IX.

pofed. Were it not more, charity or friendship CHAP. could be the only motives for lending.

In a country which had acquired its full complement of riches, where in every particular branch of bufinefs there was the greatest quantity of stock that could be employed in it, as the ordinary rate of clear profit would be very small, fo the ufual market rate of intereft which could be afforded out of it, would be fo low as to render it impoffible for any but the very wealthiest people to live upon the intereft of their money. All people of finall or middling fortunes would be obliged to fuperintend themselves the employment of their own ftocks. It would be neceffary that almost every man should be a man of business, or engage in fome fort of trade. The province of Holland feems to be approaching near to this ftate. It is there unfashionable not to be a man of business. Neceffity makes it ufual for almost every man to be so, and custom every where regulates fashion. As it is ridiculous not to dress, fo is it, in fome measure, not to be employed, like other people. As a man of a civil profeffion feems awkward in a camp or a garrifon, and is even in fome danger of being defpifed there, fo does an idle man among men of bufinefs.

THE higheft ordinary rate of profit may be fuch as, in the price of the greater part of commodities, eats up the whole of what should go to the rent of the land, and leaves only what is fufficient to pay the labour of preparing and bring

BOOK over-run the western provinces of the Roman I. empire, the performance of contracts was left

for many ages to the faith of the contracting parties. The courts of justice of their kings feldom 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 intereft altogether, it does not prevent it. Many people must borrow, and nobody will lend without fuch a confideration for the use of their money as is fuitable, not only to what can be made by the use of it, but to the difficulty and danger of evading the law. The high rate of intereft among all Mahometan nations is accounted for by Mr. Montefquieu, not from their poverty, but partly from this, and partly from the difficulty of recovering the money.

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

THE loweft ordinary rate of intereft muft, in the fame manner, be fomething more than fufficient to compensate the occafional loffes to which lending, even with tolerable prudence, is expofed.

IX.

more might be afforded if it were a good deal CHA P. higher.

IN countries which are faft advancing to riches, the low rate of profit may, in the price of many commodities, compenfate the high wages of labour, and enable thofe countries to fell as cheap as their lefs 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-dreffers, the fpinners, the weavers, &c. fhould, all of them, be advanced two pence a day; it would be neceffary to heighten the price of a piece of linen only by a number of two pences equal to the number of people that had been employed about it, multiplied by the number of days during which they had been fo employed. That part of the price of the commodity which refolved itself into wages would, through all the different ftages of the manufacture, rife only in arithmetical proportion to this rife of wages. But if the profits of all the different employers of those working people fhould be raised five per cent. that part of the price of the commodity which refolved itself into profit, would, through all the different ftages of the manufacture, rife in geometrical proportion to this rife of profit. The employer of the flax-dreffers would in felling 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

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BOOK the spinners would require an additional five per cent. both upon the advanced price of the flax and upon the wages of the fpinners. And the employer of the weavers would require a like five per cent. both upon the advanced price of the linen yarn and upon the wages of the weavers. In raising the price of commodities the rife of wages operates in the fame manner as fimple intereft does in the accumulation of debt. The rife of profit operates like compound intereft. Our merchants and mafter-manufacturers complain much of the bad effects of high wages in raising the price, and thereby leffening the fale of their goods both at home and abroad. They fay nothing concerning the bad effects of high profits. They are filent with regard to the pernicious effects of their own gains. They complain only of those of other people.

CHA P. X.

Of Wages and Profit in the different Employments of Labour and Stock.

TH

X,

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

PECUNIARY wages and profit, indeed, are every-where in Europe extremely different according to the different employments of labour and stock. But this difference arises partly from certain circumftances in the employments themfelves, which, either really, or at least in the imaginations of men, make up for a small pecuniary

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