Obser。2。Ifartherconclude，thatnothingistobegatheredfromthoseworks，whichshouldengageustoentertainahighopinionofthewealth，orotherspeciesofmagnificenceinthepeoplewhoexecutedthem。Allthatcanbedeterminedpositivelyconcerningtheireconomyastothisparticular，is，thatatthetimetheywereperformed，agriculturemusthavebeenexercisedasatrade，inordertofurnishasurplussufficienttomaintaintheworkmen；orthatsubsistencemusthavecomefromabroad，eitherasareturnforotherspeciesofindustry，orgratuitously，thatis，byrapine，tribute，&c。
Obser。3。Thattheconsequenceofsuchworks，is，tomakemeat，drink，andnecessariescirculatefromthehandsofthosewhohaveasuperfluityofthem，intothosewhoareemployedtolabour；ortoobligethosewhoformerlyworkedforthemselvesonly，toworkalsoinpartforothers。Toexecutethis，theremustbeasubordination:forwhowillincreasehislabour，voluntarily，inordertofeedpeoplewhodonotworkforhimself，butforthepublic？Thiscombinationwasneglectedthroughoutthefirstbook；becausewethereleftmankindatlibertytofollowthebentoftheirinclinations。Thiswasnecessarytogivearightideaofthesubjectwethenintendedtotreat，andtopointoutthedifferenteffectsofslaveryandliberty；butnow，thatwehaveformedtradingnations，andrivetedamultitudeofreciprocaldependences，whichtiethemembersofthemtogether，thereislessdangerinintroducingrestraints；becausetheadvantageswhichpeoplefind，fromlivinginawellorderedsociety，makethemputupthebetterwiththeinconveniencesofsupportingandimprovingit。Itisanuniversalprinciple，thatinstructionshouldbegivenwithgentleness。Ayounghorseistobecarressedwhenthesaddleisfirstputuponhisback:anythingthatappearsharsh，letitbeeversousefulornecessary，mustbeforborninthebeginning，inordertocaptivatetheinclinationofthecreaturewhichweinclinetoinstruct。
Obser。4。Whenastatesmanknowstheextentandqualityoftheterritoryofhiscountry，soastobeabletoestimatewhatnumbersitmayfeed；hemaylaydownhisplanofpoliticaleconomy，andchalkoutadistributionofinhabitants，asifthenumberwerealreadycompleat。Itwilldependuponhisjudgmentalone，anduponthecombinationofcircumstances，foreignanddomestic，todistribute，andtoemploytheclasses，ateveryperiodduringthisexecution，inthebestmannertoadvanceagriculture，soastobringallthelandstoathoroughcultivation。Arulingprinciplehere，is，tokeepthehusbandmancloselyemployed，thattheirsurplusmaybecarriedashighaspossible；becausethissurplusisthemainspringofallalienationandindustry。Thenextthingistomakethissurpluscirculate；nomanmusteatofitfornothing。Whataprodigiousdifferencedoesapersonfind，whenheconsiderstwocountries，equallygreat，equallyfertile，equallycultivated，equallypeopled，theoneundertheeconomyhererepresented；theother，whereeveryoneisemployedinfeedingandprovidingforhimselfonly。
Astatesman，therefore，undersuchcircumstances，shouldreasonthus:Ihaveacountrywhichmaintainsamillionofinhabitants，Isuppose，andwhichiscapableofmaintainingasmanymore；Ifindeveryoneemployedinprovidingforhimself，andconsideringthesimplicityoftheirmanners，afarlessnumberwillbesufficienttodoallthework:theconsequenceis，thatmanyarealmostidle，whileothers，whohavemanychildren，arestarving。Letmecallmypeopletogether，andshewthemtheinconvenienceofhavingnoroads。Hethenproposesthateveryonewhochoosestoapplytothiswork，shallbefedandtakencareofbythecommunity，andhislandsdistributedtothosewhoinclinetotakethem。Theadvantageisfelt，thepeopleareengagedtoworkalittleharder，soastoundertakethecultivationoftheportionsofthosewhohaveabandonedthem。Uponthisrevolution，labourisincreased，thesoilcontinuescultivatedasbefore，andtheadditionallabourofthefarmersappearsinafinehighroad。
Isthisanymorethanamethodtoengageonepartofapeopletolabour，inordertomaintainanother？
Obser。5。HereIask，whetheritbenotbettertofeedaman，inordertomakehimlabourandbeuseful，thantofeedhiminordertomakehimliveanddigesthisvictuals？Thislastwasthecaseofmultitudesduringtheagesofancientslavery，aswellastheconsequenceofill-directedmoderncharity。Oneandtheotherbeingequallywellcalculatedforproducingasimplicityofmanners:andHoracehaspaintedittothelife，whenhesays，Nosnumerussumus，etfrugesconsumerenati。
ThisIhaveheardhumorouslytranslated，thoughnastilyI
confess；Weaddtothenumberoft-dmills。Averyjustrepresentationofmanyofthehumanspecies！totheirshamebeitspoken，asitequallycastsareflectiononreligionandongovernment。
Consistentlywiththeseprinciples，wefindnogreatorpublicworkcarriedonincountriesofgreatliberty。NothingofthiskindistobeseenamongtheTartarsorhuntingIndians。
TheseIcallfreenations，butnotourEuropeanrepublics，whereIhavefoundjustasmuchsubordinationandconstraintasanywhereelse。
Ihaveonseveraloccasions，letdropsomeexpressionswithregardtocharity，whichIamsensiblemaybemisinterpreted。Itwillthereforebepropertomakesomeapology，whichnobodycansuspectofinsincerity；becausemyreasonforintroducingit，iswithaviewtoafartherillustrationofmysubject。
WhenIseearichandmagnificentmonasteryofbeggingfriars，adornedwithprofusionofsculpture，astupendouspileofbuilding，statelytowers，incrustationsofmarble，beautifulpavements；whenIcomparetheexecutionandtheexpenceofallthese，withthefacultiesofapersonofthelargestfortune，I
findthereisnoproportionbetweenwhatthebeggarshaveexecutedwiththeproduceofprivatecharities，andwhatanyLordhasdonewithhisovergrownestate。Naymonasteriestherearewhich，hadtheybeenexecutedbyprinces，wouldhavebeencitedbyhistorians，fromgenerationtogeneration，aseternalmonumentsofthegreatestprodigalityanddissipation。Herethenisaneffectofcharity，whichIhaveheardcondemnedbymany，andIthinkwithoutmuchreason。Whatprostitutionofriches！saythey:howusefullymightallthismoneyhavebeenemployed，inestablishingmanufactures，buildinganavy，andinmanyothergoodpurposes？WhereasIamsoentirelytakenupwiththeeffectsarisingfromtheexecutionofthework，thatIseldomgivemyselftimetoreflectupontheuseofit。Thebuildingofthismonasteryhasfedtheindustriouspoor，hasencouragedtheliberalarts，hasimprovedthetasteoftheinhabitants，hasopenedthedoortothecuriosityofstrangers:andwhenIexaminemypurse，Ifindthatinsteadofhavingcontributedtothebuildingofitfromacharitabledisposition，mycuriositytoseeithasobligedmetocontributemyproportionoftheexpence。I
spendmymoneyinthatcountry，andsodootherstrangers，withoutbringinganythingawayforit。Nobalanceoftradeisclearerthanthis。ThemiraculoustongueofSt。AnthonyofPadua，hasbroughtmoreclearmoneyintothatcitythantheindustryofathousandweaverscouldhavedone:thecharitygivenisnottothemonks，buttothepoorwhomtheyemploy。Ifyoungwits，therefore，makeajestofsuchadevotion；Iask，whooughttobelaughedat，thosewhogive，orthosewhoreceivemoneyfortheshow？
Inacountrywheresuchworksareusuallycarriedon，theyceaseinagreatmeasuretobeuseful，whenevertheyarefinished；andanewoneshouldbesetonfootdirectly，orwhatwillbecomeofthosewhoarewithoutemployment？Itmustnotbeconcludedfromthis，thattheusefUlnessofpublicworksisnotaprincipalconsideration。Themoreaworkisusefulafteritisdone，somuchthebetter；becauseitmaythenhavetheeffectofgivingbreadtothosewhohavenotbuiltit。Butwhetherusefulornotafterwards，itmustbeusefulwhileitisgoingon；andmany，whowithpleasurewillgiveathousandpoundstoadornachurch，wouldnotgiveashillingtobuildWestminsterbridge，ortheportofRochefort；andthepoorliveequallybytheexecutionofeither。Expensivepublicworks，arethereforeameanofgivingbreadtothepoor，andofadvancingindustry，withouthurtingthesimplicityofmanners；whichisananswertotheseventhquestion。
Obser。6。Greatworksfoundinonecountryandnonefoundinanother，isnoproofthatthefirsthavesurpassedthesecondinlabourandindustry:thecontrastmarksonlythedifferentdivisionofproperty，ortasteofexpence。Everyundertakingpointsoutaparticularinterest。Palacesarearepresentationofrichindividuals；snugboxes，intheneighbourhoodofcities，representsmallbuteasyfortunes；hutspointoutpoverty；
aqueducts，highways，&c。testifyanopulentcommongood:andifthesebefoundinacountrywherenovestigeofprivateexpenceappears，Ithenmustconcludethattheyhavebeenexecutedbyslaves，orbyoppression；otherwisesomebody，atleast，wouldhavegainedbytheexecution；andhisgainswouldappearinonespeciesofexpenceoranother。
Obser。7。Incountrieswherefortuneshavebeenunequallydivided，wheretherehavebeenfewrichandmanypoor，itiscommontofindlastingmonumentsoflabour；becausegreatfortunesonlyarecapableofproducingthem。AsaproofofthisletuscomparethecastlesofancienttimesImeanfourorfivehundredyearsagowiththehousesbuiltoflate。Atthattimefortunesweremuchmoreunequalthanatpresent，andaccordinglywefindthehabitationsofthegreatinmostcountriesnotnumerous，butofanextraordinarybulkandsolidity。Nowabuildingisnevertobejudgedofbythemoneyitcost，butbythelabouritrequired。Fromthehousesinacountry，Ijudgeoftheopulenceofthegreat，andoftheproportionoffortunesamongtheinhabitants。Thetasteinwhichtheseoldcastlesarebuilt，marksthepowerofthosewhobuiltthem，and，astheirnumbersaresmall，wemayjudgefromthenatureofman，wholovesimitation，thattheonlyreasonforitwas，thattherewerefewinaconditiontobuildthem。Whydowefindinmoderntimesafarlessdisproportionbetweentheconveniencewithwhicheverybodyislodged，thanformerly；butmerelybecauserichesfromtheoperationsofindustryabove-describedaremoreequallydivided。
Obser。8。Fromthiswemayconclude，thatlastingmonumentsarenoadequatemeasureoftheindustryofacountry。Theexpenceofamodernprince，inasplendidcourt，numerousarmies，frequentjourneys，magnificentbanquets，operas，masquerades，tournaments，andshews，maygiveemploymentandbreadtoasmanyhands，asthetasteofhimwhobuiltthepyramid；andthesmokeofthegun-powderatthereviews，andoftheflambeausandwaxlightsattheentertainments，maybeofasgreatusetoposterity，astheshadowofthepyramid，whichistheonlyvisibleeffectproductedbyit；buttheoneremainsforever，theotherleavesnovestigebehindit。Theveryremainingofthework，howeveruselessinitself，becomesadvantageous，sofarasitisornamental，andinspiressentimentsofemulationtosucceedingprinces，theeffectsofwhichwillstillbeproductiveofthegoodconsequencesofkeepingpeopleemployed。Theexpenceoftheotherflattersthesenses，andgivesdelight:thereisnochoicehere。Allsuchuselessexpencegratifiesvanityonly；
accidentalonemakesonespeciespermanent，anothertransitory。
Thosewhohavemoneymaybeengagedtopartwithitinfavourofthepoor，butneverforcedtopartwithittotheprejudiceoftheirposterity。Inspire，ifyoucan，agoodandusefultasteofexpence；nothingsoright；butnevercheckthedissipationofreadymoney，withaviewtopreserveprivatefortunes。Leavesuchprecautionstotheprudenceofeveryindividual。Everyman，nodoubt，hasasgoodarighttoperpetuateandprovideforhisownposterity，asastatehastoperpetuatethewelfareofthewholecommunity；itisthecombinationofeveryprivateinterestwhichformsthecommonweal。FromthisIconclude，that，withoutthestrongestreasonstothecontrary，perpetualsubstitutionsofpropertyshouldbeleftasfreetothosewhopossesslands，aslockingupinchestsshouldbepermittedtothosewhohavemuchmoney。
Quest。8。Whataretheprincipleswhichinfluencetheestablishmentofmercantilecompanies；andwhateffectsdotheseproduceupontheinterestsoftrade？
Thereisacloseconnectionbetweentheprinciplesrelatingtocompaniesandthosewehaveexaminedinthetwenty-thirdchapter，concerningcorporations。Theoneandtheotherhaveexcellentconsequences，andbothareequallyliabletoabuse。A
rightexaminationofprinciplesisthebestmethodtoadvancethefirst，andtopreventthelatter。
Theadvantagesofcompaniesarechieflytwo。
1。Thatbyunitingthestocksofseveralmerchantstogether，anenterprisefarbeyondtheforceofanyone，becomespracticabletothecommunity。
2。Thatbyunitingtheinterestsofseveralmerchants，whodirecttheirforeigncommercetowardsthesameobject，thecompetitionbetweenthemabroadistakenaway；andwhateveristhusgained，issomuchclearprofit，notonlytothecompany，buttothesocietyofwhichtheyaremembers。
Itisinconsiderationofthelastcircumstance，thatcompaniesforforeigncommercehaveaclaimtoextensiveprivileges。Butnoencouragementgiventosuchassociationsshouldbecarriedfartherthanthepublicgoodnecessarilyrequiresitshouldbe。Thepublicmayrewardtheingenuity，industryandinventionsofparticularmembers，andsupportaprivateundertakingasfarasisreasonable；buteveryencouragementgivenoughttobeattheexpenceofthewholecommunity，notatthatofparticulardenominationsofinhabitants。
Thedisadvantagesproceedingfromcompaniesareeasilytobeguessedat，fromtheverynatureoftheadvantageswehavebeensettingforth:andtherelationbetweentheoneandtheotherwillpointouttheremedies。
First，theweightofmoneyinthehandsofcompanies，andthepublicencouragementgiventhem，crushtheeffortsofprivateadventurers，whiletheirsuccessinspiresemulation，andadesireineveryindividualtocarryonatradeequallyprofitable。
Hereastatesmanoughtnicelytoexaminetheadvantageswhichthecompanyreapsfromtheincorporationoftheirstock，andthosewhichproceedfromthepublicencouragementgiventotheundertaking；thatwithanimpartialhand，hemaymakeanequaldistributionofpublicbenefits。Andwhenhefindsitimpossibletocontributetotheadvancementofthepublicgood，bycommunicatingtheprivilegesofcompaniestoprivateadventurers，heoughttofacilitatetheadmittanceofeverypersonproperlyqualifiedintosuchassociations。
Secondly，Theseconddisadvantageofcompanies，is，aconcomitantofthatbenefitsosensiblyfeltbythestate，fromtheunionoftheirinterest，whiletheypurchaseinforeignmarkets:thesameunionwhich，atthetimeofbuying，securesthecompanyfromallcompetitions，provesequallydisadvantageoustothosewhopurchasefromthemathome。Theyaremastersoftheirprice，andcanregulatetheirprofitsbytheheightofdemand；
whereastheyoughttokeepthemconstantlyproportionedtotherealvalueofthemerchandize。
Theadvantageresultingfromtheunionofmanyprivatestocksiscommontoallcompanies；butthosewehavementionedtoproceedfromtheunionoftheirinterest，ispeculiartothosewhocarryonanexclusivetradeincertaindistantpartsoftheworld。Wehave，inaformerchapter，laiddownthemaximswhichinfluencetheconductofastatesmaninregulatingthepricesofmerchandize，bywatchingoverthebalanceofworkanddemand，andbypreservingtheprinciplesofcompetitionintheirfullactivity。Buthereacasepresentsitself，where，upononesideofthecontract，competitioncanhavenoeffect，andwhereitsintroductionisforbiddenforthesakeofthepublicgood，becauseitdestroystheexclusiveprivilegeofthecompanytotradeincertaincountries。
Whatmethod，therefore，canbefallenupontopreservetheadvantagewhichthenationreapsfromthecompany’sbuyinginforeignpartswithoutbeingexposedtocompetition；andatthesametimetopreventthedisadvantagetowhichtheindividualsofthesocietyareexposedathome，whentheyendeavour，incompetitionwithoneanother，topurchasefromacompany，who，invirtueofthesameexclusiveprivilege，areunitedintheirinterest，andbecomemasterstodemandwhatpricetheythinkfit？
Itmaybeanswered，thatitcannotbesaidofcompaniesasofprivatedealers，thattheyprofitofeverylittlecircumstanceofcompetition，toraisetheirprice。Companieshaveafixedstandard，andalltheworldbuysfromthematthesamerate；sothatretailers，whosupplytheconsumption，haveinonerespectthisnotableadvantage，thatasallbuyfromthematthesameprice，noonecanundersellanother；andthecompetitionbetweenthemselvessecuresthepublicfromexorbitantprices。
Iagreethattheseadvantagesarefelt，andthattheyarereal；butstilltheyprovenomorethanthattheestablishmentofcompaniesisnotsohurtfultotheinterestofthosewhoconsumetheirgoods，asitwouldbecouldtheyprofittotheutmostoftheirexclusiveprivilegeinsellingbyretail。Butitdoesnotfollowfromthis，thattheprofitsuponsuchatradedonotriseinconsequenceoftheirprivilegeabovethestandardproperformakingthewholecommerceofanationflourish。Theveryjealousyanddissatisfaction，conceivedbyothermerchants，equallyindustriousandequallywelldeservingofthepublic，becauseofthegreatadvantagesenjoyedbythosewhoareincorporated，undertheprotectionofexclusiveprivileges，isahurttotradeingeneral，iscontrarytothatprincipleofimpartialitywhichshouldanimateagoodstatesman，andshouldbepreventedifpossible。Letusthereforegotothebottomofthisaffair；and，bytracingtheprogressofsuchmercantileundertakings，asareproperobjectsforthefoundationofcompanies，andwhichentitlethemtodemandandtoobtaincertainexclusiveprivileges，letusendeavourtofindoutamethodbywhichastatesmanmayestablishsuchsocieties，soastohaveitinhispowertolaytheirinlandsalesundercertainregulations，capabletosupplythewantofcompetition；andtopreventtheprofitsofexclusivetradefromrising，considerably，abovethelevelofthatwhichiscarriedonwithoutanysuchassistancefromthepublic。
Whiletheinterestofcompaniesisinfewhands，theunionofthemembersismoreintimate，andtheiraffairsarecarriedonwithmoresecrecy。Thisisalwaysthecaseintheinfancyofsuchundertakings。Butthewantofexperiencefrequentlyoccasionsconsiderablelosses；andwhilethiscontinuestobethecase，nocomplaintsareheardagainstsuchassociations。Fewpretendtorivaltheirundertaking，anditbecomesatfirstmorecommonlytheobjectofraillerythanofjealousy。Duringthisperiod，thestatesmanshouldlaythefoundationofhisauthority；heoughttosparenopainsnorencouragementtosupporttheundertaking；heoughttoinquireintothecapacityofthoseattheheadofit；
ordertheirprojectstobelaidbeforehim；andwhenhefindsthemreasonable，andwellplanned，heoughttotakeunforeseenlossesuponhimself:heisworkingforthepublic，notforthecompany；andthemorecareandexpenceheisatinsettingtheundertakingonfoot，themorehehasarighttodirecttheprosecutionofittowardsthegeneralgood。Thiskindofassistancegiven，entitleshimtotheinspectionoftheirbooks；
andfromthis，morethananything，hewillcomeattheexactknowledgeofeverycircumstancerelatingtotheirtrade。Bythismethodofproceeding，therewillbenocomplaintsonthesideoftheadventurers，theywillengagewithchearfulness，beingmadecertainofthepublicassistanceineveryreasonableundertaking；
theirstockbecomesinamannerinsured，individualsareencouragedtogivethemcredit，andfromcreditorstheywillnaturallybecomeassociatesintheundertaking。Sosoonastheprojectcomestosuchabearingastodrawjealousy，thebottommaybeenlargedbyopeningthedoorstonewassociates，insteadofpermittingtheoriginalproprietorstoaugment，andthusthefundofthecompanytheirstockwithborrowedmoney；maybeincreasedinproportiontotheemploymentfoundforit，andeveryonewillbesatisfied。
Whenthingsareconductedinthisway，theauthorityofpublicinspectionisnocurbuponthetrade；theindividualswhoservethecompanyarecutofffromthepossibilityofdefrauding；
nomysteries，nosecrets，fromwhichabusesarise，willbeencouraged；tradewillbecomehonourableandsecure，notfraudulentandprecarious；becauseitwillgrowundertheinspectionofitsprotector，whoprotectsitforthepublicgoodonly。
Whydocompaniesdemandexclusiveprivileges，andwhyaretheyevergranted，butasarecompensetothosewhohavebeenatgreatexpenceinacquiringaknowledgewhichhascostnothingtothestate？Andwhydotheyexerttheirutmosteffortsinordertoconcealthesecretsoftheirtrade，andtobetheonlysharersintheprofitsofit，buttomakethepublicrefundtenfoldtheexpenceoftheirundertaking？
Whencompaniesareoncefirmlyestablished，thenextcareofastatesmanis，topreventtheprofitsoftheirtradefromrisingaboveacertainstandard。Wespeakatpresentofthoseonly，whombyexclusiveprivileges，areexposedtonocompetitionattheirsales。Oneverygoodmethodtokeepdownprices，is，tolaycompaniesunderanecessityofincreasingtheirstockastheirtradecanbearit，bytheadmissionofnewassociates；forbyincreasingthecompany’sstock，youincrease，Isuppose，thequantityofgoodstheydisposeof，andconsequentlydiminishthecompetitionofthosewhodemandofthem:butaseventhiswillnothavetheeffectofreducingpricestotheadequatevalueofthemerchandizeathingtobedonebycompetitiononly，thestatesmanhimselfmayinterposeanextraordinaryoperation。Hemaysupporthighprofitstothecompany，uponallarticlesofluxuryconsumedathome，andfavourthekeepingdownofthepricesofsuchgoodsasareeitherforexportationormanufacture。
Thiscanbedonewhenhehascompaniesonlytodealwith:ineveryothercase，theprinciplesofcompetitionbetweendifferentmerchants，tradinginthesamegoods，uponseparateinterests，makesthethingimpossible。Butwheretheinterestsofthesellers，whicharethecompany，areunited，andwherethereisnocompetition，theyaremastersoftheirprice，accordingtotheprincipleslaiddownintheseventhchapter。Now，providedthedividenduponthewholestockbeasufficientrecompensebothforthevalueofthefund，andtheindustryofthosewhoareemployedtoturnittoaccount，theendisaccomplished。Extraordinaryprofitsuponanyparticularspeciesoftradecastadiscouragementuponallothers。
Weveryfrequentlyseethatgreattradingcompaniesbecomethemeansofestablishingpubliccredit；onwhichoccasions，itispropertodistinguishbetweenthetradingstockofthecompany，whichremainsintheirpossession，andtheactions，bonds，annuities，contracts，&c。whichcarrytheirname，andwhichhavenothingbutthenameincommon。Thepriceofthefirstisconstantlyregulatedbytheprofitsuponthetrade；thepriceoftheother，bythecurrentvalueofmoney。
Letmenextobservetheadvantagewhichmightresulttoanation，fromaprudentinterpositionofthestatesman，intheregulationofatariffofpricesforsuchgoodsasareputtosalewithoutanycompetitiononthesideofthesellers。
Theprincipleswehavelaiddown，directustoproscribe，asmuchaspossible，allforeignconsumption，especiallythatofwork:andtoencourageasmuchaspossibletheexportationofit。
Now，ifwhattheIndiacompanyofEngland，forexample，sellstostrangers，andexportsforareturninmoney，beequaltothemoneysheherselfhasformerlyexported，thebalanceupontheIndiatradewillstandeven。ButifthecompetitionoftheFrenchandDutchbefoundhurtfultotheEnglishcompanyinheroutwardsales，maynotthegovernmentofthisnationlendahandtowardsrisingtheprofitsofthecompany，upontea，china，andjapanwares，whicharearticlesofsuperfluityconsumedbytherichathome，inordertoenablethecompanytoaffordhersilkandcottonstuffstostrangers，atamorereasonablerate？Theseoperations，Isay，arepracticable，whereacompanysellswithoutcompetition，butarenevertobeundertaken，butwhenthestateofitsaffairsareperfectlywellknown；becausethepricesofexportablegoodsmight，perhaps，bekeptupbyabuseandmismanagement，andnotbythesuperioradvantageswhichothernationshaveincarryingonalikecommerce。Theonlyremedyagainstabuseisreformation。Buthowoftendoweseeapeoplelidundercontributioninordertosupportthatabuse！
Companies，wehavesaid，owetheirexclusiveprivilegestothedifficultiestowhichaninfantcommerceisexposed:thesedifficultiesoncesurmounted，andthecompanyestablisheduponasolidfoundation，newobjectsofprofitpresentthemselvesdaily；
somuch，thattheoriginalinstitutionisfrequentlyeclipsed，bytheaccessaryinterestsofthesociety。Itisthereforethebusinessofastatesmantotakecarethattheexclusiveprivilegesgrantedtoasociety，foracertainpurpose，benotextendedtootherinterests，nowiserelativetothatwhichsetthesocietyonfoot，andgaveitaname。Andwhenexclusiveprivilegesaregiven，astatesmanshouldneverfailtostipulateforhimself，aparticularprivilegeofinspectionintoalltheaffairsofthecompany，inordertobeabletotakemeasureswhichmayeffectuallypreventbadconsequencestothegeneralinterestofthenation，ortothatofparticularclasses。
Letthissufficeatpresent，astotheprivilegesenjoyedbycompaniesinforeigntrade。Letmenowexaminethenatureofsuchsocietiesingeneral，inordertodiscovertheirinfluenceonthemercantileinterestsofanation，andhowtheytendtobringeverybranchoftradetoperfection，whentheyareestablishedandcarriedonundertheeyeofawiseadministration。
Besidestheadvantagesanddisadvantagesabovementioned，thereareothersfoundtofollowtheestablishmentoftradingcompanies。Thefirstproceedfromunion，thatis，acommoninterest；thelastfromdisunion，thatis，fromseparateinterests。
Acommoninterestunites，andaseparateinterestdisunitesthemembersofeverysociety；anddidnotthefirstpreponderateamongmankind，therewouldbenosocietyatall。Thoseofthesamenationmayhaveacommoninterestrelativetoforeigners，andaseparateinterestrelativetooneanother。thoseofthesameprofessionmayhaveacommoninterestrelativetotheobjectoftheirindustry，andaseparateinterestrelativetothecarryingiton:themembersofthesamemercantilecompanymayhavethesameinterestinthedividend，andaseparateinterestintheadministrationofthefundwhichproducesit。Thechildrenofthesamefamily，nayevenamanandhiswife，thoughtiedbythebondsofcommoninterest，maybedisjoinedbytheeffectsofaseparateone。Mankindarelikeloadstones，theydrawbyonepole，andrepelbyanother。Andastatesman，inordertocementhissociety，shouldknowhowtoengageeveryone，asfaraspossible，toturnhisattractingpoletowardstheparticularcentreofcommongood。
Fromthisemblematicalrepresentationofhumansociety，I
infer，thatitisdangeroustothecommoninterest，topermittoocloseanunionbetweenthemembersofanysubalternsociety。Whenthemembersoftheseareboundtogether，asitwerebyeveryarticulation，theyinsomemeasurebecomeindependentofthegreatbody。whentheunionislessintimate，theyadmitofotherconnections，whichcementthemtothegeneralmass。
Companiesoughttobepermitted，consistentlywiththeseprinciples。Theirmercantileinterestsaloneoughttobeunited，sofarasunionisrequiredtocarryontheirundertakingwithreasonableprofits；butbeyondthis，everycollateraladvantagebywhichtheassociatesmightprofit，inconsequenceoftheirunion，oughttobecutoff；andthepublicshouldtakecaretosupporttheinterestofprivatepersonsagainstthem，onalloccasions，wheretheytakeadvantageoftheiruniontohurttherightofindividuals。Letmeillustratethisbyanexample。
Severalweavers，fishermen，orthoseofanyotherclassoftheindustrious，unitetheirstocks，inordertoovercomethosedifficultiestowhichsingleworkmenareexposed，fromamultiplicationofexpences，whichcanbesavedbytheirassociation。Thiscompanymakesagreatdemandforthematerialsnecessaryforcarryingontheirbusiness。Bythisdemandtheyattachtothemselvesagreatmanyoftheindustriousnotincorporated，whotherebygetbreadandemployment。Sofarthesefindanadvantage:butinproportionastheundertakingisextended，andthecompanybecomesabletoengrossthewhole，oraconsiderablepartofsuchamanufacture，theydestroyallcompetitionforit:andbyformingasingleinterest，inthepurchaseofit，aswellasinthesaleoftheirownmanufactures，theyprofitinthefirstcase，byreducingthegainsofthosewhoarenotincorporated，belowtheproperstandard；andinthesecond，theyraisetheirownprofitstoofarabovewhatisnecessary。
Themethod，therefore，topreventsuchabuses，is，forastatesmantointerpose；notbyrestrainingtheoperationsofthecompany，butbyopposingtheforceofprinciplessimilartothosebywhichtheyprofit，insuchamannerastorendertheirunjustdealingsineffectual。Iftheweaversoppressthespinners，forinstance，methodsmaybefallenupon，ifnotbyincorporatingthelast，atleastbyunitingtheirinterests，soastopreventahurtfulcompetitionamongthem。IfthedealersinwoolinEngland，profitingoftheprohibitiontoexportthiscommodity，shouldenterintoaconcertagainstthegrowersofit，inordertohavethewoolattheirownprice；governmentmayeasilydisappointthem，byreceivingineverycounty，atareasonableprice，allthewoolwhichremainsunsold。Thisquantitygovernmentmayexport，withfarlesshurttoEngland，thanwhatthenationsuffersbytheconcertamongthewoolmerchantsagainstthelandedinterest。Hemaylikewisediscouragetooextensivecompanies，byestablishingandsupportingothers，whichmayservetopreservecompetition；andhemaypunish，severely，everytransgressionofthelawstendingtoestablishanarbitrarydependenceonthecompany。Inshort，whilesuchsocietiesareforming，heoughttobetheirprotector；and，whentheyareformed，heoughttotakethoseunderhisprotection，whomtheymightbeapttooppress。
Inestablishingcompaniesformanufactures，itisagoodexpedienttoemploynoneinsuchundertakings，butthosewhohavebeenbredtothedifferentbranchesoftheirbusiness。Whenpeopleoffortune，ignorantandprojecting，interestthemselvesininfantmanufactures，underthepretextofpublicspirit，thoughmerelywithaviewtobecomesuddenlyrich，theyaresobentuponmakingvastprofits，proportionedtotheirstock，thattheirhopesaregenerallydisappointed，andtheundertakingfails。Pains-takingpeople，bredtofrugality，contentthemselveswithsmallergains；butunderthepublicprotection，thesewillswellintoalargesum，andtheaccumulationofsmallprofitswillformanewclassofopulentpeople，whoadopt，orratherretainthesentimentsoffrugalitywithwhichtheywereborn。
Thus，forinstance，inestablishingfisheries，insteadofprivatesubscriptionsfromthosewhoputintheirmoneyfrompublicspirit，andpartlywithaviewtodrawaninterestforit；
orfromthosewhoarealluredbythehopesofbeinggreatgainersintheend，thelastIcallprojectorsthepublicshoulddefraythegreatexpence:andcoopers，sail-makers，rope-makers，ship-carpenters，net-makers；inshort，everyoneusefultotheundertaking，shouldbegratuitouslytakeninforasmallshareoftheprofits；andbytheirbeinglodgedtogetherinabuilding，ortown，properforcarryingiton，everyworkmanbecomesanundertakertothecompany，forthearticlesofhisownwork。Nomanconcerneddirectlyintheinter-prize，shouldresideelsewherethanintheplace:anyoneoftheassociatesmayundertaketofurnishwhatcannotbemanufacturedathomeatfixedprices。Thusthewholeexpenceofthepublicinthesupportoftheundertaking，maycirculatethroughthehandsofthosewhocarryiton；andeveryonebecomeacheckuponanother，forthesakeofthedividenduponthegeneralprofits。Onegreatadvantageincarryingonundertakingsinthismanner，is，thatalthoughthoseconcerneddrawnoprofitatallupontheundertakingitself，theyfindtheiraccountinit，upontheseveralbranchesoftheirownindustry。TheherringtradewasatfirstsetonfootinHollandbyacompanyofmerchants，whofailed；andtheirstockofbusses，stores，&c。beingsoldatanundervalue，wereboughtbyprivatepeople，whohadbeeninstructedattheexpenceofthecompany’smiscarriageineverypartofthetrade，andwhocarrieditonwithsuccess。Hadthecompanybeensetupatfirstinthemannerherementioned，theirtradeneverwouldhavesufferedanycheck。
Quest。9。Whataretheprincipleswhichinfluencethefluctuationsinthepriceofsubsistence，incountrieswhereagriculture，trade，andindustryaresolidlyestablished？Andbywhatrulecanweformajudgment，whensuchpricesaretoohighfortheprosperityofmanufacturers，andwhentheyaretoolowfortheinterestsofagriculture？
Thepriceofsubsistenceisfixed，ashasbeensaid，chap。
28ofthisbook，bythequantitywhichcanbebroughttomarket，andthenumberofthosewhomustbuyit。Thispricemayriseandfallaccordingtocircumstances。Whenthequantityatanytimebroughttomarket，exceedsthedemandoftheday，thesellerswhoarethemostpressedformoney，lowertheprice。Whenthequantityatanytimebroughttomarket，islessthanthedemandoftheday，thebuyerswhoarethemostpressedtohavefoodraisethepricebytheircompetition。Incountriesofagriculture，ofindustry，andoffree-tradewiththeworld，suchfluctuationsareconfinedwithincertainlimits，namely，theycannotrisehigherthanthefacultiesofthebuyerscanaffordtopayfortheshortestsubsistence；theycannotsinklowerthanwhatthegoodscanbeexportedforwithprofit。
Thefacultiesofthebuyersofsubsistence，areverydifferent；becauseeverymanheremaybesupposedtobeabuyer，exceptthefarmers，andsuchlandlordswhoserentsarepaidinarticlesofsubsistence。Thefaculties，therefore，ofthelowestandmostnumerousclass，arethesewhichcircumscribetherisingoftheprice。
Letmecalltheclasseswhobuy，bythelettersofthealphabeta，b，c，d，e，f。Iftherebesubsistencetobesold，amplysufficient，andnomorethansufficient，forthesesixclasses，whichIsupposetoberangedaccordingtotheeaseoftheircircumstances，froma，thehighest，tof，thelowest；thenthepriceoffullsubsistencewillbeinproportiontothefacultiesoff。Shouldtheprovisionproveinsufficientfortheamplesubsistenceofalltheclasses，thepricewillrise；andfwillbeabletobuyapartonly。Butshouldthispartbecomelessthantheshortestsubsistenceforf，thedemandoffwouldbewithdrawnfromthemarket，whichthenwouldbeoverstockedforthedemandofthehigherclasses。
Nowincountriesofindustry，thisnevercanbethecase；
becausetheclassfistherethemostnumerousofany；andbeforeitcanbereducedtothelaststageofwant，thediminutionofitsconsumptionwillfarexceedalldeficienciesofcrops，andwillcarrythesupplyforthehigherclassesfarbeyondtheproportionoftheirdemand；andpriceswillfall:topreventwhichfall，theproprietorsofthesubsistencemechanicallyadjustthepricetheysellat，totheabilitiesofthelowestclasstopurchasetheshortestsubsistence；andbeyondthispricesnevercanrise。
LetmeapplythisreasoningtothesituationofScotlandforthreeyearsprecedingMarch1768。
Thepriceofoat-meal，inthesouthernpartsofthecountrywas，duringthisperiod，constantlyatoraboveoneshillingperpeckofeightpoundsAmsterdamweight；andnomiserywascomplainedofbyday-labourerswhogainthreeshillingsandsixpenceandfourshillingsperweek。ThisIreckontheclassfinScotland。FromwhichImustconclude，thatoneshillingperpeckofoat-meal，iscompatiblewiththefacultiesoftheScotsclassoff。Again，fourshillingsperweekis10l。8s。perannum；
andtheusualcomputationforthefoodofastrongmaninoat-mealissixbollsonehalfperannum，or832poundsAmsterdamweight，which，atoneshillingperpeck，is5l。4s。
Fromthisitappears，thatinScotland，andaccordingtothemanneroflivinginthiscountry，aslongasthegrainconsumedbyourlowestclass，doesnotexceedthevalueofonehalfoftheirgains，nodistressisfound。Imustfurtherobserve，thatthiscomputationastotheirgains，regardsmarriedmenwithwivesandchildren；andasitisamatteroffact，wellknownhere，thatfamiliesdosubsistonsuchgains，andatsuchprices；
theascertainingofthiscircumstanceisfarmoreusefulfordeterminingtheimportantquestionconcerningtheproportionbetweenthefacultiesofthelowestclasses，andtherateofsubsistence，thananycalculationwhichcanbemade。FromthisI
amledtodemand，ifpricesbehigher，andwageslowerinEngland，thanwithus？
AquarterofwheatisreckonedforthesubsistenceofaninhabitantinEngland:andinFrance，wherethepeopleliveinamanneruponbreadalone，threeseptiers，orthirteenWinchesterbushels，isaveryreasonableallowance。ThereisalsoanotherverygoodwayofcomparinggainsinEngland，withtherateofmarkets；namely，byobservinghowthesobermarriedmenamongfootsoldiersarefoundtolive。
Ifafootsoldierhaveeightpenceperdiem，heisinahigherclassthanaScotslabourerwhogainseightpenceperdiem；becauseheispaidforSundays，aswellasdaysofsicknessandinterruptionfromlabour。Thegainsofthesoldierarefourshillingsandeightpenceeveryweekintheyear，thegainsoftheScotslabourerarefourshillings，whenhemeetswithnointerruption。
NowinEngland，thelowestclass，exceptthefootsoldier，andthemostnumerousofanyinthekingdom，isthecountrylabourerwhogainsatleastoneshillingaday，inallseasons，oftheyear；asitappearsfromalatepublication，intitled，’A
SixWeeksTowerthroughtheSouthernCountiesofEnglandandWales。’
Thisauthorinformsus，thatin1767，whenhighpricesweresomuchcomplainedof，breadwasuniversallyalmost，attwo-penceperpound，beefandmuttonatfour-pence；andthattwo-penceperdiemissupposedtobeequaltosmallbeer；andinp。179，heobserves，thatoneshillingperdiemtheyearround，withsmallbeer，thatistosayfourteenpenceperdiem，isexcessivelycheaplabour。NowallowinganEnglishlaboureronepoundandanhalfofbread，andthreequartersofapoundofmeat，withsmallbeer，theexpencewillbeeight-penceaday；consequentlyhisfoodisbutonepennymorethanonehalfofhiswages，anddaylabourersareevidentlythelowestclassofindustriouspeoplealloverEngland。Whatthereforearewetothinkoftheuniversalclamourraisedinthenationatthattime，uponaccountofthedistressoftheindustriouspoor？Whatjudgementarewetoformconcerningtheuniversalacquiescencetothetruthofthesecomplaintsbythosewhomusthavebeenthebestinformedconcerningthetruestateofthematter？unlesswesupposeittohavebeenallamerefarce，orwhattheFrenchcallthesecretofthecomedy，towit，athingwhicheveryoneknows，althoughnobodybesupposedeithertoknowitortobelieveit。
ThesoldiersareevidentlytheclassfinEngland。Butthenumberofthemissosmall，whencomparedwithanyoftheindustriousclasses，especiallywiththedaylabourers，thatwereitnotforthefrequentcelibacyamongthem，Iampersuadedhighpriceswouldgreatlydistressthem，beforeanyotherclassofmen。Thesmallnessoftheirnumbers，Isay，isanadditionaldisadvantagetothem；becauseitisthegreatnumberofthelowestclass，whichforthereasonalreadygivenchieflypreventspricesfromrisingabovetheirabilitiestopurchaseashortsubsistence。
Whileafootsoldier，then，cansubsistuponhispay，attherateoftheEnglishmarket，Inevershallbelievethatanyclassofindustriouspeoplethere，canbeinsuchwantastorequireanextraordinaryrelieffromthestate；oneespeciallywhichinvolvesthelandedinterestthatisthefarmersinsogreatadistress，astohavethepriceoftheirgraindiminished，withoutaugmentingthequantityofit。Thisisthematerialdifferencebetweenareductionofpriceswhenproducedbyplenty，andwhenproducedbyimportation。
Ifitbesaid，thatitisgreatseveritytoreducepeoplewholabourhard，tothesubsistenceofanidlesoldier，Ianswer，thatpeoplewholabourhard，andthosewhoaddedtotheirdiligence，havealsoashareofingenuityintheirseveralprofessions，constantlyreceivewagesproportionallyhigher。Theexampleofthesoldieristakeninordertoformanestimateonlyofthepriceatwhichpeoplemaysubsist；andnottodeterminetherateofwages；whichtherateofdemandfortheirlabourwillconstantlyregulate，independentlyofthepriceofsubsistence；
andthisleadsmetoanotherbranchofthisdoctrine，whichis，Thattherateofwagesisinproportiontothevalueoftheworkperformed，relativelytothepersonwhoemploystheworkman，andnotinproportiontothepriceofsubsistence。
ThisItaketobeanuniversalprinciple，inallcountriesofindustry。Itisthiswhichdistinguishestheindustriousfree-manfromthepoorslave。Theindustriousfree-manmustshareintheprofitsofhimwhoemployshim；thepoorslavecandemandofhismasternomorethansubsistence。
Letthereforesubsistencebeeversocheap，thefree-manwillinsistuponwagesinproportiontothevalueofhiswork，whenbroughttomarket。Shouldhisemployertellhim，thatbecausesubsistenceisatalowprice，hemustthereforeworkcheaper，hewilltellhisemployer，thatsinceonthisaccounthesellsnocheapertohiscustomers，neitherwillheworkcheaperforhim；
andhisargumentisgood；becauseweresubsistencetoriseeversohigh，thiswouldbenoinducementtohisemployertoraisehiswagesinproportion，aslongastherateofthemarketforgoodsorlabour，standsthesameasatothertimes。
Whentherateofthemarketforgoodsorlabouristhereforeraiseduponanybranchofindustry；whetherinconsequenceofariseinthepriceofsubsistence，orinconsequenceofahigherdemand；thenwageswillrise，inspightofallattemptstocircumscribethem。If，ontheotherhand，therateofthemarketforgoodsorlabourshalleitherstandthesame，orevendiminish，theemployerwillgivenoaugmentationofwages，letprovisionsbeeversodear。
Thepoorslave，again，whogetsnomorethanhissubsistenceatalltimes，isinthesituationofthepoorlabouringhorse，whoisfedwiththesameprovender，letitbedearorcheap。
WhatIhavesaid，Itaketobeafairandcandidrepresentationofgeneralprinciples，whichnostatecanalter:
andwhenanattemptismadetocounteractthem，itwillnotsucceed。Someindividuals，indeed，mayberelievedbyit；butbystoppingasmallhole，abreachwillbemadeinanotherpart。
Ineveryindustrioussociety，thelowestclassisfrequentlyfoundreducedtothebarelynecessary。Thecompetitionamongthemselvestoobtainemploymentatanyrate，producesthiseffect；andcompetitionmustbealloweditsfreecourse。
Imustnowsetforththestrongestobjectionwhichcanbemadeagainstthiswholedoctrine；and，inmyanswertoit，I
shallhaveanopportunityofexplainingmymeaningbetterthanasyetIhavedone。Theobjectionisthis:
Ifitbetruethatinanindustriousnationwhere，upontheaverage，grainisannuallyexported，thepriceoftheshortestsubsistencecanatnotimeriseabovethefacultiesofthelowestclassofthosewhogotomarket；thenwemustsay，thatnoscarcitywhatsoevercantherereducethequantityofsubsistencebelowwhatisbarelynecessarytofeedthepeople。
WereIatoncefranklytoavowthisconsequence，andsay，thatinindustriousnations，whoontheaverageofyearsaresubsistedontheirowngrowth，thedifferenceofcropsisnotgreaterthanthedifferencebetweenampleandbaresubsistence，manyatfirstsight，mightbestartledatsoboldanassertion。
Imustthereforesay，thatwherecropsaresoprecarious，as，insomeyears，todeprivethepeopleoftheshortestsubsistence，nonationcanbeindustrious。Whattrade，whatindustrycanstanditsground，whileapartoftheinhabitantsareabsolutelystarving？
Ihaveonlyoneobjectionmoretoobviate，whichis:ThatthesuppositionIhavebeenreasoningon，towitthatEnglandproducesintheworstyearsabaresubsistenceforallherinhabitants，cannotbeadmittedtobetrue。
ThefactIapprehendtobereallyso:asImay，however，bemistaken，Imustnextproposeaproperremedyevenagainstthisproblematicalwantofsubsistence。
Wecannotreasonablysupposethisdeficiencytoexceedontheaverageofyearsthegreatestquantityofsubsistencethateverwasimportedinanyoneyear。Nowthisquantityisnotequalto200，000quartersofallsortsofgrain，ashasbeenobservedabove。Letgovernment，therefore，beattheexpenceoflayingupuponthefirstappearanceofplenty，200，000quartersofwheatandrye。Letthembedepositedinsomeofthemostconsiderableportsinthekingdom，andletnoneofthisquantityeverbesoldcheaperthanatthepricewhichatpresentisthoughtsohighastoengageustotakeoffthedutiesonimportation。
Wereittobeissuedatalowerratethanthisthewholeintentionofsuchgranarieswouldbedefeated。Nay，weretheytocontainmanymillionsofquartersinplaceof200，000，stillweretheyopenedatacheaperratethanatthehighestpricewhichgraineveroughttobear，theywouldsoonbeexhausted；becauseitisthehighpriceonlywhichcircumscribestheconsumptionofthelowestclasstothebarelynecessary，eveninthetimesoffreeimportation。
Iamveryfarfromwishingtoseeanyindustriouspersonindistressforwantoffood。TheexpedientsIhavebeenproposing，namelytheraisingoftheirwages，andestablishingagranary，would，Iampersuaded，provemuchmorecertainandsalutaryexpedientsthananyother，topreventsogreatadistress。ButI
think，ontheotherhand，thatthemoresoberlyourlowestclassesaremadetoliveatalltimes，thecheapermayourmanufacturesbesold；andthebetterwillforeignMarketsforthembesupplied。
Everyonewillacknowledge，thatthecheapnessofsubsistenceisneverattendedwithaproportionalfallinthepriceofcommodities；andmanyknowbyexperience，thatitismorecommonlyattendedwiththeriotandidlenessofthoseuponwhomthegreatnessofthisnationprincipallydepends，namely，thelowerclassesofourpeople。
Ishallthereforeconcludebyobserving，First，Thatthebest，andindeedtheonlywaytojudgeofreasonableprices，istocompare，asIhavesaid，thegainsofthelowerclasseswiththepriceoftheshortestsubsistence；andthataslongasthelatterdoesnotriseabovetheproportionofthefirst，nothingistobefeared。Secondly，Thatwhilethereremainssomesmalladvantageinthisproportioninfavourofthelowerclasses，nogreatharmcanensue；butassoonasallproportionistotallylost，bythelowpriceofprovisions，industryrunsagreatrisktosufferinplaceofgainingground。
Thirdly，Thatthisproportionistobemaintainedbygranariesinyearsofscarcity，andbybountiesinyearsofplenty。And，fourthly，Thatuntilexperienceshallevince，thattheexpedientshereproposedareineffectual，allimportationshouldbelaidaside，asaremedyviolentinitsnature；
destructivetoagriculture，andtendingtodiminishthebalanceofourtrade，withwhichalonewecandischargetheheavydebtweowetoothernations。
Bountieswhichpromoteexportation，andwhichraisethepricesofgraintothedueproportionofthegainsofthelowestclass，eveninyearsofplenty，resemble，inagreatmeasure，anexciselaidupontheluxuryofthelowerclasses。Thedifferenceconsistsinthis；thatinbounties，thepublicincursanexpence，whichnotonlyremainsathome，buthastheeffectofbringinginagreatadditionofwealthfromourneighbours。Thisfirstcirculatesamongourselves，andatlastfindsitswayintotheexchequer。Anexciseagain，bringsmoneydirectlythither，withoutanycirculationatallamongourselves，whichisundoubtedlylessadvantageoustoatradingnation。
ImportationinEnglanddidnot，whiletheportswereopenin1768produce，Iconfess，anyveryhurtfulconsequences；becauseitthenhappened，thatnonationinEuropeenjoyedsogreatplentyofwheat，astobringthepriceofthisgrain，solowastohurttheEnglishfarmer。ButitwasnotsoinScotland；whereaverysmallimportationofthepoorestsubsistenceoat-meal
willatanytimebringourmarketssolowastothrowmanyofourfarmersintothegreatestdistress。
NOTES:
1。ThecitiesoftheAustrianNetherlandsare，fromthesecauses，atpresentinastateofdepopulation；andtheindustriousclassesareassemblinginthevillages，whicharebeginningtorivalthepopulousnessofthecities。Inthesevillages，theprivilegesofthecitiesarenotestablished。Privilegeswhichwillinallprobabilityendintheirbankruptcyaswellasdepopulation。Thedepopulationwillfollowfromthecausesalreadymentioned；thebankruptcyfromthesumsthesecorporationslendtothesovereign，onthecreditofnewimpositionsconstantlylayinguponeverybranchofconsumption。Thisissotrue，thattheacquisitionofthiscountryoneofthemostfertileandmostpopulousinEuropewouldhardlybeworththehaving，ifthedebtsduetothecorporationsweretobefairlypaid，andtheirruinousprivilegesastheyarecalledallowedtosubsistwithoutalteration。
AnInquiryintothePrinciplesofPoliticalOeconomyBookIII
OfMoneyandCoinPartI
ThePrinciplesofMoneyDeduced，andAppliedtotheCoinofGreatBritainAdvertisementThisbook，whichtreatsofmoney，containssuchvarietyofmatter，thatIhavefoundanadvantageindividingitintotwoparts。Inthefirst，theprinciplesarededucedandappliedprincipallytothedomesticcircumstancesofGreatBritainintheyear1760，whenthisbookwaswritten。Inthesecond，theinterestsofforeigntrade，andstateofcoininthetwogreatcommercialnationswithwhomweareincorrespondencearetakenin。
Insteadofachapterofrecapitulationattheendofthebook，Ifoundherethatafulltableofcontentswouldgivethereaderageneralviewofthesubject，andservethepurposeofrecollectionbetter。
IntroductionInaninquirylikethis，where，atalmosteverystep，wefinditbranchingoutintonewrelations，whichleadtodifferentchainsofconsequences，itisofusetohaverecoursetoeveryexpedientforconnectingthewholetogether。
Forthispurpose，anintroductorychapteratthebeginningofanewsubjectseemsnecessary。
ThereaderwillhaveobservedthatthelastchaptersoftheprecedingbookthoseImeanwhichtreatofthevibrationofthebalanceofwealthandofcirculationhavebeenwrittenwithaviewtointroducethesubjectofmoney。
Ithoughtitbettertoanticipatesomeprinciplesbyconnectingthemdirectlywiththoseoftrade，thantointroducethispartofmysubjectasanewtreatise。
Theassistanceourmemoryreceivesfromsuchadistributionmustcompensatetheinconvenienceofafewrepetitions。
Ihave，inthelastchaptersofthesecondbookherereferredto，hadoccasiontomention，andslightlytopointoutsomeessentialdifferencesbetweencoinandpapermoney。Ihaveshewnthegreatusefulnessofthelatterinsupportingcirculation。
Although，ingivingthedefinitionofpapermoneyinthetwenty-sixthchapterofthesecondbook，Imentionedcreditasbeingatermsynonimouswithit；yetthiswasdonemerelyforthesakeofsimplifyingourideas:oneofthebestexpedientsforcastinglightuponanintricatesubject。Itisnowrequisitetopointoutthedifferencebetweenthem。
Symbolicalorpapermoneyisbutaspeciesofcredit:itisnomorethanthemeasurebywhichcreditisreckoned。Creditisthebasisofallcontractsbetweenmen:fewcontractscanoperatesoinstantaneouslyasnottoleavesomeperformance，orprestation，asthecivilianscallit，ononesideorother，atleastforashorttime，insuspence。Hethereforewhofulfilshispart，givescredittothepartywhopromisesonlytofulfil，andaccordingtothevarietyofcontracts，thenatureoftheprestationsorperformances，thereinstipulated，andthesecuritygivenforfulfillingwhatisnotperformed，creditassumesdifferentforms，andcommunicatestousdifferentideas。Papercreditorsymbolicalmoney，ontheotherhand，ismoresimple。Itisanobligationtopaytheintrinsicvalueofcertaindenominationsofmoneycontainedinthepaper。Herethenliesthedifferencebetweenapaymentmadeincoin，andanothermadeinpaper。Hewhopaysincoin，putsthepersontowhomhepaysintherealpossessionofwhatheowed；andthisdone，thereisnomoreplaceforcredit。Hewhopaysinpaperputshiscreditorinpossessiononlyofanotherperson’sobligationtomakethatvaluegoodtohim:herecreditisnecessaryevenafterthepaymentismade。
Someintrinsicvalueorother，therefore，mustbefoundouttoformthebasisofpapermoney:forwithoutthisitisimpossibletofixanydeterminatestandard-worthforthedenominationscontainedinthepaper。
Ihavefoundnobranchofmysubjectsodifficulttoreducetoprinciples，asthedoctrineofmoney:thisdifficulty，however，hasnotdeterredmefromundertakingit。Itisofgreatconsequencetoastatesmantounderstanditthoroughly；anditisofthelastimportancetotradeandcredit，thatthemoneyofanationbekeptstableandinvariable。
Tokeepmyideasasdistinctasthenatureofthissubjectwilladmit，Ihaveinthefirstpartadheredtoadeductionofgeneralprinciples，takingbywayofillustration，asIgoalong，thepresentstateoftheBritishcurrency。
Inthesecondpart，Ishallexaminetheeffectsofturningcoinintoamanufacture，bysuperaddingthepriceoffabricationtoitsvalue；andpointouttheconsequencesofthisadditionalcombinationuponexchange，andtheinterestoftradingnations。
Chap。I
OfMoneyofAccountThemetalshavesolongperformedtheuseofmoney，thatmoneyandcoinarebecomealmostsynonimous，althoughintheirprinciplestheybequitedifferent。
Thefirstthingthereforetobedoneintreatingofmoney，is，toseparatetwoideas，which，bybeingblendedtogether，haveverygreatlycontributedtothrowaclouduponthewholesubject。
Money，whichIcallofaccount，isnomorethananarbitraryscaleofequalparts，inventedformeasuringtherespectivevalueofthingsvendible。
Moneyofaccounttherefore，isquiteadifferentthingfrommoney-coin，andmightexist，althoughtherewasnosuchthingintheworldasanysubstance，whichcouldbecomeanadequateandproportionalequivalentforeverycommodity。
Thesubjectthereforeofthefirstchaptershallbe，1。Topointouttheprincipleswhichdeterminethevalueofthings；2。
Theuseofaninvariablescaletomeasuretheirvalue；3。Howtheinventionofmoneyofaccountisexactlyadaptedformeasuringthevalueontheonehand，andmeasuringthepriceontheother；
and4。Howitpreservesitselfinvariableamidstallthefluctuations，notonlyofthevalueofthingsthemselves，butofthemetalswhicharecommonlyconsideredasthemeasuresoftheirvalue。
First，Moneyofaccount，whichIshallherecallmoney，performsthesameofficewithregardtothevalueofthings，thatdegrees，minutes，seconds，&c。dowithregardtoangles，orasscalesdotogeographicalmaps，ortoplansofanykind。
Inalltheseinventions，thereisconstantlysomedenominationtakenfortheunit。
Inangles，itisthedegree；ingeography，itisthemile，orleague；inplans，thefoot，yard，ortoise；inmoney，itisthepound，livre，florin，&c。
Thedegreehasnodeterminatelength，soneitherhasthatpartofthescaleuponplanswhichmarkstheunit:theusefulnessofallthoseinventionsbeingsolelyconfinedtothemarkingofproportion。
Justsotheunitinmoneycanhavenoinvariabledeterminateproportiontoanypartofvalue，thatistosay，itcannotbefixedtoperpetuitytoanyparticularquantityofgold，silver，oranyothercommoditywhatsoever。
Butitmaybeascertainedforatime，andthenwecan，bymultiplyingit，ascendtothegreatestvalue；andwhenwedescendbelowthesubalterndivisionsofthisunit，wehavetheassistanceofmeasuresandweights，whichrendertheoperationeasy。ThusinEngland，whereafarthingisthelowestdenominationofmoney，thegrainsofwheatareboughtbymeasure，andcherriesbythepound。
II。Thevalueofthingsdependsuponmanycircumstances，whichhowevermaybereducedtofourprincipalheads:
First，Theabundanceofthethingstobevalued。
Secondly，Thedemandwhichmankindmakeforthem。
Thirdly，Thecompetitionbetweenthedemanders；andFourthly，Theextentofthefacultiesofthedemanders。
Thefunctionthereforeofmoneyistopublishandmakeknownthevalueofthings，asitisregulatedbythecombinationofallthesecircumstances。
ThispropositionIthinkisself-evident，anditissusceptibleofathousandproofs；Ishallmentiononlyone。
Werethereadeterminateproportionbetweencertainquantitiesofgoldandsilver，andcertainquantitiesofotherthingsvendible，Idonotseehowpricescouldvarywhiletheproportionofquantitytoquantitybetweenmetalsandthingsremainedthesame。
Butifthedesiresofmentopossessanyparticularcommodityandthecompetitionbetweenthemtoacquireitbecapabletoraiseathing，formerlyofthelowestvalue，toanyheight，andiftheabsenceofthesecircumstancescandebaseathingformerlyofgreatvalue，tothelowestrate，isitnotevident，thattheprice，thatis，thegoldandsilverpeoplepossessevenallowingthatitmayuponmanyoccasionspromoteacompetitionamongthem
canneverbethemeasureoftheirfanciesorcaprices，whicharewhatconstitutesthevalueofthings。
Substancesarevaluedeitheraccordingtotheirweight，theirsuperficialmeasure，themeasureoftheirbulk，orbythepiece。
Thesemaybeconsideredasthefourclassesofvendiblecorporealcommodities。
Allthespeciesofeachclassaccordingtotheirdifferentqualitiesofgoodness，maybereducedtoaproportionofvalue。A
poundofgold，oflead，ofdifferentgrains，ofdifferentbutters，orofwhatyouwill，valuedbythepound，mayatanyprecisetime，bereducedtoascaleofproportionalvalues，whichthewants，demands，competitionandfacultiesofbuyersandsellers，keepinaperpetualfluctuation。
Asfartherefore，asanincreaseofthemetalsandcoinshallproduceanincreaseofdemand，andagreatercompetitionthanbefore，sofarwillthiscircumstanceinfluencetheriseofprices，andnofarther。
Thevalueofcommoditiestherefore，dependinguponcircumstancesrelativetothemselvesandtothefanciesofmen，theirvalueoughttobeconsideredaschangingwithrespecttooneanotheronly:consequently，anythingwhichtroublesorperplexestheascertainingthesechangesofproportionbythemeansofageneral，determinateandinvariablescale，mustbehurtfultotrade，andacloguponalienation。Thistroubleandperplexityistheinfallibleconsequenceofeveryviceinthepolicyofmoneyorofcoin。
III。Itmayherebedemandedwhatnecessitythereistohaverecoursetosuchametaphysicaldeductionuponsofamiliarasubject。Dowenotseeeverywherethatthingsarevaluedbysilverandgoldcoin，andthatthereisnooccasiontorejectthematthistime，inordertointroduceanimaginaryscale。
Ianswer，thatnothingbutnecessityobligesmetointroducethisimaginaryscale，andthatnotwithanyintentiontorejecttheserviceofthemetalsinperformingtheofficeofameasure，butasanassistancetoourunderstandingforcomprehendingthedoctrineofmoney，andforrightlydistinguishingtheideaswhicharedailyproposedtousbythosewhowriteandspeakconcerningitstheory。
Couldgoldandsilvercoinexactlyperformtheofficeofmoney，itwouldbeabsurdtointroduceanyothermeasureofvalue；buttherearemoralandphysicalincapacitiesinthemetals，whichpreventtheirperformingthefunctionofascale:
andthecommonopinionbeing，thattherearenosuchincapacities，makesitnecessarytoexposethemintheclearestlight，byshewingtheexactdifferencebetweenpricethatiscoinconsideredasameasure，andpriceconsideredasanequivalentforvalue。
Theinconsistencieswhichfollow，whenwedependblindlyupontheinfallibilityofthemetal’sdischargingthisdoubleoffice，tendtoconfoundthewholesystemofourideasconcerningthosematters。
Themoralaswellasphysicalincapacitiesinherentinthemetals，whichpreventtheirperformingexactlytheofficeofmoney，shallbeafterwardspointedout。Imustatpresentexplainalittlefartherthenatureofidealmoney。
IV。Money，strictlyandphilosophicallyspeaking，is，ashasbeensaid，anidealscaleofequalparts。Ifitbedemandedwhatoughttobethestandardvalueofonepart？Ianswer，byputtinganotherquestion；Whatisthestandardlengthofadegree，aminute，asecond？
Ithasnone，andthereisnonecessityofitshavinganyotherthanwhatbyconventionmankindthinkfittogiveit。Butsosoonasonepartbecomesdetermined，bythenatureofascale，alltherestmustfollowinproportion。
Thefirststepbeingperfectlyarbitrary，peoplemayadjustoneormoreofthosepartstoaprecisequantityofthepreciousmetals；andsosoonasthisisdone，andthatmoneybecomesrealized，asitwere，ingoldandsilver，thenitacquiresanewdefinition:itthenbecomestheprice，aswellasthemeasureofvalue。
Itdoesnotfollowfromthisadjustingofthemetalstothescaleofvalue，thattheythemselvesshouldthereforebecomethescale，asanyonemustreadilyperceive。
Butinformertimes，beforetheintroductionofcommerce，whenmankindhadlessoccasiontomeasurevaluewithascrupulousexactness，thepermanentnatureofthemetalsrenderedthemsufficientlycorrect，bothtoserveasthescale，andasthepriceineveryalienation。Sincetheintroductionofcommerce，nationshavelearnedtheimportanceofreducingtheirrespectiveinterestsanddebts，tothenicestequationsofvalue；andthishaspointedouttheinconvenienceofadmittingthemetals，asformerly，toservebothasthemeasureandthepriceinsuchoperations。
Justsogeographersandastronomerswerelongofopinion，thatadegreeoftheequatorwasadeterminatelengthtomeasureeverydegreeoflatitudeupontheglobe。
Theythenconsideredtheearthasasphere，andnogreatinconveniencywasfoundtoresultfromthissupposition。Butasaccuracymadeaprogress，thismeasurewasfoundtobeincorrect。
Degreesoflatitudearenowfoundtobeofdifferentlengthsindifferentclimates；andperhapsintimeitwillbefoundthatnotwodegreesofanygreatcircledescribedupontheglobe，areinageometricalequality。
Thatmoney，therefore，whichconstantlypreservesanequalvalue，whichpoisesitself，asitwere，inajustequilibriumbetweenthefluctuatingproportionofthevalueofthings，istheonlypermanentandequalscale，bywhichvaluecanbemeasured。
Ofthiskindofmoney，andofthepossibilityofestablishingit，wehavetwoexamples:thefirst，amongoneofthemostknowing；thesecond，amongthemostignorantnationsoftheworld。TheBankofAmsterdampresentsuswiththeone，thecoastofAngolawiththeother。
Aflorinbancohasamoredeterminatevaluethanapoundoffinegold，orsilver；itisanunitwhichtheinventionofmen，instructedintheartsofcommerce，havefoundout。
Thisbankmoneystandsinvariablelikearockinthesea。
Accordingtothisidealstandardarethepricesofallthingsregulated；andveryfewpeoplecantellexactlywhatitdependsupon。Thepreciousmetalswiththeirintrinsicvalue，varywithregardtothiscommonmeasure，likeeveryotherthing。Apoundofgold，apoundofsilver，athousandguineas，athousandcrowns，athousandpiastres，orathousandducats，aresometimesworthmore，sometimesworthlessofthisinvariablestandard；accordingastheproportionofthemetalsofwhichtheyaremadevarybetweenthemselves。
Noadulterationsintheweight，fineness，ordenominationsofcoinhaveanyeffectuponbankmoney。Thesecurrencieswhichthebanklooksuponasmerchandise，likeeveryotherthing，areeitherworthmoreorlessbankmoney，accordingtotheactualvalueofthemetalstheyaremadeof。Allismerchandisewithrespecttothisstandard；consequently，itstandsunrivalledintheexerciseofitsfunctionofacommonmeasure。
ThesecondexampleisfoundamongthesavagesupontheAfricancoastofAngola，wherethereisnorealmoneyknown。Theinhabitantstherereckonbymacoutes；andinsomeplacesthisdenominationissubdividedintodecimals，calledpieces。Onemacouteisequaltotenpieces。Thisisjustascaleofequalpartsforestimatingthetruckstheymake。Ifasheep，e。g。beworth10macoutes，anoxmaybeworth40，andahandfulofgolddust1000。
Moneyofaccount，therefore，cannotbefixedtoanymaterialsubstance，thevalueofwhichmayvarywithrespecttootherthings。Theoperationsoftrade，andtheeffectsofanuniversalcirculationofvalue，overthecommercialworld，canaloneadjustthefluctuatingvalueofallkindsofmerchandise，tothisinvariablestandard。ThisisarepresentationofthebankmoneyofAmsterdam，whichmayatalltimesbemostaccuratelyspecifiedinadeterminateweightofsilverandgold；butwhichcanneverbetieddowntothatpreciseweightfortwenty-fourhours，anymorethantoabarrelofherrings。