. 11
( 25)


Sometimes they have been introduced in the manner above mentioned, by
the violent operation, if one may say so, of the stocks of particular
merchants and undertakers, who established them in imitation of some
foreign manufactures of the same kind. Such manufactures, therefore,
are the offspring of foreign commerce; and such seem to have been the
ancient manufactures of silks, velvets, and brocades, which flourished
in Lucca during the thirteenth century. They were banished from thence
by the tyranny of one of Machiavel's heroes, Castruccio Castracani. In
1310, nine hundred families were driven out of Lucca, of whom
thirty-one retired to Venice, and offered to introduce there the silk
manufacture. {See Sandi Istoria civile de Vinezia, part 2 vol. i, page
247 and 256.} Their offer was accepted, many privileges were conferred
upon them, and they began the manufacture with three hundred workmen.
Such, too, seem to have been the manufactures of fine cloths that
anciently flourished in Flanders, and which were introduced into
England in the beginning of the reign of Elizabeth, and such are the
present silk manufactures of Lyons and Spitalfields. Manufactures
introduced in this manner are generally employed upon foreign
materials, being imitations of foreign manufactures. When the Venetian
manufacture was first established, the materials were all brought from
Sicily and the Levant. The more ancient manufacture of Lucca was
likewise carried on with foreign materials. The cultivation of
mulberry trees, and the breeding of silk-worms, seem not to have been
common in the northern parts of Italy before the sixteenth century.
Those arts were not introduced into France till the reign of Charles
IX. The manufactures of Flanders were carried on chiefly with Spanish
and English wool. Spanish wool was the material, not of the first
woollen manufacture of England, but of the first that was fit for
distant sale. More than one half the materials of the Lyons
manufacture is at this day foreign silk; when it was first
established, the whole, or very nearly the whole, was so. No part of
the materials of the Spitalfields manufacture is ever likely to be the
produce of England. The seat of such manufactures, as they are
generally introduced by the scheme and project of a few individuals,
is sometimes established in a maritime city, and sometimes in an
inland town, according as their interest, judgment, or caprice, happen
to determine.

At other times, manufactures for distant sale grow up naturally, and
as it were of their own accord, by the gradual refinement of those
household and coarser manufactures which must at all times be carried
on even in the poorest and rudest countries. Such manufactures are
generally employed upon the materials which the country produces, and
they seem frequently to have been first refined and improved In such
inland countries as were not, indeed, at a very great, but at a
considerable distance from the sea-coast, and sometimes even from all
water carriage. An inland country, naturally fertile and easily
cultivated, produces a great surplus of provisions beyond what is
necessary for maintaining the cultivators; and on account of the
expense of land carriage, and inconveniency of river navigation, it
may frequently be difficult to send this surplus abroad. Abundance,
therefore, renders provisions cheap, and encourages a great number of
workmen to settle in the neighbourhood, who find that their industry
can there procure them more of the necessaries and conveniencies of
life than in other places. They work up the materials of manufacture
which the land produces, and exchange their finished work, or, what is
the same thing, the price of it, for more materials and provisions.
They give a new value to the surplus part of the rude produce, by
saving the expense of carrying it to the water-side, or to some
distant market; and they furnish the cultivators with something in
exchange for it that is either useful or agreeable to them, upon
easier terms than they could have obtained it before. The cultivators
get a better price for their surplus produce, and can purchase cheaper
other conveniencies which they have occasion for. They are thus both
encouraged and enabled to increase this surplus produce by a further
improvement and better cultivation of the land; and as the fertility
of she land had given birth to the manufacture, so the progress of the
manufacture reacts upon the land, and increases still further it's
fertility. The manufacturers first supply the neighbourhood, and
afterwards, as their work improves and refines, more distant markets.
For though neither the rude produce, nor even the coarse manufacture,
could, without the greatest difficulty, support the expense of a
considerable land-carriage, the refined and improved manufacture
easily may. In a small bulk it frequently contains the price of a
great quantity of rude produce. A piece of fine cloth, for example
which weighs only eighty pounds, contains in it the price, not only of
eighty pounds weight of wool, but sometimes of several thousand weight
of corn, the maintenance of the different working people, and of their
immediate employers. The corn which could with difficulty have been
carried abroad in its own shape, is in this manner virtually exported
in that of the complete manufacture, and may easily be sent to the
remotest corners of the world. In this manner have grown up naturally,
and, as it were, of their own accord, the manufactures of Leeds,
Halifax, Sheffield, Birmingham, and Wolverhampton. Such manufactures
are the offspring of agriculture. In the modern history of Europe,
their extension and improvement have generally been posterior to those
which were the offspring of foreign commerce. England was noted for
the manufacture of fine cloths made of Spanish wool, more than a
century before any of those which now flourish in the places above
mentioned were fit for foreign sale. The extension and improvement of
these last could not take place but in consequence of the extension
and improvement of agriculture, the last and greatest effect of
foreign commerce, and of the manufactures immediately introduced by
it, and which I shall now proceed to explain.



The increase and riches of commercial and manufacturing towns
contributed to the improvement and cultivation of the countries to
which they belonged, in three different ways:

First, by affording a great and ready market for the rude produce of
the country, they gave encouragement to its cultivation and further
improvement. This benefit was not even confined to the countries in
which they were situated, but extended more or less to all those with
which they had any dealings. To all of them they afforded a market for
some part either of their rude or manufactured produce, and,
consequently, gave some encouragement to the industry and improvement
of all. Their own country, however, on account of its neighbourhood,
necessarily derived the greatest benefit from this market. Its rude
produce being charged with less carriage, the traders could pay the
growers a better price for it, and yet afford it as cheap to the
consumers as that of more distant countries.

Secondly, the wealth acquired by the inhabitants of cities was
frequently employed in purchasing such lands as were to be sold, of
which a great part would frequently be uncultivated. Merchants are
commonly ambitious of becoming country gentlemen, and, when they do,
they are generally the best of all improvers. A merchant is accustomed
to employ his money chiefly in profitable projects; whereas a mere
country gentleman is accustomed to employ it chiefly in expense. The
one often sees his money go from him, and return to him again with a
profit; the other, when once he parts with it, very seldom expects to
see any more of it. Those different habits naturally affect their
temper and disposition in every sort of business. The merchant is
commonly a bold, a country gentleman a timid undertaker. The one is
not afraid to lay out at once a large capital upon the improvement of
his land, when he has a probable prospect of raising the value of it
in proportion to the expense; the other, if he has any capital, which
is not always the case, seldom ventures to employ it in this manner.
If he improves at all, it is commonly not with a capital, but with
what he can save out or his annual revenue. Whoever has had the
fortune to live in a mercantile town, situated in an unimproved
country, must have frequently observed how much more spirited the
operations of merchants were in this way, than those of mere country
gentlemen. The habits, besides, of order, economy, and attention, to
which mercantile business naturally forms a merchant, render him much
fitter to execute, with profit and success, any project of

Thirdly, and lastly, commerce and manufactures gradually introduced
order and good government, and with them the liberty and security of
individuals, among the inhabitants of the country, who had before
lived almost in a continual state of war with their neighbours, and of
servile dependency upon their superiors. This, though it has been the
least observed, is by far the most important of all their effects. Mr
Hume is the only writer who, so far as I know, has hitherto taken
notice of it.

In a country which has neither foreign commerce nor any of the finer
manufactures, a great proprietor, having nothing for which he can
exchange the greater part of the produce of his lands which is over
and above the maintenance of the cultivators, consumes the whole in
rustic hospitality at home. If this surplus produce is sufficient to
maintain a hundred or a thousand men, he can make use of it in no
other way than by maintaining a hundred or a thousand men. He is at
all times, therefore, surrounded with a multitude of retainers and
dependants, who, having no equivalent to give in return for their
maintenance, but being fed entirely by his bounty, must obey him, for
the same reason that soldiers must obey the prince who pays them.
Before the extension of commerce and manufactures in Europe, the
hospitality of the rich and the great, from the sovereign down to the
smallest baron, exceeded every thing which, in the present times, we
can easily form a notion of Westminster-hall was the dining-room of
William Rufus, and might frequently, perhaps, not be too large for his
company. It was reckoned a piece of magnificence in Thomas Becket,
that he strewed the floor of his hall with clean hay or rushes in the
season, in order that the knights and squires, who could not get
seats, might not spoil their fine clothes when they sat down on the
floor to eat their dinner. The great Earl of Warwick is said to have
entertained every day, at his different manors, 30,000 people; and
though the number here may have been exaggerated, it must, however,
have been very great to admit of such exaggeration. A hospitality
nearly of the same kind was exercised not many years ago in many
different parts of the Highlands of Scotland. It seems to be common in
all nations to whom commerce and manufactures are little known. I have
seen, says Doctor Pocock, an Arabian chief dine in the streets of a
town where he had come to sell his cattle, and invite all passengers,
even common beggars, to sit down with him and partake of his banquet.

The occupiers of land were in every respect as dependent upon the
great proprietor as his retainers. Even such of them as were not in a
state of villanage, were tenants at will, who paid a rent in no
respect equivalent to the subsistence which the land afforded them. A
crown, half a crown, a sheep, a lamb, was some years ago, in the
Highlands of Scotland, a common rent for lands which maintained a
family. In some places it is so at this day; nor will money at present
purchase a greater quantity of commodities there than in other places.
In a country where the surplus produce of a large estate must be
consumed upon the estate itself, it will frequently be more convenient
for the proprietor, that part of it be consumed at a distance from his
own house, provided they who consume it are as dependent upon him as
either his retainers or his menial servants. He is thereby saved from
the embarrassment of either too large a company, or too large a
family. A tenant at will, who possesses land sufficient to maintain
his family for little more than a quit-rent, is as dependent upon the
proprietor as any servant or retainer whatever, and must obey him with
as little reserve. Such a proprietor, as he feeds his servants and
retainers at his own house, so he feeds his tenants at their houses.
The subsistence of both is derived from his bounty, and its
continuance depends upon his good pleasure.

Upon the authority which the great proprietors necessarily had, in
such a state of things, over their tenants and retainers, was founded
the power of the ancient barons. They necessarily became the judges in
peace, and the leaders in war, of all who dwelt upon their estates.
They could maintain order, and execute the law, within their
respective demesnes, because each of them could there turn the whole
force of all the inhabitants against the injustice of anyone. No other
person had sufficient authority to do this. The king, in particular,
had not. In those ancient times, he was little more than the greatest
proprietor in his dominions, to whom, for the sake of common defence
against their common enemies, the other great proprietors paid certain
respects. To have enforced payment of a small debt within the lands of
a great proprietor, where all the inhabitants were armed, and
accustomed to stand by one another, would have cost the king, had he
attempted it by his own authority, almost the same effort as to
extinguish a civil war. He was, therefore, obliged to abandon the
administration of justice, through the greater part of the country, to
those who were capable of administering it; and, for the same reason,
to leave the command of the country militia to those whom that militia
would obey.

It is a mistake to imagine that those territorial jurisdictions took
their origin from the feudal law. Not only the highest jurisdictions,
both civil and criminal, but the power of levying troops, of coining
money, and even that of making bye-laws for the government of their
own people, were all rights possessed allodially by the great
proprietors of land, several centuries before even the name of the
feudal law was known in Europe. The authority and jurisdiction of the
Saxon lords in England appear to have been as great before the
Conquest as that of any of the Norman lords after it. But the feudal
law is not supposed to have become the common law of England till
after the Conquest. That the most extensive authority and
jurisdictions were possessed by the great lords in France allodially,
long before the feudal law was introduced into that country, is a
matter of fact that admits of no doubt. That authority, and those
jurisdictions, all necessarily flowed from the state of property and
manners just now described. Without remounting to the remote
antiquities of either the French or English monarchies, we may find,
in much later times, many proofs that such effects must always flow
from such causes. It is not thirty years ago since Mr Cameron of
Lochiel, a gentleman of Lochaber in Scotland, without any legal
warrant whatever, not being what was then called a lord of regality,
nor even a tenant in chief, but a vassal of the Duke of Argyll, and
with out being so much as a justice of peace, used, notwithstanding,
to exercise the highest criminal jurisdictions over his own people. He
is said to have done so with great equity, though without any of the
formalities of justice; and it is not improbable that the state of
that part of the country at that time made it necessary for him to
assume this authority, in order to maintain the public peace. That
gentleman, whose rent never exceeded 500 a-year, carried, in 1745,
800 of his own people into the rebellion with him.

The introduction of the feudal law, so far from extending, may be
regarded as an attempt to moderate, the authority of the great
allodial lords. It established a regular subordination, accompanied
with a long train of services and duties, from the king down to the
smallest proprietor. During the minority of the proprietor, the rent,
together with the management of his lands, fell into the hands of his
immediate superior; and, consequently, those of all great proprietors
into the hands of the king, who was charged with the maintenance and
education of the pupil, and who, from his authority as guardian, was
supposed to have a right of disposing of him in marriage, provided it
was in a manner not unsuitable to his rank. But though this
institution necessarily tended to strengthen the authority of the
king, and to weaken that of the great proprietors, it could not do
either sufficiently for establishing order and good government among
the inhabitants of the country; because it could not alter
sufficiently that state of property and manners from which the
disorders arose. The authority of government still continued to be, as
before, too weak in the head, and too strong in the inferior members;
and the excessive strength of the inferior members was the cause of
the weakness of the head. After the institution of feudal
subordination, the king was as incapable of restraining the violence
of the great lords as before. They still continued to make war
according to their own discretion, almost continually upon one
another, and very frequently upon the king; and the open country still
continued to be a scene of violence, rapine, and disorder.

But what all the violence of the feudal institutions could never have
effected, the silent and insensible operation of foreign commerce and
manufactures gradually brought about. These gradually furnished the
great proprietors with something for which they could exchange the
whole surplus produce of their lands, and which they could consume
themselves, without sharing it either with tenants or retainers. All
for ourselves, and nothing for other people, seems, in every age of
the world, to have been the vile maxim of the masters of mankind. As
soon, therefore, as they could find a method of consuming the whole
value of their rents themselves, they had no disposition to share them
with any other persons. For a pair of diamond buckles, perhaps, or for
something as frivolous and useless, they exchanged the maintenance,
or, what is the same thing, the price of the maintenance of 1000 men
for a year, and with it the whole weight and authority which it could
give them. The buckles, however, were to be all their own, and no
other human creature was to have any share of them; whereas, in the
more ancient method of expense, they must have shared with at least
1000 people. With the judges that were to determine the preference,
this difference was perfectly decisive; and thus, for the
gratification of the most childish, the meanest, and the most sordid
of all vanities they gradually bartered their whole power and

In a country where there is no foreign commerce, nor any of the finer
manufactures, a man of 10,000 a-year cannot well employ his revenue
in any other way than in maintaining, perhaps, 1000 families, who are
all of them necessarily at his command. In the present state of
Europe, a man of 10,000 a-year can spend his whole revenue, and he
generally does so, without directly maintaining twenty people, or
being able to command more than ten footmen, not worth the commanding.
Indirectly, perhaps, he maintains as great, or even a greater number
of people, than he could have done by the ancient method of expense.
For though the quantity of precious productions for which he exchanges
his whole revenue be very small, the number of workmen employed in
collecting and preparing it must necessarily have been very great. Its
great price generally arises from the wages of their labour, and the
profits of all their immediate employers. By paying that price, he
indirectly pays all those wages and profits, and thus indirectly
contributes to the maintenance of all the workmen and their employers.
He generally contributes, however, but a very small proportion to that
of each; to a very few, perhaps, not a tenth, to many not a hundredth,
and to some not a thousandth, or even a ten thousandth part of their
whole annual maintenance. Though he contributes, therefore, to the
maintenance of them all, they are all more or less independent of him,
because generally they can all be maintained without him.

When the great proprietors of land spend their rents in maintaining
their tenants and retainers, each of them maintains entirely all his
own tenants and all his own retainers. But when they spend them in
maintaining tradesmen and artificers, they may, all of them taken
together, perhaps maintain as great, or, on account of the waste which
attends rustic hospitality, a greater number of people than before.
Each of them, however, taken singly, contributes often but a very
small share to the maintenance of any individual of this greater
number. Each tradesman or artificer derives his subsistence from the
employment, not of one, but of a hundred or a thousand different
customers. Though in some measure obliged to them all, therefore, he
is not absolutely dependent upon any one of them.

The personal expense of the great proprietors having in this manner
gradually increased, it was impossible that the number of their
retainers should not as gradually diminish, till they were at last
dismissed altogether. The same cause gradually led them to dismiss the
unnecessary part of their tenants. Farms were enlarged, and the
occupiers of land, notwithstanding the complaints of depopulation,
reduced to the number necessary for cultivating it, according to the
imperfect state of cultivation and improvement in those times. By the
removal of the unnecessary mouths, and by exacting from the farmer the
full value of the farm, a greater surplus, or, what is the same thing,
the price of a greater surplus, was obtained for the proprietor, which
the merchants and manufacturers soon furnished him with a method of
spending upon his own person, in the same manner as he had done the
rest. The cause continuing to operate, he was desirous to raise his
rents above what his lands, in the actual state of their improvement,
could afford. His tenants could agree to this upon one condition only,
that they should be secured in their possession for such a term of
years as might give them time to recover, with profit, whatever they
should lay not in the further improvement of the land. The expensive
vanity of the landlord made him willing to accept of this condition;
and hence the origin of long leases.

Even a tenant at will, who pays the full value of the land, is not
altogether dependent upon the landlord. The pecuniary advantages which
they receive from one another are mutual and equal, and such a tenant
will expose neither his life nor his fortune in the service of the
proprietor. But if he has a lease for along term of years, he is
altogether independent; and his landlord must not expect from him even
the most trifling service, beyond what is either expressly stipulated
in the lease, or imposed upon him by the common and known law of the

The tenants having in this manner become independent, and the
retainers being dismissed, the great proprietors were no longer
capable of interrupting the regular execution of justice, or of
disturbing the peace of the country. Having sold their birth-right,
not like Esau, for a mess of pottage in time of hunger and necessity,
but, in the wantonness of plenty, for trinkets and baubles, fitter to
be the playthings of children than the serious pursuits of men, they
became as insignificant as any substantial burgher or tradesmen in a
city. A regular government was established in the country as well as
in the city, nobody having sufficient power to disturb its operations
in the one, any more than in the other.

It does not, perhaps, relate to the present subject, but I cannot help
remarking it, that very old families, such as have possessed some
considerable estate from father to son for many successive
generations, are very rare in commercial countries. In countries which
have little commerce, on the contrary, such as Wales, or the Highlands
of Scotland, they are very common. The Arabian histories seem to be
all full of genealogies; and there is a history written by a Tartar
Khan, which has been translated into several European languages, and
which contains scarce any thing else; a proof that ancient families
are very common among those nations. In countries where a rich man can
spend his revenue in no other way than by maintaining as many people
as it can maintain, he is apt to run out, and his benevolence, it
seems, is seldom so violent as to attempt to maintain more than he can
afford. But where he can spend the greatest revenue upon his own
person, he frequently has no bounds to his expense, because he
frequently has no bounds to his vanity, or to his affection for his
own person. In commercial countries, therefore, riches, in spite of
the most violent regulations of law to prevent their dissipation, very
seldom remain long in the same family. Among simple nations, on the
contrary, they frequently do, without any regulations of law; for
among nations of shepherds, such as the Tartars and Arabs, the
consumable nature of their property necessarily renders all such
regulations impossible.

A revolution of the greatest importance to the public happiness, was
in this manner brought about by two different orders of people, who
had not the least intention to serve the public. To gratify the most
childish vanity was the sole motive of the great proprietors. The
merchants and artificers, much less ridiculous, acted merely from a
view to their own interest, and in pursuit of their own pedlar
principle of turning a penny wherever a penny was to be got. Neither
of them had either knowledge or foresight of that great revolution
which the folly of the one, and the industry of the other, was
gradually bringing about.

It was thus, that, through the greater part of Europe, the commerce
and manufactures of cities, instead of being the effect, have been the
cause and occasion of the improvement and cultivation of the country.

This order, however, being contrary to the natural course of things,
is necessarily both slow and uncertain. Compare the slow progress of
those European countries of which the wealth depends very much upon
their commerce and manufactures, with the rapid advances of our North
American colonies, of which the wealth is founded altogether in
agriculture. Through the greater part of Europe, the number of
inhabitants is not supposed to double in less than five hundred years.
In several of our North American colonies, it is found to double in
twenty or five-and-twenty years. In Europe, the law of primogeniture,
and perpetuities of different kinds, prevent the division of great
estates, and thereby hinder the multiplication of small proprietors. A
small proprietor, however, who knows every part of his little
territory, views it with all the affection which property, especially
small property, naturally inspires, and who upon that account takes
pleasure, not only in cultivating, but in adorning it, is generally of
all improvers the most industrious, the most intelligent, and the most
successful. The same regulations, besides, keep so much land out of
the market, that there are always more capitals to buy than there is
land to sell, so that what is sold always sells at a monopoly price.
The rent never pays the interest of the purchase-money, and is,
besides, burdened with repairs and other occasional charges, to which
the interest of money is not liable. To purchase land, is, everywhere
in Europe, a most unprofitable employment of a small capital. For the
sake of the superior security, indeed, a man of moderate
circumstances, when he retires from business, will sometimes choose to
lay out his little capital in land. A man of profession, too whose
revenue is derived from another source often loves to secure his
savings in the same way. But a young man, who, instead of applying to
trade or to some profession, should employ a capital of two or three
thousand pounds in the purchase and cultivation of a small piece of
land, might indeed expect to live very happily and very independently,
but must bid adieu for ever to all hope of either great fortune or
great illustration, which, by a different employment of his stock, he
might have had the same chance of acquiring with other people. Such a
person, too, though he cannot aspire at being a proprietor, will often
disdain to be a farmer. The small quantity of land, therefore, which
is brought to market, and the high price of what is brought thither,
prevents a great number of capitals from being employed in its
cultivation and improvement, which would otherwise have taken that
direction. In North America, on the contrary, fifty or sixty pounds is
often found a sufficient stock to begin a plantation with. The
purchase and improvement of uncultivated land is there the most
profitable employment of the smallest as well as of the greatest
capitals, and the most direct road to all the fortune and illustration
which can be required in that country. Such land, indeed, is in North
America to be had almost for nothing, or at a price much below the
value of the natural produce; a thing impossible in Europe, or indeed
in any country where all lands have long been private property. If
landed estates, however, were divided equally among all the children,
upon the death of any proprietor who left a numerous family, the
estate would generally be sold. So much land would come to market,
that it could no longer sell at a monopoly price. The free rent of the
land would go no nearer to pay the interest of the purchase-money, and
a small capital might be employed in purchasing land as profitable as
in any other way.

England, on account of the natural fertility of the soil, of the great
extent of the sea-coast in proportion to that of the whole country,
and of the many navigable rivers which run through it, and afford the
conveniency of water carriage to some of the most inland parts of it,
is perhaps as well fitted by nature as any large country in Europe to
be the seat of foreign commerce, of manufactures for distant sale, and
of all the improvements which these can occasion. From the beginning
of the reign of Elizabeth, too, the English legislature has been
peculiarly attentive to the interest of commerce and manufactures, and
in reality there is no country in Europe, Holland itself not excepted,
of which the law is, upon the whole, more favourable to this sort of
industry. Commerce and manufactures have accordingly been continually
advancing during all this period. The cultivation and improvement of
the country has, no doubt, been gradually advancing too; but it seems
to have followed slowly, and at a distance, the more rapid progress of
commerce and manufactures. The greater part of the country must
probably have been cultivated before the reign of Elizabeth; and a
very great part of it still remains uncultivated, and the cultivation
of the far greater part much inferior to what it might be, The law of
England, however, favours agriculture, not only indirectly, by the
protection of commerce, but by several direct encouragements. Except
in times of scarcity, the exportation of corn is not only free, but
encouraged by a bounty. In times of moderate plenty, the importation
of foreign corn is loaded with duties that amount to a prohibition.
The importation of live cattle, except from Ireland, is prohibited at
all times; and it is but of late that it was permitted from thence.
Those who cultivate the land, therefore, have a monopoly against their
countrymen for the two greatest and most important articles of land
produce, bread and butcher's meat. These encouragements, although at
bottom, perhaps, as I shall endeavour to show hereafter, altogether
illusory, sufficiently demonstrate at least the good intention of the
legislature to favour agriculture. But what is of much more importance
than all of them, the yeomanry of England are rendered as secure, as
independent, and as respectable, as law can make them. No country,
therefore, which the right of primogeniture takes place, which pays
tithes, and where perpetuities, though contrary to the spirit of the
law, are admitted in some cases, can give more encouragement to
agriculture than England. Such, however, notwithstanding, is the state
of its cultivation. What would it have been, had the law given no
direct encouragement to agriculture besides what arises indirectly
from the progress of commerce, and had left the yeomanry in the same
condition as in most other countries of Europe? It is now more than
two hundred years since the beginning of the reign of Elizabeth, a
period as long as the course of human prosperity usually endures.

France seems to have had a considerable share of foreign commerce,
near a century before England was distinguished as a commercial
country. The marine of France was considerable, according to the
notions of the times, before the expedition of Charles VIII. to
Naples. The cultivation and improvement of France, however, is, upon
the whole, inferior to that of England. The law of the country has
never given the same direct encouragement to agriculture.

The foreign commerce of Spain and Portual to the other parts of
Europe, though chiefly carried on in foreign ships, is very
considerable. That to their colonies is carried on in their own, and
is much greater, on account of the great riches and extent of those
colonies. But it has never introduced any considerable manufactures
for distant sale into either of those countries, and the greater part
of both still remains uncultivated. The foreign commerce of Portugal
is of older standing than that of any great country in Europe, except

Italy is the only great country of Europe which seems to have been
cultivated and improved in every part, by means of foreign commerce
and manufactures for distant sale. Before the invasion of Charles
VIII., Italy, according to Guicciardini, was cultivated not less in
the most mountainous and barren parts of the country, than in the
plainest and most fertile. The advantageous situation of the country,
and the great number of independent status which at that time
subsisted in it, probably contributed not a little to this general
cultivation. It is not impossible, too, notwithstanding this general
expression of one of the most judicious and reserved of modern
historians, that Italy was not at that time better cultivated than
England is at present.

The capital, however, that is acquired to any country by commerce and
manufactures, is always a very precarious and uncertain possession,
till some part of it has been secured and realized in the cultivation
and improvement of its lands. A merchant, it has been said very
properly, is not necessarily the citizen of any particular country. It
is in a great measure indifferent to him from what place he carries on
his trade; and a very trifling disgust will make him remove his
capital, and, together with it, all the industry which it supports,
from one country to another. No part of it can be said to belong to
any particular country, till it has been spread, as it were, over the
face of that country, either in buildings, or in the lasting
improvement of lands. No vestige now remains of the great wealth said
to have been possessed by the greater part of the Hanse Towns, except
in the obscure histories of the thirteenth and fourteenth centuries.
It is even uncertain where some of them were situated, or to what
towns in Europe the Latin names given to some of them belong. But
though the misfortunes of Italy, in the end of the fifteenth and
beginning of the sixteenth centuries, greatly diminished the commerce
and manufactures of the cities of Lombardy and Tuscany, those
countries still continue to be among the most populous and best
cultivated in Europe. The civil wars of Flanders, and the Spanish
government which succeeded them, chased away the great commerce of
Antwerp, Ghent, and Bruges. But Flanders still continues to be one of
the richest, best cultivated, and most populous provinces of Europe.
The ordinary revolutions of war and government easily dry up the
sources of that wealth which arises from commerce only. That which
arises from the more solid improvements of agriculture is much more
durable, and cannot be destroyed but by those more violent convulsions
occasioned by the depredations of hostile and barbarous nations
continued for a century or two together; such as those that happened
for some time before and after the fall of the Roman empire in the
western provinces of Europe.



Political economy, considered as a branch of the science of a
statesman or legislator, proposes two distinct objects; first, to
provide a plentiful revenue or subsistence for the people, or, more
properly, to enable them to provide such a revenue or subsistence for
themselves; and, secondly, to supply the state or commonwealth with a
revenue sufficient for the public services. It proposes to enrich both
the people and the sovereign.

The different progress of opulence in different ages and nations, has
given occasion to two different systems of political economy, with
regard to enriching the people. The one may be called the system of
commerce, the other that of agriculture. I shall endeavour to explain
both as fully and distinctly as I can, and shall begin with the system
of commerce. It is the modern system, and is best understood in our
own country and in our own times.



That wealth consists in money, or in gold and silver, is a popular
notion which naturally arises from the double function of money, as
the instrument of commerce, and as the measure of value. In
consequence of its being the instrument of commerce, when we have
money we can more readily obtain whatever else we have occasion for,
than by means of any other commodity. The great affair, we always
find, is to get money. When that is obtained, there is no difficulty
in making any subsequent purchase. In consequence of its being the
measure of value, we estimate that of all other commodities by the
quantity of money which they will exchange for. We say of a rich man,
that he is worth a great deal, and of a poor man, that he is worth
very little money. A frugal man, or a man eager to be rich, is said to
love money; and a careless, a generous, or a profuse man, is said to
be indifferent about it. To grow rich is to get money; and wealth and
money, in short, are, in common language, considered as in every
respect synonymous.

A rich country, in the same manner as a rich man, is supposed to be a
country abounding in money; and to heap up gold and silver in any
country is supposed to be the readiest way to enrich it. For some time
after the discovery of America, the first inquiry of the Spaniards,
when they arrived upon any unknown coast, used to be, if there was any
gold or silver to be found in the neighbourhood? By the information
which they received, they judged whether it was worth while to make a
settlement there, or if the country was worth the conquering. Plano
Carpino, a monk sent ambassador from the king of France to one of the
sons of the famous Gengis Khan, says, that the Tartars used frequently
to ask him, if there was plenty of sheep and oxen in the kingdom of
France? Their inquiry had the same object with that of the Spaniards.
They wanted to know if the country was rich enough to be worth the
conquering. Among the Tartars, as among all other nations of
shepherds, who are generally ignorant of the use of money, cattle are
the instruments of commerce and the measures of value. Wealth,
therefore, according to them, consisted in cattle, as, according to
the Spaniards, it consisted in gold and silver. Of the two, the Tartar
notion, perhaps, was the nearest to the truth.

Mr Locke remarks a distinction between money and other moveable goods.
All other moveable goods, he says, are of so consumable a nature, that
the wealth which consists in them cannot be much depended on; and a
nation which abounds in them one year may, without any exportation,
but merely by their own waste and extravagance, be in great want of
them the next. Money, on the contrary, is a steady friend, which,
though it may travel about from hand to hand, yet if it can be kept
from going out of the country, is not very liable to be wasted and
consumed. Gold and silver, therefore, are, according to him, the must
solid and substantial part of the moveable wealth of a nation; and to
multiply those metals ought, he thinks, upon that account, to be the
great object of its political economy.

Others admit, that if a nation could be separated from all the world,
it would be of no consequence how much or how little money circulated
in it. The consumable goods, which were circulated by means of this
money, would only be exchanged for a greater or a smaller number of
pieces; but the real wealth or poverty of the country, they allow,
would depend altogether upon the abundance or scarcity of those
consumable goods. But it is otherwise, they think, with countries
which have connections with foreign nations, and which are obliged to
carry on foreign wars, and to maintain fleets and armies in distant
countries. This, they say, cannot be done, but by sending abroad money
to pay them with; and a nation cannot send much money abroad, unless
it has a good deal at home. Every such nation, therefore, must
endeavour, in time of peace, to accumulate gold and silver, that when
occasion requires, it may have wherewithal to carry on foreign wars.

In consequence of those popular notions, all the different nations of
Europe have studied, though to little purpose, every possible means of
accumulating gold and silver in their respective countries. Spain and
Portugal, the proprietors of the principal mines which supply Europe
with those metals, have either prohibited their exportation under the
severest penalties, or subjected it to a considerable duty. The like
prohibition seems anciently to have made a part of the policy of most
other European nations. It is even to be found, where we should least
of all expect to find it, in some old Scotch acts of Parliament, which
forbid, under heavy penalties, the carrying gold or silver forth of
the kingdom. The like policy anciently took place both in France and

When those countries became commercial, the merchants found this
prohibition, upon many occasions, extremely inconvenient. They could
frequently buy more advantageously with gold and silver, than with any
other commodity, the foreign goods which they wanted, either to import
into their own, or to carry to some other foreign country. They
remonstrated, therefore, against this prohibition as hurtful to trade.

They represented, first, that the exportation of gold and silver, in
order to purchase foreign goods, did not always diminish the quantity
of those metals in the kingdom; that, on the contrary, it might
frequently increase the quantity; because, if the consumption of
foreign goods was not thereby increased in the country, those goods
might be re-exported to foreign countries, and being there sold for a
large profit, might bring back much more treasure than was originally
sent out to purchase them. Mr Mun compares this operation of foreign
trade to the seed-time and harvest of agriculture. "If we only
behold," says he, "the actions of the husbandman in the seed time,
when he casteth away much good corn into the ground, we shall account
him rather a madman than a husbandman. But when we consider his
labours in the harvest, which is the end of his endeavours, we shall
find the worth and plentiful increase of his actions."

They represented, secondly, that this prohibition could not hinder the
exportation of gold and silver, which, on account of the smallness of
their bulk in proportion to their value, could easily be smuggled
abroad. That this exportation could only be prevented by a proper
attention to what they called the balance of trade. That when the
country exported to a greater value than it imported, a balance became
due to it from foreign nations, which was necessarily paid to it in
gold and silver, and thereby increased the quantity of those metals in
the kingdom. But that when it imported to a greater value than it
exported, a contrary balance became due to foreign nations, which was
necessarily paid to them in the same manner, and thereby diminished
that quantity: that in this case, to prohibit the exportation of
those metals, could not prevent it, but only, by making it more
dangerous, render it more expensive: that the exchange was thereby
turned more against the country which owed the balance, than it
otherwise might have been; the merchant who purchased a bill upon the
foreign country being obliged to pay the banker who sold it, not only
for the natural risk, trouble, and expense of sending the money
thither, but for the extraordinary risk arising from the prohibition;
but that the more the exchange was against any country, the more the
balance of trade became necessarily against it; the money of that
country becoming necessarily of so much less value, in comparison with
that of the country to which the balance was due. That if the exchange
between England and Holland, for example, was five per cent. against
England, it would require 105 ounces of silver in England to purchase
a bill for 100 ounces of silver in Holland: that 105 ounces of silver
in England, therefore, would be worth only 100 ounces of silver in
Holland, and would purchase only a proportionable quantity of Dutch
goods; but that 100 ounces of silver in Holland, on the contrary,
would be worth 105 ounces in England, and would purchase a
proportionable quantity of English goods; that the English goods which
were sold to Holland would be sold so much cheaper, and the Dutch
goods which were sold to England so much dearer, by the difference of
the exchange: that the one would draw so much less Dutch money to
England, and the other so much more English money to Holland, as this
difference amounted to: and that the balance of trade, therefore,
would necessarily be so much more against England, and would require a
greater balance of gold and silver to be exported to Holland.

Those arguments were partly solid and partly sophistical. They were
solid, so far as they asserted that the exportation of gold and silver
in trade might frequently be advantageous to the country. They were
solid, too, in asserting that no prohibition could prevent their
exportation, when private people found any advantage in exporting
them. But they were sophistical, in supposing, that either to preserve
or to augment the quantity of those metals required more the attention
of government, than to preserve or to augment the quantity of any
other useful commodities, which the freedom of trade, without any such
attention, never fails to supply in the proper quantity. They were
sophistical, too, perhaps, in asserting that the high price of
exchange necessarily increased what they called the unfavourable
balance of trade, or occasioned the exportation of a greater quantity
of gold and silver. That high price, indeed, was extremely
disadvantageous to the merchants who had any money to pay in foreign
countries. They paid so much dearer for the bills which their bankers
granted them upon those countries. But though the risk arising from
the prohibition might occasion some extraordinary expense to the
bankers, it would not necessarily carry any more money out of the
country. This expense would generally be all laid out in the country,
in smuggling the money out of it, and could seldom occasion the
exportation of a single sixpence beyond the precise sum drawn for. The
high price of exchange, too, would naturally dispose the merchants to
endeavour to make their exports nearly balance their imports, in order
that they might have this high exchange to pay upon as small a sum as
possible. The high price of exchange, besides, must necessarily have
operated as a tax, in raising the price of foreign goods, and thereby
diminishing their consumption. It would tend, therefore, not to
increase, but to diminish, what they called the unfavourable balance
of trade, and consequently the exportation of gold and silver.

Such as they were, however, those arguments convinced the people to
whom they were addressed. They were addressed by merchants to
parliaments and to the councils of princes, to nobles, and to country
gentlemen; by those who were supposed to understand trade, to those
who were conscious to them selves that they knew nothing about the
matter. That foreign trade enriched the country, experience
demonstrated to the nobles and country gentlemen, as well as to the
merchants; but how, or in what manner, none of them well knew. The
merchants knew perfectly in what manner it enriched themselves, it was
their business to know it. But to know in what manner it enriched the
country, was no part of their business. The subject never came into
their consideration, but when they had occasion to apply to their
country for some change in the laws relating to foreign trade. It then
became necessary to say something about the beneficial effects of
foreign trade, and the manner in which those effects were obstructed
by the laws as they then stood. To the judges who were to decide the
business, it appeared a most satisfactory account of the matter, when
they were told that foreign trade brought money into the country, but
that the laws in question hindered it from bringing so much as it
otherwise would do. Those arguments, therefore, produced the
wished-for effect. The prohibition of exporting gold and silver was,
in France and England, confined to the coin of those respective
countries. The exportation of foreign coin and of bullion was made
free. In Holland, and in some other places, this liberty was extended
even to the coin of the country. The attention of government was
turned away from guarding against the exportation of gold and silver,
to watch over the balance of trade, as the only cause which could
occasion any augmentation or diminution of those metals. From one
fruitless care, it was turned away to another care much more
intricate, much more embarrassing, and just equally fruitless. The
title of Mun's book, England's Treasure in Foreign Trade, became a
fundamental maxim in the political economy, not of England only, but
of all other commercial countries. The inland or home trade, the most
important of all, the trade in which an equal capital affords the
greatest revenue, and creates the greatest employment to the people of
the country, was considered as subsidiary only to foreign trade. It
neither brought money into the country, it was said, nor carried any
out of it. The country, therefore, could never become either richer or
poorer by means of it, except so far as its prosperity or decay might
indirectly influence the state of foreign trade.

A country that has no mines of its own, must undoubtedly draw its gold
and silver from foreign countries, in the same manner as one that has
no vineyards of its own must draw its wines. It does not seem
necessary, however, that the attention of government should be more
turned towards the one than towards the other object. A country that
has wherewithal to buy wine, will always get the wine which it has
occasion for; and a country that has wherewithal to buy gold and
silver, will never be in want of those metals. They are to be bought
for a certain price, like all other commodities; and as they are the
price of all other commodities, so all other commodities are the price
of those metals. We trust, with perfect security, that the freedom of
trade, without any attention of government, will always supply us with
the wine which we have occasion for; and we may trust, with equal
security, that it will always supply us with all the gold and silver
which we can afford to purchase or to employ, either in circulating
our commodities or in other uses.

The quantity of every commodity which human industry can either
purchase or produce, naturally regulates itself in every country
according to the effectual demand, or according to the demand of those
who are willing to pay the whole rent, labour, and profits, which must
be paid in order to prepare and bring it to market. But no commodities
regulate themselves more easily or more exactly, according to this
effectual demand, than gold and silver; because, on account of the
small bulk and great value of those metals, no commodities can be more
easily transported from one place to another; from the places where
they are cheap, to those where they are dear; from the places where
they exceed, to those where they fall short of this effectual demand.
If there were in England, for example, an effectual demand for an
additional quantity of gold, a packet-boat could bring from Lisbon, or
from wherever else it was to be had, fifty tons of gold, which could
be coined into more than five millions of guineas. But if there were
an effectual demand for grain to the same value, to import it would
require, at five guineas a-ton, a million of tons of shipping, or a
thousand ships of a thousand tons each. The navy of England would not
be sufficient.

When the quantity of gold and silver imported into any country exceeds
the effectual demand, no vigilance of government can prevent their
exportation. All the sanguinary laws of Spain and Portugal are not
able to keep their gold and silver at home. The continual importations
from Peru and Brazil exceed the effectual demand of those countries,
and sink the price of those metals there below that in the
neighbouring countries. If, on the contrary, in any particular
country, their quantity fell short of the effectual demand, so as to
raise their price above that of the neighbouring countries, the
government would have no occasion to take any pains to import them. If
it were even to take pains to prevent their importation, it would not
be able to effectuate it. Those metals, when the Spartans had got
wherewithal to purchase them, broke through all the barriers which the
laws of Lycurgus opposed to their entrance into Lacedaemon. All the
sanguinary laws of the customs are not able to prevent the importation
of the teas of the Dutch and Gottenburg East India companies; because
somewhat cheaper than those of the British company. A pound of tea,
however, is about a hundred times the bulk of one of the highest
prices, sixteen shillings, that is commonly paid for it in silver, and
more than two thousand times the bulk of the same price in gold, and,
consequently, just so many times more difficult to smuggle.

It is partly owing to the easy transportation of gold and silver, from
the places where they abound to those where they are wanted, that the
price of those metals does not fluctuate continually, like that of the
greater part of other commodities, which are hindered by their bulk
from shifting their situation, when the market happens to be either
over or under-stocked with them. The price of those metals, indeed, is
not altogether exempted from variation; but the changes to which it is
liable are generally slow, gradual, and uniform. In Europe, for
example, it is supposed, without much foundation, perhaps, that during
the course of the present and preceding century, they have been
constantly, but gradually, sinking in their value, on account of the
continual importations from the Spanish West Indies. But to make any
sudden change in the price of gold and silver, so as to raise or lower
at once, sensibly and remarkably, the money price of all other
commodities, requires such a revolution in commerce as that occasioned
by the discovery of America.

If, not withstanding all this, gold and silver should at any time fall
short in a country which has wherewithal to purchase them, there are
more expedients for supplying their place, than that of almost any
other commodity. If the materials of manufacture are wanted, industry
must stop. If provisions are wanted, the people must starve. But if
money is wanted, barter will supply its place, though with a good deal
of inconveniency. Buying and selling upon credit, and the different
dealers compensating their credits with one another, once a-month, or
once a-year, will supply it with less inconveniency. A well-regulated
paper-money will supply it not only without any inconveniency, but, in
some cases, with some advantages. Upon every account, therefore, the
attention of government never was so unnecessarily employed, as when
directed to watch over the preservation or increase of the quantity of
money in any country.

No complaint, however, is more common than that of a scarcity of
money. Money, like wine, must always be scarce with those who have
neither wherewithal to buy it, nor credit to borrow it. Those who have
either, will seldom be in want either of the money, or of the wine
which they have occasion for. This complaint, however, of the scarcity
of money, is not always confined to improvident spendthrifts. It is
sometimes general through a whole mercantile town and the country in
its neighbourhood. Over-trading is the common cause of it. Sober men,
whose projects have been disproportioned to their capitals, are as
likely to have neither wherewithal to buy money, nor credit to borrow
it, as prodigals, whose expense has been disproportioned to their
revenue. Before their projects can be brought to bear, their stock is
gone, and their credit with it. They run about everywhere to borrow
money, and everybody tells them that they have none to lend. Even such
general complaints of the scarcity of money do not always prove that
the usual number of gold and silver pieces are not circulating in the
country, but that many people want those pieces who have nothing to
give for them. When the profits of trade happen to be greater than
ordinary over-trading becomes a general error, both among great and
small dealers. They do not always send more money abroad than usual,
but they buy upon credit, both at home and abroad, an unusual quantity
of goods, which they send to some distant market, in hopes that the
returns will come in before the demand for payment. The demand comes
before the returns, and they have nothing at hand with which they can
either purchase money or give solid security for borrowing. It is not
any scarcity of gold and silver, but the difficulty which such people
find in borrowing, and which their creditor find in getting payment,
that occasions the general complaint of the scarcity of money.

It would be too ridiculous to go about seriously to prove, that wealth
does not consist in money, or in gold and silver; but in what money
purchases, and is valuable only for purchasing. Money, no doubt, makes
always a part of the national capital; but it has already been shown
that it generally makes but a small part, and always the most
unprofitable part of it.

It is not because wealth consists more essentially in money than in
goods, that the merchant finds it generally more easy to buy goods
with money, than to buy money with goods; but because money is the
known and established instrument of commerce, for which every thing is
readily given in exchange, but which is not always with equal
readiness to be got in exchange for every thing. The greater part of
goods, besides, are more perishable than money, and he may frequently
sustain a much greater loss by keeping them. When his goods are upon
hand, too, he is more liable to such demands for money as he may not
be able to answer, than when he has got their price in his coffers.
Over and above all this, his profit arises more directly from selling
than from buying; and he is, upon all these accounts, generally much
more anxious to exchange his goods for money than his money for goods.
But though a particular merchant, with abundance of goods in his
warehouse, may sometimes be ruined by not being able to sell them in
time, a nation or country is not liable to the same accident, The
whole capital of a merchant frequently consists in perishable goods
destined for purchasing money. But it is but a very small part of the
annual produce of the land and labour of a country, which can ever be
destined for purchasing gold and silver from their neighbours. The far
greater part is circulated and consumed among themselves; and even of
the surplus which is sent abroad, the greater part is generally
destined for the purchase of other foreign goods. Though gold and
silver, therefore, could not be had in exchange for the goods destined
to purchase them, the nation would not be ruined. It might, indeed,
suffer some loss and inconveniency, and be forced upon some of those
expedients which are necessary for supplying the place of money. The
annual produce of its land and labour, however, would be the same, or
very nearly the same as usual; because the same, or very nearly the
same consumable capital would be employed in maintaining it. And
though goods do not always draw money so readily as money draws goods,
in the long-run they draw it more necessarily than even it draws them.
Goods can serve many other purposes besides purchasing money, but
money can serve no other purpose besides purchasing goods. Money,
therefore, necessarily runs after goods, but goods do not always or
necessarily run after money. The man who buys, does not always mean to
sell again, but frequently to use or to consume; whereas he who sells
always means to buy again. The one may frequently have done the whole,
but the other can never have done more than the one half of his
business. It is not for its own sake that men desire money, but for
the sake of what they can purchase with it.

Consumable commodities, it is said, are soon destroyed; whereas gold
and silver are of a more durable nature, and were it not for this
continual exportation, might be accumulated for ages together, to the
incredible augmentation of the real wealth of the country. Nothing,
therefore, it is pretended, can be more disadvantageous to any
country, than the trade which consists in the exchange of such lasting
for such perishable commodities. We do not, however, reckon that trade
disadvantageous, which consists in the exchange of the hardware of
England for the wines of France, and yet hardware is a very durable
commodity, and were it not for this continual exportation, might too
be accumulated for ages together, to the incredible augmentation of
the pots and pans of the country. But it readily occurs, that the
number of such utensils is in every country necessarily limited by the
use which there is for them; that it would be absurd to have more pots
and pans than were necessary for cooking the victuals usually consumed
there; and that, if the quantity of victuals were to increase, the
number of pots and pans would readily increase along with it; a part
of the increased quantity of victuals being employed in purchasing
them, or in maintaining an additional number of workmen whose business
it was to make them. It should as readily occur, that the quantity of
gold and silver is, in every country, limited by the use which there
is for those metals; that their use consists in circulating
commodities, as coin, and in affording a species of household
furniture, as plate; that the quantity of coin in every country is
regulated by the value of the commodities which are to be circulated
by it; increase that value, and immediately a part of it will be sent
abroad to purchase, wherever it is to be had, the additional quantity
of coin requisite for circulating them: that the quantity of plate is
regulated by the number and wealth of those private families who
choose to indulge themselves in that sort of magnificence; increase
the number and wealth of such families, and a part of this increased
wealth will most probably be employed in purchasing, wherever it is to
be found, an additional quantity of plate; that to attempt to increase
the wealth of any country, either by introducing or by detaining in it
an unnecessary quantity of gold and silver, is as absurd as it would
be to attempt to increase the good cheer of private families, by
obliging them to keep an unnecessary number of kitchen utensils. As
the expense of purchasing those unnecessary utensils would diminish,
instead of increasing, either the quantity or goodness of the family
provisions; so the expense of purchasing an unnecessary quantity of
gold and silver must, in every country, as necessarily diminish the
wealth which feeds, clothes, and lodges, which maintains and employs
the people. Gold and silver, whether in the shape of coin or of plate,
are utensils, it must be remembered, as much as the furniture of the
kitchen. Increase the use of them, increase the consumable commodities
which are to be circulated, managed, and prepared by means of them,
and you will infallibly increase the quantity; but if you attempt by
extraordinary means to increase the quantity, you will as infallibly
diminish the use, and even the quantity too, which in those metals can
never be greater than what the use requires. Were they ever to be
accumulated beyond this quantity, their transportation is so easy, and
the loss which attends their lying idle and unemployed so great, that
no law could prevent their being immediately sent out of the country.

It is not always necessary to accumulate gold and silver, in order to
enable a country to carry on foreign wars, and to maintain fleets and
armies in distant countries. Fleets and armies are maintained, not
with gold and silver, but with consumable goods. The nation which,
from the annual produce of its domestic industry, from the annual
revenue arising out of its lands, and labour, and consumable stock,
has wherewithal to purchase those consumable goods in distant
countries, can maintain foreign wars there.

A nation may purchase the pay and provisions of an army in a distant
country three different ways; by sending abroad either, first, some
part of its accumulated gold and silver; or, secondly, some part of
the annual produce of its manufactures; or, last of all, some part of
its annual rude produce.

The gold and silver which can properly be considered as accumulated,
or stored up in any country, may be distinguished into three parts;
first, the circulating money; secondly, the plate of private families;
and, last of all, the money which may have been collected by many
years parsimony, and laid up in the treasury of the prince.

It can seldom happen that much can be spared from the circulating
money of the country; because in that there can seldom be much
redundancy. The value of goods annually bought and sold in any country
requires a certain quantity of money to circulate and distribute them
to their proper consumers, and can give employment to no more. The
channel of circulation necessarily draws to itself a sum sufficient to
fill it, and never admits any more. Something, however, is generally
withdrawn from this channel in the case of foreign war. By the great
number of people who are maintained abroad, fewer are maintained at
home. Fewer goods are circulated there, and less money becomes
necessary to circulate them. An extraordinary quantity of paper money
of some sort or other, too, such as exchequer notes, navy bills, and
bank bills, in England, is generally issued upon such occasions, and,
by supplying the place of circulating gold and silver, gives an
opportunity of sending a greater quantity of it abroad. All this,
however, could afford but a poor resource for maintaining a foreign
war, of great expense, and several years duration.

The melting down of the plate of private families has, upon every
occasion, been found a still more insignificant one. The French, in
the beginning of the last war, did not derive so much advantage from
this expedient as to compensate the loss of the fashion.

The accumulated treasures of the prince have in former times afforded
a much greater and more lasting resource. In the present times, if you
except the king of Prussia, to accumulate treasure seems to be no part
of the policy of European princes.

The funds which maintained the foreign wars of the present century,
the most expensive perhaps which history records, seem to have had
little dependency upon the exportation either of the circulating
money, or of the plate of private families, or of the treasure of the
prince. The last French war cost Great Britain upwards of 90,000,000,
including not only the 75,000,000 of new debt that was contracted,
but the additional 2s. in the pound land-tax, and what was annually
borrowed of the sinking fund. More than two-thirds of this expense
were laid out in distant countries; in Germany, Portugal, America, in
the ports of the Mediterranean, in the East and West Indies. The kings
of England had no accumulated treasure. We never heard of any
extraordinary quantity of plate being melted down. The circulating
gold and silver of the country had not been supposed to exceed
18,000,000. Since the late recoinage of the gold, however, it is
believed to have been a good deal under-rated. Let us suppose,
therefore, according to the most exaggerated computation which I
remember to have either seen or heard of, that, gold and silver
together, it amounted to 30,000,000. Had the war been carried on by
means of our money, the whole of it must, even according to this
computation, have been sent out and returned again, at least twice in
a period of between six and seven years. Should this be supposed, it
would afford the most decisive argument, to demonstrate how
unnecessary it is for government to watch over the preservation of
money, since, upon this supposition, the whole money of the country
must have gone from it, and returned to it again, two different times
in so short a period, without any body's knowing any thing of the
matter. The channel of circulation, however, never appeared more empty
than usual during any part of this period. Few people wanted money who
had wherewithal to pay for it. The profits of foreign trade, indeed,
were greater than usual during the whole war, but especially towards
the end of it. This occasioned, what it always occasions, a general
over-trading in all the ports of Great Britain; and this again
occasioned the usual complaint of the scarcity of money, which always
follows over-trading. Many people wanted it, who had neither
wherewithal to buy it, nor credit to borrow it; and because the
debtors found it difficult to borrow, the creditors found it difficult
to get payment. Gold and silver, however, were generally to be had for
their value, by those who had that value to give for them.

The enormous expense of the late war, therefore, must have been
chiefly defrayed, not by the exportation of gold and silver, but by
that of British commodities of some kind or other. When the
government, or those who acted under them, contracted with a merchant
for a remittance to some foreign country, he would naturally endeavour
to pay his foreign correspondent, upon whom he granted a bill, by
sending abroad rather commodities than gold and silver. If the
commodities of Great Britain were not in demand in that country, he
would endeavour to send them to some other country in which he could
purchase a bill upon that country. The transportation of commodities,
when properly suited to the market, is always attended with a
considerable profit; whereas that of gold and silver is scarce ever
attended with any. When those metals are sent abroad in order to
purchase foreign commodities, the merchant's profit arises, not from
the purchase, but from the sale of the returns. But when they are sent
abroad merely to pay a debt, he gets no returns, and consequently no
profit. He naturally, therefore, exerts his invention to find out a
way of paying his foreign debts, rather by the exportation of
commodities, than by that of gold and silver. The great quantity of
British goods, exported during the course of the late war, without
bringing back any returns, is accordingly remarked by the author of
the Present State of the Nation.

Besides the three sorts of gold and silver above mentioned, there is
in all great commercial countries a good deal of bullion alternately
imported and exported, for the purposes of foreign trade. This
bullion, as it circulates among different commercial countries, in the
same manner as the national coin circulates in every country, may be
considered as the money of the great mercantile republic. The national
coin receives its movement and direction from the commodities
circulated within the precincts of each particular country; the money
in the mercantile republic, from those circulated between different
countries. Both are employed in facilitating exchanges, the one
between different individuals of the same, the other between those of
different nations. Part of this money of the great mercantile republic
may have been, and probably was, employed in carrying on the late war.
In time of a general war, it is natural to suppose that a movement and
direction should be impressed upon it, different from what it usually
follows in profound peace, that it should circulate more about the
seat of the war, and be more employed in purchasing there, and in the
neighbouring countries, the pay and provisions of the different
armies. But whatever part of this money of the mercantile republic
Great Britain may have annually employed in this manner, it must have
been annually purchased, either with British commodities, or with
something else that had been purchased with them; which still brings
us back to commodities, to the annual produce of the land and labour
of the country, as the ultimate resources which enabled us to carry on
the war. It is natural, indeed, to suppose, that so great an annual
expense must have been defrayed from a great annual produce. The
expense of 1761, for example, amounted to more than 19,000,000. No
accumulation could have supported so great an annual profusion. There
is no annual produce, even of gold and silver, which could have
supported it. The whole gold and silver annually imported into both
Spain and Portugal, according to the best accounts, does not commonly
much exceed 6,000,000 sterling, which, in some years, would scarce
have paid four months expense of the late war.

The commodities most proper for being transported to distant
countries, in order to purchase there either the pay and provisions of
an army, or some part of the money of the mercantile republic to be
employed in purchasing them, seem to be the finer and more improved
manufactures; such as contain a great value in a small bulk, and can
therefore be exported to a great distance at little expense. A country
whose industry produces a great annual surplus of such manufactures,
which are usually exported to foreign countries, may carry on for many
years a very expensive foreign war, without either exporting any
considerable quantity of gold and silver, or even having any such
quantity to export. A considerable part of the annual surplus of its
manufactures must, indeed, in this case, be exported without bringing
back any returns to the country, though it does to the merchant; the
government purchasing of the merchant his bills upon foreign
countries, in order to purchase there the pay and provisions of an
army. Some part of this surplus, however, may still continue to bring
back a return. The manufacturers during; the war will have a double
demand upon them, and be called upon first to work up goods to be sent
abroad, for paying the bills drawn upon foreign countries for the pay
and provisions of the army: and, secondly, to work up such as are
necessary for purchasing the common returns that had usually been
consumed in the country. In the midst of the most destructive foreign
war, therefore, the greater part of manufactures may frequently
flourish greatly; and, on the contrary, they may decline on the return
of peace. They may flourish amidst the ruin of their country, and
begin to decay upon the return of its prosperity. The different state
of many different branches of the British manufactures during the late
war, and for some time after the peace, may serve as an illustration
of what has been just now said.

No foreign war, of great expense or duration, could conveniently be
carried on by the exportation of the rude produce of the soil. The
expense of sending such a quantity of it into a foreign country as
might purchase the pay and provisions of an army would be too great.
Few countries, too, produce much more rude produce than what is
sufficient for the subsistence of their own inhabitants. To send
abroad any great quantity of it, therefore, would be to send abroad a
part of the necessary subsistence of the people. It is otherwise with
the exportation of manufactures. The maintenance of the people
employed in them is kept at home, and only the surplus part of their
work is exported. Mr Hume frequently takes notice of the inability of
the ancient kings of England to carry on, without interruption, any
foreign war of long duration. The English in those days had nothing
wherewithal to purchase the pay and provisions of their armies in
foreign countries, but either the rude produce of the soil, of which
no considerable part could be spared from the home consumption, or a
few manufactures of the coarsest kind, of which, as well as of the
rude produce, the transportation was too expensive. This inability did
not arise from the want of money, but of the finer and more improved
manufactures. Buying and selling was transacted by means of money in
England then as well as now. The quantity of circulating money must
have borne the same proportion, to the number and value of purchases
and sales usually transacted at that time, which it does to those
transacted at present; or, rather, it must have borne a greater
proportion, because there was then no paper, which now occupies a
great part of the employment of gold and silver. Among nations to whom
commerce and manufactures are little known, the sovereign, upon
extraordinary occasions, can seldom draw any considerable aid from his
subjects, for reasons which shall be explained hereafter. It is in
such countries, therefore, that he generally endeavours to accumulate
a treasure, as the only resource against such emergencies. Independent
of this necessity, he is, in such a situation, naturally disposed to
the parsimony requisite for accumulation. In that simple state, the
expense even of a sovereign is not directed by the vanity which
delights in the gaudy finery of a court, but is employed in bounty to
his tenants, and hospitality to his retainers. But bounty and
hospitality very seldom lead to extravagance; though vanity almost
always does. Every Tartar chief, accordingly, has a treasure. The
treasures of Mazepa, chief of the Cossacks in the Ukraine, the famous
ally of Charles XII., are said to have been very great. The French
kings of the Merovingian race had all treasures. When they divided
their kingdom among their different children, they divided their
treasures too. The Saxon princes, and the first kings after the
Conquest, seem likewise to have accumulated treasures. The first
exploit of every new reign was commonly to seize the treasure of the
preceding king, as the most essential measure for securing the
succession. The sovereigns of improved and commercial countries are
not under the same necessity of accumulating treasures, because they
can generally draw from their subjects extraordinary aids upon
extraordinary occasions. They are likewise less disposed to do so.
They naturally, perhaps necessarily, follow the mode of the times; and
their expense comes to be regulated by the same extravagant vanity
which directs that of all the other great proprietors in their
dominions. The insignificant pageantry of their court becomes every
day more brilliant; and the expense of it not only prevents
accumulation, but frequently encroaches upon the funds destined for
more necessary expenses. What Dercyllidas said of the court of Persia,
may be applied to that of several European princes, that he saw there
much splendour, but little strength, and many servants, but few

The importation of gold and silver is not the principal, much less the
sole benefit, which a nation derives from its foreign trade. Between
whatever places foreign trade is carried on, they all of them derive
two distinct benefits from it. It carries out that surplus part of the
produce of their land and labour for which there is no demand among
them, and brings back in return for it something else for which there
is a demand. It gives a value to their superfluities, by exchanging
them for something else, which may satisfy a part of their wants and
increase their enjoyments. By means of it, the narrowness of the home
market does not hinder the division of labour in any particular branch
of art or manufacture from being carried to the highest perfection. By
opening a more extensive market for whatever part of the produce of
their labour may exceed the home consumption, it encourages them to
improve its productive power, and to augment its annual produce to the
utmost, and thereby to increase the real revenue and wealth of the
society. These great and important services foreign trade is
continually occupied in performing to all the different countries
between which it is carried on. They all derive great benefit from it,
though that in which the merchant resides generally derives the
greatest, as he is generally more employed in supplying the wants, and
carrying out the superfluities of his own, than of any other
particular country. To import the gold and silver which may be wanted
into the countries which have no mines, is, no doubt a part of the
business of foreign commerce. It is, however, a most insignificant
part of it. A country which carried on foreign trade merely upon this
account, could scarce have occasion to freight a ship in a century.

It is not by the importation of gold and silver that the discovery of
America has enriched Europe. By the abundance of the American mines,
those metals have become cheaper. A service of plate can now be
purchased for about a third part of the corn, or a third part of the
labour, which it would have cost in the fifteenth century. With the
same annual expense of labour and commodities, Europe can annually
purchase about three times the quantity of plate which it could have
purchased at that time. But when a commodity comes to be sold for a
third part of what bad been its usual price, not only those who
purchased it before can purchase three times their former quantity,
but it is brought down to the level of a much greater number of
purchasers, perhaps to more than ten, perhaps to more than twenty
times the former number. So that there may be in Europe at present,
not only more than three times, but more than twenty or thirty times
the quantity of plate which would have been in it, even in its present
state of improvement, had the discovery of the American mines never
been made. So far Europe has, no doubt, gained a real conveniency,
though surely a very trifling one. The cheapness of gold and silver
renders those metals rather less fit for the purposes of money than
they were before. In order to make the same purchases, we must load
ourselves with a greater quantity of them, and carry about a shilling
in our pocket, where a groat would have done before. It is difficult
to say which is most trifling, this inconveniency, or the opposite
conveniency. Neither the one nor the other could have made any very
essential change in the state of Europe. The discovery of America,
however, certainly made a most essential one. By opening a new and
inexhaustible market to all the commodities of Europe, it gave
occasion to new divisions of labour and improvements of art, which in
the narrow circle of the ancient commerce could never have taken
place, for want of a market to take off the greater part of their
produce. The productive powers of labour were improved, and its
produce increased in all the different countries of Europe, and
together with it the real revenue and wealth of the inhabitants. The
commodities of Europe were almost all new to America, and many of
those of America were new to Europe. A new set of exchanges,
therefore, began to take place, which had never been thought of
before, and which should naturally have proved as advantageous to the
new, as it certainly did to the old continent. The savage injustice of
the Europeans rendered an event, which ought to have been beneficial
to all, ruinous and destructive to several of those unfortunate

The discovery of a passage to the East Indies by the Cape of Good
Hope, which happened much about the same time, opened perhaps a still
more extensive range to foreign commerce, than even that of America,
notwithstanding the greater distance. There were but two nations in
America, in any respect, superior to the savages, and these were
destroyed almost as soon as discovered. The rest were mere savages.
But the empires of China, Indostan, Japan, as well as several others
in the East Indies, without having richer mines of gold or silver,
were, in every other respect, much richer, better cultivated, and more
advanced in all arts and manufactures, than either Mexico or Peru,
even though we should credit, what plainly deserves no credit, the
exaggerated accounts of the Spanish writers concerning the ancient
state of those empires. But rich and civilized nations can always
exchange to a much greater value with one another, than with savages
and barbarians. Europe, however, has hitherto derived much less
advantage from its commerce with the East Indies, than from that with
America. The Portuguese monopolized the East India trade to themselves
for about a century; and it was only indirectly, and through them,
that the other nations of Europe could either send out or receive any
goods from that country. When the Dutch, in the beginning of the last
century, began to encroach upon them, they vested their whole East
India commerce in an exclusive company. The English, French, Swedes,
and Danes, have all followed their example; so that no great nation of
Europe has ever yet had the benefit of a free commerce to the East
Indies. No other reason need be assigned why it has never been so
advantageous as the trade to America, which, between almost every
nation of Europe and its own colonies, is free to all its subjects.
The exclusive privileges of those East India companies, their great
riches, the great favour and protection which these have procured them
from their respective governments, have excited much envy against
them. This envy has frequently represented their trade as altogether
pernicious, on account of the great quantities of silver which it
every year exports from the countries from which it is carried on. The
parties concerned have replied, that their trade by this continual
exportation of silver, might indeed tend to impoverish Europe in
general, but not the particular country from which it was carried on;
because, by the exportation of a part of the returns to other European
countries, it annually brought home a much greater quantity of that
metal than it carried out. Both the objection and the reply are
founded in the popular notion which I have been just now examining. It
is therefore unnecessary to say any thing further about either. By the
annual exportation of silver to the East Indies, plate is probably
somewhat dearer in Europe than it otherwise might have been; and
coined silver probably purchases a larger quantity both of labour and
commodities. The former of these two effects is a very small loss, the
latter a very small advantage; both too insignificant to deserve any
part of the public attention. The trade to the East Indies, by opening
a market to the commodities of Europe, or, what comes nearly to the
same thing, to the gold and silver which is purchased with those
commodities, must necessarily tend to increase the annual production
of European commodities, and consequently the real wealth and revenue
of Europe. That it has hitherto increased them so little, is probably
owing to the restraints which it everywhere labours under.

I thought it necessary, though at the hazard of being tedious, to
examine at full length this popular notion, that wealth consists in
money or in gold and silver. Money, in common language, as I have
already observed, frequently signifies wealth; and this ambiguity of
expression has rendered this popular notion so familiar to us, that
even they who are convinced of its absurdity, are very apt to forget
their own principles, and, in the course of their reasonings, to take
it for granted as a certain and undeniable truth. Some of the best
English writers upon commerce set out with observing, that the wealth
of a country consists, not in its gold and silver only, but in its
lands, houses, and consumable goods of all different kinds. In the
course of their reasonings, however, the lands, houses, and consumable
goods, seem to slip out of their memory; and the strain of their
argument frequently supposes that all wealth consists in gold and
silver, and that to multiply those metals is the great object of
national industry and commerce.

The two principles being established, however, that wealth consisted
in gold and silver, and that those metals could be brought into a
country which had no mines, only by the balance of trade, or by
exporting to a greater value than it imported; it necessarily became
the great object of political economy to diminish as much as possible
the importation of foreign goods for home consumption, and to increase
as much as possible the exportation of the produce of domestic
industry. Its two great engines for enriching the country, therefore,
were restraints upon importation, and encouragement to exportation.

The restraints upon importation were of two kinds.

First, restraints upon the importation of such foreign goods for home
consumption as could be produced at home, from whatever country they
were imported.

Secondly, restraints upon the importation of goods of almost all
kinds, from those particular countries with which the balance of trade
was supposed to be disadvantageous.

Those different restraints consisted sometimes in high duties, and
sometimes in absolute prohibitions.

Exportation was encouraged sometimes by drawbacks, sometimes by
bounties, sometimes by advantageous treaties of commerce with foreign
states, and sometimes by the establishment of colonies in distant

Drawbacks were given upon two different occasions. When the home
manufactures were subject to any duty or excise, either the whole or a
part of it was frequently drawn back upon their exportation; and when
foreign goods liable to a duty were imported, in order to be exported
again, either the whole or a part of this duty was sometimes given
back upon such exportation.

Bounties were given for the encouragement, either of some beginning
manufactures, or of such sorts of industry of other kinds as were
supposed to deserve particular favour.

By advantageous treaties of commerce, particular privileges were
procured in some foreign state for the goods and merchants of the
country, beyond what were granted to those of other countries.

By the establishment of colonies in distant countries, not only
particular privileges, but a monopoly was frequently procured for the
goods and merchants of the country which established them.

The two sorts of restraints upon importation above mentioned, together
with these four encouragements to exportation, constitute the six
principal means by which the commercial system proposes to increase
the quantity of gold and silver in any country, by turning the balance
of trade in its favour. I shall consider each of them in a particular
chapter, and, without taking much farther notice of their supposed
tendency to bring money into the country, I shall examine chiefly what
are likely to be the effects of each of them upon the annual produce
of its industry. According as they tend either to increase or diminish
the value of this annual produce, they must evidently tend either to
increase or diminish the real wealth and revenue of the country.



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