them, and, as their numbers are small, we may judge, from the -nature of man, who loves imitation, that the only reason for it was, -that there were few in a condition to build them. Why do we find in -modern times a far less disproportion between the conveniency with which -every body is lodged, than formerly; but only because riches are more -equally divided, from the operations of industry above-described. - -OBSER. 8. From this we may gather, that lasting monuments are no -adequate measure of the industry of a country. The expence of a modern -prince, in a splendid court, numerous armies, frequent journeys, -magnificent banquets, operas, masquerades, tournaments, and shews, may -give employment and bread to as many hands, as the taste of him who -built the pyramid; and the smoke of the gun-powder at his reviews, of -the flambeaus and wax lights at his entertainments, may be of as great -use to posterity, as the shadow of the pyramid, which is the only -visible effect produced by it; but the one remains for ever, the other -leaves no vestige behind it. The very remaining of the work, however -useless in itself, becomes useful, in so far as it is ornamental, -inspires noble sentiments of emulation to succeeding princes, the -effects of which will still be productive of the good consequences of -keeping people employed. The expence of the other flatters the senses, -and gives delight: there is no question of choice here. All useless -expence gratifies vanity only; accident alone makes one species -permanent, another transitory. - -Those who have money may be _engaged_ to part with it in favour of the -poor, but never forced to part with it, to the prejudice of their -posterity. Inspire, if you can, a good and useful taste of expence; -nothing so right; but never check the dissipation of ready money, with a -view to preserve private fortunes. Leave such precautions to the -prudence of every individual. Every man, no doubt, has as good a right -to perpetuate and provide for his own posterity, as a state has to -perpetuate the welfare of the whole community; it is the combination of -every private interest which forms the common weal. From this I -conclude, that, without the strongest reasons to the contrary, perpetual -substitutions of property should be left as free to those who possess -lands, as locking up in chests should be permitted to those who have -much money. - -QUEST. 8. What are the principles which influence the establishment of -mercantile companies; and what effects do these produce upon the -interests of trade? - -There is a close connexion between the principles relating to companies, -and those we have examined in the twenty third chapter, concerning -corporations. The one and the other have excellent consequences, and -both are equally liable to abuse. A right examination of principles is -the best method to advance the first and to prevent the latter. - -The advantages of companies are chiefly two. - -1. That by uniting the _stocks_ of several merchants together, an -enterprise far beyond the force of any one, becomes practicable to the -community. - -2. That by uniting the _interests_ of several merchants, who direct -their _foreign_ commerce towards the same object, the competition -between them _abroad_ is taken away; and whatever is thus gained, is so -much clear profit, not only to the company, but to the society of which -they are members. - -It is in consideration of the last circumstance, that companies for -foreign commerce have a claim to extensive privileges. But no -encouragement given to such associations should be carried farther than -the public good necessarily requires it should be. The public may reward -the ingenuity, industry and inventions of particular members, and -support a private undertaking as far as is reasonable; but every -encouragement given, ought to be at the expence of the whole community, -not at that of particular denominations of inhabitants. - -The disadvantages proceeding from companies are easily to be guessed at, -from the very nature of the advantages we have been setting forth: and -the relation between the one and the other will point out the remedies. - -1. The weight of money in the hands of companies, and the public -encouragement given, them, crush the efforts of private adventurers, -while their success inspires emulation, and a desire in every individual -to carry on a trade equally profitable. - -Here a statesman ought nicely to examine the advantages which the -company reaps from the incorporation of their stock, and those which -proceed from the public encouragement given to the undertaking; that -with an impartial hand, he may make an equal distribution of public -benefits. And when he finds it impossible to contribute to the -advancement of the public good, by communicating the privileges of -companies to private adventurers, he ought to facilitate the admittance -of every person properly qualified into such associations. - -2. The second disadvantage of companies, is, a concomitant of that -benefit so sensibly felt by the state, from the union of their interest, -while they purchase in foreign markets: the same union which, at the -time of buying, secures the company from all competitions, proves -equally disadvantageous to those who purchase from them at home. They -are masters of their price, and can regulate their profits by the -_height_ of demand; whereas they ought to keep them constantly -proportioned to the real value of the merchandize. - -The advantages resulting from the union of many private stocks is common -to all companies; but those we have mentioned to proceed from the union -of their interest, is peculiar to those who carry on an exclusive trade -in certain distant parts of the world. We have, in a former chapter, -laid down the maxims which influence the conduct of a statesman in -regulating the prices of merchandize, by watching over the balance of -work and demand, and by preserving the principles of competition in -their full activity. But here a case presents itself, where, upon one -side of the contract, competition can have no effect, and where its -introduction, by destroying the exclusive privilege of the company to -trade in certain countries, is forbid for the sake of the public good. - -What method, therefore, can be fallen upon to preserve the advantage -which the nation reaps from the company’s buying in foreign parts -without being exposed to competition; and at the same time to prevent -the disadvantage to which the individuals of the society are exposed at -home, when they endeavour, in competition with one another, to purchase -from a company, who, in virtue of the same exclusive privilege, are -united in their interest, and become masters to demand what price they -think fit. - -It may be answered, that it cannot be said of companies as of private -dealers, that they profit of every little circumstance of competition, -to raise their price. Those have a fixed standard, and all the world -buys from them at the same rate; so that retailers, who supply the -consumption, have in one respect this notable advantage, that all buying -at the same price, no one can undersell another; and the competition -between them secures the public from exorbitant prices. - -I agree that these advantages are felt, and that they are real; but -still they prove no more than that the establishment of companies is not -so hurtful to the interest of those who consume their goods, as it would -be could they profit to the utmost of their exclusive privilege in -selling by retail. But it does not follow from this, that the profits -upon such a trade do not rise (in consequence of their privilege) above -the standard proper for making the whole commerce of a nation flourish. -The very jealousy and dissatisfaction, conceived by other merchants, -equally industrious and equally well deserving of the public, because of -the great advantages enjoyed by those incorporated, under the protection -of exclusive privileges, is a hurt to trade in general, is contrary to -that principle of impartiality which should animate a good statesman, -and should be prevented if possible. Let us therefore go to the bottom -of this affair; and, by tracing the progress of such mercantile -undertakings, as are proper objects for the foundation of companies, and -which entitle them to demand and to obtain certain exclusive privileges, -let us endeavour to find out a method by which a statesman may establish -such societies, so as to have it in his power to lay their inland sales -under certain regulations, capable to supply the want of competition; -and to prevent the profits of exclusive trade from rising, considerably, -above the level of _that_ which is carried on without any such -assistance from the public. - -While the interest of companies is in few hands, the union of the -members is more intimate, and their affairs are carried on with more -secrecy. This is always the case in the infancy of such undertakings. -But the want of experience frequently occasions considerable losses; and -while this continues to be the case, no complaints are heard against -such associations. Few pretend to rival their undertaking, and it -becomes at first more commonly the object of raillery than of jealousy. -During this period, the statesman should lay the foundation of his -authority; he ought to spare no pains nor encouragement to support the -undertaking; he ought to inquire into the capacity of those at the head -of it; order their projects to be laid before him; and when he finds -them reasonable, and well planned, he ought to take unforeseen losses -upon himself: he is working for the public, not for the company; and the -more care and expence he is at in setting the undertaking on foot, the -more he has a right to direct the prosecution of it towards the general -good. This kind of assistance given, entitles him to the inspection of -their books; and from this, more than any thing, he will come at an -exact knowledge of every circumstance relating to their trade. By this -method of proceeding, there will be no complaints on the side of the -adventurers, they will engage with chearfulness, being made certain of -the public assistance, in every reasonable undertaking; their stock -becomes in a manner insured, individuals are encouraged to give them -credit, and from creditors they will naturally become associates in the -undertaking. So soon as the project comes to such a bearing as to draw -jealousy, the bottom may be enlarged by opening the doors to new -associates, in place of permitting the original proprietors to augment -their stock with borrowed money; and thus the fund of the company may be -increased in proportion to the employment found for it, and every one -will be satisfied. - -When things are conducted in this way, the authority of public -inspection is no curb upon trade; the individuals who serve the company -are cut off from the possibility of defrauding: no mysteries, no -secrets, from which abuses arise, will be encouraged; trade will become -honourable and secure, not fraudulent and precarious; because it will -grow under the inspection of its protector, who only protects it for the -public good. - -Why do companies demand exclusive privileges, and why are they ever -granted, but as a recompense to those who have been at great expence in -acquiring a knowledge which has cost nothing to the state? And why do -they exert their utmost efforts to conceal the secrets of their trade, -and to be the only sharers in the profits of it, but to make the public -refund tenfold the expence of their undertaking. - -When companies are once firmly established, the next care of a -statesman, is, to prevent the profits of their trade from rising above a -certain standard. We speak at present of those only, who, by exclusive -privileges, are exposed to no competition at their sales. One very good -method to keep down prices, is, to lay companies under a necessity of -increasing their stock as their trade can bear it, by the admission of -new associates; for by increasing the company’s stock, you increase, I -suppose, the quantity of goods they dispose of, and consequently -diminish the competition of those who demand of them: but as even this -will not have the effect, of reducing prices to the adequate value of -the merchandize (a thing only to be done by competition) the statesman -himself may interpose an extraordinary operation. He may support high -profits to the company, upon all articles of luxury consumed at home, in -favour of keeping down the prices of such goods as are either for -exportation or manufacture. - -This can only be done when he has companies to deal with: in every other -case, the principles of competition between different merchants, trading -in the same goods, upon separate interests, makes the thing impossible. -But where the interests of the sellers, which are the company, are -united, and where there is no competition, they are masters of their -price, according to the principles laid down in the seventh chapter. -Now, provided the dividend upon the whole stock be a sufficient -recompense both for the value of the fund, and the industry of those who -are employed to turn it to account, the end is accomplished. -Extraordinary profits upon any particular species of trade cast a -discouragement upon all others. - -We very frequently see that great trading companies become the means of -establishing public credit; on which occasions, it is proper to -distinguish between the trading stock of the company, which remains in -their possession, and the actions, bonds, annuities, contracts, &c. -which carry their name, and which have nothing but the name in common. -The price of the first is constantly regulated by the profits upon the -trade; the price of the other, by the current value of money. - -Let me next observe the advantage which might result to a nation, from a -prudent interposition of the statesman, in the regulation of a tarif of -prices for such goods as are put to sale without any competition on the -side of the sellers. - -The principles we have laid down, direct us to proscribe, as much as -possible, all foreign consumption, especially that of work; and to -encourage as much as possible the exportation of it. Now, if what the -India company of England, for example, sells to strangers, and exports -for a return in money, is equal to the money she herself has formerly -exported, the balance upon the India trade will stand even. But if the -competition of the French and Dutch is found hurtful to the English -company in her outward sales, may not the government of that nation lend -a hand towards raising the profits of the company, upon tea, china, and -japan wares, which are articles of superfluity consumed by the rich, in -order to enable the company to afford her silk and cotton stuffs to -strangers, at a more reasonable rate? These operations, I say, are -practicable, where a company sells without competition, but are never to -be undertaken, but when the state of its affairs are perfectly well -known; because the prices of exportable goods might, perhaps, be kept up -by abuse and mismanagement, and not by the superior advantages which -other nations have in carrying on a like commerce. The only remedy -against abuse is reformation. But how often do we see a people laid -under contribution in order to support that evil! - -Companies, we have said, owe their beginning to the difficulties to -which an infant commerce is exposed: these difficulties once surmounted, -and the company established upon a solid foundation, new objects of -profit present themselves daily; so much, that the original institution -is frequently eclipsed, by the accessary interests of the society. It is -therefore the business of a statesman to take care that the exclusive -privileges granted to a society, for a certain purpose, be not extended -to other interests, nowise relative to that which set the society on -foot, and gave it a name. And when exclusive privileges are given, a -statesman should never fail to stipulate for himself, a particular -privilege of inspection into all the affairs of the company, in order to -be able to take measures which effectually prevent bad consequences to -the general, interest of the nation, or to that of particular classes. - -Let this suffice at present, as to the privileges enjoyed by companies -in foreign trade. Let me now examine the nature of such societies in -general, in order to discover their influence on the mercantile -interests of a nation, and how they tend to bring every branch of trade -to perfection, when they are established and carried on under the eye of -a wise administration. - -Besides the advantages and disadvantages above mentioned, there are -others found to follow the establishment of trading companies. The first -proceed from _union_, that is, a common interest; the last from -_disunion_, that is, from separate interests. - -A common interest unites, and a separate interest disunites the members -of every society; and did not the first preponderate among mankind, -there would be no society at all. Those of the same nation may have a -common interest relative to foreigners, and a separate interest relative -to one another; those of the same profession may have a common interest -relative to the object of their industry, and a separate interest -relative to the carrying it on: the members of the same mercantile -company may have the same interest in the dividend, and a separate -interest in the administration of the fund which produces it. The -children of the same family; nay even a man and his wife, though tied by -the bonds of a common interest, may be disjoined by the effects of a -separate one. Mankind are like loadstones, they draw by one pole, and -repel by another. And a statesman, in order to cement his society, -should know how to engage every one, as far as possible, to turn his -attracting pole towards the particular center of common good. - -From this emblematical representation of human society, I infer, that it -is dangerous to the common interest, to permit too close an union -between the members of any subaltern society. When the members of these -are bound together, as it were by every articulation, they in some -measure become independent of the great body; when the union is less -intimate, they admit of other connections, which cement them to the -general mass[O]. - -Footnote O: - - This was writ before the society of Jesuits was suppressed in France. - -Companies ought to be permitted, consistently with these principles. -Their mercantile interests alone ought to be united, in so far as union -is required to carry on their undertaking with reasonable profits; but -beyond this, every subaltern advantage by which the associates might -profit, in consequence of their union, ought to be cut off; and the -public should take care to support the interest of any private person -against them, on all occasions, where they take advantage of their union -to hurt the right of individuals. Let me illustrate this by an example. -Several weavers, fishermen, or those of any other class of the -industrious, unite their stocks, in order to overcome those difficulties -to which single workmen are exposed, from a multiplication of expences, -which might be saved by their association. This company makes a great -demand for the materials necessary for carrying on their business. By -this demand they attach to themselves a great many of the industrious -not incorporated, who thereby get bread and employment. So far these -find an advantage: but in proportion as the undertaking is extended, and -the society becomes able to engross the whole, or a considerable part of -such a manufacture, they destroy their competitors; and by forming a -single interest, in the purchase of the materials requisite, and in the -sale of their manufactures, they profit in the first case, by reducing -the gains of their subaltern assistants below the proper standard; and -in the second, they raise their own profits too far above what is -necessary. - -The method, therefore, to prevent such abuses, is, for a statesman to -interpose; not by restraining the operations of the company, but by -opposing the force of principles similar to those by which they profit, -in such a manner as to render their unjust dealings ineffectual. If the -weavers oppress the spinners, for instance, methods may be fallen upon, -if not by incorporating the last, at least by uniting their interests, -so as to prevent a hurtful competition among them. He may discourage too -extensive companies, by establishing and supporting others, which may -serve to preserve competition; and he may punish, severely, every -transgression of the laws, tending to establish an arbitrary dependence -on the company. In short, while such societies are forming, he ought to -be their protector; and when they are formed, he ought to take those -whom they might be apt to oppress under his protection. - -In establishing companies for manufactures, it is a good expedient to -employ, in such undertakings, none but those who have been bred to the -different branches of their business. When people of fortune, ignorant -and projecting, interest themselves in infant manufactures, with a view -to become suddenly rich, they are so bent upon making vast profits, -proportioned to their stock, that their hopes are generally -disappointed, and the undertaking fails. Pains-taking people, bred to -frugality, content themselves with smaller gains; but under the public -protection, these will swell into a large sum, and the accumulation of -small profits will form a new class of opulent people, who adopt, or -rather retain the sentiments of frugality with which they were born. - -Thus, for instance, in establishing fisheries, in place of private -subscriptions from those who put in their money from public spirit, and -partly with a view to draw an interest for it; or from those who are -allured by the hopes of being great gainers in the end, (the last I call -projectors) the public should be at the great expence requisite; and -coopers, sail-makers, rope-makers, ship-carpenters, net-makers; in -short, every one useful to the undertaking, should be gratuitously taken -in for a small share of the profits; and by their being lodged together -in a building, or town, proper for carrying it on, every workman becomes -an undertaker to the company, for the articles of his own work. No man -concerned directly in the enterprize, should reside elsewhere than in -the place: any one of the associates may undertake to furnish what -cannot be manufactured at home at fixed prices. Thus the whole expence -of the public in the support of the undertaking, may circulate through -the hands of those who carry it on; and every one becomes a check upon -another, for the sake of the dividend upon the general profits. One -great advantage in carrying on undertakings in this manner, is, that -although those concerned draw no profit at all upon the undertaking -itself, they find their account in it, upon the several branches of -their own industry. The herring trade was at first set on foot in -Holland by a company of merchants, who failed; and their stock of -busses, stores, &c. being sold at an under value, were bought by private -people, who had been instructed (at the expence of the company’s -miscarriage) in every part of the trade, and who carried it on with -success. Had the company been set up at first in the manner here -mentioned, their trade would never have suffered any check. - ------------------------------------------------------------------------- - - - - - CHAP. XXXI. - _Recapitulation of the Second Book._ - - -Having paved the way in the first book, for a particular inquiry into -the principles of modern political oeconomy; in the introduction to -this, I shew that the ruling principle of the science, in all ages, has -been to proceed upon the supposition that every one will act, in what -regards the public, from a motive of private interest; and that the only -public spirited sentiment any statesman has a right to exact of his -subjects, is their strict obedience to the laws. The union of every -private interest makes the common good: this it is the duty of a -statesman to promote; this consequently ought to be the motive of all -his actions; because the goodness of an action depends on the conformity -between the motive and the duty of the agent. We can, therefore, no more -subject the actions of a statesman to the laws of private morality, than -we can judge of the dispensations of providence by what _we_ think right -and wrong[P]. - -Footnote P: - - From the want of attending duly to this distinction, some have been - led into the blasphemy of imputing evil to the Supreme Being. There is - no such thing as evil in the universe; all is good, all is absolutely - perfect. The most flagitious actions tend to universal good: even - these, in one respect, may be called the actions of God, as all that - is done is done by him; but with respect to the _motive_ which God had - in doing them, it is pure in the most sublime degree; the action is - impious and wicked, with respect only to the agent; and his wickedness - does not proceed from the action itself, but from the want of - conformity between his duty and his motive in acting. Now if the - punishment of such a transgression (which is also considered as the - action of the Supreme Being) enters into the system of general good, - is it not a monstrous folly to call it unjust? We know the duties of - man, we know the duties of governors, but we know not the duties of - God, if we may be allowed to make use of so very improper an - expression, and it is for this reason only, that we cannot judge of - the goodness of his providence. We must therefore take it for granted; - and this is one object of what divines call _faith_, the belief of - things not seen, when the disbelief of them would imply an absurdity. - -_CHAP._ I. In treating the principles of any science, many things must -be blended together, at first, which in themselves are very different. -In the first book I considered multiplication and agriculture as the -same subject; in the second, trade and industry are represented as -mutually depending on one another. To point out this relation, I give a -definition of the one and the other, by which it appears, that to -constitute trade, there must be a consumer, a manufacturer, and a -merchant. To constitute their industry, there must be freedom in the -industrious. His motive to work must be in order to procure for himself, -by the means of trade, an equivalent, with which he may purchase every -necessary, and remain with something over, as the reward of his -diligence. Consequently, industry differs from labour, which may be -forced, and which draws no other recompence, commonly, than bare -subsistence. Here I take occasion to shew the hurtful effects of slavery -on the progress of industry; from which I conclude, that its progress -was in a great measure prevented by the subordination of classes under -the feudal government; and that the dissolution of that system -established it. Whether trade be the cause of industry, or industry the -cause of trade, is a question of little importance, but the principle -upon which both depend is a taste for superfluity in those who have an -equivalent to give; this taste is what produces _demand_, and this again -is the main spring of the whole operation. - -_CHAP._ II. We have substituted throughout this book, the term _demand_, -to express the idea we conveyed in the last by that of _wants_; and -since the subject becomes more complex, and that we have many more -relations to take in, I must make a recapitulation of all the different -acceptations of this term _demand_. - -_Demand_, in the first place, is always relative to _merchandize_; it is -the buyer who demands; the seller offers to sale. 2. It is said to be -_reciprocal_, when there is a double operation, that is, when the seller -in the first, becomes the buyer in the second case; and then, taking the -two operations in one view, we call those _demanders_ who have paid the -highest price. 3. Demand is _simple_, or _compound_; _simple_, when -there is no competition among the buyers; _compound_, when there is. 4. -It is _great_ or _small_, according to the _quantity_ demanded. And 5. -_high_ or _low_, according to the _price_ offered. The nature of a -_gradual_ increase of demand, is to encourage industry, by augmenting -the supply; that of a _sudden_ increase, is to make prices rise. This -principle has not every where the same efficacy in producing these -varieties: it is checked in its operations between merchants, who seek -their profit; and it is accelerated among private people, who seek for -subsistence, necessaries, or luxurious gratifications. - -_CHAP._ III. I come next to deduce the origin of trade and industry, -which I discover from the principles of the first book, where bartering -of necessaries was understood to be trade; and I find that the progress -of this is owing to the progress of multiplication and agriculture. When -a people arrive at a moral impossibility of increasing in numbers, there -is a stop put to the progress of barter. This grows into trade, by the -introduction of a new want (money) which is the universal object of -desire to all men. While the desires of man are regulated by their -physical wants, they are circumscribed within certain limits. So soon as -they form to themselves others of a political nature, then all bounds -are broken down. The difficulty of adapting wants to wants, naturally -introduces money, which is an adequate equivalent for every thing. This -constitutes sale, which is a refinement on barter. Trade is only a step -farther; it is a double sale, the merchant buys, not for himself, but -for others. A merchant is a machine of a complex nature. Do you want, he -supplies you; have you any superfluities, he relieves you of them; do -you want some of the universal equivalent money, he gives it you, by -creating in you a credit in proportion to your circumstances. The -introduction of so useful a machine, prompts every one to wish for the -power of using it; and this is the reason why mankind extend their -labour beyond the mere supply of their physical wants. - -Trade therefore abridges the tedious operations of sale and barter, and -brings to light many things highly important for individuals, who live -by relieving the wants of others, to know. It marks the standard of -_demand_, which is, in a manner, the voice of the statesman, conducting -the operations of industry towards the relief of wants; and directing -the circulation of subsistence towards the habitations of the -necessitous. - -_CHAP._ IV. The consequence of this, is to determine the value of -commodities, and to mark the difference between _prime cost_ and -_selling prices_. The first depends upon the time employed, the expence -of the workman, and the value of the materials. The second is the sum of -these, added to the profit upon alienation. It is of consequence to -distinguish exactly between these two constituent parts of price, the -cost and the profit: the first is invariable after the first -determination, but the second is constantly increasing, either from -delay in selling off, or by the multiplicity of alienations; and the -more exactly every circumstance with regard to the whole analysis of -manufactures is examined, the easier it is for a statesman to correct -every vice or abuse which tends to carry prices beyond the proper -standard. - -_CHAP._ V. Nothing tends to introduce an advantageous foreign trade more -than low and determined prices. In the first place, it draws strangers -to market. This we call _passive commerce_. Secondly, it gives merchants -an opportunity to distribute the productions of their country with -greater advantage among other nations, which is what we call _active -foreign trade_. In this chapter, I trace the effects of the last -species. I shew how merchants profit at first of the ignorance of their -correspondents; how they engage them to become luxurious; how the -competition between themselves, when profits are high, make them betray -one another; and how the most ignorant savages are taught to take -advantage of the discovery; how this intercourse tends to unite the most -distant nations, as well as to improve them; and how naturally their -mutual interest leads them to endeavour to become serviceable to one -another. - -_CHAP._ VI. I next endeavour to shew the effects of trade upon those -nations who are passive in the operation. Here I take an opportunity of -bringing in a connexion between the principles of trade, and those of -agriculture, and I shew on what occasions passive trade may tend to -advance the cultivation of lands, and when it cannot. Upon this, I build -a principle, that when passive trade implies an augmentation of the -domestic consumption of subsistence, in order to carry it on, then will -agriculture be advanced by it, and not otherwise; and as the first is -commonly the case, from this I conclude, that trade naturally has the -effect of increasing the numbers of mankind in every country where it is -established. I next trace the consequences of a growing taste for -superfluity, among nations living in simplicity; and I shew how -naturally it tends to promote industry among the lower classes, -providing they be free; or to make them more laborious, supposing them -to be slaves: from which I conclude, that where the advancement of -refinement requires the head, that is, the ingenuity and invention of -man, those who are free have the advantage; and where it requires hands, -that is to say labour, that the advantage is on the side of the slaves: -slavery, for example, might have made Holland; but liberty alone could -have made the Dutch. - -_CHAP._ VII. Having given a rough idea of trade in general, I come to a -more accurate examination of the principles which a statesman must keep -in view, in order to carry it to perfection, by rendring it a means of -promoting ease and affluence at home, as well as power and superiority -abroad. As a private person becomes easy in his circumstances in -proportion to his industry, and so rises above the level of his fellows, -in like manner, does an industrious nation become wealthy, and acquires -a superiority over all her less industrious neighbours. - -The principle which set trade on foot we have shewn to be _demand_, what -supports it and carries it to its perfection is _competition_. These -terms are often confounded, or at least so blended together as to -produce ideas incorrect, dark, and often contradictory: for this reason -I have judged an analysis of them necessary, comparing them together, -and pointing out their relations, differences, and coincidences. - -_Demand_ and _competition_ are both relative to buying and selling; but -_demand_ can only be applied to _buying_, and _competition_ may be -applied to _either_. - -_Demand_ marks an inclination to have, _competition_ an emulation to -obtain a preference. - -_Demand_ can exist without _competition_, but _competition_ must -constantly imply _demand_. - -_Demand_ is called _simple_, when there appears only one interest on the -side of the buyers. - -_Competition_ is called _simple_, when it takes place on one side of the -contract only, or when the emulation is at least much stronger on one -side than on the other. - -_Demand_ is called _compound_, when more interests than one are found -among those who desire to buy. - -_Competition_ is called _compound_, when an emulation is found to -prevail on both sides of the contract at once. - -_Simple competition_ raises prices; _double competition_ restrains them -to the adequate value of the merchandize. - -While _double competition_ prevails, the balance of work and demand -stands even, under a gentle vibration; _simple competition_ destroys and -overturns it. - -The objects of _competition_ frequently determine its force. Merchants -buy in order to sell; consequently, their _competition_ is in proportion -to their views of profit. Hungry people buy to eat, and their -_competition_ is in proportion to their funds. The luxurious buy to -gratify their desires, their _competition_ is in proportion to these. -Strong _competition_ on one side, makes it diminish on the other; and -when it becomes so strong as effectually to unite the interests on one -side of the contract, then it becomes absolutely _simple_; this totally -overturns the balance, and must in a short time destroy the divided -interest. - -_CHAP._ VIII. I next examine the relative terms of _expence_, _profit_ -and _loss_. The relations they bear, are often not expressed, which -involves those who use them in ambiguities proper to be avoided. I -therefore call expence _national_, when the national stock is diminished -by it, in favour of other states; it is _public_, when the money -proceeding from a national contribution is expended by the state within -the country; and _private expence_ is the laying out of money belonging -to private people or private interests: this has no other effect than to -promote domestic circulation. I farther distinguish between what we call -_spending_, and what is called _advancing of money_; the first marks an -intention to consume; the second marks a view to a subsequent -alienation. - -Profit is either _positive_, _relative_, or _compound_. - -_Positive_, when some body gains and no body loses; _relative_, when -some body gains exactly what is lost by another; and _compound_, when -the gain of one implies a loss to another, but not equal to the full -value of the gain. The same distinction may be applied to loss. - -_CHAP._ IX. Having laid down the fundamental principles which influence -the operations of trade and industry, I take a view of their political -consequences, and of the effects resulting to a state, which has begun -to subject her political oeconomy to the interests of commerce; and such -a state I call a _trading nation_. - -The first consequence is an augmentation of demand for the work of the -people; because they begin now to supply strangers. If this augmentation -is sudden, it will _raise_ demand; if it be gradual, it will _increase_ -it. If prices rise upon one extensive branch of industry, they must rise -upon all; because a competition for hands must take place: the farmer -looks out for servants, and must dispute them with the loom; and the -first must draw back his additional expence upon the sale of his -articles of the first necessity. Upon this revolution, wo to those who -cannot increase their fund of subsistence in proportion to the -augmentation of their expence! Nothing is so agreeable as the gradual -rise of profits upon industry, and nothing so melancholy as the stop, -which is the necessary consequence of all augmentations. When prices -rise high, the market is deserted, and other nations profit of this -circumstance to obtain a preference. From hence I conclude, that the -_rise_ of demand is the forerunner of decay in trade; and the -_augmentation_ of it, the true foundation of lasting opulence. But as an -augmentation of supply may imply an augmentation of inhabitants, the -statesman must constantly keep subsistence in an easy proportion to the -demand for it: on this the whole depends. Plentiful subsistence is the -infallible means of keeping prices low; and sudden and violent -revolutions in the value of it, must ruin industry, in spite of a -combination of every other favourable circumstance. The reason is plain: -that article alone, comprehends two thirds of the whole expence of all -the lower classes, and their gains must be in proportion to their -expence; but as the gains of those who work for exportation are fixed, -in a trading nation, by the effects of foreign competition, if their -subsistence is not kept at an equal standard, they must live -precariously, or in a perpetual vicissitude between plenty and want. -From this may be gathered the infinite importance of distinguishing, in -every trading nation, where the prices of subsistence are liable to -great and sudden variations, these who supply strangers from those who -supply their countrymen. As also the inconceivable advantage which would -result from such a police upon grain, as might keep the price of it -within determined limits. - -_CHAP._ X. This doctrine leads me naturally to consider the proportions -between _demand_ and _supply_, and for the better conveying my ideas, I -have considered them as two quantities suspended in the scales of a -political balance, which I call that _of work and demand_; preferring -the word _work_ to that of _supply_, because it is the interests of the -workmen which chiefly come under our consideration. - -When the _work_ is proportioned to the _demand_, the balance vibrates -under the influence of double competition; trade and industry flourish: -but as the operation of natural causes must destroy this equilibrium, -the hand of a statesman becomes constantly necessary to preserve it. - -After representing the different ways in which the balance comes to be -subverted (by the _positive_ or _relative_ preponderancy of either -scale) I point out the consequences of this neglect in the statesman’s -administration. If the scale of _work_ should preponderate, that is, if -there be more work than demand, either the workmen enter into a hurtful -competition, which reduces their profit below the proper standard and -makes them starve; or a part of the goods lie upon their hands, to the -discouragement of industry. If the scale of demand should preponderate, -then either prices will rise and profits consolidate, which prepares the -way for establishing foreign rivalship, or the demand will immediately -cease, which marks a check given to the growth of industry. - -Every subversion, therefore, of this balance, implies one of four -inconveniencies, either the industrious starve one another; or a part of -their work provided lies upon hand; or their profits rise and -consolidate; or a part of the demand made, is not answered by them. -These I call the immediate effects of the subversion of this balance. I -next point out the farther consequences which they draw along with them, -when the statesman is not on his guard to prevent them. - -A statesman must be constantly attentive, and so soon as he perceives a -too frequent tendency in any one of the scales to preponderate, he ought -gently to load the opposite scale, but never except in cases of the -greatest necessity, take any thing out of the heavy one. Thus when the -scale of demand is found to preponderate, he ought to give encouragement -to the establishment of new undertakings, for augmenting the supply, and -for preserving prices at their former standard: when the scale of work -is on the preponderating hand, then every expedient for increasing -exportation must be employed, in order to prevent profits from falling -below the price of subsistence. - -_CHAP._ XI. I next examine how this equal balance comes at last to be -destroyed. - -_1mo._ The constant increase of work implies an augmentation of numbers, -and consequently of food; but the quantity of food depends on the extent -and fertility of the soil: so soon therefore as the soil refuses to give -more food, it must be sought for from abroad, and when the expence of -procuring it rises above a certain standard, subsistence becomes dear; -this raises the prices, the market is deserted, and the scale of work is -made to preponderate, until the industrious enter into a hurtful -competition and starve one another: here the application of public money -becomes necessary. - -_2do._ When an idle people, abundantly fed, betake themselves to -industry, they can afford, for a while, manufactures at the cheapest -rate; because they do not _live_ by their industry, but _amuse -themselves_ with it. Hence the cheapness of all sorts of country work, -in former times, and of Nuns work in those we live in. But when the -lands become purged of superfluous mouths, and when those purged off -come to be obliged to live by their industry alone, then prices rise, -and the market is deserted. - -_3tio._ When a statesman imprudently imposes taxes, in such a way as to -oblige strangers to refund that part paid by the industrious who supply -them; this also raises prices, and the market is deserted. Thus the -operation of natural causes must bring every augmentation to a stop, -unless the hand of a statesman be employed to check their immediate bad -effects. When subsistence becomes scarce, and the improvement of lands -too expensive, he must make the public contribute towards the -improvement of the soil: when the price of subsistence still rises, from -farther augmentations, he must keep it down with public money: and when -this operation becomes too extensive, he must content himself with -effectuating a diminution of price upon that part of subsistence which -is consumed by those who supply foreign markets. - -_CHAP._ XII. Domestic vices alone are not sufficient to undo a trading -nation; she must have rivals who are able to profit of them. - -While her balance of _work_ and _demand_ is made to vibrate by alternate -_augmentations_, she marches on triumphant, and has nothing to fear: -when these come to a stop, she must learn how to stand still, by the -help of alternate _augmentations_ and _diminutions_, until the abuses in -other nations shall enable her again to vibrate by _augmentations_. But -so soon as a preponderancy of the scale of work is rectified, by -retrenching the number of the industrious, and that the vibrations of -the balance are carried on by alternate _diminutions_, in favour of -supporting high profits upon industry, then all goes to wreck, and -foreign nations, in spite of every disadvantage attending new -undertakings, establish a successful rivalship: they take the bread out -of the mouths of those who formerly served them; and profiting of the -advantages formerly enjoyed by the traders, they make their own balance -vibrate by augmentations, which sink the trade of the others by slow -degrees, until it becomes extinct. - -_CHAP._ XIII. The rivalship between nations, leads me to inquire how far -the form of their government may be favourable or unfavourable to the -competition between them. Here I am led into a digression concerning the -origin of power and subordination among men, so far as it is rational -and consistent with natural equity; and I conclude, that all -_subordination_ between man and man, in whatever relation they stand to -one another, ought to be in proportion to their _mutual dependence_. The -degrees of which are as various as the shades of a colour. I divide them -however into four. 1. That of slaves upon their masters. 2. That of -children upon their parents. 3. That of labourers upon the proprietors -of lands. 4. That of the free hands, employed in trades and -manufactures, upon their customers. And ascending a moment beyond my -sphere, I say, that the subordination of subjects to their sovereigns, -in all free governments, extends no farther than to a punctual obedience -to the laws. I then proceed to an examination of former principles, and -from a confrontation of the politics of our ancestors with the modern -system, I conclude, that the great political impediment to the progress -of trade and industry, proceeds more from an arbitrary, irregular, and -undetermined subordination between classes, and between individuals, -than from differences in the regular and established form of their -government, legislation, and execution or administration of the supreme -authority. While laws only govern, it is of the less importance who -makes them, or who puts them in execution. - -_CHAP._ XIV. In this chapter I endeavour to amuse my reader with an -application of our principles to the political oeconomy of the -Lacedemonian commonwealth, where I shew, that trade and industry are not -essential to security and happiness. By making an analysis of Lycurgus’s -plan, I shew that its perfection was entirely owing to the simplicity of -the institution. - -_CHAP._ XV. I come next to the application of general principles to -particular modifications of trade. - -The balance of work and demand promotes the _foreign_ and _domestic_ -interests of a nation, equally. The _first_, by advancing her power and -superiority abroad; the _last_, by keeping every one employed and -subsisted at home. These interests are influenced by principles entirely -different; and this opens a new combination highly proper to be attended -to. - -In the first book, we considered the consumers and suppliers as members -of the same society, and as having their interests blended together; but -the moment that a question about foreign trade arises, they become -entirely separated. Every country appears to be put under the direction -of a particular statesman, and these must play against one another as if -they were playing at chess. He who governs the consumers, must use his -utmost endeavours to teach his people how to supply themselves. He who -is at the head of the suppliers, must do what _he_ can to render the -efforts of the other ineffectual, by selling cheap, and by making it the -immediate interest of the subjects of his rival to employ the suppliers -preferably to his own countrymen. Here then are two plans, opposite and -contrary, to be executed; and we endeavour to point out the principles -which ought to influence the conduct of the respective undertakers, in -every stage of their prosperity or decline. We lay down the methods of -improving every favourable circumstance, so as to advance the end -proposed, and shew how to season every unavoidable inconvenience with -the best palliatives, when a perfect remedy becomes impracticable. - -_CHAP._ XVI. In this chapter I continue the thread of my reasoning, in -order to draw the attention of my readers to the difference between the -principles of _foreign_ and _domestic_ commerce; and setting the latter -apart for a subsequent examination, I enter upon an inquiry into the -difference between those branches of foreign trade which make nations -depend on one another _necessarily_, and those where the dependence is -only _contingent_. The first may be reckoned upon, but the last being of -a precarious nature, the preservation of them ought to be the particular -care of the statesman. - -The method to be followed for this purpose, is, to keep the price of -every article of exportation at a standard, proportioned to the -possibility of furnishing it; and never to allow it to rise higher, let -the foreign demand afford ever so favourable an opportunity. The danger -to be avoided, is not the high profits, but the _consolidation_ of them; -this consideration, therefore, must direct the statesman’s conduct in -this particular. On the other hand, he must take care that the great -classes of the industrious, who supply foreign demand, and who, from -political considerations, are reduced to the _minimum_ of profits, be -not by an accidental diminution of that foreign demand reduced below -this necessary standard: he therefore must supply the want of foreign -demand, by procuring a sale, in one way or other, for whatever part of -this industry is found to lie upon hand; and if loss be incurred in this -operation, it is better that it should fall on the whole community, who -may be able to bear it, than on a single class, who must be crushed -under the burthen. - -_CHAP._ XVII. When manufacturers are found without employment, the first -thing to be done is to inquire minutely into the cause of it. It may -proceed from a rise in the price of subsistence, from a diminution of -demand from abroad, or from new establishments of manufactures at home; -for each of which the proper remedy must be applied. The complaints of -manufacturers are not the infallible sign of a decaying trade; they -complain most when their exorbitant profits are cut off. The complaints -of the real sufferers, those who lose _the necessary_, are feeble, and -seldom extend farther than the sphere of their own misery. The true -symptoms of a decaying trade, is to be sought for in the mansions of the -rich, where foreign consumption makes its first appearance. A statesman -will judge of the decay of _that_ trade _which supports and enriches the -people_, more certainly from the _ease_ of the industrious classes, than -from their _distress_. Foreign nations will willingly give _bread_ to -those who serve them, but very seldom _any thing more_; and from hence I -conclude, that the more manufacturers are at their ease, the more a -statesman ought to be upon his guard to prevent this temporary advantage -from bringing on both national poverty and private distress. - -When home consumption begins to be supplied from abroad, and when -foreigners desert the market, or refuse our merchandize when we carry it -to them, then we have an infallible proof of declining commerce; -although the increase of home demand may immediately relieve every -industrious person made idle, and even furnish them with better -employment than ever, in supplying the luxury of their countrymen. - -A statesman ought to be provided with remedies against every disease. -When luxury is on the road of rooting out foreign trade, let him lie -upon the catch to pick up every workman made idle from the caprice of -fashions, in order to give him useful employment: he may set his own -example in opposition to that of the more luxurious, and in proportion -as he gains ground upon them, he must open every channel to carry off -the manufactures of those he has set to work for the re-establishment of -foreign trade. If, on the other hand, he himself be of a luxurious -disposition, and that he inclines to encourage it, he ought to take care -that the example of dissipation he gives, may not have the effect of -diminishing the hands employed for supplying both home consumption and -foreign demand. This is accomplished by preserving a plentiful -subsistence in the country, and by keeping down the prices of every -species of manufacture, by gradually augmenting the hands employed, in -proportion to the augmentation of demand; thus his luxury will increase -his numbers, without hurting his foreign trade: the great art, -therefore, is to adapt administration to circumstances, and to regulate -it according to invariable principles. - -_CHAP._ XVIII. But as a statesman is not always the architect of that -oeconomy by which his people must be governed, he should know how to -remove inconveniencies as well as to prevent them; because he is -answerable, in a great measure, for the consequences of the faults of -those who have gone before him. Thus when his predecessors have allowed -the operation of natural causes to raise prices, and to destroy foreign -trade, he must descend into the most minute analysis of every -circumstance relating to industry, in order to pluck up by the root the -real cause of such augmentations. Mistaken remedies, applied in a -disease not rightly understood, produce frequently the most fatal -consequences. - -If a statesman, for instance, should apply the remedy against -_consolidated profits_, by multiplying the hands employed in a -manufacture, at a time when high prices proceed only from the dearness -of living, by this simple mistake he will ruin all: those who really -gain no more than a physical-necessary, will then enter into a hurtful -competition, and starve one another. But if instead of multiplying hands -he augments subsistence, prices will fall; and then by keeping hands -rightly proportioned to demand, they will naturally and gradually come -down to the lowest standard; and exportation will go on prosperously. - -I consider _consolidated profits_, and _high prices of subsistence_, as -vices in a state, within the compass of a statesman’s care to redress. -But there is a third cause of high prices, (that is relatively high, -when compared with those in other countries) which will equally ruin -foreign trade, in spite of all precautions. - -This happens when other nations have learned to profit of their superior -natural advantages. I have shewn how vices at home enable foreigners to -become our rivals; but without this assistance, every nation well -governed, will be able to profit of its own natural superiority, in -spite of the best management on the other side. The only remedy in such -a case, is, for the nation whose trade begins to decline, in consequence -of the natural superiority of other nations, to adhere closely to her -_frugality_; to leave no stone unturned to inspire a luxurious taste in -her rivals; and to wait with patience until the unwary beginners shall, -from that cause, fall into the inconveniencies of dear living, and -consolidated profits. Besides this expedient, there are others which -depend on a judicious application of public money: an irresistible -engine in trade, capable of ruining the commerce of any other nation, -(not supporting it by similar operations) and of carrying on -exportation, in spite of great natural disadvantages. But these -principles are reserved for the fifth book, when we come to treat of the -application of taxes. - -Having pointed out the methods of preserving a foreign trade already -established, I next examine how those nations which have been -contributing inadvertently to the exaltation of others more industrious, -by carrying on with them a trade hurtful to themselves, may put a stop -to the exhausting of their own treasures; may learn to supply themselves -with every thing necessary; and may be taught to profit of their own -natural advantages, so as to become the rivals of those who have perhaps -reduced them to poverty; and even to recover, not only their former -rank, but to lay the foundation of a political oeconomy capable of -raising them to the level of the most flourishing states. - -I conclude my chapter, by calling for the attention of my reader to the -wide difference there is between _theory_, where all the vices to be -corrected appear clear and uncompounded; and _practice_, where they are -often difficult to be discovered, and so complicated with one another, -that it is hardly possible to apply any remedy which will not be -productive of very great inconveniencies. Were the remedies for abuse as -easily applied as theory seems to suggest, they would quickly be -corrected every where. - -Let theorists, therefore, beware of trusting to their science, when in -matters of administration, they either advise those who are disposed -blindly to follow them; or when they undertake to meddle in it -themselves. An old practitioner feels difficulties which he cannot -reduce to principles, nor render intelligible to every body; and the -theorist who boldly undertakes to remedy every evil, and who foresees -none on the opposite side, will most probably miscarry, and then give a -very rational account for his ill success. A good theorist, therefore, -may be excellent in deliberation, but without a long and confirmed -practice, he will ever make a blundering statesman in practice. - -_CHAP._ XIX. Having treated of the fundamental principles of _trade_ and -_industry_; having explained the doctrine of _demand_ and _competition_; -the theory of _prices_, with the causes of their _rise_ and _fall_; the -difference between _prime cost_ and _profits_; the _consolidation_ of -these; and the effects of such _consolidation_ in any branch of -manufacture; I set my subject in a new light, and present it to my -readers under a more extended view. Having, as I may say, studied the -map of every province, we are now to look at that of the whole country. -Here the principal rivers and cities are marked; but all brooks, -villages, &c. are suppressed. This is no more than a short -recapitulation of what has been gone through already. Trade, considered -in this view, divides itself into three districts, or into three stages -of life, as it were, _infancy_, _manhood_, and _old age_. - -During the _infancy_ of trade, the statesman should lay the foundation -of _industry_. He ought to multiply wants, encourage the supply of them; -in short, pursue the principles of the first book, with this addition, -that he must exclude all importation of foreign work. While luxury tends -only to banish idleness, to give bread to those who are in want, and to -advance dexterity, it is productive of the best effects. - -When a people have fairly taken a laborious turn, when sloth is -despised, and dexterity carried to perfection, then the statesman must -endeavour to remove the incumbrances which must have proceeded from the -execution of the first part of his plan. The scaffolding must be taken -away when the fabric is compleated. These incumbrances are high prices, -at which he has been obliged to wink, while he was inspiring a taste for -industry in the advancement of agriculture and of manufactures; but now -that he intends to supply foreign markets, he must multiply hands; set -them in competition; bring down the price both of subsistence and work; -and when the luxury of his people render this difficult, he must attack -the manners of the rich, and give a check to the domestic consumption of -superfluity, in order to have the more hands for the supply of -strangers. - -The last stage of trade is by far the most brilliant; when, upon the -extinction of foreign trade, the wealth acquired comes to circulate at -home. The variety of new principles which arise upon this revolution, -makes the subject of what remains to be examined in the succeeding -chapters. - -_CHAP._ XX. Before I enter upon the principles of inland commerce, I -prepare the way, by a short dissertation upon the term luxury. I -endeavour to analyse the word to the bottom, to discover, and to range -in order, every idea which can be conveyed by it. In this way I -vindicate the definition I have given of it (which is the consumption of -superfluity) and shew that luxury, as I recommend it, is free from the -imputation either of being vicious or abusive. - -I distinguish, therefore, between _luxury_, _sensuality_, and _excess_, -three terms often confounded, but conveying very different ideas. A -person may consume great quantities of superfluity from a principle of -ostentation, or even with a political view to encourage industry; him I -call _luxurious_. _Sensuality_ may be indulged in a cottage, as well as -in a palace; and excess is purely relative to circumstances. _Luxury_, -therefore, as well as _sensuality_, or any other passion, may be carried -to _excess_, and so become vicious. Now _excess_ in consumption is -vicious in proportion as it affects our _moral_, _physical_, _domestic_, -or _political_ interests; that is to say, our _mind_, our _body_, our -_private fortune_, or the _state_. When the consumption we make, does no -harm in any of these respects, it may be called moderate and free from -vice. - -Our _moral_ and _physical_ interests are hurt by excess, in _eating_, -_drinking_, _love_, and _ease_, or indolence; according as these -gratifications do respectively affect the _mind_, or the _body_, or -both. - -Our _domestic_ interest frequently obliges us to call that _excess_, -which nature hardly finds _sufficient_; and, on other occasions, both -mind and body go to destruction, by _excesses_ which have contributed to -amass the greatest fortunes. - -The most direct _political_ inconvenience of excessive luxury, is, the -loss of foreign trade. The more indirect follow as consequences of those -already described; because they may render those employed in the service -of the state, negligent and unfit, rapacious and corrupt, but these -evils are more properly the _direct_ effects of the imperfections of the -mind, than consequences resulting _naturally_ from excess in the -consumption of superfluity. They ought, therefore, to be considered as -secondary effects, since they may proceed from avarice as well as -prodigality. The correcting of political vices resembles the weeding a -bed of tender flowers, the roots are all blended together, and the -leaves are almost alike. It is proper, therefore, to have both the -discernment and dexterity of a good gardner for such an operation. - -_CHAP._ XXI. From _luxury_ I pass to the _physical-necessary_, which I -define from the consumption implied by it: a man has his -physical-necessary when _he is fed, clothed, and protected from harm_. -But as these enjoyments, we find, do by no means satisfy his desires, I -am led to establish another _necessary_ which I call _political_. This I -measure also by the consumption implied by it, to wit, that which is -suitable to the _rank_ of the person. - -_Rank_ again is determined by the _common opinion of men_, and this -_opinion_ is founded upon circumstances, which relate to the _birth_, -_education_, or _habits_ of the person. When common opinion has placed -any one in a certain rank, he becomes entitled to enjoy certain articles -of _physical-superfluity_, which enter into the composition of his -_political-necessary_: thus, such as are raised above the level of the -very lowest class of inhabitants, are entitled to have a Sunday’s dress; -the farmer has a better coat than a labouring servant; the priest of the -parish must have a gown; the magistrate of a little town must have -ruffles, perhaps silk stockings; a provost a velvet coat, and a lord -mayor a state coach; these and such like articles constitute what I call -the _political-necessary_. - -A man’s rank sometimes obliges him to certain articles of expence, which -may possibly affect even his _physical-necessary_. How frequently do we -see people cover their shoulders, at the expence of their belly. The -competition between the desires of our _mind_, and those which proceed -from our _animal oeconomy_ is so strong, that it is frequently hard to -determine, whether the incapacity to supply our _physical wants_, -proceeds from our having too far gratified our other desires, or from -real poverty. - -The lowest classes of a people, in a country of trade, must be -restrained to their physical-necessary; but this restraint must be -brought about, not by _oppression_, but by the effects of _competition_ -alone. While this is supported among people of the same class, it has -the effect to reduce them all to the _physical-necessary_, and when it -reduces them lower it is a vice, and ought to be checked. A peculiar -ingenuity in some workmen of the same class, will raise them above this -level; and the more they can raise themselves above competition, the -greater will their gains be. By becoming masters in any art, they share -the profits of those whom they employ; and thus rise in rank and -fortune, provided their frugality concur with every other natural or -acquired advantage. It is therefore a principle, _to encourage -competition universally, until it has had the effect to reduce people of -industry to the physical-necessary, and to prevent it ever from bringing -them lower_: from this results the necessity of applying every expedient -for relieving certain classes of the load of their children, if you -incline they should breed; and of preventing taxes and other burthens -from affecting them unequally. - -_CHAP._ XXII. I now come to treat directly of inland commerce, as taking -place upon the extinction of foreign trade, when all attempts to recover -it are found to be vain. In such a situation, a wealthy nation is not to -consider itself as undone: an able statesman must know how to make his -people happy in every situation. It is an universal principle of -conduct, private and political, to look forward, and to improve the -present from the experience of the past. One great inconvenience -resulting from a foreign trade _already lost_, is, that there is no -farther question of making any new acquisition of wealth, or of -replacing one farthing of what at any time may be sent out of the -country. But the greatest inconveniencies are felt in the losing such a -trade: these are numberless, when an able statesman is not at hand to -prevent them. - -That I may point them out in order, I make a short recapitulation of our -principles: the slightest hint is sufficient to shew their force; and -when my reader is sensible of a repetition, which he finds superfluous, -let him reflect that this very circumstance is proof of their exactness. -In this science we must use our principles as a carpenter uses his -foot-rule; there is nothing new to him in this instrument; but still he -must have it in his hand, to be able to know any thing, with accuracy, -concerning his work. - -In this chapter I throw in a short dissertation upon the difference -between antient and modern luxury. Their natures and effects are briefly -insisted on. I point out the resemblance between the luxury of modern -times, and that of the few great trading cities of antiquity; such as -Tyre and Carthage; and I shew in what respect it differed from that -luxury which proved the downfall of the empires of Asia and Rome. - -When empires were once formed, they were ruined by luxury, and preserved -by means of their wars: because these made their wealth circulate. - -When the trading states took a military turn, and became ambitious of -conquest, their ruin soon followed: because war destroyed the industry -which made their greatness. - -The cause of difference I find to proceed from this; that in the -_monarchy_, the riches from which the luxury sprung was the effect of -rapine; in the _other_, the effect of industry. The first gave no -equivalent for their wealth; the others did. Where no equivalent is -given in the acquisition, all proportion is lost in the dissipation. The -luxury of the robbers was monstrous and violent: that of the merchants, -systematical and proportional. The luxury of the monarchies brought on -neglect in public affairs: in the cities, it was this neglect which -destroyed their luxury. The luxury of the monarchies had nothing to -recommend it, but the gratification of the passions: the luxury of the -others produced no harm, but from this very circumstance. From the -contrast I have drawn, I establish the difference between antient and -modern luxury. The first was violent; the last is systematical, and can -be supported by industry and liberty only. A farther consequence is, -that as rapine is incompatible with industry, so is arbitrary power: -consequently, those absolute princes who establish industry in their -country, in order to taste of the sweets of luxury and wealth, put -insensibly a bridle in the mouths of their successors, who must, from -this consideration alone, submit their government to a regular system of -laws and political œconomy. - -This is a better scheme for limiting the arbitrary power of Princes than -all the rebellions that ever were contrived. Confusion establishes -arbitrary power, and order destroys it. - -_CHAP._ XXIII. When a nation, which has long dealt and enriched herself -by a reciprocal commerce in manufactures with other nations, finds the -balance of trade turn against her, it is her interest to put a total -stop to it, and to remain as she is, rather than to persist habitually -in a practice, which, by a change of circumstances, must have effects -very opposite to those advantages which it produced formerly. Such a -stop may be brought about by the means of duties and prohibitions, which -a statesman can lay on importations, so soon as he perceives that they -begin to preponderate with respect to the _exportations_ of his own -country. - -I illustrate this principle by an examination of those which influence -the establishment of incorporated cities and boroughs. I shew how these -may be considered as so many states, which domestic luxury, taxes, and -the high price of living, have put out of a capacity to support a -competition with strangers (that is with the open country) which here -represents the rest of the world. I shew the reasonableness of such -exclusive privileges, in favour of those who share the burthens peculiar -to the community, in so far only as regards the supply of their own -consumption; and I point out, by what methods any discouragements to -industry may be prevented, as often as that industry has for its object -the supplying the wants of those who are not included in the -corporation. - -From the long and constant practice of raising _taxes_ within -incorporated cities, I conclude, that _taxes_ are a very natural -consequence of luxury, and of the loss of foreign trade; and as Princes -have taken the hint from the cities, to extend them universally, it is -no wonder to see foreign trade put an end to, in consequence of such -injudicious extensions. - -_CHAP._ XXIV. I next proceed to the methods proper to be used, in the -delicate operation of so great a revolution as that of degrading a -people from their right of being considered as a trading nation. - -If a statesman keeps a watchful eye over every article of importation; -and examines minutely, the use every article imported is put to; he will -easily discern, when it is proper to encourage, when to restrain, and -when to prohibit. - -In this examination, however, every relation must be taken in: because -the importation of a foreign commodity affects many different interests, -some within, some without the nation; some directly, others only -consequentially. Nothing is so complex as the interests of trade. The -importation of a commodity may first advance the interest of those at -home, who furnish the commodities exported, of which the importation is -the return. The importation may be useful for the advancement of -manufactures, providing it consist in matter fit for them; yet if the -whole manufacture produced from it be for home-consumption, the national -interest will, on the whole, be hurt by the importation. The importation -of wines and brandies is a great saving upon subsistence, in northern -countries, where liquors distilled from grain are made to supply the -place of them. These and many other relations must be examined, before a -statesman can pass sentence upon an article of importation. The inquiry -made, and accounts balanced on both sides, every hurtful article of -importation should be cut off; and when this is done, if the consequence -should prove a general stop to exportation, then is foreign trade -decently interred, without any violent revolution; because the statesman -is supposed to have proceeded gradually, and to have been all the while -labouring to increase consumption at home, in proportion as the -industrious have been forced to lie idle by the other operations. - -When foreign trade is at an end, the number of inhabitants must be -reduced to the proportion of home-subsistence, in case their former -prosperity had carried them beyond it. The nation’s wealth must be kept -entire, and made to circulate, so as to provide subsistence and -employment for every body. - -_CHAP._ XXV. Let a nation be reduced ever so low in point of foreign -commerce, she will always find a demand from abroad for the -superfluities of her natural productions; which, if rightly conducted, -will prove a means of advancing her national wealth. - -If the exportation of subsistence should go forward, while many are -found in want at home, a restraint laid upon exportation will not -redress the inconvenience; because the wretched will still remain so, -unless they are assisted and put in a capacity to dispute the -subsistence of their own country with foreign nations. The principal -cause of this phenomenon is the preponderancy of the scale of work at -home. When home-demand does not fill up the void, of which we have -spoken, a vicious competition takes place among those who work for a -physical-necessary; the price of their labour falls below the general -standard of subsistence _abroad_; their portion is exported, and they -are forced to starve. - -A statesman, therefore, at the head of a luxurious people, must -endeavour to keep his balance even; and if a subversion is necessary, it -is far better it should happen by the preponderancy of the scale of -demand. Here is my reason for preferring this alternative. - -All subversions are bad, and are attended with bad consequences. If the -scale of work preponderates, the industrious will starve, their -subsistence will be exported; the nation gains by the balance, but -appears in a manner to sell her inhabitants. If the scale of demand -preponderates, luxury must increase, but the poor are fed at the expence -of the rich, and the national stock of wealth stands as it was. Upon the -cessation, therefore, of foreign trade, you must either lose your -people, or encourage luxury. - -The statesman having regulated the concerns of his outward commerce, -must apply more closely than ever to his domestic concerns. I reduce the -principal objects of his attention to three. 1. To regulate the progress -of luxury according to the hands ready to supply the demand for it. 2. -To circumscribe the bounds of it, that is, the multiplication of his -people, to the proportion of the extent and fertility of the soil. And -in the last place, to distribute his people into classes, according as -circumstances (of which he is not master) may demand. - -Here I point out the reasons why the progress of luxury does less hurt -to a great kingdom than to a small state. Why sumptuary laws are good in -an imperial town of Germany, and why they would be hurtful in London or -Paris. Why the establishment of a standing army, _in a country fully -peopled_ and rich, should be accompanied with endeavours to diminish -luxury, in order to prevent too great a preponderancy of the scale of -demand, and the rising of prices, which would cut off the hopes of -recovering a foreign trade. - -Having briefly gone through the objects of the statesman’s concern, I -come to examine the natural consequences of this revolution upon the -spirit, government, and manners of a people, who from industrious and -frugal are become luxurious and polite. - -The traders withdraw their stocks as trade decays, and lend it out at -home to landed men, who thereby are enabled to become luxurious. This -indemnifies the industrious for the loss of foreign demand. When the -money, formerly employed in order to gain more, begins to circulate at -home, for providing superfluities, and augmenting domestic consumption, -the country appears daily to be growing more opulent; tradesmen and -manufacturers, who were formerly confined to a physical-necessary, are -now easy in their circumstances; they increase their consumption; this -accelerates circulation; an air of plenty and ease spreads over the face -of the country; and the very consequences of their decline, are -construed as invincible proofs of their growing prosperity. - -Riches may be considered by a statesman in three different lights; as a -mine when they are locked up; as an object of trade when they are -employed in order to gain more; or as an object of luxury, and fund for -taxation, when they are spent in the gratification of our political -wants. - -The general cast of mind and disposition of the inhabitants of every -country (in so far as regards money) may, I think, be reduced to one or -other of these three modifications. It is the business of a statesman to -work upon the spirit of his people, so as to model their taste of -expence by insensible degrees, and to bring it to be analogous to that -principle which is most conducive to national prosperity. Hoarding in -private people, can hardly ever be advantageous to a state; when the -state hoards, the case is very different, as shall be shewn. While money -is employed to gain more, it never can procure to the proprietor, either -power or authority; but when, in the last case, it is employed for the -gratification of our desires, in the hands of the ambitious, it acquires -power; consequently, may rival that influence which no person ought to -enjoy, but he who is at the head of the state. This is the mother of -faction, and the root from which all hurtful parties spring. It is by -such means that governments (be they good or bad) are brought into -anarchy. Private wealth corrupted, and at last destroyed the excellence -of the Roman commonwealth: and private wealth alone established the -liberty of Holland upon the ruins of Spanish tyranny. So soon therefore -as the inhabitants of a country begin to employ their riches to gratify -their inclinations, at the same time should a statesman begin to make -himself rich, in order to preserve that superiority which is essential -to _him_ who sits at the head of every principle of action. And whenever -this lies beyond his reach, the power he had will soon disappear; and -the government will take a new form. - -A statesman acquires wealth by imposing taxes upon his people: rapine is -the tax of the despote; capitation, land tax, and others which affect -persons, are those of the monarch; excises upon consumption are imposed -by limited governments. The first lay all flat, the second affect -growing wealth, the last accelerate dissipation. I conclude my chapter -with some little historical illustrations concerning the power and -influence of great men in a state, under different circumstances. - -_CHAP._ XXVI. I next consider the nature of what I call the _balance of -wealth_. The more circulation there is in a country, the more this -object becomes important. While the greatest part of a nation’s coin was -locked up; or while it circulated by rapine and extortion, the effects -discovered in modern times, where it circulates by industry, and as an -adequate equivalent for services, were hardly perceived. - -The specie, or circulating coin of a country, must be considered as a -part of the national patrimony. This is constantly changing hands in a -country of industry, and he who is proprietor of any part of it, is in -so far a proprietor of the public stock. - -With this species of property, every other may be acquired. When it is -given as the price of land, such an exchange produces no alteration in -the respective situation of the parties. An estate in land is neither -better or worse than another in coin of the same value. If I purchase an -annuity, or pay off my debts with the coin I have in my pocket, neither -I or the person with whom I transact, make any change of situation in -point of wealth. - -But if I lay out my coin for consumable commodities for my own use, then -so soon as any part of what I buy is consumed, I become poorer: for this -operation annihilates, in a manner, as to me, the coin I had. This I -call a vibration in the balance of wealth; I grow poorer, and he who -produced the consumable commodity for my use, is so far richer: the -balance, therefore, is turned against me, in his favour. - -As many people, therefore, live by producing consumable commodities, one -use of coin is to render inconsumable, as it were, that part of them -which is superfluous to our own consumption. By this operation the -superfluity passes into other hands who consume it, and the coin which -the industrious receive in return purchases a supply for all their -wants, in proportion as they choose to relieve them. - -The vibration of the balance of wealth, therefore, is no more than the -changes which are daily taking place, as to the relative proportion of -riches between the individuals of a state: and as this vibration can -only be produced when the coin any one possesses comes to disappear, -without his retaining the possession of any real equivalent which he can -alienate for the same value; it follows, that the balance is constantly -turning in favour of those who either sell their effects, their service, -or their work; and this balance they retain, in proportion as their -gains exceed their own consumption. On the other hand, the balance is -constantly turning against the idle consumers; because they are supposed -to produce nothing; consequently, the whole of their consumption goes in -diminution of their wealth. - -Hitherto the question has only been about the balance of moveable -wealth, that is coin; but the introduction of this, together with a -taste for superfluity, has the effect of melting down _solid property_ -into what I call _symbolical money_. - -When once this refinement upon the use of money takes place, we see -houses, lands, jurisdictions, provinces, principalities, crowns, -scepters and empires, thrown into circulation by means of the symbolical -money called bank notes, transfer in bank stock, accounts, bonds, -mortgages, alienations of domain, mortgage of taxes, and cessions made -in definitive treaties. - -As frugality and industry are in our days capable of amassing the -greatest fortunes in solid property, so is dissipation, by the means of -symbolical money, as certain an expedient for the annihilation of them. -From this I conclude, that dissipation implies frugality, and frugality -dissipation. In every country of great circulation, they balance and -destroy one another; and since there is no such thing as equality of -fortune to be preserved without proscribing alienation, that is -circulation, the next best expedient for making people equal, I think, -is to enrich them by turns. - -I conclude my chapter by inquiring into the effects of national debts -upon the vibration of this balance; and I conclude, from the principles -laid down, that with respect to the collective interests of the state, -that is, between the state itself, the creditors, and the people, there -is no vibration of wealth produced by loans to the public. But that -according as the money borrowed is spent in the country or abroad, in so -far the balance is either made to vibrate between individuals at home, -or to turn against the state in favour of foreign nations. - -_CHAP._ XXVII. I next endeavour to shew how necessary a thing it is for -a statesman to acquire a thorough knowledge of the nature and effects of -circulation. By this he is able to judge, when the coin _circulating_ in -the country is sufficient for carrying on alienation; and when it is -not, he is taught how to augment the quantity of it, either by drawing -it from the repositories as oft as he finds the inhabitants disposed to -lock it up; or by substituting symbolical or paper money in place of it, -when the metals are really wanting. - -Here I observe, that the _circulating_ or _current_ money of any nation -is constantly in proportion to the taste of dissipation in the rich, and -application to industry in the poor. - -When the dissipation of the rich, tends to call off the industrious from -supplying the branches of exportation, then the statesman, in place of -facilitating the melting down of solid property in favour of domestic -circulation, by the easy introduction of symbolical money, should render -this operation more difficult, permitting the lands to be loaded by -entails, substitutions, trusts, settlements, and other inventions which -may hurt the credit of young people, such as retarding the term of -coming to full age, and others of a like nature. - -On the other hand, while lands remain ill cultivated; while the numerous -classes remain idle and poor; and while much money is found locked up, -the very opposite administration is expedient: Every method then must be -employed to facilitate and establish the credit of those who have solid -property; such as the introduction of loans upon interest; the breaking -entails upon estates; the facilitating the sale of them, in favour of -the liquidation of all claims competent to the industrious, against the -proprietors, even declaring the cause of creditors the favourable side -in all ambiguous law-suits; and, last of all, allowing arrestment of the -person for moveable debts, which is supporting the interest of creditors -as far, I think, as is possible, in any free nation. Every regulation -becomes, in short, expedient, which can favour the industrious, -accelerate circulation, and establish a credit to every one in -proportion to his worth. - -The more money becomes necessary for carrying on consumption, the more -it is easy to levy taxes; the use of which is to advance the public -good, by drawing from the rich, a fund sufficient to employ both the -_deserving_, and the _poor_, in the service of the state; or to correct -the bad consequences of domestic luxury as to foreign trade, by -providing a fund for the payment of bounties upon exportation. - -In imposing taxes, a statesman should attend to the nature of those -branches of circulation where the balance is made to vibrate, in order -to distinguish them from those where no vibration is implied. When a man -buys an estate, it would be absurd to make him pay a tax of _cent. per -cent._ though you may safely make him pay at that rate, when he buys a -pint of gin, or a pound of chocolate. - -In taxes, again, upon consumption, a particular attention is to be had, -not to confound those which are paid by people who consume to gratify -their desires, with those which are paid by such as consume in order to -produce; that is to say, those which affect the rich, with those which -affect the industrious. - -Farther, a statesman must see with perspicuity how far the imposition of -taxes may influence the prices of exportable goods; and in so far as -prices are influenced by them, they must be refunded with interest, and -even when that is not sufficient to support the foreign competition, -premiums or bounties are to be thrown in, at the expence of new -impositions upon domestic consumption. - -As all augmentations must at last come to a stop, so must these -expedients for the support of foreign trade against the influence of -domestic abuse; but when trade comes to a stop, taxes may be increased; -because the considerations in favour of exportation are removed. The -statesman then must change his plan, and make use of the power and -influence he acquires by an opulent exchequer, to root out the abuses -which have dried up the spring from which his country used to receive a -continual augmentation of wealth. - -I conclude my chapter with this reflection: That under a wise -administration, every vice in a state carries a proper antidote along -with it. - -If luxury extinguishes foreign trade it gives birth to taxation; and -money in the hands of a good statesman is an irresistible engine for -correcting every abuse. - -In treating of taxes, I frequently look no farther than my pen, when I -raise my head and look about, I find the politics of my closet very -different from those of the century in which I live. I agree that the -difference is striking; but still reason is reason, and there is no -impossibility in the supposition of its becoming practice. - -_CHAP._ XXVIII. Prices imply alienation for money, and frequent and -familiar alienations only can fix a standard. - -The price of articles of the first necessity regulate, in a great -measure, the price of every thing else. Now the frequent and familiar -alienation of such articles implies industry, and a numerous class of -free hands; because these only are the buyers. No alienation is implied -in the consumption of necessaries, by those whose occupation it is to -produce them for themselves. Did every one, therefore, supply himself -with necessaries, there would be no alienation of them; consequently, no -price fixed. From hence it follows, that the price of necessaries -depends on the occupations of a people, and not on the quantity of their -specie. - -The standard price of _subsistence_ is in the compound proportion of the -number of those who are obliged to buy, and of the demand found for -their labour. Subsistence never can rise above the level of the -faculties of the numerous classes of a people; because so soon as a -price rises above the faculties of the buyer, his demand is withdrawn; -and when the demand of a numerous class is withdrawn, subsistence is -found in too great plenty for the rich, to bear a high price. - -The more equal, therefore, the faculties of the industrious populace of -any country are, the less distress will follow upon scarcity, and those -only, whose means cannot reach that standard price, run any risk of -starving. - -The faculties, therefore, of the _physical-necessarians_ (as we have -taken the liberty to call them) will, in countries of industry, -determine the standard value of subsistence; and the value, _in money_, -which they receive for their work, will determine the standard of those -faculties; consequently, the price of subsistence must rise and fall -according to the number of workmen, and demand for their work: that is -to say, the price of subsistence must be in the compound proportion -above mentioned. - -Here I am led into an examination of the opinion of Messrs. De -Montesquieu and Hume, who think that the price of every thing depends -upon the _quantity of specie_ in the country, which they consider as the -representation of _every thing vendible_; as if these two quantities, -the _commodities_, and the _specie_, were divided into aliquot parts, -exactly proportioned to one another. I do my endeavour to investigate -the meaning of these propositions, in order to shew in what respect they -lead to error, in place of throwing light upon an intricate question: -and then I propose another doctrine, which is, that nothing can -determine the value of a vendible commodity, any where, _but the -complicated operations of demand and competition_, which however -frequently _influenced_ by wealth, yet never can be _regulated_ by it. - -_CHAP._ XXIX. In this chapter I follow the succession of Mr. Hume’s -ideas, in his political discourses; and as he is led from his principles -to believe, that there is no such thing as a wrong balance of trade -against a nation, but on the contrary thinks that the nature of money -resembles that of a fluid, which tends every where to a level: In -pursuing the consequences of our former reasoning, I shew, that nothing -is so easy, or more common than a right or a wrong balance of trade; and -I observe, that what we mean by a balance, is not the bringing the fluid -to a level, but either the accumulating or raising it in some countries, -by the means of national industry and frugality, which is a right -balance; or the depressing it in others, by national luxury and -dissipation, which is a wrong one. Thus the general doctrine of the -_level_ can only take place, on the supposition that all nations are -equally frugal and industrious; or rather, that they have an equal -mixture of these and their opposite qualities, together with a -reciprocal trade entirely laid open. When the ideas of different people -are fairly exposed, every question comes to be resolved without -disputation: vices in reasoning seldom take place but when terms are not -rightly understood. - -_CHAP._ XXX. As the intention of this inquiry is not to treat of -population, agriculture, trade, industry, &c. as particular subjects, -but as objects influencing the political œconomy of modern states, my -end is answered, so soon as I find the general principles relating to -each sufficiently deduced and ranged under general heads. The use, -therefore, of a chapter of miscellaneous questions and observations, is -to serve as an exercise on what is gone before; to introduce, without a -direct connection, questions analogous to the subject of the book, or to -give a further extension to such as I have treated, in the course of the -chapters, with too much brevity. - -In the first and second questions, I endeavour to shew, that the -quantity of coin in any country, is no sufficient rule for judging of -the state of her foreign trade; because money may be acquired and -expended by operations nowise mercantile. A nation, may borrow from -foreigners more than the amount of the balance against her: she may pay -away, in subsidies, and foreign wars, sums greatly beyond the value of a -right balance on her trade. She may call in her specie, and trade with -it abroad, while paper is made to circulate in its place at home: or she -may lock it up in banks, where it never may appear. In short, the riches -of a trading nation may resemble those of a trading man; who may be -immensely rich, with very little specie in his possession. - -On the other hand, the riches of a prodigal nation may resemble those of -a prodigal man; who may be full of money, borrowed from all hands, upon -the credit of a large fund of solid property. - -The third question concerns the effects of riches in those countries -where trade and industry are little known. Under such circumstances, -coin must be locked up, or virtue will go to wreck. Why? Because, if -coin circulate where there is no industry, it must circulate for no -adequate equivalent in work or service; that is, for the gratification -of the passions, or in monstrous prodigality. Experience demonstrated -the truth of this principle. While the Greek Monarchs of Asia and Ægypt -remained in possession of their vast treasures, virtue and simplicity -stood their ground; when those riches were thrown into circulation, -under the first Roman Emperors, we see the horrible consequences which -ensued. What could produce such monsters, except a taste of dissipation, -without rational objects to discharge their wealth upon? All the money -in the universe, thrown into the hands of an extravagant modern Prince, -would not affect his morals; the taste of luxury would soon discharge -him of it; and the consequence would be, to enrich those who gratified -his desires, and that nearly in proportion to their service. But in -antient times, the violence of government stopped the progress of -industry: the consequence of which was, that the few productions of it -were sold for the most exorbitant prices, and the wealth accumulated by -private people commonly occasioned their destruction; because rapine was -the only expedient Princes had fallen upon to draw back money into their -coffers. - -Comparing the antient with our modern œconomy, I find both are -curious and entertaining. A contrast often makes us reflect upon -circumstances which otherwise might escape our observation. - -In the fourth and fifth questions, I apply the principles we have laid -down, in order to discover why the establishment of trade and industry -has naturally given rise to an established system of taxation, and -regular standing armies. - -This leads me to compare circumstances relative to the œconomy of -Europe some centuries ago, when taxes were almost unknown, with the -present times, when they are becoming daily more familiar; and I shew -that they are, in a great part, paid in lieu of the personal service to -which the subjects were formerly bound, and by the means of which states -were supported; and if they are extended beyond this proportion, it is -in consequence of a new circulation opened between the state and those -who serve it: so that the effect of taxes, spent within a country well -governed, is to draw money gratuitously from those who have a -superfluity of it, in order to bestow it upon those who are willing and -capable to advance the service of the state; that is, in other words, to -oblige private people to lay out their money for the service of their -country. - -From the same principles, and from a very succinct historical deduction -of the facts relating to the state of the militia of Europe, from the -time of the Romans, I endeavour to shew, that standing armies in our -days are become necessary, while Princes have the rage of making war; -because, without keeping up such bodies of men in time of peace, the -call of the luxurious would provide employment for them, which they -would not choose to quit, when the will of their sovereign might command -their attendance. - -These questions lead me to inquire into the method of estimating the -relative power of different states in making war. - -Here I reduce power to the two principles of men and money; the men at -the command of a state, are those who have a poor and precarious living, -or at least a worse condition than that which the state can offer for -their military service; consequently, the more a people are usefully -employed, the less they are calculated for filling armies. From hence it -is that luxury is said to render a nation effeminate: a true -proposition, when rightly understood, relatively to the industrious, not -to the luxurious classes of the people. - -The annual revenue of a state is in proportion to the circulation; -because it is at the time of circulation only that national -contributions can be levied with the fewest inconveniencies. Money which -does not circulate is of no use to the proprietors, and consequently can -be of no utility to the state. - -Credit is in proportion to the capacity of paying the interest of money -borrowed. - -Having abundantly insisted on the advantages of industry in providing -for the poor, I now come to consider its permanent effects, after the -first end has been accomplished. If a thousand pounds are bestowed upon -making a fire-work, a number of people are thereby employed, and gain a -temporary livelihood. If the same sum is bestowed for making a canal for -watering the fields of a province, a like number of people may reap the -same benefit, and hitherto accounts stand even: but the fire-work played -off, what remains, but the smoke and stink of the powder? Whereas the -consequence of the canal is a perpetual fertility to a formerly barren -soil. Here I enter again into an examination and confrontation of -antient and modern oeconomy. I shew that the magnificence of the -antients had not the same tendency to destroy simplicity, as the luxury -of modern times has; because they owed their magnificence to the slavery -of the inferior classes of people, who got no return for their labour -farther than bare subsistence. Whereas modern magnificence depends upon -industry; which draws after it such a retribution in money, as soon -enables those who at first contributed to the luxury of others, to call -for the like services from an inferior class, who are entering on the -course which the more wealthy abandon. - -I conclude this chapter with an inquiry into the principles which ought -to regulate the establishment of trading companies. Those principles -relate to the _advantages_ and _disadvantages_ which severally attend -them. The principal advantage in common to all, proceeds from the union -of private stocks; consequently, the statesman ought to protect -companies so far only as this union promotes the end for which they were -instituted: but whenever he finds that the strength of united stocks is -made use of to oppress the unincorporated industrious, he ought to take -these under his protection, by providing an outlet for _their_ industry, -by which he will frustrate any attempt of turning that into a monopoly, -which was intended only to extend trade and industry. - -The second advantage is peculiar to such companies as trade to foreign -parts under exclusive privileges. By these a state reaps the benefit of -keeping prices low in foreign markets; because the company is freed from -the competition of their own countrymen. But the inconvenience resulting -in consequence of this, is, that as the company _buys_, so they also -_sell_ without competition. The method, therefore, of preventing the bad -consequence of this, is, for the state constantly to be at the great -expence of every such settlement in favour of foreign trade; and to -grant the exclusive privilege in favour of commerce in general, and not -in the common way, as an indemnification to particular people for the -expence of making the settlement, or from other political -considerations. When an exclusive privilege is granted upon such -principles, the state may retain a power of inspection into all their -affairs, and may open the doors of the company to new subscribers, in -proportion to the demand for the trade, in place of allowing the company -to swell their stock with borrowed money. By such means frauds are -prevented; a foundation is laid for several mercantile operations, which -advance the prosperity of the state, without hurting the company; and -jealousy is taken away, by preventing the too close connection between -the members of it, when few in number, from degenerating into an -oppressive and scandalous monopoly. - -END OF THE SECOND BOOK. - -[Illustration] - ------------------------------------------------------------------------- - - - - - AN - INQUIRY - INTO THE - PRINCIPLES OF POLITICAL OECONOMY. - ------------------------------------------------------------------------- - - - - - BOOK III. - - OF MONEY AND COIN. - - - - - PART I. - - THE PRINCIPLES OF MONEY DEDUCED, AND - APPLIED TO THE COIN OF GREAT BRITAIN. - - -[Illustration] - - ADVERTISEMENT. - -This book, which treats of money, contains such variety of matter, that -I have found an advantage in dividing it into two parts. In the first, -the principles are deduced and applied principally to the domestic -circumstances of Great Britain in the year 1760, when this book was -written. In the second, the interests of foreign trade, and state of -coin in the two great commercial nations with whom we are in -correspondence are taken in. - -Instead of a chapter of recapitulation at the end of the book, I found -here that a full table of contents would give the reader a general view -of the subject, and serve the purpose of recollection better. - ------------------------------------------------------------------------- - - - - - AN - INQUIRY - INTO THE - PRINCIPLES OF POLITICAL OECONOMY. - ------------------------------------------------------------------------- - - - - - BOOK III. - OF MONEY AND COIN. - - - - - PART I. - THE PRINCIPLES OF MONEY DEDUCED AND APPLIED TO THE COIN OF GREAT - BRITAIN. - ------------------------------------------------------------------------- - - - - - INTRODUCTION. - - -In an inquiry like this, where, at almost every step, we find it -branching out into new relations, which lead to different chains of -consequences, it is of use to have recourse to every expedient for -connecting the whole together. - -For this purpose, an introductory chapter at the beginning of a new -subject seems necessary. - -The reader will have observed that the last chapters of the preceding -book (those I mean which treat of the vibration of the balance of wealth -and of circulation) have been writ with a view to introduce the subject -of money. - -I thought it better to anticipate some principles by connecting them -directly with those of trade, than to introduce this part of my subject -as a new treatise. - -The assistance our memory receives from such a distribution must -compensate the inconvenience of a few repetitions. - -I have, in the last chapters of the second book here referred to, had -occasion to mention, and slightly to point out some essential -differences between coin and paper money. I have shewn the great -usefulness of the latter in supporting circulation. - -Although, in giving the definition of paper money in the twenty-sixth -chapter of the second book, I mentioned credit as being a term -synonimous with it; yet this was done only for the sake of simplifying -our ideas: one of the best expedients for casting light upon an -intricate subject. It is now requisite to point out the difference -between them. - -Symbolical or paper money is but a species of credit: it is no more than -the measure by which credit is reckoned. Credit is the basis of all -contracts between men: few can be so simultaneous as not to leave some -performance, or prestation, as the civilians call it, on one side or -other, at least for a short time, in suspence. He therefore who fulfils -his part, gives credit to the party who only promises to fulfil, and -according to the variety of contracts, the nature of the prestations, or -performances, therein stipulated, and the security given for fulfilling -what is not performed, credit assumes different forms, and communicates -to us different ideas. Paper credit or symbolical money, on the other -hand, is more simple. It is an obligation to pay the intrinsic value of -certain denominations of money contained in the paper. Here then lies -the difference between a payment made in intrinsic value, and another -made in paper. He who pays in intrinsic value, puts the person to whom -he pays in the real possession of what he owed; and this done, there is -no more place for credit. He who pays in paper puts his creditor only in -possession of another person’s obligation to make that value good to -him: here credit is necessary even after the payment is made. - -Some intrinsic value or other, therefore, must be found out to form the -basis of paper money: for without that it is impossible to fix any -determinate standard-worth for the denominations contained in the paper. - -I have found no branch of my subject so difficult to reduce to -principles, as the doctrine of money: this difficulty, however, has not -deterred me from undertaking it. It is of great consequence to a -statesman to understand it thoroughly; and it is of the last importance -to trade and credit, that the money of a nation be kept stable and -invariable. - -To circumscribe combinations as much as the nature of this subject will -admit, I have in the first part adhered to a deduction of general -principles, taking by way of illustration, as I go along, the present -state of the British currency. - -In the second part, I shall examine the effects of turning coin into a -manufacture, by superadding the price of fabrication to its value; and -point out the consequences of this additional combination upon exchange, -and the interest of trading nations. - - - - - CHAP. I. - _Of Money of Accompt._ - - -[Sidenote: What money is.] - -I. The metals have so long performed the use of money, that money and -coin are become almost synonimous, although in their principles they be -quite different. - -The first thing therefore to be done in treating of money, is, to -separate two ideas, which, by being blended together, have very greatly -contributed to throw a cloud upon the whole subject. - -[Sidenote: Definitions.] - -Money, which I call of account, is no more than _an arbitrary scale of -equal parts, invented for measuring the respective value of things -vendible_. - -_Money_ of _account_, therefore, is quite a different thing from -_money-coin_, which is _price_, and might exist, although there was no -such thing in the world as any substance which could become an adequate -and proportional equivalent, for every commodity. - -The subject therefore of the first chapter shall be, 1. To point out the -principles which determine the value of things; 2. The use of an -invariable scale to measure their value; 3. How the invention of money -of account is exactly adapted for measuring the value on the one hand, -and measuring the price on the other; and 4. How it preserves itself -invariable amidst all the fluctuations, not only of the value of things -themselves, but of the metals which are commonly considered as the -measures of their value. - -[Sidenote: Money, a scale for measuring value.] - -_1mo._ Money of account, which I shall here call _money_, performs the -same office with regard to the value of things, that degrees, minutes, -seconds, &c. do with regard to angles, or as scales do to geographical -maps, or to plans of any kind. - -In all these inventions, there is constantly some denomination taken for -the unit. - -In angles, it is the degree; in geography, it is the mile, or league; in -plans, the foot, yard, or toise; in money, it is the _pound_, _livre_, -_florin_, &c. - -The degree has no determinate length, so neither has that part of the -scale upon plans which marks the unit: the usefulness of all those -inventions being solely confined to the marking of proportion. - -Just so the unit in money can have no invariable determinate proportion -to any part of value, that is to say, it cannot be fixed to any -particular quantity of gold, silver, or any other commodity whatsoever. - -The unit once fixed, we can by multiplying it, ascend to the greatest -value; and when we descend below the subaltern divisions of this unit, -we have the assistance of measures and weights, which render the -operation easy. Thus in England, where a farthing is the lowest -denomination of money, the grains of wheat are bought by measure, and -cherries by the pound. - -[Sidenote: Principles which determine the value of things.] - -II. The value of things depend upon the general combination of many -circumstances, which however may be reduced to four principal heads: - -_1mo._ The abundance of the things to be valued. - -_2do._ The demand which mankind make for them. - -_3tio._ The competition between the demanders; and - -_4to._ The extent of the faculties of the demanders. The function -therefore of money is to publish and make known the value of things, as -it is regulated by the combination of all these circumstances. - -[Sidenote: Prices not regulated by the quantity of money,] - -This proposition I think is self-evident, and it is susceptible of a -thousand proofs; I shall only mention one. - -Were there a determinate proportion between certain quantities of gold -and silver, and certain quantities of other things vendible, I do not -see how prices could vary while the proportion of quantity to quantity -between metals and things remained the same. - -But if the desires of men to possess any particular commodity and the -competition between them to acquire it be capable to raise a thing, -formerly of the lowest value, to any height, and if the absence of these -circumstances can debase a thing formerly of great value, to the lowest -rate, is it not evident, that the _price_, that is, the gold and silver -people possess (even allowing that it may upon many occasions promote a -competition among them) can never be the measure of their fancies or -caprices, which are what constitutes the value of things. - -Substances are valued either according to their weight, their -superficial measure, the measure of their bulk, or by the piece. These -may be considered as the four classes of vendible corporeal commodities. - -All the species of each class according to their different qualities of -goodness, may be reduced to a proportion of value. A pound of gold, of -lead, of different grains, of different butters, or of what you will, -valued by the pound, may at any precise time, be reduced to a scale of -proportional values, which the wants, demands, competition and faculties -of buyers and sellers, keep in a perpetual fluctuation. - -As far therefore, as an increase of the metals and coin shall produce an -increase of demand, and a greater competition than before, so far will -that circumstance influence the rise of prices, and no farther. - -[Sidenote: But by the relative proportion between commodities and - the wants of mankind.] - -The value of commodities therefore, depending upon a general combination -of circumstances relative to themselves and to the fancies of men, their -value ought to be considered as changing only with respect to one -another; consequently, any thing which troubles or perplexes the -ascertaining those changes of proportion by the means of a general, -determinate and invariable scale, must be hurtful to trade and a clog -upon alienation. This trouble and perplexity is the infallible -consequence of every vice in the policy of money or of coin. - -[Sidenote: Necessity of distinguishing between money and price.] - -III. It may here be demanded what necessity there is to have recourse to -such a metaphysical deduction upon so familiar a subject. Do we not see -every where, that things are valued by silver and gold coin, and that -there is no occasion to reject them at this time, in order to introduce -an imaginary scale. - -I answer, that nothing but necessity obliges me to introduce this -imaginary scale, and that not with any intention to reject the service -of the metals in performing the office of a measure, but as an -assistance to our understanding for comprehending the doctrine of money, -and for rightly distinguishing the ideas which are daily proposed to us -by those who write and speak concerning its theory. - -Could gold and silver coin exactly perform the office of money, it would -be absurd to introduce any other measure of value; but there are moral -and physical incapacities in the metals, which prevent their performing -the function of a scale: and the common opinion being, that there are no -such incapacities, makes it necessary to expose them in the clearest -light, by shewing the exact difference between _price_ (that is coin) -considered as a measure, and _price_ considered as an equivalent for -value. - -The inconsistencies which follow, when we depend blindly upon the -infallibility of the metal’s discharging this double office, tend to -confound the whole system of our ideas concerning those matters. - -The moral as well as physical incapacities inherent in the metals, which -prevent their performing exactly the office of money, shall be -afterwards pointed out. I must at present explain a little farther the -nature of this ideal money. - -[Sidenote: Money of account what and how contrived.] - -IV. Money, strictly and philosophically speaking, is, as has been said, -an ideal scale of equal parts. If it be demanded what ought to be the -standard value of one part? I answer, by putting another question; What -is the standard length of a degree, a minute, a second? - -It has none, and there is no necessity of its having any other than what -by convention mankind think fit to give it. But so soon as one part -becomes determined, by the nature of a scale, all the rest must follow -in proportion. - -The first step being perfectly optional, people may adjust one or more -of those parts to a precise quantity of the precious metals; and so soon -as this is done, and that money becomes realized, as it were, in gold -and silver, then it acquires a new definition; it then becomes the -_price, as well as the measure of value_. - -It does not follow from this adjusting the metals to the scale of value, -that they themselves should therefore become the scale, as any one must -readily perceive. - -But in former times, before the introduction of commerce, when mankind -had less occasion to measure value with a scrupulous exactness, the -permanent nature of the metals rendred them sufficiently correct, both -to serve as the scale, and as the price in every alienation. Since the -introduction of commerce, nations have learned the importance of -reducing their respective interests and debts, to the nicest equations -of value; and this has pointed out the inconvenience of admitting the -metals, as formerly, to serve both as the measure and the price in such -operations. - -Just so geographers and astronomers were long of opinion, that a degree -of the equator was a determinate length to measure every degree of -latitude upon the globe. - -They then considered the earth as a sphere, and no great inconveniency -was found to result from this supposition. But as accuracy made a -progress, that measure was found to be incorrect. Degrees of latitude -are now found to be of different lengths in different climates; and -perhaps in time, it will be found that no two degrees of any great -circle described upon the globe, are in a geometrical equality. - -That money, therefore, which constantly preserves an equal value, which -poises itself, as it were, in a just equilibrium between the fluctuating -proportion of the value of things, is the only permanent and equal -scale, by which value can be measured. - -[Sidenote: Examples of it.] - -Of this kind of money, and of the possibility of establishing it, we -have two examples: the first, among one of the most knowing; the second, -among one of the most ignorant nations of the world. The bank of -Amsterdam presents us with the one, the coast of Angola with the other. - -A florin banco has a more determinate value than a pound of fine gold, -or silver; it is an unit which the invention of men, instructed in the -arts of commerce, have found out. - -[Sidenote: Bank money.] - -This bank money stands invariable like a rock in the sea. According to -this ideal standard are the prices of all things regulated; and very few -people can tell exactly what it depends upon. The precious metals, with -their intrinsic value, vary with regard to this common measure, like -every other thing. A pound of gold, a pound of silver, a thousand -guineas, a thousand crowns, a thousand piastres, or a thousand ducats, -are sometimes worth more, sometimes worth less of this invariable -standard; according as the proportion of the metals of which they are -made vary between themselves. - -No adulterations in the weight, fineness, or denominations of coin have -any effect upon bank money. These currencies which the bank looks upon -as merchandize, like every other thing, are either worth more or less -bank money, according to the actual value of the metals they are made -of. All is merchandize with respect to this standard; consequently, it -stands unrivalled in the exercise of its function of a common measure. - -[Sidenote: Angola money.] - -The second example is found among the savages upon the African coast of -Angola, where there is no real money known. The inhabitants there reckon -by _macoutes_; and in some places this denomination is subdivided into -decimals, called pieces. One _macoute_ is equal to ten pieces. This is -just a scale of equal parts for estimating the trucks they make. If a -sheep, e. g. be worth 10, an ox may be worth 40, and a handful of gold -dust 1000. - -Money of account, therefore, cannot be fixed to any material substance, -the value of which may vary with respect to other things. The operations -of trade, and the effects of an universal circulation of value, over the -commercial world, can alone adjust the fluctuating value of all kinds of -merchandize, to this invariable standard. This is a representation of -the bank money of Amsterdam, which may at all times be most accurately -specified in a determinate weight of silver and gold; but which can -never be tied down to that precise weight for twenty-four hours, any -more than to a barrel of herrings. - ------------------------------------------------------------------------- - - - - - CHAP. II - _Of Artificial or Material money._ - -[Sidenote: Usefulness of the precious metals for making of money.] - -I. From infancy of the world, at least as far back as our accounts of -the transactions of mankind reach, we find they had adopted the precious -metals, that is silver and gold, as the common measure of value, and as -the adequate equivalent for every thing alienable. - -The metals are admirably adapted for this purpose; they are perfectly -homogeneous: When pure, their masses, or bulks, are exactly in -proportion to their weights: No physical difference can be found between -two pounds of gold, or silver, let them be the production of the mines -of Europe, Asia, Africa, or America: They are perfectly malleable, -fusible, and suffer the most exact division which human art is capable -to give them: They are capable of being mixed with one another, as well -as with metals of a baser, that is, of a less homogeneous nature, such -as copper. By this mixture they spread themselves uniformly through the -whole mass of the composed lump, so that every atom of it becomes -proportionally possessed of a share of this noble mixture; by which -means the subdivision of the precious metals is rendred very extensive. - -Their physical qualities are invariable; they lose nothing by keeping; -they are solid and durable; and though their parts are separated by -friction, like every other thing, yet still they are of the number of -those which suffer least by it. - -If money, therefore, can be made of any thing, that is, if the -proportional value of things vendible can be measured by any thing -material, it may be measured by the metals. - -[Sidenote: Adjusting a standard, what?] - -II. The two metals being pitched upon as the most proper substances for -realizing the ideal scale of money, those who undertake the operation of -adjusting a standard must constantly keep in their eye the nature and -qualities of a scale, as well as the principles upon which it is formed. - -The unit of the scale must constantly be the same, although realized in -the metals, or the whole operation fails in the most essential part. -This realizing the unit is like adjusting a pair of compasses to a -geometrical scale, where the smallest deviation from the exact opening -once given must occasion an incorrect measure. The metals, therefore, -are to money what a pair of compasses is to a geometrical scale. - -This operation of adjusting the metals to the money of account, implies -an exact and determinate proportion of both metals to the money-unit, -realized in all the species and denominations of coin, adjusted to that -standard. - -The smallest particle of either metal added to, or taken away from any -coin, which represents certain determinate parts of the scale, overturns -the whole system of material money. And if, notwithstanding such -variation, these coins continue to bear the same denominations as -before, this will as effectually destroy their usefulness in measuring -the value of things, as it would overturn the usefulness of a pair of -compasses, to suffer the opening to vary, after it is adjusted to the -scale representing feet, toises, miles, or leagues, by which the -distances upon the plan are to be measured. - -[Sidenote: Debasing and raising a standard, what.] - -III. Debasing the standard is a good term; because it conveys a clear -and distinct idea. It is diminishing the weight of the pure metal -contained in that denomination by which a nation reckons, and which we -have called the money-unit. Raising the standard requires no farther -definition, being the direct contrary. - -[Sidenote: The alteration of a standard, how to be discovered.] - -IV. Altering the standard (that is raising or debasing the value of the -money-unit) is like altering the national measures or weights. This is -best discovered by comparing the thing altered with things of the same -nature which have suffered no alteration. Thus if the foot of measure -was altered at once over all England, by adding to it, or taking from -it, any proportional part of its standard length, the alteration would -be best discovered, by comparing the new foot with that of Paris, or of -any other country, which had suffered no alteration. Just so, if the -pound sterling, which is the English unit, shall be found any how -changed, and if the variation it has met with be difficult to ascertain, -because of a complication of circumstances, the best way to discover it -will be to compare the former and the present value of it with the money -of other nations which has suffered no variation. This the course of -exchange will perform with the greatest exactness. - -[Sidenote: Of alloy.] - -V. Artists pretend, that the precious metals, when absolutely pure from -any mixture, are not of sufficient hardness to constitute a solid and -lasting coin. They are found also in the mines mixed with other metals -of a baser nature, and the bringing them to a state of perfect purity -occasions an unnecessary expence. To avoid, therefore, the inconvenience -of employing them in all their purity, people have adopted the expedient -of mixing them with a _determinate proportion_ of other metals, which -hurts neither their fusibility, malleability, beauty, or lustre. This -metal is called _alloy_, and being considered only as a support to the -principal metal, is accounted of no value in itself. So that eleven -ounces of gold, when mixed with one ounce of silver, acquires, by that -addition, no augmentation of value whatever. - -This being the case, we shall, as much as possible, overlook the -existence of alloy, in speaking of money, in order to render language -less subject to ambiguity. I must except such cases, where the -considering the mass of the compound metal, according to its weight, can -be accompanied with no inconvenience. - ------------------------------------------------------------------------- - - - - - CHAP. III. - _Incapacities of the Metals to perform the office of an invariable - measure of value._ - -[Sidenote: They vary in their relative value to one another.] - -I. Were there but one species of such a substance as we have represented -gold and silver to be: were there but one metal possessing the qualities -of purity, divisibility, and durability; the inconveniences in the use -of it for money would be fewer by far than they are found to be as -matters stand. - -Such a metal might then, by an unlimited division into parts exactly -equal, be made to serve as a tolerable steady and universal measure. But -the rivalship between the metals, and the perfect equality which is -found between all their physical qualities, so far as regards purity, -and divisibility, render them so equally well adapted to serve as the -common measure of value, that they are universally admitted to pass -current as money. - -[Sidenote: All measures ought to be invariable.] - -What is the consequence of this? That the one measures the value of the -other, as well as that of every other thing. Now the moment any measure -begins to be measured by another, whose proportion to it is not -physically, perpetually, and invariably the same, all the usefulness of -such a measure is lost. An example will make this plain. - -A foot of measure is a determinate length. An English foot may be -compared with the Paris foot, or with that of the Rhine; that is to say, -it may be measured by them; and the proportion between their lengths may -be expressed in numbers; which proportion will be the same perpetually. -The measuring the one by the other will occasion no uncertainty; and we -may speak of lengths by Paris feet, and be perfectly well understood by -others who are used to measure by the English foot, or by the foot of -the Rhine. - -[Sidenote: Consequences when they vary.] - -But suppose that a youth of twelve years old takes it into his head to -measure from time to time, as he advances in age, by the length of his -own foot, and that he divides this growing foot into inches and -decimals: what can be learned from his account of measures? As he -increases in years, his foot, inches, and subdivisions, will be -gradually lengthening; and were every man to follow his example, and -measure by his own foot, then the foot of a measure now established -would totally cease to be of any utility. - -This is just the case with the two metals. There is no determinate -invariable proportion between their value; and the consequence of this -is, that when they are both taken for measuring the value of other -things, the things to be measured, like the lengths to be measured by -the young man’s foot, without changing their relative proportion between -themselves, change however with respect to the denominations of both -their measures. An example will make this plain. - -Let us suppose an ox to be worth three thousand pounds weight of wheat, -and the one and the other to be worth an ounce of gold, and the ounce of -gold to be worth exactly fifteen ounces of silver: If the case should -happen, that the proportional value between gold and silver should come -to be as 14 is to 1, would not the ox, and consequently the wheat, be -estimated at less in silver, and more in gold, than formerly? I ask -farther, if it would be in the power of any state to prevent this -variation in the measure of the value of oxen and wheat, without putting -into the unit of their money less silver and more gold than formerly. - -[Sidenote: Defects of a silver standard.] - -If therefore any particular state should fix the standard of the unit of -their money to one species of the metals, while in fact both the one and -the other are actually employed in measuring value; does not such a -state resemble the young man, who measures all by his growing foot. For, -if silver, for example, be retained as the standard, while it is gaining -upon gold one fifteenth additional value; and if gold continues all the -while to determine the value of things as well as silver, it is plain -that, to all intents and purposes, this silver measure is lengthening -daily, like the young man’s foot, since the same weight of it must -become every day equivalent to more and more of the same commodity; -notwithstanding that we suppose the same proportion to subsist, without -the least variation, between that commodity and every other species of -things alienable. - -[Sidenote: Arguments in favours of it.] - -After having exposed the matter in this light, I think it can hardly, -with reason, be urged, that notwithstanding it be admitted that gold and -silver may change their proportion of value with regard to one another, -yet still this does not prevent silver from remaining the standard, -without any inconvenience; for the following reasons. - -_1mo._ Because, when it is considered as a standard, it never ought to -be looked upon as changing its value with regard to gold; but that gold -ought to be considered as changing its value with regard to silver. - -_2do._ Because being the measure itself, it is absurd to consider it as -the thing measured; that therefore it retains all the requisites of an -invariable scale; since it measures all things according to the -proportion they bear to itself, which physically never can vary. And, - -_3tio._ That a person who has borrowed a certain weight of silver from -another, is obliged to repay the same weight of silver he had borrowed; -although at that time silver should be of greater value than when he -borrowed it. - -[Sidenote: Answers to these arguments.] - -I answer to the first argument: That if in fact silver becomes of more -or less value with respect to merchandize, with respect to gold, and -with respect to bank money, by there being a greater or less demand for -it than there was before; I cannot see how calling it a standard, can -remove this inconvenience, which is inseparable from the nature of the -thing; nor how we can change a _matter of fact_, by changing our -_language_, and by saying, that merchandize, gold, and bank money, -become of more value, or of less value, with respect to silver, in -proportion as the demand for them is greater or less. This language we -must use, although we know for certain that these things remain in the -exact relative proportion of quantity and demand as before: And although -it should evidently appear, that a demand for silver has raised the -price of it, with respect to every thing it measured the day before. - -If the yard in a mercer’s shop should be subject to such revolutions, in -consequence of the wood it was made of; and if in measuring a piece of -stuff to a customer, which the mercer had bought by this yard the day -before for 50 yards, he should find the piece measure but 40, it would -not be easy to persuade him, I believe, that his piece was become -shorter; but suppose he should have the curiosity to measure over again -all the pieces in his shop, and that he should find exactly one fifth -diminution upon the length of every one, would he not very rationally -conclude that his yard was grown longer, and would he not run -immediately to his neighbour’s shop and compare it? - -As to the second argument, I agree that silver may at all times very -exactly measure the value of things with respect to itself; but this -gives us no idea of an universal measure. - -I can measure the proportion of the length of things, with any rod or -with any line, the length of which I know nothing about; but no body -calls this measuring, because I cannot compare the things measured, with -any other thing which I have not measured with the same rod or line, as -I might easily do, had I measured with a foot, yard, or toise; -consequently the intention of measuring in such a case is almost -entirely lost. - -To the third argument, I answer, that I subscribe very willingly to the -truth of that proposition; providing that by silver is understood the -bare metal, without attending to its additional quality of the universal -standard measure of value. But if I borrow the silver not as bullion, -but as coin (the common measure of value) then I say, that I overpay in -giving back the same weight I had received. Is there any thing more -familiar than such examples? I borrow 100_l._ from my neighbour, he -proposes to give so much of the value in grain; I accept. The price of -grain rises about the term of payment; can I be obliged to repay an -equal quantity of grain in payment of a proportional part of what I owe? -By no means; because I did not receive the grain as any thing but as a -species of money. But if I borrow some quarters of grain to be repaid in -harvest, then I am obliged to restore grain for grain, because in that -case I did not receive the grain as money, but as a commodity. - -[Sidenote: Usefulness of an universal measure.] - -Buying and selling are purely conventional, and no man is obliged to -give his merchandize at what may be supposed to be the proportion of its -worth. The use, therefore, of an universal measure, is, to mark, not -only the relative value of the things to which it is applied as a -measure, but to discover in an instant the proportion between the value -of those, and of every other commodity valued by a determinate measure -in all the countries of the world. - -Were pounds sterling, livres, florins, piastres, &c. which are all money -of account, invariable in their values, what a facility would it produce -in all conversions, what an assistance to trade! But as they are all -limited or fixed to coins, and consequently vary from time to time, this -example shews the utility of the invariable measure which we have -described. - -[Sidenote: They have two values, one as coin, and one as metals.] - -There is another circumstance which incapacitates the metals from -performing the office of money; the substance of which the coin is made, -is a commodity, which rises and sinks in its value with respect to other -commodities, according to the wants, competition, and caprices of -mankind. The advantage, therefore, found in putting an intrinsic value -into that substance which performs the function of money of account, is -compensated by the instability of that intrinsic value; and the -advantage obtained by the stability of paper, or symbolical money, is -compensated by the defect it commonly has of not being at all times -susceptible of realization into solid property, or intrinsic value. - -In order, therefore, to render material money more perfect, this quality -of metal, that is of a commodity, should be taken from it; and in order -to render paper money more perfect, it ought to be made to circulate -upon metallic or land security. The expedient with regard to the metals -shall find a place in this inquiry (in the chapter of miscellaneous -questions at the end of this book, article 4th). What regards the paper -is foreign to our purpose, and belongs to the doctrine of credit. - -[Sidenote: Smaller inconveniences attending material money.] - -II. There are several smaller inconveniences accompanying the use of the -metals, which we shall here shortly enumerate, reserving the discussion -of all the consequences they draw along with them, until we come to -consider the operations of trade and money, upon the complicated -interests of mankind. - -[Sidenote: It wears in circulation.] - -_1mo._ No money made of gold or silver can circulate long, without -losing of its weight, although it all along preserves the same -denomination. This represents the contracting a pair of compasses which -had been rightly adjusted to the scale. Such a defect must appear -striking, when we reflect upon the principles (already laid down) which -necessarily influence the fixing of a standard. - -[Sidenote: It is inaccurately coined.] - -_2do._ Another inconvenience proceeds from the fabrication of money. -Supposing the faith of Princes who coin money to be inviolable, and the -probity, as well as capacity, of those to whom they commit the -inspection of the fineness of the metals to be sufficient, it is hardly -possible for workmen to render every piece exactly of a proper weight, -or to preserve the due proportion between pieces of different -denominations; that is to say, to make every ten sixpences exactly of -the same weight with every crown piece and every five shillings struck -in a coinage. In proportion to such inaccuracies, the parts of the scale -become unequal. - -[Sidenote: The coinage adds to its value without adding to its - weight.] - -_3tio._ Another inconvenience, and far from being inconsiderable, flows -from the expence requisite for the coining of money. This expence adds -to its value as a manufacture, without adding any thing to its weight. I -shall take notice, in the proper place, of the consequences which attend -this inconvenience, even to nations where coinage is free. - -[Sidenote: The value of it may be arbitrarily changed.] - -_4to._ The last inconvenience I shall mention, is, that by fixing the -money of account entirely to the coin, without having any independent -common measure (to mark and control these deviations from mathematical -exactness, which are either inseparable from the metals themselves, or -from the fabrication of them) the whole measure of value, and all the -relative interests of debtors and creditors, become at the disposal not -only of workmen in the mint, of Jews who deal in money, of clippers and -washers of coin, but they are also entirely at the mercy of Princes, who -have the right of coinage, and who have frequently also the right of -raising or debasing the standard of the coin, according as they find it -most for their present and temporary interest. - -[Sidenote: Trade profits of the smallest defects in the coin.] - -Several of the inconveniences we have here enumerated, may appear -trifling, and so they are found to be in countries where commerce is -little known; but the operations of trade surpass in nicety the -conceptions of any man but a merchant; and as a proof of this, it may be -affirmed with truth, that one shilling can hardly lose a grain of its -weight, either by fraud or circulation, without contributing by that -circumstance, towards the diminution of the standard value of the -money-unit, or pound sterling, over all England, as I hope to be able to -shew both by reason and facts. - -All and every one of these inconveniences to which coin is exposed, -disappear in countries where the use of pure ideal money of account is -properly established. - ------------------------------------------------------------------------- - - - - - CHAP. IV. -_Methods which may be proposed for lessening the several inconveniences - to which material Money is liable._ - - -I. In this chapter, I shall point out the methods which may be proposed -for lessening the inconveniences to which all coin is liable, in order -thereby to make it resemble as much as possible the invariable scale of -ideal money of accompt. - -[Sidenote: Use of theory in political matters.] - -To propose the throwing out of coin altogether, because it is liable to -inconveniences, and the reducing all to an ideal standard, is acting -like the tyrant who adjusted every man’s length to that of his own bed, -cutting from the length of those who were taller than himself, and -racking and stretching the limbs of such as he found to be of a lower -stature. The use of theory in political matters is not only to discover -the methods of removing all abuses, it must also lend its aid towards -palliating inconveniences which are not easily cured. - -[Sidenote: Five remedies against the effects of the variation - between the value of the metals.] - -The inconveniences from the variation in the relative value of the -metals to one another, may in some measure be obviated by the following -expedients. - -_1mo._ By considering one only as the standard, and leaving the other to -seek its own value, like any other commodity. - -_2do._ By considering one only as the standard, and fixing the value of -the other from time to time by authority, according as the market price -of the metals shall vary. - -_3tio._ By fixing the standard of the unit according to the mean -proportion of the metals, attaching it to neither; regulating the coin -accordingly; and upon every considerable variation in the proportion -between them, either to make a new coinage, or to raise the denomination -of one of the species, and lower it in the other, in order to preserve -the unit exactly in the mean proportion between the gold and silver. -This idea is dark, but it shall afterwards be sufficiently explained. - -_4to._ To have two units, and two standards, one of gold, and one of -silver, and to allow every body to stipulate in either. - -_5to._ Or last of all, to oblige all debtors to pay one half in gold and -one half in the silver standard. - -I have here proposed the attaching the standard to one of the species, -as a remedy against the effects of variation between the metals, because -when that is done, the consequences are not so hurtful as when the unit -is affixed to both, as I shall prove in its proper place. - -The regulating the proportion of that metal which is considered as -merchandize, to the other which is considered as the standard, upon -every variation in the market price of bullion, as well as the other -expedient of striking the unit according to the mean proportion, is an -endless labour, and implies a necessity either of perpetually recoining, -or of introducing fractions of value into the current coin, which cannot -fail to embarrass circulation. - -The establishing two units, the one of gold, and the other of silver, -does not render the unit of money any more invariable than before; all -that can be said for this expedient, is, that money becomes thereby more -determinate, and that people who enter into permanent contracts are, at -least, apprised of the consequences of the varying of the proportion of -the metals, and may regulate their interests accordingly. - -The last expedient of making debtors pay half in gold and half in -silver, would answer every inconvenience, providing all creditors were -supposed to melt the money down upon receiving it, in order to sell it -for bullion; but as that is not the case, it would be proper, together -with this expedient, to be also very exact in observing the market -proportion of the metals in the coin; because it cannot be supposed, -that every small payment can be made in both species, and wherever this -is omitted, every former inconvenience may take place. - -[Sidenote: Remedies against the other inconveniences.] - -II. The other imperfections of coin have been already enumerated. They -relate either to its wear, the want of exactness in the fabrication, the -price of coinage, or the opportunity thereby afforded to Princes to -adulterate and change the standard. - -[Sidenote: Against the wearing of the coin.] - -_1mo._ As to the first the best expedients are, 1. To strike the -greatest part of the coin in large solid pieces, having as little -surface as possible, consistently with beauty and ease of fabrication. - -2. To order large sums (of silver at least) to circulate in bags of -determinate sums, and determinate weights, all in pieces of the larger -denominations. - -3. To make all light coin whatsoever go by weight, upon the requisition -of the person who is to receive it. - -[Sidenote: Against inaccuracy of coinage.] - -_2do._ As to the inaccuracy of the fabrication, there is no other remedy -than a strict attention in government to a matter of so great -consequence. - -[Sidenote: Against the expence of coinage.] - -_3tio._ The price of coinage principally affects the interest of nations -with regard to foreign trade; consequently, trading states should -endeavour, as nearly as possible, to observe the same regulations with -their neighbours, in every thing which regards the coin. The consequence -of this inconvenience to those within the society is unavoidable, and -therefore no remedy can be proposed. - -[Sidenote: Against arbitrary changes on the value of coin.] - -_4to._ The establishment of public credit is the best security against -all adulterations of the standard. No fundamental law can bind up a -Prince’s hands so effectually as his own interest. While a Prince lives -within his income, he will have no occasion to adulterate the coin; when -he exceeds it, he will (in a trading nation) have recourse to credit, -and if once he establishes that, he must give over meddling with the -standard of his coin, or he will get no body to lend him any more. The -only Prince who can gain by adulterating of the standard, is he who -seeks for extraordinary supplies out of a treasure already formed. - -These are, briefly, the expedients to be put in practice by those -governments which have the prosperity of their subjects at heart. The -infinite variety of circumstances relating to every state can alone -decide as to those which are respectively proper to be adopted by each. -Our business at present is to point out the variations to which the -value of the money-unit is exposed, from every disorder in the coin; and -to shew that as far as the value of the unit shall appear affected by -them, so far must material money in such a case be defective. - ------------------------------------------------------------------------- - - - - - CHAP. V. - _Variations to which the Value of the Money-unit is exposed from every - disorder in the Coin._ - - -I. Let suppose, at present, the only disorder to consist in a want of -the due proportion between the gold and silver in the coin. - -[Sidenote: How the market price of the metals is made to vary.] - -This proportion can only be established by the market price of the -metals; because an augmentation and rise in the demand for gold or -silver has the effect of augmenting the value of the metal demanded. Let -us suppose that to-day one pound of gold may buy fifteen pounds of -silver; if to-morrow there be a high demand for silver, a competition -among merchants, to have silver for gold, will ensue, they will contend -who shall get the silver at the rate of fifteen pounds for one of gold: -this will raise the price of it, and in proportion to their views of -profit, some will accept of less than the fifteen pounds. -[Sidenote: The variation ought to be referred to the rising metal, -and never to the sinking.] This is plainly a rise in the silver, more -properly than a fall in the gold; because it is the competition for the -silver which has occasioned the variation in the former proportion -between the metals. Had the competition for gold carried the proportion -above 1 to 15, I should then have said that the gold had risen. - -As it is, therefore, the _active demand_ for either gold or silver which -makes the price of the metals to vary, I think language would be more -correct (in speaking concerning the metals only) never to mention the -_sinking_ of the price of either gold or silver. As to every other -merchandize, the expression is very proper; because the diminishing of -the price of one commodity, does not so essentially imply the rise of -any other, as the sinking of one of the metals must imply the rising of -the other, since they are the only measures of one another’s worth. I -would not be here understood to mean that the term _sinking_ of the -price of gold or silver is improper; all I say is, that the other being -equally proper, and conveying with it the cause of the variation (to -wit, the competition to acquire one metal preferably to the other) may -be preferred, and this the rather, that from using these terms -promiscuously (gold has _fallen_, in place of silver has _risen_) we are -apt to believe, that the falling of the price of the metal, must proceed -from some augmentation of the quantity of it; whereas it commonly -proceeds from no other cause than a higher demand than formerly for the -other. - -Let us now suppose that a state having, with great exactness, examined -the proportion of the metals in the market, and having determined the -precise quantity of each for realizing or representing the money-unit, -shall execute a most exact coinage of gold and silver coin. As long as -that proportion continues unvaried in the market, no inconvenience can -result from that quarter, in making use of the metals for money of -account. - -[Sidenote: How the money-unit of account is made to vary in its - value from the variation of the metals.] - -[Sidenote: Consequences of this.] - -But let us suppose the proportion to change; that the silver, for -example, shall rise in its value with regard to gold; will it not -follow, from that moment, that the unit realized in the silver, will -become of more value than the unit realized in the gold coin? - -But as the law has ordered them to pass as equivalents for one another, -and as debtors have always the option of paying in what legal coin they -think fit, will they not all choose to pay in gold, and will not then -the silver coin be melted down or exported, in order to be sold as -bullion, above the value it bears when it circulates in coin? Will not -this paying in gold also really diminish the value of the money-unit, -since upon this variation every thing must sell for more gold than -before, as we have already observed? - -[Sidenote: The true unit is the mean proportional between the - value of the metals.] - -Consequently, merchandize which have not varied in their relative value -to any other thing but to gold and silver, must be measured by the mean -proportion of the metals, and the application of any other measure to -them is altering the standard. If they are measured by the gold, the -standard is debased; if by silver, it is raised, as shall presently be -proved. - -If to prevent the inconvenience of melting down the silver, the state -shall give up affixing the value of their unit to both species at once, -and shall fix it to one, leaving the other to seek its price as any -other commodity, in that case no doubt the melting down of the coin will -be prevented; but will ever this restore the value of the money-unit to -its former standard? Would it, for example, in the foregoing -supposition, raise the debased value of the money-unit in the gold coin, -if that species were declared to be the standard? It would indeed render -silver coin purely a merchandize, and by allowing it to seek its value, -would certainly prevent it from being melted down as before; because the -pieces would rise conventionally in their denomination; or an agio, as -it is called, would be taken in payments made in silver; but the gold -would not, on that account, rise in its value, or begin to purchase any -more merchandize than before. Were therefore the standard fixed to the -gold, would not this be an arbitrary and a violent revolution in the -value of the money-unit, and a debasement of the standard? - -If, on the other hand, the state should fix the standard to the silver, -which we suppose to have risen in its value, would that ever sink the -advanced value which the silver coin had gained above the worth of the -former standard unit, and would not this be a violent and an arbitrary -revolution in the value of the money-unit, and a raising of the -standard? - -The only expedient, therefore, as has been said, is in such a case to -fix the numerary unit to neither of the metals, but to contrive a way to -make it fluctuate in a mean proportion between them; which is in effect -the introduction of a pure ideal money of account. This shall be farther -explained as we go along. - -[Sidenote: The unit to be attached to the mean proportion, upon a - new coinage, not after the metals have varied.] - -I have only one observation to make in this place, to wit, that the -regulation of fixing the unit by the mean proportion, ought to take -place at the instant the standard unit is affixed with exactness both to -the gold and silver. If it be introduced long after the market -proportion between the metals has deviated from the proportion -established in the coin, and if the new regulation is made to have a -retrospect, with regard to the acquitting of permanent contracts entred -into, while the value of the money-unit had attached itself to the -lowest currency, in consequence of the principle above laid down, then -the restoring the money-unit to that standard where it ought to have -remained (to wit, to the mean proportion) is an injury to all debtors -who have contracted since the time that the proportion of the metals -began to vary. - -This is clear from the former reasoning. The moment the market price of -the metals differs from that in the coin, every one who has payments to -make pays in that species which is the highest rated in the coin; -consequently, he who lends, lends in that species. If after the -contract, therefore, the unit is carried up to the mean proportion, this -must be a loss to him who had borrowed. - -[Sidenote: It is better to affix the unit to one than to both - metals.] - -From this we may perceive why, in the first article of the preceding -chapter, it was said, that there was less inconvenience from the varying -of the proportion of the metals, where the standard is fixed to one of -them, than when it is fixed to both. In the first case, it is at least -uncertain whether the _standard_ or the _merchandize-species_ is to -rise; consequently it is uncertain whether the debtors or the creditors -are to gain by a variation. If the _standard_ species should rise, the -creditors will gain; if the _merchandize-species_ rises, the debtors -will gain; but when the unit is attached to both species, then the -creditors never can gain, let the metals vary as they will: if silver -rises, then debtors will pay in gold; if gold rises, debtors will pay in -silver. But whether the unit be attached to one or to both species, the -infallible consequence of a variation is, that one half of the -difference is either gained or lost by debtors and creditors. The -invariable unit is constantly the mean proportional between the two -measures. - -I intended to have postponed the entring upon what concerns the -interests of debtors and creditors in all variations of the coin, until -I came to treat particularly of that matter; but as it is a thing of the -greatest consequence to be attended to, in every proposal for altering -or regulating the coin of a nation, it will, perhaps, upon that account, -bear a repetition. - -[Sidenote: Variation to which the money-unit is exposed, from the - wearing of the coin.] - -II. To render our ideas as distinct as possible, we must keep them -simple. Let us now suppose that the metals are perfectly well -proportioned in the coin, but that the coin is worn by use. - -If this be the case, we must either suppose it to be all equally worn, -or unequally worn. - -If all be equally worn, I think it needs no demonstration to prove, that -the money-unit which was attached to the coin, when weighty, (drawing -its value from the metals contained in it) must naturally diminish in -its value in proportion as the metals are rubbed away. - -If the coin be unequally worn, the money-unit will be variously -realized, or represented; that is to say, it will be of different -values, according to the weight of the pieces. - -The consequence of this is the same as in the disorder of the proportion -of the metals: debtors will choose to pay in the light pieces, and the -heavy will be melted down. In proportion, therefore, to this disorder, -will the value of the unit gradually descend. This was the great -disorder in England in 1695; while the standard of the pound sterling -was affixed to the silver only, the gold being left to seek its own -value. - -[Sidenote: Variations to which the money-unit is exposed, from the - inaccuracy in the fabrication of the money.] - -III. Since the invention of the money wheel, the inaccuracy in the -fabrication is greatly prevented. Formerly, when money was coined with -the hammer, the mint-masters weighed the coin delivered by the workmen, -_in cumulo_, by the pound troy weight, without attending very exactly to -the proportion of the pieces. At present exactness is more necessary, -and every piece must be weighed by itself. - -It is of very great consequence that all the pieces and denominations of -coin be in exact proportion to that of their current value, which is -always relative to the money-unit of accompt. When any inequality -happens there, it is easy to perceive how all the pieces which are above -the proportion of their just weight, will be immediately picked up, and -melted down, and none but the light ones will remain in circulation. - -This, from the principles already laid down, must proportionally -diminish the value of the money-unit. - -From what has been observed concerning the deviations in the coin from -the proportion in the market price of the metals, and from the legal -weight, we may lay down this undoubted principle, _That the value of the -money-unit of accompt is not to be sought for in the statutes and -regulations of the mint, but in the actual intrinsic value of that -currency in which all obligations are acquitted, and all accompts are -kept_. - -[Sidenote: Variations to which the money-unit is exposed, from the - imposition of coinage.] - -IV. As I have at present principally in view to lay down certain -principles with regard to money, which I intend afterwards to apply to -the state of the British coin; and as these principles are here -restricted to the effects which every variation in the coin has upon the -value of the unit of money in accompt, I shall in this place only -observe, as to the imposition of coinage, - -That coin being necessary in every country where the money-unit is -attached to the metals, it must be procured by those who are obliged to -acquit their obligations in material money. - -If, therefore, the state shall oblige every one who carries the metals -to the mint to pay the coinage, the coin they receive must be valued, -not only at the price the metals bear in the market, when they are sold -as bullion, (or mere metal, of no farther value than as a physical -substance) but also at the additional value these metals receive in -being rendred useful for purchasing commodities, and acquitting -obligations. This additional value is the price of coinage. - -[Sidenote: When coinage is imposed, bullion must be cheaper than - coin.] - -If, therefore, in a country where coinage is free, as in England, this -coinage shall come to be imposed, the money-unit continuing to be -affixed as before to the same quantity of the metals, ought to rise in -its value; that is, ought to become equal to a greater quantity of every -sort of merchandize than before; consequently, as the rough metals of -which the coin is made are merchandize, like every other thing, the same -number of money-units realized, or represented in the coin, ought to -purchase more of the metals than before: That is to say, _that in every -country where coinage is imposed, bullion must be cheaper than coin_. - -This proposition would be liable to no exception; were it true that no -debt could be exacted but in the nation’s coin; because in that case, -the creditor would be constantly obliged to receive it at its full -value. - -[Sidenote: Exception from this rule.] - -But when nations owe to one another, the party debtor must pay the party -creditor in _his_ coin: the debtor, therefore, is obliged to sell his -own coin for what he can get for it, and with that he must buy of the -coin of his creditor’s country, and with this he must pay him. - -Let us, to avoid abstract reasoning, take an example: and we cannot -choose a better than that of England and France. In England, coinage is -free, in France it costs 82⁄10 _per cent._ as shall be made out in its -proper place. - -France owes England 1000_l._ sterling. In paying the bullion contained -in this sum, either in gold or silver, in the market of London, the debt -is paid; because the coining of it costs nothing. Here France acquits -her debt cheaper than by sending her own coin as bullion; because the -bullion she sends is not worth an equal weight of her coin. - -England owes France 20,000 livres. In paying the bullion contained in -this sum, England is not quit; she must also pay France 82⁄10 _per -cent._ in order to put it into coin. - -I reserve the farther examination of all the intricate consequences of -this principle, until I come to the application of it, in the Second -part. - -[Sidenote: Variation to which the money-unit is exposed, by the - arbitrary operations of Princes in raising and debasing the - coin.] - -V. The operation of raising and debasing the coin is performed in three -ways. - -_1mo_, By augmenting or diminishing the weight of the coin. - -_2do_, By augmenting or diminishing the proportion of alloy in the coin. - -_3tio_, By augmenting or diminishing the proportion between the money -(coin) and the money of accompt, as if every sixpence were called a -shilling, and every twenty sixpences a pound sterling. - -The French call this increasing or diminishing the _numerary value_: and -as I think it is a better term than that of raising or sinking the -denomination, I shall take the liberty now and then to employ it. - -These three operations may be reduced to one, and expressed by one term: -they all imply the augmenting or diminishing the weight of the pure -metals in the money-unit of accompt. - -It would require a separate treatise, to investigate all the artifices -which have been contrived, to make mankind lose sight of the principles -of money, in order to palliate and make this power in the sovereign of -changing the value of the coin, appear reasonable. But these artifices -seem to be at an end, and Princes now perceive that the only scheme to -get money when occasion requires, is to preserve their credit, and to -allow the coin, by which that credit is reckoned to remain in a stable -condition. There are still, however, examples of such operations to be -met with; for which reason I shall subjoin, towards the end of this -book, a particular inquiry into the interest of Princes with regard to -the altering the value of their coin, which is a synonimous term with -that of altering the value of the unit of money. - ------------------------------------------------------------------------- - - - - - CHAP. VI. - _How the Variations in the intrinsic value of the unit of Money must - affect all the domestic Interests of a Nation._ - - -[Sidenote: How this variation affects the interests of debtors and - creditors.] - -I. We have briefly pointed out the effects of the imperfections of the -metals in producing a variation in the value of the unit of accompt, we -must now point out the consequences of this variation. - -If the changing the content of the bushel by which grain is measured, -would affect the interest of those who are obliged to pay, or who are -intitled to receive, a certain number of bushels of grain for the rent -of lands; in the same manner must every variation in the value of the -unit of accompt affect all persons who, in permanent contracts, are -obliged to make payments, or who are intitled to receive sums of money -stipulated in multiples or in fractions of that money-unit. - -Every variation, therefore, upon the intrinsic value of the money-unit, -has the effect of benefiting the class of creditors, at the expence of -debtors, or _vice versa_. - -This consequence is deduced from an obvious principle. Money is more or -less valuable in proportion as it can purchase more or less of every -kind of merchandize. Now without entring a-new into the causes of the -rise and fall of prices, it is agreed upon all hands, I suppose, that -whether an augmentation of the general mass of money in circulation has -the effect of raising prices in general, or not, any augmentation of the -quantity of the metals appointed to be put into the money-unit, must at -least augment the value of that money-unit, and make it purchase more of -any commodity than before; that is to say, if 113 grains of fine gold, -the present weight of a pound sterling in gold, can buy 113 pounds of -flour; were the pound sterling raised to 114 grains of the same metal, -it would buy 114 pounds of flour; consequently, were the pound sterling -augmented by one grain of gold, every miller who paid a rent of ten -pounds a year, would be obliged to sell 1140 pounds of his flour, in -order to procure 10 pounds to pay his rent, in place of 1130 pounds of -flour which he sold formerly to procure the same sum; consequently by -this innovation, the miller must lose yearly ten pounds of flour, which -his master consequently must gain. From this example, I think it is -plain, that every augmentation of metals put into the pound sterling, -either of silver or gold, must imply an advantage to the whole class of -creditors who are paid in pounds sterling, and consequently, must be a -proportional loss to all debtors who must pay by the same denomination. - -[Sidenote: A mistake of Mr. Locke.] - -I should not have been so particular in giving a proof of so plain a -proposition, had it not escaped the penetration of the great Mr. Locke. - -In 1695 there was a proposal made to the government of England, to -diminish the value of the pound sterling by 20 _per cent._ by making a -new coinage of all the silver, and by making every shilling ⅕ lighter -than before. The author of this project (Mr. Lowndes) having given his -scheme to the public, was answered by Mr. Locke, That this debasing the -value of the money-unit was effectually defrauding all the landed -interest of 20 _per cent._ of their rents. Lowndes replied, that silver -was augmented 20 _per cent._ in its value, and that therefore the pound -sterling, though reduced 20 _per cent._ in its weight of pure silver, -was still as valuable as before. This proposition Mr. Locke exploded -with the most solid reasoning, and indeed nothing could be more absurd, -than to affirm, that silver had risen in value with respect to itself. -But though Mr. Locke _felt_ that all the landed interest, and all those -who were creditors in permanent contracts, must lose 20 _per cent._ by -Mr. Lowndes’s scheme, yet he did not _perceive_ (which is very -wonderful) that the debtors in these contracts must gain. This led him -to advance a very extraordinary proposition, which abundantly proves -that the interests of debtors and creditors, which are now become of the -utmost consequence to be considered attentively by modern statesmen, -were then but little attended to, and still less understood. - -We find in the 46th page of Mr. Locke’s _Farther Considerations -concerning the raising the value of Money_, that Mr. Lowndes had -affirmed in support of his scheme, that this new money would pay as much -debt, and buy as many commodities as the then money which was one fifth -heavier. Then adds Mr. Locke, “What he says of debts is true; but yet I -would have it well considered by our English gentlemen, that though -creditors will lose ⅕ of their principal and use, and landlords will -lose ⅕ of their income, _yet the debtors and tenants will not get it_. -It may be asked, who will get it? Those, I say, and those only, who have -great sums of weighty money (whereof one sees not a piece now in -payments) hoarded up by them, will get it. To these, by the proposed -change of our money, will be an increase of ⅕ added to their riches, -paid out of the pockets of the rest of the nation.” - -If the authority of any man could prevail, where reason is dark, it -would be that of Mr. Locke; and had any other person than Mr. Locke -advanced such a doctrine, I should have taken no notice of it. - -Here that great man, through inadvertency, at once gives up the argument -in favour of his antagonist, after he had refuted him in the most solid -manner: for if a man, who at that time had hoarded heavy money, was to -gain ⅕ upon its being coined into pieces ⅕ lighter, Mr. Locke must agree -with Mr. Lowndes, that a light piece was as much worth as a heavy one. - -Those who had heavy money at that time locked up in their coffers, would -gain no doubt, _provided they were debtors_; because having, I shall -suppose, borrowed 4000_l._ sterling in heavy money, and having it -augmented to 5000_l._ by Mr. Lowndes’s plan, they might pay their debt -of 4000_l._ and retain one thousand clear profit for themselves. But -supposing them to have no debts, which way could they possibly gain by -having heavy money, since the 5000_l._ after the coinage, would have -bought no more land, nor more of any commodities, than 4000_l._ would -have done before the coinage. - -[Sidenote: When the value of the unit is diminished, creditors - lose; when it is augmented, debtors lose.] - -We may therefore safely conclude, that every _diminution_ of the metals -contained in the money-unit, must imply a loss to all creditors; and -that in proportion to that loss, those who are debtors must gain. - -That on the contrary, whatever _augmentation_ is made of the money-unit, -such augmentation must be hurtful to debtors, and proportionally -advantageous to creditors. - -In the preceding chapters, I have laid down, with as much distinctness -as I am capable of, the most general principles which influence the -doctrine of money, and to those I think every other may be applied. - -The combination, however, of these principles with one another, -occasions a surprizing variety of problems, relating to money, coin, and -bullion, which are difficult to resolve, only by the difficulty there is -found in applying them to the rule. - -In order therefore to render this inquiry more useful, I shall now apply -the principles I have laid down, to the state of the British coin, and -to the resolution of every question which shall occur during the -examination of the disorder into which it has fallen. A deviation from -the standard weight of the coin, and proportion of the metals (small if -compared with what was common in former ages) has introduced very great -obstructions in the circulation of the two species, and presents very -great inconveniencies when there is any question of removing them by a -new regulation of the mint. - -The most distinct method of treating such matters, is, to consider all -coin as reduced to the weight of the pure metals; and to avoid the -perplexity of different denominations of weights, I shall examine all by -the troy grain. - -The interests I intend to combine in this matter not being confined to -those of England alone, I have entred into the most accurate calculation -possible, with regard to the coin of those nations which I shall have -occasion to mention, and to compare with that of England. These I have -reduced to a general table which is inserted at the end of this volume. -The reader may have recourse to it upon every occasion where mention is -made of the conversion of money into grains of silver and gold, and -thereby form to himself a far better idea of many things than I could -otherwise have given him. - ------------------------------------------------------------------------- - - - - - CHAP. VII. -_Of the disorder in the British Coin, so far as it occasions the melting - down or the exporting of the Specie._ - -[Sidenote: Defects in the British coin.] - -The defects in the British coin are three. - -_1mo._ The proportion between the gold and silver in it is found to be -as 1 to 152⁄10, whereas the market price may be supposed to be nearly as -1 to 14½. - -_2do._ Great part of the current money is worn and light. - -_3tio._ From the second defect proceeds the third, to wit, that there -are several currencies in circulation which pass for the same value, -without being of the same weight. - -_4to._ From all these defects results the last and greatest -inconvenience, to wit, that some innovation must be made, in order to -set matters on a right footing. - -I shall take no notice of the inaccuracies of fabrication, because these -are inseparable from the imperfections of human art, and as long as they -are not very considerable, no profit can be made in discovering them, -and therefore no bad consequence can result from them. - -[Sidenote: Of the standard of the English coin and money-unit.] - -The English, besides the unit of their money which they call the pound -sterling, have also the unit of their weight for weighing the precious -metals. - -This is called the pound troy, and consists of 12 ounces, every ounce of -20 penny weight, and every penny weight of 24 grains. The pound troy, -therefore, consists of 240 penny weight, and 5760 grains. - -The fineness of the silver is reckoned by the number of ounces and penny -weights of the pure metals in the pound troy of the composed mass; or in -other words, the pound troy, which contains 5760 grains of standard -silver, contains 5328 grains of fine silver, and 432 grains of copper, -called alloy. - -Thus standard silver is 11 ounces 2 penny weights of fine silver in the -pound troy, to 18 penny weights copper, or 111 parts fine silver to 9 -parts alloy. - -Standard gold is 11 ounces fine to one ounce silver or copper employed -for alloy, which together make the pound troy; consequently, the pound -troy of standard gold, contains 5280 grains fine, and 480 grains alloy, -which alloy is reckoned of no value. - -[Sidenote: A pound sterling by statute contains 1718.7 grains - troy, fine silver.] - -This pound of standard silver is ordered, by statute of the 43d of -Elizabeth, to be coined into 62 shillings, 20 of which make the pound -sterling; consequently the 20 shillings contain 1718.7 grains of fine -silver, and 1858.06 standard silver. - -[Sidenote: The guinea 118.644 grains of fine gold.] - -The pound troy of standard gold, 11⁄12 fine, is ordered by an act of -King Charles II. to be cut into 44½ guineas; that is to say, every -guinea contains 129.43 grains of standard gold, and 118.644 of fine -gold, and the pound sterling, which is 20⁄21 of the guinea, contains -112.994, which we may state at 113 grains of fine gold, as has been -said. - -[Sidenote: Coinage in England free.] - -The coinage in England is entirely defrayed at the expence of the state. -The mint price for the metals is the very same with the price of the -coin. Whoever carries to the mint an ounce of standard silver, receives -for it in silver coin 5_s._ 2_d._ or 62_d._ whoever carries an ounce of -standard gold receives in gold coin 3_l._ 17_s._ 10_d_½. the one and the -other making exactly an ounce of the same fineness with the bullion. -Coin, therefore, can have no value in the market above bullion; -consequently, no loss can be incurred by those who melt it down. - -When the guinea was first struck, the government (not inclining to fix -the pound sterling to the gold coin of the nation) fixed the guinea at -20 shillings, (which was then below its proportion to the silver) -leaving it to seek its own price above that value, according to the -course of the market. - -By this regulation no harm was done to the English silver standard; -because the guinea, or 118.644 grains fine gold being worth more, at -that time, than 20 shillings, or 1718.7 grains fine silver, no debtor -would pay with gold at its standard value, and whatever it was received -for above that price was purely conventional. - -[Sidenote: The standard not attached to the gold coin, till the - year 1728.] - -Accordingly guineas sought their own price until the year 1728, that -they were fixed a-new, not below their value as at first, but at what -was then reckoned their exact value, according to the proportion of the -metals, to wit, at 21 shillings, and at this they were ordered to pass -current in all payments. - -[Sidenote: Consequence of this regulation to debase the standard.] - -This operation had the effect of making the gold a standard as well as -the silver. Debtors then paid indifferently in gold as well as in -silver, because both were supposed to be of the same intrinsic as well -as current value; in which case no inconvenience could follow upon this -regulation. But, in time, silver came to be more demanded; the making of -plate began to prevail more than formerly, and the exportation of silver -to the East Indies increasing yearly, made the demand for it greater; or -perhaps brought its quantity to be proportionally less than before. This -changed the proportion of the metals, and by slow degrees they have come -from that of 1 to 15.2 (the proportion they were supposed to have when -the guineas were fixed and made a lawful money at 21 shillings) to that -of 14.5 the present _supposed_ proportion. - -The consequence of this has been, that the same guinea which was worth -1804.6 grains fine silver, at the time it was fixed at 21 shillings, is -now worth no more than 1719.9 grains of fine silver according to the -proportion of 14½ to 1. - -[Sidenote: That debtors will not pay in silver but in gold.] - -Consequently, debtors, who have always the option of the legal species -in paying their debts, will pay pounds sterling no more in silver but in -gold; and as the gold pounds they pay in, are not intrinsically worth -the silver pounds they paid in formerly, according to the statute of -Elizabeth, it follows that the pound sterling in silver is really no -more the standard, since no body will pay at that rate, and since no -body can be compelled to do it. - -Besides this want of proportion between the metals, the silver coined -before the reign of George I. is now become light by circulation; and -the guineas coined by all the Princes since Charles II. pass by tale, -though many of them are considerably diminished in their weight. - -Let us now examine what profit the want of proportion, and the want of -weight in the coin can afford to the money jobbers, in melting it down -or exporting it. - -Did every body consider coin only as the measure for reckoning value, -without attending to its value as a metal, the deviations of gold and -silver coin from perfect exactness either as to proportion or weight, -would occasion little inconvenience. - -[Sidenote: That some people consider coin a money of accompt,] - -Great numbers indeed, in every modern society, consider coin in no other -light, than that of money of accompt, and have great difficulty to -comprehend what difference any one can find between a light shilling and -a heavy one; or what inconvenience there can possibly result from a -guinea’s being some grains of fine gold too light to be worth 21 -shillings standard weight. And did every one think in the same way, -there would be no occasion for coin of the precious metals at all; -leather, copper, iron, or paper, would keep the reckoning as well as -gold and silver. - -[Sidenote: others consider it as a metal.] - -But although there be many who look no farther than at the stamp on the -coin, there are others whose sole business it is to examine its -intrinsic worth as a commodity, and to profit of every irregularity in -the weight and proportion of metals. - -By the very institution of coinage, it is implied, that every piece of -the same metal, and same denomination with regard to the money-unit, -shall pass current for the same value. - -It is, therefore, the employment of those money jobbers, as I shall call -them, to examine, with a scrupulous exactness, the precise weight of -every piece of coin which comes into their hands. - -[Sidenote: Operations of money jobbers when the coin deviates from - the market proportion of the metals, or from the legal - weight.] - -The first object of their attention, is, the price of the metals in the -market: a jobber finds, at present, that with 14.5 pounds of fine silver -bullion, he can buy one pound of fine gold bullion. - -[Sidenote: They melt down when the metals in it are wrong - proportioned.] - -He therefore buys up with gold coin, all the new silver as fast as it is -coined, of which he can get at the rate of 15.2 pounds for one in gold; -these 15.2 pounds silver coin he melts down into bullion, and converts -that back into gold bullion, giving at the rate of only 14.5. pounds for -one. - -By this operation he remains with the value of 7⁄10 of one pound weight -of silver bullion clear profit upon the 15½ pounds he bought; which 7⁄10 -is really lost by the man who inadvertently coined silver at the mint, -and gave it to the money jobber for his gold. Thus the state loses the -expence of the coinage, and the public the convenience of change for -their guineas. - -[Sidenote: And when the coin is of unequal weight.] - -But here it may be asked, Why should the money jobber melt down the -silver coin, can he not buy gold with it as well without melting it -down? I answer, he cannot; because when it is in coin, he cannot avail -himself of its being new and weighty. Coin goes by tale, not by weight; -therefore, were he to come to market with his new silver coin, gold -bullion being sold at the mint price I shall suppose, viz. at 3_l._ -17_s._ 10½_d._ sterling money _per_ ounce, he would be obliged to pay -the price of what he bought with heavy money, which he can equally do -with light. - -He therefore melts down the new silver coin, and sells it for bullion, -at so many pence an ounce, the price of which bullion is, in the English -market, always above the price of silver at the mint, for the reasons -now to be given. - -[Sidenote: Why silver bullion is dearer than coin.] - -When you sell standard silver bullion at the mint, you are paid in -weighty money; that is, you receive for your bullion the very same -weight in standard coin; the coinage costs nothing; but when you sell -bullion in the market, you are paid in worn out silver, in gold, in bank -notes, in short, in every species of lawful current money. Now all these -payments have some defect: the silver you are paid with is worn and -light; the gold you are paid with is over-rated, and perhaps also light; -and the bank notes must have the same value with the specie with which -the bank pays them, that is, with light silver or over-rated gold. - -It is for these reasons, that silver bullion, which is bought by the -mint at 5_s._ 2_d._ _per_ ounce of heavy silver money, may be bought at -market at 65 pence[Q] the ounce in light silver, over-rated gold, or -bank notes, which is the same thing. - -Footnote Q: - - The price of silver is constantly varying in the London market; I - therefore take 65 pence _per_ ounce as a mean price, the less to - perplex calculations, which here are all hypothetical. - -[Sidenote: Because that species has risen in the market price as - bullion, and not as coin.] - -Farther, we have seen how the imposition of coinage has the effect of -raising coin above the value of bullion, by adding a value to it which -it had not as a metal. - -Just so when the unit is once affixed to certain determined quantities -of both metals, if one of the metals should afterwards rise in value in -the market, the coin made of that metal must lose a part of its value as -coin, although it retains it as a metal. Consequently, as in the first -case, it acquired an additional value by being coined, it must now -acquire an additional value by being melted down. From this we may -conclude, that when the standard is affixed to both the metals in the -coin, and when the proportion of that value is not made to follow the -price of the market, that species which rises in the market is melted -down, and the bullion is sold for a price as much exceeding the mint -price, as the metal has risen in its value. - -If, therefore, in England the price of silver bullion is found to be at -65 pence the ounce, while at the mint it is rated at 62; this proves -that silver has risen 3⁄65 above the proportion observed in the coin, -and that all coin of standard weight may consequently be melted down -with a profit of 3⁄65. But as there are several other circumstances to -be attended to, which regulate and influence the price of bullion, we -shall here pass them in review the better to discover the nature of this -disorder in the English coin, and the advantages which money jobbers may -draw from it. - -[Sidenote: What regulates the price of bullion.] - -The price of bullion, like that of every other merchandize, is regulated -by the value of the money it is paid with. - -If bullion, therefore, sells in England for 65 pence an ounce, paid in -silver coin, it must sell for 65 shillings the pound troy; that is to -say, the shillings it is commonly paid with, do not exceed the weight of -2⁄65 of a pound troy: for if the 65 shillings with which the pound of -bullion is paid weighed more than a pound troy, it would be a shorter -and better way for him who wants bullion, to melt down the shillings and -make use of the metal, than to go to market with them in order to get -less. - -We may, therefore, be very certain, that no man will buy silver bullion -at 65 pence an ounce, with any shilling which weighs above 1⁄65 of a -pound troy. - -We have gone upon the supposition that the ordinary price of bullion in -the English market is 65 pence _per_ ounce. This has been done upon the -authority of some late writers on this subject[R]: it is now proper to -point out the causes which may make it deviate from that value. - -Footnote R: - - This was writ in Germany, _anno_ 1759, when I was not well informed of - certain facts, and it is not worth while to make any alterations, as - it is only a supposition. - -[Sidenote: The intrinsic value of the currency.] - -I. It may vary and certainly will vary in the price according as the -currency is better or worse. When the expences of a war, or a wrong -balance of trade, have carried off a great many heavy guineas, it is -natural that bullion should rise; because then it will be paid for more -commonly in light gold and silver; that is to say, with pounds sterling, -below the value of 113 grains fine gold, the worth of the pound sterling -in new guineas. - -[Sidenote: A demand for exporting bullion.] - -II. This wrong balance of trade, or a demand for bullion abroad, -becoming very great, may occasion a scarcity of the metals in the -market, as well as a scarcity of the coin; consequently, an advanced -price must be given for it in proportion to the greatness and height of -the demand. In this case, both the specie and the bullion must be bought -with paper. But I must observe, that the rise in the price of bullion -proceeds from the demand for the metals, and the competition between -merchants to procure them, and not because the paper given as the price -is at all of inferior value to the specie. The least discredit of this -kind would not tend to diminish the value of the paper; it would -annihilate it at once. Therefore, since the metals must be had, and that -the paper cannot supply the want of them when they are to be exported, -the price rises in proportion to the difficulties in finding metals -elsewhere than in the English market. - -[Sidenote: Or for making of plate.] - -III. A sudden call for bullion, for the making of plate. A gold-smith -can well afford to give 67 pence for an ounce of silver, that is to say, -he can afford to give one pound of gold for 14 pounds of silver, and -perhaps for less, notwithstanding that what he gives be more than the -ordinary proportion between the metals, because he indemnifies himself -amply by the price of his workmanship: just as a tavern-keeper will pay -any price for a fine fish, because, like the goldsmith, he buys for -other people. - -[Sidenote: Exchange raises, and the mint price brings down - bullion.] - -IV. The mint price has as great an effect in bringing down the price of -bullion, as exchange has in raising it. In countries where the metals in -the coin are justly proportioned, where all the currencies are of legal -weight, and where coinage is imposed, the operations of trade make the -price of bullion constantly to fluctuate between the value of the coin -and the mint price of the metals. This shall afterwards be sufficiently -explained, in the second part. - -[Sidenote: Continuation of the operations of money-jobbers] - -Now let us suppose that the current price of silver bullion in the -market is 65 pence the ounce, paid in lawful money, no matter of what -weight, or of what metal. [Sidenote: Their rule for melting the coin.] -Upon this the money-jobber falls to work. All shillings which are above -1⁄65 of a pound troy, he throws into his melting pot, and sells them as -bullion, for 65_d._ _per_ ounce; all those which are below that weight -he carries to market, and buys bullion with them, at 65 pence _per_ -ounce. - -What is the consequence of this? - -That those who sell the bullion, finding the shillings which the -money-jobber pays with perhaps not above 1⁄66 of a pound troy, they on -their side raise the price of their bullion to 66 pence the ounce. - -This makes new work for the money-jobber; for he must always gain. He -now weighs all shillings as they come to hand; and as formerly he threw -into his melting-pot those only which were worth more than 1⁄65 of a -pound troy, he now throws in all that are in value above 1⁄66. He then -sells the melted shillings at 66 pence the ounce, and buys bullion with -the light ones, at the same price. - -This is the consequence of ever permitting any species of coin to pass -by the authority of the stamp, without controlling it at the same time -by the weight: and this is the manner in which money-jobbers gain by the -currency of light money. - -[Sidenote: The pence in guineas equal to the pence of shillings of - 65 in the pound troy.] - -It is no argument against this exposition of the matter to say, that -silver bullion is seldom bought with silver coin; because the pence in -new guineas are worth no more than the pence of shillings of 65 in the -pound troy: that is to say, that 240 pence contained in 20⁄21 of a new -guinea, and 240 pence contained in 20 shillings of 65 to the pound troy, -differ no more in the intrinsic value than 0.88 of a grain of fine -silver upon the whole, which is a mere trifle[S]. - -Footnote S: - - See table, English coins, N^o. 6, & 7. - -[Sidenote: When guineas may be melted down with profit.] - -Whenever, therefore, shillings come below the weight of 1⁄65 of a pound -troy, then there is an advantage in changing them for new guineas; and -when that is the case, the new guineas will be melted down, and profit -will be found in selling them for bullion, upon the principles we have -just been explaining. - -It would be very tedious to enumerate all the fraudulent operations -which are occasioned by this defect of proportion between the metals in -the coin, and by the unequal weight of coins carrying the same -denomination. - -[Sidenote: Silver is exported preferably to gold.] - -We have already given a specimen of the domestic operations of the -money-jobbers; but these are not the most prejudicial to national -concerns. The jobbers may be supposed to be Englishmen; and in that case -the profit they make remains at home; but whenever there is a call for -bullion to pay the balance of trade, it is evident that this will be -paid in silver coin, never in gold, if heavy silver can be got; and this -again carries away the silver coin, and renders it at home so rare, that -great inconveniencies are found for want of the lesser denominations of -it. The loss, however, here is confined to an inconvenience; because the -balance of trade being a debt which must be paid, I don’t consider the -exportation of the silver for that purpose as any consequence of the -disorder of the coin. But besides this exportation which is necessary, -there are others which are arbitrary, and which are made only with a -view to profit of the wrong proportion. - -When the money-jobbers find difficulty in carrying on the traffic we -have described, in the English market, because of the competition among -themselves, they carry the silver coin out of the country, and sell it -abroad for gold, upon the same principles that the East India company -send silver to China, in order to purchase gold. - -[Sidenote: This hurtful, when done by foreigners.] - -It may be demanded, what hurt this trade can do to England, since those -who export silver bring back the same value in gold? I answer, that were -this trade carried on by natives, there would be no loss; because they -would bring home gold for the whole intrinsic value of the silver. But -if we suppose foreigners sending over gold to be coined at the English -mint, and changing that gold into English silver coin, and then carrying -off this coin, I think it is plain that they must gain the difference, -as well as the money-jobbers. But it may be answered, that having given -gold for silver at the rate of the mint, they have given value for what -they have received. Very right; but so did Sir Hans Sloane, when he paid -five guineas for an overgrown toad: he got value for his money; but it -was value only to himself. Just so, whenever the English government -shall be obliged to restore the proportion of the metals, (as they must -do) this operation will annihilate that imaginary value which they have -hitherto set upon gold; which imagination is the only thing which -renders the exchange of their silver against the foreign gold equal. - -But it is farther objected, that foreigners cannot carry off the heavy -silver; because there is none to carry off. Very true; but then I say -they have carried off a great quantity already: or if the English Jews -have been too sharp to allow such a profit to fall to strangers, (which -may or may not have been the case) then I say that this disorder is an -effectual stop to any more coinage of silver for circulation. - ------------------------------------------------------------------------- - - - - - CHAP. VIII. -_Of the disorder in the British coin, so far as it affects the value of - the pound sterling currency._ - - -[Sidenote: Two legal pounds sterling in England.] - -From what has been said, it is evident, that there must be found in -England two legal pounds sterling, of different values; the one worth -113 grains of fine gold, the other worth 1718.7 grains of fine silver. I -call them different; because these two portions of the precious metals -are of different values all over Europe. - -[Sidenote: And several others, in consequence of the wearing of - the coin.] - -But besides these two different pounds sterling, which the change in the -proportion of the metals have created, the other defects of the -circulating coin produce similar effects. The guineas coined by all the -Princes since K. Charles II. have been of the same standard weight and -fineness, 44½ in a pound troy of standard gold 11⁄12 fine: these have -been constantly wearing ever since they have been coined; and in -proportion to their wearing they are of less value. - -If, therefore, the new guineas are below the value of a pound sterling -in silver, standard weight, the old must be of less value still. Here -then is another currency, that is, another pound sterling; or indeed -more properly speaking, there are as many different pounds sterling as -there are guineas of different weights. This is not all; the -money-jobbers having carried off all the weighty silver, that which is -worn with use, and reduced even below the standard of gold, forms one -currency more, and totally destroys all determinate proportion between -the money-unit and the currencies which are supposed to represent it. - -[Sidenote: Why any silver coin remains in England.] - -It may be asked, how, at this rate, any silver at all has remained in -England? I answer, that the few weighty shillings which still remain in -circulation, have marvellously escaped the hands of the money-jobbers; -and as for the rest, the rubbing and wearing of these pieces has done -what the slate might have done; that is to say, it has reduced them to -their due proportion with the lightest gold. - -The disorder, therefore, of the English coin has rendered the standard -of a pound sterling quite uncertain. To say that it is 1718.7 grains of -fine silver, is quite ideal. Who are paid in such pounds? To say that it -is 113 grains of pure gold, may also not be true; because there are many -currencies worse than the new guineas. - -[Sidenote: Value of a pound sterling current.] - -What then is the consequence of all this disorder? What effect has it -upon the current value of a pound sterling? And which way can the value -of that be determined? - -[Sidenote: Determined by the operations of trade.] - -The operations of trade bring value to an equation, notwithstanding the -greatest irregularities possible, and so in fact a pound sterling has -acquired a determinate value over all the world by the means of foreign -exchange. This is a kind of ideal scale for measuring the British coin, -although it has not all the properties of that described above. - -[Sidenote: To the mean value of all the currencies.] - -Exchange considers the pound sterling as a value determined according to -the combination of the values of all the different currencies, in -proportion as payments are made in the one or the other; and as debtors -generally take care to pay in the worst species they can, it -consequently follows, that the value of the pound sterling should fall -to that of the lowest currency. - -Were there a sufficient quantity of worn gold and silver to acquit all -bills of exchange, the pound sterling would come down to the value of -them; but if the new gold be also necessary for that purpose, the value -of it must be proportionally greater. - -All these combinations are liquidated and compensated with one another, -by the operations of trade and exchange: and the pound sterling, which -is so different in itself, becomes thereby, in the eyes of commerce, a -determinate unit, subject however to variations, from which it never can -be exempted. - -Here is then the proof of what was said in the end of the first chapter, -that the wearing of one shilling had the effect of contributing towards -the diminution of the value of the pound sterling every where; a -proportion which, at first sight, has the air of a paradox, though, when -it is understood, nothing is more consistent with the ruling principles -of commerce. - -[Sidenote: Exchange a good measure for the value of a pound - sterling.] - -Exchange, therefore, in my humble opinion, is one of the best measures -for valuing a pound sterling, present currency. Here occurs a question. - -Does the great quantity of paper money in England tend to diminish the -value of the pound sterling? - -[Sidenote: The use of paper money not hurtful in debasing the - standard.] - -I answer (according to my weak conceptions) in the negative. _Paper -money_ is just as good as gold or silver money, and no better. The -variation of the standard, we have already said, and I think proved, -must influence the interests of debtors and creditors proportionally -every where. From this it follows, that all augmentation of the value of -the money-unit in the specie must hurt the debtors in the paper money; -and all diminutions on the other hand must hurt the creditors in the -paper money, as well as every where else. The payments, therefore, made -in paper money, never can contribute to the regulation of the standard -of the pound sterling; it is the specie received in liquidation of that -paper money which alone can contribute to mark the value of the British -unit; because it is affixed to nothing else. - -[Sidenote: The pound sterling not regulated by statute, but by the - mean value of the current money.] - -From this we may draw a principle, _That in countries where the -money-unit is entirely affixed to the coin, the actual value of it is -not according to the legal standard of that coin, but according to the -mean proportion of the actual worth of those currencies in which debts -are paid_. - -[Sidenote: Why exchange appears so commonly against England.] - -From this we see the reason why the exchange between England and all the -trading towns in Europe has long appeared so unfavourable. People -calculate the real par, upon the supposition that a pound sterling is -worth 1718.7 grains troy of fine silver, when in fact the currency is -not perhaps worth 1638, the value of a new guinea in silver, at the -market proportion of 1. to 14.5; that is to say, the currency is but -95.3. _per cent._ of the silver standard of the 43d of Elizabeth. No -wonder then if the exchange be thought unfavourable. - -[Sidenote: How the market prices of bullion marks the value of the - pound sterling.] - -From the principle we have just laid down, we may gather a confirmation -of what we advanced concerning the cause of the advanced price of -bullion in the English market. - -When people buy bullion with current money at a determinate price, that -operation, in conjunction with the course of exchange, ought naturally -to mark the actual value of the pound sterling with great exactness. - -[Sidenote: Shillings at present weigh no more than 1⁄65 of a pound - troy,] - -If therefore the price of standard bullion in the English market, when -no demand is found for the exportation of the metals, that is to say, -when paper is found for paper upon exchange, and when merchants, versed -in these matters, judge exchange (that is remittances) to be at par, if -then, I say, silver bullion cannot be bought at a lower price than 65 -pence the ounce, it is evident that this bullion might be bought with 65 -pence in shillings, of which 65 might be coined out of the pound troy -English standard silver; since 65 pence per ounce implies 65 shillings -for the 12 ounces or pound troy. - -This plainly shews how standard silver bullion should sell for 65 pence -the ounce, in a country where the ounce of standard silver in the coin -is worth no more than 62; and were the market price of bullion to stand -uniformly at 65 _per_ ounce, that would shew the value of the pound -sterling to be tolerably fixed. All the heavy silver coin is now carried -off[T]; because it was intrinsically worth more than the gold it passed -for in currency. The silver therefore which remains is worn down to the -market proportion of the metals, as has been said, that is to say, 20 -shillings in silver currency are worth 113 grains of fine gold, at the -proportion of 1 to 14.5 between gold and silver. Now, - - as 1 is to 14.5, so is 113 to 1638. - -so the 20 shillings current weigh but 1638 grains fine silver, instead -of 1718.7, which they ought to do according to the standard. - -Footnote T: - - This was writ during last war. - -Now let us speak of standard silver, since we are examining how far the -English coin must be worn by use. - -[Sidenote: and are worn 4.29 troy grains light of their standard - weight.f] - -The pound troy contains 5760 grains. This, according to the standard, is -coined into 62 shillings; consequently, every shilling ought to weigh -92.9 grains. Of such shillings it is impossible that ever standard -bullion should sell at above 62 pence _per_ ounce. If therefore such -bullion sells for 65 _pence_, the shillings with which it is bought must -weigh no more than 88.64 grains standard silver; that is, they must lose -4.29 grains, and are reduced to 1⁄65 of a pound troy. - -But it is not necessary that bullion be bought with shillings; no -stipulation of _price_ is ever made farther, than at so many pence -sterling _per_ ounce. Does not this virtually determine the value of -such currency with regard to all the currencies in Europe? Did a -Spaniard, a Frenchman, or a Dutchman, know the exact quantity of silver -bullion which can be bought in the London market for a pound sterling, -would he inform himself any farther as to the intrinsic value of that -money-unit; would he not understand the value of it far better from that -circumstance than by the course of any exchange, since exchange does not -mark the intrinsic value of money, but only the value of that money -transported from one place to another. - -The price of bullion, therefore, when it is not influenced by -extraordinary demand (such as for the payment of a balance of trade, or -for making an extraordinary provision of plate) but when it stands at -what every body knows to be meant by the common market price, is a very -tolerable measure of the value of the _actual_ money-standard in any -country. - -[Sidenote: A pound sterling worth at present no more than 1638 - grains troy fine silver, according to the price of bullion;] - -If it be therefore true, that a pound sterling cannot purchase above -1638 grains of fine silver bullion, it will require not a little logic -to prove that it is really, or has been for these many years, worth any -more; notwithstanding that the standard weight of it in England is -regulated by the laws of the kingdom at 1718.7 grains of fine silver. - -[Sidenote: and according to the course of exchange,] - -If to this valuation of the pound sterling drawn from the price of -bullion, we add the other drawn from the course of exchange; and if by -this we find, that when paper is found for paper upon exchange, a pound -sterling cannot purchase above 1638 grains of fine silver in any country -in Europe, upon these two authorities, I think, we may very safely -conclude (as to the matter of fact at least) that the pound sterling is -not worth more, either in London or in any other trading city, and if -this be the case, it is just worth 20 shillings of 65 to the pound troy. - -[Sidenote: shillings coined at 65 in the pound troy, would be in - proportion with the gold,] - -If therefore the mint were to coin shillings at that rate, and pay for -silver bullion at the market price, that is, at the rate of 65 pence -_per_ ounce in those new coined shillings, they would be in proportion -to the gold: silver would be carried to the mint equally with gold, and -would be as little subject to be exported or melted down. - -It may be inquired in this place, how far the coining the pound troy -into 65 shillings is contrary to the laws of England? - -[Sidenote: which shews that the standard has been debased,] - -The moment a state pronounces a certain quantity of gold to be worth a -certain quantity of silver, and orders these respective quantities of -each metal to be received as equivalents of each other, and as lawful -money in payments, that moment gold is made a standard as much as -silver. If therefore too small a quantity of gold be ordered or -permitted to be considered as an equivalent for the unit, the silver -standard is from that moment debased; or indeed more properly speaking, -all silver money is from that moment proscribed; for who, from that -time, will ever pay in silver, when he can pay cheaper in gold? Gold, -therefore, by such a law is made the standard, and all declarations to -the contrary are against the matter of fact. - -[Sidenote: and that the preserving it where it is, is no new - debasement.] - -Were the King, therefore, to coin silver at 65 shillings in the pound, -it is demonstration _that by such an act_ he would commit no -adulteration upon the standard: the adulteration is already committed. -The standard has descended to where it is, by slow degrees, and by the -operation of political causes only, and nothing prevents it from falling -lower, but the standard of the gold coin. Let guineas be now left to -seek their value as they did formerly, and let light silver continue to -go by tale, we shall see the guineas up at 30 shillings in 20 years -time, as was the case in 1695. - -[Sidenote: Proof that the standard has been debased by law,] - -It is as absurd to say that the standard of Queen Elizabeth has not been -debased by enacting, that the English unit shall be acquited with 113 -grains of fine gold, as it would be to affirm that it would not be -debased from what it is at present, by enacting, That a pound of butter -should every where be received in payment for a pound sterling; although -the pound sterling should continue to consist of 3 ounces, 17 penny -weights, and 10 grains of standard silver, according to the statute of -the 43 Elizabeth. I believe in that case most debtors would pay in -butter, and silver would, as at present, acquire a conventional value as -a metal, but would be looked upon no longer as a standard, or as money. - -If therefore, by the law of England, a pound sterling must consist of -1718.7 grains troy of fine silver, by the law of England also, 113 -grains of gold must be of the same value, but no law can establish that -proportion; consequently, in which ever way a reformation be brought -about, some law must be reversed; consequently, expediency, and not -compliance with law, must be the motive in reforming the abuse. - -[Sidenote: and is at present reduced to the value of the gold.] - -From what has been said, it is not at all surprising that the pound -sterling should in fact be reduced nearly to the value of the gold. -Whether it ought to be kept at that value is another question; and shall -be examined in its proper place. All that we here decide, is, that -coining the pound troy into 65 shillings would restore the proportion of -the metals, and render both species common in circulation. But restoring -the weight and proportion of the coin is not the difficulty, as I -conjecture, which prevents a reformation of the English coinage. - -I have dwelt longer, perhaps, than what was necessary upon this -estimation of the present value of the pound sterling, and in setting -the matter in different lights, have been forced into repetitions. The -importance of that point in the present inquiry must plead my excuse. - ------------------------------------------------------------------------- - - - - - CHAP. IX. - _Historical account of the Variations of the British Coin._ - -[Sidenote: Purport of this treatise not to dictate, but to - inquire] - -The whole purport of this part of my inquiry, is, to examine and -investigate the principles relating to money; to range them in order, -and to render them easily applicable to any combination of circumstances -which may occur. If I have applied my reasoning to the state of the -British coin, it has been with no intention to erect myself as a judge -of the interests of that nation, or with a design to point out to them -what measure is the most expedient to be followed. I am a stranger to -the true state of the question, and I reason only upon suppositions, not -from exact information; upon this footing I intend to proceed. - -I shall take a view of every scheme which I think may be proposed as a -remedy against the disorder, and examine all the consequences which can -result from each, according to the influence of the different principles -under which they fall. _Circumstances hid_ from me will nevertheless -work their full effect, and may render the best deduced principles quite -delusive, when, without attending to _them_, we pretend to draw -conclusions. - -[Sidenote: how the disorder in the coin may be remedied without - inconveniences,] - -We have examined the nature of the disorder of the coin of Great -Britain, and such it certainly is, as demands some reformation. A nation -so justly renowned for knowledge, so thoroughly versed in the arts of -commerce, and so expert in every matter of calculation, cannot be -supposed to be at any loss for a method to remove the cause of the -disorder. The question is not, therefore, how to fix the standard, how -to restore the proportion between the metals in the coin, nor how to -render all the current money of its just weight. But the question is, -how to execute this without incurring greater inconveniences than those -at present felt. - -If the smallest change should be made upon the present value of the -pound sterling, the operation is arbitrary; and those who either advise -it or execute it, would be answerable for every consequence. If the -consequences should prove salutary to the nation, the projector will -meet with applause; but if they should be attended with injustice, he -will merit blame; if with perplexity and confusion, he may very possibly -never see himself approved of. - -The present disorder has proceeded from neglect on the part of -government; a neglect however which admits of an apology, for reasons -afterwards to be assigned. When an abuse creeps in by degrees, no -particular person can be charged with it: when it is to be corrected, -some person or other must undertake the work; and few are found who -incline to be volunteers in the service of the public, upon an occasion -where the interest of the nation is not clear and evident. - -[Sidenote: by making the nation itself choose the remedy.] - -The best way therefore to accomplish such a work, is, to put it into the -hands of the nation itself. When the people are fully instructed in the -matter, when the state of the question is laid before them in a clear -light, and stripped of all money-jargon, they will see the natural -consequences of every innovation; and when they have well considered of -them, they may resolve whether they will keep the pound sterling they -have, or whether they will take another. - -[Sidenote: If the present standard is departed from, every other - to be pitched upon is arbitrary.] - -The question to be determined, is, what the weight of the pound sterling -now is, and what it ought to be. If it be made different from what it is -at present, that operation must be conducted with justice and -impartiality. If a new standard is to be pitched upon, the choice is -quite arbitrary, as has been said; and were any weight to be preferred -to another, the best of any, no doubt, would be the pound troy of -standard silver. This was the pound sterling for many ages, and the most -that can be said for Queen Elizabeth’s act, is, that it is the last -_deliberate_ adulteration by law of the English coin. - -The next question is, how to conduct that operation so as to do justice -to every man in the nation in contracts already entred into; how to do -justice to the creditors of Great Britain; how to do justice to Great -Britain with respect to her creditors; how to do all this, I say, and at -the same time to make an innovation upon the present state of the coin. - -[Sidenote: People imagine the present standard is the same with - that of Queen Elizabeth.] - -Debasing the standard is odious in the opinion of every mortal; and it -seems also to be the opinion of many, that every regulation which shall -not carry the value of a pound sterling, to the value of the silver -appointed to enter into it by the statute of Queen Elizabeth, is a -debasing of it from what it is at present. - -In order to cast more light upon the historical part of the English -coinage, I shall here lay together some short observations upon the -state of that question from the reformation to the present time. - -[Sidenote: Debasements of the standard during the reformation.] - -Henry VIII. and Edward VI. during the violent convulsions of the -reformation, so sophisticated the fineness of the coin, and so curtailed -the weight of it, that all proportion of value was lost. - -[Sidenote: Raised by Edward VI.] - -This run the whole nation into inextricable confusion, and forced the -ministers of the young King Edward, in 1552, to restore the purity of -the metals, and to raise the weight of the coin in the pound sterling, -from 220 grains troy of fine silver, to which it was then debased, to -1884. Mary reduced it to 1880 grains, at which it stood during her -reign. [Sidenote: Debased by Elizabeth.] From this Elizabeth raised -it in the second year of her reign to 1888 grains; and in the 43d she -passed the famous statute by which it was debased to 1718.7, the present -legal silver standard. [Sidenote: Supported by her successors,] -During the reign of James I. trade began to take root in England; and -this pointed out the necessity of preserving the standard of their money -invariable. The confusions occasioned by the former adulterations left a -strong impression on the minds of the English nation in the succeeding -reigns, a statute which had been preserved without alteration for many -years acquired in time great authority, and the standard continued -constantly attached to the silver. Gold was occasionally coined; but -circulated only under a conventional value, and was not made a legal -money. The interests of trade at last required a more extensive -circulation, and King Charles II. when he first coined guineas, -determined a value for their currency, in order to compass that end: but -very well observing that without fixing the gold at a price below its -true proportion to the silver, there was no possibility of preventing it -from becoming also a standard for the pound sterling, and thereby -introducing a confusion, the guinea was valued no higher than 20 -shillings, and allowed to find its own value above that price. - -The guinea accordingly fluctuated in its value; sometimes at 22 -shillings, which marks the proportion of the metals at 1 to 15.84, -sometimes at 21_s._ 6_d._ which marks the proportion at 1 to 15.6, at -last at 21 shillings, which marks the proportion as 1 to 15.2, and now -it is worth no more than its original statute value, to wit, 20 -shillings, which marks the proportion as 1 to 14.5. These conversions -are formed upon the supposition, that in all the variations the -shillings are of the statute weight, and that the guinea circulated -according to the market proportion of the metals; two circumstances -which are by no means to be depended on. - -[Sidenote: until it was debased by the clipping after the - revolution.] - -About the time of the revolution, silver money had begun to be coined -with the wheel, or fly-press, (which prevented the frauds to which coin -was formerly exposed from clipping and washing) and then the custom of -weighing the current money went into disuse. But as at that time there -were still great quantities of the hammered money remaining, the -clippers profited of the inattention of the public, and fell to work -with the hammered money. The consequence of this was, that those who -were obliged to pay, paid in clipped money; the value of the pound -sterling fell to the rate of the then currency; all weighty coin was -locked up or melted down; the guineas rose to 30 shillings, and 100_l._ -sterling, which in silver ought to weigh above 32 pounds troy, did not -commonly exceed one half. - -The kingdom at this time was involved in a war, and was annually obliged -to borrow large sums, paid in those pounds sterling currency, which were -worth no more than 2⁄3 of a guinea, or 14 shillings of such currency as -the present of 65 to the pound troy. This is evident, since the guinea -was then worth 30 shillings, or 1½ pound sterling; and that at present -it is worth 21 shillings of 65 to the pound troy. - -[Sidenote: Lowndes’s scheme refuted by Locke, the standard raised - to that of Elizabeth, and the consequences of that measure.] - -Lowndes contended strongly for having the pound sterling reduced 20 _per -cent._ Locke insisted upon the old standard of Queen Elizabeth: the -latter carried his point. A new coinage was made in 1695, and the -government acquitted a great part of the debts they had contracted from -the revolution (which had been paid them at the value of between ten and -fourteen shillings present currency) at the rate of 20 shillings of the -standard of Queen Elizabeth. This is the matter of fact: whether this -was doing justice to the nation, I leave every man to determine. It must -not however be believed that there was no reason for this extraordinary -step. By the raising of the standard, the state gained considerably upon -the score of taxes, as well as the creditors upon their capitals and -interest; and the nation, which was the principal loser, was pleased; -because their standard was not debased: thus all the three parties were -satisfied. - -Upon this coinage in 1695, the coin was once more set upon a solid -footing: all money was of weight, and the pound was rightly attached to -the silver standard. Upon that footing it remained, until the guinea was -made a legal coin, and fixed at its then supposed intrinsic worth: here -is the æra of the present confusion. - -[Sidenote: Silver has been rising from the beginning of this - century.] - -From the beginning of this century, silver has been rising in its price. -In 1709, the French found it as 1 to 15, in the great coinage, by edict -of the month of May; and so early as 1726, they found the proportion to -be nearly as 1 to 14½, and fixed their coinage accordingly. - -[Sidenote: The English standard has been debased by law, since - 1726.] - -We may therefore conclude, that from 1726, at least, if not several -years before, a pound sterling ought to have been worth at least 118½ -grains troy of fine gold, according to the proportion of the silver -standard; and yet from the inattention of government, it has constantly -been suffered to be acquitted with 113. Has not this been a plain -debasement of the standard for near 40 years, which we can ascertain? If -it is at this time restored to where it was, will not that be raising it -from what it is at present? - -[Sidenote: The trading interest chiefly to be blamed for this - neglect.] - -We have seen, from a deduction of the plainest principles, the utter -impossibility of keeping an unit, which ought to be invariable, attached -at once to the two metals, which are constantly varying between -themselves. To this the state has not attended, nor has it probably been -sufficiently informed of it, by those who were most capable, but least -interested to point out the consequences. - -[Sidenote: Debasing the standard chiefly affects permanent - contracts,] - -The variations of the standard affect chiefly those who are engaged in -permanent contracts, which is not the case of trading men: the -obligations they contract are in a perpetual fluctuation, and by the -assistance of their pen, they avoid the inconveniences which other -people, who do not calculate, are liable to. - -The rising of the value of silver has been all along advantageous to -this class; and it would be still more advantageous to them were -government to allow guineas at this time to seek their own value; as we -shall observe in its proper place. Every thing which tends gradually and -insensibly to debase the value of the money unit, and promote confusion, -is advantageous to merchants. When this debasement proceeds by slow -degrees, it is not to be discovered but by foreign exchange; _because at -home there is no invariable standard for money, as there is for every -other kind of measure_. This shall be proved. - -The unit therefore being solely attached to the coin, must vary as it -does. - -[Sidenote: and prevents prices from rising as they should do.] - -Now the value of the coin has varied imperceptibly; and this is the -reason why people imagine that such variations or debasements of the -standard are not of great consequence. The greatest mistake any person -can labour under! By this imperceptible debasement, prices do not rise -as they ought to do; the ignorant, and those who do not perceive the -gradual diminution, keep to the same nominal prices as formerly, and the -merchants profit in the mean time. Is not this sacrificing the interest -of all the people of England to that of the trading part of it? - -The competition between the merchants betrays the secret to the -multitude from time to time; but they ascribe the appearances to a wrong -cause; they think every thing is growing dearer, whereas the reason is, -that price (i. e. coin) is growing lighter: and as this disorder is -always going on, the merchants, being the first informed of the progress -of the decline of the value of the coin, must constantly be in the way -to profit of the ignorance of those who have not the opportunity of -measuring the value of the coin they receive by any standard measure. - -This being the case, it is no wonder that the trading part of the nation -has not informed government of a disorder which has brought, by slow -degrees, the pound sterling to about 95 _per cent._ of its former value. -This is a short review of the vicissitudes of the English coin from the -reformation to this day: and it is at the same time an apology for the -neglect of the British administration in a matter of so great -consequence. - ------------------------------------------------------------------------- - - CHAP. X. - _Of the disorder of the British Coin, so far as it affects the -Circulation of Gold and Silver Coin; and of the Consequences of reducing - Guineas to Twenty Shillings._ - - -I must now take notice of the inconveniences which this disorder has -occasioned to the public, and of the consequences which might follow -upon adopting the remedy proposed[U] for removing it, to wit, by fixing -the currency of guineas at 20 shillings, without recoining the silver at -the standard of Elizabeth. - -Footnote U: - - By Mr. Harris, in his _Essay on Money and Coins_. - -[Sidenote: Why silver coin is so scarce.] - -The great inconvenience felt by the public is the scarcity of silver -coin, occasioned by the disproportion of the metals. No mortal will -ever, as matters stand, carry silver to be coined; that which is worn by -circulation, is not sufficient, even for changing gold, much less for -all those small payments which, in the course of business, are -absolutely necessary. This being the case, all considerable payments -must be made in guineas; and as there are great numbers of these already -become light by use, all the weighty are picked up, and either exported, -or perhaps frequently melted down: so that, in general, the current -specie of England is not sufficient for the occasions of the nation. - -[Sidenote: Consequences of fixing the guinea at 20 shillings, with - regard to circulation,] - -The great scarcity of silver coin in England, being evidently occasioned -by the disproportion between the metals in the coin, it has been -proposed to remedy that disorder all at once, by crying down the value -of guineas to 20 shillings, without making a new coinage, or taking any -measures for preventing the horrid consequences which would follow upon -such a step, as matters stand at present. Whoever inclines to read all -that may be said in favour of this operation, may consult Mr. Harris’s -_Essay upon Money and Coins_, Part II. p. 84. et seq. - -My intention is not to refute the sentiments of particular people, but -to trace out the principles I have laid down, and to apply them to the -removing such objections as I think either plausible in themselves, or -which may appear plausible to people who do not thoroughly understand -those matters. - -I shall then, in the first place, examine what consequence this bringing -down the legal currency of guineas to 20 shillings would have upon -common voluntary circulation; that is to say, buying and selling, -abstracting from unvoluntary circulation which takes place when people -are about to pay, or acquit obligations; two things totally different in -themselves, and which ought carefully to be set asunder. - -[Sidenote: will make coin disappear altogether.] - -The consequences of reducing guineas to 20 shillings, without a -re-coinage of the silver, will be, 1. To fix the standard of the pound -sterling to the mean proportion of the worn out silver money in present -currency. 2. To make the light guineas, which are below the value of 20 -old shillings, to pass by tale for pounds sterling; though intrinsically -not worth the new guineas. 3. To occasion the melting down of all the -new guineas. And 4. When once the coin is brought to consist of nothing -but old unequal pieces, to occasion the heaviest of these to be melted -down in their turn, until at last coin must disappear altogether. - -If to supply specie, government shall send silver or gold to be coined -at the mint at the legal standard, the moment it appears, the old -shillings and the light gold will buy it up, and it will be thrown into -the melting pot. This will stop even the melting down of the more -weighty pieces of the old specie; because (by this trade) they will -become more valuable; since in currency they will be an equivalent for -the new specie of full standard weight. No private person surely will -carry either of the metals to the mint, because there they would receive -but 62 shillings or 44½ guineas for their troy pound of the respective -metals, whereas in the market they will get a greater number of old -shillings and guineas to buy, weight for weight, which will serve the -same purpose in circulation. - -[Sidenote: How light shillings are bought by weight.] - -Let not my reader laugh at the scheme of buying old shillings at the -market by weight. The thing is done every day. For whether I sell my -silver bullion for 65 shillings _per_ pound (paid in shillings, guineas, -or bank-notes) or buy old shillings weight for weight, it is quite the -same thing. The reason why people do not sell the old shillings by the -pound, is only because they are not all of the same weight, although -they be all of the same value in circulation; but they sell their -bullion, as it were, against old worn shillings reduced to a mean -proportion of value; which sale of bullion is virtually buying old -shillings at market by weight. A man, therefore, who can with a pound of -silver bullion buy the value of 65 old shillings, will certainly never -employ it to buy 62 heavy ones from the mint, which are no where worth -more, except in the melting pot. The same is true of the gold. - -[Sidenote: Consequences as to circulation with merchants and - bankers.] - -I have endeavoured to shew by the plainest arguments, that no silver -coin, the value of which is above the value of any other currency within -the kingdom, can remain in circulation, or can escape the money-jobber -and the melting pot. I think this is a point pretty well agreed on all -hands; because it is the argument made use of against those who propose -to introduce shillings of base metal into circulation, as an expedient -for procuring change for the gold: a scheme so entirely repugnant to all -the principles of money, that I have taken no notice of it. - -[Sidenote: That guineas would still pass current for 21 - shillings:] - -If, therefore, it be true, that the shillings are really worth no more -than 1⁄21 of a guinea, what effect would the law, reducing guineas to 20 -shillings, have as to merchants? Guineas would pass as before with every -banker in London for 21 shillings, and 21 shillings for a guinea. - -[Sidenote: That the standard would be affixed to the light silver, - as it was in 1695:] - -But as we suppose no new coinage set on foot, and that the light silver -would continue to pass current by tale, as at present, what security -would there be for the pound sterling not falling every year lower? The -standard would then be entirely affixed to the old silver; and no man -would pay in guineas at 20 shillings, any more than he will now pay in -silver of standard weight. The only expedient then to obtain coin would -be, to allow guineas to seek their own value. Upon this they would rise -to 21 shillings, which is their intrinsic worth. In this case, would not -the shillings, by becoming lighter, become of less value in proportion -to the guinea? Was not this the case 1695? Did not this abuse raise the -price of guineas, and proportionally debase the worth of the pound -sterling? - -[Sidenote: That merchants would gain by it;] - -As every thing, therefore, which gradually debases the standard, must be -advantageous to those who can avail themselves of it, so the making gold -a merchandize, while the bulk of the nation has no standard to measure -it with, must be advantageous to those who have a sure one, to wit, the -foreign exchange. - -[Sidenote: debtors would be ruined.] - -Besides the evident tendency such a measure would have to debase the -standard, below the present value, it would be accompanied with the most -ruinous consequences to all the class of debtors. I shall beg leave to -state an example. A person is debtor, I shall suppose, for a great sum, -100,000_l._ his creditor demands payment. He offers guineas at the -current and conventional value of 21 shillings, the creditor refuses the -offer; he offers bank notes, refused: it is no excuse to say that -100,000_l._ of silver coin cannot be picked up; he who owes must find -it. The creditor tells him that the mint is open. Here the debtor is -obliged either to part with his guineas at 20 shillings value, or to -carry silver, which costs him 65 shillings the pound troy, to the mint, -and to pay it to his creditor at the rate of 62. There would be still -some consolation, if, from such a hard necessity, the state were to be -provided with weighty coin; but that is not the consequence. The -creditor is no sooner paid in silver, than he throws his coin into the -melting pot, and then sends the bullion to market to be sold at 65 pence -the ounce in bank notes. - -[Sidenote: Consequences as to the bank.] - -He next goes to the bank, and demands payment of his notes, It is not to -be supposed that there is old worn silver enough there to pay all the -notes in circulation. The bank must be in the same situation with every -debtor, it must send silver to the mint; not as perhaps at present to be -afterwards exported, or to furnish work for the mint and then to be -melted down again, but to acquit the notes which it had issued in lieu -of light silver, or guineas at 21 shillings. The creditor melts down his -new silver again, sells it as bullion for bank notes as before, and -returns upon the hank with a new demand. - -[Sidenote: Reducing guineas to 20 shillings, is the same as making - them a commodity.] - -It is the same thing as to this last supposition, whether the guineas be -left as merchandize to seek their value, or be fixed at 20 shillings; -for no man upon earth will give a heavy guinea for 20 shillings present -currency; and if debtors were obliged to pay at that rate, the hardship -would be exactly the same as in the foregoing supposition; for the -difference in paying with heavy silver or with good guineas at 20 -shillings, is no more than that of 1718.7 to 1719.9; a guinea, which -weighs 118½ grains fine gold, being worth 1719.9 grains of fine silver, -according to the proportion of 1 to 14½, and a pound sterling, according -to statute, is worth no more than 1718.7 grains of the same metal. - -We may therefore conclude, that the scheme of reducing guineas to 20 -shillings must proceed upon the supposition of a new coinage of all the -silver: without this, the same confusion as to the coin would remain as -formerly; a new disproportion of the metals would take place; no body -would pay in gold, as at present no body will pay in silver. - ------------------------------------------------------------------------- - - CHAP. XI. - _Method of restoring the Money-unit to the Standard of Elizabeth, and - the Consequences of that Revolution._ - -[Sidenote: How to fix the pound sterling at the standard of Queen - Elizabeth.] - -I come now to the proposal of restoring the standard to that of the -statute of Elizabeth, which is in other words the same with what has -been proposed in bringing down the guineas to 20 shillings; only that it -implies a new coinage of all the silver specie and of all the old gold. -Nothing is more easy than to execute this reformation. - -I. The first step is to order all coin, gold and silver, coined -preceeding a certain year, to pass by weight only. - -II. To preserve the mint price of silver as formerly, at 5 _s._ 2 _d._ -the ounce, and to fix that of gold at 3 _l._ 14 _s._ 2¼ _d._ - -III. To order the pound troy standard silver to be coined as formerly, -into 62 shillings, and the pound of gold into 44½ guineas. - -IV. And last of all, to order these guineas to pass for 20 shillings. - -Thus the standard is restored to the value of the silver by the statute -of Elizabeth, the metals are put at within a mere trifle of the -proportion of 1 to 14½: all the coin in the kingdom is brought to -standard weight: no profit will be found in melting or exporting one -species preferably to another: exchange will answer, when at par, to the -real par (when rightly calculated) of either silver or gold, with -nations, such as France, who observe the same proportions: and the pound -sterling will remain attached to both the gold and silver, as before. - -[Sidenote: The consequences of this reformation will be to raise - the standard 5 _per cent._] - -The consequences of this reformation will be, that the pound sterling -will be raised from 1638 grains fine silver (the value of the present -worn silver currency) to 1718.7; and from 113 grains fine gold (the -present gold currency) to 118.644; that is to say, the value of the -pound sterling will be raised upon both species 4.9 _per cent._ above -the value of the present. This all creditors will gain, and all debtors -will lose. From the day of the regulation, the exchange upon all the -places in Europe will rise 4.9 _per cent._ in favour of England, and -every man who is abroad, and who draws for the rents of his estate, will -yearly gain 4.9 _per cent._ upon his draughts or remittances made to -him. Whether prices in England will fall in proportion I do not know; -one thing is pretty certain, that every article bought for foreign -exportation will fall; for this good reason, that merchants will not be -the dupe of this innovation, nor will they buy with heavy money at the -same rate they were in use to buy with light. Justice will be done to -all gentlemen whose ancestors let their lands in the reign of Queen -Elizabeth, or at any time since, when gold and silver were at the -proportion of 1 to 14½, and when the silver coin was at its standard -weight. All taxes imposed by pounds, shillings, and pence, will be -raised; all those imposed at so much _per cent._ of the value will stand -the same, but will appear to sink in the denomination; that is, they -will produce as much value, but fewer pounds, shillings, and pence, than -before. The nation will lose 4.9 _per cent._ upon the whole capital and -interest of the public debts; this the creditors will gain. The bank -will gain in its quality of creditor upon the public, and will lose -(together with all the bankers in England) 4.9 _per cent._ upon all -their circulating paper. All annuitants, landlords, and creditors of -every denomination, whose contracts are under 30 years standing, will -gain. All debtors, mortgagors, tenants, whose contracts are of a fresher -date, will lose. All merchandize whatsoever ought to fall 4.9 _per -cent._ in its value; and every farthing any thing falls less in its -price is lost to the consumers. - -These are some of the most evident consequences which must result from -this plan of reformation, and the nation is the best judge how far they -will contribute to her advantage. - -Either this reasoning is just, or all the principles I have laid down -are false from the beginning. - -[Sidenote: Every interest in a nation equally entitled to - protection,] - -A wise nation, I apprehend, is actuated by a spirit of justice. Every -class, every denomination of inhabitants is equally entitled to the -protection of a good government. Whatever step of administration can -profit one set of men, to the detriment of another, is ill combined: -whatever step can do justice to one set of men who have wrongfully -suffered loss, to the detriment of another who have unjustly gained, is -well combined. Upon these principles it is impossible to approve of the -operation we have described. It is a political hodge-podge: it is, as it -were, throwing all the interests of Great Britain into a bag, and -drawing them as in a lottery. - -[Sidenote: Those who suffer by the debasement of the standard,] - -We must, therefore, enter into a more particular examination of those -opposite and jarring interests; we must inquire into the interests which -have suffered, and which continue to suffer, from the actual debasement -of the standard, and into those which must suffer upon a restitution of -it according to the plan proposed. When we are informed concerning the -sufferers, we shall easily perceive who must be the gainers. - -Those who suffer by the debasement of the standard, are - -_1mo._ Every person who is creditor in a contract entered into before -the debasement of the standard. - -_2do._ In proportion as the disorder in the coin continues, and as the -currency becomes lighter, every man who sells to merchants is a loser. - -In a trading nation such as England, it is not possible that any -currency can long sustain itself by virtue of the stamp, at a higher -value than its intrinsic worth. Whoever therefore, from a habit of -selling any particular merchandize, continues to consider a currency -which is daily becoming lighter as remaining at the same value, is -deceived in his dealings by every man who is instructed in the matter of -fact. - -[Sidenote: ought only to benefit by the restitution,] - -Those, I think, are the only persons who are really losers by the -debasement of the standard, and who have a right to be redressed. - -I must not omit however, to mention another set of people infinitely -more considerable than both, who think fit to rank themselves in this -class, without having the smallest pretension to enter into it. - -These are such who would be gainers, were the government of England to -restore the standard upon the supposition that justice required it, -without giving themselves the trouble to examine into the merits of that -important question. - -[Sidenote: and not the whole class of creditors,] - -Of this class are all the public creditors, all enjoying any salary, -pension, or pay whatsoever for personal service; all annuitants, -landlords, &c. In short, every man in the kingdom, so far as he is a -creditor upon any public or private interest. - -But to this class I must beg leave to put a question: What title has any -person to receive in payment one grain of silver or gold more than he -had stipulated from his debtor at the time of contracting, because the -government of Great Britain thinks proper to make a new regulation with -respect to their coin? If it be true that every man has a right to -complain of the _debasement_ of the standard so far as he is thereby -defrauded of that weight of the fine metals which he was entitled to -receive, surely every man has a right to complain of the _rising_ of the -standard, who thereby becomes obliged to repay more weight of the fine -metals than ever he received value for. - -In justice and in common sense, the raising of the standard of the coin -ought never to be allowed to benefit any person but those who have been -unjustly sufferers by the debasement of it, nor ought it ever to be -prejudicial to any person but to such as by the debasement have been -unjustly gainers. - -[Sidenote: whose claim ought to be liable to a conversion,] - -In every contrast where neither of the parties can produce any palpable -loss sustained by the former debasement of the standard, the alteration -ought to have no manner of effect. All debts of whatever kind, ought to -be liable to a fair conversion, as much as those contracted in guilders, -florins, livres, &c. when they come to be paid in pounds sterling. The -old and the new standards are not the same, because they carry the same -denominations of value, any more than a piastre is a pound, because they -begin with the same letter. - -All the world must agree that the standard of queen Elizabeth is -debased, and that a pound sterling is no longer worth 1718.7 grains troy -fine silver. Every body must also agree that were the standard restored, -merchandize of every kind ought to fall in value. - -[Sidenote: according to justice and impartiality.] - -If therefore, after the restitution, a person who has merchandize to -buy, shall have the privilege to proportion his price according to the -change of money, why should another who is a debtor be in a worse -situation? Why should permanent contracts be obligatory according to -language, and momentary contracts, such as sale, be obligatory according -to things? - -Two people hire each a servant, the one stipulates to pay twenty guineas -wages, the other stipulates twenty-one pounds sterling: the standard is -in a short time after restored in the manner we have been describing; -can any thing be more absurd, than that he who stipulated the twenty -guineas, shall be quit after the restitution, on paying the twenty -guineas as before, and that he who stipulated the twenty-one pounds -sterling, shall be obliged to pay twenty-one guineas? - -What pretension therefore can any man who is possessed of a salary, an -annuity, or of a bond or other security for a sum due to him by another, -have to be paid the same number of pounds sterling stipulated at first, -when the pound comes to be increased in its intrinsic value 5 per cent. -above the value it had when the obligation was contracted? - ------------------------------------------------------------------------- - - - - - CHAP. XII. -_Objections stated against the Principles laid down in this Inquiry, and - Answers to them._ - - -I hope it will be remarked, that I do not pretend that the coining the -pound troy standard silver into 65 shillings, or the making a new -coinage upon the old footing of 62, reducing the guineas to 20 -shillings, and then allowing conversions from the old to the new -standard at a deduction of 5 per cent. upon permanent contracts formerly -entred into, is not a manifest debasement of the value of the pound -sterling, from what it was while affixed to the silver according to the -statute of Elizabeth. All I pretend to allege is, that neither of these -operations (which are nearly the same thing) would be a debasement of -the present value of the pound sterling, or of what it has been worth -for these thirty years past at least. - -But as this opinion is by no means generally adopted, I must now do -justice to its adversaries, and set before the reader the several -objections which may be opposed to it. - -[Sidenote: That a pound will always be considered as a pound.] - -_OBJECTION_ I. That the force of habit is so strong in uniting the ideas -of value to the denominations of coin, that a pound sterling, whether it -be raised or no, will always carry along with it the same measure of -value: that merchandize will not sink in price according to the due -proportion of the rise: that if conversions are suffered, the confusion -will be endless; and that in the main, the diminution thereby operated -upon the _numerary_, will turn out a real diminution upon the -_intrinsic_ value. - -[Sidenote: That the standard is not debased at present, being - affixed to the statute not to the coin.] - -_OBJ._ II. That the disorder in the proportion of the coin, and the -wearing and lightness of the currency are not a real debasement of the -standard. That the money-unit preserves its intrinsic value, in virtue -of the statute of Elizabeth which establishes it. That it is false to -allege that the English standard is solely affixed to the coin, or that -it has no invariable measure to be compared with. That the pound -sterling is really fixed to that statute not to the coin; and therefore -that no variation of the coin, but only a variation of that statute, can -change the standard. - -[Sidenote: That the pound sterling is virtually worth 1718.7 - grains fine silver.] - -_OBJ._ III. That the pound sterling is still virtually, and in many -respects worth the silver statute of Elizabeth, although traders in -bills of exchange, and jobbers in the metals may make it appear -otherwise. That consequently a new regulation either by the coinage of -silver at 65 shillings in the pound troy, or by admitting deductions of -5 per cent. upon the old standard, on pretence that a pound sterling is -worth no more at present than 1638 grains of fine silver, is not -preserving the standard at what it has been these thirty years, but -really a debasement of it from the present value. - -[Sidenote: That these principles imply a progressive debasement of - the standard every new coinage.] - -_OBJ._ IV. That if the rubbing and wearing of the coin be said to debase -the standard in spite of all statutes, and if every new coinage is to be -regulated by the weight of the former grown light, in order to support -the actual value of the money-unit, it is plain, that in time that unit -must be reduced to nothing. - -[Sidenote: That the same argument holds for debasing the standard - measures of weights, capacity, &c.] - -_OBJ._ V. That were the measures in common use, by wear and by -fraudulent practices, rendred less than the standard measures kept in -the exchequer, it would appear manifestly absurd, for that reason, to -diminish these standard measures. That for the same reason, while the -statute of Elizabeth subsists, it would be equally absurd to diminish -the silver standard of the pound sterling. - -[Sidenote: That the wearing of the coin falls on them who possess - it at the crying down, but does not debase the standard.] - -_OBJ._ VI. That debasing the standard by law is violently invading every -man’s property; that when the coin is debased by circulation, the loss -only falls upon him who happens to be in possession of any part of it at -the time it is cried down. - -[Sidenote: That inland dealings, not the price of bullion, or - course of exchange, regulate the standard.] - -_OBJ._ VII. That although merchants and money-jobbers may consider the -value of a pound sterling according to its weight of silver or of gold; -and although exchange and the price of bullion may make it appear to be -at present of no greater value than 113 grains of fine gold, and 1638 -grains of fine silver; yet still in inland dealings it is worth its -standard weight, to wit, 1718.7 grains of silver; because the -inhabitants of England never consider their money by its weight, but by -tale. The currency by tale regards the standard, as currency by weight -regards the coins themselves. - -That the quantity of money which goes abroad, or even the quantity of -foreign dealings, is so inconsiderable, when compared with domestic -circulation, that the value foreigners put upon English money can but -very little affect the value of it in the country. - -[Sidenote: That public currency supports the value of the coin.] - -_OBJ._ VIII. That the coin, though light, being received by the King in -all the public offices for its value, keeps up that value to the -standard, notwithstanding its being under the weight. - -[Sidenote: That this scheme is the same with that of Lowndes.] - -_OBJ._ IX. That the scheme proposed is the same with that proposed by -Lowndes in 1695, so fully refuted by Mr. Locke, and rejected by the -decision of the nation on a parallel occasion. - -[Sidenote: Answers to these objections.] - -In order to leave nothing unsaid which can tend to set this matter in a -clear light, I shall briefly give an answer to all these objections, in -the most distinct manner I am capable of. I have gathered them from -every quarter, particularly from Mr. Harris. I have endeavoured to state -them in all their force, and I shall answer them with candor, according -to the principles laid down, and according to uncontroverted matters of -fact. - -[Sidenote: That a pound will be considered at its worth by all - debtors, and those who buy.] - -_ANSWER TO OBJECTION_ I. Here I reply, that no habit any people can -contract, is strong enough to blind them with regard to their interest. -Nothing is so familiar in many countries, as to raise and sink -arbitrarily the numerary value of the several denominations of coins; -but no sooner is the change made, than it becomes familiar, even to the -children of twelve and fourteen years old; and any person who has had -occasion to travel, must have been astonished at the acuteness of the -common people in their knowledge of the value of coins. The habit of -uniting ideas to old pounds sterling will, upon a restitution of the -standard only, be found in the heads of sellers and creditors; buyers -and debtors will very quickly learn to profit of a deduction of 5 _per -cent._ provided they are legally authorised to do it. It will greatly -depend upon government to oblige commodities to follow the just -proportion of their worth, by making conversions of the taxes, new -regulations of assize, for bread, beer, &c. and by putting into the -hands of the people convenient tables for that purpose. When the thing -is once understood, the execution will be easy. - -[Sidenote: If the standard was affixed to the statute, people - would be obliged to pay by weight.] - -_ANSW._ II. Could it be made out that the standard of the pound sterling -is affixed to the statute of Elizabeth, and not to the coin, this -objection would be invincible. But were the matter so, the payment of -all obligations might be exacted by weight of silver; because the -statute regulates nothing else. A man owes me a thousand pounds, he -makes me a legal offer of silver or gold coin to the current value, were -the standard affixed to that statute, I should have the privilege to -refuse both the current species, if light or ill proportioned, and -demand of him to weigh me down 1718700 grains of fine silver, or 1858060 -grains weight of the nation’s silver coin. - -As this is not the case, the standard is not affixed to the statute of -Elizabeth; consequently, not affixed to an invariable measure; -consequently, must vary according as the coin varies, to which alone it -is by law attached. - -[Sidenote: No body can be obliged to pay 1718.7 grains of fine - silver for a pound sterling.] - -_ANSW._ III. That if it is said, that the pound sterling is in any case -of the value of 1718.7 grains of fine silver, I am entitled to ask who -can force any man in Great Britain to pay him at that rate? But if it be -true on the contrary, that there is not any pound sterling due within -that kingdom which may not be legally acquitted with 113 grains of fine -gold, or with 1638 grains of fine silver, then I am authorised to state -the present value of the pound sterling at that rate. If this be the -case, then the addition of one grain of silver or of gold more, in a new -coinage, necessarily implies a raising of the standard. - -[Sidenote: That it is not the regulation of the mint, but the - disorder of the coin which must debase the standard.] - -_ANSW._ IV. This objection lies against the rubbing of the coin, not -against the regulation of the mint. I have frequently observed, that it -is the rubbing of the coin which of itself debases the standard, in -spite of the statute as it stands, but not in spite of what it might be. - -There is no doubt, that as long as any nation permits her current coin -to pass below the standard weight, by virtue of the stamp, she by that -neglect, opens a door to the debasement of the standard, and totally -disappoints that part of the statute which regulates the weight; -consequently the act of making a new coinage afterwards, at the then -debased value, is not of itself a new debasement. - -The new coinage, in that case, is a temporary interruption put to the -circulation of coin unequally worn, which is what occasions, more than -any thing, the progressive debasement of the standard; but it is no new -debasement in itself, nor is it any preservative against debasements for -the future. - -If it be not provided by statute, that debtors shall make good the -weight of the coin with which they pay, in one way or other, of -necessity the state must either go on regularly debasing her standard -every new coinage, or be obliged to raise it by jerks, to the detriment -of all the debtors who have contracted during the preceding debasement. - -[Sidenote: That people are obliged to measure by the standard - weight, but are not obliged to pay by the standard pound.] - -_ANSW._ V. The comparison between the standard weights in the exchequer, -with the standard of the pound sterling, is not just. If a merchant -offers me grain, bullion, or cloth, by a measure which is not of the -legal content, weight, or length, I may refuse it. I have even an action -against him for fraudulent dealing, in case I shall have unwarily -accepted of the merchandize. But I cannot reclaim (as has been said) the -measure of the money-unit according to the statute. - -Now let me suppose, that for 40 years no access could be got to the -standard measures of the exchequer, that during this time all the -measures of the nation should be debased; that notwithstanding this, the -landlords over all England should continue to stipulate their rents in -grain, by the debased bushel of their respective counties: if after 40 -years of such confusion, the exchequer should be opened, and all -measures fitted to the standards, would it not be a horrid piece of -injustice not to allow both landlords and farmers who had entred into -leases within the 40 years, the liberty of converting their rents from -the _debased_ to the _standard_ bushel. - -[Sidenote: That the loss upon light money when called in does not - fall upon the possessors.] - -_ANSW._ VI. This objection proceeds entirely on the supposition, that it -is the _altering the statute_, and not the _rubbing of the coin_, or the -_changing the proportion of the market price of the metals_ which -debases the standard. - -Were that proposition true, the consequence drawn from it would be true -also, to wit, that the loss by the wearing of the coin remains entirely -suspended until the worn coin is all at once cried down. But if I can -prove, that the wearing of the coin does not fall upon the person in -whose hands it is found when cried down, except only so far as it -happens to be below the mean weight of the whole currency, or so far as -the person is a debtor, and unjustly obliged, by an arbitrary law, to -pay what he had received in light, with heavy coin. If this, I say, be -true, I hope it will follow, that there is not the least force in this -objection. This consequence is plain. - -It is certain, that by the wearing of the coin there is a loss incurred -by somebody; if it be proved that it is not incurred by the person in -whose hands the light coin is found when cried down, it must follow, -that it has already fallen proportionally upon those who, in the mean -time, have been considering it as of the standard value, while it has -been really below it. - -Here follows the proof of this proposition. - -I shall suppose the silver coin of Great Britain is actually so worn as -to be 5 _per cent._ lighter than its standard weight at a medium. If at -that time the silver is ordered to be recoined of the standard weight, I -say the currency, after the coinage, will be 5 _per cent._ better than -before. Ought not then all merchandize to fall 5 _per cent._ in value -upon this revolution. - -Two men (A) and (B) have, the day before the calling in of the light -specie, each a thousand pounds sterling of it in tale; (A) goes to -market and buys corn with his thousand pounds, (B) keeps his coin, and -next day is obliged to carry it to the mint, where he sells it at 5 _per -cent._ discount; that is, for nine hundred and fifty pounds of new heavy -silver coin. (B) after this operation goes to market; and finding grain -fallen in the price 5 _per cent._ he with his nine hundred and fifty -pounds, buys just as much as (A) had bought the day before with his -thousand pounds. I ask what loss (B) has suffered in carrying his silver -to the mint? - -But if we suppose the thousand pounds in silver tale money, which (B) -had, to be worn more than at the rate of 5 _per cent._ then he would -lose all the difference; because the price of things would fall only -according to the general proportion of the rise upon the value of the -currency: but on the other hand, he would gain upon the supposition that -his thousand pounds should happen to be less worn than the 5 _per cent._ - -Can any thing, therefore, be more absurd, than to appoint by law, that -one, who shall at this time happen to be indebted for a thousand pounds, -shall be obliged to pay this thousand pounds in heavy money, when he had -borrowed it in light. - -We have seen how (B) in buying corn with nine hundred and fifty pounds -of the new coin, got as much as (A) had got the day before with his -thousand. But suppose they had both bought grain the day before the -crying down of the coin, (A) with his money, (B) with a note payable -next day, how absurd must any law be, which should oblige (B), for one -day’s credit, to pay at the rate of 5 _per cent._ increase of price; and -this because of the accident of calling in of the money: an event he -could neither foresee or prevent. - -We may, therefore, conclude, that while the coin of a nation is upon the -decline from the standard value of the unit (as it ought to be preserved -by some invariable measure) those only through whose hands it -circulates, lose upon what they have, in proportion to the debasement of -the standard, while the coin remains in their hands. - -[Sidenote: That inland dealings cannot support the standard where - there are money-jobbers or foreign commerce.] - -_ANSW._ VII. It has been said, and I think proved, that in a trading -nation, such as England is, nothing can long support the value of the -money-unit (while affixed entirely to the coin, and while coinage is -free) above the intrinsic value of the metals contained in it. I must -now shew how the operations of foreign trade have the effect of -regulating the value of the currency, in the hands even of those who -consider coin merely as money of accompt; who give it and receive it by -tale; and who never attend to the circumstances of weight, or proportion -between the metals. - -The price of commodities, in a trading nation, is not settled by private -convention, but by market prices. Foreign markets regulate the price of -grain, which regulates, in a great measure, that of every other thing; -and the price of grain is regulated by the value which other nations pay -for the pound sterling, by which the grain is bought. If, therefore, the -lightness of the coin debases the value of the pound sterling in foreign -markets, it must, for the same reason, raise the price of the grain -bought with these pounds sterling; because the value of the pound -sterling has no influence upon the value of grain abroad. The domestic -competition between the merchants in the buying of the grain at home, -informs the farmers of its value abroad; and they, without combination -of circumstances, esteem it and sell it for inland consumption, at a -value proportioned to what it bears in foreign markets; that is to say, -proportioned to the actual value of the coin. Thus English farmers, -although in buying and selling they do not attend to the weight of the -coin, regulate their prices exactly as if they did. - -I ask, What is meant by this expression, _that the lightness of the -coins is no ways considered in any of our internal dealings with one -another. Currency by tale refers only to the legal standard, as currency -by weight doth to the coins themselves_? (Essay upon money, Part 2d, p. -79.) Will a person who considers his light shilling as a standard coin, -buy more with it than if he considered it by its weight? Will any man in -England sell cheaper to a porter, who never considered his shilling -farther than to look at the King’s head, than he would to a Jew, who has -had his shilling in a scale, and who knows to the fraction of a grain -what it weighs? Which way, therefore, (in a trading nation) can money -possibly be worth more than its weight? I comprehend very well how one -shilling may be better than another to a money-jobber; but I cannot -conceive how any shilling whatever, which passes by tale, be it light or -weighty, can ever be worth more than according to the mean weight of the -present currency. People, therefore, who know nothing of the value of -money, may lose by giving away their heavy coin; but I cannot see how -ever they can gain in their inland dealings, or how they can ever -circulate their light coin for more than the value of the present -currency. - -We may, therefore, lay down the following principles: _1mo_, That, in a -trading nation such as Great Britain, where coinage is free, the value -of tale-money is exactly in proportion to the mean weight of the whole -currency. _2do_, That the money-unit being only affixed to the coin, is -exactly in proportion to its weight. _3tio_, That when the intrinsic -value of all the coin is not in the exact proportion of its -denomination, the operations of trade will strike the average, or mean -proportional. _4to_, That when this is done, those who pay by tale, in -coin which is worth more than the mean proportion, are really losers; -and those who pay by tale in coin below that value, are really gainers, -whether they know it or not. - -[Sidenote: That public currency supports the authority of the - coin, not the value of the pound sterling.] - -_ANSW._ VIII. The authority given to coin, by its being every where -received in the King’s offices, is entirely confined to its currency, -and not to its value. The consequence of its being received at the -exchequer according to tale; makes coin which is not worth a pound -sterling pass as if it were so. This debases the value of the pound, but -gives no additional value to the coin. Is not this debasing the standard -by authority, since it may oblige a creditor who lent 100 _l._ to accept -of 95⁄100 of the value, as a legal payment. - -The pounds sterling paid into the exchequer are no better, nor will they -buy more of any commodity, than the worst pound sterling that ever came -out of the hands of a money-jobber; and therefore contribute nothing to -keep up the value of the coin. Merchants who know the value of coin, are -those who regulate prices; and the public sale of one hundredth, nay of -one thousandth part of a commodity sold by retail through all the -nation, is sufficient to regulate the price of it every where. If this -be true, to suppose that a pound sterling being regulated by statute, -can add any thing to its value; or that my right is left unviolated, -when I have been every day for these forty years giving my pound for -what I ought to buy for 19 shillings of Queen Elizabeth’s standard, is -as ideal a representation of the value of right as any thing I have ever -heard. - -If it be said, that this right implies a title to be indemnified by a -reformation, or a restitution of the standard, for the loss I have -sustained by the gradual debasement of it: I reply, that a state must -examine the nature of my claim, and do me justice, without all doubt; -but it does not follow as a consequence, that because a creditor in an -old contract has been a loser by his debtor, that therefore all the -creditors in the nation should share in the benefit of his restitution, -at the expence of debtors, from whom they have suffered no loss. - -[Sidenote: That the scheme is similar to, tho’ not the same with - that of Lowndes.] - -_ANSW._ IX. I own the scheme proposed is pretty much the same with that -proposed by Mr. Lowndes; and I must here give a satisfactory answer how -a project so solidly refuted in 1695, can possibly be eligible in 1760. - -[Sidenote: Lowndes reasoned upon wrong principles;] - -First then, I say, that the question was not then understood. Mr. -Lowndes put it upon a wrong issue, and supported his argument upon wrong -principles. He insisted, that his scheme implied no debasement of the -former standard. He ascribed the rise of the price of bullion to the -rise of the intrinsic value of silver, and not to the lightness of the -coin with which it was bought. He always supposed, that the stamp, and -not the substance, made the currency. A light shilling and a heavy one -were both shillings, according to him. He proposed reducing the weight -of the silver coin 20 _per cent._ below the standard of Elizabeth, -because he was ashamed to propose more; but a reduction of 33 _per -cent._ or rather 50, would hardly have brought the pound sterling to the -mean value of the silver currency at that time. - -[Sidenote: Locke attended to supporting the standard, without - attending to the consequences.] - -Mr. Locke, on the other hand, supposed the whole dispute to rest upon -one point, to wit, Whether or not Mr. Lowndes’s scheme implied a -debasement of the standard? He reasoned upon sound principles, and with -good sense; but he did not turn his attention to the only object which -fixes ours at present, to wit, the interests of those who are engaged in -permanent contracts. - -Mr. Lowndes’s great argument for reducing the standard was, that silver -bullion was risen to 6 _s._ 5 _d._ _per_ ounce, (_that is, that it might -have been bought with 77 pence of shillings of 1⁄77 part of a pound -troy_) and therefore he was of opinion, that the pound troy should be -coined into 77 shillings; which was diminishing the value of the pound -sterling about 20 _per cent._ or 1⁄5. Mr. Locke answered him very well, -that the 77 pence were paid in clipped money, and that those 77 pence -were not in weight above 62 pence standard coin. This answer is quite -satisfactory. But I ask, whether Mr. Locke would have been of opinion -that any man who had borrowed 1000 _l._ sterling in this clipped money, -ought to have been obliged, upon a reformation of the standard, to pay -back 1000 _l._ sterling in standard weight? These gentlemen, Mr. Lowndes -and Mr. Locke, examined very slightly the influence which altering the -standard might have upon the interest of debtors and creditors; which is -the only consideration that makes the reformation difficult to adjust at -present. So great an influence in every political matter has the change -of circumstances! Credit then was little known; consequently the mass of -debts in England was small: now it is universally established, and the -mass of debts active and passive is very great, and forms a very -considerable interest in Great Britain. - -In those days the landed interest, and the interest of the crown, were -only attended to. Trade at that time was almost at a stop, and had been -ruined by a piratical war. The evil was past a remedy, consistent with -justice. Credit was very low, and daily declining, and demanded an -instant reformation of the coin. Restoring the standard was the most -favourable, both for the landed interest and the exchequer; and so it -was gone into. The nation, and every debtor, was robbed by their -creditors; but they did not perceive it; and what we do not see, seems -to do us no harm. The question, therefore, is very different: -circumstances must constantly be examined, and according to these every -political question must be decided. - -I have already observed, how the introduction of milled coin had the -effect of introducing the clipping of that part which had been coined -with the hammer. Guineas, at the revolution, (if I am well informed) -passed for 21 shillings and sixpence. Gold was then to silver, over all -Europe, rather above the proportion of 1 to 15, as appears by the famous -regulation in 1690, called the convention of Leipzick, when the German -coinage was settled; and it appears also by the proportion observed in -France; and in Spain it was still higher, being as 1 to 16. At this rate -we may be certain, that at the revolution the English silver was -standard weight; because the guinea being left to seek its own price -above 20 shillings, the statute value, did not rise above 21 shillings 6 -pence, which marks the proportion to have been as 15.6 is to 1. The -guinea, therefore, would not have failed to have risen higher, had the -silver coin been light. - -From 1692 to 1695, that is, in _three years time_, (Locke’s Farther -Consid. p. 74.) the progress of clipping went on with such rapidity, -that guineas rose from 21 shillings 6 pence, to 30 shillings; and -according to a very sensible letter which lies before me, signed G. D. -and printed in 1695, intituled, _A Letter from an English merchant at -Amsterdam, to his friend in London_, I find there was at that time no -determinate value at all for the pound sterling: so great was the -difference of the currencies! As a proof, he says, that _100 pounds -sterling in silver, which ought to weigh 32 pounds troy, weighed then -commonly between 14 and 18_. At which rate guineas were very cheap at 30 -shillings: they were worth above 40 shillings: and Davenant says, that -five millions then borrowed by the state did not produce the value of -two millions and a half. - -[Sidenote: Political circumstances are greatly changed.] - -It would be foreign to the present purpose to enter into a particular -disquisition, in order to shew the difference between the political -state of England then, and at present: let it suffice to remark in -general, - -I. That there was then no possibility of determining what the current -value of a pound sterling was. It varied every month, and was daily -declining. At present it is nearly of the same standard as it has been -for many years. - -II. The money-unit then had nothing to preserve it at any determinate -value. The silver, to which it was affixed, was clipped three times in a -year, while the gold sought its value as a commodity. At present the -gold cannot vary: the guinea is fixed, and must pass for 21 shillings, -let the silver be ever so light; and this gives a determinate value to -the pound sterling. - -III. In 1695, the whole disorder had been coming on with rapidity; at -present it has advanced with imperceptible steps: consequently, - -IV. At that time the number of permanent contracts which stretched -beyond the æra of the debasement of the standard, were many; at present -they are few. - -V. In 1695, a money’d interest was hardly known. The rich had their -money in their chests; now they have it in their pocket-book. - -VI. The different between the currency and the legal standard in 1695, -was one half: at present it is one twentieth. - -VII. The debts of the nation did not then exceed 12 millions: now they -exceed 140[V]. - -Footnote V: - - In 1766. - -VIII. Many sums then had been borrowed on assignments of certain -branches of the excise, the amount of which was uncertain, and -deficiencies (which in such cases are unavoidable) were not made good to -the creditors. At present all is paid in determinate sums of pounds -sterling. - -IX. And lastly, the question was not understood. Locke and Lowndes -_felt_, but did not _see_ distinctly, wherein the difference of their -sentiments consisted: and those who only _feel_ never describe with -perspicuity. - -It was then generally imagined that a _pound_ could never be more than a -_pound_; but at present people know how to reckon coin by grains, and -see clearly that 1718 is more than 1638. - -For these reasons I apprehend, that a scheme, similar to that proposed -by Mr. Lowndes, may now be mentioned without offence; that the people of -Great Britain are just now as good judges of what is for their interest, -as they were in 1695. And if the decision of a former parliament is -alledged in favour of the old standard, I answer, that such arguments -are only good, when people are disposed to pay a greater deference to -the sentiments of their fathers than their own; which I am apt to -believe is not the case at present. - -[Sidenote: Reconciliation of the two opinions.] - -If these answers are found satisfactory, we may conclude, that in -whatever way the disorder of the British coin is removed, the change -ought to be made in such a manner as neither to benefit or to prejudice -any, but such as have lost or gained by the debasement of the standard. -Lest, however, that these answers should be perplexing only, without -drawing conviction along with them, (which in matters of dispute is -frequently the case) I shall say something farther upon this subject, -with a view to reconcile two opinions, which are perhaps more opposite -in appearance than in reality. - -I have already apprized the reader, that I pretend to reason only upon -principles, not upon exact information of facts. Circumstances which are -hid from me, will nevertheless work their full effect, and may render -the best deduced principles delusive, when, without attending to them, -we pretend to draw conclusions. - -Now, such circumstances in the present case there must certainly be; -otherwise every body in England would agree, that the standard is at -present actually debased, and that the restitution of it would -effectually be raising it from what it has been for these many years. -Upon this supposition, the consequences we have drawn must be allowed by -every body to be just and natural. - -Nothing, I think, is more certain, than that all men would be of the -same opinion upon every proposition, were such propositions well -understood, and did all parties make the application of them to the same -object, and in the same sense. - -If this be true, let me try to give a reason how it happens that there -are different sentiments in England upon the method of restoring the -standard. - -[Sidenote: The question in dispute is not understood.] - -I. First then, the question is not understood; and the principal thing -which obscures people’s ideas concerning it, is their constantly -attending to the denominations of the money of accompt, instead of -attending to the denominations of the coin. These two things are -universally confounded. A pound sterling is always a pound sterling, no -doubt; but the grains of silver which compose one pound sterling are not -the same in number with those which compose every pound sterling. Now, -the moment money is realized in the metals, and that the standard -measure of value is affixed to them, let them be worn or not, it is very -evident that nothing but the grains of the metal in the several pieces -can represent the scale by which the coin becomes a measure of value. -Whenever, therefore, people lose sight of this undoubted truth, and -begin to measure by the denominations of the ideal money of accompt, -without examining whether that value be exactly realized or not, it is -just the same thing as if they were to measure a length upon a plan -without adjusting their compasses to the scale, and upon a bare -supposition that the opening they had, by accident might answer to the -length they were to measure. - -[Sidenote: The true characteristic of a change in the standard is - not attended to.] - -II. The state, in every country almost, is negligent in instructing the -people of the consequences of every variation in the coin; and likewise -negligent in providing against the inconveniences which result from all -changes in those matters. It is not to be supposed that the common -people can exactly comprehend the consequences of making a pound -sometimes consist of more silver and sometimes of less. When the pieces -are heavy however, they weigh them in their hand, and say _this is good -money_; but when they find that they must give as much in tale of this -good money to pay their debts, as if it had been light, they _feel_ a -regret, but they do not _see_ the injustice of such a regulation. - -Farther, when people find that upon a reformation of the coin they are -still obliged to acquit their obligations with the same denominations as -before, is it not very natural for sellers to insist upon having the -former prices for all sorts of commodities. This is the reason why the -universal experience of France (which nation has been more accustomed to -variations in their coin, than England) proves that merchandize does not -immediately rise and fall according to the variations of the coin. But -the operations of foreign trade, which are immediately felt and profited -of by the trading part of the nation, insensibly affect the dealings of -the body of the people, and produce, after a certain time, those -effects, which ought to have followed immediately upon the innovation. - -[Sidenote: Principles will not operate their effect without the - assistance of the state.] - -Now it is very certain that the principles we have been laying down will -not, in practice, answer, unless the state should lend a hand, both by -instructing their subjects in the nature of the change intended, and by -interposing their authority to see justice done among them. - -[Sidenote: When people understand one another, they soon agree.] - -Those who oppose the doctrine we have been laying down, go upon the -supposition that the law ought to order all obligations to be acquitted -according to their denomination after the reformation of the standard. I -go upon the supposition that it is just they should be acquitted -according to the intrinsic value. Where then lies the difference between -our sentiments? We are of the same opinion, as to the main question: for -were it true that prices were not to sink 5 _per cent._ after the -reformation, I should be the last man to propose, that debtors ought to -be allowed conversions in paying with the new standard; and I suppose -that those who support the contrary sentiment would be just as little -inclined to oppose a conversion, upon the supposition that ninety five -pounds, after the supposed reformation, were to be equivalent, to all -intents and purposes, to a hundred at present. - -[Sidenote: Permanent contracts are confounded with sale in this - dispute.] - -III. The clearest and the best reasoners I have met with upon this -subject, are apt upon some occasions to confound the two species of -circulation which we have endeavoured carefully to distinguish; to wit, -the involuntary which takes place in acquitting _contracts already -made_, with the voluntary which takes place in common sales. As an -example of this, and as a means of reconciling opinions, and not with -any intention of entring upon refutations, I shall here extract a -passage from Mr. Harris upon coins, Part II. p. 96. and insert in -Italics what I think will explain the difference between our sentiments. - -“You affirm (says he) that if the rate of a guinea be reduced one -shilling, there would be a loss of the one and twentieth part upon all -the guineas in the nation;” (_yes, as often as debtors might be obliged -to give them to their creditors for pounds sterling_) “but that there -would be no loss at all upon guineas, if they were ordered to pass for -twenty one shillings, having in them no more silver than there is at -present in twenty standard shillings.” (_no, certainly; because the -debtor would pay his debt with the same number of guineas which he had -borrowed._) "Strange, very strange indeed, that there should be such -magic in the word shilling, and the number twenty one, as to make the -same thing, only calling it by different names, have such different -effects! It is scarce necessary to take any farther notice of such a -mere jingle of words; but out of tenderness to these young logicians, -but more out of regard to those who may be deceived by them, if any such -there can be, I shall endeavour to shew, that our scheme is more -favourable to them than their own. - -“It is self-evident that the nation would not lose one farthing upon all -the gold it exported, by a reduction of the mint price of gold: for this -reduction would not in the least debase the intrinsic quality of the -gold, and every guinea that went into foreign parts, would fetch there -as much afterwards, as it doth at present.” - -What I have put in Italics clears up the opinion which the author -endeavours to refute. He seems much surprized to find magic concealed -under the word _shilling_, and _twenty one_, whereas there are no words -more magical in all the jargon of astrology than in these, and in every -term relating to the denominations of money of accompt. Is it not very -magical, that the same quantity of silver at present found in twenty one -light shillings, being coined into twenty standard shillings, should -only acquit a pound sterling of debt, and that were it coined again into -twenty one shillings, it would acquit one pound one shilling of debt? -Nay more, were it coined into a hundred shillings, it would acquit a -debt of five pounds. - -The doctrine, therefore, which the author endeavours to combat in this -place, is not so ridiculous as it appeared to him; but he has not, in -this place, attended to the difference between paying what one owes, and -buying merchandize in the course of foreign trade. Let me illustrate -this by an example. - -I come to my creditor with a guinea, and I say, I owe you twenty one -shillings; there you have them. No, says my creditor, that piece is but -twenty, by the new regulation; I must have one shilling more. There is -no reasoning here, the denomination of the coin must decide between us, -not the weight, not the intrinsic value of what I had borrowed. But I go -to a shop to buy a hat, the hatter asks twenty shillings; I offer him a -guinea and demand a shilling to be returned; says the hatter, That -guinea is worth but twenty shillings: Very well, say I, if my piece of -gold is worth no more than 20 shillings, your hat was, yesterday, worth -a shilling less than it, and, consequently, to day is worth no more than -19 shillings. - -In the last example, magic has no effect, and to such cases Mr. Harris -has only attended in the passage cited; but in the first, the magical -word of a statute, is capable to undo one half of the nation; although -their ruin does not imply the exportation of a shilling out of the -kingdom, or any benefit to foreigners, unless they be creditors to Great -Britain. - -[Sidenote: The interest of creditors is always the predominant, - and determines the opinion of a nation.] - -IV. The sentiments which the people of England generally form upon this -subject, are directed by those of the higher classes. These are all of -the class of creditors, and very naturally retain sentiments analogous -to their own interest. I am far from insinuating any thing here to the -prejudice of this class; all I mean is, that upon an obscure point, -people lean naturally to that side which favours themselves, especially -when the nation’s interest, and the interest of justice, do not -evidently declare against it. - -I call the higher classes of a people creditors; because they live upon -a fortune already made, and draw their income from permanent contracts: -and those are the debtors, who are bound on the opposite side of such -contracts. Besides these two interests, there is another which can never -be at the mercy of any arbitrary regulation as to money: those, to wit, -who live upon their industry, and who enter into no contract but that of -sale: they regulate their prices according to the intrinsic value of the -coin at the time; whereas the others who are engaged in permanent -contracts, must regulate theirs according to the words of their -contract, and the interpretation which the law puts upon those words. -Every man therefore, whose fortune is already made, either in land, -money, or salary, has an interest in seeing the standard raised, and -those who are bound in permanent contracts with them, are those only who -can be hurt by it. - -Farther, the higher classes in Great Britain have always the penning of -the law. Is it then surprising, to find the interest of creditors -constantly attended to, in new regulations of the standard? When Princes -arbitrarily debase the standard, they debase it because at such a time -they are virtually in the class of debtors: their expence then exceeds -their income. On the contrary, when wars come to cease, and when their -expences are reduced within the compass of their revenue, they raise the -standard: because they become then of the class of creditors. - -This principle is a key to all the mystery of the raising and sinking of -the numerary value of the French coin in former times, before public -credit was established among them. - -Now let us apply this reasoning to the present case. - -Since in all changes upon the coin we find (of late) the interest of -creditors constantly attended to in Great Britain, is it not very -natural for people to reason upon the supposition that there is no -injustice in raising the standard; and is it not natural to suppose that -government will act upon the same principles in their future regulations -of the standard, as upon the last occasion in 1695? Every one, -therefore, whose fortune is made, finds it his interest to have the -standard brought back to what it was formerly; and he does not perceive -the injury such a regulation would do to his debtors. On the other hand, -the merchants see plainly that if this standard should be restored upon -an imaginary principle of justice, the prices of commodities will not -fall as they ought to do, and as foreign trade requires they should; -they are therefore against raising the standard, because it will be a -prejudice to trade, a clog upon exportation, and therefore a loss to -themselves. - -This, I think, very naturally accounts for the difference of opinion -among the people of England, upon a matter of very general concern, and -nothing is so easy as to reconcile all those interests by doing justice -to every one, and injustice to none. - -[Sidenote: Application of principles to the change lately made by - the Dutch with respect to their coin.] - -As an illustration of this subject, I shall cite a recent example of a -change made in the circulation of Dutch ducats, executed by that wise -nation, seemingly in direct opposition to the principles here laid down, -and exactly consistent with those we are endeavouring to explode. - -The States General lately called down all the light ducats, and ordered -them to go by weight, as bullion, without making any allowance to such -as might suffer by it. - -This regulation, and a new coinage of ducats, had the immediate effect -of raising the value of that species of current money; consequently, it -may be said, that debtors by that regulation have been proportionally -hurt, by an act of one of the wisest governments in Europe, if our -principles are admitted to be just. But before this conclusion can be -drawn, circumstances must be examined. - -Ducats in Holland are the _price_, _not_ the _measure_ of value, having -no fixed legal denomination. The current silver coin is what the state, -and all the mercantile interest attend to: and in proportion as this -current silver coin or bank species is become light, the agio upon that -currency has risen. The agio then, in combination with every currency, -furnishes an invariable measure for value, as well as the bank money of -Amsterdam; and to that every one attends who regards his interest. - -The state, therefore, by this arbitrary measure, or sudden revolution on -the ducats, did not hurt any debtor; because debtors never were obliged -to give ducats in payment. - -Will any one say that the Dutch silver currency, now that the agio is -high, is of equal value in inland dealings as formerly when it was low: -and must not the same argument hold with respect to the currency of -Great Britain, although no such thing as agio be there known? Or will it -be said, that because the Dutch, who have an invariable measure of value -independent of their coin, make an arbitrary operation upon their -currency, which is only price; that therefore the English, who have no -invariable measure of value independent of their coin, may make a -similar operation upon theirs? - -[Sidenote: All decisions in political questions depend upon - circumstances.] - -Thus it is that circumstances influence our decisions upon all political -matters; and principles well deduced do not cease to be true, although -they appear contradictory to experience, in cases where every -circumstance is not exactly known. For this reason, I shall be very far -from deciding as to the part proper to be taken by the British -government; I go no farther than to point out plain principles; it is -the business of statesmen to apply them according to circumstances. - ------------------------------------------------------------------------- - - - - - CHAP. XIII. -_In what Sense the Standard may be said to have been debased by Law, and - in what Sense it may be said to have suffered a gradual Debasement by - the Operation of political Causes._ - - -[Sidenote: These proportions appear contradictory.] - -In the course of this inquiry, the standard has been represented -sometimes as having been debased by law, above thirty years ago, to 113 -grains fine gold, at which it remains at present, and sometimes as -having gradually declined for these many years. - -These propositions are true, though they appear inconsistent, or at -least inaccurate; and they must now be set in a clear light. - -I have had no opportunity of tracing the progress of the variations as -to the price of the metals in the English market from the beginning of -this century; and to supply the want of exact observation, I have gone -upon the following suppositions: 1. That while the guineas were left to -find their own value (being regulated by the law below their worth, and -not being considered as a lawful money) they naturally would fix -themselves according to the market proportion of the metals. 2. That, at -the time the standard was affixed to the guineas in conjunction with the -silver, and both were made lawful money, the value of the guineas was -exactly inquired into and regulated at their precise value. - -[Sidenote: Debased by law when affixed to the gold.] - -From these circumstances I conclude, that after this affixing the -standard to both species, the least variation in the proportion of the -metals must have had the effect of _throwing the standard_ (as I may -call it) upon that metal which was the least valuable in the coin: and -since it is certain, that for thirty years backward, at least, gold coin -of equal denomination has been less valuable than silver, payments have -been made, commonly, in gold, under the sanction of law, while the -silver has been melted down or exported; for these reasons, I have -frequently represented the standard as long ago debased by law to the -value of 113 grains fine gold; and I believe I have advanced nothing but -the truth. - -[Sidenote: Effects which the changing the proportion of the metals - has upon melting the coin and regulating payments.] - -Here we may conclude, that it is impossible for any law to keep the -standard attached both to the gold and the silver coin at once, without -preserving constantly the market proportion of the metals at par, with -the numerary value of the coins. The rise of silver for one week in the -London market is a cause of the silver coin’s being melted; and during -that week, all payments will be made in gold. If the week following, -gold should rise above the proportion fixed in the coin, gold coin would -be melted, and payments would be made in silver. - -[Sidenote: Payments made by bankers regulate all others.] - -I do not, at present, consider the small circulation either among the -nobility, or among the commons; but I attend to the great circulation -among bankers, who have all the specie in the nation in their hands once -in a year; and I say, that the payments they make must influence those -of all others. Every gentleman pays with the money his banker gives him: -did the bank of England find its interest in paying in silver, would it -not soon become plentiful in circulation, and would not payments begin -to be made in it preferably to gold? - -The standard, therefore, has been debased by law by being affixed to the -gold, of which metal the pound sterling has uniformly, for these thirty -years past, been worth 113 grains, in new guineas. - -But I have also said, that the standard has been gradually diminishing; -consequently it might be objected, that if a pound sterling was, thirty -years ago, equal to 113 grains of gold, if it has been ever since at -that standard, and if it be to-day 113 grains of gold, it cannot be said -to have been gradually diminishing. The answer is evident, when we -reflect upon our principles. - -[Sidenote: The standard gradually debased, by the rising of the - silver.] - -The standard affixed to the _gold_ has been diminishing, because these -113 grains of gold have been diminishing in their value with regard to -the _silver_. When the guinea, in 1728, was fixed at 21 shillings, the -pound sterling was fixed thereby at 113 grains fine gold, as has been -said; consequently, if that weight of gold was then worth 1718.7 fine -silver, there was no debasement made by that statute: but in consequence -of that statute, the debasement must take place the moment the silver -rose in its value. - -I am not authorized, by any fact, to advance, that at the time the -guineas were brought down from 21 shillings 6 pence to 21 shillings, the -metals in the coin were not put at the exact proportion they then bore -in the English market. The great Sir Isaac Newton was the person -consulted in that matter, and to criticise his decision without plain -evidence, would be rash. All I shall say is, that in France the -proportion then was 1 to 14½, although according to the English statute -it was regulated as 1 to 15.21. - -[Sidenote: The proportion of the metals, in 1728, supposed to have - been as 15.21 is to 1.] - -Let us therefore suppose, that in 1728, the metals were at the -proportion of 1 to 15.21; and that 113 grains of fine gold were really -worth 1718.7 grains of fine silver. - -[Sidenote: By what progression the silver standard has been - debased.] - -But the silver having risen, the standard, for this reason, has been -thrown upon the gold, and has constantly remained at 113 grains (that -is, in new guineas;) and as the metals have varied from the proportion -of 1 to 15.21, to that of 1 to 14.5, by the same steps has the value of -the pound sterling, in silver, changed from 1718.7, to 1638.5; which -1638.5 is to 113 as 14.5 is to 1: and were the proportion between gold -and silver to come by slow degrees to the Chinese proportion of 1 to 10, -the pound sterling would still remain at 113 grains of fine gold, as it -has been since the year 1728; but the silver coin would either be melted -down, or so rubbed away, as to make a pound sterling of it weigh no more -than 1130 grains of fine silver, so as to bring it to the proportion of -10 to 1, together with the metals. - -Does not this evidently shew the defect of fixing the standard either to -one or to both the species? - -As a farther illustration of this matter, which, because of its -importance, cannot, I think, be too often repeated, I shall shew, in a -very few words, how far people are mistaken, when they imagine that by -reducing the guineas to 20 shillings, and re-coining the silver -according to the plan proposed, the standard of the pound sterling will -be brought to that of Elizabeth. - -[Sidenote: The standard of Elizabeth for the pound sterling, was - 1718.7 grains silver, and 157.6 grains gold, both fine.] - -When Elizabeth fixed the standard of the pound sterling at 1718.7 grains -of fine silver, the proportion of the metals, according to the table in -the essay of money and coins above cited, was as 10.905 to 1; -consequently that pound paid in gold was, in 1601, equal to 157.6 grains -fine gold. - -[Sidenote: The gold standard of her pound worth, at present, - 2285.3 grains fine silver.] - -Had, therefore, by accident, the standard been then fixed to the gold, -in place of the silver, and had the silver ever since been considered as -a commodity, the pound sterling at present would be worth 157.6 grains -of fine gold, and consequently worth 2285.3 grains fine silver, at the -proportion of 14.5 to 1; whereas, having been fixed to the silver, it -has been kept at the old standard of 1718.7, and consequently is worth -no more than 118.5 grains of fine gold. - -[Sidenote: The variation of the metals has produced three - different standards of Elizabeth.] - -Now supposing that in the year 1601, three different payments of a pound -sterling had been made, and locked up in a chest till this day, let us -inquire what would be the value of each at present, were they to be -melted down, and sold as bullion in the English market. The first -payment I shall suppose to have been made in silver, to the value of -1718.7 grains fine silver, which make of standard silver 1858.06 grains; -this sold at the rate of 65 pence an ounce, the present supposed value -of silver, at the rate [Sidenote: One worth £1 0 11⅜ present -currency.] of the gold, when full weight, makes £1 0 11⅜. The second -payment I shall suppose to have been made in gold,[Sidenote: -Another worth £1 7 10⅞] to the value of 157.6 grains fine gold, which -makes of standard gold 171.9 grains, this at the mint price of gold, -that is, £3 17 10½ the ounce, makes of present sterling, £1 7 10⅞. - -[Sidenote: And a third worth £1 4 5⅛.] - -The third payment I suppose to have been made, one half in gold, one -half in silver, which makes 859.36 grains fine silver, and 78.8 grains -of fine gold, which, at the above conversions, - - makes for the silver £0 - 10 511⁄16 - - And for the gold £0 13 117⁄16 - - ————— - - Together £1 4 5⅛ - -[Sidenote: The last is the true standard of Elizabeth for the - pound sterling, and worth at present 2002 grains fine silver, - and 138 ditto gold.] - -Here we have three different pounds sterling, produced purely by the -variation in the proportion of the metals, although in 1601, they must -have been absolutely the same. Which of the three, therefore, is the -standard of Elizabeth? Is it not evident, that it can be no other than -according to the value of that pound which was paid, half in gold, and -half in silver? And is it not also plain, that this is the exact -arithmetical mean proportional between the gold and the silver? Let the -silver and the gold pounds be added together, they make £2 8 10¼; the -half of which is the value of that pound which was paid half in gold, -and half in silver, to wit, £1 4 5⅛ of the present gold currency, -reckoning standard silver at 65 pence _per_ ounce, and gold at the mint -price. To realize this value exactly in gold and silver, while the -proportion remains as 1 to 14.5, it would be proper to put into the -pound sterling 2001.9 grains troy fine silver, and 138.04 grains of fine -gold. These quantities of the metals would answer exactly to the value -of £1 4 10¼, the mean proportional above mentioned. - -Here then is the standard of Elizabeth: if it has any excellence in it -above all others, it might be preferred. - -[Sidenote: But may vary at every moment.] - -It must however be observed, that it will remain the standard only -whilst the proportion of 1 to 14.5, upon which it has been established, -shall remain unvaried between the metals; and it will vary from where it -might be at present settled, in the same manner as it has varied at all -times from the year 1601, to wit, according to the vicissitudes which -shall happen in the proportion of the metals. But at every period of -time, and in all different varieties of proportion between gold and -silver, no problem is more easily resolved than that of the mean -proportional between the gold and silver, the moment one knows the -proportion of the metals at the time; as shall be demonstrated in a -following chapter. - -[Sidenote: Gold rose during the whole 17th century;] - -During the whole seventeenth century, gold rose in its value; or to -express this as the French writers do, the _proportion of the metals was -increasing_, from that of 1 to 10.905, to that of 1 to 15; and in Spain -it got up to that of 1 to 16. The standard, therefore being fixed by -Elizabeth to the silver, was then attached to that metal which was the -least sought for; and who knows whether the mercantile interest at that -time, and in the succeeding reigns, did not find it their interest to -keep it attached to the silver, for the same reason they now wish it -attached to the gold? - -[Sidenote: and silver has risen since the beginning of this - century.] - -Since the beginning of this century the metals have taken a different -turn, and now the _proportion is diminishing_; that is to say, the value -of _silver is rising_; the consequence of which is, that the mercantile -interest would gladly have the standard fixed to the gold; because in -this case, (the proportion of the metals being upon the diminishing -hand) the standard of the pound will gradually diminish, and trading men -will thereby gain, according to the principles above laid down. - -From what has been said, the reader may reconcile me with myself, when I -sometimes have spoken of the standard of the pound sterling, as having -been debased by law thirty years ago, to 113 grains of gold; and when, -upon other occasions, I have represented it as having descended by -degrees to where it is at present. Had I involved my reasoning in all -the distinctions which I have now explained, I should have lost my way, -and perplexed my subject, instead of throwing light upon it. I shall -hereafter examine how these circumstances may be attended to in a new -regulation of the mint. - -Providing the subject be well understood, men of capacity will be found -to execute this great operation according to justice, in spight of the -most perplexing combinations. - -Let me here recapitulate a few positions, which we may now have occasion -to apply. - -[Sidenote: Some positions recapitulated.] - -I. The standard is debased by being fixed by statute to 113 grains of -fine gold, not by the act of fixing it, but by the rising of the silver -since that time, which the statute could not prevent: and gold being now -the metal the least sought for, is become the standard of the pound -sterling, and regulates its value so, that no silver coin, which is -above the proportion of the gold, can remain in currency. - -II. That according as the proportion of the metals shall diminish from -what it is at present, the standard will still fall lower with respect -to silver, but will remain fixed with respect to gold, at 113 grains. - -III. That the true value of the pound sterling will always be found in -the mean proportion between 113 grains fine gold, and 1638.5 grains fine -silver. - -IV. That if light guineas are allowed to pass current, the standard will -fall below the 113 grains, and the price of gold bullion will rise above -£3 17 10½ in the English market. - -V. That upon calling in the light guineas afterwards, a hurt will be -done to all those who have contracted during their currency. - ------------------------------------------------------------------------- - - - - - CHAP. XIV. - _Circumstances to be attended to in a new Regulation of the British - Coin._ - - -I think I have sufficiently laid open all the principles which can -influence a new regulation of the British standard, as far as a change -may influence either the value of the money-unit, or the interests -within the state. - -As to the first, it has been said above, that if, by the future -regulation, any change whatsoever shall be made upon the value of the -money-unit, as it stands at present, the adopting any other whatsoever -is a thing purely arbitrary. - -[Sidenote: The adopting the standard of Elizabeth has an air of - justice.] - -To people who do not understand the nature of such operations, it may -have an air of justice to support the unit at what is commonly believed -to be the standard of Queen Elizabeth, to wit, at 1718.5 grains of fine -silver. - -[Sidenote: Advantages of that of Mary I.] - -The regulating the standard of both silver and gold to 11⁄12 fine, and -the pound sterling to four ounces standard silver, as it stood during -the reign of Queen Mary I. has also its advantages, as Mr. Harris has -observed. It makes the crown piece to weigh just one ounce, the shilling -four penny weight, and the penny eight grains; consequently, were the -new statute to bear, that the weight of the coin should regulate its -currency upon certain occasions, the having the pieces adjusted to -certain aliquot parts of weight, would make weighing easy, and would -accustom the common people to judge of the value of money by its weight, -and not by the stamp. - -In that case, there might be a conveniency in striking the gold coins of -the same weight with the silver; because the proportion of their values -would then constantly be the same with the proportion of the metals. The -gold crowns would be worth at present, 3_l._ 12_s._ 6_d._ the half -crowns 1_l._ 16_s._ 3_d._ the gold shillings 14_s._ and 6_d._ and the -half 7_s._ and 3_d._ This was antiently the practice in the Spanish -mints. - -I have, in one place, mentioned the _pound troy_ as the best weight of -all for the pound sterling; and so it would be, were the pound sterling, -by its nature, susceptible of being fixed to any determinate quantity of -the metals. But what I there suggested was only thrown out to shew, that -the choice of any other value than the present is a matter of no -consequence, when all interests within doors are properly taken care of, -and when confusion and perplexity are avoided in making the alteration. - -[Sidenote: Conversions necessary in every case.] - -The interests within the state can, I think, be nowise perfectly -protected but by permitting conversions of value from the old to the new -standard, whatever it be, and by regulating the footing of such -conversions by act of parliament, according to circumstances. The -intention of this chapter is to point out some circumstances to which it -would be proper to attend; and to propose a scheme of establishing a new -standard, which might perhaps render conversions and regulations less -necessary. - -Schemes are here proposed, not to be adopted, but as a means of setting -this important matter in different lights, and thereby, perhaps, of -furnishing hints to some superior genius, who may form a plan liable to -fewer inconveniences than any I can devise. - -[Sidenote: Every interest within the state to be examined.] - -For this purpose, I shall examine those interests which will chiefly -merit the attention of government, when they form a regulation for the -future acquitting of permanent contracts already entred into. Such as -may be contracted afterwards will naturally follow the new standard. - -[Sidenote: Landed interest examined.] - -The landed interest is, no doubt, the most considerable in the nation. -Let us therefore examine, in the first place, what regulations it may be -proper to make, in order to do justice to this great class, with respect -to the land-tax on one hand, and with respect to their lessees on the -other. - -The valuation of the lands of England was made many years ago, and -reasonably ought to be supported at the real value of the pound sterling -at that time, according to the principles already laid down. The general -valuation, therefore, of the whole kingdom will rise according to this -scheme. This will be considered as an injustice; and no doubt it would -be so, if, for the future, the land tax be imposed as heretofore, -without attending to this circumstance; but as that imposition is -annual, as it is laid on by the landed interest itself, who compose the -parliament, it is to be supposed that this great class will, at least, -take care of their own interest. - -Were the valuation of the lands to be stated according to the valuation -of the pound sterling of 1718.7 grains of silver, which is commonly -supposed to be the standard of Elizabeth, there would be no great injury -done: this would raise the valuation only 5 _per cent._ and the land tax -in proportion. - -There is no class of inhabitants in all England so much at their ease, -and so free from taxes, as the class of farmers. By living in the -country, and by consuming the fruits of the earth without their -suffering any alienation, they avoid the effect of many excises, which, -by those who live in corporations, are felt upon _many articles_ of -their consumption, as well as on those which are immediately loaded with -these impositions. For this reason it will not, perhaps, appear -unreasonable, if the additional 5 _per cent._ on the land tax were -thrown upon this class, and not upon the landlords. - -With respect to leases, it may be observed, that we have gone upon the -supposition that the pound sterling, in the year 1728, was worth 1718.7 -grains of fine silver, and 113 grains of fine gold. - -There would, I think, be no injustice done the lessees of all the lands -in the kingdom, were their rents to be fixed at the mean proportion of -these values. We have observed how the pound sterling has been gradually -diminishing in its worth from that time, by the gradual rise of the -silver. This mean proportion, therefore, will nearly answer to what the -value of the pound sterling was seventeen years ago; that is to say, in -1743; supposing the rise of the silver to have been uniform: and -seventeen years, I apprehend, is not much above the mean proportion of -the time elapsed of all the leases entred into with the landed interest -of England. - -It may be farther alleged in favour of the landlords, that the gradual -debasement of the standard has been more prejudicial to their interest -in letting their lands, than to the farmers in disposing of the fruits -of them. Proprietors cannot so easily raise their rents upon new leases, -as farmers can raise the prices of their grain, according to the -debasement of the value of the currency. We have shewn how the -operations of trade communicate their influence to country markets; but -as the cause of the rise of prices is not rightly understood by country -people, and as it is commonly ascribed rather to accident than to any -thing permanent, it is easy to perceive how such a circumstance must be -prejudicial to the landed interest. These combinations are too -complicated to fall under any calculation, and nothing but the wisdom -and penetration of the legislature is capable of estimating them at -their just value. - -The pound sterling, thus regulated at the mean proportion of its worth, -as it stands at present, and as it stood in 1728, may be realized in -1678.6 grains of fine silver, and 115.76 grains fine gold; which is 2.4 -_per cent._ above the value of the present currency. No injury, -therefore, would be done to lessees, and no unreasonable gain would -accrue to the landed interest, in appointing conversions of all land -rents at 2½ _per cent._ above the value of the present currency. - -Without a thorough knowledge of every circumstance relating to Great -Britain, it is impossible to lay down any plan. It is sufficient, here, -briefly to point out the principles upon which it must be regulated. - -[Sidenote: The interest of the public creditors examined.] - -The next interest to be considered is that of the nation’s creditors. -The right regulation of their concerns will have a considerable -influence in establishing public credit upon a solid basis, by making it -appear to all the world, that no political operation upon the money of -Great Britain can in any respect either benefit or prejudice the -interest of those who lend their money upon the faith of the nation. The -regulating also the interest of so great a body, will serve as a rule -for all creditors who are in the same circumstances, and will, upon -other accounts, be productive of greater advantages to the nation in -time coming, as we shall presently make appear. - -In 1749, a new regulation was made with the public creditors, when the -interest of the whole redeemable national debt was reduced to 3 _per -cent._ This circumstance infinitely facilitates the matter, with respect -to this class, since, by this innovation of all former contracts, the -whole national debt may be considered as contracted at, or posterior to -the 25th of December 1749. - -Were the state by any arbitrary operation upon money (which every -reformation must be) to diminish the value of the pound sterling, in -which the parliament at that time, bound the nation to acquit those -capitals and the interest upon them, would not all Europe say, that the -British parliament had defrauded their creditors. If therefore the -operation proposed to be performed should have a contrary tendency, to -wit, to augment the value of the pound sterling, with which the -parliament at that time bound the nation to acquit those capitals and -interests, must not all Europe also agree, that the British parliament -had defrauded the nation? - -This convention with the antient creditors of the state, who, in -consequence of the debasement of the standard, might have justly claimed -an indemnification for the loss upon their capitals, lent at a time when -the pound sterling was at the value of the heavy silver, removes all -cause of complaint from that quarter. There was in the year 1749, an -innovation in all their contracts, and they are now to be considered as -creditors only from the 25th of December of that year. - -I shall now give a sketch of a regulation which may be made, not only -for the national creditors at present, but in all times to come, which, -by setting money upon a solid footing, may be an advantage both to the -nation, to the creditors, and to credit in general. - -Let the value of the pound sterling be inquired into during one year -preceding and one posterior to the transaction of the month of December -1749. The great sums borrowed and paid back by the nation, during that -period, will furnish data sufficient for that calculation. Let this -value of the pound be specified in troy grains of fine silver and fine -gold bullion, without mentioning any denomination of money according to -the exact proportion of the metals at that time. And let this pound be -called the _pound of national credit_. - -This first operation being determined, let it be enacted, that the pound -sterling, by which the state is to borrow for the future, and that in -which the creditors are to be paid, shall be the exact mean proportion -between the quantities of gold and silver above specified, according to -the actual proportion of the metals at the time such payments shall be -made; or that the sums shall be borrowed or acquitted, one half in gold -and one half in silver, at the respective requisitions of the creditors -or of the state, when borrowing. All debts contracted posterior to 1749, -may be made liable to conversions. - -The consequence of this regulation will be the insensible establishment -of a bank-money, the usefulness of which has been explained. Nothing -would be more difficult to establish by a positive institution than such -an invariable measure, and nothing will be found so easy as to let it -establish itself by its own advantages. This bank-money will be liable -to much fewer inconveniences than that of Amsterdam. There the persons -transacting must be upon the spot, here, the sterling currency may, -every quarter of a year, be adjusted by the exchequer to this invariable -standard, for the benefit of all debtors and creditors, who incline to -profit of the stability of this measure of value. - -This scheme is liable to no inconvenience from the variation of the -metals, let them be ever so frequent, or hard to be determined; because -upon every occasion where there is the smallest doubt as to the actual -proportion, the option competent to creditors to be paid half in silver -and half in gold, will remove. - -Such a regulation will also have this good effect, that it will give the -nation more just ideas of the nature of money, and consequently of the -influence it ought to have upon prices. - -If the value of the pound sterling shall be found to have been by -accident less in December 1749, than it is at present; or if at present -(upon the account of the war, and the exportation of the more weighty -coin) the currency be found below what has commonly been since 1749, in -justice to the creditors, and to prevent all complaints, the nation may -grant them the mean proportion of the value of the pound sterling from -1749 to 1760; or any other which may to parliament appear reasonable. - -This regulation must appear equitable in the eyes of all Europe, and the -strongest proof of it will be, that it will not produce the smallest -effect prejudicial to the interest of the foreign creditors. The course -of exchange with regard to them will stand precisely as before. - -A Dutch, French, or German creditor, will receive the same value for his -interest in the English stocks as heretofore. This must silence all -clamours at home, being the most convincing proof, that the new -regulation of the coin will have made no alteration upon the real value -of any man’s property, let him be debtor or creditor. - -The interest of every other denomination of creditors, whose contracts -are of a fresh date, may be regulated upon the same principles. But -where debts are of an old standing, justice demands, that attention be -had to the value of money at the time of contracting. Nothing but the -stability of the English coin, when compared with that of other nations, -can make such a proposal appear extraordinary. Nothing is better known -in France than this stipulation added to obligations, _argent au cours -de ce jour_, that is to say, that the sum shall be repaid in coin of the -same intrinsic value with what has been lent. Why should such a clause -be thought reasonable for guarding people against arbitrary operations -upon the numerary value of the coin, and not be found just upon every -occasion where the numerary value of it is found to be changed, let the -cause be what it will. - -[Sidenote: Interest of trade examined.] - -The next interest we shall examine is that of trade, when men have -attained the age of twenty one, they have no more occasion for -guardians. This may be applied to traders: they can parry with their -pen, every inconvenience which may result to other people from the -changes upon money, provided only the laws permit them to do themselves -justice with respect to their engagements. This class demands no more -than a right to convert all reciprocal obligations, into denominations -of coin of the same intrinsic value with those they have contracted in. - -The next interest is that of buyers and sellers; that is, of -manufacturers, with regard to consumers, and of servants, with respect -to those who hire their personal service. - -[Sidenote: Interest of buyers and sellers examined.] - -The interest of this class requires a most particular attention. They -must, literally speaking, be put to school, and taught the first -principles of their trade, which is buying and selling. They must learn -to judge of price by the grains of silver and gold they receive. They -are children of a mercantile mother, however warlike the father’s -disposition may be. If it be the interest of the state that their bodies -be rendred robust and active, it is no less the interest of the state, -that their minds be instructed in the first principle of the trade they -exercise. - -For this purpose, tables of conversion from the old standard to the new -must be made, and ordered to be put up in every market, in every shop. -All duties, all excises, must be converted in the same manner. -Uniformity must be made to appear every where. The smallest deviation -from this will be a stumbling block to the multitude. - -Not only the interest of the individuals of the class we are at present -considering, demands the nation’s care and attention in this particular; -but the prosperity of trade and the well being of the nation, are also -deeply interested in the execution. - -The whole delicacy of the intricate combinations of commerce, depends -upon a just and equable vibration of prices, according as circumstances -demand it. The more therefore the industrious classes are instructed in -the principles which influence prices, the more easily will the machine -move. A workman then learns to sink his price without regret, and can -raise it without avidity. When principles are not understood, prices -cannot gently fall, they must be pulled down; and merchants dare not -suffer them to rise, for fear of abuse, even although the perfection of -an infant manufacture should require it. - -[Sidenote: Interest of the bank examined.] - -The last interest I shall examine is that of the bank of England, which -naturally must regulate that of every other. - -Had this great company followed the example of other banks, and -established a bank-money of an invariable standard, as the measure of -all their debts and credits, they would not have been liable to any -inconvenience upon a variation of the standard. - -I am not sufficiently versed in English affairs to be able to sift out -every reason which that company may have had to neglect a thing which -other companies have found of such importance. - -An attention to the circumstances of the time of its institution, and to -others relative to the principles of English government with regard to -money, may help us to guess at what other people, who have access to be -informed, may discover with certainty. - -The bank of England was projected about the year 1694, at a time when -the current money of the nation was in the greatest disorder, and -government in the greatest distress, both for money and for credit. -Commerce was then at a very low ebb, and the only, or at least the most -profitable trade of any, was jobbing in coin, and carrying backwards and -forwards the precious metals from Holland to England. Merchants profited -also greatly from the effects which the utter disorder of the coin -produced upon the price of merchandize. - -At such a juncture the resolution was taken to make a new coinage, and -upon the prospect of this, a company was found, who, for an exclusive -charter to hold a bank for 13 years, willingly lent the government -upwards of a million sterling at 8 _per cent._ (in light money I -suppose) with a prospect of being repaid both interest and capital in -heavy. This was not all: part of the money lent, was to be applied for -the establishment of the bank, and no less than 4000 pounds a year was -allowed to the company, above the full interest, for defraying the -charge of management. - -Under such circumstances the introduction of bank-money was very -superfluous, and would have been very impolitic. That invention is -calculated against the raising of the standard; but here the bank -profited of that rise in its quality of creditor for the money lent, and -took care not to commence debtor by circulating their paper, until the -effect of the new regulation took place in 1695. That is after the -general recoinage of all the clipped silver. - -From that time till now, the bank of England has been the basis of the -nation’s credit; and with great reason, has been constantly under the -most intimate protection of every minister. - -The value of the pound sterling, as we have seen, has been declining -ever since the year 1601, the standard being fixed to silver during all -that century, while the gold was constantly rising. No sooner had the -proportion taken another turn, and silver begun to rise, than the -government of England threw the standard, virtually, upon the gold, by -regulating the value of the guineas at the exact proportion of the -market, whether at the instigation of the bank, or not, I shall not -pretend to determine. By these operations, however, the company has -constantly been a gainer (in its quality of debtor) upon all the paper -in circulation; and therefore has lost nothing by not having established -a bank-money. - -The interest of this great company being established upon the principles -we have endeavoured to explain, it is very evident that the government -of England never will take any step in the reformation of the coin, -which in its consequences can prove hurtful to the bank. Such a step -would be contrary both to justice and to common sense. To make a -regulation which, by raising the standard, will prove beneficial to the -public creditors, to the prejudice of the bank (which I may call the -public debtor) would be an operation upon public credit, like that of a -person who is at great pains to support his house by props upon all -sides, and who at the same time blows up the foundation of it with -gun-powder. - -We may therefore conclude, that with regard to the bank of England, as -well as every other private banker, the notes which are constantly -payable upon demand, must be made liable to a conversion at the actual -value of the pound sterling at the time of the new regulation. - -That the bank will gain by this, is very certain; but the circulation of -their notes is so swift that it would be absurd to allow to the then -possessors of them, that indemnification, which naturally should be -shared by all those through whose hands they have passed, in proportion -to the debasement of the standard during the time of their respective -possession. - -Having now shortly examined the several interests within the state, -according to that combination of circumstances, which, with lame -information, I can form to myself, I must again observe that other -circumstances, to which I am a stranger, will nevertheless operate their -effects. These must be carefully examined, and strictly attended to, -before the proper regulation can be established. - -My reasoning has proceeded entirely upon the supposition that the -reformation of the standard implies a change upon the intrinsic value of -the unit of money of accompt, and that strict justice is to be done to -every one, so as to render the change neither profitable or hurtful to -any, but such as have been unjustly gainers or losers by the former -disorder in the coin. - -[Sidenote: Inconveniences attending all innovations.] - -No quality in a statesman is more amiable or more admirable, than -justice and impartiality in every step which can affect the complicated -interests of the people he governs. Such however is the nature of human -society, that the inconveniences resulting from every innovation, do -frequently more than overbalance all the advantages which are obtained -from the closest attention to material and distributive justice upon -such occasions. For this reason, innovations are to be avoided as much -as possible, especially when by their nature they must be sudden. - -[Sidenote: Argument for preserving the standard at the present - value.] - -Were the pound sterling preserved at its present value, it would, no -doubt, be a plain adulteration of the former standard, and yet I do not -know if it would be a more unpopular measure than another which might -restore it, and at the same time do justice to every interest within the -state; because I apprehend that the greatest hurt done to most people, -with regard to their pecuniary interest, consists in the change. Every -one _feels_ a sudden change, but those only who reflect and who combine, -_perceive_ the consequences of a gradual one. - -[Sidenote: That every change must either hurt the bank or the - public creditors.] - -Besides these considerations which are in common to all states, the -government of Great Britain has one peculiar to itself. The interest of -the bank, and that of the creditors, are diametrically opposite: every -thing which raises the standard hurts the bank, every thing which can -sink it, hurts the creditors: and upon the right management of the one -and the other, depends the solidity of public credit. For these reasons -I am apt to believe, that, without the most certain prospect of -conducting a restitution of the standard to the general advantage, as -well as approbation of the nation, no minister will ever undertake so -dangerous an operation. - -[Sidenote: A more easy method of making a change upon the - standard.] - -I shall now propose an expedient which may remove at least some of the -inconveniences which would result from so extensive an undertaking as -that of regulating the respective interests in Great Britain by a -positive law, upon a change in the value of their money of accompt. - -Suppose then, that before any change is made in the coin, government -should enter into a transaction with the public creditors, and ascertain -a permanent value for the pound sterling for the future, specified in a -determined proportion of the fine metals in common bullion, without any -regard to money, of accompt, or to any coin whatever. - -This preliminary step being taken, let the intended alteration of the -standard be proclaimed a certain time before it is to commence. Let the -nature of the change be clearly explained, and let all such as are -engaged in contracts which are dissolvable at will upon the prestations -stipulated, be acquitted between the parties, or innovated as they shall -think proper, with certification, that posterior to a certain day, the -stipulations formerly entred into, shall be binding according to the -denominations of the money of accompt in the new standard. - -As to permanent contracts, which cannot at once be fulfilled and -dissolved, such as leases, the parliament may either prescribe the -methods and terms of conversion; or a liberty may be given to the -parties to annul the contract, upon the debtor’s refusing to perform his -agreement according to the new standard. Contracts, on the other hand, -might remain stable, with respect to creditors who would be satisfied -with payments made on the footing of the old standard. If the rise -intended should not be very considerable, no great injustice can follow -such a regulation. - -Annuities are now thoroughly understood, and the value of them is -brought to so nice a calculation, that nothing will be easier than to -regulate these upon the footing of the value paid for them, or of the -subject affected by them. If by the regulation land-rents are made to -rise in denomination, the annuities charged upon them, ought to rise in -proportion; if in intrinsic value, the annuity should remain as it was. - ------------------------------------------------------------------------- - - - - - CHAP. XV. -_Regulations which the Principles of this Inquiry point out as expedient - to be made by a new Statute for regulating_ the British _Coin_. - - -Let us now examine what regulations it may be proper to make by a new -statute concerning the coin of Great Britain, in order to preserve -always the same exact value of the pound sterling realized in gold and -in silver, in spite of all the incapacities inherent in the metals to -perform the functions of an invariable scale or measure of value. - -[Sidenote: 1. Regulation, as to the standard.] - -I shall not pretend to determine the precise standard which government -may prefer as the best to be chosen for the value of a pound sterling in -all future times; but let it be what it will, the first point is to -determine the exact number of grains of fine gold and fine silver which -are to compose it, according to the then proportion of the metals in the -London market. - -[Sidenote: 2. As to the weight.] - -2. To determine the proportion of these metals with the pound troy, and -in regard that the standard of gold and silver is different, let the -mint price of both metals be regulated according to the pound troy fine. - -[Sidenote: 3. Mint price.] - -3. To fix the mint price within certain limits: that is to say, to leave -to the King and Council, by proclamation, to carry the mint price of -bullion up to the value of the coin, as is the present regulation, or to -sink it to _per cent._ below that price, according as government -shall incline to impose a duty upon coinage. - -[Sidenote: 4. Denominations.] - -4. To order that silver and gold coin shall be struck of such -denominations as the King shall think fit to appoint; in which the -proportion of the metals above determined, shall be constantly observed -through every denomination of the coin, until necessity shall make a new -general coinage unavoidable. - -[Sidenote: 5. Marking the weight on the coin.] - -5. To have the number of grains of the fine metal in every piece marked -upon the exergue, or upon the legend of the coin, in place of some -initial letters of titles, which not one person in a thousand can -decypher; and to make the coin of as compact a form as possible, -diminishing the surface of it as much as is consistent with beauty. - -[Sidenote: 6. Liberty to stipulate payment in gold or silver.] - -6. That it shall be lawful for all contracting parties to stipulate -their payments either in gold or silver coin, or to leave the option of -the species to one of the parties. - -[Sidenote: 7. Creditors may demand payment half in gold and half - in silver.] - -7. That where no particular stipulation is made, creditors shall have -power to demand payment, half in one species, half in the other; and -when the sum cannot fall equally into gold and silver coins, the -fractions to be paid in silver. - -[Sidenote: 8. Regulations as to sale.] - -8. That in buying and selling, when no particular species has been -stipulated, and when no act in writing has intervened, the option of the -species shall be competent to the buyer. - -[Sidenote: 9. Ditto, as to payments to and from banks, &c.] - -9. That all sums paid or received by the King’s receivers, or by -bankers, shall be delivered by weight, if demanded. - -[Sidenote: 10. All coin to be of full weight when paid away.] - -10. That all money which shall be found under the legal weight, from -whatever cause it may proceed, may be rejected in every payment -whatsoever; or if offered in payment of a debt above a certain sum, may -be taken according to its weight, at the then mint price, in the option -of the creditor. - -[Sidenote: 11. Liberty to melt and export coin, but death to clip - or wash.] - -11. That no penalty shall be incurred by those who melt down or export -the nation’s coin; but that washing, clipping, or diminishing the weight -of any part of it shall be deemed felony, as much as any other theft, if -the person so degrading the coin shall afterwards make it circulate for -lawful money. - -To prevent the inconveniences proceeding from the variation in the -proportion between the metals, it may be provided, - -[Sidenote: 12. Rule for changing the mint price of the metals.] - -12. That upon every variation of proportion in the market price of the -metals, the price of both shall be changed, according to the following -rule. - -Let the price of the pound troy fine gold in the coin be called G. - -Let the price of ditto in the silver be called S. - -Let the new proportion between the market price of the metals be called -P. - -Then state this formula: - -G/2P + S/2 = to a pound troy fine silver, in sterling currency. - -S/2 × P + G/2 = to a pound troy fine gold, in sterling currency. - -This will be a rule for the mint, to keep the price of the metals -constantly at par with the price of the market; and coinage may be -imposed as has been described, by fixing the mint price of them at a -certain rate below the value of the fine metals in the coin. - -[Sidenote: 13. When to change the mint price.] - -13. As long as the variation of the market price of the metals shall not -carry the price of the rising metal so high as the advanced price of the -coin above the bullion, no alteration need be made on the denomination -of either species. - -[Sidenote: 14. Rule for changing the denomination of the coins.] - -14. So soon as the variation of the market price of the metals shall -give a value to the rising species, above the difference between the -coin and the bullion; then the King shall alter the denominations of all -the coin, silver and gold, adding to the coins of the rising metal -exactly what is taken from those of the other. An example will make this -plain. - -Let us suppose that the coinage has been made according to the -proportion of 14.5 to 1; that 20 shillings, or 4 crown pieces, shall -contain, in fine silver, 14.5 times as many grains as the guinea, or the -gold pound, shall contain grains of fine gold. Let the new proportion of -the metals be supposed to be 14 to 1. In that case, the 20 shillings, or -the 4 crowns, will contain 1⁄29 more value than the guinea. Now since -there is no question of making a new general coinage upon every -variation, in order to adjust the proportion of the metals in the weight -of the coins, that proportion must be adjusted by changing their -respective denominations according to this formula. - -Let the 20 shillings, or 4 crowns, in coin, be called S. Let the guinea -be called G. Let the difference between the old proportion and the new, -which is 1⁄29, be called P. Then say, - -S - P/2 = a pound sterling, and G + P/2 = a pound sterling. - -By this it appears that all the silver coin must be raised in its -denomination 1⁄58, and all the gold coin must be lowered in its -denomination 1⁄58; yet still S + G, will be equal to two pounds -sterling, as before, whether they be considered according to the old, or -according to the new denominations. - -But it may be observed, that the imposition of coinage rendering the -value of the coin greater than the value of the bullion, that -circumstance gives a certain latitude in fixing the new denominations of -the coin, so as to avoid minute fractions. For providing the deviation -from the exact proportion shall fall within the advanced price of the -coin, no advantage can be taken by melting down one species preferably -to another; since, in either case, the loss incurred by melting the coin -must be greater than the profit made upon selling the bullion. The mint -price of the metals, however, may be fixed exactly, that is, within the -value of a farthing upon a pound of fine silver or gold. This is easily -reckoned at the mint; although upon every piece in common circulation -the fractions of farthings would be inconvenient. - -[Sidenote: 15 How contracts are to be fulfilled, after a change in - the denominations has taken place.] - -15. That notwithstanding of the temporary variations made upon the -denomination of the gold and silver coins, all contracts formerly entred -into, and all stipulations in pounds, shillings, and pence, may continue -to be acquitted according to the old denominations of the coins, paying -one half in gold, and one half in silver; unless in the case where a -particular species has been stipulated; in which case, the sums must be -paid according to the new regulation made upon the denomination of that -species, to the end that neither profit or loss may result to any of the -parties. - -[Sidenote: 16. The weight of the several coins never to be - changed, except upon a general recoinage of one denomination - at least.] - -16. That notwithstanding the alterations on the mint price of the -metals, and in the denomination of the coins, no change shall be made -upon the weight of the particular pieces of the latter, except in the -case of a general recoinage of one denomination at least: that is to -say, the mint must not coin new guineas, crowns, &c. of a different -weight from those already in currency, although by so doing the -fractions might be avoided. This would occasion confusion, and the -remedy would cease to be of any use upon a new change in the proportion -of the metals. But it may be found convenient, for removing the small -fractions in shillings and sixpences, to recoin such denominations all -together, and to put them to their integer numbers, of twelve, and of -six pence, without changing in any respect their proportion of value to -all other denominations of the coin: this will be no great expence, when -the bulk of the silver coin is put into 5 shilling pieces. - -[Sidenote: How this will preserve the same value to the pound - sterling at all times, and how fractions in the denominations - of coin may be avoided.] - -By this method of changing the denominations of the coin, there never -can result any alteration in the value of the pound sterling: and -although fractions of value may now and then be introduced, in order to -prevent the abuses to which the coin would otherwise be exposed, by the -artifice of those who melt it down, yet still the inconvenience of such -fractions may be avoided in paying, according to the old denominations, -in both species, by equal parts. This will also prove demonstratively -that no change is thereby made in the true value of the national unit of -money. - -[Sidenote: 17. Small coins to be current only for twenty years, - and larger coins for forty years or more.] - -17. That it be ordered that shillings and sixpences shall only be -current for twenty years, and all other coins, both gold and silver, for -forty years, or more. For ascertaining which term, there may be marked, -upon the exergue of the coin, the last year of their currency, in place -of the date of their fabrication. This term elapsed, or the date -effaced, that they shall have no more currency whatsoever; and when -offered in payment, may be received as bullion at the actual price of -the mint, or refused, at the option of the creditor. - -[Sidenote: 18. All foreign coin to pass for bullion only.] - -18. That no foreign coin shall have any _legal_ currency, except as -bullion at the mint price. - -By these or the like regulations may be prevented, _1mo_, The melting or -exporting of the coin in general. _2do_, The melting or exporting one -species, in order to sell it as bullion, at an advanced price. -[Sidenote: Consequences of these regulations.]_3tio_, The profit in -acquitting obligations preferably in one species to another. _4to_, The -degradation of the standard, by the wearing of the coin, or by a change -in the proportion between the metals. _5to_, The circulation of the coin -below the legal weight. _6to_, The profit that other nations reap by -paying their debts more cheaply to Great Britain than Great Britain can -pay hers to them. - -And the great advantage of it is, that it is an uniform plan, and may -serve as a perpetual regulation, compatible with all kinds of -denominations of coins, variations in the proportion of the metals, and -with the imposition of a duty upon coinage; or with the preserving it -free; and farther, that it may in time be adopted by other nations, who -will find the advantage of having their money of accompt preserved -perpetually at the same value, with respect to the denominations of all -foreign money of accompt established on the same principles. - - A TABLE OF COINS, - - Shewing the Quantity of Fine Metal contained in them. - -The number of grains of fine metal in every coin is sought for in the -regulations of the mint of the country where it is coined, and is -expressed in the grains in use in that mint: from that weight it is -converted into those of other countries, according to the following -proportions: - -3840 Troy-grains, 4676.35 Paris-grains, 5192.8 Holland-aces or grains, -and 4649.06 Colonia-grains, are supposed to be equal weights; and the -coins in the table are converted according to those proportions. - -Table of Coins, reduced to Grains of fine Metal, according to the Troy, -Paris, Colonia, and Holland-weights. - - ──────────────────────────────────┬─────────────────────────────────── - │ Gold Coins. - │Troy. │Paris. │Colonia.│Holland. - ──────────────────────────────────┼────────┼────────┼────────┼──────── - English Coins. │ │ │ │ - 1 A Guinea by statute │— │144.46 │143.65 │160.45 - 2 A Crown by statute │— │— │— │— - 3 A Shilling by statute │— │— │— │— - 4 A Silver Pound sterling by │ │ │ │ - statute 1601 │ │ │ │ - 5 A Gold Pound sterling by statute│113. │137.61 │136.8 │152.8 - 1728 │ │ │ │ - 6 A Silver Pound sterling in │— │— │— │— - currency = 20⁄65 lib. troy │ │ │ │ - 7 A Silver Pound sterl. at the │113. │137.61 │136.8 │152.8 - proportion of gold to silver as │ │ │ │ - 1 to 14½ │ │ │ │ - 8 A Gold Pound sterling at the │118.4 │144.18 │143.34 │160.11 - same proportion of 1 to 14½ │ │ │ │ - 9 A Pound sterling at the mean │115.769 │140.98 │140.16 │156.55 - proportion in gold and in silver│ │ │ │ - 10 A Shilling current = 1⁄65 of a │— │— │— │— - pound troy │ │ │ │ - 11 A Guinea in silver, or 21 │— │— │— │— - shillings standard weight │ │ │ │ - 12 A Guinea at the proportion of 1│— │— │— │— - to 14½, worth in silver │ │ │ │ - 13 A Pound troy, or 12 ounces │5760. │7019.2 │6973.5 │7789.2 - English weight │ │ │ │ - │ │ │ │ - French Coins. │ │ │ │ - 1 A Louis d’or │113.27 │137.94 │137.13 │153.17 - 2 A Crown of six livres │— │— │— │— - 3 A Crown of three ditto │— │— │— │— - 4 A Livre │— │— │— │— - 5 A Louis d’or, or 24 livres in │— │— │— │— - silver │ │ │ │ - 6 A Marc of Paris weight, fine │3783.87 │4608. │4581.1 │5116.9 - gold or silver │ │ │ │ - 7 A Marc of gold coin effective │3398.3 │4138.5 │4114.3 │4593.4 - weight, in fine │ │ │ │ - 8 A Marc of silver coin effective │— │— │— │— - weight, in fine │ │ │ │ - │ │ │ │ - German Coins. │ │ │ │ - 1 A Carolin legal weight │115.45 │140.6 │139.78 │156.12 - 2 A Ducat of the Empire ditto │52.8 │64.37 │64. │71.48 - 3 A Florin of Convention │— │— │— │— - 4 A Dollar of Convention │— │— │— │— - 5 A Dollar of Exchange, the │17.85 │21.74 │21.615 │24.14 - Carolin = 9 flor. 42 kreutzers │ │ │ │ - 6 A Florin current = 1⁄11 of a │10.54 │12.84 │12.77 │14.26 - Carolin │ │ │ │ - 7 A Carolin in Silver at the │— │— │— │— - proportion of 1 to 14½ │ │ │ │ - │ │ │ │ - Dutch Coins. │ │ │ │ - 1 A Dutch Ducat │51.76 │63. │62.67 │70. - 2 A Florin in silver │— │— │— │— - - │ Silver Coins. - ──────────────────────────────────┼────────┬────────┬────────┬──────── - │Troy. │Paris. │Colonia.│Holland. - ──────────────────────────────────┼────────┼────────┼────────┼──────── - English Coins. │ │ │ │ - 1 A Guinea by statute │— │— │— │— - 2 A Crown by statute │429.68 │523.2 │520.2 │581. - 3 A Shilling by statute │85.935 │104.65 │104. │116.2 - 4 A Silver Pound sterling by │1718.7 │2093. │2080.8 │2324.1 - statute 1601 │ │ │ │ - 5 A Gold Pound sterling by statute│— │— │— │— - 1728 │ │ │ │ - 6 A Silver Pound sterling in │1639.38 │1996.4 │1984.7 │2216. - currency = 20⁄65 lib. troy │ │ │ │ - 7 A Silver Pound sterl. at the │1638.5 │1995.3 │1983.7 │2215.7 - proportion of gold to silver as │ │ │ │ - 1 to 14½ │ │ │ │ - 8 A Gold Pound sterling at the │1718.7 │2093. │2080.8 │2324.1 - same proportion of 1 to 14½ │ │ │ │ - 9 A Pound sterling at the mean │1078.6 │2041.2 │2032.2 │2269.9 - proportion in gold and in silver│ │ │ │ - 10 A Shilling current = 1⁄65 of a │81.961 │99.8 │99. │110.82 - pound troy │ │ │ │ - 11 A Guinea in silver, or 21 │1804.6 │2197.6 │2184.8 │2440.3 - shillings standard weight │ │ │ │ - 12 A Guinea at the proportion of 1│1720.4 │2095.1 │2082.8 │2326.4 - to 14½, worth in silver │ │ │ │ - 13 A Pound troy, or 12 ounces │— │— │— │— - English weight │ │ │ │ - │ │ │ │ - French Coins. │ │ │ │ - 1 A Louis d’or │— │— │— │— - 2 A Crown of six livres │409.94 │499.22 │496.3 │554.3 - 3 A Crown of three ditto │204.97 │249.61 │248.15 │277.1 - 4 A Livre │68.34 │83.23 │82.74 │92.42 - 5 A Louis d’or, or 24 livres in │1639.7 │1996.9 │1985.2 │2217.4 - silver │ │ │ │ - 6 A Marc of Paris weight, fine │3783.87 │4608. │4581.1 │5116.9 - gold or silver │ │ │ │ - 7 A Marc of gold coin effective │— │— │— │— - weight, in fine │ │ │ │ - 8 A Marc of silver coin effective │3402.3 │4143.4 │4119.2 │4600.9 - weight, in fine │ │ │ │ - │ │ │ │ - German Coins. │ │ │ │ - 1 A Carolin legal weight │— │— │— │— - 2 A Ducat of the Empire ditto │— │— │— │— - 3 A Florin of Convention │179.73 │218.87 │217.6 │243. - 4 A Dollar of Convention │269.59 │328.31 │326.4 │364.5 - 5 A Dollar of Exchange, the │— │— │— │— - Carolin = 9 flor. 42 kreutzers │ │ │ │ - 6 A Florin current = 1⁄11 of a │— │— │— │— - Carolin │ │ │ │ - 7 A Carolin in Silver at the │1674. │2038.6 │2026.8 │2263.8 - proportion of 1 to 14½ │ │ │ │ - │ │ │ │ - Dutch Coins. │ │ │ │ - 1 A Dutch Ducat │— │— │— │— - 2 A Florin in silver │148. │180.3 │179·2 │200.21 - - [The Binder is desired to place this TABLE at the End of Vol. I. - and not to cut off the Margin, but to fold it.] - - END OF THE FIRST VOLUME. - ------------------------------------------------------------------------- - - Transcriber’s Note - -Beginning on p. #362, there is an enumerated outline, summarized as -having four parts (1), (2), (3) and (4). The indicated sections -subsequently appear, inconsistently, as ‘1’ (arguably ‘I’), ‘II’, ‘3tio’ -and ‘4to’. These have been retained, adopting ‘I’ for the first section. - -A large table, appearing between pages 638 and 639, was, according to a -bracketed note included in the text, to be bound at the end of Volume I. -That wish has been granted. The Table itself has been redesigned to -better display in this medium. - -The table of contents mistakenly implies that two sections (‘The -question in dispute is not understood’, and the section following) -appear on p. 606. They appear a page later, on p.607. This has been -corrected. - -Spelling, generally, is not ‘corrected’, given the age of the text, -unless there is a clear preponderance of an alternate more standard -spelling. ‘Knowledge’ appears three times as ‘knowlege’, but more than -twenty times with the ‘d’. Verbs ending with -er (‘enter’, ‘render’) are -frequently spelled without the ‘e’ when used in other tenses, as -‘entred’, ‘rendring’, etc. - -Diacritical marks in non-English languages are frequently missing, and -have not been added. - -On p. 388, a parenthetical remark beginning ‘(by throwing a part of the -wealth...’ is not closed, and it is not obvious where the author -intended it to close. It is left to the reader to close it. - -Errors deemed most likely to be the printer’s have been corrected, and -are noted here. The references are to the page and line in the original. -The following issues should be noted, along with the resolutions. - -P. 569 was mispaginated as p. 561, which has no impact on this version. - - ix.12 Men of parts and knowle[d]ge Inserted. - xvii.4 a perfect knowle[d]ge of facts Inserted. - 22.24 an entire depend[a/e]nce Replaced. - 78.4 seven times that number, or than 201[,]887 Inserted. - 137.17 no difference as to agricultu[t/r]e Replaced. - 296.20 to enable it to undersel[l] Added. - 301.5 after travelling over [eh/the] regions Most likely. - 307.7 that the wor[l]d _luxury_ Removed. - 331.6 drain off the nation[’]s wealth Inserted. - 368.30 as saleable as [houshold] furniture _sic_ - 506.7 and accounts bal[l]anced on both sides Removed. - 518.26 lead me to inqu[i]re Inserted. - 592.11 who is possessed of a sal[l]ary Removed. - 624.31 Without a thorough knowle[d]ge Inserted. - 635.2 or to sink it to _per cent._ below that Missing. - price - - - - -*** END OF THE PROJECT GUTENBERG EBOOK PRINCIPLES OF POLITICAL OECONOMY *** - -Updated editions will replace the previous one--the old editions will -be renamed. - -Creating the works from print editions not protected by U.S. copyright -law means that no one owns a United States copyright in these works, -so the Foundation (and you!) can copy and distribute it in the -United States without permission and without paying copyright -royalties. 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