, . . AN

INQUIRY

INTO THE

Nature and Caufes

OF THE

WEALTH of NATIONS.

VOL. II.

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A N

INQUIRY

INTO THE

Nature and Caufes

OF THE

WEALTH of NATIONS.

By ADAM SMITH, LL. D. and F. R. S.

Formerly Profeflbr of Moral Philofophy in the Univerfity of Glasgow.

V O L. II.

LONDON:

PRINTED FOR W. STR AH AN j AND T. CADELL, IN THE STRAND.

MDCCLXXVI.

The Reader is defired to correft with his Pen the two followin
ERRATA, which in this Second Volume affect, the Senfe.

Page 467, Line 6, counting from the Bottom; inftead of

immoveable, read moveable.

Page 483, Lines 3 and 4, counting from the Top; inftead of

three killings a bufal, read three Jhillings and four-pence a.

bujbeh

*AVO«

A N

I N Q, U I R Y

INTO THE

NATURE and CAUSES

OF THE.

WEALTH of NATIONS.

BOOK IV.

Of Syftems of political Oeconomy.

INTRODUCTION.

TP^OLITICAL ceconomy, confidered as a branch of the fcience of book
\r a ftatefman or legiflator, propofes two diftinct obiec~ts : firft, „ IV- .

JUL. . Introduction.

to provide a plentiful revenue or fubfiftence for the people, or
more properly to enable them to provide fuch a revenue or fub-
fiftence for themfelves ; and fecondly, to fupply the ftate or com-
monwealth with a revenue fufricient for the publick fervices. It
propofes to enrich both the people and the fovereign.

The different progrefs of opulence in different ages and nations,
has given occafion to two different fyffems of political ceconomy,
with regard to enriching the people. The one may be called
the fyftem of commerce, the other that of agriculture. I mall
endeavour to explain both as fully and diftinc"tly as I can, and fhall
begin with the fyftem of commerce. It is the modern fyftem, and
is beft underftood in our own country and in our own times.

Vol. II. B

THE NATURE AND CAUSES OF

CHAP. I.

Of the "Principle of the commercial, or mercantile Syftem.

BOOK / I ^HAT wealth confifts in money, or in gold and filver, is
c-— v— j JL a popular notion which naturally allies from the double
function of money, as the inftrurnent of commerce, and as the
meafure of value. In confequence of its being the inftrument of
commerce, when we have money we can more readily obtain
whatever elfe we have occafion for, than by means of any other
commodity. The great affair, we always find, is to get money.
When that is obtained, there is no difficulty in making any fub-
fequent purchafe. In confequence of its being the meafure of
value, we eftimate that of all other commodities by the quantity
of money which they will exchange for. We fay of a rich man
that he is worth a great deal, and of a poor man that he is worth
very little money. A frugal man, or a man eager to be rich, is
faid to love money ; and a carelefs, a generous, or a profufe man,
is faid to be indifferent about it. To grow rich is to get money *
and wealth and money, in fhort, are in common language con-
fidered as in every refpect fynonymous.

A rich country, in the fame manner as a rich man, is fup-
pofed to be a country abounding in money ; and to heap up gold
and filver in any country is fuppofed to be the readieft way to enrich
it. For fome time after the difcovery of America, the firft en-
quiry of the Spaniards, when they arrived upon any unknown
coaft, ufed to be, if there was any gold or filver to be found in
the neighbourhood. By the information which they received, they
judged whether it was worth while to make a fettlement there, or
if the country was worth the conquering. Piano Carpino, a monk

fenfc

THE WEALTH OF NATIONS.

fent ambaflador from the king of France to one of the fons of C HA p.
the famous Gengis Khan, fays that the Tartars ufed frequently k_-^v~«j
to afk him if there was plenty of flieep and oxen in the kingdom
of France. Their enquiry had the fame object with that of the
Spaniards. They wanted to know if the country was rich enough
to be worth the conquering. Among the Tartars, as among all
other nations of fhepherds, who are generally ignorant of the
ufe of money, cattle are the inftruments of commerce and the
meamres of value. Wealth, therefore, according to them, con-
lifted in cattle, as according to the Spaniards it confuted in gold
and filver. Of the two, the Tartar notion, perhaps, was the
neareft to the truth.

Mr. Locke remarks a diftincrion between money and other
moveable goods. All other moveable goods, he fays, are of
fo confumable a nature that the wealth which confifts in them
cannot be much depended on, and a nation which abounds in
them one year may, without any exportation, but merely by their
own wafte and extravagance, be in great want of them the next.
Money, on the contrary, is a fteady friend, which, though it may
travel about from hand to hand, yet, if it can be kept from going
out of the country, is not very liable to be wafted and con-
fumed. Gold and filver, therefore, are, according to him, the
moft folid and fubftantial part of the moveable wealth of a nation,
and to multiply thofe metals ought, he thinks, upon that account,
to be the great objecl of its political ceconomy.

Others admit that if a nation could be feparated from all the
world, it would be of no confequence how much, or how little
money circulated in it. The confumable goods which were cir-
culated by means of this money, would only be exchanged for a
greater or a fmaller number of pieces ; but the real wealth or

B 2 poverty

THE NATURE AND CAUSES OF

K poverty of the country, they allow, would depend altogether upon
-J the abundance or fcarcity of thofe confumable goods. But it is
otherwife, they think, with countries which have connections with
foreign nations, and which are obliged to cany on foreign wars, and
to maintain fleets and armies in diftant countries. This, they fay,
cannot be done, but by fending abroad money to pay them with >
and a nation cannot fend much money abroad, unlefs it has a good
deal at home. Every fuch nation, therefore, mufl endeavour in
time of peace to accumulate gold and filver, that, when occafion
requires, it may have wherewithal to carry on foreign wars.

In confequence of thefe popular notions, all the different nations
of Europe have ftudied, though to little purpofe, every poffible
means of accumulating gold and filver in their refpective countries.
Spain and Portugal, the proprietors of the principal mines which
fupply Europe with thofe medals, have either prohibited their expor-
tation under the fevereft penalties, or fubjected it to a confiderable
duty. The like prohibition feems antiently to have made a part of
the policy of moil other European nations. It is even to be found,
where we mould expect leaft of all to find it, in fome old Scotch
acts of parliament, which forbid under heavy penalties the car-
rying gold or filver forth of the kingdom. The like policy antiently
took place both in France and England.

When thofe countries became commercial, the merchants found
this prohibition, upon many occafions, extreamly inconvenient.
They could frequently buy more advantageoufly with gold and
filver than with any other commodity, the foreign goods which
they wanted either to import into their own, or to carry to fome
other foreign country. They remonftrated, therefore, againft this
prohibition as hurtful to trade.

They

THE WEALTH OF NATIONS.

They reprefented, firft, that the exportation of gold and filver CHAP,
in order to purchafe foreign goods, did not always diminish the u— y-*»
quantity of thofe metals in the kingdom. That, on the contrary*
it might frequently increafe it ; becaufe if the confumption of
foreign goods was not thereby increafed in the country, thofe
goods might be re-exported to foreign countries, and being there
fold for a large profit, might bring back much more treamre
than was originally fent out to purchafe them. Mr. Mun com-
pares this operation of foreign trade to the feed time and harveft
of agriculture. " If we only behold," fays he, " the actions of
*< the hufbandman in the feed time when he cafteth away much
" good corn into the ground, we mail account him rather a madman
** than a hufbandman. But when we confider his labours in-
*' the harveft, which is the end of his endeavours, we fhall find
*' the worth and plentiful increafe of his actions."

They reprefented, fecondly, that this prohibition could not
hinder the exportation of gold and filver, which, on account of
the fmallnefs of their bulk" in proportion to their value, could eafily
be fmuggled abroad. That this exportation could only be prevented
by a proper attention to, what they called, the balance of trade,.
That when the country exported to a greater value than it imported,
a balance became due to it from foreign nations, which was necef-
farily paid to it in gold and filver, and thereby increafed the quan-
tity of thofe metals in the kingdom. But that when it imported
to a greater value than it exported, a contrary balance became
due to foreign nations, which was neceffarily paid to them in the
fame manner, and thereby diminifhed that quantity. That in this
cafe to prohibit the exportation of thofe metals could not prevent it,
but only, by making it more dangerous, render it more expenfive.
That the exchange was thereby turned more againft the country
which owed the balance, than it otherwife might have been ; the
merchant who purchafed a bill upon the foreign country being

obliged

6

THE NATURE AND CAUSES OF

B O O K obliged to pay the banker who fold it, not only for the natural
v-^J rlfk, trouble and expence of fending the money thither, but for
the extraordinary rifk arifmg from the prohibition. But that the
more the exchange was againft any country, the more the balance
of trade became neceffarily againft it ; the money of that country
becoming neceflarily of fo much lefs value, in comparifon with that
of the country to which the balance was due. That if the
exchange between England and Holland, for example, was five
per cent, againft England, it would require a hundred and five
ounces of filler in England to purchafe a bill for a hundred ounces
of filver in Holland : that a hundred and five ounces of filver in
England, therefore, would be worth only a hundred ounces of
filver in Holland, and would purchafe only a proportionable quan-
tity of Dutch goods : but that a hundred ounces of filver in Hol-
land, on the contrary, would be worth a hundred and five ounces
in England, and would purchafe a proportionable quantity of
Englifh goods : That the Englifh goods which were fold to Holland
would be fold fo much cheaper ; and the Dutch goods which were
fold to England, fo much dearer, by the difference of the ex-
change ; that the one would draw fo much lefs Dutch money to
England, and the other fo much more Englifh money to Holland,
as this difference amounted to : and that the balance of trade,
therefore, would neceffarily be fo much more againft England,
and would require a greater balance of gold and filver to be ex-
ported to Holland.

Those arguments were partly folid and partly fophiftical. They
were folid fo far as they alTerted that the exportation of gold and
filver in trade might frequently be advantageous to the country.
They were folid too in aflerting that no prohibition could prevent
their exportation, when private people found any advantage in ex-
porting them. Eut they were fophiftical in fuppofing, that either

to

THE WEALTH OF NATIONS.

to preferve or to augment the quantity of thofe metals required C
more the attention of government, than to preferve or to augment u
the quantity of any other ufeful commodities, which the freedom
of trade, without any fuch attention, never fails to fupply in the
proper quantity. They were fophiftical too, perhaps, in affert-
ing that the high price of exchange neceffarily increafed, what they
called, the unfavourable balance of trade, or occafioned the ex-
portation of a greater quantity of gold and filver. That high
price, indeed, was extremely difadvantageous to the merchants
who had any money to pay in foreign countries. They paid fo
much dearer for the bills which their bankers granted them upon
thofe countries. But though the rifk arifing from the prohibition
might occafion fome extraordinary expence to the bankers, it would
not neceffarily carry any more money ou; of the country. This
expence would generally be all laid out in the country, in fmug-
gling the money out of it, and could feldom occafion the export-
ation of a fingle fix-pence beyond the precife fum drawn for.
The high price of exchange too would naturally difpofe the mer-
chants to endeavour to make their exports nearly balance their im-
ports, in order that they might have this high exchange to pay
upon as fmall a fum as poffible. The high price of exchange,
therefore, would tend, not to increafe, but to diminiih, what they
called, the unfavourable balance of trade, and confequently the
exportation of gold and filver.

Such as they were, however, thofe arguments convinced the
people to whom they were addreffed. They were addreffed by
merchants to parliaments, and to the councils of princes, to
nobles and to country gentlemen ; by thofe who were fuppofed to>
underftand trade, to thofe who were confeious to themfelves that
they knew nothing about the matter. That foreign trade enriched
the country, experience demonflrated to the nobles and country

4 gentlemen,

8 THE NATURE AND CAUSES OF

B 9«P K gentlemen, as well as to the merchants ; but how, or in what
t— — v—— * manner, none of them well knew. The merchants knew perfectly
in what manner it enriched themfelves. It was their bulinefs to
know it. But to know in what manner it enriched the country,
was no part of their bufinefs. This fubject never came into their
confideration, but when they had occalion to apply to their country
for fome change in the laws relating to foreign trade. It then
became neceffary to fay fomething about the beneficial effects of
foreign trade, and the manner in which thofe effects were obftructed
by the laws as they then flood. To the judges who were to decide
the bufinefs, it appeared a moft fatisfactory account of the matter,
when they were told that foreign trade brought money into the
country, but that the laws in queftion hindered it from bringing fo
much as it otherwife would do. Thofe arguments therefore produced
the wifhed-for effect. The prohibition of exporting gold and filver
v/as in France and England confined to the coin of thofe refpective
countries. The exportation of foreign coin and of bullion was
made free. In Holland, and in fome other places, this liberty
was extended even to the coin of the country. The attention of
government v/as turned away from guarding againfl the exportation
of gold and filver, to watch over the balance of trade, as the only
caufe which could occafion any augmentation or diminution of
thofe metals. From one fruitlefs care it was turned away to an-
other care much more intricate, much more embarraffing, and juft
equally fruitlefs. The title of Mun's book, England's Treafure
in Foreign Trade, became a fundamental maxim in the political
ceconomy, not of England only, but of all other commercial
countries. The inland or home trade, the moft important of all, the
trade in which an equal capital affords the greater! revenue and
-creates the greater!: employment to the people of the country, was
.confidered as fubfidiary only to foreign trade. It neither brought
money into the country, it was faid, nor carried any out of it.

The

THE WEALTH OF NATIONS.

The country therefore could never become either richer or poorer by fC
means of it, except fo far as its profperity or -decay might indirectly
influence the ftate of foreign trade.

A country that has no mines of its own muft undoubtedly
draw its gold and filver from foreign countries, in the fame manner
as one that has no vineyards of its own muft draw its wines. It does
not feem neceflary, however, that the attention of government
mould be more turned towards the one than towards the other object.
A country that has wherewithal to buy wine, will always get the wine
which it has occafion for j and a country that has wherewithal to
buy gold and filver, will never be in want of thofe metals. They
are to be bought for. a certain price like all other commodities, and
as they are the price of all other commodities, fo all other com-
modities are the price of thofe metals. We truft with perfecl fecu-
rity that the freedom of trade, without any attention of govern-
ment, will always fupply us with the wine which we have occafion
for : and we may truft with equal fecurity that it will always fup-
ply us with all the gold and filver which we can afford to purchafe
or to employ, either in circulating our commodities or in other
ufes.

The quantity of every commodity which human induftry can
either purchafe or produce, naturally regulates itfelf in every country
according to the effectual demand, or according to the demand of
thofe who are willing to pay the whole rent, labour, and profits which
muft be paid in order to prepare and bring it to market. But no
commodities regulate themfelves more eafily or more exactly accord-
ing to this effectual demand than gold and filver j becaufe on account
of the fmall bulk and great value of thofe metals, no commodities
can be more eafily tranfported from one place to another, from the
.places where they are cheap, to thofe where they are dear, from the

Vol. II. C places

to

THE NATURE AND CAUSES OF

B K P^aces where they exceed, to thofe where they fall ftiort of this ef-
^ fectual demand. If there was in England, for example, art
effectual demand for an additional quantity of gold, a packet-boat
could bring from Lifibon, or from wherever elfe it was to be had,
fifty tuns of gold, which could be coined into more than five mil-
lions of guineas. But if there was an effectual demand for grain
to the fame value, to import it would require, at five guineas a
tun, a million of tuns of fhipping, or a thoufand fhips of a
thoufand tuns each. The navy of England would not be fuf-
ficient.

When the quantity of gold and filver imported into any country-
exceeds the effectual demand, no vigilance of government can
prevent their exportation. All the fanguinary laws of Spain and
Portugal are not able to keep their gold and filver at home. The
continual importations from Peru and Brazil exceed the effectual
demand of thofe countries, and fink the price of thofe metals there
below that in the neighbouring countries. If, on the contrary*
in any particular country their quantity fell fhort of the effectual
demand, fo as to raife their price above that in the neighbouring
countries, the government would have no occafion to take any
pains to import them. If it was even to take pains to prevent
their importation, it would not be able to effectuate it. Thofe
metals, when the Spartans had got wherewithal to purchafe them,
broke through all the barriers which the laws of Lycurgus oppofed
to their entrance into Lacedemon. All the fanguinary laws of
the cuftoms, are not able to prevent the importation of the teas
of the Dutch and Gottenburg Eaft India companies ; becaufe
fomewhat cheaper than thofe of the Britifh company. A pound
of tea, however, is about a hundred times the bulk of one of
the higher!: prices, fixteen fhillings, that is commonly paid for
it in filver, and more than two thoufand times the bulk of the

4 fame

THE WEALTH OF NATIONS

ii

fame price in gold, and confequently juft fo many times more dif- CHAP,
ficult to fmuggle. <— -v'-— <

It is partly owing to the eafy tranfportation of gold and filver
from the places where they abound to thofe where they are wanted,
that the price of thofe metals does not fluctuate continually like that
of the greater part of other commodities, which are hindered by
their bulk from fhifting their fituation, when the market happens
to be either over or underftocked with them. The price of thofe
metals, indeed, is not altogether exempted from variation, but the
changes to which it is liable are generally flow, gradual, and uni-
form. In Europe, for example, it is fuppofed, without much
foundation perhaps, that, during the courfe of the prefent and
preceeding century, they have been conftantly but gradually fink-
ing in their value, on account of the continual importations from
the Spanifh Weft Indies. But to make any fudden change in the
price of gold and filver, fo as to raife or lower at once, fenfibly
and remarkably, the money price of all other commodities, re-
quires fuch a revolution in commerce as that occafioned by the
difcovery of America.

If notwithstanding all this, gold and filver fliould at any time
fall fhort in a country which has wherewithal to purchafe them,
there are more expedients for fupplying their place, than that of
almoft any other commodity. If the materials of manufacture
are wanted, induftry muft flop. If pro virions are wanted, the
people muft ftarve. But if money is wanted, barter will fupply
its place, though with a good deal of inconveniency. Buying and
felling upon credit, and the different dealers compenfating their
credits with one another, once a month or once a year, will fupply
it with lefs inconveniency. A well regulated paper money will
fupply it, not only without any inconveniency, but with very

C 2 great

12

THE

NATURE AND

CAUSES OF'

BOOK great advantages. Upon every account, therefore, the attention
v-*-*-' of government never was fo unnecefiarily employed, as when di*
reeled to watch over the prefervation or increafe of the quantity of
money in any country. .

No complaint, however, is more common than that of a fcarrit^
of money. Money, like wine, muft always be fcarce with thofe
v/ho have neither wherewithal to buy it; nor credit to borrow iti
Thofe who have either, , will feldom be in want either of the money,'
or of the wine which they have occafion for. This complaint;
however, of the fcarcity of money, is not always confined to im-
provident fpendthrifts. It, is-, fometimes general through a whole
mercantile town, and the country in * its neighbourhood. Over-
trading is the. common caufe of it. Sober men, whofe projects
have been difproportioned to their capitals, are as likely to have
neither wherewithal to buy money, nor credit to borrowit, as pro-
digals whofe. expence has been difproportioned to their revenues
Before their projects can be brought to bear, their flock is gone, and
their credit with it. They run about. every where to borrow money,
and every body tells them that they have none to lend. Even fuchJ
general complaints of the fcarcity of money do not always prove
that the ufual number of gold and filver pieces are not circulating
in the country, but that many people want thofe pieces who have
nothing to give for them. When the profits of trade happen to
be greater than ordinary, overtrading, becomes a general error both
among great, and fmall dealers. They do not always fend more;
money abroad than ufual, but they buy upon credit both at home
and abroad, an unufual quantity, of goods, which they fend to-
fome diftant market, in hopes that the returns will come in before
the demand for payment. The demand comes before the returns,
and they have nothing at hand, with which they can either pur-
chafe money, or give folid fecurity for borrowing. It is not any-

fcarcity

THE WEALTH OF NATIONS.

fearcity of gold and filver, but the difficulty which fuch people find C
in- borrowing, and which their creditors find in getting payment, w
that occafions the general complaint of the fearcity of money.

It would be too ridiculous to go about ferioufly to prove, that
wealth does not confift in money, or in gold and filver > but in
what money purchafes, and is valuable only for purchafing..
Money, no doubt, makes always a part of the national capital ; ;
but it has already been fliown that it generally makes but a fmali
part, . and always the moft unprofitable part of it.

It is not becaufe wealth confifts more efTentlally in money than in. s
goods, that the merchant finds it generally more eafy to buy goods
with money,, than to buy money with goods ; but becaufe money
is the known and eftablifhed inftrument of commerce, for which,
every thing is readily given in exchange, but which is not always
with equal readinefs to be got in exchange for every thing. The
greater part of goods befides are more periihable than money, and
Ire may frequently fuftain a much greater lofs by keeping them*
When his goods are upon hand too, he is more liable to fuch
demands for money , as he may not be able to anfwer, than when
he has got their price in his coffers. Over and above all this*
his profit arifes more directly from felling than from buying, ,
and he is upon all thefe accounts generally much more anxious
to exchange his goods for money, than his money for goods.
But though a particular merchant, with abundance of goods in
his warehoufe, may fometimes be ruined ' by not being able, to
fell them in time, a nation or country is not liable to the fame
accident. The whole capital of a merchant frequently confifls in
psrifhable goods deftined for purchafing money. But it is but a
very fmall part of the annual produce of the land and labour of
a country which can ever be deftined for purchafing gold and filver

from )

4 THE NATURE AND CAUSES OF

BOOK from their neighbours. The far greater part is circulated and
cJ^~ i confumed among themfelves ; and even of the furplus which is
fent abroad, the greater part is generally deftined for the purchafe
of other foreign goods. Though gold and filver, therefore, could
not be had in exchange for the goods deftined to purchafe them,
the nation would not be ruined. It might, indeed, fufFer fome
lofs and inconveniency, and be forced upon fome of thofe expe-
dients which are neceffary for fupplying the place of money.
The annual produce of its land and labour, however, would be
the fame, or very nearly the fame, as ufual, becaufe the fame, or
very nearly the fame consumable capital would be employed in
maintaining it. And though goods do not always draw money fo
readily as money draws goods, in the long-run they draw it more
neceflarily than even it draws them. Goods caa ferve many other
purpofes befides purchafing money, but money can ferve no other
purpofe befides purchafing goods. Money, therefore, neceflarily
runs after goods, but goods do not always or neceflarily run after
money. The man who buys, does not always mean to fell again,
but frequently to ufe or to confume j whereas he who fells, always
means to buy again. The one may frequently have done the whole,
but the other can never have done more than the one-half of his
bufinefs. It is not for its own fake that men defire money, but for
the fake of what they can purchafe with it.

Consumable commodities, it is faid, arefoon deftroyed; where-
as gold and filver are of a more durable nature, and, were it not
for this continual exportation, might be accumulated for ages to-
gether, to the incredible augmentation of the real wealth of the
country. Nothing, therefore, it is pretended, can be more dif-
advantageous to any country, than the trade which confifts in the
exchange of fuch lading for fuch perifhable commodities. We do
not, however, reckon that trade difadvantageous which confifts

in

THE WEALTH OF NATIONS

J5

in the exchange of the hardware of England for the wines of c HjA p-
France ; and yet hardware is a very durable commodity, and was t^-^—J
it not for this continual exportation, might too be accumulated
for ages together, to the incredible augmentation of the pots and
pans of the country. But it readily occurs that the number of
fuch utenfils is in every country neceffarily limited by the ufe which
there is for them ; that it would be abfurd to have more pots
and pans than were neceffary for cooking the victuals ufually
con fumed there j and that if the quantity of victuals were to in-
creafe, the number of pots and pans would readily increafe along
with it, a part of the increafed quantity of victuals being employed
in purchafing them, or in maintaining an additional number of
workmen whofe bufinefs it was to make them. It mould as readily
occur that the quantity of gold and filver is in every country limited
by the ufe which there is for thofe metals that their ufe confirms
in circulating commodities as coin, and in affording a fpecies of
houfhold furniture as plate ; that . the quantity of coin in every
country is regulated by the value of the commodities which are
to be circulated by it : increafe that value, and immediately a
part of it will be fent abroad to purchase, wherever it is to be had,
the additional quantity of coin requifite for circulating them :
that the quantity of plate is regulated by the number and wealth
of thofe private families who chufe to indulge themfelves in that
fort of magnificence : increafe the number and wealth of fuch
families, and a part of this increafed wealth will moft probably
be employed in purchafing, wherever it is to be found, an addi-
tional quantity of plate : that to attempt to increafe the wealth
of any country, either by introducing or by detaining in it an
unnecefTary quantity of gold and filver, is as abfurd as it would be to
attempt to increafe the good cheer of private families, by obliging
them to keep an unnecefTary number of kitchen utenfils. As the
expence of purchafing thofe unnecefTary utenfils would diminifh

inftead

THE NATURE -AND CAUSES OF

inftead of increafmg either the quantity or goodnefs of the family
provifions ; fo the expence of purchafing an unneceffary quantity
of gold and . filver mull, in every country, as neceffarily diminifh.
the wealth which feeds, cloaths and lodges, which maintains and
employs the people. Gold and filver, whether in the fhape of
coin or of plate, are utenfils, it mull: be remembered, as much
as the furniture of the kitchen. Increafe the ufe for them, increafe
the confumable commodities which are to be circulated, managed
and prepared by means of them, and you will infallibly increafe
the quantity ; but if you attempt, by extraordinary means, to in-
creafe the quantity, you will as infallibly diminifh the ufe and
even the quantity too, which in thofe metals can never be greater
than what the ufe requires. Were they ever to be accumulated
beyond this quantity, their tranfportation is fo eafy, and the lofs
which attends their lying idle and unemployed fo great, that no
law could prevent their being immediately fent out of the country.

It is not always neceffary to accumulate gold and filver, in
order to enable a country to carry on foreign wars, and to main-
tain fleets and armies in diftant countries. Fleets and armies are
maintained, not with gold and filver, but with confumable goods.
The nation which, from the annual produce of its domeftic induftry,
from the annual revenue arifing out of its lands, labour and con-
fumable (lock, has wherewithal to purchafe thofe confumable
goods in diftant countries, can maintain foreign wars there.

A nation may purchafe the pay and provifions of an army
in a diftant country three different v/ays ; by fending abroad either,
firft, fome part of its accumulated gold and filver ; or, fecondly,
fome part of the annual produce of its manufactures ; or laft of
all, fome part of its annual rude produce.

7

The

THE WEALTH OF NATIONS. i

The gold and (liver which can properly beconfidered as accumu- CHAP,
lated or ftored up in any country, may be diftinguifhed into three v— -v^j
parts ; nrft, the circulating money ; fecondly, the plate of private
families ; and laft of all, the money which may have been collected
by many years parfimony, and laid up in the treafury of the prince.

It can feidom happen that much can be fpared from the
circulating money of the country ; becaufe in that there can
feidom be much redundancy. The value of goods annually bought
and fold in any country requires a certain quantity of money to
circulate and diftribute them to their proper confumers, and can
give employment to no more. The channel of circulation neceffa-
rily draws to itfelf a fum fafficient to fill it, and never admits
any more. Something, however, is generally withdrawn from this
channel in the cafe of foreign war. Ey the great number of people
who are maintained abroad, fewer are maintained at home. Fewer
goods are circulated there, and lefs money becomes neceffary to
circulate them. An extraordinary quantity of paper money, of
fome fort or other too, fuch as exchequer notes, navy bills,
and bank bills in England, is generally iffued upon fuch occafions,
and by fupplying the place of circulating gold and filver, gives an
opportunity of fending a greater quantity of it abroad. All this,
however, could afford but a poorrefource for maintaining a foreign
war, of great expence and feveral years duration.

The melting down the plate of private families, has upon every
occaiion been found a ftill more infignincant one. The French,
in the beginning of the lafr war, did not derive fo much advantage
from this expedient as to compenfate the lofa of the fafhion.

The accumulated treafures of the prince have, in former times,
afforded a much greater and more lafting refource. In the prefent
times, if you except the king of Prufiia, to accumulate treafure
feems to be no part of the policy of European princes.

Vol. II. D Th*

•i8 THE NATURE AND CAUSES OF

BOOK The funds which maintained the foreign wars of the prefent
y-^j ^century, the moll: expeniive perhaps which hiftory records, feem
to have had little dependency upon the exportation either of the
circulating money, or of the plate of private families, or of the
treafure of the prince. The laft French war coft Great Britain
upwards of ninety millions, including not only the feventy-five
millions of new debt that was contracted, but the additional two
{hillings in the pound land tax, and what was annually borrowed
of the finking fund. More than two-thirds of this expence was
laid out in diftant countries ; in Germany, Portugal, America, in
the ports of the Mediterranean, in the Eaft and Weft Indies.
The kings of England had no accumulated treafure. We never
heard of any extraordinary quantity of plate being melted down.
The circulating gold and filver of the country had not been fup-
pofed to exceed eighteen millions. Since the late recoinage of the
gold, however, it is believed to have been a good deal under-rated.
'Let us fuppofe, therefore, according to the exaggerated computation
of Mr. Horfely, that, gold and lilver together, it amounted to thirty
millions. Had the war been carried on, by means of our money,
the whole of it muft, even according to this computation, have
been fent out and returned again at leaft twice, in a period of
between fix and feven years. Should this be fuppofed, it would
afford the moft decifive argument to demonftrate how unnecefTary it
is for government to watch over the prefervation of money, fince
upon this fuppofition the whole money of the country muft have
gone from it and returned to it again, two different times in
fo fhort a period, without any body's knowing any thing of the
matter. The channel of circulation, however, never appeared
more empty than ufual daring any part of this period. Few peo-
ple wanted money who had wherewithal to pay for it. The
profits of foreign trade, indeed, were greater than ufual during the
whole war; but efpecially towards the end of it. This occafioned,
what it always cccafions, a general overtrading in all the ports of
Great Britain ; and this again occafioned the ufual complaint of the
4 fcarcity

f

THE WEALTH OF NATIONS. 19

fcarcity of money, which always follows overtrading. Many CHAP-,
people wanted it, who had neither wherewithal to buy it, nor credit v— *~ v— — '
to borrow it ; and becaufe the debtors found it difficult to borrow,
the creditors found it difficult to get payment. Gold and filver,
however, were generally to be had for their value, by thofe who had
that value to give for them.

The enormous expence of the late war, therefore, mud: have
been chiefly defrayed, not by the exportation of gold and filver, but
by that of Britifh commodities of fome kind or other. When the
government, or thofe who acted under them, contracted with a
merchant for a remittance to fome foreign country, he would
naturally endeavour to pay his foreign correfpondent, upon whom
he had granted a bill, by fending abroad rather commodities than
gold and filver. If the commodities of Great Britain were not in
demand in that country, he would endeavour to fend them to fome
other country, in which he could purchafe a bill upon that country.
The tranfportation of commodities, when properly fluted to the
market, is always attended with a confiderable profit ; whereas that
of gold and filver is fcarce ever attended with any. When thofe
metals are fent abroad in order to purchafe foreign commodities, the
merchant's profit arifes, not from the purchafe, but from the fale
of the returns. But when they are fent abroad merely to pay a
debt, he gets no returns, and confequently no profit. He naturally,
therefore, exerts his invention to find out a way of paying his
'foreign debts, rather by the exportation of commodities than by
that of gold and 'filver. The great quantity of Britifh goods ex-
ported during the courfe of the late war, without bringing back any
returns, is accordingly remarked by the author of The Prefer* t
State of the Nation.

Besides the three forts of gold and filver above mentioned, there
as in all great commercial countries a good deal of bullion alter-

D 2 nately

THE NATURE AND CAUSES OF

nately imported and exported for the purpofes of foreign trade.
This bullion, as it circulates among different commercial countries
in the fame manner as the national coin circulates in every particular
country, may be confidered as the money of the great mercantile
republick. The national coin receives its movement and di-
rection from the commodities circulated within the precincts of
each particular country : the money of the mercantile republick,
from thofe circulated between different countries. Both are em-
ployed in facilitating exchanges, the one between different indivi-
duals of the fame, the other between thofe of different nations.
Part of this money of the great mercantile republick may have
been, and' probably was, employed in carrying on the late
war. Iii time of a general war, it is natural to fuppofe that
a movement and direction fhould be impreffed upon it, different
from what it ufuaily follows in profound peace ; that it fhould
circulate more about the feat of the war, and be more employed in
purchafing there, and in the neighbouring countries, the pay and
provifions of the different armies. But whatever part of this money
of the mercantile republick, Great Britain may have annually em-
ployed in this manner, it muft have been annually purchafed, either
with Britifh commodities, or with fomething elfe that had been pur-
chafed with them ; which ftill brings us back to commodities, to the
annual produce of the land and labour of the country, as the ultimate
refources which enabled us to carry on the war. It is natural indeed
to fuppofe, that fo great an annual expence muft have been de-
frayed from a great annual produce. The expence of 1761,
for example, amounted to more than nineteen millions. No
accumulation could have fupported fo great an annual profufion.
There is no annual produce even of gold and fdver which could
have fupported it. The whole gold and filver annually im-
ported into both Spain and Portugal, according- to the beft
accounts, does not commonly much exceed fix millions fterling,

which,

THE WEALTH OF NATIONS.

which, in fome years, would fcarce have paid four months expence
of the late war.

The commodities moft proper for being tranfported to diftant?
countries, in order to purchafe there, either the pay and provifibns
of an army, or fome part of the money of the mercantile republick
to be employed in purchafmg them, feem to be the finer and more
improved manufactures ; fuch as contain a great value in a fmall
bulk, and can, therefore, be exported to a great diftance at little
exDence. A country whofe induxhy produces a great annual
furplus of fuch manufactures, which are ufually exported to foreign
countries, may carry on for many years a very expenfive foreign
war, without either exporting any confiderable quantity of gold
and filver, or even having any fuch quantity to export. A con-
fiderable part of the annual furplus of its manufactures muff,
indeed, in this cafe be exported, without bringing back any returns.
Some part of it, however, may "frill continue to bring back a
return. The manufacturers, during the war, will have a double
demand upon them, and be called upon, firfl, to work up goods to
be fent abroad, for paying the bills drawn upon foreign countries
for the pay and provifions of the army; and, fecondly, to work up
fuch as are neceffary for purchafmg the common returns that had
ufually been confumed in the country. In the midft of the moft
deflructive foreign war, therefore, the greater part of manufactures
may frequently flourim greatly ; and, on the contrary, they may.
decline on the return of the peace; They may flouriih amidfl: the-
ruin of their country, and begin to decay upon the return of its
profperity. The different flate of many different branches of the
Britifh manufactures during the late war, and for fome time after
the peace, may ferve as an illuftration of what has been juft
now faid, ,

No

THE NATURE AND CAUSES OF

No foreign war of great expence or duration could conveniently
be carried on by the exportation of the rude produce of the foil.
The expence of fending fuch a quantity of it to a foreign country
as might pmchafe the pay and provifions of an army, would be too
great. Few countries too produce much more rude produce than
what is fufficient for the fubfifrence of their own inhabitants. To
fend abroad any great quantity of it therefore, would be to fend
abroad a part of the neceffary fubfiftencc of the people. It is
otherwife with the exportation of manufactures. The maintenance
of the people employed in them is kept at home, and only the fur-
plus part of their work is exported. Mr. Hume frequently takes
notice of the inability of the antient kings of England to carry on,
without interruption, any foreign war of long duration. The
Englifh, in thofe days, had nothing wherewithal to purchafe the
pay and provifions of their armies in foreign countries, but either
the rude produce of the foil, of which no confiderable part could
be fpared from the home confumption, or a few manufactures of the
coarfeft kind, of which, as well as of the rude produce, the tranf-
portation was too expenfive. This inability did not arife from the
want of money, but of the finer and more improved manufactures.
Buying and felling was tranfacled by means of money in England
then, as well as now. The quantity of circulating money muft
have borne the fame proportion to the number and value of pur-
chafes and fales ufually tranfacled at that time, which it does
to thofe tranfacled at prefcnt ; or rather it mufc have borne
a greater proportion, becaufe there was then no paper, which
now occupies a great part of the employment of gold and filver.
Among nations to whom commerce and manufactures are little
known, the fovereign, upon extraordinary occafions, can feldom
draw any cmfiderable aid from his fubjects, for reafons which fhall
be explained hereafter. It is in fuch countries, therefore, that
he generally endeavours to accumulate a treafure, as the only refource
againfc fuch emergencies. Independant of this necefllty, he is in

fuch

THE WEALTH OF NATIONS.

fuch a fituation naturally difpofed to the parfimony requifite for
accumulation. - In that fimple ftate, the expence even of a fove-
reign is not directed by the vanity which delights in the gaudy,
finery of a court, but is employed in bounty to his tenants, and hof-
pitality to his retainers. But bounty and hofpitality very feldom
lead to extravagance j though vanity almoft always does. Every
Tartar chief, accordingly, has a treafure. The treafures of Ma-
zepa, chief of the Coffacks in the Ukraine, the famous ally of
Charles the Xllth, are faid to have been very great. The French
kings of the Merovingian race had all treafures. When they
divided their kingdom among their different, children, they divided
their treafure too. The Saxon princes, and the fir ft kings
after the conqueft, feem likewife to have accumulated treafures.
The firft exploit of every new reign was commonly to feize the
treafure of the preceeding king, as the moft effential meafure for
lecuring the fucceffion. The fovereigns of improved, and com-
mercial countries are not under the fame necefiity of accumulating
treafures, becaufe they can generally draw from their ftibjecls ex-
traordinary aids upon extraordinary occafions. They are likewife
lefs difpofed to do fo. They naturally, perhaps neceffarily, follow
the mode of the times, and their expence comes to be regulated by
the fame extravagant, vanity which directs that of all the other
great proprietors in their dominions. The infignificant pageantry
of their court becomes every day more brilliant, and the expence.
of it not only prevents accumulation, but frequently encroaches .
upon the funds deftined for more necefTary expences. What
Dercyllidas faid of the court of Perfia, may be applied to that of
feveral European princes, that he faw there much, fplendor. but
little ftrength, and many fervants but few foldiers.

The importation of gold and filver is not the principal, much fcfs*
the fole benefit which a nation derives from its foreign trade.

Between

THE NATURE AND CAUSES OF

K Between whatever places foreign trade is carried on, they all of
*-j them derive two diflinct benefits from it. It carries out that fur-
plus part of the produce of their land and labour for which there
is no demand among them, and brings back in return for it fome-
thing elfe for which there is a demand. It gives a value to their
fiiperfluitics, by exchanging them for fomething elfe, which may
fatisfy a part of their wants, and increafe their enjoyments. By
means of it, the narr-ownefs of the home market does not hinder
the divifion of labour in any particular branch of art or manu-
facture from being carried to the higheft perfection. By opening
a more extenfive market for whatever part of the produce of their
labour may exceed the home confumption, it encourages them to
improve its productive powers, and to augment its annual produce
to the utmoft, and thereby increafe the real revenue and wealth of
the fociety. Thefe great and important fervices foreign trade is
continually occupied in performing, to. all the different countries
between which it is carried on. They all derive great benefit from,
it, though that in which the merchant refides generally derives the
greatest, as he is generally more employed in fupplying the wants,
and carrying out the fuperfluities of his own, than of any other par-
ticular country. To import the gold and filver which may be
wanted, into the countries which have no mines, is, no doubt, a part
of the bufmefs of foreign commerce. It is, however, a moft infig-
riificarit part of it. A country which carried on foreign trade merely
upon this account, could fcarce have occafion to freight a fhip
in a century.

It is not by the importation of gold and filver, that the dif-
covery of America has enriched Europe. By the abundance of the
American mines, thofe metals have become cheaper. A fervice of
plate can now be purchafed for about a third part of the corn,
or a third part of the labour, which it would have colt in the
7 fifteenth

THE WEALTH OF NATIONS.

fifteenth century. With the fame annual expence of labour and c
commodities, Europe can annually purchafe about three times the
quantity of plate which it could have purchafed at that time.
But when a commodity comes to be fold for a third part of
what had been its ufual price, not only thofe who purchafed it
before can purchafe three times their former quantity, but it is
brought down to the level of a much greater number of purcha-
iers ; ; perhaps to more than ten, perhaps to more than twenty
times the former number. So that there may be in Europe at
prefent, not only more than three times, but more than twenty
or thirty times, the quantity of plate which would have been in it,
even in its prefent. ftate of improvement, had the difcovery of the
American mines never been made. So far Europe has, no doubt,
gained a real con veniency, .though furely a very trifling one. The
cheapnefs of gold and filver renders thofe metals rather lefs fit
for the purpofes of money than they were before. In order to
make the fame purchafes, we muft load ourfelves with a greater
quantity of them, and carry about a (hilling in our pocket where
a groat would have done before. . It is difficult to fay which is
moft trifling, this inconveniency, or the oppofitre conveniency.
Neither the one nor the other could have made any very efTential
change in the ftate -of Europe. The difcovery of America, how-
ever, certainly made a moft efTential one. By opening a new and
inexhauftible market to all the commodities of Europe, it gave
occafion to new • divifions of labour and improvements of art,
which,- in the narrow circle of the antient commerce, could never
have taken place for want of a market to take off the greater part
of their produce. The productive -powers of labour were im-
proved, and its produce increafed in all the different countries of
Europe, and together with it the real revenue and wealth of the
inhabitants. The commodities of Europe were almoft all new to
America, and many of thofe of- America were new to Europe.
Vol. II. E A new

2<5 THE NATURE AND CAUSES OF

BOOK A new fett of exchanges, therefore, began to take place which haS
c— y-*-» never been thought of before, and which mould naturally have
proved as advantageous to the new, as it certainly did to the old
continent. The favage injuftice of the Europeans rendered an
event, which ought to have been beneficial to all, ruinous and
^eftruclive to feveral of thofe unfortunate countries.

The difcovery of a paffage to the Eaft Indies, by the Cape of
Good Hope, which happened much about the fame time, opened,
perhaps, a (till more extenfive range to foreign commerce than even
that of America, notwithstanding the greater diftance. There were
but two nations in America, in any refpect fuperior to favages,
and thefe were deftroyed almoft as foon as discovered. The
.reft were mere favages. But the empires of China, Indoftan, Japan,
as well as feveral others in the Eaft Indies, without having richer
mines of gold or filver, were in every other respect much richer,
better cultivated, and more advanced in all arts and manufactures
than either Mexico or Peru, even though we mould credit, what
plainly deferves no credit, the exaggerated accounts of the Spanifh
writers, concerning the antient ftate of thofe empires. But rich
and civilized nations can always exchange to a much greater value
with one another, than with favages and barbarians. Europe,
however, has hitherto derived much lefs advantage from its com-
merce with the Eaft Indies, than from that with America. The
Portuguefe monopolifed the Eaft India trade tothemfelves for about
a century, and it was only indirectly and through them, that the
.other nations of Europe could either fend out or receive any goods
from that country. When the Dutch, in the beginning of the raft
century, began to encroach upon them, they vefteel their whole
Eaft India commerce in an exclufive company. The Englifh,
French, Swedes, and Danes, have all followed their example, fo
that no great nation in Europe has ever yet had the benefit of a

free

THE WEALTH OF NATIONS.

free commerce to the Eaft Indies. No other reafon need be afligned
why it has never been fo advantageous as the trade to America,
which, between almoft every nation of Europe and its own colonies,
is free to all its fubjects. The exclufive privileges of thofe Eaft India
companies, their great riches, the great favour and protection which
thefe have procured them from their refpective governments, have
excited much envy againft them. This envy has frequently re-
prefented their trade as altogether pernicious, on account of the
great quantities of filver, which it every year exports from the
countries from which it is carried on. The parties concerned have
replied, that their trade, by this continual exportation of filver, ,
might, indeed, tend to impoverifh Europe in general, but not
the particular country from which it was carried on ; becaufe, by
the exportation of a part of the returns to other European
countries, it annually brought home a much greater quantity of
that metal than it carried out. Both the objection and the reply
are founded in the popular notion which I have been juft now
examining. It is, therefore, unneceffary to fay any thing further
about either. By the annual exportation of filver to the Eaft"
Indies, plate is probably fomewhat dearer in Europe than it other-
wife might have been and coined filver probably purchafes a larger
quantity both of labour and commodities. The former of thefe
two effects is a very fmall lofs, the latter a very fmall advantage ;
both too infignificant to deferve any part of the publick attention.
The trade to the Eaft Indies, by opening a market to the com-
modities of Europe, or, what comes nearly to the fame thing,
to the gold and filver which is purchafed with thofe commodities,
muft neceffarily tend to increafe the annual production of European
commodities, and confequently the real wealth and revenue of
Europe. That it has hitherto increafed them fo little, is pro-
bably owing to the restraints which it every where labours
under*

1 THOUGHT

THE NATURE AND CAUSES OF

I thought it neceffary, though at the hazard of being tedious,
to examine at full length this popular notion that wealth confifts
in money, or in gold and filver. Money in common language,
as I have already obfcrved, frequently fignifies wealth ; and this
ambiguity of expreflion has rendered this popular notion fo fa-
miliar to us, that even they, who -are convinced of its abfurdity*
are very apt to forget their own principles, and in the courfe of
their reafonings to take it for granted as a certain and undeniable
-truth. Some of the beft Englifh writers upon commerce fet out
with obferving, that the wealth of a country confifts, not in its
gold and filver only, but in its lands, houfes, and confumable
goods of all different kinds. In the courfe of their reafonings,
however, the lands, houfes, and confumable goods feem to flip
out of their memory, and the ftrain of their argument frequently
fuppofes that all wealth confifts in gold and filver, and that to
•multiply thofe metals is the great object of national induftry and
commerce.

•The two principles being eftablifhed, however, that wealth
confifted in gold and filver, and that thofe metals could be brought
into a country which had no mines only by the balance of trade, or
by exporting to a ; greater value than it imported; it neceffarily
.became the great object, of political ceconomy to diminifh as, much
as poflible the importation of foreign goods for home-confump-
tion, and to increafe as much as poflible the exportation of the pro-
duce of domeftick induftry. Its two great engines for enriching
the country, therefore, were reftraints upon importation, and en-
.couragements to exportation.

The reftraints upon importation were of two kinds.

Fpr st, -reftraints upon the importation of fuch ■■foreign goods

for home-confumption as could be produced at home, from what-

..ever, country they were imported.

7 Secondly,

THE WEALTH OF NATIONS.

Second-ly, reftraints upon the importation of goods of almoft C
all kinds from thofe particular countries with which the balance of <—
trade was fuppofed to be difadvantageous.

Those different reftraints confided fometimes in high duties, and
fometimes in abfolute prohibitions.

Exportation was encouraged fometimes by drawbacks, fome-
times by bounties, fometimes by advantageous treaties of com-
merce with foreign ftates, and fometimes by the eftablifhment of
colonies in diftant countries.

Drawbacks were given upon two different occafions. When
the home-manufaclures were fubje6l to any duty or excife, either
the whole or a part of it was frequently drawn back upon their
exportation; and when foreign goods liable to a duty were im-
ported, in order to be exported again, either the whole or a
part of this duty was fometimes given back upon fuch expor-
tation.

Bounties were given for the encouragement either of fome
beginning manufactures, or of fuch forts of induftry of other kinds
as were fuppofed to deferve particular favour.

By advantageous treaties of commerce, particular privileges were
procured in fome foreign ftate for the goods and merchants
of the country, beyond what were granted to thofe of other
countries.

By the eftablimment of colonies in diftant countries, not only
particular privileges, but a monopoly was frequently procured

for

THE 'NATURE AND CAUSES OF

for the goods and merchants of the country which eftablifhed
them.

The two forts of reftraints upon importation above mentioned,
together with thefe four encouragements to exportation, conftitute
the fix principal means by which the commercial fyftem propofes
to increafe the quantity of gold and filver in any country by turning
the balance of trade in its favour. I fhall coniider each of them in
a particular chapter, and without taking much further notice of
their fuppofed tendency to bring money into the country, I fhall
examine chiefly what are likely to be the effects of each of them
upon the annual produce of its induftry. According as they tend
either to increafe or diminifh the value of this annual produce, they
mi] ft evidently tend either to increafe or diminifh the real wealth
and revenue of the country.

THE WEALTH OF NATIONS.

3*

CHAP. II.

Of Reftraints upon the Importation of fuch Goods from Foreign
Countries as can be produced at Home.

BY reftraining either by high duties or by abfolute prohibitions CHAP,
the importation of fuch goods from foreign countries as can ^.^L^
be produced at home, the monopoly of the home-market is more
or lefs fecured to the domeftick induftry employed in producing
them. Thus the prohibition of importing either live cattle or
fait provifions from foreign countries fecures to the graziers of
Great Britain the monopoly of the home-market for butchers-
meat. The high duties upon the importation of corn, which in
times of moderate plenty amount to a prohibition, give a like ad-
vantage to the growers of that commodity. The prohibition of
the importation of foreign woollens is equally favourable to the
woollen manufacturers. The filk manufacture, though altogether
employed upon foreign materials, has lately obtained the fame
advantage. The linen manufacture has not yet obtained it, but
is making great ftrides towards it. Many other forts of manu-
facturers have, in the fame manner, obtained in Great Britain*
either altogether, or very nearly a monopoly againft their coun-
trymen.

That this monopoly of the home-market frequently gives great
encouragement to that particular fpecies of induftry which enjoys
it, and frequently turns towards that employment a greater fhare
of both the labour and flock of the fociety than v/ould otherwife
have gone to it, cannot be doubted. But whether it tends either

to

THE NATURE AND CAUSES OF

to increafe the general induftry of the fociety, or to give it the
moft advantageous direction, is not, perhaps, altogether fo cer^
tain.

The general induftry of the fociety never can exceed what the
capital of the fociety can employ. As the number of workmen
that can be kept in employment by any particular perfon muft bear
a certain proportion to his capital, fo the number of thofe that can •
be continually employed by all the members of a great . fociety
muft bear a certain proportion to the whole capital of that fociety, ,
and never can exceed that proportion. No regulation of commerce
can increafe the quantity of induftry in any fociety beyond what its
capital can maintain. It can only divert a part of it into a . di-
rection into which it might not otherwife have gone 3. and it is by
no means certain that this artificial direction is likely to be more
advantageous to the fociety than that into which, it would have
gone, of its own accord." .

Every individual is continually exerting himfelf to find out the
moft advantageous employment for whatever capital he can com-
mand. It is his own advantage, indeed, and not that of the fo-
ciety, which he has in view. But the ftudy of his own advantage
naturally, or rather neceffarily leads him to prefer that employment
which is moft advantageous to the fociety.

First, every individual endeavours to employ his capital as
near home as he can, and confequently as much as he can in the
fupport of domeftick induftry ; provided always that he can thereby
obtain the ordinary, or not a great deal lefs than the ordinary pro-
fits of ftock.

Thus upon equal or nearly equal profits, every wholefale mer-
chant naturally prefers the home-trade to the foreign trade of

confumption,

THE WEALTH OF NATIONS.

33

confumption, and the foreign trade of confumption to the carrying c H A P.
trade. In the home-trade his capital is never fo long out of his u-y—J <
fight as it frequently is in the foreign trade of confumption. He
can know better the character and fituation of the perfons whom
he trufts, and if he mould happen to be deceived, he knows better
the laws of the country from which he muft feek redrefs. In the
carrying trade, the capital of the merchant is, as it were, divided
between two foreign countries, and no part of it is ever neceffarily
brought home, or placed under his own immediate view and com-
mand. The capital which an Amfterdam merchant employs in
carrying corn from Konnigfberg to Lifbon, and fruit and wine
from Lifbon to Konnigfberg, muft generally be the one-half of it
at Konnigfberg and the other half at Lifbon. No part of it
need ever come to Amfterdam. The natural refidence of fuch a
merchant fhould either be at Konnigfberg or Liibon, and it can
only be fome very particular circumftances which can make him
prefer the refidence of Amfterdam. The uneafinefs, however,
which he feels at being feparated fo far from his capital, generally
determines him to bring part both of the Konnigfberg goods
which he deftines for the market of Lifbon, and of the Lifbon goods
which he deftines for that of Konnigfberg, to Amfterdam : and
though this neceffarily fubjects him to a double charge of load-
ing and unloading, as well as to the payment of fome duties
and cuftoms, yet for the fake of having fome part of his capital
always under his own view and command, he willingly fubmits
to this extraordinary charge; and it is in this manner that every
country which has any confiderable fliare of the carrying trade»
becomes always the emporium or general market for the goods of
all the different countries whofe trade it carries on. The mer-
chant, in order to fave a fecond loading and unloading, endeavours
always to fell in the home-market as much of the goods of all
thofe different countries as he can, and thus, fo far as he can, to
Vol. II. F convert

34

THE NATURE AND CAUSES OF

BOOK convert his carrying trade into a foreign trade of confumption.

v-v~» A merchant, in the fame manner, who is engaged in the foreign
trade of confumption, when he collects goods for foreign markets,
will always be glad, upon equal or nearly equal profits, to fell as
great a part of them at home as he can. He faves himfelf the
rilk and trouble of exportation, when fo far as he can, he thus
converts his foreign trade of confumption into a home-trade.
Home is in this manner the center, if I may fay fo, round which
the capitals of the inhabitants of every country are continually cir-
culating, and towards which they are always tending, though
by particular caufes they may fometimes be driven off and repelled
from it towards more diftant employments. But a capital em-'
ployed in the home-trade, it has already been mown, neceffarily
puts into motion a greater quantity of domeftick induftry, and
gives revenue and employment to a greater number of the inha-
bitants of the country, than an equal capital employed in the
foreign trade of confumption : and one employed in the foreign
trade of confumption has the fame advantage over an equal capital
employed in the carrying trade. Upon equal, or only nearly equal
profits, therefore, every individual naturally inclines to employ
his capital in the manner in which it is likely to afford the greater!:
fupport to domeftick induftry, and to give revenue and employ-
ment to the greateft number of the people of his own country.

Secondly, every individual who employs his capital in the
fupport of domeftick induftry, neceffarily endeavours fo to direct
that induftry, that its produce may be of the greater!: poflible value.

The produce of induftry is what it adds to the fubjec~t or ma-
terials upon which it is employed. In proportion as the value of
this produce is great or fmall, fo will likewife be the profits of the
employer. But it is only for the fake of profit that any man em-
ploys

THE WEALTH OF NATIONS.

ploys a capital in the fupport of induftry j and he will always, there- C
fore, endeavour to employ it in the fupport of that induftry of u
which the produce is likely to be of the greateft value, or to
exchange for the greateft quantity either of money or of other
goods.

But the annual revenue of every fociety is always precifely equal
to the exchangeable value of the whole annual produce of its in-
duftry, or rather is precifely the fame thing with that exchangeable
value. As every individual, therefore, endeavours as much as he
can both to employ his capital in the fupport of domeftick induftry,
and fo to direct that induftry that its produce may be of the greateft
value; every individual neceflarily labours to render the annual re-
venue of the fociety as great as he can. He generally, indeed, neither
intends to promote the publick intereft, nor knows how much he is
promoting it. By preferring the fupport of domeftick to that of
foreign induftry he intends only his own fecurity ; and by directing
that induftry in fuch a manner as its produce may be of the greateft
value, he intends only his own gain, and he is in this, as in many
other cafes, led by an invifible hand to promote an end which was
no part of his intention. Nor is it always the worfe for the fociety
that it was no part of it. By purfuing his own intereft he frequently
promotes that of the fociety more effectually than when he really
intends to promote it. I have never known much good done by
thofe who affected to trade for the publick good. Jt is an affec-
tation, indeed, not very common among merchants, and very few
words need be employed in difiuading them from it.

What is the fpecies of domeftick induftry which his capital
can employ, and of which the produce is likely to be of the greateft
value, every individual, it is evident, can, in his local fituation,
judge much better than any ftatefman or lawgiver can do for him.

F 2 The

.£ THE NATURE AND CAUSES OF

BOOK The ftatefman, who fhould attempt to direct private people in what
t, manner they ought to employ their capitals, would not only load

himfelf with a moft unnecelTary attention, but aflume an authority
which could fafely be trufted, not only to no fingle perfon, but
to no council or fenate whatever, and which would no where be
fo dangerous as in the hands of a man who had folly and pre-
fumption enough to fancy himfelf fit to exercife it.

To give the monopoly of the home-market to the produce of
domeftick induftry, in any particular art or manufacture, is in fome
meafure to direct private people in what manner they ought to
employ their capitals, and muft, in almoft all cafes, be either a
ufelefsor a hurtful regulation. If the produce of domeftick can be
brought there as cheap as that of foreign induftry, the regulation
is evidently ufelefs. If it cannot, it muft generally be hurtful.
It is the maxim of every prudent mafter of a family, never to at-
tempt to make at home what it will coft him more to make than
to buy. The taylor does not attempt to make his own fhoes, but
buys them of the fhoemaker. The fhoemaker does not attempt to
make his own cloaths, but employs a taylor. The farmer at-
tempts to make neither the one nor the other, but employs thofe
different artificers. All of them find it for their intereft to employ
their whole induftry in a way in which they have fome advantage
over their neighbours, and to purchafe with a part of its produce,
or what is the fame thing, with the price of a part of it, whatever
elfe they have occafion for.

What is prudence in the conduct of every private family,
can fcarce be folly in that of a great kingdom. If a foreign coun-
try can fupply us with a commodity cheaper than we ourfelves
can make it, better buy it of them with fome part of the pro-
duce of our own induftry, employed in a way in which we have

fome

THE WEALTH OF NATIONS.

fome advantage. The general induftry of the country, being C
always in proportion to the capital which employs it, will not u
thereby be diminifhed, no more than that of the above-mentioned
artificers j but only left to find out the way in which it can be
employed with the greateft advantage. It is certainly not em-
ployed to the greateft advantage, when it is thus directed to-
wards an object which it can buy cheaper than it can make. The
value of its annual produce is certainly more or lefs diminifhed, when
it is thus turned away from producing commodities evidently of
more value than the commodity which it is directed to produce.
According to the fuppofition, that commodity could be purchafed
from foreign countries cheaper than it can be made at home. It
could, therefore, have been purchafed with a part only of the
commodities, or, what is the fame thing, with a part only of the
price of the commodities, which the induftry employed by an equal
capital, would have produced at home, had it been left to follow
its natural courfe. The induftry of the country, therefore, is
thus turned away from a more, to a lefs advantageous employment^
and the exchangeable value of its annual produce, inftead of being
increafed, according to the intention of the lawgiver, muft necef-
farily be diminifhed by every fuch regulation*

By means of fuch regulations, indeed, a particular manufacture
may fometimes be acquired fooner than it could have been otherwife,
and after a certain time may be made at home as cheap or cheaper
than in the foreign country. But though the induftry of the
ibciety may be thus carried with advantage into a particular channel
fooner than it could have been otherwife, it will by no means
follow that the fum total either of its induftry or of its revenue
can ever be augmented by any fuch regulation. The induftry of
the fociety can augment only in proportion as its capital augments ?
and its capital can augment only in proportion to what can be
gradually faved out of its revenue. But the immediate effect of
8 every

3*

THE NATURE AND CAUSES OF

BOOK every fuch regulation is to diminiih its revenue, and what diminimes
v — v-^j its revenue, is certainly not very likely to augment its capital
fafter than it would have augmented of its own accord, had both
capital and induftry been left to find out their natural employments.

Though for want of fuch regulations the fociety fliould never
acquire the propofed manufacture, it would not, upon that account,
neceffarily be the poorer in any one period of its duration, in every
period of its duration its whole capital and induftry might ftill have
been employed, though upon different objects, in the manner that
was molt advantageous at the time. In every period its revenue
might have been the greater! which its capital could afford, and
both capital and revenue might have been augmenting with the
greater!: poIRble rapidity.

The natural advantages which one country has over another in
producing particular commodities are fometimes fo great, that it is
acknowledged by all the world to be in vain to ftruggle with them,
I3y means of glaffes, hotbeds, and hotwalls, very good grapes can
be raifed in Scotland, and very good wine too can be made of them
at about thirty times the expence for which at lead: equally good
can be brought from foreign countries. Would it be a reafonable
law to prohibit the importation of all foreign wines, merely to
encourage the making of claret and burgundy in Scotland ? But
if there would be a manifeff abfurdity in turning towards any em-
ployment, thirty times more of the capital and induftry of the
country, than would be neceffary to purchafe from foreign countries
an equal quantity of the commodities wanted, there rauft be an
abfurdity, though not altogether fo glaring, yet exactly of the
fame kind, in turning towards any fuch employment a thirtieth,
or even a three hundredth part more of either. Whether the ad-
vantages which one country has over another, be natural or ac-
quired,

«

THE WEALTH OF NATIONS. 3<

quired, is in this refpect of no confequence. As long as the one C HA P.
country has thofe advantages, and the other wants them, it will Ur-v--H
always be more advantageous for the latter, rather to buy of the
former than to make. It is an acquired advantage only, which
one artificer has over his neighbour, who exercifes another trade,
and yet they both find it more advantageous to buy of one ano-
ther, than to make what does not belong to their particular
trades.

Merchants and manufacturers are the people who derive
the greater!: advantage from this monopoly of the home market.
The prohibition of the importation of foreign cattle, and of fait
provifions, together with the high duties upon foreign corn, which
in times of moderate plenty amount to a prohibition, are not near
fo advantageous to the graziers and farmers of Great Britain, as
other regulations of the fame kind are to its merchants and manu-
facturers. Manufactures, thofe of the finer kind elpecially, are
more eafily tranfported from one country to another than corn or
cattle. It is in the fetching and carrying manufactures, accords
ingly, that foreign trade is chiefly employed. In manufactures,
a very fmall advantage will enable foreigners to underfeli our own
workmen, even in the home market. It will require a very great
one to enable them to do fo in the rude produce of the foil. If
the free importation of foreign manufactures was permitted, feverai
of the home manufactures would probably fuffer, and fome of
of them, perhaps, go to ruin altogether, and a confiderable part
of the ftock and induftry at prefent employed in them, would be
forced to find out fome other employment. But the freeft im-
portation of the rude produce of the foil could have no fuch effect
upon the agriculture of the country.

If the importation of foreign cattle, for example, was made ever
fo free, fo few could be imported, that the grazing trade of Great

Britain

THE NATURE AND CAUSES OF

K Britain could be little affected by it. Live cattle are, perhaps, the
«-> only commodity of which the transportation is more expenfive by
fea than by land. By land they carry themfelves to market. By
fea, not only the cattle, but their food and their water too rauft be
carried at no fmall expence and inconveniency. The fhort fea
between Ireland and Great Britain, indeed, renders the importation
of Irifh cattle more eafy. But though the free importation of
them, which was lately permitted only for a limited time, were
rendered perpetual, it could have no considerable effect upon the
intereft. of the graziers of Great Britain. Thofe parts of Great
Britain which border upon the Irifh fea are all grazing countries.
Irifli cattle could never be imported for their ufe, but muff be drove
through thofe very extenfive countries, at no fmall expence and in-
conveniency, before they could arrive at their proper market. Fat
cattle could not be drove fo far. Lean cattle, therefore, only
could be imported, and fuch importation could interfere, not with
the intereft of the feeding -or fattening countries, to which by
reducing the price of lean cattle, it would rather be advantageous,
but with that of the breeding countries only. The fmall number
of Irifh cattle imported fmce their importation was permitted,
together with the good price at which lean cattle ftill continue to
fell, feem to demonftrate that even the breeding countries of Great
Britain are never likely to be much affected by the free importation
of Irifh cattle. The common people of Ireland, indeed, are faid
to have fometimes oppofed with violence the exportation of their
cattle. But if the exporters had found any great advantage in
continuing the trade, they could eafily, when the law was on their
fide, have conquered this mobbifh oppofition.

Feeding and fattening countries, befides, muft always be
highly improved, whereas breeding countries are generally un-
cultivated. The high price of lean cattle, by augmenting the value

of

THE

WEALTH

OF NATIONS.

4i

of uncultivated land, is like a bounty againft improvement. To CHAP,
any country which was highly improved throughout, it would be v— -»
more advantageous to import its lean cattle than to breed them.
The province of Holland, accordingly, is faid to follow this
maxim at prefent. The mountains of Scotland, Wales, and
Northumberland, indeed, are countries not capable of much im-^
provement, and feem deftined by nature to be the breeding coun-
tries of Great Britain. The freeft importation of foreign cattle
could have no other effect than to hinder thofe breeding countries
from taking advantage of the increafing population and improve-
ment of the reft of the kingdom, from raifmg their price to an
exorbitant height, and from laying a real tax upon all the more
improved and cultivated parts of the country.

The freeft importation of fait provifions, in the fame manner,
could have as little effect upon the intereft of the graziers of
Great Britain as that of live cattle. Salt provifions are not only
a very bulky commodity, but when compared with frefh meat,
they are a commodity both of worfe quality, and as they coft
more labour and expence, of higher price. They could never,
therefore, come into competition with the frefh meat, though
they might with the fait provifions of the country. They might
be ufed for victualling mips for diftant voyages, and fuch like ufes,
but could never make any confiderable part of the food of the
people. The fmall quantity of fait provifions imported from Ire-
land fmce their importation was rendered free, is an experimental
proof that our -graziers have nothing to apprehend from it. It
does not appear that the price of butcher's- meat has ever been
fenfibly affected by it.

Even the free importation of foreign corn could very little
affect the intereft of the farmers of Great Britain. Corn is a
much more bulky commodity than butcher's-meat. A pound of

Vol. H. G wheat

THE NATURE AND CAUSES OF

K wheat at a penny is as dear as a pound of butcher's-meat at four-
~> pence. The fmall quantity of foreign corn imported even in times
of the greateft fcarcity, may fatisfy our farmers that they can have
nothing to fear from the freeft importation. The average quantity
imported, one year with another, amounts only, according to the
very well informed author of the tracts upon the corn trade, to-
twenty-three thoufand feven hundred and twenty- eight quarters
of all forts of grain, and does not exceed the five hundredth
and feventy-one part of the annual confumption. But as the
bounty upon corn occalions a greater exportation in years of plenty,
fo it muft of confequence occafion a greater importation in
years of fcarcity, than would otherwife take place. By means
of it, the plenty of one year does not compenfate the fcarcity of
another, and as the average quantity exported is neceffarily aug-
mented by it, fo muft likewife, in the actual ftate of tillage, the
average quantity imported. If there was no bounty, as lefs corn-
would be exported, fo it is probable that one year with another,
lefs would be imported than at prefent. The corn merchants, the
fetchers and carriers of corn, between Great Britain and foreign
countries, would have much lefs employment, and might fuffer
confiderably ; but the country gentlemen and farmers could fuffer
very little. It is in the corn merchants accordingly, rather than
in the country gentlemen and farmers, that I have obferved the
greateft anxiety for the renewal and continuation of the bounty.

Country gentlemen and farmers are, to their great honour,
of all people, the leaft fubject to the wretched fpirit of monopoly.
The undertaker of a great manufactory is fometimes alarmed if
another work of the fame kind is eftablifhed within twenty miles
of him. The Dutch undertaker of the woollen manufacture at
Abbeville, ftipulated that no work of the fame kind mould be
eftablimed within thirty leagues of that city. Farmers and country

gentlemen

THE WEALTH OF NATIONS.

43

gentlemen, on the contrary, are generally difpofed rather to promote c A p-
than to obftruct the cultivation and improvement of their neigh- C- «J
bours farms and eftates. They have no fecrets, fuch as thofe of
the greater part of manufacturers, but are generally rather fond
of communicating to their neighbours, and of extending as far
as poflible any new practice which they have found to be advan-
tageous. Pius £>ucjlus, fays old Cato, JlabiliJJimufque, minime-
que invidiofus ; minimeque male cogitantes funt, qui in eo Jludio
occupati funt. Country gentleman and farmers, difperfed in dif-
ferent parts of the country, cannot fo eafily combine as merchants
and manufacturers, who being collected into towns, and accuftomed
to that exclufive corporation fpirit which prevails in them, na-
turally endeavour to obtain againft all their countrymen, the
fame exclufive privilege which they generally poffefs againft the
inhabitants of their refpective towns. They accordingly feem to
have been the original inventors of thofe reftraints upon the im-
portation of foreign goods, which fecure to them the monopoly
of the home market. It. was probably in imitation of them,
and to put themfelves upon a level with thofe, who, they found
were difpofed to opprefs them, that the country gentlemen and
farmers of Great Britain fo far forgot the generolity which is na-
tural to their ftation, as to demand the exclufive privilege of
fupplying their countrymen with corn and butcher's-meat. They
did not perhaps take time to confider, how much lefs their intereft
could be affected by the freedom of trade, than that of the people
whofe example they followed.

To prohibit by a perpetual law the importation of foreign corn
and cattle, is in reality to enact, that the population and induftry
of the country (hall at no time exceed what the rude produce of
its own foil can maintain.

There

THE NATURE AND CAUSES OF

There feem, however, to be two cafes in which it will generally
be advantageous to lay forae burden upon foreign, for the encou-
ragement of domeflick induftry.

The firft is when fome particular fort of induftry is necefTary
for the defence of the country. The defence of Great Britain,
for example, depends very much upon the number of its failors
and fhipping. The act of navigation, therefore, very properly
endeavours to give the failors and fhipping of Great Britain the
monopoly of the trade of their own country, in fome cafes, by
abfolute prohibitions, and in others by heavy burdens upon the
fhipping of foreign countries. The following are the principal
difpofitions of this act :

First, all mips, of which the owners, m afters, and three-
fourths of the mariners are not Britifh fubjects, are prohibited,
upon pain of forfeiting (hip and cargo, from trading to the Britifh
fettlements and plantations, or from being employed in the coafl-
ing trade of Great Britain.

Secondly, a great variety of the moft bulky articles of im-
portation can be brought into Great Britain only, either in fuch
fhips as are above defcribed, or in fhips of the country where
thofe goods are produced, and of which the owners, matters, and
three-fourths of the mariners are of that particular country ; and
when imported even in mips of this latter kind, they are fubjecr to
double aliens duty. If imported in fhips of any other country, the
penalty is forfeiture of fhip and cargo. When this act was made,
the Dutch were, what they {till are, the great carriers of Europe, and
by this regulation they were entirely excluded from being the carriers
to Great Britain, or from importing to us the goods of any other
European country.

Thirdly^

THE WEALTH OF NATIONS.

Thirdly, a great variety of the moft bulky articles of im- C
portation are prohibited from being imported, even in Britifh mips, <-
from any country but that in which they are produced •, under pnin
of forfeiting fhip and cargo. This regulation too was probably
intended againfl the Dutch. Holland was then, as now, the great
emporium for all European goods, and by this regulation, Britifh
(hips were hindered from loading in Holland the goods of any other
European country.

Fourthly, fait fifth of all kinds, whale-fins, whale-bone, oil
and blubber, not caught by and cured on board Britifh. vefl'els, when
imported into Great Britain, are fubjecled to double aliens duty. The
Dutch, as they are frill the principal, were then the only fifhers
in Europe that attempted to fupply foreign nations with nth. By
this regulation, a very heavy burden was laid upon their fupplying
Great Britain.

When the act of navigation was made, though England and
Holland were not actually at war, the moft violent animofity
fubfifled between the two nations. It had begun during the
government of the long parliament which firft framed this act,
and it broke out foon after in the Dutch wars during that of the
Protector and of Charles the lid. It is not impoffible, therefore,
that fome of the regulations of this famous act may have proceeded
from national animofity. They are as wife, however, as if they
had all been dictated by the moft deliberate wifdom. National ani-
mofity at that particular time aimed at the very fame object which
the moft deliberate wifdom would have recommended, the dimi-
nution of the naval power of Holland, the only naval power
which could endanger the fecurity of England..

*

The act of navigation is not favourable to foreign commerce,,
©r to the growth of that opulence which can arife from it. The

inter.efti

THE NATURE AND CAUSES OF

K intereft of a nation in its commercial relations to foreign nations
~j is, like that of a merchant with regard to the different people with
whom he deals, to buy as cheap and to fell as dear as poffible. But
it will be moft likely to buy cheap, when by the moft perfect free-
dom of trade it encourages all nations to bring to it the goods
which it has occafion to purchafe ; and, for the fame reafon, it will
.be moft likely to fell dear, when its markets are thus filled with
the greater!: number of buyers. The act of navigation, it is true,
lays no burden upon foreign {hips that come to export the produce
of Britifh induftry. Even the antient aliens duty, which ufed to
be paid upon all goods exported as well as imported, has, by feverai
fubfequent acts, been taken off from the greater part of the articles
.of exportation. But if foreigners, either by prohibitions or high
duties, are hindered from coming to fell, they cannot always afford
to come to buy ; becaufe coming without a cargo, they mult lofe the
freight from their own country to Great Britain. By diminifhing the
number of feliers, therefore, we neceffarily diminifli that of buyers,
and are thus likely not only to buy foreign goods dearer, but to fell
our own cheaper, than if there was a more perfect freedom of
trade. As defence, however, is of much more importance than
opulence, the acl of navigation is, perhaps, trie wifeft of all the
commercial regulations of England.

The fecond cafe, in which it will generally be advantageous to
lay fome burden upon foreign for the encouragement of domeftick
induftry, is, when fome tax is impofed at home upon the produce
of the latter. In this cafe, it feems reafonable that an equal tax
fhould be impofed upon the like produce of the former. This
would not give the monopoly of the home market to domeftick '
induftry, nor turn towards a particular employment a greater fhare
of the ftock and labour of the country, than what would naturally
go to it. It would only hinder any part of what would naturally

THE WEALTH OF NATIONS.

47

go to it from being turned away by the tax, into a lefs natural c HA P.
direction, and would leave the competition between foreign and u^-y--H
domeftick induftry, after the tax, as nearly as poffible upon the
fame footing as before it. In Great Britain, when any fuch tax
is laid upon the produce of domeftick induftry, it is ufual at the
fame time, in order to ftop the clamorous complaints of our
merchants and manufacturers, that they will be underfold at home,
to lay a much heavier duty upon the importation of all foreign
goods of the fame kind.

This fecond limitation of the freedom of trade according to1
feme people fhould, upon fome occalions, be extended much further
than to the precife foreign commodities which could come into
competition with thofe which had been taxed at home. When the
neceflaries of life have been taxed in any country, it becomes proper,,
they pretend, to tax not only the like neceffaries of life imported,
from other countries, but all forts of foreign goods which can
come into competition with any thing that is the produce of
domeftick induftry. Subfiftence, they fay, becomes neceflarily
dearer in confequence of fuch taxes ; and the price of labour muft
always rife with the price of the labourers fubfiftence. Every com-
modity, therefore, which is the produce of domeftick induftry^
though not immediately taxed itfelf, becomes dearer in confequence
of fuch taxes, becaufe the labour which produces it becomes fo.
Such taxes, therefore, are really equivalent, they fay, to a tax
upon every particular commodity produced at home. In order
to put domeftick upon the fame footing with foreign induftry,
therefore, it becomes neceflary, they think, to lay fome duty
upon every foreign commodity, equal to this enhancement of the
price of the home commodities with which it can come into com-
petition;.

Whether

THE NATURE AND CAUSES OF

K Whether taxes upon the neceuaries of life, fuch as thofe in
-j Great Britain upon malt, beer, foap, fait, leather, candles, &c.
neceffarily raife the price of labour, and confequently that of all
other commodities, I fhall confider hereafter, when I come to
treat of taxes. Suppofing, however, in the mean time, that
they have this effect, and they have it undoubtedly, this general
enhancement of the price of all commodities, in confequence of
that of labour, is a cafe which differs in the two following
refpects from that of a particular commodity, of which the price
was enhanced by a particular tax immediately impofed upon it.

First, it might always be known with great exacTnefs how
far the price of fuch a commodity could be enhanced by fuch a tax :
but how far the general enhancement of the price of labour might
affect, that of every different commodity, about which labour was
employed, could never be known with any tolerable exactnefs.
It would be impoffible, therefore, to proportion with any tolerable
exaclnefs the tax upon every foreign to this enhancement of the
price of every home commodity.

Secondly, taxes upon the necelTaries of life have nearly the
fame effect upon the circumftances of the people as a poor foil
and a bad climate. Provifions are thereby rendered dearer in the
fame manner as if it required extraordinary labour and expence to
raife them. As in the natural fcarcity arihng from foil and cli-
mate, it would be abfurd to direct the people in what manner they
ought to employ their capitals and induftry, fo it is likewife in thc
artificial fcarcity arifing from fuch taxes. To be left to accommo-.
date, as well as they could, their induftry to their. fituation, and to
find out thofe employments in which, notwithstanding their un-
favourable circumftances, they might have fome advantage either in

the

THE

WEALTH

OF NATIONS.

49

die home, or in the foreign market, is what in both cafes, would CIJjAt>'
evidently be moft for their advantage. To lay a new tax upon them, v»- 1
becaufe they are already overburdened with taxes, and becaufe they
already pay too dear for the neceflaries of life, to make them likewife
pay too dear for the greater part of other commodities, is certainly
a moft abfurd way of making amends.

Such taxes, when they have grown up to a certain height, are
a curfe equal to the barrennefs of the earth and the inclemency of
the heavens ; and yet it is in the richeft and moft induftrious coun-
tries that they have been moft generally impofed. No other coun-
tries could fupport fo great a diforder. As the ftrongeft bodies
only can live and enjoy health, under an unwholefome regimen;
fo the nations only, that in every fort of induftry have the greateft
natural and acquired advantages, can fubfift and profper under fuch
taxes. Holland is the country in Europe in which they abound
moft, and which from peculiar circumftances continues to profper,
not by means of them, as has been moft abfurdly fuppofed, but
in fpite of them.

As there are two cafes in which it will generally be advantage-
ous to lay fome burden upon foreign, for the encouragement of
domeftick induftry ; fo there are two others in which it may fome-
times be a matter of deliberation ; in the one, how far it is proper
to continue the free importation of certain foreign goods; and
in the other, how far or in what manner it may be proper to reftore
that free importation after it has been for fome time interrupted.

The cafe in which it may fometimes be a matter of deliberation
how far it is proper to continue the free importation of certain
foreign goods, is, when fome foreign nation reftrains by high duties
©r prohibitions the importation of fome of our manufactures into

Vol. II. H their

;o THE NATURE AND CAUSES OF

B O O Kl their country. Revenge in this cafe naturally dictates retaliation,
uJ%t^-j and that we fhould impofe the like duties and prohibitions upon
the importation of fome or all of their manufactures into ours.
Nations, accordingly, feldom fail to retaliate in this manner.
The French have been particularly forward to favour their own
manufactures by reftraining the importation of fuch foreign goods
as could come into competition with them. In this conlifted a
great part of the policy of Mr. Colbert, who, notwithstanding his
great abilities, feems in this cafe to have been impofed upon by the
fophiftry of merchants and manufacturers, who are always demand-
ing a monopoly againft their countrymen. It is at prefent the
opinion of the moft intelligent men in France that his operations
of this kind have not been beneficial to his country. That minifter'
by the tarif of 1 667, impofed very high duties upon a great num-
ber of foreign manufactures. Upon his refufing to moderate them
in favour of the Dutch, they in 1671 prohibited the importation
of the wines, brandies, and manufactures of France. The war
of 1672 feems to have been in part occafioned by this commercial
difpute. The peace of Nimeguen put an end to it in 1678, by
moderating fome of thofe duties in favour of the Dutch, who in
confequence took off their prohibition. It was about the fame time
that the French and Englifh began mutually to opprefs each other's
induftry, by the like duties and prohibitions, of which the French>
however, feem to have fet the firft example. The fpirit of hof-
tility which has fubfifted between the two nations ever fince, has
hitherto hindered them from being moderated on either fide. In
1697 the Englifh prohibited the importation of bonelace, the
manufacture of Flanders. The government of that country, at
that time under the dominion of Spain, prohibited in return the
importation of Englilh woollens. In 1700, the prohibition of
importing bonelace into England, was taken off upon condition
that the importation of Englifh woollens into Flanders mould be
put on the fame footing as before.

There

THE WEALTH OF NATIONS.

There may be good policy in retaliations of this kind, when cl
there is a probability that they will procure the repeal of the high fee
duties or prohibitions complained of. The recovery of a great
foreign market will generally more than compenfate the tranfitory
inconveniency of paying dearer during a fhort time for fome forts
of goods. To judge whether fuch retaliations are likely to produce
fuch an effect, does not, perhaps, belong fo much to the fcience
of a legiflator, whofe deliberations ought to be governed by general
principles which are always the fame, as to the fkill of that in-
fidious and crafty animal, vulgarly called a ftatefman or politician,
whofe councils are directed by the momentary fluctuations of affairs.
When there is no probability that any fuch repeal can be procured,
it feems a bad method of compenfating the injury done to certain
claffes of our people, to do another injury ourfelves both to thofe
clalTes and to almofl all the other claffes of them. When our
neighbours prohibit fome manufacture of ours, we generally pro-
hibit, not only the fame, for that alone would feldom affect them
confiderably, but fome other manufacture of theirs. This may
no doubt give encouragement to fome particular clafs of workmen
among ourfelves, and by excluding fome of their rivals, may en-
able them to raife their price in the home market. Thofe work-
men, however, who fuffered by our neighbours prohibition will
not be benefited by ours. On the contrary, they, and almoft all
the other claffes of our citizens will thereby be obliged to pay dearer
than before for certain goods. Every fuch law, therefore, impofes
a real tax upon the whole country, not in favour of that particular
clafs of workmen who were injured by our neighbours prohibition,
but of fome other clafs.

The cafe in which it may fometimes be a matter of deliberation
how far or in what manner it is proper to reftore the free impor-
tation of foreign goods, after it has been for fome time interrupted,

H 2 is,

■2 THE NATURE AND CAUSES OF

BOOK is, when particular manufactures, by means of high duties or
l^^-j prohibitions upon all foreign goods which can come into compe-
tition with them, have been fo far extended as to employ a great
multitude of hands. Humanity may in this cafe require that the
freedom of trade mould be reftored only by flow gradations, and
with a good deal of referve and circumfpeftion. Were thofe high
duties and prohibitions taken away all at once, cheaper foreign goods
of the fame kind might be poured fo fad into the home market,
as to deprive all at once many thoufands of our people of their or-
dinary employment and means of fubfidence. The diforder which
this would occafion might no doubt be very confiderable. It would
in all probability, however, be much lefs than is commonly ima-
gined,, for the two following reafons :

First, all thofe manufactures, of which any part is commonly
exported to other European countries without a bounty, could be
very little affected by the freed importation of foreign goods. Sucli
manufactures mud be fold as cheap abroad as any other foreign
goods of the fame quality and kind, and confequently mud be fold
cheaper at home. They would dill, therefore, keep poffeffion of
the home market, and though a capricious man of fafliion might
fometimes prefer foreign wares, merely becaufe they were foreign, to
cheaper and better goods of the fame kind that were made at home,
this folly could from the nature of things extend to fo few, that
it could make no fenlible impreflion upon the general employment
of the people. But a great part of all the different branches of
our woollen manufacture, of our tanned leather, and of our hard-
ware, are annually exported to other European countries without
any bounty, and thefe are the manufactures which employ the
greated number of hands. The filk, perhaps, is the manufacture
which would fuffer the mod by this freedom of trade, and after it
the linen, though the latter much lefs than the former.

Secondly,

THE WEALTH OF NATIONS.

Secondly, though a great number of people mould, by thus C
reftoring the freedom of trade, be thrown all at once out of their u
ordinary employment and common method of fubfiftence, it would
by no means follow that they would thereby be deprived either of
employment or fubfiitence. By the reduction of the army and navy
at the end of the late war more than a hundred thoufand foldiers and
feamen, a number equal to what is employed in the greateft manu-
factures, were all at once thrown out of their ordinary employ-
ment y but, though they no doubt fuffered fome inconveniency,
they were not thereby deprived of all employment and fubfiftence.
The greater part of the feamen, it is probable, gradually betook
themfelves to the merchants fervice as they could find occafion,
and in the mean time both they and the foldiers were abforbed in
the great mafs of the people, and employed in a great variety of
occupations. Not only no great convulfion, but no fenfible dis-
order arofe from fo great a change in the Situation of more than
a hundred thoufand men, all accuftomed to the ufe of arms, and
many of them to rapine and plunder. The number of vagrants
was fcarce anywhere fenfibly increafed by it, even the wages of
labour were not reduced by it in any occupation, fo far as I have
been able to learn, except in that of feamen in the merchant fer-
vice. But if we compare together the habits of a foldier and of
any fort of manufacturer, we mall find that thofe of the latter do
not tend fo much to difqualify him from being employed in a new
trade, as thofe of the former from being employed in any. The
manufacturer has always been accuftomed to look for his fubfiftence
from his labour only : the foldier to expect it from his pay. Appli-
cation and induftry have been familiar to the one; idlenefs and dif-
fipation to the other. But it is furely much eafierto change the"
direction of induftry from one fort of labour to another, than to
turn idlenefs and diflipation to any. To the greater part of
manufactures befides, it has already been obferved, there are other

collateral;

THE NATURE AND CAUSES OF

collateral manufactures of fo fimilar a nature, that a workman
can eafily transfer his induftry from one of them to another. The
greater part of fuch workmen too are occafionally employed in
country labour. The flock which employed them in a particular
manufacture before, will ftill remain in the country to employ an
equal number of people in fome other way. The capital of the
country remaining the fame, the demand for labour will likewife
be the fame, or very nearly the fame, though it may be exerted in
different places and for different occupations. Soldiers and fea-
men, indeed, when difcharged from the kings fervice, are at liberty
to exercife any trade, within any town or place of Great Britain or
Ireland. Let the fame natural liberty of exercifing what fpecies
of induftry they pleafe be reftored to all his majefty's fubjects, in
the fame manner as to foldiers and feamen that is, break down
the exclusive privileges of corporations, and repeal the ftatute of
apprenticefhip, both which are real encroachments upon natural
liberty, and add to thefe the repeal of the law of fettlements, fo
that a poor workman, when thrown out of employment either in
one trade or in one place, may feek for it in another trade or in
another place, without the fear either of a profecution or of a
removal, and neither the publick nor the individuals will fuffer
much more from the occafional difbanding fome particular claffes of
manufacturers, than from that of foldiers. Our manufacturers have
210 doubt great merit with their country, but they cannot have more
than thofe who defend it with their blood, nor deferve to be treated
with more delicacy.

To expect, indeed, that the freedom of trade fhould ever be entirely
reftored in Great Britain, is as abfurd as to expect that an Oceana
or Utopea fhould ever be eftablifhed in it. Not only the prejudices
of the publick, but what is much more unconquerable, the private
interefts of many individuals irrefiftably oppofe it. Were the
8 officers

THE WEALTH OF NATIONS.

officers of the army to oppofe with the fame zeal and unanimity C
any reduction in the number of forces, with whicli matter manu- u
facturers fet themfelves againft every law that is likely to increafe
the number of their rivals in the home market, were the former
to animate their foldiers in the fame manner as the latter enflame
their workmen to attack with violence and outrage the propofers
of any fuch regulation, to attempt to reduce the army would be
as dangerous as it has now become to attempt to diminifh in any
refpect the monopoly which our manufacturers have obtained
againft us. This monopoly has fo much increafed the number
of fome particular tribes of them, that, like an overgrown {land-
ing army, they have become formidable to the government, and
upon many occafions intimidate the legislature. The member of
parliament who fupports every propofal for strengthening this mo-
nopoly, is fure to acquire not only the reputation of understanding
trade, but great popularity and influence with an order 'of men
whofe numbers and wealth render them of great importance. If
he oppofes them, on the contrary, and ftill more if he has authority
enough to be able to thwart them, neither the raoft acknowledged
probity, nor the highest rank, nor the greatest publick fervices can
protect him from the most infamous abufe and detraction, from
perfonal infults, nor fometimes from real danger, arifing from the
infolent outrage of furious and difappointed monopolists.

The undertaker of a great manufacture who, by the home
markets being fuddenly laid open to the competition of foreigners,,
fhould be obliged to abandon his trade, would no doubt naffer
very considerably. That part of his capital which had usually
been employed in purchafing materials and in paying his workmen,
might, without much difficulty, perhaps, find another employment,
But that part of it which was fixed in workhoufes, and in the in-
struments of trade, could fcarce be difpofed of without confiderable-

lofs; .

THE NATURE AND CAUSES, Sec.

K lofs. The equitable regard, therefore, to his intereft requires that
> changes of this kind fhould never be introduced fuddenly, but
flowly, gradually, and after a very long warning. The legiflature
were it poffible that its deliberations could be always directed, not
by the clamorous importunity of partial interefts, but by an
extenfive view of the general good, ought upon this very account
perhaps, to be particularly careful neither to eftablifh any new
monopolies of this kind, nor to extend further thofe which are
already eftablifhed. Every fuch regulation introduces fome degree
of real diforder into the conftitution of the ftate, which it will
be difficult afterwards to cure without occafioning another dif-
order.

How far it may be proper to impofe taxes upon the importation
of foreign goods, in order, not to prevent their importation, but to
raife a revenue for government, I mall confider hereafter when I
come to treat of taxes. Taxes impofed with a view to prevent, or
even to diminifli importation, are evidently as deftru&ive of the
revenue of the cuftoms as of the freedom of trade.

THE WEALTH OF NATIONS.

SI

CHAP. III.

Of the extraordinary Rejlraints upon the Importation of Goods of
ahnoft all Kinds, from thofe Countries with which the Balance is
fuppofed to be difadvantageous .

Hp O lay extraordinary reftraints upon the importation of goods CHAP.

of almoft all kinds, from thofe particular countries with u -y* J
which the balance of trade is fuppofed to be difadvantageous, is the
fecond expedient by which the commercial fyftem propofes to in-
creafe the quantity of gold and filver. Thus in Great Britain
higher duties are laid upon the wines of France than upon thofe of
Portugal. German linen may be imported upon paying certain
duties ; but French linen is altogether prohibited. The principles
which I have been examining, took their origin from private intereft
and the fpirit of monopoly : thofe which I am going to examine
from national prejudice and animofity. They are, accordingly, as
might well be expected, ftill more unreafonable. They are fo, even
upon the principles of the commercial fyftem.

First, though it were certain that in the cafe of a free trade
between France and England, for example, the balance would be
in favour of France, it would by no means follow that fuch a trade
would be difadvantageous to England, or that the general balance
of its whole trade would thereby be turned more againft it. If
the wines of France are better and cheaper than thofe of Portugal,
or its linens than thofe of Germany, it would be more advantageous
for Great Britain to purchafe both the wine and the foreign linen
which it had occafion for of France, than of Portugal and Ger-
many. Though the value of the annual importations from France
would thereby be greatly augmented, the value of the whole annual
importations would be diminifhed, in proportion as the French

Vol. II. I goods

THE NATURE AND CAUSES OF

K goods of the fame quality were cheaper than thofe of the other tw&
countries. This would be the cafe, even upon the fuppofition that
the whole French goods imported were to be confumed in Great
Britain.

But, fecondly, a great part of them might be re-exported to
other countries, where, being fold with profit, they might bring
back a return equal in value, perhaps, to the prime coft of the
whole French goods imported. What has frequently been faid of
the Earl: India trade might poflibly be true of the French ; that
though the greater part of Eaft India goods were bought with gold
and filver, the re-exportation of a part of them to other countries,
brought back more gold and filver to that which carried on the
trade than the prime cofl of the whole amounted to. One of the
moft important branches of the Dutch trade, at prefent, confifts in
the carriage of French goods to other European countries. A great
part even of the French wine drank in Great Britain is clandeftinely
imported from Holland and Zealand. If there was either a free
trade between France and England, or if French goods could be
imported upon paying only the fame duties as thofe of other Euro-
pean nations, to be drawn back upon exportation, England might
have fome fhare of a trade which is found fo advantageous to
Holland.

Thirdly, and laftly, there is no certain criterion by which we
can determine on which fide what is called the balance between any
two countries lies, or which of them exports to the greater!: value.
National prejudice and animofity, prompted always by the private
intereft of particular traders, are the principles which generally di-
rect our judgement upon all queftions concerning it. There are
two criterions, however, which have frequently been appealed to
upon fuch occafions, the cuftom-houfe books and the courfe of ex-
change.

THE WEALTH OF NATIONS.

change. The cuftoin-houfe books, I think, it is now generally ac- C
knowledged, area very uncertain criterion, on account of the inac-
curacy of the valuation at which the greater part of goods are rated
in thern. The courfe of exchange, at leaft, as it has hitherto been
eftimated, is, perhaps, almoft equally fo.

When the exchange between two places, fuch as London and
Paris, is at par,, it is faid to be a fign that the debts due from Lon-
don to Paris are compenfated by thofe due from Paris to London.
On the contrary, when a premium is paid at London for a bill
upon Paris, it is faid to be a fign that the debts due from London
to Paris are not compenfated by thofe due from Paris to London,
but that a balance in money muft be fent out from the latter place ;
for the rifk, trouble, and expence of exporting which, the pre-
mium is both demanded and given. But the ordinary Hate of debt
and credit between thofe two cities muft neceflarily be regulated, it
is faid, by the ordinary courfe of their dealings with one another.
When neither of them imports from the other to a greater amount
than it exports to it, the debts and credits of each may compenfate
one another. But when one of them imports from the other to a
greater value than it exports to it, the former neceflarily becomes
indebted to the latter in a greater fum than the latter becomes in-
debted to it : the debts and credits of each do not compenfate one
another, and money muft be fent out from that place of which
the debts over-balance the credits. The common courfe of ex-
change, therefore, being an indication of the ordinary ftate of debt
and credit between two places, muft likewife be an indication of
the ordinary courfe of their exports and imports, as thefe necefla-
rily regulate that ftate.

But though this doctrine, of which fome part is, perhaps, not a
little doubtful, were fuppofed ever fo certain, the manner in which
the par of exchange has hitherto been computed, renders uncer-
tain every conclufion that has ever yet been drawn from it.

I a When

THE NATURE AND CAUSES OF

K When for a fum of money paid in England, containing, accord-
ing to the ftandard of the Englifli mint, a certain number of
ounces of pure filver, you receive a bill for a fum of money to be
paid in France, containing, according to the ftandard of the French
mint, an equal number of ounces of pure filver, exchange is faid
to be at par between England and France. When you pay more,
you are fuppofed to give a premium, and exchange is faid to be
againft England, and in favour of France. When you pay lefs,
you are fuppofed to get a premium, and exchange is faid to be
againft France, and in favour of England-.

But, fi'rft we cannot always judge of the value of the current
money of different countries by the ftandards of their refpective
mints. In fome it is more, in others it is lefs worn, dipt, and
otherwife degenerated from that ftandard. But the value of the
current coin of every country, compared with that of any other
country, is in proportion, not to the quantity of pine filver which
it ought to contain, but to that which it actually does contain.
Before the reformation of the filver coin in king William's time,
exchange between England and Holland, computed, in the ufual
manner, according. to the ftandards of their refpective mints, was five
and twenty per cent, againft England. But the value of the cur-
rent coin of England, as we learn from Mr. Lowndes, was at that
time rather more than five and twenty per cent, below its ftandard
value. The real exchange, therefore, may even at that time have
been in favour of England,, notwithstanding the computed exchange
was fo much againft it ; a fmaller number of ounces of pure filver,
actually paid in England, may have purchafed' a bill for a greater
number of ounces of pure filver to be paid in Holland, and the man
who was fuppofed to give, may in reality have got the premium. The
French coin was, before the late reformation of the Englifh gold
coin, much lefs worn than the Englifli, and was, perhaps, two or

three

THE WEALTH OF NATIONS.

three per cent, nearer its ftandard. If the computed exchange c
with France, therefore, was not more than two or three per cent,
againft England, the real exchange might have been in its favour.
Since the reformation of the gold coin, the exchange has been con-
ftantly in favour of England, and againft France.

Secondly, in fome countries, the expence of coinage is defrayed
by the government, in others, it is defrayed by the private people
who carry their bullion to the mint, and the government even de-
rives fome revenue from the coinage. In England, it is defrayed by
the government, and if you carry a pound weight of ftandard filver
to the mint, you get back fixty-two {hillings, containing a pound
weight of the like ftandard filver. In France, a duty of eight per
cent, is deducted for the coinage, which not only defrays the ex-
pence of it, but affords a fmall revenue to the government. In
England, as the coinage cofts nothing, the current coin can never
be much more valuable than the quantity of bullion which it actually
contains. In France, the workmanfhip as you pay for it, adds to
the value, in the fame manner as to that of wrought plate. A
fum of French money, therefore, containing a certain weight of
pure filver, is more valuable than a Sum of Englifh money contain-
ing an equal weight of pure filver, and muft require more bullion,,
or other commodities to purchafe it. Though the current coin of
the two countries, therefore, were equally near the ftandards of
their refpective mints, a fum of Englifh money could not well pur-
chafe a fum of French money, containing an equal number of
ounces of pure filver,, nor confequently a bill upon France for fuch
a fum. If for fuch a bill no more additional money was paid than
what was fufficient to compenfate the expence of the French coin-
age, the real exchange might be at par between the two countries,
their debts and credits might mutually compenfate one another,,
while, the computed exchange was considerably in favour of France.

If

THE NATURE AND CAUSES OF

K If left than this was- pa-id, the real exchange might be in favour of
England, while the computed was in favour of France.

Thirdly, and laftly, in fome places, as at Amfterdam, Ham-
burgh, Venice, 6cc. foreign bills of exchange are paid in what they
call bank money ; while in others, as at London, Lifbon, Antwerp,
Leghorn, 6cc. they are paid in the common currency of the coun-
try. What is called bank money is always of more value than the
fame nominal fum of common currency. A thoufand guilders in
the bank of Amfterdam, for example, are of more value than a
thoufand guilders of Amfterdam currency. The difference between
them is called the agio of the bank, which, at Amfterdam, is gene-
rally about five per cent. Suppofmg the current money of two
countries equally near to the ftandard of their refpeclive mints, and
that the one pays foreign bills in this common currency, while the
other pays them in bank money, it is evident that the computed ex-
change may be in favour of that which pays in bank money, though
the real exchange mould be in favour of that which pays in cur-
rent money ; for the fame reafon that the computed exchange may
be in favour of that which pays in better money, or in money
nearer to its own ftandard, though the real exchange fhould be in
favour of that which pays in worfe. The computed exchange,
before the late reformation of the gold coin, was generally againft
London with Amfterdam, Hamburgh, Venice, and, I believe, with
all other places which pay in what is called bank money. It will
by no means follow, however, that the real exchange was againft
it. Since the reformation of the gold coin, it has been in favour of
London even with thofe places. The computed exchange has gene-
rally been in favour of London with Lifbon, Antwerp, Leghorn,
and, if you except France, I believe, with moft other parts of
Europe that pay in common currency j and it is not improbable
that the real exchange was fo too.

8

THE WEALTH OF NATIONS.

Digrejjion concerning Banks of Depojit, particularly concerning that

of Amfterdam,

TH E currency of a great ftate, fuch as France or England,
generally confifts almoft entirely of its own coin. Should
this currency, therefore, be at any time worn, dipt, or otherwife
degraded below its ftandard value, the ftate by a reformation of
its coin can effectually re-eftabliftt its currency. But the currency
of a fmall ftate, fuch as Genoa or Hamburgh, can feldom confift
altogether in its own coin, but muft be made up, in a great mea-
fure, of the coins of all the neighbouring ftates with which its in-
habitants have a continual intercourfe. Such a ftate, therefore, by
reforming its coin, will not always be able to reform its currency.
If foreign bills of exchange are paid in this currency, the uncertain
value of any fum, of what is in its own nature fo uncertain, muft
render the exchange always very much againft fuch a ftate, its cur-
rency being, in all foreign ftates, neceflarily valued even below
what it is worth.

In order to remedy the inconvenience to which this difadvanta-
geous exchange muft have fubjected their merchants, fuch fmall
ftates, when they began to attend to the intercft of trade, have
frequently enacted, that foreign bills of exchange of a certain value
mould be paid, not in common currency, but by an order upon, or
by a transfer in the books of a certain bank, eftablifhed upon the
credit, and under the protection of the ftate ; this bank being al-
ways obliged to pay, in good and true money, exactly according to
the ftandard of the ftate. The banks of Venice, Genoa, Amfter-
dam, Hamburgh, and Nuremberg, feem to have been all originally
eftablifhed with this view, though fome of them may have after-
wards

THE NATURE AND CAUSES OF

wards been made fubfervient to other purpofes. The money of
fuch banks being better than the common currency of the coun-
try, neceflarily bore an agio, which was greater or fmaller, accord-
ing as the currency was fuppofed to be more or lefs degraded below
the ftandard .of the ftate. The agio of the bank of Hamburgh,
for example, which is faid to be commonly about fourteen per cent,
is the fuppofed difference between the good ftandard money of the
ftate and the dipt, worn, and diminifli.ed currency poured into it
from all the neighbouring ftates.

Before 1609 the great quantity of dipt and worn foreign coin.,
•which the extenfive trade of Amfterdam brought from all parts of
Europe, reduced the value of its currency about nine per cent,
below that of good money frefh from the mint. Such money no
fooner appeared than it was melted down or carried away, as it al-
ways is in fuch circumftances. The merchants, with plenty of
currency, could not always find a fufhcient quantity of good money
to pay their bills of exchange; and the value of thofe bills, in fpite
of feveral regulations which were made to prevent it, became in a
great meafure uncertain.

In order to remedy thefe inconveniencies, a bank was eftablifhed
in 1609 under the guarantee of the city. This -bank received both
foreign coin, and the light and worn coin of the country at its real
intrinsic value in the good ftandard money of the country, deduct-
ing only fo much as was necefTary for defraying the expence of
coinage, and the other necefTary expence of management. For the
value which remained after this fmall deduction was made, it gave
a credit in its books. This credit was called bank money, which,
as it reprefented money exactly according to the ftandard of the
mint, was always of the fame real value, and intrinficaljy worth
more than current money. It was at the fame time enacted, that

all

THE WEALTH OF NATIONS.

all bills drawn upon or negociated at Amfterdam of the value of C
fix hundred gilders and upwards mould be paid in bank money, <~
which at once took away all uncertainty in the value of thofe
bills. Every merchant, in confequence of this regulation, was
obliged to keep an account with the bank in order to pay his fo-
reign bills of exchange, which neceflarily occafioned a certain de-
mand for bank money.

Bank money, over and above both its intrinnc fuperiority to
currency, and the additional value which this demand neceflarily
gives it, has likewife fome other advantages. It is fecure from
fire, robbery, and other accidents ; the city of Amfcerdam is
bound for it ; it can be paid away by a fimple transfer, without
the trouble of counting, or the rifk of tranfporting it from one
place to another. In confequence of thofe different advantages, it
feems from the beginning to have borne an agio, and it is ge-
nerally believed that all the money originally depofited in the
bank was allowed to remain there, nobody caring to demand pay-
ment of a debt which he could fell for a premium in the market.
By demanding payment of the bank, the owner of a bank credit
would lofe this premium. As a milling frefh from the mint will
buy no more goods in the market than one of our common worn
millings, fo the good and true money which might be brought
from the coffers of the bank into thofe of a private perfon, being
mixed and confounded with the common currency of the country,
would be of no more value than that currency, from which it
could no longer be readily diftinguifhed. While it remained in
the coffers of the bank, its fuperiority was known and afcertained.
When it had come into thofe of a private perfon, its fuperiority
could not well be afcertained without more trouble than perhaps
the difference was worth. By being brought from the coffers of
the bank, befides, it lofi all the other advantages of bank money ;

Vol. II. K its

to

THE NATURE AND CAUSES OF

B O p K its fecurity, its eafy and fafe transferability, its ufe in paying fo~
c— y-*"-1 reign bills of exchange. LOver and above all this, it could not be

brought from thofe coffers, as it will appear by and by, without

previoufly paying for the keeping.

Those depofits of coin, or which the bank was bound to re-
ftore in coin, conftituted the original capital of the bank, or the
whole value of what was reprefented by what is called bank mo-
ney. At prefent they are fuppofed to conftitute but a very fmall
part of it. In order to facilitate the trade in bullion, the bank has
been for thefe many years in the practice of giving credit in its
books upon depofits of gold and lilver bullion. This credit is
generally about five per cent, below the mint price of fuch bullion.
The bank grants at the fame time what is called a recipice or re~
ceipt, intitling the perfon who makes the depofit, or the bearer, to
take out the bullion again at any time within fix months, upon
re-transferring to the bank a quantity of bank money equal to
that for which credit had been given in its books when the depofit
was made, and upon paying one-fourth per cent, for the keeping,
if the depofit was in filver ; and one-half per cent, if it was in
gold j but at the fame time declaring, that in default of fuch pay-
ment, and upon the expiration of this term, the depofit lliould
belong to the bank at the price at which it had been received, or
for which credit had been given in the transfer books. What is
thus paid for the keeping of the dqfofit may be confidered as a
fort of warehoufe rent ; and why this warehoufe rent fhould be fo
much dearer for gold than for filver, feveral different reafons have
been affigned. The finenefs of gold, it has been faid, is more
difficult to be afcertained than that of filver. Frauds are more eafily
practifed, and occafion a greater lofs in the more precious metal.
Silver, befides, being the ftandard metal, the ftate, it has been

faid.

THE WEALTH OF NATIONS.

/aid, wifhes to encourage more the making of depofits of filver c
than of thofe of gold.

.- Deposits of bullion are mod: commonly made when the price
is fomewhat lower than ordinary ; and they are taken put again
when it happens to rife. In Holland the market price of bullion
is generally above the mint price, for the fame reafon that it was
fo in England before the late reformation of the gold coin. The
difference is faid to be commonly from about fix to fixteen flivers
upon the mark, or eight ounces of filver of eleven parts fine,
and one part alloy. The bank price, or the credit which the
bank gives for depofits of fuch. filver (when made in foreign coin,
of which the finenefs is well known and afcertained, fuch as
Mexico dollars) is twenty-two gilders, the mark; the mint
price is about twenty -three gilders; and the market price is
from twenty-three gilders fix, to twenty-three gilders fixteen
ftivers, or from two to three per cent, above the mintprice.*
The Proportions between the bank price, the mint price, and the
market price of gold bullion, arenearly thefame. A perfon can
generally fell his receipt for the difference between the mint price
of bullion and the market price. A receipt for bullion is almofl

K 2 always

* The following are the prices at which the bank of Amfterdam at prefent (Sepi
terriber, 1775) receives bullion and coin of different kinds.

SILVER.

Mexico dollars "1 Gilders.

French crowns i B— 22 per mark.

Englifh filver coin J

Mexico dollars new coin - 21 10

Ducatoons - - - - _ 3

Rix dollars ----- 28
Bar filver containing f| fine filver zr per mark, and in this proportion down to | fke,
on which 5 gilders are given.
Fine bars, 23 per mark, GOLD

THE NATURE AND CAUSES OF

BOOK always worth fomething, and it very feldom happens, therefore,
<— — that any body iuffers his receipt to expire, or allows his bullion ta
- fall to the bank at the price at which it had been received, either
by not taking it out before the end of the fix months, or by neg-
lecting to pay the one-fourth or one-half per cent, in order to ob-
tain a new receipt for another fix months. This, however,
though it happens feldom, is faid to happen fometimes, and more
frequently with regard to gold than with regard to iilver, on ac-
count of the higher warehoufe-rent which is paid far the keeping
of the more precious metal..

The perfon who by making a depofit of bullion obtains both
a bank credit and a receipt, pays his bills of exchange as they be-
come due with his bank credit ; and either fells or keeps his re-
ceipt according as he judges that the price of bullion is likely to
rife or to fall. The receipt and the bank credit feldom keep long
together, and there is no occahon that they mould. The perfon
who has a receipt, and who wants to take out bullion, finds al-
ways plenty of bank credits, or bank money to buy at the ordi-
nary price ; and the perfon who has bank money, and wants -to
take out bullion, finds receipts always in equal abundance.

The owners of bank credits and the holders of receipts con-
stitute two different forts of creditors againft the bank. The
holder of a receipt cannot draw out the bullion for which it is

granted*

GOLD.
Portugal coin "1

Guineas > B — 310 per mark.

Louis d'ors new J

Ditto old - - - 300

New ducats - - - 4 19 8 per ducat.
Bar or ingot gold is received in proportion to its finenefs compared with the above
foreign gold coin. Upon fine bars the bank gives 3+0 per mark. In general, how.
ever, fomething more is given upon coin of a known finenefs, than upon gold
and filver bars, of which , the finenefs cannot be afcertained but by a procefs of melt-
ing and afTaying.

THE WEALTH OF NATIONS

granted, without re-afligning to the bank a fum of bank money
equal to the price at which the bullion had been received. If he
has no bank money of his own, he muft purchafe it of thofe
who have it. The owner of bank money cannot draw out bul-
lion without producing to the bank receipts for the quantity
which he wants. If he has none of his own, he muft buy them
of thofe who have them. The holder of a receipt, when he
purchafes bank money, purchafes the power of taking out a
quantity of bullion, of which the mint price is five per cent,
above the bank price. The agio of five per cent, therefore,
which he commonly pays for it, is paid, not for an imaginary,
but for a real value. The owner of bank money, when he pur-
chafes a receipt, purchafes the power of taking out a quantity of
bullion of which the market price is commonly from two to
three per cent, above the mint price. The price which he pays
for it, therefore, is paid likewife for a real value. The price of
the receipt, and the price of the bank money, compound or make
up between them the full value or price of the bullion.

Upon depofits of the coin current in the country, the bank
grants receipts likewife as well as bank credits but thofe re-
ceipts are frequently of no value, and will bring no price in the
market. Upon ducatoons, for example, which in the currency
pafs for three gilders three flivers each, the bank gives a credit of
three gilders only, or five per cent, below their current value. It
grants a receipt likewife intitling the bearer to take out the num-
ber of ducatoons depofited at any time within fix months, upon
paying one-fourth per cent, for the keeping. This receipt will
frequently bring no price in the market, Three gilders bank mo-
ney generally fell in the market for three gilders three flivers, the
full value of the decatoons if they were taken out of the bank ;
and before they can be taken out, one-fourth per cent, muft be

paid

Z THE NATURE AND CAUSES OF

ii O B K paid for the keeping, which would be mere lofs to the holder of the"
* receipt. If the agio of the bank, however, fhould at any time fall
to three per cent, fuch receipts might bring fome price in the
market, and might fell for one and three-fourths per cent. But
the agio of the bank being now generally about five per cent,
inch receipts are frequently allowed to expire, or as they exprefs it,
to fall to the bank. The receipts which are given for depofits of
gold ducats fall to it yet more frequently,- becaufe a higher ware -
houfe-rent, or one-half per cent, muft be paid for the keeping of
them before they can be taken out again. The five per cent,
which the bank gains, when depofits either of coin or bullion are
allowed to fall to it, may be conndered as the warehoufe-rent for
the perpetual keeping of fuch depofits.

The fum of bank money for which the receipts are expired
muft be very confiderable. It muft comprehend the whole origi-
nal capital of the bank, which, it is generally fuppofed, has been
allowed to remain there from the time it was flrft depofited, no-
body caring either to renew his receipt or to take out his depofit,
as, for the reafons already afligned, neither the one nor the other
could be done without lofs. But whatever may be the amount of
this fum, the proportion which it bears to the whole mafs of bank
money is fuppofed to be very fmall. The bank of Amfterdam has for
thefe many years paft been the great warehoufe of Europe for bul-
lion, for which the receipts are very feldom allowed to expire, or,
as they exprefs it, to fall to the bank. The far greater part of the
bank money, or of the credits upon the books of the bank, is
fuppofed to have been created, for thefe many years paft, by fuch
depofits which the dealers in bullion are continually both making
and withdrawing.

No demand can be made upon the bank but by means of a
recipice or receipt. The fmaller mafs of bank money, for which
the receipts are expired, is mixed and confounded with the much
8 greater

THE WEALTH OF NATIONS.

greater mafs for which they are itill in force; fo that, though
there may be a confiderable fum of bank money, for which there
are no receipts, there is no fpecific fum or portion of it, which
may not at any time be demanded by one. The bank cannot be
debtor to two perfons for the fame thing and the owner of bank
money who has no receipt cannot demand payment of the bank
till he buys one. In ordinary and quiet times, he can find no dif-
ficulty in getting one to buy at the market price, which generally
correfponds with the price at which he can fell, the coin or bullion
it in titles him to take out of the bank..

It might be otherwife during a public calamity; an invafion,
for example, fuch as that of the French in 1672. The owners
of bank money being then all eager to draw it out of the bank,
in order to have it in their own keeping, the demand for receipts
might raife their price to an exorbitant height. The holders of
them might form extravagant expectations, and, infread of two
or three per cent, demand half the bank money for which credit
had been given upon the depofits that the receipts had refpeclively
been granted for. The enemy, informed of the conftitution of
the bank, might even buy them up in order to prevent the carry-
ing away of the treafure. In fuch emergencies, the bank, it is
fuppofed, would break through its ordinary rule of making pay-
ment only to the holders of receipts. The holders of receipts,,
who had no bank money, mufl have received within two. or three
per cent, of the value of the depofit for which their refpective re-
ceipt^ had been granted. The bank, therefore, it is faid, would,
in this cafe make no fcruple of paying, either with money or bul-
lion, the full value of what the owners of bank money who
could get no receipts, were credited for in its bocks • paying at
the fame time two or three per cent, to fuch holders of receipts as
had no bank money, that being the whole value which in this ftate
of things could juftly be fuppofed due to them,

Even.

F2 THE NATURE AND CAUSES OP

BOOK Even in ordinary and quiet times it is the intereft of the
holders of receipts to deprefs the agio, in order either to buy
bank money (and confequently the bullion, which their receipts
would then enable them to take out of the bank) fo much
cheaper, or to fell their receipts to thofe who have bank money,
and who want to take out bullion, fo much dearer; the price of
a receipt being generally equal to the difference between the
market price of bank money, and that of the coin or bullion for
which the receipt had been granted. It is the intereft of the owners
of bank money, on the contrary, to raife the agio, in order either to
fell their bank money fo much dearer, or to buy a receipt fo
much cheaper. To prevent the ftock jobbing tricks which thofe
oppofite interefts might fometimes occafion, the bank has of late
years come to the refolution to fell at all times bank money for
currency, at five per cent, agio, and to buy it in again at four
per cent. agio. In confequence of this refolution, the agio can
never either rife above five, or fink below four per cent, and the
proportion between the market price of bank and that of current
money, is kept at all times very near to the proportion between
their intrinsic values. Before this refolution was taken , the market
price of bank money ufed fometimes to rife fo high as nine per
<cent. agio, and fometimes to fink fo low as par, according as
oppofite interefts happened to influence the market.

The bank of Amfterdam profefles to lend out no part of what
■is depofited with it, but, for every gilder for which it gives credit in
its books, to keep in its repofitories the value of a gilder either in
money or bullion. That it keeps in its repofitories all the money
or bullion for which there are receipts in force, for which it is at
all times liable to be called upon, and which, in reality, is conti-
nually going from it and returning to it again, cannot well be
doubted. But whether it does fo likewife with regard to that part

of

THE WEALTH OF NATIONS.

73

of its capital, for which the receipts are long ago expired, for which c J A p«
in ordinary and quiet times it cannot be called upon, and which 1 — v~— «i
in reality is very likely to remain with it for ever, or as long as
the States of the United Provinces fubfift, may perhaps appear
more uncertain. At Amfterdam, however, no point of faith is
better eftablifhed than that for every gilder, circulated as bank mo-
ney, there is a correfpondent gilder in gold or filver to be found in
the treafure of the bank. The city is guarantee that it mould be
fo. The bank is under the direction of the four reigning burgo-
mafters, who are changed every year. Each new fett of burgo-
mafters vifits the treafure, compares it with the books, receives it
upon oath, and delivers it over, with the fame awful folemnity, to
the fett which fucceeds it ; and in that fober and religious country
oaths are not yet difregarded. A rotation of this kind feems alone
a fufBcient fecurity againft any practices which cannot be avowed.
Amidft all the revolutions which faction has ever occafioned in the
government of Amfterdam, the prevailing party has at no time
accufed their predeceffors of infidelity in the administration of the
bank. No accufation could have affected more deeply the reputa-
tion and fortune of the difgraced party, and if fuch an accufation
could have been Supported, we may be allured that it would have
been brought. In 1672, when the French king was at Utrecht,
the bank of Amfterdam paid fo readily as left no doubt of the fide-
lity with which it had obferved its engagements. Some of the
pieces which were then brought from its repofitories appeared to
have been fcorched with the fire which happened in the town-houfe
foon after the bank was eftablifhed. Thofe pieces, therefore, muft
have lain there from that time.

What may be the amount of the treafure in the bank is a ques-
tion which has long employed the Speculations of the curious. No-
thing but conjecture can be offered concerning it. It is generally
reckoned that there are about two thoufand people who keep

Vol. II. L accounts

THE NATURE AND CAUSES OF

accounts with the bank, and allowing them to have, one with ano-
ther, the value of fifteen hundred pounds fterling lying upon their
refpeclive accounts, (a very large allowance) the whole quantity of
bank money, and confequently of treafure in the bank, will amount
to about three millions fterling, or, at eleven gilders the pound fter-
ling, thirty-three millions of gilders ; a great fum, and fufficient to
carry on a very extenfive circulation, but vaftly below the extra-
vagant ideas which fome people have formed of this treafure.

The city of Amfterdam derives a confiderable revenue from the
bank. Befides what may be called the warehoufe-rent above-men-
tioned, each perfon, upon firft opening an account with the bank,
pays a fee of ten gilders ; and for every new account three gilders
three ftivers ; for every transfer two ftivers j and if the transfer is
for lefs than three hundred gilders, fix ftivers, in order to difcou-
rage the multiplicity of fmall tranfactions. The perfon who neg-
lects to balance his account twice in the year forfeits twenty-five
gilders. The perfon who orders a transfer for more than is upon
his account, is obliged to pay three per cent, for the fum over-
drawn, and his order is fet afide into the bargain. The bank is
fuppofed too to make a confiderable profit by the fale of the foreign
coin or bullion which fometimes falls to it by the expiring of re-
ceipts, and which is always kept till it can be fold with advantage.
It makes a profit likewife by felling bank money at five per cent,
agio, and buying it in at four. Thefe different emoluments
amount to a good deal more than what is neceflary for paying the
falaries of officers, and defraying the expence of management.
What is paid for the keeping of bullion upon receipts, is alone fup-
pofed to amount to a neat annual revenue of between one hundred
and fifty thoufand and two hundred thoufand gilders. Public utility,
however, and not revenue, was the original object of this inftitu-
tion. Its object was to relieve the merchants from the inconveni-
ence of a difadvantageous exchange. The revenue which has ari-

fen

BOOK
IV.

THE WEALTH OF NATIONS.

fen from it was unforefeen, and may be confidered as accidental.
But it is now time to return from this long digreffion, into which I
have been infenfibly led in endeavouring to explain the reafons why
the exchange between the countries which pay in what is called
bank money, and thofe which pay in common currency, mould
generally appear to be in favour of the former, and againfc the
latter. The former pay in a fpecies of money of which the intrin-
fic value is always the fame, and exactly agreeable to the ftandard
of their refpective mints ; the latter in a fpecies of money of which
the intrinfic value is continually varying, and is almoft always more
or lefs below that ftandard. But though the computed exchange
muft generally be in favour of the former, the real exchange may
frequently be in favour of the latter.

[End of the Digreffion concerning Banks of DepoJitJ]

Though the computed exchange between any two places were
m every refpect the fame with the real, it would not always fol-
low that what is called the. balance of trade was in favour of that
place which had the ordinary courfe of exchange in its favour.
The ordinary courfe of exchange might, indeed, in this cafe, be
a tolerable indication of the ordinary ftate of debt and credit
between them, and mow which of the two countries ufually had
occafion to fend out money to the other. But the ordinary (late of
debt and credit between any two places is not always entirely regu-
lated by the ordinary courfe of their dealings with one another, but
is influenced by that of the dealings cf both with many other
countries. If it was ufual, for example, for the merchants of
England to pay the goods which they buy from Hamburgh, Dant-
zick, Riga, &c. by bills upon Holland, the ordinary ftate of debt
and credit between England and Holland would not be entirely
regulated by the ordinary courfe of the dealings of thofe two coun-
tries with one another, but would be influenced by that of Eng-
land with thofe other places. England might, in this cafe, be
annually obliged to fend out money to Holland, though its annual

L 2 exports

THE NATURE AND CAUSES OF

exports to that country exceeded the annual value of its imports
from it, and though what is called the balance of trade was very
much in favour of England.

Hitherto I have been endeavouring to fhew, even upo» the
principles of the commercial fyftem, how unnecefTary it is to lay
extraordinary reftraints upon the importation of goods from thofe
countries with which the balance of trade is fuppofed to be difad-
vantageous.

Nothing, however, can be more abfurd than this whole doc-
trine of the balance of trade, upon which, not only thefe reftraints^
but almoft all the other regulations of commerce are founded.
When two places trade with one another, this doctrine fuppofes
that, if the balance be even, neither of them either lofes or gains ;
but if it leans in any degree to one fide, that one of them lofes^ and
the other gains in proportion to its declenfion from the exact equi-
librium. Both fuppofitions are falfe. A trade which is forced by
means of bounties and monopolies, may be, and commonly is dif-
advantageous to the country in whofe favour it is meant to be efta-
blifhed, as I mail endeavour to fhew hereafter. But that trade
which, without force or conftraint, is naturally and regularly car-
ried on between any two places, is always advantageous, though
not always equally fo, to both.

By advantage or gain, I underftand, not the increafe of the
quantity of gold and filver, but that of the exchangeable value of
the annual produce of the land and labour of the country, or the
increafe of the annual revenue of its inhabitants.

If the balance be even, and if the trade between the two places
confift altogether in the exchange of their native commodities,
they will, upon moft occafions, not only both gain, but they will
gain equally, or very near equally : each will in this cafe afford a
market for a part of the furplus produce of the other : each will

replace

THE WEALTH OF NATIONS.

replace a capital which had been employed in raifing this part of c
the furplus produce of the other, and which had been diftributed u
among, and given revenue and maintenance to a certain number
of its inhabitants. Some part of the inhabitants of each there-
fore will indirectly derive their revenue and maintenance from the
other. As the commodities exchanged too are fuppofed to be of
equal value, fo the two capitals employed in the trade will, upon
rnofl occafions, be equal, or very nearly equal ; and both being
employed in railing the native commodities of the two countries,
the revenue and maintenance which their diftribution will afford
to the inhabitants of each will be equal, or very nearly equal.
This revenue and maintenance, thus mutually afforded, will be
greater or fmaller in proportion to the extent of their dealings. If
thefe mould annually amount to an hundred thoufand pounds, for
example, or to a million on each fide, each of them would afford
an annual revenue, in the one cafe, of an hundred thoufand
pounds, in the other, of a million, to the inhabitants of the other,

If their trade mould be of fuch a nature that one of them ex-
ported to the other nothing but native commodities, while the
returns of that other confifled altogether in foreign goods ; the
balance, in this cafe, would ftill be fuppofed even, commodities
being paid for with commodities. They would, in this cafe too, both
gain, but they would not gain equally ; and the inhabitants of the
country which exported nothing but native commodities would
derive the greateft revenue from the trade. If England, for exam-
ple, mould import from France nothing but the native commodi-
ties of that country, and, not having fuch commodities of its
own as were in demand there, mould annually repay them by
fending thither a large quantity of foreign goods, tobacco, we mall
fuppofe, and Eaft India goods j this trade, though it would give
fome revenue to the inhabitants of both countries,, would give

more.-

THE NATURE AND CAUSES OF

more to thofe of France than to thofe of England. The whole
French capital annually employed in it would annually be diftri-
buted among the people of France. But that part of the Englifli
capital only which was employed in producing the Englifh commo-
dities with which thofe foreign goods were purchafed, would be
annually diftributed among the people of England. The greater
part of it would replace the capitals which had been employed in
Virginia, Indoftan, and China, and which had given revenue and
maintenance to the inhabitants of thofe difrant countries. If the
capitals were equal, or nearly equal, therefore, this employment
of the French capital would augment much more the revenue of
the people of France, than that of the Englifh capital would the
revenue of the people of England. France would in this cafe
carry on a direct foreign trade of confumption with England ;
whereas England would carry on a round-about trade of the fame
kind with France. The different effects of a capital employed in
the direct, and of ons employed in the round-about foreign trade
of confumption, have already been fully explained.

There is not, probably, between any two countries, a trade
which confifts altogether in the exchange either of native commo-
dities on both fides, or of native commodities on one fide and of
foreign goods on the other. Almoft all countries exchange with
one another partly native and partly foreign goods. That coun-
try, however, in whofe cargoes there is the greater! proportion
of native, and the leafr. of foreign goods, will always be the prin-
cipal gainer. If it was not with tobacco and Ean: India goods,
but with gold and filver, that England paid for the commodities
annually imported from France, the balance, in this cafe, would
be fuppofed uneven, commodities not being paid for with commo-
dities, but with gold and filver. The trade, however, would, in
this cafe, as in the foregoing, give fome revenue to the inhabitants
3 • of

THE WEALTH OF NATIONS.

79

of both countries, but more to thofe of France than to thofe of c p«
England. It would give fome revenue to thofe of England. The u-
capital which had been employed in producing the Englifh goods
that purchafed this gold and filver, the capital which had been
diftributed among, and given revenue to certain inhabitants of
England, would thereby be replaced, and enabled to continue that
employment. The whole capital of England would no more be
diminifhed by this exportation of gold and filver, than by the expor-
tation of an equal value of any other goods. On the contrary, it
would, in moft cafes, be augmented. No goods are fent abroad
but thofe for which the demand is fuppofed to be greater abroad
than at home, and of which the returns confequently, it is expect-
ed, will be of more value at home than the commodities export-
ed. If the tobacco which, in England, is worth only a hundred
thoufand pounds, when fent to France will purchafe wine which
is, in England, worth a hundred and ten thoufand pounds, the
exchange will augment the capital of England by ten thoufand
pounds. If a hundred thoufand pounds of Englifli gold, in the
fame manner, purchafe French wine which, in England, is worth
a hundred and ten thoufand, this exchange will equally augment
the capital of England by ten thoufand pounds. As a merchant
who has a hundred and ten thoufand pounds worth of wine in his
cellar, is a richer man than he who has only a hundred thoufand
pounds worth of tobacco in his warehoufe, fo is he likewife a
richer man than he who has only a hundred thoufand pounds
worth of gold in his coffers. He can put into motion a greater
quantity of induftry, and give revenue, maintenance, and employ-
ment, to a greater number of people than either of the other two.
But the capital of the country is equal to the capitals of all its
different inhabitants, and the quantity of induflry which can be
annually maintained in it, is equal to what all thofe different capi-
tals can maintain. Both the capital of the country, therefore,

and

So THE NATURE AND CAUSES OF

BOOK and the quantity of induftry which can be annually maintained in
v~' it, mull generally be augmented by this exchange. It would,
indeed, be more advantageous for England that it could purchafe
the wines of France with its own hardware and broad-cloth, than
with either the tobacco of Virginia, or the gold and filver of Brazil
and Peru. A direct foreign trade of confumption is always more
advantageous than a round-about one. Eut a round-about foreign
trade of confumption which is carried on with gold and filver, does
not feem to be lefs advantageous than any other equally round-
about one. Neither is a country which has no mines more likely
to be exhaufted of gold and filver by this annual exportation of
thofe metals, than one which does not grow tobacco by the like
annual exportation of that plant. As a country which has where-
withal to buy tobacco will never be long in want of it, fo nei-
ther will one be long in want of gold and fdver which has where-
withal to purchafe thofe metals.

It is a lofmg trade, it is faid, which a workman carries on
with the alehoufe ; and the trade which a manufacturing nation
would naturally carry on with a wine country, may be confidered
as a trade of the fame nature. I anfwer, that the trade with the
alehoufe is not neceffarily a loling trade. In its own nature it is
juft as advantageous as any other, though, perhaps, fomewhat
more liable to be abufed. The employment of a brewer, and even
that of a retailer of fermented liquors, are as neceffary divifions of
labour as any other. It will generally be more advantageous for
a workman to buy of the brewer the quantity he has occafion for
than to make it himfelf, and if he is a poor workman, it will ge-
nerally be more advantageous for him to buy it by little and little
of the retailer, than a large quantity of the brewer. He may no
doubt buy too much of either, as he may of any other dealers in
his neighbourhood, of the butcher, if he is a glutton, or of the
draper, if he affects to be a beau among his companions. It is

advan-

THE WEALTH OF NATIONS.

advantageous to the great body of workmen notwithstanding, that C H^A P.
all thefe trades fhould be free, though this freedom may be abufed <, — v — i
in all of them, and is more likely to be fo, perhaps, in fome than
in others. Though individuals, befides, may fometimes ruin their
fortunes by an exceflive confumption of fermented liquors, there
feems to be no riik that a nation mould do fo. Though in every
country there are many people who fpend upon fuch liquors more
than they can afford, there are always many more who fpend lefs.
It deferves to be remarked too that, if we confult experience, the
cheapnefs of wine feems to be a caufe, not of drunkennefs, but
of fobriety. The inhabitants of the wine countries are in ge-
neral the fobereft people in Europe ; witnefs the Spaniards, the
Italians, and the inhabitants of the fouthern provinces of France.
People are feldom guilty of excefs in what is their daily fare.
Nobody affects the character of liberality and good fellowfhip, by
being profufe of a liquor which is as cheap as fmall beer. On
the contrary, in the countries which from either exceflive heat or
cold produce no grapes, and where wine confequently is dear and
a rarity, drunkennefs is a common vice, as among the northern
nations, and all thofe who live between the tropicks, the negroes*
for example, on the coaft of Guinea. When a French regiment
comes from fome of the northern provinces of France, where
wine is fomewhat dear, to be quartered in the fouthern, where it
is very cheap, the foldiers, I have frequently heard it obferved,
are at firft debauched by the cheapnefs and novelty of good wine j
but after a few months refidence, the greater part of them become
as fober as the reft of the inhabitants. Were the duties upon
foreign wines, and the excifes upon malt, beer, and ale, to he
taken away all at once, it might, in the fame manner, occafion
in Great Britain a pretty general and temporary drunkennefs
among the middling and inferior ranks of people, which would
-probably be foon followed by a permanent and almoft umverfal
Vol. IL M fobriety.

THE NATURE AND CAUSES OF

K fobriety. At prefent drunkennefs is by no means the vice of peo-
-J pie of fafhion, or of thofe who can eafily afford the molt expen-
live liquors. A gentleman drunk with ale, has fcarce ever been
feen among us. The restraints upon the wine trade in Great
Britain befides, do not fo much feem calculated to hinder the
people from going, if I may fay fo, to the aiehoufe, as from
going where they can buy the beft and cheaper!: liquor. They
favour the wine trade of Portugal, and difcourage that of France.
The Portuguefe, it is faid, indeed, are better cuftomers for our
manufactures than the French, and mould therefore be encou-
raged in preference to them. As they give us their cuftom, it is
pretended, v/e Ihould give them our's. The fneaking arts of un-
derling tradefmen are thus erected into political maxims for the
conduct of a great empire : for it is the moft underling tradefmen
only who make it a rule to employ chiefly their own cuftomers,
A great trader purchafes his goods always where they are cheapefl
and beft, without regard to any little intereft of this kind.

By fuch maxims as thefe, however, nations have been taught
that their i ntereft confuted in beggaring all their neighbours.
Each nation has been made to look with an invidious eye upon
the profperity of all the nations with which it trades, and to con-
fider their gain as its own lofs. Commerce, which ought naturally
to be, among nations, as among individuals, a bond of union
and friendfiiip, has become the moft fertile fource of difcord and
animofity. The capricious ambition of kings and minifters has
not, during the prefent and the preceeding century, been more
fatal to the repofe of Europe than the impertinent jealoufy of
merchants and manufacturers. The violence and injuftice ©f the
rulers of mankind is an ancient evil, for which, I am afraid the
nature of human affairs can fcarce admit of a remedy. But the
mean rapacity, the monopolizing fpirit of merchants and manu-
facturers,

THE WEALTH OF NATIONS

facturers, who neither are, nor ought to be the rulers of man- C HA P.
kind, though it cannot perhaps be corrected, may very eafily be u-— y— «J
prevented from difturbing the tranquillity of any body but
themfelves..

That it was the fpirit of monopoly which originally both in-
vented and propagated this doctrine, cannot be doubted ; and they
who firft taught it were by no means fuch fools as they who be-
lieved it. In every country it always is and rauft be the intereft of
the great body of the people to buy whatever they want of thofc
who fell it cheapen:. The propofition is fo very manifeft, that it
feems ridiculous to take any pains to prove it ; nor could it ever
have been called in queftion had not the interefted fophiftry of
merchants and manufacturers confounded the common fenfe of
mankind. Their intereft is, in this refpect, directly oppofite to
that of the great body of the people. As it is the intereft of the
freemen of a corporation to hinder the reft of the inhabitants from
employing any workmen but themfelves, fo it is the intereft of
the merchants and manufacturers of every country to fecure to
themfelves the monopoly of the home market. Hence in Great
Britain and in moft other European countries the extraordi-
nary duties upon almoft all goods imported by alien merchants.
H^ence the high duties and prohibitions upon all thofe foreign
manufactures which can come into competition with our own.
Hence too the extraordinary reftraints upon the importation of
almoft all forts of goods from thofe countries with which the ba-
lance of trade is fuppofed to be difadvantageous ; that is, from
thofe againft whom national animohty happens to be moft vio-
lently inflamed.

The wealth of a neighbouring nation, however, though danger-
ous in war and politicks, is certainly advantageous in trade. In a

M 2 flat*

THE NATURE AND CAUSES OF

B O^PK ftate of hoftility it may enable our enemies to maintain fleets and'
— — . — ; armies fuperior to our own but in a ftate of peace and commerce
it muft likewife enable them to exchange with us to a greater'
value, and to afford a better market, either for the immediate
produce of our own induftry, or for whatever is purchafed with
that produce. As a rich man is likely to be a better cuftomer to
the induftrious people in his neighbourhood, than a poor, fo is
likewife a rich nation. A rich man, indeed, who is himfelf a
manufacturer, is a very dangerous neighbour to allthofe who deal
in the fame way. All the reft of the neighbourhood, however, by
far the greateft number, profit by the good* market which his ex-
pence affords them. They even profit by his underfilling the
poorer workmen who deal in the lame way with him. The ma-
nufacturers of a rich nation, in the fame manner, may no doubt'
be very dangerous rivals to thofe of their neighbours. This very
competition, however, is advantageous to the great body of the
people, who profit greatly befides by the good market which the
great expence of fuch a nation affords them in every other way.
Private people who want to make a fortune, never think of retir-
ing to the remote and poor provinces of the country, but refort
either to the capital or to fome of the great commercial towns.
They know, that where little wealth circulates there is little to be
got, but that where a great deal is in motion, fome fhare of it
may fall to them. The fame maxims which would in this man-
ner direct the common fenfe of one, or ten. or twenty indivi-
duals, fhould regulate the judgement of one, or ten, or twenty
millions, and mould make a whole nation regard the riches of
its neighbours, as a probable caufe and cccafion for itfelf to acquire
riches. A nation that would enrich itfelf by foreign trade i&
certainly moft likely to do fo when its neighbours are all rich,
induftrious, and commercial nations. A great nation furrounded

on

THE WEALTH OF NATIONS.

85

©n all fides by wandering favages and poor barbarians might, no C H A P.
doubt, acquire riches by the cultivation of its own lands, and by u— y-w
its own interior commerce, but not by foreign trade. It feems to
have been in this manner that the ancient Egyptians and the
modern Chinefe acquired their great wealth. The ancient Egyp-
tians, it is faid, neglected foreign commerce, and the modern
Chinefe, it is known, hold it in the utmoft contempt, and fcarce
deign to afford it the decent protection of the laws. The modern
maxims of foreign commerce, by aiming at the impoverifhment
of all our neighbours, fo far as they are capable of producing
their intended effect, tend to render that very commerce infigni--
ficantand contemptible..

There is no commercial country in Europe of which the-
approaching ruin has not frequently been foretold by the pre-
tended doctors of this fyftem, from an unfavourable balance of
trade. After all the anxiety however which they have excited
about this, after all the vain" attempts of almoft all trading nations
to turn that balance in their own favour and againft. their neigh-
bours, it does not appear that any one nation in Europe has been
in any refpect impoverifhed by this caufe. Every town and coun-
try, on the contrary, in proportion as they have opened their
ports to all nations inftead of being ruined by this free trade,
as the principles of the commercial fyftem would lead us to ex-
pect, have been enriched by it. Though there are in Europe,
indeed, a few towns which in fome refpects deferve the name of
free ports, there is no country which does fo. Holland, perhaps,
approaches the neareft to this character of any, though flill very
remote from it ; and Holland, it is acknowledged, not only derives
Jts whole wealth, but a great part of its neceffary fubfiftence, from -'
foreign trade.

There •

THE NATURE AND CAUSES OF

There is another balance indeed, which has already been ex-
plained> very different from the balance of trade, and which,
according as it happens to be either favourable or unfavourable,
necefTarily occafions the profperity or decay of every nation. This
is the balance of the annual produce and confumpti.;;i. If the
exchangeable value of the annual produce, it has already been
obferved, exceeds that of the annual confumption, the capital of
the fociety muft annually increafe in proportion to this excefs.
The fociety in this cafe lives within its revenue, and what is
annually faved out of its revenue, is naturally added to its capi-
tal, and employed fo as to increafe ftill further the annual pro-
duce. If the exchangeable value of the annual produce, on the
contrary, fall fhort of the annual confumption, the capital of
the fociety mud annually decay in proportion tc this deficiency.
The expence of the fociety in this cafe exceeds its revenue, and
necefTarily encroaches upon its capital. Its capital, therefore, muft
necefTarily decay, and together with it, the exchangeable value of
the annual produce of its induftry.

This balance of produce and confumption is entirely different
from, what is called, the balance of trade. It might take place
in a nation which had no foreign trade, but which was entirely
Separated from all the world. It may take place in the whole
globe of the earth, of which the wealth, population, and improve-
ment may be either gradually increafmg or gradually of caying.

The balance of produce and confumption may be conftantly
in favour of a nation, though what is called the balance of trade
be generally againfl: it. A nation may import to a greater value
than it exports for half a century, perhaps, together the gold
and filver which comes into it during all this time may be all im-
mediately fent out of it ; its circulating coin may gradually decay,

different

THE WEALTH OF NATIONS.

different forts of paper money being fubftituted in its place, and c
even the debts too which it contracts in the principal nations
with whom it deals may be gradually increafing ; and yet its real
wealth, the exchangeable value of the annual produce of its lands
and labour may, during the fame period, have been increafing in
a much greater proportion. The ftate of our North American
colonies, and the trade which they carried on with Great Britain,
before the commencement of the late diflurbances, may ferve as
a proof that this is by no means an impoflible fuppofition.

CHAP. IV.

Of Drawbacks,

MERCHANTS and manufacturers are not contented with
the monopoly of the home market, but delire likewife the
mod extenfive foreign fale for their goods. Their country has no
jurifdiction in foreign nations, and therefore can feldom procure
them any monopoly there. They are generally obliged therefore
to content themfelves with petitioning for certain encouragements
to exportation.

Of thefe encouragements what are called Drawbacks feem to be
the moft reafonable. To allow the merchant to draw back upon
exportation, either the whole or a part of whatever excife or in-
land duty is impofed upon domeflick induftry, can never occafion
the exportation of a greater quantity of goods than what would
have been exported had no duty been impofed. Such encourage-
ments do not tend to turn towards any particular employment a
greater mare of the capital of the country, than what would go

to

88 THE NATURE AND CAUSES OF 1

BOOK to It of its own accord, but only to hinder the duty from driving
j^y^j away any part of that mare to other employments. They tend
not to overturn that balance which naturally eftablifhes itfelf
among all the various employments of the fociety ; but to hinder
it from being overturned by the duty. They tend not to deftroy
but to preferve, what it is in moft cafes advantageous to pre-
serve, the natural divifion and diftribution of labour in the
ibciety.

The fame thing may be faid of the drawacks upon the re-expor-
tation of foreign goods imported which in Great Britain generally
amount to by much the largeft part of the duty upon importation.
Half the duties impofed by what is called the old fublidy, are drawn
back univerfally, except upon goods exported to the Britifh plan-
tations ; and frequently the whole, almoft always a part of thofe
impofed by later fubfidies and imports. Drawbacks were, per-
haps, originally granted for the encouragement of the carrying
trade, which, as the freight of the fhips is frequently paid by fo-
reigners in money, was fuppofed to be peculiarly fitted for bring-
ing gold and filver into the country. But though the carrying
trade certainly deferves no peculiar encouragement, though the
motive of the inftitution was, perhaps, abundantly fooliih, the
inftitution itfelf feems reafonable enough. Such drawbacks cannot
force into this trade a greater mare of the capital of the country
than what would have gone to it of its own accord, had there
been no duties upon importation. They only prevent its being
.excluded altogether by thofe duties. The carrying trade, though
it deferves no preference, ought not to be precluded, but to be
left free like all other trades. It is a neceflary refource for thofe
.capitals which cannot find employment either in the agriculture or
in the manufactures of the country, either in its home trade or in

#ts foreign trade of confumntion.
8

the

WEALTH OF NATIONS.

89

The revenue of the cuftoms, inftead of fuffering, profits from c H
fuch drawbacks, by that part of the duty which is retain
If the whole duties had been retained, the foreign goods upon
which they are paid, could feldom have been exported,
confequently imported, for want of a market. The duties,
therefore, of which a part is retained, would never have been
paid.

These reafons feem fufncLently to juftify drawbacks, ;
-would juftify them, though the whole duties, whether upon the
produce of domeftick induftry, or upon foreign goods, were
always drawn back upon exportation. The revenue of excife
would in this cafe, indeed, fuffer a little, and that of the cuftoms
agood deal more ; but the natural balance of induftry, the natural
divifion and diftribution of labour, which is always more or lefs
difturbed by fuch duties, would be more nearly re-eftablimed by
fuch a regulation.

These reafons, however, will juftify drawbacks only upon ex-
porting goods to thofe countries which are altogether foreign and
independent, not to thofe in which our merchants and manu-
facturers enjoy a monopoly. A drawback, for example, upon
the exportation of European goods to our American colonies,
will not always occafion a greater exportation than what would
have taken place without it. By means of the monopoly which
our merchants and manufacturers enjoy there, the fame quantity
might frequently, perhaps, be fent thither, though the whole
duties were retained. The drawback, therefore, may frequently
be nine lofs to the revenue of excife and cuftoms, without altering
the ftate of the trade, or rendering it in any refpect more exten-
five. How far fuch drawbacks can be juftifted, as a proper en-
couragement to the induftry of our colonies, or how far it is

Vol. II. N advantageous

THE NATURE AND CAUSES OF

BOOK advantageous to the mother country, that they mould be exempted
from taxes which are paid by all the reft of their fellow fubjects,
will appear hereafter when I come to treat of colonies.

Drawbacks however, it muft always be underftood, are ufeful
only in thofe cafes in which the goods for the exportation of which
they are given, are really exported to fome foreign country ; and:
not clandeftinely reimported into cur own. That fome drawbacks,,
particularly thofe upon tobacco, have frequently been abufed in this
manner, and have given occafion to many frauds equally hurtful;
both to the revenue and to the fair trader, is well known.

CHAP. V.

Of Bounties.

BOUNTIES upon exportation are, in Great Britain, fre-
quently petitioned for, and fometimes granted to the produce
of particular branches of domeftick induftry. By means of them
our merchants and manufacturers, it is pretended, will be enabled
to fell their goods as cheap or cheaper than their rivals in the
foreign market. A greater quantity, it is faid, will thus be export-
ed, and the balance of trade confequently turned more in favour
of our own country. W e cannot give our workmen a monopoly
in the foreign, as we have done in the home market. We cannot
force foreigners to buy their goods, as we have done our own coun-
trymen. The next beft expedient, it has been thought, therefore,
is to pay them for buying. It is in this manner that the mercan-
tile fyftem propofes to enrich the whole country, and to put money
into all our pockets by means of the balance of trade.

Bounties,

THE WEALTH OF NATIONS.

Bounties, it is allowed, ought to be given to thofe branches of C H A P.
trade only which cannot be carried on without them. But every u-— v-^J
branch of trade in which the merchant can fell his goods for a
price which replaces to him, with the ordinary profits of ftock,
the whole capital employed in preparing and lending them to mar-
ket, can be carried on without a bounty. Every fuch branch is
evidently upon a level with all the other branches of trade which
are carried on without bounties, and cannot therefore require one
more than they. Thofe trades only require bounties in which the
merchant is obliged to fell his goods for a price which does not
replace to him his capital, together with the ordinary profit; o
in which he is obliged to fell them for lefs than it really cofts hi
to fend them to market. The bounty is given in order to m ik \
up this lofs, and to encourage him to continue, or perhaps to b
gin, a trade of which the expence is fuppofed to be greater than
the returns, of which every operation eats up a part of the capi-
tal employed in it, and which is of fuch a nature, that, if all other
trades refembled it, there would foon be no capital left in the
country.

The trades, it is to be obferved, which are carried on by means
of bounties, are the only ones which can be carried on between
two nations for any confiderable time together, in fuch a manner
as that one of them mall always and regularly lofe, or fell its goods
for lefs than it really cofts to fend them to market. But if the
bounty did not repay to the merchant what he would otherwife
lofe upon the price of his goods, his own intereft would foon oblige
him to employ his ftock in another way, or to find out a trade in
which the m ice of the goods would replace to him, with the ordi-
nary profit, the capital employed in fending them to market. The
effect of bounties, like that of all the other expedients of the mer-
cantile lyftem, can only be to force the trade of a country into a

N 2 channel

2

THE NATURE AND CAUSES OF

BOOK channel much lefs advantageous than that in which it would. natu-
v— v — -> rally run of its own accord.

The ingenious and well informed author of the tracts upon
the corn trade has mown very clearly, that fmce the bounty upon
the exportation of corn was firft eflablifhed, the price of the corn
exported, valued moderately enough, has exceeded that of the corn
imported, valued very high, by a much greater fum than the
amount of the whole bounties which have been paid during that
period. This, he imagines, upon the true principles of the mer-
cantile fyflem, is a clear proof that this forced corn trade is bene-
ficial to the nation the value of the exportation exceeding that
of the importation by a much greater fum than the whole extraor-
dinary expence which the publick has been at in order to get it
exported. He does not confider that this extraordinary expence, or
the bounty, is the fmalleft part of the expence which the exporta-
tion of corn really cofls the fociety. The capital which the far-
mer employed in raifing it muft likewife be taken into the account.
Unlefs the price of the corn when fold in the foreign markets re-
places, not only the bounty, but this capital, together with the
ordinary profits of flock, the fociety is a lofer by the difference, or
the national flock is fo much diminifhed. But the very reafon for
which it has been thought neceflary to grant a bounty is the fup-
pofed infufHciency of the price to do this.

The/ average price of corn, it has been faid, has fallen confider-
ably fince the efcablifhment of the bounty. That the average price
of corn began to fall fomewhat towards the end of the lafl cen-
tury, and has continued to do fo during the courfe of the fixty-
four firft years of the prefent, I have already endeavoured to mow.
But this event, fuppofmg it to be as real as I believe it to be, muft
have happened in fpite of the bounty, and cannot pofiibly have
happened in conference of it.

In

THE WEALTH OF NATIONS.

93

In years of plenty, it has already been obferved, the bounty, by C HA p.
occafioning an extraordinary exportation, neceflarily keeps up the <— ~«y- — j
price of corn in the home market above what it would naturally
fall to. To do fo was the avowed purpofe of the inftitution. In
years of fcarcity, though the bounty is frequently fufpended, yet
the great exportation which it occafions in years of plenty, muft
frequently hinder more or lefs the plenty of one year from relieving
the fcarcity of another. Both in years of plenty, and in years of
fcarcity, therefore, the bounty neceflarily tends to raife the money
price of corn fomewhat higher than it otherwife would be in the:
home market.

That, in the actual ftate of tillage, the bounty muft neceflarily
have this tendency, will not, I apprehend, be difputed by any rea<-
fonable perfon. But it has been thought by many people, that by
fecuring to the farmer a better price than he could otherwife expect
in the actual ftate of tillage, it tends to encourage tillage ; and that
the confequent incrcafe of corn may, in a long period of years,
lower its price more than the bounty can raife it in the actual ftate
which tillage may, at the end of that period, happen to be in.

I answer, that this might be the cafe if the effect of the bounty
was to raife the real price of corn, or to enable the farmer with
an equal quantity of it to maintain a greater number of labourers
in the fame manner, whether liberal, moderate, or fcanty, that other
labourers are commonly maintained in his neighbourhood. But
neither the bounty, it is evident, nor any other human inftitution,
can have any fuch effect. It is not the real, but the nominal price
of corn only, which can be at all affected by the bounty.

The real effect of the bounty is not fo much to raife the real
value of corn, as to degrade the real value of filverj or to make an
equal quantity of it exchange for a fmaller quantity, not only of

corn 3

THE NATURE AND CAUSES OF

corn, but of all other commodities : for the money price of corn
regulates that of all other commodities.

It regulates the money price of labour, which muft always be
fuch as to enable the labourer to purchafe a quantity of corn fuf-
ficient to maintain him and his family either in the liberal, mode-
rate, or fcanty manner in which the advancing, ftationary, or de-
clining circumftances of the fociety oblige his employers to main-
tain him.

It regulates the money price of all the other parts of the rude
produce of land, which, in every period of improvement, mull:
bear a certain proportion to that of corn, though this proportion
is different in different periods. It regulates, for example, the
money price of grafs and hay, of butcher's meat, of horfes, and the
maintenance of horfes, of land carriage confequently, or of the
greater part of the inland commerce of the country.

By regulating the money price of all the other parts of the rude
produce of land, it regulates that of the materials of all manufac-
tures. By regulating the money price of labour, it regulates that
of manufacturing art and indufhy. And by regulating both, it
regulates that of the compleat manufacture. The money price of
labour, and of every thing that is the produce either of land or
labour, muff necefiarily either rife or fall in proportion to the mo-
ney price of corn.

Though in confequence of the bounty, therefore, the farmer
ihould be enabled to fell his corn for four millings the bufhel in-
•ftead of three and lixpence, and to pay his landlord a money rent
proportionable to this rife in the money price of his produce ; yet,
if in confequence of this rife in the price of corn, four millings
will purchafe no more goods of any other kind than three and fix-
pence

THE WEALTH OF

NATIONS.

95

pence would have done before, neither the circumftances of the c ^A p-

farmer, nor thofe of the landlord, will be in the fmalleft degree u— v-— J
mended by this change. The farmer will not be able to cultivate
better : the landlord will not be able to live better.

That degradation in the value of filver which is the effect, of the
fertility of the mines, and which operates equally, or very near
equally, through the greater part of the commercial world, is a
matter of very little confequence to any particular country. The
confeauent rife of all money prices, though it does not make thofe
who receive them really richer, does not make them really poorer.
A fervice of plate becomes really cheaper, and every thing elfe re-
mains precifely of the fame real value as before.

But that degradation in the value of filver which, being the
effect either of the peculiar fltuation, or of the political inftitu-
tions of a particular country, takes place only in that country, is
a matter of very great confequence, which, far from tending to
make any body really richer, tends to make every body really
poorer. The rife in the money price of all commodities, which is
in this cafe peculiar to that country, tends to difcourage more or
lefs every fort of indufhy which is carried on within it, and to
enable foreign nations, by furnifhing almoft all forts of goods for
a fmaller quantity of filver than its own workmen can afford to do, .
to underfeil them, not. only in the foreign, but even in the home
market.

It is the peculiar fltuation of Spain and Portugal, as proprietors
of the mines, to be the diftributors of gold and filver to all the
other countries of Europe. Thofe metals ought naturally, there-
fore, to be fomewhat cheaper in Spain and Portugal than in any
other part of Europe. The difference, however, . fhould be no
v more

THE NATURE AND CAUSES OF

K more than the amount of the freight and infurance ; and, on ac-
count of the great value and fmall bulk of thofe metals, their
freight is no great matter^ and their infurance is the fame as that
of any other goods of equal value. Spain and Portugal, there-
fore, could fuffer very little from their peculiar fituation, if they
•did not aggravate its difadvantages by their political inftitutions.

Spain by taxing, and Portugal by prohibiting the exportation
of gold and filver, load that exportation with the expence of fmug-
gling, and raife the value of thofe metals in other countries fo
much more above what it is in their own, by the whole amount
of this expence. When you dam up a ftream of water, as foon
as the dam is full, as much water muft run over the dam -head as
if there was no dam at all. The prohibition of exportation can-
not detain a greater quantity of gold and filver in Spain and Por-
tugal than what they can afford to employ, than what the annual
produce of their land and labour will allow them to employ, in
coin, plate, gilding, and other ornaments of gold and filver. When
they have got this quantity the dam is full, and the whole ftream
which flows in afterwards muft run over. The annual exportation
of gold and filver from Spain and Portugal accordingly is, by all
accounts, notwithstanding thefe reftraints, very near equal to the
whole annual importation. As the water, however, muft always
be deeper behind the dam-head than before it, fo the quantity cf
gold and filver which thefe reftraints detain in Spain and Por-
tugal muft, in proportion to the annual produce of their land and
labour, be greater that what is to be found in other countries.
The higher and ftronger the dam-head, the greater muft be the
difference in the depth of water behind and before it. The higher
the tax, the higher the penalties with which the prohibition is guard-
ed, the more vigilant and fevere the police which looks after the
.execution of the law, the greater muft be the difference in the
8 propor-

THE WEALTH OF NATIONS. 9;

proportion of gold and filver to the annual produce of the land CHAP,
and labour of Spain and Portugal, and to that of other countries. u~y~— '
It is faid accordingly to be very eonfiderable, and that you fre-
quently find there a profufion of plate in houfes, where there is
nothing elfe which would, in other countries, be thought fuitable
or correfpondent to this fort of magnificence. The cheapnefs of
gold and filver, or, what is the fame thing, the dearnefs of all
commodities, which is the necefTary effect of this redundancy of
the precious metals, difcourages both the agriculture and manufac-
tures of Spain and Portugal, and enables foreign nations to fupply
them with many forts of rude, and with almoft all forts of manu-
factured produce, for a fmaller quantity of gold and filver than
what they themfelves can either raife or make them for at home.
The tax and prohibition operate in two different ways. They not
only lower very much the value of the precious metals in Spain
and Portugal, but by detaining there a certain quantity of thofe
metals which would otherwife flow over other countries, they keep
up their value in thofe other countries fomewhat above what it
otherwife would be, and thereby give thofe countries a double advan-
tage in their commerce with Spain and Portugal. Open the flood-
gates and there will prefently be lefs water above, and more below, the
dam-head, and it will foon come to a level in both places. Remove
the tax and the prohibition, and as the quantity of gold and filver
will diminifih confiderably in Spain and Portugal, fo it will increafe
fomewhat in other countries, and the value of thofe metals, their
proportion to the annual produce of land and labour, will foon
come to a level, or very near to a level, in all. The lofs which Spain
and Portugal could fuftain by this exportation of their gold and
filver would be altogether nominal and imaginary. The nominal
value of their goods, and of the annual produce of their land and
labour would fall, and would be exprefted or reprefented by a
fmaller quantity of filver than before : but their real value would
Vol. It O be

98 THE NATURE AND CAUSES OF

B O O K be the fame as before, and would be fufficient to maintain, com-
mand, and employ, the fame quantity of labour. As the nomi-
nal value of their goods would fall, the real value of what re-
mained of their gold and filver would rife, and a fmaller quantity
of thofe metals would anfwer all the fame purpofes of commerce
and circulation which had employed a greater quantity before. The
gold and filver which would go abroad would not go abroad for
nothing, but would bring back an equal value of goods of fome
kind or another. Thofe goods too would not be all matters of
mere luxury and expence, to be confumed by idle people who pro-
duce nothing in return for their confumption. As the real wealth
and revenue of idle people would not be augmented by this extraor-
dinary exportation of gold and filver, fo neither would their con-
fumption be much augmented by it. Thofe goods would, proba-
bly, the greater part of them, and certainly fome part of them,
confift In materials, tools, and provifions, for the employment and
maintenance of induftrious people, who would reproduce, with a
profit, the full value of their confumption. A part of the dead
ftock of the fociety would thus be turned into active ftock, and
would put into motion a greater quantity of induftry than had been
employed before. The annual produce of their land and labour
would immediately be augmented a little, and in a few years would-,
probably, be augmented a great deal ; their induftry being thus
relieved from one of the moft opprefiive burdens which it at pre-
fent labours under.

The bounty upon the exportation of corn neceffarily ope-
rates exactly in the fame way as this abfurd policy of Spain and
Portugal. Whatever be the actual ftate of tillage, it renders our
corn fomewhat dearer in the home market than it otherwife
would be in that ftate, and fomewhat cheaper in the foreign ; and
as the average money price of corn regulates more or lefs that of

all

THE WEALTH OF NATIONS.

all other commodities, it lowers the value of filver confiderably in c
the one, and tends to raife it a little in the other. It enables u»
foreigners, the Dutch in particular, not only to eat our corn
cheaper than they otherwife could do, but fometimes to eat it
cheaper than even our own people can do upon the fame occa-
fions; as we are allured by an excellent authority, that of Sir
Mathew Decker. It hinders our own workmen from furnifhing
their goods for fo fmall a quantity of filver as they otherwife
might do ; and enables the Dutch to furnifh their's for a fmaller.
It tends to render our manufactures fomewhat dearer in every
market, and their's fomewhat cheaper than .they otherwife would
be, and confequently to give their induftry a double advantage
over our own.

»fidoiq ,bhjow ;€boo§ aiorlT Si vjdi ^srtnamgtrB ddutn ad xxoi?t3niui
The bounty, as it raifes in the home market, not the real,
but only the nominal price of our corn, as it augments, not the
quantity of labour which a certain quantity of corn can maintain
and employ, but only the quantity of filver which it will exchange
for, it difcourages our manufactures without rendering the fmalleft
real fer vice either to our farmers or country gentlemen. It puts,
indeed, a little more money into the pockets of both, and it will
perhaps be fomewhat difficult to perfuade the greater part of
them that this is not rendering them a very real fervice. But if
this money links in its value, in the quantity of labour, provifions,
and commodities of all different kinds which it is capable of pur-
chafing, as much as it rifes in its quantity, the fervice will be
merely nominal and imaginary.

There is, perhaps, but one fet of men in the whole com-
monwealth to whom the bounty either was or could be really
ferviceable. Thefe were the corn merchants, the exporters and
importers of corn. In years of plenty the bounty necefiarily

O 2 occafioned

TOO

THE NATURE AND CAUSES OF

B Op K occafioned a greater exportation than would otherwife have taken
v — ; place ; and by hindering the plenty of one year from relieving tht
fcarcity of another, it occafioned in years of fcarcity a greater
importation than would otherwife have been neceffary. It in-
creafed the bufinefs of the corn merchant in both, and in years
of fcarcity it not only enabled him to import a greater quantity,
but to fell it for a better price, and confequently with a greater
profit than he could otherwife have made, if the plenty of one
year had not been more or lefs hindered from relieving the fcar-
city of another. It is in this fett of men, accordingly, that I

have obferved the greater!: zeal for the continuance or renewal of

i » in ifrfwr suiftf r. -iiio-j riocu) I > fl 4 fin ejmioj 10
the bounty..

Our country gentlemen, when they impofed the high duties
upon the importation of foreign corn, which in times of moderate
plenty amount to a prohibition, and when they eftablifhed the
bounty, feem to have imitated the conduct of our manufacturers.
By the one inftitution, they fecured to themfelves the monopoly of
the home market, and by the other they endeavoured to prevent
that market from ever being overftocked with their commodity.
By both they endeavoured to raife its real value, in the fame man-
ner as our manufacturers had, by the like inftitutions, raifed the
real value of many different forts of manufactured goods. They
did not perhaps attend to the great and effential difference which
nature has eftablifhed between corn and almofl every other fort of
goods. When either by the monopoly of the home market, or
by a bounty upon exportation, you enable our woollen or linen
manufacturers to fell their goods for fomewhat a better price than
they otherwife could get for them, you raife, not only the nomi-
nal, but the real price of thofe goods. You render them equiva-
lent to a greater quantity of labour and fubfiftence, you increafe,
not only the nominal, but the real profit, the real wealth and

revenue

THE WEALTH OF NATIONS. m

revenue of thofe manufaaurers, and you enable them either to C! HA %
live better themfelves, or to employ a greater quantity of labour
in thofe particular manufaftures. You really encourage thofe
manufactures, and direct towards them a greater quantity of the
induftry of the country, than what would probably go to them
of its own accord. But when by the like inftitutions you raife
the nominal or money price of corn, you do not raife its real
value. You do not increafe the real wealth, the real revenue
either of our farmers or country gentlemen. You do not encou-
rage the growth of corn, becaufe you do not enable them to
maintain and employ more labourers in raifmg it. The nature
of things has (lamped upon corn a real value which no human
inftitution can alter. No bounty upon exportation, no monopoly
of the home market can raife it. The freeft competition cannot
lower it. Through the world in general that value is equal to
the quantity of labour which it can maintain, and in every par-
ticular place it is equal to the quantity of labour which it can
maintain in the way, whether liberal, moderate, or fcanty, in
which labour is commonly maintained in that place. Woollen*
or linen cloth are not the regulating commodities by which the
real value of all other commodities muft be finally meafured and
determined. Corn is. The real value of every other commodity
is finally meafured and determined by the proportion which its
average money price bears to the average money price of corn.
The real value of corn does not vary with thofe variations in its
average money price, which fometimes occur from one century to-
another. It is the real value of filver which varies with them.

Bounties upon the exportation of any home-made commodity
are liable, firft, to that general objection which may be made to
all the different expedients of the mercantile fyftem ; the objection
of forcing fome part of the. induftry of the country into a channel

le&

02 THE NATURE AND CAUSES OF

qpi q | rf AK' O H T J X 4 W £ ! rf
BOOK lefs advantageous than that in which it would run of its own

v*— » accord: and, fecondly, to the particular objection of forcing it,
not .only into a channel that is lefs advantageous, but into one
that is actually difadvantageous ; the trade which cannot be carried
on but by means of a bounty being neceffarily a lofing trade.
The bounty upon the exportation of corn is liable to this further
objection, that it can in no refpect promote the railing of that par-
ticular commodity of which it was meant to encourage the produc-
tion. When our country gentlemen, therefore, demanded the efta-
blifhment of the bounty, though they acted in imitation of our
merchants and manufacturers, they did not ail with that com-
pleat comprehenfion of their own intereft which commonly directs
the conduct of thofe two other orders of people. They loaded the
publick revenue with a very conliderable expence ; but they did
not in any refpect increafe the real value of their own commodity,
and by lowering fomewhat the real value of filver they difcouraged
in fome degree the general induftry of the country, and inftead of
advancing, retarded more or lefs the improvement of their own
lands, which necefiarily depends upon the general induftry of the
country.

To encourage the production of any commodity, a bounty
upon production, one fhould imagine, would have a more direct
operation than one upon exportation. It has, however, been
more rarely granted. The prejudices eftablifhed by the commer-
cial fyftem have taught us to believe that national wealth arifes
more immediately from exportation than from production. It
■has been more favoured accordingly, as the more immediate means
of bringing money into the country. Bounties upon production,
it has been laid too, have been found by experience more liable to
frauds than thofe upon exportation. How far this is true, I know
not. That bounties upon exportation have been abufed to many

fraudulent
8

THE WEALTH OF NATIONS.

fraudulent purpofes, is very well known. But it is not the intereft C
of merchants and manufacturers, the great inventors of all thefe u
expedients, that the home market mould be overftocked with their
goods, an event which a bounty upon production might fome-
times occafion. A bounty upon exportation, by enabling them to
fend abroad the furplus part, and to keep up the price of what
remains in the home market, effectually prevents this. Of all the
expedients of the mercantile fyftem, accordingly, it is the one of
which they are the fondeft. I have known the different under-
takers of fome particular works agree privately among themfelves
to give a bounty out of their own pockets upon the exportation
of a certain proportion of the goods which they dealt in. This
expedient fucceeded fo well that it more than doubled the price of
their goods in the home market, notwithstanding a very confider-
able increafe in the produce. The operation of the bounty upon
corn mult have been wonderfully different, if it has lowered the
money price of that commodity..

Something like a bounty upon production, however, has
been granted upon fome particular occafions. The encourage-
ments given to the white-herring and whale-fifheries may, perhaps,
be confidered as fomewhat of this nature. They tend directly to
render the goods cheaper in the home market than they otherwife
would be in the actual ftate of production. In other refpects
their effects are the fame as thofe of bounties upon exportation.
By means of them a part of the capital of the country is em-
ployed in bringing goods to market, of which the price does not
repay the cony together with the ordinary profits of ftock. But
though the bounties to thofe fiffieries do not contribute to the
opulence of the nation, they may perhaps be defended as con-
ducing to its defence, by augmenting the number of its failors
and {flipping. This may frequently be done by means of fuch

bounties,.

THE NATURE AND CAUSES OF

K bounties, at a much fmaller expence than by keeping up a great
{landing navy, if I may ufe fuch an expremon, in time of peace,
in the fame manner as a Handing army.

Some other bounties may be vindicated perhaps upon the fame
principle. It is of importance that the kingdom mould depend
as little as pofiible upon its neighbours for the manufactures
neceffary for its defence -y and if thefe cannot otherwife be main-
tained at home, it is reafonable that all other branches of induftry
mould be taxed in order to fupport them. The bounties upon
the importation of naval Itores from America, upon Britifh made
fail-cloth, and upon Britifh made gunpowder, may perhaps all
three be vindicated upon this principle. The firft is a bounty
upon the production of America, for the ufe of Great Britain.
The two others are bounties upon exportation.

What is called a bounty is fometimes no more than a
-drawback, and confequently is not liable to the fame objections
as what is properly a bounty. The bounty, for example, upon
refined (agar exported may be confidered as a drawback of the duties
upon the brown and mufcovado fugars, from which it is made.
The bounty upon wrought lilk exported, a drawback of the duties
upon raw and thrown filk imported. The bounty upon gun-
powder exported, a drawback of the duties upon brimitone and
faltpetre imported. In the language of the cuftoms thofe allow-
ances only are called drawbacks, which are given upon goods
exported in the fame form in which they are imported. When
that form has been altered by manufacture of any kind, they are
called bounties-

Premiums given by the publick to artifls and manufacturers
who excell in their particular occupations, are not liable to the
fame objections as bounties. By encouraging extraordinary dex-
terity

THE WEALTH OF NATIONS. 10

terity and ingenuity, they ferve to keep up the emulation of the CHAP,

workmen actually employed in thofe refpe&ive occupations, i t~*4

and are not confiderable enough to turn towards any one of them „
a greater fliare of the capital of the country than what would
go to it of its own accord. Their tendency is not rto overturn
the natural balance of employments, but to render the work
which is done in each as perfect and compleat as pofTible. The
expence of premiums, befides, is very trifling ; that of bounties
very great. The bounty upon corn alone has fometimes coft the
publick in one year, more than three hundred thoufand pounds.

Bounties are fometimes called premiums, as drawbacks are
fometimes called bounties. But we mufl in all cafes attend to the
nature of the thing, without paying any regard to the word.

I cannot conclude this chapter concerning bounties, with-
out obferving that the praifes which have been beftowed upon
the law which eftablimes the bounty upon the exportation of
corn, and upon that fyftem of regulations which is connected
with it, are altogether unmerited. A particular examination of
the nature of the corn trade, and of the principal Rritifh laws
which relate to it, will fufficiently demonftrate the truth of this
affertion. The great importance of this fubject. rauft jiutify the
length of the digreffion.

The trade of the corn merchant is compofed of four different
branches, which, though they may fometimes be all carried on by
the fame perfon, are in their own nature four feparate and diftincr.
trades. Thefe are, firft, the trade of the inland dealer ; fecondly,
that of the merchant importer for home confumption; thirdly,
that of the merchant exporter of home produce for foreign con-
fumption ; and, fourthly, that of the merchant carrier, or of the
importer of corn in order to export it again.

Vol. II. . P I. The

106 THE NATURE AND CAUSES OF

B l v° ^ * ^HE ^ntere^- °^ ^ n"dand dealer, and that of the great body
< — r— J of the people, how oppofite foever they may at firft fight appear,
are, even in years of the greateft fcarcity, exactly the fame. It is
his intereft to raife the price of his corn as high as the real fcarcity
of the feafon requires, and it can never be his intereft to raife it
higher. By raifing the price he difcourages thexonfumption, and
puts every body more or lefs, but particularly the inferior ranks of
people, upon thrift and good management. If, by raifing it too
high, he difcourages the confumption fo much that the fupply of
the feafon is likely to go beyond the confumption of the feafon,
and to laft for fome time after the next crop begins to come in,,
he runs the hazard, not only of lofing a considerable part of his
corn by natural caufes, but of being obliged to fell what remains of
it for much lefs than what he might have had for it feveral months
before. If by not raifing the price high enough he difcourages the
confumption fo little, that the fupply of the feafon is likely to fall
fhort of the confumption of the feafon, he not only lofes a part of
the profit which he might otherwife have made, but he expofes the
people to fuffer before the end of the feafon, inftead of the hard-
ihips of a dearth, the dreadful horrors of a famine. It is the
intereft of the people that their daily, weekly, and monthly con-
fumption, mould be proportioned as exactly as poffible to the fup-
ply of the feafon. The intereft of the inland corn dealer is the
fame. Ey fupply ing them, as nearly as he can judge, in this pro-
portion, he is likely to fell all his corn for the higheft price, and
with the greateft profit ; and his knowledge of the ftate of the
crop, and of his daily, weekly, and monthly fales, enable him to
judge, with more or lefs accuracy, how far they really are fupplied
in this manner. Without intending the intereft of the people, he
is neceftarily led, by a regard to his own intereft, to treat them, even
in years of fcarcity, pretty much In the fame manner as the pru-
dent mafter of a veftel is fometimes obliged to treat his crew. When

he

THE WEALTH OF

NATIONS.

he forefees that provifions are likely to run fhort, he puts them C HA P.
upon fhort allowance. Though from excefs of caution he mould u— v~»
fometimes do this without any real neceffity, yet all the inconveni-
encies which his crew can thereby fuffer are inconfiderable in com-
parifon of the danger, mifery, and ruin, to which they might
fometimes be expofed by a lefs provident conduct. Though from
excefs of avarice, in the fame manner, the inland corn merchant
fhould fometimes raife the price of his corn fomewhat higher than
the fcarcity of the feafon requires, yet all the inconveniencies which
the people can fuffer from this conduct, which effectually fecures
them from a famine in the end of the feafon, are inconfiderable in
comparifon of what they might have been expofed to by a more
liberal way of dealing in the beginning of it. The corn merchant
himfelf is likely to fuffer the moft by this excefs of avarice ; not
only from the indignation which it generally excites againft him,
but, though he fhould efcape the effects of this indignation, from
the quantity of corn which it neceffarily leaves upon his hands in
the end of the feafon, and which, if the next feafon happens to
prove favourable, he muff always fell for a much lower price than
be might otherwife have had.

Were it poftible, indeed, for one great company of merchants
to poffefs themfelves of the whole crop of an extenfive country, it
might, perhaps, be their intereft to deal with it as the Dutch are
laid to do with the fpiceries of the Molluccas, to deftroy or throw
away a confiderable part of it, in order to keep up the price of the
reft. But it is fcarce poffible, even by the violence of law, to efta-
blifh fuch an extenfive monopoly with regard to corn ; and, where-
ever the law leaves the trade free, it is of all commodities the leaft
liable to be engroffed or monopolifed by the force of a few large
capitals, which buy up the greater part of it. Not only its value
far exceeds what the capitals of a few private men are capable of

P 2 pur-

THE NATURE AND CAUSES OF

BOOK purchanng, but, fbppofmg they were capable of purchasing it, the
^.-t-1,,j manner in which it is produced renders this- purchafe altogetheir
impracticable. As in every civilized country it is the commodity
of which the annual confumption is the greater!, fo a greater quan-
tity of induftry is annually employed in producing, corn than in
producing any other commodity. When it firft comes from the
ground too* it is neeeffarily divided among a greater number of
owners than any other commodity ; and thefe owners can never be
collected into one place like a number of independent manufactu-
rers, but are neeeffarily fcattered through all the different corners-
of the country. Thefe firft owners either immediately fupply the
cpnfumers in their own neighbourhood, or they fupply other inland
dealers who fupply thofe confumers. The inland dealers in corn,
therefore,, including both the farmer and the baker, are neeeffa-
rily more numerous than the dealers in any other commodity, and
their difperfed fituation renders it altogether impoffible for them to
enter into any general combination. If in a year of fcarcity, there-
fore, any of them fhould find that he had a good deal more corn
upon hand than, at the current price, he could hope to difpofe of
before the end of the feafon, he would never think of keeping up
this price to his own lofs, and to the fole benefit of his rivals and
competitors, but would immediately lower it in order to get rid of
his corn before the new crop began to come in. The fame mo-
tives, the fame interefts, which would thus regulate the conduct of
any one dealer, would regulate that of every other, and oblige them
all in general to fell their corn at the price which, according to
the beft of their judgement, was moft fuitable to the fcarcity or
plenty of the feafon.

Whoever examines, with attention, the hiftory of the dearths
and famines which have afflicted any part of Europe, during either
the courfe of the prefent or that of the two preceeding centuries,

of

THE WEALTH OF NATIONS.

of feveral of which we have pretty exact accounts, will find, I c
believe, that a dearth never has arifen from any combination among <c
the inland dealers in corn, nor from any other caufe but a real fear-
city, occafioned fometimes perhaps, and in fome particular places,
by the wafte of war, but in by far the greateft number of cafes,
by the fault of the feafons and that a famine has never arifen
from any other caufe but the violence of government attempting,
by improper means, to remedy the inconveniencies of a dearth.

In an extenfive corn country, between all the different parts of
which there is a free commerce and communication, the fcarcity
occafioned by the raoft unfavourable feafons can never be fo great
as to produce a famine and the fcantieft crop, if managed with
frugality and ceconomy, will maintain, through the year, the fame
number of people that are commonly fed in a more affluent man-
ner by one of moderate plenty. The feafons raoft unfavourable to
the crop are thofe of exceflive drought or exceflive rain. But, as
corn grows equally upon high and low lands, upon grounds that
are difpofed to be too wet, and upon thofe that are difpofed to be
too dry, either the drought or the rain which is hurtful to one
part of the country is favourable to another and though both in
the wet and in the dry feafon the crop is a good deal lefs than in
one more properly tempered, yet in both what is loft in one part
of the country is in fome meafure compenfated by what is gained
in the other. In rice countries, where the crop not only requires a
very moift foil, but where in a certain period of its growing it muft
be laid under water, the effects of a drought are much more dif-
mal. Even in fuch countries, however, the drought is, perhaps,
fcarce ever fo univerfal as neceffarily to occafion a famine, if the
government would allow a free trade. The drought in Bengal, a
few years ago, might probably have occafioned a very great dearth.
Some improper regulations, fome injudicious reftraints impofed by

the

no

THE NATURE AND CAUSES OF

B oo K the fervants of the Eaft India Company upon the rice trade, con-»
u— v-— ' tributed, perhaps, to turn that dearth into a famine.

When the government, in order to remedy the inconveniencies
of a dearth, orders all the dealers to fell their corn at what it fup-
pofes a reafonable price, it either hinders them from bringing it to
market, which may fometimes produce a famine, even in the begin-
ning of the feafon ; or if they bring it thither, it enables the peo-
ple, and thereby encourages them to confume it fo faft, as mull
neceffarily produce a famine before the end of the feafon. The
unlimited, unreftrained freedom of the corn trade, as it is the only
effectual preventative of the miferies of a famine, fo it is the
beft palliative of the inconveniencies of a dearth ; for the incon-
veniencies of a real fcarcity cannot be remedied j they can only be
palliated. No trade deferves more the full protection of the law,
and no trade requires it fo much ; becaufe no trade is fo much ex-
pofed to popular odium.

In years of fcarcity the inferior ranks of people impute their
diftrefs to the avarice of the corn merchant, who becomes the ob-
ject of their hatred and indignation. Inftead of making profit
upon fuch occafions, therefore, he is often in danger of being
utterly ruined, and of having his magazines plundered and de-
ftroyed by their violence, it is in years of fcarcity, however,
when prices are high, that the corn merchant expects to make his
principal profit. He is generally in contract with fome farmers
to furnifh him for a certain number of years with a certain quan-
tity of corn at a certain price. This contract price is fettled ac-
cording to what is fuppofed to be the moderate and reafonable,
that is, the ordinary or average price, which, before the late years of
fcarcity, was commonly about eight and twenty millings for the
quarter of wheat, and for that of other grain in proportion.

8 In

THE WEALTH OF NATIONS.

in

In years of fcarcity, therefore, the corn merchant buys a great part of c ^A p»
Iiis corn for the ordinary price, and fells it for a much higher. That u^v--— >
this extraordinary profit, however, is no more than fufiicient to
put his trade upon a fair level with other trades, and to compen-
fate the many lofles which he fuftains upon other occafions, both
from the perifhable nature of the commodity itfelf, and from the
frequent and unforefeen fluctuations of its price, feems evident
enough, from this fingle circumftance, that great fortunes are as
feldom made in this as in any other trade. The popular odium,
however, which attends it in years of fcarcity, the only years in
which it can be very profitable, renders people of character and
fortune averfe to enter into it. It is abandoned to an inferior fett
of dealers and millers, bakers, mealmen and meal factors, toge-
ther with a number of wretched huckfters, are almoft the only
middle people that, in the home market, come between the grower
and the confumer..

The ancient policy of Europe, inftead of difcountenancing this
popular odium againfb a trade fo beneficial to the publick, feems,
on the contrary, to have authorifed and encouraged it.

By the 5th and 6th of Edward VI. cap. 14. it was enacted,
That whoever fhould buy any corn or grain with intent to fell
it again, fhould be reputed an unlawful engrofTer, and fhould,
for the nift fault, fuffer two months imprifonment, and forfeit
the value of the corn j for the fecond, fuffer fix months imprifon-
ment, and forfeit double the value ; and for the third, be fet in
the pillory, fuffer imprifonment during the king's pleafure, and
forfeit all his goods and chattels. The antient policy of mofl
other parts of Europe was no better than that of England.

Ous-

THE NATURE AND CAUSES OF

Our anceftors feem to have imagined that the people would
buy their corn cheaper of the farmer than of the corn merchant,
who, they were afraid, would require, over and above the price
which he paid to the farmer, an exorbitant profit to himfelf.
They endeavoured, therefore, to annihilate his trade altogether.
They even endeavoured to hinder as much as poffible any middle
man of any kind from coming in between the grower and the
confumer ; and this was the meaning of the many reftraints
which they impofed upon the trade of thofe whom they called
kidders or carriers of corn, a trade which nobody was allowed to
exercife without a licence afcertaining his qualifications as a man
of probity and fair dealing. The authority of three juftices of
the peace was, by the ftatute of Edward VI. neceffary, in order
to grant this licence. But even this reftraint was afterwards
thought infufficie'nt, and by a ftatute of Elizabeth, the privilege
of granting it was confined to the quarter-feflions.

The antient policy of Europe endeavoured in this manner to
regulate agriculture, the great trade of the country, by maxims
quite different from thofe which it eftablimed with regard to ma-
nufactures, the great trade of the towns. By leaving the farmer
no other cuftomers but either the confumer or his immediate
factors, the kidders and carriers of corn, it endeavoured to force
him to exercife the trade, not only of a farmer, but of a corn
merchant or corn retailer. On the contrary, it in many cafes
prohibited the manufacturer from exercifing the trade of a fhop-
keeper, or from felling his own goods by retail. It meant by the
one law to promote the general intereft of the country, or to ren-
der corn cheap, without, perhaps, its being well underftood how
this was to be done. By the other it meant to promote that of
a particular order of men, the fhopkeepers, who would be fo

much

THE WEALTH OF NATIONS.

much underfold by the manufacturer, it was fuppofed, that their c
trade would be ruined if he was allowed to retail at all. <—

The manufacturer, however, though he had been allowed to
keep a fhop, and to fell his own goods by retail, could not have
underfold the common fhopkeeper. Whatever part of his capital
he might have placed in his (hop, he mull have withdrawn it
from his manufacture. In order to carry on his bufmefs on a
level with that of other people, as he muft have had the profit
of a manufacturer on the one part, fo he muft have had that of
a fhopkeeper upon the other. Let us fuppofe, for example, that
in the particular town where he lived, ten per cent, was the ordi-
nary profit both of manufacturing and fhopkeeping flock ; he
muft in this cafe have charged upon every piece of his own goods
which he fold in his fhop, a profit of twenty per cent. When he
carried them from his workhoufe to his fhop, he muft have valued
them at the price for which he could have fold them to a dealer
or fhopkeeper, who would have bought them by wholefale. If
he valued them lower, he loft a part of the profit of his manu-
facturing capital. When again he fold them from his fhop,
unlefs he got the fame price at which a fhopkeeper would have fold
them, he loft a part of the profit of his fhopkeeping capital.
Though he might appear, therefore, to make a double profit
upon the fame piece of goods, yet as thefe goods made fuccefllvely
a part of two diftinct capitals, he made but a fingle profit upon
the whole capital employed about them ; and if he made lefs than
this profit, he was a lofer, or did not employ his whole capital
with the fame advantage as the greater part of his neighbours.

What the manufacturer was prohibited to do, the farmer was
in fome meafure enjoined to do j to divide his capital between
two different employments ; to keep one part of it in his grana-

Vol. II. ries

[14 THE NATURE AND CAUSES OF

BOOK lies and flack yard, for fupplying the occafional demands of the
u-^— j market and to employ the other in the cultivation of his land.

But as he could not afford to employ the latter for lefs than the
ordinary profits of farming flock, fo he could as little afford to
employ the former for lefs than the ordinary profits of mercantile
flock. Whether the flock which really carried on the bufinefs of
the corn merchant belonged to the perfon who was called a farmer,
or to the perfon who was called a corn merchant, an equal profit
was in both cafes requifite, in order to indemnify its owner 'for
employing it in this manner; in order to put his bufinefs upon
a level with other trades, and in order to hinder him from having
an interefl to change it as foon as poffible for fome other. The
farmer, therefore, who was thus forced to exercife the trade of a
corn merchant, could not afford to fell his corn cheaper than any
other corn merchant would have been obliged to do in the cafe of
a free competition.

The dealer who can employ his whole flock in one fingle
"branch of bufinefs, has an advantage of the fame kind with the
workman who can employ his whole labour in one fingle opera-
tion. As the latter acquires a dexterity which enables him, with
the fame two hands, to perform a much greater quantity of
work; fo the former acquires fo eafy and ready a method of
tranfacling his bufinefs, of buying and difpofing of his goods,
that with the fame capital he can tranfa£l a much greater quan-
tity of bufinefs. As the one can commonly afford his work a
good deal cheaper, fo the other can commonly afford his goods fome-
what cheaper than if his flock and attention wrere both employed
about a greater variety of objects. The greater part of manu-
facturers could not afford to retail their own goods fo cheap as a
vigilant and active fhopkeeper, whofe fole bufinefs it was to buy
them by wholefale, and to retail them again. The greater part of
farmers could ftill lefs afford to retail their own corn, or to fupply

the

I CL 23 3 U AO Ciyih 2L2L U T A VT. 3. R T
THE WEALTH OF NATIONS,

the inhabitants of a town, at perhaps tour or five miles diftance
from the greater part of them, fo cheap as a vigilant and active
corn merchant, whofe fole bufinefs it was to purchafe corn by
wholefale, to collect it into a great magazine, and to retail it

The law which prohibited the manufacturer from exercifmg the
trade of a fhopkeeper, endeavoured to force this divifion in the
employment of ftock to go on falter than it might otherwife have
done. The law which obliged the farmer to exercife the trade of
a corn merchant, endeavoured to hinder it from going on fo faft.
Both laws were evident violations of natural liberty, and there-
fore unjuft ; and they were both too as impoliticly as they were
unjuft. It is the intereft of every fociety, that things of this kind
fhould never either be forced or obftructed. The man who em-
ploys either his labour or his ftock in a greater variety of ways
than his fituation renders neceffary, can never hurt his neigh-
bour by underfelhng him. He may hurt himfelf, and he gene-
rally does fo. Jack of all trades will never be rich, fays the
proverb. But the law ought always to truft people with the care
of their own intereft, as in their local fituations they muft gene-
rally be able to judge better of it than the legiflator can do.
The law, however, which obliged the farmer to exercife the trade
of a corn merchant, was by far the moft pernicious of the two.

It obftructed, not only that divificn in the employment of
ftock which is fo advantageous to every fociety, but it obftructed
likewife the improvement and cultivation of the land. By oblig-
ing the farmer to carry on two trades inftead of one, it forced hir.i
to divide his capital into two parts, of which one only could he
employed in cultivation. But if he had been at liberty to fell his
whole crop to a corn merchant as faft as he could threfh it out,

Q^2 his

THE NATURE AND CAUSES OF

B ?v* K ^s w^e capitaI might have returned immediately to the land,
' and have been employed in buying more cattle, and hiring more
fervants, in order to improve and cultivate it better. But by
being obliged to fell his corn by retail, he was obliged to keep a
great part of his capital in his granaries and fcack yard through
the year, and could not, therefore, cultivate fo well as with the
fame capital he might other wife have done. This law,, therefore,
neceflarily obftructed the improvement of the land, and, inflead
of tending to render corn cheaper, muft have tended to render it
fcarcer, and therefore dearer, than it would otherwife have been.

After the bufmefs of the farmer, that of the corn merchant
is in reality the trade which, if properly protected and encou-
raged, would contribute the mod to the raifing of corn. It
would fupport the trade of the farmer in the fame manner as
the trade of the wholefale dealer fupports that of the manu-
facturer.

The wholefale dealer, by affording a ready market to the ma-
nufacturer, by taking his goods off his hand as faft as he can
make them, and by fometimes even advancing their price to him
before he has made them, enables him to keep his whole capital,
and fometimes even more than his whole capital, conftantly em-
ployed in manufacturing, and confequently to manufacture a
much greater quantity of goods than if he was obliged to dif-
pofe of them himfelf to the immediate confumers, or even to the
retailers. As the capital of the wholefale merchant too is ge-
nerally fufficient to replace that of many manufacturers, this in-
tercourse between him and them interefts the owner of a large
capital to fupport the owners of a great number of fmall ones,
and to afTift them in thofe loffes and misfortunes which midit
otherwife prove ruinous to them.

8 An

-

THE WEALTH OF NATIONS.

117

An intercourfe of the fame kind univerfally eflablifhed between CH^AP.
the farmers and the corn merchants, would be attended with • v-*-»
effects equally beneficial to the farmers. They would be enabled
to keep their whole capitals, and even more than their whole
capitals, conflantly employed in cultivation. In cafe of any of
thofe accidents, to which no trade is more liable than theirs,
they would find in their ordinary cuflomer, the wealthy corn
merchant, a perfon who had both an interefl to fupport them,
and the ability to do it, and they would not, as at prefent, be
entirely dependent upon the forbearance of their landlord, or the
mercy of his fie ward. Were it poffible, as perhaps it is not, to
eftablifh this intercourfe univerfally, and all at once, were it pof-
fible to turn all at once the whole farming flock of the kingdom
to its proper bufinefs, the cultivation of land, withdrawing it
from every other employment into which any part of it may be
at prefent diverted, and were it poffible, in order to fupport and
aflifl upon occafion the operations of this great flock, to provide
all at once another flock almofl equally great, it is not perhaps
very eafy to imagine how great, how extenfive, and how fudden
would be the improvement which this change of circumflances
would alone produce upon the whole face of the country.

The flatute of Edward VI. therefore, by prohibiting as much
as poffible any middle man from coming in between the grower
and the confumer, endeavoured to annihilate a trade of which the
free exercife is not only the befl palliative of the inconveniencies
of a dearth, but the befl preventative of that calamity : after the
trade of the farmer, no trade contributing fo mucli to the grow-
ing of corn as that of the corn merchant..

The rigour of this law was afterwards foftened by feveral
fubfequent ftatutes, which fuccefllvely permitted the engroffing of
corn when the price of wheat fhould not exceed twenty, twenty-
four, thirty- two, and forty fhillings the quarter. At lafly by the

15th

ou .87EOITAP1. 10 HJJAHW 3HT

US THE NATURE AND CAUSES OF

BOOK i5th of Charles II. e. 7. the engrofiing or buying of com in
w~,j order to fell it again, as long as the price of wheat did not exceed
forty-eight (hillings the quarter, and that of other grain in pro-
portion, was declared lawful to all perfons not being foreftaikrs,
that is, not felling again in the fame market within three months.
All the freedom which the trade of the inland corn dealer has
ever yet enjoyed, was bellowed upon it by this ftatute. The
ftatute of the twelfth of the prefent king, which repeals ahnofr.
all the other antient laws againfr. engrofTers and foreftallers, does
not repeal the reftriclions of thuVparticular ftatute, which there-
fore ftill continue in force.

This ftatute, however, authorizes in fome meafure two very
abfurd popular prejudices. , . , . ,m,,ljf

First, it fuppofes that when the price of wheat has rifen fo
high as forty-eight millings the quarter, and that of other grain
in proportion, corn is likely to be fo engroffed as to hurt the
people. But from what has been already faid, it feems evident
enough that corn can at no price be fo engroffed by the inland
dealers as to hurt the people ; and forty- eight millings the quarter
befides, though it may be confidered as a very high price, yet
in years of fcarcity it is a price which frequently takes place
immediately after harveft, when fcarce any part of the new crop
can be fold off, and when it is impoflible even for ignorance to
fuppofe that any part of it can be fo engrorTed as to hurt the
people.

Secondly, it fuppofes that there is a certain price at which corn is
likely to be forcftalled, that is, bought up in order to be fold again
foon after in the fame market, fo as to hurt the people. But if a mer-
chant ever buys up corn, either going to a particular market or in a
particular market, in order to fell it again foon after in the fame mar-
ket,

THE WEALTH OF NATIONS. 119

^6 338TJA3 fWA ■3^UTAM. 3HT . 811
ket, it mud be becaufe he judges that the market cannot be fo libe- c p«

rally fupplied through the whole feafon as upon that particular occa- ^ — ■r—-'
fion, and that the price, therefore, muftfoon rife. If he judges wrong
in this, and if the price does not rife, he not only lofes the whole
profit of the ftock which he employs in this manner, but a part
of the ftock itfelf, by the expence and lofs which necefiarily attends
the ftoring and keeping of corn. He hurts himfelf, therefore,
much more effentially than he can hurt even the particular people
whom he may hinder from fupplying themfelves upon that particu-
lar market day, becaufe they may afterwards fupply themfelves juft
as cheap upon any other market day. If he judges right, inftead of
hurting the great body of the people, he renders them a moft im-
portant fervice. By making them feel the inconveniencies of a
dearth fomewhat earlier than they otherwife might do, he prevents
their feeling them afterwards fo feverely as they certainly would
do, if the cheapnefs of price encouraged them to confume fafter
than fuited the real fcarcity of the feafon. When the fcarcity is
real, the beft thing that can be done for the people is to divide the
inconveniencies of it as equally as poftible through all the diffe-
rent months, and weeks, and days of the year. The intereft of
the corn merchant makes him ftudy to do this as exactly as he
can ; and as no other perfon can have either the fame intereft, or.
the fame knowledge, or the fame abilities to do it lb exactly as he,
this moft important operation of commerce ought to be ti lifted
entirely to him ; or, in other words, the corn trade, fo far at leaft
as concerns the fupply of the home market, ought to be left per-
fectly free.

The popular fear of engrofting and foreftalling maybe com-
pared to the popular terrors and fufpicions of witchcraft. The
unfortunate wretches accufed of this latter crime were not more
innocent of the misfortunes imputed to them, than thofe who

have

120

THE NATURE AND

CAUSES OF

13 O O fC have been accufed of the former. The law which put an end to
vJ^-^i all profecutions againft witchcraft, which put it out of any man's
power to gratify his own malice by acculing his neighbour of that
imaginary crime, feems effectually to have put an end to thofe fears
and fufpicions, by taking away the great caufe which encouraged
and fupported them. The law which fhould reftore entire freedom
to the inland trade of corn, would probably prove as effectual to put
an end to the popular fears of engrofllng and forestalling.

The 15th of Charles II. c. 7. however, with all its imperfec-
tions, has perhaps contributed more both to the plentiful supply of
the home market, and to the increafe of tillage, than any other
law in the statute book. It is from this law that the inland com
trade has derived all the liberty and protection which it has ever yet
enjoyed ; and both the fupply of the home market, and the inte-
rest of tillage, are much more effectually promoted by the inland,
than either by the importation or exportation trade.

The proportion of the average quantity of all forts of grain
imported into Great Britain to that of all forts of grain confumed,
it has been computed by the author of the tracts upon the corn
trade, does not exceed that of one to five hundred and feventy.
For supplying the home market, therefore, the importance of the
inland trade muff be to that of the importation trade as five hun-
dred and feventy to one.

The average quantity of all forts of grain exported from Great
Britain does not, according to the fame author, exceed the one and
thirtieth part of the annual produce. For the encouragement of
tillage, therefore, by providing a market for the home produce, the
importance of the inland trade muff be to that of the exportation
trade as thirty to one.

I HAVE

THE WEALTH OF NATIONS. 12

I 11 ave no great faith in political arithmctick, and I mean not CHAP,
to warrant the exactnefs of either of thefe computations. I men- u-^v-^si.
tion them only in order to fhow of how much lefs confequence, in
, the opinion of the moft judicious and experienced perfons, the fo-
reign trade of corn is than the home trade. The great cheapnefs
of corn in the years immediately preceeding the eftablifhment of
the bounty, may perhaps, with reafon, be afcribed in fome meafure
to the operation of this ffatute of Charles II. which had been en-
acted about five and twenty years before, and which had there-
fore full time to produce its effect*

A very few words will fufficiently explain all that I have to fay
concerning the other three branches of the corn trade.

II. The trade of the merchant importer of foreign corn for
home confumption, evidently contributes to the immediate fupply
of the home market, and muff fo far be immediately beneficial to
the great body of the people. It tends, indeed, to lower fomewhat
the average money price of corn, but not to diminifh its real value,
or the quantity of labour which it is capable of maintaining. If
importation was at all times free, our farmers and country gentle-
men would, probably, one year with another, get lefs money for
their corn than they do at prefent, when importation is at mofl
times in effect prohibited ; but the money which they got would be
of more value, would, buy more goods of all other kinds, and
would employ more labour. Their real wealth, their real revenue,
therefore, would be the fame as at prefent, though it might be
expreffed by a fmaller quantity of filver ; and they would neither
be difabled nor difcouraged from cultivating corn as much as they
do at prefent. On the contrary, as the rife in the real value of fil-
ver, in confequence of lowering the money price of corn, lowers
fomewhat the money price of all other commodities, it gives the

Vol. II. R induftry

THE NATURE AND CAUSES OF

BOOK induftry of the country where it takes place fome advantage in all
\i — foreign markets, and thereby tends to encourage and increafe that
indufhy. But the extent of the home market for corn muft be in
proportion to the general induftry of the country where it grows,
or to the number of thofe who produce fomething elfe, and there-
fore have fomething elfe, or what comes to the fame thing, the price
of fomething elfe, to give in exchange for corn. But in every
country the home market, as it is the neareft and moft conve-
nient, fo is it likewife the greateft and moft important market for
corn. That rife in the real value of filver, therefore, which is the
effect of lowering the average money price of corn, tends to en-
large the greater!: and moft important market for corn, and thereby
to encourage, inftead of difcouraging, its growth,
vjrnod ydi ioi j^'ieoi oih hnsJxa oi &bw fibiiio srfj doidw lo
By the 226. of Charles II. c. 13. the importation of wheat,
whenever the price in the home market did not exceed fifty-three
fhillings and four pence the quarter, was fubjected to a duty of
fixteen fhillings the quarter ; and to a duty of eight millings
whenever the price did not exceed four pounds. The former of
thefe two prices has, for more than a century paft, taken place
only in times of very great fcarcity and the latter has, fo far as I
know, not taken place at all. Yet, till wheat had rifen above this
latter price, it was by this ftatute fubjecled to a very high duty;
and, till it had rifen above the former, to a duty which amounted
to a prohibition. The importation of other forts of grain was
reftrained by duties proportionably high.

The diftrefs which, in years of fcarcity, the ftricf execution of
this ftatute might have brought upon the people, would probably
have been very great. But, upon fuch occaiions, its execution was
generally fufpended by temporary ftatutes, which permitted, for a
limited time, the importation of foreign corn. The neceiiity of

thefe

THE WEALTH OF NATIONS.

123

rbefe temporary ftatutes fnfficiently demonftrates the impropriety C H^A P.
of this general one. u— y— J

x%i 9d fiufii moo *ir>> radium '-amorl sHt trwi*^ -fit - v^ftobAI :«v-
. These reftraints upon importation, though prior to the efta-
blilhmcnt of the bounty, were dictated by the fame fpirit, by the
fame principles, which afterwards enacted that regulation. How
hurtful foever in themfelves, thefe or fome other reftraints upon
importation became neceffary in confequence of that regulation.
If, when wheat was either below forty-eight fhillings the quarter,
or not much above it, foreign corn could have been imported either
duty flee, or upon paying only a fmall duty, it might have been
exported again, with the benefit of the bounty, to the great lofs of
the publick revenue, and to the intire perverfion of the inftitution,
of which the object was to extend the market for the home
growth, not that for the growth of foreign countries.

III. The trade of the merchant exporter of corn for foreign
confumption, certainly does not contribute directly to the plen-
tiful fupply of the home market. It does fo, however, indirectly.
From whatever fource this fupply may be ufually drawn, whether
from home growth or from foreign importation, unlefs more corn
is either ufually grown, or ufually imported into the country, than
what is ufually confumed in it, the fupply of the home market
can never be very plentiful. But, unlefs the furplus can, in all
ordinary cafes, be exported, the growers will be careful never to
grow more, and the importers never to import more, than what
the bare confumption of the home market requires. -That market
will very feldom be overftocked but it will generally be under-
ftocked, the people, whofe bufinefs it is to fupply it, being gene-
rally afraid left their goods mould be left upon their hands. The
prohibition of exportation limits the improvement and culti-
vation of the country to what the fupply of its own inhabitants

R 2 requires.

THE NATURE AND CAUSES OF

requires. The freedom of exportation enables it to extend its cul-
tivation for the fupply of foreign nations.

-uncqml to Itr3iiior>.£ujo5lib aril \8. .taahcm smod sdi ni riiijwb

By the 12th of Charles II. c. 4. the exportation of corn was
permitted whenever the price of wheat did not exceed forty {hil-
lings the quarter, and that of other grain in proportion. By the
15th of the fame prince this liberty was extended till the price of
wheat exceeded forty- eight {hillings the quarter; and by the 2 2d,
to all higher prices. A poundage, indeed, was to be paid to the
king upon fuch exportation. But all grain was rated fo low in
the book of rates, that this poundage amounted only upon wheat
to a fhilling, upon oats to four-pence, and upon all other grain to
lixpence the quarter. By the 1 ft of William and Mary, the act
which ertablifhed the bounty, this fmall duty was virtually taken
off whenever the price of wheat did not exceed forty- eight mil«-
lings the quarter; and by the 1 ith and 12th of William ill. c. 2.0^
it was exprefsly taken off at all higher prices.

The trade of the merchant exporter was in this manner, not
only encouraged by a bounty, but rendered much more free than
that of the inland dealer. By the laft of thefe ftatutes, corn could
be engroffed at any price for exportation ; but it could not be en-
groiTed for inland fale, except when the price did not exceed forty-
eight millings the quarter. The intereft of the inland dealer, how-
ever, it has already been mown, can never be oppofite to that of
the great body of the people. That of the merchant exporter
may, and in fact fometimes is. If, while his own country labours
under a dearth, a neighbouring country mould be afflicted with a
famine, it might be his intereft to carry corn to the latter country
in fuch quantities as might very much aggravate the calamities of
the dearth. The plentiful fupply of the home market was not the
direct object of thofe ftatutes 3 but, under the pretence of encou-
raging

THE WEALTH OF NATIONS.

raging agriculture, to raife the money price of corn as high as pof- C
fible, and thereby to occafion, as much as poflible, a conftant ^
dearth in the home market. By the difcouragement of importa-
tion, the fupply of that market, even in times of great fcarcity,
was confined to the home growth and by the encouragement of
exportation, when the price was fo high as forty-eight millings the
quarter, that market was not, even in times of confiderable fcar-
city, allowed to enjoy the whole of that growth. The temporary
laws, prohibiting for a limited time the exportation of corn, and
taking off for a limited time the duties upon its importation, expe-
dients to which GreatBritain has been obliged fo frequently to have
recourfe, fufficiently demonftrate the impropriety of her general
fyftem. Had that fyftem been good, fhe would not fo frequently
have been reduced to the neceffity of departing from it.

-JmV }d§iVyrio'i b^xd toft bib \o sbnq srfo iwarre^w tic

Were all nations to follow the liberal fyftem of free exporta-
tion and free importation, the different" ftates into which a great
continent was divided would fo far refemble the different provinces
of a great empire. As among the different provinces of a great
empire the freedom of the inland trade appears, both from reafon
and experience, not only the beft palliative of a dearth, but the:
moft effect ual preventative of a famine j fo would the freedom of
the exportation and importation trade be among the different ftates ;
into which a great continent was divided. The larger the conti-
nent, the eafier the communication through all the different parts
of it, both by land and by water, the lefs would any one particu-
lar part of it ever be expofed to either of thefe calamities, the fcarcity
of any one country being more likely to be relieved by the plenty
of fome other. But very few countries have entirely adopted this •
liberal fyftem. The freedom of the corn trade is aim oft every
where more or lefs reftrained, and, in many countries, is confined,
by fuch abfurd regulations, as frequently aggravate the unavoidable
misfortune of a dearth into the dreadful calamity of a famine,.

. The.'

126

THE NATURE AND CAUSES OF

B O O K The demand of fuch countries for corn may frequently become fo
i^J-y^j great and fo urgent, that a fmall ftate in their neighbourhood,
which happened at the fame time to be labouring under fome de-
cree of dearth, could not venture to fupply them without expofmg
itfelf to the like dreadful calamity. The very bad policy of one
country may thus render it in fome meafure dangerous and impru-
dent to eftablifh what would otherwife be the beft policy in ano-
ther. The unlimited freedom of exportation, however, would be
much lefs dangerous in great ftates, in which the growth being
much greater, the fupply could feldom be much affecled by any
quantity of corn that was likely to be exported. In a Swifs can-
ton, or in fome of the little ftates of Italy, it may, perhaps, fome-
times be neceflary to reftrain the exportation of corn. In fuch
great countries as France or England it fcarce ever can. To hin-
der, befides, the farmer from fending his goods at all times to the beft
market, is evidently to facrifice the ordinary laws of juftice to an
idea of public utility, to a fort of reafons of ftate ; an aft of legi-
flative authority which ought to be exercifed only, which can be
pardoned only in cafes of the moft urgent neceftity. The price
at which the exportation of corn is prohibited, if it is ever to be
prohibited, ought always to be a very high price.

The laws concerning corn may every where be compared to the
laws concerning religion. The people feel themfelves fo much inte_
refted in what relates either to their fubfiftence in this life, or to
their happinefs in a life to come, that government muft yield to
their prejudices, and, in order to preferve the public tranquillity, efta-
blifh. that fyftem which they approve of. It is upon this account,
perhaps, that we fo feldom find a reafonable fyftem eftablifhed
with regard to either of thofe two capital objects.

IV. The trade of the merchant carrier, or of the importer of
foreign corn, in order to export it again, contributes to the

plentiful

THE WEALTH OF NATIONS.

plentiful fupply of the home market. It is not indeed the direct
purpofe of his trade to fell his corn there. But he will generally
he willing to do fo, and even for a good deal lefs money than
he might expect, in a foreign market ; becaufe he faves in this
manner the expence of loading and unloading, of freight and
infurance. The inhabitants of the country which, by means of
the carrying trade, becomes the magazine and ftorehoufe for the
fupply of other countries, can very feldom be in want them-
felves. Though the carrying trade might thus contribute to
reduce the average money price of corn in the home market, it
would not thereby lower its real value. It would only raife fome-
what the real value of filver.

The carrying trade was in effect, prohibited in Great Britain
upon all ordinary occafions, by the high duties upon the im-
portation of foreign corn ; and upon extraordinary occafions,
when a fcarcity made it neceffary to fufpend thofe duties by tem-
porary ftatutes, exportation was always prohibited. By this fyftem
of laws, therefore, the carrying trade was in effecT: prohibited
upon all occafions.

That fyftem of laws, therefore, which is connected with
the eftablifhment of the bounty, feems to deferve no part of the
praife which has been beftowed upon it. The improvement and
profperity of Great Britain, which has been fo often afcribed to
thofe laws, may very eafily be accounted for by other caufes.
That fecurity which the laws in Great Britain give to every man
that he fhall enjoy the fruits of his own labour, is alone fufficient
to make any country flourim, notwithstanding thefe and twenty
other abfurd regulations of commerce ; and this fecurity was
perfected by the revolution, much about the fame time that the
bounty was eftablifhed. The natural effort of every individual
8 to

THE NATURE AND CAUSES OF

BOOK to better his own condition, when fuffered to exert itfelf with.

. , freedom and fecurity, is fo powerful a principle that it is alone,

and without any affiftance, not only capable of carrying on the
fociety to wealth and profperity, but of furmounting a hundred
impertinent obftructions with which the folly of human laws too
often incumbers its operations; though the effect of thefe ob-
ftructions is always more or lefs either to encroach upon its free-
dom, or to diminifh its fecurity. In Great Britain induftry is
perfectly fecure and though it is far from being perfectly free,
it is as free or freer than in any other part of Europe.

Though the period of the greateft profperity and improve-
ment of Great Britain, has been pofterior to that fyftem of laws
which is connected with the bounty, we mutt not upon that
account impute it to thofe laws. It has been pofterior likewife to
the national debt. But the national debt has moil afluredly not
been the caufe of it.

Though the fyftem of laws which is connected with the
bounty, has exactly the fame tendency with the police of Spain
and Portugal ; to lower fomewhat the value of the precious
metals in the country where it takes place j yet Great Britain is
certainly one of the richeft countries in Europe, while Spain and
Portugal are perhaps among the moil beggarly. This difference
of fituation, however, may eafily be accounted for from two dif-
ferent caufes. Firft, the tax in Spain, the prohibition in Portu-
gal of exporting gold and filver, and the vigilant police which
watches over the execution of thofe laws, mull, in two very poor
countries, which between them import annually upwards of fix
millions fterling, operate, not only more directly, but much more
forcibly in reducing the value of thofe metals there, than the
corn laws can do in Great Britain. And, fecondly, this bad
policy is not in thofe countries counter-balanced by the general

liberty

THE WEALTH OF NATIONS.

liberty and fecurity of the people. Indttftry is there neither free C H P.
nor fecure, and the civil and ecclefiaftical governments of both -v-*-^
Spain and Portugal, are fuch as would alone be fufficient to per-
petuate their prefent ftate of poverty, even though their regula-
tions of commerce were as wife as the greater part of them are
abfurd and foolifh.

The 13th of the prefent king, c. 43. feems to have eftablifhed
a new fyftem with regard to the corn laws, in many refpects
better than the ancient one, but in one refpect perhaps not quite
fo good.

By this ftatute the high duties upon importation for home
coiifumption are taken off as foon as the price of wheat is fo
high as forty-eight fhillings the quarter, and inftead of them a
fmall duty is impofed of only fixpenceupon the quarter of wheat,
and upon that of other grain in proportion. The home market
is in this manner not fo totally excluded from foreign fupplies as
it was before.

. By the fame ftatute the old bounty of five fhillings upon the
quarter of wheat ceafes when the price rifes fo high as forty-
four millings, and upon that of other grain in proportion. The
bounties too upon the coarfer forts of grain are reduced fome-
what lower than they were before, even at the prices at which
they take place. If bounties are as improper as 1 have en-
deavoured to prove them to be, the- fooner they ceafe and the lower
they are, fo much the better.

...Th£ .fame ftatute permits at all prices the importation of corn
in order, to be exported again, duty free % provided it is in the
meantime lodged in the king's w'arehoufe. This liberty indeed
extends to. ..no more thaji twenty-five of the different ports of
Vol. IT. S 4 Great

s3o THE NATURE AND CAUSES OF

B CK> K Great Britain. They are, however, the principal ones, and there-
v«*-v— -j may not perhaps be warehoufes proper for this purpofe in the

greater part of the others. Some provifion is thus made for the

eftabliihment of the carrying trade*

•-diil fii* fe.jhv _--'it*-.r vtfo'itBtt idrijo io afcoo^-ad* sh/Boad-

So far this law feems evidently an improvement upon the

antient fyftem.

But by the fame law exportation, is prohibited as foon as the
price of wheat riles to forty- four mil lings the quarter, and that
of other grain in proportion. The price feems to be a good deal
too low, and there feems to be an impropriety befides in flopping ex-
portation altogether, at the very fame price at which that bounty
which was given in order to force it, is withdrawn. The bounty
ought certainly either to have been withdrawn at a much lower
price, or exportation ought to have been allowed at a much
higher. So far,, therefore, this law feems to be inferior to the
ancient fyftem.

Of treaties of commerce.

[i£l vldjsdoici ion iixw 'in .oo fifaitti t?iiw*i3o^o Ji XfjOcii i?''jfcPfli*

WH E N a nation binds itfelf by treaty either to permit
the entry of certain goods from. one foreign country which
it prohibits from all others, or to exempt the goods of one coun-
try from duties to which it fubjecls thofe of all others, the
country, or at leaft the merchants and manufacturers of the
country, whofe commerce is fo favoured, muft neceffarily derive
| great

THE WEALTH OF NATIONS.

great advantage from the treaty. Thofe merchants and manufac- c ^A P.
turers enjoy a fort of monopoly in the country which is fo indul* J
gent to them. That country becomes a market both more ex-
tenfive and more advantageous for their goods : more extenfive,
becaufe the goods of other nations being either excluded or fub-
jected to heavier duties, it takes off a greater quantity of theirs :
more advantageous, becaufe the merchants of the favoured coun-
try, enjoying a fort of monopoly there, will often fell their goods
for a better price than if expofed to the free competition of all
other nations.

Jbsd woog b ad ot zmttl 3Di*iq 3fl X .nomoqorq m nierg isrlJQ. to

Such treaties, however, though they may be advantageous to
the merchants and manufacturers of the favoured, are neceflariiy
difadvantageous to thofe of the favouring country. A monopoly
is thus granted againft them to a foreign nation : and they muft
frequently buy the foreign goods they have occafion for dearer than
if the free competition of other nations was admitted. That part of
its own produce with which fuch a nation purchafes foreign goods »
muft confequently be fold cheaper, becaufe when two things are ex-
changed for one another, the cheapnefs of the one is a neceflary
confequence, or rather is the fame thing with the dearnefs of the
other. The exchangeable value of its annual produce, therefore, is
likely to be diminifhed by every fuch treaty. This diminution, however,
can fcarce amount to any pofitive lofs, but only to a lefiening of
the gain which it might otherwife make. Though it fells its goods
cheaper than it otherwife might do, it will not probably fell
them for lefs than they coft j nor, as in the cafe of bounties, for
a price which will not replace the capital employed in bringing
them to market, together with the ordinary profits of ftock. The
trade could not go on long if it did. Even the favouring coun-
try, therefore, may ftill gain by the trade, though - lefs than it
there was a free competition..

S z Some

THE NATURE AND CAUSES OF

Some treaties of commerce, however, have been fuppofed ad-
vantageous upon principles very different from thefe and a com-
mercial country has fometimes granted a monopoly of this kind
againft Itfelf to certain goods of a foreign nation, becaufe it
expected that in the whole commerce between them, it would
annually fell more than it would buy, and that a balance in gold
and fdver would be annually returned to it. It is upon this
principle that the treaty of commerce between England and Por-
tugal, concluded in 1703 by Mr. Methuen, has been fo much
commended. The following is a literal tranflation of that treaty;
which confifts of three articles only.

ART. I.

His facred royal majefty of Portugal promifes, both in his own
name, and that of his fucceffors, to admit, for ever hereafter*
into Portugal, the woollen cloths, and the reft of the woollen
manufactures of the Britifli, as was accuftomed, till they were
prohibited by the law ; neverthelefs upon this condition :

ART. II.

That is to fay, that her facred royal majefty of Great Britain
fnall, in her own name, and that of her fucceflors, be obliged
for ever hereafter, to admit the wines of the growth of Portu-
gal into Britain j fo that at no time, whether there mall be peace
or war between the kingdoms of Britain and France, any thing
more fhall be demanded for thefe wines by the name of cuftom
or duty, or by whatfoever other title, directly or indirectly, whe-
ther they mall be imported into Great Britain in pipes or hogf-
heads, or other calks, than what mall be demanded for the like
quantity or meafure of French wine, deducting or abating a third-
part of the cuftom or duty. But if at any time this deduction or
abatement of cuftoms, which is to be made as aforefaid, fhall in

any

THE WEALTH OF NATIONS.

*33

any manner be attempted and prejudiced, it fhall be juft and c y^P.
lawful for his facred royal majcfty of Portugal, again to pro-
hibit the woollen cloths, and the reft of the Britifli woollen
manufactures.

art. nr.

The moft excellent lords the plenipotentiaries promife and take
upon themfelves, that their above-named mafters fhall ratify this
treaty, and within the fpace of two months, the ratifications
mail be exchanged.

By this treaty the crown of Portugal becomes bound to admit
the Englifh woollens upon the fame footing as before the prohi-
bition, that is, not to raife the duties which had been paid before
that time. But it does not become bound to admit them upon
any better terms than thofe of any other nation, of France or
Holland, for example. The crown of Great Britain, on the
contrary, becomes bound to admit the wines of Portugal, upon
paying only two-thirds of the duty, which is paid for thofe of
France, the wines moft likely to come into competition with them.
So far this treaty, therefore, is evidently advantageous to Portu-
gal, and difadvantageous to Great Britain.

It has been celebrated, however, as a mafter-piece of the
commercial policy of England. Portugal receives annually from
the Brazils a greater quantity of gold than can be employed in
its domeftick commerce, whether in the fhape of coin or of
plate. The furplus is too valuable to be allowed to lie idle and
locked up in coffers, and as it can find no advantageous market
at home, it muft, notwithstanding any prohibition, be fent abroad
and exchanged for fomething for which there is a more advan-
tageous market at home. A large fhare of it comes annually to
England, in return either for Englifh goods, or for thofe of other

European

.8M0ITAH ^O.HTJAEW 3 HT
134 THE NATURE AND CAUSES OF

,4 A H D V }uS .larho io hciiA, srnol to. zboog sldEmulnoD 10I basimloxa
11 x|rj K European nations that receive their returns through England,
v— v— — ' Mr. Baretti was informed that the weekly packet-boat from
Liibon brings, one week with another, more than fifty thoufand
pounds in gold to England. The fum had probably been exag-
gerated. It would amount to more than two millions fix hun-
dred thoufand pounds a year, which is more than the Brazils are
fuppofed to afford.

y ! ii ' t to ^*pli^ili(8i'rik.fi' "il .i&fbb -stb":tsi .-flfilll .3CK>'
X)vr merchants were fome years a,go out of humour with

the crown of Portugal. Some privileges which had been granted

them, not by treaty, but by the free grace of that crown,

at the folicitation, indeed, it is probable, and in return for much

greater favours, defence and protection, from the crown of Great

Britain, had been either infringed or revoked. The people,

therefore, ufually moft intereftc.d in celebrating the Portugal trade,

were then rather difpofed to reprefent it as lefs advantageous

than it had .commonly been imagined. The far greater part,

almoft the whole, they pretended, of this annual importation of

gold, was not on account of Great Britain, but of other European

nations ; the fruits and wines of Portugal annually imported into

Great Britain nearly compenfating the value of the Britim. goods

fent thither.

Let us fuppofe, however, that the whole was on account
of Great Britain, and that it amounted to a ftill greater fum
than Mr. Baretti feems .to imagine : this trade would not, upon
that account, be more advantageous than any other in which for
the fame value fent out, we received an equal value of consum-
able goods in return.

It is but a very fmall part of this importation which, it can be
fuppofed, is employed as an annual addition either to the plate op
to the coin of the kingdom. The reft mult all be fent abroad and

exchanged

THE WEALTH OF NATIONS-

10 2 3 80 AO- QMA HflUTAVI fHT
exchanged for confumable goods of fome kind or other. But if C
thofe confumable goods were purchafed directly with the produce of
Englifh induftry, it would be more for the advantage of England
than firft to purchafe with that produce the gold of Portugal, and
afterwards to purchafe with that gold thofe confumable goods.
A direct foreign trade of confumption is always more advantageous
than a round-about one ; and to bring the fame value of foreign
goods to the home market, requires a much fmaller capital in the
one than in the other. If a fmaller (hare of its induftry, there-
fore, had been employed in producing goods fit for the Portugal
market, and a greater in producing thofe fit for the other markets
where thofe confumable goods for which there is a demand in
Great Britain are to be had,, it would have been more for the
advantage of England. To procure both the gold, which it wants.
for its own ufe, and the confumable goods, would, in this way,,
employ a much fmaller capital than at prelent. There would be a
fpare capital, therefore, to be employed for other purpofes, in,
exciting an additional quantity of induftry, and in railing a
greater annual produce..

Though- Britain were entirely excluded from the Portugal trade,
it could find very little difficulty in procuring all the annual fup-
plies of gold which it wants, either for the purpofes of plate, or
of coin, or of foreign tiade. Gold, like every other commodity, is
always fomewhere or another to be got for its value by thofe who
have that value to give for it. The annual furplus of gold in Por-
tugal, befides, would ftill be fent abroad, and, though not carried
away by Great Britain, would be carried away by fome other nation,
which would be glad to fell it again for its price, in the fame man-
ner as Great Britain does at prefent. In buying gold of Portu-
gal, indeed, we buy it at the firft hand whereas, in buying it of
any other nation, except Spain, we ftiould buy it at the fecond,

and

THE NATURE AND CAUSES OF

K and might pay fomewhat dearer. This difference, however,
-* would furely be too infignificant to deferve the publick attention.

Almost all our gold, it is faid, comes from Portugal. With
other nations the balance of trade is either againft us, or not much
in our favour. But we fhould remember, that the more gold
we import from one country, the lefs we muft neceffarily import
from all others. The effectual demand for gold, like that for every
other commodity, is in every country limited to a certain quan-
tity. If nine-tenths of this quantity are imported from one coun-
try, there remains a tenth only to be imported from all others.
The more gold befides that is annually imported from fome parti-
cular countries, over and above what is requifite for plate and for
coin, the more muff neceffarily be exported to fome others ; and
the more, that mod infignificant object of modern policy, the ba-
lance of trade, appears to be in our favour with fome particular
countries, the more it muft neceffarily appear to be againft us with
many others.

It was upon this filly notion, however, that England could
not fubfift without the Portugal trade, that, towards the end of
the hte W'li/. Fiance and Spain, without pretending either offence
or provocation, required the king of Portugal to exclude all Bri-
tifli (hips from his ports, and for the fecurity of this exciufion,
to receive into them . French or Spanifh garrifons. Had the
king of Portugal fubmitted to thofe ignominious terms which
his brother-in-law- the king of Spain propofed to him, Britain
would have been freed from a much greater inconvcniency than
the lofs of the Portugal trade, the. burden of fupporting a very
weak ally, fo unprovided of every thing for his own defence,
that the whole power of England, had it been directed to that
ffngle purpofe, could fcarce perhaps have defended him for another

campaign.

THE WEALTH OF NATIONS.

campaign. The lofs of the Portugal trade would, no doubt, have
occafioned a confiderable embarraflment to the merchants at that
time engaged in it, who might not, perhaps, have found out, for a
year or two, any other equally advantageous method of employing
their capitals ; and in this would probably have confided all
the inconveniency which England could have fuffered from this
notable piece of commercial policy.

- The great annual importation of gold and filver is neither for
the purpofe of plate nor of coin, but of foreign trade. A round-
about foreign trade of confumption can be carried on more advan-
tageoufly by means of thefe metals than of almoft any other
goods. As they are the univerfal inftruments of commerce, they
are more readily received in return for all commodities than anv
other goods ; and on account of their fmall bulk and great value,
it colts lefs to tranfport them backward and forwards from one
place to another than almoft any other fort of merchandize, and
they lofe lefs of their value by being fo tranfported. Of all the
commodities, therefore, which are bought in one foreign country,
for no other purpofe but to be fold or exchanged again for fome
other goods in another, there are none fo convenient as gold and
filver. In facilitating all the different round-about foreign trades
of confumption which are carried on in Great Britain, confifts the
principal advantage of the Portugal trade; and though it is not a
capital advantage, it is, no doubt, a confiderable one.

That any annual addition which, it can reafonably be fup-
pofed, is made either to the plate or to the coin of the kingdom,
could require but a very fmall annual importation of gold and
filver, feems evident enough i and, though we had no direct trade
with Portugal, this fmall quantity could always, fomewhere or
another, be very eafily got.

Though the goldfmiths trade be very confiderable in Great Bri~
tain, the far greater part of the new plate which they annually
Vol. II. T felJ^

THE NATURE AND CAUSES OF

fell, is made from other old plate melted down; fo that the addi-
tion annually made to the whole plate of the kingdom cannot be
very great, and could require but a very fmall annual importation.

It is the fame cafe with the coin. Nobody imagines, I believe,
that even the greater part of the annual coinage, amounting, for ten
years together before the late reformation of the gold coin, to up-
wards of eight hundred thoufand pounds a year in gold, was an
annual addition to the money before current in the kingdom. In a
country where the expence of the coinage is defrayed by the govern-
ment, the value of the coin, even when it contains its full itandard
weight of gold and filver, can never be much greater than that of
an equal quantity of thole metals uncoined ; becaufe it requires only
the trouble of going to the mint, and the delay perhaps of a few
weeks, to procure for any quantity of uncoined gold and filver an
equal quantity of thofe metals in coin. But, in every country, the
greater part of the current coin is almoft always more or lefs worn,
or otherwife degenerated from its ftandard. In Great Britain it was,
before the late reformation, a good deal fo, the gold being more than
two per cent, and the filver more than eight per cent, below its ftand-
ard weight. But if forty-four guineas and a half, containing their
full ftandard weight, a pound weight of gold, could purchafe
very little more than a pound weight of uncoined gold, forty-four
guineas and a half wanting a part of their weight could not pur-
chafe a pound weight, and fomething was to be added in order to
make up the deficiency. The current price of gold bullion at
market, therefore, inftead of being the fame with the mint price, or
46I. 14s. 6d. was then about 47I. 14s. and fometimes about forty-
eight pounds. When the greater part of the coin, however, was
in this degenerate condition, forty-four guineas and a half, frefli
from the mint, would purchafe no more goods in the market than
any other ordinary guineas, becaufe when they come into the cof-
fers of the merchant, being confounded with other money, they

could

THE WEALTH OF NATIONS.

could not afterwards be diftinguifhed without more trouble than
the difference was worth. Like other guineas they were worth no
more than 46 1. 14s. 6d. If thrown into the melting pot, how-
ever, they produced, without any fenfible lofs, a pound weight of
ftandard gold, which could be fold at any time for between 47I. 14s.
and 48 1. either in gold or filver, as fit for all the purpofes of coin
as that which had been melted down. There was an evident pro-
fit, therefore, in melting down new coined money, and it was
done fo inftantaneoufly, that no precaution of government could
prevent it. The operations of the mint were, upon this account,
fomewhat like the web of Penelope the work that was done in
the day was undone in the night. The mint was employed, not
fo much in making daily additions to the coin, as in replacing the

very beft part of it which was daily melted down.

iue i3.vl/l .BflB-Bjiog: bsruoajiii fk> -{jum-: -j ^ns io\ ^Tc^oiq >ot -yss^w

Were the private people, who carry their gold and filver to the
mint, to pay themfelves for the coinage, it would add to the value
of thofe metals in the fame manner as the fafhion does to that
of plate. Coined gold and filver would be more valuable than
uncoined. The feignorage, if it was not exorbitant, would add to
the bullion the whole value of the duty ; becaufe, the government
having every where the exclufive privilege of coining, no coin can
come to market cheaper than they think proper to afford it. If
the duty was exorbitant indeed, that is, if it was very much above
the real value of the labour and expence requifite' for coinage,
falfe coiners, both at home and abroad, might be encouraged, by the
great difference between the value of bullion and that of coin, to
pour in fo great a quantity of counterfeit money as might reduce
the value of the government money. In France, however, though
the feignorage is eight per cent, no fenfible inconveniency of this
kind is found to arife from it. The dangers to which a falfe coiner

is every where expofed, if he lives in the count4-y of which he coun-

Dflfo riiiw. bbaudfcty , li terfbIts

THE NATURE AND CAUSES OF

K terfeits the coin, and to which his agents or correfpondents are
-j expofed if he lives in a foreign country, are by far too great to he
incurred for the fake of a profit of fix or feven per cent.

The feignorage in France raifes the value of the coin higher
than in proportion to the quantity of pure gold which it contains.
Thus by the edict of January, 1726, *the mint price of fine gold
of twenty-four carats was fixed at feven hundred and forty livres,
nine fous and one denier one-eleventh, the mark of eight Paris
ounces. The gold coin of France, making an allowance for the
remedy of the mint, contains twenty-one carats and three-fourths
of fine gold, and two carats one-fourth of alloy. The mark of
ftandard gold, therefore, is worth no more than about fix hundred
and feventy-one .livres ten deniers. But in France this mark of
ftandard gold is coined into thirty Louis d' ors of twenty-four
livres each, or into feven hundred and twenty livres. The coinage,
therefore, increafes the value of a mark of ftandard gold bullion,
by the difference between fix hundred and feventy-one livres ten,
deniers and feven hundred and twenty livres ; or by forty-eight
livres, nineteen fous, and two deniers.

A seignor age will, in many cafes, take away altogether, and
will, in all cafes, diminifh the profit of melting down the new coin.
This profit always arifes from the difference between the quan-
tity of bullion which the common currency ought to contain, and
that which it actually does contain. If this difference is lefs than
the feignorage, there will be lofs inftead of profit. If it is equal
to the feignorage, there will neither be profit nor lofs. If it is
greater than the feignorage, there will indeed be fome profit, but

* See Diclionaire des Monnoies, torn. i. article Seigneurage, p. 489. par M. Abot
cle Bazinghen, Confeiller-Comiffaire en la Cour des Monnoies a Paris.

lefs

THE WEALTH OF NATIONS.] 141

lefs than if there was no feignorage. If, before the late reforma- c ytA p#
tion of the gold coin, for example, there had been a feignorage of c — *— 5*
five per cent, upon the coinage, there would have been a lofs of
three per cent, upon the melting down of the gold coin. If the
feignorage had been two per cent, there would have been neither
profit nor lofs. If the feignorage had been one per cent, there
would have been a profit, but of one per cent, only inftead of
two per cent. Wherever money is received by tale, therefore, and
not by weight, a feignorage is the moll effectual preventative of the.
melting down of the coin, and, for the fame reafon, of its expor-
tation. It is the ben: and heavieft pieces that are commonly either
melted down or exported ; becaufe it is upon fuch that the largeft
profits are made.

The law for the encouragement of the coinage, by rendering it
duty-free, was firft enacted, during the reign of Charles If. for a
limited time and afterwards continued, by different prolonga-
tions, till 1769, when it was rendered perpetual. The bank of
England, in order to replenifh their coffers with money, are fre~
quently obliged to carry bullion to the mint ; and it was more for
their intereft, they probably imagined, that the coinage mould be
at the expence of the government, than at their own. It was*,
probably, out of complaifmce to this great company that the go-
vernment agreed to render this law perpetual; Should the cuftom
of weighing gold, however, come to be difufed, as it is very likely
to- be on account of its inconveniency fhould the gold coin o§
England come to be received by tale, as it was before the late re-
coinage, this great company may, perhaps, find that they have:
upon this, as upon fome other occafions, miftaken their own inte-
reft not a little.

Before the late re-coinage, when the gold currency of Eng-
land was two per cent, below its ftandard weight, as there was.-
8 no

THE NATURE AND CAUSES OF

K no feignorage, it was two per cent, below the value of that
■j quantity of ftandard gold bullion which it ought to have con-
tained. When this great company, therefore, bought gold bul-
lion in order to have it coined, they were obliged to pay for it
two per cent, more than it was worth after the coinage. But if
there had been a feignorage of two per cent, upon the coinage,
the common gold currency, though two per cent, below its ftand-
ard weight, would notwithftanding have been equal in value to
the quantity of ftandard gold which it ought to have contained ;
the value of the fafhion compenfating in this cafe the diminution
of the weight. They would indeed have had the feignorage to
pay, which being two per cent, their lofs upon the whole tranf-
aclion would have been two per cent, exactly the fame, but no
greater than it actually was.

If the feignorage had been five per cent, and the gold cur-
rency only two per cent, below its ftandard weight, the bank
would in this cafe have gained three per cent, upon the price of
the bullion ; but as they would have had a feignorage of five per
cent, to pay upon the coinage, their lofs upon the whole tranfac-
tion would, in the fame manner, have been exactly two per
cent.

If the feignorage had been only one per cent, and the gold
currency two per cent, below its ftandard weight, the bank
would in this cafe have loft only one per cent, upon the price of
the bullion ; but as they would likewife have had a feignorage of
one per cent, to pay, their lofs upon the whole tranfaction would
have been exactly two per cent, in the fame manner as in all
other cafes.

If there was a reafonable feignorage, while at the fame time
the coin contained its full ftandard weight, as it has done very

nearly

THE WEALTH OF NATIONS

nearly fince the late re-coinage, whatever the bank might lofe by C
the feignorage, they would gain upon the price of the bullion ; u
and whatever they might gain upon the price of the bullion, they
,would lofe by the feignorage. They would neither lofe nor gain,
therefore, upon the whole tranfaction, and they would in this, as
in all the foregoing cafes, be exactly in the fame fituation as if
there was no feignorage.

When the tax upon a commodity is fb moderate as not to
encourage fmuggling, the merchant, who deals in it, though he
advances, does not properly pay the tax, as he gets it back in
the price of the commodity. The tax is finally paid by the laft
purchafer or confumer. But money is a commodity with regard
to which every man is a merchant. Nobody buys it but in
order to fell it again ; and with regard to it there is in ordinary
cafes no laft purchafer or confumer. When the tax upon coin-
age, therefore, is fo moderate as not to encourage falfe coin-
ing, though every body advances the tax, nobody finally pays it;
becaufe every body gets it back in the advanced value of the
coin.

A moderate feignorage, therefore, would not in any cafe
augment the expence of the bank, or of any other private per-
fons who carry their bullion to the mint in order to be coined,
and the want of a moderate feignorage does not in any cafe dimi-
nifh it. Whether there is or is not a feignorage, if the currency
contains its full ftandard weight, the coinage cofts nothing to
any body, and if it is fhoit of that weight, the coinage muft
always coft the difference between the quantity of bullion which
ought to be contained in it, and that which actually is con-
tained in it.

The government, therefore, when it defrays the expence of
coinage, not only incurrs fome fmall expence, but lofes fome

final!

THE NATURE AND CAUSES OF

fmall revenue which it might get by a proper duty j and neither
the bank nor any other private perfons are in the fmalleft degree
benefited by this ufelefs piece of public generality.

The directors of the bank, however, would probably be unwilling
to agree to the impofition of a feignorage upon the authority of a
fpeculation which promifes them no gain, but only pretends to in-
fure them from any lofs. In the prefent (late of the gold coin,
and as long as it continues to be received by weight, they cer-
tainly would gain nothing by fuch a change. But if the cuftora
of weighing the gold coin mould ever go into difufe, as it is very
likely to do, and if the gold coin fnould ever fall into the fame
ftate of degradation in which it was before the late re-coinage,
the gain, or more properly the favings of the bank, in confequence
of the impofition of a feignorage, would probably be very confi-
derable. The bank of England is the only company which fends
any confiderable quantity of bulhcn to the mint, and the bur-
den of the annual coinage falls entirely or almoft entirely upon
it. If this annual coinage had nothing to do but to repair the
unavoidable lofles and neceffary tear and wear of the coin, it
•could feldom exceed fifty thoufand or at moft a hundred thoufand
pounds. But when the coin is degraded below its ftandard
weight, the annual coinage muff, befides this, fill up the large
vacuities which exportation and the melting pot are continually
making in the current coin. It was upon this account that dur-
ing the ten or twelve years immediately preceeding the late refor-
mation of the gold coin, the annual coinage amounted at an
average to more than eight hundred and fifty thoufand pounds.
But if there had been a feignorage of four or five per cent, upon
the gold coin, it would probably, even in the ftate in which things
then were, have put an effectual ftop to the bufmefs both of
exportation and of the melting pot. The bank, inftead of lofmg

every

THE WEALTH OF NATIONS, g*,

every year about two and a half per cent, upon the bullion CHAP,

which was to be coined into more than eight hundred and fifty w-y- J

thoufand pounds, or incurring an annual lofs of more than
twenty one thoufand two hundred and fifty pounds, would not
probably have incurred the tenth part of that lofs.

The revenue allotted by parliament for defraying the expence
of the coinage is but fourteen thoufand pounds a year, and the
real expence which it cofts the government, or the fees of the
officers of the mint, do not upon ordinary occafions, I am
allured, exceed the half of that fum. The faving of fo very
fmall a fum, or even the gaining of another which could not
well be mUch larger, are objects too inconfiderable, it may be
thought, to deferve the ferious attention of government. But
the faving of eighteen or twenty thoufand pounds a year in cafe
of an event which is not improbable, which has frequently hap-
pened before, and which is very likely to. happen again, is finely
an object which well deferves the ferious attention even of fo great
a company as the bank of England.

Some of the foregoing reafonings and obfervations might per-
haps have been more properly placed in thofe chapters of the
firlt book which treat of the origin and ufe of money, and of
the difference between the real and the nominal price of com-
modities. But as the law for the encouragement of coinage de-
rives its origin from thofe vulgar prejudices which have been in-
troduced by the mercantile fyftem I judged it more proper to
referve them for this chapter. Nothing could be more agreeable
to the fpirit of that fyftem than a fort of bounty upon the pro-
duction of money, the very thing which, it fuppofes, conftitutes
tiie wealth of every nation. It is one of its many admirable ex-
pedients for enriching the country.

Vol. II.

U

THE NATURE AND CAUSES 0«P

skj"^c#j$.jfjd' H^D,gniiboH;' .ylb iad?om «jlt %> .JflskKp:^
CHAP. VII.

0/* Colo?iiest

Part First.
motives for ejlablijhing new colonies.

TH E intereft which occafioned the firft fettlement of the
different European colonies in America and the Weft Indies,
was not altogether fo plain and diftincl as that which directed the
eftablifhment of thofe of antient Greece and Rome.

All the different ftates of antient Greece poffeffed, each of
them, but a very fmall territory, and when the people in any one
of them multiplied beyond what that territory could eafily main-
tain, a part of them were fent in queft of a new habitation in,
fome remote and diftant part of the world j the warlike neigh-
bours who furrounded them on all fides, rendering it difficult for
any of them to enlarge very much its territory at home. The
colonies of the Dorians reforted chiefly to Italy and Sicily, which
in the times preceeding the foundation of Rome, were inhabited
by barbarous and uncivilized nations : thofe of the lonians and
Eolians, the two other great tribes of the Greeks, to Afia minor
and the iflands of the Egean fea, of which the inhabitants feem
at that time to have been pretty much in the fame ftate as thofe of
Sicily and Italy. The mother city, though fhe confidered the
colony as a child, at all times entitled to great favour and affift-
ance, and owing in return much gratitude and refpect, yet con-
fidered it as an emancipated child over whom fhe pretended to claim
no direct authority or jurifdiction. The colony fettled its own
form of government, enacted its own laws, elected its own magi-
ftrates, and made peace or war with its neighbours as an inde-
pendant ftate which had no occafion to wait for the approbation

or

146

BOOK
IV.

THE WEALTH OF NATIONS.

or confent of the mother city. Nothing can be more plain and c
diflinc~l than the interefl which directed every fuch eflablifhment.

Rome, like mofl of the other antient republicks, was originally
founded upon an Agrarian law, which divided the publick territory
in a certain proportion among the different citizens who compofed
the ftate. The courfe of human affairs, by marriage, by fuccef-
fion, and by alienation, neceflanly deranged this original divi-
fion, and frequently threw the lands, which had been allotted
for the maintenance of many different families, into the poneflion
of a fingle perfon. To remedy this diforder, for fuch it was fup-
pofed to be, a law was made, reftricling the quantity of land
which any citizen could poffefs to five hundred jugera, about three
hundred and fifty Englifh acres. This law, however, though we
read of its having been executed upon one or two occafions, was
either neglected or evaded, and the inequality of fortunes went on
continually increafing. The greater part of the citizens had no
land, and without it the manners and cuftoms of thofe times ren-
dered it difficult for a freeman to maintain his independancy. In
the prefent times, though a poor man has no land, of his own, if he
has a little flock, he may either farm the lands of another, or he
may carry on fome little retail trade ; and if he has no flock, he
may find employment either as a country labourer, or as an artifi-
cer. But, among the antient Romans, the lands of the rich were
all cultivated by flaves, who wrought under an overfeer, who
was likewife a flave ; fo that a poor freeman had little chance
of being employed either as a farmer or as a labourer. All
trades and manufactures too, even the retail trade, were carried
on by the Haves of the rich for the benefit of their mailers, whofe
wealth, authority and protection, made it difficult for a poor free-
man to maintain the competition againft them. The citizens,
therefore, who had no land, had fcarce any other means of fubfiil-

U 2 ence

THE NATURE AND CAUSES OF

ence but the bounties of the candidates at the annual elections.
The tribunes, when they had a mind to animate the people againil
the rich and the great, put them in mind of the antient divifion.
of lands, and reprefented that law which reftricted this fort of pri-
vate property as the fundamental law of the republick. The peo-
ple became clamorous to get land, and the rich and the great, we
may believe, were perfectly determined not to give them any part
of theirs. To fatisfy them in fome meafure, therefore, they fre-
quently propofed to fend out a new colony. But conquering Rome
was> even upon fuch occafions, under no neceffity of turning out
her citizens to feek their fortune, if one may fay fo± through the
wide world, without knowing where they were to fettle. She
affigned them lands generally in the conquered provinces of Italy,
where, being within the dominions of the republick, they could:
never form any independent ftate; but were at beft but a fort of
corporation, which, though it had the power of enacting bye-laws
for its own government, was at all times fubject to the correction,
jurifdiction, and legillative authority of the mother city. The
fending out a colony of this kind, not only gave fome fatisfaction
to the people, but often eftablifhed a fort of garrifon too in a
newly conquered province, of which the obedience might other-
wife have been doubtful. A Roman colony, therefore, whether we
confider the nature of the eftablifliment itfelf, or the motives for
making it, was altogether different from a Greek one. The words
accordingly, which in the original- languages denote thofe different
eftablimments, have very different meanings. The latin word'
(Colonia) fignifies fimply a plantation. The Greek word (wn-oiKia)
on the contrary, fignifies a feparation of dwelling, a departure from
home, a going out of the houfe. But, though the Roman colo-
nies were in many refpects different from the Greek ones, the inte-
reft which prompted to eftablilh them was equally plain and di-
ftinct. Both inftitutions derived their origin either from irrefifta-
ble neceffity, or from clear and evident utility.

The

THE WEALTH OF NATIONS. 149

The eftablifhment of the European colonies in America and the C HA P.
Weft Indies arofe from no neceflity j and though the utility which v — ^
has refulted from them has been very great, it is not altogether fo
clear and evident. It was not underftood at their firft eftablifli-
ment, and was not the motive either of that eftablifliment or of
the difcoveries which gave occafion to it, and the nature, extent,
and limits of that utility are not, perhaps, well underftood at this
day..

srnoX snnofjprtoD iw9.\ .^noioD wan £ Juo i^roi 01 d^ickjo'hj ^uiVJV'^
. The Venetians, during the fourteenth and fifteenth centuries,,
carried on a very advantageous commerce in fpiceries, and other
Eaft India goods, which they diftributed among the other nations
of Europe. They purchafed them in Egypt, at that time under
the dominion of the Mammeluks, the enemies of the Turks, of
whom the Venetians were the enemies and this union of intereft,
affifted by the money of Venice, formed fiich a conne&ion, as
gave the Venetians almofl a monopoly of the trade.

The great profits of the Venetians tempted the avidity of the
Portugueze. They had been endeavouring, during the courfe of
the fifteenth century, to find out by fea a way to the countries from
which the Moors brought them ivory and gold duft acrofs the De-
fart. They difcovered the Madeiras, the Canaries, the Azores, the
Cape de Verd iflands, the coafl of Guinea, that of Congo, Angola,
and Loango, and, finally, the Cape of Good Hope. They had
long wifhed to (hare in the profitable traffic of the Venetians, and
this laft difcovery opened to them a probable profpecl: of doing fo.
In 1497, Vafco de Gama failed from the port of Lifbon with a
fleet of four fhips, and, after a navigation of eleven months, arrived
upon the coaft of Indoftan, and thus compleated a courfe of dif-
coveries which had been purfued with great fteadinefs> and with
very little interruption, for near a century together.

Some.

5o THE NATURE AND CAUSES OF

BOO K Some years before this, while the expectations of Europe were
u — iHM in fufpence about the projects of the Portugueze, of which the
fuccefs appeared yet to be doubtful, a Genoefe pilot formed the
yet more daring project: of failing to the Eaft Indies by the weft.
The fituation of thofe countries was at that time very imperfectly-
known in Europe. The few European travellers who had been
there had magnified the diftance j perhaps through fimplicity and
ignorance, what was really very great appearing almoft infinite to
thofe who could not meafure it ; or, perhaps, in order to increafe
fomewhat more the marvellous of their own adventures in vifiting
regions fo immenfely remote £rom Europe. The longer the way
was by the Eaft, Columbus very juftly concluded, the fliorter it
would be by the Weft. He propofed, therefore, to take that way,
as both the fhorteft and the fureft, and he had the good fortune to
convince Ifabella of Caftile of the probability of his project. He
failed from the port of Palos in Auguft 1492, near five years be-
fore the expedition of Vafco de Gama fet out from Portugal, and,
after a voyage of between two and three months, difcovered firft
fome of the fmall Bahama or Lucayan iflands, and afterwards the
great hland of St. Domingo.

But the countries which Columbus difcovered, either in this or
in any of his fubfequent voyages, had no refemblance to thofe
which he had gone in queft of. Inftead of the wealth, cultiva-
tion, and populoufnefs of China and Indoftan, he found, in St.
Domingo, and in all the other parts of the new world which he
ever vifited, nothing but a country quite covered with wood, uncul-
tivated, and inhabited only by fome tribes of naked and miferable
favages. He was not very willing, however, to believe that they
were not the fame with fome of the countries defcribed by Marco
Polo, the firft European who had vifited, or at leaft had left be-
hind him, any defcription of China or the Eaft Indies ; and a very

THE WEALTH OF NATIONS.

flight refemblance, fuch as that which he found between the name C HA P.
of Cibao, a mountain in St. Domingo, and that of Cipango, men- u«-y-^j
tioned by Marco Polo, was frequently fufficient to make him return to
this favourite prepoffeflion, though contrary to the clearer! evidence.
In his letters to Ferdinand and Ifabella he called the countries
which he had difcovered the Indies, He entertained no doubt but
that they were the extremity of thofe which had been defcribed by
Marco Polo, and that they were not very diftant from the Ganges,
or from the countries which had been conquered by Alexander.
Even when at laft convinced that they were different, he ftill flat-
tered himfelf that thofe rich countries were at no great diftance, and,
in a fubfequent voyage, accordingly, went in queft of them along,
the coaft of Terra Firma, and towards the ifthmus of Darien.

In confequence of this miftake of Columbus, the name of the
Indies has ftuck to thofe unfortunate countries ever fince; and
when it was at laft clearly difcovered that the new were altogether
different from the old Indies, the former were called the Weft in
contradiftinc~tion to the latter, which were called the Eaft Indies.

It was of importance to Columbus, however, that the coun-
tries which he had difcovered, whatever they were, mould be rep re-
fented to the court of Spain as of very great confequence; and, in
what conftitutes the real riches of every country, the animal and
vegetable productions of the foil, there was at that time nothing
which could well juftify fuch a reprefentation of them.

The Cori, fomething between a rat and a rabbit, and fuppofed
by Mr. Buffo n to be the fame with the Aperea of Brazil, was the
largeft viviparous quadruped in St. Domingo. This fpecies feems
never to have been very numerous, and the dogs and cats of the
Spaniards are faid to have long ago almoft entirely extirpated it, as

well

:52 THE NATURE AND CAUSES OF

BOOK well as fome other tribes of a (till fmaller fize. Thefe, however,
IV

together with a pretty large lizard, called the Ivana or Iguana,
constituted the principal part of the animal food which the land
afforded.

The vegetable food of the inhabitants, though from their
want of induftry not very abundant, was not altogether fo fcanty*
It confifted in Indian corn, yams, potatoes, bananes, &c. plants
which were then altogether unknown in Europe, and which have
never fince been very much efteemed in it, or fuppofed to yield a
fuftenance equal to what is flrawn from the common forts of
grain and pulfe, which have been cultivated in this part of the
world time out of mind.

The cotton plant indeed afforded the material of a very im-
portant manufacture, and was at that time to Europeans un-
doubtedly the moll valuable of all the vegetable productions of
thofe iflands. But though in the end of the fifteenth century the
muflins and other cotton goods of the Eafl Indies were much
efteemed in every part of Europe, the cotton manufacture itfelf
was not cultivated in any part of it. Even this production there-
fore, could not at that time appear in the eyes of Europeans
to be of very great confequence.

Finding nothing either in the animals or vegetables of the
newly difcovered countries, which could juftify a very advantageous
reprefentation of them, Columbus turned his view towards their
minerals ; and in the richnefs of the productions of this third
kingdom, he flattered himfelf, he had found a full compenfation
for the infignificancy of thofe of the other two. The little
bits of gold with which the inhabitants ornamented their drefs,
and which, he was informed, they frequently found in the rivu-
lets and torrents that fell from the mountains, were fufficient to

fatisfy

THE WEALTH OF NATIONS.

fatisfy him that thofe moun.ains abounded with the richer!: gold c
mines. St. Domingo, therefore, was reprefented as a country
abounding with gold, and, upon that account, (according to the
prejudices not only of the prefent times, but of thofe times)
an inexliauftible fource of real wealth to the crown and kingdom
of Spain. When Columbus, upon his return from his firfr. voyage,
was introduced with a fort of triumphal honours to the fovereigns
of Caftile and Arragon, the principal productions of the coun-
tries which he had difcovered were carried in folemn proceflion
before him. The only valuable part of them confrfted in fome
little fillets, bracelets, and other ornaments of gold, and in fome
bales of cotton. The reft were mere objects of vulgar wonder
and curionty ; fome reeds of an extraordinary fize, fome birds of
a very beautiful plumage, and fome fluffed {kins of the huge
alligator and manati ; all of which were preceeded by fix or feven
of the wretched natives, whofe lingular colour and appearance added
greatly to the novelty of the {hew.

In confequence of the reprefentations of Columbus, the
council of Caftile determined to take poueflion of countries
of which the inhabitants were plainly incapable of defending
themfelves. The pious purpofe of converting them to chriftianity
fanclified the injuffice of the project. But the hope of finding
treafures of gold there, was the fole motive which prompted to
undertake it ; and to give this motive the greater weight, it was
propofed by Columbus that the half of all the gold and filver that
fhould be found there mould belong to the crown. This pro-
pofal was approved of by the council.

As foaig as the whole or the far greater part of the gold,
which the drrc adventurers imported into Europe, was got by fo
very e&fy a method as the plundering of the defencelefs natives,
it wa^ iwt psinaps very difficult to pay even this heavy tax. But

Vol. II. X when

E54 THE NATURE AND CAUSES OF

BOOK when the natives were once fairly ftript of all that they had,
u— y-^ which, in St. Domingo, and in all the other countries difcovered
by Columbus, was done compleatly in fix or eight years, and
when in order to find more it had become necefiary to dig for
it in the mines, there was no longer any poffibility of paying
this tax. The rigorous exaction of it, accordingly, firft occa-
fioned, it is faid, the total abandoning of the mines of St. Do-
mingo, which have never been wrought fince. It was foon re-
duced therefore to a third ; then to a fifth ; afterwards to a tenth,
and at laft to a twentieth part of the grofs produce of the gold
mines. The tax upon filver, indeed, ftill continues to be a fifth
of the grofs produce. But the firft adventurers do not appear to
have been much interefted about filver. Nothing lefs precious than
gold feemed worthy of their attention.

All the other enterprizes of the Spaniards in the new world,
fubfequent to thofe of Columbus, feem to have been prompted by
the fame motive. It was the facred thirft of gold that carried
Oieda, Nicueffa, and Vafco Nugnes de Balboa, to the ifthmus of
Darien, that carried Cortez to Mexico, and Almagro and Piz-
zarro to Chili and Peru. When thofe adventurers, arrived upon
any unknown coaft, their firft enquiry was always if there was
any gold to be found there; and according to the information
which they received concerning this particular, they determined
either to quit the country, or to fettle in it.

Of all thofe expenfive and uncertain projects, however, which
bring bankruptcy upon the greater part of the people who
engage in them, there is none perhaps more perfectly ruin-
ous than the fearch after new filver and gold mines. It is perhaps
the moft difadvantageous lottery in the world, or the one in which
the gain of thofe who draw the prizes bears the leaft proportion
to the lofs of thofe who draw the blanks : for though the prizes

are

THE WEALTH OF NATIONS.

are few and the blanks; many, the common price of a ticket is ^HAP,
the whole fortune of a very rich man. Projects of mining, in- t — v— — *
ftead of replacing the capital employed in them, together with
the ordinary profits of ftock, commonly abforb both capital and
profit. They are the projects, therefore, to which of all others
a prudent law- giver, who delired to increafe the capital of his
nation, would leaft chufe to give any extraordinary encourage-
ment, or to turn towards them a greater (hare of that capital
than what would go to them of its own accord. Such in reality
'u> the abfurd confidence which almoft all men have in their own
good fortune, that wherever there is the leaft probability of fuc-
cefs, too great a fhare of it is apt to go to them of its own
accord.

But though the judgement of fober reafon and experience con-
cerning fuch projects has always been extreamly unfavourable,
that of human avidity has commonly been quite otherwife. The
fame paffion which has fuggefted to fo many people the abfurd
idea of the philofopher's ftone, has fuggefted to others the equally
abfurd one of immenfe rich mines of gold and filver. They did
not confider that the value of thofe metals has, in all ages and
nations, arifen chiefly from their fcarcity, and that their fcarcity
has arifen from the very fmall quantities of them which nature
lias any where depofited in one place, from the hard and intract-
able fJoftances with which fire has almoft every where furrounded
thofe fmall quantities, and confequently from the labour and ex-
pence which are every where neceffary in order to penetrate to
and get at them. They flattered themfelves that veins of thofe-
metals might in many places be found as large and as abundant
as thofe which are commonly found of lead, or copper, or tin,
or iron. The dream of Sir Walter Raleigh concerning the goki.ii
city and country of Eldorado, may fatisfy us that even wife men

X 2 are

[56 THE NATURE AND CAUSES OF

BOOK are not always exempt from fuch ftrange detufions. More than a
c—y^ hundred years after the death of that great man, thejefait Gumila
was ftill convinced of the reality of that wonderful country, and
exprefTed with great warmth, and I dare to fay, with great fin-
eerity, how happy he mould be to carry the light of the gofpel
to a people who could fo well reward the pious labours of their
miflionary.

In the countries firft difcovered by the Spaniards, no gold or
lilver mines are at prefent known which are fuppofed to be worth*
the working. The quantities of thofe metals which the firft ad-
venturers are faid to have found there, had probably been very
much magnified, as well as the fertility of the mines which' were
wrought immediately after the firft difcovery. What thofe adven-
turers were reported to have found, however, was fufflcient to
enftame the avidity of all their countrymen. Every Spaniard who
failed to America expected to find an Eldorado. Fortune too did
upon this what fhe has done upon very few other occafions. She
realized in fome meafure the extravagant hopes of her votaries,,
and in the difcovery and conqueft of Mexico and Peru (of which
the one happened about thirty, the other about forty years after
the firft expedition of Columbus) fhe prefented them with fome-
thing not very unlike that profufion of the precious metals which
they fought for.

A project of commerce to the Eaft Indies, therefore, gave
occafion to the firft difcovery of the Weft. A project of con-
queft gave occafion to all the eftabliihments of the Spaniards in
thofe newly difcovered countries. The motive which excited them
to this conqueft v/as a project of gold and filver mines j and a
courfe of accidents, which no human wifdom could forefee, ren-
dered this project much more fuccefsful than the undertakers had
any reafonable grounds for expecting.

The

THE WEALTH OF NATIONS.

The firft adventurers of all the other nations of Europe, who C
attempted to make fettlements in America, were animated by the
like chimerical views ; but they were not equally fuccefsful. It was
more than a hundred years after the firft fettlement of the Brazils,
before any filver, gold, or diamond mines were difcovered there.
In the Englifh, French, Dutch and Danifli colonies, none have
ever yet been difcovered at leaft none that are at prefect fuppofed
to be worth the working. The firft Englifh fettlers in North
America, however, offered a fifth of all the gold and filver which
<fhould be found there, to the king as a motive for granting them
their patents. In the patents to Sir Walter Raleigh, to the I^on-
don and Plymouth companies, to the council of Plymouth, &c.
this fifth was accordingly refer ved to the crown. To the expecta-
tion of finding gold and filver mines, thole firft fettlers too joined
^that of difcovering a north weft paffage to the Eaft Indies. They
have hitherto been difappointed in both.

Part Second.

Caufcs of the prosperity of new colonics.

/TpH E colony of a civilized nation which takes poffeflion, either
of a wafte country, or of one fo thinly inhabited, that the
natives eafily give place to the new fettlers, advances more rapidly
to wealth and greatnefs than any other human fociety..

The colonifts carry out with them a knowledge of agriculture
and of other ufeful arts, fuperior to what can grow up of its own
accord in the courfe of many centuries among favage and barbarous
nations. They carry out with them too the habit of fubordination,.
iome notion of the regular government which takes place in their
own country, of the fyftem of laws which fupport it, and of a re-
gular admmiftration of juftice ; and they naturally eftabliih fome-
thing of the fame kind in the new fettlement. But among favage
8 and

,5* THE NATURE AND CAUSES OF

BOOK ,and barbarous nations, the natural progrefs of law and govern-
v^-y^j ment is ftill flower than the natural progrefs of arts, after law and
government have been fo far eftablifhed, as is neceflary for their pro-
tection. Every colonift gets more land than he can poftlbly cul-
tivate. He has no rent, and fcarce any taxes to pay. No landlord
fhares with him in its produce, and the fliare of the fovereign is
commonly but a trifle. He has every motive to render as great as
poflible a produce, which is thus to be almoft entirely his own.
But his land is commonly fo extenfive, that with all his own in-
duftry, and with all the induftry of other people whom he can get
to employ, he canfeldom make it produce the tenth part of what
it is capable of producing. He is eager, therefore, to collect la-
bourers from all quarters, and to reward them with the moll liberal
wages. But thole liberal wages, joined to the plenty and cheap-
nefs of land, foon make thofe labourers leave him in order to be-
come landlords themfelves, and to reward, with equal liberality,
other labourers, who foon leave them for the fame reafon that they
left their firft mailer. The liberal reward of labour encourages
marriage. The children during the tender years of infancy are
well fed and properly taken care of, and when they are grown up,
the value of their labour greatly over-pays their maintenance.
When arrived at maturity, the high price of labour, and the low
price of land, enable them to eitab'ifh themfelves in the fame man-
ner as their fathers did before them.

In other countries, rent and profit eat up wages, and the two
fupenor orders of people opprefs the inferior one. But in new co-
lonies, the intereft of the two fuperior orders obliges them to treat
the inferior one with more generofity and humanity ; at ler.ft, where
that inferior one is not in a ftate of flavery. Wade lands, of the
greaceft natural fertility, are to be had for a trifle. The increafe of
revenue which the proprietor, who is always the undertaker, ex-
pects

THE WEALTH OF NATIONS.

pects from their improvement, conftitutes his profit ; which in thefe C
circumftances is commonly very great. But this great profit cannot
be made without employing the labour of other people in clearing
and cultivating the land ; and the difproportion between the great
extent of the land and the fmall number of the people, which com-
monly takes place in new colonies, makes it difficult for him to get
this labour. He does not, therefore, difpute about wages, but is
willing to employ labour at any price. The high wages of labour
encourage population. The cheapnefs and plenty of good land
encourage improvement, and enable the proprietor to pay thofe high
wages. In thofe wages confifts almoft the whok price of the land;
and though they are high, confidered as the wages of labour, they
are low, confidered as the price of what is fo very valuable. What
encourages the progrefs of population and improvement, encou-
rages that of real wealth and greatnefs.

The progrefs of many of the antient Greek colonies towards
wealth and greatnefs, feems accordingly to have ,been very rapid.
In the courfe of a century or two, feveral of them appear to have
rivalled and even to have lurpafled their mother cities. Syracufe
and Aggrigentum in Sicily, Tarentum and Locri in Italy, Ephe-
fus and Miletus in lefTer Afia, appear by all accounts to have been*
at leaft, equal to any of the cities of antient Greece. Though po-
fteripr in their eftablimment, yet all the arts of refinement, philo-
fophy, poetry, and eloquence, feem to have been cultivated as early,
and to have been improved as highly in them, as in any part of the
mother country. The fchools of the two oldeft Greek philofo-
phers, thofe of Thales and Pythagoras, were eftablimed, it is re-
markable, not in antient Greece, but the one in. an Afiatick, the
other in an Italian colony. All thofe colonies had eftablL, ed them-
felves in countries inhabited by favage and barbarous nations, who
eafily gave place to the new fettlers. They had plenty of good land,
and as they were altogether independent of the mother city, they

were

160 THE NATURE AND CAUSES OF

BOOK vvere at liberty to manage their own affairs in the way that they
u—y-»~ » judged was moft fuitable to their own interert.

The hiftory of the Roman colonies is by no means fo bril-
liant. Some of them indeed, fuch as Florence, have in the
courfe of many ages, and after the fall of the mother city, grown
up to be confiderable ftates. But the progrefs of no one of them
feems ever to have been very rapid. They vvere a'l efhblhhed in
conquered provinces, which in molt, cafes had been fully inhabited
before. The quantity of land afligned to each coloniit was feidom
very confiderable, and as the colony was not independent, they were
not always at liberty to manage their own affairs in the way that
they judged was moll fuitable to their own intereft.

In the plenty of good land, the European colonies efrablimed in
America and the Weft-Indies refemble, and even greatly furpafs
thofeof antient Greece.' In their dependency upon the mother ftate,
they refemble thofe of antient Rome ; but their great diftance from
Europe has in all of them alleviated more or lefs the effects of this
dependency. Their fituation has placed them lefs in the view and
lefs in the power of their mother country. In purfuing their in-
tereit their own way, their conduct has, upon many occafions,
been over-looked, either becaufe not known or not underftood in
Europe; and upon fome occafions it has been fairly fuffered
and fubmitted to, becaufe their diftance rendered it difficult to
reftrain it. Even the violent and arbitrary government of Spain
has, upon many occafions, been obliged to recall or foften the
orders w;;ich had hptn given for the government of its colonies, for
fear of a general infurrection. The progrefs of all the European
colonies in wealth, population and improvement, has accordingly
been very great.

The

THE WEALTH OF NATIONS. l6l

The crown of Spain, by its fhare of the gold and filver, derived C H A P.
fome revenue from its colonies, from the moment of their nrft efta- v— -y-»J
blifhment. It was a revenue too, of a nature to excite in human
avidity the moft extravagant expectations of ftill greater riches.
The Spanifli colonies, therefore, from the moment of their nrft efta-
blifnment, attracted very much the attention of their mother coun-
try ; while thofe of the other European nations were for a long
time in a great meafure neglected. The former did not, perhaps,
thrive the better in confequence of this attention ; nor the latter the
worfe in confequence of this neglect. In proportion to the extent
of the country which they in fome meafure poflefs, the Spanifli co-
lonies are confidered as lefs populous and thriving than thofe of
almoft any other European nation. The progrefs even of the Spa-
nifli colonies, however, in population and improvement, has cer-
tainly been very rapid and very great. The city of Lima, founded
fmce the conqueft, is reprefented by Ulloa, as containing fifty
thoufand inhabitants near thirty years ago. Quito, which had
been but a miferable hamlet of Indians, is reprefented by the fame
author as in his time equally populous. Gemelli Carreri, a pre-
tended traveller, it is faid, indeed, but who feems every where
to have written upon extreme good information, reprefents the city
of Mexico as containing a hundred thoufand inhabitants ; a num-
ber which, in fpite of all the exaggerations of the Spanifli writers,
is, probably, more than five times greater than what it contained
in the time of Montezuma. Thefe numbers exceed greatly thofe of
Bolton, New York and Philadelphia, the three greater!: cities of the
Englifh colonies. Before the conqueft of the Spaniards there were
no cattle fit for draught, either in Mexico or Peru. The lama was
their only beaft of burden, and its ftiength feems to have been a
good deal inferior to that of a common afs. The plough was un-
known among them. They were ignorant of the ufe of iron. They
had no coined money, nor any eftabliftied inftrument of commerce
of any kind. Their commerce was carried on by barter. A fort

Vol. II. Y of

THE

NATURE AND

CAUSES

OF

BOOK of wooden fpade was their principal inftrument of agriculture,
Sharp ftones ferved them for knives and hatchets to cut with ; tifli
bones and the hard finews of certain animals ferved them for nee-
dles to few with ; and thefe feem to have been their principal inftru-
ments of trade. In this flate of things, it feems impoffible, that
either of thofe empires could have been fo much improved or fo well
cultivated as at prefent, when they are plentifully furniuhed with
all forts of European cattle, and when the ufe of iron, of the plough*
and of many of the arts of Europe, has been introduced among
them. But the populoufnefs of every country muft be in propor-
tion to the degree of its improvement and cultivation. In fpite of
the cruel deitruction of the natives which, followed the conqueft,
thele two great empires are, probably, more populous now than
they ever were before, and the people are furely very different
for we muft acknowledge, I apprehend, that the Spanifh Creoles are.
in many refpects fuperior to the antient Indians.

After the fettlements of the Spaniards, that of the Portugueze
in Brazil is the oldeft of any European nation in America. But as
for a long time after the firft difcovery, neither gold nor filver mines
were found in it, and as it afforded, upon that account, little cr
no revenue to the crown,, it was for a long time in a great meafure
neglected ; and during this ft ate of neglect, it grew up to be a great
and powerful colony. While Portugal was under the dominion of
Spain, Brazil was attacked by the Dutch, who got poflerfion of
feven of the fourteen provinces into which it is divided. They
expected foon to conquer the other feven, when Portugal recovered
its independency by the elevation of the family of Braganza to the
throne. The Dutch then, as enemies to the Spaniards, became
friends to the Portugueze, who were likewife the enemies of the
Spaniards. They agreed, therefore, to leave that part of Brazil,
which they had not conquered, to the king of Portugal, who agreed
to leave that part which they had conquered to them, as a matter
8 not

THE WEALTH OF NATIONS. 16

not worth difputing about with fuch good allies. But the Dutch CHAP,
government foon began to opprefs the Portugueze colonifls, who, u--v--— 1
inftead of amufmg themfelves with complaints, took arms againft
their new matters, and by their own valour and refolution, with the
connivance indeed, but without any avowed affiltance from the
mother country, drove them out of Brazil. The Dutch, therefore>
finding it impoflible to keep any part of the country to themfelves,
were contented that it lhould be entirely reftored to the crown of
Portugal. In this colony there are faid to be more than fix hun-
dred thoufand people, either Portugueze or defcended from Portu-
gueze, Creoles, mulattoes, and a mixed race between Portugueze and
Brazilians. No one colony in America is fuppofed to contain fo
great a number of people of European extraction.

Towards the end of the fifteenth, and during the greater part of
the fixteenth century, Spain and Portugal were the two great naval
powers upon the ocean ; for though the commerce of Venice ex-
tended to every part of Europe, its fleets had fcarce ever failed be-
yond the Mediterranean. The Spaniards, in virtue of the . firil
difcovery, claimed all America as their own and though they
could not hinder fo great a naval power as that of Portugal from fet-
tling in Brazil, fuch was, at that time, the terror of their name,
that the greater part of the other nations of Europe were afraid to
eftablifli themfelves in any other part of that great continent. The
French, who attempted to fettle in Florida, were all murdered by
the Spaniards. But the declenfion of the naval power of this latter
nation, in confequence of the defeat or mifcarriage of, what they
called their Invincible Armada, which happened towards the end of
the fixteenth century, put it out of their power to obftruct. any lon-
ger the fettiemento of the other European nations. In the courfe
of the feventeenth century, therefore, the Englim, French, Dutch,
Danes and Swedes, all the great nations who had any ports upon
the ocean, attempted to make fome fettlements in the new world.

Y 2 The

THE NATURE AND CAUSES OF

The Swedes eftablifhed themfclves in New Jerfey ; and the number
of Swedifh families ftill to be found there, fufficientiy demonftrates*
that this colony was very likely to profper, had it been protected
by the mother country. But being neglected by Sweden, it was foon
fwallowed up by the Dutch colony of New York, which again in
1674, fell under the dominion of the Englifh.

The fmall iflands of St. Thomas and Santa Cruz are the only
countries in the new world that have ever been poiTeffed by the
Danes. Thefe little fettlements too were under the government of
an exclufive company, which had the fole right, both of purchafing
the furplus produce of the colonifts, and of fupplying them with
fuch goods of other countries as they wanted, and which, therefore,
both in its purchafes and fales, had not only the power of opprefling
them, but the greateft temptation to do fo. The government of ari
exclufive company of merchants is, perhaps, the worft of all govern-
ments for any country whatever. It was not, however, able to
ftop altogether the progrefs of thefe colonies, though it rendered it
more flow and languid. The late king of Denmark diflblved this
company, and iince that time the profperity of thefe colonies has
been very great.

The Dutch fettlements in the Weft, as well as thofe in the Eaft
Indies, were originally put under the government of an exclufive
company. The progrefs of fome of them, therefore, though it
has been confiderable, in comparifon with that of almoft any coun-
try that has been long peopled and eftablifhed, has been languid
and flow in comparifon with that of the greater part of new
colonies. The colony of Surinam, though very confiderable, is
ftill inferior to the greater part of the fugar colonies of the other
European nations. The colony of Nova Belgia, now divided
into the two provinces of New York and New Jerfey, would pro-
bably have foon become confiderable too, even though it had re-
mained

THE WEALTH OF NATIONS. 265

mainecl under the government of the Dutch. The plenty and CyII^p*
cheapnefs of good land are fuch powerful caufes of profperity, that u-y-^J
the very worft government is fcarce capable of checking altogether
the efficacy of their operation. The great diftance too from the
mother country would enable the colonifts to evade more or lefs by
fmuggling the monopoly which the company enjoyed againii them.
At prefent the company allows all Dutch fhips to trade to Surinam
upon paying two and- a half per cent, upon the value of their cargo
for a licence and only referves to itfelf exclufively the direct trade
from Africa to America, which confifts almoft entirely in the flave
trade. This relaxation in the exclufive privileges of the company,
is probably the principal caufe of that degree of profperity which
that colony at prefent enjoys. Curacoa and Euftatia, the two
principal iflands belonging to the Dutch, are free ports open to
the fhips of all nations ; and this freedom, in the midft of better
colonies whofe ports are open to thofe of one nation only, has
been the great caufe of the profperity of thofe two barren iilands.

The French colony of Canada was, during the greater part of
the laft century, and fome part of the prefent, under the govern-
ment of an exclufive company. Under fo unfavourable an admi-
nistration its progrefs was necefTarily very flow in comparifon with
that of other new colonies ; but it became much more rapid when
this company was diflblved after the fall of what is called the Mifiifiipi
fcheme. When the Enghfh got pofTeffion of this country, they found
in it near double the number of inhabitants which father Char-
levoix had affigned to it between twenty and thirty years before.
That jefuit had travelled over the whole country, and had no in-
clination to reprefent it as lefs confiderable than it really was.

The French colony of St. Domingo was eftablimed by pirates
and free-booters, who, for a long time, neither required the pro-

1 tection5

,64 THE NATURE AND CAUSES OF

BOOK tection, nor acknowledged the authority of France ; and when the
<.J^u race of banditti became fo far citizens as to acknowledge this au-
thority, it was for a long time neceflary to exercife it with very
great gentlenefs. During this period the population and improve-
ment of this colony encreafed very faft. Even the oppreflion of
the exclufive company to which it was for fome time fubjec~red, with
all the other colonies of France, though it no doubt retarded, had
not been able to flop its progrefs altogether. The courfe of its
profperity returned as foon as it was relieved from that oppreflion.
It is now the moft important of the fugar colonies of the Weft
Indies, and its produce is faid to be greater than that of all the
Englifh fugar colonies put together. The other fugar colonies of
France are in general all very thriving,
i

But there are no colonies of which the progrefs has been more
rapid than that of the Englifh in North America.

*' -tO. fifi'il 1 13VilfiSJXSl t VlliJ lOi t*riti3jil£l.; ^flQltfiflSJlfi 33i£}luOJst

Plenty of good land, and liberty to manage their own affairs
their own way, feem to be the two great caufes of the profperity
of all new colonies.

In the plenty of good land the Englifh colonies of North Ame-
rica, though, no doubt, very abundantly provided, are, however, in-
ferior to thofe of the Spaniards and Portugueze, and not fuperior to
fome of thofe pofTefTed by the French before the late war. But the
political inftitutions of the Englifh colonies have been more favour-
able to the improvement and cultivation of this land, than thofe
pf any of the other three nations.

First, the engroffing of uncultivated land, though it has by no
means been prevented altogether, has been more reftrained in the
Englifh colonies than in any other. The colony law which im-

pofes

THE WEALTH OF NATIONS. ' t6j

pofes upon every proprietor the obligation of improving and culti- C HA P.
vating, within a limited time, a certain proportion of his lands, and u^v~?
which, in cafe of failure, declares thofe negle&ed lands gran table
to any other perfon •, though it has not, perhaps, been very ftriclly
executed, has, however, had fome effec-1.

Secondly, in Penfylvania there is no right of primogeniture,
and lands, like moveables, are divided equally among all the chil-
dren of the family. In three of the provinces of New England
the oldeft has only a double fhare, as in the Mofaical law. Though
in thofe provinces, therefore, too great a quantity of land mould
fometimes be engrorfed by a particular individual,, it is. likely, in
the courfe of a generation or two, to be fufficiently divided again*
In the other Englifli colonies, indeed, the right of primogeniture
takes place, as in the law of England. But in all the Englifh co-
jonies the tenure of their lands, which are all held by free focage,
facilitates alienation, and the grantee of any extenfive tract of
land generally finds it for his intereft to alienate, as faft as he
can, the greater part of it, referving only a frnall quit- rent. In the
Spanifh and Portugueze colonies, what is called the right of Mayo-
razzo * takes place in the fucceflion- of all thofe great eflates to
which any title of honour is annexed.. Such eflates go all to one
perfon, and are in effect entailed and unalienable. The French
colonies, indeed, are fubjecx to the cuitom of Paris, which, in the
inheritance of land, is much more favourable to the younger chil-
dren than the law of England. But, in the French colonies, if
any part of an eftate, held by the noble tenure of chivalry and
homage, is alienated, it is,, for a limited time, fubject to the right of
redemption, either by the heir of the fuperior or by the heir of
the family ; and all the larger! eftates of the country are held by
fuch noble tenures, which neceffarily embarrafs alienation. But,
in a new colony, a great uncultivated eftate is likely to be much

more

* Jus Mayoratus,.

THE NATURE AND CAUSES OF

more fpeedily divided by alienation than by fucceffion. The engroff-
ing, however, of uncultivated land, it has already been obferved,
is the greater! obftruction to its improvement and cultivation ; and
the labour that is employed in the improvement and cultivation of
land, affords the greater!: and moll valuable produce to the fociety.
Its produce, in this cafe, pays not only its own wages, and the
profit of the flock which employs it, but the rent of the land too
upon which it is employed. The labour of the Englifh colonifis,
therefore, being more employed in the improvement and cultiva-
tion of land, is likely to afford a greater and more valuable pro-
duce than that of any of the other three nations, which, by the
engroffing of land, is more or lefs diverted towards other employ-
ments.

Thirdly, the labour of the Englifh colonifis is not only likely to
afford a greater and more valuable produce, but, in confequence of
the moderation of their taxes, a greater proportion of this produce
belongs to themfelves, which they may flore up and employ in put-
ting into motion a fiill greater quantity of labour. The Englifh
colonifis have never yet contributed any thing towards the defence
of the mother country, or towards the fupport of its civil govern-
ment. They themfelves, on the contrary, have hitherto been de-
fended almoft entirely at the expence of the mother country. But
the expence of fleets and armies is out of all proportion greater than
the neceffary expence of civil government. The expence of their
own civil government has always been very moderate. It has gene-
rally been confined to what was neceffary for paying competent
falaries to the governor, to the judges, and to fome other officers of
police, and for maintaining a few of the moll ufeful publick
works. The expence of the civil eftabliihment of Maflachufcts
Bay, before the commencement of the prefent difturbances, ufed to
be but about i8,oool. a year. That of New Hampfhire and

Rhode

THE WEALTH OF NATIONS.

Rhode I (land 3,5001. each. That of Connecticut 4,0001. That c^^p*
of New York and Penfilvania 4,5001. each. That of New Jerfey v—-
1,200 1. That of Virginia and South Carolina 8,000 1. each. The
civil eftablifhment of Nova Scotia and Georgia are partly fupported
by an annual grant of parliament. But Nova Scotia pays, be-
fides, about 7,000!. a year towards the publick expences of the
colony ; and Georgia about 2,qool. 3 year. All the different
civil eftablifliments in North America, in fhort, exclufive of thofe
of Maryland and North Carolina, of which no exact account has
been got, did not, before the commencement of the prefent distur-
bances, cofl the inhabitants above 64,7001. a year j an ever me-
morable example at how fmall an expence three millions of people
may not only be governed, but well governed. The mod impor-
tant part of the expence of government, indeed, that of defence
and protection, has conftantly fallen upon the mother country..
The ceremonial too of the civil government in the colonies, upon
the reception of a new governor, upon the opening of a new
afTembly, &c. though fufficiently decent, is not accompanied with
any expenfive pomp or parade. Their ecclefiaftical government is
conducted upon a plan equally frugal. Tithes are unknown among
them ; and their clergy, who are far from being numerous, are
maintained either by moderate Stipends, or by the. voluntary contri-
butions of the people. The power of Spain and Portugal, on the
contrary, derives fome fupport from the taxes levied upon their colo-
nies. France, indeed, has never drawn any considerable revenue
from its colonies, the taxes which it levies upon them being gene-
rally fpent among them. But the colony government of all thefe
three nations is conducted upon a much more expenfive plan, and is >
accompanied with a much more expenfive ceremonial. The lums
fpent upon the reception of a new viceroy of Peru, for example,,
have frequently been enormous. Such ceremonials are not only
real taxes paid by the rich colonifts upon thofe particular occafions, ,
Vol. II. Z but.

THE NATURE AND CAUSES OF

but they ferve to introduce among them the habit of vanity and
expence upon all other occafions. They are not only very grievous
occafional taxes, but they contribute to eftablifh perpetual taxes of
the fame kind ftill more grievous ; the ruinous taxes of private
luxury and extravagance. In the colonies of all thofe three nations
too the ecclefiaftical government is extremely oppreflive. Tithes
take place in all of them, and are levied with the utmoft rigour in
thofe of Spain and Portugal. All of them befides are oppreffed
with a numerous race of mendicant friars, whofe beggary being
not only licenfed, but confecrated by religion, is a raoft grievous
tax upon the poor people^ who are moft carefully taught that it is
a duty to give, and a very great fin to refufe them their charity.
Over and above all this the clergy are, in all of them, the greateft
engroffers of land.

Fourthly, in the difpofal of their furplus produce, or of what
is over and above their own confumption, the Englifh colonies have
been more favoured, and have been allowed a more extenfive mar-
ket than thofe of any other European nation. Every European
nation has endeavoured more or lefs to monopolize to itfelf the
commerce of its colonies, and, upon that account, has prohibited
the mips of foreign nations from trading to them, and has pro-
hibited them from importing European goods from any foreign
nation. But the manner in which this monopoly has been exercifed
in different nations has been very different.

Some nations have given up the whole commerce of their colo-
nies to an exclufive company, of whom the colonilts were obliged
to buy all fuch European goods as they wanted, and to whom they
were obliged to fell the whole of their own furplus produce. It
was the intereft of the company, therefore, not only to fell the for-
mer as dear, and to buy the latter as cheap as poITible, but to buy

no

THE WEALTH OF NATIONS.

no more of the latter, even at this low price, than what they C
could difpofe of for a very high price in Europe. It was their
intereft, not only to degrade in all cafes the value of the furplus
produce of the colony, but in many cafes to difcourage and keep
down the natural increafe of its quantity. Of all the expedients
that can well be contrived to ftunt the natural growth of a new
colony, that of an exclufive company is undoubtedly the moft
effectual. This, however, has been the policy of Holland, though
their company in the courfe of the prefent century, has given
up in many refpects the exertion of their exclufive privilege. This-
too was the policy of Denmark till the reign of the late king.
It has occafionally been the policy of France, and of late, fince
1755, after it had been abandoned by all other nations, on ac-
count of its abfurdity, it has become the policy of Portugal with
regard at leafl to two of the principal provinces of Brazil, Fer-
numbuco and Marannon.

Other nations, without eftablifhing an exclufive company,
have confined the whole commerce of their colonies to a parti-
cular port of the mother country, from whence no fhip was
allowed to fail, but either in a fleet and at a particular feafon, or,
if fingle, in confequence of a particular licence, which in moft
cafes was very well paid for. This policy opened, indeed, the
trade of the colonies to all the natives of the mother country,
provided they traded from the proper port, at the proper feafon
and in the proper vefTels. But as all the different merchants, who
joined their fto.clts in order to fit out thofe licenfed vefTels, would
find it for their intereft to act in concert, the trade which was
carried on in this manner would necefTarily be conducted very
nearly upon the fame principles as that of an exclufive company.
The profit of thofe merchants would be almoft equally exorbi-
tant and oppreffive. The colonies would be ill fupplied, and

Z 2. would

,7a THE NATURE AND CAUSES OF

BOOK would be obliged both to buy very dear, and to fell very cheap. This,
i^J^L^j however, has always been the policy of Spain, and the price of
all European goods, accordingly, is faid to be enormous in the
Spanifh Weft Indies. At Quito, we are told by Ulloa, a pound
of iron fells for about four and fixpence, and a pound of fteel for
about fix and nine-pence fterling. But it is chiefly in order to
purchafe European goods, that the colonies part with their own
produce. The more, therefore, they pay for the one, the Ids
they really get for the other, and the dearnefs of the one is the
fame thing with the cheapnefs of the other. The policy of Por-
tugal is in this refpecl the fame as that of Spain, with regard to
all its colonies, except Fernambuco and Marannon, and with
regard to thefe it has lately adopted a ftill worfe.

Other nations leave the trade of their colonies free to all
their fubjecls who may carry it on from all the different ports of
the mother country, and who have occafion for no other licence
than the common difpatches of the cuftomhoufe. In this cafe
the number and difperfed fituation of the different traders ren-
ders it impolfible for them to enter into any general combination*
and their competition is fufficient to hinder them from making
very exorbitant profits. Under fb liberal a policy the colonies
are enabled both to fell their own produce and to buy the goods of
Europe at a reafonable price. But fince the dilfolution of the
Plymouth company, when our colonies were but in their in-
fancy, this has always been the policy of England. It has ge-
nerally too been that of France, and it has been uniformly fo fince
the dilfolution of what, in England, is commonly called their Mifli-
fippi company. The profits of the trade therefore which France
and England carry on with their colonies, though no doubt
fomewhat higher than if the competition was free to all other
nations, are, however, by no means exorbitant; and then rice of
European goods accordingly is not extravagantly high in the
greater part of the colonies of either of thofe nations.

In

THE WEALTH OF NATIONS.

In the exportation of their own furplus produce too it is only c
with regard to certain commodities that the colonies of Great Bri-
tain are confined to the market of the mother country. Thefe
commodities having been enumerated in the Act of navigation and
in fome other fubfequent acls, have upon that account been called
enumerated commodities. The reft are called non - enumerated
and may be" exported directly to other countries, provided it is in
Britifh or Plantation mips of which the owners and three-fourths
of the mariners are Britifh fubjecls.

Among the non-enumerated commodities are fome of the moft
important productions of America and the Weft Indies; grain of
all forts, lumber, fait provifions, fifh, fugar, and rum.

Grain is naturally the firft and principal object of the cul-
ture of all new colonies. By allowing them a very extenfive
market for it, the law encourages them to extend this culture
much beyond the confumption of a thinly inhabited country,
and thus to provide beforehand an ample fubfiftence for a con-
tinually increafmg population.

In a country quite covered with wood, where timber con-
fequently is of little or no value, the expence of clearing the
ground is the principal obftacle to improvement. By allowing
the colonies a very extenfive market for their lumber, the law
endeavours to facilitate improvement by raifing the price of a
commodity which would otherwife be of little value, and thereby
enabling them to make fome profit of what would otherwife be
meer expence.

In a country neither half peopled nor half cultivated, cattle
naturally multiply beyond the confumption of the inhabitants,
and are often upon that account of little or no value. But it is

iiecefTary9

\

74 THE NATURE AND CAUSES OF

BOOK neceffary, it has already been fhewn, that the price of cattle mould
u-i^— i bear a certain proportion to that of corn before the greater part
of the lands of any country can be improved. By allowing to
American cattle, in all fhapes, dead and alive, a very extenhve
market, the law endeavotirs to raife the value of a commodity of
which the high price is fo very effential to improvement. The
good effects of this liberty, however, muff be fomewhat diminifti-
ed by the 4th of George III. c. 15. which puts hides and fkins
among the enumerated commodities, and thereby tends to reduce
the value of American cattle.

To increafe the fhipping and naval power of Great Britain, by
the extenfion of the fifheries of our colonies, is an object which the
legiflature feems to have had almoft conftantly in view. Thofe
filheries, upon this account, have had all the encouragement which
freedom can give them, and they have flourifhed accordingly. The
New-England fifhery in particular was, before the late diftur-
bances, one of the mod important, perhaps, in the world. The
whale-fifhery which, notwithstanding an extravagant bounty, is in
Great Britain carried on to fo little purpofe, that in the opinion of
many people (which I do not, however, pretend to warrant) the
whole produce does not much exceed the value of the bounties
which are annually paid for it, is in New England carried on
without any bounty to a very great extent. Fifh is one of the
principal articles with which the North Americans trade to Spain,
Portugal and the Mediterranean..

Sugar was originally an enumerated commodity which could be
exported only to Great Britain. But in 173 1, upon a reprefenta-
tion of the fugar planters, its exportation was permitted to all parts
of the world. The reftrictions, however, with which this liberty
was granted, joined to the high price of fugar in Great Britain,
have rendered it, in a great meafure, ineffectual. Great Britain

9 and

THE WEALTH

OF

NATIONS

»75

and her colonies, (till continue to be almoft the fole market for all C HA p.
the fugar produced in the Britifh plantations. Their confumption u ■■ » —*«J
increafes.fo faft that, though in confequence of the increafing im-
provement of Jamaica as well as of the ceded iflands, the importation
of fugar has increafed very greatly within thefe twenty years, the
exportation to foreign countries is faid to be not much greater
than before.

Rum is a very important article in the trade which the Americans
carry on to the coaft of Africa, from which they bring back negroe
flaves in return.

If the whole furplus produce of America in grain of all forts,
in fait provifions and in fifh, had been put into the enumeration,
and thereby forced into the market of Great Britain, it would
have interfered too much with the produce "of the induftry of our
own people. It was probably not fo much from any regard to
the intereft of America, as from a jealoufy of this interference,
that thofe important commodities have not only been kept out of
the enumeration, but that the importation into Great Britain of all
grain, except rice, and of fait provifions has, in the ordinary ftate
of the law, been prohibited.

The non-enumerated commodities could originally be exported
to all parts of the world. Lumber and rice, having been once
put into the enumeration, when they were afterwards taken out
of it, were confined, as to the European market, to the countries
that lie fouth of Cape Finifterre. By the 6th of George III. c. 52.
all non-enumerated commodities were fubjected to the like re-
ftriclion. The parts of Europe which lie fouth of Cape Finifterre,
are not manufacturing countries, and we were lefs jealous of the
colony mips carrying home from them any manufactures which
could interfere with our own.

, The

THE NATURE AND CAUSES OF

The enumerated commodities are of two forts : firft, fuch as-
are either the peculiar produce of America, or as cannot be pro-
duced, or at leaft are not produced in the mother country. Of
this kind are melaffes, coffee, cacao-nuts, tobacco, pimento,
ginger, whale-fins, raw filk, cotton-wool, beaver, and other
peltry of America, indigo, fuftick, and other dying woods : fe-
condly, fuch as are not the peculiar produce of America, but
which are and may be produced in the mother country, though
not in fuch quantities as to fupply the greater part of her demand,
which is principally fupplied from foreign countries. Of this kind
are all naval ftores, malts, yards, and bowfprits, tar, pitch, and
turpentine, pig and bar iron, copper ore, hides and fkins, pot and
pearl afhes. The largeh; importation of commodities of the firft
kind could not difcourage the growth or interfere with the fale of
any part of the produce of the mother country. By confining
them to the home market, our merchants, it was expected, would
not only be enabled to buy them cheaper in the plantations, and
confequently to fell them with a better profit at home, but to
eftablifh between the plantations and foreign countries an advan-
tageous carrying trade, of which Great Britain was neceffarily to
be the center or emporium, as the European country into which
thofe commodities were firft to be imported. The importation
of commodities of the fecond kind might be fo managed too, it
was fuppofed, as to interfere, not with the fale of thofe of the
fame kind which were produced at home, but with that of thofe
which were imported from foreign countries ; becaufe, by means
of proper duties, they might be rendered always fomewhat dearer
than the former, and yet a good deal cheaper than the latter.
By confining fuch commodities to the home market, therefore, it
was. propofed to difcourage the produce, not of Great Britain,
but of fome foreign countries with which the balance of trade
was believed to be unfavourable to Great Britain.

8 The

THE WEALTH OF NATIONS

J77

The prohibition of exporting from the colonies, to any other ^'y^1*'
country but Great Britain, mails, yards, and bowfprits, tar,
pitch, and turpentine, naturally tended to lower the price of
timber in the colonies, and confequently to increafe the expence
of clearing their lands, the principal obftacle to their improve-
ment. But about the beginning of the prefent century, in 1703,
the pitch and tar company of Sweden endeavoured to raife the
price of their commodities to Great Britain, by prohibiting their
exportation, except in their own mips, at their own price, and in
fuch quantities as they thought proper. In order to counteract this
notable piece of mercantile policy, and to render herfelf as much as
pofnble independent4, not only^of Sweden, but of all the other northern
powers, Great Britain gave a bounty upon the importation of naval
ftores from America, and the effect of this bounty was to raife
the price of timber in America, much more than the confinement
to the home market could lower it ; and as both regulations were
enacted at the fame time, their joint effect was rather to encourage
than to difcourage the clearing of land in America.

Though pig and bar iron too have been put among the enu-
merated commodities, yet as, when imported from America, they
are exempted from confiderable duties to which they are fubject
when imported from any other country, the one part of the regu-
lation contributes more to encourage the erection of furnaces in
America, than the other to difcourage it. There is no manufacture
which occafions fo great a confumption of wood as a furnace, or
which can contribute fo much to the clearing of a country overgrown
with it.

The tendency of fome of thefe regulations to raife the value of
timber in America, and, thereby, to facilitate the clearing of
the land, was neither, perhaps, intended nor underftood by

Vol. II. A a the

,7g THE NATURE AND CAUSES OF

BOOK the legiflature. Though their beneficial effects, however, have
u — been in this refpect accidental, they have not upon that account
been kfs real.

imfatlB ^nivfib \d usguVio x^^'^"
The moft perfect freedom of trade is permitted between the
Britifli colonies of America and the Weft Indies, both in the enume-
rated and in the non-enumerated commodities. Thofe colonies
are now become fo populous and thriving, that each of them finds
in fome of the others a great and extenfive market for every pare of
its produce. All of them taken together, they make a great internal
market for the produce of one another.

The liberality of England, however, towards the trade of her
colonies has been confined chiefly to what concerns the market for
their produce, either in its rude ftate, or in what may be called the
very firft ftage of manufacture. The more advanced or more
refined manufactures even of the colony produce, the merchants
and manufacturers of Great Britain chufe to referve to themfelves,
and have prevailed upon the legiflature to prevent their eftablifh-
ment in the colonies, fometimes by high duties, and fometimes by
abfolute prohibitions.

While, for example, Mulkovado fugars from the Britifh plan-
tations, pay upon importation only 6s. 4.6. the hundred weight;
white fugars pay 1 1. is. id.; and refined, either double or fingle,
in loaves 4I. 2s. $d. &l When thofe high duties were impofed,
Great Britain was the fole, and fhe frill continues to be the principal
market to which the fugars of the Britifh colonies could be exported.
They amounted, therefore, to a prohibition, at firft of claying or refin-
ing fugar for any foreign market, and at prefent of claying or refining it
for the market, which takes off, perhaps, more than nine-tenths of the
whole produce. The manufacture of claying or refining fugar accord-
ingly,

THE

WEALTH

OF NATIONS.

179

ingly, though it has flourifhed in all the fugar colonies of France, has c H>- J ffi
been little cultivated in any of thofe of England, except for the market v-— *
of the colonies themfelves. While Grenada was in the hands of the
French, there was a refinery of fugar by claying, at leaft, upon almoft
every plantation. Since it fell into thofe of the Englifh, almcfl all
works of this kind have been given up, and there are at prefent,
October 1773, I am affured, not above two or three remaining in
the ifland. At prefent, however, by an indulgence of the cuftom-
houfe, clayed or refined fugar, if reduced from loaves into powder,
is commonly imported as Mufkovado.

While Great Britain encourages in America the manufactures of
pig and bar iron, by exempting them from duties to which the like
commodities are fubject when imported from any other country, fhe
impofes an abfolute prohibition upon the erection of fteel furnaces
and flit-mills in any of her American plantations. She will not
fuffer her colonifts to work in thofe more refined manufactures even
for their own confumption j but infifts upon their purchaflng of
her merchants and manufacturers all goods of this kind which they
have occafion for.

She prohibits the exportation from one province to another by
water, and even the carriage by land upon horfe-back or in a cart,
of hats, of wools and woollen goods, of the produce of America ;
a regulation which effectually prevents the eftablifhment of any
manufacture of fuch commodities for diftant fale, and confines the
induftry of her colonifts in this way to fuch coarfe and houfhold
manufactures, as a private family commonly makes for its own ufe,
or for that of fome of its neighbours in the fame province.

To prohibit a great people, however, from making all that they
can of every part of their own produce, or from employing their frock

A a 2 and

THE NATURE AND CAUSES OF

B OO K and induftry in the way that they judge moft advantageous to them-
u— v^— » felves, is a manifeft violation of the moft facred rights of mankind,
Unjuft, however, as fuch prohibitions may be, they have not hitherto
been very hurtful to the colonies. Land is ftill fo cheap, and,
confequently, labour fo dear among them, that they can import
from the mother country,, almoft all the more refined or more,
advanced manufactures cheaper than they could make them for
themfelves. Though they had not, therefore, been prohibited from-
eftablifhing fuch manufactures, yet in their prefent ftate of improve-
ment, a regard to their own intereft would, probably, have pre-
vented them from doing fo. In their prefent ftate of improvement,
thofe prohibitions, perhaps, without cramping their induftry, . or
reftraining it from any employment to which it would have gone of
its own accord, are only impertinent badges of flavery impofed
upon them, without any fufficient reafon, by the groundlefs jealouiy:
of the merchants and manufacturers of the mother country. In a
more advanced ftate they might be really oppreflive and infup-
portable,

TtflufoxS SnVilsh^ri oJ'fcatatftbs gr lived fusfrtd' ?B3*i^ bri£ * zanjnjjo;?

Great Britain too, as me confines to her own market fome of
the moft important productions of the colonies, fo in compenfation
me gives to fome of them an advantage in that market ; fometimes
by impofing higher duties upon the like productions when imported
from other countries, and fometimes by giving bounties upon their
importation from the colonies. In the firft way fhe gives an advan-
tage in the home market to the fugar, tobacco and iron of her own
colonies, and in the fecond, to their raw filk, to their hemp and
flax, to their indigo, to their naval ftores, and to their building
timber. This fecond way of encouraging the colony produce by
bounties upon importation, is, fo far as I have been able to learn,
peculiar to Great Britain. The firft is not. Portugal does not
content herfelf with impofing higher duties upon the importation of

tobacco

THE WEALTH OF NATIONS 181

tobacco from any other country, but prohibits it under the fevered c ^ p*
penalties. ora sdt }o aohzl v— — ^

ohsriiid ton'svisrl prh ^d.^Bm. gnotfidirloiq dssft tfavaWbii tfiujrf J
With regard to *he importation of goods from Europe, England
has likewife dealt more liberally with her colonies than any other nation.'

i>"lOfH ^O -)l»**7.*)i SlO/Tl 3fU -lifi JjOfnlB ^YljfiL'Oti "ISflJOtn 3X11 TUCi*

Great Britain allows a part, almoft always the half, generally
a larger portion, and fometimes the whole of the duty which
is paid upon the importation of foreign goods, to be drawn
back upon their exportation to any foreign country. No inde-.
pendent foreign country, it was eafy to forefee, would receive
them if they came- to it loaded with the heavy duties to which,
almoft all foreign goods are fubjected on their importation into-
Great Britain. Unlefs, therefore, fome part of thofe duties was
drawn back upon exportation, there was an end of the carrying
trade; a trade fo much favoured by the mercantile fyftem..

-qiilnj brifi avSbiqqfe /<i.W# r&ifyfi^brtri* \i#'Jtwh& tnom
Our- colonies, however, are by no means independent foreign
countries ; and Great Britain having affumed to herfelf the exclufive
right of fupplying them with all goods from Europe, might have
forced them (in the fame manner as other countries have done their
colonies) to receive fuch goods, loaded with all the fame duties
which they paid in the mother country. But, on the contrary,
till 1763, the fame drawbacks were paid upon the exportation of the
greater part of foreign .goods to our colonies as to any independent
foreign country. In 1763, indeed, by the 4th of George 1 1 Id,
c. 15. this indulgence was. a good deal abated, and it was enacted,
«« That no part of the duty called the old fubfidy fhould be drawn
" back for any goods of the growth, production, or manufacture
** of Europe or the Eaft Indies, which fhould be exported from
*« this kingdom to any Britifh colony or plantation in America ;
tf wines, white cailicoes and muflins excepted." Before this law*
many different forts of foreign goods might have been bought

4 cheaper

,B2 THE NATURE AND CAUSES OF

a a w ri s-.AAt» e ft^d perl hiil vlflo/nrnot) si ii fiifiJiiS l£3iO 3iufo£WnBrn
B OO K cheaper in the plantations than in the mother country j and fome

v-^« J may ftill.

Of the greater part of the regulations concerning the colony
trade, the merchants who carry it on, it muft be obferved, have
been the principal advifers. We muft not wonder, therefore,
if in the greater part of them, their intereft has been more
confidered than either that of the colonies or that of the mother
country. In their exclufive privilege of fupplying the colonies with
all the goods which they wanted from Europe, and of purchafing
all fuch parts of their furplus produce as could not interfere with
any of the trades which they themfelves carried on at home, the
intereft of the colonies was facrificed to the intereft of thofe merchants.
In allowing the fame drawbacks upon the re-exportation of the
greater part of European and Eaft India goods to the colonies,
as upon their re-exportation to any independent country, the
intereft of the mother country was facrificed to it, even according to
the mercantile ideas of that intereft. It was for the intereft of the
merchants to pay as little as poflible, for the foreign goods which
they fent to the colonies, and, confequently, to get back as much as
poflible of the duties which they advanced upon their importation
into Great Britain. They might thereby be enabled to lell in the
colonies, either the fame quantity of goods with a greater profit, or
a greater quantity with the fame profit, and, confequently, to gain
fomething either in the one way or the other. It was, likewife, for
the intereft of the colonies to get all fuch goods as cheap and in as
great abundance as poflible. But this might not always be for the
intereft of the mother country. She might frequently fuffer both
in her revenue, by giving back a great part of the duties which had
been paid upon the importation of fuch goods and in her manu-
factures, by being underfold in the colony market, in confequence of
the eafy terms upon which foreign manufactures could be carried
thither by means of thofe drawbacks. The progrefs of the linen
8 manufacture

THE WEALTH OF NATIONS, 18

manufacture of Great Britain, it is commonly faid, has been a good CHAP,
deal retarded by the drawbacks upon the re-exportation of German l ,j
linen to the American colonies.

But though the policy of Great Britain with regard to the trade
of her colonies has been dictated by the fame mercantile fpirit as
that of other nations, it has, however, upon the whole, been lefs
illiberal and opprefllve than that of any of them.

In every thing, except their foreign trade, the liberty of the Englifli
colonifts to manage their own affairs their own way is com pleat.
It is in every refpect equal to that of their fellow citizens at home,
and is fecured in the fame manner, by an affembly of the reprefen-
tatives of the people, who claim the fole right of impofing taxes for
the fupport of the colony government. The authority of this
affembly over-awes the executive power, and neither the meaner!:
nor the moft obnoxious colonifl, as long as he obeys the law, has
any thing to fear from the refentment either of the governour or
of any other civil or military officer in the province. The colony
afTembiies, though, like the houfe of commons in England, they
are not always a very equal reprefentation of the people, yet as
the executive power either has not the means to corrupt them, or,
on account of the fupport which it receives from the mother
country, is not under the neceflity of doing fo, they are perhaps
in general more influenced by the inclinations of their confti-
tuents. The councils, which, in the colony legislatures, corre-
fpond to the Houfe of Lords in Great Britain, are not compofed
of an hereditary nobility. In fome of the colonies, as in three
of the governments of New England, thofe councils are not
appointed by the king, but chofen by the reprefentatives of the
people. In none of the Englifh colonies is there any hereditary
nobility. In all of them, indeed, as in all other free countries, the
defendant of an old colony family is more refpecled than an upftart

or

,x84 THE NATURE AND CAUSES OF

BOOK of equal merit and fortune : but he is only more refpected, and
t__ ^y~, j he has no privileges by which he can be troublefome to his neigh-
bours. Before the commencement of the prefent difturbances, the
colony affemblies had not only the legiilative, but a part of the
executive power. In Connecticut and Rhode illand, they elected
the governor. In the other colonies they appointed the revenue
officers who -collected the taxes impofed by thofe refpective alfemblies,
to whom thofe officers were immediately refponlible. There is more
equality, therefore, among theEnglifh colonifts than among the inha-
bitants of the mother country. Their manners are more republican,
and their governments, thofe of three of the provinces of New
England in particular, have hitherto been more republican too.

«

The abfolute governments of Spain, Portugal, and France,
on the contrary, take place in their colonies ; and the difcretionary
powers which fuch governments commonly delegate to all their
inferior officers are, on account of the great diftance, naturally
exercifed there with more than ordinary violence. Under all
abfolute governments there is more liberty in the capital than in
any other part of the country. The fovereign himfelf can never
have either intereft or inclination to pervert the order of juftice, or
to opprefs the great "body of the people. In the capital his pre-
fence over-awes more or lefs all his inferior officers, who in the
remoter provinces, from whence the complaints of the people are
lefs likely to reach him, can exercife their tyranny with much more
fafety. But the European colonies in America are more remote
than the molt diftant provinces of the greateft empires which had
ever been known before. The government of the Englifh colo-
nies is perhaps the only one which, fince the world began, could
give perfect fecurity to the inhabitants of fo very diftant a pro-
vince. The adminiftration of the French colonies, however, has
always been conducted with more gentlenefs and moderation than
that of the Spanifh and Portugueze. This fupsriority of conduct

is

THE WEALTH OF NATIONS. 18c

^ fa. . . , , . v! im Ui a w $;a<

is fuitable both to the character of the French nation, and to what CHAP.

VIL

forms the character of every nation, the nature of their govern-
ment, which though arbitrary and violent in comparifon with
that of Great Britain, is legal and free in comparifon with thofe
of Spain and Portugal.

It is in the progrefs of the North American colonies, however,
that the fuperiority of the Englifh policy chiefly appears. The
progrefs of the fugar colonies of France has been at leaft equal,
perhaps fuperior, to that of the greater part of thofe of England j
and yet the fugar colonies of England enjoy a free government
nearly of the fame kind with that which takes place in her colonies
of North America. But the fugar colonies of France are not dis-
couraged, like thofe of England, from refining their own fugar ;
and, what is of ftill greater importance, the genius of their govern-
ment naturally introduces a better management of their negro
flaves.

In all European colonies the culture of the fugar cane is carried
on by negro flaves. The conftitution of thofe who have been
born in the temperate climate of Europe could not, it is fup-
pofed, fupport the labour of digging the ground under the burn-
ing fun of the Weft Indies ; and the culture of the fugar cane, as
it is managed at prefent, is all hand labour, though, in the opi-
nion of many, the drill plough might be introduced into it with
great advantage. But, as the profit and fuccefs of the cultiva-
tion which is carried on by means of cattle, depend very much
upon the good management of thofe cattle • fo the profit and fuc-
cefs of that which is carried on by flaves, muft depend equally upon
the good management of thofe flaves; and in the good manage-
ment of their flaves the French planters, I think it is generally
allowed, are fuperior to the Englifh. . The law, fo far as it gives

Vol. II. B b fome

i86

THE

NATURE AND CAUSES

OF

B 00 K fome weak protection to the flave againft the violence of his mafter,
u — t?mj is likely to be better executed in a colony where the government is
in a great meafure arbitrary, than in one where it is altogether free.
In every country where the unfortunate law of flavery is eftabliflied,
the magiftrate, when he protects the flave, intermeddles in fome
meafure in the management of the private property of the mafter ;
and, in a free country, where the mafter is perhaps either a mem-
ber of the colony affembly, or an elector of fuch a member, he
dare not do this but with the greater!: caution and circumfpection.
The refpect which he is obliged to pay to the mafter, renders it
more difficult for him to protect the flave. But in a country where
the government is in a great meafure arbitrary, where it is ufual for
the magiftrate to intermeddle even in the management of the pri-
vate property of individuals, and to fend them, perhaps, a lettre de
cachet if they do not manage it according to his liking, it is much
eafier for him to give fome protection to the flave -y and common
humanity naturally difpofes him to do fo. The protection of the
magiftrate renders the flave lefs contemptible in the eyes of his
mafter, who is thereby induced to confider him with more regard,
and to treat him with more gentlenefs. Gentle ufage renders the
flave not only more faithful, but more intelligent, and therefore,
upon a double account, more ufeful. He approaches more to the
condition of a free fervant, and may poflefs fome degree of inte-
grity and attachment to his mafter's intereft, virtues which fre-
quently belong to free fervants, but which never can belong to a
flave, who is treated as flaves commonly are in countries where
the mafter is perfectly free and fecure.

That the condition of a flave is better under an arbitrary thafi
under a free government, is, I believe, fupported by the hiftory of
all ages and nations. In the Roman hiftory, the firft time we read
of the magiftrate interpofing to protect the flave from the violence

- of

THE WEALTH OF NATIONS

of his mafler, is under the emperors. When Vedius Pollio, in the
prefence of Auguflus, ordered one of his flaves, who had com-
mitted a flight fault, to be cut into pieces and thrown into his
fifti pond in order to feed his fifties, the emperor commanded him,
with indignation, to emancipate immediately, not only that Have,
but all the others that belonged to him. Under the republick no
magillrate could have had authority enough to protect the flave,
much lefs to punifh the mailer.

The flock, it is to be obferved, which has improved the fugar
colonies of France, particularly the great colony of St. Domingo,
has been raifed almofl entirely from the gradual improvement and
cultivation of thofe colonies. It has been almoft altogether the
produce of the foil and induflry of the colonifls, or, what comes
to the fame thing, the price of that produce gradually accumulated
by good management, and employed in raifmg a flill greater pro-
duce. But the flock which has improved and cultivated the fugar
colonies of England has, a great part of it, been fent out from
England, and has by no means been altogether the produce of
the foil and induflry of the colonifls. The profperity of the
Englifh fugar colonies has been, in a great meafure, owing to the
great riches of England, of which a part has overflowed, if one
may fay fo, upon thofe colonies. But the profperity of the fugar
colonies of France has been entirely owing to the good conduct of
the colonifls, which mufl therefore have had fome fuperiority over
that of the Englifh ; and this fuperiority has been remarked in
nothing fo much as in the good management of their flaves.

Such have been the general outlines of the policy of the different
European nations with regard to their colonies.

The policy of Europe, therefore, has very little to boafl of,
either in the original eftablifhment, or in the fubfecjuent profpe-
rity of the colonies of America.

B b 2 Folly

i88

THE NATURE AND CAUSES OF

BOOK Folly and injuftice feem to have been the principles which
u— v^— » prefided over and directed the firft project of eftablifliing thofe
colonies; the folly of hunting after gold and filver mines, and the
injuftice of coveting the pofTefllon of a country whofe harmlefs
natives, far from having ever injured the people of Europe, had
received the firft adventurers with every mark of kindnefs and
hofpitality.

The adventurers, indeed, who formed fome of the later efta-
blifhments, joined, to the chimerical projecl of finding gold and
filver mines, other motives more reafonable and more laudable ;
but even thefe motives do very little honour to the policy of
Europe.

The Englifh puritans, perfecuted at home, fled for freedom to
America, and eftablifhed there the four governments of New Eng-
land. The Englifh catholicks, treated with equal injuftice, efta-
blifhed that of Maryland } the Quakers, that of Penfylvania. The
Portugueze Jews, perfecuted by the inquifition, ftript of their for-
tunes, and banifhed to Brazil, introduced, by their example, fome
fort of order and induftry among the tranfported felons and {trum-
pets, by whom that colony was originally peopled, and taught
them the culture of the fugar cane. Upon all thefe different occa-
fions it was, not the wifdom and policy, but the diforder and inju-
ftice of the European governments, which peopled and cultivated
America.

In effectuating fome of the moft important of thefe eftablifli-
ments, the different governments of Europe had as little merit as
in projecting them. The conqueft of Mexico was the projecl, not
of the council of Spain, but of a governor of Cuba ; and it was
effectuated by the fpirit of the bold adventurer to whom it was

entrufted,

THE WEALTH OF NATIONS.

189

entrufted, in fpite of every thing which that governor, who foon CHAP,
repented of having trufted fuch a perfon, could do to thwart it. u— v-^->
The conquerors of Chili and Peru, and of almoft all the other
Spanilh fettlements upon the continent of America, carried out
with them no other publick encouragement, but a general per-
miflion to make fettlements and conquefts in the name of the king
of Spain. Thofe adventures were all at the private rifk and ex-
pence of the adventurers. The government of Spain contributed
fcarce any thing to any of them. That of England contributed
as little towards effectuating the eftablifhment of fome of its moft
important colonies in North America.

When thofe eftablifhments were effectuated, and had become fo
confiderable as to attract: the attention of the mother country, the
firft regulations which me made with regard to them had always
in view to fecure to herfelf the monopoly of their commerce ; to
confine their market, and to enlarge her own at their expence, and,
confequently, rather to damp and difcourage, than to quicken and
forward the courfe of their profperity. In the different ways in
which this monopoly has been exercifed, confifts one of the moft
effential differences in the policy of the different European nations
with regard to their colonies. The beft of them all, that of Eng-
land, is only fomewhat lefs illiberal and oppreffive than that of
any of the reft.

In what way, therefore, has the policy of Europe contributed
either to the firfl: eftablifhment, or to the prefent grandeur of the colo-
nies of America ? In one way, and in one way only, it has contri-
buted a good deal. Magna virum Mater f It bred and formed the
men who were capable of atchieving fuch great actions, and of
laying the foundation of fo great an empire 3 and there is no other
quarter of the world of which the policy is capable of forming,
. . , :.;.!• or

THE NATURE AND CAUSES OF

K or has ever actually and in fact formed fuch men. The colo-
o nies owe to the policy of Europe the education and great views of
their active and enterprizing founders ; and fome of the greateft
and moft important of them, owe to it fcarce any thing elfe.

Part Third.

Of the Advantages which Europe has derived from the Difcovery of
America, and from that of a Pqflage to the Eaji Indies by the
Cape of Good Hope.

g U C H are the advantages which the colonies of America hav£
derived from the policy of Europe.

What are thofe which Europe has derived from the difcovery
and colonization of America ?

Those advantages may be divided, firft, into the general advan-
tages which Europe, confidered as one great country, has derived
from thofe great events ; and, fecondly, into the particular advan-
tages which each colonizing country has derived from the colonies
which particularly belong to it, in confequence of the authority or
dominion which it exercifes over them.

The general advantages which Europe, confidered as one great
country, has derived from the difcovery and colonization of Ame-
rica, confift, firft, in the increafe of its enjoyments ; and, fecond-
ly, in the augmentation of its induftry.

The furplus produce of America, imported into Europe, fur-
nifhes the inhabitants of this great continent with a variety of
commodities which they could not otherwife have pofleffed, fome
for conveniency and ufe, fome for pleafure, and fome for orna-
ment, and thereby contributes to increafe their enjoyments.

8 The

THE WEALTH OF NATIONS.

The difcovery and colonization of America, it will readily be 0 H A Pi
allowed, have contributed to augment the induftry, firft, of all the w-v-^J
countries which trade to it directly ; fuch as Spain, Portugal,
France, and England; and, fecondly, of all thofe which, without
trading to it directly, fend, through the medium of other coun-
tries, goods to it of their own produce; fuch as Auftrian Flan-
ders, and fome provinces of Germany, which, through the medium
of the countries before mentioned, fend to it a considerable quan-
tity of linen and other goods. All fuch countries have evidently
gained a more extenfive market for their furplus produce, and muft
confequently have been encouraged to increafe its quantity.

But, that thofe great events mould likewife have contributed to
encourage the induftry of countries, fuch as Hungary and Poland,
which may never, perhaps, have fent a fingle commodity of their
own produce to America, is not, perhaps, altogether fo evident.
That thofe events have done fo, however, cannot be doubted. Some
part of the produce of America is confumed in Hungary and Po-
land, and there is fome demand there for the fugar, chocolate, and
tobacco, of that new quarter of the world. But thofe commodi-
ties muft be purchafed with fomething which is either the produce
of the induftry of Hungary and Poland, or with fomething which
had been purchafed with fome part of that produce. Thofe com-
modities of America are new values, new equivalents, introduced
into Hungary and Poland,, to be exchanged there for the furplus
produce of thofe countries. By being carried thither they create
a new and more extenfive market for that furplus produce. They
raife its value, and thereby contribute to encourage its increafe.
Though no part of it may ever be carried to America, it may be
carried to other countries which purchafe it with a part of their
ihare of the furplus produce of America; and it may find a market
by means of the circulation of that trade which was originally put
into motion by the furplus produce of America,.

Thqsb

THE NATURE AND CAUSES OF

Those great events may even have contributed to increafe the
enjoyments, and to augment the induftry of countries which, not
only never fent any commodities to America, but never received
any from it. Even fuch countries may have received a greater abun-
dance of other commodities from countries of which the furplus
produce had been augmented by means of the American trade.
This greater abundance, as it muft neceflarily have increafed their
enjoyments, fo it muft likewife have augmented their induftry.
A greater number of new equivalents of fome kind or other
muft have been prefented to them to be exchanged for the furplus
produce of that induftry. A more extenfive market muft have
been created for that furplus produce, fo as to raife its value, and
thereby encourage its increafe. The mafs of commodities annu-
ally thrown into the great circle of European commerce, and by
its various revolutions annually diftributed among all the different
nations comprehended within it, muft have been augmented by the
whole furplus produce of America. A greater fhare of this greater
mafs, therefore, is likely to have fallen to each of thofe nations, to
have increafed their enjoyments, and augmented their induftry.

The exclufive trade of the mother countries tends to diminifh,
or, at leaft, to keep down below what they would otherwife rife to,
both the enjoyments and induftry of all thofe nations in general,
and of the American colonies in particular. It is a dead weight
upon the action of one of the great fprings which puts into mo-
tion a great part of the bufinefs of mankind. By rendering the
colony produce dearer in all other countries it leffens its confump-
tion, and thereby cramps the induftry of the colonies, and both
the enjoyments and the induftry of all other countries, which both
enjoy lefs when they pay more for what they enjoy, and produce
lefs when they get lefs for what they produce. By rendering the
produce of all other countries dearer in the colonies, it cramps,

in

THE WEALTH OF NATIONS. 193

fn the fame manner, the induftry of all other countries, and both C HAP.
the enjoyments and the induftry of the colonies. It is a clog v^-v-^-J
which, for the fuppofed benefit of fome particular countries, em-
barrafTes the pleafures, and encumbers the induftry of all other
countries ; but of the colonies more than of any other. It only
excludes, as much as poffible, all other countries from one parti-
cular market ; but it confines, as much as poflible, the colonies to
one particular market : and the difference is very great between
being excluded from one particular market, when all others are
open, and being confined to one particular market, when all others
are fhut up. The furplus produce of the colonies, however, is the
original fource of all that increafe of enjoyments and induftry
which Europe derives from the difcovery and colonization of Ame-
rica; and the exclufive trade of the mother countries tends to
render this fource much iefs abundant than it otherwife would be.

The particular advantages which each colonizing country derives
from the colonies which particularly belong to it, are of two diffe-
rent kinds ; firft, thofe common advantages which every empire
derives from the provinces fubje£t to its dominion; and, fecondly,
thofe peculiar advantages which are fuppofed to refult from pro-
vinces of fo very peculiar a nature as the European colonies of
America.

The common advantages which every empire derives from the
provinces, fubject to its dominion, confift, firft, in the military
force which they furnifli for its defence ; and, fecondly, in the
revenue which they furnifti for the fupport of its civil govern-
ment. 1 he Roman colonies furnimed occaiionally both the one
and the other. The Greek colonies, fometimes, furniftied a mili-
tary force ; but feldom any revenue. They feldom acknowledged
themfelves fubjedt to the dominion of the mother city. They were
generally her allies in war, but very feldom her fubjecb in peace.

Vol. II. C c The

THE NATURE AND CAUSES OF

K The European colonies of America have never yet furnifhed any
military force for the defence of the mother country. Their military
force has never yet been fufficient for their own defence j and in the
different wars in which the mother countries have been engaged, the
defence of their colonies has generally occafioned a very confiderable
diffraction of the military force of thofe countries. In this refpect,
therefore, all the European colonies have, without exception,
been a caufe rather of weaknefs than of (Irength to their refpec-
tive mother countries.

The colonies of Spain and Portugal only have contributed any
revenue towards the defence of the mother country, or the fup-
port of her civil government. The taxes winch have been levied
upon thofe of other European nations, upon thofe of England in
particular, have feldom been equal to the expence laid out upon
them in time of peace, and never fufficient to defray that which
they occafioned in time of war. Such colonies, therefore, have
been a fource of expence and not of revenue to their refpective
mother countries.

The advantages of fuch colonies to their refpective mother
countries, confift altogether in thofe peculiar advantages which
are fuppofed to refult from provinces of fo very peculiar a nature
as the European colonies of America ; and the exclufive trade,
it is acknowledged, is the fole fource of all thofe peculiar
advantages.

In confequence of this exclufive trade, all that part of the
furplus produce of the Engiifh colonies, for example, which
confifts in what are called enumerated commodities, can be fent
to no other country but England. Other countries mull after-
wards buy it of her. It muft be cheaper therefore in England
than it can be in any other country, and muft contribute more to

increafe

THE WEALTH OF NATIONS. 195

increafe the enjoyments of England, than thofe of any other C HAP.
country. It muft likewife contribute more to encourage her in- u-v-*J
duftry. For all thofe parts of her own furplus produce which
England exchanges for thofe enumerated commodities, (lie muft
get a better price than any other country can get for the like parts
of theirs when they exchange them for the fame commodities. The
manufactures of England, for example, will purchafe a greater
quantity of the fugar and tobacco of her own colonies, than the
like manufactures of other countries can purchafe of that fugar and
tobacco. So far, therefore, as the manufactures of England and
thofe of other countries are both to be exchanged for the fugar and
tobacco of the Englifh colonies, this fuperiority of price gives an
encouragement to the former, beyond what the latter can in thefe
circumftances enjoy. The exclufive trade of the colonies, there-
fore, as it diminifhes, or, at leaft, keeps down below what they
would otherwife rife to, both the enjoyments and the induftry
of the countries which do not pofTefs it; fo it gives an evident
advantage to the countries which do pofTefs it over thofe other
countries.

This advantage, however, will, perhaps, be found to be rather
what may be called a relative than an abfolute advantage ; and to
give a fuperiority to the country which enjoys it, rather by depref-
fmg the induftry and produce of other countries, than by raifing
thofe of that particular country above what they would naturally
rife to in the cafe of a free trade.

The tobacco of Maryland and Virginia, for example, by means
of the monopoly which England enjoys of it, certainly comes
cheaper to England than it can do to France, to whom England
commonly fells a confiderable part of it. But had France, and all
other European countries been, at all times, allowed a free trade

C c 2 to

196 THE NATURE AND CAUSES OF

B OO K to Maryland and Virginia, the tobacco of thofe colonies might, by
u — » — *j this time, have come cheaper than it actually does, not onlv to alt
thofe other countries, but likewife to England. The produce of
tobacco, in confequence of a market fo much more extenfive than
any which it has hitherto enjoyed, might, and probably would, by
this time, have been fo much increafed as to reduce the profits of a
tobacco plantation to their natural level with thofe of a corn planta-
tion, which, it is fuppofed, they are (till fomewhat above. The
price of tobacco might, and probably would, by this time, have
fallen fomewhat lower than it is at prefent. An equal quantity of
the commodities either of England, or of thofe other countries,
might have purchafed in Maryland and Virginia a greater quantity
of tobacco than it can do at prefent, and, confequently, have been
fold there for fo much a better price. So far as that weed, there-
fore, can, by its cheapnefs and abundance, increafe the enjoyments
or augment the induftry either of England or of any other country,
it would, probably, in the cafe of a free trade, have produced both
thefe effects in fomewhat a greater degree than it can do at prefent..
England, indeed, would not in this cafe have had any advantage
over other countries. She might have bought the tobacco of her
colonies fomewhat cheaper, and, confequently, have fold fome of
her own commodities fomewhat dearer than fhe actually does. But
fiie could neither have bought the one cheaper nor fold the other
dearer than any other country might have done. She might,
perhaps, have gained an abfolute, but fhe would certainly have
loft a relative advantage.

In order, however, to obtain this relative advantage in the
colony trade, in order to execute the invidious and malignant
project of excluding as much as poflible other nations from any
fhare in it, England, there are very probable reafons for believing,
has not only facrifked a part of the abfolute advantage which fhe,

as

THE WEALTH OF NATIONS.

as well as every oilier nation, might have derived from that trade,
but has fubje&cd herfelf both to an abfolute and to a relative difad-
vantage in almoft every other branch of trade.

When, by the a6t of navigation, England afTumed to herfelf
the monopoly of the colony trade, the foreign capitals which had
before been employed in it were neceffarily withdrawn from itv
The Englifli capital, which had before carried on but a part of it,
was now to carry on the whole. The capital which had before
fupplied the colonies with but a part of the goods which they wanted
from Europe, was now all that was employed to fupply them with
the whole. But it could not fupply them with the whole, and the
goods with which it did fupply them were neceffarily fold very dear.
The capital which had before bought but a part of the furplus
produce of the colonies, was now all that was employed to buy the
whole. But it could not buy the whole at any thing near the old
price, and, therefore, whatever it did buy it neceffarily bought very
cheap. But in an employment of capital in which the merchant
fold very dear and bought very cheap, the profit muft have been
very great, and much above the ordinary level of profit in other
branches of trade. This fuperiority of profit in the colony trade,
could not fail to draw from other branches of trade a part of the
capital which had before been employed in them. But this revulfibn
of capital, as it muft have gradually increafed the competition of
capitals in the colony trade, fo it muft have gradually diminifhed
that competition in all thofe other branches of trade ; as it muft have
gradually lowered the profits of the one, fo it muft have gradually
raifed thofe of the other, till the profits of all came to a new level,
different from and fomewhat higher than that at which they had
been before.

CHAP.
VII.

This double effect, of drawing capital from all other trades, and
of raifing the rate of profit fomewhat higher than it otherwife would

9 have

i9& THE NATURE AND CAUSES OF

BOOK have been in all trades, was not only produced by this monopoly
upon its firft eftablifliment, but has continued to be produced by
it ever fince.

First, this monopoly has been continually drawing capital from
all other trades to be employed in that of the colonies.

Though the wealth of Great Britain has increafed very much
fince the eftablifliment of the act of navigation, it certainly has not
increafed in the fame proportion as that of the colonies. But the
foreign trade of every country naturally increafes in proportion to
its wealth, its furplus produce in proportion to its whole produce ;
and Great Britain having engrofTed to herfelf almoft the whole
of what may be called the foreign trade of the colonies, and her
capital not having increafed in the fame proportion as the extent of
that trade, fhe could not carry it on without continually withdrawing
from other branches of trade fome part of the capital which had
before been employed in them, as well as with-holding from them
a great deal more which would otherwife have gone to them. Since
the eftablifliment of the act of navigation, accordingly, the colony
trade has been continually increafmg, while many other branches
of foreign trade, particularly of that to other parts of Europe, have
been continually decaying. Our manufactures for foreign fale,
inftead of being fuited, as before the act of navigation, to the
neighbouring market of Europe, or to the more diftant one of the
countries which lie round the Mediterranean fea, have, the greater
part of them, been accommodated to the ftill more diftant one of the
colonies, to the market in which they have the monopoly, rather
than to that in which they have many .competitors. The caufes of
decay in other branches of foreign trade, which, by Sir Matthew
Decker and other writers, have been fought for in the excefs and
improper mode of taxation, in the high price of labour, in the

increafe

THE WEALTH OF NATIONS. 29c

increafe of luxury, &c. may all be found in the over-growth of CHAP,
the colony trade. The mercantile capital of Great Britain, though ^*f*mj
very great, yet not being infinite; and though greatly increafed
fmce the act of navigation, yet not being increafed in the fame
proportion as the colony trade, that trade could not poflibly be
carried 011 without withdrawing fome part of that capital from
other branches of trade, nor confequently without fome decay of.
thofe other branches.

England, it muft be obferved, was a great trading country,,
her mercantile capital was very great and likely to become ftill
greater and greater every day, not only before the acl: of naviga-
tion had eftabliftied the monopoly of the colony trade, but before
that trade was very confiderable. In the Dutch war, 'during the
government of Cromwel, her navy was fuperior to that of Hol-
land ; and in that which broke out in the beginning of the reign
of Charles II. it was at leaft equal, perhaps fuperior, to the
united navies of France and Holland. Its fuperiority, perhaps,
would fcarce appear greater in the prefent times at lean: if the
Dutch navy was to bear the fame proportion to the Dutch com-
merce now which it did then. But this great naval power could
not, in either of thofe wars, be owing to the act of navigation.
During the firft of them the plan of that acl had been but juft
formed ; and though before the breaking out of the fecond it had
been fully enacted by legal authority ; yet no part of it could
have had time to produce any confiderable effect, and leaft of all
that part which eftabliftied the exclufive trade to the colonies.
Both the colonies and their trade were inconfiderable then in com-
parifon of what they are now. The iiland of Jamaica was an
unwholefome defart, little inhabited and lefs cultivated. New
York and New Jerfey were in the pofleflion of the Dutch : the
half of St. Chriftopher's in that of the French. The ifland of

4 Antigua,

THE NATURE AND CAUSES OF

K Antigua, the two Carolinas, Penfylvania, Georgia, and Nova
-j Scotia, were not planted. Virginia, Maryland, and New Eng-
land were planted ; and though they were very thriving colonies,
yet there was not, perhaps, at that time either in Europe or
America a fingle perfon who forefaw or even fufpecled the rapid
progrefs which they have hnce made in wealth, population and
improvement. The ifland of Barbadoes, in fhort,* was the only
Britifh colony of any confequence of which the condition at that
time bore any refemblance to what it is at prefent. The trade of
the colonies, of which England, even for fome time after the act of
navigation, enjoyed but a part (for the act of navigation was not
very ftrictly executed till feveral years after it was enacted) could
not at that time be the caufe of the great trade of England, nor
of the great naval power which was fupported by that trade. The
trade which at that time fupported that great naval power was
the trade of Europe, and of the countries which lie round the
Mediterranean fea. But the fhare which Great Britain at pre-
fent enjoys of that trade could not fupport any fuch great naval
power. Had the growing trade of the colonies been left free to
all nations, whatever mare of it might have fallen to Great Bri-
tain, and a very confiderable fhare would probably have fallen to
her, mud: have been all an addition to this great trade of which
me was before in pofTefTion. In confequence of the monopolv, the
increafe of the colony trade has not fo much occafioned an
addition to the trade which Great Britain had before, as a total
change in its direction.

Secondly, this monopoly has necefTarily contributed to keep
up the rate of profit in all the different branches of Britifh trade
higher than it naturally would have been, had all nations been
allowed a free trade to the Britilh colonies.

The

THE WEALTH OF NATIONS. 20

The monopoly of the colony trade, as it necefiarily drew to- CHAP,
wards that trade a greater proportion of the capital of Great ^^^j
Britain than what would have gone to it of its own accord ; fo
by the expullion of all foreign capitals it necefiarily reduced the
whole quantity of capital employed in that trade below what it
naturally would have been in the cafe of a free trade. But, by
lefTening the competition of capitals in that branch of trade, it
necefiarily raifed the rate of the profit in that branch. By leflen-
ing too the competition of Britifii capitals in all oiher branches
of trade, it necefiarily raifed the rate of Britifii profit in all thofe
other branches. Whatever may have been, at any particular period,
fince the eftablifliment of the act of navigation, the ftate or
extent of the mercantile capital of Great Britain, the monopoly
of the colony trade muft, during the continuance of that ftate,
have raifed the ordinary rate of Britifii profit higher than it other-
wife would have been both in that and in all the other branches of
Britifii trade. If, fince the eftablifliment of the act of naviga-
tion, the ordinary rate of Britifii profit has fallen con fiderably, as
it certainly has, it muft have fallen ftill lower, had not the mo-
nopoly eftablifiied by that act contributed to keep it up.

But whatever raifes in any country the ordinary rate of profit
higher than itotherwife would be, necefiarily fubjects that country
both to an abfolute and to a relative difad vantage in every branch
of trade of which fiie has not the monopoly.

It fubjects her to an abfolute difadvantage : becaufe in fuch
branches of trade her merchants cannot get this greater profit,
without felling dearer than they otherwife would do both the
goods of foreign countries which they import into their own,
and the goods of their own country, which they export to fo-
reign countries. Their own country muft both buy dearer and
fell dearer ; muft both buy lefs and fell lefs j muft both enjoy lefs
and produce lefs than (he otherwife would do.

Vol. II. D d It

202

THE NATURE AND CAUSES OF

It fubjecls her to a relative difadvantage becaufe in fuch
branches of trade it fets other countries which are not fubjecl: to
the fame abfolute difadvantage either more above her or lefs below
her than they otherwife would be. It enables them both to enjoy
more and to produce more in proportion to what fhe enjoys and
produces. It renders their fuperiority greater or their inferiority lefs
than it otherwife would be. By raifing the price of her produce
above what it otherwife would be, it enables the merchants of
other countries to underfell her in foreign markets, and thereby to
juftle her out of almoft all thofe branches of trade, of which (he
hasv not the monopoly.

Our merchants frequently complain of the high wages of
Britiih labour as the caufe of their manufactures being underfold
in foreign markets ; but they are filent about the high profits of
flock. They complain of the extravagant gain of other people -3
but they fay nothing of their own. The high profits of Britiih
ftock, however, may contribute towards raifing the price of Britiih.
manufactures in many cafes as much, and in fome perhaps more
than the high wages of Britiih labour.

It is in this manner that the capital of Great Britain, one
may juftly fay, has partly been drawn and partly been driven from
the greater part of the different branches of trade of which fhe has
not the monopoly ; from the trade of Europe in particular, and
from that of the countries which lie round the Mediterranean fea.

It has partly been drawn from thofe branches of trade; by the
attraction of fuperior profit in the colony trade in confequence
of the continual increafe of that trade, and of the continual in-
fufficiency of the capital which had carried it on one year to carry
it on the next.

8 It

THE WEALTH OF NATIONS

It has partly been driven from them by the advantage which C
the high rate of profit, eftablifhed in Great Britain, gives to other u
countries, in all the different branches of trade of which Great
Britain has not the monopoly.

As the monopoly of the colony trade has drawn from thole
other branches a part of the Britifh capital which would other-
wife have been employed in them, fo it has forced into them
many foreign capitals which would never have gone to them, had
they not been expelled from the colony trade. In thofe other
branches of trade it has diminifhed the competition of Britifh
capitals, and thereby raifed the rate of Britifh profit higher than
it otherwife would have been. On the contrary, it has increafed
the competition of foreign capitals, and thereby funk the rate of
foreign profit lower than it otherwife would have been. Both in
the one way and in the other it muft evidently have fubjected
Great Britain to a relative difadvantage in all thofe other branches
of trade.

The colony trade, however, it may perhaps be faid, is more
advantageous to Great Britain than any other ; and the mono-
poly, by forcing into that trade a greater proportion of the
capital of Great Britain than what would otherwife have gone to
it, has turned that capital into an employment more advantage-
ous to the country than any other which it could have found.

The moft advantageous employment of any capital to the
country to which it belongs, is that which maintains there the
greateft quantity of productive labour, and increafes the moft
the annual produce of the land and labour of that coun-
try. But the quantity of productive labour which any capital
employed in the foreign trade of confumption can main-
tain is exactly in proportion, it has been fhewn in the fecond
book, to the frequency of its returns. A capital of a thoufand

D d 2 pounds,

•of THE NATURE AND CAUSES OF

Book pounds, for example, employed in a foreign trade of confump-
^S^L^j tion, of which the returns are made regularly once in the year,
can keep in conftant employment in the country to which it
belongs a quantity of productive labour equal to what a thou-
fand pounds can maintain there for a year. If the returns are
made twice or thrice in the year it can keep in conftant employ-
ment a quantity of productive labour equal to what two or three
thoufand pounds can maintain there for a year. A foreign trade
of confumption carried on with a neighbouring country is upon
this account in general more advantageous than one carried on
with a diftant country ; and for the fame reafon a direct foreign
trade of confumption, as it has Iikewife been fhewn in the
fecond book, is in general more advantageous than a round-
about one.

But the monopoly of the colony trade, fo far as it has operated"
upon the employment of the capital of Great Britain, has in all
cafes forced fome part of it from a foreign trade of confumption
carried on with a neighbouring country, to one carried on with
a more diftant country, and in many cafes from a direct foreign-
trade of confumption to a round-about one.

First, the monopoly of the colony trade has in all cafes
forced fome part of the capital of Great Britain from a foreign
trade of confumption carried on with a neighbouring to one car-
ried on with a more diftant country.

It has, in all cafes, forced fome part of that capital from the
trade with Europe, and with the countries which lie round the
Mediterranean fea, to that with the more diftant regions of Ame-
rica and the Weft Indies, from which the returns are necefTarily
lefs frequent, not only on account of the greater diftance, but on

4 account

the wealth of nations.

account of the peculiar circumftances of thofe countries. New Cyj^p*
colonies, it has already been obferved, are always underftocked. v- — v— ^
Their capital is always much lefs than what they could employ
with great profit and advantage in the improvement and cultiva-
tion of their land. They have a conftant demand, therefore, for
more capital than they have of their own ; and, in order to fup-
ply the deficiency of their own, they endeavour to borrow as much
as they can of the mother country, to whom they are, therefore,
always in debt. The moft common way in which the colonift3
contract this debt, is not by borrowing upon bond of the rich
people of the mother country, though they fometimes do this too,
but by running as much in arrear to their correfpondents, who
fupply them with goods from Europe, as thofe correfpondents will
allow them. Their annual returns frequently do not amount to more
than a third, and fometimes not to fo great a proportion of what
they owe. The whole capital, therefore, which their correfpondents
advance to them is feldom returned to Britain in lefs than three,
and fometimes not in lefs than four or five years* But a Britifh
capital of a thoufand pounds, for example, which is returned to-
Great Britain only once in five years, can keep in conftant employ-
ment only one-fifth part of the Britifli induftry which it could
maintain if the whole was returned once in the year; and, inftead
of the quantity of induftry which a thoufand pounds could main-
tain for a year, can keep in conftant employment the quantity only
which two hundred pounds can maintain for a year. The planter,
no doubt, by the high price which he pays for the goods from Eu-
rope, by the intereft upon the bills which he grants at diftant dates,
and by the commifhon upon the renewal of thofe which he grants
at near dates, makes up, and probably more than makes up, all
the lofs which his correfpondent can fuftain by this delay. But,
though he may make up the lofs of his correfpondent, he cannot
make up that of Great Britain. In a trade of which the returns

are.

206 THE NATURE AND CAUSES OF

BOOK are very diftant, the profit of the merchant may be as great or
c—v-^-> greater than in one in which they are very frequent and near; but
the advantage of the country in which he refides, the quantity of
productive labour conftantly maintained there, the annual produce
of the land and labour muft always be much lefs. That the
returns of the trade to America, and ftill more thofe of that to
the Weft Indies, are, in general, not only more diftant, but more
irregular, and more uncertain too, than thofe of the trade to any
part of Europe, or even of the countries which lie round the
Mediterranean fea, will readily be allowed, I imagine, by every
body who has any experience of thofe different branches of trade.

Secondly, the monopoly of the colony trade has, in many
cafes, forced fome part of the capital of Great Britain from a
direct foreign trade of confumption, into a round-about one.

Among the enumerated commodities which can be fent to no
other market but Great Britain, there are feveral of which the
quantity exceeds very much the confumption of Great Britain, and
of which a part, therefore, muft be exported to other countries.
But this cannot be done without forcing fome part of the capital
of Great Britain into a round-about foreign trade of confumption.
Maryland and Virginia, for example, fend annually to Great Bri-
tain upwards of ninety-fix thoufand hogfheads of tobacco, and the
confumption of Great Britain is faid not to exceed fourteen thoufand.
Upwards of eighty- two thoufand hogfheads, therefore, muft be
exported to other countries, to France, to Holland, and to the
countries which lie round the Baltick and Mediterranean feas.
But, that part of the capital of Great Britain which brings thofe
eighty-two thoufand hogfheads to Great Britain, which re-exports
them from thence to thofe other countries, and which brings back
from thofe other countries to Great Britain either goods or money

in

THE WEALTH OF NATIONS.

in return, is employed in a round-about foreign trade of confump-
tion ; and is necefTarily forced into this employment in order to
difpofe of this great furplus. If we would compute in how many
years the whole of this capital is likely to come back to Great Bri-
tain, we muft add to the diftance of the American returns that of
the returns from thole other countries. If, in the direct foreign
trade of confumption which we carry on with America, the whole
capital employed frequently does not come back in lefs than three
or four years ; the whole capital employed in this round-about one
is not likely to come back in lefs than four or five. ]f the one can
keep in conftant employment but a third or a fourth part of the
domeftick induftry which could be maintained by a capital returned
once in the year, the other can keep in conftant employment but a
fourth or a fifth part of that induftry. But, had not the colonies
been confined to the market of Great Britain for the fale of their
tobacco, very little more of it would probably have come to us
than what was necefTary for the home confumption. The goods
which Great Britain purchafes at prefent for her own confumption
with the great furplus of tobacco which fhe exports to other coun-
tries, fhe would, in this cafe, probably have purchafed with the
immediate produce of her own induftry, or with fome part of her
own manufactures. That produce, thole manufactures, inftead of
being almoft entirely fuited to one great market, as at prefent,
would probably have been fitted to a great number of fmaller mar-
kets. Inftead of one great round-about foreign trade of confump-
tion, Great Britain would probably have carried on a great num-
ber of fmall direct foreign trades of the fame kind. On account
of the frequency of the returns, a part, and, probably,, but a fmall
part; perhaps not above a third or a fourth, of the capital which at
prefent carries on this great round-about trade, might have been
fufficient to carry on all thofe fmall direct: ones, might have kept in
conftant employment an equal quantity of Britifh induftry, and

have.

208

THE NATURE AND CAUSES OF

B CK) K have equally fupported the annual produce of the land and labour
of Great Britain. All the purpofes of this trade being, in this
manner, anfwered by a much fmaller capital, there would have
been a large fpare capital to apply to other purpofes ; to improve
the lands, to increafe the manufactures, and to extend the com-
merce of Great Britain; to come into competition at leaft with
the other Britiih capitals employed in all thofe different ways,
to reduce the rate of profit in them all, and thereby to give to
Great Britain, in all of them, a fuperiority over other countries
flill greater than what (lie at prefent pofTefTes.

The monopoly of the colony trade too has forced fome part
of the capital of Great Britain from all foreign trade of con-
sumption to a carrying trade and, confequently, from fupporting
more or lefs the induftry of Great Britain, to be employed alto-
gether in fupporting partly that of the colonies, and partly that of
fome other countries.

The goods, for example, which are annually purchafed with the
great furplus of eighty-two thoufand hogfheads of tobacco annu-
ally re-exported from Great Britain, are not all confumed in Great
Britain. Part of them, linen from Germany and Holland, for
example, is returned to the colonies for their particular confump-
tion. But, that part of the capital of Great Britain which buys
the tobacco with which this linen is afterwards bought, is necef-
farily withdrawn from fupporting the induftry of Great Britain,
to be employed altogether in fupporting partly that of the colo-
nies, and partly that of the particular countries who pay for this
tobacco with the produce of their own induftry.

The monopoly of the colony trade befides, by forcing towards
it a much greater proportion of the capital of Great Britain than

what

THE WEALTH OF NATIONS

what would naturally have gone to it, fcems to have broken alto- Cyj^p<
gether that natural balance which would otherwife have taken place u — « —
among all the different branches of Britifh induftry. The indu-
ftry of Great Britain, inftead of being accommodated to a great
number of fmall markets, has been principally fuited to one great
market. Her commerce, inftead of running in a great number of
fmall channels, has been taught to run principally in one great
channel. But the whole fyftem of her induftry and commerce has
thereby been rendered lefs fecurej the whole ftate of her body
politick lefs healthful than it otherwife would have been. In her
prefent condition, Great Britain refembles one of thofe unwhol-
fome bodies in which fome of the vital parts are overgrown,
and which, upon that account, are liable to many dangerous dif-
orders fcarce incident to thofe in which all the parts are more pro-
perly proportioned. A fmall ftop in that great blood vefTel, which
has been artificially fwelled beyond its natural dimenfions, and
through which an unnatural proportion ' of the induftry and com-
merce of the country has been forced to circulate, is very likely to
bring on the moft dangerous diforders upon the whole body poli-
tick. The expectation of a rupture with the colonies, accordingly,
has ftruck the people of Great Britain with more terror than they
ever felt for a Spanifh armada or a French invafion. It was this
terror, whether well or ill grounded, which rendered the repeal of the
ftamp act a popular meafure, among the merchants at leaft. In the
total exclufion from the colony market, was it to laft only for a few
years, the greater part of our merchants ufed to fancy that they
forefaw an entire ftop to their trade; the greater part of our mafter
manufacturers, the entire ruin of their bufinefs ; and the greater
part of our workmen an end of their employment. A rupture with
any of our neighbours upon the continent, though likely too to
occafion fome ftop or interruption in the employments of fome of
all thefe different orders of people, is forefeen, however, without
Vol. II. E e any

m THE NATURE AND CAUSES OF

BOOK any llich general emotion. The blood, of which the circulation is
jftopt in fome of the fmaller veflels, eafily difgorges itfelf into the
greater, without occafioning any dangerous diforder ; but, when it
is ftopt in any of the greater vefTels, convulfions, apoplexy, or
death, are the immediate and unavoidable confequences. If but
one of thofe overgrown manufactures, which, by means either of
bounties, or of the monopoly of the home and colony markets,
have been artificially raifed up to an unnatural height, finds fome
fmall flop or interruption in its employment, it frequently occa-
fions a mutiny and diforder alarming to government, and embar-
raffing even to the deliberations of the legiflature. How great,
therefore, would be the diforder and confufion, it was thought,
which muft neceffarily be occafioned by a fudden and entire flop
in the employment of fo great a proportion of our principal manu-
facturers ?

Some moderate and gradual relaxation of the laws which give to-
Great Britain the exclufive trade to the colonies, till it is rendered
in a great meafure free, feems to be the only expedient which can-
deliver her from this danger, which can enable her or even force her
to withdraw fome part of her capital from this overgrown employ-
ment, and to turn it, though with lefs profit, towards other
employments ; and which, by gradually diminifhing one branch
of herinduftry and gradually increafing all the reft, can by degrees
reftore all the different branches of it to that natural, healthful and
proper proportion which perfect liberty necefTarily eftablimes, and
which perfect liberty can alone preferve. To open the colony trade
all at once to all nations, might not only occafion fome tranfitory
inconveniency, but a great permanent lofs to the greater part of
thofe whofe induftry or capital is at prefent engaged in it. The
fudden lofs of the employment even of the fhips which import
the eighty-two thoufand hogfheads of tobacco, which are over and

above

THE

WEALTH OF NATIONS.

above the confumption of Great Britain, might alone be felt veiy c H A P.
fenfibly. Such are the unfortunate effects of all the regulations of the
mercantile fyftem ! They not only introduce very dangerous diforders
into the ftate of the body politic, but diforders which it is often
difficult to remedy, without occafioning for a time, at leaft, ftill
greater diforders. In what manner, therefore, the colony trade
ought gradually to be opened ; what are the reftraints which ought
firft, and what are thofe which ought laft to be taken away j or in
what manner the natural fyftem of perfecl liberty and juftice ought
gradually to be reftored, we muft leave to the wifdom of future
ftatefmen and legiflators to determine.

Five different events, unforefeen and un thought of, have very
fortunately concurred to hinder Great Britain from feeling, fo
fenfibly as it was generally expected fhe would, the total exclufion
which has now taken place for more than a year (from the firft
of December, 1 774) from a very important branch of the colony
trade, that of the twelve affpciated provinces of North America.
Firft, thofe colonies in preparing themfelves for their non-impor-
tation agreement, drained Great Britain compleatly of all the com-
modities which were fit for their market : fecondly, the extraordi-
nary demand of the Spanifh Flota has, this year, drained Germany
and the north of many commodities, linen in particular, which
ufed to come into competition, even in the Britilh market, with
the manufactures of Great Britain : thirdly, the peace between Ruf-
fia and Turkey has occafioned an extraordinary demand from the
Turkey market, which, during the cnftrels of the country, and
while a Ruffian .fleet was cruizing in the Archipelago, had been
very poorly fupplied : fourthly, the demand of the north of Eu-
rope for the manufactures of Great Britain, has been increafing
from year to year for fome time paft : and, fifthly, the late parti-
tion and confequential pacification of Poland, by opening the mar-

E e 2 tet

THE NATURE AND CAUSES OF

K ket of that great country, have this year added an extraordinary
demand from thence to the increafing demand of the north. Thefc
events are all, except the fourth, in their nature tranfitory and
accidental, and the exclufion from fo important a branch of the
colony trade, if unfortunately it mould continue much longer,
may Mill occafion fome degree of diftrefs. This diftrefs, however,
as it will come on gradually, will be felt much lefs feverely than if
it had come on all at once; and, in the mean time, the induftry and
capital of the country may find a new employment and direction,
fo as to prevent it from ever riling to any confiderable height.

The monopoly of the colony trade, therefore, fo far as it ha^
turned towards that trade a greater proportion of the capital of
Great Britain than what would otherwife have gone to it, has in
all cafes turned it, from a foreign trade of confumption with a neigh-
bouring, into one with a more diftant country ; in many cafes, from
a direct foreign trade of confumption, into a< round-about one °,
and in fome cafes, from all foreign trade of confumption, into a
carrying trade. It has in all cafes, therefore, turned it, from a
direction in which it would have maintained a greater quantity of
productive labour, into one, in which it can maintain a much'
fmaller quantity. By fuiting, befides, to one particular market
only fo great a part of the induftry and commerce of Great Britain^
it has rendered the whole ftate of that induftry and commerce more
precarious and lefs fecure, than if their prodjuce had been accom-
modated to a greater variety of markets.

We muft carefully diftinguifh between the effects of the colony-
trade and thofe of the monopoly of that trade.The former are always
and neceffarily beneficial ; the latter always and neceffarily hurtful.
But the former are fo beneficial, that the colony trade, though fubject:
to a monopoly, and notwithstanding the hurtful effects of that
4 monopoly*

THE WEALTH O F NATIONS. 2ij

monopoly, is flill upon the whole beneficial, and greatly beneficial; CHAP,
though a good deal lefs To than it otherwife would be. — y--— «j

The effect of the colony trade* in its natural and free ftate, is tor
open a great, though diftant market for fuch parts of the produce
of Britilh induftry as may exceed the demand of the markets nearer
home, of thofe of Europe and of the countries which lie round the
Mediterranean fea. In its natural and free ftate the colony trade,-
without drawing from thofe markets any part of the produce which-
had ever been lent to them, encourages Great Britain to increafe
thefurplus continually, by continually prefenting new equivalents to-
be exchanged for it. In its natural and free flate, the colony trade
tends to increafe the quantity of productive labour in Great Britain,,
but without altering in any refpedf. the direction of that which had
been employed there before. In the natural and free ftate of the
colony trade, the competition of all other nations would hinder the
rate of profit from riling above the common level either in the new.
market, or in the new employment. The new market, without
drawing any thing from the old one, would create, if one may fay
fo, a new produce for its own fupply and that new produce would
conftitute a new capital for carrying on the new employment
which- in the fame manner would draw nothing from the old one, .

The monopoly of the colony trade, on the contrary, by excluding
the competition of other nations, and thereby raifmg the rate of
profit both in the new market and in the new employment, draw3
produce from the old market and capital from the old employment.
To augment our Ihare of the colony trade beyond what it other-
wife would be, is the avowed purpofe of the monopoly. If our
fhare of that trade were to be no greater with, than it would have
been without the monopoly, there could have been no reafon for
eftabliming the monopoly. But whatever forces into a branch of

trade -

214

THE NATURE AND CAUSES OF

BOOK trade of which the returns are flower and more difcant than thofe
s. — y^j of the greater part of other trades, a greater proportion of the
capital of any country, than what of its own accord would go to
that branch, neceffarily renders the whole quantity of productive
labour annually maintained there, the whole annual produce of the
land and labour of that country lefs than they otherwife would be.
It keeps down the revenue of the inhabitants of that country, below
what it would naturally rife to, and thereby diminiflies their power
of accumulation. It not only hinders, at all times, their capital
from maintaining fo great a quantity of productive labour as it
would otherwife maintain, but it hinders it from increafing fo fan:
as it would otherwife increafe, and confequently from maintaining a
ftill greater quantity of productive labour.

The natural good effects of the colony trade, however, more
than counter-balance to Great Britain the bad effects of the mono-
poly, fo that, monopoly and all together, that trade, even as it is
carried on at prefent, is not only advantageous, but greatly advan-
tageous. The new market and new employment which are opened
by the colony trade, are of much greater extent than that portion
of the old market and of the old employment which is loft by the
monopoly. The new produce and the new capital which has been
created, if one may fay fo, by the colony trade, maintain in Great
Britain a greater quantity of productive labour, than what can have
been thrown out of employment by the revullion of capital from
other trades of which the returns are more frequent. If the
colony trade, however, even as it is carried on at prefent is advan-
tageous to Great Britain, it is not by means of the monopoly, but
in fpite of the monopoly.

It is rather for the manufactured than for the rude produce of
Europe, that the colony trade opens a new market. Agricul-
8 ture

s

THE WEALTH OF NATIONS. 215

ture is the proper bufinefs of all new colonies ; a bufmefs which C HA P.
the cheapnefs of land renders more advantageous than any u —
other. They abound, therefore, in the rude produce of land, and
inftead of importing it from other countries, they have generally a
large furplus to export. In new colonies, agriculture, either draws
hands from all other employments, or keeps them from going to
any other employment. There are few hands to fpare for the
neceffary, and none for the ornamental manufactures. The greater
part of the manufactures of both kinds, they find it cheaper to
purchafe of other countries than to make for themfelves. It is
chiefly by encouraging the manufactures of Europe, that the
colony trade indirectly encourages its agriculture. The manufac-
turers of Europe to whom that trade gives employment constitute
a new market for the produce of the land and the moft advanta-
geous of all markets, the home market, for the corn and cattle, for
the bread and butcher's -meat of Europe, is thus greatly extended:
by means of the trade to America.

But that the monopoly of the trade of populous and thriving,
colonies is not alone fufBcient to eftablilh, or even to maintain
manufactures in any country, the examples of Spain and Portugal,
fufficiently demonftrate. Spain and Portugal were manufacturing
countries before they had any confiderable colonies. Since they
had the richeft and moft fertile in the world they have both ceafed
to be fo.

In Spain and Portugal, the bad effects of the monopoly,, aggra-
vated by other caufes, have entirely conquered the natural good:
effects ofthe colony trade. Thefe caufes fee m to be, other mono-
polies of different kinds ; the degradation of the value of gold and:
filver below what it is in mon: other countries; the exclufion-
from foreign markets by improper taxes upon exportation, and the

narrowing

2l6

THE NATURE AND CAUSES OF

narrowing of the home market, by ftill more improper taxes upon
the tranfportation of goods from one part of the country to another;
but above all, that irregular and partial adminiftration of juftice,
•which often protects the rich and powerful debtor from the purfuit
t>f his injured creditor, and which makes the induftrious part of the
nation afraid to prepare goods for the confumption ofthofe haughty
and great men, to whom they dare not refufe to fell upon credit,
and from whom they are altogether uncertain of re-payment.

In England, on the contrary, the natural good effects of the
colony trade, aflifted by other caufes, have in a great meafure
conquered the bad effects of the monopoly. Thefe caufes feem to
be, the general liberty of trade, which, notwithftanding fome
reftraints is at leaft equal, perhaps fuperior, to what it is in any
other country ; the liberty of exporting, duty free, almoft all forts
of goods which are the produce of domeftick induftry, to almoft
any foreign country, and what, perhaps, is of ftill greater import-
ance, the unbounded liberty of tranfporting them from any one
•part of our own country to any other, without being obliged to
give any account to any publick office, without being liable to
queftion or examination of any kind ; but above all, that equal
and impartial adminiftration of juftice which renders the rights of
the meaneft Britifh fubject refpectable to the greateft, and which*
by fecuring to every man the fruits of his own induftry, gives the
greateft and moft effectual encouragement to every fort of induftry.

If the manufactures of Great Britain, however, have been ad-
vanced, as they certainly have, by the colony trade, it has not
been by means of the monopoly of that trade, but in fpite of
the monopoly. The effect of the monopoly has been, not to
augment the quantity, but to alter the quality and fhape of a part
of the manufactures of Great Britain, and to accommodate to a

market,

BOOK
iv.

THE WEALTH OF NATIONS.

217

market, from which the returns are flow and diftant, what would C HA P.
otherwife have been accommodated to one from which the returns u--v— v
are frequent and near. Its effect has confequently been to turn a
part of the capital of Great Britain from an employment in
which it would have maintained a greater quantity of manu-
facturing induftry, to one in which it maintains a much
fmaller, and thereby to diminifh, inftead of increafing, the
whole quantity of manufacturing induftry maintained in Great
Britain.

The monopoly of the colony trade, therefore, like all the
other mean and malignant expedients of the mercantile fyftem,
depreffes the induftry of all other countries, but chiefly that of
the colonies, without in the leaft increafing, but on the con-
trary diminifhing that of the country in whofe favour it is efta-
blifhed.

The monopoly hinders the capital of that country, whatever
may at any particular time be the extent of that capital, from
maintaining fo great a quantity of productive labour as it would
otherwife maintain, and from affording fo great a revenue to the
induftrious inhabitants as it would otherwife afford. But as capital
can be increafed only by favings from revenue, the monopoly, by
hindering it from affording fo great a revenue as it would
otherwife afford, neceffarily hinders it from increafing lb faft
as it would otherwife increafe, and confequently from maintaining
a ftill greater quantity of productive labour, and affording a
ftill greater revenue to the induftrious inhabitants of that coun-
try. One great original fource of revenue, therefore, the wages
of labour, the monopoly muft neceffarily have rendered at all
times lefs abundant than it otherwife would have been.

Vol. II. F f By

2l8

THE NATURE AND CAUSES OF

BOOK By railing the rate of mercantile profit, the monopoly difcou-
v^j rages the improvement of land. The profit of improvement de-
pends upon the difference between what the land actually produces
and what, by the application of a certain capital, it can be made
to produce. If this difference affords a greater profit than what
can be drawn from an equal capital in any mercantile employ-
ment, the improvement of land will draw capital from all mer-
cantile employments. If the profit is lefs, mercantile employments
will draw capital from the improvement of land. Whatever there-
fore raifes the rate of mercantile profit, either leflens the fupe-
riority or increafes the inferiority of the profit of improvement y
and in the one cafe hinders capital from going to improvement,,
and in the other draws capital from it. But by difcouraging im-
provement, the monopoly neceffarily retards the natural increafe
of another great original fource of revenue, the rent of land.
By raifmg the rate of profit too the monopoly neceffarily keeps
up the market rate of intereft higher than it otherwife would be.
But the price of land in proportion to the rent which it affords^
the number of years purchafe which is commonly paid for it,,
neceffarily falls as the rate of intereft rifes, and rifes as the rate of
intereft falls. The monopoly therefore hurts the intereft of the
landlord two different ways, by retarding the natural increafe,
firft, of his rent, and fecondly, of the price which he would get
for his land in proportion to the rent which it affords.

The monopoly, indeed, raifes the rate of mercantile profit,,
and thereby augments fomewhat the gain of our merchants. But
as it obftructs the natural increafe of capital, it tends rather to
diminifh than to increafe the fum total of the revenue which the
inhabitants of the country derive from the profits of ftock; a
.fmall profit upon a great capital generally affording a greater
revenue than a great profit upon a fmall one. The monopoly

raifes

THE WEALTH OF NATIONS.

raifes the rate of profit, but it hinders the fum of profit from C
riling fo high as it otherwife would do.

All the original foUrces of revenue, the wages of labour, the
rent of land, and the profits of flock, the monopoly renders
much lefs abundant than they otherwife would be. To promote
the little intereft of one little order of men in one country, it hurts
the intereft of all other orders of men in that country, and of
all men in all other countries.

It is folely by raifing the ordinary rate of profit that the mo«
nopoly either has proved or could prove advantageous to any one
particular order of men. But befides all the bad effects to the
country in general which have already been mentioned as necef-
farily refulting from a high rate of profit; there is one
more fatal, perhaps, than all thefe put together, but which,
If we may judge from experience, is infeparably connected with
it. The high rate of profit feems every where to deftroy that
parfimony which in other circumftances is natural to the character
of the merchant. When profits are high, that fober virtue feems
to be fuperfluous, and expenfive luxury to fuit better the affluence
of his fituation. But the owners of the great mercantile capitals
are necefTarily the leaders and conductors of the whole induftry of
every nation, and their example has a much greater influence
upon the manners of the whole induftrious part of it than that
of any other order of men. If his employer is attentive and
parfimonious, the workman is very likely to be fo too ; but if
the mafler is diffolute and diforderly, the fervant who fhapes his
work according to the pattern which his mafter prefcribes to him,
will fliape his life too according to the example which he fets
him. Accumulation is thus prevented in the hands of all thofe
who are naturally the moft difpofed to accumulate j and the funds

F f 2 deftined

120 THE NATURE AND CAUSES OF

BOOK deftined for the maintenance of productive labour receive no aug-
V— ' mentation from the revenue of thofe who ought naturally to
augment them the moft. The capital of the country, inftead of
increafing, gradually dwindles away, and the quantity of produc-
tive labour maintained in it grows every day lefs and lefs. Have
the exorbitant profits of the merchants of Cadiz and Liibon aug-
mented the capital of Spain and Portugal ? Have they alleviated
the poverty, have they promoted the induftry of thofe two beg-
garly countries ? Such has been the tone of mercantile expence in
thofe two trading cities, that thofe exorbitant profits, far from
■augmenting the general capital of the country, feem fcarce to
have been fufficient to keep up the capitals upon which they were
made. Foreign capitals are every day intruding themfelves, if I may
fay fo, more and more into the trade of Cadiz and Liibon. It is
to expel thofe foreign capitals from a trade which their own capital
grows every day more and more infufficient for carrying on, that
the Spaniards and Portugueze endeavour every day to ftraiten,
more and more the galling bands of their abfurd monopoly.
Compare the mercantile manners of Cadiz and Lifbon with thofe
of Amfterdam, and you will be fenfible how differently the con<-
duct and character of merchants are affected by the high and by
the low profits of ftock. The merchants of London indeed have
not yet generally become fuch magnificent lords as thofe of Cadiz
and Lifbonj but neither are they in general fuch attentive and
parfimonious burghers as thofe of Amfterdam. They are fup-
pofed, however, many of them, to be a good deal richer than
the greater part of the former, and not quite fo rich as many of
the latter. But the rate of their profit is commonly much lower
than that of the former, and a good deal higher than that of the
latter. Light come light go, fays the proverb ; and the ordinary
tone of expence feems every where to be regulated, not fo much
according to the real ability of fpending, as to the fuppofed facility
cf getting money to fpend.

It

THE WEALTH OF NATIONS.

It is thus that the Tingle advantage which the monopoly pro- CI^P*
cures to a fingle order of men is in many different ways hurtful u— v~>
to the general intereft of the country.

To found a great empire for the fole purpofe of railing up a
people of cuftomers, may at firft fight appear a project fit only
for a nation of fhopkeepers. It is, however, a project altogether
unfit for a nation of fhopkeepers ; but extremely fit for a nation
that is governed by fhopkeepers. Such fovereigns, and fuch fo-
vereigns only, are capable of fancying that they will find fome
advantage in employing the blood and treafure of their fubjects,
to found and to maintain fuch an empire. Say to a fhopkeeper, Buy
me a good eftate, and I fhall always buy my cloaths at your fhop,
even though I fhould pay fomewhat dearer than what I can have
them for at other fhops ; and you will not find him very forward
to embrace your propofal. But fhould any other perfon buy you
fuch an eftate, the fhopkeeper would be much obliged to your bene-
factor if he would enjoin you to buy all your cloaths at his fhop.
England purchafed for fome of her fubjects, who found them-
felves uneafy at home, a great eftate in a diftant country. The
price indeed was very fmall, and inftead of thirty years purchafe,
the ordinary price of land in the prefent times> it amounted to
little more than the expence of the different equipments which made
the firft difcovery, reconnoitered the coaft, and took a fictitious
pofTeffion of the country. The land was good and of great ex-
tent, and the cultivators having plenty of good ground to work
upon, and being for feme time at liberty to fell their produce
where they pleafed, became in the courfe of little more than
thirty or forty years (between 1620 and 1660) fo numer-
ous and thriving a people, that the fhopkeepers and other
traders of England wifhed to fecure to themfelves the monopoly
of their cuftom. Without pretending, therefore, that they had
jaid any part, either of the original purchafe money, or of the

fubfequent

33 THE NATURE AND CAUSES OF

BOOK fubfequent expence of improvement, they petitioned the parlia-
uJv^j ment that the cultivators of America might for the future be
confined to their mop firft, for buying all the goods which they
wanted from Europe ; and, fecondly, for felling all fuch parts of
their own produce as thofe traders might find it convenient to
buy. For they did not find it convenient to buy every part of
it. Some parts of it imported into England might have inter-
fered with fome of the trades which they themfelves carried on
at home. Thofe particular parts of it, therefore, they were
willing that the colonifts fllould fell where they could ; the farther
off the better and upon that account propofed that their
market Ihould be confined to the countries fouth of Cape
Finifterre. A claufe in the famous act of navigation eftablifhed
this truly fhopkeeper propofal into a law.

The maintenance of this monopoly has hitherto been the prin-
cipal, or more properly perhaps the fole end and purpofe of the
dominion which Great Britain afhimes over her colonies. In the
exclufive trade, it is fuppofed, confifts the great advantage of pro-
vinces, which have never yet afforded either revenue or military
force for the fupport of the civil government, or the defence of the
mother country. The monopoly is the principal badge of their
dependency, and it is the fole fruit which has hitherto been gathered
from that dependency. Whatever expence Great Britain has
hitherto laid out in maintaining this dependency, has really been
laid out in order to fupport this monopoly. The expence of
the ordinary peace efrablifhment of the colonies amounted, before
the commencement of the prefent difturbances, to the pay of twenty
regiments of foot ; to the expence of the artillery, ftores, and extra-
ordinary provifions with which it is necefTary to fupply them ; and
to the expence of a very confiderable naval force which is con-
ftantly kept up in order to guard, from the fmuggling veffels of
9 other

THE WEALTH OF NATIONS.

other nations, the immenfe coaft of North America, and that CHAP.

VII

of our Weft Indian iflands. The whole expence of this peace u— v-— '
eftablifhment was a charge upon the revenue of Great Britain, and
was, at the fame time, the fmalleft part of what the dominion of
the colonies has coft the mother country. If we would know the
amount of the whole, we muft add to the annual expence of this
peace eftablifhment the intereft of the fums which, in confequence
of her confidering her colonies as provinces fubjecl: to her domi-
nion,. Great Britain has upon different occafions laid out upon
their defence. We muft add to it, in particular, the whole expence
of the late war, and a great part of that which preceeded it. The
late war was altogether a colony quarrel, and the whole expence
of it, in whatever part of the world it may have been laid out*
whether in Germany or in the Eaft Indies, ought juftly to be
ftated to the account of the colonies. It amounted to more than
ninety millions fterling, including not only the new debt which was
contracted, but the two fhillings in the pound additional land tax*
and the fums which were every year borrowed from the finking
fund. The Spanifh war which began in 1739, was principally a
colony quarrel. Its principal obje£f. was to prevent the fearch
of the colony fhips which carried on a contraband trade with the
Spanifh main. This whole expence is, in reality, a bounty which
has been given in order to fupport a monopoly. The pretended
purpofe of it was to encourage the manufactures, and to encreafe
the commerce of Great Britain. But its real effect has been to
raife the rate of mercantile profit, and to enable our merchants to
turn into a branch of trade, of which the returns are more flow
and diftant than thofe of the greater part of other trades, a
greater proportion of their capital than they otherwife would have
done i two events which, if a bounty could have prevented, it
might perhaps have been very well worth while to give fuch a
bounty.

Under

THE NATURE AND CAUSES OF

Under the prefent fyftem of management, therefore, Great Bri-
tain derives nothing but lofs from the dominion which me affumes
over her colonies*

To propofe that Great Britain mould voluntarily give up all
authority over her colonies, and leave them to elect their own magi-
strates, to enact their own laws, and to make peace and war as
they might think proper, would be to propofe fuch a meafure as
never was, and never will be adopted, by any nation in the world.
No nation ever voluntarily gave up the dominion of any province,
how troublefome foever it might be to govern it, and how fmall
foever the revenue which it afforded might be in proportion to the
expence which it occafioned. Such facrifices, though they might
frequently be agreeable to the intereft, are always mortifying to
the pride of every nation, and what is perhaps of ftill greater
confequence, they are always contrary to the private intereft of the
governing part of it, who would thereby be deprived of the dif-
pofal of many places of truft and profit, of many opportunities of
acquiring wealth and distinction, which the polfefTion of thcmoft
turbulent, and, to the great body of the people, the mod unpro-
fitable province feldom fails to afford. The moft vifionary enthu-
iiaft would fcarce be capable of propofing fuch a meafure, with any
ferious hopes at leaft of its ever being adopted. If it was adopt-
ed, however, Great Britain would not only be immediately freed
from the whole annual expence of the peace eftablifhment of the
colonies, but might fettle with them fuch a treaty of commerce as
would effectually fecure to her a free trade, more advantageous to
the great body of the people, though lefs fo to the merchants, than
the monopoly which flie at prefent enjoys. By thus parting good
friends, the natural affection of the colonies to the mother country,
which, perhaps, our late diffenfions have well nigh extinguifhed,
would quickly revive. It might difpofe them not only to refpect,
8 for

THE WEALTH OF NATIONS.

for whole centuries together, that treaty of commerce which they
iiad concluded with us at parting, but to favour us in war as well
as in trade, and, inftead of turbulent and factious fubjecls, to
become our moft faithful, affectionate, and generous allies ; and the
fame fort of parental affection on the one fide, and filial refpecl: on
the other, might revive between Great Britain and her colonies,
which ufed to fubfift between thofe of ancient Greece and the
mother city from which they defcended.

In order to render any province advantageous to the empire to
which it belongs, it ought to afford, in time of peace, a revenue to
the publick fufHcient not only for defraying the whole expence of
its own peace eftablifhment, but for contributing its proportion to
the fupport of the general government of the empire. Every pro-
vince neceffarily contributes, more or lefs, to increafe the expence
of that general government. If any particular province, there-
fore, does not contribute its mare towards defraying this expence,
an unequal burden muft be thrown upon fome other part of the
empire. The extraordinary revenue too which every province affords
to the publick in time of war, ought, from parity of reafon, to bear
the fame proportion to the extraordinary revenue of the whole
empire which its ordinary revenue does in time of peace. That
neither the ordinary nor extraordinary revenue which Great Britain
derives from her colonies, bears this proportion to the whole revenue
of the Britifh empire, will readily be allowed. The monopoly, it
has been fuppofed, indeed, by mcreafiftg the private revenue of the
people of Great Britain, and thereby enabling them to pay greater
taxes, compenfates the deficiency of the publick revenue of the
colonies. But this monopoly, I have endeavoured to mow, though
a very grievous tax upon the colonies, and though it may increafe
the revenue of a particular order of men in Great Britain, dimi-
nifhes inftead of increafing that of the great body of the people ; and
confequently diminifties inftead of increafing the ability of the great

Vol. II. G g body

THE NATURE AND CAUSES OF

K body of the people to pay taxes. The men too whofe revenue the
monopoly increafes, conftitute a particular order which it is both
abfolutely impofiible to tax beyond the proportion of other orders,
and extremely impolitick even to attempt to tax beyond that propor-
tion, as I mall endeavour to fhow in the following book. No
particular refource, therefore, can be drawn from this particular
order.

The colonies may be taxed either by their own afTemblies or by
the parliament of Great Britain.

That the colony afTemblies can ever be fo managed as to levy
upon their constituents a publick revenue fufficient not only to
maintain at all times their own civil and military eftablifhment, but to
pay their proper proportion of the expence of the general govern-
ment of the Britifh empire, feems not very probable. It was a long time
before even the parliament of England, though placed immediately
under the eye of the fovereign, could be brought under fuch a fyftem
of management, or could be rendered fufficiently liberal in their
grants for fupporting the civil and military eftablifhments even of
their own country. It was only by distributing among the parti-
cular members of parliament, a great part either of the offices, or
of the difpofal of the offices arifing from this civil and military
eftablifhment, that fuch a fyftem of management could be efta-
blilhed even with regard to the parliament of England. But the
diftance of the colony afTemblies from the eye of the fovereign, their
number, their difperfed fituation, and their various conftitutions,
would render it very difficult to manage them in the fame manner,
even though the fovereign had the fame means of doing it and thofe
means are wanting. It would be abfolutely impofTible to diftribute
among all the leading members of all the colony afTemblies fuch a
jfhare, either of the offices or of the difpofal of the offices arifing

from

THE WEALTH OF NATIONS.

from the general government of the Britifh empire, as to difpofe
them to give up their popularity at home and to tax their conftituents
for the fupport of that general government, of which almoft the
whole emoluments were to be divided among people who were
ftrangers to them. The unavoidable ignorance of adminiftration,
befides, concerning the relative importance of the different mem-
bers of thofe different affemblies, the offences which muft frequently
be given, the blunders which muft conftantly be committed in
attempting to manage them in this manner, feem to render fuch
a fyftem of management altogether impracticable with regatd
to them.

The colony aflemblies, befides, cannot be fuppofed the proper
judges of what is neceffary for the defence and fupport of the whole
empire. The care of that defence and fupport is not intruded to
them. It is not their bufinefs, and they have no regular means of
information concerning it. The alfembly of a province, like the
veftry of aparilh, may judge very properly concerning the affairs of its
own particular diftrict •, but can have no proper means of judging
concerning thofe of the whole empire. It cannot even judge properly
concerning the proportion which its own province bears to the
whole empire ; or concerning the relative degree of its wealth and
importance, compared with the other provinces ; becaufe thofe
other provinces are not under the infpection and fuper-intendancy
of the affembly of a particular province. What is neceffary for the
defence and fupport of the whole empire, and in what proportion
each part ought to contribute, can be judged of only by that aflem-
bly which infpecls and luper-intends the affairs of the whole empire.

It has been propofed, accordingly, that the colonies fhoukl be tiKcd
by requifition, the parliament of Great Britain determining the fum
which each colony ought to pay, and the provincial affembly afTefling

G e 2 and

223

THE NATURE AND CAUSES OF

B OO K and levying it in the way that fluted beft the circumftances of the
u-- v~--> province. What concerned the whole empire would in this way be
determined by the affembly which infpects and fuper-intends the affairs
of the whole empire j and the provincial affairs of each colony might
jftill be regulated by its own affembly. Though the colonies fhould in
this cafe have no reprefentatives in the Britifh parliament, yet, if we
may judge by experience, there is no probability that the parliamen-
tary requifition would be unreafonable. The parliament of England
has not upon any occafion mown ths fmalleft. difpolition to over-
burden thofe parts of the empire which are not reprefented in
parliament. The iflands of Guernfey and Jerfey, without any
means of refilling the authority of parliament, are more lightly
taxed than any part of Great Britain. Parliament in attempting
to exercife its fuppofed right, whether well or ill grounded, of taxing
the colonies, has never hitherto demanded of them any thing which
even approached to a juft proportion to what was paid by their fellow
fubje:ts at home. If the contribution of the colonies, befides,
was to rife or fall in proportion to the rife or fall of the land tax ;
parliament could not tax them without taxing at the fame time its
own conftituents, and the colonies might in this cafe be confi-
dered as virtually reprefented in parliament.

Examples are not wanting of empires in which all the different
provinces are not taxed, if I may be allowed the expreffion, in one
mafs i but in which the fovereign regulates the fum which each
province ought to pay, and in fome provinces affeifes and levies it
as he thinks proper while in others, he leaves it to be affeffed and
levied as the refpecli\re (rates of each province fhall determine. In.
fome provinces of France, the king not only impofes what taxes he
thinks proper, but affeffes and levies them in the way he thinks
proper. From others he demands a certain fum, but leaves it to
the ftates of each province to affefs and levy that fum as they think

proper*

THE WEALTH OF NATIONS.

proper. According to the fcheme of taxing by requifition, the C
parliament of Great Britain would ftand nearly in the fame fituation u.
towards the colony afTemblies, as the king of France does towards
the ftates of thofe provinces which ftill enjoy the privilege of having
ftates of their own, the provinces of Fiance which are fuppofed to
be the beft governed.

But though, according to this fcheme, the colonies could have
no juft reafon to fear that their fnare of the publick burdens mould
ever exceed the proper proportion to that of their fellow citizens at
home; Great Britain might have juft reafon to fear that it never
would amount to that proper proportion. The parliament of
Great Britain has not for fome time paft had the fame eftablifhed
authority in the colonies, which the French king has in thofe
provinces of France, which ftill enjoy the privilege of having ftates
of their own. The colony afTemblies, if they were not very favour-
ably difpofed (and unlefs more fkilfully managed than they ever
have been hitherto, they are not very likely to be fo) might ftill
find many pretences for evading or rejecting the moft reafonable
requifitions of parliament. A French war breaks out, we jfliall
fuppofe; ten millions muft immediately be raifedin order to defend
the feat of the empire. This fum muft be borrowed upon the credit
of fome parliamentary fund mortgaged for paying the intereft. Part of
this fund parliament propofes to raife by a tax to be levied in Great
Britain, and part of it by a requifition to all the different colony afTem-
blies of America and the Weft Indies. Would people readily advance
their money upon thecreditof a fund, which partly depended upon the
good humour of all thofe afTemblies, far diftant from the feat of the
war, and fometimes, perhaps, thinking themfelves not much con-
cerned in the event of it ? Upon fuch a fund no more money would
probably be advanced than what the tax to be levied in Great Britain
might be fuppofed to anfwer for. The whole burden of the debt

contracted

THE NATURE AND CAUSES OF

C QO K contracted on account of the war would in this manner fall, as
i^— v— -J it always has done hitherto, upon Great j Britain, upon apart of
the empire and not upon the whole empire. Great Britain is,
perhaps, lince the world began, the only ftate which, as it has
extended its empire, has only increafed its expence without once
augmenting its refources. Other (fates have generally disburdened
themfelves upon their fubjecl and fubordinate provinces of the
moft confiderable p.irt of the expence of defending the empire.
Great Britain lias hitherto fuffered her fubjett and fubordinate
provinces to disburden themfelves upon her of almofr. this whole
expence. In order to put Great Britain upon a footing of equality
with her own colonies, which the law has hitherto fuppofed to be*
fubjecl and fubordinate, it feems necelTary, upon the fcheme of
taxing them by parliamentary requifltion, that parliament fhould
have fome means X)f rendering its requifitions immediately effec-
tual in cafe the colony alfemblies fhould attempt to evade or reject
them ; and what thofe means are, it is not very eafy to conceive,
and it has not yet been explained.

Should the parliament of Great Britain, at the fame time,
be ever fully eftablifhed in the right of taxing the colonies, even
independent of the confent of their own alfemblies, the impor-
tance of thofe affemblies would from that moment be at an end,
and with it that of all the leading men of Britifh America.
Men defire to have fome fhare in the management of public affairs
chiefly on account of the importance which it gives them. Upon
the power which the greater part of the leading men, the natural
ariftccracy of every country, have of prcferving or defending
their refpective importance, depends the liability and duration of
every fyllem of free government. In the attacks which thofe
leading men are continually making upon the importance of one
another, and in the defence of their own, confifts the whole play

0

THE WEALTH OF NATIONS.

of domcftic faction and ambition. The leading men of America, C
like thofe of all other countries, defire to preferve their own im-
portance. They feel, or imagine that if their affemblies, which
they are fond -of calling parliaments, and of confidering as equal
in authority to the parliament of Great Britain, fhould be fo far
degraded as to become the humble minifters and executive officers
of that parliament, the greater part of their own importance would
be at an end. They have rejected, therefore, the propofal of
being taxed by parliamentary requisition, and like other ambitious
and high fpirited men, have rather chofen to draw the fword in
defence of their own importance.

Towards the declenfion of the Roman republic, the allies of
Rome, who had born the principal burden of defending the irate
and extending the empire, demanded to be admitted to all the
privileges of Roman citizens. Upon being refufed, the focial war
broke out. During the courfe of that war Rome granted thole
privileges to the greater part of them, one by one, and in pro-
portion as they detached themfelves from the general confederacy.
The parliament of Great Britain infifts upon taxing the colonies;
and they refufe to be taxed by a parliament in which they are not
reprefented. If to each colony, which fhould detach itfelf from the
general confederacy, Great Britain fhould allow fuch a number of
reprefentatives as fuited the proportion of what it contributed to
the public revenue of the empire, in confequence of its being
fubjected to the fame taxes, and in compenfation admitted to the
fame freedom of trade with its fellow fubjects at home ; the num-
ber of its reprefentatives to be augmented as the proportion of its
contribution might afterwards augment a new method of acquir-
ing importance, a new and more dazzling object of ambition
would be prefented to the leading men of each colony. Inftead
of piddling for the little prizes which are to be found in what
6 may

i32 THE NATURE AND CAUSES OF

BOOK may be called the paltry raffle of colony faction ; they might
i^-y^j then hope, from the prefumption which men naturally have in
their own ability and good fortune, to draw fome of the great
prizes which fometimes come from the wheel of the great ftate
lottery of Britifh politics. Unlefs this or fome other method is
fallen upon, and there feems to be none more obvious than this, of
preferving the importance and of gratifying the ambition of the
leading men of America, it is not very probable that they will
ever voluntarily fubmit to us ; and we ought to confider that the
blood which muft be fhed in forcing them to do fo, is every drop
of it, the blood either of thofe who are, or of thofe whom we
wifh to have for our fellow citizens. They are very weak who
flatter themfelves that, in the ftate to which things have come, our
colonies will be eafily conquered by force alone. The perfons who
now govern the refolutions of what they call their continental
congrefs, feel in themfelves at this moment a degree of importance
which, perhaps, the greateft fubjecls in Europe fcarce feel. From
fhopkeepers, tradefmen, and attornies, they are become ftatef-
men and legiftators, and are employed in contriving a new
form of government for an extenfive empire, which, they
flatter themfelves, will become, and which, indeed, feems very
likely to become one of the greateft and moft formidable that
ever was in the world. Five hundred different people, per-
haps, who in different ways act immediately under the continental
congrefs; and five hundred thoufand, perhaps, who act under thofe
five hundred, all feel in the fame manner a proportionable rife
in their own importance. Almoft every individual of the govern-
ing party in America fills, at prefent, in his own fancy, a ftation
fuperior, not only to what he had ever filled before, but to what
he had ever expected to fill ; and unlefs fome new object of am-
bition is prefented either to him or to his leaders, if he has the
ordinary fpirit of a man, he will die in defence of that ftation.

9

It

THE WEALTH OF NATIONS,

It is a remark of the prefident Henaut that we now read with C
pleafure the account of many little tranfaclions of the Ligue, which
when they happened were not perhaps confidered as very im-
portant pieces of news. But every man then, fays he, fancied
himfelf of fome importance and the innumerable memoirs which
have come down to us from thofe times, were, the greater part
of them, written by people who took pleafure in recording and
magnifying events in which, they flattered themfelves, they had
been confiderable aclors. How obftinately the city of Paris upon
that occafion defended itfelf, what a dreadful famine it fupported
rather than fubmit to the belt and afterwards the mod beloved of
all the French kings, is well known. The greater part of the
citizens, or thofe who governed the greater part of them, fought
in defence of their own importance, which they forefaw was to be
at an end whenever the antient government mould be re-eftablifh-
ed. Our colonies, unlefs they can be induced to confent to- a
union, are very likely to defend themfelves againft the ben: of all
mother countries, as obfthiately as the city of Paris did againfl
one of the befc of kings.

The idea of reprefentation was unknown in antient times*
When the people of one ftate were admitted to the right of
citizenfnip in another, they had no other means of exercifmg
that right but by coming in a body to vote and deliberate with the
people of that other ftate. The admililon of the greater part
of the inhabitants of Italy to the privileges of Roman citizens,
completely ruined the Roman republic. It was no longer poffible
to diitinguim between who was and who was not a Roman citizen.
No tribe could know its own members. A rabble of any kind,
-could be introduced into the affemblies of the people, could diive
out the real citizens, and decide upon the affairs of the republic as
if they themfelves had been fuch. But though America was to

Vol. II. H h fend

254 THE NATURE AND CAUSES OF

B OO K fen(j fifty or fixty new reprefentatives to parliament, the door-
v~« keeper of the houfe of commons could not find any great diffi-
culty in diftinguifhing between who was and who was not a
member. Though the Roman conftitution, therefore, was necef-r
farily ruined by the union of Rome with the allied ftates of Italy,
there is not the leaft probability that the Britifh conftitution would
be hurt by the union of Great Britain with her colonies. That
conftitution, on the contrary, would be compleated by it, and
feems to be imperfect without it. The aflembly which deliberates
and decides concerning the affairs of every part of the empire, in
order to be properly informed, ought certainly to have reprefen-
tatives from every part of it. That this union, however, couid
be eafily effectuated, or that difficulties and' great difficulties
might not occur in the execution, I do not pretend. I' have yet
heard of none, however, which appear infurmountable. The
principal perhaps arife, not from the nature of things, but from
the prejudices and opinions of the people both on this and the
ether fide of the Atlantic.

£U>ni^ 1o tarlt bptoxf ttlgim iteajidm A to souboiq adi <zqsd>

We, on this fide the water, are afraid left the multitude of
American reprefentatives mould over-turn the balance of the confti-
tution, and increafe too much either the influence of the crown
on the one hand, or the force of the democracy on the other.
But if the number of American reprefentatives was to be in pro*
portion to the produce of American taxation, the number of
people to be managed would increafe exactly in proportion to
the means of managing them j and the means of managing, to
the number of people to be managed. The monarchical and de<-
mocratical parts of the conftitution would, after the union, ftand
exactly in the fame degree of relative force with regard to one
another as they had done before.

The

THE WEALTH OF NATIONS.

The people on the other fide of the water are afraid left their
diftance from the feat of government might expofe them to many
oppreflions. But their reprefentatives in parliament, of which
the number ought from the firft to be confiderable, would eafily be
able to protect them from all oppreflion. The diftance could not
much weaken the dependency of the reprefentative upon the con-
ftituent, and the former would ftill feel that he owed his feat jn
parliament and all the confequence which he derived from it to
the good will of the latter. It would be the intereft of the for-
mer, therefore, to cultivate that good-will by complaining with
all the authority of a member of the legiftature, of every outrage
which any civil or military officer might be guilty of in thofe
remote parts of the empire. The diftance of America from the
feat of government, befides, the nations of tUat country might
flatter themfelves, with fome appearance of reafon too, would not
be of very long continuance. Such has hitherto been the rapid
progrefs of that country in wealth, population and improve-
ment, that in the courfe of little more than a century, per-
haps, the produce of American might exceed that of Britifli
taxation. The feat of the empire would then naturally remove
itfelf to that part of the empire which contributed moft to the
general defence and fupport of the whole.

The difcovery of America, and that of a paffage to the E aft
Indies by the Cape of Good Hope, are the two greateft and raoft
important events recorded in the hiftory of mankind. Their con-
fequences have already been very great : but, in the fhort period
of between two and three centuries which has elapfed fince thefe
difcoveries were made, it is impoffible that the whole extent of their
confequences can have been feen. What benefits, or what misfortunes
to mankind may hereafter refult from thofe great events no human
wifdom can forefee. By uniting, in fome meafure, the moft diftant
parts of the world, by enabling them to relieve one another's

H h 2 wants,

THE NATURE AND CAUSES OF

WO O E wants, to increafe one another's enjoyments, and to encourage one
iv • |

w-v-»-j another's induftry, their general tendency would feem to be bene-
ficial. To the natives, however, both of the Eaft and Weft Indies,
all the commercial benefits which can have refulted from thofe
events have been funk and loft in the dreadful misfortunes
which they have occalioned. Thefe misfortunes, however, feem to
have arifen rather from accident than from any thing in the nature
of thofe events themfelves. At the particular time when thefe dis-
coveries were made, the Superiority of force happened to be fo
great on the fide of the Europeans, that they were enabled to com-
mit with impunity every fort of injuftice in thofe remote countries.
Hereafter, perhaps, the natives of thofe countries may grow
ftronger, or thofe of Europe may grow weaker, and the inhabitants
of all the different quarters of the world may arrive at that equality
of courage and force which, by infpiring mutual fear, can alone
overawe the injuftice of independent nations into fome fort of
refpecl for the rights of one another. But nothing feems more
likely to eftablifh this equality of force than that mutual commu-
nication of knowledge and of all forts of improvements which an
extenfive commerce from all countries to all countries naturally,
or rather neceffarily, carries along with it.

In the mean time one of the principal effects of thofe difcove-
lies has been to raife the mercantile fyftem to a degree of fplen-
dor and glory which it could never otherwife have attained to. It
is the object of that fyftem to enrich a great nation rather by trade
and manufactures than by the improvement and cultivation of
land, rather by the induftry of the towns than by that of the
country. But, in confequence of thofe difcoveries, the commer-
cial towns of Europe, inftead of being the manufacturers and car-
riers for but a very fmall part of the world, (that part of Europe
which is wafhed by the Atlantic ocean, and the countries which

8 lie

THE WEALTH OF NATIONS.

lie round the Baltick and Mediterranean feas), have now become c
the manufacturers for the numerous and thriving cultivators of
America, and the carriers, and in fome refpects the manufacturers
too, for almoft all the different nations of Afia, Africa, and Ame-
rica. Two new worlds have been opened to their induftry, each of
them much greater and more extenfive than the old one, and the
market of one of them growing flill greater and greater every
day. *

The countries which poffefs the colonies of America, and which
trade directly to the Eaft Indies, enjoy, indeed, the whole mew and
fplendor of this great commerce. Other countries, however, not-
withstanding all the invidious reftraints by which it is meant to
exclude them, frequently enjoy a greater mare of the real benefit
of it. The colonies of Spain and Portugal, for example, give
more real encouragement to the induftry of other countries than
to that of Spain and Portugal. In the fmgle article of linen alone
the confumption of thofe colonies amounts, it is faid, but I do not
pretend to warrant the quantity, to more than three millions fter-
ling a year. But this great confumption is almoft entirely fup-
piied by France, Flanders, Holland, and Germany. Spain and
Portugal furnifh but a fmall part of it. The capital which fupplies
the colonies with this great quantity of linen is annually diftri-
buted among, and furnifhes a revenue to the inhabitants of thofe
other countries. The profits of it only are fpent in Spain and
Portugal, where they help to fupport the fumptuous profulion of
the merchants of Cadiz and Lifbon.

Even the regulations by which each nation endeavours to fecure
to itfelf the excluhve trade of its own colonies, are frequently
more hurtful to the countries in favour of which they are efta-
bullied than to thofe againft which they are eftablifhed. The

unjuft

THE NATURE AND CAUSES OT

tmjuft oppreflion of the induftry of other countries falls back, if
li may fay fo, upon the heads of the oppreffors, and crufhes their
induftry more than it does that of thofe other countries. By thofe
regulations, for example, the merchant of Hamburgh muft fend
the linen which he deftines for the American market to London,
and he muft bring back from thence the tobacco which he deftines
for the German market becaufe he can neither fend the one
directly to America, nor bring back the other directly from thence.
By this reftraint he is probably obliged to fell the one fomewhat
cheaper, and to buy 'the other fomewhat dearer than he otherwife
might have done ; and his profits are probably fomewhat abridged
by means of it. In this trade, however, between Hamburgh and
London, he certainly receives the returns of his capital much
more quickly than he could poflibly have done in the direct trade
to America, even though we fhould fuppofe, what is by no means
the cafe, that the payments of America were as punctual as thofe
of London. In the trade, therefore, to which thofe regulations
confine the merchant of Hamburgh, his capital can keep in con-
front employment a much greater quantity of German induftry
than it poflibly could have done in the trade from which he is
excluded. Though the one employment, therefore, may to him
perhaps be lefs profitable than the other, it cannot be lefs advan-
tageous to his country. It is quite otherwife with the employment
into which the monopoly naturally attracts, if I may fay fo, the
capital of the London merchant. That employment may, per-
haps, be more profitable to him than the greater part of other
employments, but, on account -of the flownefs of the returns, it
cannot be more advantageous to his country.

After all the unjuft attempts, therefore, of every country in
Europe to engrofs to itfelf the whole advantage of the trade of its
own colonies, no country has yet been able to engrofs to itfelf any
4 thing

THE WEALTH OP NATIONS. 239

thing but the expence of fupporting in time of peace and of defending C HA P.
in time of war the opprefhve authority which it aflumes over them, v. —
The inconveniencies refulting from the poffeffion of its colonies,*
every country has engroffed to itfelf completely. The advantages
refulting from their trade it has been- obliged to fliare. with many-
other countries.,

At nrft fight, no doubt, the monopoly of the great commerce
of America, naturally feems to be an acquifition of the higheft?
value. To the undifcerning eye of giddy ambition, it naturally
prefents itfelf, arnidft the confufed fcramble of politicks and wai%
as a very dazzling object to fight for. The dazzling fplendor of
the object, however, the immenfe greatnefs of the commerce, is
the very quality which renders the monopoly of it hurtful, or which
makes one employment, in its own nature necelTarily lefs advan-
tageous to the country than the greater part of other employments,
abforb a much greater proportion of the capital of the country than
what would other wife have gone to it.

yifiubfri insm'iaQ to yJ.iirtBnp 1310313 ileum : js '4i!amyelq/n3 litah
The mercantile ftock of every country, it has been- fhewn in the
fecond book, naturally feeks, if one may fay fo, the employment
moft advantageous to that country. If it is employed in the carrying
trade, the country to which it belongs becomes the emporium of the
goods of all the countries whofe trade that flock carries on. Bttt
the owner of that ftock neceflarily wifhes to difpofe of as great a
part of thofe goods as he can at home. He thereby faves himfelf
the trouble, rilk and- expence, of exportation, and he will upon
that account be glad to fell them at home, not only for a much
fmaller price, but with fomewhat a fmaller profit than he might
expect to make by fending them abroad. He naturally, therefore,
endeavours as much as he can to turn his carrying trade into a
foreign trade of confumption. If his ftock again is employed in a
foreign trade of confumption, he will, for the fame reafon, be glad

to

j4o THE NATURE AND CAUSES O F

BOOK to difpofe of at home as great a part as he can of the home goods,
which he collects in order to export to lome foreign market, and he
will thus endeavour as much as he can, to turn his foreign trade of
confumption into a home trade. The mercantile flock of every
country naturally courts in this manner the near, and fhuns the
diftant employment ; naturally courts the employment in which
the returns are frequent, and fhuns that in which they are
diftant and flow ; naturally courts the employment in which it
can maintain the greatefl quantity of productive labour in. the
country to which it belongs, or in which its owner refutes, and
fhuns that in which it can maintain there the fmalleft quantity. It
naturally courts the employment which in ordinary cafes is mofl
advantageous, and fhuns that which in ordinary cafes is leaft advan-
tageous to that country.

But if in any of thofe diftant employments, which irm ordinary
cafes are lefs advantageous to the country, the profit mould happen
to rife fomewhat higher than what is fuffkient to balance the natural
preference which is given to nearer employments, this fuperiority
of profit will draw ftock from thofe nearer employments, till the
profits of all return to their proper level. This fuperiority of profit,
however, is a proof that in the actual circumftances of the fociety,
thofe diftant employments are fomewhat underftocked in proportion
to other employments, and that the ftock of the fociety is notdiftrir
buted in the propereft manner among all the different employments
carried on in it. It is a proof that fomething is either bought cheaper
or fold dearer than it ought to be, and that fome particular clafs of
citizens is more or lefs opprefTed either by paying more or by getting
lefs- than what is fuitable to that equality, which ought to take place,
and which naturally docs take place among all the different clafks
of them. Though the fame capital never will maintain the fame
quantity of productive labour in a diftant as in a near employment,
yet a diftant employment may be as neceffary for the welfare of the

fociety

THE WEALTH OF NATIONS.

fociety as a near one j the goods which the diftant employment C
deals in being neceflary, perhaps, for carrying on many of the u
nearer employments. But if the profits of thofe who deal in fuch
goods are above their proper level, thofe goods will be fold dearer
than they ought to be, or fomewhat above their natural price, and
all thofe engaged in the nearer employments will be more or lefs
opprefled by this high price. Their intereft, therefore, in this cafe
requires that fome ftock fhould be withdrawn from thofe nearer
employments, and turned towards that diftant employment, in
order to reduce its profits to their proper level, and the price of the
goods which it deals in to their natural price. In this extraordi-
nary cafe, the publick intereft requires that fome ftock fhould be
withdrawn from thofe employments which in ordinary cafes are
more advantageous, and turned towards one which in ordinary cafes
is lefs advantageous to the publick : and in this extraordinary cafe,
the natural interefts and inclinations of men coincide as exactly
with the publick intereft as in all other ordinary cafes, and lead
them to withdraw ftock from the near, and to turn it towards the
diftant employment.

It is thus that the private interefts and paflions of individuals
naturally difpofe them to turn their ftock towards the employments
which in ordinary cafes are moft advantageous to the fociety. Bu
if from this natural preference they fhould turn too much of it
towards thofe employments, the fall of profit in them and the rife
of it in all others immediately difpofe them to alter this faulty diftri-
bution. Without any intervention of law, therefore, the private
interefts and palfions of men naturally lead them to divide and
diftribute the ftock of every fociety, among all the different employ-
ments carried on in it, as nearly as polfible in the proportion which
is moft agreeable to the intereft of the whole fociety.

Vol. II.

Ii

All

»42 THE NATURE AND CAUSES OF

BOOK all the different regulations of the mercantile fyftem, neceffarily
v-~-J derange more or lefs this natural and moft advantageous diftribution
of frock. But thofe which concern the trade to America and the
Eaft Indies derange it perhaps more than any other ; becaufe the
trade to thofe two great continents abforbs a greater quantity of
flock , than any two other branches of trade. The regulations,
however, by which this derangement is effected in thofe two
different branches of trade are not altogether the fame. Monopoly
is the great engine of both but it is a different fort of monopoly.
Monopoly of one kind or another, indeed, feems to be the fole
engine of the mercantile fyftern.

In the trade to America every nation endeavours to engrofs as
much as poflible the whole market of its own colonies, by fairly
excluding all other nations from any direct trade to them. During
the greater part of the fixteenth century, the Portugueze endeavoured
to manage the trade to the Eaft Indies in the fame manner, by
claiming the fole right of failing in the Indian feas, on account of.
the merit of having fir ft found out the road to them. The Dutch
ftiil continue to exclude all other European nations from any direct
trade to their fpice iflands. Monopolies of this kind are evidently
eftablifhed againftall other European nations, who are thereby not
only excluded from a trade to which it might be convenient for
them to turn fome part of their ftock, but are obliged to buy the
goods which that trade deals in fomewhat dearer than if they
could import them themfelves directly from the countries which
produce them.

But fince the fall of the power of Portugal, no European nation
has claimed the exclufive right of failing in the Indian feas, of which
the principal ports are now open to the mips of all European nations.
Except in Portugal, however, and within the fe few years in France,

the

THE WEALTH OF NATIONS.

243

the trade to the Eaft Indies has in every European country been C HA P.

fubjected to an exclufive company. Monopolies of this kind are 1 y-^

properly eftablifhed againft the very nation which erects them.
The greater part of that nation are thereby, not only excluded
from a trade to which it might be convenient for them to turn fome
part of their flock, but are obliged to buy the goods which that
trade deals in, fomewhat dearer than if it was open and free to all
their countrymen. Since the eftablifhment of the Englifh Eaft
India company, for example, the other inhabitants of England,
over and above being excluded from the trade, muft have paid in
the price of the Eaft India goods which they have confumed, not
only for all the extraordinary profits which the company may have
made upon thofe goods in confequence of their monopoly, but for
all the extraordinary wafte which the fraud and abufe, infeparable
from the management of the affairs of fb great a company, muft
neceflarily have occafioned. The abfurdity of this fecond kind of
monopoly, therefore, is much more manifeft than that of the
firft.

Both thefe kinds of monopolies derange more or lefs the natural
diftribution of the ftock of the fociety : but they do not always
derange it in the fame way.

Monopolies of the firft kind always attract, to the particular
trade in which they are eftablifhed, a greater proportion of the ftock
of the fociety than what would go to that trade of its own accord.

Monopolies of the fecond kind may fometimes attract, ftock
towards the particular trade in which they are eftablifhed and
lometimes repel it from that trade according to different circum-
.flances. In poor countries they naturally attract towards that
trade more ftock than would otherwife go to it. In rich countries

I i 2 they

THE NATURE AND CAUSES OF

they naturally repel from it a good deal of flock which would
otherwife go to it.

, Sahara A vw scrirftc/bcnq . isuilo Is isvil ibti z& llsw1 licit l^vld bn'& *

Such poor countries as Sweden and Denmark, for example,
would probably have never fent a fingle fhip to the Eaft Indies, had
not the trade been fubjected to an exclufive company. The efta-
blifliment of fuch a company neceflfarily encourages adventurers.
Their monopoly fecures them againft all competitors in the home
market, and they have the fame chance for foreign markets with the
traders of other nations. Their monopoly (hows them the certainty
of a great profit upon a confiderable quantity of goods, and the
chance of a confiderable profit upon a great quantity. Without fuch
extraordinary encouragement, the poor traders of fuch poor countries
would probably never have thought of hazarding their fmall capitals
in fo very diftant and uncertain an adventure as the trade to the
Eaft Indies muft naturally have appeared to them.

. islhji #iw3#i hum csri jxui'oa ^o wi l$icdL ' 1& il/xa ion Jbjuqw:
Such a rich country as Holland, on the contrary, would pro-
bably, in the cafe of a free trade, fend many more mips to the
Eaft Indies than it actually does. The limited ftock of the Dutch
Eaft India company probably repels from that trade many great
mercantile capitals which would otherwife go to it. The mer-
cantile capital of Holland is fo great that it is, as it were, con-
tinually overflowing, fometimes into the public funds of foreign
countries, fometimes into loans to private traders and adventurers
of foreign countries, fometimes into the moft round about fo-
reign trades of confumption, and fometimes into the carrying
trade. All near employments being completely filled up, all the
capital which can be placed' in them with any tollerable profit
being already placed in them, the capital of Holland neceffarily
flows towards the moft diftant employments. The trade to the
Eaft Indies, if it was altogether free, would probably abforb the

5 greater

THE WEALTH OE NATIONS.

greater part of this redundant capital. The Eaft Indies offer a
market both for the manufactures of Europe and for the gold
and filver as well as for feveral other productions of America,
greater and more, extenfive than both Europe and America put

Every derangement of the natural diftribution of ftock is necef-
iarily hurtful to the fociety in which it takes place whether it be
by repelling from a particular trade the ftock which would other-
wife go to it, or by attracting towards a particular trade that
which would not otherwife come to it. If without any exclusive
company, the trade of Holland to the Eaft Indies would be greater
than it actually is, that country muff, fuffer a confiderable lofs by
part of its capital being excluded from the employment moft conve-
nient for that part. And in the fame manner, if without an exclu-
five company, the trade of Sweden and Denmark to the Eaft Indies
would be lefs than it actually is, or, what perhaps is more probable,
would not exift at all, thofe two countries muft likewife fuffer a
confiderable lofs by part of their capital being drawn into an employ-
ment which muft be more or lefs unfuitable to their prefent circum-
ftances. Better for them, perhaps, in their prefent circumftances
to buy Eaft India goods of other nations, even though they mould
pay fomewhat dearer, than to turn fo great a part of their fmall
capital to fo very diftant a trade, in which the returns are fo very
flow, in which that capital can maintain fo fmall a quantity
of productive labour at home, where productive labour is fo much
wanted, where fo little is done, and where fo much is to do.

Though without an exclufive company, therefore, a particular
country fhould not be able to carry on any direct trade to the Eaft
Indies, it will not from thence follow that fueh a company ought to
j be eftablifhed there, but only that fuch a country ought not in

thefe

THE NATURE AND CAUSES OF

K thefe circumftances to trade directly to the Eaft Indies. That fuch
companies are not in general neceflaryfor carrying on theEaft India
trade, is fufficiently demonftrated by the experience of the Portu-
gneze, who enjoyed almoft the whole of it for more than a century
together without any exclufive company.

No private merchant, it has been faid, could well have capital
fufficient to maintain factors and agents in the different ports of
theEaft Indies, in order to provide goods for the mips which he might
occafionally fend thither ; and yet, unlefs he was able do this, the
difficulty of finding a cargo might frequently make his fhips lofe the
feafon for returning, and the expence of fo long a delay would not
only eat up the whole profit of the adventure, but frequently occafion
a very confiderable lofs. This argument, however, if it proved
any thing at all, would prove that no one great branch of trade
could be carried on Without an exclufive company, which is
contrary to the experience of all nations. There is no great branch
of trade in which the capital of any one private merchant is fufficient
for carrying on all the fubordinate branches which muft be carried
on in order to carry on the principal branch. But when a nation
is ripe for any great branch of trade, fome merchants naturally turn
their capitals towards the principal, and fome towards the fubor-
dinate branches of it ; and though all the different branches of it
are in this manner carried on, yet it very feldom happens that
they are all carried on by [the capital of one private merchant.
If a nation, therefore, is ripe for the Eaft India trade, a certain
portion of its capital will naturally divide itfelf among all the
different branches of that trade. Some of its merchants will find
it for their intereft to refide in the Eaft Indies, and to employ their
capitals there in providing goods for the fhips which are to be fent
out by other merchants who refide in Europe. The fettlements

which

THE WEALTH OF NATIONS.

which different European nations have obtained in the Eaft Indies,
if they were taken from the exelufive companies to which they at
prefent belong and put under the immediate protection of the fove-
reign, would render this refidence both fafe and eafy, at leaft to the
merchants of the particular nations to whom thofe fettlements
belong. If at any particular time that part of the capital of any
country which of its own accord tended and inclined, if I may fay
fo, towards the Eaft India trade, was not fufficient for carrying on
all thofe different branches of it, it would be a proof that at that
particular time, that country was not ripe for that trade, and that
it would do better to buy for fome time, even at a higher price,
from other European nations, the Eaft India goods it had occafion
for, than to import them itfelf directly from the Eaft Indies. What
it might lofe by the high price of thofe goods could feldom be equal
to the lofs which it would fuftain by the diftraclion of a large portion
of its capital from other employments more neceffary, or more
ufeful, or more fuitable to its circumftances and fituation than a
direct trade to the Eaft Indies.

Though the Europeans poffefs many confiderable fettlements
both upon the coaft of Africa and in the Eaft Indies, they have not
yet eftablifhed in either of thofe countries fuch numerous and
thriving colonies as thofe in the iflands and continent of America.
Africa, however, as well as feveral of the countries comprehended
under the general name of the Eaft Indies, are inhabited by barba-
rous nations. But thofe nations were by no means fo weak and
defencelefs as the miferable and helplefs Americans 3 and in propor-
tion to the natural fertility of the countries which they inhabited, they
were befides much more populous. The moft barbarous nations
either of Africa or of the Eaft Indies were fhepherds -y even the
Hotentots were fo. But the natives of every part of America,
except Mexico and Peru, were only hunters ; and the difference is

4 very

THE NATURE AND CAUSES OF

very great between the number of fhepherds and that of hunters
whom the fame extent of equally fertile territory can maintain. In
Africa and the Eaft Indies, therefore, it was moredifficult todifplace the
natives, and to extend the European plantations over the greater part
of the lands of the original inhabitants. The genii s of exclufive com-
panies, befides, is unfavourable, it has already been obferved, to the
growth of new colonies, and has probably been the principal caufe
of the little progrefs which they have made in the Eaft Indies. The
Portugueze carried on the trade both to Africa and the Eaft Indies
without any exclufive companies, and their fettlements at Congo,
Angola, and Benguela on the coaft of Africa, and at Goa in the
Eaft Indies, though much dep retted by fuperftition and every fort
of bad government, yet bear lome faint refemblance to the colonies
of America, and are partly inhabited by Portugueze who have been
eftablifhed there for feveral generations. The Dutch fettlements at
the Cape of Good Hope and at Batavia, are at prefent the moft
confiderable colonies which the Europeans have eftablifhed either in
Africa or in the Eaft Indies, and both thofe fettlements are pecu-
liarly fortunate in their fituation. The Cape of Good Hope was
inhabited by a race of people almoft as barbarous and quite as inca-
pable of defending themfelves as the natives of America. It is
befides the half way-houfe, if one may fay fo, between Europe and
the Eaft Indies, at which almoft every European fhip makes fome
ftay both in going and returning. The fupplying of thofe fliips with
every fort of frefh provifions, with fruit and fometimes with wine,
affords alone a very extenfive market for the furplus produce of the
colonifts. What the Cape of Good Hope is between Europe and
every part of the Eaft Indies, Batavia is between the principal
countries of the Eaft Indies. It lies upon the moft frequented
road from Indoftan to China and Japan, and is nearly about
mid- way upon that road. Almoft all the fhips too that fail between

Europe

THE WEALTH OF NATIONS.

Europe and China touch at Batavia ; and it is, over and above all C
this, the center and principal mart of what is called the country u
trade of the Eaft Indies not only of that part of it which is car-
ried on by Europeans, but of that which is carried on by the native
Indians, and veffels navigated by the inhabitants of China and Japan ;
of Tonquin, Malacca, Cochin- China and the ifland of Celebes,
are frequently to be feen in its port. Such advantageous fituations
have enabled thofe two colonies to furmount all the obftacles which
the oppreflive genius of an exclufive company may have occafionally
oppofed to their growth. They have enabled Batavia to furmount
the additional difadvantage of perhaps the moft unwholefome
■climate in the world.

The Englilh and Dutch companies, though they have eftablifhed
no confiderable colonies, except the two above mentioned, have both
made confiderable conquefts in the Eaft Indies. But in the man-
ner in which they both govern their new fubjefls, the natural genius
of an exclufive company has mown itfelf raoft diftinclly. In the
fpice iflands the Dutch burn all the fpiceries which a fertile feafon
produces beyond what they ex peel: to difpofe of in Europe with fuch
a profit as they think fufficient. In the iflands where they have no
fettlements, they give a premium to thofe who collect the young
bloflbms and green leaves of the clove and nutmeg trees which
naturally grow there, but which this barbarous policy has now, it
is faid, almoft completely extirpated. Even m the iflands where
they have fettlements they have very much reduced, it is faid, the
number of thofe trees. If the produce even of their own iflands
was much greater than what fuited their market, the natives, they
fufpect, might find means to convey fome part of it to other nations ;
and the bed way, they imagine, to fecure their own monopoly, is to
take care that no more fhall grow than what they themfelves carry
to market. By different arts of oppreflion they have reduced the
population of feveral of the Moluccas nearly to the number which

Vol. II. K k is

THE NATURE AND CAUSES OF

K is fufficient to fupply with frefh provifions and other neceflaries of
life their own infignificant garrifons, and fuch of their fhips as
occafionally come there for a cargo of fpices. Under the govern-
ment even of the Portugueze, however, thofe iflands are faid to
have been tolerably well inhabited. The Englifh company have
not yet had time to eftablifh in Bengal fo perfectly deftructive a
fyftem. The plan of their government, however, has had exactly
the fame tendency. It has not been uncommon, I am well allured,
for the chief, that is, the firft clerk of a factory, to order a peafant
to plough up a rich field of poppies, and fow it with rice' or fome
other grain. The pretence was, to prevent a fcarcity of provifions ;
but the real reafon, to give the chief an opportunity of felling at a
better price a large quantity of opium, which he happened then to
have upon hand. Upon other occafions the order has been reverfed;
and a rich field of rice or other grain has been ploughed up in order
to make room for a plantation of poppies j when the chief forefaw
that extraoidinary profit was likely to be made by opium. The
fervants of the company have upon feveral occafions attempted to
eftablifh in their own favour the monopoly of fome of the moft
important branches, not only of the foreign, but of the inland
trade of the country. Had they been allowed to go on, it is impof-
fible that they mould not at fome time or another have attempted to
reftrain the production of the particular articles of which they had1
thus ufurped the monopoly, not only to the quantity which they,
themfelves could purchafe, but to that which they could expect to.
fell with fuch a profit as they might think fufficient. In the courfe
of a century or two, the policy of the Englifh company would in
this manner have probably proved as completely deftructive as
that of the Dutch.

Nothing, however, can be more directly contrary to the real
intereft of thofe companies, confidered as the fovereigns of the
countries which they have conquered, than this deftructive plan.

In

THE WEALTH OF NATIONS. 25

In almoin all countries the revenue of the fovereign is drawn from CHAP,
that of the people. The greater the revenue of the people, there- v-XJ-L- 1
fore, the greater the annual produce of their land and labour, the
more they can afford to the fovereign. It is his interefr, therefore,
toincreafe as much as poffible that annual produce. But if this is
the intereft of every fovereign, it is peculiarly fo of one whofe
revenue, like that of the fovereign of Bengal, arifes chiefly from a
land-rent. That rent mult neceffarily be in proportion to the
quantity and value of the produce, and both the one and the other
muft depend upon the extent of the market. The quantity will
always be fuited with more or lefs exactnefs to the confumption of
thofe who can afford to pay for it, and the price which they will pay
will always be in proportion to the eagernefs of their competition.
It is the interefl of fuch a fovereign, therefore, to open the mod
extenfive market for the produce of his country, to allow the moft
perfect freedom of commerce, in order to increafe as much as poffible
the number and the competition of buyers and upon this account
to abolifh, not only all monopolies, but all reftraints upon the
tranfportation of the home produce from one part of the country to
another, upon its exportation to foreign countries, or upon the
importation of goods of any kind for which it can be exchanged.
He is in this manner moft likely to increafe both the quantity and
value of that produce, and confequently of his own fliare of it,
or of his own revenue.

But a company of merchants are, it feems, incapable of confider-
ing themfelves as fovereigns, even after they have become fuch.
Trade, or buying in order to fell again, they (till confider as the
principal bufmefs, and by a ftrange abfurdity, regard the character
of the fovereign as but an appendix to that of the merchant, as
fomething which ought to be made fubfervient to it, or by means of
which they may be enabled to buy cheaper in India and thereby to

K k 2 fell

252

THE NATURE AND CAUSES OF

BOOK fell with a better profit in Europe. They endeavour for this
W-V-— ' purpofe to keep out as much as poflible all competitors from the
market of the countries which are fubject. to their government, and
confequently to reduce, at leaft, fome part of the Surplus produce
of thofe countries to what is barely fufficient for fupplying their own
demand, or to what they can expect to fell in Europe with fuch a
profit as they may think reafonable. Their mercantile habits draw
them in this manner, almon: neceflarily, though perhaps infenfibly, to
prefer upon all ordinary occasions the little and tranfitory profit of
the monopolist, to the great and permanent revenue of the fovereigir
and would gradually lead them to treat the countries fubject to their
government nearly as the Dutch treat the Moluccas.

But if the genius of fuch a government, even as to what concerns
its direction in Europe, is in this manner efTentially and perhaps
incurably faulty, that of its administration in India is (till morefo.
That administration is neceflarily compofed of a council of mer-
chants, a profeflion no doubt extremely refpectable, but which in
no country in the world carries along with it that fort of authority
which naturally over- awes the people, and without force commands
their willing obedience. Such a council can command obedience
only by the military force with which they are accompanied, and
their government is therefore neceflarily military and defpotical.
Their proper bufinefs, however, is that of merchants. It is to>
fell, upon their mailers account, the European goods configned to
them, and to buy in return Indian goods for the European market.
It is to- fell the one as dear and to buy the other as cheap as poflible,
and confequently to exclude as much as poflible all rivals from the
particular market where they keep their fhop. The genius of
the administration, therefore, fo far as concerns the trade of
the company, is the fame as that of the direction. It tends to
make government fubfervient to the intereft of monopoly, and

confequently

TCTHS WEALTH OF NATIONS. 25

confequently to ftunt the natural growth of fome parts at lead of CHAP,
the furplus produce of the country to what is barely fufficient for u-X^-*
anfwering the demand of the company.

All the members of the adminiftration, befides, trade more or
lefs upon their own account, and it is in vain to prohibit them from
doing fo. Nothing can be more completely foolifh than to expect
that the clerks of a great counting-houfe at ten thoufand miles
diftance, and confequently almoft quite out of fight, mould, upon a
iimple order from their m afters, give up at once doing any fort of
bufmefs upon their own account, abandon forever all hopes of
making a fortune of which they have the means in their hands,
and content themfelves with the moderate falaries which thofe mafters
allow them, and which, moderate as they are, can feldom be aug-
mented, being commonly as large as the real profits of the company
trade can afford. In fuch circumftances, to prohibit the fervants
of the company from trading upon their own account, can have
fcarce any other effect than to enable the fuperior fervants, under
pretence of executing their mafters order, to opprefs fuch of the
inferior ones as have had the misfortune to fall under their difplea-
fure. The fervants naturally endeavour to eftablifh the fame mono-
poly in favour of their own private trade as of the publick trade of
the company. If they are fuffered to act as they could wifli, they
will eftablifh this monopoly openly and directly, by fairly prohibiting
all other people from trading in the articles in which they chufe to
deal-j and this perhaps is the beft and leaft oppreliive way of efta-
blifhingit. But if by an order from Europe they are prohibited from
doing this, they will, notwithftanding, endeavour to eftablifh a
monopoly of the fame kind, fecretly and indirectly, in a way that
is much more deftructive to the country. They will employ the
whole authority of government, and pervert the adminiftration of
juftice, in older to harrafs and ruin thofe who interfere with them

iu

THE NATURE AND- CAUSES OF

K in any branch of commerce which by means of agents, either con-
_> cealed or at lead not publickly avowed, they may chufe to carry
on. But the private trade of the fervants will naturally extend to
a much greater variety of articles than the publick trade of the
company. The publick trade of the company extends no further
than the trade with Europe, and comprehends a part only of the
foreign trade of the country. But the private trade of the fervants
may extend to all the different branches both of its inland and foreign
trade. The monopoly of the company can tend only to Hunt the
natural growth of that part of the furplus produce which in the
cafe of a free trade would be exported to Europe. That of the
fervants tends to ftunt the natural growth of every part of the
produce in which they chufe to deal, of what is deftined for home
confumption, as well as of what is deftined for exportation : and
confequently to degrade the cultivation of the whole country, and to
reduce the number of its inhabitants. It tends to reduce the quan-
tity of every fort of produce, even that of the necefpiries of life,
whenever the fervants of the company chufe to deal in them, to
what thofe fervants can both afford to buy and expect to fell with
fuch a profit as pleafes them.

From the nature of their fituation too the fervants muft be more
difpofed to fupport with rigorous feverity their own intereft againft
that of the country which they govern, than their m afters can be to
fupport theirs. The country belongs to their mafters, who cannot
avoid having fome regard for the intereft of what belongs to them.
But it does not belong to the fervants. The real intereft of their
mafters, if they were capable of underftanding it, is the fame with
that of the country, and it is from ignorance only and the meannefs
of mercantile prejudice that they ever opprefs it. But the real
intereft of the fervants is by no means the fame with that of the
country, and the moll perfect information would not neceifarily

9 . put

THE WEALTH OF NATIONS.

put an end to their oppreffions. The regulations accordingly which
have been fent out from Europe, though they have beei frequently
weak, have commonly been well-meaning. More intelligence and
perhaps lefs good-meaning has fometimes appeared in thofe eftablifhed
by the fervants in India. Jt is a very lingular government in which
every member of the administration wifhes to get out of the
country, and confequently to have done with the government, as foon
as he can, and to whofe intereft, the day after he has left it and
carried his whole fortune with him, it is perfectly indifferent if the
whole country was fvvallowed up by an earthquake.

I mean not, however, by any thing which I have here faid.to throw
any odious imputation upon the general character of the fervants of
the Ea'ft India company, and much lefs upon that of any particular
perfons. It is the fyffem of government, the fituation in which
they were placed, that I mean to cenfure ; not the character of
thofe who have acted in it. They acted as their fituation naturally
directed, and they who have clamoured the louden: againft them
would probably not have acted better themfelves. In war and
negociation, the councils of Madrafs and Calcutta have upon feveral
occafions conducted themfelves with a refolution and decifive wifdom
which would have done honour to the fenate of Rome in the belt
days of that republick. The members of thofe councils, however,
had been bred to profeffions very different from war and politicks.
But their fituation alone, without education, experience, or even
example, feems to have formed in them all at once the great quali-
ties which it required, and to haveinfpired them both with abilities
and virtues which they themfelves could not well know that they
poffeffed. if uponfome occafions, therefore, it has animated them
to actions of magnanimity which could not well have been expected,
from them; we mould not wonder if upon others it has prompted,
them to exploits of fomewhat a different nature.

Such

THE NATURE AND CAUSES OF

BOOK Such exclufive companies, therefore, are nuifances in every
v-— > refpedl ; always more or lefs inconvenient to the countries in which
they are eftablifhed, and deftru&ive to thofe which have the misfor-
tune to fall under their government.

CHAP. VIII.

Of the agricultural Syftcms, or of thofe Syjlems of political Oeconomy
which reprefent the Produce of Land as either the fole or the
principal Source of the Revenue and Wealth of every Country,

TH E agricultural fyftems of political ceconomy will not require
fo long an explanation as that which I have thought it
necefTary to bellow upon the mercantile or commercial fyftem.

That fyftem which reprefents the produce of land as the fole
fource of the revenue and wealth of every country, has, fo far as I
know, never been adopted by any nation, and it at prefent exifts
only in the fpecularions of a few men of great learning and inge-
nuity in France. It would not, furely, be worth while to examine
at great length the errors of a fyftem which never has done, and
probably never will do any harm in any part of the world. I mall
endeavour to explain, however, as diftinc"lly as I can, the great
outlines of this very ingenious fyftem.

Mr. Colbert, the famous minifter of Lewis XlVth, was a man
of probity, of great induftry and knowledge of detail ; of great
experience and acutcnefs in the examination of publick accounts,
and of abilities, in mort, every way fitted for introducing method

5 and

THE WEALTH OF NATIONS.

and good order into the colle<5lion and expenditure of the publick
revenue. That minifter had unfortunately embraced all the preju-
dices of the mercantile fyftem. That fyftem, in its nature and
eflence a fyftem of reftraint and regulation, could fcarce fail to
be agreeable to a laborious and plodding man of bufmefs, who had
been accuftomed to regulate the different departments of publick
offices, and to eftablilh the neceffary checks and controuls for
confining each to its proper fphere. The induftry and commerce
of a great country he endeavoured to regulate upon the fame model
as the departments of a publick office ; and inftead of allowing every
man to purfue his own intereft his own way, upon the liberal plan
of equality, liberty and juftice, he beftowedupon certain branches
of induftry extraordinary privileges, while he laid others under as
extraordinary reftraints. He was not only difpofed, like other
European minifters, to encourage more the induftry of the towns
than that of the country, but in order to fupport the induftry of
the towns, he was willing even to deprefs and keep down that of
the country. In order to render provifions cheap to the inhabitants
of the towns, and thereby to encourage manufactures and foreign
commerce, he prohibited altogether the exportation of corn, and
thus excluded the inhabitants of the country from every foreign
market for by far the moft important part of the produce of their
induftry. This prohibition, joined to the reftraints impofed by the
antient provincial laws of France upon the tranfportation of corn
from one province to another, and to the arbitrary and degrading
taxes which are levied upon the cultivators in almoft all the
provinces, difcouraged and kept down the agriculture of that
country very much below the ftate to which it would naturally
have rifen in fo very fertile a foil and fo very happy a climate. This
ftate of difcouragement and depreflion was felt more or lefs in every
different part of the country, and many different enquiries were
iet on foot concerning the caufes of it. One of thofe caufcs
Vol. II. L 1 appeared

THE NATURE AND CAUSES OF

appeared to be the preference given, by the inftitutions of Mr.
Colbert,, to the induftry of the towns above that of the country.

If the rod be bent too much one way, fays the proverb, in
order to make it ftraight you muft bend it as much the other.
The French philofophers, who have propofed the fyftem which
reprefents agriculture as the fole fource of the revenue and wealth
of every country, feem to have adopted this proverbial maxim y
and as in the plan of Mr. Colbert the induftry of the towns was
certainly over- valued in comparifon with that of the country ; fo
in their fyftem it feems to be as certainly under-valued.

The different orders of people who have ever been fuppofed to
contribute in any refpect towards the annual produce of the land

and labour of the country, they divide into three clafles. The firft
is the clafs of the proprietors of land. The fecond is the clafs of
the cultivators, of farmers and country labourers,whom they honour
with the peculiar appellation of the productive clafs. The third
is the clafs of artificers, manufacturers and merchants, whom they
endeavour to degrade by the humiliating appellation of the barren
or unproductive clafs.

The clafs of proprietors contributes to the annual produce by
the expence which they may occafionally lay out upon the improve-
ment of the land, upon the buildings, drains, enclofures and
other ameliorations, which they may either make or maintain upon
it, and by means of which the cultivators are enabled, with the
fame capital, to raife a greater produce, and confequently to pay a
greater rent. This advanced rent may be confidered as the intereft
or profit due to the proprietor upon the expence or capital which he
thus employs in the improvement of his land. Such expences are
in this fyftem called ground expences (depenfes foncieres).

The

THE WEALTH OF NATIONS. - 254

The cultivators or farmers contribute to the annual produce ^j^1**
by what are in this fyftem called the original and annual expences u--v— -J
(depenfes primitives et depenfes annuelles) which they lay out
upon the cultivation of the land. The original expences confift
in the inftruments of huibandry, in the ftock of cattle, in the
feed, and in the maintenance of the farmer's family, fervants and
cattle, during at leaft a great part of the firft year of his occu-
pancy, or till he can receive fome return from the land. The
annual expences confift in the feed, in the tear and wear of the
inftruments of huibandry, and in the annual maintenance of the
farmer's fervants and cattle, and of his family too, fo far as any
part of them can be confidered as fervants employed in cultiva-
tion. That part of the produce of the land which remains to
him after paying the rent, ought to be fufficient, firft, to replace
to him within a reafonable time, at leaft during the term of his
occupancy, the whole of his original expences, together with the
ordinary profits of ftock ; and, fecondly, to replace to him an-
nually the whole of his annual expences, together likewife with
the ordinary profits of ftock. Thofe two forts of expences are
two capitals which the farmer employs in cultivation ; and unlefs
they are regularly reftored to him, together with a reafonable
profit, he cannot carry on his employment upon a level with
other employments j but, from a regard to his own intereft,
muft defert it as foon as poffible, and feek fome other employ-
ment. That part of the produce of the land which is thus ne-
cefTary for enabling the farmer to continue his bufinefs, ought to
be confidered as a fund facred to cultivation, which if the land-
lord violates, he neceftarily degrades the produce of his own land,
and in a few years not only difables the farmer from paying this
racked rent, but from paying the reafonable rent which he might
otherwife have got for his land. The rent which properly belongs
to the landlord, is no more than the neat produce which remains

L I 2 after

THE NATURE AND CAUSES OF

B O O K after paying in the compleateft manner all the neceflary expences
c. — v — * which muft be previoufly laid out in order to raife the grofs, cr
the whole produce. It is becaufe the labour of the cultivators,
over and above paying compleatly all thofe neceflary expences,
affords a neat produce of this kind, that this clafs of people are in
this fyftem peculiarly diftinguifhed by the honourable appellation
of the productive clafs. Their original and annual expences are
for the fame reafon called, in this fyftem, productive expences,
becaufe, over and above replacing their own value, they occafion the
annual reproduction of this neat produce.

The ground expences, as they are called,, or. what, the land-
lord lays out upon die improvement of his land, are in this
fyftem too honoured with the appellation of productive expences.
Till the whole of thofe expences, together with the ordinary
profits of flock, have been compleatly repaid to him by the ad-
vanced rent which he gets from his land, that advanced rent
ought to be regarded as facred and inviolable, both by the church
and by the king; ought to be fubject neither to tithe nor to taxa.-
tion. If it is otherwife, by difcouraging the improvement, of
land, the church difcourages the future increafe of her own tithes,
and the king the future increafe of his own taxes. As in a well
ordered ftate of things, therefore, , thofe ground expences, over
and above reproducing in the compleateft manner their own
value, occafion likewife after a certain time a reproduction of
a neat produce, they are in this fyftem confidered as productive
expences.

The ground expences of the landlord, however, together with,
the original and the annual expences of the farmer, are the only
three forts of expences which in this fyftem are confidered as pro-
ductive. Ail other expences and all other orders of people, even
thofe who in the common apprehenfions of men are regarded as

the

THE WEALTH OF NATIONS.

the mod productive, are in this account of things reprefented as c
altogether barren and unproductive. u

Artificers and manufacturers, in particular, whofe induftry*
in the common apprehenfions of men, increafes fo much the
value of the rude produce of land, are in this fyftem. reprefented
as a clafs of people altogether barren and unproductive. Their
labour, it is faid, replaces only the ftock which employs them,
together with its ordinary profits. That ftock confifts in the ma-
terials, tools, and wages, advanced to them by their employer ;
and is the fund deftined for their employment and maintenance,
Its profits are the fund deftined for the maintenance of their em-
ployer. Their employer, as he advances to them the ftock of
materials, tools and wages neceffary for their employment, fo he
advances to himfelf what is neceflary for his own maintenance,
and this maintenance he generally proportions to the profit which
he expects to make by the price of their work. Unlefs its price
repays to him the maintenance which he advances to. himfelf, as
well as the materials, tools and wages which he advances to his
workmen, it evidently does not repay him the whole expence
which he lays out upon it. The profits of manufacturing ftock,
therefore, are not, like the rent of land, a neat produce which
remains after compleatly repaying the whole expence which muff
be laid out in order to obtain them. The ftock of the farmer
yields him a profit as well as that of the mafter manufacturer i
and it yields a rent likewife to another perfdn, which that of the
mafter manufafturer does not. The expence, therefore, laid out
in employing and maintaining artificers and manufacturers, does
no more than continue, if one may fay fo, the exiftence of its
own value, and does not produce any new value. It is therefore
altogether a barren and unproductive expence. The. expence,.
en the contrary, laid out in employing farmers and country
4; labourer s>

262 THE NATURE AND CAUSES OF

BOOK labourers, over and above continuing the exiftence of its own
u- v-— J value, produces a new value, the rent of the landlord. It is there-
fore a productive expence.

Mercantile ftock is equally barren and unproductive with
manufacturing ftock. It only continues the exiftence of its own
value, without producing any new value. Its profits are only the
repayment of the maintenance which its employer advances to
himfelf during the time that he employs it, or till he receives the
returns of it. They are only the repayment of a part of the
expence which muft be laid out in employing it.

The labour of artificers and manufacturers never adds any thing
to the value of the whole annual amount of the rude produce of
the land. It adds indeed greatly to the value of fome particular
parts of it. But the confumption which in the mean time it
occafions of other parts, is precifely equal to the value which it
adds to thofe parts ; fo that the value of the whole amount is not,
at any one moment of time, in the lean: augmented by it. The
perfon who works the lace of a pair of fine ruffles, for example,
will fometimes raife the value of perhaps a pennyworth of flax to
thirty pounds fterling. But though at firft fight he appears thereby to
multiply the value of a part of the rude produce about feven thoufand
and two hundred times, he in reality adds nothing to the value of
the whole annual amount of the rude produce. The working
of that lace cofls him perhaps two years labour. The thirty pounds
which he gets for it when it is finifhed, is no more than the repay-
ment of the fubfiftence which he advances to himfelf during the
two years that he is employed about it. The value which, by every
day's, month's, or year's labour, he adds to the flax, does no more
than replace the value of his own confumption during that day,
month, or year. At no moment of time, therefore, does he add
9 - >» any

THE WEALTH OF NATIONS. 263

any thing to the value of the whole annual amount of the rude CyTj1^P'
produce of the land : the portion of that produce which he v. — « — -»
is continually confuming, being always equal to the value
which he is continually producing. The extream poverty of the
greater part of the perlons employed in this expenfive, though
trifling manufacture, may fatisfy us that the price of their work
does not in ordinary cafes exceed the value of their fubfiftence. It
is otherwife with the work of farmers and country labourers. The
rent of the landlord is a value, which, in ordinary cafes, it is con-
tinually producing, over and above replacing, in the moft compleat
manner, the whole confumption, the whole expence laid out upon
the employment and maintenance both of the workmen and of
their employer. ;f

Artificers, manufacturers and merchants, can augment the
revenue and wealth of their foci?ty, by parfimony only ; or, as it is ex-
prefTed in this fyftem, by privation, that is, by depriving themfelves of
a part of the funds deftiried for their own fubfiftence. They annually
reproduce nothing but thofe funds. Unlefs, therefore, they annually
fave fome part of them, unlefs they annually deprive themfelves of
the enjoyment of fome part of them, the revenue and wealth of
their fociety can never be in the fmalleft degree augmented by
means of their induftry. Farmers and country labourers, on the
contrary, may enjoy compleatly the whole funds deftined for their
own fubfiftence, and yet augment at the fame time the revenue and
wealth of their fociety. Over and above the funds deftined for
their own fubfiftence, their induftry annually affords a neat produce,
of which the augmentation necefTarily augments the revenue and
wealth of their fociety. Nations, therefore, which, like France or
England, confift in a great meafure of proprietors and cultivators,
can be enriched by induftry and enjoyment. Nations, on the
contrary, which, like Holland and Hamburgh, are compoled
chiefly of merchants, artificers and manufacturers, can grow rich

only

THE NATURE AND CAUSES OF

only through parfimony and privation. As the intereft of nations
fo differently circumftanced is very different, fo is likewife the com-
mon character of the people. In thofe of the farmer kind libera-
lity, franknefs, and good fellowfhip, naturally make a part of that
common character. In the latter, narrownefs, meannefs, and a
felfifli difpofition, averfe to all focial pleafure and enjoyment.

The unproductive clafs, that of merchants, artificers, and manu-
facturers, is maintained and employed altogether at the expence of
the two other clafles, of that of proprietors, and of that of culti-
vators. They furnifh it both with the materials of its work and
with the fund of its fubfiftence, with the corn and cattle which it
confumes while it is employed about that work. The proprietors
and cultivators finally pay both the wages of all the workmen of
the unproductive clafs, and the profits of all their employers.
Thofe workmen and their employers are properly the fervants of
the proprietors and cultivators. They are only fervants who work
without doors, as menial fervants work within. Both the one
and the other, however, are equally maintained at the expence of
the fame matters. The labour of both is equally unproductive.
It adds nothing to the value of the fum total of the rude produce
.of the land. Infread of increafing the value of that fum total, it
is a charge and expence which mujft be paid out of it.

The unproductive clafs, however, is not only ufeful, but greatly
-ufeful to the other two clafTes. By means of the induftry of mer-
chants, artificers, and manufacturers, the proprietors and cultiva-
tors can purchafe both the foreign goods and the manufactured
produce of their own country which they have occafion for, with
the produce of a much fmaller quantity of their own labour than
what they would be obliged to employ if they were to attempt, in
an aukward and unlkilful manner, either to import the one or to

make

THE WEALTH OF NATIONS.

iRakethc other for their own ufe. By means of the unproductive c
clafs, the cultivators are delivered from many cares which would
otherwife diftract their attention from the cultivation of land. The
fuperiority of produce which, in confequence of this undivided
attention, they are enabled to raife, is fully fufficient to pay the
whole expence which the maintenance and employment of the
unproductive clafs cofts either the proprietors, or themfelves.
The induftry of merchants, artificers, and manufacturers, though
in its own nature altogether unproductive, yet contributes in
this manner indirectly to increafe the produce of the land. It
increafes the productive powers of productive labour, by leaving it
at liberty to confine itfelf to its proper employment, -the cultiva-
tion of land ; and the plough goes frequently the eafier and the
better by means of the labour of the man whofe bufinefs is mod
remote from the plough.

It can never be the interefi of the proprietors and cultivators
to reftrain or to clifcourage in any refpect the induftry of mer-
chants, artificers and manufacturers. The greater the liberty
which this unproductive clafs enjoys, the greater will be the com-
petition in all the different trades which compofe it, and the cheaper
will the other twoclaffes be fupplied both with foreign goods, and
with the manufactured produce of their own country.

It can never be the interefl of the unproductive clafs to opprels
the other two claries. It is the furplus produce of the land, or
what remains after deducting the maintenance, firft, of the cultiva-
tors, and afterwards of the proprietors, that maintains and employs
the unproductive clafs. The greater this furplus the greater muft
likewife be its maintenance and employment. The eftablifhment
of perfeil juftice, of perfect liberty, and of perfect equality, is the

Vol. 1U M m very

THE NATURE AND CAUSES OF

B or> rc very fimple fecret which mod effectually fecures the higheft degree
<- — j of profperity to all the three claries.

The merchants, artificers, and manufacturers of thofe mercantile
flates which, like Holland and Hamburgh, confift chiefly of this
unproductive clafs, are in the fame manner maintained and em-
ployed altogether at the expence of the proprietors and cultivators
of land.. The only difference is, that thofe proprietors and culti-
vators are, the greater part of them, placed at a moft inconvenient
diftance from the merchants, artificers, and manufacturers whom
they iupply with the materials of their work and the fund of
their fubliftence, are the inhabitants of other countries, and the
fubjeets of other governments..

Such mercantile (rates, however, are not only ufeful, but greatly
ufeful to the inhabitants of thofe other countries. They fill up,
in fome meafure, a very important void, and fupply the place of
the merchants, artificers and manufacturers, whom the inhabitants
of thofe countries ought to find at home, but whom, from fome
defect in their policy, they do not find at home.

It can never be the intereft of thofe landed nations, if I may
call them fo, to difcourage or diftrefs the induftry of fuch mercantile
ftates, by impofing high duties upon their trade, or upon the
commodities which they furnifii. Such duties, by rendering thofe
commodities dearer, could ferve only to fink the real value of the
furplus produce of their own land, with which, or, what comes to
the fame thing, with the price of which thofe commodities are
purchafed. Such duties could ferve only to difcourage the increafe
of that furplus produce, and confequently the improvement and
cultivation of their own land. The mof! effectual expedient, on
the contrary, for raifmg the value of that furplus . produce* for

encouraging-

THE WEALTH OF NATIONS. 267

encouraging its increafe, and confequently the improvement and C H A g.
cultivation of their own land, would be to allow the moft perfect
freedom to the trade of all fuch mercantile nations.

This perfect freedom of trade would even be the moft effectual
expedient for fupplying them, in due time, with all the artificer?*
manufacturers and merchants, whom they wanted at home, and for
filling up in the propereft and moft advantageous manner that very
important void which they felt there.

Jcimrnvnohm, from r> is otfrBiq <rnadJ to nsq 7vie;nf 3^} t31B zioibv

The continual increafe of the furplus produce of their land,
would, in due time, create a greater capital than what could be
employed with the ordinary rate of profit in the improvement and
cultivation of land ; and the furplus part of it would naturally turn
itfelf to the employment of artificers and manufacturers at home.
But thofe artificers and manufacturers, finding at home, both the
materials of their work and the fund of their fubliftence, might
immediately, even with much lefs art and (kill, be able to work as
cheap as the like artificers and manufacturers of fuch mercantile
ftates, who had both to bring from a great diftance. Even though,
from want of art and (kill, they might not for fome time be able
to work as cheap, yet, finding a market at home, they might
be able to fell their work there as cheap as that of the artificers and
manufacturers of fuch mercantile ftates, which could not be brought
to that market but from fo great a diftance; and as their art and
ikill improved, they would foon be able to fell it cheaper. The
artificers and manufacturers of fuch mercantile ftates, therefore,
would immediately be rivalled in the market of thofe landed nations,
and foon after underfold and juftled out of it altogether. The
cheapnefs of the manufactures of thofe landed nations, in confe-
quence of the gradual improvements of art and (kill, would, in
due time, extend their fale beyond the home market, and carry

Mm 2 them

TH"E NATURE AND CAUSES OF

K them to many foreign markets, from which they would in the
*» fame manner gradually juftle out many of the manufactures of
fuch mercantile nations.

This continual increafe both of the rude and" manufactured
produce of thofe landed nations would in due time create a
greater capital than cou!d, with the ordinary rate of profit, be
employed either in agriculture or in manufactures. The furplus of
this capital would naturally turn itfelf to foreign trade, and be
employed in exporting to foreign countries fuch parts of the rude
and manufactured produce of its own country as exceeded the
demand of the home market. In the exportation of the produce of
their own country, the merchants of a. landed nation would
have an advantage of the fame kind over thofe of mercantile
nations, which its artificers and manufacturers had over the
artificers and manufacturers of fuch nations j the advantage
of finding at home that cargo, and thofe ftores and provi-
ftons, which the others were obliged to feek for at a diftance. With
inferior art and {kill in navigation, therefore, they would be able
to fell that cargo as cheap in foreign markets as the merchants of
fuch mercantile nations ; and with equal art and fkill they would
be able to fell it cheaper. They would fc-on, therefore,, rival thofe
mercantile nations in this branch of their foreign trade, and in
due time would juftle them out of it. altogether.

According to this liberal and generous fyftem, therefore, the moit
advantageous method in which a landed nation can raife up arti-
ficers, manufacturers and merchants of its own, is to grant the moft
perfect freedom of trade to the artificers, manufacturers and mer-
chants of all other nations. It thereby raifes the value of the furplus .
produce of its own land, of which the continual increafe gradually ,
cftablifhes a fund which in due time necefTarily raifes up all the.

artificers, .

THE WEALTH OF NATIONS. 269

artificers, manufacturers and merchants whom it has cccafion c,?Tftp-
* \ 111.

foi .

When a landed nation, on the contrary, oppreiTcs either by
high duties or by prohibitions the trade of foreign nations, it necef-
farily hurts its own intereft in two different ways. Firft, by raifing
the price of all foreign goods and of all forts of manufactures, it
ncceflarily finks the real value of the furplus produce of \u own land,
with which, or, what comes to the fame thing, with the price of
which it purchafes thofe foreign goods and manufactures, f Jcoadly,by
giving a fort of monopoly of the home market to its own wierchants,.
artificers and manufacturers, it raifes the rate of mercantile and
manufacturing profit in proportion to that of agricultural profit,
and confequently either draws from agriculture a part of the capital
which had before been employed in it, or hinders from going to it
a part of what would, otherwife have gone to- it. This policy,
therefore, difcourages agriculture in. two different ways firft, by
finking the real value of its produce,, and thereby lowering the rate
fir its profit ; and, fecondly,. by raifing the rate of profit in all
other employments. Agriculture is rendered lefs advantageous*
and trade and manufactures more advantageous than they other-
wife would be ; and every man is tempted by his own intereft to turn,
as much as he can, both his capital and his induftry from the former
to the latter employments.

Though,, by this opprelfive policy, a landed nation mould be
able to raife up artificers, manufacturers and merchants, of its own,
fomewhat iooner than it could do by the. freedom of trade; a
matter, however, which is not a little doubtful ; yet it would raife
them up, if one may fay fo, prematurely, and before it was perfectly
ripe for them. By raifing up too haftily one fpecies of induftry, it
^Eould deprefs another morejvaluable fpecies. of induftry. By raifing.
& up

THE NATURE AND CAUSES OF

up too haftiiy a fpecies of induftry which only replaces the flock
which employs it, together with the ordinary profit, it would
deprefs a fpecies of induftry which, over and above replacing that
ftock with its profit, affords like wife a neat produce, a free rent
to the landlord. It would deprefs productive labour, by encou-
raging too haftiiy that labour which is altogether barren and
unproductive.

In what manner, according to this fyftem, the fum total of the
annual produce of the land is diftributed -among the three claffes
abovementioned, and in what manner the labour of the unpro-
ductive clafs, does no more than replace the value of its own
confumption, without increafing in any refpect the value of that fum
total, is reprefented by Mr. Quefnai, the very ingenious and
profound author of this fyftem, in fome arithmetical formularies.
The firft of thefe formularies, which by way of eminence he
peculiarly diftinguilh.es by the name of the Oeconomical Table,
reprefents the manner in which he fuppofes this diftribution takes
place, in a ftate of the moft perfect liberty, and therefore of the
higheft profperity ; in a ftate where the annual produce is fuch as
to afford the greateft poftible neat produce, and where each clafs
enjoys its proper fhare of the whole annual produce. Some fubiequent
formularies reprefent the manner in which, he fuppofes, this diftri-
bution is made in different ftates of reftraint and regulation ; in which,
either the clafs of proprietors, or the barren and unproductive clafs,
is more favoured than the clafs of cultivators, and in which either
the one or the other encroaches more or lefs upon the fhare which
ought properly to belong to this productive clafs. Every fuch
encroachment, every violation of that natural diftribution, which the
moft perfect liberty would eftablifli, muft, according to this fyftem,
neceffarily degrade more or lefs from one year to another the value
and fum total of the annual produce, and muft neceffarily occafion

a gra-

THE WEALTH OF NATIONS.

a gradual declenfion in the real wealth and revenue of the fociety ; C^^P*
a declenfion of which the progrefs muft be quicker or flower, — w — A
according to the degree of this encroachment, according as that
natural diftribntion, which the moft perfect liberty would cftablifh,
is more or lefs violated. Thofe inbfequent formularies reprefent the
different degrees of declenfion, which, according to this fyftem,
correfpond to the different degrees in which this natural diftributioa
of thimrs is violated.

Some fpeculative phyficians feem to have imagined that the
health of the human body could be preferved only by a certain
precife regimen of diet and exercife, of which every the fmallefr.
violation neceffarily occafioned fome degree of difeafe or diforder
proportioned to the degree of the violation. Experience, however,
would feem to fhow that the human body frequently preferves, at
leaft to all appearance, the molt perfect ftate of health under a
vaft variety of different regimens -t even under fbme which are
generally believed to be very far from being perfectly wholefome-.
But the healthful ftate of the human body, it would feem, contains
in itfelf fome unknown principle of prelervation, capable either of
preventing or of correcting, in many refpects, the bad effects even
of a very faulty regimen. Mr. Quefnai> who was himfelf a phyfi-
cian, and a very fpeculative phyfician, feem s to have entertained a
notion of the fame kind concerning the political body, and to have
imagined that it would thrive and profper only under a certain
precife regimen, the exact regimen of perfect liberty and perfect
juitke. He feems not to have confidered that in the political body,
the natural effort which every man is continually making to bettar
his own condition, is a principle of prefervation capable of preventv
ing and correcting in many refpects the bad effects of a political
oeconomy in fome degree both partial, and oppreflive. Such
a political oeconomy, though it no doubt retards more or lefs,.

&

THE NATURE AND CAUSES OF

is not always capable of flopping altogether the natural progrefs of
a nation towards wealth and profperity, and (till lefs of making it
go backwards. If a nation could not profper without the
enjoyment of perfect liberty and perfect jaflice, there is not
in the world a nation which could ever have profpered. In the
political body, however, the wifdom of nature has fortunately
made ample provifion for remedying many of the bad effects of the
folly and injuflice of man ; in the fame manner as it has done in
the natural body for remedying thofe of his floth and intem-
perance.

The capital error of this fyftem, however, feems to lie in its
reprefenting the clafs of artificers, manufacturers and merchants,
as altogether barren and unproductive. The following obfervations
may ferve to mow the impropriety of this reprefentation.

First, this clafs, it is acknowledged, reproduces annually the
value of its own annual confumption, and continues, at leaft, the
exiflence of the flock or capital which maintains and employs it.
But upon this account alone the denomination of barren or unpro-
ductive mould feem to be very improperly applied to it. We
mould not call a marriage barren or unproductive, though it
produced only a fon and a daughter, to replace the father and
mother, and though it did not increafe the number of the human
fpecies, but only continued it as it was before. Farmers and
country labourers, indeed, over and above the flock which maintains
and employs them, reproduce annually a neat produce, a free rent
to the landlord. As a marriage which affords three children is
certainly more productive than one which affords only two ; fb the
labour of farmers and country labourers is certainly more productive
than that of merchants, artificers and manufacturers. The fupe-

rior

THE WEALTH OF NATIONS

nor produce of the one clafs, however, does not render the other CyI-^p*
barren or unproductive. u— v— - -»

Secondly, itfeems, upon this account, altogether improper to
confider artificers, manufacturers and merchants, in the fame light
as menial fervants. The labour of menial fervants does not conti-
nue the exiftence of the fund which maintains and employs them.
Their maintenance and employment is altogether at the expence of
their matters, and the work which they perform is not of a nature
to repay that expence. That work confifts in fervices which perifh
generally in the very inftant of their performance, and does not
fix or realize itfelf in any vendible commodity which can replace the
value of their wages and maintenance. The labour, on the
contrary, of artificers, manufacturers and merchants, naturally
does fix and realize itfelf in fome fuch vendible commodity. It is
upon this account that, in the chapter in which I treat of productive
and unproductive labour, I have claffed artificers, manufacturers
and- merchants, among the productive labourers, ancl menial fervants
among the barren or unproductive.

Thirdly, it feems, upon every fuppofition, improper to fay, that
the labour of artificers, manufacturers and merchants, does not
increafe the real revenue of the fociety. Though we mould fuppofe,
for example, as it feems to be fuppofed in this fyftem, that the
value of the daily, monthly, and yearly confumption of this clafs was
exactly equal to that of its daily, monthly, and yearly production,
yet it would not from thence follow that its labour added nothing to
the real revenue, to the real value of the annual produce of the land and
labour of the fociety. An artificer, for example, who in the firfl
fix months after harveft, executes ten pounds worth of work, though
he fliould in the fame time confume ten pounds worth of corn and
other necelfaries, yet really adds the value of ten pounds to the

Vol. II. N n annual

THE NATURE AND CAUSES OF

K annual produce of the land and labour of the fociety. While lie
— > • has been confuming a half yearly revenue of ten pounds worth of
com and other neceftaries, he has produced an equal value of work
capable of purchafing, either to himfelf or to fome other perfon,
an equal half yearly revenue. The value, therefore, of what has
been confumed and produced during thefe fix months is equal, not
to ten, but to twenty pounds. It is poflible, indeed, that no more
than ten pounds worth of this value, may ever have exifted at any
one moment of time. But if the ten pounds worth of corn and
other necefiaries, which were confumed by the artificer, had been
confumed by a foldier or by a menial fervant, the value of that part
of the annual produce which exifted at the end of the fix months,,
would have been ten pounds lefs than it actually is in confequence
of the labour of the artificer. Though the value of what the artificer
produces, therefore, mould not at any one moment of time be
fuppofed greater than the value he confumes, yet at every moment of
time the actually exifting value of goods in the market is, in confe-
quence of what he produces, greater than, it otherwife would be.

When the patrons of this fyftem alTert that the confumption of
artificers, manufacturers and merchants, is equal to the value of
what they produce, they probably mean no more than that their
revenue, or the fund deftined for their confumption, is equal to it.
But if they had exprefled themfelves more accurately, and only
aiTerted that the revenue of this clafs was equal to the value of what
they produced, it might readily have occurred to the reader that what
would naturally be faved out of this revenue, muft neceffarily
increafe more or lefs the real wealth of the fociety. In order,
therefore, to make out fomething like an argument, it was necefiary
that they mould exprefs themfelves as they have done ; and this
argument, even fuppofing things actually were as it feems to prefume
them to be, turns out to be a very inconclufive one.

Fourthly,

THE WEALTH OF NATIONS

Fourthly, farmers and country labourers can no more aug-
ment, without parfimony, the real revenue, the annual produce
of the land and labour of their fociety, than artificers, manufac-
turers and merchants. The annual produce of the land and labour
of any fociety can be augmented only in two ways ; either, firft,
by fome improvement in the productive powers of the ufeful labour
actually maintained within it j or, fecondly, by fome increafe in the
quantity of that labour.

The improvement in the productive powers of ufeful labour
depend, firft, upon the improvement in the ability of the work-
man ; and, fecondly, upon that of the machinery with which he
works. But the labour of artificers and manufacturers, as it is
capable of being more fubdivided, and the labour of each workman
reduced to a greater fimplicity of operation than that of farmers
and country labourers, fo it is likewife capable of both thefe forts
of improvement in a much higher degree. * In this refpect, there-
fore, the clafs of cultivators can have no fort of advantage over that
of artificers and manufacturers.

The increafe in the quantity of ufeful labour actually employed
within any fociety, muft depend altogether upon the increafe of the
capital which employs it ; and the increafe of that capital again
muft be exactly equal to the amount of the favings from the revenue
either of the particular perfons who manage and direct the employ-
ment of that capital, or of fome other perfons who lend it to them.
If merchants, artificers and manufacturers are, as this fyftem feems
to fuppofe, naturally more inclined to parfimony and faving than
proprietors and cultivators, they are, fo far, more likely to aug-

* See Book I. Chap. I,
N U 2

ment

276 THE NATURE AND CAUSES OF

BOOK ment the quantity of ufeful labour employed within their fociety,
and confequently to increafe its real revenue, the annual produce of
its land and labour.

Fifthly and laftly, though the revenue of the inhabitants of
every country was fuppofed to confift altogether, as this fyftem feems
to fuppofe, in the quantity of fubfiftence which their induftry could
procure to them ; yet, even upon this fuppohtion, the revenue of
a trading and manufacturing country muft, other things being
equal, always be much greater than that of one without trade or
manufactures. By means of trade and manufactures, a greater
quantity of fubfiftence can be annually imported into a particular
country than what its own lands, in the actual ftate of their culti-
vation, could afford. The inhabitants of a town, though they fre-
quently poffefs no lands of their own, yet draw to themfelves by
their induftry fuch a quantity of the rude produce of the lands of
other people as fupplies them, not only with the materials of their
^ work, but with the fund of their fubfiftence. What a town always
is with regard to the country in its neighbourhood, one inde-
pendent ftate or country may frequently be with regard to other
independent ftates or countries. It is thus that Holland draws a.
great part of its fubfiftence from other countries ; live cattle from .
Holftein and Jutland, and corn from almoft all the different coun-
tries of Europe. A fmall quantity of manufactured produce pur-
chafes a great quantity of rude produce. A trading and manufact urg-
ing country, therefore, naturally purchafes with a fmall part of its
manufactured produce a great part of the rude produce of other coun-
tries ; while, on the contrary, a country without trade and manu-
factures is generally obliged to purchafe, at the expence of a great part
of its rude produce, a very fmall part of the manufactured produce
of other countries. The one exports what can fubnft and accom-
modate but a very few,, and imports the fubfiftence and accommo-
dation of a great number. The other exports the accommodation

and

THE WEALTH OF NATIONS.

277

and fubfiftence of a great number, and imports that of a very few-
only. The inhabitants of the one muft always enjoy a much greater
quantity of fubfiftence than what their own lands, in the actual
ftate of their cultivation, could afford. The inhabitants of the
other muft always enjoy a much fmaller quantity.

This fyftem, however, with all its imperfections is, perhaps the
nearcft approximation to the truth that has yet been publifhed upon;
the fubject of political oeconomy, and is upon that account well
worth the confideration of every man who wifhes to examine with
attention the principles of that, very important fcience. Though
in reprefenting. the labour which is employed upon land as the only
productive labour, the notions which it inculcates are perhaps too
narrow and confined yet in reprefenting the wealth of nations as
confifting, not in the unconfumable riches of money, but in the
confumable goods annually reproduced by the labour of the fociety ;
and in reprefenting perfect liberty as the only effectual expedient for
rendering this annual reproduction the greateft poflible, its doctrine
feems to be in every refpect as juft as it is generous and liberal. Its
followers are very numerous ; and as men are fond of paradoxes,
and of appearing to understand what furpaffes the comprehenfion
of ordinary people, the paradox which it maintains, concerning
the unproductive nature of manufacturing labour, has not perhaps
contributed a little to increafe the number of its admirers. They have
for fbme years paft made a pretty confiderable feet, diftinguifhed in
the French republick of letters by the name of, The Oeconomifts.
Their works have certainly been of fome fervice to their country;
not only by bringing into general difcuflion, many fubjects which
had never been well examined before,, but by influencing in fome
meafure the publick adminiftration in favour of agriculture. It
has been in confequence of their reprefentations, accordingly, that
the agriculture of France has been delivered from feveral of the

oppref--

CH A P.
VIII.

273 THE NATURE AND CAUSES OF

BOOK oppreffions which it before laboured under. The term during
which iuch a leafe can be granted, as will be valid againft every
future purchafer or proprietor of the land, has been prolonged from
nine to twenty- feven years. The antient provincial reftraints upon
the tranfportation of corn from one province of the kingdom to
another, have been entirely taken away, and the liberty of exporting
it to all foreign countries, has been eftablifhed as the common law
of the kingdom in all ordinary cafes. This feci:, in their works,
which are very numerous, and which treat not only of what is
properly called Political Oeconomy, or of the nature and caufes
of the wealth of nations, but of every other branch of the fyftem
of civil government, all follow implicitly, and without any
fenfible variation, the doctrine of Mr. Quefnai. There is upon
this account little variety in the greater part of their works. The
moft diftinc! and beft connected account of this doctrine is to be
found in a little book written by Mr. Mercier de la Riviere, fome-
time Intendant of Martinico, intitled, The natural and efkntiai
Order of Political Societies. The admiration of this whole feet
for their mafter, who was hirrifelf a man of the greater! modefty and
fimplicity, is not inferior to that of any of the antient philofophers
for the founders of their refpective fyftems. There have been,
fince the world began, fays a very diligent and refpectable author,
the Marquis de Mirabeau, three great inventions which have princi-
pally given liability to political focieties, independent of many
other inventions which have enriched and adorned them. The firit
is the invention of writing, which alone gives human nature the
power of tranfmitting without alteration, its laws, its contracts, its
annals, and its difcoveries. The fecond, is the invention of money,
which binds together all the relations between civilized focieties.
The third, is the Oeconomical Table, the refult of the other two, which
completes them both by perfecting their object ; the great difcovery
of our age, but of which our pofterity will reap the benefit.

8 As

THE WEALTH OF NATIONS.

As the political oeconomy of the nations of modern Europe, C
has been more favourable to manufactures and foreign trade, the u
induftry of the towns, than to agriculture, the induftry of the
country j fo that of other nations has followed a different plan, and
has been more favourable to agriculture than to manufactures and
foreign trade.

The policy of China favours agriculture more than all other
employments. In China, the condition of a labourer is faid to-
be as much fuperior to that of an artificer ; as in moft parts
of Europe, that of an artificer is to that of a labourer. In
China, the great ambition of every man is to get pofleilion of
fome little bit of land, either in property or in leafe ; and leafes
are there faid to be granted upon very moderate terms, and to be fuffi.-*
ciently fecured to the lefTees. The Chinefe have little refpect for
foreign trade. Your beggarly commerce ! was the language ia
which the Mandarins of Pekin ufed to talk to Mr. Langiet, the
Ruffian envoy, concerning it. Except with Japan, the Chinefer
carry on themfelves and in their own bottoms little or no foreign
trade ; and it is only into one or two ports of their kingdom that
they even admit the mips of foreign nations. Foreign trade,
therefore, is, in China, every way confined within a much nar-
rower circle than that to which it would naturally extend itfelf,
if more freedom was allowed to it, either in their own mips, or in
thofe of foreign nations.

Manufactures, as in a fmall bulk they frequently contain
a great value, and can upon that account be tranfported at lefs
expence from one country to another than mofi forts of rude
produce, are in almoft all countries the principal fupport of foreign
trade. In countries befides lefs extenfive and lefs favourably circum-
ftanced for interior commerce than China, they generally require
the fupport of foreign trade. Without an extenfive foreign market;,
' they

THE NATURE AND CAUSES OF

they could not well flourifti either in countries fo moderately exten-
five as to afford but a narrow home market ; or in countries where
the communication between one province and another was fo difficult
as to render it impoffible for the goods of any particular place to
enjoy the whole of that home market which the country could
afford. The perfection of manufacturing induftry, it rauft be
remembered, depends altogether upon the divifion of labour ; and
the degree to which the divifion of labour can be introduced into
any manufacture, is neceffarily regulated, it has already been
fhown, by the extent of the market. But the great extent of the
empire of China, the vaft multitude of its inhabitants, the variety
of climate, and confequently of productions in its different
provinces, and the eafy communication by means of water
carriage between the greater part of them, render the home
market of that country of fo great extent, as to be alone fuffi-
cient to fupport very great manufactures, and to admit of very
corifiderable fubdivifions of labour. The home market of China
13 perhaps in extent not much inferior to the market of all the
different countries of Europe put together. A more extenfive
foreign trade, however, which to this great home market added
the foreign market of all the reft of the world; efpecially if any
eonfiderable part of this trade was carried on in Chinefe (hips
could fcarce fail to increafe very much the manufactures of China,
and to improve very much the productive powers of its manufac-
turing induftry. By a more extenfive navigation, the Chinefe would
naturally learn the art of ufing and conftructing themfelves all the
different machines made ufe of in other countries, as well as all the
other improvements of art and induftry which are pradtifed in all
the different parts of the world. Upon their prefent plan they have
little opportunity of improving themfelves by the example of
any other nation ; except that of the Japanefe.

9

The

THE WEALTH OF NATIONS.

23l

The policy of antient Egypt too and that of the Gcntoo govern-
ment of Indoftan feem to have favoured agriculture more than all
other employments.

Both in antient Egypt and in Indoftan, the whole body of the
people was divided into different cafts or tribes, each of which was
confined, from father to fon, to a particular employment or clafs
of employments. The fon of a prieft was neceffarily a prieft ; the
fon of a foldier, a foldier ; the fon of a labourer, a labourer ; the
fon of a weaver, a weaver ; the fon of a taylor, a taylor ; &c. In
both countries, the call: of the priefts held the higheft rank, and that
of the foldiers the next; and in both countries, the caft of the
farmers and labourers was fuperior to the cafts of merchants and
manufacturers.

The government of both countries was particularly attentive to
the intereft of agriculture. The works conftructed by the antient
fovereigns of Egypt for the proper diftribution of the waters of
the Nile were famous in antiquity ; and the ruined remains of fome
of them are ftill the admiration of travellers. Thofe of the fame
kind which were conftrucled by the antient fovereigns of Indoftan,
for the proper diftribution of the waters of the Ganges as well as of
many other rivers, though they have been lefs celebrated, feem to
have been equally great. Both countries accordingly, though fubject
occafionally to dearths, have been famous for their great fertility.
Though both were extreamly populous, yet in years of moderate
plenty they were both able to export great quantities of grain to
their neighbours.

■ The antient Egyptians had a fuperftitious aveifion to the fea ;
and as the Gentoo religion does not permit its followers to light a
fire, nor confequently to drefs any victuals upon the water, it in
A^ol. II. O o effect

CHAP.
VIII.

THE NATURE AND CAUSES OF

O^O K effect prohibits them from all diftant fea voyages. Both the Egyptians
w-v — l and Indians -muft have depended almoft altogether upon the navi-
gation of other nations for the exportation of their furplus produce $
and this dependency, as it muft have confined the market, fo it
muft have difcouraged the increafe of this furplus produce. It muft
have difcouraged too the increafe of the manufactured produce
more than that of: the rude produce. Manufactures require a much
more extenfive market than the moft important parts of the rude
produce of the land. A fingle fhoemaker will make more than
three hundred pairs of fhoes in the year ; and his own family will
not perhaps wear out fix pairs. Unlefs therefore he has the cuftom
of at leaft fifty fu.ch families as his own, he cannot difpofe of the
whole produce of his own labour. The moft numerous clafs of
artificers will feldom, in a large.country, make more than one in fifty
or one in a hundred of the whole number of families contained in it.
But in fuch large countries as France and England, the number of
people employed in agriculture has by fome authors been computed
at a half, by others at a third, and by no author that I know of,
at lefs than a fifth of the whole inhabitants of the country. But
as the produce of the agriculture of both France and England is,
the far greater part of it, confumed at home, each perfon employed
in it muft, according to thefe computations, require little more than
the cuftom of one, two, or at moft four fuch families as his own, in
order to difpofe of the whole produce of his own labour. Agricul-
ture, therefore, can fupport itfelf under the difcouragement of a
confined market, much better than manufactures. In both antient
Egypt and Indoftan, indeed, the confinement of the foreign
market was in fome meafure compenfated by the conveniency of
many inland navigations, which opened in the moft advantageous
manner the whole extent of the home, market to every part of
the produce of every different diftrict of thofe countries. The
great extent of Indoftan too. rendered the home market of that .

country

THE WEALTH OF NATIONS.

country very great, and fufficient to fupport a great variety of manu- C
features'. But the fmali extent of antient Egypt, which was never
equal to England, muft at all times have rendered the home market
of that country too narrow for fupporting any great variety of ma-
nufactures. Bengal, accordingly, the province of Indoftan which
commonly, exports the greateft quantity of rice, has always been
more remarkable for the exportation of a great variety of manufac-
tures, than for that of its grain. Antient Egypt, on the contrary,
though it exported fome manufactures, fine linen in particular, as
well as fome other goods, was always moil diftinguifhed for its
great exportation of grain. It was long the granary of the Roman
empire.

The fovereigns of China, of ancient Egypt, and of the different
kingdoms into which Indoftan has at different times been divided,
have always derived the whole, or by far the moft confiderable part,
of their revenue from fome fort of land-tax or land-rent. This land-
tax or land -rent, like the tithe in Europe, confifted in a certain pro-
portion, a fifth-, it is faid, of the produce of the land, which was either
delivered in kind or paid in money, according to a certain valua-
tion, and which therefore varied from year to year according to all the
variations of the produce. It was natural, therefore, that the fovereigns
of thofe countries mould be particularly attentive to the interefts of
agriculture, upon the profperity or declenfion of which immediately
depended the yearly increafe or diminution of their own revenue.

The policy of the antient republicks of Greece, and that of
Rome, though it honoured agriculture more than manufactures or
foreign trade, yet feems rather to have difcouraged the latter employ-
ments, than to have given any direct or intentional encouragement
to the former. In feveral of the antient ftates of Greece, foreign
trade was prohibited altogether ; and in feveral others the employ-

O o z -merits

254 . THE NATURE AND CAUSES OF

BOOK mentsof artificers and manufacturers were confidered as hurtful to
v--— i the ftrength and agility of the human body, as rendering it inca-
pable of thofe habits which their military and gymnaftic exercifes
endeavoured to form in it, and as thereby disqualifying it more or
lefs from undergoing the fatigues and encountering the dangers of
war. Such occupations were coniidered as fit only for flaves,. and the
free citizens of the ftate were prohibited from exercifing them. Even
in thole ftates where no fuck prohibition took place, as in Rome
and Athens, the great body of the people were in effect excluded
from all the trades which are now commonly exercifed by the lower
fort of tke inhabitants of towns.. Such trades were at Athens and
Rome all occupied by the (laves of the rich, who exercifed them for
the benefit of their matters, whofe wealth, power and protection,
made it almoft impoflible for a poor freeman to find a market for
his work when it came into competition with that of the flaves of the
rich. Slaves, however, are very feldom inventive ; and all the moft
important improvements, either in machinery, or in that arrange-
ment an<^ distribution of work which facilitate and abridge labour,
nave been the difcoveries of freemen. Should a flave propofe any im-
provement of this kind, his mafter would be very apt to confider the
propofal as the fuggeftion of lazinefs, and of a defire to fave his own
labour at the mailer's expence. The poor llave, inttead of reward,
would probably meet with much abufe, perhaps with fomepunifk-
mentjn the manufactures carried on by flaves, therefore, more labour
muft generally have been employed to execute the fame quantity of
work than in thofe carried on by freemen. The work of the former
muft, upon that account, generally have been dearer than that of
the latter. The Hungarian mines, it is remarked by Mr. Montes-
quieu, though not more rich, have always been wrought with
lefs expence, and therefore with, more profit, than the Turkiik
mines in their neighbourhood. The Turkifh mines are wrought
by flaves ; and the arms of thofe flaves are the only machines
which the Turks have ever thought of employing. The Hungarian

mines,

THE WEALTH OF NATIONS.

2S5

mines are wrought by freemen, who employ a good deal of machinery, c HA p;
by which they facilitate and abridge their own labour. From the v— ~*.
very little that is known about the price of manufactures in the
times of the Greeks and Romans, it would appear that thofe of the
finer fort were exceflively dear. Silk fold for its weight in gold. It
was not, indeed, in thofe times a European manufacture ; and as
it was all brought from the Eaft Indies, the diftanceof the carriage
may in fome meafure account for the greatnefs of the price. The
price, however, which a lady, it is faid, would fometimes pay for
a piece of very fine linen feems to have been equally extravagant;
and as linen was always either a European, or, at fartheft, an
Egyptian manufacture, this high price can be accounted for
only by the great expence of the labour which mull: have been
employed about it, and the expence of this labour again could
arife from nothing but the aukwardnefs of the machinery
which it made ufe of. The price of fine woollens too, though
not quite fo extravagant, feems however to have been much above
that of the prefent times. Some cloths, we are told by Pliny, dyed
in a particular manner, coft a hundred denarii, or three pounds fix
millings and. eight pence, the pound weight. Others dyed in another
manner coft a thoufand denarii the pound weight, or thirty-three
pounds fix (hillings and eight pence. The Roman pound, it muft
be remembered, contained, only twelve of our averdupois ounces.
This high price, indeed, feems to have been principally owing to
the dye. But had not the cloths themfelves been much dearer than
any which are made in the prefent times, fo very expenfive a dye
would not probably have been bellowed upon them. The difpro-
portion would have been too great between the value of the accef-
fory and that of the principal. The price mentioned by the fame
author of fome Triclinaria, a fort of woollen pillows or cufhions
made ufe of to lean upon as they reclined upon their couches at
table, pafics all credibility j fome of them being faid to have coft
more, than thirty thoufand, others more than, three hundred thoii/-

fancl

,2%

THE NATURE AND CAUSES OF

BOOK fand pounds. This high price too is not faid to have arifen from
v,^^— i the dye. In the drefs of the people of fafhion of both fexes, there
feems to have been much lefs variety, it is obferved by Doftor
Arbuthnot, in antient than in modern times and the very little
variety which we find in that of the antient ftatues confirms his
obfervation. He infers from this, that their drefs muft upon the
whole have been cheaper than ours : but the conclufion does not
feem to follow. When the expence of fafhionable drefs is very
great, the variety muft be very fmall. But when, by the improvements
in the productive powers of manufacturing art and induftry, the
expence of any one drefs comes to be very moderate, the variety
will naturally be very great. The rich, not being able to diftin-
guifh themfelves by the expence of any one drefs, will naturally
endeavour to do fo by the multitude and variety of their dreffes.

The greateft and moft important branch of the commerce of
every nation, it has already been obferved, is that which is carried
on between the inhabitants of the town and thofe of the country.
The inhabitants of the town draw from the country the rude
produce which conftitutes both the materials of their work and the
fund of their fubfiftence ; and they pay for this rude produce by
fending back to the country a certain portion of it manufactured
and prepared for immediate ufe. The trade which is carried on
between thofe two different fets of people confifts ultimately in a
certain quantity of rude produce exchanged for a certain quan-
tity of manufactured produce. The dearer the latter, there-
fore, the cheaper the former ; and whatever tends in any coun-
try to raife the price of manufactured produce, tends to lower
that of the rude produce of the land, and thereby to difcourage
agriculture. The fraaller the quantity of manufactured produce
which any given quantity of rude produce, or, what comes to the
fame thing, which the price of any given quantity of rude produce
is capable of purchafing, the fmaller the real value of that given
6 quantity

THE WEALTH OF NATIONS.

quantity of rude produce; the fmaller the encouragement which CyIj^Ip*
cither the landlord has to increafe its quantity by improving, or the l. — y — 1^
farmer by cultivating the land. Whatever, befides, tends to dimi-
niih in any country the number of artificers and manufacturers,
tends to diminilh the home market, the mod important of all
markets, for the rude produce of the land, and thereby ftill further
to difcourage agriculture.

Those fyftems, therefore, which preferring agriculture to all
other employments, in order to promote it impofe reftraints upon
manufactures and foreign trade, aft -contrary to the very end which ;
they propofe, and indirectly difcourage that very fpecies of induftry
which they mean to promote. They are fo far, perhaps, more
inconfiftent than even the mercantile fyftem. That fyftem, by
encouraging manufactures and foreign trade more than agriculture,
turns a certain portion of the capital of the fociety from fupporting
a. more advantageous, to fupport a lefs advantageous fpecies of
induftry. But ftill it really and in the end encourages that fpecies ■
of induftry which it means to promote. Thofe agricultural
fyftems, on the contrary, really and in the end difcourage their own '
favourite fpecies of induftry.

It is thus that every fyftem which endeavours, either, by extraor-
dinary encouragements, to draw towards a particular fpecies of
induftry a greater fhare of the capital of the fociety than what
would naturally go to it ; or, by extraordinary reftraints, to force
from a particular fpecies of induftry fome fhare of the capital which
would otherwife be employed in it -} is in reality fubverfive of the
great purpofe which it means to promote. It retards, inftead of
accelerating, the progrefs of the fociety towards real wealth and
greatnefs; and diminifhes, inftead of increafing, the real value of •
the . annual produce of its land and labour^ .

THE NATURE AND CAUSES OF

All fyftems either of preference or of reftraint, therefore, being
thus completely taken away, the obvious and fimple fyftem of
natural liberty eftablifhes Itfelf of its own accord. Every man, as
long as he does not violate the laws of juftice, is left perfectly free
to purfue his own intereft his own way, and to bring both his
induftry and capital into competition with thofe of any other man
or order of men. The fovereign is completely difcharged from a
duty, in the attempting to perform which he muft always be
expofed to innumerable delufions, and for the proper performance
of which no human wifdom or knowledge could ever be fufficient;
the duty of fuper-intending the induftry of private people, and of
directing it towards the employments moft fuitable to the intereft
of the fociety. According to the fyftem of natural liberty, the fove-
reign has only three duties to attend to; three duties of great import-
ance, indeed, but plain and intelligible to common understandings :
firft, the duty of protecting the fociety from the violence and invafion
of other independent focieties ; fecondly, the duty of protecting,
as far as polfible, every member of the fociety from the injuftice or
oppreffion of every other member of it, or the duty of eftablifhing
an exact administration of juftice; and, thirdly, the duty of erect-
ing and maintaining certain publick works and certain publick
inftitutions, which it can never be for the intereft of any indivi-
dual, or fmall number of individuals, to erect and maintain ;
becaufe the profit could never repay the expence to any individual
or fmall number of individuals, though it may frequently do much
more than repay it to a great fociety.

The proper performance of thofe feveral duties of the fovereign
neceffarily fuppofes a certain expence ; and this expence again
neceifarily requires a certain revenue to fupport it. In the following
book, therefore, I fhall endeavour to explain j firft, what are the
ueceflfary expences of the fovereign or common -wealth ; and which

of

THE WEALTH OF NATIONS.

289

of thofe expences ought to be defrayed by the general contribution C^HAP;
of the whole fociety ; and which of them, by that of fome par- ^*-^r— -4
ticular part only, or of fome particular members of the fociety :
fecondly, what are the different methods in wluch the whole
fociety may be made to contribute towards defraying the expences
incumbent on the whole fociety, and what are the principal advan-
tages and inconveniences of each of thofe methods : and, thirdly,
what are the reafons and caufes which have induced almoft
all modern governments to mortgage fome part of this reve-
nue, or to contract debts, and what have been the effects of
thofe debts upon the real wealth, the annual produce of the land
and labour of the fociety. The following book, therefore, will
naturally be divided into three chapters.

Vol. II.

( 29i )

BOOK V.

Of the Revenue of the Sovereign or Commonwealth,

CHAP. I.

Of the Expences of the Sovereign or Commonwealth,

Part First.
Of the Expence of Defence, -

THE firft duty of the fovereign, that of protecting the fociety c H A P,,
from the violence and invafion of other independent focieties, \°-*uj
can be performed only by means of a military force. But the
expence both of preparing this military force in time of peacer and
of employing, it in time of war, is very different in the different
ftates of fociety, in the different periods of improvement.

Among nations of hunters, the Ioweft and rudeft ftate of fociety-,
fuch as we find it among the native tribes of North America, every,
man is a warrior as well as a hunter. When he goes to war, either
to defend his fociety, or to revenge the injuries which have been
done to it by other focieties, he maintains himfelf by his own labour
in the fame manner as when he lives at home. His fociety, - for
m this ftate of things there is properly neither fovereign nor com-
monwealth, is at no fort of expence, either to prepare him for the
fteld, or to maintain him while he is in it.

P p 2, Among

THE NATURE AND CAUSES OP

K Among nations of fhepherds, a more advanced ftate of fociety,
*j fuch as we find it among the Tartars and Arabs, every man is, in
the fame manner, a warrior. Such nations have commonly no
fixed habitation, bdt " live either in tents or in a fort of covered
waggons which are eafily tranfported from place to place. The
whole tribe or nation changes its fituation according to the different
feafons of the year, as well as according to other accidents. When
its herds and flocks have confumed the forage of one part of the
country, it removes to another, and from that to a third. In the
dry feafon, it comes down to the banks of the rivers ; in the wet
feafon it retires to the upper country. When fuch a nation goes to
war, the warriors will not truft their herds and flocks to the feeble
defence of their old men, their women and children ; and their old
men, their women and children,will not be left behind without defence
and without fubfiflence. The whole nation, befides, being accuftomed
to a wandering life, even in time of peace, eafily takes the field in
time of war. Whether it marches as an army, or moves about as a
company of herdfmen, the way of life is nearly the fame, though
the object propofed by it is very different. They all go to war
together, therefore, and every one does as well as he can. Among
the Tartars, even the women have been frequently known to engage
in battle. If they conquer, whatever belongs to the hoftile tribe is
the recompence of the victory. But if they are vanquished, all is
loft, and not only their herds and flocks, but their women and
children become the booty of the conqueror. Even the greater
part of thofe who furvive the action are obliged to fubmit to him
for the fake of immediate fubfiflence. The reft are commonly diffl-
pated and difperfed in the defart.

The ordinary life, the. ordinary exercifes of a Tartar or Arab,
prepare him fufficiently for war, Running, wreftling, cudgel-play-
ing, throwing the javeling, drawing the bow, Sec, are the common
6 paftimes

THE WEALTH OF NATIONS

paftimcs of thofe who live in the open air, and are all of them the c
images of war. When a Tartar or Arab actually goes to war, he
is maintained by his own herds and flocks which he carries with
him, in the fame manner as in peace. His chief or fovereign, for
thofe nations have all chiefs or fovereigns, is at no fort of expencc
in preparing him for the held ; and when he is in it, the chance
of plunder is the only pay which he either expects or requires.

An army of hunters can feldom exceed two or three hundred
men. The precarious fubfiftence which the chace affords could
feldom allow a greater number to keep together for any confiderable
time. An army of fhepherds, on the contrary, may fometimes
amount to two or three hundred thouland. As long as nothing
ft ops their progrefs, as long as they can go on from one diftrict,
of which they have confumed the forage, to another which is yet
entire; there feems to be fcarce any limit to the number who can
march on together. A nation of hunters can never be formi-
dable to the civilized nations in their neighbourhood. A nation
of fhepherds may. Nothing can be more contemptible than an
Indian war in North America. Nothing, on the contrary, can be
more dreadful than a Tartar invafion has frequently been in Afia.
The judgement of Thucidides, that both Europe and Afia could not
refift the Scythians united, has been verified by the experience of all
ages. The inhabitants of the exteniive, but defencelefs plains of
Scythia or Tartary, have been frequently united under the dominion
of the chief of fome conquering horde or clan j and the havock and
devaluation of Afia have always fignalized their union. The inha-
bitants of the inhofpitable defarts of Arabia, the other great
nation of fliepherds, have never been united but once j under
Mahomet and his immediate fuccefibrs. Their union, which was
more the effect of religious enthufiafm than of conqueft, was
fignalized in the fame manner. If the hunting nations of America

fhoukl

:94 THE NATURE AND CAUSES OF

BOOK mould ever become fhepherds, their neighbourhood would be much
-v-^~» more dangerous to the European colonies than it is at prefent.

In a yet more advanced ftate of fociety, among thofe nations of
hufbandmen who have little foreign commerce and no other manu-
factures but thofe coarfe and houfliold ones which almoft every
private family prepares for its own ufe, every man, in the fame
manner, either is a warrior or eafily becomes fuch. They who live
by agriculture generally pafs the whole day in the open air, expofed
to all the inclemencies of the feafons. The hardinefs of their
ordinary life prepares them for the fatigues of war, to fome of
which their neceflary occupations bear a good deal of analogy.
The neceflary occupation of a ditcher prepares him to work in the
trenches, and to fortify a camp as well as to enclofe a field. The
ordinary paftimes of fuch hutbandmen are the fame as thofe of
Ihepherds, and are in the fame manner the images of war. But as
hulbandmen have lefs leifure than fhepherds, they are not fa
frequently employed in thofe paftimes. They are foldiers, but
foldiers not quite fo much mafters of their exercife. Such as they
are, however, it feldom cofts the fovereign or commonwealth any
expence to prepare them for the field.

Agriculture, even in its rudeft and loweft ftate, fuppo/es ai
fettlement fome fort of fixed habitation which cannot be abandoned
without great lofs. When a nation of mere hufbandmen, therefore,
goes to war, the whole people cannot take the field together. The
old men, the women and children, at leaft muft remain at home
to take care of the habitation. All the men of the military age,
however, may take the field, and in fmall nations of this kind have
frequently done fo. In every nation the men of the military age
are fuppofed to amount to about a fourth or fifth part of the whole
body of the people. If the campaign too fliould begin after feed

time;

THE WEALTH OF NATIONS

295

time and end before harveft, both the hufbandman and his prin- C HA P.
cipal labourers can be fpared from the farm without much lofs. u-v— o
He trufts that the work which muft be done in the meantime can
be well enough executed by the old men, the women and the
children. He is not unwilling, therefore, to ferve without pay
during fo fhort a campaign, and it frequently cofls the fovereign or
commonwealth as little to maintain him in the field as to prepare
him for it. The citizens of all the different ftates of antient Greece
feem tohaveferved in this manner till after the fecond Perfian war ;
and the people of Peloponefus till after the Peloponefian war. The
Peloponefians, Thucidides obferves, generally left the field in
the fummer and returned home to reap the harveft. The Roman
people under their kings and during the firft ages of the republick
ferved in the fame manner. It was not till the fiege of Veii, that
they who ftaid at home began to contribute fomething towards
maintaining thofe who went to war. In the European monarchies
which were founded upon the ruins of the Roman empire, both
before and for fome time after the eftablifhment of what is properly
called the feudal law, the great lords with all their immediate
dependents ufed to ferve the crown at their own expence. In the
field, in the fame manner as at home, they maintained themfelves
by their own revenue, and not by any ftipend or pay which they
received from the king upon that particular occafion.

In a more advanced ftate of fociety, two different caufes contri-
bute to render it altogether impofTible that they who take the field
mould maintain themfelves at their own expence. Thofe two
caufes are, the progrefs of manufactures, and the improvement in
the art of war,

t$p&. visriiitif sdi io nam 3*£t uoiaiiti'iwaTy jfil y ^ y*a:ilJ: v;

Though a hufbandman fliould be employed in an expedition,
provided it begins after feed time and ends before harveft, the inter-

4 ruption

29G THE NATURE AND CAUSES OF

BOOK ruption of his bufinefs will not always occafion any confiderable
4^-v~ * diminution of his revenue. Without the intervention of his labour,
nature does herfelf the greater part of the work which remains to
be done. But the moment that an artificer, a fmith, a car-
penter, or a weaver, for example, quits his workhoufe, the fole
fource of his revenue is completely dried up. Nature does nothing
for him, he does all for himfelf. When he takes the field, there-
fore, in defence of the publick, as he has no revenue to maintain
himfelf, he muft necefTarily be maintained by the publick. But in
a country of which a great part of the inhabitants are artificers and
manufacturers, a great part of the people who go to war muft be
drawn from thofe clafTes, and muft therefore be maintained by the
publick as long as they are employed in its fervice.

When the art of war too has gradually grown up to be a very intri-
cate and complicated fcience, when the event of warceafes to be de-
termined, as in the firft ages of fociety, by a fmgle irregular fkirmifh
or battle, but when the conteft is generally fpun out through feveral
different campaigns, each of which lafts during the greater part of the
year; it becomes univerfally neceftary that the publick fhould main-
tain thofe who ferve the publick in war, at leaft while they are
employed in that fervice. Whatever in time of peace might be the
ordinary occupation of thofe who go to war, fo very tedious and
expenhve a fervice would otherwife be by far too heavy a burden
upon them. After the fecond Perfian war, accordingly, the armies
of Athens feem to have been generally compofed of mercenary
troops; confuting indeed partly of citizens, but partly too of
foreigners ; and all of them equally hired and paid at the expence
©f the ftate. From the time of the feige of Veii the armies of
Rome received pay for their fervice during the time which they
remained in the field. Under the feudal governments the military
fervice both of the great lords and of their immediate dependents

was,,

THE WEALTH OF NATIONS,

was, after a certain period, univerfally exchanged for a payment in
money, which was employed to maintain thofe who ferved in
their ftead.

The number of thofe who can go to war, in proportion to the
whole number of the people, is neceflarily much fmaller in a civi-
lized than in a rude ftate of fociety. In a civilized fociety, as the
foldiers are maintained altogether by the labour of thofe who are
not foldiers, the number of the former never can exceed what the
latter can maintain, over and above maintaining in a manner fuitable
to their refpeclive ftations both themfelves and the other officers of
government, and law, whom they are obliged to maintain. In the
little Agrarian ftates of antient Greece, a fourth or a fifth part of
the whole body of the people confidered themfelves as foldiers, and
would fometimes, it is faid, take the field. Among the civilized
nations of modern Europe, it is commonly computed, that not
more than one hundredth part of the inhabitants of any country
can be employed as foldiers,, without ruin to the country at whofe
expence they are employed.

The expence of preparing the army for the field feems not to
have become confiderable in any nation, till long after that of main-
taining it in the field had devolved entirely upon the fovereign or
commonwealth. In all the different republicks of antient Greece,
to learn his military exercifes was a neceffary part of education
impofed by the ftate upon every free citizen. In every city there
feems to have been a publick field, in which, under the protec-
tion of the publick magiftrate, the young people were taught
their different exercifes by different mailers. In this very fimple
inftitution confifted the whole expence which any Grecian ftate
feems ever to have been at in preparing its citizens for war. In
antient Rome the exercifes of the Campus Martius anfwered the

Vol. IL. Q^q fame

297

THE NATURE AND CAUSES OF

fame purpofe with thofe of the Gymnafium in antient Greece.
Under the feudal governments, the many publick ordinances that
the citizens of every diftrict mould practife archery as well as feveral
other military exercifes, were intended for promoting the fame
purpofe, but do not feem to.have promoted, it fo well. Either from
want of intereft in the officers entrufted with the execution of thofe
ordinances, or from fome. other caufe, they appear to have been
univerfaily neglected; and in the progrefs of all thofe governments,
military exercifes feem to have gone gradually into difufe among the
great body of the people..

f In the republicks of antient Greece and Rome, during the whole
period of their exigence, and under the feudal governments for a
confiderable time after their firft eilablifhment, the trade of a
foldier was not a feparate diftinct trade which conffituted the fole or
principal occupation of a particular clafs of citizens. Every fubject
of the ftate, whatever might be the ordinary trade or occupation
by which he gained his livelihood, confidered himfelf upon all ordi-
nary occafions as fit like wife to exercife the trade of a foldier, and
upon many extraordinary occafions as bound to exercife it.

The art of war, however, as it is certainly the nobleft of all
arts, fo in the progrefs of improvement it neCeffarily becomes one
of the moft complicated among them. The ftate of the mechanical,
as well as of fome other arts with which it is neceffarily connected,
determines the degree of perfection to which it is capable of being
carried at any particular time. But in order to carry it to this
degree of perfection, it is neceJTary that it fliould become the fole or
principal occupation of a particular clafs of citizens, and the divL-
fion of labour is as necefiary for the improvement of this as of
every other art. Into other arts the divifion of labour is naturally
introduced by the prudence of individuals, who find that they

promote.

THE WEALTH OF NATIONS.

promote their private intereft better by confining themfelves to a
particular trade, than by exercifing a great number. But it is the
wifdom of the ftate only which can render the trade of a foldier a
particular trade feparate and diftinct from all others. A private
citizen who, in time of profound peace and without any particular
encouragement from the publick, fhould fpend the greater part of
his time in military exercifes, might, no doubt, both improve him-
felf very much in them, and amufe himfelf very well ; but he cer-
tainly would not promote his own intereft. It is the wifdom of the
ftate only which can render it for his intereft to give up the greater
part of his time to this peculiar occupation : and ftates have not
always had this wifdom, even when their circum (lances had become
fuch that the prefervation of their exiftence required that they
fliould have it.

A shepherd has a great deal of leifure ; a huibandman, in the
rude ftate of husbandry, has fome ; an artificer or manufacturer has
none at all. The firft may, without any lofs, employ a great deal
of his time in martial exercifes ; the fecond may employ fome
part of it j but the laft cannot employ a fmgle hour in them with-
out fome lofs, and his attention to his own intereft naturally leads
him to neglect them altogether. Thofe improvements in hufbandry
too, which the progrefs of arts and manufactures neceflarily intro-
duces, leave the huibandman as little leifure as the artificer. Mili-
tary exercifes come to be as much neglected by the inhabitants of
the country as by thofe of the town, and the great body of the people
becomes altogether unwarlike. That wealth, at the fame time,
which always follows the improvements of agriculture and manu-
factures, and which in reality is no more than the accumulated
produce of thofe improvements, provokes the invafion of all their
neighbours. Aninduftrious, and upon that account, a wealthy nation,
is of all nations the moft likely to be attacked j and unlefs the ftate

Q^q 2 takes

V.

3oo THE NATURE AND CAUSES OF

BOOK takes fome new meafures for the publick defence, the natural
habits of the people render them, altogether incapable of defending
themfelves.

In thefe circurnftances there feem to be but two methods by
which the ftate can make any tolerable provifion for the publick
defence.

It may either, firft, by means of a very rigorous police, and in
fpite of the whole bent of the intereft, genius and inclinations of the
people, enforce the practice of military exercifes, and oblige either
all the citizens of the military age, or a certain number of them, to
join in fome meafure the trade of a foldier. to whatever other trade or
profeffion they may. happen to carry on..

Or, fecondly, by maintaining and employing a certain number
of citizens in the conftant practice of military exercifes, it may
render the trade of a foldier a particular trade, feparate and diftincl:
from all others.

If the ftate has recourfe to the firft of thofe two expedients, its
military force is faid to confift in a militia ; if to the fecond, it is
laid to confift in a ftanding army. The practice of military exercifes
is the fole or principal occupation of the foldiers of a ftanding army,
and the maintenance or pay which the ftate affords them is the prin-
cipal and ordinary fund of their fubliftence. The practice of military
exercifes is only the occafional occupation of the foldiers of a
militia, and they derive the principal and ordinary fund of their
fubfiftence from fome other occupation. In a militia, the charac-
ter of the labourer, artificer or tradefman, predominates over that
of the foldier: in a ftanding army, that of the foldier predominates
over every other character 3 and in this diftinction feems to confift.
6 the

THE WEALTH OF NATIONS.

the cflcntial difference between thofe two different fpecies of mili-
tary force.

Militias have been of feveral different kinds. In fome coun-
tries the citizens deftined for defending the ftate,, feem to have been
exercifed only, without being, if I may fay fo, regimented; thai;
is, without being divided into feparate and diftinft bodies of troops,
each of which performed its exercifes under its own proper and per-
manent officers. In the republicks of antient Greece and Rome each
citizen, as long as he remained at home, feems to have practifed his
exercifes either feparately and independently, or with fuch of his
equals as he liked beft ; and not to have been attached to any
particular body of troops till he was actually called upon to
take the field. In other countries, . the militia has not only been
exercifed, but regimented. In England, in Switzerland, and, I
believe, in every other country of modern Europe, where any
imperfect military force of this kind has been eftablifhed, every mili-
tia-man is, even in time of peace, attached to a particular body of
troops, whiclv performs its exercifes under its own proper and perma-*
nent officers. '-

Before the invention of fire-arms,, that army was fuperior in
which the foldiers had, each individually, the greater! fkill and dexte-
rity in the ufe of their arms. Strength and agility of body were of the
higheft confequence,. and commonly determined the fate of battles.
But this Ikill and dexterity in the ufe of their arms, could be acquired
only in the fame manner as fencing is acquired at prefent, by prac-
tifing, not in great bodies, but each man feparately, in a particular
fchool under a particular matter, or with his own particular equals
and companions. Since the invention of fire-arms, ftrength and
agility of body, or even extraordinary dexterity and fkill in the ufe
of arms, though they are far from being of no confequence, are,
however, of lefs confequence. The nature of the weapon, "though

it.

3o2 THE NATURE AND CAUSES OF

B O^O K it by no means puts the awkward upon a level with the fkilful, puts
him more nearly fo than he ever was before. All the dexterity and
fkill, it is fuppofed, which are necefiary for ufing it, can be well
enough acquired by practifing in great bodies.

Regularity, order, and prompt obedience to command, are
qualities which, in modern armies, are of more importance towards
determining the fate of battles than the dexterity and lkill of the
foldiers in the ufe of their arms. But the noife of fire-arms, the
fmoke, and the invifible death to which every man feels himfelf
every moment expofed, as foon as he comes within cannon-fliot,
and frequently a long time before the battle can be well faid to be
engaged, muft render it very difficult to maintain any confiderablc
degree of this regularity, order, and prompt obedience, even in
the beginning of a modern battle. In an antient battle there was
no noife but what arofe from the human voice; there was no
fmoke, there was no invifible caufe of wounds or death. Every
man, till fome mortal weapon actually did approach him, favv
clearly that no fuch weapon was near him. In thefe circumftances,
and among troops who had fome confidence in their own lkill and
dexterity in the ufe of their arms, it muft have been a good deal
lefs difficult to preferve fome degree of regularity and order, not only
in the beginning, but through the whole progrefs of an antient
battle, and till one of the two armies was fairly defeated. But the
habits of regularity, order, and prompt obedience to command,
can be acquired only by troops which are exercifed in great bodies.

A militia, however, in whatever manner it may be either
difciplined or exercifed, muft always be much inferior to a well
difciplined and well exercifed ftanding army.

The foldiers, who are exercifed only once a week or once a
month, can never be fo expert in the ufe of their arms, as thofe

who

THE WEALTH OF NATIONS.

who are cxercifed every day or every other day j and though this CHjA£-
circumftauce may not be of fo much confequence in modern, as it ^ — >r-— i
was in antient times ; yet the acknowledged fuperiority of the Pruf-
fian troops, owing, it is faid, very much to their fuperior expert-
nefs in their exercife, may fatisfy us that it is, even at this day, of
very confiderable confequence.

The foldiers, who are bound to obey their officer only once a
week or once a month, and who are at all other times at liberty to
manage their own affairs their own way, without being in any
refpect accountable to him, can never be under the fame awe in his
pretence, can never have the fame difpofition to ready obedience, with
thcfe whofe whole life and conduct are every day directed by him,
and who every day even rife and go to bed, or at leaft retire to their
quarters, according to his orders. In what is called difcipline, or
in the habit of ready obedience, a militia muft always be ftill more
inferior to a {landing army, than, it may fometimes be in what
is called the manual exercife, or in the management and ufe of its
arms. But in modern war the habit of ready and inftant obedience
is of much greater confequence than a confiderable fuperiority in.
the management of arms..

Thos-e militias which, like the Tartar or Arab militia, go to
war under the fame chieftains whom they are accuftomed to obey in;
peace, are by far the beft. In refpect for their officers, in the habit
of ready obedience, they approach neareft to ftanding armies. The
highland' militia, when it ferved under its own chieftains, had fome
advantage of the fame kind. As the highlanders, however, were,
not wandering, but ftationary fhepherds, as they had all a fixed
habitation, and were not, in peaceable times, accuftomed to follow-
their chieftain from place to place;, fo in time of war they were lefs.
willing to follow him to any confiderable diftance, or to continue,
for any long, time in the field.. When they had acquired any booty

they.

304 THE NATURE AND CAUSES OF

they were eager to return home, and his authority was feldom fur"*
ncient to detain them. In point of obedience they were always
much inferior to what is reported of the Tartars and Arabs. As
the highlanders too, from their ftationary life, fpend lefs of their
time in the open air, they were always lefs accuftomed to military
exercifes, and were lefs expert in the ufe of their arms than the
Tartars and Arabs are faid to be.

A militia of any kind, it muft be obferved, however, which-
has ferved for feveral fucceffive campaigns in the field, becomes in
every refpecl a ftanding army. The foldiers are every day exercifed
in the ufe of their arms, and, being conftantly under the command
of their officers, are habituated to the fame prompt obedience which
takes place in ftanding armies. What they were before they took
the field, is of little importance. They neceffarily become in
every refpect a ftanding army, after they have paffed a few cam-
paigns in it. Should the war in America drag out through another
campaign, the American militia may become in every refpecr, a
match for that ftanding army, of which, in the laft war, the valour
appeared at leaft not inferior to that of the hardieft veterans of
France and Spain.

This diftinction being well underftood, the hiftory of all ages,
it will be found, bears teftimony to the irrefiftible fuperiority which
a well regulated ftanding army has over every fort of militia.

One of the firft ftanding armies of which we have any diftinc*l
account, in any well authenticated hiftory, is that of Philip of
Macedon. His frequent wars with the Thracians, IUyrians, Thef-
falians, and fome of the Greek cities in the neighbourhood of Ma-
cedon, gradually formed his troops, which in the beginning were
probably militia, to the exact difcipline of a ftanding army. When
he was at peace, which he was very feldom, and never for any

long

BOOK
V.

THE WEALTH OF NATIONS

long time together, he was careful not to difband that army. It C
vanquiflied and fubdued, after a long and violent ftruggle indeed,
the galant and well exercifed militias of the principal republicks of
antient Greece •> and afterwards, with very little ftruggle, the
effeminate and ill exercifed militia of the great Perfian empire. The
fall of the Greek republicks and of the Perfian empire, was the
effect of the irrefiftable fuperiority which a (landing army has over
every fort of militia. It is the firft great revolution in the affairs
of mankind of which hiftory has preferved any diftinct or circum-
ftantial account.

The fall of Carthage, and the confequent elevation of Rome, is
the fecond. All the varieties in the fortune of thofe two famous
republicks may very well be accounted for from the fame caufe.

From the end of the firft to the beginning of the fecond Cartha-
ginian war, the armies of Carthage were continually in the field>
and employed under three great generals, who fucceeded one ano-
ther in the command j Amilcar, his fon in law Afdrubal, and his
fon Annibal ; firft in chaftifing their own rebellious flaves, after-
wards in fubduing the revolted nations of Africa, and, laftly, in
conquering the great kingdom of Spain. The army which Anni-
bal led from Spain into Italy muft necefTarily, in thofe different
wars, have been gradually formed to the exact difcipline of a ftand-
ing army. The Romans in the mean time, though they had not
been altogether at peace, yet they had not, during this period, been
engaged in any war of very great confequence ; and their military
difcipline, it is generally faid, was a good deal relaxed. The Roman
armies which Annibal encountered at Trebia, Thrafymenus, and
Cannae, were militia oppofed to a ftanding army. This circum-
ftance, it is probable, contributed more than any other to deter-
mine the fate of thofe battles.

Vol. II. R r Ths

THE NATURE AND CAUSES OF

K The ftanding army which Annibal left behind him in Spain, had
mj the like fuperiority over the militia which the Romans fent to
oppofe it, and in a few years, under the command of his brother,
the younger Afdrubal, expelled them almoft entirely from that
country.

Annibal was ill fupplied from home. The Roman militia,
being continually in the field, became in the progrefs of the war a
well difciplined and well exercifed ftanding army j and the fupe-
riority of Annibal grew every day lefs and lefs. Afdrubal judged
it necelfary to lead the whole, or almoft the whole of the ftanding
army which he commanded in Spain, to the afriftance of his bro-
ther in Italy. In his march he is faid to have been milled by his
guides ; and in a country which he did not know, was furprized
and attacked by another ftanding army, in every refpecl equal or
fuperior to his own, and was entirely defeated.

When Afdrubal had left Spain, the great Scipio found nothing
to oppofe him but a militia inferior to his own. He conquered
and fubdued that militia, and, in the courfe of the war, his own
militia neceffarily became a well difciplined and well exercifed ftand-
ing army. That ftanding army was afterwards carried to Africa,
where it found nothing but a militia to oppofe it. In order to
defend Carthage it became neceffary to recall the ftanding army of
Annibal. The difheartened and frequently defeated African militia
joined it, and, at the battle of Zama, compofed the greater part of
the troops of Annibal. The event of that day determined the
fate of the two rival republieks.

From the end of the fecond Carthaginian war till the fall of
the Roman republick, the armies of Rome were in every refpeft
ftanding armies. The ftanding army of Macedon made fome

refiftance

THE WEALTH OF. NATIONS.

refinance to their arms. In the height of their grandeur it coft C
them two great wars, and three great battles, to fubdue that little u
kingdom j of which the conqueft would probably have been ftill
more difficult, had it not been for the cowardice of its laft king.
The militias of all the civilized nations of the ancient world, of
Greece, of Syria, and of Egypt, made but a feeble refiftance to
the (landing armies of Rome. The militias of fome barbarous
nations defended themfelves much better. The Scythian or Tar-
tar militia, which Mithridates drew from the countries north of
the Euxine and Cafpian feas, were the moft formidable enemies
which the Romans had to encounter after the fecond Carthaginian
war. The Parthian and German militias too were always refpect-
able, and, upon feveral occalions, gained very confiderable advan-
tages over the Roman armies. In general, however, and when the
Roman armies were well commanded, they appear to have been
very much fuperior ; and if the Romans did not purfue the final
conqueft either of Parthia or Germany, it was probably becaufe
they judged that it was not worth while to add thofe two barbarous
countries to an empire which was already too large. The antient
Parthians appear to have been a nation of Scythian or Tartar
extraction, and to have always retained a good deal of the manners
of their anceftors. The ancient Germans were, like the Scythians
or Tartars, a nation of wandering fhepherds, who went to war
under the fame chiefs whom they were accuftomed to follow in
peace. Their militia was exactly of the fame kind with that of
the Scythians or Tartars, from whom too they were probably
defcended.

Many different caufes contributed to relax the difcipline of the
Roman armies. Its extreme feverity was, perhaps, one of thofe
caufes. In the days of their grandeur, when no enemy appeared
capable of oppofing them, their heavy armour was laid afide as

R r 2 unneceflarily

THE NATURE AND CAUSES OF

imnecefTarily burdenlbme, their laborious exercifes were neglected"
as unneceffarily toilfome. Under the Roman emperors befides,.
the (landing armies of Rome, thofe particularly which guarded
the German and Pannonian frontiers, became dangerous to their
matters, again ft whom they ufed frequently to fet up their own
generals. In order to render them lefs formidable, according to
fome authors* Dioclefian, according to others, Conflantine, firfb
withdrew them from the frontier, where they had always before,
been encamped in great bodies, generally of two or three legions-
each, and difperfed them in fmall bodies through the different?
provincial towns, from whence they were fcarce ever removed*
but when it became necefTary to repel an invafion. Small bo-
dies of foldiers quartered in trading and manufacturing towns^
and feldom removed from thofe quarters, became themfelves*
tradefmen, artificers, and manufacturers. The civil came to pre-
dominate over the military character ; and the Handing armies of
Rome gradually degenerated into a corrupt, neglected, and undis-
ciplined militia, incapable of refilling the attack of the German
and Scythian militias, which foon afterwards invaded the weftern1
empire. It was only by hiring the militia of fome of thofe nations*
to oppofe to that of others, that the emperors were for fome time
able to defend themfelves. The fall of the weflern empire is the
third great revolution in the affairs of mankind, of which antienfc
hiftory has preferved any diflinct or circumflantial account. Ife
was brought about by the irrefiflable fuperiority which -the militia
of a barbarous has over that of a civilized nation j which the
militia of a nation of fhepherds has over that of a nation of huf--
bandmen, artificers, and manufacturers. The victories which have
been gained by militias have generally^ been, not over flandrng
armies, but over other militias in exercife and difcipline inferior to
themfelves. Such were the victories which the Greek militia gained
©ver that of the Perfian. empire ; and fuch too were thofe which

THE WEALTH OF NATIONS. 30$

& later times the Swifs militia gained over that of the Au{lrian3 CHAP,,
and Burgundians, w — v-— *•

The military force of the German and Scythian nations who-
eflablifhed themfelves upon the ruins of the weftern empire, con-
tinued for fome time to be of the fame kind in their new fettle-
men ts as it had been in their original country. It was a militia-
of fhepherds and hufbandmen, which, in time of war, took the field
under the command of the fame chieftains whom it was accuftomed
to obey in- peace. It was, therefore, tolerably well exercifed, and
tolerably well difciplined. As arts and indudry advanced, however*
the authority of the chieftains gradually decayed, and the great
body of the. people had lefs time to fpare for military exercifes.
Both the difcipline and the.exercife of the feudal militia, therefore,
went gradually to ruin, and {landing armies* were gradually intro-
duced to fupply the place of it. When the- expedient of a {land-
ing army, befides, had once been adopted by one civilized nation, it
became necenary that all its neighbours mould follow the example.
They foon found that their fafety depended upon their doing fo,
and that their own militia was altogether incapable of refilling the
attack of fuch an army, i

The foldiers- of a {landing army, though they may never have
feen an enemy, yet have frequently appeared to poffefs all the cou-
rage of veteran troops, and the very moment that they took the field
to have been fit to face the Jrardieft and moll experienced veterans-
In 1756, when the Ruffian. army marched into Poland, -the valour
of the Ruffian foldiers did not appear inferior to that of the Prufc
iians, at that time fuppofed to be the hardieft and moft experienced
veterans in Europe. The Ruffian empire, however, had enjoyed
a profound peace for near twenty years before, and could at that
tkne have very few foldiers who had ever feen an enemy. When.

the,..

THE NATURE AND CAUSES OF

K the Spanifh war broke out in 1739, England had enjoyed a pro-
-» found peace for about eight and twenty years. The valour of her
foldiers, however, far from being corrupted by that long peace, was
never more diflinguimed than in the attempt upon Carthagena,
the firfl unfortunate exploit of that unfortunate war. In a long
peace the generals, perhaps, may fometimes forget their Ikill ; but,
where a well regulated (landing army has been kept up, the fol-
diers feem never to forget their valour.

When a civilized nation depends for its defence upon a militia,
it is at all times expofed to be conquered by any barbarous nation
which happens to be in its neighbourhood. The frequent con-
quefts of all the civilized countries in Afia by the Tartars, fuffi-
ciently demonflrate the natural fuperiority which the militia of a
barbarous has over that of a civilized nation. A well regulated
{landing army is fuperior to every militia. Such an army, as it
can beft be maintained by an opulent and civilized nation, fo it
can alone defend fuch a nation againfl the invafion of a poor and
barbarous neighbour. It is only by means of a flanding army,
therefore, that the civilization of any country can be perpetuated,
or even preferved for any confiderable time.

As it is only by means of a well regulated flanding army that a
civilized country can be defended, fo it is only by means of it that
a barbarous country can be fuddenly and tolerably civilized. A
{landing army eftablifhes, with an irrefiftible force, the law of the
fovereign through the remotefl provinces of the empire, and main-
tains fome degree of regular government in countries which could
not otherwife admit of any. Whoever examines, with attention,
the improvements which Peter the Great introduced into the Ruf-
fian empire, will find that they almoft all refolve themfelves into the
eftablifliment of a well regulated (landing army. It is the inflru-
8 merit

THE WEALTH OF NATIONS

ment which executes and maintains all his other regulations. That C
degree of order and internal peace which that empire has ever fince
enjoyed, is altogether owing to the influence of that army.

Men of republican principles have been jealous of a {landing
army as dangerous to liberty. It certainly is lb wherever the
intereft of the general and that of the principal officers are not
neceflarily connected with the fupport of the conftitution of the
ftate. The ftanding army of Cefar deftroyed the Roman repub-
lic!;. The ftanding army of Cromwell turned the long parlia-
ment out of doors. But where the fovereign is himfelf the
general, and the principal nobility and gentry of the country the
chief officers of the army ; where the military force is placed under
the command of thofe who have the greater! intereft in the fup-
port of the civil authority, becaufe they have themfelves the
greateft mare of that authority, a ftanding army can never be
dangerous to liberty. On the contrary, it may in fome cafes be
favourable to liberty. The fecurity which it gives to the fovereign -
renders unneceffary that troublefome jealoufy which in fome
modern republicks feems to watch over the minuteft actions, and
to be at all times ready to difturb the peace of every citizen.
Where the fecurity of the magiftrate, though fupported by the
principal people of the country, is endangered by every popular
difcontent where a fmall tumult is capable of bringing about in a
few hours a great revolution, the whole authority of government
muft be employed to fupprefs and punifh every murmur and
complaint againft it. To a fovereign, on the contrary, who feels
himfelf fupported, ' not only by the natural ariftocracy of the
country, but by a well regulated ftanding army, the rudeft, the
moft groundlefs, and the moft licentious remonftrances can give-
little difturbance. He can fafely pardon or neglect: them, and his
confciouinefs of his own fuperiority naturally diipofes him to do

THE NATURE AND CAUSES OF

fo. That degree of liberty which approaches to licentioufnefs cart
. be tolerated only in countries where the fovereign is fecured by
a well regulated ftanding army. It is in fuch countries only that
the publick fafety does not require that the fovereign fhould
fee trufted with any difcretionary power for fuppreifing even the
impertinent wantonnefs of this licentious liberty.

The firft duty of the fovereign, therefore, that of defending
the fociety from the violence and injuftice of other independent
focieties, grows gradually -more and more expenfive as the fociety
advances in civilization. The military force of the fociety, which
originally coft the fovereign no expence either in time of peace
or in -time of war, muft, in the progrefs of improvement, firft
be maintained by him in time of war, and afterwards even in
time of peace.

The great change introduced into the art of war by the inven-
tion of fire arms, has enhanced frill further both the expence of
exercifing and difciplining any particular number of foldiers in
time of peace, and that of employing them in time of war.
Both their arms and their ammunition are become more expenfive.
A mufquet is a more expenfive machine than a javelin or a bow
and arrows ; a cannon or a mortar, than a balifta or a catapulta.
The powder which is fpent in a modern review is loft irrecover-
ably, and occafions a very confiderable expence. The javelins
and arrows which were thrown or fhot in an antient one, could
eafily be picked up again, and were befides of very little value.
The cannon and the mortar are, not only much dearer, but much
heavier machines than the balifta or catapulta, and require a
greater expence not only to prepare them for the field, but to
carry them to it. As the fuperiority of the modern artillery too
over that of the antients is very great ; it has become much more
4 difficult,

THE WEALTH OF NATIONS.

difficult, and confequently much more expcnfivc, to fortify a c
rown fo as to refill even for a few weeks the attack of that fupe-
tior artillery. In modern times many different caufes c. uribute
to render the defence of the fociety more expenfive. The unavoid-
able effects of the natural progrefs of improvement have, in this
refpecl, been a good deal enhanced by a great revolution in the
art of war, to which a mere accident, the invention of gunpowder,
feems to have given occafion.

In modern war the great expence of fire-arms gives an evident
advantage to the nation which can beft afford that expence ; and
confequently to an opulent and civilized over a poor and barbarous
nation. In antient times the opulent and civilized found it diffi-
cult to defend themfelves againft the poor and barbarous nations..
In modern times the poor and barbarous find it difficult to defend
themfelves againft the opulent and civilized. The invention of
fire-arms, an invention which at firft fight appears to be fo perni-
cious, is certainly favourable both to the permanency and to the
extenfton of civilization.

Part II.

Of the Expence of Jujlicat.

A~rs H E fecond duty of the fovereign, that of protecting, as far
as poflible, every member of the fociety from the injuftice
or oppreflion of every other member of it, or the duty of eftablifh-
ing an exact adminiftration of juftice, requires too very different
degrees of expence in the different periods of fociety.

Among nations of hunters, as there is fcarce any property, or
at leaft none that exceeds the value of two or three days labour •
fo there is feldom any eftablifhed magiftrate or any regular admi-
niftration of juftice. Men who have no property can injure one

Vol. II. S f another

THE NATURE AND CAUSES OF

another only in their perfons or reputations. But when one man
kills, wounds, beats, or defames another, though he to whom the
injury is done fuffers, he who does it receives no benefit. It is
otherwife with the injuries to property. The benefit of the perfon
who does the injury is often equal to the lofs of him who fuffers
it. Envy, malice, or refentment, are the only paffions which can
prompt one man to injure another in his perfon or reputation.
But the greater part of men are not very frequently under the
influence of thofe pafiions ; and the very worft men are fo only
occafionally. As their gratification too, how agreeable foever it
may be to certain characters, is not attended with any real or
permanent advantage, it is in the greater part of men commonly
reftrained by prudential confiderations. Men may live together in
lbciety with fome tolerable degree of fecurity, though there is no
civil magiftrate to protect them from the injuftice of thofe paffions.
But avarice and ambition in the rich, in the poor the hatred' of
labour and the love of prefent eafe and enjoyment, are the
paffions which prompt to invade property, paffions much more
fteady in their operation, and much more univerfal in their
influence. Wherever there is great property, there is great ine-
quality. For one very rich man, there muft be at leaf!
five hundred poor, and the affluence of the few fuppofes the
indigence of the many. The affluence of the- rich excites the
indignation of the poor, who are often both driven by want, and
prompted by envy to invade his pofTeflions. It is only under the
fhelter of the civil magiftrate that the owner of that valuable
property,, which is acquired by the labour of many years, or
perhaps of many fucceffive generations, can fleep a fingle night in
fecurity. He is at all times furrounded by unknown, enemies,
wlu)m, though he never provoked, he can never appeafe, and from
whofe injuftice he can be protected only by the powerful arm of
the civil magiftrate continually held up to chaftife it. The acqui-
7 fition

THE WEALTH OF NATIONS.

3*5

fition of valuable or extenfive property, therefore, neceftarily c P«

requires the eftablifhment of civil government. Where there is <- — v-— »
no property, or at leaft none that exceeds the value of two or three
days labour, civil government is not fo neceflary.

Civil government fuppofes a certain fubordination. But as the
neceffity of civil government gradually grows up with the acquisi-
tion of valuable property, fo the principal caufes which naturally
introduce fubordination gradually grow up with the growth of that
valuable property.

The caufes or circumftances which naturally introduce fubordi-
nation, or which naturally, and antecedent to any civil inftitution,
give fome men fome fuperiority over the greater part of their
brethren, feem to be four in number.

The firft of thofe caufes or circumftances is the fuperiority of
perfonal qualifications, of ftrength, beauty, and agility of body ;
of wifdom, and virtue, of prudence, juftice, fortitude, and mo-
deration of mind. The qualifications of the body, unlefs fup-
ported by thofe of the mind, can give little authority in any
period of fociety. He is a very ftrong man who by mere ftrength
of body can force two weak ones to obey him. The qualifica-
tions of the mind can alone give very great authority. They
are, however, invifible qualities -y always difputable, and generally
difputed. No fociety, whether barbarous or civilized, has ever
found it convenient to fettle the rules of precedency, of rank and
fubordination, according to thofe invifible qualities j but according
to fomething that is more plain and palpable.

The fecond of thofe caufes or circumftances is the fuperiority
of age. An old man, provided his age is not fo far advanced as
to give fufpicion of dotage, is every where more refpecled than a

S f 2 young

3i6 THE NATURE AND CAUSES OF

B DO K young man of equal rank, fortune, and abilities. Among nations
t»-^v~— 1 of hunters, fuch as the native tribes of North America, age is the
fole foundation of rank and precedency. Among them, father
is the appellation of a fuperior ; brother, of an equal ; and fon,
of an inferior. In the mo ft opulent and civilized nations, age
regulates rank among thofe who are in every other refpecT: equal,
and among whom therefore there is nothing elfe to regulate it.
Among brothers and among fillers, the eldeft always take place '„
and in the fucceflion of the paternal eftate every thing which
cannot be divided, but muft go entire to one perfon, fuch as a
title of honour, is in moft cafes given to the eldeft. Age is a
plain and palpable quality which admits of no difpute.

The third of thofe caufes or circumftances is the fuperiority of
fortune. The authority of riches, however, though great in
every age of fociety, is perhaps greateft in the rudeft age of fociety
which admits of any confiderable inequality of fortune. A Tartar
chief, the increafe of whofe herds and flocks is fufficient to main-
tain a thoufand men, cannot well employ that increafe in any
other way than in maintaining a thoufand men. The rude ftate
of his fociety does not afford him any manufactured produce, any
trinkets or baubles of any kind, for which he can exchange that
part of his rude produce which is over and above his own con-
fumption. The thoufand men whom he thus maintains, de-
pending entirely upon him for their fubfiftence, muft both obey
his orders in war, and fubmit to his jurifdiclion in peace. He is
necefTarily both their general and their judge, and his chieftainfhip
is the neceflary effect of the fuperiority of his fortune. In an
opulent and civilized fociety, a man may pofTefs a much greater
fortune, and yet not be able to command a dozen of people.
Though the produce of his eftate may be fufficient to maintain,
and may perhaps actually maintain, more than a thoufand people,
8 yet

THE WEALTH OF NATIONS.

yet as thofe people pay for every thing which they get from him, c
as he gives fcarce any thing to any body but in exchange for an v.
equivalent, there is fcarce any body who confiders himfelf as en-
tirely dependent upon him, and his authority extends only over a
few menial fervantsi: The authority of fortune, however, is very
great even in an opulent and civilized fociety. That it is much
greater than that either of age or of perfonal qualities, has been
the conftant complaint of every period of fociety which admitted
of any confiderable inequality of fortune. The rirft period of
fociety, that of hunters, admits of no fuch inequality. Univerfal
poverty eftablifhes there univerfal equality, and the fuperiority
either of age or of perfonal qualities are the feeble, but the fole
foundations of authority and fubordination. There is there-
fore little or no authority or fubordination in this period of
fociety. The fecond period of fociety, that of fhepherds, admits
of very great inequalities of fortune, and there is no period in
which the fuperiority of fortune gives fo great authority to thofe
who poflefs it. There is no period accordingly in which authority
and fubordination are more perfectly eftablimed. The authority
of an Arabian fcherif is very great ; that of a Tartar khan alto-
gether defpotical.

The fourth of thofe caufes or circumftances is the fuperiority
of birth. Superiority of birth fuppofes an antient fuperiority of
fortune in the family of the perfon who claims it. All families
are equally antient ; and the anceftors of the prince, though they
may be better known, cannot well be more numerous than thofe
of the beggar. Antiquity of family means every where the anti-
quity either of wealth, or of that greatnefs which is commonly
either founded upon wealth or accompanied with it. Upftart
greatnefs is every where lefs refpecled than antient greatnefs. The
hatred of ufurpers, the love for the family of an antient monarch,

are

THE NATURE AND CAUSES OF

B OO K are in a great meafure founded upon the contempt which men
< — v-—-J naturally have for the former, and upon their veneration for the
latter. As a military officer fubmits without reluctance to the
authority of a fuperior by whom he has always been commanded,
but cannot bear that his inferior lhould be fet* over his head j fo
men eafily fubmit to a family to whom they and their anceftors
have always fubmitted, but are fired with indignation when
another family, in whom they had never acknowledged any fuch
fuperiority, affumes a dominion over them.

The diftincrion of birth, being fubfequent to the inequality of
fortune, can have no place in nations of hunters, among whom
all men, being equal in fortune, muft likewife be very nearly
equal in birth. The fon of a wife and brave man may, indeed,
even among them, be fomewhat more refpected than a man of
equal merit who has the misfortune to be the fon of a fool or a
coward. The difference, however, will not be very great ; and
there never was, I believe, a great family in the world whole
iiluftration was intirely derived from the inheritance of wifdom
and virtue.

The diftinclion of birth not only may, but always does take
place among nations of fhepherds. Such nations are always
Grangers to every fort of luxury, and great wealth can fcarce
ever be diflipated among them by improvident profufion, There
are no- nations accordingly who abound more in families revered
and honoured, on account of their defcent from a long race of
great and illuftrious anceftors; becaufe there are no nations
among whom wealth is likely to continue longer in the fame
families.

Birth and fortune are evidently the two circumftances which
principally let one man above another. They are the two great fources i

of

THE WEALTH OF NATIONS.

of perfonal diftincYion,- and are therefore the principal caufes which
naturally eftablifh authority and fubordination among men. Among
nations of fhepherds both thofe caufes operate with their full force.
The great (hepherd or herdfman, refpecled on account of his great
wealth, and of the great number of thofe who depend upon him
for fubfiftence, and revered on account of the noblenefs of his birth,
and of the immemorial antiquity of his illuftrious family, has a
natural authority over all the inferior fhepherds or herdfmen of his
horde or clan. He can command the united force of a greater
number of people than any of them. His military power is greater
than that of any of them, in time of war they are all of them
naturally difpofed to mufter themfelves under his banner, rather
than under that of any other perfon, and his birth and fortune thus
naturally procure to him fome fort of executive power. JBy com-
manding too the united force of a greater number of people than
any of them, he is beft able to compel any one of them who may
have injured another to compenfate the wrong* He is the perfon,
therefore, to whom all thofe who are too weak to defend themfelves
naturally look up for protection. It is to him that they naturally
complain of the injuries which they imagine have been done to
them, and his interpolation in fuch cafes is more eafily fubmitted to,
even by the perfon complained of, than that of any other perfon
would be. His birth and fortune thus naturally procure him fome
fort of judicial authority.

It is in the age of fhepherds, in the fecond period of fociety,
that the inequality of fortune firft begins to take place, and intro-
duces among men a degree of authority and fubordination which
could not poliibly exift before. It thereby introduces fome degree
of that civil government which is indifpenfably neceffary for its own
prefervation : and it feems to do this naturally, and even independent
of the confideration of that neceflity. The confideration of that

neceffity

320

THE NATURE AND CAUSES OF

top K necefllty comes no doubt afterwards to contribute very much to
w-v-— J maintain and fecure that authority and fubordination . The rich, in
particular, are neceiiarily interefted to fupport that order of things
which can alone fecure them in the polleflion of their own advantages.
Men of inferior wealth combine to defend thofe of fuperior wealth
in the pofteflion of their property, in order that men of fuperior
wealth may combine to defend them in the pofTeffion of theirs. All
the inferior fhepherds and herdfmen feel that the fecurity of their
own herds and flocks depends upon the fecurity of thofe of the great
fhepherd or herdfman ; that the maintenance of their leffer autho-
rity depends upon that of his greater authority, and that upon their
fubordination to him depends his power of keeping their inferiors
in fubordination to them. They conftitute a fort of little nobility,
who feel themfelves interefted to defend the property and to fupport
the authority of their own little fovereign, in order that he may be
able to defend their property and to fupport their authority. Civil
government, fo far as it is inftituted for the fecurity of property,
is in reality inftituted for the defence of the rich again ft the poor,
or of thofe who have fome property againft thofe who have none
at all.

The judicial authority of fuch a fovereign, however, far from
being a caufe of expence, was for a long time a fource of revenue
to him. The perfons who applied to him for juftice were always
willing to pay for it, and a prefent never failed to accompany a
petition. After the authority of the fovereign too was thoroughly
eftablifhed, the perfon found guilty, over and above the fatisfaclion
which he was obliged to make to the party, was likewife forced to
pay an amercement to the fovereign. He had given trouble, he had
difturbed, he had broke the peace of his lord the king, and for thofe
offences an amercement was thought due. In the Tartar govern-
ments

THE WEALTH OF NATIONS.

321

ments of Afia, in the governments of Europe which v/ere CHAP,
founded by the German and Scythian nations who overturned the v— '
Roman empire, the adminiftration of juftice was a confiderable
fource of revenue both to the fovereign and to all the letter chiefs
or lords who exercifed under him any particular jurifdiction,
either over fome particular tribe or clan, or over fome particular
territory ordiftri£t. Originally both the fovereign and the inferior
chiefs ufedto exercife this jurifdiction in their own perfons. After-
wards they univerfally found it convenient to delegate it to fome
fubftitute, bailiff, or judge. This fubftitute, however, was ftill
obliged to account to his principal or conftituent for the profits of
the jurifdiction. Whoever reads the inftmclions * which were given
to the judges of the circuit in the time of Henry II. will fee clearly
that thofe judges were a fort of itinerant factors, fent round the
country for the purpofe of levying certain branches of the king's
revenue. In thofe days the adminiftration of juftice not only
afforded a certain revenue to the fovereign, but to procure this reve-
nue feems to have been one of the principal advantages which he
propofed to obtain by the adminiftration of juftice.

This fchemeof making the adminiftration of juftice fubfervient to
the purpofes of revenue, could fcarce fail to be productive of feveral
very grofs abufes. The perfon who applied for juftice with a large
prefent in his hand was likely to get fomething more than juftice ;
while he who applied for it with a fmall one was likely to get fome-
thing lefs. Juftice too might frequently be delayed, in order that
this prefent might be repeated. The amercement, befides, of the
perfon complained of, might frequently fuggeft a very ftrong reafon
for finding him in the wrong, even when he had not really beer, fa.
That fuch abufes were far from being uncommon, the antient
hiftory of every country in Europe bears witnefs.

* They are to be found in Terrell s H ftory of England.

Vol. II.

When

$22 THE NATURE AND CAUSES OF

B CK) K When the fovereign or chief exercifed his judicial authority in
u—y-^-i his own perfon, how much foever he might abufe it, it muft have
been fcarce poflible to get any redrefs ; becaufe there could feldom be
any body powerful enough to call him to account. When he exercifed
it by a bailiff, indeed, redrefs might fometimes be had. If it was for his
own benefit only that the bailiff had been guilty of any act. of injuftice*
the fovereign himfelf might not always be unwilling to punim him,
or to oblige him to repair the wrong. But if it was for the benefit
of his fovereign, if it was in order to make court to the perfon who
appointed him and who might prefer him, that he had committed
any acl: of opprefiion, redrefs would upon moft occafions be as
impoffible as if the fovereign had committed it himfelf. In all bar-
barous governments, accordingly, in all thofe antient governments
of Europe in particular, which were founded upon the ruins of
the Roman empire, the adminiftration of juftice appears for a long
time to have been extremely corrupt ; far from being quite equal
and impartial even under the. befl monarchs, and altogether profligate
under the worft.

Among nations of fhepherds, where the fovereign or chief is.
only the greater!: fhepherd or herdfman of the horde or clan, he is
maintained in the fame manner as any of his vafTals or fubjects, by
the increafe of his own herds or flocks. Among thofe nations of
hufbandmen who are but juft come out of the fhepherd ftate, and
who are not much advanced beyond that ftate ; fuch as the Greek
tribes appear to have been about the time of the Trojan war, and our
German and Scythian anceftors when they firfl fettled upon the ruins
of the weftern empire ; the fovereign or chief is in the fame manner
only the greateft landlord of the country, and is maintained, in thefame
manner as any other landlord, by a revenue derived from his own private
eftate, or from what in modern Europe was called the derrefne of the
crown. His fubjecls upon ordinary occafions contribute nothing to

his

THE WEALTH OF NATIONS

his fupport, except when they ftand in need of the interpolation of C
his authority in order to protect: them from the oppreffion of fome u
of their fellow fubjects. The prefents which they make him upon
fuch occafions conftitute the whole ordinary revenue, the whole
of the emoluments which, except perhaps upon fome very extra-
ordinary emergencies, he derives from his dominion over them.
When Agamemnon, in Homer, offers to Achilles for his friend-
fhip the fovereignty of feven Greek cities, the fole advantage which
he mentions as likely to be derived from it was, that the peo-
ple would honour him with prefents. As long as fuch prefents,
as long as the emoluments of juftice, or what may be called
the fees of court, constituted in this manner the whole ordinary
revenue which the fovereign derived from his fovereignty, it could
not well be expected, it could not even decently be propofed that
he fliould give them up altogether. It might, and it frequently
was propofed, that he fhould regulate and afcertain them. But
after they had been fo regulated and afcertained, how to hinder a
perfon who was. all-powerful from extending them beyond thole
regulations, was (till very difficult, not to fay impoffible. During
the continuance of this ftate of things, therefore, the corruption
of juftice, naturally refulting from the arbitrary and uncertain
nature of thofe prefents, fcarce admitted of any effectual remedy.

But when from different caufes, chiefly from the continually
Increafing expence of defending the nation againft the invafion of
other nations, the private eftate of the fovereign had become alto-
gether infufficient for defraying the expence of the fovereignty;
and when it had become neceffary that the people mould, for their
own fecurity. contribute towards this expence by taxes of different
kinds, it feems to have been very commonly ftipulated that no
prefent for the adminiftration of juftice fhould, under any pre-
tence, be accepted either by the fovereign, or by his bailiffs and fub-

T t 2 ftitutes,

.§4 the nature and causes of

BOOK ftitutes, the judges. Thofe prefents, it feems to have been fup-
4— -v-*^ pofed, could more eafily be abolifhed altogether, than effectually
regulated and afcertained. Fixed falaries were appointed to the
judges, which were fuppofed to compenfate to them the lofs of
whatever might have been their fhare of the antient emoluments
of juftice; as the taxes more than compenfated to the fovereign
the lofs of his. Juftice was then faid to be adminiftered gratis.

Justice, however, never was in reality adminiftered gratis in
any country. Lawyers and attornies, at leaft, muft always be
paid by the parties ; and, if they were not, they would perform their
duty ftill worfe than they actually perform it. The fees annually
paid to lawyers and attornies amount, in every court, to a much
greater fum than the falaries of the judges. The circumftance of
thofe falaries being paid by the crown, can no where much dimi-
nilh the neceflary expence of a law-fuit. But it was not fo much
to diminiih the expence, as to prevent the corruption of juftice,
that the judges were prohibited from receiving any prefent or fee
from the parties.

The office of judge is in itfelf fo very honourable, that men are
willing to accept of it, though accompanied with very fmali emolu-
ments. The inferior office of juftice of peace, though attended
with a good deal of trouble, and in moft cafes with no emoluments
at all, is an object of ambition to the greater part of our country
gentlemen. The falaries of all the different judges, high and low,,
together with the whole expence of the adminiftration and execu-
tion of juftice, even where it is not managed with very good
(Economy, makes, in any civilized country, but a very inconfider-
able part of the whole expence of government.

The whole expence of juftice too might eafily be defrayed by the
fees of court ; and, without expofing the adminiftration of juftice

to

THE WEALTH OF NATIONS.

to any real hazard of corruption, the public revenue might thus C HA P.
be entirely difcharged from a certain, though, perhaps, but a fmall u~-v-—> '
incumbrance. It is difficult to regulate the fees of court effectu-
ally, where a perfon fo powerful as the fovereign is to fhare in
them, and to derive any confiderable part of his revenue from
them. It is very eafy, where the judge is the principal perfon who
can reap any benefit from them. The law can very eafily oblige
the judge to refpecl: the regulation, though it might not always be
able to make the fovereign refpecl: it. Where the fees of court
are precifely regulated and afcertained, where they are paid all at
once, at a certain period of every procefs, into the hands of a
cafhier or receiver, to be by him diflributed in certain known pro-
portions among the different judges after the procefs is decided,
and not till it is decided, there feems to be no more danger of cor-
ruption than where fuch fees are prohibited altogether. Thofe
fees, without occafioning any confiderable increafe in the expence
of a law-fuit, might be rendered fully fufficient for defraying the
whole expence- of juftice. By not being paid to the judges till the
procefs was, determined, they might be fome incitement to the dili-
gence of the court in examining and deciding it. In courts which
confifted of a confiderable number of judges, by proportioning
the {hare of each judge to the number of hours and days which
he had employed in examining the procefs, either in the court or
in a committee by order of the court, thofe fees might give fome
encouragement to the diligence of each particular judge. Public
fervices are never better performed than when their reward comes
only in confequence of their being performed, and is proportioned
to the diligence employed in performing them. In the different par-
liaments of France, the fees of court (called Epices and vacations)
eonftitute the far greater part of the emoluments of the judges. After
all deductions are made, the neat falary paid by the crown to a coun-
cilor or judge in the parliament of Touloufe, in rank and dignity the

fecond'

THE NATURE AND CAUSES OF

■ ' ;g K O 1 T A 71 H O H~ La i :i IT I

K. fecond parliament of the kingdom, amounts only to a hundred and
-j fifty livres, about fix pounds eleven {hillings fterling a year. About
feven years ago that fum was in the fame place the ordinary yearly
wages of a common footman. The diflribution of thofe Epices
too is according to the diligence of the judges. A diligent judge
gains a comfortable, though moderate revenue by his office : An
idle one gets little more than his falary. Thofe parliaments are
perhaps, in many refpects, not very convenient courts of juflice;
but they have never been accufed ; they feem never even to have

been fufpected of corruption.

^lfijj\niJ •gnivm lot tfiol am £»ur jmsnai mn ivm v* /

vd ai^w b3i3voo3i *3rd nDirfw^sgemKb 3rti piBsit4 «n TP m
The fees of court feem originally to have been the principal fup-
port of the different courts of juflice in England. Each court
endeavoured to draw to itfelf as much bufinefs as it could, and
was, upon that account, willing to take cognizance of many fuits
which were not originally intended to fall under its jurifdiclion.
The court of king's bench, inftituted for the trial of criminal caufes
only, took cognizance of civil fuits ; the plaintiff pretending that the
defendant, in not doing him juflice, had been guilty of fome trefpafs
or mifdemeanor. The court of exchequer, inftituted for the levying
of the king's revenue, and for enforcing the payment of fuch debts
only as were due to the king, took cognizance of all other contract
debts ; the plaintiff alledging that he could not pay the king, be-
caufe the defendant would not pay him. In confequence of fuch
fictions it came, in many cafes, to depend altogether upon the par-
ties before what court they would chufe to have their caufe tried ;
and each court endeavoured, by fuperior difpatch and impartiality,
to draw to itfelf as many caufes as it could. The prefent admi-
rable conflitution of the courts of juflice in England was, perhaps,
originally in a great meafure formed by this emulation which
anticntly took place between their refpeclive judges; each judge
endeavouring to give, in his own court, the fpeedieft and moft

9 effectual

THE WEALTH OF NATIONS.

effectual remedy, which the law would admit, for every fort of C
injuftice. Originally the courts of law gave damages only for
breach of contract. The court of chancery, as a court of con-
fcience, firft took upon it to enforce the fpecific performance of
agreements. When the breach of contract confined in the non-
payment of money, the damage fuftained could be compenfated in
no other way than by ordering payment, which was equivalent to
a fpecific performance of the agreement. In fuch cafes, there-
fore, the remedy of the courts of law was fufncient. It was not
fo in others. When the tenant fued his lord for having unjuftly
outed him of his leafe, the damages which he recovered were by
no means equivalent to the pofTeffion of the land. Such caufes,
therefore, for fome time, went all to the court of chancery, to the
no fmall lofs of the courts of law. It was to draw back fuch caufes
to themfelves that the courts of law are faid to have invented the
artificial and fictitious writ of ejectment, the moil effectual remedy
for an unjuft outer or difpofTefTion of land,

A stamp-duty upon the law proceedings of each particular
court, to be levied by that court, and applied towards the mainte-
nance of the judges and other officers belonging to it, might, in
the fame manner, afford a revenue fufficient for defraying the
expence of the adminiftration of jultice, without bringing any bur-
den upon the general revenue of the fociety. The judges indeed
might, in this cafe, be under the temptation of multiplying unne-
ceffarily the proceedings upon every caufe, in order to increafe, as
much as pofiible, the produce of fuch a (lamp-duty. It has been
the cultom in modern Europe to regulate, upon moft occafions,
the payment of the attornies and clerks of court according to the
number of pages which they had occafion to write ; the court,
however, requiring that each page mould contain fo many lines,
and each line fo many words. In order to increafe their payment,

the

328 THE NATURE AND CAUSES OF

JB O O K the attoniies and clerks have contrived to multiply words beyond
all neceftity, to the corruption of the law language of, I believe,
every court of juftice in Europe. A like temptation might per-
haps occafion a like corruption in the form of law proceedings.

But whether the adminiftration of juftice be fo contrived as to
defray its own expence, or whether the judges be maintained by
fixed falaries paid to them from fome other fund, it does not feem
necefTary that the perfon or perfons entrufted with the executive
power mould be charged with the management of that fund, or with
the payment of thofe falaries. That fund might arife from the
rent of landed eftates, the management of each eftate being entrufted
to the particular court which was to be maintained by it. That
fund might arife even from the intereft of a fum of money, the
lending out of which might, in the fame manner, be entrufted to
the court which was to be maintained by it. A part, though indeed
but a fmall part, of the falary of the judges of the court of feftion
in Scotland, arifes from the intereft of a fum of money. The
necefTary inftability of fuch a fund feems, however, to render it an
improper one for the maintenance of an inftitution which ought
to laft forever.

The feparation of the judicial from the executive power feems
originally to have arifen from the increafing bufinefs of the fociety,
in confequence of its increafing improvement. The adminiftration
of juftice became fo laborious and fo complicated a duty as to
require the undivided attention of the perfons to whom it was
entrufted. The perfon entrufted with the executive power not having
Jeifure to attend to the decifion of private caufes himfelf, a deputy
was appointed to decide them in his ftead. In the progrefs of the
Roman greatnefs, the conful was too much occupied with the poli-
tical affairs of the ftate to attend- to the adminiftration of juftice.

8 A pra>

THE WEALTH OF NATIONS. ||<

A prastor, therefore, was appointed to adminifter it in his ftead. C H A P.

In the progrefs of the European monarchies which were founded v— -v— -*

upon the ruins of the Roman empire, the fovereigns and the great

lords came univerfally to confider the adminiftration of juftice as an

office both too laborious and too ignoble for them to execute in their

own perfons. They univerfally, therefore, difcharged themfelves

of it by appointing a deputy, bailiff, or judge.

When the judicial is united to the executive power, it is fcarce
poffible that juftice mould not frequently be facrificed to, what is
vulgarly called, politics. The perfons entrufted with the great
interefts of the ftate may, even without any corrupt views, fometimes
imagine it necefTary to facrifice to thofe interefts the rights of a pri-
vate man. But upon the impartial adminiftration of juftice depends
the liberty of every individual, the fenfe which he has of his own
fecurity. In order to make every individual feel himfelf perfectly
fecure in the pofTeflion of every right which belongs to him, it is
not only neceflary that the judicial fhould be feparated from the
executive power, but that it fhould be rendered as much as poflible
independent of that power. The judge fhould not be liable to be
removed from his office according to the caprice of that power.
The regular payment of his falary fhould not depend upon the good-
will, or even upon the good ceconomy of that power.

Part III.

Of the Expence of public k Works and publick Injlitutions.

H E third and laft duty of the fovereign or commonwealth is
that of erecting and maintaining thofe publick inftitutions and
thofe publick works, which, though they may be in the highefl
degree advantageous to a great fociety, are, however, of fuch a
Vol. II. U u nature

j3o THE NATURE AND CAUSES OF

B O o K nature, that the profit could never repay the expence to any indivi-
4 dual or fmall number of individuals, and which it therefore cannot
be expected that any individual or fmall number of individuals fhoukl
erect or maintain. The performance of this duty requires too
very different degrees of expence in the different periods of fociety.

After the publick inftitutions and publick works neceffary for
the defence of the fociety, and for the adminiftration of juftice, both
of which have already heen mentioned, the other works and infti-
tutions of this kind are chiefly thofe for facilitating the commerce of
the fociety, and thofe for promoting the inftruction of the people.
The inflitutions for inftruction are of two kinds ; thofe for the
education of the youth, and thofe for the inftruction of people
of all ages. The confideration of the manner in which the expence
of thofe different forts of publick work .and inftitutions may be
moft properly defrayed, will divide this third part of the prefent
chapter into three different articles.

Article I.

Of the publick Works and Inflitutions for facilitating the Commerce

of the Society..

THAT the erection and maintenance of the publick works which
facilitate the commerce of any country, fuch as good roads, bridges,,
navigable canals, harbours, &c. muff require very different degrees of
expenceinthe different periods of fociety, is evident without any proofs
The expence of making and maintaining the publick roads of any
country muff: evidently increafe with the annual produce of the land
and labour of that country, or with the quantity and weight of the
goods which it becomes neceffary to fetch and carry upon thofe
roads. The ftrength of a bridge muff be fuited to the number and
weight of the carriages which are likely to pafs over it. The depth
and the fupply of water for a navigable canal muff be proportioned
to the number and tunnage of the lighters which are likely to carry

goods

I

THE WEALTH OF NATIONS.

331

goods upon it ; the extent of a harbour to the number of the (hip- CHAP,
ping which are likely to take fhelter in it.

It does not feem neceffary that the expence of thofe publick
works fhould be defrayed from that publick revenue, as it is com-
monly called, of which the collection and application is in moft
countries affigned to the executive power. The greater part of
fuch publick works may eafily be fo managed as to afford a parti-
cular revenue fufficient for defraying their own expence, without
bringing: any burden upon the general revenue of the focietv.

A highway, abridge, a navigable canal, for example, may in
moft cafes be both made and maintained by a fmall toll upon the
carriages which make ufe of them : a harbour, by a moderate port
duty upon the tunnage of the (hipping which load or unload in it.
The coinage, another inflitution for facilitating commerce, in
many countries, not only defrays its own expence, but affords a
fmall revenue or feignorage to the fovereign. The poll office, an-
other institution for the fame purpofe, over and above defraying its
own expence, affords in almoft; all countries a very confiderable.
revenue to the fovereign.

When the carriages which pafs over a highway or a bridge, and
the lighters which fail upon a navigable canal, pay toll in proportion
to their weight or their tunnage, they pay for the maintenance of thofe
publick works exactly in proportion to the tear and wear which they
occafion of them. It feems fcarce poffible to invent a more equitable
way of maintaining fuch works. This tax or toll too, though it is
advanced by the carrier, is finally paid by the confunier, to whom
it muft always be charged in the price of the goods. As the expence
of carriage, however, is very much reduced by means of fuch
publick works, the goods, notwithftandiiig the toll, come cheaper

r\ jj aaatdslr sBj 32£fintf3 baB IsdfiUJ'n. 9nt ctt*

532 THE NATURE AND CAUSES OF

BOOK to the confumer than they could otherwife have done j their price
v-— v^-J not being fo much raifed by the toll, as it is lowered by the cheapnefs
of the carnage. The perfon who finally pays this tax, therefore, gains,
by the application, more than he lofes by the payment of it. His
payment is exactly in proportion to his gain. It is in reality no
more than a part of that gain which he is obliged to give up in order
to get the reft. It feems impoflible to imagine a more equitable
method of raifing a tax.

When the toll upon carriages of luxury, upon coaches, poft-
ehaifes, &c. is made fomewhat higher in proportion to their weight,
than upon carriages of neceflary ufe, fuchas carts, waggons> &c.
the indolence and vanity of the rich is made to contribute in a very
«afy manner to the relief of the poor, by rendering cheaper the trans-
portation of heavy goods to all the different parts of the country..

When high roads, bridges, canals, &c. are in this manner
made and fupported by the commerce which is carried on by means
of tHem, they can be made only where that commerce requires
them> and confequently where it is proper to make them. Their
expence too, their grandeur and magnificence muft be fuited to
what that commerce can afford to pay. They muft be made con-
fequently as it is proper to make them. A magnificent high road
cannot be made through a defart country where there is little or
no commerce, or merely becaufe it happens to lead to the country
villa of the intendant of the province, or to that of fome great lor^
to whom the intendant finds it convenient to make his court. A
great bridge cannot be thrown over a river at a place where nobody
paffes, or merely to embellim the view from the windows of a
neighbouring palace : things which fometimes happen in countries
where works of this kind are earned on by any other revenue than
that which they themfelves are capable of affording.

In

THE WEALTH OF NATIONS.

333

In feveral different parts of Europe the toll or lock-duty upon a C H^A P.
canal is the property of private perfons, whofe private intereft w-v^-fl
obliges them to keep up the canal. If it is not kept in tolerable
order, the navigation neceffarily ceafes altogether, and along with it
the whole profit which they can make by the tolls. If thofe tolls
were put under the management of commifnoners, who had them-
felves no intereft in them, they might be lefs attentive to the main-
tenance of the works which produced them. The canal of Languedoc
coft the king of France and the province upwards of thirteen millions
of livres, which (at twenty-eight Iivres the mark of lilver, the value
of French money in the end of the laft century) amounted to
upwards of nine hundred thoufand pounds fteiling. When that;
great work was finifhed, the moft likely method, it was found, of
keeping it in conftant repair was to make a prefent of the tolls to
Riquet the engineer, who planned and conducted the work. Thofe
tolls conftitute at prefent a very large eftate to the different branches
of the family of that gentleman, who have therefore a great intereft
to keep the work in conftant repair. But had thofe tolls been put
under the management of commifnoners who had no fuch intereft,
they might perhaps have been diffipated in ornamental and unnecef-
fary expences, while the moft efTential parts of the work were
allowed to go to ruin.

The tolls for the maintenance of a high road, cannot with any
fafety be made the property of private perfons. A high road?
though entirely neglected, does not become altogether impafTable,
though a canal does. The proprietors of the tolls upon a high
road, therefore, might neglect altogether the repair of the road,

J

and yet continue to levy very nearly the fame tolls. It is proper,
therefore, that the tolls for the maintenance of fuch a work lhoujd
be put under the management of commifnoners or truftees.

334

THE NATURE AND CAUSES OF

BOOK In Great Britain, the abufes which the truftees have committed
in the management of thofe tolls, have in many cafes been very
juftly complained of. At many turnpikes, it has been faid, the
money levied is more than double of what is neceffary for execut-
ing in the compleateft manner the work which is often executed
in a very flovenly manner, and fometimes not executed at all.
The fyftem of repairing the high roads by tolls of this kind,
it muft be obferved, is not of very long {landing. We mould
not wonder, therefore, if it has not yet been brought to that
degree of perfection of which it feems to be capable. If mean
and improper perfons are frequently appointed truftees and
if proper courts of infpeclion and account have not yet been
eftablifbed for controuling their conduct-, and for reducing the
tolls to what is barely fufficient for executing the work to be done
by them ; the recency of the inftitution both accounts and apo-
logizes for thofe defe<5ts, of which, by the wifdom of parliament,
the greater part may in due time be gradually remedied.

The money levied at the different turnpikes in Great Britain
is fuppofed to exceed fo much what is necefTary for repairing the
roads, that the favings, which with proper oeconomy might be
inade from it, have been confidered, even by fome minifters, as a
very great refource which might at fome time or another be
applied to the exigencies of the ftate. Government, it has been
faid, by taking the management of the turnpikes into its own
bands, and by employing the foldiers, who would work for a
very fmall addition to their pay, could keep the roads in good
order at a much lefs expence than it can be done by truftees who
have no other workmen to employ, but fuch as derive their whole
fubfiftence from their wages. A great revenue, half a million
perhaps, it has been pretended, might in this manner be gained
without laying any new burden upon the people ; and the turn-
7 pike

THE WEALTH OF NATIONS.

335

pike roads might be made to contribute to the general expence of C HA P.
lhc ftate, in the fame manner as the poft- office does at prefent. r— i

That a confiderable revenue might be gained in this manner,
I have no doubt, though probably not near fo much, as the pro-
jectors of this plan have fuppofed. The plan itfelf, however,
feems liable to feveral very important objections.

First, if the tolls which are levied at the turnpikes fhouM
ever be confidered as one of the refources for fupplying the exi-
gencies of the ftate, they would certainly be augmented as thofe
exigencies were fuppofed to require. According to the policy of
Great Britain, therefore, they would probably be augmented very
faft. The facility with which a great revenue could be drawn
from them, would probably encourage adminiftration to recur
very frequently to this refource. Though it may perhaps be more
than doubtful whether half a million could by any oeconomy be
faved out of the prefent tolls, it can fcarce be doubted but that a
million might be faved out of them if they were doubled, and
perhaps two millions if they were tripled. This great revenue
too might be levied without the appointment of a Tingle new
officer to collect and receive it. But the turnpike tolls being con-
tinually augmented in this manner, inftead of facilitating the
inland commerce of the country, as at prefent, would foon be-
come a very great encumbrance upon it. The expence of tranf-
porting all heavy goods from one part of the country to another
would foon be fo much increafed, the market for all fuch goods
confequently would foon be fo much narrowed, that their pro-
duction would be in a great meafure difcouraged, and the moft
important branches of the domeltic induftry of the country anni*»
hilated altogether.

Secondly

336

THE NATURE AND CAUSES OF

B O^o K Secondly, a tax upon carriages in proportion to their weight,
i though a very equal tax when applied to the fole purpofe of re-
pairing the roads, is a very unequal one, when applied to anv
other purpofe, or to fupply the common exigencies of the ftate.
When it is applied to the fole purpofe above mentioned, each
carriage is fuppofed to pay exactly for the tear and wear which
that carriage occafions of the roads. But when it is applied to
any other purpofe, each carriage is fuppofed to pay foj more than
that tear and wear, and contributes to the fupply of fome other
exigency of the ftate. But as the turnpike toll raifes the price of
goods in proportion to their weight, and not to their value, it is
chiefly paid by the confumers of coarfe and bulky, not by thofe
of precious and light commodities. Whatever exigency of the
ftate therefore this tax might be intended to fupply, that exigency
would be chiefly fupplied at the expence of the poor, not of the
rich ; at the expence of thofe who are leaft able to fupply it,
not of thofe who are moft able.

Thirdly, if government fhould at any time neglect the repa-
ration of the high roads, it would be ftill more difficult than it
is at prefent to compel the proper application of any part of the
turnpike tolls. A large revenue might thus be levied upon the
people, without any part of it being applied to the only purpofe
to which a revenue levied in this manner ought ever to be ap-
plied. If the meannefs and poverty of the truftees of turnpike
roads render it fometimes difficult at prefent to oblige them to
repair their wrong ; their wealth and greatnefs would render it
ten times more fo in the cafe which is here fuppofed.

In France the funds deftined for the reparation of the high
roads are under the immediate direction of the executive power.
Thofe funds confift partly in the fix days labour which the country
people are in moft parts of Europe obliged to give to the repa-
8 ration

THE WEALTH OF NATIONS.

ration of the highways ; and partly in fuch a portion of the ge- C
neral revenue of the itate as the king chuies to fpare from his u
other expences.

By the antient law of France, as well as t>y that of raoft other
parts of Europe, the fix days labour was under the direction of
a. local or provincial magistracy, which had no immediate depen-
dency upon the king's council. But by the prefent practice both
the fix days labour, and whatever other fund the king may chufe
to affign for the reparation of the high roads in any particular
•province or generality, are entirely under the management of the
intendant; an officer who is appointed and removed by the king's
council, who receives his orders from it, and is in conftant corref-
pondence with it. In the progrefs of defpotifm the authority of the
executive power gradually abforbs that of every other power in the
ftate, and alTumes to itfelf the management of every branch of reve-
nue which is deftined for any public purpofe. In France, however,
the great port roads, the roads which make the communication be-
tween the principal towns of the kingdom, are in general kept in
good order ; and in fome provinces are even a good deal fuperior
to the greater part of the turnpike roads of England. But what we
call the crofs roads, that is, the far greater part of the roads in the
country, are entirely neglected, and are in many places abfolutely
impaflable for any heavy carriage. In fome places it is even dan-
gerous to travel on horfeback, and mules are the only conveyance
which can fafely be trufted. The proud minifter of an oftenta-
tious court may frequently take pleafure in executing a work of
fplendor and magnificence, fuch as a great highway which is fre-
quently feen by the principal nobility, whofe applaufes, not only
flatter his vanity, but even contribute to fupport his intereft at
court. But to execute a great number of little works, in which
nothing that can be done can make any great appearance, or
excite the fmalleft degree of admiration in any traveller, and

Vol. II. X x which

333

THE NATURE AND CAUSES OF

B CK) K which, in fhort, have nothing to recommend them but their ex-
u— y^-^ treme utility, is a bufinefs which appears in every refpect too mean

and paultry to merit the attention of fo great a magiftrate.

Under fuch an adminiftration, therefore, fuch works are almoft

always entirely neglected.

In China, and in feveral other governments of Ana, the execu-
tive power charges itfelf both with the reparation of the high
roads, and with the maintenance of the navigable canals. In the
inftruclions which are given to the governor of each province,
thofe objects, it is faid, are conftantly recommended to him, and
the judgement which the court forms of his conduct is very much
regulated by the attention which he appears to have paid to this-
part of his inftru&ions. This branch of public police accordingly
is faid to be very much attended to in all thofe countries, but
particularly in China, where the high roads, and ftill more the
navigable canals, it is pretended, exceed very much every thing
of the fame kind which is known in Europe. The accounts of
thofe works, however, which have been tranfmitted to Europe,
have generally been drawn up by weak and wondering travellers,
frequently by ftupid and lying miflionaries. If they had been
examined by more intelligent eyes, and if the accounts of them
had been reported by more faithful witneffes, they would not
perhaps appear to be fo wonderful. The account which Bernier
gives of fome works of this kind in Indoftan, falls very much
fhort of what had been reported of them by other travellers more
difpofed to the marvellous than he was. It may too perhaps be
in thofe countries as it is in France, where the great roads, the
great communications which are likely to be the fubjecls of con-
verfation at the court and in the capital, are attended to, and all
the reft neglected. In China, befides, in Indoftan, and in feveral
other governments of Afia, the revenue of the fovereign arifes
almoft altogether from a land-tax or land-rent, which rifes or falls

with

THE WEALTH OF NATIONS. 33,

with the rife or fall of the annual produce of the land. The great CHAP,
intereft of the fovereign, therefore, his revenue, is in fuch coun- -c^-^-o
tries neceflarily and immediately connected with the cultivation of
the land, with the greatnefs of its produce, and with the value of
its produce. But in order to render that produce both as great and
as valuable as poiTible, it is neceflary to procure to it as extenfivc
a market as poflible, and confequently to eftablilh the freeft, the
eafieft, and the leaft expenfive communication between all the
different parts of the country, which can be done only by means
of the beft roads and the belt navigable canals. But the revenue
of the fovereign does not in any part of Europe arife chiefly from
a land-tax or land-rent. In all the great kingdoms of Europe,
perhaps the greater part of it may ultimately depend upon the
produce of the land : But that dependency is neither fo immediate,
nor fo evident. In Europe, therefore, the fovereign does not feel
himfelf fo directly called upon to promote the increafe, both in
quantity and value, of the produce of the land, or, by maintain-
ing good roads and canals, to provide the mod extenfive market
for that produce. Though it fhould be true, therefore, what I
apprehend is not a little doubtful, that in fome parts of Afia this
department of the public police is very properly managed by the
executive power, there is not the leaft probability that, during the
prefent ftate of things, it could be tolerably managed by that
power in any part of Europe.

Even thofe public works which are of fuch a nature that they
cannot afford any revenue for maintaining themfelves, but of
which the conveniency is nearly confined to fome particular place
or diftricl, are always better maintained by a local or provincial
revenue under the management of a local or provincial admini-
ftration, than by the general revenue of the ftate, of which the
executive power muft always have the management, Were the

X x 2 ftreets

i

34o THE NATURE AND CAUSES OF

BOOK ftreets of London to be lighted and paved at the expence of the
treafury, is there any probability that they would be fo well lighted
and paved as they are at prefent, or even at fo fmall an expence ?
The expence befides, inftead of being raifed by a local tax upon
the inhabitants of each particular ftreet, parifh, or diftricTt in Lon-
don, would, in this cafe, be defrayed out of the general revenue of
the ftate, and would confequently be raifed by a tax upon all the
inhabitants of the kingdom, of whom the greater part derive no
fort of benefit from the lighting and paving of the ftreets of
London.

smoYto inai aril moit ^unsvai lebnivoiq ioIbsoI amol moil vfoifta

The abufes which fometimes creep into the local and provincial
admin iftration of a local and provincial revenue, how enormous
foever they may appear, are in reality, however, almoft always very
trifling in comparifon of thofe which commonly take place in the
adminiftration and expenditure of the revenue of a great empire.
They are, befides, much more eafily corrected. Under the local or
provincial adminiftration of the juftices of the peace in Great Bri-
tain, the fix days labour which the country people are obliged to
give to the reparation of the highways, is not always perhaps very
judicioufly applied, but it is fcarce ever exacted with any circum-
ftance of cruelty or oppreflion. In France, under the adminiftra-
tion of the intendants, the application is not always more judi-
cious, and the exaction is frequently the moft cruel and oppreflive.
Such Corvees, as they are called, make one of the principal inftru-
ments of tyranny by which the intendant chaftifes any parifh or
communaute which has had the misfortune to fall under his dif-
pleafure.

jbiflw mo it ssiuol vhio srii oib noiflfolo'icLaisdJ to alnsmuloms srli

Article II.

Of the Expence of the Inflitutions for the Education of the Touth.

TH E inflitutions for the education of the youth may in the
jfame^manner furnifh a revenue fufficient for defraying their own

expence.

THE WEALTH OF NATIONS. 34,1

expence. The fee or honorary which the fcholar pays to the mailer C HA P.
naturally conftitutes a revenue of this kind. r-— \

Even where the reward of the matter does not arife altogether
from this natural revenue, it ftill is not necefTary that it mould be
derived from that general revenue of the fociety of which the col-
lection and application is in moft countries afligned to the execu^
tive power. Through the greater part of Europe accordingly the
endowment of fchools and colleges makes either no charge upon that
general revenue, or but a very fmall one. It every where arifes
chiefly from fome local or provincial revenue, from the rent of fome
landed eftate, or from the intereft of fome fum of money allotted
and put under the management of truftees for this particular pur-
pofe, fometimes by the fovereign himfelf, and fometimes by fome;
private donor..

Have thofe public endowments contributed in general to pro-
mote the end of their inftitution ? Have they contributed to encou-
rage the diligence, and to improve the abilities of the teachers ?
Have they directed the courfe of education towards objects more
ufeful, both to the individual and to the public, than thofe to which
it would naturally have gone of its own accord ? It mould not
feem very difficult to give at leaft a probable anfwer to each of thofe
queftions.

In every profeflion the exertion of the greater part of thofe who
cxercife it is always in proportion to the neceflity they are under of
making that exertion. This neceflity is greateft with thofe to whom
the emoluments of their profeflion are the only fource from which
they expect their fortune, or even their ordinary revenue and fub-
fiftence. In order to acquire this fortune, or even to get this fub-
fiftence, they muft, in the courfe of the year, execute a certain

quantity

1

THE NATURE AND CAUSES OF

quantity of work of a known value ; and, where the competition
is free, the rivalfhip of competitors, who are all endeavouring to
juftle one another out of employment, obliges every man to endea-
vour to execute his work with a certain degree of exactnefs. The
greatnefs of the objects which are to be acquired by fuccefs in fome
particular profeffions may, no doubt, fometimes animate the exer-
tion of a few men of extraordinary fpirit and ambition. Great
objects, however, are evidently not neceflary in order to occafion
the greater! exertions, Rivalfhip and emulation render excellency,
even in mean profeiTions, an object of ambition, and frequently
occafion the very greater!" exertions. Great objects, on the con-
trary, alone and unfupported by the neceflity of application, have
feldom been fufHcient to occafion any confiderable exertion. In
England, fuccefs in the profeffion of the law leads to fome very
great objects of ambition and yet how few men, born to eafy
fortunes, have ever in this country been eminent in that pro-
feflion !

The endowments of fchools and colleges have neceffarily dimi-
nifhed more or lefs the neceffity of application in the teachers.
Their fubfiftence, fo far as it arifes from their falaries, is evidently
derived from a fund altogether independent of their fuccefs and
reputation in their particular profeffions.

In fome univerfities the falary makes but a part, and frequently
but a fmall part of the emoluments of the teacher, of which the
greater part arifes from the honoraries or fees of his pupils. The
neceflity of application, though always more or lefs diminimed, is
not in this cafe entirely taken away. Reputation in his profeffion is
ftill of fome importance to him, and he ftill has fome dependency
upon the affection, gratitude, and favourable report of thofe who
have attended upon his inftructions, and thefe favourable fenti-

ments

THE WEALTH OF NATIONS.

34j

ments he is likely to gain in no way fo well as by deferving them,
that is, by the abilities and diligence with which he difcharges every
part of his duty.

In other univerfities the teacher is prohibited from receiving any
honorary or fee from his pupils, and his falary conftitutes the
whole of the revenue which he derives from his office. His inte-
reft is, in this cafe, fet as directly in oppofition to his duty as it is
Doffible to fet it. It is the intereft of every man to live as much at

J.

his eafe as he can ; and if his emoluments are to be precifely the
fame whether he does, or does not perform fome very laborious
duty, it is certainly his intereft, at leaft as intereft is vulgarly un-
derftood, either to neglect it altogether, or, if he is fubject to fome
authority which will not fuffer him to do this, to perform it in as
earelefs and flovenly a manner as that authority will permit. If
he is naturally active and a lover of labour, it is his intereft to
employ that activity in any way, from which he can derive fome
advantage, rather than in the performance of his duty, from which
he can derive none.

If the authority to which he is fubject refides in the body corpo-
rate, the college, or univerfity, of which he himfelf is a member,
and in which the greater part of the other members are, like himfelf,
perfons who either are or ought to be teachers, they are likely to
make a common caufe, to be all very indulgent to one another,
and every man to confent that his neighbour may neglect his duty,,
provided he himfelf is allowed to neglect his own. In the univer-
fity of Oxford, the greater part of the public profeflors have, for
thefe many years, given up altogether even the pretence of teaching,.

If the authority to which he is fubject refides, not fo much in
the body corporate of which he is a member, as in fome other extra-
8 neons

544 THE NATURE AND CAUSES OF

B O O K neons perfons, in the bifhop of the diocefe, for example j in the
u—y-— ~ 1 governor of the province ; or, perhaps, in fome minifter of ftate,
it is not indeed in this cafe very likely that he will be fuffered to
neglect his duty altogether. All that fuch fuperiors, however, can
force him to do is to attend upon his pupils a certain number of
hours, that is, to give a certain number of lectures in the week or
in the year. What thofe lectures fliall be, muff frill depend upon
the diligence of the teacher ; and that diligence is likely to be pro-
portioned to the motives which he has for exerting it. An extra-
neous jurisdiction of this kind, befides, is liable to be exercifed both
ignorantly and capricioufly. In its nature it is arbitrary and difcre-
tionary, and the perfons who exercife it, neither attending upon
the lectures of the teacher themfelves, nor perhaps under/landing
the fciences which it is his bufinefs to teach, are feldom capable of
exercifing it with judgement. From the infolence of office too they
are frequently indifferent how they exercife it, and are very apt to
cenfure or deprive him of his office wantonly, and without any juft
caufe. The perfon fubject to fuch jurifdi&ion is neceffarily degraded
by it, and, infiead of being one of the moft refpeclable, is rendered
one of the meaneft and moft contemptible perfons in the fociety.
It is by powerful protection only that he can effectually guard him-
. felf againft the bad ufage to which he is at all times expofed ; and
this protection he is moft likely to gain, not by ability or diligence
in his profeffion, but by obfequioufnefs to the will of his fuperiors,
and by being ready, at all times, to facrifice to that will the rights,
the intereft, and the honour of the body corporate of which he is
a member. Whoever has attended for any confiderable time to
the adminiftration of a French univerfity, muft have had occafion
to remark the effects which naturally refult from an arbitrary and
extraneous jurifdiction of this kind.

Whatever forces a certain number of ftudents to any college
or univerfity, independent of the merit or reputation of the teachers,

9 tends

THE WEALTH OF NATIONS*

345

tends more or lefs to diminifh the neceflity of that merit or C HA P.
reputation. v*-^

The privileges of graduates in arts, in law, in phyfic, and
divinity, when they can be obtained only by reiiding a certain num-
ber of years in certain univerfities, neceflarily force a certain number
of fludents to fuch univerfities independent of the merit or reputa-
tion of the teachers. The privileges of graduates are a fort of
flatutes of apprenticefhip, which have contributed to the improve-
ment of education, jufl as other flatutes of apprenticefhip have
to that of arts and manufactures.

The charitable foundations of fcholarfhips, exhibitions, burfa-
ries, &c. neceffarily attach a certain number of fludents to certain
colleges, independent altogether of the merit of thofe particular
colleges. Were the fludents upon fuch charitable foundations
left free to chufe what college they liked befl, fuch liberty might
perhaps contribute to excite fome emulation among different
colleges. ■ A regulation, on the contrary, which prohibited even
the independent members of every particular college from leaving
it, and going to any other, without leave firil afked and obtained of
that which they meant to abandon, would tend very much to
extinguifh that emulation.

If in each college the tutor or teacher who was to inflrucl each
fludent in all arts and fciences, fliould not be voluntarily chofen by
the fludent, but appointed by the head of the college ; and if in
cafe of neglect, inability, or bad ufage, the fludent fliould not be
allowed to change him for another without leave firfl afked and
obtained ; fuch a regulation would not only tend very much
to extinguifh all emulation among the different tutors of the

Vol. II. Y y fame

46 THE NATURE AND CAUSES OF

BOOK fame college, but to diminiflr very much in all of them the
\— - neceffity of diligence and of attention to their refpective pupils.

Such teachers, though very well paid by their ftudents, might be as
much difpofed to neglect them as thofe who are not paid by them
at all, or who have no other recompence but their falary.

If the teacher happens to be a man of fenfe, it muft be an
unpleafant thing to him to be confcious, while he is lecturing his
ftudents, that he is either fpeaking or reading nonfenfe, or what is
very little better than nonfenfe. It muft too be unpleafant to him
to obferve that the greater part of his ftudents defert his lectures ;
or perhaps attend upon them with plain enough marks of neglect,
contempt and derifion. If he is obliged, therefore, to give
a certain number of lectures, thefe motives alone, without any
other intereft, might difpofe him to take fome pains to give tolerably
good ones. Several different expedients, however, may be fallen
upon which will effectually blunt the edge of all thofe incitements
to diligence. The teacher, in (lead of explaining to his pupils
himfelf, the fcience in which he propofes to inftruct them, may read
fome book upon it ; and if this book is written in a foreign and
dead language, by interpreting it to them into their own or, what
would give him ftill lefs trouble, by making them interpret it to
him, and by now and then making an occafional remark upon it,
he may flatter himfelf that he is giving a lecture. The flighted
degree of knowledge and application will enable him to do this with-
out expofmg himfelf to contempt or derifion, or faying any thing
that is really foolifh, abfurd, or ridiculous. The difcipline of the
college at the fame time may enable him to force all his pupils to
the moft regular attendance upon this fham -lecture, and to maintain
themoft decent and refpectful behaviour during the whole time of
the performance.

The

THE WEALTH OF NATIONS.

347

The difcipiine of colleges and univerfities is in general contrived c ^A p«
not for the benefit of the ftudents, but for the intcreft, or more - v— -»
properly fpeaking, for the eafe of the matters. Its object is in all
cafes to maintain the authority of the mafter, and whether he
neglects or performs his duty, to oblige the ftudents in all cafes to
behave to him as if he performed it with the greateft diligence and
ability. It feems to prefume perfect wifdom and virtue in the one
order, and the greateft weaknefs and folly in the other. Where the
matters, however, really perform their duty, there are no examples, I
believe, that the greater part of the ftudents ever neglect theirs. No
difcipiine is ever requifite to force attendance upon lectures which
are really worth the attending, as is well known where-ever any fuch
lectures are given. Force and reftraint may no doubt be in fome
degree requifite in order to oblige children or very young boys to
attend to thofe parts of education which it is thought necefTary for
them to acquire during that early period of life ; but after twelve
or thirteen years of age, provided the mafter does his duty, force
or reftraint can fcarce ever be necefTary to carry on any
part of education. Such is the generofity of the greater part of
young men, that, fo far from being difpofed to neglect or defpife
the inftructions of their mafter, provided he fhows fome ferious
intention of being of ufe to them, they are generally inclined to
pardon a great deal of incorrectnefs in the performance of his duty,
and fometimes even to conceal, from the publick a good deal of
grofs negligence.

Those parts of education, it is to be obferved, for the teaching
of which there are no publick inftitutions, are generally the beft
taught. When a young man goes to a fencing or a dancing fchool,
he does not indeed always learn to fence or to dance very well ; but
he feldom fails of learning to fence or to dance. The good effects
of the riding fchool are not commonly fo evident. The expence of a

Y y 2 riding

THE NATURE AND CAUSES OF

riding fchool is fo great, that in moft places it is a publick inftitution,.
The three moft eflential parts of literary education, to read, write,
and account, it ftill continues to be more common to acquire ill
private than in publick fchools ; and it very leldom happens that
any body fails of acquiring them to the degree in which it is necef-
iary to acquire them.

In England the publick fchools are much lefs corrupted than
the univerfities. In the fchools the youth are taught, or at leaft
may be taught, Greek and Latin, that is, every thing which the
mafters pretend to teach, or which, it is expected, they fhould teach.
In the univerfities the youth neither are taught, nor always can find
any proper means of being taught, the. fciences which it is the
bufmefs of thofe incorporated bodies to teach. The reward of the
fchoolmafter in moft cafes depends principally, in fome cafes almoft
entirely, upon the fees or honoraries of his fcholars. Schools have
no exclulive privileges. In order to obtain the honours of gradua-
tion, it is not neceffary that a perfon fhould bring a certificate of
bis having ftudied a certain number of years at a publick fchool.
If upon examination he appears to underftand what is taught there,
no queftions are afked about the place where he learnt it.

The parts of education which are commonly taught in unrverfi-.
ties, it may perhaps be faid, are not very well taught. But had
it not been for thofe inftitutions they would not have been com^
monly taught at all, and both the individual and the public would
have fuffered a good deal from the want of thofe important parts
of education. .

The prefent univerfities of Europe were originally, the greater
part of them, ecclefiaftical corporations; inftituted for the educa-
tion of churchmen. They were founded by the authority of the

4 pope, ,

THE WEALTH OF NATIONS.

pope, and were lb entirely under his immediate protection, that C
their members, whether matters or ftud'ents, had all of them u-
what was then called the benefit of clergy, that is, were ex-
empted from the civil jurifdiclion of the countries in which their
refpective univerfities were fituated, and were amenable only to
the ecclefiaftical tribunals. What was taught in the greater part
of thofe univerfities was, fuitable to the end of their institution,
either theology, or fomething that was merely preparatory to
theology.

^fllt iLmHw •Qfticfi. VilWS 2t'jtelij ! ftP£*i fifl& v^3".lO ffljirjfi} 30 V£,iil

When chriftianity was firft eftabliihed by law, a corrupted lathi
had become the common language of all the weftern parts of
Europe. The fervice of the church accordingly, and the tranfla-
tion of the Bible, which was read in churches, were both in that
corrupted latin, that is, in the common language of the country.
After the irruption of the barbarous nations who overturned the
Roman empire, latin gradually ceafed to be the language of any
part of Europe. But the reverence of the people naturally pre-
ferves the eftabliihed forms and ceremonies of religion, long after
the circumftances which firft introduced and rendered them rea-
sonable are no more. Though latin, therefore, was no longer
underftood any where by the great body of the people, the whole
fervice of the church ftill continued to be performed in that lan-
guage. Two different languages were thus eftablifhed in Europe,
in the fame manner as in antient Egypt ; a language of the .priefts,
and a language of the people a facred and a profane y a learned
and an unlearned language. But it was necefTary that the priefts
fhould understand fomething of that facred and learned language
in which they were to officiate ; and the ftudy of the latin lan-
guage therefore made from the beginning an efTential part of
univerfity education.

It was not fo with that either of the Greek or of the Hebrew
language. The infallible decrees of the church had pronounced

the

5So THE NATURE AND CAUSES OF

BOOK the latin tranflation of the Bible, commonly called the Latin Vul-
v— y^— ; gate, to have been equally chelated by divine infpiration, and
therefore of equal authority with the Greek and Hebrew originals.
The knowledge of thofe two languages, therefore, not being in-
difpenfibly requiiite to a churchman, the ftudy of them did not
for a long time make a necefiary part of the common courfe of
univerfity education. There are fome Spanifh univerfities, I am
allured, in which the ftudy of the Greek language has never yet
made any part of that courfe. The firft reformers found the
Greek text of the new teftament and even the Hebrew text of the
old more favourable to their opinions than the vulgate tranflation,
which, as might naturally be fuppofed, had been gradually accom-
modated to fupport the doctrines of the catholic church. They
fet themfelves therefore to expofe the many errors of that tranfla-
tion, which the Roman catholic clergy were thus put under the
neceflity of defending or explaining. But this could not well be
done without fome knowledge of the original languages, of which
the ftudy was therefore gradually introduced into the greater part
of univerfities ; both of thofe which embraced and of thofe which
rejected the doctrines of the reformation. The Greek language
was connected with every part of that claflical learning, which,
though at firft principally cultivated by catholics and Italians,
happened to come into fafhion much about the fame time that
the doctrines of the reformation were fet on foot. In the greater
part of univerfities therefore that language was taught previous to
the ftudy of philofophy, and as foon as the ftudent had made
fome progrefs in the latin. The Hebrew language having no
connection with claiTical learning, and, except the holy fcriptures,
being the language of not a fingle book in any efteem, the ftudy
of it did not commonly commence till after that of philo-
fophy, and when the ftudent had entered upon the ftudy of
theology.

Originally

THE WEALTH OF NATIONS.

Originally the firft rudiments both of the Greek and Latin c
languages were taught in univerfities, and they ftill continue to be
fo in fome univerfities. In others it is expected that the ftudent
fliould have previoufly acquired at lean: the rudiments of one or
both of thofe languages, of which the fhidy continues to make
every where a very confiderable part of univerfity education.

The antient Greek philofophy was divided into three great
branches ; phyfics, or natural philofophy •> ethics, or moral philo-
fophy ; and logic. This general divifion feems perfectly agreeable
to the nature of things.

The great phenomena of nature, the revolution of the hea-
venly bodies, eclipfes, comets, thunder, lightning, and othe^
extraordinary meteors, the generation, the life, growth, and dif-
folution of plants and animals, are objects which, as they naturally
excite the wonder, fo they necefTarily call forth the curiofity of
mankind to enquire into their caufes. Superftition firft attempted
to fatisfy this curiofity by referring all thofe wonderful appearances
to the immediate agency of the gods. Philofophy afterwards en-
deavoured to account for them, from more familiar caufes, or
from fuch as mankind were better acquainted with, than the
agency of the gods. As thofe great phenomena are the firft
objects of human curiofity, fo the fcience which pretends to
explain them muft naturally have been the firft branch of philo-
fophy that was cultivated. The firft philofophers accordingly of
whom hiftory has preferved any account, appeal' to have been
natural philofophers.

In every age and country of the world men muft have attended
to the characters, defigns, and actions of one another, and many
reputable rules and maxims for the conduct of human life, muft
have been laid down and approved of by common confent. As

foon

352

THE NATURE ' AND

CAUSES

OF

BOO K foon as writing came into fafhion, wife men, or thofe who fancied
u— -v— J themfelves fuch, would naturally endeavour to increafe the num-
ber of thofe eftablifhed and refpected maxims, and to exprefs their
own fenfe of what was either proper or improper conduct, fome-
times in the more artificial form of apologues, like what are
called the fables of JEfop ; and fometimes in the more fimple one
of apophthegms, or wife fayings, like the Proverbs of Solomon,
the verfes of Theognis and Phocyllides, and fome part of the
works of Hefiod. They might continue in this manner for a
long time merely to multiply the number of thofe maxims of
prudence and morality, without even attempting to arrange
them in any very diftinct or methodical order, much lefs to
connect them together by one or more general principles, from
which they were all deducible like effects from their natural
caufes. The beauty of a fyftematical arrangement of different
obfervations connected by a few common principles, was firft feen
in the rude effays of thofe antient times towards a fyftem of natural
philofophy. Something of the fame kind was afterwards attempted
in morals. The maxims of common life were arranged in fome
methodical order, and connected together by a few common prin-
ciples, in the fame manner as they had attempted to arrange and
connect the phenomena of nature. The fcience which pretends
to inveftigate and explain thofe connecting principles, is what is
properly called moral philofophy.

Different authors gave different fyflems both of natural and
moral philofophy. But the arguments by which they fupported
thofe different fyftems, far from being always demonftrations, were
frequently at beft but very flender probabilities, and fometimes
mere fophifms, which had no other foundation but the inaccuracy
and ambiguity of common language. Speculative fyftems have in
all ages of the world been adopted for reafons too frivolous to
have determined the judgement of any man of common fenfe, in

a matter

THE WEALTH OF NATIONS. *?<

a matter of the fmalleft pecuniary intereft. Grofs fophiftry has c H A p-
fcarce ever had any influence upon the opinions of mankind, u— ^— y
except in matters of philofophy and fpeculation ; and in thefe it
has frequently had the grcateft. The patrons of each fyftem of
natural and moral philofophy naturally endeavoured to expofe the
weaknefs of the arguments adduced to fupport the fyftems which
were oppofite to their own. In examining thofe arguments, they
were neceffarily led to conlider the difference between a probable
and a demonftrative argument, between a fallacious and a con-
clufive one ; and Logic, or the fcience of the general principles of
good and bad reafoning, neceffarily arofe out of the obfervations
which a fcrutiny of this kind gave occafion to. Though in its
origin pofterior both to pliyfics and to ethics, it was commonly
taught, not indeed in all, but in the greater part of the antient
fchools of philofophy, previoufly to either of thofe fciences. The
ftudent, it feems to have been thought, ought to underftand well
the difference between good and bad reafoning, before he was led
to reafon upon fubjects of fo great importance.

This antient divifion of philofophy into three parts was in the
greater part of the univerhties of Europe, changed for another
into five.

In the antient philofophy, whatever was taught concerning the
nature either of the human mind or of the Deity, made a part of
the fyftem of phyfics. Thofe beings, in whatever their effence
might be fuppofed to con lift, were parts of the great fyftem of the
univerfe, and parts too productive of the moft important effects.
Whatever human reafon could either conclude or conjecture
concerning them made, as it were, two chapters, though no
doubt two very important ones, of the fcience which pretended to
give an account of the origin and revolutions of the great fyflem

Vol. II. Z z oi

354 THE NATURE AND CAUSES OF

B O O K. of the univerfe. But in the univerfities of Europe, where philo-
u-~v-— > fophy was taught only as fubfervient to theology, it was natural to
dwell longer upon thofe two chapters than upon any other of the
fcience. Thofe two chapters were gradually more and more extend-
ed, and were divided into many inferior chapters, till at laft the
doctrine of fpirits, of which fo little can be known, came to take
vip as much room in the fyftem of philofophy as the doctrine of
bodies, of which fo much can be known. The doctrines concern-
ing thofe two fubjects were confidered as making two diftinct fci-
ences. What was called Metaphylics or Pneumatics was fet in
oppofition to Phyfics, and was cultivated not only as the more fub-
lime, but, for the purpofes of a particular profeffion, as the more
ufeful fcience of the two. The proper fubject of experiment and
obfervation, a fubject in which a careful attention is capable of
making fo many ufeful difcoveries, was almofl entirely neglected.
The fubject in which, after a few very fimple and almofl obvious
truths, the moil careful attention can difcover nothing but obfcu-
rity and uncertainty, and can confequently produce nothing but
fubtleties and fophifms, was greatly cultivated.

When thofe two fciences had thus been fet in oppofition to
one another, the comparifon between them naturally gave birth to
a third, to what was called Ontology, or the fcience which- treated
of the qualities and attributes which were common to both the
fubjects of the other two fciences. But if fubtleties and fophifms
compofed the greater part of the Metaphyfics or Pneumatics of the
fchools, they compofed the whole of this cobweb fcience of Onto-
logy, which was likewife fometimes called Metaphyfics.

Wherein confifted the happinefs and perfection of a man>
confidered not only as an individual, but as the member of a
family, of a ftate, and of the great fociety of mankind, was the

object

THE WEALTH OF NATIONS. 35«

object which the antient moral philofophy propofed to inveftigate. CHAP.
In that philofophy the duties of human life were treated of as fub- v*-^— j
fervient to the happinefs and perfection of human life. But when
moral, as well as natural philofophy, came to be taught only as
fubfervient to theology, the duties of human life were treated of
as chiefly fubfervient to the happinefs of a life to come. In the
antient philofophy the perfection of virtue was reprefented as neccf-
farily productive, to the perfon who pofleifed it, of the moft per-
fect happinefs in this life. In the modern philofophy it was fre-
quently reprefented as generally, or rather as almoft always incon-
fiftent with any degree of happinefs in this life ; and heaven was to
be earned only by penance and mortification, by the aufterities and
abafement of a monk ; not by the liberal, generous, and fpirited
conduct of a man. Cafuiftry and an afcetic morality made up in
moft cafes the greater part of the moral philofophy of the fchools.
By far the moft important of all the different branches of philofo-
phy, became in this manner by far the moft corrupted.

Such, therefore, was the common courfe of philofophical edu-
cation in the greater part of the univerfities of Europe. Logic
was taught firft : Ontology came in the fecond place.: Pneumato-
logy, comprehending the doctrine concerning the nature of the
human foul and of the Deity, in the third : In the fourth followed
a debafed fyftem of Moral philofophy, which was confidered as
immediately connected with the doctrines of Pneumatology, with
the immortality of the human foul, and with the rewards and
punifhments which, from the juftice of the Deity, were to be
expected in a life to come : A fhort and" fuperficial fyftem of Phy-
fics ufually concluded the courfe.

The alterations which the univerfities of Europe thus intro-
duced into the antient courfe of philofophy, were all meant for the

Z z 2 education

556 THE NATURE AND CAUSES OF

BOOK education of ecclefiaftics, and to render it a more proper introduc-
v^-v-^ tion to the ftudy of theology. But the additional quantity of fub-
tlety and fophiftry ; the cafuiftry and the afcetic morality which
thole alterations introduced into it, certainly did not render it more
proper for the education of gentlemen or men of the world, or
more likely either to improve the underftanding, or to mend the
heart.

This courfe of philofophy is what ftill continues to be taught
in the greater part of the univerfities of Europe with more or
lefs diligence, according as the conftitution of each particular uni-
verfity happens to render diligence more or lefs necefTary to the
teachers. In fame of the richer!: and bell endowed univerfi-
ties the tutors content themfelves with teaching a few unconnected
fhreds and parcels of this corrupted courfe ; and even thefe they
commonly teach very negligently and fuperfkially.

The improvements which, in modern times, have been made in
feveral different branches of philofophy, have not, the greater part
of them, been made in univerfities ; though fome no doubt have.
The greater part of univerfities have not even been very forward
to adopt thofe improvements after they were made ; and feveral of
thofe learned focieties have chofen to remain for a long time the
fanctuaries in which exploded fyftems and obfolete prejudices found
fhelter and protection, after they had been hunted out of every other
corner of the world. In general, the richeft and beft endowed uni-
verfities have been the flaweft in adopting thofe improvements, and
the moft averfe to permit any confiderable change in the eftablifhed
plan of education. Thofe improvements were more eafily intro-
duced into fome of the poorer univerfities, in which the teachers,
depending, upon their reputation for the greater part of their fub-
fiftence, were obliged to pay more attention to the current opinions
©f the world. 6

But:

THE WEALTH OF NATIONS. 35;

But though the publick fchools and univerfities of Europe were CHAP.

originally intended only for the education of a particular profeffion, ' 1^

that of churchmen ; and though they were not always very dili-
gent in inftructing their pupils even in the fciences which were fup-
pofed neceffary for that profeffion, yet they gradually drew to them-
felves the education of almoft all other people, particularly of almoft
all gentlemen and men of fortune. No better method, it feems,
could be fallen upon of fpending, with any advantage, the long
interval between infancy and that period of life at which men
begin to apply in good earned to the real bufinefs of the world*
the bufinefs which is to employ them during the remainder of their
days. The greater part of what is taught in fchools and univer-
fities, however, does not feem to be the moft proper preparation
for that bufinefs.

In England, it becomes every day more and more the cuftom to
fend young people to travel in foreign countries immediately upon
their leaving fchool, and without fending them to any univerfity.
Our young people, it is faid, generally return home much improved
by their travels. A young man who goes abroad at feventeen or
eighteen, and returns home at one and twenty, returns three or
four years older than he was when he went abroad ; and at that age
it is very difficult not to improve a good deal in three or four years.
In the courfe of his travels he generally acquires fome knowledge of
one or two foreign languages ; a knowledge, however, which is fel-
dom Sufficient to enable him either to fpeak or write them with pro-*
priety. In other refpects he commonly returns home more conceited,
more unprincipled, more diffipated, and more incapable of any
ferious application either to ftudy or to bufinefs, than he could well .
have become in fo fhort a time had he lived at home. By travel-
ling fo very young, by fpending in the moft frivolous diffipation
tlie. moft precious years of his life, at a diftance from . the inipec*

tiort,

THE NATURE AND CAUSES OF

K tion and controul of his parents and relations, every ufeful habit
•J which the earlier parts of his education might have had fome ten-
dency to form in him, inftead of being rivetted and confirmed, is
almoft neceffariiy either weakened or effaced. Nothing but the
difcredit into which the univerfities are allowing themfelves to fall,
could ever have brought into repute fo very abfurd a practice as
that of travelling at this early period of life. By fending his fon
abroad, a father delivers himfelf, at leafl for fome time, from fo dif-
agreeable an object as that of a fon unemployed, neglected, and
going to ruin before his eyes.

Such have been the effects of fome of the modern inftitutions
for education.

Different plans and different inftitutions for education feem
to have taken place in other ages and nations.

In the republics of antient Greece, every free citizen was inflruct-
ed, under the direction of the public magiftrate, in gymnaffic exer-
cifes and in mufic. By gymnaffic exercifes it was intended to har-
den his body, to marpen his courage, and to prepare him for the
fatigues and dangers of war; and as the Greek militia was, by all
accounts, one of the beft that ever was in the world, this part of
their public education muff have anfwered completely the purpofe
for which it was intended. By the other part, mufic, it was pro-
pofed, at leaft by the philofophers and hiftorians who have given
us an account of thofe inftitutions, to humanize the mind, to foften
the temper, and to difpofe it for performing all the focial and moral
duties both of public and private life.

In antient Rome the exercifes of the Campus Martius anfwered
the fame purpofe as thofe of the Gymnazium in antient Greece,
8 an4

THE WEALTH OF NATIONS.

359

and they feem to have anfwered it equally well. But among the C H A P.
Romans there was nothing which correfponded to the mufical edu- v^-v— ~|
cation of the Greeks. The morals of the Romans, however, both
in private and public life, feem to have been not only equal, but,
upon the whole, a good deal fuperior to thofe of the Greeks. That
they were fuperior in private life we have the exprefs teftimony of
Polybius and of Dionyfius of HaticarnafTus ; two authors well
acquainted with both nations ; and the whole tenor of the Greek
and Roman hiftory bears witnefs to the fuperiority of the public
morals of the Romans. The good temper and moderation of con-
tending factions feems to be the moft enential circumftance in the
public morals of a free people. But the factions of the Greeks were
almoft always violent and fanguinary ; whereas, till the time of the
Gracchi, no blood had ever been (hed in any Roman faction ; and
from the time of the Gracchi the Roman republic may be confidered
as in reality diflblved. Notwithstanding, therefore, the very refpect-
able authority of Plato, Ariftotle, and Polybius, and notwith-
standing the very ingenious reafons by which Mr. Montefquieu
endeavours to fupport that authority, it feems probable that the
mufical education of the Greeks had no great effect: in mending
their morals, fince, without any fuch education, thofe of the Ro-
mans were upon the whole fuperior. The refpect cf thofe antient
fitges for the inftitutions of their anceftors had probably difpofed.
them to find much political wifdom in what was, perhaps, merely
an antient cuftom, continued without interruption from the ear-
lieft period of thofe focieties to the times in which they had arrived
at a confiderable degree of refinement. Mufic and dancing are
the great amufements of almoft all barbarous nations, and the.,
great accomplifhments v/hich are fuppofed to fit any man for enter-
taining his fociety. It is fo at this day among the negroes on the
coaft of Africa. It was fo among the antient Celtes, among the
antient Scandinavians, and, as we may learn from Homer, among

the

fa THE NATURE AND CAUSES OF

BOOK the antient Greeks in the times preceding the Trojan war. When
the Greek tribes had formed themfelves into little republics, it was
natural that the ftudy of thofe accomplishments mould for a long
time make a part of the public and common education of the
people.

The matters who inflrucled the young people either in mufic or
in military exercifes, do not feem to have been paid, or even appointed
by the ftate, either in Rome, or even in Athens, the Greek republic
of whofe laws and cuftoms we are the heft informed. The ftate
required that every free citizen fhould fit himfelf for defending it
in war, and mould, upon that account, learn his military exercifes.
But it left him to learn them of fuch matters as he could find, and
it feems to have advanced nothing for this purpofe but a public
field or place of exercife, in which he fhould praciife and perform
them.

In the early ages both of the Greek and Roman republics, the
other parts of education feem to have confitted in learning to read,
write, and account, according to the arithmetic of the times.
Thefe accomplishments the richer citizens feem frequently to have
acquired at home by the affittance of fome domeftic pedagogue, who
was generally either a (lave or a freed-man ; and the poorer citizens
in the fchools of fuch matters as made a trade of teaching for hire.
Such parts of education, however, were abandoned altogether to
the care of the parents or guardians of each individual. It does
not appear that the ftate ever aflumed any infpeclion or direction
of them. By a law of Solon, indeed, the children were acquitted
from maintaining in their old age thofe parents who had negle&ed
to inftrucl them in fome profitable trade or bufinefs.

In the progrefs of refinement, when philofophy and rhetoric
came into fafhion, the better fort of people ufed to fend their chil-
dren

THE WEALTH OF NATIONS.

361

dren to the fchools of philofophers and rhetoricians, in order to be C H^A P.
inftrucled in thofe fafliionable fciences. But thofe fchools were not 1— — >r- — »
fupported by the public. They were for a long time barely tole-
rated by it. The demand for philofophy and rhetoric was for a
long time fo fmall, that the firft profeffed teachers of either could
not find conftant employment in any one city, but were obliged
to travel about from place to place. In this manner lived Zeno
of Elea, Protagoras, Gorgias, Hippias, and many others. As
the demand increafed, the fchools both of philofophy and rhetoric
became ftationary ; firfl in Athens, and afterwards in feveral other
cities. The ftate however feems never to have encouraged them
further than by affigning to fome o-f them a particular place to
teach in, which was fometimes done too by private donors. The
ftate feems to have afligned the Academy to Plato, the Lyceum to
Ariftotle, and the Portico to Zeno of Citta the founder of the
Stoics. But Epicurus bequeathed his gardens to his own fchool.
Till about the time of Marcus Antoninus however, no teacher ap-
pears to have had any falary from the public, or to have had any
other emoluments, but what arofe from the honoraries or fees
of his fcholars. The bounty which that philofophical emperor, as
we learn from Lucian, beftowed upon the teachers of philofophy,
probably lafted no longer than his own life. There was nothing
equivalent to the privileges of graduation, and to have attended any
of thofe fchools was not neceffary, in order to be permitted to prac-
tife any particular trade or profeflion. If the opinion of their own
utility could not draw fcholars to them, the law neither forced any
body to go to them, nor rewarded any body for having gone to
them. The teachers had no jurifdiction over their pupils, nor
any other authority befides that natural authority which fuperior
virtue and abilities never fail to procure from young people
towards thofe who are entrufted with any part of their edu-
cation.

Vol. II.

A a a

At

THE NATURE AND CAUSES OF

K At Rome, the ftudy of the civil law made a part of the edu-
cation, not of the greater part of the citizens, but of fome par-
ticular families. The young people however, who wifhed to acquire
knowledge in the law, had no public fchool to go to, and had no
other method of ftudying it than by frequenting the company of
fuch of their relations and friends, as were fuppofed to under-
hand it. It is perhaps worth while to remark, that though the
laws of the twelve tables were many of them copied from thofe of
fome antient Greek republics, yet law never feems to have grown
up to be a fcience in any republic of antient Greece. In Rome
it became a fcience very early, and gave a confiderable degree of
illuftration to thofe citizens who had the reputation of under-
ftanding it. In the republics of antient Greece, particularly in
Athens, the ordinary courts of juftice confifted of numerous and
therefore diforderly bodies of people, who frequently decided
almoft at random, or as clamour, faction, and party fpirit hap-
pened to determine. The ignominy of an unjuft decifion, when
it was to be divided among five hundred, a thoufand, or fifteen
hundred people, (for fome of their courts were fo very numer-
ous) could not fall very heavy upon any individual. At Rome,
on the contrary, the principal courts of juftice confifted either
of a fingle judge, or of a fmall number of judges, whole
characters, efpecially as they deliberated always in public, could
not fail to be very much affected by any rafli or unjuft decifion.
In doubtful cafes, fuch courts, from their anxiety to avoid blame,
would naturally endeavour to fhelter themfelves under the example
or precedent of the judges who had fat before them either in the
fame or s in fome other court. This attention to practice and
precedent neceffarily formed the Roman law into that regular and
orderly fyftem in which it has been delivered down to us ; and
the like attention has had the like effects upon the laws of every
other country where fuch attention has taken place. The fupe-
nority of character in the Romans over that of the Greeks, fo

much

THE WEALTH OF NATIONS.

363

much remarked by Polybius and Dionyfius of Halicarnafllis, was c p-
probably more owing to the better conftitution of their courts of »'-~ ->
juftice, than to any of the circumftances to which thofe authors
afcribe it. The Romans are faid to have been particularly diftin-
guifhed for their fuperior- refpe6l to an oath. But the people
who were accuflomed to make oath only before fome diligent and
well informed court of juftice, would naturally be much more
attentive to what they fwore, than they who were accuflomed to
do the fame thing before mobbifh and diforderly aftemblies.

The abilities both civil and military of the Greeks and Romans
will readily be allowed to have been at leaft: equal to thofe of any
modern nation. Our prejudice is perhaps rather to over-rate
them. But except in what related to military exercifes, the ftate
feems to have been at no pains to form thofe great abilities : for
I cannot be induced to believe that the mufical education of the
Greeks could be of much confequence in forming them. Matters,
however, had been found, it feems, for inftrucling the better fort
of people among thofe nations in every art and fcience in which
the circumftances of their fociety rendered it necefTary or conve-
nient for them to be inftructed. The demand for fuch inftruction
produced, what it always produces, the talent for giving it j and
the emulation which an unreftrained competition never fails to
excite, appears to have brought that talent to a very high degree
of perfection. In the attention which the antient philofophers
excited, in the empire which they acquired over the opinions and
principles of their auditors, in the faculty which they pofTefTed of
<nvin£ a certain tone and character to the conduct and converfa-
tion of thofe auditors j they appear to have been much fuperior
to any modern teachers. In modern times, the diligence of public
teachers is more or lefs corrupted by the circumftances, which
render them more or lefs independent of their fuccefs and repu-
tation in their particular profeffions. Their falaries too put the
private teacher, who would pretend to come into competition with

A a a 2 them,

THE NATURE AND CAUSES OF

K them, in the fame ftate with a merchant who attempts to 'trade
without a bounty, in competition with thofe who trade with a con-
fiderable one. If he fells his goods at nearly the fame price, he can-
not have the fame profit, and poverty and beggary at leaft, if not
bankruptcy and ruin, wilt infallibly be his lot. If he attempts to
fell them much dearer, he is likely to have fo few cuftomers that
his circumftance9 will not be much mended. The privileges of
graduation, befides, are in many countries neceflary; or at leaft
extremely convenient to moft men of learned profeffions, that is-,
to the far greater part of thofe who have occafion for a learned
education. But thofe privileges can be obtained' only by attend-
ing the lectures of the public teachers. The moft careful attendance
upon the ableft inftruclions of any private teacher, cannot always
give any title to demand them: It is from thefe different caufes
that the private teacher of any of the fciences which are com-
monly taught in univerfities, is in modern times generally con-
fidered as in the very loweft order of men of letters. A man of
real abilities can fcarce find out a more humiliating or a more
unprofitable employment to turn them to. The endowments of
fchools and colleges have in this manner not only corrupted the
diligence of public teachers, but have rendered it almoft impoflible
to have any good private ones.

Were- there no public inftitutions for education, no fyftem,
no fcience would be taught for which , there was not fome de-
mand ; or which the circumftances. of the times did not render
it, either. neceflary, or convenient, or at leaft fafhionable to
learn* A private teacher could never find his account in teach-r
ing either an exploded and antiquated fyftem of a fcience acknow-
leged to be ufeful, or a fcience univerfally believed to be a mere
ufelefs and pedantic heap of fcphiilry and nonfenfe. Such
fyftems, fuch fciences, can fubfift no where but in \ thofe incor-
porated focieties for education whofe profperity and. revenue are
in a, great meaiure independent of their reputation, and- aho

gether

THE WEALTH OF NATIONS.

gether independent of their induftry. Were there no public infti-
tutions for education, a gentleman, after going through with
application and abilities the moft complete courfe of education,
which the circumftances of the times were fuppofed to afford,
could not come into the world completely ignorant of every
thing which is the common fubjecl: of converfation among gen-
tlemen and men of the world.-

There are. no public inftitutions for the education of women,,
and there is accordingly nothing ufelefs, abfurd, or fantaftical in
the common courfe of their education. They are taught what
their parents or guardians judge it neceffary or ufeful for them to
learn ; and they are taught nothing elfe. Every part of their
education tends evidently to fome-ufeful purpofe j either to im-
prove the natural attractions - of their, perfon, or to form , their
mind to referve, to modefty, to chaftity, and to oeconomy : to
render, them both likely to become the miftreffes of a family, and
to behave. properly when they have become fucb. In every part of
her life a. woman feels fome conveniency or advantage. from, every
part of* her education. It feldom happens that a man in any
part of his . life derives any conveniency or advantage from fome
o5 the moft. laborious and troublefome. parts of -his. education*.

Ought tire public, therefore, to give no attention, it -may be-
afked, to the education of the people ? Or if it ought to give any*
what are the different parts of education which it ought to attend
to in the different orders of the people ? and in what manner ought
it to attend to them ?

von&c sanapbs .10 mswjl .hpu&yiwii pfm bskofyxa cb ladib

In. fome cafes the flate of the fociety , necelTarily places; the
greater part of individuals in fuch fituations as naturally form in
them, without any attention of government, almoll: all the abili-
ties, and. virtues which that flate requires, or perhaps can admit
lie- i>{u*':' xaobatutpi uodi ,1o ^i-iuvaibai 9%i!bztm ti&ig t ..pf».

366

THE NATURE AND CAUSES OF

B °y° K *n otner ca^"es tne ^ate °f tne f°ciety does not place the

v*— v——* greater part of individuals in fuch fituations, and fome attention
of government is neceflary in order to prevent the almoft entire
corruption and degeneracy of the great body of the people.

In the progrefs of the divifion of labour, the employment of
the far greater part of tliofe who live by labour, that is, of the
great body of the people, comes to be confined to a very few
limple operations frequently to one or two. But the under-
standings of the greater part of men are necefTarily formed by
their ordinary employments. The man whofe whole life is fpent
in performing a few fimple operations, of which the effects too
are, perhaps, always the fame, or very nearly the fame, has no
occafion to exert his underjftanding, or to exercife his invention in
finding out expedients for removing difficulties which never occur.
He naturally lofes, therefore, the habit of fuch exertion, and
generally becomes as ftupid and ignorant as it is pofiible for a
human creature to become. The torpor of his mind renders
him, not only incapable of relifhing or bearing a part in any
rational converfation, but of conceiving any generous, noble, or
tender fentiment, and confequently of forming any juft judgement
concerning many even of the ordinary duties of private life. Of
the great and extenfive interefts of his country, he is altogether
incapable of judging j and unlefs very particular pains have been
taken to render him otherwife, he is equally incapable of defend-
ing his country in war. The uniformity of his Stationary life
naturally corrupts the courage of his mind, and makes him
* regard with abhorrence the irregular, uncertain, and adventurous

life of a foldier. It corrupts even the adtivity of his body, and
renders him incapable of exerting his ftrength with vigour and
perfeverance in any other employment than that to which he has
been bred. His dexterity at his own particular trade feems in
this manner to be acquired at the expence of his intellectual,
4 focial,

THE WEALTH OF NATIONS.

focial, and martial virtues. But in every improved and civilized
fociety this is the ftate into which the labouring poor, that is, the
great body of the people, muft necefTarily fall, unlefs government-
takes fome pains to prevent it.

It is otherwife in the barbarous focieties, as they are commonly
called, of hunters, of fhepherds, and even of hu (band men in
that rude ftate of hufbandry which precedes the improvement of
manufactures, and the extension of foreign commerce. In such
focieties the varied occupations of every man oblige every man to
exert his capacity, and to invent expedients for removing difficul-
ties which are continually occurring. Invention is kept alive,
and the minds of men are not fuffered to fall into that drovvfy
ftupidity which in a civilized fociety feems to benumb the under-
standing of almoft all the inferior ranks of people. In thofe bar-
barous focieties, as they are called, every man, it has already been
obferved, is a warrior. Every man too is in fome meafure a
ftatefman, and can form a tolerable judgement concerning the
interest of the fociety, and the conduct of thofe who govern it.
How far their chiefs are good judges in peace, or good leaders irt
war, is obvious to the obfervation of almoft every fingle man among
them. In fuch a fociety indeed, no man can well acquire that
improved and refined understanding which a few men fometimes
polfefs in a more civilized ftate. Though in a rude fociety there
is a good deal of variety in the occupations of every individual,
there is not a great deal in thofe of the whole fociety. Every
man does, or is capable of doing, almoft every thing which
any other man does or is capable of doing. Every man has a
considerable degree of knowledge, ingenuity and invention; but
fcarce any man has a great degree. The degree, however, which
is commonly poffefted, is generally sufficient for conducting the
whole simple bufinefs of the fociety. In a civilized ftate, on the
contrary, though there is little variety in the occupations of the

greater

THE NATURE AND CAUSES -OF

greater part of individuals, there is an almoft infinite variety in
thole of the whole fociety. Thefe varied occupations prefent an
almoft infinite variety of objects to the contemplation of thofe few
who, being attached to no particular occupation themfelves, have
leifure and inclination to examine the occupations of other people.
The contemplation of fo great a variety of objects necefTarily exer-
cifes their minds in endlefs comparifons and combinations, and
renders their underftandings in an extraordinary degree both acute
and comprehenfive. Unlefs thofe few, however, happen to be
placed in fome very particular fituations, their great abilities, though
honourable to themfelves, may contribute very little to the good
government or happinefs of their fociety. Notwithstanding the
great abilities of thofe few, all the nobler parts of the human cha-
racter may be in a great meafure obliterated and extinguifhed in
the great body of the people.

The education of the common people requires, perhaps, in a
-civilized and commercial fociety, the attention of the public more
than that of people of fome rank and fortune. People of fome
rank and fortune are generally eighteen or nineteen years of age
before they enter upon that particular bufmefs, profeflion, or trade,
by which they propofe to diftinguifh themfelves in the world. They
have before that full time to acquire, or at leaft to fit themfelves for
afterwards acquiring, every accomplimment which can recommend
-them to the public efleem, or render them worthy of it. Their parents
or guardians are generally fufficiently anxious that they mould be
fo accomplifhed, and are in moft cafes willing enough to lay out the
-expence which is necefiary for that purpofe. If they are not always
properly educated, it is feldom from the want of expence laid out
upon their education ; but from the improper application of that
expence. It is feldom from the want of mailers ; hut from the
negligence and incapacity of the matters who are to be had, and

6 from

THE WEALTH OF NATIONS.

369

from the difficulty, or rather from the impoflibility which there is CHAP.

in the prefent ftate of things of finding any better. The employ- 1 w—

ments too in which people of fome rank or fortune fpend the
greater part of their lives are not, like thole of the common people,
fimple and uniform. They are almoft all of them extremely com-
plicated, and fuch as exercife the head more than the hands. The
underftandings of thofe who are engaged in fuch employments can
feldom grow torpid from want of exercife. The employments of
people of fome rank and fortune, befides, are feldom fuch as har-
rafs them from morning to night. They generally have a good
deal of leifure, during which they may perfect themfelves in every
branch either of ufeful or ornamental knowledge of which they
may have laid the foundation, or for which they may have acquired
fome tafte in the earlier part of life.

It is otherwife with the common people. They have little time
to fpare for education. Their parents can fcarce afford to main-
tain them even in infancy. As foon as they are able to work, they
mud apply to fome trade by which they can earn their fubfirience.
That trade too is generally fo fimple and uniform as to give little
exercife to the underft anding, while at the fame time their labour is
both fo conftant and fo fevere, that it leaves them little leifure and
lefs inclination to apply to, or even to think of any thing elfe.

But though the common people cannot in any civilized fociety
be fo well inftructed as people of fome rank and fortune, the molt
eifential parts of education, however, to read, write, and account,
can be acquired at fo early a period of life, that the greater part
even of thofe who are to be bred to the loweft occupations, have
time to acquire them before they can be employed in thofe occu-
pations. For a very fmall expence the public can facilitate, can
encourage, and can even impofe upon almoft the whole body of

Vol. II. B b b the

i7o THE NATURE AND CAUSES OF

BOOK the people, the necefiity of acquiring thofe moll efTential parts of
^.^i^j education.

The public can facilitate this acquifition by eftablifhing in every
parifh or diftrict a little fchool, where children may be taught for a
reward fo moderate, that even a common labourer may afford it ;
the matter being partly, but not wholly paid by the public j becaufe
if he was wholly, or even principally paid by it, he would foon
learn to neglect his bufmefs. In Scotland the eftablifhment of
fuch parifh fchools has taught aim off the whole common people to
read, and a very great proportion of them to write and account.
In England the eftablifhment of charity fchools has had an effect
of the fame kind, though not fo univerfally, becaufe the ettablim-
ment is not fo univerfal. If in thofe little fchools the books by
which the children are taught to read were a little more inftrucTive
than they commonly are > and if, inftead of the little fmattering of
Latin, which the children of the common people are fometimes
taught there, and which can fcarce ever be of any ufe to them,
they were inftrucled in the elementary parts of geometry and
mechanics, the literary education of this rank of people would
perhaps be as complete as it is capable of being. There is fcarce a
common trade which does not afford fome opportunities of apply-
ing to it the principles of geometry and mechanics, and which
would not therefore gradually exercife and improve the common
people in thofe principles, the necefiary introduction to the moll
iublime as well as to the mofl ufeful fciences.

The public can encourage the acquifition of thofe mod efTential
parts of education by giving fmall premiums, and little badges of
difrinction, to the children of the common people who excel in them.

The public can impofe upon almofl: the whole body of the people

the necefiity of acquiring thofe mofl: efTential parts of education, by

obliging every man to undergo an examination or probation in them
& to j to r

befora

THE WEALTH OF NATIONS.

before he can obtain the freedom in any corporation, or be allowed C
to fet up any trade either in a village or town corporate. u

It was in this manner, by facilitating the acquifition of their
military and gymnaftic exercifes, by encouraging it, and even by
impofing upon the whole body of the people the neceflity of learn-
ing thofe exercifes, that the Greek and Roman republics maintained
the martial fpirit of their refpeciive citizens. They facilitated the
acquifition of thofe exercifes by appointing a certain place for
learning and practifing them, and by granting to certain matters
the privilege of teaching in that place. Thofe matters do not ap-
pear to have had either falaries or exclufive privileges of any kind.
Their reward confifted altogether in what they got from their fcho-
lars ; and a citizen who had learnt his exercifes in the public Gym-
nafia, had no fort of legal advantage over one who had learnt them
privately, provided the latter had learnt them equally well. Thofe
republics encouraged the acquifition of thofe exercifes by ,bettow-
ing little premiums and badges of dittinction upon thofe who excel-
led in them. To have gained a prize in the Olympic, Ifthmian or
Nemaean games, gave illuttration not only to the perfon who gained
[t, but to his whole family and kindred. The obligation which every
citizen was under to ferve a certain number of years, if called upon,
in the armies of the republic, fufficiently impofed the neceflity of
learning thofe exercifes without which he could not be fit for that
fervice.

That in the progrefs of improvement the practice of military
exercifes, unlefs government takes proper pains to fupport it, goes
gradually to decay, and, together with it, the martial fpirit of the
great body of the people, the example of modern Europe fuffi-
ciently demonftrates. But the fecurity of every fociety mutt always
depend, more or lefs, upon the martial fpirit of the great body of
the people. In the prefent times, indeed, that martial fpirit alone,

Bbb 2 and

THE NATURE AND CAUSES OF

B OO K and unfupported by a well difciplined {landing army, would not
u- *j perhaps be fufficient for the defence and fecurity of any fociety.

But where every citizen had the fpirit of a foldier, a fmaller {land-
ing army would furely be requifite. That fpirit befides would necef-
farily diminifh very much the dangers to liberty, whether real or
imaginary, which are commonly apprehended from a {landing army.
As it would very much facilitate the operations of that army againft
a foreign invader, fo it would obftruct them as much if unfortu-
nately they fhould ever be directed againfl the conftitution of the
flate.

The antient inftitutions of Greece and Rome feem to have been
much more effectual for maintaining the martial fpirit of the great
body of the people than the eftablifhment of what are called the mili-
tias of modern times. They were much more fimple. When they
were onceeftablifhed, they executed themfelves, and it required little
or no attention from government to maintain them in the mofl
perfect vigour. Whereas to maintain even in tolerable execution
the complex regulations of any modern militia, requires the conti-
nual and painful attention of government, without which they are
conflantly falling into total neglect: and difufe. The influence
befides of the antient inftitutions was much more univerfal. By
means of them the whole body of the people was completely
inftructed in the ufe of arms. Whereas it is but a very fmall part
of them who can ever be fo inftructed by the regulations of any
modern militia; except, perhaps, that of Switzerland. But a cow-
ard, a man incapable either of defending or of revenging himfelf,
evidently wants one of the mod efTential parts of the character of a
man. He is as much mutilated and deformed in his mind as another
is in his body, who is either deprived of fome of its moft efTential
members, or has loft the ufe of thofe members. He is evidently the
more wretched and miferable of the two ; becaufe happinefs and

mifery-j.

THE WEALTH OF NATIONS

mifery, which refide altogether in the mind, mud neceflarily depend G
more upon the healthful or unhealthful, the mutilated or entire ftate u
of the mind, than upon that of the body. Even though the mar-
tial fpirit of the people were of no ufe towards the defence of the
fociety, yet to prevent that fort of mental mutilation, deformity and
wretchednefs which cowardice neceflarily involves in it, from fpread-
ing themfelves through the great body of the people, would ftill
deferve the moft ferious attention of government ; in the lame man-
ner as it would deferve its moft ferious attention to prevent a leprofy
or any other loathfome and offenfive difeafe, though neither mortal
nor dangerous, from fpreading itfelf among them ; though per-
haps no other public good might refult from fuch attention befides
the prevention of fo great, a public evil.

The fame thing may be faid of the grofs ignorance and ftupidity
which, in a civilized fociety, feem fo frequently to benumb the
underftandings of all the inferior ranks of people. A man, with-
out the proper ufe of the intellectual faculties of a man, is, if pof-
ftble, more contemptible than even a coward, and feems to be muti-
lated and deformed in a ftill more effential part of the character of
human nature. Though the ftate was to derive no advantage from
the inftrucYion of the inferior ranks of people, it would ftill deferve
its attention that they mould not be altogether uninftrucled. The
ftate, however, derives- no inconfiderable advantage from their
inftru6tion. The. more they are inftrucled, the lefs liable they are
to the delufions of enthufiafm and fuperftition, which, among igno-
rant nations, frequently occafion the moft: dreadful diforders. An
inftru6led and intelligent people belides are always more decent
and orderly than an ignorant and ftupid one. They, feel them-
felves each individually more refpeclable, and more likely to obtain
the refpect of their lawful fuperiors, and they are therefore more
difpofed to refpect thofe fuperiors. They are more difpofed to
4. examine;

374

THE NATURE AND CAUSES OF

B op K examine, and more capable of feeing through, the interested com-*
v- — ' plaints of faction and fedition, and they are, upon that account,
lefs apt to be milled into any wanton or unneceflary oppofition to
the meafures of government. In free countries, where the fafety
of government depends very much upon the favourable judgement
which the people may form of its conduct, it muft furely be of the
higheft importance that they mould not be dhpofed to judge rafhly
or capricioufly concerning it.

Article III.
Of the Expence of the Inftitutiom for the Injlruttion of People of

a// Ages.

THE inftitutions for the inftruction of people of all ages' are
chiefly thofe for religious inftruction. This is a fpecies of inftruc-
tion of which the object is not fo much to render the people good
citizens in this world, as to prepare them for another and a better
world in a life to come. The teachers of the doctrine which con-
tains this inftruction, in the fame manner as other teachers, may
either depend altogether for their fubllftence upon the voluntary
contributions of their hearers ; or they may derive it from fome
other fund to which the law of their country may entitle them ;
fuch as a landed eftate, a tythe or land-tax, an eftablifhed falary or
ftipend. Their exertion, their zeal and induftry, are likely to be
much greater in the former fituation than in the latter. In this
refpect the teachers of new religions have always had a confiderable
advantage in attacking thofe antient and eftablifhed fyftems of
which the clergy, repofing themfelves upon their benefices, had
neglected to keep up the fervour of faith and devotion in the great
body of the people ; and having given themfelves up to indolence,
were become altogether incapable of making any vigorous exertion
in defence even- of their own eftablifhment. The clergy of an efta-
blifhed and well endowed religion frequently become men of learn-
ing and elegance, who pofTefs all the virtues of gentlemen, or which

can

THE WEALTH OF NATIONS.

375

can recommend them to the efteem of gentlemen ; but they are C HA P.
apt gradually to lofe the qualities, both good and bad, which ,— • -v —
gave them authority and influence with the inferior ranks of peo-
ple, and which had perhaps been the original caufes of the fuccefs
and eftablifhment of their religion. Such a clergy, when attacked
by a fet of popular and bold, though perhaps ftupid and ignorant
enthufiafts, feel themfelves as perfectly defencelefs as the indolent,
effeminate, and full-fed nations of the fouthern parts of Afia, when
they were invaded by the active, hardy, and hungry Tartars of the
North. Such a clergy, upon fuch an emergency, have commonly
no other refource than to call upon the civil magiftrate to perfe-
cute, deftroy, or drive out their adverfaries as difturbers of the
public peace. It was thus that the Roman catholic clergy called
upon the civil magiftrate to perfecute the protectants ; and the
church of England to perfecute the difienters ; and that in general
every religious feci, when it has once enjoyed for a century or two
the fecurity of a legal eftablifhment, has found itfelf incapable of
making any vigorous defence againft any new feci which chofe to
attack its doctrine or difcipline; Upon fuch occafions the advan-
tage in point of learning and good writing may fometimes be on
the fide of the eftablifhed church. But the arts of popularity,
all the arts of gaining profelytes, are conftantly on the fide of its
adverfaries. In England thofe arts have been- long neglected by the
well- endowed clergy of tbe eftablifhed church, and are at prefent
chiefly culitvated by the difienters and by the methodifts. The
independent provifions, however, which in many places have been
made for diffenting teachers, by means of voluntary fubferiptions, of
truft-rights, and other evalions of the law, feem very much to have
abated the zeal and activity of thofe teachers. They have many
of them become very learned, ingenious, and refpectable men; but
they have in general ceafed to be very popular preachers. The
methodifts, without half the learning of the difienters, are much
more in vogue.

6> lis

THE NATURE AND CAUSES OF

*rt$ 3vjs§i of (ti (iw W|§ \o tioifZiuho'iliii fhft no BOB/risa **
In the church of Rome the induftry and zeal of the inferior
clergy is kept more alive by the powerful motive of felf-intereft
than perhaps in any eftablifhed proteftant church. The parochial
clergy derive, many of them, a very considerable part of their
fubfiftence from the voluntary oblations of the people ; a fource of
revenue which confefiion gives them many opportunities of improv-
ing. The mendicant orders derive their whole fubfiftence frorri fuch
oblations. It is with them, as with the buffers and light infantry
fof fome armies, no plunder, no pay. The parochial clergy are
like, thofe teachers whofe reward depends partly upon their falary,
and partly upon the fees or honoraries which they get from their
. pupils, and thefe muff, always depend more or lefs upon their induftry
and reputation. The mendicant orders are like thofe teachers
whofe fubfiftence depends altogether upon their induftry. They
are obliged, therefore, to ufe every art which can animate the
devotion of the common people. The eftablifhment of the two
great mendicant orders of St. Dominick and St. Francis, it is
obferved by Machiavel, revived, in the thirteenth and fourteenth
centuries, the languishing faith and devotion of the catholic
church. In Roman catholic countries the fpirit of devotion is
fupported altogether by the monks and by the poorer parochial
clergy. The great dignitaries of the church, with all the accom-
plishments of gentlemen and men of the world, and lometimes with
thofe of men of learning, are careful enough to maintain the
neceffary discipline over their inferiors, but feldom give themfelves
any trouble about the instruction of the people.

'* Most of the arts and profeffions in a ftate," fays, by far the
molt illuftrious philofopher and historian of the prefent age, '* are
" of fuch a nature, that, while they promote the interefts of the
«< fociety, they are alfo ufeful or agreeable to fome individuals;
*randm that cafe, the constant rule of the magistrate, except,

" perhaps,

THE WEALTH OF NATIONS. 377

«« perhaps, on the firft introduction of any art, is, to leave the CHAP.
" profeflion to itfelf, and truft its encouragement to the indivi- v^-y— i
*.* duals who reap the benefit of it. The artizans finding their
" profits to rife by the favour of their cuftomers, increafe, as
" much as poflible, their fkill and induftry j and as matters are
*' not difturbed by any injudicious tampering, the commodity is
" always fure to be at all times nearly proportioned to the
" demand.

" But there are alfo fome callings, which, though ufeful and
" even neceflary in a ftate, bring no advantage or pleafure to any
e< individual, and the fupreme power is obliged to alter its conduct
M with regard to the retainers of thofe profeffions. It muft give
•* them publick encouragement in order to their fubfiftence; and it
" muft provide againft that negligence to which they will naturally
** be fubject, either by annexing particular honours to the profef-
«' fion, by eftablifhing a long fubordination of ranks and a ftrict
*' dependance, or by fome other expedient. The perfons employed
' ' in the finances, fleets, and magiftracy, are inftances of this order
« of men."

,{ It may naturally be thought, at firft fight, that the eccle-
" fiaftics belong to the firft clafs, and that their encouragement, as
*« well as that of lawyers and phyficians, may fafely be entrufted to
" the liberality of individuals, who ane attached to their doctrines,
" and who find benefit or confolation from their fpiritual miniftry
'* and affiftance. Their induftry and vigilance will, no doubt, be
" whetted by fuch an additional motive ; and their (kill in the
" profeflion, as well as their addrefs in governing the minds of the
" people, muft receive daily increafe, from their increafing practice,
" ftudy, and attention.

Vol. II.

C c c

«' But

THE NATURE AND CAUSES OF

" But if we confider the matter more clofely, we mail find, that
" this interefted diligence of the clergy is what every wife legiflator
" will ftudy to prevent j becaufe in every religion except the true,
V it is highly pernicious, and it has even a natural tendency to
" pervert the true, by infilling into it a ftrong mixture of fuper-
«? ftition, folly, and delufion. Each ghoftly practitioner, in order
<f to render himfelf more precious and facred in the eyes of his
" retainers, will infpire them with the moft violent abhorrence oi
" all other feels, and continually endeavour, by fome novelty, to
" excite the languid devotion of his audience. No regard will be
" paid to truth, morals, or decency in the doctrines inculcated.
** Every tenet will be adopted that bell fuits the diforderly affections
" of the human frame. Cuftomers will be drawn to each conven-
" tide by new indufrry and addrefs in practifing on the paffions
" and credulity of the populace. And in the end, the civil
" mag'utrate will find, that he has dearly paid for his pretended
" frugality, in faving a fixed eftablimment for the prieils and
*' that in reality the moft decent and advantageous compofition*
i( which he can make with the fpiritual guides, is to bribe their
«' indolence, by afligning ftated falaries to their profeffion, and
<s rendering it fuperfluous for them to be farther active, than
*' merely to prevent their flock from ftraying in quell: of new
" paftures. And in this manner ecclefialUeal eftabliihments, though
" commonly they arofe at firft from religious views> prove in the
*' end advantageous to the political interefts of fociety."

But whatever may have been the good or bad effects of the
independent provifion of the clergy; it has, perhaps, been very
feldom beftowed upon them from any view to thofe effects. Times
of violent religious controverfy have generally been times of equally
violent political faction. Upon fuch occafions each political
party has either found it, or imagined it, for its intereft to league

" itfelf

THE WEALTH OF NATIONS.

379

ifcfelf with fome one or other of the contending religious fe6ts. But c HA p
this could be done only by adopting, or at leaft by favouring, the w-^— J
tenets of that particular feci. The feet which had the good fortune
to be leagued with the conquering party, necefTarily fhared in th«
victory of its ally, by whofe favour and protection it was foori
enabled in fome degree to filence and fubdue all its adverfaries.
Thofe adverfaries had generally leagued themfelves with the enemies
of the conquering party, and were therefore the enemies of that party.
The clergy of this particular feci: having thus become complete
matters of the field, and their influence and authority with the
great body of the people being in its higheft vigour, they were
powerful enough to over-awe the chiefs and leaders of their own
party, and to oblige the civil magiftrate to refpeel their opinions
and inclinations. Their firft demand was generally, that he mould
filence and fubdue all their adverfaries ; and their fecond, that he
mould beftow an independent provifion on themfelves. As they
had generally contributed a good deal to the victory, it feemed not
unreafonable that they mould have fome mare in the fpoil. They
were weary befides of humouring the people, and of depending
upon their caprice for a fubfiftence. In making this demand there-
fore they confulted their own eafe and comfort, without troubling
themfelves about the effect which it might have in future times
upon the influence and authority of their order. The civil magi-
ftrate, who could comply with this demand only by giving them
lbmething which he would have chofen much rather to take or to
keep to himfelf, was feldom very forward to grant it. Neceflity,
however, always forced him to fubmit at laft, though frequently
not till after many delays, evafions, and affected excufes.

But if politics had never called in the aid of religion, had the
conquering party never adopted the tenets of one feet more than
thofe of another, when it had gained the victory, it would proba-

Ccc 2 bly

THE NATURE AND CAUSES OF

bly have dealt equally and impartially with all the different feels,
and have allowed every man to chufe his own prieft and his own
religion as he thought proper. There would in this cafe, no
,rioubt, have been a great multitude of religious feels. Almoft every
different congregation might probably have made a little feci by
itfelf, or have entertained fome peculiar tenets of its own. Each
teacher would no doubt have felt himfelf under the ne'eeffity of
making the utmoft exertion, and of uiing every art both to preferve
and to increafe the number of his difciples. But as every other
teacher would have felt himfelf under the fame neceffity ; the fuccefs
of no one teacher, or feci: of teachers, could have been very great.
The interefted and active zeal of religious teachers can be dangerous
and troublefome only where there is either but one feci: tolerated
in the fociety, or where the whole of a large fociety is divided into
two or three great feels ; the teachers of each feci acling by concert,
and under a regular difcipline and fubordination. But that zeal
muft be altogether innocent where the fociety is divided into two
or three hundred, or perhaps into as many thoufand fmall feels,
of which no one could be canfiderable enough to difturb the publick
tranquillity. The teachers of each feci, feeing themfelves fur-
rounded on all fides with more adverfaries than friends, would be
obliged to learn that candour and moderation which is fo feldom to
be found among the teachers of thofe great feels, whofe tenets being
fupported by the civil magiftrate, are held in veneration by almofl
all the inhabitants of extenfive kingdoms and empires, and who
therefore fee nothing round them but followers, difciples, and
humble admirers. The teachers of each little feci, finding themfelves
• almofl: alone^ would be obliged to refpeel thofe of almoft every other
feci, and the conceffions which they would mutually find it both
convenient and agreeable to make to one another, might in time
I probably reduce the doclrine of the greater part of them to that pure
and rationalreligioiij free from every mixture of abfurdity, import ure, pr
r/fiwle fanaticifm,

THE WEALTH OF NATIONS.

fanaticifm, fuchas wife men have in all ages of the world wifhed to fee c
eftablifhed ; but fucli as pofitive law has perhaps never yet eftablifh- v-
ed, and probably never will eftablifh in any country : becaufe with
regard to religion, pofitive law always has been, and probably always
will be, more orlefs influenced by popular fuperftition and enthufi-
afm. This plan of ecclefiaftical government, or more properly of no
ecclefiaftical government, was what the feet called independents, a
feci no doubt of very wild enthufiafts, propofed to eftablifh in
England towards the end of the civil war. If it had been efta-
bliihed, though of a very unphilofophical origin, it would probably
by this time have been productive of the moft philofophical good
temper and moderation with regard to every fort of religious prin-
ciple. It has been eftablifhed in Penfylvania, where, though the
quakers happen to be the moft numerous feet, the law in reality
favours no one feci: more than another, and it is there faid to-
have been productive of this philofophical good temper and mode*-
ration.

But though this equality of treatment fhould not be productive of
this good temper and moderation in all, or even in the greater part of
the religious feels of a particular country ; yet provided thofe feels
were fufficiently numerous, and each of them confequently too fmallto
difturb the publick tranquillity, theexceffive zeal of each feci for its
particular tenets, could not well be productive of any very hurtful
effects, but, on the contrary, of feveral good ones : and. if the
government was perfectly decided both to let them-all alone, and to
oblige them all to let alone one another,, there is little danger that
they would not of their own accord fubdivide themfelves fail
enough, fa as foon to become fufficiently numerous,
ami? 'fli Jiigun yiarrJofrn 3flo xtf satem <)i s^ssfrae brifi Inainavnos *
In every civilized fociety, in every fociety where the diftinclicn
of ranks has once been completely eftablifhed, there have been

always

382 THE NATURE AND CAUSES OF

BOO K. always two different fchemes or fyftems of morality current at the
fame time; of which the one may be called the ftricl or auftere ;
the other the liberal, or, if you will, the loofe fyftem. The former
is generally admired and revered by the common people: The latter
is commonly more efteemed and adopted by what are called people
of fafhion. The degree of difapprobation with which we ought
to mark the vices of levity, the vices which are apt to arife from
great profperity, and from the excefs of gaiety and good humour,
feems to conftitute the principal diftinction between thofe two
oppofite fchemes or fyftems, In the liberal or loofe fyftem, luxury,
wanton and even diforderly mirth, the purfuit of pleafure to
fome degree of intemperance, the breach of chaftity, at leaft in
one of the two fexes, &c. provided they are not accompanied with
grofs indecency, and do not lead to fallhood or injuftice, are
generally treated with a good deal of indulgence, and are eafily
either excufed or pardoned altogether. In the auftere fyftem, on
the contrary, thofe excefles are regarded with the utmoft abhorrence '
and deteftation. The vices of levity are always ruinous to the
common people, and a (ingle week's thoughtlefnefs and diflipation
is often fufficient to undo a poor workman for ever, and to drive
him through defpair upon committing the moft enormous
crimes. The wifer and better fort of the common people, there-
fore, have always the utmoft abhorrence and deteftation of fuch
excefles, which their experience tells them are fo immediately fatal
to people of their condition. The diforder and extravagance of
ieveral years, on the contrary, will not always ruin a man of
fafhion, and people of that rank are very apt to confider the
power of indulging in fome degree of excefs as one of the ad-
vantages of their fortune, and the liberty of doing fo without
eenfure or reproach, as one of the privileges which belong to their
ftation. In people of their own ftation, therefore, they regard
fuch excefles with but a fmall degree of difapprobation, and cen-

iure them either very flightly or not at all.

4 Almost

THE. WF ALTH OP. NATIONS.

Almost s feels have begun among the common CI

people, from vyjhom they have generally drawn their earlieft, as
well as their molt numerous profelytes. The auftere fyftem of
morality has, accordingly, been adopted by thofe feels almoft con-
ftantly, or with very few exceptions ; for there have been fome.
It was the fyftem by which they could beft recommend themfelves
to that order of people to whom they firft propofed their plan of
reformation upon what had been before eftablifhed. Many of
them, perhaps the grea :er part of them, have even endeavoured to
gain credit by refining upon this auftere fyftem, and by carrying
it to fome degree of folly and extravagance ; and this exceffive
rigour has frequently recommended them more than any thing
elfe to the refpect and veneration of the common people.

A man of rank and fortune is by his ftation the diftinguifhed :
member of a great fociety, who attend to every part of his con-
duct, and who thereby oblige him to attend to every part of it
himfelf. His authority and confideration depend very much upon
the refpect which this fociety bears to him. He dare not do any
thing which would difgrace or difcredit him in it, and he is
obliged to a very ftrict obfervation of that fpecies of morals, whe-
ther liberal or auftere, which the general confent of this fociety
prefcribes to perfons of his rank and fortune. A man of low
condition, on the contrary, is far from being a diftinguifhed
member of any great fociety. While he remains in a country
village his conduct may be attended to, and he may be obliged to
attend to it himfelf. In this fituation, and in this fituation only,
he may have what is called a character to lofe. But as foon as
he comes into a great city, he is funk in obfeurity and '.darknefs*
His conduct is obferved and attended to by nobody, and he is
therefore very likely to neglect it himfelf, and to abandon himfelf
to every fort of low profligacy and vice. He never emerges lb
effectually from this obfeurity, his conduct never excites fo much

the

3^4

THE

NATURE

AND CAUSES OF

B CK) K. the attention of any refpectable fociety, as by his becoming
v-— i the member of a fmall religious feci:. He from that moment
acquires a degree of confideration which he never had before.
All his brother Sectaries are, for the credit of the feci:, intc-
refted to obferve his conduct, and if he gives occafion to any
fcandal, if he deviates very much from thofe auftere morals
which they almoft always require of one another, to punifh him
by what is always a very fevere punifhment, even where no civil
effects attend it, expulfion or excommunication from the feet.
In little religious fects, accordingly, the morals of the common
people have been almoft always remarkably regular and orderly
generally much more fo than in the eftablifhed church. The
morals of thofe little feels indeed have frequently been rather dis-
agreeably rigorous and unfocial.

There are two very eafy and effectual remedies, however, by
whofe joint operation the ftate might, without violence, correct
whatever was unfocial or difagreeably rigorous in the morals of
all the little fects into which the country was divided.

The firfl of thofe remedies is the ftudy of fcience and philo-
fophy, which the ftate might render almoft univerfal among all
people of middling or more than middling rank and fortune;
not by giving falaries to teachers in order to make them negli-
gent and idle, but by inftituting fome fort of probation, even in
the higher and more difficult fciences, to be undergone by every
perfon before he was permitted to exercife any liberal profeffion,
or before he could be received as a candidate for any honour-
able office of truft or profit. If the ftate impofed upon this
order of men the neceflity of learning, it would have no occafion
to give itfelf any trouble about providing them with proper
teachers. They would foon find better teachers for themfelves
than any whom the ftate could provide for them. Science is the
8 great

THE WEALTH OF NATIONS.

animoDad- yd & .ytorDol sMsftaqfei job to j^tiostit 91b 3f OG j? J

great antidote to die poifon of enthufiafm and fuperftition ; and » C H^A P.
where all the fuperior ranks of people were fecured from it, u~v— ^
the inferior ranks could not be much expofed to it.

yne Li ncil&&o ssvrj.acl ^rhns' tfiu&f!^ iltt^TrHtdD of fcoibi
The fecond of thofe remedies is the frequency and gaiety of
public diverfions. The ftate, by encouraging, that is by giving

■ entire liberty to all thofe who for their own intereft would attempt,
without fcandal or indecency, to amufe and divert the people by
painting, poetry, mufic, dancing; by all forts of dramatic repre-
sentations and exhibitions, would eafily diflipate in the greater
part of them that melancholy and gloomy humour which is
almoft always the nurfe of popular fuperftition and enthu-
fiafm. Public diverfions have always been the objects of dread
and hatred, to all the fanatical promoters of thofe popular fren-
zies. The gaiety and good humour which thofe diverfions infpirc
were altogether inconfiftent with that temper of mind, which
was fitteft for their purpofe, or which they could beft work uporu
Dramatic re'prefentations befides, frequently expofing their artifices
to public ridicule, and fometimes even to public execration,- were
upon that account more than all other diverfions the objects of
their peculiar abhorrence.

In a country where the law "favoured the teachers of ho
one religion more than thofe of another, it would not be
neceflary that any of them mould have any particular or imme-
diate dependency upon the fovereign or executive power ; or
that he fhould have any thing to do either in appointing
or in difmifling them from their offices. In fuch a fituation
he would have no occafion to give himfelf any concern about
them, further than to keep the peace among them in the fame
manner as among the reft of his fubjects ; that is, to hinder them
from perfecuting, abufing, or opprefling one another. But it
is quite otherwife in countries where there is an eftabliflied or

Vol. II. Ddd .governing

THE NATURE AND CAUSES OF

governing religion. The fovereign can in this cafe never be
fecure, imlefs he has the means of influencing in a considerable
degree the greater part of the teachers of that religion.

The clergy of every eftabliftied church constitute a great incor-
poration. They can act in concert, and purfue their intereft upon one
plan and with one fpirit, as much as if they were under the direc-
tion of one man ; and they are frequently too under fuch direc-
tion. Their intereft as an incorporated body is never the fame
with that of the fovereign, and is fometimes directly oppofite to
it. Their great intereft is to maintain, their authority with the
people; and this authority depends upon the fuppofed certainty
and importance of the whole doctrine which they inculcate,
and upon the fuppofed neceflity of adopting every part of it
with the moft implicit faith, in order to avoid eternal mifery..
Should the fovereign have the imprudence to appear either
to deride or doubt himfelf of the moft trifling part of their
doctrine, or from humanity attempt to protect thofe who did
either the one or the other, the punctilious honour of a clergy who
have no fort of dependency upon him, is immediately provoked
to profcribe him as a profane perfon, and to employ all the terrors
of religion in order to oblige the people to transfer their allegiance
to fome more orthodox and obedient prince. Should he oppofe any
of their pretenfions or ufurpations, the danger is equally great.
The princes who have dared in this manner to rebel againft the
church, over and above this crime of rebellion, have generally been
charged too with the additional crime of herefy, notwithstanding
their folemn proteftations of their faith and humble fubmiffion to
every tenet which fhe thought proper to prefcribe to them. But the
authority of religion is fuperior to every other authority. The
fears which it fuggefts conquer all other fears. When the autho-
rised teachers of religion propagate through the great body of the

people.

THE WEALTH OF NATIONS.

people doctrines fubverfive of the authority of the fovereign, it is c
by violence only, or by the force of a {landing army, that he can \-
maintain his authority. Even a {landing army cannot in this cafe
give him any lafling fecurity ; becaufe if the foldiers are not foreign-
ers, which can feldom be the cafe, but drawn from the great body
of the people, which rauft almoft always be the cafe, they are likely
to be foon corrupted by thofe very doctrines . The revolutions
which the turbulence of the Greek clergy was continually occafion-
ing at Constantinople as long as the eaftern empire fubfifled ; the
convulfions which, during the courfe of feveral centuries, the tur-
bulence of the Roman clergy was continually occafioning in every
part of Europe, fuffkiently demonftrate how precarious and infe-
cure muft always be the fituation of the fovereign who has no pro-
per means of influencing the clergy of the eftabliflied and govern-
ing religion of his country.

Articles of faith, as well as all other fpiritual matters, it is
evident enough, are not within the proper department of a tempo-
ral fovereign, who, though he may be very well qualified for pro-
tecting, is feldom fuppofed to be fo for inftructing the people. With
regard to fuch matters, therefore, his authority can feldom be
fufficient to counterbalance the united authority of the clergy of
the eftabliflied church. The public tranquillity, however, and his
own fecurity, may frequently depend upon the doctrines which
they may think proper to propagate concerning fuch matters. As
he can feldom directly oppofe their decifion, therefore, with proper
weight and authority, it is neceflary that he mould be able to influ-
ence it j and he can influence it only by the fears and expectations
which he may excite in the greater part of the individuals of the
order. Thofe fears and expectations may confift in the fear of depri-
vation or other puniftiment, and in the expectation of further pre-
ferment.

D d d z In

THE NATURE AND CAUSES OF

In all chriftian • churches the benefices of the clergy are a fort c£
freeholds which they enjoy, not during pleafure, but during life, or
good behaviour. If they held them by a more precarious tenure,
and were liable, to be turned out upon every flight difobligation
either of the fovereign or of his miniflers, it would perhaps be
impofllble for them to maintain their authority with the people,
w.ho would then confider them as mercenary dependants upon the
court, in the fincerity of whofe inftruclions they could no longer
have, any confidence. But mould the fovereign attempt irregu-
larly, and by violence to deprive any number of clergymen of their
freeholds on account,, perhaps, . of their having propagated, with,
more than ordinary zeal, fome factious or feditious doctrine,, he
would only render, by fuch perfecution, both them and their doc-
trine ten i times more popular", and therefore ten times* more trou-
blefome and dangerous than they had been before. Fear is in almoft
all cafes a wretched inftrument of government, and ought in par-
ticular never to be employed againfr. any order of men who have the
fmalleft pretentions to independency. To. attempt to terrify them
ferves only to irritate their bad humour, and. to confirm them in
an oppofition which more. gentle ufage perhaps . might eafily induce
them either to foften or to lay afide altogether. The violence which
the French government ufually employed in order to oblige all their
parliaments or fovereign courts of juflice to enregifter any unpo-
pular edict, very feldom fucceeded. The means commonly em-
ployed,, however, the imprifcnment of all the refractory members,
one would think were forcible ;enough.. The princes of the .houfe
of Steuart fometimes employed the like means in order to influence
fome of the members of the parliament of England,.; and. they
generally found them equally intractable. The parliament of Eng-
land is now managed in another manner ; and a very fin ail expe-
riment which- the duke of Choifeul made about twelve years agq
upon the parliament of Paris, demonftrated fufficiently that, all the.

parliaments

THE WEALTH OF NATIONS;

parliaments of France might have been managed ftill more eafily CHAP,
in the fame manner. That experiment was not purfued. For -v— J
though management and perfuafion are always the eafieft and
the fafeft inftruments of government, as force and violence are
the worft and the molt dangerous, yet fuch, it feems, is the natu~
rai infolence of man, that he almoft always difdains to ufe the
good inftrument, except when, he cannot or dare not ufe the bad-
one. The French government could and durft ufe force, and
therefore difdained to ufe management and perfuafion. But there
is no order of men, it appears, I believe, from the experience of all
ages, upon whom it is fo dangerous, or rather fo perfectly ruinous, .
to. employ force and violence, as. upon the refpected clergy of any
eftabliflied church. The rights, the. privileges, the perfonal liberty
of every individual ecclefiaftic, who is upon good terms with his
own order, are even in the moft defpotic governments more refpected
than thofe of/any other perfon of nearly equal rank, and fortune..
It is fo in every gradation of defpotifm,. from that of the gentle and
mild government of Paris, to that of the violent and furious govern-
ment of Conftantinople. But though this order of men can fcarce
ever be forced, they may be managed as eafily as any other j and
the fecurity of the fovereign, as well as of the public tranquillity,,
feems to depend, very much upon the means which he has of.
managing them and thofe means feem to confift altogether, in the,
preferment ; which he. has. to beftow upon them. .

In .the antient conftitution of. the Roman catholic church, the*
bifliop of each diocefe was elected by the joint votes of the clergy,
and of the people of the epifcopal.city. The people did not long;
retain their right of election and while they did retain it, they - :
almoft always acted under the influence of the clergy, who in fuch,
fpjritual matters appeared to be their natural guides. . The clergy,,
however, foon grew weary of the trouble of ma'naging^them, and.t

6 found.

r90 THE NATURE AND CAUSES OF

BOOK found it eafier to elect their own bifhops themfelves. The abbot,

t, y-^j in the fame manner, was elected by the monks of the monaftery,

at lead in the greater part of abbacies. All the inferior ecclefiafti-
cal benefices comprehended within the diocefe were collated by the
bifliop, who beftowed them upon fu :h ecclefiaftics as he thought
proper. All church preferments were in this manner in the dif-
pofal of the church. The fovereign, though he might have fome
indirect influence in thofe elections, and though it was fometimes
ufual to afk both his confent to elect, and his approbation of the
election, yet had no direct or fufficient means of managing the
clergy. The ambition of every clergyman naturally led him to
pay court, not fo much to his fovereign, as to his own order, from
which only he could expect preferment.

Through the greater part of Europe the Pope gradually drew
to himfelf ft'rft the collation of almoft all bifliopricks and abba-
cies, or of what were called Confiftorial benefices, and afterwards,
by various machinations and pretences, of the greater part of infe-
rior benefices comprehended within each diocefe ; little more being
left to the bifhop than what was barely necefTary to give him a
decent authority with his own clergy. By this arrangement the con-
dition of the fovereign was ftill worfe than it had been before. The
clergy of all the different countries of Europe were thus formed into
a fort of fpiritual army, difperfed in different quarters indeed, but of
which all the movements and operations could now be directed by
one head, and conducted upon one uniform plan. The clergy of
each particular country might be confidered as a particular detach-
ment of that army, of which the operations could eafily be fup-
ported and feconded by all the other detachments quartered in the
.different countries round about. Each detachment was not only
independent of the fovereign of the country in which it was quar-
tered, and by which it was maintained, but dependant upon a

foreign

THE WEALTH OF NATIONS

foreign fovereign, who could at any time turn its arms againft the C H^A p.
fovereign of that particular country, and fupport them by the v— — .~-«*
arms of all the other detachments.

Those arms were the mofl formidable that can well be imaginecf.-
In the antient ftate of Europe, before the eftablifhment of arts
and manufactures, the wealth of the clergy gave them the fame fort
of influence over the common people, which that of the great,
barons gave them over their refpe&ive vaffals, tenants, and retain-
ers. In the great landed eftates which the miftaken piety both of.
princes and private perfons had bellowed upon the church, jurif-
di&ions were eftabliflied of the fame kind with thofe of the great
barons p and for the fame reafon. In thofe great landed eftates, the
clergy or their bailiffs could eafily keep the peace without the fup-
port or afliftance either of the king or of any other perfon ; and
neither the king nor any other perfon could keep the peace there
without the fupport and affiftance of the clergy. The jurifdi&ions
of the clergy, therefore, in their particular baronies or manors, were
equally independent, and equally exclufive of the authority of the •
Icing's courts, as thofe of the great temporal lords. The tenants
of the clergy were, like thofe of the great barons, almoft all tenants
at will, entirely dependent upon their immediate lords, and
therefore liable to be called out at pleafure, in order to fight in
any quarrel in which the clergy might think proper to engage them.
Over and above the rents of thofe eftates, the clergy pofTeffed, in the ■
tythes, a very large portion of the rents of all the other eltates in
every kingdom of Europe. The revenues arifing from both thofe •
fpecies of rents were, the greater part of them, , paid in kind, in
corn, wine, cattle, poultry, &c. The quantity exceeded greatly
what the clergy could themfelves confume and there were neither
arts nor manufactures for the produce of which they could exchange
the furplus. The clergy could derive advantage from this immerrfe -
4 furplus.3

THE NATURE AND CAUSES OF

K furplus in no other way than by employing it, as the great barons
mj employed the like furplus of their revenues, in the moft profufe
hofpitality, and in the moft extenfive charity. Both the hofpitality
and the charity of the antient clergy, accordingly, are faid to have
been very great. They not only maintained almoft the whole poor
of every kingdom, but many knights and gentlemen had frequently
no other means of fubfiftence than by travelling about from mona-
ftery to monaftery, under pretence of devotion, but in reality to
enjoy the hofpitality of the clergy. The retainers of fome parti-
cular prelates were often as numerous as thofe of the greateft lay-
lords ; and the retainers of all the clergy taken together were, per-
haps, more numerous than thofe of all the lay-lords. There was
always much more union among the clergy than among the lay-
lords. The former were under a regular difcipline and fubordina-
tion to the papal authority. The latter were under no regular dif-
cipline or fubordination, but almoft always equally jealous of one
another, and of the king. Though the tenants and retainers of
the clergy, therefore, had both together been lefs numerous than
thofe of the great lay-lords, and their tenants were probably much
lefs numerous, yet their union would have rendered them more for-
midable. The hofpitality and charity of the clergy too, not only
gave them the command of a great temporal force, but increafed
very much the weight of their fpiritual weapons. Thofe virtues
procured them the higheft refpecl and veneration among all the
inferior ranks of people, of whom many were conftantly, and
almoft'^ill occafionally, fed by them. Every thing belonging or
related to fo popular an order, its polTefTions, its privileges, its doc-
trines, neceffarily appeared facred in the eyes of the common people,
and every violation of them, whether real or pretended, the higheft
act of facrilegious wickednefs and profanenefs. In this ftate of
things, if the fovereign frequently found it difficult to reiift the con-
federacy of a few of the great nobility, we cannot wonder that he

fliould

THE WEALTH OF NATIONS.

flioukl find it ftill more fo to refift the united force of the clergy
of his own dominions fupported by tha,t of the clergy of all the
neighbouring dominions. In fuch circumftances the wonder is,
not that he was fometimes obliged to yield, but that he ever was
able to refift.

The privileges of the clergy in thofe antient times (which to us
who live in the prefent times appear the moft abfurd) their total
exemption from the fecular jurifdiction, for example, or what in
England was called the benefit of clergy ; were the natural or rather
the neceffary confequences of this ftate of things. How dangerous
muft it have been for the fovereign to attempt to punifh a clergy-
man for any crime whatever, if his own order were difpofed to
protect him, and to reprefent either the proof as infufficient for
convicting fo holy a man, or the punifhment as too fevere to be
inflicted upon one whofe perfon had been rendered facred by reli-
gion. The fovereign could, in fuch circumftances, do no better
than leave him to be tried by the ecclefiaftical courts, who, for the
honour of their own order, were interefted to reftrain, as much
as poflible, every member of it from committing enormous crimes,
or even from giving occafion to fuch grofs fcandal as might difgult
the minds of the people.

In the ftate in which things were through the greater part of
Europe during the tenth, eleventh, twelfth and thirteenth centuries,
and for fome time both before and after that period, the conftitu-
tiou of the church of Rome may be confidered as the moft formi-
dable combination that ever was formed againft the authority and
fecurity of civil government, as well as againft the liberty, reafon
and happinefs of mankind, which can flourifli only where civil
government is able to protect them. In that conftitution the
grolleft delufions of fuperftition were fupported in fuch a manner by

Vol. II. E e e the

THE NATURE AND CAUSES OF

K the private interefts of fo great a number of people as put them out of
all danger from any afTaultWf human reafon : becaufe though human
reafon might perhaps have been able to unveil, even to the eyes of
the common people, fome of the delufions of fuperftition j it
could never have diffolved the ties of private intereft. Had this
eonftitution been attacked by no other enemies but the feeble
efforts of human reafon, it mult have endured forever. But that
immenfe and well built fabric, which all the wifdom and virtue of
man could never have fhaken, much lefs have over-turned, was
by the natural courfe of things, firft weakened, afterwards in part'
deftroyed, and is now likely, in the courfe of a few centuries more* ,
perhaps to crumble into ruins altogether.

The gradual improvements of arts, manufactures and com-
merce, the fame caufes which deftroyed the power. of the great
barons, deftroyed in the fame manner, through the greater part of.
Europe, the whole temporal power of the clergy. In the produce
of arts, manufactures and commerce, the clergy, like the great
barons, found fomething for which they could exchange, their rude
produce, and thereby difcovered the means of fpending their whole
revenues upon their own perfons, without giving, any confiderable
lhare of them to other people. Their charity became gradually lefs
extenlive, their hofpitality lefs liberal or lefs profufe. Their
retainers became confequently lefs numerous, and by degrees
dwindled away altogether. The clergy too, like the great barons^
wifhed to get a better rent from their landed eftates, in order to
fpend it, in the fame manner, upon the gratification of their own
private vanity and folly. But this increafe of rent could be got
only by granting leafes to their tenants, who thereby became in a
great meafure independent of them. The ties of intereft, which
bound the inferior ranks of people to the clergy, were in this man-
ner gradually broken and diffolved. They were even broken and

9 difTolvecl

THE WEALTH OF NATIONS. 39

diflblved fooner than thofe which bound the fame ranks of people CHAP.
1 to the great barons : becaufe the benefices of the church being, the v^-v^J
greater part of them, much fmaller than the eftates of the great
barons, the pofTeflbr of each benefice was much fooner able to
fpend the whole of its revenue upon his own perfon. During the
greater part of the fourteenth and fifteenth centuries the power
of the great barons was, through the greater part of Europe, in
full vigour. But the temporal power of the clergy, the abfolute
command which they had once had over the great body of the
people, was very much decayed. The power of the church was by
that time very nearly reduced through the greater part of Europe
to what arofe from her fpiritual authority 3 and even that fpiritual
authority was much weakened when it ceafed to be fupported by the
charity and hofpitality of the clergy. The inferior ranks of people
no ionger looked upon that order, as they had done before, as the
comforters of their diflrefs, and the relievers of their indigence.
On the contrary, they were provoked and difgufted by the vanity5
luxury, and expence of the richer clergy, who appeared to Ipend
upon their own pleafures what had always before been regarded as
the patrimony of the poor.

In this foliation of things, the fovereigns in the different ftates
of Europe endeavoured to recover the influence which they had
once had in the difpofal of the great benefices of the church, by
procuring to the deans and chapters of each diocefe the reftora-
tion of their antient right of electing the bifhop, and to the monks
of each abbacy that of electing the abbot. The re-eftablifhing
of this antient order was the object of feveral flatutes enacted in
England during the courfe of the fourteenth century, and of the
pragmatic fanction eflablifhed in France in the fifteenth century. In
order to render the election valid, it was necefTary that the fovereign
iliould both confent to it before-hand, and afterwards approve of

E e e 2 the

THE NATURE AND CAUSES OF

K the perfon elected ; and though the election was ftill fuppofed to be
mj free, he had, however, all the indirect means which his fituation
necelfarily afforded him of influencing the clergy in his own domi-
nions. Other regulations of a fimilar tendency were eftablifhed in
other parts of Europe. But the power of the pope in the collation
of the great benefices of the church feems, before the reformation,
to have been no where fo effectually and fo univerfally renrained as
in France and England. The Concordat afterwards, in the fixteenth
century, gave to the kings of France the abfolute right of prefent-

ing to all the great and confiftorial benefices of the Gallican

* M S3"'29b ilgni r niiw sasifw vaswj aim zan'viftob wan arlT

church,

• .imnruna . -JuriJ viiJ3 , dpw ■ .D9lc§£qo"iq, p;& w vodT- , .vuov^lt 'xshjqoq

ii mdyr)^$a ^arfhiqt $di ^^tRmm^virAOtmn^ai^dvj hssx
Since the eftablifhment of the Pragmatic fanction and of the

Concordat, the clergy of France have in general mown lefs reipect

to the decrees of the papal court than the clergy of any other

catholic country. In all the difputes which their fovereign has had

with the pope, they have almoft conftantly taken party with the

former. This independency of the clergy of France upon the

court of Rome, feems to be principally founded upon the Pragmatic

fondtion and the Concordat. In the earlier periods of the monarchy,

the clergy of France appear to have been as much devoted to the

pope as thofe of any other country. When Robert, the fecond Prince

of theCapetian race, was moft unjuftly excommunicated by the court

of Rome, his own fervants, it is faid, threw the victuals which

came from his table to the dogs, and refufed to tafte any thing

themfelves which had been polluted by the contact of a perfon in

his fituation. They were taught to do fo, it may very fafely be pre-

fumed, by the clergy of his own dominions.

The claim of collating to the great benefices of the church,, a
claim in defence of which the court of Rome had frequently fhaken
and fometimes overturned the thrones of fome of the greateft fove-
reign a.

THE

WEALTH

OF NATIONS

397

reigns in Chriftendom, was in this manner either reftrained or c ^A p«
modified, or given up altogether, in many different parts of Europe, -v—
even before the time of the reformation. As the clergy had now
lefs influence over the people, fo the ftate had more influence over
the clergy. The clergy therefore had both lefs power and lefs
inclination to difturb the ftate.

The authority of the church of Rome was in this ftate of declen-
fion when the difputes which gave birth to the reformation began in
Germany, and foon fpread themfelves through every part of Europe.
The new doctrines were every where received with a high degree of
popular favour. They were propagated with all that enthufiaftic
zeal which commonly animates the fpirit of party when it attacks
eftabliihed authority. The teachers of thofe doctrines, though
perhaps in other refpects not more learned than many of the divines
who defended the eftabliihed church, fee m in general to have been
better acquainted with ecclefiaftical hiftory, and with the origin
and progrefs of that fyftem of opinions upon which the authority of
the church was eftabliihed, and they had thereby fome advantage m
almoft every difpute. The aufterity of their manners gave them
authority with the common people, who contrafted the ftrict regula-
rity of their conduct with the diforderly lives of the greater part of
their own clergy. They pofleifed too in a much higher degree than
their adverfaries, all the arts of popularity and of gaining prole-
lytes, arts which the lofty and dignified fons of the church had long
neglected, as being to them in a great meafui'e ufelefs. The
reafon of the. new doctrines recommended them to fome, their
novelty to many -} the hatred and contempt of the eftablifhed clergy
to a ftill greater number; but the zealous, paffionate and fanatical
though frequently coarfe and ruftic eloquence with which they were
almoft every where inculcated, recommended them to by far the

greatcft number,

-'• fbifcpi^ 3dt to amot to pfioinV. baaiwWvQ gamtfacno)

THE NATURE AND CAUSES OF

The fuccefs of the new doctrines was almoft every where fo
great, that the princes who at that time happened to be on bad
terms with the court of Rome, were by means of them eafily
.enabled, in their own dominions, to over-turn the church, which
having loft the refpect and veneration of the inferior ranks of
people, could make fcarce any refiftance. The court of Rome had
difobliged fome of the fmaller princes in the northern parts of
Germany, whom it had probably confidered as too infignificant
to be worth the managing. They univerfally, therefore, eftabliftied
the reformation in their own dominions. The tyranny of Chrif-
tiern II. and of Troll archbimop of Upfal, enabled Guftavus
Vafa to expel them both from Sweden. The pope favoured the
tyrant and the archbifhop, and Guftavus Vafa found no difficulty
in eftabliftiing the reformation in Sweden. Chriftiern II. was
afterwards depofed from the throne of Denmark, where his con-
duct had rendered him as odious as in Sweden. The pope,
however, was ft ill difpofed to favour him, and Frederic of Hol-
ftein, who had mounted the throne in his ftead, revenged himfelf
by following the example of Guftavus Vafa. The magiftrates of
Berne and Zurich, who had no particular quarrel with the pope,
eitablifhed with great eafe the reformation in their refpeclive
.cantons,* where juft before fome of the clergy had, by an impofture
fomewhat grciler than ordinary, rendered the whole order both
odious and contemptible.

* ^jSjisK sd *IAV 1ft « ■'( ' ")'f/"i (if) S'll Ot IsOdQK OS OOffiTlO-

In this critical fituation of its affairs the papal court was at
Sufficient pains to cultivate the friendfhip of the powerful fove-
reigns of France and Spain, of whom the latter was at that time
emperor of Germany. With their affiftance it was enabled,
though not without great difficulty and much bloodfhed, either to
fuppreis altogether or • to obftru6t very much the progrefs of the
reformation in their dominions. Jt was well enough inclined too
to be complailant to the .king of England. But from the circum-

ftances

THE WEALTH OF NATIONS.

fiances of the times it could not be fo without giving offence to a
fHll greater fovereign, Charles V. king of Spain and emperor of
Germany. Henry VIII. accordingly, though he did not embrace
himfelf the greater part of the doctrines of the reformation, was
yet enabled, by the general. prevalence of thofe doctrines, to fup-
prefs all the mcnafteries, and to abolifh the authority of the
church of Rome in his dominions. That he mould go fo far,
though he went no further, gave fome fatisfaction to the patrons
of the reformation, who having got poffeffion of the government
in the reign of his fon and fucceffor, completed without any dif-
ficulty the work which Henry VIII. had .begun.

In fome countries, as in Scotland, where the government was
weak, unpopular, and not very firmly eftablifhed, the reforma-
tion was ftrong enough to overturn, not only the church, but the
ftate like wife for attempting to fupport the church.

Among the followers of the reformation, dilperfed in all the
different countries of Europe, there was no general tribunal
which, like that of the court of Rome, or an oecumenical coun-
cil, could fettle all difputes among them, and with irrefiftable
authority prefcribe to all of them the precife limits of orthodoxy.
When the followers of the reformation in one country, therefore,
happened to differ from their brethren in another, as they had no
common judge to appeal to, the difpute could never be decided j
and many fuch difputes arofe among them. Thofe concerning the
government of the church, and the right of conferring eccle-
fiaftical benefices, were perhaps the moft - interefring to the peace
and- welfare of civil fociety. They gave birth accordingly to the
two principal parties or fects among the followers of the refor-
mation, the Lutheran and Calviniftie feels, the only feels among
them, of which the doctrine and difcipline have ever yet been
eftablifhed by .law in any part of .Europe. .

The;.

th£ nature

AND

CAUSES

OF

BOOK. The followers of Luther, together with what is called the
u-T— -J church of England, preferved more or lefs of the epifcopal go-
vernment, eftablifhed fubordination among the clergy, gave the
fovereign the difpofal-of all the bifhopricks, and other confiftorial
benefices within his dominions, and thereby rendered him the
real head of the church ; and without depriving the bifliop of
the right of collating to the fmailer benefices within his diocefe,
they, even to thofe benefices, not only admitted, but favoured
the right of prefentation both in the fovereign and in all other
lay-patrons. This fyftem of church government was from
the beginning favourable to peace and good order, and to fub-
miffion to the civil fovereign. It has never accordingly been the
occafion of any tumult or civil commotion in any country in
which it has once been eftabliflied. The church of England in
particular has always valued herfelf, with great reafon, upon the
unexceptionable loyalty of her principles. Under fuch a govern-
ment the clergy naturally endeavour to recommend themfelves
to the fovereign, to the court, and to the nobility and gentry of
the country, by whofe influence they chiefly expect to obtain
preferment. They pay court to thofe patrons, fometimes, no
doubt, by the vileft flattery and afientation, but frequently too
by cultivating all thofe arts which befl: defeive, and which are
therefore mofl likely to gain them the efteem of people of rank
and fortune by their knowledge in all the different branches of
ufeful and ornamental learning, by the decent liberality of their
manners, by the focial good humour of their converfation, and by
their avowed contempt of thofe abfurd and hypocritical aufterities
which fanatics inculcate and pretend to practife, in order to draw
upon themfelves the veneration, and upon the greater part of men
of rank and fortune, who avow that they do not pracYife them,
the abhorrence of the common people. Such a clergy, however,
while they pay their court in this manner to the higher ranks of
life, are very apt to neglect altogether the means of maintaining
& their

THE WEALTH OF NATIONS.

their influence and authority with the lower. They are liftened C
to, efteemed and refpected by their fuperiors ; but before their u
inferiors they are frequently incapable of defending, effectually
and to the conviction of fuch hearers, their own fober and mo-
derate doctrines againft the mod ignorant enthufiaft who chufes
to attack them.

The followers of Zuinglius, or more properly thofe of Calvin,
on the contrary, beftowed upon the people of each parifh, whenever
the church became vacant, the right of electing their own paftor ;
and eftablifhed at the fame time the molt perfect equality among
the clergy. The former part of this inftitution, as long as it
remained in vigour, feems to have been productive of nothing but
diforder and confufion, and to have tended equally to corrupt the
morals both of the clergy and of the people. The latter part
ieems never to have had any effects but what were perfectly
agreeable.

As long as the people of each parifh preferved the right of
electing their own paftors, they acted almoft always under the
influence of the clergy, and generally of the molt factious and
fanatical of the order. The clergy, in order to preferve their
influence in thofe popular elections, became, or affected to become
many of them, fanatics themfelves, encouraged fanaticifm among
the people, and gave the preference almoft always to the molt
fanatical candidate. So fmall a matter as the appointment of a
parifh pried occafioned almoft always a violent conteft, not only
in one parifh, but in all the neighbouring pari flies, who feldom
failed to take party in the quarrel. When the parifh happened to
be fituated in a great city, it divided all the inhabitants into two
parties ; and when that city happened either to conftitute itfelf a
little republic, or to be the head and capital of a little republic,
as is the cafe with many of the conhderable cities in Switzerland
and Holland, every paltry difpute of this kind, over and above

Vol. II. F f f exafperating

THE NATURE AND CAUSES OF

exafperating the animofity of all their other factions, threatened
to leave behind it both a new fchifm in the church, and a new
faction in the ftate. In thofe fmall republics, therefore, the
magiftrate very foon found it necefFary, for the fake of preferving
the public peace, to anume to himfelf the right of prefenting to
all vacant benefices. In Scotland, the moft extenfive country in
which this prefbyterian form of church government has ever been
eftablifhed, the rights of patronage were in effect abolifhed by
the act which eftablifhed prefbytery in the beginning of the reign-
of William III. That act at leaft put it in the power of certain
claries of people in each parifh to purchafe for a very final! price
the right of electing their own paftor. The conftitution which
this act eftablifhed was allowed to fubfift for about two and
twenty years, but wasabolifhed by the ioth of queen Ann, ch. 12.
on account of the confufions and diforders which this more popular
mode of election had almoft every where occafioned. In fb ex-
tenfive a country as Scotland, however, a tumult in a remote
parifh was not fo likely to give difturbance to government, as in
a fmaller ftate. The ioth of queen Ann reftored the rights of
patronage. But though in Scotland the law gives the benefice
without any exception to the perfon prefented by the patron ; yet
the church requires fometimes (for fhe has not in this refpect been
very uniform in her decifions) a certain concurrence of the peo-
ple, before fhe will confer upon the prefentee what is called the
cure of fouls, or the ecclefiaftical jurifdiction in the parifh. She
fometimes at leaft, from an affe£t ed concern for the peace of the pa-
rifh, delays the fettlement till this concurrence can be procured. The
private tampering of fome of the neighbouring clergy, fometimes
to procure, but more frequently to prevent this concurrence, and
the popular arts which they cultivate in order to enable them upon
fuch occafions to tamper more effectually, are perhaps the caufes
which principally keep up whatever remains of the old fanatical

fpirit, either in the clergy or in the people of Scotland.

9 The

THE WEALTH OF NATIONS.

The equality which the prefbyterian form of church govern- CHAP,
merit eftablifhes among the clergy, confifts, firft, in the equality >r— J
of authority or ecclefiaftical jurifdiclion ; and, fecondly, in the
equality of benefice. In all prefbyterian churches the equality of
authority is perfect : that of benefice is not fo. The difference
however, between one benefice and another, is feldom fo confi-
derable as commonly to tempt the poffefTor even of the fmall
benefice to pay court to his patron, by the vile arts of flattery
and alternation, in order to get a better. In all the prefbyterian
churches, where the rights of patronage are thoroughly efta-
blifhed, it is by nobler and better arts that the eftablifhed clergy in
general endeavour to gain the favour of their fuperiors ; by their
learning, by the irreproachable regularity of their life, and by the
faithful and diligent difcharge of their duty. Their patrons even
frequently complain of the independency of their fpirit, which
they are apt to conftrue into ingratitude for pah: favours, but
which at word perhaps is feldom any more than that indiffer-
ence which naturally arifes from the confcioufnefs that no further
favours of the kind are ever to be expected. There is fcarce
perhaps to be found any where in Europe a more learned, des-
cent, independent, and refpectable fet of men, than the greater
part of the prefbyterian clergy of Holland, Geneva, Switzer-
land, and Scotland.

adt bsto ei JB/iw saJnaftiq sirj noqy rii Mtov likv -sift aioiad <alq
Where the church benefices are all nearly equal, none of
them can be very great ? and this mediocrity of benefice, though
it may no doubt be carried 'too far, has, however, fome very
agreeable effects. Nothing but the moft exemplary morals can
give dignity to a man of fmall fortune. The vices of levity and
vanity neceffarily render him ridiculous, and are, belides, almoft
as ruinous to him as they are to the common people. In his own
conduct, therefore, he is obliged to follow that fyftem of moral?
which the common people refpect the mod. He gains their efteeni

4<H THE NATURE AND CAUSES OF

B O O K an(j affection by that plan of life which his own intereft and fitna-
u-v-J tion would lead him to follow. The common people look upon
him with that kindnefs with which we naturally regard one who
approaches fomewhat to our own condition, but who, we think*
ought to be in a higher. Their kindnefs naturally provokes his
kindnefs. He becomes careful to inftruct them, and attentive to
affift and relieve them. He does not even defpife the prejudices
of people who are difpofed to be fo favourable to him, and never
treats them with thofe contemptuous and arrogant airs which we
fo often meet with in the proud dignitaries of opulent and well-
endowed churches. The prefbyterian clergy, accordingly, have
more influence over the minds of the common people than per-
haps the clergy of any other eftablifhed church. It is accordingly
in prefbyterian countries only that we ever find the common people
converted, without perfecution, completely, and almoft to a man,
to the eftablifhed church*

In countries where church benefices are the greater part of them
very moderate, a chair in a univerfity is generally a better eftablifh-
ment than a church benefice. The univerfities have, in this cafe,
the picking and chufing of their members from all the churchmen
of the country > who, in every country, conftitute by far the moft
numerous clafs of men of letters. Where church benefices, on
the contrary, are many of them very confiderable, the church natu-
rally draws from the univerfities the greater part of their eminent
men of letters ; who generally find fome patron who does himfelf
honour by procuring them church preferment. In the former filia-
tion we are likely to find the univerfities filled with the moft emi-
nent men of letters that are to be found in the country. In the lat-
ter we are likely to find few eminent men among them, and thofe
few among the younger! members- of the fociety, who are likely
too to be drained away from it before they can have acquired expe-
rience

THE WEALTH OF NATIONS

rience and knowledge enough to be of much ufe to it. It is ob- C
ferved by Mr. de Voltaire that father Porree, a jefuit of no great
eminence in the republic of letters, was the only profeffor they had
ever had in France whofe works were worth the reading. In a
country which has produced fo many eminent men of letters, it
muft appear fomewhat lingular that fcarce one of them mould
have been a profeffor in a univerfity. The famous Gaflendi was,
in the beginning of his life, a profeffor in the univerfity of Aix.
Upon the firft dawning of his genius it was represented to him
that by going into the church he could eafily find a much more
quiet and comfortable fubfiftence, as well as a better fituation for
purfuing his ftudies ; and he immediately followed the advice. The
obfervation of Mr. de Voltaire may be applied, 1 believe, not only
to France, but to all other Roman catholic countries. We very
rarely find, in any of them* an eminent man of letters who is a
profeffor in a univerfity, except, perhaps, in the profeffions of law
and phylic profeffions from which the church is not fo likely to
draw them. After the church of Rome, that of England, is by
far the richeft and beft endowed church in Chriftendom. In Eng-
land, accordingly, the church is continually draining the univerfities-
of all their bed and ableft members ; and an old college tutor,
who is known and diftinguifhed in Europe as an eminent man of
letters, is as rarely to be found there as in any Roman catholic
country. In Geneva, on the contrary, in the proteftant cantons
of Switzerland,, in the proteftant countries of Germany, in Hol-
land, in Scotland, in Sweden, and Denmark, the moft eminent men
of letters whom thofe countries have produced, have, not all indeed,
but the far greater part of them, been profeffors in univerfities. In
thofe countries the univerfities are continually draining the church.,
of all its molt eminent men of letters..

It mayj perhaps, be worth while to remark, that, if we except
the poets,, a few orators, and a few hiftorians, the far greater part

of;

THE NATURE AND CAUSES OF

of the other eminent men of letters, both of Greece and Rome,
appear to have been either public or private teachers ; generally
either of philofophy or of rhetoric. This remark will be found to
hold true from the days of Lyfias and Ifocrates, of Plato and
Ariftotle, down to thofe of Plutarch and Epictetus, of Suetonius
and Quintilian. Several of thofe whom we do not know with
certainty to have been public teachers, appear to have been private
tutors. Polybius, we know, was private tutor to Scipio ^Emilia-
nus. Dionyfius of Halicarnaffus, there are fome probable reafons
for believing, was fo to the children of Marcus and Quintus Cicero.
To impofe upon any man the neceflity of teaching, year after year,
any particular branch of fcience, feems, in reality, to be the moft
effectual method for rendering him completely mafter of it him-
felf. By being obliged to go every year over the fame ground, if
he is good for any thing, he neceflarily becomes, in a few years,
well acquainted with every part of it : and if upon any particular
point he mould form too hafty an opinion one year, when he comes
in the courfe of his lectures to re-confider the fame fubject the year
thereafter, he is very likely to correct: it. As to be a teacher of
fcience is certainly the natural employment of a mere man of let-
ters ; fo is it likewife, perhaps, the education which is moft likely
to render him a man of folid learning and knowledge. The medio-
crity of church benefices naturally tends to draw the greater
part of men of letters, in the country where it takes place, to the
employment in which they can be the moft ufeful to the public,
and, at the fame time, to give them the beft education, perhaps,
they are capable of receiving. It tends to render their learning
both as folid as poffible, and as ufeful as poftible.

The revenue of every eftablifhed church, fuch parts of it ex-
cepted as may arife from particular lands or manors, is a branch,
it ought to be obferved, of the general revenue of the ftate, which

is

THE WEALTH OF NATIONS,

is thus diverted to a purpofe very different from the defence of the CHAP,
ftate. The tythe, for example, is a real land-tax, which puts it
out of the power of the proprietors of land to contribute fo largely
towards the defence of the ftate as they otherwife might be able
to do. The rent of land, however, is, according to fome, the fole
fund, and, according to others, the principal fund, from, which, in
all great monarchies, the exigencies of the ftate muft be ultimately
fupplied. The more of this fund that is given to the church, the
lefs, it is evident, can be fpared to the ftate. It may be laid down
as a certain maxim, that, all other things being fuppofed equal, the
richer the church, the poorer muft neceffarily be, either the fove-
reign on the one hand, or the people on the other; and,, in all
cafes, the lefs able mull the ftate be to defend itfelf. In feveral
proteftant countries, particularly in all the proteftant cantons of
Switzerland, the revenue which antiently belonged to the Roman
catholic church, the tythes and church lands, has been found a fund
fufficient not only to afford competent falaries to the eftablifhed
clergy, but to defray, with little or no addition, all the other expences
of the ftate. The magiftrates of the powerful canton of Berne, in
particular, have accumulated out of the favings from this fund a
very large fum, fuppofed to amount to feveral millions, part of
which is depofited in a public treafure, and part is placed at interest
in what are called the public funds of the different indebted na-
tions of Europe ; chiefly in thofe of France and Great Britain.
What may be the amount of the whole expence which the church,
either of Berne, or of any other proteftant canton, cofts the ftate,
I do not pretend to know. By a very exact account it appears,
that, in 1755, the whole revenue of the clergy of the church of
Scotland, including their glebe or church lands, and the rent of
their manfes or dwelling houfes,. eftimated according to a reafonable
valuation, amounted only to 68,514.1. is. $d. * This very mode-
rate revenue affords a decent fubfiftence to nine hundred and forty-
four:

THE NATURE AND CAUSES OF

K four minifters. The whole expence of the church, including
-j what is occafionally laid out for the building and repara tion of
churches, and of the manfes of minifters, cannot well be fuppofed
to exceed eighty or eighty-five thoufand pounds a year. The moft
opulent church in Chriftendom does not maintain better the uni-
formity of faith, the fervour of devotion, the fpirit of order, regu-
larity, and auftere morals in the great body of the popple, than this
very poorly endowed church of Scotland. All the good effects,
both civil and religious, which an eftablifhed church can be fup-
pofed to produce, are produced by it as completely as by any other.
The greater part of the protectant churches of Switzerland, which
in general are not better endowed than the church of Scotland,
produce thofe effects in a ftill higher degree. In the greater part
of the proteftant cantons, there is not a fingle perfon to be found
who does not profefs himfelf to be of the eftablifhed church.
If he profefTes himfelf to be of any other, indeed, the law obliges
him to leave the canton. But fo fevere, or rather indeed fo oppref-
five a law, could never have been executed in fuch free countries,
had not the diligence of the clergy before-hand converted to the
eftablifhed church the whole body of the people, with the excep-
tion of, perhaps, a few individuals only. In fome parts of Swit-
zerland, accordingly, where, from the accidental union of a pro-
teftant and roman catholic country, the converfion has not been
fo complete, both religions are not only tolerated, but eftabliftied
by law.

The proper performance of every fervice feems to require that
its pay or recompence fhould be, as exactly as poftible, propor-
tioned to the nature of the fervice. If any fervice is very much
under- paid, it is very apt to fuffer by the meannefs and incapacity
of the greater part of thofe who are employed in it. If it is very
much over-paid, it is apt to fuffer, perhaps, ftill more by their
negligence and idlenefs. A man of a large revenue, whatever may

be

h

THE WEALTH OF NATIONS.

to his profeffion, thinks he ought to live like other men of large C
revenues ; and to fpend a great part of his time in feftivity, in
vanity, and in. diffipation. But in a clergyman this train of life
not only confumes the time which ought to be employed in the
duties of his function, but in the eyes of the common people
deftroys almoft entirely that fanclity of character which can alone
enable him to perform thofe duties with proper weight and
authority.

Part IV.

Of the Expence of fupportmg the Dignity of the Sovereign.

fYVER and above the expence necefTary for enabling the fovereign
to perform his feveral duties, a certain expence is requifite for
the fupport of his dignity. This expence varies both with the
different periods of improvement, and with the different forms of
government.

In an opulent and improved fociety, where all the different orders
of people are growing every day more expenfive in their houfes, in
their furniture, in their tables, in their drefs, and in their equipage;
it cannot well be expected that the fovereign mould alone hold out
againft the fafhion. He naturally, therefore, or rather neceflarily
becomes more expenfive in all thofe different articles too. His
dignity even feems to require that he mould become fo.

As in point of dignity, a monarch is more raifed above his fubjects
than the chief magiftrate of any republic is ever fuppofed to be
above his fellow citizens ; fo a greater expence is neceffary for fup-
poxting that higher dignity. We naturally expect more fplendor
in the court of a king than in the manfion-houfe of a doge or
burgo-mafter.

Vol. II.

G g g

CONCLU*

4io

THE NATURE AND CAUSES OF

BOOK Conclusion.
v.

THE expence of defending the fociety, and that of fupporting
the dignity of the chief magiftrate, are both laid out for the general
benefit of the whole fociety. It is reafonable, therefore, that they
fliould be defrayed by the general contribution of the whole fociety,
all the different members contributing, as nearly as poftible, in
proportion to their refjpeclive. abilities *

The expence of the adminiftration of juftice too may,, no doubt,
be confidered as laid out for the benefit of the whole fociety. There
is no impropriety, therefore, in its being defrayed by the general
contribution of the whole fociety. The perfons, however, who give
occafion to this expence are thofe, who, by their injuftice in one
way or another, make it neceffary to feek redrefs or protection from
the courts of juftice. The perfons again moft immediately bene-
fited by this expence, are thofe whom the courts of juftice either
reftore to their rights or maintain in their rights. The expence of
the adminiftration of juftice, therefore, may very properly be
defrayed by the particular contribution of one or other or both of
thofe two different fets of perfons according as different occafions
may require, that is, by the fees of court. It cannot be neceffary
to have recourfe to the general contribution of the whole fociety,
except for the conviction of thofe criminals who have not them-
felves any eftate or fund fufficient for paying thofe fees...

Those local or provincial expences of which the benefit is local or.
provincial (what is laid out,. for example, upon the police of a parti-
cular town or diftrici) ought to be defrayed by a local or provincial
revenue, and ought to be no burden upon the general revenue of the
fociety. It is unjuftthat the whole fociety fhould contribute towards
an expence of which the benefit is confined to a part of the fociety.

The

THE WEALTH OF NATIONS.

The expence of maintaining good roads and communications C
is, no doubt, beneficial to the whole fociety, and may, therefore, 4,
without any jj juftice, be defrayed by the general contribution of
the whole fociety. This expence, however, is moil immediately
and directly beneficial to thofe who travel or carry goods from one
place to another, and to thofe who confume fuch goods. The turn-
pike tolls in England, and the duties called peages in other coun-
tries, lay it altogether upon thofe two different fetts of people, and
thereby difcharge the general revenue of the fociety from a very
confiderable burden.

The expence of the inftitutions for education and religious
inftruction, is like wife, no doubt, beneficial to the whole fociety,
and may, therefore, without in juftice, be defrayed by the general
contribution of the whole fociety. This expence, however, might
perhaps with equal propriety, and even with fome advantage, be
defrayed altogether by thofe who receive the immediate benefit of
fuch education and inftruction, or by the voluntary contribution
of thofe who think they have occafion for either the one or
the other.

When the inftitutions or public works which are beneficial to
the whole fociety, either cannot be maintained altogether, or are not
maintained altogether by the contribution of fuch particular mem*
bers of the fociety as are moft immediately benefited by them, the
deficiency muff, in mofl cafes be made up by the general contribution
of the whole fociety. The general revenue of the fociety, over
and above defraying the expence of defending the fociety and of
fupporting the dignity of the chief magiftrate, muft make up for
the deficiency of many particular branches of revenue. The
fources of this general or public revenue, I fliall endeavour to
explain in the following chapter.

Ggg3

CHAP.

412

THE NATURE AND CAUSES OF

BOOK
V.

CHAP. II.

Of the Sources of the general or publick Revenue of the Society,

TH E revenue which muft defray, not only the expence of
defending the fociety and of fupporting the dignity of the
chief magiftrate, but all the other necefTary expences of govern-
ment, for which the conftitution of the ftate has not provided any
particular revenue, may be drawn, either, firft, from fome fund
which peculiarly belongs to the fovereign or commonwealth, and
which is independent of the revenue of the people or, fecondJy,
^rom the revenue of the people.

Part I.

Of the Funds or Sources of Revenue which may peculiarly belong to the

Sovereign or Commonwealth.

'"jp H E funds or fources of revenue which may peculiarly belong
to the fovereign or commonwealth muft confift either in ftock
or in land.

The fovereign, like any other owner of ftock, may derive a
revenue from it, either by employing it himfelf, or by lending it.
His revenue is in the one cafe, profit; in the other, intereft.

The revenue of a Tartar or Arabian chief confifts in profit.
It arifes principally from the milk and increafe of his own herds
and flocks, of which he himfelf fuper-intends the management, and
is the principal fhepherd or herdfman of his own horde or tribe. It
is, however, in this earlieft and rudeft ftate of civil government

7 on]y

THE WEALTH OF NATIONS.

only that profit has ever made the principal part of the public
revenue of a monarchical ftate.

Small republics have fometimes derived a confiderable revenue
from the profit of mercantile projects. The republic of Hamburgh
is faid to do fo from the profits of a. public wine cellar and apothe*-
caries fliop *. The ftate cannot be very great of which the fove-
reign has leifure to carry on the trade of a wine merchant or apo-
thecary. The profit of a public bank has been a fource of revenue to
more confiderable ftates. It has been fo not only to Hamburgh',
but to Venice and Amfterdam. A revenue of this kind has even
by fome people been thought not below the attention of fo great
an empire as that of Great Britain. Reckoning the ordinary
dividend of the bank of England at five and a half per cent, and
its capital at ten millions feven hundred and eighty thoufand
pounds,, the neat annual profit, after paying theexpence of manage-
ment, muft amount, it is faid, to five hundred and ninety-two
thoufand nine hundred pounds. Government, it is pretended,
could borrow this capital at three per cent, intereft, and by taking
the management of the bank into its own hands, might make a clear
profit of two hundred and fixty-nine thoufand five hundred pounds
a year. The orderly, vigilant and parfimonious adminiftration of
fuch ariftocracies as thofe of Venice and Amfterdam, is extremely
proper, it appears from experience, for the management of a mer-
cantile project of this kind. But whether fuch a government as
that of England ; which, wrhatever may be its virtues, has never

* See Memoires concernant lcs Droits 5c Impofitions en Europe : tome i. page jy.
This work was compiled by the order of the court for the ufe of a commiffion employed
for fome years pail: in confidering the proper means for reforming the finances of France.
The account of the French taxes, which takes up three volumes in quarto, may be
regarded as perfectly authentic. That of thofe of other European nations was com-
piled from fuch Informations as the French min liters at the different courts could
procure. It is much fhorter, and probably not quite fo exacl as that of the
French taxes.

been

4H

THE NATURE AND CAUSES OF

B O O K been famous for goon (Economy, which in time of peace has gene-
>— - J rally conducted itfelf with the flothful and negligent profufion that
is perhaps natural to monarchies ; and in time of war has con-
stantly acted with all the thoughtlefs extravagance that democra-
cies are apt to fall into ; could be fafely trufted with the ma-
nagement of fuch a project muft at leafc be a good deal more
doubtful.

The port office is properly a mercantile project. The govern-
ment advances the expence of eftablifhing the different offices,
and of buying or hiring the neceffary horfes or carriages, and is
repaid with a large profit by the duties upon what is carried. It
is perhaps the only mercantile project which has been fuccefsfully
managed by, I believe, every fort of government. The capital
to be advanced is not very considerable. There is no myftery in
the bufinefs. The returns are not only certain, but immediate.

Princes, however, have frequently engaged in many other
mercantile projects, and have been willing, like private perfons,
to mend their fortunes by becoming adventurers in the common
branches of trade. They have fcarce ever fucceeded. The pro-
fufion with which the affairs of princes are always managed,
renders it almofl impoflible that they mould. The agents of a
prince regard the wealth of their matter as inexhaustible ; are
carelefs at what price they buy j are carelefs at what price they
fell ; are carelefs at what expence they tranfport his goods from
one place to another. Thofe agents frequently live with the profu-
fion of princes, and fometimes too, in fpite of that profufion, and
by a proper method of making up their accounts, acquire the
fortunes of princes. It was thus, as we are told by Machiavel,
that the agents of Lorenzo of Medicis, not a prince of mean
abilities, carried on his trade. The republic of Florence was
feveral times obliged to pay the debt into which their extrava-
4 gance

THE WEALTH" OF NATIONS

gance had involved him. He found it convenient, accordingly, C
to give up the bufinefs of merchant, the bufinefs to which his u
famiiy had originally owed their fortune, and in the latter part of
his life to employ both what remained of that fortune, and the
revenue of the flate of which he had the difpofal, in projects and
expences more Ratable to his flation.

No t ,vo characters feem more inconfiftent than thole of trader
and fovereign. If the trading fpirit of the Englifh Eaft India
company renders them very bad fovereigns ; the fpirit of fove-
reignty feems to have rendered them equally bad traders. While
they were traders only, they managed their trade fuccefsfully, and
were able to pay from their profits a moderate dividend to the
proprietors of their flock. Since they became fovereigns, with a
revenue which, it is faid, was originally more than three millions
fterling, they have been obliged to beg the extraordinary afliflance
of government in order to avoid immediate bankruptcy. In their
former fituation, their fervants in India confidered themfelves as
the clerks of merchants : In their prefent fituation, thole fervants
confider themfelves as the miniflers of fovereigns.

A state may fometimes derive fome part of its public revenue
from the intereft of money, as well as from the profits of flock.
If it has amafTed a treafare, it may lend a part of that treafure,.-
either to foreign ftates, or to its own fubjects;

The canton of Berne derives a confiderable revenue by lending
a part of its treafure to foreign flates, that is, by placing it in the
public funds of the different indebted nations of Europe, chiefly
in thofe of France and England. The fecurity of this revenue
mufl depend, firfl, upon the fecurity of the funds in which it is
placed, or upon the good faith of the government which has the
management of fhem5 and, fecondly, upon the certainty or pro-
bability

THE NATURE AND CAUSES OF

bability of the continuance of peace with the debtor nation. In
the cafe of a war, the very firft acl: of hoftility, on the part of
the debtor nation, might be the forfeiture of the funds of its
creditor. This policy of lending money to foreign ftates is, fo
far as I know, peculiar to the canton of Berne.

The city of Hamburgh * has eftablifhed a fort of public pawn-
fhop, which lends money to the fubjecls of the ftate upon
pledges at fix per cent, intereft. This pawn-fhop or Lombard, as
it is called, affords a revenue, it is pretended, to the ftate of a
hundred and fifty thoufand crowns, which, at four and fixpence the
crown, amounts to 33,7501. fterling.

The government of Penfylvania, without amaffing any trea-
fure, invented a method of lending, not money indeed, but what
is equivalent to money, to its fubjecls. By advancing to private
people, at intereft, and upon land fecurity to double the value,
paper bills of credit to be redeemed fifteen years after their
date, and in the mean time made transferable from hand to
hand like bank notes, and declared by acl: of affembly to be a
legal tender in all payments from one inhabitant of the province
to another, it raifed a moderate revenue, which went a confiderable
way towards defraying an annual expence of about 4500 1. the
whole ordinary expence of that frugal and orderly government.
The fuccefs of an expedient of this kind muft have depended
upon three different circumftances ; firft, upon the demand for
fome other inftrument of commerce, befides gold and filver
money, or upon the demand for fuch a quantity of confumable
ftcck as could not be had without fending abroad the greater
part of their gold and filver money, in order to purchafe it ;
fecondly, upon the good credit of the government which made
ufe of this expedient and, thirdly, upon the moderation with

* Se.e id. ibid.

which

THE WEALTH OF NATIONS.

which it was ufed, the whofc value of- the paper bills of credit C
never exceeding that of the gold and filver money which would u
have been neceffary for carrying on their circulation had there
been no paper bills of credit. The fame expedient was upon
different occafions adopted by feveral. other American colonies ;
but, from want of tins moderation, it produced, in the greater
part of them, much more diforder than conveniency.

The unliable and perifhable nature of flock and credit, how-
ever, render them unfit to be trufled to as the principal funds of
that fure, fleady, and permanent revenue, which can alone give
fecurity and dignity to government. The government of no great
nation, that was advanced beyond the fhepherd flate, feems ever
to have derived the greater part of its public revenue from fuch
fources.

Land is a fund of a more flable and permanent nature; and
the rent of public lands, accordingly, has been the principal
fource of the public revenue of many a great nation that was
much advanced beyond the fhepherd Hate. From the produce or
rent of the public lands, the antient republics of Greece and Italy
derived for a long time the greater part of that revenue which
defrayed the neceffary expences of the commonwealth. The rent
of the crown lands conflituted for a long time the greater part of
the revenue of the antient fovereigns of Europe.

War and the preparation for war, are the two circum fiances
which in modern times occafion the greater part of the neceffary
expence of all great flates. But in the antient republics of
Greece and Italy every citizen was a foldier, who both ferved and
prepared himfelf for fervice at his own expence. Neither of thofe
two circumffances, therefore, could occafion any very cenffder-
able expence to the ftate. The rent of a very moderate landed

Vol. II. H h h eftate

THE NATURE AND CAUSES OF

B CK) K eftate might be fully fufiicient for defraying all the other neceffary-
< — -v—~ ' expences of government.'

In the antient monarchies of Europe, the manners and cuftoms
of the times fufficiently prepared the great body of the people
for war j and when they took the field they were, by the con-
dition of their feudal tenures, to be maintained either at their,
own expence, or at that of their immediate lords, without bring-
ing any new charge upon the fovereign. The other expences of
government were, the greater part of them, very moderate. The
adminiftration of juftice, it has been fhown, inftead of being a
caufe of expence, was a fource of revenue. The labour of the
country people for three days before and for three days- after
harveft, was thought a fund fufiicient for making and maintain-
ing all the bridges, highways, and other public works which the
commerce of the country was fuppofed to require^. In thofe days
the principal expence of the fovereign feems to have confifted
in the maintenance of his own family and houfhold. The officers
of his houfhold, accordingly, were, then the great officers of
ftate. The lord treafurer received his rents. The lord fteward
and lord chamberlain looked after the expence of his family.
The care of his ftables was committed to the lord conftable and
the lord marfhal. His houfes. were all buiLt in the form of
caftles, and feem to have been the principal fortrefles which he
pofTeffed. The keepers of thofe houfes or caftles might be con-
sidered as a fort of military governors. They feem to have been
the only military officers whom it was neceffary to maintain in
time of peace. In thefe chcumftances the rent of a great
landed eftate might, upon ordinary occafions, very well defray
all the neceffary expences of government.

In the prefent ftate of the greater part of the civilized mo-
narchies of Europe, the rent of all the lands in the country,

managed

THE WEALTH OF NATIONS. 41^

•managed as they probably would be if they all belonged to one CHAP,
proprietor, would fcarce perhaps amount to the ordinary revenue ~v— — '
which they levy upon the people even in peaceable times. The
ordinary revenue of Great Britain, for example, including not
only what is neceffary for defraying the current expence of the
year, but for paying the interefl of the public debts, and for fink-
ing a part of the capital of thofe debts, amounts to upwards of ten
millions a year. But the land-tax, at four millings in the pound,
falls fliort of two millions a year. This land-tax, as it is called,
however, is fuppofed to be one-fifth, not only of the rent of all
the land, but of that. of all the houfes, and of the interefl of all
the capital ftock of Great Britain, that part of it only excepted
which is either lent to the ,public, or employed as farming ftock
in the cultivation of land. A very confiderable part of the pro-
duce of this tax arifes from the rent of houfes, and the intereft of
capital ftock. The land-tax of the city of London, for example,
at four fhillings in the pound, amounts to 123,3991. 6s. yd.
That of the city of Weftminfter, to 63,0921. is. 5 d. That of
the palaces of Whitehall and St. James's, to 30,7541. 6s. 3d.
A certain proportion of the land-tax is in the fame manner affefTed
upon all the other cities and towns corporate in the kingdom,
and arifes almoft altogether either from the rent of houfes or
from what is fuppofed to be the intereft of trading and capital
ftock. According to the eftimation, therefore, by which Great
Britain is rated to the land-tax, the whole mafs of revenue arifing
from the rent of all the lands, from that of all the houfes, and
from the intereft of all the capital ftock, that part of it only
excepted which is either lent to the public or employed in the
cultivation of land, does not exceed ten millions fterling a year, the
ordinary revenue which government levies upon the people even in
peaceable times. The eftimation by which Great Britain is rated
to the land-tax is, no doubt, taking the whole kingdom at an
average, very much below the real value ; though in " feveral par-

H h h 2 ticular

4-20

THE NATURE AND CAUSES OF

BOOK ticular counties and diftricrs it is faid to be nearly equal to that

value. The rent of the lands alone, exclufive of that of houfes,
and of the intereft of frock, has by many people been eftimated
at twenty millions, an eitimation made in a great meafure at ran-
dom, and which, I apprehend, is as likely to be above as below
the truth. But if the lands of Great Britain, in the prefent ftate
of their cultivation, do not afford a rent of more than twenty mil-
lions a year, they could not well afford the half, moft probably
not the fourth part of that rent, if they all belonged to a fingle pro-
prietor, and were put under the negligent, expenfive, and oppref-
five management of his factors and agents. The crown lands of
Great Britain do not at prefent afford the fourth part of the rent
which could probably be drawn from them if they were the pro-
perty of private perfons. If the crown lands were more extenfive,
it is probable they would be flill worfe managed.

The revenue which the great -body of the people derives from
land is in proportion, not to the rent, but to the produce of
the land. The whole annual produce of the land of every coun-
try, if we except what is referved for feed, is either annually
confumed by the great body of the people, or exchanged for
fomething elfe that is confumed by them. Whatever keeps down
the produce of the land below what it would othervvife rife to,
keeps down the revenue of the great body of the people ftill
more than it does that of the proprietors of land. The rent of
land, that portion of the produce which belongs to the proprietors,
is fcarce any where in Great Britain fuppofed to be more than
a third part of the whole produce. If the land, which in one ftate
of cultivation affords a rent of ten millions flcrling a year, would
in another afford a rent of twenty millions ; the rent being, in
both cafes, fuppofed a third part of the produce; the revenue of
the proprietors would be lefs than it ofnerwife might be by ten
millions a year only; but the revenue of the great body of the peo-

ple

THE WEALTH OF NATIONS.

421

pie would be lefs than it other wife might be by thirty millions a C HA P.
year, deducting only what would be neceflary for feed. The popu- u- -y"— -*
lation of the country would be lefs by the number of people which
thirty millions a year, deducting always the feed, could maintain,
according to the particular mode of living and expence which might
take place in the different ranks of men among whom the remain-
der was diftributed.

Though there is not at prefent, in Europe, any civilized ftate of
any kind which derives the greater part of its public revenue from
the rent of lands which are the property of the ftate ; yet, in all
the great monarchies of Europe, there are ftill many large tracts
of land which belong to the crown. They are generally foreltj
and fometimes foreft where, after travelling feveral miles, you will
fcarce find a fingle tree ; a mere wafte and lofs of country in refpect
both of produce and population. In every great monarchy of
Europe the fale of the crown lands would produce a very large
fum of money, which, if applied to the payment of the public
debts, would deliver from mortgage a much greater revenue than
any which thofe lands have ever afforded to the crown. In coun-
tries where lands, improved and cultivated very highly, and yielding
at the time of fale as great a rent as can eafily be got from them,
commonly fell at thirty years purchafe ; the unimproved, unculti-
vated, and low-rented crown lands might well be expected to fell
at forty, fifty, or fixty years purchafe. The crown might imme-
diately enjoy the revenue which this great price would redeem from
mortgage. In the courfe of a few years it would probably enjoy
another revenue. When the crown lands had become private pro-
perty, they would, in the courfe of a few years, become well-
improved and well-cultivated. The increafe of their produce, would
increafe the population of the country, by augmenting the revenue
and. confumption of the people. But the revenue which the crown

derives

THE NATURE AND CAUSES OF

K derives from the duties of cuftoms and excife, would neceflarily
«j increafe with the revenue and confumption of the people.

i

, The revenue which, in any civilized monarchy, the crown de-
rives from the crown lands, though it appears to coff nothing to
individuals, in reality cofts more to the fociety than perhaps any
other equal revenue which the crown enjoys. It would, in all
cafes, be for the interefl of the fociety to replace this revenue to the
crown by fome other equal revenue, and to divide the lands among
the people, which could not well be done better, perhaps, than by
expofing them to public fale.

Lands, for the purpofes of pleafure and magnificence, parks,
gardens, public walks, 5cc. pofTeflions which are every where confi-
dered as caufes of expence, not as fources of revenue, feem to be
jthe only lands which, in a great and civilized monarchy, ought to
belong to the crown.

Public ftock and public lands, therefore, the two fources of
revenue which may peculiarly belong to the fovereign or common-
wealth, being both improper and infufficient funds for defraying
the neceffary expence of any great and civilized ftate ; it remains
that this expence muft, the greater part of it, be defrayed by taxes
of one kind or another; the people contributing a part of their
own private revenue in order to make up a public revenue to the
fovereign or common-wealth.

Part II.
Of 'Taxes,

H E private revenue of individuals, it has been fhewn in the
firfl book of this inquiry, arifes ultimately from three different
fources j Rent, Profit, and Wages. Every tax muft finally be paid

from

THE WEALTH OF NATIONS.

from fome one or other of thofe three different forts of revenue, C HA P.
or from all of them indifferently. I fhall endeavour to give the <— — v~ — *
bed account I can, firft, of thofe taxes which, it is intended, fhould
fall upon rent ; fecondly, of thofe which, it is intended, mould fall
upon profit ; thirdly, of thofe which, it is intended, fhould fall
upon wages ; and, fourthly, of thofe which, it is intended, fhould
fall indifferently upon all thofe three different fources of private
revenue. The particular confideration of each of thefe four diffe-
rent forts of taxes will divide the fecond part of the prefent chap-
ter into four articles, three. of which will require feveral other fub-
divifions. Many of thofe taxes, it will appear from the following
review, are not finally paid from the fund or fource of revenue
upon which it was intended they fhould fall.

Before I enter upon the examination of particular taxes, it is
neceffary to premife the four following maxims with regard to taxes
in general.

I. The fubjects of every ftate ought to contribute towards the
fupport of the government, as nearly as poffible, in proportion to
their refpecf ive abilities ; that is, in proportion to the revenue
which they refpectively enjoy under, the protection of the ftate.
The expence of government to the individuals of a great nation,
is like the expence of management to the joint tenants of a great
eftate, who are all obliged to contribute in proportion to their
refpeclive interefts in the eflate* In the observation or neglect of
this maxim confifts what is called the equality or inequality of
taxation. Every tax, it mufr be obferved once for all, which fails
finally noon one only of the three forts of revenue above-men-
tioned is neceflarily unequal, in fo far as it does not affect the other
two. In the following examination of different taxes I fhall fel- -
com take much further notice of this fort of inequality, but fhall*

in.

.24 THE NATURE AND CAUSES OF

B CK) K in moft cafes, confine my obfervations to that inequality which is
l — y- — i occafioned by a particular tax falling unequally even upon that
particular fort of private revenue which is affected by it.

II. The tax which each individual is bound to pay ought to be
certain, and not arbitrary. The time of payment, the manner of
payment, the quantity to be paid, ought all to be clear and plain
to the contributor, and to every other ptrfon. Where it is other-
wife, every perfon fubjecl to the tax is put more or lefs in the power
of the tax-gatherer, who can either aggravate the tax upon any-
obnoxious contributor, or extort, by the terror of fuch aggrava-
tion, fome prefent or perquisite to himfelf. The uncertainty of
taxation encourages the infolence and favours the corruption of an
order of men who are naturally unpopular, even where they are
neither infolent nor corrupt. The certainty of what each indivi-
dual ought to pay is, in taxation, a matter of fo great importance,
that a very confiderable degree of inequality, it appears, I believe,
from the experience of all nations, is not near fo great an evil as
a very fmall degree of uncertainty.

III. Every tax ought to be levied at the time, or in the manner
in which it is moft likely to be convenient for the contributor to
pay it. A tax upon the rent of land or of houfes, payable at the
fame term at which fuch rents are ufually paid, is levied at the time
when it is moft likely to be convenient for the contributor to pay j
or, when he is moft likely to have wherewithal to pay. Taxes
upon fuch confumable goods as are articles of luxury, are all finally
paid by the confumer, and generally in a manner that is very con-
venient for him. He pays them by little and utile, as he has
occafion to buy the goods. As he is at liberty too either to buy
or not to buy as he pleafes, it muft be his own fault if he ever
fufFers any confiderable inconveniency from fuch taxes.

8

IV. Every

THE WEALTH OF NATIONS.

425

IV. Every tax ought to be fo contrived as both to take out C HA P.
and to keep out of the pockets of the people as little as poflible, 1 — v~- - *
over and above what it brings into the public treafury of the ftate.
A tax may either take out or keep out of the pockets of the people
a great deal more than it brings into the public treafury, in the
four following ways. Firft, the levying of it may require a great
number of officers, whofe falaries may eat up the greater part of the
produce of the tax, and whofe perquifites may impofe another addi-
tional tax upon the people. Secondly, it may obftruct. the indu-
ftry of the people, and difcourage them from applying to certain
branches of bufinefs which might give maintenance and employ-
ment to great multitudes. While it obliges the people to pay, it
may thus diminim, or perhaps deftroy fome of the funds, which
might enable them more eafily to do fo. Thirdly, by the forfei-
tures and other penalties which thofe unfortunate individuals
incur who attempt unfuccefsfully to evade the tax, it may fre-
quently ruin them, and thereby put an. end to the benefit which
the community might have received from the employment of their
capitals. An injudicious tax offers a great temptation to fmug-
gling. But the penalties of fmuggling muft rife in proportion to
the temptation. The law, contrary to all the ordinary princi-
ples of juftice, firft creates the temptation, and then punifhes
thofe who yield to it ; and it commonly enhances the punifliraent
too in proportion to the very circumftance which ought certainly to
alleviate it, the temptation to commit the crime*. Fourthly, by
fubjecYing the people to the frequent vifitSj and die odious exami-
nation of the tax-gatherers, it may expofe them to much unnecef-
fary trouble, vexation, and oppreflion ; and though vexation is not,
ftrictly fpeaking, expence, it is certainly equivalent to the expence
at which every man would be willing to redeem himfeif from it.
It is in fome one or other of thefe four different ways that taxes
are frequently fo much more burdenfome to the people than they
are beneficial to the fovereign.

* See Sketches of the Hifrory of Man, page 47+. & feq.

Vol. II. I i i Thjs

p$ THE NATURE AND CAUSES OF

BOOK. The evident juftice and utility of the foregoing maxims haver
y^—i recommended them more or lefs to the attention of all nations.
All nations have endeavoured, to the beft of their judgement, to
render their taxes as equal, as certain,, as convenient to the contri-
butor, both in the time and in the mode of payment, and, nv
proportion to the revenue which they brought to > the prince, as
fittle burdenfome to the people as they could contrive. The follow*-
ing mort review of fome of the principal taxes which have taken
place in different ages and countries will mow that the endeavours
of all nations have not in this refpect been equally fuccefsfuh

Article I.
Taxes upon Rent. Taxes upon the Rent of Land.

A TAX upon the rent of land may either be impofed according:
to a certain canon, every diftri£t being valued at a certain rent,
which valuation is not afterwards to be altered j or it may be
impofed in fuch a manner as to vary with every variation in the
real rent of the land, and to rife or fall with the improvement or
cleclenlion of its cultivation*

•( 13V3 Jlomte \o v^rteqloiq tssig ol nsq m 'grriwo rwacf zzd rl

A land tax which* like that of Great Britain, is impofed
according to a certain invariable canon, though it mould be equal
at the time of its firft- eftablifhment, neceffarily becomes unequal in
procefs of time according to the unequal degrees of improve-
ment or neglect in the cultivation of the different parts of
the country. In England, the valuation according to which
the different counties and parilhes were affeffed to the land-
tax by the 4th of William and Mary was very unequal even at its
firft eftablifhment. This tax, therefore, fo far offends againft
the firft of the four maxims above-mentioned. It is perfectly
agreeable to the other three. It is perfectly certain. The time of
payment for the tax, being the fame as^ that for the rent, is as
4. convenient

THE WEALTH OF NATIONS.

427

convenient as it can be to the contributor. Though the landlord CHAP,
is in all cafes the real contributor, the tax is commonly advanced t^-y-^j
by the tenant, to whom the landlord is obliged to allow it in the
payment of the rent. This tax is levied by a much fmaller number of
officers than any other which affords nearly the fame revenue. As
the tax does not rife with the rife of the rent, the fovereign does not
fliare in the profits of the landlord's improvements. The tax,
therefore, does not difcourage thofe improvements, nor keep down
the produce of the land below what it would otherwife rife to. As
it has no tendency to diminiffi the quantity, it can have none
to raife the price of that produce. It does not obftrucf the indus-
try of the people. It fubjecfs the landlord to no other inconve-
niency befides the unavoidable one of paying the tax.

The advantage, however, which the landlord has derived from
the invariable conflancy of the valuation by which all the lands of
Great Britain are rated to the land-tax, has been principally-
owing to fome circumflances altogether extraneous to the nature
of the tax.

Uiff. •~:;',';.\>-f* , ... :>? tw . .. ittbk«vplao ■ eii lo noilrobiti

It has been owing in part to the great profperity of almoft every
part of the country, the rents of a'lmoft all the eftates of Great Britain
having, fince the time when this valuation was firft eftablifhed, been
continually riling, and fcarce any of them having fallen. The land-
lords, therefore, have almofr. all gained the difference between the tax
which they would have paid, according to the prefent rent of their
eftates, and that which they actually pay according to the ancient
-valuation. Had the ftate of the country been different, had rents
been gradually falling in confequence of the declenfion of cultiva-
tion, the landlords would almoft all have loft this difference. In
the ftate of things which has happened to take place fince the revo-
lution, the conflancy of the valuation has been advantageous to the
landlord and hurtful to the fovereign. In a different ftate of things
^I3in3vxi03 I i i a it

THE NATURE

AND

CAUSES

OF

B OO K it might have been advantageous to the fovereign and hurtful to
v-— ' the landlord.

As the tax is made payable in money, fo the valuation of the
land is exprefTed in money. Since the eftablifhment of this
valuation the value of filver has been pretty uniform, and there
has been no alteration in the ftandard of the coin either as to
weight or finenefs. Had filver rifen confiderably in its value, as it
feems to have done in the courfe of the two centuries which
preceeded the difcovery of the mines of America, the conftancy of
the valuation might thave proved very oppreflive to the landlord.
Had filver fallen confiderably in its value, as it certainly did for
about a century at lean: after the difcovery of thofe mines,, the fame
conftancy of valuation would have reduced very much this branch
of the revenue of the fovereign. Had any confiderable alteration
been made in the ftandard of the money, either by finking the
fame quantity of filver to a lower denomination, or by raifing it to
a higher j. had an ounce of filver, for example, inftead of being
coined into five {hillings and twopence, been coined either into
pieces which bore fo low a denomination as two millings and
ieven-pence, or into pieces which bore fo high a one as ten millings
and fourpence, it would in the one cafe have hurt the revenue
of the proprietor, in the ether that of the fovereign.

In circumftances, therefore, fomewhat different from thofe which
have actually taken place, this conftancy of valuation might have
been a very great inconveniency, either to the contributors, or to the
commonwealth. In the courfe of ages fuch circumftances, how-
ever, muft, at fome time or. other, happen. But though empires,
like all the other works of men, have all hitherto proved mortal,
yet every empire aims at immortality. Every conftitution, there-
fore, which it is meant fhould be as permanent as the empire
itklf,, ought to, be convenient,, not in certain circumftances onlv,

but

THE WEALTH OF NATIONS.., 429-

but in all circumftances or ought to be fuited, not to thofe circum- c HA p*
fiances which are tranfitory, occafional, or accidental, but to thofe K^-y^j
which are neceffary and therefore always the fame.

A tax upon the rent of land which varies with every variation
of the rent, or which riles and falls according to the improvement
or neglect of cultivation, is recommended by that feci: of men of
letters in France, who call themfelves, the oeconomifts, as the
moll equitable of all taxes. All taxes, they pretend, fall ultimately
upon the rent of land, and ought therefore to be impofed equally
upon the fund which muft finally pay them. That all taxes ought
to fall as equally as poffible upon the fund which muft finally pay
them, is certainly true. But without entering into the difagree-
able difcuflion of the metaphyseal arguments by which they fup-
port their very ingenious theory, it will fufEciently appear from
the following, review, what are the taxes which fall finally upon the
rent of the land, and what are thofe which fall finally, upon fome
other fund.,

In the Venetian territory all the arable lands which are given irv
leafe to farmers are taxed at a tenth of the rent *. The leafes are
recorded in a public regifter which is kept by the officers of revenue
in each province or diftricr. When the proprietor cultivates his
own lands, they are valued according to an equitable eftimation
and he is allowed a deduction of one-fifth, of the tax, fp that for
fuch lands he pays only, eight inftead of ten. psr cent, of the
fuppofed rent.

.-won zqo^lJIc^o'iio " drjm gegs-io .sIujqd- am al .fl}Jfeawnommoj»

' 'gaaKimb' Asuo'Ai ia2 .mtiasid tisdio 30 amiJ smdl Jfi Sum -,iav»
A land-tax of this kind is certainly more equal than the

land-tax of England. It might not perhaps be altogether fo

certain, and the afTelfment of the tax might frequently occafion a

* Memoires concern ant les Droits, p. 240, 241*

good*

THE NATURE AND CAUSES OF

K good deal more trouble to the landlord. It might too be a goc4
mj deal more expenfive in the levying.

Such a fyftem of adminiftration, however, might perhaps be
contrived as would in a great meafure both prevent this uncertainty
and moderate this expence.

The landlord and tenant, for example, might jointly be obliged
to record their leafe in a public r.egifter. Proper penalties might
be enacted againft concealing or mifreprefenting any of the condi-
tions ; and if part of thofe penalties was to be paid to either of the
two parties who informed againft and convicted the other of fuch
concealment or mifreprefentation, it would effectually deter them
from combining together in order to defraud the public revenue.
All the conditions of the leafe might be fufficiently known from
fuch a record.

-Some landlords, inftead of raifing the rent, take a fine for the
renewal of the leafe. This practice is in moft cafes the expedient
of a Spendthrift, who for a fum of ready money fells a future reve-
nue of much greater value. It is in moft cafes, therefore, hurtful
to the landlord. It is frequently hurtful to the tenant, and it is
always hurtful to the community. It frequently takes from the
tenant fo great a part of his capital, and thereby diminishes fo
much his ability to cultivate the land, that he finds it more difficult
to pay a fmall rent than it would otherwife have been to pay a great
one. Whatever diminimes his ability to cultivate, necefTarily keeps
down below what it would otherwife have been the moft important
part of the revenue of the community. By rendering the tax
upon fuch fines a good deal heavier than upon the ordinary rent,
thii hurtful practice might be difcouraged to the no fmall advantage

of

THE WEALTH OF NATIONS'.

of all the different parties concerned, of the landlord, of the C
tenant, of the fovereign, and of the whole community, l-

Some leafes prefcribe to the tenant a certain mode of cultivation;
and a certain fuccenion of crops daring the whole continuance of
the leafe. This condition (which is generally the effect of the
landlords conceit of his own fuperior knowledge, a conceit in mofl
cafes very ill founded) ought always to be confidered as an additional
rent; as a rent in fcjvice inllead of a rent in money. In order
to difcourage the practice, which is generally a foolifli one, this
fpecies of rent might be valued rather high, and consequently taxed
fomewhat higher than common money rents.

Some landlords, inftead of a rent in money, require a rent ia
Kind, in corn, cattle, poultry, wine, oil, &c. others again require
a rent in fervice. Such rents are always more hurtful to the tenant
than beneficial to the landlord. They either take more or keep
more out of the pocket of the former than they put into that of
the latter. In every country where they take place, the tenants
are poor and beggarly, pretty much according to the degree in
which they take place. By valuing, in the fame manner* fuch
rents rather high, and confequently taxing them fomewhat higher
than common money-rents, a practice which is hurtful to the whole

community might perhaps be fufficiently difcouraged.

'Si" ?.3fninimib ycTaism hns jBiiq/SD nn 16- 'fiscpB -?£9ij9 01 inBnal

When the landlord chofe to occupy himfelf a part of his own
lands, the refit might be vat r d according to an equitable arbitra-
tion of the farmers and laixvllords in the neighbourhood, and a
moderate abatement of the, tax might be gi anted to him in the fame
manner as in the Venetian territory 3 provided the rent of the lands
which he occupied did not exceed a certain ium. It is of import-
ance that the. landlord fhould be. encouraged to cultivate a part of

his

THE NATURE AND CAUSES OF

K his own land. His capital is generally greater than that of the
■j tenant, and with lefs fkill he can frequently raife a greater pro-
duce. The landlord can afford to try experiments, and is generally
difpofed to do fo. His unfuccefsful experiments occafion only a
moderate lofs to himfelf. His fuccefsful ones contribute to the
improvement and better cultivation of the whole country. It
might be of importance however, that the abatement of the tax
fhould encourage him to cultivate to a certain extent only. If
the landlords mould the greater part of them be tempted to farm
the whole of their own lands, the country, (inftead of fober
and induftrious tenants, who are bound by their own intereft
to cultivate as well as their capital and fkill will allow
them) would be filled with idle and profligate bailiffs, whofe
abufive management would foon degrade the cultivation and
reduce the annual produce of the land, to the diminution, not
only of the revenue of their matters, but of the moft important
part of that of the whole fociety,

'• Such a fyltern of administration might perhaps free a tax of
this kind from any degree of uncertainty which could occafion
either oppreffion or inconveniency to the contributor ; and might
at the fame time ferve to introduce into the common management
of land, fuch a plan or policy as might contribute a good deal
to the general improvement and good cultivation of the country.

The expence of levying a land-tax, which varied with every
variation of the rent, would no doubt be fomewhat greater than
-that of levying one which was always rated according to a fixed
valuation. Some additional expence would neceffariJy be in-
curred both by the different regifler offices which it would be
proper to eftablifh in the different districts of the country, and
by the different valuations which might occasionally be made of
6 the

THE WEALTH OF NATIONS.

the lands which the proprietor chofe to occupy himfelf. The C
expence of all this, however, might be very moderate, and 4,
much below what is incurred in the levying of many other taxes
which afford a very inconfiderable revenue in companion of what
might eafily be drawn from a tax of this kind.

The difcouragement which a variable land-tax of this kind
might give to the improvement of land feems to be the moft im-
portant objection which can be made to it. The landlord would
certainly be lefs difpofed to improve when the fovereign, who
contributed nothing to the expence, was to mare in the profit of
the improvement. Even this objection might perhaps be obviated
by allowing the landlord, before he began his improvement, to
afcertain, in conjunction with the officers of revenue, the actual
value of his lands according to the equitable arbitration of a
certain number of landlords and farmers in the neighbourhood
equally chofen by both parties ; and by rating him according to
this valuation for fuch a number of years, as might be fully
iufneient for his complete indemnification. To draw the attention
of the fovereign towards the improvement of the land, from a
regard to the increafe of his own revenue, is one of the principal
advantages propofed by this fpecies of land-tax. The term, there-
fore, allowed for the indemnification of the landlord ought not
to be a great deal longer than what was neceffary for that pur-
pofe; left the remotenefs of the intereft fhould difcourage too
much this attention. It had better, however, be fomewhat too
long than in any refpect too fliort. No encitement to the atten-
tion of the fovereign can ever counter-balance the fmalleft difcou-
ragement to that of the landlord. The attention of the fovereign
can be at beft but a very general and vague confideration of what
is likely to contribute to the better cultivation of the greater part
of his dominions. The attention of the landlord is a particular
and minute confideration of what is likely to be the moft advan-

Vol. II. Kkk tageous

t.34 THE NATURE AND CAUSES OF

BOOK tageous application of every inch of ground upon his eftate. The
^^mmj principal attention of the fovereign ought to be to encourage, by
every means in his power, the attention both of the landlord and
of the farmer ; by allowing both to purfue their own intereft in
their own way, and according to their own judgement ; by giving
to both the moft perfect fecurity that they mall enjoy the full
recompence of their own induftry and by procuring to both the
moft extenfive market for every part of their produce in confe-
quence of eftablifhing the eafieft and fafeft communications both
by land and by water, through every part of his own dominions,
as well as the moft unbounded freedom of exportation to the do-
minions of all other princes.

If by fuch a fyftem of adminiftration a tax of this kind could
be fo managed as to give, not only no difcouragement, but, on
the contrary, fome encouragement to the improvement of land,,
k does not appear likely to occafion any other inconveniency to
the landlord, except always the unavoidable one. of being obliged,
to pay the tax.

In all the variations of the ftate of the fociety, in the improve-
ment and in the declenfion of agriculture in all the variations in
the value of filver, and in all thofe in the ftandard of the coin, a
tax of this kind would, of its own accord and without any atten-
tion of government, readily fmt itfclf to tire actual fituation of
things, and would be equally juft and equitable in all thofe dif-
ferent changes. It would, therefore, be much more proper to.
be eftablifhed as a perpetual and unalterable regulation, or as.
what is called a fundamental law of the common- wealth,
than any tax which was always to be levied according to a certain,
valuation.

Some ftates, inftead of the fimple and obvious expedient of a
regifter of leafes, have had recourfe to the laborious and expenfive

9 one

THE WEALTH OF NATIONS.

one of an actual furvey and valuation of all the lands in the
country. They have fufpected, probably, that the leflbr and lefTee,
in order to defraud the public revenue, might combine to conceal
the real terms of the leafe. Doomfday book feems to have been
the remit of a very accurate furvey of this kind.

:iluV ^ojfi9.;Itfifl| ^3Jf|j ififfr yiiiiiool J;t • i0t$riQfl£j. rriod OJ
In ,the antient dominions of the king of Pruffia the land-tax
is afleued according to an actual furvey and valuation, which is
reviewed and altered from time to time *. According to that valua-
tion the lay proprietors pay from twenty to twenty- five per cent,
of their revenue. Ecclefiaftics from forty to forty-five per cent.
The furvey and valuation of Silefia was made by order of the
prefent king ; it is faid with great accuracy. According to that
valuation the lands belonging to the bifhop of Breflaw are taxed
at twenty-five per cent, of their rent. The other revenues of the
ecclefiaftics of both religions, at fifty per cent. The commande-
ries of the Teutonic order and of that of Malta, at forty per cent.
Lands held by a noble tenure, at thirty-eight and one-third per
cent. Lands held by a bafe tenure, at thirty-five and one-third
per cent.

The furvey and valuation of Bohemia is faid to have been
the work of more than a hundred years. It was not perfected
till after the peace of 1748, by the orders of the prefent emprefs
queen -f •. The furvey of the dutchy of Milan, which was begun
in the time of Charles VI. was not perfected till after 1760.
It is efteemed one of the moft accurate that has ever been made.
The furvey of Savoy and Piemont was executed under the orders
of the late king of Sardinia t .

pkma £ oi smbioaafi fpi vsrad oi-ev^wlq sew noidw y.Bji ync asm

* Memoires concernant les Droits, &c. tome i. p. 1 14, riy, 1 16, &c.
£ Id. p. 83, 84. J Id. p. 280, &c. alfo p. 28;, &c. to 316.

K k k 2 In

THE NATURE AND CAUSES OF

In the dominions of the king of Pruffia the revenue of the
church is taxed much higher than that of lay proprietors. The
revenue of the church is, the greater part of it, a burden upon
the rent of land. It feldom happens that any part of it is applied
towards the improvement of land ; or is fo employed as to con-
tribute in any refpecr towards increafing the revenue of the great
body of the people. His Pruffian majefty had probably, upon
that account, thought it reafonable that it mould contribute a
good deal more towards relieving the exigencies of the ftate* In
fome countries the lands of the church are exempted from all
taxes. In others they are taxed more lightly than other lands-
In the dutchy of Milan, the lands which the church poiTefled before
1575, are rated to the tax at a third only of their value.

In Silefia lands held by a noble tenure are taxed three per cent,
higher than thofe held by a bafe tenure. The honours and pri-
vileges of different kinds annexed to the former, his Pruffian
majefty had probably imagined, would fufficiently compenfate to
the proprietor a fmall aggravation of the tax ; while at the fame
time the humiliating inferiority of the latter would be in fome
meafure alleviated by being taxed fomewhat more lightly. In
other countries the fyftem of taxation, inftead of alleviating,
aggravates this inequality. In the dominions of the king of
Sardinia, and in thofe provinces of France which are fubjecl
to what is called the Real or predial taille, the tax falls alto-
gether upon the lands held by a bafe tenure. Thofe held by a
noble one are exempted.

A land-tax alfefTed according to a general furvey and valua-
tion, how equal foever it may be at firft, muft, in the courfe of
a very moderate period of time, become unequal. To prevent
its becoming fo would require the continual and painful attention
<q{ government to all the variations in the ftate and produce of

4 every .

THE WEALTH OF NATIONS.

every different farm in the country. The governments of Prnflia, C
of Bohemia, of Sardinia, and of the dutchy of Milan, actually u
exert an attention of this kind; an attention fo unfuitable to the
nature of government, that it is not likely to be of long conti-
nuance, and which, if it is continued, will probably in the long-
run occ;ilon much more trouble and vexation than it can pof-
fibiy bring relief to the contributors.

In 16&6, the generality of Montauban was affeffed to tlie
Real or predial taille according, it is faid, to a very exa£t furvey
and valuation *, By 1727, this .aileiTment had become altogether
unequal. In order to remedy this inconveniency, government
has found no better expedient than to impofe upon the whole
generality an additional tax of a hundred and twenty thoufand
livres. This additional tax is rated upon all the different diitricts
fubjecl to the taille according to the old aifeifment. But it is -
levied only upon thofe which in the actual-Hate of things are by
that aifeifment under-taxed, and it is applied to the relief of-
thofe which by the fame affeffment are over-taxed. Two diftricTs,
for example, one of which ought in the actual ftate of .things to
be taxed at nine hunt' red, the other at eleven hundred livres a
are by the old affeOment both taxed at a thoufand livres. Both
thefe diftricts ait: by the additional tax rated at eleven hundred
livres each. But this additional tax is levied only upon the diitrict
undercharged, and it is applied altogether to the relief of that
over- charged, which confequently pays only nine hundred livres.
The government neither gains nor lofes by the additional tax,
which is applied altogether to remeav he inequalities arinng from
the old aifeifment. The appficati >h is pretty much regulated
according to the difcretion of the intendant of the generality,
and muft, therefore, be in a great meafure arbitrary.

* Id.tome.ii. p. 13;, &c.

faxes ■:

43*

THE NATURE AND CAUSES OF

BOOK

v- Taxes which are proportioned, not to the Rent, hut to the produce

of hand.

TAXES upon'the produce of land are in reality taxes upon the
rent ; and though they may be originally advanced by the farmer,
are finally paid by the landlord. When a certain portion of the
produce is to be paid away for a tax, the farmer computes, as
well as he can, what the value of this portion is, one year with
another, likely to amount to, and he makes a proportionable abate-
ment in the rent which he agrees to pay to the landlord. There
is no farmer who does not compute beforehand what the church-
tythe, which is a land-tax of this kind, is, one year with another,
likely to amount to.

The tythe, and every other land-tax of this kind, under the
appearance of perfect equality, are very unequal taxes a certain
portion of the produce being, in different fituations, equivalent to
a very different portion of the rent. In fome very rich lands the
produce is fo great, that the one half of it is fully fufficient to
replace to the farmer his capital employed in cultivation, together
with the ordinary profits of farming flock in the neighbourhood.
The other half, or, what comes to the fame thing, the value of the
other half, he could afford to pay as rent to the landlord, if there
was no tythe. Eut if a tenth of the produce is taken from him
in the way of tythe, he mint require an abatement of the fifth
part of this rent, othervvife he cannot get back his capital with
the ordinary profit. In this cafe the rent of the landlord, inftead
of amounting to a half, or five-tenths of the whole produce, will
amount only to four- tenths of it. In poorer lands, on the con-
trary, the produce is fometimes fo fmall, and the expence of culti-
vation fo great, that it requires four-fifths of the whole produce to
replace to the farmer his capital with the ordinary profit. In this

cafe,

THE WEALTH OF NATIONS,

439'

cafe, though there was no tythe, the rent of the landlord could C HA P.
amount to no more than one-fifth or two-tenths of the whole i--v~H
produce. But if the farmer pays one-tenth of the produce in the
way of tythe, he muft require an equal abatement of the rent of
the landlord, which will thus be reduced to one-tenth only of the
whole produce. Upon the rent of rich lands, the tythe may fome-
times be a tax of no more than one- fifth part, or four (hillings in
the pound ; whereas, upon that of poorer lands, it may fometimes
be a tax of one-half, or of ten {hillings in the pound.

The tythe, as it is frequently a very unequal tax upon the rent,
fo it is always a great difcouragement both to the improvements of
the landlord and to the cultivation of the farmer. The one cannot
venture to make the moft important, which are generally the moft
expenfive improvements ; nor the other to raife the moft valuable,
which are generally too the moft expenfive crops ; when the church,
which lays out no part of the expence, is to fhare fo very largely in
the profit. The cultivation of madder was for a long time con-
fined by the tythe to the United Provinces, which, being prefbyte-
rian countries, and upon that account exempted from this deftruclive
tax, enjoyed a fort of monopoly of that ufeful dying drug againft
the reft of Europe. The late attempts to introduce the culture
of this plant into England, have been made only in confequence
of the ftatute which enacted that five (hillings an acre fhould be-
received in lieu of all manner of tythe upon madder.

As through the greater part of Europe, the church, fo in many
different countries of Afia the ftate, is principally fupported by *
land-tax, proportioned, not to the rent, but to the produce of the land.
In China, the principal revenue of the fovereign confifts in a tenth
part of the produce of all the lands of the empire. This tenth
part, however, is eftimated fo very moderately, that, in many pro-

vinces>

44°

THE NATURE AND CAUSES OF

vinces, it is faid not to exceed a thirtieth part of the ordinary pro-
duce. The land-tax or land rent which ufed to be paid to the
Mahometan government of Bengal, before that country fell into
the hands of the Engluh Eaft India company, is faid to have
amounted to about a fifth part of the produce. The land-tax of
antient Egypt is faid hkevvife to have amounted to a fifth part.

In Afia, this fort of land-tax is faid to intereft the fovereign in
the improvement and cultivation of land. The fovereigns of
China, thofe of Bengal while under the Mahometan government,
and thofe of antient Egypt, are faid accordingly to have been ex-
tremely attentive to the making and maintaining of good roads
and navigable canals, in order to increafe, as much as poffible,
both the quantity and value of every part of the produce of the
land, by procuring to every part of it the mofr. extenfive market
which their own dominions could afford. The tythe of the church
is divided into fuch fmall portions, that no one of its proprietors
gsm have any intereft of this kind. The parfon of a parifh could
never find his account in making a road or canal to a diftant part
of the country, in order to extend the market for the produce of
his own particular parifh. Such taxes, when defcined for the main-
tenance of the flate, have fome advantages which may ferve in
f9}rne meafure to balance their inconveniency. When deftined for
the maintenance of the church, they arc attended with nptfyjgg
b^t inconveniency.

•^lfiV iiiw tYSW V.t&lQi 3titt ijftt 'k&jtft$l .UBS* $ if A f'< ;>'.!<$

^hTaxes upon the produce of land may be levied, either in kind;
orjepecording to a certain valuation, in money.

The parfon of a parifh, or a gentleman of fmall fortune who
lives upon his eftate, may fometimes, perhaps, find fome advantage
in receiving, the one his tythe, and the other his rent, in kind.

The

THE WEALTH OF NATIONS

The quantity to be collected, and the diftrict within which it is to -CU A- P.
be collected, are fo fmall, that they both can overfee, with their u—v— -»
own eyes, the collection and difpofal of every part of what is due
to them. A gentleman of great fortune, who lived in the capital,
would be in danger of fuffering much by the neglect, and more by
the fraud of his factors and agents, if the rents of an eftate in a
diftant province were to be paid to him in this manner. The lofs
of the ibvereign, from the abufe and depredation of his tax-gather-
ers, would neceflarily be much greater The fervants of the moft
carelefs private perfon are, perhaps, more under the eye of their
matter than thole of the molt careful prince ; and a public reve-
nue, which was paid in kind, would fuffer fo much from the mif-
msnagement of the collectors, that a very fmall part of what was
levied upon the people would ever arrive at the treafury of the
prince. Some part of the public revenue of China, however, is
faid to be paid in this manner. The Mandarins and other tax-
gatherers will, no doubt, find their advantage in continuing the
practice of a payment which is fo much more liable to abufe than
any payment in money.

A Tax upon the produce of land which is levied in money,
may be levied either according to a valuation which varies with all
the variations of the market price or according to a fixed valua-
tion, a bufhel of wheat, for example, being always valued at one
and the fame money price, whatever may be the ftate of the mar-
ket. The produce of a tax levied in the former way, will vary
only according to the variations in the real produce of the land,
according to the improvement or neglect of cultivation. The pro-
duce of a tax levied in the latter way will vary, not only accord-
ing to the variations in the produce of the land, but according to
both thole in the value of the precious metals, and thofe in the
quantity of thofe metals which is at different times contained in

Vol. II. L 1 1 coin

4{3 THE NATURE AND CAUSES OF

B p p IC coin of the fame denomination. The produce of the former will
always bear the fame proportion to the value of the real produce
of the land. The produce of the latter may, at different times,
bear very different proportions to that value.

When, in-ftead either of a certain portion of the produce of
land, or of the price of a certain portion, a certain fum of money
is- to be paid in full, compenfation for all tax or tythe the tax
becomes, in this cafe,, exaclly of the famenazfcure with the land-tax
of England. It neither rifes nor falls with the rent of the land.
It neither encourages nor difcourages improvement. The tythe m
the greater part of thole parilh.es which pay what is calkd^a Modus
in. lieiv.of all other tythe, is a tax o£ this kind. During the Maho-
metan government of Bengal, inffead of the payment in. kind of a
fifth part of the produce, a modus, and, it is laid, a very moderate
one, was e$ablime4i in the greater part of the diftricls or zeminda^
ries of- the G-ountry. Some of the fervants of the Eaft India com-
pany, under pretence of refroring the public revenue to its proper
value, have, in fome provinces, exchanged this modus for a pave-
ment in kind. Under their management this change is likely both
to difepurage cultivation, and to give new opportunities for abufe
in, the colleclipn of the public revenue, which has fallen very much
below what it was faid. to have been when it firil fell under the
management of the company. The fervants of the company mayj
perhaps, have profited by this change, but at the expence, it is pro-
babjig, both, of their mailers and of the country.
wh<( odi zi fmi zuiq'iul siriT '/wmio* aril oi &£q- '^iatefqrrrto

raxes upon ths Rent cf Houfes..

moil fc>n*M> B Jb jtived v/ilmjoD M .nohnmh aril \o sgRJnBvbs

THE rent of a houfe may be diftinguifhed into two parts, of
which the one may very properly, be called the Building rent ; the
other is commonly called the Ground rent,

4 Tiis

THE

WEALTH

O F

NATIONS.

The building rent is the intereft or profit of the capital expended C
in building the houfe. In order to put the trade of a builder upon
a level with other trades, it is neceffary that this rent fhould be fur"-
ficient, firft, to pay him the fame intereft which he would have got
for his capital if he had lent it upon good fecurity ; and, fecondly,
to keep the houfe in conftant repair, or, what comes to the farrie
thing, to replace, within a certain term of years, the capital
which had been employed in building it. The building rent, tfr
the ordinary profit of building, is, therefore, every where regu-
lated by the ordinary intereft of money. Where the market rate
of intereft is four per cent, the rent of a houfe which, over
and above paying the ground rent, affords Fix, Or fix and a half per
cent, upon the whole expence of building, may perhaps afford a
fuffieient profit to the builder. Where the market rate of interest
is five per cent, it may perhaps require feven or feven and a half
per cent. Jf, in proportion to the intereft of money, the trade of
the builder affords at any time a much greater profit than this, it
will foon draw fo much capital from other trades as will reduce the
profit to its proper level. If it affords at any time much lefs than
this, other trades will foon draw fo much capital from it as will
again raife that profit.

Whatever part of the whole rent of a houfe is over and above
what is funkient for affording this reafonable profit, naturally goes
to the ground-rent; and where the owner of the ground afftHftfe!
owner of the building are two different perfons, is, in mo'ft cafes,
completely paid to the former. This furpms rent is the price
which the inhabitant of the houfe pays for fome real or fuppofed
advantage of the fituation. In country houfes, at a diftance from
any great town, where there is plenty of ground to ch'ufe upon,
the ground rent is fcarce any thing, or no more than what the
ground which the houfe (lands upon would pay if employed hi

L 1 1 2 agriculture.

THE NATURE AND CAUSES OF

K agriculture. In country villas in the neighbourhood of fome great
-J town, it is fometimes a good deal higher ; and the peculiar conve-
niency or beauty of fituation is there frequently very well paid for.
Ground rents are generally higheft in the capital, and in thole par-
ticular parts of it where there happens to be the greateft demand for
houfcs, whatever be the reafon of that demand, whether for trade
and bufinefs, for pleafure and fociety, or for mere vanity and
fafhion.

A tax upon houfe-rent, payable by the tenant and proportioned
to the whole rent of each houfe, could not, for any confiderable
time at leaft, affect the building rent. If the builder did not get
his reafonable profit, he would be obliged to quit the trade ; which,
by raifing the demand for building, would in a fhort time bring
back his profit to its proper level with that of other trades. Neither
would fuch a tax fall altogether upon the ground rent but it would
divide itfelf in fuch a manner as to fall, partly upon the inhabitant
of the houfe, and partly upon the owner of the ground.

Let us fuppofe, for example, that a particular perfon judges
that he can afford for houfe-rent an expence of fixty pounds a
year ; and let us fuppofe too that a tax of four millings in the
pound, or of one- fifth, payable by the inhabitant, is laid upon
houfe-rent. A houfe of fixty pounds rent will in this cafe coil
him feventy-two pounds a year, which is twelve pounds more than
he thinks he can afford. He will, therefore, content himfelf with
a worfe houfe, or a houfe of fifty pounds rent, which, with the
additional ten pounds that he muff pay for the tax, will make up the
fum of fixty pounds a year, the expence which he judges he can
afford ; and in order to pay the tax he will give up a part of the
additional conveniency which he might have had from a houfe of

ten pounds a year more rent. He will give up, I fay, a part of

'-3>jfo "i:f r/hcig ^rfknirnrb 1i doe .3$rg3D magm stfc&l

THE WEALTH OF N AT I ONs! 445

this additional conveniency ; for he will feldom be obliged to give CHAP,
up the whole, but will, in confequence of the tax, get a better
houfe for fifty pounds a year, than he could have got if there had
been no tax. For as a tax of this kind, by taking away this parti-
cular competitor, muft diminifh the competition for houfcs of fixty
pounds rent, fo it muft likewife diminish it for thofe of fifty pounds
rent, and in the fame manner for thofe of all other rents, except
the lowcft rent, for which it would for lome time increafe the com-
petition But the rents of every clafs of houfes for which the com-
petition was diminifhed, would neceffarily be more or lefs reduced.
As no part of this reduction, however, could, for any confiderable
time at leafr, affect the building rent; the whole of it muft in the
long-run neceffarily fall upon the ground -rent. The final pay-
ment of this tax, therefore, would fall, partly upon the inhabitant
of the houfe, who, in order to pay his (hare, would be obliged to
give up a part of his conveniency ; and partly upon the owner of the
ground, who, in order to pay his fhare, would be obliged to give
up a part of his revenue. In what proportion this final payment
would be divided between them/ it is not perhaps very eafy to afcer-
tain. The divifion would probably be very different in different
circumftances, and a tax of this kind might, according to thofe
different circumftances, affe6t very unequally both the inhabitant
of the houfe and the owner of the grounds

itoD slip fi&Jjyi iliw lira?..- 8onxiO(j,^Xil.:ip DfflpU, v3nav.3ljjod

The inequality 'with which a tax of this kind might fall upon
the owners of different ground rents, would arife- altogether from
the accidental inequality of this divifion. But the inequality. «wjUv
which it might fall upon the inhaBi^ants^oT different houfes would,
arife, not only from this, but from another caule. The proportion
of the expence of houfe-rent to the whole expence of living, is
different in the different degrees of fortune. It is perhaps higheft:
in the higheft degree, and it diminifnes gradually through the ihfe-
8 rior

446 THE NATURE AND CAUSES OF

BOOK rior degrees, Co as in general to be loweft in the loweft degree.

u— v*— » The neceffaries of life occafion the great expence of the poor.

They find it difficult to get food, and the greater part of then- little
revenue is fpent in getting it. The luxuries and vanities of life
occafion the principal expence of the rich j and a magnificent
houfe embellifhes and fets off to the beft advantage all the other
luxuries and vanities which they poffefs. A tax upon houfe-rents,
therefore, would in general fall heavieft upon the rich ; and in this
fort of inequality there would not, perhaps, be any thing very
unreafonable. It is not very unreafonable that the rich ftiould
contribute to the public expence, not only in proportion to their
revenue, but fomething more than in that proportion.

The rent of houfes, though it infome refpecls refembles the rent
of land, is in one refpect eiTentially different from it. The rent of
land is paid for the ufe of a productive fubject. The land which
pays it produces it. The rent of houfes is paid for the ufe of an
unproductive fubject. Neither the houfe nor the ground which it
{lands upon produce any thing. The perfbn who pays the rent,
therefore, mud draw it from fome other fburce of revenue,
diftincl from, and independent of, this jfubjecl:. A tax upon
the rent of houfes, fo far as it fails upon the inhabitants, mult
be drawn from the fame fburce as the rent itfelf, and muft be
paid from their revenue, whether derived from the wages of labour,
the profits of flock, or the rent of land. So far as it falls upon
the inhabitants, it is one of thofe taxes which fall, not upon one"
only, but indifferently upon all the three different fburces of reve-
nue j and is in every refpect of the fame nature as a tax upon any
other fort of confumable commodities. In general there is not,
perhaps, any one article of expence or confumption by which the
liberality or naixownefs of a man's whole expence can be better
judged of, than by his houfe-rent. A proportional tax upon:

this

THE WEALTH OF NATIONS. 44T

this particular ^fide of expence might, perhaps, produce a more CHAP,
conliderabie revenue than any which has hitherto' been drawn from
it in any part of Europe. If the tax indeed was very high, the.
greater part of people would endeavour to evade it as much as^
they could, by contenting themfelves with fmaller houfes, and by
turning. the greater part of their expence into fome other channel.

131 -51 11 01

n ff<"vtn SrR"t A

The rent of houfes might eafily be afcertained witli fufHcienr
accuracy, by a policy of the fame kind with that which would be
necefiary for afcertaining the ordinary rent of land. Houfes not
inhabited ought to pay no tax. A tax upon them would fall alto-
gether upon the proprietor, who would thus be taxed for a fnbjecl:
which afforded him- neither convenieney nor revenue. Houfes inha-
bited by the proprietor ought to be rated, not according to the
expence which they might have coft in building, but according to
the rent which an equitable arbitration might judge them likely
to bring, if leafed to a tenant. If rated according to the expence
which they may have coft in building, a tax of three or. four mil-
lings in the pound, joined with other taxes, would ruin almoft. all
the rich and great families of this, and, I believe, of every other
civilized country. Whoever will examine, w-ith attention, the dif-
ferent town and country houfes of fome of the richeft and greateft
families in this country, will find that, at the rate of only, fix and
a half,, or feven per cent, upon the original expence of building,,
their houfe-rent is nearly equal to the whole neat rent of their
eftates. It is the accumulated expence of feveral fucceffive genera-
tions, laid' out upon objects of great beauty and . magnificence,
indeed but, in proportion to what, they coft, of. very fmali ex**.,
changeable, value.

oih rbitlw v^d nqitgrrjulxfOO'*iO 3^ri3qx3 to bbiJ'is T-'ffr iPtjfifftaq
Ground-rents are a ftili more proper fubjeel: of taxation
than, the rent of houfes, A tax upon ground-rents would not.

raife-

THE NATUPvE AND CAUSES OF

K raife the rents of houfes. It would fall altogether upon the owner
-* of the ground-rent, who ac^ always as a m <m opolift, and exacts the
greater! rent which can be got for the ufe of his ground. More
or lefs can be got for it according as the competitors happen to be
richer or poorer, or cap afford to gratify their fancy for a parti-
cular fpot of ground at a greater or fmaller expence. In every
country the greateft number of rich competitors is in the capitalr
and it is there accordingly that the higher!: ground-rents are always
to be found. As the wealth of thole competitors would in no
refpect be increafed by a tax upon ground- rents, they would not
probably be difpofed to pay more for the uie of the ground. Whe-
ther the tax was to be advanced by the inhabitant or by the owner
of the ground, would be of little importance. Trie more the inha-
bitant was obliged to pay for the tax, the lefs he would incline to
pay for the ground j fo that the final payment of the tax would
fall altogether upon the owner of the ground-rent. The ground-
rents of uninhabited houfes ought to pay no tax.

Both ground-rents and the ordinary rent of land are a fpecies
of revenue which the owner, in many cafes, enjoys without any
care or attention of his own. Though a part of this revenue
fhould be taken from him in order to defray the expences of the
ftate, no dilcouragement will thereby be given to any fort of indu-
ftry. The annual produce of the land and labour of the fociety,
the real wealth and revenue of the great body of the people, might
be the fame after iuch a tax as before. Ground- rents, and the
ordinary rent of land, are therefore, perhaps, the fpecies of reve-
nue which can beft bear to have a peculiar tax impofed upon them.

Ground-rents feem, in this refpecr, a more proper fubject of
peculiar taxation than even the ordinary ient of land. The ordi-
nary rent of land is, in many cafes, owing partly at leaft to the

attention

THE WEALTH OF NATIONS.

449

attention and good management of the landlord. A very heavy C HA P.
tax might difcourage too much this attention and good manage- u— v-— *
ment. Ground-rents, fo far as they exceed the ordinary rent of
land, are altogether owing to the good government of the fove-
reign, which, by protecting the induftry either of the whole people,
or of the inhabitants of fome particular place, enables them to
pay fo much more than its real value for the ground which they
build their houfes upon ; or to make to its owner fo much more
than compenfation for the lofs which he might fuftain by this ufe
of it. Nothing can be more reafonable than that a fund which
owes its exiftence to the good government of the ftate, fhould be
taxed peculiarly, or mould contribute fomething more than the
greater part of other funds towards the fupport of that govern-
ment.

Though, in many different countries of Europe, taxes have
been impofed upon the rent of houfes, I do not know of any in
which ground- rents have been confidered as a feparate fubject of
taxation. The contrivers of taxes have, probably, found fome
difficulty in afcertaining what part of the rent ought to be confi-
dered as ground-rent, and what part ought to be confidered as build-
ing rent. It mould not, however, feem very difficult to diftinguifh
thofe two parts of the rent from one another.

In Great Britain the rent of houfes is luppofed to be taxed in the
fame proportion as the rent of land, by what is called the annual
land tax. The valuation, according to which each different parifli
and diftrict is affefled to this tax, is always the fame. It was ori-
ginally extremely unequal, and it frill continues to be fo. Through
the greater part of the kingdom this tax falls frill more lightly
upon the rent of houfes than upon that of land. In fome few
diftricts only, which were originally rated high, and in which the

Vol. II. M m m rents

45°

THE NATURE AND CAUSES OF

B CK) K rents of houfes have fallen confiderably, the land tax of three or
u~ -y^j four {hillings in the pound, is faid to amount to an equal propor-
tion of the real rent of the houfes. Untenanted houfes, though by
law fubjeft to the tax, are, in molt diftric~ts, exempted from it by
the favour of the affenors ; and this exemption fometimes occanons
ibme little variation in the rate of particular houfes, though that of
the diftricl: is always the fame.

In the province of Holland * every houfe is taxed at two and a
half percent, of its value, without any regard either to the rent
which it actually pays, or to the circumftance of its being tenanted
or untenanted* There feems to be a hardfhip in obliging the pro-
prietor to pay a tax for an untenanted houfe, from which he can
derive no revenue; efpecially fo very heavy a tax. In Holland,
where the market rate of intereft does not exceed three per cent,
two and a half per cent, upon the whole value of the houfe, mutt,
in raoft cafes, amount to more than a third of the building- rent,
perhaps of the whole rent. The valuation, indeed, according to
which the houfes are rated, though very unequal, is faid to be
always below the real value. When a houfe is rebuilt, improved,,
or enlarged, there is a new valuation, and the tax is rated accord-
ingly.

The contrivers of the feveral taxes which in England have, at diffe-
rent times, been impofed upon houfes, feem to have imagined that
there was fome great difficulty in afcertaining, with tolerable exa<5l-
nefs, what was the real rent of every houfe. They have regulated
their taxes, therefore, according to fome more obvious circum-
Itance, fuch as they had probably imagined would, in moft cafes*,
bear fome proportion to the rent.

The firft tax of this kind was hearth-money; or a tax of two
Shillings upon every hearth. In order to afcertain how many

hearths

* Memoires cone ernant les Droits, &c. p, 223,

THE WEALTH OF NATIONS

hearths were in the houfe, it was neceflary that the tax-gatherer C
mould enter every room in it. This odious vifit rendered the tax <-
odious. Soon after the revolution, therefore, it was abolifhed as
a badge of (la very.

The next tax of this kind was, a tax of two (hillings upon every
dwelling houfe inhabited. A houfe with ten windows to pay four
{hillings more. A houfe with twenty windows and upwards to
pay eight millings. This tax was afterwards fo far altered, that
houfes with twenty windows, and with lefs than thirty, were ordered
to pay ten (hillings, and thofe with thirty windows and upwards
to pay twenty millings. The number of windows can, in moft
cafes, be counted from the outfide, and, in all cafes, without entering
every room in the houfe. The vifit of the tax-gatherer, therefore,
was lefs offenfive in this tax than in the hearth-money.

This tax was afterwards repealed, and in the room of it was
eftablifhed the window tax, which has undergone too feveral alte-
rations and augmentations. The window tax, asitftands at prefent,
(January, 1775) over and above the duty of three millings upon
every houfe in England, and of one milling upon every houfe in
Scotland, lays a duty upon every window, which, in England, aug-
ments gradually from two-pence, the loweft rate, upon houfes with
not more than feven windows ; to two (hillings, the higher!: rate,
upon houfes- with twenty-five windows and upwards.
-fDBxa 5ldms\ol rllIw"tSnini£ii3oi£ ni .^luDinib tB3i§ 3mo) ?ew rarfc

The principal objection to all fuch taxes is their inequality, an
inequality of the worn: kind, as they muft frequently fall much hea-
vier upon the poor than upon the rich. A houfe of ten pounds
rent in a country town may fometimes have more windows than a
houfe of five hundred pounds rent in London ; and though the
inhabitant of the former is likely to be a much poorer man than
that of the latter, yet fo far as his contribution is regulated by the

M m m 2 window

THE NATURE AND CAUSES OF

window- tax, he mull: contribute more to the fupport of the
flate. Such taxes are, therefore, directly contrary to the firft of
the four maxims above mentioned. They do not feem to. offend
much againft any of the other three.

The natural tendency of the window-tax, and of all other
taxes upon houfes, is to lower rents. The more a man pays for
the tax, the lefs,. it is evident, he can afford to. pay for the
rent. Since the impofition of the window-tax, however,, the
rents of houfes have upon the whole rifen, more or lefs, in almofl
every town and village of Great Britain with which I am acquainted.
Such has been almoft every where the increafe of the demand for
houfes, that it has raifed the rents more than the window-tax
could, fink them ; one of the many proofs of the great profpes-
rity of the country, and of the increafing revenue of its. inha.*>
bitants. Had it not been for the tax, rents would probably have
rifen ftill higher.-.

Art i c l e H.

Taxes upon Profit, or upon the Revenue artfihg from Stock* .

THE revenue or profit- arifing from flock naturally divides
itfelf into two parts ; that which pays the interefl, and which
belongs to the owner of the flock ; and that furplus part which
is over and above what is necefTary for paying the interefl.

This latter part of profit is evidently a fubjecl: not taxable
directly. It is the compenfation, and in mod cafes it is no
more than a very moderate compenfation, for the rifk and trouble
of employing the flock. The employer mufl have this compen-
fation, otherwife he cannot, confiflently with his own interefl,
continue the employment. If he was taxed directly, therefore,
in proportion to the whole profit, he would be obliged either to

raifc

THE WEALTH OF NATIONS.

452

raife the rate of his profit, or to charge the tax upon die intereft c H A P.
of money ; that is, to pay lefs intereft. If he raifed the rate of v--y-— *■
his profit in proportion to the tax, the whole tax, though it
might be advanced by him, would be finally paid by one or other
of two different fets of people, according to the different ways ia
which he might employ the ftock of which he had the manage-
ment. If he employed it as a farming ftock in the cultivation of
land, he could raife the rate of his profit only by retaining a
greater portion, or, what comes to the fame thing, the price of
a greater portion of the produce of the land ; and as this could
he done only by a reduction of rent, the final payment of the tax
would fall upon the landlord. If he employed it as-a mercantile
or manufacturing ftock, he could raife the rate of his profit only
by railing the price of his goods ; in which cafe the final pay-
ment of the tax would fall altogether upon the confumers of.
thofe goods. If he did not raife the rate of his profit, he would
be obliged to charge the whole tax upon that part of it which
was allotted for the intereft of money. He could afford lefs
intereft for whatever ftock he borrowed, and the whole weight
of the tax would in this cafe fall ultimately upon the intereft
of money. So far as he could not relieve himfelf from the tax
in the one way, he would be obliged to relieve himfelf in the

n jifl DiLC ^JilTfwlliJi Jill "V J •**^''>*» *'***** f^<C>ii«v^ v <»/ \JJHl liiJIJt

other.

rpotw iiBq ewIcriiJi Jem one Aooix 9m to "wnwo art? 01 egnoisd

The intereft of money feems at firft fight a fubject equally
capable of being taxed directly as the rent of land. Like the
rent of land it is a neat produce which remains after completely
compenfating the whole rifle4 and trouble of employing the ftock.
As a tax upon the rent of land cannot raife rents -y becaufe the
neat produce which remains after replacing the ftock of the
farmer, together with his reafonable profit, cannot be greater
after the tax than before it : fo, for the fame reafon, a tax upon

the

[5i, THE NATURE AND CAUSES OF

BOOK the intereft of money could not raife the rate of intereft ; the
quantity of flock or money in the country, like the quantity of
land, being fuppofed to remain the fame after the tax as before it.
The ordinary rate of profit, it has been Ihewn in the firft book,
is every where regulated by the quantity of ftock to be employed
in proportion to the quantity of the employment, or of the
bufinefs which muft be done by it. But the quantity of the
employment, or of the bufinefs to be done by llock, could nei-
ther be increafed nor diminifhed by any tax upon the intereft of
money. If the quantity of the flock to be employed, therefore,
was neither increafed nor diminifhed by it, the ordinary rate of
profit would neceffarily remain the fame. But the portion of
this profit neceffary for compenfating the rifle and trouble of the
employer, would likewife remain the fame ; that rifk and trouble
being in no refpecl altered. The refidue, therefore, that portion
which belongs to the owner of the flock, and which pays the
intereft of money, would neceffarily remain the fame too. At
firft fight, therefore, the intereft of money feems to be a fub-
ject as fit to be taxed direflly as the rent of land.

There are, however, two different circumftances which render
the intereft of money a much lefs proper fubject of direct taxa-
tion than the rent of land.

First, the quantity and value of the land which any man
poileflfis can never be a fecret, and can always be afcertained with
great exadlnefs. But the whole amount of the capital ftock
which he poflefTes is almoft always a fecret, and can fcarce ever
be afcertained with tolerable exadlnefs. It is liable, befides, to
almoft continual variations. A year feldom paffes away, fre-
quently not a month, fometimes fcarce a fingle day, in which it
does not rife or fall more or lefs. An inquifiuon into every man's
private circumftances, and an incmifition which, in order to

accommodate

THE WEALTH OF NATIONS. 45,

accommodate the tax to them, watched over all the fluctuations CHAP.
®f his fortune, would be a fource of fuch continual and endlefs u. ..j
vexation as no people could fupport.

Secondly, land is a fubjecl which cannot be removed ; whereas
flock eafily may. The proprietor of land is necefTarily a citizen
of the particular country in which his eflate lies. The proprietor
of flock is properly a citizen of the world,, and is not necefTarily
attached to any particular country. He would be apt to abandon
the country in which he was expofed to a vexatious inquifition,
in order to be aflHTed to a burdenfome tax, and would remove
his flock to fome other country where he could either carry on
his bufinefs or enjoy his fortune more at his eafe. By removing
his flock he would put an end to all the induflry which it had
maintained in the country which he left. Stock cultivates land %
flock employs labour. A tax which tended to drive away flock
from any particular country, would fo far tend to dry up every
fource of revenue,- both to the fovereign and to the fociety. Not
only the profits of flock, but the rent of land and the wages of
labour, would necefTarily be more or lefs diminifhed by its removah

The nations, accordingly, who have attempted to tax the~-
revenue arifing from flock, inflead of any fevere inquifition of
this kind, have been obliged to content themfelves with fome
very loofe, and therefore more or lefs arbitrary eflimation, The
extreme inequality and uncertainty of a tax afTefTed in this man-
ner, can be compenfated only by its extreme moderation, in
confequence of which every man finds himfelf rated fo very
much below his real revenue, that he gives himfelf little diflur-
bance though his neighbour fhould be rated fomewhat lower.

By what is called the land-tax in England, it was intended
that flock fhould be taxed in the fame proportion as land.

When-

456

'THE MATURE AND CAUSES OF

B op K When the tax upon land was at four fhillings in the pound, or
w-v--— ' at one-fifth of the fuppofed rent, it was intended that ftock
fhould be taxed at one -fifth of the fuppofed intereft. When the
prefent annual land-tax was firft impofed, the legal rate of in-
tereft was fix per cent. Every hundred pounds ftock, accord-
ingly, was fuppofed to be taxed at twenty-four (hillings, the
fifth part of fix pounds. Since the legal rate of intereft has been
reduced to five per cent, every hundred pounds ftock is fuppofed
to be taxed at twenty fhillings only. The fum to be raifed, by
what is called the land-tax, was divided between the country
and the principal towns. The greater part of it was laid upon
the country ; and of what was laid upon the towns, the greater
part was afieffed upon the houfes. What remained to be aiTelTed
upon the ftock or trade of the towns (for the ftock upon the
land was not meant to be taxed) was very much below the real
value of that ftock or trade. Whatever inequalities, therefore,
there might be in the original aflefTment, gave little difturbance.
Every parifh and diftrici: ftili continues to be rated for its land,
its houfes, and its ftock, according to the original afleffment ; and
the almoft univerfal profperity of the country, which in moft
places has raifed very much the value of all thefe, has rendered
thofe inequalities of ftill lefs importance now. The rate too
upon each diftrict continuing always the fame, the uncertainty
of this tax, fo far as it might be affefTed upon the ftock of
any individual, has been very much diminifhed, as well as ren-
dered of much lefs confequence. If the greater part of the lands
of England are not rated to the land-tax at half their actual
value, the greater part of the ftock of England is perhaps fcarce
rated at the fiftieth part of its actual value. In fome towns the
whole land-tax is aftefTed upon houfes as in Weftminfter,
where ftock and trade are free. It is otherwife in London.

9

In

THE WEALTH OF NATIONS. 45

In all countries a fevere inquifition into the circumftances of CHAP,
private perfons has been carefully avoided. v^y~-«j

At Hamburgh * every inhabitant is obliged to pay to the
ftate, one-fourth per cent, of all that he poffeffes ; and as the
wealth of the people of Hamburgh confifts principally in ftock,
this tax may be confidered as a tax upon flock. Every man
affeffes himfelf, and, in the prefence of the magiftrate, puts an-
nually into the public coffer a certain fum of money, which he
declares upon oath to be one-fourth per cent, of all that he
poffeffes, but without declaring what it amounts to, or being
liable to any examination upon that fubject. This tax is gene-
rally fuppofed to be paid with great fidelity. In a fmall republic,
where the people have entire confidence in their magiftrates, are
convinced of the neceflity of the tax for the fupport of the ftate,
and believe that it will be faithfully applied to that purpofe, fuch
confcientious and voluntary payment may fometimes be expecled.
It is not peculiar to the people of Hamburgh.

The canton of Underwold in Switzerland is frequently ravaged
by dorms and inundations, and is thereby expofed to extraordi-
nary expences. Upon fuch occafions the people affemble, and
every one is faid to declare with the greateft franknefs what he is
worth, in order to be taxed accordingly. At Zurich the law
orders that in cafes of neceffity every one fliould be taxed in
proportion to his revenue ; the amount of which he is obliged to
declare upon oath. They have no fufpicion, it is faid, that any
of their fellow citizens will deceive them. At Bafil the principal
revenue of the (late arifes from a fmall cuftom upon goods ex-
ported. All the citizens make oath that they will pay every three
months all the taxes impofed by the law. All merchants and
even all inn-keepers are trufted with keeping themfelves the

f* Memoires concernant Tes Droits, tome i. p. 74.

Vol. II. N n n account

THE NATURE AND CAUSES OF

K account of the goods which they fell either within or without the
~j territory. At the end of every three months they fend this account
to the treafurer, with the amount of the tax computed at the bottom
of it. It is not fufpected that the revenue fuffers by this confi-
dence *.

To oblige every citizen to declare publickly upon oath the
amount of his fortune, muft not, it feems, in thofe Swifs cantons,
be reckoned a hardfhip. At Hamburgh it would be reckoned the
greateft. Merchants engaged in the hazardous projects of trade,
all tremble at the thoughts of being obliged at all times to expofe
the real ftate of their circumftances. The ruin of their credit and the
mifcarriage of their projects, they forefee, would too often be the
confequence. A fober and parfimonious people, who are ftrangers
to all fuch projects, do not feel that they have occafion for any
fuch concealment.

In Holland, foon after the exaltation of the late prince of Orange
t© the ftadtholderfhip, a tax of two per cent, or the fiftieth penny,
as. it was called, was impofed upon the whole fubftance of every
citizen. Every citizen aflefled himfelf and paid his tax in the
feme manner as at Hamburgh ; and it was in general fuppofed to
have been paid with great fidelity. The people had at that time the
greateft affection for their new government, which they had juft efta-
bliflied by a general infurrection. The tax was to be paid but once ;
in order to relieve the ftate in a particular exigency. It was, indeed,
too heavy to be permanent. In a country where the market rate of
intereft feldom exceeds three per cent, a tax of two per cent, amounts
to thirteen fhillings and fourpence in the pound upon the higheft:
Beat revenue which is commonly drawn from ftock. It is a tas

* Id, tome i. p. 163, 1 66, 171.

4

which

THE WEALTH OF NATIONS.

which very few people could pay without encroaching more or lefs
upon their capitals. In a particular exigency the people may, from
great public zeal, make a great effort, and give up even a part of
their capital in order to relieve the ftate. But it is impoflihle that
they mould continue to do fo for any confiderable time ; and if
they did, the tax would foon ruin them fo completely as to render
them altogether incapable of fupporting the ftate.

THEtaxupon ftock impofed by the land-tax bill in England, tho*
it is proportioned to the capital, is not intended to diminifh of
take away any part of that capital. It is meant only to be a tax
upon the intereft of money proportioned to that upon the rent of
land ; fo that when the latter is at four millings in the pound, the
former may be at four millings in the pound too. The tax at
Hamburgh, and the ftill more moderate taxes of Underwold and
Zurich, are meant, in the fame manner, to be taxes, not upon
the capital, but upon the intereft or neat revenue of ftock. That
of Holland was meant to be a tax upon the capital.

Taxes upon the Profit of particular Employments.

I N fome countries extraordinary taxes are impofed upon the
profits of ftock fometimes when employed in particular branches

of trade, and fometimes when employed in agriculture.

* •* ' _ • ^^roW^»l vi£.y [ v «*>*i333f? , , jt: rn v-:';o...'.-..-i i .• ,

Of the former kind are in England the tax upon hawkers and
pedlars, that upon hackney coaches and chairs, and that which the
keepers of ale-houfes pay for a licence to retail ale and fpirituous
liquors. During the late war, another tax of the fame kind was
propofed upon fliops. The war having been undertaken, it was
faid, in defence of the trade of the country, the merchants,

N n n a who

THE NATURE AND CAUSES OF

B CMD K who were to profit by it, ought to contribute towards the fuppor^
— v — -> of it.

A tax, however, upon the profits of ftock employed in any parti-
cular branch of trade, can never fall finally upon the dealers (who
muft in all ordinary cafes have their reafonable profit, and, where
the competition is free, cam feldom have more than that profit) but
always upon the confumers, who muft be obliged to pay in the price
of the goods the tax which the dealer advances ; and generally with ,
fome over-charge.

A tax of this kind, when it is proportioned to the trade of the
dealer, is finally paid by the confumer, and occafions no oppreflion
to the dealer. When it is not fo proportioned, but is the fame
upon all dealers, though in this cafe too it is finally paid by the
confumer, yet it favours the great, and occafions fome opprefiion to
the fmall dealer. The tax of five (hillings a week upon every hack-
ney coach, and' that of ten millings a year upon every hackney
chair, fo far as it is advanced by the different keepers of fuch
coaches and chairs, is exactly enough proportioned to the extent of
their refpeftive dealings. It neither favours the great, nor oppreffes
the fmaller dealer. The tax of twenty millings a year for. a licence
to fell ale ; of forty millings for a licence to fell fpirituous liquors ;
and of forty fhillings more for a licence to fell wine, being the fame
upon all retailers, muft necefiarily give fome advantage to the great', .
and occafion fome opprefiion to the fmall dealers. The former
muft find it more eafy to get back the tax in the price of their goods
than the latter. The moderation of the tax, however, renders this
inequality of lefs importance, and it may to many, people appear not
improper to give fome difcouragement to the multiplication of little
ale-houfes. The tax upon fhops, it was intended, lhould . be the
fame upon all mops. It could not well have been otherwife. It-
would

THE WEALTH OF NATIONS.

461

would have been impoffible to proportion with tolerable exactnefs CHAP.

the tax upon a (hop to the extent of the trade carried on in it> y

without fuch an inquifition, as would have been altogether infup*
portable in a free country. If the tax had been confiderable, it
would have opprefTed the fmall, and forced almoft the whole retail
trade into the hands of the great dealers. The competition of the
former being taken away, the latter would have enjoyed a mono-
poly of the trade and like all other monopolifts would foon have
combined to raife their profits much beyond what was neceffary for
the payment of the tax, The final payment, inftead of falling
upon the fhopkeeper, would have fallen upon the confumer, with a
confvderable over-charge to the profit of the fhopkeeper.. For thefe
reafons, the project of a tax upon {hops was laid afide,. and in tha
room of it was fubftituted the fubfidy 1759.

What in France is called the perfbnal taille is, perhaps, tire
moft important tax upon the profits of ftock employed in agricul-
ture that is levied in any part of Europe..

In the diforderly ftate of Europe during the prevalence of the
feudal government, the fovereign was obliged to content himfelf
with taxing thole who were too weak to refufe to pay taxes. The
great lords, though-willing toaffift him upon particular emergencies,
refufed to fubject themfelves to any conftant tax, and he was not
ftrong enough to force them. The occupiers of land, all. over
Europe, were the greater part of them originally bond-men.
Through the greater part of Europe they were gradually eman-
cipated. Some of them acquired the property of landed eilates
which they held by fome bafe or ignoble tenure, fometimes under the
king, and lometimes under fome other great lord, like the antient
copy-holders of England. Others, without acquiring the property,
obtained leafes for terms of years of the lands which they occu-

7 piec*

THE NATURE AND CAUSES OF

pied under their lord, and thus became lefs dependent upon him.
The great lords feem to have beheld the degree of profperity and
independency which this inferior order of men had thus come to
enjoy, with malignant and contemptuous indignation, and wil-
lingly confented that the fovereign mould tax them. In fome coun-
tries this tax was confined to the lands which were held in property
by an ignoble tenure j and, in this cafe, the taille was faid to be
real. The land-tax eftablifhed by the late king of Sardinia, and
the taille in the provinces of Languedoc, Provence, Dauphine, and
Brittany; in the generality of Montauban, and in the elections of
Agen and Condom, as well as in fome other diftricts of France,
are taxes upon lands held in property by an ignoble tenure. In
other countries the tax was laid upon the fuppofed profits of all
thofe who held in farm or leafe lands belonging to other people,
whatever might be the tenure by which the proprietor held them j
and in this cafe the taille was faid to be perfonal. In the greater
part of thofe provinces of France, which are called the Countries
of Elections, the taille is of this kind. The real taille, as it is
impofed only upon a part of the lands of the country, is neceffa-
rily an unequal, but it is not always an arbitrary tax, though it is
fo upon fome occalions. The perfonal taille, as it is intended to be
proportioned to the profits of a certain clafs of people, which can
only be gueffed at, is necelfarily both arbitrary and unequal.

In France the perfonal taille at prefent, (1775,) annually impofed
upon the twenty generalities, called the Countries of Elections,
amounts to 40,107,239 livres, 16 fous *. The proportion in which
this fum is affelfed upon thofe different provinces, varies from year
to year, according to the reports which are made to the king's
council concerning the goodnefs or badnefs of the crop, as well as
other circumftances which may either increafe or diminifh their

refpe&ive

* Memoires .conccmant les Droits, &c tome ii. p. 17.

THE WEALTH OF NATIONS.

refpective abilities to pay. Each generality is divided into a cer- C
tain number of elections, and the proportion in which the fum <«.
impofed upon the whole generality is divided among thofe different
elections, varies likewife from year to year, according to the reports
made to the council concerning their refpective abilities. It feems
impoffible that the council, with the beft intentions, can ever pro-
portion with tolerable exactnefs, either of thofe two afTeflments to
the real abilities of the province or diftrict upon which they are
refpectively laid. Ignorance and mifinformation muft always, more,
or lefs, miflead the moft upright council. The proportion which
each parifh ought to fupport of what is afTeffed upon the whole
election, and that which each individual ought to fupport of what
is aliened upon his particular parifh, are both in the fame manner
varied, from year to year, according as circumftances are fuppofed
to require. Thefe circumftances are judged of, in the one cafe,
by the officers of the election ; in. the other by thofe of the pandit
and both the one and the other are, more or lefs, under the direc-
tion and influence of the intendant. Not only ignorance and mif-
information, but friendfhip, party animofity, and private refent-
ment, are faid frequently to miilead fuch afleflbrs. No man fub-
ject to fuch a tax, it is evident, can ever be certain, before he is
aflefled, of what he is to pay. He cannot even be certain after he
is afTeffed. If any perfon has been taxed who ought to have been
exempted •> or if any perfon has been taxed beyond his proportion,
though both muft pay in the mean time, yet if they complain and:
make good their complaints, the whole parifh is reimpofed next year,
in order to reimburfe them. If any of the contributors become bank-
rupt or infolvent, the collector is obliged to advance his tax, and
the whole parifh is reimpofed- next year in order to reimburfe the
collector. If the collector himfelf fhould become bankrupt, the
parifh which elects him muft anfwer for his conduct to the receiver-
general of the election. But, as it might.be. troublefome for the

receiver

464 THE NATURE AND CAUSES OV

receiver to profecute the whole parifh, he takes at his choice five or
fix of the richeft contributors, and obliges them to make good
what had been loft by the infolvency of the collector. The parifh
is afterwards reimpofed in order to reimburfe thofe five or fix. Such
reimpofitions are always over and above the tailie of the particular
year in which they are laid on.

When a tax is impofed upon the profits of ftock in a particular
branch of trade, the traders are all careful to bring no more goods
to market than what they can fell at a price fufficient to reimburfe
them for advancing the tax. Some of them withdraw a part of
their flocks from the trade, and the market is more fparingly fup-
plied than before. The price of the goods rifes, and the final pay-
ment of the tax falls upon the confumer. But when a tax is im-
pofed upon the profits of ftock employed in agriculture, it is not
the intereft of the farmers to withdraw any part of their ftock
from that employment. Each farmer occupies a certain quantity
of land, for which he pays rent. For the proper cultivation of
this land a certain quantity of ftock is neceffary ; and by withdraw-
ing any part of this neceffary quantity, the farmer is not likely to
.be more able to pay either the rent or the tax. In order to pay
the tax, it can never be his intereft to diminifh the quantity of his
produce, nor confequently to fupply the market more fparingly than
.before. The tax, therefore, will never enable him to raife the price
.of his produce, nor to reimburfe himfelf by throwing the final
payment upon the confumer. The farmer, however, muft have
his reafonable profit as well as every other dealer, otherwife he muft
give up the trade. After the impofitioil of a tax of this kind, he
can get this reafonable profit only by paying lefs rent to the land-
lord. The more he is obliged to pay in the way of tax, the lefs he
-can afford to pay in the way of rent. A tax of this kind impofed
.during the currency of a leafe may, no doubt, diftrefs or ruin the

farmer.

BOOK
V.

THE WEALTH OF NATIONS. 465

farmer. Upon the renewal of the leafe it muft always fall upon c H A P.
the landlord. v^— y^oi

In the countries where the perfonal taille takes place, the farmer
is commonly affefTed in proportion to the ftock which he appears
to employ in cultivation. He is, upon this account, frequently
afraid to have a good team of horfes or oxen, but endeavours to
cultivate with the meaneft and moft wretched inftruments of huf-
bandry that he can. Such is his diftruft in the juftice of his alfef-
fbrs, that he counterfeits poverty, and wifhes to appear fcarce able to
pay any thing for fear of being obliged to pay too much. By this
miferable policy he does not, perhaps, always confult his own inte-
reft in the moft effectual manner ; and he probably lofes more by /
the diminution of his produce than he faves by that of his tax«
Though, in confequence of this wretched cultivation the market is,
no doubt, fomewhat worfe fupplied ; yet the fmall rife of pric«
which this may occafion, as it is not likely even to indemnify the
farmer for the diminution of his produce, it is ftill lefs likely to
enable him to pay more rent to the landlord. The public, the far-
mer, the landlord, all fuffer more or lefs by this degraded cultiva-
tion. That the perfonal taille tends, in many different ways, to
difcourage cultivation, and confequently to dry up the principal
fource of the wealth of every great country, I have already had
occafion to obferve in the third book of this inquiry.

What are called poll-taxes in the (buthern provinces of North
America, and in the Weft India iflands, annual taxes of fo much
a head upon every negro, are properly taxes upon the profits of a
certain fpecies of ftdefc employed in agriculture. As the planters
are, the greater part of them, both farmers and landlords, the
final payment of the tax falls upon them in their quality of land-
lords without any retribution.

Vol. II. Q o © Taxes

THE NATURE AND CAUSES OF

K Taxes of fo much a head upon the bondmen employed in cul-
*i *tivation, feem antiently to have been common all over Europe.
There fubfifts at prefent a tax of this kind in the empire of Ruffia.
It is probably upon this account that poll-taxes of all hinds have
often been reprefented as badges of flavery. Every tax, however,
is to the peifon who pays it a badge, not of flavery, but of liberty.
It denotes that he is fubject to government, indeed, but that, as, he
has fome property, he cannot himfelf be the property of a matter.
A poll-tax upon flaves is altogether different from a poll-tax upon
freemen. The latter is paid by the perfons upon whom it is iui-
poled j the former by a different fet of perfons. The latter is either
altogether arbitrary or altogether unequal, and in moft cafes is both
the one and the other; the former, though in fome refpecls un-
equal, different flaves being of different values, is in no refpeel: arbi-
trary. Every mailer who knows the number of his own flaves,
knows exactly what he has to pay. Thofe different taxes, however,
being called by the fame name, have been confideied as of the
fame nature.

Taxes upon the profits of flock in particular employments can
never affect the interefl: of money. Nobody will lend his money
for lefs interefl to thofe who exercile the taxed, than to thofe who
exercife the untaxed employments. Taxes upon the revenue arifing
from flock in all employments, where the government attempts to
levy them with any degree of exactnefs, will, in many cafes, fall
upon the interefl of money. The Vingtieme or twentieth-penny in
France, is a tax of the fame kind with what is called the land-tax
in England, and is affeffed, in the fame manner, upon the revenue
arifing from land, houfes, and flock. Solar as it affects fleck, it is
affeffed, though not with great rigour, yet wl:h much more exactnefs
than that part of the land-tax of England which is impofed upon
the fame fund. It, in many cafes, fails altogether upon the inte-

8 ' reft

THE WEALTH OF NATIONS

reft of money. Money is frequently funk in France upon what C HA P.
are called Contracts for the conftitution of a rent, that is, perpe- i— y-~- t
tual annuities redeemable at any time by the debtor upon repay-
ment of the fum originally advanced, but of which this redemption
id not exigible by the creditor except in particular cafes. The ving-
tieme feems not to have raifed the rate of thofe annuities, though
it is exactly levied upon them all..

Appendix to Articles I. and II.

Taxes upon the capital Value of La?idt Houfes, and Stock.
riled gi pi&'i horn nLhftz i$w-if&.jidipmil& ip. wm&ifivt '*i'ubt>&rtK
WHILE property remains in the pofleflion of the fame perfon,
whatever permanent taxes may have been impofed upon it, they
<have never been intended to diminim or take away any part of its
capital value, but only fome part of the revenue arifmg from it.
But when property changes hands, when it is tranfmitted either
from the dead to the living, or from the living to the living, fuch
taxes have frequently been impofed upon it as neceflarily take away
fome part of its capital value.

The transference of all forts of property from the dead to the
living, and that of immoveable property, of land and houfes, from
the living to the living, are transactions which are in their nature
either public and notorious, or fuch as cannot be long concealed.
Such tranfactions, therefore, may be taxed directly. The trans-
ference of ftock or immoveable property from the living to the
living by the lending of money, is frequently a fecret transaction?
and may always be made fo. It cannot ealily, therefore, be taxed
directly. It has been taxed indirectly in two different ways firft,
by requiring that the deed, containing the obligation to repay,
fliould be written upon paper or parchment, which had paid a

O o o 2 certain

THE NATURE AND CAUSES OP

K certain ftamp-duty, otherwife not to be valid ; fecondly, by re-
•j quiring, under the like penalty of invalidity, that it fhould be
recorded either in a public or fecret regifter, and by impofing cer-
tain duties upon fuch regiftration. Stamp-duties and duties of
regiftration have frequently been impofed likewife upon the deeds
transferring property of all kinds from the dead to the living, and
upon thofe transferring immoveable property from the living to the
living, tranfaclions which might eafily have been taxed dire&ly.

The Vicefima Hereditatum, the twentieth penny of inheritances,
impofed by Auguftus upon the antient Romans, was a tax upon
the transference of property from the dead to the living. Dion
Caffius-j-, the author. who writes concerning it the lead indiftinctly,
fays, that it was impofed upon all fucceffions, legacies and dona-
tions, in cafe of death, except upon thofe to the neareft relations,
and to the poor.

Of the fame kind is the Dutch tax upon fucceffions *. Colla-
teral fucceffions are taxed, according to the degree of relation, from
five to thirty per cent, upon the whole value of the fucceffion.
Teftamentary donations or legacies to collaterals, are fubject to the
like duties. Thofe from hufband to wife, or from wife to huf-
band, to the fiftieth penny. The LuCluofa Hereditas, the mourn-
ful fucceffion of afcendents to dependents, to the twentieth penny
only. Direct fucceffions, or thofe of dependents to afcendents,
pay no tax. The death of a father, to fuch of his children as live
in the fame houfe with him, is feldom attended with any increafe,
and frequently with a confiderabk diminution of revenue -3 by the
lofs of his induflry, of his office, or of fome life-rent eftate, of
which he may have been in pofleffion. That tax would be cruel and
oppreffive which aggravated their lofs by taking from them any part

t Lib. 55. See alfo Burman dc pep. Rom. cap. xi. and Bouchaud ds-

1' jmpot du vingtieme fur Ics fucceJiions, .,; ifi ziix

* Mcmoires concernant Ies Droits, &c. torn. i. p. 225,.

THE WEALTH OF NATIONS.

of his fuccefllon. It may, however, fometimes be otherwife with C
thole children who, in the language of the Roman law, are laid u.
to be emancipated ; in that of the Scotch law, to be foris-fami-
liated; that is, who have received their portion, have got fami-
lies of their own, and are fuppoited by funds feparate and inde-
pendent of thofe of their facher. Whatever part of his fuccef-
fion might come to fuch children, would be a real addition to
their fortune, and might, therefore, perhaps, without, more incon-
veniency than what attends all duties of this kind, be liable to fome
tax.

The cafualties of the feudal law were taxes upon the trans-
ference of land, both from the dead to the living, and from the
living to the living. In antient times they conftituted in every
part of Europe one of the principal branches of the revenue of
the crown.

The heir of every immediate vaffal of the crowrr paid a cer-
tain duty, generally a year's rent, upon receiving the inveftiture of
the eftate. If the heir was a minor, the whole rents of the
eilate, during the continuance of the minority., devolved to the
Superior without any other charge, befides the maintenance of
the minor, and the payment of the widow's dower, when there hap-
pened to be a dowager, upon the land. When the minor came to be
of age, another tax, called Relief, was ftill due to the fuperior, which
generally amounted likewife to a year's rent. A long minorlf^
which in the prefent times fo frequently difburdens a great eftate of
all its incumbrances, and reftores the family to their antient fplendor,
could in thofe times have no fuch effect. The wafte, and not the dill
incumbrance of the eftate, was the common effect of a long minority.

By the feudal law the vaflal could not alienate without the
confent of his fuperior, who generally extorted a fine or com—
pofitiou for granting it. This fine, which was at firft' arbitrary,
came in many countries to be regulated at a certain portion

6; of

THE NATURE AND CAUSES OF

of the price of the land. In fome countries, where the greater
part of the other feudal cuftoms have gone into difufe, this tax
upon the alienation of land {till continues to make a confiderable
branch of the revenue of the fovereign. In the canton of Berne
it is fo high as a fixth part of the price of all noble fiefs ;
and a tenth part of that of all ignoble ones *. In the canton of
Lucerne the tax upon the fale of lands is not univerfal, and takes
place only in certain diftridts. But if any perfon fells his land;
in order to remove out of the territory, he pays ten per cent,
upon the whole price of the fale -f. Taxes of the fame kind
upon the fale either of all lands, or of lands held by certain
tenures, take place in many other countries, and make a more
or lefs confiderable branch of the revenue of the fovereign.

Such tranfacYions may be taxed indirecliy by means either
of ftamp- duties, or of duties upon regiftration ; and thofe duties
either may or may not be proportioned to the value of the fubjecf.
which is transferred.

In Great Britain the ftamp-duties are higher or lower, not fo
much according to the value of the property transferred, (an
eighteen penny or half crown ftamp being fufficient upon a bond
for the largeft fum of money) as according to the nature of the
deed. 1 he higheft do not exceed fix pounds upon every meet of
paper, or fkin of parchment ; and thefe high duties fall chiefly
upon grants from the crown, and upon certain law proceedings ;
without any regard to the value of the fubjecl. There are in
Great Britain no duties on the regiftration of deeds or writings,
except the fees of the officers, who keep the regifter ; and thefe
are feldom more than a reafonable recompence for their labour.
The crown derives no revenue from them.

* Memoires cor.cenisnt ks D/oits, kc. torn. i. p. 154. f ^. P« '57-

In

THE WEALTH OF NATIONS.

In Holland * there are both ftamp-duties and duties upon regi- q
ftration ; which in fome cafes are, and in fome are not proportioned
to the value of the property transferred. All teftaments rauft be writ-
ten upon ftampt-paper, of which the price is proportioned to the
property difpofed of, fo that there are (lamps which coft from three-
pence, or three ftivers a meet, to three hundred florins, equal to about
twenty-feven pound ten millings of our money. If the ftamp is
of an inferior price to what the teftator ought to have made ufe
of, his fucceffion is connfcated. This is over and above all
their other taxes on fucceffion. Except bills of exchange, and
fome other mercantile bills, all other deeds, bonds and contracts,
are fubject to a ftamp-duty. This duty, however, does . not rife
in proportion to the value of the fubject. All fales of. land, and
of houfes, and all mortgages upon either, mufl be regiftered, and,
upon regiftration, pay a duty to the flare of two and a half per
cent, upon the amount of the price or the mortgage. This
duty is extended to the fale of all mips and veflels of more than
two tons burthen, whether decked or undecked. Thefe, it feems?
are conftdered as a fort of houfes upon the water. The fale of
moveables, -when it is ordered by a court of juftice, is fubject to
the like duty of two and a half per cent.

In France there are both ftamp-duties and duties upon regi-
ftration. The former are confidered as a branch of the aides or
excife, and in the provinces where thofe duties take place, are
levied by the excife officers. The latter are confidered as a branch
of the domaine of the crown, and are levied by a different fefe
of officers.

Those modes of taxation, by ftamp-duties and by duties
upon regiftration, are of very modern invention. In the courfe
of little more than a century, however, ftamp-duties have, in
Europe, become almoft univerfal, and duties upon regiftration
* Id. torn. i. p. 223, 224, 225.

extremely-

THE NATURE AND CAUSES OF

K extremely common. There is no art which one government fooner
»j learns of another than that of draining money from the pockets
of the people.

Taxes upon the transference of property from the dead to
the living, fall finally as well as immediately upon the perfon to
whom the property is transferred. Taxes upon the fale of land
fall altogether upon the feller. The feller is almoft always under
the neceffity of felling, and mult, therefore, take fuch a price
as he can get. The buyer is fcarce ever under the neceflity of
buying, and will, therefore, give only fuch a price as he likes.
He confiders what the land will coft him in tax and price toge-
ther. The more he is obliged to pay in the way of tax, the
lefs he will be difpofed to give in the way of price. Such taxes,
therefore, fall almoft always upon a neceflitous perfon, and muft,
therefore, be frequently very cruel and oppreflive. Taxes upon
the fale of new-built houfes, where the building is fold without
the ground, fall generally upon the buyer, becaufe the builder
muft generally have his profit ; otherwife he muft give up the
trade. If he advances the tax, therefore, the buyer muft gene-
rally repay it to him. Taxes upon the fale of old houfes, for the
fame reafon as thofe upon the fale of land, fall generally upon
the feller ; whom in moft cafes either conveniency or necefiity
obliges to fell. The number of new built houfes that are annu-
ally brought to market, is more or lefs regulated by the demand.
Unlefs the demand is fuch as to afford the builder his profit, after
paying all expences, he will build no more houfes. The number
of old houfes which happen at any time to come to market is
regulated by accidents of which the greater part have no relation
to the demand. Two or three great bankruptcies in a mercan-
tile town, will bring many houfes to fale, which muft be fold
for what can be got for them. Taxes upon the fale of ground-
rents fall altogether upon the feller for the fame reafon as thofe

upon

THE WEALTH OF NATIONS.

upon the fale of land. Stamp duties, and duties upon the rern- C
fixation of bonds and contracts for borrowed money, fall alto-
gether upon the borrower, and, in fact, are always paid by him.
Duties of the fame kind upon law proceedings fall upon the
fuitors. They reduce to both the capital value of the fubject in
difpute. The more it cofts to acquire any property, the lefs muft
be the value of it when acquired.

All taxes upon the transference of property of every kind, fo
far as they diminim the capital value of that property, tend to
diminifh the funds deftined for the maintenance of productive
labour. They are all more or lefs unthrifty taxes that increafe
the revenue of the fovereign, which feldom maintains any but
unproductive labourers, at the expence of the capital of the
people which maintains none but productive.

Such taxes, even when they are proportioned to the value of
the property transferred, are ftill unequal ; the frequency of tranf-
ference not being always equal in property of equal value. When
they are not proportioned to this value, which is the cafe with
the greater part of the ftamp- duties, and duties of regiftration,
they are ftill more fo. They are in no refpect arbitrary, but are
or may be in all cafes perfectly clear and certain. Though they
fometimes fall upon the perfon who is not very able to payj the
time of payment is in moft cafes fufficiently convenient for him.
When the payment becomes due, he muft in moft cafes have the
money to pay. They are levied at very little expence, and in
general fubject the contributors to no other inconveniency befides
always the unavoidable one of paying the tax.

In France the ftamp -duties are not much complained of. Thole
of regiftration, which they call the Controle, are. They give
occaflon, it is pretended, to much extortion in the officers of the

Vol. II. P p p farmers

474

THE NATURE AND CAUSES OF

B OO K farmers general who collect: the tax, which is in a great meafure
Wv^— ) arbitrary and uncertain. In the greater part of the libels which
have been written againft the prefent fyftem of finances in France,
the abufes of the controle make a principal article. Uncertainty,
however, does not feem to be neceflarily inherent in the nature of
fuch taxes. If the popular complaints are well founded, the
abufe muft arife, not fo much from the nature of the tax, as
from the want of precifion and diftinctnefs in the words of the
edicts or laws which impofe it.

The regiftration of mortgages> and in general of all rights
upon immoveable property, as it gives great fecurity both to
creditors and purchafers, is extremely advantageous to the pub-
lic. That of the greater part of deeds of other kinds is frequently
inconvenient and even dangerous to individuals, without any
advantage to the public. All regifters which, it is acknow-
ledged, ought to be kept fecret, ought certainly never to exift.
The credit of individuals ought certainly never to depend upon
fo very (lender a fecurity as the probity and religion of the inferior
officers of revenue. But where the fees of regiftration have been
made a fource of revenue to the fovereign, regifter offices have
commonly been multiplied without end, both for the deeds which
ought to be regiftered, and for thofe which ought not. In France
there are feveral different forts of fecret regifters. This abufe,
though not perhaps a neceffary, it muft be acknowledged, is a very
natural effect of fuch taxes.

Such ftamp-duties as thofe in England upon cards and dice,
upon news- papers and periodical pamphlets, &c. are properly
taxes upon confumption ; the final payment falls upon the per-
fons who ufe or confume fuch commodities. Such ftamp-duties as
thofe upon licences to retail ale, wine and fpirituous liquors, though
intended perhaps to fall upon the profits of the retailers, are
a likewife

THE WEALTH OF NATIONS.

475

likewife finally paid by the confumers of thofe liquors. Such CHAP,
taxes, though called by the fame name, and levied by the fame <^-v— — '
officers and in the fame manner with the ftamp-duties above men-
tioned upon the transference of property, are however of a quite
different nature, and fall upon quite different funds.

8£t- <xb* 3/it 0ii/i$n srfi moil dovm o'-r i rt 'Stim ityrni : oUick

Article III.

■

Taxes upon the Wages of Labour.

THE wages of the inferior claffes of workmen, I have endea-
voured to mow in the firft book, are every where neceflarily
regulated by two different circumftances ; the demand for labour,
and the ordinary or average price of provifions. The demand for
labour, according as it happens to be either increafing, ftationary,
or declining j or to require an increafing, ftationary, or declining
population, regulates the fubfiftence of the labourer, and determines
in what degree it mail be, either liberal, moderate, or fcanty. The
ordinary or average price of provifions determines the quantity of
money which muft be paid to the workman in order to enable him,
one year with another, to purchafe this liberal, moderate, or
fcanty fubfiftence. While the demand for labour and the price of
provifions, therefore, remain the fame, a direct tax upon the
wages of labour can have no other effect than to raife them fome-
what higher than the tax. Let us fuppofe, for example, that in
a particular place the demand for labour and the price of provi-
fions were fuch as to render ten fhillings a week the ordinary
wages of labour ; and that a tax of one-fifth, or four fhillings in
the pound, was impofed upon wages. If the demand for labour
and the price of provifions remained the fame, it would ftill be
necefTary that the labourer fhould in that place earn fuch a fubfift-
ence as could be bought only for ten fhillings a week, or that after

P p p 2 paying

476 THE NATURE AND CAUSES OF

BOOK paying the tax he mould: have ten millings a week free wages. But
V — J in order to leave him fuch free wages after paying fuch a tax, the
price of iabour muft in that place foon rife, not to twelve fhillings
a week only, but to twelve and fixpencej that is, in order to
enable him to pay a tax of one-fifth, his wages muft necefiarily
foon rife, not one-fifth part only, but one-fourth. Whatever
was the proportion of the tax, the wages of labour muft in all
cafes rife, not only in that proportion, but in a higher proportion.
If the tax, for example, was one-tenth, the wages of labour muft
neceflarily foon rife, not one-tenth part only, but one- eighth,

A direct tax upon the wages of labour, therefore, though
the labourer might perhaps pay it out of his hand, could not pro-
perly be faid to be even advanced by him ; at leaft if the demand
for labour and the average price of provifions remained the fame
after the tax as before it. In all fuch cafes, not only the tax, but
fomething more than the tax, would in reality be advanced by the
perfon who immediately employed him. The final payment
would in different cafes fall upon different perfons. The rife
which fuch a tax might occalion in the wages of manufacturing
labour would be advanced by the mafter manufacturer, who would
both be entitled and obliged to charge it, with a profit, upon the
price of his goods. The final payment of this rife of wages there-
fore, together with the additional profit of the mafter manufac-
turer, would fall upon the confumer. The rife which, fuch a tax
might occafibn in the wages of country labour would be advanced
by the farmer, who in order to maintain the fame number of
labourers as before would be obliged to. employ a greater capital.
In order to get back this greater capital, together with the ordinary
profits of flock, it would be neceffary that he mould retain a larger
portion, or what comes to the fame thing, the price of a larger
portion, of the produce of the land, and confequently that he

6 fhould.

THE WEALTH OF NATIONS.

ihould pay lefs rent to the landlord. The final payment of this
i i!e of wages, therefore, would in this cafe fall upon the landlord,
together with the additional profit of the farmer who had advanced
it. In all cafes a direct tax upon the wages of labour mud, in
the long run, occafion both a greater reduction in the rent of land,
and a greater rife in the price of manufactured goods, than would
have followed from the proper afTeffrnent of a fum equal to the
produce of the tax, partly upon the rent of land, and partly upon
ccnfumable commodities.

If direct taxes upon the wages of labour have not always occa-
fioned a proportionable rife in thofe wages, it is becaufe they have
generally occafioned a confiderable fall in the demand for labour.
The declenfion of induftry, the decreafe of employment for the
poor, the diminution of the annual produce of the land and labour
of the country, have generally been the effects of fuch taxes. In
confequence of them, however, the price of labour muft al-
ways be higher than it otherwife would have been in the actual
ftate of the demand : and this enhancement of price, together with
the profit of thofe who advance it,, muft always be finally paid
by. the landlords and confumers.

^rf5 fiocm lflo*rq z rffiw .ii DSiEffo 01 basildo bnfc baljilna sd rfJod
A tax upon the wages of country labour does notraife the price

of the rude produce of land ; for the fame reafon that a- tax upon

the farmers profit does not raife that price.

Absurd and deflrucHve as fuch taxes are, however, they take
place in many countries. In France that part of the taille which
is charged upon the induftry of workmen and day-labourers m
country village?, is properly a tax of this kind. Their wages are
computed according to the common rate of the diftrict in which
they refide, and that they may be as little liable as pofhble to any
over-charge, their yearly gains are eft! mated at no more than two

hundred:

THE

NATURE AND

CAUSES

OF

B O O K hundred working days in the year *. The tax of each individual
v*— v-—-' is varied from year to year according to different circumftances, of
which the collector or the commiffary, whom the intendant appoints
to aflift him, are the judges. In Bohemia, in confequence of the
alteration in the fyftem of finances which was begun in 1748, a
very heavy tax is impofed upon the induftry of artificers. They
are divided into four clafles. The higher!: clafs pay a hundred
florins a year; which, at two and twenty-pence halfpenny a florin,
amounts topi. 7 s. 6 do The fecond clafs are taxed at feventy;
the third at fifty ; and the fourth, comprehending artificers in vil-
lages and the loweft clafs of thofe in towns, at twenty-five
florins -f*.

The recompence of ingenious artifts and of men of liberal pro-
feffions, I have endeavoured to fhow in the firft book, necellarily
keeps a certain proportion to the emoluments of inferior trades. A
tax upon this recompence, therefore, could have no other effect,
than to raife it fomewhat higher than in proportion to the tax. If
it did not rife in this manner, the ingenious arts and the liberal
profeflions, being no longer upon a level with other trades,
would be fo much deferted that they would foon return to that
level.

The emoluments of offices are not, like thofe of trades and
profeflions, regulated by the free competition of the market, and do
not, therefore, always bear a juft proportion to what the nature
of the employment requires. They are, perhaps in moft coun-
tries, higher than it requires ; the perfons who have the admini-
ftration of government being generally difpofed to reward both
themfelves and their immediate dependents rather more than enough.
The emoluments of offices, therefore, can in moft cafes very well

• Id. torn. ii. p. 108. f Id. torn. iii. p. 87.

bear

THE WEALTH OF NATIONS.

47?

bear to be taxed. The perfons, befides, who enjoy public offices, CHAP,
efpecially the more lucrative, are in all countries the objects of ge- v— .-v~-j.
neral envy ; and a tax upon their emoluments, even though it
mould be fomewhat higher than upon any other fort of revenue, is
always a very popular tax. In England, for example, when by the
land-tax every other fort of revenue was fuppofed to be afiefled at
four millings in the pound, it was very popular to lay a real tax
of five millings in the pound upon the falaries of offices which;
exceeded a hundred pounds a year; thofe of the judges and a few
others lefs obnoxious to envy excepted. There are in England no
other direct taxes upon the wages of labour.

Article IV".

Taxes which, it is intended, Jhould fall indifferently upon every
different Species of Revenue.

THE taxes which, it is intended, mould fall indifferently upon
every different fpeeies of revenue, are capitation taxes, and
taxes upon confumable commodities. Thefe muft be paid indif-
ferently from whatever revenue the contributors may poffefs j from
the rent of their land, from the • profits of their flock, or from
the wages of their labour.

Capitation Taxes*

CAPITATION taxes, if it is attempted to proportion them to
die fortune or revenue of each contributor, become altogether arbi-
trary. The flate of a man's fortune varies from day to day, and-
without an inquifition more intolerable than any tax, and renewed
at leaft once every year, can only be gueffed at. His afTefTment,
therefore, mult in moft cafes depend upon the good or bad hu^
mour of his afTehors, and muft, therefore, be altogether arbitrary
and uncertain.

Capitation; ;

THE NATURE AND CAUSES OF

Capitation taxes, if they are proportioned, not to the fup-
pofed fortune, but to the rank of each contributor, become alto-
gether unequal ; the degrees of fortune being frequently unequal in
the fame degree of rank.

Such taxes, therefore, if it is attempted to render them equal,
become altogether arbitrary and uncertain ; and if it is attempted
to render them certain and not arbitrary, became altogether un-
equal. Let the tax be light cr heavy, uncertainty is always a
great grievance. In a light tax a confiderable degree of inequality
may be fupported; in a heavy one it is altogether intolerable.

In the different poll-taxes which took place in England, during
the reign of William III. the contributors were, the greater part
of them, aliened according to the degree of their rank; as dukes,
marquifTes, earls, vifcounts, barons, efquires, gentlemen, the
eldeft and younger! fons of peers, &c. All fhopkeepers and tradef-
men worth more than three hundred pounds, that is, the better
fort of them, were fubjecl: to the fame affeffmentj how great fo-
ever might be the difference in their fortunes. Their rank was
more confidered than their fortune. Several of tliofe who in the
firft poll-tax were rated according to their fuppofed fortune, were
afterwards rated according to their rank. Sergeants, attornies,
and proctors at law, who in the firft poll-tax were affeffed at three
fhillings in the pound of their fuppofed income, were afterwards
affeffed as gentlemen. In the affeffment of a tax, which was not
very heavy, a confiderable degree of inequality had been found lefs
infupportable than any degree of uncertainty.
b nj_ii il'Sflu qJ- •baiawQ^rai.aavK. _ «3f%!%ng8 ftohfj<¥W&$8te -ftmi::

. In the capitation which has been levied in Prance without any
interruption fince the beginning of the prefent century, the highefl:
orders of people are rated according to their rank by an invariable

tariff;

THE WEALTH OF NATIONS.

tarif; the lower orders of people, according to what is fuppofed
to be their fortune, by an affeffment which varies from year to year.
The officers of the king's court, the judges and other officers in the
fuperior courts of juftice, the officers of the troops, 6cc. are af-
feffed in the firfl: manner. The inferior ranks of people in the
provinces ate affeffed in the fecond. In France the great eafily
fubmit to a confiderable degree of inequality in a tax which, fo
far as it affects them, is not a very lueavy one ; but could not
brook the arbitrary affeffment of an intendant. The inferior ranks
of people rauft, in that country, fuffer patiently the ufage which
their fuperiors think proper to give them.

In England the different poll-taxes never produced the fum
which had been expected from them, or which, it was fuppofed,
they might have produced, had they been exactly -levied. In
France the capitation always produces the fum expected from it.
The mild government of England, when it affeffed the different
ranks of people to the poll-tax, contented itfelf with what that
affeffment happened to produces and required no compenfation far
the lofs which the irate might fuftain either by thofe who could
not pay, or by thofe who would not pay, (for there were many
fuch), and who, by the indulgent execution of the law, were not.
forced to pay. The more fevere government of France affeffcs
upon each generality a certain fum, which the intendant muft find
as he can. If any province complains of being affeffed too high, it
may, in the alfeffment of next year, obtain an abatement propor-
tioned to the over-charge of the year before : But it muff pay in
the meantime. The intendant, in order to be fure of fiiKlingiJ&e
fum affeffed upon his generality, was impowered to affefs it in a
larger fum, that the failure or inability of fome of the contributors
might be compensated by the over-charge of the reft; and till
1765, the fixation of this furplus affeffment, was left altogether

Vol. II. Q^q q to

THE NATURE AND CAUSES OF

to his difcretion. In that year indeed the council afiumed this
power to itfelf. In the capitation of the provinces, it is obferved
by the perfectly-well informed author of the Memoirs upon the
impofitions in France, the portion which falls upon the nobility,
and upon thofe whofe privileges exempt them from the taille, is
the leaft confiderable. The largeft falls upon thofe fabject to the
taille, who are afleffed to the capitation at fo much a pound of what
they pay to that other tax..

Capitation taxes, fo far as they are levied upon the lower
ranks of people, are direct, taxes upon the wages of labour, and ,
are attended with all the inconveniencies of fuch taxes.

Capitation taxes are levied at little expencej and, where-
they are rigoroufly exacted, afford a very fure revenue to the ftate.
It is upon this account that in countries where the eafe, comfort,
and fecurity of the inferior ranks of people are little attended to,
capitation taxes are very common. It is in general, however,
but a fmall part of the public revenue, which, in a great empire,
has ever been drawn from fuch taxes ; and the greateft fum which
they have ever afforded, might always have been found in fome

Other way much more convenient to the people.

83x& f&tfdhlbf ;^Jttfc1 ^fl^^--i^^H^t^.d^i^ 09 ion nam oi isib'&n
■sii" zttnitsttipi jibyitiib ^ffK'-' Juorfjiw jfloilduq sradJ gniisaqqe

Taxes upon confumabk Commodities*
o'DWfBti hMAvj; zenith afcttfl .vlfto son Ibnada'iqrnoa I ^iohi$di
THE impofTibility of taxing the people, in proportion to their
revenue, by any capitation, feems to have given occafion to the inven-
tion of taxes upon confumabk commodities. The ftate not knowing
how to tax directly and proportionably the revenue of its fubjects,
endeavours to tax it indirectly by taxing their expence, which, it
is fuppofed, will in mofl cafes be nearly in proportion to their

revenue.

THE WEALTH OF NATIONS.

483

revenue. Their expence is taxed by taxing the con fumable com- CHAP,
naodities upon which it is laid out. c-^y

Consumable commodities are either necefTaries or luxuries.

By necefTaries I underftand, not only the commodities which
are indifpenfibly neceffary for the fupport of life, but whatever
the cuftom of the country renders it indecent for creditable people,
even of the loweft order, to be without. A linen fhirt, for ex-
ample, is, ftrictly fpeaking, not a neceffary of life. The Greeks
and Romans lived, I fuppofe, very comfortably, though they had
no linen. But in the prefent times, through the greater part of
Europe, a creditable day-labourer would be afhamed to appear in
public without a linen fhirt, the want of which would be fuppofed
to denote that difgraceful degree of poverty, which, it is prefumed,
no body can well fall into without extreme bad conduct. Cuftom,
in the fame manner, has rendered leather (hoes a neceffary of life
in England. The pooreft creditable perfon of either fex would be
afhamed to appear in public without them. In Scotland, cuftom
has rendered them a neceffary of life to the loweft order of men ;
but not to the fame order of women, who may, without any
difcredit, walk about bare-footed. In France, they are necefTaries
neither to men nor to women ; the loweft rank of both fexes
appearing there publicly, without any difcredit, fometimes in
wooden fhoes, and fometimes bare-footed. Under necefTaries,
therefore, I comprehend, not only thofe things which nature,
but thofe things which the eftablilhed rules of decency have ren-
dered neceffary to the loweft rank of people. All other things,
I call luxuries without meaning by this appellation, to throw the
imalleft degree of reproach upon the temperate ufe of them. Beer
and ale, for example, in Great Britain, and wine, even in the
wine countries, I call luxuries. A man of any rank may, without
;DDfl3vai Q^q q 2 any

4$4

THE NATURE AND CAUSES OF

B CK) K any reproach, abftain totally from tafting fuch liquors. Nature
v — — ' does not render them neceffary for the fupport of life; and euftom
no where renders it indecent to live without them.

As the wages of labour are every where regulated partly by the
demand for it, and partly by the average price of the neceffary
articles of fubfiftence; whatever raifes this average price muft lie-
ceffarily raife thofe wages, fo that the labourer may ftill be able
to purchafe that quantity of thofe necefTary articles which the ftate
of the demand for labour, whether increafing, ftationary, or
declining, requires that he fhould have -j-. A tax upon thofe ar-
ticles rieceffarily raifes their price fomewhat higher than the
amount of the tax, becaufe the dealer, who advances the tax*
muft generally get it back with a profit. Such a tax muft, there-
fore, occafton a rife in the wages of labour proportionable to this
rife of price.

It is thus that a tax upon the neceffaries of life, operates ex-
actly in the fame manner as a direct tax upon the wages of labour.
The labourer, though he may pay it out of his hand ; cannot, for
any confiderable time at leaft, be properly faid even to advance it.
It muft always in the long-run be advanced to him by his imme-
diate employer in the advanced rate of his wages. His employer,
if he is a manufacturer, will charge upon the price of his goods
this rife of wages, together with a profit ; fo that the final payment
of the tax, together with this over-charge, will fall upon the
confumer. If his employer is a farmer, the final payment, to-
gether with a like over-charge, will fall upon the rent of the
landlord.

~m3aj s^Iubru ol si/miaoja trlgim ynabionb bni> vlulollLb 3£p brt£

It is othei wife with taxes upon what I call luxuries ; even upon
thofe of the poor. The rife in the price of the taxed commodities.

t See Book I. Cap. 8.

4 will

THE

WEALTH OF NATIONS.

will not necenarily occafion any rife in the wages of labour. A C H A P.
tax upon tobacco, for example, though a luxury of the poor as v — A- »
well as of the rich, will not raife wages. Though it is taxed in
England at three times, and in France at fifteen times its original
price, thofe high duties feem to have no effect upon the wages of
labour. The fame thing may be laid of the taxes upon tea and
lugarj which in England and Holland have become luxuries of
the loweft ranks of people ; and of thofe upon chocolate, which in
Spain is faid to have become fo. The different taxes which in
Great Britain have in the courfe of the prefent century been im-
pofed upon fpirituous liquors, are not fuppofed to have had any
effect upon the wages of labour. The rife in the price of porter,,
cccafioned by an additional tax of three fhillings upon the barrel,
of flrong beer, has not raifed the wages of common labour in:
London. Thefe were about eighteen-pence and twenty-pence a
day before the tax, and they are not more now.

The high price of fuch commodities does not neceflarily di-
minifh the ability of the inferior ranks of people to bring up
families. Upon the fober and induftrious poor, taxes upon fuch
commodities act as fumptuary laws, and difpofe them either tc*
moderate, or to refrain altogether from the ufe of fuperfluities
which they can no longer eafily afford. Their ability to bring up
families, in confequence of this forced frugality, inftead of being
diminifhed, is frequently,, perhaps, increafed by the tax. It is
the fober and induftrious poor who generally bring up the molt
numerous families, and who principally fupply the demand for
ufeful labour. All the poor indeed are not fober and induftrious^
and the diftblute and diforderly might continue to indulge them-
felves in the ufe of fuch commodities after this rife of price in the
fame manner as before ; without regarding the diftrefs which this*
indulgence might bring upon their families. Such diforderly per-

fonSir

THE NATURE AND CAUSES OF

fons, however, feldom rear up numerous families; their children
generally perifhing from neglect, mifmanagement, and the fcanti-
nefs or unwholefomenefs of their food. If by the ftrength of
their conftitution they furvive the hardfhips to which the bad
conduct of their parents expofes them; yet the example of that
bad conduct commonly corrupts their morals; fo that, inflead of
being ufeful to fociety by their induftry, they become public
Kuifances by their vices and diforders. Though the advanced price
of the luxuries of the poor, therefore, might increafe fomewhat
the diftrefs of fuch diforderly families, and thereby diminifh fome-
what their ability to bring up children ; it would not probably
diminifh much the ufeful population of the country.

Any rife in the average price of neceffaries, unlefs it is com-
penfated by a proportionable rife in the wages of labour, muft
neceffarily diminifh more or lefs the ability of the poor to bring up
numerous families, and confequently to fupply the demand for
ufeful labour; whatever may be the ftate of that demand, whether
increafing, ftationary, or declining; or fuch as requires an in-

creating, ftationary, or declining, population.

iisyolciui^ ^urfw ^mUirt07. ft3m^iov:/ aroiiJ- xiDifiv/ ^3lbn£D srli tiooti

-Jifil arfr ffoid// .asfbipf .sd3,yttqqu Knt,pdt,iX>i-h(XB, .daLyidl 'way ni
Taxes upon luxuries have no tendency to raife the price of

any other commodities except that of the commodities taxed.
Taxes upon neceffaries, by raifing the wages of labour, neceffarily
tend to raife the price of all manufactures, and confequently to
diminim, the extent of their fale and confumption. Taxes upon
luxuries are finally paid by the confumers of the commodities
taxed, without any retribution. They fall indifferently upon every
fpecies of revenue, the wages of labour, the profits of flock, and
the rent of land. Taxes upon neceffaries, fb far as they affect the
labouring poor, are finally paid, partly by landlords in the dimi-
nifhed rent of their lands, and partly by rich confumers, whether

landlords

THE WEALTH OF NATIONS.

iandlards or others, in the advanced price of manufactured goods ;
and always with a confiderable over-charge. The advanced price
of fuch manufactures as are real nec-efTaries of life, and are deftined
for the confumption of the poor, of coarfe woollens, for example,
mull: be compenfated to the poor by a farther advancement of their
wages. The middling and fuperior ranks of people, if they under-
11 ood their own intereft, ought always to oppofe all taxes upon
the neceHaries of life,. as well as all direct taxes upon the wages of
labour. The final payment of both the one and the other falls
altogether upon themfelves, and always with a confiderable over-
charge. They fall heavier! upon the. landlords, who always pay iri
a double capacity ; in that of landlords, by the reduction of their
rent; and in that of rich confumers, by the increafe of their ex-
pence. The obferyation of Sir Mathew Decker, that certain taxes
are in the price of certain goods fometimes repeated and accumu-
lated four, or five times, is perfectly juft with regard to taxes upon
the necelfaries of life. In the price of leather, for example, you
mult pay, not only for the tax upon the leather of your own fhoess
but for a part of that upon thofe of the fhoe-maker and the tanner.
You muft pay too for the tax upon the fait, upon the foap, and
upon the candles which thofe workmen confume while employed
in your fervice, and for the tax upon the leather, which the falt-

maker, the foap-maker, and the candle-maker confume while em-

J»3X£i .83iiibommo3 anl io
ployed in their iervice.

^Irifitbosfl tujoa£l to 83g£w ml gnniB'i \d ^riBtbosn noqu 23xeT

Oi vIlCISD Q3ilIQ3 J}fl£ 33'iuil)£3[JJri£rn Kb \o SDllQ 3t\i sEWbi I — *

In Great Britain, the principal taxes upon the neceffaries of
are thofe upon the four commodities juft now mentioned, fait,
ther, foap, and candles.

yi3V3 noqu 'vUfiaianibm list pdT .nortuanlsi yn£ iuoriirv/ <b3X£i

brut JLiofl to sifto'iq zrti twQdf;l to 83g£w srii .aagsys.i to 83i33ql
Salt is a very antient and a very univerfal fubject of taxation.

It was taxed among the Romans, and it is fo at prefent in, I be-
lieve, every part of Europe. The quantity annually confumed by.

^b'IoIb^£^ an^

488

THE NATURE AND CAUSES OF

BOOK any individual is fo fmall, and may be purchafed fo gradually, that
u^-^-^j nobody, it feems to have been thought, could feel very fenfibly
even a pretty heavy tax upon it. It is in England taxed at three
{hillings a bufhel ; about three times the original price of the com-
modity. In fome other countries the tax is ftill higher. Leather
is a real neceflary of life. The ufe of linen renders foap fuch. In
countries where the winter nights are long, candles are a neceflary
inftrument of trade. Leather and foap are in Great Britain taxed
at three halfpence a pound ; candles at a penny; taxes which, upon
the original price of leather may amount to about eight or ten per
cent ; upon that of foap to about twenty or five and twenty per
cent ; and upon that of candles to about fourteen or fifteen per
cent ; taxes which, though lighter than that upon fait, are ftill very
heavy. As all thofe four commodities are real neceflaries of life,
fuch heavy taxes upon them muft increafe fomewhat the expence of
the fober and induftrious poor, and muft confequently raife more or
lefs the wages of their labour.

In a country where the winters are fo cold as in Great Britain,
fuel is, during that feafon, in the ftricteft fenfe of the word, a
neceflary of life, not only for the purpofe of drefling victuals, but
for the comfortable fubfiftence of many different forts of workmen
who work within doors ; and coals are the cheaper! of all fuel.
The price of fuel has fo important an influence upon that of labour,
that all over Great Britain manufactures have confined themfelves
principally to the coal countries-; other 'parts of the country, on
account of the high price of this neceflary article, not being able
to work fo cheap. In fome manufactures, befides, coal is a ne-
ceflary inftrument of trade ; as in thofe of glafs, iron, and all other
metals. If a bounty could in any cafe be reasonable, it might per-
haps be fo upon the tranfportation of coals from thofe parts of the
country in which they abound, to thofe in which they are wanted.

But

THE WEALTH OF NATIONS.

But the legiflature, inflead of a bounty, has impofed a tax of three c
(hillings and three-pence a ton upon coal carried coaftvvays ; which <-
upon moft forts of coal is more than fixty per cent, of the original
price at the coal-pit. Coals carried either by land or by inland
navigation pay no duty. Where they are naturally cheap, they
are confumed duty free : Where they are naturally dear, they are
loaded with a heavy duty.

Such taxes, though they raife the price of fubfiftence, and con-
fequently the wages of labour, yet they afford a confiderable reve-
nue to government, which it might not be eafy to find in any other
way. There may, therefore, be good reafons for continuing them.
The bounty upon the exportation of corn, fo far as it tends in the
actual ftate of tillage to raife the price of that neceffary article,
produces all the like bad effects ; and inftead of affording any reve-
nue, frequently occafions a very great expence to government.
The high duties upon the importation of foreign corn, which in
years of moderate plenty amount to a prohibition ; and the abfo-
lute prohibition of the importation either of live cattle or of fait
provilions, which takes place in the ordinary ftate of the law, and
which on account of the fcarcity is at prefent fufpended for a
limited time with regard to Ireland and the Britifli plantations,
have all the bad effects of taxes upon the neceflaries of life, and
produce no revenue to government. Nothing feems neceffarv for
the repeal of fuch regulations, but to convince the public of the
futility of that fyftem in confequence of which they have been
eftablifhed.

iMb afii^J Jort ,3loii*tfi Y'lBiboan zidi io sjnq rigid lo. Iauodob.

Taxes upon the neceffaries of life are much higher in many
other countries than in Great Britain. Duties upon flour and meal
when ground at the mill, and upon bread when baked at the oven,
take place in many countries. In Holland the money price of the
id confumed in towns is fuppofed to be doubled by means of

Vol. II. R r r fuch

THE NATURE AND CAUSES OF

B O O K fuch taxes. In lieu of a part of them, the people who live in the
w-v^"-* country pay every year fo much a head, according to the fort of
bread they are fuppofed to confume. Thofe who confume wheaten
bread, pay three gilders fifteen ftivers about fix millings and
nine-pence halfpenny. Thefe, and fome other taxes of the fame
kind, by raifing the price of labour, are faid to have ruined the
greater part of the manufactures of Holland*. Similar taxes, though
not quite fo heavy, take place in the Milanefe, in the ftates of
Genoa, in the dutchy of Modena, in the dutchies of Parma,
Placentia, and Guaftalla, and in the ecclefiaftical ftate. A French
author -j- of fome note has propofed to reform the finances of
his country, by fubfHtuting in the room of the greater part of other
taxes this moft ruinous of all taxes. There is nothing fo abfurd,
fays Cicero, which has not fometimes been afTerted by fome phi-
lofophers.

Taxes upon butchers meat are ftill more common than thofe
upon bread. It may indeed be doubted whether butchers meat is
any where a neceffary of life. Grain and other vegetables, with the
help of milk, cheefe, and butter, or oil where butter is not to be
had, it is known from experience, can, without any butchers meat,
afford the moft plentiful, the moft wholefome, the moft nourifh-
ing, and the moft invigorating diet. Decency no where requires
that any man fhould eat butchers meat, as it in moft places requires
that he fhould wear a linen fhirt or a pair of leather ftioes.

I31J33D 3-flJ , UrfflJSfn 2IflJ fU J33Xf»J tiH DlfJOOl • YI333QI yi^f IO 3JS1D

Consumable commodities, whether neceffaries or luxuries,
may be taxed in two different ways. The confumer may either pay
an annual fum on account of his ufmg or consuming goods of a

*" W i * « . . c *^ J -J I 1 is 1CJ J 1 1 J i -villi J yJkll 1 Hi JjOi irO I(J O J 2J>VV

certain kind; or the goods may be taxed while they remain in the
hands of the dealer, and before they are delivered to the confumer.
The confumable goods which laft a considerable time before they
are confumed altogether, are moft properly taxed in the one way.
* Memoires concernant les Droits, &c. p. zio, zn. f Le reformareur.

Thofe

THE WEALTH OF NATIONS.

Thofe of which the confumption is either immediate or more fpeedy, c
in the other. The coach-tax and plate-tax are examples of the u
former method of impofing : The greater part of the other duties
of excife and cuftoms, of the latter.

A co AC ii may, with good management, laft ten or twelve years.
It might be taxed, once for all, before it comes out of the hands of
the coach-maker. But it is certainly more convenient for the buyer
to pay four pounds a year for the privilege of keeping a coach,
than to pay all at once forty or forty-eight pounds additional price
to the coach-maker or a fum equivalent to what the tax is likely
to coil him during the time he ufes the fame coach. A fervice of
plate, in the fame manner, may laft more than a century. It is
certainly eafier for the confumer to pay five millings a year for
every hundred ounces of plate, near one percent, of the value, than
to redeem this long annuity at five and twenty or thirty years pur-
chafe, which would enhance the price at leaft five and twenty or
thirty per cent. The different taxes which affect houfes are cer-
tainly more conveniently paid by moderate annual payments, than
by a heavy tax of equal value upon the firft building or fale of the
houfe.

2^tfpep<:s5W!w 'oil ,?3«tt^«&n v&ibl ^kiS^m^hinSmn $th -fens >fgtfi
It was the well known propofal of Sir Mathew Decker that all
commodities, even thofe of which the confumption is either imme-
diate or very fpeedy, mould be taxed in this manner the dealer
advancing nothing, but the confumer paying a certain annual fum
for the licence to confume certain goods. The object, of his fchenVc
was to promote all the different branches of foreign trade, particu -
larly the carrying trade, by taking away all diities upon importa-
tion and exportation, and thereby enabling the merchant to employ
his whole capital and credit in the purchafe of goods and the
freight of mips, no part of either being diverted towards the

R r r 2 advancing

THE NATURE AND CAUSES OF

K advancing of taxes. The pro j eel, however, of taxing, in this man-
—> ner, goods of immediate or fpeedy confumption, feems liable
to the four following very important objections. Firft, the tax
would be more unequal, or not fo well proportioned to the expence
and confumption of the different contributors, as in the way in
which it is commonly impofed. The taxes upon ale, wine, and
fpirituous liquors, which are advanced by the dealers, are finally
paid by the different confumers exactly in proportion to their
refpective confumption. But if the tax was to be paid by pur-
chafing a licence to drink thofe liquors, the fober would, in propor-
tion to his confumption, be taxed much more heavily than the
drunken confumer. A family which exercifed great hofpitality would
be taxed much more lightly than one which entertained fewer guefts.
Secondly, this mode of taxation, by paying for an annual, half- yearly,,
or quarterly licence to confume certain goods, would diminifh very-
much one of the principal conveniencies of taxes upon goods of
fpeedy confumption ; the piece-meal payment. In the price of
three-pence halfpenny, which is at prefent paid for a pot of porter,
the different taxes upon malt, hops, and beer, together with the
extraordinary profit which the brewer charges for having advanced
them, may perhaps amount to about three halfpence. If a work-
man can conveniently fpare thofe three halfpence, he buys a pot of
porter. If he cannot, he contents himfelf with a pint, and, as a penny
faved is a penny got, he thus gains a farthing by his temperance. He
pays the tax piece-meal, as he can afford to pay it, and when he can
afford to pay it ; and every act of payment is perfectly voluntary, and
what lie can avoid if he chufes to do fo. Thirdly, fueh taxes would
operate lefs as fumptuary laws. When the licence was once purchafed,
whether the purchafer drunk much or drunk little, his tax would
be the fame. Fourthly, if a workman was to pay all at once, by-
yearly, half-yearly, or quarterly payments, a tax equal to what he
at prefent pays, with little or no inconveniency, upon all the diffe-
rent.

THE

WEALTH OF NATIONS.

493

rent pots and pints of porter which he drinks in any fuch period of c H A P.
time, the faai might frequently diftrefs him very much. This ^— -v--—
mode of taxation, therefore, it feems evident, could never, without
the moft grievous oppreflion, produce a revenue nearly equal to
what is derived from the prefent mode without any oppreflion. In
feveral countries, however, commodities of an immediate or very
fpeedy confumption are taxed in this manner. In Holland, people
pay fo much a head for a licence to drink tea. I have already men-
tioned a tax upon bread, which, fo far as it is confumed in farm-
houfes and country villages, is there levied in the fame manner.

adl nfirti . vJivEarf oiom ihum b-sxai od tnortqanftfictt otjhoh
The duties of excife are impofed chiefly upon goods of home:

produce deftined for home confumption. They are impofed only
upon a few forts of goods of the moft general ufe. There can
never be any doubt either concerning the goods which are fub-
jec~t to thofe duties, or concerning the particular dutv which eacli:
fpecies of goods is fubjeel to. They fall almofl altogether upon
what I call luxuries, excepting always the four duties above-
mentioned, upon fait, foap, leather, candles, and, perhaps, that
upon green glafs.

The duties of cuftoms are much more antient than thofe of
excife. They feem to have been called cuftoms, as denoting cuf- -
tomary payments which had been in ufe from time immemorial^
They appear to have been originally confidered as taxes upon the ,
profits of merchants. During the barbarous times of feudal anar-
chy, merchants, like all the other inhabitants of burghs, were, con-
fidered as little better than emancipated bondmen, whofe perfons ■
were defpifed, and whofe gains were envied* The great nobility,,
who had confented that the king ihouid tallage the profits of their
own tenants, were not unwilling that he mould tallage likewife.
thofe of an order of men whom.it was much lefs their intereft. to-

protect...

494. THE NATUPvE'AND CAUSES OF

BOOK protect. In thofe ignorant times it was not underftood that tlie
' profits of merchants are a fubjecl not taxable directly ; or that
the final payment of all fuch taxes muft fall, with a confiderable
overcharge, upon the confamers.

The gains of alien merchants were looked upon more unfavour-
ably than thofe of Englifh merchants. It was natural, therefore,
that thofe of the former mould be taxed more heavily than thofe
of the latter. This diftinction between the duties upon aliens
and thofe upon Englifh merchants, which was begun from igno-
rance, has been continued from the fpirit of monopoly, or in order
to give our own merchants an advantage both in the home and in
the foreign market.

With this diftincr.ion the antient duties of cuftoms were im-
pofed equally upon all forts of goods, neceffaries as well as luxuries,
goods exported as well as goods imported. Why fhould the dealers
in one fort of goods, it feems to have been thought, be more
favoured than thofe in another ? or why fhould the merchant
exporter be more favoured than the merchant importer ?

The antient cuftoms were divided into three branches. The
firft, and perhaps the moft antient of all thofe duties, was that
upon wool and leather. It feems to have been chiefly or alto-
gether an exportation duty. When the woollen manufacture came
to be eftablirhed in England, left the king lhould lofe any part of
his cuftoms upon wool by the exportation of woollen cloths, a
like duty was impofed upon them. The other two branches were,
firft, a duty upon wine, which being impofed at fo much a ton,
was called a tonnage ; and, fecondly, a duty upon all other goods,
which being impofed at fo much a pound of their fuppofed value,
was called a poundage. In the forty-feventh year of Edward III.

8 a' duty

THE WEALTH OF NATIONS.

495

a duty of fi\--pence in the pound was impofcd upon all goods CHAP,
exported and imported, except wools, wool-fells, leather, and wines,
which were fubject to particular duties. In the fourteenth of
Richard II. this duty was railed to one fhilling in the pound; but,,
three years afterwards, it was again reduced to fix-pence. It was
railed to eight-pence in the fecond year of Henry IV. and in the
fourth year of trie lame prince, to one (hilling. From this time to
the ninth year of William III. this duty continued at one (hilling in
the pound. The duties of tonnage and poundage were generally
granted to the king by one and the fame ad of parliament, and
were called the Subfidy of Tonnage and Poundage. The fubfidy
of poundage having continued for fo long a time at one (hilling in
the pound, or at five per cent, j a fubfidy came, in the language of
the cuftoms, to denote a general duty of this kind of five per cent.
This fubfidy, which is now called the Old Subfidy, (till continues to
be levied according to the book of rates eftablifhed in the twelfth
of Charles II. The method of afcertaining, by a book of rates, the
value of goods fubjecl to this duty, is faid to be older than the time
of James I. The new fubfidy impofed by the ninth and tenth of
William III., was an additional five per cent, upon the greater part
of goods. The one-third and the two-third fubfidy made up be-
tween them another five per cent, of which they were proportion-
able parts. The fubfidy of 1747 made a fourth five per cent, upon
the greater part of goods and that of 1759, a fifth upon fome
particular forts of goods. Befides thofe five fubfidies, a great
variety of other duties have occaHonally b;en impofed upon parti-
cular forts of goods, in order fometimes to relieve the exigencies of the
ffcate, and fometimes to regulate the trade of the country, accord-
ing to the principles of the mercantile fyftem.
no1 £ rbx/rxi dl l£ rbiriw <3firw noqu yjub £ J

That fyftem has come gradually more and more into fafhion.
The old fubfidy was impofed indifferently upon exportation as well

as

--/tub £

496

THE NATURE AND CAUSES OF

B OO K as importation. The fodr fubfequent fubfidies, as weil as the other
ju-v^-j duties which have fince been occafionally impofed upon particular
forts of goods, have, with a few exceptions, been laid altogether
upon importation. The greater part of the antient duties which had
been impofed upon the exportation of the goods of home produce
and manufacture, have either been lightened or taken away alto-
gether. In mofl cafes they have been taken away. Bounties have
even been given upon the exportation of fome of them. Draw-
backs too, fometimes of the whole, and, in mofl cafes, of a part of
the duties which are paid upon the importation of foreign goods>
have been granted upon their exportation. Only half the duties
impofed by the old fubfidy upon importation are drawn back upon
exportation : but the whole of thofe impofed by the later fubfidies
and other impofls are, upon the greater part of goods, drawn back
in the fame manner. This growing favour of exportation, and
difcouragement of importation, have fuffered only a few exceptions,
which chiefly concern the materials of fome manufactures. Thefe
our merchants and manufacturers are willing fhould come as cheap
as pofTible to themfelves, and as dear as poffible to their rivals and
competitors in other countries. Foreign materials are, upon this
account, fometimes allowed to be imported duty free; Spanifh
wool, for example, flax, and raw linen yarn. The exportation of
the materials of home produce, and of thofe which are the pecu-
liar produce of our colonies, has fometimes been prohibited, and
fometimes fubjected to higher duties. The exportation of Englifh
wool has been prohibited. That of beaver fkins, of beaver wool,
and of gum Senega, has been fubje&ed to higher duties -3 Great
Britain, by the conqueft of Canada and Senegal., having got almoft
the monopoly of thofe commodities.

That the mercantile fyftem has not been very favourable to
the revenue of the great body of the people, to the annual pro-

4 duce

THE WEALTH OF NATIONS.

497

duce of the land and labour of the country, I have endeavoured c H A P-
to fhe\v in the fourth book of this inquiry. It feems not to '
have been more favourable to the revenue of the fovereign ; fo
far at leaft as that revenue depends upon the duties of cuftoms.

In confequence of that fyftem, the importation of feveral forts
of goods has been prohibited altogether. This prohibition has
in fome cafes entirely prevented, and in others very much dimi-
niftied the importation of thofe commodities, by reducing the
importers to the necefiity of fmuggling. It has entirely prevented
the importation of foreign woollens j and it has very much di-
minifhed that of foreign filks and velvets. In both cafes it has
entirely annihilated the revenue of cuftoms which might have been
levied upon fuch importation.

The high duties which have been impofed upon the importa*
tion of many different forts of foreign goods, in order to dis-
courage their confumption in Great Britain, have in many cafes
ierved only to encourage fmuggling ; and in all cafes have reduced
the revenue of the cuftoms below what more moderate duties would
have afforded. The faying of Dr. Swift, that in the arithmetic of the
cuftoms two and two, inftead of making four, make fometimes
only one, holds perfectly true with regard to fuch heavy duties,
which never could have been impofed had not the mercantile
fyftem taught us in many cafes to employ taxation as an inftru-
ment, not of revenue, but of monopoly.

5£st"> • r*tl&trt oi bsftskfr/Vn^d serf " *B^i'ff*i^r£ *o brie

The bounties which are fometimes given upon the exporta-
tion of home produce and manufactures, and the drawbacks
which are paid upon the re-exportation of the greater part of
foreign goods, have given occafion to many frauds, and to a
fpecies of fmuggling more deftructive of the public revenue than
Vol. II. S f f any

498 THE NATURE AND CAUSES OF

BOOK any other. In order to obtain the bounty or drawback, the
c— -v^~i goods, it is well known, are fometimes fhipped and fent to fea;

but foon afterwards clandeftinely re-landed in fome other part of
the country. The defalcation of the revenue , of cuftoms occa-
fioned by bounties and drawbacks, of which a great part are
obtained fraudulently, is very great. The grofs produce of the
cuftoms in the year which ended on the 5th of January, 1755,
amounted to 5,068,0001. The bounties which were paid out of
this revenue, though in that year there was no bounty upon
corn, amounted to 167,8001. The drawbacks which were paid
upon debentures and certificates to 2,156,800.1. Bounties and
drawbacks together amounted to 2,324,6001. In confequence of
thefe deductions the revenue of the cuftoms amounted only to
2,743,400 k : from which deducting 287,900 1. for the expence of
management in falaries and other incidents, the neat revenue of
the cuftoms for that year comes out to be 2,455,500!. The
expence of management amounts, in this manner, to between
five and fix per cent, upon the grofs revenue of the cuftoms, and
to fomething more than ten per cent, upon what remains of that
revenue, after deducting what is paid away in bounties and
drawbacks.

Heavy duties being impofed upon almoft all goods imported,
our merchant importers fmuggle as much, and make entry of
as little as they can. Our merchant exporters, on the contrary,
make entry of more than they export ; fometimes out of vanity,
and to pafs for great dealers in goods which pay no duty ; and
fometimes to gain a bounty or a- drawback. Our exports, in
confequence of thefe different frauds, appear upon the cuftom-
houfe books greatly to overbalance our imports ; to the unfpeak-
able comfort of thofe politicians who meafure the national pros-
perity by what they call the balance of trade.

Ail

THE WEALTH OF NATIONS.

499

All goods imported, unlefs particularly exempted, and fiich CHAP,
exemptions are not very numerous, are liable to fome duties of v.— -y—
cuftoms. If any goods are imported not mentioned in the book
of rates, they are taxed at 4 s. 9 d. ^ for every twenty fhillings
value, according to the oath of the importer, that is, nearly at
five fubfidies, or five poundage duties. The book of rates is
extremely comprehenfive, and enumerates a great variety of arti-
cles, many of them little ufed, and therefore not well known.
It is upon this account frequently uncertain under what article a
particular fort of goods ought to be clafTed, and confequently
what duty they ought to pay. Miftakes with regard to this
fometlmes ruin the cuftom-houfe officer, and frequently occafion
much trouble, expence and vexation to the importer. In point
of perfpicuity, precifion and diftinftnefs, therefore, the duties of
cuftoms are much inferior to thofe of excife.

In order that the greater part of the members of any fociety
fliould contribute to the public revenue in proportion to their
refpective expence, it does not feem necefTary that every fingle
article of that expence fliould be taxed. The revenue which is
levied by the duties of excife is fuppofed to fall as equally upon
the contributors as that which is levied by the duties of cuftoms ;
and the duties of excife are impofed upon a few articles only of
the moft general ufe and confumption. It has been the opinion
of many people that, by proper management, the duties of cuf-
toms might likewife, without any lofs to the public revenue, and
with great advantage to foreign trade, be confined to a few
articles only.

The foreign articles of the moft general ufe and confumpticn
in Great Britain, feem at prefent to confift chiefly in foreign
wines and brandies ; in fome of the productions of America and
the Weft Indies, fugar, rum, tobacco, cacao- nuts, &c. and in

S f f 2 fome

;0o THE NATURE AND CAUSES OF

BOOK fome of thofe of the Eaft Indies, tea, coffee, china-ware, fpiceries
v-— y^-*j of all kinds, feveral forts of piece goods, &c. Thefe different
articles afford perhaps at prefent the greater part of the revenue
which is drawn from the duties of cuffoms. The taxes which at
prefent fubfift upon foreign manufactures, if you except thofe
upon the few contained in the foregoing enumeration, have the
greater part of them been impofed for the purpofe, not of re-
venue, but of monopoly, or to give our own merchants an
advantage in the home market. By removing all prohibitions,
and by fubjecting all foreign manufactures to fuch moderate
taxes as it was found from experience afforded upon each article
the greateft revenue to the public, our own workmen might flill
have a confiderable advantage in the home market, and many arti-
cles, fome of which at prefent afford no revenue to government,
and others a very inconfiderable one, might afford a very great one.

High taxes, fometimes by diminifhing the confumption of the
taxed commodities, and fometimes by encouraging fmuggling,
frequently afford a fmaller revenue to government than what might,
be drawn from more moderate taxes.

When the diminution of revenue is the effect of the diminu-
tion of confumption, there can be but one remedy, and that is
the lowering of the tax.

When the diminution of revenue is the effect of the encou-
ragement given to fmuggling, it may perhaps be remedied in.
two ways ; either by diminifhing the temptation to fmuggle, or
by increafmg the difficulty of fmuggling. The temptation to
fmuggle can be diminifhed only by the lowering of the tax; and
the difficulty of fmuggling can be increafed only by eftablifhing
that fyftem of adminiftration which is moft proper for prevent-
ing it.

The

THE WEALTH OF NATIONS.

The excife laws, it appears, I believe, from experience, ob- CHAP,
ftrucr. and cmbarraii the operations of the fmuggter much more ^ —
effectually than thofe of the cuftoms. By introducing into the
cuftoms a fyftem of adnfuuftration as fimilar to that of the excife
as the nature of the deferent duties will admit, the difficulty of
fmuggling might be very much increafed. This alteration, it-
has been fuppofed by many people, might very eafily be brought
about.

The importer of commodities liable to any duties of cuftoms,
it has been faid, might at his option be allowed either to carry
them to his own private warehoufe, or to lodge them in a warehoufe
provided either at his own expence or at that of the public, but
under the key of the cuftomhoufe officer, and never to be opened
but in his prefence. If the merchant carried them to his own
private warehoufe, the duties to be immediately paid, and never
afterwards to be drawn back ; and that warehoufe to be at all
times fubject to the vifit and examination of the cuftomhoufe
officer, in order to afcertain how far the quantity contained in it
correfponded with that for which the duty had been paid, If he '
carried them to the public warehoufe, no duty to be paid till
they were taken out for home confumption. If taken cut for
exportation, to be duty-free ; proper fecurity being always givea
that they mould be fo exported. The dealers in thofe particular
commodities, either by wholefale or retail, to be at all times
iubjeel to the vifit and examination of the cuftomhoufe officer ; .
and to be obliged to juftify by proper certificates the payment of
the duty upon the whole qu^ntity^ contained in their (hops or
warehoufes. What are called the excife duties upon rum im-
ported are at prefent levied m this manner, and the fame fyfteni
of adminiftration might perhaps be extended to all duties upon
goods imported ; provided always, that thofe duties were, like the
duties of excife, confined to a few forts of goods of the moll.
4 general.

THE NATURE AND CAUSES OF

general ufe and confumption. If they were extended to almoft
all forts of goods, as at prefent, public warehoufes of fufficient
extent could not eafily be provided, and goods of a very delicate
nature, or of which the prefervation required much care and
attention, could not fafely be trufted by the merchant in any
warehoufe but his own.

If by fuch a fyftem of adminiftration fmuggling to any con-
fiderable extent could be prevented even under pretty high duties,
and if every duty Was occafionally either heightened or lowered
according as it was molt likely, either the one way or the other,
to afford the greateft revenue to the ftate; taxation being always
employed as an inftrument of revenue and never of monopoly;
it feems not improbable that a revenue at leaft equal to the prefent
neat revenue of the cuftoras might be drawn from duties upon the
importation of only a few forts of goods of the moft general ufe
and confumption and that the duties of cuftoms might thus be
brought to the fame degree of fimplicity, certainty and precifion, as
thofe of excife. What the revenue at prefent lofes by drawbacks
upon the re-exportation of foreign goods which are afterwards
re-landed and confumed at home, would under -this fyftem be
faved altogether. If to this faving, which would alone be very
confiderable, was added the abolition of all bounties upon the
exportation of home-produce, in all cafes in which thofe bounties
were not in reality drawbacks of fome duties of excife which had
before been advanced j it cannot well be doubted but that the
neat revenue of cuftoms might after an alteration of this kind be
fully equal to what it had ever been before.

If by fuch a change of fyftem the public revenue fuffered no
lofs; the trade and manufacl: ares of the country would certainly
gain a very confiderable advantage. The trade in the commodities
8 n°t

THE WEALTH OF NATIONS.

5°3

not taxed, by far the greater!: number, would be perfectly free, c HA P.
and might be carried on to and from all parts of the world with u — *J
every poffible advantage. Among thofe commodities would be
comprehended all the neceflaries of life, and all the materials of
manufacture. So far as the free importation of the neceflaries of
life reduced their average money price in the home- market, it
would reduce the money price of labour, but without reducing
in any refpect its real recompence. The value of money is in
proportion to the quantity of the neceflaries of life which it will
purchafe, That of the neceflaries of life is altogether independant
of the quantity of money which can be had for them. The re-
duction in the money price of labour would neceflarily be attended
with a proportionable one in that of all home-manufactures, which
would thereby gain fome advantage in all foreign markets. The
price of fome manufactures would be reduced in a ftill greater
proportion by the free importation of the raw • materials. If raw
filk could be imported from China and Indoftan duty-free, the
filk manufacturers in England could greatly underfell thofe of both
France and Italy. There would be no occafion to prohibit the
importation of foreign filks and velvets. The cheapnefs of their
goods would fecure to our own workmen, not only the pofTeflicn
of the home, but a very great command of the foreign market.
Even the trade in the commodities taxed would be carried on with
much more advantage than at pre fen t. If thofe commodities
were delivered out of the public warehoufe for foreign exportation,
being in this cafe exempted from all taxes, the trade in them
would be perfectly free. The carrying trade in all forts of goods
would under this fyflem enjoy every poflible advantage. If thofe
commodities were delivered out for home-confumption, the im-
porter not being obliged to advance the tax till he had an oppor-
tunity of felling his goods either to fome dealer, or to fome con-
fumer, he could always afford to fell them cheaper than if he hrxl

. been*

504. THE NATURE AND CAUSES OF

B %° K ^een 0DnSed to advance it at the moment of importation.

Under the fame taxes, the foreign trade of confumption even in the
taxed commodities, might in this manner be carried on with much
more advantage than it can at prefent.

It was the object of the famous excife fcheme of Sir Robert
Walpole to eftablifh, with regard to wine and tobacco, a fyftem
not very unlike that which is here propofed. But though the bill
which was then brought into parliament, comprehended thofe two
commodities only; it was generally fuppofed to be meant as an
introduction to a more extenfiv e fcheme of the fame kind. Faction,
combined with the intereft of fmuggling merchants, raifed fo
violent, though fo unjufc, a clamour againfl that bill, that the
minifter thought proper to drop it ; and from a dread of exciting a
clamour of the fame kind, none of his fuccefTors have dared to
refume the project.

The duties upon foreign luxuries imported for home-confump-
tion, though they fometimes fall upon the poor, fall principally
upon people of middling or more than middling fortune. Such
are, for example, the duties upon foreign wines, upon coffee,
chocolate, tea, fugar, &c.

iioaqmiiimj $i^tj£ r jr&t tiio sifc to luottel Ibnjipbgfil -jdi\o atifii o*i
The duties upon the cheaper luxuries of home-produce de-
fined for home-confumption, fall pretty equally upon people of
all ranks in proportion to their refpe£tive expence. The poor pay
the duties upon malt3 hops, beer, and ale, upon their own con,

.fumption : The rich, both upon their own confumption and upon

i3 v3fi jyxp ^rti Lfioqjj YtfnsiainDm iifii ibsdw slodi isnlm Utah wifmh
that or their lervants.

The whole confumption of the inferior ranks of people, or of
thofe below the middling rank, it mult be obferved, is in every

country

THE WEALTH OP NATIONS.

country much greater, not only in quantity, but in value, than C
that of the middling and of thofe above the middling rank. The u
whole expence of the inferior is much greater than that of the
fuperior ranks. In the firft place, almoft the whole capital of every
country is annually diftributed among the inferior ranks of people
as the wages of productive labour. Secondly, a great part of
the revenue arifing both from the rent of land and from the profits
of flock, is annually diftributed among the fame rank, in the
wages and maintenance of menial fervants, and other unproduc-
tive labourers. Thirdly, fome part of the profits of flock belongs
to the fame rank, as a revenue arifing from the employment of
their fmall capitals. The amount of the profits annually made by
fmall fhopkeepers, tradefmen, and retailers of all kinds, is every-
where very confiderable, and makes a very confiderable portion of
the annual produce. Fourthly, and laftly, fome part even of
the rent of land belongs to the fame rank j a confiderable part to
thofe who are fomewhat below the middling rank, and a fmall
part even to the loweft rank 5 common labourers fometimes pof-
fefiing in property ah acre or two of land. Though the expence
of thofe inferior ranks of people, therefore, taking them indi-
vidually, is very fmall, yet the whole mafs of it, taking them
collectively, amounts always to by much the Iargeft portion of
the whole expence of the fociety; what remains of the annual
produce of the land and labour of the country for the confumption
of the fuperior ranks being always much lefs, not only in quantity
but in value. The taxes upon expence, therefore, which fail
chiefly upon that of the fuperior ranks of people, upon the fmaller
portion of the annual produce, are likely to be much lefs pro-
ductive than either thofe which fall indifferently upon the expence of
all ranks, or even thofe which fall chiefly upon that of the inferior
ranks than either thofe which fall indifferently upon the whole
annual produce, or thofe which fall chiefly upon the larger por-
Vol. II. T t t tion

5o6

THE NATURE, AND CAUSES OF

BOOK tion of it. The excife upon the materials and manufacture c£
c^-v— «^ home-made fermented and fpirituous liquors is accordingly, of all
the different taxes upon expence, by far the moft productive ; and
this branch of the excife falls very much, perhaps principally, upon
the expence of the common people. In the year which ended on
the 5th of July, 1775, the grofs produce of this branch of the
excife amounted to 3,314,223 1. 18 s. ioid.

It muft always be remembered, however, that it is the luxurious
and not the necefTary expence of the inferior ranks of people that
ought ever to be taxed. The final payment of any tax upon their
necefTary expence would fall altogether upon the fuperior ranks of
people; upon the fmaller portion of the annual produce, and not
upon the greater. Such a tax muft in all cafes either raife the
wages of labour, or lefien the demand for it. It could not raife the
wages of labour, without throwing the final payment of the tax
upon the fuperior ranks, of people. It could not lefTen the de-
mand for labour, without leflening. the annual produce of the
land and labour of the country,, the fund from which all. taxes
muft be finally paid. Whatever might be the ftate to which a
tax of this kind reduced the demand. for labour, it muft always
raife wages higher than they otherwife. would be in that ftate; and
the final payment of this enhancement of wages muft in all cafes
fall upon the fuperior ranks of people.

Fermented liquors brewed, and fpirituous liquors diftilied,
not for fale,.but for private ufe, are not in Great Britain liable
to any duties of excife. This exemption, of which the object is
not to expofe private families to the odious vifit and examination
of the tax-gatherer, occafions the burden of thofe duties to fall
frequently much lighter upon the rich than upon the poor. It is
not, indeed, very, common to diftill for private ufe, though it is
8 done

THE WEALTH OF NATIONS. 50;

done fometimes. But in the country, many middling and almoft C H A P.
all rich and great families brew their own beer. Their ftrong -v— - j
beer, therefore, cofts them eight fhillings a barrel lefs than it
cofts the common brewer, who muft have his profit upon the
tax, as well as upon all the other expence which he advances. Such
families, therefore, muft drink their beer at leaft nine or ten
millings a barrel cheaper than any liquor of the fame quality can
be drunk by the common people, to whom it is every where more
convenient to buy their beer, by little and little, from the brewery
or the ale-houfe. Malt, in the fame manner, that is made for
the ufe of a private family, is not liable to the vifit or examination
of the tax-gatherer; but in this cafe the family muft compound at
feven fhillings and fixpence a head for the tax. Seven fhillings
and fixpence are equal to the excife upon ten bufhels of malt; a
quantity fully equal to what all the different members of any
fober family, men, women, and children, are at an average likely
to confume. But in rich and great families, where country
hofpitality is much practifed, the malt liquors confumed by the
members of the family make but a fmall part of the confumption of
the houfe. Either on account of this compofition, however, or
for other reafons, it is not near fo common to malt as to brew for
private ufe. It is difficult to imagine any equitable reafon why
thofe who either brew or diftill for private ufe, fliould not be
fubject to a compofition of the fame kind.

A greater revenue than what is at prefent drawn from
all the heavy taxes upon malt, beer, and ale, might be raited
it has frequently been faid, by a much lighter tax upon malt;
the opportunities of defrauding the revenue being much greater in
a brewery than in a malt-houfe ; and thofe who brew for private
ufe being exempted from all duties or compofition for duties, which
is not the cafe with thofe who malt for private ufe.

T t t 2 la

THE NATURE AND CAUSES OF

% In the porter brewery of London, a quarter of malt Is com-
-J monly brewed into more than two barrels and a half, fometimes
into three barrels of porter. The different taxes upon malt amount
to fix' {hillings a quarter; thofe upon flrong beer and ale to eight
fhillings a barrel. In the porter brewery, therefore, the different
taxes upon malt, beer, and ale, amount to between twenty-fix
and thirty {hillings upon the produce of a quarter of malt. In the
country brewery for common country fale, a quarter of malt is
feldom brewed into lefs than two barrels of ffrong and one barrel
of fmall beer; frequently into two barrels and a half of flrong
beer. The different taxes upon fmall beer amount to one fhilling
and four-pence a barrel. In the country brewery, therefore, the.
different taxes upon malt, beer, and ale, feldom amount to lefs than
twenty- three millings and four- pence, frequently to twenty-fix
ihillings, upon the produce of a quarter of malt. Taking the
whole kingdom at an average, therefore, the whole amount of the
duties upon malt, beer, and ale, cannot be eftimated at lefs than
twenty-four or twenty-five ihillings upon the- produce of a quarter
of malt. But by taking off all the different duties upon beer and
ale, and by tripling the malt-tax, or by railing it from fix to
eighteen fhillings upon the quarter of malt, a greater revenue, it is
faid, might be raifed by this fingle tax than what is at prefent drawn
from all thofe heavier taxes,
-y- £ <[go«8£Q 10 -.fifom ogBiavs aril gmfjbfi rBirf w' bT : I

ttv v c (1° «crvc** 71 ' " _LJ -j ■ v '

if srH '"tilth' ^jpi^p&i&k T&\xtifjkm.&h^BKkfayiid mS. »

In

THE WEALTH

OF

NATIONS.

I s. d. CHAP.

In 1772, the old malt tax produced — 722,023 if 11

The additional — — 356*776 7 9--

In 1773, the old tax produced — 561,627 3 y*

The additional — — 278,650 15 3.1

In 1774, the old tax produced — - 624,614 17 c3

The additional — — 310,745 z 8-1

In 1775, the old tax produced — — 657,357 H-

The additional — — 323,78 5 12 6JL

■

4)3*835,580 12 — _3r

Average of thefe four years — 958,895 3 — j

ttBdiiihsktot Hun; * <Pf. ... .,_ .. ...

In 1772, the country excite produced — 1,243,128 5 3

The London brewery — 408,260 v 11

In 1773, the country excife 1,245,808 3 3

The London brewery — 4.0 c, 4.06 17

In 1774, the country excife — — 1,246,373 14

The London brewery — 320,601 18

In 1775, the country excife — — 1,214,583 6 1

5*

The London brewery 463,670 7

4)6>547>832 l9 2;

Average of thefe four years 1,636,958 4 94.

To which adding the average malt tax, or 958,895 3 —

— -5-

The whole amount of thofe different taxes |
comes out to be — — 52>5?5»853 7 944-

But by tripling the malt tax, or by railing it~j

from fix to eighteen millings upon the!

quarter of malt, that lingle tax would \2 5 87^685 9 ~~t?

produce — — — J

A fum which exceeds the foregoing by — 280,832 1

Under

THE NATURE AND CAUSES OF

Under the old malt tax, indeed, is comprehended a tax of four
i {hillings upon the hogfhead of cyder, and another of ten {hillings
upon the barrel of mum. In i 774, the tax upon cyder produced
only 3083 i. 6 s. 8 d. It probably fell fomewhat fhort of its ufual
amount; all the different taxes upon cyder having that year pro-
duced lefs than ordinary. The tax upon mum, though much
heavier, is frill lefs productive, on account of the fmaller eon-
lumption of that liquor. But to balance whatever may be the
ordinary amount of thofe two taxes ; there is comprehended under
what is called The country excife, firft, the old excife of fix mil-
lings and eight-pence upon the hogfhead of cyder; fecondly, a
like tax of fix fhillings and eight- pence upon the hogfhead of
verjuice; thirdly, another of eight fhillings and nine-pence upon
the hogfliead of vinegar; and, laftly, a fourth tax of eleven-
pence upon the gallon of mead or metheglin : The produce of
thofe different taxes will probably much more than counter-
balance that of the duties impofed, by what is called The annual
malt tax, upon cyder and mum.

Malt is confumed not only in the brewery of beer and ale,
but in the manufacture of low wines and fpirits. If the malt
tax was to be raifed to eighteen (hillings upon the quarter, it
might be neceffary to make fome abatement in the different ex-
cifes which are impofed upon thofe particular forts of low wines
and fpirits of which malt makes any part of the materials. In*
what are called Malt fpirits, it makes commonly but a third part
of the materials ; the other two-thirds being either raw barley, or
one-third barley and one- third wheat. In the diftillery of malt
fpirits, both the opportunity, and the temptation to fmuggle, are
much greater than cither in a brewery or in a malt-houfe; the
opportunity, on account of the fmaller bulk - and greater value
of the commodity; and the temptation, on account of the fuperior

height

THE WEALTH OF NATIONS.

height of the duties, which amount to 2 sr. 6 d. upon the gallon
of fpirits. By increafing the duties upon malt, and reducing thofe
upon the diftillery, both the opportunities and the temptation to
fmuggle would be diminifhed., which might occafion a ftill further
augmentation of revenue.

It has for fome time part been the policy of Great Britain to
difcourage the confumption of fpirituous liquors, on account of
their fuppofed tendency to ruin the health and to corrupt the
morals of the common people. According to this policy, the
abatement of the taxes upon the diftillery ought not to be fo great
as to reduce in any refpect the price of thofe liquors. Spirituous
liquors might remain as dear as ever; while at the fame time the
wholefome and invigorating liquors of beer and ale might be con-
fiderably reduced in their price. The people might thus be in
part relieved from one of the burdens of which they at prefent
complain the moft; while at the fame time the revenue might
be considerably augmented.

The objections of Doctor Davenant to this alteration in the
prefent fyftem of excife duties, feem to be without foundation.
Thofe objections are, that the tax, inftead of dividing itfelf as
at prefent pretty equally upon the profit of the maltfter, upon that
pf the brewer, and upon that of the retailer, would, fo far as it
affected profit, fall altogether upon that of the maltfter ; that the
maltfter could not fo eafily get back the amount of the tax in the
advanced price of his malt, as the brewer and' retailer in the ad-
vanced price of their liquor; and that fo heavy a tax upon m ait.
might reduce the rent and profit of barley land.

No tax can ever reduce, for any confiderable time, the rate of
profit in any particular trade, which mull always keep its level;

. with.

5i2 * THE NATURE AND CAUSES OF

BOOK with other trades in the neighbourhood. The prefent duties upon
u-v^-i malt, beer, and ale, do not affect the profits of the dealers in thofe
commodities, who all get back the tax with an additional profit, in
the enhanced price of their goods. A tax indeed may render the
goods upon which it is impofed fo dear as to diminifh the con-
fumption of them. But the confumption of malt is in malt
liquors ; and a tax of eighteen millings upon the quarter of malt
could not well render thofe liquors dearer than the different taxes,
amounting to twenty-four or twenty-five fhillings, do at prefent,
Thofe liquors, on the contrary, would probably become cheaper,
and the confumption of them would be more likely to increafe than
to diminiih.

It is not very eafy to underftand why it fhould be more difficult
for the maltfter to get back eighteen millings in the advanced price
of his malt, than it is at prefent for the brewer to get back twenty-
four or twenty-five, fometimes thirty fhillings, in that of his liquor.
The maltfter, indeed, inftead of a tax of fix fhillings, would be
obliged to advance one of eighteen millings upon every quarter of
malt. But the brewer is at prefent obliged to advance a tax of
twenty-four or twenty-five, fometimes thirty millings, upon every
quarter of malt which he brews. It could not be more inconvenient
for the maltfter to advance a lighter tax, than it is at prefent for the
brewer to advance a heavier one. The maltfter doth not always
keep in his granaries a ftock of malt which it will require a longer
time to difpofe of, than the ftock of beer and ale which the brewer
frequently keeps in his cellars. The former, therefore, may fre-
quently get the returns of his money as foon as the latter. But
whatever inconveniency might ariie to the maltfter from being
obliged to advance a heavier tax, could eafily be remedied by
granting him a few months longer credit than is at prefent com-
monly given to the brewer.

4

Nothing

THE

WEALTH OF

NATIONS.

5*3

Nothing could reduce the rent and profit of barley land which c HnA p*
did not reduce the demand for barley. But a change of fyfiem v— v— - ■>
which reduced the duties upon a quarter of malt brewed into beer
and ale from twenty-four and twenty-five fhillings to eighteen
fhillings, would be more likely to increafe than diminifh that
demand. The rent and profit of barley land, befides, muft always
be nearly equal to thofe of other equally fertile and equally well
cultivated land. If they were lefs, fome part of the barley land
would foon be turned to fome other purpofe; and if they were
greater, more land would foon be turned to the railing of barley.
When the ordinary price of any particular produce of land is at
what may be called a monopoly price, a tax upon it neceflarily
reduces the rent and profit of the land which grows it. A tax upon
the produce of thofe precious vineyards, of which the wine falls fo
much fhort of the effe&ual demand, that its price is always above
the natural proportion to that of the produce of other equally
fertile and equally well cultivated land, would neceflarily reduce
the rent and profit of thofe vineyards. The price of the wines,
being already the higheft that could be got for the quantity com-
monly fen t to market, it could not be raifed higher without dimi-
nishing that quantity ; and the quantity could not be diminimed
without ftill greater lofs, becaufe the lands could not be turned
to any other equally valuable produce. The whole weight of the
tax, therefore, would fall upon the rent and profit ; properly upon
the rent of the vineyard. When it has been propofed to lay any
new tax upon fugar, our fugar planters have frequently complained
that the whole weight of fuch taxes fell, not upon the confumer,
but upon the producer; they never having been able to raife the
price of their fugar after the tax higher than it was before. The
price had, it feems, before the tax been a monopoly price ; and the
argument adduced to-fhow that fugar was an improper Subject, of
taxation, demonstrated perhaps that it was a proper one; the
gains of monopolies, whenever they can be come at, being cer-

Vol. II. U u u tainly

THE NATURE AND CAUSES OF

tazily of all fu ejects the moFc proper. But the ordinary price of
barley, has never been a monopoly price 3 and the rent and profit of
barky land have never been above their natural proportion to.
thole of other equally fertile and; equally well cultivated land.
The different taxes which have been irnpofed upon malt, beer,,
and ale, have never lowered the price of barley, lrave never re»
duced the rent and profit of barley land. The price of malt
to the brewer has conftantly 1 ifen in proportion to the taxes im-
pofed upon it g and thole taxes, together with the different du-
ties upon beer and ale, have conftantly either raifed the price,
or what comes to. the lame thing, reduced the quality of tho&
commodities to the confumer. The final payment of thofe taxes
has fallen conftantly upon the confumer, and not upon the pro-
ducer.

•V" . - r:;--> • '•• •• ivr. ctri oi

The only people likely to- fuffer by the change of fyftem here

propofed, are thole who brew for their own private ufe. But the
exemption which this fuperior rank of people at prefent Qnjoy from
very heavy taxes which are paid by the poor labourer and artificer,
is furely moft unjuft and unequal,, and ought to be taken away,,
even though this change was never to take place. It has probably
been the intereft of this fuperior order of people, however, which
has hitherto prevented a change of fyftem that could not well
fail both to increafe the revenue and to relieve the people.
3«iol ni sbdT .i?d%Qn§ . oi vijnuoD- ngisjo'} 3no - spo il - ti5)&w
1 Besides fuch duties as thofe of cuftoms and excife above-men-
tioned, there are feveral others which affect the price of goods more
unequally and more indirectly. Of this kind are the duties which
in French are called Peages, which in old Saxon times were called
duties of PalTage, and which feem to have been originally eftablifhed
for the fame purpofe as our turnpike tolls or the tolls upon our
canals and navigable rivers ; for the maintenance of the road or of
the navigation. Thofe duties, when applied to fuch purpofes, are

molt

THE WEALTH OF NATIONS

5'S

moil properly impofed according to the bulk or weight of the C H^A P.
goods. As they were originally local and provincial duties, applU w— - v~-^
cable to local and provincial purpofes, the adminiilration of them
was in mod cafes entrufted to the particular town, parifh, or lord-
fhip, in which they were levied; fuch communities being in fome
way or other fuppofed to be accountable for the application. The
fovereign, who is altogether unaccountable, has in many countries
affumed to himfelf the adminiftration of thofe duties; and though
he has in moll cafes enhanced very much the duty, he has in
many entirely neglected the application. If the turnpike tolls of
Great Britain mould ever become one of the refources of govern-
ment, we may learn, by the example of many other nations, what
would probably be the confequence. Such tolls are no doubt finally
paid by the eonfumer ; but the confumer is not taxed in proportion
to his expenee when he pays, not according to the value, but ac-
cording to the bulk or weight of what he confumes. When fuch
•duties are impofed, not according to the bulk or weight, but ac-
cording to the fuppofed value of the goods, they become properly
a fqrt of inland cuftoras or excifes, which obftruct very much the
moil important of all branches of commerce, the interior com-
merce of the country.

In fome fmall ftates duties fimilar to thofe paflage duties are im-
pofed upon goods carried acrofs the territory, either by land or -by
water, from one foreign country to another. Thefe are in fome
countries called tranfit-duties. Some of the Little Italian ftates,
which are fituated upon the Po, and the rivers which run into it,
derive fome revenue from duties of this kind, which are paid altoger
ther by foreigners, and which are perhaps the only duties that one
ftate can impofe upon the fubjeCts of another without obftrufting
in any refpe& the induftry or commerce of its own. The moll
important tranfit-duty in the world is that levied by the king of
Denmark upon all merchant fhips which pafs through the Souiitf.

U u u 2 STJCIi

THE NATURE AND CAUSES OF

Such taxes upon luxuries as the greater part of the duties oi
cuiroms and excife, though they fall indifferently upon every dif-
ferent fpecies of revenue, and are paid finally, or without any retri-
bution, by whoever confumes the commodities upon which they are
impofed, yet they do not' always fall equally or proportionably
up^n the revenue of every individual. As every man's humour
regulates the degree of his confumption, every man contributes
rather according to his humour than in proportion to his revenue;
the profufe contribute more, the parhmonious lefs, than then-
proper proportion. During the minority of a man of great for-
tune, he contributes commonly very little by his confumption to-
wards the fupport of that ftate from whofe protection he derives a
great revenue. Thofe who live in another country contribute no-
thing by their confumption towards the fupport of the government
of that country in which is fituated the fource of their revenue. If
in this latter country there mould be no land-tax, nor any con-
fiderable duty upon the transference either of moveable or of im-
moveable property, as is the cafe in Ireland, fuch abfentees may
derive a great revenue from the protection of a government to the
fupport of which they do not contribute a fingle milling. This
inequality is likely to be greater! in a country of which the go-
vernment is in fome refpecfs fubordinate and dependent upon
that of fome other. The people who pofTefs the moft exten-
five property in the dependent, will in this cafe generally chufe to
live in the governing country. Ireland is precifely in this fituation*
'and we cannot therefore wonder that the propofal of a tax upon
abfentees mould be fo very popular in that country. It might per-
haps be a little difficult to afcertain either what fort, or what degree
of abfence fhould fubjecl: a man to be taxed as an abfentee, or at
what precife time the tax fhould either begin or end. If you ex-
cept, however, this very peculiar fituation, any inequality in the
contribution of individuals, which can arife from fuch t^xes, is

much

THE WEALTH OF NATIONS

much more than compenfated by the very circumftance which occa-
fions that inequality ; the circumftance that every man's contribution
is altogether voluntary ; it being altogether in his power either to
confume or not to confume the commodity taxed. Where fuch
taxes, therefore, are properly aiTefTed and upon proper commodi-
ties, they are paid with lefs grumbling than any other. When
they are advanced by the merchant or manufacturer, the confumer,
who finally pays them, foon comes to confound them with the price
of the commodities, and almoft forgets that he pays any tax.

Such taxes are or may be perfectly certain, or may be afTefTed fo
as to leave no doubt concerning either what ought to be paid, or
when it ought to be paid ; concerning either the quantity or the
time of payment. Whatever uncertainty there may fometimes be,
either in the duties of cuftoms in Great Britain, or in other duties
of the fame kind in other countries, it cannot arife from the na-
ture of thofe duties, but from the inaccurate or unfkilful manner
in which the law that impofes them is exprefTed.

Taxes upon luxuries generally are, and always may be, paid
piece-meal, or in proportion as the contributors have occafion to
purchafe the goods upon which they are impofed. In the time and
mode of payment they are, or may be, of all taxes the moft con-
venient. Upon the whole, fuch taxes, therefore, are, perhaps, as
-agreeable to the three firft of the four general maxims concerning
taxation, as any other. They offend in every refpecl againft the
fourth.

Such taxes, in proportion to what they bring into the public trea-
sury of the ftate, always take out or keep out of the pockets of
the people more than almoft any other taxes. They feem to do
this in all the four different ways in which it is pollible to do it.

First,

;i5 THE NATURE AND CAUSES OF

BOOK F'iRST, the levying of fuch taxes, even when impcfed in the mod
u— v*w^ judicious manner, requires a great number of cuftom-houfe and
excife officers, whofe fateries and perquifites are a real tax upon
the people, which brings -.nothing into the treafury of the ftate.
This expence, .however, it muit be acknowledged, is m-Ore mode-
rate in Great Britain than in moil other countries. In the year
which ended on the firth of July, 1775, thegrofs produce of the
deferent duties, under the management of the commiffioners of
excife in England, amounted to 5,479,695!. 7s. tad. which was
levied at an expence of little more than five and a half per cent.
From this grofs produce, however, there muft be deducted what
was paid away in bounties and drawbacks upon the exportation -of
excifeable goods, which will reduce the neat produce below five mil-
lions. The levying of the fait duty, an excife duty, but under a
different management, is much more escpenfiVe. Tiie neat revenue
.of the cuftoms does not amount to two millions and a half, which
is levied at an expence of more than ten per cent, in the falaries
of officers, and ojiher incidents. But the perquifites of cuftom-
houfe officers are every where much greater than their falaries at
fome .ports more than double or triple thofe falaries. If the fala-
ries of officers, and other incidents, therefore, amount to more
than ten per cent, upon the neat revenue of the cuftoms ; the
whole expence of levying that revenue may amount, in falaries and
perquifites together, to more than twenty or thirty per cent. The
officers of excife receive few or no perquifites ; and the admini-
ftration of that branch of the revenue, being of more recent efta-
blifhment, is in general lefs corrupted than that of the cuftoms,
into which length of time has introduced and authorifed many
ahufes. By charging upon malt the whole revenue which is at
prafcnt levied by the different duties upon malt and malt liquors, a
faving, it is fuppofed, of more than fifty thoufand pounds might
be made in the annual expence of the excife. By confining the
6 duties

THE WEALTH' OF NATIONS.

duties of cuftoms to a few forts of goods, and by levying thofe C
duties according, to the excife laws, a muck greater laving might w
probably be made in the annual expence of the cuitoms..

Secondly, fuch taxes necefiarily occafion fbme obftruction or
*.iifeouj?agement- to certain branches of indufrry. As they always
raife the price of the commodity taxed, they fo far difcourage its
eonfomption, and eonfequently its production. If it is a eommo-
dity of home growth or manufacture, lefs labour Gomes, to be
empfoyed in railing and producing it. If it is a foreign commo-
dity of which the tax inereafes in this manner the price, the com-
modities of the feme kind which are made at home may thereby,
indeed, gain fome advantage in the home market, and a. greater
quantity of domeftic induftry may thereby be turned towards pre-
paring them. But though this rife of price in a foreign commo-
dity may encourage domelHc indufVry in one particular branch*, it
necefiarily difcourages that induftry in almofl; every other. The
dearer the Birmingham manufacturer buys his foreign, wine, the
cheaper he neceilarily fells that part of his hardware with which, or,
what comes to the fame thing, with the price of which he buys it.
That part of his hardware, therefore, becomes of lefs value to him,
and he has lefs encouragement to work at it. The dearer the con-
fumers in one country pay for the furplus produce of another, the
cheaper they neceflarily fell that part of their own furplus produce
with which, or, what comes to the fame thing, with the price cf
which they bay it. That part of their own furplus produce becomes
of lefs value to them-, and they have lefs encouragement no increafe
its quantity. All taxes upon confutable commodities, therefore;
tend to reduce, the quantity of productive labour below what it
other. wife would, be, either in preparing the commodities taxed, it
they are home commodities; or in preparing thofe with which they
are purchaled, if they are foreign. cqsii modules.. Such, taxes- too

always

520

THE NATURE AND CAUSES OF

BOOK always alter, more or lefs, the natural direction of national indu-
w-y-— i ftry, and turn it into a channel always different from, and gene-
rally lefs advantageous than that in which it would have run of
its own accord.

Thirdly, the hope of evading fuch taxes by fmuggling gives
frequent occaiion to forfeitures and other penalties, which entirely
ruin the fmuggler; a perfon who, though no doubt highly blameable
for violating the laws of his country, is frequently incapable of
violating thofe of natural juftice, and would have been, in every
refpect, an excellent citizen, had not the laws of his country made
that a crime which nature never meant to be fo. In thofe cor-
rupted governments where there is at leaft a general fulpicion of
much unnecefTary expence, and great mifapplication of the pub-
lic revenue, the laws which guard it are little refpected. Not
many people are fcrupulous about fmuggling when, without per-
jury, they can find any eafy and fafe opportunity of doing fo.
To pretend to have any fcruple about buying fmuggled goods,
though a manifeft encouragement to the violation of the ' revenue
laws, and to the perjury which almoft always attends it, would in
moft countries be regarded as one of thofe pedantic pieces of hypo-
crify which, inftead of gaining credit with any body, ferve only to
expofe the perfon who affects to pracYife them, to the fufpicion of
being a greater knave than moft of his neighbours. By this indul-
gence of the public, the fmuggler is often encouraged to continue
a trade which he is thus taught to confider as in fome mea-
fure innocent; and when the feverity of the revenue laws is ready
to fall upon him, he is frequently difpofed to defend with vio-
lence, what he has been accuftomed to regard as his juft property.
From being at firft, perhaps9 rather imprudent than criminal,
he at laft too often becomes, one of the hardieft and moft deter-
mined violaters of. the laws of fociety. By the ruin of the fmug-
8 gler,

THE WEALTH OF NATIONS.

gler, his capital, which had before been employed in maintaining C
productive labour, is abforbed either in the revenue of the ftate or u
in that of the revenue-rofncer, and is employed in maintaining
unproductive, to the diminution of the general capital of the
fociety, and of the ufeful indujftry which it might otherwife have
maintained.

Fourthly, fuch taxes, by fubje6ling at leaft the dealers in the
taxed commodities to the frequent vihts and odious examination of
the tax gatherers, expofe them fometimes, no doubt, to fome degree
of opprellion, and always to much trouble and vexation j and though
vexation, as has already been faid, is not urictly fpeaking expence,
it is certainly equivalent to the expence at which every man would be
willing to redeem hjmfelf from it. The laws of excife, though
more effectual for the purpofe for which they were inftituted, are,
in this refpect, more vexatious than thofe of the cuftoms. When a
merchant has imported goods fubject to certain duties of cuftoms,
when he has paid thole duties, and lodged the goods in his ware-
houfe, he is not in molt cafes liable to any further trouble or vexa-
tion from the cuitom-houfe officer. It is otherwife with goods
fubject to duties of excife. The dealers have no refpite from the
continual vifits and examination of the excife officers. The duties
of excife are, upon this account, more unpopular than thofe of the
cuftoms ; and fo are the officers who levy them. Thofe of^cers,
it is pretended, though in general, perhaps, they do their duty
fully as well as thofe of the cuftoms ; yet, as tl^at duty obliges
them to be frequently very troublefome to fome of their neigh-
bour's, commonly contract a certain hardnefs of character which thf
others frequently have not. This obfervation, however, may very
probably be the meer fuggeftion of fraudulent dealers, whofe fmug;-
gling is either prevented or detected by their diligence.

• r- * rbiifrfW' *'•£' •" ' • . * ' • ■ [i ill

The inconveniencies, however, which are, perhaps, in fome

. degree infeparable from taxes upon confumable commodities, fall as

Vol. II. X x x light

522

THE NATURE AND CAUSES OF

B O O K light upon the people of Great Britain as upon thofe of any other
v. — r—j country of which the government is nearly as expenfrve. Our ftate

is not perfect, and might be. mended ; but it is as good or better

than that of molt of our neighbours.

In confequence of the notion that duties upon confumable goods
were taxes upon the profits of merchants, thofe duties have, in
fome countries, been repeated upon every fucceiTive fale of the goods.
If the profits of the merchant importer or merchant manufacturer
were taxed, equality feemed to require that thofe of all the middle
buyers, who intervened between either of them and the confumer,,
fhould likewife be taxed. The famous Alcavala of Spain feems to
have been eftablhhed upon this principle. It was at firft a tax of
ten per cent, afterwards of fourteen per cent, and is at prefent of
only fix per cent, upon the fale of every fort of property, whether
moveable or immoveable ; and it is repeated every time the pro-
perty is fold. * The levying of this tax requires a multitude of
revenue officers fufficient to guard the tranfportation of good's, not
only from one province to another, but from one fhop to another.
It fubjects not only the dealers in fome forts of goods, but thofe in.
all forts, every farmer, every manufacturer, ev^ry merchant and*
fhop- keeper, to the continual vifits and examination of the tax
gatherers. Through the greater part of a country in which a tax
of this kind is eitablifhed, nothing can be produced for diftant
fale. The produce of every part of the country muft be propor-
tioned to the confumption of the neighbourhood. It is to the
Alcavala, accordingly, that Uftaritz imputes the ruin of the' manu-
factures of Spain. He might have imputed to it likewife the declen-
fion of agriculture, it being impofed not only upon manufactures,
but upon the rude produce of the land.

In the kingdom of Naples there is a fimilar tax of three per
cent, upon the value of all contracts, and confequently upon that

of

* Memoircs concernant les Droits, &c. torn. i. p. 455.

THE WEALTH OF NATIONS.

of all contracts of fale. It is both lighter than the Spanifh tax, C H A P.
and the greater part of towns and parifhes are allowed to pay a
compofition in lieu of it. They levy this compofition in what
manner they pleafe, generally in a way that gives no interrup-
tion to the interior commerce of the place. The Neapolitan tax,
therefore, is not near fo ruinous as the Spanifh one.

The uniform fyftem of taxation, which, with a few excep-
tions of no great confequence, takes place in all the different
parts of the united kingdom of Great Britain, leaves the in-
terior commerce of the country, the inland and coafting
trade, almoft entirely free. The inland trade is almoft per-
fectly free, and the greater part of goods may be carried
from one end of the kingdom to the other, without requir-
ing any permit or let-pafs, without being fubject to queftion,
vifit or examination from the revenue officers. There are a
few exceptions, but they are fuch as can give no interruption
to any important branch of the inland commerce of the country.
Goods carried coaftwife, indeed, require certificates or coaft-
cockets. If you except coals, however, the reft are almoft all
duty-free. This freedom of interior commerce, the effect of the
uniformity of the fyftem of taxation, is perhaps one of the prin-
cipal caufes of the profperity of Great Britain ; every great country
being neceffarily the beft and moft extenfive market for the greater
part of the productions of its own induftry. If the fame free-
dom, in confequence of the fame uniformity, could be extended
to Ireland and the plantations, both the grandeur of the ftate
and the profperity of every part of the empire, would probably
be ftill greater than at prcfent.

In France, the different revenue laws which take place in the
different provinces, require a multitude of revenue officers to fur-
round, not only the frontiers of the kingdom, but thofe cf
almoft each particular province, in order either to prevent the

X x x 2 impoi ration

THE NATURE AND CAUSES OF

K importation of certain goods, or to fubjecl: it to the payment of
'mi certain duties, to the no fmall interruption of the interior com-
merce of the country. Some provinces are allowed to compound
for the gabelle or falt-tax. Others are exempted from it altoge-
ther. Some provinces are exempted from the exclufive fale of
tobacco, which the farmers-general enjoy through the greater part
of the kingdom. The aides, which correfpond to the excife in
England, are very different in different provinces. Some pror
vinces are exempted from them, and pay a compofition or equi-
valent. In thofe in which they take place and are in farm, there
are many local duties which do not extend beyond a particular
town or diPcricTt. The Traites, which correfpond to our cuf-
toms, divide the kingdom into three great parts j firft, the pro-
vinces fubject to the taiif of 1664, which are called the pro-
vinces of the five great farms, and under which are compre-
hended Picardy, Normandy, and the greater part of the interior
provinces of the kingdom ; fecondly, the provinces fubjecl: to the
tarif of 1667, which are called the provinces reckoned foreign,
and under which are comprehended the greater part of the fron-
tier provinces ; and, thirdly, thofe provinces which are faid to be
treated as foreign, or which, becaufe they are allowed a free
commerce with foreign countries, are in their commerce with
the other provinces 01 France fubjecled to the fame duties as
other foreign countries. Thefe are Alface, the three bifhopricks
of Metz, Toul, and Verdun, and the three cities of Dunkirk,
Bayonne, and Marfeilles. Both in the provinces of the five
great farms, (called fo on account of an aniient divifion of the
duties of cuiioms into five great branches, each of which was
originally the fubjecl: of a, particular farm, though they are now
all united into one) and in thofe which are faid to be reckoned
foreign, there are many local duties which do not extend beyond
a particular town or diftrift. There are fome fuch even in the
4 provinces

THE WEALTH OF NATIONS.

provinces which are faid to be treated as foreign, particularly in C H A P.
the city of Marfeilles. It is unneceffary to obferve how much v-~v — ■!
both the reftraints upon the interior commerce of the country,
and the number of the revenue officers muft be multiplied, in
order to guard the frontiers of thofe different provinces and
diftricTs, which are fubject to fuch different fyftems of taxation.

Over and above the general reftraints annng from this Com-
plicated fyftem of revenue laws, the commerce of wine, after
corn perhaps the moil important production of France, is in
the greater part of the provinces fubjecl to particular reftraints
arifmg from the favour which has been fhewn to the vineyards of
particular provinces and diftricts, above thofe of others. The
provinces moft famous for their wines, it will be found, I be-
lieve, are thofe in which the trade in that article is fubjecl to
the feweft reftraints of this kind. The extenfive market which
fuch provinces enjoy, encourages good management both in the
cultivation of their vineyards, and in the fubfequent preparation,
of their wines.

Such various and complicated revenue laws are riot peculiar
to France. The little dutchy of Milan is divided into fix pro-
vinces, in each of which there is a different fyftem of taxation
with regard to feveral different forts of consumable goods. The
frill fmaller territories of the duke of Parma are divided into
ihree or four, each of which has, in the fame manner, a fyftem
of its own. Under fuch abfurd management, nothing but the
great fertility of the foil and happinefs of the climate could pre-
ferve fuch countries from foon relapfing. into the loweft ftate of
poverty and barbarifm..

Taxes upon confumable commodities may either be levied by
an adminiftration of which the officers are appointed by govern-
ment^

THE ' NATURE AND CAUSES OF

B O^OK ment, and are immediately accountable to government, of which
u-— the revenue muft in this cafe vary from year to year, according to
the occafional variations in the produce of the tax; or they may
be lett in farm for a rent certain, the farmer being allowed to ap-
point his own officers, who, though obliged to levy the tax in the
manner directed by the law, are under his immediate infpection,
and are immediately accountable to him. The beft and moft
frugal way of levying a tax can never be by farm. Over and
above what is neceffary for paying the ftipulated rent, the fata-
lies of the officers, and the whole expence of adminiftration,
the farmer muft always draw from the produce of the tax a
certain profit proportioned at leaft to the advance which he
makes, to the rifk which he runs, to the trouble which he is at,
and to the knowledge and fkill which it requires to manage fo
very complicated a concern. Government, by eftablifhing an
adminiftration under their own immediate infpeclion of the fame
kind with that which the farmer eftablifhes, might at leaft fave
this profit which is almoft always exorbitant. To farm any con-
fiderable branch of the public revenue, requires either a great capi-
tal or a great credit •, circumftances which would alone reftrain the
competition for fuch an undertaking to a very fmall number of
people. Of the few who have this capital or credit, a ftill
imaller number have the neceffary knowledge or experience ; an-
other circumftance which reftrains the competition ftill further.
The very few who are in condition to become competitors find
it more for their intereft to combine together; to become co-
partners inftead of competitors, and when the farm is fet up to
auction to offer no rent, but what is much below the real value.
In countries where the public revenues are in farm, the farmers

2IflJ ni D9iy31 3'I'S "tjBl DfIB ODDBOQt OOQn -fLll .?JvTBT T ill

are generally the moft opulent people. Their wealth would
alone excite the public indignation, and the vanity which almoft
always accompanies fuch upftart fortunes, the foolifh orientation

witli

THE WEALTH OF NATIONS.

with which they commonly difplay that wealth, excites that indig-
nation ftill more.

The farmers of the public revenue never find the Taws too
fevere, which punifh any attempt to evade the payment of a tax.
They have no bowels for the contributors, who are not their fub-
jects, and whofe univerfal bankruptcy, if it fhould happen the
day after their farm is expired, would not much affect their in-
tereft. In the greater!: exigencies of the ftate, when the anxiety
of the fovereign for the exact payment of his revenue is necefiarily
the greater!:, they feldom fail to complain that without laws more
rigorous than thofe which actually take place,, it will be impoffible
for them to pay even the ufual rent. In thofe moments of public
diftrefs their demands cannot be difputed. The revenue Jaws,
therefore, become gradually more and more fevere. The molt
fanguinary are always to be found in countries where the greater'
part of the public revenue is in farm. The mildefl, in countries
where it is levied under the immediate inflection of the fovereign.
Even a bad fovereign feels more compaffion for his people than
can ever be expected from the farmers of his revenue. He knows
that the permanent grandeur of his family depends upon the
profperity of his people, and he will never knowingly ruin that
profperity for the fake of any momentary interefl of his own. It
is otherwife with the farmers of his revenue, whofe grandeur may
frequently be the effect of the ruin, and not of the profperity of
his people.^ ^.i^Ht^o* ^jitfmo^ :

A tax is fometimes, not only farmed for a rent certain, but
the farmer has, befides, the monopoly of the commodity taxed.
In France, the taxes upon tobacco and fait are levied in this
manner. In fuch cafes the farmer, inftead of one, levies two
exorbitant profits upon the people; the profit of the farmer, and
the ftill more exorbitant one of the monopolift. Tobacco being

a luxury,

9

CHAP.

if.

\ v -J-

523 THE NATURE AND CAUSES

BOOK a luxury, every man is allowed to buy or not to buy as he
chufes. But fait being a neceffary, every man is obliged to buy of

T

the farmer a certain quantity of it ; becaufe if he did not buy
this quantity of the farmer, he would, it is prefumed, buy it of
fome fmuggler. The taxes upon both commodities are exorbitant.
The temptation to fmuggle confequently is to many people irrefifl-
able, while at the fame time the rigour of the law, and the vigi-
lance of the farmer's officers, render the yielding to that tempta-
tion almoft certainly ruinous. The fmuggling of fait and tobacco
fends every year feveral hundred people to the gallies, belides a
very confiderable number whom it fends to the gibbet. Thofe
taxes levied in this manner yield a very confiderable revenue to
government. In 1767, the farm of tobacco was lett for twenty-
two millions five hundred and forty-one thoufand two hundred
and feventy-eight livres a year. That of fait, for thirty- fix mil-
lions four hundred and ninety-two thoufand four hundred and
four livres. The farm in both cafes was to commence in 7768,
and to laft for fix years. Thofe who confider the blood of the
people as nothing in comparifon with the revenue of the prince,
may perhaps approve of this method of levying taxes. Similar
ta^es and monopolies of fait and tobacco, have been eftablifhed in
many other countries j particularly in the Auftrian and Pruffian
dominions, and in the greater part of the dates of Italy.

In France, the greater part of the actual .revenue of the crown
is ^derived from eight different fources ; the taille, the capitation,
the two vingtlemes, the gabelles, the aides, the traite-3, the
ddmaine, and the farm of tobacco. The five laft are, "jn the
greater part of the provinces, under farm. The three firft are
every where levied by an admimftration under the immediate in-
fpectlon and direction of government, and it is univerfally acknow-
ledged that in proportion to what they take out of the pockets
-of the people, they bring more into the treafury of the prince than

the

the

WEALTH OF NATIONS.

the other five, of which the adminiftration is much more wafteful c HA p«
and expenfive. u— -v-*--*

The finances of France feem, in their prefent ftate, to admit of
three very obvious reformations. Firft, by abolifhing the taille
and the capitation, and by increafmg the number of vingtiemes, fo
as to produce an additional revenue equal to the amount of thofe
other taxes, the revenue of the crown might be preferved ; the
expence of collection might be much diminiflied ; the vexation of
the inferior ranks of people, which the taille and capitation occa-
fion, might be entirely prevented ; and the fuperior ranks might
not be more burdened than the greater part of them are at prefent.
The vingtieme, I have already obferved, is a tax very nearly of the
fame kind with what is called the land-tax of England. The bur-
den of the taille, it is acknowledged, falls finally upon the proprie-
tors of land ; and as the greater part of the capitation is alfeffed
upon thofe who are fubject to the taille at fo much a pound of
that other tax, the final payment of the greater part of it
muft likewife fall upon the fame order of people. Though the
number of the vingtiemes, therefore, was increafed fo as to pro-
duce an additional revenue equal to the amount of both thofe"
taxes, the fuperior ranks of people might not be more burdened
than they are at prefent. Many individuals no doubt would j on
account of the great inequalities with which the taille is commonly
afTeffed upon the eftates and tenants of different individuals. The
intereft and oppofition of fuch favoured fubjecls are the obfta-
cles moft likely to prevent this or any other reformation of the
fame kind. Secondly, by rendering the gabelle, the aides, the taxes
upon tobacco, all their different cuftoms and excifes uniform in all
the different parts of the kingdom, thofe taxes might be levied at
much lefs expence, and the interior commerce of the kingdom
might be rendered as free as that of England, Thirdly, and laftly,

Vol. II. Y y y b?

THE NATURE AND CAUSES OF

K by fubjecting all thofe taxes to an adminiftration under the imme-
*j diate infpedion and direction of government, the exorbitant profits
of the farmers general might be added to the revenue of the Mate.
The oppofition arifing from the private intereft of individuals, is
likely to be as effectual for preventing the two laft as the firft men-
tioned fcheme of reformation.

The French fyftemof taxation feems, in every refpect, inferior
to the Britifii. In Great Britain ten millions fterling are annually
levied upon lefs than eight millions of people, without its being
poilible to fay that any particular order is opprefled. From the
collections of the abbe Expilly, and the obfervations of the author
of the Eflay upon the legiflation and commerce of corn, it appears
probable that France, including the provinces of Lorraine and Bar,
contains about twenty-three or twenty-four millions of people ;
three times the number perhaps contained in great Britain. The
foil and climate of France are better than thofe of Great Britain.
The country has been much longer in a ftate of improvement and
cultivation, and is, upon that account, better flocked with all thofe
things which it requires a long time to raife up and accumulate,
fuch as great towns, and convenient and well-built houfes, both in
town and country. With thefe advantages it might be expected
that in France a revenue of thirty millions might be levied for the
fupport of the ftate, with as little inconveniency as a revenue of
ten millions is in Great Britain. In 1765 and 1766, the whole reve-
nue paid into the treafury of France, according to the beft, though,
I acknowledge, very imperfect: accounts which I could get of it,
nfually run between 308 and 325 millions of livres; that is, it did not
amount to fifteen millions fterling ; not the half of what might
have been expected, had the people contributed in the fame propor-
tion to their numbers as the people of Great Britain. The people
©f France, however, it is generally acknowledged, are much more

opprejled

THE WEA L T H OF NATIONS.

53*

oppreffed by taxes than the people of Great Britain. France, how- CIj1A ^
ever, is certainly the great empire in Europe which, after that of
Great Britain, enjoys the miideft and moft indulgent government. ■

■ In He-Hand the heavy taxes upon the necefiaries of life have
ruined, it is faid, their principal manufactures, and are likely to
difcour'age gradually even their fimeries and their trade in mip
building. The taxes upon the necefiaries of life are inconfiderablc
in Great Britain, and no manufacture has hitherto been ruined by
them. The Britifh taxes which bear hardeft on manufactures are
fome duties upon the importation of raw materials, particularly
upon that of raw filk. The revenue of the ftates general and of
the different cities, however, is faid to amount to more than five
millions two hundred and fifty thoufand pounds fterling j and as thc
inhabitants of the United Provinces cannot well be fuppofed to
amount to more than a third part of thofe of Great Britain, they
muft, in proportion to their number, be much more heavily taxed.

fans' ijJdffiSY^Ui'** * n, ■ ■ • *? :' ■ *■ 'tvy X, i a ' ' y 'u<7no$< 911*7

After all the proper fubjects of taxation have been exhaufted,

if the exigencies of the ftate ftill continue to require new taxes,

they muft be impofed upon improper ones. The taxes upon

the necefiaries of life, therefore, may be no impeachment of the

wifdom of that republic, which, in order to acquire and to maintain

its independency, has, in fpite of its great frugality, been involved

m fuch expenhve wars as have obliged it to contract great debts.

The fmgular countries of Holland and Zealand, befiues, require a

considerable expence even to preferve their exiftence, or to prevent

their being fwallowed up by the fea, which muft have contributed

to increafe confiderably the load of taxes in thofe two provinces.

The republican form of government feems to be the principal fup*

port of the prefent grandeur of Holland. The owners of great

Capitals, the great mercantile families, have generally either fomg

Y y y 2 direct

THE NATURE AND CAUSES OF

K direct mare, or fome indirect influence in the adminiftration of that
-j government. For the fake of the refpect and authority which
they derive from this fituation, they are willing to live in a country
where their capital, if they employ it themfelves, will bring them
lefs profit, and if they lend it to another, lefs intereft -t and where
the very moderate revenue which they can draw from it will pur-
chafe lefs of the neceffaries and conveniencies of life than in any
other part of Europe. The refidence of fuch wealthy people ne-
ceffarily keeps alive, in fpite of all difadvantages, a certain degree
of induftry in the country. Any public calamity which mould
deftroy the republican form of government, which fhould throw
the whole adminiftration into the hands of nobles and of foldiers,
which mould annihilate altogether the importance of thofe wealthy
merchants, would foon render it difagreeable to them to live in a
country where they were no longer likely to be much refpecled.
They would remove both their refidence and their capital to fome
other country, and the induftry and commerce of Holland would
foon follow the capitals which fupported them.

-qfruAfiOj nwo siri -svods imn-.iavo a is *biriw zlshstecn Hodjlo Jiaq '
vhsan 3flJBob bne baaliud znfrpiil ?di jbivt-gtuAion ob xibd ad tnort
fbtrlw ni Y^^^5f<^'tod .A : .taxlteab bfi£ foaal tii#r '3i 3B alqoaq vr^m z&
«noh£jfi3flo on ti&m&Mdw ni Ylilsisdil £ has ipuxt/i ©a zi aiaifct
adJ to asaaagxa Uqbntiq tfgnnfj lo noil£ijJ?i zidl ni ,noika:>G
oJ bswovfiabna aliwa^il svnd I <al3dJ JuH .JEaig briB foil
via*/ Jon ai£ aiqosq cbixlw \d aaanaqxa su> .^ood omdi ad* ni wort)
nulsalq d\hiil zqfid'iaq ion gi tns&T. .2avIaimaiiJ' niin ctf 3q£
ri3V3 bsniu 1 esmiJafnol ion esd tiiil'iuq sdJ -dairivv xzuok>vrit cB
u9 . .\t:&m bsnifji acd gnhrign-iaoa 'iot norTisq A .nam aldilna}
avBfl odw afqoaq 1o 8r;oi3mun \iav Jon 3i£ .avaibd I t83in£ftni sdJ
sdJ jltywll. ihfii'A zidl\o vjilfii^dfl, 10 v.lii/;l;qiod £ yd bstiini nsa-a
ipatdin ' • i^n&fiQ 1o viil&isdil adj J>n« v [oxul $0 ^iifeiiqljcd-

fhidw gttil arnii gnof arb t2ioiban£ kbifsl uso gnornA ^ncci

THE WEALTH OF NATIONS.

533

xfoinV/ ypiiodiUh 6<1ji> ipaqta? srfj djlsl aril iorI .Jnarnmavog

CHAP.
III.

vtffiooo b ai avii saUliw sib y3^!. tnoiteujd eiiij moil avmb yjiIj

CHAP. HL

Cy pvMck Debts.

JN that rude ftate of fociety which precedes the extenfion of
.^commerce and the improvement of manufactures, when thofe
expenlive luxuries which commerce and manufactures can alone in-
troduce, are altogether unknown, the perfon who pofTefTes a large
revenue, I have endeavoured to mow in the third book of this
inquiry, can fpend or enjoy that revenue in no other way than by
maintaining nearly as many people as it can maintain. A large
revenue may at all times be faid to confift in the command of a large
quantity of the neceftaries of life. In that rude ftate of things it is
commonly paid in a large quantity of thofe necefTaries, in the ma-
terials of plain food and coarfe cloathing, in corn and cattle, in
wool and raw hides. When neither commerce, nor manufactures
furnifh any thing for which the owner can exchange the greater
part of thofe materials which are over and above his own confump-
tion, he can do nothing with the furplus but feed and cloathe nearly
as many people as it will feed and cloathe. A hofpitality in which
there is no luxury, and a liberality in which there is no oftentation,
occafion, in this fituation of things, the principal expences of the
rich and the great. But thefe, I have likewife endeavoured to
{how. in the fame book, are expences by which people are not very
apt to ruin themfelves. There is not perhaps any fdfiih pleafure
lb frivolous, of which the purfuit has not fometimes ruined even
fenfible men. A pafiion for cock-fighting has ruined many. Bu
the inftances, I believe, are not very numerous of people who have
been ruined by a hofpitality or liberality of this kind; though the
hofpitality of luxury and the liberality of oftentation have ruined
many. Among our feudal anceftors, the long time during which
<j eibirea

THE NATURE AND CAUSES OF

eflates ufedto continue in the fame family fufficiently demonfrrat.es
the general difpofition of people to live within their income.
Though the ruftic hofpitallty conftantly exercifed by the great land-
holders may not to us in the prefent times feem confident with
that order which we are apt to confider as infeparably connected
with good oeconomy, yet we muft certainly allow them to have
been at leaft fo far frugal as not commonly to have fpent their
whole income. A part of their wool and raw hides they had ge-
nerally an opportunity of felling for money. Some part of this
money perhaps they fpent In purchafing the few objects of vanity
and luxury with which the circumstances of the times could furnifh
them ; but fome part of it they feem commonly to have hoarded.
They could not well indeed do any thing elfe but hoard whatever
money they faved. To trade was dilgraceful to a gentleman, and
to lend money at intereft, which at that time was confidered as
ufury and prohibited by law, would have been frill more fo. In
thole times of violence and diforder, befides, it was convenient to
have a hoard of money at hand, that in cafe they fnould be driven
from their own home they might have fomething of known value
to carry with them to fome place of fafety. The fame violence
which made it convenient to hoard, made it equally convenient to
conceal the hoard. The frequency of treafure trove, or of treafure
found of which no owner was known, fufficiently demonstrates the
frequency inthofe times both of hoarding and of concealing the hoard.
T^eafure-trove was then confidered as an- important branch of the
revenue of the fovereign. All the treafure-trove of the kingdom
would fcarce perhaps in the prefent times make an important branch
of the revenue of a private gentleman of a good eftate.
:tb ' law^tf-'^/ftnatab • arb rfonra ' yisv ^frnitasb ot e£ • atrnsv&i zm
The fame difpofition to fave and to hoard prevailed in the fove-
reign, as well as in the fuhjects. Among nations to whom com-
merce and manufactures are little known, the fovereign, it has

THE WEALTH OF NATIONS.

535

already been obferved in the fourth book, is in a fituation which cfj[AP*
naturally difpofes him to the parfimony requifite for accumulation. ~v — «♦*
In that fituation the expence even of a fovereign cannot be directed
by that vanity which delights in the gaudy finery of a court. The
ignorance of the times affords but few of the trinkets in which that
finery confifts. Standing armies are not then neceffary, fo that
the expence even of a fovereign, like that of any other great lord,
can be employed in fcarce any thing but bounty to his tenants,,
and hofpitality to his retainers. But bounty and hofpitality very
feldom lead to extravagance ; though vanity almoft always does.
All the antient fovereigns of Europe accordingly, it has already
been obferved, had treafures. Every Tartar chief in the prefenf
times is faid. to have one.

In a commercial country abounding with every fort of expenfive-
luxury, the fovereign, in the fame manner as almoft all the great-
proprietors in his dominions, naturally fpends a great part of his
revenue in purchafing thofe luxuries. His own and the neighbour-
ing, countries fupply him abundantly with all the coftly trinkets*
which compofe the fplendid, but infignificant pageantry of a court*
For the fake of an inferior pageantry of the fame kind, his nobles-
difmifs their retainers, make their tenants independent, and be-
come gradually themfelves as infignificant as the greater part of the-
wealthy burghers in his dominions. The fame frivolous paffions
which influence their conduct influence his. How can it be
fuppofed that he fhould be the only rich man in his dominions
who is infenfible to pleafures of this kind? If he does not, what:
he is very likely to do, fpend upon thofe pleafures fo great a part of
his revenue as to debilitate very much the defenfive power of
the ftate, it cannot well be expected that he fhould not fpend upon,
them all that part of it which is over and above what is neceflarjr
for fupporting that defenfive power. His ordinary e ; pence be-

• • a comes;.

-36 THE NATURE AND CAUSES OF

BOOK comes equal to his ordinary revenue, and it is well if it does not
i^-y-^j frequently exceed it. The amafiing of treafure can no longer be
expected, and when extraordinary exigencies require extraordinary
expences, he mure neceffarily call upon his fubjecls for an extraor-
dinary aid. The prefent and the late king of Pruffia are the only
great princes of Europe who, fince the death of Henry IV. of
France in 1610, are fuppofed to have amafTed any confiderable
treafuie. The parlimony which leads to accumulation has become
almoft as rare in republican as in monarchical governments. The
Italian republics, the United Provinces of the Netherlands, are
all in debt. The canton of Berne is the (ingle republic in Europe
which has amarTed any confiderable treafure. The other Swifs
republics have not. The tafte for fome fort of pageantry, for
fplendid buildings, at leaft, and other publick ornaments, fre-
quently prevails as much in the apparently fober fenate-houfe of a
little republic as in the diffipated court of the greater!: king.

The want of parfimony in time of peace, impofes the neceflity
of contracting debt in time of war. When war comes, there is
no money in the treafury but what is necefTary for carrying on the
ordinary expence of the peace eftabliftiment. In war an eftablifli-
ment of three or four times that expence becomes necefTary for the
defence of the ftate, and confequently a revenue three or four times
greater than the peace revenue. Suppofing that the fovereign mould
have, what he fcarce ever has, the immediate, means of augmenting
his revenue in proportion to the augmentation of his expence, yet
ftill the produce of the taxes from which this increafe of revenue
muft be drawn will not begin to come into the treafury till per-
haps ten or twelve months after they are impofed. But the moment
in which war begins, or rather the moment in which it appears
likely to begin, the army muft be augmented, the fleet muft be
fitted out, the garrifoned towns muft be put into a pofture of defence ;

THE WEALTH OF NATIONS. S37

that army, that fleet, thofe garrifoned towns muft be furnifhed C H A P.
with arms, ammunition and provifions. An immediate and great
expence muft be incurred in that moment of immediate danger,
which will not wait for the gradual and flow returns of the new
taxes. In this exigency government can have no other refource
but in borrowing.

The fame commercial ftate of fociety which, by the operation
of moral caufes, brings government in this manner into the ne-
ceflity of borrowing, produces in the fubjects both an ability and
an inclination to lend. If it commonly brings along with it
the neceflity of borrowing, it likewife brings along with it the
facility of doing fo.

A country abounding with merchants and manufacturers,
neceflarily abounds with a fet of people through whofe hands,
not only their own capitals, but the capitals of all thofe who
either lend them money, or truft them with goods, pafs as fre-
quently, or more frequently, than the revenue of a private man,
who, without trade or bufinefs, lives upon his income, panes
through his hands. The revenue of fuch a man can regularly
pafs through his hands only once in the year. But the whole
amount of the capital and credit of a merchant who deals in a
trade of which the returns are very quick, may fometimes pafs
through his hands two, three, or four times in a year. A country
abounding with merchants and manufacturers, therefore, necef-
farily abounds with a fet of people who. Have it at ail times in their
power to advance, if they chufe to do fo, a very large fum of mo-
ney to government. Hence the ability in the fubjects of a con
mercial ftate to lend.

Commerce and manufactures can feldom flourifli long in any
ftate which does not enjoy a regular adminiftration of juftice, in
which the people do not feel themfelves fecure in the pofleflion of

Vol. II. Z z z their

c3S THE NATURE' AND CAUSES OF

B Cy° K their property, in which the faith of contracts is not fupported by
Vo— v-~- > iavv? and in which the authority of the ftate is not fuppofed to
be regularly employed in enforcing the payment of debts from all
thofe who are able to pay. Commerce and manufactures, in
fhort, can feldom nourilh in any ftate in which there is not a
certain degree of confidence in the juftice of government, The
fame confidence which difpofes great merchants and manufac-
turers, upon ordinary occafions, to truft their property to the pro-
tection of a particular government,- , difpofes. them, upon extraor-
dinary occafions, to truft that government with the ufe of theii;
property. By lending money to government, they do not even
for a moment diminifh their ability to carry on their trade and
manufactures. On the contrary, they commonly augment it.
The neceflities of the ftate render government upon molt oc-
cafions willing to borrow upon terms extremely advantageous
to the lender. The fecurity which it grants to the original
creditor, is made transferable to any other creditor, and, from
the univerfal confidence in the juftice of the ftate, generally
fells in the market for more than was originally paid for it. The
merchant or monied man makes money by lending money to go-
vernment, and inftead of diminiftiing, increafes his trading capi-
tal. He generally confiders it as a favour, therefore, when the
adminiftration admits him to a Ihare in the firft fubfeription for
a new loan. Hence the inclination or willingnefs in the fubjects
sf a commercial ftafe ftitea,1* nwd Jcbb |?j m° Yjri£q bus

,9Jon v;ioHimoiq io hid Bid noqu gf^mJnoa rizm ,9Jjsvijq $ itarfvf
101 The government of fuch a ftate is very apt to repofe itfejf
upon this ability and willingnefs of its fubjecls to lend it their
jmoney on extraordinary occafions. It forefees the facility of bor-
rowing, and therefore difpenfes itfelf from the duty of laving*

. In a rude ftate of fociety there are no great mercantile or
manufacturing capitals. The individuals who, hoard whatever

money

THE WEALTH OF NATIONS.

money they can fave, and who conceal their hoard, do fo from C
a diftruft of the juftice of government, from a fear that if it Cs
was known that they had a hoard, and where that hoard was to
be found, they would quickly be plundered. In fuch a ftate of
things few people would be able, and nobody would be willing to
lend their money to government on extraordinary exigencies.
The fovereign feels that he muft provide for fuch exigencies by
faving, becaufe he forefees the abfolute impollibility of borrowing.
This forefight increafes ftill further his natural difpofition to
fare.

nsv^ ion ob varii ,Jffemnidvo§ \bhorh ^mfcfiM* vK i^ltHq
BhSThe progrefs of the enormous debts which at prefent opprefs,
and wiU in the long-run probably ruin all the great nations of
Europe, has been pretty uniform. Nations, like private men,
have generally begun to borrow upon what may be called perfonal
credit, witihout affigning or mortgaging any particular fund for
the payment of the debt and when this refource has failed them,
they have gone on to borrow upon affignments or mortgages of
particular funds.

• - OT '^slibtirl " & pifrnsf vd" ^ffi S'ttsnt'csm biinom 10 ia&dy&m
What is called the unfunded debt of Great Britain, is con-
tracted in the former of thofe two ways. It confifts partly in
a debt which bears or is fuppofed to bear no intereft, and which
refembles the debts thafr. a private man contracts upon account;
and partly in a debt which bears intereft, and which refembles
what a private man contra<5ts upon his bill or prominory note.
The debts which are due either for extraordinary fervices, or for
fervices either not provided for, or not paid at the time when they
are performed part of the extraordinaries of the army, riatfy,
and ordnance, the arrears of fubfidies to foreign princes, thofe of
feamens wages, &c. ufually conftitute a debt of the firft kind.
Navy and exchequer bills, which are in"ued fometimes in pay-
ment of apart of fuch debts, and fometimes for other purpofes,
vanpm Zzz2 conftitute

flHv NATURE- AND CAUSES OF

K conftitute a*dekt of the fecond kind ; exchequer bills bearing in-
tereft from the day on which they are iffued, and navy bills fix
months after they are iflued. The bank of England, either by volun-
tarily difcounting thofe bills at their current value; or by agreeing
with government for certain considerations to circulate Exchequer
bills, that is, to receive them at par, paying the intereft whidl
happens to be due upon them, keeps up their value and facili-
tates their circulation, and thereby frequently enables government
to contract a very large debt of this kind. In France, where
there is no bank, the ftate bills (billets d'etat) -f have fometimes
fold at fixty and feventy per cent, difcount. During the great
re-coinage in king William's time, when the bank of England
thought proper to put a flop to its ufual tranfactions, exchequer
bills and tallies are faid to have fold from twenty-five to fixty per
cent, difcount ; owing partly, no doubt, to the fuppofed inftability
of the new government eftabliflied by the revolution, but partly
too to the want of the fupport of the bank of England.

; . ; •. . '. , • . . -.- . • - r i y. ■•■ •. ?. > «*»•: ■»'«',*• Vh)Q3*
When this refource is exhaufted, and it becomes necenary, in

order to raife money, to aflign or mortgage fome particular branch
of the public revenue for tl>e payment of the debt, government
lias upon different occafions done this in two different ways. Some-
times it has made this aflignment or mortgage for a fhort perkxi
.of time only, a year or. a few years, for example ; and fometimes
for perpetuity. In the one cafe the fund was fuppofed fufhcient
to pay, within the limited time, both principal and intereft of the
money borrowed. In the other it was fuppofed. fufficient to pay
the intereft only, or a perpetual annuity equivalent to the intereft,.
government being at liberty to redeem at any time this annuity
-upon paying back the principal Turn borrowed. When money
was raifed in the one way, it was faid to be raifed by anticipation ;
when in the other, by perpetual funding, or, more fhortly, by
funding. :^Xitl v< HMuoms , flays ..^uoioicj ihit noqw

t See Examen des Reflexions politiques fur les finances,.

In

THE WEALTH OF NATIONS'.

In Great Britain the annual land and malt taxes are regularly c
anticipated every year, by virtue of a borrowing claufe conftantly <~
inferted into the acts which impofe them, The bank of Eng-
land generally advances at an intereft, which fince the revolution
has varied from eight to three per cent, the fums for which thofe
taxes are granted, and receives payment as their produce gra-
dually comes in. If there is a deficiency, which there always is>
it is provided for in the fupplies of the enfuing year. The only
confiderable branch of the public revenue which yet remains
unmortgaged is thus regularly fpent before it comes in. Like an
unprovident fpendthfift, whofe preffing occafions will not allow
trim to wait for the regular payment of his revenue, the ftate is
in, the conftant practice of borrowing of its own factors and
agents, and of paying intereft for the ufe of its own money.

^iilidsilm bii-x^i qfa Muobba, *xlTmq $niw> ......

In the reign of king William, and during a great part of that

of queen Anne, before we had become fo familiar as we are

now with the practice of perpetual funding, the greater part of

the new taxes were impofed but for a fhort period of time, (for

four, five, fix, or feven years only) and a great part of the

grants of every year confifted in loans upon anticipations of the

produce of thofe taxes. The produce being frequently infuffi^

cient for paying within the limited term the principal and intereft

In 1697, by the 8th of William III. c. 20. the deficiencies ©f
feveral taxes were charged upon what was then called the fiitft
general mortgage or fund, confuting' of a prolongation to the
firft of Auguft, 1706, of feveral different taxes, which would
have expired within a fhorter term, and of which the produce
was accumulated into one general fund. The deficiencies charged
upon this prolonged term amounted to 5, 1 60,4.59 1. 14s. ./

I nil 2ji>p:i:ioq znoixsiB^ eab nsxnczS s?2 f In

THE NATURE AND CAUSES OF

In 1701 thofe duties with fome others were ftill further pro-
longed for the like purpofes till the firft of Auguft, 17 10, and
were called the fecond general mortgage or fund. The deficien-
cies charged upon it amounted to 2,055,999 1. 7 s. u4-d.

In 1707, thofe duties were ftill further prolonged, as a fund
for new loans, to the firft of Auguft, 1712, and were called the
third general mortgage or fund. The fum borrowed upon it was
98^,254 1. lis. 9^d.

In 1708, thofe duties were all (except the old fubfidy of ton-
nage and poundage, of which one moiety only was made a part
of this fund, and a duty upon the importation of Scotch linen,
which had been taken off by the articles of union) ftill further
continued, as a fund for new loans, to the firft of Auguft, 1714,
and were called the fourth general mortgage or fund. The fum
borrowed upon it was 925,1761. 9 s. 2^d.

,.;,,,/ :;• • -:\'f- ~ 0 8 \ i lM\ / V^V.M ■ «3fl i 'Aj -7i^f/f*|

In 1709, thofe duties were all (except the old fubfidy of ton-
nage and poundage, which was now left out of this fund alto-
gether) ftill further continued for the fame purpofe to the firft of
Auguft, 1 716, and were called the fifth general mortgage or
fund. The film borrowed upon it was 922,029 1. 6 s. od.

In 1710, thofe duties were again prolonged to the firft of Au-
guft, 1720, and were called the fixth genera1 mortgage or fund.
The fum borrowed upon it was 1,296,552 1; 9 s. 1 1 1 d.

In 171 1, the fame duties (which at this time were thus fubjecl
to four different anticipations) together with feveral others were
continued for ever, and made a fund for paying the intereft of
the capital of the South Sea company, which had that year ad-
vanced to government, for paying debts and making good defi-
ciencies, the fum of 9,177,967 L ij- s, 4 d. the greater!: loan which
at that time had ever been made.

Before

THE WEALTH OF NATION Si

Before this period, the principal, fo far as I have been able C
to bbferve, the only taxes which in order to pay the intereft of a
debt had been impofed for perpetuity, were thofe for paying the
intereft of the money which had been advanced to government
by the Bank and Eaft India company, and of what it was expected
would be advanced, but which was never advanced, by a pro-
jected land-bank. The bank fund at this time amounted to
3,375,027 1. 17s. ioid. for which was paid an annuity or intereft
of 206,501k 13s. 5d. The Eaft India fund amounted to
3,200,0001. for which was paid an annuity or intereft of i6o,oool'.;
the bank fund being at fix per cent, the Eaft India fund at five
per cent, intereft. 0

In i 71 5, by the firft of George I. c. 12. the different taxes
which had been mortgaged for paying the hank annuity, together
with feveral others which by this act were likewife rendered per-
petual, were accumulated into one common fund called The
Aggregate Fund, which was charged, not only with the payment
of the bank annuity, but with feveral other annuities and bur-
dens of different kinds. This fund was afterwards augmented
by the third of George I. c. 8. and by the fifth of George I. c. 3.
and the different duties which were then added to it were likewife

rendered perpetual.

«uA 10 "nft 3ni oj DagrioiQicj niEgs siaw'Sicwib slorrc *oi^f wx .

•^1717, by lWt tfflff of George I.e. 7. feveral oth&'taftiE
were rendered perpetual, and accumulated into another common"
fund, called The General Fund, for the payment of certain an-
nuities, amounting in the whole to 724,8491. 6s. 10; d.

3i3w swno i£i3v3i nlrw i3fiJ3goi (?nofjBqmJnB JnD'ioTtib luoi of

In corifequence of thofe difftWit 9aW, greater part' of the*
taxes which before had been anticipated drily for a fliort term of !
years, were rendered perpetual as a fund for paying, not the'
capital, but the intereft only, of the money which had been bor-
rowed upon them by different fuccefRvt- anticipations.

Vol. II. Z z z 4 Had

THE NATURE AND CAUSES OF

Had money never been raifed but by anticipation, the courfe of
a few years would have liberated the public revenue, without any
other attention of government befides that of not overloading the
fund by charging it with more debt than it could pay within the
limited term, and of not anticipating a fecond time before the ex-
piration of the firft anticipation. But the greater part of European
governments have been incapable of thofe attentions, They have,
frequently overloaded the fund even upon the firft anticipation;
and when this happened not to be the cafe, they have generally
taken care to overload it by anticipating a fecond and a third
time before the expiration of the firft anticipation. The fund
becoming in this manner altogether infufficient for paying both
principal and intereft of the money borrowed upon it, it became
necefTary to charge it with the intereft only, or a perpetual annuity
equal to the intereft, and fuch improvident anticipations necefTarily
gave birth to the more ruinous practice of perpetual funding.
But though this practice necefTarily puts off the liberation of the
public revenue from a fixed period to one fo indefinite that it is
not very likely ever to arrive yet as a greater fum can in all cafes
be raifed by this new practice than by the old one of anticipations,
the former, when men have once become familiar with it, has in
the great exigencies of the ftate been univedally preferred to the
latter. To relieve the prefent exigency is always the object which
principally interefts thofe immediately concerned in the admini-
ftration of public affairs. The future liberation of the public
revenue, they leave to the care of pofterity.

During the reign of queen Anne, the market rate of intereft
had fallen from fix to five per cent, and in the twelfth year of
her reign five per cent, was declared to be the higheft rate
which could lawfully be taken for money borrowed upon private
fecurity. Soon after the greater part of the temporary taxes of
Great Britain had been rendered perpetual, and diftribnted into the
Aggregate, South Sea, and General Funds, the creditors of the

public,

THE WEALTH OF NATIONS. 545

publick, like thofe of private perfons, were induced to accept of B H A P.
five per cent, for the intereft of their money, which occafioned a
faving of one per cent, upon the capital of the greater part of the
debts which had been thus funded for perpetuity, or of one-fixth
of the greater part of the annuities which were paid out of the
three great funds above mentioned. This faving left a confiderable
furplus in the produce of the different taxes which had been accu-
mulated into thofe funds, over and above what was neceffary for
paying the annuities which were now charged upon them, and laid
the foundation of what has fince been called the Sinking Fund.
In 1717, it amounted to 323,434.1. 7s. 7^-d. In 1727, the in-
tereft of the greater part of the public debts was ftill further re-
duced to four per cent.; and in 1753 and 1757, to three and a
half and three per cent. ; which reductions ftill further augmented
the finking fund.

A sinking fund, though inftituted for the payment of old,
facilitates very much the contracting of new debts. It is a fub-
fidiary fund always at hand to be mortgaged in aid of any other
doubtful fund, upon which money is propofed to be raifed in any
exigency of the ftate. Whether the finking fund of Great Britaia
lias been more frequently applied to the one or to the other of thofe
two purpofes, will Efficiently appear by and by.

0 'IC1

Besides thofe two methods of borrowing, by anticipations and
by perpetual funding, there are two other methods, which hold a
fort of middle place between them. Thefe are, that of borrowing
upon annuities for terms of years, and that of borrowing upon
annuities for lives.

During the reigns of king William and queen Anne, large fums
were frequently borrowed upon annuities for terms of years, which
Vol. II, 4 A *verc

546 THE NATURE AND CAUSES OF

BOOK were ibmetirries longer and fometimes fhorter. In 1693, an a&.

u-v*^ was paffed for borrowing one million upon an annuity of fourteen
per cent, or of 140,000!. a year for fixteen years. In 1691, an
act was paffed for borrowing a million upon annuities for lives,
upon terms which in the prefent times would appear very advan-
tageous. But the fubfcription was not filled up. In the following
year the deficiency was made good by borrowing upon annuities for
lives at fourteen per cent, or at little more than feven years pur-
chafe. In 1695, the perfons who had purchafed thofe annuities
were allowed to exchange them for others of ninety-fix years,
upon paying into the Exchequer fixty-three pounds in the hun-
dred ; that is, the difference between fourteen per cent, for life,
and fourteen per cent, for ninety- fix years, was fold for fixty-three
pounds, or for four and a half years purchafe. Such was the lup-
pofed instability of government, that even thefe terms procured
few purchafers. In the reign of queen Anne, money was upon
different occafions borrowed both upon annuities for lives, and
upon annuities for terms of thirty-two, of eighty-nine, of ninety-
eight, and of ninety-nine years. In 171 9, the proprietors of the
annuities for thirty- two years were induced to accept in lieu of
them South- fea flock to the amount of eleven and a half years pur-
chafe of the annuities, together with an additional quantity of flock
equal to the arrears which happened then to be due upon them,.
In 1720, the greater part of the other annuities for terms of years
both long and fhortwere fubfcribed into the fame fund. The long
annuities at that time amounted to 666,821 1. 8s. 34-d. a year.
Gift the 5th of January, 1775, the remainder of them, or what
was not fubfcribed at that time, amounted only to 136,453k

12 S 8tl ' '■ ~y '

wfo\wvil steisqpl noqu baining m zshiuanz nariW viotrm

. j • . -Tnu/fWh, tnciioniifi hiubivfbni V13V3 lo dteitb
During the two wars which begun in 1739, and in 1755, little

money was borrowed either upon annuities for terms of years, or

upon

THE WEALTH OF NATIONS.

upon thofe for lives. An annuity for ninety-eight or ninety-nine C
years, however, is worth nearly as much money as a perpetuity,
and mould therefore, one might think, be a fund for borrowing
nearly as much. But thofe who, in order to make family fettle-
ments, and to provide for remote futurity, buy into the public
ftocks, would not care topurchafe into one of which the value was
continually diminifhingj and fuch people make a very confiderable
proportion both of the proprietors and purchafers of ftock. Ah
annuity for a long term of years therefore, though its intrinfic
value may be very nearly the fame with that of a perpetual annuity,
will not find nearly the fame number of purchafers. The fub-
fcribers to a new loan, who mean generally to fell their fubfcription
as foon as poffible, prefer greatly a perpetual annuity redeemable by
parliament, to an irredeemable annuity for a long term of years
of only equal amount. The value of the former may be fuppofed
always the fame or very nearly the fame, and it makes therefore a
more convenient transferable ftock than the latter.

•»Yftnin to ^flin-Yjd^b t <-.m^l toi z&tunnk- rtoqrr

During the two laft mentioned wars, annuities either for terms
of years or for lives were feldom granted but as premiums to. the
fubfcribers to a new loan, over and above the redeemable annuity or
intereft upon the credit of which the loan was fuppofed to be made.
They were granted, not as the proper fund upon which the
money was borrowed j but as an additional encouragement to the
iender^x Midi smsl $&$ oim adholdi

0i£ST e »b4£ 8 ^ .iis8fd^d oi bbirtudme smb^Bifr '-ifi agrtiernnj?
Annuities for lives have occafionally been granted in .two,

different ways ; either upon feparate lives, or upon lots of lives,

which in French are called Tontines, from the name of their inr

ventor. When annuities are granted upon feparate lives, the

death of every individual annuitant difburthens the public revenue

fo far as it was affected by his annuity. When annuities are

noq„ 4 A a Srante4

THE NATURE AND CAUSES OF

granted upon tontines, the liberation of the public revenue does
not commence till the death of all the annuitants comprehended
in one lot, which may fometimes conuft of twenty or thirty per-
foms, of whom the furvivors fucceed to the annuities of all thofe
who die before them j the laft furvivor fucceeding to the annui-
ties of the whole lot. Upon the fame revenue more money can
always be railed by tontines than by annuities for feparate lives.
An annuity, with a right of furvivorlhip, is really worth more
than *an equal annuity for a feparate life, and from the -confidence
which every man naturally has in his own good fortune, the
principle upon which is founded the fuccefs of all lotteries, fuch
an -annuity generally fells for Ibmething more than it is worth.
In countries where it is ufual for government to raife money by
granting annuities, tontines are upon this account generally pre-
ferred to .annuities for feparate lives. The expedient which will
raife moft money, is almoft always preferred to that which is likely
to bring about in the fpeedielt manner the liberation of the public
revenue.

In France a much greater proportion of the public debts con—
fills in annuities for lives than in England. According to a
memoir prefented by the parliament of Bourdeaux to the king,
in 1764, the whole public debt of France is eftimated at twenty-
four hundred millions of livres ; of which the capital for which
annuities for lives had been granted, is fuppofed to amount to
three hundred millions, the eighth-part of the whole public
debt. The annuities themfelves are computed to amount to
thirty millions a year, the fourth part of one hundred and twenty
millions, the fuppofed intereft of that whole debt. Thefe efri-
mations, I know very well, are not -exact, but having been pre-
fented by fo very refpeclable a body as approximations to the
truth, they may, I apprehend, be confidered as fuch. It is not.
the different degrees of anxiety in the two governments of France

and.

THE WEALTH OF NATIONS.

and England for the liberation of the public revenue, which occa- C
fions this difference in their refpeclive modes of borrowing. It arifes
altogether from the different views and interefts of the lenders.

In England, the feat of government being in the greateft mer-
cantile city in the world, the merchants are generally the people
who advance money to government. By advancing it they do
not mean to diminifh, but, on the contrary, to increafe their
■mercantile capitals ; and unlefs they expected to fell with fome
profit their ihare in the fubfcription for a new loan, they never
would fubfciibe. But if by advancing their money they were to
purchafe, inftead of perpetual annuities, annuities for lives only,
whether their own or thofe of other people, they would not
always be fo likely to fell them with a profit. Annuities upon
their own lives they would always fell with lofs ; becaufe no man
will give for an annuity upon the life of another, whofe age
and ftate of health are nearly the fame with his own, the fame
price which he would, give for one upon his own. An annuity
upon the life of a third perfon, indeed, is, no doubt, of equal
value to the buyer and the feller ; but its real value begins to
diminifh from the .moment it is granted, and continues to do fo
more and more as long as it fubfifts. It can never, therefore,
make fo convenient a transferable flock as a perpetual annuity, of
which the real value may be fuppofed always the fame, or very

nearly the fame. .

* botoqmjJ <\ )Bfl 33V1I 10I gsiitunriB

?oii&ts& -irfJ ' 'i$^j«i-.'ih£i§isJ • --art* • «3noiIJim imbw/rf syfrfr

In France, the feat of government not being in a great mercan-
tile city, merchants do not make fo great a proportion of the peo-
ple who advance money to government. The people concerned,
in the finances, the farmers general, the receivers of the taxes which
are not in farm, the court bankers, &c. make the greater part of
thofe who advance their money inall public exigencies. Such people
are commonly men of mean birth, but of great wealth, and fre-
7 quently

T1IE NATURE- AND CAUSES OF

K quently of great pride. They are too proud to marry their equals,
and women of quality difdain to marry them. They frequently
refolve, therefore, to live bachelors, and having neither any i ami-
nes of their own, nor much regard for thofe of their relations,
whom they are not always very fond of acknowledging, they defire,
only to live in fplendor during their own time, and are not unwil-
ling that their fortune fhould end With themfelves. The number
. Y'fEfiouiv. briBiworii ii> oi J^fiB Tjn^fn3irrni&

of rich people, befides, who are either averfe to marry, or whole

condition of life renders it either improper or inconvenient for
them to do fo, is much greater in France than in England. To
fuch people, who have little or no care for pofterity, nothing can.
be more convenient than to exchange their capital for a revenue,
which is to lad juft as long as, and no longer than, they wifli it

*° ribio arli

i> i >d vsm ti \9iiri3V3i aulq^'amol uhoS*t*83XBi wan $Al ibiv
The ordinary expence of the greater part of modern govern- i

ments in time of peace being equal or nearly equal to their ordU „

nary revenue, when war comes they are both unwilling and unable

to increafe their revenue in proportion to the increafe of their ex- ,

pence. They are unwiliing, for fear of offending the people, who,

by fo great and fo fudden an increafe of taxes, would foon be dif-

gufted with the war ; and they are unable, from not well know-

ing what taxes would be fufficient to produce the revenue wanted.

The facility of borrowing delivers them from the embarraffm£nt

which this fear and inability would otherwife occafion. Byorriean&a

of borrowing they are enabled, with a very moderate increafe of

taxes, to raife, from year to year, money fufficient for carrying on

the war, and by the practice of perpetual funding they are enabled,

with the fmalleft poffible increafe of taxes, to raife annually the

larger! poffible fum of money. In great empires the people who

live in the capital, and in the provinces remote from the fcene of

acYion, feel, many of them, fcarce any inconveniency from the

9 TObffit/ini iBvkur^rrl

THE WEALTH OF NATIONS. 551

war; but enjoy, at their eafe, the amufement of reading in the ctjI^p'
news-papers the exploits of their own fleets and armies. To them
this amufement compenfates the final 1 difference between the taxes
which they pay on account of the war, and thofe which they had
been accuftomed to pay in time of peace. They are commonly
diffatisfied with the return of peace, which puts an end to their
amufement, and to a thoufand vifionary hopes of conquer!, and
national glory » from a longer continuance of the war.

The return of peace, indeed, feldom relieves them from the
greater part of the taxes impofed during the war. Thefe are morU
gaged for the intererc of the debt contracted in order to carry it on.
I£ over and above paying the intereit of this debt, and defraying,
the ordinary expence of government, the old revenue, together
with the new taxes* produce fome furplus revenue, it may perhaps
be converted into a finking fund for paying off the debt. But, in
the firft place, this finking fund, even fuppofing it fhould be
applied to no other purpofe, is generally altogether inadequate for
paying, in the couife of any period during which it can reafonably
be expected that peace fhould continue, the whole debt contracted
during the war; and, in the fecond place, this fund is almofl: always

applied to other purpofes^

D3Jn£w 3un3V3'i arta soubom oi tnsbrBut sx£t Jbiiw grtt

The new taxes were impofed for the fole purpofe of paying the
in-terete of the money borrowed upon them. If they produce more,
it is generally fomething which was neither intended nor expected, ~
and is therefore feldom. very confiderable. Sinking funds have gene-
rally arifen, not fo much from . any forplus of the taxes which was
over and above what was neceiiary for paying the intereff or an-
nuity originally charged upon them, as from a fubfequent reduc- :
tion of that intereft. That of Holland in 1655, and that of the
ecclefiaffical ftate in 1685, were both formed in this manner. Hence
the ufual infufficiency of fuch funds, g

During

THE NATURE AND CAUSES OF

K During the moil profound peace, various events occur which
-J require an extraordinary expence, and government finds it always
more convenient to defray this expence by mifapplying the finking
fund than by impofmg a new tax. Every new tax is immediately
felt more or lefs by the people. It occafions always fome mur-
mur, and meets with fome oppofition. The more taxes may have
been multiplied, the higher they may have been raifed upon every
different fubject of taxation ; the more loudly the people complain
of every new tax, the more difficult it becomes too either to find
out new fubjects of taxation, or to raife much higher the taxes
already impofed upon the old. A momentary fufpenfion of the
payment of debt is not immediately felt by the people, and occa-
fions neither murmur nor complaint. To borrow of the finking
fund is always an obvious and eafy expedient for getting out of the
prefent difficulty. The more the public debts may have been accu-
mulated, the more necefiary it may have become to jftudy to reduce
them, the more dangerous, the more ruinous it may be to, mifepply
any part of the finking fund ; the lefs likely is the public debt to
be reduced to any confiderable degree, the more likely, the more
certainly is the finking fund to be mifapplied towards defraying all the
extraordinary expences which occur in time of peace. When a nation
is already overburdened with taxes, nothing but the neceffities of a
new war, nothing but either the animofity of national vengeance,
or the anxiety for national fecurity, can induce the people to fub-
mit, with tolerable patience, to a new tax. Hence the ufual mis-
application of the finking fund.

Iff Great Britain, from the time that we had firft recourfe to the
ruinous expedient of perpetual funding, the reduction of the pub-
lic debt in time of peace, has never borne any proportion to its
accumulation in time of war. It was in the war which began in
1688, and was concluded by the treaty of Ryfvvick in 1697, that
the foundation of the prefent enormous debt of Great -Britain was
firtf laid.

On

THE WEALTH OF NATIONS*

On the 31ft of December, 1697, the public debts of Great Bri- C
tain, funded and unfunded, amounted to 21,515,742!. 13s. 8{d.
A great part of thofe debts had been contracted upon fhort anti-
cipations, and fome part upon annuities for lives; fo that before the
31ft of December, 1701, in lefs than four years, there had partly
been paid off, and partly reverted to the public,, the fum of
5, 1 2 1 ,04 1 1. 1 2 s. o I d. ; a greater reduction of the public debt than
has ever fince been brought about in fo fhort a period of time. The
remaining debt, therefore, amounted only to 16,394,701 1. is. 7^d.

In the war which began in 1702, and which was concluded by
the treaty of Utrecht, the public debts were ftill more accumu-
lated. On the 31ft of December, 1714, they amounted to
53,681,0761. 5 s. 6ir*icf. The fubftription into the South Sea
fund of the long and fhort annuities increafed the capital of the
public debts, fo that on the 31ft of December, 1722, it amounted
to 55,282,978!. 1 s. 3-id. The reduction of the debt began in
1723, and went on fo flowly that, on the 31ft of December, 1739,
- during feventeen years of profound peace, the whole fum paid off
was no more than 8,328,3541. 17 s. ii-JLd. the capital cf the
public debt at that time amounting to 46,954,623 1. 3 s.

The Spaniih war, which began in 1739, and the French war
which foon followed it, occafioned a further encreale of the debt,
which, on the 31ft of December, 1748, after the war had been
concluded by the treaty of Aix la Chapelle, amounted to
78,293,3131. is., io^d. The moft profound peace of feventeen
years continuance had taken no more than 8,328,3541. 17s. ii-^d.
from it. A war of lefs than nine years continuance added
31,338,6891. iHs. 6*-d. to it '*..

During the adminiftration of Mr. Pelham, the intereft of the
public debt was reduced, or at leaft meafures were taken for reduce-
Vol. II. 4 B ing

* See James Poftlethwaite's hirtory of the public revenue,

0

554 THE NATURE AND CAUSES OF

B OO K Jng it, from four to three per cent. the finking fund was increafed,
v-— v-—-' and Come part of the public debt was paid off. In 1755, before
the breaking out of the late war, the funded debt of Great Britain
■amounted to 72,289,673 1. On the 5th of January, 1763, at the
conclufion of the peace, the funded debt amounted to 122,603,3361.
S s. 2^d. The unfunded debt has been ftated at 13,927,5891.
2 s. 2 d. But the expeiice occafioned by the war did not end with
the conclufion of the peace; fo that though on the 5th of Janu-
ary, 1764, the funded debt was increafed (partly by a new loan,
and partly by funding a part of the unfunded debt) to 129,586,7891.
10 s. iid. there ftill remained (according to the very well informed
author of the Confiderations on the trade and finances of Great
Britain) an unfunded debt, which was brought to account in
that and the following year, of 9,975,0171, 12 s. 2iid. In
1764, therefore, the public debt of Great Britain, funded and
unfunded together, amounted, according to this author, to
139,561,8071. 2 s. 4d, The annuities for lives too, which
had been granted as premiums to the fubferibers to the new
loans in 1757, eftimated at fourteen years purchafe, were valued
at 472,5001.; and the annuities for long terms of years, granted
as premiums likevvife, in 1761 and 1762, eftimated at 27.1 years
purchafe, were valued at 6,826,8751. During a peace of about
feven years continuance, the prudent and truly patriot adminiftra-
tion of Mr. Pelham, was not able to pay off an old debt of
fix millions. During a war of nearly the fame continuance,
a new debt of more than feven ty-five millions was contracted.

On the 5th of January, 1775, the funded debt of Great
Britain amounted to 124,996,0861. is. 6|d. The unfunded,
exclufive of a large civil lift debt, to 4,150,236 k 3 s, 1 1 { d,
Both together, to 129,146,322 k 5 s. 6 d. According to this
account the whole debt paid off during eleven years profound
peace amounted only to 10,415,474 k 16 s. 9I d. Even this

THE WEALTH OF NATIONS..

Fmall reduction of debt, however, has not been all made from
the favings out of the ordinary revenue of the irate. Several
extraneous fums, altogether independant of that ordinary revenue,
have contributed towards it. Among thefe we may reckon an
additional milling in the pound land tax for three years ;
the two millions received from the Eaft India company, as
indemnification for their territorial acquisitions.; and the one
hundred and ten thoufand pounds received from the tank for
the renewal of their charter. To thefe rauft be added feveral
other fums whkh, as they arofe out of the late war, ought perhaps
to be confidered as deductions from the expences of it. The prin-
cipal are,

1. s. d.

The produce of French prizes — — 690,449 i3 9
■Composition for French prifoners — 670,000 o o
What has been received from the fale of the ceded 7

iOands — J 95

00

Total, 1,455,949 iS 9

If we add to this fum the balance of the earl of Chatham's and
Mr. Cakraft's accounts, and other army favings of the fame kind,
-together with what has been received from the bank, the Eafl
India company, and the additional {hilling in the pound, land
tax* the whole must be a good deal more than five millions. The
■debt, therefore, which fmce the peace has been paid out of the
favings from the ordinary revenue of the Rate, has not, one year
with another, amounted to half a million a year. The finking
fund has, no doubt, been considerably augmented since the peace,
by the debt which has been paid off, by the reduction of the
redeemable four per cents, to three per cents-, and by the annuities
lives which have fallen in, and, if peace was- to continue,

4. B 2 a million

5S6 THE NATURE;- AND CAUSES OF

£ DO K a million perhaps might now be annually fpared out of it towards
c— v— w the difcliarge of the debt. Another million, accordingly, was
paid in the courfe of laft year ; but, at the fame time, a large
civil lift debt was left unpaid, and we are now involved in a
new war which, in its progrefs, may prove as expenfive as any
of our former wars. The new debt which will probably be con-
tracted before the end of the next campaign, may perhaps be nearly
equal to all the old debt which has been paid off from the favings
out of the ordinary revenue of the ftate. It would be altogether
chimerical, therefore, to expect, that the public debt mould
ever be completely difcharged by any favings which are likely
to be made from that ordinary revenue as it ftands, at pre-
lent.

J) jL -luuuva jaj 07 ji SDBiqa^ jon bib

«w t(\*G'j,5ilt<fti n$9d avail Wuow-3ii^.;^a^n^iip|o a*. jj|jioBi\«*iWP
The public funds of the different indebted nations of Europe,,
particularly thofe of England, have by one author been repre-
sented as the accumulation of a great capital fuper-added to the.
other capital of the country, by means of which its trade is ex-
tended, its manufactures multiplied, and its lands cultivated and
improved much beyond what they could have been by means of
that other capital only. He does not confider that the capital
which the firft creditors of the public advanced to government,
r£was, from the moment in which they advanced it, a certain por-
3di .tlQn of the annual produce turned away from ferving in the
-m<; function of a capital, to ferve in that of a revenue; from main-
taining productive labourers to. maintain unproductive ones, and
:io j . . to be fpent and wafted, generally in the courfe of the year, without
-an Jorcven the hope of any future reproduction. In return for the
capital which they advanced they obtained, indeed, an annuity in
the public funds in moft cafes of more than equal value. This
annuity, no doubt, replaced to them their capital, and enabled
. them to carry on their trade and bufinefs to the fame or perhaps
to a greater extent than before ; that is, they were enabled either

8 tG;

THE WEALTH OF NATIONS; 557

to borrow of other people a new capital upon the credit of this CIJj^P'
annuity, or by felling it to get from other people a new capital
of their own, equal or fuperior to that which they had advanced
to government. This new capital, however, which they in this
manner either bought or borrowed of other people, muft have
exifted in the country before, and muft have been employed, as
. all capitals are, in maintaining productive labour. When it came
into the hands of thofe who had advanced their money to govern-
ment, though it was in fome refpects a new capital to them, it
was notfo to the country; but was only a capital withdrawn from
certain employments in order to be turned towards others. Though
it replaced to them what they had advanced to government, it
did not replace it to the country. Had they not advanced this
capital to government, there would have been in the country two
capitals, two portions of the annual produce, inftead of one, emr.
ployed in maintaining productive labour.

When for defraying the expence of government a revenue is
raifed within the year from the produce of free or unmortgaged
taxes, a certain portion of the revenue of private people is only
turned away from maintaining one fpeeies of unproductive labour,
towards maintaining another. Some part of what they pay in
thofe taxes might no doubt have been accumulated into capital, and
nifirn confeqnently employed in maintaining productive labour; but the
greater part would probably have been fpent and confequently em-
ployed in maintaining unproductive labour. The public expence
however* when defrayed in this manner, no doubt hinders more or-
lefs the further accumulation of new capital ; bu: u does not ne«
ceffarily occafion the deitru6lion. of any actualiy lifting capital.

When the publick expence is defrayed by funding, it is defrayed;

by the annual deftruc"Hon of fome capital which had before exifted

3i

55s THE NATURE AND CAUSES OF

B Gy° K *n country ; ^y perverfion of fame portion of the annual
«— produce which bad before been deftined for the maintenance of
productive labour, towards that of unproductive labour. As- in
this cafe, however, the taxes are lighter than they would have
been, had a revenue fufficient for defraying the fame expenee been
railed within the- year; the private revenue of individuals is necef-
farily lefs burthened, and confequently their ability to fave and aecu-:
mulate fome part of that revenue into capital is a good deal leii
impaired. If the method of funding deftroys more old capital, it
at the fame time hinders lefs the accumulation or aequifition of <
new capital, than that of defraying the public expenee by a revenue,
rkifed within the year. Under the fyftera of funding, the frugality
and induftry of private people can more eafily repair trie breaches ,
which the wafte and extravagance of government may occafionaJJy ,j
aaake in the general capital of the fociety.

It is only during the continuance of war, however, that the
fyftem of funding has this advantage over the other fyftem. Were ,
the expenee of war to be defrayed always by a revenue! faifecl j
within the year, the taxes from which that extraordinary irevienue
was drawn would laft no longer than the war. The ability of
private people to accumulate, though lefs during the war, would
have been greater during the peace than under the fyftem of i
funding. War would not neceftarily have occafioned the deltruc-
tion of any old capitals, and peace would have occafioned the.
accumulation of many more new. Wars would m general be . ,
mo^l^eedily concluded, and lefs wantonly undertaken. The peo-
ple- &elifi£, during the continuance of the war, the complete
burden of it, would foon grow weary of it, and government, in
order to humour them, would not be under the neceflity of carry-
ing it on longer than it was neceffary to do fo. The forefight of ,
t-he heavy and unavoidable burdens of war would hinder the

people

aofidl

THE WEALTH OF NATIONS.

people from wantonly calling for it when there was no real or
folid intereft. to fight for. The feafons during which the ability
of private people to accumulate was fomewhat impaired, would
occur more rarely, and be of fhorter continuance. Thofe, on the
contrary, during which that ability was in the higheft vigour,
would be of much longer duration than they can well be under the
fyftem of funding.

"When funding, befides, has made a certain progrefs, the mul-
tiplication of taxes which it brings along with it fometimes im-
pairs as much the ability of private people to accumulate even in
time of peace, as the other fyftem would in time of war. The
peace revenue of Great Britain amounts at prefent to more than
ten millions a year. If free and unmortgaged, it might be fufficient^
with proper management and without contracting a milling of
new debt,, to carry on the moft vigorous war. The private revenue
of the inhabitants of Great Britain is at prefent as much encum-
bered in time of" peace, their ability to accumulate is as much
impaired as it would have been in the time of the moft expenfive
war, had the pernicious fyftem of funding never been adopted.

In the payment of the intereft of the public debt, it has been
laid, it is the right hand which pays the left. The money doe*. ;
not go out of the country. It is only a part of the revenue o£
one fet of the inhabitants which is transferred to another ; andr
the nation is not a farthing the poorer. This apology is founded
altogether in the fophiftry of the mercantile fyftern,. and after the
long examination which I have already bestowed upon that fyftenj*, i
it may perhaps be unneCeflary to fay any thing further about it. It >
fuppofes, befides, that the whole public debt is owing to the inha-
bitants of the country, which happens not to be true j the Dutch*,
as well as feveral other foreign nations, having a very confiderable

{hate

THE NATURE AND CAUSES OF

K {hare in our public funds. But though the whole debt were owing
to the inhabitants of the country, it would not upon that account
be lefs pernicious.

Land and capital ftock are the two original fources of all re-
venue both private and public. Capital ftock pays the wages of
productive labour, whether employed in agriculture, manufactures,
or commerce. The management of thofe two original fources of
revenue belongs to two different fetts of people; the proprietors
of land, and the owners or employers of capital ftock.

The- proprietor of land is interefted for the fake of his own
revenue to keep his eftate in as good condition as he can, by build-
ing and repairing his tenants houfes, by making and maintaining
the neceffary drains and enclofures, and all thofe other expenfive
improvements which it properly belongs to the landlord to make
and maintain. But by different land-taxes the revenue of the
landlord may be fo much diminifhed ; and by different duties Upon
the neceffaries and conveniencies of life, that diminifhed revenue
may be rendered of fo little real value, that he may find himfelf
altogether unable to make or maintain thofe expenfive improve-
ments. When the landlord, however, ceafes to do his part, it is
altogether impoffible that the tenant fhould continue to do his.
As the diftrefs of the landlord increafes, the agriculture of the
country muft neceffarily decline.

When by different taxes upon the neceffaries and conveniencies
of life, the owners and employers of capital ftock find, that what-
ever revenue they derive from it, will not, in a particular country,
purchafe the fame quantity of thofe neceffaries and conveniencies,
which an equal revenue would in almoft any other; they will be
difpofed to remove to fome other. And. when, in order to raife thofe
ft taxes,

THE WEALTH OF NATIONS.

taxes, all or the greater part of merchants and manufacturers, that C H
is, all or the greater part of the employers of great capitals, come u
to be continually expofed to the mortifying and vexatious vifits of
the tax gatherers ; this difpofition to remove will foon be changed
into an actual removal. The iriduftry of the country will necef-
farily fall with the removal of the capital which fupported it, and
the ruin of trade and manufactures will follow the declenfion of
agriculture.

To transfer from the owners of thofe two great fources of reve-
nue, land and capital ftock, from the perfons immediately interefted
in the good condition of every particular portion of land, and in
the good management of every particular portion of capital ftock,
to another fett of perfons, (the creditors of the public, who have no
fuch particular intereft) the greater part of the revenue arifing
from either, muft, in the long-run, occafion both the neglect of
land, and the wafte or removal of capital ftock. A creditor of the
public has no doubt a general intereft in the profperity of the agri-
culture, manufactures, and commerce of the country ; and con-
fequently iu the good condition of its lands, and in the good ma-
nagement of its capital ftock. Should there be any general failure
or declenfion in any of thefe things, the produce of the different
taxes might no longer be fufficient to pay him the annuity or in-
tereft which is due to him. But a creditor of the public, corj-
fidered merely as fuch, has no intereft in the good condition o(
any particular portion of land, or in the good management of any
particular portion of capital ftock. As a creditor of the public
he has no knowledge of any fuch particular portion. He has no
infpection, of it. He can have no care about it. Its ruin may
in moft cafes be unknown to him, and cannot directly affect him.

The practice of funding has gradually enfeebled every ftate
which has adopted it. The Italian republics feem to have begun it.
Vol. II. 4 C Genoa

THE NATURE AND CAUSES OF

K Genoa and Venice, the only two remaining which can pretend to
an independent exiftence, have both been enfeebled by it. Spain
feems to have learned the practice from the Italian republics, and
(its taxes being probably lefs judicious than theirs) it has, in pro-
portion to its natural ftrength, been ftill more enfeebled. The
debts of Spain are of very old ftanding. It was deeply in debt be-
fore the end of the fixteenth century, about a hundred years
before England owed a milling. France, notwithstanding all its
natural refources, languifhes under an oppreflive load of the fame
kind. The republic of the United Provinces is as much enfeebled
by its debts as either Genoa or Venice. Is it likely that in Great
Britain alone a practice, which has brought either weaknefs or de-
folation into every other country, fhould prove altogether inno-
cent ?

The fyftem of taxation eftabliihed in thofe different countries*,
it may be faid, is inferior to that of England. I believe it is fo.
But it ought to be remembered, that when the wileft government
has exhaufted all the proper fubjecls of taxation, it mult, in cafes
of urgent neceffity, have recourfe to improper ones. The wife
republic of Holland has upon fome occalions been obliged to have
recourfe to taxes as inconvenient as the greater part of thole of
Spain. Another war begun before any confiderable liberation of
the publick revenue had been brought about, and growing in its
progrefs as expenfive as the laft war, may, from irrefiftable neceffity,.
render the Britifh fyftem of taxation as oppreflive as that of Hol-
land, or even as that of Spain. To the honour of our prefent
fyftem of taxation, indeed, it has hitherto given fo little embar-
raflment to induftry, that, during the courfe even of the moft ex-
penfive wars, the frugality and good conduct of individuals feems to
have been able, by faving and accumulation, to repair all the
breaches which the wafte and extravagance of government had

made

THE WEALTH OF NATIONS. 563

made in the general capital of the fociety. At the conclufion of c H A P,
the late war, the mod expenlive that Great Britain ever waged, v-— 4
her agriculture was as flouri filing, her manufacturers as numerous
and as fully employed, and her commerce as extenfive, as they had*
ever been before. The capital, therefore, which fupported all
thofe different branches of induftry, mull have been equal to what
it had ever been before. Since the peace, agriculture has been ftill
further improved, the rents of houfes have rifen in every town and
village of the country* a proof of the increafing wealth and reve-
nue of the people j and the annual amount of the greater part of
the old taxes, of the principal branches of the excife and cuftoms
in particular, has been continually increafing, an equally clear
proof of an increafing confumption, and confequently of an in-
creafing produce, which could alone fupport that confumption.
Great Britain feems to fupport with eafe, a burden which, half a
century ago, nobody believed her capable of fupporting. Let us
not, however, upon this account rafhly conclude that (he is capa-
ble of fupporting any burden nor even be too confident that flie
could fupport, without great diftrefs, a burden a little greater than
what has already been laid upon her.

When national debts have once been accumulated to a certain
degree, there is fcarce, I believe, a fingle inltance of their having
been fairly and completely paid. The liberation of the public
revenue, if it has ever been brought about at all, has always been
brought about by a bankruptcy ; fometimes by an avowed one, ,
but always by a real one, though frequently by a pretended pay-
ment.

The raifing of the denomination of the coin lias been the moft
ufual expedient by which a real public bankruptcy has been dif-
guifed under the appearance of a pretended payment. If a fixpence^

Vox. II. 4 C 2 for-

THE NATURE AND CAUSES OF

K for example, mould either by a<5t of parliament or royal prccla-
•J mation be raifed to the denomination of a milling, and twenty fix -
pencestothat of a pound fterling; the perfon who under the old
denomination had borrowed twenty (hillings, or near four ounces
of filver, would, under the new, pay with twenty fixpences, or
with fomething lefs than two ounces. A national debt of. about a
hundred and twenty-eight millions, nearly the capital of the
funded and unfunded debt of Great Britain, might in this manner
be paid with about fixty-four millions of our prefent money. It
would indeed be a pretended payment only, and the creditors of
the public would really be defrauded of ten millings in the pound
of what was due to them. The calamity too would extend much
further than to the creditors of the public, and thofe of every
private perfon would fuffer a proportionable lofs ; and this without
any advantage, but in moft cafes with a great additional lofs, to
the creditors of the public. If the creditors of the public indeed
were generally much in debt to other people, they might in fome
meafure compenfate their lofs by paying their creditors in the fame
coin in which the public had paid them. But in moll: countries
the creditors of the public are, the greater part of them, wealthy
people, who ftand more in the relation of creditors than in that
of debtors towards the reft of their fellow citizens. A pretended
payment of this kind, therefore, inftead of alleviating, aggravates
in hioft cafes the lofs of the creditors of -the public ; and with-
out any advantage to the public extends the calamity to a great
'number of other innocent people. It occafions a general and
moft pernicious fubverflon of the fortunes of private people j
-enriching in rnofr cafes the idle and profufe debtor at the expence
of the induftrious and frugal creditor, and tranfporting a great
part of the national capital, i from the hands which were
likely to encreafe and improve it, to thofe which are likely to
dilTipate anddeftroy it. When it becomes neceflary for a ftate to

declare

THE WEALTH OF NATIONS.

declare iticlf bankrupt, in the fame manner as when it becomes C
neceilary for an individual to do fo, a fair, open, and avowed bank- u
ruptcy is always the meafure which is both leaft difhonourable to
the debtor, and leaft hurtful to the creditor. The honour of a
ftatc is furely very poorly provided for, when, in order to cover
the difgrace of a real bankruptcy, it has recourfe to a juggling trick
of this kind, fo eafily feen through, and at the fame time fo
extremely pernicious.

Almost all ftates, however, antient as well as modern, when
reduced to this necelHty, have, upon fome occafions, played this very
juggling trick. The Romans, at the end of the firft punic war,
reduced the As, the coin or denomination by which they computed
the value of all their other coins, from containing twelve ounces of
copper to contain only two ounces; that is, they raifed two ounces
of copper to a denomination which had always before expreffed the
value of twelve ounces. The republic was, in this manner, enabled
to pay the great debts which it had contracted with the fixth part
of what it really owed. So fudden and fo great a bankruptcy, we
fhould in the prefent times be apt to imagine, muft have occa-
fioned a very violent popular clamour. It does not appear to have
occasioned any. The law which enacted it was, like all other laws
relating to the coin, introduced and carried through the auembly
of the people by a tribune, and was probably a very popular law.
In Rome, as in all the other antient republics, the poor people
were conftantly in debt to the rich and the great, who, in order to
fecure their votes at the annual elections, ufed to lend them money
at exorbitant intereft, which, being never paid, foon accumulated
into a fum too great either for the debtor to pay, or for any body
elfe to pay for him. The debtor, for fear of a very fevere execu-
tion, was obliged, without any further gratuity, to vote for the
candidate whom the creditor recommended. In fpite of all the
j'Lsbob 4 C 3 laws

THE NATURE AND CAUSES OF

K laws againft bribery and corruption, the bounty of the candidates,,
together with the cccafional diftributions of com, which were
ordered by the fenate, were the principal funds from which, during
the later times of the Roman republic, the poorer citizens derived,
their fubfiftence. To deliver themfelves from this fubje<5tion to<
their creditors, the poorer citizens were continually calling out
either for an entire abolition of debts, or for what they called New
Tables; that is, for a law which mould entitle, them to a complete
acquittance, upon paying only a certain proportion of their accu-
mulated debts. The law which reduced the coin of all denomina-
tions to a fixth part of its former value, as it enabled them to pay
their debts with a fixth part of what they really owed, . was equiva-
lent to the moft advantageous new tables. In order to fatisfy the
people, the rich and the great were, upon feveral different occa-
iions, obliged to confent to laws both for abolifhing debts, and
for introducing new tables ; and they probably were induced to con-
fent to this law, partly for the fame reafon, and partly that by libe-
rating the public revenue, they might reftore vigour to that govern-
ment of which they themfelves had the principal direclion. An
operation of this kind would at once reduce a debt of a hundred
and twenty-eight millions to twenty-one millions, three hundred
and thirty-three thoufand, three hundred and thirty-three pounds*
fix (hillings and eight-pence. In the courfe of: the fecond
punk war the As was ftill further reduced, firft, from two ounces
of copper to one ounce; and afterwards from one ounce to half.

2fIF

an ounce; that is, to the twenty-fourth part of its original value.
By combining the three Roman operations into one, a debt of a
hundred and twenty- eight millions of our prefent money, might in
this manner be reduced all at once to a debt of rive millions, three
hundred and thirty-three thoufand, three hundred and thirty-three
pounds, fix (hillings and eight-pence. Even the enormous debt
of Great Britain might in this manner foon be paid.

Q By

THE WEALTH OF NATIONS. 56;

By means of fuch expedients the coin of, I believe, all nations CHAP.

has been gradually reduced more and more below its original value, i -j

and the fame nominal fum has been gradually brought to contain a
fmaller and a fmaller quantity of filver.

Nations have fometimes, for the lame purpofe, adulterated the
ftandard of their coin ; that is, have mixed a greater quantity of
alloy in it. If in the pound weight of our filver coin, for exam-
ple, inftead of eighteen penny weight, according to the prefent
ftandard, there was mixed eight ounces of alloy ; a pound fterling,
or twenty (hillings of fuch coin, would be worth little more than
fix fliiUings and eight-pence of our prefent money. The quan-
tity of filver contained in fix millings and eight-pence of our pre-
fent money, would thus, be raifed very nearly to the denomination
of a pound fterling. The adulteration of the ftandard has exactly
the fame effect with what the French call an augmentation, or a
direct raiiing of the denomination of the coin.

An augmentation, or a direct raifing of the denomination of the
coin, always is, and from its nature muft be, an open and avowed,
operation. By means of it pieces of a fmaller weight and bulk are.
called by the fame name which had before been given to pieces of
a greater weight and bulk. The adulteration of the ftandard, on
the contrary, has generally been a concealed operation. By means
of it pieces were iftued from the mint of the fame denominations,'
and, as nearly as could be contrived, of the fame weight, bulk,,
and appearance,, with pieces which had been current before of much
greater value. When king John of France *, in order to pay his
debts, adulterated his coin, all the officers of his mint were fworn.
to fecrefy. Both operations are unjuft. But a fimple augmenta-
tion is an injuftice of open violence •, whereas an adulteration is an
injuftice of treacherous fraud. This latter operation, therefore, as.

foon

* See du Cange Gloflary, voce Monetaj the Benedictine edition.

THE NATURE AND CAUSES OF

foon as it has been difcovered, and it could never be concealed very
long, has always excited much greater indignation than the former.
The coin, after any confiderable augmentation, has very feldom
been brought back to its former weight; but after the greateft
adulterations it has almoft always been brought back to its former
finenefs. It has fcarce ever happened that the fury and indignation
of the people could otherwife be appeafed.

In the end of the reign of Henry VIII. and in the beginning of
that of Edward VI. the Englifh coin was not only raifed in its
denomination, but adulterated in its ftandard. The like frauds
were practifed in Scotland during the minority of James VI. They
have occafionally been practifed in mofl other countries.

That the public revenue of Great Britain can ever be com-
pletely liberated, or even that any confiderable progrefs can ever be
made towards that liberation, while the fufplus of that revenue,
or what is over and above defraying the annual expence of the
peace eftablilhment, is fo very fmall, it feems altogether in vain to
expect. That liberation, it is evident, can never be brought about
without either fome very confiderable augmentation of the public
revenue, or fome equally confiderable reduction of the public
expence.

A more equal land-tax, a more equal tax upon the rent of
houfes, and fuch alterations in the prefent fyftem of cuftoms and
excife as thofe which have been mentioned in the foregoing chapter,
might, perhaps, without increafmg the burden of the greater part
of the people, but only diftributing the weight of it more equally
upon the whole, produce a confiderable augmentation of revenue.
The mofl fanguine projector, however, could fcarce flatter himlelf
that any augmentation of this kind would be fuch as could give
any reafonable hopes either of liberating the public revenue alto-
6 gether,

THE WEALTH OF NATIONS.

gether, or even of making fuch progrefs towards that liberation in
time of peace, as either to prevent or to compenfate the further
accumulation of the public debt in the next war.

By extending the Britifh fyftem of taxation to all the different
provinces of the empire inhabited by people either of Britifh or Eu-
ropean extraction, a much greater augmentation of revenue might
be expected. This, however, could fcarce perhaps be done, confid-
ently, with the principles of the Britiih conftitution, without admit-
ting into the Britiih parliament, or if you will into the ftates gene-
ral of the BritHh. Empire, a fair and equal reprefentation of all
thofe different provinces, that of each province bearing the fame
proportion to the produce of its taxes, as the reprefentation of
Great Britain might bear to the produce of the taxes levied upon
Great Britain. The private intereft of many powerful individuals,
the confirmed prejudices of great bodies of people feem, indeed, at
prefent, to oppofe to fo great a change fuch obftacles as it may be
very difficult, perhaps altogether impoffible, to furmount. With-
out, however, pretending to determine whether fuch a union be
practicable or impracticable, it may not, perhaps, be improper, in
a fpeculative work of this kind, to conlider how far the Britrih.
fyftem of taxation might be applicable to all the different provinces
of the empire ; what revenue might be expected from it if fo
applied, and in what manner a general union of this kind might
be likely to affect the happinefs and profperity of the different pro-
vinces comprehended within it. Such a fpeculation can at vvorft
be regarded but. as a new Utopia, lefs amufing certainly, but not
more ufelefs and chimerical than the old one.

The land-tax, the ftamp duties, and the different duties of
cuftoms and excife, conftitute the four principal branches of tlx
Britiih taxes.

Vol. II, 4 D I^elakd

THE NATURE AND CAUSES OF

K Ireland is certainly as able, and our American and Weft
Indian plantations more able to pay a land-tax than Great Bri-
tain. Where the landlord is fubject. neither to tithe nor poors
rate, he muft certainly be more able to pay fuch a tax, than where
he is fubject. to both thofe other burdens. The tithe, where there
is no modus, and where it is levied in kind, diminifhes more
what would otherwife be the rent of the landlord, than a land-
tax which really amounted to five fhillings in the pound. Such
a tithe will be found in moll cafes to amount to more than a
fourth part of the real rent of the land, or of what remains after
replacing compleatly the capital of the farmer, together with his
reafonable profit. If all modufes and all impropriations were
taken away, the complete church tithe of Great Britain and Ire-
land, could not well be eftimated at lefs than fix or feven mil-
lions. If there was no tithe either in Great Britain or Ireland,
the landlords could afford to pay fix or feven millions additional
land-tax, without being more burdened than a very great part of
them are at prefent. America pays no tithe, and could therefore
very well afford to pay a land-tax. The lands in America and the
Weft Indies, indeed, are in general not tenanted or leafed out
to farmers. They could not therefore be afTefled according to
any rent-roll. But neither were the lands of Great Britain, in
the 4 th of William and Mary, aflelfed according to any rent-
roll, but according to a very loofe and inaccurate eftimation. The
lands in America might be aflefTed either in the fame manner, or
according to an equitable valuation in confequence of an accurate
furvey* like that which was lately made in the Milanefe, and in
the dominions of Auftria, PrufTia,. and Sardinia-

Stamp-duties, it is evident, might be levied without any
variation in all countries where the forms of law procefs, and
the deeds by which property both real and perfonal is transferred,
are the fame or nearly the fame,

THE WEALTH OF NATIONS.

57*

The externum of the cuftomhoufe laws of Great Britain to C II A P.
Ireland and the plantations, provided it was accompanied, as in C —
juftice it ought to be, with an extenflon of the freedom of trade,
would be in the higheft degree advantageous to both. All the
invidious reftraints which at prefent opprefs the trade of Ireland,
the diftinction between the enumerated and non-enumerated com-
modities of America, would be entirely at an end. The coun-
tries north of Cape Finifterre would be as open to every part of
the produce of America, as thofe fouth of that cape are to fome
parts of that produce at prefent. The trade between all the
different parts of the Britifh empire would, in confequence of
this uniformity in the cuftomhoufe laws, be as free as the coaft-
ing trade of Great Britain is at prefent. The Britifh empire
would thus afford within itfelf an immenfe internal market for
every part of the produce of all its different provinces. So great
an extenfion of market would foon compenfate both to Ireland
and the plantations, ail that they could fuffer from the increafe of
the duties of cuftoms.

The excife is the only part of the Britifh fyftem of taxation,
which would require to be varied in any refpect according as it
was applied to the different provinces of the empire. It might
be applied to Ireland without any variation ; the produce and
confumption of that kingdom being exactly of the fame nature
with thofe of Great Britain. In its application to America and
the Weft Indies, of which the produce and confumption. are.fo
very different from thofe of Great Britain, fome modiftcafcioial
might be neceffary, in the fame manner as in its application' to tkb
cyder and beer counties of England.

&&a- iuorltiw bsivsf 3« 'Jffalcn - flri3biv3 z\ il <33rTU'<l-iU£AT3
A fermented liquor, for example, which is called beer, but

which, as it is made of melaffes, bears very little refemblance ta

our beer, makes a confiderable part of the common drink of the

people in America. This liquor, as it can be kept only for a few

4 D 2 days.

THE NATURE AND CAUSES OF

days, cannot, like our beer, be prepared and ftored up for fale in
great breweries ; but every private family muft brew it for their
own ufe, in the fame manner as they cook their victuals. But to
fubject every private family to the odious vifits and examination
of the tax gatherers, in the fame manner as we fubjecl the
keepers of alehoufes and the brewers for public fale, would be
altogether inconfiftent with liberty. If for the fake of equality it
was thought neceflary to lay a tax upon this liquor, it might be
taxed by taxing the material of which it is made, either at the
place of manufacture, or, if the circurnftances of the trade ren-
dered fuch an excife improper, by laying a duty upon its importa-
tion into the colony in which it was to be confumed. Befides the
duty of one penny a gallon impofed by the Britifh parliament
upon the importation of melafTes into America; there is a provincial
tax of this kind upon their importation into MafTachufets Bay, in
fhips belonging to any other colony, of eight-pence the hogfhead ;
and another upon their importation, from the northern colonies,
into South Carolina of five-pence the gallon. Or if neither of thefe
methods was found convenient, each family might compound for
its confumption of this liquor, either according to the number of
perfons of which it confided, in the fame manner as private families
compound for the malt-tax in England; or according to the
different ages and fexes of thole perfons, in the fame manner- as.
feveral different taxes are levied in Holland • or nearly as Sir
Mathew Decker propofes that all taxes upon confumabie com-
modities mould be levied in England. This mode of taxation,
\t has already been obferved, when applied to objects of a fpeedy
confumption, is not a very convenient one. It might be adopted,,
however, in cafes where no better could be done.

Sugar, rum, and tobacco, - are commodities which are no-
where neceffaries of life, which are become objects of almoft uni-
verfal confumption, and which are therefore extreamly proper fub-

jec~h

THE WEALTH OF NATIONS. 573

jecls of taxation. If a union with the colonies' was1 to take place, CHj^p*
thofe commodities might be taxed either before they go out of
the hands of the manufacturer or grower ; or if this mode of
taxation did not fuit the circumftances of thofe perfons, they
might be depofite'd in public warehouses both at the place of ma-
nufacture, anld' at ! all the different ports of the empire to which
they might afterwards be tranfported, to remain there, under the
joint cuftody of the owner and the revenue officer, till fuch time
as they mould be delivered out either to the confumer, to the
merchant retailer for home confumption, or to the merchant
exporter the tax not to be advanced till fuch delivery. When
delivered out for exportation, to go duty fixe upon proper fecu-
rity being given that they fhould really be exported out of the
empire. Thefe are perhaps the principal commodities with regard
to which a union with the colonies might require fome confiderable
change in the prefent fyftem of Britifh taxation.

What might be the amount of the revenue which this fyftem
of taxation extended to" all the different provinces of the empire
might produce, it muft, no doubt, be altogether impoflible to
afcertain with tolerable exactnefs. By means of this fyftem there is
annually levied in Great Britain, upon lefs than eight millions of
people, more than ten millions of revenue. Ireland contains more
than two millions of people, and according to the accounts laid
before the congrefs, the twelve aflociatecl provinces of America
contain more than three. Thofe accounts, however, may have
been exaggerated, m cider, perhaps, either to encourage their, own
people, or to intimidate thoic of this country, and we mall
fuppofe therefore that bur N.ohlV American and Weft Indian co-
lonies taken together contain no more than three millions ; or
. . . ....

that the whole Bntifh empire, in Europe and America, contains

&0' more 'than thirteen millions of inhabitants. If upon lefs than

eight

9

THE NATURE AND CAUSES OF

O K eight millions of inhabitants this fyftem of taxation raifes a re-
venue of more than ten millions fterling; it ought upon thirteen
millions of inhabitants to raife a revenue of more than fixteen
millions two hundred and fifty thoufand pounds fterling. From
this revenue, fuppofing that this fyftem could produce it, muft
be deducled, the revenue ufually raifed in Ireland and the planta-
tions for defraying the expence of their refpeclive civil govern-
ments. The expence of the civil and military eftablifhment of
Ireland, together with the intereft of the public debt, amounts
at. a medium of the two years which ended March, 1775, to
fomething lefs than feven hundred and fifty thoufand pounds a
year. By a very exacl account of the revenue of the principal
colonies of America and the Weft Indies, it amounted, before the
commencement of the late difturbances, to a hundred and forty-
one thoufand eight hundred pounds. In this account, however,
the revenue of Maryland, of North Carolina, and of all our late
aoquifitions both upon the continent and in the iflands, is omitted,
which may perhaps make a difference of thirty or forty thoufand
pounds. For the fake of even numbers therefore, let us fuppofe
that the revenue necefTary for fupporting the civil government of
Ireland, and the plantations, may amount to a million. There
would remain confequently a revenue of fifteen millions two hun-
dred and fifty thoufand pounds, to be applied towards defraying
the general expence of the empire, and towards paying the public
debt. But if from the prefent revenue of Great Britain a mil-
lion could in peaceable times be fpared towards the payment of
that debt, fix millions two hundred and fifty thoufand pounds
could very well be fpared from, this improved revenue. This great
linking fund too might be augmented every year by the intereft of
the debt which had been difcharged the year before, and might in
this manner increafe fo very rapidly, as to be fufficient in a few
years to difcharge the whole debt, and thus to reftore compleatly
the at prefent debilitated and languishing vigour of the empire.
8 In

THE WEALTH OF NATIONS. S7$

In the meantime the people might be relieved' from fome of the CHAP,
moft burdenfome taxes ; from thofe which are impofed either upon
the neceffaries of life, or upon the materials of manufacture. The
labouring poor would thus be enabled to live better, to work
cheaper, and to fend their goods cheaper to market. The cheap-
nefs of their goods would | increafe the demand for them, and
confequently for the labour , of thofe who produced them. This
increafe in the demand for labour, would both increafe the numbers
and improve the circumftances of the labouring poor. Their
confumption would increafe, and together with it the revenue
arifing from all thofe articles of their confumption upon which the
taxes might be allowed to remain.

The revenue arifing from this fyftern of taxation, however,
might not immediately increafe in proportion to the number c€
people who were fubjected to it. Great indulgence would for fome
time be due to thofe provinces of the empire which were thus fub-
jected to burthens to which they had not before been accuftomed,
and even when the fame taxes came to be levied every where as
exactly as poflible, they would not every where produce a revenue
proportioned to the numbers of the people. In a poor country
the confumption of the principal commodities fubject to the duties
of cuftoms and excife is very fmallj and in a thinly inhabited
country the opportunities of fmuggling are very great. The con-
fumption of malt liquors among the inferior ranks of people in
Scotland is very fmall, and the excife upon malt, beer, and ale,
produces lefs there than in England in proportion to the numbers
of the people and the rate of the duties, which upon malt is dif-
ferent on account of a fuppofed difference of quality. In thefe
particular branches of the excife there is not, I apprehend, much
more fmuggling in the one country than in the other. The duties
upon the diftillery, and the greater part of the duties of cuftoms,.

THE NATURE AND CAUSES 'OF

K in proportion to the. numbers of people in the respective countries,
~> produce lefs in Scotland than in .England, not only on account
of the. Smaller confumption of the taxed commodities, but of the
much greater facility of fmuggling. ' In Ireland, the inferior ranks
of people are .ftill poorer than in Scotland, and many parts of the
country are alraoft as thinly inhabited. In Ireland, therefore, the
consumption of the taxed commodities might, in proportion to
the number of the people, be Hill lefs than in Scotland, and tire
facility of fmuggling nearly the fame. In America and the Weft
Indies the white people even of the loweft rank are in much better
circumftances than thofe of the fame rank in England, and their
confumption of all the luxuries in which - they ufually indulge
themfelves is probably much greater. The blacks, indeed, who
make the greater part of the inhabitants both of the fouthern
colonies upon the continent and of the Weft Indian iftands, as they
are in a ftate of llavery, are, no doubt, in a worfe condition than
the pooreft people either in Scotland or Ireland. We mult not,
however, upon that account, imagine that they are worfe fed, or
that their confumption of articles which might be fubjected to
moderate duties, is lefs than that even of the lower ranks of people
in England. In order that they may work well, it is the intereft,
of their mafter that they mould be fed well and kept in good
heart, in the fame manner as it is his intereft that his working
■cattle mould be fo. The blacks accordingly have almoft every
•where their allowance of rum and of melalfes or Spruce beer, in
the fame manner as the white Servants; and this allowance would
not probably be withdrawn, though thofe articles mould be fub-
jected to moderate duties. The confumption of the taxed commodi-
ties, therefore, in proportion to the number of inhabitants, would
probably be as great in America and the Weft Indies as in any
part of the Britiih empire. The opportunities of fmuggling,
indeed, would be much greater; America, in proportion to the

extent

THE WEALTH OF NATIONS.

577

extent of the country, being much more thinly inhabited than c A p>
either Scotland or Ireland^ If the revenue,, however, which is at - v— J
prefent raifed by the different duties upon malt and malt liquors,
was to be levied by a fmgie duty upon malt, the opportunity of
fmuggling in the moft important branch of the excife would be
almoft entirely taken away: And if the duties of cuftoms, inftead
of being impofed upon almoft all the different articles of impor-
tation, were confined to a few of the moft general ufe and con-
fumption, and if the levying of thofe duties was fubjected to the
excife laws, the opportunity of fmuggling, though not fo entirely
taken away, would be very much diminifhed. In confequence of
thofe two, apparently, very fimple and eafy alterations, the duties
of cuftoms and excife might probably produce a revenue as great in
proportion to the confumption of the moft thinly inhabited pro-
vince as they do at prefent in proportion to that of the moft po-
pulous.

The Americans, it has been faid, indeed, have no gold or
filver money; the interior commerce of the country being carried
on by a paper currency, and the gold and filver which occafionally
come among them being all fent to Great Britain in return for the
commodities which they receive from us. But without gold and
filver, it is added, there is no pofTibility of paying taxes. We
already get all the gold and filver which they have. How is it
poflible to draw from them what they have not ?

The prefent fcarcity of gold and filver money in America is
not the effect of the poverty of that country, or of the inability
of the people there to purchafe thofe metals. In a country where
the wages of labour are fo much higher, and the price of pro-
vifions fo much lower than in England, the greater part of the
people muft furely have wherewithal to purchafe a greater quantity,

Vol. II. 4 E if

THE NATURE AND CAUSES OF

if it was either neceffary or convenient for them to do fo. The
fcarcity of thofe metals, therefore, muft be the effect of choice, and
not of neceffity.

It is for tranfacting either domeflic or foreign bufinefs,. that
gold and filver money is either neceffary or convenient.

The domeflic bufinefs of every country, it has been (hewn in-
the fecond book of this inquiry, may, at leafl in peaceable times, be
tranfacted by means of a paper currency, with nearly the fame
degree of conveniency as by gold and filver money. It is con-
venient for the Americans,, who could always, employ with profit,
in the improvement of their lands a greater flock than they can
eafily get, to fave as much as poflible the expence of fo coflly an
inftrument of commerce as gold and filver, and rather to employ
that part of their furplus produce which would be neceffary for
purchafing thofe metals, in purchafing the inftruments of trade,,
the materials of cloathing, feveral parts of houfhold furnitures
and the iron-work neceflary for building and extending their
fettlements and plantations ; in purchafing, not dead flock, but
aclive and productive flock. The colony governments find it for
their intereft to fupply people with fuch a quantity of paper-
money as is fully fufficient and generally more than lufRcient for
tranfacting their domeflic bufinefs. Some of thofe governments>
that of Penfylvania particularly, derive a revenue from lending
this paper-money to their fubjects at an intereft of fo much per
cent. Others, like that of Maffachufet's Bay, advance upon
extraordinary emergencies a paper-money of this kind for de-
fraying the public expence, and afterwards, when it fuits the
conveniency of the colony, redeem it at the depreciated value to
which it gradually falls. In 1747 * that colony paid, in this man-
ner, the greater part of its public debts, with the tenth part of

the

* See Hutchinfon's Hiilory of MaiTachufet's Bay, Vol. II. Page 436. & feq,

THE WEALTH OF NATIONS.

the money for which its bills had been granted. It fuits the con- C
veniency of the planters .to fave the expence of employing gold and
filver money in their domeftic tranfactions ; and it fuits the conve-
niency of the colony governments to fupply them with a medium,
which, though attended with fome very confiderable difadvantages,
enables them to fave that expence. The redundancy of paper mo-
ney neceflarily banifhes gold and filver from the domeftic tranfac-
tions of the colonies, for the fame reafon that it has banifhed thofe
metals from the greater part of the domeftic tranfactions of Scot-
land ; and in both countries it is not the poverty, but the enter-
prifing and projecting fpirit of the people, their defire of employ-
ing all the ftock which they can get as active and productive ftock,
which has occafioned this redundancy of paper money.

In the exterior commerce which the different colonies carry on
with Great Biitain, gold and filver are more or lefs employed,
exactly in proportion as they are more or lefs neceftary. Where
thofe metals are not neceftary, they feldom appear. Where they are
neceftary, they are generally found.

In the commerce between Great Britain and the tobacco colo-
nies, the Britifli goods are generally advanced to the colonifts at a
pretty long credit, and are afterwards paid for in tobacco, rated at
a certain price. It is more convenient for the colonifts to pay in
tobacco than in gold and filver. It would be more convenient for
any merchant to pay for the goods which his correfpondents had
fold to him in fome other fort of goods which he might happen to
deal in,_than in money. Such a merchant would have no occafion
to keep any part of his- ftock by him unemployed, and in ready
money, for anfwering occaftonal demands. He could have, at all
times, a larger quantity of goods in his fhop or warehoufe, and he
could deal to a greater extent. But it feldom happens to be con-

4 E 2 venient

5$o THE NATURE AND CAUSES OF

BOOK venient for all the correfpondents of a merchant to receive pay-
ment for the goods which they fell to him, in goods of fome other
kind which he happens to deal in. The Britiih merchants who
.trade to Virginia and Maryland happen to be a. particular fett of
correfpondents, to whom it is more convenient to receive payment
for the goods which they fell to thofe colonies in tobacco than in
gold and filver. They expect to make a profit by the fale of the
tobacco. They could make none by that of the gold and filver.
.Gold and filver, therefore, very feldom appear in the commerce
between Great Britain and the tobacco colonies.. Maryland and
Virginia have as little occafion for thofe metals in their foreign
as in their domeftic commerce. They are faid,. accordingly,
to have lefs gold and filver money than any other colonies in Ame-
rica. They are reckoned, however, as thriving, and confequently
as rich as any of their neighbours.

In the northern colonies, Penfylvania, New York, New Jerfey,
the four governments of New England, 6cc. the value of their own
produce which they export to Great Britain is not equal to that of
the manufactures which they import for their own ufe, and for
that of fome of the other colonies to which they are the carriers.
A balance, therefore, muft be paid to the mother country in gold
and filver, and this balance they generally find*

In the fugar colonies the value of the produce annually exported
to Great Britain is much greater than that of all the goods imported
from thence. If the fugar and rum annually fent to the mother
country were paid for in thofe colonies, Great Britain would be
obliged to fend out every year a very large balance in money, and
the trade to the Weft Indies would, by a certain fpecies of politi-
cians, be confidered as extremely difadvantageous. But it fo hap-
pens, that many of the principal proprietors of the fugar planta-
tions refide in Great Britain. Their rents are remitted to them in

fugar

THE WEALTH OF NATIONS.

fugar and rum, the produce of their eftates. The fugar and rum c
which the Weft India merchants purchafe in thofe colonies upon
their own account, are not equal in value to the goods which
they annually fell there. A balance, therefore, muft generally be
paid to them in gold and filver, and this balance too is generally
found.

The difficulty and irregularity of payment from the different
colonies to Great Britain, have not been at all in proportion to the
greatnefs or fmallnefs of the balances which were refpectively due
from them. Payments have in general been more regular from
the northern than from the tobacco colonies, though the former
have generally paid a pretty large balance in money, while the lat-
ter have paid either no balance, or a much fmaller one. The diffi-
culty of getting payment from our different fugar colonies has been
greater or lefs in proportion, not fa much to the extent of the
balances refpeclively due from them, as to the quantity of uncul-
tivated land which they contained; that is, to the greater or fmaller
temptation which the planters have been under of over- trading, or
of undertaking the fettlement and plantation of greater quantities
of wafteland than fuited the extent of their capitals. The returns
from the great ifland of Jamaica, where there is ftill much uncul-
tivated land, have, upon this account, been in general more irre-
gular and uncertain than thofe from the fmaller iflands of Barba-
does, Antigua, and St. Chriftophers, which have for thefe many
years been completely cultivated, and have, upon that account,
afforded lefs field for the fpeculations of the planter. The new
acquifitions of Grenada, Tobago, St. Vincents, and Dominica, have
opened a new field for fpeculations of this kind ; and the returns
from thofe Hlands have of late been as irregular and uncertain as
thofe from the great ifland of Jamaica.

It is not, therefore, the poverty of the colonies which occaflons,
in the greater part of them, the prefent fcarcity of gold and filver

money.

V* —

5Zz THE NATURE AND CAUSES OF

BOOK money. Their great demand for active and productive ftock
-j makes it convenient for them to have as little dead ftock as
poflible ; and difpofes them upon that account to content them-
felves with a cheaper, though lefs commodious inftrument of com-
merce than gold and filver. They are thereby enabled to con-
vert the value of that gold and filver into the inftruments of
trade, into the materials of cloathing, into houfliold furniture, and
into the iron work necerlary for building and extending their fettle-
ments and plantations. In thofe branches of bufinefs which can-
not be tranfacled without gold and filver money, it appears that
they can always find the neceflary quantity of thofe metals and if
they frequently do not find it, their failure is generally the effect,
not of their neceflary poverty, but of their unneceflary and excef-
five enterprize. It is not becaufe they are poor that their payments
are irregular and uncertain ; but becaufe they are too eager to
become exceffively rich. Though all that part of the produce of
the colony taxes, which was over and above what was neceflary for
defraying the expence of their own civil and military eftablifh-
ments, were to be remitted to Great Britain in gold and filver,
the colonies have abundantly wherewithal to purchafe the requifite
quantity of thofe metals. They would in this cafe be obliged,
indeed, to exchange a part of their furplus produce, with which
the)' now purchale active and productive ftock, for dead ftock. In
tranfacting their domeftic bufinefs they would be obliged to employ
a coftly initead of a cheap inftrument of commerce ; and the ex-
pence of purchafmg this coftly inftrument might damp fomewhat
the vivacity and ardour of their exceflive enterprize in the improve-
ment of land. Jt might not, however, be neceflary to remit any
part of the American revenue in gold and filver. It might be remit-
ted in bills drawn upon and accepted by particular merchants or
companies in Great Britain, to whom a part of the furplus produce
of America had been configned, who would pay into the treafury
the American revenue in money, after having themfelves received
4 the

THE WEALTH OF NATIONS.

583

the value of it in goods ; and the whole bufinefs might frequently c ^f A P.
be tranfacted without exporting a fingle ounce of gold and filver ~v — -»
from America.

It is not contrary to juftice that both Ireland and America
fhould contribute towards the difcharge of the public debt
of Great Britain. That debt has been contracted in fupport
of the government eftablifhed by the revolution, a government to
which the proteftants of Ireland owe, not only the whole authority
which they at prefent enjoy in their own country, but every fecu-
rity which they pofTefs for their liberty, their property, and their
religion ; a government to which feveral of the colonies of America
owe their prefent charters, and confequently their prefent confti-
tution, and to which all the colonies of America owe the liberty,
fecurity, and property, which they have ever fmce enjoyed. That
public debt has been contracted in the defence, not of Great Bri-
tain alone, but of all the different provinces of the empire; the
immenfe debt contracted in the late war in particular, and a great
part of that contracted in the war before, were both, properly con-
tracted in defence of America.

By a union with Great Britain, Ireland would gain, befides ther.
freedom of trade, other advantages much more important, and
which would much more than compenfate any increafe of taxes that
might accompany that union. By the union with England, the
middling and inferior ranks of people in Scotland gained a com-
plete deliverance from the power of an ariftocracy which had al-
ways before oppreffed them. By a union with Great Britain the
greater part of the people of all ranks in Ireland would gain an
equally complete deliverance from a much more oppreffive arifto-
cracy ; an ariftocracy not founded, like that of Scotland, in the
5^atural and refpectable. diftinctions of birth and fortune; but in

the

34 THE NATURE AND CAUSES OF

BOOK the moft odious of all diftinctions, thofe of religious and political
u— v-w prejudices; diftinctions which more than any other animate both
the infolence of the oppreffors and the hatred and indignation of the
oppreffed, and which commonly render the inhabitants of the fame
country more hoftile to one another than thofe of different coun-
tries ever are. Without a union with Great Britain, the inhabi-
tants of Ireland are not likely for many ages to confider themfelves
as one people.

No oppreflive ariftocracy has ever ' prevailed in the colonies.
Even they, however, would, in point of happinefs and tranquillity,
gain confiderably by a union with Great Britain. It would, at
kaft, deliver them from thofe rancorous and virulent factions
which are infeparable from fmall democracies, and which have fo
frequently divided the affections of their people, and difturbed the
tranquillity of their governments, in their form fo nearly democra-
tical. In the cafe of a total feparation from Great Britain, which,
unlefs prevented by a union of this kind, feems very likely to take
place, thofe factions would be ten times more virulent than ever.
Before the commencement of the prefent difturbances, the coercive
power of the mother country had always been able to reftrain thofe
factions from breaking out into any thing worfe than grofs bru-
tality and infult. If that coercive power was entirely taken away,
they would probably foon break out into open violence and blood-
fhed. In all great countries which are united under one uniform
government, the fpirit of party commonly prevails lefsinthe remote
provinces, than in the center of the empire. The diftance of thofe
provinces from the capital, from the principal feat of the great
fcramble of faction and ambition, makes them enter lefs into the
views of any of the contending parties, and renders them more
indifferent and impartial fpectators of the conduct of all. The
fpirit of party prevails lefs in Scotland than in England.

In

THE WEALTH OF NATIONS. 585

In the cafe of a union it would probably prevail lefs in Ireland CHAP,
than in Scotland, and the colonies would probably foon enjoy a y--— '
degree of concord and unanimity at prefent unknown in any part
of the Britifh empire. Both Ireland and the colonies, indeed,
would be fubjecled to heavier taxes than any which they at prefent
pay. In confequence, however, of a diligent and faithful appli-
cation of the public revenue towards the difcharge of the national
debt, the greater part of thofe taxes might not be of long conti-
nuance, and the public revenue of Great Britain might foon be
reduced to what was neceflary for maintaining a moderate peace
eftablifhment.

The territorial acquifitions of the Eaft India company, the un-
doubted right of the crown, that is, of the ftate and people of
Great Britain, might be rendered another fource of revenue more
abundant perhaps than all thofe already mentioned. Thofe coun*-
tries are reprefented as more fertile, more extenfive ; and in pro-
portion to their extent much richer and more populous than Great
Britain. In order to draw a great revenue from them,, it would not
probably be necelfary to introduce any new fyftem of taxation
into countries which are already fufficiently and more than fuffi-
ciently taxed. It might perhaps be more proper to lighten than to
aggravate the burden of thofe unfortunate countries, and to en-
deavour to draw a revenue from them, not by impofing new taxes,
but by preventing the embezzlement and mifapplication of the
greater part of thofe which they already pay.

If it mould be found impracticable for Great Britain to draw
any confiderable augmentation of revenue from any of the re-
fources above- mentioned j the only refource which can remain to
her is a diminution of her expence. In the mode of collecting
and in that of expending the public revenue ; though in both

Vol. IL 4 F there-

:86

THE NATURE AND CAUSES OF

BOOK there may be ftill room for improvement; Great Britain feems
to be at leaft as oeconomical as any of her neighbours. The mi-
litary eftablifhment which fhe maintains for her own defence in
time of peace, is more moderate than that of any European ftate
which can pretend to rival her either in wealth or in power.
None of thofe articles, therefore, feem to admit of any confider-
able reduction of expence. The expence of the peace eftablifh-
ment of the colonies was, before the commencement of the pre-
fent difturbances, very confiderable, and is an expence which,
may, and if no revenue can be drawn from them, ought cer-
tainly to be faved altogether. This conftant expence in time of
peace, though very great, is infignificant in comparifon with
what the defence of the colonies has coft us in time of war,
The laft war, which was undertaken altogether on account of
the colonies, coft Great Britain, it has already been obferved,
upwards of ninety millions. The Spanifh war of 1739 was prin-
cipally undertaken on their account j in which, and in the French
war that was the confequence of it, Great Britain fpent up-
wards of forty millions, a great part of which ought juftly to
be charged to the colonies. In thofe two wars the colonies coft:
Great Britain much more than double the fum which the na-
tional debt amounted to before the commencement of the firft
of them. Had it not been for thofe wars that debt might, and.
probably would by this time have been compleatly paid ; and had
it not been for the colonies, the former of thofe wars might not,
and the latter certainly would not have been undertaken. It
was becaufe the colonies were fuppofed to be provinces of the
Britifh empire, that this expence was laid out upon them. But
countries which contribute neither revenue nor military force to-
wards the fupport of the empire, cannot be confidered as pro-
vinces. They may perhaps be confidered as appendages, as a
fort of fplendid and fhowy equipage of the empire. But if the

empire

THE WEALTH OF NATIONS.

empire can no longer fupport the expence of keeping up this equi- C
page, it ought certainly to lay it down ; and if it cannot raife
its revenue in proportion to its expence, it ought, at leaft, to
accommodate its expence to its revenue. If the colonies, not-
withftanding their refufal to fubmit to Britilh taxes, are ftiii to
be confidered as provinces of the Britifli empire, their defence in
fome future war may coft Great Britain as great an expence as
it ever has done in any former war. The rulers of Great Britain
have for more than a century pad amufed the people with the
imagination that they pofiefled a great empire on the weft fide
of the Atlantic. This empire, however, has hitherto exifted in
imagination only. It has hitherto been, not an empire, but the
project of an empire ; not a gold mine, but the project of a
gold mine ; a project which has coft, which continues to coft,
and which if purfued in the fame way as it has been hitherto, is
likely to coft immenfe expence, without being likely to bring any
profit ; for the effects of the monopoly of the colony trade, it has
been (hewn, are, to the great body of the people, mere lofs
inftead of profit. It is furely now time that our rulers mould
either realize this golden dream, in which they have been indulg-
ing themfelves, perhaps, as well as the people ; or, that they
fhould awake from it themfelves, and endeavour to awaken the
people. If the project cannot be compleated, it ought to be
given up. If any of the provinces of the Britifli empire cannot:
be made to contribute towards the fupport of the whole empire,
it is furely time that Great Britain fhould free herfelf from the
expence of defending thofe provinces in time of war, and of
fupporting any part of their civil or military eftabliihments in
time of peace, and endeavour to accommodate her future views
and defigns to the real mediocrity of her circumftances.

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