The second duty of the sovereign, that of protecting, as far as possible,

every member of the society from the injustice or oppression of every

other member of it, or the duty of establishing an exact administration of

justice, requires two very different degrees of expense in the different

periods of society.

Among nations of hunters, as there is scarce any property, or at least

none that exceeds the value of two or three days labour; so there is

seldom any established magistrate, or any regular administration of

justice. Men who have no property, can injure one another only in their

persons or reputations. But when one man kills, wounds, beats, or defames

another, though he to whom the injury is done suffers, he who does it

receives no benefit. It is otherwise with the injuries to property. The

benefit of the person who does the injury is often equal to the loss of

him who suffers it. Envy, malice, or resentment, are the only passions

which can prompt one man to injure another in his person or reputation.

But the greater part of men are not very frequently under the influence of

those passions; and the very worst men are so only occasionally. As their

gratification, too, how agreeable soever it may be to certain characters,

is not attended with any real or permanent advantage, it is, in the

greater part of men, commonly restrained by prudential considerations. Men

may live together in society with some tolerable degree of security,

though there is no civil magistrate to protect them from the injustice of

those passions. But avarice and ambition in the rich, in the poor the

hatred of labour and the love of present ease and enjoyment, are the

passions which prompt to invade property; passions much more steady in

their operation, and much more universal in their influence. Wherever

there is a great property, there is great inequality. For one very rich

man, there must be at least five hundred poor, and the affluence of the

few supposes the indigence of the many. The affluence of the rich excites

the indignation of the poor, who are often both driven by want, and

prompted by envy to invade his possessions. It is only under the shelter

of the civil magistrate, that the owner of that valuable property, which

is acquired by the labour of many years, or perhaps of many successive

generations, can sleep a single night in security. He is at all times

surrounded by unknown enemies, whom, though he never provoked, he can

never appease, and from whose injustice he can be protected only by the

powerful arm of the civil magistrate, continually held up to chastise it.

The acquisition of valuable and extensive property, therefore, necessarily

requires the establishment of civil government. Where there is no

property, or at least none that exceeds the value of two or three days

labour, civil government is not so necessary.

Civil government supposes a certain subordination. But as the necessity of

civil government gradually grows up with the acquisition of valuable

property; so the principal causes, which naturally introduce

subordination, gradually grow up with the growth of that valuable

property.

The causes or circumstances which naturally introduce subordination, or

which naturally and antecedent to any civil institution, give some men

some superiority over the greater part of their brethren, seem to be four

in number.

The first of those causes or circumstances, is the superiority of personal

qualifications, of strength, beauty, and agility of body; of wisdom and

virtue; of prudence, justice, fortitude, and moderation of mind. The

qualifications of the body, unless supported by those of the mind, can

give little authority in any period of society. He is a very strong man,

who, by mere strength of body, can force two weak ones to obey him. The

qualifications of the mind can alone give very great authority. They are

however, invisible qualities; always disputable, and generally disputed.

No society, whether barbarous or civilized, has ever found it convenient

to settle the rules of precedency of rank and subordination, according to

those invisible qualities; but according to something that is more plain

and palpable.

The second of those causes or circumstances, is the superiority of age. An

old man, provided his age is not so far advanced as to give suspicion of

dotage, is everywhere more respected than a young man of equal rank,

fortune, and abilities. Among nations of hunters, such as the native

tribes of North America, age is the sole foundation of rank and

precedency. Among them, father is the appellation of a superior; brother,

of an equal; and son, of an inferior. In the most opulent and civilized

nations, age regulates rank among those who are in every other respect

equal; and among whom, therefore, there is nothing else to regulate it.

Among brothers and among sisters, the eldest always takes place; and in

the succession of the paternal estate, every thing which cannot be

divided, but must go entire to one person, such as a title of honour, is

in most cases given to the eldest. Age is a plain and palpable quality,

which admits of no dispute.

The third of those causes or circumstances, is the superiority of fortune.

The authority of riches, however, though great in every age of society,

is, perhaps, greatest in the rudest ages of society, which admits of any

considerable inequality of fortune. A Tartar chief, the increase of whose

flocks and herds is sufficient to maintain a thousand men, cannot well

employ that increase in any other way than in maintaining a thousand men.

The rude state of his society does not afford him any manufactured produce

any trinkets or baubles of any kind, for which he can exchange that part

of his rude produce which is over and above his own consumption. The

thousand men whom he thus maintains, depending entirely upon him for their

subsistence, must both obey his orders in war, and submit to his

jurisdiction in peace. He is necessarily both their general and their

judge, and his chieftainship is the necessary effect of the superiority of

his fortune. In an opulent and civilized society, a man may possess a much

greater fortune, and yet not be able to command a dozen of people. Though

the produce of his estate may be sufficient to maintain, and may, perhaps,

actually maintain, more than a thousand people, yet, as those people pay

for every thing which they get from him, as he gives scarce any thing to

any body but in exchange for an equivalent, there is scarce anybody who

considers himself as entirely dependent upon him, and his authority

extends only over a few menial servants. The authority of fortune,

however, is very great, even in an opulent and civilized society. That it

is much greater than that either of age or of personal qualities, has been

the constant complaint of every period of society which admitted of any

considerable inequality of fortune. The first period of society, that of

hunters, admits of no such inequality. Universal poverty establishes their

universal equality; and the superiority, either of age or of personal

qualities, are the feeble, but the sole foundations of authority and

subordination. There is, therefore, little or no authority or

subordination in this period of society. The second period of society,

that of shepherds, admits of very great inequalities of fortune, and there

is no period in which the superiority of fortune gives so great authority

to those who possess it. There is no period, accordingly, in which

authority and subordination are more perfectly established. The authority

of an Arabian scherif is very great; that of a Tartar khan altogether

despotical.

The fourth of those causes or circumstances, is the superiority of birth.

Superiority of birth supposes an ancient superiority of fortune in the

family of the person who claims it. All families are equally ancient; and

the ancestors of the prince, though they may be better known, cannot well

be more numerous than those of the beggar. Antiquity of family means

everywhere the antiquity either of wealth, or of that greatness which is

commonly either founded upon wealth, or accompanied with it. Upstart

greatness is everywhere less respected than ancient greatness. The hatred

of usurpers, the love of the family of an ancient monarch, are in a great

measure founded upon the contempt which men naturally have for the former,

and upon their veneration for the latter. As a military officer submits,

without reluctance, to the authority of a superior by whom he has always

been commanded, but cannot bear that his inferior should be set over his

head; so men easily submit to a family to whom they and their ancestors

have always submitted; but are fired with indignation when another family,

in whom they had never acknowledged any such superiority, assumes a

dominion over them.

The distinction of birth, being subsequent to the inequality of fortune,

can have no place in nations of hunters, among whom all men, being equal

in fortune, must likewise be very nearly equal in birth. The son of a wise

and brave man may, indeed, even among them, be somewhat more respected

than a man of equal merit, who has the misfortune to be the son of a fool

or a coward. The difference, however will not be very great; and there

never was, I believe, a great family in the world, whose illustration was

entirely derived from the inheritance of wisdom and virtue.

The distinction of birth not only may, but always does, take place among

nations of shepherds. Such nations are always strangers to every sort of

luxury, and great wealth can scarce ever be dissipated among them by

improvident profusion. There are no nations, accordingly, who abound more

in families revered and honoured on account of their descent from a long

race of great and illustrious ancestors; because there are no nations

among whom wealth is likely to continue longer in the same families.

Birth and fortune are evidently the two circumstances which principally

set one man above another. They are the two great sources of personal

distinction, and are, therefore, the principal causes which naturally

establish authority and subordination among men. Among nations of

shepherds, both those causes operate with their full force. The great

shepherd or herdsman, respected on account of his great wealth, and of the

great number of those who depend upon him for subsistence, and revered on

account of the nobleness of his birth, and of the immemorial antiquity or

his illustrious family, has a natural authority over all the inferior

shepherds or herdsmen of his horde or clan. He can command the united

force of a greater number of people than any of them. His military power

is greater than that of any of them. In time of war, they are all of them

naturally disposed to muster themselves under his banner, rather than

under that of any other person; and his birth and fortune thus naturally

procure to him some sort of executive power. By commanding, too, the

united force of a greater number of people than any of them, he is best

able to compel any one of them, who may have injured another, to

compensate the wrong. He is the person, therefore, to whom all those who

are too weak to defend themselves naturally look up for protection. It is

to him that they naturally complain of the injuries which they imagine

have been done to them; and his interposition, in such cases, is more

easily submitted to, even by the person complained of, than that of any

other person would be. His birth and fortune thus naturally procure him

some sort of judicial authority.

It is in the age of shepherds, in the second period of society, that the

inequality of fortune first begins to take place, and introduces among men

a degree of authority and subordination, which could not possibly exist

before. It thereby introduces some degree of that civil government which

is indispensably necessary for its own preservation; and it seems to do

this naturally, and even independent of the consideration of that

necessity. The consideration of that necessity comes, no doubt,

afterwards, to contribute very much to maintain and secure that authority

and subordination. The rich, in particular, are necessarily interested to

support that order of things, which can alone secure them in the

possession of their own advantages. Men of inferior wealth combine to

defend those of superior wealth in the possession of their property, in

order that men of superior wealth may combine to defend them in the

possession of theirs. All the inferior shepherds and herdsmen feel, that

the security of their own herds and flocks depends upon the security of

those of the great shepherd or herdsman; that the maintenance of their

lesser authority depends upon that of his greater authority; and that upon

their subordination to him depends his power of keeping their inferiors in

subordination to them. They constitute a sort of little nobility, who feel

themselves interested to defend the property, and to support the

authority, of their own little sovereign, in order that he may be able to

defend their property, and to support their authority. Civil government,

so far as it is instituted for the security of property, is, in reality,

instituted for the defence of the rich against the poor, or of those who

have some property against those who have none at all.

The judicial authority of such a sovereign, however, far from being a

cause of expense, was, for a long time, a source of revenue to him. The

persons who applied to him for justice were always willing to pay for it,

and a present never failed to accompany a petition. After the authority of

the sovereign, too, was thoroughly established, the person found guilty,

over and above the satisfaction which he was obliged to make to the party,

was like-wise forced to pay an amercement to the sovereign. He had given

trouble, he had disturbed, he had broke the peace of his lord the king,

and for those offences an amercement was thought due. In the Tartar

governments of Asia, in the governments of Europe which were founded by

the German and Scythian nations who overturned the Roman empire, the

administration of justice was a considerable source of revenue, both to

the sovereign, and to all the lesser chiefs or lords who exercised under

him any particular jurisdiction, either over some particular tribe or

clan, or over some particular territory or district. Originally, both the

sovereign and the inferior chiefs used to exercise this jurisdiction in

their own persons. Afterwards, they universally found it convenient to

delegate it to some substitute, bailiff, or judge. This substitute,

however, was still obliged to account to his principal or constituent for

the profits of the jurisdiction. Whoever reads the instructions (They are

to be found in Tyrol’s History of England) which were given to the judges

of the circuit in the time of Henry II will see clearly that those judges

were a sort of itinerant factors, sent round the country for the purpose

of levying certain branches of the king’s revenue. In those days, the

administration of justice not only afforded a certain revenue to the

sovereign, but, to procure this revenue, seems to have been one of the

principal advantages which he proposed to obtain by the administration of

justice.

This scheme of making the administration of justice subservient to the

purposes of revenue, could scarce fail to be productive of several very

gross abuses. The person who applied for justice with a large present in

his hand, was likely to get something more than justice; while he who

applied for it with a small one was likely to get something less. Justice,

too, might frequently be delayed, in order that this present might be

repeated. The amercement, besides, of the person complained of, might

frequently suggest a very strong reason for finding him in the wrong, even

when he had not really been so. That such abuses were far from being

uncommon, the ancient history of every country in Europe bears witness.

When the sovereign or chief exercises his judicial authority in his own

person, how much soever he might abuse it, it must have been scarce

possible to get any redress; because there could seldom be any body

powerful enough to call him to account. When he exercised it by a bailiff,

indeed, redress might sometimes be had. If it was for his own benefit

only, that the bailiff had been guilty of an act of injustice, the

sovereign himself might not always be unwilling to punish him, or to

oblige him to repair the wrong. But if it was for the benefit of his

sovereign; if it was in order to make court to the person who appointed

him, and who might prefer him, that he had committed any act of

oppression; redress would, upon most occasions, be as impossible as if the

sovereign had committed it himself. In all barbarous governments,

accordingly, in all those ancient governments of Europe in particular,

which were founded upon the ruins of the Roman empire, the administration

of justice appears for a long time to have been extremely corrupt; far

from being quite equal and impartial, even under the best monarchs, and

altogether profligate under the worst.

Among nations of shepherds, where the sovereign or chief is only the

greatest shepherd or herdsman of the horde or clan, he is maintained in

the same manner as any of his vassals or subjects, by the increase of his

own herds or flocks. Among those nations of husbandmen, who are but just

come out of the shepherd state, and who are not much advanced beyond that

state, such as the Greek tribes appear to have been about the time of the

Trojan war, and our German and Scythian ancestors, when they first settled

upon the ruins of the western empire; the sovereign or chief is, in the

same manner, only the greatest landlord of the country, and is maintained

in the same manner as any other landlord, by a revenue derived from his

own private estate, or from what, in modern Europe, was called the demesne

of the crown. His subjects, upon ordinary occasions, contribute nothing to

his support, except when, in order to protect them from the oppression of

some of their fellow-subjects, they stand in need of his authority. The

presents which they make him upon such occasions constitute the whole

ordinary revenue, the whole of the emoluments which, except, perhaps, upon

some very extraordinary emergencies, he derives from his dominion over

them. When Agamemnon, in Homer, offers to Achilles, for his friendship,

the sovereignty of seven Greek cities, the sole advantage which he

mentions as likely to be derived from it was, that the people would honour

him with presents. As long as such presents, as long as the emoluments of

justice, or what may be called the fees of court, constituted, in this

manner, the whole ordinary revenue which the sovereign derived from his

sovereignty, it could not well be expected, it could not even decently be

proposed, that he should give them up altogether. It might, and it

frequently was proposed, that he should regulate and ascertain them. But

after they had been so regulated and ascertained, how to hinder a person

who was all-powerful from extending them beyond those regulations, was

still very difficult, not to say impossible. During the continuance of

this state of things, therefore, the corruption of justice, naturally

resulting from the arbitrary and uncertain nature of those presents,

scarce admitted of any effectual remedy.

But when, from different causes, chiefly from the continually increasing

expense of defending the nation against the invasion of other nations, the

private estate of the sovereign had become altogether insufficient for

defraying the expense of the sovereignty; and when it had become necessary

that the people should, for their own security, contribute towards this

expense by taxes of different kinds; it seems to have been very commonly

stipulated, that no present for the administration of justice should,

under any pretence, be accepted either by the sovereign, or by his

bailiffs and substitutes, the judges. Those presents, it seems to have

been supposed, could more easily be abolished altogether, than effectually

regulated and ascertained. Fixed salaries were appointed to the judges,

which were supposed to compensate to them the loss of whatever might have

been their share of the ancient emoluments of justice; as the taxes more

than compensated to the sovereign the loss of his. Justice was then said

to be administered gratis.

Justice, however, never was in reality administered gratis in any country.

Lawyers and attorneys, at least, must always be paid by the parties; and

if they were not, they would perform their duty still worse than they

actually perform it. The fees annually paid to lawyers and attorneys,

amount, in every court, to a much greater sum than the salaries of the

judges. The circumstance of those salaries being paid by the crown, can

nowhere much diminish the necessary expense of a law-suit. But it was not

so much to diminish the expense, as to prevent the corruption of justice,

that the judges were prohibited from receiving my present or fee from the

parties.

The office of judge is in itself so very honourable, that men are willing

to accept of it, though accompanied with very small emoluments. The

inferior office of justice of peace, though attended with a good deal of

trouble, and in most cases with no emoluments at all, is an object of

ambition to the greater part of our country gentlemen. The salaries of all

the different judges, high and low, together with the whole expense of the

administration and execution of justice, even where it is not managed with

very good economy, makes, in any civilized country, but a very

inconsiderable part of the whole expense of government.

The whole expense of justice, too, might easily be defrayed by the fees of

court; and, without exposing the administration of justice to any real

hazard of corruption, the public revenue might thus be entirely discharged

from a certain, though perhaps but a small incumbrance. It is difficult to

regulate the fees of court effectually, where a person so powerful as the

sovereign is to share in them and to derive any considerable part of his

revenue from them. It is very easy, where the judge is the principal

person who can reap any benefit from them. The law can very easily oblige

the judge to respect the regulation though it might not always be able to

make the sovereign respect it. Where the fees of court are precisely

regulated and ascertained where they are paid all at once, at a certain

period of every process, into the hands of a cashier or receiver, to be by

him distributed in certain known proportions among the different judges

after the process is decided and not till it is decided; there seems to be

no more danger of corruption than when such fees are prohibited

altogether. Those fees, without occasioning any considerable increase in

the expense of a law-suit, might be rendered fully sufficient for

defraying the whole expense of justice. But not being paid to the judges

till the process was determined, they might be some incitement to the

diligence of the court in examining and deciding it. In courts which

consisted of a considerable number of judges, by proportioning the share

of each judge to the number of hours and days which he had employed in

examining the process, either in the court, or in a committee, by order of

the court, those fees might give some encouragement to the diligence of

each particular judge. Public services are never better performed, than

when their reward comes only in consequence of their being performed, and

is proportioned to the diligence employed in performing them. In the

different parliaments of France, the fees of court (called epices and

vacations) constitute the far greater part of the emoluments of the

judges. After all deductions are made, the neat salary paid by the crown

to a counsellor or judge in the parliament of Thoulouse, in rank and

dignity the second parliament of the kingdom, amounts only to 150 livres,

about £6:11s. sterling a-year. About seven years ago, that sum was in the

same place the ordinary yearly wages of a common footman. The distribution

of these epices, too, is according to the diligence of the judges. A

diligent judge gains a comfortable, though moderate revenue, by his

office; an idle one gets little more than his salary. Those parliaments

are, perhaps, in many respects, not very convenient courts of justice; but

they have never been accused; they seem never even to have been suspected

of corruption.

The fees of court seem originally to have been the principal support of

the different courts of justice in England. Each court endeavoured to draw

to itself as much business as it could, and was, upon that account,

willing to take cognizance of many suits which were not originally

intended to fall under its jurisdiction. The court of king’s bench,

instituted for the trial of criminal causes only, took cognizance of civil

suits; the plaintiff pretending that the defendant, in not doing him

justice, had been guilty of some trespass or misdemeanour. The court of

exchequer, instituted for the levying of the king’s revenue, and for

enforcing the payment of such debts only as were due to the king, took

cognizance of all other contract debts; the planitiff alleging that he

could not pay the king, because the defendant would not pay him. In

consequence of such fictions, it came, in many cases, to depend altogether

upon the parties, before what court they would choose to have their cause

tried, and each court endeavoured, by superior dispatch and impartiality,

to draw to itself as many causes as it could. The present admirable

constitution of the courts of justice in England was, perhaps, originally,

in a great measure, formed by this emulation, which anciently took place

between their respective judges: each judge endeavouring to give, in his

own court, the speediest and most effectual remedy which the law would

admit, for every sort of injustice. Originally, the courts of law gave

damages only for breach of contract. The court of chancery, as a court of

conscience, first took upon it to enforce the specific performance of

agreements. When the breach of contract consisted in the non-payment of

money, the damage sustained could be compensated in no other way than by

ordering payment, which was equivalent to a specific performance of the

agreement. In such cases, therefore, the remedy of the courts of law was

sufficient. It was not so in others. When the tenant sued his lord for

having unjustly outed him of his lease, the damages which he recovered

were by no means equivalent to the possession of the land. Such causes,

therefore, for some time, went all to the court of chancery, to the no

small loss of the courts of law. It was to draw back such causes to

themselves, that the courts of law are said to have invented the

artificial and fictitious writ of ejectment, the most effectual remedy for

an unjust outer or dispossession of land.

A stamp-duty upon the law proceedings of each particular court, to be

levied by that court, and applied towards the maintenance of the judges,

and other officers belonging to it, might in the same manner, afford a

revenue sufficient for defraying the expense of the administration of

justice, without bringing any burden upon the general revenue of the

society. The judges, indeed, might in this case, be under the temptation

of multiplying unnecessarily the proceedings upon every cause, in order to

increase, as much as possible, the produce of such a stamp-duty. It has

been the custom in modern Europe to regulate, upon most occasions, the

payment of the attorneys and clerks of court according to the number of

pages which they had occasion to write; the court, however, requiring that

each page should contain so many lines, and each line so many words. In

order to increase their payment, the attorneys and clerks have contrived

to multiply words beyond all necessity, to the corruption of the law

language of, I believe, every court of justice in Europe. A like

temptation might, perhaps, occasion a like corruption in the form of law

proceedings.

But whether the administration of justice be so contrived as to defray its

own expense, or whether the judges be maintained by fixed salaries paid to

them from some other fund, it does not seen necessary that the person or

persons entrusted with the executive power should be charged with the

management of that fund, or with the payment of those salaries. That fund

might arise from the rent of landed estates, the management of each estate

being entrusted to the particular court which was to be maintained by it.

That fund might arise even from the interest of a sum of money, the

lending out of which might, in the same manner, be entrusted to the court

which was to be maintained by it. A part, though indeed but a small part

of the salary of the judges of the court of session in Scotland, arises

from the interest of a sum of money. The necessary instability of such a

fund seems, however, to render it an improper one for the maintenance of

an institution which ought to last for ever.

The separation of the judicial from the executive power, seems originally

to have arisen from the increasing business of the society, in consequence

of its increasing improvement. The administration of justice became so

laborious and so complicated a duty, as to require the undivided attention

of the person to whom it was entrusted. The person entrusted with the

executive power, not having leisure to attend to the decision of private

causes himself, a deputy was appointed to decide them in his stead. In the

progress of the Roman greatness, the consul was too much occupied with the

political affairs of the state, to attend to the administration of

justice. A praetor, therefore, was appointed to administer it in his

stead. In the progress of the European monarchies, which were founded upon

the ruins of the Roman empire, the sovereigns and the great lords came

universally to consider the administration of justice as an office both

too laborious and too ignoble for them to execute in their own persons.

They universally, therefore, discharged themselves of it, by appointing a

deputy, bailiff or judge.

When the judicial is united to the executive power, it is scarce possible

that justice should not frequently be sacrificed to what is vulgarly

called politics. The persons entrusted with the great interests of the

state may even without any corrupt views, sometimes imagine it necessary

to sacrifice to those interests the rights of a private man. But upon the

impartial administration of justice depends the liberty of every

individual, the sense which he has of his own security. In order to make

every individual feel himself perfectly secure in the possession of every

right which belongs to him, it is not only necessary that the judicial

should be separated from the executive power, but that it should be

rendered as much as possible independent of that power. The judge should

not be liable to be removed from his office according to the caprice of

that power. The regular payment of his salary should not depend upon the

good will, or even upon the good economy of that power.

PART III. Of the Expense of public Works and public Institutions.

The third and last duty of the sovereign or commonwealth, is that of

erecting and maintaining those public institutions and those public works,

which though they may be in the highest degree advantageous to a great

society, are, however, of such a nature, that the profit could never repay

the expense to any individual, or small number of individuals; and which

it, therefore, cannot be expected that any individual, or small number of

individuals, should erect or maintain. The performance of this duty

requires, too, very different degrees of expense in the different periods

of society.

After the public institutions and public works necessary for the defence

of the society, and for the administration of justice, both of which have

already been mentioned, the other works and institutions of this kind are

chiefly for facilitating the commerce of the society, and those for

promoting the instruction of the people. The institutions for instruction

are of two kinds: those for the education of the youth, and those for the

instruction of people of all ages. The consideration of the manner in

which the expense of those different sorts of public works and

institutions may be most properly defrayed will divide this third part of

the present chapter into three different articles.

ARTICLE I.—Of the public Works and Institutions for facilitating the

Commerce of the Society.

And, first, of those which are necessary for facilitating Commerce in

general.

That the erection and maintenance of the public works which facilitate the

commerce of any country, such as good roads, bridges, navigable canals,

harbours, etc. must require very different degrees of expense in the

different periods of society, is evident without any proof. The expense of

making and maintaining the public roads of any country must evidently

increase with the annual produce of the land and labour of that country,

or with the quantity and weight of the goods which it becomes necessary to

fetch and carry upon those roads. The strength of a bridge must be suited

to the number and weight of the carriages which are likely to pass over

it. The depth and the supply of water for a navigable canal must be

proportioned to the number and tonnage of the lighters which are likely to

carry goods upon it; the extent of a harbour, to the number of the

shipping which are likely to take shelter in it.

It does not seem necessary that the expense of those public works should

be defrayed from that public revenue, as it is commonly called, of which

the collection and application are in most countries, assigned to the

executive power. The greater part of such public works may easily be so

managed, as to afford a particular revenue, sufficient for defraying their

own expense without bringing any burden upon the general revenue of the

society.

A highway, a bridge, a navigable canal, for example, may, in most cases,

be both made add maintained by a small toll upon the carriages which make

use of them; a harbour, by a moderate port-duty upon the tonnage of the

shipping which load or unload in it. The coinage, another institution for

facilitating commerce, in many countries, not only defrays its own

expense, but affords a small revenue or a seignorage to the sovereign. The

post-office, another institution for the same purpose, over and above

defraying its own expense, affords, in almost all countries, a very

considerable revenue to the sovereign.

When the carriages which pass over a highway or a bridge, and the lighters

which sail upon a navigable canal, pay toll in proportion to their weight

or their tonnage, they pay for the maintenance of those public works

exactly in proportion to the wear and tear which they occasion of them. It

seems scarce possible to invent a more equitable way of maintaining such

works. This tax or toll, too, though it is advanced by the carrier, is

finally paid by the consumer, to whom it must always be charged in the

price of the goods. As the expense of carriage, however, is very much

reduced by means of such public works, the goods, notwithstanding the

toll, come cheaper to the consumer than they could otherwise have done,

their price not being so much raised by the toll, as it is lowered by the

cheapness of the carriage. The person who finally pays this tax,

therefore, gains by the application more than he loses by the payment of

it. His payment is exactly in proportion to his gain. It is, in reality,

no more than a part of that gain which he is obliged to give up, in order

to get the rest. It seems impossible to imagine a more equitable method of

raising a tax. When the toll upon carriages of luxury, upon coaches,

post-chaises, etc. is made somewhat higher in proportion to their weight,

than upon carriages of necessary use, such as carts, waggons, etc. the

indolence and vanity of the rich is made to contribute, in a very easy

manner, to the relief of the poor, by rendering cheaper the transportation

of heavy goods to all the different parts of the country.

When high-roads, bridges, canals, etc. are in this manner made and

supported by the commerce which is carried on by means of them, they can

be made only where that commerce requires them, and, consequently, where

it is proper to make them. Their expense, too, their grandeur and

magnificence, must be suited to what that commerce can afford to pay. They

must be made, consequently, as it is proper to make them. A magnificent

high-road cannot be made through a desert country, where there is little

or no commerce, or merely because it happens to lead to the country villa

of the intendant of the province, or to that of some great lord, to whom

the intendant finds it convenient to make his court. A great bridge cannot

be thrown over a river at a place where nobody passes, or merely to

embellish the view from the windows of a neighbouring palace; things which

sometimes happen in countries, where works of this kind are carried on by

any other revenue than that which they themselves are capable of

affording.

In several different parts of Europe, the toll or lock-duty upon a canal

is the property of private persons, whose private interest obliges them to

keep up the canal. If it is not kept in tolerable order, the navigation

necessarily ceases altogether, and, along with it, the whole profit which

they can make by the tolls. If those tolls were put under the management

of commissioners, who had themselves no interest in them, they might be

less attentive to the maintenance of the works which produced them. The

canal of Languedoc cost the king of France and the province upwards of

thirteen millions of livres, which (at twenty-eight livres the mark of

silver, the value of French money in the end of the last century) amounted

to upwards of nine hundred thousand pounds sterling. When that great work

was finished, the most likely method, it was found, of keeping it in

constant repair, was to make a present of the tolls to Riquet, the

engineer who planned and conducted the work. Those tolls constitute, at

present, a very large estate to the different branches of the family of

that gentleman, who have, therefore, a great interest to keep the work in

constant repair. But had those tolls been put under the management of

commissioners, who had no such interest, they might perhaps, have been

dissipated in ornamental and unnecessary expenses, while the most

essential parts of the works were allowed to go to ruin.

The tolls for the maintenance of a highroad cannot, with any safety, be

made the property of private persons. A high-road, though entirely

neglected, does not become altogether impassable, though a canal does. The

proprietors of the tolls upon a high-road, therefore, might neglect

altogether the repair of the road, and yet continue to levy very nearly

the same tolls. It is proper, therefore, that the tolls for the

maintenance of such a work should be put under the management of

commissioners or trustees.

In Great Britain, the abuses which the trustees have committed in the

management of those tolls, have, in many cases, been very justly

complained of. At many turnpikes, it has been said, the money levied is

more than double of what is necessary for executing, in the completest

manner, the work, which is often executed in a very slovenly manner, and

sometimes not executed at all. The system of repairing the high-roads by

tolls of this kind, it must be observed, is not of very long standing. We

should not wonder, therefore, if it has not yet been brought to that

degree of perfection of which it seems capable. If mean and improper

persons are frequently appointed trustees; and if proper courts of

inspection and account have not yet been established for controlling their

conduct, and for reducing the tolls to what is barely sufficient for

executing the work to be done by them; the recency of the institution both

accounts and apologizes for those defects, of which, by the wisdom of

parliament, the greater part may, in due time, be gradually remedied.

The money levied at the different turnpikes in Great Britain, is supposed

to exceed so much what is necessary for repairing the roads, that the

savings which, with proper economy, might be made from it, have been

considered, even by some ministers, as a very great resource, which might,

at some time or another, be applied to the exigencies of the state.

Government, it has been said, by taking the management of the turnpikes

into its own hands, and by employing the soldiers, who would work for a

very small addition to their pay, could keep the roads in good order, at a

much less expense than it can be done by trustees, who have no other

workmen to employ, but such as derive their whole subsistence from their

wages. A great revenue, half a million, perhaps {Since publishing the two

first editions of this book, I have got good reasons to believe that all

the turnpike tolls levied in Great Britain do not produce a neat revenue

that amounts to half a million; a sum which, under the management of

government, would not be sufficient to keep in repair five of the

principal roads in the kingdom}, it has been pretended, might in this

manner be gained, without laying any new burden upon the people; and the

turnpike roads might be made to contribute to the general expense of the

state, in the same manner as the post-office does at present.

That a considerable revenue might be gained in this manner, I have no

doubt, though probably not near so much as the projectors of this plan

have supposed. The plan itself, however, seems liable to several very

important objections.

First, If the tolls which are levied at the turnpikes should ever be

considered as one of the resources for supplying the exigencies of the

state, they would certainly be augmented as those exigencies were supposed

to require. According to the policy of Great Britain, therefore, they

would probably he augmented very fast. The facility with which a great

revenue could be drawn from them, would probably encourage administration

to recur very frequently te this resource. Though it may, perhaps, be more

than doubtful whether half a million could by any economy be saved out of

the present tolls, it can scarcely be doubted, but that a million might be

saved out of them, if they were doubled; and perhaps two millions, if they

were tripled {I have now good reason to believe that all these conjectural

sums are by much too large.}. This great revenue, too, might be levied

without the appointment of a single new officer to collect and receive it.

But the turnpike tolls, being continually augmented in this manner,

instead of facilitating the inland commerce of the country, as at present,

would soon become a very great incumbrance upon it. The expense of

transporting all heavy goods from one part of the country to another,

would soon be so much increased, the market for all such goods,

consequently, would soon be so much narrowed, that their production would

be in a great measure discouraged, and the most important branches of the

domestic industry of the country annihilated altogether.

Secondly, A tax upon carriages, in proportion to their weight, though a

very equal tax when applied to the sole purpose of repairing the roads, is

a very unequal one when applied to any other purpose, or to supply the

common exigencies of the state. When it is applied to the sole purpose

above mentioned, each carriage is supposed to pay exactly for the wear and

tear which that carriage occasions of the roads. But when it is applied to

any other purpose, each carriage is supposed to pay for more than that

wear and tear, and contributes to the supply of some other exigency of the

state. But as the turnpike toll raises the price of goods in proportion to

their weight and not to their value, it is chiefly paid by the consumers

of coarse and bulky, not by those of precious and light commodities.

Whatever exigency of the state, therefore, this tax might be intended to

supply, that exigency would be chiefly supplied at the expense of the

poor, not of the rich; at the expense of those who are least able to

supply it, not of those who are most able.

Thirdly, If government should at any time neglect the reparation of the

high-roads, it would be still more difficult, than it is at present, to

compel the proper application of any part of the turnpike tolls. A large

revenue might thus be levied upon the people, without any part of it being

applied to the only purpose to which a revenue levied in this manner ought

ever to be applied. If the meanness and poverty of the trustees of

turnpike roads render it sometimes difficult, at present, to oblige them

to repair their wrong; their wealth and greatness would render it ten

times more so in the case which is here supposed.

In France, the funds destined for the reparation of the high-roads are

under the immediate direction of the executive power. Those funds consist,

partly in a certain number of days labour, which the country people are in

most parts of Europe obliged to give to the reparation of the highways;

and partly in such a portion of the general revenue of the state as the

king chooses to spare from his other expenses.

By the ancient law of France, as well as by that of most other parts of

Europe, the labour of the country people was under the direction of a

local or provincial magistracy, which had no immediate dependency upon the

king’s council. But, by the present practice, both the labour of the

country people, and whatever other fund the king may choose to assign for

the reparation of the high-roads in any particular province or generality,

are entirely under the management of the intendant; an officer who is

appointed and removed by the king’s council who receives his orders from

it, and is in constant correspondence with it. In the progress of

despotism, the authority of the executive power gradually absorbs that of

every other power in the state, and assumes to itself the management of

every branch of revenue which is destined for any public purpose. In

France, however, the great post-roads, the roads which make the

communication between the principal towns of the kingdom, are in general

kept in good order; and, in some provinces, are even a good deal superior

to the greater part of the turnpike roads of England. But what we call the

cross roads, that is, the far greater part of the roads in the country,

are entirely neglected, and are in many places absolutely impassable for

any heavy carriage. In some places it is even dangerous to travel on

horseback, and mules are the only conveyance which can safely be trusted.

The proud minister of an ostentatious court, may frequently take pleasure

in executing a work of splendour and magnificence, such as a great

highway, which is frequently seen by the principal nobility, whose

applauses not only flatter his vanity, but even contribute to support his

interest at court. But to execute a great number of little works, in which

nothing that can be done can make any great appearance, or excite the

smallest degree of admiration in any traveller, and which, in short, have

nothing to recommend them but their extreme utility, is a business which

appears, in every respect, too mean and paltry to merit the attention of

so great a magistrate. Under such an administration therefore, such works

are almost always entirely neglected.

In China, and in several other governments of Asia, the executive power

charges itself both with the reparation of the high-roads, and with the

maintenance of the navigable canals. In the instructions which are given

to the governor of each province, those objects, it is said, are

constantly recommended to him, and the judgment which the court forms of

his conduct is very much regulated by the attention which he appears to

have paid to this part of his instructions. This branch of public police,

accordingly, is said to be very much attended to in all those countries,

but particularly in China, where the high-roads, and still more the

navigable canals, it is pretended, exceed very much every thing of the

same kind which is known in Europe. The accounts of those works, however,

which have been transmitted to Europe, have generally been drawn up by

weak and wondering travellers; frequently by stupid and lying

missionaries. If they had been examined by more intelligent eyes, and if

the accounts of them had been reported by more faithful witnesses, they

would not, perhaps, appear to be so wonderful. The account which Bernier

gives of some works of this kind in Indostan, falls very short of what had

been reported of them by other travellers, more disposed to the marvellous

than he was. It may too, perhaps, be in those countries, as it is in

France, where the great roads, the great communications, which are likely

to be the subjects of conversation at the court and in the capital, are

attended to, and all the rest neglected. In China, besides, in Indostan,

and in several other governments of Asia, the revenue of the sovereign

arises almost altogether from a land tax or land rent, which rises or

falls with the rise and fall of the annual produce of the land. The great

interest of the sovereign, therefore, his revenue, is in such countries

necessarily and immediately connected with the cultivation of the land,

with the greatness of its produce, and with the value of its produce. But

in order to render that produce both as great and as valuable as possible,

it is necessary to procure to it as extensive a market as possible, and

consequently to establish the freest, the easiest, and the least expensive

communication between all the different parts of the country; which can be

done only by means of the best roads and the best navigable canals. But

the revenue of the sovereign does not, in any part of Europe, arise

chiefly from a land tax or land rent. In all the great kingdoms of Europe,

perhaps, the greater part of it may ultimately depend upon the produce of

the land: but that dependency is neither so immediate nor so evident. In

Europe, therefore, the sovereign does not feel himself so directly called

upon to promote the increase, both in quantity and value of the produce of

the land, or, by maintaining good roads and canals, to provide the most

extensive market for that produce. Though it should be true, therefore,

what I apprehend is not a little doubtful, that in some parts of Asia this

department of the public police is very properly managed by the executive

power, there is not the least probability that, during the present state

of things, it could be tolerably managed by that power in any part of

Europe.

Even those public works, which are of such a nature that they cannot

afford any revenue for maintaining themselves, but of which the

conveniency is nearly confined to some particular place or district, are

always better maintained by a local or provincial revenue, under the

management of a local and provincial administration, than by the general

revenue of the state, of which the executive power must always have the

management. Were the streets of London to be lighted and paved at the

expense of the treasury, is there any probability that they would be so

well lighted and paved as they are at present, or even at so small an

expense? The expense, besides, instead of being raised by a local tax upon

the inhabitants of each particular street, parish, or district in London,

would, in this case, be defrayed out of the general revenue of the state,

and would consequently be raised by a tax upon all the inhabitants of the

kingdom, of whom the greater part derive no sort of benefit from the

lighting and paving of the streets of London.

The abuses which sometimes creep into the local and provincial

administration of a local and provincial revenue, how enormous soever they

may appear, are in reality, however, almost always very trifling in

comparison of those which commonly take place in the administration and

expenditure of the revenue of a great empire. They are, besides, much more

easily corrected. Under the local or provincial administration of the

justices of the peace in Great Britain, the six days labour which the

country people are obliged to give to the reparation of the highways, is

not always, perhaps, very judiciously applied, but it is scarce ever

exacted with any circumstance of cruelty or oppression. In France, under

the administration of the intendants, the application is not always more

judicious, and the exaction is frequently the most cruel and oppressive.

Such corvees, as they are called, make one of the principal instruments of

tyranny by which those officers chastise any parish or communeaute, which

has had the misfortune to fall under their displeasure.

Of the public Works and Institution which are necessary for facilitating

particular Branches of Commerce.

The object of the public works and institutions above mentioned, is to

facilitate commerce in general. But in order to facilitate some particular

branches of it, particular institutions are necessary, which again require

a particular and extraordinary expense.

Some particular branches of commerce which are carried on with barbarous

and uncivilized nations, require extraordinary protection. An ordinary

store or counting-house could give little security to the goods of the

merchants who trade to the western coast of Africa. To defend them from

the barbarous natives, it is necessary that the place where they are

deposited should be in some measure fortified. The disorders in the

government of Indostan have been supposed to render a like precaution

necessary, even among that mild and gentle people; and it was under

pretence of securing their persons and property from violence, that both

the English and French East India companies were allowed to erect the

first forts which they possessed in that country. Among other nations,

whose vigorous government will suffer no strangers to possess any

fortified place within their territory, it may be necessary to maintain

some ambassador, minister, or consul, who may both decide, according to

their own customs, the differences arising among his own countrymen, and,

in their disputes with the natives, may by means of his public character,

interfere with more authority and afford them a more powerful protection

than they could expect from any private man. The interests of commerce

have frequently made it necessary to maintain ministers in foreign

countries, where the purposes either of war or alliance would not have

required any. The commerce of the Turkey company first occasioned the

establishment of an ordinary ambassador at Constantinople. The first

English embassies to Russia arose altogether from commercial interests.

The constant interference with those interests, necessarily occasioned

between the subjects of the different states of Europe, has probably

introduced the custom of keeping, in all neighbouring countries,

ambassadors or ministers constantly resident, even in the time of peace.

This custom, unknown to ancient times, seems not to be older than the end

of the fifteenth, or beginning of the sixteenth century; that is, than the

time when commerce first began to extend itself to the greater part of the

nations of Europe, and when they first began to attend to its interests.

It seems not unreasonable, that the extraordinary expense which the

protection of any particular branch of commerce may occasion, should be

defrayed by a moderate tax upon that particular branch; by a moderate

fine, for example, to be paid by the traders when they first enter into

it; or, what is more equal, by a particular duty of so much per cent. upon

the goods which they either import into, or export out of, the particular

countries with which it is carried on. The protection of trade, in

general, from pirates and freebooters, is said to have given occasion to

the first institution of the duties of customs. But, if it was thought

reasonable to lay a general tax upon trade, in order to defray the expense

of protecting trade in general, it should seem equally reasonable to lay a

particular tax upon a particular branch of trade, in order to defray the

extraordinary expense of protecting that branch.

The protection of trade, in general, has always been considered as

essential to the defence of the commonwealth, and, upon that account, a

necessary part of the duty of the executive power. The collection and

application of the general duties of customs, therefore, have always been

left to that power. But the protection of any particular branch of trade

is a part of the general protection of trade; a part, therefore, of the

duty of that power; and if nations always acted consistently, the

particular duties levied for the purposes of such particular protection,

should always have been left equally to its disposal. But in this respect,

as well as in many others, nations have not always acted consistently; and

in the greater part of the commercial states of Europe, particular

companies of merchants have had the address to persuade the legislature to

entrust to them the performance of this part of the duty of the sovereign,

together with all the powers which are necessarily connected with it.

These companies, though they may, perhaps, have been useful for the first

introduction of some branches of commerce, by making, at their own

expense, an experiment which the state might not think it prudent to make,

have in the long-run proved, universally, either burdensome or useless,

and have either mismanaged or confined the trade.

When those companies do not trade upon a joint stock, but are obliged to

admit any person, properly qualified, upon paying a certain fine, and

agreeing to submit to the regulations of the company, each member trading

upon his own stock, and at his own risk, they are called regulated

companies. When they trade upon a joint stock, each member sharing in the

common profit or loss, in proportion to his share in this stock, they are

called joint-stock companies. Such companies, whether regulated or

joint-stock, sometimes have, and sometimes have not, exclusive privileges.

Regulated companies resemble, in every respect, the corporation of trades,

so common in the cities and towns of all the different countries of

Europe; and are a sort of enlarged monopolies of the same kind. As no

inhabitant of a town can exercise an incorporated trade, without first

obtaining his freedom in the incorporation, so, in most cases, no subject

of the state can lawfully carry on any branch of foreign trade, for which

a regulated company is established, without first becoming a member of

that company. The monopoly is more or less strict, according as the terms

of admission are more or less difficult, and according as the directors of

the company have more or less authority, or have it more or less in their

power to manage in such a manner as to confine the greater part of the

trade to themselves and their particular friends. In the most ancient

regulated companies, the privileges of apprenticeship were the same as in

other corporations, and entitled the person who had served his time to a

member of the company, to become himself a member, either without paying

any fine, or upon paying a much smaller one than what was exacted of other

people. The usual corporation spirit, wherever the law does not restrain

it, prevails in all regulated companies. When they have been allowed to

act according to their natural genius, they have always, in order to

confine the competition to as small a number of persons as possible,

endeavoured to subject the trade to many burdensome regulations. When the

law has restrained them from doing this, they have become altogether

useless and insignificant.

The regulated companies for foreign commerce which at present subsist in

Great Britain, are the ancient merchant-adventurers company, now commonly

called the Hamburgh company, the Russia company, the Eastland company, the

Turkey company, and the African company.

The terms of admission into the Hamburgh company are now said to be quite

easy; and the directors either have it not in their power to subject the

trade to any troublesome restraint or regulations, or, at least, have not

of late exercised that power. It has not always been so. About the middle

of the last century, the fine for admission was fifty, and at one time one

hundred pounds, and the conduct of the company was said to be extremely

oppressive. In 1643, in 1645, and in 1661, the clothiers and free traders

of the west of England complained of them to parliament, as of

monopolists, who confined the trade, and oppressed the manufactures of the

country. Though those complaints produced no act of parliament, they had

probably intimidated the company so far, as to oblige them to reform their

conduct. Since that time, at least, there have been no complaints against

them. By the 10th and 11th of William III. c.6, the fine for admission

into the Russia company was reduced to five pounds; and by the 25th of

Charles II. c.7, that for admission into the Eastland company to forty

shillings; while, at the same time, Sweden, Denmark, and Norway, all the

countries on the north side of the Baltic, were exempted from their

exclusive charter. The conduct of those companies had probably given

occasion to those two acts of parliament. Before that time, Sir Josiah

Child had represented both these and the Hamburgh company as extremely

oppressive, and imputed to their bad management the low state of the

trade, which we at that time carried on to the countries comprehended

within their respective charters. But though such companies may not, in

the present times, be very oppressive, they are certainly altogether

useless. To be merely useless, indeed, is perhaps, the highest eulogy

which can ever justly be bestowed upon a regulated company; and all the

three companies above mentioned seem, in their present state, to deserve

this eulogy.

The fine for admission into the Turkey company was formerly twenty-five

pounds for all persons under twenty-six years of age, and fifty pounds for

all persons above that age. Nobody but mere merchants could be admitted; a

restriction which excluded all shop-keepers and retailers. By a bye-law,

no British manufactures could be exported to Turkey but in the general

ships of the company; and as those ships sailed always from the port of

London, this restriction confined the trade to that expensive port, and

the traders to those who lived in London and in its neighbourhood. By

another bye-law, no person living within twenty miles of London, and not

free of the city, could be admitted a member; another restriction which,

joined to the foregoing, necessarily excluded all but the freemen of

London. As the time for the loading and sailing of those general ships

depended altogether upon the directors, they could easily fill them with

their own goods, and those of their particular friends, to the exclusion

of others, who, they might pretend, had made their proposals too late. In

this state of things, therefore, this company was, in every respect, a

strict and oppressive monopoly. Those abuses gave occasion to the act of

the 26th of George II. c. 18, reducing the fine for admission to twenty

pounds for all persons, without any distinction of ages, or any

restriction, either to mere merchants, or to the freemen of London; and

granting to all such persons the liberty of exporting, from all the ports

of Great Britain, to any port in Turkey, all British goods, of which the

exportation was not prohibited, upon paying both the general duties of

customs, and the particular duties assessed for defraying the necessary

expenses of the company; and submitting, at the same time, to the lawful

authority of the British ambassador and consuls resident in Turkey, and to

the bye-laws of the company duly enacted. To prevent any oppression by

those bye-laws, it was by the same act ordained, that if any seven members

of the company conceived themselves aggrieved by any bye-law which should

be enacted after the passing of this act, they might appeal to the board

of trade and plantations (to the authority of which a committee of the

privy council has now succeeded), provided such appeal was brought within

twelve months after the bye-law was enacted; and that, if any seven

members conceived themselves aggrieved by any bye-law which had been

enacted before the passing of this act, they might bring a like appeal,

provided it was within twelve months after the day on which this act was

to take place. The experience of one year, however, may not always be

sufficient to discover to all the members of a great company the

pernicious tendency of a particular bye-law; and if several of them should

afterwards discover it, neither the board of trade, nor the committee of

council, can afford them any redress. The object, besides, of the greater

part of the bye-laws of all regulated companies, as well as of all other

corporations, is not so much to oppress those who are already members, as

to discourage others from becoming so; which may be done, not only by a

high fine, but by many other contrivances. The constant view of such

companies is always to raise the rate of their own profit as high as they

can; to keep the market, both for the goods which they export, and for

those which they import, as much understocked as they can; which can be

done only by restraining the competition, or by discouraging new

adventurers from entering into the trade. A fine, even of twenty pounds,

besides, though it may not, perhaps, be sufficient to discourage any man

from entering into the Turkey trade, with an intention to continue in it,

may be enough to discourage a speculative merchant from hazarding a single

adventure in it. In all trades, the regular established traders, even

though not incorporated, naturally combine to raise profits, which are

noway so likely to be kept, at all times, down to their proper level, as

by the occasional competition of speculative adventurers. The Turkey

trade, though in some measure laid open by this act of parliament, is

still considered by many people as very far from being altogether free.

The Turkey company contribute to maintain an ambassador and two or three

consuls, who, like other public ministers, ought to be maintained

altogether by the state, and the trade laid open to all his majesty’s

subjects. The different taxes levied by the company, for this and other

corporation purposes, might afford a revenue much more than sufficient to

enable a state to maintain such ministers.

Regulated companies, it was observed by Sir Josiah Child, though they had

frequently supported public ministers, had never maintained any forts or

garrisons in the countries to which they traded; whereas joint-stock

companies frequently had. And, in reality, the former seem to be much more

unfit for this sort of service than the latter. First, the directors of a

regulated company have no particular interest in the prosperity of the

general trade of the company, for the sake of which such forts and

garrisons are maintained. The decay of that general trade may even

frequently contribute to the advantage of their own private trade; as, by

diminishing the number of their competitors, it may enable them both to

buy cheaper, and to sell dearer. The directors of a joint-stock company,

on the contrary, having only their share in the profits which are made

upon the common stock committed to their management, have no private trade

of their own, of which the interest can be separated from that of the

general trade of the company. Their private interest is connected with the

prosperity of the general trade of the company, and with the maintenance

of the forts and garrisons which are necessary for its defence. They are

more likely, therefore, to have that continual and careful attention which

that maintenance necessarily requires. Secondly, The directors of a

joint-stock company have always the management of a large capital, the

joint stock of the company, a part of which they may frequently employ,

with propriety, in building, repairing, and maintaining such necessary

forts and garrisons. But the directors of a regulated company, having the

management of no common capital, have no other fund to employ in this way,

but the casual revenue arising from the admission fines, and from the

corporation duties imposed upon the trade of the company. Though they had

the same interest, therefore, to attend to the maintenance of such forts

and garrisons, they can seldom have the same ability to render that

attention effectual. The maintenance of a public minister, requiring

scarce any attention, and but a moderate and limited expense, is a

business much more suitable both to the temper and abilities of a

regulated company.

Long after the time of Sir Josiah Child, however, in 1750, a regulated

company was established, the present company of merchants trading to

Africa; which was expressly charged at first with the maintenance of all

the British forts and garrisons that lie between Cape Blanc and the Cape

of Good Hope, and afterwards with that of those only which lie between

Cape Rouge and the Cape of Good Hope. The act which establishes this

company (the 23rd of George II. c.51 ), seems to have had two distinct

objects in view; first, to restrain effectually the oppressive and

monopolizing spirit which is natural to the directors of a regulated

company; and, secondly, to force them, as much as possible, to give an

attention, which is not natural to them, towards the maintenance of forts

and garrisons.

For the first of these purposes, the fine for admission is limited to

forty shillings. The company is prohibited from trading in their corporate

capacity, or upon a joint stock; from borrowing money upon common seal, or

from laying any restraints upon the trade, which may be carried on freely

from all places, and by all persons being British subjects, and paying the

fine. The government is in a committee of nine persons, who meet at

London, but who are chosen annually by the freemen of the company at

London, Bristol, and Liverpool; three from each place. No committeeman can

be continued in office for more than three years together. Any

committee-man might be removed by the board of trade and plantations, now

by a committee of council, after being heard in his own defence. The

committee are forbid to export negroes from Africa, or to import any

African goods into Great Britain. But as they are charged with the

maintenance of forts and garrisons, they may, for that purpose export from

Great Britain to Africa goods and stores of different kinds. Out of the

moneys which they shall receive from the company, they are allowed a sum,

not exceeding eight hundred pounds, for the salaries of their clerks and

agents at London, Bristol, and Liverpool, the house-rent of their offices

at London, and all other expenses of management, commission, and agency,

in England. What remains of this sum, after defraying these different

expenses, they may divide among themselves, as compensation for their

trouble, in what manner they think proper. By this constitution, it might

have been expected, that the spirit of monopoly would have been

effectually restrained, and the first of these purposes sufficiently

answered. It would seem, however, that it had not. Though by the 4th of

George III. c.20, the fort of Senegal, with all its dependencies, had been

invested in the company of merchants trading to Africa, yet, in the year

following (by the 5th of George III. c.44), not only Senegal and its

dependencies, but the whole coast, from the port of Sallee, in South

Barbary, to Cape Rouge, was exempted from the jurisdiction of that

company, was vested in the crown, and the trade to it declared free to all

his majesty’s subjects. The company had been suspected of restraining the

trade and of establishing some sort of improper monopoly. It is not,

however, very easy to conceive how, under the regulations of the 23d

George II. they could do so. In the printed debates of the house of

commons, not always the most authentic records of truth, I observe,

however, that they have been accused of this. The members of the committee

of nine being all merchants, and the governors and factors in their

different forts and settlements being all dependent upon them, it is not

unlikely that the latter might have given peculiar attention to the

consignments and commissions of the former, which would establish a real

monopoly.

For the second of these purposes, the maintenance of the forts and

garrisons, an annual sum has been allotted to them by parliament,

generally about £13,000. For the proper application of this sum, the

committee is obliged to account annually to the cursitor baron of

exchequer; which account is afterwards to be laid before parliament. But

parliament, which gives so little attention to the application of

millions, is not likely to give much to that of £13,000 a-year; and the

cursitor baron of exchequer, from his profession and education, is not

likely to be profoundly skilled in the proper expense of forts and

garrisons. The captains of his majesty’s navy, indeed, or any other

commissioned officers, appointed by the board of admiralty, may inquire

into the condition of the forts and garrisons, and report their

observations to that board. But that board seems to have no direct

jurisdiction over the committee, nor any authority to correct those whose

conduct it may thus inquire into; and the captains of his majesty’s navy,

besides, are not supposed to be always deeply learned in the science of

fortification. Removal from an office, which can be enjoyed only for the

term of three years, and of which the lawful emoluments, even during that

term, are so very small, seems to be the utmost punishment to which any

committee-man is liable, for any fault, except direct malversation, or

embezzlement, either of the public money, or of that of the company; and

the fear of the punishment can never be a motive of sufficient weight to

force a continual and careful attention to a business to which he has no

other interest to attend. The committee are accused of having sent out

bricks and stones from England for the reparation of Cape Coast Castle, on

the coast of Guinea; a business for which parliament had several times

granted an extraordinary sum of money. These bricks and stones, too, which

had thus been sent upon so long a voyage, were said to have been of so bad

a quality, that it was necessary to rebuild, from the foundation, the

walls which had been repaired with them. The forts and garrisons which lie

north of Cape Rouge, are not only maintained at the expense of the state,

but are under the immediate government of the executive power; and why

those which lie south of that cape, and which, too, are, in part at least,

maintained at the expense of the state, should be under a different

government, it seems not very easy even to imagine a good reason. The

protection of the Mediterranean trade was the original purpose or pretence

of the garrisons of Gibraltar and Minorca; and the maintenance and

government of those garrisons have always been, very properly, committed,

not to the Turkey company, but to the executive power. In the extent of

its dominion consists, in a great measure, the pride and dignity of that

power; and it is not very likely to fail in attention to what is necessary

for the defence of that dominion. The garrisons at Gibraltar and Minorca,

accordingly, have never been neglected. Though Minorca has been twice

taken, and is now probably lost for ever, that disaster has never been

imputed to any neglect in the executive power. I would not, however, be

understood to insinuate, that either of those expensive garrisons was

ever, even in the smallest degree, necessary for the purpose for which

they were originally dismembered from the Spanish monarchy. That

dismemberment, perhaps, never served any other real purpose than to

alienate from England her natural ally the king of Spain, and to unite the

two principal branches of the house of Bourbon in a much stricter and more

permanent alliance than the ties of blood could ever have united them.

Joint-stock companies, established either by royal charter, or by act of

parliament, are different in several respects, not only from regulated

companies, but from private copartneries.

First, In a private copartnery, no partner without the consent of the

company, can transfer his share to another person, or introduce a new

member into the company. Each member, however, may, upon proper warning,

withdraw from the copartnery, and demand payment from them of his share of

the common stock. In a joint-stock company, on the contrary, no member can

demand payment of his share from the company; but each member can, without

their consent, transfer his share to another person, and thereby introduce

a new member. The value of a share in a joint stock is always the price

which it will bring in the market; and this may be either greater or less

in any proportion, than the sum which its owner stands credited for in the

stock of the company.

Secondly, In a private copartnery, each partner is bound for the debts

contracted by the company, to the whole extent of his fortune. In a

joint-stock company, on the contrary, each partner is bound only to the

extent of his share.

The trade of a joint-stock company is always managed by a court of

directors. This court, indeed, is frequently subject, in many respects, to

the control of a general court of proprietors. But the greater part of

these proprietors seldom pretend to understand any thing of the business

of the company; and when the spirit of faction happens not to prevail

among them, give themselves no trouble about it, but receive contentedly

such halfyearly or yearly dividend as the directors think proper to make

to them. This total exemption front trouble and front risk, beyond a

limited sum, encourages many people to become adventurers in joint-stock

companies, who would, upon no account, hazard their fortunes in any

private copartnery. Such companies, therefore, commonly draw to themselves

much greater stocks, than any private copartnery can boast of. The trading

stock of the South Sea company at one time amounted to upwards of

thirty-three millions eight hundred thousand pounds. The divided capital

of the Bank of England amounts, at present, to ten millions seven hundred

and eighty thousand pounds. The directors of such companies, however,

being the managers rather of other people’s money than of their own, it

cannot well be expected that they should watch over it with the same

anxious vigilance with which the partners in a private copartnery

frequently watch over their own. Like the stewards of a rich man, they are

apt to consider attention to small matters as not for their master’s

honour, and very easily give themselves a dispensation from having it.

Negligence and profusion, therefore, must always prevail, more or less, in

the management of the affairs of such a company. It is upon this account,

that joint-stock companies for foreign trade have seldom been able to

maintain the competition against private adventurers. They have,

accordingly, very seldom succeeded without an exclusive privilege; and

frequently have not succeeded with one. Without an exclusive privilege,

they have commonly mismanaged the trade. With an exclusive privilege, they

have both mismanaged and confined it.

The Royal African company, the predecessors of the present African

company, had an exclusive privilege by charter; but as that charter had

not been confirmed by act of parliament, the trade, in consequence of the

declaration of rights, was, soon after the Revolution, laid open to all

his majesty’s subjects. The Hudson’s Bay company are, as to their legal

rights, in the same situation as the Royal African company. Their

exclusive charter has not been confirmed by act of parliament. The South

Sea company, as long as they continued to be a trading company, had an

exclusive privilege confirmed by act of parliament; as have likewise the

present united company of merchants trading to the East Indies.

The Royal African company soon found that they could not maintain the

competition against private adventurers, whom, notwithstanding the

declaration of rights, they continued for some time to call interlopers,

and to persecute as such. In 1698, however, the private adventurers were

subjected to a duty of ten per cent. upon almost all the different

branches of their trade, to be employed by the company in the maintenance

of their forts and garrisons. But, notwithstanding this heavy tax, the

company were still unable to maintain the competition. Their stock and

credit gradually declined. In 1712, their debts had become so great, that

a particular act of parliament was thought necessary, both for their

security and for that of their creditors. It was enacted, that the

resolution of two-thirds of these creditors in number and value should

bind the rust, both with regard to the time which should be allowed to the

company for the payment of their debts, and with regard to any other

agreement which it might be thought proper to make with them concerning

those debts. In 1730, their affairs were in so great disorder, that they

were altogether incapable of maintaining their forts and garrisons, the

sole purpose and pretext of their institution. From that year till their

final dissolution, the parliament judged it necessary to allow the annual

sum of £10,000 for that purpose. In 1732, after having been for many years

losers by the trade of carrying negroes to the West Indies, they at last

resolved to give it up altogether; to sell to the private traders to

America the negroes which they purchased upon the coast; and to employ

their servants in a trade to the inland parts of Africa for gold dust,

elephants teeth, dyeing drugs, etc. But their success in this more

confined trade was not greater than in their former extensive one. Their

affairs continued to go gradually to decline, till at last, being in every

respect a bankrupt company, they were dissolved by act of parliament, and

their forts and garrisons vested in the present regulated company of

merchants trading to Africa. Before the erection of the Royal African

company, there had been three other joint-stock companies successively

established, one after another, for the African trade. They were all

equally unsuccessful. They all, however, had exclusive charters, which,

though not confirmed by act of parliament, were in those days supposed to

convey a real exclusive privilege.

The Hudson’s Bay company, before their misfortunes in the late war, had

been much more fortunate than the Royal African company. Their necessary

expense is much smaller. The whole number of people whom they maintain in

their different settlements and habitations, which they have honoured with

the name of forts, is said not to exceed a hundred and twenty persons.

This number, however, is sufficient to prepare beforehand the cargo of

furs and other goods necessary for loading their ships, which, on account

of the ice, can seldom remain above six or eight weeks in those seas. This

advantage of having a cargo ready prepared, could not, for several years,

be acquired by private adventurers; and without it there seems to be no

possibility of trading to Hudson’s Bay. The moderate capital of the

company, which, it is said, does not exceed one hundred and ten thousand

pounds, may, besides, be sufficient to enable them to engross the whole,

or almost the whole trade and surplus produce, of the miserable though

extensive country comprehended within their charter. No private

adventurers, accordingly, have ever attempted to trade to that country in

competition with them. This company, therefore, have always enjoyed an

exclusive trade, in fact, though they may have no right to it in law. Over

and above all this, the moderate capital of this company is said to be

divided among a very small number of proprietors. But a joint-stock

company, consisting of a small number of proprietors, with a moderate

capital, approaches very nearly to the nature of a private copartnery, and

may be capable of nearly the same degree of vigilance and attention. It is

not to be wondered at, therefore, if, in consequence of these different

advantages, the Hudson’s Bay company had, before the late war, been able

to carry on their trade with a considerable degree of success. It does not

seem probable, however, that their profits ever approached to what the

late Mr Dobbs imagined them. A much more sober and judicious writer, Mr

Anderson, author of the Historical and Chronological Deduction of

Commerce, very justly observes, that upon examining the accounts which Mr

Dobbs himself has given for several years together, of their exports and

imports, and upon making proper allowances for their extraordinary risk

and expense, it does not appear that their profits deserve to be envied,

or that they can much, if at all, exceed the ordinary profits of trade.

The South Sea company never had any forts or garrisons to maintain, and

therefore were entirely exempted from one great expense, to which other

joint-stock companies for foreign trade are subject; but they had an

immense capital divided among an immense number of proprietors. It was

naturally to be expected, therefore, that folly, negligence, and

profusion, should prevail in the whole management of their affairs. The

knavery and extravagance of their stock-jobbing projects are sufficiently

known, and the explication of them would be foreign to the present

subject. Their mercantile projects were not much better conducted. The

first trade which they engaged in, was that of supplying the Spanish West

Indies with negroes, of which (in consequence of what was called the

Assiento Contract granted them by the treaty of Utrecht) they had the

exclusive privilege. But as it was not expected that much profit could be

made by this trade, both the Portuguese and French companies, who had

enjoyed it upon the same terms before them, having been ruined by it, they

were allowed, as compensation, to send annually a ship of a certain

burden, to trade directly to the Spanish West Indies. Of the ten voyages

which this annual ship was allowed to make, they are said to have gained

considerably by one, that of the Royal Caroline, in 1731; and to have been

losers, more or less, by almost all the rest. Their ill success was

imputed, by their factors and agents, to the extortion and oppression of

the Spanish government; but was, perhaps, principally owing to the

profusion and depredations of those very factors and agents; some of whom

are said to have acquired great fortunes, even in one year. In 1734, the

company petitioned the king, that they might be allowed to dispose of the

trade and tonnage of their annual ship, on account of the little profit

which they made by it, and to accept of such equivalent as they could

obtain from the king of Spain.

In 1724, this company had undertaken the whale fishery. Of this, indeed,

they had no monopoly; but as long as they carried it on, no other British

subjects appear to have engaged in it. Of the eight voyages which their

ships made to Greenland, they were gainers by one, and losers by all the

rest. After their eighth and last voyage, when they had sold their ships,

stores, and utensils, they found that their whole loss upon this branch,

capital and interest included, amounted to upwards of £237,000.

In 1722, this company petitioned the parliament to be allowed to divide

their immense capital of more than thirty-three millions eight hundred

thousand pounds, the whole of which had been lent to government, into two

equal parts; the one half, or upwards of £16,900,000, to be put upon the

same footing with other government annuities, and not to be subject to the

debts contracted, or losses incurred, by the directors of the company, in

the prosecution of their mercantile projects; the other half to remain as

before, a trading stock, and to be subject to those debts and losses. The

petition was too reasonable not to be granted. In 1733, they again

petitioned the parliament, that three-fourths of their trading stock might

be turned into annuity stock, and only one-fourth remain as trading stock,

or exposed to the hazards arising from the bad management of their

directors. Both their annuity and trading stocks had, by this time, been

reduced more than two millions each, by several different payments from

government; so that this fourth amounted only to £3,662,784:8:6. In 1748,

all the demands of the company upon the king of Spain, in consequence of

the assiento contract, were, by the treaty of Aix-la-Chapelle, given up

for what was supposed an equivalent. An end was put to their trade with

the Spanish West Indies; the remainder of their trading stock was turned

into an annuity stock; and the company ceased, in every respect, to be a

trading company.

It ought to be observed, that in the trade which the South Sea company

carried on by means of their annual ship, the only trade by which it ever

was expected that they could make any considerable profit, they were not

without competitors, either in the foreign or in the home market. At

Carthagena, Porto Bello, and La Vera Cruz, they had to encounter the

competition of the Spanish merchants, who brought from Cadiz to those

markets European goods, of the same kind with the outward cargo of their

ship; and in England they had to encounter that of the English merchants,

who imported from Cadiz goods of the Spanish West Indies, of the same kind

with the inward cargo. The goods, both of the Spanish and English

merchants, indeed, were, perhaps, subject to higher duties. But the loss

occasioned by the negligence, profusion, and malversation of the servants

of the company, had probably been a tax much heavier than all those

duties. That a joint-stock company should be able to carry on successfully

any branch of foreign trade, when private adventurers can come into any

sort of open and fair competition with them, seems contrary to all

experience.

The old English East India company was established in 1600, by a charter

from Queen Elizabeth. In the first twelve voyages which they fitted out

for India, they appear to have traded as a regulated company, with

separate stocks, though only in the general ships of the company. In 1612,

they united into a joint stock. Their charter was exclusive, and, though

not confirmed by act of parliament, was in those days supposed to convey a

real exclusive privilege. For many years, therefore, they were not much

disturbed by interlopers. Their capital, which never exceeded £744,000,

and of which £50 was a share, was not so exorbitant, nor their dealings so

extensive, as to afford either a pretext for gross negligence and

profusion, or a cover to gross malversation. Notwithstanding some

extraordinary losses, occasioned partly by the malice of the Dutch East

India company, and partly by other accidents, they carried on for many

years a successful trade. But in process of time, when the principles of

liberty were better understood, it became every day more and more

doubtful, how far a royal charter, not confirmed by act of parliament,

could convey an exclusive privilege. Upon this question the decisions of

the courts of justice were not uniform, but varied with the authority of

government, and the humours of the times. Interlopers multiplied upon

them; and towards the end of the reign of Charles II., through the whole

of that of James II., and during a part of that of William III., reduced

them to great distress. In 1698, a proposal was made to parliament, of

advancing two millions to government, at eight per cent. provided the

subscribers were erected into a new East India company, with exclusive

privileges. The old East India company offered seven hundred thousand

pounds, nearly the amount of their capital, at four per cent. upon the

same conditions. But such was at that time the state of public credit,

that it was more convenient for government to borrow two millions at eight

per cent. than seven hundred thousand pounds at four. The proposal of the

new subscribers was accepted, and a new East India company established in

consequence. The old East India company, however, had a right to continue

their trade till 1701. They had, at the same time, in the name of their

treasurer, subscribed very artfully three hundred and fifteen thousand

pounds into the stock of the new. By a negligence in the expression of the

act of parliament, which vested the East India trade in the subscribers to

this loan of two millions, it did not appear evident that they were all

obliged to unite into a joint stock. A few private traders, whose

subscriptions amounted only to seven thousand two hundred pounds, insisted

upon the privilege of trading separately upon their own stocks, and at

their own risks. The old East India company had a right to a separate

trade upon their own stock till 1701; and they had likewise, both before

and after that period, a right, like that or other private traders, to a

separate trade upon the £315,000, which they had subscribed into the stock

of the new company. The competition of the two companies with the private

traders, and with one another, is said to have well nigh ruined both. Upon

a subsequent occasion, in 1750, when a proposal was made to parliament for

putting the trade under the management of a regulated company, and thereby

laying it in some measure open, the East India company, in opposition to

this proposal, represented, in very strong terms, what had been, at this

time, the miserable effects, as they thought them, of this competition. In

India, they said, it raised the price of goods so high, that they were not

worth the buying; and in England, by overstocking the market, it sunk

their price so low, that no profit could be made by them. That by a more

plentiful supply, to the great advantage and conveniency of the public, it

must have reduced very much the price of India goods in the English

market, cannot well be doubted; but that it should have raised very much

their price in the Indian market, seems not very probable, as all the

extraordinary demand which that competition could occasion must have been

but as a drop of water in the immense ocean of Indian commerce. The

increase of demand, besides, though in the beginning it may sometimes

raise the price of goods, never fails to lower it in the long-run. It

encourages production, and thereby increases the competition of the

producers, who, in order to undersell one another, have recourse to new

divisions or labour and new improvements of art, which might never

otherwise have been thought of. The miserable effects of which the company

complained, were the cheapness of consumption, and the encouragement given

to production; precisely the two effects which it is the great business of

political economy to promote. The competition, however, of which they gave

this doleful account, had not been allowed to be of long continuance. In

1702, the two companies were, in some measure, united by an indenture

tripartite, to which the queen was the third party; and in 1708, they were

by act of parliament, perfectly consolidated into one company, by their

present name of the United Company of Merchants trading to the East

Indies. Into this act it was thought worth while to insert a clause,

allowing the separate traders to continue their trade till Michaelmas

1711; but at the same time empowering the directors, upon three years

notice, to redeem their little capital of seven thousand two hundred

pounds, and thereby to convert the whole stock of the company into a joint

stock. By the same act, the capital of the company, in consequence of a

new loan to government, was augmented from two millions to three millions

two hundred thousand pounds. In 1743, the company advanced another million

to government. But this million being raised, not by a call upon the

proprietors, but by selling annuities and contracting bond-debts, it did

not augment the stock upon which the proprietors could claim a dividend.

It augmented, however, their trading stock, it being equally liable with

the other three millions two hundred thousand pounds, to the losses

sustained, and debts contracted by the company in prosecution of their

mercantile projects. From 1708, or at least from 1711, this company, being

delivered from all competitors, and fully established in the monopoly of

the English commerce to the East Indies, carried on a successful trade,

and from their profits, made annually a moderate dividend to their

proprietors. During the French war, which began in 1741, the ambition of

Mr Dupleix, the French governor of Pondicherry, involved them in the wars

of the Carnatic, and in the politics of the Indian princes. After many

signal successes, and equally signal losses, they at last lost Madras, at

that time their principal settlement in India. It was restored to them by

the treaty of Aix-la-Chapelle; and, about this time the spirit of war and

conquest seems to have taken possession of their servants in India, and

never since to have left them. During the French war, which began in 1755,

their arms partook of the general good fortune of those of Great Britain.

They defended Madras, took Pondicherry, recovered Calcutta, and acquired

the revenues of a rich and extensive territory, amounting, it was then

said, to upwards of three millions a-year. They remained for several years

in quiet possession of this revenue; but in 1767, administration laid

claim to their territorial acquisitions, and the revenue arising from

them, as of right belonging to the crown; and the company, in compensation

for this claim, agreed to pay to government £400,000 a-year. They had,

before this, gradually augmented their dividend from about six to ten per

cent.; that is, upon their capital of three millions two hundred thousand

pounds, they had increased it by £128,000, or had raised it from one

hundred and ninety-two thousand to three hundred and twenty thousand

pounds a-year. They were attempting about this time to raise it still

further, to twelve and a-half per cent., which would have made their

annual payments to their proprietors equal to what they had agreed to pay

annually to government, or to £400,000 a-year. But during the two years in

which their agreement with government was to take place, they were

restrained from any further increase of dividend by two successive acts of

parliament, of which the object was to enable them to make a speedier

progress in the payment of their debts, which were at this time estimated

at upwards of six or seven millions sterling. In 1769, they renewed their

agreement with government for five years more, and stipulated, that during

the course of that period, they should be allowed gradually to increase

their dividend to twelve and a-half per cent; never increasing it,

however, more than one per cent. in one year. This increase of dividend,

therefore, when it had risen to its utmost height, could augment their

annual payments, to their proprietors and government together, but by

£680,000, beyond what they had been before their late territorial

acquisitions. What the gross revenue of those territorial acquisitions was

supposed to amount to, has already been mentioned; and by an account

brought by the Cruttenden East Indiaman in 1769, the neat revenue, clear

of all deductions and military charges, was stated at two millions

forty-eight thousand seven hundred and forty-seven pounds. They were said,

at the same time, to possess another revenue, arising partly from lands,

but chiefly from the customs established at their different settlements,

amounting to £439,000. The profits of their trade, too, according to the

evidence of their chairman before the house of commons, amounted, at this

time, to at least £400,000 a-year; according to that of their accountant,

to at least £500,000; according to the lowest account, at least equal to

the highest dividend that was to be paid to their proprietors. So great a

revenue might certainly have afforded an augmentation of £680,000 in their

annual payments; and, at the same time, have left a large sinking fund,

sufficient for the speedy reduction of their debt. In 1773, however, their

debts, instead of being reduced, were augmented by an arrear to the

treasury in the payment of the four hundred thousand pounds; by another to

the custom-house for duties unpaid; by a large debt to the bank, for money

borrowed; and by a fourth, for bills drawn upon them from India, and

wantonly accepted, to the amount of upwards of twelve hundred thousand

pounds. The distress which these accumulated claims brought upon them,

obliged them not only to reduce all at once their dividend to six per

cent. but to throw themselves upon the mercy of govermnent, and to

supplicate, first, a release from the further payment of the stipulated

£400,000 a-year; and, secondly, a loan of fourteen hundred thousand, to

save them from immediate bankruptcy. The great increase of their fortune

had, it seems, only served to furnish their servants with a pretext for

greater profusion, and a cover for greater malversation, than in

proportion even to that increase of fortune. The conduct of their servants

in India, and the general state of their affairs both in India and in

Europe, became the subject of a parliamentary inquiry: in consequence of

which, several very important alterations were made in the constitution of

their government, both at home and abroad. In India, their principal

settlements or Madras, Bombay, and Calcutta, which had before been

altogether independent of one another, were subjected to a

governor-general, assisted by a council of four assessors, parliament

assuming to itself the first nomination of this governor and council, who

were to reside at Calcutta; that city having now become, what Madras was

before, the most important of the English settlements in India. The court

of the Mayor of Calcutta, originally instituted for the trial of

mercantile causes, which arose in the city and neighbourhood, had

gradually extended its jurisdiction with the extension of the empire. It

was now reduced and confined to the original purpose of its institution.

Instead of it, a new supreme court of judicature was established,

consisting of a chief justice and three judges, to be appointed by the

crown. In Europe, the qualification necessary to entitle a proprietor to

vote at their general courts was raised, from five hundred pounds, the

original price of a share in the stock of the company, to a thousand

pounds. In order to vote upon this qualification, too, it was declared

necessary, that he should have possessed it, if acquired by his own

purchase, and not by inheritance, for at least one year, instead of six

months, the term requisite before. The court of twenty-four directors had

before been chosen annually; but it was now enacted, that each director

should, for the future, be chosen for four years; six of them, however, to

go out of office by rotation every year, and not be capable of being

re-chosen at the election of the six new directors for the ensuing year.

In consequence of these alterations, the courts, both of the proprietors

and directors, it was expected, would be likely to act with more dignity

and steadiness than they had usually done before. But it seems impossible,

by any alterations, to render those courts, in any respect, fit to govern,

or even to share in the government of a great empire; because the greater

part of their members must always have too little interest in the

prosperity of that empire, to give any serious attention to what may

promote it. Frequently a man of great, sometimes even a man of small

fortune, is willing to purchase a thousand pounds share in India stock,

merely for the influence which he expects to aquire by a vote in the court

of proprietors. It gives him a share, though not in the plunder, yet in

the appointment of the plunderers of India; the court of directors, though

they make that appointment, being necessarily more or less under the

influence of the proprietors, who not only elect those directors, but

sometimes over-rule the appointments of their servants in India. Provided

he can enjoy this influence for a few years, and thereby provide for a

certain number of his friends, he frequently cares little about the

dividend, or even about the value of the stock upon which his vote is

founded. About the prosperity of the great empire, in the government of

which that vote gives him a share, he seldom cares at all. No other

sovereigns ever were, or, from the nature of things, ever could be, so

perfectly indifferent about the happiness or misery of their subjects, the

improvement or waste of their dominions, the glory or disgrace of their

administration, as, from irresistible moral causes, the greater part of

the proprietors of such a mercantile company are, and necessarily must be.

This indifference, too, was more likely to be increased than diminished by

some of the new regulations which were made in consequence of the

parliamentary inquiry. By a resolution of the house of commons, for

example, it was declared, that when the £1,400,000 lent to the company by

government, should be paid, and their bond-debts be reduced to £1,500,000,

they might then, and not till then, divide eight per cent. upon their

capital; and that whatever remained of their revenues and neat profits at

home should be divided into four parts; three of them to be paid into the

exchequer for the use of the public, and the fourth to be reserved as a

fund, either for the further reduction of their bond-debts, or for the

discharge of other contingent exigencies which the company might labour

under. But if the company were bad stewards and bad sovereigns, when the

whole of their neat revenue and profits belonged to themselves, and were

at their own disposal, they were surely not likely to be better when

three-fourths of them were to belong to other people, and the other

fourth, though to be laid out for the benefit of the company, yet to be so

under the inspection and with the approbation of other people.

It might be more agreeable to the company, that their own servants and

dependants should have either the pleasure of wasting, or the profit of

embezzling, whatever surplus might remain, after paying the proposed

dividend of eight per cent. than that it should come into the hands of a

set of people with whom those resolutions could scarce fail to set them in

some measure at variance. The interest of those servants and dependants

might so far predominate in the court of proprietors, as sometimes to

dispose it to support the authors of depredations which had been committed

in direct violation of its own authority. With the majority of

proprietors, the support even of the authority of their own court might

sometimes be a matter of less consequence than the support of those who

had set that authority at defiance.

The regulations of 1773, accordingly, did not put an end to the disorder

of the company’s government in India. Notwithstanding that, during a

momentary fit of good conduct, they had at one time collected into the

treasury of Calcutta more than £3,000,000 sterling; notwithstanding that

they had afterwards extended either their dominion or their depredations

over a vast accession of some of the richest and most fertile countries in

India, all was wasted and destroyed. They found themselves altogether

unprepared to stop or resist the incursion of Hyder Ali; and in

consequence of those disorders, the company is now (1784) in greater

distress than ever; and, in order to prevent immediate bankruptcy, is once

more reduced to supplicate the assistance of government. Different plans

have been proposed by the different parties in parliament for the better

management of its affairs; and all those plans seem to agree in supposing,

what was indeed always abundantly evident, that it is altogether unfit to

govern its territorial possessions. Even the company itself seems to be

convinced of its own incapacity so far, and seems, upon that account

willing to give them up to government.

With the right of possessing forts and garrisons in distant and barbarous

countries is necessarily connected the right of making peace and war in

those countries. The joint-stock companies, which have had the one right,

have constantly exercised the other, and have frequently had it expressly

conferred upon them. How unjustly, how capriciously, how cruelly, they

have commonly exercised it, is too well known from recent experience.

When a company of merchants undertake, at their own risk and expense, to

establish a new trade with some remote and barbarous nation, it may not be

unreasonable to incorporate them into a joint-stock company, and to grant

them, in case of their success, a monopoly of the trade for a certain

number of years. It is the easiest and most natural way in which the state

can recompense them for hazarding a dangerous and expensive experiment, of

which the public is afterwards to reap the benefit. A temporary monopoly

of this kind may be vindicated, upon the same principles upon which a like

monopoly of a new machine is granted to its inventor, and that of a new

book to its author. But upon the expiration of the term, the monopoly

ought certainly to determine; the forts and garrisons, if it was found

necessary to establish any, to be taken into the hands of government,

their value to be paid to the company, and the trade to be laid open to

all the subjects of the state. By a perpetual monopoly, all the other

subjects of the state are taxed very absurdly in two different ways:

first, by the high price of goods, which, in the case of a free trade,

they could buy much cheaper; and, secondly, by their total exclusion from

a branch of business which it might be both convenient and profitable for

many of them to carry on. It is for the most worthless of all purposes,

too, that they are taxed in this manner. It is merely to enable the

company to support the negligence, profusion, and malversation of their

own servants, whose disorderly conduct seldom allows the dividend of the

company to exceed the ordinary rate of profit in trades which are

altogether free, and very frequently makes a fall even a good deal short

of that rate. Without a monopoly, however, a joint-stock company, it would

appear from experience, cannot long carry on any branch of foreign trade.

To buy in one market, in order to sell with profit in another, when there

are many competitors in both; to watch over, not only the occasional

variations in the demand, but the much greater and more frequent

variations in the competition, or in the supply which that demand is

likely to get from other people; and to suit with dexterity and judgment

both the quantity and quality of each assortment of goods to all these

circumstances, is a species of warfare, of which the operations are

continually changing, and which can scarce ever be conducted successfully,

without such an unremitting exertion of vigilance and attention as cannot

long be expected from the directors of a joint-stock company. The East

India company, upon the redemption of their funds, and the expiration of

their exclusive privilege, have a right, by act of parliament, to continue

a corporation with a joint stock, and to trade in their corporate capacity

to the East Indies, in common with the rest of their fellow subjects. But

in this situation, the superior vigilance and attention of a private

adventurer would, in all probability, soon make them weary of the trade.

An eminent French author, of great knowledge in matters of political

economy, the Abbe Morellet, gives a list of fifty-five joint-stock

companies for foreign trade, which have been established in different

parts of Europe since the year 1600, and which, according to him, have all

failed from mismanagement, notwithstanding they had exclusive privileges.

He has been misinformed with regard to the history of two or three of

them, which were not joint-stock companies and have not failed. But, in

compensation, there have been several joint-stock companies which have

failed, and which he has omitted.

The only trades which it seems possible for a joint-stock company to carry

on successfully, without an exclusive privilege, are those, of which all

the operations are capable of being reduced to what is called a routine,

or to such a uniformity of method as admits of little or no variation. Of

this kind is, first, the banking trade; secondly, the trade of insurance

from fire and from sea risk, and capture in time of war; thirdly, the

trade of making and maintaining a navigable cut or canal; and, fourthly,

the similar trade of bringing water for the supply of a great city.

Though the principles of the banking trade may appear somewhat abstruse,

the practice is capable of being reduced to strict rules. To depart upon

any occasion from those rules, in consequence of some flattering

speculation of extraordinary gain, is almost always extremely dangerous

and frequently fatal to the banking company which attempts it. But the

constitution of joint-stock companies renders them in general, more

tenacious of established rules than any private copartnery. Such

companies, therefore, seem extremely well fitted for this trade. The

principal banking companies in Europe, accordingly, are joint-stock

companies, many of which manage their trade very successfully without any

exclusive privilege. The bank of England has no other exclusive privilege,

except that no other banking company in England shall consist of more than

six persons. The two banks of Edinburgh are joint-stock companies, without

any exclusive privilege.

The value of the risk, either from fire, or from loss by sea, or by

capture, though it cannot, perhaps, be calculated very exactly, admits,

however, of such a gross estimation, as renders it, in some degree,

reducible to strict rule and method. The trade of insurance, therefore,

may be carried on successfully by a joint-stock company, without any

exclusive privilege. Neither the London Assurance, nor the Royal Exchange

Assurance companies have any such privilege.

When a navigable cut or canal has been once made, the management of it

becomes quite simple and easy, and it is reducible to strict rule and

method. Even the making of it is so, as it may be contracted for with

undertakers, at so much a mile, and so much a lock. The same thing may be

said of a canal, an aqueduct, or a great pipe for bringing water to supply

a great city. Such under-takings, therefore, may be, and accordingly

frequently are, very successfully managed by joint-stock companies,

without any exclusive privilege.

To establish a joint-stock company, however, for any undertaking, merely

because such a company might be capable of managing it successfully; or,

to exempt a particular set of dealers from some of the general laws which

take place with regard to all their neighbours, merely because they might

be capable of thriving, if they had such an exemption, would certainly not

be reasonable. To render such an establishment perfectly reasonable, with

the circumstance of being reducible to strict rule and method, two other

circumstances ought to concur. First, it ought to appear with the clearest

evidence, that the undertaking is of greater and more general utility than

the greater part of common trades; and, secondly, that it requires a

greater capital than can easily be collected into a private copartnery. If

a moderate capital were sufficient, the great utility of the undertaking

would not be a sufficient reason for establishing a joint-stock company;

because, in this case, the demand for what it was to produce, would

readily and easily be supplied by private adventurers. In the four trades

above mentioned, both those circumstances concur.

The great and general utility of the banking trade, when prudently

managed, has been fully explained in the second book of this Inquiry. But

a public bank, which is to support public credit, and, upon particular

emergencies, to advance to government the whole produce of a tax, to the

amount, perhaps, of several millions, a year or two before it comes in,

requires a greater capital than can easily be collected into any private

copartnery.

The trade of insurance gives great security to the fortunes of private

people, and, by dividing among a great many that loss which would ruin an

individual, makes it fall light and easy upon the whole society. In order

to give this security, however, it is necessary that the insurers should

have a very large capital. Before the establishment of the two joint-stock

companies for insurance in London, a list, it is said, was laid before the

attorney-general, of one hundred and fifty private usurers, who had failed

in the course of a few years.

That navigable cuts and canals, and the works which are sometimes

necessary for supplying a great city with water, are of great and general

utility, while, at the same time, they frequently require a greater

expense than suits the fortunes of private people, is sufficiently

obvious.

Except the four trades above mentioned, I have not been able to recollect

any other, in which all the three circumstances requisite for rendering

reasonable the establishment of a joint-stock company concur. The English

copper company of London, the lead-smelting company, the glass-grinding

company, have not even the pretext of any great or singular utility in the

object which they pursue; nor does the pursuit of that object seem to

require any expense unsuitable to the fortunes of many private men.

Whether the trade which those companies carry on, is reducible to such

strict rule and method as to render it fit for the management of a

joint-stock company, or whether they have any reason to boast of their

extraordinary profits, I do not pretend to know. The mine-adventurers

company has been long ago bankrupt. A share in the stock of the British

Linen company of Edinburgh sells, at present, very much below par, though

less so than it did some years ago. The joint-stock companies, which are

established for the public-spirited purpose of promoting some particular

manufacture, over and above managing their own affairs ill, to the

diminution of the general stock of the society, can, in other respects,

scarce ever fail to do more harm than good. Notwithstanding the most

upright intentions, the unavoidable partiality of their directors to

particular branches of the manufacture, of which the undertakers mislead

and impose upon them, is a real discouragement to the rest, and

necessarily breaks, more or less, that natural proportion which would

otherwise establish itself between judicious industry and profit, and

which, to the general industry of the country, is of all encouragements

the greatest and the most effectual.

ART. II.—Of the Expense of the Institution for the Education of

Youth.

The institutions for the education of the youth may, in the same manner,

furnish a revenue sufficient for defraying their own expense. The fee or

honorary, which the scholar pays to the master, naturally constitutes a

revenue of this kind.

Even where the reward of the master does not arise altogether from this

natural revenue, it still is not necessary that it should be derived from

that general revenue of the society, of which the collection and

application are, in most countries, assigned to the executive power.

Through the greater part of Europe, accordingly, the endowment of schools

and colleges makes either no charge upon that general revenue, or but a

very small one. It everywhere arises chiefly from some local or provincial

revenue, from the rent of some landed estate, or from the interest of some

sum of money, allotted and put under the management of trustees for this

particular purpose, sometimes by the sovereign himself, and sometimes by

some private donor.