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Book I
Chapter VIII. Of the Wages of Labour
Page 91.
The produce of labour constitutes the natural recompense or wages of labour.
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 quantity.
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 recompense or wages of labor.
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, authorizes, 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, a 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 neighbors and equals. We seldom,
indeed, hear of this combination, because it is the usual, and one may say, 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 the 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 combinations 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.
. . .
Page 110
... The common complaint that luxury extends itself even to the lowest ranks of the people, and that the
labouring poor will not be contented with the same lodging which satisfied them in former times, may
convince us that it is not the money price of labour only but its real recompense, which has augmented.
Is this improvement in the circumstances of the lower ranks of the people to be regarded as all advantage
or an inconveniency to the society? The answer seems at first sight 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 an 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.
. . .
Chapter IX. Of the Profits of Stock
Page 136
In raising the price of commodities the rise of wages operates in the same manner as
simple interest does in the accumulation of debt. The rise of profit operates like
compound interest. Our merchants and master-manufacturers complain much of the bad
effects of high wages in raising the price, and thereby lessening the sale of their
goods both at home and abroad. They say nothing concerning the bad effects of high
profits. They are silent with regard to the pernicious effects of their own gains.
They complain only of those of other people.
. . .
Chapter X. Inequalities of Wages and Profit
P.195
Particular Acts of Parliament, however still attempt sometimes to regulate
wages in particular trades and in particular places.
Thus the 8th of George III prohibits under heavy penalties all master
tailors in London, and five miles round it, from giving, and their workmen
from accepting, more than two shillings and seven pence halfpenny a day
except in the case of a general mourning. Whenever the legislature attempts
to regulate the differences between masters and their workmen, its counselors
are always the masters. When the regulation, therefore, is in favour of the
workmen it is always just and equitable; but it is sometimes otherwise when
in favour of the masters. Thus the law which obliges the masters in several
different trades to pay their workmen in money and not in goods is quite just
and equitable. It imposes no real hardship upon the masters. It only obliges
them to pay that value in money which they pretended to pay but did not
always really pay in goods. This law is in favour of the workmen; but the
8th of George III is in favour of the masters. When masters combine together
in order to reduce the wages of their workmen, they commonly enter into a
private bond or agreement not to give more than a certain wage under a
certain penalty. Were the workmen to enter into a contrary combination of
the same kind, not to accept of a certain wage under a certain penalty, the
law would punish them very severely; and if it dealt impartially, it would
treat the masters in the same manner. But the 8th of George III enforces by
law that very regulation which masters sometimes attempt to establish by such
combinations. The complaint of the workmen, that it puts the ablest and
most industrious upon the same footing with an ordinary workman, seems
perfectly well founded.
. . .
Chapter XI, The Rent of Land
Page 335.
I shall conclude this very long chapter with observing that every improvement in the
circumstances of the society tends either directly or indirectly to raise the real
rent of land, to increase the real wealth of the landlord, his power of purchasing the
labour, or the produce of the labour of other people.
The extension of improvement and cultivation tends to raise it directly. The landlord's
share of the produce necessarily increases with the increase of the produce.
That rise in the real price of those parts of the rude produce of land, which is first
the effect of extended improvement and cultivation. and afterwards the cause of their
being still further extended, the rise in the price of cattle, for example, tends too
to raise the rent of land directly, and in a still greater proportion. The real value
of the landlord' s share, his real command of the labour of other people, not only
rises with the real value of the produce, but the proportion of his share to the whole
produce rises with it. That produce, after the rise in its real price, requires no more
labour to collect it than before. A smaller proportion of it will, therefore, be
sufficient to replace, with the ordinary profit, the stock which employs that labour.
A greater proportion of it must, consequently, belong to the landlord.
All those improvements in the productive powers of labour, which tend directly to reduce
the real price of manufactures, tend indirectly to raise the real rent of land. The
landlord exchanges that part of his rude produce, which is over and above his own
consumption, or what comes to the same thing, the price of that part of it, for
manufactured produce. Whatever reduces the real price of the latter, raises that of the
former. An equal quantity of the former becomes thereby equivalent to a greater quantity
of the latter; and the landlord is enabled to purchase a greater quantity of the
conveniences, ornaments, or luxuries, which he has occasion for.
Every increase in the real wealth of the society, every increase in the quantity of
useful labour employed within it, tends indirectly to raise the real rent of land.
A certain proportion of this labour naturally goes to the land. A greater number of
men and cattle are employed in its cultivation, the produce increases with the increase
of the stock which is thus employed in raising it, and the rent increases with the produce.
The contrary circumstances, the neglect of cultivation and improvement, the fall in the
real price of any part of the rude produce of land, the rise in the real price of
manufactures from the decay of manufacturing art and industry, the declension of the real
wealth of the society, all tend, on the other hand, to lower the real rent of land, to reduce
the real wealth of the landlord, to diminish his power of purchasing either the labour, or the
produce of the labour of other people.
The whole annual produce of the land and labour of every country, or what comes to the same thing,
the whole price of that annual produce, naturally divides itself, it has already been observed,
into three parts; the rent of land, the wages of labour, and the profits of stock; and constitutes
a revenue to three different orders of people; to those who live by rent, to those who live by wages,
and to those who live by profit. These are the three great, original, and constituent orders of every
civilized society from whose revenue that of every other order is ultimately derived.
The interest of the first of those three great orders, it appears from what has been just now said,
is strictly and inseparably connected with the general interest of the society. Whatever either
promotes or obstructs the one, necessarily promotes or obstructs the other. When the public deliberates
concerning any regulation of commerce or police, the proprietors of land never can mislead it, with a
view to promote the interest of their own particular order, at least, if they have any tolerable
knowledge of that interest. They are, indeed, too often defective in this tolerable knowledge. They
are the only one of the three orders whose revenue costs them neither labour nor care, but comes to
them, as it were, of its own accord, and independent of any plan or project of their own. That
indolence, which is the natural effect of the case and security of their situation, renders them
too often, not only ignorant, but incapable of that application of mind which is necessary in order
to foresee and understand the consequences of any public regulation.
The interest of the second order, that of those who live by wages, is as strictly connected with the
interest of the society as that of the first. The wages of the labourer, it has already been shown, are
never so high as when the demand for labour is continually rising, or when the quantity employed is
every year increasing considerably. When this real wealth of the society becomes stationary, his wages
are soon reduced to what is barely enough to enable him to bring up a family, or to continue the race
of labourers. When the society declines, they fall even below this. The order of proprietors may perhaps,
gain more by the prosperity of the society than that of labourers ; but there is no order that suffers so
cruelly from its decline. But though the interest of the labourer is strictly connected with that of the
society, he is incapable either of comprehending that interest or of understanding its connection with his
own. His condition leaves him no time to receive the necessary information, and his education and habits
are commonly such as to render him unfit to judge even though he was fully informed. In the public
deliberations, therefore, his voice is little heard and less regarded, except upon some particular occasions,
when his clamour is animated, set on and supported by his employers, not for his, but their own particular purposes.
His employers constitute the third order, that of those who live by profit. It is the stock that is
employed for the sake of profit which puts into motion the greater part of the useful labour of every
society. The plans and projects of the employers of stock regulate and direct all the most important
operations of labour and profit is the end proposed by all those plans and projects. But the rate of
profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society.
On the contrary, it is naturally low in rich and high in poor countries, and it is always highest in the
countries which are going fastest to ruin. The interest of this third order, therefore, has not the same
connection with the general interest of the society as that of the other two. Merchants and master manufacturers
are, in this order, the two classes of people who commonly employ the largest capitals, and who by their wealth
draw to themselves the greatest share of the public consideration. As during their whole lives they are engaged
in plans and projects, they have frequently more acuteness of understanding than the greater part of country
gentlemen. As their thoughts however, are commonly exercised rather about the interest of their own particular
branch of business, than about that of the society, their judgment, even when given with the greatest candour
(which it has not been upon every occasion) is much more to be depended upon with regard to the former of those
two objects than with regard to the latter. Their superiority over the country gentleman is not no much in their
knowledge of the public interest as in their having a better knowledge of their own interest than he has of his.
It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and
persuaded him to give up both his own interest and that of the public, from a very simple but honest conviction
that their interest, and not his, was the interest of the public. The interest of the dealers, however, in any
particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that
of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen
the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must
always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally
would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any
new law or regulation of commerce which comes from this order ought always to be listened to with great precaution,
and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous,
but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with
that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly
have, upon many occasions, both deceived and oppressed it.
. . .
Book II Of the Nature, Accumulation, and Employment of Stock
Chapter III Of the Accumulation of Capital
Page 441
But though the profusion of government must, undoubtedly, have retarded the natural
progress of England towards wealth and improvement, it has not been able to stop it.
The annual produce of its land and labour is, undoubtedly much greater at present
than it was either at the Restoration or at the Revolution. The capital, therefore,
annually employed in cultivating this land, and in maintaining this labour, must
likewise be much greater. In the midst of all the exactions of government, this
capital has been silently and gradually accumulated by the private frugality and
good conduct of individuals, by their universal, continual, and uninterrupted
effort to better their own condition. It is this effort, protected by law and
allowed by liberty to exert itself in the manner that is most advantageous, which
has maintained the progress of England towards opulence and improvement in almost
all former times, and which, it is to be hoped, will do so in all future times.
England, however, as it has never been blessed with a very parsimonious government,
so parsimony has at no time been the characteristical virtue of its inhabitants.
It is the highest impertinence and presumption, therefore, in kings and ministers,
to pretend to watch over the economy of private people, and to restrain their
expense, either by sumptuary laws, or by prohibiting the importation of foreign
luxuries. They are themselves always, and without any exception, the greatest
spendthrifts in the society. Let them look well after their own expense, and
they may safely trust private people with theirs. If their own extravagance
does not ruin the state, that of their subjects never will.
. . .
Page 445
The expense, besides, that is laid out in durable commodities gives maintenance, commonly,
to a greater number of people than that which is employed in the most profuse hospitality.
Of two or three hundredweight of provisions, which may sometimes be served up at a great
festival, one half, perhaps, is thrown to the dunghill, and there is always a great deal
wasted and abused. But if the expense of this entertainment had been employed in setting to
work masons, carpenters, upholsterers, mechanics, etc., a quantity of provisions, of equal
value, would have been distributed among a still greater number of people who would have
bought them in pennyworths and pound weights, and not have lost or thrown away a single
ounce of them. In the one way, besides, this expense maintains productive, in the other
unproductive hands. In the one way, therefore, it increases, in the other, it does not
increase, the exchangeable value of the annual produce of the land and labour of
the country.
I would not, however, by all this be understood to mean that the one species of expense
always betokens a more liberal or generous spirit than the other. When a man of fortune
spends his revenue chiefly in hospitality, he shares the greater part of it with his
friends and companions; but when he employs it in purchasing such durable commodities,
he often spends the whole upon his own person, and gives nothing to anybody without an
equivalent. The latter species of expense, therefore, especially when directed towards
frivolous objects, the little ornaments of dress and furniture, jewels, trinkets,
gewgaws, frequently indicates, not only a trifling, but a base and selfish disposition.
All that I mean is, that the one sort of expense, as it always occasions some accumulation
of valuable commodities, as it is more favourable to private frugality, and, consequently,
to the increase of the public capital, and as it maintains productive, rather than
unproductive hands, conduces more than the other to the growth of public opulence. [End chapter]
. . .
Book III Of the different Progress of Opulence in different Nations
Chapter IV Towns Improved the Country
Page 525
But what all the violence of the feudal institutions could never have effected,
the silent and insensible operation of foreign commerce and manufactures gradually
brought about. These gradually furnished the great proprietors with something for
which they could exchange the whole surplus produce of their lands, and which they
could consume themselves without sharing it either with tenants or retainers. All
for ourselves and nothing for other people, seems, in every age of the world, to
have been the vile maxim of the masters of mankind. As soon, therefore, as they
could find a method of consuming the whole value of their rents themselves, they
had no disposition to share them with any other persons. For a pair of diamond buckles,
perhaps, or for something as frivolous and useless, they exchanged the maintenance, or
what is the same thing, the price of the maintenance of a thousand men for a year, and
with it the whole weight and authority which it could give them. The buckles, however,
were to be all their own, and no other human creature was to have any share of them;
whereas in the more ancient method of expense they must have shared with at least a
thousand people. With the judges that were to determine the preference this difference
was perfectly decisive; and thus, for the gratification of the most childish, the meanest,
and the most sordid of all vanities, they gradually bartered their whole power and authority.
. . .
Book IV Of Systems of political Economy
Chapter II Restraints on Particular Imports
Page 569
Every individual is continually exerting himself to find out the most advantageous employment
for whatever capital he can command. It is his own advantage, indeed, and not that of the
society, which he has in view. But the study of his own advantage naturally, or rather
necessarily, leads him to prefer that employment which is most advantageous to the society.
. . .
Page 572
But the annual revenue of every society is always precisely equal to the exchangeable value
of the whole annual produce of its industry, or rather is precisely the same thing with
that exchangeable value. As every individual, therefore endeavours as much as he can both
to employ his capital in the support of domestic industry, and so to direct that industry
that its produce may be of the greatest value; every individual necessarily labours to
render the annual revenue of the society as great as he can. He generally, indeed, neither,
intends to promote the public interest, nor knows how much he is promoting it. By preferring
the support of domestic to that of foreign industry, he intends only his own security, and
by directing that industry in such a manner as its produce may be of the greatest value,
he intends only his own gain, and he is in this, as in many other cases, led by an
invisible hand to promote an end which was no part of his intention. Nor is it always
the worse for the society that it was no part of it. By pursuing his own interest
he frequently promotes that of the society more effectually than when he really
intends to promote it. I have never known much good done by those who affected to
trade for the public good. It is an affectation, indeed, not very common among
merchants, and very few words need be employed in dissuading them from it.
. . .
Chapter II Restraints on Particular Imports
Page 588
The case in which it may sometimes be a matter of deliberation, how far, or in what
manner, it is proper to restore the free importation of foreign goods, after it has
been for some time interrupted, is, when particular manufactures, by means of high
duties or prohibitions upon all foreign goods which can come into competition with
them, have been so far extended as to employ a great multitude of hands. Humanity
may in this case require that the freedom of trade should be restored only by slow
gradations, and with a good deal of reserve and circumspection. Were those high
duties and prohibitions taken away all at once, cheaper foreign goods of the same
kind might be poured so fast into the home market as to deprive all at once many
thousands of our people of their ordinary employment and means of subsistence.
The disorder which this would occasion might no doubt be very considerable. It
would in all probability, however, be much less than is commonly imagined, for
the two following reasons:
First, all those manufactures, of which any part is commonly exported to other
European countries without a bounty, could be very little affected by the freest
importation of foreign goods. Such manufactures must be sold as cheap abroad as
any other foreign goods of the same quality and kind. and consequently must be
sold cheaper at home. They would still, therefore, keep possession of the home
market, and though a capricious man of fashion might sometimes prefer foreign wares,
merely because they were foreign, to cheaper and better goods of the same kind that
were made at home, this folly could, from the nature of things, extend to so few
that it could make no sensible impression upon the general employment of the people.
But a great part of all the different branches of our woollen manufacture, of our
tanned leather, and of our hardware, are annually exported to other European countries
without any bounty, and these are the manufactures which employ the greatest number of
hands. The silk, perhaps, is the manufacture which would suffer the most by this freedom
of trade, and after it the linen, though the latter much less than the former.
Secondly, though a great number of people should, by thus restoring the freedom of trade,
be thrown all at once out of their ordinary employment and common method of subsistence,
it would by no means follow that they would thereby be deprived either of employment or
subsistence. By the reduction of the army and navy at the end of the late war, more than
a hundred thousand soldiers and seamen, a number equal to what is employed in the greatest
manufactures, were all at once thrown out of their ordinary employment; but, though they
no doubt suffered some inconveniency, they were not thereby deprived of all employment
and subsistence. The greater part of the seamen, it is probable, gradually betook
themselves to the merchant-service as they could find occasion, and in the meantime both
they and the soldiers were absorbed in the great mass of the people, and employed in a
great variety of occupations. Not only no great convulsion, but no sensible disorder arose
from so great a change in the situation of more than a hundred thousand men, all accustomed
to the use of arms, and many of them to rapine and plunder.
The number of vagrants was scarce anywhere sensibly increased by it, even the wages of labour
were not reduced by it in any occupation, so far as I have been able to learn, except in that
of seamen in the merchant service. But if we compare together the habits of a soldier and of
any sort of manufacturer, we shall find that those of the latter do not tend so much to disqualify
him from being employed in a new trade, as those of the former from being employed in any. The
manufacturer has always been accustomed to look for his subsistence from his labour only: the
soldier to expect it from his pay. Application and industry have been familiar to the one;
idleness and dissipation to the other. But it is surely much easier to change the direction of
industry from one sort of labour to another than to turn idleness and dissipation to any. To the
greater part of manufactures besides, it has already been observed, there are other collateral
manufactures of so similar a nature that a workman can easily transfer his industry from one of
them to another. The greater part of such workmen too are occasionally employed in country labour.
The stock which employed them in a particular manufacture before will still remain in the country
to employ an equal number of people in some other way. The capital of the country remaining the
same, the demand for labour will likewise be the same, or very nearly the same, though it may be
exerted in different places and for different occupations. Soldiers and seamen, indeed, when
discharged from the king's service, are at liberty to exercise any trade, within any town or place
of Great Britain or Ireland. Let the same natural liberty of exercising what species of industry
they please, be restored to all his Majesty's subjects, in the same manner as to soldiers and seamen;
that is, break down the exclusive privileges of corporations, and repeal the Statute of Apprenticeship,
both which are real encroachments upon natural liberty, and add to these the repeal of the Law of
Settlements, so that a poor workman, when thrown out of employment either in one trade or in one
place, may seek for it in another trade or in another place without the fear either of a prosecution
or of a removal, and neither the public nor the individuals will suffer much more from the occasional
disbanding some particular classes of manufacturers than from that of soldiers. Our manufacturers
have no doubt great merit with their country, but they cannot have more than those who defend it with
their blood, nor deserve to be treated with more delicacy.
To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain is as
absurd as to expect that an Oceana or Utopia should ever be established in it. Not only the prejudices
of the public, but what is much more unconquerable, the private interests of many individuals, irresistibly
oppose it. Were the officers of the army to oppose with the same zeal and unanimity any reduction in the
numbers of forces with which master manufacturers set themselves against every law that is likely to
increase the number of their rivals in the home market; were the former to animate their soldiers in
the same manner as the latter enflame their workmen to attack with violence and outrage the proposers
of any such regulation, to attempt to reduce the army would be as dangerous as it has now become to
attempt to diminish in any respect the monopoly which our manufacturers have obtained against us.
This monopoly has so much increased the number of some particular tribes of them that, like an overgrown
standing army, they have become formidable to the government, and upon many occasions intimidate the
legislature. The Member of Parliament who supports every proposal for strengthening this monopoly is
sure to acquire not only the reputation of understanding trade, but great popularity and influence with
an order of men whose numbers and wealth render them of great importance. If he opposes them, on the
contrary, and still more if he has authority enough to be able to thwart them, neither the most acknowledged
probity nor the highest rank, nor the greatest public services can protect him from the most infamous abuse
and detraction, from personal insults, nor sometimes from real danger, arising from the insolent outrage of
furious and disappointed monopolists.
The undertaker of a great manufacture, who, by the home markets being suddenly laid open to the competition
of foreigners, should be obliged to abandon his trade, would no doubt suffer very considerably. That part
of his capital which had usually been employed in purchasing materials and in paying his workmen might,
without much difficulty, perhaps, find another employment. But that part of it which was fixed in workhouses,
and in the instruments of trade, could scarce be disposed of without considerable loss. The equitable regard,
therefore, to his interest requires that changes of this kind should never be introduced suddenly, but slowly,
gradually, and after a very long warning. The legislature, were it possible that its deliberations could be
always directed, not by the clamorous importunity of partial interests, but by an extensive view of the general
good, ought upon this very account, perhaps, to be particularly careful neither to establish any new monopolies
of this kind, nor to extend further those which are already established. Every such regulation introduces some
degree of real disorder into the constitution of the state, which it will be difficult afterwards to cure without
occasioning another disorder.
How far it may be proper to impose taxes upon the importation of foreign goods, in
order not to prevent their importation but to raise a revenue for government, I shall consider hereafter when I
come to treat of taxes. Taxes imposed with a view to prevent, or even to diminish importation, are evidently as
destructive of the revenue of the customs as of the freedom of trade.
. . .
Chapter III Restraints on Imports
Page 619
It is a losing trade, it is said, which a workman carries on with the alehouse; and the trade which a
manufacturing nation would naturally carry on with a wine country may be considered as a trade of the
same nature. I answer, that the trade with the alehouse is not necessarily a losing trade. In its own
nature it is just as advantageous as any other, though perhaps somewhat more liable to be abused. The
employment of a brewer, and even that of a retailer of fermented liquors, are as necessary divisions of
labour as any other. It will generally be more advantageous for a workman to buy of the brewer the
quantity he has occasion for than to brew it himself, and if he is a poor workman, it will generally
be more advantageous for him to buy it by little and little of the retailer than a large quantity of
the brewer. He may no doubt buy too much of either, as he may of any other dealers in his neighbourhood,
of the butcher, if he is a glutton, or of the draper, if he affects to be a beau among his companions.
It is advantageous to the great body of workmen, notwithstanding, that all these trades should be free,
though this freedom may be abused in all of them, and is more likely to be so, perhaps, in some than in
others. Though individuals, besides, may sometimes ruin their fortunes by an excessive consumption of
fermented liquors, there seems to be no risk that a nation should do so. Though in every country there
are many people who spend upon such liquors more than they can afford, there are always many more who spend
less. It deserves to be remarked too, that, if we consult experience, the cheapness of wine seems to be a
cause, not of drunkenness, but of sobriety. The inhabitants of the wine countries are in general the soberest
people in Europe; witness the Spaniards, the Italians, and the inhabitants of the southern provinces of France.
People are seldom guilty of excess in what is their daily fare. Nobody affects the character of liberality and
good fellowship by being profuse of a liquor which is as cheap as small beer. On the contrary, in the countries
which, either from excessive heat or cold, produce no grapes, and where wine consequently is dear and a rarity,
drunkenness is a common vice, as among the northern nations, and all those who live between the tropics, the
negroes, for example, on the coast of Guinea. When a French regiment comes from some of the northern provinces
be quartered in the southern, where it is very cheap, the soldiers, I have frequently heard it observed are at
first debauched by the cheapness and novelty of good wine; but after a few months residence, the greater part
of them become as sober as the rest of the inhabitants. Were the duties upon foreign wines, and the excises upon
malt, beer, and ale to be taken away all at once, it might, in the same manner, occasion in Great Britain a pretty
general and temporary drunkenness among the middling and inferior ranks of people, which would probably be soon
followed by a permanent and almost universal sobriety. At present drunkenness is by no means the vice of people
of fashion, or of those who can easily afford the most expensive liquors. A gentleman drunk with ale has scarce
ever been seen among us. The restraints upon the wine trade in Great Britain, besides, do not so much seem
calculated to hinder the people from going, if I may say so, to the alehouse, as from going where they can buy
the best and cheapest liquor. They favour the wine trade of Portugal, and discourage that of France. The
Portuguese, it is said indeed, are better customers for our manufactures than the French, and should therefore
be encouraged in preference to them. As they give us their custom, it is pretended, we should give them ours.
The sneaking arts of underling tradesmen are thus erected into political maxims for the conduct of a great empire:
for it is the most underling tradesmen only who make it a rule to employ chiefly their own customers. A great trader
purchases his goods always where they are cheapest and best, without regard to any little interest of this kind.
By such maxims as these, however, nations have been taught that their interest consisted in beggaring all their
neighbours. Each nation has been made to look with an invidious eye upon the prosperity of all the nations with
which it trades, and to consider their gain as its own loss. Commerce, which ought naturally to be, among nations,
as among individuals, a bond of union and friendship, has become the most fertile source of discord and animosity.
The capricious ambition of kings and ministers has not, during the present and the preceding century, been more fatal
to the repose of Europe than the impertinent jealousy of merchants and manufacturers. The violence and injustice of
the rulers of mankind is an ancient evil for which, I am afraid, the nature of human affairs can scarce admit of a
remedy. But the mean rapacity, the monopolizing spirit of merchants and manufacturers, who neither are, nor ought
to be, rulers of mankind, though it cannot perhaps be corrected, may very easily be prevented from disturbing the
tranquillity of anybody but themselves.
That it was the spirit of monopoly which originally both invented and propagated this doctrine cannot be doubted;
and they who first taught it were by no means such fools as they who believed it. In every country it always is
and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest.
The proposition is so very manifest that it seems ridiculous to take any pains to prove it; nor could it ever have
been called in question had not the interested sophistry of merchants and manufacturers confounded the common sense
of mankind. Their interest is, in this respect, directly opposite to that of the great body of the people. As it
is the interest of the freemen of a corporation to hinder the rest of the inhabitants from employing any workmen
but themselves, so it is the interest of the merchants and manufacturers of every country to secure to themselves
the monopoly of the home market. Hence in Great Britain, and in most other European countries, the extraordinary
duties upon almost all goods imported by alien merchants. Hence the high duties and prohibitions upon all those
foreign manufactures which can come into competition with our own. Hence, too, the extraordinary
re-straints upon the importation of almost all sorts of goods from those countries with which the balance
of trade is supposed to be disadvantageous; that is, from those against whom national animosity happens to
be most violently inflamed.
. . .
Page 625
But the very same circumstances which would have rendered an open and free commerce between the two countries
so advantageous to both, have occasioned the principal obstructions to that commerce. Being neighbours they
are necessarily enemies, and the wealth and power of each becomes, upon that account, more formidable to the
other and what would increase the advantage of national friendship serves only to inflame the violence of
national animosity. They are both rich and industrious nations; and the merchants and manufacturers of each
dread the competition of the skill and activity of those of the other. Mercantile jealousy is excited, and
both inflames, and is itself inflamed, by the violence of national animosity, and the traders of both countries
have announced with all the passionate confidence of interested falsehood, the certain ruin of each, in consequence
of that unfavourable balance of trade, which, they pretend, would be the infallible effect of an
unrestrained commerce with the other.
. . .
Chapter V Digression on the Corn Trade
Page 669
The law which prohibited the manufacturer from exercising the trade of a shopkeeper endeavoured to force this
division in the employment of stock to go on faster then it might otherwise have done. The law which obliged
the farmer to exercise the trade of a corn merchant endeavoured to hinder it from going on so fast. Both laws
were evident violations of natural liberty, and therefore unjust; and they were both, too, as impolitic as they
were unjust. It is the interest of every society that things of this kind should never either be forced or
obstructed. The man who employs either his labour or his stock in a greater variety of ways than his situation
renders necessary can never hurt his neighbour by underselling him. He may hurt himself, and he generally does
so. Jack of all trades will never be rich, says the proverb. But the law ought always to trust people with the
care of their own interest, as in their local situations they must generally be able to judge better of it than
the legislator can do. The law, however, which obliged the farmer to exercise the trade of a corn merchant was
by far the most pernicious of the two.
It obstructed not only that division in the employment of stock which is so advantageous to every society, but
it obstructed likewise the improvement and cultivation of the land. By obliging the farmer to carry on two trades
instead of one, it forced him to divide his capital into two parts, of which one only could be employed in
cultivation. But if he had been at liberty to sell his whole crop to a corn merchant as fast as he could thresh
it out, his whole capital might have returned immediately to the land, and have been employed in buying more
cattle, and hiring more servants, in order to improve and cultivate it better. But by being obligated to sell
his corn by retail, he was obliged to keep a great part of his capital in his granaries and stock yard through
the year, and could not, therefore, cultivate so well as with the same capital he might otherwise have done.
This law, therefore, necessarily obstructed the improvement of the land, and, instead of tending to render corn
cheaper, must have tended to render it scarcer, and therefore dearer, than it would otherwise have been.
After the business of the farmer, that of the corn merchant is in reality the trade which, if properly
protected and encouraged, would contribute the most to the raising of corn. It would support the trade
of the farmer, in the same manner as the trade of the wholesale dealer supports that of the manufacturer.
The wholesale dealer, by affording a ready market to the manufacturer, by taking his goods off his hand
as fast as he can make them, and by sometimes even advancing their price to him before he has made them,
enables him to keep his whole capital, and sometimes even more than his whole capital, constantly employed
in manufacturing, and consequently to manufacture a much greater quantity of goods than if he was obliged
to dispose of them himself to the immediate consumers, or even to the retailers. As the capital of the
wholesale merchant, too, is generally sufficient to replace that of many manufacturers, this intercourse
between him and them interests the owner of large capital to support the owners of a great number of small
ones, and to assist them in those losses and misfortunes which might otherwise prove ruinous to them.
An intercourse of the same kind universally established between the farmers and the corn merchants would be
attended with effects equally beneficial to the farmers. They would be enabled to keep their whole capitals,
and even more than their whole capitals constantly employed in cultivation. In case of any of those accidents,
to which no trade is more liable than theirs, they would find in their ordinary customer, the wealthy corn
merchant, a person who had both an interest to support them, and the ability to do it, and they would not,
as at present, be entirely dependent upon the forbearance of their landlord, or the mercy of his steward.
Were it possible, as perhaps it is not, to establish this intercourse universally, and all at once, were it
possible to turn all at once the whole farming stock of the kingdom to its proper business, the cultivation
of land, withdrawing it from every other employment into which any part of it may be at present diverted,
and were it possible, in order to support and assist upon occasion the operations of this great stock, to
provide all at once another stock almost equally great, it is not perhaps very easy to imagine how great,
how extensive, and how sudden would be the improvement which this change of circumstances would alone produce
upon the whole face of the country.
The statute of Edward VI, therefore, by prohibiting as much as possible any middle man from coming between
the grower and the consumer, endeavoured to annihilate a trade, of which the free exercise is not only the
best palliative of the inconveniences of a dearth but the best preventative of that calamity: after the trade
of the farmer, no trade contributing so much to the growing of corn as that of the corn merchant.
The rigour of this law was afterwards softened by several subsequent statutes, which successively permitted
the engrossing of corn when the price of wheat should not exceed twenty, twenty-four, thirty two, and forty
shillings the quarter. At last, by the 16th of Charles II, c. 7, the engrossing or buying of corn in order
to sell it again, as long as the price of wheat did not exceed forty-eight shillings the quarter, and that
of other grain in proportion, was declared lawful to all persons not being forestallers, that is, not selling
again in the same market within three months. All the freedom which the trade of the inland corn dealer has
ever yet enjoyed was bestowed upon it by this statute. The statute of the 12th of the present king, which
repeals almost all the other ancient laws against engrossers and forestallers, does not repeal the restrictions
of this particular statute, which therefore still continue in force.
This statute, however, authorizes in some measure two very absurd popular prejudices.
First, it supposes that when the price of wheat has risen so high as forty eight shillings the
quarter, and that of other grains in proportion, corn is likely to be so engrossed as to hurt the
people. But from what has been already said, it seems evident enough that corn can at no price be
so engrossed by the inland dealers as to hurt the people: and forty-eight shillings the quarter,
besides, though it may be considered as a very high price, yet in years of scarcity it is a price
which frequently takes place immediately after harvest, when scarce any part of the new crop can be
sold off, and when it is impossible even for ignorance to suppose that any part of it can be so
engrossed as to hurt the people.
Secondly, it supposes that there is a certain price at which corn is likely to be forestalled, that is,
bought up in order to be sold again soon after in the same market, so as to hurt the people. But if a
merchant ever buys up corn, either going to a particular market or in a particular market, in order to
sell it again soon after in the same market, it must be because he judges that the market cannot be so
liberally supplied through the whole season as upon that particular occasion and that the price, therefore,
must soon rise. If he judges wrong in this, and if the price does not rise, he not only loses the whole
profit of the stuck which he employs in this manner, but a part of the stock itself, by the expense and
loss which necessarily attend the storing and keeping of corn. He hurts himself, therefore, much more
essentially than he can hurt even the particular people whom he may hinder from supplying themselves
upon that particular market day, because they may afterwards supply themselves just as cheap upon any
other market day. If he judges right, instead of hurting the great body of the people, he renders them
a most important service. By making them feel the inconveniencies of a dearth somewhat earlier than
they otherwise might do, he prevents their feeling them afterwards so severely as they certainly would
do, if the cheapness of price encouraged them to consume faster than suited the real scarcity of the
season. When the scarcity is real, the best thing that can be done for the people is to divide the
inconveniencies of it as equally as possible through all the different months, and weeks, and days of
the year. The interest of the corn merchant makes him study to do this as exactly as he can: and as no
other person can have either the same interest, or the same knowledge, or the same abilities to do it
so exactly as he, this most important operation of commerce ought to be trusted entirely to him; or,
in other words, the corn trade, so far at least as concerns the supply of the home market, ought to
be left perfectly free.
The popular fear of engrossing and forestalling may be compared to the popular terrors and suspicions
of witchcraft. The unfortunate wretches accused of this latter crime were not more innocent of the
misfortunes imputed to them than those who have been accused of the former. The law which put an end
to all prosecutions against witchcraft, which put it out of any man's power to gratify his own malice
by accusing his neighbour of that imaginary crime, seems effectually to have put an end to those fears
and suspicions by taking away the great cause which encouraged and supported them. The law which should
restore entire freedom to the inland trade of corn would probably prove as effectual to put an end to
the popular fears of engrossing and forestalling.
The 15th of Charles II, c. 7, however, with all its imperfections, has perhaps contributed more both to
the plentiful supply of the home market, and to the increase of tillage, than any other law in the statute
book. It is from this law that the inland corn trade has derived all the liberty and protection which it
has ever yet enjoyed; and both the supply of the home market, and the interest of tillage, are much more
effectually promoted by the inland than either by the importation or exportation trade.
. . .
Chapter VII, Part II Prosperity of New Colonies
Page 728
... But the colony government of all these three nations [France, Spain, Portugal] is conducted upon
a much more expensive ceremonial [than is that of Britain - ed.]. The sums spent upon the reception
of a new viceroy of Peru, for example, have frequently been enormous. Such ceremonials are not only
real taxes paid by the rich colonists upon those particular occasions, but they serve to introduce
among them the habit of vanity and expense upon all other occasions. They are not only very grievous
occasional taxes, but they contribute to establish perpetual taxes of the same kind still more grievous;
the ruinous taxes of private luxury and extravagance. In the colonies of all those three nations too,
the ecclesiastical government is extremely oppressive. Tithes take place in all of them, and are levied
with the utmost rigour in those of Spain and Portugal. All of them, besides, are oppressed with a numerous
race of mendicant friars, whose beggary being not only licensed but consecrated by religion, is a most
grievous tax upon the poor people, who are most carefully taught that it is a duty to give and a very
great sin to refuse them their charity. Over and above all this, the clergy are, in all of them, the
greatest engrossers of land.
. . .
Chapter VII, Part III America and East Indies
Page 761
Our merchants frequently complain of the high wages of British labour as the
cause of their manufactures being undersold in foreign markets, but they are
silent about the high profits of stock. They complain of the extravagant gain
of other people, but they say nothing of their own. The high profits of
British stock, however, may contribute towards raising the price of British
manufactures in many cases as much, and in some perhaps more, than the high
wages of British labour.
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