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VIII.

given to the labourer; and the money price of CHA P. labour is determined by what is requifite for purchafing this quantity. Though the money price of labour, therefore, is fometimes high where the price of provifions is low, it would be ftill higher, the demand continuing the fame, if the price of provifions was high.

It is because the demand for labour increases in years of fudden and extraordinary plenty, and diminishes in thofe of fudden and extraordinary fcarcity, that the money price of labour fometimes rifes in the one, and finks in the other.

In a year of fudden and extraordinary plenty, there are funds in the hands of many of the employers of induftry, fufficient 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. Thofe mafters, therefore, who want more workmen, bid against one another, in order to get them, which fometimes raises both the real and the money price of their labour.

The contrary of this happens in a year of fudden and extraordinary scarcity. The funds deftined for employing industry are less than they had been the year before. A confiderable number of people are thrown out of employment, who bid against one another, in order to get it, which fometimes lowers both the real and the money price of labour. In 1740, a year of extraordinary fcarcity, many people were willing to work for bare fubfiftence. In the fucceeding

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BOOK years of plenty, it was more difficult to get I. labourers and fervants.

The scarcity of a dear year, by diminishing the demand for labour, tends to lower its price, as the high price of provifions tends to raise it. The plenty of a cheap year, on the contrary, by increafing the demand, tends to raise the price of labour, as the cheapness of provifions tends to lower it. In the ordinary variations of the price of provisions, those two oppofite causes seem to counterbalance one another; which is probably in part the reason why the wages of labour are every-where so much more fteady and permanent than the price of provifions.

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The increase in the wages of labour neceffarily increases the price of many commodities, by increafing that part of it which refolves itself into wages, and fo far tends to diminish their confumption both at home and abroad. The fame caufe, however, which raises the wages of labour, the increase of ftock, tends to increafe its productive powers, and to make a smaller quantity of labour produce a greater quantity of work. The owner of the ftock which employs a great number of labourers, neceffarily endeavours for his own advantage, to make fuch a proper divi fion and diftribution of employment, that they may be enabled to produce the greatest quantity of work poffible. For the fame reafon he endeavours to fupply them with the best machinery which either he or they can think of. What takes place among the labourers in a particular workhouse,

VIII.

workhouse, takes place, for the fame reafon, CHAP among those of a great fociety. The greater their number, the more they naturally divide themselves into different claffes and fubdivifions of employment. 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 are many commodities, therefore, which, in confequence of these improvements, come to be produced by fo much lefs labour than before, that the increase of its price is more than compenfated by the diminu tion of its quantity.

CHAP. IX.

Of the Profits of Stock.

IX.

THE rife and fall in the profits of flock CHA P. depend upon the fame caufes with the rife and fall in the wages of labour, the increasing or declining state of the wealth of the fociety; but thofe caufes 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 fame 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

BOOK on in the fame fociety, the fame competition muft produce the fame effect in them all.

I.

It is not eafy, it has already been obferved, to afcertain what are the average wages of labour even in a particular place, and at a particular time. We can, even in this cafe, feldom determine more than what are the most ufual wages. But even this can feldom be done with regard to the profits of flock. Profit is fo very fluctuating, that the perfon 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 cuftomers, and by a thousand other accidents to which goods when carried either by fea 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 afcertain 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 precifion, must be altogether impoffible.

But though it may be impoffible to deter mine with any degree of precifion, what are or were the average profits of flock, either in the prefent, or in ancient times, fome notion may be formed of them from the intereft of money, It may be laid down as a maxim, that wherever a great deal can be made by the ufe of money,

a great

IX.

a great deal will commonly be given for the ufe CHA P. of it; and that wherever little can be made by it, lefs will commonly be given for it. According, therefore, as the ufual market rate of intereft varies in any country, we may be affured that the ordinary profits of stock muft with it, muft fink as it finks, and rife as it rifes. The progrefs of intereft, therefore, may lead us to form fome notion of the progrefs of profit.

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By the 37th of Henry VIII. all interest above ten per cent. was declared unlawful. More, it feems, had fometimes been taken before that. In the reign of Edward VI. religious zeal prohibited all intereft. This prohibition, however, like all others of the fame kind, is faid to have produced no effect, and probably rather increased than diminished the evil of ufury. The ftatute of Henry VIII., was revived by the 13th of Elizabeth, cap. 8. and ten per cent continued to be the legal rate of intereft till the 21ft of James I. when it was reftricted to eight per cent. It was reduced to fix per cent, foon after the restoration, and by the 12th of Queen Anne, to five per cent. All thefe different statutory regulations feem to have been made with great propriety. They feem to have followed and not to have gone before the market rate of intereft, or the rate at which people of good credit ufually borrowed. Since the time of Queen Anne, five per cent. feems 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

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