An Inquiry into the Nature and Causes of the Wealth of Nations

INTRODUCTION AND PLAN OF THE WORK.

The annual labour of every nation is the fund which originally supplies it with
all the necessaries and conveniencies of life which it annually consumes, and
which consist always either in the immediate produce of that labour, or in what
is purchased with that produce from other nations.

According, therefore, as this produce, or what is purchased with it, bears a
greater or smaller proportion to the number of those who are to consume it, the
nation will be better or worse supplied with all the necessaries and
conveniencies for which it has occasion.

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

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

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

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

Nations tolerably well advanced as to skill, dexterity, and judgment, in the
application of labour, have followed very different plans in the general
conduct or direction of it; and those plans have not all been equally
favourable to the greatness of its produce. The policy of some nations has
given extraordinary encouragement to the industry of the country; that of
others to the industry of towns. Scarce any nation has dealt equally and
impartially with every sort of industry. Since the down-fall of the Roman
empire, the policy of Europe has been more favourable to arts, manufactures,
and commerce, the industry of towns, than to agriculture, the Industry of the
country. The circumstances which seem to have introduced and established this
policy are explained in the third book.

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

To explain in what has consisted the revenue of the great body of the people,
or what has been the nature of those funds, which, in different ages and
nations, have supplied their annual consumption, is the object of these four
first books. The fifth and last book treats of the revenue of the sovereign, or
commonwealth. In this book I have endeavoured to shew, first, what are the
necessary expenses of the sovereign, or commonwealth; which of those expenses
ought to be defrayed by the general contribution of the whole society, and
which of them, by that of some particular part only, or of some particular
members of it: secondly, what are the different methods in which the whole
society may be made to contribute towards defraying the expenses incumbent on
the whole society, and what are the principal advantages and inconveniencies of
each of those methods; and, thirdly and lastly, what are the reasons and causes
which have induced almost all modern governments to mortgage some part of this
revenue, or to contract debts; and what have been the effects of those debts
upon the real wealth, the annual produce of the land and labour of the society.

BOOK I.
OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE POWERS OF LABOUR, AND OF THE
ORDER ACCORDING TO WHICH ITS PRODUCE IS NATURALLY DISTRIBUTED AMONG THE
DIFFERENT RANKS OF THE PEOPLE.

CHAPTER I.
OF THE DIVISION OF LABOUR.

The greatest improvements in the productive powers of labour, and the greater
part of the skill, dexterity, and judgment, with which it is anywhere directed,
or applied, seem to have been the effects of the division of labour. The
effects of the division of labour, in the general business of society, will be
more easily understood, by considering in what manner it operates in some
particular manufactures. It is commonly supposed to be carried furthest in some
very trifling ones; not perhaps that it really is carried further in them than
in others of more importance: but in those trifling manufactures which are
destined to supply the small wants of but a small number of people, the whole
number of workmen must necessarily be small; and those employed in every
different branch of the work can often be collected into the same workhouse,
and placed at once under the view of the spectator.

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

To take an example, therefore, from a very trifling manufacture, but one in
which the division of labour has been very often taken notice of, the trade of
a pin-maker: a workman not educated to this business (which the division of
labour has rendered a distinct trade), nor acquainted with the use of the
machinery employed in it (to the invention of which the same division of labour
has probably given occasion), could scarce, perhaps, with his utmost industry,
make one pin in a day, and certainly could not make twenty. But in the way in
which this business is now carried on, not only the whole work is a peculiar
trade, but it is divided into a number of branches, of which the greater part
are likewise peculiar trades. One man draws out the wire; another straights it;
a third cuts it; a fourth points it; a fifth grinds it at the top for receiving
the head; to make the head requires two or three distinct operations; to put it
on is a peculiar business; to whiten the pins is another; it is even a trade by
itself to put them into the paper; and the important business of making a pin
is, in this manner, divided into about eighteen distinct operations, which, in
some manufactories, are all performed by distinct hands, though in others the
same man will sometimes perform two or three of them. I have seen a small
manufactory of this kind, where ten men only were employed, and where some of
them consequently performed two or three distinct operations. But though they
were very poor, and therefore but indifferently accommodated with the necessary
machinery, they could, when they exerted themselves, make among them about
twelve pounds of pins in a day. There are in a pound upwards of four thousand
pins of a middling size. Those ten persons, therefore, could make among them
upwards of forty-eight thousand pins in a day. Each person, therefore, making a
tenth part of forty-eight thousand pins, might be considered as making four
thousand eight hundred pins in a day. But if they had all wrought separately
and independently, and without any of them having been educated to this
peculiar business, they certainly could not each of them have made twenty,
perhaps not one pin in a day; that is, certainly, not the two hundred and
fortieth, perhaps not the four thousand eight hundredth, part of what they are
at present capable of performing, in consequence of a proper division and
combination of their different operations.

In every other art and manufacture, the effects of the division of labour are
similar to what they are in this very trifling one, though, in many of them,
the labour can neither be so much subdivided, nor reduced to so great a
simplicity of operation. The division of labour, however, so far as it can be
introduced, occasions, in every art, a proportionable increase of the
productive powers of labour. The separation of different trades and employments
from one another, seems to have taken place in consequence of this advantage.
This separation, too, is generally carried furthest in those countries which
enjoy the highest degree of industry and improvement; what is the work of one
man, in a rude state of society, being generally that of several in an improved
one. In every improved society, the farmer is generally nothing but a farmer;
the manufacturer, nothing but a manufacturer. The labour, too, which is
necessary to produce any one complete manufacture, is almost always divided
among a great number of hands. How many different trades are employed in each
branch of the linen and woollen manufactures, from the growers of the flax and
the wool, to the bleachers and smoothers of the linen, or to the dyers and
dressers of the cloth! The nature of agriculture, indeed, does not admit of so
many subdivisions of labour, nor of so complete a separation of one business
from another, as manufactures. It is impossible to separate so entirely the
business of the grazier from that of the corn-farmer, as the trade of the
carpenter is commonly separated from that of the smith. The spinner is almost
always a distinct person from the weaver; but the ploughman, the harrower, the
sower of the seed, and the reaper of the corn, are often the same. The
occasions for those different sorts of labour returning with the different
seasons of the year, it is impossible that one man should be constantly
employed in any one of them. This impossibility of making so complete and
entire a separation of all the different branches of labour employed in
agriculture, is perhaps the reason why the improvement of the productive powers
of labour, in this art, does not always keep pace with their improvement in
manufactures. The most opulent nations, indeed, generally excel all their
neighbours in agriculture as well as in manufactures; but they are commonly
more distinguished by their superiority in the latter than in the former. Their
lands are in general better cultivated, and having more labour and expense
bestowed upon them, produce more in proportion to the extent and natural
fertility of the ground. But this superiority of produce is seldom much more
than in proportion to the superiority of labour and expense. In agriculture,
the labour of the rich country is not always much more productive than that of
the poor; or, at least, it is never so much more productive, as it commonly is
in manufactures. The corn of the rich country, therefore, will not always, in
the same degree of goodness, come cheaper to market than that of the poor. The
corn of Poland, in the same degree of goodness, is as cheap as that of France,
notwithstanding the superior opulence and improvement of the latter country.
The corn of France is, in the corn-provinces, fully as good, and in most years
nearly about the same price with the corn of England, though, in opulence and
improvement, France is perhaps inferior to England. The corn-lands of England,
however, are better cultivated than those of France, and the corn-lands of
France are said to be much better cultivated than those of Poland. But though
the poor country, notwithstanding the inferiority of its cultivation, can, in
some measure, rival the rich in the cheapness and goodness of its corn, it can
pretend to no such competition in its manufactures, at least if those
manufactures suit the soil, climate, and situation, of the rich country. The
silks of France are better and cheaper than those of England, because the silk
manufacture, at least under the present high duties upon the importation of raw
silk, does not so well suit the climate of England as that of France. But the
hardware and the coarse woollens of England are beyond all comparison superior
to those of France, and much cheaper, too, in the same degree of goodness. In
Poland there are said to be scarce any manufactures of any kind, a few of those
coarser household manufactures excepted, without which no country can well
subsist.

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

First, the improvement of the dexterity of the workmen, necessarily increases
the quantity of the work he can perform; and the division of labour, by
reducing every man’s business to some one simple operation, and by making
this operation the sole employment of his life, necessarily increases very much
the dexterity of the workman. A common smith, who, though accustomed to handle
the hammer, has never been used to make nails, if, upon some particular
occasion, he is obliged to attempt it, will scarce, I am assured, be able to
make above two or three hundred nails in a day, and those, too, very bad ones.
A smith who has been accustomed to make nails, but whose sole or principal
business has not been that of a nailer, can seldom, with his utmost diligence,
make more than eight hundred or a thousand nails in a day. I have seen several
boys, under twenty years of age, who had never exercised any other trade but
that of making nails, and who, when they exerted themselves, could make, each
of them, upwards of two thousand three hundred nails in a day. The making of a
nail, however, is by no means one of the simplest operations. The same person
blows the bellows, stirs or mends the fire as there is occasion, heats the
iron, and forges every part of the nail: in forging the head, too, he is
obliged to change his tools. The different operations into which the making of
a pin, or of a metal button, is subdivided, are all of them much more simple,
and the dexterity of the person, of whose life it has been the sole business to
perform them, is usually much greater. The rapidity with which some of the
operations of those manufactures are performed, exceeds what the human hand
could, by those who had never seen them, be supposed capable of acquiring.

Secondly, the advantage which is gained by saving the time commonly lost in
passing from one sort of work to another, is much greater than we should at
first view be apt to imagine it. It is impossible to pass very quickly from one
kind of work to another, that is carried on in a different place, and with
quite different tools. A country weaver, who cultivates a small farm, must lose
a good deal of time in passing from his loom to the field, and from the field
to his loom. When the two trades can be carried on in the same workhouse, the
loss of time is, no doubt, much less. It is, even in this case, however, very
considerable. A man commonly saunters a little in turning his hand from one
sort of employment to another. When he first begins the new work, he is seldom
very keen and hearty; his mind, as they say, does not go to it, and for some
time he rather trifles than applies to good purpose. The habit of sauntering,
and of indolent careless application, which is naturally, or rather
necessarily, acquired by every country workman who is obliged to change his
work and his tools every half hour, and to apply his hand in twenty different
ways almost every day of his life, renders him almost always slothful and lazy,
and incapable of any vigorous application, even on the most pressing occasions.
Independent, therefore, of his deficiency in point of dexterity, this cause
alone must always reduce considerably the quantity of work which he is capable
of performing.

Thirdly, and lastly, everybody must be sensible how much labour is facilitated
and abridged by the application of proper machinery. It is unnecessary to give
any example. I shall only observe, therefore, that the invention of all those
machines by which labour is so much facilitated and abridged, seems to have
been originally owing to the division of labour. Men are much more likely to
discover easier and readier methods of attaining any object, when the whole
attention of their minds is directed towards that single object, than when it
is dissipated among a great variety of things. But, in consequence of the
division of labour, the whole of every man’s attention comes naturally to
be directed towards some one very simple object. It is naturally to be
expected, therefore, that some one or other of those who are employed in each
particular branch of labour should soon find out easier and readier methods of
performing their own particular work, whenever the nature of it admits of such
improvement. A great part of the machines made use of in those manufactures in
which labour is most subdivided, were originally the invention of common
workmen, who, being each of them employed in some very simple operation,
naturally turned their thoughts towards finding out easier and readier methods
of performing it. Whoever has been much accustomed to visit such manufactures,
must frequently have been shewn very pretty machines, which were the inventions
of such workmen, in order to facilitate and quicken their own particular part
of the work. In the first fire engines {this was the current designation for
steam engines}, a boy was constantly employed to open and shut alternately the
communication between the boiler and the cylinder, according as the piston
either ascended or descended. One of those boys, who loved to play with his
companions, observed that, by tying a string from the handle of the valve which
opened this communication to another part of the machine, the valve would open
and shut without his assistance, and leave him at liberty to divert himself
with his play-fellows. One of the greatest improvements that has been made upon
this machine, since it was first invented, was in this manner the discovery of
a boy who wanted to save his own labour.

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

It is the great multiplication of the productions of all the different arts, in
consequence of the division of labour, which occasions, in a well-governed
society, that universal opulence which extends itself to the lowest ranks of
the people. Every workman has a great quantity of his own work to dispose of
beyond what he himself has occasion for; and every other workman being exactly
in the same situation, he is enabled to exchange a great quantity of his own
goods for a great quantity or, what comes to the same thing, for the price of a
great quantity of theirs. He supplies them abundantly with what they have
occasion for, and they accommodate him as amply with what he has occasion for,
and a general plenty diffuses itself through all the different ranks of the
society.

Observe the accommodation of the most common artificer or daylabourer in a
civilized and thriving country, and you will perceive that the number of
people, of whose industry a part, though but a small part, has been employed in
procuring him this accommodation, exceeds all computation. The woollen coat,
for example, which covers the day-labourer, as coarse and rough as it may
appear, is the produce of the joint labour of a great multitude of workmen. The
shepherd, the sorter of the wool, the wool-comber or carder, the dyer, the
scribbler, the spinner, the weaver, the fuller, the dresser, with many others,
must all join their different arts in order to complete even this homely
production. How many merchants and carriers, besides, must have been employed
in transporting the materials from some of those workmen to others who often
live in a very distant part of the country? How much commerce and navigation in
particular, how many ship-builders, sailors, sail-makers, rope-makers, must
have been employed in order to bring together the different drugs made use of
by the dyer, which often come from the remotest corners of the world? What a
variety of labour, too, is necessary in order to produce the tools of the
meanest of those workmen! To say nothing of such complicated machines as the
ship of the sailor, the mill of the fuller, or even the loom of the weaver, let
us consider only what a variety of labour is requisite in order to form that
very simple machine, the shears with which the shepherd clips the wool. The
miner, the builder of the furnace for smelting the ore, the feller of the
timber, the burner of the charcoal to be made use of in the smelting-house, the
brickmaker, the bricklayer, the workmen who attend the furnace, the millwright,
the forger, the smith, must all of them join their different arts in order to
produce them. Were we to examine, in the same manner, all the different parts
of his dress and household furniture, the coarse linen shirt which he wears
next his skin, the shoes which cover his feet, the bed which he lies on, and
all the different parts which compose it, the kitchen-grate at which he
prepares his victuals, the coals which he makes use of for that purpose, dug
from the bowels of the earth, and brought to him, perhaps, by a long sea and a
long land-carriage, all the other utensils of his kitchen, all the furniture of
his table, the knives and forks, the earthen or pewter plates upon which he
serves up and divides his victuals, the different hands employed in preparing
his bread and his beer, the glass window which lets in the heat and the light,
and keeps out the wind and the rain, with all the knowledge and art requisite
for preparing that beautiful and happy invention, without which these northern
parts of the world could scarce have afforded a very comfortable habitation,
together with the tools of all the different workmen employed in producing
those different conveniencies; if we examine, I say, all these things, and
consider what a variety of labour is employed about each of them, we shall be
sensible that, without the assistance and co-operation of many thousands, the
very meanest person in a civilized country could not be provided, even
according to, what we very falsely imagine, the easy and simple manner in which
he is commonly accommodated. Compared, indeed, with the more extravagant luxury
of the great, his accommodation must no doubt appear extremely simple and easy;
and yet it may be true, perhaps, that the accommodation of an European prince
does not always so much exceed that of an industrious and frugal peasant, as
the accommodation of the latter exceeds that of many an African king, the
absolute masters of the lives and liberties of ten thousand naked savages.

CHAPTER II.
OF THE PRINCIPLE WHICH GIVES OCCASION TO THE DIVISION OF LABOUR.

This division of labour, from which so many advantages are derived, is not
originally the effect of any human wisdom, which foresees and intends that
general opulence to which it gives occasion. It is the necessary, though very
slow and gradual, consequence of a certain propensity in human nature, which
has in view no such extensive utility; the propensity to truck, barter, and
exchange one thing for another.

Whether this propensity be one of those original principles in human nature, of
which no further account can be given, or whether, as seems more probable, it
be the necessary consequence of the faculties of reason and speech, it belongs
not to our present subject to inquire. It is common to all men, and to be found
in no other race of animals, which seem to know neither this nor any other
species of contracts. Two greyhounds, in running down the same hare, have
sometimes the appearance of acting in some sort of concert. Each turns her
towards his companion, or endeavours to intercept her when his companion turns
her towards himself. This, however, is not the effect of any contract, but of
the accidental concurrence of their passions in the same object at that
particular time. Nobody ever saw a dog make a fair and deliberate exchange of
one bone for another with another dog. Nobody ever saw one animal, by its
gestures and natural cries signify to another, this is mine, that yours; I am
willing to give this for that. When an animal wants to obtain something either
of a man, or of another animal, it has no other means of persuasion, but to
gain the favour of those whose service it requires. A puppy fawns upon its dam,
and a spaniel endeavours, by a thousand attractions, to engage the attention of
its master who is at dinner, when it wants to be fed by him. Man sometimes uses
the same arts with his brethren, and when he has no other means of engaging
them to act according to his inclinations, endeavours by every servile and
fawning attention to obtain their good will. He has not time, however, to do
this upon every occasion. In civilized society he stands at all times in need
of the co-operation and assistance of great multitudes, while his whole life is
scarce sufficient to gain the friendship of a few persons. In almost every
other race of animals, each individual, when it is grown up to maturity, is
entirely independent, and in its natural state has occasion for the assistance
of no other living creature. But man has almost constant occasion for the help
of his brethren, and it is in vain for him to expect it from their benevolence
only. He will be more likely to prevail if he can interest their self-love in
his favour, and shew them that it is for their own advantage to do for him what
he requires of them. Whoever offers to another a bargain of any kind, proposes
to do this. Give me that which I want, and you shall have this which you want,
is the meaning of every such offer; and it is in this manner that we obtain
from one another the far greater part of those good offices which we stand in
need of. It is not from the benevolence of the butcher, the brewer, or the
baker that we expect our dinner, but from their regard to their own interest.
We address ourselves, not to their humanity, but to their self-love, and never
talk to them of our own necessities, but of their advantages. Nobody but a
beggar chooses to depend chiefly upon the benevolence of his fellow-citizens.
Even a beggar does not depend upon it entirely. The charity of well-disposed
people, indeed, supplies him with the whole fund of his subsistence. But though
this principle ultimately provides him with all the necessaries of life which
he has occasion for, it neither does nor can provide him with them as he has
occasion for them. The greater part of his occasional wants are supplied in the
same manner as those of other people, by treaty, by barter, and by purchase.
With the money which one man gives him he purchases food. The old clothes which
another bestows upon him he exchanges for other clothes which suit him better,
or for lodging, or for food, or for money, with which he can buy either food,
clothes, or lodging, as he has occasion.

As it is by treaty, by barter, and by purchase, that we obtain from one another
the greater part of those mutual good offices which we stand in need of, so it
is this same trucking disposition which originally gives occasion to the
division of labour. In a tribe of hunters or shepherds, a particular person
makes bows and arrows, for example, with more readiness and dexterity than any
other. He frequently exchanges them for cattle or for venison, with his
companions; and he finds at last that he can, in this manner, get more cattle
and venison, than if he himself went to the field to catch them. From a regard
to his own interest, therefore, the making of bows and arrows grows to be his
chief business, and he becomes a sort of armourer. Another excels in making the
frames and covers of their little huts or moveable houses. He is accustomed to
be of use in this way to his neighbours, who reward him in the same manner with
cattle and with venison, till at last he finds it his interest to dedicate
himself entirely to this employment, and to become a sort of house-carpenter.
In the same manner a third becomes a smith or a brazier; a fourth, a tanner or
dresser of hides or skins, the principal part of the clothing of savages. And
thus the certainty of being able to exchange all that surplus part of the
produce of his own labour, which is over and above his own consumption, for
such parts of the produce of other men’s labour as he may have occasion
for, encourages every man to apply himself to a particular occupation, and to
cultivate and bring to perfection whatever talent of genius he may possess for
that particular species of business.

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

As it is this disposition which forms that difference of talents, so remarkable
among men of different professions, so it is this same disposition which
renders that difference useful. Many tribes of animals, acknowledged to be all
of the same species, derive from nature a much more remarkable distinction of
genius, than what, antecedent to custom and education, appears to take place
among men. By nature a philosopher is not in genius and disposition half so
different from a street porter, as a mastiff is from a grey-hound, or a
grey-hound from a spaniel, or this last from a shepherd’s dog. Those
different tribes of animals, however, though all of the same species are of
scarce any use to one another. The strength of the mastiff is not in the least
supported either by the swiftness of the greyhound, or by the sagacity of the
spaniel, or by the docility of the shepherd’s dog. The effects of those
different geniuses and talents, for want of the power or disposition to barter
and exchange, cannot be brought into a common stock, and do not in the least
contribute to the better accommodation and conveniency of the species. Each
animal is still obliged to support and defend itself, separately and
independently, and derives no sort of advantage from that variety of talents
with which nature has distinguished its fellows. Among men, on the contrary,
the most dissimilar geniuses are of use to one another; the different produces
of their respective talents, by the general disposition to truck, barter, and
exchange, being brought, as it were, into a common stock, where every man may
purchase whatever part of the produce of other men’s talents he has
occasion for.

CHAPTER III.
THAT THE DIVISION OF LABOUR IS LIMITED BY THE EXTENT OF THE MARKET.

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

There are some sorts of industry, even of the lowest kind, which can be carried
on nowhere but in a great town. A porter, for example, can find employment and
subsistence in no other place. A village is by much too narrow a sphere for
him; even an ordinary market-town is scarce large enough to afford him constant
occupation. In the lone houses and very small villages which are scattered
about in so desert a country as the highlands of Scotland, every farmer must be
butcher, baker, and brewer, for his own family. In such situations we can
scarce expect to find even a smith, a carpenter, or a mason, within less than
twenty miles of another of the same trade. The scattered families that live at
eight or ten miles distance from the nearest of them, must learn to perform
themselves a great number of little pieces of work, for which, in more populous
countries, they would call in the assistance of those workmen. Country workmen
are almost everywhere obliged to apply themselves to all the different branches
of industry that have so much affinity to one another as to be employed about
the same sort of materials. A country carpenter deals in every sort of work
that is made of wood; a country smith in every sort of work that is made of
iron. The former is not only a carpenter, but a joiner, a cabinet-maker, and
even a carver in wood, as well as a wheel-wright, a plough-wright, a cart and
waggon-maker. The employments of the latter are still more various. It is
impossible there should be such a trade as even that of a nailer in the remote
and inland parts of the highlands of Scotland. Such a workman at the rate of a
thousand nails a-day, and three hundred working days in the year, will make
three hundred thousand nails in the year. But in such a situation it would be
impossible to dispose of one thousand, that is, of one day’s work in the
year. As by means of water-carriage, a more extensive market is opened to every
sort of industry than what land-carriage alone can afford it, so it is upon the
sea-coast, and along the banks of navigable rivers, that industry of every kind
naturally begins to subdivide and improve itself, and it is frequently not till
a long time after that those improvements extend themselves to the inland parts
of the country. A broad-wheeled waggon, attended by two men, and drawn by eight
horses, in about six weeks time, carries and brings back between London and
Edinburgh near four ton weight of goods. In about the same time a ship
navigated by six or eight men, and sailing between the ports of London and
Leith, frequently carries and brings back two hundred ton weight of goods. Six
or eight men, therefore, by the help of water-carriage, can carry and bring
back, in the same time, the same quantity of goods between London and Edinburgh
as fifty broad-wheeled waggons, attended by a hundred men, and drawn by four
hundred horses. Upon two hundred tons of goods, therefore, carried by the
cheapest land-carriage from London to Edinburgh, there must be charged the
maintenance of a hundred men for three weeks, and both the maintenance and what
is nearly equal to maintenance the wear and tear of four hundred horses, as
well as of fifty great waggons. Whereas, upon the same quantity of goods
carried by water, there is to be charged only the maintenance of six or eight
men, and the wear and tear of a ship of two hundred tons burthen, together with
the value of the superior risk, or the difference of the insurance between land
and water-carriage. Were there no other communication between those two places,
therefore, but by land-carriage, as no goods could be transported from the one
to the other, except such whose price was very considerable in proportion to
their weight, they could carry on but a small part of that commerce which at
present subsists between them, and consequently could give but a small part of
that encouragement which they at present mutually afford to each other’s
industry. There could be little or no commerce of any kind between the distant
parts of the world. What goods could bear the expense of land-carriage between
London and Calcutta? Or if there were any so precious as to be able to support
this expense, with what safety could they be transported through the
territories of so many barbarous nations? Those two cities, however, at present
carry on a very considerable commerce with each other, and by mutually
affording a market, give a good deal of encouragement to each other’s
industry.

Since such, therefore, are the advantages of water-carriage, it is natural that
the first improvements of art and industry should be made where this
conveniency opens the whole world for a market to the produce of every sort of
labour, and that they should always be much later in extending themselves into
the inland parts of the country. The inland parts of the country can for a long
time have no other market for the greater part of their goods, but the country
which lies round about them, and separates them from the sea-coast, and the
great navigable rivers. The extent of the market, therefore, must for a long
time be in proportion to the riches and populousness of that country, and
consequently their improvement must always be posterior to the improvement of
that country. In our North American colonies, the plantations have constantly
followed either the sea-coast or the banks of the navigable rivers, and have
scarce anywhere extended themselves to any considerable distance from both.

The nations that, according to the best authenticated history, appear to have
been first civilized, were those that dwelt round the coast of the
Mediterranean sea. That sea, by far the greatest inlet that is known in the
world, having no tides, nor consequently any waves, except such as are caused
by the wind only, was, by the smoothness of its surface, as well as by the
multitude of its islands, and the proximity of its neighbouring shores,
extremely favourable to the infant navigation of the world; when, from their
ignorance of the compass, men were afraid to quit the view of the coast, and
from the imperfection of the art of ship-building, to abandon themselves to the
boisterous waves of the ocean. To pass beyond the pillars of Hercules, that is,
to sail out of the straits of Gibraltar, was, in the ancient world, long
considered as a most wonderful and dangerous exploit of navigation. It was late
before even the Phoenicians and Carthaginians, the most skilful navigators and
ship-builders of those old times, attempted it; and they were, for a long time,
the only nations that did attempt it.

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

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

All the inland parts of Africa, and all that part of Asia which lies any
considerable way north of the Euxine and Caspian seas, the ancient Scythia, the
modern Tartary and Siberia, seem, in all ages of the world, to have been in the
same barbarous and uncivilized state in which we find them at present. The sea
of Tartary is the frozen ocean, which admits of no navigation; and though some
of the greatest rivers in the world run through that country, they are at too
great a distance from one another to carry commerce and communication through
the greater part of it. There are in Africa none of those great inlets, such as
the Baltic and Adriatic seas in Europe, the Mediterranean and Euxine seas in
both Europe and Asia, and the gulfs of Arabia, Persia, India, Bengal, and Siam,
in Asia, to carry maritime commerce into the interior parts of that great
continent; and the great rivers of Africa are at too great a distance from one
another to give occasion to any considerable inland navigation. The commerce,
besides, which any nation can carry on by means of a river which does not break
itself into any great number of branches or canals, and which runs into another
territory before it reaches the sea, can never be very considerable, because it
is always in the power of the nations who possess that other territory to
obstruct the communication between the upper country and the sea. The
navigation of the Danube is of very little use to the different states of
Bavaria, Austria, and Hungary, in comparison of what it would be, if any of
them possessed the whole of its course, till it falls into the Black sea.

CHAPTER IV.
OF THE ORIGIN AND USE OF MONEY.

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

But when the division of labour first began to take place, this power of
exchanging must frequently have been very much clogged and embarrassed in its
operations. One man, we shall suppose, has more of a certain commodity than he
himself has occasion for, while another has less. The former, consequently,
would be glad to dispose of; and the latter to purchase, a part of this
superfluity. But if this latter should chance to have nothing that the former
stands in need of, no exchange can be made between them. The butcher has more
meat in his shop than he himself can consume, and the brewer and the baker
would each of them be willing to purchase a part of it. But they have nothing
to offer in exchange, except the different productions of their respective
trades, and the butcher is already provided with all the bread and beer which
he has immediate occasion for. No exchange can, in this case, be made between
them. He cannot be their merchant, nor they his customers; and they are all of
them thus mutually less serviceable to one another. In order to avoid the
inconveniency of such situations, every prudent man in every period of society,
after the first establishment of the division of labour, must naturally have
endeavoured to manage his affairs in such a manner, as to have at all times by
him, besides the peculiar produce of his own industry, a certain quantity of
some one commodity or other, such as he imagined few people would be likely to
refuse in exchange for the produce of their industry. Many different
commodities, it is probable, were successively both thought of and employed for
this purpose. In the rude ages of society, cattle are said to have been the
common instrument of commerce; and, though they must have been a most
inconvenient one, yet, in old times, we find things were frequently valued
according to the number of cattle which had been given in exchange for them.
The armour of Diomede, says Homer, cost only nine oxen; but that of Glaucus
cost a hundred oxen. Salt is said to be the common instrument of commerce and
exchanges in Abyssinia; a species of shells in some parts of the coast of
India; dried cod at Newfoundland; tobacco in Virginia; sugar in some of our
West India colonies; hides or dressed leather in some other countries; and
there is at this day a village in Scotland, where it is not uncommon, I am
told, for a workman to carry nails instead of money to the baker’s shop
or the ale-house.

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

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

Those metals seem originally to have been made use of for this purpose in rude
bars, without any stamp or coinage. Thus we are told by Pliny (Plin. Hist Nat.
lib. 33, cap. 3), upon the authority of Timaeus, an ancient historian, that,
till the time of Servius Tullius, the Romans had no coined money, but made use
of unstamped bars of copper, to purchase whatever they had occasion for. These
rude bars, therefore, performed at this time the function of money.

The use of metals in this rude state was attended with two very considerable
inconveniences; first, with the trouble of weighing, and secondly, with that of
assaying them. In the precious metals, where a small difference in the quantity
makes a great difference in the value, even the business of weighing, with
proper exactness, requires at least very accurate weights and scales. The
weighing of gold, in particular, is an operation of some nicety in the coarser
metals, indeed, where a small error would be of little consequence, less
accuracy would, no doubt, be necessary. Yet we should find it excessively
troublesome if every time a poor man had occasion either to buy or sell a
farthing’s worth of goods, he was obliged to weigh the farthing. The
operation of assaying is still more difficult, still more tedious; and, unless
a part of the metal is fairly melted in the crucible, with proper dissolvents,
any conclusion that can be drawn from it is extremely uncertain. Before the
institution of coined money, however, unless they went through this tedious and
difficult operation, people must always have been liable to the grossest frauds
and impositions; and instead of a pound weight of pure silver, or pure copper,
might receive, in exchange for their goods, an adulterated composition of the
coarsest and cheapest materials, which had, however, in their outward
appearance, been made to resemble those metals. To prevent such abuses, to
facilitate exchanges, and thereby to encourage all sorts of industry and
commerce, it has been found necessary, in all countries that have made any
considerable advances towards improvement, to affix a public stamp upon certain
quantities of such particular metals, as were in those countries commonly made
use of to purchase goods. Hence the origin of coined money, and of those public
offices called mints; institutions exactly of the same nature with those of the
aulnagers and stamp-masters of woollen and linen cloth. All of them are equally
meant to ascertain, by means of a public stamp, the quantity and uniform
goodness of those different commodities when brought to market.

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

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

The denominations of those coins seem originally to have expressed the weight
or quantity of metal contained in them. In the time of Servius Tullius, who
first coined money at Rome, the Roman as or pondo contained a Roman pound of
good copper. It was divided, in the same manner as our Troyes pound, into
twelve ounces, each of which contained a real ounce of good copper. The English
pound sterling, in the time of Edward I. contained a pound, Tower weight, of
silver of a known fineness. The Tower pound seems to have been something more
than the Roman pound, and something less than the Troyes pound. This last was
not introduced into the mint of England till the 18th of Henry the VIII. The
French livre contained, in the time of Charlemagne, a pound, Troyes weight, of
silver of a known fineness. The fair of Troyes in Champaign was at that time
frequented by all the nations of Europe, and the weights and measures of so
famous a market were generally known and esteemed. The Scots money pound
contained, from the time of Alexander the First to that of Robert Bruce, a
pound of silver of the same weight and fineness with the English pound
sterling. English, French, and Scots pennies, too, contained all of them
originally a real penny-weight of silver, the twentieth part of an ounce, and
the two hundred-and-fortieth part of a pound. The shilling, too, seems
originally to have been the denomination of a weight. “When wheat is at
twelve shillings the quarter,” says an ancient statute of Henry III.
“then wastel bread of a farthing shall weigh eleven shillings and
fourpence”. The proportion, however, between the shilling, and either the
penny on the one hand, or the pound on the other, seems not to have been so
constant and uniform as that between the penny and the pound. During the first
race of the kings of France, the French sou or shilling appears upon different
occasions to have contained five, twelve, twenty, and forty pennies. Among the
ancient Saxons, a shilling appears at one time to have contained only five
pennies, and it is not improbable that it may have been as variable among them
as among their neighbours, the ancient Franks. From the time of Charlemagne
among the French, and from that of William the Conqueror among the English, the
proportion between the pound, the shilling, and the penny, seems to have been
uniformly the same as at present, though the value of each has been very
different; for in every country of the world, I believe, the avarice and
injustice of princes and sovereign states, abusing the confidence of their
subjects, have by degrees diminished the real quantity of metal, which had been
originally contained in their coins. The Roman as, in the latter ages of the
republic, was reduced to the twenty-fourth part of its original value, and,
instead of weighing a pound, came to weigh only half an ounce. The English
pound and penny contain at present about a third only; the Scots pound and
penny about a thirty-sixth; and the French pound and penny about a sixty-sixth
part of their original value. By means of those operations, the princes and
sovereign states which performed them were enabled, in appearance, to pay their
debts and fulfil their engagements with a smaller quantity of silver than would
otherwise have been requisite. It was indeed in appearance only; for their
creditors were really defrauded of a part of what was due to them. All other
debtors in the state were allowed the same privilege, and might pay with the
same nominal sum of the new and debased coin whatever they had borrowed in the
old. Such operations, therefore, have always proved favourable to the debtor,
and ruinous to the creditor, and have sometimes produced a greater and more
universal revolution in the fortunes of private persons, than could have been
occasioned by a very great public calamity.

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

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

The word VALUE, it is to be observed, has two different meanings, and sometimes
expresses the utility of some particular object, and sometimes the power of
purchasing other goods which the possession of that object conveys. The one may
be called ‘value in use;’ the other, ‘value in
exchange.’ The things which have the greatest value in use have
frequently little or no value in exchange; and, on the contrary, those which
have the greatest value in exchange have frequently little or no value in use.
Nothing is more useful than water; but it will purchase scarce any thing;
scarce any thing can be had in exchange for it. A diamond, on the contrary, has
scarce any value in use; but a very great quantity of other goods may
frequently be had in exchange for it.

In order to investigate the principles which regulate the exchangeable value of
commodities, I shall endeavour to shew,

First, what is the real measure of this exchangeable value; or wherein consists
the real price of all commodities.

Secondly, what are the different parts of which this real price is composed or
made up.

And, lastly, what are the different circumstances which sometimes raise some or
all of these different parts of price above, and sometimes sink them below,
their natural or ordinary rate; or, what are the causes which sometimes hinder
the market price, that is, the actual price of commodities, from coinciding
exactly with what may be called their natural price.

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

CHAPTER V.
OF THE REAL AND NOMINAL PRICE OF COMMODITIES, OR OF THEIR PRICE IN LABOUR, AND
THEIR PRICE IN MONEY.

Every man is rich or poor according to the degree in which he can afford to
enjoy the necessaries, conveniencies, and amusements of human life. But after
the division of labour has once thoroughly taken place, it is but a very small
part of these with which a man’s own labour can supply him. The far
greater part of them he must derive from the labour of other people, and he
must be rich or poor according to the quantity of that labour which he can
command, or which he can afford to purchase. The value of any commodity,
therefore, to the person who possesses it, and who means not to use or consume
it himself, but to exchange it for other commodities, is equal to the quantity
of labour which it enables him to purchase or command. Labour therefore, is the
real measure of the exchangeable value of all commodities.

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

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

But though labour be the real measure of the exchangeable value of all
commodities, it is not that by which their value is commonly estimated. It is
often difficult to ascertain the proportion between two different quantities of
labour. The time spent in two different sorts of work will not always alone
determine this proportion. The different degrees of hardship endured, and of
ingenuity exercised, must likewise be taken into account. There may be more
labour in an hour’s hard work, than in two hours easy business; or in an
hour’s application to a trade which it cost ten years labour to learn,
than in a month’s industry, at an ordinary and obvious employment. But it
is not easy to find any accurate measure either of hardship or ingenuity. In
exchanging, indeed, the different productions of different sorts of labour for
one another, some allowance is commonly made for both. It is adjusted, however,
not by any accurate measure, but by the higgling and bargaining of the market,
according to that sort of rough equality which, though not exact, is sufficient
for carrying on the business of common life.

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

But when barter ceases, and money has become the common instrument of commerce,
every particular commodity is more frequently exchanged for money than for any
other commodity. The butcher seldom carries his beef or his mutton to the baker
or the brewer, in order to exchange them for bread or for beer; but he carries
them to the market, where he exchanges them for money, and afterwards exchanges
that money for bread and for beer. The quantity of money which he gets for them
regulates, too, the quantity of bread and beer which he can afterwards
purchase. It is more natural and obvious to him, therefore, to estimate their
value by the quantity of money, the commodity for which he immediately
exchanges them, than by that of bread and beer, the commodities for which he
can exchange them only by the intervention of another commodity; and rather to
say that his butcher’s meat is worth three-pence or fourpence a-pound,
than that it is worth three or four pounds of bread, or three or four quarts of
small beer. Hence it comes to pass, that the exchangeable value of every
commodity is more frequently estimated by the quantity of money, than by the
quantity either of labour or of any other commodity which can be had in
exchange for it.

Gold and silver, however, like every other commodity, vary in their value; are
sometimes cheaper and sometimes dearer, sometimes of easier and sometimes of
more difficult purchase. The quantity of labour which any particular quantity
of them can purchase or command, or the quantity of other goods which it will
exchange for, depends always upon the fertility or barrenness of the mines
which happen to be known about the time when such exchanges are made. The
discovery of the abundant mines of America, reduced, in the sixteenth century,
the value of gold and silver in Europe to about a third of what it had been
before. As it cost less labour to bring those metals from the mine to the
market, so, when they were brought thither, they could purchase or command less
labour; and this revolution in their value, though perhaps the greatest, is by
no means the only one of which history gives some account. But as a measure of
quantity, such as the natural foot, fathom, or handful, which is continually
varying in its own quantity, can never be an accurate measure of the quantity
of other things; so a commodity which is itself continually varying in its own
value, can never be an accurate measure of the value of other commodities.
Equal quantities of labour, at all times and places, may be said to be of equal
value to the labourer. In his ordinary state of health, strength, and spirits;
in the ordinary degree of his skill and dexterity, he must always lay down the
same portion of his ease, his liberty, and his happiness. The price which he
pays must always be the same, whatever may be the quantity of goods which he
receives in return for it. Of these, indeed, it may sometimes purchase a
greater and sometimes a smaller quantity; but it is their value which varies,
not that of the labour which purchases them. At all times and places, that is
dear which it is difficult to come at, or which it costs much labour to
acquire; and that cheap which is to be had easily, or with very little labour.
Labour alone, therefore, never varying in its own value, is alone the ultimate
and real standard by which the value of all commodities can at all times and
places be estimated and compared. It is their real price; money is their
nominal price only.

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

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

The distinction between the real and the nominal price of commodities and
labour is not a matter of mere speculation, but may sometimes be of
considerable use in practice. The same real price is always of the same value;
but on account of the variations in the value of gold and silver, the same
nominal price is sometimes of very different values. When a landed estate,
therefore, is sold with a reservation of a perpetual rent, if it is intended
that this rent should always be of the same value, it is of importance to the
family in whose favour it is reserved, that it should not consist in a
particular sum of money. Its value would in this case be liable to variations
of two different kinds: first, to those which arise from the different
quantities of gold and silver which are contained at different times in coin of
the same denomination; and, secondly, to those which arise from the different
values of equal quantities of gold and silver at different times.

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

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

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

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

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

Though the real value of a corn rent, it is to be observed, however, varies
much less from century to century than that of a money rent, it varies much
more from year to year. The money price of labour, as I shall endeavour to shew
hereafter, does not fluctuate from year to year with the money price of corn,
but seems to be everywhere accommodated, not to the temporary or occasional,
but to the average or ordinary price of that necessary of life. The average or
ordinary price of corn, again is regulated, as I shall likewise endeavour to
shew hereafter, by the value of silver, by the richness or barrenness of the
mines which supply the market with that metal, or by the quantity of labour
which must be employed, and consequently of corn which must be consumed, in
order to bring any particular quantity of silver from the mine to the market.
But the value of silver, though it sometimes varies greatly from century to
century, seldom varies much from year to year, but frequently continues the
same, or very nearly the same, for half a century or a century together. The
ordinary or average money price of corn, therefore, may, during so long a
period, continue the same, or very nearly the same, too, and along with it the
money price of labour, provided, at least, the society continues, in other
respects, in the same, or nearly in the same, condition. In the mean time, the
temporary and occasional price of corn may frequently be double one year of
what it had been the year before, or fluctuate, for example, from
five-and-twenty to fifty shillings the quarter. But when corn is at the latter
price, not only the nominal, but the real value of a corn rent, will be double
of what it is when at the former, or will command double the quantity either of
labour, or of the greater part of other commodities; the money price of labour,
and along with it that of most other things, continuing the same during all
these fluctuations.

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

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

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

Though at distant places there is no regular proportion between the real and
the money price of commodities, yet the merchant who carries goods from the one
to the other, has nothing to consider but the money price, or the difference
between the quantity of silver for which he buys them, and that for which he is
likely to sell them. Half an ounce of silver at Canton in China may command a
greater quantity both of labour and of the necessaries and conveniencies of
life, than an ounce at London. A commodity, therefore, which sells for half an
ounce of silver at Canton, may there be really dearer, of more real importance
to the man who possesses it there, than a commodity which sells for an ounce at
London is to the man who possesses it at London. If a London merchant, however,
can buy at Canton, for half an ounce of silver, a commodity which he can
afterwards sell at London for an ounce, he gains a hundred per cent. by the
bargain, just as much as if an ounce of silver was at London exactly of the
same value as at Canton. It is of no importance to him that half an ounce of
silver at Canton would have given him the command of more labour, and of a
greater quantity of the necessaries and conveniencies of life than an ounce can
do at London. An ounce at London will always give him the command of double the
quantity of all these, which half an ounce could have done there, and this is
precisely what he wants.

As it is the nominal or money price of goods, therefore, which finally
determines the prudence or imprudence of all purchases and sales, and thereby
regulates almost the whole business of common life in which price is concerned,
we cannot wonder that it should have been so much more attended to than the
real price.

In such a work as this, however, it may sometimes be of use to compare the
different real values of a particular commodity at different times and places,
or the different degrees of power over the labour of other people which it may,
upon different occasions, have given to those who possessed it. We must in this
case compare, not so much the different quantities of silver for which it was
commonly sold, as the different quantities or labour which those different
quantities of silver could have purchased. But the current prices of labour, at
distant times and places, can scarce ever be known with any degree of
exactness. Those of corn, though they have in few places been regularly
recorded, are in general better known, and have been more frequently taken
notice of by historians and other writers. We must generally, therefore,
content ourselves with them, not as being always exactly in the same proportion
as the current prices of labour, but as being the nearest approximation which
can commonly be had to that proportion. I shall hereafter have occasion to make
several comparisons of this kind.

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

The Romans are said to have had nothing but copper money till within five years
before the first Punic war (Pliny, lib. xxxiii. cap. 3), when they first began
to coin silver. Copper, therefore, appears to have continued always the measure
of value in that republic. At Rome all accounts appear to have been kept, and
the value of all estates to have been computed, either in asses or in
sestertii. The as was always the denomination of a copper coin. The word
sestertius signifies two asses and a half. Though the sestertius, therefore,
was originally a silver coin, its value was estimated in copper. At Rome, one
who owed a great deal of money was said to have a great deal of other
people’s copper.

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

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

In this state of things, the distinction between the metal which was the
standard, and that which was not the standard, was something more than a
nominal distinction.

In process of time, and as people became gradually more familiar with the use
of the different metals in coin, and consequently better acquainted with the
proportion between their respective values, it has, in most countries, I
believe, been found convenient to ascertain this proportion, and to declare by
a public law, that a guinea, for example, of such a weight and fineness, should
exchange for one-and-twenty shillings, or be a legal tender for a debt of that
amount. In this state of things, and during the continuance of any one
regulated proportion of this kind, the distinction between the metal, which is
the standard, and that which is not the standard, becomes little more than a
nominal distinction.

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

In reality, during the continuance of any one regulated proportion between the
respective values of the different metals in coin, the value of the most
precious metal regulates the value of the whole coin. Twelve copper pence
contain half a pound avoirdupois of copper, of not the best quality, which,
before it is coined, is seldom worth seven-pence in silver. But as, by the
regulation, twelve such pence are ordered to exchange for a shilling, they are
in the market considered as worth a shilling, and a shilling can at any time be
had for them. Even before the late reformation of the gold coin of Great
Britain, the gold, that part of it at least which circulated in London and its
neighbourhood, was in general less degraded below its standard weight than the
greater part of the silver. One-and-twenty worn and defaced shillings, however,
were considered as equivalent to a guinea, which, perhaps, indeed, was worn and
defaced too, but seldom so much so. The late regulations have brought the gold
coin as near, perhaps, to its standard weight as it is possible to bring the
current coin of any nation; and the order to receive no gold at the public
offices but by weight, is likely to preserve it so, as long as that order is
enforced. The silver coin still continues in the same worn and degraded state
as before the reformation of the cold coin. In the market, however,
one-and-twenty shillings of this degraded silver coin are still considered as
worth a guinea of this excellent gold coin.

The reformation of the gold coin has evidently raised the value of the silver
coin which can be exchanged for it.

In the English mint, a pound weight of gold is coined into forty-four guineas
and a half, which at one-and-twenty shillings the guinea, is equal to forty-six
pounds fourteen shillings and sixpence. An ounce of such gold coin, therefore,
is worth £ 3:17:10½ in silver. In England, no duty or seignorage is paid upon
the coinage, and he who carries a pound weight or an ounce weight of standard
gold bullion to the mint, gets back a pound weight or an ounce weight of gold
in coin, without any deduction. Three pounds seventeen shillings and tenpence
halfpenny an ounce, therefore, is said to be the mint price of gold in England,
or the quantity of gold coin which the mint gives in return for standard gold
bullion.

Before the reformation of the gold coin, the price of standard gold bullion in
the market had, for many years, been upwards of £3:18s. sometimes £ 3:19s, and
very frequently £4 an ounce; that sum, it is probable, in the worn and degraded
gold coin, seldom containing more than an ounce of standard gold. Since the
reformation of the gold coin, the market price of standard gold bullion seldom
exceeds £ 3:17:7 an ounce. Before the reformation of the gold coin, the market
price was always more or less above the mint price. Since that reformation, the
market price has been constantly below the mint price. But that market price is
the same whether it is paid in gold or in silver coin. The late reformation of
the gold coin, therefore, has raised not only the value of the gold coin, but
likewise that of the silver coin in proportion to gold bullion, and probably,
too, in proportion to all other commodities; though the price of the greater
part of other commodities being influenced by so many other causes, the rise in
the value of either gold or silver coin in proportion to them may not be so
distinct and sensible.

In the English mint, a pound weight of standard silver bullion is coined into
sixty-two shillings, containing, in the same manner, a pound weight of standard
silver. Five shillings and twopence an ounce, therefore, is said to be the mint
price of silver in England, or the quantity of silver coin which the mint gives
in return for standard silver bullion. Before the reformation of the gold coin,
the market price of standard silver bullion was, upon different occasions, five
shillings and fourpence, five shillings and fivepence, five shillings and
sixpence, five shillings and sevenpence, and very often five shillings and
eightpence an ounce. Five shillings and sevenpence, however, seems to have been
the most common price. Since the reformation of the gold coin, the market price
of standard silver bullion has fallen occasionally to five shillings and
threepence, five shillings and fourpence, and five shillings and fivepence an
ounce, which last price it has scarce ever exceeded. Though the market price of
silver bullion has fallen considerably since the reformation of the gold coin,
it has not fallen so low as the mint price.

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

Upon the reformation of the silver coin, in the reign of William III., the
price of silver bullion still continued to be somewhat above the mint price. Mr
Locke imputed this high price to the permission of exporting silver bullion,
and to the prohibition of exporting silver coin. This permission of exporting,
he said, rendered the demand for silver bullion greater than the demand for
silver coin. But the number of people who want silver coin for the common uses
of buying and selling at home, is surely much greater than that of those who
want silver bullion either for the use of exportation or for any other use.
There subsists at present a like permission of exporting gold bullion, and a
like prohibition of exporting gold coin; and yet the price of gold bullion has
fallen below the mint price. But in the English coin, silver was then, in the
same manner as now, under-rated in proportion to gold; and the gold coin (which
at that time, too, was not supposed to require any reformation) regulated then,
as well as now, the real value of the whole coin. As the reformation of the
silver coin did not then reduce the price of silver bullion to the mint price,
it is not very probable that a like reformation will do so now.

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

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

Three pounds seventeen shillings and tenpence halfpenny (the mint price of
gold) certainly does not contain, even in our present excellent gold coin, more
than an ounce of standard gold, and it may be thought, therefore, should not
purchase more standard bullion. But gold in coin is more convenient than gold
in bullion; and though, in England, the coinage is free, yet the gold which is
carried in bullion to the mint, can seldom be returned in coin to the owner
till after a delay of several weeks. In the present hurry of the mint, it could
not be returned till after a delay of several months. This delay is equivalent
to a small duty, and renders gold in coin somewhat more valuable than an equal
quantity of gold in bullion. If, in the English coin, silver was rated
according to its proper proportion to gold, the price of silver bullion would
probably fall below the mint price, even without any reformation of the silver
coin; the value even of the present worn and defaced silver coin being
regulated by the value of the excellent gold coin for which it can be changed.

A small seignorage or duty upon the coinage of both gold and silver, would
probably increase still more the superiority of those metals in coin above an
equal quantity of either of them in bullion. The coinage would, in this case,
increase the value of the metal coined in proportion to the extent of this
small duty, for the same reason that the fashion increases the value of plate
in proportion to the price of that fashion. The superiority of coin above
bullion would prevent the melting down of the coin, and would discourage its
exportation. If, upon any public exigency, it should become necessary to export
the coin, the greater part of it would soon return again, of its own accord.
Abroad, it could sell only for its weight in bullion. At home, it would buy
more than that weight. There would be a profit, therefore, in bringing it home
again. In France, a seignorage of about eight per cent. is imposed upon the
coinage, and the French coin, when exported, is said to return home again, of
its own accord.

The occasional fluctuations in the market price of gold and silver bullion
arise from the same causes as the like fluctuations in that of all other
commodities. The frequent loss of those metals from various accidents by sea
and by land, the continual waste of them in gilding and plating, in lace and
embroidery, in the wear and tear of coin, and in that of plate, require, in all
countries which possess no mines of their own, a continual importation, in
order to repair this loss and this waste. The merchant importers, like all
other merchants, we may believe, endeavour, as well as they can, to suit their
occasional importations to what they judge is likely to be the immediate
demand. With all their attention, however, they sometimes overdo the business,
and sometimes underdo it. When they import more bullion than is wanted, rather
than incur the risk and trouble of exporting it again, they are sometimes
willing to sell a part of it for something less than the ordinary or average
price. When, on the other hand, they import less than is wanted, they get
something more than this price. But when, under all those occasional
fluctuations, the market price either of gold or silver bullion continues for
several years together steadily and constantly, either more or less above, or
more or less below the mint price, we may be assured that this steady and
constant, either superiority or inferiority of price, is the effect of
something in the state of the coin, which, at that time, renders a certain
quantity of coin either of more value or of less value than the precise
quantity of bullion which it ought to contain. The constancy and steadiness of
the effect supposes a proportionable constancy and steadiness in the cause.

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

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

CHAPTER VI.
OF THE COMPONENT PART OF THE PRICE OF COMMODITIES.

In that early and rude state of society which precedes both the accumulation of
stock and the appropriation of land, the proportion between the quantities of
labour necessary for acquiring different objects, seems to be the only
circumstance which can afford any rule for exchanging them for one another. If
among a nation of hunters, for example, it usually costs twice the labour to
kill a beaver which it does to kill a deer, one beaver should naturally
exchange for or be worth two deer. It is natural that what is usually the
produce of two days or two hours labour, should be worth double of what is
usually the produce of one day’s or one hour’s labour.

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

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

In this state of things, the whole produce of labour belongs to the labourer;
and the quantity of labour commonly employed in acquiring or producing any
commodity, is the only circumstance which can regulate the quantity of labour
which it ought commonly to purchase, command, or exchange for.

As soon as stock has accumulated in the hands of particular persons, some of
them will naturally employ it in setting to work industrious people, whom they
will supply with materials and subsistence, in order to make a profit by the
sale of their work, or by what their labour adds to the value of the materials.
In exchanging the complete manufacture either for money, for labour, or for
other goods, over and above what may be sufficient to pay the price of the
materials, and the wages of the workmen, something must be given for the
profits of the undertaker of the work, who hazards his stock in this adventure.
The value which the workmen add to the materials, therefore, resolves itself in
this case into two parts, of which the one pays their wages, the other the
profits of their employer upon the whole stock of materials and wages which he
advanced. He could have no interest to employ them, unless he expected from the
sale of their work something more than what was sufficient to replace his stock
to him; and he could have no interest to employ a great stock rather than a
small one, unless his profits were to bear some proportion to the extent of his
stock.

The profits of stock, it may perhaps be thought, are only a different name for
the wages of a particular sort of labour, the labour of inspection and
direction. They are, however, altogether different, are regulated by quite
different principles, and bear no proportion to the quantity, the hardship, or
the ingenuity of this supposed labour of inspection and direction. They are
regulated altogether by the value of the stock employed, and are greater or
smaller in proportion to the extent of this stock. Let us suppose, for example,
that in some particular place, where the common annual profits of manufacturing
stock are ten per cent. there are two different manufactures, in each of which
twenty workmen are employed, at the rate of fifteen pounds a year each, or at
the expense of three hundred a-year in each manufactory. Let us suppose, too,
that the coarse materials annually wrought up in the one cost only seven
hundred pounds, while the finer materials in the other cost seven thousand. The
capital annually employed in the one will, in this case, amount only to one
thousand pounds; whereas that employed in the other will amount to seven
thousand three hundred pounds. At the rate of ten per cent. therefore, the
undertaker of the one will expect a yearly profit of about one hundred pounds
only; while that of the other will expect about seven hundred and thirty
pounds. But though their profits are so very different, their labour of
inspection and direction may be either altogether or very nearly the same. In
many great works, almost the whole labour of this kind is committed to some
principal clerk. His wages properly express the value of this labour of
inspection and direction. Though in settling them some regard is had commonly,
not only to his labour and skill, but to the trust which is reposed in him, yet
they never bear any regular proportion to the capital of which he oversees the
management; and the owner of this capital, though he is thus discharged of
almost all labour, still expects that his profit should bear a regular
proportion to his capital. In the price of commodities, therefore, the profits
of stock constitute a component part altogether different from the wages of
labour, and regulated by quite different principles.

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

As soon as the land of any country has all become private property, the
landlords, like all other men, love to reap where they never sowed, and demand
a rent even for its natural produce. The wood of the forest, the grass of the
field, and all the natural fruits of the earth, which, when land was in common,
cost the labourer only the trouble of gathering them, come, even to him, to
have an additional price fixed upon them. He must then pay for the licence to
gather them, and must give up to the landlord a portion of what his labour
either collects or produces. This portion, or, what comes to the same thing,
the price of this portion, constitutes the rent of land, and in the price of
the greater part of commodities, makes a third component part.

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

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

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

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

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

As any particular commodity comes to be more manufactured, that part of the
price which resolves itself into wages and profit, comes to be greater in
proportion to that which resolves itself into rent. In the progress of the
manufacture, not only the number of profits increase, but every subsequent
profit is greater than the foregoing; because the capital from which it is
derived must always be greater. The capital which employs the weavers, for
example, must be greater than that which employs the spinners; because it not
only replaces that capital with its profits, but pays, besides, the wages of
the weavers: and the profits must always bear some proportion to the capital.

In the most improved societies, however, there are always a few commodities of
which the price resolves itself into two parts only: the wages of labour, and
the profits of stock; and a still smaller number, in which it consists
altogether in the wages of labour. In the price of sea-fish, for example, one
part pays the labour of the fisherman, and the other the profits of the capital
employed in the fishery. Rent very seldom makes any part of it, though it does
sometimes, as I shall shew hereafter. It is otherwise, at least through the
greater part of Europe, in river fisheries. A salmon fishery pays a rent; and
rent, though it cannot well be called the rent of land, makes a part of the
price of a salmon, as well as wares and profit. In some parts of Scotland, a
few poor people make a trade of gathering, along the sea-shore, those little
variegated stones commonly known by the name of Scotch pebbles. The price which
is paid to them by the stone-cutter, is altogether the wages of their labour;
neither rent nor profit makes an part of it.

But the whole price of any commodity must still finally resolve itself into
some one or other or all of those three parts; as whatever part of it remains
after paying the rent of the land, and the price of the whole labour employed
in raising, manufacturing, and bringing it to market, must necessarily be
profit to somebody.

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

Whoever derives his revenue from a fund which is his own, must draw it either
from his labour, from his stock, or from his land. The revenue derived from
labour is called wages; that derived from stock, by the person who manages or
employs it, is called profit; that derived from it by the person who does not
employ it himself, but lends it to another, is called the interest or the use
of money. It is the compensation which the borrower pays to the lender, for the
profit which he has an opportunity of making by the use of the money. Part of
that profit naturally belongs to the borrower, who runs the risk and takes the
trouble of employing it, and part to the lender, who affords him the
opportunity of making this profit. The interest of money is always a derivative
revenue, which, if it is not paid from the profit which is made by the use of
the money, must be paid from some other source of revenue, unless perhaps the
borrower is a spendthrift, who contracts a second debt in order to pay the
interest of the first. The revenue which proceeds altogether from land, is
called rent, and belongs to the landlord. The revenue of the farmer is derived
partly from his labour, and partly from his stock. To him, land is only the
instrument which enables him to earn the wages of this labour, and to make the
profits of this stock. All taxes, and all the revenue which is founded upon
them, all salaries, pensions, and annuities of every kind, are ultimately
derived from some one or other of those three original sources of revenue, and
are paid either immediately or mediately from the wages of labour, the profits
of stock, or the rent of land.

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

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

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

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

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

As in a civilized country there are but few commodities of which the
exchangeable value arises from labour only, rent and profit contributing
largely to that of the far greater part of them, so the annual produce of its
labour will always be sufficient to purchase or command a much greater quantity
of labour than what was employed in raising, preparing, and bringing that
produce to market. If the society were annually to employ all the labour which
it can annually purchase, as the quantity of labour would increase greatly
every year, so the produce of every succeeding year would be of vastly greater
value than that of the foregoing. But there is no country in which the whole
annual produce is employed in maintaining the industrious. The idle everywhere
consume a great part of it; and, according to the different proportions in
which it is annually divided between those two different orders of people, its
ordinary or average value must either annually increase or diminish, or
continue the same from one year to another.

CHAPTER VII.
OF THE NATURAL AND MARKET PRICE OF COMMODITIES.

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

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

These ordinary or average rates may be called the natural rates of wages,
profit and rent, at the time and place in which they commonly prevail.

When the price of any commodity is neither more nor less than what is
sufficient to pay the rent of the land, the wages of the labour, and the
profits of the stock employed in raising, preparing, and bringing it to market,
according to their natural rates, the commodity is then sold for what may be
called its natural price.

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

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

The actual price at which any commodity is commonly sold, is called its market
price. It may either be above, or below, or exactly the same with its natural
price.

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

When the quantity of any commodity which is brought to market falls short of
the effectual demand, all those who are willing to pay the whole value of the
rent, wages, and profit, which must be paid in order to bring it thither,
cannot be supplied with the quantity which they want. Rather than want it
altogether, some of them will be willing to give more. A competition will
immediately begin among them, and the market price will rise more or less above
the natural price, according as either the greatness of the deficiency, or the
wealth and wanton luxury of the competitors, happen to animate more or less the
eagerness of the competition. Among competitors of equal wealth and luxury, the
same deficiency will generally occasion a more or less eager competition,
according as the acquisition of the commodity happens to be of more or less
importance to them. Hence the exorbitant price of the necessaries of life
during the blockade of a town, or in a famine.

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

When the quantity brought to market is just sufficient to supply the effectual
demand, and no more, the market price naturally comes to be either exactly, or
as nearly as can be judged of, the same with the natural price. The whole
quantity upon hand can be disposed of for this price, and can not be disposed
of for more. The competition of the different dealers obliges them all to
accept of this price, but does not oblige them to accept of less.

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

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

If, on the contrary, the quantity brought to market should at any time fall
short of the effectual demand, some of the component parts of its price must
rise above their natural rate. If it is rent, the interest of all other
landlords will naturally prompt them to prepare more land for the raising of
this commodity; if it is wages or profit, the interest of all other labourers
and dealers will soon prompt them to employ more labour and stock in preparing
and bringing it to market. The quantity brought thither will soon be sufficient
to supply the effectual demand. All the different parts of its price will soon
sink to their natural rate, and the whole price to its natural price.

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

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

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

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

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

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

When, by an increase in the effectual demand, the market price of some
particular commodity happens to rise a good deal above the natural price, those
who employ their stocks in supplying that market, are generally careful to
conceal this change. If it was commonly known, their great profit would tempt
so many new rivals to employ their stocks in the same way, that, the effectual
demand being fully supplied, the market price would soon be reduced to the
natural price, and, perhaps, for some time even below it. If the market is at a
great distance from the residence of those who supply it, they may sometimes be
able to keep the secret for several years together, and may so long enjoy their
extraordinary profits without any new rivals. Secrets of this kind, however, it
must be acknowledged, can seldom be long kept; and the extraordinary profit can
last very little longer than they are kept.

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

Such enhancements of the market price are evidently the effects of particular
accidents, of which, however, the operation may sometimes last for many years
together.

Some natural productions require such a singularity of soil and situation, that
all the land in a great country, which is fit for producing them, may not be
sufficient to supply the effectual demand. The whole quantity brought to
market, therefore, may be disposed of to those who are willing to give more
than what is sufficient to pay the rent of the land which produced them,
together with the wages of the labour and the profits of the stock which were
employed in preparing and bringing them to market, according to their natural
rates. Such commodities may continue for whole centuries together to be sold at
this high price; and that part of it which resolves itself into the rent of
land, is in this case the part which is generally paid above its natural rate.
The rent of the land which affords such singular and esteemed productions, like
the rent of some vineyards in France of a peculiarly happy soil and situation,
bears no regular proportion to the rent of other equally fertile and equally
well cultivated land in its neighbourhood. The wages of the labour, and the
profits of the stock employed in bringing such commodities to market, on the
contrary, are seldom out of their natural proportion to those of the other
employments of labour and stock in their neighbourhood.

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

A monopoly granted either to an individual or to a trading company, has the
same effect as a secret in trade or manufactures. The monopolists, by keeping
the market constantly understocked by never fully supplying the effectual
demand, sell their commodities much above the natural price, and raise their
emoluments, whether they consist in wages or profit, greatly above their
natural rate.

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

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

Such enhancements of the market price may last as long as the regulations of
policy which give occasion to them.

The market price of any particular commodity, though it may continue long
above, can seldom continue long below, its natural price. Whatever part of it
was paid below the natural rate, the persons whose interest it affected would
immediately feel the loss, and would immediately withdraw either so much land
or so much labour, or so much stock, from being employed about it, that the
quantity brought to market would soon be no more than sufficient to supply the
effectual demand. Its market price, therefore, would soon rise to the natural
price; this at least would be the case where there was perfect liberty.

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

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

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

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

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

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

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

CHAPTER VIII.
OF THE WAGES OF LABOUR.

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

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

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

But this original state of things, in which the labourer enjoyed the whole
produce of his own labour, could not last beyond the first introduction of the
appropriation of land and the accumulation of stock. It was at an end,
therefore, long before the most considerable improvements were made in the
productive powers of labour; and it would be to no purpose to trace further
what might have been its effects upon the recompence or wages of labour.

As soon as land becomes private property, the landlord demands a share of
almost all the produce which the labourer can either raise or collect from it.
His rent makes the first deduction from the produce of the labour which is
employed upon land.

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

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

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

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

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

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

We rarely hear, it has been said, of the combinations of masters, though
frequently of those of workmen. But whoever imagines, upon this account, that
masters rarely combine, is as ignorant of the world as of the subject. Masters
are always and everywhere in a sort of tacit, but constant and uniform,
combination, not to raise the wages of labour above their actual rate. To
violate this combination is everywhere a most unpopular action, and a sort of
reproach to a master among his neighbours and equals. We seldom, indeed, hear
of this combination, because it is the usual, and, one may say, the natural
state of things, which nobody ever hears of. Masters, too, sometimes enter into
particular combinations to sink the wages of labour even below this rate. These
are always conducted with the utmost silence and secrecy till the moment of
execution; and when the workmen yield, as they sometimes do without resistance,
though severely felt by them, they are never heard of by other people. Such
combinations, however, are frequently resisted by a contrary defensive
combination of the workmen, who sometimes, too, without any provocation of this
kind, combine, of their own accord, to raise the price of their labour. Their
usual pretences are, sometimes the high price of provisions, sometimes the
great profit which their masters make by their work. But whether their
combinations be offensive or defensive, they are always abundantly heard of. In
order to bring the point to a speedy decision, they have always recourse to the
loudest clamour, and sometimes to the most shocking violence and outrage. They
are desperate, and act with the folly and extravagance of desperate men, who
must either starve, or frighten their masters into an immediate compliance with
their demands. The masters, upon these occasions, are just as clamorous upon
the other side, and never cease to call aloud for the assistance of the civil
magistrate, and the rigorous execution of those laws which have been enacted
with so much severity against the combination of servants, labourers, and
journeymen. The workmen, accordingly, very seldom derive any advantage from the
violence of those tumultuous combinations, which, partly from the interposition
of the civil magistrate, partly from the superior steadiness of the masters,
partly from the necessity which the greater part of the workmen are under of
submitting for the sake of present subsistence, generally end in nothing but
the punishment or ruin of the ringleaders.

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

A man must always live by his work, and his wages must at least be sufficient
to maintain him. They must even upon most occasions be somewhat more, otherwise
it would be impossible for him to bring up a family, and the race of such
workmen could not last beyond the first generation. Mr Cantillon seems, upon
this account, to suppose that the lowest species of common labourers must
everywhere earn at least double their own maintenance, in order that, one with
another, they may be enabled to bring up two children; the labour of the wife,
on account of her necessary attendance on the children, being supposed no more
than sufficient to provide for herself: But one half the children born, it is
computed, die before the age of manhood. The poorest labourers, therefore,
according to this account, must, one with another, attempt to rear at least
four children, in order that two may have an equal chance of living to that
age. But the necessary maintenance of four children, it is supposed, may be
nearly equal to that of one man. The labour of an able-bodied slave, the same
author adds, is computed to be worth double his maintenance; and that of the
meanest labourer, he thinks, cannot be worth less than that of an able-bodied
slave. Thus far at least seems certain, that, in order to bring up a family,
the labour of the husband and wife together must, even in the lowest species of
common labour, be able to earn something more than what is precisely necessary
for their own maintenance; but in what proportion, whether in that
above-mentioned, or many other, I shall not take upon me to determine.

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

When in any country the demand for those who live by wages, labourers,
journeymen, servants of every kind, is continually increasing; when every year
furnishes employment for a greater number than had been employed the year
before, the workmen have no occasion to combine in order to raise their wages.
The scarcity of hands occasions a competition among masters, who bid against
one another in order to get workmen, and thus voluntarily break through the
natural combination of masters not to raise wages. The demand for those who
live by wages, it is evident, cannot increase but in proportion to the increase
of the funds which are destined to the payment of wages. These funds are of two
kinds, first, the revenue which is over and above what is necessary for the
maintenance; and, secondly, the stock which is over and above what is necessary
for the employment of their masters.

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

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

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

It is not the actual greatness of national wealth, but its continual increase,
which occasions a rise in the wages of labour. It is not, accordingly, in the
richest countries, but in the most thriving, or in those which are growing rich
the fastest, that the wages of labour are highest. England is certainly, in the
present times, a much richer country than any part of North America. The wages
of labour, however, are much higher in North America than in any part of
England. In the province of New York, common labourers earned in 1773, before
the commencement of the late disturbances, three shillings and sixpence
currency, equal to two shillings sterling, a-day; ship-carpenters, ten
shillings and sixpence currency, with a pint of rum, worth sixpence sterling,
equal in all to six shillings and sixpence sterling; house-carpenters and
bricklayers, eight shillings currency, equal to four shillings and sixpence
sterling; journeymen tailors, five shillings currency, equal to about two
shillings and tenpence sterling. These prices are all above the London price;
and wages are said to be as high in the other colonies as in New York. The
price of provisions is everywhere in North America much lower than in England.
A dearth has never been known there. In the worst seasons they have always had
a sufficiency for themselves, though less for exportation. If the money price
of labour, therefore, be higher than it is anywhere in the mother-country, its
real price, the real command of the necessaries and conveniencies of life which
it conveys to the labourer, must be higher in a still greater proportion.

But though North America is not yet so rich as England, it is much more
thriving, and advancing with much greater rapidity to the further acquisition
of riches. The most decisive mark of the prosperity of any country is the
increase of the number of its inhabitants. In Great Britain, and most other
European countries, they are not supposed to double in less than five hundred
years. In the British colonies in North America, it has been found that they
double in twenty or five-and-twenty years. Nor in the present times is this
increase principally owing to the continual importation of new inhabitants, but
to the great multiplication of the species. Those who live to old age, it is
said, frequently see there from fifty to a hundred, and sometimes many more,
descendants from their own body. Labour is there so well rewarded, that a
numerous family of children, instead of being a burden, is a source of opulence
and prosperity to the parents. The labour of each child, before it can leave
their house, is computed to be worth a hundred pounds clear gain to them. A
young widow with four or five young children, who, among the middling or
inferior ranks of people in Europe, would have so little chance for a second
husband, is there frequently courted as a sort of fortune. The value of
children is the greatest of all encouragements to marriage. We cannot,
therefore, wonder that the people in North America should generally marry very
young. Notwithstanding the great increase occasioned by such early marriages,
there is a continual complaint of the scarcity of hands in North America. The
demand for labourers, the funds destined for maintaining them increase, it
seems, still faster than they can find labourers to employ.

Though the wealth of a country should be very great, yet if it has been long
stationary, we must not expect to find the wages of labour very high in it. The
funds destined for the payment of wages, the revenue and stock of its
inhabitants, may be of the greatest extent; but if they have continued for
several centuries of the same, or very nearly of the same extent, the number of
labourers employed every year could easily supply, and even more than supply,
the number wanted the following year. There could seldom be any scarcity of
hands, nor could the masters be obliged to bid against one another in order to
get them. The hands, on the contrary, would, in this case, naturally multiply
beyond their employment. There would be a constant scarcity of employment, and
the labourers would be obliged to bid against one another in order to get it.
If in such a country the wages of labour had ever been more than sufficient to
maintain the labourer, and to enable him to bring up a family, the competition
of the labourers and the interest of the masters would soon reduce them to the
lowest rate which is consistent with common humanity. China has been long one
of the richest, that is, one of the most fertile, best cultivated, most
industrious, and most populous, countries in the world. It seems, however, to
have been long stationary. Marco Polo, who visited it more than five hundred
years ago, describes its cultivation, industry, and populousness, almost in the
same terms in which they are described by travellers in the present times. It
had, perhaps, even long before his time, acquired that full complement of
riches which the nature of its laws and institutions permits it to acquire. The
accounts of all travellers, inconsistent in many other respects, agree in the
low wages of labour, and in the difficulty which a labourer finds in bringing
up a family in China. If by digging the ground a whole day he can get what will
purchase a small quantity of rice in the evening, he is contented. The
condition of artificers is, if possible, still worse. Instead of waiting
indolently in their work-houses for the calls of their customers, as in Europe,
they are continually running about the streets with the tools of their
respective trades, offering their services, and, as it were, begging
employment. The poverty of the lower ranks of people in China far surpasses
that of the most beggarly nations in Europe. In the neighbourhood of Canton,
many hundred, it is commonly said, many thousand families have no habitation on
the land, but live constantly in little fishing-boats upon the rivers and
canals. The subsistence which they find there is so scanty, that they are eager
to fish up the nastiest garbage thrown overboard from any European ship. Any
carrion, the carcase of a dead dog or cat, for example, though half putrid and
stinking, is as welcome to them as the most wholesome food to the people of
other countries. Marriage is encouraged in China, not by the profitableness of
children, but by the liberty of destroying them. In all great towns, several
are every night exposed in the street, or drowned like puppies in the water.
The performance of this horrid office is even said to be the avowed business by
which some people earn their subsistence.

China, however, though it may, perhaps, stand still, does not seem to go
backwards. Its towns are nowhere deserted by their inhabitants. The lands which
had once been cultivated, are nowhere neglected. The same, or very nearly the
same, annual labour, must, therefore, continue to be performed, and the funds
destined for maintaining it must not, consequently, be sensibly diminished. The
lowest class of labourers, therefore, notwithstanding their scanty subsistence,
must some way or another make shift to continue their race so far as to keep up
their usual numbers.

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

The liberal reward of labour, therefore, as it is the necessary effect, so it
is the natural symptom of increasing national wealth. The scanty maintenance of
the labouring poor, on the other hand, is the natural symptom that things are
at a stand, and their starving condition, that they are going fast backwards.

In Great Britain, the wages of labour seem, in the present times, to be
evidently more than what is precisely necessary to enable the labourer to bring
up a family. In order to satisfy ourselves upon this point, it will not be
necessary to enter into any tedious or doubtful calculation of what may be the
lowest sum upon which it is possible to do this. There are many plain symptoms,
that the wages of labour are nowhere in this country regulated by this lowest
rate, which is consistent with common humanity.

First, in almost every part of Great Britain there is a distinction, even in
the lowest species of labour, between summer and winter wages. Summer wages are
always highest. But, on account of the extraordinary expense of fuel, the
maintenance of a family is most expensive in winter. Wages, therefore, being
highest when this expense is lowest, it seems evident that they are not
regulated by what is necessary for this expense, but by the quantity and
supposed value of the work. A labourer, it may be said, indeed, ought to save
part of his summer wages, in order to defray his winter expense; and that,
through the whole year, they do not exceed what is necessary to maintain his
family through the whole year. A slave, however, or one absolutely dependent on
us for immediate subsistence, would not be treated in this manner. His daily
subsistence would be proportioned to his daily necessities.

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

Thirdly, as the price of provisions varies more from year to year than the
wages of labour, so, on the other hand, the wages of labour vary more from
place to place than the price of provisions. The prices of bread and
butchers’ meat are generally the same, or very nearly the same, through
the greater part of the united kingdom. These, and most other things which are
sold by retail, the way in which the labouring poor buy all things, are
generally fully as cheap, or cheaper, in great towns than in the remoter parts
of the country, for reasons which I shall have occasion to explain hereafter.
But the wages of labour in a great town and its neighbourhood are frequently a
fourth or a fifth part, twenty or five-and—twenty per cent. higher than
at a few miles distance. Eighteen pence a day may be reckoned the common price
of labour in London and its neighbourhood. At a few miles distance, it falls to
fourteen and fifteen pence. Tenpence may be reckoned its price in Edinburgh and
its neighbourhood. At a few miles distance, it falls to eightpence, the usual
price of common labour through the greater part of the low country of Scotland,
where it varies a good deal less than in England. Such a difference of prices,
which, it seems, is not always sufficient to transport a man from one parish to
another, would necessarily occasion so great a transportation of the most bulky
commodities, not only from one parish to another, but from one end of the
kingdom, almost from one end of the world to the other, as would soon reduce
them more nearly to a level. After all that has been said of the levity and
inconstancy of human nature, it appears evidently from experience, that man is,
of all sorts of luggage, the most difficult to be transported. If the labouring
poor, therefore, can maintain their families in those parts of the kingdom
where the price of labour is lowest, they must be in affluence where it is
highest.

Fourthly, the variations in the price of labour not only do not correspond,
either in place or time, with those in the price of provisions, but they are
frequently quite opposite.

Grain, the food of the common people, is dearer in Scotland than in England,
whence Scotland receives almost every year very large supplies. But English
corn must be sold dearer in Scotland, the country to which it is brought, than
in England, the country from which it comes; and in proportion to its quality
it cannot be sold dearer in Scotland than the Scotch corn that comes to the
same market in competition with it. The quality of grain depends chiefly upon
the quantity of flour or meal which it yields at the mill; and, in this
respect, English grain is so much superior to the Scotch, that though often
dearer in appearance, or in proportion to the measure of its bulk, it is
generally cheaper in reality, or in proportion to its quality, or even to the
measure of its weight. The price of labour, on the contrary, is dearer in
England than in Scotland. If the labouring poor, therefore, can maintain their
families in the one part of the united kingdom, they must be in affluence in
the other. Oatmeal, indeed, supplies the common people in Scotland with the
greatest and the best part of their food, which is, in general, much inferior
to that of their neighbours of the same rank in England. This difference,
however, in the mode of their subsistence, is not the cause, but the effect, of
the difference in their wages; though, by a strange misapprehension, I have
frequently heard it represented as the cause. It is not because one man keeps a
coach, while his neighbour walks a-foot, that the one is rich, and the other
poor; but because the one is rich, he keeps a coach, and because the other is
poor, he walks a-foot.

During the course of the last century, taking one year with another, grain was
dearer in both parts of the united kingdom than during that of the present.
This is a matter of fact which cannot now admit of any reasonable doubt; and
the proof of it is, if possible, still more decisive with regard to Scotland
than with regard to England. It is in Scotland supported by the evidence of the
public fiars, annual valuations made upon oath, according to the actual state
of the markets, of all the different sorts of grain in every different county
of Scotland. If such direct proof could require any collateral evidence to
confirm it, I would observe, that this has likewise been the case in France,
and probably in most other parts of Europe. With regard to France, there is the
clearest proof. But though it is certain, that in both parts of the united
kingdom grain was somewhat dearer in the last century than in the present, it
is equally certain that labour was much cheaper. If the labouring poor,
therefore, could bring up their families then, they must be much more at their
ease now. In the last century, the most usual day-wages of common labour
through the greater part of Scotland were sixpence in summer, and fivepence in
winter. Three shillings a-week, the same price, very nearly still continues to
be paid in some parts of the Highlands and Western islands. Through the greater
part of the Low country, the most usual wages of common labour are now eight
pence a-day; tenpence, sometimes a shilling, about Edinburgh, in the counties
which border upon England, probably on account of that neighbourhood, and in a
few other places where there has lately been a considerable rise in the demand
for labour, about Glasgow, Carron, Ayrshire, etc. In England, the improvements
of agriculture, manufactures, and commerce, began much earlier than in
Scotland. The demand for labour, and consequently its price, must necessarily
have increased with those improvements. In the last century, accordingly, as
well as in the present, the wages of labour were higher in England than in
Scotland. They have risen, too, considerably since that time, though, on
account of the greater variety of wages paid there in different places, it is
more difficult to ascertain how much. In 1614, the pay of a foot soldier was
the same as in the present times, eightpence a-day. When it was first
established, it would naturally be regulated by the usual wages of common
labourers, the rank of people from which foot soldiers are commonly drawn.
Lord-chief-justice Hales, who wrote in the time of Charles II. computes the
necessary expense of a labourer’s family, consisting of six persons, the
father and mother, two children able to do something, and two not able, at ten
shillings a-week, or twenty-six pounds a-year. If they cannot earn this by
their labour, they must make it up, he supposes, either by begging or stealing.
He appears to have enquired very carefully into this subject {See his scheme
for the maintenance of the poor, in Burn’s History of the Poor Laws.}. In
1688, Mr Gregory King, whose skill in political arithmetic is so much extolled
by Dr Davenant, computed the ordinary income of labourers and out-servants to
be fifteen pounds a-year to a family, which he supposed to consist, one with
another, of three and a half persons. His calculation, therefore, though
different in appearance, corresponds very nearly at bottom with that of Judge
Hales. Both suppose the weekly expense of such families to be about
twenty-pence a-head. Both the pecuniary income and expense of such families
have increased considerably since that time through the greater part of the
kingdom, in some places more, and in some less, though perhaps scarce anywhere
so much as some exaggerated accounts of the present wages of labour have lately
represented them to the public. The price of labour, it must be observed,
cannot be ascertained very accurately anywhere, different prices being often
paid at the same place and for the same sort of labour, not only according to
the different abilities of the workman, but according to the easiness or
hardness of the masters. Where wages are not regulated by law, all that we can
pretend to determine is, what are the most usual; and experience seems to shew
that law can never regulate them properly, though it has often pretended to do
so.

The real recompence of labour, the real quantity of the necessaries and
conveniencies of life which it can procure to the labourer, has, during the
course of the present century, increased perhaps in a still greater proportion
than its money price. Not only grain has become somewhat cheaper, but many
other things, from which the industrious poor derive an agreeable and wholesome
variety of food, have become a great deal cheaper. Potatoes, for example, do
not at present, through the greater part of the kingdom, cost half the price
which they used to do thirty or forty years ago. The same thing may be said of
turnips, carrots, cabbages; things which were formerly never raised but by the
spade, but which are now commonly raised by the plough. All sort of garden
stuff, too, has become cheaper. The greater part of the apples, and even of the
onions, consumed in Great Britain, were, in the last century, imported from
Flanders. The great improvements in the coarser manufactories of both linen and
woollen cloth furnish the labourers with cheaper and better clothing; and those
in the manufactories of the coarser metals, with cheaper and better instruments
of trade, as well as with many agreeable and convenient pieces of household
furniture. Soap, salt, candles, leather, and fermented liquors, have, indeed,
become a good deal dearer, chiefly from the taxes which have been laid upon
them. The quantity of these, however, which the labouring poor are under any
necessity of consuming, is so very small, that the increase in their price does
not compensate the diminution in that of so many other things. The common
complaint, that luxury extends itself even to the lowest ranks of the people,
and that the labouring poor will not now be contented with the same food,
clothing, and lodging, which satisfied them in former times, may convince us
that it is not the money price of labour only, but its real recompence, which
has augmented.

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

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

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

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

The liberal reward of labour, by enabling them to provide better for their
children, and consequently to bring up a greater number, naturally tends to
widen and extend those limits. It deserves to be remarked, too, that it
necessarily does this as nearly as possible in the proportion which the demand
for labour requires. If this demand is continually increasing, the reward of
labour must necessarily encourage in such a manner the marriage and
multiplication of labourers, as may enable them to supply that continually
increasing demand by a continually increasing population. If the reward should
at any time be less than what was requisite for this purpose, the deficiency of
hands would soon raise it; and if it should at any time be more, their
excessive multiplication would soon lower it to this necessary rate. The market
would be so much understocked with labour in the one case, and so much
overstocked in the other, as would soon force back its price to that proper
rate which the circumstances of the society required. It is in this manner that
the demand for men, like that for any other commodity, necessarily regulates
the production of men, quickens it when it goes on too slowly, and stops it
when it advances too fast. It is this demand which regulates and determines the
state of propagation in all the different countries of the world; in North
America, in Europe, and in China; which renders it rapidly progressive in the
first, slow and gradual in the second, and altogether stationary in the last.

The wear and tear of a slave, it has been said, is at the expense of his
master; but that of a free servant is at his own expense. The wear and tear of
the latter, however, is, in reality, as much at the expense of his master as
that of the former. The wages paid to journeymen and servants of every kind
must be such as may enable them, one with another to continue the race of
journeymen and servants, according as the increasing, diminishing, or
stationary demand of the society, may happen to require. But though the wear
and tear of a free servant be equally at the expense of his master, it
generally costs him much less than that of a slave. The fund destined for
replacing or repairing, if I may say so, the wear and tear of the slave, is
commonly managed by a negligent master or careless overseer. That destined for
performing the same office with regard to the freeman is managed by the freeman
himself. The disorders which generally prevail in the economy of the rich,
naturally introduce themselves into the management of the former; the strict
frugality and parsimonious attention of the poor as naturally establish
themselves in that of the latter. Under such different management, the same
purpose must require very different degrees of expense to execute it. It
appears, accordingly, from the experience of all ages and nations, I believe,
that the work done by freemen comes cheaper in the end than that performed by
slaves. It is found to do so even at Boston, New-York, and Philadelphia, where
the wages of common labour are so very high.

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

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

The liberal reward of labour, as it encourages the propagation, so it increases
the industry of the common people. The wages of labour are the encouragement of
industry, which, like every other human quality, improves in proportion to the
encouragement it receives. A plentiful subsistence increases the bodily
strength of the labourer, and the comfortable hope of bettering his condition,
and of ending his days, perhaps, in ease and plenty, animates him to exert that
strength to the utmost. Where wages are high, accordingly, we shall always find
the workmen more active, diligent, and expeditious, than where they are low; in
England, for example, than in Scotland; in the neighbourhood of great towns,
than in remote country places. Some workmen, indeed, when they can earn in four
days what will maintain them through the week, will be idle the other three.
This, however, is by no means the case with the greater part. Workmen, on the
contrary, when they are liberally paid by the piece, are very apt to overwork
themselves, and to ruin their health and constitution in a few years. A
carpenter in London, and in some other places, is not supposed to last in his
utmost vigour above eight years. Something of the same kind happens in many
other trades, in which the workmen are paid by the piece; as they generally are
in manufactures, and even in country labour, wherever wages are higher than
ordinary. Almost every class of artificers is subject to some peculiar
infirmity occasioned by excessive application to their peculiar species of
work. Ramuzzini, an eminent Italian physician, has written a particular book
concerning such diseases. We do not reckon our soldiers the most industrious
set of people among us; yet when soldiers have been employed in some particular
sorts of work, and liberally paid by the piece, their officers have frequently
been obliged to stipulate with the undertaker, that they should not be allowed
to earn above a certain sum every day, according to the rate at which they were
paid. Till this stipulation was made, mutual emulation, and the desire of
greater gain, frequently prompted them to overwork themselves, and to hurt
their health by excessive labour. Excessive application, during four days of
the week, is frequently the real cause of the idleness of the other three, so
much and so loudly complained of. Great labour, either of mind or body,
continued for several days together is, in most men, naturally followed by a
great desire of relaxation, which, if not restrained by force, or by some
strong necessity, is almost irresistible. It is the call of nature, which
requires to be relieved by some indulgence, sometimes of ease only, but
sometimes too of dissipation and diversion. If it is not complied with, the
consequences are often dangerous and sometimes fatal, and such as almost
always, sooner or later, bring on the peculiar infirmity of the trade. If
masters would always listen to the dictates of reason and humanity, they have
frequently occasion rather to moderate, than to animate the application of many
of their workmen. It will be found, I believe, in every sort of trade, that the
man who works so moderately, as to be able to work constantly, not only
preserves his health the longest, but, in the course of the year, executes the
greatest quantity of work.

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

In years of plenty, servants frequently leave their masters, and trust their
subsistence to what they can make by their own industry. But the same cheapness
of provisions, by increasing the fund which is destined for the maintenance of
servants, encourages masters, farmers especially, to employ a greater number.
Farmers, upon such occasions, expect more profit from their corn by maintaining
a few more labouring servants, than by selling it at a low price in the market.
The demand for servants increases, while the number of those who offer to
supply that demand diminishes. The price of labour, therefore, frequently rises
in cheap years.

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

Masters of all sorts, therefore, frequently make better bargains with their
servants in dear than in cheap years, and find them more humble and dependent
in the former than in the latter. They naturally, therefore, commend the former
as more favourable to industry. Landlords and farmers, besides, two of the
largest classes of masters, have another reason for being pleased with dear
years. The rents of the one, and the profits of the other, depend very much
upon the price of provisions. Nothing can be more absurd, however, than to
imagine that men in general should work less when they work for themselves,
than when they work for other people. A poor independent workman will generally
be more industrious than even a journeyman who works by the piece. The one
enjoys the whole produce of his own industry, the other shares it with his
master. The one, in his separate independent state, is less liable to the
temptations of bad company, which, in large manufactories, so frequently ruin
the morals of the other. The superiority of the independent workman over those
servants who are hired by the month or by the year, and whose wages and
maintenance are the same, whether they do much or do little, is likely to be
still greater. Cheap years tend to increase the proportion of independent
workmen to journeymen and servants of all kinds, and dear years to diminish it.

A French author of great knowledge and ingenuity, Mr Messance, receiver of the
tallies in the election of St Etienne, endeavours to shew that the poor do more
work in cheap than in dear years, by comparing the quantity and value of the
goods made upon those different occasions in three different manufactures; one
of coarse woollens, carried on at Elbeuf; one of linen, and another of silk,
both which extend through the whole generality of Rouen. It appears from his
account, which is copied from the registers of the public offices, that the
quantity and value of the goods made in all those three manufactories has
generally been greater in cheap than in dear years, and that it has always been
greatest in the cheapest, and least in the dearest years. All the three seem to
be stationary manufactures, or which, though their produce may vary somewhat
from year to year, are, upon the whole, neither going backwards nor forwards.

The manufacture of linen in Scotland, and that of coarse woollens in the West
Riding of Yorkshire, are growing manufactures, of which the produce is
generally, though with some variations, increasing both in quantity and value.
Upon examining, however, the accounts which have been published of their annual
produce, I have not been able to observe that its variations have had any
sensible connection with the dearness or cheapness of the seasons. In 1740, a
year of great scarcity, both manufactures, indeed, appear to have declined very
considerably. But in 1756, another year of great scarcity, the Scotch
manufactures made more than ordinary advances. The Yorkshire manufacture,
indeed, declined, and its produce did not rise to what it had been in 1755,
till 1766, after the repeal of the American stamp act. In that and the
following year, it greatly exceeded what it had ever been before, and it has
continued to advance ever since.

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

Though the variations in the price of labour not only do not always correspond
with those in the price of provisions, but are frequently quite opposite, we
must not, upon this account, imagine that the price of provisions has no
influence upon that of labour. The money price of labour is necessarily
regulated by two circumstances; the demand for labour, and the price of the
necessaries and conveniencies of life. The demand for labour, according as it
happens to be increasing, stationary, or declining, or to require an
increasing, stationary, or declining population, determines the quantities of
the necessaries and conveniencies of life which must be given to the labourer;
and the money price of labour is determined by what is requisite for purchasing
this quantity. Though the money price of labour, therefore, is sometimes high
where the price of provisions is low, it would be still higher, the demand
continuing the same, if the price of provisions was high.

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

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

The contrary of this happens in a year of sudden and extraordinary scarcity.
The funds destined for employing industry are less than they had been the year
before. A considerable number of people are thrown out of employment, who bid
one against another, in order to get it, which sometimes lowers both the real
and the money price of labour. In 1740, a year of extraordinary scarcity, many
people were willing to work for bare subsistence. In the succeeding years of
plenty, it was more difficult to get labourers and servants. The scarcity of a
dear year, by diminishing the demand for labour, tends to lower its price, as
the high price of provisions tends to raise it. The plenty of a cheap year, on
the contrary, by increasing the demand, tends to raise the price of labour, as
the cheapness of provisions tends to lower it. In the ordinary variations of
the prices of provisions, those two opposite causes seem to counterbalance one
another, which is probably, in part, the reason why the wages of labour are
everywhere so much more steady and permanent than the price of provisions.

The increase in the wages of labour necessarily increases the price of many
commodities, by increasing that part of it which resolves itself into wages,
and so far tends to diminish their consumption, both at home and abroad. The
same cause, however, which raises the wages of labour, the increase of stock,
tends to increase its productive powers, and to make a smaller quantity of
labour produce a greater quantity of work. The owner of the stock which employs
a great number of labourers necessarily endeavours, for his own advantage, to
make such a proper division and distribution of employment, that they may be
enabled to produce the greatest quantity of work possible. For the same reason,
he endeavours to supply them with the best machinery which either he or they
can think of. What takes place among the labourers in a particular workhouse,
takes place, for the same reason, among those of a great society. The greater
their number, the more they naturally divide themselves into different classes
and subdivisions of employments. More heads are occupied in inventing the most
proper machinery for executing the work of each, and it is, therefore, more
likely to be invented. There are many commodities, therefore, which, in
consequence of these improvements, come to be produced by so much less labour
than before, that the increase of its price is more than compensated by the
diminution of its quantity.

CHAPTER IX.
OF THE PROFITS OF STOCK.

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

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

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

But though it may be impossible to determine, with any degree of precision,
what are or were the average profits of stock, either in the present or in
ancient times, some notion may be formed of them from the interest of money. It
may be laid down as a maxim, that wherever a great deal can be made by the use
of money, a great deal will commonly be given for the use of it; and that,
wherever little can be made by it, less will commonly he given for it.
Accordingly, therefore, as the usual market rate of interest varies in any
country, we may be assured that the ordinary profits of stock must vary with
it, must sink as it sinks, and rise as it rises. The progress of interest,
therefore, may lead us to form some notion of the progress of profit.

By the 37th of Henry VIII. all interest above ten per cent. was declared
unlawful. More, it seems, had sometimes been taken before that. In the reign of
Edward VI. religious zeal prohibited all interest. This prohibition, however,
like all others of the same kind, is said to have produced no effect, and
probably rather increased than diminished the evil of usury. The statute of
Henry VIII. was revived by the 13th of Elizabeth, cap. 8. and ten per cent.
continued to be the legal rate of interest till the 21st of James I. when it
was restricted to eight per cent. It was reduced to six per cent. soon after
the Restoration, and by the 12th of Queen Anne, to five per cent. All these
different statutory regulations seem to have been made with great propriety.
They seem to have followed, and not to have gone before, the market rate of
interest, or the rate at which people of good credit usually borrowed. Since
the time of Queen Anne, five per cent. seems to have been rather above than
below the market rate. Before the late war, the government borrowed at three
per cent.; and people of good credit in the capital, and in many other parts of
the kingdom, at three and a-half, four, and four and a-half per cent.

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

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

In Scotland, though the legal rate of interest is the same as in England, the
market rate is rather higher. People of the best credit there seldom borrow
under five per cent. Even private bankers in Edinburgh give four per cent. upon
their promissory-notes, of which payment, either in whole or in part may be
demanded at pleasure. Private bankers in London give no interest for the money
which is deposited with them. There are few trades which cannot be carried on
with a smaller stock in Scotland than in England. The common rate of profit,
therefore, must be somewhat greater. The wages of labour, it has already been
observed, are lower in Scotland than in England. The country, too, is not only
much poorer, but the steps by which it advances to a better condition, for it
is evidently advancing, seem to be much slower and more tardy. The legal rate
of interest in France has not during the course of the present century, been
always regulated by the market rate {See Denisart, Article Taux des Interests,
tom. iii, p.13}. In 1720, interest was reduced from the twentieth to the
fiftieth penny, or from five to two per cent. In 1724, it was raised to the
thirtieth penny, or to three and a third per cent. In 1725, it was again raised
to the twentieth penny, or to five per cent. In 1766, during the administration
of Mr Laverdy, it was reduced to the twenty-fifth penny, or to four per cent.
The Abbé Terray raised it afterwards to the old rate of five per cent. The
supposed purpose of many of those violent reductions of interest was to prepare
the way for reducing that of the public debts; a purpose which has sometimes
been executed. France is, perhaps, in the present times, not so rich a country
as England; and though the legal rate of interest has in France frequently been
lower than in England, the market rate has generally been higher; for there, as
in other countries, they have several very safe and easy methods of evading the
law. The profits of trade, I have been assured by British merchants who had
traded in both countries, are higher in France than in England; and it is no
doubt upon this account, that many British subjects chuse rather to employ
their capitals in a country where trade is in disgrace, than in one where it is
highly respected. The wages of labour are lower in France than in England. When
you go from Scotland to England, the difference which you may remark between
the dress and countenance of the common people in the one country and in the
other, sufficiently indicates the difference in their condition. The contrast
is still greater when you return from France. France, though no doubt a richer
country than Scotland, seems not to be going forward so fast. It is a common
and even a popular opinion in the country, that it is going backwards; an
opinion which I apprehend, is ill-founded, even with regard to France, but
which nobody can possibly entertain with regard to Scotland, who sees the
country now, and who saw it twenty or thirty years ago.

The province of Holland, on the other hand, in proportion to the extent of its
territory and the number of its people, is a richer country than England. The
government there borrow at two per cent. and private people of good credit at
three. The wages of labour are said to be higher in Holland than in England,
and the Dutch, it is well known, trade upon lower profits than any people in
Europe. The trade of Holland, it has been pretended by some people, is
decaying, and it may perhaps be true that some particular branches of it are
so; but these symptoms seem to indicate sufficiently that there is no general
decay. When profit diminishes, merchants are very apt to complain that trade
decays, though the diminution of profit is the natural effect of its
prosperity, or of a greater stock being employed in it than before. During the
late war, the Dutch gained the whole carrying trade of France, of which they
still retain a very large share. The great property which they possess both in
French and English funds, about forty millions, it is said in the latter (in
which, I suspect, however, there is a considerable exaggeration ), the great
sums which they lend to private people, in countries where the rate of interest
is higher than in their own, are circumstances which no doubt demonstrate the
redundancy of their stock, or that it has increased beyond what they can employ
with tolerable profit in the proper business of their own country; but they do
not demonstrate that that business has decreased. As the capital of a private
man, though acquired by a particular trade, may increase beyond what he can
employ in it, and yet that trade continue to increase too, so may likewise the
capital of a great nation.

In our North American and West Indian colonies, not only the wages of labour,
but the interest of money, and consequently the profits of stock, are higher
than in England. In the different colonies, both the legal and the market rate
of interest run from six to eight percent. High wages of labour and high
profits of stock, however, are things, perhaps, which scarce ever go together,
except in the peculiar circumstances of new colonies. A new colony must always,
for some time, be more understocked in proportion to the extent of its
territory, and more underpeopled in proportion to the extent of its stock, than
the greater part of other countries. They have more land than they have stock
to cultivate. What they have, therefore, is applied to the cultivation only of
what is most fertile and most favourably situated, the land near the sea-shore,
and along the banks of navigable rivers. Such land, too, is frequently
purchased at a price below the value even of its natural produce. Stock
employed in the purchase and improvement of such lands, must yield a very large
profit, and, consequently, afford to pay a very large interest. Its rapid
accumulation in so profitable an employment enables the planter to increase the
number of his hands faster than he can find them in a new settlement. Those
whom he can find, therefore, are very liberally rewarded. As the colony
increases, the profits of stock gradually diminish. When the most fertile and
best situated lands have been all occupied, less profit can be made by the
cultivation of what is inferior both in soil and situation, and less interest
can be afforded for the stock which is so employed. In the greater part of our
colonies, accordingly, both the legal and the market rate of interest have been
considerably reduced during the course of the present century. As riches,
improvement, and population, have increased, interest has declined. The wages
of labour do not sink with the profits of stock. The demand for labour
increases with the increase of stock, whatever be its profits; and after these
are diminished, stock may not only continue to increase, but to increase much
faster than before. It is with industrious nations, who are advancing in the
acquisition of riches, as with industrious individuals. A great stock, though
with small profits, generally increases faster than a small stock with great
profits. Money, says the proverb, makes money. When you have got a little, it
is often easy to get more. The great difficulty is to get that little. The
connection between the increase of stock and that of industry, or of the demand
for useful labour, has partly been explained already, but will be explained
more fully hereafter, in treating of the accumulation of stock.

The acquisition of new territory, or of new branches of trade, may sometimes
raise the profits of stock, and with them the interest of money, even in a
country which is fast advancing in the acquisition of riches. The stock of the
country, not being sufficient for the whole accession of business which such
acquisitions present to the different people among whom it is divided, is
applied to those particular branches only which afford the greatest profit.
Part of what had before been employed in other trades, is necessarily withdrawn
from them, and turned into some of the new and more profitable ones. In all
those old trades, therefore, the competition comes to be less than before. The
market comes to be less fully supplied with many different sorts of goods.
Their price necessarily rises more or less, and yields a greater profit to
those who deal in them, who can, therefore, afford to borrow at a higher
interest. For some time after the conclusion of the late war, not only private
people of the best credit, but some of the greatest companies in London,
commonly borrowed at five per cent. who, before that, had not been used to pay
more than four, and four and a half per cent. The great accession both of
territory and trade by our acquisitions in North America and the West Indies,
will sufficiently account for this, without supposing any diminution in the
capital stock of the society. So great an accession of new business to be
carried on by the old stock, must necessarily have diminished the quantity
employed in a great number of particular branches, in which the competition
being less, the profits must have been greater. I shall hereafter have occasion
to mention the reasons which dispose me to believe that the capital stock of
Great Britain was not diminished, even by the enormous expense of the late war.

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

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

But, perhaps, no country has ever yet arrived at this degree of opulence. China
seems to have been long stationary, and had, probably, long ago acquired that
full complement of riches which is consistent with the nature of its laws and
institutions. But this complement may be much inferior to what, with other laws
and institutions, the nature of its soil, climate, and situation, might admit
of. A country which neglects or despises foreign commerce, and which admits the
vessel of foreign nations into one or two of its ports only, cannot transact
the same quantity of business which it might do with different laws and
institutions. In a country, too, where, though the rich, or the owners of large
capitals, enjoy a good deal of security, the poor, or the owners of small
capitals, enjoy scarce any, but are liable, under the pretence of justice, to
be pillaged and plundered at any time by the inferior mandarins, the quantity
of stock employed in all the different branches of business transacted within
it, can never be equal to what the nature and extent of that business might
admit. In every different branch, the oppression of the poor must establish the
monopoly of the rich, who, by engrossing the whole trade to themselves, will be
able to make very large profits. Twelve per cent. accordingly, is said to be
the common interest of money in China, and the ordinary profits of stock must
be sufficient to afford this large interest.

A defect in the law may sometimes raise the rate of interest considerably above
what the condition of the country, as to wealth or poverty, would require. When
the law does not enforce the performance of contracts, it puts all borrowers
nearly upon the same footing with bankrupts, or people of doubtful credit, in
better regulated countries. The uncertainty of recovering his money makes the
lender exact the same usurious interest which is usually required from
bankrupts. Among the barbarous nations who overran the western provinces of the
Roman empire, the performance of contracts was left for many ages to the faith
of the contracting parties. The courts of justice of their kings seldom
intermeddled in it. The high rate of interest which took place in those ancient
times, may, perhaps, be partly accounted for from this cause.

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

The lowest ordinary rate of profit must always be something more than what is
sufficient to compensate the occasional losses to which every employment of
stock is exposed. It is this surplus only which is neat or clear profit. What
is called gross profit, comprehends frequently not only this surplus, but what
is retained for compensating such extraordinary losses. The interest which the
borrower can afford to pay is in proportion to the clear profit only. The
lowest ordinary rate of interest must, in the same manner, be something more
than sufficient to compensate the occasional losses to which lending, even with
tolerable prudence, is exposed. Were it not, mere charity or friendship could
be the only motives for lending.

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

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

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

In countries which are fast advancing to riches, the low rate of profit may, in
the price of many commodities, compensate the high wages of labour, and enable
those countries to sell as cheap as their less thriving neighbours, among whom
the wages of labour may be lower.

In reality, high profits tend much more to raise the price of work than high
wages. If, in the linen manufacture, for example, the wages of the different
working people, the flax-dressers, the spinners, the weavers, etc. should all
of them be advanced twopence a-day, it would be necessary to heighten the price
of a piece of linen only by a number of twopences equal to the number of people
that had been employed about it, multiplied by the number of days during which
they had been so employed. That part of the price of the commodity which
resolved itself into the wages, would, through all the different stages of the
manufacture, rise only in arithmetical proportion to this rise of wages. But if
the profits of all the different employers of those working people should be
raised five per cent. that part of the price of the commodity which resolved
itself into profit would, through all the different stages of the manufacture,
rise in geometrical proportion to this rise of profit. The employer of the flax
dressers would, in selling his flax, require an additional five per cent. upon
the whole value of the materials and wages which he advanced to his workmen.
The employer of the spinners would require an additional five per cent. both
upon the advanced price of the flax, and upon the wages of the spinners. And
the employer of the weavers would require alike five per cent. both upon the
advanced price of the linen-yarn, and upon the wages of the weavers. In raising
the price of commodities, the rise of wages operates in the same manner as
simple interest does in the accumulation of debt. The rise of profit operates
like compound interest. Our merchants and master manufacturers complain much of
the bad effects of high wages in raising the price, and thereby lessening the
sale of their goods, both at home and abroad. They say nothing concerning the
bad effects of high profits; they are silent with regard to the pernicious
effects of their own gains; they complain only of those of other people.

CHAPTER X.
OF WAGES AND PROFIT IN THE DIFFERENT EMPLOYMENTS OF LABOUR AND STOCK.

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

Pecuniary wages and profit, indeed, are everywhere in Europe extremely
different, according to the different employments of labour and stock. But this
difference arises, partly from certain circumstances in the employments
themselves, which, either really, or at least in the imagination of men, make
up for a small pecuniary gain in some, and counterbalance a great one in
others, and partly from the policy of Europe, which nowhere leaves things at
perfect liberty.

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

PART I. Inequalities arising from the nature of the employments
themselves.

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

First, the wages of labour vary with the ease or hardship, the cleanliness or
dirtiness, the honourableness or dishonourableness, of the employment. Thus in
most places, take the year round, a journeyman tailor earns less than a
journeyman weaver. His work is much easier. A journeyman weaver earns less than
a journeyman smith. His work is not always easier, but it is much cleanlier. A
journeyman blacksmith, though an artificer, seldom earns so much in twelve
hours, as a collier, who is only a labourer, does in eight. His work is not
quite so dirty, is less dangerous, and is carried on in day-light, and above
ground. Honour makes a great part of the reward of all honourable professions.
In point of pecuniary gain, all things considered, they are generally
under-recompensed, as I shall endeavour to shew by and by. Disgrace has the
contrary effect. The trade of a butcher is a brutal and an odious business; but
it is in most places more profitable than the greater part of common trades.
The most detestable of all employments, that of public executioner, is, in
proportion to the quantity of work done, better paid than any common trade
whatever.

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

Disagreeableness and disgrace affect the profits of stock in the same manner as
the wages of labour. The keeper of an inn or tavern, who is never master of his
own house, and who is exposed to the brutality of every drunkard, exercises
neither a very agreeable nor a very creditable business. But there is scarce
any common trade in which a small stock yields so great a profit.

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

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

The difference between the wages of skilled labour and those of common labour,
is founded upon this principle.

The policy of Europe considers the labour of all mechanics, artificers, and
manufacturers, as skilled labour; and that of all country labourers as common
labour. It seems to suppose that of the former to be of a more nice and
delicate nature than that of the latter. It is so perhaps in some cases; but in
the greater part it is quite otherwise, as I shall endeavour to shew by and by.
The laws and customs of Europe, therefore, in order to qualify any person for
exercising the one species of labour, impose the necessity of an
apprenticeship, though with different degrees of rigour in different places.
They leave the other free and open to every body. During the continuance of the
apprenticeship, the whole labour of the apprentice belongs to his master. In
the meantime he must, in many cases, be maintained by his parents or relations,
and, in almost all cases, must be clothed by them. Some money, too, is commonly
given to the master for teaching him his trade. They who cannot give money,
give time, or become bound for more than the usual number of years; a
consideration which, though it is not always advantageous to the master, on
account of the usual idleness of apprentices, is always disadvantageous to the
apprentice. In country labour, on the contrary, the labourer, while he is
employed about the easier, learns the more difficult parts of his business, and
his own labour maintains him through all the different stages of his
employment. It is reasonable, therefore, that in Europe the wages of mechanics,
artificers, and manufacturers, should be somewhat higher than those of common
labourers. They are so accordingly, and their superior gains make them, in most
places, be considered as a superior rank of people. This superiority, however,
is generally very small: the daily or weekly earnings of journeymen in the more
common sorts of manufactures, such as those of plain linen and woollen cloth,
computed at an average, are, in most places, very little more than the
day-wages of common labourers. Their employment, indeed, is more steady and
uniform, and the superiority of their earnings, taking the whole year together,
may be somewhat greater. It seems evidently, however, to be no greater than
what is sufficient to compensate the superior expense of their education.
Education in the ingenious arts, and in the liberal professions, is still more
tedious and expensive. The pecuniary recompence, therefore, of painters and
sculptors, of lawyers and physicians, ought to be much more liberal; and it is
so accordingly.

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

Thirdly, the wages of labour in different occupations vary with the constancy
or inconstancy of employment.

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

A house-carpenter seems to exercise rather a nicer and a more ingenious trade
than a mason. In most places, however, for it is not universally so, his
day-wages are somewhat lower. His employment, though it depends much, does not
depend so entirely upon the occasional calls of his customers; and it is not
liable to be interrupted by the weather.

When the trades which generally afford constant employment, happen in a
particular place not to do so, the wages of the workmen always rise a good deal
above their ordinary proportion to those of common labour. In London, almost
all journeymen artificers are liable to be called upon and dismissed by their
masters from day to day, and from week to week, in the same manner as
day-labourers in other places. The lowest order of artificers, journeymen
tailors, accordingly, earn their half-a-crown a-day, though eighteen pence may
be reckoned the wages of common labour. In small towns and country villages,
the wages of journeymen tailors frequently scarce equal those of common labour;
but in London they are often many weeks without employment, particularly during
the summer.

When the inconstancy of employment is combined with the hardship,
disagreeableness, and dirtiness of the work, it sometimes raises the wages of
the most common labour above those of the most skilful artificers. A collier
working by the piece is supposed, at Newcastle, to earn commonly about double,
and, in many parts of Scotland, about three times, the wages of common labour.
His high wages arise altogether from the hardship, disagreeableness, and
dirtiness of his work. His employment may, upon most occasions, be as constant
as he pleases. The coal-heavers in London exercise a trade which, in hardship,
dirtiness, and disagreeableness, almost equals that of colliers; and, from the
unavoidable irregularity in the arrivals of coal-ships, the employment of the
greater part of them is necessarily very inconstant. If colliers, therefore,
commonly earn double and triple the wages of common labour, it ought not to
seem unreasonable that coal-heavers should sometimes earn four and five times
those wages. In the inquiry made into their condition a few years ago, it was
found that, at the rate at which they were then paid, they could earn from six
to ten shillings a-day. Six shillings are about four times the wages of common
labour in London; and, in every particular trade, the lowest common earnings
may always be considered as those of the far greater number. How extravagant
soever those earnings may appear, if they were more than sufficient to
compensate all the disagreeable circumstances of the business, there would soon
be so great a number of competitors, as, in a trade which has no exclusive
privilege, would quickly reduce them to a lower rate.

The constancy or inconstancy of employment cannot affect the ordinary profits
of stock in any particular trade. Whether the stock is or is not constantly
employed, depends, not upon the trade, but the trader.

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

The wages of goldsmiths and jewellers are everywhere superior to those of many
other workmen, not only of equal, but of much superior ingenuity, on account of
the precious materials with which they are entrusted. We trust our health to
the physician, our fortune, and sometimes our life and reputation, to the
lawyer and attorney. Such confidence could not safely be reposed in people of a
very mean or low condition. Their reward must be such, therefore, as may give
them that rank in the society which so important a trust requires. The long
time and the great expense which must be laid out in their education, when
combined with this circumstance, necessarily enhance still further the price of
their labour.

When a person employs only his own stock in trade, there is no trust; and the
credit which he may get from other people, depends, not upon the nature of the
trade, but upon their opinion of his fortune, probity and prudence. The
different rates of profit, therefore, in the different branches of trade,
cannot arise from the different degrees of trust reposed in the traders.

Fifthly, the wages of labour in different employments vary according to the
probability or improbability of success in them.

The probability that any particular person shall ever be qualified for the
employments to which he is educated, is very different in different
occupations. In the greatest part of mechanic trades success is almost certain;
but very uncertain in the liberal professions. Put your son apprentice to a
shoemaker, there is little doubt of his learning to make a pair of shoes; but
send him to study the law, it as at least twenty to one if he ever makes such
proficiency as will enable him to live by the business. In a perfectly fair
lottery, those who draw the prizes ought to gain all that is lost by those who
draw the blanks. In a profession, where twenty fail for one that succeeds, that
one ought to gain all that should have been gained by the unsuccessful twenty.
The counsellor at law, who, perhaps, at near forty years of age, begins to make
something by his profession, ought to receive the retribution, not only of his
own so tedious and expensive education, but of that of more than twenty others,
who are never likely to make any thing by it. How extravagant soever the fees
of counsellors at law may sometimes appear, their real retribution is never
equal to this. Compute, in any particular place, what is likely to be annually
gained, and what is likely to be annually spent, by all the different workmen
in any common trade, such as that of shoemakers or weavers, and you will find
that the former sum will generally exceed the latter. But make the same
computation with regard to all the counsellors and students of law, in all the
different Inns of Court, and you will find that their annual gains bear but a
very small proportion to their annual expense, even though you rate the former
as high, and the latter as low, as can well be done. The lottery of the law,
therefore, is very far from being a perfectly fair lottery; and that as well as
many other liberal and honourable professions, is, in point of pecuniary gain,
evidently under-recompensed.

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

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

There are some very agreeable and beautiful talents, of which the possession
commands a certain sort of admiration, but of which the exercise, for the sake
of gain, is considered, whether from reason or prejudice, as a sort of public
prostitution. The pecuniary recompence, therefore, of those who exercise them
in this manner, must be sufficient, not only to pay for the time, labour, and
expense of acquiring the talents, but for the discredit which attends the
employment of them as the means of subsistence. The exorbitant rewards of
players, opera-singers, opera-dancers, etc. are founded upon those two
principles; the rarity and beauty of the talents, and the discredit of
employing them in this manner. It seems absurd at first sight, that we should
despise their persons, and yet reward their talents with the most profuse
liberality. While we do the one, however, we must of necessity do the other,
Should the public opinion or prejudice ever alter with regard to such
occupations, their pecuniary recompence would quickly diminish. More people
would apply to them, and the competition would quickly reduce the price of
their labour. Such talents, though far from being common, are by no means so
rare as imagined. Many people possess them in great perfection, who disdain to
make this use of them; and many more are capable of acquiring them, if any
thing could be made honourably by them.

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

That the chance of gain is naturally overvalued, we may learn from the
universal success of lotteries. The world neither ever saw, nor ever will see,
a perfectly fair lottery, or one in which the whole gain compensated the whole
loss; because the undertaker could make nothing by it. In the state lotteries,
the tickets are really not worth the price which is paid by the original
subscribers, and yet commonly sell in the market for twenty, thirty, and
sometimes forty per cent. advance. The vain hopes of gaining some of the great
prizes is the sole cause of this demand. The soberest people scarce look upon
it as a folly to pay a small sum for the chance of gaining ten or twenty
thousand pounds, though they know that even that small sum is perhaps twenty or
thirty per cent. more than the chance is worth. In a lottery in which no prize
exceeded twenty pounds, though in other respects it approached much nearer to a
perfectly fair one than the common state lotteries, there would not be the same
demand for tickets. In order to have a better chance for some of the great
prizes, some people purchase several tickets; and others, small shares in a
still greater number. There is not, however, a more certain proposition in
mathematics, than that the more tickets you adventure upon, the more likely you
are to be a loser. Adventure upon all the tickets in the lottery, and you lose
for certain; and the greater the number of your tickets, the nearer you
approach to this certainty.

That the chance of loss is frequently undervalued, and scarce ever valued more
than it is worth, we may learn from the very moderate profit of insurers. In
order to make insurance, either from fire or sea-risk, a trade at all, the
common premium must be sufficient to compensate the common losses, to pay the
expense of management, and to afford such a profit as might have been drawn
from an equal capital employed in any common trade. The person who pays no more
than this, evidently pays no more than the real value of the risk, or the
lowest price at which he can reasonably expect to insure it. But though many
people have made a little money by insurance, very few have made a great
fortune; and, from this consideration alone, it seems evident enough that the
ordinary balance of profit and loss is not more advantageous in this than in
other common trades, by which so many people make fortunes. Moderate, however,
as the premium of insurance commonly is, many people despise the risk too much
to care to pay it. Taking the whole kingdom at an average, nineteen houses in
twenty, or rather, perhaps, ninety-nine in a hundred, are not insured from
fire. Sea-risk is more alarming to the greater part of people; and the
proportion of ships insured to those not insured is much greater. Many sail,
however, at all seasons, and even in time of war, without any insurance. This
may sometimes, perhaps, be done without any imprudence. When a great company,
or even a great merchant, has twenty or thirty ships at sea, they may, as it
were, insure one another. The premium saved up on them all may more than
compensate such losses as they are likely to meet with in the common course of
chances. The neglect of insurance upon shipping, however, in the same manner as
upon houses, is, in most cases, the effect of no such nice calculation, but of
mere thoughtless rashness, and presumptuous contempt of the risk.

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

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

The lottery of the sea is not altogether so disadvantageous as that of the
army. The son of a creditable labourer or artificer may frequently go to sea
with his father’s consent; but if he enlists as a soldier, it is always
without it. Other people see some chance of his making something by the one
trade; nobody but himself sees any of his making any thing by the other. The
great admiral is less the object of public admiration than the great general;
and the highest success in the sea service promises a less brilliant fortune
and reputation than equal success in the land. The same difference runs through
all the inferior degrees of preferment in both. By the rules of precedency, a
captain in the navy ranks with a colonel in the army; but he does not rank with
him in the common estimation. As the great prizes in the lottery are less, the
smaller ones must be more numerous. Common sailors, therefore, more frequently
get some fortune and preferment than common soldiers; and the hope of those
prizes is what principally recommends the trade. Though their skill and
dexterity are much superior to that of almost any artificers; and though their
whole life is one continual scene of hardship and danger; yet for all this
dexterity and skill, for all those hardships and dangers, while they remain in
the condition of common sailors, they receive scarce any other recompence but
the pleasure of exercising the one and of surmounting the other. Their wages
are not greater than those of common labourers at the port which regulates the
rate of seamen’s wages. As they are continually going from port to port,
the monthly pay of those who sail from all the different ports of Great
Britain, is more nearly upon a level than that of any other workmen in those
different places; and the rate of the port to and from which the greatest
number sail, that is, the port of London, regulates that of all the rest. At
London, the wages of the greater part of the different classes of workmen are
about double those of the same classes at Edinburgh. But the sailors who sail
from the port of London, seldom earn above three or four shillings a month more
than those who sail from the port of Leith, and the difference is frequently
not so great. In time of peace, and in the merchant-service, the London price
is from a guinea to about seven-and-twenty shillings the calendar month. A
common labourer in London, at the rate of nine or ten shillings a week, may
earn in the calendar month from forty to five-and-forty shillings. The sailor,
indeed, over and above his pay, is supplied with provisions. Their value,
however, may not perhaps always exceed the difference between his pay and that
of the common labourer; and though it sometimes should, the excess will not be
clear gain to the sailor, because he cannot share it with his wife and family,
whom he must maintain out of his wages at home.

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

In all the different employments of stock, the ordinary rate of profit varies
more or less with the certainty or uncertainty of the returns. These are, in
general, less uncertain in the inland than in the foreign trade, and in some
branches of foreign trade than in others; in the trade to North America, for
example, than in that to Jamaica. The ordinary rate of profit always rises more
or less with the risk. It does not, however, seem to rise in proportion to it,
or so as to compensate it completely. Bankruptcies are most frequent in the
most hazardous trades. The most hazardous of all trades, that of a smuggler,
though, when the adventure succeeds, it is likewise the most profitable, is the
infallible road to bankruptcy. The presumptuous hope of success seems to act
here as upon all other occasions, and to entice so many adventurers into those
hazardous trades, that their competition reduces the profit below what is
sufficient to compensate the risk. To compensate it completely, the common
returns ought, over and above the ordinary profits of stock, not only to make
up for all occasional losses, but to afford a surplus profit to the
adventurers, of the same nature with the profit of insurers. But if the common
returns were sufficient for all this, bankruptcies would not be more frequent
in these than in other trades.

Of the five circumstances, therefore, which vary the wages of labour, two only
affect the profits of stock; the agreeableness or disagreeableness of the
business, and the risk or security with which it is attended. In point of
agreeableness or disagreeableness, there is little or no difference in the far
greater part of the different employments of stock, but a great deal in those
of labour; and the ordinary profit of stock, though it rises with the risk,
does not always seem to rise in proportion to it. It should follow from all
this, that, in the same society or neighbourhood, the average and ordinary
rates of profit in the different employments of stock should be more nearly
upon a level than the pecuniary wages of the different sorts of labour.

They are so accordingly. The difference between the earnings of a common
labourer and those of a well employed lawyer or physician, is evidently much
greater than that between the ordinary profits in any two different branches of
trade. The apparent difference, besides, in the profits of different trades, is
generally a deception arising from our not always distinguishing what ought to
be considered as wages, from what ought to be considered as profit.

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

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

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

Though the profits of stock, both in the wholesale and retail trade, are
generally less in the capital than in small towns and country villages, yet
great fortunes are frequently acquired from small beginnings in the former, and
scarce ever in the latter. In small towns and country villages, on account of
the narrowness of the market, trade cannot always be extended as stock extends.
In such places, therefore, though the rate of a particular person’s
profits may be very high, the sum or amount of them can never be very great,
nor consequently that of his annual accumulation. In great towns, on the
contrary, trade can be extended as stock increases, and the credit of a frugal
and thriving man increases much faster than his stock. His trade is extended in
proportion to the amount of both; and the sum or amount of his profits is in
proportion to the extent of his trade, and his annual accumulation in
proportion to the amount of his profits. It seldom happens, however, that great
fortunes are made, even in great towns, by any one regular, established, and
well-known branch of business, but in consequence of a long life of industry,
frugality, and attention. Sudden fortunes, indeed, are sometimes made in such
places, by what is called the trade of speculation. The speculative merchant
exercises no one regular, established, or well-known branch of business. He is
a corn merchant this year, and a wine merchant the next, and a sugar, tobacco,
or tea merchant the year after. He enters into every trade, when he foresees
that it is likely to be more than commonly profitable, and he quits it when he
foresees that its profits are likely to return to the level of other trades.
His profits and losses, therefore, can bear no regular proportion to those of
any one established and well-known branch of business. A bold adventurer may
sometimes acquire a considerable fortune by two or three successful
speculations, but is just as likely to lose one by two or three unsuccessful
ones. This trade can be carried on nowhere but in great towns. It is only in
places of the most extensive commerce and correspondence that the intelligence
requisite for it can be had.

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

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

First, this equality can take place only in those employments which are well
known, and have been long established in the neighbourhood.

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

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

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

The demand for almost every different species of labour is sometimes greater,
and sometimes less than usual. In the one case, the advantages of the
employment rise above, in the other they fall below the common level. The
demand for country labour is greater at hay-time and harvest than during the
greater part of the year; and wages rise with the demand. In time of war, when
forty or fifty thousand sailors are forced from the merchant service into that
of the king, the demand for sailors to merchant ships necessarily rises with
their scarcity; and their wages, upon such occasions, commonly rise from a
guinea and seven-and-twenty shillings to forty shillings and three pounds
a-month. In a decaying manufacture, on the contrary, many workmen, rather than
quit their own trade, are contented with smaller wages than would otherwise be
suitable to the nature of their employment.

The profits of stock vary with the price of the commodities in which it is
employed. As the price of any commodity rises above the ordinary or average
rate, the profits of at least some part of the stock that is employed in
bringing it to market, rise above their proper level, and as it falls they sink
below it. All commodities are more or less liable to variations of price, but
some are much more so than others. In all commodities which are produced by
human industry, the quantity of industry annually employed is necessarily
regulated by the annual demand, in such a manner that the average annual
produce may, as nearly as possible, be equal to the average annual consumption.
In some employments, it has already been observed, the same quantity of
industry will always produce the same, or very nearly the same quantity of
commodities. In the linen or woollen manufactures, for example, the same number
of hands will annually work up very nearly the same quantity of linen and
woollen cloth. The variations in the market price of such commodities,
therefore, can arise only from some accidental variation in the demand. A
public mourning raises the price of black cloth. But as the demand for most
sorts of plain linen and woollen cloth is pretty uniform, so is likewise the
price. But there are other employments in which the same quantity of industry
will not always produce the same quantity of commodities. The same quantity of
industry, for example, will, in different years, produce very different
quantities of corn, wine, hops, sugar tobacco, etc. The price of such
commodities, therefore, varies not only with the variations of demand, but with
the much greater and more frequent variations of quantity, and is consequently
extremely fluctuating; but the profit of some of the dealers must necessarily
fluctuate with the price of the commodities. The operations of the speculative
merchant are principally employed about such commodities. He endeavours to buy
them up when he foresees that their price is likely to rise, and to sell them
when it is likely to fall.

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

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

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

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

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

In opulent countries, the market is generally so extensive, that any one trade
is sufficient to employ the whole labour and stock of those who occupy it.
Instances of people living by one employment, and, at the same time, deriving
some little advantage from another, occur chiefly in poor countries. The
following instance, however, of something of the same kind, is to be found in
the capital of a very rich one. There is no city in Europe, I believe, in which
house-rent is dearer than in London, and yet I know no capital in which a
furnished apartment can be hired so cheap. Lodging is not only much cheaper in
London than in Paris; it is much cheaper than in Edinburgh, of the same degree
of goodness; and, what may seem extraordinary, the dearness of house-rent is
the cause of the cheapness of lodging. The dearness of house-rent in London
arises, not only from those causes which render it dear in all great capitals,
the dearness of labour, the dearness of all the materials of building, which
must generally be brought from a great distance, and, above all, the dearness
of ground-rent, every landlord acting the part of a monopolist, and frequently
exacting a higher rent for a single acre of bad land in a town, than can be had
for a hundred of the best in the country; but it arises in part from the
peculiar manners and customs of the people, which oblige every master of a
family to hire a whole house from top to bottom. A dwelling-house in England
means every thing that is contained under the same roof. In France, Scotland,
and many other parts of Europe, it frequently means no more than a single
storey. A tradesman in London is obliged to hire a whole house in that part of
the town where his customers live. His shop is upon the ground floor, and he
and his family sleep in the garret; and he endeavours to pay a part of his
house-rent by letting the two middle storeys to lodgers. He expects to maintain
his family by his trade, and not by his lodgers. Whereas at Paris and
Edinburgh, people who let lodgings have commonly no other means of subsistence;
and the price of the lodging must pay, not only the rent of the house, but the
whole expense of the family.

PART II.—Inequalities occasioned by the Policy of Europe.

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

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

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

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

The exclusive privilege of an incorporated trade necessarily restrains the
competition, in the town where it is established, to those who are free of the
trade. To have served an apprenticeship in the town, under a master properly
qualified, is commonly the necessary requisite for obtaining this freedom. The
bye-laws of the corporation regulate sometimes the number of apprentices which
any master is allowed to have, and almost always the number of years which each
apprentice is obliged to serve. The intention of both regulations is to
restrain the competition to a much smaller number than might otherwise be
disposed to enter into the trade. The limitation of the number of apprentices
restrains it directly. A long term of apprenticeship restrains it more
indirectly, but as effectually, by increasing the expense of education.

In Sheffield, no master cutler can have more than one apprentice at a time, by
a bye-law of the corporation. In Norfolk and Norwich, no master weaver can have
more than two apprentices, under pain of forfeiting five pounds a-month to the
king. No master hatter can have more than two apprentices anywhere in England,
or in the English plantations, under pain of forfeiting; five pounds a-month,
half to the king, and half to him who shall sue in any court of record. Both
these regulations, though they have been confirmed by a public law of the
kingdom, are evidently dictated by the same corporation-spirit which enacted
the bye-law of Sheffield. The silk-weavers in London had scarce been
incorporated a year, when they enacted a bye-law, restraining any master from
having more than two apprentices at a time. It required a particular act of
parliament to rescind this bye-law.

Seven years seem anciently to have been, all over Europe, the usual term
established for the duration of apprenticeships in the greater part of
incorporated trades. All such incorporations were anciently called
universities, which, indeed, is the proper Latin name for any incorporation
whatever. The university of smiths, the university of tailors, etc. are
expressions which we commonly meet with in the old charters of ancient towns.
When those particular incorporations, which are now peculiarly called
universities, were first established, the term of years which it was necessary
to study, in order to obtain the degree of master of arts, appears evidently to
have been copied from the term of apprenticeship in common trades, of which the
incorporations were much more ancient. As to have wrought seven years under a
master properly qualified, was necessary, in order to entitle any person to
become a master, and to have himself apprentices in a common trade; so to have
studied seven years under a master properly qualified, was necessary to entitle
him to become a master, teacher, or doctor (words anciently synonymous), in the
liberal arts, and to have scholars or apprentices (words likewise originally
synonymous) to study under him.

By the 5th of Elizabeth, commonly called the Statute of Apprenticeship, it was
enacted, that no person should, for the future, exercise any trade, craft, or
mystery, at that time exercised in England, unless he had previously served to
it an apprenticeship of seven years at least; and what before had been the
bye-law of many particular corporations, became in England the general and
public law of all trades carried on in market towns. For though the words of
the statute are very general, and seem plainly to include the whole kingdom, by
interpretation its operation has been limited to market towns; it having been
held that, in country villages, a person may exercise several different trades,
though he has not served a seven years apprenticeship to each, they being
necessary for the conveniency of the inhabitants, and the number of people
frequently not being sufficient to supply each with a particular set of hands.
By a strict interpretation of the words, too, the operation of this statute has
been limited to those trades which were established in England before the 5th
of Elizabeth, and has never been extended to such as have been introduced since
that time. This limitation has given occasion to several distinctions, which,
considered as rules of police, appear as foolish as can well be imagined. It
has been adjudged, for example, that a coach-maker can neither himself make nor
employ journeymen to make his coach-wheels, but must buy them of a master
wheel-wright; this latter trade having been exercised in England before the 5th
of Elizabeth. But a wheel-wright, though he has never served an apprenticeship
to a coachmaker, may either himself make or employ journeymen to make coaches;
the trade of a coachmaker not being within the statute, because not exercised
in England at the time when it was made. The manufactures of Manchester,
Birmingham, and Wolverhampton, are many of them, upon this account, not within
the statute, not having been exercised in England before the 5th of Elizabeth.

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

In Scotland, there is no general law which regulates universally the duration
of apprenticeships. The term is different in different corporations. Where it
is long, a part of it may generally be redeemed by paying a small fine. In most
towns, too, a very small fine is sufficient to purchase the freedom of any
corporation. The weavers of linen and hempen cloth, the principal manufactures
of the country, as well as all other artificers subservient to them,
wheel-makers, reel-makers, etc. may exercise their trades in any town-corporate
without paying any fine. In all towns-corporate, all persons are free to sell
butchers’ meat upon any lawful day of the week. Three years is, in
Scotland, a common term of apprenticeship, even in some very nice trades; and,
in general, I know of no country in Europe, in which corporation laws are so
little oppressive.

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

The institution of long apprenticeships can give no security that insufficient
workmanship shall not frequently be exposed to public sale. When this is done,
it is generally the effect of fraud, and not of inability; and the longest
apprenticeship can give no security against fraud. Quite different regulations
are necessary to prevent this abuse. The sterling mark upon plate, and the
stamps upon linen and woollen cloth, give the purchaser much greater security
than any statute of apprenticeship. He generally looks at these, but never
thinks it worth while to enquire whether the workman had served a seven years
apprenticeship.

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

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

Long apprenticeships are altogether unnecessary. The arts, which are much
superior to common trades, such as those of making clocks and watches, contain
no such mystery as to require a long course of instruction. The first invention
of such beautiful machines, indeed, and even that of some of the instruments
employed in making them, must no doubt have been the work of deep thought and
long time, and may justly be considered as among the happiest efforts of human
ingenuity. But when both have been fairly invented, and are well understood, to
explain to any young man, in the completest manner, how to apply the
instruments, and how to construct the machines, cannot well require more than
the lessons of a few weeks; perhaps those of a few days might be sufficient. In
the common mechanic trades, those of a few days might certainly be sufficient.
The dexterity of hand, indeed, even in common trades, cannot be acquired
without much practice and experience. But a young man would practice with much
more diligence and attention, if from the beginning he wrought as a journeyman,
being paid in proportion to the little work which he could execute, and paying
in his turn for the materials which he might sometimes spoil through
awkwardness and inexperience. His education would generally in this way be more
effectual, and always less tedious and expensive. The master, indeed, would be
a loser. He would lose all the wages of the apprentice, which he now saves, for
seven years together. In the end, perhaps, the apprentice himself would be a
loser. In a trade so easily learnt he would have more competitors, and his
wages, when he came to be a complete workman, would be much less than at
present. The same increase of competition would reduce the profits of the
masters, as well as the wages of workmen. The trades, the crafts, the
mysteries, would all be losers. But the public would be a gainer, the work of
all artificers coming in this way much cheaper to market.

It is to prevent this reduction of price, and consequently of wages and profit,
by restraining that free competition which would most certainly occasion it,
that all corporations, and the greater part of corporation laws have been
established. In order to erect a corporation, no other authority in ancient
times was requisite, in many parts of Europe, but that of the town-corporate in
which it was established. In England, indeed, a charter from the king was
likewise necessary. But this prerogative of the crown seems to have been
reserved rather for extorting money from the subject, than for the defence of
the common liberty against such oppressive monopolies. Upon paying a fine to
the king, the charter seems generally to have been readily granted; and when
any particular class of artificers or traders thought proper to act as a
corporation, without a charter, such adulterine guilds, as they were called,
were not always disfranchised upon that account, but obliged to fine annually
to the king, for permission to exercise their usurped privileges {See Madox
Firma Burgi p. 26 etc.}. The immediate inspection of all corporations, and of
the bye-laws which they might think proper to enact for their own government,
belonged to the town-corporate in which they were established; and whatever
discipline was exercised over them, proceeded commonly, not from the king, but
from that greater incorporation of which those subordinate ones were only parts
or members.

The government of towns-corporate was altogether in the hands of traders and
artificers, and it was the manifest interest of every particular class of them,
to prevent the market from being overstocked, as they commonly express it, with
their own particular species of industry; which is in reality to keep it always
understocked. Each class was eager to establish regulations proper for this
purpose, and, provided it was allowed to do so, was willing to consent that
every other class should do the same. In consequence of such regulations,
indeed, each class was obliged to buy the goods they had occasion for from
every other within the town, somewhat dearer than they otherwise might have
done. But, in recompence, they were enabled to sell their own just as much
dearer; so that, so far it was as broad as long, as they say; and in the
dealings of the different classes within the town with one another, none of
them were losers by these regulations. But in their dealings with the country
they were all great gainers; and in these latter dealings consist the whole
trade which supports and enriches every town.

Every town draws its whole subsistence, and all the materials of its industry,
from the: country. It pays for these chiefly in two ways. First, by sending
back to the country a part of those materials wrought up and manufactured; in
which case, their price is augmented by the wages of the workmen, and the
profits of their masters or immediate employers; secondly, by sending to it a
part both of the rude and manufactured produce, either of other countries, or
of distant parts of the same country, imported into the town; in which case,
too, the original price of those goods is augmented by the wages of the
carriers or sailors, and by the profits of the merchants who employ them. In
what is gained upon the first of those branches of commerce, consists the
advantage which the town makes by its manufactures; in what is gained upon the
second, the advantage of its inland and foreign trade. The wages of the
workmen, and the profits of their different employers, make up the whole of
what is gained upon both. Whatever regulations, therefore, tend to increase
those wages and profits beyond what they otherwise: would be, tend to enable
the town to purchase, with a smaller quantity of its labour, the produce of a
greater quantity of the labour of the country. They give the traders and
artificers in the town an advantage over the landlords, farmers, and labourers,
in the country, and break down that natural equality which would otherwise take
place in the commerce which is carried on between them. The whole annual
produce of the labour of the society is annually divided between those two
different sets of people. By means of those regulations, a greater share of it
is given to the inhabitants of the town than would otherwise fall to them, and
a less to those of the country.

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

That the industry which is carried on in towns is, everywhere in Europe, more
advantageous than that which is carried on in the country, without entering
into any very nice computations, we may satisfy ourselves by one very simple
and obvious observation. In every country of Europe, we find at least a hundred
people who have acquired great fortunes, from small beginnings, by trade and
manufactures, the industry which properly belongs to towns, for one who has
done so by that which properly belongs to the country, the raising of rude
produce by the improvement and cultivation of land. Industry, therefore, must
be better rewarded, the wages of labour and the profits of stock must evidently
be greater, in the one situation than in the other. But stock and labour
naturally seek the most advantageous employment. They naturally, therefore,
resort as much as they can to the town, and desert the country.

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

The inhabitants of the country, dispersed in distant places, cannot easily
combine together. They have not only never been incorporated, but the
incorporation spirit never has prevailed among them. No apprenticeship has ever
been thought necessary to qualify for husbandry, the great trade of the
country. After what are called the fine arts, and the liberal professions,
however, there is perhaps no trade which requires so great a variety of
knowledge and experience. The innumerable volumes which have been written upon
it in all languages, may satisfy us, that among the wisest and most learned
nations, it has never been regarded as a matter very easily understood. And
from all those volumes we shall in vain attempt to collect that knowledge of
its various and complicated operations which is commonly possessed even by the
common farmer; how contemptuously soever the very contemptible authors of some
of them may sometimes affect to speak of him. There is scarce any common
mechanic trade, on the contrary, of which all the operations may not be as
completely and distinctly explained in a pamphlet of a very few pages, as it is
possible for words illustrated by figures to explain them. In the history of
the arts, now publishing by the French Academy of Sciences, several of them are
actually explained in this manner. The direction of operations, besides, which
must be varied with every change of the weather, as well as with many other
accidents, requires much more judgment and discretion, than that of those which
are always the same, or very nearly the same.

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

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

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

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

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

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

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

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

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

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

It has been considered as of so much importance that a proper number of young
people should be educated for certain professions, that sometimes the public,
and sometimes the piety of private founders, have established many pensions,
scholarships, exhibitions, bursaries, etc. for this purpose, which draw many
more people into those trades than could otherwise pretend to follow them. In
all Christian countries, I believe, the education of the greater part of
churchmen is paid for in this manner. Very few of them are educated altogether
at their own expense. The long, tedious, and expensive education, therefore, of
those who are, will not always procure them a suitable reward, the church being
crowded with people, who, in order to get employment, are willing to accept of
a much smaller recompence than what such an education would otherwise have
entitled them to; and in this manner the competition of the poor takes away the
reward of the rich. It would be indecent, no doubt, to compare either a curate
or a chaplain with a journeyman in any common trade. The pay of a curate or
chaplain, however, may very properly be considered as of the same nature with
the wages of a journeyman. They are all three paid for their work according to
the contract which they may happen to make with their respective superiors.
Till after the middle of the fourteenth century, five merks, containing about
as much silver as ten pounds of our present money, was in England the usual pay
of a curate or a stipendiary parish priest, as we find it regulated by the
decrees of several different national councils. At the same period, fourpence
a-day, containing the same quantity of silver as a shilling of our present
money, was declared to be the pay of a master mason; and threepence a-day,
equal to ninepence of our present money, that of a journeyman mason. {See the
Statute of Labourers, 25, Ed. III.} The wages of both these labourers,
therefore, supposing them to have been constantly employed, were much superior
to those of the curate. The wages of the master mason, supposing him to have
been without employment one-third of the year, would have fully equalled them.
By the 12th of Queen Anne, c. 12. it is declared, “That whereas, for want
of sufficient maintenance and encouragement to curates, the cures have, in
several places, been meanly supplied, the bishop is, therefore, empowered to
appoint, by writing under his hand and seal, a sufficient certain stipend or
allowance, not exceeding fifty, and not less than twenty pounds a-year”.
Forty pounds a-year is reckoned at present very good pay for a curate; and,
notwithstanding this act of parliament, there are many curacies under twenty
pounds a-year. There are journeymen shoemakers in London who earn forty pounds
a-year, and there is scarce an industrious workman of any kind in that
metropolis who does not earn more than twenty. This last sum, indeed, does not
exceed what is frequently earned by common labourers in many country parishes.
Whenever the law has attempted to regulate the wages of workmen, it has always
been rather to lower them than to raise them. But the law has, upon many
occasions, attempted to raise the wages of curates, and, for the dignity of the
church, to oblige the rectors of parishes to give them more than the wretched
maintenance which they themselves might be willing to accept of. And, in both
cases, the law seems to have been equally ineffectual, and has never either
been able to raise the wages of curates, or to sink those of labourers to the
degree that was intended; because it has never been able to hinder either the
one from being willing to accept of less than the legal allowance, on account
of the indigence of their situation and the multitude of their competitors, or
the other from receiving more, on account of the contrary competition of those
who expected to derive either profit or pleasure from employing them.

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

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

That unprosperous race of men, commonly called men of letters, are pretty much
in the situation which lawyers and physicians probably would be in, upon the
foregoing supposition. In every part of Europe, the greater part of them have
been educated for the church, but have been hindered by different reasons from
entering into holy orders. They have generally, therefore, been educated at the
public expense; and their numbers are everywhere so great, as commonly to
reduce the price of their labour to a very paltry recompence.

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

In ancient times, before any charities of this kind had been established for
the education of indigent people to the learned professions, the rewards of
eminent teachers appear to have been much more considerable. Isocrates, in what
is called his discourse against the sophists, reproaches the teachers of his
own times with inconsistency. “They make the most magnificent promises to
their scholars,” says he, “and undertake to teach them to be wise,
to be happy, and to be just; and, in return for so important a service, they
stipulate the paltry reward of four or five minae.” “They who teach
wisdom,” continues he, “ought certainly to be wise themselves; but
if any man were to sell such a bargain for such a price, he would be convicted
of the most evident folly.” He certainly does not mean here to exaggerate
the reward, and we may be assured that it was not less than he represents it.
Four minae were equal to thirteen pounds six shillings and eightpence; five
minae to sixteen pounds thirteen shillings and fourpence. Something not less
than the largest of those two sums, therefore, must at that time have been
usually paid to the most eminent teachers at Athens. Isocrates himself demanded
ten minae, or £ 33:6:8 from each scholar. When he taught at Athens, he is said
to have had a hundred scholars. I understand this to be the number whom he
taught at one time, or who attended what we would call one course of lectures;
a number which will not appear extraordinary from so great a city to so famous
a teacher, who taught, too, what was at that time the most fashionable of all
sciences, rhetoric. He must have made, therefore, by each course of lectures, a
thousand minae, or £ 3335:6:8. A thousand minae, accordingly, is said by
Plutarch, in another place, to have been his didactron, or usual price of
teaching. Many other eminent teachers in those times appear to have acquired
great fortunes. Georgias made a present to the temple of Delphi of his own
statue in solid gold. We must not, I presume, suppose that it was as large as
the life. His way of living, as well as that of Hippias and Protagoras, two
other eminent teachers of those times, is represented by Plato as splendid,
even to ostentation. Plato himself is said to have lived with a good deal of
magnificence. Aristotle, after having been tutor to Alexander, and most
munificently rewarded, as it is universally agreed, both by him and his father,
Philip, thought it worth while, notwithstanding, to return to Athens, in order
to resume the teaching of his school. Teachers of the sciences were probably in
those times less common than they came to be in an age or two afterwards, when
the competition had probably somewhat reduced both the price of their labour
and the admiration for their persons. The most eminent of them, however, appear
always to have enjoyed a degree of consideration much superior to any of the
like profession in the present times. The Athenians sent Carneades the
academic, and Diogenes the stoic, upon a solemn embassy to Rome; and though
their city had then declined from its former grandeur, it was still an
independent and considerable republic.

Carneades, too, was a Babylonian by birth; and as there never was a people more
jealous of admitting foreigners to public offices than the Athenians, their
consideration for him must have been very great.

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

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

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

It frequently happens, that while high wages are given to the workmen in one
manufacture, those in another are obliged to content themselves with bare
subsistence. The one is in an advancing state, and has therefore a continual
demand for new hands; the other is in a declining state, and the superabundance
of hands is continually increasing. Those two manufactures may sometimes be in
the same town, and sometimes in the same neighbourhood, without being able to
lend the least assistance to one another. The statute of apprenticeship may
oppose it in the one case, and both that and an exclusive corporation in the
other. In many different manufactures, however, the operations are so much
alike, that the workmen could easily change trades with one another, if those
absurd laws did not hinder them. The arts of weaving plain linen and plain
silk, for example, are almost entirely the same. That of weaving plain woollen
is somewhat different; but the difference is so insignificant, that either a
linen or a silk weaver might become a tolerable workman in a very few days. If
any of those three capital manufactures, therefore, were decaying, the workmen
might find a resource in one of the other two which was in a more prosperous
condition; and their wages would neither rise too high in the thriving, nor
sink too low in the decaying manufacture. The linen manufacture, indeed, is in
England, by a particular statute, open to every body; but as it is not much
cultivated through the greater part of the country, it can afford no general
resource to the work men of other decaying manufactures, who, wherever the
statute of apprenticeship takes place, have no other choice, but either to come
upon the parish, or to work as common labourers; for which, by their habits,
they are much worse qualified than for any sort of manufacture that bears any
resemblance to their own. They generally, therefore, chuse to come upon the
parish.

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

The obstruction which corporation laws give to the free circulation of labour
is common, I believe, to every part of Europe. That which is given to it by the
poor laws is, so far as I know, peculiar to England. It consists in the
difficulty which a poor man finds in obtaining a settlement, or even in being
allowed to exercise his industry in any parish but that to which he belongs. It
is the labour of artificers and manufacturers only of which the free
circulation is obstructed by corporation laws. The difficulty of obtaining
settlements obstructs even that of common labour. It may be worth while to give
some account of the rise, progress, and present state of this disorder, the
greatest, perhaps, of any in the police of England.

When, by the destruction of monasteries, the poor had been deprived of the
charity of those religious houses, after some other ineffectual attempts for
their relief, it was enacted, by the 43d of Elizabeth, c. 2. that every parish
should be bound to provide for its own poor, and that overseers of the poor
should be annually appointed, who, with the church-wardens, should raise, by a
parish rate, competent sums for this purpose.

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

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

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

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

This statute, therefore, rendered it almost impracticable for a poor man to
gain a new settlement in the old way, by forty days inhabitancy. But that it
might not appear to preclude altogether the common people of one parish from
ever establishing themselves with security in another, it appointed four other
ways by which a settlement might be gained without any notice delivered or
published. The first was, by being taxed to parish rates and paying them; the
second, by being elected into an annual parish office, and serving in it a
year; the third, by serving an apprenticeship in the parish; the fourth, by
being hired into service there for a year, and continuing in the same service
during the whole of it. Nobody can gain a settlement by either of the two first
ways, but by the public deed of the whole parish, who are too well aware of the
consequences to adopt any new-comer, who has nothing but his labour to support
him, either by taxing him to parish rates, or by electing him into a parish
office.

No married man can well gain any settlement in either of the two last ways. An
apprentice is scarce ever married; and it is expressly enacted, that no married
servant shall gain any settlement by being hired for a year. The principal
effect of introducing settlement by service, has been to put out in a great
measure the old fashion of hiring for a year; which before had been so
customary in England, that even at this day, if no particular term is agreed
upon, the law intends that every servant is hired for a year. But masters are
not always willing to give their servants a settlement by hiring them in this
manner; and servants are not always willing to be so hired, because, as every
last settlement discharges all the foregoing, they might thereby lose their
original settlement in the places of their nativity, the habitation of their
parents and relations.

No independent workman, it is evident, whether labourer or artificer, is likely
to gain any new settlement, either by apprenticeship or by service. When such a
person, therefore, carried his industry to a new parish, he was liable to be
removed, how healthy and industrious soever, at the caprice of any churchwarden
or overseer, unless he either rented a tenement of ten pounds a-year, a thing
impossible for one who has nothing but his labour to live by, or could give
such security for the discharge of the parish as two justices of the peace
should judge sufficient.

What security they shall require, indeed, is left altogether to their
discretion; but they cannot well require less than thirty pounds, it having
been enacted, that the purchase even of a freehold estate of less than thirty
pounds value, shall not gain any person a settlement, as not being sufficient
for the discharge of the parish. But this is a security which scarce any man
who lives by labour can give; and much greater security is frequently demanded.

In order to restore, in some measure, that free circulation of labour which
those different statutes had almost entirely taken away, the invention of
certificates was fallen upon. By the 8th and 9th of William III. it was enacted
that if any person should bring a certificate from the parish where he was last
legally settled, subscribed by the church-wardens and overseers of the poor,
and allowed by two justices of the peace, that every other parish should be
obliged to receive him; that he should not be removable merely upon account of
his being likely to become chargeable, but only upon his becoming actually
chargeable; and that then the parish which granted the certificate should be
obliged to pay the expense both of his maintenance and of his removal. And in
order to give the most perfect security to the parish where such certificated
man should come to reside, it was further enacted by the same statute, that he
should gain no settlement there by any means whatever, except either by renting
a tenement of ten pounds a-year, or by serving upon his own account in an
annual parish office for one whole year; and consequently neither by notice nor
by service, nor by apprenticeship, nor by paying parish rates. By the 12th of
Queen Anne, too, stat. 1, c.18, it was further enacted, that neither the
servants nor apprentices of such certificated man should gain any settlement in
the parish where he resided under such certificate.

How far this invention has restored that free circulation of labour, which the
preceding statutes had almost entirely taken away, we may learn from the
following very judicious observation of Doctor Burn. “It is
obvious,” says he, “that there are divers good reasons for
requiring certificates with persons coming to settle in any place; namely, that
persons residing under them can gain no settlement, neither by apprenticeship,
nor by service, nor by giving notice, nor by paying parish rates; that they can
settle neither apprentices nor servants; that if they become chargeable, it is
certainly known whither to remove them, and the parish shall be paid for the
removal, and for their maintenance in the mean time; and that, if they fall
sick, and cannot be removed, the parish which gave the certificate must
maintain them; none of all which can be without a certificate. Which reasons
will hold proportionably for parishes not granting certificates in ordinary
cases; for it is far more than an equal chance, but that they will have the
certificated persons again, and in a worse condition.” The moral of this
observation seems to be, that certificates ought always to be required by the
parish where any poor man comes to reside, and that they ought very seldom to
be granted by that which he purposes to leave. “There is somewhat of
hardship in this matter of certificates,” says the same very intelligent
author, in his History of the Poor Laws, “by putting it in the power of a
parish officer to imprison a man as it were for life, however inconvenient it
may be for him to continue at that place where he has had the misfortune to
acquire what is called a settlement, or whatever advantage he may propose
himself by living elsewhere.”

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

The very unequal price of labour which we frequently find in England, in places
at no great distance from one another, is probably owing to the obstruction
which the law of settlements gives to a poor man who would carry his industry
from one parish to another without a certificate. A single man, indeed who is
healthy and industrious, may sometimes reside by sufferance without one; but a
man with a wife and family who should attempt to do so, would, in most
parishes, be sure of being removed; and, if the single man should afterwards
marry, he would generally be removed likewise. The scarcity of hands in one
parish, therefore, cannot always be relieved by their superabundance in
another, as it is constantly in Scotland, and I believe, in all other countries
where there is no difficulty of settlement. In such countries, though wages may
sometimes rise a little in the neighbourhood of a great town, or wherever else
there is an extraordinary demand for labour, and sink gradually as the distance
from such places increases, till they fall back to the common rate of the
country; yet we never meet with those sudden and unaccountable differences in
the wages of neighbouring places which we sometimes find in England, where it
is often more difficult for a poor man to pass the artificial boundary of a
parish, than an arm of the sea, or a ridge of high mountains, natural
boundaries which sometimes separate very distinctly different rates of wages in
other countries.

To remove a man who has committed no misdemeanour, from the parish where he
chooses to reside, is an evident violation of natural liberty and justice. The
common people of England, however, so jealous of their liberty, but like the
common people of most other countries, never rightly understanding wherein it
consists, have now, for more than a century together, suffered themselves to be
exposed to this oppression without a remedy. Though men of reflection, too,
have sometimes complained of the law of settlements as a public grievance; yet
it has never been the object of any general popular clamour, such as that
against general warrants, an abusive practice undoubtedly, but such a one as
was not likely to occasion any general oppression. There is scarce a poor man
in England, of forty years of age, I will venture to say, who has not, in some
part of his life, felt himself most cruelly oppressed by this ill-contrived law
of settlements.

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

Particular acts of parliament, however, still attempt sometimes to regulate
wages in particular trades, and in particular places. Thus the 8th of George
III. prohibits, under heavy penalties, all master tailors in London, and five
miles round it, from giving, and their workmen from accepting, more than two
shillings and sevenpence halfpenny a-day, except in the case of a general
mourning. Whenever the legislature attempts to regulate the differences between
masters and their workmen, its counsellors are always the masters. When the
regulation, therefore, is in favour of the workmen, it is always just and
equitable; but it is sometimes otherwise when in favour of the masters. Thus
the law which obliges the masters in several different trades to pay their
workmen in money, and not in goods, is quite just and equitable. It imposes no
real hardship upon the masters. It only obliges them to pay that value in
money, which they pretended to pay, but did not always really pay, in goods.
This law is in favour of the workmen; but the 8th of George III. is in favour
of the masters. When masters combine together, in order to reduce the wages of
their workmen, they commonly enter into a private bond or agreement, not to
give more than a certain wage, under a certain penalty. Were the workmen to
enter into a contrary combination of the same kind, not to accept of a certain
wage, under a certain penalty, the law would punish them very severely; and, if
it dealt impartially, it would treat the masters in the same manner. But the
8th of George III. enforces by law that very regulation which masters sometimes
attempt to establish by such combinations. The complaint of the workmen, that
it puts the ablest and most industrious upon the same footing with an ordinary
workman, seems perfectly well founded.

In ancient times, too, it was usual to attempt to regulate the profits of
merchants and other dealers, by regulating the price of provisions and ether
goods. The assize of bread is, so far as I know, the only remnant of this
ancient usage. Where there is an exclusive corporation, it may, perhaps, be
proper to regulate the price of the first necessary of life; but, where there
is none, the competition will regulate it much better than any assize. The
method of fixing the assize of bread, established by the 31st of George II.
could not be put in practice in Scotland, on account of a defect in the law,
its execution depending upon the office of clerk of the market, which does not
exist there. This defect was not remedied till the third of George III. The
want of an assize occasioned no sensible inconveniency; and the establishment
of one in the few places where it has yet taken place has produced no sensible
advantage. In the greater part of the towns in Scotland, however, there is an
incorporation of bakers, who claim exclusive privileges, though they are not
very strictly guarded. The proportion between the different rates, both of
wages and profit, in the different employments of labour and stock, seems not
to be much affected, as has already been observed, by the riches or poverty,
the advancing, stationary, or declining state of the society. Such revolutions
in the public welfare, though they affect the general rates both of wages and
profit, must, in the end, affect them equally in all different employments. The
proportion between them, therefore, must remain the same, and cannot well be
altered, at least for any considerable time, by any such revolutions.

CHAPTER XI.
OF THE RENT OF LAND.

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

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

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

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

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

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

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

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

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

PART I.—Of the Produce of Land which always affords Rent.

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

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

The most desert moors in Norway and Scotland produce some sort of pasture for
cattle, of which the milk and the increase are always more than sufficient, not
only to maintain all the labour necessary for tending them, and to pay the
ordinary profit to the farmer or the owner of the herd or flock, but to afford
some small rent to the landlord. The rent increases in proportion to the
goodness of the pasture. The same extent of ground not only maintains a greater
number of cattle, but as they are brought within a smaller compass, less labour
becomes requisite to tend them, and to collect their produce. The landlord
gains both ways; by the increase of the produce, and by the diminution of the
labour which must be maintained out of it.

The rent of land not only varies with its fertility, whatever be its produce,
but with its situation, whatever be its fertility. Land in the neighbourhood of
a town gives a greater rent than land equally fertile in a distant part of the
country. Though it may cost no more labour to cultivate the one than the other,
it must always cost more to bring the produce of the distant land to market. A
greater quantity of labour, therefore, must be maintained out of it; and the
surplus, from which are drawn both the profit of the farmer and the rent of the
landlord, must be diminished. But in remote parts of the country, the rate of
profit, as has already been shewn, is generally higher than in the
neighbourhood of a large town. A smaller proportion of this diminished surplus,
therefore, must belong to the landlord.

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

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

But the relative values of those two different species of food, bread and
butcher’s meat, are very different in the different periods of
agriculture. In its rude beginnings, the unimproved wilds, which then occupy
the far greater part of the country, are all abandoned to cattle. There is more
butcher’s meat than bread; and bread, therefore, is the food for which
there is the greatest competition, and which consequently brings the greatest
price. At Buenos Ayres, we are told by Ulloa, four reals, one-and-twenty pence
halfpenny sterling, was, forty or fifty years ago, the ordinary price of an ox,
chosen from a herd of two or three hundred. He says nothing of the price of
bread, probably because he found nothing remarkable about it. An ox there, he
says, costs little more than the labour of catching him. But corn can nowhere
be raised without a great deal of labour; and in a country which lies upon the
river Plate, at that time the direct road from Europe to the silver mines of
Potosi, the money-price of labour could be very cheap. It is otherwise when
cultivation is extended over the greater part of the country. There is then
more bread than butcher’s meat. The competition changes its direction,
and the price of butcher’s meat becomes greater than the price of bread.

By the extension, besides, of cultivation, the unimproved wilds become
insufficient to supply the demand for butcher’s meat. A great part of the
cultivated lands must be employed in rearing and fattening cattle; of which the
price, therefore, must be sufficient to pay, not only the labour necessary for
tending them, but the rent which the landlord, and the profit which the farmer,
could have drawn from such land employed in tillage. The cattle bred upon the
most uncultivated moors, when brought to the same market, are, in proportion to
their weight or goodness, sold at the same price as those which are reared upon
the most improved land. The proprietors of those moors profit by it, and raise
the rent of their land in proportion to the price of their cattle. It is not
more than a century ago, that in many parts of the Highlands of Scotland,
butcher’s meat was as cheap or cheaper than even bread made of oatmeal.
The Union opened the market of England to the Highland cattle. Their ordinary
price, at present, is about three times greater than at the beginning of the
century, and the rents of many Highland estates have been tripled and
quadrupled in the same time. In almost every part of Great Britain, a pound of
the best butcher’s meat is, in the present times, generally worth more
than two pounds of the best white bread; and in plentiful years it is sometimes
worth three or four pounds.

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

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

Thus, in the neighbourhood of a great town, the demand for milk, and for forage
to horses, frequently contribute, together with the high price of
butcher’s meat, to raise the value of grass above what may be called its
natural proportion to that of corn. This local advantage, it is evident, cannot
be communicated to the lands at a distance.

Particular circumstances have sometimes rendered some countries so populous,
that the whole territory, like the lands in the neighbourhood of a great town,
has not been sufficient to produce both the grass and the corn necessary for
the subsistence of their inhabitants. Their lands, therefore, have been
principally employed in the production of grass, the more bulky commodity, and
which cannot be so easily brought from a great distance; and corn, the food of
the great body of the people, has been chiefly imported from foreign countries.
Holland is at present in this situation; and a considerable part of ancient
Italy seems to have been so during the prosperity of the Romans. To feed well,
old Cato said, as we are told by Cicero, was the first and most profitable
thing in the management of a private estate; to feed tolerably well, the
second; and to feed ill, the third. To plough, he ranked only in the fourth
place of profit and advantage. Tillage, indeed, in that part of ancient Italy
which lay in the neighbour hood of Rome, must have been very much discouraged
by the distributions of corn which were frequently made to the people, either
gratuitously, or at a very low price. This corn was brought from the conquered
provinces, of which several, instead of taxes, were obliged to furnish a tenth
part of their produce at a stated price, about sixpence a-peck, to the
republic. The low price at which this corn was distributed to the people, must
necessarily have sunk the price of what could be brought to the Roman market
from Latium, or the ancient territory of Rome, and must have discouraged its
cultivation in that country.

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

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

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

In the Appendix to the life of Prince Henry, Doctor Birch has given us an
account of the prices of butcher’s meat as commonly paid by that prince.
It is there said, that the four quarters of an ox, weighing six hundred pounds,
usually cost him nine pounds ten shillings, or thereabouts; that is thirty-one
shillings and eight-pence per hundred pounds weight. Prince Henry died on the
6th of November 1612, in the nineteenth year of his age.

In March 1764, there was a parliamentary inquiry into the causes of the high
price of provisions at that time. It was then, among other proof to the same
purpose, given in evidence by a Virginia merchant, that in March 1763, he had
victualled his ships for twentyfour or twenty-five shillings the hundred weight
of beef, which he considered as the ordinary price; whereas, in that dear year,
he had paid twenty-seven shillings for the same weight and sort. This high
price in 1764 is, however, four shillings and eight-pence cheaper than the
ordinary price paid by Prince Henry; and it is the best beef only, it must be
observed, which is fit to be salted for those distant voyages.

The price paid by Prince Henry amounts to 3d. 4/5ths per pound weight of the
whole carcase, coarse and choice pieces taken together; and at that rate the
choice pieces could not have been sold by retail for less than 4½d. or 5d. the
pound.

In the parliamentary inquiry in 1764, the witnesses stated the price of the
choice pieces of the best beef to be to the consumer 4d. and 4½d. the pound;
and the coarse pieces in general to be from seven farthings to 2½d. and 2¾d.;
and this, they said, was in general one halfpenny dearer than the same sort of
pieces had usually been sold in the month of March. But even this high price is
still a good deal cheaper than what we can well suppose the ordinary retail
price to have been in the time of Prince Henry.

During the first twelve years of the last century, the average price of the
best wheat at the Windsor market was £ 1:18:3½d. the quarter of nine Winchester
bushels.

But in the twelve years preceding 1764 including that year, the average price
of the same measure of the best wheat at the same market was £ 2:1:9½d.

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

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

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

In a hop garden, a fruit garden, a kitchen garden, both the rent of the
landlord, and the profit of the farmer, are generally greater than in acorn or
grass field. But to bring the ground into this condition requires more expense.
Hence a greater rent becomes due to the landlord. It requires, too, a more
attentive and skilful management. Hence a greater profit becomes due to the
farmer. The crop, too, at least in the hop and fruit garden, is more
precarious. Its price, therefore, besides compensating all occasional losses,
must afford something like the profit of insurance. The circumstances of
gardeners, generally mean, and always moderate, may satisfy us that their great
ingenuity is not commonly over-recompensed. Their delightful art is practised
by so many rich people for amusement, that little advantage is to be made by
those who practise it for profit; because the persons who should naturally be
their best customers, supply themselves with all their most precious
productions.

The advantage which the landlord derives from such improvements, seems at no
time to have been greater than what was sufficient to compensate the original
expense of making them. In the ancient husbandry, after the vineyard, a
well-watered kitchen garden seems to have been the part of the farm which was
supposed to yield the most valuable produce. But Democritus, who wrote upon
husbandry about two thousand years ago, and who was regarded by the ancients as
one of the fathers of the art, thought they did not act wisely who inclosed a
kitchen garden. The profit, he said, would not compensate the expense of a
stone-wall: and bricks (he meant, I suppose, bricks baked in the sun) mouldered
with the rain and the winter-storm, and required continual repairs. Columella,
who reports this judgment of Democritus, does not controvert it, but proposes a
very frugal method of inclosing with a hedge of brambles and briars, which he
says he had found by experience to be both a lasting and an impenetrable fence;
but which, it seems, was not commonly known in the time of Democritus.
Palladius adopts the opinion of Columella, which had before been recommended by
Varro. In the judgment of those ancient improvers, the produce of a kitchen
garden had, it seems, been little more than sufficient to pay the extraordinary
culture and the expense of watering; for in countries so near the sun, it was
thought proper, in those times as in the present, to have the command of a
stream of water, which could be conducted to every bed in the garden. Through
the greater part of Europe, a kitchen garden is not at present supposed to
deserve a better inclosure than that recommended by Columella. In Great
Britain, and some other northern countries, the finer fruits cannot be brought
to perfection but by the assistance of a wall. Their price, therefore, in such
countries, must be sufficient to pay the expense of building and maintaining
what they cannot be had without. The fruit-wall frequently surrounds the
kitchen garden, which thus enjoys the benefit of an inclosure which its own
produce could seldom pay for.

That the vineyard, when properly planted and brought to perfection, was the
most valuable part of the farm, seems to have been an undoubted maxim in the
ancient agriculture, as it is in the modern, through all the wine countries.
But whether it was advantageous to plant a new vineyard, was a matter of
dispute among the ancient Italian husbandmen, as we learn from Columella. He
decides, like a true lover of all curious cultivation, in favour of the
vineyard; and endeavours to shew, by a comparison of the profit and expense,
that it was a most advantageous improvement. Such comparisons, however, between
the profit and expense of new projects are commonly very fallacious; and in
nothing more so than in agriculture. Had the gain actually made by such
plantations been commonly as great as he imagined it might have been, there
could have been no dispute about it. The same point is frequently at this day a
matter of controversy in the wine countries. Their writers on agriculture,
indeed, the lovers and promoters of high cultivation, seem generally disposed
to decide with Columella in favour of the vineyard. In France, the anxiety of
the proprietors of the old vineyards to prevent the planting of any new ones,
seems to favour their opinion, and to indicate a consciousness in those who
must have the experience, that this species of cultivation is at present in
that country more profitable than any other. It seems, at the same time,
however, to indicate another opinion, that this superior profit can last no
longer than the laws which at present restrain the free cultivation of the
vine. In 1731, they obtained an order of council, prohibiting both the planting
of new vineyards, and the renewal of these old ones, of which the cultivation
had been interrupted for two years, without a particular permission from the
king, to be granted only in consequence of an information from the intendant of
the province, certifying that he had examined the land, and that it was
incapable of any other culture. The pretence of this order was the scarcity of
corn and pasture, and the superabundance of wine. But had this superabundance
been real, it would, without any order of council, have effectually prevented
the plantation of new vineyards, by reducing the profits of this species of
cultivation below their natural proportion to those of corn and pasture. With
regard to the supposed scarcity of corn occasioned by the multiplication of
vineyards, corn is nowhere in France more carefully cultivated than in the wine
provinces, where the land is fit for producing it: as in Burgundy, Guienne, and
the Upper Languedoc. The numerous hands employed in the one species of
cultivation necessarily encourage the other, by affording a ready market for
its produce. To diminish the number of those who are capable of paying it, is
surely a most unpromising expedient for encouraging the cultivation of corn. It
is like the policy which would promote agriculture, by discouraging
manufactures.

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

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

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

The vine is more affected by the difference of soils than any other fruit-tree.
From some it derives a flavour which no culture or management can equal, it is
supposed, upon any other. This flavour, real or imaginary, is sometimes
peculiar to the produce of a few vineyards; sometimes it extends through the
greater part of a small district, and sometimes through a considerable part of
a large province. The whole quantity of such wines that is brought to market
falls short of the effectual demand, or the demand of those who would be
willing to pay the whole rent, profit, and wages, necessary for preparing and
bringing them thither, according to the ordinary rate, or according to the rate
at which they are paid in common vineyards. The whole quantity, therefore, can
be disposed of to those who are willing to pay more, which necessarily raises
their price above that of common wine. The difference is greater or less,
according as the fashionableness and scarcity of the wine render the
competition of the buyers more or less eager. Whatever it be, the greater part
of it goes to the rent of the landlord. For though such vineyards are in
general more carefully cultivated than most others, the high price of the wine
seems to be, not so much the effect, as the cause of this careful cultivation.
In so valuable a produce, the loss occasioned by negligence is so great, as to
force even the most careless to attention. A small part of this high price,
therefore, is sufficient to pay the wages of the extraordinary labour bestowed
upon their cultivation, and the profits of the extraordinary stock which puts
that labour into motion.

The sugar colonies possessed by the European nations in the West Indies may be
compared to those precious vineyards. Their whole produce falls short of the
effectual demand of Europe, and can be disposed of to those who are willing to
give more than what is sufficient to pay the whole rent, profit, and wages,
necessary for preparing and bringing it to market, according to the rate at
which they are commonly paid by any other produce. In Cochin China, the finest
white sugar generally sells for three piastres the quintal, about thirteen
shillings and sixpence of our money, as we are told by Mr Poivre {Voyages
d’un Philosophe.}, a very careful observer of the agriculture of that
country. What is there called the quintal, weighs from a hundred and fifty to
two hundred Paris pounds, or a hundred and seventy-five Paris pounds at a
medium, which reduces the price of the hundred weight English to about eight
shillings sterling; not a fourth part of what is commonly paid for the brown or
muscovada sugars imported from our colonies, and not a sixth part of what is
paid for the finest white sugar. The greater part of the cultivated lands in
Cochin China are employed in producing corn and rice, the food of the great
body of the people. The respective prices of corn, rice, and sugar, are there
probably in the natural proportion, or in that which naturally takes place in
the different crops of the greater part of cultivated land, and which
recompenses the landlord and farmer, as nearly as can be computed, according to
what is usually the original expense of improvement, and the annual expense of
cultivation. But in our sugar colonies, the price of sugar bears no such
proportion to that of the produce of a rice or corn field either in Europe or
America. It is commonly said that a sugar planter expects that the rum and the
molasses should defray the whole expense of his cultivation, and that his sugar
should be all clear profit. If this be true, for I pretend not to affirm it, it
is as if a corn farmer expected to defray the expense of his cultivation with
the chaff and the straw, and that the grain should be all clear profit. We see
frequently societies of merchants in London, and other trading towns, purchase
waste lands in our sugar colonies, which they expect to improve and cultivate
with profit, by means of factors and agents, notwithstanding the great distance
and the uncertain returns, from the defective administration of justice in
those countries. Nobody will attempt to improve and cultivate in the same
manner the most fertile lands of Scotland, Ireland, or the corn provinces of
North America, though, from the more exact administration of justice in these
countries, more regular returns might be expected.

In Virginia and Maryland, the cultivation of tobacco is preferred, as most
profitable, to that of corn. Tobacco might be cultivated with advantage through
the greater part of Europe; but, in almost every part of Europe, it has become
a principal subject of taxation; and to collect a tax from every different farm
in the country where this plant might happen to be cultivated, would be more
difficult, it has been supposed, than to levy one upon its importation at the
custom-house. The cultivation of tobacco has, upon this account, been most
absurdly prohibited through the greater part of Europe, which necessarily gives
a sort of monopoly to the countries where it is allowed; and as Virginia and
Maryland produce the greatest quantity of it, they share largely, though with
some competitors, in the advantage of this monopoly. The cultivation of
tobacco, however, seems not to be so advantageous as that of sugar. I have
never even heard of any tobacco plantation that was improved and cultivated by
the capital of merchants who resided in Great Britain; and our tobacco colonies
send us home no such wealthy planters as we see frequently arrive from our
sugar islands. Though, from the preference given in those colonies to the
cultivation of tobacco above that of corn, it would appear that the effectual
demand of Europe for tobacco is not completely supplied, it probably is more
nearly so than that for sugar; and though the present price of tobacco is
probably more than sufficient to pay the whole rent, wages, and profit,
necessary for preparing and bringing it to market, according to the rate at
which they are commonly paid in corn land, it must not be so much more as the
present price of sugar. Our tobacco planters, accordingly, have shewn the same
fear of the superabundance of tobacco, which the proprietors of the old
vineyards in France have of the superabundance of wine. By act of assembly,
they have restrained its cultivation to six thousand plants, supposed to yield
a thousand weight of tobacco, for every negro between sixteen and sixty years
of age. Such a negro, over and above this quantity of tobacco, can manage, they
reckon, four acres of Indian corn. To prevent the market from being
overstocked, too, they have sometimes, in plentiful years, we are told by Dr
Douglas {Douglas’s Summary, vol. ii. p. 379, 373.} (I suspect he has been
ill informed), burnt a certain quantity of tobacco for every negro, in the same
manner as the Dutch are said to do of spices. If such violent methods are
necessary to keep up the present price of tobacco, the superior advantage of
its culture over that of corn, if it still has any, will not probably be of
long continuance.

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

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

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

A rice field produces a much greater quantity of food than the most fertile
corn field. Two crops in the year, from thirty to sixty bushels each, are said
to be the ordinary produce of an acre. Though its cultivation, therefore,
requires more labour, a much greater surplus remains after maintaining all that
labour. In those rice countries, therefore, where rice is the common and
favourite vegetable food of the people, and where the cultivators are chiefly
maintained with it, a greater share of this greater surplus should belong to
the landlord than in corn countries. In Carolina, where the planters, as in
other British colonies, are generally both farmers and landlords, and where
rent, consequently, is confounded with profit, the cultivation of rice is found
to be more profitable than that of corn, though their fields produce only one
crop in the year, and though, from the prevalence of the customs of Europe,
rice is not there the common and favourite vegetable food of the people.

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

The food produced by a field of potatoes is not inferior in quantity to that
produced by a field of rice, and much superior to what is produced by a field
of wheat. Twelve thousand weight of potatoes from an acre of land is not a
greater produce than two thousand weight of wheat. The food or solid
nourishment, indeed, which can be drawn from each of those two plants, is not
altogether in proportion to their weight, on account of the watery nature of
potatoes. Allowing, however, half the weight of this root to go to water, a
very large allowance, such an acre of potatoes will still produce six thousand
weight of solid nourishment, three times the quantity produced by the acre of
wheat. An acre of potatoes is cultivated with less expense than an acre of
wheat; the fallow, which generally precedes the sowing of wheat, more than
compensating the hoeing and other extraordinary culture which is always given
to potatoes. Should this root ever become in any part of Europe, like rice in
some rice countries, the common and favourite vegetable food of the people, so
as to occupy the same proportion of the lands in tillage, which wheat and other
sorts of grain for human food do at present, the same quantity of cultivated
land would maintain a much greater number of people; and the labourers being
generally fed with potatoes, a greater surplus would remain after replacing all
the stock, and maintaining all the labour employed in cultivation. A greater
share of this surplus, too, would belong to the landlord. Population would
increase, and rents would rise much beyond what they are at present.

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

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

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

PART II.—Of the Produce of Land, which sometimes does, and sometimes
does not, afford Rent.

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

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

Land, in its original rude state, can afford the materials of clothing and
lodging to a much greater number of people than it can feed. In its improved
state, it can sometimes feed a greater number of people than it can supply with
those materials; at least in the way in which they require them, and are
willing to pay for them. In the one state, therefore, there is always a
superabundance of these materials, which are frequently, upon that account, of
little or no value. In the other, there is often a scarcity, which necessarily
augments their value. In the one state, a great part of them is thrown away as
useless and the price of what is used is considered as equal only to the labour
and expense of fitting it for use, and can, therefore, afford no rent to the
landlord. In the other, they are all made use of, and there is frequently a
demand for more than can be had. Somebody is always willing to give more for
every part of them, than what is sufficient to pay the expense of bringing them
to market. Their price, therefore, can always afford some rent to the landlord.

The skins of the larger animals were the original materials of clothing. Among
nations of hunters and shepherds, therefore, whose food consists chiefly in the
flesh of those animals, everyman, by providing himself with food, provides
himself with the materials of more clothing than he can wear. If there was no
foreign commerce, the greater part of them would be thrown away as things of no
value. This was probably the case among the hunting nations of North America,
before their country was discovered by the Europeans, with whom they now
exchange their surplus peltry, for blankets, fire-arms, and brandy, which gives
it some value. In the present commercial state of the known world, the most
barbarous nations, I believe, among whom land property is established, have
some foreign commerce of this kind, and find among their wealthier neighbours
such a demand for all the materials of clothing, which their land produces, and
which can neither be wrought up nor consumed at home, as raises their price
above what it costs to send them to those wealthier neighbours. It affords,
therefore, some rent to the landlord. When the greater part of the Highland
cattle were consumed on their own hills, the exportation of their hides made
the most considerable article of the commerce of that country, and what they
were exchanged for afforded some addition to the rent of the Highland estates.
The wool of England, which in old times, could neither be consumed nor wrought
up at home, found a market in the then wealthier and more industrious country
of Flanders, and its price afforded something to the rent of the land which
produced it. In countries not better cultivated than England was then, or than
the Highlands of Scotland are now, and which had no foreign commerce, the
materials of clothing would evidently be so superabundant, that a great part of
them would be thrown away as useless, and no part could afford any rent to the
landlord.

The materials of lodging cannot always be transported to so great a distance as
those of clothing, and do not so readily become an object of foreign commerce.
When they are superabundant in the country which produces them, it frequently
happens, even in the present commercial state of the world, that they are of no
value to the landlord. A good stone quarry in the neighbourhood of London would
afford a considerable rent. In many parts of Scotland and Wales it affords
none. Barren timber for building is of great value in a populous and
well-cultivated country, and the land which produces it affords a considerable
rent. But in many parts of North America, the landlord would be much obliged to
any body who would carry away the greater part of his large trees. In some
parts of the Highlands of Scotland, the bark is the only part of the wood
which, for want of roads and water-carriage, can be sent to market; the timber
is left to rot upon the ground. When the materials of lodging are so
superabundant, the part made use of is worth only the labour and expense of
fitting it for that use. It affords no rent to the landlord, who generally
grants the use of it to whoever takes the trouble of asking it. The demand of
wealthier nations, however, sometimes enables him to get a rent for it. The
paving of the streets of London has enabled the owners of some barren rocks on
the coast of Scotland to draw a rent from what never afforded any before. The
woods of Norway, and of the coasts of the Baltic, find a market in many parts
of Great Britain, which they could not find at home, and thereby afford some
rent to their proprietors.

Countries are populous, not in proportion to the number of people whom their
produce can clothe and lodge, but in proportion to that of those whom it can
feed. When food is provided, it is easy to find the necessary clothing and
lodging. But though these are at hand, it may often be difficult to find food.
In some parts of the British dominions, what is called a house may be built by
one day’s labour of one man. The simplest species of clothing, the skins
of animals, require somewhat more labour to dress and prepare them for use.
They do not, however, require a great deal. Among savage or barbarous nations,
a hundredth, or little more than a hundredth part of the labour of the whole
year, will be sufficient to provide them with such clothing and lodging as
satisfy the greater part of the people. All the other ninety-nine parts are
frequently no more than enough to provide them with food.

But when, by the improvement and cultivation of land, the labour of one family
can provide food for two, the labour of half the society becomes sufficient to
provide food for the whole. The other half, therefore, or at least the greater
part of them, can be employed in providing other things, or in satisfying the
other wants and fancies of mankind. Clothing and lodging, household furniture,
and what is called equipage, are the principal objects of the greater part of
those wants and fancies. The rich man consumes no more food than his poor
neighbour. In quality it may be very different, and to select and prepare it
may require more labour and art; but in quantity it is very nearly the same.
But compare the spacious palace and great wardrobe of the one, with the hovel
and the few rags of the other, and you will be sensible that the difference
between their clothing, lodging, and household furniture, is almost as great in
quantity as it is in quality. The desire of food is limited in every man by the
narrow capacity of the human stomach; but the desire of the conveniencies and
ornaments of building, dress, equipage, and household furniture, seems to have
no limit or certain boundary. Those, therefore, who have the command of more
food than they themselves can consume, are always willing to exchange the
surplus, or, what is the same thing, the price of it, for gratifications of
this other kind. What is over and above satisfying the limited desire, is given
for the amusement of those desires which cannot be satisfied, but seem to be
altogether endless. The poor, in order to obtain food, exert themselves to
gratify those fancies of the rich; and to obtain it more certainly, they vie
with one another in the cheapness and perfection of their work. The number of
workmen increases with the increasing quantity of food, or with the growing
improvement and cultivation of the lands; and as the nature of their business
admits of the utmost subdivisions of labour, the quantity of materials which
they can work up, increases in a much greater proportion than their numbers.
Hence arises a demand for every sort of material which human invention can
employ, either usefully or ornamentally, in building, dress, equipage, or
household furniture; for the fossils and minerals contained in the bowels of
the earth, the precious metals, and the precious stones.

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

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

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

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

Some coal mines, advantageously situated, cannot be wrought on account of their
barrenness. The produce does not pay the expense. They can afford neither
profit nor rent.

There are some, of which the produce is barely sufficient to pay the labour,
and replace, together with its ordinary profits, the stock employed in working
them. They afford some profit to the undertaker of the work, but no rent to the
landlord. They can be wrought advantageously by nobody but the landlord, who,
being himself the undertaker of the work, gets the ordinary profit of the
capital which he employs in it. Many coal mines in Scotland are wrought in this
manner, and can be wrought in no other. The landlord will allow nobody else to
work them without paying some rent, and nobody can afford to pay any.

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

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

The price of wood, again, varies with the state of agriculture, nearly in the
same manner, and exactly for the same reason, as the price of cattle. In its
rude beginnings, the greater part of every country is covered with wood, which
is then a mere incumbrance, of no value to the landlord, who would gladly give
it to any body for the cutting. As agriculture advances, the woods are partly
cleared by the progress of tillage, and partly go to decay in consequence of
the increased number of cattle. These, though they do not increase in the same
proportion as corn, which is altogether the acquisition of human industry, yet
multiply under the care and protection of men, who store up in the season of
plenty what may maintain them in that of scarcity; who, through the whole year,
furnish them with a greater quantity of food than uncultivated nature provides
for them; and who, by destroying and extirpating their enemies, secure them in
the free enjoyment of all that she provides. Numerous herds of cattle, when
allowed to wander through the woods, though they do not destroy the old trees,
hinder any young ones from coming up; so that, in the course of a century or
two, the whole forest goes to ruin. The scarcity of wood then raises its price.
It affords a good rent; and the landlord sometimes finds that he can scarce
employ his best lands more advantageously than in growing barren timber, of
which the greatness of the profit often compensates the lateness of the
returns. This seems, in the present times, to be nearly the state of things in
several parts of Great Britain, where the profit of planting is found to be
equal to that of either corn or pasture. The advantage which the landlord
derives from planting can nowhere exceed, at least for any considerable time,
the rent which these could afford him; and in an inland country, which is
highly cultivated, it will frequently not fall much short of this rent. Upon
the sea-coast of a well-improved country, indeed, if coals can conveniently be
had for fuel, it may sometimes be cheaper to bring barren timber for building
from less cultivated foreign countries than to raise it at home. In the new
town of Edinburgh, built within these few years, there is not, perhaps, a
single stick of Scotch timber.

Whatever may be the price of wood, if that of coals is such that the expense of
a coal fire is nearly equal to that of a wood one we may be assured, that at
that place, and in these circumstances, the price of coals is as high as it can
be. It seems to be so in some of the inland parts of England, particularly in
Oxfordshire, where it is usual, even in the fires of the common people, to mix
coals and wood together, and where the difference in the expense of those two
sorts of fuel cannot, therefore, be very great. Coals, in the coal countries,
are everywhere much below this highest price. If they were not, they could not
bear the expense of a distant carriage, either by land or by water. A small
quantity only could be sold; and the coal masters and the coal proprietors find
it more for their interest to sell a great quantity at a price somewhat above
the lowest, than a small quantity at the highest. The most fertile coal mine,
too, regulates the price of coals at all the other mines in its neighbourhood.
Both the proprietor and the undertaker of the work find, the one that he can
get a greater rent, the other that he can get a greater profit, by somewhat
underselling all their neighbours. Their neighbours are soon obliged to sell at
the same price, though they cannot so well afford it, and though it always
diminishes, and sometimes takes away altogether, both their rent and their
profit. Some works are abandoned altogether; others can afford no rent, and can
be wrought only by the proprietor.

The lowest price at which coals can be sold for any considerable time, is, like
that of all other commodities, the price which is barely sufficient to replace,
together with its ordinary profits, the stock which must be employed in
bringing them to market. At a coal mine for which the landlord can get no rent,
but, which he must either work himself or let it alone altogether, the price of
coals must generally be nearly about this price.

Rent, even where coals afford one, has generally a smaller share in their price
than in that of most other parts of the rude produce of land. The rent of an
estate above ground, commonly amounts to what is supposed to be a third of the
gross produce; and it is generally a rent certain and independent of the
occasional variations in the crop. In coal mines, a fifth of the gross produce
is a very great rent, a tenth the common rent; and it is seldom a rent certain,
but depends upon the occasional variations in the produce. These are so great,
that in a country where thirty years purchase is considered as a moderate price
for the property of a landed estate, ten years purchase is regarded as a good
price for that of a coal mine.

The value of a coal mine to the proprietor, frequently depends as much upon its
situation as upon its fertility. That of a metallic mine depends more upon its
fertility, and less upon its situation. The coarse, and still more the precious
metals, when separated from the ore, are so valuable, that they can generally
bear the expense of a very long land, and of the most distant sea carriage.
Their market is not confined to the countries in the neighbourhood of the mine,
but extends to the whole world. The copper of Japan makes an article of
commerce in Europe; the iron of Spain in that of Chili and Peru. The silver of
Peru finds its way, not only to Europe, but from Europe to China.

The price of coals in Westmoreland or Shropshire can have little effect on
their price at Newcastle; and their price in the Lionnois can have none at all.
The productions of such distant coal mines can never be brought into
competition with one another. But the productions of the most distant metallic
mines frequently may, and in fact commonly are.

The price, therefore, of the coarse, and still more that of the precious
metals, at the most fertile mines in the world, must necessarily more or less
affect their price at every other in it. The price of copper in Japan must have
some influence upon its price at the copper mines in Europe. The price of
silver in Peru, or the quantity either of labour or of other goods which it
will purchase there, must have some influence on its price, not only at the
silver mines of Europe, but at those of China. After the discovery of the mines
of Peru, the silver mines of Europe were, the greater part of them, abandoned.
The value of silver was so much reduced, that their produce could no longer pay
the expense of working them, or replace, with a profit, the food, clothes,
lodging, and other necessaries which were consumed in that operation. This was
the case, too, with the mines of Cuba and St. Domingo, and even with the
ancient mines of Peru, after the discovery of those of Potosi. The price of
every metal, at every mine, therefore, being regulated in some measure by its
price at the most fertile mine in the world that is actually wrought, it can,
at the greater part of mines, do very little more than pay the expense of
working, and can seldom afford a very high rent to the landlord. Rent
accordingly, seems at the greater part of mines to have but a small share in
the price of the coarse, and a still smaller in that of the precious metals.
Labour and profit make up the greater part of both.

A sixth part of the gross produce may be reckoned the average rent of the tin
mines of Cornwall, the most fertile that are known in the world, as we are told
by the Rev. Mr. Borlace, vice-warden of the stannaries. Some, he says, afford
more, and some do not afford so much. A sixth part of the gross produce is the
rent, too, of several very fertile lead mines in Scotland.

In the silver mines of Peru, we are told by Frezier and Ulloa, the proprietor
frequently exacts no other acknowledgment from the undertaker of the mine, but
that he will grind the ore at his mill, paying him the ordinary multure or
price of grinding. Till 1736, indeed, the tax of the king of Spain amounted to
one fifth of the standard silver, which till then might be considered as the
real rent of the greater part of the silver mines of Peru, the richest which
have been known in the world. If there had been no tax, this fifth would
naturally have belonged to the landlord, and many mines might have been wrought
which could not then be wrought, because they could not afford this tax. The
tax of the duke of Cornwall upon tin is supposed to amount to more than five
per cent. or one twentieth part of the value; and whatever may be his
proportion, it would naturally, too, belong to the proprietor of the mine, if
tin was duty free. But if you add one twentieth to one sixth, you will find
that the whole average rent of the tin mines of Cornwall, was to the whole
average rent of the silver mines of Peru, as thirteen to twelve. But the silver
mines of Peru are not now able to pay even this low rent; and the tax upon
silver was, in 1736, reduced from one fifth to one tenth. Even this tax upon
silver, too, gives more temptation to smuggling than the tax of one twentieth
upon tin; and smuggling must be much easier in the precious than in the bulky
commodity. The tax of the king of Spain, accordingly, is said to be very ill
paid, and that of the duke of Cornwall very well. Rent, therefore, it is
probable, makes a greater part of the price of tin at the most fertile tin
mines than it does of silver at the most fertile silver mines in the world.
After replacing the stock employed in working those different mines, together
with its ordinary profits, the residue which remains to the proprietor is
greater, it seems, in the coarse, than in the precious metal.

Neither are the profits of the undertakers of silver mines commonly very great
in Peru. The same most respectable and well-informed authors acquaint us, that
when any person undertakes to work a new mine in Peru, he is universally looked
upon as a man destined to bankruptcy and ruin, and is upon that account shunned
and avoided by every body. Mining, it seems, is considered there in the same
light as here, as a lottery, in which the prizes do not compensate the blanks,
though the greatness of some tempts many adventurers to throw away their
fortunes in such unprosperous projects.

As the sovereign, however, derives a considerable part of his revenue from the
produce of silver mines, the law in Peru gives every possible encouragement to
the discovery and working of new ones. Whoever discovers a new mine, is
entitled to measure off two hundred and forty-six feet in length, according to
what he supposes to be the direction of the vein, and half as much in breadth.
He becomes proprietor of this portion of the mine, and can work it without
paving any acknowledgment to the landlord. The interest of the duke of Cornwall
has given occasion to a regulation nearly of the same kind in that ancient
dutchy. In waste and uninclosed lands, any person who discovers a tin mine may
mark out its limits to a certain extent, which is called bounding a mine. The
bounder becomes the real proprietor of the mine, and may either work it
himself, or give it in lease to another, without the consent of the owner of
the land, to whom, however, a very small acknowledgment must be paid upon
working it. In both regulations, the sacred rights of private property are
sacrificed to the supposed interests of public revenue.

The same encouragement is given in Peru to the discovery and working of new
gold mines; and in gold the king’s tax amounts only to a twentieth part
of the standard rental. It was once a fifth, and afterwards a tenth, as in
silver; but it was found that the work could not bear even the lowest of these
two taxes. If it is rare, however, say the same authors, Frezier and Ulloa, to
find a person who has made his fortune by a silver, it is still much rarer to
find one who has done so by a gold mine. This twentieth part seems to be the
whole rent which is paid by the greater part of the gold mines of Chili and
Peru. Gold, too, is much more liable to be smuggled than even silver; not only
on account of the superior value of the metal in proportion to its bulk, but on
account of the peculiar way in which nature produces it. Silver is very seldom
found virgin, but, like most other metals, is generally mineralized with some
other body, from which it is impossible to separate it in such quantities as
will pay for the expense, but by a very laborious and tedious operation, which
cannot well be carried on but in work-houses erected for the purpose, and,
therefore, exposed to the inspection of the king’s officers. Gold, on the
contrary, is almost always found virgin. It is sometimes found in pieces of
some bulk; and, even when mixed, in small and almost insensible particles, with
sand, earth, and other extraneous bodies, it can be separated from them by a
very short and simple operation, which can be carried on in any private house
by any body who is possessed of a small quantity of mercury. If the
king’s tax, therefore, is but ill paid upon silver, it is likely to be
much worse paid upon gold; and rent must make a much smaller part of the price
of gold than that of silver.

The lowest price at which the precious metals can be sold, or the smallest
quantity of other goods for which they can be exchanged, during any
considerable time, is regulated by the same principles which fix the lowest
ordinary price of all other goods. The stock which must commonly be employed,
the food, clothes, and lodging, which must commonly be consumed in bringing
them from the mine to the market, determine it. It must at least be sufficient
to replace that stock, with the ordinary profits.

Their highest price, however, seems not to be necessarily determined by any
thing but the actual scarcity or plenty of these metals themselves. It is not
determined by that of any other commodity, in the same manner as the price of
coals is by that of wood, beyond which no scarcity can ever raise it. Increase
the scarcity of gold to a certain degree, and the smallest bit of it may become
more precious than a diamond, and exchange for a greater quantity of other
goods.

The demand for those metals arises partly from their utility, and partly from
their beauty. If you except iron, they are more useful than, perhaps, any other
metal. As they are less liable to rust and impurity, they can more easily be
kept clean; and the utensils, either of the table or the kitchen, are often,
upon that account, more agreeable when made of them. A silver boiler is more
cleanly than a lead, copper, or tin one; and the same quality would render a
gold boiler still better than a silver one. Their principal merit, however,
arises from their beauty, which renders them peculiarly fit for the ornaments
of dress and furniture. No paint or dye can give so splendid a colour as
gilding. The merit of their beauty is greatly enhanced by their scarcity. With
the greater part of rich people, the chief enjoyment of riches consists in the
parade of riches; which, in their eye, is never so complete as when they appear
to possess those decisive marks of opulence which nobody can possess but
themselves. In their eyes, the merit of an object, which is in any degree
either useful or beautiful, is greatly enhanced by its scarcity, or by the
great labour which it requires to collect any considerable quantity of it; a
labour which nobody can afford to pay but themselves. Such objects they are
willing to purchase at a higher price than things much more beautiful and
useful, but more common. These qualities of utility, beauty, and scarcity, are
the original foundation of the high price of those metals, or of the great
quantity of other goods for which they can everywhere be exchanged. This value
was antecedent to, and independent of their being employed as coin, and was the
quality which fitted them for that employment. That employment, however, by
occasioning a new demand, and by diminishing the quantity which could be
employed in any other way, may have afterwards contributed to keep up or
increase their value.

The demand for the precious stones arises altogether from their beauty. They
are of no use but as ornaments; and the merit of their beauty is greatly
enhanced by their scarcity, or by the difficulty and expense of getting them
from the mine. Wages and profit accordingly make up, upon most occasions,
almost the whole of the high price. Rent comes in but for a very small share,
frequently for no share; and the most fertile mines only afford any
considerable rent. When Tavernier, a jeweller, visited the diamond mines of
Golconda and Visiapour, he was informed that the sovereign of the country, for
whose benefit they were wrought, had ordered all of them to be shut up except
those which yielded the largest and finest stones. The other, it seems, were to
the proprietor not worth the working.

As the prices, both of the precious metals and of the precious stones, is
regulated all over the world by their price at the most fertile mine in it, the
rent which a mine of either can afford to its proprietor is in proportion, not
to its absolute, but to what may be called its relative fertility, or to its
superiority over other mines of the same kind. If new mines were discovered, as
much superior to those of Potosi, as they were superior to those of Europe, the
value of silver might be so much degraded as to render even the mines of Potosi
not worth the working. Before the discovery of the Spanish West Indies, the
most fertile mines in Europe may have afforded as great a rent to their
proprietors as the richest mines in Peru do at present. Though the quantity of
silver was much less, it might have exchanged for an equal quantity of other
goods, and the proprietor’s share might have enabled him to purchase or
command an equal quantity either of labour or of commodities.

The value, both of the produce and of the rent, the real revenue which they
afforded, both to the public and to the proprietor, might have been the same.

The most abundant mines, either of the precious metals, or of the precious
stones, could add little to the wealth of the world. A produce, of which the
value is principally derived from its scarcity, is necessarily degraded by its
abundance. A service of plate, and the other frivolous ornaments of dress and
furniture, could be purchased for a smaller quantity of commodities; and in
this would consist the sole advantage which the world could derive from that
abundance.

It is otherwise in estates above ground. The value, both of their produce and
of their rent, is in proportion to their absolute, and not to their relative
fertility. The land which produces a certain quantity of food, clothes, and
lodging, can always feed, clothe, and lodge, a certain number of people; and
whatever may be the proportion of the landlord, it will always give him a
proportionable command of the labour of those people, and of the commodities
with which that labour can supply him. The value of the most barren land is not
diminished by the neighbourhood of the most fertile. On the contrary, it is
generally increased by it. The great number of people maintained by the fertile
lands afford a market to many parts of the produce of the barren, which they
could never have found among those whom their own produce could maintain.

Whatever increases the fertility of land in producing food, increases not only
the value of the lands upon which the improvement is bestowed, but contributes
likewise to increase that of many other lands, by creating a new demand for
their produce. That abundance of food, of which, in consequence of the
improvement of land, many people have the disposal beyond what they themselves
can consume, is the great cause of the demand, both for the precious metals and
the precious stones, as well as for every other conveniency and ornament of
dress, lodging, household furniture, and equipage. Food not only constitutes
the principal part of the riches of the world, but it is the abundance of food
which gives the principal part of their value to many other sorts of riches.
The poor inhabitants of Cuba and St. Domingo, when they were first discovered
by the Spaniards, used to wear little bits of gold as ornaments in their hair
and other parts of their dress. They seemed to value them as we would do any
little pebbles of somewhat more than ordinary beauty, and to consider them as
just worth the picking up, but not worth the refusing to any body who asked
them, They gave them to their new guests at the first request, without seeming
to think that they had made them any very valuable present. They were
astonished to observe the rage of the Spaniards to obtain them; and had no
notion that there could anywhere be a country in which many people had the
disposal of so great a superfluity of food; so scanty always among themselves,
that, for a very small quantity of those glittering baubles, they would
willingly give as much as might maintain a whole family for many years. Could
they have been made to understand this, the passion of the Spaniards would not
have surprised them.

PART III.—Of the variations in the Proportion between the respective
Values of that sort of Produce which always affords Rent, and of that which
sometimes does, and sometimes does not, afford Rent.

The increasing abundance of food, in consequence of the increasing improvement
and cultivation, must necessarily increase the demand for every part of the
produce of land which is not food, and which can be applied either to use or to
ornament. In the whole progress of improvement, it might, therefore, be
expected there should be only one variation in the comparative values of those
two different sorts of produce. The value of that sort which sometimes does,
and sometimes does not afford rent, should constantly rise in proportion to
that which always affords some rent. As art and industry advance, the materials
of clothing and lodging, the useful fossils and materials of the earth, the
precious metals and the precious stones, should gradually come to be more and
more in demand, should gradually exchange for a greater and a greater quantity
of food; or, in other words, should gradually become dearer and dearer. This,
accordingly, has been the case with most of these things upon most occasions,
and would have been the case with all of them upon all occasions, if particular
accidents had not, upon some occasions, increased the supply of some of them in
a still greater proportion than the demand.

The value of a free-stone quarry, for example, will necessarily increase with
the increasing improvement and population of the country round about it,
especially if it should be the only one in the neighbourhood. But the value of
a silver mine, even though there should not be another within a thousand miles
of it, will not necessarily increase with the improvement of the country in
which it is situated. The market for the produce of a free-stone quarry can
seldom extend more than a few miles round about it, and the demand must
generally be in proportion to the improvement and population of that small
district; but the market for the produce of a silver mine may extend over the
whole known world. Unless the world in general, therefore, be advancing in
improvement and population, the demand for silver might not be at all increased
by the improvement even of a large country in the neighbourhood of the mine.
Even though the world in general were improving, yet if, in the course of its
improvements, new mines should be discovered, much more fertile than any which
had been known before, though the demand for silver would necessarily increase,
yet the supply might increase in so much a greater proportion, that the real
price of that metal might gradually fall; that is, any given quantity, a pound
weight of it, for example, might gradually purchase or command a smaller and a
smaller quantity of labour, or exchange for a smaller and a smaller quantity of
corn, the principal part of the subsistence of the labourer.

The great market for silver is the commercial and civilized part of the world.

If, by the general progress of improvement, the demand of this market should
increase, while, at the same time, the supply did not increase in the same
proportion, the value of silver would gradually rise in proportion to that of
corn. Any given quantity of silver would exchange for a greater and a greater
quantity of corn; or, in other words, the average money price of corn would
gradually become cheaper and cheaper.

If, on the contrary, the supply, by some accident, should increase, for many
years together, in a greater proportion than the demand, that metal would
gradually become cheaper and cheaper; or, in other words, the average money
price of corn would, in spite of all improvements, gradually become dearer and
dearer.

But if, on the other hand, the supply of that metal should increase nearly in
the same proportion as the demand, it would continue to purchase or exchange
for nearly the same quantity of corn; and the average money price of corn
would, in spite of all improvements. continue very nearly the same.

These three seem to exhaust all the possible combinations of events which can
happen in the progress of improvement; and during the course of the four
centuries preceding the present, if we may judge by what has happened both in
France and Great Britain, each of those three different combinations seems to
have taken place in the European market, and nearly in the same order, too, in
which I have here set them down.

Digression concerning the Variations in the value of Silver during the
Course of the Four last Centuries.

First Period.—In 1350, and for some time before, the average price of the
quarter of wheat in England seems not to have been estimated lower than four
ounces of silver, Tower weight, equal to about twenty shillings of our present
money. From this price it seems to have fallen gradually to two ounces of
silver, equal to about ten shillings of our present money, the price at which
we find it estimated in the beginning of the sixteenth century, and at which it
seems to have continued to be estimated till about 1570.

In 1350, being the 25th of Edward III. was enacted what is called the Statute
of Labourers. In the preamble, it complains much of the insolence of servants,
who endeavoured to raise their wages upon their masters. It therefore ordains,
that all servants and labourers should, for the future, be contented with the
same wages and liveries (liveries in those times signified not only clothes,
but provisions) which they had been accustomed to receive in the 20th year of
the king, and the four preceding years; that, upon this account, their
livery-wheat should nowhere be estimated higher than tenpence a-bushel, and
that it should always be in the option of the master to deliver them either the
wheat or the money. Tenpence: a-bushel, therefore, had, in the 25th of Edward
III. been reckoned a very moderate price of wheat, since it required a
particular statute to oblige servants to accept of it in exchange for their
usual livery of provisions; and it had been reckoned a reasonable price ten
years before that, or in the 16th year of the king, the term to which the
statute refers. But in the 16th year of Edward III. tenpence contained about
half an ounce of silver, Tower weight, and was nearly equal to half-a-crown of
our present money. Four ounces of silver, Tower weight, therefore, equal to six
shillings and eightpence of the money of those times, and to near twenty
shillings of that of the present, must have been reckoned a moderate price for
the quarter of eight bushels.

This statute is surely a better evidence of what was reckoned, in those times,
a moderate price of grain, than the prices of some particular years, which have
generally been recorded by historians and other writers, on account of their
extraordinary dearness or cheapness, and from which, therefore, it is difficult
to form any judgment concerning what may have been the ordinary price. There
are, besides, other reasons for believing that, in the beginning of the
fourteenth century, and for some time before, the common price of wheat was not
less than four ounces of silver the quarter, and that of other grain in
proportion.

In 1309, Ralph de Born, prior of St Augustine’s, Canterbury, gave a feast
upon his installation-day, of which William Thorn has preserved, not only the
bill of fare, but the prices of many particulars. In that feast were consumed,
1st, fifty-three quarters of wheat, which cost nineteen pounds, or seven
shillings, and twopence a-quarter, equal to about one-and-twenty shillings and
sixpence of our present money; 2dly, fifty-eight quarters of malt, which cost
seventeen pounds ten shillings, or six shillings a-quarter, equal to about
eighteen shillings of our present money; 3dly, twenty quarters of oats, which
cost four pounds, or four shillings a-quarter, equal to about twelve shillings
of our present money. The prices of malt and oats seem here to be higher than
their ordinary proportion to the price of wheat.

These prices are not recorded, on account of their extraordinary dearness or
cheapness, but are mentioned accidentally, as the prices actually paid for
large quantities of grain consumed at a feast, which was famous for its
magnificence.

In 1262, being the 51st of Henry III. was revived an ancient statute, called
the assize of bread and ale, which, the king says in the preamble, had been
made in the times of his progenitors, some time kings of England. It is
probably, therefore, as old at least as the time of his grandfather, Henry II.
and may have been as old as the Conquest. It regulates the price of bread
according as the prices of wheat may happen to be, from one shilling to twenty
shillings the quarter of the money of those times. But statutes of this kind
are generally presumed to provide with equal care for all deviations from the
middle price, for those below it, as well as for those above it. Ten shillings,
therefore, containing six ounces of silver, Tower weight, and equal to about
thirty shillings of our present money, must, upon this supposition, have been
reckoned the middle price of the quarter of wheat when this statute was first
enacted, and must have continued to be so in the 51st of Henry III. We cannot,
therefore, be very wrong in supposing that the middle price was not less than
one-third of the highest price at which this statute regulates the price of
bread, or than six shillings and eightpence of the money of those times,
containing four ounces of silver, Tower weight.

From these different facts, therefore, we seem to have some reason to conclude
that, about the middle of the fourteenth century, and for a considerable time
before, the average or ordinary price of the quarter of wheat was not supposed
to be less than four ounces of silver, Tower weight.

From about the middle of the fourteenth to the beginning of the sixteenth
century, what was reckoned the reasonable and moderate, that is, the ordinary
or average price of wheat, seems to have sunk gradually to about one half of
this price; so as at last to have fallen to about two ounces of silver, Tower
weight, equal to about ten shillings of our present money. It continued to be
estimated at this price till about 1570.

In the household book of Henry, the fifth earl of Northumberland, drawn up in
1512 there are two different estimations of wheat. In one of them it is
computed at six shilling and eightpence the quarter, in the other at five
shillings and eightpence only. In 1512, six shillings and eightpence contained
only two ounces of silver, Tower weight, and were equal to about ten shillings
of our present money.

From the 25th of Edward III. to the beginning of the reign of Elizabeth, during
the space of more than two hundred years, six shillings and eightpence, it
appears from several different statutes, had continued to be considered as what
is called the moderate and reasonable, that is, the ordinary or average price
of wheat. The quantity of silver, however, contained in that nominal sum was,
during the course of this period, continually diminishing in consequence of
some alterations which were made in the coin. But the increase of the value of
silver had, it seems, so far compensated the diminution of the quantity of it
contained in the same nominal sum, that the legislature did not think it worth
while to attend to this circumstance.

Thus, in 1436, it was enacted, that wheat might be exported without a licence
when the price was so low as six shillings and eightpence: and in 1463, it was
enacted, that no wheat should be imported if the price was not above six
shillings and eightpence the quarter: The legislature had imagined, that when
the price was so low, there could be no inconveniency in exportation, but that
when it rose higher, it became prudent to allow of importation. Six shillings
and eightpence, therefore, containing about the same quantity of silver as
thirteen shillings and fourpence of our present money (one-third part less than
the same nominal sum contained in the time of Edward III), had, in those times,
been considered as what is called the moderate and reasonable price of wheat.

In 1554, by the 1st and 2nd of Philip and Mary, and in 1558, by the 1st of
Elizabeth, the exportation of wheat was in the same manner prohibited, whenever
the price of the quarter should exceed six shillings and eightpence, which did
not then contain two penny worth more silver than the same nominal sum does at
present. But it had soon been found, that to restrain the exportation of wheat
till the price was so very low, was, in reality, to prohibit it altogether. In
1562, therefore, by the 5th of Elizabeth, the exportation of wheat was allowed
from certain ports, whenever the price of the quarter should not exceed ten
shillings, containing nearly the same quantity of silver as the like nominal
sum does at present. This price had at this time, therefore, been considered as
what is called the moderate and reasonable price of wheat. It agrees nearly
with the estimation of the Northumberland book in 1512.

That in France the average price of grain was, in the same manner, much lower
in the end of the fifteenth and beginning of the sixteenth century, than in the
two centuries preceding, has been observed both by Mr Dupré de St Maur, and by
the elegant author of the Essay on the Policy of Grain. Its price, during the
same period, had probably sunk in the same manner through the greater part of
Europe.

This rise in the value of silver, in proportion to that of corn, may either
have been owing altogether to the increase of the demand for that metal, in
consequence of increasing improvement and cultivation, the supply, in the mean
time, continuing the same as before; or, the demand continuing the same as
before, it may have been owing altogether to the gradual diminution of the
supply: the greater part of the mines which were then known in the world being
much exhausted, and, consequently, the expense of working them much increased;
or it may have been owing partly to the one, and partly to the other of those
two circumstances. In the end of the fifteenth and beginning of the sixteenth
centuries, the greater part of Europe was approaching towards a more settled
form of government than it had enjoyed for several ages before. The increase of
security would naturally increase industry and improvement; and the demand for
the precious metals, as well as for every other luxury and ornament, would
naturally increase with the increase of riches. A greater annual produce would
require a greater quantity of coin to circulate it; and a greater number of
rich people would require a greater quantity of plate and other ornaments of
silver. It is natural to suppose, too, that the greater part of the mines which
then supplied the European market with silver might be a good deal exhausted,
and have become more expensive in the working. They had been wrought, many of
them, from the time of the Romans.

It has been the opinion, however, of the greater part of those who have written
upon the prices of commodities in ancient times, that, from the Conquest,
perhaps from the invasion of Julius Caesar, till the discovery of the mines of
America, the value of silver was continually diminishing. This opinion they
seem to have been led into, partly by the observations which they had occasion
to make upon the prices both of corn and of some other parts of the rude
produce of land, and partly by the popular notion, that as the quantity of
silver naturally increases in every country with the increase of wealth, so its
value diminishes as it quantity increases.

In their observations upon the prices of corn, three different circumstances
seem frequently to have misled them.

First, in ancient times, almost all rents were paid in kind; in a certain
quantity of corn, cattle, poultry, etc. It sometimes happened, however, that
the landlord would stipulate, that he should be at liberty to demand of the
tenant, either the annual payment in kind or a certain sum of money instead of
it. The price at which the payment in kind was in this manner exchanged for a
certain sum of money, is in Scotland called the conversion price. As the option
is always in the landlord to take either the substance or the price, it is
necessary, for the safety of the tenant, that the conversion price should
rather be below than above the average market price. In many places,
accordingly, it is not much above one half of this price. Through the greater
part of Scotland this custom still continues with regard to poultry, and in
some places with regard to cattle. It might probably have continued to take
place, too, with regard to corn, had not the institution of the public fiars
put an end to it. These are annual valuations, according to the judgment of an
assize, of the average price of all the different sorts of grain, and of all
the different qualities of each, according to the actual market price in every
different county. This institution rendered it sufficiently safe for the
tenant, and much more convenient for the landlord, to convert, as they call it,
the corn rent, rather at what should happen to be the price of the fiars of
each year, than at any certain fixed price. But the writers who have collected
the prices of corn in ancient times seem frequently to have mistaken what is
called in Scotland the conversion price for the actual market price. Fleetwood
acknowledges, upon one occasion, that he had made this mistake. As he wrote his
book, however, for a particular purpose, he does not think proper to make this
acknowledgment till after transcribing this conversion price fifteen times. The
price is eight shillings the quarter of wheat. This sum in 1423, the year at
which he begins with it, contained the same quantity of silver as sixteen
shillings of our present money. But in 1562, the year at which he ends with it,
it contained no more than the same nominal sum does at present.

Secondly, they have been misled by the slovenly manner in which some ancient
statutes of assize had been sometimes transcribed by lazy copiers, and
sometimes, perhaps, actually composed by the legislature.

The ancient statutes of assize seem to have begun always with determining what
ought to be the price of bread and ale when the price of wheat and barley were
at the lowest; and to have proceeded gradually to determine what it ought to
be, according as the prices of those two sorts of grain should gradually rise
above this lowest price. But the transcribers of those statutes seem frequently
to have thought it sufficient to copy the regulation as far as the three or
four first and lowest prices; saving in this manner their own labour, and
judging, I suppose, that this was enough to show what proportion ought to be
observed in all higher prices.

Thus, in the assize of bread and ale, of the 51st of Henry III. the price of
bread was regulated according to the different prices of wheat, from one
shilling to twenty shillings the quarter of the money of those times. But in
the manuscripts from which all the different editions of the statutes,
preceding that of Mr Ruffhead, were printed, the copiers had never transcribed
this regulation beyond the price of twelve shillings. Several writers,
therefore, being misled by this faulty transcription, very naturally conclude
that the middle price, or six shillings the quarter, equal to about eighteen
shillings of our present money, was the ordinary or average price of wheat at
that time.

In the statute of Tumbrel and Pillory, enacted nearly about the same time, the
price of ale is regulated according to every sixpence rise in the price of
barley, from two shillings, to four shillings the quarter. That four shillings,
however, was not considered as the highest price to which barley might
frequently rise in those times, and that these prices were only given as an
example of the proportion which ought to be observed in all other prices,
whether higher or lower, we may infer from the last words of the statute:
“Et sic deinceps crescetur vel diminuetur per sex denarios.” The
expression is very slovenly, but the meaning is plain enough, “that the
price of ale is in this manner to be increased or diminished according to every
sixpence rise or fall in the price of barley.” In the composition of this
statute, the legislature itself seems to have been as negligent as the copiers
were in the transcription of the other.

In an ancient manuscript of the Regiam Majestatem, an old Scotch law book,
there is a statute of assize, in which the price of bread is regulated
according to all the different prices of wheat, from tenpence to three
shillings the Scotch boll, equal to about half an English quarter. Three
shillings Scotch, at the time when this assize is supposed to have been
enacted, were equal to about nine shillings sterling of our present money. Mr
Ruddiman seems {See his Preface to Anderson’s Diplomata Scotiae.} to
conclude from this, that three shillings was the highest price to which wheat
ever rose in those times, and that tenpence, a shilling, or at most two
shillings, were the ordinary prices. Upon consulting the manuscript, however,
it appears evidently, that all these prices are only set down as examples of
the proportion which ought to be observed between the respective prices of
wheat and bread. The last words of the statute are “reliqua judicabis
secundum praescripta, habendo respectum ad pretium
bladi.”—“You shall judge of the remaining cases, according to
what is above written, having respect to the price of corn.”

Thirdly, they seem to have been misled too, by the very low price at which
wheat was sometimes sold in very ancient times; and to have imagined, that as
its lowest price was then much lower than in later times its ordinary price
must likewise have been much lower. They might have found, however, that in
those ancient times its highest price was fully as much above, as its lowest
price was below any thing that had ever been known in later times. Thus, in
1270, Fleetwood gives us two prices of the quarter of wheat. The one is four
pounds sixteen shillings of the money of those times, equal to fourteen pounds
eight shillings of that of the present; the other is six pounds eight
shillings, equal to nineteen pounds four shillings of our present money. No
price can be found in the end of the fifteenth, or beginning of the sixteenth
century, which approaches to the extravagance of these. The price of corn,
though at all times liable to variation varies most in those turbulent and
disorderly societies, in which the interruption of all commerce and
communication hinders the plenty of one part of the country from relieving the
scarcity of another. In the disorderly state of England under the Plantagenets,
who governed it from about the middle of the twelfth till towards the end of
the fifteenth century, one district might be in plenty, while another, at no
great distance, by having its crop destroyed, either by some accident of the
seasons, or by the incursion of some neighbouring baron, might be suffering all
the horrors of a famine; and yet if the lands of some hostile lord were
interposed between them, the one might not be able to give the least assistance
to the other. Under the vigorous administration of the Tudors, who governed
England during the latter part of the fifteenth, and through the whole of the
sixteenth century, no baron was powerful enough to dare to disturb the public
security.

The reader will find at the end of this chapter all the prices of wheat which
have been collected by Fleetwood, from 1202 to 1597, both inclusive, reduced to
the money of the present times, and digested, according to the order of time,
into seven divisions of twelve years each. At the end of each division, too, he
will find the average price of the twelve years of which it consists. In that
long period of time, Fleetwood has been able to collect the prices of no more
than eighty years; so that four years are wanting to make out the last twelve
years. I have added, therefore, from the accounts of Eton college, the prices
of 1598, 1599, 1600, and 1601. It is the only addition which I have made. The
reader will see, that from the beginning of the thirteenth till after the
middle of the sixteenth century, the average price of each twelve years grows
gradually lower and lower; and that towards the end of the sixteenth century it
begins to rise again. The prices, indeed, which Fleetwood has been able to
collect, seem to have been those chiefly which were remarkable for
extraordinary dearness or cheapness; and I do not pretend that any very certain
conclusion can be drawn from them. So far, however, as they prove any thing at
all, they confirm the account which I have been endeavouring to give. Fleetwood
himself, however, seems, with most other writers, to have believed, that,
during all this period, the value of silver, in consequence of its increasing
abundance, was continually diminishing. The prices of corn, which he himself
has collected, certainly do not agree with this opinion. They agree perfectly
with that of Mr Dupré de St Maur, and with that which I have been endeavouring
to explain. Bishop Fleetwood and Mr Dupré de St Maur are the two authors who
seem to have collected, with the greatest diligence and fidelity, the prices of
things in ancient times. It is somewhat curious that, though their opinions are
so very different, their facts, so far as they relate to the price of corn at
least, should coincide so very exactly.

It is not, however, so much from the low price of corn, as from that of some
other parts of the rude produce of land, that the most judicious writers have
inferred the great value of silver in those very ancient times. Corn, it has
been said, being a sort of manufacture, was, in those rude ages, much dearer in
proportion than the greater part of other commodities; it is meant, I suppose,
than the greater part of unmanufactured commodities, such as cattle, poultry,
game of all kinds, etc. That in those times of poverty and barbarism these were
proportionably much cheaper than corn, is undoubtedly true. But this cheapness
was not the effect of the high value of silver, but of the low value of those
commodities. It was not because silver would in such times purchase or
represent a greater quantity of labour, but because such commodities would
purchase or represent a much smaller quantity than in times of more opulence
and improvement. Silver must certainly be cheaper in Spanish America than in
Europe; in the country where it is produced, than in the country to which it is
brought, at the expense of a long carriage both by land and by sea, of a
freight, and an insurance. One-and-twenty pence halfpenny sterling, however, we
are told by Ulloa, was, not many years ago, at Buenos Ayres, the price of an ox
chosen from a herd of three or four hundred. Sixteen shillings sterling, we are
told by Mr Byron, was the price of a good horse in the capital of Chili. In a
country naturally fertile, but of which the far greater part is altogether
uncultivated, cattle, poultry, game of all kinds, etc. as they can be acquired
with a very small quantity of labour, so they will purchase or command but a
very small quantity. The low money price for which they may be sold, is no
proof that the real value of silver is there very high, but that the real value
of those commodities is very low.

Labour, it must always be remembered, and not any particular commodity, or set
of commodities, is the real measure of the value both of silver and of all
other commodities.

But in countries almost waste, or but thinly inhabited, cattle, poultry, game
of all kinds, etc. as they are the spontaneous productions of Nature, so she
frequently produces them in much greater quantities than the consumption of the
inhabitants requires. In such a state of things, the supply commonly exceeds
the demand. In different states of society, in different states of improvement,
therefore, such commodities will represent, or be equivalent, to very different
quantities of labour.

In every state of society, in every stage of improvement, corn is the
production of human industry. But the average produce of every sort of industry
is always suited, more or less exactly, to the average consumption; the average
supply to the average demand. In every different stage of improvement, besides,
the raising of equal quantities of corn in the same soil and climate, will, at
an average, require nearly equal quantities of labour; or, what comes to the
same thing, the price of nearly equal quantities; the continual increase of the
productive powers of labour, in an improved state of cultivation, being more or
less counterbalanced by the continual increasing price of cattle, the principal
instruments of agriculture. Upon all these accounts, therefore, we may rest
assured, that equal quantities of corn will, in every state of society, in
every stage of improvement, more nearly represent, or be equivalent to, equal
quantities of labour, than equal quantities of any other part of the rude
produce of land. Corn, accordingly, it has already been observed, is, in all
the different stages of wealth and improvement, a more accurate measure of
value than any other commodity or set of commodities. In all those different
stages, therefore, we can judge better of the real value of silver, by
comparing it with corn, than by comparing it with any other commodity or set of
commodities.

Corn, besides, or whatever else is the common and favourite vegetable food of
the people, constitutes, in every civilized country, the principal part of the
subsistence of the labourer. In consequence of the extension of agriculture,
the land of every country produces a much greater quantity of vegetable than of
animal food, and the labourer everywhere lives chiefly upon the wholesome food
that is cheapest and most abundant. Butcher’s meat, except in the most
thriving countries, or where labour is most highly rewarded, makes but an
insignificant part of his subsistence; poultry makes a still smaller part of
it, and game no part of it. In France, and even in Scotland, where labour is
somewhat better rewarded than in France, the labouring poor seldom eat
butcher’s meat, except upon holidays, and other extraordinary occasions.
The money price of labour, therefore, depends much more upon the average money
price of corn, the subsistence of the labourer, than upon that of
butcher’s meat, or of any other part of the rude produce of land. The
real value of gold and silver, therefore, the real quantity of labour which
they can purchase or command, depends much more upon the quantity of corn which
they can purchase or command, than upon that of butcher’s meat, or any
other part of the rude produce of land.

Such slight observations, however, upon the prices either of corn or of other
commodities, would not probably have misled so many intelligent authors, had
they not been influenced at the same time by the popular notion, that as the
quantity of silver naturally increases in every country with the increase of
wealth, so its value diminishes as its quantity increases. This notion,
however, seems to be altogether groundless.

The quantity of the precious metals may increase in any country from two
different causes; either, first, from the increased abundance of the mines
which supply it; or, secondly, from the increased wealth of the people, from
the increased produce of their annual labour. The first of these causes is no
doubt necessarily connected with the diminution of the value of the precious
metals; but the second is not.

When more abundant mines are discovered, a greater quantity of the precious
metals is brought to market; and the quantity of the necessaries and
conveniencies of life for which they must be exchanged being the same as
before, equal quantities of the metals must be exchanged for smaller quantities
of commodities. So far, therefore, as the increase of the quantity of the
precious metals in any country arises from the increased abundance of the
mines, it is necessarily connected with some diminution of their value.

When, on the contrary, the wealth of any country increases, when the annual
produce of its labour becomes gradually greater and greater, a greater quantity
of coin becomes necessary in order to circulate a greater quantity of
commodities: and the people, as they can afford it, as they have more
commodities to give for it, will naturally purchase a greater and a greater
quantity of plate. The quantity of their coin will increase from necessity; the
quantity of their plate from vanity and ostentation, or from the same reason
that the quantity of fine statues, pictures, and of every other luxury and
curiosity, is likely to increase among them. But as statuaries and painters are
not likely to be worse rewarded in times of wealth and prosperity, than in
times of poverty and depression, so gold and silver are not likely to be worse
paid for.

The price of gold and silver, when the accidental discovery of more abundant
mines does not keep it down, as it naturally rises with the wealth of every
country, so, whatever be the state of the mines, it is at all times naturally
higher in a rich than in a poor country. Gold and silver, like all other
commodities, naturally seek the market where the best price is given for them,
and the best price is commonly given for every thing in the country which can
best afford it. Labour, it must be remembered, is the ultimate price which is
paid for every thing; and in countries where labour is equally well rewarded,
the money price of labour will be in proportion to that of the subsistence of
the labourer. But gold and silver will naturally exchange for a greater
quantity of subsistence in a rich than in a poor country; in a country which
abounds with subsistence, than in one which is but indifferently supplied with
it. If the two countries are at a great distance, the difference may be very
great; because, though the metals naturally fly from the worse to the better
market, yet it may be difficult to transport them in such quantities as to
bring their price nearly to a level in both. If the countries are near, the
difference will be smaller, and may sometimes be scarce perceptible; because in
this case the transportation will be easy. China is a much richer country than
any part of Europe, and the difference between the price of subsistence in
China and in Europe is very great. Rice in China is much cheaper than wheat is
any where in Europe. England is a much richer country than Scotland, but the
difference between the money price of corn in those two countries is much
smaller, and is but just perceptible. In proportion to the quantity or measure,
Scotch corn generally appears to be a good deal cheaper than English; but, in
proportion to its quality, it is certainly somewhat dearer. Scotland receives
almost every year very large supplies from England, and every commodity must
commonly be somewhat dearer in the country to which it is brought than in that
from which it comes. English corn, therefore, must be dearer in Scotland than
in England; and yet in proportion to its quality, or to the quantity and
goodness of the flour or meal which can be made from it, it cannot commonly be
sold higher there than the Scotch corn which comes to market in competition
with it.

The difference between the money price of labour in China and in Europe, is
still greater than that between the money price of subsistence; because the
real recompence of labour is higher in Europe than in China, the greater part
of Europe being in an improving state, while China seems to be standing still.
The money price of labour is lower in Scotland than in England, because the
real recompence of labour is much lower: Scotland, though advancing to greater
wealth, advances much more slowly than England. The frequency of emigration
from Scotland, and the rarity of it from England, sufficiently prove that the
demand for labour is very different in the two countries. The proportion
between the real recompence of labour in different countries, it must be
remembered, is naturally regulated, not by their actual wealth or poverty, but
by their advancing, stationary, or declining condition.

Gold and silver, as they are naturally of the greatest value among the richest,
so they are naturally of the least value among the poorest nations. Among
savages, the poorest of all nations, they are scarce of any value.

In great towns, corn is always dearer than in remote parts of the country.
This, however, is the effect, not of the real cheapness of silver, but of the
real dearness of corn. It does not cost less labour to bring silver to the
great town than to the remote parts of the country; but it costs a great deal
more to bring corn.

In some very rich and commercial countries, such as Holland and the territory
of Genoa, corn is dear for the same reason that it is dear in great towns. They
do not produce enough to maintain their inhabitants. They are rich in the
industry and skill of their artificers and manufacturers, in every sort of
machinery which can facilitate and abridge labour; in shipping, and in all the
other instruments and means of carriage and commerce: but they are poor in
corn, which, as it must be brought to them from distant countries, must, by an
addition to its price, pay for the carriage from those countries. It does not
cost less labour to bring silver to Amsterdam than to Dantzic; but it costs a
great deal more to bring corn. The real cost of silver must be nearly the same
in both places; but that of corn must be very different. Diminish the real
opulence either of Holland or of the territory of Genoa, while the number of
their inhabitants remains the same; diminish their power of supplying
themselves from distant countries; and the price of corn, instead of sinking
with that diminution in the quantity of their silver, which must necessarily
accompany this declension, either as its cause or as its effect, will rise to
the price of a famine. When we are in want of necessaries, we must part with
all superfluities, of which the value, as it rises in times of opulence and
prosperity, so it sinks in times of poverty and distress. It is otherwise with
necessaries. Their real price, the quantity of labour which they can purchase
or command, rises in times of poverty and distress, and sinks in times of
opulence and prosperity, which are always times of great abundance; for they
could not otherwise be times of opulence and prosperity. Corn is a necessary,
silver is only a superfluity.

Whatever, therefore, may have been the increase in the quantity of the precious
metals, which, during the period between the middle of the fourteenth and that
of the sixteenth century, arose from the increase of wealth and improvement, it
could have no tendency to diminish their value, either in Great Britain, or in
my other part of Europe. If those who have collected the prices of things in
ancient times, therefore, had, during this period, no reason to infer the
diminution of the value of silver from any observations which they had made
upon the prices either of corn, or of other commodities, they had still less
reason to infer it from any supposed increase of wealth and improvement.

Second Period.—But how various soever may have been the opinions of the
learned concerning the progress of the value of silver during the first period,
they are unanimous concerning it during the second.

From about 1570 to about 1640, during a period of about seventy years, the
variation in the proportion between the value of silver and that of corn held a
quite opposite course. Silver sunk in its real value, or would exchange for a
smaller quantity of labour than before; and corn rose in its nominal price,
and, instead of being commonly sold for about two ounces of silver the quarter,
or about ten shillings of our present money, came to be sold for six and eight
ounces of silver the quarter, or about thirty and forty shillings of our
present money.

The discovery of the abundant mines of America seems to have been the sole
cause of this diminution in the value of silver, in proportion to that of corn.
It is accounted for, accordingly, in the same manner by every body; and there
never has been any dispute, either about the fact, or about the cause of it.
The greater part of Europe was, during this period, advancing in industry and
improvement, and the demand for silver must consequently have been increasing;
but the increase of the supply had, it seems, so far exceeded that of the
demand, that the value of that metal sunk considerably. The discovery of the
mines of America, it is to be observed, does not seem to have had any very
sensible effect upon the prices of things in England till after 1570; though
even the mines of Potosi had been discovered more than twenty years before.

From 1595 to 1620, both inclusive, the average price of the quarter of nine
bushels of the best wheat, at Windsor market, appears, from the accounts of
Eton college, to have been £ 2:1:6 9/13. From which sum, neglecting the
fraction, and deducting a ninth, or 4s. 7 1/3d., the price of the quarter of
eight bushels comes out to have been £ 1:16:10 2/3. And from this sum,
neglecting likewise the fraction, and deducting a ninth, or 4s. 1 1/9d., for
the difference between the price of the best wheat and that of the middle
wheat, the price of the middle wheat comes out to have been about £ 1:12:8 8/9,
or about six ounces and one-third of an ounce of silver.

From 1621 to 1636, both inclusive, the average price of the same measure of the
best wheat, at the same market, appears, from the same accounts, to have been £
2:10s.; from which, making the like deductions as in the foregoing case, the
average price of the quarter of eight bushels of middle wheat comes out to have
been £ 1:19:6, or about seven ounces and two-thirds of an ounce of silver.

Third Period.—Between 1630 and 1640, or about 1636, the effect of the
discovery of the mines of America, in reducing the value of silver, appears to
have been completed, and the value of that metal seems never to have sunk lower
in proportion to that of corn than it was about that time. It seems to have
risen somewhat in the course of the present century, and it had probably begun
to do so, even some time before the end of the last.

From 1637 to 1700, both inclusive, being the sixty-four last years of the last
century the average price of the quarter of nine bushels of the best wheat, at
Windsor market, appears, from the same accounts, to have been £ 2:11:0 1/3,
which is only 1s. 0 1/3d. dearer than it had been during the sixteen years
before. But, in the course of these sixty-four years, there happened two
events, which must have produced a much greater scarcity of corn than what the
course of the seasons would otherwise have occasioned, and which, therefore,
without supposing any further reduction in the value of silver, will much more
than account for this very small enhancement of price.

The first of these events was the civil war, which, by discouraging tillage and
interrupting commerce, must have raised the price of corn much above what the
course of the seasons would otherwise have occasioned. It must have had this
effect, more or less, at all the different markets in the kingdom, but
particularly at those in the neighbourhood of London, which require to be
supplied from the greatest distance. In 1648, accordingly, the price of the
best wheat, at Windsor market, appears, from the same accounts, to have been £
4:5s., and, in 1649, to have been £ 4, the quarter of nine bushels. The excess
of those two years above £ 2:10s. (the average price of the sixteen years
preceding 1637) is £ 3:5s., which, divided among the sixty four last years of
the last century, will alone very nearly account for that small enhancement of
price which seems to have taken place in them. These, however, though the
highest, are by no means the only high prices which seem to have been
occasioned by the civil wars.

The second event was the bounty upon the exportation of corn, granted in 1688.
The bounty, it has been thought by many people, by encouraging tillage, may, in
a long course of years, have occasioned a greater abundance, and, consequently,
a greater cheapness of corn in the home market, than what would otherwise have
taken place there. How far the bounty could produce this effect at any time I
shall examine hereafter: I shall only observe at present, that between 1688 and
1700, it had not time to produce any such effect. During this short period, its
only effect must have been, by encouraging the exportation of the surplus
produce of every year, and thereby hindering the abundance of one year from
compensating the scarcity of another, to raise the price in the home market.
The scarcity which prevailed in England, from 1693 to 1699, both inclusive,
though no doubt principally owing to the badness of the seasons, and,
therefore, extending through a considerable part of Europe, must have been
somewhat enhanced by the bounty. In 1699, accordingly, the further exportation
of corn was prohibited for nine months.

There was a third event which occurred in the course of the same period, and
which, though it could not occasion any scarcity of corn, nor, perhaps, any
augmentation in the real quantity of silver which was usually paid for it, must
necessarily have occasioned some augmentation in the nominal sum. This event
was the great debasement of the silver coin, by clipping and wearing. This evil
had begun in the reign of Charles II. and had gone on continually increasing
till 1695; at which time, as we may learn from Mr Lowndes, the current silver
coin was, at an average, near five-and-twenty per cent. below its standard
value. But the nominal sum which constitutes the market price of every
commodity is necessarily regulated, not so much by the quantity of silver,
which, according to the standard, ought to be contained in it, as by that
which, it is found by experience, actually is contained in it. This nominal
sum, therefore, is necessarily higher when the coin is much debased by clipping
and wearing, than when near to its standard value.

In the course of the present century, the silver coin has not at any time been
more below its standard weight than it is at present. But though very much
defaced, its value has been kept up by that of the gold coin, for which it is
exchanged. For though, before the late recoinage, the gold coin was a good deal
defaced too, it was less so than the silver. In 1695, on the contrary, the
value of the silver coin was not kept up by the gold coin; a guinea then
commonly exchanging for thirty shillings of the worn and clipt silver. Before
the late recoinage of the gold, the price of silver bullion was seldom higher
than five shillings and sevenpence an ounce, which is but fivepence above the
mint price. But in 1695, the common price of silver bullion was six shillings
and fivepence an ounce, {Lowndes’s Essay on the Silver Coin, 68.} which
is fifteen pence above the mint price. Even before the late recoinage of the
gold, therefore, the coin, gold and silver together, when compared with silver
bullion, was not supposed to be more than eight per cent. below its standard
value, In 1695, on the contrary, it had been supposed to be near
five-and-twenty per cent. below that value. But in the beginning of the present
century, that is, immediately after the great recoinage in King William’s
time, the greater part of the current silver coin must have been still nearer
to its standard weight than it is at present. In the course of the present
century, too, there has been no great public calamity, such as a civil war,
which could either discourage tillage, or interrupt the interior commerce of
the country. And though the bounty which has taken place through the greater
part of this century, must always raise the price of corn somewhat higher than
it otherwise would be in the actual state of tillage; yet, as in the course of
this century, the bounty has had full time to produce all the good effects
commonly imputed to it to encourage tillage, and thereby to increase the
quantity of corn in the home market, it may, upon the principles of a system
which I shall explain and examine hereafter, be supposed to have done something
to lower the price of that commodity the one way, as well as to raise it the
other. It is by many people supposed to have done more. In the sixty-four years
of the present century, accordingly, the average price of the quarter of nine
bushels of the best wheat, at Windsor market, appears, by the accounts of Eton
college, to have been £ 2:0:6 10/32, which is about ten shillings and sixpence,
or more than five-and-twenty percent. cheaper than it had been during the
sixty-four last years of the last century; and about nine shillings and
sixpence cheaper than it had been during the sixteen years preceding 1636, when
the discovery of the abundant mines of America may be supposed to have produced
its full effect; and about one shilling cheaper than it had been in the
twenty-six years preceding 1620, before that discovery can well be supposed to
have produced its full effect. According to this account, the average price of
middle wheat, during these sixty-four first years of the present century, comes
out to have been about thirty-two shillings the quarter of eight bushels.

The value of silver, therefore, seems to have risen somewhat in proportion to
that of corn during the course of the present century, and it had probably
begun to do so even some time before the end of the last.

In 1687, the price of the quarter of nine bushels of the best wheat, at Windsor
market, was £ 1:5:2, the lowest price at which it had ever been from 1595.

In 1688, Mr Gregory King, a man famous for his knowledge in matters of this
kind, estimated the average price of wheat, in years of moderate plenty, to be
to the grower 3s. 6d. the bushel, or eight-and-twenty shillings the quarter.
The grower’s price I understand to be the same with what is sometimes
called the contract price, or the price at which a farmer contracts for a
certain number of years to deliver a certain quantity of corn to a dealer. As a
contract of this kind saves the farmer the expense and trouble of marketing,
the contract price is generally lower than what is supposed to be the average
market price. Mr King had judged eight-and-twenty shillings the quarter to be
at that time the ordinary contract price in years of moderate plenty. Before
the scarcity occasioned by the late extraordinary course of bad seasons, it
was, I have been assured, the ordinary contract price in all common years.

In 1688 was granted the parliamentary bounty upon the exportation of corn. The
country gentlemen, who then composed a still greater proportion of the
legislature than they do at present, had felt that the money price of corn was
falling. The bounty was an expedient to raise it artificially to the high price
at which it had frequently been sold in the times of Charles I. and II. It was
to take place, therefore, till wheat was so high as fortyeight shillings the
quarter; that is, twenty shillings, or 5-7ths dearer than Mr King had, in that
very year, estimated the grower’s price to be in times of moderate
plenty. If his calculations deserve any part of the reputation which they have
obtained very universally, eight-and-forty shillings the quarter was a price
which, without some such expedient as the bounty, could not at that time be
expected, except in years of extraordinary scarcity. But the government of King
William was not then fully settled. It was in no condition to refuse anything
to the country gentlemen, from whom it was, at that very time, soliciting the
first establishment of the annual land-tax.

The value of silver, therefore, in proportion to that of corn, had probably
risen somewhat before the end of the last century; and it seems to have
continued to do so during the course of the greater part of the present, though
the necessary operation of the bounty must have hindered that rise from being
so sensible as it otherwise would have been in the actual state of tillage.

In plentiful years, the bounty, by occasioning an extraordinary exportation,
necessarily raises the price of corn above what it otherwise would be in those
years. To encourage tillage, by keeping up the price of corn, even in the most
plentiful years, was the avowed end of the institution.

In years of great scarcity, indeed, the bounty has generally been suspended. It
must, however, have had some effect upon the prices of many of those years. By
the extraordinary exportation which it occasions in years of plenty, it must
frequently hinder the plenty of one year from compensating the scarcity of
another.

Both in years of plenty and in years of scarcity, therefore, the bounty raises
the price of corn above what it naturally would be in the actual state of
tillage. If during the sixty-four first years of the present century,
therefore, the average price has been lower than during the sixty-four last
years of the last century, it must, in the same state of tillage, have been
much more so, had it not been for this operation of the bounty.

But, without the bounty, it may be said the state of tillage would not have
been the same. What may have been the effects of this institution upon the
agriculture of the country, I shall endeavour to explain hereafter, when I come
to treat particularly of bounties. I shall only observe at present, that this
rise in the value of silver, in proportion to that of corn, has not been
peculiar to England. It has been observed to have taken place in France during
the same period, and nearly in the same proportion, too, by three very
faithful, diligent, and laborious collectors of the prices of corn, Mr Dupré de
St Maur, Mr Messance, and the author of the Essay on the Police of Grain. But
in France, till 1764, the exportation of grain was by law prohibited; and it is
somewhat difficult to suppose, that nearly the same diminution of price which
took place in one country, notwithstanding this prohibition, should, in
another, be owing to the extraordinary encouragement given to exportation.

It would be more proper, perhaps, to consider this variation in the average
money price of corn as the effect rather of some gradual rise in the real value
of silver in the European market, than of any fall in the real average value of
corn. Corn, it has already been observed, is, at distant periods of time, a
more accurate measure of value than either silver or, perhaps, any other
commodity. When, after the discovery of the abundant mines of America, corn
rose to three and four times its former money price, this change was
universally ascribed, not to any rise in the real value of corn, but to a fall
in the real value of silver. If, during the sixty-four first years of the
present century, therefore, the average money price of corn has fallen somewhat
below what it had been during the greater part of the last century, we should,
in the same manner, impute this change, not to any fall in the real value of
corn, but to some rise in the real value of silver in the European market.

The high price of corn during these ten or twelve years past, indeed, has
occasioned a suspicion that the real value of silver still continues to fall in
the European market. This high price of corn, however, seems evidently to have
been the effect of the extraordinary unfavourableness of the seasons, and
ought, therefore, to be regarded, not as a permanent, but as a transitory and
occasional event. The seasons, for these ten or twelve years past, have been
unfavourable through the greater part of Europe; and the disorders of Poland
have very much increased the scarcity in all those countries, which, in dear
years, used to be supplied from that market. So long a course of bad seasons,
though not a very common event, is by no means a singular one; and whoever has
inquired much into the history of the prices of corn in former times, will be
at no loss to recollect several other examples of the same kind. Ten years of
extraordinary scarcity, besides, are not more wonderful than ten years of
extraordinary plenty. The low price of corn, from 1741 to 1750, both inclusive,
may very well be set in opposition to its high price during these last eight or
ten years. From 1741 to 1750, the average price of the quarter of nine bushels
of the best wheat, at Windsor market, it appears from the accounts of Eton
college, was only £ 1:13:9 4/5, which is nearly 6s.3d. below the average price
of the sixty-four first years of the present century. The average price of the
quarter of eight bushels of middle wheat comes out, according to this account,
to have been, during these ten years, only £ 1:6:8.

Between 1741 and 1750, however, the bounty must have hindered the price of corn
from falling so low in the home market as it naturally would have done. During
these ten years, the quantity of all sorts of grain exported, it appears from
the custom-house books, amounted to no less than 8,029,156 quarters, one
bushel. The bounty paid for this amounted to £ 1,514,962:17:4 1/2. In 1749,
accordingly, Mr Pelham, at that time prime minister, observed to the house of
commons, that, for the three years preceding, a very extraordinary sum had been
paid as bounty for the exportation of corn. He had good reason to make this
observation, and in the following year he might have had still better. In that
single year, the bounty paid amounted to no less than £ 324,176:10:6. {See
Tracts on the Corn Trade, Tract 3,} It is unnecessary to observe how much this
forced exportation must have raised the price of corn above what it otherwise
would have been in the home market.

At the end of the accounts annexed to this chapter the reader will find the
particular account of those ten years separated from the rest. He will find
there, too, the particular account of the preceding ten years, of which the
average is likewise below, though not so much below, the general average of the
sixty-four first years of the century. The year 1740, however, was a year of
extraordinary scarcity. These twenty years preceding 1750 may very well be set
in opposition to the twenty preceding 1770. As the former were a good deal
below the general average of the century, notwithstanding the intervention of
one or two dear years; so the latter have been a good deal above it,
notwithstanding the intervention of one or two cheap ones, of 1759, for
example. If the former have not been as much below the general average as the
latter have been above it, we ought probably to impute it to the bounty. The
change has evidently been too sudden to be ascribed to any change in the value
of silver, which is always slow and gradual. The suddenness of the effect can
be accounted for only by a cause which can operate suddenly, the accidental
variations of the seasons.

The money price of labour in Great Britain has, indeed, risen during the course
of the present century. This, however, seems to be the effect, not so much of
any diminution in the value of silver in the European market, as of an increase
in the demand for labour in Great Britain, arising from the great, and almost
universal prosperity of the country. In France, a country not altogether so
prosperous, the money price of labour has, since the middle of the last
century, been observed to sink gradually with the average money price of corn.
Both in the last century and in the present, the day wages of common labour are
there said to have been pretty uniformly about the twentieth part of the
average price of the septier of wheat; a measure which contains a little more
than four Winchester bushels. In Great Britain, the real recompence of labour,
it has already been shewn, the real quantities of the necessaries and
conveniencies of life which are given to the labourer, has increased
considerably during the course of the present century. The rise in its money
price seems to have been the effect, not of any diminution of the value of
silver in the general market of Europe, but of a rise in the real price of
labour, in the particular market of Great Britain, owing to the peculiarly
happy circumstances of the country.

For some time after the first discovery of America, silver would continue to
sell at its former, or not much below its former price. The profits of mining
would for some time be very great, and much above their natural rate. Those who
imported that metal into Europe, however, would soon find that the whole annual
importation could not be disposed of at this high price. Silver would gradually
exchange for a smaller and a smaller quantity of goods. Its price would sink
gradually lower and lower, till it fell to its natural price; or to what was
just sufficient to pay, according to their natural rates, the wages of the
labour, the profits of the stock, and the rent of the land, which must be paid
in order to bring it from the mine to the market. In the greater part of the
silver mines of Peru, the tax of the king of Spain, amounting to a tenth of the
gross produce, eats up, it has already been observed, the whole rent of the
land. This tax was originally a half; it soon afterwards fell to a third, then
to a fifth, and at last to a tenth, at which late it still continues. In the
greater part of the silver mines of Peru, this, it seems, is all that remains,
after replacing the stock of the undertaker of the work, together with its
ordinary profits; and it seems to be universally acknowledged that these
profits, which were once very high, are now as low as they can well be,
consistently with carrying on the works.

The tax of the king of Spain was reduced to a fifth of the registered silver in
1504 {Solorzano, vol, ii.}, one-and-forty years before 1545, the date of the
discovery of the mines of Potosi. In the course of ninety years, or before
1636, these mines, the most fertile in all America, had time sufficient to
produce their full effect, or to reduce the value of silver in the European
market as low as it could well fall, while it continued to pay this tax to the
king of Spain. Ninety years is time sufficient to reduce any commodity, of
which there is no monopoly, to its natural price, or to the lowest price at
which, while it pays a particular tax, it can continue to be sold for any
considerable time together.

The price of silver in the European market might, perhaps, have fallen still
lower, and it might have become necessary either to reduce the tax upon it, not
only to one-tenth, as in 1736, but to one twentieth, in the same manner as that
upon gold, or to give up working the greater part of the American mines which
are now wrought. The gradual increase of the demand for silver, or the gradual
enlargement of the market for the produce of the silver mines of America, is
probably the cause which has prevented this from happening, and which has not
only kept up the value of silver in the European market, but has perhaps even
raised it somewhat higher than it was about the middle of the last century.

Since the first discovery of America, the market for the produce of its silver
mines has been growing gradually more and more extensive.

First, the market of Europe has become gradually more and more extensive. Since
the discovery of America, the greater part of Europe has been much improved.
England, Holland, France, and Germany; even Sweden, Denmark, and Russia, have
all advanced considerably, both in agriculture and in manufactures. Italy seems
not to have gone backwards. The fall of Italy preceded the conquest of Peru.
Since that time it seems rather to have recovered a little. Spain and Portugal,
indeed, are supposed to have gone backwards. Portugal, however, is but a very
small part of Europe, and the declension of Spain is not, perhaps, so great as
is commonly imagined. In the beginning of the sixteenth century, Spain was a
very poor country, even in comparison with France, which has been so much
improved since that time. It was the well known remark of the emperor Charles
V. who had travelled so frequently through both countries, that every thing
abounded in France, but that every thing was wanting in Spain. The increasing
produce of the agriculture and manufactures of Europe must necessarily have
required a gradual increase in the quantity of silver coin to circulate it; and
the increasing number of wealthy individuals must have required the like
increase in the quantity of their plate and other ornaments of silver.

Secondly, America is itself a new market, for the produce of its own silver
mines; and as its advances in agriculture, industry, and population, are much
more rapid than those of the most thriving countries in Europe, its demand must
increase much more rapidly. The English colonies are altogether a new market,
which, partly for coin, and partly for plate, requires a continual augmenting
supply of silver through a great continent where there never was any demand
before. The greater part, too, of the Spanish and Portuguese colonies, are
altogether new markets. New Granada, the Yucatan, Paraguay, and the Brazils,
were, before discovered by the Europeans, inhabited by savage nations, who had
neither arts nor agriculture. A considerable degree of both has now been
introduced into all of them. Even Mexico and Peru, though they cannot be
considered as altogether new markets, are certainly much more extensive ones
than they ever were before. After all the wonderful tales which have been
published concerning the splendid state of those countries in ancient times,
whoever reads, with any degree of sober judgment, the history of their first
discovery and conquest, will evidently discern that, in arts, agriculture, and
commerce, their inhabitants were much more ignorant than the Tartars of the
Ukraine are at present. Even the Peruvians, the more civilized nation of the
two, though they made use of gold and silver as ornaments, had no coined money
of any kind. Their whole commerce was carried on by barter, and there was
accordingly scarce any division of labour among them. Those who cultivated the
ground, were obliged to build their own houses, to make their own household
furniture, their own clothes, shoes, and instruments of agriculture. The few
artificers among them are said to have been all maintained by the sovereign,
the nobles, and the priests, and were probably their servants or slaves. All
the ancient arts of Mexico and Peru have never furnished one single manufacture
to Europe. The Spanish armies, though they scarce ever exceeded five hundred
men, and frequently did not amount to half that number, found almost everywhere
great difficulty in procuring subsistence. The famines which they are said to
have occasioned almost wherever they went, in countries, too, which at the same
time are represented as very populous and well cultivated, sufficiently
demonstrate that the story of this populousness and high cultivation is in a
great measure fabulous. The Spanish colonies are under a government in many
respects less favourable to agriculture, improvement, and population, than that
of the English colonies. They seem, however, to be advancing in all those much
more rapidly than any country in Europe. In a fertile soil and happy climate,
the great abundance and cheapness of land, a circumstance common to all new
colonies, is, it seems, so great an advantage, as to compensate many defects in
civil government. Frezier, who visited Peru in 1713, represents Lima as
containing between twenty-five and twenty-eight thousand inhabitants. Ulloa,
who resided in the same country between 1740 and 1746, represents it as
containing more than fifty thousand. The difference in their accounts of the
populousness of several other principal towns of Chili and Peru is nearly the
same; and as there seems to be no reason to doubt of the good information of
either, it marks an increase which is scarce inferior to that of the English
colonies. America, therefore, is a new market for the produce of its own silver
mines, of which the demand must increase much more rapidly than that of the
most thriving country in Europe.

Thirdly, the East Indies is another market for the produce of the silver mines
of America, and a market which, from the time of the first discovery of those
mines, has been continually taking off a greater and a greater quantity of
silver. Since that time, the direct trade between America and the East Indies,
which is carried on by means of the Acapulco ships, has been continually
augmenting, and the indirect intercourse by the way of Europe has been
augmenting in a still greater proportion. During the sixteenth century, the
Portuguese were the only European nation who carried on any regular trade to
the East Indies. In the last years of that century, the Dutch began to encroach
upon this monopoly, and in a few years expelled them from their principal
settlements in India. During the greater part of the last century, those two
nations divided the most considerable part of the East India trade between
them; the trade of the Dutch continually augmenting in a still greater
proportion than that of the Portuguese declined. The English and French carried
on some trade with India in the last century, but it has been greatly augmented
in the course of the present. The East India trade of the Swedes and Danes
began in the course of the present century. Even the Muscovites now trade
regularly with China, by a sort of caravans which go over land through Siberia
and Tartary to Pekin. The East India trade of all these nations, if we except
that of the French, which the last war had well nigh annihilated, has been
almost continually augmenting. The increasing consumptions of East India goods
in Europe is, it seems, so great, as to afford a gradual increase of employment
to them all. Tea, for example, was a drug very little used in Europe, before
the middle of the last century. At present, the value of the tea annually
imported by the English East India company, for the use of their own
countrymen, amounts to more than a million and a half a year; and even this is
not enough; a great deal more being constantly smuggled into the country from
the ports of Holland, from Gottenburgh in Sweden, and from the coast of France,
too, as long as the French East India company was in prosperity. The
consumption of the porcelain of China, of the spiceries of the Moluccas, of the
piece goods of Bengal, and of innumerable other articles, has increased very
nearly in a like proportion. The tonnage, accordingly, of all the European
shipping employed in the East India trade, at any one time during the last
century, was not, perhaps, much greater than that of the English East India
company before the late reduction of their shipping.

But in the East Indies, particularly in China and Indostan, the value of the
precious metals, when the Europeans first began to trade to those countries,
was much higher than in Europe; and it still continues to be so. In rice
countries, which generally yield two, sometimes three crops in the year, each
of them more plentiful than any common crop of corn, the abundance of food must
be much greater than in any corn country of equal extent. Such countries are
accordingly much more populous. In them, too, the rich, having a greater
superabundance of food to dispose of beyond what they themselves can consume,
have the means of purchasing a much greater quantity of the labour of other
people. The retinue of a grandee in China or Indostan accordingly is, by all
accounts, much more numerous and splendid than that of the richest subjects in
Europe. The same superabundance of food, of which they have the disposal,
enables them to give a greater quantity of it for all those singular and rare
productions which nature furnishes but in very small quantities; such as the
precious metals and the precious stones, the great objects of the competition
of the rich. Though the mines, therefore, which supplied the Indian market, had
been as abundant as those which supplied the European, such commodities would
naturally exchange for a greater quantity of food in India than in Europe. But
the mines which supplied the Indian market with the precious metals seem to
have been a good deal less abundant, and those which supplied it with the
precious stones a good deal more so, than the mines which supplied the
European. The precious metals, therefore, would naturally exchange in India for
a somewhat greater quantity of the precious stones, and for a much greater
quantity of food than in Europe. The money price of diamonds, the greatest of
all superfluities, would be somewhat lower, and that of food, the first of all
necessaries, a great deal lower in the one country than in the other. But the
real price of labour, the real quantity of the necessaries of life which is
given to the labourer, it has already been observed, is lower both in China and
Indostan, the two great markets of India, than it is through the greater part
of Europe. The wages of the labourer will there purchase a smaller quantity of
food: and as the money price of food is much lower in India than in Europe, the
money price of labour is there lower upon a double account; upon account both
of the small quantity of food which it will purchase, and of the low price of
that food. But in countries of equal art and industry, the money price of the
greater part of manufactures will be in proportion to the money price of
labour; and in manufacturing art and industry, China and Indostan, though
inferior, seem not to be much inferior to any part of Europe. The money price
of the greater part of manufactures, therefore, will naturally be much lower in
those great empires than it is anywhere in Europe. Through the greater part of
Europe, too, the expense of land-carriage increases very much both the real and
nominal price of most manufactures. It costs more labour, and therefore more
money, to bring first the materials, and afterwards the complete manufacture to
market. In China and Indostan, the extent and variety of inland navigations
save the greater part of this labour, and consequently of this money, and
thereby reduce still lower both the real and the nominal price of the greater
part of their manufactures. Upon all these accounts, the precious metals are a
commodity which it always has been, and still continues to be, extremely
advantageous to carry from Europe to India. There is scarce any commodity which
brings a better price there; or which, in proportion to the quantity of labour
and commodities which it costs in Europe, will purchase or command a greater
quantity of labour and commodities in India. It is more advantageous, too, to
carry silver thither than gold; because in China, and the greater part of the
other markets of India, the proportion between fine silver and fine gold is but
as ten, or at most as twelve to one; whereas in Europe it is as fourteen or
fifteen to one. In China, and the greater part of the other markets of India,
ten, or at most twelve ounces of silver, will purchase an ounce of gold; in
Europe, it requires from fourteen to fifteen ounces. In the cargoes, therefore,
of the greater part of European ships which sail to India, silver has generally
been one of the most valuable articles. It is the most valuable article in the
Acapulco ships which sail to Manilla. The silver of the new continent seems, in
this manner, to be one of the principal commodities by which the commerce
between the two extremities of the old one is carried on; and it is by means of
it, in a great measure, that those distant parts of the world are connected
with one another.

In order to supply so very widely extended a market, the quantity of silver
annually brought from the mines must not only be sufficient to support that
continued increase, both of coin and of plate, which is required in all
thriving countries; but to repair that continual waste and consumption of
silver which takes place in all countries where that metal is used.

The continual consumption of the precious metals in coin by wearing, and in
plate both by wearing and cleaning, is very sensible; and in commodities of
which the use is so very widely extended, would alone require a very great
annual supply. The consumption of those metals in some particular manufactures,
though it may not perhaps be greater upon the whole than this gradual
consumption, is, however, much more sensible, as it is much more rapid. In the
manufactures of Birmingham alone, the quantity of gold and silver annually
employed in gilding and plating, and thereby disqualified from ever afterwards
appearing in the shape of those metals, is said to amount to more than fifty
thousand pounds sterling. We may from thence form some notion how great must be
the annual consumption in all the different parts of the world, either in
manufactures of the same kind with those of Birmingham, or in laces,
embroideries, gold and silver stuffs, the gilding of books, furniture, etc. A
considerable quantity, too, must be annually lost in transporting those metals
from one place to another both by sea and by land. In the greater part of the
governments of Asia, besides, the almost universal custom of concealing
treasures in the bowels of the earth, of which the knowledge frequently dies
with the person who makes the concealment, must occasion the loss of a still
greater quantity.

The quantity of gold and silver imported at both Cadiz and Lisbon (including
not only what comes under register, but what may be supposed to be smuggled)
amounts, according to the best accounts, to about six millions sterling a-year.

According to Mr Meggens {Postscript to the Universal Merchant p. 15 and 16.
This postscript was not printed till 1756, three years after the publication of
the book, which has never had a second edition. The postscript is, therefore,
to be found in few copies; it corrects several errors in the book.}, the annual
importation of the precious metals into Spain, at an average of six years, viz.
from 1748 to 1753, both inclusive, and into Portugal, at an average of seven
years, viz. from 1747 to 1753, both inclusive, amounted in silver to 1,101,107
pounds weight, and in gold to 49,940 pounds weight. The silver, at sixty two
shillings the pound troy, amounts to £ 3,413,431:10s. sterling. The gold, at
forty-four guineas and a half the pound troy, amounts to £ 2,333,446:14s.
sterling. Both together amount to £ 5,746,878:4s. sterling. The account of what
was imported under register, he assures us, is exact. He gives us the detail of
the particular places from which the gold and silver were brought, and of the
particular quantity of each metal, which, according to the register, each of
them afforded. He makes an allowance, too, for the quantity of each metal
which, he supposes, may have been smuggled. The great experience of this
judicious merchant renders his opinion of considerable weight.

According to the eloquent, and sometimes well-informed, author of the
Philosophical and Political History of the Establishment of the Europeans in
the two Indies, the annual importation of registered gold and silver into
Spain, at an average of eleven years, viz. from 1754 to 1764, both inclusive,
amounted to 13,984,185 3/5 piastres of ten reals. On account of what may have
been smuggled, however, the whole annual importation, he supposes, may have
amounted to seventeen millions of piastres, which, at 4s. 6d. the piastre, is
equal to £ 3,825,000 sterling. He gives the detail, too, of the particular
places from which the gold and silver were brought, and of the particular
quantities of each metal, which according to the register, each of them
afforded. He informs us, too, that if we were to judge of the quantity of gold
annually imported from the Brazils to Lisbon, by the amount of the tax paid to
the king of Portugal, which it seems, is one-fifth of the standard metal, we
might value it at eighteen millions of cruzadoes, or forty-five millions of
French livres, equal to about twenty millions sterling. On account of what may
have been smuggled, however, we may safely, he says, add to this sum an eighth
more, or £ 250,000 sterling, so that the whole will amount to £ 2,250,000
sterling. According to this account, therefore, the whole annual importation of
the precious metals into both Spain and Portugal, mounts to about £ 6,075,000
sterling.

Several other very well authenticated, though manuscript accounts, I have been
assured, agree in making this whole annual importation amount, at an average,
to about six millions sterling; sometimes a little more, sometimes a little
less.

The annual importation of the precious metals into Cadiz and Lisbon, indeed, is
not equal to the whole annual produce of the mines of America. Some part is
sent annually by the Acapulco ships to Manilla; some part is employed in a
contraband trade, which the Spanish colonies carry on with those of other
European nations; and some part, no doubt, remains in the country. The mines of
America, besides, are by no means the only gold and silver mines in the world.
They, are, however, by far the most abundant. The produce of all the other
mines which are known is insignificant, it is acknowledged, in comparison with
theirs; and the far greater part of their produce, it is likewise acknowledged,
is annually imported into Cadiz and Lisbon. But the consumption of Birmingham
alone, at the rate of fifty thousand pounds a-year, is equal to the
hundred-and-twentieth part of this annual importation, at the rate of six
millions a-year. The whole annual consumption of gold and silver, therefore, in
all the different countries of the world where those metals are used, may,
perhaps, be nearly equal to the whole annual produce. The remainder may be no
more than sufficient to supply the increasing demand of all thriving countries.
It may even have fallen so far short of this demand, as somewhat to raise the
price of those metals in the European market.

The quantity of brass and iron annually brought from the mine to the market, is
out of all proportion greater than that of gold and silver. We do not, however,
upon this account, imagine that those coarse metals are likely to multiply
beyond the demand, or to become gradually cheaper and cheaper. Why should we
imagine that the precious metals are likely to do so? The coarse metals,
indeed, though harder, are put to much harder uses, and, as they are of less
value, less care is employed in their preservation. The precious metals,
however, are not necessarily immortal any more than they, but are liable, too,
to be lost, wasted, and consumed, in a great variety of ways.

The price of all metals, though liable to slow and gradual variations, varies
less from year to year than that of almost any other part of the rude produce
of land: and the price of the precious metals is even less liable to sudden
variations than that of the coarse ones. The durableness of metals is the
foundation of this extraordinary steadiness of price. The corn which was
brought to market last year will be all, or almost all, consumed, long before
the end of this year. But some part of the iron which was brought from the mine
two or three hundred years ago, may be still in use, and, perhaps, some part of
the gold which was brought from it two or three thousand years ago. The
different masses of corn, which, in different years, must supply the
consumption of the world, will always be nearly in proportion to the respective
produce of those different years. But the proportion between the different
masses of iron which may be in use in two different years, will be very little
affected by any accidental difference in the produce of the iron mines of those
two years; and the proportion between the masses of gold will be still less
affected by any such difference in the produce of the gold mines. Though the
produce of the greater part of metallic mines, therefore, varies, perhaps,
still more from year to year than that of the greater part of corn fields,
those variations have not the same effect upon the price of the one species of
commodities as upon that of the other.

Variations in the Proportion between the respective Values of Gold and
Silver.

Before the discovery of the mines of America, the value of fine gold to fine
silver was regulated in the different mines of Europe, between the proportions
of one to ten and one to twelve; that is, an ounce of fine gold was supposed to
be worth from ten to twelve ounces of fine silver. About the middle of the last
century, it came to be regulated, between the proportions of one to fourteen
and one to fifteen; that is, an ounce of fine gold came to be supposed worth
between fourteen and fifteen ounces of fine silver. Gold rose in its nominal
value, or in the quantity of silver which was given for it. Both metals sunk in
their real value, or in the quantity of labour which they could purchase; but
silver sunk more than gold. Though both the gold and silver mines of America
exceeded in fertility all those which had ever been known before, the fertility
of the silver mines had, it seems, been proportionally still greater than that
of the gold ones.

The great quantities of silver carried annually from Europe to India, have, in
some of the English settlements, gradually reduced the value of that metal in
proportion to gold. In the mint of Calcutta, an ounce of fine gold is supposed
to be worth fifteen ounces of fine silver, in the same manner as in Europe. It
is in the mint, perhaps, rated too high for the value which it bears in the
market of Bengal. In China, the proportion of gold to silver still continues as
one to ten, or one to twelve. In Japan, it is said to be as one to eight.

The proportion between the quantities of gold and silver annually imported into
Europe, according to Mr Meggens’ account, is as one to twenty-two nearly;
that is, for one ounce of gold there are imported a little more than twenty-two
ounces of silver. The great quantity of silver sent annually to the East Indies
reduces, he supposes, the quantities of those metals which remain in Europe to
the proportion of one to fourteen or fifteen, the proportion of their values.
The proportion between their values, he seems to think, must necessarily be the
same as that between their quantities, and would therefore be as one to
twenty-two, were it not for this greater exportation of silver.

But the ordinary proportion between the respective values of two commodities is
not necessarily the same as that between the quantities of them which are
commonly in the market. The price of an ox, reckoned at ten guineas, is about
three score times the price of a lamb, reckoned at 3s. 6d. It would be absurd,
however, to infer from thence, that there are commonly in the market three
score lambs for one ox; and it would be just as absurd to infer, because an
ounce of gold will commonly purchase from fourteen or fifteen ounces of silver,
that there are commonly in the market only fourteen or fifteen ounces of silver
for one ounce of gold.

The quantity of silver commonly in the market, it is probable, is much greater
in proportion to that of gold, than the value of a certain quantity of gold is
to that of an equal quantity of silver. The whole quantity of a cheap commodity
brought to market is commonly not only greater, but of greater value, than the
whole quantity of a dear one. The whole quantity of bread annually brought to
market, is not only greater, but of greater value, than the whole quantity of
butcher’s meat; the whole quantity of butcher’s meat, than the
whole quantity of poultry; and the whole quantity of poultry, than the whole
quantity of wild fowl. There are so many more purchasers for the cheap than for
the dear commodity, that, not only a greater quantity of it, but a greater
value can commonly be disposed of. The whole quantity, therefore, of the cheap
commodity, must commonly be greater in proportion to the whole quantity of the
dear one, than the value of a certain quantity of the dear one, is to the value
of an equal quantity of the cheap one. When we compare the precious metals with
one another, silver is a cheap, and gold a dear commodity. We ought naturally
to expect, therefore, that there should always be in the market, not only a
greater quantity, but a greater value of silver than of gold. Let any man, who
has a little of both, compare his own silver with his gold plate, and he will
probably find, that not only the quantity, but the value of the former, greatly
exceeds that of the latter. Many people, besides, have a good deal of silver
who have no gold plate, which, even with those who have it, is generally
confined to watch-cases, snuff-boxes, and such like trinkets, of which the
whole amount is seldom of great value. In the British coin, indeed, the value
of the gold preponderates greatly, but it is not so in that of all countries.
In the coin of some countries, the value of the two metals is nearly equal. In
the Scotch coin, before the union with England, the gold preponderated very
little, though it did somewhat {See Ruddiman’s Preface to
Anderson’s Diplomata, etc. Scotiae.}, as it appears by the accounts of
the mint. In the coin of many countries the silver preponderates. In France,
the largest sums are commonly paid in that metal, and it is there difficult to
get more gold than what is necessary to carry about in your pocket. The
superior value, however, of the silver plate above that of the gold, which
takes place in all countries, will much more than compensate the preponderancy
of the gold coin above the silver, which takes place only in some countries.

Though, in one sense of the word, silver always has been, and probably always
will be, much cheaper than gold; yet, in another sense, gold may perhaps, in
the present state of the Spanish market, be said to be somewhat cheaper than
silver. A commodity may be said to be dear or cheap not only according to the
absolute greatness or smallness of its usual price, but according as that price
is more or less above the lowest for which it is possible to bring it to market
for any considerable time together. This lowest price is that which barely
replaces, with a moderate profit, the stock which must be employed in bringing
the commodity thither. It is the price which affords nothing to the landlord,
of which rent makes not any component part, but which resolves itself
altogether into wages and profit. But, in the present state of the Spanish
market, gold is certainly somewhat nearer to this lowest price than silver. The
tax of the king of Spain upon gold is only one-twentieth part of the standard
metal, or five per cent.; whereas his tax upon silver amounts to one-tenth part
of it, or to ten per cent. In these taxes, too, it has already been observed,
consists the whole rent of the greater part of the gold and silver mines of
Spanish America; and that upon gold is still worse paid than that upon silver.
The profits of the undertakers of gold mines, too, as they more rarely make a
fortune, must, in general, be still more moderate than those of the undertakers
of silver mines. The price of Spanish gold, therefore, as it affords both less
rent and less profit, must, in the Spanish market, be somewhat nearer to the
lowest price for which it is possible to bring it thither, than the price of
Spanish silver. When all expenses are computed, the whole quantity of the one
metal, it would seem, cannot, in the Spanish market, be disposed of so
advantageously as the whole quantity of the other. The tax, indeed, of the king
of Portugal upon the gold of the Brazils, is the same with the ancient tax of
the king of Spain upon the silver of Mexico and Peru; or one-fifth part of the
standard metal. It may therefore be uncertain, whether, to the general market
of Europe, the whole mass of American gold comes at a price nearer to the
lowest for which it is possible to bring it thither, than the whole mass of
American silver.

The price of diamonds and other precious stones may, perhaps, be still nearer
to the lowest price at which it is possible to bring them to market, than even
the price of gold.

Though it is not very probable that any part of a tax, which is not only
imposed upon one of the most proper subjects of taxation, a mere luxury and
superfluity, but which affords so very important a revenue as the tax upon
silver, will ever be given up as long as it is possible to pay it; yet the same
impossibility of paying it, which, in 1736. made it necessary to reduce it from
one-fifth to one-tenth, may in time make it necessary to reduce it still
further; in the same manner as it made it necessary to reduce the tax upon gold
to one-twentieth. That the silver mines of Spanish America, like all other
mines, become gradually more expensive in the working, on account of the
greater depths at which it is necessary to carry on the works, and of the
greater expense of drawing out the water, and of supplying them with fresh air
at those depths, is acknowledged by everybody who has inquired into the state
of those mines.

These causes, which are equivalent to a growing scarcity of silver (for a
commodity may be said to grow scarcer when it becomes more difficult and
expensive to collect a certain quantity of it), must, in time, produce one or
other of the three following events: The increase of the expense must either,
first, be compensated altogether by a proportionable increase in the price of
the metal; or, secondly, it must be compensated altogether by a proportionable
diminution of the tax upon silver; or, thirdly, it must be compensated partly
by the one and partly by the other of those two expedients. This third event is
very possible. As gold rose in its price in proportion to silver,
notwithstanding a great diminution of the tax upon gold, so silver might rise
in its price in proportion to labour and commodities, notwithstanding an equal
diminution of the tax upon silver.

Such successive reductions of the tax, however, though they may not prevent
altogether, must certainly retard, more or less, the rise of the value of
silver in the European market. In consequence of such reductions, many mines
may be wrought which could not be wrought before, because they could not afford
to pay the old tax; and the quantity of silver annually brought to market, must
always be somewhat greater, and, therefore, the value of any given quantity
somewhat less, than it otherwise would have been. In consequence of the
reduction in 1736, the value of silver in the European market, though it may
not at this day be lower than before that reduction, is, probably, at least ten
per cent. lower than it would have been, had the court of Spain continued to
exact the old tax. That, notwithstanding this reduction, the value of silver
has, during the course of the present century, begun to rise somewhat in the
European market, the facts and arguments which have been alleged above, dispose
me to believe, or more properly to suspect and conjecture; for the best opinion
which I can form upon this subject, scarce, perhaps, deserves the name of
belief. The rise, indeed, supposing there has been any, has hitherto been so
very small, that after all that has been said, it may, perhaps, appear to many
people uncertain, not only whether this event has actually taken place, but
whether the contrary may not have taken place, or whether the value of silver
may not still continue to fall in the European market.

It must be observed, however, that whatever may be the supposed annual
importation of gold and silver, there must be a certain period at which the
annual consumption of those metals will be equal to that annual importation.
Their consumption must increase as their mass increases, or rather in a much
greater proportion. As their mass increases, their value diminishes. They are
more used, and less cared for, and their consumption consequently increases in
a greater proportion than their mass. After a certain period, therefore, the
annual consumption of those metals must, in this manner, become equal to their
annual importation, provided that importation is not continually increasing;
which, in the present times, is not supposed to be the case.

If, when the annual consumption has become equal to the annual importation, the
annual importation should gradually diminish, the annual consumption may, for
some time, exceed the annual importation. The mass of those metals may
gradually and insensibly diminish, and their value gradually and insensibly
rise, till the annual importation becoming again stationary, the annual
consumption will gradually and insensibly accommodate itself to what that
annual importation can maintain.

Grounds of the suspicion that the Value of Silver still continues to
decrease.

The increase of the wealth of Europe, and the popular notion, that as the
quantity of the precious metals naturally increases with the increase of
wealth, so their value diminishes as their quantity increases, may, perhaps,
dispose many people to believe that their value still continues to fall in the
European market; and the still gradually increasing price of many parts of the
rude produce of land may confirm them still farther in this opinion.

That that increase in the quantity of the precious metals, which arises in any
country from the increase of wealth, has no tendency to diminish their value, I
have endeavoured to shew already. Gold and silver naturally resort to a rich
country, for the same reason that all sorts of luxuries and curiosities resort
to it; not because they are cheaper there than in poorer countries, but because
they are dearer, or because a better price is given for them. It is the
superiority of price which attracts them; and as soon as that superiority
ceases, they necessarily cease to go thither.

If you except corn, and such other vegetables as are raised altogether by human
industry, that all other sorts of rude produce, cattle, poultry, game of all
kinds, the useful fossils and minerals of the earth, etc. naturally grow
dearer, as the society advances in wealth and improvement, I have endeavoured
to shew already. Though such commodities, therefore, come to exchange for a
greater quantity of silver than before, it will not from thence follow that
silver has become really cheaper, or will purchase less labour than before; but
that such commodities have become really dearer, or will purchase more labour
than before. It is not their nominal price only, but their real price, which
rises in the progress of improvement. The rise of their nominal price is the
effect, not of any degradation of the value of silver, but of the rise in their
real price.

Different Effects of the Progress of Improvement upon three different sorts
of rude Produce.

These different sorts of rude produce may be divided into three classes. The
first comprehends those which it is scarce in the power of human industry to
multiply at all. The second, those which it can multiply in proportion to the
demand. The third, those in which the efficacy of industry is either limited or
uncertain. In the progress of wealth and improvement, the real price of the
first may rise to any degree of extravagance, and seems not to be limited by
any certain boundary. That of the second, though it may rise greatly, has,
however, a certain boundary, beyond which it cannot well pass for any
considerable time together. That of the third, though its natural tendency is
to rise in the progress of improvement, yet in the same degree of improvement
it may sometimes happen even to fall, sometimes to continue the same, and
sometimes to rise more or less, according as different accidents render the
efforts of human industry, in multiplying this sort of rude produce, more or
less successful.

First Sort.—The first sort of rude produce, of which the price rises in
the progress of improvement, is that which it is scarce in the power of human
industry to multiply at all. It consists in those things which nature produces
only in certain quantities, and which being of a very perishable nature, it is
impossible to accumulate together the produce of many different seasons. Such
are the greater part of rare and singular birds and fishes, many different
sorts of game, almost all wild-fowl, all birds of passage in particular, as
well as many other things. When wealth, and the luxury which accompanies it,
increase, the demand for these is likely to increase with them, and no effort
of human industry may be able to increase the supply much beyond what it was
before this increase of the demand. The quantity of such commodities,
therefore, remaining the same, or nearly the same, while the competition to
purchase them is continually increasing, their price may rise to any degree of
extravagance, and seems not to be limited by any certain boundary. If woodcocks
should become so fashionable as to sell for twenty guineas a-piece, no effort
of human industry could increase the number of those brought to market, much
beyond what it is at present. The high price paid by the Romans, in the time of
their greatest grandeur, for rare birds and fishes, may in this manner easily
be accounted for. These prices were not the effects of the low value of silver
in those times, but of the high value of such rarities and curiosities as human
industry could not multiply at pleasure. The real value of silver was higher at
Rome, for sometime before, and after the fall of the republic, than it is
through the greater part of Europe at present. Three sestertii equal to about
sixpence sterling, was the price which the republic paid for the modius or peck
of the tithe wheat of Sicily. This price, however, was probably below the
average market price, the obligation to deliver their wheat at this rate being
considered as a tax upon the Sicilian farmers. When the Romans, therefore, had
occasion to order more corn than the tithe of wheat amounted to, they were
bound by capitulation to pay for the surplus at the rate of four sestertii, or
eightpence sterling the peck; and this had probably been reckoned the moderate
and reasonable, that is, the ordinary or average contract price of those times;
it is equal to about one-and-twenty shillings the quarter. Eight-and-twenty
shillings the quarter was, before the late years of scarcity, the ordinary
contract price of English wheat, which in quality is inferior to the Sicilian,
and generally sells for a lower price in the European market. The value of
silver, therefore, in those ancient times, must have been to its value in the
present, as three to four inversely; that is, three ounces of silver would then
have purchased the same quantity of labour and commodities which four ounces
will do at present. When we read in Pliny, therefore, that Seius {Lib. X, c.
29.} bought a white nightingale, as a present for the empress Agrippina, at the
price of six thousand sestertii, equal to about fifty pounds of our present
money; and that Asinius Celer {Lib. IX, c. 17.} purchased a surmullet at the
price of eight thousand sestertii, equal to about sixty-six pounds thirteen
shillings and fourpence of our present money; the extravagance of those prices,
how much soever it may surprise us, is apt, notwithstanding, to appear to us
about one third less than it really was. Their real price, the quantity of
labour and subsistence which was given away for them, was about one-third more
than their nominal price is apt to express to us in the present times. Seius
gave for the nightingale the command of a quantity of labour and subsistence,
equal to what £ 66:13: 4d. would purchase in the present times; and Asinius
Celer gave for a surmullet the command of a quantity equal to what £ 88:17: 9d.
would purchase. What occasioned the extravagance of those high prices was, not
so much the abundance of silver, as the abundance of labour and subsistence, of
which those Romans had the disposal, beyond what was necessary for their own
use. The quantity of silver, of which they had the disposal, was a good deal
less than what the command of the same quantity of labour and subsistence would
have procured to them in the present times.

Second sort.—The second sort of rude produce, of which the price rises in
the progress of improvement, is that which human industry can multiply in
proportion to the demand. It consists in those useful plants and animals,
which, in uncultivated countries, nature produces with such profuse abundance,
that they are of little or no value, and which, as cultivation advances, are
therefore forced to give place to some more profitable produce. During a long
period in the progress of improvement, the quantity of these is continually
diminishing, while, at the same time, the demand for them is continually
increasing. Their real value, therefore, the real quantity of labour which they
will purchase or command, gradually rises, till at last it gets so high as to
render them as profitable a produce as any thing else which human industry can
raise upon the most fertile and best cultivated land. When it has got so high,
it cannot well go higher. If it did, more land and more industry would soon be
employed to increase their quantity.

When the price of cattle, for example, rises so high, that it is as profitable
to cultivate land in order to raise food for them as in order to raise food for
man, it cannot well go higher. If it did, more corn land would soon be turned
into pasture. The extension of tillage, by diminishing the quantity of wild
pasture, diminishes the quantity of butcher’s meat, which the country
naturally produces without labour or cultivation; and, by increasing the number
of those who have either corn, or, what comes to the same thing, the price of
corn, to give in exchange for it, increases the demand. The price of
butcher’s meat, therefore, and, consequently, of cattle, must gradually
rise, till it gets so high, that it becomes as profitable to employ the most
fertile and best cultivated lands in raising food for them as in raising corn.
But it must always be late in the progress of improvement before tillage can be
so far extended as to raise the price of cattle to this height; and, till it
has got to this height, if the country is advancing at all, their price must be
continually rising. There are, perhaps, some parts of Europe in which the price
of cattle has not yet got to this height. It had not got to this height in any
part of Scotland before the Union. Had the Scotch cattle been always confined
to the market of Scotland, in a country in which the quantity of land, which
can be applied to no other purpose but the feeding of cattle, is so great in
proportion to what can be applied to other purposes, it is scarce possible,
perhaps, that their price could ever have risen so high as to render it
profitable to cultivate land for the sake of feeding them. In England, the
price of cattle, it has already been observed, seems, in the neighbourhood of
London, to have got to this height about the beginning of the last century; but
it was much later, probably, before it got through the greater part of the
remoter counties, in some of which, perhaps, it may scarce yet have got to it.
Of all the different substances, however, which compose this second sort of
rude produce, cattle is, perhaps, that of which the price, in the progress of
improvement, rises first to this height.

Till the price of cattle, indeed, has got to this height, it seems scarce
possible that the greater part, even of those lands which are capable of the
highest cultivation, can be completely cultivated. In all farms too distant
from any town to carry manure from it, that is, in the far greater part of
those of every extensive country, the quantity of well cultivated land must be
in proportion to the quantity of manure which the farm itself produces; and
this, again, must be in proportion to the stock of cattle which are maintained
upon it. The land is manured, either by pasturing the cattle upon it, or by
feeding them in the stable, and from thence carrying out their dung to it. But
unless the price of the cattle be sufficient to pay both the rent and profit of
cultivated land, the farmer cannot afford to pasture them upon it; and he can
still less afford to feed them in the stable. It is with the produce of
improved and cultivated land only that cattle can be fed in the stable;
because, to collect the scanty and scattered produce of waste and unimproved
lands, would require too much labour, and be too expensive. If the price of the
cattle, therefore, is not sufficient to pay for the produce of improved and
cultivated land, when they are allowed to pasture it, that price will be still
less sufficient to pay for that produce, when it must be collected with a good
deal of additional labour, and brought into the stable to them. In these
circumstances, therefore, no more cattle can with profit be fed in the stable
than what are necessary for tillage. But these can never afford manure enough
for keeping constantly in good condition all the lands which they are capable
of cultivating. What they afford, being insufficient for the whole farm, will
naturally be reserved for the lands to which it can be most advantageously or
conveniently applied; the most fertile, or those, perhaps, in the neighbourhood
of the farm-yard. These, therefore, will be kept constantly in good condition,
and fit for tillage. The rest will, the greater part of them, be allowed to lie
waste, producing scarce any thing but some miserable pasture, just sufficient
to keep alive a few straggling, half-starved cattle; the farm, though much
overstocked in proportion to what would be necessary for its complete
cultivation, being very frequently overstocked in proportion to its actual
produce. A portion of this waste land, however, after having been pastured in
this wretched manner for six or seven years together, may be ploughed up, when
it will yield, perhaps, a poor crop or two of bad oats, or of some other coarse
grain; and then, being entirely exhausted, it must be rested and pastured again
as before, and another portion ploughed up, to be in the same manner exhausted
and rested again in its turn. Such, accordingly, was the general system of
management all over the low country of Scotland before the Union. The lands
which were kept constantly well manured and in good condition seldom exceeded a
third or fourth part of the whole farm, and sometimes did not amount to a fifth
or a sixth part of it. The rest were never manured, but a certain portion of
them was in its turn, notwithstanding, regularly cultivated and exhausted.
Under this system of management, it is evident, even that part of the lands of
Scotland which is capable of good cultivation, could produce but little in
comparison of what it may be capable of producing. But how disadvantageous
soever this system may appear, yet, before the Union, the low price of cattle
seems to have rendered it almost unavoidable. If, notwithstanding a great rise
in the price, it still continues to prevail through a considerable part of the
country, it is owing in many places, no doubt, to ignorance and attachment to
old customs, but, in most places, to the unavoidable obstructions which the
natural course of things opposes to the immediate or speedy establishment of a
better system: first, to the poverty of the tenants, to their not having yet
had time to acquire a stock of cattle sufficient to cultivate their lands more
completely, the same rise of price, which would render it advantageous for them
to maintain a greater stock, rendering it more difficult for them to acquire
it; and, secondly, to their not having yet had time to put their lands in
condition to maintain this greater stock properly, supposing they were capable
of acquiring it. The increase of stock and the improvement of land are two
events which must go hand in hand, and of which the one can nowhere much outrun
the other. Without some increase of stock, there can be scarce any improvement
of land, but there can be no considerable increase of stock, but in consequence
of a considerable improvement of land; because otherwise the land could not
maintain it. These natural obstructions to the establishment of a better
system, cannot be removed but by a long course of frugality and industry; and
half a century or a century more, perhaps, must pass away before the old
system, which is wearing out gradually, can be completely abolished through all
the different parts of the country. Of all the commercial advantages, however,
which Scotland has derived from the Union with England, this rise in the price
of cattle is, perhaps, the greatest. It has not only raised the value of all
highland estates, but it has, perhaps, been the principal cause of the
improvement of the low country.

In all new colonies, the great quantity of waste land, which can for many years
be applied to no other purpose but the feeding of cattle, soon renders them
extremely abundant; and in every thing great cheapness is the necessary
consequence of great abundance. Though all the cattle of the European colonies
in America were originally carried from Europe, they soon multiplied so much
there, and became of so little value, that even horses were allowed to run wild
in the woods, without any owner thinking it worth while to claim them. It must
be a long time after the first establishment of such colonies, before it can
become profitable to feed cattle upon the produce of cultivated land. The same
causes, therefore, the want of manure, and the disproportion between the stock
employed in cultivation and the land which it is destined to cultivate, are
likely to introduce there a system of husbandry, not unlike that which still
continues to take place in so many parts of Scotland. Mr Kalm, the Swedish
traveller, when he gives an account of the husbandry of some of the English
colonies in North America, as he found it in 1749, observes, accordingly, that
he can with difficulty discover there the character of the English nation, so
well skilled in all the different branches of agriculture. They make scarce any
manure for their corn fields, he says; but when one piece of ground has been
exhausted by continual cropping, they clear and cultivate another piece of
fresh land; and when that is exhausted, proceed to a third. Their cattle are
allowed to wander through the woods and other uncultivated grounds, where they
are half-starved; having long ago extirpated almost all the annual grasses, by
cropping them too early in the spring, before they had time to form their
flowers, or to shed their seeds. {Kalm’s Travels, vol 1, pp. 343, 344.}
The annual grasses were, it seems, the best natural grasses in that part of
North America; and when the Europeans first settled there, they used to grow
very thick, and to rise three or four feet high. A piece of ground which, when
he wrote, could not maintain one cow, would in former times, he was assured,
have maintained four, each of which would have given four times the quantity of
milk which that one was capable of giving. The poorness of the pasture had, in
his opinion, occasioned the degradation of their cattle, which degenerated
sensibly from one generation to another. They were probably not unlike that
stunted breed which was common all over Scotland thirty or forty years ago, and
which is now so much mended through the greater part of the low country, not so
much by a change of the breed, though that expedient has been employed in some
places, as by a more plentiful method of feeding them.

Though it is late, therefore, in the progress of improvement, before cattle can
bring such a price as to render it profitable to cultivate land for the sake of
feeding them; yet of all the different parts which compose this second sort of
rude produce, they are perhaps the first which bring this price; because, till
they bring it, it seems impossible that improvement can be brought near even to
that degree of perfection to which it has arrived in many parts of Europe.

As cattle are among the first, so perhaps venison is among the last parts of
this sort of rude produce which bring this price. The price of venison in Great
Britain, how extravagant soever it may appear, is not near sufficient to
compensate the expense of a deer park, as is well known to all those who have
had any experience in the feeding of deer. If it was otherwise, the feeding of
deer would soon become an article of common farming, in the same manner as the
feeding of those small birds, called turdi, was among the ancient Romans. Varro
and Columella assure us, that it was a most profitable article. The fattening
of ortolans, birds of passage which arrive lean in the country, is said to be
so in some parts of France. If venison continues in fashion, and the wealth and
luxury of Great Britain increase as they have done for some time past, its
price may very probably rise still higher than it is at present.

Between that period in the progress of improvement, which brings to its height
the price of so necessary an article as cattle, and that which brings to it the
price of such a superfluity as venison, there is a very long interval, in the
course of which many other sorts of rude produce gradually arrive at their
highest price, some sooner and some later, according to different
circumstances.

Thus, in every farm, the offals of the barn and stable will maintain a certain
number of poultry. These, as they are fed with what would otherwise be lost,
are a mere save-all; and as they cost the farmer scarce any thing, so he can
afford to sell them for very little. Almost all that he gets is pure gain, and
their price can scarce be so low as to discourage him from feeding this number.
But in countries ill cultivated, and therefore but thinly inhabited, the
poultry, which are thus raised without expense, are often fully sufficient to
supply the whole demand. In this state of things, therefore, they are often as
cheap as butcher’s meat, or any other sort of animal food. But the whole
quantity of poultry which the farm in this manner produces without expense,
must always be much smaller than the whole quantity of butcher’s meat
which is reared upon it; and in times of wealth and luxury, what is rare, with
only nearly equal merit, is always preferred to what is common. As wealth and
luxury increase, therefore, in consequence of improvement and cultivation, the
price of poultry gradually rises above that of butcher’s meat, till at
last it gets so high, that it becomes profitable to cultivate land for the sake
of feeding them. When it has got to this height, it cannot well go higher. If
it did, more land would soon be turned to this purpose. In several provinces of
France, the feeding of poultry is considered as a very important article in
rural economy, and sufficiently profitable to encourage the farmer to raise a
considerable quantity of Indian corn and buckwheat for this purpose. A middling
farmer will there sometimes have four hundred fowls in his yard. The feeding of
poultry seems scarce yet to be generally considered as a matter of so much
importance in England. They are certainly, however, dearer in England than in
France, as England receives considerable supplies from France. In the progress
of improvements, the period at which every particular sort of animal food is
dearest, must naturally be that which immediately precedes the general practice
of cultivating land for the sake of raising it. For some time before this
practice becomes general, the scarcity must necessarily raise the price. After
it has become general, new methods of feeding are commonly fallen upon, which
enable the farmer to raise upon the same quantity of ground a much greater
quantity of that particular sort of animal food. The plenty not only obliges
him to sell cheaper, but, in consequence of these improvements, he can afford
to sell cheaper; for if he could not afford it, the plenty would not be of long
continuance. It has been probably in this manner that the introduction of
clover, turnips, carrots, cabbages, etc. has contributed to sink the common
price of butcher’s meat in the London market, somewhat below what it was
about the beginning of the last century.

The hog, that finds his food among ordure, and greedily devours many things
rejected by every other useful animal, is, like poultry, originally kept as a
save-all. As long as the number of such animals, which can thus be reared at
little or no expense, is fully sufficient to supply the demand, this sort of
butcher’s meat comes to market at a much lower price than any other. But
when the demand rises beyond what this quantity can supply, when it becomes
necessary to raise food on purpose for feeding and fattening hogs, in the same
manner as for feeding and fattening other cattle, the price necessarily rises,
and becomes proportionably either higher or lower than that of other
butcher’s meat, according as the nature of the country, and the state of
its agriculture, happen to render the feeding of hogs more or less expensive
than that of other cattle. In France, according to Mr Buffon, the price of pork
is nearly equal to that of beef. In most parts of Great Britain it is at
present somewhat higher.

The great rise in the price both of hogs and poultry, has, in Great Britain,
been frequently imputed to the diminution of the number of cottagers and other
small occupiers of land; an event which has in every part of Europe been the
immediate forerunner of improvement and better cultivation, but which at the
same time may have contributed to raise the price of those articles, both
somewhat sooner and somewhat faster than it would otherwise have risen. As the
poorest family can often maintain a cat or a dog without any expense, so the
poorest occupiers of land can commonly maintain a few poultry, or a sow and a
few pigs, at very little. The little offals of their own table, their whey,
skimmed milk, and butter milk, supply those animals with a part of their food,
and they find the rest in the neighbouring fields, without doing any sensible
damage to any body. By diminishing the number of those small occupiers,
therefore, the quantity of this sort of provisions, which is thus produced at
little or no expense, must certainly have been a good deal diminished, and
their price must consequently have been raised both sooner and faster than it
would otherwise have risen. Sooner or later, however, in the progress of
improvement, it must at any rate have risen to the utmost height to which it is
capable of rising; or to the price which pays the labour and expense of
cultivating the land which furnishes them with food, as well as these are paid
upon the greater part of other cultivated land.

The business of the dairy, like the feeding of hogs and poultry, is originally
carried on as a save-all. The cattle necessarily kept upon the farm produce
more milk than either the rearing of their own young, or the consumption of the
farmer’s family requires; and they produce most at one particular season.
But of all the productions of land, milk is perhaps the most perishable. In the
warm season, when it is most abundant, it will scarce keep four-and-twenty
hours. The farmer, by making it into fresh butter, stores a small part of it
for a week; by making it into salt butter, for a year; and by making it into
cheese, he stores a much greater part of it for several years. Part of all
these is reserved for the use of his own family; the rest goes to market, in
order to find the best price which is to be had, and which can scarce be so low
is to discourage him from sending thither whatever is over and above the use of
his own family. If it is very low indeed, he will be likely to manage his dairy
in a very slovenly and dirty manner, and will scarce, perhaps, think it worth
while to have a particular room or building on purpose for it, but will suffer
the business to be carried on amidst the smoke, filth, and nastiness of his own
kitchen, as was the case of almost all the farmers’ dairies in Scotland
thirty or forty years ago, and as is the case of many of them still. The same
causes which gradually raise the price of butcher’s meat, the increase of
the demand, and, in consequence of the improvement of the country, the
diminution of the quantity which can be fed at little or no expense, raise, in
the same manner, that of the produce of the dairy, of which the price naturally
connects with that of butcher’s meat, or with the expense of feeding
cattle. The increase of price pays for more labour, care, and cleanliness. The
dairy becomes more worthy of the farmer’s attention, and the quality of
its produce gradually improves. The price at last gets so high, that it becomes
worth while to employ some of the most fertile and best cultivated lands in
feeding cattle merely for the purpose of the dairy; and when it has got to this
height, it cannot well go higher. If it did, more land would soon be turned to
this purpose. It seems to have got to this height through the greater part of
England, where much good land is commonly employed in this manner. If you
except the neighbourhood of a few considerable towns, it seems not yet to have
got to this height anywhere in Scotland, where common farmers seldom employ
much good land in raising food for cattle, merely for the purpose of the dairy.
The price of the produce, though it has risen very considerably within these
few years, is probably still too low to admit of it. The inferiority of the
quality, indeed, compared with that of the produce of English dairies, is fully
equal to that of the price. But this inferiority of quality is, perhaps, rather
the effect of this lowness of price, than the cause of it. Though the quality
was much better, the greater part of what is brought to market could not, I
apprehend, in the present circumstances of the country, be disposed of at a
much better price; and the present price, it is probable, would not pay the
expense of the land and labour necessary for producing a much better quality.
Through the greater part of England, notwithstanding the superiority of price,
the dairy is not reckoned a more profitable employment of land than the raising
of corn, or the fattening of cattle, the two great objects of agriculture.
Through the greater part of Scotland, therefore, it cannot yet be even so
profitable.

The lands of no country, it is evident, can ever be completely cultivated and
improved, till once the price of every produce, which human industry is obliged
to raise upon them, has got so high as to pay for the expense of complete
improvement and cultivation. In order to do this, the price of each particular
produce must be sufficient, first, to pay the rent of good corn land, as it is
that which regulates the rent of the greater part of other cultivated land;
and, secondly, to pay the labour and expense of the farmer, as well as they are
commonly paid upon good corn land; or, in other words, to replace with the
ordinary profits the stock which he employs about it. This rise in the price of
each particular produce; must evidently be previous to the improvement and
cultivation of the land which is destined for raising it. Gain is the end of
all improvement; and nothing could deserve that name, of which loss was to be
the necessary consequence. But loss must be the necessary consequence of
improving land for the sake of a produce of which the price could never bring
back the expense. If the complete improvement and cultivation of the country
be, as it most certainly is, the greatest of all public advantages, this rise
in the price of all those different sorts of rude produce, instead of being
considered as a public calamity, ought to be regarded as the necessary
forerunner and attendant of the greatest of all public advantages.

This rise, too, in the nominal or money price of all those different sorts of
rude produce, has been the effect, not of any degradation in the value of
silver, but of a rise in their real price. They have become worth, not only a
greater quantity of silver, but a greater quantity of labour and subsistence
than before. As it costs a greater quantity of labour and subsistence to bring
them to market, so, when they are brought thither they represent, or are
equivalent to a greater quantity.

Third Sort.—The third and last sort of rude produce, of which the price
naturally rises in the progress of improvement, is that in which the efficacy
of human industry, in augmenting the quantity, is either limited or uncertain.
Though the real price of this sort of rude produce, therefore, naturally tends
to rise in the progress of improvement, yet, according as different accidents
happen to render the efforts of human industry more or less successful in
augmenting the quantity, it may happen sometimes even to fall, sometimes to
continue the same, in very different periods of improvement, and sometimes to
rise more or less in the same period.

There are some sorts of rude produce which nature has rendered a kind of
appendages to other sorts; so that the quantity of the one which any country
can afford, is necessarily limited by that of the other. The quantity of wool
or of raw hides, for example, which any country can afford, is necessarily
limited by the number of great and small cattle that are kept in it. The state
of its improvement, and the nature of its agriculture, again necessarily
determine this number.

The same causes which, in the progress of improvement, gradually raise the
price of butcher’s meat, should have the same effect, it may be thought,
upon the prices of wool and raw hides, and raise them, too, nearly in the same
proportion. It probably would be so, if, in the rude beginnings of improvement,
the market for the latter commodities was confined within as narrow bounds as
that for the former. But the extent of their respective markets is commonly
extremely different.

The market for butcher’s meat is almost everywhere confined to the
country which produces it. Ireland, and some part of British America, indeed,
carry on a considerable trade in salt provisions; but they are, I believe, the
only countries in the commercial world which do so, or which export to other
countries any considerable part of their butcher’s meat.

The market for wool and raw hides, on the contrary, is, in the rude beginnings
of improvement, very seldom confined to the country which produces them. They
can easily be transported to distant countries; wool without any preparation,
and raw hides with very little; and as they are the materials of many
manufactures, the industry of other countries may occasion a demand for them,
though that of the country which produces them might not occasion any.

In countries ill cultivated, and therefore but thinly inhabited, the price of
the wool and the hide bears always a much greater proportion to that of the
whole beast, than in countries where, improvement and population being further
advanced, there is more demand for butcher’s meat. Mr Hume observes, that
in the Saxon times, the fleece was estimated at two-fifths of the value of the
whole sheep and that this was much above the proportion of its present
estimation. In some provinces of Spain, I have been assured, the sheep is
frequently killed merely for the sake of the fleece and the tallow. The carcase
is often left to rot upon the ground, or to be devoured by beasts and birds of
prey. If this sometimes happens even in Spain, it happens almost constantly in
Chili, at Buenos Ayres, and in many other parts of Spanish America, where the
horned cattle are almost constantly killed merely for the sake of the hide and
the tallow. This, too, used to happen almost constantly in Hispaniola, while it
was infested by the buccaneers, and before the settlement, improvement, and
populousness of the French plantations ( which now extend round the coast of
almost the whole western half of the island) had given some value to the cattle
of the Spaniards, who still continue to possess, not only the eastern part of
the coast, but the whole inland mountainous part of the country.

Though, in the progress of improvement and population, the price of the whole
beast necessarily rises, yet the price of the carcase is likely to be much more
affected by this rise than that of the wool and the hide. The market for the
carcase being in the rude state of society confined always to the country which
produces it, must necessarily be extended in proportion to the improvement and
population of that country. But the market for the wool and the hides, even of
a barbarous country, often extending to the whole commercial world, it can very
seldom be enlarged in the same proportion. The state of the whole commercial
world can seldom be much affected by the improvement of any particular country;
and the market for such commodities may remain the same, or very nearly the
same, after such improvements, as before. It should, however, in the natural
course of things, rather, upon the whole, be somewhat extended in consequence
of them. If the manufactures, especially, of which those commodities are the
materials, should ever come to flourish in the country, the market, though it
might not be much enlarged, would at least be brought much nearer to the place
of growth than before; and the price of those materials might at least be
increased by what had usually been the expense of transporting them to distant
countries. Though it might not rise, therefore, in the same proportion as that
of butcher’s meat, it ought naturally to rise somewhat, and it ought
certainly not to fall.

In England, however, notwithstanding the flourishing state of its woollen
manufacture, the price of English wool has fallen very considerably since the
time of Edward III. There are many authentic records which demonstrate that,
during the reign of that prince (towards the middle of the fourteenth century,
or about 1339), what was reckoned the moderate and reasonable price of the tod,
or twenty-eight pounds of English wool, was not less than ten shillings of the
money of those times {See Smith’s Memoirs of Wool, vol. i c. 5, 6, 7.
also vol. ii.}, containing, at the rate of twenty-pence the ounce, six ounces
of silver, Tower weight, equal to about thirty shillings of our present money.
In the present times, one-and-twenty shillings the tod may be reckoned a good
price for very good English wool. The money price of wool, therefore, in the
time of Edward III. was to its money price in the present times as ten to
seven. The superiority of its real price was still greater. At the rate of six
shillings and eightpence the quarter, ten shillings was in those ancient times
the price of twelve bushels of wheat. At the rate of twenty-eight shillings the
quarter, one-and-twenty shillings is in the present times the price of six
bushels only. The proportion between the real price of ancient and modern
times, therefore, is as twelve to six, or as two to one. In those ancient
times, a tod of wool would have purchased twice the quantity of subsistence
which it will purchase at present, and consequently twice the quantity of
labour, if the real recompence of labour had been the same in both periods.

This degradation, both in the real and nominal value of wool, could never have
happened in consequence of the natural course of things. It has accordingly
been the effect of violence and artifice. First, of the absolute prohibition of
exporting wool from England: secondly, of the permission of importing it from
Spain, duty free: thirdly, of the prohibition of exporting it from Ireland to
another country but England. In consequence of these regulations, the market
for English wool, instead of being somewhat extended, in consequence of the
improvement of England, has been confined to the home market, where the wool of
several other countries is allowed to come into competition with it, and where
that of Ireland is forced into competition with it. As the woollen
manufactures, too, of Ireland, are fully as much discouraged as is consistent
with justice and fair dealing, the Irish can work up but a smaller part of
their own wool at home, and are therefore obliged to send a greater proportion
of it to Great Britain, the only market they are allowed.

I have not been able to find any such authentic records concerning the price of
raw hides in ancient times. Wool was commonly paid as a subsidy to the king,
and its valuation in that subsidy ascertains, at least in some degree, what was
its ordinary price. But this seems not to have been the case with raw hides.
Fleetwood, however, from an account in 1425, between the prior of Burcester
Oxford and one of his canons, gives us their price, at least as it was stated
upon that particular occasion, viz. five ox hides at twelve shillings; five cow
hides at seven shillings and threepence; thirtysix sheep skins of two years old
at nine shillings; sixteen calf skins at two shillings. In 1425, twelve
shillings contained about the same quantity of silver as four-and-twenty
shillings of our present money. An ox hide, therefore, was in this account
valued at the same quantity of silver as 4s. 4/5ths of our present money. Its
nominal price was a good deal lower than at present. But at the rate of six
shillings and eightpence the quarter, twelve shillings would in those times
have purchased fourteen bushels and four-fifths of a bushel of wheat, which, at
three and sixpence the bushel, would in the present times cost 51s. 4d. An ox
hide, therefore, would in those times have purchased as much corn as ten
shillings and threepence would purchase at present. Its real value was equal to
ten shillings and threepence of our present money. In those ancient times, when
the cattle were half starved during the greater part of the winter, we cannot
suppose that they were of a very large size. An ox hide which weighs four stone
of sixteen pounds of avoirdupois, is not in the present times reckoned a bad
one; and in those ancient times would probably have been reckoned a very good
one. But at half-a-crown the stone, which at this moment (February 1773) I
understand to be the common price, such a hide would at present cost only ten
shillings. Through its nominal price, therefore, is higher in the present than
it was in those ancient times, its real price, the real quantity of subsistence
which it will purchase or command, is rather somewhat lower. The price of cow
hides, as stated in the above account, is nearly in the common proportion to
that of ox hides. That of sheep skins is a good deal above it. They had
probably been sold with the wool. That of calves skins, on the contrary, is
greatly below it. In countries where the price of cattle is very low, the
calves, which are not intended to be reared in order to keep up the stock, are
generally killed very young, as was the case in Scotland twenty or thirty years
ago. It saves the milk, which their price would not pay for. Their skins,
therefore, are commonly good for little.

The price of raw hides is a good deal lower at present than it was a few years
ago; owing probably to the taking off the duty upon seal skins, and to the
allowing, for a limited time, the importation of raw hides from Ireland, and
from the plantations, duty free, which was done in 1769. Take the whole of the
present century at an average, their real price has probably been somewhat
higher than it was in those ancient times. The nature of the commodity renders
it not quite so proper for being transported to distant markets as wool. It
suffers more by keeping. A salted hide is reckoned inferior to a fresh one, and
sells for a lower price. This circumstance must necessarily have some tendency
to sink the price of raw hides produced in a country which does not manufacture
them, but is obliged to export them, and comparatively to raise that of those
produced in a country which does manufacture them. It must have some tendency
to sink their price in a barbarous, and to raise it in an improved and
manufacturing country. It must have had some tendency, therefore, to sink it in
ancient, and to raise it in modern times. Our tanners, besides, have not been
quite so successful as our clothiers, in convincing the wisdom of the nation,
that the safety of the commonwealth depends upon the prosperity of their
particular manufacture. They have accordingly been much less favoured. The
exportation of raw hides has, indeed, been prohibited, and declared a nuisance;
but their importation from foreign countries has been subjected to a duty; and
though this duty has been taken off from those of Ireland and the plantations
(for the limited time of five years only), yet Ireland has not been confined to
the market of Great Britain for the sale of its surplus hides, or of those
which are not manufactured at home. The hides of common cattle have, but within
these few years, been put among the enumerated commodities which the
plantations can send nowhere but to the mother country; neither has the
commerce of Ireland been in this case oppressed hitherto, in order to support
the manufactures of Great Britain.

Whatever regulations tend to sink the price, either of wool or of raw hides,
below what it naturally would be, must, in an improved and cultivated country,
have some tendency to raise the price of butcher’s meat. The price both
of the great and small cattle, which are fed on improved and cultivated land,
must be sufficient to pay the rent which the landlord, and the profit which the
farmer, has reason to expect from improved and cultivated land. If it is not,
they will soon cease to feed them. Whatever part of this price, therefore, is
not paid by the wool and the hide, must be paid by the carcase. The less there
is paid for the one, the more must be paid for the other. In what manner this
price is to be divided upon the different parts of the beast, is indifferent to
the landlords and farmers, provided it is all paid to them. In an improved and
cultivated country, therefore, their interest as landlords and farmers cannot
be much affected by such regulations, though their interest as consumers may,
by the rise in the price of provisions. It would be quite otherwise, however,
in an unimproved and uncultivated country, where the greater part of the lands
could be applied to no other purpose but the feeding of cattle, and where the
wool and the hide made the principal part of the value of those cattle. Their
interest as landlords and farmers would in this case be very deeply affected by
such regulations, and their interest as consumers very little. The fall in the
price of the wool and the hide would not in this case raise the price of the
carcase; because the greater part of the lands of the country being applicable
to no other purpose but the feeding of cattle, the same number would still
continue to be fed. The same quantity of butcher’s meat would still come
to market. The demand for it would be no greater than before. Its price,
therefore, would be the same as before. The whole price of cattle would fall,
and along with it both the rent and the profit of all those lands of which
cattle was the principal produce, that is, of the greater part of the lands of
the country. The perpetual prohibition of the exportation of wool, which is
commonly, but very falsely, ascribed to Edward III., would, in the then
circumstances of the country, have been the most destructive regulation which
could well have been thought of. It would not only have reduced the actual
value of the greater part of the lands in the kingdom, but by reducing the
price of the most important species of small cattle, it would have retarded
very much its subsequent improvement.

The wool of Scotland fell very considerably in its price in consequence of the
union with England, by which it was excluded from the great market of Europe,
and confined to the narrow one of Great Britain. The value of the greater part
of the lands in the southern counties of Scotland, which are chiefly a sheep
country, would have been very deeply affected by this event, had not the rise
in the price of butcher’s meat fully compensated the fall in the price of
wool.

As the efficacy of human industry, in increasing the quantity either of wool or
of raw hides, is limited, so far as it depends upon the produce of the country
where it is exerted; so it is uncertain so far as it depends upon the produce
of other countries. It so far depends not so much upon the quantity which they
produce, as upon that which they do not manufacture; and upon the restraints
which they may or may not think proper to impose upon the exportation of this
sort of rude produce. These circumstances, as they are altogether independent
of domestic industry, so they necessarily render the efficacy of its efforts
more or less uncertain. In multiplying this sort of rude produce, therefore,
the efficacy of human industry is not only limited, but uncertain.

In multiplying another very important sort of rude produce, the quantity of
fish that is brought to market, it is likewise both limited and uncertain. It
is limited by the local situation of the country, by the proximity or distance
of its different provinces from the sea, by the number of its lakes and rivers,
and by what may be called the fertility or barrenness of those seas, lakes, and
rivers, as to this sort of rude produce. As population increases, as the annual
produce of the land and labour of the country grows greater and greater, there
come to be more buyers of fish; and those buyers, too, have a greater quantity
and variety of other goods, or, what is the same thing, the price of a greater
quantity and variety of other goods, to buy with. But it will generally be
impossible to supply the great and extended market, without employing a
quantity of labour greater than in proportion to what had been requisite for
supplying the narrow and confined one. A market which, from requiring only one
thousand, comes to require annually ten thousand ton of fish, can seldom be
supplied, without employing more than ten times the quantity of labour which
had before been sufficient to supply it. The fish must generally be sought for
at a greater distance, larger vessels must be employed, and more expensive
machinery of every kind made use of. The real price of this commodity,
therefore, naturally rises in the progress of improvement. It has accordingly
done so, I believe, more or less in every country.

Though the success of a particular day’s fishing may be a very uncertain
matter, yet the local situation of the country being supposed, the general
efficacy of industry in bringing a certain quantity of fish to market, taking
the course of a year, or of several years together, it may, perhaps, be thought
is certain enough; and it, no doubt, is so. As it depends more, however, upon
the local situation of the country, than upon the state of its wealth and
industry; as upon this account it may in different countries be the same in
very different periods of improvement, and very different in the same period;
its connection with the state of improvement is uncertain; and it is of this
sort of uncertainty that I am here speaking.

In increasing the quantity of the different minerals and metals which are drawn
from the bowels of the earth, that of the more precious ones particularly, the
efficacy of human industry seems not to be limited, but to be altogether
uncertain.

The quantity of the precious metals which is to be found in any country, is not
limited by any thing in its local situation, such as the fertility or
barrenness of its own mines. Those metals frequently abound in countries which
possess no mines. Their quantity, in every particular country, seems to depend
upon two different circumstances; first, upon its power of purchasing, upon the
state of its industry, upon the annual produce of its land and labour, in
consequence of which it can afford to employ a greater or a smaller quantity of
labour and subsistence, in bringing or purchasing such superfluities as gold
and silver, either from its own mines, or from those of other countries; and,
secondly, upon the fertility or barrenness of the mines which may happen at any
particular time to supply the commercial world with those metals. The quantity
of those metals in the countries most remote from the mines, must be more or
less affected by this fertility or barrenness, on account of the easy and cheap
transportation of those metals, of their small bulk and great value. Their
quantity in China and Indostan must have been more or less affected by the
abundance of the mines of America.

So far as their quantity in any particular country depends upon the former of
those two circumstances (the power of purchasing), their real price, like that
of all other luxuries and superfluities, is likely to rise with the wealth and
improvement of the country, and to fall with its poverty and depression.
Countries which have a great quantity of labour and subsistence to spare, can
afford to purchase any particular quantity of those metals at the expense of a
greater quantity of labour and subsistence, than countries which have less to
spare.

So far as their quantity in any particular country depends upon the latter of
those two circumstances (the fertility or barrenness of the mines which happen
to supply the commercial world), their real price, the real quantity of labour
and subsistence which they will purchase or exchange for, will, no doubt, sink
more or less in proportion to the fertility, and rise in proportion to the
barrenness of those mines.

The fertility or barrenness of the mines, however, which may happen at any
particular time to supply the commercial world, is a circumstance which, it is
evident, may have no sort of connection with the state of industry in a
particular country. It seems even to have no very necessary connection with
that of the world in general. As arts and commerce, indeed, gradually spread
themselves over a greater and a greater part of the earth, the search for new
mines, being extended over a wider surface, may have somewhat a better chance
for being successful than when confined within narrower bounds. The discovery
of new mines, however, as the old ones come to be gradually exhausted, is a
matter of the greatest uncertainty, and such as no human skill or industry can
insure. All indications, it is acknowledged, are doubtful; and the actual
discovery and successful working of a new mine can alone ascertain the reality
of its value, or even of its existence. In this search there seem to be no
certain limits, either to the possible success, or to the possible
disappointment of human industry. In the course of a century or two, it is
possible that new mines may be discovered, more fertile than any that have ever
yet been known; and it is just equally possible, that the most fertile mine
then known may be more barren than any that was wrought before the discovery of
the mines of America. Whether the one or the other of those two events may
happen to take place, is of very little importance to the real wealth and
prosperity of the world, to the real value of the annual produce of the land
and labour of mankind. Its nominal value, the quantity of gold and silver by
which this annual produce could be expressed or represented, would, no doubt,
be very different; but its real value, the real quantity of labour which it
could purchase or command, would be precisely the same. A shilling might, in
the one case, represent no more labour than a penny does at present; and a
penny, in the other, might represent as much as a shilling does now. But in the
one case, he who had a shilling in his pocket would be no richer than he who
has a penny at present; and in the other, he who had a penny would be just as
rich as he who has a shilling now. The cheapness and abundance of gold and
silver plate would be the sole advantage which the world could derive from the
one event; and the dearness and scarcity of those trifling superfluities, the
only inconveniency it could suffer from the other.

Conclusion of the Digression concerning the Variations in the Value of
Silver.

The greater part of the writers who have collected the money price of things in
ancient times, seem to have considered the low money price of corn, and of
goods in general, or, in other words, the high value of gold and silver, as a
proof, not only of the scarcity of those metals, but of the poverty and
barbarism of the country at the time when it took place. This notion is
connected with the system of political economy, which represents national
wealth as consisting in the abundance and national poverty in the scarcity, of
gold and silver; a system which I shall endeavour to explain and examine at
great length in the fourth book of this Inquiry. I shall only observe at
present, that the high value of the precious metals can be no proof of the
poverty or barbarism of any particular country at the time when it took place.
It is a proof only of the barrenness of the mines which happened at that time
to supply the commercial world. A poor country, as it cannot afford to buy
more, so it can as little afford to pay dearer for gold and silver than a rich
one; and the value of those metals, therefore, is not likely to be higher in
the former than in the latter. In China, a country much richer than any part of
Europe, the value of the precious metals is much higher than in any part of
Europe. As the wealth of Europe, indeed, has increased greatly since the
discovery of the mines of America, so the value of gold and silver has
gradually diminished. This diminution of their value, however, has not been
owing to the increase of the real wealth of Europe, of the annual produce of
its land and labour, but to the accidental discovery of more abundant mines
than any that were known before. The increase of the quantity of gold and
silver in Europe, and the increase of its manufactures and agriculture, are two
events which, though they have happened nearly about the same time, yet have
arisen from very different causes, and have scarce any natural connection with
one another. The one has arisen from a mere accident, in which neither prudence
nor policy either had or could have any share; the other, from the fall of the
feudal system, and from the establishment of a government which afforded to
industry the only encouragement which it requires, some tolerable security that
it shall enjoy the fruits of its own labour. Poland, where the feudal system
still continues to take place, is at this day as beggarly a country as it was
before the discovery of America. The money price of corn, however, has risen;
the real value of the precious metals has fallen in Poland, in the same manner
as in other parts of Europe. Their quantity, therefore, must have increased
there as in other places, and nearly in the same proportion to the annual
produce of its land and labour. This increase of the quantity of those metals,
however, has not, it seems, increased that annual produce, has neither improved
the manufactures and agriculture of the country, nor mended the circumstances
of its inhabitants. Spain and Portugal, the countries which possess the mines,
are, after Poland, perhaps the two most beggarly countries in Europe. The value
of the precious metals, however, must be lower in Spain and Portugal than in
any other part of Europe, as they come from those countries to all other parts
of Europe, loaded, not only with a freight and an insurance, but with the
expense of smuggling, their exportation being either prohibited or subjected to
a duty. In proportion to the annual produce of the land and labour, therefore,
their quantity must be greater in those countries than in any other part of
Europe; those countries, however, are poorer than the greater part of Europe.
Though the feudal system has been abolished in Spain and Portugal, it has not
been succeeded by a much better.

As the low value of gold and silver, therefore, is no proof of the wealth and
flourishing state of the country where it takes place; so neither is their high
value, or the low money price either of goods in general, or of corn in
particular, any proof of its poverty and barbarism.

But though the low money price, either of goods in general, or of corn in
particular, be no proof of the poverty or barbarism of the times, the low money
price of some particular sorts of goods, such as cattle, poultry, game of all
kinds, etc. in proportion to that of corn, is a most decisive one. It clearly
demonstrates, first, their great abundance in proportion to that of corn, and,
consequently, the great extent of the land which they occupied in proportion to
what was occupied by corn; and, secondly, the low value of this land in
proportion to that of corn land, and, consequently, the uncultivated and
unimproved state of the far greater part of the lands of the country. It
clearly demonstrates, that the stock and population of the country did not bear
the same proportion to the extent of its territory, which they commonly do in
civilized countries; and that society was at that time, and in that country,
but in its infancy. From the high or low money price, either of goods in
general, or of corn in particular, we can infer only, that the mines, which at
that time happened to supply the commercial world with gold and silver, were
fertile or barren, not that the country was rich or poor. But from the high or
low money price of some sorts of goods in proportion to that of others, we can
infer, with a degree of probability that approaches almost to certainty, that
it was rich or poor, that the greater part of its lands were improved or
unimproved, and that it was either in a more or less barbarous state, or in a
more or less civilized one.

Any rise in the money price of goods which proceeded altogether from the
degradation of the value of silver, would affect all sorts of goods equally,
and raise their price universally, a third, or a fourth, or a fifth part
higher, according as silver happened to lose a third, or a fourth, or a fifth
part of its former value. But the rise in the price of provisions, which has
been the subject of so much reasoning and conversation, does not affect all
sorts of provisions equally. Taking the course of the present century at an
average, the price of corn, it is acknowledged, even by those who account for
this rise by the degradation of the value of silver, has risen much less than
that of some other sorts of provisions. The rise in the price of those other
sorts of provisions, therefore, cannot be owing altogether to the degradation
of the value of silver. Some other causes must be taken into the account; and
those which have been above assigned, will, perhaps, without having recourse to
the supposed degradation of the value of silver, sufficiently explain this rise
in those particular sorts of provisions, of which the price has actually risen
in proportion to that of corn.

As to the price of corn itself, it has, during the sixty-four first years of
the present century, and before the late extraordinary course of bad seasons,
been somewhat lower than it was during the sixty-four last years of the
preceding century. This fact is attested, not only by the accounts of Windsor
market, but by the public fiars of all the different counties of Scotland, and
by the accounts of several different markets in France, which have been
collected with great diligence and fidelity by Mr Messance, and by Mr Dupré de
St Maur. The evidence is more complete than could well have been expected in a
matter which is naturally so very difficult to be ascertained.

As to the high price of corn during these last ten or twelve years, it can be
sufficiently accounted for from the badness of the seasons, without supposing
any degradation in the value of silver.

The opinion, therefore, that silver is continually sinking in its value, seems
not to be founded upon any good observations, either upon the prices of corn,
or upon those of other provisions.

The same quantity of silver, it may perhaps be said, will, in the present
times, even according to the account which has been here given, purchase a much
smaller quantity of several sorts of provisions than it would have done during
some part of the last century; and to ascertain whether this change be owing to
a rise in the value of those goods, or to a fall in the value of silver, is
only to establish a vain and useless distinction, which can be of no sort of
service to the man who has only a certain quantity of silver to go to market
with, or a certain fixed revenue in money. I certainly do not pretend that the
knowledge of this distinction will enable him to buy cheaper. It may not,
however, upon that account be altogether useless.

It may be of some use to the public, by affording an easy proof of the
prosperous condition of the country. If the rise in the price of some sorts of
provisions be owing altogether to a fall in the value of silver, it is owing to
a circumstance, from which nothing can be inferred but the fertility of the
American mines. The real wealth of the country, the annual produce of its land
and labour, may, notwithstanding this circumstance, be either gradually
declining, as in Portugal and Poland; or gradually advancing, as in most other
parts of Europe. But if this rise in the price of some sorts of provisions be
owing to a rise in the real value of the land which produces them, to its
increased fertility, or, in consequence of more extended improvement and good
cultivation, to its having been rendered fit for producing corn; it is owing to
a circumstance which indicates, in the clearest manner, the prosperous and
advancing state of the country. The land constitutes by far the greatest, the
most important, and the most durable part of the wealth of every extensive
country. It may surely be of some use, or, at least, it may give some
satisfaction to the public, to have so decisive a proof of the increasing value
of by far the greatest, the most important, and the most durable part of its
wealth.

It may, too, be of some use to the public, in regulating the pecuniary reward
of some of its inferior servants. If this rise in the price of some sorts of
provisions be owing to a fall in the value of silver, their pecuniary reward,
provided it was not too large before, ought certainly to be augmented in
proportion to the extent of this fall. If it is not augmented, their real
recompence will evidently be so much diminished. But if this rise of price is
owing to the increased value, in consequence of the improved fertility of the
land which produces such provisions, it becomes a much nicer matter to judge,
either in what proportion any pecuniary reward ought to be augmented, or
whether it ought to be augmented at all. The extension of improvement and
cultivation, as it necessarily raises more or less, in proportion to the price
of corn, that of every sort of animal food, so it as necessarily lowers that
of, I believe, every sort of vegetable food. It raises the price of animal
food; because a great part of the land which produces it, being rendered fit
for producing corn, must afford to the landlord and farmer the rent and profit
of corn land. It lowers the price of vegetable food; because, by increasing the
fertility of the land, it increases its abundance. The improvements of
agriculture, too, introduce many sorts of vegetable food, which requiring less
land, and not more labour than corn, come much cheaper to market. Such are
potatoes and maize, or what is called Indian corn, the two most important
improvements which the agriculture of Europe, perhaps, which Europe itself, has
received from the great extension of its commerce and navigation. Many sorts of
vegetable food, besides, which in the rude state of agriculture are confined to
the kitchen-garden, and raised only by the spade, come, in its improved state,
to be introduced into common fields, and to be raised by the plough; such as
turnips, carrots, cabbages, etc. If, in the progress of improvement, therefore,
the real price of one species of food necessarily rises, that of another as
necessarily falls; and it becomes a matter of more nicety to judge how far the
rise in the one may be compensated by the fall in the other. When the real
price of butcher’s meat has once got to its height (which, with regard to
every sort, except perhaps that of hogs flesh, it seems to have done through a
great part of England more than a century ago), any rise which can afterwards
happen in that of any other sort of animal food, cannot much affect the
circumstances of the inferior ranks of people. The circumstances of the poor,
through a great part of England, cannot surely be so much distressed by any
rise in the price of poultry, fish, wild-fowl, or venison, as they must be
relieved by the fall in that of potatoes.

In the present season of scarcity, the high price of corn no doubt distresses
the poor. But in times of moderate plenty, when corn is at its ordinary or
average price, the natural rise in the price of any other sort of rude produce
cannot much affect them. They suffer more, perhaps, by the artificial rise
which has been occasioned by taxes in the price of some manufactured
commodities, as of salt, soap, leather, candles, malt, beer, ale, etc.

Effects of the Progress of Improvement upon the real Price of
Manufactures.

It is the natural effect of improvement, however, to diminish gradually the
real price of almost all manufactures. That of the manufacturing workmanship
diminishes, perhaps, in all of them without exception. In consequence of better
machinery, of greater dexterity, and of a more proper division and distribution
of work, all of which are the natural effects of improvement, a much smaller
quantity of labour becomes requisite for executing any particular piece of
work; and though, in consequence of the flourishing circumstances of the
society, the real price of labour should rise very considerably, yet the great
diminution of the quantity will generally much more than compensate the
greatest rise which can happen in the price.

There are, indeed, a few manufactures, in which the necessary rise in the real
price of the rude materials will more than compensate all the advantages which
improvement can introduce into the execution of the work. In carpenters’
and joiners’ work, and in the coarser sort of cabinet work, the necessary
rise in the real price of barren timber, in consequence of the improvement of
land, will more than compensate all the advantages which can be derived from
the best machinery, the greatest dexterity, and the most proper division and
distribution of work.

But in all cases in which the real price of the rude material either does not
rise at all, or does not rise very much, that of the manufactured commodity
sinks very considerably.

This diminution of price has, in the course of the present and preceding
century, been most remarkable in those manufactures of which the materials are
the coarser metals. A better movement of a watch, than about the middle of the
last century could have been bought for twenty pounds, may now perhaps be had
for twenty shillings. In the work of cutlers and locksmiths, in all the toys
which are made of the coarser metals, and in all those goods which are commonly
known by the name of Birmingham and Sheffield ware, there has been, during the
same period, a very great reduction of price, though not altogether so great as
in watch-work. It has, however, been sufficient to astonish the workmen of
every other part of Europe, who in many cases acknowledge that they can produce
no work of equal goodness for double or even for triple the price. There are
perhaps no manufactures, in which the division of labour can be carried
further, or in which the machinery employed admits of a greater variety of
improvements, than those of which the materials are the coarser metals.

In the clothing manufacture there has, during the same period, been no such
sensible reduction of price. The price of superfine cloth, I have been assured,
on the contrary, has, within these five-and-twenty or thirty years, risen
somewhat in proportion to its quality, owing, it was said, to a considerable
rise in the price of the material, which consists altogether of Spanish wool.
That of the Yorkshire cloth, which is made altogether of English wool, is said,
indeed, during the course of the present century, to have fallen a good deal in
proportion to its quality. Quality, however, is so very disputable a matter,
that I look upon all information of this kind as somewhat uncertain. In the
clothing manufacture, the division of labour is nearly the same now as it was a
century ago, and the machinery employed is not very different. There may,
however, have been some small improvements in both, which may have occasioned
some reduction of price.

But the reduction will appear much more sensible and undeniable, if we compare
the price of this manufacture in the present times with what it was in a much
remoter period, towards the end of the fifteenth century, when the labour was
probably much less subdivided, and the machinery employed much more imperfect,
than it is at present.

In 1487, being the 4th of Henry VII., it was enacted, that “whosoever
shall sell by retail a broad yard of the finest scarlet grained, or of other
grained cloth of the finest making, above sixteen shillings, shall forfeit
forty shillings for every yard so sold.” Sixteen shillings, therefore,
containing about the same quantity of silver as four-and-twenty shillings of
our present money, was, at that time, reckoned not an unreasonable price for a
yard of the finest cloth; and as this is a sumptuary law, such cloth, it is
probable, had usually been sold somewhat dearer. A guinea may be reckoned the
highest price in the present times. Even though the quality of the cloths,
therefore, should be supposed equal, and that of the present times is most
probably much superior, yet, even upon this supposition, the money price of the
finest cloth appears to have been considerably reduced since the end of the
fifteenth century. But its real price has been much more reduced. Six shillings
and eightpence was then, and long afterwards, reckoned the average price of a
quarter of wheat. Sixteen shillings, therefore, was the price of two quarters
and more than three bushels of wheat. Valuing a quarter of wheat in the present
times at eight-and-twenty shillings, the real price of a yard of fine cloth
must, in those times, have been equal to at least three pounds six shillings
and sixpence of our present money. The man who bought it must have parted with
the command of a quantity of labour and subsistence equal to what that sum
would purchase in the present times.

The reduction in the real price of the coarse manufacture, though considerable,
has not been so great as in that of the fine.

In 1463, being the 3rd of Edward IV. it was enacted, that “no servant in
husbandry nor common labourer, nor servant to any artificer inhabiting out of a
city or burgh, shall use or wear in their clothing any cloth above two
shillings the broad yard.” In the 3rd of Edward IV., two shillings
contained very nearly the same quantity of silver as four of our present money.
But the Yorkshire cloth which is now sold at four shillings the yard, is
probably much superior to any that was then made for the wearing of the very
poorest order of common servants. Even the money price of their clothing,
therefore, may, in proportion to the quality, be somewhat cheaper in the
present than it was in those ancient times. The real price is certainly a good
deal cheaper. Tenpence was then reckoned what is called the moderate and
reasonable price of a bushel of wheat. Two shillings, therefore, was the price
of two bushels and near two pecks of wheat, which in the present times, at
three shillings and sixpence the bushel, would be worth eight shillings and
ninepence. For a yard of this cloth the poor servant must have parted with the
power of purchasing a quantity of subsistence equal to what eight shillings and
ninepence would purchase in the present times. This is a sumptuary law, too,
restraining the luxury and extravagance of the poor. Their clothing, therefore,
had commonly been much more expensive.

The same order of people are, by the same law, prohibited from wearing hose, of
which the price should exceed fourteen-pence the pair, equal to about
eight-and-twenty pence of our present money. But fourteen-pence was in those
times the price of a bushel and near two pecks of wheat; which in the present
times, at three and sixpence the bushel, would cost five shillings and
threepence. We should in the present times consider this as a very high price
for a pair of stockings to a servant of the poorest and lowest order. He must
however, in those times, have paid what was really equivalent to this price for
them.

In the time of Edward IV. the art of knitting stockings was probably not known
in any part of Europe. Their hose were made of common cloth, which may have
been one of the causes of their dearness. The first person that wore stockings
in England is said to have been Queen Elizabeth. She received them as a present
from the Spanish ambassador.