An Inquiry into the Nature and Causes of the Wealth of Nations
Adam Smith

Part 2 out of 19

When the price of any commodity is neither more nor less than what is
sufficient to pay the rent of the land, the wages of the labour, and
the profits of the stock employed in raising, preparing, and bringing
it to market, according to their natural rates, the commodity is then
sold for what may be called its natural price.

The commodity is then sold precisely for what it is worth, or for what
it really costs the person who brings it to market; for though, in
common language, what is called the prime cost of any commodity does
not comprehend the profit of the person who is to sell it again, yet,
if he sells it at a price which does not allow him the ordinary rate
of profit in his neighbourhood, he is evidently a loser by the trade;
since, by employing his stock in some other way, he might have made
that profit. His profit, besides, is his revenue, the proper fund of
his subsistence. As, while he is preparing and bringing the goods to
market, he advances to his workmen their wages, or their subsistence;
so he advances to himself, in the same manner, his own subsistence,
which is generally suitable to the profit which he may reasonably
expect from the sale of his goods. Unless they yield him this profit,
therefore, they do not repay him what they may very properly be said
to have really cost him.

Though the price, therefore, which leaves him this profit, is not
always the lowest at which a dealer may sometimes sell his goods, it
is the lowest at which he is likely to sell them for any considerable
time; at least where there is perfect liberty, or where he may change
his trade as often as he pleases.

The actual price at which any commodity is commonly sold, is called
its market price. It may either be above, or below, or exactly the
same with its natural price.

The market price of every particular commodity is regulated by the
proportion between the quantity which is actually brought to market,
and the demand of those who are willing to pay the natural price of
the commodity, or the whole value of the rent, labour, and profit,
which must be paid in order to bring it thither. Such people may be
called the effectual demanders, and their demand the effectual demand;
since it maybe sufficient to effectuate the bringing of the commodity
to market. It is different from the absolute demand. A very poor man
may be said, in some sense, to have a demand for a coach and six; he
might like to have it; but his demand is not an effectual demand, as
the commodity can never be brought to market in order to satisfy it.

When the quantity of any commodity which is brought to market falls
short of the effectual demand, all those who are willing to pay the
whole value of the rent, wages, and profit, which must be paid in
order to bring it thither, cannot be supplied with the quantity which
they want. Rather than want it altogether, some of them will be
willing to give more. A competition will immediately begin among them,
and the market price will rise more or less above the natural price,
according as either the greatness of the deficiency, or the wealth and
wanton luxury of the competitors, happen to animate more or less the
eagerness of the competition. Among competitors of equal wealth and
luxury, the same deficiency will generally occasion a more or less
eager competition, according as the acquisition of the commodity
happens to be of more or less importance to them. Hence the exorbitant
price of the necessaries of life during the blockade of a town, or in
a famine.

When the quantity brought to market exceeds the effectual demand, it
cannot be all sold to those who are willing to pay the whole value of
the rent, wages, and profit, which must be paid in order to bring it
thither. Some part must be sold to those who are willing to pay less,
and the low price which they give for it must reduce the price of the
whole. The market price will sink more or less below the natural
price, according as the greatness of the excess increases more or less
the competition of the sellers, or according as it happens to be more
or less important to them to get immediately rid of the commodity. The
same excess in the importation of perishable, will occasion a much
greater competition than in that of durable commodities; in the
importation of oranges, for example, than in that of old iron.

When the quantity brought to market is just sufficient to supply the
effectual demand, and no more, the market price naturally comes to be
either exactly, or as nearly as can be judged of, the same with the
natural price. The whole quantity upon hand can be disposed of for
this price, and can not be disposed of for more. The competition of
the different dealers obliges them all to accept of this price, but
does not oblige them to accept of less.

The quantity of every commodity brought to market naturally suits
itself to the effectual demand. It is the interest of all those who
employ their land, labour, or stock, in bringing any commodity to
market, that the quantity never should exceed the effectual demand;
and it is the interest of all other people that it never should fall
short of that demand.

If at any time it exceeds the effectual demand, some of the component
parts of its price must be paid below their natural rate. If it is
rent, the interest of the landlords will immediately prompt them to
withdraw a part of their land; and if it is wages or profit, the
interest of the labourers in the one case, and of their employers in
the other, will prompt them to withdraw a part of their labour or
stock, from this employment. The quantity brought to market will soon
be no more than sufficient to supply the effectual demand. All the
different parts of its price will rise to their natural rate, and the
whole price to its natural price.

If, on the contrary, the quantity brought to market should at any time
fall short of the effectual demand, some of the component parts of its
price must rise above their natural rate. If it is rent, the interest
of all other landlords will naturally prompt them to prepare more land
for the raising of this commodity; if it is wages or profit, the
interest of all other labourers and dealers will soon prompt them to
employ more labour and stock in preparing and bringing it to market.
The quantity brought thither will soon be sufficient to supply the
effectual demand. All the different parts of its price will soon sink
to their natural rate, and the whole price to its natural price.

The natural price, therefore, is, as it were, the central price, to
which the prices of all commodities are continually gravitating.
Different accidents may sometimes keep them suspended a good deal
above it, and sometimes force them down even somewhat below it. But
whatever may be the obstacles which hinder them from settling in this
centre of repose and continuance, they are constantly tending towards

The whole quantity of industry annually employed in order to bring any
commodity to market, naturally suits itself in this manner to the
effectual demand. It naturally aims at bringing always that precise
quantity thither which may be sufficient to supply, and no more than
supply, that demand.

But, in some employments, the same quantity of industry will, in
different years, produce very different quantities of commodities;
while, in others, it will produce always the same, or very nearly the
same. The same number of labourers in husbandry will, in different
years, produce very different quantities of corn, wine, oil, hops,
etc. But the same number of spinners or weavers will every year
produce the same, or very nearly the same, quantity of linen and
woollen cloth. It is only the average produce of the one species of
industry which can be suited, in any respect, to the effectual demand;
and as its actual produce is frequently much greater, and frequently
much less, than its average produce, the quantity of the commodities
brought to market will sometimes exceed a good deal, and sometimes
fall short a good deal, of the effectual demand. Even though that
demand, therefore, should continue always the same, their market price
will be liable to great fluctuations, will sometimes fall a good deal
below, and sometimes rise a good deal above, their natural price. In
the other species of industry, the produce of equal quantities of
labour being always the same, or very nearly the same, it can be more
exactly suited to the effectual demand. While that demand continues
the same, therefore, the market price of the commodities is likely to
do so too, and to be either altogether, or as nearly as can be judged
of, the same with the natural price. That the price of linen and
woollen cloth is liable neither to such frequent, nor to such great
variations, as the price of corn, every man's experience will inform
him. The price of the one species of commodities varies only with the
variations in the demand; that of the other varies not only with the
variations in the demand, but with the much greater, and more
frequent, variations in the quantity of what is brought to market, in
order to supply that demand.

The occasional and temporary fluctuations in the market price of any
commodity fall chiefly upon those parts of its price which resolve
themselves into wages and profit. That part which resolves itself into
rent is less affected by them. A rent certain in money is not in the
least affected by them, either in its rate or in its value. A rent
which consists either in a certain proportion, or in a certain
quantity, of the rude produce, is no doubt affected in its yearly
value by all the occasional and temporary fluctuations in the market
price of that rude produce; but it is seldom affected by them in its
yearly rate. In settling the terms of the lease, the landlord and
farmer endeavour, according to their best judgment, to adjust that
rate, not to the temporary and occasional, but to the average and
ordinary price of the produce.

Such fluctuations affect both the value and the rate, either of wages
or of profit, according as the market happens to be either overstocked
or understocked with commodities or with labour, with work done, or
with work to be done. A public mourning raises the price of black
cloth ( with which the market is almost always understocked upon such
occasions), and augments the profits of the merchants who possess any
considerable quantity of it. It has no effect upon the wages of the
weavers. The market is understocked with commodities, not with labour,
with work done, not with work to be done. It raises the wages of
journeymen tailors. The market is here understocked with labour. There
is an effectual demand for more labour, for more work to be done, than
can be had. It sinks the price of coloured silks and cloths, and
thereby reduces the profits of the merchants who have any considerable
quantity of them upon hand. It sinks, too, the wages of the workmen
employed in preparing such commodities, for which all demand is
stopped for six months, perhaps for a twelvemonth. The market is here
overstocked both with commodities and with labour.

But though the market price of every particular commodity is in this
manner continually gravitating, if one may say so, towards the natural
price; yet sometimes particular accidents, sometimes natural causes,
and sometimes particular regulations of policy, may, in many
commodities, keep up the market price, for a long time together, a
good deal above the natural price.

When, by an increase in the effectual demand, the market price of some
particular commodity happens to rise a good deal above the natural
price, those who employ their stocks in supplying that market, are
generally careful to conceal this change. If it was commonly known,
their great profit would tempt so many new rivals to employ their
stocks in the same way, that, the effectual demand being fully
supplied, the market price would soon be reduced to the natural price,
and, perhaps, for some time even below it. If the market is at a great
distance from the residence of those who supply it, they may sometimes
be able to keep the secret for several years together, and may so long
enjoy their extraordinary profits without any new rivals. Secrets of
this kind, however, it must be acknowledged, can seldom be long kept;
and the extraordinary profit can last very little longer than they are

Secrets in manufactures are capable of being longer kept than secrets
in trade. A dyer who has found the means of producing a particular
colour with materials which cost only half the price of those commonly
made use of, may, with good management, enjoy the advantage of his
discovery as long as he lives, and even leave it as a legacy to his
posterity. His extraordinary gains arise from the high price which is
paid for his private labour. They properly consist in the high wages
of that labour. But as they are repeated upon every part of his stock,
and as their whole amount bears, upon that account, a regular
proportion to it, they are commonly considered as extraordinary
profits of stock.

Such enhancements of the market price are evidently the effects of
particular accidents, of which, however, the operation may sometimes
last for many years together.

Some natural productions require such a singularity of soil and
situation, that all the land in a great country, which is fit for
producing them, may not be sufficient to supply the effectual demand.
The whole quantity brought to market, therefore, may be disposed of to
those who are willing to give more than what is sufficient to pay the
rent of the land which produced them, together with the wages of the
labour and the profits of the stock which were employed in preparing
and bringing them to market, according to their natural rates. Such
commodities may continue for whole centuries together to be sold at
this high price; and that part of it which resolves itself into the
rent of land, is in this case the part which is generally paid above
its natural rate. The rent of the land which affords such singular and
esteemed productions, like the rent of some vineyards in France of a
peculiarly happy soil and situation, bears no regular proportion to
the rent of other equally fertile and equally well cultivated land in
its neighbourhood. The wages of the labour, and the profits of the
stock employed in bringing such commodities to market, on the
contrary, are seldom out of their natural proportion to those of the
other employments of labour and stock in their neighbourhood.

Such enhancements of the market price are evidently the effect of
natural causes, which may hinder the effectual demand from ever being
fully supplied, and which may continue, therefore, to operate for

A monopoly granted either to an individual or to a trading company,
has the same effect as a secret in trade or manufactures. The
monopolists, by keeping the market constantly understocked by never
fully supplying the effectual demand, sell their commodities much
above the natural price, and raise their emoluments, whether they
consist in wages or profit, greatly above their natural rate.

The price of monopoly is upon every occasion the highest which can be
got. The natural price, or the price of free competition, on the
contrary, is the lowest which can be taken, not upon every occasion
indeed, but for any considerable time together. The one is upon every
occasion the highest which can be squeezed out of the buyers, or which
it is supposed they will consent to give; the other is the lowest
which the sellers can commonly afford to take, and at the same time
continue their business.

The exclusive privileges of corporations, statutes of apprenticeship,
and all those laws which restrain in particular employments, the
competition to a smaller number than might otherwise go into them,
have the same tendency, though in a less degree. They are a sort of
enlarged monopolies, and may frequently, for ages together, and in
whole classes of employments, keep up the market price of particular
commodities above the natural price, and maintain both the wages of
the labour and the profits of the stock employed about them somewhat
above their natural rate.

Such enhancements of the market price may last as long as the
regulations of policy which give occasion to them.

The market price of any particular commodity, though it may continue
long above, can seldom continue long below, its natural price.
Whatever part of it was paid below the natural rate, the persons whose
interest it affected would immediately feel the loss, and would
immediately withdraw either so much land or no much labour, or so much
stock, from being employed about it, that the quantity brought to
market would soon be no more than sufficient to supply the effectual
demand. Its market price, therefore, would soon rise to the natural
price; this at least would be the case where there was perfect

The same statutes of apprenticeship and other corporation laws,
indeed, which, when a manufacture is in prosperity, enable the workman
to raise his wages a good deal above their natural rate, sometimes
oblige him, when it decays, to let them down a good deal below it. As
in the one case they exclude many people from his employment, so in
the other they exclude him from many employments. The effect of such
regulations, however, is not near so durable in sinking the workman's
wages below, as in raising them above their natural rate. Their
operation in the one way may endure for many centuries, but in the
other it can last no longer than the lives of some of the workmen who
were bred to the business in the time of its prosperity. When they are
gone, the number of those who are afterwards educated to the trade
will naturally suit itself to the effectual demand. The policy must be
as violent as that of Indostan or ancient Egypt (where every man was
bound by a principle of religion to follow the occupation of his
father, and was supposed to commit the most horrid sacrilege if he
changed it for another), which can in any particular employment, and
for several generations together, sink either the wages of labour or
the profits of stock below their natural rate.

This is all that I think necessary to be observed at present
concerning the deviations, whether occasional or permanent, of the
market price of commodities from the natural price.

The natural price itself varies with the natural rate of each of its
component parts, of wages, profit, and rent; and in every society this
rate varies according to their circumstances, according to their
riches or poverty, their advancing, stationary, or declining
condition. I shall, in the four following chapters, endeavour to
explain, as fully and distinctly as I can, the causes of those
different variations.

First, I shall endeavour to explain what are the circumstances which
naturally determine the rate of wages, and in what manner those
circumstances are affected by the riches or poverty, by the advancing,
stationary, or declining state of the society.

Secondly, I shall endeavour to shew what are the circumstances which
naturally determine the rate of profit; and in what manner, too, those
circumstances are affected by the like variations in the state of the

Though pecuniary wages and profit are very different in the different
employments of labour and stock; yet a certain proportion seems
commonly to take place between both the pecuniary wages in all the
different employments of labour, and the pecuniary profits in all the
different employments of stock. This proportion, it will appear
hereafter, depends partly upon the nature of the different
employments, and partly upon the different laws and policy of the
society in which they are carried on. But though in many respects
dependent upon the laws and policy, this proportion seems to be little
affected by the riches or poverty of that society, by its advancing,
stationary, or declining condition, but to remain the same, or very
nearly the same, in all those different states. I shall, in the third
place, endeavour to explain all the different circumstances which
regulate this proportion.

In the fourth and last place, I shall endeavour to shew what are the
circumstances which regulate the rent of land, and which either raise
or lower the real price of all the different substances which it



The produce of labour constitutes the natural recompence or wages of

In that original state of things which precedes both the appropriation
of land and the accumulation of stock, the whole produce of labour
belongs to the labourer. He has neither landlord nor master to share
with him.

Had this state continued, the wages of labour would have augmented
with all those improvements in its productive powers, to which the
division of labour gives occasion. All things would gradually have
become cheaper. They would have been produced by a smaller quantity of
labour; and as the commodities produced by equal quantities of labour
would naturally in this state of things be exchanged for one another,
they would have been purchased likewise with the produce of a smaller

But though all things would have become cheaper in reality, in
appearance many things might have become dearer, than before, or have
been exchanged for a greater quantity of other goods. Let us suppose,
for example, that in the greater part of employments the productive
powers of labour had been improved to tenfold, or that a day's labour
could produce ten times the quantity of work which it had done
originally; but that in a particular employment they had been improved
only to double, or that a day's labour could produce only twice the
quantity of work which it had done before. In exchanging the produce
of a day's labour in the greater part of employments for that of a
day's labour in this particular one, ten times the original quantity
of work in them would purchase only twice the original quantity in it.
Any particular quantity in it, therefore, a pound weight, for example,
would appear to be five times dearer than before. In reality, however,
it would be twice as cheap. Though it required five times the quantity
of other goods to purchase it, it would require only half the quantity
of labour either to purchase or to produce it. The acquisition,
therefore, would be twice as easy as before.

But this original state of things, in which the labourer enjoyed the
whole produce of his own labour, could not last beyond the first
introduction of the appropriation of land and the accumulation of
stock. It was at an end, therefore, long before the most considerable
improvements were made in the productive powers of labour; and it
would be to no purpose to trace further what might have been its
effects upon the recompence or wages of labour.

As soon as land becomes private property, the landlord demands a share
of almost all the produce which the labourer can either raise or
collect from it. His rent makes the first deduction from the produce
of the labour which is employed upon land.

It seldom happens that the person who tills the ground has wherewithal
to maintain himself till he reaps the harvest. His maintenance is
generally advanced to him from the stock of a master, the farmer who
employs him, and who would have no interest to employ him, unless he
was to share in the produce of his labour, or unless his stock was to
be replaced to him with a profit. This profit makes a second deduction
from the produce of the labour which is employed upon land.

The produce of almost all other labour is liable to the like deduction
of profit. In all arts and manufactures, the greater part of the
workmen stand in need of a master, to advance them the materials of
their work, and their wages and maintenance, till it be completed. He
shares in the produce of their labour, or in the value which it adds
to the materials upon which it is bestowed; and in this share consists
his profit.

It sometimes happens, indeed, that a single independent workman has
stock sufficient both to purchase the materials of his work, and to
maintain himself till it be completed. He is both master and workman,
and enjoys the whole produce of his own labour, or the whole value
which it adds to the materials upon which it is bestowed. It includes
what are usually two distinct revenues, belonging to two distinct
persons, the profits of stock, and the wages of labour.

Such cases, however, are not very frequent; and in every part of
Europe twenty workmen serve under a master for one that is
independent, and the wages of labour are everywhere understood to be,
what they usually are, when the labourer is one person, and the owner
of the stock which employs him another.

What are the common wages of labour, depends everywhere upon the
contract usually made between those two parties, whose interests are
by no means the same. The workmen desire to get as much, the masters
to give as little, as possible. The former are disposed to combine in
order to raise, the latter in order to lower, the wages of labour.

It is not, however, difficult to foresee which of the two parties
must, upon all ordinary occasions, have the advantage in the dispute,
and force the other into a compliance with their terms. The masters,
being fewer in number, can combine much more easily: and the law,
besides, authorises, or at least does not prohibit, their
combinations, while it prohibits those of the workmen. We have no acts
of parliament against combining to lower the price of work, but many
against combining to raise it. In all such disputes, the masters can
hold out much longer. A landlord, a farmer, a master manufacturer, or
merchant, though they did not employ a single workman, could generally
live a year or two upon the stocks, which they have already acquired.
Many workmen could not subsist a week, few could subsist a month, and
scarce any a year, without employment. In the long run, the workman
may be as necessary to his master as his master is to him; but the
necessity is not so immediate.

We rarely hear, it has been said, of the combinations of masters,
though frequently of those of workmen. But whoever imagines, upon this
account, that masters rarely combine, is as ignorant of the world as
of the subject. Masters are always and everywhere in a sort of tacit,
but constant and uniform, combination, not to raise the wages of
labour above their actual rate. To violate this combination is
everywhere a most unpopular action, and a sort of reproach to a master
among his neighbours and equals. We seldom, indeed, hear of this
combination, because it is the usual, and, one may say, the natural
state of things, which nobody ever hears of. Masters, too, sometimes
enter into particular combinations to sink the wages of labour even
below this rate. These are always conducted with the utmost silence
and secrecy till the moment of execution; and when the workmen yield,
as they sometimes do without resistance, though severely felt by them,
they are never heard of by other people. Such combinations, however,
are frequently resisted by a contrary defensive combination of the
workmen, who sometimes, too, without any provocation of this kind,
combine, of their own accord, to raise tile price of their labour.
Their usual pretences are, sometimes the high price of provisions,
sometimes the great profit which their masters make by their work. But
whether their combinations be offensive or defensive, they are always
abundantly heard of. In order to bring the point to a speedy decision,
they have always recourse to the loudest clamour, and sometimes to the
most shocking violence and outrage. They are desperate, and act with
the folly and extravagance of desperate men, who must either starve,
or frighten their masters into an immediate compliance with their
demands. The masters, upon these occasions, are just as clamorous upon
the other side, and never cease to call aloud for the assistance of
the civil magistrate, and the rigorous execution of those laws which
have been enacted with so much severity against the combination of
servants, labourers, and journeymen. The workmen, accordingly, very
seldom derive any advantage from the violence of those tumultuous
combinations, which, partly from the interposition of the civil
magistrate, partly from the superior steadiness of the masters, partly
from the necessity which the greater part of the workmen are under of
submitting for the sake of present subsistence, generally end in
nothing but the punishment or ruin of the ringleaders.

But though, in disputes with their workmen, masters must generally
have the advantage, there is, however, a certain rate, below which it
seems impossible to reduce, for any considerable time, the ordinary
wages even of the lowest species of labour.

A man must always live by his work, and his wages must at least be
sufficient to maintain him. They must even upon most occasions be
somewhat more, otherwise it would be impossible for him to bring up a
family, and the race of such workmen could not last beyond the first
generation. Mr Cantillon seems, upon this account, to suppose that the
lowest species of common labourers must everywhere earn at least
double their own maintenance, in order that, one with another, they
may be enabled to bring up two children; the labour of the wife, on
account of her necessary attendance on the children, being supposed no
more than sufficient to provide for herself: But one half the children
born, it is computed, die before the age of manhood. The poorest
labourers, therefore, according to this account, must, one with
another, attempt to rear at least four children, in order that two
may have an equal chance of living to that age. But the necessary
maintenance of four children, it is supposed, may be nearly equal to
that of one man. The labour of an able-bodied slave, the same author
adds, is computed to be worth double his maintenance; and that of the
meanest labourer, he thinks, cannot be worth less than that of an
able-bodied slave. Thus far at least seems certain, that, in order to
bring up a family, the labour of the husband and wife together must,
even in the lowest species of common labour, be able to earn something
more than what is precisely necessary for their own maintenance; but
in what proportion, whether in that above-mentioned, or many other, I
shall not take upon me to determine.

There are certain circumstances, however, which sometimes give the
labourers an advantage, and enable them to raise their wages
considerably above this rate, evidently the lowest which is consistent
with common humanity.

When in any country the demand for those who live by wages, labourers,
journeymen, servants of every kind, is continually increasing; when
every year furnishes employment for a greater number than had been
employed the year before, the workmen have no occasion to combine in
order to raise their wages. The scarcity of hands occasions a
competition among masters, who bid against one another in order to get
workmen, and thus voluntarily break through the natural combination of
masters not to raise wages. The demand for those who live by wages, it
is evident, cannot increase but in proportion to the increase of the
funds which are destined to the payment of wages. These funds are of
two kinds, first, the revenue which is over and above what is
necessary for the maintenance; and, secondly, the stock which is over
and above what is necessary for the employment of their masters.

When the landlord, annuitant, or monied man, has a greater revenue
than what he judges sufficient to maintain his own family, he employs
either the whole or a part of the surplus in maintaining one or more
menial servants. Increase this surplus, and he will naturally increase
the number of those servants.

When an independent workman, such as a weaver or shoemaker, has got
more stock than what is sufficient to purchase the materials of his
own work, and to maintain himself till he can dispose of it, he
naturally employs one or more journeymen with the surplus, in order to
make a profit by their work. Increase this surplus, and he will
naturally increase the number of his journeymen.

The demand for those who live by wages, therefore, necessarily
increases with the increase of the revenue and stock of every country,
and cannot possibly increase without it. The increase of revenue and
stock is the increase of national wealth. The demand for those who
live by wages, therefore, naturally increases with the increase of
national wealth, and cannot possibly increase without it.

It is not the actual greatness of national wealth, but its continual
increase, which occasions a rise in the wages of labour. It is not,
accordingly, in the richest countries, but in the most thriving, or in
those which are growing rich the fastest, that the wages of labour are
highest. England is certainly, in the present times, a much richer
country than any part of North America. The wages of labour, however,
are much higher in North America than in any part of England. In the
province of New York, common labourers earned in 1773, before the
commencement of the late disturbances, three shillings and sixpence
currency, equal to two shillings sterling, a-day; ship-carpenters, ten
shillings and sixpence currency, with a pint of rum, worth sixpence
sterling, equal in all to six shillings and sixpence sterling;
house-carpenters and bricklayers, eight shillings currency, equal to
four shillings and sixpence sterling; journeymen tailors, five
shillings currency, equal to about two shillings and tenpence
sterling. These prices are all above the London price; and wages are
said to be as high in the other colonies as in New York. The price of
provisions is everywhere in North America much lower than in England.
A dearth has never been known there. In the worst seasons they have
always had a sufficiency for themselves, though less for exportation.
If the money price of labour, therefore, be higher than it is anywhere
in the mother-country, its real price, the real command of the
necessaries and conveniencies of life which it conveys to the
labourer, must be higher in a still greater proportion.

But though North America is not yet so rich as England, it is much
more thriving, and advancing with much greater rapidity to the further
acquisition of riches. The most decisive mark of the prosperity of any
country is the increase of the number of its inhabitants. In Great
Britain, and most other European countries, they are not supposed to
double in less than five hundred years. In the British colonies in
North America, it has been found that they double in twenty or
five-and-twenty years. Nor in the present times is this increase
principally owing to the continual importation of new inhabitants, but
to the great multiplication of the species. Those who live to old age,
it is said, frequently see there from fifty to a hundred, and
sometimes many more, descendants from their own body. Labour is there
so well rewarded, that a numerous family of children, instead of being
a burden, is a source of opulence and prosperity to the parents. The
labour of each child, before it can leave their house, is computed to
be worth a hundred pounds clear gain to them. A young widow with four
or five young children, who, among the middling or inferior ranks of
people in Europe, would have so little chance for a second husband, is
there frequently courted as a sort of fortune. The value of children
is the greatest of all encouragements to marriage. We cannot,
therefore, wonder that the people in North America should generally
marry very young. Notwithstanding the great increase occasioned by
such early marriages, there is a continual complaint of the scarcity
of hands in North America. The demand for labourers, the funds
destined for maintaining them increase, it seems, still faster than
they can find labourers to employ.

Though the wealth of a country should be very great, yet if it has
been long stationary, we must not expect to find the wages of labour
very high in it. The funds destined for the payment of wages, the
revenue and stock of its inhabitants, may be of the greatest extent;
but if they have continued for several centuries of the same, or very
nearly of the same extent, the number of labourers employed every year
could easily supply, and even more than supply, the number wanted the
following year. There could seldom be any scarcity of hands, nor could
the masters be obliged to bid against one another in order to get
them. The hands, on the contrary, would, in this case, naturally
multiply beyond their employment. There would be a constant scarcity
of employment, and the labourers would be obliged to bid against one
another in order to get it. If in such a country the wages off labour
had ever been more than sufficient to maintain the labourer, and to
enable him to bring up a family, the competition of the labourers and
the interest of the masters would soon reduce them to the lowest rate
which is consistent with common humanity. China has been long one of
the richest, that is, one of the most fertile, best cultivated, most
industrious, and most populous, countries in the world. It seems,
however, to have been long stationary. Marco Polo, who visited it more
than five hundred years ago, describes its cultivation, industry, and
populousness, almost in the same terms in which they are described by
travellers in the present times. It had, perhaps, even long before his
time, acquired that full complement of riches which the nature of its
laws and institutions permits it to acquire. The accounts of all
travellers, inconsistent in many other respects, agree in the low
wages of labour, and in the difficulty which a labourer finds in
bringing up a family in China. If by digging the ground a whole day he
can get what will purchase a small quantity of rice in the evening, he
is contented. The condition of artificers is, if possible, still
worse. Instead of waiting indolently in their work-houses for the
calls of their customers, as in Europe, they are continually running
about the streets with the tools of their respective trades, offering
their services, and, as it were, begging employment. The poverty of
the lower ranks of people in China far surpasses that of the most
beggarly nations in Europe. In the neighbourhood of Canton, many
hundred, it is commonly said, many thousand families have no
habitation on the land, but live constantly in little fishing-boats
upon the rivers and canals. The subsistence which they find there is
so scanty, that they are eager to fish up the nastiest garbage thrown
overboard from any European ship. Any carrion, the carcase of a dead
dog or cat, for example, though half putrid and stinking, is as
welcome to them as the most wholesome food to the people of other
countries. Marriage is encouraged in China, not by the profitableness
of children, but by the liberty of destroying them. In all great
towns, several are every night exposed in the street, or drowned like
puppies in the water. The performance of this horrid office is even
said to be the avowed business by which some people earn their

China, however, though it may, perhaps, stand still, does not seem to
go backwards. Its towns are nowhere deserted by their inhabitants. The
lands which had once been cultivated, are nowhere neglected. The same,
or very nearly the same, annual labour, must, therefore, continue to
be performed, and the funds destined for maintaining it must not,
consequently, be sensibly diminished. The lowest class of labourers,
therefore, notwithstanding their scanty subsistence, must some way or
another make shift to continue their race so far as to keep up their
usual numbers.

But it would be otherwise in a country where the funds destined for
the maintenance of labour were sensibly decaying. Every year the
demand for servants and labourers would, in all the different classes
of employments, be less than it had been the year before. Many who had
been bred in the superior classes, not being able to find employment
in their own business, would be glad to seek it in the lowest. The
lowest class being not only overstocked with its own workmen, but with
the overflowings of all the other classes, the competition for
employment would be so great in it, as to reduce the wages of labour
to the most miserable and scanty subsistence of the labourer. Many
would not be able to find employment even upon these hard terms, but
would either starve, or be driven to seek a subsistence, either by
begging, or by the perpetration perhaps, of the greatest enormities.
Want, famine, and mortality, would immediately prevail in that class,
and from thence extend themselves to all the superior classes, till
the number of inhabitants in the country was reduced to what could
easily be maintained by the revenue and stock which remained in it,
and which had escaped either the tyranny or calamity which had
destroyed the rest. This, perhaps, is nearly the present state of
Bengal, and of some other of the English settlements in the East
Indies. In a fertile country, which had before been much depopulated,
where subsistence, consequently, should not be very difficult, and
where, notwithstanding, three or four hundred thousand people die of
hunger in one year, we maybe assured that the funds destined for the
maintenance of the labouring poor are fast decaying. The difference
between the genius of the British constitution, which protects and
governs North America, and that of the mercantile company which
oppresses and domineers in the East Indies, cannot, perhaps, be better
illustrated than by the different state of those countries.

The liberal reward of labour, therefore, as it is the necessary
effect, so it is the natural symptom of increasing national wealth.
The scanty maintenance of the labouring poor, on the other hand, is
the natural symptom that things are at a stand, and their starving
condition, that they are going fast backwards.

In Great Britain, the wages of labour seem, in the present times, to
be evidently more than what is precisely necessary to enable the
labourer to bring up a family. In order to satisfy ourselves upon this
point, it will not be necessary to enter into any tedious or doubtful
calculation of what may be the lowest sum upon winch it is possible to
do this. There are many plain symptoms, that the wages of labour are
nowhere in this country regulated by this lowest rate, which is
consistent with common humanity.

First, in almost every part of Great Britain there is a distinction,
even in the lowest species of labour, between summer and winter wages.
Summer wages are always highest. But, on account of the extraordinary
expense of fuel, the maintenance of a family is most expensive in
winter. Wages, therefore, being highest when this expense is lowest,
it seems evident that they are not regulated by what is necessary for
this expense, but by the quantity and supposed value of the work. A
labourer, it may be said, indeed, ought to save part of his summer
wages, in order to defray his winter expense; and that, through the
whole year, they do not exceed what is necessary to maintain his
family through the whole year. A slave, however, or one absolutely
dependent on us for immediate subsistence, would not be treated in
this manner. His daily subsistence would be proportioned to his daily

Secondly, the wages of labour do not, in Great Britain, fluctuate with
the price of provisions. These vary everywhere from year to year,
frequently from month to month. But in many places, the money price of
labour remains uniformly the same, sometimes for half a century
together. If, in these places, therefore, the labouring poor can
maintain their families in dear years, they must be at their ease in
times of moderate plenty, and in affluence in those of extraordinary
cheapness. The high price of provisions during these ten years past,
has not, in many parts of the kingdom, been accompanied with any
sensible rise in the money price of labour. It has, indeed, in some;
owing, probably, more to the increase of the demand for labour, than
to that of the price of provisions.

Thirdly, as the price of provisions varies more from year to year than
the wages of labour, so, on the other hand, the wages of labour vary
more from place to place than the price of provisions. The prices of
bread and butchers' meat are generally the same, or very nearly the
same, through the greater part of the united kingdom. These, and most
other things which are sold by retail, the way in which the labouring
poor buy all things, are generally fully as cheap, or cheaper, in
great towns than in the remoter parts of the country, for reasons
which I shall have occasion to explain hereafter. But the wages of
labour in a great town and its neighbourhood, are frequently a fourth
or a fifth part, twenty or five-and--twenty per cent. higher than at a
few miles distance. Eighteen pence a day may be reckoned the common
price of labour in London and its neighbourhood. At a few miles
distance, it falls to fourteen and fifteen pence. Tenpence may be
reckoned its price in Edinburgh and its neighbourhood. At a few miles
distance, it falls to eightpence, the usual price of common labour
through the greater part of the low country of Scotland, where it
varies a good deal less than in England. Such a difference of prices,
which, it seems, is not always sufficient to transport a man from one
parish to another, would necessarily occasion so great a
transportation of the most bulky commodities, not only from one parish
to another, but from one end of the kingdom, almost from one end of
the world to the other, as would soon reduce them more nearly to a
level. After all that has been said of the levity and inconstancy of
human nature, it appears evidently from experience, that man is, of
all sorts of luggage, the most difficult to be transported. If the
labouring poor, therefore, can maintain their families in those parts
of the kingdom where the price of labour is lowest, they must be in
affluence where it is highest.

Fourthly, the variations in the price of labour not only do not
correspond, either in place or time, with those in the price of
provisions, but they are frequently quite opposite.

Grain, the food of the common people, is dearer in Scotland than in
England, whence Scotland receives almost every year very large
supplies. But English corn must be sold dearer in Scotland, the
country to which it is brought, than in England, the country from
which it comes; and in proportion to its quality it cannot be sold
dearer in Scotland than the Scotch corn that comes to the same market
in competition with it. The quality of grain depends chiefly upon the
quantity of flour or meal which it yields at the mill; and, in this
respect, English grain is so much superior to the Scotch, that though
often dearer in appearance, or in proportion to the measure of its
bulk, it is generally cheaper in reality, or in proportion to its
quality, or even to the measure of its weight. The price of labour, on
the contrary, is dearer in England than in Scotland. If the labouring
poor, therefore, can maintain their families in the one part of the
united kingdom, they must be in affluence in the other. Oatmeal,
indeed, supplies the common people in Scotland with the greatest and
the best part of their food, which is, in general, much inferior to
that of their neighbours of the same rank in England. This difference,
however, in the mode of their subsistence, is not the cause, but the
effect, of the difference in their wages; though, by a strange
misapprehension, I have frequently heard it represented as the cause.
It is not because one man keeps a coach, while his neighbour walks
a-foot, that the one is rich, and the other poor; but because the one
is rich, he keeps a coach, and because the other is poor, he walks

During the course of the last century, taking one year with another,
grain was dearer in both parts of the united kingdom than during that
of the present. This is a matter of fact which cannot now admit of any
reasonable doubt; and the proof of it is, if possible, still more
decisive with regard to Scotland than with regard to England. It is in
Scotland supported by the evidence of the public fiars, annual
valuations made upon oath, according to the actual state of the
markets, of all the different sorts of grain in every different county
of Scotland. If such direct proof could require any collateral
evidence to confirm it, I would observe, that this has likewise been
the case in France, and probably in most other parts of Europe. With
regard to France, there is the clearest proof. But though it is
certain, that in both parts of the united kingdom grain was somewhat
dearer in the last century than in the present, it is equally certain
that labour was much cheaper. If the labouring poor, therefore, could
bring up their families then, they must be much more at their ease
now. In the last century, the most usual day-wages of common labour
through the greater part of Scotland were sixpence in summer, and
fivepence in winter. Three shillings a-week, the same price, very
nearly still continues to be paid in some parts of the Highlands and
Western islands. Through the greater part of the Low country, the most
usual wages of common labour are now eight pence a-day; tenpence,
sometimes a shilling, about Edinburgh, in the counties which border
upon England, probably on account of that neighbourhood, and in a few
other places where there has lately been a considerable rise in the
demand for labour, about Glasgow, Carron, Ayrshire, etc. In England,
the improvements of agriculture, manufactures, and commerce, began
much earlier than in Scotland. The demand for labour, and consequently
its price, must necessarily have increased with those improvements. In
the last century, accordingly, as well as in the present, the wages of
labour were higher in England than in Scotland. They have risen, too,
considerably since that time, though, on account of the greater
variety of wages paid there in different places, it is more difficult
to ascertain how much. In 1614, the pay of a foot soldier was the same
as in the present times, eightpence a-day. When it was first
established, it would naturally be regulated by the usual wages of
common labourers, the rank of people from which foot soldiers are
commonly drawn. Lord-chief-justice Hales, who wrote in the time of
Charles II. computes the necessary expense of a labourer's family,
consisting of six persons, the father and mother, two children able to
do something, and two not able, at ten shillings a-week, or twenty-six
pounds a-year. If they cannot earn this by their labour, they must
make it up, he supposes, either by begging or stealing. He appears to
have enquired very carefully into this subject {See his scheme for the
maintenance of the poor, in Burn's History of the Poor Laws.}. In
1688, Mr Gregory King, whose skill in political arithmetic is so much
extolled by Dr Davenant, computed the ordinary income of labourers and
out-servants to be fifteen pounds a-year to a family, which he
supposed to consist, one with another, of three and a half persons.
His calculation, therefore, though different in appearance,
corresponds very nearly at bottom with that of Judge Hales. Both
suppose the weekly expense of such families to be about twenty-pence
a-head. Both the pecuniary income and expense of such families have
increased considerably since that time through the greater part of the
kingdom, in some places more, and in some less, though perhaps scarce
anywhere so much as some exaggerated accounts of the present wages of
labour have lately represented them to the public. The price of
labour, it must be observed, cannot be ascertained very accurately
anywhere, different prices being often paid at the same place and for
the same sort of labour, not only according to the different abilities
of the workman, but according to the easiness or hardness of the
masters. Where wages are not regulated by law, all that we can pretend
to determine is, what are the most usual; and experience seems to shew
that law can never regulate them properly, though it has often
pretended to do so.

The real recompence of labour, the real quantity of the necessaries
and conveniencies of life which it can procure to the labourer, has,
during the course of the present century, increased perhaps in a still
greater proportion than its money price. Not only grain has become
somewhat cheaper, but many other things, from which the industrious
poor derive an agreeable and wholesome variety of food, have become a
great deal cheaper. Potatoes, for example, do not at present, through
the greater part of the kingdom, cost half the price which they used
to do thirty or forty years ago. The same thing may be said of
turnips, carrots, cabbages; things which were formerly never raised
but by the spade, but which are now commonly raised by the plough. All
sort of garden stuff, too, has become cheaper. The greater part of the
apples, and even of the onions, consumed in Great Britain, were, in
the last century, imported from Flanders. The great improvements in
the coarser manufactories of both linen and woollen cloth furnish the
labourers with cheaper and better clothing; and those in the
manufactories of the coarser metals, with cheaper and better
instruments of trade, as well as with many agreeable and convenient
pieces of household furniture. Soap, salt, candles, leather, and
fermented liquors, have, indeed, become a good deal dearer, chiefly
from the taxes which have been laid upon them. The quantity of these,
however, which the labouring poor an under any necessity of consuming,
is so very small, that the increase in their price does not compensate
the diminution in that of so many other things. The common complaint,
that luxury extends itself even to the lowest ranks of the people, and
that the labouring poor will not now be contented with the same food,
clothing, and lodging, which satisfied them in former times, may
convince us that it is not the money price of labour only, but its
real recompence, which has augmented.

Is this improvement in the circumstances of the lower ranks of the
people to be regarded as an advantage, or as an inconveniency, to the
society? The answer seems at first abundantly plain. Servants,
labourers, and workmen of different kinds, make up the far greater
part of every great political society. But what improves the
circumstances of the greater part, can never be regarded as any
inconveniency to the whole. No society can surely be flourishing and
happy, of which the far greater part of the members are poor and
miserable. It is but equity, besides, that they who feed, clothe, and
lodge the whole body of the people, should have such a share of the
produce of their own labour as to be themselves tolerably well fed,
clothed, and lodged.

Poverty, though it no doubt discourages, does not always prevent,
marriage. It seems even to be favourable to generation. A half-starved
Highland woman frequently bears more than twenty children, while a
pampered fine lady is often incapable of bearing any, and is generally
exhausted by two or three. Barrenness, so frequent among women of
fashion, is very rare among those of inferior station. Luxury, in the
fair sex, while it inflames, perhaps, the passion for enjoyment, seems
always to weaken, and frequently to destroy altogether, the powers of

But poverty, though it does not prevent the generation, is extremely
unfavourable to the rearing of children. The tender plant is produced;
but in so cold a soil, and so severe a climate, soon withers and dies.
It is not uncommon, I have been frequently told, in the Highlands of
Scotland, for a mother who has born twenty children not to have two
alive. Several officers of great experience have assured me, that, so
far from recruiting their regiment, they have never been able to
supply it with drums and fifes, from all the soldiers' children that
were born in it. A greater number of fine children, however, is seldom
seen anywhere than about a barrack of soldiers. Very few of them, it
seems, arrive at the age of thirteen or fourteen. In some places, one
half the children die before they are four years of age, in many
places before they are seven, and in almost all places before they are
nine or ten. This great mortality, however will everywhere be found
chiefly among the children of the common people, who cannot afford to
tend them with the same care as those of better station. Though their
marriages are generally more fruitful than those of people of fashion,
a smaller proportion of their children arrive at maturity. In
foundling hospitals, and among the children brought up by parish
charities, the mortality is still greater than among those of the
common people.

Every species of animals naturally multiplies in proportion to the
means of their subsistence, and no species can ever multiply be yond
it. But in civilized society, it is only among the inferior ranks of
people that the scantiness of subsistence can set limits to the
further multiplication of the human species; and it can do so in no
other way than by destroying a great part of the children which their
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

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

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.



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 Abbé
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

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

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.



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

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


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