In every country of luxury, we constantly find certain classes of

workmen in distress, from the change of modes. Were a statesman upon his

guard to employ such as are forced to be idle, before they betake

themselves to new inventions, for the support of the old plan, or before

they contract an abandoned and vitious life, he would get them cheap,

and might turn their labour both to the advantage of the state and to

the discouragement of luxury.

I confess, however, that while a luxurious taste in the rich subsists,

industrious people will always be found to supply the instruments of it

to the utmost extent; and I also allow, that such a taste has infinite

allurements, especially while youth and health enable a rich man to

indulge in it. Those, however, who are systematically luxurious, that

is, from a formed taste and confirmed habit, are but few, in comparison

of those who become so from levity, vanity, and the imitation of others.

The last are those who principally support and extend the system; but

they are not the most incorrigible. Were it not for imitation, every age

would seek after, and be satisfied with the gratification of natural

desires. Twenty-five might think of dress, horses, hunting, dogs, and

generous wines: forty, of a plentiful table, and the pleasures of

society: sixty, of coaches, elbow-chairs, soft carpets, and instruments

of ease. But the taste for imitation blends all ages together. The old

fellow delights in horses and fine clothes; the youth rides in his

chariot on springs, and lolls in an easy chair, large enough to serve

him for a bed. All this proceeds from the superfluity of riches and

taste of imitation, not from the real allurements of ease and taste of

luxury, as every one must feel, who has conversed at all with the great

and rich. Fashion, which I understand here to be a synonimous term for

imitation, leads most people into superfluous expence, which is so far

from being an article of luxury, that it is frequently a load upon the

person who incurs it. All such branches of expence, it is in the power

of a statesman to cut off, by setting his own example, and that of his

favourites and servants, above the caprice of fashion.

The levity and changeableness of mankind, as I have said, will even

assist him. A generation of oeconomists is sometimes found to succeed a

generation of spendthrifts; and we now see, almost over all Europe, a

system of sobriety succeeding an habitual system of drunkenness.

Drunkenness, and a multitude of useless servants, were the luxury of

former times.

Every such revolution may be profited of by an able statesman, who must

set a good example on one hand, while, on the other, he must profit of

every change of taste, in order to re-establish the foreign trade of his

subjects. An example of frugality, in the head of a luxurious people,

would do infinite harm, were it only intended to reform the morals of

the rich, without indemnifying the poor for the diminution upon their

consumption.

At the same time, therefore, that luxury comes to lose ground at home, a

door must be opened, to serve as an out-let for the work of those hands

which must be thereby made idle; and which, consequently, must fall into

distress.

This is no more than the principle before laid down, in the fifteenth

chapter, reversed: there we said, that when foreign demand begins to

decline, domestic luxury must be made to increase, in order to soften

the shock of the sudden revolution in favour of the industrious. For the

same reason here we say, that foreign trade must be opened upon every

diminution of domestic luxury.

How few Princes do we find either frugal or magnificent from political

considerations! And, this being the case, is it not necessary to lay

before them the natural consequences of the one and the other? And it is

still more necessary to point out the methods to be taken in order to

avoid the inconveniencies which may proceed from either.

Under a prodigal administration, the number of people will increase. The

statesman therefore should keep a watchful eye upon the supplying of

subsistence. Under a frugal reign, numbers will diminish, if the

statesman does not open every channel which may carry off the

superfluous productions of industry. Here is the reason: a diminution of

expence at home, is a diminution of employment; and this again implies a

diminution of people; because it interrupts the circulation of the

subsistence which made them live; but if employment is sent far from

abroad, the nation will preserve its people, and the savings of the

Prince may be compensated by the balance coming in from strangers.

These topics are delivered only as hints; and the amplification of them

might not improperly have a place here; but I expect to bring them in

elsewhere to greater advantage, after examining the principles of

taxation, and pointing out those which direct the application of public

money.

------------------------------------------------------------------------

CHAP. XVIII.

_Methods of lowering the Price of Manufactures, in order to make them

vendible in foreign Markets._

The multiplicity of relations between the several parts of political

oeconomy, forces me to a frequent repetition of principles. I have no

other rule to judge whether such relations be superfluous, or necessary,

but by the tendency they have to give me a more distinct view of my

subject. This is the case when the same principles are applied to

different combinations of circumstances.

Almost every thing to be said on the head mentioned in the title of this

chapter, has been taken notice of elsewhere; and my present intention is

only to lay together ideas which appear scattered, because they have

been occasionally brought in by their relations to other matters.

The methods of lowering the price of manufactures, so as to render them

exportable, are of two kinds.

The first, such as proceed from a good administration, and which bring

down prices within the country, in consequence of natural causes.

The second, such as operate only upon that part which comes to be

exported, in consequence of a proper application of public money.

As I have not yet inquired into the methods of providing a public fund,

it would, I think, be contrary to order to enter on the disposal of it,

for bringing down the price of manufactures. This operation will come in

more naturally afterwards, and the general distinction here mentioned,

is only introduced by the by, that my readers may retain it and apply it

as we go along.

The end proposed is to lower the price of manufactures, so that they may

be exported. The first thing therefore to be known, is the cause from

whence it happens, that certain manufactures cannot be furnished at home

so cheap as in other countries; the second, how to apply the proper

remedy for lowering the price of them.

The causes of high prices, that is, of prices relatively high to what

they are found to be in other nations, are reducible to four heads;

which I shall lay down in their order, and then point out the methods of

removing them likewise, in their order.

_1mo._ The consolidation of high profits with the real value of the

manufacture. This cause operates in countries where luxury has gained

ground, and when domestic competition has called off too many of the

hands, which were formerly content to serve at a low price, and for

small gains.

_2do._ The rise in the price of articles of the first necessity. This

cause operates when the progress of industry has been more rapid than

that of agriculture. The progress of industry we have shewn necessarily

implies an augmentation of _useful inhabitants_; and as these have

commonly wherewithal to purchase subsistence, the moment their numbers

swell above the proportion of the quantity of it produced by

agriculture, or above what is found in the markets of the country, or

brought from abroad, they enter into competition and raise the price of

it. Here then let it be observed, by the by, that what raises the price

of subsistence is the augmentation of the numbers of useful inhabitants,

that is, of such as are easy in their circumstances. Let the wretched be

ever so many, let the vicious procreation go on ever so far, such

inhabitants will have little effect in raising price, but a very great

one in increasing misery. A proof of this is to be met with in many

provinces where the number of poor is very great, and where at the same

time the price of necessaries is very low; whereas no instance can be

found where a number of the industrious being got together, do not

occasion an immediate rise on most of the articles of subsistence.

_3tio._ The natural advantages of other countries. This operates in

spight of all the precautions of the most frugal and laborious people.

Let them deprive themselves of every superfluity; let them be ever so

diligent and ingenious; let every circumstance be improved by the

statesman to the utmost for the establishment of foreign trade; the

advantage of climate and situation may give such a superiority to the

people of another country, as to render a direct competition with them

impossible.

_4to._ The superior dexterity of other nations in working up their

manufactures, their knowledge in the science of trade, the advantage

they have in turning their money to account in the intervals of their

own direct circulation, the superior abilities of their statesman, the

application of their public money, in one word, the perfection of their

political oeconomy.

Before I enter upon the method of removing these several

inconveniencies, I must observe, that as we are at present treating of

the _relative_ height of the price of manufactures, a competition

between nations is constantly implied. It is this which obliges a

statesman to be principally attentive to the rise of prices. The term

_competition_ is relative to, and conveys the idea of emulation between

two parties striving to compass the same end. I must therefore

distinguish between the endeavours which a nation makes to _retain_ a

superiority already got, and those of another which strives to get the

better of it. The first I shall call a competition to _retain_; the

second, a competition to _acquire_.

The first three heads represent the inconveniencies to which the

competitors to _retain_ are liable; and the fourth comprehends those to

which the competitors to _acquire_ are most commonly exposed.

Having digested our subject into order, I shall run through the

principles which severally influence the removing of every

inconvenience, whether incident to a nation whose foreign trade is

already well established, or to another naturally calculated for entring

into a competition for the acquisition of it.

In proposing a remedy for the particular causes of augmentation here set

down, we must suppose every one entirely simple, and uncompounded with

the others; a thing which in fact seldom happens. This I do for the sake

of distinctness; and the principal difficulty in practice is to combine

the remedies in proportion to the complication of the disease. I now

come to the first of the four causes of high prices, to wit,

consolidated profits.

The whole doctrine of these has been abundantly set forth in the 10th

chapter. We there explained the nature of them, shewed how the

subversion of the balance, by a long preponderancy of the scale of

demand, had the effect of consolidating profits in a country of luxury;

and observed, that the reducing them to the proper standard could never

fail of bringing those who had long enjoyed them, into distress.

The question here is to reduce them, when foreign trade cannot otherwise

be retained, let the consequences be ever so hurtful to certain

individuals. When the well being of a nation comes in competition with a

temporary inconvenience to some of the inhabitants, the general good

must be preferred to particular considerations.

I have observed above, that domestic luxury, by offering high prices

upon certain species of industry, calls off many hands employed to

supply the articles of exportation, upon which profits are generally

very moderate. The first natural and immediate effect of this, is, to

diminish the hands employed in furnishing the foreign demand;

consequently, to diminish the supply; consequently, to occasion a

_simple competition_ on the side of the strangers, who are the

purchasers; consequently, to augment profits, until by their rise and

consolidation the market is deserted.

The very progress here laid down, points out the remedy. The number of

hands employed in these particular branches must be multiplied; and if

the luxurious taste and wealth of the country prevent any one who can do

better, from betaking himself to a species of industry lucrative to the

nation, but ungrateful to those who exercise it, the statesman must

collect the children of the wretched into workhouses, and breed them to

this employment, under the best regulations possible for saving every

article of unnecessary expence; here likewise may be employed

occasionally those above mentioned, whom the change of modes may have

cast out of employment, until they can be better provided for. This is

also an outlet for foundlings, since many of those who work for foreign

exportation, are justly to be ranked in the lowest classes of the

people; and in the first book we proposed, that every one brought up at

the expence of public charity, should be thrown in for recruiting these

classes, which can with greatest difficulty support their own

propagation.

Here let me observe, that although it be true in general, that the

greatest part of exportable manufactures do yield but very middling

profits, from the extension of industry in different countries, yet

sundry exceptions may be found; especially in nations renowned for their

elegance of taste. But how quickly do we see these lucrative branches of

foreign trade cut off, from the very inconvenience we here seek a remedy

for. The reason is plain. When strangers demand such manufactures, they

only share in the instruments of foreign luxury, which bring every where

considerable profits to the manufacturer. These high profits easily

establish a rivalship in favour of the nation to whom they are supplied;

because a hint is sufficient to enable such as exercise a similar

profession in that country, to supply their own inhabitants. This being

the case, an able statesman should be constantly attentive to every

growing taste in foreign nations for the inventions of his people; and

so soon as his luxurious workmen have set any one on foot, he may throw

that branch into the hands of the most frugal, in order to support it,

and give them such encouragement as to prevent, at least, the rivalship

of those strangers who are accustomed to work for large profits. This is

one method of turning a branch of luxury into an article of foreign

trade. Let me illustrate this by an example.

What great advantages do not the French reap from the exportation of

their modes? But we quickly find their varnishes, gauzes, ribbands, and

colifichets, imitated by other nations, for no other reason but because

of the large, or at least consolidated profits enjoyed by the French

workmen themselves, who, fertile in new inventions, and supported by

their reputation for elegance of dress, have got into possession of the

right of prescribing to all Europe the standard of taste in articles of

mere superfluity. This however is no permanent prerogative; and that

elegant people, by long setting the example, and determining the

standard of refinement in some luxurious arts, will at last inspire a

similar taste into their scholars, who will thereby be enabled to

supplant them. Whereas were they careful to supply all their inventions

at the lowest prices possible, they would ever continue to be the only

furnishers.

The method therefore of reducing consolidated profits, whether upon

articles of exportation, or home consumption, is to increase the number

of hands employed in supplying them; and the more gradually this

revolution is made to take place, the fewer inconveniencies will result

to those who will thereby be forced to renounce them.

A country which has an extensive territory, and great opportunities of

extending her agriculture (such as I supposed the present situation of

France to be) may, under a good administration, find the progress of

luxury very compatible with the prosperity of her foreign trade; because

inhabitants may be multiplied at discretion. But so soon as subsistence

becomes hard to be obtained, this expedient is cut off. A statesman must

then make the best of the inhabitants he has, luxury must suffer a

check; and those who are employed in supplying home consumption at high

prices, must be made to reduce their consolidated profits, in order to

bring the total amount of their manufactures within such bounds as to

make them vendible in foreign markets.

If manufacturers become luxurious in their way of living, it must

proceed from their extraordinary profits. These they may still continue

to have, as long as the produce of their work is consumed at home. But

no merchant will pretend to sell it out of the country; because, in this

case, he will find the labour of other people who are less luxurious,

and consequently work cheaper, in competition with him.

To re-establish then the foreign trade, these consolidated profits must

be put an end to, by attacking luxury when circumstances render an

augmentation of people inconvenient, and prices will fall of course.

This will occasion great complaints among all sorts of tradesmen. The

cry will be, that trade is ruined, manufacturers are starving, and the

state is undone: but the truth will be, that manufacturers will, by

their labour, begin to enrich their own nation, at the expence of all

those who trade with her, instead of being enriched at the expence of

their own countrymen; and only by a revolution in the balance of wealth

at home.

It will prove very discouraging to any statesman to attempt a sudden

reform of this abuse of consolidated profits, when he is obliged to

attack the luxury of his own people. The best way therefore is to

prevent matters from coming to such a pass, as to demand so dangerous

and difficult a remedy.

There is hardly a possibility of changing the manners of a people, but

by a proper attention to the education of the youth. All methods,

therefore, should be fallen upon to supply manufactures with new hands;

and lest the corruption of example should get the better of all

precautions, the seat of manufactures might be changed; especially when

they are found in great and populous cities, where living is dear: in

this case, others should be erected in the provinces where living is

cheap. The state must encourage these new undertakings, numbers of

children must be taken in, in order to be bred early to industry and

frugality; this again will encourage people to marry and propagate, as

it will contribute towards discharging them of the load of a numerous

family. If such a plan as this be followed, how inconsiderable will the

number of poor people become in a little time; and as it will insensibly

multiply the useful inhabitants, out of that youth which recruited and

supported the numbers of the poor, so the taxes appropriated for the

relief of poverty may be wholly applied, in order to prevent it.

Laws of naturalization have been often proposed in a nation where

consolidated profits have occasioned the inconveniencies for which we

have here been proposing a remedy. By this expedient many flatter

themselves to draw industrious strangers into the country, who being

accustomed to live more frugally, and upon less profits, may, by their

example and competition, beat down the price of work among the

inhabitants.

Several circumstances concur to defeat the success of this scheme. The

first is, that consolidated profits are not the only inconvenience to be

removed: there is also a complication of high prices upon many

necessaries. The second, as no real change is supposed to be made within

the country, either as to the increase of subsistence, or the regulation

of its price, or manner of living, these strangers, who, as such, must

be exposed to extraordinary expence, are not able to subsist, nor

consequently to work so cheap as they did at home. Besides, what can be

supposed to be their motive of coming, if it be not to have higher

wages, and to live better?

Here then is a nation sending for strangers, in order that they may work

cheaper; and strangers flocking into the country in hopes of selling

their work dearer. This is just the case with two friends who are about

making a bargain; the seller imagines that _his friend_ will not grudge

a good price. The buyer, on the other hand, flatters himself that _his

friend_ will sell to him cheaper than to another. This seldom fails to

produce discontent on both sides.

Besides, unless the quantity of food be increased, if strangers are

imported to eat part of it, natives must in some degree starve; and if

you augment the quantity of food, and keep it at a little lower price

than in neighbouring nations, your own inhabitants will multiply; the

state may take great numbers of them into their service when young; they

soon come to be able to do something in the manufacturing way; they may

be bound for a number of years, sufficient to indemnify the public for

the first expence; and the encouragement alone of having bread cheaper

than elsewhere, will bring you as many strangers as you incline to

receive, provided a continual supply of food can be procured in

proportion to the increase of the people.

But I imagine that it is always better for a state to multiply by means

of its own inhabitants, than by that of strangers; for many reasons

which to me appear obvious.

We come now to the second cause of high prices, to wit, a rise in the

value of the articles of the first necessity, which we have said

proceeds from the progress of industry having outstripped the progress

of agriculture. Let me set this idea in a clearer light; for here it is

shut up in too general terms to be rightly viewed on all sides.

The idea of inhabitants being multiplied beyond the proportion of

subsistence, seems to imply that there are too many already; and the

demand for their industry having been the cause of their multiplication,

proves that formerly there were too few. Add to this, that if,

notwithstanding the rise upon the price of work proceeding from the

scarcity of subsistence, the scale of home demand is found to

preponderate, at the expence of foreign trade, this circumstance proves

farther, that however the inhabitants may be already multiplied above

the proportion of subsistence, their numbers are still too few for what

is demanded of them at home; and for what is required of them towards

promoting the prosperity of their country, in supporting their trade

abroad.

From this exposition of the matter, the remedy appears evident: both

inhabitants and subsistence must be augmented. The question comes to be,

in what manner, and with what precautions, must these operations be

performed?

Inhabitants are multiplied by reducing the price of subsistence, to the

value which demand has fixed upon the work of those who are to consume

it. This is only to be accomplished by augmenting the quantity, by

importation from foreign parts, when the country cannot be made to

produce more of itself.

Here the interposition of a statesman is absolutely necessary; since

great loss may often be incurred by bringing down the price of grain in

a year of scarcity. Premiums, therefore, must be given upon importation,

until a plan can be executed for the extending of agriculture; of which

in another place. This must be gone about with the greatest

circumspection; for if grain be thereby made to fall too low, you ruin

the landed interest, and although (as we have said above) all things

soon become balanced in a trading nation, yet sudden and violent

revolutions, such as this must be, are always to be apprehended. They

are ever dangerous; and the spirit of every class of inhabitants must be

kept up.

By a discredit call upon any branch of industry, the hands employed in

it may be made to abandon it, to the great detriment of the whole. This

will infallibly happen, when violent transitions do not proceed from

natural causes, as in the example here before us, when the price of

grain is supposed to be brought down, from the increase of its quantity

by importation, and not by plenty. Because, upon the falling of the

market by importation, the poor farmer has nothing to make up for the

low price he gets for his grain; whereas, when it proceeds from plenty,

he has an additional quantity.

In years, therefore, of general scarcity, a statesman should not, by

premiums given, reduce the price of grain, but in a reciprocal

proportion to the quantity wanted: that is to say, the more grain is

wanted, the less the price should be diminished.

It may appear a very extensive project for any government to undertake

to keep down the prices of grain, in years of general scarcity. I allow

it to be politically impossible to keep prices low; because if all

Europe be taken together, the produce of the whole is consumed one year

with another, by the inhabitants; and in a year when there is a general

scarcity, it would be very hard, if not impossible, (without having

previously established a plan for this purpose) to make any nation live

in plenty while others are starving. All therefore that is proposed, is

to keep the prices of grain in as just a proportion as possible to the

plenty of the year.

Now if a government does not interpose, this never is the case. I shall

suppose the inhabitants of a country to consume, in a year of moderate

plenty, six millions of quarters of grain; if in a year of scarcity it

shall be found, that one million of quarters, or indeed a far less

quantity, be wanting, the five millions of quarters produced, will rise

in their price to perhaps double the ordinary value, instead of being

increased only by one fifth. But if you examine the case in countries

where trade is not well established, as in some inland provinces on the

continent, it is no extraordinary thing to see grain bearing three times

the price it is worth in ordinary years of plenty, and yet if in such a

year there were wanting six months provisions for the inhabitants of a

great kingdom, all the rest of Europe would perhaps hardly be able to

keep them from starving.

It is the fear of want, and not real want, which makes grain rise to

immoderate prices. Now as this extraordinary revolution in the rise of

it, does not proceed from a natural cause, to wit, the degree of

scarcity, but to the avarice and evil designs of men who hoard it up, it

produces as bad consequences to that part of the inhabitants of a

country employed in manufactures, as the fall of grain would produce to

the farmers, in case the prices should be, by importation, brought below

the just proportion of the quantity produced in the nation.

Besides the importation of grain, there is another way of increasing the

quantity of it very considerably, in some countries of Europe. In a year

of scarcity, could not the quantity of food be considerably augmented by

a prohibition to make malt liquors, allowing the importation of wines

and brandies; or indeed without laying any restraint upon the liberty of

the inhabitants as to malt liquors, I am persuaded that the liberty of

importing wines duty free, would, in years of scarcity, considerably

augment the quantity of subsistence.

This is not a proper place to examine the inconvenience which might

result to the revenue by such a scheme; because we are here only talking

of those expedients which might be fallen upon to preserve a balance on

foreign trade. An exchequer which is filled at the expence of this, will

not continue long in a flourishing condition.

These appear to be the most rational temporary expedients to diminish

the price of grain in years of scarcity; we shall afterwards examine the

principles upon which a plan may be laid down to destroy all

precariousness in the price of subsistence.

Precautions of another kind must be taken in years of plenty; for high

prices occasioned by exportation are as hurtful to the poor tradesman as

if they were occasioned by scarcity. And low prices occasioned by

superfluity are as hurtful to the poor husbandman as if his crop had

failed him.

A statesman therefore, should be very attentive to put the inland trade

in grain upon the best footing possible, to prevent the frauds of

merchants, and to promote an equal distribution of food in all corners

of the country: and by the means of importation and exportation,

according to plenty and scarcity, to regulate a just proportion between

the general plenty of the year in Europe, and the price of subsistence;

always observing to keep it somewhat lower at home, than it can be found

in any rival nation in trade. If this method be well observed,

inhabitants will multiply; and this is a principal step towards reducing

the expence of manufactures; because you increase the number of hands,

and consequently diminish the price of labour.

Another expedient found to operate most admirable effects in reducing

the price of manufactures (in those countries where living is rendred

dear, by a hurtful competition among the inhabitants for the subsistence

produced) is the invention and introduction of machines. We have, in a

former chapter, answered the principal objections which have been made

against them, in countries where the numbers of the idle, or trifling

industrious, are so great, that every expedient which can abridge

labour, is looked upon as a scheme for starving the poor. There is no

solidity in this objection; and if there were, we are not at present in

quest of plans for feeding the poor; but for accumulating the wealth of

a trading nation, by enabling the industrious to feed themselves at the

expence of foreigners. The introduction of machines is found to reduce

prices in a surprizing manner. And if they have the effect of taking

bread from hundreds, formerly employed in performing their simple

operations, they have that also of giving bread to thousands, by

extending numberless branches of ingenuity, which, without the machines,

would have remained circumscribed within very narrow limits. What

progress has not building made within these hundred years? Who doubts

that the conveniency of great iron works, and saw mills, prompts many to

build? And this taste has greatly contributed to increase, not diminish,

the number both of smiths and carpenters, as well as to extend

navigation. I shall only add in favour of such expedients, that

experience shews the advantage gained by certain machines, is more than

enough to compensate every inconvenience arising from consolidated

profits, and expensive living; and that the first inventors gain thereby

a superiority which nothing but adopting the same invention can

counterbalance.

The third cause of high prices we have said to be owing to the natural

advantages which neighbouring nations reap from their climate, soil, or

situation.

Here no rise of prices is implied in the country in question, they are

only supposed to have become relatively high by the opportunity other

nations have had to furnish the same articles at a lower rate, in

consequence of their natural advantages.

There are two expedients to be used, in order to defeat the bad effects

of a competition which cannot be got the better of in the ordinary way.

The first to be made use of, is, to assist the branches in distress with

the public money. The other is patience, and perseverance in frugality,

as has been already observed. A short example of the first will be

sufficient in this place to make the thing fully understood. I have

already said, that I purposely postpone an ample dissertation upon the

principles which influence such operations.

Let me suppose a nation accustomed to export to the value of a million

sterling of fish every year, undersold in this article by another which

has found a fishery on its own coasts, so abundant as to enable it to

undersell the first by 20 _per cent._ This being the case, the statesman

may buy up all the fish of his subjects, and undersell his competitors

at every foreign market, at the loss of perhaps 250,000_l._ What is the

consequence? That the million he paid for the fish remains at home, and

that 750,000_l._ comes in from abroad for the price of them. How is the

250,000_l._ to be made up? By a general imposition upon all the

inhabitants. This returns into the public coffers, and all stands as it

was. If this expedient be not followed, what are the consequences? That

those employed in the fishery are forced to starve; that the fish taken

either remain upon hand, or if sold by the proprietors, at a great loss;

these are undone, and the nation for the future loses the acquisition of

750,000_l._ a year.

To abridge this operation, premiums are given upon exportation, which

comes to the same thing, and is a refinement on the application of this

very principle: but premiums are often abused. It belongs to the

department of the coercive power of government to put a stop to such

abuse. All I shall say upon the matter is, that if there be crimes

called high treason, which are punished with greater severity than

highway robbery, and assassination, I should be apt (were I a statesman)

to put at the head of that bloody list, every attempt to defeat the

application of public money, for the purposes here mentioned. The

multiplicity of frauds alone, discourages a wise government from

proceeding upon this principle, and disappoints the scheme. If severe

punishment can in its turn put a stop to frauds, I believe it will be

thought very well applied.

While a statesman is thus defending the foreign trade of his country, by

an extraordinary operation performed upon the circulation of its wealth,

he must at the same time employ the second expedient with equal address.

He must be attentive to support sobriety at home, and wait patiently

until abuses among his neighbours shall produce some of the

inconveniencies we have already mentioned. So soon as this comes to be

the case, he has gained his point; the premiums then may cease; the

public money may be turned into another channel; or the tax may be

suppressed altogether, according as circumstances may require.

I need not add, that the more management and discretion is used in such

operations, the less jealousy will be conceived by other rival nations.

And as we are proposing this plan for a state already in possession of a

branch of foreign trade, ready to be disputed by others, having superior

natural advantages, it is to be supposed that the weight of money, at

least, is on her side. This, if rightly employed, will prove an

advantage, more than equal to any thing which can be brought against it;

and if such an operation comes to raise the indignation of her rival, it

will, on the other hand, reconcile the favour of every neutral state,

who will find a palpable benefit from the competition, and will never

fail giving their money to those who sell the cheapest. In a word, no

private trader can stand in competition with a nation’s wealth. Premiums

are an engine in commerce, which nothing can resist but a similar

operation.

Hitherto we have been proposing methods for removing the inconveniencies

which accompany wealth and superiority, and for preserving the

advantages which result from foreign trade already established: we must

now change sides, and adopt the interest of those nations who labour

under the weight of a heavy competition with their rich neighbours,

versed in commerce, dextrous in every art and manufacture, and conducted

by a statesman of superior abilities, who sets all engines to work, in

order to make the most of every favourable circumstance.

It is no easy matter for a state unacquainted with trade and industry,

even to form a distant prospect of rivalship with such a nation, while

the abuses attending upon their wealth are not supposed to have crept in

among them. Consequently, it would be the highest imprudence to attempt

(at first setting out) any thing that could excite their jealousy.

The first thing to be inquired into, is the state of natural advantages.

If any branch of natural produce, such as grain, cattle, wines, fruits,

timber, or the like, are here found of so great importance to the rival

nation, that they will purchase them with money, not with an exchange of

their manufactures, such branches of trade may be kept open with them.

If none such can be found, the first step is to cut off all

communication of trade by exchange with such a people; and to apply

closely to the supply of every want at home, without having recourse to

foreigners.

So soon as these wants begin to be supplied, and that a surplus is

found, other nations must be fought for, who enjoy less advantages; and

trade may be carried on with them in a subaltern way. People here must

glean before they can expect to reap. But by gleaning every year they

will add to their stock of wealth, and the more it is made subservient

to public uses, the faster it will increase.

The beginners will have certain advantages inseparable from their infant

state; to wit, a series of augmentations of all kinds, of which we have

so frequently made mention. If these can be preserved in an equable

progression; if the balance of work and demand, and that of population

and agriculture, can be kept in a gentle vibration, by alternate

augmentations; and if a plan of oeconomy, equally good with that of the

rivals, be set on foot and pursued; time will bring every natural

advantage of climate, soil, situation, and extent, to work their full

effects; and in the end they will decide the superiority.

I shall now conclude my chapter, with some observations on the

difference between theory and practice, so far as regards the present

subject.

In theory, we have considered every one of the causes which produce high

prices, and prevent exportation, as simple and uncompounded: in practice

they are seldom ever so. This circumstance makes the remedies difficult,

and sometimes dangerous. Difficult, from the complication of the

disease; dangerous, because the remedy against consolidated profits will

do infinite harm, if applied to remove that which proceeds from dear

subsistence, as has been said.

Another great difference between theory and practice occurs in the

fourth case; where we suppose a nation unacquainted with trade, to set

out upon a competition with those who are in possession of it. When I

examine the situation of some countries of Europe (Spain perhaps) to

which the application of these principles may be made, I find that it is

precisely in such nations, where the other disadvantages of consolidated

profits, and even the high prices of living, are carried to the greatest

height; and that the only thing which keeps one shilling of specie among

them, is the infinite advantage they draw from the mines, and from the

sale of their pure and unmanufactured natural productions, added to

their simplicity of life, occasioned by the wretchedness of the lower

classes, which alone prevents these also from consuming foreign

commodities. Were money in these countries as equally distributed as in

those of trade and industry, it would quickly be exported. Every one

would extend his consumption of foreign commodities, and the wealth

would disappear. But this is not the case; the rich keep their money in

their coffers; because lending at interest, there, is very wisely laid

under numberless obstructions. The vice, therefore, is not that the

lending of money at interest is forbid, but that the people are not put

in a situation to have any pressing occasion for it, as a means of

advancing their industry. Were they taught to supply their own wants,

the state might encourage circulation by loan; but as they run to

strangers for that supply, money is better locked up.

Upon a right use and application of these general principles, according

to the different combinations of circumstances, in a nation whose

principal object is an extensive and profitable foreign trade, I imagine

a statesman may both establish and preserve, for a very long time, a

great superiority in point of commerce; provided peace can be preserved:

for in time of war, every populous nation, if great and extended, will

find such difficulties in procuring food, and such numbers of hands to

maintain, that what formerly made its greatness, will hasten its ruin.

------------------------------------------------------------------------

CHAP. XIX.

_Of infant, foreign, and inland Trade, with respect to the several

Principles which influence them._

I have always found the geography of a country easier to retain, from

the inspection of maps, after travelling over the regions there

represented, than before; as most prefaces are best understood, after

reading the book, which they are calculated to introduce. I intend this

as an apology for presenting my readers with a chapter of distribution

in the middle of my subject.

My intention, at present, is to take a view of the whole region of

trade, divided into its different districts, in order to point out a

ruling principle in each, from which every other must naturally flow, or

may be deduced by an easy reasoning. These I shall lay before my reader,

that from them he may distribute his ideas in the same order I have

done. Hence the terms I shall be obliged to use will be rendred more

adequate, in expressing the combinations I may have occasion to convey

by them.

I divide trade into infant, foreign, and inland.

_1mo._ Infant trade, taken in a general acceptation, may be understood

to be that species, which has for its object the supplying the

necessities of the inhabitants of a country; because it is commonly

antecedent to the supplying the wants of strangers. This species has

been known in all ages, and in all countries, in a less, or greater

degree, in proportion to the multiplication of the wants of mankind, and

in proportion to the numbers of those who depend on their ingenuity for

procuring subsistence.

The general principles which direct a statesman in the proper

encouragement of this commerce, relate to two objects.

1. To promote the ease and happiness of the higher classes in making

their wealth subservient to their wants and inclinations.

2. To promote the ease and happiness of the lower classes, by turning

their natural faculties to an infallible means of relieving their

necessities.

This communicates the idea of a free society; because it implies the

circulation of a real equivalent for every service; to acquire which,

mankind submit with pleasure to the hardest labour.

In the first book, I had little occasion to consider trade under

different denominations; or as influenced by any other principle than

that of promoting the multiplication of mankind, and the extension of

agriculture, _by drawing the wealth of the rich into the hands of the_

industrious. This operation, when carried no farther, is a true

representation of infant trade.

But now I must set the matter in a new light: and consider this infant

trade as a basis for establishing a foreign commerce. In itself it is

only a means of gratifying the desires of those who have the equivalent;

and of providing it for those who have it not. We are next to examine

how, by the care of a statesman, it may prove a method whereby one

society may be put in a situation to acquire a superiority over others;

by diminishing, on one hand, the quantity they have of that general

equivalent, and by increasing, on the other, the absolute quantity of it

at home; in such a manner as not only to promote the circulation of that

part of it which is necessary to supply the wants of all the citizens;

but by a surplus of it, to render other nations dependent upon them, in

most operations of their political oeconomy.

The statesman who resolves to improve this infant trade into foreign

commerce, must examine the wants of other nations, and consider the

productions of his own country. He must then determine, what kinds of

manufactures are best adapted for supplying the first, and for consuming

the latter. He must introduce the use of such manufactures among his

subjects; and endeavour to extend his population, and his agriculture,

by encouragements given to these new branches of consumption. He must

provide his people with the best masters; he must supply them with every

useful machine; and above all, he must relieve them of their work, when

home demand is not sufficient for the consumption of it.

A considerable time must of necessity be required to bring a people to a

dexterity in manufactures. The branches of these are many; and every one

requires a particular slight of hand, and a particular master, to point

out the rudiments of the art. People do not perceive this inconveniency,

in countries where they are already introduced; and many a projector has

been ruined for want of attention to it.

In the more simple operations of manufacturing, where apprenticeships

are not in use, every one teaches another. The new beginners are put

among a number who are already perfect: all the instructions they get,

is, _do as you see others do before you_. This is an advantage which an

established industry has over another newly set on foot; and this I

apprehend to be the reason why we see certain manufactures, after

remaining long in a state of infancy, make in a few years a most

astonishing progress. What loss must be at first incurred! what numbers

of aspiring geniuses overpowered by unsuccessful beginnings, when a

statesman does not concern himself in the operation! If he assists his

subjects, by a prohibition upon foreign work, how often do we see this

expedient become a means of extending the most extravagant profits?

Because he neglects, at the same time, to extend the manufacture by

multiplying the hands employed in it. I allow, that as long as the gates

of a kingdom are kept shut, and that no foreign communication is

permitted, large profits do little harm; and tend to promote dexterity

and refinement. This is a very good method for laying a foundation for

manufactures: but so soon as the dexterity has been sufficiently

encouraged, and that abundance of excellent masters are provided, then

the statesman ought to multiply the number of scholars; and a new

generation must be brought up in frugality, and in the enjoyment of the

most moderate profits, in order to carry the plan into execution.

The ruling principle, therefore, which ought to direct a statesman in

this first species of trade, is to encourage the manufacturing of every

branch of natural productions, by extending the home-consumption of

them; by excluding all competition with strangers; by permitting the

rise of profits, so far as to promote dexterity and emulation in

invention and improvement; by relieving the industrious of their work,

as often as demand for it falls short. And until it can be exported to

advantage, it may be exported with loss, at the expence of the public.

To spare no expence in procuring the ablest masters in every branch of

industry, nor any cost in making the first establishments; providing

machines, and every other thing necessary or useful to make the

undertaking succeed. To keep constantly an eye upon the profits made in

every branch of industry; and so soon as he finds, that the real value

of the manufacture comes so low as to render it exportable, to employ

the hands, as above, and to put an end to these profits he had permitted

only as a means of bringing the manufacture to its perfection. In

proportion as the prices of every species of industry are brought down

to the standard of exportation, in such proportion does this species of

trade lose its original character, and adopt the second.

_2do._ _Foreign trade_ has been explained sufficiently: the ruling

principles of which are to banish luxury; to encourage frugality; to fix

the lowest standard of prices possible; and to watch, with the greatest

attention, over the vibrations of the balance between work and demand.

While this is preserved, no internal vice can affect the prosperity of

it. And when the natural advantages of other nations constitute a

rivalship, not otherwise to be overcome, the statesman must

counterbalance these advantages, by the weight and influence of public

money; and when this expedient also becomes ineffectual, foreign trade

is at an end; and out of its ashes arises the third species, which I

call inland commerce.

_3tio._ The more general principles of _inland trade_ have been

occasionally considered in the first book, and more particularly hinted

at in the 15th chapter of this; but there are still many new relations

to be examined, which will produce new principles, to be illustrated in

the subsequent chapters of this book. I shall, here only point out the

general heads, which will serve to particularize and distinguish this

third species of trade, from the two preceding.

Inland commerce, as here pointed out, is supposed to take place upon the

total extinction of foreign trade. The statesman must in such a case, as

in the other two species, attend to supplying the wants of the rich, in

relieving the necessities of the poor, by the circulation of the

equivalent as above; but as formerly he had it in his eye to watch over

the balance of work and demand, so now he must principally attend to the

balance of wealth, as it vibrates between consumers and manufacturers;

that is, between the rich and the industrious. The effects of this

vibration have been shortly pointed out, Chap. xv.

In conducting a foreign trade, his business was to establish the lowest

standard possible as to prices; and to confine profits within the

narrowest bounds: but as now there is no question of exportation, this

object of his care in a great measure disappears; and high profits made

by the industrious will have then no other effect than to draw the

balance of wealth more speedily to their side. The higher the profits,

the more quickly will the industrious be enriched, the more quickly will

the consumers become poor, and the more necessary will it become to cut

off the nation from every foreign communication in the way of trade.

From this political situation of a state arises the fundamental

principle of taxation; which is, _that, at the time of the vibration of

the balance between the consumer and the manufacturer, the state should

advance the dissipation of the first, and share in the profits of the

latter_. This branch of our subject I shall not here anticipate; but I

shall, in the remaining chapters of this book, make it sufficiently

evident, that so soon as the wealth of a state becomes considerable

enough to introduce luxury, to put an end to foreign trade, and from the

excessive rise of prices to extinguish all hopes of restoring it, then

taxes become necessary, both for preserving the government on the one

hand, and on the other, to serve as an expedient for recalling foreign

trade in spite of all the pernicious effects of luxury to extinguish it.

I hope from this short recapitulation and exposition of principles, I

have sufficiently communicated to my reader the distinctions I wanted to

establish, between what I have called infant, foreign, and inland trade.

Such distinctions are very necessary to be retained; and it is proper

they should be applied in many places of this treatise, in order to

qualify general propositions: these cannot be avoided, and might lead

into error, without a perpetual repetition of such restrictions, which

would tire the reader, appear frivolous to him, perhaps, and divert his

attention.

I only add, that we are not to suppose the commerce of any nation

restricted to any one of the three species. I have considered them

separately, according to custom, in order to point out their different

principles. It is the business of statesmen to compound them according

to circumstances.

------------------------------------------------------------------------

CHAP. XX.

_Of Luxury._

My reader may perhaps be surprized to find this subject formally

introduced, after all I have said of it in the first book, under a

definition which renders the term sufficiently clear, by distinguishing

it from sensuality and excess; and by confining it to _the providing of

superfluities, in favour of a consumption_, which necessarily must

produce the good effects of giving employment and bread to the

industrious.

The simple acceptation of the term, was the most proper for explaining

the political effects of extraordinary consumption. I cannot however

deny, that the word _luxury_ commonly conveys a more complex idea; and

did I take no notice of this circumstance, it might be thought that I

had purposely restrained a general term to a particular acceptation, in

order to lead to error, and to suppress the vicious influence of modern

oeconomy over the minds of mankind; which influence, if vicious, cannot

fail to affect even their political happiness.

My intention therefore, in this chapter, is to amuse, and to set my

ideas concerning luxury (in the most extensive acceptation of the word)

in such an order, as first to vindicate the definition I have given of

it, by shewing that it is a proper one; and secondly, to reconcile the

sentiments of those who appear to combat one another, on a subject

wherein all must agree, when terms are fully understood.

For this purpose I must distinguish _luxury_ as it affects our different

interests, by producing hurtful consequences; from _luxury_, as it

regards the moderate gratification of our natural or rational desires. I

must separate objects which are but too frequently confounded, and

analyze this complicated term, by specifying the ideas it contains,

under partial definitions.

The interests affected by luxury, I take to be four; _1mo._ _the moral_,

in so far as it does hurt to the mind; _2do._ _the physical_, as it

hurts the body; the _domestic_, as it hurts the fortune; and the

_political_, as it hurts the state.

The natural desires which proceed from our animal oeconomy, and which

are gratified by _luxury_, may be also reduced to four; viz. _hunger_,

_thirst_, _love_, and _ease_ or indolence. The moderate gratification of

these desires, and physical happiness, is the same thing. The immoderate

gratification of them is _excess_; and if this also be implied by

_luxury_, no man, I believe, ever seriously became its apologist.

The first point to be explained, is what is to be understood by

_excess_. What appears an excess to one man, may appear moderation to

another. I therefore measure the _excess_ by the bad effects it produces

on the _mind_, the _body_, the _fortune_, and the _state_: and when we

speak of _luxury_ as a vice, it is requisite to point out the particular

bad effects it produces, to one, more, or all the interests which may be

affected by it: when this is neglected, ambiguities ensue, which involve

people in inextricable disputes.

In order to communicate my thoughts upon this subject with the more

precision, I shall give an example of the harm resulting to the _mind_,

the _body_, the _fortune_, and the _state_, from the excessive

gratification of the several natural desires above-mentioned.

_1mo._ As to the mind, _eating to excess_ produces the inconvenience of

rendring the perceptions dull, and of making a person unfit for study or

application.

_Drinking_ confounds the understanding, and often prevents our

discovering the most palpable relations of things.

_Love_ fixes our ideas too much upon the same object, makes all our

pursuits and pleasures analogous to it, and consequently renders them

trifling and superficial.

_Ease_, that is, too great a fondness for it, destroys activity, damps

our resolutions, and misleads the decisions of our judgment on every

occasion, where one side of the question implies an obstacle to the

enjoyment of a favourite indolence.

These are examples of the evils proceeding from _luxury_ in the most

general acceptation of the term. While the gratification of those

desires is accompanied by no such inconveniencies, I think it is a

proof, that there has been no _moral excess_, or that no moral evil has

been directly implied in the gratification. But I cannot equally

determine, that there has been no luxury in the enjoyment of

superfluity.

_2do._ _The physical_ inconveniencies which follow from all the four,

terminate in the hurt they do the body, health or constitution. If no

such harm follows upon the gratification of our desires, I find no

_physical_ evil: but still _luxury_, I think, may be applied in every

acceptation in which the term can be taken.

_3tio._ If the _domestic_ inconveniences of the four species be

examined, they all center in one, viz. the dissipation of fortune, upon

which depends the future ease of the proprietor, and the well-being of

his posterity. When _luxury_ is examined with respect to this object,

the idea we conceive of it admits of a new modification. An _excess_

here, is compatible with a very moderate gratification of our most

natural desires. It is not _eating_, nor _drinking_, _love_, nor

_indolence_ which are hurtful to the fortune, but the expence attending

such gratifications. All these are frequently indulged even to _excess_,

in a _moral_ and _physical_ sense, by people who are daily becoming more

wealthy by these very means.

_4to._ Some _political_ inconveniencies of _luxury_ have been already

pointed out. The extinction of foreign trade is the most striking. But

the loss of trade, conveys no ideas of any _moral_, _physical_, or

_domestic excess_; and still it is vicious in so far as it affects the

well-being of a state. Besides this particular evil, I very willingly

agree, that in as far as the good government of a state depends upon the

application and capacity, as well as the integrity of those who sit at

the helm, or who are employed in the administration, or direction of

public affairs, in so far may the moral inconveniencies of _luxury_

mentioned above, affect the prosperity of a state. The consequences of

_excessive luxury_, _moral_ and _physical_, as well as the dissipation

of private fortunes, may render both the statesman, and those whom he

employs, negligent in their duty, unfit to discharge it, rapacious and

corrupt. These may, indirectly, be reckoned among the _political_ evils

attending _luxury_, in so far as they take place. But on the other hand,

as they cannot be called the _necessary effects_ of the _cause_ to which

they are here ascribed, that is, to _moral_, _physical_, and _domestic

luxury_, I do not think they can with propriety be implied in the

definition of the term. They are rather to be attributed to the

imperfection of the human mind, than to any other second cause, which

might occasionally contribute to their production. They may proceed from

_avarice_, as well as from _prodigality_.

I hope this short exposition of a matter, not absolutely falling within

the limits of my subject, will suffice to prove that my definition of

_luxury_, describes at least the most essential requisite towards

determining it: _the providing of superfluity with a view to

consumption_. This is inseparable from our ideas of _luxury_; but

vicious _excess_ certainly is not. A sober man may have a most delicate

table, as well as a glutton; and a virtuous man may enjoy the pleasures

of love and ease with as much sensuality as Heliogabalus. But no man can

become luxurious, in our acceptation of the word, without giving bread

to the industrious, without encouraging emulation, industry, and

agriculture; and without producing the circulation of an adequate

equivalent for every service. This last is the palladium of liberty, the

fountain of gentle dependence, and the agreeable band of union among

free societies.

Let me therefore conclude my chapter, with a metaphysical observation.

The use of words, is to express ideas; the more simple any idea is, the

more easy it is to convey it by a word. Whenever, therefore, language

furnishes several words, which are called _synonimous_, we may conclude,

that the idea conveyed by them is not simple. On every such occasion, it

is doing a service to learning, to render them as little synonimous as

possible, and to point out the particular differences between the ideas

they convey.

Now as to the point under consideration. I find the three terms,

_luxury_, _sensuality_, and _excess_, generally considered in a

synonimous light, notwithstanding the characteristic differences which

distinguish them. _Luxury consists in providing the objects of

sensuality, in so far_ _as they are superfluous._ _Sensuality_ consists

_in the actual enjoyment of them_; and _excess_ implies _an abuse of

enjoyment_. A person, therefore, according to these definitions, may be

very _luxurious_ from vanity, pride, ostentation, or with a political

view of encouraging consumption, without having a turn for sensuality,

or a tendency to fall into excess. _Sensuality_, on the other hand,

might have been indulged in a Lacedemonian republic, as well as at the

court of Artaxerxes. _Excess_, indeed, seems more closely connected with

_sensuality_, than with _luxury_; but the difference is so great, that I

apprehend _sensuality_ must in a great measure be extinguished, before

_excess_ can begin.

------------------------------------------------------------------------

CHAP. XXI.

_Of Physical and Political Necessaries._

After having cleared up our ideas concerning _luxury_, it comes very

naturally in, to examine what is meant by _physical necessary_.

I have observed in the third chapter of the first book, that in most

countries where food is limited to a determined quantity, inhabitants

are fed in a regular progression down from plenty and ample subsistence,

to the last period of want, and dying from hunger. _It is ample

subsistence where no degree of superfluity is implied_, which

communicates an idea of the _physical-necessary_. It is the top of this

ladder; it is the first rank among men who enjoy no superfluity

whatsoever. A man enjoys the physical-necessary as to food, when he is

fully fed; if he is likewise sufficiently clothed, and well defended

against every thing which may hurt him, he enjoys his full

physical-necessary. The moment he begins to add to this, he may be

considered as moving upwards into another category, to wit, the class of

the _luxurious_, or consumers of superfluity; of which there are to be

found, in most countries, as many stages upward, as there are stages

downwards, from where he stood before. This is one general idea of the

question. Let me now look for another.

If we examine the state of many animals which have no appetites leading

them to excess, we may form a very just idea of a _physical-necessary_

for man. When they are free from labour, and have food at will, they

enjoy their full physical-necessary. They are then in the height of

beauty, and enjoy the greatest degree of happiness they are capable of.

Animals which are forced to labour, prove to us very plainly, that this

_physical-necessary_ is not fixed to a point, but that it may vary like

most other things: every one perceives the difference between labouring

cattle which are well fed, and those which are middling, or ill fed; all

however, I suppose to live in health, and to work according to their

strength. This represents the nature of a _physical-necessary_ for man.

In many of the inferior classes in every nation, we find various degrees

of ease among the individuals; and yet upon the whole, it would be hard

to determine, which are those who enjoy superfluity; which are those who

possess the pure physical-necessary; and which are those who fall below

it. The cause of this ambiguity must here be explained.

The nature of man furnishes him with some desires relative to his wants,

which do not proceed from his animal oeconomy, but which are entirely

similar to them in their effects. These proceed from the affections of

his mind, are formed by habit and education, and when once _regularly

established_, create another kind of necessary, which, for the sake of

distinction, I shall call _political_. The similitude between these two

species of _necessary_, is therefore the cause of ambiguity.

This _political-necessary_ has for its object, certain articles of

_physical superfluity_, which distinguishes what we call _rank_ in

society.

_Rank_ is determined by birth, education, or habit. A man with

difficulty submits to descend from a higher way of living to a lower;

and when an accidental circumstance has raised him for a while, above

the level of that _rank_ where his _birth_ or _education_ had placed

him, his ambition prompts him to support himself in his elevation. If

his attempt be a rational scheme, he is generally approved of; the

common consent of his fellow-citizens prescribes a certain

_political-necessary_ for him, proportioned to his ambition; and when at

any time _this_ comes to fail, he is considered to be in want.

If on the other hand, a person either from vanity, or from no rational

prospect of success, forms a scheme of rising above the _rank_ where

_birth_ or _education_ had placed him, his fellow-citizens do not

consent to prescribe for him a political-necessary suitable to his

ambition; and when this fails him, he is only considered to fall back

into the class he properly belonged to. But if the political-necessary

suitable to this rank should come to fail, then he is supposed to be

deprived of his _political-necessary_.

The measure of this last species of _necessary_, is determined only by

general opinion, and therefore can never be ascertained justly; and as

this opinion may have for its object even those who are below the level

of the _physical-necessary_; it often happens, that we find great

difficulties in determining its exact limits.

It may appear absurd, to suppose that any one can enjoy _superfluity_

(which we have called the characteristic of _political-necessary_) to

whom any part of the _physical-necessary_ is found wanting. However

absurd this may appear, nothing, however, is more common among men, and

the reason arises from what has been observed above. The desires which

proceed from the affections of his mind, are often so strong, as to make

him comply with them at the expence of becoming incapable of satisfying

that which his animal oeconomy necessarily demands.

From this it happens, that however easy it may be to conceive an

accurate idea of a physical-necessary for _animals_, nothing is more

difficult, than to prescribe the proper limits for it with regard to

_man_.

This being the case, let us suppose the condition of those who enjoy but

little superfluity, and who fill the lower classes of the people, to be

distinguished into three denominations; to wit, the highest, middle, and

lowest degree of physical-necessary; and then let us ask, how we may

come to form an estimation as to the respective value of the consumption

implied in each, in order to determine the minimum as to the profits

upon industry. This question is of great importance; because we have

shewn that the prosperity of foreign trade depends on the cheapness of

manufacturing; and this again depends on the price _of living_, that is

of the physical-necessary for manufacturers.

One very good method of estimating the value of the total consumption

implied by this necessary quantity, is to compute the expence of those

who live in communities, such as in hospitals, workhouses, armies,

convents, according to the different degrees of ease, severally enjoyed

by those who compose them. In running over the few articles of expence

in such establishments, it will be easy to discern between those, which

relate to the supply of the physical, and those which relate to the

supply of the political-necessary: ammunition bread is an example of the

first; a Monk’s hood and long sleeves, are a species of the latter.

When once the real value of a man’s subsistence is found, the statesman

may the better judge of the degree of ease, necessary or expedient for

him to allow to the several classes of the laborious and ingenious

inhabitants.

As we have divided this physical-necessary into three degrees; the

_highest_, _middle_, and _lowest_; the next question is, which of the

three degrees is the most expedient to be established, as the standard

value of the industry of the very lowest class of a people.

I answer, that in a society, it is requisite that the individual of the

most puny constitution for labour and industry, and of the most slender

genius for works of ingenuity, having no natural defect, and enjoying

health, should be able by a labour proportioned to his force, to gain

the _lowest_ degree of the physical-necessary; for in this case, by far

the greatest part of the industrious will be found in the second class,

and the strong and healthy all in the first.

The difference between the highest class and the lowest, I do not

apprehend to be very great. A small quantity added to what is barely

sufficient, makes enough: but this _small quantity_ is the most

difficult to acquire, and this is the most powerful spur to industry.

The moment a person begins to live by his industry, let his livelihood

be ever so poor, he immediately forms little objects of ambition;

compares his situation with that of his fellows who are a degree above

him, and considers a shade more of ease, as I may call it, as an

advancement, not only of his happiness, but of his rank.

There are still more varieties to be met with among those who are

confined to the sphere of the physical-necessary. The labour of a strong

man ought to be otherwise recompensed than that of a puny creature. But

in every state there is found labour of different kinds, some require

more, and some less strength, and all must be paid for; but as a weakly

person does not commonly require so much nourishment as the strong and

robust, the difference of his gains may be compensated by the smalness

of his consumption.

What we mean by the _first class_ of the physical-necessary, is when a

person gains wherewithal to be well fed, well clothed, and well defended

against the injuries of heat and cold, without any superfluity. This I

say, a strong healthy person should be able to gain by the exercise of

the lowest denominations of industrious labour, and that without a

possibility of being deprived of it, by the competition of others of the

same profession.

Could a method be fallen upon to prevent competition among industrious

people of the same profession, the moment they come to be reduced within

the limits of the _physical-necessary_, it would prove the best security

against decline, and the most solid basis of a lasting prosperity.

But as we have observed in the first book, the thing is impossible,

while marriage subsists on the present footing. From this one

circumstance, the condition of the industrious of the same profession,

is rendred totally different. Some are loaded with a family, others are

not. The only expedient, therefore, for a statesman, is to keep the

general principles constantly in his eye, to destroy this competition as

much as he can, at least in branches of exportation; to avoid, in his

administration, every measure which may tend to promote it, by

constituting a particular advantage in favour of some individuals of the

same class; and if the management of public affairs, necessarily implies

such inconveniencies, he must find out a way of indemnifying those who

suffer by the competition.

We may therefore, in this place, lay down two principles: First, that no

competition should be _encouraged_ among those who labour for a

_physical-necessary_; secondly, that in a state which flourishes by her

foreign trade, competition is to be encouraged in every branch of

exportation, until the competitors have reduced one another within the

limits of that necessary.

Farther, I must observe, that this _physical-necessary_ ought to be the

highest degree of ease, which any one should be able to acquire with

labour and industry, where no peculiar ingenuity is required. This also

is a point deserving the attention of a statesman. How frequently do we

find, in great cities, different employments, such as carrying of water,

and other burthens, sawing of wood, &c. erected into confraternities,

which prevent competition, and raise profits beyond the standard of the

_physical-necessary_. This, I apprehend, is a discouragement to

ingenuity, and has the bad effect of rendring living dear, without

answering any one of the intentions of establishing corporations, as

shall be shewn in another place. The _physical-necessary_, therefore,

ought to be the reward of _labour_ and _industry_; whatever any workman

gains above this standard, ought to be in consequence of his superior

_ingenuity_.

It is not at all necessary to prescribe the limits between these two

classes; they will sufficiently distinguish themselves by the simple

operation of competition. Let a particular person fall upon an ingenious

invention, he will profit by it, and rise above the lower classes which

are confined to the physical-necessary; but if the invention be such as

may be easily copied, he will quickly be rivalled to such a degree as to

reduce his profits within the bounds of that _physical-necessary_; so

soon as this comes to be the case, his _ingenuity_ disappears, because

it ceases to be _peculiar_ to him.

Here arises a question: whence does it happen that certain workmen avoid

this competition, and make considerable gains by their employment, while

others are rivalled in their endeavours to retain a bare

physical-necessary?

There is a combination of several causes to operate these effects, which

we shall examine separately; leaving to the reader to judge, how far the

combination of them may extend profits beyond the physical-necessary.

I. We have said (chap. 9.) that the value of a workman’s labour is

determined from the quantity performed, in general, by those of his

profession, neither supposing them the best nor the worst, nor as having

any advantage or disadvantage, from the place of their abode. A workman

therefore, who, to an extraordinary dexterity, joins the advantages of

place, must gain more than another.

II. We have often remarked, that competition between workmen of the same

profession, diminishes the profits upon labour. From this it follows,

that in such arts where the least competition is found, there must be

the largest profits. Now several circumstances prevent competition.

First. An extraordinary dexterity in any art, and especially in those

where the whole excellency depends upon great exactness, such as

watch-making, painting of all kinds, making mathematical instruments,

and the like; all which set a celebrated artist in a manner above a

possibility of rivalship, and make him the master of his price, as

experience shews. 2d. The difficulty of acquiring the dexterity

requisite, resulting both from the time and money necessary to be spent

in apprenticeship, proves a plain obstacle to a numerous competition.

Few there are, who having the stock sufficient to defray the loss of

several years fruitless application, have also the turn necessary to

lead them to that particular branch of ingenuity. 3d. Many there are,

who have skill and capacity sufficient to enter into competition, but

are obliged to work for others, because of the expensive apparatus of

instruments, machines, lodging, and many other things necessary for

setting out as a master in the art. These, and similar causes, prevent

competition, and support large profits. 4th. Masters increase their

profits greatly by sharing that of their journeymen: this share, the

first have a just title to from the constant employment they procure for

the latter; and the certainty these have of gaining their

_physical-necessary_, together with a profit proportional to their

dexterity, makes them willing to share with their master. The 5th cause

of considerable gains, and the last I shall mention, is the most

effectual of all, viz. great oeconomy, and parsimonious living. In

proportion to the concurrence and combination of these circumstances,

the fortune of the artist will increase, which is the answer to the

first part of the question proposed.

We are next to enquire how it happens that many industrious people are

rivalled in an industry which brings no more than a bare

physical-necessary. This proceeds from some disadvantage either in their

personal or political situation. In their personal situation, when they

are loaded with a numerous family, interrupted by sickness, or other

accidental avocations. In their political situation, when they happen to

be under a particular subordination from which others are free, or

loaded with taxes which others do not pay.

I shall only add, that in computing the value of the

_physical-necessary_ of the lowest denomination, a just allowance must

be made for all interruptions of labour: no person can be supposed to

work every free day; and the labour of the year must defray the expence

of the year. This is evident. Farther, neither humanity, or policy, that

is the interest of a state, can suggest a rigorous oeconomy upon this

essential quantity. If the great abuses upon the price of labour are

corrected, those which remain imperceptible to the public eye, will

prove no disadvantage to exportation; and as long as this goes on with

success, the state is in health and vigour. Exportation _of work_ is

another pulse of the political body.

------------------------------------------------------------------------

CHAP. XXII.

_Preliminary Reflections upon inland Commerce._

I resume the subject, which, as a rest to the mind, I dropt at the end

of the 19th chapter.

I am to treat directly of inland commerce, which has been sufficiently

distinguished from infant, and foreign trade.

We are to consider ourselves now as transported into a new country. Here

foreign trade has been carried to the greatest height possible; but the

luxury of the inhabitants, the carelessness, perhaps, of the statesman,

and the natural advantages of other nations, added to the progress of

their industry and refinement, have concurred to cut this branch off,

and thereby to dry up the source which had constantly been augmenting

national opulence.

We must examine the natural effects of this revolution; we must point

out how every inconvenience may be avoided, and how a statesman may

regulate his conduct, so as to prevent the exportation of any part of

that wealth which the nation may have heaped up within herself, during

the prosperity of her foreign trade. How he may keep the whole of his

people constantly employed, and by what means he may promote an equable

circulation of domestic wealth, as an adequate equivalent given by the

rich, for services rendred them by the industrious poor. How, by a

judicious imposition of taxes, he may draw together an equitable

proportion of every man’s annual income, without reducing any one below

the standard of a full physical-necessary. How he may, with this public

fund, preserve in vigour every branch of industry, and be enabled also,

by the means of it, to profit of the smallest revolution in the

situation of other nations, so as to re-establish the foreign trade of

his own people. And lastly, how the society may be thereby sufficiently

defended against foreign enemies, by a body of men regularly supported

and maintained at the public charge, without occasioning any sudden

revolution hurtful to industry, either when it becomes necessary to

increase their numbers, in order to carry on an unavoidable war, or to

diminish them, upon the return of peace and tranquility. This is, in few

words, the object of a statesman’s attention when he is at the head of a

people living upon their own wealth, without any mercantile connections

with strangers.

However hurtful the natural and immediate effects of political causes

may have been formerly, when the mechanism of government was less

compounded than at present, they are now brought under such

restrictions, by the complicated system of modern oeconomy, that the

evil which might otherwise result, is guarded against with ease.

As often, therefore, as we find a notable prejudice resulting to a

state, from a change of their circumstances, _gradually taking place_,

we may safely conclude, that negligence, or want of abilities, in those

who have the direction of public affairs, has more than any other cause

been the occasion of it.

It was observed, in the third chapter of the first book, that before the

introduction of modern oeconomy, which is made to subsist by the means

of taxes, a state was seldom found to be interested in watching over the

actions of the people. They bought and sold, transferred, transported,

modified, and compounded productions and manufactures, for public use,

and private consumption, just as they thought fit. Now it is precisely

in these operations that a modern state is chiefly interested; because

proportional taxes are made to affect a people on every such occasion.

The interest the state has in levying these impositions, gives a

statesman an opportunity of laying such operations under certain

restrictions; by the means of which, upon every change of circumstances,

he can produce the effect he thinks fit. Do the people buy from

foreigners what they can find at home, he imposes a duty upon

importation. Do they sell what they ought to manufacture, he shuts the

gates of the country. Do they transfer or transport at home, he

accelerates or retards the operation, as best suits the common interest.

Do they modify or compound what the public good requires to be consumed

in its simple state, he can either prevent it by a positive prohibition,

or he may permit such consumption to the more wealthy only, by

subjecting it to a duty.

So powerful an influence over the operations of a whole people, vests an

authority in a modern statesman, which was unknown in former ages, under

the most absolute governments. We may discover the effects of this, by

reflecting on the force of some states, at present, in Europe, where the

sovereign power is extremely limited, as to every _arbitrary_ exercise

of it, and where, at the same time, that very power is found to operate

over the wealth of the inhabitants, in a manner far more efficacious

than the most despotic and arbitrary authority can possibly do.

It is the order and regularity in the administration of the complicated

modern oeconomy, which alone can put a statesman in a capacity to exert

the whole force of his people. The more he has their actions under his

direction, the easier it is for him to make them concur in advancing the

general good.

Here it is objected, that any free people who invest a statesman with a

power to control their most trivial actions, must be out of their wits,

and considered as submitting to a voluntary slavery of the worst nature,

as it must be the most difficult to be shaken off. This I agree to;

supposing the power vested to be of an arbitrary nature, such as we have

described in the thirteenth chapter of this book. But while the

legislative power is only exerted in acquiring an influence over the

actions of individuals, in order to promote a scheme of political

oeconomy, uniform and consistent in all its parts, the consequence will

be so far from introducing slavery among the people, that the execution

of the plan will prove absolutely inconsistent with every arbitrary or

irregular measure.

The power of a modern Prince, let him be, by the constitution of his

kingdom, ever so absolute, becomes immediately limited so soon as he

establishes the plan of oeconomy which we are endeavouring to explain.

If his authority formerly resembled the solidity and force of the wedge,

which may indifferently be made use of, for splitting of timber, stones,

and other hard bodies, and which may be thrown aside and taken up again

at pleasure; it will, at length come to resemble the watch, which is

good for no other purpose than to mark the progression of time, and

which is immediately destroyed, if put to any other use, or touched by

any but the gentlest hand.

As modern oeconomy, therefore, is the most effectual bridle ever

invented against the folly of despotism; so the wisdom of so great a

power shines no where with greater lustre, than when we see it exerted

in planning and establishing this oeconomy, as a bridle against the

wanton exercise of power in succeeding generations. I leave it to my

reader to seek for examples in the conduct of our modern Princes, which

may confirm what, I think, reason seems to point out: were they less

striking, I might be tempted to mention them.

The part of our subject we are now to treat of, will present us with a

system of political oeconomy, still more complicated than any thing we

have hitherto met with.

While foreign trade flourishes and is extended, the wealth of a nation

increases daily; but her force is not so easily exerted, as after this

wealth begins to circulate more at home, as we shall easily shew. But,

on the other hand, the force she exerts is much more easily recruited.

In the first case, her frugality enables her to draw new supplies out of

the coffers of her neighbours; in the last, her luxury affords a

resource from the wealth of her own citizens.

In opening my chapter, I have introduced my reader into a new country;

or indeed I may say, that I have brought him back into the same which we

had under our consideration in the first book.

Here luxury and superfluous consumption will strike his view almost at

every step. He will naturally compare the system of frugality, which we

have dismissed, with that of dissipation, which we are now to take up;

and we may very naturally conclude, that the introduction of the latter,

must prove a certain forerunner of destruction. The examples found in

history of the greatest monarchies being broken to pieces, so soon as

the taste of simplicity was lost, seem to justify this conjecture. It

is, therefore, necessary to examine circumstances a little, that we may

compare, in this particular also, the oeconomy of the antients with our

own; in order to discover whether the introduction of luxury be as

hurtful at present, as it formerly proved to those states which made so

great a figure in the world; and which now are only known from history,

and judged of, from the few scattered ruins which remain to bear

testimony of their former greatness.

Luxury is the child of wealth; and wealth is acquired by states, as by

private people, either by a lucrative, or by an onerous title, as the

civilians speak. The lucrative title, by which a state acquires, is

either by rapine, or from her mines; the onerous title, or that for a

valuable consideration, is by industry.

The wealth of the ancient monarchs of Babylon, Persia, Greece, and Rome,

was the effect of rapine; whereas industry enriched the cities of Sydon,

Tyre, Carthage, Athens, and Alexandria. The luxury of the first, proved

the ruin of the luxurious; the luxury of the last, advanced their

grandeur: because they had no rivals to take advantage of the natural

effects of this luxury, in cutting off the profits of foreign trade.

Peace was as hurtful to the plunderers, as war was destructive to the

industrious.

When an empire was at war, its wealth was thereby made to circulate for

an equivalent in services performed. So soon as peace was restored,

every one returned, as it were, to a state of slavery. The monarch then

possessed himself of all the wealth, and distributed it by caprice.

Fortunes were made in an instant, and no body knew how: they were lost

again by transitions equally violent and sudden. The luxury of those

days was attended with the most excessive oppression. Extraordinary

consumption was no proof of the circulation of any adequate equivalent

in favour of the industrious: it had not the effect of giving bread to

the poor, nor of proportionally diminishing the wealth of the rich. The

great constantly remained great; and the more they were prodigal, the

more the small were brought into distress. In one word, luxury had

nothing to recommend it, but that quality which _solely_ constitutes the

abuse of it in modern times; to wit, the excessive gratification of the

passions of the great, which frequently brought on the corruption of

their manners.

When such a state became luxurious, public affairs were neglected;

because it was not from a right administration that wealth was to be

procured. War, under such circumstances, worked effects almost similar

to the springing up of industry in modern times; it procured employment,

and this produced a more regular circulation, as has been said.

On the other hand, the wealth and luxury of the trading cities

abovementioned, which was of the same species with that of modern times,

proceeded from the alienation of their work; that is, from their

industry. Nothing was gained for nothing, and when they were forced to

go to war, they found themselves obliged either to dissipate their

wealth, by hiring troops, or to abandon the resources of it, the labour

of their industrious citizens. Thus the punic wars exalted the grandeur

of plundering Rome, and blotted out the existence of industrious

Carthage. I do not here pretend to vindicate the justness of these

reflections in every circumstance, and it is foreign to my present

purpose to be more particular; all I seek for, is to point out the

different effects of luxury in antient and modern times.

Antient luxury was quite _arbitrary_; consequently could be laid under

no limitations, but produced the worst effects, which _naturally_ and

_mechanically_ could proceed from it.

Modern luxury is _systematical_; it cannot make one step, but at the

expence of an adequate equivalent, acquired by those who stand the most

in need of the protection and assistance of their fellow citizens; and

without producing a vibration in the balance of their wealth. This

balance is in the hands of the statesman, who may receive a contribution

upon every such vibration. He has the reins in his hand, and may turn,

restrain, and direct the luxury of his people, towards whatever object

he thinks fit.

Luxury here is so far from drawing on a neglect of public affairs, that

it requires the closest application to the administration of them, in

order to support it. When these are neglected, the industrious will be

brought to starve, consumption will diminish; that is, luxury will

insensibly disappear, and hoarding will succeed it. These and similar

consequences will undoubtedly take place, and _mechanically_ follow one

another, when a skilful hand is not applied; to prevent them.

It is impossible not to perceive the advantages of supporting a

flourishing inland trade, after the extinction of foreign commerce. By

such means elegance of taste, and the polite arts, may be carried to the

highest pitch. The whole of the inhabitants may be employed in working

and consuming; all may be made to live in plenty and in ease, by the

means of a swift circulation, which will produce a reasonable equality

of wealth among all the inhabitants. Luxury can never be the cause of

inequality. Hoarding and parcimony form great fortunes, luxury

dissipates them and restores equality.

Such a situation would surely be of all others the most agreeable, and

the most advantageous, were all mankind collected into one society, or

were the country where it is established cut off from every

communication with other nations.

The balance between work and demand would then only influence the

balance of wealth among individuals. If hands became scarce, the balance

would turn the quicker in favour of the laborious, and the idle would

grow poor. If hands became too plentiful (which indeed is hardly to be

expected) every thing would be bought the cheaper; but the same quantity

of wealth would still remain without any diminution.

Where is, therefore, the great advantage of foreign trade?

I answer by putting another question. Where is the great advantage of a

person’s making a large fortune in his own country? A man of a small

estate may, no doubt, be as happy as another with a great one; and the

same thing would be true of nations, were all equally inspired with a

spirit of peace and justice; or were they subordinate to a higher

temporal power, which could protect the weak against the violence and

injustice of the strong.

It is, therefore, the separate interests of nations who incline to

communicate together, and consume of one another’s commodities, which

renders the consideration of the principles of trade, a matter of great

importance.

While nations contented themselves with their own productions, while the

difference of their customs, and contrast of their prejudices were

great, the connections between them were not very intimate.

From this proceeds the great diversity of languages and dialects. When a

traveller finds a sudden transition from one language to another, or

from one dialect to another, it is a proof that the manners of such

people have been long different, and that they have had little

communication with one another. On the contrary, when dialects change by

degrees, as in the provinces of the same country, it is a proof that

there has been no great repugnancy in their customs. In like manner,

when we find several languages, at present different, but plainly

deriving from the same source, we may conclude, that there was a time

when such nations were connected by correspondence, or that the language

has been transplanted from one to the other, by the migration of

colonies. But I insensibly wander from my subject.

I have said, that when nations contented themselves with their own

productions, connections between them were not very intimate. While

trade was carried on by the exchange of consumable commodities, this

operation also little interested the state: consumption then was equal

on both sides; and no balance was found upon either. But so soon as the

precious metals became an object of commerce, and when, by being rendred

an universal equivalent for every thing, it became also the measure of

power between nations, then the acquisition, or at least the

preservation of a proportional quantity of it, became, to the more

prudent, an object of the last importance.

We have seen how a foreign trade, well conducted, has the necessary

effect of drawing wealth from all other nations. We have seen in what

manner the benefit resulting from this trade may come to a stop, and how

the balance of it may come round to the other side. We are now to

examine how the same prudence which set foreign trade on foot, and

supported it as long as possible, may guard against a sudden revolution,

and at the same time put an effectual stop to it; to the end that a

nation enriched by commerce may not, by blindly or mechanically carrying

it on, when the balance is against her, fall into those inconveniencies

which other nations must have experienced during her prosperity.

------------------------------------------------------------------------

CHAP. XXIII.

_When a Nation, which has enriched herself by a reciprocal Commerce in

Manufactures with other Nations, finds the Balance of Trade turn against

her, it is her Interest to put a Stop to it altogether._

Trade having subsisted long in the nation we are now to keep in our eye,

I shall suppose that, through length of time, her neighbours have

learned to supply one article of their own and other peoples wants

cheaper than she can do. What is to be done? No body will buy from her,

when they can be supplied from another quarter at a less price. I say,

what is to be done? For if there be no check put upon trade, and if the

statesman do not interpose with the greatest care, it is certain, that

merchants will import the produce, and even the manufactures of rival

nations; the inhabitants will buy them preferably to their own; the

wealth of the nation will be exported; and her industrious manufacturers

will be brought to starve. We may therefore look upon this, as a problem

in trade, to be resolved by the principles already established.

First, then, it must be inquired, if, in the branch in which she is

undersold, her rivals enjoy a natural advantage above her, which no

superior industry, frugality, or address on her side, can

counterbalance? If this be the case, there are three different courses

to be pursued, according to circumstances.

_1mo._ To renounce that branch of commerce entirely, and to take the

commodities wanted from foreigners, as they can furnish them cheaper.

_2do._ To prohibit the importation of such commodities altogether.

_3tio._ To impose a duty upon importation, in order to raise the price

of them so high as to make them dearer than the same kind of commodity

produced at home.

The first course may be taken, if, upon examining how the hands employed

in a manufacture may be disposed of, it be found, that they may easily

be thrown into another branch of industry, in which the nation’s natural

advantages are as superior to her rivals, as their’s are superior to

her’s in the branch she intends to abandon; and providing her neighbours

will agree to open their ports to the free importation of the

commodities in question. For though there may be little profit in a

trade by exchange, I still think it adviseable to continue

correspondence, and to avoid every occasion of cutting off commerce with

other nations. A laborious, oeconomical, and sagacious nation, such as I

suppose our traders to be, will be able to profit of many circumstances,

which would infallibly turn to the disadvantage of others less expert in

commerce, with whom she trades; and in expectation of favourable

revolutions, she ought not rashly, nor because of small inconveniencies,

to renounce trading with them; especially if luxury should appear there

to be on the growing hand.

But suppose the rival nation will not consent to receive the

manufactures which the traders may produce with great natural

advantages, what course then is the best to be taken?

I think she ought to encourage the branch in which she is rivalled, for

her own consumption, though she must give over exporting it; and, in

this case, it must be examined, whether that trade with foreigners

should be prohibited altogether, (which is the second course mentioned

above) or whether it be more adviseable to prefer the last scheme, viz.

to allow the commodities to be imported, with a duty which may raise

their price to so just a height as neither to suffer them to be sold so

cheap as to discourage the domestic fabrication, nor dear enough to

raise the profits of manufactures above a reasonable standard, in case

of an augmentation of demand.

The second course must be taken, when the natural advantages of the

foreign nations are so great, as to oblige the statesman to raise duties

to such a height as to give encouragement to smuggling.

The third course seems the best, when the advantages of the rivals are

more inconsiderable; in which case, the traders, may, in time, and by

the progress of luxury among their neighbours, or from other

revolutions, which happen frequently in trading nations, regain their

former advantages.

This may be a decision, in case a nation be rivalled in a branch where

she has not equal advantages with her neighbours; and when she cannot

compensate this inconvenience, either by her frugality or industry, or

by the means of a proper application of her national wealth. These

operations have been already fully explained, and are now considered as

laid aside; not that we suppose they can ever cease to operate their

effects in all nations, but in order to simplify our ideas, and to point

out the principles which ought to direct a statesman upon occasions

where he finds better expedients impracticable, from different

combinations of circumstances.

Let me next suppose a nation to be rivalled, in her staple manufactures;

that is, in those where she has the greatest natural advantages in her

favour.

Whenever such a case happens, it must proceed from some vice within the

state. Either from the progress of luxury in the workmen, which must

proceed from consolidated profits, or from accidental disadvantage; such

as dearness of subsistence, or from taxes injudiciously imposed. These

(I mean all, except the taxes, of which afterwards) must be removed upon

the principles above laid down: and if this cannot be compassed, no

matter why; then comes the fatal period, when all foreign reciprocal

commerce in manufactures must be given up. For if no profit can be made

upon branches where a nation has the greatest natural advantages, it is

more than probable, that every other branch will prove at least equally

disadvantageous. If upon this revolution the ports of the nation be not

shut against the importation of foreign manufactures, merchants will

introduce them, and this will drain off the nation’s wealth, and bring

the industrious to starve.

It is upon this principle that incorporations are established. Of these

we shall say a word, and conclude our chapter.

Cities and corporations, may be considered as nations, where luxury and

taxes have rendred living so expensive, that work cannot be furnished

but at a high rate. If labour, therefore, of all kinds, were permitted

to be brought from the provinces, or from the country, to supply the

demand of the capital and smaller corporations, what would become of

tradesmen and manufactures who have their residence there? If these, on

the other hand, were to remove beyond the liberties of such

corporations, what would become of the public revenue, collected in

these little states, as I may call them?

By the establishment of corporations, a statesman is enabled to raise

high impositions upon all sorts of consumption; and notwithstanding that

these have the necessary consequence of increasing the price of labour,

yet by other regulations, of which afterwards, the bad consequences

thereby resulting to foreign trade may be avoided, and every article of

exportation be prevented from rising above the proper standard for

making it vendible, in spite of all foreign competition.

The plan of modern taxation seems first to have been introduced into

cities, while the country was subject to the barons, and remained in a

manner quite free from them. Cities having obtained the privilege of

incorporation, began, in consequence of the power vested in their

magistrates, to levy taxes: and finding the inconveniences resulting

from external competition (foreign trade) they erected the different

classes of their industrious into confraternities, or corporations of a

lower denomination, with power to prevent the importation of work from

their fellow tradesmen not of the society.

Here arises a question.

Why are corporations complained of in many countries, as being a check

upon industry; if the establishment of them proceeds from so plain a

principle as that here laid down?

Let me draw my answer from another question. Why are they not complained

of in all countries?

The difference between the situation of one country and another, will

plainly point out the principle which ought to regulate the

establishment and government of corporations. When this is well

understood, all disputes concerning the general utility, or harm arising

from them will be at an end: and the question will be brought to the

proper issue; to wit, their relative utility considered with respect to

the actual situation of the country where they are established. In one

province a corporation will be found useful, in another just the

contrary.

First then it must be agreed, on all hands, that the principle laid down

is just. No body ever advanced, that the industry carried on in _towns_,

where living is dear, ought to suffer a competition with that of the

_country_, where living is cheap; I mean for the direct consumption of

the citizens. But it may be advanced, that no subaltern corporation

should enjoy an exclusive privilege against those who share of every

burthen imposed by the great corporation from which they draw their

existence. That they have no right of exclusion against citizens; but

only against strangers who are not under the same jurisdiction, nor

liable to the same burthens. Here the dispute lies between the members

of the great corporation and those of the smaller. Now, I say, while no

other interest is concerned, the decision of this question ought to be

left to the corporation itself. But the moment the public good comes to

be affected by certain privileges enjoyed by individuals, such

privileges should either be abolished, or put under limitations.

In countries where industry stands at a determined height, while the

consumption of cities neither augments nor diminishes; when those who

live upon an income acquired, live uniformly in the same way; when this

regular consumption is regularly supplied, by a certain number of

citizens sufficient to supply it; when the hands employed for this

purpose are in a perfect proportion to the demand made upon them; in

such countries, I say, any diminution of the privileges of corporations

would be a means of overturning the equal balance between work and

demand.

We have said above, that when hands become too many for the work,

profits fall below the necessary standard of subsistence; that the

industrious enter into competition for the physical-necessary, and hurt

one another. Here then is the principle which the corporation ought to

keep in their eye: the profits upon every trade ought to be in

proportion to work.

In order to come the better at the knowledge of this proportion, many

corporations in Germany have the subaltern corporations of trades

restrained to certain numbers. There is a determined number of

apothecaries, joiners, smiths, &c. allowed in every town, and no more;

according as employment is found for them. This seems a good regulation.

I do not say it may not be abused. But the power of administration must

be lodged somewhere; and if in a country where industry is making little

progress, corporations were laid open, the consequence would be, that

every one would starve another, and the consumers would be ill served.

On the other hand, when industry springs up, when the manners of a

people change all of a sudden, or by quick degrees, as has been the case

in many countries in Europe within these threescore years: it is a mark

of a narrow capacity not to perceive that a change of administration

becomes necessary; and if on such revolutions those who are at the head

of corporations should profit of the increase of demand, and occasion

prices to rise in favour of the incorporated workmen, the infallible

consequence will be, to make the city become deserted, and deprived of a

trade, which otherwise would necessarily fall to her share, in

consequence of the advantage she must draw from establishments already

made for supplying every branch of consumption[K]. But let the principle

above mentioned be constantly followed; let profits be kept at a right

standard; let hands be increased according to demand; let the city

workmen gain no advantage over those of the country which may not be

compensated by the difference of the price of subsistence; let the

disadvantages again on the side of the town affect only their own

consumption, not the surplus of their industry; let every convenience

for carrying on foreign trade (every thing here is understood to be

foreign, which does not enter into the consumption of the town) be

provided for in the suburbs, or, if you please, in a place out of the

town walled in for that purpose; let markets there be held for every

kind of work coming from the country; and then the true intent of a

corporation will be answered. If it be found that the prosperity of

trade demands still more liberty, then the corporation may be thrown

open; but on the other hand, every burthen must be taken off, and every

incorporated member must be indemnified by the state, for the loss he is

thereby made to suffer.

Footnote K:

The cities of the Austrian Netherlands are, from these causes, at

present in a state of depopulation; and the industrious classes are

assembling in the villages, which are beginning to rival the

populousness of cities. In these villages, the privileges of the

cities are not established. Privileges which will in all probability

end in their bankruptcy as well as depopulation. The depopulation will

follow from the causes already mentioned; the bankruptcy from the sums

these corporations lend the sovereign, on the credit of new

impositions constantly laying upon every branch of consumption. This

is so true, that the acquisition of this country (one of the most

fertile and most populous in Europe) would hardly be worth the having,

if the debts owing by the corporations were to be fairly paid, and

their ruinous _privileges_ (as they are called) allowed to subsist

without alteration.

The great change daily operating on the spirit of European nations,

where corporations have been long established, without any great

inconvenience having been found to arise from them, suggests these

reflections, which seem to flow naturally, from the principles we have

deduced. I shall only add, that from the practice of imposing taxes

within these little republics (as I have called them) Princes seem to

have taken the hint of extending that system; by first appropriating to

the public revenue, what the cities had established in favour of

themselves, and then by enlarging the plan as circumstances favoured

their design. That this is the true origin of the modern plan of

taxation (I mean that upon consumption) may be gathered from hence; that

the right of imposing taxes appears no where, almost, to have been

essentially attached to royalty, even in those kingdoms, where Princes

have long enjoyed an unlimited constitutional authority over the persons

of their subjects. This right I take to be the least equivocal

characteristic of an absolute and unlimited power. I know of no

christian monarchy (except, perhaps, Russia) where either the consent of

states, or the approbation or concurrence of some political body within

the state, has not been requisite to make the imposition of taxes

constitutional; and if more exceptions are found, I believe it will not

be difficult to trace the origin of such an exertion of sovereign

authority, without ascending to a very high antiquity. The prerogative

of Princes in former times, was measured by the power they could

constitutionally exercise over the _persons_ of their subjects; that of

modern princes, by the power they have over their _purse_.

Having, therefore, shewn the necessity of putting a stop to foreign

reciprocal commerce in manufactures, so soon as in every branch this

trade becomes disadvantageous to a nation; the next question comes to

be, how to proceed in the execution, so as to avoid a sudden and violent

revolution in the oeconomy of the state, which is of all things the most

dangerous: the hurt, therefore, ought to be foreseen at a great

distance, in order to be methodically prevented.

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CHAP. XXIV.

_What is the proper Method to put a Stop to a foreign Trade in

Manufactures, when the Balance of it turns against a Nation?_

It must not be understood, from what was said in the last chapter, that

so soon as the balance of foreign trade, either on the whole, or on any

branch of manufacture, is to be found against a nation, that a statesman

should then at once put a total stop to it. This is too violent a remedy

ever to be applied with success.

It is hardly possible, that a considerable revolution in the trade of a

nation should happen suddenly, either to its advantage, or disadvantage,

unless in times of civil discord, or foreign wars, which at present do

not enter into the question.

A sagacious statesman will, at all times, keep a watchful eye upon every

branch of foreign commerce, especially upon importations. These consist

either in the natural produce of other countries, or in such produce

increased in its value by manufacture.

In all trade two things are to be considered in the commodity sold. The

first is the matter; the second is the labour employed to render this

matter useful.

The matter exported from a country, is what the country loses; the price

of the labour exported, is what it gains.

If the value of the matter imported, be greater than the value of what

is exported, the country gains. If a greater value of labour be

imported, than exported, the country loses. Why? Because in the first

case, strangers must have paid, _in matter_, the surplus of labour

exported; and in the second case, because the country must have paid to

strangers, _in matter_, the surplus of labour imported.

It is therefore a general maxim, to discourage the importation of work,

and to encourage the exportation of it.

When any manufacture begins to be imported, which was usually made at

home, it is a mark that either the price of it begins to rise within the

country, or that strangers are making a new progress in it. On the other

hand, when the importation of manufactures consumed within a country

comes to diminish, and when merchants begin to lose upon such branches

of trade, it is a proof that industry at home is gaining ground in those

articles. The statesman then must take the hint, and set out by clogging

gently the importation of those commodities, not so as to put a stop to

it all at once; because this might have the effect of carrying profits

too high upon the home fabrication of them.

All sudden revolutions are to be avoided. A sudden stop upon a large

importation, raises the prices of domestic industry by jerks, as it

were; they do not rise gradually; and these sudden profits engage too

many people to endeavour to share in them. This occasions a desertion

from other branches of industry equally profitable to the state. Such

revolutions do great harm; because it is a long time before people come

to be informed of their true cause, and during the uncertainty, they

are, as it were, in a wilderness, surprized and delighted with the

consequences, according as their several interests are affected by them.

Every one accounts for the phenomena in a different way. Some are for

applying remedies against the inconveniencies; while others are totally

taken up in profiting to the utmost of every momentary advantage. In a

word, nothing is more hurtful than a sudden revolution, in so

complicated a body as that of the whole class of the industrious, in a

modern society. When therefore such changes happen, in spite of all a

statesman can do, the best way to prevent the inconveniencies which they

draw along with them, is to inform the public of the true causes of

every change, favourable or hurtful to the several classes of

inhabitants. This also seems to be the best method to engage every one

to concur in promoting the proper remedies, when the inconveniencies

themselves cannot be prevented. So much for a scheme of encouraging

growing manufactures, or of supporting them in their decline. I proceed

next to consider the methods of preventing the loss of others already

established.

We have said, that the importation of any article of consumption usually

provided at home, was a proof by no means equivocal of a foreign

rivalship. I shall say nothing, at present, of the methods to be used as

a remedy for this inconvenience: these have been already discussed. We

must now suppose, every one that might be contrived for this purpose, to

become ineffectual; and that foreign industry is so far gaining ground,

as daily, more and more, to supply the several branches of domestic

consumption.

Upon this, the statesman will begin by laying the importation of such

commodities under certain restrictions. If these do not prove

sufficient, they must be increased; and if the augmentation produces

frauds, difficult to be prevented, the articles must be prohibited

altogether. By this method of proceeding, it will be found, that without

any violent or sudden prohibition laid upon foreign trade, by little and

little, every pernicious branch of it will be cut off, till at last it

will cease altogether, as in the case mentioned above; to wit, when the

most advantageous branches cannot be carried on without loss.

Something, however, must here be added, in order to restrain so general

a plan of administration. Nothing is more complex than the interests of

trade, considered with respect to a whole nation. It is hardly possible

for a people to have every branch of trade favourable for the increase

of her wealth: consequently, a statesman who, upon the single inspection

of one branch, would lay the importation of it under limitations, in

proportion as he found the balance upon it unfavourable to the nation,

might very possibly undo a flourishing commerce.

He must first examine minutely every use to which the merchandize

imported is put: if a part is re-exported with profit, this profit must

be deduced from the balance of loss incurred by the consumption of the

remainder. If it be consumed upon the account of other branches of

industry, which are thereby advanced, the balance of loss may still be

more than compensated. If it be a means of supporting a correspondence

with a neighbouring nation, otherwise advantageous, the loss resulting

from it may be submitted to, in a certain degree. But if upon examining

the whole chain of consequences, he finds the nation’s wealth not at all

increased, nor her trade encouraged, in proportion to the damage at

first incurred by the importation, I believe he may decide, that such a

branch of trade is hurtful; and therefore that it ought to be cut off,

in the most prudent manner, according to the general rule.

The first object of the care of a statesman, who conducts a nation,

which is upon the point of losing her foreign trade, without any

prospect or probability of recovering it, is to preserve her wealth

already acquired. No motive ought to engage him to sacrifice this

wealth, the safety alone of the whole society excepted, when suddenly

threatned by foreign enemies. The gratification of particular people’s

habitual desires, although the wealth they possess may enable them,

without the smallest hurt to their private fortunes, to consume the

productions of other nations; the motive of preventing hoards; that of

promoting a brisk circulation within the country; the advantages to be

made by merchants, who may enrich themselves by carrying on a trade

disadvantageous to the nation; even, to say all in one word, the

supporting of the same number of inhabitants, ought not to engage his

consent to the diminution of national wealth.