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Of Police - Adam Smith, Glasgow Edition of the Works and Correspondence Vol. 5 Lectures On Jurisprudence [1762]

Edition used:

Lectures On Jurisprudence, ed. R.. L. Meek, D. D. Raphael and P. G. Stein, vol. V of the Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1982).

Part of: The Glasgow Edition of the Works and Correspondence of Adam Smith, 7 vols.

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


Of Police

Police is the second general division of jurisprudence. The name is French, and is originaly derived from the Greek πολιτεια, which properly signified the policey of civil government, but now it only means the regulation of the inferiour parts of government, viz. cleanliness, security, and cheapness or plenty. The two former, to witt, the proper method of carrying dirt from the streets, and the execution of justice, so far as it regards regulations for preventing crimes or the method of keeping a city guard, tho’ usefull, are too mean to be considered in a general discourse of this kind. An observation or two before we proceed to the third particular is all that is necessary.

We observe then, that in cities where there is most police and the greatest number of regulations concerning it, there is not always the greatest security. In Paris the regulations concerning police are so numerous as not to be comprehended in several volumes. | In London there are only two or three simple regulations. Yet in Paris scarce a night passes without somebody being killed, while in London, which is a larger city, there are scarce three or four in a year. On this account one would be apt to think that the more police there is the less security, but this is not the cause. In England as well as in France, during the time of the feudal government and as late as Queen Elizabeth’s reign, great numbers of retainers were kept idle about the noblemen’s houses, to keep the tenants in awe. These retainers, when turned out, had no other way of getting their subsistance but by committing robberies and living on plunder, which occasioned the greatest disorder. A remain of the feudal manners, still preserved in France, gives occasion to the difference. The nobility at Paris keep far more menial servants than ours, who are often turned out on their own account or thro’ the caprice of their masters, and, being in the most indigent circumstances, are forced to committ the most dreadfull crimes. In Glasgow, where almost no body has more than one servant, there are fewer capital crimes than in Edinburgh. In Glasgow there is not one in several years, but not a year passes in Edinburgh without some such disorders. Upon this principle, therefore, it is not so much the police that prevents the commission of crimes as the having as few persons as possible to live upon others. Nothing tends so much to corrupt mankind as dependencey, while independencey still encreases the honesty of the people. | The establishment of commerce and manufactures, which brings about this independencey, is the best police for preventing crimes. The common people have better wages in this way than in any other, and in consequence of this a general probity of manners takes place thro’ the whole country. No body will be so mad as to expose himself upon the highway, when he can make better bread in an honest and industrious manner. The nobility of Paris and London are no doubt much upon a level, but the common people of the former, being much more dependent, are not to be compared with these of the latter, and for the same reason the commonality in Scotland differ from these in England, tho’ the nobility too are much upon a level.

Thus far for the two first particulars which come under the general division of police. In the following part of this discourse we are to confine ourselves to the consideration of cheapness or plenty, or, which is the same thing, the most proper way of procuring wealth and abundance. Cheapness is in fact the same thing with plenty. | It is only on account of the plenty of water that it is so cheap as to be got for the lifting, and on account of the scarcity of diamonds (for their real use seems not yet to be discovered) that they are so dear. To ascertain the most proper method of obtaining these conveniences, it will be necessary to shew first wherein opulence consists, and still previous to this we must consider what are the natural wants of mankind which are to be supplied; and if we differ from common opinions we shall at least give the reasons for our non–conformity.

Nature produces for every animal every thing that is sufficient to support it without having recourse to the improvement of the original production. Food, cloaths, and lodging are all the wants of any animal whatever, and most of the animal creation are sufficiently provided for by nature in all these wants to which their condition is liable. Such is the delicacey of man alone, that no object is produced to his liking. He finds that in every thing there is need of improvement. Tho’ the practice of savages shews that his food needs no preparation, | yet being acquainted with fire he finds that it can be rendered more wholesome and easily digested, and thereby may preserve him from many diseases which are very violent among them. But it is not only his food that requires this improvement. His puny constitution is hurt also by the intemperature of the air he breathes in, which tho’ not very capable of improvement must be brought to a proper temperament for his body and an artificial atmosphere prepared for this purpose. The human skin cannot endure the inclemencies of the weather, and even in these countries where the air is warmer than the natural warmth of the constitution, and where they have no need of cloaths, it must be stained and painted to be able to endure the hardships of the sun and rain. In general, however, the necessities of man are not so great but that they can be supplied by the unassisted labour of the individual. All the above necessities every one can provide for himself, such as animals and fruits for his food, and skins for his cloathing.

As the delicacey of a man’s body requires much greater provision | than that of any other animal, the same or rather the much greater delicacey of his mind requires a still greater provision, to which all the different arts <are> subservient. Man is the only animal who is possessed of such a nicety that the very colour of an object hurts him. Among different objects a different division or arrangement of them pleases. The taste of beauty, which consists chiefly in the three following particulars, proper variety, easy connection, and simple order, is the cause of all this niceness. Nothing without variety pleases us: a long uniform wall is a dissagreable object. Too much variety, such as the crowded objects of a parterre, is also dissagreable. Uniformity tires the mind; too much variety, too far encreased, occasions an overgreat dissipation of it. Easy connection also renders objects agreable; when we see no reason for the contiguity of the parts, when they are without any natural connection, when they have neither a proper resemblance nor contrast, they never fail of being dissagreable. If simplicity of order be not observed, so as that the whole may be easily comprehended, it hurts the delicacey of our taste.

| Again, imitation and painting render objects more agreable. To see upon a plain, trees, forrests, and other such representations is an agreable surprize to the mind. Variety of objects also renders them agreable. What we are every day accustomed to does but very indifferently affect us. Gems and diamonds are on this account much esteemed by us. In like manner our pinchbeck and many of our toys were so much valued by the Indians, that in bartering their jewels and diamonds for them they thought they had made by much the better bargain.

These qualities, which are the ground of preference and which give occasion to pleasure and pain, are the cause of many insignificant demands which we by no means stand in need of. The whole industry of human life is employed not in procuring the supply of our three humble necessities, food, cloaths, and lodging, but in procuring the conveniences of it according to the nicety and [and] delicacey of our taste. To improve and multiply the materials which are the principal objects of our necessities, gives occasion to all the variety of the arts.

| Agriculture, of which the principal object is the supply of food, introduces not only the tilling of the ground, but also the planting of trees, the producing of flax, hemp, and inumerable other things of a similar kind. By these again are introduced different manufactures, which are so very capable of improvement. The mettals dug from the bowells of the earth furnish materials for tools, by which many of these arts are practised. Commerce and navigation are also subservient to the same purposes by collecting the produce of these several arts. By these again other subsidiary <arts> are occasioned. Writing, to record the multitude of transactions, and geometry, which serves many usefull purposes. Law and government, too, seem to propose no other object but this, they secure the individual who has enlarged his property, that he may peaceably enjoy the fruits of it. By law and government all the different arts flourish, and that inequality of fortune to which they give occasion is sufficiently preserved. By law and government domestic peace is enjoyed and security from the forreign invader. Wisdom and virtue too derive their lustre from supplying these necessities. | For as the establishment of law and government is the highest effort of human prudence and wisdom, the causes cannot have a different influence from what the effects have. Besides, it is by the wisdom and probity of those with whom we live that a propriety of conduct is pointed out to us, and the proper means of attaining it. Their valour defends us, their benevolence supplies us, the hungry is fed, the naked is cloathed, by the exertion of these divine qualities. Thus according to the above representation, all things are subservient to supplying our threefold necessities.

In an uncivilized nation, and where labour is undivided, every thing is provided for that the natural wants of mankind require; yet when the nation is cultivated and labour divided a more liberal provision is allotted them; and it is on this account that a common day labourer in Brittain has more luxury in his way of living than an Indian sovereign. The woolen coat he wears requires very considerable preperations; the wool gatherer, the dresser, the spinster, the dyer, the weaver, the taylor, and many more must all be employed befor the labourer is cloathed. The tools by which all this is effectuated employ a still greater number of artists, the loom maker, miln wright, ropemaker, not to mention the bricklayer, the treefeller, the miner, the smelter, | the forger, the smith, etc. Besides his dress, consider also his houshold furniture, his coarse linens, his shoes, his coals dug out of the earth or brought by sea, his kitchen utensils and different plates, those that are employed in providing his bread and beer, the sower, the brewer, the reaper, the baker, his glass windows and the art required in preparing <?them>, without which our northern climate could hardly be inhabited. When we examine the conveniences of the day labourer, we find that even in his easy simple manner he cannot be accomodated without the assistance of a great number, and yet this is nothing compared with the luxury of the nobility. An European prince, however, does not so far exceed a commoner as the latter does the chief of a savage nation. It is easy to conceive how the rich can be so well provided for, as they can direct so many hands to serve their purposes. They are supported by the industry of the peasant. In a savage nation every one enjoys the whole fruit of his own labour, yet their indigence is greater than any where.

It is the division of labour which encreases the opulence of a country. | In a civilized society, tho’ there is indeed a division of labour there is no equal division, for there are a good many who work none at all. The division of opulence is not according to the work. The opulence of the merchant is greater than that of all his clerks, tho’ he works less; and they again have six times more than an equal number of artizans, who are more employed. The artizan who works at his ease within doors has far more than the poor labourer who trudges up and down without intermission. Thus he who, as it were, bears the burthen of society has the fewest advantages.

We shall next shew how this division of labour occasions a multiplication of the product, or, which is the same thing, how opulence arises from it. In order to this let us observe the effect of the division of labour in some manufactures. If all the parts of a pin were made by one man, if the same person dug the ore, <s>melted it, and split the wire, it would take him a whole year to make one pin, and this pin must therefore be sold at the expence of his maintenance for that time, which taking <it> aty a moderate computation would at least be six pounds for a pin. If the labour is so far divided that the wire is ready made, he will not make above 20 per day, which allowing 10 pence for wages makes the pin twopence.11 The pin maker therefore divides the labour among a great number of different persons, | the cutting, pointing, heading, and gilding are all seperate professions. Two or three are employed in making the head, one or two in putting it on, and so on, to the putting them in the paper, being in all eighteen. By this division every one can with great ease make 2000 a day. The same is the case in the linen and woolen manufactures. Some arts, however, there are which will not admit of this division, and therefore they cannot keep pace with other manufactures and arts. Such are farming and grazing. This is entirely owing to the returns of the seasons, by which one man can only be for a short time employed in any one operation. In countries where the season<s> do not make such alterations it is otherwise. In France the corn is better and cheaper than in England. But our toys, which have no dependance on the climate and in which labour can be divided, are far superiour to those of France.

When labour is thus divided, and so much done by one man in proportion, the surplus above their maintenance is considerable, which each man can exchange for a fourth of what he could have done if he had finished it alone.12 By this means the commodity becomes far cheaper, and the labour dearer. It is to be observed that the price of labour by no means determines the opulence of society. | It is only when a little labour can procure abundance. On this account a rich nation, when it’s manufactures are greatly improven, may have an advantage over a poor one by underselling it. The cotton and other commodities from China would undersell any made with us, were it not for the long carriage and other taxes that are laid upon them.

We must not judge of the dearness of labour by the money or coin that is paid for it. One penny in some places will purchase as much as eighteenpence in others. In the country of the Mogul, where the days wages are only twopence, labour is better rewarded than in some of our sugar islands, where men are almost starving with four or five shillings a day. Coin therefore can be no proper estimate. Further, tho’ human labour be employed both in the multiplication of commodities and of money, yet the chance of success is not equal. A farmer by the proper cultivation of an acre is sure of encrease, but the miner may work again and again without success. Commodities must therefore multiply in greater proportion than gold and silver.

But again, the quantity of work which is done by the division of labour is much encreased by the three following articles, first, encrease of dexterity, secondly, the saving of time lost in passing from one species of labour to another, | and thirdly, the invention of machinery. Of these in order.

1st. When any kind of labour is reduced to a simple operation, a frequencey of action insensibly fits men to a dexterity in accomplishing it. A country smith not accustomed to make nails will work very hard for 3 or 400 a day, and these too very bad. But a boy used to it will easily make 2000, and these incomparably better; yet the improvement of dexterity in this very complex manufacture can never be equal to that in others. A nail maker changes postures, blows the bellows, changes tools, etca. and therefore the quantity produced cannot be so great as in manufactures of pins and buttons, where the work is reduced to simple operations.

2dly. There is always sometime lost in passing from one species of labour to another, even when they are pretty much connected. When a person has been reading he must rest a little before he begin to write. This is still more the case with the country weaver, who is possessed of a little farm; he must saunter a little when he goes from one to the other. This in general is the case with the country labourers; they are always the greatest saunterers, the country employments of sowing, | reaping, threshing being so different. They naturaly acquire a habit of indolence and are seldom very dextrous. By fixing every man to his own operation, and preventing the shifting from one piece of labour to another, the quantity of work must be greatly encreased.

3dly. The quantity of work is greatly encreased by the invention of machines. Two men and three horses will do more in a day with the plow than 20 men without it. The miller and his servant will do more with the water miln than a dozen with the hand miln, tho’ it too be a machine. The division of labour no doubt first gave occasion to the invention of machines. If a man’s business in life is the performance of two or three things, the bent of his mind will be to find out the cleverest way of doing it, but when the force of his mind is divided it cannot be expected that he should be so successfull. We have not nor cannot have any compleat history of the invention of machines, because most of them are at first imperfect, and receive gradual improvements and encrease of powers from those who use them. It was probably a farmer who made the original plow, tho’ the improvements might be owing to some other. Some miserable slave who had perhaps been employed for a long time in grinding corn between two stones probably first found out the method of supporting the upper stone | by a spindle. A miln wright perhaps found out the way of turning the spindle with the hand. But he who contrived that the outer wheel should go by water was a philosopher, whose business it is to do nothing, but observe every thing. They must have extensive views of things, who as in this case bring in the assistance of new powers not formerly applied. Whether he was an artizan, or whatever he was who first executed this, he must have been a philosopher; fire machines, wind and water–milns, were the invention of philosophers, whose dexterity too is encreased by a division of labour. They all divide themselves, according to the different branches, into the mechanical, moral, political, chymical philosophers. Thus we have shewn how the quantity of labour is encreased by machines.

We have already shewn that the division of labour is the immediate cause of opulence. We shall next consider what gives occasion to the division of labour, or from what principles in our nature it can best be accounted for. We cannot imagine this to be an effect of human prudence. It was indeed made a law by Sesostratis13 that every man should follow the employment of his father. But this is by no means suitable to the dispositions of human nature | and can never long take place. Every one is fond of being a gentleman, be his father what he would. They who are strongest and in the bustle of society have got above the weak, must have as many under as to defend them in their station; from necessary causes, therefore, there must be as many in the lower stations as there is occasion for. There must be as many up as down, and no division can be overstretched. But it is not this which gives occasion to the division of labour. It flows from a direct propensity in human nature for one man to barter with another, which is common to all men and known to no other animal. No body ever saw a dog, the most sagacious animal, exchange a bone with his companion for another. Two greyhounds, indeed, in runing down a hare, seem to have something like compact or agreement betwixt them, but this is nothing else but a concurrence of the same passions. If an animal intends to truck, as it were, or gain any thing from man, it is by it’s fondness and kindness. Man, in the same manner, works on the selflove of his fellows, by setting before them a sufficient temptation to get what he wants; the language of this disposition is, give me what I want, and you shall have what you want. It is not from benevolence, as the dogs, but from selflove that man expects any thing. | The brewer and the baker serve us not from benevolence but from selflove. No man but a beggar depends on benevolence, and even they would die in a week were their entire dependance upon it.

By this disposition to barter and exchange the surplus of ones labour for that of other people, in a nation of hunters, if any one has a talent for making bows and arrows better than his neighbours he will at first make presents of them, and in return get presents of their game. By continuing this practice he will live better than before and will have no occasion to provide for himself, as the surplus of his own labour does it more effectualy.

This disposition to barter is by no means founded upon different genius and talents. It is doubtfull if there be any such difference at all; at least it is far less than we are aware of. Genius is more the effect of the division of labour than the latter is of it. The difference between a porter and a philosopher in the first four or five years of their life is properly speaking none at all. When they come to be employed in different occupations, their views widen and differ by degrees. As every one has this natural disposition to truck and barter | by which he provides for himself, there is no need for such different endowments, and accordingly among savages there is always the greatest uniformity of character. In other animals of the same species we find a much greater difference than betwixt the philosopher and porter antecedent to custom. The mastiff and spaniel have quite different powers, but tho’ these animals are possessed of talents they cannot, as it were, bring them into the common stock and exchange their productions, and therefore their different talents are of no use to them.

It is quite otherwise among mankind; they can exchange their several productions according to their quantity or quality. The philosopher and the porter are both of advantage to each other. The porter is of use in carrying burthens for the philosopher, and in his turn he burns his coals cheaper by the philosopher’s invention of the fire machine. Thus we have shewn that different genius is not the foundation of this disposition to barter, which is the cause of the division of labour. The real foundation of it is that principle to perswade which so much prevails in human nature. When any arguments are offered to perswade, it is always expected that they should have their proper effect. If a person asserts any thing about the moon, tho’ it should not be true, | he will feel a kind of uneasiness in being contradicted, and would be very glad that the person he is endeavouring to perswade should be of the same way of thinking with himself. We ought then mainly to cultivate the power of perswasion, and indeed we do so without intending it. Since a whole life is spent in the exercise of it, a ready method of bargaining with each other must undoubtedly be attained. As was before observed, no animal can do this but by gaining the favour of those whom they would perswade. Sometimes, indeed, animals seem to act in concert, but there never is any thing like bargain among them. Monkeys when they rob a garden throw the fruit from one to another till they deposit it in the hoard, but there is always a scramble about the division of the booty, and usually some of them are killed.

From all that has been said we may observe that the division of labour must always be proportioned to the extent of commerce. If ten people only want a certain commodity, the manufacture of it will never be so divided as if a thousand wanted it. Again, the division of labour, in order to opulence, becomes always more perfect by the easy method of conveyance in a country. If the road be infested with robbers, if it be deep and conveyance not easy, the progress of commerce must be stopped. | Since the mending of roads in England 40 or 50 years ago, its opulence has increased extremely. Water carriage is another convenience, as by it 300 ton can be conveyed at the expence of the tare and wear of the vessel and the wages of 5 or 6 men, and that too in a shorter time than by 100 waggons, which will take 6 horses and a man each. Thus the division of labour is the great cause of the increase of public opulence, which is always proportioned to the industry of the people, and not to the quantity of gold and silver as is foolishly imagined, and the industry of the people is always proportioned to the division of labour.

Having thus shewn what gives occasion to public opulence, in farther considering this subject we propose to consider:

1st. What circumstances regulate the price of commodities.

2dly. Money in two different views, first as the measure of value and then as the instrument of commerce.

3dly. The history of commerce, in which shall be taken notice of the causes of the slow progress of opulence both in ancient and modern times, | which causes shall be shewn either to affect agriculture or arts and manufactures. Lastly, the effects of a commercial spirit on the government, temper, and manners of a people, whether good or bad, and the proper remedies. Of these in order.

Of every commodity there are two different prices, which tho’ apparently independent will be found to have a necessary connection, viz. the natural price and the market price. Both of these are regulated by certain circumstances. When men are induced to a certain species of industry rather than any other, they must make as much by the employment as will maintain them while they are employed. An arrow maker must be sure to exchange as much surplus product as will maintain him during as long time as he took to make them. But upon this principle in the different trades there must be a considerable difference, because some trades, such as these of the taylor and weaver, are not learned by casual observation and a little experience, like that of the day–labourer, but take a great deal of time and pains | before they are acquired. When a person begins them, for a considerable time his work is of no use to his master or any other person, and therefore his master must be compensated both for what maintains him and for what he spoils. When he comes to exercise his trade, he must be repaid what he has laid out, both of expences and of apprentice fee. And as his life is not worth above 10 or 12 years purchase at most, his wages must be high on account of the risque he runs of not having the whole made up. But again, there are many arts which require more extensive knowledge than is to be got during the time of an apprenticeship. A blacksmith and weaver may learn their business well enough without any previous knowledge of mathematics. But a watch maker must be acquainted with several sciences in order to understand his business well, such as arithmetic, geometry, and astronomy with regard to the equation of time, and their wages must be high in order to compensate the additional expence. In general, this is the case in all the liberal arts, because after they have spent a long time in their education it is ten to one if ever they make any thing by it. Their wages therefore must be higher in proportion to the expence they have been at, | the risk of not living long enough, and the risk of not having dexterity enough to manage their business. Among the lawyers there is not one among twenty that attains such knowledge and dexterity in his business as enables him to get back the expences of his education, and many of them never make the price of their gown, as we say. The fees of lawyers are so far from being extravagant, as they are generally thought, that they are rather low in proportion. It is the eminence of the profession, and not the money made by it, that is the temptation for applying to it, and the dignity of that rank is to be considered as a part of what is made by it.

In the same manner we shall find that the price of gold and silver is not extravagant if we consider it in this view, for in a gold or silver mine there is a great chance of missing it altogether. If we suppose an equal number of men employed in raising corn and digging silver, the former will make more than the latter, because perhaps of forty or fifty employed in a mine only twenty make any thing at all. Some of the rest may indeed make fortunes, but every cornman succeeds in his undertakings, so that upon the whole there is more made this way than the other. | It is the ideal acquisition which is the principal temptation in a mine. A man then has the natural price of his labour when it is sufficient to maintain him during the time of labour, to defray the expence of education, and to compensate the risk of not living long enough and of not succeeding in the business. When a man has this, there is sufficient encouragement to the labourer and the commodity will be cultivated in proportion to the demand.

The market price of goods is regulated by quite other circumstances. When a buyer comes to the market, he never asks of the seller what expences he has been at in producing them. The regulation of the market price of goods depends on the three following articles:

1st. The demand or need for the commodity. There is no demand for a thing of little use; it is not a rational object of desire.

2dly. The abundance or scarceity of the commodity in proportion to the need of it. If the commodity be scarce, the price is raised, but if the quantity be more than is sufficient to supply the demand, the price falls. Thus it is that diamonds and other precious stones are dear, | while iron, which is much more usefull, is so many times cheaper, tho’ this depends principally on the last cause, viz.

3dly. The riches or poverty of those who demand. When there is not enough produced to serve every body, the fortune of the bidders is the only regulation of the price.

The story which is told of the merchant and the carrier in the desarts of Arabia is an evidence of this. The merchant gave 10,000 ducats for a certain quantity of water. His fortune here regulated the price, for if he had not had them, he could not have given them, and if his fortune had been less, the water would have been cheaper. When the commodity is scarce, the seller must be content with that degree of wealth which they have who buy it. The case is much the same as in an auction; if two persons have an equal fondness for a book, he whose fortune is largest will carry it. Hence things that are very rare go always to rich countries. The King of France only could purchase that large diamond of so many thousand pounds value. Upon this principle every thing is dearer or cheaper according as it is the purchase of a higher or lower sett of people.

Utensils of gold are comeatible only by persons in certain circumstances.

These of silver fall to another sett of people | and their prices are regulated by what the majority can give. The prices of corn and beer are regulated by what all the world can give, and on this account the wages of the day–labourer have a great influence upon the price of corn. When the price of corn rises, wages rise also, and vice versa. When the quantity of corn falls short, as in a sea voyage, it always occasions a famine and then the price becomes enormous. Corn then becomes the purchase of a higher sett of people, and the lower must live on turneeps and potatoes.

Thus we have considered the two prices, the natural and the market price, which every commodity is supposed to have. We observed before that however seemingly independant they appear to be, they are necessarily connected. This will appear from the following considerations. If the market price of any commodity is very great, and the labour very highly rewarded, the market is prodigiously crouded with it, greater quantities of it are produced, and it can be sold to the inferiour ranks of people. If for every ten diamonds there were ten thousand, they would become the purchase of every body, because they would become very cheap, and would sink to their natural price. Again, when the market is overstocked and there is not enough got for the labour of the manufacture, no body will bind to it; they cannot have a subsistence by it, because the market price falls then below the natural price. | It is alledged that as the price of corn sink<s>, the wages of the labourer should sink, as he is then better rewarded. It is true that if provisions were long cheap, as more people would flock to this labour where the wages are high, thro’ this concurrence of labour the wages would come down. But we find that when the price of corn is doubled the wages continue the same as before, because the labourers have no other way to turn themselves. The same is the case with menial servants.

From the above we may observe that whatever police tends to raise the market price above the natural, tends to diminish public opulence. Dearness and scarceity are in effect the same thing. When commodities are in abundance, they can be sold to the inferiour ranks of people, who can afford to give less for them, but not if they are scarce. So far therefore as goods are a conveniencey to the society, the society lives less happy when only the few can possess them. Whatever therefore keeps goods above their natural price for a permanencey, diminishes <a> nations opulence. Such are:

| 1st. All taxes upon industry, upon leather, and upon shoes, which people grudge most, upon salt, beer, or whatever is the strong drink of the country, for no country wants some kind of it. Man is an anxious animal and must have his care swept off by something that can exhilarate the spirits. It is alledged that this tax upon beer is an artificial security against drunkeness, but if we attend to it, <?we shall find> that it by no means prevents it. In countries where strong liquors are cheap, as in France and Spain, the people are generally sober. But in northern countries, where they are dear, they do not get drunk with beer but with spirituous liquors. No body presses his friend to a glass of beer unless he choose it.

2dly. Monopolies also destroy public opulence. The price of the monopolized goods is raised above what is sufficient for encourageing the labour. When only a certain person or persons have the liberty of importing a commodity, there is less of it imported than would otherwise be: the price of it is therefore higher, and fewer people supported by it. It is the concurrence of different labourer[er]s which always brings down the price. In monopolies such as the Hudson’s Bay and East India companies | the people engaged in them make the price what they please.

3dly. Exclusive priviledges of corporations have the same effect. The butchers and bakers raise the price of their goods as they please, because none but their own corporation is allowed to sell in the market, and therefore their meat must be taken, whether good or not. On this account there is always required a magistrate to fix the prices. For any free commodity, such as broad cloth, there is no occasion for this, but it is necessary with bakers, who may agree among themselves to make the quantity and price what they please. Even a magistrate is not a good enough expedient for this, as he must always settle the price at the outside, else the remedy must be worse than the disease, for no body would apply to these businesses and a famine would ensue. On this account bakers and brewers have always profitable trades.

As what rises the market price above the natural one diminishes public opulence, so what brings it down below it has the same effect.

It is only upon manufactures to be exported that this can usualy be done by any law or regulation, such as the bounty allowed by the government upon coarse linen, by which it becomes exportable | when under 12 pence a yard. The public paying a great part of the price, it can be sold cheaper to forreigners than what is sufficient for encourageing the labour. In the same manner, by the bounty of five shillings upon the quarter of corn when sold under 40 shillings, as the public pays an eight part of the price, it can be sold just so much cheaper at a forreign market. By this bounty the commodity is rendered more comeatible, and a greater quantity of it produced, but then it breaks what may be called the natural balance of industry. The disposition to apply to the production of that commodity is not proportioned to the natural cause of the demand, but to both that and the annexed bounty. But14 has not only this effect with regard to the particular commodity, but likewise people are called from other productions which are less encouraged, and thus the balance of industry is broken.

Again, after the ages of hunting and fishing, in which provisions were the immediate produce of their labour, when manufactures were introduced, nothing could be produced without a great deal of time. It was a long time before the weaver could carry to the market the cloth which he bought in flax. Every trade therefore requires a stock of food, cloaths, and lodging to carry it on.

| Suppose then, as is realy the case in every country, that there is in store a stock of food, cloaths, and lodging, the number of people that are employed must be in proportion to it. If the price of one commodity is sunk below it’s natural price, while another is above it, there is a smaller quantity of the stored stock left to support the whole, on account of the natural connection of all trades in the stock. By allowing bounties to me15 you take away the stock from the rest. This has been the real consequence of the corn bounty.

The price of corn being sunk, the rent of the farms sinks also, yet the bounty upon corn, which was laid on at the time of the taxes, was intended to raise the rent, and had the effect for sometime, because the tenants were assured of a price for their corn both at home and abroad. But tho’ the effects of the bounty encourageing agriculture brought down the price of corn, yet it raised the grass–farms, for the more corn the less grass.

The price of grass being raised, butcher’s meat, in consequence of its dependance upon it, must be raised also. So that if the price of corn is diminished, the price of other commodities is necessarily raised. The price of corn has indeed fallen from 42 to 35, but the price of hay has risen from 25 to near 50 shillings. | As the price of hay has risen, horses are not so easily kept, and therefore the price of carriage has risen also. But whatever encreases the price of carriage diminishes plenty in the market. Upon the whole, therefore, it is by far the best police to leave things to their natural course, and allow no bounties, nor impose taxes on commodities. Thus we have shewn what circumstances regulate the price of commodities, which was the first thing proposed.

We come now to the second particular, to consider money, first as the measure of value and then as the medium of permutation or exchange.

When people deal in many species of goods, one of them must be considered as the measure of value. Suppose there were only three commodities, sheep, corn, and oxen, we can easily remember them comparatively. But if we have a hundered different commodities, there are ninety nine values of each arising from a comparison with each of the rest. As these cannot easily be remembered, men naturaly fall upon one of them to be a common standard with which they compare all the rest. This will naturaly at first be the commodity with which they are best acquainted. Accordingly we find that black cattle and sheep were the standard in Homer’s time. | The armour of one of his heroes was worth nine oxen, and that of another worth an hundered. Black cattle was the common standard in ancient Greece. In Italy, and particularly in Tuscany, every thing was compared with sheep, as this was their principal commodity. This is what may be called the natural measure of value.

In like manner there were natural measures of quantity, such as fathoms, cubits, inches, taken from the proportions of the human body, once in use with every nation. But by a little observation they found that one man’s arm was longer or shorter than anothers, and that one was not to be compared with the other, and therefore wise men who attended to these things would endeavour to fix upon some more accurate measure, that equal quantities might be of equal values. This method became absolutely necessary when people came to deal in many commodities and in great quantities of them. Tho’ an inch was altogether inconsiderable when their dealings were confined to a few yards, more accuracey was required when they came to deal in some thousands. We find, in countries where their dealings are small, the remains of this inaccurracey. | The cast of the balance is nothing thought of in their coarse commodities.

Since, then, there must of necessity be a common standard of which equal quantities should be of equal values, mettals in general seemed best to answer this purpose, and of these the value of gold and silver could best be ascertained. The temper of steel cannot be precisely known, but what degree of alloy is in gold and silver can be exactly found out. Gold and silver were therefore fixed upon as the most exact standard to compare goods with, and were therefore considered as the most proper measure of value.

In consequence of gold and silver becoming the measure of value, it came also to be the instrument of commerce. It soon became necessary that goods should be carried to market, and they could never be cleverly exchanged unless the measure of value was also the instrument of commerce. In the age of shepherds it might be no great inconvenience that cattle should be the medium of exchange, as the expence of maintaining them was nothing, the whole country being considered as one great common. But when lands came to be divided and the division of labour introduced, this custom would be productive of very considerable inconveniences. The butcher and shoemaker might at times have no use for one another’s commodities. | The farmer very often cannot maintain upon his ground a cow more than he has; it would be a very great hardship on a Glasgow merchant to give him a cow for one of his commodities. To remedy this, these materials which were before considered as the measure of value came also to be the instrument of exchange. Gold and silver had all advantages; they can be kept without expence, they do not waste, and they are very portable. Gold and silver however do not derive their whole utility from being the medium of exchange. Tho’ they never had been used as money, they are more valuable than any other mettals. They have a superiour beauty, are capable of a finer polish, and are more proper for making any instrument except these with an edge. For all these reasons gold and silver came to be the proper measure of value and the instrument of exchange. But in order to render them more proper for these purposes, it was necessary that both their weight and their fineness should be ascertained. At first their balances were not very accurate and therefore frauds were easily committed; however, this was remedied by degrees.

| But common business would not allow of the experiments which are necessary to fix precisely the degree of fineness; tho’ with a great quantity of alloy, they are to appearance good. It was necessary therefore, to facilitate exchange, that they should fall upon some expedient to ascertain with accuracey both weight and fineness. Coinage most effectualy secures both these. The public, finding how much it would tend to facilitate commerce, put a stamp upon certain pieces, that whoever saw them might have the public faith that they were of a certain weight and fineness; and this would be what was at first marked upon the coin, as being of most importance.

Accordingly the coins of every country appear to have been16 the names of the weights corresponding to them, and they contained the denomination they expressed. The British pound sterling seems originaly to have been a pound weight of pure silver. As gold could be easily exchanged into silver, the latter came always to be the standard or measure of value. As there cannot be two standards, and in the greater part of purchases silver is necessary, we never say a man is worth so many guineas, but always pounds.

It is to be observed that the measure of | quantity has always encreased, while that of value has decreased. The British pound has now decreased to less than a third of its original value, which was sixty three shillings, while the measure of quantity has considerably encreased. The reason is that the interest of the government requires this. It is the interest of the baker and the brewer to make the measure of quantity as little as possible, and therefore there are inspectors appointed who, when it is brought down, always settle it a little farther up. All our measures which were taken from the Roman foot, fathom, and inch, are now a great deal more. In like manner what was called Troy weight, from Troy, a town in Champaigne where then the greatest commerce was carried on, gave rise to a heavier weight, because there was usualy given the cast of the balance along with it, and as this render’d dealings inaccurate, it was necessary that this cast of the balance should be determined. Accordingly, averdupois (avoir du poise) or heavy weight was settled at 13 ounces, but as this was a number not easily divided, it was settled at 16, the ounces being made proportioned to it.

Thus the measure of quantity has been encreasing. We shall next shew how the coin decreased.

| When the government takes the coinage into its own hands, the expences naturaly fall upon it, and if any private man coins, he must lessen the value or have nothing but his labour for his pains; and besides, as no man’s authority can be so great as to make his coin pass in common payments, he must forge the stamp of the government. As the government took the task upon themselves, they would endeavour, in order to prevent frauds, to prevent counterfeiting the king’s coin and encroaching on his prerogative. Besides, as the public faith was engaged, it was necessary to prevent all kinds of fraud, because it was likewise necessary that people should be obliged to receive the coin according to its denomination, and that if any refused it after a legal tender of payment was made, the debtor should be free and the creditor guilty of felony.17

In rude and barbarous periods the government was laid under many temptations to debase the coin or, according to the Mint language, to raise it. When, for instance, on any important occasion, such as paying of debts, or of soldiers, it has occasion for two millions, but has no more than one, it calls in the coin of the country and, mixing with it a greater quantity of alloy, makes it come out 2 millions, as like as possible to what it was before. Many operations of this kind have | [have] been performed in every country. But England, from the freedom which it has almost uninterruptedly enjoyed, has been less troubled with this than any other nation. There it has only fallen to one third. But in many other countries it is not a fiftieth of its original value.

The inconveniences of such practices are very great. The debasement of the coin hinders commerce or at least greatly embarrasses it. A new calculation must be made, how much of the new coin must be given for so much of the old. People are disposed to keep their goods from the market, as they know not what they will get for them. Thus a stagnation of commerce is occasioned. Besides, the debasing of the coin takes away the public faith. No body will lend any sum to the government, or bargain with it, as he perhaps may be paid with one half of it. As there is a fraud committed by the government, every subject must be allowed to do the same and pay his debts with the new money, which is less than he owed. This scheme, however, serves the purpose for some small time, on the following account. The use of money is twofold, for the payment of debts and the purchasing of commodities. When the coin is debased, a debt of twenty shillings is then paid with ten, but if the new coin be carried to a forreign market | it will give nothing but the old value. All day labourers are paid in the new coin. The necessities of life must be sold at what the greater part of people can give, and consequently their price will for sometime be diminished. However, the king himself loses much, tho’ he gains in the meantime. His doubling it is no doubt a present advantage, but it necessarily diminishes his revenue, because all his taxes are paid in the new coin. To prevent this loss the French, and indeed all other nations on the like occasion, when they double the money by edict without recoinage, make the augmentation after the money is called in and before it goes out, and a diminution is made before next term of payment.18 A diminution has always a worse effect than an augmentation. An augmentation injures the creditor, a diminution the debtor, who should always be favoured. If I bind for ten pounds and be obliged to pay fifteen, common industry must be excessively embarrassed.

The coins of most countries are either of copper, silver, or gold. We are obliged even to receive payment in sixpences, which sometimes is the occasion of confusion and loss of time. The different coins are regulated not by the caprice of the government, but by the market price of gold and silver, and according to this the proportion of gold and silver <is> settled.

| This proportion sometimes varies a little. The guineas sometime ago were valued at 22 shillings, and at other times they have been at 20. The gold rises more in proportion in Brittain than any where else, and as it makes the silver of somewhat less value it is the cause of a real inconvenience. As silver buys more gold abroad than at home, by sending abroad silver they bring gold in return, which buys more silver here than it does abroad. By this means a kind of trade is made of it, the gold coin encreasing and the value19 diminishing. Sometime ago a proposal was given in to remedy this, but it was thought so complex a case that they resolved for that time not to meddle with it. We have shewn what rendered money the measure of value, but it is to be observed that labour, not money, is the true measure of value. National opulence consists therefore in the quantity of goods and the facility of barter. This shall next be considered.

The more money that is necessary to circulate the goods of any country, the more is the quantity of goods diminished. Suppose that the whole stock of Scotland in corn, cattle, money, etca. | amounts to 20 millions, and if one million in cash is necessary to carry on the circulation, there will be in the country only 19 millions of food, cloaths, and lodging, and the people have less by one million than they would have if there were no occasion for this expedient of money. It is therefore evident that the poverty of any country encreases as the money encreases, money being a dead stock in itself, supplying no convenience of life. Money in this respect may be compared to the high roads of a country, which bear neither corn nor grass themselves but circulate all the corn and grass in the country. If we could find any way to save the ground taken up by highways, we would encrease considerably the quantity of commodities and have more to carry to the market. In the same manner as <?the value of> a piece of ground does not lye in the number of highways that run thro’ it, so the riches of a country does not consist in the quantity of money employed to circulate commerce, but in the great abundance of the necessaries of life. If we could therefore fall on a method to send the half of our money abroad to be converted into goods, and at the same time supply the channel of circulation at home, we would greatly encrease the wealth of the country. | Hence the beneficial effects of the erection of banks and paper credit. It is easy to shew that the erection of banks is of advantage to the commerce of a country. Suppose as above that the whole stock of Scotland amounted to 20 millions, and that 2 millions are employed in the circulation of it, the other 18 are in commodities. If then the banks in Scotland issued out notes to the value of 2 millions, and reserved among them 300,000£ to answer immediate demands, there would be one million seven hundered thousand pounds circulating in cash, and 2 millions of paper money besides. The natural circulation however is 2 million, and the channel will receive no more. What is over will be sent abroad to bring home materials for food, cloaths, and lodging. That this has a tendencey to enrich a nation may be seen at first sight, for whatever commodities are imported, just so much is added to the opulence of the country.20 The only objection against paper money is that it drains the country of gold and silver, that bank notes will not circulate in a forreign mercat, and that forreign commodities must be paid in specie. This is no doubt the case. | But if we consider attentively we will find that this is no real hurt to a country. The opulence of a nation does not consist in the quantity of coin but in the abundance of the commodities which are necessary for life, and whatever tends to encrease these tends so far to encrease the riches of a country.

Money is fit for none of the necessaries of life; it cannot of itself afford either food, cloaths, or lodging, but must be exchanged for commodities fit for these purposes. If all the coin of the nation were exported and our commodities proportionably encreased, it might be recalled on any sudden emergencey sooner than any one could well imagine. Goods will always bring in money, and as long as the stock of commodities in any nation encreases, they have it in their power to augment the quantity of coin, if thought necessary, by exporting their stock to forreign countries. This reasoning is confirmed by matter of fact. We find that the commerce of every nation in Europe has been prodigiously encreased by the erection of banks. In this country every body is sensible of their good effects, and our American colonies, where most of the commerce is carried on by paper circulation, are in a most flourishing condition.

| What first gave occasion to the establishment of banks was to facilitate the transferrence of money. This at this day is the only design of the bank at Amsterdam. When commerce is carried to a high pitch, the delivery of gold and silver consumes a great deal of time. When a great merchant had ten or 20 thousand pound to give away, he would take almost a week to count it out in guineas and shillings. A bank bill prevents all this trouble. Before the erection of the bank[s] at Amsterdam, the method the merchants fell upon to lessen the trouble of counting out great quantities of cash was to keep certain sums put up in bags to answer immediate demands. In this case you must either trust the honesty of the merchant or you must take the trouble of counting it over. If you trusted his fidelity, frequent frauds would be committed; if not, your trouble was not lessened. The inconveniences arising from this gave occasion to the erection of that bank, of which the whole transaction is this: you deposit a certain sum of money there, and the bank gives you a bill to that extent. This money is secure, and you never call for it, because the bill will generally | sell above par, and it is therefore an advantage to yourself to let it ly. The bank has no office for payment, because there is seldom any payment demanded. In this manner the bank of Amsterdam has a good effect in facilitating commerce, and it’s notes circulate only there. The credit of that city is not in the least endangered by the bank. In 1701,21 when the French army was at Utrecht, a sudden demand was made upon it, and all Holland was alarmed with the expected fatal consequences, but no danger ensued. Before this a suspicion prevailed that the bankers had fallen into a custom of trading with the money, but at that time it was found that a great quantity of the money had been scorched by a fire that happened in the neighbourhood about 50 years before that. This plainly shewed that there was no ground for the suspicion, and the credit of the bank remained unhurt. It has been affirmed by some that the bank of Amsterdam has always money in its stores to the amount of 80 or 90 millions. But this has lately been shown by an ingenious gentleman to be false, from a comparison of the trade of London and Amsterdam.22

| The constitution of the banks in Brittain differs widely from that in Amsterdam. Here there is only about a sixth part of the stock kept in readiness for answering demands, and the rest is employed in trade. Originaly they were on the same footing with the Amsterdam bank, but the directors taking liberty to send out money, they gradually came to their present situation.

The ruin of a bank would not be so dangerous as is commonly imagined. Suppose all the money in Scotland was issued by one bank and that it became bankrupt, a very few individuals would be ruined by it, but not many, because the quantity of cash or paper that people have in their hands bears no proportion to their wealth. Neither would the wealth of the whole country be much hurt by it, because the 100 part of the riches of a country does not consist in money. The only method to prevent the bad consequence arising from the ruin of banks is to give monopolies to none, but to encourage the erection of as many as possible. When several are established in a country, a mutual jealousy prevails, they are continualy making unexpected runs on one another. This puts them on their guard and obliges them to provide themselves against such demands. Was there but one bank in Scotland it would perhaps be a little more enterprizing | as it would have no rival, and by mismanagement might become bankrupt, but a number puts this beyond all danger. Even tho’ one did break, every individual <would> have very few of it’s notes. From all these considerations it is manifest that banks are beneficial to the commerce of a country, and that it is a bad police to restrain them.

Several political writers have published treatises to shew the pernicious nature of banks and paper money. Mun, a London merchant, published one with this intention,23 in answer to a book that had been written on the opposite before. He affirms that as England is drained of it’s money it must go to ruin. The circulation of paper banishes gold and silver from the country. All other goods which we have in our possession, being spent upon our subsistence, gradually diminish, and must at last come to an end. Money never decays, a stock of it will last for ever, and by keeping up great quantities of it in the country we shall insure our riches as long as the world stands. This reasoning was in these days thought very satisfactory. But from what has been said before concerning the nature of public opulence, it appears evidently absurd.

| Sometime after that, Mr. Gee, likewise a merchant, wrote with the same intention.24 He endeavours to shew that England would soon be ruined by trade with forreign countries; by the exchange he calculates that the balance is always against us, and consequently that in almost all our commercial dealings with other nations we are losers. As they drain us of our money, we must soon come to ruin.25 The absurdity of this is likewise evident from former considerations, and we find that tho’ no stop was put to the manner of carrying on forreign commerce by any regulations, the nation has prodigiously encreased in riches, and is still encreasing. He proposed indeed some regulations to prevent our ruin from this quarter, which if the government had been foolish <?enough> to have complied with, they would more probably have impoverished the nation.

Mr. Hume published some essays shewing the absurdity of these and other such doctrines.26 He proves very ingeniously that money must always bear[s] a certain proportion to the quantity of commodities in every country, that wherever money is accumulated beyond the proportion of commodities in any country the price of goods will necessarily rise, that this country will be undersold at the forreign market and consequently the money | must depart into other nations; but on the contrary whenever the quantity of money falls below the proportion of goods the price of goods diminishes, the country undersells others in forreign marketts and consequently money returns in great plenty. Thus money and goods will keep near about a certain level in every country.27 Mr. Hume’s reasoning is exceedingly ingenious. He seems however to have gone a little into the notion that public opulence consists in money, which was considered above.28

We may observe upon this that human industry always multiplies goods and money together, tho’ not always in the same proportion. The labour of men will always be employed in produceing whatever is the object of human desire, and things will encrease in proportion as it is in the power of man to cultivate them. Corn and other commodities of that kind must always be produced in greater abundance than gold, precious stones, and the like, because they are more within the reach of human industry. Almost any part of the surface of the earth may by proper culture be made capable of produceing corn, but gold is not to be found every where, and even where it is to be found it lies concealed in the bowells of the earth, | and to produce a small quantity of it long time and much labour are requisite. For these reasons money never encreases in proportion to the increase of goods, and consequently money will be sold at a cheaper rate in proportion as a country becomes opulent. In savage nations money gives a vast price because savages have no money but <?what> they acquire by plunder, for they have not that knowledge which is necessary for produceing money in their own country. But when a nation arrives at a certain degree of improvement in the arts, it’s value diminishes; then they begin to search the mines and manufacture it themselves. From the fall of the Roman Empire to the discovery of the West Indies, the value of money was very high and continualy encreasing. Since that latter period it’s value has decreased considerably.

Mr. Locke, too, published a treatise to show the pernicious consequences of allowing the nation to be drained of money. His notions were likewise founded upon the idea that public opulence consists in money, tho’ he treats the matter in a more philosophical light than the rest.

He affirms with Mr. Mun that if there is no money in a nation it must soon come to ruin, | that all commodities are soon spent, but money lasts for ever. Upon the whole we may observe on this subject that the reason why our riches do not consist in money, but commodities, is that money cannot be used for any of the purposes of life, but that commodities are fitted for our subsistence. The consumptibility, if we may use the word, of goods is the great cause of human industry, and an industrious people will always produce more than they consume. It is easy to shew how small a proportion the cash in every country bears to the public opulence. It is generally supposed that there are 30 millions of money circulating in Brittain, but the annual consumption amounts to much more than a 100 millions, for, computing the inhabitants of the island at 10 millions, and allowing 10 pounds per annum for the subsistence of each person, which is by much too little, the whole annual consumption amounts to that sum. So it appears that the circulating cash bears but a small proportion to the whole opulence of the country.29 It is probable however that there are not 30 millions in Brittain, and in that case the proportion will be still less.

It is said by some who support the notion that the riches of a country consists in money, that when a person retires from trade he turns his stock immediately into cash. | It is plain, however, that the reason of this is that as money is the instrument of commerce, a man can change it for the necessaries and elegancies of life more easily than any thing else. Even the miser who locks up his gold in his chest has this end in view. No man in his senses hoards up money for it’s own sake, but he considers that by keeping money always by him he has it in his power to supply at once all the necessities of himself and his family. This opinion that riches consist in money, as it is absurd in speculation, so it has given occasion to many prejudicial errors in practice, some of which are the following.

It was owing to these tenets that the government prohibited the exportation of coin.z Which prohibition has been extremely hurtfull to the commerce of the country, because whatever quantity of money there is in any country above what is sufficient for the circulation is merely a dead stock.

In King William’s time there were two species of coin, milled and unmilled. The unmilled was frequently clipped by different persons in it’s circulation. This occasioned frequent disorders among the people, and therefore the Parliament ordered all the clipt money to be brought into the Mint, and the government was at the expence of recoining it, | which operation cost them about 2 millions. As they had been at this expence, they thought it just and proper to prohibit the exportation of money for the future. The merchants however complained of this hardship, and were then allowed to export money to a small extent. The great complaint, however, was always scarceity of money. In order to remedy this, the government established a common office for coining money where every one might get their gold and silver turned into coin without any expence. The consequence of this was that as coin was of no more value than bullion a great deal of coin was melted down and exported. To prevent this it was rendered felony to melt coin, but it is so simple an operation, and so easily gone about, that the law was easily eluded. The immediate effect of this regulation was that more coin was exported than ever. This might have been easily prevented by fixing a certain price upon the coinage of bullion, or by ordaining the Master of the Mint to be paid by the persons who brought their money to be coined. But such a regulation was never thought of. Any regulation of the above kind is very absurd, for there is no fear if things be left to their free course that any nation will want money sufficient for the circulation of their commodities, and every prohibition of exportation is always ineffectuall, | and very often occasions the exportation of more than otherwise would be. Suppose for instance the Portuguese prohibited from exporting their money by a capital punishment. As they have few goods to give in exchange for ours, their forreign trade must cease; or if they attempt to smuggle, the British merchant must lay such a price upon his goods as will be sufficient to reward him for the risk he runs of being detected, and the Portuguese merchant, being obliged to buy his goods too dear, must be a loser. In general, every prohibition of this kinda hurts the commerce of a country. Every unecessary accumulation of money is a dead stock which might be employed in enriching the nation by forreign commerce. It likewise raises the price of goods, and makes the country undersold at forreign markets.

It is to be observed that prohibiting the exportation of money is realy one great cause of the poverty of Spain and Portugal. When they got possession of the mines of Mexico and Peru, they thought they could command all Europe by the continual supplies which they received from thence, if they could keep the money among them, and therefore they prohibited the exportation of it. But this had a quite contrary effect, for when money is, as it were, dammed up to an unatural height, and there is more than the circulation requires, the consequences are very unfavourable to the country. | For it is impossible that the exportation of gold and silver can be wholly stopped, as the balance of trade must be against them, that is, they must buy more than they sell, and it is indispensibly necessary that this balance be paid in money. Every commodity rises to an extravagant height. The Portuguese pay for English cloth, additional to the natural price of it, the expence and risk of carrying it there, for no body ever saw a Spanish or Portuguese ship in a British harbour. All the goods sent to these countries are carried by ourselves and consigned to the British factors, to be disposed of by them. But besides the carriage and insurance, the British merchant must be paid for the risk of having his money seized in Portugal in consequence of the prohibition. All risk of forfeiture or penalty must ly upon the goods. This has a miserable effect upon the domestic industry of these countries, and has put a stop to their manufactures. No body ever saw a piece of Spanish cloth in any other country, yet they have the best materials in the world and, with the same art that we have, might monopolize the trade of Europe. It drew the attention of the nations who trade with them in these commodities, when a general on a certain occasion presented to His Majesty | the regiment of which he had the command cloathed in the manufactures of Spain. In general they export no manufactured commodities, swords and armour excepted, as they have confessedly the best steel in the world, but only the spontaneous productions of the country such as fruits and wines.

Regulations of a similar nature were made in Brittain in King William’s time. Money was thought to constitute opulence, and therefore the accumulation of it commanded the whole of the public attention. They coined all money brought in for nothing, and the expences of coinage, which amounted to about fourteen thousand pounds, were entirely thrown away; and, besides, great encouragement was given to exportation, because, as gold and silver were coined for nothing, coined money could never be dearer than bullion. As the exportation of bullion was free they melted down the coin and sent it abroad. At present there is a great temptation to such practices, for an oz. of pure silver at mint price is exactly valued at 5 sh. 2d., but bullion is often bought at 5 sh. 6d.. As nothing is lost in melting, here is a profit of 4d. per oz. It is on this account that we seldom or never see a new shilling, and it is one of the causes that silver is so scarce in proportion to gold.

| The idea of publick opulence consisting in money has been productive of other bad effects. Upon this principle most pernicious regulations have been established. These species of commerce which drain us of our money are thought dissadvantageous and these which increase it beneficial; therefore the former are prohibited and the latter encouraged. As France is thought to produce more of the elegancies of life than this country, and as we take much from them and they need little from us, the balance of trade is against us, and therefore almost all our trade with France is prohibited by great taxes and duties on importation. On the other hand, as Spain and Portugal take more of our commodities than we of theirs, the balance is in our favours, and this trade is not only allowed but encouraged. The absurdity of these regulations will appear on the least reflection.

All commerce that is carried on betwixt any two countries must necessarily be advantageous to both. The very intention of commerce is to exchange your own commodities for others which you think will be more convenient for you. When two men trade between themselves it is undoubtedly for the advantage of both. | The one has perhaps more of one species of commodities than he has occasion for, he therefore exchanges a certain quantity of it with the other, for another commodity that will be more usefull to him. The other agrees to the bargain on the same account, and in this manner the mutual commerce is advantageous to both. The case is exactly the same betwixt any two nations. The goods which the English merchants want to import from France are certainly more valuable to them than what they give for them. Our very desire to purchase them shews that we have more use for them than either the money or the commodities which we give for them. It may be said indeed that money lasts for ever, but that claret and cambrics are soon consumed. This is true. But what is the intention of industry if it be not to produce these things which are capable of being used, and are conduceive to the convenience and comfort of human life? Unless we use the produce of our industry, unless we can subsist more people in a better way, what avails it? Besides, if we have money to spend upon forreign commodities, what purpose serves it | to keep it in the country? If the circulation of commodities require it, there will be none to spare; and if the channel of circulation be full, no more is necessary. And if only a certain sum be necessary for that purpose, why throw more into it?

Again, by prohibiting the exportation of goods to forreign mercats, the industry of the country is greatly discouraged. It is a very great motive to industry that people have it in their power to exchange the produce of their labour for what they please, and wherever there is any restraint on people in this respect they will not be so vigorous in improving manufactures. If we be prohibited to send corn and cloth to France, that industry is stopped which raises corn and prepares cloth for the French market. It may be said indeed that if we were allowed to trade with France we would not exchange our commodities with theirs, but our money, and thus human industry is by no means discouraged. But if we attend to it we shall find that it comes to the same thing at last. By hindering people to dispose of their money as they think proper, you discourage these manufactures by which this money is gained. All jealousies therefore between different nations, | and prejudices of this kind, are extremely hurtfullb to commerce and limit public opulence. This is always the case betwixt France and us in the time of a war.

In general we may observe that these jealousies and prohibitions are most hurtfull to the richest nations, and that in proportion as a free commerce would be advantageous. When a rich man and a poor man deal with one another, both of them will encrease their riches, if they deal prudently, but the rich man’s stock will encrease in a greater proportion than the poor man’s. In like manner, when a rich and a poor nation engage in trade the rich nation will have the greatest advantage, and therefore the prohibition of this commerce is most hurtfull to it of the two. All our trade with France is prohibited by the high duties imposed on every French commodity imported. It would however have been better police to encourage our trade with France. If any forreign commerce is to be prohibited, it ought to be that with Spain and Portugal. This would have been much more advantageous to England. France is much more populous, a more extensive country, farther advanced in arts and manufactures of every kind, and the industry which a commerce | with that country would have exerted30 at home would have been much greater. Twenty millions of people perhaps in a great society, working as it were to one anothers hands, from the nature of the division of labour before explained would produce a thousand times more goods than another society consisting only of 2 or 3 millions. It were happy, therefore, both for this country and for France, that all national prejudices were rooted out, and a free and uninterrupted commerce established. It may be observed in general that we never heard of any nation ruined by this balance of trade. When Gee published his book, the balance with all nations were against us, except Spain and Portugal. It was then thought that in a few years we would be reduced to an absolute state of poverty. This indeed has been the cry of all political writers since the time of Charles IId. Notwithstanding all this we find ourselves far richer than before, and when there isc occasion for it we can raise much more money than ever has been done. A late Minister of State levied in one year 23 millions with greater ease than Lord Godolphin could levy 6 in Q. Ann’s time.

| The French and Dutch writer’s, embraceing the same principle, frequently alarmed their country with the same groundless terror, but they still continue to flourish.

It is to be observed that the poverty of a nation can never proceed from forreign trade if carried on with wisdom and prudence. The poverty of a nation proceeds from much the same causes with these which render an individual poor.

When a man consumes more than he gains by his industry, he must impoverish himself unless he has some other way of subsistence. In the same manner, if a nation consume more than it produces, poverty is inevitable. If its annual produce be 90 millions and it’s annual consumption an 100, then it spends, eats and drinks, tears, wears, 10 millions more than it produces, and it’s stock of opulence must gradualy <?come> to nothing.

There is still another bad effect proceeding from that absurd notion that national opulence consists in money. It is commonly imagined that whatever people spend in their own country cannot diminish public opulence, if you take care of exports and imports. | This is the foundation of Dr. Mandevilles system that private vices are public benefits. What is spent at home is all spent among ourselves, none of it goes out of the country. But it is evident that when any man tears and wears and spends his stock, without employing himself in any species of industry, the nation is at the end of the year so much the poorer by it. If he spend only the interest of the money he does no harm, as the capital still remains and is employed in promoting industry, but if he spend the capital the whole is gone. To illustrate this let us make a supposition, that my father at his death, instead of a thousand pounds in cash, leaves me the necessaries and conveniences of life to the same value, which is precisely the same as if he left it in money because I afterwards purchase them in money. I get a number of idle folks about me and eat, drink, tear and wear, till the whole is consumed. By this I not only reduce myself to want, but certainly rob the public stock of a 1000 pounds, as it is spent and nothing produced for it. As a farther illustration of the hurt which the public receives from such practices, let us suppose that this island was invaded by a numberous band of Tartars, a people who are still in the state of shepherds, a people who lead a roving life and have little or no idea of industry. | Here they would find all commodities for the taking, they would put on fine cloaths, eat, drink, tear and wear every thing they laid their hands upon. The consequence would be that from the highest degree of opulence the whole country would be reduced to the lowest pitch of misery and brought back to its ancient state. The 30 millions of money would probably remain for sometime. But all the necessaries of life would be consumed. This shews the absurdity of that opinion that no home consumption can hurt the opulence of a country.

Upon this principle that no public expence employed at home can be hurtfull, a war in Germany is thought a dreadfull calamity, as it drains the country of money, and a land war is always thought more prejudicial than a sea one for the same reason. But upon reflection we will find that it is the same thing to the nation how or where its stock be spent. If I purchase a thousand pounds worth of French wines and drink them all when they come home, the country is 2000 pounds poorer, because both the goods and money are gone. If I spend a 1000 pounds worth of goods at home upon myself, the country is only deprived of 1000 pounds, as the money still remains. But in maintaining an army in a distant war it is the same thing whether we pay them in goods or money, because the consumption is the same at any rate. | Perhaps it is the better police to pay them in money, as goods are better fitted for the purposes of life at home. For the same reason there is no difference between land and sea wars, as is commonly imagined.

From the above considerations it appears that Brittain should by all means be made a free port, that there should be no interruptions of any kind made to forreign trade, that if it were possible to defray the expences of government by any other method, all duties, customs, and excise should be abolished, and that free commerce and liberty of exchange should be allowed with all nations and for all things.

But still further, and on the same principles as above, an apology is made for the public debt. Say they, tho’ we <owe> at present above 100 millions, we owe it to ourselves, or at least very little of it to forreigners. It is just the right hand owing the left, and on the whole can be little or no disadvantage. But <it> is to be considered that the interest of this 100 millions is paid by industrious people, and given to support idle people who are employed in gathering it. Thus industry is taxed to support idleness. If the debt had not been contracted, by prudence and oeconomy the nation would have been much richer than at present. Their industry would not be hurt by the oppression of these idle people who live upon it. | Instead of the brewer paying taxes which are often improper, the stock might have been lent out to such industrious people as would have made 6 or 7 per cent. by it, and have given better interest than the government does. This stock would then have been employed for the country<’s> wellfare. When there are such heavy taxes to pay, every merchant must carry on less trade than he would otherwise do; he has his taxes to pay before he sell any of his commodities. This narrows as it were his stock, and hinders his trade from being so extensive as it otherwise would be. To stop this clamour Sir Robert Walpole endeavoured to shew that the public debt was no inconvenience, tho’ it is to be supposed that a man of his abilities saw the contrary himself.31

The last bad effect that shall be taken notice of is the notion of Mr. Law, a Scotch merchant. He thought that national opulence consists in money, and that the value of gold and silver is arbitrary and depends on constitution and agreement. He imagined that the idea of value might be brought to paper, and it preferred to money. If this could be done, he thought it would be a great convenience, as the government then might do what it pleased, | raise armies, pay soldiers, and be at any expense whatever. Mr. Law proposed his scheme to the Scotch Parliament in 1701.32 It was rejected, and he went over to France, where his project was relish’d by the Duke of Orleans. In this book33 he agrees with the forementioned writers that, the balance of trade being against a nation, it must soon be drained of its money. In order to turn the balance of trade in our favours, he proposed to the Scotch Parliament the following scheme.

As there was little gold or silver in this country, he thought they might fall upon some other method of creating money independent of it, to witt, by paper. On this account he proposed the erecting of a land bank at Edinburgh, in which it is to be observed he falls into many blunders concerning tenures and the nature of property. At this bank they were to keep by them only 20 or 30 thousand pounds to answer small demands, and to give out notes for land. For 2 acres of arable land they were to issue out a note of equal value, and if any extraordinary demand was made upon them, they would pay so much of it in money and so much in land. By this means in a very short time the whole land of Scotland would go from hand to hand, | as a 20 shilling note does. As this project never was executed, it is hard to say what the consequence might have been; it is however obviously liable to the following inconveniences. Taking the land rent of Scotland at 5 million per annum, tho’ it be much more, at 20 years purchase it amounts to an 100 millions; there would then be just so much currency in the country, and if one million was then necessary for circulation there would just be 99 millions for no purpose, as none of it could go abroad. They would not have been able to maintain one man more than formerly, as their food, cloaths, and lodging would not have been encreased, and every commodity would have risen to 99 times it’s present value.

Mr. Law, not meeting with the encouragement he expected, went over to France in the year[s] 1714 and, as was before mentioned, found favour with the Duke of Orleans, then Regent,34 and got liberty to erect a bank there, which at first was only to the extent of 6 millions of livres35 or 3200£ sterling. From this beginning he carried it on to a very great height, issued out many notes, and in a short time engrossed the whole circulation of France. | As Mr. Law’s notes were received in payment of the revenue, this contributed to the success of the scheme. This too had a greater effect in France than it could have had here, considering the number of taxes and the manner in which they are levied. By this and other circumstances his notes were always at par with gold and silver, especially as they were making continual changes in their coin. About that time 28 livres, which were equal to 8 ounces of pure silver, were raised to 60, and as a diminution of coin is always the consequent of a sudden rise,36 this was daily expected. Mr. Law made his notes payable in what was called the money of the day. Instead of promising to pay his notes, as we would say, in pounds sterling, he did it in crowns and half crowns, which was a very proper method to make them par with gold and silver. Suppose that our coin were raised to double, a half crown would become a crown, and so in this manner the bank notes and money would rise and fall together.37

| As Law wanted to make his notes above par, he fell upon the following scheme. He issued out his bank notes payable in livres turnois,38 by which, when the coin came to be diminished, he would not be obliged to pay above one half. The coin was not received in the market or elsewhere, as the diminution was still expected and did not come for sometime. This favoured his design and kept the notes above par, by which the credit of his bank was established. The next step Mr. Law fell upon was the relieving of the public debts, which amounted to 200 millions.39 As he saw the diminution must needs come, he took another method to keep up his notes. He got a grant of the exclusive priviledge of trading to Canada, and established the Mississippi Company. To this he joined the African, the Turky, and the East India companies. He also farmed the tobacco and all the public revenues of France at 12 millions,40 | for in France the whole revenue is farmed by one man, who undertakes it and levies it without excisemen, and the farmers there are the richest in the country, and must be skilled in the finances and public revenues. Mr. Law undertook this, and having the whole trade of the country monopolized, it was difficult to say what profits he would make.

He wanted to lend the government 80 or 90 millions, which he could easily do by issuing notes to that value, but then he saw that they would soon return upon him. To prevent this his invention was sett on work, and we shall see how far he succeeded. As the company he erected seemed to be in a very flourishing condition, shares were purchased in it at a very considerable rate. He opened a subscription to it at 500 livres, so that a navy ticket or billet d’etat purchased a share into it, which raised them to a par as they had for a long time been far below it. The government of France was never in such a miserable condition as then. The interest of the money which should have paid the billets d’etat | was seized upon for other purposes. Never was monarch more degraded than Lewis XIVth. After the Treaty of Utrecht he had occasion to borrow 8 millions of livres from Holland, and not only to give them his bond for 32 millions but to get some merchants to be security for him.41 Since that was the case, we need not be surprized that the billets d’etat sold at great discount, as they bore no interest and it was quite uncertain when they would be paid. Law published a declaration that one of these, which was granted for 500 livres, should purchase a share in the company, and thus they came again to par. The people still continuing in great expectations of profit, he in a few days opened a new subscription at 5000 livres, and afterwards another at 10000. At this time he was enabled to lend the government 1600 millions of livres at 3 per cent.42 Had he stopt here it is probable that he would have answered all engagements, but his future proceedings ruined all. It was impossible that the value of shares could long continue at such a high rate.

| He thought, however, that it was necessary to do all that he could to keep them up, as the whole fortunes of many people were in the bank. He had issued out notes to double the circulation of the country, which raised the price of every thing to an enormous pitch, and consequently the exchange was against France in all forreign trade. This was principaly occasioned by his opening an office to purchase 500 livres shares at 9000 livres,43 which obliged him to issue out many notes. People of prudence who were concerned opposed this scheme, and indeed it was the first thing that made his bank lose credit and occasioned it’s dissolution. As he was not obliged to pay the capital sums, only the annual dividend of 200 livres arising from the profits, he might have let them fall to their original 500 without any great loss but that of reputation. But his buying up the shares occasioned his issuing out so many notes that they must of necessity return upon him. This was so much the case that he was obliged to open offices in different parts of Paris for the payment of them. When in this manner oppressed, he was making continual changes on the coin, in order to dissuade people from returning on the bank, and disgust them at gold and silver.44 | He cried up gold, but as coin cannot be kept much above the level of the mettal, when it was so much depreciated it was not taken. If a person had 20,000 guineas, as he was affraid that the coin would not continue at that value, he went to the bank and got it exchanged for notes. The same consideration prevented them from returning upon the bank, as they would there be paid in coin. By this means he not only prevented his notes from coming upon him, but filled his coffers with almost all the gold in the country. In order to accomplish this part of his scheme more perfectly, he most arbitrarily published an edict prohibiting any persons from keeping by them gold or silver beyond a certain sum.45 He also took away the severe penalties that were in force against the exportation of coin, and every person was allowed to export money free from duty.46 By this means much of it went to Holland. He reasoned with himself, some instrument of exchange is necessary. Paper, gold, and silver at present are the medium. If gold and silver be utterly exported, paper only remains, and may be rendered the sole instrument of commerce. | This he thought he had done effectualy when by an edict he had swept a part into his coffers, and cleared the country of the remainder. They would therefore be obliged to take paper. At last, however, after a great number of expedients he found it was impracticable. By paying out great sums he kept off ruin for some months, but at last published an edict that all bank notes were to be paid only in one half; and indeed if he had stood to this, as some imagined he might have done, it would have been far better than to have suffered the after consequences. Upon this edict the credit of the bank was entirely broken, and the bank notes all on a sudden sunk to nothing.47

This ruined an immense number of people. Brittain can never be much hurt by the breaking of a bank, because few people keep notes by them to any value.48 A man wort