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THE ONLINE LIBRARY OF LIBERTY
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CLASSICS IN THE HISTORY OF LIBERTY ADAM SMITH, THE GLASGOW EDITION OF THE WORKS AND CORRESPONDENCE OF ADAM SMITH (1981) AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS, VOL. I
Updated: April 7, 2004
Return to the Introduction to Adam Smith and the detailed Table of Contents.

EDITION USED
An Inquiry into the Nature and Causes of the Wealth of Nations, ed. A.S. Skinner and R.H. Campbell, vol. II of The Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1981). The Glasgow Edition of the Works and Correspondence of Adam Smith and the associated volumes are published in hardcover by Oxford University Press. The six titles of the Glasgow Edition, but not the associated volumes, are being published in softcover by Liberty Fund. The online edition is published by Liberty Fund under license from Oxford University Press. © Oxford University Press 1976. All rights reserved. No part of this material may be stored transmitted retransmitted lent or reproduced in any form or medium without the permission of Oxford University Press.

TABLE OF CONTENTS
PREFACE KEY TO ABBREVIATIONS AND REFERENCES GENERAL INTRODUCTION SCOPE AND METHOD SOCIAL THEORY THE STAGES OF SOCIETY ECONOMIC THEORY AND THE EXCHANGE ECONOMY THE ROLE OF THE STATE THE INSTITUTIONAL RELEVANCE OF THE WN SMITH’S USE OF HISTORY ENDNOTES THE TEXT AND APPARATUS ENDNOTES

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INTRODUCTION AND PLAN OF THE WORK ENDNOTES BOOK I OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE POWERS OF LABOUR, AND OF THE ORDER ACCORDING TO WHICH ITS PRODUCE IS NATURALLY DISTRIBUTED AMONG THE DIFFERENT RANKS OF THE PEOPLE CHAPTER I CHAPTER II CHAPTER III CHAPTER IV CHAPTER V CHAPTER VI COMMODITIES CHAPTER VII CHAPTER VIII CHAPTER IX CHAPTER X OF THE NATURAL AND MARKET PRICE OF COMMODITIES OF THE WAGES OF LABOUR OF THE PROFITS OF STOCK OF WAGES AND PROFIT IN THE DIFFERENT EMPLOYMENTS PART I PART II EUROPE CHAPTER XI OF THE RENT OF LAND PART I
PART II

OF THE DIVISION OF LABOUR OF THE PRINCIPLE WHICH GIVES OCCASION TO THE THAT THE DIVISION OF LABOUR IS LIMITED BY THE OF THE ORIGIN AND USE OF MONEY OF THE REAL AND NOMINAL PRICE OF COMMODITIES, OR OF THE COMPONENT PARTS OF THE PRICE OF

DIVISION OF LABOUR EXTENT OF THE MARKET

OF THEIR PRICE IN LABOUR, AND THEIR PRICE IN MONEY

OF LABOUR AND STOCK INEQUALITIES ARISING FROM THE NATURE OF THE INEQUALITIES OCCASIONED BY THE POLICY OF EMPLOYMENTS THEMSELVES

OF THE PRODUCE OF LAND WHICH ALWAYS OF THE PRODUCE OF LAND WHICH SOMETIMES OF THE VARIATIONS IN THE PROPORTION

AFFORDS RENT DOES, AND SOMETIMES DOES NOT, AFFORD RENT PART III BETWEEN THE RESPECTIVE VALUES OF THAT SORT OF PRODUCE WHICH ALWAYS AFFORDS RENT, AND OF THAT WHICH SOMETIMES DOES, AND SOMETIMES DOES NOT, AFFORD RENT DIGRESSION CONCERNING THE VARIATIONS IN THE VALUE OF SILVER DURING THE COURSE OF THE FOUR LAST CENTURIES FIRST PERIOD SECOND PERIOD THIRD PERIOD VARIATIONS IN THE PROPORTION BETWEEN THE RESPECTIVE VALUES OF GOLD AND SILVER GROUNDS OF THE SUSPICION THAT THE VALUE

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OF SILVER STILL CONTINUES TO DECREASE DIFFERENT EFFECTS OF THE PROGRESS OF IMPROVEMENT UPON THE REAL PRICE OF THREE DIFFERENT SORTS OF RUDE PRODUCE FIRST SORT SECOND SORT THIRD SORT CONCLUSION OF THE DIGRESSION CONCERNING THE VARIATIONS IN THE VALUE OF SILVER EFFECTS OF THE PROGRESS OF IMPROVEMENT UPON THE REAL PRICE OF MANUFACTURES
CONCLUSION

OF THE

CHAPTER

ENDNOTES NOTES TO THE NOTES BOOK II OF THE NATURE, ACCUMULATION, AND EMPLOYMENT OF STOCK INTRODUCTION CHAPTER I CHAPTER II OF THE DIVISION OF STOCK OF MONEY CONSIDERED AS A PARTICULAR BRANCH OF

THE GENERAL STOCK OF THE SOCIETY, OR OF THE EXPENCE OF MAINTAINING THE NATIONAL CAPITAL CHAPTER III CHAPTER IV CHAPTER V ENDNOTES NOTES TO THE NOTES BOOK III OF THE DIFFERENT PROGRESS OF OPULENCE IN DIFFERENT NATIONS CHAPTER I CHAPTER II CHAPTER III CHAPTER IV ENDNOTES NOTES TO THE NOTES BOOK IV OF SYSTEMS OF POLITICAL OECONOMY INTRODUCTION CHAPTER I SYSTEM CHAPTER II CHAPTER III OF RESTRAINTS UPON THE IMPORTATION AS CAN BE OF THE EXTRAORDINARY RESTRAINTS UPON THE PRODUCED AT HOME OF THE PRINCIPLE OF THE COMMERCIAL, OR MERCANTILE OF THE NATURAL PROGRESS OF OPULENCE OF THE DISCOURAGEMENT OF AGRICULTURE IN THE OF THE RISE AND PROGRESS OF CITIES AND TOWNS, HOW THE COMMERCE OF THE TOWNS CONTRIBUTED TO OF THE ACCUMULATION OF CAPITAL, OR OF PRODUCTIVE OF STOCK LENT AT INTEREST OF THE DIFFERENT EMPLOYMENT OF CAPITALS AND UNPRODUCTIVE LABOUR

ANTIENT STATE OF EUROPE AFTER THE FALL OF THE ROMAN EMPIRE AFTER THE FALL OF THE ROMAN EMPIRE THE IMPROVEMENT OF THE COUNTRY

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IMPORTATION OF GOODS OF ALMOST ALL KINDS, FROM THOSE COUNTRIES WITH WHICH THE BALANCE IS SUPPOSED TO BE DISADVANTAGEOUS
PART I

OF THE UNREASONABLENESS OF THOSE

RESTRAINTS EVEN UPON THE PRINCIPLES OF THE COMMERCIAL SYSTEM DIGRESSION CONCERNING BANKS OF DEPOSIT, PARTICULARLY CONCERNING THAT OF AMSTERDAM
PART II

OF THE UNREASONABLENESS OF THOSE

EXTRAORDINARY RESTRAINTS UPON OTHER PRINCIPLES CHAPTER IV CHAPTER V OF DRAWBACKS OF BOUNTIES DIGRESSION CONCERNING THE CORN TRADE AND CORN LAWS ENDNOTES NOTES TO THE NOTES

PREFACE
WHILE this volume as a whole was prepared by the General Editors, the actual text of the Wealth of Nations was established by W. B. Todd following principles which are explained in a separate note. As far as the general or non–textual editorial work is concerned, we have sought to provide a system of cross references within the WN, together with a comprehensive list of references from the WN to Smith’s other works, including the Lecture Notes and Correspondence. In addition, Smith’s own references have been traced and parallels with other writers indicated where it seems reasonably certain that he had actually used their works. Comment has been made on matters of historical fact where this might be of benefit to the modern reader. In the introduction, we have tried to give some idea of the links which exist between Smith’s economics and other parts of a wider system of social science, together with an account of the structure and scope of the WN itself. We have also sought to indicate the extent to which the WN was the reflection of the times in which Smith lived. In executing a work of this kind we have incurred debts which are too numerous to mention. We should, however, like to acknowledge the great benefit which we have received from the work of Edwin Cannan, whose original index has been retained. R.H.C. A.S.S.

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KEY TO ABBREVIATIONS AND REFERENCES Corr. ED EPS Ancient Logics Ancient Physics Astronomy English and Italian Verses External Senses Imitative Arts Music, Dancing, and Poetry Stewart FA, FB LJ(A) LJ(B) LRBL TMS WN Anderson Notes Correspondence ‘Early Draft’ of The Wealth of Nations Essays on Philosophical Subjects (which include:) ‘History of the Ancient Logics and Metaphysics’ ‘History of the Ancient Physics’ ‘History of Astronomy’ ‘Of the Affinity between certain English and Italian Verses’ ‘Of the External Senses’ ‘Of the Nature of that Imitation which takes place in what are called the Imitative Arts’ ‘Of the Affinity between Music, Dancing and Poetry’ Dugald Stewart, ‘Account of the Life and Writings of Adam Smith, LL.D.’ Two fragments on the division of labour, Buchan Papers, Glasgow University Library. Lectures on Jurisprudence: Report of 1762–63. Lectures on Jurisprudence: Report dated 1766. Lectures on Rhetoric and Belles Lettres The Theory of Moral Sentiments The Wealth of Nations From John Anderson’s Commonplace Book, vol. i, Andersonian Library, University of Strathclyde.

References to Smith’s published works are given according to the original divisions, together with the paragraph numbers added in the margin of the Glasgow edition. For example:

TMS I.iii.2.2 = WN I.x.b.1 = Astronomy, I.4 =

Theory of Moral Sentiments, Part I, section iii, chapter 2, paragraph 2. Wealth of Nations, Book I, chapter x, section b, paragraph 1. ‘History of Astronomy’, Section I, paragraph 4.

The Table of Corresponding Passages appended to this volume identifies the sections into which the WN is divided and provides for each paragraph the page references in the Cannan editions of 1930 and 1937.

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In the case of the lecture notes we have adopted the following practice: references to the LRBL are given in the form ‘LRBL i.8’ (= volume i, page 8 of the original manuscript), with references to the Lothian edition (London, 1963) in parenthesis. In the Lectures on Jurisprudence we have also cited the volume and page reference from the original manuscript (all of which will be included in the Glasgow edition) while retaining page references to the Cannan edition (Oxford, 1896) where appropriate. References to the Correspondence give date of letter and letter number from the Glasgow edition. Postscript. The Anderson Notes are now published in R. L. Meek, Smith, Marx and After (London, 1977).

GENERAL INTRODUCTION

Scope And Method
ALTHOUGH it would be extravagant to claim that Adam Smith was the last of the great polymaths, it is nonetheless true that he wrote on a remarkable range of subjects including as it does economics and history; law and government; language and the arts, not to mention essays on astronomy, ancient logics and metaphysics. Indeed, the latter group of essays, apparently written in the 1750s, although not published until 1795, moved J. A. Schumpeter to remark that ‘Nobody, I venture to say, can have an adequate idea of Smith’s intellectual stature who does not know these essays’ and to describe that on astronomy as the ‘pearl of the collection’ . The Astronomy is especially valuable as an exercise in ‘philosophical history’; a form of enquiry in which Smith was particularly interested, and which, in this case, led him to examine the first formation and subsequent development of those astronomical theories which had culminated in the work of Newton. But at the same time, the essay was designed to illustrate the principles which lead and direct philosophical enquiries. The essay was thus concerned with the question of motivation, and as such may tell us a good deal about Smith’s own drives as a thinker, contributing in this way to our understanding of the form which his other works in fact assumed. Smith’s main purpose in the Astronomy was to consider the stimulus given to the exercise of the understanding by the sentiments of surprise, wonder, and admiration; sentiments which he did not necessarily consider to be the sole sources of stimuli to philosophical work, but which represented forces whose influence was, he believed, ‘of far wider extent than we should be apt upon a careless view to imagine’ (Intro., 7). In elaborating on this statement Smith made a number of simple assumptions: that man is endowed with certain faculties and propensities such as reason, reflection, and imagination, and that he is motivated by a desire to acquire the means of pleasure and to avoid pain, where in this context pleasure relates to a state of the imagination involving tranquility and composure; a state attained from the contemplation of relation, similarity, or customary connection. He went on to argue that we feel surprise when some object or relation does not fall into an expected pattern; a sentiment which is quickly followed by wonder, which is in turn associated with the perception of something like a gap or interval (i.e. a lack of known connection or failure to conform to an established classification) between the object or objects of examination. For Smith, the essence of wonder was that it gave rise to a feeling of pain (i.e. disutility) to which the normal response is an act of attempted explanation, designed to

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restore the mind to a state of equilibrium; a goal which can only be attained where an explanation for the phenomena in question is found, and where that explanation is coherent, capable of accounting for observed appearances, and stated in terms of plausible (or familiar) principles. Smith considered these feelings and responses to be typical of all men, while suggesting that the philosopher or scientist was particularly subject to them, partly as a result of superior powers of observation and partly because of that degree of curiosity which normally leads him to examine problems (such as the conversion of flesh into bone) which are to the ordinary man so ‘familiar’ as not to require any explanation at all (II.11). Nature as a whole, Smith argued, ‘seems to abound with events which appear solitary and incoherent’ (II.12) so that the purpose of philosophy emerges as being to find ‘the connecting principles of nature’ (II.12) with, as its ultimate end, the ‘repose and tranquility of the imagination’ (IV.13). It is here especially that the sentiment of admiration becomes relevant in the sense that once an explanation has been offered for some particular problem, the very existence of that explanation may heighten our appreciation of the ‘appearances’ themselves. Thus, for example, we may learn to understand and thus to admire a complex economic structure once its hidden ‘springs’ have been exposed, just as the theory of astronomy leads us to admire the heavens by presenting ‘the theatre of nature’ as a coherent and therefore as a more ‘magnificent spectacle’ (II.12). Scientific explanation is thus designed to restore the mind to a state of balance and at the same time productive of a source of pleasure in this rather indirect way. Smith also added, however, that men pursue the study of philosophy for its own sake, ‘as an original pleasure or good in itself, without regarding its tendency to procure them the means of many other pleasures’ (III.3). There are perhaps three features of this argument which are worth emphasizing at this point. First, Smith’s suggestion that the purpose of philosophy is to explain the coherence of nature, allied to his recognition of the interdependence of phenomena, leads directly to the idea of a system which is designed to explain a complex of phenomena or ‘appearances’. It is interesting to recall in this connection that the history of astronomy unfolded in terms of four systems of this kind, and that Smith should have likened such productions of the intellect to machines whose function was to connect together ‘in the fancy those different movements and effects which are already in reality performed’ (IV.19). Secondly, it is noteworthy that Smith should have associated intellectual effort, and the forms which the corresponding output may assume, with certain sources of pleasure. He himself often spoke of the beauty of ‘systematical arrangement’ (WN V.i.f.25) and his ‘delight’ in such arrangement was one of the qualities of his mind to which Dugald Stewart frequently drew attention. In the Imitative Arts (II.30) Smith likened the pleasure to be derived from the contemplation of a great system of thought to that felt when listening to ‘a well composed concerto of instrumental Music’ ascribing to both an almost sensual quality. Points such as these are relevant at least in the sense that a general preference for order or system may lead the thinker to work in certain ways and even to choose a particular method of organizing his arguments. Smith in fact considered the various ways of organizing scientific (or didactic) discourse in the LRBL where it is stated that the technique whereby we ‘lay down certain principles, [primary?] or proved, in the beginning, from whence we account for the severall Phaenomena, connecting all together by the same chain’ is ‘vastly more ingenious’ and for that reason ‘more engaging’ than any other. He added: ‘It gives us a pleasure

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to see the phenomena which we reckoned the most unaccountable, all deduced from some principle (commonly, a wellknown one) and all united in one chain’. (LRBL ii.133–4, ed. Lothian, 140.) Elsewhere he referred to a propensity, common to all men, to account for ‘all appearances from as few principles as possible’ (TMS VII.ii.2.14). However, while there is little doubt that Smith’s major works (including of course the Astronomy itself) are dominated by such a choice, it would be as wrong to imply that such works are to be regarded as deductive exercises in practical aesthetics as it would be to ignore the latter element altogether. The fact is that the dangers as well as the delights of purely deductive reasoning were widely recognized at this time, and the choice of Newton rather than Descartes (who was also a proponent of the ‘method’ described above) as the model to be followed is indicative of the point. The distinctive feature of Newton’s work was not, after all, to be found in the use of ‘certain principles’ in the explanation of complex phenomena, but rather in the fact that he (following the lead of others) sought to establish those principles in a certain way. Those interested in the scientific study of man at this time sought to apply the Newtonian vision of a law governed universe to a new sphere, and to employ the ‘experimental method’ as an aid to the discovery of those laws of nature which governed the behaviour of the machine and disclosed the intention of its Design. Smith’s contribution to what would now be defined as the ‘social sciences’ is contained in his work on ethics, jurisprudence, and economics, which correspond in turn to the order in which he lectured on these subjects while Professor of Moral Philosophy at Glasgow. All are characterized by certain common features which are readily apparent on examination: in each case Smith sought to explain complex problems in terms of a small number of basic principles, and each conforms to the requirements of the Newtonian method in the broad sense of that term. All three make use of the typical hypothesis that the principles of human nature can be taken as constant, and all employ the doctrine of ‘unintended social outcomes’—the thesis that man, in following the prompting of his nature, unconsciously gives substantial expression to some parts of the [Divine?] Plan. Again, each area of Smith’s thought is marked by a keen sense of the fact that manners and institutions may change through time and that they may show striking variations in different communities at the same point in time—a feature which was rapidly becoming quite common in an age dominated by Montesquieu. It is perhaps even more remarkable that not only were Smith’s ethics, jurisprudence, and economics, marked by a degree of systematic thought of such a kind as to reveal a great capacity for model–building, but also by an attempt to delineate the boundaries of a single system of thought, of which these separate subjects were the component parts. For example, the TMS may be seen to offer an explanation as to the way in which so self–regarding a creature as man succeeds (by natural as distinct from artificial means) in erecting barriers against his own passions; an argument which culminates in the proposition that some system of magistracy is generally an essential condition of social stability. On the other hand, the historical treatment of jurisprudence complements this argument by showing the way in which government originates, together with the sources of social and political change, the whole running in terms of a four stage theory of economic development. The economic analysis as such may be seen to be connected with the other areas of Smith’s thought in the sense that it begins from a specific stage of historical development and at the same time makes use of the psychological assumptions established by the TMS.

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Before proceeding to the economics it may therefore be useful to review the main elements of the other branches of Smith’s work, and to elucidate some of their interconnections. This may be an appropriate choice not only because Smith himself taught the elements of economics against a philosophical and historical background, but also because so much of that background was formally incorporated in the WN itself—a book, after all, which is concerned with much more than economics as that term is now commonly understood.

Social Theory
Smith’s Theory of Moral Sentiments is, of course, an important contribution to moral philosophy in its own right, and one which attempted to answer the two main questions which Smith considered to be the proper province of this kind of philosopher: First, wherein does virtue consist? Or what is the tone of temper, and tenour of conduct, which constitutes the excellent and praise–worthy character, the character which is the natural object of esteem, honour, and approbation? And, secondly, by what power or faculty in the mind is it, that this character, whatever it be, is recommended to us? Or in other words, how and by what means does it come to pass, that the mind prefers one tenour of conduct to another? (VII.i.2) On Smith’s argument, the process by which we distinguish between objects of approval or disapproval depends largely on our capacity for ‘other–regarding’ activities and involves a complex of abilities and propensities which include sympathy, imagination, reason and reflection. To begin with, he stated a basic principle in arguing that man is possessed of a certain fellow feeling which permits him to feel joy or sorrow according as the circumstances facing others contribute to their feelings of pleasure or pain. An expression of sympathy (broadly defined) for another person thus involves an act of reflection and imagination on the part of the observer in the sense that we can only form an opinion with regard to the mental state of another person by ‘changing places in the fancy’ with him. Smith was also careful to argue in this connection that our judgement with regard to others was always likely to be imperfect, at least in the sense that we can have ‘no immediate experience of what other men feel’ (I.i.1.2). Given these basic principles, Smith then proceeded to apply them in considering the two different ‘aspects’ or ‘relations’ under which we may judge an action taken by ourselves or others, ‘first, in relation to the cause or object which excites it; and, secondly, in relation to the end which it proposes, or to the effect which it tends to produce’ (II.i.2). We may take these in turn: In dealing with the first question we go beyond the consideration of the circumstances in which the subject of our judgement may find himself, and his state of mind (i.e. whether he is happy or sad) to consider the extent to which his actions or ‘affections’ (i.e. expressions of feeling) are appropriate to the conditions under which they take place or the objects which they seek to attain. In short, the purpose of judgement is to form an opinion as to the propriety or impropriety of an action, or expression of feeling, where these qualities are found to consist in ‘the suitableness or unsuitableness, in the proportion or disproportion which the affection seems to

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bear to the cause or object which excites it’ (I.i.3.6). Given the principles so far established it will be evident that when the spectator of another man’s conduct tries to form an opinion as to its propriety, he can only do so by ‘bringing home to himself’ both the circumstances and feelings of the subject. Smith went on to argue that exactly the same principles apply when we seek to form a judgement as to our own actions, the only difference being that we must do so indirectly rather than directly; by visualizing the manner in which the real or supposed spectator might react to them. Or, as Smith put it: We can never survey our own sentiments and motives, we can never form any judgement concerning them; unless we remove ourselves, as it were, from our own natural station, and endeavour to view them as at a certain distance from us. But we can do this in no other way than by endeavouring to view them with the eyes of other people, or as other people are likely to view them. (III.1.2) Given these points, we can now examine the second ‘relation’, that is, the propriety of action ‘in relation to the end which it proposes, or the effect which it tends to produce’. Here, as far as the agent is concerned, Smith argued that the spectator can form a judgement as to whether or not an action is proper or improper in terms, for example, of motive as well as by reference to the propriety of the choice of means to attain a given end. In the same way, the spectator can form a judgement with regard to the propriety of the reaction of the subject (or person affected) to the circumstances created by the action of the agent. Now while it is evident that the spectator can form these judgements when examining the actions of the two parties taken separately, it is an essential part of Smith’s argument that a view with regard to the merit or demerit of a given action can be formed only by taking account of the activities of the two parties simultaneously. He was careful to argue in this connection, for example, that we might sympathize with the motives of the agent while recognizing that the action taken had had unintended consequences which might have either harmed or benefited some third party. Similarly, the spectator might sympathize with the reaction of the subject to a particular situation, while finding that sympathy qualified by recognition of the fact that the person acting had not intended another person either to gain or lose. It is only given a knowledge of the motives of the agent and the consequences of an action that we can form a judgement as to its merit or demerit, where that judgement is based on some perception of the propriety or impropriety of the activities of the two parties. Given these conditions Smith concluded that as our perception of the propriety of conduct ‘arises from what I shall call a direct sympathy with the affections and motives of the person who acts, so our sense of its merit arises from what I shall call an indirect sympathy with the gratitude of the person who is, if I may say so, acted upon’ (II.i.5.1). Smith went on from this point to argue that where approval of motive is added to a perception of the beneficent tendency of the action taken, then such actions deserve reward; while those of the opposite kind ‘seem then to deserve, and, if I may say so, to call aloud for, a proportionable punishment; and we entirely enter into, and thereby approve of, that resentment which prompts to inflict it’ (II.i.4.4). As we shall see, this principle was to assume considerable importance in

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terms of Smith’s discussion of justice. Before going further there are perhaps three points which should be emphasized and which arise from Smith’s discussion of the two different ‘relations’ in terms of which we can examine the actions of ourselves or other men. First, Smith’s argument is designed to suggest that judgement of our actions is always framed by the real or supposed spectator of our conduct. It is evident therefore that the accuracy of the judgement thus formed will be a function of the information available to the spectator with regard to action or motive, and the impartiality with which that information is interpreted. Secondly, it follows from the above that wherever an action taken or a feeling expressed by one man is approved of by another, then an element of restraint (and therefore control of our ‘affections’) must be present. For example, it is evident that since we have no immediate experience of what other men feel, then we as spectators can ‘enter into’ their situation only to a limited degree. The person judged can therefore attain the agreement of the spectator only: by lowering his passion to that pitch, in which the spectators are capable of going along with him. He must flatten, if I may be allowed to say so, the sharpness of its natural tone, in order to reduce it to harmony and concord with the emotions of those who are about him. (I.i.4.7) Finally, it will be obvious that the individual judged will only make the effort to attain a certain ‘mediocrity’ of expression where he regards the opinion of the spectator as important. In fact Smith made this assumption explicit in remarking: Nature when she formed man for society, endowed him with an original desire to please, and an original aversion to offend his brethren. She taught him to feel pleasure in their favourable, and pain in their unfavourable regard. She rendered their approbation most flattering . . . for its own sake; and their disapprobation most mortifying and most offensive. (III.2.6) Given the desire to acquire the sources of pleasure and to avoid pain, this aspect of the psychology of man would appear to ensure that he will generally act in ways which will secure the approbation of his brethren, and that he is to this extent fitted for the society of other men. At the same time, however, Smith makes it clear that this general disposition may of itself be insufficient to ensure an adequate source of control over our actions and passions, and this for reasons which are at least in part connected with the spectator concept and the problem of self– interest. We have already noted that the spectator can never be entirely informed with regard to the feelings of another person, and it will be evident therefore that it will always be particularly difficult to attain a knowledge of the motive which may prompt a given action. Smith noted this

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point in remarking that in fact the world judges by the event, and not by the design, classifying this tendency as one of a number of ‘irregularities’ in our moral sentiments. The difficulty is, of course, that such a situation must constitute something of a discouragement to virtue; a problem which was solved in Smith’s model by employing an additional (and explicit) assumption with regard to the psychology of man. As Smith put it, a desire for approval and an aversion to the disapproval of his fellows would not alone have rendered man fit: for that society for which he was made. Nature, accordingly, has endowed him not only with a desire of being approved of, but with a desire of being what ought to be approved of; or of being what he approves of in other men. The first desire could only have made him wish to appear to be fit for society. The second was necessary in order to render him anxious to be really fit. (III.2.7) Hence the importance in Smith’s argument of the ideal or supposed spectator, of the ‘man within the breast’, the abstract, ideal, spectator of our sentiments and conduct who is always well informed with respect to our own motives, and whose judgement would be that of the actual spectator where the latter was possessed of all the necessary information. It is this tribunal, the voice of principle and conscience, which, in Smith’s argument, helps to ensure that we will in fact tread the path of virtue and which supports us in this path even when our due rewards are denied us or our sins unknown. However, having made this point, Smith drew attention to another difficulty, namely that even where we have access to the information necessary to judge our own conduct, and even where we are generally disposed to judge ourselves as others might see us, if they knew all, yet there are at least two occasions on which we may be unlikely to regard our own actions with the required degree of impartiality: ‘first, when we are about to act; and, secondly, after we have acted. Our views are apt to be very partial in both cases; but they are apt to be most partial when it is of most importance that they should be otherwise’ (III.4.2). In this connection he went on to note that when ‘we are about to act, the eagerness of passion will very seldom allow us to consider what we are doing with the candour of an indifferent person’, while in addition a judgement formed in a cool hour may still be lacking in sufficient candour, because ‘It is so disagreeable to think ill of ourselves, that we often purposely turn away our view from those circumstances which might render that judgement unfavourable’ (III.4.4). The solution to this particular logical problem is found in the idea of general rules of morality or accepted conduct; rules which we are disposed to obey by virtue of the claims of conscience, and of which we attain some knowledge by virtue of our ability to form judgements in particular cases. As Smith argued: It is thus that the general rules of morality are formed. They are ultimately founded upon experience of what, in particular instances, our moral faculties, our natural sense of merit and propriety, approve, or disapprove of. We do not originally approve or condemn particular actions; because, upon examination, they appear to be agreeable or inconsistent with a certain general rule. The general rule, on the contrary, is formed, by finding from experience, that all actions of a certain kind, or circumstanced in a

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certain manner, are approved or disapproved of. (III.4.8) It will be noted that such rules are based on our experience of what is fit and proper to be done or to be avoided, and that they become standards or yardsticks against which we can judge our conduct even in the heat of the moment, and which are therefore ‘of great use in correcting the misrepresentations of self–love’ (III.4.12). Yet even here Smith does not claim that a knowledge of general rules will of itself be sufficient to ensure good conduct, and this for reasons which are not unconnected with (although not wholly explained by) yet a further facet of man’s nature. For Smith, man was an active being, disposed to pursue certain objectives which may be motivated by a desire to be thought well of by his fellows but which at the same time may lead him to take actions which have hurtful consequences as far as others are concerned. It is indeed one of Smith’s more striking achievements to have recognized the social objective of many economic goals in remarking: it is chiefly from this regard to the sentiments of mankind, that we pursue riches and avoid poverty. For to what purpose is all the toil and bustle of this world? what is the end of avarice and ambition, of the pursuit of wealth, of power and pre–eminence? . . . what are the advantages we propose by that great purpose of human life which we call bettering our condition? To be observed, to be attended to, to be taken notice of with sympathy, complacency, and approbation, are all the advantages which we can propose to derive from it. (I.iii.2.1) However, Smith was well aware that the pursuit of status, the desire to be well thought of in a public sense, could be associated with self–delusion, and with actions which could inflict damage on others either by accident or design. In this connection, he remarked that the individual: In the race for wealth, and honours, and preferments . . . may run as hard as he can, and strain every nerve and every muscle, in order to outstrip all his competitors. But if he should justle, or throw down any of them, the indulgence of the spectators is entirely at an end. It is a violation of fair play, which they cannot admit of. (II.ii.2.1) Knowledge of the resentment of the spectators thus emerges as something of a deterrent as far as the agent is concerned, although Smith placed more emphasis on the fact that a feeling of resentment generated by some act of injustice produces a natural approval of punishment, just as the perception of the good consequences of some action leads, as we have seen, to a desire to see it rewarded. In this world at least, it is our disposition to punish and approval of punishment which restrains acts of injustice, and which thus helps to restrain the actions of individuals within due bounds. Justice in this sense of the term is of critical importance, and Smith went on to

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notice that while nature ‘exhorts mankind to acts of beneficence, by the pleasing consciousness of deserved reward’, beneficence is still the ‘ornament which embellishes, not the foundation which supports the building’. He continued: Justice, on the contrary, is the main pillar that upholds the whole edifice. If it is removed, the great, the immense fabric of human society . . . must in a moment crumble into atoms. (II.ii.3.4) In Smith’s eyes, a fundamental pre–condition of social order was a system of positive law, embodying our conception of those rules of conduct which relate to justice. He added that these rules must be administered by some system of government or ‘magistracy’, on the ground that: As the violation of justice is what men will never submit to from one another, the public magistrate is under a necessity of employing the power of the commonwealth to enforce the practice of this virtue. Without this precaution, civil society would become a scene of bloodshed and disorder, every man revenging himself at his own hand whenever he fancied he was injured. (VII.iv.36) It now remains to be seen just how ‘government’ originates, to explain the sources of its authority, and the basis of obedience to that authority.

The Stages Of Society
It was in the lectures on justice rather than the TMS that Smith set out to consider the grounds on which we were disposed to obey our ‘magistrates’, finding the basis of obedience in the principles of utility and authority. In practice, Smith placed most emphasis on the latter and identified four main sources: personal qualifications, age, fortune, and birth. Taking these four sources in turn, he argued that personal qualities such as wisdom, strength, or beauty, while important as sources of individual distinction, were yet of rather limited political value, since they are all qualities which are open to dispute. As a result, he suggests that age, provided there is no ‘suspicion of dotage’, represents a more important source of authority and of respect, since it is ‘a plain and palpable quality’ about which there can be no doubt’. Smith also observed that as a matter of fact age regulates rank among those who are in every other respect equal in both primitive and civilized societies, although its relative importance in the two cases is likely to vary. The third source of authority, wealth, of all the sources of power is perhaps the most emphasized by Smith, and here again he cites two elements. First, he noted that through an ‘irregularity’ of our moral sentiments, men tend to admire and respect the rich (rather than the poor, who may be morally more worthy) as the possessors of all the imagined conveniences of wealth. Secondly, he argued that the possession of riches may also be associated with a degree of power which arises from the dependence of the poor for their subsistence. Thus, for example, the great chief who has no other way of spending his surpluses other than in the maintenance of men, acquires retainers and dependents who:

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depending entirely upon him for their subsistence, must both obey his orders in war, and submit to his jurisdiction in peace. He is necessarily both their general and their judge, and his chieftainship is the necessary effect of the superiority of his fortune. (WN V.i.b.7) Finally, Smith argues that the observed fact of our tendency to venerate antiquity of family, rather than the upstart or newly rich, also constitutes an important source of authority which may reinforce that of riches. He concluded that: Birth and fortune are evidently the two circumstances which principally set one man above another. They are the two great sources of personal distinction, and are therefore the principal causes which naturally establish authority and subordination among men. (V.i.b.11) Having made these points, Smith then went on to argue that just as wealth (and the subsequent distinction of birth) represents an important source of authority, so in turn it opens up an important source of dispute. In this connection we find him arguing that where people are prompted by malice or resentment to hurt one another, and where they can be harmed only in respect of person or reputation, then men may live together with some degree of harmony; the point being that ‘the greater part of men are not very frequently under the influence of those passions; and the very worst men are so only occasionally.’ He went on to note: As their gratification too, how agreeable soever it may be to certain characters, is not attended with any real or permanent advantage, it is in the greater part of men commonly restrained by prudential considerations. Men may live together in society with some tolerable degree of security, though there is no civil magistrate to protect them from the injustice of those passions. (V.i.b.2) But in a situation where property can be acquired, Smith argued there could be an advantage to be gained by committing acts of injustice, in that here we find a situation which tends to give full rein to avarice and ambition. The acquisition of valuable and extensive property, therefore, necessarily requires the establishment of civil government. Where there is no property, or at least none that exceeds the value of two or three days labour, civil government is not so necessary. (ibid.) Elsewhere he remarked that ‘Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all’ (V.i.b.12). It is a government, on Smith’s argument, which in some situations at least is supported by a perception of its utility, at least on

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the side of the ‘rich’, but which must gradually have evolved naturally and independently of any consideration of that necessity. In Smith’s own words: Civil government supposes a certain subordination. But as the necessity of civil government gradually grows up with the acquisition of valuable property, so the principal causes which naturally introduce subordination gradually grow up with the growth of that valuable property. (V.i.b.3) In this way Smith stated the basic principles behind the origin of government and illustrated the four main sources of authority. In the subsequent part of the argument he then tried to show the way in which the outlines of society and government would vary, by reference to four broad socio–economic types: the stages of hunting, pasture, agriculture, and commerce. One of the more striking features of Smith’s argument is in fact the link which he succeeded in establishing between the form of economy prevailing (i.e. the mode of earning subsistence) and the source and distribution of power or dependence among the classes of men which make up a single ‘society’. The first stage of society was represented as the ‘lowest and rudest’ state, such ‘as we find it among the native tribes of North America’ (WN V.i.a.2). In this case, life is maintained through gathering the spontaneous fruits of the soil, and the dominant activities are taken to be hunting and fishing—a mode of acquiring subsistence which is antecedent to any social organization in production. As a result, Smith suggested that such communities would be small in size and characterized by a high degree of personal liberty—due of course to the absence of any form of economic dependence. Smith also observed that in the absence of private property which was also capable of accumulation, disputes between different members of the community would be minor ‘so there is seldom any established magistrate or any regular administration of justice’ (V.i.b.2) in such states. He added: Universal poverty establishes there universal equality, and the superiority, either of age, or of personal qualities, are the feeble, but the sole foundations of authority and subordination. There is therefore little or no authority or subordination in this period of society. (V.i.b.7) The second social stage is that of pasture, which Smith represented as a ‘more advanced state of society, such as we find it among the Tartars and Arabs’ (V.i.a.3). Here the use of cattle is the dominant economic activity and this mode of subsistence meant, as Smith duly noted, that life would tend to be nomadic and the communities larger in size than had been possible in the preceding stage. More dramatically, Smith observed that the appropriation of herds and flocks which introduced an inequality of fortune, was that which first gave rise to regular government. We also find here a form of property which can be accumulated and transmitted from one generation to another, thus explaining a change in the main sources of authority as compared to the previous period. As Smith put it:

3

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The second period of society, that of shepherds, admits of very great inequalities of fortune, and there is no period in which the superiority of fortune gives so great authority to those who possess it. There is no period accordingly in which authority and subordination are more perfectly established. The authority of an Arabian scherif is very great; that of a Tartar khan altogether despotical. (V.i.b.7) At the same time it is evident that the mode of subsistence involved will ensure a high degree of dependence on the part of those who must acquire the means of subsistence through the exchange of personal service, and those who, owning the means of subsistence, have no other means of expending it save on the maintenance of dependents, who also contribute to their military power. Smith added that while the distinction of birth, being subsequent to the inequality of fortune, can have no place in a nation of hunters, this distinction ‘always does take place among nations of shepherds’ (V.i.b.10). Since the great families lack, in this context, the means of dissipating wealth, it follows that ‘there are no nations among whom wealth is likely to continue longer in the same families’ (ibid.). The third economic stage is perhaps the most complicated of Smith’s four–fold classification at least in the sense that it seems to have a lower, middle and upper phase. Thus for example the initial stage may be seen to correspond to that situation which followed the overthrow of Rome by the barbarians; pastoral nations which had, however, acquired some idea of agriculture and of property in land. Smith argued that such peoples would naturally adapt existing institutions to their new situation and that their first act would be to divide the available territories, introducing by this means a settled abode and some form of rudimentary tillage; i.e. the beginnings of a new form of productive activity. Under the circumstances outlined, each estate or parcel of land would assume the character of a separate principality, while presenting many of the features of the second stage. As in the previous case, for example, the basis of power is property, and, as before, those who lack the means of subsistence can acquire it only through the exchange of personal service, thus becoming members of a group who ‘having no equivalent to give in return for their maintenance’ must obey their lord ‘for the same reason that soldiers must obey the prince who pays them’ (III.iv.5). Each separate estate could thus be regarded as stable in a political sense in that it was based on clear relations of power and dependence, although Smith did emphasize that there would be an element of instability in terms of the relations between the principalities; a degree of instability which remained even after the advent of the feudal period with its complex of rights and obligations. In Smith’s words the authority possessed by the government of a whole country ‘still continued to be, as before, too weak in the head and too strong in the inferior members’ (III.iv.9), a problem basically created by the fact that: In those disorderly times, every great landlord was a sort of petty prince. His tenants were his subjects. He was their judge, and in some respects their legislator in peace, and their leader in war. He made war according to his own discretion, frequently against his neighbours, and sometimes against his sovereign. (III.ii.3) It was a situation which effectively prevented economic development, and one where the open

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country remained ‘a scene of violence, rapine, and disorder’ (III.iv.9). The middle stage of this period may be represented as preserving the institutions of the previous stage (save with the substitution of the feudal for the allodial system of land–tenure), albeit with the significant addition of self–governing cities paying a ‘rent certain’ to the king. In this way, Smith suggested, the kings were able to acquire a source of power capable of offsetting that of the great lords, by way of a tactical alliance with the cities. Smith made exactly this point when remarking that mutual interest would lead the burghers to ‘support the king, and the king to support them against the lords. They were the enemies of his enemies, and it was his interest to render them as secure and independent of those enemies as he could’ (III.iii.8). Two significant developments were then traced from this situation, itself a response to the political instability of the agrarian period. First, the cities, as self–governing communities (a kind of independent republics Smith calls them) would create the essential conditions for economic development (personal security), while, secondly, their development would also generate an important shift in the balance of political power. The upper stage of the period differs from the previous phase most obviously in that Smith here examines a situation where the trade and manufactures of the cities had had a significant impact on the power of the nobles, by providing them for the first time with a means of expending their surpluses. It was this trend, Smith suggested, which led the great proprietors to improve the form of leases (with a view to maximizing their exchangeable surpluses) and to the dismissal of the excess part of their tenants and retainers—all with consequent effects on the economic and thus the political power of this class. As Smith put it: For a pair of diamond buckles perhaps, or for something as frivolous and useless, they exchanged the maintenance, or what is the same thing, the price of the maintenance of a thousand men for a year, and with it the whole weight and authority which it could give them. (III.iv.10) The fourth and apparently final economic stage (commerce) may be simply described as one wherein all goods and services command a price, thus effectively eliminating the direct dependence of the feudal period and to this extent diminishing the power to be derived from the ownership of property. Thus for example Smith noted that in the present stage of Europe a man of ten thousand a year might maintain only a limited number of footmen, and that while tradesmen and artificers might be dependent on his custom, none the less ‘they are all more or less independent of him, because generally they can all be maintained without him’ (III.iv.11). From the standpoint of the economics of the situation, the significant development was that of a two sector economy at the domestic level where the constant drive to better our condition could provide the maximum stimulus to economic growth within an institutional framework which ensured that the pursuit of private interest was compatible with public benefit. From the standpoint of the politics of the situation, the significant development was a new source of wealth which was more widely distributed than previously, and which ultimately had the effect of limiting the power of kings by shifting the balance of consideration away from the old landed aristocracy and towards a new mercantile class. In the words of John Millar, it was a general trend which

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served to propagate sentiments of personal independence, as a result of a change in the mode of earning subsistence; a trend which must lead us to expect that ‘the prerogatives of the monarch and of the ancient nobility will be gradually undermined, that the privileges of the people will be extended in the same proportion, and that power, the usual attendant of wealth, will be in some measure diffused over all the members of the community.’

4

Once again we face a situation where a change in the mode of earning subsistence has altered the balance and distribution of political power, with consequent effects on the nature of government. Once again, we find a situation where the basis of authority and obedience are found in the principles of utility and authority, but where the significance of the latter is diminished (and the former increased) by the change in the pattern of dependence. It is also a situation where the ease with which fortunes may be dissipated makes it increasingly unlikely that economic, and thus political, power, will remain in the hands of particular families over long periods of time. The two areas of argument just considered disclose a number of interesting features. The TMS for example can be seen to accept the proposition that mankind are always found in ‘troops and companies’ and to offer an explanation as to how it is that man is fitted for the society of his fellows. In developing this argument Smith, as we have seen, makes much of the importance of the rules of morality (including justice), while offering an explanation of their origin of a kind which places him in the anti–rationalist tradition of Hutcheson and Hume. At the same time it is evident that the form of argument used discloses Smith’s awareness of the fact that human experience may vary; a point which is made explicitly in the TMS, and which is reflected in the fact that he did not seek to define the content of general rules in any but the most general terms. The historical argument on the other hand, can be seen to offer an explanation for the origin of government (whose necessity was merely postulated in the TMS), and at the same time indirectly to throw some light on the causes of change in accepted patterns of behaviour as a result of the emphasis given to the four socio–economic stages of growth. This same argument may also throw into relief certain problems which the TMS does not formally handle; by drawing attention to the fact that societies are not homogeneous, and to the possibility of a conflict of values. Interestingly enough, exactly this point is made in the WN in the course of a discussion of religion: ‘In every civilized society, in every society where the distinction of ranks has once been completely established, there have been always two different schemes or systems of morality current at the same time’ (V.i.g.10). But for the present purpose the most important connections are those which exist between the ethics and jurisprudence on the one hand, and the economics on the other. The historical analysis, for example, has the benefit of showing that the commercial stage or exchange economy may be regarded as the product of certain historical processes, and of demonstrating that where such a form of economy prevails, a particular social structure or set of relations between classes is necessarily presupposed. At the same time the argument (developed especially in Book III of the WN) helps to demonstrate that a particular form of government will be associated with the same socio–economic institutions; a form of government which in the

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particular case of England had been perfected by the Revolution Settlement, and which reflected the growing importance of the ‘middling’ ranks. But perhaps the links between the economic analysis and the TMS are even more readily apparent and possibly more important. As we have seen, the whole point of the TMS is to show that society, like the individual men who make it up, represents something of a balance between opposing forces; a form of argument which gave due weight to our self–regarding propensities (much as Hutcheson had done) but which departs from the teaching of Hutcheson in denying that ‘Self–love was a principle which could never be virtuous in any degree or in any direction’ (TMS VII.ii.3.12). In much the same way Smith denied Mandeville’s suggestion that the pursuit of ‘whatever is agreeable in dress, furniture, or equipage’ should be regarded as ‘vicious’ (VII.ii.4.12). To both he in effect replied that the ‘condition of human nature were peculiarly hard, if those affections, which, by the very nature of our being, ought frequently to influence our conduct, could upon no occasion appear virtuous, or deserve esteem and commendation from any body’ (VII.ii.3.18). In many respects Smith was at his most successful in showing that the desire to be approved of by our fellows, which was so important in the discussion of moral judgement, was also relevant in the economic sphere. As we have seen, he argued that the whole object of bettering our condition was to find ourselves as objects of general esteem, and noted elsewhere that ‘we cannot live long in the world without perceiving that the respect of our equals, our credit and rank in the society we live in, depend very much upon the degree in which we possess, or are supposed to possess’, the advantages of external fortune (VI.i.3). While the pursuit of status and the imagined conveniences of wealth were important sources of dispute, Smith also emphasized their economic advantage even within the confines of the TMS. It is such drives, he asserted, which serve to rouse and keep in ‘continual motion the industry of mankind’ (IV.i.1.10) and he went on to note that those who have attained fortune are, in expending it, led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. (ibid.) Equally interesting is the fact that Smith should also have discussed at such length the means whereby the poor man may seek to attain the advantages of fortune, in emphasizing the importance of prudence, a virtue which, being uncommon, commands general admiration and explains that ‘eminent esteem with which all men naturally regard a steady perseverance in the practice of frugality, industry, and application, though directed to no other purpose than the acquisition of fortune’ (IV.i.2.8). It is indeed somewhat remarkable that it is the TMS, and in particular that portion of it (Part VI) which Smith wrote just before his death, that provides the most complete account of the psychology of Smith’s public benefactor: the frugal man.

Economic Theory And The Exchange Economy

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In terms of Smith’s teaching, his work on economics was designed to follow on his treatment of ethics and jurisprudence, and therefore to add something to the sum total of our knowledge of the activities of man in society. To this extent, each of the three subjects can be seen to be interconnected, although it is also true to say that each component of the system contains material which distinguishes it from the others. One part of Smith’s achievement was in fact to see all these different subjects as parts of a single whole, while at the same time differentiating economics from them. Looked at in this way, the economic analysis involves a high degree of abstraction which can be seen in a number of ways. For example, in his economic work, Smith was concerned only with some aspects of the psychology of man and in fact confined his attention to the self–regarding propensities; a fact which is neatly expressed in his famous statement that ‘It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest’ (WN I.ii.2). Moreover, Smith was not concerned, at least in his formal analysis, with a level of moral or social experience other than that involved in a ‘mercenary exchange of good offices according to an agreed valuation’ (TMS II.ii.3.2); in short, all that the economic work requires is a situation where the minimum condition of justice obtains. Given this basic premiss, together with the hypothesis of self–interest, Smith then set out to explain the interdependence of economic phenomena. There are of course two types of account as to the way in which Smith fulfilled these purposes; one represented by the state of his knowledge when he left Glasgow in 1763, and the other by the WN itself. We now have two versions of Smith’s lecture course, together with the so called ‘early draft’ of the WN; sufficient at least to provide an adequate guide to the ground covered. There are differences between these documents: LJ (A), for example, while generally more elaborate, is less complete than LJ (B): it does not, for example, consider such topics as Law’s Bank, interest, exchange, or the causes of the slow progress of opulence. The ED, on the other hand, contains a much more elaborate account of the division of labour than that provided in either of the lecture notes, although it has nothing to say regarding the link between the division of labour and the extent of the market. While the coverage of the ED is very similar to that found in LJ (B) it is also true to say that topics other than the division of labour are dealt with in note form. But these are basically differences in detail: the three documents are not marked by any major shifts of emphasis or of analytical perspective, and it is this fact which makes it quite appropriate to take LJ (B) as a reasonable guide to the state of Smith’s thought on economics in the early 1760s. Turning now to this version of the lectures, one cannot fail to be struck by the same quality of system which we have already had occasion to note elsewhere. The lectures begin with a discussion of the natural wants of man; a discussion already present in the ethics. Smith links this thesis to the development of the arts and of productive forces, before going on to remark on the material enjoyments available to the ordinary man in the modern state as compared to the chief of some savage nation. In both the lectures and the ED Smith continued to note that, while it cannot be difficult to explain the superior advantages of the rich man as compared to the savage, it seems at first sight more difficult to explain why the ‘peasant should likewise be better provided’ (ED 2.2), especially given the fact that he who ‘bears, as it were, upon his shoulders the whole fabric of human society, seems himself to be pressed down below ground by the weight, and to be buried out of sight in the lowest foundations of the building’ (ED 2.3). The answer to this seeming paradox was found in the division of labour, which explained the great improvement in the productive powers of modern man. Smith continued to examine the

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sources of so great an increase in productivity, tracing the origin of the institution to the famous propensity to ‘truck, barter and exchange’, while observing that the scope of this development must be limited by the extent of the market. Examination of the division of labour led directly to Smith’s point that unlike the savage the modern man was largely dependent on the labour of others for the satisfaction of his full range of wants, thus directing attention to the importance of exchange. In the course of this discussion, Smith introduced the problem of price and the distinction between natural and market price. In the Lectures, natural price (or supply price) was largely defined in terms of labour cost, the argument being that: A man then has the natural price of his labour when it is sufficient to maintain him during the time of labour, to defray the expence of education, and to compensate the risk of not living long enough and of not succeeding in the business. When a man has this, there is sufficient encouragement to the labourer and the commodity will be cultivated in proportion to the demand. (LJ (B) 227, ed. Cannan 176) Market price, on the other hand, was stated to be regulated by ‘quite other circumstances’, these being: the ‘demand or need for the commodity’, the ‘abundance or scarcity of the commodity in proportion to the need of it’ and the ‘riches or poverty of those who demand’ (LJ (B) 227–8, ed. Cannan 176–7). Smith then went on to argue that while distinct, these prices were ‘necessarily connected’ and to show that where the market exceeded the natural price, labour would crowd into this employment, thus expanding the supply, and vice versa, leading to the conclusion that in equilibrium the two prices would tend to coincide. Smith quite clearly understood that resources would tend to move between employments where there were differences in the available rates of return, thus showing a grasp of the interdependence of economic phenomena which led him to speak of a ‘natural balance of industry’ and of the ‘natural connection of all trades in the stock’ (LJ (B) 233–4, ed. Cannan 180–81). Progressing logically from this point, Smith proceeded to show that any policy which prevented the market prices of goods from coinciding with their supply prices, such as monopolies or bounties, would tend to diminish public opulence and derange the distribution of stock between different employments. The discussion of price led in turn to the treatment of money as the means of exchange; to a review of the qualities of the metals which made them so suitable as a means of exchange and to the discussion of coinage. Smith also included an account of the problems of debasement at this stage of his analysis, making in the course of his argument a point with which he is not always associated, namely, that where the value of money is falling ‘People are disposed to keep their goods from the market, as they know not what they will get for them’ (LJ (B) 242, ed. Cannan 188). It was in the course of this analysis that Smith defined money as merely the instrument of exchange, at least under normal circumstances, going on to suggest that it was essentially a

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‘dead stock in itself’; a point which helped to confirm ‘the beneficial effects of the erection of banks and paper credit’ (LJ (B) 246, ed. Cannan 191). This argument led quite naturally to a critique of the prejudice that opulence consists in money and to Smith’s argument that mercantile policy as currently understood was essentially self– contradictory, and that it hindered the division of labour by artificially restricting the extent of the market. It was a short step to the conclusion (stated with characteristic caution) that: From the above considerations it appears that Brittain should by all means be made a free port, that there should be no interruptions of any kind made to forreign trade, that if it were possible to defray the expences of government by any other method, all duties, customs, and excise should be abolished, and that free commerce and liberty of exchange should be allowed with all nations and for all things.

(LJ (B) 269, ed. Cannan 209)

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It will be obvious that that section of the lectures which deals with ‘cheapness and plenty’ does in fact contain many of the subjects which were to figure in the WN. It also appears that many of his central ideas were already present in a relatively sophisticated form: ideas such as equilibrium price, the working of the allocative mechanism, and the associated concept of the ‘natural balance’ of industry. Smith also made allowance for the importance of ‘stock’ both in discussing the natural connection of all stocks in trade and with reference to the division of labour, while the distinction between employer and employed is surely implied in the discussion of the individual whose sole function is to contribute the eighteenth part of a pin. Yet at the same time there is also a good deal missing from the lectures; there is, for example, no clear distinction between factors of production and categories of return, not to mention the macro–economic analysis of the second Book of the WN with its model of the ‘circular flow’ and discussion of capital accumulation. While the distinction between rent, wages, and profits, may have come from James Oswald, or emerged as the natural consequence of Smith’s own reflection on his lectures (which seems very probable), the macro–economic model which finally appeared in the WN may well have owed something, either directly or indirectly, to Smith’s contact with the Physiocrats, and especially those who revised the system, such as Mercier de la Rivière, Baudeau and Turgot.

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It is obviously difficult to the point of impossibility to establish the extent of Smith’s debts to his predecessors, and Dugald Stewart probably had the right of it when he remarked that ‘After all, perhaps the merit of such a work as Mr Smith’s is to be estimated less from the novelty of the principles it contains, than from the reasonings employed to support these principles, and from the scientific manner in which they are unfolded in their proper order and connexion’ (Stewart, IV.26). While Stewart duly noted that Smith had made an original contribution to the subject it need not surprise us to discover that the WN (like the TMS) may also represent a great synthetic performance whose real distinction was to exhibit a ‘systematical view of the most important articles of Political Economy’ (Stewart, IV.27); a systematical view whose content shows a clear development both from Smith’s state of knowledge as it existed in the 1760s, and from that represented by the Physiocrats as a School. While it would be inappropriate to review here the pattern of this development in detail (a task which we have attempted to fulfill in the notes to the

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text) it may be useful to delineate at least some of the elements of the reformulated system albeit in the broadest terms. The first three chapters of the WN begin with an examination of the division of labour which The most obvious changes, as closely follows the elaborate account provided in the ED. regards the latter document, relate to the provision of a separate chapter linking the division of labour to the extent of the market using an account which often parallels that found in the two It is also ‘fragments’, which W. R. Scott had thought to be part of the Edinburgh Lectures. interesting to note that the discussion of inequality is omitted from the WN and that the argument as a whole is no longer prefaced by a statement of the thesis of ‘natural wants’. The following chapter is also recognizably a development of the earlier work, and deals with the inconveniences of barter, the advantages of the metals as a medium of exchange, and the necessity for coinage; the only major difference relates to arrangement in that the discussion of money now precedes that of price. Chapter v, which leads on from the previous discussion, does however break new ground in discussing the distinction between real and nominal price. In this place Smith was anxious to establish the point that while the individual very naturally measures the value of his receipts in money terms, the real measure of welfare is to be established by the money’s worth, where the latter is determined by the quantity of products (i.e. labour commanded) which can be acquired. In this chapter Smith was not so directly concerned with the problem of exchange value as normally understood, so much as with finding an invariable measure of value which would permit him to compare levels of economic welfare at different periods of time. It was probably this particular perspective which led him to state but not to ‘solve’ the so–called ‘paradox of value’—a paradox which he had already explained in the Lectures.

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Chapter vi leads on to a discussion of the component parts of the price of commodities and once more breaks new ground in formally isolating the three main factors of production and the three associated forms of monetary revenue: rent, wages and profit. These distinctions are, of course, of critical importance, and perhaps Smith’s acute awareness of the fact is reflected in his anxiety to show how easily they may be confused. Chapter vii then proceeds to discuss the determinants of price, developing ideas already present in the Lectures but in the more sophisticated form appropriate to the three–fold factor division. This section of Smith’s work is perhaps among the best from a purely analytical point of view, and is quite remarkable for the formality with which the argument unfolds. For example, the analysis is explicitly static in that Smith takes as given certain rates of factor payment (the ‘natural’ rates), treating the factors as stocks rather than flows. Smith’s old concept of ‘natural price’ is then redefined as obtaining when a commodity can be sold at a price which covers the natural rates of rent, wages, and profits, i.e. its cost of production. Market price, on the other hand, (the ‘actual’ price) is shown to be determined by specific relations of demand and supply while both prices are interconnected in that any divergence of the market from the natural price must raise or lower the rates of factor payment in relation to their natural rates, thus generating a flow of factors which has the effect of bringing the market and natural prices to equality.

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The argument then proceeds to the discussion of those forces which determine the ‘natural’ rates of return to factors. Chapter viii takes up the problem of wages, and argues that this form of return is payable for the use of a productive resource and normally arises where ‘the labourer is one person, and the owner of the stock which employs him another’ (I.viii.10). While making allowance for the relative importance of the bargaining position of the two parties, Smith

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concluded that the wage rate would normally be determined by the size of the wages fund and the supply of labour, where both are affected by the price of wage goods. Now this argument means that the wage rate actually payable in a given (annual) period may vary considerably (i.e. the prevailing or natural rate of the theory of price) as compared to other such time periods, and that it may be above, below, or equal to, the subsistence wage (where the latter must be sufficient to maintain the labourer and his family, including an allowance for customary expense). Smith illustrates these possibilities in terms of the examples of advancing, stationary, and declining economies, using this argument to suggest that whenever the prevailing wage rate sinks below, or rises above, the subsistence wage, then in the long run there will be a population adjustment. Chapter ix shows the same basic features: that is, Smith sets out to show why profit accrues and in so doing differentiates it from interest as a category of return, while arguing that it is not a return for the work of ‘inspection and direction’ but rather for the risks involved in combining the factors of production. Again, there is a ‘static’ element in that Smith, while admitting the difficulty of finding an average rate of profit, argues that some indication will be given by the rate of interest, and that the rate of profit will be determined by the level of stock in relation to the business to be transacted together with the prevailing wage rate. Once more there is also a concern with the dynamics of the case, i.e. with the trend of profits over time, the conclusion being that profits, like wages, would tend to fall, as the number of capitals increases. The following chapter is a direct development from the two which preceded it and is chiefly concerned with the ‘static’ aspects of the theory of allocation and returns. In dealing with the theory of ‘net advantage’, Smith provides a more elaborate account of the doctrine already found in the Lectures, and there confined to the discussion of labour. In the present context Smith dropped the assumption of given rates of factor payment (as made at the beginning of I.vii) in explaining that rates of monetary return may be expected to vary with the agreeableness or disagreeableness of the work, the cost of learning a trade, the constancy or inconstancy of employment, the great or small trust which may be involved, and the probability or improbability of success. Of these it is argued that only the first and the last affect profits, thus explaining the greater uniformity of rates of return (as compared to wages) in different employments. The whole purpose of the first section of this chapter is to elaborate on the above ‘circumstances’ and to show, at least where there is perfect liberty, that different rates of monetary return need occasion no difference in the ‘whole of the advantages and disadvantages, real or imaginary’ which affect different employments (I.x.b.39). In terms of the discussion of the price mechanism, we now have a complex of rates of return in different employments and an equilibrium situation where the rate of return in each type of employment stands in such a relation to the others as to ensure that there is no tendency to enter or leave any one of them. The same argument adds a further dimension of difficulty to Smith’s account of the allocative mechanism, by drawing attention to the problem of moving between employments which require different skills or levels of training.

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Mobility is in fact the theme of the second part of the chapter where (again elaborating on ideas present in the Lectures) Smith shows the various ways in which the policy of Europe prevented the equality of ‘advantages and disadvantages’ which would otherwise arise; citing such examples

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as the privileges of corporations, the statute of apprenticeship, public endowments and especially the poor law. The closing chapter of Book I is concerned with the third and final form of return—rent—and is among the longest and most complex of the whole work. But perhaps the following points can be made when looking at the chapter from the standpoint of Smith’s analytical system. First, and most obviously, the general structure of the chapter is similar to those which deal with wages and profit. That is, Smith initially tries to explain what rent is in suggesting that it is the price which must be paid for a scarce resource which is a part of the property of individuals, and in arguing that it must vary with the fertility and situation of the land. Unlike the other forms of revenue, Smith emphasized that rent was unique in that it accrued without necessarily requiring any effort from those to whom it was due, and that what was a cost to the individual farmer was really a surplus as far as society was concerned; a point which led Smith to the famous statement that rent ‘enters into the composition of the price of commodities in a different way from wages and profit. High or low wages and profit, are the causes of high or low price; high or low rent is the effect of it.’ (I.xi.a.8.) Secondly, it is noteworthy that the analysis continues the ‘static’ theme already found in the theory of price, wages, and profits, by concentrating attention on the forces which determine the allocation of land between alternative uses (such as the production of corn and cattle) and in suggesting, at least in the general case, that rent payments would tend to equality in these different uses. Thirdly, it is noteworthy that Smith should have included a dynamic perspective in the discussion of allocation, of such a kind as to make his historical sketch of the changing pattern of land use an important, if rather neglected, aspect of his general theory of economic development. Finally, Smith continues the dynamic theme in the form in which it appears in the previous chapters by considering the long term trends as far as this form of return is concerned; the conclusion being that rent payments must increase as more land is brought into use under the pressure of a growing population, and that the real value of such payments must rise given that the real price of manufactures tends to fall in the long run. If we look back over this Book from the (rather narrow) perspective of Smith’s system, it will be evident that the argument is built up quite logically by dealing with a number of separate but inter–related subjects such as costs, price, and returns. At the same time two themes appear to run through the treatment of the different subjects: a static theme in that Smith is often concerned to explain the forces which determine the prevailing rates of return at particular points in time, together with the working of the allocative mechanisms, with factors treated as stocks rather than as flows; and, secondly, a dynamic aspect where Smith considers the general trends of factor payments over long periods, together with the pattern of land use and the probable changes in the real value of wage goods and manufactures. Both of these major themes were to find a place in the analysis of the following Books. The Introduction to Book II sets the theme of the following chapters by taking the reader back to the division of labour and by re–iterating a point which had already been made in the Lectures, namely that the division of labour depends on the prior accumulation of stock. An important

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difference here, however, as compared to the Lectures, is to be found in the fact that the task of accumulation is now seen to face the employer of labour rather than the labourer himself. Chapter i then proceeds to elaborate on the nature of stock and its applications in suggesting that the individual may devote a part of his ‘stock’ to consumption purposes, and therefore earn no revenue or income from it, while a part may be devoted to the acquisition of income. In the latter case stock is divided, in the manner of the physiocrats, into circulating and fixed capital; it is also shown that different trades will require different combinations of the two types of stock and that no fixed capital can produce an income except when used in combination with a circulating capital. Reasoning by analogy, Smith proceeded to argue that the stock of society taken as a whole could be divided into the same basic parts. In this connection he suggested that in any given period (such as a year) there would be a certain stock of goods, both perishable and durable reserved for immediate consumption, one characteristic being that such goods were used up at different rates. Secondly, he argued that society as a whole would possess a certain fixed capital, where the latter included such items as machines and useful instruments of trade, stocks of buildings which were used for productive purposes, improved lands, and the ‘acquired and useful abilities’ of the inhabitants (i.e. human capital). Finally, he identified the circulating capital of society as including the supply of money necessary to carry out circulation, the stocks of materials and goods in process held by the manufacturers or farmers, and the stocks of completed goods available for sale but still in the hands of producers or merchants as distinct from their ‘proper’ consumers. Such an argument is interesting in that it provides an example of the ease with which Smith moved from the discussion of micro– to the discussion of macro–economic issues. At the same time it serves to introduce Smith’s account of the ‘circular flow’, whereby he shows how, within a particular time period, goods available for sale are used up by the parties to exchange. In Smith’s terminology, the pattern of events is such that the necessary purchases of goods by consumers and producers features a ‘withdrawal’ from the circulating capital of society, with the resulting purchases being used up during the current period or added to either the fixed capital or the stock of goods reserved for immediate consumption. As he pointed out, the constant withdrawal of goods requires replacement, and this can be done only through the production of additional raw materials and finished goods in both main sectors (agriculture and manufactures) thus exposing the ‘real exchange which is annually made between those two orders of people’ (II.i.28). The basic division into types of capital, and this particular way of visualizing the working of the process, may well owe a great deal to the Physiocrats, even if the basic sectoral division had already been suggested by Hume. The remaining chapters of the Book are basically concerned to elaborate on the relations established in the first. For example, chapter ii makes the division into classes (proprietors, undertakers, wage–labour) explicit and establishes another connection with the analysis of Book I by reminding the reader that if the price of each commodity taken singly comprehends payments for rent, wages, and profits, then this must be true of all commodities taken ‘complexly’, so that in any given (annual) period aggregate income must be divided between the three factors of production in such a way as to reflect the prevailing levels of demand for, and supply of, them. Once again we find an implicit return to the ‘static’ analysis of Book I, save at a macro–economic level. The relationship between output and income adds something to Smith’s general picture of

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the ‘circular flow’ and at the same time enabled him to expand on his account by drawing a distinction between gross and net aggregate output where the latter is established by deducting the cost of maintaining the fixed capital (together with the costs of maintaining the money supply) from the gross product. In this way Smith was able to indicate the desirability of reducing the maintenance costs of the fixed capital, and of the money supply (a part of society’s circulating capital), introducing by this means the discussion of paper money (a cheaper instrument than coin) and of banks. The chapter goes on to provide a very long account of Scottish affairs in the 1760s and 1770s, together with a history of the Bank of England. Law’s Bank is accorded a single paragraph, in contrast to the treatment in the Lectures, on the ground that its activities had already been adequately exposed by Messrs. DuVerney and DuTot. The Bank of Amsterdam, also mentioned in the conclusion of this chapter and in the Lectures, was accorded a separate digression in WN IV.iv. The third chapter of the Book elaborates still further on the basic model by introducing a distinction between income in the aggregate and the proportion of that income devoted to consumption (revenue) or to savings. Smith also introduced the famous distinction between productive and unproductive labour at this point, where the former is involved in the creation of commodities and therefore of income while the latter is involved in the provision of services. Smith does not, of course, deny that services (such as defence or justice) are useful or even necessary, he merely wished to point out that the labour which is involved in the provision of a service is always maintained by the industry of other people and that it does not directly contribute to aggregate output. Smith’s argument was of course that funds intended to function as a capital would always be devoted to the employment of productive labour, while those intended to act as a revenue might maintain either productive or unproductive labour. Two points arise from this argument: first, that the productive capacity of any society would depend on the proportion in which total income was distributed between revenue and capital; and, secondly, that capitals could only be increased through parsimony, i.e. through a willingness to forego present advantages with a view to attaining some greater future benefit. It was in fact Smith’s view that net savings would always be possible during any given annual period, and that the effort would always be made through man’s natural desire to better his condition. Moreover, he evidently believed that wherever savings were made they would be converted into investment virtually sur le champ (thus providing another parallel with Turgot) and that the rapid progress which had been made by England confirmed this general trend. In Book II economic dynamics begins to overshadow the static branch of the subject: an important reminder that Smith’s version of the ‘circular flow’ is to be seen as a spiral of constantly expanding dimensions, rather than as a circle of constant size. It is also worth emphasizing in this connection that Smith’s concern with economic growth takes us back in a sense to the oldest part of the edifice, namely his treatment of the division of labour, the point being that the increasing size of the market gives greater scope to this institution, thus enhancing the possibilities for expansion, which are further stimulated by technical change in the shape of the flow of invention (I.i.8). The fourth and fifth chapters of this book offer further insights into the working of the ‘flow’ on the one hand, and the theory of economic growth on the other. II.iv, for example, contains not only an account of the determinants of interest, but confirms that interest is distinct from profit as a form of return, while introducing the monied interest as something separate from the manufacturing and agricultural interests.

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The following chapter adds four additional uses for capitals (again providing a close parallel with Turgot) in stating that they may be used in the wholesale or retail trades in addition to all those above mentioned. Thus as far as our understanding of the circular flow is concerned, Smith argues that the retailer in purchasing from the wholesale merchant in effect replaces the capital which the latter had laid out in purchasing commodities for sale; purchases which had themselves contributed to replace the capitals advanced by the farmers or manufacturers in creating them. In the same way, the manufacturer, for example, in making purchases of the instruments of trade replaces the outlay of some fellow ‘undertaker’ while his purchases of raw materials contribute to Smith’s enumeration of the restore the capitals laid out by the farmers on their production. different employments of capital is also relevant as far as his theory of growth is concerned, because each one can be shown to give employment to different quantities of productive labour. While he had already observed in the Lectures that agriculture was the most productive form of investment, the argument was here expanded to suggest that manufacture was the next most productive, followed by the wholesale and retail trades. He also argued with regard to the wholesale trade, that its contribution to the maintenance of productive labour varied, in declining order of importance, according as it was concerned with the home trade, the foreign trade of consumption, or the carrying trade, where the critical factor was the frequency of returns. A further dimension was added to this discussion in the opening chapter of Book III where it is suggested that, when left to their own devices, men would naturally choose to invest in agriculture, manufactures, and trade (in that order) thus contributing to maximize the rate of growth by choosing those forms of investment which generated the greatest level of output for a given injection of capital. Smith’s thesis concerning the different productivities of capital and the associated (although logically distinct) argument concerning the natural progress of opulence are sometimes regarded as being among the less successful parts of the edifice; a fact which makes it all the more important to observe the great burden which they are made to bear in the subsequent argument. In Book III, for example, Smith uses the history of Europe since the fall of the Roman Empire to confirm that the pattern of development had inverted the ‘natural’ order, in the sense that the stimulus to economic advance had initially come through the cities with their trade in surpluses. As we shall see in another context, (below, p. 55) the development of trade had given a stimulus to domestic manufactures based on the refinement of local goods or on imitation of the foreigner; a pattern of events which eventually impinged on the agrarian sector, and which is made to explain the transition to the final economic stage. Smith thus suggests that a process of development regarded as ‘natural’ from the standpoint of the theory of history, was essentially ‘unnatural’ from the standpoint of the analysis of the progress of opulence. However, the argument does explain the position of the third Book and the use there made of historical material which had been included in the Lectures, where it had been mainly intended to serve a very different purpose to that found in the WN. The second main application of the thesis is in Book IV where Smith returns to a theme which had already figured prominently in the Lectures; the critique of mercantilism. Many of the points which had been made in the earlier work undoubtedly re–appear in this section of the WN. In the WN, the mercantile system, with its associated patterns of control over the import, export, and production of commodities, is again shown to be based on an erroneous notion of wealth. Smith also argues, as he had before, that the chief engines of mercantilism, such as monopoly powers, adversely affect the allocative mechanism and to this extent affect economic welfare. But the

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main burden of his argument concerning distortion in the use of resources runs in terms not of the static allocative mechanism, so much as the essentially dynamic theory of the natural progress of opulence, the argument being that mercantile policy had diverted stock to less productive uses, with slower returns, than would otherwise have been the case. This argument is particularly marked in Smith’s treatment of the colonial relationship with America; a relationship which was central to the mercantile system as presented by Smith, and which sought to create a In this connection Smith argued that the mercantile system was self–sufficient economic unit. essentially self–contradictory: that by encouraging the output of rude products in America, Great Britain had helped (unwittingly) only to accelerate an already rapid rate of growth to an extent which would inevitably make the restrictions imposed on American manufactures unduly burdensome. As far as Great Britain was concerned, Smith believed that her concentration on the American market had in effect drawn capital from trades carried on with European outlets and diverted it to the more distant one of America, while at the same time forcing a certain amount of capital from a direct to an indirect trade. Obviously, all of this must have had an adverse effect on the rate of economic growth in Great Britain; a matter of some moment, in that, as Smith represents the case, a country with a suboptimal rate of growth happened to face an increasing burden of costs from the colonies themselves. It is a plausible, powerful, thesis which may be defended on a variety of grounds other than those on which Smith relied. But, as one shrewd contemporary critic noted, Smith’s view on the different productivities of investment was central to his case, and he begged leave to arrest his steps ‘for a moment, while we examine the ground whereon we tread: and the more so, as I find these propositions used in the second part of your work as data; whence you endeavour to prove, that the monopoly of the colony trade is a disadvantageous . . . institution.’

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The Role Of The State
While the immediately preceding sections have concentrated to a large extent on the structure and organization of Smith’s thought, perhaps enough has also been said regarding its content to illustrate the existence of another kind of ‘system’; an analytical system which treats the economy as a type of model analogous to some kind of machine whose parts are unconscious of their mutual connection, or of the end which their interaction serves to promote, but where that interaction is governed by the laws of the machine. In economic terms, these law–governed processes refer, for example, to the working of the allocative mechanism, the theory of distribution, or of economic growth. The components of the ‘model’ are of course the sectors, the classes, and the individuals whose pursuit of gain contributes to the effective working of the whole. Thus, for example, the undertaker in pursuit of gain contributes to economic efficiency by endeavouring to make ‘such a proper division and distribution of stock’ amongst his workmen as to enable them to ‘produce the greatest quantity of work possible’. The individual workman or undertaker offers his services in the most lucrative employments and helps to ensure, by this means, that goods are sold at their cost of production, and all factors are paid at their ‘natural’ rates. Similarly, the constant desire to better one’s condition contributes to the flow of savings and thus to the process of economic growth. In all these cases social benefit and economic order are the result of the self–interested actions of individuals rather than the consequences of some formal plan; indeed, Smith went further in insisting that public benefit would not and need not form any part of the normal motivation of the main actors in the drama. The famous doctrine of the invisible hand, already prefigured in the TMS in precisely this connection, was designed to

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show that the individual, in pursuing his own objectives, contributed to the public benefit, thereby promoting an end ‘which was no part of his intention’ (WN IV.ii.9).

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Now this general view of the working of economic processes is important in that it helps to explain the functions which any government ought ideally to undertake, and the way in which these functions should be performed; broadly speaking, a subject which provides the focal point of Book V. In terms of the model itself, for example, governments have no strictly economic functions, at least in the sense that the sovereign should be discharged from ‘the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society’ (IV.ix.51). And yet, the functions of the state, if minimal, are quite indispensable in the sense that it must provide for such (unproductive) services as defence, justice, and those public works which are unlikely to be provided by the market because ‘the profit could never repay the expence to any individual or small number of individuals’ (IV.ix.51). Smith’s list of public services is a short one, but the discussion of the principles on which their provision should be organized is developed at some length and is interesting for two main reasons. First, Smith argued that public services should be provided only where the market has failed to do so; secondly, he suggested that the main problems with regard to such services were those of equity and efficiency. With regard to equity, Smith suggested, for example, that public services should always be paid for by those who use them (including roads and bridges). He also defended the principle of direct payment on the ground of efficiency in arguing that it is only in this way that we can avoid the building of roads through deserts for the sake of some private interest, or a situation where a great bridge is ‘thrown over a river at a place where nobody passes, or merely to embellish the view from the windows of a neighbouring palace: things which sometimes happen, in countries where works of this kind are carried on by any other revenue than that which they themselves are capable of affording’ (V.i.d.6). At the same time Smith insisted that all public services should be provided by such bodies as found it in their interest to do so effectively, and that they should be organized in such a way as to take account of the self– interested nature of man. Smith stated his basic belief in remarking that ‘Publick services are never better performed than when their reward comes only in consequence of their being performed, and is proportioned to the diligence employed in performing them’ (V.i.b.20). He tirelessly emphasized this point, especially in reference to university teaching, while reminding his readers that the principle held good in all situations and in all trades. Of course, Smith did recognise the limitations of this principle and the fact that it would not always be possible to fund or to maintain public services without recourse to general taxation. But here again the main features of the analytical system are relevant in that they affect the way in which taxation should, where possible, be handled. Thus Smith pointed out on welfare grounds that taxation should be imposed according to the famous canons of equality, certainty, convenience, and economy, and insisted that they should not be levied in ways which infringed the liberty of the subject—for example, through the ‘odious visits’ and examinations of the tax– gatherer (V.ii.b.3–7). Similarly he argued that ideally taxes ought not to interfere with the allocative mechanism (as for example, taxes on necessities) or constitute important disincentives to the individual effort on which the working of the whole system has been seen to depend (such as taxes on profits). In short, Smith’s recommendations with regard to the functions of government are designed to ensure the freedom of the individual to pursue his own (socially

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beneficial) ends and merely require that the state should provide such services as facilitate the working of the system, while conforming to the constraints of human nature and the market mechanism. Looked at from this point of view, Smith’s discussion of the role of the state is very much a part of his general model and confirms his view that the task of political economy, considered as a part of the science of the statesman or legislator, is ‘to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves’ (IV.Intro.1). But Smith went much further than this in discussing the role of the state, and in ways which remind us of his essentially practical concerns, and of the importance of other branches of his general system such as the theory of history and the TMS. To begin with, it will already be evident that one thread which runs through the WN involves criticism of those contemporary institutions which impeded the realization in its entirety of the system of natural liberty. Broadly speaking, these impediments can be reduced to four main categories each one of which Smith wished to see removed. First, there is the problem (already raised in terms of the historical analysis) that ‘Laws frequently continue in force long after the circumstances, which first gave occasion to them, and which could alone render them reasonable, are no more’ (III.ii.4). Secondly, Smith drew attention to certain institutions which had their origins in the past but which still commanded active support; institutions such as guilds and corporations, which could still regulate the government of trades. All such arrangements were, in Smith’s view impolitic because they impeded the working of the allocative mechanism and unjust because they were a ‘violation of this most sacred property’ which ‘every man has in his own labour’ (I.x.c.12). In a very similar way Smith commented on the problems presented by the poor law and the laws of settlement and summarized his appeal to government in these terms: ‘break down the exclusive privileges of corporations, and repeal the statute of apprenticeship, both which are real encroachments upon natural liberty, and add to these the repeal of the law of settlements . . .’ (IV.ii.42). Thirdly, Smith criticised the continuing use of positions of privilege, such as monopoly powers, which did not necessarily have any particular link with the past. Here again the basic theme remains, that such institutions are impolitic and unjust: unjust because they are positions of privilege and impolitic because they again affect the working of the allocative mechanism, being besides, ‘a great enemy to good management’ (I.xi.b.5). Finally, we have the main theme of Book IV which we have already had occasion to mention; that is Smith’s call for a reform of national policy in so far as that was represented by the mercantile system. All this amounts to a very considerable programme of reform, although, quite characteristically, Smith recognized that reality would fall a long way short of perfection, and that it could do so without damage to that fundamental drive to better our condition or to the capacity of that drive to overcome ‘a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations’ (IV.v.b.43). Smith recognized the existence of many practical difficulties; that people are attached to old forms and institutions for example, quite as much as to old families and kings, and also that sectional economic pressures would always find some means of influencing the legislature in their favour, precisely because of those same economic forces which helped to explain the historical dominance of the House of Commons in England. For such reasons he concluded that ‘To expect, indeed, that the freedom of trade should ever be

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entirely restored in Great Britain, is as absurd as to expect that an Oceana or Utopia should ever be established in it’ (IV.ii.43). If points such as these contribute to qualify the rather ‘optimistic’ thesis with which Smith is generally associated, the impression is further confirmed by those passages in the WN (occurring mainly in Book V) which bear more directly on the analysis of the TMS. In the former work, it will be remembered that welfare is typically defined in material terms; in terms of the level of real income, i.e. the extent to which the individual can command the produce (or labour) of others. On the other hand, in the philosophical work welfare was defined more in terms of the quality of life attainable, where ‘quality’ refers to a level of moral experience greater than that involved in the ‘mercenary exchange of good offices according to an agreed valuation’. There is of course no inconsistency between these two positions, since the two major books, while analytically linked, in fact refer to different areas of human experience. But at the same time Smith made a number of points in the WN which establish an important link between the philosophical and economic aspects of his study of man in society, while constituting a reminder that welfare should not be considered solely in economic terms. In this connection Smith drew attention to the fact that the worker in a ‘large manufactory’ was liable to the temptations of bad company with consequent effects on moral standards (I.viii.48). In the same vein he also mentioned the problems presented by large cities where, unlike the rich man who is noticed by the public and who therefore has an incentive to attend to his own conduct, the poor man is ‘sunk in obscurity and darkness. His conduct is observed and attended to by nobody, and he is therefore very likely to neglect it himself, and to abandon himself to every sort of low profligacy and vice.’ (V.i.g.12.) To this extent, the importance of the spectator is undermined, and so too may be those faculties and propensities on which moral experience has been seen to depend (a separate point). For Smith drew attention to the ‘fact’ that the division of labour which had contributed to economic growth through the subdivision and simplification of productive processes, had at the same time confined the activities of the worker to a few simple operations which gave no stimulus to the exercise of his mind, thus widening the gulf between the philosopher and the ordinary man or his employer. Smith believed that the worker could lose the habit of mental exertion, thus gradually becoming as ‘stupid and ignorant as it is possible for a human creature to become’ and he went on, in a famous passage, to remark: The torpor of his mind renders him, not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life. (V.i.f.50) As Smith duly noted, this general trend could produce the apparently paradoxical result that while the inhabitants of the fourth economic stage enjoyed far greater material benefits than those available to the hunter or savage, yet the latter would be more likely to exercise his mental faculties and to this extent be ‘better off’ (V.i.f.51). Smith recognized that the occupations of the savage were unlikely to produce an ‘improved and refined understanding’, but his main point was that in the modern state this refinement can only be attained by the few who are able to reflect at large on a wide range of problems, including the social. As Smith put it, in a passage which once

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again reminds us of the importance of the Astronomy and of the problems of stratification in society: The contemplation of so great a variety of objects necessarily exercises their minds in endless comparisons and combinations, and renders their understandings, in an extraordinary degree, both acute and comprehensive. Unless those few, however, happen to be placed in some very particular situations, their great abilities, though honourable to themselves, may contribute very little to the good government or happiness of their society. Notwithstanding the great abilities of those few, all the nobler parts of the human character may be, in a great measure, obliterated and extinguished in the great body of the people. (V.i.f.51) Smith’s belief that the ‘labouring poor, that is, the great body of the people’ (V.i.f.50) might suffer a kind of ‘mental mutilation’ led him directly to the discussion of education. To some extent he argued that market forces had proved themselves capable of the effective provision of this service, especially with regard to the education of women (V.i.f.47), and he also noted that it was the absence of such pressures which had enabled the ancient universities to become ‘the sanctuaries in which exploded systems and obsolete prejudices’ had found support and protection (V.i.f.34). Yet at the same time, he did not believe that the public could rely on the market, not least because the lower orders could scarce afford to maintain their children even in infancy, and he went on to note, with regard to the children of the relatively poor, that ‘As soon as they are able to work, they must apply to some trade by which they can earn their subsistence’ (V.i.f.53). Smith therefore advocated the provision of parish schools on the Scottish model wherein the young could be taught to read and to acquire the rudiments of geometry and mechanics— provided of course that their masters were ‘partly, but not wholly paid by the publick’ (V.i.f.55). Smith even went so far as to suggest that the public should impose ‘upon almost the whole body of the people the necessity of acquiring those most essential parts of education, by obliging every man to undergo an examination or probation in them before he can obtain the freedom in any corporation, or be allowed to set up any trade’ (V.i.f.57). Smith also advocated that the better off, despite their superior (economic) advantages in acquiring education, should be required to attain a rather higher standard of knowledge ‘by instituting some sort of probation, even in the higher and more difficult sciences, to be undergone by every person before he was permitted to exercise any liberal profession, or before he could be received as a candidate for any honourable office of trust or profit’ (V.i.g.14). Such policies were defended on the ground of benefit to the individual, but also for more practical reasons. The labourer armed with a knowledge of the rudiments of geometry and mechanics was likely to be better placed to perform his tasks effectively and to continue to see how they could be improved. Similarly, Smith suggested that an educated people would be better placed to see through the interested claims of faction and sedition, while in addition an ‘instructed and intelligent people . . . are always more decent and orderly than an ignorant and stupid one’. Such a people, he continued (in a strain which reminds us of the importance of the earlier discussion of political obligation) are also more likely to obtain the respect of their ‘lawful superiors’ and to reciprocate that respect. He concluded:

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In free countries, where the safety of government depends very much upon the favourable judgment which the people may form of its conduct, it must surely be of the highest importance that they should not be disposed to judge rashly or capriciously concerning it. (V.i.f.61) In this way Smith granted the state an important cultural purpose and at the same time introduced a significant qualification to the optimistic thesis with which he is often associated— both with regard to the efficacy of market forces and the benefits of economic growth.

The Institutional Relevance Of The WN
The attractions of Smith’s system, and of an analysis which stretched even beyond the WN to encompass his other works, was quickly recognized by contemporaries. A stream of tributes found their way to Smith. Hugh Blair, the erstwhile Minister of the High Kirk of Edinburgh and later Professor of Rhetoric and Belles Lettres at the University wrote: I am Convinced that since Montesquieu’s Esprit des Lois, Europe has not received any Publication which tends so much to Enlarge & Rectify the ideas of mankind. Your Arrangement is excellent. One chapter paves the way for another; and your System gradually erects itself. Nothing was ever better suited than your Style is to the Subject; clear & distinct to the last degree, full without being too much so, and as tercly as the Subject could admit. Dry as some of the Subjects are, It carried me along.

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William Robertson was more to the point: ‘You have formed into a regular and consistent system one of the most intricate and important parts of political science.’ In similar vein Joseph Black commended Smith for providing ‘. . . a comprehensive System composed with such just & liberal Sentiments’. Lastly, some eighteen months later Edward Gibbon described the WN as ‘the most profound and systematic treatise on the great objects of trade and revenue which had ever been published in any age or in any Country.’

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Unstinted admiration of Smith’s system was accompanied by a fear, not always clearly expressed, that the work might not prove to have an immediate appeal, a fear based on an appreciation that the WN is not a simple but a difficult and involved book. With some feeling Hugh Blair pled for an index and a ‘Syllabus of the whole’, because, ‘You travel thro’ a great Variety of Subjects. One has frequently occasion to reflect & look back.’ (Letter 151.) David Hume looked forward to a day which he, within months of his death, was not to see, when the book would be popular, but he was less sanguine about its immediate prospects: . . . the Reading of it necessarily requires so much Attention, and the Public is disposed to give so little, that I shall still doubt for some time of its being at first very popular: But it has Depth and Solidity and Acuteness, and it is so much illustrated by curious Facts, that it must at last take the public Attention.

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A week later Hume offered a comparison with Gibbon’s Decline and Fall to William Strahan, the publisher of both, a comparison not altogether in favour of the WN: ‘Dr Smith’s Performance is another excellent Work that has come from your Press this Winter; but I have ventured to tell Even on publication, him, that it requires too much thought to be as popular as Mr Gibbon’s.’ there were signs that Hume was unduly pessimistic. In his reply Strahan, while concurring with Hume’s comparison, admitted that the sales of the WN ‘though not near so rapid, has been more Adam than I could have expected from a work that requires much thought and reflection’. Ferguson’s more optimistic predictions were nearer the mark: ‘You are not to expect the run of a novel, nor even of a true history; but you may venture to assure your booksellers of a steady and continual sale, as long as people wish for information on these subjects.’

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In the event the fears of lack of immediate success were ill–founded. The first edition of the WN, published on 9 March 1776, was sold out in six months. On 13 November 1776 Smith wrote to William Strahan acknowledging payment of a sum of £300, the balance of money due to him for the first edition, and proposed that the second edition ‘be printed at your [Strahan’s] expense, Strahan agreed and the second edition appeared early in and that we should divide the profits’. 1778. Only minor amendments, though many of them, distinguished it from the first; but the third edition, published late in 1784, had such substantial additions that they were also published separately for the benefit of those who had purchased the earlier editions, under the title Additions and Corrections to the First and Second Editions of Dr Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations. The most notable changes were the introduction of Book IV, chapter viii (Conclusion of the Mercentile System); Book V, chapter i.e. (Of the Public Works and Institutions which are necessary for facilitating particular Branches of Commerce); passages on drawbacks (IV.iv.3–11), on the corn bounty (IV.v.8–9), on the herring bounty (IV.v.28–37) and the Appendix; and, particularly significant in view of Hugh Blair’s early plea, the first index. The fourth edition of 1786 and the fifth of 1789, the last in Smith’s lifetime, had only minor alterations. The English editions were not the only ones to appear in Smith’s lifetime; by 1790 the book had been, or was being published in French, German, Danish and Italian. The WN did not suffer the fate which befell the previous great treatise on economics, Sir James Steuart’s Principles of Political Oeconomy, published only nine years earlier in 1767. Its success, judged even merely by its level of sales and the five editions in Smith’s lifetime, hardly accorded with some of the fears for the book’s popularity which tinged the otherwise unbounded admiration of Smith’s friends. In welcoming the WN the members of Smith’s intellectual circle faced a dilemma. They were attracted by the WN as the crown of Smith’s system, but they feared that great achievement would not, perhaps even could not, be generally and immediately appreciated. There was, however, another side to the WN, a more pragmatic, down to earth side, which gave the work a practical relevance in the eyes of many to whom the intellectual system was perhaps a mystery or merely irrelevant. Smith’s friends did not always recognize that his ‘proper attention to facts’, even to Hume’s ‘curious facts’, was to prove an immediate source of attraction. Having gained attention in this way, Smith then commanded respect because the practical conclusions which followed from the chief elements of his system were evidently related to the economic problems of the middle of the eighteenth century. These practical conclusions may be demonstrated by casting leading elements in Smith’s system in the form of a series of practical prescriptions for economic growth. When the prescriptions are compared with the historical situation in Britain in the mid–eighteenth century, their immediate relevance is apparent. The various categories of Smith’s system had thus an institutional content or background derived from

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the experience of his day, which many admired and followed even when the system and its categories remained difficult for them to understand. The division of labour remained central to this institutional analysis. Even when Smith recognized the theoretical possibility of the operation of other factors—an increased labour force or mechanization—the division of labour remained in practice the fundamental cause of economic growth. The emphasis is clear in Book II where, as has already been pointed out (p. 30), economic dynamics begins to overshadow economic statics, specifically in II.iii.32: The annual produce of the land and labour of any nation can be increased in its value by no other means, but by increasing either the number of its productive labourers, or the productive powers of those labourers who had before been employed. The number of its productive labourers, it is evident, can never be much increased, but in consequence of an increase of capital, or of the funds destined for maintaining them. The productive powers of the same number of labourers cannot be increased, but in consequence either of some addition and improvement to those machines and instruments which facilitate and abridge labour; or of a more proper division and distribution of employment. In either case an additional capital is almost always required. It is by means of an additional capital only that the undertaker of any work can either provide his workmen with better machinery, or make a more proper distribution of employment among them. Given that the division of labour remained the key to economic growth its full effectiveness was limited by an inadequate expansion of the market and by an inadequate supply of capital. An inadequate supply of capital also limited the effectiveness of those other influences—increased quantity of labour and mechanization—which Smith recognized as theoretical, if not practical causes of economic expansion. The distinction between productive and unproductive labour had led to the conclusion that growth of capital depended on the most extensive use of funds in the employment of productive labour. Smith then developed his system to determine those fields where productive labour was most effectively employed and the conclusions, derived in this way from his analytical framework, had highly institutional implications, for they indicated the areas where growth was to be welcomed and encouraged. That was guidance for the practical man. Three propositions from II.v make the order of preference clear: No equal capital puts into motion a greater quantity of productive labour than that of the farmer. (12) After agriculture, the capital employed in manufactures puts into motion the greatest quantity of productive labour, and adds the greatest value to the annual produce. That which is employed in the trade of exportation, has the least effect of any of the three. (19) The capital, therefore, employed in the home–trade of any country will generally give encouragement and support to a greater quantity of productive labour in that country,

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and increase the value of its annual produce more than an equal capital employed in the foreign trade of consumption: and the capital employed in this latter trade has in both these respects a still greater advantage over an equal capital employed in the carrying trade. (31) Such were the practical conclusions to which the theory led and, since the desirable allocation was to be achieved through ‘the uniform, constant, and uninterrupted effort of every man to better his condition’, the implication was obvious: government intervention had to be restrained, especially when it was possible to demonstrate, as in Book IV, that intervention was usually exercised on behalf of those vested interests which perverted the natural course of opulence. Well might Hugh Blair exclaim: You have done great Service to the World by overturning all that interested Sophistry of Merchants, with which they had Confounded the whole Subject of Commerce. Your work ought to be, and I am persuaded will in some degree become, the Commercial Code of Nations. (Letter 151) Even a cursory survey of the major economic characteristics of Britain in the eighteenth century confirms the contemporary relevance of Smith’s emphases. He advocated for example the desirability of encouraging agriculture because of the superior productivity of capital invested in it. To the practical man, whether he appreciated the full logic of Smith’s analysis or not, the advocacy struck a responsive chord, since the main source of economic advance in Britain in the mid–eighteenth century lay in agriculture. Of that no one was unaware. Poor harvests and high prices benefited no one, obviously not industrial workers, and not the majority of farmers. Only a few specialist grain growers expected to reap the profits of scarcity and any potential gain was frequently eroded by the prohibitions on the use of grain for purposes other than the making of bread in times of scarcity and, more dramatically, by the activities of bread rioters. Hence a modern historian has described the period as one when ‘the coming of dearth was sufficient in This restraint on increasing wealth itself to halt, or reverse, an upward movement of activity’. was at last being tackled in the eighteenth century. Contemporaries, as well as later historians, disputed the significance and effectiveness of the specific agricultural improvements which brought the change to fruition, but, even when the method was disputed, the end was plain. The age–old spectre of famine was removed for the first time, and secure economic advance was possible. That was a dramatic change from the experience of many other countries. A similar sympathetic response followed Smith’s evaluation of the form and function of trade. Agriculture and commerce were the twin props of the economy in the eyes of many contemporaries and Smith’s extensive treatment of the latter reflected its domination of economic thought and practice. More strikingly still, the pattern of foreign trade in the eighteenth century was changing and so drew attention to the relevance of Smith’s attempt to assess the comparative contributions to economic growth of the different forms of trade. The relevance of the analysis is evident in the changes in the pattern of both commodities and markets.

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Woollen exports had long been the traditional staple, particularly to European markets, which at the beginning of the eighteenth century took over 90 per cent of the woollen goods exported. Thereafter, though Spain and Portugal were taking more, other European countries were taking less; the future lay less with Europe than in the past. Later in the eighteenth century cotton assumed the role of leading export which wool had once held, but it was dependent on non– European markets. Between the two phases of domination by two different textile industries the buoyant trading sector lay in re–exports, which had not been of great significance until the second half of the seventeenth century, but by the beginning of the eighteenth century re– exports were equal to half the level of domestic exports. Sugar, tobacco, Indian calicos were the leading commodities, and their buoyancy reflected an economy which gained from a commerce based more on Britain’s trading links than on the sale of domestic production overseas, an economy in which it was impossible to deny the paramount position, for good or ill, of overseas trade, and especially of the carrying trade. Nowhere in Britain was that situation more evident than in the economic structure of Glasgow in the third quarter of the eighteenth century. The foreign trade of Scotland had been turning from the continent of Europe to the New World even before the parliamentary union of 1707 confirmed the move, and the protection afforded by the Navigation Acts provided a firm and unfettered basis for Glasgow’s success as an entrepot in the tobacco trade. Hence to read the practical discussion in Book IV of the WN, whether to accept or to reject its conclusions, was to read an account highly relevant to the contemporary economic scene. The Book discusses the stuff of which contemporary economic policy was made. Though the problems of agriculture and of commerce were the economic issues which dominated the mind of the practical man of the eighteenth century, industrial production was increasing, and, when Smith wrote, its increase was bringing to an end a period of stability in the relative contributions to the national product of agriculture, manufacturing and commerce. Smith’s emphasis on the growth, but not on the existing domination, of manufacturing industry, and particularly his exposition of the division of labour as the prime agent of change, accorded with contemporary experience. The increased industrial output was associated with a decline in the relative importance of the woollen industry and a marked growth in the relative contribution of metal manufactures, reflecting increased division of labour in small units and not the emergence of the larger and more modern units of industrial organisation which are associated with substantial capital formation and with joint–stock enterprise. The day of large–scale capital formation and extensive joint–stock enterprise came years after Smith. Though the problems of the industrial sector did not loom large in the minds of many contemporaries, when they did, they assumed the forms which Smith enunciated. The increasing capital intensity of production, and of its concentration, which was to begin with the appearance of the cotton industry, were yet to be, and the absence of any significant analysis of that sector in the WN should be cited less as a matter of regret and criticism and more as an indication of Smith’s awareness of those aspects of the contemporary industrial scene which were of concern at the time he wrote. The WN succeeded not only because its institutional emphasis made it thus so evidently, as Blair wrote, ‘a publication for the present time’ but also because it contained a stirring message. Its plea for liberty accorded with the intellectual presuppositions of the eighteenth century. The plea for liberty in the WN is a vital factor explaining the different reception accorded to Steuart and Smith within a decade of each other. Steuart may have suffered from additional handicaps. Apart from his personal handicap of Jacobitism, his work appealed less powerfully to the intellects of the eighteenth century, and above all Steuart’s support for government intervention placed him in a

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different camp from Smith, and in one which was not popular among the increasingly influential elements in contemporary society.

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Smith provided a system with categories and elements which remain valid as parts of his analytical framework, but their institutional content, so pertinent to economic conditions in Britain in the eighteenth century, that it helped ensure the success of the WN, limits the acceptability and applicability of the system in other places and at other times. Whatever the intellectual attractiveness of Smith’s writing on the continent of Europe, it was frequently institutionally irrelevant there when it was first published. For example, in contrast with Britain, ancient mercantilist and agrarian restrictions were acceptable on the continent. In Germany local monopolistic guilds still dominated economic life, and the advocacy of the new degree of economic freedom requisite for new forms of economic enterprise was not acceptable. Palyi suggests that the surprising aspect of the WN’s reception in Germany was not that it was not readily received, but ‘that the resistance against the WN did not last longer than some twenty In France, again as Palyi points out, the situation years and did not take a more active form’. was confused because of the influence of the physiocrats. Smith gave sufficient recognition to the physiocratic point of view to lend some support to its claims, and that support was especially helpful since the acceptability of their doctrines was waning, partly because of the antagonism the physiocrats had engendered from the new and rising industrial groups, whose dislike of physiocracy grew from the support it provided to the large landowners. That confusion influenced the reception accorded to the WN. Attempts to apply the WN to societies more advanced than Britain on the eve of the industrial revolution encounter similar, or even greater problems. The difficulty of doing so is demonstrated by contrasting Smith’s emphasis on the division of labour as the central cause of economic growth and his neglect of other factors, such as increases in the supply of labour, particularly through the growth of population, and improvements in the productivity of labour through mechanization. Smith recognized that an increase in the labour force led to an increase in output, but he did not envisage unemployed labour resources being brought into use, and any increase in the supply of labour was likely to be a long–run consequence of an expansion of the national product. The demand for those who live by wages, therefore, necessarily increases with the increase of the revenue and stock of every country, and cannot possibly increase without it. The increase of revenue and stock is the increase of national wealth. The demand for those who live by wages, therefore, naturally increases with the increase of national wealth, and cannot possibly increase without it. (I.viii.21) Increasing population, whether a cause of economic growth, or as something to fear, was not highlighted. That may seem surprising. Others, among them Sir James Steuart, feared over– population, but it was possible to be as optimistic about the future in the mid–eighteenth century as at any time. The spectre of famine and of some diseases had been removed; the sharp rise in population and the problems of its concentration were yet to be. Hence it was easy to conceive the problem of economic growth as one of utilizing the labour force in ways which would most effectively meet the opportunities offered by the expansion of the market, either by improvements in the division of labour or by mechanization. Of the two possibilities Smith, with

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his analysis firmly rooted in the institutional structure of his day, stressed the former. Mechanization was recognized—as in his discussion of the steam engine—but it was conceived as a process accompanying the division of labour. The owner of the stock which employs a great number of labourers, necessarily endeavours, for his own advantage, to make such a proper division and distribution of employment, that they may be enabled to produce the greatest quantity of work possible. For the same reason, he endeavours to supply them with the best machinery which either he or they can think of. (I.viii.57) In consequence of better machinery, of greater dexterity, and of a more proper division and distribution of work, all of which are the natural effects of improvement, a much smaller quantity of labour becomes requisite for executing any particular piece of work. .. (I.xi.o.1) Not only are the division of labour and mechanization closely interwoven, but invention itself was Innovation is no more in Smith’s opinion ‘originally owing to the division of labour’ (I.i.8). central to the analysis. Projectors pass through the pages of the WN, frequently to be dismissed as detrimental rather than helpful to economic growth. In spite of his stress on psychological propensities in other parts of his work, Smith did not extend his analysis in a serious way to evaluate the qualities which determined the ability to innovate successfully. The dominance of the division of labour, and the comparative neglect of other categories in the analysis, notably mechanization, is, of course, a reflection of the institutional relevance of the WN to the British economy in the mid–eighteenth century. The penalty paid was the opening of a penetrating line of criticism for those who wished to stress Smith’s comparative neglect of the other and ultimately more powerful agent of economic growth. Into that context can be placed the criticism of Lauderdale, who, though not distinguishing between capital and entrepreneurship, was anxious to remedy Smith’s alleged failure to make adequate allowance for differences in knowledge and ability in different countries. Rae suggested even more forcefully that invention held the key to explaining the greater productivity of capital in some societies than in others. Smith’s admirer, J. B. Say, developed the idea of entrepreneurship as a very special form of labour. Later Schumpeter placed the entrepreneur and his innovating ability at the heart of an explanation of economic growth. Lauderdale, Rae, Say, Schumpeter belong to later generations, which, unlike Smith’s, had witnessed the effect of mechanization on industrial output. Smith was writing even before the large–scale application of mechanization to cotton–spinning. Hence, just as the WN did not seem so relevant to societies other than Britain in the later eighteenth century, so the institutional content of the WN was not applicable to the industrial state which Britain was beginning to be. Nevertheless, discussion of Smith’s institutional relevance can become almost pointless if it tries to prove either that Smith anticipated modern industrialization, or if it spends much time proving that he did not. Any evaluation must start from the obvious fact that Smith’s thought was

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formulated in the third quarter of the eighteenth century, and that many of his ideas had been formulated as early as the 1760s. To search the WN for examples of the institutional structure which was to emerge later in a more advanced industrial economy is to search for qualities which it cannot possess except fortuitously. The attraction of the WN was not that it was a tourist’s guide to the subsequent course of industrialization, but that it had a command of the institutional structure of the time, sufficiently convincing to demonstrate its contemporary relevance. The institutional features of the WN which date it also helped towards its immediate success. The modern reader may recognize the systematic analysis as the great intellectual achievement of the treatise and qualify the validity of Smith’s views on public policy, or even adopt the extreme interpretation of dismissing them as totally irrelevant. No contemporary could have entertained such a view; obviously misleading or erroneous comments on the public policy of the age, or, worse still, irrelevant comments, would have detracted from the intellectual achievement in their eyes. The acceptance of the WN by contemporaries rested on its apparent relevance to the affairs of everyday life as much as on its systematic analysis. It became the authority to quote as much in public discussion as in parliamentary debate. But that was not all. Smith’s relevance to his day and age insured such immediate acceptance for the WN that, even when its popularity as a guide to policy was waning, and was ultimately rejected, the work was so well established, and so generally established, that it was never neglected, and the systematic analysis was then recognized for the massive intellectual achievement which it is.

Smith’s Use Of History
If Smith achieved the unusual distinction of being a prophet with honour in his own country, he did so partly because his work was firmly rooted in a historical situation. The WN may, therefore, be used as a historical source, in at least two distinctive senses. Since Smith frequently wrote as a historian—sometimes deliberately, sometimes otherwise—he may be judged accordingly by the common criteria of historical scholarship. In addition, Smith’s account of events in the later eighteenth century may be assessed for its reliability as the report of a contemporary observer. In neither case is an account of Smith’s writing a straightforward and uncomplicated matter. Just as anyone using Smith to illuminate later economic thought must make full allowance for the limitations of his institutional background on the general applicability of his theories, so those who use the WN as a historical source in whatever sense must make even greater allowances. In the former case the deficiencies are inevitable, as Smith could not have envisaged changes which were yet to be; in the latter case the omissions may even be deliberate and so misleading, especially if they are not obvious. As always, Smith’s desire to devise a major intellectual system determined the use he made of historical and factual material. No one of his intellectual eminence would distort the facts, even if only because refutation would thus have been infinitely easier, but, even when facts were not distorted, they may still have been used in such a subordinate and supporting role to the dominating systematic model that their use for any other purpose needs qualification. If parts of the WN are to be judged as straightforward pieces of historical writing, it is necessary to distinguish the different ways in which Smith wrote as a historian. When he wrote as an orthodox historian, he tried to assemble the best documentary and factual evidence for his case; when he wrote as a philosopher of history, he tried to distil an ideal interpretation of an historical process ostensibly from the facts he had accumulated.

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Smith, as any orthodox historian, may be assessed by a review of his sources and his use of them. Their variety is striking, whether the impression be derived from those quoted in the WN itself, from the resources in Smith’s personal library, or from the accounts of the Library at Glasgow when he controlled its expenditure. The break with the tradition of Christian authority is obvious; even historical parts of the Bible and its apparent relevance to the discussion of a nomadic life are virtually ignored, with only the most incidental of references to the Old Testament. By contrast, the classical tradition dominates and supplies many illustrations of early times. Given the inevitable paucity of source material for an account of an earlier age, and yet given the necessity of formulating such an account as part of an essential background to the dynamic historical evolution which he was seeking, Smith—in common with others who adopted his approach—was forced to use another group of source materials: the travellers’ tales and accounts of contemporary societies which were at a much earlier and much more primitive stage of social evolution. Travellers’ tales bulk large in what is generally regarded as Smith’s historical writing, taking pride of place even over the classical references. To a more orthodox historian the extensive use of travellers’ tales is even more suspect than the use of classical writers, whose work can at least be subjected to a more critical appraisal of their reliability. Travellers’ tales, especially in an age when they were frequently rare, even unique, accounts of far off places, could not easily be confirmed or refuted, and so the travellers tended to highlight the unusual and the bizarre. A warning of Francis Hutcheson could well be taken to heart: The Entertainment therefore in these ingenious Studys consists chiefly in exciting Horror, and making Men stare . . . What is most surprizing in these Studys, is the wondrous Credulity of some Gentlemen of great Pretentions in other Matters to Caution of Assent, for these marvellous Memoirs of Monks, Friars, Sea–Captains, Pirates; and for the Historys, Annals, Chronologys, received by oral Tradition, or Hieroglyphicks.

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Smith was not more culpable than many of his contemporaries in his use of such material. He was certainly less guilty than some others of falling into the trap against which Hutcheson warned, for he did not accept all his sources uncritically. Trade statistics were held perceptively and authoritatively to be unreliable: Heavy duties being imposed upon almost all goods imported, our merchant importers smuggle as much, and make entry of as little as they can. Our merchant exporters, on the contrary, make entry of more than they export; sometimes out of vanity, and to pass for great dealers in goods which pay no duty; and sometimes to gain a bounty or a drawback. Our exports, in consequence of these different frauds, appear upon the customhouse books greatly to overbalance our imports; to the unspeakable comfort of those politicians who measure the national prosperity by what they call the balance of trade. (V.ii.k.29) Hence it is not surprising that Smith, though ready to endorse Gregory King’s skill in political arithmetic (I.viii.34), and willing to quote the calculations of Charles Smith on the corn trade (I.xi.g.18), had to admit that he himself had ‘no great faith in political arithmetick’ (IV.v.b.30). Quantitative sources were not the only ones treated with some reserve.

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After all the wonderful tales which have been published concerning the splendid state of those countries [Mexico and Peru] in antient times, whoever reads, with any degree of sober judgment, the history of their first discovery and conquest, will evidently discern that, in arts, agriculture, and commerce, their inhabitants were much more ignorant than the Tartars of the Ukraine are at present. (I.xi.g.26) Yet sometimes Smith’s use of a source is less critical than it should be, especially when the source confirms an argument he is developing from other and more general, often speculative sources, so that the orthodox historian thus becomes the supporter of the philosophic historian. Instances range from the trivial to the substantial. At the most trivial level Smith’s faults represent merely different standards of transcription between the eighteenth century and the present day. At times he seems to quote from memory, as when his quotations are not quite verbatim, or when he attributes a view to a source which it does not quite support, as for example, in his use of the works of Juan and Ulloa and of Frézier to support his condemnation of the mining of precious metals in the New World (I.xi.c.26–8). More serious still, in his use of statutes Smith falls into the error, not unique among historians, of failing to distinguish between the intention of the statute and the manner and extent of its implementation. The error is surprising in Smith’s case, because his experience at least after his appointment as Commissioner of Customs in 1778, enabled him to observe the gulf which could be fixed between intention and implementation in the case of some statutes, as in various attempts to suppress smuggling, and even more important because he himself sometimes provided the material for drawing such a distinction, as in his discussion of the laws relating to apprenticeship. A more serious example is his discussion of the settlement provisions of the poor law. In both cases Smith objected because of interference with the liberty he considered essential for the effective allocation of resources (above, 37). After castigating the generally restrictive effect of the Statute of Apprentices Smith proceeded to recognize the limitations on its application: to market towns and not in the country (I.x.c.8); to those trades which were established when the Act was passed and not to those which appeared subsequently, excluding—on Smith’s own admission—‘the manufactures of Manchester, Birmingham and Wolverhampton’, or at least ‘many of them’ (I.x.c.9); and finally, not to soldiers and sea–men who, ‘when discharged from the king’s service, are at liberty to exercise any trade, within any town or place of Great Britain or Ireland’ (IV.ii.42). Smith’s failure to make adequate allowance for the qualifications to the law of settlement is more serious. Smith objected to the legal restraints imposed on the right to obtain a settlement in a parish, with its entitlement to poor relief, as part of his general objection to artificial restraints on the free mobility of labour. He made his objection forcefully: There is scarce a poor man in England of forty years of age . . . who has not in some part of his life felt himself most cruelly oppressed by this ill–contrived law of settlements. (I.x.c.59) The reasons had been as sweepingly advanced in the previous paragraph:

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. . . in England, where it is often more difficult for a poor man to pass the artificial boundary of a parish, than an arm of the sea or a ridge of high mountains, natural boundaries which sometimes separate very distinctly different rates of wages in other countries. (I.x.c.58) In addition Smith contrasted conditions in Scotland with those in England, alleging that in England the law of settlement ensured that ‘The scarcity of hands in one parish . . . cannot always be relieved by their super–abundance in another, as it is constantly in Scotland’ (I.x.c.58). Once again Smith himself provided qualifications which should have led to the enunciation of his proposition in more moderate terms. He recognized the major mitigation of the restraints on the mobility of labour which followed the introduction of certificates, whereby a parish accepted liability for a potential pauper, though he promptly cast doubt on the effectiveness of the measure by commenting rather cynically, after quoting from a passage in Richard Burn’s Justice of the Peace, that ‘certificates ought always to be required by the parish where any poor man comes to reside, and that they ought very seldom to be granted by that which he proposes to leave’ (I.x.c.56). Smith also provided a general explanation of differences of wage rates between Scotland and England; one dependent not on their different laws of settlement but on differences between their rates of development and between the levels of subsistence in the two countries (I.viii.33–4). Other evidence reinforces the doubts Smith raises himself. Removals of potential paupers in England were probably less frequent than he implies, otherwise it is difficult to understand how the new developing areas ever obtained the labour force they required; in Scotland paupers were sometimes forcefully removed, though less frequently than in England. The issue was one of contemporary importance, and could have been investigated by a detailed examination of parochial administration, but of such investigation there is no evidence in the WN, so that in these matters Smith did not have knowledge comparable to that which he had about customs procedure, even before his appointment as a commissioner, and which enabled him to be more critical of evidence in that field. In his discussion of both the laws of apprenticeship and settlement Smith provides evidence which damages his own case against the restrictive legislation, and provides indications that investigations which might have been undertaken to confirm his case or otherwise were not carried out. The general principles, the opposition to restrictions damaging to the free allocation of resources, were held so strongly that there seemed no case to answer. Criticism of Smith’s use of sources becomes truly damaging only if he read into a source more serious evidence in support of a proposition than he was entitled to do. Even that criticism must not be pushed too far. All historians must choose the facts they judge relevant to their argument, and so their discussion is forced in one direction or another. Hence a significant distinction between the approaches of Smith and of orthodox historians can be drawn only if Smith’s choice of evidence strayed beyond the limits set by human frailty in determining degrees of relevance towards a demonstrable distortion of historical evidence, whether deliberate or not. Then, even if Smith’s use of his sources meets the requirements of the most refined critical apparatus of textual criticism, he would stand condemned by orthodox historians for his unacceptable choice of evidence.

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Any such distinction, or even gulf, between the approaches of Smith and of orthodox historians appears only when Smith writes as a speculative or philosophical as well as an orthodox historian, and so a fundamental issue in any appreciation of the WN lies in determining how Smith deals with any tensions which emerge between the two approaches. Each strand of his historical reasoning, the orthodox and the speculative, is a logical entity, and each, if examined and judged by its own standards, is internally consistent. Problems emerge only when attempts are made to integrate the two in order to eliminate the tensions which seem to emerge between them. Smith does not recognize the tensions, he was probably unaware of them, because his grand design of a comprehensive system dominates every other approach. Yet tension between the two approaches appears at central parts of his analysis, most significantly in Book III, where the historical evidence is, of course, embedded at the centre of the exposition, not merely providing a peripheral part of the reasoning. The philosophical historian states unequivocally the course of the ‘natural progress of opulence’: According to the natural course of things, therefore, the greater part of the capital of every growing society is, first, directed to agriculture, afterwards to manufactures, and last of all to foreign commerce. This order of things is so very natural, that in every society that had any territory, it has always, I believe, been in some degree observed. (III.i.8) In the next paragraph the orthodox historian upsets ‘the natural progress’: though this natural order of things must have taken place in some degree in every such society, it has, in all the modern states of Europe, been, in many respects, entirely inverted. The foreign commerce of some of their cities has introduced all their finer manufactures, or such as were fit for distant sale; and manufactures and foreign commerce together, have given birth to the principal improvements of agriculture. (III.i.9) The last sentence of the chapter provides both an explanation and an accusation: The manners and customs which the nature of their original government introduced, and which remained after that government was greatly altered, necessarily forced them into this unnatural and retrograde order. (III.i.9) The three chapters which follow, to make up the shortest Book in the WN, then proceed to expound an orthodox historical progress of opulence in a way which differs from that outlined in ‘the natural progress’, of how, for example in III.iv, the commerce of the towns contributed to the improvement of the country. This distinction between the speculative historical progress of opulence and the orthodox historical progress is the prime example of the tensions involved in the use of the WN as a historical source. Yet allegations of tension, of an uneasy relationship and even of contradictions

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between the two strands of thought, are evident only when Smith is judged by standards, and by a methodology, which he would not have accepted. Smith’s objective was to delineate an ideal account of historical evolution, which did not need to conform to any actual historical situation, so historical evidence, while playing a central part in his thought, was supplementary evidence of secondary importance. If historical facts indicated a divergence from the ideal explanation, then Smith felt obliged to offer explanations of the divergence. He worked from the system to the facts not from the facts to the system, and in that context his protestation that he had ‘no great faith in political arithmetic’ is significant. If the historian or the political arithmetician demonstrated the divergence from the ideal that, for instance, the progress of opulence was from the town to the country and not the reverse, the interesting problem then lay in determining the reasons for the divergence—in the present example it lay in unwise and undesirable intervention from the government. H. T. Buckle, though given to overstating his case, made a vital point, and in a lively style: Adam Smith . . .very properly rejected [statistical facts] as the basis of his science, and merely used them by way of illustration, when he could select what he liked. The same remark applies to other facts which he drew from the history of trade, and, indeed, from the general history of society. All of these are essentially subsequent to the argument. They make the argument more clear, but not more certain. For, it is no exaggeration to say, that, if all the commercial and historical facts in the Wealth of Nations were false, the book would still remain, and its conclusions would hold equally good, though they would be less attractive.

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Any tension between the speculative, or systematic, and the orthodox strands of Smith’s thought is potentially even more misleading when the systematic thought is contrasted with, or used to illuminate aspects of contemporary policy. Then Smith’s comments on the happenings of his time in the eighteenth century may be so coloured by his speculative approach that his accounts and views may have to be treated with some reserve and not used as reliable source material for historical studies of the period. It was suggested earlier that the conclusion of greatest practical significance in Smith’s analysis for the eighteenth century lay in his ordering of the productive use of capital, as in II.v.19: first, in agriculture; then in manufactures; last in ‘the trade of exportation’. In the subsequent evaluation of the wholesale trade, the very practical conclusion was stated unequivocally: . . . the great object of the political oeconomy of every country, is to encrease the riches and power of that country. It ought, therefore, to give no preference nor superior encouragement to the foreign trade of consumption above the home–trade, nor to the carrying trade above either of the other two. (II.v.31) Just as Smith’s orthodox historical work sometimes qualified the use that may be made of his speculative history, so his orthodox empirical studies cast doubt on some of the recommendations on contemporary policy derived directly from his analytical system. Examples can be given at both ends of his proposition concerning the desirable deployment of resources, from his comment on agriculture and on the colonial trade.

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‘In proportion as a greater share of [capital] is employed in agriculture, the greater will be the quantity of productive labour which it puts into motion within the country’. (II.v.19.) It was suggested above (p. 45) that the prospects for economic growth in Britain in the eighteenth century were greatest in agriculture, and Smith provides empirical evidence of the progress already made in that field in his own day and of further possible lines of progress, as, for example, in an accurate and perceptive account of the expansion of the Scottish cattle trade (I.xi.l.2–3). But another part of Smith’s system, and the empirical content he gave to its operation in agriculture, casts doubt on the pre–eminence given to agriculture in economic progress. He asserts from empirical evidence that the division of labour, the great agent of change, is least applicable in agriculture (I.i.4). Once again the different strands of the argument are logically valid, but the relationship between the two is uneasy and unclear, and so too is the use which may be made of the evidence as reflecting economic conditions in the eighteenth century. Smith’s treatment of the colonial trade is even more significant, because it looms large in the WN and in contemporary discussion. Given his general analysis it is not surprising that Smith condemns the tobacco trade as an example of how undesirable government intervention had turned trade ‘from a direction in which it would have maintained a greater quantity of productive labour, into one, in which it can maintain a much smaller quantity’ and had ‘rendered the whole state of that industry and commerce more precarious and less secure, than if their produce had been accommodated to a greater variety of markets’. (IV.vii.c.46 and 40.) It has already been suggested (p. 46) that Smith’s account of the carrying trade, both of its dependence on current commercial policy and of its effect on the domestic economy, would have been recognized by his contemporaries as a realistic survey of the conditions of the time. The growth of re–exports, and the tobacco trade’s domination, especially in Glasgow, owed much to the Navigation Acts, and the effect on the domestic economy was so limited that it is even possible to suggest that there existed two separate economies, each with its rate and extent of growth determined by different factors. But, once again, the WN itself provides the qualifications to the practical conclusion derived from the systematic analysis. To begin with, it is not clear that commercial legislation was the critical cause of the growth of the colonial trade in general, and the tobacco trade in particular. ‘There are no colonies of which the progress has been more rapid than that of the English in North America’ (IV.vii.b.15), because ‘Plenty of good land, and liberty to manage their own affairs their own way, seem to be the two great causes of the prosperity of all new colonies’ (IV.vii.b.16). Even the exact influence of the monopoly is unclear: it ‘raises the rate of mercantile profit, and therefore augments somewhat the gains of our merchants’, but it also ‘hinders the sum of profit from rising so high as it otherwise would do’ (IV.vii.c.59). To determine the overall effect of the monopolistic restrictions, Smith is admitting in effect the necessity of a nice calculation of gain and loss. In the long–run even more necessary for that purpose is an evaluation of the use to which any profit is put: a smaller profit in the hands of those who use it in ways deemed appropriate may promote economic growth more rapidly than a larger profit in the hands of those who use it differently. Of that problem Smith was aware: If the prodigality of some was not compensated by the frugality of others, the conduct of every prodigal, by feeding the idle with the bread of the industrious, tends not only to beggar himself, but to impoverish his country.

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(II.iii.20) Smith’s distinction between the prodigal and the frugal man raises immense difficulties for any attempt to use his systematic analysis as a final commentary on the effect of the colonial trade. The distinction can be highlighted in Smith’s own words in II.iii: The proportion between capital and revenue . . . seems every where to regulate the proportion between industry and idleness. Wherever capital predominates, industry prevails: wherever revenue, idleness. (13) Capitals are increased by parsimony, and diminished by prodigality and misconduct. (14) Parsimony, and not industry, is the immediate cause of the increase of capital. Industry, indeed, provides the subject which parsimony accumulates. But whatever industry might acquire, if parsimony did not save and store up, the capital would never be the greater. (16) Hence, whatever the limitations, derived from Smith’s systematic analysis, on the beneficial effects of the carrying trade, the colonial trade might still have made a major contribution to economic growth if the merchants were parsimonious and not prodigal, particularly if they then diverted their capital into agricultural enterprises at home. Smith recognized in general terms what was happening. ‘Merchants are commonly ambitious of becoming country gentlemen, and when they do, they are generally the best of all improvers’ (III.iv.3), certainly better than the great proprietors (III.ii.7). The experience of the eighteenth century confirms this aspect of Smith’s discussion. Parsimony among the merchants, including colonial merchants, and their desire to become landed gentlemen, provided the capital which Smith recognized as essential for the exploitation of the agricultural resources of Scotland itself. The undesirability of concentration on the carrying trade which Smith’s intellectual analysis demonstrated, was evidently much less in practice when a full study is made, and, once again as in the discussion of agriculture, for reasons which are embedded in the WN. The reasons are not stressed, because to do so would have required some qualification to conclusions derived from the central analysis of the desirable distribution of capital and to some of the allegedly harmful effects of the Navigation Acts. Smith’s historical writing has practical implications in the use of the WN. The historical writing is meaningful only if interpreted as part of the intellectual system which the historical material was used to illustrate and support. Similarly, Smith’s discussion of contemporary problems and events, which can easily be assumed to be an example of unbiased reporting, must also be integrated into his entire system. The belief in the natural progress of opulence, almost in its inevitability, is so strong throughout the WN that, when dealing with a contemporary problem, Smith’s main objective is to isolate those barriers which lay in the path of natural progress as he

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saw it, and to advocate their speedy removal. Hence on contemporary issues his writing verges on propaganda, he uses evidence in ways which are not wholly convincing to those not committed to his system, and he presses interpretations of contemporary events to more extreme conclusions than may well be warranted. The defects of Smith’s emphasis must not be stressed unduly, though they may seem to justify the suggestion that he was never noted for his consistency. Paradoxically the inconsistency was often consistent, because it rarely damaged the central analysis and was indeed usually introduced as a means of support for it. Nor can Smith easily be accused of inconsistency in the transfer of his analysis to policy, so long as his practical recommendations were confined to a general advocacy of the desirability of eliminating government intervention from many, if not from all aspects of economic life. The inconsistencies appear only in the detail. These are defects of greater consequence to those who read the WN today than to those who read the WN when it was first published. Then the analysis, both systematic and institutional, was largely applicable in Britain, and was a major cause of the work’s popularity; it was excellent political propaganda and such stretching of empirical evidence as it contained was not such as could discredit the whole. The problem is for those readers of later generations who seek to use the WN as a source book of contemporary comment.

Endnotes
[1 ] History of Economic Analysis (London, 1954), 182. [2 ] For comment, see R. L. Meek ‘Smith, Turgot and the Four Stages Theory’ in History of Political Economy, iii (1971), and his introduction to Turgot on Progress, Sociology, and Economics (Cambridge, 1973). [3 ] LJ (B) 149, ed. Cannan 107. The socio–economic analysis appears chiefly in Books III and V of the WN. [4 ] John Millar, The Origin of the Distinction of Ranks (1771), ed. W. C. Lehmann and included in his John Millar of Glasgow (Cambridge, 1960), 292. [5 ] It is a remarkable fact that Smith’s systematic course of instruction on economic subjects closely follows the order used by his old teacher, Francis Hutcheson, in his System of Moral Philosophy (published posthumously in 1755). For Hutcheson, like Smith, begins with an account of the division of labour (II.iv) and having explained the sources of increase in ‘skill and dexterity’ proceeded to emphasize the interdependence of men which results from it. Having next examined the importance for exchange of the right to the property of one’s own labour (II.vi) he then considered the determinants of value, using in the course of this discussion a distinction between demand and supply price and defining the latter in terms of labour cost (II.xii). The argument then proceeds to the discussion of money as a means of exchange and the analytical work is completed with an account of ‘the principal contracts of a social life’ such as interest and insurance (II.xiii). While Smith’s own lectures were undoubtedly more complete, with the economic section developed as a single whole, the parallel is nonetheless worthy of note. For comment, see W. R. Scott, Francis Hutcheson (London, 1900).

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[6 ] Hume had also drawn attention to the problems of trade regulation and shown a clear grasp of the interdependence of economic phenomena. There is certainly sufficient evidence to give some force to Dugald Stewart’s claim that ‘The Political Discourses of Mr. Hume were evidently of greater use to Mr. Smith, than any other book that had appeared prior to his Lectures’ (Stewart, IV.24). On the other hand, it would be wrong to imply that Smith may have taken an analytical structure established by Hutcheson and grafted on to it policy views, derived from Hume, regarding the freedom of trade (views which Hutcheson did not always share). To qualify this position we have Smith’s famous manifesto, dated 1755 and quoted by Dugald Stewart from a document, now lost, wherein Smith claimed some degree of originality with a good deal of ‘honest and indignant warmth’ apparently in respect of his main thesis of economic liberty. In this paper, which was read before one of Glasgow’s literary societies, Smith rejected the common view that man could be regarded as the subject of a kind of political mechanics, and stated his belief that economic prosperity only required ‘peace, easy taxes, and a tolerable administration of justice’. Such beliefs, he asserted, ‘had all of them been the subject of lectures which I read at Edinburgh the winter before I left it, and I can adduce innumerable witnesses, both from that place and from this, who will ascertain them sufficiently to be mine.’ (Stewart, IV.25.) The possible links between Hutcheson, Hume, and Smith are explored in W. L. Taylor, Frances Hutcheson and David Hume as Precursors of Adam Smith (Duke, North Carolina, 1965). See also E. Rotwein’s valuable introduction in David Hume: Writings on Economics (London, 1955). [7 ] With regard to the separation of returns into wages, profits, and rent Dugald Stewart has stated that ‘It appears from a manuscript of Mr. Smith’s, now in my possession, that the foregoing analysis or division was suggested to him by Mr. Oswald of Dunnikier’ (Works, ix (1856), 6). It is also stated in Works x (1858) that Oswald was ‘well known to have possessed as a Political and man of business, a taste for the more general and philosophical discussions of Political Economy. He lived in habits of great intimacy with Lord Kames and Mr. Hume, and was one of Mr. Smith’s earliest and most confidential friends.’ Memoir Note A [8 ] Smith’s initial stay in Paris as tutor to the Duke of Buccleuch, was for a period of only ten days, so that his real contact with the French thinkers came during the second visit (December 1765 to October 1766). By this time the School was well established: the Tableau Economique had been perfected in the late 1750s, and was followed in 1763 by the appearance of the Philosophie Rurale, the first text–book of the School and a joint production of Quesnay and Mirabeau. Smith knew both men, while in addition his own commentary on the School (WN IV.ix) shows a close knowledge of its main doctrines. It is also known from the contents of Smith’s library that he had a remarkably complete collection of the main literature, including copies of the Journal de l’Agriculture and a range of the Epemèrides du Citoyen which includes the first two (out of three) parts of Turgot’s Reflections on the Formation and Distribution of Riches—a work which Turgot completed in 1766 when Smith was resident in Paris. See H. Mizuta, Adam Smith’s Library (Cambridge, 1967). In fact Turgot begins his account of the formation and distribution of riches in a way with which Smith would have immediately sympathized: with a discussion of the division of labour, exchange, and money, using this introductory section to confirm the importance of a prior accumulation of stock. The real advance, however, came from another source, and is the consequence of Turgot’s reformulation of the basic Quesnay model in such a way as to permit him

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to employ a distinction between entrepreneurs and wage labour in both the agrarian and manufacturing sectors. This distinction led on to another in the sense that Turgot was able to offer a clear distinction between factors of production (land, labour, capital) and to point the way towards a theory of returns which included recognition of the point that profit could be regarded as a reward for the risks involved in combining the factors of production. At the same time, Turgot introduced a number of distinctions between the different employments of capital of a kind which is very close to that later used by Smith, before going on to show that the returns in different employments were necessarily interdependent and affected by the problems of ‘net advantage’. While the account offered in the WN IV.ix of the agricultural system owes a good deal to Quesnay’s work, it may not be unimportant to notice that the version which Smith expounded includes an allowance for wages, profit, and rent, distinctions which were not present in Quesnay’s original model. The most exhaustive modern commentary on the physiocrats as a school is R. L. Meek’s The Economics of Physiocracy (London, 1962). This book includes translations of the main works: see also Quesnay’s Tableau Economique, ed. M. Kuczynski and R. L. Meek (London, 1972). The possible links between Turgot and Smith are explored by P. D. Groenewegen in ‘Turgot and Adam Smith’, Scottish Journal of Political Economy, xvi (1969). [9 ] The most comprehensive modern account of the content of Smith’s work is by Samuel Hollander, The Economics of Adam Smith (Toronto, 1973). [10 ] In the WN, the division of labour was also associated with technical change, arising from: improvements made by workmen as a consequence of their experience; inventions introduced by the makers of machines, (once that has become a separate trade) and, finally, inventions introduced by philosophers ‘whose trade it is, not to do any thing, but to observe every thing’ (I.i.9). Of these, Smith considered that the first was likely to be affected adversely by the consequences of the division of labour once it had attained a certain level of development. See below, 39–40. [11 ] See R. L. Meek and A. S. Skinner, ‘The Development of Adam Smith’s Ideas on the Division of Labour’, Economic Journal, lxxxiii (1973). [12 ] For a particularly helpful comment on Smith’s treatment of value from this point of view, see M. Blaug, Economic Theory in Retrospect (London, 1964), 48–52. [13 ] There are perhaps four features of Smith’s treatment of price which may be of particular interest to the modern reader: 1. While Smith succeeds in defining an equilibrium condition he was obviously more interested in the nature of the processes by virtue of which it was attained. Natural price thus emerged as the ‘central price, to which the prices of all commodities are continually gravitating’, whatever be the obstacles which prevent its actual attainment (I.vii.15). 2. Smith gives a good deal of attention to what might be called ‘natural’ impediments; i.e. impediments associated with the nature of the economy (as distinct from ‘artificial’ obstacles which might be introduced by government action) in referring to such points as the instability of agricultural output (I.vii.17), the importance of singularity of soil or situation, spatial problems and secrets in manufacture. 3. Smith’s account may be seen to suggest that before the whole system can be in equilibrium

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each commodity must be sold at its natural price and each factor paid in each employment at its ‘natural’ rate. Any movement from this position can then be shown to involve inter–related responses in the factor and commodity markets as a result of which the trend towards equilibrium is sustained. Looked at from this point of view, Smith’s argument has a dynamic aspect at least in the sense that he handles the consequences of a given change (say in demand) as a continuously unfolding process. 4. The discussion of price is linked to the analysis of the economy as a system in Book II by throwing some light on the allocation of a given stock of resources amongst alternative uses. At the same time, the analysis of Book II with its suggestion of a continuous cycle of the purchase, consumption, and replacement of goods adds a further dimension to the use of time in I.vii. For an interesting modern example of a problem of this kind see W. J. Baumol, Economic Dynamics (2nd ed. New York, 1959), 6–7, where a time axis is added to those dealing with price and quantity. [14 ] While in general Smith seems to have considered that job mobility would be comparatively easy, it is evident that such movement might be difficult in cases where there is a considerable capital invested in learning—thus setting up distortions in the system (which could take time to resolve themselves) even in cases where there was perfect liberty. Smith also drew attention to the problems of status and geographical mobility. Citing as evidence the considerable differentials between London, Edinburgh, and their environs, in respect even of employments of a similar kind, he concluded that ‘man is of all sorts of luggage the most difficult to be transported’ (I.viii.31). [15 ] It may be useful to give a ‘conjectural’ picture of the ‘circular flow’, by drawing some of the elements of Smith’s argument together. Smith’s theory of price has already established that since each commodity taken singly must comprehend payments for rent, wages, and profits, this must be true of all taken complexly (II.ii.2 and see above, p. 25 n. 13). He therefore suggests a relationship between aggregate output and income where the latter must be distributed between the three major forms of return. Taking the year as the time period within which the working of the system is to be examined, factors can be treated as stocks (as in the theory of price) whose ordinary or natural rates (i.e. natural within the framework of the year) are determined by current levels of demand and supply (a theme developed in the theory of distribution). This income can be used for the purchase of consumption goods, including services (thus generating a secondary source of income available for expenditure in the current period) or in the form of a fixed or circulating capital. If we examine the system from the standpoint of the beginning of the period in question, each group will have an accumulated stock of goods intended for consumption, together with a certain fixed capital representing acquired skills and useful abilities. The proprietors in addition possess a capital which is fixed in the land while the entrepreneurs engaged in manufacture, agriculture, or trade, own a fixed capital embodied in their machines, implements, etc. In addition, we can assume at the beginning of the period, that the undertakers and merchants have a stock of finished goods (consumption and investment goods) which are available for sale in the current period, together with raw materials and work in process—all of which make up a part of the circulating capital of society. Assume also the undertakers have a certain net income available for use in the current period. If the farmers transmit rent payments to the proprietors to secure the use of a productive resource, this gives the latter group an income with which they can make the necessary purchases of consumption and investment goods. The undertakers in both the main sectors may

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then transmit to wage–labour the content of the wages fund, thus generating an income which can be used to make purchases of consumption goods from each sector. Similarly, the undertakers will make purchases from each other, thus generating a series of flows of money and goods within and between the sectors—with the whole pattern carried on by the wholesale and retail trades. As a result of the complex of transactions, the content of the circulating capital of society (as represented, in part, by the stock of all goods available for sale) is withdrawn from the market and either added to the social stock of consumption goods, or fixed capital, or used to replace items which reached the end of their life during the present period, or used up within that period. On the other hand, these goods are replaced by current productive activity, so that the model taken as a whole admirably succeeds in its aim of elucidating the interconnections which exist between the parts of the machine. It is worth noting perhaps, here as in the theory of price, that the emphasis is on the processes involved, rather than on the formulation of equilibrium conditions. Indeed it would have been very difficult for Smith to formulate the conditions which would have to be met before the following period could open under identical conditions to those which obtained at the beginning of the period examined, (as for example Quesnay had done) if only because of the explicit allowance made for goods which have different life–spans and for stocks of goods which have different age structures. [16 ] See D. N. Winch, Classical Political Economy and the Colonies (London, 1965), chapter 2. [17 ] A Letter from Governor Pownall to Adam Smith, L.L.D. F.R.S. (London, 1776), 23: cf. Winch, op. cit., 8–9. [18 ] It is interesting to observe that the solitary example of the ‘invisible hand’ which occurs in the WN does so in the context of the thesis concerning the natural progress of opulence. It is remarked in IV.ii.9 that: As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestick industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the publick interest, nor knows how much he is promoting it. By preferring the support of domestick to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. [19 ] Smith’s concern with sectional economic pressures is to be found throughout the WN; in the discussion of the regulation of wages, for example (I.x.c.61) and in his ascription of undue influence on colonial policy to mercantile groups (IV.vii.b.49). He referred frequently to the ‘clamourous importunity of partial interests’ and in speaking of the growth of monopoly pointed out that government policy ‘has so much increased the number of some particular tribes of them, that, like an overgrown standing army, they have become formidable to the government, and upon many occasions intimidate the legislature.’ (IV.ii.43.) The point helps to explain Smith’s recurring theme that legislative proposals emanating from members of this class ‘ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention’ (I.xi.p.10). [20 ] Letter 151 addressed to Smith, dated 3 April 1776.

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[21 ] Letter 153, 8 April 1776. [22 ] Letter 152, April 1776. [23 ] Letter 187, 26 November 1777. [24 ] Letter 150, 1 April 1776. [25 ] J. Y. T. Greig (ed.), The Letters of David Hume (Oxford, 1932), ii.314. [26 ] Letter from William Strahan to David Hume, dated 12 April 1776 (Hume MSS. Royal Society of Edinburgh). [27 ] Letter 154, 18 April 1776. [28 ] Letter 179. [29 ] Smith’s friends recognized this aspect but were faintly worried by it. Hugh Blair felt that some parts of the book, notably the discussion on the American colonies, might well be left out because they made the book ‘like a publication for the present moment’ (Letter 151), and Hume was aware that it had the attraction of offering ‘curious facts’ (Letter 150). Whatever the estimates of Blair or Hume of the practical aspect of the WN, it was a side which attracted a wider readership. A perceptive reviewer in an otherwise uninformative and brief notice in the Scots Magazine (xxxviii (1776) 205–6) assessed the twin attractions more equally and more fairly: Few writers . . . have united a proper attention to facts with a regular and scientific investigation of principles . . . [Smith] has taken an extensive and connected view of the several subjects in which the wealth of nations is concerned; and from an happy union of fact and theory had deduced a system, which, we apprehend, is on the whole more satisfactory, and rests on better grounds, than any which had before been offered to the public. Hume, Blair, the reviewer in the Scots Magazine, each in his own and different way, recognized both the intellectual attraction of a comprehensive and systematic analysis and the additional attraction of a valid interpretation of contemporary events and problems. [30 ] T. S. Ashton, Economic Fluctuations in England, 1700–1800 (Oxford, 1959), 173. [31 ] Steuart’s general position is perhaps adequately summarized in the statement that ‘In treating every question of political œconomy, 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, by their natural and immediate effects or consequences, from hurting any interest within the commonwealth.’ (An Inquiry into the Principles of Political Oeconomy: Being an Essay on the Science of Domestic Policy in Free Nations (London, 1767) i. 120, ed. Skinner (Edinburgh 1966), i.122). Most of the contemporary reviews of Steuart’s work commented on this aspect of it, in a way which throws an interesting light on the kind of reception Smith could expect. The Critical Review, xxiii (1767), commented for example: ‘We

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have no idea of a statesman having any connection with the affair, and we believe that the superiority which England has at present over all the world, in point of commerce, is owing to her excluding statesmen from the executive part of all commercial concerns.’ (412.) [32 ] M. Palyi, ‘The Introduction of Adam Smith on the Continent’ in J. M. Clark et al., Adam Smith, 1776–1926 (1928, reprinted New York, 1966), 196. [33 ] Even in the art of war, where the contribution of the ‘state of the mechanical as well as of some other arts’ is recognized in general, and the invention of fire–arms in particular (V.i.a.43), the division of labour is still the key to success: ‘it is necessary that [the art of war] should become the sole or principal occupation of a particular class of citizens, and the division of labour is as necessary for the improvement of this, as of every other art.’ (V.i.a.14). [34 ] F. Hutcheson, An Inquiry concerning Moral Good and Evil in An Inquiry into the Original of our Ideas of Beauty and Virtue (London, 4th ed., 1738), 207. [35 ] H. T. Buckle, History of Civilization in England (London, 1857–61). Reprinted as On Scotland and the Scotch Intellect, ed. H. J. Hanham (Chicago, 1970), 285.

THE TEXT AND APPARATUS
SINCE WN is a work of some magnitude and complexity, yet one inadequately described in the standard bibliographical references, it may be appropriate to define the various editions examined, to indicate the circumstances of printing and issue, of each edition to the present text.

1

2

and then to specify the relation

1] 4° 1st edition. Published 9 March 1776 at £1.16.0 in blue–grey or marbled boards. Vol. i: A4 a2 B–L4 M4(± M3) N–P4 Q4(± Q1) R–T4 U4(± U3) X–2Y4 2Z4(± 2Z3) 3A4(± 3A4) 3B–3N4 3O4(± 3O4) 3P–3T4. Pp. i title, ii advt for TMS 4th edn., iii–xi contents, xii blank. 12–510 text, 511–512 blank. Vol. ii: A2 B–C4 D4(± D1) E–3Y4 3Z4 (± 3Z4) 4A4 4B4 (– 4B1.2 + 4B1.2) 4C4(± 4C2.3) 4D–4E4 4F2. Pp. i half– title, iii title, iv errata, 12–587 text, 588 advts. The substitute leaves, six in the first volume and six in the second, have been noted only in their cancelled state.

3

The original edition, the first title of which serves as a frontispiece to this volume, properly serves as copy–text: the printing closest to original manuscript and thus ordinarily preserving in its ‘accidentals’, or spelling and punctuation, the author’s several idiosyncracies. Nonetheless, since the edition was printed not directly from the author’s original script but, apparently like all his work, from a copy prepared by an amanuensis, some of its peculiarities may be attributed to another hand and therefore discounted whenever the third edition, closely attended by the author, offers a less ambiguous reading. 2] 4° 2d edition. Published 28 February 1778 at £1.16.0 in boards. Vol. i: A–G4 H4(± H4) I–2D4 2E4(± 2E2.3) 2F–2L4 2M4(± 2M2.3) 2N–3S4 3T4(– 3T4). Pp. i title, iii–vii contents, viii advt for TMS 4th edn. and errata, 12–510

4

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text. Vol. ii: A4 B–4E4 4F4(– F4). Pp. i half–title, iii title, v–viii contents, 12–589 text, 590 blank. In Volume i the Texas copy still contains original leaf H4, first of the five cancelled in other specimens, but this is invariant from the cancellans. Strahan printing ledger: (Nov. 1777) 141½ sheets, 500 copies, @ 16s. = £113.4.0. Extra Corrections £4. This printing was done, it will be observed, three months before issue. The second edition exhibits a number of alterations large and small, some providing new information, some correcting matters of fact, some perfecting the idiom, and a large number now documenting references in footnotes. All these substantive changes are incorporated in the text excepting only those further amended in the third edition. 2A] 4° ‘Additions and Corrections.’ Published 20 November 1784 at 2s. in blue–grey boards, ‘to accommodate the purchasers of the former editions’. Issue: B–L4. Pp. 12–79 text, 80 blank. Strahan ledger: (Oct. 1784) 10 sheets, 500 copies, @ 16s. = £8. As the collation would indicate, this is a very considerable supplement, representing in thirteen sections some 24,000 words. The ‘Additions’ were undertaken several years before when Smith first proposed a separate printing and his publisher, Thomas Cadell, agreed subject to a proviso— which could hardly be enforced—that the issue be sold only to those who had purchased the earlier editions. Though many ‘Corrections’ doubtless were then and thereafter also entered in Smith’s copy of the Second Edition, and from the caption title would appear to be conveyed as well in this separate issue, a goodly number of lesser consequence could be accommodated expediently only in the edition next described. 3] 8° 3d edition. Published simultaneously with 2A 20 November 1784 at 18s. in boards or one guinea bound. Vol. i: A4 B–2I8 2K2. Pp. i title, iii Advertisement, iv errata, v vi–viii contents, 12– 499 text, 500 blank. Vol. ii: π2 a2 B–2K8 2L6. Pp. 1–2 blank, i title, iii iv–vi contents, 12–518 text, 519–523 Appendix, 524 blank. Vol. iii: π2 a2 B–2K8 2L2. Pp. 1–2 blank, i title, iii iv–v contents, vi blank, 12–465 text, 466 blank, 467–515 index, 516 advt for TMS, 4th edn.

5

6

7

Strahan ledger: (Oct. 1784) 97½ sheets, 1000 copies, @ £1.7.0 = £131.12.6. Extra for Index £3.5.0. Tables and Corrections £4.19.0. In view of the author’s later statement (see section 4 below) this issue must be accepted as representing his final version, one which incorporates with some further amendments all the additions issued in 2A, further revises the text and, most significantly, supplies a lengthy index. Moreover, as there is clear evidence that it was read several times in proof, with close attention to the pointing, the third edition can be regarded as supervening even the first in many of its formal aspects, and thus now serves as printers’ copy.

8

9

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4] 8° 4th edition. Published 6 November 1786 at 18s. in boards. Vol. i: A4 B–2I8 2K2. Pp. i title, iii Advt to 3d Ed., iv Advt to 4th Ed., v vi–viii contents, 12–499 text, 500 errata. Vol. ii: π2 a2 B–2K8 2L6. Pp. 1–2 blank, i title, iii iv–vi contents, 12–518 text, 519–523 Appendix, 524 errata. Vol. iii: A4 B–2K8 2L2. Pp. 1–2 blank, i title, iii iv–v contents, vi errata, 12–465 text, 466 blank, 467–515 index, 516 advt for TMS, 4th edn.

10

Strahan ledger: (Oct. 1786) 98 sheets, 1250 copies, @ £1.11.0 = £151.18.0. Extra for Tables and Index £4.2.0. If we accept Smith’s own assurance, in the new ‘Advertisement’, that there are indeed ‘no alterations of any kind’ in this edition, then the ‘few trifling alterations’ which Cannan here observed, and accepted in his own text, may be dismissed along with the others which he rightly That there are no perceived to be ‘misreadings or unauthorized corrections of the printers’. fewer than fourteen errata noted, some in each of the three volumes, attests however to the printer’s continuing concern, a concern evidenced as late as the posthumous seventh edition of 1793, where F2 in the first volume is a cancel. 5] 8° 5th edition. Published 1789, possibly also, as for 4, at 18s. in boards. Vol. i: A6 B–2I8 2K2. Pp. 1–2 blank, i title, iii–iv advt to 3d Edn., v–vi Advt to 4th Ed., vii viii–x contents, 12–499 text, 500 blank. Vol. ii: π2 a2 B–2K8 2L6. Pp. 1–2 blank, i title, iii iv–vi contents, 12–518 text, 519–523 Appendix, 524 blank. Vol. iii: A4 B–2K8 2L2. Pp. 1–2 blank, i title, iii iv–v contents, vi blank, 12–465 text, 466 blank, 467–515 index, 516 advt for TMS 4th edn.

11

12

Strahan ledger: (Feb. 1789) 98 sheets, 1500 copies, @ £1.14.0 = £166.12.0. Extra for Tables and Index £4.6.0. From this edition the present text adopts one obvious correction only, the reading ‘Hope’ in the ‘Advertisement to the Fourth Edition’, but ordinarily, as with the Fourth, refuses any admittance to numerous adjustments (as well as many misprints) now again representing, apparently, only the work of the printer. It is certainly illogical to follow this text, as does Cannan, simply because it is ‘the last published in Smith’s Lifetime’.

13

6] 8° 6th edition. Published 1791, possibly also, as for 4, at 18s. in boards.

Description as for 5, except that final advt. is now for TMS 6th edn. Strahan ledger: (Dec. 1791) 98 sheets, 2000 copies, @ £2 = £196. Extra for Tables and Index £4.6.0. Like the two preceding, this the first posthumous edition has been collated, and its variants also recorded below the text, as a matter of historical record. The account extends thus far to meet, and in this case to dismiss, any possibility that the author left some final revisions incorporated in the work only after his death.

14

15

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Once the order and validity of readings was assessed, according to the rationale set out above, the preparation of this text then followed a set procedure. First at Texas the two available specimens of 1 (the copy–text) were read against all the later editions, including a photocopy of British Library 2A, and every variant entered in a photocopy of Texas 3 (printer’s copy), the substantive readings in one column, the accidentals in a second, and end–line hyphenations in a third. This record was then verified against the copies at Glasgow and printer’s copy marked for the press. Thereafter the proofs were read independently by all three editors against 3, any discrepancies again resolved at Glasgow, and revised proofs thereafter checked against the final record. As now prepared this edition contains a number of features all described below. For the text proper the paragraphs within each section or part have been numbered both to facilitate cross reference in the annotations and to simplify later citation from this edition. Within the text stars and daggers are the author’s own devices for pointing a note, superscript figures the numbers entered by the present editors to signal their further commentary. Superscript letters, denoting substantive textual variants, are of two orders, e.g.:

16

shall a only
b

single indicator centered between two words, signifying, as noted below text, an additional reading once inserted at this point double indicators abutting the word or words in question, both delimiting, as noted below text, a passage elsewhere in variant form or omitted.

his capitalb

Differences in spelling (ancient/antient, public/publick, &c) remain unaltered as representative of the variable orthography Smith himself continually allowed on the several occasions he revised his work. In general all accidentals, if necessarily introduced from some edition other than 3, or in a few instances by the present editors, are listed in Schedule A; accidentals not admitted, along with misprinted substantives, are recorded in B; line–end hyphenation is registered in C. At the beginning of each original page in 3 the number of that page is entered in brackets. Below the text page, as now printed, three kinds of data may appear. First are Smith’s own references (together with appropriate indicators if these originally occur in some edition after the first or if they are later amended) followed immediately, within square brackets, by any extension of the reference the present editors consider necessary. Second are the substantive textual variants, all entered in a manner indicating the kind or extent of variation:

a

not 2A

‘not’ inserted in 2A ‘Additions and Corrections’ but not present in 1–2, deleted in 3–6, and therefore excluded from this text. passage first omitted in 4 but immediately corrected in 4 errata list and retained thereafter passage entered in all editions except 1 words in 1–2 differing from phrase adopted in 3–6 [includes the whole of this paragraph]

om. 4 <corrected 4e– 6>
c–c

b–b

om. 1 in this 1–2 2–6

d–d e–e

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cautionary note for an extensive addition, where insertions f andg or other amendmentsh–h andi–i may intrude
Thirdly, below text page, as signalled by superscript numerals in the text, come the editors’ own commentary. These number references are sequential only through each part. Following the work, and the several editorial schedules, there are three indexes, each of which bears its own heading as to purpose and utility. As an essential part of their own editorial work, the text and its variants have also been checked and scrutinized by the General Editors. W.B.T.

Endnotes
[1 ] Altogether the survey has extended to forty–nine copies in seven institutions: British Library, editions 1–5 and separate issue 2A; Bodleian Library, 1, 3, 4, 6; University of Glasgow 1(3 copies), 2, 2A, 4(3), 5(2); National Library of Australia, 1, 2, 2A(bound in 2), 3 (2), 4, 6(2); New York Public Library, 1(5), 2, 2A(bound in 1), 3, 4, 6; Princeton University 1(3), 2A; University of Texas at Austin, 1(2), 2–6. Duplicate copies in each library were compared against each other and the unique register of press figures for every volume checked against every other comparable volume. The figures, as cited in subsequent notes, occasionally show some displacements or other disorders in press–work, but in no copy, as later inspection confirms, is there any textual variation within the edition. [2 ] Issue date, for immediate reference listed first, is taken throughout from the London Chronicle, a journal which also carries preliminary advts. certifying the date: for first edition in the number 5–7 March 1776; for the third, 6–9 November 1784; for the fourth, 26–28 October 1786. The original preliminary notice wrongly gives the first–edition price as £2.2.0, a figure corrected on the date of publication. Rae (324), also cites the correct price but then curiously inflates the cost for the second to £2.2.0, though it still remains, as for the first, £1.16.0. The printing ledgers maintained by William Strahan to 1785, and by his son Andrew thereafter, do not indicate any work for the first edition but thenceforth cite the data given, for editions 2–5, in British Library Add. MS. 48815 (ff. 9, 66, 85, 113) and for edition 6 in Add. MS. 48811 (f. 3). [3 ] In several copies of volume ii there is no press figure p. 351 and, in all, p. 469 is figured either 6 or 8. Apparently (as noted in the Times Literary Supplement, 20 July 1940, 356) a few copies also exist with cancel titles having imprint extended to include W. Creech at Edinburgh. [4 ] As early as 1755 Smith refers to his Edinburgh lectures as ‘written in the hand of a clerk who left my service six years ago’ (Stewart IV.26) and his difficulty in writing a compact script doubtless led him to employ other clerks, one of whom, Alexander Gillies, has been identified as the amanuensis for WN. W. R. Scott, Adam Smith as Student and Professor, (Glasgow, 1937), 359–60.

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[5 ] In several copies no figure appears, in volume i, at pp. 124, 386, 389, or 390 and none in ii at p. 24. Additionally in ii the figures for Texas copy gathering 4A (pp. 545–52) reveal this to be a stray sheet held over from the printing of the first edition. [6 ] See Letter 222 addressed to Cadell dated 7 December 1782, and Cadell’s answer, Letter 223, 12 December 1782. [7 ] Volume ii page 422 is figured either 3 or 6. [8 ] This may not have been by Smith (Cannan, xvi), but quite probably was done under his direction either by amanuensis Gillies or by someone else familiar with Scottish banking practices. In the New York Public Library copy index gathering 2K, as the figures indicate, has been greatly disordered in the original imposition. [9 ] Letter 227 addressed to William Strahan, dated 22 May 1783, and Letter 237, 10 June 1784. [10 ] In several copies no figure appears, in volume ii, at pp. 431 and 490. [11 ] Cannan, xvii. It may also be noted that, beginning with this edition, Strahan does not charge for any author’s corrections. [12 ] In a few copies, volume iii, no figure appears at pp. 137, 260 and, in all, p. 408 is figured 7 or 10. [13 ] Cannan, xvii. [14 ] Again in a few copies of volume iii, no figure appears at p. 32 and, in all, p. 287 is figured 7 or 9, p. 315 figured 6 or 7. Additionally in volume ii, gathering 2D, there are three figures, a circumstance which (when two is the maximum) is most extraordinary. [15 ] The fourth, revised edition of Samuel Richardson’s Sir Charles Grandison (1762), it will be recalled, began to appear seven months after his death, and yet another edition, differently revised, was issued as late as 1810. See R. C. Pierson’s commentary in Studies in Bibliography, xxi (1968), 163–89. [16 ] To accomplish this numbering in an orderly manner some few adjustments have been made (all with due notice) in Smith’s own keys to the arrangement of his sections and subsections.

ADVERTISEMENTa
THE first Edition of the following Work was printed in the end of the year 1775, and in the beginning of the year 1776. Through the greater part of the Book, therefore, whenever the present state of things is mentioned, it is to be understood of the state they were in, either about that time, or at some earlier period, during the time I was employed in writing the Book. To bthisb

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third Edition, however, I have made several additions, particularly to the chapter upon Drawbacks, and to that upon Bounties; likewise a new chapter entitled, The Conclusion of the Mercantile System; and a new article to the chapter upon the expences of the sovereign. In all these additions, the present state of things means always the state in which they were during the

1 year 1783 and the beginning of the cpresentc year 1784.

Endnotes
[a ] TO THE THIRD EDITION. 4–6 [b–b ] the 4–6 [c–c ] om. 4–6 [1 ] The new material to be included in edition 3 is described by Smith in Letter 227 addressed to William Strahan, dated 22 May 1783 and in Letter 222, addressed to Thomas Cadell, dated 7 December 1782.

ADVERTISEMENT TO THE FOURTH EDITION
IN this fourth Edition I have made no alterations of any kind. I now, however, find myself at liberty to acknowledge my very great obligations to Mr. Henry aHopea of Amsterdam. To that Gentleman I owe the most distinct, as well as liberal information, concerning a very interesting and important subject, the Bank of Amsterdam; of which no printed account had ever appeared to me satisfactory, or even intelligible. The name of that Gentleman is so well known in Europe, the information which comes from him must do so much honour to whoever has been favoured with it, and my vanity is so much interested in making this acknowledgement, that I can no longer refuse myself the pleasure of prefixing this Advertisement to this new Edition of my Book.

1

Endnotes
[a–a ] Hop 4 [1 ] Steuart’s account of the Bank of Amsterdam can hardly be described as unintelligible (Principles of Political Oeconomy (London, 1767) IV.2, xxxvii–xxxix).

INTRODUCTION AND PLAN OF THE WORK
1
THE annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consist always, either in the immediate produce of that labour, or in what is purchased with that produce from other nations.

2

According therefore, as this produce, or what is purchased with it, bears a greater or smaller proportion to the number of those who are to consume it, the nation will be better or worse

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supplied with all the necessaries and conveniences for which it has occasion.

3 But this proportion must in every nation be regulated by two different circumstances; first, by the [2] skill, dexterity, and judgment with which aitsa labour is generally appliedb; and, secondly, by the
proportion between the number of those who are employed in useful labour, and that of those who are not so employed. Whatever be the soil, climate, or extent of territory of any particular nation, the abundance or scantiness of its annual supply must, in that particular situation, depend upon those two circumstances.

4

The abundance or scantiness of this supply too seems to depend more upon the former of those two circumstances than upon the latter. Among the savage nations of hunters and fishers, every individual who is able to work, is more or less employed in useful labour, and endeavours to provide, as well as he can, the necessaries and conveniencies of life, for himself, corc such of his family or tribe as are either too old, or too young, or too infirm to go a hunting and fishing. Such nations, however, are so miserably poor, that, from mere want, they are frequently reduced, or, at least, think themselves reduced, to the necessity sometimes of directly destroying, and sometimes of abandoning their infants, their old people, and those afflicted with lingering diseases, to perish with hunger, or to be devoured by wild beasts. Among civilized and thriving nations, on the contrary, though a great number of people do not labour at all, many of whom consume the produce of ten times, frequently of a hundred times more labour than the greater part of those who work; yet the produce of the whole labour of the society is so great, that all are

[3] often abundantly supplied, and a workman, even of the lowest and poorest order, if he is frugal
and industrious, may enjoy a greater share of the necessaries and conveniences of life than it is possible for any savage to acquire.

5

The causes of this improvement, in the productive powers of labour, and the order, according to which its produce is naturally distributed among the different ranks and conditions of men in the society, make the subject of the First Book of this Inquiry.

6

Whatever be the actual state of the skill, dexterity, and judgment with which labour is applied in any nation, the abundance or scantiness of its annual supply must depend, during the continuance of that state, upon the proportion between the number of those who are annually employed in useful labour, and that of those who are not so employed. The number of useful and productive labourers, it will hereafter appear, is every where in proportion to the quantity of capital stock which is employed in setting them to work, and to the particular way in which it is so employed. The Second Book, therefore, treats of the nature of capital stock, of the manner in which it is gradually accumulated, and of the different quantities of labour which it puts into motion, according to the different ways in which it is employed.

7

Nations tolerably well advanced as to skill, dexterity, and judgment, in the application of labour, have followed very different plans in the general conduct or direction of it; and those plans have given extraordinary encouragement to the industry of the country; that of others to the industry of towns. Scarce any nation has dealt equally and impartially with every sort of industry. Since the downfal of the Roman empire, the policy of Europe has been more favourable to arts, manufactures, and commerce, the industry of towns; than to agriculture, the industry of the country. The circumstances which seem to have introduced and established this policy are

[4] not all been equally favourable to the greatness of its produce. The policy of some nations has

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explained in the Third Book.

8

Though those different plans were, perhaps, first introduced by the private interests and prejudices of particular orders of men, without any regard to, or foresight of, their consequences upon the general welfare of the society; yet they have given occasion to very different theories of political œconomy; of which some magnify the importance of that industry which is carried on in towns, others of that which is carried on in the country. Those theories have had a considerable influence, not only upon the opinions of men of learning, but upon the public conduct of princes and sovereign states. I have endeavoured, in the Fourth Book, to explain, as fully and distinctly as I can, those different theories, and the principal effects which they have produced in different ages and nations.
d

To explaind in what has consisted the revenue of the great body of the people, or what ehas

beene the nature of those funds which, in different ages and nations, have supplied their annual

[5] consump–tion, is fthe object off these Four first Books. The Fifth and last Book treats of the
revenue of the sovereign, or commonwealth. In this Book I have endeavoured to show; first, what are the necessary expences of the sovereign, or commonwealth; which of those expences ought to be defrayed by the general contribution of the whole society; and which of them, by that of some particular part only, or of some particular members of gitg; secondly, what are the different methods in which the whole society may be made to contribute towards defraying the expences incumbent on the whole society, and what are the principal advantages and inconveniencies of each of those methods: and, thirdly and lastly, what are the reasons and causes which have induced almost all modern governments to mortgage some part of this revenue, or to contract debts, and what have been the effects of those debts upon the real wealth, the annual produce of the land and labour of the society.

Endnotes
[a–a ] 2–6 [b ] in it 1 [c–c ] and 1 [d–d ] 2–6 [e–e ] is 1 [f–f ] treated of in 1 [g–g ] the society 1

BOOK I OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE POWERS OF LABOUR, AND OF THE ORDER ACCORDING TO WHICH ITS PRODUCE IS

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NATURALLY DISTRIBUTED AMONG THE DIFFERENT RANKS OF THE PEOPLE CHAPTER I

Of The Division Of Labour
THE greatest aimprovementa in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labour.

1

2

The effects of the division of labour, in the general business of society, will be more easily understood, by considering in what manner it operates in some particular manufactures. It is commonly supposed to be carried furthest in some very trifling ones; not perhaps that it really is carried further in them than in others of more importance: but in those trifling manufactures which are destined to supply the small wants of but a small number of people, the whole number of workmen must necessarily be small; and those employed in every different branch of the work can often be

[7]

collected into the same workhouse, and placed at once under the view of the spectator. In those great manufactures, on the contrary, which are destined to supply the great wants of the great body of the people, every different branch of the work employs so great a number of workmen, that it is impossible to collect them all into the same workhouse. We can seldom see more, at one time, than those employed in one single branch. Though bin such manufactures,b therefore, the work may really be divided into a much greater number of parts, than in those of a more trifling nature, the division is not near so obvious, and has accordingly been much less observed.

3

To take an example, therefore, from a very trifling manufacture; but one in which the division of labour has been very often taken notice of, the trade of the pin–maker; a workman not educated to this business (which the division of labour has rendered a distinct trade), nor acquainted with the use of the machinery employed in it (to the invention of which the same division of labour has probably given occasion), could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty. But in the way in which this business is now carried on, not only the whole work is a peculiar trade, but it is divided into a number of branches, of which the greater part are likewise peculiar trades. One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to

2

[8]

make the head requires two or three distinct operations; to put it on, is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them. I have seen a small manufactory of this kind where ten men only were employed, and where some of them consequently performed two or three distinct operations. But though they were very poor, and therefore but indifferently accommodated with the

3

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necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. There are in a pound upwards of four thousand pins of a middling size. Those ten persons, therefore, could make among them upwards of forty–eight thousand pins in a day. Each person, therefore, making a tenth part of forty–eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day; that is, certainly, not the two hundred and fortieth, perhaps not the four thousand eight hundredth part of what they

4

[9]

are at present capable of performing, in consequence of a proper division and combination of their different operations.

4

In every other art and manufacture, the effects of the division of labour are similar to what they are in this very trifling one; though, in many of them, the labour can neither be so much subdivided, nor reduced to so great a simplicity of operation. The division of labour, however, so far as it can be introduced, occasions, in every art, a proportionable increase of the productive powers of labour. The separation of different trades and employments from one another, seems to have taken place, in consequence of this advantage. This separation too is generally carried furthest in those countries which enjoy the highest degree of industry and improvement; what is the work of one man, in a rude state of society, being generally that of several in an improved one. In every improved society, the farmer is generally nothing but a farmer; the manufacturer, nothing but a manufacturer. The labour too which is necessary to produce any one complete manufacture, is almost always divided among a great number of hands. How many different trades are employed in each branch of the linen and woollen manufactures, from the growers of the flax and the wool, to the bleachers and smoothers of the linen, or to the dyers and dressers of the cloth! The nature of agriculture, indeed, does not admit of so many subdivisions of labour, nor of so

5

[10]

complete a separation of one business from another, as manufactures. It is impossible to separate so entirely, the business of the grazier from that of the corn–farmer, as the trade of the carpenter is commonly separated from that of the smith. The spinner is almost always a distinct person from the weaver; but the ploughman, the harrower, the sower of the seed, and the reaper of the corn, are often the same. The occasions for those different sorts of labour returning with the different seasons of the year, it is impossible that one man should be constantly employed in any one of them. This impossibility of making so complete and entire a separation of all the different branches of labour employed in agriculture, is perhaps the reason why the improvement of the productive powers of labour in this art, does not always keep pace with their improvement in manufactures. The most opulent nations, indeed, generally excel all their neighbours in agriculture as well as in manufactures; but they are commonly more distinguished by their superiority in the latter than in the former. Their lands are in general better cultivated, and having more labour and expence bestowed upon them, produce more, in proportion to the extent and natural fertility of the ground. But cthisc superiority of produce is seldom much more than in proportion to the superiority of labour and expence. In agriculture, the labour of the rich country is not always much more productive than that of the poor; or, at least, it is never so much more productive, as it commonly is in manufactures. The corn of the rich country, therefore, will not

6

7

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[11]

always, in the same degree of goodness, come cheaper to market than that of the poor. The corn of Poland, in the same degree of goodness, is as cheap as that of France, notwithstanding the superior opulence and improvement of the latter country. The corn of France is, in the corn provinces, fully as good, and in most years nearly about the same price with the corn of England, though, in opulence and improvement, France is perhaps inferior to England. The dcorn–landsd of England, however, are better cultivated than those of France, and the ecorn–landse of France are said to be much better cultivated than those of Poland. But though the poor country, notwithstanding the inferiority of its cultivation, can, in some measure, rival the rich in the cheapness and goodness of its corn, it can pretend to no such competition in its manufactures; at least if those manufactures suit the soil, climate, and situation of the rich country. The silks of France are better and cheaper than those of England, because the silk manufacture, fat least under the present high duties upon the importation of raw silk,f does not gso wellg suit the climate of England has that of France.h But the hard–ware and the coarse woollens of England are beyond all comparison superior to those of France, and much cheaper too in the same degree of goodness. In Poland there are said to be scarce any manufactures of any kind, a few of those coarser household manufactures excepted, without which no country can well subsist. This great increase iofi the quantity of work, which, jin consequence of the division of

9

[12]

labour,j the same number of people are capable of performing, k is owing to three different circumstances; first, to the increase of dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and lastly, to the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many.

10

6

First, the improvement of the dexterity of the workman necessarily increases the quantity of the work he can perform, and the division of labour, by reducing every man’s business to some one simple operation, and by making this operation the sole employment of his life, necessarily increases very much the dexterity of the workman. A common smith, who, though accustomed to handle the hammer, has never been used to make nails, if upon some particular occasion he is obliged to attempt it, will scarce, I am assured, be able to make above two or three hundred nails in a day, and those too very bad ones. A smith who has been accustomed to make nails, but whose sole or principal business has not been that of a nailer, can seldom with his utmost diligence make more than eight hundred or a thousand nails in a day. I have seen several boys under twenty years of age who had never exercised any other trade but that of making nails, and who, when they exerted themselves, could make, each of them, upwards of two thousand three hundred nails in a day. The making of a nail, however, is by no

[13]

means one of the simplest operations. The same person blows the bellows, stirs or mends the fire as there is occasion, heats the iron, and forges every part of the nail: In forging the head too he is obliged to change his tools. The different operations into which the making of a pin, or of a metal button, is subdivided, are all of them much more simple, and the dexterity of the person, of whose life it has been the sole business to perform them, is usually much greater. The rapidity with which some of the operations of those manufactures are performed, exceeds what the human hand could, by those who had never seen them, be supposed capable of acquiring.

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7

Secondly, the advantage which is gained by saving the time commonly lost in passing from one sort of work to another, is much greater than we should at first view be apt to imagine it. It is impossible to pass very quickly from one kind of work to another, that is carried on in a different place, and with quite different tools. A country weaver, who cultivates a small farm, must lose a good deal of time in passing from his loom to the field, and from the field to his loom. When the two trades can be carried on in the same workhouse, the loss of time is no doubt much less. It is even in this case, however, very considerable. A man commonly saunters a little in turning his hand from one sort of employment to another. When he first begins the new work he is seldom very keen and hearty; his mind, as they say, does not go to it, and for some time he rather trifles than

[14]

applies to good purpose.

12

The habit of sauntering and of indolent careless application,

acquired by every country workman who is which is naturally, or rather necessarily obliged to change his work and his tools every half hour, and to apply his hand in twenty different ways almost every day of his life; renders him almost always slothful and lazy, and incapable of any vigorous application even on the most pressing occasions. Independent, therefore, of his deficiency in point of dexterity, this cause alone must always reduce considerably the quantity of work which he is capable of performing.

13

14

8

Thirdly, and lastly, every body must be sensible how much labour is facilitated and abridged by the application of proper machinery. It is unnecessary to give any I shall l only observe, mtherefore,m that the invention of all those machines example. by which labour is so much facilitated and abridged, seems to have been originally owing to the division of labour. Men are much more likely to discover easier and readier methods of attaining any object, when the whole attention of their minds is directed towards that single object, than when it is dissipated among a great variety of things. But in consequence of the division of labour, the whole of every man’s attention comes naturally to be directed towards some one very simple object. It is naturally to be expected, therefore, that some one or other of those who are employed in each particular branch of labour should soon find out easier and readier methods of

15

[15]

performing their own particular work, wherever the nature of it admits of such A great part of the machines nmade use ofn in those manufactures in improvement. which labour is most subdivided, were originally the inventions of common workmen, who, being each of them employed in some very simple operation, naturally turned their Whoever thoughts towards finding out easier and readier methods of performing it. has been much accustomed to visit such manufactures, must frequently have been shewn very pretty machines, which were the inventions of osucho workmen, in order to facilitate and quicken their own particular part of the work.

16

17

18

a boy was constantly employed to open and shut alternately the engines, communication between the boiler and the cylinder, according as the piston either ascended or descended. One of those boys, who loved to play with his companions, observed that, by tying a string from the handle of the valve, which opened this communication, to another part of the machine, the valve would open and shut without his assistance, and leave him at liberty to divert himself with his play–fellows. One of the greatest improvements that has been made upon this machine, since it was first invented, was in this manner the discovery of a boy who wanted to save his own labour.

19

In the first fire–

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9
[16]

All the improvements in machinery, however, have by no means been the inventions of those who had occasion to use the machines. Many improvements have been made by the ingenuity of the makers of the machines, when to make them became the business and some by that of those who are called philosophers or men of of a peculiar trade; speculation, whose trade it is, not to do any thing, but to observe every thing; and who, upon that account, are often capable of combining together the powers of the most In the progress of society, philosophy or speculation distant and dissimilar objects. becomes, like every other employment, the principal or sole trade and occupation of a particular class of citizens. Like every other employment too, it is subdivided into a great number of different branches, each of which affords occupation to a peculiar tribe or class of philosophers; and this subdivision of employment in philosophy, as well as in every other business, improves dexterity, and saves time. Each individual becomes more expert in his own peculiar branch, more work is done upon the whole, and the quantity of science is considerably increased by it.

21

22

23

10

It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well–governed society, that universal opulence which extends itself to the lowest ranks of the people. Every workman has a great quantity of his own work to dispose of beyond what he himself has occasion for; and every other workman being exactly in the same situation, he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the

24

[17]

same thing, for the price of a great quan–tity of theirs. He supplies them abundantly with what they have occasion for, and they accommodate him as amply with what he has occasion for, and a general plenty diffuses itself through all the different ranks of the society.

11

Observe the accommodation of the most common artificer or daylabourer in a civilized and thriving country, and you will perceive that the number of people of whose industry a part, though but a small part, has been employed in procuring him this accommodation, exceeds all computation. The woollen coat, for example, which covers the daylabourer, as coarse and rough as it may appear, is the produce of the joint The shepherd, the sorter of the wool, the labour of a great multitude of workmen. wool–comber or carder, the dyer, the scribbler, the spinner, the weaver, the fuller, the dresser, with many others, must all join their different arts in order to complete even this homely production. How many merchants and carriers, besides, must have been employed in transporting the materials from some of those workmen to others who often live in a very distant part of the country! How much commerce and navigation in particular, how many ship–builders, sailors, sail–makers, rope–makers, must have been employed in order to bring together the different drugs made use of by the dyer, which often come from the remotest corners of the world! What a variety of labour too is necessary in order to produce the tools of the meanest of those workmen! To say

25

[18]

nothing of such complicated ma–chines as the ship of the sailor, the mill of the fuller, or even the loom of the weaver, let us consider only what a variety of labour is requisite in order to form that very simple machine, the shears with which the shepherd clips the The miner, the builder of the furnace for smelting the ore, the feller of the wool. timber, the burner of the charcoal to be made use of in the smelting–house, the brick– maker, the brick–layer, the workmen who attend the furnace, the mill–wright, the

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forger, the smith, must all of them join their different arts in order to produce them. Were we to examine, in the same manner, all the different parts of his dress and household furniture, the coarse linen shirt which he wears next his skin, the shoes which cover his feet, the bed which he lies on, and all the different parts which compose it, the kitchen–grate at which he prepares his victuals, the coals which he makes use of for that purpose, dug from the bowels of the earth, and brought to him perhaps by a long sea and a long land carriage, all the other utensils of his kitchen, all the furniture of his table, the knives and forks, the earthen or pewter plates upon which he serves up and divides his victuals, the different hands employed in preparing his bread and his beer, the glass window which lets in the heat and the light, and keeps out the wind and the rain, with all the knowledge and art requisite for preparing that beautiful and happy invention, without which these northern parts of the world could scarce have afforded a

[19]

very comfortable habitation, together with the tools of all the different workmen employed in producing those different conveniencies; if we examine, I say, all these things, and consider what a variety of labour is employed about each of them, we shall be sensible that without the assistance and cooperation of many thousands, the very meanest person in a civilized country could not be provided, even according to, what we very falsely imagine, the easy and simple manner in which he is commonly Compared, indeed, with the more extravagant luxury of the great, accommodated. his accommodation must no doubt appear extremely simple and easy; and yet it may be true, perhaps, that the accommodation of an European prince does not always so much exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many an African king, the absolute master of the lives and liberties of ten thousand naked savages.

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CHAPTER II

Of The Principle Which Gives Occasion To The Division Of Labour
1 [20]
THIS division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom, which foresees and intends that general opulence to which it gives occasion. It is the necessary, though very slow and gradual consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another.

1

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2

Whether this propensity be one of those original principles in human nature, of which no further account can be given; or whether, as seems more probable, it be the necessary consequence of the faculties of reason and speech, it belongs not to our present subject to enquire. It is common to all men, and to be found in no other race of animals, which seem to know neither this nor any other species of contracts. Two greyhounds, in running down the same hare, have sometimes the appearance of acting in some sort of concert. Each turns her towards his companion, or endeavours to intercept her when his

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companion turns her towards himself. This, however, is not the effect of any contract, but of the accidental concurrence of their passions in the same object at that particular time. Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that. When an animal wants to obtain something either of a man or of another animal, it has no other means of persuasion but to gain the favour of those whose service it requires. A puppy

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fawns upon its dam, and a spaniel endea–vours by a thousand attractions to engage the attention of its master who is at dinner, when it wants to be fed by him. Man sometimes uses the same arts with his brethren, and when he has no other means of engaging them to act according to his inclinations, endeavours by every servile and fawning attention to obtain their good will. He has not time, however, to do this upon every occasion. In civilized society he stands at all times in need of the co–operation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. In almost every other race of animals each individual, when it is grown up to maturity, is intirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self–love in his favour, and shew them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the

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butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self–love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chuses to depend chiefly upon the benevolence of his fellow–citizens. Even a beggar does not depend upon it entirely. The charity of well–disposed people, indeed, supplies him with the whole fund of his subsistence. But though this principle ultimately provides him with all the necessaries of life which he has occasion for, it neither does nor can provide him with them as he has occasion for them. The greater part of his occasional wants are supplied in the same manner as those of other people, by treaty, by barter, and by purchase. With the money which one man gives him he purchases food. The old cloaths which another bestows upon him he exchanges for other old cloaths which suit him better, or for lodging, or for food, or for money, with which he can buy either food, cloaths, or lodging, as he has occasion.

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3

As it is by treaty, by barter, and by purchase, that we obtain from one another the greater part of those mutual good offices which we stand in need of, so it is this same trucking disposition which originally gives occasion to the division of labour. In a tribe of hunters or shepherds a particular person makes bows and arrows, for example, with more readiness and dexterity than any other. He frequently exchanges them for cattle

[23]

or for venison with his companions; and he finds at last that he can in this manner get more cattle and venison, than if he himself went to the field to catch them. From a regard to his own interest, therefore, the making of bows and arrows grows to be his chief business, and he becomes a sort of armourer.

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Another excels in making the

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frames and covers of their little huts or moveable houses. He is accustomed to be of use in this way to his neighbours, who reward him in the same manner with cattle and with venison, till at last he finds it his interest to dedicate himself entirely to this employment, and to become a sort of house–carpenter. In the same manner a third becomes a smith or a brazier, a fourth a tanner or dresser of hides or skins, the principal part of the clothing of savages. And thus the certainty of being able to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he may have occasion for, encourages every man to apply himself to a particular occupation, and to cultivate and bring to perfection whatever talent or genius he may possess for that particular species of business.

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The difference of natural talents in different men is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the

[24]

The difference between the most cause, as the effect of the division of labour. dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature, as from habit, custom, and education. When they came into the world, and for the first six or eight years of their existence, they werea, perhaps,a very much alike, and neither their parents nor play–fellows could perceive any remarkable difference. About that age, or soon after, they come to be employed in very different occupations. The difference of talents comes then to be taken notice of, and widens by degrees, till at last the vanity of the philosopher is willing to acknowledge scarce any resemblance. But without the disposition to truck, barter, and exchange, every man must have procured to himself every necessary and conveniency of life which he wanted. All must have had the same duties to perform, and the same work to do, and there could have been no such difference of employment as could alone give occasion to any great difference of talents.

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As it is this disposition which forms that difference of talents, so remarkable among men of different professions, so it is this same disposition which renders that difference useful. Many tribes of animals acknowledged to be all of the same species, derive from nature a much more remarkable distinction of genius, than what, antecedent to custom and education, appears to take place among men. By nature a philosopher is not in genius and disposition half so different from a street porter, as a mastiff is from a

[25]

greyhound, or a greyhound from a spaniel, or this last from a shepherd’s dog. Those different tribes of animals, however, though all of the same species, are of scarce any use to one another. The strength of the mastiff is not, in the least, supported either by the swiftness of the greyhound, or by the sagacity of the spaniel, or by the docility of the shepherd’s dog. The effects of those different geniuses and talents, for want of the power or disposition to barter and exchange, cannot be brought into a common stock, and do not in the least contribute to the better accommodation and conveniency of the species. Each animal is still obliged to support and defend itself, separately and independently, and derives no sort of advantage from that variety of talents with which nature has distinguished its fellows. Among men, on the contrary, the most dissimilar geniuses are of use to one another; the different produces of their respective talents, by the general disposition to truck, barter, and exchange, being brought, as it were, into a

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common stock, where every man may purchase whatever part of the produce of other men’s talents he has occasion for.

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CHAPTER III

That The Division Of Labour Is Limited By The Extent Of The Market
1
1

As it is the power of exchanging that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of that power, or, in other words, by the extent of the market. When the market is very small, no person can have any encouragement to dedicate himself entirely to one employment, for want of the power to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he has occasion for.

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There are some sorts of industry, even of the lowest kind, which can be carried on no where but in a great town. A porter, for example, can find employment and subsistence in no other place. A village is by much too narrow a sphere for him; even an ordinary market town is scarce large enough to afford him constant occupation. In the lone houses and very small villages which are scattered about in so desert a country as the Highlands of Scotland, every farmer must be butcher, baker and brewer for his own family. In such situations we can scarce expect to find even a smith, a carpenter, or a mason, within less than twenty miles of another of the same trade. The scattered

3

[27]

families that live at eight or ten miles distance from the nearest of them, must learn to perform themselves a great number of little pieces of work, for which, in more populous countries, they would call in the assistance of those workmen. Country workmen are almost every where obliged to apply themselves to all the different branches of industry that have so much affinity to one another as to be employed about the same sort of materials. A country carpenter deals in every sort of work that is made of wood: a country smith in every sort of work that is made of iron. The former is not only a carpenter, but a joiner, a cabinet–maker, and even a carver in wood, as well as a wheel–wright, a plough–wright, a cart and waggon maker. The employments of the latter are still more various. It is impossible there should be such a trade as even that of a nailer in the remote and inland parts of the Highlands of Scotland. Such a workman at the rate of a thousand nails a day, and three hundred working days in the year, will make three hundred thousand nails in the year. But in such a situation it would be impossible to dispose of one thousand, that is, of one day’s work in the year.

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As by means of water–carriage a more extensive market is opened to every sort of industry than what land–carriage alone can afford it, so it is upon the sea–coast, and along the banks of navigable rivers, that industry of every kind naturally begins to subdivide and improve itself, and it is frequently not till a long time after that those

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improvements extend themselves to the inland parts of the country. A broad–wheeled waggon, attended by two men, and drawn by eight horses, in about six weeks time carries and brings back between London and Edinburgh near four ton weight of goods. In about the same time a ship navigated by six or eight men, and sailing between the ports of London and Leith, frequently carries and brings back two hundred ton weight of goods. Six or eight men, therefore, by the help of water–carriage, can carry and bring back in the same time the same quantity of goods between London and Edinburgh, as fifty broad–wheeled waggons, attended by a hundred men, and drawn by four hundred horses. Upon two hundred tons of goods, therefore, carried by the cheapest land– carriage from London to Edinburgh, there must be charged the maintenance of a hundred men for three weeks, and both the maintenance, and, what is nearly equal to the maintenance, the wear and tear of four hundred horses as well as of fifty great waggons. Whereas, upon the same quantity of goods carried by water, there is to be charged only the maintenance of six or eight men, and the wear and tear of a ship of two hundred tons burden, together with the value of the superior risk, or the difference of the insurance between land and water–carriage. Were there no other communication between those two places, therefore, but by land–carriage, as no goods could be

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transported from the one to the other, except such whose price was very consi–derable in proportion to their weight, they could carry on but a small part of that commerce whicha at present bsubsistsb between them, and consequently could give but a small part of that encouragement which they at present mutually afford to each other’s industry. There could be little or no commerce of any kind between the distant parts of the world. What goods could bear the expence of land–carriage between London and Calcutta? Or if there cwerec any so precious as to be able to support this expence, with what safety could they be transported through the territories of so many barbarous nations? Those two cities, however, at present carry ond a very considerable commerce
e

10

with each othere, and by mutually affording a market, give a good deal of encouragement to each other’s industry. Since such, therefore, are the advantages of water–carriage, it is natural that the first improvements of art and industry should be made where this conveniency opens the whole world for a market to the produce of every sort of labour, and that they should always be much later in extending themselves into the inland parts of the country. The

4

inland parts of the country can for a long time have no other market for the greater part of their goods, but the country which lies round about them, and separates them from the sea–coast, and the great navigable rivers. The extent of their market, therefore, must for a long time be in proportion to the riches and populousness of that country,

[30]

and consequently their improvement must always be pos–terior to the improvement of that country. In our North American colonies the plantations have constantly followed either the sea–coast or the banks of the navigable rivers, and have scarce any where extended themselves to any considerable distance from both.

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The nations that, according to the best authenticated history, appear to have been first civilized, were those that dwelt round the coast of the Mediterranean sea. That sea, by far the greatest inlet that is known in the world, having no tides, nor consequently any waves except such as are caused by the wind only, was, by the smoothness of its surface, as well as by the multitude of its islands, and the proximity of its neighbouring

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shores, extremely favourable to the infant navigation of the world; when, from their ignorance of the compass, men were afraid to quit the view of the coast, and from the imperfection of the art of ship–building, to abandon themselves to the boisterous waves To pass beyond the pillars of Hercules, that is, to sail out of the of the ocean. Streights of Gibraltar, was, in the antient world, long considered as a most wonderful and dangerous exploit of navigation. It was late before even the Phenicians and Carthaginians, the most skilful navigators and shipbuilders of those old times, attempted it, and they were for a long time the only nations that did attempt it.

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6 [31]

Of all the countries on the coast of the Mediterranean sea, Egypt seems to have been the first in which either agriculture or manufactures were cultivated and improved to Upper Egypt extends itself nowhere above a few miles from any considerable degree. the Nile, and in Lower Egypt that great river breaks itself into many different canals, which, with the assistance of a little art, seem to have afforded a communication by water–carriage, not only between all the great towns, but between all the considerable villages, and even to many farm–houses in the country; nearly in the same manner as the Rhine and the Maese do in Holland at present. The extent and easiness of this inland navigation was probably one of the principal causes of the early improvement of Egypt.

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The improvements in agriculture and manufactures seem likewise to have been of very great antiquity in the provinces of Bengal in the East Indies, and in some of the eastern provinces of China; though the great extent of this antiquity is not authenticated by any histories of whose authority we, in this part of the world, are well assured. In Bengal the Ganges and several other great rivers fform a great number of navigablef canals in the same manner as the Nile does in Egypt. In the Eastern provinces of China too, several great rivers form, by their different branches, a multitude of canals, and by communicating with one another afford an inland navigation much more extensive than that either of the Nile or the Ganges, or perhaps than both of them put together. remarkable that neither the antient Egyptians, nor the Indians, nor the Chinese,

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It is

[32]

encouraged foreign commerce, but seem all to have derived their great opulence from this inland navigation.

8

All the inland parts of Africa, and all that part of Asia which lies any considerable way north of the Euxine and Caspian seas, the antient Scythia, the modern Tartary and Siberia, seem in all ages of the world to have been in the same barbarous and The sea of Tartary is the frozen uncivilized state in which we find them at present. ocean which admits of no navigation, and though some of the greatest rivers in the world run through that country, they are at too great a distance from one another to carry commerce and communication through the greater part of it. There are in Africa none of those great inlets, such as the Baltic and Adriatic seas in Europe, the Mediterranean and Euxine seas in both Europe and Asia, and the gulphs of Arabia, Persia, India, Bengal, and Siam, in Asia, to carry maritime commerce into the interior parts of that great continent: and the great rivers of Africa are at too great a distance from one another to give occasion to any considerable inland navigation. The commerce besides which any nation can carry on by means of a river which does not break itself into any great number of branches or canals, and which runs into another territory

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before it reaches the sea, can never be very considerable; because it is always in the power of the nations who possess that other territory to obstruct the communication between the upper country and the sea. The navigation of the Danube is of very little

[33]

use to the different states of Bavaria, Austria and Hungary, in comparison of what it would be if anyg of them possessed the whole of its course till it falls into the Black Sea.

CHAPTER IV

Of The Origin And Use Of Money
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1

WHEN the division of labour has been once thoroughly established, it is but a very small part of a man’s wants which the produce of his own labour can supply. He supplies the far greater part of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.

2

But when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations. One man, we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less. The former consequently would be glad to dispose of, and the latter to purchase, a part of this superfluity. But if this latter should chance to have

2

[34]

nothing that the former stands in need of, no exchange can be made between them. The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each of them be willing to purchase a part of it. But they have nothing to offer in exchange, except the different productions of their respective trades, and the butcher is already provided with all the bread and beer which he has immediate occasion for. No exchange can, in this case, be made between them. He cannot be their merchant, nor they his customers; and they are all of them thus mutually less serviceable to one another. In order to avoid the inconveniency of such situations, every prudent man in every period of society, after the first establishment of the division of labour, must naturally have endeavoured to manage his affairs in such a manner, as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry.

3

3

Many different commodities, it is probable, were successively both thought of and employed for this purpose. In the rude ages of society, cattle are said to have been the common instrument of commerce; and, though they must have been a most inconvenient one, yet in old times we find things were frequently valued according to the number of cattle which had been given in exchange for them. The armour of Diomede, says Homer, cost only nine oxen; but that of Glaucus cost aana hundred

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oxen.

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Salt is said to be the common instrument of commerce and exchanges in

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Abyssinia; a species of shells in some parts of the coast of India; dried cod at Newfoundland; tobacco in Virginia; sugar in some of our West India colonies; hides or dressed leather in some other countries; and there is at this day a village in Scotland where it is not uncommon, I am told, for a workman to carry nails instead of money to the baker’s shop or the ale–house.

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In all countries, however, men seem at last to have been determined by irresistible reasons to give the preference, for this employment, to metals above every other commodity. Metals can not only be kept with as little loss as any other commodity, scarce any thing being less perishable that they are, but they can likewise, without any loss, be divided into any number of parts, as by fusion those parts can easily be re– united again; a quality which no other equally durable commodities possess, and which more than any other quality renders them fit to be the instruments of commerce and circulation. The man who wanted to buy salt, for example, and had nothing but cattle to give in exchange for it, must have been obliged to buy salt to the value of a whole ox, or a whole sheep at a time. He could seldom buy less than this, because what he was to give for it could seldom be divided without loss; and if he had a mind to buy more, he must, for the same reasons, have been obliged to buy double or triple the quantity, the

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value, to wit, of two or three oxen, or of two or three sheep. If, on the contrary, instead of sheep or oxen, he had metals to give in exchange for it, he could easily proportion the quantity of the metal to the precise quantity of the commodity which he had immediate occasion for.

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Different metals have been made use of by different nations for this purpose. Iron was the common instrument of commerce among the antient Spartans; copper among the antient Romans ; and gold and silver among all rich and commercial nations.

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Those metals seem originally to have been made use of for this purpose in rude bars, without any stamp or coinage. Thus we are told by Pliny , upon the authority of c Timaeusc, an antient dhistoriand, that, till the time of Servius Tullius, the Romans had no coined money, but made use of unstamped bars of copper to purchase whatever they had occasion for. These rude bars, therefore, performed at this time the function of money.

*

7

The use of metals in this rude state was attended with two very considerable inconveniencies; first, with the trouble of weighing e; and, secondly, with fthatf of assaying them. In the precious metals, where a small difference in the quantity makes a great difference in the value, even the business of weighing, with proper exactness, requires at least very accurate weights and scales. The weighing of gold in particular is

[37]

an operation of some nicety. In the coarser metals, indeed, where a small error would be of little consequence, less accuracy would, no doubt, be necessary. Yet we should find it excessively troublesome, if every time a poor man had occasion either to buy or sell a farthing’s worth of goods, he was obliged to weigh the farthing. The operation of assaying is still more difficult, still more tedious, and, unless a part of the metal is fairly melted in the crucible, with proper dissolvents, any conclusion that can be drawn from it, is extremely uncertain. Before the institution of coined money, however, unless they went through this tedious and difficult operation, people must always have been liable

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to the grossest frauds and impositions, and instead of a pound weight of pure silver, or pure copper, might receive in exchange for their goods, an adulterated composition of the coarsest and cheapest materials, which had, however, in their outward appearance, been made to resemble those metals. To prevent such abuses, to facilitate exchanges, and thereby to encourage all sorts of industry and commerce, it has been found necessary, in all countries that have made any considerable advances towards improvement, to affix a publick stamp upon certain quantities of such particular metals, as were in those countries commonly made use of to purchase goods. Hence the origin

[38]

institutions exactly of the of coined money, and of those publick offices called mints; same nature with those of the aulnagers and stampmasters of woollen and linen All of them are equally meant to ascertain, by means of a publick stamp, the cloth. quantity and uniform goodness of those different commodities when brought to market.

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The first publick stamps of this kind that were affixed to the current metals, seem in many cases to have been intended to ascertain, what it was both most difficult and most important to ascertain, the goodness or fineness of the metal, and to have resembled the sterling mark which is at present affixed to plate and bars of silver, or the Spanish mark which is sometimes affixed to ingots of gold, and which being struck only upon one side of the piece, and not covering the whole surface, ascertains the fineness, but not the weight of the metal. Abraham weighs to Ephron the four hundred shekels of They are said however silver which he had agreed to pay for the field of Machpelah. to be the current money of the merchant, and yet are received by weight and not by tale, in the same manner as ingots of gold and bars of silver are at present. The revenues of the antient Saxon kings of England are said to have been paid, not in money but in kind, that is, in victuals and provisions of all sorts. William the Conqueror introduced the custom of paying them in money. This money, however, was, for a long time, received at the exchequer, by weight and not by tale.

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The inconveniency and difficulty of weighing those metals with exactness gave occasion to the institution of coins, of which the stamp, covering entirely both sides of the piece and sometimes the edges too, was supposed to ascertain not only the fineness, but the weight of the metal. Such coins, therefore, were received by tale as at present, without the trouble of weighing.

10

The denominations of those coins seem originally to have expressed the weight or quantity of metal contained in them. In the time of Servius Tullius, who first coined money at Rome, the Roman As or Pondo contained a Roman pound of good copper. It was divided in the same manner as our Troyes pound, into twelve ounces, each of

17

which contained a real ounce of good copper. The English pound sterling, in the time of The Tower Edward I., contained a pound, Tower weight, of silver of a known fineness. pound seems to have been something more than the Roman pound, and something less than the Troyes pound.

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18th of Henry VIII. The French livre contained in the time of Charlemagne a pound, Troyes weight, of silver of a known fineness. The fair of Troyes in Champaign was at that time frequented by all the nations of Europe, and the weights and measures of so

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This last was not introduced into the mint of England till the

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famous a market were generally known and esteemed. The Scots money pound contained, from the time of Alexander the First to that of Robert Bruce, a pound of silver of the same weight and fineness with the English pound sterling. English, French, and Scots pennies too, contained all of them originally a real pennyweight of silver, the

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twentieth part of an ounce, and the two–hundred–and–fortieth part of a pound. The shilling too seems originally to have been the denomination of a weight. When wheat is at twelve shillings the quarter, says an antient statute of Henry III. then wastel bread of The proportion, however, a farthing shall weigh eleven shillings and four pence. between the shilling and either the penny on the one hand, or the pound on the other, seems not to have been so constant and uniform as that between the penny and the pound. During the first race of the kings of France, the French sou or shilling appears upon different occasions to have contained five, twelve, twenty, gand fortyg pennies. Among the antient Saxons a shilling appears at one time to have contained only five and it is not improbable that it may have been as variable among them as pennies, among their neighbours, the antient Franks. From the time of Charlemagne among the French, and from that of William the Conqueror among the English, the proportion between the pound, the shilling, and the penny, seems to have been uniformly the same as at present, though the value of each has been very different. For in every country of the world, I believe, the avarice and injustice of princes and sovereign states, abusing the confidence of their subjects, have by degrees diminished the real quantity of metal, which had been originally contained in their coins. The Roman As, in the latter ages of the Republick, was reduced to the twenty–fourth part of its original value, and,

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The English pound instead of weighing a pound, came to weigh only half an ounce. and penny contain at present about a third only; the Scots pound and penny about a thirty–sixth; and the French pound and penny about a sixty–sixth part of their original value. By means of those operations the princes and sovereign states which performed them were enabled, in appearance, to pay their debts and htoh fulfil their engagements with a smaller quantity of silver than would otherwise have been requisite. It was indeed in appearance only; for their creditors were really defrauded of a part of what was due to them. All other debtors in the state were allowed the same privilege, and might pay with the same nominal sum of the new and debased coin whatever they Such operations, therefore, have always proved favourable had borrowed in the old. to the debtor, and ruinous to the creditor, and have sometimes produced a greater and more universal revolution in the fortunes of private persons, than could have been occasioned by a very great publick calamity.

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11

It is in this manner that money has become in all civilized nations the universal instrument of commerce, by the intervention of which goods of all kinds are bought and sold, or exchanged for one another.

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12

What are the rules which men naturally observe in exchanging them either for money or for one another, I shall now proceed to examine. These rules determine what may be called the relative or exchangeable value of goods.

[42] 13

The word VALUE, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called ‘value

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in use;’ the other, ‘value in exchange.’ The things which have the greatest value in use have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce any thing; scarce any thing can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it.

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14

In order to investigate the principles which regulate the exchangeable value of commodities, I shall endeavour to shew, First, what is the real measure of this exchangeable value; or, wherein consists the real price of all commodities, Secondly, what are the different parts of which this real price is composed or made up. And, lastly, what are the different circumstances which sometimes raise some or all of these different parts of price above, and sometimes sink them below their natural or ordinary rate; or, what are the causes which sometimes hinder the market price, that is, the actual price of commodities, from coinciding exactly with what may be called their natural price.

15

16 17

[43] 18

I shall endeavour to explain, as fully and distinctly as I can, those three subjects in the three following chapters, for which I must very earnestly entreat both the patience and attention of the reader: his patience in order to examine a detail which may perhaps in some places appear unnecessarily tedious; and his attention in order to understand what may, perhaps, after the fullest explication which I am capable of giving iofi it, appear still in some degree obscure. I am always willing to run some hazard of being tedious in order to be sure that I am perspicuous; and after taking the utmost pains that I can to be perspicuous, some obscurity may still appear to remain upon a subject j in its own nature extremely abstracted.

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CHAPTER V

Of The Real And Nominal Price Of Commodities, Or Of Their Price In Labour, And Their Price In Money
1
EVERY man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniencies, and amusements of human life. But after the division of labour has once thoroughly taken place, it is but a very small part of these with which a man’s own labour can supply him. The far greater part of them he must derive from the

1

[44]

labour of other people, and he must be rich or poor according to the quantity of that

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labour which he can command, or which he can afford to purchase. The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command.

2

measure of the exchangeable value of all commodities.

3

Labour, therefore, is the real

2

The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money or with goods is purchased by labour as much as what we acquire by the toil of our own body. That money or those goods indeed save us this toil. They contain the value of a certain quantity of labour which we exchange for what is supposed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase–money that was paid for all things. was not by gold or by silver, but by labour, that all the wealth of the world was

4

5

6
It

7

originally purchased; and its value, to those who possess it and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.
a

8

Wealth, as Mr. Hobbes says, is power. But the person who either acquires, or succeeds to a great fortune, does not necessarily acquire or succeed to any political power, either civil or military. His fortune may, perhaps, afford him the means of acquiring both, but the mere possession of that fortune does not necessarily convey to him either. The power which that possession immediately and directly conveys to him, is the power of purchasing; a certain command over all the labour, or over all the produce of labour which is then in the market. His fortune is greater or less, precisely in proportion to the extent of this power; or to the quantity either of other men’s labour, or, what is the same thing, of the produce of other men’s labour, which it enables him to purchase or command. The exchangeable value of every thing must always be precisely equal to the extent of this power which it conveys to its owner.a

9

4

But though labour be the real measure of the exchangeable value of all commodities, it is not that by which their value is commonly estimated. It is often difficult to ascertain the proportion between two different quantities of labour. The time spent in two different sorts of work will not always alone determine this proportion. The different degrees of hardship endured, and of ingenuity exercised, must likewise be taken into There may be more labour in an hour’s hard work than in two hours easy account. business; or in an hour’s application to a trade which it cost ten years labour to learn,

10

[46]

than in a month’s industry at an ordinary and obvious employment. But it is not easy to find any accurate measure either of hardship or ingenuity. In exchanging indeed the different productions of different sorts of labour for one another, some allowance is commonly made for both. It is adjusted, however, not by any accurate measure, but by the higgling and bargaining of the market, according to that sort of rough equality which, though not exact, is sufficient for carrying on the business of common life.

5

Every commodity besides, is more frequently exchanged for, and thereby compared

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with, other commodities than with labour. It is more natural, therefore, to estimate its exchangeable value by the quantity of some other commodity than by that of the labour which it can purchase. The greater part of people too understand better what is meant by a quantity of a particular commodity, than by a quantity of labour. The one is a plain palpable object; the other an abstract notion, which, though it can be made sufficiently intelligible, is not altogether so natural and obvious.

6

But when barter ceases, and money has become the common instrument of commerce, every particular commodity is more frequently exchanged for money than for any other commodity. The butcher seldom carries his beef or his mutton to the baker, or the brewer, in order to exchange them for bread or for beer, but he carries them to the

[47]

market, where he exchanges them for money, and afterwards exchanges that money for bread and for beer. The quantity of money which he gets for them regulates too the quantity of bread and beer which he can afterwards purchase. It is more natural and obvious to him, therefore, to estimate their value by the quantity of money, the commodity for which he immediately exchanges them, than by that of bread and beer, the commodities for which he can exchange them only by the intervention of another commodity; and rather to say that his butcher’s meat is worth threepence or fourpence a pound, than that it is worth three or four pounds of bread, or three or four quarts of small beer. Hence it comes to pass, that the exchangeable value of every commodity is more frequently estimated by the quantity of money, than by the quantity either of labour or of any other commodity which can be had in exchange for it.

11

7

Gold and silver, however, like every other commodity, vary in their value, are sometimes cheaper and sometimes dearer, sometimes of easier and sometimes of more difficult purchase. The quantity of labour which any particular quantity of them can purchase or command, or the quantity of other goods which it will exchange for, depends always upon the fertility or barrenness of the mines which happen to be known about the time when such exchanges are made. The discovery of the abundant mines of America reduced, in the sixteenth century, the value of gold and silver in Europe to

[48]

As it cost less labour to bring those metals about a third of what it had been before. from the mine to the market, so when they were brought bthitherb they could purchase or command less labour; and this revolution in their value, though perhaps the greatest, is by no means the only one of which history gives some account. But as a measure of quantity, such as the natural foot, fathom, or handful, which is continually varying in its own quantity, can never be an accurate measure of the quantity of other things; so a commodity which is itself continually varying in its own value, can never be an accurate Equal quantities of labour,c at all times measure of the value of other commodities. d d and places, may be said to be of equal value to the labourer. eIn his ordinary state of health, strength and spirits; in the ordinary degree of his skill and dexterity,

12

13

14

15

hee

must always lay down the same portion of his ease, his liberty, and his happiness. The price which he pays must always be the same, whatever may be the quantity of

16

goods which he receives in return for it. Of these, indeed, it may sometimes purchase a greater and sometimes a smaller quantity; but it is their value which varies, not that of the labour which purchases them. At all times and places that is dear which it is difficult to come at, or which it costs much labour to acquire; and that cheap which is to be had easily, or with very little labour. Labour alone, therefore, never varying in its own value,

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is alone the ultimate and real standard by which the value of all commodities can at all

[49]

times and places be estimated and compared. It is their real price; money is their nominal price only.

8

But though equal quantities of labour are always of equal value to the labourer, yet to the person who employs him they appear sometimes to be of greater and sometimes of smaller value. He purchases them sometimes with a greater and sometimes with a smaller quantity of goods, and to him the price of labour seems to vary like that of all other things. It appears to him dear in the one case, and cheap in the other. In reality, however, it is the goods which are cheap in the one case, and dear in the other.

9

In this popular sense, therefore, labour, like commodities, may be said to have a real and a nominal price. Its real price may be said to consist in the quantity of the necessaries and conveniencies of life which are given for it; its nominal price, in the quantity of money. The labourer is rich or poor, is well or ill rewarded, in proportion to the real, not to the nominal price of his labour.

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10

The distinction between the real and the nominal price of commodities and labour, is not a matter of mere speculation, but may sometimes be of considerable use in practice. The same real price is always of the same value; but on account of the variations in the value of gold and silver, the same nominal price is sometimes of very different values. When a landed estate, therefore, is sold with a reservation of a perpetual rent, if it is

[50]

intended that this rent should always be of the same value, it is of importance to the family in whose favour it is reserved, that it should not consist in a particular sum of Its value would in this case be liable to variations of two different kinds; first, money. to those which arise from the different quantities of gold and silver which are contained at different times in coin of the same denomination; and, secondly, to those which arise from the different values of equal quantities of gold and silver at different times.

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11

Princes and sovereign states have frequently fancied that they had a temporary interest to diminish the quantity of pure metal contained in their coins; but they seldom have fancied that they had any to augment it. The quantity of metal contained in the coins, I believe of all nations has, accordingly, been almost continually diminishing, and hardly ever augmenting. of a money rent.

19

Such variations therefore tend almost always to diminish the value

12

The discovery of the mines of America diminished the value of gold and silver in Europe. This diminution, it is commonly supposed, though, I apprehend, without any certain proof, is still going on gradually, and is likely to continue to do so for a long time. Upon this supposition, therefore, such variations are more likely to diminish, than to augment the value of a money rent, even though it should be stipulated to be paid, not in such a quantity of coined money of such a denomination (in so many pounds sterling, for example), but in so many ounces either of pure silver, or of silver of a certain standard.

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[51] 13

The rents which have been reserved in corn have preserved their value much better than those which have been reserved in money, even where the denomination of the

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coin has not been altered. By the 18th of Elizabeth it was enacted, That a third of the rent of all college leases should be reserved in corn, to be paid, either in kind, or according to the current prices at the nearest publick market. The money arising from this corn rent, though originally but a third of the whole, is in the present times, according to Doctor Blackstone, commonly near double of what arises from the other The old money rents of colleges must, according to this account, have two–thirds. sunk almost to a fourth part of their ancient value; or are worth little more than a fourth part of the corn which they were formerly worth. But since the reign of Philip and Mary the denomination of the English coin has undergone little or no alteration, and the same number of pounds, shillings and pence have contained very nearly the same quantity of pure silver. This degradation, therefore, in the value of the money rents of colleges, has arisen altogether from the degradation in the value of silver.

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14

When the degradation in the value of silver is combined with the diminution of the quantity of it contained in the coin of the same denomination, the loss is frequently still greater. In Scotland, where the denomination of the coin has undergone much greater alterations than it ever did in England, and in France, where it has undergone still some antient rents, originally of considerable greater than it ever did in Scotland, value, have in this manner been reduced almost to nothing.

[52]

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15

Equal quantities of labour will at distant times be purchased more nearly with equal quantities of corn, the subsistence of the labourer, than with equal quantities of gold Equal quantities of corn, therefore, and silver, or perhaps of any other commodity. will, at distant times, be more nearly of the same real value, or enable the possessor to purchase or command more nearly the same quantity of the labour of other people. They will do this, I say, more nearly than equal quantities of almost any other commodity; for even equal quantities of corn will not do it exactly. The subsistence of is the labourer, or the real price of labour, as I shall endeavour to show hereafter, very different upon different occasions; more liberal in a society advancing to opulence than in one that is standing still; and in one that is standing still than in one that is going backwards. Every other commodity, however, will at any particular time purchase a greater or smaller quantity of labour in proportion to the quantity of subsistence which it can purchase at that time. A rent therefore reserved in corn is liable only to the variations in the quantity of labour which a certain quantity of corn can purchase. But a rent reserved in any other commodity is liable, not only to the variations in the quantity

25

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of labour which any particular quantity of corn can purchase, but to the variations in the quantity of corn which can be purchased by any particular quantity of that commodity.

16

Though the real value of a corn rent, it is to be observed however, varies much less from century to century than that of a money rent, it varies much more from year to does not year. The money price of labour, as I shall endeavour to show hereafter, fluctuate from year to year with the money price of corn, but seems to be every where accommodated, not to the temporary or occasional, but to the average or ordinary price of that necessary of life. The average or ordinary price of corn again is regulated, as I shall likewise endeavour to show hereafter, by the value of silver, by the richness or barrenness of the mines which supply the market with that metal, or by the quantity of labour which must be employed, and consequently of corn which must be consumed, in

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order to bring any particular quantity of fsilverf from the mine to the market. But the value of silver, though it sometimes varies greatly from century to century, seldom varies much from year to year, but frequently continues the same, or very nearly the same, for half a century or a century together. The ordinary or average money price of corn, therefore, may, during so long a period, continue the same or very nearly the same too, and along with it the money price of labour, provided, at least, the society continues, in other respects, in the same or nearly in the same condition. In the mean

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[54]

time the temporary and occasional price of corn may frequently be double, one year, of what it had been the year before, or fluctuateg, for example,gfrom five and twenty to fifty shillings the quarterh. But when corn is at the latter price, not only the nominal, but the real value of a corn rent will be double of what it is when at the former, or will command double the quantity either of labour or of the greater part of other commodities; the money price of labour, and along with it that of most other things, continuing the same during all these fluctuations.

17

Labour, therefore, it appears evidently, is the only universal, as well as the only accurate measure of value, or the only standard by which we can compare the values of different commodities at all times and at all places. We cannot estimate, it is allowed, the real value of different commodities from century to century by the quantities of silver which were given for them. We cannot estimate it from year to year by the quantities of corn. By the quantities of labour we can, with the greatest accuracy, estimate it both from century to century and from year to year. From century to century, corn is iai better measure than silver, because, from century to century, equal quantities of corn will command the same quantity of labour more nearly than equal quantities of silver. From year to year, on the contrary, silver is a better measure than corn, because equal quantities of it will more nearly command the same quantity of labour.

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[55] 18

But though in establishing perpetual rents, or even in letting very long leases, it may be of use to distinguish between real and nominal price, it is of none in buying and selling, the more common and ordinary transactions of human life.

19

At the same time and place the real and the nominal price of all commodities are exactly in proportion to one another. The more or less money you get for any commodity, in the London market, for example, the more or less labour it will at that time and place enable you to purchase or command. At the same time and place, therefore, money is the exact measure of the real exchangeable value of all commodities. It is so, however, at the same time and place only.

20

Though at distant places, there is no regular proportion between the real and the money price of commodities, yet the merchant who carries goods from the one to the other has nothing to consider but jtheirj money price, or the difference between the quantity of silver for which he buys them, and that for which he is likely to sell them. Half an ounce of silver at Canton in China may command a greater quantity both of labour and of the necessaries and conveniencies of life, than an ounce at London. A commodity, therefore, which sells for half an ounce of silver at Canton may there be really dearer, of more real importance to the man who possesses it there, than ka commodityk which sells for an

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[56]

ounce at London lislto the man who possesses it at Lon–don. If a London merchant, however, can buy at Canton for half an ounce of silver, a commodity which he can afterwards sell at London for an ounce, he gains a hundred per cent. by the bargain, just as much as if an ounce of silver was at London exactly of the same value as at Canton. It is of no importance to him that half an ounce of silver at Canton would have given him the command of more labour and of a greater quantity of the necessaries and conveniencies of life than an ounce can do at London. An ounce at London will always give him the command of double the quantity of all these which half an ounce could have done there, and this is precisely what he wants.

21

As it is the nominal or money price of goods, therefore, which finally determines the prudence or imprudence of all purchases and sales, and thereby regulates almost the whole business of common life in which price is concerned, we cannot wonder that it should have been so much more attended to than the real price. In such mam work as this, however, it may sometimes be of use to compare the different real values of a particular commodity at different times and places, or the different degrees of power over the labour of other people which it may, upon different occasions, have given to those who possessed it. We must in this case compare, not so much the different quantities of silver for which it was commonly sold, as the different

[57]

quantities of labour which those different quantities of silver could have purchased. But the current prices of labour at distant times and places can scarce ever be known with any degree of exactness. Those of corn, though they have in few places been regularly recorded, are in general better known and have been more frequently taken notice of by We must generally, therefore, content ourselves with historians and other writers. them, not as being always exactly in the same proportion as the current prices of labour, but as being the nearest approximation which can commonly be had to that proportion. I shall hereafter have occasion to make several comparisons of this kind.

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In the progress of industry, commercial nations have found it convenient to coin several different metals into money; gold for larger payments, silver for purchases of moderate value, and copper, or some other coarse metal, for those of still smaller consideration. They have always, however, considered one of those metals as more perculiarly the measure of value than any of the other two; and this preference seems generally to have been given to the metal which they happened first to make use of as the instrument of commerce. Having once begun to use it as their standard, which they must have done when they had no other money, they have generally continued to do so even when the necessity was not the same.

24 [58]

The Romans are said to have had nothing but copper money till within five years before the first Punic war , when they first began to coin silver. Copper, therefore, appears to have continued always the measure of value in that republick. At Rome all accounts appear to have been kept, and the value of all estates to have been computed either in Asses or in Sestertii. The As was always the denomination of a copper coin. The word Sestertius signifies two Asses and a half. Though the Sestertius, therefore, was
o

*

originallyo a silver coin, its value was estimated in copper. At Rome, one who owed a

great deal of money, was said to have a great deal of other people’s copper.

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The northern nations who established themselves upon the ruins of the Roman empire, seem to have had silver money from the first beginning of their settlements, and not to have known either gold or copper coins for several ages thereafter. There were silver but there was little gold coined till the coins in England in the time of the Saxons; time of Edward III. nor any copper till that of James I. of Great Britain. In England, therefore, and for the same reason, I believe, in all other modern nations of Europe, all accounts are kept, and the value of all goods and of all estates is generally computed in silver: and when we mean to express the amount of a person’s fortune, we seldom mention the number of guineas, but the number of pounds psterlingp which we suppose would be given for it.
q

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34

Originally, inq all countries, I believe a legal tender of payment couldr be made sonlys

in the coin of that metal,t which was peculiarly considered as the standard or measure of value. In England, gold was not considered as a legal tender for a long time after it was coined into money. The proportion between the values of gold and silver money was not fixed by any public law or proclamation; but was left to be settled by the If a debtor offered payment in gold, the creditor might either reject such market. payment altogether, or accept of it at such a valuation of the gold as he and his debtor could agree upon. Copper is not at present a legal tender, except in the change of the smaller silver coins. In this state of things the distinction between the metal which was the standard, and that which was not the standard, was something more than a nominal distinction.

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27

In process of time, and as people became gradually more familiar with the use of the different metals in coin, and consequently better acquainted with the proportion between their respective values, it has in most countries, I believe, been found convenient to ascertain this proportion, and to declare by a public law that a guinea, for example, of such a weight and fineness, should exchange for one–and–twenty shillings, or be a legal tender for a debt of that uamountu . In this state of things, and during the continuance of any one regulated proportion of this kind, the distinction between the

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[60]

metal which is the standard and that which is not the standard, becomes little more than a nominal distinction.

28

In consequence of any change, however, in this regulated proportion, this distinction becomes, or at least seems to become, something more than nominal again. If the regulated value of a guinea, for example, was either reduced to twenty, or raised to two–and–twenty shillings, all accounts being kept and almost all obligations for debt being expressed in silver money, the greater part of payments could in either case be made with the same quantity of silver money as before; but would require very different quantities of gold money; a greater in the one case, and a smaller in the other. Silver would appear to be more invariable in its value than gold. Silver would appear to measure the value of gold, and gold would not appear to measure the value of silver. The value of gold would seem to depend upon the quantity of silver which it would exchange for; and the value of silver would not seem to depend upon the quantity of gold which it would exchange for. This difference, however, would be altogether owing to the custom of keeping accounts, and of expressing the amount of all great and small sums rather in silver than in gold money. One of Mr Drummond’s notes for five–and–

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twenty or fifty guineas would, after an alteration of this kind, be still payable with five– and–twenty or fifty guineas in the same manner as before. It would, after such an

[61]

alteration, be payable with the same quantity of gold as before, but with very different quantities of silver. In the payment of such a note, gold would appear to be more invariable in its value than silver. Gold would appear to measure the value of silver, and If the custom of keeping silver would not appear to measure the value of gold. accounts, and of expressing promissory notes and other obligations for money in this manner, should ever become general, gold, and not silver, would be considered as the metal which was peculiarly the standard or measure of value.

37

29

In reality, during the continuance of any one regulated proportion between the respective values of the different metals in coin, the value of the most precious metal regulates the value of the whole coin. Twelve copper pence contain half a pound, avoirdupois, of copper, of not the best quality, which, before it is coined, is seldom worth sevenpence in silver. But as by the regulation twelve such pence are ordered to exchange for a shilling, they are in the market considered as worth a shilling, and a shilling can at any time be had for them. Even before the late reformation of the gold the gold, that part of it at least which circulated in London and coin of Great Britain, its neighbourhood, was in general less degraded below its standard weight than the greater part of the silver. One–and–twenty worn and defaced shillings, however, were considered as equivalent to a guinea, which perhaps, indeed, was worn and defaced too, but seldom so much so. The late regulations have brought the gold coin as near perhaps

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[62]

to its standard weight as it is possible to bring the cur–rent coin of any nation; and the order, to receive no gold at the public offices but by weight, is likely to preserve it so asv long as that order is enforced. The silver coin still continues in the same worn and degraded state as before the reformation of the gold coin. In the market, however, one– and–twenty shillings of this degraded silver coin are still considered as worth a guinea of this excellent gold coin.
v

30

The reformation of the gold coin has evidently raised the value of the silver coin which can be exchanged for it. In the English mint a pound weight of gold is coined into forty–four guineas and a half, which, at one–and–twenty shillings the guinea, is equal to forty–six pounds fourteen shillings and six–pence. An ounce of such gold coin, therefore, is worth 3l.17s.10d. ½ in silver. In England no duty or seignorage is paid upon the coinage, and he who carries a pound weight or an ounce weight of standard gold bullion to the mint, gets back a Three pound weight or an ounce weight of gold in coin, without any deduction. pounds seventeen shillings and ten–pence halfpenny an ounce, therefore is said to be the mint price of gold in England, or the quantity of gold coin which the mint gives in return for standard gold bullion.

31

39

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[63]

Before the reformation of the gold coin, the price of standard gold bullion in the market had for many years been upwards of 3l.18s. sometimes 3l.19s. and very frequently 4l. an ounce; that sum, it is probable, in the worn and de–graded gold coin, seldom containing more than an ounce of standard gold. Since the reformation of the gold coin, the market price of standard gold bullion seldom exceeds 3l.17s.7d. an ounce. Before

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the reformation of the gold coin, the market price was always more or less above the mint price. Since that reformation, the market price has been constantly below the mint price. But that market price is the same whether it is paid in gold or in silver coin. The late reformation of the gold coin, therefore, has raised not only the value of the gold coin, but likewise that of the silver coin in proportion to gold bullion, and probably too in proportion to all other commodities; though the price of the greater part of other commodities being influenced by so many other causes, the rise in the value either of gold or silver coin in proportion to them, may not be so distinct and sensible.

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33

In the English mint a pound weight of standard silver bullion is coined into sixty–two shillings, containing, in the same manner, a pound weight of standard silver. Five shillings and two–pence an ounce, therefore, is said to be the mint price of silver in England, or the quantity of silver coin which the mint gives in return for standard silver bullion. Before the reformation of the gold coin, the market price of standard silver bullion was, upon different occasions, five shillings and four–pence, five shillings and five–pence, five shillings and six–pence, five shillings and seven–pence, and very often

[64]

five shillings and eight–pence an ounce. Five shillings and seven–pence, however, seems to have been the most common price. Since the reformation of the gold coin, the market price of standard silver bullion has fallen occasionally to five shillings and three– pence, five shillings and four–pence, and five shillings and five–pence an ounce, which last price it has scarce ever exceeded. Though the market price of silver bullion has fallen considerably since the reformation of the gold coin, it has not fallen so low as the mint price.

34

In the proportion between the different metals in the English coin, as copper is rated very much above its real value, so silver is rated somewhat below it. In the market of Europe, in the French coin and in the Dutch coin, an ounce of fine gold exchanges for about fourteen ounces of fine silver. In the English coin, it exchanges for about fifteen ounces, that is, for more silver than it is worth according to the common estimation of But as the price of copper in bars is not, even in England, raised by the high Europe. price of copper in English coin, so the price of silver in bullion is not sunk by the low rate of silver in English coin. Silver in bullion still preserves its proper proportion to gold; for the same reason that copper in bars preserves its proper proportion to silver.

41

35

Upon the reformation of the silver coin in the reign of William III. the price of silver Mr. Locke imputed this bullion still continued to be somewhat above the mint price. high price to the permission of exporting silver bullion, and to the prohibition of

42

[65]

This permission of exporting, he said, rendered the demand for exporting silver coin. silver bullion greater than the demand for silver coin. But the number of people who want silver coin for the common uses of buying and selling at home, is surely much greater than that of those who want silver bullion either for the use of exportation or for any other use. There subsists at present a like permission of exporting gold bullion, and a like prohibition of exporting gold coin; and yet the price of gold bullion has fallen below the mint price. But in the English coin silver was then, in the same manner as now, under–rated in proportion to gold; and the gold coin (which at that time too was not supposed to require any reformation) regulated then, as well as now, the real value of the whole coin. As the reformation of the silver coin did not then reduce the price of

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silver bullion to the mint price, it is not very probable that a like reformation will do so now.

36

Were the silver coin brought back as near to its standard weight as the gold, a guinea, it is probable, would, according to the present proportion, exchange for more silver in coin than it would purchase in bullion. The silver wcoinw containing its full standard weight, there would in this case be a profit in melting it down, in order, first, to sell the bullion for gold coin, and afterwards to exchange this gold coin for silver coin to be melted down in the same manner. Some alteration in the present proportion seems to be the only method of preventing this inconveniency.

[66] 37

The inconveniency perhaps would be less if silver was rated in the coin as much above its proper proportion to gold as it is at present rated below it; provided it was at the same time enacted that silver should not be a legal tender for more than the change of a guinea; in the same manner as copper is not a legal tender for more than the change of a shilling. No creditor could in this case be cheated in consequence of the high valuation of silver in coin; as no creditor can at present be cheated in consequence of the high valuation of copper. The bankers only would suffer by this regulation. When a run comes upon them they sometimes endeavour to gain time by paying in and they would be precluded by this regulation from this discreditable sixpences, method of evading immediate payment. They would be obliged in consequence to keep at all times in their coffers a greater quantity of cash than at present; and though this might no doubt be a considerable inconveniency to them, it would at the same time be a considerable security to their creditors.

44

38

Three pounds seventeen shillings and ten–pence halfpenny (the mint price of gold) certainly does not contain, even in our present excellent gold coin, more than an ounce of standard gold, and it may be thought, therefore, should not purchase more standard bullion. But gold in coin is more convenient than gold in bullion, and though, in England,

[67]

yet the gold which is carried in bullion to the mint, can seldom be the coinage is free, returned in coin to the owner till after a delay of several weeks. In the present hurry of the mint, it could not be returned till after a delay of several months. This delay is equivalent to a small duty, and renders gold in coin somewhat more valuable than an equal quantity of gold in bullion. If in the English coin silver was rated according to its proper proportion to gold, the price of silver bullion would probably fall below the mint price even without any reformation of the silver coin; the value even of the present worn and defaced silver coin being regulated by the value of the excellent gold coin for which it can be changed.

45

39

A small seignorage or duty upon the coinage of both gold and silver would probably increase still more the superiority of those metals in coin above an equal quantity of either of them in bullion. The coinage would in this case increase the value of the metal coined in proportion to the extent of this small duty; for the same reason that the fashion increases the value of plate in proportion to the price of that fashion. The superiority of coin above bullion would prevent the melting down of the coin, and would If upon any public exigency it should become necessary to discourage its exportation. export the coin, the greater part of it would soon return again of its own accord. Abroad

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it could sell only for its weight in bullion. At home it would buy more than that weight. There would be a profit, therefore, in bringing it home again. In France a seignorage of

[68]

about eight per cent. is imposed upon the coinage, and the French coin, when exported, is said to return home again of its own accord. The occasional fluctuations in the market price of gold and silver bullion arise from the same causes as the like fluctuations in that of all other commodities. The frequent loss of those metals from various accidents by sea and by land, the continual waste of them in gilding and plating, in lace and embroidery, in the xwear and tearx of coin, and in thatvof plate; require, in all countries which possess no mines of their own, a continual importation, in order to repair this loss and this waste. The merchant importers, like all other merchants, we may believe, endeavour, as well as they can, to suit their occasional importations to what, they judge, is likely to be the immediate demand. With all their attention, however, they sometimes over–do the business, and sometimes under–do it. When they import more bullion than is wanted, rather than incur the risk and trouble of exporting it again, they are sometimes willing to sell a part of it for something less than the ordinary or average price. When, on the other hand, they import less than is wanted, they get something more than this price. But when, under all those occasional fluctuations, the market price either of gold or silver bullion continues for several years together steadily and constantly, either more or less above, or more or less below the mint price; we may be assured that this steady and constant,
v

47

40

[69]

either superiority or inferiority of price, is the effect of something in the state of the coin, which, at that time, renders a certain quantity of coin either of more value or of less value than the precise quantity of bullion which it ought to contain. The constancy and steadiness of the effect, supposes a proportionable constancy and steadiness in the cause.

41

The money of any particular country is, at any particular time and place, more or less an accurate measure of value according as the current coin is more or less exactly agreeable to its standard, or contains more or less exactly the precise quantity of pure gold or pure silver which it ought to contain. If in England, for example, forty–four guineas and a half contained exactly a pound weight of standard gold, or eleven ounces of fine gold and one ounce of alloy, the gold coin of England would be as accurate a measure of the actual value of goods at any particular time and place as the nature of the thing would admit. But if, by rubbing and wearing, forty–four guineas and a half generally contain less than a pound weight of standard gold; the diminution, however, being greater in some pieces than in others; the measure of value comes to be liable to the same sort of uncertainty to which all other weights and measures are commonly exposed. As it rarely happens that these are exactly agreeable to their standard, the merchant adjusts the price of his goods, as well as he can, not to what those weights and measures ought to be, but to what, upon an average, he finds by experience they

[70]

actually are. In conse–quence of a like disorder in the coin the price of goods comes, in the same manner, to be adjusted, not to the quantity of pure gold or silver which the coin ought to contain, but to that which, upon an average, it is found by experience, it actually does contain.

42

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pure gold or silver for which they are sold, without any regard to the denomination of the coin. Six shillings and eight–pence, for example, in the time of Edward I., I consider as the same money–price with a pound sterling in the present times; because it contained, as nearly as we can judge, the same quantity of pure silver.

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CHAPTER VI

Of The Component Parts Of The Price Of Commodities
1
IN that early and rude state of society which precedes both the accumulation of stock and the appropriation of land, the proportion between the quantities of labour necessary for acquiring different objects seems to be the only circumstance which can afford any rule for exchanging them for one another. If among a nation of hunters, for example, it usually costs twice the labour to kill a beaver which it does to kill a deer, one beaver

1

[71]

should naturally ex–change for or be worth two deer. It is natural that what is usually the produce of two days or two hours labour, should be worth double of what is usually the produce of one day’s or one hour’s labour.

2

If the one species of labour should be more severe than the other, some allowance will naturally be made for this superior hardship; and the produce of one hour’s labour in the one way may frequently exchange for that of two hours labour in the other.

2

3

Or if the one species of labour requires an uncommon degree of dexterity and ingenuity, the esteem which men have for such talents, will naturally give a value to their produce, superior to what would be due to the time employed about it. Such talents can seldom be acquired but in consequence of long application, and the superior value of their produce may frequently be no more than a reasonable compensation for the time and labour which must be spent in acquiring them. In the advanced state of society, allowances of this kind, for superior hardship and superior skill, are commonly made in the wages of labour; and something of the same kind must probably have taken place in its earliest and rudest period. In this state of thingsa, the whole produce of labour belongs to the labourer; anda the quantity of labour commonly employed in acquiring or producing any commodity, is the

3

[72]

only circumstance which can regulate the quantity of la–bour which it ought commonly to purchase, command, or exchange for.

5

As soon as stock has accumulated in the hands of particular persons, some of them will naturally employ it in setting to work industrious people, whom they will supply with materials and subsistence, in order to make a profit by the sale of their work, or by what their labour adds to the value of the materials. In exchanging the complete manufacture either for money, for labour, or for other goods, over and above what may

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be sufficient to pay the price of the materials, and the wages of the workmen, something must be given for the profits of the undertaker of the work who hazards his stock in this adventure. The value which the workmen add to the materials, therefore, resolves itself in this case into two parts, of which the one pays their wages, the other the profits of their employer upon the whole stock of materials and wages which he advanced. He could have no interest to employ them, unless he expected from the sale of their work something more than what was sufficient to replace his stock to him; and he could have no interest to employ a great stock rather than a small one, unless his profits were to bear some proportion to the extent of his stock.

4

6
[73]

The profits of stock, it may perhaps be thought, are only a different name for the wages of a particular sort of labour, the labour of inspection and direction. They are, however, altogether different, are regulated by quite differ–ent principles, and bear no proportion to the quantity, the hardship, or the ingenuity of this supposed labour of inspection and direction. They are regulated altogether by the value of the stock employed, and are greater or smaller in proportion to the extent of this stock. Let us suppose, for example, that in some particular place, where the common annual profits of manufacturing stock are ten per cent. There are two different manufactures, in each of which twenty workmen are employed at the rate of fifteen pounds a year each, or at the expence of three hundred a year in each manufactory. Let us suppose too, that the coarse materials annually wrought up in the one cost only seven hundred pounds, while the finer materials in the other cost seven thousand. The capital annually employed in the one will in this case amount only to one thousand pounds; whereas that employed in the other will amount to seven thousand three hundred pounds. At the rate of ten per cent. therefore, the undertaker of the one will expect an yearly profit of about one hundred pounds only; while that of the other will expect about seven hundred and thirty pounds. But though their profits are so very different, their labour of inspection and direction may be either altogether or very nearly the same. In many great works, almost the whole labour of this kind isb committed to some principal clerk. His wages properly express the value of this labour of inspection and direction. Though in settling

[74]

them some regard is had commonly, not only to his labour and skill, but to the trust which is reposed in him, yet they never bear any regular proportion to the capital of which he oversees the management; and the owner of this capital, though he is thus discharged of almost all labour, still expects that his profits should bear a regular proportion to chis capitalc In the price of commodities, therefore, the profits of stock
d

constitute a component partd altogether different from the wages of labour, and regulated by quite different principles.

In this state of things, ethe whole produce of labour does not always belong to the labourer. He must in most cases share it with the owner of the stock which employs him. Neither ise the quantity of labour commonly employed in acquiring or producing any commodity,f the only circumstance which can regulate the quantity which it ought commonly to purchase, command, or exchange for. An additional quantity, it is evident, must be due for the profits of the stock which advanced the wages and furnished the materials of that labour.

8

As soon as the land of any country has all become private property, the landlords, like

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all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost gthe labourerg only the trouble of gathering them, comeh, even to him,h to have an additional price fixed upon them.

[75]

i

Heimust then pay for the licence to gather them; and jmust give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land, and in the price of the greater part of commodities makes a third component part.j

5

The real value of all the different component parts of pricek, it must be observed, isk measured by the quantity of labour which they can, each of them, purchase or command. Labour measures the value not only of that part of price which resolves itself into labour, but of that which resolves itself into rent, and of that which resolves itself into profit.

6

10

In every society the price of every commodity finally resolves itself into some one or other, or all of those three parts; and in every improved society, all the three enter more or less, as component parts, into the price of the far greater part of commodities.

11

In the price of corn, for example, one part pays the rent of the landlord, another pays the wages or maintenance of the labourers and labouring cattle employed in producing it, and the third pays the profit of the farmer. These three parts seem either immediately or ultimately to make up the whole price of corn. A fourth part, it may perhaps be thought, is necessary for replacing the stock of the farmer, or for compensating the lwear and tearl of his labouring cattle, and other instruments of husbandry. But it must be considered that the price of any in–strument of husbandry, such as a labouring horse, is itself made up of the same three parts; the rent of the land upon which he is reared, the labour of tending and rearing him, and the profits of the farmer who advances both the rent of this land, and the wages of this labour. Though the price of the corn, therefore, may pay the price as well as the maintenance of the horse, the whole price still resolves itself either immediately or ultimately into the same three parts of rent, labour, and profit.

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12

In the price of flour or meal, we must add to the price of the corn, the profits of the miller, and the wages of his servants; in the price of the bread, the profits of the baker, and the wages of his servants; and in the price of both, the labour of transporting the corn from the house of the farmer to that of the miller, and from that of the miller to that of the baker, together with the profits of those who advance the wages of that labour.

13

The price of flax resolves itself into the same three parts as that of corn. In the price of linen we must add to this price the wages of the flax–dresser, of the spinner, of the weaver, of the bleacher, &c. together with the profits of their respective employers.

14

As any particular commodity comes to be more manufactured, that part of the price which resolves itself into wages and profit, comes to be greater in proportion to that which resolves itself into rent. In the progress of the manufacture, not only the number

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of profits increase, but every subsequent profit is greater than the foregoing; because the capital from which it is derived must always be greater. The capital which employs the weavers, for example, must be greater than that which employs the spinners; because it not only replaces that capital with its profits, but pays, besides, the wages of the weavers; and the profits must always bear some proportion to the capital.

15

In the most improved societies, however, there are always a few commodities of which the price resolves itself into two parts only, the wages of labour, and the profits of stock; and a still smaller number in which it consists altogether in the wages of labour. In the price of sea–fish, for example, one part pays the labour of the fishermen, and the other the profits of the capital employed in the fishery. Rent very seldom makes any part of it, though it does sometimes, as I shall shew hereafter. It is otherwise, at least through the greater part of Europe, in river fisheries. A salmon fishery pays a rent, and rent, though it cannot well be called the rent of land, makes a part of the price of a salmon as well as wages and profit. In some parts of Scotland a few poor people make a trade of gathering, along the sea–shore, those little variegated stones commonly known by the name of Scotch Pebbles. The price which is paid to them by the stone–cutter is altogether the wages of their labour; neither rent nor profit make any part of it. But the whole price of manym commodity must still finally resolve itself into some one or other, or all of those three parts; as whatever part of it remains after paying the rent of the land, and the price of the whole labour employed in raising, manufacturing, and bringing it to market, must necessarily be profit to somebody.

7

17

As the price or exchangeable value of every particular commodity, taken separately, resolves itself into some one or other or all of those three parts; so that of all the commodities which compose the whole annual produce of the labour of every country, taken complexly, must resolve itself into the same three parts, and be parcelled out among different inhabitants of the country, either as the wages of their labour, the profits of their stock, or the rent of their land. The whole of what is annually either collected or produced by the labour of every society, or what comes to the same thing, the whole price of it, is in the manner originally distributed among some of its different members. Wages, profit, and rent, are the three original sources of all revenue as well as of all exchangeable value. All other revenue is ultimately derived from some one or other of these.

8

18

Whoever derives his revenue from a fund which is his own, must draw it either from his labour, from his stock, or from his land. The revenue derived from labour is called wages. That derived from stock, by the person who manages or employs it, is called profit. That derived from it by the person who does not em–ploy it himself, but lends it to another, is called the interest or the use of money. It is the compensation which the borrower pays to the lender, for the profit which he has an opportunity of making by the use of the money. Part of that profit naturally belongs to the borrower, who runs the risk and takes the trouble of employing it; and part to the lender, who affords him the opportunity of making this profit. The interest of money is always a derivative revenue, which, if it is not paid from the profit which is made by the use of the money, must be paid from some other source of revenue, unless perhaps the borrower is a spendthrift,

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who contracts a second debt in order to pay the interest of the first. The revenue which proceeds altogether from land, is called rent, and belongs to the landlord. The revenue of the farmer is derived partly from his labour, and partly from his stock. To him, land is only the instrument which enables him to earn the wages of this labour, and to make the profits of this stock. All taxes, and all the revenue which is founded upon them, all salaries, pensions, and annuities of every kind, are ultimately derived from some one or other of those three original sources of revenue, and are paid either immediately or mediately from the wages of labour, the profits of stock, or the rent of land.

9

19 [80]

When those three different sorts of revenue belong to different persons, they are readily distinguished; but when they belong to the same they are sometimes confounded with one another, at least in common language.

10

20

A gentleman who farms a part of his own estate, after paying the expence of cultivation, should gain both the rent of the landlord and the profit of the farmer. He is apt to denominate, however, his whole gain, profit, and thus confounds rent with profit, at least in common language. The greater part of our North American and West Indian planters are in this situation. They farm, the greater part of them, their own estates, and accordingly we seldom hear of the rent of a plantation, but frequently of its profit.

21

Common farmers seldom employ any overseer to direct the general operations of the farm. They generally too work a good deal with their own hands, as ploughmen, harrowers, &c. What remains of the crop after paying the rent, therefore, should not only replace to them their stock employed in cultivation, together with its ordinary profits, but pay them the wages which are due to them, both as labourers and overseers. Whatever remains, however, after paying the rent and keeping up the stock, is called profit. But wages evidently make a part of it. The farmer, by saving these wages, must necessarily gain them. Wages, therefore, are in this case confounded with profit.

22 [81]

An independent manufacturer, who has stock enough both to purchase materials, and to maintain himself till he can carry his work to market, should gain both the wages of a journeyman who works under a master, and the profit which that master makes by the sale of nthe journeyman’sn work. His whole gains, however, are commonly called profit, and wages are, in this case too, confounded with profit.

23

A gardener who cultivates his own garden with his own hands, unites in his own person the three different characters, of landlord, farmer, and labourer. His produce, therefore, should pay him the rent of the first, the profit of the second, and the wages of the third. The whole, however, is commonly considered as the earnings of his labour. Both rent and profit are, in this case, confounded with wages.

24

As in a civilized country there are but few commodities of which the exchangeable value arises from labour only, rent and profit contributing largely to that of the far greater part of them, so the annual produce of its labour will always be sufficient to purchase or command a much greater quantity of labour than what was employed in raising,

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preparing, and bringing that produce to market. If the society owaso annually to employ all the labour which it can annually purchase, as the quantity of labour would increase greatly every year, so the produce of every succeeding year would be of vastly greater value than that of the foregoing. But there is no country in which the whole annual

[82]

produce is employed in maintaining the industrious. The idle every where consume a great part of it; and according to the different proportions in which it is annually divided between those two different orders of people, its ordinary or average value must either annually increase, or diminish, or continue the same from one year to another.

11

CHAPTER VII

Of The Natural And Market Price Of Commodities
1
1

THERE is in every society or neighbourhood an ordinary or average rate both of wages and profit in every different employment of labour and stock. This rate is naturally regulated, as I shall show hereafter, partly by the general circumstances of the society, their riches or poverty, their advancing, stationary, or declining condition; and partly by the particular nature of each employment.

2

3

2

There is likewise in every society or neighbourhood an ordinary or average rate of rent, which is regulated too, as I shall show hereafter, partly by the general circumstances of the society or neighbourhood in which the land is situated, and partly by the natural or improved fertility of the land.

4

3

These ordinary or average rates may be called the natural rates of wages, profit, and rent, at the time and place in which they commonly prevail. When the price of any commodity is neither more nor less than what is sufficient to pay the rent of the land, the wages of the labour, and the profits of the stock employed in raising, preparing, and bringing it to market, according to their natural rates, the commodity is then sold for what may be called its natural price.

4 [83]

5

5

The commodity is then sold precisely for what it is worth, or for what it really costs the person who brings it to market; for though in common language what is called the prime cost of any commodity does not comprehend the profit of the person who is to sell it again, yet if he sells it at a price which does not allow him the ordinary rate of profit in his neighbourhood, he is evidently a loser by the trade; since by employing his stock in some other way he might have made that profit. His profit, besides, is his revenue, the proper fund of his subsistence. As, while he is preparing and bringing the goods to market, he advances to his workmen their wages, or their subsistence; so he advances to himself, in the same manner, his own subsistence, which is generally suitable to the profit which he may reasonably expect from the sale of his goods. Unless

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they yield him this profit, therefore, they do not repay him what they may very properly be said to have really cost him.

6

Though the price, therefore, which leaves him this profit, is not always the lowest at which a dealer may sometimes sell his goods, it is the lowest at which he is likely to sell them for any considerable time; at least where there is perfect liberty, may change his trade as often as he pleases.

6

or where he

[84] 7

The actual price at which any commodity is commonly sold is called its market price. It may either be above, or below, or exactly the same with its natural price. The market price of every particular commodity is regulated by the proportion between the quantity which is actually brought to market, and the demand of those who are willing to pay the natural price of the commodity, or the whole value of the rent, labour, and profit, which must be paid in order to bring it thither. Such people may be called the effectual demanders, and their demand the effectual demand; since it may be sufficient to effectuate the bringing of the commodity to market. It is different from the absolute demand. A very poor man may be said in some sense to have a demand for a coach and six; he might like to have it; but his demand is not an effectual demand, as the commodity can never be brought to market in order to satisfy it.

8

7

8

9

When the quantity of any commodity which is brought to market falls short of the effectual demand, all those who are willing to pay the whole value of the rent, wages, and profit, which must be paid in order to bring it thither, cannot be supplied with the quantity which they want. Rather than want it altogether, some of them will be willing to give more. A competition will immediately begin among them, and the market price will rise more or less above the natural price, according as aeithera the greatness of the deficiencyb, or the wealth and wanton luxury of the competitors, happen to animateb

[85]

more or less the eagerness of cthec competition. dAmong competitors of equal wealth and luxury thed same deficiency will generally occasion a more or less eager competition, according as the acquisition of the commodity happens to be of more or less importance to etheme Hence the exorbitant price of the necessaries of life during the blockade of a town or in a famine.

10

When the quantity brought to market exceeds the effectual demand, it cannot be all sold to those who are willing to pay the whole value of the rent, wages and profit, which must be paid in order to bring it thither. Some part must be sold to those who are willing to pay less, and the low price which they give for it must reduce the price of the whole. The market price will sink more or less below the natural price, according as the greatness of the excess increases more or less the competition of the sellers, or according as it happens to be more or less important to them to get immediately rid of the commodity. The same excess in the importation of perishable, will occasion a much greater competition than in that of durable commodities; in the importation of oranges,

9 for example, than finf that of old iron.

11

When the quantity brought to market is just sufficient to supply the effectual demand and no more, the market price naturally comes to be either exactly, or as nearly as can

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be judged of, the same with the natural price. The whole quantity upon hand can be

[86]

disposed of for this price, and cannot be disposed of for more. The competition of the different dealers obliges them all to accept of this price, but does not oblige them to accept of less.

12

The quantity of every commodity brought to market naturally suits itself to the effectual demand. It is the interest of all those who employ their land, labour, or stock, in bringing any commodity to market, that the quantity never should exceed the effectual demand; and it is the interest of all other people that it never should fall short of gthat demandg.

13

If at any time it exceeds the effectual demand, some of the component parts of its price must be paid below their natural rate. If it is rent, the interest of the landlords will immediately prompt them to withdraw a part of their land; and if it is wages or profit, the interest of the labourers in the one case, and of their employers in the other, will prompt them to withdraw a part of their labour or stock from this employment. The quantity brought to market will soon be no more than sufficient to supply the effectual demand. All the different parts of its price will rise to their natural rate, and the whole price to its natural price.

14

If, on the contrary, the quantity brought to market should at any time fall short of the effectual demand, some of the component parts of its price must rise above their natural rate. If it is rent, the interest of all other landlords will naturally prompt them to prepare more land for the raising of this commodity; if it is wages or profit, the interest

[87]

of all other labourers and dealers will soon prompt them to employ more labour and stock in preparing and bringing it to market. The quantity brought thither will soon be sufficient to supply the effectual demand. All the different parts of its price will soon sink to their natural rate, and the whole price to its natural price.

15

The natural price, therefore, is, as it were, the central price, to which the prices of all Different accidents may sometimes keep commodities are continually gravitating. them suspended a good deal above it, and sometimes force them down even somewhat below it. But whatever may be the obstacles which hinder them from settling in this center of repose and continuance, they are constantly tending towards it.

10

16

The whole quantity of industry annually employed in order to bring any commodity to market, naturally suits itself in this manner to the effectual demand. It naturally aims at bringing always that precise quantity thither which may be sufficient to supply, and no more than supply, that demand.

17

But in some employments the same quantity of industry will in different years produce very different quantities of commodities; while in others it will produce always the same, or very nearly the same. The same number of labourers in husbandry will, in different years, produce very different quantities of corn, wine, oil, hops, &c. But the same number of spinners and weavers will every year produce the same or very nearly

[88]

the same quantity of linen and woollen cloth. It is only the average produce of the one species of industry which can be suited in any respect to the effectual demand; and as

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its actual produce is frequently much greater and frequently much less than its average produce, the quantity of the commodities brought to market will sometimes exceed a good deal, and sometimes fall short a good deal of the effectual demand. Even though that demand therefore should continue always the same, their market price will be liable to great fluctuations, will sometimes fall a good deal below, and sometimes rise a good deal above their natural price. In the other species of industry, the produce of equal quantities of labour being always the same or very nearly the same, it can be more exactly suited to the effectual demand. While that demand continues the same, therefore, the market price of the commodities is likely to do so too, and to be either altogether, or as nearly as can be judged of, the same with the natural price. That the price of linen and woollen cloth is liable neither to such frequent nor to such great variations as the price of corn, every man’s experience will inform him. The price of the one species of commodities varies only with the variations in the demand: That of the other varies, not only with the variations in the demand, but with the much greater and more frequent variations in the quantity of what is brought to market in order to supply that demand.

18 [89]

The occasional and temporary fluctuations in the market price of any commodity fall chiefly upon those parts of its price which resolve them–selves into wages and profit. That part which resolves itself into rent is less affected by them. A rent certain in money is not in the least affected by them either in its rate or in its value. A rent which consists either in a certain proportion or in a certain quantity of the rude produce, is no doubt affected in its yearly value by all the occasional and temporary fluctuations in the market price of that rude produce: but it is seldom affected by them in its yearly rate. In settling the terms of the lease, the landlord and farmer endeavour, according to their best judgment, to adjust that rate, not to the temporary and occasional, but to the average and ordinary price of the produce.

19

Such fluctuations affect both the value and the rate either of wages or of profit, according as the market happens to be either over–stocked or understocked with commodities or with labour; with work done, or with work to be done. A publick (with which the market is almost always mourning raises the price of black cloth under–stocked upon such occasions) and augments the profits of the merchants who possess any considerable quantity of it. It has no effect upon the wages of the weavers. The market is understocked with commodities, not with labour; with work done, not with work to be done. It raises the wages of journeymen taylors. The market is here under–stocked with labour. There is an effectual demand for hmoreh labour, for more work to be done than can be had. It sinks the price of coloured silks and cloths, and thereby reduces the profits of the merchants who have any considerable quantity of them upon hand. It sinks too the wages of the workmen employed in preparing such commodities, for which all demand is stopped for six months, perhaps for a twelvemonth. The market is here over–stocked both with commodities and with labour.

11

[90]

20

But though the market price of every particular commodity is in this manner continually gravitating, if one may say so, towards the natural price, yet sometimes particular accidents, sometimes natural causes, and sometimes particular regulations of police, may, in many commodities, keep up the market price, for a long time together, a good

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deal above the natural price.

12

21

When by an increase in the effectual demand, the market price of some particular commodity happens to rise a good deal above the natural price, those who employ their stocks in supplying that market are generally careful to conceal this change. If it was commonly known, their great profit would tempt so many new rivals to employ their stocks in the same way, that, the effectual demand being fully supplied, the market price would soon be reduced to the natural price, and perhaps for some time even below it. If the market is at a great distance from the residence of those who supply it, they may sometimes be able to keep the secret for several years together, and may so long

[91]

Secrets of this kind, enjoy their extraordinary profits without any new rivals. however, it must be acknowledged, can seldom be long kept; and the extraordinary profit can last very little longer than they are kept.

13

22

Secrets in manufactures are capable of being longer kept than secrets in trade. A dyer who has found the means of producing a particular colour with materials which cost only half the price of those commonly made use of, may, with good management, enjoy the advantage of his discovery as long as he lives, and even leave it as a legacy to his posterity. His extraordinary gains arise from the high price which is paid for his private labour. They properly consist in the high wages of that labour. But as they are repeated upon every part of his stock, and as their whole amount bears, upon that account, a regular proportion to it, they are commonly considered as extraordinary profits of stock.

23

Such enhancements of the market price are evidently the effects of particular accidents, of which, however, the operation may sometimes last for many years together. Some natural productions require such a singularity of soil and situation, that all the land in a great country, which is fit for producing them, may not be sufficient to supply the effectual demand. The whole quantity brought to market, therefore, may be disposed of to those who are willing to give more than what is sufficient to pay the rent of the land which produced them, together with the wages of the labour, and the profits

24

[92]

of the stock which were employed in preparing and bringing them to market, ac–cording to their natural rates. Such commodities may continue ifor whole centuries togetheri to be sold at this high pricej; and that part of it which resolves itself into the rent of land is in this case the part which is generally paid above its natural rate. The rent of the land which affords such singular and esteemed productions, like the rent of some vineyards in France of a peculiarly happy soil and situation, bears no regular proportion to the rent The of other equally fertile and equally well–cultivated land in its neighbourhood. wages of the labour and the profits of the stock employed in bringing such commodities to market, on the contrary, are seldom out of their natural proportion to those of the other employments of labour and stock in their neighbourhood.

14

25

Such enhancements of the market price are evidently the effect of natural causes which may hinder the effectual demand from ever being fully supplied, and which may continue, therefore, to operate for ever.

26

A monopoly granted either to an individual or to a trading company has the same effect

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as a secret in trade or manufactures. The monopolists, by keeping the market constantly under–stocked, by never fully supplying the effectual demand, sell their commodities much above the natural price, and raise their emoluments, whether they consist in wages or profit, greatly above their natural rate.

15

27 [93]

The price of monopoly is upon every occasion the highest which can be got. The natural price, or the price of free competition, on the contrary, is the lowest which can be taken, not upon every occasion, indeed, but for any considerable time together. The one is upon every occasion the highest which can be squeezed out of the buyers, or which, it is supposed, they will consent to give: The other is the lowest which the sellers can commonly afford to take, and at the same time continue their business.

28

The exclusive privileges of corporations, statutes of apprenticeship, and all those laws which restrain, in particular employments, the competition to a smaller number than might otherwise go into them, have the same tendency, though in a less degree. They are a sort of enlarged monopolies, and may frequently, for ages together and in whole classes of employments, keep up the market price of particular commodities above the natural price, and maintain both the wages of the labour and the profits of the stock employed about them somewhat above their natural rate.

16

29

Such enhancements of the market price may last as long as the regulations of police which give occasion to them. The market price of any particular commodity, though it may continue long above, can seldom continue long below its natural price. Whatever part of it was paid below the natural rate, the persons whose interest it affected would immediately feel the loss, and would immediately withdraw either so much land, or so much labour, or so much stock,

30

[94]

from being employed about it, that the quantity brought to market would soon be no more than sufficient to supply the effectual demand. Its market price, therefore, would soon rise to the natural price. This at least would be the case where there was perfect liberty.

17

31

The same statutes of apprenticeship and other corporation laws indeed, which, when a manufacture is in prosperity, enable the workman to raise his wages a good deal above their natural rate, sometimes oblige him, when it decays, to let them down a good deal below it. As in the one case they exclude many people from his employment, so in the other they exclude him from many employments. The effect of such regulations, however, is not near so durable in sinking the workman’s wages below, as in raising them above their natural rate. Their operation in the one way may endure for many centuries, but in the other it can last no longer than the lives of some of the workmen who were bred to the business in the time of its prosperity. When they are gone, the number of those who are afterwards educated to the trade will naturally suit itself to the effectual demand. The police must be as violent as that of Indostan or antient Egypt (where every man was bound by a principle of religion to follow the occupation of his father, and was supposed to commit the most horrid sacrilege if he changed it for another) which can in any particular employment, and for several generations together,

[95]

sink either the wages of labour or the profits of stock below their natural rate.

18

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32

This is all that I think necessary to be observed at present concerning the deviations, whether occasional or permanent, of the market price of commodities from the natural price.

33

The natural price itself varies with the natural rate of each of its component parts, of wages, profit, and rent; and in every society this rate varies according to their circumstances, according to their riches or poverty, their advancing, stationary, or declining condition. I shall, in the four following chapters, endeavour to explain, as fully and distinctly as I can, the causes of those different variations.

34

First, I shall endeavour to explain what are the circumstances which naturally determine the rate of wages, and in what manner those circumstances are affected by the riches or poverty, by the advancing, stationary, or declining state of the society.

35

Secondly, I shall endeavour to show what are the circumstances which naturally determine the rate of profit, and in what manner too those circumstances are affected by the like variations in the state of the society.

36

Though pecuniary wages and profit are very different in the different employments of labour and stock; yet a certain proportion seems commonly to take place between both the pecuniary wages in all the different employments of labour, and the pecuniary profits in all the different employments of stock. This proportion, it will appear depends partly upon the nature of the different employments, and partly hereafter, upon the different laws and policy of the society in which they are carried on. But though in many respects dependent upon the laws and policy, this proportion seems to be little affected by the riches or poverty of that society; by its advancing, stationary, or declining condition; but to remain the same or very nearly the same in all those different states. I shall, in the third place, endeavour to explain all the different circumstances which regulate this proportion.

[96]

19

37

In the fourth and last place, I shall endeavour to show what are the circumstances which regulate the rent of land, and which either raise or lower the real price of all the different substances which it produces.

CHAPTER VIII

Of The Wages Of Labour
1 2
THE produce of labour constitutes the natural recompence or wages of labour. In that original state of things, which precedes both the appropriation of land and the accumulation of stock, the whole produce of labour belongs to the labourer . He has neither landlord nor master to share with him.

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Had this state continued, the wages of labour would have augmented with all those improve–ments in its productive powers, to which the division of labour gives occasion. All things would gradually have become cheaper. They would have been produced by a smaller quantity of labour; and as the commodities produced by equal quantities of labour would naturally in this state of things be exchanged for one another, they would have been purchased likewise with the produce of a smaller quantity.

4

But though all things would have become cheaper in reality, in appearance many things might have become dearer than before, or have been exchanged for a greater quantity of other goods. Let us suppose, for example, that in the greater part of employments the productive powers of labour had been improved to tenfold, or that a day’s labour could produce ten times the quantity of work which it had done originally; but that in a particular employment they had been improved only to double, or that a day’s labour could produce only twice the quantity of work which it had done before. In exchanging the produce of a day’s labour in the greater part of employments, for that of a day’s labour in this particular one, ten times the original quantity of work in them would purchase only twice the original quantity in it. Any particular quantity in it, therefore, a pound weight, for example, would appear to be five times dearer than before. In reality, however, it would be twice as cheap. Though it required five times the quantity of other

[98]

goods to purchase it, it would require only half the quantity of labour either to purchase or to produce it. The acquisition, therefore, would be twice as easy as before.

5

But this original state of things, in which the labourer enjoyed the whole produce of his own labour, could not last beyond the first introduction of the appropriation of land and the accumulation of stock. It was at an end, therefore, long before the most considerable improvements were made in the productive powers of labour, and it would be to no purpose to trace afarthera what might have been its effects upon the recompence or wages of labour. As soon as land becomes private property, the landlord demands a share of balmost all theb produce cwhichc the labourer can either raise, or collect from it. His rent makes the first deduction from the produce of the labour which is employed upon land.

7

It seldom happens that the person who tills the ground has wherewithal to maintain himself till he reaps the harvest. His maintenance is generally advanced to him from the stock of a master, the farmer who employs him, and who would have no interest to employ him, unless he was to share in the produce of his labour, or unless his stock was to be replaced to him with a profit. This profit makes a second deduction from the produce of the labour which is employed upon land.

[99] 8

The produce of almost all other labour is liable to the like deduction of profit. In all arts and manufactures the greater part of the workmen stand in need of a master to advance them the materials of their work, and their wages and maintenance till it be compleated. He shares in the produce of their labour, or in the value which it adds to the materials upon which it is bestowed; and in this share consists his profit.

3

9

It sometimes happens, indeed, that a single independent workman has stock sufficient

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both to purchase the materials of his work, and to maintain himself till it be compleated. He is both master and workman, and enjoys the whole produce of his own labour, or the whole value which it adds to the materials upon which it is bestowed. It includes what are usually two distinct revenues, belonging to two distinct persons, the profits of stock, and the wages of labour.

4

10

Such cases, however, are not very frequent, and in every part of Europe, twenty workmen serve under a master for one that is independent; and the wages of labour are every where understood to be, what they usually are, when the labourer is one person, and the owner of the stock which employs him another.

11

What are the common wages of labour depends every where upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour.

[100] 12

It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, dcan combine much more easily; and the law, besides, authorises, or at least does not prohibit their combinations,d while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, or merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long–run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

5

13

We rarely hear, it has been said, of the combinations of masters; though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and every where in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. To violate this combination is every where a most unpopular action, and a sort of reproach to a master among his neighbours and equals.

[101]

We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things which nobody ever hears of. Masters too sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy, till the moment of execution, and when the workmen yield, as they sometimes do, without resistance, though severely felt by them, they are never heard of by other people. Such combinations, however, are frequently resisted by a contrary defensive combination of the workmen; who sometimes too, without any provocation of this kind, combine of their own accord to raise the price of their labour. Their usual pretences are, sometimes the high price of provisions; sometimes the great profit which their masters make by their work. But whether their combinations be offensive or defensive, they are always abundantly heard of. In order to bring the point to a speedy decision, they have always recourse to the

6

7

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loudest clamour, and sometimes to the most shocking violence and outrage. They are desperate, and act with the folly and extravagance of desperate men, who must eeithere starve, or frighten their masters into an immediate compliance with their demands. The masters upon these occasions are just as clamorous upon the other side, and never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combinations

[102]

of servants, labourers, and journeymen. The workmen, accordingly, very seldom derive any advantage from the violence of those tumultuous combinations, which, partly from the interposition of the civil magistrate, partly from the superior steadiness of the masters, partly from the necessity which the greater part of the workmen are under of submitting for the sake of present subsistence, generally end in nothing, but the punishment or ruin of the ringleaders.

8

But though in disputes with their workmen, masters must generally have the advantage, there is however a certain rate below which it seems impossible to reduce, for any considerable time, the ordinary wages even of the lowest species of labour.

15

A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more; otherwise it would be impossible ffor himf to bring up a family, and the race of such workmen could not last beyond the first generation. Mr. Cantillon seems, upon this account, to suppose that the lowest species of common labourers must every where earn at least double their own maintenance, in order that one with another they may be enabled to bring up two children; the labour of the wife, on account of her necessary attendance on the children, being supposed no more than sufficient to provide for herself. But one–half the

[103]

children born, it is computed, die before the age of manhood. The poorest labourers, therefore, ac–cording to this account, must, one with another, attempt to rear at least four children, in order that two may have an equal chance of living to that age. But the necessary maintenance of four children, it is supposed, may be nearly equal to that of one man. The labour of an able–bodied slave, the same author adds, is computed to be worth double his maintenance; and that of the meanest labourer, he thinks, cannot be worth less than that of an able–bodied slave. Thus far at least seems certain, that, in order to bring up a family, the labour of the husband and wife together must, even in the lowest species of common labour, be able to earn something more than what is precisely necessary for their own maintenance;

9

10

but in what proportion, whether in

that abovementioned, or in any other, I shall not take upon me to determine.

11

16

There are certain circumstances, however, which sometimes give the labourers an advantage, and enable them to raise their wages considerably above this rate; evidently the lowest which is consistent with common humanity.

17

When in any country the demand for those who live by wages; labourers, journeymen, servants of every kind, is continually increasing; when every year furnishes employment for a greater number than had been employed the year before, the workmen have no occasion to combine in order to raise their wages. The scarcity of hands occasions a competition among masters, who bid against one another, in order to get gworkmeng and thus voluntarily break through the natural combination of masters not to raise

[104]

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wages.

18

The demand for those who live by wages, it is evident, cannot increase but in proportion to the increase of the funds which are destined for the payment of wages. These funds are of two kinds; first, the revenue which is over and above what is necessary for the maintenance; and, secondly, the stock which is over and above what is necessary for the employment of their masters.

19

When the landlord, annuitant, or monied man, has a greater revenue than what he judges sufficient to maintain his own family, he employs either the whole or a part of the surplus in maintaining one or more menial servants. Increase this surplus, and he will naturally increase the number of those servants.

20

When an independent workman, such as a weaver or shoe–maker, has got more stock than what is sufficient to purchase the materials of his own work, and to maintain himself till he can dispose of it, he naturally employs one or more journeymen with the surplus, in order to make a profit by their work. Increase this surplus, and he will naturally increase the number of his journeymen.

21

The demand for those who live by wages, therefore, necessarily increases with the increase of the revenue and stock of every country, and cannot possibly increase without it. The increase of revenue and stock is the increase of national wealth. The demand for those who live by wages, therefore, naturally increases with the increase of national wealth, and cannot possibly increase without it.

[105]

22

It is not the actual greatness of national wealth, but its continual increase, which occasions a rise in the wages of labour. It is not, accordingly, in the richest countries, but in the most thriving, or in those which are growing rich the fastest, that the wages of labour are highest. England is certainly, in the present times, a much richer country than any part of North America. The wages of labour, however, are much higher in North America than in any part of England.

12

labourers earn three shillings and sixpence currency, equal to two shillings sterling, a day; ship carpenters, ten shillings and sixpence currency, with a pint of rum worth sixpence sterling, equal in all to six shillings and sixpence sterling; house carpenters and bricklayers, eight shillings currency, equal to four shillings and sixpence sterling; journeymen taylors, five shillings currency, equal to about two shillings and ten pence sterling. These prices are all above the London price; and wages are said to be as high in the other colonies as in New York. The price of provisions is every where in North America much lower than in England. A dearth has never been known there. In the

*

In the province of New York, common

[106]

worst seasons, they have always had a sufficiency for themselves, though less for exportation. If the money price of labour, therefore, be higher than it is any where in the mother country, its real price, the real command of the necessaries and conveniencies of life which it conveys to the labourer, must be higher in a still greater proportion.

23

But though North America is not yet so rich as England, it is much more thriving, and advancing with much greater rapidity to the further acquisition of riches.

13

The most

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decisive mark of the prosperity of any country is the increase of the number of its inhabitants. In Great Britain, and most other European countries, they are not supposed to double in less than five hundred years.

14

In the British colonies in North America, it

has been found, that they double in twenty or five–and–twenty years. Nor in the present times is this increase principally owing to the continual importation of new inhabitants, but to the great multiplication of the species. Those who live to old age, it is said, frequently see there from fifty to a hundred, and sometimes many more, descendants from their own body. Labour is there so well rewarded that a numerous family of children, instead of being a burthen is a source of opulence and prosperity to the parents. The labour of each child, before it can leave their house, is computed to be worth a hundred pounds clear gain to them. A young widow with four or five young children, who, among the middling or inferior ranks of people in Europe, would have so

15

[107]

little chance for a second husband, is there frequently courted as a sort of fortune. The value of children is the greatest of all encouragements to marriage. We cannot, therefore, wonder that the people in North America should generally marry very young. Notwithstanding the great increase occasioned by such early marriages, there is a The demand for continual complaint of the scarcity of hands in North America. labourers, the funds destined for maintaining them, increase, it seems, still faster than they can find labourers to employ.

16

17

24

Though the wealth of a country should be very great, yet if it has been long stationary, we must not expect to find the wages of labour very high in it. The funds destined for the payment of wages, the revenue and stock of its inhabitants, may be of the greatest extent, but if they have continued for several centuries of the same, or very nearly of the same extent, the number of labourers employed every year could easily supply, and even more than supply, the number wanted the following year. There could seldom be any scarcity of hands, nor could the masters be obliged to bid against one another in order to get them. The hands, on the contrary, would, in this case, naturally multiply beyond their employment. There would be a constant scarcity of employment, and the labourers would be obliged to bid against one another in order to get it. If in such a country the wages of labour had ever been more than sufficient to maintain the

[108]

labourer, and to enable him to bring up a family, the competition of the labourers and the interest of the masters would soon reduce them to this lowest rate which is consistent with common humanity. China has been long one of the richest, that is, one of the most fertile, best cultivated, most industrious, and most populous countries in the world. It seems, however, to have been long stationary. Marco Polo, who visited it more describes its cultivation, industry, and populousness, than five hundred years ago, almost in the same terms in which they are described by travellers in the present times. It had perhaps, even long before his time, acquired that full complement of riches which the nature of its laws and institutions permits it to acquire. The accounts of all travellers, inconsistent in many other respects, agree in the low wages of labour, and in the difficulty which a labourer finds in bringing up a family in China. If by digging the ground a whole day he can get what will purchase a small quantity of rice in the evening, he is contented. The condition of artificers is, if possible, still worse. Instead of waiting indolently in their work–houses, for the calls of their customers, as in Europe, they are continually running about the streets with the tools of their respective trades, offering their service, and as it were begging employment.

18

19

20

The poverty of the lower

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ranks of people in China far surpasses that of the most beggarly nations in Europe. In the neighbourhood of Canton many hundred, it is commonly said, many thousand

[109]

families have no habitation on the land, but live constantly in little fishing boats upon the rivers and canals. The subsistence which they find there is so scanty that they are eager to fish up the nastiest garbage thrown overboard from any European ship. Any carrion, the carcase of a dead dog or cat, for example, though half putrid and stinking, is as welcome to them as the most wholesome food to the people of other countries. Marriage is encouraged in China, not by the profitableness of children, but by the liberty of destroying them. In all great towns several are every night exposed in the street, or drowned like puppies in the water. The performance of this horrid office is even said to be the avowed business by which some people earn their subsistence.

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China, however, though it may perhaps stand still, does not seem to go backwards. Its towns are no–where deserted by their inhabitants. The lands which had once been cultivated are no–where neglected. The same or very nearly the same annual labour must therefore continue to be performed, and the funds destined for maintaining it must not, consequently, be sensibly diminished. The lowest class of labourers, therefore, notwithstanding their scanty subsistence, must some way or another make shift to continue their race so far as to keep up their usual numbers.

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But it would be otherwise in a country where the funds destined for the maintenance of labour were sensibly decaying. Every year the demand for servants and labourers would, in all the dif–ferent classes of employments, be less than it had been the year before. Many who had been bred in the superior classes, not being able to find employment in their own business, would be glad to seek it in the lowest. The lowest class being not only overstocked with its own workmen, but with the overflowings of all the other classes, the competition for employment would be so great in it, as to reduce the wages of labour to the most miserable and scanty subsistence of the labourer. Many would not be able to find employment even upon these hard terms, but would either starve, or be driven to seek a subsistence either by begging, or by the perpetration perhaps of the greatest enormities. Want, famine, and mortality would immediately prevail in that class, and from thence extend themselves to all the superior classes, till the number of inhabitants in the country was reduced to what could easily be maintained by the revenue and stock which remained in it, and which had escaped either the tyranny or calamity which had destroyed the rest. This perhaps is nearly the present state of Bengal, and of some other of the English settlements in the East In a fertile country which had before been much depopulated, where Indies. subsistence, consequently, should not be very difficult, and where, notwithstanding, three or four hundred thousand people die of hunger in one year, we may be assured that the funds destined for the maintenance of the labouring poor are fast decaying. The

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difference between the genius of the British constitution which protects and governs North America, and that of the mercantile company which oppresses and domineers in the East Indies, cannot perhaps be better illustrated than by the different state of those countries.

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The liberal reward of labour, therefore, as it is the necessary effect, so it is the natural symptom of increasing national wealth. The scanty maintenance of the labouring poor,

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on the other hand, is the natural symptom that things are at a stand, and their starving condition that they are going fast backwards.

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In Great Britain the wages of labour seem, in the present times, to be evidently more than what is precisely necessary to enable the labourer to bring up a family. In order to satisfy ourselves upon this point it will not be necessary to enter into any tedious or doubtful calculation of what may be the lowest sum upon which it is possible to do this. There are many plain symptoms that the wages of labour are no–where in this country regulated by this lowest rate which is consistent with common humanity.

29

First, in almost every part of Great Britain there is a distinction, even in the lowest species of labour, between summer and winter wages. Summer wages are always highest. But on account of the extraordinary expense of fewel, the maintenance of a family is most expensive in winter. Wages, therefore, being highest when this expence is lowest, it seems evident that they are not regulated by what is necessary for this

[112]

expence; but by the quantity and supposed value of the work. A labourer, it may be said indeed, ought to save part of his summer wages in order to defray his winter expence; and that through the whole year they do not exceed what is necessary to maintain his family through the whole year. A slave, however, or one absolutely dependent on us for immediate subsistence, would not be treated in this manner. His daily subsistence would be proportioned to his daily necessities.

30

Secondly, the wages of labour do not in Great Britain fluctuate with the price of provisions. These vary every–where from year to year, frequently from month to month. But in many places the money price of labour remains uniformly the same sometimes for half a century together. If in these places, therefore, the labouring poor can maintain their families in dear years, they must be at their ease in times of moderate plenty, and in affluence in those of extraordinary cheapness. The high price of provisions during these ten years past has not in many parts of the kingdom been accompanied with any sensible rise in the money price of labour. It has, indeed, in some; owing probably more to the increase of the demand for labour, than to that of the price of provisions.

31

Thirdly, as the price of provisions varies more from year to year than the wages of labour, so, on the other hand, the wages of labour vary more from place to place than the price of provisions. The prices of bread and butcher’s meat are generally the same or very nearly the same through the greater part of the united kingdom. These and most other things which are sold by retail, the way in which the labouring poor buy all things, are generally fully as cheap or cheaper in great towns than in the remoter parts But the of the country, for reasons which I shall have occasion to explain hereafter. wages of labour in a great town and its neighbourhood are frequently a fourth or a fifth part, twenty or five–and–twenty per cent. higher than at a few miles distance. Eighteen pence a day may be reckoned the common price of labour in London and its neighbourhood. At a few miles distance it falls to fourteen and fifteen pence. Ten pence At a few miles may may be reckoned its price in Edinburgh and its neighbourhood. distance it falls to eight pence, the usual price of common labour through the greater part of the low country of Scotland, where it varies a good deal less than in England. Such a difference of prices, which it seems is not always sufficient to transport a man

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from one parish to another, would necessarily occasion so great a transportation of the most bulky commodities, not only from one parish to another, but from one end of the kingdom, almost from one end of the world to the other, as would soon reduce them more nearly to a level. After all that has been said of the levity and inconstancy of human nature, it appears evidently from experience that a man is of all sorts of luggage the most difficult to be transported. If the labouring poor, therefore, can maintain their

[114]

families in those parts of the kingdom where the price of labour is lowest, they must be in affluence where it is highest.

32

Fourthly, the variations in the price of labour not only do not correspond either in place or time with those in the price of provisions, but they are frequently quite opposite. Grain, the food of the common people, is dearer in Scotland than in England, whence Scotland receives almost every year very large supplies. But English corn must be sold dearer in Scotland, the country to which it is brought, than in England, the country from which it comes; and in proportion to its quality it cannot be sold dearer in Scotland than The quality of the Scotch corn that comes to the same market in competition with it. grain depends chiefly upon the quantity of flour or meal which it yields at the mill, and in this respect English grain is so much superior to the Scotch, that, though often dearer in appearance, or in proportion to the measure of its bulk, it is generally cheaper in reality, or in proportion to its quality, or even to the measure of its weight. The price of labour, on the contrary, is dearer in England than in Scotland. If the labouring poor, therefore, can maintain their families in the one part of the united kingdom, they must be in affluence in the other. Oatmeal indeed supplies the common people in Scotland with the greatest and the best part of their food, which is in general much inferior to

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This difference, however, in the that of their neighbours of the same rank in England. mode of their subsistence is not the cause, but the effect of the difference in their wages; though, by a strange misapprehension, I have frequently heard it represented as the cause. It is not because one man keeps a coach while his neighbour walks a–foot, that the one is rich and the other poor; but because the one is rich he keeps a coach, and because the other is poor he walks a–foot.

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During the course of the last century, taking one year with another, grain was dearer in both parts of the united kingdom than during that of the present. This is a matter of fact which cannot now admit of any reasonable doubt; and the proof of it is, if possible, still more decisive with regard to Scotland than with regard to England. It is in Scotland annual valuations made upon oath, supported by the evidence of the publick fiars, according to the actual state of the markets, of all the different sorts of grain in every different county of Scotland. If such direct proof could require any collateral evidence to confirm it, I would observe that this has likewise been the case in France, and probably in most other parts of Europe. With regard to France there is the clearest proof. But though it is certain that in both parts of the united kingdom grain was somewhat dearer in the last century than in the present, it is equally certain that labour was much cheaper. If the labouring poor, therefore, could bring up their families then, they must be much more at their ease now. In the last century, the most usual day–wages of

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common labour through the greater part of Scotland were sixpence in summer and five– pence in winter. Three shillings a week, the same price very nearly, still continues to be

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paid in some parts of the Highlands and Western Islands. Through the greater part of the low country the most usual wages of common labour are now eight–pence a day; ten–pence, sometimes a shilling about Edinburgh, in the counties which border upon England, probably on account of that neighbourhood, and in a few other places where there has lately been a considerable rise in the demand for labour, about Glasgow, Carron, Ayrshire, &c. In England the improvements of agriculture, manufactures and commerce began much earlier than in Scotland. The demand for labour, and consequently its price, must necessarily have increased with those improvements. In the last century, accordingly, as well as in the present, the wages of labour were higher in England than in Scotland. They have risen too considerably since that time, though, on account of the greater variety of wages paid there in different places, it is more difficult to ascertain how much. In 1614, the pay of a foot soldier was the same as in the present times, eight pence a day. When it was first established it would naturally be regulated by the usual wages of common labourers, the rank of people from which foot Lord Chief Justice Hales, who wrote in the time of soldiers are commonly drawn. Charles II. computes the necessary expence of a labourer’s family, consisting of six

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persons, the father and mother, two children able to do something, and two not able, at ten shillings a week, or twenty–six pounds a year. If they cannot earn this by their labour, they must make it up, he supposes, either by begging or stealing.

32

to have enquired very carefully into this subject . In 1688, Mr. Gregory King, whose skill in political arithmetick is so much extolled by Doctor Davenant, computed the ordinary income of labourers and out–servants to be fifteen pounds a year to a family, which he supposed to consist, one with another, of three and a half persons. His calculation, therefore, though different in appearance, corresponds very nearly at bottom with that of judge Hales. Both suppose the weekly expence of such families to be about twenty pence a head. Both the pecuniary income and expence of such families have increased considerably since that time through the greater part of the kingdom; in some places more, and in some less; though perhaps scarce any where so much as some exaggerated accounts of the present wages of labour have lately represented them to the publick. The price of labour, it must be observed, cannot be ascertained very accurately any where, different prices being often paid at the same place and for the same sort of labour, not only according to the different abilities of the workmen, but according to the easiness or hardness of the masters. Where wages are not regulated by

*

He appears

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law, all that we can pretend to determine is what are the most usual; and experience seems to show that law can never regulate them properly, though it has often pretended to do so.

35

The real recompence of labour, the real quantity of the necessaries and conveniencies of life which it can procure to the labourer, has, during the course of the present century, increased perhaps in a still greater proportion than its money price. Not only grain has become somewhat cheaper, but many other things from which the industrious poor derive an agreeable and wholesome variety of food, have become a great deal cheaper. Potatoes, for example, do not at present, through the greater part of the kingdom, cost half the price which they used to do thirty or forty years ago. The same thing may be said of turnips, carrots, cabbages; things which were formerly never raised but by the All sort of garden stuff too spade, but which are now commonly raised by the plough. has become cheaper. The greater part of the apples and even of the onions consumed in

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Great Britain were in the last century imported from Flanders. The great improvements in the coarser manufactures of both linen and woollen cloth furnish the labourers with cheaper and better cloathing; and those in the manufactures of the coarser metals, with cheaper and better instruments of trade, as well as with many agreeable and convenient pieces of houshold furniture. Soap, salt, candles, leather, and fermented liquors have,

[119]

indeed, become a good deal dearer; chiefly from the taxes which have been laid upon them. The quantity of these, however, which the labouring poor are under any necessity of consuming, is so very small, that the increase in their price does not compensate the The common complaint that luxury diminution in that of so many other things. extends itself even to the lowest ranks of the people, and that the labouring poor will not now be contented with the same food, cloathing and lodging which satisfied them in former times, may convince us that it is not the money price of labour only, but its real recompence, which has augumented.

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Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society? The answer seems at first sight abundantly plain. Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged.

37 [120]

Poverty, though it no doubt discourages, does not always prevent marriage. It seems A half–starved Highland woman frequently bears even to be favourable to generation. more than twenty children, while a pampered fine lady is often incapable of bearing any, and is generally exhausted by two or three. Barrenness, so frequent among women of fashion, is very rare among those of inferior station. Luxury in the fair sex, while it enflames perhaps the passion for enjoyment, seems always to weaken, and frequently to destroy altogether, the powers of generation.

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But poverty, though it does not prevent the generation, is extremely unfavourable to the rearing of children. The tender plant is produced, but in so cold a soil and so severe a climate, soon withers and dies. It is not uncommon, I have been frequently told, in the Highlands of Scotland for a mother who has borne twenty children not to have two alive. Several officers of great experience have assured me, that so far from recruiting their regiment, they have never been able to supply it with drums and fifes from all the soldiers children that were born in it. A greater number of fine children, however, is seldom seen anywhere than about a barrack of soldiers. Very few of them, it seems, arrive at the age of thirteen or fourteen. In some places one half the children born die before they are four years of age; in many places before they are seven; and in almost This great mortality, however, will every where all places before they are nine or ten. be found chiefly among the children of the common people, who cannot afford to tend

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them with the same care as those of better station. Though their marriages are generally more fruitful than those of people of fashion, a smaller proportion of their children arrive at maturity. In foundling hospitals, and among the children brought up

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by parish charities, the mortality is still greater than among those of the common people.

39

Every species of animals naturally multiplies in proportion to the means of their But in civilized society it is subsistence, and no species can ever multiply beyond it. only among the inferior ranks of people that the scantiness of subsistence can set limits to the further multiplication of the human species; and it can do so in no other way than by destroying a great part of the children which their fruitful marriages produce.

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The liberal reward of labour, by enabling them to provide better for their children, and consequently to bring up a greater number, naturally tends to widen and extend those limits. It deserves to be remarked too, that it necessarily does this as nearly as possible in the proportion which the demand for labour requires. If this demand is continually increasing, the reward of labour must necessarily encourage in such a manner the marriage and multiplication of labourers, as may enable them to supply that continually increasing demand by a continually increasing population. If kthe rewardk should at any time be less than what was requisite for this purpose, the deficiency of hands would soon raise it; and if it should at any time be more, their excessive multiplication would

[122]

soon lower it to this necessary rate. The market would be so much under–stocked with labour in the one case, and so much over–stocked in the other, as would soon force back its price to that proper rate which the circumstances of the society required. It is in this manner that the demand for men, like that for any other commodity, necessarily regulates the production of men; quickens it when it goes on too slowly, and stops it when it advances too fast. It is this demand which regulates and determines the state of propagation in all the different countries of the world, in North America, in Europe, and in China; which renders it rapidly progressive in the first, slow and gradual in the second, and altogether stationary in the last. The lwear and tearl of a slave, it has been said, is at the expence of his master; but that of a free servant is at his own expence. The mwear and tearm of the latter, however, is, in reality, as much at the expence of his master as that of the former. The wages paid to journeymen and servants of every kind must be such as may enable them, one with another, to continue the race of journeymen and servants, according as the increasing, diminishing, or stationary demand of the society may happen to require. But though the wear and tearn of a free servant be equally at the expence of his master, it generally costs him much less than that of a slave. The fund destined for replacing or repairing, if
n

[123]

I may say so, the owear and tearo of the slave, is commonly managed by a negligent master or careless overseer. That destined for performing the same office with regard to the free man, is managed by the free man himself. The disorders which generally prevail in the œconomy of the rich, naturally introduce themselves into the management of the former: The strict frugality and parsimonious attention of the poor as naturally establish themselves in that of the latter. Under such different management, the same purpose must require very different degrees of expence to execute it. It appears, accordingly, from the experience of all ages and nations, I believe, that the work done It is found to by freemen comes cheaper in the end than that performed by slaves. do so even at Boston, New York, and Philadelphia, where the wages of common labour are so very high.

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The liberal reward of labour, therefore, as it is the effect of increasing wealth, so it is the cause of increasing population. To complain of it is to lament over the necessary effect and cause of the greatest publick prosperity.

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It deserves to be remarked, perhaps, that it is in the progressive state, while the society is advancing to the further acquisition, rather than when it has acquired its full complement of riches, that the condition of the labouring poor, of the great body of the people, seems to be the happiest and the most comfortable. It is hard in the stationary, and miserable in the declining state. The progressive state is in reality the chearful and the hearty state to all the different orders of the society. The stationary is dull; the declining, melancholy.

[124] 44

The liberal reward of labour, as it encourages the propagation, so it increases the industry of the common people. The wages of labour are the encouragement of industry, which, like every other human quality, improves in proportion to the encouragement it receives. A plentiful subsistence increases the bodily strength of the and of ending his days labourer, and the comfortable hope of bettering his condition, perhaps in ease and plenty, animates him to exert that strength to the utmost. Where wages are high, accordingly, we shall always find the workmen more active, diligent, and expeditious, than where they are low; in England, for example, than in Scotland; in the neighbourhood of great towns, than in remote country places. Some workmen, indeed, when they can earn in four days what will maintain them through the week, will be idle the other three.

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Workmen, on the contrary, when they are liberally paid by the piece, are very part. apt to over–work themselves, and to ruin their health and constitution in a few years. A carpenter in London, and in some other places, is not supposed to last in his utmost vigour above eight years. Something of the same kind happens in many other trades, in which the workmen are paid by the piece; as they generally are in manufactures, and even in country labour, wherever wages are higher than ordinary. Almost every class of

42

This, however, is by no means the case with the greater

[125]

artificers is subject to some peculiar infirmity occasioned by excessive application to their peculiar species of work. Ramuzzini, an eminent Italian physician, has written a We do not reckon our soldiers the most particular book concerning such diseases. industrious set of people among us. Yet when soldiers have been employed in some particular sorts of work, and liberally paid by the piece, their officers have frequently been obliged to stipulate with the undertaker, that they should not be allowed to earn Till above a certain sum every day, according to the rate at which they were paid. this stipulation was made, mutual emulation and the desire of greater gain, frequently prompted them to over–work themselves, and to hurt their health by excessive labour. Excessive application during four days of the week, is frequently the real cause of the idleness of the other three, so much and so loudly complained of. Great labour, either of mind or body, continued for several days together, is in most men naturally followed by a great desire of relaxation, which, if not restrained by force or by some strong necessity, is almost irresistible. It is the call of nature, which requires to be relieved by some indulgence, sometimes of ease only, but sometimes too of dissipation and diversion. If it is not complied with, the consequences are often dangerous, and sometimes fatal, and such as almost always, sooner or later, bring on the peculiar infirmity of the trade. If masters would always listen to the dictates of reason and

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humanity, they have frequently occasion rather to moderate, than to animate the

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application of many of their workmen. It will be found, I believe, in every sort of trade, that the man who works so moderately, as to be able to work constantly, not only preserves his health the longest, but, in the course of the year, executes the greatest quantity of work.

45

In cheap years, it is pretended, workmen are generally more idle, and in dear ones more industrious than ordinary. A plentiful subsistence, therefore, it has been concluded, relaxes, and a scanty one quickens their industry. That a little more plenty than ordinary may render some workmen idle, cannot well be doubted; but that it should have this effect upon the greater part, or that men in general should work better when they are ill fed than when they are well fed, when they are disheartened than when they are in good spirits, when they are frequently sick than when they are generally in good health, seems not very probable. Years of dearth, it is to be observed, are generally among the common people years of sickness and mortality, which cannot fail to diminish the produce of their industry.

46

In years of plenty, servants frequently leave their masters, and trust their subsistence to what they can make by their own industry. But the same cheapness of provisions, by increasing the fund which is destined for the maintenance of servants, encourages masters, farmers especially, to employ a greater number. Farmers upon such occasions

[127]

expect more profit from their corn by maintaining a few more labouring servants, than by selling it at a low price in the market. The demand for servants increases, while the number of those who offer to supply that demand diminishes. The price of labour, therefore, frequently rises in cheap years.

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In years of scarcity, the difficulty and uncertainty of subsistence make all such people eager to return to service. But the high price of provisions, by diminishing the funds destined for the maintenance of servants, disposes masters rather to diminish than to increase the number of those they have. In dear years too, poor independent workmen frequently consume the little stocks with which they had used to supply themselves with the materials of their work, and are obliged to become journeymen for subsistence. More people want employment than can easily get it; many are willing to take it upon lower terms than ordinary, and the wages of both servants and journeymen frequently sink in dear years.

48

Masters of all sorts, therefore, frequently make better bargains with their servants in dear than in cheap years, and find them more humble and dependent in the former than in the latter. They naturally, therefore, commend the former as more favourable to industry. Landlords and farmers, besides, two of the largest classes of masters, have another reason for being pleased with dear years. The rents of the one and the profits of the other depend very much upon the price of provisions. Nothing can be more absurd,

[128]

however, than to imagine that men in ge–neral should work less when they work for themselves, than when they work for other people. A poor independent workman will generally be more industrious than even a journeyman who works by the piece. The one enjoys the whole produce of his own industry; the other shares it with his master. The one, in his separate independent state, is less liable to the temptations of bad company,

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which in large manufactories so frequently ruin the morals of the other. The superiority of the independent workman over those servants who are hired by the month or by the year, and whose wages and maintenance are the same whether they do much or do little, is likely to be still greater. Cheap years tend to increase the proportion of independent workmen to journeymen and servants of all kinds, and dear years to diminish it.

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A French author of great knowledge and ingenuity, Mr. Messance, receiver of the taillesp in the election of St. Etienne, endeavours to show that the poor do more work in cheap than in dear years, by comparing the quantity and value of the goods made upon those different occasions in three different manufactures; one of coarse woollens carried on at Elbeuf; one of linen, and another of silk, both which extend through the It appears from his account, which is copied from the whole generality of Rouen. registers of the publick offices, that the quantity and value of the goods made in all those three manufactures has generally been greater in cheap than in dear years; and
p

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that it has always been greatest in the cheapest, and least in the dearest years. All the three seem to be stationary manufactures, or which, though their produce may vary somewhat from year to year, are upon the whole neither going backwards nor forwards.

50

The manufacture of linen in Scotland, and that of coarse woollens in the west riding of Yorkshire, are growing manufactures, of which the produce is generally, though with some variations, increasing both in quantity and value. Upon examining, however, the accounts which have been published of their annual produce, I have not been able to observe that its variations have had any sensible connection with the dearness or cheapness of the seasons. In 1740, a year of great scarcity, both manufactures, indeed, appear to have declined very considerably.

48

But in 1756, another year of great

scarcity, the Scotch manufacture made more than ordinary advances. The Yorkshire manufacture, indeed, declined, and its produce did not rise to what it had been in 1755 till 1766, after the repeal of the American stamp act. In that and the following year it greatly exceeded what it had ever been before, and it has continued to qadvanceq ever since.

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The produce of all great manufactures for distant sale must necessarily depend, not so much upon the dearness or cheapness of the seasons in the countries where they are carried on, as upon the circumstances which affect the demand in the countries where they are consumed; upon peace or war, upon the prosperity or declension of other rival manufactures, and upon the good or bad humour of their principal customers. A great part of the extraordinary work, besides, which is probably done in cheap years, never enters the publick registers of manufactures. The men servants who leave their masters become independent labourers. The women return to their parents, and commonly spin in order to make cloaths for themselves and their families. Even the independent workmen do not always work for publick sale, but are employed by some of their neighbours in manufactures for family use. The produce of their labour, therefore, frequently makes no figure in those publick registers of which the records are sometimes published with so much parade, and from which our merchants and manufacturers would often vainly pretend to announce the prosperity or declension of the greatest empires.

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Though the variations in the price of labour, not only do not always correspond with those in the price of provisions, but are frequently quite opposite, we must not, upon this account, imagine that the price of provisions has no influence upon that of labour.

51

The money price of labour is necessarily regulated by two circumstances; the

The demand for labour, and the price of the necessaries and conveniencies of life. demand for labour, according as it happens to be increasing, stationary, or declining, or to require an increasing, stationary, or declining population, determines the quantity of

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the necessaries and conveniencies of life which must be given to the labourer; and the money price of labour is determined by what is requisite for purchasing this quantity. Though the money price of labour, therefore, is sometimes high where the price of provisions is low, it would be still higher, the demand continuing the same, if the price of provisions was high.

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It is because the demand for labour increases in years of sudden and extraordinary plenty, and diminishes in those of sudden and extraordinary scarcity, that the money price of labour sometimes rises in the one, and sinks in the other.

54

In a year of sudden and extraordinary plenty, there are funds in the hands of many of the employers of industry, sufficient to maintain and employ a greater number of industrious people than had been employed the year before; and this extraordinary number cannot always be had. Those masters, therefore, who want more workmen, bid against one another, in order to get them, which sometimes raises both the real and the money price of their labour.

55

The contrary of this happens in a year of sudden and extraordinary scarcity. The funds destined for employing industry are less than they had been the year before. A considerable number of people are thrown out of employment, who bid ragainst oner another, in order to get it, which sometimes lowers both the real and the money price of labour. In 1740, a year of extraordinary scarcity, many people were willing to work for

[132]

bare subsistence. In the succeeding years of plenty, it was more difficult to get labourers and servants.

56

The scarcity of a dear year, by diminishing the demand for labour, tends to lower its price, as the high price of sprovisionss tends to raise it. The plenty of a cheap year, on the contrary, by increasing the demand, tends to raise the price of labour, as the cheapness of provisions tends to lower it. In the ordinary variations of the price of provisions, those two opposite causes seem to counterbalance one another; which is probably in part the reason why the wages of labour are every–where so much more steady and permanent than the price of provisions.

57

The increase in the wages of labour necessarily increases the price of many commodities, by increasing that part of it which resolves itself into wages, and so far tends to diminish their consumption both at home and abroad. The same cause, however, which raises the wages of labour, the increase of stock, tends to increase its productive powers, and to make a smaller quantity of labour produce a greater quantity of work. The owner of the stock which employs a great number of labourers, necessarily endeavours, for his own advantage, to make such a proper division and distribution of

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employment, that they may be enabled to produce the greatest quantity of work possible. For the same reason, he endeavours to supply them with the best machinery

[133]

which either he or they can think of. What takes place among the labourers in a particular workhouse, takes place, for the same reason, among those of a great society. The greater their number, the more they naturally divide themselves into different classes and subdivisions of employment. More heads are occupied in inventing the most proper machinery for executing the work of each, and it is, therefore, more likely to be invented. There are many commodities, therefore, which, in consequence of these improvements, come to be produced by so much less labour than before, that the

53

54 increase of its price tis more than compensated byt the diminution of its quantity.

CHAPTER IX

Of The Profits Of Stock
1
THE rise and fall in the profits of stock depend upon the same causes with the rise and fall in the wages of labour, the increasing or declining state of the wealth of the society; but those causes affect the one and the other very differently.

2

The increase of stock, which raises wages, tends to lower profit. When the stocks of many rich merchants are turned into the same trade, their mutual competition naturally tends to lower its profit; and when there is a like increase of stock in all the different trades carried on in the same society, the same competition must produce the same effect in them all.

[134]

1

3

It is not easy, it has already been observed, to ascertain what are the average wages of labour even in a particular place, and at a particular time. We can, even in this case, seldom determine more than what are the most usual wages. But even this can seldom be done with regard to the profits of stock. Profit is so very fluctuating, that the person who carries on a particular trade cannot always tell you himself what is the average of his annual profit. It is affected, not only by every variation of price in the commodities which he deals in, but by the good or bad fortune both of his rivals and of his customers, and by a thousand other accidents to which goods when carried either by sea or by land, or even when stored in a warehouse, are liable. It varies, therefore, not only from year to year, but from day to day, and almost from hour to hour. To ascertain what is the average profit of all the different trades carried on in a great kingdom, must be much more difficult; and to judge of what it may have been formerly, or in remote periods of time, with any degree of precision, must be altogether impossible.

2

3

4

But though it may be impossible to determine, with any degree of precision, what are or were the average profits of stock, either in the present, or in antient times, some notion may be formed of them from the interest of money. It may be laid down as a maxim, that wherever a great deal can be made by the use of money, a great deal will

4

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commonly be given for the use of it; and that wherever little can be made by it, less will commonly be given for it. According, therefore, as the usual market rate of interest varies in any country, we may be assured that the ordinary profits of stock must vary with it, must sink as it sinks, and rise as it rises. The progress of interest, therefore, may lead us to form some notion of the progress of profit.

5

6 7

By the 37th of Henry VIII. all interest above ten per cent. was declared unlawful. More, it seems, had sometimes been taken before that. In the reign of Edward VI.

religious zeal prohibited all interest. This prohibition, however, like all others of the same kind, is said to have produced no effect, and probably rather increased than diminished the evil of usury. Elizabeth, cap. 8.

8

9

10

The statute of Henry VIII. was revived by the 13th of

and ten per cent. continued to be the legal rate of interest till the

21st of James I. when it was restricted to eight per cent.

11

and by the 12th of Queen Anne, to five per cent. cent. soon after the restoration, All these different statutory regulations seem to have been made with great propriety.

12

It was reduced to six per

13

They seem to have followed and not to have gone before the market rate of interest, or the rate at which people of good credit usually borrowed. Since the time of Queen Anne, five per cent. seems to have been rather above than below the market rate.

14

[136]

and people of good Before the late war, the government borrowed at three per cent.; credit in the capital, and in many other parts of the kingdom, at three and a half, four, and four and a half per cent.

15

6

Since the time of Henry VIII. the wealth and revenue of the country have been continually advancing, and, in the course of their progress, their pace seems rather to have been gradually accelerated than retarded. They seem, not only to have been going on, but to have been going on faster and faster. The wages of labour have been continually increasing during the same period, and in the greater part of the different branches of trade and manufactures the profits of stock have been diminishing.

7

It generally requires a greater stock to carry on any sort of trade in a great town than in a country village. The great stocks employed in every branch of trade, and the number of rich competitors, generally reduce the rate of profit in the former below what it is in the latter. But the wages of labour are generally higher in a great town than in a country village. In a thriving town the people who have great stocks to employ, frequently cannot get the number of workmen they want, and therefore bid against one another in order to get as many as they can, which raises the wages of labour, and lowers the profits of stock. In the remote parts of the country there is frequently not stock sufficient to employ all the people, who therefore bid against one another in order to get employment, which lowers the wages of labour, and raises the profits of stock.

[137] 8

In Scotland, though the legal rate of interest is the same as in England, the market rate is rather higher. People of the best credit there seldom borrow under five per cent. Even private bankers in Edinburgh give four per cent. upon their promissory notes, of which payment either in whole or in part may be demanded at pleasure. Private bankers in London give no interest for the money which is deposited with them. There are few trades which cannot be carried on with a smaller stock in Scotland than in England. The

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common rate of profit, therefore, must be somewhat greater. The wages of labour, it has already been observed, are lower in Scotland than in England. The country too is not only much poorer, but the steps by which it advances to a better condition, for it is evidently advancing, seem to be much slower and more tardy.

16

17

9

The legal rate of interest in France has not, during the course of the present century, been always regulated by the market rate . In 1720 interest was reduced from the twentieth to the fiftieth penny, or from five to two per cent. In 1724 it was raised to the thirtieth penny, or to 3⅓ per cent. In 1725 it was again raised to the twentieth penny, or to five per cent. In 1766, during the administration of Mr. Laverdy, it was reduced to the twenty–fifth penny, or to four per cent. The Abbe Terray raised it afterwards to the

*

[138]

old rate of five per cent. The sup–posed purpose of many of those violent reductions of interest was to prepare the way for reducing that of the publick debts; a purpose which has sometimes been executed. France is perhaps in the present times not so rich a country as England; and though the legal rate of interest has in France frequently been lower than in England, the market rate has generally been higher; for there, as in other The countries, they have several very safe and easy methods of evading the law. profits of trade, I have been assured by British merchants who had traded in both countries, are higher in France than in England; and it is no doubt upon this account that many British subjects chuse rather to employ their capitals in a country where trade is in disgrace, than in one where it is highly respected. The wages of labour are lower in France than in England. When you go from Scotland to England, the difference which you may remark between the dress and countenance of the common people in the one country and in the other, sufficiently indicates the difference in their condition. France, though no doubt a The contrast is still greater when you return from France. richer country than Scotland, seems not to be going forward so fast. It is a common and even a popular opinion in the country that it is going backwards; an opinion which, I apprehend, is ill founded even with regard to France, but which nobody can possibly entertain with regard to Scotland, who sees the country now and who saw it twenty or thirty years ago.

18

19

[139] 10

The province of Holland, on the other hand, in proportion to the extent of its territory and the number of its people, is a richer country than England. The government there borrow at two per cent., and private people of good credit at three. The wages of labour are said to be higher in Holland than in England, and the Dutch, it is well known, trade The trade of Holland, it has been upon lower profits than any people in Europe. pretended by some people, is decaying, and it may perhaps be true that some particular branches of it are so. But these symptoms seem to indicate sufficiently that there is no general decay. When profit diminishes, merchants are very apt to complain that trade decays; though the diminution of profit is the natural effect of its prosperity, or of a greater stock being employed in it than before. During the late war the Dutch gained the whole carrying trade of France, of which they still retain a very large share. The about forty great property which they possess both in the French and English funds, millions, it is said, in the latter (in which I suspect, however, there is a considerable exaggeration); the great sums which they lend to private people in countries where the rate of interest is higher than in their own, are circumstances which no doubt demonstrate the redundancy of their stock, or that it has increased beyond what they

20

21

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can employ with tolerable profit in the proper business of their own country: but they do

[140]

not demonstrate that that business has decreased. As the capital of a private man, though acquired by a particular trade, may increase beyond what he can employ in it, and yet that trade continue to increase too; so may likewise the capital of a great nation.

11

In our North American and West Indian colonies, not only the wages of labour, but the interest of money, and consequently the profits of stock, are higher than in England. In the different colonies both the legal and the market rate of interest run from six to eight per cent. High wages of labour and high profits of stock, however, are things, perhaps, which scarce ever go together, except in the peculiar circumstances of new colonies. A new colony must always for some time be more under–stocked in proportion to the

23

extent of its territory, and more under–peopled in proportion to the extent of its stock, They have more land than they have stock than the greater part of other countries. to cultivate. What they have, therefore, is applied to the cultivation only of what is most fertile and most favourably situated, the blandsb near the sea shore, and along the banks of navigable rivers.

24

25

Such land too is frequently purchased at a price below the

Stock employed in the purchase and improvement value even of its natural produce. of such lands must yield a very large profit, and consequently afford to pay a very large interest. Its rapid accumulation in so profitable an employment enables the planter to increase the number of his hands faster than he can find them in a new settlement.

26

[141]

Those whom he can find, therefore, are very liberally rewarded. As the colony increases, the profits of stock gradually diminish. When the most fertile and best situated lands have been all occupied, less profit can be made by the cultivation of what is inferior both in soil and situation, and less interest can be afforded for the stock which is so employed. In the greater part of our colonies, accordingly, both the legal and the market rate of interest have been considerably reduced during the course of the present century. As riches, improvement, and population have increased, interest has declined. The wages of labour do not sink with the profits of stock. The demand for labour increases with the increase of stock whatever be its profits; and after these are diminished, stock may not only continue to increase, but to increase much faster than before. It is with industrious nations who are advancing in the acquisition of riches, as with industrious individuals. A great stock, though with small profits, generally increases faster than a small stock with great profits. Money, says the proverb, makes money. When you have got a little, it is often easy to get more. The great difficulty is to get that little. The connection between the increase of stock and that of industry, or of the demand for useful labour, has partly been explained already, more fully hereafter in treating of the accumulation of stock.

27

28

but will be explained

12 [142]

The acquisition of new territory, or of new branches of trade, may sometimes raise the profits of stock, and with them the interest of money, even in a country which is fast advancing in the acquisition of riches. The stock of the country not being sufficient for the whole accession of business, which such acquisitions present to the different people among whom it is divided, is applied to those particular branches only which afford the greatest profit. Part of what had before been employed in other trades, is necessarily withdrawn from them, and turned into some of the new and more profitable ones. In all those old trades, therefore, the competition comes to be less than before. The market

29

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comes to be less fully supplied with many different sorts of goods. Their price necessarily rises more or less, and yields a greater profit to those who deal in them, who can, therefore, afford to borrow at a higher interest. For some time after the conclusion of the late war, not only private people of the best credit, but some of the greatest companies in London, commonly borrowed at five per cent. who before that had not been used to pay more than four, and four and a half per cent. The great accession both of territory and trade, by our acquisitions in North America and the West Indies, will sufficiently account for this, without supposing any diminution in the capital stock of the society. So great an accession of new business to be carried on by the old stock, must necessarily have diminished the quantity employed in a great number of particular branches, in which the competition being less, the profits must have been

[143]

greater. I shall hereafter have occasion to mention the reasons which dispose me to believe that the capital stock of Great Britain was not diminished even by the enormous expence of the late war.

30

13

The diminution of the capital stock of the society, or of the funds destined for the maintenance of industry, however, as it lowers the wages of labour, so it raises the profits of stock, and consequently the interest of money. By the wages of labour being lowered, the owners of what stock remains in the society can bring their goods cat less expencecto market than before, and less stock being employed in supplying the market than before, they can sell them dearer. Their goods cost them less, and they get more for them. Their profits, therefore, being augmented at both ends, can well afford a large interest. The great fortunes so suddenly and so easily acquired in Bengal and the other British settlements in the East Indies, may satisfy us that, as the wages of labour are very low, so the profits of stock are very high in those ruined countries. The interest of money is proportionably so. In Bengal, money is frequently lent to the farmers at forty, fifty, and sixty per cent. and the succeeding crop is mortgaged for the payment. As the profits which can afford such an interest must eat up almost the whole rent of the landlord, so such enormous usury must in its turn eat up the greater part of those profits. Before the fall of the Roman republick, a usury of the same kind seems to have been common in the provinces, under the ruinous administration of their proconsuls.

[144]

The virtuous Brutus lent money in Cyprus at deight–and–fortyd per cent. as we learn from the letters of Cicero.

31

14

In a country which had acquired that full complement of riches which the nature of its soil and climate, and its situation with respect to other countries allowed it to acquire; which could, therefore, advance no further, and which was not going backwards, both the wages of labour and the profits of stock would probably be very low. In a country fully peopled in proportion to what either its territory could maintain or its stock employ, the competition for employment would necessarily be so great as to reduce the wages of labour to what was barely sufficient to keep up the number of labourers, and, the country being already fully peopled, that number could never be augmented. In a country fully stocked in proportion to all the business it had to transact, as great a quantity of stock would be employed in every particular branch as the nature and extent of the trade would admit. The competition, therefore, would everywhere be as great, and consequently the ordinary profit as low as possible.

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15

But perhaps no country has ever yet arrived at this degree of opulence. China seems to have been long stationary, and had probably long ago acquired that full complement of riches which is consistent with the nature of its laws and institutions. But this complement may be much inferior to what, with other laws and institutions, the nature

32

[145]

of its soil, climate, and situation might admit of. A country which neglects or despises foreign commerce, and which admits the vessels of foreign nations into one or two of its ports only, cannot transact the same quantity of business which it might do with In a country too, where, though the rich or the owners different laws and institutions. of large capitals enjoy a good deal of security, the poor or the owners of small capitals enjoy scarce any, but are liable, under the pretence of justice, to be pillaged and plundered at any time by the inferior mandarines, the quantity of stock employed in all the different branches of business transacted within it, can never be equal to what the nature and extent of that business might admit. In every different branch, the oppression of the poor must establish the monopoly of the rich, who, by engrossing the whole trade to themselves, will be able to make very large profits. Twelve per cent. accordingly is said to be the common interest of money in China, and the ordinary profits of stock must be sufficient to afford this large interest.

33

34

16

A defect in the law may sometimes raise the rate of interest considerably above what the condition of the country, as to wealth or poverty, would require. When the law does it puts all borrowers nearly upon the same not enforce the performance of contracts, footing with bankrupts or people of doubtful credit in better regulated countries. The uncertainty of recovering his money makes the lender exact the same usurious interest

35

[146]

which is usually required from bankrupts. Among the barbarous nations who over–run the western provinces of the Roman empire, the performance of contracts was left for many ages to the faith of the contracting parties. The courts of justice of their kings seldom intermeddled in it. The high rate of interest which took place in those antient times may perhaps be partly accounted for from this cause.

17

When the law prohibits interest altogether, it does not prevent it. Many people must borrow, and nobody will lend without such a consideration for the use of their money as is suitable, not only to what can be made by the use of it, but to the difficulty and danger of evading the law. The high rate of interest among all Mahometan nations is accounted for by Mr. Montesquieu, not from their poverty, but partly from this, and partly from the difficulty of recovering the money.

36

18

The lowest ordinary rate of profit must always be something more than what is sufficient to compensate the occasional losses to which every employment of stock is exposed. It is this surplus only which is neat or clear profit. What is called gross profit comprehends frequently, not only this surplus, but what is retained for compensating such extraordinary losses. The interest which the borrower can afford to pay is in proportion to the clear profit only.

37

19
[147]

The lowest ordinary rate of interest must, in the same manner, be something more than sufficient to compensate the occasional losses to which lending, even with tolerable prudence, is ex–posed. Were it not more, charity or friendship could be the only motives for lending.

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20

In a country which had acquired its full complement of riches, where in every particular branch of business there was the greatest quantity of stock that could be employed in it, as the ordinary rate of clear profit would be very small, so that usual market rate of interest which could be afforded out of it, would be so low as to render it impossible for any but the very wealthiest people to live upon the interest of their money. All people of small or middling fortunes would be obliged to superintend themselves the employment of their own stocks. It would be necessary that almost every man should be a man of business, or engage in some sort of trade. The province of Holland seems to be approaching near to this state. It is there unfashionable not to be a man of business. Necessity makes it usual for almost every man to be so, and custom every where regulates fashion. As it is ridiculous not to dress, so is it, in some measure, not to be employed, like other people. As a man of a civil profession seems aukward in a camp or a garrison, and is even in some danger of being despised there, so does an idle man among men of business.

21
[148]

The highest ordinary rate of profit may be such as, in the price of the greater part of commodities, eats up the whole of what should go to the rent of the land, and leaves only what is sufficient to pay the labour of preparing and bring–ing them to market, according to the lowest rate at which labour can any–where be paid, the bare subsistence of the labourer. The workman must always have been fed in some way or other while he was about the work; but the landlord may not always have been paid. The profits of the trade which the servants of the East India Company carry on in Bengal may not perhaps be very far from this state.

38

22

The proportion which the usual market rate of interest ought to bear to the ordinary rate of clear profit, necessarily varies as profit rises or falls. Double interest is in Great Britain reckoned, what the merchants call, a good, moderate, reasonable profit; terms which I apprehend mean no more than a common and usual profit. In a country where the ordinary rate of clear profit is eight or ten per cent., it may be reasonable that one half of it should go to interest, wherever business is carried on with borrowed money. The stock is at the risk of the borrower, who, as it were, insures it to the lender; and four or five per cent. may, in the greater part of trades, be both a sufficient profit upon the risk of this insurance, and a sufficient recompence for the trouble of employing the stock. But the proportion between interest and clear profit might not be the same in countries where the ordinary rate of profit was either a good deal lower, or a good deal higher. If it were a good deal lower, one half of it perhaps could not be afforded for

39

[149]

interest; and more might be afforded if it were a good deal higher. In countries which are fast advancing to riches, the low rate of profit may, in the price of many commodities, compensate the high wages of labour, and enable those countries to sell as cheap as their less thriving neighbours, among whom the wages of labour may be lower.
e

23

In reality high profits tend much more to raise the price of work than high wages. If in the linen manufacture, for example, the wages of the different working people; the flax– dressers, the spinners, the weavers, &c. should, all of them, be advanced two pence a day: it would be necessary to heighten the price of a piece of linen only by a number of

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two pences equal to the number of people that had been employed about it, multiplied by the number of days during which they had been so employed. That part of the price of the commodity which resolved itself into wages would, through all the different stages of the manufacture, rise only in arithmetical proportion to this rise of wages. But if the profits of all the different employers of those working people should be raised five per cent. that part of the price of the commodity which resolved itself into profit, would, through all the different stages of the manufacture, rise in geometrical proportion to this rise of profit. The employer of the flax–dressers would in selling his flax require an additional five per cent. upon the whole value of the materials and wages which he

[150]

advanced to his workmen. The employer of the spinners would require an additional five per cent. both upon the advanced price of the flax and upon the wages of the spinners. And the employer of the weavers would require a like five per cent. both upon the advanced price of the linen yarn and upon the wages of the weavers. In raising the price of commodities the rise of wages operates in the same manner as simple interest does in the accumulation of debt. The rise of profit operates like compound interest. Our merchants and master–manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.e

40

CHAPTER X

Of Wages And Profit In The Different Employments Of Labour And Stock
1
THE whole of the advantages and disadvantages of the different employments of labour and stock must, in the same neighbourhood, be either perfectly equal or continually tending to equality. If in the same neighbourhood, there was any employment evidently eithera more or less advantageous than the rest, so many people would crowd into it in the one case, and so many would desert it in the other, that its advantages would soon return to the level of other employments. This at least would be the case in a society where things were left to follow their natural course, where there was perfect liberty, and where every man was perfectly free both to chuse what occupation he thought proper, and to change it as often as he thought proper. Every man’s interest would prompt him to seek the advantageous, and to shun the disadvantageous employment.
a

1

2

2

Pecuniary wages and profit, indeed, are every–where in Europe extremely different according to the different employments of labour and stock. But this difference arises partly from certain circumstances in the employments themselves, which, either really, or at least in the imaginations of men, make up for a small pecuniary gain in some, and

[152]

counter–balance a great one in others; and partly from the policy of Europe, which

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nowhere leaves things at perfect liberty.

3

The particular consideration of those circumstances and of that policy will divide this chapter into two parts.

PART I Inequalities arising from the Nature of the

Employments themselves
1
The five following are the principal circumstances which, so far as I have been able to observe, make up for a small pecuniary gain in some employments, and counter– balance a great one in others: first, the agreeableness or disagreeableness of the employments themselves; secondly, the easiness and cheapness, or the difficulty and expence of learning them; thirdly, the constancy or inconstancy of employment in them; fourthly, the small or great trust which must be reposed in those who exercise them; and, fiftly, the probability or improbability of success in them.

3

2

First, The wages of labour vary with the ease or hardship, the cleanliness or dirtiness, the honourableness or dishonourableness of the employment. Thus in most places, take the year round, a journeyman taylor earns less than a journeyman weaver. His work is much easier. A journeyman weaver earns less than a journeyman smith. His work is not always easier, but it is much cleanlier. A journeyman blacksmith, though an artificer,

[153]

seldom earns so much in twelve hours as a collier, who is only a labourer, does in eight. His work is not quite so dirty, is less dangerous, and is carried on in day–light, and above ground. Honour makes a great part of the reward of all honourable professions. In point of pecuniary gain, all things considered, they are generally under– recompensed, as I shall endeavour to show by and by. Disgrace has the contrary effect. The trade of a butcher is a brutal and an odious business; but it is in most places more profitable than the greater part of common trades. The most detestable of all employments, that of public executioner, is in proportion to the quantity of work done, better paid than any common trade whatever.

4

3

Hunting and fishing, the most important employments of mankind in the rude state of society, become in its advanced state their most agreeable amusements, and they pursue for pleasure what they once followed from necessity. In the advanced state of society, therefore, they are all very poor people who follow as a trade, what other people pursue as a pastime. Fishermen have been so since the time of Theocritus. A poacher is everywhere a very poor man in Great Britain. In countries where the rigour of the law suffers no poachers, the licensed hunter is not in a much better condition. The natural taste for those employments makes more people follow them than can live comfortably by them, and the produce of their labour, in proportion to its quantity,

5

6

*

[154]

comes always too cheap to mar–ket to afford any thing but the most scanty subsistence to the labourers.

4

Disagreeableness and disgrace affect the profits of stock in the same manner as the wages of labour. The keeper of an inn or tavern, who is never master of his own house, and who is exposed to the brutality of every drunkard, exercises neither a very

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agreeable nor a very creditable business. But there is scarce any common trade in which a small stock yields so great a profit.

5

Secondly, the wages of labour vary with the easiness and cheapness, or the difficulty and expence of learning the business.

7

6

When any expensive machine is erected, the extraordinary work to be performed by it before it is worn out, it must be expected, will replace the capital laid out upon it, with at least bthebordinary profits. A man educated at the expence of much labour and time to any of those employments which require extraordinary dexterity and skill, may be compared to one of those expensive machines. The work which he learns to perform, it must be expected, over and above the usual wages of common labour, will replace to him the whole expence of his education, with at least the ordinary profits of an equallycvaluable capital. It must do this too in a reasonable time, regard being had to the very uncertain duration of human life, in the same manner as to the more certain duration of the machine.
c

8

9

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[155] 7

The difference between the wages of skilled labour and those of common labour, is founded upon this principle. The policy of Europe considers the labour of all mechanicks, artificers, and manufacturers, as skilled labour; and that of all country labourers as common labour. It seems to suppose that of the former to be of a more nice and delicate nature than that of the latter. It is so perhaps in some cases; but in the greater part it is quite otherwise, The laws and customs of Europe, therefore, as I shall endeavour to shew by and by. in order to qualify any person for exercising the one species of labour, impose the necessity of an apprenticeship, though with different degrees of rigour in different places. They leave the other free and open to every body. During the continuance of the apprenticeship, the whole labour of the apprentice belongs to his master. In the mean time he must, in many cases, be maintained by his parents or relations, and in almost Some money too is commonly given to the all cases must be cloathed by them. master for teaching him his trade. They who cannot give money, give time, or become bound for more than the usual number of years; a consideration which, though it is not always advantageous to the master, on account of the usual idleness of apprentices, is always disadvantageous to the apprentice. In country labour, on the contrary, the labourer, while he is employed about the easier, learns the more difficult parts of his business, and his own labour maintains him through all the different stages of his

8

11

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employ–ment. It is reasonable, therefore, that in Europe the wages of mechanicks, artificers, and manufacturers, should be somewhat higher than those of common labourers. They are so accordingly, and their superior gains make them in most places be considered as a superior rank of people. This superiority, however, is generally very small; the daily or weekly earnings of journeymen in the more common sorts of manufactures, such as those of plain linen and woollen cloth, computed at an average, are, in most places, very little more than the day wages of common labourers. Their employment, indeed, is more steady and uniform, and the superiority of their earnings, taking the whole year together, may be somewhat greater. It seems evidently, however, to be no greater than what is sufficient to compensate the superior expence of

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their education.

9

Education in the ingenious arts and in the liberal professions, is still more tedious and expensive. The pecuniary recompence, therefore, of painters and sculptors, of lawyers and physicians, ought to be much more liberal: and it is so accordingly.

10

The profits of stock seem to be very little affected by the easiness or difficulty of learning the trade in which it is employed. All the different ways in which stock is commonly employed in great towns seem, in reality, to be almost equally easy and equally difficult to learn. One branch either of foreign or domestick trade, cannot well be a much more intricate business than another.

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11

Thirdly, The wages of labour in different occupations vary with the constancy or inconstancy of employment. Employment is much more constant in some trades than in others. In the greater part of manufactures, a journeyman may be pretty sure of employment almost every day in the year that he is able to work. A mason or bricklayer, on the contrary, can work neither in hard frost nor in foul weather, and his employment at all other times depends upon the occasional calls of his customers. He is liable, in consequence, to be frequently without any. What he earns, therefore, while he is employed, must not only maintain him while he is idle, but make him some compensation for those anxious and desponding moments which the thought of so precarious a situation must sometimes occasion. Where the computed earnings of the greater part of manufacturers, accordingly, are nearly upon a level with the day wages of common labourers, those of masons and bricklayers are generally from one–half more to double those wages. Where common labourers earn four and five shillings a week, masons and bricklayers frequently earn seven and eight; where the former earn six, the latter often earn nine and ten; and where the former earn nine and ten, as in London, the latter commonly earn fifteen and eighteen. No species of skilled labour, however, seems more easy to

12

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learn than that of masons and bricklayers. Chairmen in London, during the summer season, are said sometimes to be employed as bricklayers. The high wages of those workmen, therefore, are not so much the recompence of their skill, as the compensation for the inconstancy of their employment. A house carpenter seems to exercise rather a nicer and d more ingenious trade than a mason. In most places, however, for it is not universally so, his day–wages are somewhat lower. His employment, though it depends much, does not depend so entirely upon the occasional calls of his customers; and it is not liable to be interrupted by the weather.

14

When the trades which generally afford constant employment, happen in a particular place not to do so, the wages of the workmen always rise a good deal above their ordinary proportion to those of common labour. In London almost all journeymen artificers are liable to be called upon and dismissed by their masters from day to day, and from week to week, in the same manner as day–labourers in other places. The lowest order of artificers, journeymen taylors, accordingly, earn there half a crown a–

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day, though eighteen–pence may be reckoned the wages of common labour. In small towns and country–villages, the wages of journeymen taylors frequently scarce equal those of common labour; but in London they are often many weeks without employment, particularly during the summer.

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[159] 15

When the inconstancy of employment is combined with the hardship, disagreeableness and dirtiness of the work, it sometimes raises the wages of the most common labour above those of the most skilful artificers. A collier working by the piece is supposed, at Newcastle, to earn commonly about double, and in many parts of Scotland about three His high wages arise altogether from the times the wages of common labour. hardship, disagreeableness, and dirtiness of his work. His employment may, upon most occasions, be as constant as he pleases. The coal–heavers in London exercise a trade which in hardship, dirtiness, and disagreeableness, almost equals that of colliers; and from the unavoidable irregularity in the arrivals of coal–ships, the employment of the greater part of them is necessarily very inconstant. If colliers, therefore, commonly earn double and triple the wages of common labour, it ought not to seem unreasonable that coal–heavers should sometimes earn four and five times those wages. In the enquiry made into their condition a few years ago, it was found that at the rate at which they were then paid, they could earn from six to ten shillings a day. Six shillings are about four times the wages of common labour in London, and in every particular trade, the lowest common earnings may always be considered as those of the far greater number. How extravagant soever those earnings may appear, if they were more than sufficient

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to compensate all the disagreeable circumstances of the business, there would soon be so great a number of competitors as, in a trade which has no exclusive privilege, would quickly reduce them to a lower rate. The constancy or inconstancy of employment cannot eaffecte the ordinary profits of stock in any particular trade. Whether the stock is or is not constantly employed depends, not upon the trade, but the trader.

17

Fourthly, The wages of labour vary according to the small or great trust which must be reposed in the workmen.

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18

The wages of goldsmiths and jewellers are every–where superior to those of many other workmen, not only of equal, but of much superior ingenuity; on account of the precious materials with which they are intrusted.

19

We trust our health to the physician; our fortune and sometimes our life and reputation to the lawyer and attorney. Such confidence could not safely be reposed in people of a very mean or low condition. Their reward must be such, therefore, as may give them that rank in the society which so important a trust requires. The long time and the great expence which must be laid out in their education, when combined with this circumstance, necessarily enhance still further the price of their labour.

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When a person employs only his own stock in trade, there is no trust; and the credit which he may get from other people, depends, not upon the nature of his trade, but upon their opinion of his fortune, probity, and prudence. The dif–ferent rates of profit,

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therefore, in the different branches of trade, cannot arise from the different degrees of trust reposed in the traders.

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Fifthly, the wages of labour in different employments vary according to the probability or improbability of success in them. The probability that any particular person shall ever be qualified for the employment to which he is educated, is very different in different occupations. In the greater part of mechanick trades, success is almost certain; but very uncertain in the liberal professions. Put your son apprentice to a shoemaker, there is little doubt of his learning to make a pair of shoes: But send him to study the law, it is at least twenty to one if ever he makes such proficiency as will enable him to live by the business. In a perfectly fair lottery, those who draw the prizes ought to gain all that is lost by those who draw the blanks. In a profession where twenty fail for one that succeeds, that one ought to The counsellor at gain all that should have been gained by the unsuccessful twenty. law who, perhaps, at near forty years of age, begins to make something by his profession, ought to receive the retribution, not only of his own so tedious and expensive education, but of that of more than twenty others who are never likely to make any thing by it. How extravagant soever the fees of counsellors at law may sometimes appear, their real retribution is never equal to this. Compute in any

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particular place, what is likely to be annually gained, and what is likely to be an–nually spent, by all the different workmen in any common trade, such as that of shoemakers or weavers, and you will find that the former sum will generally exceed the latter. But make the same computation with regard to all the counsellors and students of law, in all the different inns of court, and you will find that their annual gains bear but a very small proportion to their annual expence, even though you rate the former as high, and the latter as low, as can well be done. The lottery of the law, therefore, is very far from being a perfectly fair lottery; and that, as well as many other liberal and honourable professions, faref, in point of pecuniary gain, evidently under–recompenced.

23

Those professions keep their level, however, with other occupations, and, notwithstanding these discouragements, all the most generous and liberal spirits are eager to crowd into them. Two different causes contribute to recommend them. First, the desire of the reputation which attends upon superior excellence in any of them; and, secondly, the natural confidence which every man has more or less, not only in his own abilities, but in his own good fortune.

24

To excel in any profession, in which but few arrive at mediocrity, is the most decisive mark of what is called genius or superior talents. The publick admiration which attends upon such distinguished abilities, makes always a part of their reward; a greater or smaller in proportion as it is higher or lower in degree. It makes a considerable part of

[163]

g

that rewardg in the profession of physick; a still greater perhaps in that of law; in

poetry and philosophy it makes almost the whole.

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There are some very agreeable and beautiful talents of which the possession commands a certain sort of admiration; but of which the exercise for the sake of gain is considered, whether from reason or prejudice, as a sort of publick prostitution. The pecuniary

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recompence, therefore, of those who exercise them in this manner, must be sufficient, not only to pay for the time, labour, and expence of acquiring the talents, but for the discredit which attends the employment of them as the means of subsistence. The exorbitant rewards of players, opera–singers, opera–dancers, &c. are founded upon those two principles; the rarity and beauty of the talents, and the discredit of employing It seems absurd at first sight that we should despise their them in this manner. persons, and yet reward their talents with the most profuse liberality. While we do the one, however, we must of necessity do the other. Should the publick opinion or prejudice ever alter with regard to such occupations, their pecuniary recompence would quickly diminish. More people would apply to them, and the competition would quickly reduce the price of their labour. Such talents, though far from being common, are by no means so rare as is imagined. Many people possess them in great perfection, who

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disdain to make this use of them; and many more are capable of acquiring them, if any thing could be made honourably by them.

26

The over–weening conceit which the greater part of men have of their own abilities, is an antient evil remarked by the philosophers and moralists of all ages. Their absurd It is, however, presumption in their own good fortune, has been less taken notice of. if possible, still more universal. There is no man living who, when in tolerable health and spirits, has not some share of it. The chance of gain is by every man more or less over– valued, and the chance of loss is by most men under–valued, and by scarce any man, who is in tolerable health and spirits, valued more than it is worth.

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That the chance of gain is naturally over–valued, we may learn from the universal success of lotteries. The world neither ever saw, nor ever will see, a perfectly fair lottery; or one in which the whole gain compensated the whole loss; because the undertaker could make nothing by it. In the state lotteries the tickets are really not worth the price which is paid by the original subscribers, and yet commonly sell in the market for twenty, thirty, and sometimes forty per cent. advance. The vain hope of gaining some of the great prizes is the sole cause of this demand. The soberest people scarce look upon it as a folly to pay a small sum for the chance of gaining ten or twenty thousand pounds; though they know that even that small sum is perhaps twenty or

[165]

thirty per cent. more than the chance is worth. In a lottery in which no prize exceeded twenty pounds, though in other respects it approached much nearer to a perfectly fair one than the common state lotteries, there would not be the same demand for tickets. In order to have a better chance for some of the great prizes, some people purchase several tickets, and others, small shares in a still greater number. There is not, however, a more certain proposition in mathematicks, than that the more tickets you adventure upon, the more likely you are to be a loser. Adventure upon all the tickets in the lottery, and you lose for certain; and the greater the number of your tickets the nearer you approach to this certainty.

28

That the chance of loss is frequently under–valued, and scarce ever valued more than it In order to make is worth, we may learn from the very moderate profit of insurers. insurance, either from fire or sea–risk, a trade at all, the common premium must be sufficient to compensate the common losses, to pay the expence of management, and to afford such a profit as might have been drawn from an equal capital employed in any

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common trade. The person who pays no more than this, evidently pays no more than the real value of the risk, or the lowest price at which he can reasonably expect to insure it. But though many people have made a little money by insurance, very few have made a great fortune; and from this consideration alone, it seems evident enough, that the ordinary balance of profit and loss is not more advantageous in this, than in

[166]

other common trades by which so many people make fortunes. Moderate, however, as the premium of insurance commonly is, many people despise the risk too much to care to pay it. Taking the whole kingdom at an average, nineteen houses in twenty, or rather perhaps ninety–nine in a hundred, are not insured from fire. Sea risk is more alarming to the greater part of people, and the proportion of ships insured to those not insured is much greater. Many sail, however, at all seasons, and even in time of war, without any insurance. This may sometimes perhaps be done without any imprudence. When a great company, or even a great merchant, has twenty or thirty ships at sea, they may, as it were, insure one another. The premium saved upon them all, may more than compensate such losses as they are likely to meet with in the common course of chances. The neglect of insurance upon shipping, however, in the same manner as upon houses, is, in most cases, the effect of no such nice calculation, but of mere thoughtless rashness and presumptuous contempt of the risk.

29

The contempt of risk and the presumptuous hope of success, are in no period of life more active than at the age at which young people chuse their professions. How little the fear of misfortune is then capable of balancing the hope of good luck, appears still or to go more evidently in the readiness of the common people to enlist as soldiers, to sea, than in the eagerness of those of better fashion to enter into what are called the liberal professions.

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What a common soldier may lose is obvious enough. Without regarding the danger, however, young volunteers never enlist so readily as at the beginning of a new war; and though they have scarce any chance of preferment, they figure to themselves, in their youthful fancies, a thousand occasions of acquiring honour and distinction which never occur. These romantick hopes make the whole price of their blood. Their pay is less than that of common labourers, and in actual service their fatigues are much greater.

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The lottery of the sea is not altogether so disadvantageous as that of the army. The son of a creditable labourer or artificer may frequently go to sea with his father’s consent; but if he enlists as a soldier, it is always without it. Other people see some chance of his making something by the one trade: nobody but himself sees any of his making any thing by the other. The great admiral is less the object of publick admiration than the great general, and the highest success in the sea service promises a less brilliant fortune and reputation than equal success in the land. The same difference runs through all the inferior degrees of preferment in both. By the rules of precedency a captain in the navy ranks with a colonel in the army: but he does not rank with him in the common estimation. As the great prizes in the lottery are less, the smaller ones must be more numerous. Common sailors, therefore, more frequently get some fortune and preferment than common soldiers; and the hope of those prizes is what principally

[168]

recommends the trade. Though their skill and dexterity are much superior to that of almost any artificers, and though their whole life is one continual scene of hardship and

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danger, yet for all this dexterity and skill, for all those hardships and dangers, while they remain in the condition of common sailors, they receive scarce any other recompence but the pleasure of exercising the one and of surmounting the other. Their wages are not greater than those of common labourers at the port which regulates the rate of seamens wages. As they are continually going from port to port, the monthly pay of those who sail from all the different ports of Great Britain, is more nearly upon a level than that of any other workmen in those different places; and the rate of the port to and from which the greatest number sail, that is the port of London, regulates that of all the rest. At London the wages of the greater part of the different classes of workmen are But the sailors who sail from about double those of the same classes at Edinburgh. the port of London seldom earn above three or four shillings a month more than those who sail from the port of Leith, and the difference is frequently not so great. In time of peace, and in the merchant service, the London price is from a guinea to about seven– and–twenty shillings the calendar month. A common labourer in London, at the rate of nine or ten shillings a week, may earn in the calendar month from forty to five–and–

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forty shillings. The sailor, indeed, over and above his pay, is supplied with provi–sions. Their value, however, may not perhaps always exceed the difference between his pay and that of the common labourer; and though it sometimes should, the excess will not be clear gain to the sailor, because he cannot share it with his wife and family, whom he must maintain out of his wages at home.

32

The dangers and hair–breadth escapes of a life of adventures, instead of disheartening young people, seem frequently to recommend a trade to them. A tender mother, among the inferior ranks of people, is often afraid to send her son to school at a sea–port town, lest the sight of the ships and the conversation and adventures of the sailors should entice him to go to sea. The distant prospect of hazards, from which we can hope to extricate ourselves by courage and address, is not disagreeable to us, and does not raise the wages of labour in any employment. It is otherwise with those in which courage and address can be of no avail. In trades which are known to be very unwholesome, the wages of labour are always remarkably high. Unwholesomeness is a species of disagreeableness, and its effects upon the wages of labour are to be ranked under that general head.

33

In all the different employments of stock, the ordinary rate of profit varies more or less with the certainty or uncertainty of the returns. These are in general less uncertain in the inland than in the foreign trade, and in some branches of foreign trade than in

[170]

others; in the trade to North America, for example, than in that to Jamaica.

27

ordinary rate of profit always rises more or less with the risk. It does not, however, seem to rise in proportion to it, or so as to compensate it compleately. Bankruptcies are most frequent in the most hazardous trades. The most hazardous of all trades, that of a smuggler, though when the adventure succeeds it is likewise the most profitable, is the infallible road to bankruptcy. The presumptuous hope of success seems to act here as upon all other occasions, and to entice so many adventurers into those hazardous trades, that their competition reduces hthehprofit below what is sufficient to compensate the risk. To compensate it compleatly, the common returns ought, over and above the ordinary profits of stock, not only to make up for all occasional losses, but to afford a surplus profit to the adventurers of the same nature with the profit of insurers. But if

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The

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the common returns were sufficient for all this, bankruptcies would not be more frequent in these than in other trades.

34

Of the five circumstances, therefore, which vary the wages of labour, two only affect the profits of stock; the agreeableness or disagreeableness of the business, and the risk or In point of agreeableness or disagreeableness, security with which it is attended. there is little or no difference in the far greater part of the different employments of stock; but a great deal in those of labour; and the ordinary profit of stock, though it rises with the risk, does not always seem to rise in proportion to it. It should follow from

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all this, that, in the same society or neighbourhood, the average and ordinary rates of profit in the different employments of stock should be more nearly upon a level than the pecuniary wages of the different sorts of labour. They are so accordingly. The difference between the earnings of a common labourer and those of a well employed lawyer or physician, is evidently much greater, than that, between the ordinary profits in any two different branches of trade. The apparent difference, besides, in the profits of different trades, is generally a deception arising from our not always distinguishing what ought to be considered as wages, from what ought to be considered as profit.

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35

Apothecaries profit is become a bye–word, denoting something uncommonly extravagant. This great apparent profit, however, is frequently no more than the reasonable wages of labour. The skill of an apothecary is a much nicer and more delicate matter than that of any artificer whatever; and the trust which is reposed in him is of much greater importance. He is the physician of the poor in all cases, and of the rich when the distress or danger is not very great. His reward, therefore, ought to be suitable to his skill and his trust, and it arises generally from the price at which he sells his drugs. But the whole drugs which the best employed apothecary, in a large market town, will sell in a year, may not perhaps cost him above thirty or forty pounds. Though he should sell them, therefore, for three or four hundred, or at a thousand per

[172]

cent. profit, this may frequently be no more than the reasonable wages of his labour charged, in the only way in which he can charge them, upon the price of his drugs. The greater part of the apparent profit is real wages disguised in the garb of profit.

36

In a small sea–port town, a little grocer will make forty or fifty per cent. upon a stock of a single hundred pounds, while a considerable wholesale merchant in the same place will scarce make eight or ten per cent. upon a stock of ten thousand. The trade of the grocer may be necessary for the conveniency of the inhabitants, and the narrowness of the market may not admit the employment of a larger capital in the business. The man, however, must not only live by his trade, but live by it suitably to the qualifications which it requires. Besides possessing a little capital, he must be able to read, write, and account, and must be a tolerable judge too of, perhaps, fifty or sixty different sorts of goods, their prices, qualities, and the markets where they are to be had cheapest. He must have all the knowledge, in short, that is necessary for a great merchant, which nothing hinders him from becoming but the want of a sufficient capital. Thirty or forty pounds a year cannot be considered as too great a recompence for the labour of a person so accomplished. Deduct this from the seemingly great profits of his capital, and little more will remain, perhaps, than the ordinary profits of stock. The greater part of the apparent profit is, in this case too, real wages.

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The difference between the apparent profit of the retail and that of the wholesale trade, is much less in the capital than in small towns and country villages. Where ten thousand pounds can be employed in the grocery trade, the wages of the grocer’s labour imake buti a very trifling addition to the real profits of so great a stock. The apparent profits of the wealthy retailer, therefore, are there more nearly upon a level with those of the wholesale merchant. It is upon this account that goods sold by retail are generally as cheap and frequently much cheaper in the capital than in small towns and country villages. Grocery goods, for example, are generally much cheaper; bread and butcher’s meat frequently as cheap. It costs no more to bring grocery goods to the great town than to the country village; but it costs a great deal more to bring corn and cattle, as the greater part of them must be brought from a much greater distance. The prime cost of grocery goods, therefore, being the same in both places, they are cheapest where the least profit is charged upon them. The prime cost of bread and butcher’s–meat is greater in the great town than in the country village; and though the profit is less, therefore, they are not always cheaper there, but often equally cheap. In such articles as bread and butcher’s meat, the same cause, which diminishes apparent profit, increases prime cost. The extent of the market, by giving employment to greater

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stocks, diminishes apparent profit; but by requiring supplies from a greater distance, it increases prime cost. This diminution of the one and increase of the other seem, in most cases, nearly to counter–balance one another; which is probably the reason that, though the prices of corn and cattle are commonly very different in different parts of the kingdom, those of bread and butcher’s–meat are generally very nearly the same through the greater part of it.

38

Though the profits of stock both in the wholesale and retail trade are generally less in the capital than in small towns and country villages, yet great fortunes are frequently acquired from small beginnings in the former, and scarce ever in the latter. In small towns and country villages, on account of the narrowness of the market, trade cannot always be extended as stock extends. In such places, therefore, though the rate of a particular person’s profits may be very high, the sum or amount of them can never be very great, nor consequently that of his annual accumulation. In great towns, on the contrary, trade can be extended as stock increases, and the credit of a frugal and thriving man increases much faster than his stock. His trade is extended in proportion to the amount of both, and the sum or amount of his profits is in proportion to the extent of his trade, and his annual accumulation in proportion to the amount of his profits. It seldom happens, however, that great fortunes are made even in great towns by any one regular, established, and well–known branch of business, but in consequence of a long

[175]

life of industry, frugality, and attention. Sudden fortunes, indeed, are some–times made in such places by what is called the trade of speculation. The speculative merchant exercises no one regular, established, or well–known branch of business. He is a corn merchant this year, and a wine merchant the next, and a sugar, tobacco, or tea merchant the year after. He enters into every trade when he foresees that it is likely to be more than commonly profitable, and he quits it when he foresees that its profits are likely to return to the level of other trades. His profits and losses, therefore, can bear no regular proportion to those of any one established and well–known branch of business. A bold adventurer may sometimes acquire a considerable fortune by two or three successful speculations; but j is just as likely to lose one by two or three unsuccessful

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ones. This trade can be carried on no where but in great towns. It is only in places of the most extensive commerce and correspondence that the intelligence requisite for it can be had.

39

The five circumstances above mentioned, though they occasion considerable inequalities in the wages of labour and profits of stock, occasion none in the whole of the advantages and disadvantages, real or imaginary, of the different employments of either. The nature of those circumstances is such, that they make up for a small pecuniary gain in some, and counter–balance a great one in others.

40 [176]

In order, however, that this equality may take place in the whole of their advantages or disadvantages, three things are requisite even where there is the most perfect freedom. First, the employments must be well known and long established in the neighbourhood; secondly, they must be in their ordinary, or what may be called their natural state; and, thirdly, they must be the sole or principal employments of those who occupy them.

41

First, this equality can take place only in those employments which are well known, and have been long established in the neighbourhood. Where all other circumstances are equal, wages are generally higher in new than in old trades. When a projector attempts to establish a new manufacture, he must at first entice his workmen from other employments by higher wages than they can either earn in their own trades, or than the nature of his work would otherwise require, and a considerable time must pass away before he can venture to reduce them to the common level. Manufactures for which the demand arises altogether from fashion and fancy, are continually changing, and seldom last long enough to be considered as old established manufactures. Those, on the contrary, for which the demand arises chiefly from use or necessity, are less liable to change, and the same form or fabrick may continue in demand for whole centuries together. The wages of labour, therefore, are likely to be higher in manufactures of the former, than in those of the latter kind. Birmingham deals

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chiefly in manufactures of the former kind; Sheffield in those of the latter; and the wages of labour in those two different places, are said to be suitable to this difference in the nature of their manufactures.

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The establishment of any new manufacture, of any new branch of commerce, or of any new practice in agriculture, is always a speculation, from which the projector promises himself extraordinary profits. These profits sometimes are very great, and sometimes, more frequently, perhaps, they are quite otherwise; but in general they bear no regular proportion to those of other old trades in the neighbourhood. If the project succeeds, they are commonly at first very high. When the trade or practice becomes thoroughly established and well known, the competition reduces them to the level of other trades.

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44

Secondly, this equality in the whole of the advantages and disadvantages of the different employments of labour and stock, can take place only in the ordinary, or what may be called the natural state of those employments.

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The demand for almost every different species of labour, is sometimes greater and sometimes less than usual. In the one case the advantages of the employment rise above, in the other they fall below the common level. The demand for country labour is greater at hay–time and harvest, than during the greater part of the year; and wages rise with the demand. In time of war, when forty or fifty thousand sailors are forced from the merchant service into that of the king, the demand for sailors to merchant

[178]

ships necessarily rises with their scarcity, and their wages upon such occasions commonly rise from a guinea and seven–and–twenty–shillings, to forty shillings and In a decaying manufacture, on the contrary, many workmen, three pounds a month. rather than quit their old trade, are contented with smaller wages than would otherwise be suitable to the nature of their employment.

34

46

The profits of stock vary with the price of the commodities in which it is employed. As the price of any commodity rises above the ordinary or average rate, the profits of at least some part of the stock that is employed in bringing it to market, rise above their proper level, and as it falls they sink below it. All commodities are more or less liable to variations of price, but some are much more so than others. In all commodities which are produced by human industry, the quantity of industry annually employed is necessarily regulated by the annual demand, in such a manner that the average annual produce may, as nearly as possible, be equal to the average annual consumption. In the same quantity of industry will some employments, it has already been observed, always produce the same, or very nearly the same quantity of commodities. In the linen or woollen manufactures, for example, the same number of hands will annually work up very nearly the same quantity of linen and woollen cloth. The variations in the market price of such commodities, therefore, can arise only from some accidental variation in

35

[179]

But as the demand the demand. A publick mourning raises the price of black cloth. for most sorts of plain linen and woollen cloth is pretty uniform, so is likewise the price. But there are other employments in which the same quantity of industry will not always produce the same quantity of commodities. The same quantity of industry, for example, will, in different years, produce very different quantities of corn, wine, hops, sugar, tobacco, &c. The price of such commodities, therefore, varies not only with the variations of demand, but with the much greater and more frequent variations of quantity, and is consequently extremely fluctuating. But the profit of some of the dealers must necessarily fluctuate with the price of the commodities. The operations of the speculative merchant are principally employed about such commodities. He endeavours to buy them up when he foresees that their price is likely to rise, and to sell them when it is likely to fall.

36

47

Thirdly, This equality in the whole of the advantages and disadvantages of the different employments of labour and stock; can take place only in such as are the sole or principal employments of those who occupy them.

48

When a person derives his subsistence from one employment, which does not occupy the greater part of his time; in the intervals of his leisure he is often willing to work at another for less wages than would otherwise suit the nature of the employment.

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49

There still subsists in many parts of Scotland a set of people called Cotters or

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Cottagers, though they were more frequent some years ago than they are now. They are a sort of out–servants of the landlords and farmers. The usual reward which they receive from their masters is a house, a small garden for pot–herbs, as much grass as will feed a cow, and, perhaps, an acre or two of bad arable land. When their master has occasion for their labour, he gives them, besides, two pecks of oatmeal a week, worth about sixteen–pence sterling. During a great part of the year he has little or no occasion for their labour, and the cultivation of their own little possession is not sufficient to occupy the time which is left at their own disposal. When such occupiers were more numerous than they are at present, they are said to have been willing to give their spare time for a very small recompence to any body, and to have wrought for less wages than other labourers. In antient times they seem to have been common all over Europe. In countries ill cultivated and worse inhabited, the greater part of landlords and farmers could not otherwise provide themselves with the extraordinary number of hands, which country labour requires at certain seasons. The daily or weekly recompence which such labourers occasionally received from their masters, was evidently not the whole price of their labour. Their small tenement made a considerable part of it. This daily or weekly recompence, however, seems to have been considered as the whole of it, by many writers who have collected the prices of labour and provisions in antient times, and who have taken pleasure in representing both as wonderfully low.

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[181] 50

The produce of such labour comes frequently cheaper to market than would otherwise Stockings in many parts of Scotland are knit much cheaper be suitable to its nature. than they can any–where be wrought upon the loom. They are the work of servants and labourers, who derive the principal part of their subsistence from some other employment. More than a thousand pair of Shetland stockings are annually imported into Leith, of which the price is from five–pence to seven–pence a pair. At Learwick, the small capital of the Shetland islands, ten–pence a day, I have been assured, is a value of a guinea a pair and upwards.

39

40

common price of common labour. In the same islands they knit worsted stockings to the

51

The spinning of linen yarn is carried on in Scotland nearly in the same way as the knitting of stockings, by servants who are chiefly hired for other purposes. They earn but a very scanty subsistence, who endeavour to get their whole livelihood by either of those trades. In most parts of Scotland she is a good spinner who can earn twenty– pence a week.

41

52

In opulent countries the market is generally so extensive, that any one trade is sufficient to employ the whole labour and stock of those who occupy it. Instances of people’s living by one employment, and at the same time deriving some little advantage from another, occur chiefly in poor countries. The following instance, however, of

[182]

something of the same kind is to be found in the capital of a very rich one. There is no city in Europe, I believe, in which house–rent is dearer than in London, and yet I know Lodging is not only no capital in which a furnished apartment can be hired so cheap. much cheaper in London than in Paris; it is much cheaper than in Edinburgh of the same degree of goodness; and what may seem extraordinary, the dearness of house–rent is the cause of the cheapness of lodging. The dearness of house–rent in London arises, not only from those causes which render it dear in all great capitals, the dearness of labour,

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the dearness of all the materials of building, which must generally be brought from a great distance, and above all the dearness of ground–rent, every landlord acting the part of a monopolist, and frequently exacting a higher rent for a single acre of bad land in a town, than can be had for a hundred of the best in the country; but it arises in part from the peculiar manners and customs of the people, which oblige every master of a family to hire a whole house from top to bottom. A dwelling–house in England means every thing that is contained under the same roof. In France, Scotland, and many other parts of Europe, it frequently means no more than a single story. A tradesman in London is obliged to hire a whole house in that part of the town where his customers live. His shop is upon the ground–floor, and he and his family sleep in the garret; and he endeavours to pay a part of his house–rent by letting the two middle stories to

[183]

lodgers. He expects to maintain his family by his trade, and not by his lodgers. Whereas, at Paris and Edinburgh, the people who let lodgings, have commonly no other means of subsistence; and the price of the lodging must pay, not only the rent of the house, but the whole expence of the family.

PART II Inequalities occasioned by the Policy of

Europe
1
Such are the inequalities in the whole of the advantages and disadvantages of the different employments of labour and stock, which the defect of any of the three requisites above–mentioned must occasion, even where there is the most perfect liberty. But the policy of Europe, by not leaving things at perfect liberty, occasions other inequalities of much greater importance.

2

It does this chiefly in the three following ways. First, by restraining the competition in some employments to a smaller number than would otherwise be disposed to enter into them; secondly, by increasing it in others beyond what it naturally would be; and, thirdly, by obstructing the free circulation of labour and stock, both from employment to employment and from place to place.

1

3
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First, The policy of Europe occasions a very important inequality in the whole of the advantages and disadvantages of the different employments of labour and stock, by restraining the competition in some employments to a smaller number than might otherwise be disposed to enter into them.

4

The exclusive privileges of corporations are the principal means it makes use of for this purpose.

2

5

The exclusive privilege of an incorporated trade necessarily restrains the competition, in the town where it is established, to those who are free of the trade. To have served an apprenticeship in the town, under a master properly qualified, is commonly the necessary requisite for obtaining this freedom. The bye–laws of the corporation regulate sometimes the number of apprentices which any master is allowed to have, and almost always the number of years which each apprentice is obliged to serve. The intention of both regulations is to restrain the competition to a much smaller number than might

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otherwise be disposed to enter into the trade. The limitation of the number of apprentices restrains it directly. A long term of apprenticeship restrains it more indirectly, but as effectually, by increasing the expence of education.

3

6

In Sheffield no master cutler can have more than one apprentice at a time, by a bye– law of the corporation. In Norfolk and Norwich no master weaver can have more than two apprentices, under pain of forfeiting five pounds a month to the king. No master hatter can have more than two apprentices any–where in England, or in the English

4

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plantations, under pain of forfeiting five pounds a month, half to the king, and half to him who shall sue in any court of record. Both these regulations, though they have been confirmed by a publick law of the kingdom, are evidently dictated by the same corporation spirit which enacted the bye–law of Sheffield. The silk weavers in London had scarce been incorporated a year when they enacted a bye–law, restraining any master from having more than two apprentices at a time. It required a particular act of parliament to rescind this bye–law.

5

6

7

Seven years seem antiently to have been, all over Europe, the usual term established for the duration of apprenticeships in the greater part of incorporated trades. All such incorporations were antiently called universities; which indeed is the proper Latin name for any incorporation whatever. The university of smiths, the university of taylors, &c. are expressions which we commonly meet with in the old charters of antient towns. When those particular incorporations which are now peculiarly called universities were first established, the term of years which it was necessary to study, in order to obtain the degree of master of arts, appears evidently to have been copied from the term of apprenticeship in common trades, of which the incorporations were much more antient. As to have wrought seven years under a master properly qualified, was necessary, in order to intitle any person to become a master, and to have himself apprentices in a

7

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common trade; so to have studied seven years under a master properly qua–lified, was necessary to entitle him to become a master, teacher, or doctor (words antiently synonimous) in the liberal arts, and to have scholars or apprentices (words likewise originally synonimous) to study under him.

8 9

By the 5th of Elizabeth, commonly called the Statute of Apprenticeship, it was enacted, that no person should for the future exercise any trade, craft, or mystery at that time exercised in England, unless he had previously served to it an apprenticeship of seven years at least; and what before had been the bye–law of many particular corporations, became in England the general and publick law of all trades carried on in market towns. For though the words of the statute are very general, and seem plainly to include the whole kingdom, by interpretation its operation has been limited to market towns, it having been held that in country villages a person may exercise several different trades, though he has not served a seven years apprenticeship to each, they being necessary for the conveniency of the inhabitants, and the number of people frequently not being sufficient to supply each with a particular sett of hands.

10

9

By a strict interpretation of the words too the operation of this statute has been limited to those trades which were established in England before the 5th of Elizabeth, and has never been extended to such as have been introduced since that time.

11

This limitation

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has given occasion to several distinctions which, considered as rules of police, appear as

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foolish as can well be ima–gined. It has been adjudged, for example, that a coach– maker can neither himself make nor employ journeymen to make his coach–wheels, but must buy them of a master wheel–wright; this latter trade having been exercised in England before the 5th of Elizabeth. But a wheel–wright, though he has never served an apprenticeship to a coach–maker, may either himself make or employ journeymen to make coaches; the trade of a coach–maker not being within the statute, because not exercised in England at the time when it was made. The manufactures of Manchester, Birmingham, and Wolverhampton, are many of them, upon this account, not within the statute; not having been exercised in England before the 5th of Elizabeth.

12

10

In France, the duration of apprenticeships is different in different towns and in different trades. In Paris, five years is the term required in a great number; but before any person can be qualified to exercise the trade as a master, he must, in many of them, serve five years more as a journeyman. During this latter term he is called the companion of his master, and the term itself is called his companionship.

13

11

In Scotland there is no general law which regulates universally the duration of apprenticeships. The term is different in different corporations. Where it is long, a part of it may generally be redeemed by paying a small fine. In most towns too a very small fine is sufficient to purchase the freedom of any corporation. The weavers of linen and

[188]

hempen cloth, the principal manufactures of the country, as well as all other artificers subservient to them, wheel–makers, reel–makers, &c. may exercise their trades in any town corporate without paying any fine. In all towns corporate all persons are free to sell butcher’s–meat upon any lawful day of the week. Three years is in Scotland a common term of apprenticeship, even in some very nice trades; and in general I know of no country in Europe in which corporation laws are so little oppressive.

14

12

The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of a poor man lies in the strength and dexterity of his hands; and to hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbour, is a plain violation of this most sacred property. It is a manifest encroachment upon the just liberty both of the workman, and of those who might be disposed to employ him. As it hinders the one from working at what he thinks proper, so it hinders the aothersa from employing whom they think proper. To judge whether he is fit to be employed, may surely be trusted to the discretion of the employers whose interest it so much concerns. The affected anxiety of the law–giver lest they should employ an improper person, is evidently as impertinent as it is oppressive.

13 [189]

The institution of long apprenticeships can give no security that insufficient workmanship shall not frequently be exposed to publick sale. When this is done it is generally the effect of fraud, and not of inability; and the longest apprenticeship can give no security against fraud. Quite different regulations are necessary to prevent this abuse. The sterling mark upon plate,

15

cloth, give the purchaser much greater security than any statute of apprenticeship. He generally looks at these, but never thinks it worth while to enquire whether the

17

and the stamps upon linen

16

and woollen

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b

workmanb had served a seven years apprenticeship.

14

The institution of long apprenticeships has no tendency to form young people to industry. A journeyman who works by the piece is likely to be industrious, because he derives a benefit from every exertion of his industry.

19

An apprentice is likely to be

idle, and almost always is so, because he has no immediate interest to be otherwise. In the inferior employments, the sweets of labour consist altogether in the recompence of labour. They who are soonest in a condition to enjoy the sweets of it, are likely soonest to conceive a relish for it, and to acquire the early habit of industry. A young man naturally conceives an aversion to labour, when for a long time he receives no benefit from it. The boys who are put out apprentices from publick charities are generally bound for more than the usual number of years, and they generally turn out very idle and worthless.

20

15 [190]

Apprenticeships were altogether unknown to the antients. The reciprocal duties of master and apprentice make a considerable article in every modern code. The Roman law is perfectly silent with regard to them. I know no Greek or Latin word (I might venture, I believe, to assert that there is none) which expresses the idea we now annex to the word Apprentice, a servant bound to work at a particular trade for the benefit of a master, during a term of years, upon condition that the master shall teach him that trade.

16

Long apprenticeships are altogether unnecessary. The arts, which are much superior to common trades, such as those of making clocks and watches, contain no such mystery The first invention of such beautiful as to require a long course of instruction. machines, indeed, and even that of some of the instruments employed in making them, must, no doubt, have been the work of deep thought and long time, and may justly be considered as among the happiest efforts of human ingenuity. But when both have been fairly invented and are well understood, to explain to any young man, in the compleatest manner, how to apply the instruments and how to construct the machines, cannot well require more than the lessons of a few weeks: perhaps those of a few days might be sufficient. In the common mechanick trades, those of a few days might certainly be sufficient. The dexterity of hand, indeed, even in common trades, cannot be acquired without much practice and experience. But a young man would practise with

21

[191]

much more diligence and attention, if from the beginning he wrought as a journey–man, being paid in proportion to the little work which he could execute, and paying in his turn for the materials which he might sometimes spoil through awkwardness and inexperience. His education would generally in this way be more effectual, and always less tedious and expensive. The master, indeed, would be a loser. He would lose all the wages of the apprentice, which he now saves, for seven years together. In the end, perhaps, the apprentice himself would be a loser. In a trade so easily learnt he would have more competitors, and his wages, when he came to be a compleat workman, would be much less than at present. The same increase of competition would reduce the profits of the masters as well as the wages of the workmen. The trades, the crafts, the mysteries, would all be losers. But the publick would be a gainer, the work of all artificers coming in this way much cheaper to market.

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17

It is to prevent this reduction of price, and consequently of wages and profit, by restraining that free competition which would most certainly ocasion it, that all corporations, and the greater part of corporation laws, have been established. In order to erect a corporation, no other authority in antient times was requisite in many parts of In England, Europe, but that of the town corporate in which it was established. indeed, a charter from the king was likewise necessary. But this prerogative of the crown seems to have been reserved rather for extorting money from the subject, than

22

[192]

for the defence of the common liberty against such oppressive monopolies. Upon paying a fine to the king, the charter seems generally to have Cf. LJ (A) vi.61: been readily granted; and when any particular class of artificers or traders thought proper to act as a corporation without a charter, such adulterine guilds, as they were called, were not always disfranchised upon that account, but obliged to fine annually to the king for permission to exercise their usurped privileges . The immediate inspection of all corporations, and of the bye–laws which they might think proper to enact for their own government, belonged to the town corporate in which they were established; and whatever discipline was exercised over them, proceeded commonly, not from the king, but from that greater incorporation of which those subordinate ones were only parts or members.

*

18

The government of towns corporate was altogether in the hands of traders and artificers; and it was the manifest interest of every particular class of them, to prevent the market from being over–stocked, as they commonly express it, with their own particular species of industry; which is in reality to keep it always under–stocked. Each class was eager to establish regulations proper for this purpose, and, provided it was allowed to do so, was willing to consent that every other class should do the same. In consequence of such regulations, indeed, each class was obliged to buy the goods they

[193]

had occasion for from every other within the town, somewhat dearer than they otherwise might have done. But in recompence, they were enabled to sell their own just as much dearer; so that so far it was as broad as long, as they say; and in the dealings of the different classes within the town with one another, none of them were losers by these regulations. But in their dealings with the country they were all great gainers; and in these latter dealings consists the whole trade which supports and enriches every town.

19

Every town draws its whole subsistence, and all the materials of its industry, from the It pays for these chiefly in two ways: first, by sending back to the country a country. part of those materials wrought up and manufactured; in which case their price is augmented by the wages of the workmen, and the profits of their masters or immediate employers: secondly, by sending to it a part both of the rude and manufactured produce, either of other countries, or of distant parts of the same country, imported into the town; in which case too the original price of those goods is augmented by the wages of the carriers or sailors, and by the profits of the merchants who employ them. In what is gained upon the first of those two branches of commerce, consists the advantage which the town makes by its manufactures; in what is gained upon the second, the advantage of its inland and foreign trade. The wages of the workmen, and the profits of

23

[194]

their different employers, make up the whole of what is gained upon both. What–ever regulations, therefore, tend to increase those wages and profits beyond what they

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otherwise would be, tend to enable the town to purchase, with a smaller quantity of its labour, the produce of a greater quantity of the labour of the country. They give the traders and artificers in the town an advantage over the landlords, farmers, and labourers in the country, and break down that natural equality which would otherwise take place in the commerce which is carried on between them. The whole annual produce of the labour of the society is annually divided between those two different sets of people. By means of those regulations a greater share of it is given to the inhabitants of the town than would otherwise fall to them; and a less to those of the country.

20

The price which the town really pays for the provisions and materials annually imported into it, is the quantity of manufactures and other goods annually exported from it. The dearer the latter are sold, the cheaper the former are bought. The industry of the town becomes more, and that of the country less advantageous.

21

That the industry which is carried on in towns is, every–where in Europe, more advantageous than that which is carried on in the country, without entering into any very nice computations, we may satisfy ourselves by one very simple and obvious observation. In every country of Europe we find, at least, a hundred people who have

[195]

acquired great fortunes from small beginnings by trade and manufactures, the industry which properly belongs to towns, for one who has done so by that which properly belongs to the country, the raising of rude produce by the improvement and cultivation Industry, therefore, must be better rewarded, the wages of labour and the of land. profits of stock must evidently be greater in the one situation than in the other. But stock and labour naturally seek the most advantageous employment. They naturally, therefore, resort as much as they can to the town, and desert the country.

24

22

The inhabitants of a town, being collected into one place, can easily combine together. The most insignificant trades carried on in towns have accordingly, in some place or other, been incorporated; and even where they have never been incorporated, yet the corporation spirit, the jealousy of strangers, the aversion to take apprentices, or to communicate the secret of their trade, generally prevail in them, and often teach them, by voluntary associations and agreements, to prevent that free competition which they cannot prohibit by bye–laws. The trades which employ but a small number of hands, run most easily into such combinations. Half a dozen wool–combers, perhaps, are necessary to keep a thousand spinners and weavers at work. By combining not to take apprentices they can not only engross the employment, but reduce the whole manufacture into a sort of slavery to themselves, and raise the price of their labour much above what is due to the nature of their work.

[196] 23

The inhabitants of the country, dispersed in distant places, cannot easily combine They have not only never been incorporated, but the corporation spirit together. never has prevailed among them. No apprenticeship has ever been thought necessary to qualify for husbandry, the great trade of the country. After what are called the fine arts, and the liberal professions, however, there is perhaps no trade which requires so The innumerable volumes which have great a variety of knowledge and experience. been written upon it in all languages, may satisfy us, that among the wisest and most learned nations, it has never been regarded as a matter very easily understood. And

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from all those volumes we shall in vain attempt to collect that knowledge of its various and complicated operations, which is commonly possessed even by the common farmer; how contemptuously soever the very contemptible authors of some of them may sometimes affect to speak of him. There is scarce any common mechanick trade, on the contrary, of which all the operations may not be as compleatly and distinctly explained in a pamphlet of a very few pages, as it is possible for words illustrated by figures to explain them. In the history of the arts, now publishing by the French academy of several of them are actually explained in this manner. The direction of sciences, operations, besides, which must be varied with every change of the weather, as well as

27

[197]

with many other accidents, requires much more judgment and discretion, than that of those which are always the same or very nearly the same.

24

Not only the art of the farmer, the general direction of the operations of husbandry, but many inferior branches of country labour require much more skill and experience than the greater part of mechanick trades. The man who works upon brass and iron, works with instruments and upon materials of which the temper is always the same, or very nearly the same. But the man who ploughs the ground with a team of horses or oxen, works with instruments of which the health, strength, and temper are very different upon different occasions. The condition of the materials which he works upon too is as variable as that of the instruments which he works with, and both require to be managed with much judgment and discretion. The common ploughman, though generally regarded as the pattern of stupidity and ignorance, is seldom defective in this judgment and discretion. He is less accustomed, indeed, to social intercourse than the mechanick who lives in a town. His voice and language are more uncouth and more difficult to be understood by those who are not used to them. His understanding, however, being accustomed to consider a greater variety of objects, is generally much superior to that of the other, whose whole attention from morning till night is commonly How much the lower ranks occupied in performing one or two very simple operations. of people in the country are really superior to those of the town, is well known to every

28

[198]

man whom either business or curiosity has led to converse much with both. In China and Indostan accordingly both the rank and the wages of country labourers are said to be superior to those of the greater part of artificers and manufacturers. They would probably be so every where, if corporation laws and the corporation spirit did not prevent it.

25

The superiority which the industry of the towns has every where in Europe over that of the country, is not altogether owing to corporations and corporation laws. It is supported by many other regulations. The high duties upon foreign manufactures and upon all goods imported by alien merchants, all tend to the same purpose. Corporation laws enable the inhabitants of towns to raise their prices, without fearing to be under–sold by the dfreed competition of their own countrymen. Those other regulations secure them equally against that of foreigners. The enhancement of price occasioned by both is every where finally paid by the landlords, farmers, and labourers of the country, who have seldom opposed the establishment of such monopolies. They have commonly neither inclination nor fitness to enter into combinations; and the clamour and sophistry of merchants and manufacturers easily persuade them that the private interest of a part, and of a subordinate part of the society, is the general interest

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of the whole.

26
[199]

In Great Britain the superiority of the industry of the towns over that of the country, seems to have been greater formerly than in the present times. The wages of country labour approach nearer to those of manufacturing labour, and the profits of stock employed in agriculture to those of trading and manufacturing stock, than they are said to have done in the last century, or in the beginning of the present. This change may be regarded as the necessary, though very late consequence of the extraordinary encouragement given to the industry of the towns. The stock accumulated in them comes in time to be so great, that it can no longer be employed with the antient profit in that species of industry which is peculiar to them. That industry has its limits like every other; and the increase of stock, by increasing the competition, necessarily reduces the The lowering of profit in the town forces out stock to the country, where, by profit. creating a new demand for country labour, it necessarily raises its wages. It then spreads itself, if I may say so, over the face of the land, and by being employed in agriculture is in part restored to the country, at the expence of which, in a great measure, it had originally been accumulated in the town. That every where in Europe the greatest improvements of the country have been owing to such overflowings of the and stock originally accumulated in the towns, I shall endeavour to show hereafter; at the same time to demonstrate, that though some countries have by this course attained to a considerable degree of opulence, it is in itself necessarily slow, uncertain, liable to be disturbed and interrupted by innumerable accidents, and in every respect

30

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contrary to the order of nature and of reason. The interests, prejudices, laws and customs which have given occasion to it, I shall endeavour to explain as fully and distinctly as I can in the third and fourth books of this enquiry.

27

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

28

A regulation which obliges all those of the same trade in a particular town to enter their names and places of abode in a publick register, facilitates such assemblies. It connects individuals who might never otherwise be known to one another, and gives every man of the trade a direction where to find every other man of it.

29

A regulation which enables those of the same trade to tax themselves in order to provide for their poor, their sick, their widows and orphans, by giving them a common interest to manage, renders such assemblies necessary.

30
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An incorporation not only renders them necessary, but makes the act of the majority binding upon the whole. In a free trade an effectual combination cannot be established but by the unanimous consent of every single etradere and it cannot last longer than every single ftraderfcontinues of the same mind. The majority of a corporation can enact a bye–law with proper penalties, which will limit the competition more effectually and

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more durably than any voluntary combination whatever.

31

The pretence that corporations are necessary for the better government of the trade, is without any foundation. The real and effectual discipline which is exercised over a workman, is not that of his corporation, but that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence. An exclusive corporation necessarily weakens the force of this discipline. A particular set of workmen must then be employed, let them behave well or ill. It is upon this account that in many large incorporated towns no tolerable workmen are to be found, even in some of the most necessary trades. If you would have your work tolerably executed, it must be done in the suburbs, where the workmen having no exclusive privilege, have nothing but their character to depend upon, and you must then smuggle it into the town as well as you can.

32

It is in this manner that the policy of Europe, by restraining the competition in some employments to a smaller number than would otherwise be disposed to enter into them, occasions a very important inequality in the whole of the advantages and disadvantages of the different employments of labour and stock.

[202] 33

Secondly, The policy of Europe, by increasing the competition in some employments beyond what it naturally would be, occasions another inequality of an opposite kind in the whole of the advantages and disadvantages of the different employments of labour and stock.

34

It has been considered as of so much importance that a proper number of young people should be educated for certain professions, that, sometimes the publick, and sometimes the piety of private founders have established many pensions, scholarships, exhibitions, for this purpose, which draw many more people into those trades than bursaries, &c. could otherwise pretend to follow them. In all christian countries, I believe, the education of the greater part of churchmen is paid for in this manner. Very few of them are educated altogether at their own expence. The long, tedious and expensive education, therefore, of those who are, will not always procure them a suitable reward, the church being crowded with people who, in order to get employment, are willing to accept of a much smaller recompence than what such an education would otherwise have entitled them to; and in this manner the competition of the poor takes away the reward of the rich. It would be indecent, no doubt, to compare either a curate or a chaplain with a journeyman in any common trade. The pay of a curate or chaplain, however, may very properly be considered as of the same nature with the wages of a

32

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journeyman. They are, all three, paid for their work according to the con–tract which they may happen to make with their respective superiors. Till after the middle of the fourteenth century, five merks, containing about as much silver as ten pounds of our present money, was in England the usual pay of a curate or g stipendiary parish priest, as we find it regulated by the decrees of several different national councils. At the same period four–pence a day, containing the same quantity of silver as a shilling of our present money, was declared to be the pay of a master mason, and three–pence a day, equal to nine–pence of our present money, that of a journeyman mason . The wages of both these labourers, therefore, supposing them to have been constantly employed,

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*

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were much superior to those of the curate. The wages of the master mason, supposing him to have been without employment one–third of the year, would have fully equalled them. By the 12th of Queen Anne, c.12, it is declared, “That whereas for want of sufficient maintenance and encouragement to curates, the cures have in several places been meanly supplied, the bishop is, therefore, empowered to appoint by writing under his hand and seal a sufficient certain stipend or allowance, not exceeding fifty and not less than twenty pounds a year”. Forty pounds a year is reckoned at present very good pay for a curate, and notwithstanding this act of parliament, there are many curacies

34

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under twenty pounds a year. There are journeymen shoemakers in London who earn forty pounds a year, and there is scarce an industrious workman of any kind in that metropolis who does not earn more than twenty. This last sum indeed does not exceed what is frequently earned by common labourers in many country parishes. Whenever the law has attempted to regulate the wages of workmen, it has always been rather to But the law has upon many occasions attempted to lower them than to raise them. raise the wages of curates, and for the dignity of the church, to oblige the rectors of parishes to give them more than the wretched maintenance which they themselves might be willing to accept of. And in both cases the law seems to have been equally ineffectual, and has never either been able to raise the wages of curates or to sink those of labourers to the degree that was intended; because it has never been able to hinder either the one from being willing to accept of less than the legal allowance, on account of the indigence of their situation and the multitude of their competitors; or the other from receiving more, on account of the contrary competition of those who expected to derive either profit or pleasure from employing them.

35

35

The great benefices and other ecclesiastical dignities support the honour of the church, notwithstanding the mean circumstances of some of its inferior members. The respect paid to the profession too makes some compensation even to them for the meanness of their pecuniary recom–pence. In England, and in all Roman Catholick countries, the lottery of the church is in reality much more advantageous than is necessary. The example of the churches of Scotland, of Geneva, and of several other protestant churches, may satisfy us that in so creditable a profession, in which education is so easily procured, the hopes of much more moderate benefices will draw a sufficient number of learned, decent, and respectable men into holy orders.

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36

In professions in which there are no benefices, such as law and physick, if an equal proportion of people were educated at the publick expence, the competition would soon be so great, as to sink very much their pecuniary reward. It might then not be worth any man’s while to educate his son to either of those professions at his own expence. They would be entirely abandoned to such as had been educated by those publick charities, whose numbers and necessities would oblige them in general to content themselves with a very miserable recompence, to the entire degradation of the now respectable professions of law and physick.

37

That unprosperous race of men commonly called men of letters, are pretty much in the situation which lawyers and physicians probably would be in upon the foregoing supposition. In every part of Europe the greater part of them have been educated for the church, but have been hindered by different reasons from entering into holy

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orders. They have generally, therefore, been educated at the publick expence, and their numbers are every–where so great as commonly to reduce the price of their labour to a very paultry recompence.

36

38

Before the invention of the art of printing, the only employment by which a man of letters could make any thing by his talents, was that of a publick ior privatei teacher, or by communicating to other people the curious and useful knowledge which he had acquired himself: And this is still surely a more honourable, a more useful, and in general even a more profitable employment than that other of writing for a bookseller, to which the art of printing has given occasion. The time and study, the genius, knowledge, and application requisite to qualify an eminent teacher of the sciences, are at least equal to what is necessary for the greatest practitioners in law and physick. But the usual reward of the eminent teacher bears no proportion to that of the lawyer or physician; because the trade of the one is crowded with indigent people who have been brought up to it at the publick expence; whereas those of the other two are incumbered with very few who have not been educated at their own. The usual recompence, however, of publick and private teachers, small as it may appear, would undoubtedly be less than it is, if the competition of those yet more indigent men of letters who write for Before the invention of the art of printing, a bread was not taken out of the market. scholar and a beggar seem to have been terms very nearly synonimous. The different

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governors of the universities before that time appear to have often granted licences to their scholars to beg.

38

39

In antient times, before any charities of this kind had been established for the education of indigent people to the learned professions, the rewards of eminent teachers appear to have been much more considerable. Isocrates, in what is called his discourse against the sophists, reproaches the teachers of his own times with inconsistency. “They make the most magnificent promises to their scholars”, says he, “and undertake to teach to be wise, to be happy, and to be just, and in return for so important a service they stipulate the paultry reward of four or five minae. They who teach wisdom”, continues he, “ought certainly to be wise themselves; but if any man jwasj to sell such a bargain for such a price, he would be convicted of the most evident folly.” He certainly does not mean here to exaggerate the reward, and we may be assured that it was not less than he represents it. Four minae were equal to thirteen pounds six shillings and eight pence: five minae to sixteen pounds thirteen shillings and four pence. Something not less than the largest of those two sums, therefore, must at that time have been usually paid to the most eminent teachers at Athens. Isocrates himself demanded ten minae, or When he taught thirty–three pounds six shillings and eight pence, from each scholar. at Athens, he is said to have had an hundred scholars. I understand this to be the

39

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number whom he taught at one time, or who attended what we would call one course of lectures, a number which will not appear extraordinary from so great a city to so famous a teacher, who taught too what was at that time the most fashionable of all sciences, rhetorick. He must have made, therefore, by each course of lectures, a thousand minae, or 3,333 l. 6s. 8d. A thousand minae, accordingly, is said by Plutarch in another place, Many other eminent teachers to have been his Didactron, or usual price of teaching. in those times appear to have acquired great fortunes. Gorgias made a present to the temple of Delphi of his own statue in solid gold.

41

42

We must not, I presume, suppose

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that it was as large as the life. His way of living, as well as that of Hippias and Protagoras, two other eminent teachers of those times, is represented by Plato as splendid even to ostentation. Plato himself is said to have lived with a good deal of magnificence. Aristotle, after having been tutor to Alexander and most munificently as it is universally agreed, both by him and his father Phillip, thought it rewarded, worth while, notwithstanding, to return to Athens, in order to resume the teaching of his school. Teachers of the sciences were probably in those times less common than they came to be in an age or two afterwards, when the competition had probably somewhat reduced both the price of their labour and the admiration for their persons. The most eminent of them, however, appear always to have enjoyed a degree of consideration

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much superior to any of the like profession in the present times. The Athenians sent Carneades the academick, and Diogenes the stoick, upon a solemn embassy to Rome; and though their city had then declined from its former grandeur, it was still an independent and considerable republick. Carneades too was a Babylonian by birth, and as there never was a people more jealous of admitting foreigners to publick offices than the Athenians, their consideration for him must have been very great.

44

40

This inequality is upon the whole, perhaps, rather advantageous than hurtful to the publick. It may somewhat degrade the profession of a publick teacher; but the cheapness of literary education is surely an advantage which greatly over–balances this trifling inconveniency. The publick too might derive still greater benefit from it, if the constitution of those schools and colleges, in which education is carried on, was more reasonable than it is at present through the greater part of Europe.

45

41

Thirdly, The policy of Europe, by obstructing the free circulation of labour and stock both from employment to employment, and from place to place, occasions in some cases a very inconvenient inequality in the whole of the advantages and disadvantages of their different employments.

42

The statute of apprenticeship obstructs the free circulation of labour from one The exclusive privileges of employment to another, even in the same place. corporations obstruct it from one place to another, even in the same employment.

46

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It frequently happens that while high wages are given to the workmen in one manufacture, those in another are obliged to content themselves with bare subsistence. The one is in an advancing state, and has, therefore, a continual demand for new hands: The other is in a declining state, and the super–abundance of hands is continually increasing. Those two manufactures may sometimes be in the same town, and sometimes in the same neighbourhood, without being able to lend the least assistance to one another. The statute of apprenticeship may oppose it in the one case, and both that and an exclusive corporation in the other. In many different manufactures, however, the operations are so much alike, that the workmen could The easily change trades with one another, if those absurd laws did not hinder them. arts of weaving plain linen and plain silk, for example, are almost entirely the same. That of weaving plain woollen is somewhat different; but the difference is so insignificant, that either a linen or a silk weaver might become a tolerable workman in a
k

47

veryk few days.

48

If any of those three capital manufactures, therefore, were

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decaying, the workmen might find a resource in one of the other two which was in a more prosperous condition; and their wages would neither rise too high in the thriving, nor sink too low in the decaying manufacture. The linen manufacture indeed is, in

[211]

open to every body; but, as it is not much cultivated England, by a particular statute, through the greater part of the country, it can afford no general resource to the workmen of other decaying manufactures, who, wherever the statute of apprenticeship takes place, have no other choice but either to come upon the parish, or to work as common labourers, for which, by their habits, they are much worse qualified than for any sort of manufacture that bears any resemblance to their own. They generally, therefore, chuse to come upon the parish.

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44

Whatever obstructs the free circulation of labour from one employment to another, obstructs that of stock likewise; the quantity of stock which can be employed in any branch of business depending very much upon that of lthel labour which can be employed in it. Corporation laws, however, give less obstruction to the free circulation of stock from one place to another than to that of labour. It is every–where much easier for a wealthy merchant to obtain the privilege of trading in a town corporate, than for a poor artificer to obtain that of working in it.

45

The obstruction which corporation laws give to the free circulation of labour is common, I believe, to every part of Europe. That which is given to it by the poor laws mis, so far as I know,m peculiar to England. It consists in the difficulty which a poor man finds in obtaining a settlement, or even in being allowed to exercise his industry in any parish but that to which he belongs. It is the labour of artificers and manufacturers only of

[212]

which the free circulation is obstructed by corporation laws. The difficulty of obtaining settlements obstructs even that of common labour. It may be worth while to give some account of the rise, progress, and present state of this disorder, the greatest perhaps of any in the police of England.

50 51
of

When by the destruction of monasteries the poor had been deprived of the charity those religious houses, after some other ineffectual attempts for their relief, it was

that every parish should be bound to provide for enacted by the 43d of Elizabeth, c.2. its own poor; and that overseers of the poor should be annually appointed, who, with the churchwardens, should raise by a parish rate, competent sums for this purpose.

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47

By this statute the necessity of providing for their own poor was indispensably imposed upon every parish. Who were to be considered as the poor of each parish, nbecame, therefore,n a question of some importance. This question, after some variation, was at last determined by the 13th and 14th of Charles II. when it was enacted, that forty days undisturbed residence should gain any person a settlement in any parish; but that within that time it should be lawful for two justices of the peace, upon complaint made by the churchwardens or overseers of the poor, to remove any new inhabitant to the parish where he was last legally settled; unless he either rented a tenement of ten pounds a year, or could give such security for the discharge of the parish where he was then living, as those justices should judge sufficient.

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Some frauds, it is said, were committed in consequence of this statute; parish officers

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sometimes bribing their own poor to go clandestinely to another parish, and by keeping themselves concealed for forty days to gain a settlement there, to the discharge of that to which they properly belonged. It was enacted, therefore, by the 1st of James II. that the forty days undisturbed residence of any person necessary to gain a settlement, should be accounted only from the time of his delivering notice in writing, of the place of his abode and the number of his family, to one of the churchwardens or overseers of the parish where he came to dwell.

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But parish officers, it seems, were not always more honest with regard to their own, than they had been with regard to other parishes, and sometimes connived at such intrusions, receiving the notice, and taking no proper steps in consequence of it. As every person in a parish, therefore, was supposed to have an interest to prevent as much as possible their being burdened by such intruders, it was further enacted by the that the forty days residence should be accounted only from the 3d of William III. publication of such notice in writing on Sunday in the church, immediately after divine service.

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“After all,” says Doctor Burn, “this kind of settlement, by continuing forty days after publication of notice in writing, is very seldom obtained; and the design of the acts is not so much for gaining of settlements, as for the avoiding of them, by persons coming into a parish clandestinely: for the giving of notice is only putting a force upon the parish to remove. But if a person’s situation is such, that it is doubtful whether he is actually removeable or not, he shall by giving of notice compel the parish either to allow him a settlement uncontested, by suffering him to continue forty days; or, by removing him, to try the right”.

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51

This statute, therefore, rendered it almost impracticable for a poor man to gain a new settlement in the old way, by forty days inhabitancy. But that it might not appear to preclude altogether the common people of one parish from ever establishing themselves with security in another, it appointed four other ways by which a settlement might be gained without any notice delivered or published. The first was, by being taxed to parish rates and paying them; the second, by being elected into an annual parish office and serving in it a year; the third, by serving an apprenticeship in the parish; the fourth, by being hired into service there for a year, and continuing in the same service during the whole of it.

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Nobody can gain a settlement by either of the two first ways, but by the publick deed of the whole parish, who are too well aware of the consequences to adopt any new–comer who has nothing but his labour to support him, either by taxing him to parish rates, or by electing him into a parish office.

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No married man can well gain any settlement in either of the two last ways. An apprentice is scarce ever married; and it is expressly enacted, that no married servant The principal effect of introducing shall gain any settlement by being hired for a year. settlement by service, has been to put out in a great measure the old fashion of hiring for a year, which before had been so customary in England, that even at this day, if no particular term is agreed upon, the law intends that every servant is hired for a year.

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But masters are not always willing to give their servants a settlement by hiring them in this manner; and servants are not always willing to be so hired, because as every last settlement discharges all the foregoing, they might thereby lose their original settlement in the places of their nativity, the habitation of their parents and relations.

54

No independent workman, it is evident, whether labourer or artificer, is likely to gain any new settlement either by apprenticeship or by service. When such a person, therefore, carried his industry to a new parish, he was liable to be removed, how healthy and industrious soever, at the caprice of any churchwarden or overseer, unless he either rented a tenement of ten pounds a year, a thing impossible for one who has nothing but his labour to live by; or could give such security for the discharge of the parish as two justices of the peace should judge sufficient. What security they shall require, indeed, is left altogether to their discretion; but they cannot well require less

[216]

than thirty pounds, it having been enacted, that the purchase even of a free–hold estate of less than thirty pounds value, shall not gain any person a settlement, as not being But this is a security which scarce any man sufficient for the discharge of the parish. who lives by labour can give; and much greater security is frequently demanded.

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55

In order to restore in some measure that free circulation of labour which those different statutes had almost entirely taken away, the invention of certificates was fallen upon. it was enacted, that if any person should bring a By the 8th and 9th of William III. certificate from the parish where he was last legally settled, subscribed by the churchwardens and overseers of the poor, and allowed by two justices of the peace, that every other parish should be obliged to receive him; that he should not be removeable merely upon account of his being likely to become chargeable, but only upon his becoming actually chargeable, and that then the parish which granted the certificate should be obliged to pay the expence both of his maintenance and of his removal. And in order to give the most perfect security to the parish where such certificated man should come to reside, it was further enacted by the same statute, that he should gain no settlement there by any means whatever, except either by renting a tenement of ten pounds a year, or by serving upon his own account in an annual parish office for one whole year; and consequently neither by notice, nor by

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service, nor by apprenticeship, nor by paying parish rates. By the 12th of Queen Anne it was further enacted, that neither the servants nor apprentices of too, stat. I. c. 18. such certificated man should gain any settlement in the parish where he resided under such certificate.

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How far this invention has restored that free circulation of labour which the preceding statutes had almost entirely taken away, we may learn from the following very judicious observation of Doctor Burn. “It is obvious,” says he, “that there are divers good reasons for requiring certificates with persons coming to settle in any place; namely, that persons residing under them can gain no settlement, neither by apprenticeship, nor by service, nor by giving notice, nor by paying parish rates; that they can settle neither apprentices nor servants; that if they become chargeable, it is certainly known whither to remove them, and the parish shall be paid for the removal, and for their maintenance in the mean time; and that if they fall sick, and cannot be removed, the parish which gave the certificate must maintain them: none of all which can be without a certificate.

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Which reasons will hold proportionably for parishes not granting certificates in ordinary cases; for it is far more than an equal chance, but that they will have the certificated persons again, and in a worse condition”. The moral of this observation seems to be, that certificates ought always to be required by the parish where any poor man comes

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to reside, and that they ought very seldom to be granted by that which he proposes to leave. “There is somewhat of hardship in this matter of certificates” says the same very intelligent author in his History of the Poor Laws, “by putting it in the power of a parish officer, to imprison a man as it were for life; however inconvenient it may be for him to continue at that place where he has had the misfortune to acquire what is called a settlement, or whatever advantage he may propose to himself by living elsewhere”.

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Though a certificate carries along with it no testimonial of good behaviour, and certifies nothing but that the person belongs to the parish to which he really does belong, it is altogether discretionary in the parish officers either to grant or to refuse it. A mandamus was once moved for, says Doctor Burn, to compel the church–wardens and overseers to sign a certificate; but the court of King’s Bench rejected the motion as a very strange attempt.

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The very unequal price of labour which we frequently find in England in places at no great distance from one another, is probably owing to the obstruction which the law of settlements gives to a poor man who would carry his industry from one parish to A single man, indeed, who is healthy and industrious, another without a certificate. may sometimes reside by sufferance without one; but a man with a wife and family who should attempt to do so, would in most parishes be sure of being removed, and if the

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single man should afterwards marry, he would generally be removed likewise. The scarcity of hands in one parish, therefore, cannot always be relieved by their super– and, I believe, in all other abundance in another, as it is constantly in Scotland, countries where there is no difficulty of settlement. In such countries, though wages may sometimes rise a little in the neighbourhood of a great town, or wherever else there is an extraordinary demand for labour, and sink gradually as the distance from such places increases, till they fall back to the common rate of the country; yet we never meet with those sudden and unaccountable differences in the wages of neighbouring places which we sometimes find in England, where it is often more difficult for a poor man to pass the artificial boundary of a parish, than an arm of the sea or a ridge of high mountains, natural boundaries which sometimes separate very distinctly different rates of wages in other countries.

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To remove a man who has committed no misdemeanour from the parish where he chuses to reside, is an evident violation of natural liberty and justice. The common people of England, however, so jealous of their liberty, but like the common people of most other countries never rightly understanding wherein it consists, have now for more than a century together suffered themselves to be exposed to this oppression without a remedy. Though men of reflection too have sometimes complained of the law of settlements as a publick grievance; yet it has never been the object of any general

[220]

popular clamour, such as that against general warrants, an abusive practice undoubtedly, but such a one as was not likely to occasion any general oppression. There is scarce a poor man in England of forty years of age, I will venture to say, who has not

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in some part of his life felt himself most cruelly oppressed by this ill–contrived law of settlements.

that though antiently it was usual to I shall conclude this long chapter with observing, rate wages, first by general laws extending over the whole kingdom, and afterwards by particular orders of the justices of peace in every particular county, both these practices have now gone entirely into disuse. “By the experience of above four hundred years,” says Doctor Burn, “it seems time to lay aside all endeavours to bring under strict regulations, what in its own nature seems incapable of minute limitation: for if all persons in the same kind of work were to receive equal wages, there would be no emulation, and no room left for industry or ingenuity”.

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Particular acts of parliament, however, still attempt sometimes to regulate wages in prohibits under particular trades and in particular places. Thus the 8th of George III. heavy penalties all master taylors in London, and five miles round it, from giving, and their workmen from accepting, more than two shillings and seven–pence halfpenny a

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day, except in the case of a general mourning. Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always When the regulation, therefore, is in favour of the workmen, it is always the masters. just and equitable; but it is sometimes otherwise when in favour of the masters. Thus the law which obliges the masters in several different trades to pay their workmen in money and not in goods, is quite just and equitable. It imposes no real hardship upon the masters. It only obliges them to pay that value in money, which they pretended to pay, but did not always really pay, in goods.

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This law is in favour of the workmen;

but the 8th of George III. is in favour of the masters. When masters combine together in order to reduce the wages of their workmen, they commonly enter into a private bond or agreement, not to give more than a certain wage under a certain penalty. Were the workmen to enter into a contrary combination of the same kind, not to accept of a certain wage under a certain penalty, the law would punish them very severely; and if it dealt impartially, it would treat the masters in the same manner. But the 8th of George III. enforces by law that very regulation which masters sometimes attempt to establish by such combinations. The complaint of the workmen, that it puts the ablest and most industrious upon the same footing with an ordinary workman, seems perfectly well founded.

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In antient times too it was usual to attempt to regulate the profits of merchants and other dealers, by rating the price both of provisions and other goods. The assize of Where there is an bread is, so far as I know, the only remnant of this ancient usage. exclusive corporation, it may perhaps be proper to regulate the price of the first necessary of life. But where there is none, the competition will regulate it much better than any assize. The method of fixing the assize of bread established by the 31st of could not be put in practice in Scotland, on account of a defect in the law; George II. its execution depending upon the office of clerk of the market, which does not exist The want of an assize there. This defect was not remedied till the 3d of George III. occasioned no sensible inconveniency, and the establishment of one, in the few places where it has yet taken place, has produced no sensible advantage. In the greater part of

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the towns of Scotland, however, there is an incorporation of bakers who claim exclusive privileges, though they are not very strictly guarded.

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The proportion between the different rates both of wages and profit in the different employments of labour and stock, seems not to be much affected, as has already been by the riches or poverty, the advancing, stationary, or declining state of observed, the society. Such revolutions in the publick welfare, though they affect the general rates both of wages and profit, must in the end affect them equally in all different employments. The proportion between them, therefore, must remain the same, and cannot well be altered, at least for any considerable time, by any such revolutions.

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CHAPTER XI

Of The Rent Of Land
1
RENT, considered as the price paid for the use of land, is naturally the highest which the tenant can afford to pay in the actual circumstances of the land. In adjusting the terms of the lease, the landlord endeavours to leave him no greater share of the produce than what is sufficient to keep up the stock from which he furnishes the seed, pays the labour, and purchases and maintains the cattle and other instruments of husbandry, together with the ordinary profits of farming stock in the neighbourhood. This is evidently the smallest share with which the tenant can content himself without being a loser, and the landlord seldom means to leave him any more. Whatever part of the produce, or, what is the same thing, whatever part of its price, is over and above this share, he naturally endeavours to reserve to himself as the rent of his land, which is evidently the highest the tenant can afford to pay in the actual circumstances of the land. Sometimes, indeed, the liberality, more frequently the ignorance, of the landlord, makes him accept of somewhat less than this portion; and sometimes too, though more rarely, the ignorance of the tenant makes him undertake to pay somewhat more, or to content himself with somewhat less than the ordinary profits of farming stock in the

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neighbourhood. This portion, however, may still be considered as the natural rent of land, or the rent for which it is naturally meant that land should for the most part be let.

2

The rent of land, it may be thought, is frequently no more than a reasonable profit or interest for the stock laid out by the landlord upon its improvement. This, no doubt, may be partly the case upon some occasions; for it can scarce ever be more than partly the case. The landlord demands a rent even for unimproved land, and the supposed interest or profit upon the expence of improvement is generally an addition to this original rent. Those improvements, besides, are not always made by the stock of the landlord, but sometimes by that of the tenant. When the lease comes to be renewed, however, the landlord commonly demands the same augmentation of rent, as if they had been all made by his own.

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He sometimes demands rent for what is altogether incapable of human improvement.

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Kelp is a species of sea–weed, which, when burnt, yields an alkaline salt, useful for making glass, soap, and for several other purposes. It grows in several parts of Great Britain, particularly in Scotland, upon such rocks only as lie within the high water mark, which are twice every day covered with the sea, and of which the produce, therefore, was never augmented by human industry. The landlord, however, whose estate is bounded by a kelp shore of this kind, demands a rent for it as much as for his corn fields.

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The sea in the neighbourhood of the islands of Shetland is more than commonly abundant in fish, which make a great part of the subsistence of their inhabitants. But in order to profit by the produce of the water, they must have a habitation upon the neighbouring land. The rent of the landlord is in proportion, not to what the farmer can make by the land, but to what he can make both by the land and abya the water. It is partly paid in sea–fish; and one of the very few instances in which rent makes a part of the price of that commodity, is to be found in that country.

5

The rent of land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take; but to what the farmer can afford to give.

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Such parts only of the produce of land can commonly be brought to market of which the ordinary price is sufficient to replace the stock which must be employed in bringing them thither, together with its ordinary profits. If the ordinary price is more than this, the surplus part of it will naturally go to the rent of the land. If it is not more, though the commodity may be brought to market, it can afford no rent to the landlord. Whether the price is, or is not more, depends upon the demand.

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There are some parts of the produce of land for which the demand must always be such as to afford a greater price than what is sufficient to bring them to market; and there are others for which it either may or may not be such as to afford this greater price. The former must always afford a rent to the landlord. The latter sometimes may, and sometimes may not, according to different circumstances.

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8

Rent, it is to be observed, therefore, enters into the composition of the price of commodities in a different way from wages and profit. High or low wages and profit, are the causes of high or low price; high or low rent is the effect of it. It is because high or low wages and profit must be paid, in order to bring a particular commodity to market, that its price is high or low. But it is because its price is high or low; a great deal more, or very little more, or no more, than what is sufficient to pay those wages and profit, that it affords a high rent, or a low rent, or no rent at all.

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The particular consideration, first, of those parts of the produce of land which always afford some rent; secondly, of those which sometimes may and sometimes may not afford rent; and, thirdly, of the variations which, in the different periods of improvement, naturally take place, in the relative value of those two different sorts of rude produce, when compared both with one another and with manufactured

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commodities, will divide this chapter into three parts.

PART I

Of the Produce of Land which always affords Rent
1
As men, like all other animals, naturally multiply in proportion to the means of their subsistence, food is always, more or less, in demand. It can always purchase or command a greater or smaller quantity of labour, and somebody can always be found who is willing to do something, in order to obtain it. The quantity of labour, indeed, which it can purchase, is not always equal to what it could maintain, if managed in the most œconomical manner, on account of the high wages which are sometimes given to labour. But it can always purchase such a quantity of labour as it can maintain, according to the rate at which that sort of labour is commonly maintained in the neighbourhood.

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But land, in almost any situation, produces a greater quantity of food than what is sufficient to maintain all the labour necessary for bringing it to market, in the most liberal way in which that labour is ever maintained. The surplus too is always more than sufficient to replace the stock which employed that labour, together with its profits. Something, therefore, always remains for a rent to the landlord.

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The most desart moors in Norway and Scotland produce some sort of pasture for cattle, of which the milk and the increase are always more than sufficient, not only to maintain all the labour necessary for tending them, and to pay the ordinary profit to the farmer or owner of the herd or flock; but to afford some small rent to the landlord. The rent increases in proportion to the goodness of the pasture. The same extent of ground not only maintains a greater number of cattle, but as they are brought within a smaller compass, less labour becomes requisite to tend them, and to collect their produce. The landlord gains both ways; by the increase of the produce, and by the diminution of the labour which must be maintained out of it. The rent of land anot onlya varies with its fertility, whatever be its produce, bbutb with its situation, whatever be its fertility. Land in the neighbourhood of a town, gives a greater rent than land equally fertile in a distant part of the country. Though it may cost no more labour to cultivate the one than the other, it must always cost more to bring the produce of the distant land to market. A greater quantity of labour, therefore, must be maintained out of it; and the surplus, from which are drawn both the profit of the farmer and the rent of the landlord, must be diminished. But in remote parts of the country the rate of cprofitc, as has already been shown, is generally higher than in the neighbourhood of a large town. A smaller proportion of this diminished surplus, therefore, must belong to the landlord.

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Good roads, canals, and navigable rivers, by diminishing the expence of carriage, put the re–mote parts of the country more nearly upon a level with those in the neighbourhood of the town.

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They are upon that account the greatest of all

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improvements. They encourage the cultivation of the remote, which must always be the most extensive circle of the country. They are advantageous to the town, by breaking down the monopoly of the country in its neighbourhood. They are advantageous even to that part of the country. Though they introduce some rival commodities into the old market, they open many new markets to its produce. Monopoly, besides, is a great enemy to good management, which can never be universally established but in consequence of that free and universal competition which forces every body to have recourse to it for the sake of self–defence. It is not more than fifty years ago that some of the counties in the neighbourhood of London, petitioned the parliament against the extension of the turnpike roads into the remoter counties. Those remoter counties, they pretended, from the cheapness of labour, would be able to sell their grass and corn cheaper in the London market than themselves, and would thereby reduce their rents, and ruin their cultivation. Their rents, however, have risen, and their cultivation has been improved since that time.

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A corn field of moderate fertility produces a much greater quantity of food for man, than the best pasture of equal extent. Though its cultivation requires much more labour, yet the surplus which remains after replacing the seed and maintaining all that labour, is likewise much greater. If a pound of butcher’s–meat, therefore, was never supposed to be worth more than a pound of bread, this greater surplus would everywhere be of greater value, and constitute a greater fund both for the profit of the farmer and the rent of the landlord. It seems to have done so universally in the rude beginnings of agriculture.

7

But the relative values of those two different species of food, bread and butcher’s–meat, are very different in the different periods of agriculture. In its rude beginnings, the unimproved wilds, which then occupy the far greater part of the country, are all abandoned to cattle. There is more butcher’s–meat than bread, and bread, therefore, is the food for which there is the greatest competition, and which consequently brings the greatest price. At Buenos Ayres, we are told by Ulloa, four reals, one–and–twenty pence halfpenny sterling, was, forty or fifty years ago, the ordinary price of an ox, chosen from a herd of two or three hundred. He says nothing of the price of bread, probably because he found nothing remarkable about it. An ox there, he says, costs little more than the labour of catching him. But corn can no–where be raised without a great deal of labour, and in a country which lies upon the river Plate, at that time the direct road from Europe to the silver mines of Potosi, the money price of labour could not be very cheap. It is otherwise when cultivation is extended over the greater part of

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the country. There is then more bread than butcher’s–meat. The competition changes its direction, and the price of butcher’s–meat becomes greater than the price of bread.

8

By the extension besides of cultivation, the unimproved wilds become insufficient to supply the demand for butcher’s–meat. A great part of the cultivated lands must be employed in rearing and fattening cattle, of which the price, therefore, must be sufficient to pay, not only the labour necessary for tending them, but the rent which the landlord and the profit which the farmer could have drawn from such land employed in tillage. The cattle bred upon the most uncultivated moors, when brought to the same market, are, in proportion to their weight or goodness, sold at the same price as those

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which are reared upon the most improved land. The proprietors of those moors profit by it, and raise the rent of their land in proportion to the price of their cattle. It is not more than a century ago that in many parts of the highlands of Scotland, butcher’s–meat was as cheap or cheaper than even bread made of oatmeal. The union opened the market of England to the highland cattle. Their ordinary price is at present about three times greater than at the beginning of the century, and the rents of many highland estates have been tripled and quadrupled in the same time. In almost every part of Great Britain a pound of the best butcher’s–meat is, in the present times, generally worth

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more than two pounds of the best white bread; and in plentiful years it is sometimes worth three or four pounds.

9

It is thus that in the progress of improvement the rent and profit of unimproved pasture come to be regulated in some measure by the rent and profit of what is improved, and Corn is an annual crop, butcher’s–meat, a these again by the rent and profit of corn. crop which requires four or five years to grow. As an acre of land, therefore, will produce a much smaller quantity of the one species of food than of the other, the inferiority of the quantity must be compensated by the superiority of the price. If it was more than compensated, more corn land would be turned into pasture; and if it was not compensated, part of what was in pasture would be brought back into corn.

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10

This equality, however, between the rent and profit of grass and those of corn; of the land of which the immediate produce is food for cattle, and of that of which the immediate produce is food for men; must be understood to take place only through the greater part of the improved lands of a great country. In some particular local situations it is quite otherwise, and the rent and profit of grass are much superior to what can be made by corn.

11

Thus in the neighbourhood of a great town, the demand for milk and for forage to horses, frequently contribute, dtogetherd with the high price of butcher’s–meat, to raise the value of grass above what may be called its natural proportion to that of corn. This local advantage, it is evident, cannot be communicated to the lands at a distance. Particular circumstances have sometimes rendered some countries so populous, that the whole territory, like the lands in the neighbourhood of a great town, has not been sufficient to produce both the grass and the corn necessary for the subsistence of their inhabitants. Their lands, therefore, have been principally employed in the production of grass, the more bulky commodity, and which cannot be so easily brought from a great distance; and corn, the food of the great body of the people, has been chiefly imported Holland is at present in this situation, and a considerable from foreign countries. part of antient Italy, seems to have been so during the prosperity of the Romans. To feed well, old Cato said, as we are told by Cicero, was the first and most profitable thing in the management of a private estate; to feed tolerably well, the second; and to feed To plough, he ranked only in the fourth place of profit and advantage. ill, the third. Tillage, indeed, in that part of antient Italy which lay in the neighbourhood of Rome, must have been very much discouraged by the distributions of corn which were frequently made to the people, either gratuitously, or at a very low price. This corn was brought from the conquered provinces, of which several, instead of taxes, were obliged

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to furnish a tenth part of their produce at a stated price, about sixpence a peck, to the

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republick. The low price at which this corn was distributed to the people, must necessarily have sunk the price of what could be brought to the Roman market from Latium, or the antient territory of Rome, and must have discouraged its cultivation in that country.

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In an open country too, of which the principal produce is corn, a well–enclosed piece of grass will frequently rent higher than any corn field in its neighbourhood. It is convenient for the maintenance of the cattle employed in the cultivation of the corn, and its high rent is, in this case, not so properly paid from the value of its own produce, as from that of the corn lands which are cultivated by means of it. It is likely to fall, if ever the neighbouring lands are compleatly inclosed. The present high rent of enclosed land in Scotland seems owing to the scarcity of enclosure, and will probably last no longer The advantage of enclosure is greater for pasture than for corn. It than that scarcity. saves the labour of guarding the cattle, which feed better too when they are not liable to be disturbed by their keeper or his dog.

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14

But where there is no local advantage of this kind, the rent and profit of corn, or whatever else is the common vegetable food of the people, must naturally regulate, upon the land which is fit for producing it, the rent and profit of pasture.

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The use of the artificial grasses, of turnips, carrots, cabbages, and the other expedients which have been fallen upon to make an equal quantity of land feed a greater number of cattle than when in natural grass, should somewhat reduce, it might be expected, the superiority which, in an improved country, the price of butcher’s–meat naturally has over that of bread. It seems accordingly to have done so; and there is some reason for believing that, at least in the London market, the price of butcher’s–meat in proportion to the price of bread is a good deal lower in the present times than it was in the beginning of the last century.

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In the appendix to the Life of prince Henry, Doctor Birch has given us an account of the prices of butcher’s–meat as commonly paid by that prince. It is there said, that the four quarters of an ox weighing six hundred pounds usually cost him nine pounds ten shillings, or thereabouts; that is, thirty–one shillings and eight pence per hundred pounds weight. year of his age.

17

Prince Henry died on the 6th of November, 1612, in the nineteenth

17

In March, 1764, there was a parliamentary enquiry into the causes of the high price of provisions at that time. It was then, among other proof to the same purpose, given in evidence by a Virginia merchant, that in March, 1763, he had victualled his ships for twenty–four or twenty–five shillings the hundred weight of beef, which he considered as the ordinary price; whereas, in that dear year, he had paid twenty–seven shillings for

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This high price in 1764, is, however, four shillings and the same weight and sort. eight–pence cheaper than the ordinary price paid by prince Henry; and it is the best beef only, it must be observed, which is fit to be salted for those distant voyages.

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The price paid by prince Henry amounts to 3

th d. per pound weight of the whole

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carcase, coarse and choice pieces taken together; and at that rate the choice pieces could not have been sold by retail for less than 4½d. or 5d. the pound.

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In the parliamentary enquiry in 1764, the witnesses stated the price of the choice pieces of the best beef to be to the consumer 4d. and 4¼d. the pound; and the coarse pieces in general to be from seven farthings to 2½d. and 2¾d.; and this they said was in general one half–penny dearer than the same sort of pieces had usually been sold in the month of March. But even this high price is still a good deal cheaper than what we can well suppose the ordinary retail price to have been in the time of prince Henry.

20

During the twelve first years of the last century, the average price of the best wheat at the Windsor market was 1 l. 18s. 3 1/6d. the quarter of nine Winchester bushels. But in the twelve years preceding 1764, including that year, the average price of the same measure of the best wheat at the same market was 2 l. 1s. 9½d.

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In the twelve first years of the last century, therefore, wheat appears to have been a good deal cheaper, and butcher’s–meat a good deal dearer than in the twelve years preceding 1764, including that year.

[237] 23

In all great countries the greater part of the cultivated lands are employed in producing either food for men or food for cattle. The rent and profit of these regulate the rent and profit of all other cultivated land. If any particular produce afforded less, the land would soon be turned into corn or pasture; and if any afforded more, some part of the lands in corn or pasture would soon be turned to that produce.

24

Those productions, indeed, which require either a greater original expence of improvement, or a greater annual expence of cultivation, in order to fit the land for them, appear commonly to afford, the one a greater rent, the other a greater profit than corn or pasture. This superiority, however, will seldom be found to amount to more than a reasonable interest or compensation for this superior expence.

25

In a hop garden, a fruit garden, a kitchen garden, both the rent of the landlord, and the profit of the farmer, are generally greater than in a corn or grass field. But to bring the ground into this condition requires more expence. Hence a greater rent becomes due to the landlord. It requires too a more attentive and skilful management. Hence a greater profit becomes due to the farmer. The crop too, at least in the hop and fruit garden, is more precarious. Its price, therefore, besides compensating all occasional losses, must afford something like the profit of insurance. The circumstances of gardeners, generally

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mean, and always moderate, may satisfy us that their great ingenuity is not commonly over–recompensed. Their delightful art is practised by so many rich people for amusement, that little advantage is to be made by those who practise it for profit; because the persons who should naturally be their best customers, supply themselves with all their most precious productions.

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The advantage which the landlord derives from such improvements seems at no time to have been greater than what was sufficient to compensate the original expence of

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making them. In the antient husbandry, after the vineyard, a well–watered kitchen garden seems to have been the part of the farm which was supposed to yield the most valuable produce. But Democritus, who wrote upon husbandry about two thousand years ago, and who was regarded by the antients as one of the fathers of the art, thought they did not act wisely who enclosed a kitchen garden. The profit, he said, would not compensate the expence of a stone wall; and bricks (he meant, I suppose, bricks baked in the sun) mouldered with the rain, and the winter storm, and required continual repairs. Columella, who reports this judgment of Democritus, does not controvert it, but proposes a very frugal method of enclosing with a hedge of
e

bramblese and briars, which, he says, he had found by experience to be both a lasting

but which, it seems, was not commonly known in the and an impenetrable fence; time of Democritus. Palladius adopts the opinion of Columella, which had before been

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In the judgment of those antient improvers, the produce of a recommended by Varro. kitchen garden had, it seems, been little more than sufficient to pay the extraordinary culture and the expence of watering; for in countries so near the sun, it was thought proper, in those times as in the present, to have the command of a stream of water, which could be conducted to every bed in the garden. Through the greater part of Europe, a kitchen garden is not at present supposed to deserve a better inclosure than that recommended by Columella. In Great Britain, and some other northern countries, the finer fruits cannot be brought to perfection but by the assistance of a wall. Their price, therefore, in such countries must be sufficient to pay the expence of building and maintaining what they cannot be had without. The fruit–wall frequently surrounds the kitchen garden, which thus enjoys the benefit of an enclosure which its own produce could seldom pay for.

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That the vineyard, when properly planted and brought to perfection, was the most valuable part of the farm, seems to have been an undoubted maxim in the antient agriculture, as it is in the modern through all the wine countries. But whether it was advantageous to plant a new vineyard, was a matter of dispute among the antient He decides, like a true lover of all Italian husbandmen, as we learn from Columella. curious cultivation, in favour of the vineyard, and endeavours to show, by a comparison

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of the profit and expence, that it was a most advan–tageous improvement. Such comparisons, however, between the profit and expence of new projects, are commonly very fallacious; and in nothing more so than in agriculture. Had the gain actually made by such plantations been commonly as great as he imagined it might have been, there could have been no dispute about it. The same point is frequently at this day a matter of controversy in the wine countries. Their writers on agriculture, indeed, the lovers and promoters of high cultivation, seem generally disposed to decide with Columella in favour of the vineyard. In France the anxiety of the proprietors of the old vineyards to prevent the planting of any new ones, seems to favour their opinion, and to indicate a consciousness in those who must have the experience, that this species of cultivation is at present in that country more profitable than any other. It seems at the same time, however, to indicate another opinion, that this superior profit can last no longer than the In 1731, they obtained laws which at present restrain the free cultivation of the vine. an order of council, prohibiting both the planting of new vineyards, and the renewal of those old ones, of which the cultivation had been interrupted for two years; without a particular permission from the king, to be granted only in consequence of an information

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from the intendant of the province, certifying that he had examined the land, and that it

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was incapable of any other culture. The pretence of this order was the scarcity of corn and pasture, and the super–abundance of wine. But had this super–abundance been real, it would, without any order of council, have effectually prevented the plantation of new vineyards, by reducing the profits of this species of cultivation below their natural proportion to those of corn and pasture. With regard to the supposed corn is no where in scarcity of corn occasioned by the multiplication of vineyards, France more carefully cultivated than in the wine provinces, where the land is fit for The numerous producing it; as in Burgundy, Guienne, and the Upper Languedoc. hands employed in the one species of cultivation necessarily encourage the other, by affording a ready market for its produce. To diminish the number of those who are capable of paying for it, is surely a most unpromising expedient for encouraging the cultivation of corn. It is like the policy which would promote agriculture by discouraging manufactures.

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The rent and profit of those productions, therefore, which require either a greater original expence of improvement in order to fit the land for them, or a greater annual expence of cultivation, though often much superior to those of corn and pasture, yet when they do no more than compensate such extraordinary expence, are in reality regulated by the rent and profit of those common crops.

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It sometimes happens, indeed, that the quantity of land which can be fitted for some particular produce, is too small to supply the effectual demand. The whole produce can be disposed of to those who are willing to give somewhat more than what is sufficient to pay the whole rent, wages and profit necessary for raising and bringing it to market, according to their natural rates, or according to the rates at which they are paid in the greater part of other cultivated land. The surplus part of the price which remains after defraying the whole expence of improvement and cultivation may commonly, in this case, and in this case only, bear no regular proportion to the like surplus in corn or pasture, but may exceed it in almost any degree; and the greater part of this excess naturally goes to the rent of the landlord.

30

The usual and natural proportion, for example, between the rent and profit of wine and those of corn and pasture, must be understood to take place only with regard to those vineyards which produce nothing but good common wine, such as can be raised almost any where, upon any light, gravelly, or sandy soil, and which has nothing to recommend it but its strength and wholesomeness. It is with such vineyards only that the common land of the country can be brought into competition; for with those of a peculiar quality it is evident that it cannot.

31

The vine is more affected by the difference of soils than any other fruit tree. From some it derives a flavour which no culture or management can equal, it is supposed, upon any other. This flavour, real or imaginary, is sometimes peculiar to the produce of a few vineyards; sometimes it extends through the greater part of a small district, and sometimes through a considerable part of a large province. The whole quantity of such wines that is brought to market falls short of the effectual demand, or the demand of those who would be willing to pay the whole rent, profit and wages necessary for

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preparing and bringing them thither, according to the ordinary rate, or according to the rate at which they are paid in common vineyards. The whole quantity, therefore, can be disposed of to those who are willing to pay more, which necessarily raises the price above that of common wine. The difference is greater or less, according as the fashionableness and scarcity of the wine render the competition of the buyers more or less eager. Whatever it be, the greater part of it goes to the rent of the landlord. For though such vineyards are in general more carefully cultivated than most others, the high price of the wine seems to be, not so much the effect, as the cause of this careful cultivation. In so valuable a produce the loss occasioned by negligence is so great as to force even the most careless to attention. A small part of this high price, therefore, is sufficient to pay the wages of the extraordinary labour bestowed upon their cultivation, and the profits of the extraordinary stock which puts that labour into motion.

29

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The sugar colonies possessed by the European nations in the West Indies, may be compared to those precious vineyards. Their whole produce falls short of the effectual demand of Europe, and can be disposed of to those who are willing to give more than what is sufficient to pay the whole rent, profit and wages necessary for preparing and bringing it to market, according to the rate at which they are commonly paid by any In Cochin–china the finest white sugar commonly sells for three other produce. piasters the quintal, about thirteen shillings and sixpence of our money, as we are told by Mr. Poivre, a very careful observer of the agriculture of that country. What is there called the quintal weighs from a hundred and fifty to two hundred Paris pounds, or a hundred and seventy–five Paris pounds at a medium, which reduces the price of the hundred weight English to about eight shillings sterling, not a fourth part of what is commonly paid for the brown or muskavada sugars imported from our colonies, and not The greater part of the a sixth part of what is paid for the finest white sugar. cultivated lands in Cochin–china are employed in producing corn and rice, the food of the great body of the people. The respective prices of corn, rice, and sugar, are there probably in the natural proportion, or in that which naturally takes place in the different crops of the greater part of cultivated land, and which recompences the landlord and farmer, as nearly as can be computed, according to what is usually the original expence of improvement and the annual expence of cultivation. But in our sugar colonies the price of sugar bears no such proportion to that of the produce of a rice or corn field

30

*

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either in Europe or ging America. It is commonly said, that a sugar planter expects that the rum and the molasses should defray the whole expence of his cultivation, and that his sugar should be all clear profit. If this be true, for I pretend not to affirm it, it is as if a corn farmer expected to defray the expence of his cultivation with the chaff and the straw, and that the grain should be all clear profit. We see frequently societies of merchants in London and other trading towns, purchase waste lands in our sugar colonies, which they expect to improve and cultivate with profit by means of factors and agents; notwithstanding the great distance and the uncertain returns, from the defective administration of justice in those countries. Nobody will attempt to improve and cultivate in the same manner the most fertile lands of Scotland, Ireland, or the corn provinces of North America, though from the more exact administration of justice in these countries, more regular returns might be expected. In Virginia and Maryland, the cultivation of tobacco is preferred, as hmoreh profitable, to

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that of corn. Tobacco might be cultivated with advantage through the greater part of Europe; but in almost every part of Europe it has become a principal subject of taxation, and to collect a tax from every different farm in the country where this plant might happen to be cultivated, would be more difficult, it has been supposed, than to levy one upon its importation at the custom–house. The cultivation of tobacco has upon this

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[246]

which account been most absurdly prohibited through the greater part of Europe, necessarily gives a sort of monopoly to the countries where it is allowed; and as Virginia and Maryland produce the greatest quantity of it, they share largely, though with some competitors, in the advantage of this monopoly. The cultivation of tobacco, however, seems not to be so advantageous as that of sugar. I have never even heard of any tobacco plantation that was improved and cultivated by the capital of merchants who resided in Great Britain, and our tobacco colonies send us home no such wealthy planters as we see frequently arrive from our sugar islands. Though from the preference given in those colonies to the cultivation of tobacco above that of corn, it would appear that the effectual demand of Europe for tobacco is not compleatly supplied, it probably is more nearly so than that for sugar: And though the present price of tobacco is probably more than sufficient to pay the whole rent, wages and profit necessary for preparing and bringing it to market, according to the rate at which they are commonly paid in corn land; it must not be so much more as the present price of sugar. Our tobacco planters, accordingly, have shewn the same fear of the super–abundance of tobacco, which the proprietors of the old vineyards in France have of the super– abundance of wine. By act of assembly they have restrained its cultivation to six thousand plants, supposed to yield a thousand weight of tobacco, for every negro

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Such a negro, over and above this quantity between sixteen and sixty years of age. of tobacco, can manage, they reckon, four acres of Indian corn. To prevent the market from being overstocked too, they have sometimes, in plentiful years, we are told by Dr. Douglas, (I suspect he has been ill informed)

34

*

burnt a certain quantity of tobacco for

If such every negro, in the same manner as the Dutch are said to do of spices. violent methods are necessary to keep up the present price of tobacco, the superior advantage of its culture over that of corn, if it still has any, will not probably be of long continuance.

35

34

It is in this manner that the rent of the cultivated land, of which the produce is human food, regulates the rent of the greater part of other cultivated land. No particular produce can long afford less; because the land would immediately be turned to another use: And if any particular produce commonly affords more, it is because the quantity of land which can be fitted for it is too small to supply the effectual demand.

35

In Europe corn is the principal produce of land which serves immediately for human food. Except in particular situations, therefore, the rent of corn land regulates in Europe Britain need envy neither the vineyards of France nor that of all other cultivated land. the olive plantations of Italy. Except in particular situations, the value of these is regulated by that of corn, in which the fertility of Britain is not much inferior to that of either of those two countries.

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[248] 36

If in any country the common and favourite vegetable food of the people should be drawn from a plant of which the most common land, with the same or nearly the same

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culture, produced a much greater quantity than the most fertile does of corn, the rent of the landlord, or the surplus quantity of food which would remain to him, after paying the labour and replacing the stock of the farmer together with its ordinary profits, would necessarily be much greater. Whatever was the rate at which labour was commonly maintained in that country, this greater surplus could always maintain a greater quantity of it, and consequently enable the landlord to purchase or command a greater quantity of it. The real value of his rent, his real power and authority, his command of the necessaries and conveniencies of life with which the labour of other people could supply him, would necessarily be much greater.

A rice field produces a much greater quantity of food than the most fertile corn field. Two crops in the year from thirty to sixty bushels each, are said to be the ordinary produce of an acre. Though its cultivation, therefore, requires more labour, a much greater surplus remains after maintaining all that labour. In those rice countries, therefore, where rice is the common and favourite vegetable food of the people, and where the cultivators are chiefly maintained with it, a greater share of this greater

37

[249]

surplus should belong to the landlord than in corn countries. In Carolina, where the planters, as in other British colonies, are generally both farmers and landlords, and the cultivation of rice is found to where rent consequently is confounded with profit, be more profitable than that of corn, though their fields produce only one crop in the year, and though, from the prevalence of the customs of Europe, rice is not there the common and favourite vegetable food of the people.

38

38

A good rice field is a bog at all seasons, and at one season a bog covered with water. It is unfit either for corn, or pasture, or vineyard, or, indeed, for any other vegetable produce that is very useful to men: And the lands which are fit for those purposes, are not fit for rice. Even in the rice countries, therefore, the rent of rice lands cannot regulate the rent of the other cultivated land which can never be turned to that produce.

39

The food produced by a field of potatoes is not inferior in quantity to that produced by a field of rice, and much superior to what is produced by a field of wheat. Twelve thousand weight of potatoes from an acre of land is not a greater produce than two thousand weight of wheat. The food or solid nourishment, indeed, which can be drawn from each of those two plants, is not altogether in proportion to their weight, on account of the watery nature of potatoes. Allowing, however, half the weight of this root to go to water, a very large allowance, such an acre of potatoes will still produce six thousand

[250]

weight of solid nourishment, three times the quantity produced by the acre of wheat. An acre of potatoes is cultivated with less expence than an acre of wheat; the fallow, which generally precedes the sowing of wheat, more than compensating the hoeing and other extraordinary culture which is always given to potatoes. Should this root ever become in any part of Europe, like rice in some rice countries, the common and favourite vegetable food of the people, so as to occupy the same proportion of the lands in tillage which wheat and other sorts of grain for human food do at present, the same quantity of cultivated land would maintain a much greater number of people, and the labourers being generally fed with potatoes, a greater surplus would remain after replacing all the stock and maintaining all the labour employed in cultivation. A greater share of this surplus too would belong to the landlord. Population would increase, and rents would

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rise much beyond what they are at present.

40

The land which is fit for potatoes, is fit for almost every other useful vegetable. If they occupied the same proportion of cultivated land which corn does at present, they would regulate, in the same manner, the rent of the greater part of other cultivated land.

41

In some parts of Lancashire it is pretended, I have been told, that bread of oatmeal is a heartier food for labouring people than wheaten bread, and I have frequently heard the same doctrine held in Scotland. I am, however, somewhat doubtful of the truth of it. The com–mon people in Scotland, who are fed with oatmeal, are in general neither so strong, nor so handsome as the same rank of people in England, who are fed with wheaten bread. They neither work, so well nor look so well; and as there is not the same difference between the people of fashion in the two countries, experience would seem to show, that the food of the common people in Scotland is not so suitable to the But it human constitution as that of their neighbours of the same rank in England. seems to be otherwise with potatoes. The chairmen, porters, and coalheavers in London, and those unfortunate women who live by prostitution, the strongest men and the most beautiful women perhaps in the British dominions, are said to be, the greater part of them, from the lowest rank of people in Ireland, who are generally fed with this root. No food can afford a more decisive proof of its nourishing quality, or of its being peculiarly suitable to the health of the human constitution.

[251]

39

40

42

It is difficult to preserve potatoes through the year, and impossible to store them, like corn, for two or three years together. The fear of not being able to sell them before they rot, discourages their cultivation, and is, perhaps, the chief obstacle to their ever becoming in any great country, like bread, the principal vegetable food of all the different ranks of the people.

41

PART II Of the Produce of Land which sometimes does,

and sometimes does not, afford Rent
1
Human food seems to be the only produce of land which always and necessarily affords some rent to the landlord. Other sorts of produce sometimes may and sometimes may not, according to different circumstances.

After food, cloathing and lodging are the two great wants of mankind.

1

3

Land in its original rude state can afford the materials of cloathing and lodging to a much greater number of people than it can feed. In its improved state it can sometimes feed a greater number of people than it can supply with those materials; at least in the way in which they require them, and are willing to pay for them. In the one state, therefore, there is always a super–abundance of those materials, which are frequently, upon that account, of little or no value. In the other there is often a scarcity, which necessarily augments their value. In the one state a great part of them is thrown away as useless, and the price of what is used is considered as equal only to the labour and expence of fitting it for use, and can, therefore, afford no rent to the landlord. In the

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other they are all made use of, and there is frequently a demand for more than can be

[253]

had. Somebody is always willing to give more for every part of them than what is sufficient to pay the expence of bringing them to market. Their price, therefore, can always afford some rent to the landlord.

4

The skins of the larger animals were the original materials of cloathing. Among nations of hunters and shepherds, therefore, whose food consists chiefly in the flesh of those animals, every man, by providing himself with food, provides himself with the materials of more cloathing than he can wear. If there was no foreign commerce, the greater part of them would be thrown away as things of no value. This was probably the case among the hunting nations of North America, before their country was discovered by the Europeans, with whom they now exchange their surplus peltry, for blankets, fire–arms, and brandy, which gives it some value. In the present commercial state of the known world, the most barbarous nations, I believe, among whom land property is established, have some foreign commerce of this kind, and find among their wealthier neighbours such a demand for all the materials of cloathing, which their land produces, and which can neither be wrought up nor consumed at home, as raises their price above what it costs to send them ato those wealthier neighboursa. It affords, therefore, some rent to the landlord. When the greater part of the highland cattle were consumed on their own hills, the exportation of their hides made the most considerable article of the commerce

[254]

of that country, and what they were exchanged for afforded some addition to the rent of the highland estates. The wool of England, which in old times could neither be consumed nor wrought up at home, found a market in the then wealthier and more industrious country of Flanders, and its price afforded something to the rent of the land which produced it. In countries not better cultivated than England was then, or than the highlands of Scotland are now, and which had no foreign commerce, the materials of cloathing would evidently be so super–abundant, that a great part of them would be thrown away as useless, and no part could afford any rent to the landlord.

2

3

5

The materials of lodging cannot always be transported to so great a distance as those of cloathing, and do not so readily become an object of foreign commerce. When they are super–abundant in the country which produces them, it frequently happens, even in the present commercial state of the world, that they are of no value to the landlord. A good stone quarry in the neighbourhood of London would afford a considerable rent. In many parts of Scotland and Wales it affords none. Barren timber for building is of great value in a populous and well–cultivated country, and the land which produces it, affords a considerable rent. But in many parts of North America the landlord would be much obliged to any body who would carry away the greater part of his large trees. In some parts of the highlands of Scotland the bark is the only part of the wood which, for want

4

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of roads and water–carriage, can be sent to market. The timber is left to rot upon the ground. When the materials of lodging are so super–abundant, the part made use of is worth only the labour and expence of fitting it for that use. It affords no rent to the landlord, who generally grants the use of it to whoever takes the trouble of asking it. The demand of wealthier nations, however, sometimes enables him to get a rent for it. The paving of the streets of London has enabled the owners of some barren rocks on the coast of Scotland to draw a rent from what never afforded any before. The woods of Norway and of the coasts of the Baltick, find a market in many parts of Great Britain

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which they could not find at home, and thereby afford some rent to their proprietors.

6

Countries are populous, not in proportion to the number of people whom their produce can cloath and lodge, but in proportion to that of those whom it can feed. When food is provided, it is easy to find the necessary cloathing and lodging. But though these are at hand, it may often be difficult to find food. In some parts bevenb of the British dominions what is called A House, may be built by one day’s labour of one man. The simplest species of cloathing, the skins of animals, requires somewhat more labour to dress and prepare them for use. They do not, however, require a great deal. Among savage candc barbarous nations, a hundredth or little more than dad hundredth part of the labour of the whole year, will be sufficient to provide them with such cloathing and

[256]

lodging as satisfy the greater part of the people. All the other ninety–nine parts are frequently no more than enough to provide them with food.

7

But when by the improvement and cultivation of land the labour of one family can provide food for two, the labour of half the society becomes sufficient to provide food for the whole. The other half, therefore, or at least the greater part of them, can be employed in providing other things, or in satisfying the other wants and fancies of mankind. Cloathing and lodging, houshold furniture, and what is called Equipage, are the principal objects of the greater part of those wants and fancies. The rich man consumes no more food than his poor neighbour. In quality it may be very different, and to select and prepare it may require more labour and art; but in quantity it is very nearly the same. But compare the spacious palace and great wardrobe of the one, with the hovel and the few rags of the other, and you will be sensible that the difference between their cloathing, lodging and houshold furniture, is almost as great in quantity as it is in quality. The desire of food is limited in every man by the narrow capacity of the human stomach; but the desire of the conveniencies and ornaments of building, dress, equipage, and houshold furniture, seems to have no limit or certain boundary. Those, therefore, who have the command of more food than they themselves can consume, are always willing to exchange the surplus, or, what is the same thing, the

7

8

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price of it, for gratifications of this other kind. What is over and above satisfying the limited desire, is given for the amusement of those desires which cannot be satisfied, The poor, in order to obtain food, exert but seem to be altogether endless. themselves to gratify those fancies of the rich, and to obtain it more certainly, they vie with one another in the cheapness and perfection of their work. The number of workmen increases with the increasing quantity of food, or with the growing improvement and cultivation of the lands; and as the nature of their business admits of the utmost subdivisions of labour, the quantity of materials which they can work up, increases in a much greater proportion than their numbers. Hence arises a demand for every sort of material which human invention can employ, either usefully or ornamentally, in building, dress, equipage, or houshold furniture; for the fossils and minerals contained in the bowels of the earth; the precious metals, and the precious stones.

10

8

Food is in this manner, not only the original source of rent, but every other part of the produce of land which afterwards affords rent, derives that part of its value from the improvement of the powers of labour in producing food by means of the improvement

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and cultivation of land.

9
[258]

Those other parts of the produce of land, however, which afterwards afford rent, do not afford it always. Even in improved and cultivated countries, the demand for them is not always such as to afford a greater price than what is sufficient to pay the labour, and replace, together with its ordinary profits, the stock which must be employed in bringing them to market. Whether it is or is not such, depends upon different circumstances.

10

Whether a coal–mine, for example, can afford any rent, depends partly upon its fertility, and partly upon its situation.

11

11

A mine of any kind may be said to be either fertile or barren, according as the quantity of mineral which can be brought from it by a certain quantity of labour, is greater or less than what can be brought by an equal quantity from the greater part of other mines of the same kind.

12

Some coal–mines advantageously situated, cannot be wrought on account of their barrenness. The produce does not pay the expence. They can afford neither profit nor rent. There are some of which the produce is barely sufficient to pay the elaboure, and replace, together with its ordinary profits, the stock employed in working them. They afford some profit to the undertaker of the work, but no rent to the landlord. They can be wrought advantageously by nobody but the landlord, who being himself undertaker of the work, gets the ordinary profit of the capital which he employs in it. Many coalmines in Scotland are wrought in this manner, and can be wrought in no other. The landlord will allow nobody else to work them without paying some rent, and nobody can afford to pay any.

12

[259] 14

Other coal–mines in the same country sufficiently fertile, cannot be wrought on account of their situation. A quantity of mineral sufficient to defray the expence of working, could be brought from the mine by the ordinary, or even less than the ordinary quantity of labour: But in an inland country, thinly inhabited, and without either good roads or watercarriage, this quantity could not be sold.

15

Coals are a less agreeable fewel than wood: they are said too to be less wholesome. The expence of coals, therefore, at the place where they are consumed, must generally be somewhat less than that of wood.

16

The price of wood again varies with the state of agriculture, nearly in the same manner, and exactly for the same reason, as the price of cattle. In its rude beginnings the greater part of every country is covered with wood, which is then a mere incumbrance of no value to the landlord, who would gladly give it to any body for the cutting. As agriculture advances, the woods are partly cleared by the progress of tillage, and partly go to decay in consequence of the increased number of cattle. These, though they do not increase in the same proportion as corn, which is altogether the acquisition of human industry, yet multiply under the care and protection of men; who store up in the

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season of plenty what may maintain them in that of scarcity, who through the whole year furnish them with a greater quantity of food than uncultivated nature provides for

[260]

them, and who by de–stroying and extirpating their enemies, secure them in the free enjoyment of all that she provides. Numerous herds of cattle, when allowed to wander through the woods, though they do not destroy the old trees, hinder any young ones from coming up, so that in the course of a century or two the whole forest goes to ruin. The scarcity of wood then raises its price. It affords a good rent, and the landlord sometimes finds that he can scarce employ his best lands more advantageously than in growing barren timber, of which the greatness of the profit often compensates the lateness of the returns. This seems in the present times to be nearly the state of things in several parts of Great Britain, where the profit of planting is found to be equal to that of either corn or pasture. The advantage which the landlord derives from planting, can no–where exceed, at least for any considerable time, the rent which these could afford him; and in an inland country which is highly cultivated, it will frequently not fall much short of this rent. Upon the sea–coast of a well–improved country, indeed, if fcoalsf can conveniently gbe hadg for fewel, it may sometimes be cheaper to bring barren timber for building from less cultivated foreign countries, than to raise it at home. In the new town of Edinburgh, built within these few years, there is not, perhaps, a single stick of Scotch timber.

13

17 [261]

Whatever may be the price of wood, if that of coals is such that the expence of a coal– fire is nearly equal to that of a wood one, we may be assured, that at that place, and in these circumstances, the price of coals is as high as it can be. It seems to be so in some of the inland parts of England, particularly in Oxfordshire, where it is usual, even in the fires of the common people, to mix coals and wood together, and where the difference in the expence of those two sorts of fewel cannot, therefore, be very great.

18

Coals, in the coal countries, are every–where much below this highest price. If they were not, they could not bear the expence of a distant carriage, either by land or by water. A small quantity only could be sold, and the coal masters and coal proprietors find it more for their interest to sell a great quantity at a price somewhat above the lowest, than a small quantity at the highest. The most fertile coal mine too, regulates the price of coals at all the other mines in its neighbourhood. Both the proprietor and the undertaker of the work find, the one that he can get a greater rent, the other that he can get a greater profit, by somewhat underselling all their neighbours. Their neighbours are soon obliged to sell at the same price, though they cannot so well afford it, and though it always diminishes, and sometimes takes away altogether both their rent and their profit. Some works are abandoned altogether; others can afford no rent, and can be wrought only by the proprietor.

19 [262]

The lowest price at which coals can be sold for any considerable time, is, like that of all other commodities, the price which is barely sufficient to replace, together with its ordinary profits, the stock which must be employed in bringing them to market. At a coal–mine for which the landlord can get no rent, but which he must either work himself or let it alone altogether, the price of coals must generally be nearly about this price.

20

Rent, even where coals afford one, has generally a smaller share in their price than in

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that of most other parts of the rude produce of land. The rent of an estate above ground, commonly amounts to what is supposed to be a third of the gross produce; and it is generally a rent certain and independent of the occasional variations in the crop. In coal–mines a fifth of the gross produce is a very great rent; a tenth the common

14

rent, and it is seldom a rent certain, but depends upon the occasional variations in the produce. These are so great, that in a country where thirty years purchase is considered as a moderate price for the property of a landed estate, ten years purchase is regarded as a good price for that of a coalmine. The value of a coal–mine to the proprietor hfrequently dependsh as much upon its situation as upon its fertility. That of a metallick mine depends more upon its fertility, and less upon its situation. The coarse, and still more the precious metals, when separated from the ore, are so valuable that they can generally bear the expence of a very long land, and of the most distant sea carriage. Their market is not confined to the

15

[263]

countries in the neighbourhood of the mine, but extends to the whole world. The copper of Japan makes an article iof commerce iniEurope; the iron of Spain in that of Chili and Peru. The silver of Peru finds its way, not only to Europe, but from Europe to China. The price of coals in Westmorland or Shropshire can have little effect on their price at Newcastle; and their price in the Lionnois can have none at all. The productions of such distant coal–mines can never be brought into competition with one another. But the productions of the most distant metallick mines frequently may, and in fact commonly are. The price, therefore, of the coarse, and still more that of the precious metals, at the most fertile mines in the world, must necessarily more or less affect their price at every other in it. The price of copper in Japan must have some influence upon its price at the copper mines in Europe. The price of silver in Peru, or the quantity either of labour or of other goods which it will purchase there, must have some influence on its price, not only at the silver mines of Europe, but at those of China. After the discovery of the mines of Peru, the silver mines of Europe were, the greater part of them, abandoned. The value of silver was so much reduced that their produce could no longer pay the expence of working them, or replace, with a profit, the food, cloaths, lodging and other necessaries which were consumed in that operation. This was the case too with the mines of Cuba

22

[264]

and St. Domingo, and even with the antient mines of Peru, after the discovery of those of Potosi.

23

The price of every metal at every mine, therefore, being regulated in some measure by its price at the most fertile mine in the world that is actually wrought, it can at the greater part of mines do very little more than pay the expence of working, and can seldom afford a very high rent of the landlord. Rent, accordingly, seems at the greater part of mines to have but a small share in the price of the coarse, and a still smaller in that of the precious metals. Labour and profit make up the greater part of both.

24

A sixth part of the gross produce may be reckoned the average rent of the tin mines of Cornwall, the most fertile that are known in the world, as we are told by the Reverend Mr. Borlace, vice–warden of the stannaries. Some, he says, afford more, and some do not afford so much.

16

A sixth part of the gross produce is the rent too of several very

fertile lead mines in Scotland.

17

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In the silver mines of Peru, we are told by Frezier and Ulloa, the proprietor frequently exacts no other acknowldgement from the undertaker of the mine, but that he will grind the ore at his mill, paying him the ordinary multure or price of grinding. jTill 1736, indeed, the tax of the king of Spain amountedj to one–fifth of the standard silver, which
k

18

till then mightk be considered as the real rent of the greater part of the silver mines of

[265]

Peru, the richest which lhave beenl known in the world. If there mhad beenm no tax this fifth would naturally nhave belongedn to the landlord, and many mines might ohave beeno wrought which pcould not then be wroughtp because they qcould notq afford this tax. The tax of the duke of Cornwall upon tin is supposed to amount to more than five and whatever may be his proportion, it per cent. or one–twentieth part of the value; would naturally too belong to the proprietor of the mine, if tin was duty free. But if you add one–twentieth to one–sixth, you will find that the whole average rent of the tin mines of Cornwall, rwasr to the whole average rent of the silver mines of Peru, as thirteen to twelve. sBut the silver mines of Peru are not now able to pay even this low rent, and the tax upon silver was, in 1736, reduced from one–fifth to one–tenth. Even this tax upon silver too gives more temptation to smuggling than the tax of one– twentieth upon tin;s and smuggling must be much easier in the precious than in the bulky commodity. The tax of the king of Spain accordingly is said to be very ill paid, and that of the duke of Cornwall very well. Rent, therefore, it is probable, makes a greater part of the price of tin at the most fertile tin mines, than it does of silver at the most fertile silver mines in the world. After replacing the stock employed in working those different mines, together with its ordinary profits, the residue which remains to the proprietor, is greater it seems in the coarse, than in the precious metal.

19

20

26 [266]

Neither are the profits of the undertakers of silver mines commonly very great in Peru. The same most respectable and well informed authors acquaint us, that when any person undertakes to work a new mine in Peru, he is universally looked upon as a man destined to bankruptcy and ruin, and is upon that account shunned and avoided by every body. Mining, it seems, is considered there in the same light as here, as a lottery, in which the prizes do not compensate the blanks, though the greatness of some tempts many adventurers to throw away their fortunes in such unprosperous projects.

21

27

As the sovereign, however, derives a considerable part of his revenue from the produce of silver mines, the law in Peru gives every possible encouragement to the discovery and working of new ones. Whoever discovers a new mine, is entitled to measure off two hundred and forty–six feet in length, according to what he supposes to be the direction of the vein, and half as much in breadth. He becomes proprietor of this portion of the mine, and can work it without paying any acknowledgement to the landlord. The interest of the duke of Cornwall has given occasion to a regulation nearly of the same kind in that antient dutchy. In waste and uninclosed lands any person who discovers a tin mine, may mark out its limits to a certain extent, which is called bounding a mine. The bounder becomes the real proprietor of the mine, and may either work it himself, or give it in lease to another, without the consent of the owner of the land, to whom,

[267]

In both however, a very small acknowledgement must be paid upon working it. regula–tions the sacred rights of private property are sacrificed to the supposed interests of publick revenue.

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The same encouragement is given in Peru to the discovery and working of new gold mines; and in gold the king’s tax amounts only to a twentieth part of the standard metal. It was once a fifth, tand afterwards a tenth,t as in silver; but it was found that the work could not bear ueven the lowest of these two taxesu. If it is rare, however, say the same authors, Frezier and Ulloa, to find a person who has made his fortune by a This silver, it is still much rarer to find one who has done so by a gold mine. twentieth part seems to be the whole rent which is paid by the greater part of the gold mines in Chili and Peru. Gold too is much more liable to be smuggled than even silver; not only on account of the superior value of the metal in proportion to its bulk, but on account of the peculiar way in which nature produces it. Silver is very seldom found virgin, but, like most other metals, is generally mineralized with some other body, from which it is impossible to separate it in such quantities as will pay for the expence, but by a very laborious and tedious operation, which cannot well be carried on but in workhouses erected for the purpose, and therefore exposed to the inspection of the king’s officers. Gold, on the contrary, is almost always found virgin. It is sometimes found in pieces of some bulk; and even when mixed in small and almost insensible

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particles with sand, earth, and other extra–neous bodies, it can be separated from them by a very short and simple operation, which can be carried on in any private house by any body who is possessed of a small quantity of mercury. If the king’s tax, therefore, is but ill paid upon silver, it is likely to be much worse paid upon gold; and rent must make a much smaller part of the price of gold, than even of that of silver.

29

The lowest price at which the precious metals can be sold, or the smallest quantity of other goods for which they can be exchanged during any considerable time, is regulated by the same principles which fix the lowest ordinary price of all other goods. The stock which must commonly be employed, the food, cloaths and lodging which must commonly be consumed in bringing them from the mine to the market, determine it. It must at least be sufficient to replace that stock, with the ordinary profits.

30

Their highest price, however, seems not to be necessarily determined by any thing but the actual scarcity or plenty of those metals themselves. It is not determined by that of any other commodity, in the same manner as the price of coals is by that of wood, beyond which no scarcity can ever raise it. Increase the scarcity of gold to a certain degree, and the smallest bit of it may become more precious than a diamond, and exchange for a greater quantity of other goods.

24

31
[269]

The demand for those metals arises partly from their utility, and partly from their beauty. If you except iron, they are more useful than, perhaps, any other metal. As they are less liable to rust and impurity, they can more easily be kept clean; and the utensils either of the table or the kitchen are often upon that account more agreeable when made of them. A silver boiler is more cleanly than a lead, copper, or tin one; and Their the same quality would render a gold boiler still better than a silver one. principal merit, however, arises from their beauty, which renders them peculiarly fit for the ornaments of dress and furniture. No paint or dye can give so splendid a colour as gilding. The merit of their beauty is greatly enhanced by their scarcity. With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their veyesv is never so compleat as when they appear to possess those

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decisive marks of opulence which nobody can possess but themselves. In their eyes the merit of an object which is in any degree either useful or beautiful, is greatly enhanced by its scarcity, or by the great labour which it requires to collect any considerable quantity of it, a labour which nobody can afford to pay but themselves. Such objects they are willing to purchase at a higher price than things much more

28

29

beautiful and useful, but more common. These qualities of utility, beauty, and scarcity, are the original foundation of the high price of those metals, or of the great quantity of other goods for which they can every where be exchanged. This value was antecedent to and independent of their being employed as coin, and was the quality which fitted

[270]

them for that employment. That employment, however, by occasioning a new demand, and by diminishing the quantity which could be employed in any other way, may have afterwards contributed to keep up or increase their value.

32

The demand for the precious stones arises altogether from their beauty. They are of no use, but as ornaments; and the merit of their beauty is greatly enhanced by their Wages and scarcity, or by the difficulty and expence of getting them from the mine. profit accordingly make up, upon most occasions, almost the whole of their high price. Rent comes in but for a very small share; frequently for no share; and the most fertile mines only afford any considerable rent. When Tavernier, a jeweller, visited the diamond mines of Golconda and Visiapour, he was informed that the sovereign of the country, for whose benefit they were wrought, had ordered all of them to be shut up, except those which wyieldedw the largest and finest stones. were to the proprietor not worth the working.

30

31

The others, it seems,

33

As the price both of the precious metals and of the precious stones is regulated all over the world by their price at the most fertile mine in it, the rent which a mine of either can afford to its proprietor is in proportion, not to its absolute, but to what may xbex called its relative fertility, or to its superiority over other mines of the same kind. If new mines were discovered as much superior to those of Potosi as they were superior to those of

[271]

Europe, the value of silver might be so much degraded as to render even the mines of Potosi not worth the working. Before the discovery of the Spanish West Indies, the most fertile mines in Europe may have afforded as great a rent to their proprietor as the richest mines in Peru do at present. Though the quantity of silver was much less, it might have exchanged for an equal quantity of other goods, and the proprietor’s share might have enabled him to purchase or command an equal quantity either of labour or of commodities. The value both of the produce and of the rent, the real revenue which they afforded both to the publick and to the proprietor, might have been the same.

34

The most abundant mines either of the precious metals or of the precious stones could add little to the wealth of the world. A produce of which the value is principally derived from its scarcity, is necessarily degraded by its abundance. A service of plate, and the other frivolous ornaments of dress and furniture, could be purchased for a smaller quantity of labour, or for a smaller quantity of commodities; and in this would consist the sole advantage which the world could derive from that abundance.

35

It is otherwise in estates above ground. The value both of their produce and of their rent is in proportion to their absolute, and not to their relative fertility. The land which

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produces a certain quantity of food, cloaths, and lodging, can always feed, cloath, and lodge a certain number of people; and whatever may be the proportion of the landlord,

[272]

it will always give him a proportionable command of the labour of those people, and of the commodities with which that labour can supply him. The value of the most barren lands is not diminished by the neighbourhood of the most fertile. On the contrary, it is generally increased by it. The great number of people maintained by the fertile lands afford a market to many parts of the produce of the barren, which they could never have found among those whom their own produce could maintain.

36

Whatever increases the fertility of land in producing food, increases not only the value of the lands upon which the improvement is bestowed, but contributes likewise to increase that of many other lands, by creating a new demand for their produce. That abundance of food, of which, in consequence of the improvement of land, many people have the disposal beyond what they themselves can consume, is the great cause of the demand both for the precious metals and the precious stones, as well as for every other Food conveniency and ornament of dress, lodging, houshold furniture, and equipage. not only constitutes the principal part of the riches of the world, but it is the abundance of food which gives the principal part of their value to many other sorts of riches. The poor inhabitants of Cuba and St. Domingo, when they were first discovered by the Spaniards, used to wear little bits of gold as ornaments in their hair and other parts of

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their dress. They seemed to value them as we would do any little pebbles of somewhat more than ordinary beauty, and to consider them as just worth the picking up, but not worth the refusing to any body who asked them. They gave them to their new guests at the first request, without seeming to think that they had made them any very valuable They were astonished to observe the rage of the Spaniards to obtain them; present. and had no notion that there could any where be a country in which many people had the disposal of so great a superfluity of food, so scanty always among themselves, that for a very small quantity of those glittering baubles they would willingly give as much as might maintain a whole family for many years. Could they have been made to understand this, the passion of the Spaniards would not have surprised them.

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PART III Of the Variations in the Proportion between

the respective Values of that Sort of Produce which always affords Rent, and of that which sometimes does, and sometimes does not, afford Rent
1
The increasing abundance of food, in consequence of increasing improvement and cultivation, must necessarily increase the demand for every part of the produce of land which is not food, and which can be applied either to use or to ornament. In the whole progress of improvement, it might therefore be expected, there should be only one

[274]

variation in the comparative values of those two different sorts of produce. The value of that sort which sometimes does and sometimes does not afford rent, should constantly rise in proportion to that which always affords some rent. As art and industry advance, the materials of cloathing and lodging, the useful fossils and minerals of the earth, the precious metals and the precious stones should gradually come to be more and more in

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demand, should gradually exchange for a greater and a greater quantity of food, or in other words, should gradually become dearer and dearer. This accordingly has been the case with most of these things upon most occasions, and would have been the case with all of them upon all occasions, if particular accidents had not upon some occasions increased the supply of some of them in a still greater proportion than the demand.

2

The value of a free–stone quarry, for example, will necessarily increase with the increasing improvement and population of the country round about it; especially if it should be the only one in the neighbourhood. But the value of a silver mine, even though there should not be another within a thousand miles of it, will not necessarily increase with the improvement of the country in which it is situated. The market for the produce of a free–stone quarry can seldom extend more than a few miles round about it, and the demand must generally be in proportion to the improvement and population

[275]

of that small district. But the market for the produce of a silver mine may extend over the whole known world. Unless the world in general, therefore, be advancing in improvement and population, the demand for silver might not be at all increased by the improvement even of a large country in the neighbourhood of the mine. Even though the world in general were improving, yet, if, in the course of its improvement new mines should be discovered, much more fertile than any which had been known before, though the demand for silver would necessarily increase, yet the supply might increase in so much a greater proportion, that the real price of that metal might gradually fall; that is, any given quantity, a pound weight of it, for example, might gradually purchase or command a smaller and a smaller quantity of labour, or exchange for a smaller and a smaller quantity of corn, the principal part of the subsistence of the labourer.

3 4

The great market for silver is the commercial and civilized part of the world. If by the general progress of improvement the demand of this market should increase, while at the same time the supply did not increase in the same proportion, the value of silver would gradually rise in proportion to that of corn. Any given quantity of silver would exchange for a greater and a greater quantity of corn; or, in other words, the average money price of corn would gradually become cheaper and cheaper.

5 [276]

If, on the contrary, the supply by some accident should increase for many years together in a greater proportion than the demand, that metal would gradually become cheaper and cheaper; or, in other words, the average money price of corn would, in spite of all improvements, gradually become dearer and dearer.

1

6

But if, on the other hand, the supply of the metal should increase nearly in the same proportion as the demand, it would continue to purchase or exchange for nearly the same quantity of corn, and the average money price of corn would, in spite of all improvements, continue very nearly the same.

7

These three seem to exhaust all the possible combinations of events which can happen in the progress of improvement; and during the course of the four centuries preceding the present, if we may judge by what has happened both in France and Great Britain, each of those three different combinations seem to have taken place in the European

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market, and nearly in the same order too in which I have here set them down.

Digression concerning the Variations in the Value of Silver during the Course of the Four last Centuries
FIRST PERIOD
1
[277]
In 1350, and for some time before, the average price of the quarter of wheat in England seems not to have been estimated lower than four ounces of silver, Tower–weight, equal to about twenty shillings of our present money. From this price it seems to have fallen gradually to two ounces of silver, equal to about ten shillings of our present money, the price at which we find it estimated in the beginning of the sixteenth century, and at which it seems to have continued to be estimated till about 1570.

2

In 1350, being the 25th of Edward III, was enacted what is called, The statute of labourers.

1

In the preamble it complains much of the insolence of servants, who

endeavoured to raise their wages upon their masters. It therefore ordains, that all servants and labourers should for the future be contented with the same wages and liveries (liveries in those times signified, not only cloaths, but provisions) which they had been accustomed to receive in the 20th year of the king, and the four preceding years; that upon this account their livery wheat should no where be estimated higher than ten–pence a bushel, and that it should always be in the option of the master to deliver them either the wheat or the money. Ten–pence a bushel, therefore, had in the 25th of Edward III, been reckoned a very moderate price of wheat, since it required a particular statute to oblige servants to accept of it in exchange for their usual livery of provisions; and it had been reckoned a reasonable price ten years before that, or in the 16th year of the king, the term to which the statute refers. But in the 16th year of Edward III, ten–pence contained about half an ounce of silver, Tower–weight, and was

2

[278]

nearly equal to half a crown of our present money. Four ounces of silver, Tower– weight, therefore, equal to six shillings and eight–pence of the money of those times, and to near twenty shillings of that of the present, must have been reckoned a moderate price for the quarter of eight bushels.

3

3

This statute is surely a better evidence of what was reckoned in those times a moderate price of grain, than the prices of some particular years which have generally been recorded by historians and other writers on account of their extraordinary dearness or cheapness, and from which, therefore, it is difficult to form any judgment concerning what may have been the ordinary price. There are, besides, other reasons for believing that in the beginning of the fourteenth century, and for some time before, the common price of wheat was not less than four ounces of silver the quarter, and that of other grain in proportion.

4

4

In 1309, Ralph de Born, prior of St. Augustine’s, Canterbury, gave a feast upon his installation–day, of which William Thorn has preserved, not only the bill of fare, but the prices of many particulars. In that feast were consumed, 1st, fifty–three quarters of

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wheat, which cost nineteen pounds, or seven shillings and two–pence a quarter, equal to about one–and–twenty shillings and six–pence of our present money: 2dly, Fifty– eight quarters of malt, which cost seventeen pounds ten shillings, or six shillings a quarter, equal to about eighteen shillings of our present money: 3dly, Twenty quarters

[279]

of oats, which cost four pounds, or four shillings a quar–ter, equal to about twelve shillings of our present money. The prices of malt and oats seem here to be higher than their ordinary proportion to the price of wheat.

5

5

These prices are not recorded on account of their extraordinary dearness or cheapness, but are mentioned accidentally as the prices actually paid for large quantities of grain consumed at a feast which was famous for its magnificence.

6

In 1262, being the 51st of Henry III, was revived an ancient statute called, The Assize of Bread and Ale, which, the king says in the preamble, had been made in the times of his progenitors sometime kings of England. It is probably, therefore, as old at least as the time of his grandfather Henry II, and may have been as old as the conquest. It regulates the price of bread according as the prices of wheat may happen to be, from one shilling to twenty shillings the quarter of the money of those times. But statutes of this kind are generally presumed to provide with equal care for all deviations from the middle price, for those below it as well as for those above it. Ten shillings, therefore, containing six ounces of silver, Tower–weight, and equal to about thirty shillings of our present money, must, upon this supposition, have been reckoned the middle price of the quarter of wheat when this statute was first enacted, and must have continued to be so in the 51st of Henry III. We cannot therefore be very a wrong in supposing that the middle price was not less than one–third of the highest price at which this statute regulates the price of bread, or than six shillings and eight–pence of the money of those times, containing four ounces of silver, Tower–weight.

6

[280]

7

From these different facts, therefore, we seem to have some reason to conclude, that about the middle of the fourteenth century, and for a considerable time before, the average or ordinary price of the quarter of wheat was not supposed to be less than four ounces of silver, Towerweight.

7

8

From about the middle of the fourteenth to the beginning of the sixteenth century, what was reckoned the reasonable and moderate, that is the ordinary or average price of wheat, seems to have sunk gradually to about one–half of this price; so as at last to have fallen to about two ounces of silver, Tower–weight, equal to about ten shillings of our present money. It continued to be estimated at this price till about 1570.

9

In the houshold book of Henry, the fifth earl of Northumberland, drawn up in 1512, there are two different estimations of wheat. In one of them it is computed at six– shillings and eight–pence the quarter, in the other at five shillings and eight–pence only. In 1512, six shillings and eight–pence contained only two ounces of silver Tower– weight, and were equal to about ten shillings of our present money.

8

10

From the 25th of Edward III, to the beginning of the reign of Elizabeth, during the space of more than two hundred years, six shillings and eight–pence, it appears from several

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[281]

different statutes, had continued to be considered as what is called the moderate and reasonable, that is the ordinary or average price of wheat. The quantity of silver, however, contained in that nominal sum was, during the course of this period, continually diminishing, in consequence of some alterations which were made in the coin. But the increase of the value of silver had, it seems, so far compensated the diminution of the quantity of it contained in the same nominal sum, that the legislature did not think it worth while to attend to this circumstance.

11

Thus in 1436 it was enacted, that wheat might be exported without a licence when the price was so low as six shillings and eight–pence: And in 1463 it was enacted, that no wheat should be imported if the price was not above six shillings and eight–pence the quarter. The legislature had imagined, that when the price was so low, there could be no inconveniency in exportation, but that when it rose higher, it became prudent to allow of importation. Six shillings and eight–pence, therefore, containing about the same quantity of silver as thirteen shillings and four–pence of our present money (one third part less than the same nominal sum contained in the time of Edward III.), had in those times been considered as what is called the moderate and reasonable price of wheat.

9

10

and in 1558, by the 1st of Elizabeth, In 1554, by the 1st and 2d of Philip and Mary; the exportation of wheat was in the same manner prohibited, whenever the price of the

11

[282]

quarter should exceed six shillings and eight–pence, which did not then contain two penny worth more silver than the same nominal sum does at present. But it had soon been found that to restrain the exportation of wheat till the price was so very low, was, in reality, to prohibit it altogether. In 1562, therefore, by the 5th of Elizabeth, the exportation of wheat was allowed from certain ports whenever the price of the quarter containing nearly the same quantity of silver as the should not exceed ten shillings, like nominal sum does at present. This price had at this time, therefore, been considered as what is called the moderate and reasonable price of wheat. It agrees nearly with the estimation of the Northumberland book in 1512.

12

13

13

That in France the average price of grain was, in the same manner, much lower in the end of the fifteenth and beginning of the sixteenth century, than in the two centuries preceding, has been observed both by Mr. Duprè de St. Maur,

14

Its price, during the same period, had author of the Essay on the police of grain. probably sunk in the same manner through the greater part of Europe.

15

and by the elegant

14

This rise in the value of silver in proportion to that of corn, may either have been owing altogether to the increase of the demand for that metal, in consequence of increasing improvement and cultivation, the supply in the mean time continuing the same as before: Or, the demand continuing the same as before, it may have been owing

[283]

altogether to the gradual diminution of the supply; the greater part of the mines which were then known in the world, being much exhausted, and consequently the expence of working them much increased: Or it may have been owing partly to the one and partly to the other of those two circumstances. In the end of the fifteenth and beginning of the sixteenth centuries, the greater part of Europe was approaching towards a more settled form of government than it had enjoyed for several ages before. The increase of

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security would naturally increase industry and improvement; and the demand for the precious metals, as well as for every other luxury and ornament, would naturally increase with the increase of riches. A greater annual produce would require a greater quantity of coin to circulate it; and a greater number of rich people would require a greater quantity of plate and other ornaments of silver. It is natural to suppose too, that the greater part of the mines which then supplied the European market with silver, might be a good deal exhausted, and have become more expensive in the working. They had been wrought many of them from the time of the Romans.

15

It has been the opinion, however, of the greater part of those who have written upon the prices of commodities in antient times, that, from the Conquest, perhaps from the invasion of Julius Caesar till the discovery of the mines of America, the value of silver

[284]

This opinion they seem to have been led into, partly by was continually diminishing. the observations which they had occasion to make upon the prices both of corn and of some other parts of the rude produce of land; and partly by the popular notion, that as the quantity of silver naturally increases in every country with the increase of wealth, so its value diminishes as its quantity increases.

16

16

In their observations upon the prices of corn, three different circumstances seem frequently to have misled them. First, In antient times almost all rents were paid in kind; in a certain quantity of corn, cattle, poultry, &c. It sometimes happened, however, that the landlord would stipulateb, that he should be at liberty to demand cof the tenant,ceither the annual payment in kind, or a certain sum of money instead of it. The price at which the payment in kind was in this manner exchanged for a certain sum of money, is in Scotland called the conversion price. As the option is always in the landlord to take either the substance or the price, it is necessary for the safety of the tenant, that the conversion price should rather be below than above the average market price. In many places, accordingly, it is not much above one–half of this price. Through the greater part of Scotland this custom still continues with regard to poultry, and in some places with regard to cattle. It might probably have continued to take place too with regard to corn, had not the institution of the publick fiars put an end to it. These are annual valuations, according to the judgment of an assize, of the average price of all the different sorts of grain, and of all

17

[285]

the different qualities of each, accord–ing to the actual market price in every different This institution rendered it sufficiently safe for the tenant, and much more county. convenient for the landlord, to convert, as they call it, the corn rentd, rather at what should happen to bedthe price of the fiars of each year,e than at any certain fixed price. But the writers who have collected the prices of corn in antient times, seem frequently to have mistaken what is called in Scotland the conversion price for the actual market price. Fleetwood acknowledges, upon one occasion, that he had made this mistake. As he wrote his book, however, for a particular purpose, he does not think proper to make this acknowledgment till after transcribing this conversion price fifteen The price is eight shillings the quarter of wheat. This sum in 1423, the year at times. which he begins with it, contained the same quantity of silver as sixteen shillings of our present money. But in 1562, the year at which he ends with it, it contained no more than the same nominal sum does at present.

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Secondly, They have been misled by the slovenly manner in which some antient statutes of assize had been sometimes transcribed by lazy copiers; and sometimes perhaps actually composed by the legislature.

19
[286]

The antient statutes of assize seem to have begun always with determining what ought to be the price of bread and ale when the price of wheat and barley were at the lowest, and to have proceeded gradually to determine what it ought to be, according as the prices of those two sorts of grain should gradually rise above this lowest price. But the transcribers of those statutes seem frequently to have thought it sufficient, to copy the regulation as far as the three or four first and lowest prices; saving in this manner their own labour, and judging, I suppose, that this was enough to show what proportion ought to be observed in all higher prices.

20

Thus in the assize of bread and ale, of the 51st of Henry III. the price of bread was regulated according to the different prices of wheat, from one shilling to twenty shillings the quarter, of the money of those times. But in the manuscripts from which all the different editions of the statutes, preceding that of Mr. Ruffhead, were printed, the copiers had never transcribed this regulation beyond the price of twelve shillings. Several writers, therefore, being misled by this faulty transcription, very naturally

21

concluded that the middle price, or six shillings the quarter, equal to about eighteen shillings of our present money, was the ordinary or average price of wheat at that time.

the price In the statute of Tumbrel and Pillory, enacted nearly about the same time, of ale is regulated according to every sixpence rise in the price of barley, from two shillings to four shillings the quarter. That four shillings, however, was not considered as the highest price to which barley might frequently rise in those times, and that these

22

[287]

prices were only given as an example of the proportion which ought to be observed in all other prices, whether higher or lower, we may infer from the last words of the statute; “et sic deinceps crescetur vel diminuetur per sex denarios”. The expression is very slovenly, but the meaning is plain enough; “That the price of ale is in this manner to be increased or diminished according to every six–pence rise or fall in the price of barley”. In the composition of this statute the legislature itself seems to have been as negligent as the copiers were in the transcription of the other.

23

In an antient manuscript of the Regiam Majestatem, an old Scotch law book, there is a statute of assize, in which the price of bread is regulated according to all the different prices of wheat, from ten–pence to three shillings the Scotch boll, equal to about half an English quarter. Three shillings Scotch, at the time when this assize is supposed to have been enacted, were equal to about nine shillings sterling of our present money. Mr. Ruddiman seems to conclude from this, that three shillings was the highest price to which wheat ever rose in those times, and that ten–pence, a shilling, or at most two shillings, were the ordinary prices. Upon consulting the manuscript, however, it appears evidently, that all these prices are only set down as examples of the proportion which ought to be observed between the respective prices of wheat and bread. The last words

24

*

[288]

of the statute are, “reliqua judicabis secundum praescripta habendo respectum ad pretium bladi.” “You shall judge of the remaining cases according to what is above written having a respect to the price of corn.”

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Thirdly, They seem to have been misled too by the very low price at which wheat was sometimes sold in very antient times; and to have imagined, that as its lowest price was then much lower than in later times, its ordinary price must likewise have been much lower. They might have found, however, that in those antient times, its highest price was fully as much above, as its lowest price was below any thing that had ever been known in later times. Thus in 1270, Fleetwood gives us two prices of the quarter of The one is four pounds sixteen shillings of the money of those times, equal to wheat. fourteen pounds eight shillings of that of the present; the other is six pounds eight shillings, equal to nineteen pounds four shillings of our present money. No price can be found in the end of the fifteenth, or beginning of the sixteenth century, which approaches to the extravagance of these. The price of corn, though at all times liable to variationsg varies most in those turbulent and disorderly societies, in which the interruption of all commerce and communication hinders the plenty of one part of the In the disorderly state of England country from relieving the scarcity of another. under the Plantagenets, who governed it from about the middle of the twelfth, till towards the end of the fifteenth century, one district might be in plenty, while another
g

25

26

[289]

at no great distance, by having its crop destroyed either by some accident of the seasons, or by the incursion of some neighbouring baron, might be suffering all the horrors of a famine; and yet if the lands of some hostile lord were interposed between them, the one might not be able to give the least assistance to the other. Under the vigorous administration of the Tudors, who governed England during the latter part of the fifteenth, and through the whole of the sixteenth century, no baron was powerful enough to dare to disturb the publick security.

27

24

The reader will find at the end of this chapter all the prices of wheat which have been collected by Fleetwood from 1202 to 1597, both inclusive, reduced to the money of the present times, and digested according to the order of time, into seven divisions of twelve years each. At the end of each division too, he will find the average price of the twelve years of which it consists. In that long period of time, Fleetwood has been able to collect the prices of no more than eighty years, so that four years are wanting to make out the last twelve years. I have added, therefore, from the accounts of Eton college, the prices of 1598, 1599, 1600, and 1601. It is the only addition which I have made. The reader will see that from the beginning of the thirteenth, till after the middle of the sixteenth century, the average price of each twelve years grows gradually lower and lower; and that towards the end of the sixteenth century it begins to rise again. The prices, indeed, which Fleetwood has been able to collect, seem to have been those

[290]

chiefly which were remarkable for extraordinary dearness or cheapness; and I do not pretend that any very certain conclusion can be drawn from them. So far, however, as they prove any thing at all, they confirm the account which I have been endeavouring to give. Fleetwood himself, however, seems, with most other writers, to have believed, that during all this period the value of silver, in consequence of its increasing abundance, was continually diminishing. The prices of corn which he himself has collected, certainly do not agree with this opinion. They agree perfectly with that of Mr. Duprè de St. Maur, and with that which I have been endeavouring to explain. Bishop Fleetwood and Mr. Duprè de St. Maur are the two authors who seem to have collected, with the greatest diligence and fidelity, the prices of things in antient times. It is somewhat curious that, though their opinions are so very different, their facts, so far as

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they relate to the price of corn at least, should coincide so very exactly.

28

25

It is not, however, so much from the low price of corn, as from that of some other parts of the rude produce of land, that the most judicious writers have inferred the great value of silver in those very antient times. Corn, it has been said, being a sort of manufacture, was, in those rude ages, much dearer in proportion than the greater part of other commodities; it is meant, I suppose, than the greater part of unmanufactured commodities; such as cattle, poultry, game of all kinds, &c. That in those times of

[291]

poverty and barbarism these were proportion–ably much cheaper than corn, is undoubtedly true. But this cheapness was not the effect of the high value of silver, but of the low value of those commodities. It was not hbecausehsilver would in such times purchase or represent a greater quantity of labour, but ibecauseisuch commodities would purchase or represent a much smaller quantity than in times of more opulence and improvement. Silver must certainly be cheaper in Spanish America than in Europe; in the country where it is produced, than in the country to which it is brought, at the expence of a long carriage both by land and by sea, of a freight and an insurance. One– and–twenty pence halfpenny sterling, however, we are told by Ulloa, was, not many years ago, at Buenos Ayres, the price of an ox chosen from a herd of three or four hundred. Sixteen shillings sterling, we are told by Mr. Byron, was the price of a good In a country naturally fertile, but of which the far greater horse in the capital of Chili. part is altogether uncultivated, cattle, poultry, game of all kinds, &c. as they can be acquired with a very small quantity of labour, so they will purchase or command but a very small quantity. The low money price for which they may be sold, is no proof that the real value of silver is there very high, but that the real value of those commodities is very low.

29

30

26

Labour, it must always be remembered, and not any particular commodity or sett of commodities, is the real measure of the value both of silver and of all other commodities.

31

[292] 27

But in countries almost waste, or but thinly inhabited, cattle, poultry, game of all kinds, &c. as they are the spontaneous productions of nature, so she frequently produces them in much greater quantities than the consumption of the inhabitants requires. In such a state of things the supply commonly exceeds the demand. In different states of society, in different stages of improvement, therefore, such commodities will represent, or be equivalent to, very different quantities of labour.

28

In every state of society, in every stage of improvement, corn is the production of human industry. But the average produce of every sort of industry is always suited, more or less exactly, to the average consumption; the average supply to the average demand. In every different stage of improvement, besides, the raising of equal quantities of corn in the same soil and climate, will, at an average, require nearly equal quantities of labour; or what comes to the same thing, the price of nearly equal quantities; the continual increase of the productive powers of labour in an
j

improvingjstate of cultivation, being more or less counter–balanced by the continually

increasing price of cattle, the principal instruments of agriculture. Upon all these accounts, therefore, we may rest assured, that equal quantities of corn will, in every

32

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state of society, in every stage of improvement, more nearly represent, or be equivalent to, equal quantities of labour, than equal quantities of any other part of the rude

[293]

produce of land. Corn, accordingly, it has already been observed, is, in all the different stages of wealth and improvement, a more accurate measure of value than any other commodity or sett of commodities. In all those different stages, therefore, we can judge better of the real value of silver, by comparing it with corn, than by comparing it with any other commodity, or sett of commodities.

33

29

Corn, besides, or whatever else is the common and favourite vegetable food of the people, constitutes, in every civilised country, the principal part of the subsistence of the labourer. In consequence of the extension of agriculture, the land of every country produces a much greater quantity of vegetable than of animal food, and the labourer every where lives chiefly upon the wholesome food that is cheapest and most abundant. Butcher’s–meat, except in the most thriving countries, or where labour is most highly poultry makes a still rewarded, makes but an insignificant part of his subsistence: smaller part of it, and game no part of it. In France, and even in Scotland, where labour is somewhat better rewarded than in France, the labouring poor seldom eat butcher’s– meat, except upon holidays, and other extraordinary occasions. The money price of labour, therefore, depends much more upon the average money price of corn, the subsistence of the labourer, than upon that of butcher’s–meat, or of any other part of the rude produce of land. The real value of gold and silver, therefore, the real quantity of labour which they can purchase or command, depends much more upon the quantity

34

[294]

of corn which they can purchase or command, than upon that of butcher’s–meat, or any other part of the rude produce of land.

30

Such slight observations, however, upon the prices either of corn or of other commodities, would not probably have misled so many intelligent authors, had they not been kinfluenced, at the same time, bykthe popular notion, that as the quantity of silver naturally increases in every country with the increase of wealth, so its value diminishes as its quantity increases. This notion, however, seems to be altogether groundless.

31

The quantity of the precious metals may increase in any country from two different causes: either, first, from the increased abundance of the mines which supply it; or, secondly, from the increased wealth of the people, from the increased produce of their annual labour. The first of these causes is no doubt necessarily connected with the diminution of the value of the precious metals; but the second is not.

32

When more abundant mines are discovered, a greater quantity of the precious metals is brought to market, and the quantity of the necessaries and conveniencies of life for which they must be exchanged being the same as before, equal quantities of the metals must be exchanged for smaller quantities of commodities. So far, therefore, as the increase of the quantity of the precious metals in any country arises from the increased abundance of the mines, it is necessarily connected with some diminution of their value.

35

[295] 33

When, on the contrary, the wealth of any country increases, when the annual produce of its labour becomes gradually greater and greater, a greater quantity of coin becomes

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necessary in order to circulate a greater quantity of commodities; and the people, as they can afford it, as they have more commodities to give for it, will naturally purchase a greater and a greater quantity of plate. The quantity of their coin will increase from necessity; the quantity of their plate from vanity and ostentation, or from the same reason that the quantity of fine statues, pictures, and of every other luxury and curiosity, is likely to increase among them. But as statuaries and painters are not likely to be worse rewarded in times of wealth and prosperity, than in times of poverty and depression, so gold and silver are not likely to be worse paid for.

34

The price of gold and silver, when the accidental discovery of more abundant mines does not keep it down, as it naturally rises with the wealth of every country, so, whatever be the state of the mines, it is at all times naturally higher in a rich than in a poor country. Gold and silver, like all other commodities, naturally seek the market where the best price is given for them, and the best price is commonly given for every thing in the country which can best afford it. Labour, it must be remembered, is the and in countries where labour is equally ultimate price which is paid for every thing, well rewarded, the money price of labour will be in proportion to that of the subsistence of the labourer. But gold and silver will naturally exchange for a greater quantity of

36

[296]

subsistence in a rich than in a poor country, in a country which abounds with subsistence, than in one which is but indifferently supplied with it. If the two countries are at a great distance, the difference may be very great; because though the metals naturally fly from the worse to the better market, yet it may be difficult to transport them in such quantities as to bring their price nearly to a level in both. If the countries are near, the difference will be smaller, and may sometimes be scarce perceptible; because in this case the transportation will be easy. China is a much richer country than and the difference between the price of subsistence in China and any part of Europe, in Europe is very great. Rice in China is much cheaper than wheat is any where in Europe. England is a much richer country than Scotland; but the difference between the money–price of corn in those two countries is much smaller, and is but just perceptible. In proportion to the quantity or measure, Scotch corn generally appears to be a good deal cheaper than English; but in proportion to its quality, it is certainly somewhat dearer. Scotland receives almost every year very large supplies from England, and every commodity must commonly be somewhat dearer in the country to which it is brought than in that from which it comes. English corn, therefore, must be dearer in Scotland than in England, and yet in proportion to its quality, or to the quantity and goodness of the flour or meal which can be made from it, it cannot commonly be sold

37

[297]

higher there than the Scotch corn which comes to market in competition with it.

38

35

The difference between the money price of labour in China and in Europe, is still greater than that between the money price of subsistence; because the real recompence of labour is higher in Europe, than in China, the greater part of Europe being in an improving state, while China seems to be standing still. The money price of labour is lower in Scotland than in England because the real recompence of labour is much lower; Scotland, though advancing to greater wealth, ladvanceslmuch more slowly than
m England. The frequency of emigration from Scotland, and the rarity of it from England, sufficiently prove that the demand for labour is very different in the two

39

countries.m The proportion between the real recompence of labour in different countries,

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it must be remembered, is naturally regulated, not by their actual wealth or poverty, but by their advancing, stationary, or declining condition.

40

36

Gold and silver, as they are naturally of the greatest value among the richest, so they are naturally of nthen least value among the poorest nations. Among savages, the poorest of all nations, they are of scarce any value. In great towns corn is always dearer than in remote parts of the country. This, however, is the effect, not of the real cheapness of silver, but of the real dearness of corn. It does not cost less labour to bring silver to the great town than to the remote parts of the country; but it costs a great deal more to bring corn.

37

[298] 38

In some very rich and commercial countries, such as Holland and the territory of Genoa, They do not produce corn is dear for the same reason that it is dear in great towns. enough to maintain their inhabitants. They are rich in the industry and skill of their artificers and manufacturers; in every sort of machinery which can facilitate and abridge labour; in shipping, and in all the other instruments and means of carriage and commerce: but they are poor in corn, which, as it must be brought to them from distant countries, must, by an addition to its price, pay for the carriage from those countries. It does not cost less labour to bring silver to Amsterdam than to Dantzick; but it costs a great deal more to bring corn. The real cost of silver must be nearly the same in both places; but that of corn must be very different. Diminish the real opulence either of Holland or of the territory of Genoa, while the number of their inhabitants oremainso the same: diminish their power of supplying themselves from distant countries; and the price of corn, instead of sinking with that diminution in the quantity of their silver, which must necessarily accompany this declension either as its cause or as its effect, will rise to the price of a famine. When we are in want of necessaries we must part with all superfluities, of which the value, as it rises in times of opulence and prosperity, so it sinks in times of poverty and distress. It is otherwise with necessaries. Their real price, the quantity of labour which they can purchase or command, rises in times of poverty

41

[299]

and distress, and sinks in times of opulence and prosperity, which are always times of great abundance; for they could not otherwise be times of opulence and prosperity. Corn is a necessary, silver is only a superfluity.

39

Whatever, therefore, may have been the increase in the quantity of the precious metals, which, during the period between the middle of the fourteenth and that of the sixteenth century, arose from the increase of wealth and improvement, it could have no tendency to diminish their value either in Great Britain, or in any other part of Europe. If those who have collected the prices of things in ancient times, therefore, had, during this period, no reason to infer the diminution of the value of silver, from any observations which they had made upon the prices either of corn or of other commodities, they had still less reason to infer it from any supposed increase of wealth and improvement.

SECOND PERIOD
1
But how various soever may have been the opinions of the learned concerning the progress of the value of silver during athisa first period, they are unanimous concerning

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it during the second.

1

2
[300]

From about 1570 to about 1640, during a period of about seventy years, the variation in the proportion between the value of silver and that of corn, held a quite opposite course. Sil–ver sunk in its real value, or would exchange for a smaller quantity of labour than before; and corn rose in its nominal price, and instead of being commonly sold for about two ounces of silver the quarter, or about ten shillings of our present money, came to be sold for six and eight ounces of silver the quarter, or about thirty and forty shillings of our present money.

3

The discovery of the abundant mines of America, seems to have been the sole cause of this diminution in the value of silver in proportion to that of corn. It is accounted for accordingly in the same manner by every body; and there never has been any dispute either about the fact, or about the cause of it. The greater part of Europe was, during this period, advancing in industry and improvement, and the demand for silver must consequently have been increasing. But the increase of the supply had, it seems, so far exceeded that of the demand, that the value of that metal sunk considerably. The discovery of the mines of America, it is to be observed, does not seem to have had any very sensible effect upon the prices of things in England till after 1570; though even the

2

3 mines of Potosi had been discovered more than btwentyb years before.

4

From 1595 to 1620, both inclusive, the average price of the quarter of nine bushels of the best wheat at Windsor market, appears from the accounts of Eton College, to have been 2l. 1s. 6d. 9/13. From which sum, neglecting the fraction, and deducting a ninth, or 4s. 7d. ⅓, the price of the quarter of eight bushels comes out to have been 1l. 16s. 10d.⅔. And from this sum, neglecting likewise the fraction, and deducting a ninth, or 4s. 1d. 1/9, for the difference between the price of the best wheat and that of the middle wheat, the price of the middle wheat comes out to have been about 1l. 12s. 8d. 8/9, or about six ounces and one–third of an ounce of silver.

4

[301]

5

From 1621 to 1636, both inclusive, the average price of the same measure of the best wheat at the same market, appears, from the same accounts, to have been 2l. 10s.; from which making the like deductions as in the foregoing case, the average price of the quarter of eight bushels of middle wheat comes out to have been 1l. 19s. 6d. or about seven ounces and two–thirds of an ounce of silver.

THIRD PERIOD
1
Between 1630 and 1640, or about 1636, the effect of the discovery of the mines of America in reducing the value of silver, appears to have been compleated, and the value of that metal seems never to have sunk lower in proportion to that of corn than it was about that time. It seems to have risen somewhat in the course of the present century, and it had probably begun to do so even some time before the end of the last.

2 [302]

From 1637 to 1700, both inclusive, being the sixty–four last years of the last century, the ave–rage price of the quarter of nine bushels of the best wheat at Windsor market,

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appears, from the same accounts, to have been 2l. 11s. 0d. ⅓; which is only 1s. 0d. ⅓ dearer than it had been during the sixteen years before. But in the course of these sixty–four years there happened two events which must have produced a much greater scarcity of corn than what the course of the seasons would otherwise have occasioned, and which, therefore, without supposing any further reduction in the value of silver, will much more than account for this very small enhancement of price.

3

The first of these events was the civil war, which, by discouraging tillage and interrupting commerce, must have raised the price of corn much above what the course of the seasons would otherwise have occasioned. It must have had this effect more or less at all the different markets in the kingdom, but particularly at those in the neighbourhood of London, which require to be supplied from the greatest distance. In 1648, accordingly, the price of the best wheat at Windsor market, appears, from the same accounts, to have been 4l. 5s. and in 1649 to have been 4l. the quarter of nine bushels. The excess of those two years above 2l. 10s. (the average price of the sixteen years preceding 1637) is 3l. 5s.; which divided among the sixty–four last years of the last century, will alone very nearly account for that small enhancement of price which

[303]

seems to have taken place in them. These, however, though the highest, are by no means the only high prices which seem to have been occasioned by the civil wars.

The second event was the bounty upon the exportation of corn, granted in 1688.

1

bounty, it has been thought by many people, by encouraging tillage, may, in a long course of years, have occasioned a greater abundance, and consequently a greater cheapness of corn in the home–market, than what would otherwise have taken place

2

The

3 there. aHow far the bounty could produce this effect at any time, I shall examine
hereafter; I shall only observe at present, thata between 1688 and 1700, it had b notbtime to produce cany suchceffect. During this short period its only effect must have been, by encouraging the exportation of the surplus produce of every year, and thereby hindering the abundance of one year from compensating the scarcity of another, to raise the price in the home–market. The scarcity which prevailed in England from 1693 to 1699, both inclusive, though no doubt principally owing to the badness of the seasons, and, therefore, extending through a considerable part of Europe, must have been somewhat enhanced by the bounty. In 1699, accordingly, the further exportation of corn was prohibited for nine months.

4

5

5

There was a third event which occurred in the course of the same period, and which, though it could not occasion any scarcity of corn, nor, perhaps, any augmentation in the real quantity of silver which was usually paid for it, must necessarily have occasioned some augmentation in the nominal sum. This event was the great ddebasementdof the silver coin, by clipping and wearing. This evil had begun in the reign of Charles II. and had gone on continually increasing till 1695; at which time, as we may learn from Mr. Lowndes, the current silver coin was, at an average, near five–and–twenty per cent. below its standard value. But the nominal sum which constitutes the market–price of every commodity is necessarily regulated, not so much by the quantity of silver, which, according to the standard, ought to be contained in it, as by that which, it is found by experience, actually is contained in it. This nominal sum, therefore, is necessarily higher when the coin is much edebasede by clipping and wearing, than when near to its

[304]

6

7

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standard value.

6

In the course of the present century, the silver coin has not at any time been more below its standard weight than it is at present. But though very much defaced, its value has been kept up by that of the gold coin for which it is exchanged. For though before the late re–coinage, the gold coin was a good deal defaced too, it was less so than the silver. In 1695, on the contrary, the value of the silver coin was not kept up by the gold coin; a guinea then commonly exchanging for thirty shillings of the worn and clipt silver. Before the late re–coinage of the gold, the price of silver bullion was seldom higher than five shillings and seven–pence an ounce, which is but five–pence above the

8

9

[305]

mint price. But in 1695, the common price of silver bullion was six shil–lings and five– pence an ounce , which is fifteen–pence above the mint price. Even before the late recoinage of the gold, therefore, the coin, gold and silver together, when compared with silver bullion, was not supposed to be more than eight per cent. below its standard value. In 1695, on the contrary, it had been supposed to be near five–and–twenty per cent. below that value. But in the beginning of the present century, that is, immediately after the great recoinage in King William’s time, the greater part of the current silver coin must have been still nearer to its standard weight than it is at present. In the course of the present century too there has been no great publick calamity, such as the civil war, which could either discourage tillage, or interrupt the interior commerce of the country. And though the bounty, which has taken place through the greater part of this century, must always raise the price of corn somewhat higher than it otherwise would be in the actual state of tillage; yet as, in the course of this century, the bounty has had full time to produce all the good effects commonly imputed to it, to encourage tillage, and thereby to increase the quantity of corn in the home market, it mayg, upon the principles of a system which I shall explain and examine hereafter,g be supposed to have done something to lower the price of that commodity the one way, as well as to

*

10

[306]

raise it the other. It is by many people supposed to have done more. h In the sixty–four firsti years of the present century accordingly, the average price of the quarter of nine bushels of the best wheat at Windsor market, appears, by the accounts of Eton College, to have been 2l. 0s. 6d19/32,
i

11

five–and–twenty per cent. cheaper than it had been during the sixty–four last years of the last century; and about nine shillings and six–pence cheaper than it had been during the sixteen years preceding 1636, when the discovery of the abundant mines of America may be supposed to have produced its full effect; and about one shilling cheaper than it had been in the twenty–six years preceding 1620, before that discovery can well be supposed to have produced its full effect. According to this account, the average price of middle wheat, during these sixty–four first years of the present century, comes out to have been about thirty–two shillings the quarter of eight bushels.

12

which is about ten shillings and sixpence, or more than

7

The value of silver, therefore, seems to have risen somewhat in proportion to that of corn during the course of the present century, and it had probably begun to do so even some time before the end of the last.

8

In 1687, the price of the quarter of nine bushels of the best wheat at Windsor market was 1l. 5s. 2d. the lowest price at which it had ever been from 1595.

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9 [307]

In 1688, Mr. Gregory King, a man famous for his knowledge in matters of this kind, estimated the average price of wheat in years of moderate plenty to be to the grower 3s. 6d. the bushel, or eight–and–twenty shillings the quarter. The grower’s price I understand to be the same with what is sometimes called the contract price, or the price at which a farmer contracts for a certain number of years to deliver a certain quantity of corn to a dealer. As a contract of this kind saves the farmer the expence and trouble of marketing, the contract price is generally lower than what is supposed to be the average market price. Mr. King had judged eight–and–twenty shillings the quarter to be at that time the ordinary contract price in years of moderate plenty. Before the scarcity occasioned by the late extraordinary course of bad seasons, it wasj, I have been assured,j the ordinary contract price in all common years. In 1688 was granted the parliamentary bounty upon the exportation of corn. The country gentlemen, who then composed a still greater proportion of the legislature than had felt that the money price of corn was falling. The bounty was they do at present, an expedient to raise it artificially to the high price at which it had frequently been sold in the times of Charles I. and II. It was to take place, therefore, till wheat was so high as forty–eight shillings the quarter; that is twenty shillings, or 5/7ths dearer than Mr. King had in that very year estimated the grower’s price to be in times of moderate plenty. If his calculations deserve any part of the reputation which they have obtained

13

14

15

[308]

very universally, eight–and–forty shillings the quarter, was a price which, without some such expedient as the bounty, could not at that time be expected, except in years of extraordinary scarcity. But the government of King William was not then fully settled. It was in no condition to refuse any thing to the country gentlemen, from whom it was at that very time soliciting the first establishment of the annual land–tax.

16

11

The value of silver, therefore, in proportion to that of corn, had probably risen somewhat before the end of the last century; and it seems to have continued to do so during the course of the greater part of the present; though the necessary operation of the bounty must have hindered that rise from being so sensible as it otherwise would have been in the actual state of tillage.

17

12

In plentiful years the bounty, by occasioning an extraordinary exportation, necessarily raises the price of corn above what it otherwise would be in those years. To encourage tillage, by keeping up the price of corn even in the most plentiful years, was the avowed end of the institution.

13

In years of great scarcity, indeed, the bounty has generally been suspended. It must, however, have had some effect kevenkupon the prices of many of those years. By the extraordinary exportation which it occasions in years of plenty, it must frequently hinder the plenty of one year from compensating the scarcity of another.

14 [309]

Both in years of plenty and in years of scarcity, therefore, the bounty raises the price of corn above what it naturally would be in the actual state of tillage. If, during the sixty– four first years of the present century, therefore, the average price has been lower than during the sixty–four last years of the last century, it must, in the same state of tillage, have been much more so, had it not been for this operation of the bounty.

18

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15

But without the bounty, it may be said, the state of tillage would not have been the same. What may have been the effects of this institution upon the agriculture of the country, I shall endeavour to explain hereafter, when I come to treat particularly of bounties. I shall only observe at present, that this rise in the value of silver, in proportion to that of corn, has not been peculiar to England. It has been observed to have taken place in France during the same period, and nearly in the same proportion too, by three very faithful, diligent, and laborious collectors of the prices of corn, Mr. Duprè de St. Maur, Mr. Messance, and the author of the Essay on the police of grain.

19

But in France, till 1764, the exportation of grain was by law prohibited; and it is somewhat difficult to suppose, that nearly the same diminution of price which took place in one country, notwithstanding this prohibition, should in another be owing to the extraordinary encouragement given to exportation.

20

16
[310]

It would be more proper, perhaps, to consider this variation in the average money price of corn as the effect rather of some gradual rise in the real value of silver in the European market, than of any fall in the real average value of corn. Corn, it has already is at distant periods of time a more accurate measure of value than been observed, either silver, or perhaps any other commodity. When, after the discovery of the abundant mines of America, corn rose to three and four times its former money price, this change was universally ascribed, not to any rise in the real value of corn, but to a fall in the real value of silver. If during the sixty–four first years of the present century, therefore, the average money price of corn has fallen somewhat below what it had been during the greater part of the last century, we should in the same manner impute this change, not to any fall in the real value of corn, but to some rise in the real value of silver in the European market.

21

17

The high price of corn during these ten or twelve years past, indeed, has occasioned a suspicion that the real value of silver still continues to fall in the European market. This high price of corn, however, seems evidently to have been the effect of the extraordinary unfavourableness of the seasons, and ought therefore to be regarded, not as a permanent, but as a transitory and occasional event. The seasons for these ten or and twelve years past have been unfavourable through the greater part of Europe; the disorders of Poland have very much increased the scarcity in all those countries,

22

[311]

So long a course of bad which, in dear years, used to be supplied from that market. seasons, though not a very common event, is by no means a singular one; and whoever has enquired much into the history of the prices of corn in former times, will be at no loss to recollect several other examples of the same kind. Ten years of extraordinary scarcity, besides, are not more wonderful than ten years of extraordinary plenty. The low price of corn from 1741 to 1750, both inclusive, may very well be set in opposition to its high price during these last eight or ten years. From 1741 to 1750, the average price of the quarter of nine bushels of the best wheat at Windsor market, it appears from the accounts of Eton College, was only 1l. 13s. 9d. , which is nearly 6s. 3d. below the average price of the sixty–four first years of the present century. The average price of the quarter of eight bushels of middle wheat, comes out, according to this account, to have been, during these ten years, only 1l. 6s. 8d.

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24

18

Between 1741 and 1750, however, the bounty must have hindered the price of corn

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from falling so low in the home market as it naturally would have done. During these ten years the quantity of all sorts of grain exported, it appears from the custom–house books, amounted to no less than eight millions twenty–nine thousand one hundred and fifty–six quarters one bushel. The bounty paid for this amounted to 1,514,962l. 17s. 4d.½.

25

In 1749 accordingly, Mr. Pelham, at that time prime minister, observed to the

[312]

House of Commons, that for the three years preceding, a very extraordinary sum had been paid as bounty for the exportation of corn. He had good reason to make this observation, and in the following year he might have had still better. In that single year the bounty paid amounted to no less than 324,176l. 10s. 6d. It is unnecessary to observe how much this forced exportation must have raised the price of corn above what it otherwise would have been in the home market.

26

*27

19

At the end of the accounts annexed to this chapter the reader will find the particular account of those ten years separated from the rest. He will find there too the particular account of the preceding ten years, of which the average is likewise below, though not so much below, the general average of the sixty–four first years of the century. The year 1740, however, was a year of extraordinary scarcity. These twenty years preceding 1750, may very well be set in opposition to the twenty preceding 1770. As the former were a good deal below the general average of the century, notwithstanding the intervention of one or two dear years; so the latter have been a good deal above it, If notwithstanding the intervention of one or two cheap ones, of 1759, for example. the former have not been as much below the general average, as the latter have been above it, we ought probably to impute it to the bounty. The change has evidently been too sudden to be ascribed to any change in the value of silver, which is always slow and

28

[313]

gradual. The suddenness of the effect can be accounted for only by a cause which can operate suddenly, the accidental variation of the seasons.

20

The money price of labour in Great Britain has, indeed, risen during the course of the This, however, seems to be the effect, not so much of any present century. diminution in the value of silver in the European market, as of an increase in the demand for labour in Great Britain, arising from the great, and almost universal prosperity of the country. In France, a country not altogether so prosperous, the money price of labour has, since the middle of the last century, been observed to sink gradually with the average money price of corn. Both in the last century and in the present, the day–wages of common labour are there said to have been pretty uniformly about the twentieth part of the average price of the septier of wheat, a measure which contains a little more than four Winchester bushels. In Great Britain the real recompence of labour, the real mquantitiesm of the necessaries and it has already been shown, conveniencies of life which are given to the labourer, has increased considerably during the course of the present century. The rise in its money price seems to have been the effect, not of any diminution of the value of silver in the general market of Europe, but of a rise in the real price of labour in the particular market of Great Britain, owing to the peculiarly happy circumstances of the country.

29

30

[314] 21

For some time after the first discovery of America, silver would continue to sell at its former, or not much below its former price. The profits of mining would for some time be very great, and much above their natural rate. Those who imported that metal into

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Europe, however, would soon find that the whole annual importation could not be disposed of at this high price. Silver would gradually exchange for a smaller and a smaller quantity of goods. Its price would sink gradually lower and lower till it fell to its natural price; or to what was just sufficient to pay, according to their natural rates, the wages of the labour, the profits of the stock, and the rent of the land, which must be paid in order to bring it from the mine to the market. In the greater part of the silver mines of Peru, the tax of the king of Spain, amounting to a ntenthnof the gross produce, eats up, it has already been observed, the whole rent of the land. This tax was originally a half; it soon afterwards fell to a third,o then to a fifth, pand at last to a tenth,p at which rate it still continues. In the greater part of the silver mines of Peru this, it seems, is all that remains after replacing the stock of the undertaker of the work, together with its ordinary profits; and it seems to be universally acknowledged that these profits, which were once very high, are now as low as they can well be, consistently with carrying on qtheq works. The tax of the king of Spain was reduced to a fifth rpartr of the registered silver in

31

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* 1504 , one– and–tfortyt years before u1545u the date of the discovery of the mines of
In the course of vninety yearsv or before 1636, these mines, the most fertile Potosi. in all America, had time sufficient to produce their full effect, or to reduce the value of silver in the European market as low as it could well fall, while it continued to pay this tax to the king of Spain. wNinetyw years is time sufficient to reduce any commodity, of which there is no monopoly, to its natural price, or to the lowest price at which, while it pays a particular tax, it can continue to be sold for any considerable time together.

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33

23

The price of silver in the European market might perhaps have fallen still lower, and it might have become necessary either to xreducex the tax upon it, ynot only to one tenth, as in 1736, but to one twentieth,y in the same manner as that upon gold, or to give up working the greater part of the American mines which are now wrought. The gradual increase of the demand for silver, or the gradual enlargement of the market for the produce of the silver mines of America, is probably the cause which has prevented this from happening, and which has not only kept up the value of silver in the European market, but has perhaps even raised it somewhat higher than it was about the middle of the last century.

24

Since the first discovery of America, the market for the produce of its silver mines has been growing gradually more and more extensive. First, The market of Europe has become gradually more and more extensive. Since the discovery of America, the greater part of Europe has been much improved. England, Holland, France, and Germany; even Sweden, Denmark, and Russia, have all advanced considerably both in agriculture and in manufactures. Italy seems not to have gone backwards. The fall of Italy preceded the conquest of Peru. Since that time it seems rather to have recovered a little. Spain and Portugal, indeed, are supposed to have gone backwards. Portugal, however, is but a very small part of Europe, and the declension of Spain is not, perhaps, so great as is commonly imagined. In the beginning of the sixteenth century, Spain was a very poor country, even in comparison with France, which has been so much improved since that time. It was the well–known remark of the

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Emperor Charles V. who had travelled so frequently through both countries, that every thing abounded in France, but that every thing was wanting in Spain. The increasing produce of the agriculture and manufactures of Europe must necessarily have required a gradual increase in the quantity of silver coin to circulate it; and the increasing number of wealthy individuals must have required the like increase in the quantity of their plate and other ornaments of silver.

26
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Secondly, America is itself a new market for the produce of its own silver mines; and as its advances in agriculture, industry, and population, are much more rapid than those of the most thriving countries in Europe, its demand must increase much more rapidly. The English colonies are altogether a new market, which, partly for coin and partly for plate, requires a continually augmenting supply of silver through a great continent where there never was any demand before. The greater part too of the Spanish and Portuguese colonies are altogether new markets. New Granada, the Yucatan, Paraguay, and the Brazils were, before discovered by the Europeans, inhabited by savage nations, who had neither arts nor agriculture. A considerable degree of both has now been introduced into all of them. Even Mexico and Peru, though they cannot be considered as altogether new markets, are certainly much more extensive ones than they ever were before. After all the wonderful tales which have been published concerning the splendid state of those countries in antient times, whoever reads, with any degree of sober judgment, the history of their first discovery and conquest, will evidently discern that, in arts, agriculture, and commerce, their inhabitants were much more ignorant than the Tartars of the Ukraine are at present. Even the Peruvians, the more civilized nation of the two, though they made use of gold and silver as ornaments, had no coined money of any kind. Their whole commerce was carried on by barter, and there was accordingly

[318]

Those who cultivated the ground were scarce any division of labour among them. obliged to build their own houses, to make their own houshold furniture, their own clothes, shoes, and instruments of agriculture. The few artificers among them are said to have been all maintained by the sovereign, the nobles, and the priests, and were probably their servants or slaves. All the ancient arts of Mexico and Peru have never furnished one single manufacture to Europe. The Spanish armies, though they scarce ever exceeded five hundred men, and frequently did not amount to half that number, found almost every where great difficulty in procuring subsistence. The famines which they are said to have occasioned almost wherever they went, in countries too which at the same time are represented as very populous and well–cultivated, sufficiently demonstrate that the story of this populousness and high cultivation is in a great measure fabulous. The Spanish colonies are under a government in many respects less favourable to agriculture, improvement and population, than that of the English They seem, however, to be advancing in all these much more rapidly than colonies. any country in Europe. In a fertile soil and happy climate, the great abundance and cheapness of land, a circumstance common to all new colonies, is, it seems, so great an advantage as to compensate many defects in civil government. Frezier, who visited Peru in 1713, represents Lima as containing between twenty–five and twenty–eight thousand inhabitants.

34

35

36

37

Ulloa, who resided in the same country between 1740 and

[319]

The difference in their 1746, represents it as containing more than fifty thousand. accounts of the populous–ness of several other principal towns in Chili and Peru is nearly the same;

38

39

and as there seems to be no reason to doubt of the good

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information of either, it marks an increase which is scarce inferior to that of the English colonies. America, therefore, is a new market for the produce of its own silver mines, of which the demand must increase much more rapidly than that of the most thriving country in Europe.

27

Thirdly, The East Indies is another market for the produce of the silver mines of America, and a market which, from the time of the first discovery of those mines, has been continually taking off a greater and a greater quantity of silver. Since that time, the direct trade between America and the East Indies, which is carried on by means of has been continually augmenting, and the indirect intercourse by the Acapulco ships, the way of Europe has been augmenting in a still greater proportion. During the sixteenth century, the Portuguese were the only European nation who carried on any regular trade to the East Indies. In the last years of that century the Dutch began to encroach upon this monopoly, and in a few years expelled them from their principal settlements in India. During the greater part of the last century those two nations divided the most considerable part of the East India trade between them; the trade of the Dutch continually augmenting in a still greater proportion than that of the

40

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Portuguese declined. The English and French carried on some trade with India in the last century, but it has been greatly augmented in the course of the present. The East India trade of the Swedes and Danes began in the course of the present century. Even the Muscovites now trade regularly with China by a sort of caravans which go over land through Siberia and Tartary to Pekin. The East India trade of all these nations, if we except that of the French, which the last war had well nigh annihilated, has been almost continually augmenting. The increasing consumption of East India goods in Europe is, it seems, so great, as to afford a gradual increase of employment to them all. Tea, for example, was a drug very little used in Europe before the middle of the last century. At present the value of the tea annually imported by the English East India Company, for the use of their own countrymen, amounts to more than a million and a half a year; and even this is not enough; a great deal more being constantly smuggled into the country from the ports of Holland, from Gottenburg in Sweden, and from the coast of France too, as long as the French East India Company was in prosperity. The consumption of the porcelain of China, of the spiceries of the Moluccas, of the piece goods of Bengal, and of innumerable other articles, has increased very nearly in a like proportion. The tonnage accordingly of all the European shipping employed in the East India trade, at

[321]

any one time during the last century, was not, perhaps, much greater than that of the English East India Company before the late reduction of their shipping.

41

28

But in the East Indies, particularly in China and Indostan, the value of the precious metals, when the Europeans first began to trade to those countries, was much higher than in Europe; and it still continues to be so. In rice countries, which generally yield two, sometimes three crops in the year, each of them more plentiful than any common crop of corn, the abundance of food must be much greater than in any corn country of Such countries are accordingly much more populous. In them too the equal extent. rich, having a greater super–abundance of food to dispose of beyond what they themselves can consume, have the means of purchasing a much greater quantity of the labour of other people. The retinue of a grandee in China or Indostan accordingly is, by all accounts, much more numerous and splendid than that of the richest subjects in

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Europe. The same super–abundance of food, of which they have the disposal, enables them to give a greater quantity of it for all those singular and rare productions which nature furnishes but in very small quantities; such as the precious metals and the Though the mines, precious stones, the great objects of the competition of the rich. therefore, which supplied the Indian market had been as abundant as those which supplied the European, such commodities would naturally exchange for a greater

43

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quantity of food in India than in Europe. But the mines which supplied the Indian market with the precious metals seem to have been a good deal less abundant, and those which supplied it with the precious stones a good deal more so, than the mines which supplied the European. The precious metals, therefore, would naturally exchange zin Indiaz for somewhat a greater quantity of the precious stones, and for a much greater quantity of The money price of diamonds, the greatest of all superfluities, food athan in Europe. would be somewhat lower, and that of food, the first of all necessaries, a great deal lower in the one country than in the other. But the real price of labour, the real quantity of the necessaries of life which is given to the labourer, it has already been observed, is lower both in China and Indostan, the two great markets of India, than it is through the greater part of Europe. The wages of the labourer will there purchase a smaller quantity of food; and as the money price of food is much lower in India than in Europe, the money price of labour is there lower upon a double account; upon account both of the small quantity of food which it will purchase, and of the low price of that food. But in countries of equal art and industry, the money price of the greater part of manufactures will be in proportion to the money price of labour; and in manufacturing art and industry, China and Indostan, though inferior, seem not to be much inferior to any part of Europe. The money price of the greater part of manufactures, therefore, will naturally be much lower in those great empires than it is any–where in Europe. Through the

44

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greater part of Europe too the expence of land–carriage increases very much both the real and nominal price of most manufactures. It costs more labour, and therefore more money, to bring first the materials, and afterwards the compleat manufacture to save the market. In China and Indostan the extent and variety of inland navigations greater part of this labour, and consequently of this money, and thereby reduce still lower both the real and the nominal price of the greater part of their manufactures. Upon all these accounts, the precious metals are a commodity which it always has been, and still continues to be, extremely advantageous to carry from Europe to India. There is scarce any commodity which brings a better price there; or which, in proportion to the quantity of labour and commodities which it costs in Europe, will purchase or command a greater quantity of labour and commodities in India. It is more advantageous too to carry silver thither than gold; because in China, and the greater part of the other markets of India, the proportion between fine silver and fine gold is but as tenb, or at most as twelve,b to one; whereas in Europe it is as fourteen or fifteen to one. In China, and the greater part of the other markets of India, tenc, or at most twelve,c ounces of silver will purchase an ounce of gold: in Europe it requires from fourteen to fifteen ounces. In the cargoes, therefore, of the greater part of European ships which sail to India, silver has generally been one of the most valuable articles. It is the most

46

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valuable article in the Acapulco ships which sail to Manilla. The silver of the new continent seems in this manner to be done of the principal commoditiesd by which the commerce between the two extremities of the old one is carried on, and it is by means of ite, in a great measure,e that those distant parts of the world are connected with one

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another.

29

In order to supply so very widely extended a market, the quantity of silver annually brought from the mines must not only be sufficient to support that continual increase both of coin and of plate which is required in all thriving countries; but to repair that continual waste and consumption of silver which takes place in all countries where that metal is used.

30

The continual consumption of the precious metals in coin by wearing, and in plate both by wearing and cleaning, is very sensible; and in commodities of which the use is so very widely extended, would alone require a very great annual supply. The consumption of those metals in some particular manufactures, though it may not perhaps be greater upon the whole than this gradual consumption, is, however, much more sensible, as it is much more rapid. In the manufactures of Birmingham alone, the quantity of gold and siver annually employed in gilding and plating, and thereby disqualified from ever afterwards appearing in the shape of those metals, is said to amount to more than fifty thousand pounds sterling. We may from thence form some notion how great must be

[325]

the annual consumption in all the different parts of the world, either in manufactures of the same kind with those of Birmingham, or in laces, embroideries, gold and silver stuffs, the gilding of books, furniture, &c. A considerable quantity too must be annually lost in transporting those metals from one place to another both by sea and by land. In the greater part of the governments of Asia, besides, the almost universal custom of concealing treasures in the bowels of the earth, of which the knowledge frequently dies with the person who makes the concealment, must occasion the loss of a still greater quantity.

31

The quantity of gold and silver imported at both Cadiz and Lisbon (including not only what comes under register, but what may be supposed to be smuggled) amounts, according to the best accounts, to about six millions sterling a year.

According to Mr. Meggens the annual importation of the precious metals into Spain, at an average of six years; viz. from 1748 to 1753, both inclusive; and into Portugal, at an average of seven years; viz. from 1747 to 1753, both inclusive; amounted in silver to 1,101,107 pounds weight; and in gold to 49,940 pounds weight. The silver, at sixty–two shillings the pound Troy, amounts to 3,413,431l. 10s. sterling. The gold, at forty–four

*

[326]

Both guineas and a half the pound Troy, amounts to 2,333,446l. 14s. sterling. together amount to 5,746,878l. 4s. sterling. The account of what was imported under register, he assures us is exact. He gives us the detail of the particular places from which the gold and silver were brought, and of the particular quantity of each metal, which, according to the register, each of them afforded. He makes an allowance too for the quantity of each metal which he supposes may have been smuggled. The great experience of this judicious merchant renders his opinion of considerable weight.

48

33

According to the eloquent and, sometimes, well–informed Author of the Philosophical and Political History of the establishment of the Europeans in the two Indies, the annual importation of registered gold and silver into Spain, at an average of eleven years; viz. from 1754 to 1764, both inclusive; amounted to 13,984,185 g
g

piastres of ten reals.

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On account of what may have been smuggled, however, the whole annual importation, he supposes, may have amounted to seventeen millions of piastres; which, at 4s. 6d. the piastre, is equal to 3,825,000 l. sterling. He gives the detail too of the particular places from which the gold and silver were brought, and of the particular quantities of He informs us each metal which, according to the register, each of them afforded. too, that if we were to judge of the quantity of gold annually imported from the Brazils

49

[327]

into Lisbon by the amount of the tax paid to the king of Portugal, which it seems is one– fifth of the standard metal, we might value it at eighteen millions of cruzadoes, or forty– five millions of French livres, equal to about two millions sterling. On account of what may have been smuggled, however, we may safely, he says, add to this sum an eighth more, or 250,000 l. sterling, so that the whole will amount to 2,250,000 l. sterling. According to this account, therefore, the whole annual importation of the precious metals into both Spain and Portugal, amounts to about 6,075,000 l. sterling.

50

Several other very well authenticatedh, though manuscript,h accounts, I have been assured, agree, in making this whole annual importation amount at an average to about six millions sterling, sometimes a little more, sometimes a little less.

35

The annual importation of the precious metals into Cadiz and Lisbon, indeed, is not equal to the whole annual produce of the mines of America. Some part is sent annually by the Acapulco ships to Manilla; some part is employed in the contraband trade which the Spanish colonies carry on with those of other European nations; and some part, no doubt, remains in the country. The mines of America, besides, are by no means the only gold and silver mines in the world. They are, however, by far the most abundant. The produce of all the other mines which are known, is insignificant, it is acknowledged, in comparison with theirs; and the far greater part of their produce, it is likewise

[328]

acknowledged, is annually imported into Cadiz and Lisbon. But the consumption of Birmingham alone, at the rate of fifty thousand pounds a year, is equal to the hundred– and–twentieth part of this annual importation at the rate of six millions a year. The whole annual consumption of gold and silver, therefore, in all the different countries of the world where those metals are used, may perhaps be nearly equal to the whole annual produce. The remainder may be no more than sufficient to supply the increasing demand of all thriving countries. It may even have fallen so far short of this demand as somewhat to raise the price of those metals in the European market.

36

The quantity of brass and iron annually brought from the mine to the market is out of all proportion greater than that of gold and silver. We do not, however, upon this account, imagine that those coarse metals are likely to multiply beyond the demand, or to become gradually cheaper and cheaper. Why should we imagine that the precious metals are likely to do so? The coarse metals, indeed, though harder, are put to much harder uses, and, as they are of less value, less care is employed in their preservation. The precious metals, however, are not necessarily immortal any more than they, but are liable too to be lost, wasted, and consumed in a great variety of ways.

37
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The price of all metals, though liable to slow and gradual variations, varies less from and the year to year than that of almost any other part of the rude produce of land; price of the pre–cious metals is even less liable to sudden variations than that of the

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coarse ones. The durableness of metals is the foundation of this extraordinary steadiness of price. The corn which was brought to market last year, will be all or almost all consumed long before the end of this year. But some part of the iron which was brought from the mine two or three hundred years ago, may be still in use, and perhaps some part of the gold which was brought from it two or three thousand years ago. The different masses of corn which in different years must supply the consumption of the world, will always be nearly in proportion to the respective produce of those different years. But the proportion between the different masses of iron which may be in use in two different years, will be very little affected by any accidental difference in the produce of the iron mines of those two years; and the proportion between the masses of gold will be still less affected by any such difference in the produce of the gold mines. Though the produce of the greater part of metallick mines, therefore, varies, perhaps, still more from year to year than that of the greater part of cornfields, those variations have not the same effect upon the price of the one species of commodities, as upon that of the other.

Variations in the Proportion between the respective Values of Gold and Silver
1
Before the discovery of the mines of America, the value of fine gold to fine silver was regulated in the different mints of Europe, between the proportions of one to ten and one to twelve; that is, an ounce of fine gold was supposed to be worth from ten to twelve ounces of fine silver. About the middle of the last century it came to be regulated, between the proportions of one to fourteen and one to fifteen; that is, an ounce of fine gold came to be supposed worth between fourteen and fifteen ounces of fine silver. Gold rose in its nominal value, or in the quantity of silver which was given for it. Both metals sunk in their real value, or in the quantity of labour which they could purchase; but silver sunk more than gold. Though both the gold and silver mines of America exceeded in fertility all those which had ever been known before, the fertility of the silver mines had, it seems, been proportionably still greater than that of the gold ones.

2

The great quantities of silver carried annually from Europe to India, have, in some of the English settlements, gradually reduced the value of that metal in proportion to gold. In the mint of Calcutta, an ounce of fine gold is supposed to be worth fifteen ounces of fine silver, in the same manner as in Europe. It is in the mint perhaps rated too high for the

[331]

value which it bears in the market of Bengal. In China, the proportion of gold to silver still continues as one to tena, or one to twelvea. In Japan, it is said to be as one to eight. The proportion between the quantities of gold and silver annually imported into Europe, according to Mr. Meggens’s account, is as one to twenty–two nearly; that is, for one ounce of gold there are imported a little more than twenty–two ounces of silver. The great quantity of silver sent annually to the East Indies, reduces, he supposes, the quantities of those metals which remain in Europe to the proportion of one to fourteen or fifteen, the proportion of their values. The proportion between their values, he seems

3

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to think, must necessarily be the same as that between their quantities, and would therefore be as one to twenty–two, were it not for this greater exportation of silver.

1

4

But the ordinary proportion between the respective values of two commodities is not necessarily the same as that between the quantities of them which are commonly in the market. The price of an ox, reckoned at ten guineas, is about threescore times the price of a lamb, reckoned at 3s. 6d. It would be absurd, however, to infer from thence, that there are commonly in the market threescore lambs for one ox: and it would be just as absurd to infer, because an ounce of gold will commonly purchase from fourteen to fifteen ounces of silver, that there are commonly in the market only fourteen or fifteen ounces of silver for one ounce of gold.

[332] 5

The quantity of silver commonly in the market, it is probable, is much greater in proportion to that of gold, than the value of a certain quantity of gold is to that of an equal quantity of silver. The whole quantity of a cheap commodity brought to market, is commonly not only greater, but of greater value, than the whole quantity of a dear one. The whole quantity of bread annually brought to market, is not only greater, but of greater value than the whole quantity of butcher’s–meat; the whole quantity of butcher’s–meat, than the whole quantity of poultry; and the whole quantity of poultry, than the whole quantity of wild fowl. There are so many more purchasers for the cheap than for the dear commodity, that, not only a greater quantity of it, but a greater value can commonly be disposed of. The whole quantity, therefore, of the cheap commodity must commonly be greater in proportion to the whole quantity of the dear one, than the value of a certain quantity of the dear one, is to the value of an equal quantity of the cheap one. When we compare the precious metals with one another, silver is a cheap, and gold a dear commodity. We ought naturally to expect, therefore, that there should always be in the market, not only a greater quantity, but a greater value of silver than of gold. Let any man, who has a little of both, compare his own silver with his gold plate, and he will probably find, that, not only the quantity, but the value of the former

[333]

greatly exceeds that of the latter. Many people, besides, have a good deal of silver who have no gold plate, which, even with those who have it, is generally confined to watch– cases, snuff–boxes, and such like trinkets, of which the whole amount is seldom of great value. In the British coin, indeed, the value of the gold preponderates greatly, but it is not so in that of all countries. In the coin of some countries the value of the two metals is nearly equal. In the Scotch coin, before the union with England, the gold preponderated very little, though it did somewhat , as it appears by the accounts of the mint. In the coin of many countries the silver preponderates. In France, the largest sums are commonly paid in that metal, and it is there difficult to get more gold than whatc is necessary to carry about in your pocket. The superior value, however, of the silver plate above that of the gold, which takes place in all countries, will much more than compensate the preponderancy of the gold coin above the silver, which takes place only in some countries.

*

6

Though, in one sense of the word, silver always has been, and probably always will be, much cheaper than gold; yet in another sense, gold may, perhaps, in the present state of the dSpanishd market, be said to be somewhat cheaper than silver. A commodity may be said to be dear or cheap, not only according to the absolute greatness or smallness

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of its usual price, but according as that price is more or less above the lowest for which it is possible to bring it to market for any considerable time together. This lowest price is that which barely replaces, with a moderate profit, the stock which must be employed in bringing the commodity thither. It is the price which affords nothing to the landlord, of which rent makes not any component part, but which resolves itself altogether into wages and profit. But, in the present state of the eSpanishe market, gold is certainly somewhat nearer to this lowest price than silver. The tax of the King of Spain upon gold is only one–twentieth part of the standard metal, or five per cent.; whereas his tax upon silver amounts to fone–tenthfpart of it, or to gteng per cent. In these taxes too, it has already been observed, consists the whole rent of the greater part of the gold and silver mines of Spanish America; and that upon gold is still worse paid than that upon silver. The profits of the undertakers of gold mines too, as they more rarely make a fortune, must, in general, be still more moderate than those of the undertakers of silver mines. The price of Spanish gold, therefore, as it affords both less rent and less profit, must, in the hSpanishh market, be somewhat nearer to the lowest price for which it is possible to bring it thither, than the price of Spanish silver. iWhen all expences are computed, the whole quantity of the one metal, it would seem, cannot, in the Spanish

2

3

[335]

market, be disposed of so advantageously as the whole quantity of the other. The tax, indeed, of the King of Portugal upon the gold of the Brazils, is the same with the ancient tax of the King of Spain upon the silver of Mexico and Peru; or one–fifth part of the standard metal. It may, therefore, be uncertain whether to the general market of Europe the whole mass of American gold comes at a price nearer to the lowest for which it is possible to bring it thither, than the whole mass of American silver.i

4

7

The price of diamonds and other precious stones may, perhaps, be still nearer to the lowest price at which it is possible to bring them to market, than even the price of gold.
j

Though it is not very probable, that any part of a tax, which is not only imposed upon one of the most proper subjects of taxation, a mere luxury and superfluity, but which affords so very important a revenue, as the tax upon silver, will ever be given up as long as it is possible to pay it; yet the same impossibility of paying it, which in 1736 made it necessary to reduce it from one–fifth to one–tenth, may in time make it necessary to reduce it still further; in the same manner as it made it necessary to reduce the tax upon gold to one–twentiethj That the silver mines of Spanish America, like all other mines, become gradually more expensive in the working, on account of the greater depths at which it is necessary to carry on the works, and of the greater expence of drawing out the water and of supplying them with fresh air at those depths, is acknowledged by every body who has enquired into the state of those mines.

5

[336] 9

These causes, which are equivalent to a growing scarcity of silver (for a commodity may be said to grow scarcer when it becomes more difficult and expensive to collect a certain quantity of it) must, in time, produce one or other of the three following events. The increase of the expence must either, first, be compensated altogether by a proportionable increase in the price of the metal; or, secondly, it must be compensated altogether by a proportionable diminution of the tax upon silver; or, thirdly, it must be compensated partly by the one, and partly by the other of those two expedients. This third event is very possible. As gold rose in its price in proportion to silver,

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notwithstanding a great diminution of the tax upon gold; so silver might rise in its price in proportion to labour and commodities, notwithstanding an equal diminution of the tax upon silver.
k

Such successive reductions of the tax, however, though they may not prevent altogether, must certainly retard, more or less, the rise of the value of silver in the European market. In consequence of such reductions, many mines may be wrought which could not be wrought before, because they could not afford to pay the old tax; and the quantity of silver annually brought to market must always be somewhat greater, and, therefore, the value of any given quantity somewhat less, than it otherwise would have been. In consequence of the reduction in 1736, the value of silver

[337]

in the European market, though it may not at this day be lower than before that reduction, is, probably, at least ten per cent. lower than it would have been, had the Court of Spain continued to exact the old tax.k
l

That, notwithstanding this reduction, the value of silver has, during the course of the present century, begun to rise somewhat in the European market, the facts and arguments which have been alleged above, dispose me to believe, or more properly to suspect and conjecture; for the best opinion which I can form upon this subject scarce, perhaps, deserves the name of belief.l The rise, indeed, msupposing there has been any,m has hitherto been so very small, that after all that has been said, it may, perhaps, appear to many people uncertain, not only whether this event has actually taken place; but whether the contrary may not have taken place, or whether the value of silver may not still continue to fall in the European market.
n

6

It must be observed, however, that whatever may be the supposed annual importation of gold and silver, there must be a certain period, at which the annual consumption of those metals will be equal to that annual importation. Their consumption must increase as their mass increases, or rather in a much greater proportion. As their mass increases, their value diminishes. They are more used, and less cared for, and their consumption consequently increases in a greater proportion than their mass. After a certain period, therefore, the annual consumption of those metals must, in this manner

[338]

become equal to their annual importation, provided that importation is not continually increasing; which, in the present times, is not supposed to be the case.

13

If, when the annual consumption has become equal to the annual importation, the annual importation should gradually diminish, the annual consumption, may, for some time, exceed the annual importation. The mass of those metals may gradually and insensibly diminish, and their value gradually and insensibly rise, till the annual importation becoming again stationary, the annual consumption will gradually and insensibly accommodate itself to what that annual importation can maintain.n

7

Grounds of the Suspicion that the Value of Silver still continues to decrease
1
The increase of the wealth of Europe, and the popular notion that, as the quantity of the

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precious metals naturally increases with the increase of wealth, so their value diminishes as their quantity increases, may, aperhapsa dispose many people to believe that their value still continues to fall in the European market; and the still gradually increasing price of many parts of the rude produce of land mayb confirm them still further in this opinion. That that increase cinc the quantity of the precious metalsd, which arises ein any countrye from the increase of wealth, has no tendency to diminish their value, I have

[339]

endeavoured to show already. Gold and silver naturally resort to a rich country, for the same reason that all sorts of luxuries and curiosities resort to it; not because they are cheaper there than in poorer countries, but because they are dearer, or because a better price is given for them. It is the superiority of price which attracts them, and as soon as that superiority ceases, they necessarily cease to go thither.

1

3

If you except corn and such other vegetables as are raised altogether by human industry, that all other sorts of rude produce, cattle, poultry, game of all kinds, the useful fossils and minerals of the earth, &c. naturally grow dearer as the society advances in wealth and improvement, I have endeavoured to show already. Though such commodities, therefore, come to exchange for a greater quantity of silver than before, it will not from thence follow that silver has become really cheaper, or will purchase less labour than before, but that such commodities have become really dearer, or will purchase more labour than before. It is not their nominal price only, but their real price which rises in the progress of improvement. The rise of their nominal price is the effect, not of any degradation of the value of silver, but of the rise in their real price.

2

Different Effects of the Progress of Improvement upon the real price of three different Sorts of rude Produce
1 [340]
These different sorts of rude produce may be divided into three classes. The first comprehends those which it is scarce in the power of human industry to multiply at all. The second, those which it can multiply in proportion to the demand. The third, those in which the efficacy of industry is either limited or uncertain. In the progress of wealth and improvement, the real price of the first may rise to any degree of extravagance, and seems not to be limited by any certain boundary. That of the second, though it may rise greatly, has, however, a certain boundary beyond which it cannot well pass for any considerable time together. That of the third, though its natural tendency is to rise in the progress of improvement, yet in the same degree of improvement it may sometimes happen even to fall, sometimes to continue the same, and sometimes to rise more or less, according as different accidents render the efforts of human industry, in multiplying this sort of rude produce, more or less successful.

First Sort
1
The first sort of rude produce of which the price rises in the progress of improvement, is

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that which it is scarce in the power of human industry to multiply at all. It consists in those things which nature produces only in certain quantities, and which being of a very perishable nature, it is impossible to accumulate together the produce of many different seasons. Such are the greater part of rare and singular birds and fishes, many different sorts of game, almost all wild–fowl, all birds of passage in particular, as well as many

[341]

other things. When wealth and the luxury which accompanies it increase, the demand for these is likely to increase with them, and no effort of human industry may be able to increase the supply much beyond what it was before this increase of the demand. The quantity of such commodities, therefore, remaining the same, or nearly the same, while the competition to purchase them is continually increasing, their price may rise to any degree of extravagance, and seems not to be limited by any certain boundary. If woodcocks should become so fashionable as to sell for twenty guineas a–piece, no effort of human industry could increase the number of those brought to market, much beyond what it is at present. The high price paid by the Romans, in the time of their greatest grandeur, for rare birds and fishes, may in this manner easily be accounted for. These prices were not the effects of the low value of silver in those times, but of the high value of such rarities and curiosities as human industry could not multiply at pleasure. The real value of silver was higher at Rome, for some time before and after the fall of the republick, than it is through the greater part of Europe at present. Three sestertii, equal to about sixpence sterling, was the price which the republick paid for the modius or peck of the tithe wheat of Sicily. This price, however, was probably below the average market price, the obligation to deliver their wheat at this rate being considered as a tax upon the Sicilian farmers. When the Romans, therefore, had occasion to order more

1

[342]

corn than the tithe of wheat amounted to, they were bound by capitulation to pay for the surplus at the rate of four sestertii, or eight–pence sterling the peck; and this had probably been reckoned the moderate and reasonable, that is, the ordinary or average contract price of those times; it is equal to about one–and–twenty shillings the quarter. Eight–and–twenty shillings the quarter was, before the late years of scarcity, the ordinary contract price of English wheat, which in quality is inferior to the Sicilian, and generally sells for a lower price in the European market. The value of silver, therefore, in those antient times, must have been to its value in the present, as three to four inversely, that is, three ounces of silver would then have purchased the same quantity of labour and commodities which four ounces will do at present.

2

3

4

Pliny, therefore, that Seius bought a white nightingale, as a present for the empress Agrippina, at the price of six thousand sestertii, equal to about fifty pounds of our purchased a surmullet at the price of eight present money; and that Asinius Celer thousand sestertii equal to about sixty–six pounds thirteen shillings and four–pence of our present money; the extravagance of those prices, how much soever it may surprise us, is apt, notwithstanding, to appear to us about one–third less than it really was. Their real price, the quantity of labour and subsistence which was given away for them, was

*5

When we read in

†6

[343]

about one–third more than their nominal price is apt to express to us in the present times. Seius gave for the nightingale the command of a quantity of labour and subsistence, equal to what 66l. 13s. 4d. would purchase in the present times; and Asinius Celer gave for the surmullet the command of a quantity equal to what 88l. 17s. 9⅓d. would purchase. What occasioned the extravagance of those high prices was, not so much the abundance of silver, as the abundance of labour and subsistence, of which those Romans had the disposal, beyond what was necessary for their own use. The

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quantity of silver, of which they had the disposal, was a good deal less than what the command of the same quantity of labour and subsistence would have procured to them in the present times.

Second Sort
1
The second sort of rude produce of which the price rises in the progress of improvement, is that which human industry can multiply in proportion to the demand. It consists in those useful plants and animals, which, in uncultivated countries, nature produces with such profuse abundance, that they are of little or no value, and which, as cultivation advances, are therefore forced to give place to some more profitable produce. During a long period in the progress of improvement, the quantity of these is continually diminishing, while at the same time the demand for them is continually increasing. Their real value, therefore, the real quantity of labour which they will

1

2

[344]

purchase or command, gradually rises, till at last it gets so high as to render them as profitable a produce as any thing else which human industry can raise upon the most fertile and best cultivated land. When it has got so high it cannot well go higher. If it did, more land and more industry would soon be employed to increase their quantity.

2

When the price of cattle, for example, rises so high that it is as profitable to cultivate land in order to raise food for them, as in order to raise food for man, it cannot well go higher. If it did, more corn land would soon be turned into pasture. The extension of tillage, by diminishing the quantity of wild pasture, diminishes the quantity of butcher’s– meat which the country naturally produces without labour or cultivation, and by increasing the number of those who have either corn, or, what comes to the same thing, the price of corn, to give in exchange for it, increases the demand. The price of butcher’s meat, therefore, and consequently of cattle, must gradually rise till it gets so high, that it becomes as profitable to employ the most fertile and best cultivated lands in raising food for them as in raising corn. But it must always be late in the progress of improvement before tillage can be so far extended as to raise the price of cattle to this height; and till it has got to this height, if the country is advancing at all, their price must be continually rising. There are, perhaps, some parts of Europe in which the price

3

[345]

of cattle has not yet got to this height. It had not got to this height in any part of Scotland before the union. Had the Scotch cattle been always confined to the market of Scotland, in a country in which the quantity of land, which can be applied to no other purpose but the feeding of cattle, is so great in proportion to what can be applied to other purposes, it is scarce possible, perhaps, that their price could ever have risen so high as to render it profitable to cultivate land for the sake of feeding them. In England, the price of cattle, it has already been observed, seems, in the neighbourhood of London, to have got to this height about the beginning of the last century; but it was much later probably before it got to it through the greater part of the remoter counties; in some of which, perhaps, it may scarce yet have got to it. Of all the different substances, however, which compose this second sort of rude produce, cattle is, perhaps, that of which the price, in the progress of improvement, afirst risesa to this height.

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3

Till the price of cattle, indeed, has got to this height, it seems scarce possible that the greater part, even of those lands which are capable of the highest cultivation, can be completely cultivated. In all farms too distant from any town to carry manure from it, that is, in the far greater part of those of every extensive country, the quantity of well– cultivated land must be in proportion to the quantity of manure which the farm itself produces; and this again must be in proportion to the stock of cattle which are

[346]

maintained upon it. The land is manured either by pasturing the cattle upon it, or by feeding them in the stable, and from thence carrying out their dung to it. But unless the price of the cattle be sufficient to pay both the rent and profit of cultivated land, the farmer cannot afford to pasture them upon it; and he can still less afford to feed them in the stable. It is with the produce of improved and cultivated land only, that cattle can be fed in the stable; because to collect the scanty and scattered produce of waste and unimproved lands would require too much labour and be too expensive. If the price of the cattle, therefore, is not sufficient to pay for the produce of improved and cultivated land, when they are allowed to pasture it, that price will be still less sufficient to pay for that produce when it must be collected with a good deal of additional labour, and brought into the stable to them. In these circumstances, therefore, no more cattle can, with profit, be fed in the stable than what are necessary for tillage. But these can never afford manure enough for keeping constantly in good condition, all the lands which they are capable of cultivating. What they afford being insufficient for the whole farm, will naturally be reserved for the lands to which it can be most advantageously or conveniently applied; the most fertile, or those, perhaps, in the neighbourhood of the farm–yard. These, therefore, will be kept constantly in good condition and fit for tillage. The rest will, the greater part of them, be allowed to lie waste, producing scarce any

[347]

thing but some miserable pasture, just sufficient to keep alive a few straggling, half– starved cattle; the farm, though much understocked in proportion to what would be necessary for its complete cultivation, being very frequently overstocked in proportion to its actual produce. A portion of this waste land, however, after having been pastured in this wretched manner for six or seven years together, may be ploughed up, when it will yield, perhaps, a poor crop or two of bad oats, or of some other coarse grain, and then, being entirely exhausted, it must be rested and pastured again as before and another portion ploughed up to be in the same manner exhausted and rested again in its turn. Such accordingly was the general system of management all over the low country of Scotland before the union. The lands which were kept constantly well manured and in good condition, seldom exceeded a third or a fourth part of the whole farm, and sometimes did not amount to a fifth or a sixth part of it. The rest were never manured, but a certain portion of them was in its turn, notwithstanding, regularly cultivated and exhausted. Under this system of management, it is evident, even that part of the lands of Scotland which is capable of good cultivation, could produce but little in comparison of what it may be capable of producing. But how disadvantageous soever this system may appear, yet before the union the low price of cattle seems to have rendered it almost unavoidable. If, notwithstanding a great rise in their price, it

[348]

still continues to prevail through a considerable part of the country, it is owing, in many places, no doubt, to ignorance and attachment to old customs, but in most places to the unavoidable obstructions which the natural course of things opposes to the immediate or speedy establishment of a better system: first, to the poverty of the tenants, to their not having yet had time to acquire a stock of cattle sufficient to cultivate their lands

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more compleatly, the same rise of price which would render it advantageous for them to maintain a greater stock, rendering it more difficult for them to acquire it; and, secondly, to their not having yet had time to put their lands in condition to maintain this greater stock properly, supposing they were capable of acquiring it. The increase of stock and the improvement of land are two events which must go hand in hand, and of which the one can no where much out–run the other. Without some increase of stock, there can be scarce any improvement of land, but there can be no considerable increase of stock but in consequence of a considerable improvement of land; because otherwise the land could not maintain it. These natural obstructions to the establishment of a better system, cannot be removed but by a long course of frugality and industry; and half a century or a century more, perhaps, must pass away before the old system, which is wearing out gradually, can be compleatly abolished through all the different parts of the country. Of all btheb commercial advantages, however, which Scotland has derived from the union with England, this rise in the price of cattle is, perhaps, the

[349]

greatest. It has not only raised the value of all highland estates, but it has, perhaps, been the principal cause of the improvement of the low country. In all new colonies the great quantity of waste land, which can for many years be applied to no other purpose but the feeding of cattle, soon renders them extremely abundant, and in every thing great cheapness is the necessary consequence of great abundance. Though all the cattle of the European colonies in America were originally carried from Europe, they soon multiplied so much there, and became of so little value, that even horses were allowed to run wild in the woods without any owner thinking it worth while to claim them. It must be a long time after the first establishment of such colonies, before it can become profitable to feed cattle upon the produce of cultivated land. The same causes, therefore, the want of manure, and the disproportion between the stock employed in cultivation, and the land which it is destined to cultivate, are likely to introduce there a system of husbandry not unlike that which still continues to take place in so many parts of Scotland. Mr. Kalm, the Swedish traveller, when he gives an account of the husbandry of some of the English colonies in North America, as he found it in 1749, observes, accordingly, that he can with difficulty discover there the character of the English nation, so well skilled in all the different branches of agriculture. They make scarce any manure for their corn fields, he says; but when one piece of ground has been exhausted by continual cropping, they clear and cultivate

6

4

7

8

[350]

another piece of fresh land; and when that is exhausted, proceed to a third. Their cattle are allowed to wander through the woods and other uncultivated grounds, where they are half–starved; having long ago extirpated almost all the annual grasses by cropping them too early in the spring, before they had time to form their flowers, or to shed their seeds . The annual grasses were, it seems, the best natural grasses in that part of North America; and when the Europeans first settled there, they used to grow very thick, and to rise three or four feet high. A piece of ground which, when he wrote, could not maintain one cow, would in former times, he was assured, have maintained four, each of which would have given four times the quantity of milk, which that one was capable of giving. The poorness of the pasture had, in his opinion, occasioned the degradation of their cattle, which degenerated sensibly from one generation to another. They were probably not unlike that stunted breed which was common all over Scotland thirty or forty years ago, and which is now so much mended through the greater part of

*

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the low country, not so much by a change of the breed, though that expedient has been employed in some places, as by a more plentiful method of feeding them.

5 [351]

Though it is late, therefore, in the progress of improvement before cattle can bring such a price as to render it profitable to cultivate land for the sake of feeding them; yet of all the different parts which compose this second sort of rude produce, they are perhaps the first which bring this price; because till they bring it, it seems impossible that improvement can be brought near even to that degree of perfection to which it has arrived in many parts of Europe.

6

As cattle are among the first, so perhaps venison is among the last parts of this sort of rude produce which bring this price. The price of venison in Great Britain; how extravagant soever it may appear, is not near sufficient to compensate the expence of a deer park, as is well known to all those who have had any experience in the feeding of deer. If it was otherwise, the feeding of deer would soon become an article of common farming; in the same manner as the feeding of those small birds called Turdi was among the antient Romans. Varro and Columella assure us that it was a most profitable article. The fattening of Ortolans, birds of passage which arrive lean in the country, is said to be so in some parts of France. If venison continues in fashion, and the wealth and luxury of Great Britain increase as they have done for some time past, its price may very probably rise still higher than it is at present.

9

7

Between that period in the progress of improvement which brings to its height the price of so necessary an article as cattle, and that which brings to it the price of such a superfluity as venison, there is a very long interval, in the course of which many other sorts of rude produce gradually arrive at their highest price, some sooner and some later, according to different circumstances.

[352]

8

Thus in every farm the offals of the barn and stables will maintain a certain number of poultry. These, as they are fed with what would otherwise be lost, are a mere save–all; and as they cost the farmer scarce any thing, so he can afford to sell them for very little. Almost all that he gets is pure gain, and their price can scarce be so low as to discourage him from feeding this number. But in countries ill cultivated, and, therefore, but thinly inhabited, the poultry, which are thus raised without expence, are often fully sufficient to supply the whole demand. In this state of things, therefore, they are often as cheap as butcher’s–meat, or any other sort of animal food. But the whole quantity of poultry, which the farm in this manner produces without expence, must always be much smaller than the whole quantity of butcher’s–meat which is reared upon it; and in times of wealth and luxury what is rare, with only nearly equal merit, is always preferred to As wealth and luxury increase, therefore, in consequence of what is common. improvement and cultivation, the price of poultry gradually rises above that of butcher’s–meat, till at last it gets so high that it becomes profitable to cultivate land for the sake of feeding them. When it has got to this height, it cannot well go higher. If it did, more land would soon be turned to this purpose. In several provinces of France, the

10

[353]

feeding of poultry is considered as a very important article in rural œconomy, and sufficiently profitable to encourage the farmer to raise a considerable quantity of Indian corn and buck–wheat for this purpose. A middling farmer will there sometimes have four

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hundred fowls in his yard. The feeding of poultry seems scarce yet to be generally considered as a matter of so much importance in England. They are certainly, however, dearer in England than in France, as England receives considerable supplies from France. In the progress of improvement, the period at which every particular sort of animal food is dearest, must naturally be that which immediately precedes the general practice of cultivating land for the sake of raising it. For some time before this practice becomes general, the scarcity must necessarily raise the price. After it has become general, new methods of feeding are commonly fallen upon, which enable the farmer to raise upon the same quantity of ground a much greater quantity of that particular sort of animal food. The plenty not only obliges him to sell cheaper, but in consequence of these improvements he can afford to sell cheaper; for if he could not afford it, the plenty would not be of long continuance. It has been probably in this manner that the introduction of clover, turnips, carrots, cabbages, &c. has contributed to sink the common price of butcher’s–meat in the London market somewhat below what it was about the beginning of the last century.

11

[354] 9

The hog, that finds his food among ordure, and greedily devours many things rejected by every other useful animal, is, like poultry, originally kept as a save–all. As long as the number of such animals, which can thus be reared at little or no expence, is fully sufficient to supply the demand, this sort of butcher’s–meat comes to market at a much lower price than any other. But when the demand rises beyond what this quantity can supply, when it becomes necessary to raise food on purpose for feeding and fattening hogs, in the same manner as for feeding and fattening other cattle, the price necessarily rises, and becomes proportionably either higher or lower than that of other butcher’s– meat, according as the nature of the country, and the state of its agriculture, happen to render the feeding of hogs more or less expensive than that of other cattle. In France, the price of pork is nearly equal to that of beef. In most according to Mr. Buffon, parts of Great Britain it is at present somewhat higher.

12

10

The great rise in the price both of hogs and poultry has in Great Britain been frequently imputed to the diminution of the number of cottagers and other small occupiers of land; an event which has in every part of Europe been the immediate fore–runner of improvement and better cultivation, but which at the same time may have contributed to raise the price of those articles, both somewhat sooner and somewhat faster than it

[355]

As the poorest family can often maintain a cat or a dog, would otherwise have risen. without any expence; so the poorest occupiers of land can commonly maintain a few poultry, or a sow and a few pigs, at very little. The little offals of their own table, their whey, skimmed milk, and butter–milk, supply those animals with a part of their food, and they find the rest in the neighbouring fields without doing any sensible damage to any body. By diminishing the number of those small occupiers, therefore, the quantity of this sort of provisions which is thus produced at little or no expence, must certainly have been a good deal diminished, and their price must consequently have been raised both sooner and faster than it would otherwise have risen. Sooner or later, however, in the progress of improvement, it must at any rate have risen to the utmost height to which it is capable of rising; or to the price which pays the labour and expence of cultivating the land which furnishes them with food as well as these are paid upon the greater part of dotherd cultivated land.

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11

The business of the dairy, like the feeding of hogs and poultry, is originally carried on as a save–all. The cattle necessarily kept upon the farm, produce more milk than either the rearing of their own young, or the consumption of the farmer’s family requires; and they produce most at one particular season. But of all the productions of land, milk is perhaps the most perishable. In the warm season, when it is most abundant, it will

[356]

scarce keep four–and–twenty hours. The farmer, by making it into fresh butter, stores a small part of it for a week: by making it into salt butter, for a year: and by making it into cheese, he stores a much greater part of it for several years. Part of all these is reserved for the use of his own family. The rest goes to market, in order to find the best price which is to be had, and which can scarce be so low as to discourage him from sending thither whatever is over and above the use of his own family. If it is very low, indeed, he will be likely to manage his dairy in a very slovenly and dirty manner, and will scarce perhaps think it worth while to have a particular room or building on purpose for it, but will suffer the business to be carried on amidst the smoke, filth, and nastiness of his own kitchen; as was the case of almost all the farmers dairies in Scotland thirty or forty years ago, and as is the case of many of them still. The same causes which gradually raise the price of butcher’s–meat, the increase of the demand, and, in consequence of the improvement of the country, the diminution of the quantity which can be fed at little or no expence, raise, in the same manner, that of the produce of the dairy, of which the price naturally connects with that of butcher’s–meat, or with the expence of feeding cattle. The increase of price pays for more labour, care, and cleanliness. The dairy becomes more worthy of the farmer’s attention, and the quality of its produce gradually improves. The price at last gets so high that it becomes worth

[357]

while to employ some of the most fertile and best cultivated lands in feeding cattle merely for the purpose of the dairy; and when it has got to this height, it cannot well go higher. If it did, more land would soon be turned to this purpose. It seems to have got to this height through the greater part of England, where much good land is commonly employed in this manner. If you except the neighbourhood of a few considerable towns, it seems not yet to have got to this height any where in Scotland, where common farmers seldom employ much good land in raising food for cattle merely for the purpose of the dairy. The price of the produce, though it has risen very considerably within these few years, is probably still too low to admit of it. The inferiority of the quality, indeed, compared with that of the produce of English dairies, is fully equal to that of the price. But this inferiority of quality is, perhaps, rather the effect of this lowness of price than the cause of it. Though the quality was much better, the greater part of what is brought to market could not, I apprehend, in the present circumstances of the country, be disposed of at a much better price; and the present price, it is probable, would not pay the expence of the land and labour necessary for producing a much better quality. Through the greater part of England, notwithstanding the superiority of price, the dairy is not reckoned a more profitable employment of land than the raising of corn, or the fattening of cattle, the two great objects of agriculture. Through the greater part of Scotland, therefore, it cannot yet be eeven soe profitable.

[358] 12

The lands of no country, it is evident, can ever be compleatly cultivated and improved, till once the price of every produce, which human industry is obliged to raise upon them, has got so high as to pay for the expence of compleat improvement and cultivation. In order to do this, the price of each particular produce must be sufficient, first, to pay the

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rent of good corn land, as it is that which regulates the rent of the greater part of other cultivated land; and, secondly, to pay the labour and expence of the farmer as well as they are commonly paid upon good corn–land; or, in other words, to replace with the ordinary profits the stock which he employs about it. This rise in the price of each particular produce, must evidently be previous to the improvement and cultivation of the land which is destined for raising it. Gain is the end of all improvement, and nothing could deserve that name of which loss was to be the necessary consequence. But loss must be the necessary consequence of improving land for the sake of a produce of which the price could never bring back the expence. If the compleat improvement and cultivation of the country be, as it most certainly is, the greatest of all publick advantages, this rise in the price of all those different sorts of rude produce, instead of being considered as a publick calamity, ought to be regarded as the necessary forerunner and attendant of the greatest of all publick advantages.

14

13 [359]

This rise too in the nominal or money–price of all those different sorts of rude produce has been the effect, not of any degradation in the value of silver, but of a rise in their real price. They have become worth, not only a greater quantity of silver, but a greater quantity of labour and subsistence than before. As it costs a greater quantity of labour and subsistence to bring them to market, so when they are brought thither, they represent or are equivalent to a greater quantity.

Third Sort
1
The third and last sort of rude produce, of which the price naturally rises in the progress of improvement, is that in which the efficacy of human industry, in augmenting the quantity, is either limited or uncertain. Though the real price of this sort of rude produce, therefore, naturally tends to rise in the progress of improvement, yet, according as different accidents happen to render the efforts of human industry more or less successful in augmenting the quantity, it may happen sometimes even to fall, sometimes to continue the same in very different periods of improvement, and sometimes to rise more or less in the same period.

2

There are some sorts of rude produce which nature has rendered a kind of appendages to other sorts; so that the quantity of the one which any country can afford, is necessarily limited by that of the other. The quantity of wool or of raw hides, for example, which any country can afford, is necessarily limited by the number of great and small cattle that are kept in it. The state of its improvement, and the nature of its agriculture, again necessarily determine this number.

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3

The same causes, which, in the progress of improvement, gradually raise the price of butcher’s–meat, should have the same effect, it may be thought, upon the prices of wool and raw hides, and raise them too nearly in the same proportion. It probably would be so, if in the rude beginnings of improvement the market for the latter commodities was confined within as narrow bounds as that for the former. But the extent of their respective markets is commonly extremely different.

4

The market for butcher’s–meat is almost every–where confined to the country which

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produces it. Ireland, and some part of British America indeed, carry on a considerable trade in salt provisions; but they are, I believe, the only countries in the commercial world which do so, or which export to other countries any considerable part of their butcher’s–meat.

5

The market for wool and raw hides, on the contrary, is in the rude beginnings of improvement very seldom confined to the country which produces them. They can easily be transported to distant countries, wool without any preparation, and raw hides with very little: and as they are the materials of many manufactures, the industry of other

[361]

countries may occasion a demand for them, though that of the country which produces them might not occasion any.

6

In countries ill cultivated, and therefore but thinly inhabited, the price of the wool and the hide bears always a much greater proportion to that of the whole beast, than in countries where, improvement and population being further advanced, there is more demand for butcher’s–meat. Mr. Hume observes, that in the Saxon times, the fleece was estimated at two–fifths of the value of the whole sheep, and that this was much above the proportion of its present estimation. In some provinces of Spain, I have been assured, the sheep is frequently killed merely for the sake of the fleece and the tallow. The carcase is often left to rot upon the ground, or to be devoured by beasts and birds of prey. If this sometimes happens even in Spain, it happens almost constantly in Chili, at Buenos Ayres, and in many other parts of Spanish America, where the horned cattle are almost constantly killed merely for the sake of the hide and the tallow. too used to happen almost constantly in Hispaniola, while it was infested by the

1

2

This

Buccaneers, and before the settlement, improvement, and populousness of the French plantations (which now extend round the coast of almost the whole western half of the island) had given some value to the cattle of the Spaniards, who still continue to possess, not only the eastern part of the coast, but the whole inland and mountainous part of the country.

[362] 7

Though in the progress of improvement and population, the price of the whole beast necessarily rises, yet the price of the carcase is likely to be much more affected by this rise than that of the wool and the hide. The market for the carcase, being in the rude state of society confined always to the country which produces it, must necessarily be extended in proportion to the improvement and population of that country. But the market for the wool and the hides even of a barbarous country often extending to the whole commercial world, it can very seldom be enlarged in the same proportion. The state of the whole commercial world can seldom be much affected by the improvement of any particular country; and the market for such commodities may remain the same or very nearly the same, after such improvements, as before. It should, however, in the natural course of things rather upon the whole be somewhat extended in consequence of them. If the manufactures, especially, of which those commodities are the materials, should ever come to flourish in the country, the market, though it might not be much enlarged, would at least be brought much nearer to the place of growth than before; and the price of those materials might at least be increased by what had usually been the expence of transporting them to distant countries. Though it might not rise therefore in the same proportion as that of butcher’s–meat, it ought naturally to rise

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somewhat, and it ought certainly not to fall.

[363] 8

In England, however, notwithstanding the flourishing state of its woollen manufacture, the price of English wool has fallen very considerably since the time of Edward III. There are many authentick records which demonstrate that during the reign of that prince (towards the middle of the fourteenth century, or about 1339) what was reckoned the moderate and reasonable price of the tod or twenty–eight pounds of English wool was not less than ten shillings of the money of those times , containing, at the rate of twenty–pence the ounce, six ounces of silver Tower–weight, equal to about thirty shillings of our present money. In the present times, one–and–twenty shillings the tod may be reckoned a good price for very good English wool. The money–price of wool, therefore, in the time of Edward III, was to its money–price in the present times as ten to seven. The superiority of its real price was still greater. At the rate of six shillings and eight–pence the quarter, ten shillings was in those antient times the price of twelve bushels of wheat. At the rate of twenty–eight shillings the quarter, one–and–twenty shillings is in the present times the price of six bushels only. The proportion between the real prices of antient and modern times, therefore, is as twelve to six, or as two to one. In those antient times a tod of wool would have purchased twice the quantity of

*3

[364]

subsistence which it will purchase at present; and consequently twice the quantity of labour, if the real recompence of labour had been the same in both periods.

9

This degradation both in the real and nominal value of wool, could never have happened in consequence of the natural course of things. It has accordingly been the effect of

5 Secondly, of the permission of importing it from bSpainb duty free; Thirdly, of the
prohibition of exporting it from Ireland to any other country but England. In consequence of these regulations, the market for English wool, instead of being

violence and artifice: First, of the absolute prohibition of exporting wool from England;

4

6

somewhat extended in consequence of the improvement of England, has been confined to the home market, where the wool of cseveralc other countries is allowed to come into competition with it, and where that of Ireland is forced into competition with it. As the woollen manufactures too of Ireland are fully as much discouraged as is consistent with justice and fair dealing, the Irish can work up but a small part of their own wool at home, and are, therefore, obliged to send a greater proportion of it to Great Britain, the only market they are allowed.

7

10

I have not been able to find any such authentick records concerning the price of raw hides in antient times. Wool was commonly paid as a subsidy to the king, and its valuation in that subsidy ascertains, at least in some degree, what was its ordinary price. But this seems not to have been the case with raw hides. Fleetwood, however,

[365]

from an account in 1425, between the prior of Burcester Oxford and one of his canons, gives us their price, at least as it was stated, upon that particular occasion; viz. five ox hides at twelve shillings; five cow hides at seven shillings and three pence; thirty–six sheepd skins of two years old at nine shillings; sixteen ecalvese skins at two shillings. In 1425, twelve shillings contained about the same quantity of silver as four–and–
d

8

twenty shillings of our present money. An ox hide, therefore, was in this account valued at the same quantity of silver as 4s. ths of our present money. Its nominal price was a good deal lower than at present. But at the rate of six shillings and eight–pence the

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quarter, twelve shillings would in those times have purchased fourteen bushels and four–fifths of a bushel of wheat, which, at three and six–pence the bushel, would in the present times cost 51s. 4d. An ox hide, therefore, would in those times have purchased as much corn as ten shillings and three–pence would purchase at present. Its real value was equal to ten shillings and three–pence of our present money. In those antient times, when the cattle were half starved during the greater part of the winter, we cannot suppose that they were of a very large size. An ox hide which weighs four stone of sixteen pounds averdupois, is not in the present times reckoned a bad one; and in those antient times would probably have been reckoned a very good one. But at half a crown the stone, which at this moment (February, 1773) I understand to be the

[366]

common price, such a hide would at present cost only ten shillings. Though its nominal price, therefore, is higher in the present than it was in those antient times, its real price, the real quantity of subsistence which it will purchase or command, is rather somewhat lower. The price of cow hides, as stated in the above account, is nearly in the common proportion to that of ox hides. That of sheep skins is a good deal above it. They had probably been sold with the wool. That of calves skins, on the contrary, is greatly below it. In countries where the price of cattle is very low, the calves, which are not intended to be reared in order to keep up the stock, are generally killed very young; as was the case in Scotland twenty or thirty years ago. It saves the milk, which their price would not pay for. Their skins, therefore, are commonly good for little.

11

The price of raw hides is a good deal lower at present than it was a few years ago; owing probably to the taking off the duty upon seal skins, and to the allowing, for a limited time, the importation of raw hides from Ireland and from the plantations duty free, which was done in 1769. Take the whole of the present century at an average, their real price has probably been somewhat higher than it was in those antient times. The nature of the commodity renders it not quite so proper for being transported to distant markets as wool. It suffers more by keeping. A salted hide is reckoned inferior to a fresh one, and sells for a lower price. This circumstance must necessarily have some

9

[367]

tendency to sink the price of raw hides produced in a country which does not manufacture them, but is obliged to export them; and comparatively to raise that of those produced in a country which does manufacture them. It must have some tendency to sink their price in a barbarous, and to raise it in an improved and manufacturing country. It must have had some tendency therefore to sink it in antient, and to raise it in modern times. Our tanners besides have not been quite so successful as our clothiers, in convincing the wisdom of the nation, that the safety of the They commonwealth depends upon the prosperity of their particular manufacture. have accordingly been much less favoured. The exportation of raw hides has, indeed, been prohibited, and declared a nuisance:

10

11

countries has been subjected to a duty; and though this duty has been taken off from those of Ireland and the plantations (for the limited time of five years only), yet Ireland has not been confined to the market of Great Britain for the sale of its surplus hides, or of those which are not manufactured at home. The hides of common cattle have but within these few years been put among the enumerated commodities which the plantations can send nowhere but to the mother country; neither has the commerce of Ireland been in this case oppressed hitherto, in order to support the manufactures of Great Britain.

12

but their importation from foreign

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12 [368]

Whatever regulations tend to sink the price either of wool or of raw hides below what it naturally would be, must, in an improved and cultivated country, have some tendency to raise the price of butcher’s–meat. The price both of the great and small cattle, which are fed on improved and cultivated land, must be sufficient to pay the rent which the landlord, and the profit which the farmer has reason to expect from improved and cultivated land. If it is not, they will soon cease to feed them. Whatever part of this price, therefore, is not paid by the wool and the hide, must be paid by the carcase. The less there is paid for the one, the more must be paid for the other. In what manner this price is to be divided upon the different parts of the beast, is indifferent to the landlords and farmers, provided it is all paid to them. In an improved and cultivated country, therefore, their interest as landlords and farmers cannot be much affected by such regulations, though their interest as consumers may, by the rise in the price of It would be quite otherwise, however, in an unimproved and uncultivated provisions. country, where the greater part of the lands could be applied to no other purpose but the feeding of cattle, and where the wool and the hide made the principal part of the value of those cattle. Their interest as landlords and farmers would in this case be very deeply affected by such regulations, and their interest as consumers very little. The fall in the price of the wool and the hide, would not in this case raise the price of the carcase; because the greater part of the lands of the country being applicable to no

13

[369]

other purpose but the feeding of cattle, the same number would still continue to be fed. The same quantity of butcher’s–meat would still come to market. The demand for it would be no greater than before. Its price, therefore, would be the same as before. The whole price of cattle would fall, and along with it both the rent and the profit of all those lands of which cattle was the principal produce, that is, of the greater part of the lands of the country. The perpetual prohibition of the exportation of wool, which is commonly, would, in the then circumstances of the but very falsely, ascribed to Edward III, country, have been the most destructive regulation which could well have been thought of. It would not only have reduced the actual value of the greater part of the lands of the kingdom, but by reducing the price of the most important species of small cattle, it would have retarded very much its subsequent improvement.

14

13

The wool of Scotland fell very considerably in its price in consequence of the union with England, by which it was excluded from the great market of Europe, and confined to the The value of the greater part of the lands in the southern narrow one of Great Britain. counties of Scotland, which are chiefly a sheep country, would have been very deeply affected by this event, had not the rise in the price of butcher’s–meat fully compensated the fall in the price of wool.

15

14 [370]

As the efficacy of human industry, in increasing the quantity either of wool or of raw hides, is limited, so far as it depends upon the produce of the country where it is exerted; so it is uncertain so far as it depends upon the produce of other countries. It so far depends, not so much upon the quantity which they produce, as upon that which they do not manufacture; and upon the restraints which they may or may not think proper to impose upon the exportation of this sort of rude produce. These circumstances, as they are altogether independent of domestick industry, so they necessarily render the efficacy of its efforts more or less uncertain. In multiplying this sort of rude produce, therefore, the efficacy of human industry is not only limited, but

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uncertain.

15

In multiplying another very important sort of rude produce, the quantity of fish that is brought to market, it is likewise both limited and uncertain. It is limited by the local situation of the country, by the proximity or distance of its different provinces from the sea, by the number of its lakes and rivers, and by what may be called the fertility or barrenness of those seas, lakes and rivers, as to this sort of rude produce. As population increases, as the annual produce of the land and labour of the country grows greater and greater, there come to be more buyers of fish, and those buyers too have a greater quantity and variety of other goods, or, what is the same thing, the price of a greater quantity and variety of other goods, to buy with. But it will generally be impossible to supply the great and extended market without employing a quantity of labour greater

[371]

than in proportion to what had been requisite for supplying the narrow and confined one. A market which, from requiring only one thousand, comes to require annually ten thousand ton of fish, can seldom be supplied without employing more than ten times the quantity of labour which had before been sufficient to supply it. The fish must generally be sought for at a greater distance, larger vessels must be employed, and more expensive machinery of every kind made use of. The real price of this commodity, therefore, naturally rises in the progress of improvement. It has accordingly done so, I believe, more or less in every country.

16

Though the success of a particular day’s fishing may be a very uncertain matter, yet, the local situation of the country being supposed, the general efficacy of industry in bringing a certain quantity of fish to market, taking the course of a year, or of several years together, it may perhaps be thought, is certain enough; and it, no doubt, is so. As it depends more, however, upon the local situation of the country, than upon the state of its wealth and industry; as upon this account it may in different countries be the same in very different periods of improvement, and very different in the same period; its connection with the state of improvement is uncertain, and it is of this sort of uncertainty that I am here speaking.

17 [372]

In increasing the quantity of the different minerals and metals which are drawn from the bowels of the earth, that of the more precious ones particularly, the efficacy of human industry seems not to be limited, but to be altogether uncertain.

18

The quantity of the precious metals which is to be found in any country is not limited by any thing in its local situation, such as the fertility or barrenness of its own mines. Those metals frequently abound in countries which possess no mines. Their quantity in every particular country seems to depend upon two different circumstances; first, upon its power of purchasing, upon the state of its industry, upon the annual produce of its land and labour, in consequence of which it can afford to employ a greater or a smaller quantity of labour and subsistence in bringing or purchasing such superfluities as gold and silver, either from its own mines or from those of other countries; and, secondly, upon the fertility or barrenness of the mines which may happen at any particular time to supply the commercial world with those metals. The quantity of those metals in the countries most remote from the mines, must be more or less affected by this fertility or barrenness, on account of the easy and cheap transportation of those metals, of their

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small bulk and great value. Their quantity in China and Indostan must have been more or less affected by the abundance of the mines of America.

19
[373]

So far as their quantity in any particular country depends upon the former of those two circumstances (the power of purchasing), their real price, like that of all other luxuries and superfluities, is likely to rise with the wealth and im–provement of the country, and to fall with its poverty and depression. Countries which have a great quantity of labour and subsistence to spare, can afford to purchase any particular quantity of those metals at the expence of a greater quantity of labour and subsistence, than countries which have less to spare.

20

So far as their quantity in any particular country depends upon the latter of those two circumstances (the fertility or barrenness of the mines which happen to supply the commercial world) their real price, the real quantity of labour and subsistence which they will purchase or exchange for, will, no doubt, sink more or less in proportion to the fertility, and rise in proportion to the barrenness of those mines.

21

The fertility or barrenness of the mines, however, which may happen at any particular time to supply the commercial world, is a circumstance which, it is evident, may have no sort of connection with the state of industry in a particular country. It seems even to have no very necessary connection with that of the world in general. As arts and commerce, indeed, gradually spread themselves over a greater and a greater part of the earth, the search for new mines, being extended over a wider surface, may have somewhat a better chance for being successful, than when confined within narrower bounds. The discovery of new mines, however, as the old ones come to be gradually exhausted, is a matter of the greatest uncertainty, and such as no human skill or

[374]

industry can ensure. All indications, it is acknowledged, are doubtful, and the actual discovery and successful working of a new mine can alone ascertain the reality of its value, or even of its existence. In this search there seem to be no certain limits either to the possible success, or to the possible disappointment of human industry. In the course of a century or two, it is possible that new mines may be discovered more fertile than any that have ever yet been known; and it is just equally possible that the most fertile mine then known may be more barren than any that was wrought before the discovery of the mines of America. Whether the one or the other of those two events may happen to take place, is of very little importance to the real wealth and prosperity of the world, to the real value of the annual produce of the land and labour of mankind. Its nominal value, the quantity of gold and silver by which this annual produce could be expressed or represented, would, no doubt, be very different; but its real value, the real quantity of labour which it could purchase or command, would be precisely the same. A shilling might in the one case represent no more labour than a penny does at present; and a penny in the other might represent as much as a shilling does now. But in the one case he who had a shilling in his pocket, would be no richer than he who has a penny at present; and in the other he who had a penny would be just as rich as he who has a shilling now. The cheapness and abundance of gold and silver plate, would be the sole

[375]

advantage which the world could derive from the one event, and the dearness and scarcity of those trifling superfluities the only inconveniency it could suffer from the other.

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Conclusion of the Digression concerning the Variations in the Value of Silver
1
The greater part of the writers who have collected the money prices of things in antient times, seem to have considered the low money price of corn, and of goods in general, or, in other words, the high value of gold and silver, as a proof, not only of the scarcity of those metals, but of the poverty and barbarism of the country at the time when it took place. This notion is connected with the system of political œconomy which represents national wealth as consisting in the abundance, and national poverty in the scarcity of gold and silver; a system which I shall endeavour to explain and examine at great length in the fourth book of this enquiry. I shall only observe at present, that the high value of the precious metals can be no proof of the poverty or barbarism of any particular country at the time when it took place. It is a proof only of the barrenness of the mines which happened at that time to supply the commercial world. A poor country, as it cannot afford to buy more, so it can as little afford to pay dearer for gold and silver than a rich one; and the value of those metals, therefore, is not likely to be higher in

[376]

the former than in the latter. In China, a coun–try much richer than any part of Europe, the value of the precious metals is much higher than in any part of Europe. As the wealth of Europe, indeed, has increased greatly since the discovery of the mines of America, so the value of gold and silver has gradually diminished. This diminution of their value, however, has not been owing to the increase of the real wealth of Europe, of the annual produce of its land and labour, but to the accidental discovery of more abundant mines than any that were known before. The increase of the quantity of gold and silver in Europe, and the increase of its manufactures and agriculture, are two events which, though they have happened nearly about the same time, yet have arisen from very different causes, and have scarce any natural connection with one another. The one has arisen from a mere accident, in which neither prudence nor policy either had or could have any share: The other from the fall of the feudal system, and from the establishment of a government which afforded to industry, the only encouragement which it requires, some tolerable security that it shall enjoy the fruits of its own labour. Poland, where the feudal system still continues to take place, is at this day as beggarly a country as it was before the discovery of America. The money price of corn, however, has risen; the real value of the precious metals has fallen in Poland, in the same manner as in other parts of Europe. Their quantity, therefore, must have

1

2

3

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increased there as in other places, and nearly in the same proportion to the annual produce of its land and labour. This increase of the quantity of those metals, however, has not, it seems, increased that annual produce, has neither improved the manufactures and agriculture of the country, nor mended the circumstances of its inhabitants. Spain and Portugal, the countries which possess the mines, are, after Poland, perhaps, the two most beggarly countries in Europe. The value of the precious metals, however, must be lower in Spain and Portugal than in any other part of Europe; as they come from those countries to all other parts of Europe, loaded, not only with a freight and an insurance, but with the expence of smuggling, their exportation being either prohibited, or subjected to a duty. In proportion to the annual produce of the land and labour, therefore, their quantity must be greater in those countries than in any other part of Europe: Those countries, however, are poorer than the greater part of

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Europe. Though the feudal system has been abolished in Spain and Portugal, it has not been succeeded by a much better.

4

2

As the low value of gold and silver, therefore, is no proof of the wealth and flourishing state of the country where it takes place; so neither is their high value, or the low money price either of goods in general, or of corn in particular, any proof of its poverty and barbarism.

5

3 [378]

But though the low money price either of goods in general, or of corn in particular, be no proof of the poverty or barbarism of the times, the low money price of some particular sorts of goods, such as cattle, poultry, game of all kinds, a&c.a in proportion to that of corn, is a most decisive one. It clearly demonstrates, first, their great abundance in proportion to that of corn, and consequently the great extent of the land which they occupied in proportion to what was occupied by corn; and, secondly, the low value of this land in proportion to that of corn land, and consequently the uncultivated and unimproved state of the far greater part of the lands of the country. It clearly demonstrates that the stock and population of the country did not bear the same proportion to the extent of its territory, which they commonly do in civilized countries, and that society was at that time, and in that country, but in its infancy. From the high or low money price either of goods in general, or of corn in particular, we can infer only that the mines which at that time happened to supply the commercial world with gold and silver, were fertile or barren, not that the country was rich or poor. But from the high or low money–price of some sorts of goods in proportion to that of others, we can infer with a degree of probability that approaches almost to certainty, that it was rich or poor, that the greater part of its lands were improved or unimproved, and that it was either in a more or less barbarous state, or in a more or less civilized one.

4 [379]

Any rise in the money price of goods which proceeded altogether from the degradation of the value of silver, would affect all sorts of goods equally, and raise their price universally a third, or a fourth, or a fifth part higher, according as silver happened to lose a third, or a fourth, or a fifth part of its former value. But the rise in the price of provisions, which has been the subject of so much reasoning and conversation, does not affect all sorts of provisions equally. Taking the course of the present century at an average, the price of corn, it is acknowledged, even by those who account for this rise by the degradation of the value of silver, has risen much less than that of some other sorts of provisions. The rise in the price of those other sorts of provisions, therefore, cannot be owing altogether to the degradation of the value of silver. Some other causes must be taken into the account, and those which have been above assigned, will, perhaps, without having recourse to the supposed degradation of the value of silver, sufficiently explain this rise in those particular sorts of provisions of which the price has actually risen in proportion to that of corn.

6

5

As to the price of corn itself, it has, during the sixty–four first years of the present century, and before the late extraordinary course of bad seasons, been somewhat lower than it was during the sixty–four last years of the preceding century. This fact is attested, not only by the accounts of Windsor market, but by the publick fiars of all the different counties of Scotland, and by the accounts of several different markets in

7

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France, which have been collected with great diligence and fidelity by Mr. Messance, and

[380]

by Mr. Dupré de St. Maur. The evidence is more compleat than could well have been expected in a matter which is naturally so very difficult to be ascertained. As to the high price of corn during these last ten or twelve years, it can be sufficiently accounted for from the badness of the seasons, without supposing any degradation in the value of silver.

8

6

7

The opinion, therefore, that silver is continually sinking in its value, seems not to be founded upon any good observations, either upon the prices of corn, or upon those of other provisions.

8

The same quantity of silver, it may, perhaps, be said, will in the present times, even according to the account which has been here given, purchase a much smaller quantity of several sorts of provisions than it would have done during some part of the last century; and to ascertain whether this change be owing to a rise in the value of those goods, or to a fall in the value of silver, is only to establish a vain and useless distinction, which can be of no sort of service to the man who has only a certain quantity of silver to go to market with, or a certain fixed revenue in money. I certainly do not pretend that the knowledge of this distinction will enable him to buy cheaper. It may not, however, upon that account be altogether useless.

9 [381]

It may be of some use to the publick by affording an easy proof of the prosperous condition of the country. If the rise in the price of some sorts of provisions be owing altogether to a fall in the value of silver, it is owing to a circumstance from which nothing can be inferred but the fertility of the American mines. The real wealth of the country, the annual produce of its land and labour, may, notwithstanding this circumstance, be either gradually declining, as in Portugal and Poland; or gradually advancing, as in most other parts of Europe. But if this rise in the price of some sorts of provisions be owing to a rise in the real value of the land which produces them, to its increased fertility; or, in consequence of more extended improvement and good cultivation, to its having been rendered fit for producing corn; it is owing to a circumstance which indicates in the clearest manner the prosperous and advancing state of the country. The land constitutes by far the greatest, the most important, and the most durable part of the wealth of every extensive country. It may surely be of some use, or, at least, it may give some satisfaction to the Publick, to have so decisive a proof of the increasing value of by far the greatest, the most important, and the most durable part of its wealth.

10

It may too be of some use to the Publick in regulating the pecuniary reward of some of its inferior servants. If this rise in the price of some sorts of provisions be owing to a fall in the value of silver, their pecuniary reward, provided it was not too large before, ought certainly to be augmented in proportion to the extent of this fall. If it is not augmented,

[382]

their real re–compence will evidently be so much diminished. But if this rise of price is owing to the increased value, in consequence of the improved fertility of the land which produces such provisions, it becomes a much nicer matter to judge either in what proportion any pecuniary reward ought to be augmented, or whether it ought to be

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augmented at all. The extension of improvement and cultivation, as it necessarily raises more or less, in proportion to the price of corn, that of every sort of animal food, so it as necessarily lowers that of, I believe, every sort of vegetable food. It raises the price of animal food; because a great part of the land which produces it, being rendered fit for producing corn, must afford to the landlord and farmer the rent and profit of corn–land. It lowers the price of vegetable food; because, by increasing the fertility of the land, it increases its abundance. The improvements of agriculture too introduce many sorts of vegetable food, which, requiring less land and not more labour than corn, come much cheaper to market. Such are potatoes and maize, or what is called Indian corn, the two most important improvements which the agriculture of Europe, perhaps, which Europe itself, has received from the great extension of its commerce and navigation. Many sorts of vegetable food, besides, which in the rude state of agriculture are confined to the kitchen–garden, and raised only by the spade, come in its improved state to be introduced into common fields, and to be raised by the plough: such as

9

[383]

turnips, carrots, cab–bages, &c. If in the progress of improvement, therefore, the real price of one species of food necessarily rises, that of another as necessarily falls, and it becomes a matter of more nicety to judge how far the rise in the one may be When the real price of butcher’s–meat has once compensated by the fall in the other. got to its height (which, with regard to every sort, except, perhaps, that of hogs flesh, it seems to have done through a great part of England, more than a century ago), any rise which can afterwards happen in that of any other sort of animal food, cannot much affect the circumstances of the inferior ranks of people. The circumstances of the poor through a great part of England cannot surely be so much distressed by any rise in the price of poultry, fish, wild–fowl, or venison, as they must be relieved by the fall in that of potatoes.

10

11

In the present season of scarcity the high price of corn no doubt distresses the poor. But in times of moderate plenty, when corn is at its ordinary or average price, the natural rise in the price of any other sort of rude produce cannot much affect them. They suffer more, perhaps, by the artificial rise which has been occasioned by taxes in the price of some manufactured commodities; as of salt, soap, leather, candles, malt, beer, and ale, &c.

11

Effects of the Progress of Improvement upon the real Price of Manufactures
1
It is the natural effect of improvement, however, to diminish gradually the real price of almost all manufactures. That of the manufacturing workmanship diminishes, perhaps, in all of them without exception. In consequence of better machinery, of greater dexterity, and of a more proper division and distribution of work, all of which are the natural effects of improvement, a much smaller quantity of labour becomes requisite for executing any particular piece of work; and though, in consequence of the flourishing circumstances of the society, the real price of labour should rise very considerably, yet the great diminution of the quantity will generally much more than compensate the greatest rise which can happen in the price.

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2

There are, indeed, a few manufactures, in which the necessary rise in the real price of the rude materials will more than compensate all the advantages which improvement can introduce into the execution of the work. In carpenters and joiners work, and in the coarser sort of cabinet work, the necessary rise in the real price of barren timber, in consequence of the improvement of land, will more than compensate all the advantages which can be derived from the best machinery, the greatest dexterity, and the most proper division and distribution of work.

[385] 3

But in all cases in which the real price of the rude materials either does not rise at all, or does not rise very much, that of the manufactured commodity sinks very considerably. This diminution of price has, in the course of the present and preceding century, been most remarkable in those manufactures of which the materials are the coarser metals. A better movement of a watch, than about the middle of the last century could have been bought for twenty pounds, may now perhaps be had for twenty shillings. In the work of cutlers and locksmiths, in all the toys which are made of the coarser metals, and in all those goods which are commonly known by the name of Birmingham and Sheffield ware, there has been, during the same period, a very great reduction of price, though not altogether so great as in watch–work. It has, however, been sufficient to astonish the workmen of every other part of Europe, who in many cases acknowledge that they can produce no work of equal goodness for double, or even for triple the price. There are perhaps no manufactures in which the division of labour can be carried further, or in which the machinery employed admits of a greater variety of improvements, than those of which the materials are the coarser metals.

4

2

5
[386]

In the clothing manufacture there has, during the same period, been no such sensible reduction of price. The price of superfine cloth, I have been assured, on the contrary, has, within these five–and–twenty or thirty years, risen somewhat in proportion to its quality; owing, it was said, to a considerable rise in the price of material, which consists altogether of Spanish wool. That of the Yorkshire cloth, which is made altogether of English wool, is said indeed, during the course of the present century, to have fallen a good deal in proportion to its quality. Quality, however, is so very disputable a matter, that I look upon all ainformationa of this kind as somewhat uncertain. In the clothing manufacture, the division of labour is nearly the same now as it was a century ago, and the machinery employed is not very different. There may, however, have been some small improvements in both, which may have occasioned some reduction of price.
b

3

But the reductionb will appear much more sensible and undeniable, if we compare the price of this manufacture in the present times with what it was in a much remoter period, towards the end of the fifteenth century, when the labour was probably much less subdivided, and the machinery employed much more imperfect than it is at present.

In 1487, being the 4th of Henry VII. it was enacted, that “whosoever shall sell by retail a broad yard of the finest scarlet grained, or of other grained cloth of the finest making, above sixteen shillings, shall forfeit forty shillings for every yard so sold.” Sixteen shillings, therefore, containing about the same quantity of silver as four–and–twenty

4

[387]

shillings of our present money, was, at that time, reckoned not an unreasonable price

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for a yard of the finest cloth; and as this is a sumptuary law, such cloth, it is probable, had usually been sold somewhat dearer. A guinea may be reckoned the highest price in the present times. Even though the quality of the cloths, therefore, should be supposed equal, and that of the present times is most probably much superior, yet, even upon this supposition, the money price of the finest cloth appears to have been considerably reduced since the end of the fifteenth century. But its real price has been much more reduced. Six shillings and eight–pence was then, and long afterwards, reckoned the average price of a quarter of wheat. Sixteen shillings, therefore, was the price of two quarters and more than three bushels of wheat. Valuing a quarter of wheat in the present times at eight–and–twenty shillings, the real price of a yard of fine cloth must, in those times, have been equal to at least three pounds six shillings and sixpence of our present money. The man who bought it must have parted with the command of a quantity of labour and subsistence equal to what that sum would purchase in the present times.

8

The reduction in the real price of the coarse manufacture, though considerable, has not been so great as in that of the fine.

In 1463, being the 3d of Edward IV. it was enacted, that “no servant in husbandry, nor common labourer, nor servant to any artificer inhabiting out of a city or burgh, shall use

5

[388]

or wear in their cloathing any cloth above two shillings the broad yard.” In the 3d of Edward IV. two shillings contained very nearly the same quantity of silver as four of our present money. But the Yorkshire cloth which is now sold at four shillings the yard, is probably much superior to any that was then made for the wearing of the very poorest order of common servants. Even the money price of their cloathing, therefore, may, in proportion to the quality, be somewhat cheaper in the present than it was in those antient times. The real price is certainly a good deal cheaper. Ten pence was then reckoned what is called the moderate and reasonable price of a bushel of wheat. Two shillings, therefore, was the price of two bushels and near two pecks of wheat, which in the present times, at three shillings and sixpence the bushel, would be worth eight shillings and nine–pence. For a yard of this cloth the poor servant must have parted with the power of purchasing a quantity of subsistence equal to what eight shillings and nine–pence would purchase in the present times. This is a sumptuary law too, restraining the luxury and extravagance of the poor. Their cloathing, therefore, had commonly been much more expensive.

10

The same order of people are, by the same law, prohibited from wearing hose, of which the price should exceed fourteen–pence the pair, equal to about eight–and–twenty pence of our present money. But fourteen–pence was in those times the price of a bushel and near two pecks of wheat; which, in the present times, at three and sixpence the bushel, would cost five shillings and three–pence. We should in the present times consider this as a very high price for a pair of stockings to a servant of the poorest and lowest order. He must, however, in those times have paid what was really equivalent to this price for them.

[389]

11

In the time of Edward IV. the art of knitting stockings was probably not known in any part of Europe. Their hose were made of common cloth, which may have been one of

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the causes of their dearness. The first person that wore stockings in England is said to have been Queen Elizabeth. She received them as a present from the Spanish ambassador.

12

Both in the coarse and in the fine woollen manufacture, the machinery employed was much more imperfect in those antient, than it is in the present times. It has since received three very capital improvements, besides, probably, many smaller ones of which it may be difficult to ascertain either the number or the importance. The three capital improvements are; first, The exchange of the rock and spindle for the spinning– wheel, which, with the same quantity of labour, will perform more than double the quantity of work. Secondly, the use of several very cveryc ngenious machines which facilitate and abridge in a still greater proportion the winding of the worsted and woollen yarn, or the proper arrangement of the warp and woof before they are put into the

6

[390]

loom; an operation which, pre–vious to the invention of those machines, must have been extremely tedious and troublesome. Thirdly, The employment of the fulling mill for thickening the cloth, instead of treading it in water. Neither wind nor water mills of any kind were known in England so early as the beginning of the sixteenth century, nor, so far as I know, in any other part of Europe north of the Alps. introduced into Italy some time before.

7

They have been

13

The consideration of these circumstances may, perhaps, in some measure explain to us why the real price both of the coarse and of the fine manufacture, was so much higher in those antient, than it is in the present times. It cost a greater quantity of labour to bring the goods to market. When they were brought thither, therefore, they must have purchased or exchanged for the price of a greater quantity.

14

The coarse manufacture probably was, in those antient times, carried on in England, in the same manner as it always has been in countries where arts and manufactures are in their infancy. It was probably a household manufacture, in which every different part of the work was occasionally performed by all the different members of almost every private family; but so as to be their work only when they had nothing else to do, and not to be the principal business from which any of them derived the greater part of their subsistence. The work which is performed in this manner, it has already been

[391]

observed, comes always much cheaper to market than that which is the principal or sole fund of the workman’s subsistence. The fine manufacture, on the other hand, was not in those times carried on in England, but in the rich and commercial country of Flanders; and it was probably conducted then, in the same manner as now, by people who derived the whole, or the principal part of their subsistence from it. It was besides a foreign manufacture, and must have paid some duty, the antient custom of tonnage and poundage at least, to the king. This duty, indeed, would not probably be very great. It was not then the policy of Europe to restrain, by high duties, the importation of foreign manufactures, but rather to encourage it, in order that merchants might be enabled to supply, at as easy a rate as possible, the great men with the conveniences and luxuries which they wanted, and which the industry of their own country could not afford them.

8

9

15

The consideration of these circumstances may perhaps in some measure explain to us

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why, in those antient times, the real price of the coarse manufacture was, in proportion to that of the fine, so much lower than in the present times.

CONCLUSION Of The CHAPTER
I shall conclude this very long chapter with observing that every improvement in the circumstances of the society tends either directly or indirectly to raise the real rent of land, to increase the real wealth of the landlord, his power of purchasing the labour, or the produce of the labour of other people.

1

2

The extension of improvement and cultivation tends to raise it directly. The landlord’s share of the produce necessarily increases with the increase of the produce.

2

3

That rise in the real price of those parts of the rude produce of land, which is first the effect of extended improvement and cultivation, and afterwards the cause of their being still further extended, the rise in the price of cattle, for example, tends too to raise the rent of land directly, and in a still greater proportion. The real value of the landlord’s share, his real command of the labour of other people, not only rises with the real value of the produce, but the proportion of his share to the whole produce rises with it. That produce, after the rise in its real price, requires no more labour to collect it than before. A smaller proportion of it will, therefore, be sufficient to replace, with the ordinary profit, the stock which employs that labour. A greater proportion of it must, consequently, belong to the landlord.

[393] 4 All those improvements in the productive powers of labour, which tend directly to reduce the real
price of manufactures, tend indirectly to raise the real rent of land. The landlord exchanges that part of his rude produce, which is over and above his own consumption, or what comes to the same thing, the price of that part of it, for manufactured produce. Whatever reduces the real price of the latter, raises that of the former. An equal quantity of the former becomes thereby equivalent to a greater quantity of the latter; and the landlord is enabled to purchase a greater quantity of the conveniences, ornaments, or luxuries, which he has occasion for.

5

Every increase in the real wealth of the society, every increase in the quantity of useful labour employed within it, tends indirectly to raise the real rent of land. A certain proportion of this labour naturally goes to the land. A greater number of men and cattle are employed in its cultivation, the produce increases with the increase of the stock which is thus employed in raising it, and the rent increases with the produce.

6

The contrary circumstances, the neglect of cultivation and improvement, the fall in the real price of any part of the rude produce of land, the rise in the real price of manufactures from the decay of manufacturing art and industry, the declension of the real wealth of the society, all tend, on

the [394] other hand, to lower the real rent of land, to reduce the real wealth of the landlord, to diminish his power of purchasing either the labour, or the produce of the labour of other people.

7

The whole annual produce of the land and labour of every country, or what comes to the same thing, the whole price of that annual produce, naturally divides itself, it has already been

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observed, into three parts; the rent of land, the wages of labour, and the profits of stock; and constitutes a revenue to three different orders of people; to those who live by rent, to those who live by wages, and to those who live by profit. These are the three great, original and constituent orders of every civilized society, from whose revenue that of every other order is ultimately derived.

3

8

The interest of the first of those three great orders, it appears from what has been just now said, is strictly and inseparably connected with the general interest of the society. Whatever either promotes or obstructs the one, necessarily promotes or obstructs the other. When the publick deliberates concerning any regulation of commerce or police, the proprietors of land never can mislead it, with a view to promote the interest of their own particular order; at least, if they have any tolerable knowledge of that interest. They are, indeed, too often defective in this tolerable knowledge. They are the only one of the three orders whose revenue costs them neither labour

4

nor [395] care, but comes to them, as it were, of its own accord, and independent of any plan or 5 which is necessary in order to foresee and understand the consequences of any publick regulation.

project of their own. That indolence, which is the natural effect of the ease and security of their situation, renders them too often, not only ignorant, but incapable of that application of mind

6

9

The interest of the second order, that of those who live by wages, is as strictly connected with the interest of the society as that of the first. The wages of the labourer, it has already been shewn, are never so high as when the demand for labour is continually rising, or when the quantity employed is every year increasing considerably. When this real wealth of the society becomes stationary, his wages are soon reduced to what is barely enough to enable him to bring up a family, or to continue the race of labourers. When the society declines, they fall even below this. The order of proprietors may, perhaps, gain more by the prosperity of the society, than that of labourers: but there is no order that suffers so cruelly from its decline. But though the interest of the labourer is strictly connected with that of the society, he is incapable either of comprehending that interest, or of understanding its connection with his own. His condition leaves him no time to receive the necessary information, and his education and habits are commonly such as to render

7

8

[396]

him unfit to judge even though he was fully informed. In the publick deliberations, therefore, his voice is little heard and less regarded, except upon some particular occasions, when his clamour is animated, set on, and supported by his employers, not for his, but their own particular purposes.

9

10 His employers constitute the third order, that of those who live by profit. It is the stock that is

employed for the sake of profit, which puts into motion the greater part of the useful labour of every society. The plans and projects of the employers of stock regulate and direct all the most important operations of labour, and profit is the end proposed by all those plans and projects. But the rate of profit does not, like rent and wages, rise with the prosperity, and fall with the declension of the society. On the contrary, it is naturally low in rich, and high in poor countries, and it is always highest in the countries which are going fastest to ruin. The interest of this third order, therefore, has not the same connection with the general interest of the society as that of

Merchants and master manufacturers are, in this order, the two classes of the other two. people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of the publick consideration. As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part

10

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of country gentlemen. As their thoughts, however, are commonly exercised rather about the interest of their own particular branch of business, than about that of the society, their judgment, [397] even when given with the greatest candour (which it has not been upon every occasion) is much more to be depended upon with regard to the former of those two objects, than with regard to the latter. Their superiority over the country gentleman is, not so much in their knowledge of the publick interest, as in their having a better knowledge of their own interest than he has of his. It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and persuaded him to give up both his own interest and that of the publick, from a very simple but honest conviction, that their interest, and not his, was the interest of the The interest of the dealers, however, in any particular branch of trade or publick. manufactures, is always in some respects different from, and even opposite to, that of the publick. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the publick; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow–citizens. The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most [398] scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the publick, who have generally an interest to deceive and even to oppress the publick, and who accordingly have, upon many occasions, both deceived and oppressed it.

11

12

13 14

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15 16 17

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18 19 20 21 22

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a

23

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b c d e f

24

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25
Prices of the Quarter of nine Bushels of the best or highest priced Wheat at Windsor Market, on [403] Lady–Day and Michaelmas, from 1595 to 1764, both inclusive; the Price of each Year being the medium between the highest Prices of those Two Market Days.

26

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Endnotes
[a–a ] improvements 1 [1 ] The first considered exposition of the term division of labour by a modern writer was probably by Sir William Petty: ‘Those who have the command of the Sea Trade, may Work at easier Freight with more profit, than others at greater: for as Cloth must be cheaper made, when one Cards, another Spins, another Weaves, another Draws, another Dresses, another Presses and Packs; than when all the Operations above–mentioned, were clumsily performed by the same hand; so those who command the Trade of Shipping, can build long slight Ships for carrying Masts, Fir–Timber, Boards, Balks, etc.’ (Political Arithmetick (London, 1690), 19, in C. H. Hull, The Economic Writings of Sir William Petty (Cambridge, 1899), i. 260). ‘For in so vast a City Manufactures will beget one another, and each Manufacture will be divided into as many parts as possible, whereby the work of each Artisan will be simple and easie: As for Example. In the making of a Watch, If one Man shall make the Wheels, another the Spring, another shall Engrave the Dial–plate, and another shall make the Cases, then the Watch will be better and cheaper, than if the whole Work be put upon any one Man.’ (Another Essay in Political Arithmetick, concerning the Growth of the City of London (London, 1683), 36–7, in C. H. Hull, ii.473.) Later use was by Mandeville and Harris: ‘There are many Sets of Hands in the Nation, that, not wanting proper Materials, would be able in less than half a Year to produce, fit out, and navigate a First–Rate [Man of War]: yet it is certain, that this Task would be impracticable, if it was not divided and subdivided into a great Variety of different Labours; and it is as certain, that none of these Labours require any other, than working Men of ordinary Capacities.’ (B. Mandeville, The Fable of the Bees, pt. ii.149, ed. F. B. Kaye (Oxford, 1924), ii.142.) ‘No number of Men, when once they enjoy Quiet, and no Man needs to fear his Neighbour, will be long without learning to divide and subdivide their Labour.’ (Ibid., pt. ii.335, ed. Kaye ii.284.) ‘The advantages accruing to mankind from their betaking themselves severally to different occupations, are very great and obvious: For thereby, each becoming expert and skilful in his own particular art; they are enabled to furnish one another with the products of their respective labours, performed in a much better manner, and with much less toil, than any one of them could do of himself.’ (J. Harris, An Essay

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upon Money and Coins. (London, 1757), i. 16.) The advantages of the division of labour are also emphasized by Turgot in sections III and IV of his Reflections on the Formation and Distribution of Riches (1766). The translation used is by R. L. Meek and included in his Turgot on Progress, Sociology and Economics (Cambridge, 1973). [b–b ] in them 1 [2 ] Cf. ED 2.4: ‘to give a very frivolous instance, if all the parts of a pin were to be made by one man, if the same person was to dig the metall out of the mine, seperate it from the ore, forge it, split it into small rods, then spin these rods into wire, and last of all make that wire into pins, a man perhaps could with his utmost industry scarce make a pin in a year.’ Smith added that even where the wire alone was furnished an unskilled man could probably make only about 20 pins a day. Similar examples occur in LJ (A) vi.29–30 and LJ (B) 213–14, ed. Cannan 163. It is remarked in LJ (A) vi.50 that the wire used in pin manufacture generally came from Sweden. [3 ] Eighteen operations are described in the Encyclopédie (1755), v.804–7. See also Chambers’ Cyclopaedia (4th ed. 1741), s.v. Pin. [4 ] A very similar passage occurs in ED 2.4 which also concludes that where the processes of manufacture are divided among 18 persons, each should in effect be capable of producing 2,000 pins in a day. These figures are also cited in LJ (A) vi.30 and 51 and LJ (B) 214, ed. Cannan 163. In referring to the disadvantages of the division of labour in LJ (B) 329, ed. Cannan 255, the lecturer mentions the example of a person engaged on the 17th part of a pin or the 80th part of a button. See below, V.i.f.50. [5 ] See below, I.x.b.52. [6 ] The same point is made at IV.ix.35. The limitation imposed on the division of labour in agriculture is stated to require greater knowledge on the part of the workman at I.x.c.24. At the same time, agriculture was regarded by Smith as the most productive form of investment, II.v.12. [7 ] LJ (A) vi.30–1 comments that: ‘Agriculture however does not admit of this separation of employment in the same degree as the manufactures of wool or lint or iron work. The same man must often be the plougher of the land, sower, harrower, reaper and thresher of the corn (tho’ here there may be some distinctions.)’ Similar points are made in LJ (B) 214, ed. Cannan 164. [8 ] The two preceding sentences follow the text of ED 2.5 very closely. [c–c ] the 1 [d–d ] lands 1 [e–e ] lands 1 [f–f ] 2–6

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[g–g ] 2–6 [h–h ] 2–6 [9 ] ED 2.5 ends with the statement that: ‘The corn of France is fully as good and in the provinces where it grows rather cheaper than that of England, at least during ordinary seasons. But the toys of England, their watches, their cutlery ware, their locks & hinges of doors, their buckles and buttons are in accuracy, solidity, and perfection of work out of all comparison superior to those of France, and cheaper too in the same degree of goodness.’ A précis of this argument appears in LJ (A) vi.31–2, and LJ (B) 214, ed. Cannan 164; and see below, I.xi.o.4, where Smith states that manufactures which use the coarser metals have probably the greatest scope for the division of labour. ED 2.6 and 7 are omitted from the WN. In these passages Smith elaborated on the advantages of the division of labour in pin making and added that these advantages were such as to suggest that any rich country which faced a loss of markets in international trade to a poor one ‘must have been guilty of some great error in its police.’ There is no corresponding passage in LJ (B), but a similar argument occurs in LJ (A) vi.34. [i–i ] in 6 [j–j ] 2–6 [k ] in consequence of the division of labour, 1 [10 ] This paragraph is evidently based on ED 2.8. Similar points appear in LJ (A) vi.38; LJ (B) 215–16, ed. Cannan 166. The advantages are also cited in the Encyclopédie (1755), i.713–17. [11 ] This whole paragraph follows ED 2.9, save that the boy is there said to have been 19 years old. A similar argument occurs in LJ (A) vi.38, where a nailsmith of 15 is said to be capable of producing 3,000–4,000 nails in a day. See also LJ (B) 216, ed. Cannan 166: A country smith not accustomed to make nails will work very hard for 3 or 400 a day, and these too very bad. But a boy used to it will easily make 2000 and these incomparably better; yet the improvement of dexterity in this very complex manufacture can never be equal to that in others. A nail–maker changes postures, blows the bellows, changes tools etca. and therefore the quantity produced cannot be so great as in manufactures of pins and buttons, where the work is reduced to simple operations. (The manufacture of nails was common in central and east Scotland. In the village of Pathhead and Gallatown near Kirkcaldy a number of nailers worked domestically, using iron supplied by merchants from Dysart. The growth of the iron industry in central Scotland provided local supplies later.) [12 ] Cf. ED 2.10: ‘A man of great spirit and activity, when he is hard pushed upon some particular occasion, will pass with the greatest rapidity from one sort of work to another through a great variety of businesses. Even a man of spirit and activity, however, must be hard pushed

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before he can do this.’ [13 ] Smith often juxtaposes the terms ‘naturally’ and ‘necessarily’. See, for example, I.viii.57, III.i.3, IV.i.30, IV.ii.4, 6, IV.vii.c.80, V.i.b.12, V.i.f.24, V.i.g.23. [14 ] The preceding two sentences follow the concluding passages of ED 2.10 very closely. Similar arguments appear in LJ (A) vi.39–40 and LJ (B) 216–17, ed. Cannan 166–7. [15 ] Smith cites three major improvements apart from the fire engines mentioned below, in I.xi.o.12, and see also II.ii.7. The ‘condensing engine’ and ‘what is founded upon it, the wind gun’ are cited as ‘ingenious and expensive machines’ in External Senses, 16. Cf. ED 2.11: ‘By means of the plough two men, with the assistance of three horses, will cultivate more ground than twenty could do with the spade. A miller and his servant, with a wind or water mill, will at their ease, grind more corn than eight men could do, with the severest labour, by hand mills.’ A similar example occurs in LJ (B) 217, ed. Cannan 167, save that it is said that the miller and his servant ‘will do more with the water miln than a dozen men with the hand miln, tho’ it too be a machine’. LJ (B) does not mention the windmill and it is also interesting to note that the example provided at LJ (A) vi.40 is exactly the same as that provided in ED. It is stated at I.xi.o.12 that neither wind nor water mills were known in England at the beginning of the sixteenth century. Cf. Montesquieu, Esprit des Lois, trans. Thomas Nugent, ed. F. Neumann (New York, 1959), XXIII.xv.3, where it is stated that machines are not always useful, for example, in cases where their effect is to reduce employment. He added that ‘if water–mills were not everywhere established, I should not have believed them so useful as is pretended’. In commenting on this remark Sir James Steuart confirmed that the advantages of using machines were ‘so palpable that I need not insist upon them’, especially in the current situation of Europe. He did, however, agree that the introduction of machines could cause problems of employment in the very short run, and that they might have adverse consequences in an economy incapable of further growth. See especially the Principles of Political Oeconomy (London, 1767), I.xix. [l ] therefore, 1 [m–m ] 2–6 [16 ] Exactly these views are expressed in ED 2.11 and LJ (B) 217, ed. Cannan 167. The brief statement in LJ (A) vi.41 reads that ‘When one is employed constantly on one thing his mind will naturally be employed in devising the most proper means of improving it.’ [n–n ] employed 1 [17 ] It is stated at IV.ix.47 that invention of this kind is generally the work of freemen. On the other hand Smith argues at V.i.f.50 that the mental faculties of the workers are likely to be damaged by the division of labour, thus affecting the flow of invention from this source. [o–o ] common 1 [18 ] Cf. LJ (A) vi.54: ‘if we go into the workhouse of any manufacturer in the new works at Sheffield, Manchester, or Birmingham, or even some towns in Scotland, and enquire concerning

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the machines, they will tell you that such or such an one was invented by some common workman.’ See also Astronomy, II.11: ‘When we enter the work–houses of the most common artizans; such as dyers, brewers, distillers; we observe a number of appearances, which present themselves in an order that seems to us very strange and wonderful.’ [19 ] In the Fourth Dialogue, Cleo refers to ‘those Engines that raise Water by the Help of Fire; the Steam you know, is that which forces it up.’ Mandeville, The Fable of the Bees, pt. ii.181–2, ed. Kaye ii.167. Fire engine was the name for the earliest steam engines. The story that follows seems untrue. See T. K. Derry and T. I. Williams, A Short History of Technology (Oxford, 1960), 316–19. [20 ] In general, Smith concluded that machines would tend to become simpler as the result of improvement; a point made in Astronomy, IV.19 and First Formation of Languages, 41. He also commented in LRBL i.v.34, ed. Lothian 11, that ‘machines are at first vastly complex but gradually the different parts are more connected and supplied by one another.’ In ED 2.11 Smith ascribes the invention of the Drill Plow to the farmer while claiming that some ‘miserable slave’ probably produced the original hand–mill (cf. below, IV.ix.47). On the other hand, some improvements were ascribed to those who made the instruments involved, as distinct from using them, and to the ‘successive discoveries of time and experience, and of the ingenuity of different artists’. This subject is briefly mentioned in LJ (B) 217–18, ed. Cannan 167. LJ (A) vi.42–3 provides a more elaborate illustration of the kind found in ED, while stating that the inventions of the mill and plough are so old that history gives no account of them (54). [21 ] The ‘fabrication of the instruments of trade’ is described as a specialized function at IV.viii.1. [22 ] Cf. ED. 2.11. Smith here suggests that it was probably a philosopher who first thought of harnessing both wind and water, especially the former, for the purposes of milling. Smith added that while the application of powers already known was not beyond the ability of the ingenious artist, innovation amounting to ‘the application of new powers, which are altogether unknown’ is the contribution of the philosopher (i.e. scientist): When an artist makes any such discovery he showes himself to be not a meer artist but a real philosopher, whatever may be his nominal profession. It was a real philosopher only who could invent the fire–engine, and first form the idea of producing so great an effect by a power in nature which had never before been thought of. Many inferior artists, employed in the fabric of this wonderful machine, may afterwards discover more happy methods of applying that power than those first made use of by its illustrious inventer. In a note to the passage just cited W. R. Scott suggested that Smith was probably referring to James Watt. Similar points regarding the role of the philosopher are made in LJ (A) vi.42–3, and more briefly in LJ (B) 218, ed. Cannan 167–8. Mandeville (The Fable of the Bees, pt. ii.152, ed. Kaye ii.144) was more sceptical with regard to the rôle of the philosopher: ‘They are very seldom the same Sort of People, those that invent Arts, and Improvements in them, and those that enquire into the Reason of Things: this latter is most commonly practis’d by such, as are idle and indolent, that are fond of Retirement, hate

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Business, and take delight in Speculation: whereas none succeed oftener in the first, than active, stirring, and laborious Men, such as will put their Hand to the Plough, try Experiments, and give all their Attention to what they are about.’ [23 ] The last two paragraphs are considered in ED 2.11, but in a form which suggests that this section of the WN was considerably redrafted, although the preceding three sentences correspond very closely to the concluding sentences of ED 2.11. In the ED Smith provides examples drawn from the separate trades of ‘mechanical, chemical, astronomical, physical, metaphysical, moral, political, commercial, and critical philosophers’. LJ (A) vi.43 includes a shorter list, but mentions ‘ethical’ and ‘theological’ philosophers. [24 ] This sentence corresponds to the opening sentence of ED 2.6 save that Smith there refers to an ‘immense multiplication’ and ‘all civilised societies’. He also alluded to ‘the great inequalities of property’ in the modern state. See below, p. 24 n. 29. [25 ] Related arguments occur in LJ (A) vi.16–17; LJ (B) 211–12, ed. Cannan 161–3. The example of the ‘coarse blue woolen coat’ is cited in ED 2.1, LJ (A) vi.21 and LJ (B) 211, ed. Cannan 161. Cf. Mandeville (The Fable of the Bees, pt. i.182–3, ed. Kaye i.169–70): ‘A Man would be laugh’d at, that should discover Luxury in the plain Dress of a poor Creature that walks along in a thick Parish Gown and a coarse Shirt underneath it; and yet what a number of People, how many different Trades, and what a variety of Skill and Tools must be employed to have the most ordinary Yorkshire Cloth? What depth of Thought and Ingenuity, what Toil and Labour, and what length of Time must it have cost, before Man could learn from a Seed to raise and prepare so useful a Product as Linen.’ Cf. ibid., part i.411, ed. Kaye i.356: ‘What a Bustle is there to be made in several Parts of the World, before a fine Scarlet or crimson Cloth can be produced, what Multiplicity of Trades and Artificers must be employ’dl’ [26 ] ED 2.1 refers to the variety of labour needed to ‘produce that very simple machine, the sheers of the clipper’. [27 ] ‘’tis obvious that for the support of human life, to allay the painful cravings of the appetites, and to afford any of those agreeable external enjoyments which our nature is capable of, a great many external things are requisite; such as food, cloathing, habitations, many utensils, and various furniture, which cannot be obtained without a great deal of art and labour, and the friendly aids of our fellows.’ (Francis Hutcheson, A System of Moral Philosophy (London, 1755), i.287). John Locke (Essay on Civil Government (3rd ed. 1698), Works (London, 1823), v.363) also noted that: ‘Twoud be a strange catalogue of things, that industry provided and made use of, about every loaf of bread, before it came to our use, if we could trace them; iron, wood, leather, bark timber, stone, bricks, coals, lime, cloth, dyeing, drugs, pitch, tar, masts, ropes, and all the materials made use of in the ship, that brought any of the commodities used by any of the workmen, to any part of the work: all which it would be almost impossible, at least too long, to reckon up. See also Thomas Mun, England’s Treasure by Forraigne Trade (London, 1664), iii.12. [28 ] Cf. Mandeville (The Fable of the Bees, pt. i.181, ed. Kaye i.169): ‘If we trace the most

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flourishing Nations in their Origin, we shall find that in the remote Beginnings of every Society, the richest and most considerable Men among them were a great while destitute of a great many Comforts of Life that are now enjoy’d by the meanest and most humble Wretches.’ [29 ] The phrase ‘absolute master’ occurs in ED 2.1 in contrasting the luxury of the common day–labourer in England with that of ‘many an Indian prince, the absolute master of the lives and liberties of a thousand naked savages’. The same paragraph also contains a contrast with the ‘chief of a savage nation in North America’. LJ (A) vi.21, 23 repeats the former example. Cf. LJ (B) 212, ed. Cannan 162. It is also remarked at 287, ed. Cannan 223, that one explanation of the contrast is to be found in the fact that ‘An Indian has not so much as a pick–ax, a spade, nor a shovel, or any thing else but his own labour.’ There is a considerable difference in the order in which the argument of ED and this part of the WN develops. For example, ED opens chapter 2 with an analysis which is very similar to that set out in the last two paragraphs of this chapter. It is then argued that while it cannot be difficult to explain the contrast between the poor savage and the modern rich (i.e. by reference to the division of labour), yet ‘how it comes about that the labourer and the peasant should likewise be better provided is not perhaps so easily understood’. Smith further illustrates the difficulty by reference to the ‘oppressive inequality’ of the modern state; a theme which is developed at considerable length (mainly in 2.2,3) before the paradox is resolved by reference to arguments similar to those developed in the first nine paragraphs of this chapter. In LJ (A) and (B) the argument follows a similar order to that found in ED, save that the discussion opens in each case with an account of the ‘natural wants of mankind’, introducing by this means the general point that even the simplest wants require a multitude of hands before they can be satisfied. The ‘natural wants’ thesis would, presumably, have figured in the (missing) first chapter of ED. See LJ (A) vi.8–18; LJ (B) 206–13, ed. Cannan 157–63. The link between the development of productive forces and the natural wants of man also features in Hume’s essays ‘Of Commerce’ and ‘Of Refinement in the Arts’. [1 ] LJ (B) 218–19, ed. Cannan 168 reads: ‘We cannot imagine this to have been an effect of human prudence. It was indeed made a law by Sesostratis that every man should follow the employment of his father. But this is by no means suitable to the dispositions of human nature and can never long take place. Everyone is fond of being a gentleman, be his father what he would.’ The law is also mentioned in LJ (A) vi.54. See below, I.vii.31 and IV.ix.43. [2 ] This paragraph closely follows the first three sentences in ED 2.12. The propensity to truck and barter is also mentioned in LJ (A) vi.44, 48 and LJ (B) 219 ff., ed. Cannan 169. Cf. LJ (B) 300–1, ed. Cannan 232: ‘that principle in the mind which prompts to truck, barter and exchange, tho’ it is the great foundation of arts, commerce and the division of labour, yet it is not marked with any thing amiable. To perform any thing, or to give any thing without a reward is always generous and noble, but to barter one thing for another is mean.’ In a Letter from Governor Pownall to Adam Smith, being an Examination of Several Points of Doctrine laid down in his Inquiry, into the Nature and Causes of the Wealth of Nations (London, 1776), the author objected that the analysis of this chapter stopped short in ascribing the division of labour directly to a propensity to barter (4–5). Pownall, a former Governor of Massachusetts, also criticized Smith’s views on labour as a measure of value, paper money, the employments of capital, colonies, etc. Smith acknowledged Pownall’s work in Letter 182 addressed to Pownall, dated 19 January 1777. In Letter 208 addressed to Andreas Holt, dated 26 October 1780 Smith remarked that: ‘In the

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second edition I flattered myself that I had obviated all the objections of Governor Pownal. I find however, he is by no means satisfied, and as Authors are not much disposed to alter the opinions they have once published, I am not much surprized at it.’ There is very little evidence to suggest that Smith materially altered his views in response to Pownall, but see below, p. 50, n. 15. [3 ] In LJ (B) 221, ed. Cannan 171, Smith argued in referring to the division of labour that ‘The real foundation of it is that principle to persuade which so much prevails in human nature.’ The same point is made in LJ (A) vi.56. [4 ] The example of the greyhounds occurs in LJ (B) 219, ed. Cannan 169. LJ (A) vi.44 uses the example of ‘hounds in a chace’ and again at 57. Cf. LJ (B) 222, ed. Cannan 171: ‘Sometimes, indeed, animals seem to act in concert, but there is never any thing like a bargain among them. Monkeys when they rob a garden throw the fruit from one to another till they deposit it in the hoard, but there is always a scramble about the division of the booty, and usually some of them are killed.’ In LJ (A) vi.57 a similar example is based on the Cape of Good Hope. [5 ] In ED 2.12 an additional sentence is added at this point: ‘When any uncommon misfortune befals it, its piteous and doleful cries will sometimes engage its fellows, and sometimes prevail even upon man, to relieve it.’ With this exception, and the first sentence of this paragraph, the whole of the preceding material follows ED 2.12 very closely and in places verbatim. The remainder of the paragraph follows ED 2.12 to its close. [6 ] ‘To expect, that others should serve us for nothing, is unreasonable; therefore all Commerce, that Men can have together, must be a continual bartering of one thing for another. The Seller, who transfers the Property of a Thing, has his own Interest as much at Heart as the Buyer, who purchases that Property; and, if you want or like a thing, the Owner of it, whatever Stock of Provision he may have of the same, or how greatly soever you may stand in need of it, will never part with it, but for a Consideration, which he likes better, than he does the thing you want.’ (Mandeville, The Fable of the Bees, pt. ii. 421–2, ed. Kaye, ii.349.) [7 ] Cf. LJ (B) 220, ed. Cannan 169: ‘The brewer and the baker serve us not from benevolence but from selflove. No man but a beggar depends on benevolence, and even they would die in a week were their entire dependance upon it.’ Also LJ (A) vi.46: ‘You do not adress his [the brewer’s and baker’s] humanity but his self–love. Beggars are the only persons who depend on charity for their subsistence; neither do they do so alltogether. For what by their supplications they have got from one, they exchange for something else they more want. They give their old cloaths to a one for lodging, the mony they have got to another for bread, and thus even they make use of bargain and exchange.’ [8 ] Cf. LJ (A) vi.46: ‘This bartering and trucking spirit is the cause of the separation of trades and the improvements in arts. A savage who supports himself by hunting, having made some more arrows than he had occasion for, gives them in a present to some of his companions, who in return give him some of the venison they have catched; and he at last finding that by making arrows and giving them to his neighbour, as he happens to make them better than ordinary, he can get more venison than by his own hunting, he lays it aside unless it be for his diversion, and becomes an arrow–maker.’ Similar points are made in LJ (B) 220, ed. Cannan 169–70, and a similar passage occurs in ED 2.13. Mandeville (The Fable of the Bees, pt. ii. 335–6, ed. Kaye

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ii.284) also noted that: ‘Man’, as I have hinted before, naturally loves to imitate what he sees others do, which is the reason that savage People all do the same thing: This hinders them from meliorating their Condition, though they are always wishing for it: But if one will wholly apply himself to the making of Bows and Arrows, whilst another provides Food, a third builds Huts, a fourth makes Garments, and a fifth Utensils, they do not only become useful to one another, but the Callings and Employments themselves will in the same Number of Years receive much greater Improvements, than if all had been promiscously follow’d by every one of the Five.’ [9 ] Cf. Hutcheson (System, i.288–9): ‘ ‘Nay ’tis well known that the produce of the labours of any given number, twenty, for instance, in providing the necessaries or conveniences of life, shall be much greater by assigning to one, a certain sort of work of one kind, in which he will soon acquire skill and dexterity, and to another assigning work of a different kind, than if each one of the twenty were obliged to employ himself, by turns, in all the different sorts of labour requisite for his subsistence, without sufficient dexterity in any. In the former method each procures a great quantity of goods of one kind, and can exchange a part of it for such goods obtained by the labours of others as he shall stand in need of. One grows expert in tillage, another in pasture and breeding cattle, a third in masonry, a fourth in the chace, a fifth in iron–works, a sixth in the arts of the loom, and so on throughout the rest. Thus all are supplied by means of barter with the work of complete artists. In the other method scarce any one could be dextrous and skilful in any one sort of labour.’ [10 ] This paragraph is based on ED 2.13, which it follows very closely. [11 ] ‘When we consider how nearly equal all men are in their bodily force, and even in their mental powers and faculties, till cultivated by education; we must necessarily allow, that nothing but their consent could, at first, associate them together, and subject them to any authority.’ (D. Hume, ‘Of the Original Contract’, in Political Discourses (1752); Essays Moral, Political and Literary, ed. T. H. Green and T. H. Grose (London, 1882), i.444–5.) Cf. Treatise of Human Nature, III.i: ‘The skin, pores, muscles, and nerves of a day–labourer, are different from those of a man of quality: so are his sentiments, actions, and manners. The different stations of life influence the whole fabric, external and internal; and these different stations arise necessarily, because uniformly, from the necessary and uniform principles of human nature.’ On the other hand, Harris (Essay, i.15) believed that: ‘Men are endued with various talents and propensities, which naturally dispose and fit them for different occupations; and are . . . under a necessity of betaking themselves to particular arts and employments, from their inability of otherwise acquiring all the necessaries they want, with ease and comfort. This creates a dependance of one man upon another, and naturally unites men into societies.’ [12 ] Cf. V.i.f 51. LJ (A) vi.47–8 reads: ‘No two persons can be more different in their genius as a philosopher and a porter, but there does not seem to have been any original difference betwixt them. For the five or six first years of their lives there was hardly any apparent difference: their companions looked upon them as persons of pretty much the same stamp. No wisdom and ingenuity appeared in the one superior to that of the other. From about that time a difference was thought to be perceived in them. Their manner of life began to affect them, and without doubt had it not been for this they would have continued the same.’ Similar arguments appear in LJ (B) 220, ed. Cannan 170. There is an interesting variant on this point in LJ (B) 327, ed. Cannan 253, where Smith commented on the fact that ‘probity and punctuality’ generally accompany the

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introduction of commerce. He added that varying degrees of these qualities were ‘not at all to be imputed to national character as some pretend. There is no natural reason why an Englishman or a Scotchman should not be as punctual in performing agreements as a Dutchman. It is far more reduceable to self interest, that general principle which regulates the actions of every man . . .’ [a–a ] 1, 4e–6 [13 ] The whole of the preceding paragraph follows ED 2.14 to this point. In ED, however, the sentence ends with ‘. . . any great difference in character’ and goes on: ‘It is upon this account that a much greater uniformity of character is to be observed among savages than among civilized nations. Among the former there is scarce any division of labour and consequently no remarkable difference of employments; whereas among the latter there is an almost infinite variety of occupations, of which the respective duties bear scarce any resemblance to one another. What a perfect uniformity of character do we find in all the heroes described by Ossian? And what a variety of manners, on the contrary, in those who are celebrated by Homer? Ossian plainly describes the exploits of a nation of hunters, while Homer paints the actions of two nations, who, tho’ far from being perfectly civilised, were yet much advanced beyond the age of shepherds, who cultivated lands, who built cities, and among whom he mentions many different trades and occupations, such as masons, carpenters, smiths, merchants, soothsayers, priests, physicians.’ The texts then assume a similar form until the end of the following paragraph of the WN. The uniformity of character found among savages is also mentioned in LJ (A) vi.48, LJ (B) 221, ed. Cannan 170. [14 ] The text of ED continues beyond this point to include an additional folio (N8) which elaborates on the interdependence between the philosopher and the porter and the advantages to be gained from these separate trades. This passage opens with the statement that ‘Every thing would be dearer if before it was exposed to sale it had been carried packt and unpackt by hands less able and less dexterous, who for an equal quantity of work, would have taken more time, and must consequently have required more wages, which must have been charged upon the goods.’ It is interesting to note that FA begins with the words ‘. . . who for an equal quantity of work’ and then continues in parallel with ED for some 25 lines. The fragment then proceeds to elaborate on the link between the division of labour and the extent of the market (a subject which is not mentioned in ED) whereas ED continues with the preceding theme. It is possible that the fragments represent an alternative, and a later, rewriting of this section of Smith’s work. The inter–dependence of philosopher and porter is briefly mentioned in LJ (A) vi.49, LJ (B) 221, ed. Cannan 171. [1 ] The subjects of this chapter, as observed in the previous note, do not figure in ED. In LJ (A) vi Smith did develop the argument that the division of labour depends on the extent of the market, but did so in the course of offering a recapitulation of his treatment of price, i.e. outwith his main discussion of the division of labour. In LJ (B) the discussion of the extent of the market is brief, but integrated with the wider discussion of the division of labour. FA and FB thus provide the most elaborate examination of the subject; a fact which lends some support to the view that the fragments may have been written after ED. Paragraphs 1 and 2 of this chapter appear to be based on FA from the first complete paragraph of the latter ‘As it is the power of exchanging . . . ’ while paragraphs 3–7 show the same close connection with the whole of FB.

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[2 ] LJ (B) 222, ed. Cannan 172: ‘From all that has been said we may observe that the division of labour must always be proportioned to the extent of commerce.’ In LJ (A) vi.63 it is remarked that the division of labour ‘is greater or less according to the market’. [3 ] Cf. LJ (A) ii.40: ‘It is found that society must be pretty far advanced before the different trades can all find subsistence: . . . And to this day in the remote and deserted parts of the country, a weaver or a smith, besides the exercise of his trade, cultivates a small farm, and in that manner exercises two trades; that of a farmer and that of a weaver.’ [4 ] The degree of correspondence between the preceding passages and FA ceases at this point and there is a long passage from the beginning of the following sentence, and ending 22 lines below (‘a ship navigated by six’) which has no counterpart in the fragment. This passage amounts to about three hundred words, which would make about one folio page in the hand of the amanuensis used. Smith may, therefore, have decided to omit the two final pages of FA and introduce a new page which is now lost. The passage from FA which is omitted from the WN had gone on to illustrate the link between the division of labour and the extent of the market by reference to primitive communities such as the North American Indians and the Hottentots, Arabs, and Tartars. In speaking of the Hottentots he pointed out that there was some separation of employments such as the tailor, physician, and smith, but that the people involved were principally, but not entirely supported by them. It was in this connection that Smith made the interesting point that ‘The compleat division of labour however, is posteriour to the invention even of agriculture.’ [5 ] See I.x.c.8 where it is stated that country labourers were excluded from the statute of apprenticeship by judicial interpretation, as a result of the nature of the employment. [6 ] LJ (A) vi.64 notes that ‘A wright in the country is a cart–wright, a house carpenter, a square wright or cabinet maker and a carver in wood; each of which in a town makes a separate business. A merchant in Glasgow or Aberdeen who deals in linnen will have in his ware–house, Irish, Scots and Hamburg linnens, but at London there are separate dealers in each of these.’ [7 ] Smith provides a further example, that of the shoemaker, at IV.ix.45. [8 ] ‘Great Cities are usually built on the seacoast or on the banks of large Rivers for the convenience of transport; because water–carriage of the produce and merchandise necessary for the subsistence and comfort of the inhabitants is much cheaper than Carriages and Land Transport.’ (R. Cantillon, Essai sur la Nature du Commerce (1755), 22–3; edited and translated by Henry Higgs (London, 1931), 19.) See below, II.v.33 and III.iii.20. While Smith gives a prominent place to navigation in explaining the historical origins of cities and manufactures in III.iii, he did not neglect the importance of land carriage. It is pointed out in LJ (B) 223, ed. Cannan 172, that ‘Since the mending of roads in England 40 or 50 years ago, its opulence has increased extremely.’ In LJ (A) vi.65 he commented on the problem of bad roads and remarked that ‘hence we see that the turnpikes of England have within these 30 or 40 years increased the opulence of the inland parts’. The advantages of good roads are also emphasized in I.xi.b.5 and V.i.d.17. [9 ] The remainder of this paragraph finds a close parallel in the opening passages of FB, save

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that 8 or 10 men sailing from the port of Leith can transport 200 tons between Edinburgh and London more cheaply than ‘Sixty six narrow wheeled wagons drawn by three hundred & ninety horses & attended by a hundred & thirty two men; or than forty broad wheeled wagons drawn by three hundred & twenty horses & attended by eighty men.’ Cf. LJ (B) 223, ed. Cannan 172: ‘Water carriage is another convenience as by it 300 ton can be conveyed at the expence of the tare and wear of the vessel, and the wages of 5 or 6 men, and that too in a shorter time than by a 100 waggons which will take 6 horses and a man each.’ In LJ (A) vi.66 Smith compares the expense of a ship of 200 tons navigated by four or five men with that incurred in the use of wagons. [a ] is 1 [b–b ] carried on 1 [10 ] Smith may exaggerate the relative advantage of water–carriage, particularly in his example of the costs of carriage between London and Edinburgh. Carriage by sea had its own dangers: natural hazards; pilfering; privateering in time of war. Fine woollen goods were often sent by land in spite of its other disadvantages (cf. IV.viii.21). Smith was writing at the end of the first major phase of passing turnpike acts, but before the improvements which followed were fully evident. Coaching times, a fairly reliable indicator of improvement, show the change. Edinburgh and London were about four days apart in the mid–eighteenth century; only 60 hours by 1786. Smith’s concern over the contribution of navigable rivers is more to the point. He was writing at the end of an age when rivers played a more important part in the economic life of Britain than they had ever done before or since. [c–c ] was 1 [d ] together 1 [e–e ] 2–6 [11 ] This sentence appears verbatim in FB, which adds: ‘What James the sixth of Scotland said of the county of Fife, of which the inland parts were at that time very ill while the sea coast was extremely well cultivated, that it was like a coarse woollen coat edged with gold lace, might still be said of the greater part of our North American colonies.’ See below, I.ix.11. [12 ] The passage from the beginning of this paragraph follows FB very closely, and often verbatim, although there is nothing corresponding to the two following sentences. [13 ] In LJ (A) iv.60–2 and LJ (B) 31, ed. Cannan 22 the early economic development of Greece is attributed to its natural advantages including ease of communication. Smith added that ‘Most of the European countries have most part of the same advantages. They are divided by rivers and branches of the sea, and are naturally fit for the cultivation of the soil and other arts.’ The development of the arts and sciences in classical Greece was attributed to its early economic advance in LJ (A) iv.60, Astronomy, III.4 and, LRBL ii.117–9, ed. Lothian 132–3. [14 ] This paragraph is evidently based on FB, which goes on, however, to conclude with the

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statement that ‘Agriculture and manufactures too seem to have been of very great antiquity in some of the maritime provinces of China & in the province of Bengal in the East Indies. All these were countries very much of the same nature with Egypt, cut by innumerable canals which afford them an immense inland navigation.’ LJ (A) iii.47 also remarks with regard to China, Egypt, and Bengal that ‘These countries are all remarkably fruitful. The banks of the Nile and the Ganges are overflowed by . . . rivers and yield immense crops, 3 or 4 in a year. This as there must be plenty of food and subsistence for man must . . . promote population, as the number of men is proportion’d to the quantity of subsistence.’ [f–f ] break themselves into many 1 [15 ] Smith comments on the inland navigation of China and Indostan at I.xi.g.28, and links the concern of these governments with canal and road improvement to their reliance on land–taxes at V.ii.d.5. He mentions that China was not eminent for foreign trade at II.v.22 and IV.iii.c.11, and comments on the limitations thereby imposed on her economic growth at I.ix.15, IV.ix.40,41. However, it is stated that at least some trade was carried on by foreigners at III.i.7 and IV.ix.45. [16 ] Smith comments on the limited improvement in Arabia due to the poorness of the soil and difficulties of transport and uses this point to explain why the Arabs had not advanced beyond the shepherd state in LJ (A) iv.36, 56–62; see also LJ (B) 303, ed. Cannan 234: ‘in Asia and other eastern countries; all inland commerce is carried on by great caravans, consisting of several thousands, for mutual defence, with waggons etca.’ The passages from LJ (A) iv above cited make it plain that the preconditions for economic development include fertility of the soil, ease of defence, and of communication where the latter provides an opportunity for the export of surpluses. In LJ (A) iv.53 Smith also comments that the Tartars ‘have indeed some of the largest rivers in the world’ while adding that they ‘have always been a state of shepherds, which they will always be from the nature of their country, which is dry and raised above the sea, with few rivers, tho’ some very large ones, and the weather and the air is too cold for the produce of any grain.’ See also 62, and cf. LJ (B) 30–1, ed. Cannan 22. [g ] one 1 [1 ] In both sets of lectures and the ED Smith considers the analysis of money immediately after that of market and natural price (which forms the subjects of I.vii. below). The subjects of this chapter, e.g. with regard to the inconvenience of barter, the usefulness of the metals as a medium of exchange, the need for coinage, debasement, etc., are considered in LJ (A) vi.97–117, LJ (B) 235–44, ed. Cannan 182–90, ED 4.1–3. In ED 4, however, Smith planned to introduce at this point a discussion of banks and paper money (the subjects of II.ii below) before proceeding directly to the examination of the fallacy that opulence consists in money (the subjects of IV). The lectures also follow this order of argument, save that LJ (B) includes an account of John Law’s scheme (see below, II.ii.78) and of the Bank of Amsterdam (below IV.iii.b). In ED Smith styled chapter 4 ‘Of money, its nature, origin and history, considered first, as the measure of value, and secondly as the instrument of commerce’ and remarked that ‘Under the first head I have little to say that is very new or particular; except a general history of the coins of France, England, & Scotland: the different changes they have undergone: their causes and effects.’ [2 ] It is remarked at I.xi.g.26 that the economy of Peru had been based on barter and that

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‘there was accordingly scarce any division of labour among them’. See also IV.vii.b.7. In LJ (A) ii.53 Smith cites the ‘Negroes on the Coast of Guinea’ as still operating a barter economy. [3 ] Cleomanes, In The Fable of the Bees, Sixth Dialogue (pt. ii.422, ed. Kaye ii.349), asks: ‘Which way shall I persuade a Man to serve me, when the Service, I can repay him in, is such as he does not want or care for? . . . Money obviates and takes away all those Difficulties, by being an acceptable Reward for all the Services Men can do to one another.’ See also Harris, Essay, i.34–6. [4 ] See IV.i.2 where Smith comments on the Tartar economy and the use of cattle as a measure of value. The Greek economy at the time of the Trojan War is described as having just left the shepherd state, V.i.b.16. [a–a ] a 1 [5 ] ‘From Glaucus did Zeus, son of Cronos, take away his wits, seeing he made exchange of armour with Diomedes, son of Tydeus, giving golden for bronze, the worth of an hundred oxen for the worth of nine.’ (Homer, Iliad, vi.234–6, translated by A. T. Murray in Loeb Classical Library (1965) i.278–9.) The example of Glaucus and Diomede appears in LJ (A) vi.98 where Smith also adds a comment on the use of sheep as money in Italy and especially Tuscany. (Cf. LJ (B) 235, ed. Cannan 183 where the Greek cattle are said to have been black cattle.) Smith comments on the use of the metals as money in LJ (B) 238–9, ed. Cannan 185, and LJ (A) vi.99, 105, Montesquieu also noted that the Athenians made use of oxen and the Romans of sheep (Esprit, XXII.ii.2). [6 ] The use of salt in Abyssinia is mentioned by Montesquieu, Esprit, XXII.i, note. He also suggests that it was used by the Moors in Africa in exchange for gold. [7 ] Cantillon pointed out that ‘Tobacco, Sugar, and Cocoa’ had been used as money in the American colonies (Essai, 145, ed. Higgs 111). Harris also reviews the problems of barter, Essay, i.34–5, and goes on (42) to comment on the use of particular commodities such as salt or ‘the small shells called by us couries’ in barbarous countries such as Africa. [8 ] Harris continued, Essay, i.43–4: ‘For the purpose of universal commerce, metals seem the fittest materials for a standard measure, or money; as copper, silver, or gold; they having all the properties above required: They are moreover divisible into minute parts, which parts retain nevertheless an intrinsic value, in proportion to their quantity or weight; because those parts may, without injuring the metal, be again united together into a greater mass. These metals are durable, and also susceptible of any form, mark, or impression; and are convertible from money or coins, into utensils of various kinds; and from these, into money again.’ See also Cantillon, Essai, I.xvii and II.i; Montesquieu, Esprit, XXII.ii, and John Law, Money and Trade Considered (Edinburgh, 1705), 8–9. [9 ] See below, I.v.24. [10 ] The examples of Rome and Sparta appear in LJ (A) vi.105 and similar points are made in LJ (B) 237, ed. Cannan 184–5. See also Cantillon, Essai, 143–4, ed. Higgs 109.

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[ * ] bPlin. Hist. Nat. lib. 33. cap. 3.b [‘King Servius was the first to stamp a design on bronze; previously according to Timaeus, at Rome they used raw metal.’ Pliny, Natural History, XXXIII. xiii translated by H. Rackham in Loeb Classical Library (1952), ix. 37.] [c–c ] one Remus 1 [d–d ] author 1 [e ] them 1 [f–f ] the trouble 1 [11 ] Similar points are made by Harris, Essay, i.48. Pufendorf (citing the authority of Aristotle) also comments on the advantages of coined money, De Jure, V.i.12. The same arguments appear in his De Officio, I.xiv and cf. Grotius, De Jure Belli, II.xii.17. See Aristotle, Politics I, 1372a (translated by William Ellis in Everyman Library (1912), 16): ‘Barter introduced the use of money . . . for which reason they invented something to exchange with each other which they should mutually give and take, that being really valuable itself, should have the additional advantage of being of easy conveyance, for the purposes of life, as iron and silver, or anything else of the same nature: and this at first passed in value simply according to its weight or size, but in process of time it had a certain stamp, to save the trouble of weighing, which stamp expressed its value.’ Cf. ‘. . . as silver can be combined with Iron, Lead, Tin, Copper, etc. which are not such scarce Metals and are mined at less expense, the exchange of Silver was subject to much fraud, and this caused several Kingdoms to establish Mints in order to certify by a public coinage the true quantity of silver that each coin contains and to return to individuals who bring bars or ingots of Silver to it the same quantity in coins bearing a stamp or certificate of the true quantity of Silver they contain.’ Cantillon, Essai, 135–6, ed. Higgs 103: Hutcheson reviews the problems of barter, the advantages of the metals as an acceptable equivalent in exchange, and the necessity of coinage (System, II.xii). Similar arguments are developed in his Short Introduction to Moral Philosophy (Glasgow, 1747), II.xii. [12 ] The aulanger sealed cloth which met prescribed standards and so ensured uniformity of production. 10 Anne, c.23 (1711) in Statutes of the Realm, ix.682–4; 10 Anne, c.21 in Ruffhead’s edition provided for the stamping of linen in Scotland. 13 George I, c.26 (1726) detailed the standard length and breadth of cloth. See below, I.x.c.13. [13 ] The subjects of the preceding paragraph are considered in LJ (A) vi.108–9 and LJ (B) 239, ed. Cannan 185. Cf. LJ (A) vi.114: ‘It was necessary that the government should be at the trouble and expence of coinage; no other could find their interest in it. The stamp gives it no additionall value; it merely ascertains the value. The government found it in their interest to be at that expence, as money facilitated taxes and the intercourse by commerce, which as it enriched the people was beneficial to the government.’ See below, I.v.38, where it is noted that the coinage was free in England. [14 ] ‘And Ephron answered Abraham . . . the land is worth four hundred shekels of silver . . . and Abraham weighed to Ephron the silver which he had named . . . four hundred shekels of

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silver, current money with the merchant. And the field of Ephron, which was in Machpelah . . . were made sure unto Abraham for a possession.’ (Genesis 23: 14–18.) [15 ] ‘The revenues of the king seem to have consisted chiefly in his demesnes, which were large; and in the tolls and imports which he probably levied at discretion on the boroughs and sea–ports, that lay within his demesnes.’ (D. Hume, The History of England (London, 1778), i.225.) [16 ] ‘. . . when King William the First, for the better pay of his Warriors, caused the Firmes, which till his time, had for the most part been answered in Victuals, to be converted in Pecuniam Numeratam . . . the Money afterwards declining, and becoming worse, it was Ordained That the Firmes of Manors should not only be paid ad Scalam, but also ad Pensam, which latter was the paying as much money for a Pound Sterling as weighed Twelve Ounces Troy.’ (W. Lowndes, Report containing an Essay for the Amendment of the Silver Coins (London, 1695), 4.) But as H. R. Loyn has pointed out, ‘money was in general use for the last four centuries of Anglo–Saxon England’ (Anglo–Saxon England and the Norman Conquest (London, 1962), 117). [17 ] See IV.ix.47 where Smith comments on the price of the ‘finer sort’ of manufactures in ancient Rome, and below I.v.24. [18 ] These points appear in LJ (A) vi.111 and LJ (B) 239, ed. Cannan 186. [19 ] A similar point is made in LJ (A) vi.112 and LJ (B) 240, ed. Cannan 187. [20 ] ‘. . . the Tower weight does not seem to have been taken away before the 18th year of the king’s reign [Henry VIII]’ (M. Folkes, A Table of English Silver Coins (London, 1745), 20). Harris commented that ‘The Tower weight continued in use at the mint there, from the conquest till the 18th year of the reign of Henry VIII; at which time it was laid aside, and the Troy weight introduced in its stead’ (Essay, i.50). [21 ] The subjects of this sentence are considered in LJ (A) vi.111 and LJ (B) 240, ed. Cannan 187. LJ (B) also adds at 304, ed. Cannan 234, that ‘Till the sixteenth century all commerce was carried on by fairs. The fairs of Bartholemew, of Leipsic, of Troy in Champaigne, and even of Glasgow, are much talked of in antiquity.’ In the latter passage from LJ (B) Smith cited the use of fairs and staple towns as factors which contributed to the slow progress of opulence in Europe. [22 ] The statute is cited to the same end by Harris, Essay, i.50. Smith’s library had a copy of the Statutes at Large from Magna Charta to the Twentieth Year of the Reign of King George III, 13 vols. (London, 1769–80). In the text (I.xi.e.20) Smith refers to this edition of the Statutes by Ruffhead and takes his other references from it. In the present edition statutes are cited according to the Statutes of the Realm for the period covered by that edition, until the end of the reign of Queen Anne in 1713, and a cross–reference is given to Ruffhead. Thereafter Ruffhead’s edition is used. A ‘Table of Variances’ between the two editions is in The Chronological Table of the Statutes from which the dates of statutes are taken. The Assize of Bread and Ale, quoted here, is given various dates. Statutes of the Realm, i.199, n., gives the date as uncertain, but recognizes that the printed copies, including Ruffhead’s, attributes it to 51 Henry III, which would make the date 1266–7. See also I.x.c.62, I.xi.e.6, 19–20.

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[g–g ] forty, and forty–eight 1 [23 ] W. Fleetwood, Chronicon Preciosum (London, 1707), 30; Hume, History of England (1778), i.226. [24 ] ‘It is thought that the livre, or pound weight, of silver, was instituted as the money integer, by CHARLEMAGNE: And this he subdivided into sols, and deniers, which bore exactly the same proportion to the pound, as our shillings and pence, now do, to our money pound, or pound sterling.’ (Harris, Essay, i.50.) [25 ] ‘It is thought that soon after the conquest a pound sterling was divided into twenty shillings.’ Hume, History of England (1778), i.227. [26 ] ‘Next according to a law of Papirius asses weighing half an ounce were struck.’ (Pliny, Natural History, XXXIII.xiii, translated by H. Rackham in Loeb Classical Library (1952), ix.39.) Also quoted in Montesquieu, Esprit, XXII.xi.3. See below, V.iii.61. [27 ] Cf. ‘Our money pound is at present . . . about one–third of what it was at the conquest . . . At the accession of King James I to this throne, the Scotch money pound was but equal to the 1/12 of ours; and the French livre is at present, only about half the value of the Scotch pound’ (Harris, Essay, i.52n.). The problems of debasement are discussed at V.iii.59–64; in LJ (A) vi.114ff. and LJ (B) 240, ed. Cannan 186. The figures given in the text as regards the content of the English and Scots pound are cited at LJ (A) vi.116–17, and the French livre is said to have been reduced ‘to less than one seventieth’. Smith also remarked with reference to Britain that ‘still the coin is on a precarious footing, being under the management of the king and privy councill, as the parliament cannot legally intermeddle.’ In LJ (A) ii.81 debasement is attributed to ‘the difficulty of raising money’ and the same point is made in LJ (B) 179–80, ed. Cannan 134, in the course of a discussion of the law of contract. In LJ (A) vi.114 and 118 debasement is attributed to the ‘necessities or frauds of the government’, cf. LJ (B) 241–2, ed. Cannan 187–8. [h–h ] om. 6 [28 ] Cf. LJ (A) ii.80–1: ‘Justice and equity plainly require that one should restore the same value as he received without regard to the nominal value of money . . . But the civil government in all countries have constituted the exact contrary of this.’ [29 ] Hutcheson develops a rather similar argument in the System, ii.60–1. Harris discusses the problem of debasement, and its impact on debtors and creditors, and those on fixed incomes, in the Essay, Part II, chapters 1, 10, 17, 18. See also Steuart Principles, III.2.vi and III.1.vi. The impact of debasement on creditors and debtors is considered in LJ (A) vi.119–20 where Smith also points out that a change in the coinage ‘necessarily embarrasses commerce’ since buyers and sellers will delay purchases and sales due to the prevailing state of uncertainty: ‘And as both stand off in this manner, the merchant choosing rather to keep up his goods than to sell them too low, a stagnation must necessarily follow in the exchange of commodities; and money in some measure ceases to answer its end as a measure of value.’ Cf. LJ (B) 242, ed. Cannan 188: ‘People are disposed to keep their goods from the market, as they know not what they will get for them. Thus a stagnation of commerce is occasioned. Besides, the debasing of the coin takes away the

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public faith.’ Montesquieu also noted that ‘Trade is in its own nature extremely uncertain; and it is a great evil to add a new uncertainty to that which is founded on the nature of the thing’ (Esprit, XXII.iii.4). [30 ] In the lectures, the discussion of money proceeds from this point to the rejection of the view that opulence consists in money and to the examination of banks and paper money. The same order of argument is suggested in ED 4.1. [31 ] Smith throws further light on the ‘paradox of value’ at I.xi.c.31, 32 and IV.vii.a.19. He also points out at I.xi.c.3 that under some circumstances goods which are of great value in use have little or no value in exchange. Cf. LJ (B) 205–6, ed. Cannan 157: ‘Cheapness is in fact the same thing with plenty. It is only on account of the plenty of water that it is so cheap as to be got for the lifting, and on account of the scarcity of diamonds (for their real use seems not yet to be discovered) that they are so dear.’ The so–called paradox of value figures in Smith’s lectures on two occasions. In the first place, Smith set out to explain the grounds of preference ‘which give occasion to pleasure and pain’ (LJ (B) 209, ed. Cannan 159) in stating the general thesis that all the arts are subservient to the ‘natural wants’ of man. In this context Smith explained that men require basic necessities, but also that his delicacy of taste gives occasion to ‘many insignificant demands’. For example he argued that qualities such as colour or variety constitute grounds of preference and thus help to explain why we place a value on commodities—including the precious stones. In LJ (A) vi.13–4 the ‘paradox’ is examined in exactly the same context and the grounds of preference summarized as ‘colour, form, variety or rarity, and imitation’ (LJ (A) vi.16). (It is interesting to note that Smith began the economic sections of his lectures in this way and that these passages should have been omitted from the WN.) The second example occurs in the course of a discussion of the determinants of price, which are stated to be (LJ (B) 227–8, ed. Cannan 176–7): 1st, The demand or need for the commodity. There is no demand for a thing of little use; it is not a rational object of desire. 2ndly, the abundance or scarcity of the commodity in proportion to the need of it. If the commodity be scarce, the price is raised, but if the quantity be more than is sufficient to supply the demand, the price falls. Thus it is that diamonds and other precious stones are dear, while iron, which is much more usefull, is so many times cheaper, tho’ this depends principally on the last cause, viz: 3rdly, the riches or poverty of those who demand. Smith was thus able to explain the paradox, while pointing out that in some conditions, such as the rich merchant lost in the deserts of Arabia, the price of water could be very high. The same examples occur in LJ (A) vi.70–5 where Smith also indicates that the price of diamonds would sink if ‘by industry their quantity could be multiplied’. The determinants of market price are summarized in ED 3.1 and LJ (A) vi.70. See below I.vii. The contrast between the value of water and diamonds is stated and explained by Samuel von Pufendorf, who also cites Plato’s Euthydemus 304B: ‘Only what is rare is valuable, and water, which is the best of all things, . . . is also the cheapest.’ De Jure Naturae et Gentium, V.i. 6, see generally V.i. and the same author’s De Officio Hominis et Civis Juxta Legem Naturalem, I.xiv, ‘On

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Value’. The latter work is an abridgement of the former. Cf. Grotius, De Jure Belli ac Pacis, II.xii, 14, and see below, I.xi. c.31–3. John Law, Money and Trade Considered, 4, also noted that: Goods have a Value from the Uses they are apply’d to; And their Value is greater or Lesser, not so much from their more or less valuable, or necessary Uses: As from the greater or lesser Quantity of them in proportion to the Demand for them. Example Water is of great use, yet of little Value; Because the Quantity of Water is much greater than the Demand for it. Diamonds are of little use, yet of great Value, because the Demand for Diamonds is much greater, than the Quantity of them. A similar example appears in Harris, Essay i.5., and cf. Cantillon, Essai, 36, ed. Higgs 29, and Mandeville, The Fable of the Bees, pt. ii.423, ed. Kaye ii.350. In his System, ii.53–4, Hutcheson remarked that: The natural ground of all value or price is some sort of use which goods afford in life; this is prerequisite to all estimation. But the prices or values in commerce do not at all follow the real use or importance of goods for the support, or natural pleasure of life. By the wisdom and goodness of Providence there is such plenty of the means of support, and of natural pleasures, that their prices are much lower than of many other things which to a wise man seem of little use. But when some aptitude to human use is presupposed, we shall find that the prices of goods depend on these two jointly, the demand on account of some use or other which many desire, and the difficulty of acquiring, or cultivating for human use. A similar argument appears in his Short Introduction, 209–10. [i–i ] om. 6 [j ] which is 1 [32 ] It is interesting that Steuart also found difficulty in dealing with the determinants of price, and that he too should have felt moved to confess that ‘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’ (Principles, i.197, ed. A. S. Skinner (Edinburgh and Chicago, 1966), i.172). [1 ] Cantillon, Essai, 1–2, ed. Higgs 1, states that ‘The Land is the Source of Matter from whence all Wealth is produced. The Labour of man is the Form which produces it: and Wealth in itself is nothing but the Maintenance, Conveniences, and Superfluities of Life.’ Harris, Essay, i.2, makes a similar point: ‘wealth or riches consist either in a propriety in land, or in the products of land and labour.’ He also remarks at i.31 that ‘labour, skill, and industry, are the true sources of wealth’. [2 ] Cf. Harris, Essay, i.9: ‘Men’s various necessities and appetites, oblige them to part with their own commodities, at a rate proportionable to the labour and skill that had been bestowed upon those things, which they want in exchange. Harris also stated that ‘as in most productions, labour hath the greatest share; the value of labour is to be reckoned the chief standard that regulates

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the values of all commodities’. [3 ] In commenting on this passage Pownall argued that labour cannot be the basis of exchangeable value: ‘We must consider also the objects on which labour is employed; for it is not simply the labour, but the labour mixed with these objects, that is exchanged; it is the composite article, the laboured article; Some part of the exchangeable value is derived from the object itself, . . .’ (Letter, 9). The discussion of value occurs mainly at pp. 9–13. [4 ] Cf. LJ (A) i.59: ‘One does not form such an attachment to a thing he has . . . acquired by little labour, as he does to what he has got by great pains and industry; . . .’ [5 ] ‘Every thing in the world is purchased by labour; and our passions are the only causes of labour.’ (D. Hume, ‘Of Commerce’, Essays Moral, Political and Literary, ed. Green and Grose, i.293.) [6 ] In commenting on this passage, Pownall inquired (11): ‘What then is to be the real standard or measure? Not labour itself. What is to give the respective estimation in which each holds his labour? . . . value cannot be fixed by and in the nature of labour; it will depend upon the nature of the feelings and the activity of the persons estimating it.’ [7 ] See below, I.xi.e.34: ‘Labour . . . is the ultimate price which is paid for everything.’ [8 ] ‘It is . . . the Labour of the Poor, and not the high and low value that is set on Gold and Silver, which all the Comforts of Life must arise from.’ (Mandeville, The Fable of the Bees, pt. i.345, ed. Kaye i.301.) [9 ] ‘Riches joined with liberality, is power; because it procureth friends, and servants; without liberality, not so; because in this case they defend not; but expose men to envy, as a prey’. (T. Hobbes, Leviathan, I.x.) See below II.v.31. Smith comments on the ‘doctrine of Hobbes’ in TMS VII.iii.2. [a–a ] 2A–6 [10 ] The allowance for hardship is mentioned at I.vi.2 and, for example, at I.x.b.2,15. [11 ] Smith comments on the confusion between money and wealth at IV.i.1 in the course of developing his critique of the mercantile ‘fallacy’. [12 ] The reduction in the value of the metals consequent on the discovery of the American mines is discussed in I.xi.f. [b–b ] there 1 [13 ] Cantillon comments, Essai, 127–9, ed. Higgs 97: ‘The real or intrinsic Value of Metals is like everything else proportionable to the Land and Labour that enters into their production. The outlay on the Land for this production is considerable only so far as the Owner of the Mine can obtain a profit from the work of the Miners when the veins are unusually rich. The Land needed

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for the subsistence of the Miners and Workers, that is the Mining Labour, is often the principal expense and the Ruin of the Proprietor. The Market Value of Metals, as of other Merchandise or Produce, is sometimes above, sometimes below, the intrinsic Value, and varies with their plenty or scarcity according to the demand.’ [14 ] LJ (A) vi.100 comments: ‘All measures were originally taken from the human body; a fathom was measured by the stretch of a mans arms, a yard was the half of this . . . These natural measures could not long satisfy them, as they would vary greatly . . . Prudent men therefore contrived, and the publick established, artificiall yards, fathoms, feet, inches, etc. . . . For the same reason they converted the originall and naturall measures of value into others not so naturall, but more convenient . . .’ Cf. LJ (B) 236, ed. Cannan 183. [c ] must 1 [d–d ] 2–6 [15 ] The passage ‘In his ordinary state of health . . . dexterity’ first appeared in ed. 2 and may reflect Smith’s response to a comment which Pownall had made with regard to the original passage. Pownall had remarked that ‘even the same person will, in different habits, relations and circumstances of life, estimate . . . his ease, liberty, and desire of happinness differently’. On this ground, Pownall questioned the validity of Smith’s choice of labour as the ultimate standard of value (12). The complex meaning of the disutility of labour is discussed in I.x.b. It is pointed out at I.xi.p.8 that the proprietors of land are the only group in society who receive a revenue which costs them neither ‘labour nor care’. [e–e ] He 1 [16 ] Cf. Hutcheson, System, ii.58: ‘a day’s digging or ploughing was as uneasy to a man a thousand years ago as it is now, tho’ he could not then get so much silver for it’. In his essay ‘Of Money’ Hume emphasized the disutility of work and also the point that wages could be regarded as the compensation for this disutility (Essays Moral, Political and Literary, ed. Green and Grose, i.313–14). In ‘Of Refinement in the Arts’, however, he made an additional point in stating that men frequently ‘enjoy, as their reward, the occupation itself, as well as those pleasures which are the fruit of their labour’ (ibid., i.301). [17 ] LJ (A) vi.36 states that ‘We are not to judge whether labour be cheap or dear by the moneyd price of it, but by the quantity of the necessaries of life which may be got by the fruits of it.’ The same point is made at 52. Cf. Cantillon, Essai, 149–50, ed. Higgs 113: Gold and Silver, like other merchandise and raw produce, can only be produced at costs roughly proportionable to the value set upon them, and whatever Man produces by Labour, this Labour must furnish his maintenance. It is the great principle one hears from the mouths of the humble classes who have no part in our speculations, and who live by their Labour or their Undertakings. “Everybody must live”. [18 ] ‘Be above all things careful how you are to make any composition or agreement for any

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long space of years to receive a certain price of money for the corn that is due to you, although for the present it may seem a tempting bargain.’ (W. Fleetwood, Chronicon Preciosum, 174.) [19 ] See above, I.iv.10. [20 ] But see below, I.xi.h.11. [21 ] Hutcheson also remarked that it would be impossible to settle ‘fixed salaries’ in monetary terms, and added that ‘The most invariable salary would be so many days labour of men, or a fixed quantity of goods produced by the plain inartificial labours, such goods as answer the ordinary purposes of life. Quantities of grain come nearest to such a standard.’ (System, ii.62–3.) [22 ] 18 Elizabeth I.c.6 (1575), applicable to Oxford, Cambridge, Winchester, and Eton. [23 ] ‘Though the rent so reserved in corn was at first but one third of the old rent, or half of what was still reserved in money, yet now the proportion is nearly inverted; and the money arising from corn rents is, communibus annis, almost double to the rents reserved in money.’ (W. Blackstone, Commentaries on the Laws of England (Oxford, 1765–9), ii.322.) [24 ] See above, I.iv.10. [25 ] Cf. Hutcheson, System, ii.58: ‘Properly, the value of labour, grain, and cattle, are always pretty much the same, as they afford the same uses in life, where no new inventions of tillage, or pasturage, cause a greater quantity in proportion to the demand. ’Tis the metal chiefly that has undergone the great change of value, since these metals have been in greater plenty . . .’ [26 ] In I.viii. [27 ] See below I.viii.31 and cf. I.viii.52–7. [f–f ] it 1 [28 ] The relative stability of the value of the metals is discussed at I.xi.g.37. [g–g ] 2–6 [h ] for example 1 [i–i ] om. 6 [29 ] Locke (Considerations of the lowering of Interest and raising the Value of Money (1691), Works (London, 1823), v.47) commented: ‘Wheat, therefore, in this part of the world, (and that grain, which is the constant general food of any other country) is the fittest measure to judge of the altered value of things, in any long tract of time: and therefore, wheat here, rice in Turkey, etc. is the fittest thing to reserve a rent in, which is designed to be constantly the same for all future ages. But money is the best measure of the altered value of things in a few years: because its vent is the same, and its quantity alters slowly. But wheat, or any other grain, cannot serve

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instead of money, because of its bulkiness, and too quick change of its quantity.’ Harris, Essay, i.62,n., remarked on Locke: Mr Locke well observes, that that grain which is the most constant and general food of any country, as wheat in England, and rice in Turkey, is the most likely thing to keep the same proportion to its vent for a long course of time; and therefore the fittest thing to reserve a rent in, which is designed to be constantly the same in all future ages; and the fittest measure whereby to judge of the altered values of things in any long tract of time. A similar point appears in Pufendorf, De Jure, V.i,15. [j–j ] the 6 [k–k ] one 1 [l–l ] 2–6 [m–m ] om. 4 <corrected 4e–6.> [30 ] Smith expressed doubts as to the accuracy of historians at I.xi.e.3,24. [31 ] See below, I.xi, passim. [ * ] nPliny, lib.xxxiii.c.3.n [‘Silver was first coined in the 485th year of the city, in the consulship of Quintus Ogulnius and Gaius Fabius, five years before the first Punic War.’ (Pliny, Natural History, XXXIII, xiii translated by H. Rackham in Loeb Classical Library (1952), ix.37.)] [o–o ] always 1–2 [32 ] See above I.iv.5,6. The silver denarius was first struck in 268 B.C. though there may have been Roman issues of silver coins of Greek denomination a little earlier. The Athenian coinage had silver, gold and bronze coins much earlier and influenced the Roman practice through Carthage. E. V. Morgan, A History of Money (London 1965), 15–16. [33 ] The sceattas, referred to as ‘pennies’ in the late seventh century. Morgan, Money, 18. [p–p ] 2–6 [34 ] A similar point is made in LJ (B) 239, ed. Cannan 186. Harris remarked in Essay, i.59–60: ‘All nations having, for so many ages, made use of silver for the standard measure of the values of other things; that alone, seems to be a sufficient reason for continuing the same standard.’ [q–q ] In 1 [r ] originally 1

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[s–s ] 2–6 [t ] only 1 [35 ] LJ (B) 243, ed. Cannan 189 stated that: ‘The different coins are regulated not by the caprice of the government, but by the market price of gold and silver, and according to this the proportion of gold and silver is settled.’ A similar point is made in LJ (A) vi.125. [u–u ] sum 1 [36 ] As A. Feaveryear has pointed out recently, the situation was not reached quite so easily as may be inferred. When the guinea was first issued in 1663, it was undervalued by the Mint. (The Pound Sterling (Oxford, 1963), 97–8, 120–1, 154.) [37 ] ‘It would be a ridiculous and vain attempt, to make a standard integer of gold, whose parts should be silver; or to make a motly standard, part gold and part silver. These different materials could not long agree in value; and silver being the most common and useful coin, would soon regain its antient place of a standard measurer.’ (Harris, Essay, i.61.) [38 ] In 1774 by 14 George III,c.70. The ‘late recoinage’ is considered below, I.xi.g.6 and IV.vi.18. [v–v ] om. 4; ,as 4e–6 [39 ] See II.ii.54 where Smith comments that government is ‘properly at the expence of the coinage’ and cf. IV.vi.18. [40 ] See IV.iii.b.7 where Smith remarks that in Holland the market price of bullion is generally above the mint price for the same reason as it was in England before the reformation of the coinage. [41 ] Gold to silver ratios: French coin, 1 to 14 5803/12279; Dutch coin, 1 to 14 82550/154425; English coin, 1 to 15 14295/68200 N. Magens, The Universal Merchant, ed. W. Horsley (London, 1753), 53–5. [42 ] 7 and 8 William III,c.1 (1695) in Statutes of the Realm, vii.1–4; 7 William III,c.1 in Ruffhead’s edition. [43 ] ‘Silver in standard bullion would not be in value one jot above the same silver in coin, if clipped money were not current by tale, and coined silver, . . . as well as bullion, had the liberty of exportation. For when we have no clipped money, but all our current coin is weight, according to the standard, all the odds of value that silver in bullion has to silver in coin, is only owing to the prohibition of its exportation in money.’ (J. Locke, Further Considerations concerning raising the Value of Money (1695), Works, v.173.) [w–w ] om. 5–6

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[44 ] Cf. LJ (A) vi.124–5: ‘It may even sometimes be a hardship to be oblidged to take silver, as the banks have frequently endeavour’d to perplex by making payments in sixpences; but they ought not to be indulged in trifling in business.’ It is stated at II.ii.85 that the Bank of England had been reduced to this expedient on occasion. The device was also used in Glasgow, and led to litigation in the Court of Session in the late 1750s. [45 ] The statutes governing coinage are mentioned at IV.vi.22. [46 ] See below, IV.vi.18. [47 ] See below IV.iii.a.10 and IV.vi.19. In Letter 150 addressed to Smith, dated 1 April 1776, Hume remarked that ‘It appears to me impossible that the King of France can take a Seigniorage of 8 per cent. upon the Coinage. No–body would bring Bullion to the mint: It would all be sent to Holland or England, where it might be coined and sent back to France for less than two per cent. Accordingly Neckre says, that the French King takes only two per cent. of Seigniorage.’ In fact the seigniorage was about 3 per cent. See Jacques Necker, Sur la legislation et le commerce des grains (1775), a work which Smith quotes below V.ii.k.78. Smith comments on the desirability of a charge for coinage in LJ (A) vi.150–1 calculated the costs incurred in England at £14,000. The same figure is given in LJ (B) 260. Cannan read it as £140,000 (p. 203). See below IV.vi.31. Sir James Steuart also cites 8 per cent as the seignorage in France; Principles, i.552, ii.13,17. See especially III.2.ii. [x–x ] tear and wear 1 [v–v ] the tear and wear 1 [48 ] The subjects of the latter part of this chapter are considered at some length in IV.vi, especially §§ 18–32 where Smith points out that this material might well have appeared ‘in those chapters of the first book which treat of the origin and use of money’ (32). [1 ] There is an interesting discussion of property by occupation and its application to the hunting stage in LJ (A) i.27–46, ii.28. The problem is also mentioned in LJ (B) 150, ed. Cannan 108. [2 ] Allowance for hardship is mentioned above I.v.4 and see also I.x.b.2,15. [3 ] Cf. I.x.b.25 where it is pointed out that some talents of themselves admired are disapproved of when employed for gain, so that the rate of return must be sufficient to compensate the public discredit attending their use. [a–a ] 2–6 [4 ] The role of the undertaker is examined at some length in Cantillon, Essai, I.xiii. Cantillon particularly emphasized the issue of risk. [b ] frequently 1

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[c–c ] it 1–2 [d–d ] are a source of value 1 [e–e ] therefore, 1 [f ] is by no means 1 [g–g ] 2–6 [h–h ] 2–6 [i–i ] Men 1 [j–j ] in exchanging them either for money, for labour, or for other goods, over and above what is due, both for the labour of gathering them, and for the profits of the stock which employs that labour, some allowance must be made for the price of the licence, which constitutes the first rent of land. In the price, therefore, of the greater part of commodities the rent of land comes in this manner to constitute a third source of value. In this state of things, neither the quantity of labour commonly employed in acquiring or producing any commodity, nor the profits of the stock which advanced the wages and furnished the materials of that labour, are the only circumstances which can regulate the quantity of labour which it ought commonly to purchase, command, or exchange for. A third circumstance must likewise be taken into consideration; the rent of the land; and the commodity must commonly purchase, command, or exchange for, an additional quantity of labour, in order to enable the person who brings it to market to pay this rent. 1 [5 ] But see below I.xi.a.8. Dugald Stewart indicated in his Works, (ed. Sir William Hamilton), ix (Edinburgh, 1856), 6, that the division of returns into rent, wages, and profits was first suggested to Smith by James Oswald of Dunnikier as ‘appears from a manuscript of Mr. Smith’s, now in my possession’. Cf. Stewart, III.2. [k–k ] is in this manner 1 [6 ] The point is made with greater clarity at II.ii.20. [l–l ] tear and wear 1 [7 ] See below, I.xi.a.4. [m–m ] every 1–2 [8 ] A similar passage occurs at I.xi.p.7 and II.ii.1. [9 ] The rate of interest is discussed in II.iv. [10 ] Examples of confusion between categories of return are given at I.viii.9, I.x.b.35 and 37.

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[n–n ] his 1 [o–o ] were 4–6 [11 ] See below, II.iii, where Smith examines the distinction between productive and unproductive labour. [1 ] In the lectures and ED, the analysis of price follows directly on the discussion of the division of labour and precedes that of money. The intervening chapters of the WN do not, therefore, have any counterpart in the older work. Moreover, in both lectures and ED, while the distinction between market and natural price is used, the latter is mainly defined in terms of the supply price of labour: ‘When the wages are so proportion’d as that they are exactly sufficient to maintain the person, to recompense the expense of education, the risque of dying before this is made up, and the hazard that tho’ one lives he shall never be able to become in any way serviceable, they are then at their naturall rate, and the temptation is great enough to induce anyone to apply to it’ (LJ (A) vi.62–3). Much of the material with regard to the costs of education and of risk finds a place in I.x.b. See, for example, I.x.b.6 and II.i.17. The determinants of market price are discussed in LJ (A) vi.70, LJ (B) 227–8, ed. Cannan 176–7, and ED 3.2. This price is shown to be interrelated with natural price in LJ (A) vi.75–6, LJ (B) 229, ed. Cannan 178, and ED 3.3. In the lectures and ED Smith then proceeded directly to the discussion of policies which kept prices either above or below the equilibrium level; a theme which is also developed in the concluding paragraphs of this chapter. [2 ] Below, I.viii and I.ix. [3 ] Pownall comments on this passage, Letter, 13–15. He considered that Smith’s distinction between market and natural price was ambiguous. [4 ] Below, I.xi.b. [5 ] Hume disagreed at least with regard to rent: ‘I cannot think, that the Rent of Farms makes any part of the Price of the Produce, but that the Price is determined altogether by the Quantity and the Demand.’ (Letter 150, addressed to Smith, dated 1 April 1776.) [6 ] The phrase ‘perfect liberty’ is used frequently; see for example I.vii.30, I.x.a.1, IV.vii.c.44. The term ‘natural liberty’ is used in the discussion of physiocracy at IV.ix.51. [7 ] Cf. Turgot, Reflections, LXVI. Sir James Steuart used the term ‘effectual demand’ in the Principles, i. 115, ed. Skinner i. 117. [8 ] ‘If one, who is forced to walk on Foot envies a great Man for keeping a Coach and Six, it will never be with that Violence, or give him that Disturbance which it may to a Man, who keeps a Coach himself, but can only afford to drive with four Horses.’ (Mandeville, The Fable of the Bees, pt. i. 141, ed. Kaye i. 136.) [a–a ] 2–6

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[b–b ] increases 1 [c–c ] this 1 [d–d ] The 1 [e–e ] the competitors 1 [f–f ] om. 4 <corrected 4e–6> [9 ] See below, IV.i.18. Steuart particularly emphasized the importance of competition between buyers in order to procure stocks of a commodity, and competition between sellers in order to get rid of certain stocks. This form of argument enabled him to state one of the conditions for price stability in noting that ‘In proportion . . . as the rising of price can stop demand, or the sinking of price can increase it, in the same proportion will competition prevent either the rise or fall from being carried beyond a certain length . . . ’ (Principles, i.203, ed. Skinner i.177). The discussion of the mechanics of price determination appears in II.iv, vii, viii, and x. The determinants of price are summarized in III.i. [g–g ] it 1 [10 ] In Cantillon the distinction is between market price and intrinsic value, where the latter is taken to be constant, being the measure of the quantity of land and labour entering into the production of a commodity. Cantillon also refers to a ‘perpetual ebb and flow’ of market prices around this standard. See Essai, I.x. [11 ] The example is used below, I.x.b.46 and see also I.x.c.43. It is pointed out at I.x.c.61 that the upper limits set by statute to the wages of master tailors in and around London were waived ‘in the case of a general mourning’. [h–h ] 2–6 [12 ] In discussing the forces which kept prices in excess of the natural or equilibrium level, Smith commented in LJ (B) 232–3, ed. Cannan 180: ‘what raises the market price above the natural one diminishes public opulence . . .’ and cited as examples taxes on necessaries, and monopolies. Cf. LJ (A) vi.84ff. He also objected to policies which kept the market price below the natural level (e.g. bounties) and endeavoured to show that both types of policy broke in effect ‘what may be called the natural balance of industry’ by artificially altering the distribution of stock between trades. See LJ (A) vi.92; LJ (B) 233, ed. Cannan 181, and ED 3.5 where it is stated that ‘Whatever tends to break this balance tends to hurt the national or public opulence.’ The argument is a feature of Smith’s critique of mercantilism, see for example IV.ii.3 and IV.vii.c.89. [13 ] In another connection Smith noted that spatial division could be an advantage, remarking that the dispersed situation of manufacturers and dealers militated against collusion and combination. The point was frequently made: see for example I.x.c.23, IV.ii.21, IV.v.b.4, IV.vii.b.24, IV.viii.4 and 34.

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[i–i ] 2–6 [j ] for whole centuries together, 1 [14 ] See below, I.xi.b.31. Smith discusses taxes on the produce of rare vines at V.ii.k.54. [15 ] It is suggested that monopoly powers destroy frugality by artificially raising the level of profit, IV.vii.c.61. Smith also argued that monopoly was an enemy to good management at I.xi.b.5, but did however admit the usefulness of temporary monopolies at V.i.e.30 and of exclusive privileges in particular cases. See for example, IV.vii.c.95 and V.i.e.5. He also said in LJ (A) ii.35 that all forms of monopoly are extremely detrimental and that ‘Besides this, the goods are worse; as they know none can undersell them; so they keep up the price, and . . . care not what the quality be.’ [16 ] Cf. LJ (B) 306, ed. Cannan 236 ‘All monopolies and exclusive priviledges of corporations, for whatever good ends they were at first instituted, have the same bad effect. In like manner the statute of apprenticeship, which was originaly an imposition on government, has a bad tendencey.’ Cf. LJ (A) vi.88. See also I.x.c.8 and 9 where Smith comments on the limitations to which the statute of apprenticeship was subject, and on the ease with which its restrictions could be avoided. [17 ] Smith seems to have considered that the transfer of resources between employments would be quite easy, at least in the absence of institutional impediments. See for example I.x.c.43, but cf. I.viii.31 where it is stated that man is ‘of all sorts of luggage the most difficult to be transported’. [18 ] See IV.ix.43 and above, 25 n.1. It is pointed out in LJ (A) vi.54 that the law of Sesostris was designed to ensure that man’s ambition to ‘advance himself into what we call a gentlemanny character’ did not leave the lower trades deserted. Cf. LJ (B) 218–19, ed. Cannan 168. Montesquieu remarks: ‘Laws which oblige every one to continue in his profession, and to devolve it upon his children, neither are nor can be of use in any but despotic kingdoms; where nobody either can or ought to have emulation.’ (Esprit, XX.xxii.2.) [19 ] I.x. [1 ] The same words are used, but in a different order, at I.vi.1. [2 ] The same words are used above, I.vi.4. [a–a ] further 1, 4–6 [b–b ] whatever 1 [c–c ] 2–6 [3 ] See above, I.vi.5.

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[4 ] Smith comments on the need to distinguish between types of return at I.vi.19. [d–d ] cannot only combine more easily, but the law authorizes their combinations, or at least does not prohibit them, 1 [5 ] Smith comments on the role of government at I.x.c.34 and mentions statutes affecting wages at I.x.c.61.7 George I, st.1, c.13 (1720) regulated journeymen tailors; 12 George I, c.34 (1725) regulated certain workmen in the woollen manufactures; 12 George I, c.35 (1725) regulated brickmakers; and 22 George II, c.27 (1748) extended the provisions to a wide range of industries. [6 ] See below, I.x.c.61. [7 ] Smith comments on the influence of the price of provisions on wages below, I.viii.46–57. [e–e ] 2–6 [8 ] It is noted in the index under the article ‘Labourers’ that they ‘are seldom successful in their outrageous combinations’. The same point is made under the article ‘Wages’. [f–f ] 2–6 [9 ] ‘According to the calculations and observations of the celebrated Dr. Halley’ (Cantillon, Essai, 42–3, ed. Higgs 33). Examples of child mortality are given at I.viii.38. [10 ] Cf. Harris, Essay, i.9–10: ‘It may be reasonably allowed, that a labouring man ought to earn at least, twice as much as will maintain himself in ordinary food and cloathing; that he may be enabled to breed up children, pay rent for a small dwelling, find himself in necessary utensils, &c. So much at least the labourer must be allowed, that the community may be perpetuated.’ [11 ] Cantillon holds that the problem ‘does not admit of exact calculation, and exactitude is not very necessary; it suffices to be near enough to the truth’ (Essai 44, ed. Higgs 35). It is noteworthy, in this connection, that in speaking of the subsistence wage, Smith made allowance for customary expense and for ‘those things which the established rules of decency have rendered necessary to the lowest rank of people’. See, for example, V.ii.k.3 and 15. [g–g ] them 1 [12 ] In commenting on Smith’s doctrine that the highest wages would be found in those countries which had the highest rates of growth Pownall pointed out that the rate of increase in the price of commodities might outstrip the rate of increase in the ‘price’ of wages, so that in the ‘triumph of prosperity’ the lower orders could find themselves in ‘a constant state of helpless oppression’. Letter, 15–16. He makes a similar point at p. 7, suggesting that commodity prices ‘do forerun, and must, during the progress of improvement, always forerun’ both wages and rent. Pownall made the additional point at pp. 32–3 that in a country enjoying a rapid rate of improvement, the rate of change in the prices of manufactured goods would tend to outstrip that of corn, thus placing both landlords and wagelabour in a relatively unfavourable position. Pownall

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argued that ‘the landed men and labourers must be in a continual state of oppression and distress: that they are so in fact, the invariable and universal experience of all improving countries.’ For a modern examination of a similar problem, see H. J. Habakkuk, American and British Technology in the Nineteenth Century (Cambridge, 1962). [ * ] hThis was written in 1773, before the commencement of the ipresenti disturbances.h [13 ] See below, II.v.21, where the rapid rate of growth in America is ascribed to the predominance of investment in agriculture, and cf. IV.vii.c.79. [14 ] Sir William Petty calculated ‘360 Years for the time of doubling (including some Allowance for Wars, Plagues, and Famine, the Effects thereof, though they be Terrible at the Times and Places where they happen, yet in a period of 360 Years, is no great Matter in the whole Nation.)’ (Another Essay in Political Arithmetick concerning the Growth of the City of London (London, 1683), 15, ed. C. H. Hull, ii.463.) Cf. Gregory King: ‘That, Anno 1260, or about 200 years after the Norman Conquest, the kingdom had 2,750,000 people, or half the present number; so that the people of England have doubled in about 435 years last past; That in probability the next doubling of the people of England will be in about 600 years to come.’ (Natural and Political Observations and Conclusions upon the State and Condition of England, 1688, in G. Chalmers, Comparative Strength of Great Britain to 1803 (London, 1804), 41; quoted in C. D’avenant, Political and Commercial Works, ed. C. Whitworth (London, 1771), ii.176.) [15 ] The same figures are cited below, III.iv.19. It is stated at IV.iii.c.12 that the population of France was 24, and that of America, 3 millions. The same figure for America is cited at V.iii.76 where it is also stated that Britain had less than 8 and Ireland more than 2 million inhabitants. Richard Price also remarked, on the authority of Dr. Heberden, that: ‘in Madeira, the inhabitants double their own number in 84 years. But this . . . is a very slow increase, compared with that which takes place among our colonies in AMERICA. In the back settlements, where the inhabitants apply themselves entirely to agriculture, and luxury is not known, they double their own number in 15 years; and all thro’ the northern colonies, in 25 years.’ (Observations on Reversionary Payments (London, 1772), 203.) Evidently Smith did not admire Price. Letter 251 addressed to George Chalmers, dated 22 December 1785 reads: ‘Price’s speculations cannot fail to sink into the neglect that they always deserved. I have always considered him as a factious citizen, a most superficial Philosopher and by no means an able calculator.’ [16 ] The profitability of children is mentioned at IV.vii.b.2. [17 ] It is pointed out in LJ (B) 329–30, ed. Cannan 256, that in Scotland there is relatively little demand for the labour of the very young, owing to prevailing economic conditions: ‘This however is not the case in the commercial parts of England. A boy of 6 or 7 years of age at Birmingham can gain his 3 pence or sixpence a day, and parents find it to be their interest to set them soon to work.’ See below, V.i.f.53. [18 ] In 1275. Marco Polo is also mentioned below, IV.vii.a.8. [19 ] See below, I.ix.15.

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[20 ] ‘Les artisans courent les villes du matin au soir pour chercher pratique.’ (F. Quesnay, Oeuvres économiques et philosophiques, ed. A. Oncken (Paris, 1888), 581.) [21 ] The authority is probably J. B. Du Halde, Description geographique, historique, chronologique, politique, et physique de l’Empire de la Chine et de la Tartarie Chinoise (Paris, 1735), ii.73–4. See also Cantillon, Essai, 88–90, ed. Higgs 67–9. TMS V.i.2.15 refers to the barbarous custom of exposing children and observes that the practice was followed by civilized nations such as the Greeks, and condoned by philosophers such as Plato and Aristotle. Smith added: ‘We find, at this day, that this practice prevails among all savage nations; and in that rudest and lowest state of society it is undoubtedly more pardonable than in any other.’ He makes the same points in LJ (A) iii.80–1 and also refers to the practice in China where women were said to go from house to house collecting children to be thrown into the river: ‘as we would send a parcell of puppies or kittens to be drowned. The fathers [i.e. of the Church] make a great merit of their conduct on this occasion. They converted to Christianity two of these women, and took their promise that they should bring them to be baptised before they drowned them. And in this they glory as having saved a vast number of souls.’ In LJ (A) iii.79 Smith mentioned the exposure of children in Rome, and Athens, and that it was also ‘practised in most early nations’ and in many countries where polygamy took place. He also pointed out in LJ (B) 146, ed. Cannan 104, that ‘Even in the times of exposition, when an infant was some time kept it was thought cruel to put him to death.’ The Anderson Notes contain the comment that exposure ‘took place among the Greeks and Romans, but if the child lived several weeks the father had no right to expose it’ (28). In his essay ‘Of the Populousness of Ancient Nations’ Hume refers to the modern Chinese practice of exposing children and makes the point that in ancient times it was so common that it was ‘not spoken of by any author of those times with the horror it deserves, or scarcely even with dissapprobation’ (Essays Moral, Political and Literary, ed. Green and Grose, i.396). See also Montesquieu, Esprit, VIII.xxi.13, XXIII.xvi.1 and xxii. [22 ] It is stated at I.xi.g.25 that Spain and Portugal, alone among the European nations, seem to have gone ‘backwards’ since the discovery of America. [23 ] The influence of British institutions on the development of America is considered at IV.vii.b.17–21 and IV.vii.b.51. The government of the East India Company is described at IV.vii.c.101–7. [24 ] See below, I.x.b.37. [25 ] Smith may overestimate the wage rates slightly. At Whittinghame in East Lothian a day labourer earned 4d. to 6d. in 1760 and 10d to 1s. in 1790. Old Statistical Account, ii.354. See also below, I.x.b.31. [26 ] Smith mentioned the law of settlement in England as part of the explanation for the relatively wide differences in wage rates at I.x.c.58. [27 ] The same point is made in similar words at I.xi.e.34. [28 ] Smith judges by contemporary social conventions and not by modern nutritional standards. R. H. Campbell, ‘Diet in Scotland: An Example of Regional Variation’, in T. C. Barker, J. C.

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McKenzie, and J. Yudkin, Our Changing Fare (London, 1966), 48. A. H. Kitchen and R. Passmore, The Scotsman’s Food (Edinburgh, 1949), 6–13. See below, I.xi.b.41. Smith later points out that ‘it is not more than a century ago that in many parts of the highlands of Scotland, butcher’s–meat was as cheap or cheaper than even bread made of oatmeal’ (I.xi.b.8). But contemporary livestock husbandry was inefficient because of the low price (see below, I.xi.l.2). [29 ] The fiars’ prices do not necessarily prove Smith’s point. Prices were lower in the early eighteenth century. R. Mitchison, ‘The Movements of Scottish Corn Prices in the Seventeenth and Eighteenth Centuries’, Economic History Review xviii (1965), 278. Prices were certainly higher during the years of scarcity in the later seventeenth century. For further discussion of fiars’ prices see below I.xi.n.5. [30 ] See below I.xi.n.5. [31 ] ‘The common pay of a private man in the infantry was eight pence a–day, a lieutenant two shillings, an ensign eighteen pence.’ (D. Hume, History of England, (1778), vi.178, quoting Rymer, xvi.717.) In LJ (A) vi.138 a soldier’s pay is calculated at £9 per year, ‘and he has besides this kept as his arrears nearly £3 for cloathes and lodging’. Cf. LJ (A) iii.134: ‘A man according to the ordinary computation may make a shift to support himself and perhaps a wife and family on ten pounds a year.’ Steuart remarked that ‘If a foot soldier have eight pence per diem, he is in a higher class than a Scots labourer who gains eight pence per diem; because he is paid for Sundays, as well as days of sickness and interruption from labour.’ Principles, ed. Skinner ii.399 (this passage did not appear in the 1767 edition). [32 ] ‘. . . a Poor Man and his Wife though able to work, may have four Children, two of them possibly able to work, two not able: The Father and Mother are not able to maintain themselves and their Family in Meat, Drink, Cloathing and House–rent under ten Shillings per Week, and so much they might probably get if imployed; This amounts to £26 per Annum . . . without a supply Equivalent to this they must live by Begging or Stealing, or Starve.’ (M. Hale, Discourse touching Provision for the Poor (London 1683), 16–17.) [ * ] jSee his scheme for the maintenance of the Poor, in Burn’s History of the Poor–laws.j [R. Burn, History of the Poor Laws (London, 1764), 135–60.] [33 ] Gregory King, State and Condition of England, in G. Chalmers, Comparative Strength of Great Britain to 1803, 49; quoted in C. D’avenant, Political and Commercial Works, ed. Whitworth, ii.175. Gregory King is also mentioned at I.xi.g.9. Smith comments on his own lack of faith in ‘political arithmetic’ at IV.v.b.30. [34 ] See below, I.xi.n.10. [35 ] It is remarked in LJ (B) 231, ed. Cannan 179, that taxes keep up the price of commodities and thus diminish public opulence, such as ‘all taxes upon industry, upon leather and upon shoes, which people grudge most, upon salt, beer, or whatever is the strong drink of the country, for no country wants some kind of it’. Similar points are made in LJ (A) vi.85 and see below, I.xi.n.11, IV.ii.33, and V.ii.k.4–13 where it is stated that salt, leather, soap, and candles may be regarded as necessaries so that taxes on them must raise the price of subsistence and therefore wages.

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Spirits are stated to be a luxury at V.ii.k.3 and Smith went on to argue that taxes on this commodity would not therefore raise wages but rather have the desirable effect of reducing consumption, V.ii.k.50. [36 ] See below, V.ii.k.7. [37 ] LJ (A) iii.133 comments: ‘It is generally reckon’d that half of mankind die before 5 years of age. But this is the case only with the meaner and poorer sort, whose children are neglected and exposed to many hardships from the inclemencies of the weather and other dangers. The better sort, who can afford attendance and attention to their children, seldom lose near so many. Few women of middling rank who have borne 8 children have lost 4 by the time they are 5 years old, and frequently none of them at all. It is therefore neglect alone that is the cause of this great mortality.’ See also I.viii.15. Cf. Anderson Notes, 36: ‘Of mankind the half die under 7, and of these the children of the vulgar most commonly. It is not unusual in Wales, Ireland, and the Highlands to see women without a child who have borne half a dozen, which is owing to their poverty which renders them unfit to bring up the most tender of all animals, viz infants.’ [38 ] LJ (A) iii.47 comments that: ‘the number of men is proportion’d to the quantity of subsistence’. The same point is made below, I.xi.b.1. With regard to the link between population and the food supply, see also I.xi.c.7, IV.ii.22, and IV.v.a.8. Cf. Cantillon, Essai, 110, ed. Higgs 83: ‘Men multiply like Mice in a barn if they have unlimited Means of Subsistence.’ In speaking of the relationship between population and the food supply, Steuart remarked that ‘the generative faculty resembles a spring loaded with a weight, which always exerts itself in proportion to the diminution of resistance’ (Principles, i.20, ed. Skinner i.32). [k–k ] it 1 [l–l ] tear and wear 1 [m–m ] tear and wear 1 [n–n ] tear and wear 1 [o–o ] tear and wear 1 [39 ] ED 5.6 remarks that ‘the work which is done by slaves always [comes] dearer than that which is done by freemen’. The same point is made in LJ (B) 290,299, ed. Cannan 225,231. Cf. LJ (A) iii.111: ‘the advantage gained by the labours of the slaves, if we deduce their originall cost and the expence of their maintenance, will not be so great as that which is gain’d from free tenants.’ The labour of freemen is stated to be cheaper than that of slaves at III.ii.9 and IV.ix.47; cf. IV.vii.b.54. [40 ] See below, II.iii.31, where Smith refers to the ‘uniform, constant, and uninterrupted effort of every man to better his condition’. [41 ] LJ (B) 330, ed. Cannan 257, comments that ‘their work thro’ half the week is sufficient to maintain them, and thro’ want of education they have no amusement for the other but riot and

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debauchery.’ Cf. Mandeville (The Fable of the Bees, pt.i.211, ed. Kaye, i.192.) ‘Every Body knows that there is a vast number of Journey–men Weavers, Tailors, Clothworkers, and twenty other Handicrafts; who, if by four Days Labour in a Week they can maintain themselves, will hardly be persuaded to work the fifth; . . .’ [42 ] Cf. I.x.c.14 where it is stated that in the inferior employments, the sweets of labour consist entirely in its recompense. [43 ] B. Ramazzini, De morbis artificum diatriba, translated into English as A Treatise of the Diseases of Tradesmen (London, 1705). [44 ] See below, V.i.d.10 and note. Smith also comments on the use of piece rates at I.x.c.14. [45 ] This example is extensively examined in LJ (A) vi.78–80 and see also LJ (B) 230, ed. Cannan 178. [46 ] See below, V.i.g.12, where Smith comments on the additional problems presented by the quality of life in large cities. [p–p ] taillies 3–6 [47 ] Messance, Recherches sur la population des généralites d’Auvergne, de Lyon, de Rouen et de quelques provinces et villes du royaume, avec des réflexions sur la valeur du bled taut en France qu’en Angleterre, depuis 1674, jusqu’en 1764 (Paris 1766). Messance is one of the authorities cited in I.xi.n.5. [48 ] Smith overstates his case.

Output Broad cloth (thousand pieces) Scottish linen (thousand yards)

1738 42·4 4,666

1739 43·1 4,802

1740 41·4 4,610

1741 46·4 4,858

1742 45·0 4,432

(B. R. Mitchell, Abstract of British Historical Statistics (Cambridge, 1962), 189 and 200.) [49 ] The increase in output of Scottish linen was more probably the result of the restoration of export bounties, which were first granted in 1742 and withdrawn for two years in 1754. R. H. Campbell, States of the Annual Progress of the Linen Manufacture, 1727–54 (Edinburgh, 1964), vi. [50 ] The increase in output of West Riding cloth in 1766 may have followed improved methods of supervision. H. Heaton, The Yorkshire Woollen and Worsted Industries (Oxford, 1920), 414–16. The stamp act is mentioned below, IV.vii.c.43. [q–q ] do so 1 [51 ] See below, IV.v.a.12.

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[52 ] See below, V.ii.k.4. [r–r ] one against 6 [s–s ] provision 6 [53 ] A similar point is made in the introduction to II. [t–t ] does not compensate 1 [54 ] See below, I.xi.o. and V.i.e.26 (p. 748), where it is pointed out with regard to an increase in the level of demand for manufactured goods, that ‘though in the beginning it may sometimes raise the price of goods, never fails to lower it in the long run’. [1 ] See below, I.x.c.26 and II.iv.8. [2 ] See above, I.viii.34. [3 ] Cf. above, I.vii.1. [4 ] Defined above, I.vi.18, and examined in II.iv. [5 ] Cf. II.iv.13. [6 ] Cantillon remarked, with regard to interest, that ‘its constant usage in States seems based upon the Profits which the Undertakers can make out of it’ (Essai, 265, ed. Higgs 201). [7 ] 37 Henry VIII, c.9 (1545). [8 ] 5 and 6 Edward VI, c.20 (1551). [9 ] ‘Nothing is more amusing than the multitude of Laws and Canons made in every age on the subject of the Interest of Money, always by Wiseacres who were hardly acquainted with Trade and always without effect.’ (Cantillon, Essai, 278–9, ed. Higgs, 211.) [10 ] Of 1571. [11 ] 21 James I, c.17 (1623). [12 ] 12 Charles II, c.13 (1660). [13 ] 13 Anne, c.15 (1713), in Statutes of the Realm, ix.928; 12 Anne, st.2, c.16, in Ruffhead’s edition. See also V.ii.f.8 and V.iii.27. [14 ] The relationship between the market and legal rates of interest is discussed below, II.iv.15. [15 ] The approximate yield on 3 per cent Funds was 3 per cent or below from 1750 to 1755.

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The yield increased during the war years from 1756 to a peak of 4.2 per cent in 1762. [16 ] See above, I.viii.31,33. [17 ] See below, I.xi.e.35. [ * ] aSee Denisart, Article Taux de Terres, tom.iii. p. 18.a [J. B. Denisart, Collection de décisions nouvelles et de notions relatives à la jurisprudence actuelle (Paris, 7th ed., 1771).] [18 ] See below, II.iv.16. In England the usury laws were generally respected. [19 ] Cf. Imitative Arts, I.14: ‘In France, the condition of the inferior ranks of people is seldom so happy as it frequently is in England.’ [20 ] See below, V.ii.f.13 and V.ii.k.80. [21 ] It is stated at V.ii.a.9 that the policy of lending to foreign states was peculiar to the Canton of Berne. [22 ] There were differences of opinion. According to Postlethwayt, ‘The annuity we are constantly obliged to pay to foreigners, for the proportion of the principal money debt, which has been estimated by some at ⅓, and by others at ¼, of the whole debt.’ (M. Postlethwayt, Dictionary of Commerce (London, 1774).) By contrast, ‘It is more than probable, that Foreigners are not concerned in any Thing like One–fourth of the national Debt; the Dutch, who are the principal Creditors, however engaged before, not advancing an equal Proportion of the last accumulated Debt of 30,000,000. I have been informed, that most of the Money which the Dutch have here, is in Bank, East India, and South Sea Stocks, and that their Interest in them might account to One–third of the Whole.’ (N. Magens, The Universal Merchant, ed. Horsley 13.) In The Present State of the Nation (1768), 30, the author states that ‘the interest of the debt due to foreigners amounts to £1,560,000, which must be paid out of the profits of our trade’. Foreigners would hold about one–quarter on his computation. [23 ] See above, I.ix.23. [24 ] See below, IV.vii.c.38. [b–b ] land 4–6 [25 ] See above, I.iii.4, and below, II.v.21, where Smith comments on the importance of investment in agriculture, as explaining the rapid growth rate of the American colonies. [26 ] See below, III.i.5 and IV.vii.b.2. [27 ] See above, I.viii. [28 ] See below, II.iii.

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[29 ] See below, especially IV.vii.c.19–25. This argument was to be a feature of Smith’s critique of colonial policy in IV.vii.c. [30 ] See below, II.iii.35 and V.iii.58. [c–c ] cheaper 1–2 [d–d ] five and forty 1 [31 ] ‘If Brutus thinks that I ought to have allowed 48 per cent, when throughout my province I have recognized only 12 per cent, and have fixed this rate in my edict, with the approval of the most grasping userers; . . . I shall be sorry that he is angry with me, but I shall be far sorrier at discovering that he is not the man I imagined he was.’ (Cicero, Letters to Atticus, VI, i.5–6, translated by E. O. Winstedt in Loeb Classical Library (1912), i.422–3.) [32 ] See above, I.viii.24. Smith comments on China’s neglect of foreign commerce, for example, at I.iii.7, II.v.22, III.i.7, and IV.iii.c.11, arguing at IV.ix.40 and 41 that any relaxation of the laws governing her trade would give a considerable stimulus to growth. [33 ] Montesquieu attributed the lack of trade to the character of the Chinese, whose precarious subsistence inspired them with such ‘an excessive desire of gain, that no trading nation can confide in them. This acknowledged infedility has secured them the possession of the trade to Japan.’ Esprit, XIX.x.3. In XIX.xx.1 the Chinese are described as the ‘greatest cheats upon earth’. [34 ] Cantillon held that in China the large number of small undertakers ‘keep up the rate of Interest in the highest class at 30 per cent, while it hardly exceeds 5 per cent in our Europe. At Athens in the time of Solon interest was at 18 per cent. In the Roman Republic it was most commonly 12 per cent, but has been known to be 48, 20, 8, 6 and the lowest 4 per cent.’ (Essai, 281–2, ed. Higgs 213.) [35 ] For a discussion of contract, see LJ (B) 175–80, ed. Cannan 130–4. [36 ] ‘The laws of Mahomet confound usury with lending upon interest. Usury increases in Mahommedan countries in proportion to the severity of the prohibition. The lender indemnifies himself for the danger he undergoes of suffering the penalty. In those Eastern countries, the greater part of the people are secure in nothing; there is hardly any proportion between the actual possession of a sum and the hopes of receiving it again after having lent it: usury, then, must be raised in proportion to the danger of insolvency.’ (Montesquieu, Esprit, XXII.xix.5–6.) [37 ] See below, V.ii.f, where Smith discusses taxes on profits. [38 ] See below, IV.vii.c.101–5. [39 ] See below, V.ii.e.2, where Smith discusses profits on house–building. [e–e ] 2–6 [includes the whole of this paragraph]

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[40 ] Similar sentiments are expressed below, IV.vii.c.29. Smith also states that high profits destroy parsimony, at IV.vii.c.61. [a–a ] either evidently 1–2 [1 ] Smith uses the doctrine of net advantages in discussing taxes on particular employments, below, V.ii.i.6. [2 ] This term is used, for example, at I.vii.6 and 30, IV.vii.c.44. [3 ] Cf. Cantillon, Essai, 24, 26–7, ed. Higgs 19, 21–3: Those who employ Artisans or Craftsmen must needs therefore pay for their labour at a higher rate than for that of a Husbandman or common Labourer; and their labour will necessarily be dear in proportion to the time lost in learning the trade and the cost and risk incurred in becoming proficient. The Crafts which require the most Time in training or most Ingenuity and Industry must necessarily be the best paid. A skilful Cabinet–maker must receive a higher price for his work than an ordinary Carpenter, and a good Watchmaker more than a Farrier. The Arts and Crafts which are accompanied by risks and dangers like those of Founders, Mariners, Silver miners, etc. ought to be paid in proportion to the risks. When over and above the dangers skill is needed they ought to be paid still more, e.g. Pilots, Divers, Engineers, etc. When Capacity and trustworthiness are needed the labour is paid still more highly, as in the case of Jewellers, Bookkeepers, Cashiers and others. Also Harris, Essay, i.13: ‘And as any given trade is attended with greater risques of any sort, requires more skill, more trust, more expence in setting up, etc. the artificer will be entitled to still better wages. In like manner, those professions that require genius, great confidence, a liberal education, etc. have a right to be rewarded proportionably.’ Hutcheson also points out that wages and profits may be affected by the costs of maintaining the ‘dignity of station in which, according to the custom of a country, the men must live who provide us with certain goods, or works of art’ (System, ii.55; Cf. ii.63 and below, V.ii.k.3). Smith discusses the different considerations which will induce a man ‘to apply all his art and industry to some particular branch of business’ in LJ (A) vi.58–63, 67–9, LJ (B) 224–7, ed. Cannan 173–6. See also ED 3.1: the returns from any employment must be sufficient ‘1st to maintain him; 2ndly to indemnify him for the expence of his education to that particular business; 3dly to compensate him for the risk he may run, either of not living long enough to receive this indemnification, or of not succeding in the trade, let him live ever so long.’ [4 ] See below, I.x.b.24. [5 ] LJ (A) i.56 refers to the ‘delight the great take in hunting and the great inclination they have to screw all they can out of their hands.’ [6 ] Cf. I.xi.b.25.

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[ * ] aSee Idyllium xxi.a [Idyll xxi, ‘The Fishermen’, begins, ‘It is Poverty . . . that alone can rouse the crafts’, translated by R. C. Trevelyan, The Idylls of Theocritus (Cambridge, 1947), 66– 8.] [7 ] ‘Nothing can be dear, of which there is great Plenty, how beneficial soever it may be to Man; and Scarcity inhances the Price of Things much oftener than the Usefulness of them. Hence it is evident why those Arts and Sciences will always be the most lucrative that cannot be attain’d to, but in great length of Time, by tedious Study and close Application; or else require a particular Genius, not often to be met with. It is likewise evident, to whose Lot, in all Societies, the hard and dirty Labour, which no Body would meddle with, if he could help it, will ever fall.’ (Mandeville, The Fable of the Bees, pt. ii. 423, ed. Kaye ii.350–1.) [b–b ] its 1–2 [8 ] See below, II.ii.7. [9 ] See below, II.i.17, where Smith includes the ‘acquired and useful abilities’ of the inhabitants in the nation’s fixed capital, and cf. IV.viii.44, where the artificer is described as a ‘living instrument’ of trade. [c–c ] equal 4 <corrected 4e–6> [10 ] In LJ (A) vi.60 the life of a man, after completing his apprenticeship, is estimated at 10 or 12 years’ purchase. The same figure is cited in LJ (B) 225, ed. Cannan 174, and in Cantillon, Essai, 24, ed. Higgs 19. [11 ] See below, I.x.c.23. [12 ] See below, I.x.c.14. [13 ] See LJ (A) vi.59. [d ] a 6 [14 ] See below, I.x.c.61. [15 ] In LJ (B) 139, ed. Cannan 100, the wages of labour are given as between 6 and 8 pence, and as not exceeding 10 pence or a shilling for Newcastle colliers. In LJ (A) iii.129–30 it is stated that these colliers will not earn in excess of 13 or 14 pence a day and that 6 pence is the mean rate for other classes of labour, with agricultural rates varying between 8 and 5 pence. In contrast, wages in the Scottish collieries, which used a form of slave labour, were stated in LJ (B) 139, ed. Cannan 100, to be of the order of 2s. 6d. and in LJ (A) iii.129 to vary between 2s. and 3s. In referring to the differential between Scottish and Newcastle rates in the mines, Smith comments that colliers still left Scottish coal works . . . ‘and run there tho’ they have less wages, where they have liberty’ (LJ (B) 139). With regard to the differential between wages in the Scottish collieries and other employments in the same country Smith says in LJ (A) iii.129–30 that the collier has ‘about four times the wages

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he would have were the work open to all men’, many of whom were deterred from entering into the trade, since ‘it is a rule that one who works a year and a day in the coal pit becomes a slave as the rest and may be claimed by the owner, unless he has bargain’d not to take advantage of this.’ Cf. Anderson, Notes, 34: Were our salters and colliers put upon the same footing with other fabourers, it would be much better for their masters. When men are constrained to work for another they will not work so hard as if at liberty—this is manifest in quarrying and other mines. In the Newcastle mines work is done cheaper than in this country. In this country a collier and salter can earn more than a quarrier or any other labourer who works as hard. Smith comments on the high cost of slave labour, above, I.viii.41, and contrasts its use with that of free men in mining at IV.ix.47. [e–e ] effect 5 [16 ] ‘It is a familiar rule in all business, that every man should be payed, in proportion to the trust reposed in him, and to the power, which he enjoys.’ (Hume, History of England (1778), viii.325.) [17 ] Cf. Letter 143 addressed to Cullen, dated 20 September 1774: ‘There never was, and I will venture to say there never will be, a University from which a degree could give any tolerable security, that the person upon whom it had been conferred, was fit to practice physic.’ See below, V.i.f.11. [18 ] Smith makes a similar point in LJ (A) vi.68–9 in the course of discussing the relative merits of raising corn and mining for the precious metals; cf. LJ (B) 226, ed. Cannan 176. [f–f ] is 5–6 [g–g ] it 1 [19 ] The point is further illustrated at V.i.b.19, and V.ii.k.80. Cf. LJ (A) vi.62, with regard to the profession of law: ‘The temptation to engage in this or any other of the liberall arts is rather the respect, credit, and eminence it gives one, than the profit of it.’ Cf. LJ (B) 226, ed. Cannan 175. In LJ (A) v.37, Smith commented that judges were usually men of ‘great integrity and knowledge’ and often one of ‘the first men in the kingdom’. However, LJ (A) v.5 refers to the humbler office of sheriff as one which was not ‘attended with great dignity and . . . profit, so that many pay a fine of £500 to be excused from it’. TMS III.i.2.20 points out that some philosophers, for example mathematicians such as Sir Isaac Newton, ‘are frequently very indifferent about the reception they meet with from the public’, being assured of the truth of their discoveries. He added that in this respect natural philosophers ‘approach nearly to mathematicians’. Mandeville took note of a related problem in observing that ‘There are abundance of Men of a Genteel Education, that have but very small Revenues, and yet are forced, by their Reputable Callings, to make a greater Figure than ordinary People of twice their Income.’ (The Fable of the Bees, pt.i.46, ed. Kaye, i.59.)

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[20 ] This concept of concern with the public opinion of our conduct is further illustrated at II.iii.40, V.i.g.12, and V.ii.k.3. [21 ] These employments are described as unproductive at II.iii.2. LRBL ii.230, ed. Lothian 183, refers to Aeschines ‘who was bred a player, an employment as creditable at that time as it is discreditable now’. In TMS I.iii.2.1 Smith argues that men naturally seek the approval of their fellows, a point which may explain why certain levels of monetary return are required in order to compensate the kind of public disapprobation incurred by the opera singer or dancer. By the same token, public approbation may help to explain why in some cases, monetary returns should be relatively low. [22 ] Hutcheson, however, had commented on the ‘vain hopes of multitudes, and a sort of self– flattery in their good fortune’ in discussing the disadvantages of lotteries (System, ii.75). In the same vein, he stated in the Short Introduction, 221, with regard to lotteries, that ‘as men thro’ some vain opinions of their own good luck are generally very prone to them; they should be every where under the restraint of laws’. Smith comments on man’s absurd presumption of success for example at I.x.b.33, I.xi.c.26, and V.iii.33. Cf. Montesquieu: ‘Mankind are generally fond of gaming; and even the most prudent have no aversion to it’ (Esprit, XX.vi.3). [23 ] The trade of insurance is described as suitable for a joint stock company, being reducible to strict rule and method, at V.i.e.32. Smith describes the attraction of the joint stock organization in terms of the exemption provided from risk at V.i.e.18. [24 ] See below, V.i.a.14. [25 ] Cf. Mandeville, The Fable of the Bees, pt. i.366, ed. Kaye i.319: ‘When it is taken for granted that a Soldier, whose Strength and Vigour is to be kept up at least as much as any Body’s, can live upon Six–Pence a Day, I can’t conceive the Necessity of giving the greatest part of the Year Sixteen and Eighteen Pence to a Day–Labourer.’ [26 ] See above, I.viii.31. [27 ] See below, III.ii.10, where Smith admits that the profits on sugar plantations in the West Indian colonies were ‘generally much greater than those of any other cultivation that is known either in Europe or America’. [28 ] See above, I.ix.18. [h–h ] their 5–6 [29 ] See IV.v.b.8 regarding the corn trade, and II.iv.17 with reference to investment in land. [30 ] Smith comments on the need to distinguish categories of return at I.vi.19. [31 ] See above, I.viii.31. [i–i ] must be 6

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[j ] it 3 om. 1–2 <corrected 3e–6> [32 ] See below, III.iii.20, where the manufactures of Sheffield and Birmingham are stated to have developed as a result of the refinement of domestic output, as distinct from having been introduced as a consequence of foreign contacts. [33 ] Smith argues below, II.iii.26, that unsuccessful projects diminish the funds available for investment. This argument is linked to Smith’s willingness to regulate the rate of interest. See below, II.iv.15. [34 ] See below, IV.ii.42. [35 ] See above, I.vii.17. [36 ] See above, I.vii.19. [37 ] See below, V.i.d.10, where Smith discusses a proposal to employ soldiers on the roads. [38 ] For a description of this set of people, see M. Gray, The Highland Economy (Edinburgh, 1957), 201–4. Cf. Sir James Steuart: ‘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).’ He added that he imagined this sort of subsistence farming ‘to be, less or more, the picture of Europe 400 years ago’ (Principles, i.103, ed. Skinner, i.105–6). [39 ] A similar point is made below, I.xi.o.14. [40 ] Lerwick. [41 ] Cf. IV.viii.4. [42 ] James Boswell lived for £22 a year in comfortable lodgings in London in 1762. J. Boswell, London Journal, 1762–3, (ed. F. A. Pottle and C. Marley, Harmondsworth, 1966), 85. In a letter dated London, 11 March 1766, Professor Rouet informed Baron Mure that Sir James Steuart had rented ‘a parlour and two pair of stair rooms to sleep in, at one guinea per week’ (Caldwell Papers (Maitland Club, 1854), ii.81), Skinner, xlv. [1 ] Smith comments at IV.viii.44 on the restrictions imposed on the movement of artificers between countries. [2 ] At V.i.e.7 Smith maintains that regulated companies resemble ‘in every respect, the corporations of trades’. [3 ] Smith called for the abolition of such privileges, including the law of settlements and the statute of apprenticeship, at IV.ii.42. [4 ] Charles II, c.5 (1662) in Statutes of the Realm, v.370–4; 13 and 14 Charles II, c.5 in

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Ruffhead’s edition. [5 ] 8 Elizabeth I, c.11 (1566), further enforced by 1 James I, c.17 (1603), in Statutes of the Realm, iv(2) 1035; 2 (vulgo 1) James I, c.17 in Ruffhead’s edition and extended to the American colonies by 5 George II, c.22 (1731). [6 ] 19 and 20 Charles II, c.11 (1670) in Statutes of the Realm, v.640; 20 Charles II, c.6 in Ruffhead’s edition; s.3 states ‘no By–law already made or hereafter to be made by the said Company shall or may limit or confine any Freeman of the said Company to take a lesse number than three Apprentices at any time’. [7 ] Thomas Madox, Firma Burgi (London, 1726), 32. [8 ] In Letter 143 addressed to Cullen, dated 20 September 1774 Smith remarked that the Universities required 5 and 7 years for a Master of Arts, 11 and 16 for a Doctor of Law, Physic, or Divinity. He added that the real motive behind such long periods of study was commercial, and they were simply designed so that ‘the student may spend more money among them, and that they may make more profit by him’. See below, V.i.e.7, and V.i.f.11. [9 ] 5 Elizabeth I, c.4 (1562). See below, I.x.c.42. [10 ] See above, I.iii.2. [11 ] Discharged soldiers and sailors were allowed to exercise any trade even against 5 Elizabeth I, c.4 by 12 Charles II, c.16 (1660). Similar provisions were made by 12 Anne, c.14 (1712) in Statutes of the Realm, ix.791–3; 12 Anne, st.1, c.13 in Ruffhead’s edition, and by 3 George III, c.8 (1762). See below, IV.ii.42. [12 ] A brief discussion of the legal and other qualifications in the operation of the Act is in J. H. Clapham A Concise Economic History of Britain (Cambridge, 1949), 256–7. [13 ] ‘Compagnon’ and ‘compagnonnage’. [14 ] There were considerable local variations in Scotland, and the prescribed period of three years was not necessarily so general as Smith implies. I. F. Grant, Social and Economic Development of Scotland before 1603 (Edinburgh, 1930), 422–3. Miss Grant also holds that ‘the object of the craftsmen was rather to limit their privileges to those who were willing to pay for them than to exclude as many people as possible’ (420). [a–a ] other 1 [15 ] 28 Edward I, c.20 (1300). [16 ] 10 Anne, c.23 (1711) in Statutes of the Realm, ix.682–4; 10 Anne, c.21 in Ruffhead’s edition provided for the stamping of linen in Scotland. 13 George I, c.26 (1726) detailed the standard length and breadth of cloth.

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[17 ] 39 Elizabeth I, c.20 (1597), confirmed by 43 Elizabeth I, c.10 (1601). See above, I.iv.7. [18 ] LJ (B) 306–7, ed. Cannan 236, comments that a seven–year apprenticeship was no security against bad cloth, and added that: ‘You yourself cannot inspect a large piece of cloth, this must be left to the stampmaster, whose credit must be depended upon.’ [b–b ] workmen 5–6 [19 ] Cantillon remarked, Essai, 52, ed. Higgs 41, that where piece rates are used, journeymen will ‘work for their own interest as hard as they can without further inspection’. See also Steuart, Principles, i.193, ed. Skinner, i.169. See above, I.viii.44, where payment by the piece is also discussed. [20 ] See above, I.x.b.8, on the idleness of apprentices. [21 ] Smith was rather more generous in LJ (B) 225, ed. Cannan 175: a