 Chapter 5 of the Wealth of Nations, Book 2. Though all capitals are destined for the maintenance of productive labor only, yet the quantity of that labor which equal capitals are capable of putting into motion varies extremely according to the diversity of their employment, as does likewise the value which that employment adds to the annual produce of the land and labor of the country. A capital may be employed in four different ways. Either first, in procuring the rude produce annually required for the use and consumption of the society, or secondly, in manufacturing and preparing that rude produce for immediate use and consumption, or thirdly, in transporting either the rude or manufactured produce from the places where they abound to those where they are wanted, or lastly, in dividing particular portions of either into such small parcels as suit the occasional demands of those who want them. In the first way are employed the capitals of all those who undertake improvement or cultivation of lands, mines, or fisheries. In the second, those of all master manufacturers. In the third, those of all wholesale merchants. And in the fourth, those of all retailers. It is difficult to conceive that a capital should be employed in any way which may not be classed under some one or other of those four. Each of those four methods of employing a capital is essentially necessary either to the existence or extension of the other three or to the general convenience of the society. Unless a capital was employed in furnishing rude produce to a certain degree of abundance, neither manufacturers nor trade of any kind could exist. Unless a capital was employed in manufacturing that part of the rude produce which requires a good deal of preparation before it can be fit for use and consumption, it either would never be produced because there could be no demand for it, or if it was produced spontaneously it would be of no value in exchange and could add nothing to the wealth of the society. Unless a capital was employed in transporting either the rude or manufactured produce from the places where it abounds to those where it is wanted, no more of either could be produced than was necessary for the consumption of the neighborhood. The capital of the merchant exchanges the surplus produce of one place for that of another, and thus encourages the industry and increases the enjoyment of both. Unless a capital was employed in breaking and dividing certain portions either of the rude or manufactured produce into such small parcels as suit the occasional demands of those who want them, every man would be obliged to purchase a greater quantity of the goods he wanted than his immediate occasions required. If there was no such trade as a butcher, for example, every man would be obliged to purchase a whole ox or a whole sheep at a time. This would generally be inconvenient to the rich and much more so to the poor. If a poor workman was obliged to purchase a month or six months provisioned at a time, a great part of the stock which he employs as a capital and the instruments of his trade or in the furniture of his shop, and which yields him a revenue, he would be forced to place in that part of his stock which is reserved for immediate consumption and which yields him no revenue. It can be more convenient for such a person than to be able to purchase his subsistence from day to day or even from hour to hour as he wants it. He is thereby unable to employ almost his whole stock as a capital. He is thus unable to furnish work to a greater value, and the profit which he makes by it in this way much more than compensates the additional price which the profit of the retailer imposes upon the goods. The prejudices of some political writers against shopkeepers and tradesmen are altogether without foundation. So far as it from being necessary either to tax them or to restrict their numbers, that they can never be multiplied so as to hurt the public, though they may so as to hurt one another. The quantity of grocery goods for example which can be sold in a particular town is limited by the demand of that town and its neighborhood. The capital therefore which can be employed in the grocery trade cannot exceed what is sufficient to purchase that quantity. If this capital is divided between two different grocers, their competition will tend to make both of them sell cheaper than if it were in the hands of one only. And if it were divided among twenty, their competition would be just so much the greater, and the chance of their combining together in order to raise the price just so much the less. Their competition might perhaps ruin some of themselves, but to take care of this is the business of the parties concerned, and it may safely be trusted to their discretion. It can never hurt either the consumer or the producer. On the contrary it must tend to make the retailers both sell cheaper and buy dearer than if the whole trade was monopolized by one or two persons. Some of them perhaps may sometimes decoy a weak customer to buy what he has no occasion for. This evil however is of too little importance to deserve the public attention, nor would it necessarily be prevented by restricting their numbers. It is not the multitude of alehouses to give the most suspicious example that occasions a general disposition to drunkenness among the common people, but that disposition arising from other causes necessarily gives employment to a multitude of alehouses. The persons whose capitals are employed in any of those four ways are themselves productive laborers. Their labor, when properly directed, fixes and realizes itself in the subject or vendible commodity upon which it is bestowed, and generally adds to its price the value at least of their own maintenance and consumption. The profits of the farmer, of the manufacturer, of the merchant and retailer are all drawn from the price of the goods which the two first produce and the two last buy and sell. Equal capitals however employed in each of those four different ways will immediately put into motion very different quantities of productive labor, and augment, too, in very different proportions the value of the annual produce of the land and labor of the society to which they belong. The capital of the retailer replaces, together with its profits, that of the merchant of whom he purchases goods, and thereby enables him to continue his business. The retailer himself is the only productive laborer whom it immediately employs. In his profit consists the whole value which its employment adds to the annual produce of the land and labor of the society. The capital of the wholesale merchant replaces, together with their profits, the capitals of the farmers and manufacturers of whom he purchases the rude and manufactured produce which he deals in, and thereby enables them to continue their respective trades. It is by this service chiefly that he contributes indirectly to support the productive labor of the society and to increase the value of its annual produce. His capital employs, too, the sailors and carriers who transport his goods from one place to another, and it augments the price of those goods by the value, not only of his profits, but of their wages. This is all the productive labor which it immediately puts into motion, and all the value which it immediately adds to the annual produce. Its operation in both these respects is a good deal superior to that of the capital of the retailer. Part of the capital of the master manufacturer is employed as a fixed capital in the instruments of his trade, and replaces, together with its profits, that of some other artificer of whom he purchases them. Part of his circulating capital is employed in purchasing materials and replaces, with their profits, the capitals of the farmers and miners of whom he purchases them. But a great part of it is always, either annually or in a much shorter period, distributed among the different workmen whom he employs. It augments the value of those materials by their wages and by their master's profits upon the whole stock of wages, materials, and instruments of trade employed in the business. It puts immediately into motion, therefore, a much greater quantity of productive labor, and adds a much greater value to the annual produce of the land and labor of the society than an equal capital in the hands of any wholesale merchant. No equal capital puts into motion a greater quantity of productive labor than that of the farmer. Not only his laboring servants, but his laboring cattle are productive laborers. In agriculture too, nature labors along with man. And though her labor costs no expense, its produce has its value, as well as that of the most expensive workmen. The most important operations of agriculture seem intended, not so much to increase, though they do that too, as to direct the fertility of nature towards the production of the plants most profitable to man. A field overgrown with briars and brambles may frequently produce as great a quantity of vegetables as the best cultivated vineyard or cornfield. Planting and tillage frequently regulate more than they animate the active fertility of nature. And after all their labor, a great part of the work always remains to be done by her. The laborers and laboring cattle, therefore, employed in agriculture not only occasion, like the workmen and manufacturers, the reproduction of a value equal to their own consumption or to the capital which employs them, together with its owner's profits, but of a much greater value. Over and above the capital of the farmer and all its profits, they regularly occasion the reproduction of the rent of the landlord. This rent may be considered as the produce of those powers of nature, the use of which the landlord lends to the farmer. It is greater or smaller according to the supposed extent of those powers, or in other words according to the supposed natural and improved fertility of the land. It is the work of nature which remains, after deducting or compensating everything which can be regarded as the work of man. It is seldom less than a fourth and frequently more than a third of the whole produce. No equal quantity of productive labor employed in manufacturers can ever occasion so great reproduction. In them nature does nothing, man does all, and the reproduction must always be in proportion to the strength of the agents that occasion it. The capital employed in agriculture, therefore, not only puts into motion a greater quantity of productive labor than any equal capital employed in manufacturers, but in proportion, too, to the quantity of productive labor which it employs, it adds a much greater value to the annual produce of the land and labor of the country, to the real wealth and revenue of its inhabitants. Of all the ways in which a capital can be employed, it is by far the most advantageous to society. The capitals employed in the agriculture and in the retail trade of any society must always reside within that society. Their employment is confined almost to a precise spot, to the farm, and to the shop of the retailer. They must generally, too, though there are some exceptions to this, belong to resident members of the society. The capital of a wholesale merchant on the contrary seems to have no fixed or necessary residence anywhere, but may wander about from place to place according as it can either buy cheap or sell dear. The capital of the manufacturer must, no doubt, reside where the manufacturer is carried on, but where this shall be is not always necessarily determined. It may frequently be at a great distance, both from the place where the materials grow, and from that where the complete manufacturer is consumed. The people of fashion in Sicily are clothed in silks made in other countries, from the materials which their own produces. Part of the wool of Spain is manufactured in Great Britain, and some part of that cloth is afterwards sent back to Spain. Whether the merchant whose capital exports the surplus produce of any society, be a native or a foreigner, is of very little importance. Whether the merchant whose capital exports the surplus produce of any society, be a native or a foreigner, is of very little importance. If he is a foreigner, the number of their productive laborers is necessarily less than if he had been a native, by one man only, and the value of their annual produce by the profits of that one man. The sailors or carriers whom he employs may still belong indifferently either to his country, or to their country, or to some third country, in the same manner as if he had been a native. The capital of a foreigner gives a value to their surplus produce equally with that of a native, by exchanging it for something for which there is a demand at home. It as effectually replaces the capital of the person who produces that surplus, and as effectually enables him to continue his business, the service by which the capital of a wholesale merchant chiefly contributes to support the productive labor, and to augment the value of the annual produce of the society to which he belongs. It is of more consequence that the capital of the manufacturer should reside within the country. It necessarily puts into motion a greater quantity of productive labor, and adds a greater value to the annual produce of the land and labor of the society. It may, however, be very useful to the country, though it should not reside within it. The capitals of the British manufacturers who work up the flax and hemp annually imported from the coasts of the Baltic are surely very useful to the countries which produce them. Those materials are a part of the surplus produce of those countries, which, unless it was annually exchanged for something which is in demand here, would be of no value and would soon cease to be produced. The merchants who export it replace the capitals of the people who produce it, and thereby encourage them to continue the production, and the British manufacturers replace the capitals of those merchants. A particular country, in the same manner as a particular person, may frequently not have capital sufficient both to improve and cultivate all its lands to manufacture and prepare their whole rude produce for immediate use and consumption, and to transport the surplus part either of the rude or manufactured produce to those distant markets, where it can be exchanged for something for which there is a demand at home. The inhabitants of many different parts of Great Britain have not capital sufficient to improve and cultivate their lands. The wool of the southern countries of Scotland is a great part of it after a long land carriage through very bad roads manufactured in Yorkshire, for want of a capital to manufacture it at home. There are many little manufacturing towns in Great Britain, of which the inhabitants have not capital sufficient to transport the produce of their own industry to those distant markets for where there is demand and consumption for it. If there are any merchants among them, they are, properly, only the agents of wealthier merchants who reside in some of the great commercial cities. When the capital of any country is not sufficient for all those three purposes, in proportion as a greater share of it is employed in agriculture, the greater will be the quantity of productive labor which it puts into motion within the country, as will likewise be the value which its employment adds to the annual produce of the land and labor of the society. After agriculture, the capital employed in manufacturers puts into motion the greatest quantity of productive labor and adds the greatest value to the annual produce. That which is employed in the trade of exportation has the least effect of any of the three. The country, indeed, which has not capital sufficient for all those three purposes, has not arrived at that degree of opulence for which it seems naturally destined. To attempt, however prematurely, and with an insufficient capital, to do all the three is certainly not the shortest way for a society no more than it would be for an individual to acquire a sufficient one. The capital of all the individuals of a nation has its limits in the same manner as that of a single individual and is capable of executing only certain purposes. The capital of all the individuals of a nation is increased in the same manner as that of a single individual by their continually accumulating and adding to it whatever they save out of their revenue. It is likely to increase the fastest, therefore, when it is employed in the way that affords the greatest revenue to all the inhabitants or the country as they will thus be enabled to make the greatest savings. But the revenue of all the inhabitants of the country is necessarily in proportion to the value of the annual produce of their land and labor. It has been the principal cause of the rapid progress of our American colonies towards wealth and greatness that almost their whole capitals have hitherto been employed in agriculture. They have no manufacturers, those household and coarser manufacturers accepted, which necessarily accompany the progress of agriculture and which are the work of the women and children in every private family. The greater part, both of the exportation and coasting trade of America, is carried on by the capitals of merchants who reside in Great Britain. Even the stores and warehouses from which goods are retailed in some provinces, particularly in Virginia and Maryland, belong many of them to merchants who reside in the mother country, and afford one of the few instances of the retail trade of a society being carried on by the capitals of those who are not resident members of it. Were the Americans, either by combination or by any other sort of violence, to stop the importation of European manufacturers, and by thus giving a monopoly to such of their own countrymen as could manufacture the light goods, divert any considerable part of their capital into this employment, they would retard, instead of accelerating, the further increase in the value of their annual produce, and would obstruct instead of promoting the progress of their country towards real wealth and greatness. This would be still more the case were they to attempt, in the same manner, to monopolize to themselves their whole exportation trade. The course of human prosperity, indeed, seems scarce ever to have been of so long continuance as to enable any great country to acquire capital sufficient for all those three purposes. Unless, perhaps, we give credit to the wonderful accounts of the wealth and cultivation of China, of those of ancient Egypt, and of the ancient state of Indostan. Even those three countries, the wealthiest, according to all accounts, that ever were in the world, are chiefly renowned for their superiority in agriculture and the manufacturers. They do not appear to have been eminent for foreign trade. The ancient Egyptians had a superstitious antipathy to the sea, a superstition nearly of the same kind prevails among the Indians, and the Chinese have never excelled in foreign commerce. The greater part of the surplus produce of all those three countries seems to have been always exported by foreigners who gave in exchange for it something else, for which they found a demand there, frequently gold and silver. It is thus that the same capital will in any country put into motion a greater or smaller quantity of productive labor, and add a greater or smaller value to the annual produce of its land and labor, according to the different proportions in which it is employed in agriculture, manufacturers, and wholesale trade. The difference, too, is very great, according to the different sorts of wholesale trade in which any part of it is employed. All wholesale trade, all buying in order to sell again by wholesale, may be reduced to three different sorts, the home trade, the foreign trade of consumption, and the carrying trade. The home trade is employed in purchasing in one part of the same country and selling in another, the produce of the industry of that country. It comprehends both the inland and the coasting trade. The foreign trade of consumption is employed in purchasing foreign goods for home consumption. The carrying trade is employed in transacting the commerce of foreign countries, or in carrying the surplus produce of one to another. The capital which is employed in purchasing in one part of the country in order to sell in another, the produce of the industry of that country generally replaces, by every such operation, two distinct capitals that had both been employed in the agriculture or manufacturers of that country, and thereby enables them to continue that employment. When it sends out from the residents of the merchant a certain value of commodities, it generally brings back in return at least an equal value of other commodities. When both are the produce of domestic industry, it necessarily replaces, by every such operation, two distinct capitals which had both been employed in supporting productive labor, and thereby enables them to continue that support. The capital which sends Scotch manufacturers to London and brings back English corn and manufacturers to Edinburgh necessarily replaces, by every such operation, two British capitals which had both been employed in the agriculture or manufacturers of Great Britain. The capital employed in purchasing foreign goods for home consumption when this purchase is made at the produce of domestic industry replaces two, by every such operation, two distinct capitals. But one of them only is employed in supporting domestic industry. The capital which sends British goods to Portugal and brings back Portuguese goods to Great Britain replaces, by every such operation, only one British capital. The other is a Portuguese one. Though the returns, therefore, of the foreign trade of consumption should be as quick as those of the home trade, the capital employed in it will give but one half of the encouragement to the industry or productive labor of the country. But the returns of the foreign trade of consumption are very seldom so quick as those of the home trade. The returns of the home trade generally come in before the end of the year, and sometimes three or four times in the year. The returns of the foreign trade of consumption seldom come in before the end of the year and sometimes not till after two or three years. A capital, therefore, employed in the home trade will sometimes make 12 operations or be sent out and returned 12 times before a capital employed in the foreign trade of consumption has made one. If the capitals are equal, therefore, the one will give four and 20 times more encouragement and support to the industry of the country than the other. The foreign goods for home consumption may sometimes be purchased, not with the produce of domestic industry, but with some other foreign goods. These last, however, must have been purchased either immediately with the produce of domestic industry or with something else that had been purchased with it. For the case of war and conquest accepted, foreign goods can never be acquired, but in exchange for something that had been produced at home either immediately or after two or more different exchanges. The effects, therefore, of a capital employed in such a roundabout foreign trade of consumption are in every respect the same as those of one employed in the most direct trade of the same kind, except that the final returns are likely to be still more distant, as they must depend upon the returns of two or three distinct foreign trades. If the hemp and flax of Riga are purchased with the tobacco of Virginia, which had been purchased with British manufacturers, the merchant must wait for the returns of two distinct foreign trades before he can employ the same capital in repurchasing a light quantity of British manufacturers. If the tobacco of Virginia had been purchased, not with British manufacturers, but with the sugar and rum of Jamaica, which had been purchased with those manufacturers, he must wait for the returns of three. If those two or three distinct foreign trades should happen to be carried on by two or three distinct merchants, of whom the second buys the goods imported by the first and the third buys those imported by the second in order to export them again, each merchant indeed will, in this case, receive the returns of his own capital more quickly. But the final returns of the whole capital employed in the trade will be just as slow as ever. Whether the whole capital employed in such a roundabout trade belong to one merchant or to three can make no difference with regard to the country, though it may with regard to the particular merchants. Three times a greater capital must in both cases be employed in order to exchange a certain value of British manufacturers for a certain quantity of flax and hemp, then would have been necessary had the manufacturers and the flax and hemp been directly exchanged for one another. The whole capital employed therefore in such a roundabout foreign trade of consumption will generally give less encouragement and support to the productive labor of the country than an equal capital employed in a more direct trade of the same kind. Whatever be the foreign commodity with which the foreign goods for home consumption are purchased, it can occasion no essential difference either in the nature of the trade or in the encouragement and support which it can give to the productive labor of the country from which it is carried on. If they are purchased with the gold of Brazil, for example, or with the silver of Peru, this gold and silver, like the tobacco of Virginia, must have been purchased with something that either was the produce of the industry of the country or that had been purchased with something else that was so. So far therefore as the productive labor of the country is concerned, the foreign trade of consumption which is carried on by means of gold and silver has all the advantages and all the inconveniences of any other equally roundabout foreign trade of consumption and will replace just as fast or just as slow the capital which is immediately employed in supporting that productive labor. It seems even to have one advantage over any other equally roundabout foreign trade. The transportation of those metals from one place to another on account of their small bulk and great value is less expensive than that of almost any other foreign goods of equal value. Their freight is much less and their insurance not greater and no goods besides are less liable to suffer by the carriage. An equal quantity of foreign goods therefore may frequently be purchased with a smaller quantity of the produce of domestic industry by the intervention of gold and silver than by that of any other foreign goods. The demand of the country may frequently in this manner be supplied more completely and at a smaller expense than any other. Whether by the continual exportation of those metals a trade of this kind is likely to impoverish the country from which it is carried on in any other way I shall have occasion to examine at great length hereafter. That part of the capital of any country which is employed in the carrying trade is altogether withdrawn from supporting the productive labor of that particular country to support that of some foreign countries. Though it may replace by every operation two distinct capitals yet neither of them belongs to that particular country. The capital of the Dutch merchant which carries the corn of Poland to Portugal and brings back the fruits and wines of Portugal to Poland replaces by every such operation two capitals neither of which had been employed in supporting the productive labor of Holland but one of them in supporting that of Poland and the other that of Portugal. The profits only returned regularly to Holland and constitute the whole addition which this trade necessarily makes to the annual produce of the land and labor of that country. When indeed the carrying trade of any particular country is carried on with the ships and sailors of that country that part of the capital employed in it which pays the freight is distributed among and puts into motion a certain number of productive laborers of that country. Almost all nations that have had any considerable share of the carrying trade have in fact carried it on in this manner. Whatever be the foreign commodity with which the foreign goods for home consumption are purchased it can occasion no essential difference either in the nature of the trade or in the encouragement and support which it can give to the productive labor of the country from which it is carried on. If they are purchased with the gold of Brazil for example or with the silver of Peru this gold and silver like the tobacco of Virginia must have been purchased with something that either was the produce of the industry of the country or that had been purchased with something else that was so. So far therefore as the productive labor of the country is concerned the foreign trade of consumption which is carried on by means of gold and silver has all the advantages and all the inconveniences of any other equally round about foreign trade of consumption and will replace just as fast or just as slow the capital which is immediately employed in supporting that productive labor. It seems even to have one advantage over any other equally round about foreign trade. The transportation of those metals from one place to another on account of their small bulk and great value is less expensive than that of almost any other foreign goods of equal value. Their freight is much less and their insurance not greater and no goods besides are less liable to suffer by the carriage. An equal quantity of foreign goods therefore may frequently be purchased with a smaller quantity of the produce of domestic industry by the intervention of gold and silver than by that of any other foreign goods. The demand of the country may frequently in this manner be supplied more completely and at a smaller expense than any other. Whether by the continual exportation of those metals a trade of this kind is likely to impoverish the country from which it is carried on in any other way I shall have occasion to examine at great length hereafter. That part of the capital of any country which is employed in the carrying trade is altogether withdrawn from supporting the productive labor of that particular country to support that of some foreign countries. Though it may replace by every operation two distinct capitals yet neither of them belongs to that particular country. The capital of the Dutch merchant which carries the corn of Poland to Portugal and brings back the fruits and wines of Portugal to Poland replaces by every such operation two capitals neither of which had been employed in supporting the productive labor of Holland but one of them in supporting that of Poland and the other that of Portugal. The profits only return regularly to Holland and constitute the whole addition which this trade necessarily makes to the annual produce of the land and labor of that country. When indeed the carrying trade of any particular country is carried on with the ships and sailors of that country that part of the capital employed in it which pays the freight is distributed among and puts into motion a certain number of productive laborers of that country. Almost all nations that have had any considerable share of the carrying trade have in fact carried it on in this manner. The trade itself has probably derived its name from it the people of such countries being the carriers to other countries. It does not however seem essential to the nature of the trade that it should be so. A Dutch merchant may for example employ his capital in transacting the commerce of Poland and Portugal by carrying part of the surplus produce of the one to the other not in Dutch but in British bottoms. It may be presumed that he actually does so upon some particular occasions. It is upon this account however that the carrying trade has been supposed peculiarly advantageous to such a country as Great Britain of which the defense and security depend upon the number of its sailors and shipping. But the same capital may employ as many sailors and shipping either in the foreign trade of consumption or even in the home trade when carried on by coasting vessels as it could in the carrying trade. The number of sailors and shipping which any particular capital can employ does not depend upon the nature of the trade but partly upon the bulk of the goods and proportion to their value and partly upon the distance of the ports between which they are to be carried chiefly upon the former of those two circumstances. The cold trade from Newcastle to London, for example, employs more shipping than all the carrying trade of England though the ports are at no great distance. To force therefore by extraordinary encouragements a larger share of the capital of any country into the carrying trade than what would naturally go to it will not always necessarily increase the shipping of that country. The capital therefore employed in the home trade of any country will generally give encouragement and support to a greater quantity of productive labor in that country and increase the value of its annual produce more than an equal capital employed in the foreign trade of consumption and the capital employed in this latter trade has in both respects a still greater advantage over an equal capital employed in the carrying trade. The riches and so far as power depends upon riches the power of every country must always be in proportion to the value of its annual produce or the fund from which all taxes must ultimately be paid. But the great object of the political economy of every country is to increase the riches and power of that country. It ought therefore to give no preference nor superior encouragement to the foreign trade of consumption above the home trade nor to the carrying trade above either of the other two. It ought neither to force nor to allure into either of those two channels a greater share of the capital of the country than what would naturally flow into them of its own accord. Each of those different branches of trade however is not only advantageous but necessary and unavoidable when the course of things without any constraint or violence naturally introduces it. When the produce of any particular branch of industry exceeds what the demand of the country requires the surplus must be sent abroad and exchanged for something for which there is a demand at home. Without such exportation a part of the productive labor of the country must cease and the value of its annual produce diminish. The land and labor of Great Britain produce generally more corn, woolens, and hardware than the demand of the home market requires. The surplus part of them therefore must be sent abroad and exchanged for something for which there is a demand at home. It is only by means of such exportation that this surplus can acquire value sufficient to compensate the labor and expense of producing it. The neighborhood of the sea coast and the banks of all navigable rivers are advantageous situations for industry only because they facilitate the exportation and exchange of such surplus produce for something else which is more in demand there. When the foreign goods which are thus purchased with the surplus produce of domestic industry exceed the demand of the home market the surplus part of them must be sent abroad again and exchanged for something more in demand at home. About 96,000 hogs head of tobacco are annually purchased in Virginia and Maryland with a part of the surplus produce of British industry. But the demand of Great Britain does not require perhaps more than 14,000. If the remaining 82,000 therefore could not be sent abroad and exchanged for something more in demand at home the importation of them must cease immediately. And with it the productive labor of all those inhabitants of Great Britain who are at present employed in preparing the goods with which these 82,000 hogs heads are annually purchased. Those goods which are part of the produce of the land and labor of Great Britain having no market at home and being deprived of that which they had abroad must cease to be produced. The most round about foreign trade of consumption therefore may upon some occasions be as necessary for supporting the productive labor of the country and the value of its annual produce as the most direct. When the capital stock of any country is increased to such a degree that it cannot be all employed in supplying the consumption and supporting the productive labor of that particular country the surplus part of it naturally disgorges itself into the carrying trade and is employed in performing the same offices to other countries. The carrying trade is the natural effect and symptom of great national wealth but it does not seem to be the natural cause of it. Those statesmen who have been disposed to favor it with particular encouragement seem to have mistaken the effect and symptom for the cause. Holland, in proportion to the extent of the land and the number of its inhabitants by far the richest country in Europe has accordingly the greatest share of the carrying trade of Europe. England, perhaps the second richest country of Europe is likewise supposed to have a considerable share in it though what commonly passes for the carrying trade of England will frequently perhaps be found to be no more than a round about foreign trade of consumption. Such are, in a great measure, the trades which carry the goods to the East and West Indies and of America to the different European markets. Those goods are generally purchased either immediately with the produce of British industry or with something else which had been purchased with that produce and the final returns of those trades are generally used or consumed in Great Britain. The trade which is carried on in British bottoms between the different ports of the Mediterranean and some trade of the same kind carried on by British merchants between the different ports of India make perhaps the principal branches of what is properly the carrying trade of Great Britain. The extent of the home trade and of the capital which can be employed in it is necessarily limited by the value of the surplus produce of all those distant places within the country which have occasion to exchange their respective productions with one another that of the foreign trade of consumption by the value of the surplus produce of the whole country and of what can be purchased with it that of the carrying trade by the value of the surplus produce of all the different countries in the world. Its possible extent, therefore, is in a manner infinite in comparison of that of the other two and is capable of absorbing the greatest capitals. The consideration of his own private profit is the sole motive which determines the owner of any capital to employ it either in agriculture and manufacturers or in some particular branch of the wholesale or retail trade. The different quantities of productive labor which it may put into motion and the different values which it may add to the annual produce of the land and labor of the society according as it is employed in one or other of those different ways never enter into his thoughts. In countries therefore where agriculture is the most profitable of all employments and farming and improving the most direct roads to a splendid fortune, the capitals of individuals will naturally be employed in the manner most advantageous to the whole society. The profits of agriculture, however, seem to have no superiority over those of other employments in any part of Europe. Projectors indeed in every corner of it have, within these few years, amused the public with most magnificent accounts of the profits to be made by the cultivation and the improvement of land. Without entering into any particular discussion of their calculations, a very simple observation may satisfy us that the result of them must be false. We see every day the most splendid fortunes that have been acquired in the course of a single life by trade and manufacturers frequently from a very small capital, sometimes from no capital. A single instance of such a fortune acquired by agriculture in the same time and from such a capital has not perhaps occurred in Europe during the course of the present century. In all the great countries of Europe, however, much good land still remains uncultivated and the greater part of what has cultivated is far from being improved to the degree of which it is capable. Agriculture, therefore, is almost everywhere capable of absorbing a much greater capital than has ever yet been employed in it. What circumstances in the policy of Europe have given the trades which are carried on in towns so great an advantage over that which is carried on in the country that private persons frequently find it more for their advantage to employ their capitals in the most distant carrying trades of Asia and America than in the improvement and cultivation of the most fertile fields in their own neighborhood. I shall endeavor to explain at full length in the two following books. End of Book Two, Chapter Five. End of Book Two of the Wealth of Nations, of the nature, accumulation, and employment of stock. Chapter One of Book Three of the Wealth of Nations. This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Recording by Stephen Escalera. The Wealth of Nations by Adam Smith, Book Three, of the different progress of opulence in different nations. Chapter One of Book Three of the Natural Progress of Opulence. The great commerce of every civilized society is that carried on between the inhabitants of the town and those of the country. It consists in the exchange of rude for manufactured produce, either immediately or by the intervention of money or of some sort of paper which represents money. The country supplies the town with the means of subsistence and the materials of manufacture. The town repays this supply by sending back a part of the manufactured produce to the inhabitants of the country. The town in which there neither is nor can be any reproduction of substances may very properly be said to gain its whole wealth and subsistence from the country. We must not, however, upon this account imagine that the gain of the town is the loss of the country. The gains of both are mutual and reciprocal and the division of labor is in this as in all other cases advantageous to all the different persons employed in the various occupations into which it is subdivided. The inhabitants of the country purchase of the town a greater quantity of manufactured goods with the produce of a much smaller quantity of their own labor. Then they must have employed had they attempted to prepare them themselves. The town affords a market for the surplus produce of the country or what is over and above the maintenance of the cultivators, and it is there that the inhabitants of the country exchange it for something else which is in demand among them. The greater the number and revenue of the inhabitants of the town, the more extensive is the market which it affords to those of the country. And the more extensive that market, it is always the more advantageous to a great number. The corn which grows within a mile of the town sells there for the same price with that which comes from 20 miles distance. But the price of the latter must generally not only pay the expense of raising it and bringing it to market, but afford to the ordinary profits of agriculture to the farmer. The proprietors and cultivators of the country, therefore, which lies in the neighborhood of the town over and above the ordinary profits of agriculture gain in the price of what they sell the whole value of the carriage of the light produce that is brought from more distant parts. And they save besides the whole value of this carriage in the price of what they buy. Compare the cultivation of the lands in the neighborhood of any considerable town with that of those which lie at some distance from it. And you will easily satisfy yourself how much the country is benefited by the commerce of the town. Among all the absurd speculations that have been propagated concerning the balance of trade, it has never been pretended that either the country loses by its commerce with the town or the town by that with the country which maintains it. As subsistence is in the nature of things prior to convenience and luxury, so the industry which procures the former must necessarily be prior to that which ministers to the latter. The cultivation and improvement of the country, therefore, which affords subsistence must necessarily be prior to the increase of the town which furnishes only the means of convenience and luxury. It is the surplus produce of the country only or what is over and above the maintenance of the cultivators that constitutes the subsistence of the town which can therefore increase only with the increase of the surplus produce. The town indeed may not always derive its whole subsistence from the country in its neighborhood or even from the territory to which it belongs, but from very distant countries. And this, though it forms no exception from the general rule, has occasioned considerable variations in the progress of opulence in different ages and nations. That order of things which necessity imposes, in general, though not in every particular country, is in every particular country promoted by the natural inclinations of man. If human institutions had never thwarted those natural inclinations, the towns could nowhere have increased beyond what the improvement and cultivation of the territory in which they were situated could support. Till such time, at least, as the whole of that territory was completely cultivated and improved. Upon equal or nearly equal profits, most men will choose to employ their capitals rather in the improvement and cultivation of the land than either in manufacturers or in foreign trade. The man who employs his capital and land has it more under his view and command, and his fortune is much less liable to accidents than that of the trader who is obliged frequently to commit it, not only to the winds and the waves, but to the more uncertain elements of human folly and injustice by giving credits in distant countries to men with whose character and situation he can seldom be thoroughly acquainted. The capital of the landlord, on the contrary, which is fixed in the improvement of his land, seems to be as well secured as the nature of human affairs can admit of. The beauty of the country, besides the pleasure of a country life, the tranquility of mind which it promises, and, wherever the injustice of human laws does not disturb it, the independency which it really affords have charms that, more or less, attract everybody. And as to cultivate the ground was the original destination of man, so, in every stage of his existence, he seems to retain a predilection for this primitive employment. Without the assistance of some artificers, indeed, the cultivation of land cannot be carried on, but with great inconvenience and continual interruption. Smiths, carpenters, wheelwrights and plowwrights, masons and bricklayers, tanners, shoemakers, and tailors are people whose service the farmer has frequent occasion for. Such artificers, too, stand occasionally in need of the assistance of one another. And as their residence is not, like that of the farmer, necessarily tied down to a precise spot, they naturally settle in the neighborhood of one another and thus form a small town or village. The butcher, the brewer, and the baker soon join them, together with many other artificers and retailers, necessary or useful for supplying their occasional wants and who contribute still further to augment the town. The inhabitants of the town and those of the country are mutually the servants of one another. The town is a continual fair or market to which the inhabitants of the country resort in order to exchange their rude for manufactured produce. It is this commerce which supplies the inhabitants of the town, both with the materials of their work and the means of their subsistence. The quantity of the finished work which they sell to the inhabitants of the country necessarily regulates the quantity of the materials and provisions which they buy. Neither their employment nor subsistence therefore can augment but in proportion to the augmentation of the demand from the country for finished work. And this demand can augment only in proportion to the extension of improvement and cultivation. Had human institutions therefore never disturb the natural course of things, the progressive wealth and increase of the towns would, in every political society, be consequential and in proportion to the improvement and cultivation of the territory of country. In our North American colonies, where uncultivated land is still to be had upon easy terms, no manufacturers for distant sale have ever yet been established in any of their towns. When an artificer has acquired a little more stock than is necessary for carrying on his own business and supplying the neighboring country, he does not, in North America, attempt to establish with it a manufacture for more distant sale, but employs it in the purchase and improvement of uncultivated land. From artificer, he becomes planter, and neither the large wages nor the easy subsistence which that country affords to artificers can bribe him rather to work for other people than for himself. He feels that an artificer is the servant of his customers, from whom he derives his subsistence, but that a planter who cultivates his own land and derives his necessary subsistence from the labor of his own family is really a master and independent of all the world. In countries on the contrary, where there is either no uncultivated land or none that can be had upon easy terms, every artificer who has acquired more stock than he can employ in the occasional jobs of the neighborhood endeavors to prepare work for more distant sale. This myth erects some sort of iron, the weaver, some sort of linen or woollen manufacturing. Those different manufacturers come in process of time to be gradually subdivided and thereby improved and refined in a great variety of ways which may easily be conceived and which it is therefore unnecessary to explain any farther. In seeking for employment to a capital, manufacturers are, upon equal or nearly equal profits, naturally preferred to foreign commerce for the same reason that agriculture is naturally preferred to manufacturers. As the capital of the landlord or farmer is more secure than that of the manufacturer, so the capital of the manufacturer, being at all times more within his view and command, is more secure than that of the foreign merchant. In every period, indeed, of every society, the surplus part, both of the rude and manufactured produce or that for which there is no demand at home must be sent abroad in order to be exchanged for something for which there is some demand at home. But whether the capital which carries this surplus produce abroad be a foreign or a domestic one is of very little importance. If the society has not acquired sufficient capital, both to cultivate all its lands and to manufacture in the completest manner the whole of its rude produce, there is even a considerable advantage that the rude produce should be exported by foreign capital in order that the whole stock of the society may be employed in more useful purposes. The wealth of ancient Egypt, that of China and India stand sufficiently demonstrate that a nation may attain a very high degree of opulence, though the greater part of its exportation trade be carried on by foreigners. The progress of our North American and West Indian colonies would have been much less rapid, had no capital, but what belonged to themselves been employed in exporting their surplus produce. According to the natural course of things, therefore the greater part of the capital of every growing society is, first, directed to agriculture, afterwards to manufacturers and last of all to foreign commerce. This order of things is so very natural that in every society that had any territory it has always, I believe, been in some degree observed. Some of their lands must have been cultivated before any considerable towns could be established and some sort of course industry of the manufacturing kind must have been carried on in those towns before they could well think of employing themselves in foreign commerce. But though this natural order of things must have taken place in some degree in every society, it has, in all the modern states of Europe, been in many respects entirely inverted. The foreign commerce of some of their cities has introduced all their finer manufacturers or such as were fit for distant sale and manufacturers and foreign commerce together have given birth to the principal improvements of agriculture. The manners and customs which the nature of their original government introduced and which remained after that government was greatly altered, necessarily forced them into this unnatural and retrograde order. End of book three, chapter one. Chapter two of book three of the wealth of nations. This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Recording by Stephen Escalera. The Wealth of Nations by Adam Smith. Chapter two of book three of the discouragement of agriculture in the ancient state of Europe after the fall of the Roman Empire. When the German and Scythian nations overran the western provinces of the Roman Empire, the confusions which followed so great a revolution lasted for several centuries. The rapin and violence which the barbarians exercised against the ancient inhabitants interrupted the commerce between the towns and the country. The towns were deserted and the country was left uncultivated and the western provinces of Europe which had enjoyed a considerable degree of opulence under the Roman Empire sunk into the lowest state of poverty and barbarism. During the continuance of those confusions, the chiefs and principal leaders of those nations acquired, or usurped to themselves, the greater part of the lands of those countries. A great part of them was uncultivated, but no part of them, whether cultivated or uncultivated, was left without a proprietor. All of them were engrossed and the greater part by a few great proprietors. This original engrossing of uncultivated lands, though a great, might have been but a transitory evil. They might soon have been divided again and broken into small partials, either by succession or by alienation. The law of primogeniture hindered them from being divided by succession. The introduction of entails prevented their being broken into small partials by alienation. When land, like movables, is considered as the means only of subsistence and enjoyment, the natural law of succession divides it, like them, among all the children of the family, of all of whom the subsistence and enjoyment may be supposed equally dear to the father. This natural law of succession, accordingly, took place among the Romans, who made no more distinction between elder and younger, between male and female, in the inheritance of lands, than we do in the distribution of movables. But when land was considered as the means, not of subsistence merely, but of power and protection, it was thought better that it should descend undivided to one. In those disorderly times, every great landlord was a sort of petty prince. His tenants were his subjects. He was their judge, and in some respects, their legislator in peace and their leader in war. He made war according to his own discretion, frequently against his neighbors, and sometimes against his sovereign. The security of a landed estate, therefore, the protection which its owner could afford to those who dwelt on it, depended upon its greatness. To divide it was to ruin it, and to expose every part of it to be oppressed and swallowed up by the incursions of its neighbors. The law of promogeniture, therefore, came to take place, not immediately indeed, but in process of time, in the succession of landed estates, for the same reason that it has generally taken place in that of monarchies, though not always at their first institution. That the power, and consequently the security of the monarchy, may not be weakened by division, it must be send entire to one of the children. To which of them so important a preference shall be given must be determined by some general rule, founded not upon the doubtful distinctions of personal merit, but upon some plain and evident difference which can admit of no dispute. Among the children of the same family, there can be no indisputable difference, but that of sex and that of age. The male sex is universally preferred to the female, and when all other things are equal, the elder everywhere takes place of the younger. Hence the origin of the right of promogeniture, and of what is called lineal succession. Laws frequently continue in force long after the circumstances which first gave occasion to them, and which could alone render them reasonable, are no more. In the present state of Europe, the proprietor of a single acre of land is as perfectly secure in his possession as the proprietor of 100,000. The right of promogeniture, however, still continues to be respected, and as of all institutions, it is the fittest to support the pride of family distinctions. It is still likely to endure for many centuries. In every other respect, nothing can be more contrary to the real interest of the numerous family than a right which, in order to enrich one, beggars all the rest of the children. Intales are the natural consequences of the law of promogeniture. They were introduced to preserve a certain lineal succession of which the law of promogeniture first gave the idea and to hinder any part of the original estate from being carried out of the proposed line, either by gift or device or alienation, either by the folly or by the misfortune of any of its successive owners. They were altogether unknown to the Romans. Neither their substitutions nor fide commises bear any resemblance to intales, though some French lawyers have thought proper to dress the modern institution in the language and garb of those ancient ones. When great landed estates were a sort of principalities, intales might not be unreasonable. Like what are called the fundamental laws of some monarchies, they might frequently hinder the security of thousands from being endangered by the caprice or extravagance of one man. But in the present state of Europe, when small as well as great estates derive their security from the laws of their country, nothing can be more completely absurd. They are founded upon the most absurd of all suppositions, the supposition that every successive generation of men have not an equal right to the earth and to all that it possesses, but that the property of the present generation should be restrained and regulated according to the fancy of those who died perhaps 500 years ago. Intales, however, are still respected through the greater part of Europe, in those countries particularly in which noble birth is a necessary qualification for the enjoyment either of civil or military honors. Intales are thought necessary for maintaining this exclusive privilege of the nobility to the great offices and honors of their country, and that order, having usurped one unjust advantage over the rest of their fellow citizens, lest their poverty should render it ridiculous, it is thought reasonable that they should have another. The common law of England, indeed, is said to abhor perpetuities and they are accordingly more restricted there than in any other European monarchy, though even England is not altogether without them. In Scotland, more than one-fifth, perhaps more than one-third part of the whole lands in the country are at present supposed to be under strict entail. Great tracts of uncultivated land were in this manner not only engrossed by particular families, but the possibility of their being divided again was as much as possible precluded forever. It seldom happens, however, that a great proprietor is a great improver. In the disorderly times which gave birth to those barbarous institutions, the great proprietor was sufficiently employed in defending his own territories or in extending his jurisdiction and authority over those of his neighbors. He had no leisure to attend to the cultivation and improvement of land. When the establishment of law and order afforded him this leisure, he often wanted the inclination and almost always the requisite abilities. If the expense of his house and person either equaled or exceeded his revenue, as it did very frequently, he had no stock to employ in this manner. If he was an economist, he generally found it more profitable to employ his annual savings in new purchases than in the improvement of his old estate. To improve land with profit, like all other commercial projects, requires an exact attention to small savings and small gains of which a man born to a great fortune, even though naturally frugal, is very seldom capable. The situation of such a person naturally disposes him to attend rather to ornament, which pleases his fancy than to profit, for which he has so little occasion. The elegance of his dress, of his equipage, of his house and household furniture are objects which, from his infancy, he has been accustomed to have some anxiety about. The turn of mind which this habit naturally forms follows him when he comes to think of the improvement of land. He embellishes perhaps four or 500 acres in the neighborhood of his house at 10 times the expense which the land is worth after all his improvements and finds that if he was to improve his whole estate in the same manner and he has little taste for any other, he would be bankrupt before he had finished the 10th part of it. There still remain in both parts of the United Kingdom some great estates which have continued without interruption in the hands of the same family since the times of feudal anarchy. Compare the present condition of those estates with the possessions of the small proprietors in their neighborhood and you will require no other argument to convince you how unfavorable such extensive property is to improvement. If little improvement was to be expected from such great proprietors, still less was to be hoped for from those who occupied the land under them. In the ancient state of Europe, the occupiers of land were all tenants at will. They were all or almost all slaves, but their slavery was of a milder kind than that known among the ancient Greeks and Romans or even in our West Indian colonies. They were supposed to belong more directly to the land than to their master. They could, therefore, be sold with it, but not separately. They could marry, provided it was with the consent of their master, and he could not afterwards dissolve the marriage by selling the man and wife to different persons. If he maimed or murdered any of them, he was liable to some penalty, though generally, but to a small one. They were not, however, capable of acquiring property. Whatever they acquired was acquired to their master, and he could take it from them at pleasure. Whatever cultivation and improvement could be carried on by means of such slaves was properly carried on by their master. It was at his expense. The seed, the cattle, and the instruments of husbandry were all his. It was for his benefit. Such slaves could acquire nothing but their daily maintenance. It was properly the proprietor himself, therefore, that in this case occupied his own lands and cultivated them by his own bondmen. This species of slavery still subsists in Russia, Poland, Hungary, Bohemia, Moravia, and other parts of Germany. It is only in the western and southwestern provinces of Europe that it has gradually been abolished altogether. But if great improvements are seldom to be expected from great proprietors, they are least of all to be expected when they employ slaves for their workmen. The experience of all ages and nations, I believe, demonstrates that the work done by slaves, though it appears to cost only their maintenance, is in the end the dearest of any. A person who can acquire no property can have no other interest but to eat as much and to labor as little as possible. Whatever work he does beyond what is sufficient to purchase his own maintenance can be squeezed out of him by violence only and not by any interest of his own. In ancient Italy, how much the cultivation of corn degenerated, how unprofitable it became to the master when it fell under the management of slaves is remarked both by Pliny and Colomela. In the time of Aristotle, it had not been much better in ancient Greece. Speaking of the ideal republic described in the laws of Plato to maintain 5,000 idle men, the number of warriors supposed necessary for its defense, together with their women and servants would require, he says, a territory of boundless extent and fertility, like the plains of Babylon. The pride of man makes him love to domineer, and nothing mortifies him so much as to be obliged to condescend to persuade his inferiors. Wherever the law allows it and the nature of the work can afford it, therefore he will generally prefer the service of slaves to that of freemen. The planting of sugar and tobacco can afford the expense of slave cultivation. The raising of corn, it seems, in the present times cannot. In the English colonies, of which the principal produces corn, the far greater part of the work is done by freemen. The late resolution of the Quakers in Pennsylvania to set at liberty all their negro slaves may satisfy us that their number cannot be very great. Had they made any considerable part of their property, such a resolution could never have been agreed to. In our sugar colonies, on the contrary, the whole work is done by slaves, and in our tobacco colonies a very great part of it. The profits of a sugar plantation in any of our West Indian colonies are generally much greater than those of any other cultivation that is known either in Europe or America. And the profits of a tobacco plantation, though inferior to those of sugar, are superior to those of corn, as has already been observed. Both can afford the expense of slave cultivation, but sugar can afford it still better than tobacco. The number of negroes, accordingly, is much greater in proportion to that of whites in our sugar than in our tobacco colonies. To the slave cultivators of ancient times, gradually succeeded a species of farmers known at present in France by the name of Métagy. They are called in Latin, Coloni Partiari. They have been so long and disused in England that at present I know no English name for them. The proprietor furnished them with the seed, cattle, and instruments of husbandry, the whole stock, in short, necessary for cultivating the farm. The produce was divided equally between the proprietor and the farmer after setting aside what was judged necessary for keeping up the stock which was restored to the proprietor when the farmer either quitted or was turned out of the farm. Land occupied by such tenants is properly cultivated at the expense of the proprietors, as much as that occupied by slaves. There is, however, one very essential difference between them. Such tenants, being free men, are capable of acquiring property and having a certain proportion of the produce of the land, they have a plain interest that the whole produce should be as great as possible in order that their own proportion may be so. A slave on the contrary who can acquire nothing but his maintenance consults his own ease by making the land produce as little as possible over and above that maintenance. It is probable that it was partly upon account of this advantage and partly upon account of the encroachments which the sovereigns, always jealous of the great lords, gradually encouraged their villains to make upon their authority, in which seemed, at least, to have been such as rendered this species of servitude altogether inconvenient that tenure and villainage gradually wore out through the greater part of Europe. The time and manner, however, in which so important a revolution was brought about, is one of the most obscure points in modern history. The Church of Rome claims great merit in it, and it is certain that so early Alexander III published a bull for the general emancipation of slaves. It seems, however, to have been rather a pious exhortation than a law to which exact obedience was required from the faithful. Slavery continued to take place almost universally for several centuries afterwards till it was gradually abolished by the joint operations of the two interests above mentioned, that of the proprietor on the one hand and that of the sovereign on the other. A villain, enfranchised and at the same time allowed to continue in possession of the land, having no stock of his own, could cultivate it only by means of what the landlord advanced to him, and must therefore have been what the French called a metéie. It could never, however, be in the interest, even of this last species of cultivators, to lay out in the further improvement of the land any part of the little stock which they might save from their own share of the produce, to get one half of whatever it produced. The tithe, which is but a tenth of the produce, is found to be a very great hindrance to improvement. Attacks, therefore, which amounted to one half must have been an effectual bar to it. It might be the interest of a metéie to make the land produce as much as could be brought out of it by means of the stock furnished by the proprietor, but it could never be in his interest to mix any part of his own with it. Five parts out of six of the whole kingdom are said to be still occupied by this species of cultivators. The proprietors complain that their metéie take every opportunity of employing their master's cattle rather in carriage than in cultivation, because, in the one case, they get the whole profits to themselves, in the other, they share them with their landlord. This species of tenants still subsists in some parts of Scotland. They are called steel-balled tenants. The English tenants, who are said by Chief Baron Gilbert and Dr. Blackstone to have been rather bailiffs of the landlord than farmers properly so-called were probably of the same kind. To this species of tenantry succeeded, though by very slow degrees, farmers, properly so-called, who cultivated the land with their own stock, paying a certain rent to the landlord. When such farmers have a lease for a term of years, they may out part of their capital in the further improvement of the farm, because they may sometimes expect to recover it with a large profit before the expiration of the lease. The possession, even of such farmers, however, was long, extremely precarious, and still is so in many parts of Europe. They could, before the expiration of their term, be legally ousted of their leases by a new purchaser, in England even by the fictitious action of a common recovery. When they were turned out illegally by the violence of their master, the action by which they obtained redress was extremely imperfect. It did not always reinstate them in the possession of the land, but gave them damages, which never amounted to a real loss. Even in England, the country, perhaps of Europe, where the yeomanry has always been most respected, it was not till about the fourteenth of Henry the seventh that the action of the landlady was not necessarily but possession, and in which his claim is not necessarily concluded by the uncertain decision of a single assise. This action has been found so effectual a remedy that, in the modern practice, when the landlord has occasion to sue for the possession of the land, he seldom makes use of the actions which properly belong to him as a landlord, the writ of right or the writ of entry, but the property of the tenant is equal to that of the proprietor. In England, besides a lease for life of forty shillings a year value is a freehold, and entitles the lessee to a vote for a member of parliament, and as a great part of the yeomanry have freeholds of this kind, the whole order becomes respectable to their landlords on account of the political consideration which this gives them. There is, I believe, the land of which he had no lease, and trusting that the honour of his landlord would take no advantage of so important an improvement. Those laws and customs so favourable to the yeomanry have perhaps contributed more to the present grandeur of England than all their boasted regulations of commerce taken together. The law which secures the longest leases against the yeomanry as fourteen forty nine by law of James II. Its beneficial influence, however, has been much obstructed by entails, the heirs of entail being generally restrained from letting leases for any long term of years frequently for more than one year. A late act of parliament has, in this respect, somewhat slackened their fetters, though they are still by much too straight. In Scotland, besides as no leasehold gives a vote for a lease, it has in that country indeed been lately extended to twenty-seven, a period still too short to encourage the tenant to make the most important improvements. The proprietors of land were anciently the legislators of every part of Europe. In other parts of Europe, after it was found convenient to secure tenants both against heirs and purchasers, the term of their security was still only the legislators of every part of Europe. The laws relating to land, therefore, were all calculated for what they supposed the interest of the proprietor. It was for his interest, they had imagined, that no lease granted by any of his predecessors should hinder him from enjoing, during a long term of years, the full value of his land. Averas and injustice are run the real interest of the landlord. The farmers, too, besides paying the rent, were anciently it was supposed bound to perform a great number of services to the landlord which were seldom either specified in the lease or regulated by any precise rule but by the use and want of the manor or barony. These services, therefore, being almost entirely arbitrary, subjected the tenant to many vexations. In Scotland, the services not precisely stipulated in the lease has, in the course of a few years, very much altered for the better the condition of the yeomanry of that country. The public services to which the yeomanry were bound were not less arbitrary than the private ones. To make and maintain the high roads, a servitude which still subsists, I believe, everywhere, though with different degrees of oppression in different countries, was not the only one. When the king's troops, officers of any kind, passed through any part of the country, the yeomanry were bound to provide them with horses, carriages, and provisions, at a price regulated by the purveyor. Great Britain is, I believe, the only monarchy in Europe where the oppression of purveyets has been entirely abolished. It still subsists in France and Germany. The public taxes to which they were subject were as irregular and oppressive as the services. The ancient lords, though extremely willing to grant themselves any pecuniary aid to their sovereign, easily allowed him to tallage, as they called it, their tenants, and had not knowledge enough to foresee how much this must, in the end, affect their own revenue. The taia, as it still subsists in France, may serve as an example of those ancient tallages. It is taxed upon the supposed prophets of the farmer, which they estimate by the stock that he has upon the farm. It is his interest, therefore, to appear to have as little possible, and consequently to employ as little as possible in its cultivation and none in its improvement. Should any stock happen to accumulate in the hands of a French farmer, the taia is almost equal to a prohibition of its ever being employed upon the land. This tax, besides, is supposed to dishonor whoever is subject to it, and to degrade him below, not only the rank of a gentleman, but that of a burger, and whoever rents the land of another becomes subject to it. No gentleman, nor even any burger, who has stock will submit to this degradation. This tax, therefore, not only hinders the stock which accumulates upon the land from being employed in its improvement, but drives away all other stock from it. The ancient tense, and fifteenths, so usual in England and former times, seem so far as they have affected the land to have been taxes of the same nature with the taia. Under all these discouragements, little improvement could be expected from the occupiers of land. That order of people, with all the liberty and security which law can give, must always improve under great disadvantage. The farmer, compared with a proprietor, is as a merchant who trades with borrowed money, compared with one who trades with his own. The stock of both may improve, but that of the one, with only equal good conduct, must always improve more slowly than that of the other, on account of the large share of the produce which is consumed in the rent, and which, had the farmer been proprietor, he might have employed in the further improvement of the land. The station of a farmer, besides, is, from the nature of things, inferior to that of a proprietor. 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After small proprietors, however, rich and great farmers are in every country the principal improvers. There are more such perhaps in England than in any other European market. In the republican governments of Holland and of Bern in Switzerland, the farmers are said to be not inferior to those of England. The ancient policy of Europe was, over and above all this, unfavorable to the improvement and cultivation of land, whether carried on by the proprietor or by the farmer. First by the general prohibition of the exportation of corn without a special license which seems to have been a very universal regulation. And secondly by the restraints which were laid upon the inland commerce, not only of corn, but of almost every other part of the produce of the farm, by the absurd laws against engrossers, regraders, and forsoilers, and by the privileges of fares and markets. It has already been observed in what manner the prohibition of the exportation of corn, together with some encouragement given to the importation of foreign corn, obstructed the cultivation of ancient Italy, naturally the most fertile country in Europe, and at that time the seat of the greatest empire in the world. To what degree such restraints upon the inland commerce of this commodity, joined to the general prohibition of exportation, must have discouraged the cultivation of countries less fertile and less favorably circumstanced, it is not perhaps very easy to imagine. CHAPTER III OF BOOK III OF THE WEALTH OF NATIONS This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Recording by Stephen Escalera. THE WEALTH OF NATIONS by Adam Smith. CHAPTER III OF BOOK III OF THE RISE AND PROGRESS OF CITIES AND TOWNS AFTER THE FALL OF THE ROMAN EMPIRE. The inhabitants of cities and towns were, after the fall of the Roman Empire, not more favored than those of the country. They consisted, indeed, of a very different order of people from the first inhabitants of the ancient republics of Greece and Italy. These last were composed chiefly of the proprietors of lands, among whom the public territory was originally divided, and who found it convenient to build their houses in the neighborhood of one another and to surround them with a wall, for the sake of common defense. After the fall of the Roman Empire, on the contrary, the proprietors of land seemed generally to have lived in fortified castles on their own estates, and in the midst of their own tenants and dependents. The towns were chiefly inhabited by tradesmen and mechanics who seemed, in those days, to have been of servile, or very nearly of servile, condition. The privileges which we find granted by ancient charters to the inhabitants of some of the principal towns in Europe sufficiently show what they were before those grants. The people to whom it is granted as a privilege that they might give away their own daughters in marriage without the consent of their lord, that upon their death their own children, and not their lord, should succeed to their goods, and that they might dispose of their own effects by will, must, before those grants, have been altogether, or very nearly, in the same state of villainage with the occupiers of land in the country. They seem indeed to have been a very poor, mean set of people, who seemed to travel about with their goods from place to place and from fair to fair, like the hawkers and peddlers of the present times. In all the different countries of Europe, then, in the same manner as in several of the charter governments of Asia at present, taxes used to be levied upon the persons and goods of travelers when they passed through certain manners, when they went over certain bridges, when they carried about their goods from place to place in a fair, when they erected in it a booth or stall to sell them in. These different taxes were known in England by the names of Passage, Pontage, Lastage, and Stollage. As the king, sometimes a great lord, who had, it seems, upon some occasions authority to do this, would grant to particular traders, to such particularly as lived in their own domains, a general exemption from such taxes. Such traders, though in other respects of servile, or very nearly of servile condition, were upon this account called free traders. They, in return, usually paid to their protector a sort of annual poll tax. In those days protection was seldom granted without a valuable consideration, and this tax might perhaps be considered as compensation for what their patrons might lose by their exemption from other taxes. At first both those poll taxes and those exemptions seemed to have been altogether personal, and to have effected only particular individuals, during either their lives or the pleasure of their protectors. In the very imperfect accounts which had been published from Doomsday Book of several of the towns of England, mention is frequently made, sometimes of the tax which particular burgers paid, each of them, either to the king, or to some other great lord, for this sort of protection, and sometimes of the general amount only of all those taxes. But how servile, so ever, may have been originally the condition of the inhabitants of the towns, it appears evidently that they arrived at liberty and independency much earlier than the occupiers of land in the country. That part of the king's revenue which arose from such poll taxes in any particular town used commonly to be let and farmed during a term of years for a rent certain, sometimes to the sheriff of the county, and sometimes to other persons. The burgers themselves frequently got credit enough to be admitted to farm the revenues of this sort which arose out of their own town. They'd become enjoently and severly answerable for the whole rent. To let a farm in this manner was quite agreeable to the usual economy of, I believe, the sovereigns of all the different countries of Europe, who used frequently to let whole manners to all the tenants of those manners they become enjoently and severly answerable for the whole rent, but in return being allowed to collect it in their own way and to pay it into the king's ex-checker by the hands of their own bailiff, and being thus altogether freed from the insolence of the king's officers, a circumstance in those days regarded as of the greatest importance. At first the farm of the town was probably let to the burgers, in the same manner as it had been to other farmers, for a term of years only. In process of time, however, it seems to have become the general practice to grant it to them in fee, that is, forever, reserving a rent certain never afterwards to be augmented. The payment having thus become perpetual, the exemptions in return for which it was made naturally became perpetual, too. Those exemptions therefore ceased to be personal and could not afterwards be considered as belonging to individuals as individuals, but as burgers of a particular berg which upon this account was called a free berg, for the same reason that they had been called free burgers or free traders. Along with this grant the important privileges above mentioned that they might give away their own daughters in marriage, that their children should succeed to them, and that they might dispose of their own effects by will, were generally bestowed upon the burgers of the town to whom it was given. Whether such privileges had before been usually granted, along with the freedom of trade, to particular burgers as individuals I know not. I reckon that not improbable that they were, though I cannot produce any direct evidence of it. But however this may have been, the principal attributes of villainage and slavery being thus taken away from them, they now at least became really free, in our present sense of the word freedom. Nor was this all. They were generally at the same time erected into a common alty or corporation, with the privilege of having magistrates and a town council of their own, of making bylaws for their own government, of building walls for their own defense, and of reducing all their inhabitants under a sort of military discipline by obliging them to watch and ward, that is, as anciently understood, to guard and defend those walls against all attacks and surprises by night as well as by day. In England they were generally exempted from suit to the Hundred and County Courts, and all such pleas as should arise among them, the pleas of the Crown accepted, were left to the decision of their own magistrates. In other countries much greater and more extensive jurisdictions were frequently granted to them. It might, probably, be necessary to grant to such towns as were admitted to farm their own revenues, some sort of compulsive jurisdiction to oblige their own citizens to make payment. In those disorderly times it might have been extremely inconvenient to have left them to seek this sort of justice from any other tribunal. But it must seem extraordinary that the sovereigns of all the different countries of Europe should have exchanged in this manner for a rent certain, never more to be augmented, that branch of their revenue which was, perhaps of all others, the most likely to be improved by the natural course of things without either expense or attention of their own, and that they should, besides have in this manner voluntarily erected a sort of independent republics in the heart of their own dominions. In order to understand this it must be remembered that in those days the sovereign of perhaps no country in Europe was able to protect, through the whole extent of his dominions, the weaker part of his subjects from the oppression of the great lords. Those whom the law could not protect, and who were not strong enough to defend themselves, were obliged either to have recourse to the protection of some great lord, and in order to obtain it to become either his slaves or vassals, or to enter into a league of mutual defense for the common protection of one another. The inhabitants of cities and bergs, considered as single individuals, had no power to defend themselves. But by entering into a league of mutual defense with their neighbors they were capable of making no contemptible resistance. The lords despised the burgers, whom they considered not only as a different order, but as a parcel of emancipated slaves, almost of a different species from themselves. The wealth of the burgers never failed to provoke their envy and indignation, and they plunder them upon every occasion without mercy or remorse. The burgers naturally hated and feared the lords. The king hated and feared them too, but though perhaps he might despise he had no reason either to hate or fear the burgers. Mutual interests therefore disposed them to support the king, and the king to support them against the lords. They were the enemies of his enemies, and it was his interest to render them as secure and independent of those enemies as he could. By granting them magistrates of their own, the privilege of making bylaws for their own government, that of building walls for their own defense, and that of reducing all their inhabitants under a sort of military discipline, he gave them all the means of security and independency of the barons which it was in his power to bestow. Without the establishment of some regular government of this kind, without some authority to compel their inhabitants to act according to some certain plan or system, no voluntary league of mutual defense could either have afforded them any permanent security or have enabled them to give the king any considerable support. By granting them the farm of their own town and fee, he took away from those whom he wished to have for his friends, and if one may say so, for his allies, all ground of jealousy and suspicion that he was ever afterwards to oppress them, either by raising the farm rent of their town or by granting it to some other farmer. The princes who lived upon the worst terms with their barons seemed accordingly to have been the most liberal and grants of this kind to their berks. King John of England, for example, appears to have been a most munificent benefactor to his towns. Philip I of France lost all authority over his barons. Towards the end of his reign, his son Louis, known afterwards by the name of Louis the Fat, consulted according to Father Daniel with the bishops of the royal domains concerning the most proper means of restraining the violence of the great lords. Their advice consisted of two different proposals. One was to erect a new order of jurisdiction by establishing magistrates and a town council in every considerable town of his domains. The other was to form a new militia by making the inhabitants of those towns, under the command of their own magistrates, march out upon proper occasions to the assistance of the king. It is from this period, according to the French antiquarians, that we are to date the institution of the magistrates and councils of cities in France. It was during the unprosperous reigns of the princes of the House of Swabia that the greater part of the free towns of Germany received the first grants of their privileges, and that the famous Hanseatic League first became formidable. The militia of the cities seems, in those times, not to have been inferior to that of the country, and as they could be more readily assembled upon any sudden occasion they frequently had the advantage in their disputes with the neighboring lords. In countries such as Italy or Switzerland, in which, on account either of their distance from the principal seat of government, of the natural strength of the country itself, or of some other reason, the sovereign came to lose the whole of his authority. The cities generally became independent republics and conquered all the nobility in their neighborhood, obliging them to pull down their castles in the country and to live like other peaceable inhabitants in the city. This is the short history of the Republic of Bern, as well as of several other cities in Switzerland. If you accept Venice, for of that city the history is somewhat different. It is the history of all the considerable Italian republics, of which so great a number arose and perished between the end of the twelfth and the beginning of the sixteenth century. In countries such as France and England, where the authority of the sovereign, though frequently very low, never was destroyed altogether, the cities had no opportunity of becoming entirely independent. They became, however, so considerable that the sovereign could impose no tax upon them besides the stated farm-rent of the town without their own consent. They were, therefore, called upon to send deputies to the general assembly of the states of the kingdom, where they might join with the clergy and the barons in granting, upon urgent occasions, some extraordinary aid to the king. Being generally too more favorable to his power, their deputies seemed sometimes to have been employed by him as a counterbalance in those assemblies to the authority of the great lords. Hence the origin of the representation of Bergs in the state's general of all great monarchies in Europe. Ever and good government, and along with them the liberty and security of individuals, were in this manner established in cities, at a time when the occupiers of land and the country were exposed to every sort of violence. But men in this defenseless state naturally content themselves with their necessary subsistence, because, to acquire more, might only tempt the injustice of their oppressors. On the contrary, when they are secure of enjoying the fruits of their industry, they naturally exert it to better their condition, and to acquire not only the necessaries, but the conveniences and elegancies of life. That industry, therefore, which aims at something more than necessary subsistence, was established in cities long before it was commonly practiced by the occupiers of land and the country. If, in the hands of a poor cultivator, oppressed with the servitude of villainage some little stock should accumulate, he would naturally conceal it with great care from his master, to whom it would otherwise have belonged, and take the first opportunity of running away to a town. The law was at that time so indulgent to the inhabitants of towns, and so desirous of diminishing the authority of the lords over those of the country, that if he could conceal himself there from the pursuit of his lord for a year, he was free for ever. Whatever stock, therefore, accumulated in the hands of the industrious part of the inhabitants of the country, naturally took refuge in cities, as the only sanctuaries in which it could be secured to the person that acquired it. The inhabitants of a city, it is true, must always ultimately derive their subsistence and the whole materials and means of their industry from the country. But those of a city, situated near either the sea-coast or the banks of a navigable river, are not necessarily confined to derive them from the country and their neighborhood. They have a much wider range, and may draw them from the most remote corners of the world, either in exchange for the manufactured produce of their own industry, or by performing the office of carriers between distant countries, and exchanging the produce of one for that of another. A city might, in this manner, grow up to great wealth and splendor, while not only the country and its neighborhood, but all those to which it traded, were in poverty and wretchedness. Each of those countries, perhaps taken singly, could afford it but a small part, either of its subsistence or of its employment, but all of them taken together could afford it both a great subsistence and a great employment. There were, however, within the narrow circle of the commerce of those times some countries that were opulent and industrious. Such was the Greek Empire as long as it subsisted and that of the Saracens during the reigns of the Abysses. Such too was Egypt till it was conquered by the Turks, some part of the coast of Barbary, and all those provinces of Spain which were under the government of the Moors. The cities of Italy seemed to have been the first in Europe which were raised by commerce to any considerable degree of opulence. Italy lay in the center of what was, at that time, the improved and civilized part of the world. The Crusades too, though, by the great waste of stock and destruction of inhabitants which they occasioned, they must necessarily have retarded the progress of the great part of Europe, were extremely favorable to that of some Italian cities. The great armies which marched from all parts to the conquest of the Holy Land gave extraordinary encouragement to the shipping of Venice, Genoa, and Pisa, sometimes in transporting them thither and always in supplying them with provisions. They were the commissaries, if one may say so, of those armies, and the most destructive frenzy that ever befell the European nations was a source of opulence to those republics. The inhabitants of trading cities, by importing the improved manufacturers and expensive luxuries of richer countries, afforded some food to the vanity of the great proprietors who eagerly purchased them with great quantities of the rude produce of their own lands. The commerce of a great part of Europe in those times accordingly consisted chiefly in the exchange of their own rude for the manufactured produce of more civilized nations. Thus the wool of England used to be exchanged for the wines of France, and the fine cloths of Flanders in the same manner as the corn in Poland is at this day exchanged for the wines and brandies of France, and for the silks and velvets of France and Italy. A taste for the finer and more improved manufacturers was in this manner introduced by foreign commerce into countries where no such works were carried on. But when this taste became so general as to occasion a considerable demand, the merchants, in order to save the expense of carriage, naturally endeavored to establish some manufactures of the same kind in their own country. Hence, the origin of the first manufactures for distant sale that seemed to have been established in the western provinces of Europe after the fall of the Roman Empire. No large country it must be observed ever did or could subsist without some sort of manufactures being carried on in it, and when it is said of any such country that it has no manufactures it must always be understood of the finer and more improved or of such as our fit for distant sale. In every large country both the clothing and household furniture, or the far greater part of the people, are the produce of their own industry. This is even more universally the case in those poor countries which are commonly said to have no manufactures than in those rich ones that are said to abound in them. In the latter you will generally find, both in the clothes and household furniture of the lowest rank of people, a much greater proportion of foreign productions than in the former. Those manufactures which are fit for distant sale seem to have been introduced into different countries in two different ways. Sometimes they have been introduced in the manner above mentioned, by the violent operation, if one may say so, of the stocks of particular merchants and undertakers who established them in imitation of some foreign manufactures of the same kind. Such manufactures therefore are the offspring of foreign commerce, and such seem to have been the ancient manufactures of silks, velvets, and brocades which flourished in Luka during the thirteenth century. They were banished from Thence by the tyranny of one of Machiavelli's heroes, Castraccio Castracani, and in 1310 900 families were driven out of Luka, of whom 31 retired to Venice and offered to introduce there the silk manufacturer. Their offer was accepted, many privileges were conferred upon them, and they began the manufacture with 300 workmen. Such too seemed to have been the manufactures of fine cloths that anciently flourished in Flanders, and which were introduced into England in the beginning of the reign of Elizabeth, and such are the present silk manufactures of lions and spittle fields. Manufactures introduced in this manner are generally employed upon foreign materials being imitations of foreign manufactures. When the Venetian manufacture was first established, the materials were all brought from Sicily and the Levant. The more ancient manufacture of Luka was likewise carried on with foreign materials. The cultivation of mulberry trees, and the breeding of silk worms, seemed not to have been common in the northern parts of Italy before the 16th century. Those arts were not introduced into France to the reign of Charles IX. The manufactures of Flanders were carried on chiefly with Spanish and English wool. Spanish wool was the material, not of the first woolen manufacturer of England, but of the first that was fit for distant sale. More than one-half the materials of the lion's manufacture is at this day foreign silk, when it was first established, the whole, or very nearly the whole, was so. No part of the materials of the spittle field's manufacture is ever likely to be the produce of England. The seat of such manufacturers, as they are generally introduced by the scheme and project of a few individuals, is sometimes established in a maritime city and sometimes in an inland town, according as their interest, judgment or caprice happen to determine. At other times, manufacturers for distant sale grow up naturally, and as it were of their own accord, by the gradual refinement of those household and coarser manufacturers, which must at all times be carried on even in the poorest and rudest countries. Such manufacturers are generally employed upon the materials which the country produces, and they seem frequently to have been first refined and improved in such inland countries as were not, indeed, at a very great, but at a considerable distance from the sea coast, and sometimes even from all water carriage. An inland country, naturally fertile and easily cultivated, produces a great surplus of provisions beyond what is necessary for maintaining the cultivators. And on account of the expense of land carriage and inconvenience of river navigation, it may frequently be difficult to send this surplus abroad. Abundance therefore renders provisions cheap and encourages a great number of workmen to settle in the neighborhood, who find that their industry can there procure them more of the necessaries and conveniences of life than in other places. They work up the materials of manufacture which the land produces, and exchange their finished work, or what is the same thing, the price of it, for more materials and provisions. They give a new value to the surplus part of the root produce by saving the expense of carrying it to the waterside or to some distant market, and they furnish the cultivators with something in exchange for it that is either useful or agreeable to them upon easier terms than they could have obtained it before. The cultivators get a better price for their surplus produce and can purchase cheaper other conveniences which they have occasion for. They are thus both encouraged and enabled to increase this surplus produce by a further improvement and better cultivation of the land, and as the fertility of the land had given birth to the manufacturer, so the progress of the manufacturer reacts upon the land and increases still further its fertility. The manufacturers first supply the neighborhood and afterwards as their work improves and refines more distant markets. For though neither the root produce nor even the course manufacturer could, without the greatest difficulty, support the expense of a considerable land carriage, the refined and improved manufacturer easily may. In a small bulk it frequently contains the price of a great quantity of root produce. A piece of fine cloth, for example, which weighs only eighty pounds, contains in it the price not only of eighty pounds weight of wool, but sometimes of several thousand weight of corn, the maintenance of the different working people and of their immediate employers. The corn which could with difficulty have been carried abroad in its own shape is, in this manner, virtually exported in that of the complete manufacturer, and may easily be sent to the remotest corners of the world. In this manner have grown up naturally and, as it were, of their own accord the manufacturers of Leeds, Halifax, Sheffield, Birmingham, and Wolverhampton. Such manufacturers are the offspring of agriculture. In the modern history of Europe their extension and improvement have generally been posterior to those which were the offspring of foreign commerce. England was noted for the manufacture of fine cloths made of Spanish wool more than a century before any of those which now flourish in the places above mentioned were fit for foreign sale. The extension and improvement of these last could not take place, but in consequence of the extension and improvement of agriculture, the last and greatest effect of foreign commerce, and of the manufacturers immediately introduced by it, and which I shall now proceed to explain.