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fruitful marriages produce.

The liberal reward of labour, by enabling them to provide better for
their children, and consequently to bring up a greater number,
naturally tends to widen and extend those limits. It deserves to be
remarked, too, that it necessarily does this as nearly as possible in
the proportion which the demand for labour requires. If this demand is
continually increasing, the reward of labour must necessarily
encourage in such a manner the marriage and multiplication of
labourers, as may enable them to supply that continually increasing
demand by a continually increasing population. If the reward should at
any time be less than what was requisite for this purpose, the
deficiency of hands would soon raise it; and if it should at any time
be more, their excessive multiplication would soon lower it to this
necessary rate. The market would be so much understocked with labour
in the one case, and so much overstocked in the other, as would soon
force back its price to that proper rate which the circumstances of
the society required. It is in this manner that the demand for men,
like that for any other commodity, necessarily regulates the
production of men, quickens it when it goes on too slowly, and stops
it when it advances too fast. It is this demand which regulates and
determines the state of propagation in all the different countries of
the world; in North America, in Europe, and in China; which renders it
rapidly progressive in the first, slow and gradual in the second, and
altogether stationary in the last.

The wear and tear of a slave, it has been said, is at the expense of
his master; but that of a free servant is at his own expense. The wear
and tear of the latter, however, is, in reality, as much at the
expense of his master as that of the former. The wages paid to
journeymen and servants of every kind must be such as may enable them,
one with another to continue the race of journeymen and servants,
according as the increasing, diminishing, or stationary demand of the
society, may happen to require. But though the wear and tear of a free
servant be equally at the expense of his master, it generally costs
him much less than that of a slave. The fund destined for replacing or
repairing, if I may say so, the wear and tear of the slave, is
commonly managed by a negligent master or careless overseer. That
destined for performing the same office with regard to the freeman is
managed by the freeman himself. The disorders which generally prevail
in the economy of the rich, naturally introduce themselves into the
management of the former; the strict frugality and parsimonious
attention of the poor as naturally establish themselves in that of the
latter. Under such different management, the same purpose must require
very different degrees of expense to execute it. It appears,
accordingly, from the experience of all ages and nations, I believe,
that the work done by freemen comes cheaper in the end than that
performed by slaves. It is found to do so even at Boston, New-York,
and Philadelphia, where the wages of common labour are so very high.

The liberal reward of labour, therefore, as it is the effect of
increasing wealth, so it is the cause of increasing population. To
complain of it, is to lament over the necessary cause and effect of
the greatest public prosperity.

It deserves to be remarked, perhaps, that it is in the progressive
state, while the society is advancing to the further acquisition,
rather than when it has acquired its full complement of riches, that
the condition of the labouring poor, of the great body of the people,
seems to be the happiest and the most comfortable. It is hard in the
stationary, and miserable in the declining state. The progressive
state is, in reality, the cheerful and the hearty state to all the
different orders of the society; the stationary is dull; the declining
melancholy.

The liberal reward of labour, as it encourages the propagation, so it
increases the industry of the common people. The wages of labour are
the encouragement of industry, which, like every other human quality,
improves in proportion to the encouragement it receives. A plentiful
subsistence increases the bodily strength of the labourer, and the
comfortable hope of bettering his condition, and of ending his days,
perhaps, in ease and plenty, animates him to exert that strength to
the utmost. Where wages are high, accordingly, we shall always find
the workmen more active, diligent, and expeditious, than where they
are low; in England, for example, than in Scotland; in the
neighbourhood of great towns, than in remote country places. Some
workmen, indeed, when they can earn in four days what will maintain
them through the week, will be idle the other three. This, however, is
by no means the case with the greater part. Workmen, on the contrary,
when they are liberally paid by the piece, are very apt to overwork
themselves, and to ruin their health and constitution in a few years.
A carpenter in London, and in some other places, is not supposed to
last in his utmost vigour above eight years. Something of the same
kind happens in many other trades, in which the workmen are paid by
the piece; as they generally are in manufactures, and even in country
labour, wherever wages are higher than ordinary. Almost every class of
artificers is subject to some peculiar infirmity occasioned by
excessive application to their peculiar species of work. Ramuzzini, an
eminent Italian physician, has written a particular book concerning
such diseases. We do not reckon our soldiers the most industrious set
of people among us; yet when soldiers have been employed in some
particular sorts of work, and liberally paid by the piece, their
officers have frequently been obliged to stipulate with the
undertaker, that they should not be allowed to earn above a certain
sum every day, according to the rate at which they were paid. Till
this stipulation was made, mutual emulation, and the desire of greater
gain, frequently prompted them to overwork themselves, and to hurt
their health by excessive labour. Excessive application, during four
days of the week, is frequently the real cause of the idleness of the
other three, so much and so loudly complained of. Great labour, either
of mind or body, continued for several days together is, in most men,
naturally followed by a great desire of relaxation, which, if not
restrained by force, or by some strong necessity, is almost
irresistible. It is the call of nature, which requires to be relieved
by some indulgence, sometimes of ease only, but sometimes too of
dissipation and diversion. If it is not complied with, the
consequences are often dangerous and sometimes fatal, and such as
almost always, sooner or later, bring on the peculiar infirmity of the
trade. If masters would always listen to the dictates of reason and
humanity, they have frequently occasion rather to moderate, than to
animate the application of many of their workmen. It will be found, I
believe, in every sort of trade, that the man who works so moderately,
as to be able to work constantly, not only preserves his health the
longest, but, in the course of the year, executes the greatest
quantity of work.

In cheap years it is pretended, workmen are generally more idle, and
in dear times more industrious than ordinary. A plentiful subsistence,
therefore, it has been concluded, relaxes, and a scanty one quickens
their industry. That a little more plenty than ordinary may render
some workmen idle, cannot be well doubted; but that it should have
this effect upon the greater part, or that men in general should work
better when they are ill fed, than when they are well fed, when they
are disheartened than when they are in good spirits, when they are
frequently sick than when they are generally in good health, seems not
very probable. Years of dearth, it is to be observed, are generally
among the common people years of sickness and mortality, which cannot
fail to diminish the produce of their industry.

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

In years of scarcity, the difficulty and uncertainty of subsistence
make all such people eager to return to service. But the high price of
provisions, by diminishing the funds destined for the maintenance of
servants, disposes masters rather to diminish than to increase the
number of those they have. In dear years, too, poor independent
workmen frequently consume the little stock with which they had used
to supply themselves with the materials of their work, and are obliged
to become journeymen for subsistence. More people want employment than
easily get it; many are willing to take it upon lower terms than
ordinary; and the wages of both servants and journeymen frequently
sink in dear years.

Masters of all sorts, therefore, frequently make better bargains with
their servants in dear than in cheap years, and find them more humble
and dependent in the former than in the latter. They naturally,
therefore, commend the former as more favourable to industry.
Landlords and farmers, besides, two of the largest classes of masters,
have another reason for being pleased with dear years. The rents of
the one, and the profits of the other, depend very much upon the price
of provisions. Nothing can be more absurd, however, than to imagine
that men in general should work less when they work for themselves,
than when they work for other people. A poor independent workman will
generally be more industrious than even a journeyman who works by the
piece. The one enjoys the whole produce of his own industry, the other
shares it with his master. The one, in his separate independent state,
is less liable to the temptations of bad company, which, in large
manufactories, so frequently ruin the morals of the other. The
superiority of the independent workman over those servants who are
hired by the month or by the year, and whose wages and maintenance are
the same, whether they do much or do little, is likely to be still
greater. Cheap years tend to increase the proportion of independent
workmen to journeymen and servants of all kinds, and dear years to
diminish it.

A French author of great knowledge and ingenuity, Mr Messance,
receiver of the taillies in the election of St Etienne, endeavours to
shew that the poor do more work in cheap than in dear years, by
comparing the quantity and value of the goods made upon those
different occasions in three different manufactures; one of coarse
woollens, carried on at Elbeuf; one of linen, and another of silk,
both which extend through the whole generality of Rouen. It appears
from his account, which is copied from the registers of the public
offices, that the quantity and value of the goods made in all those
three manufactories has generally been greater in cheap than in dear
years, and that it has always been; greatest in the cheapest, and
least in the dearest years. All the three seem to be stationary
manufactures, or which, though their produce may vary somewhat from
year to year, are, upon the whole, neither going backwards nor
forwards.

The manufacture of linen in Scotland, and that of coarse woollens in
the West Riding of Yorkshire, are growing manufactures, of which the
produce is generally, though with some variations, increasing both in
quantity and value. Upon examining, however, the accounts which have
been published of their annual produce, I have not been able to
observe that its variations have had any sensible connection with the
dearness or cheapness of the seasons. In 1740, a year of great
scarcity, both manufactures, indeed, appear to have declined very
considerably. But in 1756, another year or great scarcity, the Scotch
manufactures made more than ordinary advances. The Yorkshire
manufacture, indeed, declined, and its produce did not rise to what it
had been in 1755, till 1766, after the repeal of the American stamp
act. In that and the following year, it greatly exceeded what it had
ever been before, and it has continued to advance ever since.

The produce of all great manufactures for distant sale must
necessarily depend, not so much upon the dearness or cheapness of the
seasons in the countries where they are carried on, as upon the
circumstances which affect the demand in the countries where they are
consumed; upon peace or war, upon the prosperity or declension of
other rival manufactures and upon the good or bad humour of their
principal customers. A great part of the extraordinary work, besides,
which is probably done in cheap years, never enters the public
registers of manufactures. The men-servants, who leave their masters,
become independent labourers. The women return to their parents, and
commonly spin, in order to make clothes for themselves and their
families. Even the independent workmen do not always, work for public
sale, but are employed by some of their neighbours in manufactures for
family use. The produce of their labour, therefore, frequently makes
no figure in those public registers, of which the records are
sometimes published with so much parade, and from which our merchants
and manufacturers would often vainly pretend to announce the
prosperity or declension of the greatest empires.

Through the variations in the price of labour not only do not always
correspond with those in the price of provisions, but are frequently
quite opposite, we must not, upon this account, imagine that the price
of provisions has no influence upon that of labour. The money price of
labour is necessarily regulated by two circumstances; the demand for
labour, and the price of the necessaries and conveniencies of life.
The demand for labour, according as it happens to be increasing,
stationary, or declining, or to require an increasing, stationary, or
declining population, determines the quantities of the necessaries and
conveniencies of life which must be given to the labourer; and the
money price of labour is determined by what is requisite for
purchasing this quantity. Though the money price of labour, therefore,
is sometimes high where the price of provisions is low, it would be
still higher, the demand continuing the same, if the price of
provisions was high.

It is because the demand for labour increases in years of sudden and
extraordinary plenty, and diminishes in those of sudden and
extraordinary scarcity, that the money price of labour sometimes rises
in the one, and sinks in the other.

In a year of sudden and extraordinary plenty, there are funds in the
hands of many of the employers of industry, sufficient to maintain and
employ a greater number of industrious people than had been employed
the year before; and this extraordinary number cannot always be had.
Those masters, therefore, who want more workmen, bid against one
another, in order to get them, which sometimes raises both the real
and the money price of their labour.

The contrary of this happens in a year of sudden and extraordinary
scarcity. The funds destined for employing industry are less than they
had been the year before. A considerable number of people are thrown
out of employment, who bid one against another, in order to get it,
which sometimes lowers both the real and the money price of labour. In
1740, a year of extraordinary scarcity, many people were willing to
work for bare subsistence. In the succeeding years of plenty, it was
more difficult to get labourers and servants. The scarcity of a dear
year, by diminishing the demand for labour, tends to lower its price,
as the high price of provisions tends to raise it. The plenty of a
cheap year, on the contrary, by increasing the demand, tends to raise
the price of labour, as the cheapness of provisions tends to lower it.
In the ordinary variations of the prices of provisions, those two
opposite causes seem to counterbalance one another, which is probably,
in part, the reason why the wages of labour are everywhere so much
more steady and permanent than the price of provisions.

The increase in the wages of labour necessarily increases the price of
many commodities, by increasing that part of it which resolves itself
into wages, and so far tends to diminish their consumption, both at
home and abroad. The same cause, however, which raises the wages of
labour, the increase of stock, tends to increase its productive
powers, and to make a smaller quantity of labour produce a greater
quantity of work. The owner of the stock which employs a great number
of labourers necessarily endeavours, for his own advantage, to make
such a proper division and distribution of employment, that they may
be enabled to produce the greatest quantity of work possible. For the
same reason, he endeavours to supply them with the best machinery
which either he or they can think of. What takes place among the
labourers in a particular workhouse, takes place, for the same reason,
among those of a great society. The greater their number, the more
they naturally divide themselves into different classes and
subdivisions of employments. More heads are occupied in inventing the
most proper machinery for executing the work of each, and it is,
therefore, more likely to be invented. There me many commodities,
therefore, which, in consequence of these improvements, come to be
produced by so much less labour than before, that the increase of
its price is more than compensated by the diminution of its quantity.




CHAPTER IX.

OF THE PROFITS OF STOCK.

The rise and fall in the profits of stock depend upon the same causes
with the rise and fall in the wages of labour, the increasing or
declining state of the wealth of the society; but those causes affect
the one and the other very differently.

The increase of stock, which raises wages, tends to lower profit. When
the stocks of many rich merchants are turned into the same trade,
their mutual competition naturally tends to lower its profit; and when
there is a like increase of stock in all the different trades carried
on in the same society, the same competition must produce the same
effect in them all.

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

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

By the 37th of Henry VIII. all interest above ten per cent. was
declared unlawful. More, it seems, had sometimes been taken before
that. In the reign of Edward VI. religious zeal prohibited all
interest. This prohibition, however, like all others of the same kind,
is said to have produced no effect, and probably rather increased than
diminished the evil of usury. The statute of Henry VIII. was revived
by the 13th of Elizabeth, cap. 8. and ten per cent. continued to be
the legal rate of interest till the 21st of James I. when it was
restricted to eight per cent. It was reduced to six per cent. soon
after the Restoration, and by the 12th of Queen Anne, to five per
cent. All these different statutory regulations seem to have been made
with great propriety. They seem to have followed, and not to have gone
before, the market rate of interest, or the rate at which people of
good credit usually borrowed. Since the time of Queen Anne, five per
cent. seems to have been rather above than below the market rate.
Before the late war, the government borrowed at three per cent.; and
people of good credit in the capital, and in many other parts of the
kingdom, at three and a-half, four, and four and a-half per cent.

Since the time of Henry VIII. the wealth and revenue of the country
have been continually advancing, and in the course of their progress,
their pace seems rather to have been gradually accelerated than
retarded. They seem not only to have been going on, but to have been
going on faster and faster. The wages of labour have been continually
increasing during the same period, and, in the greater part of the
different branches of trade and manufactures, the profits of stock
have been diminishing.

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

In Scotland, though the legal rate of interest is the same as in
England, the market rate is rather higher. People of the best credit
there seldom borrow under five per cent. Even private bankers in
Edinburgh give four per cent. upon their promissory-notes, of which
payment, either in whole or in part may be demanded at pleasure.
Private bankers in London give no interest for the money which is
deposited with them. There are few trades which cannot be carried on
with a smaller stock in Scotland than in England. The common rate of
profit, therefore, must be somewhat greater. The wages of labour, it
has already been observed, are lower in Scotland than in England. The
country, too, is not only much poorer, but the steps by which it
advances to a better condition, for it is evidently advancing, seem to
be much slower and more tardy. The legal rate of interest in France
has not during the course of the present century, been always
regulated by the market rate {See Denisart, Article Taux des
Interests, tom. iii, p.13}. In 1720, interest was reduced from the
twentieth to the fiftieth penny, or from five to two per cent. In
1724, it was raised to the thirtieth penny, or to three and a third
per cent. In 1725, it was again raised to the twentieth penny, or to
five per cent. In 1766, during the administration of Mr Laverdy, it
was reduced to the twenty-fifth penny, or to four per cent. The Abb
Terray raised it afterwards to the old rate of five per cent. The
supposed purpose of many of those violent reductions of interest was
to prepare the way for reducing that of the public debts; a purpose
which has sometimes been executed. France is, perhaps, in the present
times, not so rich a country as England; and though the legal rate of
interest has in France frequently been lower than in England, the
market rate has generally been higher; for there, as in other
countries, they have several very safe and easy methods of evading the
law. The profits of trade, I have been assured by British merchants
who had traded in both countries, are higher in France than in
England; and it is no doubt upon this account, that many British
subjects chuse rather to employ their capitals in a country where
trade is in disgrace, than in one where it is highly respected. The
wages of labour are lower in France than in England. When you go from
Scotland to England, the difference which you may remark between the
dress and countenance of the common people in the one country and in
the other, sufficiently indicates the difference in their condition.
The contrast is still greater when you return from France. France,
though no doubt a richer country than Scotland, seems not to be going
forward so fast. It is a common and even a popular opinion in the
country, that it is going backwards; an opinion which I apprehend, is
ill-founded, even with regard to France, but which nobody can possibly
entertain with regard to Scotland, who sees the country now, and who
saw it twenty or thirty years ago.

The province of Holland, on the other hand, in proportion to the
extent of its territory and the number of its people, is a richer
country than England. The government there borrow at two per cent. and
private people of good credit at three. The wages of labour are said
to be higher in Holland than in England, and the Dutch, it is well
known, trade upon lower profits than any people in Europe. The trade
of Holland, it has been pretended by some people, is decaying, and it
may perhaps be true that some particular branches of it are so; but
these symptoms seem to indicate sufficiently that there is no general
decay. When profit diminishes, merchants are very apt to complain that
trade decays, though the diminution of profit is the natural effect of
its prosperity, or of a greater stock being employed in it than
before. During the late war, the Dutch gained the whole carrying trade
of France, of which they still retain a very large share. The great
property which they possess both in French and English funds, about
forty millions, it is said in the latter (in which, I suspect,
however, there is a considerable exaggeration ), the great sums which
they lend to private people, in countries where the rate of interest
is higher than in their own, are circumstances which no doubt
demonstrate the redundancy of their stock, or that it has increased
beyond what they can employ with tolerable profit in the proper
business of their own country; but they do not demonstrate that that
business has decreased. As the capital of a private man, though
acquired by a particular trade, may increase beyond what he can employ
in it, and yet that trade continue to increase too, so may likewise
the capital of a great nation.

In our North American and West Indian colonies, not only the wages of
labour, but the interest of money, and consequently the profits of
stock, are higher than in England. In the different colonies, both the
legal and the market rate of interest run from six to eight percent.
High wages of labour and high profits of stock, however, are things,
perhaps, which scarce ever go together, except in the peculiar
circumstances of new colonies. A new colony must always, for some
time, be more understocked in proportion to the extent of its
territory, and more underpeopled in proportion to the extent of its
stock, than the greater part of other countries. They have more land
than they have stock to cultivate. What they have, therefore, is
applied to the cultivation only of what is most fertile and most
favourably situated, the land near the sea-shore, and along the banks
of navigable rivers. Such land, too, is frequently purchased at a
price below the value even of its natural produce. Stock employed in
the purchase and improvement of such lands, must yield a very large
profit, and, consequently, afford to pay a very large interest. Its
rapid accumulation in so profitable an employment enables the planter
to increase the number of his hands faster than he can find them in a
new settlement. Those whom he can find, therefore, are very liberally
rewarded. As the colony increases, the profits of stock gradually
diminish. When the most fertile and best situated lands have been all
occupied, less profit can be made by the cultivation of what is
inferior both in soil and situation, and less interest can be afforded
for the stock which is so employed. In the greater part of our
colonies, accordingly, both the legal and the market rate of interest
have been considerably reduced during the course of the present
century. As riches, improvement, and population, have increased,
interest has declined. The wages of labour do not sink with the
profits of stock. The demand for labour increases with the increase of
stock, whatever be its profits; and after these are diminished, stock
may not only continue to increase, but to increase much faster than
before. It is with industrious nations, who are advancing in the
acquisition of riches, as with industrious individuals. A great stock,
though with small profits, generally increases faster than a small
stock with great profits. Money, says the proverb, makes money. When
you have got a little, it is often easy to get more. The great
difficulty is to get that little. The connection between the increase
of stock and that of industry, or of the demand for useful labour, has
partly been explained already, but will be explained more fully
hereafter, in treating of the accumulation of stock.

The acquisition of new territory, or of new branches of trade, may
sometimes raise the profits of stock, and with them the interest of
money, even in a country which is fast advancing in the acquisition of
riches. The stock of the country, not being sufficient for the whole
accession of business which such acquisitions present to the different
people among whom it is divided, is applied to those particular
branches only which afford the greatest profit. Part of what had
before been employed in other trades, is necessarily withdrawn from
them, and turned into some of the new and more profitable ones. In all
those old trades, therefore, the competition comes to be Jess than
before. The market comes to be less fully supplied with many different
sorts of goods. Their price necessarily rises more or less, and yields
a greater profit to those who deal in them, who can, therefore, afford
to borrow at a higher interest. For some time after the conclusion of
the late war, not only private people of the best credit, but some of
the greatest companies in London, commonly borrowed at five per cent.
who, before that, had not been used to pay more than four, and four
and a half per cent. The great accession both of territory and trade
by our acquisitions in North America and the West Indies, will
sufficiently account for this, without supposing any diminution in the
capital stock of the society. So great an accession of new business to
be carried on by the old stock, must necessarily have diminished the
quantity employed in a great number of particular branches, in which
the competition being less, the profits must have been greater. I
shall hereafter have occasion to mention the reasons which dispose me
to believe that the capital stock of Great Britain was not diminished,
even by the enormous expense of the late war.

The diminution of the capital stock of the society, or of the funds
destined for the maintenance of industry, however, as it lowers the
wages of labour, so it raises the profits of stock, and consequently
the interest of money. By the wages of labour being lowered, the
owners of what stock remains in the society can bring their goods at
less expense to market than before; and less stock being employed in
supplying the market than before, they can sell them dearer. Their
goods cost them less, and they get more for them. Their profits,
therefore, being augmented at both ends, can well afford a large
interest. The great fortunes so suddenly and so easily acquired in
Bengal and the other British settlements in the East Indies, may
satisfy us, that as the wages of labour are very low, so the profits
of stock are very high in those ruined countries. The interest of
money is proportionably so. In Bengal, money is frequently lent to the
farmers at forty, fifty, and sixty per cent. and the succeeding crop
is mortgaged for the payment. As the profits which can afford such an
interest must eat up almost the whole rent of the landlord, so such
enormous usury must in its turn eat up the greater part of those
profits. Before the fall of the Roman republic, a usury of the same
kind seems to have been common in the provinces, under the ruinous
administration of their proconsuls. The virtuous Brutus lent money in
Cyprus at eight-and-forty per cent. as we learn from the letters of
Cicero.

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

But, perhaps, no country has ever yet arrived at this degree of
opulence. China seems to have been long stationary, and had, probably,
long ago acquired that full complement of riches which is consistent
with the nature of its laws and institutions. But this complement may
be much inferior to what, with other laws and institutions, the nature
of its soil, climate, and situation, might admit of. A country which
neglects or despises foreign commerce, and which admits the vessel of
foreign nations into one or two of its ports only, cannot transact the
same quantity of business which it might do with different laws and
institutions. In a country, too, where, though the rich, or the owners
of large capitals, enjoy a good deal of security, the poor, or the
owners of small capitals, enjoy scarce any, but are liable, under the
pretence of justice, to be pillaged and plundered at any time by the
inferior mandarins, the quantity of stock employed in all the
different branches of business transacted within it, can never be
equal to what the nature and extent of that business might admit. In
every different branch, the oppression of the poor must establish the
monopoly of the rich, who, by engrossing the whole trade to
themselves, will be able to make very large profits. Twelve per cent.
accordingly, is said to be the common interest of money in China, and
the ordinary profits of stock must be sufficient to afford this large
interest.

A defect in the law may sometimes raise the rate of interest
considerably above what the condition of the country, as to wealth or
poverty, would require. When the law does not enforce the performance
of contracts, it puts all borrowers nearly upon the same footing with
bankrupts, or people of doubtful credit, in better regulated
countries. The uncertainty of recovering his money makes the lender
exact the same usurious interest which is usually required from
bankrupts. Among the barbarous nations who overran the western
provinces of the Roman empire, the performance of contracts was left
for many ages to the faith of the contracting parties. The courts of
justice of their kings seldom intermeddled in it. The high rate of
interest which took place in those ancient times, may, perhaps, be
partly accounted for from this cause.

When the law prohibits interest altogether, it does not prevent it.
Many people must borrow, and nobody will lend without such a
consideration for the use of their money as is suitable, not only to
what can be made by the use of it, but to the difficulty and danger of
evading the law. The high rate of interest among all Mahometan nations
is accounted for by M. Montesquieu, not from their poverty, but partly
from this, and partly from the difficulty of recovering the money.

The lowest ordinary rate of profit must always be something more than
what is sufficient to compensate the occasional losses to which every
employment of stock is exposed. It is this surplus only which is neat
or clear profit. What is called gross profit, comprehends frequently
not only this surplus, but what is retained for compensating such
extraordinary losses. The interest which the borrower can afford to
pay is in proportion to the clear profit only. The lowest ordinary
rate of interest must, in the same manner, be something more than
sufficient to compensate the occasional losses to which lending, even
with tolerable prudence, is exposed. Were it not, mere charity or
friendship could be the only motives for lending.

In a country which had acquired its full complement of riches, where,
in every particular branch of business, there was the greatest
quantity of stock that could be employed in it, as the ordinary rate
of clear profit would be very small, so the usual market rate of
interest which could be afforded out of it would be so low as to
render it impossible for any but the very wealthiest people to live
upon the interest of their money. All people of small or middling
fortunes would be obliged to superintend themselves the employment of
their own stocks. It would be necessary that almost every man should
be a man of business, or engage in some sort of trade. The province of
Holland seems to be approaching near to this state. It is there
unfashionable not to be a man of business. Necessity makes it usual
for almost every man to be so, and custom everywhere regulates
fashion. As it is ridiculous not to dress, so is it, in some measure,
not to be employed like other people. As a man of a civil profession
seems awkward in a camp or a garrison, and is even in some danger of
being despised there, so does an idle man among men of business.

The highest ordinary rate of profit may be such as, in the price of
the greater part of commodities, eats up the whole of what should go
to the rent of the land, and leaves only what is sufficient to pay the
labour of preparing and bringing them to market, according to the
lowest rate at which labour can anywhere be paid, the bare subsistence
of the labourer. The workman must always have been fed in some way or
other while he was about the work, but the landlord may not always
have been paid. The profits of the trade which the servants of the
East India Company carry on in Bengal may not, perhaps, be very far
from this rate.

The proportion which the usual market rate of interest ought to bear
to the ordinary rate of clear profit, necessarily varies as profit
rises or falls. Double interest is in Great Britain reckoned what the
merchants call a good, moderate, reasonable profit; terms which, I
apprehend, mean no more than a common and usual profit. In a country
where the ordinary rate of clear profit is eight or ten per cent. it
may be reasonable that one half of it should go to interest, wherever
business is carried on with borrowed money. The stock is at the risk
of the borrower, who, as it were, insures it to the lender; and four
or five per cent. may, in the greater part of trades, be both a
sufficient profit upon the risk of this insurance, and a sufficient
recompence for the trouble of employing the stock. But the proportion
between interest and clear profit might not be the same in countries
where the ordinary rate of profit was either a good deal lower, or a
good deal higher. If it were a good deal lower, one half of it,
perhaps, could not be afforded for interest; and more might be
afforded if it were a good deal higher.

In countries which are fast advancing to riches, the low rate of
profit may, in the price of many commodities, compensate the high
wages of labour, and enable those countries to sell as cheap as their
less thriving neighbours, among whom the wages of labour may be lower.

In reality, high profits tend much more to raise the price of work
than high wages. If, in the linen manufacture, for example, the wages
of the different working people, the flax-dressers, the spinners, the
weavers, etc. should all of them be advanced twopence a-day, it would
be necessary to heighten the price of a piece of linen only by a
number of twopences equal to the number of people that had been
employed about it, multiplied by the number of days during which they
had been so employed. That part of the price of the commodity which
resolved itself into the wages, would, through all the different
stages of the manufacture, rise only in arithmetical proportion to
this rise of wages. But if the profits of all the different employers
of those working people should be raised five per cent. that part of
the price of the commodity which resolved itself into profit would,
through all the different stages of the manufacture, rise in
geometrical proportion to this rise of profit. The employer of the
flax dressers would, in selling his flax, require an additional five
per cent. upon the whole value of the materials and wages which he
advanced to his workmen. The employer of the spinners would require an
additional five per cent. both upon the advanced price of the flax,
and upon the wages of the spinners. And the employer of the weavers
would require alike five per cent. both upon the advanced price of the
linen-yarn, and upon the wages of the weavers. In raising the price of
commodities, the rise of wages operates in the same manner as simple
interest does in the accumulation of debt. The rise of profit operates
like compound interest. Our merchants and master manufacturers
complain much of the bad effects of high wages in raising the price,
and thereby lessening the sale of their goods, both at home and
abroad. They say nothing concerning the bad effects of high profits;
they are silent with regard to the pernicious effects of their own
gains; they complain only of those of other people.




CHAPTER X.

OF WAGES AND PROFIT IN THE DIFFERENT EMPLOYMENTS OF LABOUR AND STOCK.

The whole of the advantages and disadvantages of the different
employments of labour and stock, must, in the same neighbourhood, be
either perfectly equal, or continually tending to equality. If, in the
same neighbourhood, there was any employment evidently either more or
less advantageous than the rest, so many people would crowd into it in
the one case, and so many would desert it in the other, that its
advantages would soon return to the level of other employments. This,
at least, would be the case in a society where things were left to
follow their natural course, where there was perfect liberty, and
where every man was perfectly free both to choose what occupation he
thought proper, and to change it as often as he thought proper. Every
man's interest would prompt him to seek the advantageous, and to shun
the disadvantageous employment.

Pecuniary wages and profit, indeed, are everywhere in Europe extremely
different, according to the different employments of labour and stock.
But this difference arises, partly from certain circumstances in the
employments themselves, which, either really, or at least in the
imagination of men, make up for a small pecuniary gain in some, and
counterbalance a great one in others, and partly from the policy of
Europe, which nowhere leaves things at perfect liberty.

The particular consideration of those circumstances, and of that
policy, will divide this Chapter into two parts.


PART I. Inequalities arising from the nature of the employments
themselves.

The five following are the principal circumstances which, so far as I
have been able to observe, make up for a small pecuniary gain in some
employments, and counterbalance a great one in others. First, the
agreeableness or disagreeableness of the employments themselves;
secondly, the easiness and cheapness, or the difficulty and expense of
learning them; thirdly, the constancy or inconstancy of employment in
them; fourthly, the small or great trust which must be reposed in
those who exercise them; and, fifthly, the probability or
improbability of success in them.

First, the wages of labour vary with the ease or hardship, the
cleanliness or dirtiness, the honourableness or dishonourableness, of
the employment. Thus in most places, take the year round, a journeyman
tailor earns less than a journeyman weaver. His work is much easier. A
journeyman weaver earns less than a journeyman smith. His work is not
always easier, but it is much cleanlier. A journeyman blacksmith,
though an artificer, seldom earns so much in twelve hours, as a
collier, who is only a labourer, does in eight. His work is not quite
so dirty, is less dangerous, and is carried on in day-light, and above
ground. Honour makes a great part of the reward of all honourable
professions. In point of pecuniary gain, all things considered, they
are generally under-recompensed, as I shall endeavour to shew by and
by. Disgrace has the contrary effect. The trade of a butcher is a
brutal and an odious business; but it is in most places more
profitable than the greater part of common trades. The most detestable
of all employments, that of public executioner, is, in proportion to
the quantity of work done, better paid than any common trade whatever.

Hunting and fishing, the most important employments of mankind in the
rude state of society, become, in its advanced state, their most
agreeable amusements, and they pursue for pleasure what they once
followed from necessity. In the advanced state of society, therefore,
they are all very poor people who follow as a trade, what other people
pursue as a pastime. Fishermen have been so since the time of
Theocritus. {See Idyllium xxi.}. A poacher is everywhere a very poor
man in Great Britain. In countries where the rigour of the law suffers
no poachers, the licensed hunter is not in a much better condition.
The natural taste for those employments makes more people follow them,
than can live comfortably by them; and the produce of their labour, in
proportion to its quantity, comes always too cheap to market, to
afford any thing but the most scanty subsistence to the labourers.

Disagreeableness and disgrace affect the profits of stock in the same
manner as the wages of labour. The keeper of an inn or tavern, who is
never master of his own house, and who is exposed to the brutality of
every drunkard, exercises neither a very agreeable nor a very
creditable business. But there is scarce any common trade in which a
small stock yields so great a profit.

Secondly, the wages of labour vary with the easiness and cheapness, or
the difficulty and expense, of learning the business.

When any expensive machine is erected, the extraordinary work to be
performed by it before it is worn out, it must be expected, will
replace the capital laid out upon it, with at least the ordinary
profits. A man educated at the expense of much labour and time to any
of those employments which require extraordinary dexterity and skill,
may be compared to one of those expensive machines. The work which he
learns to perform, it must be expected, over and above the usual wages
of common labour, will replace to him the whole expense of his
education, with at least the ordinary profits of an equally valuable
capital. It must do this too in a reasonable time, regard being had to
the very uncertain duration of human life, in the same manner as to
the more certain duration of the machine.

The difference between the wages of skilled labour and those of common
labour, is founded upon this principle.

The policy of Europe considers the labour of all mechanics,
artificers, and manufacturers, as skilled labour; and that of all
country labourers us common labour. It seems to suppose that of the
former to be of a more nice and delicate nature than that of the
latter. It is so perhaps in some cases; but in the greater part it is
quite otherwise, as I shall endeavour to shew by and by. The laws and
customs of Europe, therefore, in order to qualify any person for
exercising the one species of labour, impose the necessity of an
apprenticeship, though with different degrees of rigour in different
places. They leave the other free and open to every body. During the
continuance of the apprenticeship, the whole labour of the apprentice
belongs to his master. In the meantime he must, in many cases, be
maintained by his parents or relations, and, in almost all cases, must
be clothed by them. Some money, too, is commonly given to the master
for teaching him his trade. They who cannot give money, give time, or
become bound for more than the usual number of years; a consideration
which, though it is not always advantageous to the master, on account
of the usual idleness of apprentices, is always disadvantageous to the
apprentice. In country labour, on the contrary, the labourer, while he
is employed about the easier, learns the more difficult parts of his
business, and his own labour maintains him through all the different
stages of his employment. It is reasonable, therefore, that in Europe
the wages of mechanics, artificers, and manufacturers, should be
somewhat higher than those of common labourers. They are so
accordingly, and their superior gains make them, in most places, be
considered as a superior rank of people. This superiority, however, is
generally very small: the daily or weekly earnings of journeymen in
the more common sorts of manufactures, such as those of plain linen
and woollen cloth, computed at an average, are, in most places, very
little more than the day-wages of common labourers. Their employment,
indeed, is more steady and uniform, and the superiority of their
earnings, taking the whole year together, may be somewhat greater. It
seems evidently, however, to be no greater than what is sufficient to
compensate the superior expense of their education. Education in the
ingenious arts, and in the liberal professions, is still more tedious
and expensive. The pecuniary recompence, therefore, of painters and
sculptors, of lawyers and physicians, ought to be much more liberal;
and it is so accordingly.

The profits of stock seem to be very little affected by the easiness
or difficulty of learning the trade in which it is employed. All the
different ways in which stock is commonly employed in great towns
seem, in reality, to be almost equally easy and equally difficult to
learn. One branch, either of foreign or domestic trade, cannot well be
a much more intricate business than another.

Thirdly, the wages of labour in different occupations vary with the
constancy or inconstancy of employment.

Employment is much more constant in some trades than in others. In the
greater part of manufactures, a journeyman maybe pretty sure of
employment almost every day in the year that he is able to work. A
mason or bricklayer, on the contrary, can work neither in hard frost
nor in foul weather, and his employment at all other times depends
upon the occasional calls of his customers. He is liable, in
consequence, to be frequently without any. What he earns, therefore,
while he is employed, must not only maintain him while he is idle, but
make him some compensation for those anxious and desponding moments
which the thought of so precarious a situation must sometimes
occasion. Where the computed earnings of the greater part of
manufacturers, accordingly, are nearly upon a level with the day-wages
of common labourers, those of masons and bricklayers are generally
from one-half more to double those wages. Where common labourers earn
four or five shillings a-week, masons and bricklayers frequently earn
seven and eight; where the former earn six, the latter often earn nine
and ten; and where the former earn nine and ten, as in London, the
latter commonly earn fifteen and eighteen. No species of skilled
labour, however, seems more easy to learn than that of masons and
bricklayers. Chairmen in London, during the summer season, are said
sometimes to be employed as bricklayers. The high wages of those
workmen, therefore, are not so much the recompence of their skill, as
the compensation for the inconstancy of their employment.

A house-carpenter seems to exercise rather a nicer and a more
ingenious trade than a mason. In most places, however, for it is not
universally so, his day-wages are somewhat lower. His employment,
though it depends much, does not depend so entirely upon the
occasional calls of his customers; and it is not liable to be
interrupted by the weather.

When the trades which generally afford constant employment, happen in
a particular place not to do so, the wages of the workmen always rise
a good deal above their ordinary proportion to those of common labour.
In London, almost all journeymen artificers are liable to be called
upon and dismissed by their masters from day to day, and from week to
week, in the same manner as day-labourers in other places. The lowest
order of artificers, journeymen tailors, accordingly, earn their
half-a-crown a-day, though eighteen pence may be reckoned the wages of
common labour. In small towns and country villages, the wages of
journeymen tailors frequently scarce equal those of common labour; but
in London they are often many weeks without employment, particularly
during the summer.

When the inconstancy of employment is combined with the hardship,
disagreeableness, and dirtiness of the work, it sometimes raises the
wages of the most common labour above those of the most skilful
artificers. A collier working by the piece is supposed, at Newcastle,
to earn commonly about double, and, in many parts of Scotland, about
three times, the wages of common labour. His high wages arise
altogether from the hardship, disagreeableness, and dirtiness of his
work. His employment may, upon most occasions, be as constant as he
pleases. The coal-heavers in London exercise a trade which, in
hardship, dirtiness, and disagreeableness, almost equals that of
colliers; and, from the unavoidable irregularity in the arrivals of
coal-ships, the employment of the greater part of them is necessarily
very inconstant. If colliers, therefore, commonly earn double and
triple the wages of common labour, it ought not to seem unreasonable
that coal-heavers should sometimes earn four and five times those
wages. In the inquiry made into their condition a few years ago, it
was found that, at the rate at which they were then paid, they could
earn from six to ten shillings a-day. Six shillings are about four
times the wages of common labour in London; and, in every particular
trade, the lowest common earnings may always be considered as those of
the far greater number. How extravagant soever those earnings may
appear, if they were more than sufficient to compensate all the
disagreeable circumstances of the business, there would soon be so
great a number of competitors, as, in a trade which has no exclusive
privilege, would quickly reduce them to a lower rate.

The constancy or inconstancy of employment cannot affect the ordinary
profits of stock in any particular trade. Whether the stock is or is
not constantly employed, depends, not upon the trade, but the trader.

Fourthly, the wages of labour vary according to the small or great
trust which must be reposed in the workmen.

The wages of goldsmiths and jewellers are everywhere superior to those
of many other workmen, not only of equal, but of much superior
ingenuity, on account of the precious materials with which they are
entrusted. We trust our health to the physician, our fortune, and
sometimes our life and reputation, to the lawyer and attorney. Such
confidence could not safely be reposed in people of a very mean or low
condition. Their reward must be such, therefore, as may give them that
rank in the society which so important a trust requires. The long time
and the great expense which must be laid out in their education, when
combined with this circumstance, necessarily enhance still further the
price of their labour.

When a person employs only his own stock in trade, there is no trust;
and the credit which he may get from other people, depends, not upon
the nature of the trade, but upon their opinion of his fortune,
probity and prudence. The different rates of profit, therefore, in the
different branches of trade, cannot arise from the different degrees
of trust reposed in the traders.

Fifthly, the wages of labour in different employments vary according
to the probability or improbability of success in them.

The probability that any particular person shall ever be qualified for
the employments to which he is educated, is very different in
different occupations. In the greatest part of mechanic trades success
is almost certain; but very uncertain in the liberal professions. Put
your son apprentice to a shoemaker, there is little doubt of his
learning to make a pair of shoes; but send him to study the law, it as
at least twenty to one if he ever makes such proficiency as will
enable him to live by the business. In a perfectly fair lottery, those
who draw the prizes ought to gain all that is lost by those who draw
the blanks. In a profession, where twenty fail for one that succeeds,
that one ought to gain all that should have been gained by the
unsuccessful twenty. The counsellor at law, who, perhaps, at near
forty years of age, begins to make something by his profession, ought
to receive the retribution, not only of his own so tedious and
expensive education, but of that of more than twenty others, who are
never likely to make any thing by it. How extravagant soever the fees
of counsellors at law may sometimes appear, their real retribution is
never equal to this. Compute, in any particular place, what is likely
to be annually gained, and what is likely to be annually spent, by all
the different workmen in any common trade, such as that of shoemakers
or weavers, and you will find that the former sum will generally
exceed the latter. But make the same computation with regard to all
the counsellors and students of law, in all the different Inns of
Court, and you will find that their annual gains bear but a very small
proportion to their annual expense, even though you rate the former as
high, and the latter as low, as can well be done. The lottery of the
law, therefore, is very far from being a perfectly fair lottery; and
that as well as many other liberal and honourable professions, is, in
point of pecuniary gain, evidently under-recompensed.

Those professions keep their level, however, with other occupations;
and, notwithstanding these discouragements, all the most generous and
liberal spirits are eager to crowd into them. Two different causes
contribute to recommend them. First, the desire of the reputation
which attends upon superior excellence in any of them; and, secondly,
the natural confidence which every man has, more or less, not only in
his own abilities, but in his own good fortune.

To excel in any profession, in which but few arrive at mediocrity, it
is the most decisive mark of what is called genius, or superior
talents. The public admiration which attends upon such distinguished
abilities makes always a part of their reward; a greater or smaller,
in proportion as it is higher or lower in degree. It makes a
considerable part of that reward in the profession of physic; a still
greater, perhaps, in that of law; in poetry and philosophy it makes
almost the whole.

There are some very agreeable and beautiful talents, of which the
possession commands a certain sort of admiration, but of which the
exercise, for the sake of gain, is considered, whether from reason or
prejudice, as a sort of public prostitution. The pecuniary recompence,
therefore, of those who exercise them in this manner, must be
sufficient, not only to pay for the time, labour, and expense of
acquiring the talents, but for the discredit which attends the
employment of them as the means of subsistence. The exorbitant rewards
of players, opera-singers, opera-dancers, etc. are founded upon those
two principles; the rarity and beauty of the talents, and the
discredit of employing them in this manner. It seems absurd at first
sight, that we should despise their persons, and yet reward their
talents with the most profuse liberality. While we do the one,
however, we must of necessity do the other, Should the public opinion
or prejudice ever alter with regard to such occupations, their
pecuniary recompence would quickly diminish. More people would apply
to them, and the competition would quickly reduce the price of their
labour. Such talents, though far from being common, are by no means so
rare as imagined. Many people possess them in great perfection, who
disdain to make this use of them; and many more are capable of
acquiring them, if any thing could be made honourably by them.

The over-weening conceit which the greater part of men have of their
own abilities, is an ancient evil remarked by the philosophers and
moralists of all ages. Their absurd presumption in their own good
fortune has been less taken notice of. It is, however, if possible,
still more universal. There is no man living, who, when in tolerable
health and spirits, has not some share of it. The chance of gain is by
every man more or less over-valued, and the chance of loss is by most
men under-valued, and by scarce any man, who is in tolerable health
and spirits, valued more than it is worth.

That the chance of gain is naturally overvalued, we may learn from the
universal success of lotteries. The world neither ever saw, nor ever
will see, a perfectly fair lottery, or one in which the whole gain
compensated the whole loss; because the undertaker could make nothing
by it. In the state lotteries, the tickets are really not worth the
price which is paid by the original subscribers, and yet commonly sell
in the market for twenty, thirty, and sometimes forty per cent.
advance. The vain hopes of gaining some of the great prizes is the
sole cause of this demand. The soberest people scarce look upon it as
a folly to pay a small sum for the chance of gaining ten or twenty
thousand pounds, though they know that even that small sum is perhaps
twenty or thirty per cent. more than the chance is worth. In a lottery
in which no prize exceeded twenty pounds, though in other respects it
approached much nearer to a perfectly fair one than the common state
lotteries, there would not be the same demand for tickets. In order to
have a better chance for some of the great prizes, some people
purchase several tickets; and others, small shares in a still greater
number. There is not, however, a more certain proposition in
mathematics, than that the more tickets you adventure upon, the more
likely you are to be a loser. Adventure upon all the tickets in the
lottery, and you lose for certain; and the greater the number of your
tickets, the nearer you approach to this certainty.

That the chance of loss is frequently undervalued, and scarce ever
valued more than it is worth, we may learn from the very moderate
profit of insurers. In order to make insurance, either from fire or
sea-risk, a trade at all, the common premium must be sufficient to
compensate the common losses, to pay the expense of management, and to
afford such a profit as might have been drawn from an equal capital
employed in any common trade. The person who pays no more than this,
evidently pays no more than the real value of the risk, or the lowest
price at which he can reasonably expect to insure it. But though many
people have made a little money by insurance, very few have made a
great fortune; and, from this consideration alone, it seems evident
enough that the ordinary balance of profit and loss is not more
advantageous in this than in other common trades, by which so many
people make fortunes. Moderate, however, as the premium of insurance
commonly is, many people despise the risk too much to care to pay it.
Taking the whole kingdom at an average, nineteen houses in twenty, or
rather, perhaps, ninety-nine in a hundred, are not insured from fire.
Sea-risk is more alarming to the greater part of people; and the
proportion of ships insured to those not insured is much greater. Many
sail, however, at all seasons, and even in time of war, without any
insurance. This may sometimes, perhaps, be done without any
imprudence. When a great company, or even a great merchant, has twenty
or thirty ships at sea, they may, as it were, insure one another. The
premium saved up on them all may more than compensate such losses as
they are likely to meet with in the common course of chances. The
neglect of insurance upon shipping, however, in the same manner as
upon houses, is, in most cases, the effect of no such nice
calculation, but of mere thoughtless rashness, and presumptuous
contempt of the risk.

The contempt of risk, and the presumptuous hope of success, are in no
period of life more active than at the age at which young people
choose their professions. How little the fear of misfortune is then
capable of balancing the hope of good luck, appears still more
evidently in the readiness of the common people to enlist as soldiers,
or to go to sea, than in the eagerness of those of better fashion to
enter into what are called the liberal professions.

What a common soldier may lose is obvious enough. Without regarding
the danger, however, young volunteers never enlist so readily as at
the beginning of a new war; and though they have scarce any chance of
preferment, they figure to themselves, in their youthful fancies, a
thousand occasions of acquiring honour and distinction which never
occur. These romantic hopes make the whole price of their blood. Their
pay is less than that of common labourers, and, in actual service,
their fatigues are much greater.

The lottery of the sea is not altogether so disadvantageous as that of
the army. The son of a creditable labourer or artificer may frequently
go to sea with his father's consent; but if he enlists as a soldier,
it is always without it. Other people see some chance of his making
something by the one trade; nobody but himself sees any of his making
any thing by the other. The great admiral is less the object of public
admiration than the great general; and the highest success in the sea
service promises a less brilliant fortune and reputation than equal
success in the land. The same difference runs through all the inferior
degrees of preferment in both. By the rules of precedency, a captain
in the navy ranks with a colonel in the army; but he does not rank
with him in the common estimation. As the great prizes in the lottery
are less, the smaller ones must be more numerous. Common sailors,
therefore, more frequently get some fortune and preferment than common
soldiers; and the hope of those prizes is what principally recommends
the trade. Though their skill and dexterity are much superior to that
of almost any artificers; and though their whole life is one continual
scene of hardship and danger; yet for all this dexterity and skill,
for all those hardships and dangers, while they remain in the
condition of common sailors, they receive scarce any other recompence
but the pleasure of exercising the one and of surmounting the other.
Their wages are not greater than those of common labourers at the port
which regulates the rate of seamen's wages. As they are continually
going from port to port, the monthly pay of those who sail from all
the different ports of Great Britain, is more nearly upon a level than
that of any other workmen in those different places; and the rate of
the port to and from which the greatest number sail, that is, the port
of London, regulates that of all the rest. At London, the wages of the
greater part of the different classes of workmen are about double
those of the same classes at Edinburgh. But the sailors who sail from
the port of London, seldom earn above three or four shillings a month
more than those who sail from the port of Leith, and the difference is
frequently not so great. In time of peace, and in the
merchant-service, the London price is from a guinea to about
seven-and-twenty shillings the calendar month. A common labourer in
London, at the rate of nine or ten shillings a week, may earn in the
calendar month from forty to five-and-forty shillings. The sailor,
indeed, over and above his pay, is supplied with provisions. Their
value, however, may not perhaps always exceed the difference between
his pay and that of the common labourer; and though it sometimes
should, the excess will not be clear gain to the sailor, because he
cannot share it with his wife and family, whom he must maintain out of
his wages at home.

The dangers and hair-breadth escapes of a life of adventures, instead
of disheartening young people, seem frequently to recommend a trade to
them. A tender mother, among the inferior ranks of people, is often
afraid to send her son to school at a sea-port town, lest the sight of
the ships, and the conversation and adventures of the sailors, should
entice him to go to sea. The distant prospect of hazards, from which
we can hope to extricate ourselves by courage and address, is not
disagreeable to us, and does not raise the wages of labour in any
employment. It is otherwise with those in which courage and address
can be of no avail. In trades which are known to be very unwholesome,
the wages of labour are always remarkably high. Unwholesomeness is a
species of disagreeableness, and its effects upon the wages of labour
are to be ranked under that general head.

In all the different employments of stock, the ordinary rate of profit
varies more or less with the certainty or uncertainty of the returns.
These are, in general, less uncertain in the inland than in the
foreign trade, and in some branches of foreign trade than in others;
in the trade to North America, for example, than in that to Jamaica.
The ordinary rate of profit always rises more or less with the risk.
it does not, however, seem to rise in proportion to it, or so as to
compensate it completely. Bankruptcies are most frequent in the most
hazardous trades. The most hazardous of all trades, that of a
smuggler, though, when the adventure succeeds, it is likewise the most
profitable, is the infallible road to bankruptcy. The presumptuous
hope of success seems to act here as upon all other occasions, and to
entice so many adventurers into those hazardous trades, that their
competition reduces the profit below what is sufficient to compensate
the risk. To compensate it completely, the common returns ought, over
and above the ordinary profits of stock, not only to make up for all
occasional losses, but to afford a surplus profit to the adventurers,
of the same nature with the profit of insurers. But if the common
returns were sufficient for all this, bankruptcies would not be more
frequent in these than in other trades.

Of the five circumstances, therefore, which vary the wages of labour,
two only affect the profits of stock; the agreeableness or
disagreeableness of the business, and the risk or security with which
it is attended. In point of agreeableness or disagreeableness, there
is little or no difference in the far greater part of the different
employments of stock, but a great deal in those of labour; and the
ordinary profit of stock, though it rises with the risk, does not
always seem to rise in proportion to it. It should follow from all
this, that, in the same society or neighbourhood, the average and
ordinary rates of profit in the different employments of stock should
be more nearly upon a level than the pecuniary wages of the different
sorts of labour.

They are so accordingly. The difference between the earnings of a
common labourer and those of a well employed lawyer or physician, is
evidently much greater than that between the ordinary profits in any
two different branches of trade. The apparent difference, besides, in
the profits of different trades, is generally a deception arising from
our not always distinguishing what ought to be considered as wages,
from what ought to be considered as profit.

Apothecaries' profit is become a bye-word, denoting something
uncommonly extravagant. This great apparent profit, however, is
frequently no more than the reasonable wages of labour. The skill of
an apothecary is a much nicer and more delicate matter than that of
any artificer whatever; and the trust which is reposed in him is of
much greater importance. He is the physician of the poor in all cases,
and of the rich when the distress or danger is not very great. His
reward, therefore, ought to be suitable to his skill and his trust;
and it arises generally from the price at which he sells his drugs.
But the whole drugs which the best employed apothecary in a large
market-town, will sell in a year, may not perhaps cost him above
thirty or forty pounds. Though he should sell them, therefore, for
three or four hundred, or at a thousand per cent. profit, this may
frequently be no more than the reasonable wages of his labour,
charged, in the only way in which he can charge them, upon the price
of his drugs. The greater part of the apparent profit is real wages
disguised in the garb of profit.

In a small sea-port town, a little grocer will make forty or fifty per
cent. upon a stock of a single hundred pounds, while a considerable
wholesale merchant in the same place will scarce make eight or ten per
cent. upon a stock of ten thousand. The trade of the grocer may be
necessary for the conveniency of the inhabitants, and the narrowness
of the market may not admit the employment of a larger capital in the
business. The man, however, must not only live by his trade, but live
by it suitably to the qualifications which it requires. Besides
possessing a little capital, he must be able to read, write, and
account and must be a tolerable judge, too, of perhaps fifty or sixty
different sorts of goods, their prices, qualities, and the markets
where they are to be had cheapest. He must have all the knowledge, in
short, that is necessary for a great merchant, which nothing hinders
him from becoming but the want of a sufficient capital. Thirty or
forty pounds a year cannot be considered as too great a recompence for
the labour of a person so accomplished. Deduct this from the seemingly
great profits of his capital, and little more will remain, perhaps,
than the ordinary profits of stock. The greater part of the apparent
profit is, in this case too, real wages.

The difference between the apparent profit of the retail and that of
the wholesale trade, is much less in the capital than in small towns
and country villages. Where ten thousand pounds can be employed in the
grocery trade, the wages of the grocer's labour must be a very
trifling addition to the real profits of so great a stock. The
apparent profits of the wealthy retailer, therefore, are there more
nearly upon a level with those of the wholesale merchant. It is upon
this account that goods sold by retail are generally as cheap, and
frequently much cheaper, in the capital than in small towns and
country villages. Grocery goods, for example, are generally much
cheaper; bread and butchers' meat frequently as cheap. It costs no
more to bring grocery goods to the great town than to the country
village; but it costs a great deal more to bring corn and cattle, as
the greater part of them must be brought from a much greater distance.
The prime cost of grocery goods, therefore, being the same in both
places, they are cheapest where the least profit is charged upon them.
The prime cost of bread and butchers' meat is greater in the great
town than in the country village; and though the profit is less,
therefore they are not always cheaper there, but often equally cheap.
In such articles as bread and butchers' meat, the same cause which
diminishes apparent profit, increases prime cost. The extent of the
market, by giving employment to greater stocks, diminishes apparent
profit; but by requiring supplies from a greater distance, it
increases prime cost. This diminution of the one and increase of the
other, seem, in most cases, nearly to counterbalance one another;
which is probably the reason that, though the prices of corn and
cattle are commonly very different in different parts of the kingdom,
those of bread and butchers' meat are generally very nearly the same
through the greater part of it.

Though the profits of stock, both in the wholesale and retail trade,
are generally less in the capital than in small towns and country
villages, yet great fortunes are frequently acquired from small
beginnings in the former, and scarce ever in the latter. In small
towns and country villages, on account of the narrowness of the
market, trade cannot always be extended as stock extends. In such
places, therefore, though the rate of a particular person's profits
may be very high, the sum or amount of them can never be very great,
nor consequently that of his annual accumulation. In great towns, on
the contrary, trade can be extended as stock increases, and the credit
of a frugal and thriving man increases much faster than his stock. His
trade is extended in proportion to the amount of both; and the sum or
amount of his profits is in proportion to the extent of his trade, and
his annual accumulation in proportion to the amount of his profits. It
seldom happens, however, that great fortunes are made, even in great
towns, by any one regular, established, and well-known branch of
business, but in consequence of a long life of industry, frugality,
and attention. Sudden fortunes, indeed, are sometimes made in such
places, by what is called the trade of speculation. The speculative
merchant exercises no one regular, established, or well-known branch
of business. He is a corn merchant this year, and a wine merchant the
next, and a sugar, tobacco, or tea merchant the year after. He enters
into every trade, when he foresees that it is likely to lie more than
commonly profitable, and he quits it when he foresees that its profits
are likely to return to the level of other trades. His profits and
losses, therefore, can bear no regular proportion to those of any one
established and well-known branch of business. A bold adventurer may
sometimes acquire a considerable fortune by two or three successful
speculations, but is just as likely to lose one by two or three
unsuccessful ones. This trade can be carried on nowhere but in great
towns. It is only in places of the most extensive commerce and
correspondence that the intelligence requisite for it can be had.

The five circumstances above mentioned, though they occasion
considerable inequalities in the wages of labour and profits of stock,
occasion none in the whole of the advantages and disadvantages, real
or imaginary, of the different employments of either. The nature of
those circumstances is such, that they make up for a small pecuniary
gain in some, and counterbalance a great one in others.

In order, however, that this equality may take place in the whole of
their advantages or disadvantages, three things are requisite, even
where there is the most perfect freedom. First the employments must be
well known and long established in the neighbourhood; secondly, they
must be in their ordinary, or what may be called their natural state;
and, thirdly, they must be the sole or principal employments of those
who occupy them.

First, This equality can take place only in those employments which
are well known, and have been long established in the neighbourhood.

Where all other circumstances are equal, wages are generally higher in
new than in old trades. When a projector attempts to establish a new
manufacture, he must at first entice his workmen from other
employments, by higher wages than they can either earn in their own
trades, or than the nature of his work would otherwise require; and a
considerable time must pass away before he can venture to reduce them
to the common level. Manufactures for which the demand arises
altogether from fashion and fancy, are continually changing, and
seldom last long enough to be considered as old established
manufactures. Those, on the contrary, for which the demand arises
chiefly from use or necessity, are less liable to change, and the same
form or fabric may continue in demand for whole centuries together.
The wages of labour, therefore, are likely to be higher in
manufactures of the former, than in those of the latter kind.
Birmingham deals chiefly in manufactures of the former kind; Sheffield
in those of the latter; and the wages of labour in those two different
places are said to be suitable to this difference in the nature of
their manufactures.

The establishment of any new manufacture, of any new branch of
commerce, or of any new practice in agriculture, is always a
speculation from which the projector promises himself extraordinary
profits. These profits sometimes are very great, and sometimes, more
frequently, perhaps, they are quite otherwise; but, in general, they
bear no regular proportion to those of other old trades in the
neighbourhood. If the project succeeds, they are commonly at first
very high. When the trade or practice becomes thoroughly established
and well known, the competition reduces them to the level of other
trades.

Secondly, this equality in the whole of the advantages and
disadvantages of the different employments of labour and stock, can
take place only in the ordinary, or what may be called the natural
state of those employments.

The demand for almost every different species of labour is sometimes
greater, and sometimes less than usual. In the one case, the
advantages of the employment rise above, in the other they fall below
the common level. The demand for country labour is greater at hay-time
and harvest than during the greater part of the year; and wages rise
with the demand. In time of war, when forty or fifty thousand sailors
are forced from the merchant service into that of the king, the demand
for sailors to merchant ships necessarily rises with their scarcity;
and their wages, upon such occasions, commonly rise from a guinea and
seven-and-twenty shillings to forty shilling's and three pounds
a-month. In a decaying manufacture, on the contrary, many workmen,
rather than quit their own trade, are contented with smaller wages
than would otherwise be suitable to the nature of their employment.

The profits of stock vary with the price of the commodities in which
it is employed. As the price of any commodity rises above the ordinary
or average rate, the profits of at least some part of the stock that
is employed in bringing it to market, rise above their proper level,
and as it falls they sink below it. All commodities are more or less
liable to variations of price, but some are much more so than others.
In all commodities which are produced by human industry, the quantity
of industry annually employed is necessarily regulated by the annual
demand, in such a manner that the average annual produce may, as
nearly as possible, be equal to the average annual consumption. In
some employments, it has already been observed, the same quantity of
industry will always produce the same, or very nearly the same
quantity of commodities. In the linen or woollen manufactures, for
example, the same number of hands will annually work up very nearly
the same quantity of linen and woollen cloth. The variations in the
market price of such commodities, therefore, can arise only from some
accidental variation in the demand. A public mourning raises the price
of black cloth. But as the demand for most sorts of plain linen and
woollen cloth is pretty uniform, so is likewise the price. But there
are other employments in which the same quantity of industry will not
always produce the same quantity of commodities. The same quantity of
industry, for example, will, in different years, produce very
different quantities of corn, wine, hops, sugar tobacco, etc. The
price of such commodities, therefore, varies not only with the
variations of demand, but with the much greater and more frequent
variations of quantity, and is consequently extremely fluctuating; but
the profit of some of the dealers must necessarily fluctuate with the
price of the commodities. The operations of the speculative merchant
are principally employed about such commodities. He endeavours to buy
them up when he foresees that their price is likely to rise, and to
sell them when it is likely to fall.

Thirdly, this equality in the whole of the advantages and
disadvantages of the different employments of labour and stock, can
take place only in such as are the sole or principal employments of
those who occupy them.

When a person derives his subsistence from one employment, which does
not occupy the greater part of his time, in the intervals of his
leisure he is often willing to work at another for less wages than
would otherwise suit the nature of the employment.

There still subsists, in many parts of Scotland, a set of people
called cottars or cottagers, though they were more frequent some years
ago than they are now. They are a sort of out-servants of the
landlords and farmers. The usual reward which they receive from their
master is a house, a small garden for pot-herbs, as much grass as will
feed a cow, and, perhaps, an acre or two of bad arable land. When
their master has occasion for their labour, he gives them, besides,
two pecks of oatmeal a-week, worth about sixteen pence sterling.
During a great part of the year, he has little or no occasion for
their labour, and the cultivation of their own little possession is
not sufficient to occupy the time which is left at their own disposal.
When such occupiers were more numerous than they are at present, they
are said to have been willing to give their spare time for a very
small recompence to any body, and to have wrought for less wages than
other labourers. In ancient times, they seem to have been common all
over Europe. In countries ill cultivated, and worse inhabited, the
greater part of landlords and farmers could not otherwise provide
themselves with the extraordinary number of hands which country labour
requires at certain seasons. The daily or weekly recompence which such
labourers occasionally received from their masters, was evidently not
the whole price of their labour. Their small tenement made a
considerable part of it. This daily or weekly recompence, however,
seems to have been considered as the whole of it, by many writers who
have collected the prices of labour and provisions in ancient times,
and who have taken pleasure in representing both as wonderfully low.

The produce of such labour comes frequently cheaper to market than
would otherwise be suitable to its nature. Stockings, in many parts of
Scotland, are knit much cheaper than they can anywhere be wrought upon
the loom. They are the work of servants and labourers who derive the
principal part of their subsistence from some other employment. More
than a thousand pair of Shetland stockings are annually imported into
Leith, of which the price is from fivepence to seven-pence a pair. At
Lerwick, the small capital of the Shetland islands, tenpence a-day, I
have been assured, is a common price of common labour. In the same
islands, they knit worsted stockings to the value of a guinea a pair
and upwards.

The spinning of linen yarn is carried on in Scotland nearly in the
same way as the knitting of stockings, by servants, who are chiefly
hired for other purposes. They earn but a very scanty subsistence, who
endeavour to get their livelihood by either of those trades. In most
parts of Scotland, she is a good spinner who can earn twentypence
a-week.

In opulent countries, the market is generally so extensive, that any
one trade is sufficient to employ the whole labour and stock of those
who occupy it. Instances of people living by one employment, and, at
the same time, deriving some little advantage from another, occur
chiefly in pour countries. The following instance, however, of
something of the same kind, is to be found in the capital of a very
rich one. There is no city in Europe, I believe, in which house-rent
is dearer than in London, and yet I know no capital in which a
furnished apartment can be hired so cheap. Lodging is not only much
cheaper in London than in Paris; it is much cheaper than in Edinburgh,
of the same degree of goodness; and, what may seem extraordinary, the
dearness of house-rent is the cause of the cheapness of lodging. The
dearness of house-rent in London arises, not only from those causes
which render it dear in all great capitals, the dearness of labour,
the dearness of all the materials of building, which must generally be
brought from a great distance, and, above all, the dearness of
ground-rent, every landlord acting the part of a monopolist, and
frequently exacting a higher rent for a single acre of bad land in a
town, than can be had for a hundred of the best in the country; but it
arises in part from the peculiar manners and customs of the people,
which oblige every master of a family to hire a whole house from top
to bottom. A dwelling-house in England means every thing that is
contained under the same roof. In France, Scotland, and many other
parts of Europe, it frequently means no more than a single storey. A
tradesman in London is obliged to hire a whole house in that part of
the town where his customers live. His shop is upon the ground floor,
and he and his family sleep in the garret; and he endeavours to pay a
part of his house-rent by letting the two middle storeys to lodgers.
He expects to maintain his family by his trade, and not by his
lodgers. Whereas at Paris and Edinburgh, people who let lodgings have
commonly no other means of subsistence; and the price of the lodging
must pay, not only the rent of the house, but the whole expense of the
family.


PART II. -- Inequalities occasioned by the Policy of Europe.

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