Chap. XXX: Miscellaneous Questions and Observations relative to Trade and Industry

In the former chapters, we have been treating of the nature and consequences of circulation, the effects of augmentations and diminutions of specie, and the doctrine of Mr Hume concerning the balance of trade. The perspicuity with which this author writes, renders his ideas easy to be conceived; and when people understand one another, most disputes are soon at an end.

In order, therefore, to throw a little more light upon the nature of the balance of trade between nations, let me examine the following questions while we have the subject of the last chapter fresh in our memory.

Quest. 1. Can any judgment be formed concerning the state of the balance of trade of a nation, barely from the quantity of specie that is found in it?

I answer in the negative. A great proportion of all the specie of Europe, may be found in a country against which the balance of trade has stood regularly for many years. An inconsiderable proportion of it may be found in another, which has had it as regularly in its favour for the same time. Here follows the proof of this proposition.

The balance upon every article of trade may be favourable to a nation, which squanders away more than the returns of it, upon foreign wars. The balance of every article of trade may be against a country, which receives more than all the loss incurred, either from her mines, or from countries tributary to her, or who willingly furnish subsidies upon many political considerations.

Besides these varieties, there are still other circumstances to be combined, relative to the specie itself. The money found in a country, may either be said to belong absolutely to the country, when neither the state itself, or the particular people of it, are in debt to foreigners; or only so by virtue of a loan. Now, whether it is borrowed or not, the property of it belongs to the country; but the difference consists in this, that when it is borrowed, the acquisition of the metals adds nothing to the national patrimony, that is to say, there is no acquisition of wealth thereby made; but when it is gained by industry, the money adds to the real value of the country, in consequence of the principles laid down in the 26th chapter.

May not a nation, then, having very little gold and silver, open a subscription for millions, at so much per cent? Will not strangers lend to her, when her own subjects cannot? May she not yearly, by paying away the interest of the money borrowed, and by a heavy balance of trade against her, be constantly diminishing her specie, and yet by new contracts, keep up, and even increase the mass of the circulating value, to such a degree, as to be possessed of a greater proportion of specie than any of her neighbours? Farther.

Is it not certain, that all nations will endeavour to throw their ready money, not necessary for their own circulation, into that country where the interest of money is high with respect to their own, and where consequently the value of property in land is low; since they may either draw a high interest from it, or make the acquisition of solid property? Forbidding therefore the acquisition of solid property to strangers, is, in effect, a prohibition upon the gratuitous importation of specie. I allow there may be examples of people who make such purchases, with a view to draw the rents of the lands bought, out of the country; but whatever be the intention at the time of purchase, such however is the effect of an established fortune in a country, that, sooner or later, it draws the proprietor to it; and when this does not happen, a subsequent alienation commonly takes place.

Were the purchase, therefore, of lands permitted universally, and were it established, that property in land, to a certain value, should give a right to naturalization, I have little doubt but large sums would be brought into those countries, where lands are found to be the cheapest; and as no exportable commodity is given in return, the specie of such counties will mark the quantity of lands sold, as well as that of merchandize exported. For want of a sufficient extension of these and many other combinations, which it would be easy to contrive, Mr Belloni, in his Dissertation upon Commerce, Chap. 1. Sect. 5. falls into several mistakes, when he judges of the exportation of commodities of a particular country, by the quantities of money found in it.

'It being the case (says he) that the plenty of coin, wherever it be found, points out the plenty of those goods of which it is the measure: Such persons, therefore, have justly been called rich, and such kingdoms wealthy, where there is found a great quantity of coin. On the other hand again, if we consider the state of a kingdom, and of the coin which is in it, supposing always the intrinsic value of the coin to be preserved (which is nothing else but the measure of the goods and of the price which is given for them), we must necessarily conclude, as every one must acknowledge, that in such countries where we find plenty of coin there must be a considerable trade in exporting goods for the use of strangers; and on the contrary, wherever coin is found to be scarce we may conclude that a great importation of foreign goods has taken place of the coin, which must have gone abroad for the payment of them.'

These consequences are just, only so far as money comes into a country or goes out of it, as the price of merchandize exported or imported. But how much money has not this author himself drawn into Rome from England, for the exportation of nothing but the bills of travellers?

On the other hand, may not a country, which is actually in possession of great quantities of gold and silver, call in these metals and circulate, in their place, a symbolical money; may not a nation then, as well as a private person, employ this specie in a profitable foreign trade, and gain daily by it? May she not, after some time, withdraw her stock, by calling in her debts? And may she not also call in her paper, and remain with an additional acquisition of specie in her pocket? Consequently, during the circulation of the paper, no judgment can be formed as to the balance of her trade, by examining the state of her specie; because I can suppose that at this time every shilling of it may be in the hands of strangers. Consequently, the richest nation in Europe may be the poorest in circulating specie.

'The writings of Mr Gee (says Mr Hume in his Political Discourse upon the Balance of Trade) struck the nation with an universal panic, when they saw it plainly demonstrated, by a detail of particulars, that the balance was against them for so considerable a sum as must leave them without a single shilling in five or six years. But, luckily, twenty years have since elapsed, along with an expensive foreign war; and yet 'tis commonly supposed that money is still more plentiful among us than in any former period.' I quote from the French translation.

Mr Gee was in the wrong to conclude, that the balance of trade would have the effect of carrying off the coin: and Mr Hume has been misled by this mistake, to conclude, that Mr Gee's calculations were false. I know nothing as to the matter of fact; nor whether Mr Gee was a good or a bad judge of the question he treated; but, from what has been said, I hope it appears, that the state of the coin in England, at the time Mr Hume wrote, was no proof on either side.

To judge of the balance of trade is one thing; to judge of the wealth of a nation as to specie is another. England may greatly increase her specie by her trade, and greatly diminish it by her wars: perhaps this may be the fact. She may also, at certain times, have a balance of trade against her; and great sums laid out in foreign wars may be the means of making it return in her favour. Should this nation begin to pay off her debts to strangers, in ready coin, might she not soon diminish, perhaps exhaust, the specie she is now possessed of; yet surely none ever became poorer by paying off their debts. Nothing is so easy as to have specie, when one has solid property to pledge for it; and nothing can be worse judged, than to purchase specie from strangers, at the expence of paying an interest for it, when one can contrive a circulating value in paper-money, representing the solid value which must be pledged to strangers for the loan of their metals.

But still it may be asked, how it happens, that notwithstanding the most unfavourable balance of trade, no nation ever found herself entirely drained of her specie; and since we have proved, that the specie of a country may be diminished by a disadvantageous trade, what are the principles which prevent the total dissipation of it?

This is a very curious question, and opens a door to a multitude of new ideas, which will furnish abundant matter of speculation, when we come to treat more directly of credit. I shall here examine it in general, for the sake only of applying the principles we have laid down.

First, It may be said, that as common prudence prevents a private person from spending to his last shilling; so the like prudence commonly engages a people to put a stop to trade, before it has time totally to drain them. Although most people drink wine, there is no reason why every body should be drunk.

Secondly, Nothing is so complicated as the balance of trade, considered among many nations. The general wealth circulates from one to another, as the money which the farmer gives the landlord circulates back to the farmer. In the number of hands through which the money passes, some are of the class of the luxurious, some of the frugal; the first represents those nations who lose by the balance, the latter those who gain. But the most industrious nations of all, and those who, considered abstractedly from extraordinary accidents, appear in the way to swallow up the wealth of all the rest, are, by the means of such accidents, made liable to terrible restitutions. How many millions, for example, has England restored to the continent, in consequence of her wars and subsidies? She then lays a foundation for many more years of favourable balance, and accordingly we see it return to her, as the money which the state spends within the nation returns into the Exchequer at the end of the year.

Thirdly, It may be asked, how it happens that no nation has ever spent to its last farthing, as many an individual has done? I answer, that I am far from believing that this has never happened; nay, I believe there is nothing more frequent or familiar than this very case, provided the riches of a country be here supposed to mean no more than the specie absolutely belonging to herself, not borrowed from other nations.

I have said above, that the acquisition of money by industry increased the real value of a country, as much as the addition of a portion of territory; now what should hinder a people from spending their ready money, and preserving their land at the same time? Because a young gentleman, whose father has left him a fine estate in land, and ten thousand pounds in ready money, has spent the ten thousand pounds, does it follow, that he is not worth a shilling? Upon this view of the question, it will, I believe, be granted, that Dr Swift's idea that all the specie of Ireland would in a short time be exported, in consequence of an unfavourable balance of trade, is very far from being chimerical, and may be exactly true; although at this time there be six times more coin in circulation than ever; just as a person who is running through his fortune, has commonly more money in his hands than his father used to have, when he was acquiring it. Let Ireland pay her debts to England, and then reckon her specie. Let England pay hers to all the world, and then weigh her gold and silver. Suppose that on summing up the accounts, there is not found one shilling in either country, is this any proof of their being undone? By no means: coin is one article of our wealth, but never can be the measure of it.

I know little of the state of Ireland; but if it be true, that paper money is increasing daily in that country, it is, I suppose, because the specie is daily exported to England, as the returns of estates belonging to people who reside there, and that the Irish, instead of buying it back again for their own use in circulation, augment their paper, in proportion to the progress of their industry; and buy such quantities only of specie as are necessary for paying the balance of their trade. Now by buying specie, I do not suppose, that they bring any over to Ireland, in order to send it back to England; but that they send over goods to the value, which the English merchants pay in specie, or in English paper, to those who are creditors upon Ireland, for the value of their rents, &c.

Suppose then, for a farther illustration of some principles, that all the lands of Ireland belonged to Englishmen residing in their own country, and annually drawing from Ireland the income belonging to them, what would the consequence be? I answer, that as long as this portion of the produce of lands, which goes for rent, (and which we have said to be the fund provided for the subsistence of the free hands who purchase their own necessaries,) can be bought and consumed by the Irish themselves, that is, in other words, while in Ireland there is a demand for this portion of the fruits, it will be paid for, either in coin, to the diminution of their specie, or in something which may be converted into money; that is, by the produce of their industry, and thus, by the means of trade, will come into the hands of the English proprietors, either in specie, or in any other form they judge proper.

That so soon as the demand for this portion of fruits comes to fail, for want of money, or industry, in Ireland, to purchase it, what remains on hand will be sent over to England in kind; or, by the way of trade, be made to circulate with other nations (in beef, butter, tallow, &c.) who will give silver and gold for it, to the proprietors of the Irish lands. By such a diminution of demand in the country, for the fruits of the earth, the depopulation of Ireland is implied; because they who consumed them formerly, consume them no more; that is to say, they are dead, or have left the country.

To conclude; a great part of the value of a country is its produce and manufactures; but it does not follow that these should as necessarily draw into a country a proportional sum of the gold and silver of Europe, as a shoal of small fishes draws water-fowl, or as charity draws the poor, or as beauty draws admiration.

Quest. 2. Can no rule be found to judge of the balance of trade from the state of specie, or at least to perceive the effects of this balance in augmenting or diminishing the mass of riches?

Could it be supposed that specie never circulated between nations, but in the way of trade, and in exchange for exportable commodities, the following rules might be laid down.

First, In nations where the earth produces neither gold or silver, and where these metals are imported as the returns of industry only, the balance in their favour, from the introduction of specie, to this day, would be measured by the quantity of it which they possess. Here Mr Belloni's opinion is just.

Secondly, The consumption made by any nation for the same term of years, is equal to the whole natural produce and labour of the inhabitants for that time, minus the quantity of such produce and labour, as is, or has been, equal in value to the actual national specie.

Thirdly, On the other hand, in nations where gold and silver are produced by the earth, the balance of trade against them, from the time these metals became the object of trade to this day, may be estimated by the quantity of them which has been exported.

Fourthly, and farther; the consumption made by such nations, for the same term of years, is equal to the whole natural produce and labour of the inhabitants for that time, plus the quantity of such produce and labour, as is, or has been, equal to the quantity of these metals exported.

These rules are by much too general to be laid down as principles; because trade is not concerned in every acquisition or alienation of specie; but they may serve, in the mean time, to illustrate the doctrine we have been considering, and even in many cases may be found pretty exact. For example:

If it be true, that in any nation of Europe, there be now just as much silver and gold as there was ten years ago, and if that nation, during this period, has supported, without borrowing from strangers, an expensive war which may have cost it, I suppose, five millions fairly exported in coin, it is certain that, during this period, the home-consumption must have been the value of five millions less than the natural produce, labour, and industry of the inhabitants; which sum of five millions must have come from abroad in coin, and in return for a like value of the production, labour, &c. remaining over and above their own consumption, and exported for this return in ready specie.

In this supposition, the national wealth (the metals) stands as before; the balance of it only is changed. How this change is performed, and what are its consequences, may be discovered by an application of the principles already laid down.

Quest. 3. What were the effects of riches before the introduction of trade and industry?

I never can sufficiently recommend to my readers to compare circumstances in the economy of the ancients, with these of modern politics; because I see a multitude of new doctrines laid down, which, I think, never would have been broached, had such circumstances been properly attended to. I have endeavoured to shew, that the price of goods, but especially of articles of the first necessity, have little or no connection with the quantities of specie in a country The slightest inspection into the state of circulation, in different ages, will fortify our reasoning: but the general taste of dissipation, which is daily gaining ground, makes people now imagine, that wealth and circulation are synonymous terms; whereas nothing is more contrary both to reason and matter of fact. A slight review of this matter, in different ages, will set it in a clearer light than a more abstract reasoning can do.

It is a question with me, whether the mines of Potosi and Brazil, have produced more riches to Spain and Portugal, within these two hundred years, than the treasures heaped up in Asia, Greece, and Egypt, after the death of Alexander, furnished to the Romans, during the two hundred years which followed the defeat of Perseus, and the conquest of Macedonia.

From the treasures mentioned by all the historians who have written of the conquest of these kingdoms by the Romans, I do not think I am far from truth, when I compare the treasures of the frugal Greeks to the mines of the new world.

What effect, as to circulation, had the accumulation of these vast treasures? Not any to accelerate it, surely: and no person, the least conversant in antiquity, will pretend that the circulating specie in those times bore as great a proportion to their treasures, as what is at present circulating among us bears to the wealth of the most oeconomising Prince in Europe. If any one doubt of this particular, let him listen to Appian, who will inform him, that the successors of Alexander, the possessors of these immense riches, lived with the greatest frugality. These treasures were then, as I have said, a real addition to the value of their kingdoms but had not the smallest influence upon prices. In those days of small circulation, the prices of every thing must have been vastly low, not from the great abundance of them, but because of the little demand; and as a proof of this, I cite the example of a country, which, within the space of fifty years, possessed in specie, at one time, considerably beyond the worth of the land, houses, slaves, merchandize, natural produce, moveables, and ready money, at another. The example is mentioned by Mr Hume; and I am surprized the consequence of it did not strike him. For if the money they possessed was greatly above the worth of all their property, moveable and immoveable, surely it never could be considered as a representation of their industry, which made so small a part of the whole. Athens possessed, before the Peloponnesian war, a treasure of ten thousand talents; and fifty years afterwards, all Athens, in the several articles above specified, did not amount to the value of six thousand. Hume's Political Discourses upon the Balance of Trade.

These treasures were spent in the war, and they had been laid up for no other purpose. Therefore I was in the right, when I observed above, Chap. 22., that war in ancient times had the effect that industry has now: it was the only means of making wealth circulate. But, peace producing a general stagnation of circulation, people returned to the ancient simplicity of their manners, and the prices of subsistence remained on the former footing; because there was no increase of appetite, or rising of demand upon any necessary article. So much for the state of wealth during the days of frugality.

The Romans subdued all those kingdom of the Greeks, and drew their treasures to Rome. The republic went to destruction, and a succession of the most prodigal princes ever known in history succeeded one another for about two hundred years. Those monstrous treasures were then thrown into circulation: and I must now give an idea of the effects produced by such a revolution.

I have already observed (Chap. 28.), that in consequence of the great prodigality of those times, the price of superfluities rose to a monstrous height; while the price of necessaries kept excessively low. The fact is indisputable; and any one who inclines to satisfy himself father, may look into that valuable collection of examples of ancient luxury, wealth, and, at the same time, of simplicity, found in Dr Wallace's Dissertation upon the Numbers of Mankind in ancient and modern Times, p. 132. et seq.

But how is it to be accounted for, that the price of superfluities should stand so high, while the price of necessaries was so low? The reason is plain, from the principles we have laid down. The circulation of money had no resemblance to that of modern times: fortunes were made by corruption, fraud, concussion, rapine, and penury; not by trade and industry. Seneca amassed in four years 2,400,000 pounds sterling. An augur was found to be worth 3 millions sterling. M. Antony owed on the ides of March, 322,916 pounds sterling, and paid it before the calends of April. We know of no such circulation. Every revolution was violent: the powerful were rapacious and prodigal, the weak were poor and lived in the greatest simplicity: consequently, the objects of the desires for the rich were immensely dear; and the necessaries for the poor were excessively cheap. This is a confirmation of the principles we have laid down in Chap. 28., that the price of subsistence must ever be in proportion to the faculties of the numerous classes of those who buy: that the price of every thing must be in proportion to the demand for it; and that in every case, where the supply can naturally be increased in proportion to the demand, there must be a determinate proportion between the price of such articles and that of subsistence. Now in the examples given by Dr Wallace, of things which sold at monstrous prices, we find such only as could not be increased according to demand: here is the enumeration of them. Large asses brought from Spain, peacocks, fine doves, mullets, lampreys, peaches, large asparagus, purple, wool, jewels, carpets, vestes Byssinae, slaves skilled in the finer arts, pictures, statues, books, and rewards to those who taught the sciences. By casting a glance upon the catalogue, we may easily perceive that the extraordinary price must have proceeded from the impossibility of augmenting the supply in proportion to the demand; not from the abundance of the money, which had no effect in raising the price of necessaries. The cheapness, again, of these did not proceed from the vast plenty of them; but because the price remained in proportion to the faculties of the numerous poor; and because the augmentation of the wealth of the rich never could increase their consumption of any necessary article. Had the Roman empire been governed with order and tranquillity, this taste of luxury, by precipitating money into the hands of the numerous classes, would, in time, have wrought the effects of multiplying the number of the industrious; consequently, of increasing the demand for vendible subsistence; consequently, of raising the price of it. And, on the other hand, the introduction of a more adequate proportion between services and rewards given by the public, would have checked the other branch of circulation which produced those monstrous fortunes, to wit, rapine and corruption: and, industry receiving a regular encouragement, every article of extraordinary demand for delicate aliments, birds, fishes, fruits, &c. would have been supplied with sufficient abundance; and consequently, would have fallen in its price. But while either despotism or slavery were the patrimonial inheritance of every one on coming into the world, we are not to expect to see the same principles operate, as in ages where the monarch and the peasant are born equally free to enjoy the provision made for them by their forefathers.

Quest. 7. In what manner, therefore, may a statesman establish industry, so as not to destroy simplicity, nor occasion a sudden revolution in the manners of his people, the great classes of which are supposed to live secure in ease and happiness; and, at the same time, so as to provide with necessaries every one who may be in want?

The observations we are going to make will point out the answer to this question: they will still farther unfold the political economy of the ancients, and explain how manners remained so pure from vicious luxury, notwithstanding the great and sumptuous works carried on, which strike us with so lofty an idea of their useful magnificence and noble simplicity. These observations will also confirm the justness of a distinction made, in the first chapter of this book, between labour and industry; by shewing that labour may ever be procured, even by force, at the expence of furnishing man with his physical-necessary, from which no superfluity can proceed: whereas industry cannot be established, but by means of an adequate equivalent, proportioned, not to the absolutely necessary, but to the reasonable desire of the industrious; which equivalent becomes afterwards the means of diffusing a luxurious disposition among all the classes of a people.

If a statesman find certain individuals in want, he must either feed them, in which case he may employ them as he thinks fit; or he must give them a piece of land, as the means of feeding themselves. If he give the land, he can require no equivalent for it, because a person who has nothing can give nothing but his labour; and if he be obliged to labour for his food, he cannot purchase with labour the earth itself, which produces it. If it be asked, whether a statesman does better to give the food, or to give the land? I think it will appear very evident, that the first is the better course, because he can then exact an equivalent; and since in either way the person is fed, the produce of his labour is always clear gain. But in order to give the food, he must have it to give; in which case it must either be a surplus-produce of public lands, or a contribution from the people. In both which cases, is implied an industry carried on beyond the personal wants of those who labour the ground. If this fund be applied in giving bread to those whom he employed in improving the soil of the country in general, it will have no immediate effect in destroying the simplicity of their manners; it will extend the fund only of their subsistence. If he employs them in making highways, aqueducts, common sewers, bridges, and the like; it will extend the correspondence between the different places of the country, and render living in cities more easy and agreeable: and these changes have an evident tendency towards destroying simplicity. But here let it be remarked, that the simplicity of individuals is not hurt by the industry carried on at the expence of the public. The superfluous food at the statesman's disposal, is given to people in necessity, who are employed in relieving the wants of the public, not of private persons. But if, for example, in consequence of the roads made, any inhabitant shall incline to remove from place to place in a chariot, instead of riding on horseback, or walking, he must engage somebody to make the machine: this is a farther extension to occupation, on the side of those who labour. but the consequence of the employment is very different, when considered with regard to the simplicity of manners. The reason is plain: the ingenuity here must be paid for; and this superfluity in the hands of the workman is a fund for his becoming luxurious.

Industry destroys simplicity of manners in him who gives an equivalent for an article of superfluity; and the equivalent given frequently gives rise to a subordinate species of luxury in the workman. When industry therefore meets with encouragement from individuals, who given an equivalent in order to satisfy growing desires, it is a proof that they are quitting the simplicity of their manners. In this case, the wants and desires of mankind are the sources of industry, which was the supposition in the first book; because, in fact, the industry of Europe is owing to this cause alone.

But the industry of ancient times was very different, when the multitude of slaves ready to execute whatever was demanded, either by the state or by their masters, for the equivalent of simple maintenance only, prevented wealth from ever falling into the hands of industrious free men; and he who has no circulating equivalent to give for satisfying a desire for superfluity, must remain in his former simplicity. The labour therefore of those days producing no circulation, could not corrupt the manners of the people; because, remaining constantly poor, they never could increase their consumption of superfluity.

I must, in this place, insert the authority of an ancient author, in order both to illustrate and to prove the justness of this representation of the political oeconomy of the ancients.

There remains a discourse of Xenophon upon the improvement of the revenue of the state of Athens. Concerning the authenticity of this work, I have not the smallest doubt. It is a chef d'oeuvre of its kind, and from it more light is to be had, in relation to the subject we are here upon, than from any thing I have ever seen, ancient or modern.

From this ancient monument we learn the sentiments of the author with regard to the proper employment of the three principal classes of the Athenian people, viz. the citizens, the strangers, and the slaves. From the plan he lays down we plainly discover, that, in the state of Athens, (more renowned than any other of antiquity for the arts of luxury and refinement,) it never entered into the imagination of any politician to introduce industry even among the lowest classes of the citizens; and Xenophon 's plan was to reap all the benefits we at present enjoy from it, without producing any change upon the spirit of the Athenian people.

The state at this time used to impose taxes upon their confederate cities, in order to maintain their own common people, and Xenophon's intention in this discourse was to lay down a plan for improving the revenue of the state in such a manner as out of it to give every citizen a pension of three oboli a day, or three pence three farthings of our money.

I shall not here go through every branch of his plan, nor point out the resources he had fallen upon to form a sufficient fund for this purpose; but he says, that in case of any deficiency in the domestic revenue of the state, people from all quarters, Princes and strangers of note, in all countries, would be proud of contributing towards it, for the honour of being recorded in the public monuments of Athens, and having their names transmitted to posterity as benefactors to the state in the execution of so grand a design.

In our days, such an idea would appear ridiculous; in the days of Xenophon, it was perfectly rational. At that time great quantities of gold and silver were found locked up in the coffers of the rich: this was in a great measure useless to them, in the common course of life, and was the more easily parted with from a sentiment of vanity or ostentation.

In our days, the largest income is commonly found too small for the current expence of the proprietor. From whence it happens, that presents, great expence at funerals and marriages, godfathers' gifts, &c. so very familiar among ourselves in former times, are daily going out of fashion. These are extraordinary and unforeseen expences which our ancestors were fond of; because they Battered their vanity, without diminishing the fund of their current expence: but as now we have no full coffers to fly to, we find them excessively burthensome, and endeavour to retrench them as soon as we can, not from frugality, God knows, but in consequence of a change in our manners.

Besides providing this daily pension of three pence three farthings a day for every citizen of Athens, rich and poor, he proposed to build, at the public charge, many trading vessels, a great many inns and houses of entertainment for all strangers in the sea-ports, to erect shops, warehouses, exchanges, &c. the rents of which would increase the revenue, and add great beauty and magnificence to the city. In short, Xenophon recommends to the state to perform, by the hands of their slaves and strangers, what a free people in our days are constantly employed in doing in every country and industry. While the Athenian citizens continued to receive their daily pensions, proportioned to the value of their pure physical-necessary, their business being confined to their service in the army in time of war, their attendance in public assemblies, and the theatres in times of peace, clothed like a parcel of capucins, they, as became freemen, were taught to despise industrious labour, and to glory in the austerity and simplicity of their manners. The pomp and magnificence of the Persian Emperors were a subject of ridicule in Greece, and a proof of their barbarity, and of the slavery of their subjects. From this plain representation of Xenophon's plan, I hope, the characteristic difference between the ancient and modern economy is manifest; and for such readers as take a particular delight in comparing the systems of simplicity and luxury, I recommend the perusal of this most valuable discourse.

To put this matter past all dispute, and to prove that the simplicity of the manners, as well as the idleness of the common people of Athens in Xenophon's time, proceeded from refinement not from ignorance, I shall here insert a passage from President Goguet's Origin of Laws, Arts, and Sciences, with the authorities he cites in part 3d, book 4th, chap. 3d.

'Hesiod and Plutarch have observed,' says he, 'that, in the ages I am now speaking of (before the reign of Cyrus) commerce was held in great honour among the Greeks. No labour, say these authors, was accounted shameful, no art, no trade, placed any difference among men. This maxim, so reasonable and so useful to such a nation as the Greeks, was, nevertheless, altered. We see by the works of Xenophon, of Plato, of Aristotle, and of many other writers of merit, that, in their age, all professions which were calculated to gain money, were regarded as unworthy of a freeman. Aristotle maintains, that, in a well ordered state, they will never give the right of citizens to artisans. Plato would have a citizen punished who should enter into commerce. In fine, we see these two philosophers, whose sentiments, on the principles and maxims of government, are otherwise so opposite, agreeing to recommend that the lands should be cultivated by slaves: only. It is very surprising,' concludes the President, 'that with such principles, which all the Greeks appear to have imbibed, they should ever have been so intelligent in commerce, and so powerful at sea, as they are known to have been in some ages.'

Putting, therefore, all these circumstances together, and comparing them with the contrast, which is found, as to every particular, in our times, I think it is but doing justice to the moderns, to allow, that the extensive luxury, which daily diffuses itself through every class of a people, is more owing to the abolishing of slavery, the equal distribution of riches, and the circulation of an adequate equivalent for every service, than to any greater corruption of our manners, than what prevailed among the ancients.

In order to have industry directed towards the object of public utility, the public, not individuals, must have the equivalent to give. Must not the employment be adapted to the taste of him who purchases it? Now, in ancient times, most public works were performed either by slaves, or at the price of the pure physical-necessary of free men. We find the price of a pyramid, recorded to us by Herodotus, in the quantity of turnips, onions, and garlic, consumed by the builders of it. Those who made the via appia, I apprehend, were just as poor when it was finished as the day it was begun; and this must always be the case, when the work requires no peculiar dexterity in the workmen. If, on the other hand, examples can be brought where workmen gained high wages, then the consequences must have been the same as in our days.

As long, therefore, as industry is not directed to such objects as require a particular address, which, by the principles laid down in the twenty-first chapter, raises profits above the physical-necessary, the industrious never can become rich; and if they be paid in money, this money must return into the hands of those who feed them: and if no superfluity be found any where but in the hands of the state, such industry may be the means of consuming a surplus of subsistence, but never can draw one penny into circulation. This I apprehend to be a just application of our principles, to the state of industry under the Roman republic: and it is this species of industry which we call labour. We are not therefore to ascribe the taste for simplicity in those days to the virtue of the times. A man who had riches, and who spent them, spent them no doubt then, as at present, to gratify his desires; and if the simplicity of the times furnished no assistance to his own invention, in diversifying them, the consequence was, that the money was not spent, but locked up. I have heard many a man say, had I so much money I should not know how to spend it. The thing is certainly true; for people do not commonly take it into their head to lay it out for the public.

Nobody, I believe, will deny that money is better employed in building a house, or in producing something useful and permanent, than in providing articles of mere transitory superfluity. But what principle of politics can influence the taste of the proprietors of wealth? This being the case, a statesman is brought to a dilemma; either to allow industry to run into a channel little beneficial to the state, little permanent in its nature, or to deprive the poor of the advantage resulting from it. May I not farther suggest, that a statesman, who is at the head of a people, whose taste is directed towards a trifling species of expence, does very well to diminish the fund of their prodigality, by calling in, by the means of taxes, a part of the circulating equivalent which they give for it? When once he is enriched by these contributions, he comes to be in the same situation with ancient statesmen, with this difference, that they had their slaves at their command, whom they fed and provided for; and that he has the free, for the sake of an equivalent with which they feed and provide for themselves. He then can set public works on foot, and by his example, inspire a taste for industry of a more rational kind, which may advance the public good and procure a lasting benefit to the nation.

I have frequently said, that the acquisition of money, by the sale of industry to strangers, or in return for consumable commodities, was a way of augmenting the general worth of a nation. Now I say, that whoever can transform the most consumable commodities of a country into the most durable and most beneficial works, makes a high improvement. If therefore meat and drink, which are of all things the most consumable, can be turned into harbours, high roads, canals, and public buildings, is not the improvement inexpressible? This is in the power of every statesman to accomplish, who has subsistence at his disposal; and beyond the power of all those who have it not. There is no absolute occasion for money to improve a country. All the magnificent buildings which ornament Italy, are more properly the representation of a scanty subsistence, than of the gold and silver in that country at the time they were executed. Let me now conclude with a few miscellaneous observations on what has been said.

Obser. 1. When I admire the magnificence and grandeur of public works in any country, such as stupendous churches, amphitheatres, roads, dykes, canals; in a word, when I examine Holland, the greatest work perhaps ever done by man, I am never struck with the expence. I compare them with the numbers of men only who have lived to perform them. When I see another country well inhabited, where no such works appear, the contrast suggests abundance of reflections.

As to the first, I conclude, that while these works were carrying on, either slavery or taxes must have been established; because it seldom happens, that a prince will, out of his own patrimony, launch out into such expences, purely to serve the public. Public works are carried on by the public; and for this purpose, either the persons or purses of individuals, must be at its command. The first I call slavery; that is service: the second taxes; that is public contributions in money or in necessaries.

Obser. 2. I farther conclude, that nothing is to be gathered from those works, which should engage us to entertain a high opinion of the wealth, or other species of magnificence in the people who executed them. All that can be determined positively concerning their economy as to this particular, is, that at the time they were performed, agriculture must have been exercised as a trade, in order to furnish a surplus sufficient to maintain the workmen; or that subsistence must have come from abroad, either as a return for other species of industry, or gratuitously, that is, by rapine, tribute, &c.

Obser. 3. That the consequence of such works, is, to make meat, drink, and necessaries circulate from the hands of those who have a superfluity of them, into those who are employed to labour; or to oblige those who formerly worked for themselves only, to work also in part for others. To execute this, there must be a subordination: for who will increase his labour, voluntarily, in order to feed people who do not work for himself, but for the public? This combination was neglected throughout the first book; because we there left mankind at liberty to follow the bent of their inclinations. This was necessary to give a right idea of the subject we then intended to treat, and to point out the different effects of slavery and liberty; but now, that we have formed trading nations, and riveted a multitude of reciprocal dependences, which tie the members of them together, there is less danger in introducing restraints; because the advantages which people find, from living in a well ordered society, make them put up the better with the inconveniences of supporting and improving it. It is an universal principle, that instruction should be given with gentleness. A young horse is to be carressed when the saddle is first put upon his back: any thing that appears harsh, let it be ever so useful or necessary, must be forborn in the beginning, in order to captivate the inclination of the creature which we incline to instruct.

Obser. 4. When a statesman knows the extent and quality of the territory of his country, so as to be able to estimate what numbers it may feed; he may lay down his plan of political economy, and chalk out a distribution of inhabitants, as if the number were already compleat. It will depend upon his judgment alone, and upon the combination of circumstances, foreign and domestic, to distribute, and to employ the classes, at every period during this execution, in the best manner to advance agriculture, so as to bring all the lands to a thorough cultivation. A ruling principle here, is, to keep the husbandman closely employed, that their surplus may be carried as high as possible; because this surplus is the main spring of all alienation and industry. The next thing is to make this surplus circulate; no man must eat of it for nothing. What a prodigious difference does a person find, when he considers two countries, equally great, equally fertile, equally cultivated, equally peopled, the one under the economy here represented; the other, where every one is employed in feeding and providing for himself only.

A statesman, therefore, under such circumstances, should reason thus: I have a country which maintains a million of inhabitants, I suppose, and which is capable of maintaining as many more; I find every one employed in providing for himself, and considering the simplicity of their manners, a far less number will be sufficient to do all the work: the consequence is, that many are almost idle, while others, who have many children, are starving. Let me call my people together, and shew them the inconvenience of having no roads. He then proposes that every one who chooses to apply to this work, shall be fed and taken care of by the community, and his lands distributed to those who incline to take them. The advantage is felt, the people are engaged to work a little harder, so as to undertake the cultivation of the portions of those who have abandoned them. Upon this revolution, labour is increased, the soil continues cultivated as before, and the additional labour of the farmers appears in a fine high road. Is this any more than a method to engage one part of a people to labour, in order to maintain another?

Obser. 5. Here I ask, whether it be not better to feed a man, in order to make him labour and be useful, than to feed him in order to make him live and digest his victuals? This last was the case of multitudes during the ages of ancient slavery, as well as the consequence of ill-directed modern charity. One and the other being equally well calculated for producing a simplicity of manners: and Horace has painted it to the life, when he says,

Nos numerus sumus, et fruges consumere nati.

This I have heard humorously translated, though nastily I confess; We add to the number of t-d mills. A very just representation of many of the human species! to their shame be it spoken, as it equally casts a reflection on religion and on government.

Consistently with these principles, we find no great or public work carried on in countries of great liberty. Nothing of this kind is to be seen among the Tartars or hunting Indians. These I call free nations, but not our European republics, where I have found just as much subordination and constraint as any where else.

I have on several occasions, let drop some expressions with regard to charity, which I am sensible may be misinterpreted. It will therefore be proper to make some apology, which nobody can suspect of insincerity; because my reason for introducing it, is with a view to a farther illustration of my subject.

When I see a rich and magnificent monastery of begging friars, adorned with profusion of sculpture, a stupendous pile of building, stately towers, incrustations of marble, beautiful pavements; when I compare the execution and the expence of all these, with the faculties of a person of the largest fortune, I find there is no proportion between what the beggars have executed with the produce of private charities, and what any Lord has done with his overgrown estate. Nay monasteries there are which, had they been executed by princes, would have been cited by historians, from generation to generation, as eternal monuments of the greatest prodigality and dissipation. Here then is an effect of charity, which I have heard condemned by many, and I think without much reason. What prostitution of riches! say they: how usefully might all this money have been employed, in establishing manufactures, building a navy, and in many other good purposes? Whereas I am so entirely taken up with the effects arising from the execution of the work, that I seldom give myself time to reflect upon the use of it. The building of this monastery has fed the industrious poor, has encouraged the liberal arts, has improved the taste of the inhabitants, has opened the door to the curiosity of strangers: and when I examine my purse, I find that instead of having contributed to the building of it from a charitable disposition, my curiosity to see it has obliged me to contribute my proportion of the expence. I spend my money in that country, and so do other strangers, without bringing any thing away for it. No balance of trade is clearer than this. The miraculous tongue of St. Anthony of Padua, has brought more clear money into that city than the industry of a thousand weavers could have done: the charity given is not to the monks, but to the poor whom they employ. If young wits, therefore, make a jest of such a devotion; I ask, who ought to be laughed at, those who give, or those who receive money for the show?

In a country where such works are usually carried on, they cease in a great measure to be useful, whenever they are finished; and a new one should be set on foot directly, or what will become of those who are without employment? It must not be concluded from this, that the usefUlness of public works is not a principal consideration. The more a work is useful after it is done, so much the better; because it may then have the effect of giving bread to those who have not built it. But whether useful or not afterwards, it must be useful while it is going on; and many, who with pleasure will give a thousand pounds to adorn a church, would not give a shilling to build Westminster bridge, or the port of Rochefort; and the poor live equally by the execution of either. Expensive public works, are therefore a mean of giving bread to the poor, and of advancing industry, without hurting the simplicity of manners; which is an answer to the seventh question.

Obser. 6. Great works found in one country and none found in another, is no proof that the first have surpassed the second in labour and industry: the contrast marks only the different division of property, or taste of expence. Every undertaking points out a particular interest. Palaces are a representation of rich individuals; snug boxes, in the neighbourhood of cities, represent small but easy fortunes; huts point out poverty; aqueducts, highways, &c. testify an opulent common good: and if these be found in a country where no vestige of private expence appears, I then must conclude that they have been executed by slaves, or by oppression; otherwise somebody, at least, would have gained by the execution; and his gains would appear in one species of expence or another.

Obser. 7. In countries where fortunes have been unequally divided, where there have been few rich and many poor, it is common to find lasting monuments of labour; because great fortunes only are capable of producing them. As a proof of this let us compare the castles of ancient times (I mean four or five hundred years ago) with the houses built of late. At that time fortunes were much more unequal than at present, and accordingly we find the habitations of the great in most countries not numerous, but of an extraordinary bulk and solidity. Now a building is never to be judged of by the money it cost, but by the labour it required. From the houses in a country, I judge of the opulence of the great, and of the proportion of fortunes among the inhabitants. The taste in which these old castles are built, marks the power of those who built them, and, as their numbers are small, we may judge from the nature of man, who loves imitation, that the only reason for it was, that there were few in a condition to build them. Why do we find in modern times a far less disproportion between the convenience with which every body is lodged, than formerly; but merely because riches from the operations of industry above-described are more equally divided.

Obser. 8. From this we may conclude, that lasting monuments are no adequate measure of the industry of a country. The expence of a modern prince, in a splendid court, numerous armies, frequent journeys, magnificent banquets, operas, masquerades, tournaments, and shews, may give employment and bread to as many hands, as the taste of him who built the pyramid; and the smoke of the gun-powder at the reviews, and of the flambeaus and wax lights at the entertainments, may be of as great use to posterity, as the shadow of the pyramid, which is the only visible effect producted by it; but the one remains for ever, the other leaves no vestige behind it. The very remaining of the work, however useless in itself, becomes advantageous, so far as it is ornamental, and inspires sentiments of emulation to succeeding princes, the effects of which will still be productive of the good consequences of keeping people employed. The expence of the other flatters the senses, and gives delight: there is no choice here. All such useless expence gratifies vanity only; accident alone makes one species permanent, another transitory.

Those who have money may be engaged to part with it in favour of the poor, but never forced to part with it to the prejudice of their posterity. Inspire, if you can, a good and useful taste of expence; nothing so right; but never check the dissipation of ready money, with a view to preserve private fortunes. Leave such precautions to the prudence of every individual. Every man, no doubt, has as good a right to perpetuate and provide for his own posterity, as a state has to perpetuate the welfare of the whole community; it is the combination of every private interest which forms the common weal. From this I conclude, that, without the strongest reasons to the contrary, perpetual substitutions of property should be left as free to those who possess lands, as locking up in chests should be permitted to those who have much money.

Quest. 8. What are the principles which influence the establishment of mercantile companies; and what effects do these produce upon the interests of trade?

There is a close connection between the principles relating to companies and those we have examined in the twenty-third chapter, concerning corporations. The one and the other have excellent consequences, and both are equally liable to abuse. A right examination of principles is the best method to advance the first, and to prevent the latter.

The advantages of companies are chiefly two.

1. That by uniting the stocks of several merchants together, an enterprise far beyond the force of any one, becomes practicable to the community.

2. That by uniting the interests of several merchants, who direct their foreign commerce towards the same object, the competition between them abroad is taken away; and whatever is thus gained, is so much clear profit, not only to the company, but to the society of which they are members.

It is in consideration of the last circumstance, that companies for foreign commerce have a claim to extensive privileges. But no encouragement given to such associations should be carried farther than the public good necessarily requires it should be. The public may reward the ingenuity, industry and inventions of particular members, and support a private undertaking as far as is reasonable; but every encouragement given ought to be at the expence of the whole community, not at that of particular denominations of inhabitants.

The disadvantages proceeding from companies are easily to be guessed at, from the very nature of the advantages we have been setting forth: and the relation between the one and the other will point out the remedies.

First, the weight of money in the hands of companies, and the public encouragement given them, crush the efforts of private adventurers, while their success inspires emulation, and a desire in every individual to carry on a trade equally profitable.

Here a statesman ought nicely to examine the advantages which the company reaps from the incorporation of their stock, and those which proceed from the public encouragement given to the undertaking; that with an impartial hand, he may make an equal distribution of public benefits. And when he finds it impossible to contribute to the advancement of the public good, by communicating the privileges of companies to private adventurers, he ought to facilitate the admittance of every person properly qualified into such associations.

Secondly, The second disadvantage of companies, is, a concomitant of that benefit so sensibly felt by the state, from the union of their interest, while they purchase in foreign markets: the same union which, at the time of buying, secures the company from all competitions, proves equally disadvantageous to those who purchase from them at home. They are masters of their price, and can regulate their profits by the height of demand; whereas they ought to keep them constantly proportioned to the real value of the merchandize.

The advantage resulting from the union of many private stocks is common to all companies; but those we have mentioned to proceed from the union of their interest, is peculiar to those who carry on an exclusive trade in certain distant parts of the world. We have, in a former chapter, laid down the maxims which influence the conduct of a statesman in regulating the prices of merchandize, by watching over the balance of work and demand, and by preserving the principles of competition in their full activity. But here a case presents itself, where, upon one side of the contract, competition can have no effect, and where its introduction is forbidden for the sake of the public good, because it destroys the exclusive privilege of the company to trade in certain countries.

What method, therefore, can be fallen upon to preserve the advantage which the nation reaps from the company's buying in foreign parts without being exposed to competition; and at the same time to prevent the disadvantage to which the individuals of the society are exposed at home, when they endeavour, in competition with one another, to purchase from a company, who, in virtue of the same exclusive privilege, are united in their interest, and become masters to demand what price they think fit?

It may be answered, that it cannot be said of companies as of private dealers, that they profit of every little circumstance of competition, to raise their price. Companies have a fixed standard, and all the world buys from them at the same rate; so that retailers, who supply the consumption, have in one respect this notable advantage, that as all buy from them at the same price, no one can undersell another; and the competition between themselves secures the public from exorbitant prices.

I agree that these advantages are felt, and that they are real; but still they prove no more than that the establishment of companies is not so hurtful to the interest of those who consume their goods, as it would be could they profit to the utmost of their exclusive privilege in selling by retail. But it does not follow from this, that the profits upon such a trade do not rise (in consequence of their privilege) above the standard proper for making the whole commerce of a nation flourish. The very jealousy and dissatisfaction, conceived by other merchants, equally industrious and equally well deserving of the public, because of the great advantages enjoyed by those who are incorporated, under the protection of exclusive privileges, is a hurt to trade in general, is contrary to that principle of impartiality which should animate a good statesman, and should be prevented if possible. Let us therefore go to the bottom of this affair; and, by tracing the progress of such mercantile undertakings, as are proper objects for the foundation of companies, and which entitle them to demand and to obtain certain exclusive privileges, let us endeavour to find out a method by which a statesman may establish such societies, so as to have it in his power to lay their inland sales under certain regulations, capable to supply the want of competition; and to prevent the profits of exclusive trade from rising, considerably, above the level of that which is carried on without any such assistance from the public.

While the interest of companies is in few hands, the union of the members is more intimate, and their affairs are carried on with more secrecy. This is always the case in the infancy of such undertakings. But the want of experience frequently occasions considerable losses; and while this continues to be the case, no complaints are heard against such associations. Few pretend to rival their undertaking, and it becomes at first more commonly the object of raillery than of jealousy. During this period, the statesman should lay the foundation of his authority; he ought to spare no pains nor encouragement to support the undertaking; he ought to inquire into the capacity of those at the head of it; order their projects to be laid before him; and when he finds them reasonable, and well planned, he ought to take unforeseen losses upon himself: he is working for the public, not for the company; and the more care and expence he is at in setting the undertaking on foot, the more he has a right to direct the prosecution of it towards the general good. This kind of assistance given, entitles him to the inspection of their books; and from this, more than any thing, he will come at the exact knowledge of every circumstance relating to their trade. By this method of proceeding, there will be no complaints on the side of the adventurers, they will engage with chearfulness, being made certain of the public assistance in every reasonable undertaking; their stock becomes in a manner insured, individuals are encouraged to give them credit, and from creditors they will naturally become associates in the undertaking. So soon as the project comes to such a bearing as to draw jealousy, the bottom may be enlarged by opening the doors to new associates, instead of permitting the original proprietors to augment, and thus the fund of the company their stock with borrowed money; may be increased in proportion to the employment found for it, and every one will be satisfied.

When things are conducted in this way, the authority of public inspection is no curb upon the trade; the individuals who serve the company are cut off from the possibility of defrauding; no mysteries, no secrets, from which abuses arise, will be encouraged; trade will become honourable and secure, not fraudulent and precarious; because it will grow under the inspection of its protector, who protects it for the public good only.

Why do companies demand exclusive privileges, and why are they ever granted, but as a recompense to those who have been at great expence in acquiring a knowledge which has cost nothing to the state? And why do they exert their utmost efforts in order to conceal the secrets of their trade, and to be the only sharers in the profits of it, but to make the public refund tenfold the expence of their undertaking?

When companies are once firmly established, the next care of a statesman is, to prevent the profits of their trade from rising above a certain standard. We speak at present of those only, whom by exclusive privileges, are exposed to no competition at their sales. One very good method to keep down prices, is, to lay companies under a necessity of increasing their stock as their trade can bear it, by the admission of new associates; for by increasing the company's stock, you increase, I suppose, the quantity of goods they dispose of, and consequently diminish the competition of those who demand of them: but as even this will not have the effect of reducing prices to the adequate value of the merchandize (a thing to be done by competition only), the statesman himself may interpose an extraordinary operation. He may support high profits to the company, upon all articles of luxury consumed at home, and favour the keeping down of the prices of such goods as are either for exportation or manufacture.

This can be done when he has companies only to deal with: in every other case, the principles of competition between different merchants, trading in the same goods, upon separate interests, makes the thing impossible. But where the interests of the sellers, which are the company, are united, and where there is no competition, they are masters of their price, according to the principles laid down in the seventh chapter. Now, provided the dividend upon the whole stock be a sufficient recompense both for the value of the fund, and the industry of those who are employed to turn it to account, the end is accomplished. Extraordinary profits upon any particular species of trade cast a discouragement upon all others.

We very frequently see that great trading companies become the means of establishing public credit; on which occasions, it is proper to distinguish between the trading stock of the company, which remains in their possession, and the actions, bonds, annuities, contracts, &c. which carry their name, and which have nothing but the name in common. The price of the first is constantly regulated by the profits upon the trade; the price of the other, by the current value of money.

Let me next observe the advantage which might result to a nation, from a prudent interposition of the statesman, in the regulation of a tariff of prices for such goods as are put to sale without any competition on the side of the sellers.

The principles we have laid down, direct us to proscribe, as much as possible, all foreign consumption, especially that of work: and to encourage as much as possible the exportation of it. Now, if what the India company of England, for example, sells to strangers, and exports for a return in money, be equal to the money she herself has formerly exported, the balance upon the India trade will stand even. But if the competition of the French and Dutch be found hurtful to the English company in her outward sales, may not the government of this nation lend a hand towards rising the profits of the company, upon tea, china, and japan wares, which are articles of superfluity consumed by the rich at home, in order to enable the company to afford her silk and cotton stuffs to strangers, at a more reasonable rate? These operations, I say, are practicable, where a company sells without competition, but are never to be undertaken, but when the state of its affairs are perfectly well known; because the prices of exportable goods might, perhaps, be kept up by abuse and mismanagement, and not by the superior advantages which other nations have in carrying on a like commerce. The only remedy against abuse is reformation. But how often do we see a people lid under contribution in order to support that abuse!

Companies, we have said, owe their exclusive privileges to the difficulties to which an infant commerce is exposed: these difficulties once surmounted, and the company established upon a solid foundation, new objects of profit present themselves daily; so much, that the original institution is frequently eclipsed, by the accessary interests of the society. It is therefore the business of a statesman to take care that the exclusive privileges granted to a society, for a certain purpose, be not extended to other interests, nowise relative to that which set the society on foot, and gave it a name. And when exclusive privileges are given, a statesman should never fail to stipulate for himself, a particular privilege of inspection into all the affairs of the company, in order to be able to take measures which may effectually prevent bad consequences to the general interest of the nation, or to that of particular classes.

Let this suffice at present, as to the privileges enjoyed by companies in foreign trade. Let me now examine the nature of such societies in general, in order to discover their influence on the mercantile interests of a nation, and how they tend to bring every branch of trade to perfection, when they are established and carried on under the eye of a wise administration.

Besides the advantages and disadvantages above mentioned, there are others found to follow the establishment of trading companies. The first proceed from union, that is, a common interest; the last from disunion, that is, from separate interests.

A common interest unites, and a separate interest disunites the members of every society; and did not the first preponderate among mankind, there would be no society at all. Those of the same nation may have a common interest relative to foreigners, and a separate interest relative to one another. those of the same profession may have a common interest relative to the object of their industry, and a separate interest relative to the carrying it on: the members of the same mercantile company may have the same interest in the dividend, and a separate interest in the administration of the fund which produces it. The children of the same family, nay even a man and his wife, though tied by the bonds of common interest, may be disjoined by the effects of a separate one. Mankind are like loadstones, they draw by one pole, and repel by another. And a statesman, in order to cement his society, should know how to engage every one, as far as possible, to turn his attracting pole towards the particular centre of common good.

From this emblematical representation of human society, I infer, that it is dangerous to the common interest, to permit too close an union between the members of any subaltern society. When the members of these are bound together, as it were by every articulation, they in some measure become independent of the great body. when the union is less intimate, they admit of other connections, which cement them to the general mass.

Companies ought to be permitted, consistently with these principles. Their mercantile interests alone ought to be united, so far as union is required to carry on their undertaking with reasonable profits; but beyond this, every collateral advantage by which the associates might profit, in consequence of their union, ought to be cut off; and the public should take care to support the interest of private persons against them, on all occasions, where they take advantage of their union to hurt the right of individuals. Let me illustrate this by an example. Several weavers, fishermen, or those of any other class of the industrious, unite their stocks, in order to overcome those difficulties to which single workmen are exposed, from a multiplication of expences, which can be saved by their association. This company makes a great demand for the materials necessary for carrying on their business. By this demand they attach to themselves a great many of the industrious not incorporated, who thereby get bread and employment. So far these find an advantage: but in proportion as the undertaking is extended, and the company becomes able to engross the whole, or a considerable part of such a manufacture, they destroy all competition for it: and by forming a single interest, in the purchase of it, as well as in the sale of their own manufactures, they profit in the first case, by reducing the gains of those who are not incorporated, below the proper standard; and in the second, they raise their own profits too far above what is necessary.

The method, therefore, to prevent such abuses, is, for a statesman to interpose; not by restraining the operations of the company, but by opposing the force of principles similar to those by which they profit, in such a manner as to render their unjust dealings ineffectual. If the weavers oppress the spinners, for instance, methods may be fallen upon, if not by incorporating the last, at least by uniting their interests, so as to prevent a hurtful competition among them. If the dealers in wool in England, profiting of the prohibition to export this commodity, should enter into a concert against the growers of it, in order to have the wool at their own price; government may easily disappoint them, by receiving in every county, at a reasonable price, all the wool which remains unsold. This quantity government may export, with far less hurt to England, than what the nation suffers by the concert among the wool merchants against the landed interest. He may likewise discourage too extensive companies, by establishing and supporting others, which may serve to preserve competition; and he may punish, severely, every transgression of the laws tending to establish an arbitrary dependence on the company. In short, while such societies are forming, he ought to be their protector; and, when they are formed, he ought to take those under his protection, whom they might be apt to oppress.

In establishing companies for manufactures, it is a good expedient to employ none in such undertakings, but those who have been bred to the different branches of their business. When people of fortune, ignorant and projecting, interest themselves in infant manufactures, under the pretext of public spirit, though merely with a view to become suddenly rich, they are so bent upon making vast profits, proportioned to their stock, that their hopes are generally disappointed, and the undertaking fails. Pains-taking people, bred to frugality, content themselves with smaller gains; but under the public protection, these will swell into a large sum, and the accumulation of small profits will form a new class of opulent people, who adopt, or rather retain the sentiments of frugality with which they were born.

Thus, for instance, in establishing fisheries, instead of private subscriptions from those who put in their money from public spirit, and partly with a view to draw an interest for it; or from those who are allured by the hopes of being great gainers in the end, (the last I call projectors) the public should defray the great expence: and coopers, sail-makers, rope-makers, ship-carpenters, net-makers; in short, every one useful to the undertaking, should be gratuitously taken in for a small share of the profits; and by their being lodged together in a building, or town, proper for carrying it on, every workman becomes an undertaker to the company, for the articles of his own work. No man concerned directly in the inter-prize, should reside elsewhere than in the place: any one of the associates may undertake to furnish what cannot be manufactured at home at fixed prices. Thus the whole expence of the public in the support of the undertaking, may circulate through the hands of those who carry it on; and every one become a check upon another, for the sake of the dividend upon the general profits. One great advantage in carrying on undertakings in this manner, is, that although those concerned draw no profit at all upon the undertaking itself, they find their account in it, upon the several branches of their own industry. The herring trade was at first set on foot in Holland by a company of merchants, who failed; and their stock of busses, stores, &c. being sold at an under value, were bought by private people, who had been instructed (at the expence of the company's miscarriage) in every part of the trade, and who carried it on with success. Had the company been set up at first in the manner here mentioned, their trade never would have suffered any check.

Quest. 9. What are the principles which influence the fluctuations in the price of subsistence, in countries where agriculture, trade, and industry are solidly established? And by what rule can we form a judgment, when such prices are too high for the prosperity of manufacturers, and when they are too low for the interests of agriculture?

The price of subsistence is fixed, as has been said, (chap. 28 of this book,) by the quantity which can be brought to market, and the number of those who must buy it. This price may rise and fall according to circumstances. When the quantity at any time brought to market, exceeds the demand of the day, the sellers who are the most pressed for money, lower the price. When the quantity at any time brought to market, is less than the demand of the day, the buyers who are the most pressed to have food raise the price by their competition. In countries of agriculture, of industry, and of free-trade with the world, such fluctuations are confined within certain limits, namely, they cannot rise higher than the faculties of the buyers can afford to pay for the shortest subsistence; they cannot sink lower than what the goods can be exported for with profit.

The faculties of the buyers of subsistence, are very different; because every man here may be supposed to be a buyer, except the farmers, and such landlords whose rents are paid in articles of subsistence. The faculties, therefore, of the lowest and most numerous class, are these which circumscribe the rising of the price.

Let me call the classes who buy, by the letters of the alphabet a, b, c, d, e, f. If there be subsistence to be sold, amply sufficient, and no more than sufficient, for these six classes, which I suppose to be ranged according to the ease of their circumstances, from a, the highest, to f, the lowest; then the price of full subsistence will be in proportion to the faculties of f. Should the provision prove insufficient for the ample subsistence of all the classes, the price will rise; and f will be able to buy a part only. But should this part become less than the shortest subsistence for f, the demand of f would be withdrawn from the market, which then would be overstocked for the demand of the higher classes.

Now in countries of industry, this never can be the case; because the class f is there the most numerous of any; and before it can be reduced to the last stage of want, the diminution of its consumption will far exceed all deficiencies of crops, and will carry the supply for the higher classes far beyond the proportion of their demand; and prices will fall: to prevent which fall, the proprietors of the subsistence mechanically adjust the price they sell at, to the abilities of the lowest class to purchase the shortest subsistence; and beyond this prices never can rise.

Let me apply this reasoning to the situation of Scotland for three years preceding March 1768.

The price of oat-meal, in the southern parts of the country was, during this period, constantly at or above one shilling per peck of eight pounds Amsterdam weight; and no misery was complained of by day-labourers who gain three shillings and sixpence and four shillings per week. This I reckon the class f in Scotland. From which I must conclude, that one shilling per peck of oat-meal, is compatible with the faculties of the Scots class of f. Again, four shillings per week is 10 l.8s. per annum; and the usual computation for the food of a strong man in oat-meal is six bolls one half per annum, (or 832 pounds Amsterdam weight,) which, at one shilling per peck, is 5 l. 4s. From this it appears, that in Scotland, and according to the manner of living in this country, as long as the grain consumed by our lowest class, does not exceed the value of one half of their gains, no distress is found. I must further observe, that this computation as to their gains, regards married men with wives and children; and as it is a matter of fact, well known here, that families do subsist on such gains, and at such prices; the ascertaining of this circumstance is far more useful for determining the important question concerning the proportion between the faculties of the lowest classes, and the rate of subsistence, than any calculation which can be made. From this I am led to demand, if prices be higher, and wages lower in England, than with us?

A quarter of wheat is reckoned for the subsistence of an inhabitant in England: and in France, where the people live in a manner upon bread alone, three septiers, or thirteen Winchester bushels, is a very reasonable allowance. There is also another very good way of comparing gains in England, with the rate of markets; namely, by observing how the sober married men among foot soldiers are found to live.

If a foot soldier have eight pence per diem, he is in a higher class than a Scots labourer who gains eight pence per diem; because he is paid for Sundays, as well as days of sickness and interruption from labour. The gains of the soldier are four shillings and eight pence every week in the year, the gains of the Scots labourer are four shillings, when he meets with no interruption.

Now in England, the lowest class, except the foot soldier, and the most numerous of any in the kingdom, is the country labourer who gains at least one shilling a day, in all seasons, of the year; as it appears from a late publication, intitled, 'A Six Weeks Tower through the Southern Counties of England and Wales.'

This author informs us, that in 1767, when high prices were so much complained of, bread was universally almost, at two-pence per pound, beef and mutton at four-pence; and that two-pence per diem is supposed to be equal to small beer; and in p. 179, he observes, that one shilling per diem the year round, with small beer, that is to say fourteen pence per diem, is excessively cheap labour. Now allowing an English labourer one pound and an half of bread, and three quarters of a pound of meat, with small beer, the expence will be eight-pence a day; consequently his food is but one penny more than one half of his wages, and day labourers are evidently the lowest class of industrious people all over England. What therefore are we to think of the universal clamour raised in the nation at that time, upon account of the distress of the industrious poor? What judgement are we to form concerning the universal acquiescence to the truth of these complaints by those who must have been the best informed concerning the true state of the matter? unless we suppose it to have been all a mere farce, or what the French call the secret of the comedy, to wit, a thing which every one knows, although nobody be supposed either to know it or to believe it.

The soldiers are evidently the class f in England. But the number of them is so small, when compared with any of the industrious classes, especially with the day labourers, that were it not for the frequent celibacy among them, I am persuaded high prices would greatly distress them, before any other class of men. The smallness of their numbers, I say, is an additional disadvantage to them; because it is the great number of the lowest class, which (for the reason already given) chiefly prevents prices from rising above their abilities to purchase a short subsistence.

While a foot soldier, then, can subsist upon his pay, at the rate of the English market, I never shall believe that any class of industrious people there, can be in such want as to require an extraordinary relief from the state; one especially which involves the landed interest (that is the farmers) in so great a distress, as to have the price of their grain diminished, without augmenting the quantity of it. This is the material difference between a reduction of prices when produced by plenty, and when produced by importation.

If it be said, that it is great severity to reduce people who labour hard, to the subsistence of an idle soldier, I answer, that people who labour hard, and those who added to their diligence, have also a share of ingenuity in their several professions, constantly receive wages proportionally higher. The example of the soldier is taken in order to form an estimate only of the price at which people may subsist; and not to determine the rate of wages; which the rate of demand for their labour will constantly regulate, independently of the price of subsistence; and this leads me to another branch of this doctrine, which is, That the rate of wages is in proportion to the value of the work performed, relatively to the person who employs the workman, and not in proportion to the price of subsistence.

This I take to be an universal principle, in all countries of industry. It is this which distinguishes the industrious free-man from the poor slave. The industrious free-man must share in the profits of him who employs him; the poor slave can demand of his master no more than subsistence.

Let therefore subsistence be ever so cheap, the free-man will insist upon wages in proportion to the value of his work, when brought to market. Should his employer tell him, that because subsistence is at a low price, he must therefore work cheaper, he will tell his employer, that since on this account he sells no cheaper to his customers, neither will he work cheaper for him; and his argument is good; because were subsistence to rise ever so high, this would be no inducement to his employer to raise his wages in proportion, as long as the rate of the market for goods or labour, stands the same as at other times.

When the rate of the market for goods or labour is therefore raised upon any branch of industry; whether in consequence of a rise in the price of subsistence, or in consequence of a higher demand; then wages will rise, in spight of all attempts to circumscribe them. If, on the other hand, the rate of the market for goods or labour shall either stand the same, or even diminish, the employer will give no augmentation of wages, let provisions be ever so dear.

The poor slave, again, who gets no more than his subsistence at all times, is in the situation of the poor labouring horse, who is fed with the same provender, let it be dear or cheap.

What I have said, I take to be a fair and candid representation of general principles, which no state can alter: and when an attempt is made to counteract them, it will not succeed. Some individuals, indeed, may be relieved by it; but by stopping a small hole, a breach will be made in another part.

In every industrious society, the lowest class is frequently found reduced to the barely necessary. The competition among themselves to obtain employment at any rate, produces this effect; and competition must be allowed its free course.

I must now set forth the strongest objection which can be made against this whole doctrine; and, in my answer to it, I shall have an opportunity of explaining my meaning better than as yet I have done. The objection is this:

If it be true that in an industrious nation where, upon the average, grain is annually exported, the price of the shortest subsistence can at no time rise above the faculties of the lowest class of those who go to market; then we must say, that no scarcity whatsoever can there reduce the quantity of subsistence below what is barely necessary to feed the people.

Were I at once frankly to avow this consequence, and say, that in industrious nations, who on the average of years are subsisted on their own growth, the difference of crops is not greater than the difference between ample and bare subsistence, many at first sight, might be startled at so bold an assertion.

I must therefore say, that where crops are so precarious, as, in some years, to deprive the people of the shortest subsistence, no nation can be industrious. What trade, what industry can stand its ground, while a part of the inhabitants are absolutely starving?

I have only one objection more to obviate, which is: That the supposition I have been reasoning on, to wit that England produces in the worst years a bare subsistence for all her inhabitants, cannot be admitted to be true.

The fact I apprehend to be really so: as I may, however, be mistaken, I must next propose a proper remedy even against this problematical want (of) subsistence.

We cannot reasonably suppose this deficiency to exceed (on the average of years) the greatest quantity of subsistence that ever was imported in any one year. Now this quantity is not equal to 200,000 quarters of all sorts of grain, as has been observed above. Let government, therefore, be at the expence of laying up upon the first appearance of plenty, 200,000 quarters of wheat and rye. Let them be deposited in some of the most considerable ports in the kingdom, and let none of this quantity ever be sold cheaper than at the price which at present is thought so high as to engage us to take off the duties on importation.

Were it to be issued at a lower rate than this the whole intention of such granaries would be defeated. Nay, were they to contain many millions of quarters in place of 200,000, still were they opened at a cheaper rate than at the highest price which grain ever ought to bear, they would soon be exhausted; because it is the high price only which circumscribes the consumption of the lowest class to the barely necessary, even in the times of free importation.

I am very far from wishing to see any industrious person in distress for want of food. The expedients I have been proposing, namely the raising of their wages, and establishing a granary, would, I am persuaded, prove much more certain and salutary expedients than any other, to prevent so great a distress. But I think, on the other hand, that the more soberly our lowest classes are made to live at all times, the cheaper may our manufactures be sold; and the better will foreign Markets for them be supplied.

Every one will acknowledge, that the cheapness of subsistence is never attended with a proportional fall in the price of commodities; and many know by experience, that it is more commonly attended with the riot and idleness of those upon whom the greatness of this nation principally depends, namely, the lower classes of our people.

I shall therefore conclude by observing, First, That the best, and indeed the only way to judge of reasonable prices, is to compare, as I have said, the gains of the lower classes with the price of the shortest subsistence; and that as long as the latter does not rise above the proportion of the first, nothing is to be feared. Secondly, That while there remains some small advantage in this proportion in favour of the lower classes, no great harm can ensue; but as soon as all proportion is totally lost, by the low price of provisions, industry runs a great risk to suffer in place of gaining ground.

Thirdly, That this proportion is to be maintained by granaries in years of scarcity, and by bounties in years of plenty. And, fourthly, That until experience shall evince, that the expedients here proposed are ineffectual, all importation should be laid aside, as a remedy violent in its nature; destructive to agriculture, and tending to diminish the balance of our trade, with which alone we can discharge the heavy debt we owe to other nations.

Bounties which promote exportation, and which raise the prices of grain to the due proportion of the gains of the lowest class, even in years of plenty, resemble, in a great measure, an excise laid upon the luxury of the lower classes. The difference consists in this; that in bounties, the public incurs an expence, which not only remains at home, but has the effect of bringing in a great addition of wealth from our neighbours. This first circulates among ourselves, and at last finds its way into the exchequer. An excise again, brings money directly thither, without any circulation at all among ourselves, which is undoubtedly less advantageous to a trading nation.

Importation in England did not, while the ports were open in 1768 produce, I confess, any very hurtful consequences; because it then happened, that no nation in Europe enjoyed so great plenty of wheat, as to bring the price of this grain, so low as to hurt the English farmer. But it was not so in Scotland; where a very small importation of the poorest subsistence (oat-meal) will at any time bring our markets so low as to throw many of our farmers into the greatest distress.