I.

BOOK fideration for the use of their money as is fuitable, 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 intereft among all Mahometan nations is accounted for by Mr. Montefquieu, not from their poverty, but partly from this, and partly from the difficulty of recovering the money.

THE lowest ordinary rate of profit muft always be fomething more than what is fufficient to compenfate the occafional loffes to which every employment of stock is expofed. It is this furplus only which is neat or clear profit. What is called grofs profit comprehends frequently, not only this furplus, but what is retained for compenfating fuch extraordinary loffes. The intereft which the borrower can afford to pay is in proportion to the clear profit only.

THE loweft ordinary rate of intereft muft, in the fame manner, be fomething more than fufficient to compenfate the occafional loffes to which lending, even with tolerable prudence, is expofed. Were it not more, 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 flock that could be employed in it, as the ordinary rate of clear profit would be very fmall, fo the ufual market rate of interest which could be afforded out of it, would be fo low as to render it impoffible for any but the very wealthiest people to live upon the interest of their money. All people of fmall or middling fortunes would be obliged to fuperintend themselves the employment of their own flocks. It would be neceffary that almost every man should be a man of bufinefs, or engage in fome fort of trade. The province of Holland feems to be approaching near to this ftate. It is there unfashionable not to be a man of business. Neceffity makes it ufual for almost every man to be so, and cuftom every where regulates fashion. As it is ridiculous not to drefs, fo is it, in fome measure, not to be employed, like other people. As a man of a civil profeffion feems

aukward

IX.

aukward in a camp or a garrison, and is even in fome danger of being CHAP. defpifed there, fo does an idle man among men of business.

THE higheft ordinary rate of profit may be fuch 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 fufficient to pay the labour of preparing and bringing them to market, according to the lowest rate at which labour can any where be paid, the bare subfiftence of the labourer. The workman must always have been fed in fome 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 Eaft India Company carry on in Bengal may not perhaps be very far from this rate.

THE proportion which the usual market rate of intereft ought to bear to the ordinary rate of clear profit, neceffarily varies as profit rifes or falls. Double intereft 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 ufual 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, infures it to the lender; and four or five per cent. may in the greater part of trades, he both a fufficient profit upon the risk of this infurance, and a fufficient recompence for the trouble of employing the flock. But the proportion between intereft and clear profit might not be the fame 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 intereft; and more might be afforded if it were a good deal higher.

IN countries which are faft advancing to riches, the low rate of profit may, in the price of many commodities, compenfate the high.

4

wages

BOOK

I.

wages of labour, and enable thofe countries to fell as cheap as their lefs:
thriving neighbours, among whom the
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-dreffers, the spin-
ners, the weavers, &c. fhould, all of them, be advanced two pence
a day: it would be necessary to heighten the price of a piece of linen
only by a number of two pences equal to the number of people that
had been employed about it, multiplied by the number of days
during which they had been fo employed. That part of the price
of the commodity which resolved itself into wages would, through
all the different ftages of the manufacture, rise only in arithmetical
proportion to this rife of wages. But if the profits of all the dif-
ferent employers of those working people fhould be raised five per
cent. that part of the price of the commodity which resolved itself
into profit, would, through all the different stage of the manufacture,
rife in geometrical proportion to this rife of profit. The em-
ployer of the flax-dreffers would in felling his flax require an addi-
tional five per cent. upon the whole value of the materials and wages
which he advanced to his workmen. The employer of the fpin-
ners would require an additional five per cent. both upon the advanced
price of the flax and
upon the wages of the spinners. And the em-
ployer of the weavers would require a like 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 rife of wages ope-
rates in the fame manner as fimple intereft does in the accumulation
of debt. The rise of profit operates like compound interest. Our
merchants and mafter-manufacturers complain much of the bad effects
of high wages in raifing the price, and thereby leffening the fale of
their goods both at home and abroad. They fay nothing concerning
the bad effects of high profits. They are filent with regard to the
pernicious effects of their own gains. They complain only of those
of other people.

CHAP. X.

Of Wages and Profit in the different Employments of Labour and

T

Stock.

X.

HE whole of the advantages and disadvantages of the dif- CHA ferent employments of labour and stock muft, in the fame neighbourhood, be either perfectly equal or continually tending to equality. If, in the fame neighbourhood, there was any employment evidently either more or lefs advantageous than the reft, fo many people would crowd into it in the one cafe, and fo many would defert it in the other, that its advantages would foon return to the level of other employments. This at least would be the cafe in a fociety where things were left to follow their natural course, where there was perfect liberty, and where every man was perfectly free both to chufe what occupation he thought proper, and to change it as often as he thought proper. Every man's intereft would prompt him to seek the advantageous, and to fhun the disadvantageous employment.

PECUNIARY wages and profit, indeed, are every where in Europe extremely different according to the different employments of labour and stock. But this difference arifes partly from certain circumstances in the employments themselves, which, either really, or at least in the imaginations of men, make up for a small pecuniary gain in fome, and counter-balance a great one in others; and partly from the policy of Europe, which no where leaves things at perfect liberty.

VOL. I.

R

THE

THE particular confideration 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, fo

far as I have been able to obferve, make up for a fmall pecuniary gain in some employments, and counter-balance a great one in others: first, the agreeablenefs or difagreeablenefs of the employments themselves; fecondly, the eafinefs and cheapness, or the difficulty and expence of learning them; thirdly, the conftancy or inconftancy of employment in them; fourthly, the small or great trust which must be repofed in those who exercise them; and, fifthly, the probability or improbability of fuccefs in them.

FIRST, The wages of labour vary with the ease or hardship, the cleanliness or dirtinefs, the honourableness or difhonourableness of the employment. Thus in moft places, take the year round, a journeyman taylor earns lefs than a journeyman weaver. His work is much easier. A journeyman weaver earns less than a journeyman fmith. His work is not always eafier, but it is much cleanlier. A journeyman blacksmith, though an artificer, feldom earns fo much in twelve hours as a collier, who is only a labourer, does in eight. His work is not quite fo dirty, is lefs dangerous, and is carried on in day-light, and above ground. Honour makes a great part of the reward of all honourable profeffions. In point of pecuniary gain, all things confidered, they are generally under-recompenfed, as I fhall endeavour to show by and by. Difgrace has the contrary effect. The trade of a

butcher