fed, than when they are well fed, when they are hired by the mouth or by the year, and are disheartened than when they are in good whose wages and maintenance are the same, spirits, when they are frequently sick than whether they do much or do little, is likely to when they are generally in good health, seems be still greater. Cheap years tend to increase not very probable. Years of dearth, it is to be observed, are generally among the common people years of sickness and mortality, which cannot fail to diminish the produce of their industry.

the proportion of independent workmen to journeymen and servants of all kinds, and dear years to diminish it.

A French author of great knowledge and ingenuity, Mr Messance, receiver of the taillies in the election of St Etienne, endeavours to shew that the poor do more work in cheap than in dear years, by comparing the quantity and value of the goods made upon those different occasions in three different manufactures; one of coarse woollens, carried on at Elbeuf; one of linen, and another of silk, both which extend through the whole generality of Rouen. It appears from his ac

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

the public offices, that the quantity and value of the goods made in all those three manufactories has generally been greater in cheap than in dear years, and that it has always beer greatest in the cheapest, and least in the dearIn years of scarcity, the difficulty and un-est years. All the three seem to be stationary certainty of subsistence make all such people manufactures, or which, though their produce eager to return to service. But the high price may vary somewhat from year to year, are, upof provisions, by diminishing the funds des- on the whole, neither going backwards nor tined for the maintenance of servants, disposes forwards. masters rather to diminish than to increase the The manufacture of linen in Scotland, and number of those they have. In dear years, that of coarse woollens in the West Riding of too, poor independent workmen frequently Yorkshire, are growing manufactures, of which consume the little stock with which they had the produce is generally, though with some used to supply themselves with the materials variations, increasing both in quantity and va of their work, and are obliged to become jour-lue. Upon examining, however, the accounts neymen for subsistence. More people want which have been published of their annual employment than easily get it; many are will-produce, I have not been able to observe that ing to take it upon lower terms than ordinary; its variations have had any sensible connection and the wages of both servants and journey- with the dearness or cheapness of the seasons. men frequently sink in dear years.

In 1740, a year of great scarcity, both manuMasters of all sorts, therefore, frequently factures, indeed, appear to have declined very make better bargains with their servants in considerably. But in 1756, another year of dear than in cheap years, and find them more great scarcity, the Scotch manufactures made humble and dependent in the former than in more than ordinary advances. The Yorkshire the latter. They naturally, therefore, com- manufacture, indeed, declined, and its promend the former as more favourable to indus- duce did not rise to what it had been in 1755, try. Landlords and farmers, besides, two of till 1766, after the repeal of the American the largest classes of masters, have another stamp act. In that and the following year, reason for being pleased with dear years. The it greatly exceeded what it had ever been berents of the one, and the profits of the other, fore, and it has continued to advance ever depend very much upon the price of provi- since. sions. Nothing can be more absurd, how- The produce of all great manufactures for ever, than to imagine that men in general distant sale must necessarily depend, not so should work less when they work for them- much upon the dearness or cheapness of the selves, than when they work for other people. seasons in the countries where they are carried A poor independent workman will generally on, as upon the circumstances which affect the be more industrious than even a journeyman demand in the countries where they are conwho works by the piece. The one enjoys the sumed; upon peace or war, upon the prospe whole produce of his own industry, the other rity or declension of other rival manufactures, shares it with his master. The one, in his and upon the good or bad humour of their separate independent state, is less liable to principal customers. A great part of the exthe temptations of bad company, which, in traordinary work, besides, which is probably large manufactories, so frequently ruin the morals of the other. The superiority of the independent workman over those servants who

done in cheap years, never enters the public registers of manufactures. The men-servants, who leave their masters, become independent

C

labourers.

The women return to their pa- The scarcity of a dear year, by diminishing rents, and commonly spin, in order to make the demand for labour, tends to lower its clothes for themselves and their families. Even the independent workmen do not always work for public sale, but are employed by some of their neighbours in manufactures for family use. The produce of their labour, therefore, frequently makes no figure in those public registers, of which the records are sometimes published with so much parade, and from which our merchants and manufacturers would often vainly pretend to announce the prosperity or declension of the greatest empires.

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

The increase in the wages of labour necesThough the variations in the price of labour sarily increases the price of many commodinot only do not always correspond with those ties, by increasing that part of it which resolves in the price of provisions, but are frequently itself into wages, and so far tends to diminisha quite opposite, we must not, upon this ac- their consumption, both at home and abroad. count, imagine that the price of provisions has The same cause, however, which raises the no influence upon that of labour. The money wages of labour, the increase of stock, tends price of labour is necessarily regulated by two to increase its productive powers, and to make circumstances; the demand for labour, and a smaller quantity of labour produce a greater the price of the necessaries and conveniencies quantity of work. The owner of the stock of life. The demand for labour, according as which employs a great number of labourers it happens to be increasing, stationary, or de- necessarily endeavours, for his own advantage, clining, or to require an increasing, station- to make such a proper division and distribuary, or declining population, determines the tion of employment, that they may be enabled quantities of the necessaries and conveniencies to produce the greatest quantity of work posof life which must be given to the labourer; sible. For the same reason, he endeavours to and the money price of labour is determined by what is requisite for purchasing this quantity. Though the money price of labour, therefore, is sometimes high where the price of provisions is low, it would be still higher, the demand continuing the same, if the price of provisions was high.

supply them with the best machinery which either he or they can think of. What takes place among the labourers in a particular workhouse, takes place, for the same reason, among those of a great society. The greater their number, the more they naturally divide themselves into different classes and subdivi

It is because the demand for labour in- sions of employments. More heads are occreases in years of sudden and extraordinary cupied in inventing the most proper machinery plenty, and diminishes in those of sudden and for executing the work of each, and it is, extraordinary scarcity, that the money price of therefore, more likely to be invented. There labour sometimes rises in the one, and sinks are many commodities, therefore, which, in in the other. consequence of these improvements, come to

In a year of sudden and extraordinary plen-be produced by so much less labour than be ty, there are funds in the hands of many of fore, that the increase of its price is more than the employers of industry, sufficient to main-compensated by the diminution of its quantity. tain and employ a greater number of industri

ous people than had been employed the year before; and this extraordinary number cannot always be had. Those masters, therefore, who want more workmen, bid against one another, in order to get them, which sometimes raises both the real and the money price of their labour.

CHAP. IX.

OF THE PROFITS OF STOCK.

The contrary of this happens in a year of sudden and extraordinary scarcity. The funds THE rise and fall in the profits of stock dedestined for employing industry are less than pend upon the same causes with the rise and they had been the year before. A consider- fall in the wages of labour, the increasing or able number of people are thrown out of em- declining state of the wealth of the society; ployment, who bid one against another, in or- but those causes affect the one and the other er to get it, which sometimes lowers both the very differently. real and the money price of labour. In 1740, i

The increase of stock, which raises wages,

a year of extraordinary scarcity, many people tends to lower profit. When the stocks of were willing to work for bare subsistence. In many rich merchants are turned into the saine the succeeding years of plenty, it was more trade, their mutual competition naturally tends difficult to get labourers and servants. to lower its profit; and when there is a like

ail.

increase of stock in all the different trades propriety. They seem to have followed, and carried on in the same society, the same com- not to have gone before, the market rate of petition must produce the same effect in them interest, or the rate at which people of good credit usually borrowed. Since the time of Queen Anne, five per cent, seems to have been rather above than below the market rate. Before the late war, the government borrowed at three per cent.; and people of good credit in the capital, and in many other parts of the kingdom, at three and a-half, four, and four and a-half per cent.

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

seem not only to have been going on, but to have been going on faster and faster. The wages of labour have been continually increasing during the same period, and, in the great

manufactures, the profits of stock have been diminishing.

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

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

bid against one another, in order to get employment, which lowers the wages of labour, and raises the profits of stock.

In Scotland, though the legal rate of interest is the same as in England, the market rate is rather higher. People of the best credit there seldom borrow under five per cent. By the 37th of Henry VIII. all interest Even private bankers in Edinburgh give four above ten per cent. was declared unlawful. per cent. upon their promissory-notes, of More, it seems, had sometimes been taken be- which payment, either in whole or in part, fore that. In the reign of Edward VI. reli- may be demanded at pleasure. Private bank. gious zeal prohibited all interest. This pro-ers in London give no interest for the money hibition, however, like all others of the same which is deposited with them. There are few kind, is said to have produced no effect, and trades which cannot be carried on with probably rather increased than diminished the smaller stock in Scotland than in England. evil of usury. The statute of Henry VIII. The common rate of profit, therefore, muz was revived by the 13th of Elizabeth, cap. 8. be somewhat greater. The wages of 1: bour, and ten per cent. continued to be the legal has already been observed, are lower in rate of interest till the 21st of James I. when Scotland than in England. The country, too, it was restricted to eight per cent. It was re- is not only much poorer, but the steps by duced to six per cent. soon after the Restor-which it advances to a better condition, for it ation, and by the 12th of Queen Anne, to five is evidently advancing, seem to be much slowper cent. All these different statutory regu-er and more tardy.

tions seem to have been made with great | The legal rate of interest in France has not.

cent.

during the course of the present century, been | chants are very apt to complain that trade dealways regulated by the market rate*. In cays, though the diminution of profit is the 1720, interest was reduced from the twentieth natural effect of its prosperity, or of a greater to the fiftieth penny, or from five to two per stock being employed in it than before. DurIn 1724, it was raised to the thirtieth ing the late war, the Dutch gained the whole penny, or to three and a third per cent. In carrying trade of France, of which they still 1725, it was again raised to the twentieth retain a very large share. The great properpenny, or to five per cent. In 1766, during ty which they possess both in French and the administration of Mr Laverdy, it was re- English funds, about forty millions, it is said duced to the twenty-fifth penny, or to four in the latter (in which, I suspect, however, per cent. The Abbé Terray raised it after- there is a considerable exaggeration), the great wards to the old rate of five per cent. The sums which they lend to private people, in supposed purpose of many of those violent re- countries where the rate of interest is higher ductions of interest was to prepare the way than in their own, are circumstances which no for reducing that of the public debts; a pur- doubt demonstrate the redundancy of their pose which has sometimes been executed. stock, or that it has increased beyond what France is, perhaps, in the present times, not they can employ with tolerable profit in the so rich a country as England; and though proper business of their own country; but the legal rate of interest has in France fre- they do not demonstrate that that business has quently been lower than in England, the decreased. As the capital of a private man, market rate has generally been higher; for though acquired by a particular trade, may there, as in other countries, they have several increase beyond what he can employ in it, and very safe and easy methods of evading the law. yet that trade continue to increase too, so may The profits of trade, I have been assured by likewise the capital of a great nation. British merchants who had traded in both In our North American and West Indian countries, are higher in France than in Eng-colonies, not only the wages of labour, but the land; and it is no doubt upon this account, interest of money, and consequently the prothat many British subjects chuse rather to em-fits of stock, are higher than in England. In ploy their capitals in a country where trade is the different colonies, both the legal and the in disgrace, than in one where it is highly re-market rate of interest run from six to eight spected. The wages of labour are lower in France than in England. When you go from Scotland to England, the difference which you may remark between the dress and countenance of the common people in the one country and in the other, sufficiently indicates the difference in their condition. The contrast is still greater when you return from France. France, though no doubt a richer country than Scotland, seems not to be going forward so fast. It is a common and even a popular opinion in the country, that it is going backwards; an opinion which I apprehend, is ill-vourably situated, the land near the sea-shore founded, even with regard to France, but which nobody can possibly entertain with regard to Scotland, who sees the country now, and who saw it twenty or thirty years ago.

per cent. High wages of labour and high profits of stock, however, are things, perhaps, which scarce ever go together, except in the peculiar circumstances of new colonies. A new colony must always, for some time, be more understocked in proportion to the extent of its territory, and more underpeopled in proportion to the extent of its stock, than the greater part of other countries. They have more land than they have stock to cultivate. What they have, therefore, is applied to the cultivation only of what is most fertile and most fe

and along the banks of navigable rivers. Such land, too, is frequently purchased at a price below the value even of its natural produce. Stock employed in the purchase and The province of Holland, on the other improvement of such lands, must yield a very nand, in proportion to the extent of its terri-large profit, and, consequently, afford to pay tory and the number of its people, is a richer a very large interest. Its rapid accumulation country than England. The government there in so profitable an employment enables the borrow at two per cent. and private people of planter to increase the number of his hands good credit at three. The wages of labour faster than he can find them in a new settleare said to be higher in Holland than in Eng-ment. Those whom he can find, therefore, land, and the Dutch, it is well known, trade upon lower profits than any people in Europe. The trade of Holland, it has been pretended by some people, is decaying, and it may perhaps be true that some particular branches of it are so; but these symptoms seem to indicate sufficiently that there is no general decay. When profit diminishes, mer

are very liberally rewarded. As the colony increases, the profits of stock gradually diminish. When the most fertile and best situated lands have been all occupied, less profit can be made by the cultivation of what is inferior both in soil and situation, and less interest can be afforded for the stock which is so employed. In the greater part of our colonies, accordingly, both the legal and the market rate of interest have been considerably reduced during the course of the presen.

century. As riches, improvement, and popu-wages of labour, so it raises the profits of lation, have increased, interest has declined. stock, and consequently the interest of money. The wages of labour do not sink with the profits of stock. The demand for labour increases with the increase of stock, whatever be its profits; and after these are diminished, stock may not only continue to increase, but to increase much faster than before. It is with industrious nations, who are advancing in the acquisition of riches, as with industrious individuals. A great stock, though with small profits, generally increases faster than a small stock with great profits. Money, says the proverb, makes money. When you have got a little, it is often easy to get more. The great difficulty is to get that little. The connection between the increase of stock and that of industry, or of the demand for useful labour, has partly been explained already, but will be explained more fully hereafter, in treating of the accumulation of stock.

By the wages of labour being lowered, the owners of what stock remains in the society can bring their goods at less expense to market than before; and less stock being employed in supplying the market than before, they can sell them dearer. Their goods cost them less, and they get more for them. Their profits, therefore, being augmented at both ends, can well afford a large interest. The great fortunes so suddenly and so easily acquired in Bengal and the other British settlements in the East Indies, may satisfy us, that as the wages of labour are very low, so the profits of stock are very high in those ruined countries. The interest of money is proportionably so. In Bengal, money is frequently lent to the farmers at forty, fifty, and sixty per cent. and the succeeding crop is mortgaged for the payment. As the profits which can afford such The acquisition of new territory, or of new an interest must eat up almost the whole rent branches of trade, may sometimes raise the of the landlord, so such enormous usury must profits of stock, and with them the interest of in its turn eat up the greater part of those money, even in a country which is fast ad- profits. Before the fall of the Roman repubvancing in the acquisition of riches. The lic, a usury of the same kind seems to have stock of the country, not being sufficient for been common in the provinces, under the ruinthe whole accession of business which such ac-ous administration of their proconsuls. The quisitions present to the different people among virtuous Brutus lent money in Cyprus at whom it is divided, is applied to those parti- eight-and-forty per cent, as we learn from the cular branches only which afford the greatest letters of Cicero. profit. Part of what had before been employed in other trades, is necessarily withdrawn from them, and turned into some of the new and more profitable ones. In all those old trades, therefore, the competition comes to be less than before. The market comes to be less fully supplied with many different sorts of goods. Their price necessarily rises more or less, and yields a greater profit to those who deal in them, who can, therefore, afford to borrow at a higher interest. For some time after the conclusion of the late war, not only private people of the best credit, but some of the greatest companies in London, commonly borrowed at five per cent. who, before that, had not been used to pay more than four, and four and a half per cent. The great accession both of territory and trade by our acquisitions in North America and the West Indies, will sufficiently account for this, without supposing any diminution in the capital stock of the society. So great an accession of new business to be carried on by the old stock, must necessarily have diminished the quantity em- But, perhaps, no country has ever yet arployed in a great number of particular branch-rived at this degree of opulence. China seems es, in which the competition being less, the to have been long stationary, and had, probprofits must have been greater. I shall here- ably, long ago acquired that full complement after have occasion to mention the reasons of riches which is consistent with the nature which dispose me to believe that the capital, of its laws and institutions. But this comstock of Great Britain was not diminished, plement may be much inferior to what, with even by the enormous expense of the late war. 'other laws and institutions, the nature of its The diminution of the capital stock of the soil, climate, and situation, might admit of. society, or of the funds destined for the main- A country which neglects or despises foreign tenance of industry, however, as it lowers the commerce, and which admits the vessels of

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