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.

IX.

THE HE 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 increafing or declining state of the wealth of the fociety; but thofe caufes affect the one and the other very differently.

The increase of ftock, which raifes wages, tends to lower profit. When the ftocks 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 moft ufual wages. But even this can feldom be done with regard to the profits of stock. 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 customers, and by a thoufand 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 remotę periods of time, with any degree of precision, 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 fstock, 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 B. 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 vary 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.

By the 37th of Henry VIII. all intereft 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 these different ftatutory 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 usually 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

K 4

many

BOOK many other parts of the kingdom, at three and a half, four, and four and a half per cent.

I.

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 feems rather to have been gradually accelerated than retarded. They feem, not only to have been going on, but to have been going on fafter and fafter. The wages of labour have been continually increasing during the fame 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 fort of trade in a great town than in a
country village. The great flocks 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 fufficient
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 ftock.

IX.

In Scotland, though the legal rate of intereft CHAP. is the fame as in England, the market rate is rather higher. People of the best credit there feldom borrow under five per cent. Even private bankers in Edinburgh give four per cent. upon their promiffory notes, of which payment either in whole or in part may be demanded at pleasure. Private bankers in London give no intereft for the money which is depofited 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 obferved, 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, feem to be much flower and more tardy.

The legal rate of intereft in France has not, during the courfe of the prefent century, been always regulated by the market rate*. In 1720 intereft 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 3 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. cent. The Abbe Terray raised it afterwards to the old rate of five per cent. The fup

* See Denisart, Article Taux des Interets, tom. iii. p. 18.

pofed