 Chapter 7 of Book I of the Wealth of Nations. There is in every society or neighborhood an ordinary or average rate, both of wages and profit in every different employment of labor and stock. This rate is naturally regulated, as I shall show hereafter, partly by the general circumstances of the society, their riches or poverty, their advancing, stationary or declining condition, and partly by the particular nature of each employment. There is likewise in every society or neighborhood an ordinary or average rate of rent, which is regulated too, as I shall show hereafter, partly by the general circumstances of the society or neighborhood in which the land is situated, and partly by the natural or improved fertility of the land. These ordinary or average rates may be called the natural rates of wages, profit, and rent at the time and place in which they commonly prevail. When the price of any commodity is neither more nor less than what is sufficient to pay the rent of the land, the wages of the labor, and the profits of the stock employed in raising, preparing, and bringing it to market according to their natural rates, the commodity is then sold for what may be called its natural price. The commodity is then sold precisely for what it is worth, or for what it really costs the person who brings it to market. For though, in common language, what is called the prime cost of any commodity does not comprehend the profit of the person who is to sell it again, yet if he sells it at a price which does not allow him the ordinary rate of profit in his neighborhood, he is evidently a loser by the trade, since, by employing his stock in some other way, he might have made that profit. His profit, besides, is his revenue, the proper fund of his subsistence. As while he is preparing and bringing the goods to market, he advances to his workmen their wages, or their subsistence, so he advances to himself in the same manner his own subsistence, which is generally suitable to the profit which he may reasonably expect from the sale of his goods. Unless they yield him this profit, therefore, they do not repay him what they may very properly be said to have really cost him. Although the price, therefore, which leaves him this profit, is not always the lowest at which a dealer may sometimes sell his goods, it is the lowest at which he is likely to sell them for any considerable time, at least where there is perfect liberty, or where he may change his trade as often as he pleases. The actual price at which any commodity is commonly sold is called its market price. It may either be above, or below, or exactly the same with its natural price. The market price of every particular commodity is regulated by the proportion between the quantity which is actually brought to market, and the demand of those who are willing to pay the natural price of the commodity, or the whole value of the rent, labor, and profit which must be paid in order to bring it thither. Such people may be called the effectual demanders, and their demand the effectual demand, since it may be sufficient to effectuate the bringing of the commodity to the market. It is different from the absolute demand. A very poor man may be said, in some sense, to have a demand for a coach and six. He may like to have it, but his demand is not an effectual demand, as the commodity can never be brought to market in order to satisfy it. When the quantity of any commodity which is brought to market falls short of the effectual demand, all those who are willing to pay the whole value of the rent, wages, and profit, which must be paid in order to bring it thither, cannot be supplied with the quantity which they want. Rather than want it all together, some of them will be willing to give more. A competition will immediately begin among them, and the market price will rise more or less above the natural price. According as either the greatness of the deficiency, or the wealth and wanton luxury of the competitors, happen to animate more or less the eagerness of the competition. Among competitors of equal wealth and luxury, the same deficiency will generally occasion a more or less eager competition, according as the acquisition of the commodity happens to be of more or less importance to them. Hence, the exorbitant price of the necessaries of life during the blockade of a town or in a famine. When the quantity brought to market exceeds the effectual demand, it cannot be all sold to those who are willing to pay the whole value of the rent, wages, and profit which must be paid in order to bring it thither. Some part must be sold to those who are willing to pay less, and the low price which they give for it must reduce the price of the whole. The market price will sink more or less below the natural price, according as the greatness of the excess increases more or less the competition of the sellers, or according as it happens to be more or less important to them to get immediately rid of the commodity. The same excess and the importation of perishable will occasion a much greater competition than in that of durable commodities, in the importation of oranges, for example, than in that of old iron. When the quantity brought to market is just sufficient to supply the effectual demand and no more, the market price naturally comes to be either exactly or as nearly as can be judged of the same with the natural price. The whole quantity upon hand can be disposed of for this price and cannot be disposed of for more. The competition of the different dealers obliges them all to accept of this price, but does not oblige them to accept of less. The quantity of every commodity brought to market naturally suits itself to the effectual demand. It is in the interest of all those who employ their land, labor, or stock in bringing any commodity to market, that the quantity never should exceed the effectual demand, and it is the interest of all other people that it never should fall short of that demand. If at any time it exceeds the effectual demand, some of the component parts of its price must be paid below their natural rate. If it is rent, the interest of the landlords will immediately prompt them to withdraw a part of their land, and if it is wages or profit, the interest of the laborers in the one case and of their employers in the other will prompt them to withdraw a part of their labor or stock from this employment. The quantity brought to market will soon be no more than sufficient to supply the effectual demand. All the different parts of its price will rise to their natural rate and the whole price to its natural price. If on the contrary, the quantity brought to market should at any time fall short of the effectual demand, some of the component parts of its price must rise above their natural rate. If it is rent, the interest of all other landlords will naturally prompt them to prepare more land for the raising of this commodity. If it is wages or profit, the interest of all other laborers and dealers will soon prompt them to employ more labor and stock in preparing and bringing it to market. The quantity brought thither will soon be sufficient to supply the effectual demand. All the different parts of its price will soon sink to their natural rate and the whole price to its natural price. The natural price, therefore, is, as it were, the central price to which the prices of all commodities are continually gravitating. Different accidents may sometimes keep them suspended a good deal above it and sometimes force them down even somewhat below it, but whatever may be the obstacles which hinder them from settling in this center of repose and continuance, they are constantly tending towards it. The whole quantity of industry annually employed in order to bring any commodity to market naturally suits itself in this manner to the effectual demand. It naturally aims at bringing always that precise quantity thither which may be sufficient to supply and no more than supply that demand. But in some employment, the same quantity of industry will, in different years, produce very different quantities of commodities, while in others it will produce always the same or very nearly the same. The same number of laborers and husbandry will, in different years, produce very different quantities of corn, wine, oil, hops, etc. But the same number of spinners or weavers will every year produce the same or very nearly the same quantity of linen and woolen cloth. It is only the average produce of the one species of industry which can be suited in any respect to the effectual demand. And as its actual produce is frequently much greater and frequently much less than its average produce, the quantity of the commodities brought to market will sometimes exceed a good deal and sometimes fall short a good deal of the effectual demand. Even though that demand, therefore, should continue always the same, their market price will be liable to great fluctuations, will sometimes fall a good deal below and sometimes rise a good deal above their natural price. In the other species of industries, the produce of equal quantities of labor being always the same or very nearly the same, it can be more exactly suited to the effectual demand. While that demand continues the same, therefore, the market price of the commodities is likely to do so too, and to be either altogether or as nearly as can be judged of, the same with the natural price. That the price of linen and woolen cloth is liable neither to such frequent nor to such great variations as the price of corn, every man's experience will inform him. The price of the one species of commodities varies only with the variations in the demand, that of the other varies not only with the variations in the demand, but with the much greater and more frequent variations in the quantity of what is brought to market in order to supply that demand. The occasional and temporary fluctuations in the market price of any commodity fall chiefly upon those parts of its price which resolve themselves into wages and profit, that part which resolves itself into rent is less affected by them. A rent, certain in money, is not in the least affected by them, either in its rate or in its value. A rent which consists either in a certain proportion or in a certain quantity of the rude produce is no doubt affected in its yearly value by all the occasional and temporary fluctuations in the market price of that rude produce. But it is seldom affected by them in its yearly rate. In settling the terms of the lease, the landlord and farmer endeavor according to their best judgment to adjust that rate not to the temporary and occasional, but to the average and ordinary price of the produce. Such fluctuations affect both the value and the rate, either of wages or of profit according as the market happens to be either overstocked or understocked with the commodities or with labor, with work done, or with work to be done. A public morning raises the price of black cloth, with which the market is almost always understocked upon such occasions, and augments the profits of the merchants who possess any considerable quantity of it. It has no effect upon the wages of the weavers. The market is understocked with commodities, not with labor, with work done, not with work to be done. It raises the wages of journeymen tailors. The market is here understocked with labor. There is an effectual demand for more labor, for more work to be done than can be had. It sinks the price of colored silks and cloths, and thereby reduces the profits of the merchants who have any considerable quantity of them upon hand. It sinks to the wages of the workmen employed in preparing such commodities, for which all demand is stopped for six months, perhaps for a twelve month. The market is here overstocked both with commodities and with labor. But though the market price of every particular commodity is in this manner continually gravitating, if one may say so, towards the natural price, yet sometimes particular accidents, sometimes natural causes, and sometimes particular regulations of policy may, in many commodities, keep up the market price for a long time together, a good deal above the natural price. When, by an increase in the effectual demand, the market price of some particular commodity happens to rise a good deal above the natural price, those who employ their stocks in supplying that market are generally careful to conceal this change. If it was commonly known, their great prophet would tempt so many new rivals to employ their stocks in the same way that, the effectual demand being fully supplied, the market price would soon be reduced to the natural price and perhaps for some time even below it. If the market is at a great distance from the residence of those who supply it, they may sometimes be able to keep the secret for several years together and may so long enjoy their extraordinary profits without any new rivals. Secrets of this kind, however, it must be acknowledged, can seldom be long kept, and the extraordinary profit can last very little longer than they are kept. Secrets in manufacturers are capable of being longer kept than secrets in trade. A dire who has found the means of producing a particular color with materials which costs only half the price of those commonly made use of may with good management enjoy the advantage of his discovery as long as he lives and even leave it as a legacy to his posterity. His extraordinary gains arise from the high price which is paid for his private labor. They properly consist in the high wages of that labor. But as they are repeated upon every part of his stock and as their whole amount bears upon that account a regular proportion to it, they are commonly considered as extraordinary profits of stock. Such enhancements on the market price are evidently the effects of particular accidents, of which, however, the operation may sometimes last for many years together. Some natural productions require such a singularity of soil and situation that all the land in a great country, which is fit for producing them, may not be sufficient to supply the effectual demand. The whole quantity brought to market, therefore, may be disposed of to those who are willing to give more than what is sufficient to pay the rent of the land which produced them, together with the wages of the labor and the profits of the stock which were employed in preparing and bringing them to market according to their natural rates. Such commodities may continue for whole centuries together to be sold at this high price, and that part of it which resolves itself into the rent of land is, in this case, the part which is generally paid above its natural rate. The rent of the land which affords such singular and esteemed productions, like the rent of some vineyards in France of a peculiarly happy soil and situation, bears no regular proportion to the rent of other equally fertile and equally well cultivated land in its neighborhood. The wages of the labor and the profits of the stock employed in bringing such commodities to market, on the contrary, are seldom out of their natural proportion to those of the other employments of labor and stock in their neighborhood. Such enhancements on the market price are evidently the effect of natural causes, which may hinder the effectual demand from ever being fully supplied, and which may continue, therefore, to operate forever. A monopoly granted either to an individual or to a trading company has the same effect as a secret in trade or manufacturers. The monopolist, by keeping the market constantly understocked by never fully supplying the effectual demand, sell their commodities much above the natural price, and raise their emolument, whether they consist in wages or profit, greatly above their natural rate. The price of monopoly is, upon every occasion, the highest which can be got. The natural price, or the price of free competition, on the contrary, is the lowest which can be taken, not upon every occasion indeed, but for any considerable time together. The one is, upon every occasion, the highest which can be squeezed out of the buyers, or which it is supposed they will consent to give. The other is the lowest which the sellers can commonly afford to take, and at the same time, continue their business. The exclusive privileges of corporations, statutes of apprenticeship, and all those laws which restrain in particular employments, the competition to a smaller number than might otherwise go into them, have the same tendency, though in a less degree. They are a sort of enlarged monopolies, and may frequently, for ages together and in whole classes of employments, keep up the market price of particular commodities above the natural price, and maintain both the wages of the labor and the profits of the stock employed about them somewhat above their natural rate. Such enhancements of the market price may last as long as the regulations of policy which give occasion to them. The market price of any particular commodity, though it may continue long above, can seldom continue long below its natural price. Whatever part of it was paid below the natural rate, the persons whose interest it affected would immediately feel the loss, and would immediately withdraw either so much land, or so much labor, or so much stock from being employed about it, that the quantity brought to market would soon be no more than sufficient to supply the effectual demand. Its market price, therefore, would soon rise to the natural rate. This, at least, would be the case where there was perfect liberty. The same statutes of apprenticeship and other corporation laws, indeed, which, when a manufacturer is in prosperity, enable the workman to raise his wages a good deal above their natural rate, sometimes oblige him when it decays to let them down a good deal below it. As in the one case, they exclude many people from his employment, so in the other they exclude him from many employments. The effect of such regulations, however, is not near so durable in sinking the workman's wages below, as in raising them above their natural rate. Their operation in the one way may endure for many centuries, but in the other it can last no longer than the lives of some of the workmen who are bred to the business in the time of its prosperity. When they are gone, the number of those who are afterwards educated to the trade will naturally suit itself to the effectual demand. The policy must be as violent as that of Hindustan, or ancient Egypt, where every man was bound by a principle of religion to follow the occupation of his father, and was supposed to commit the most horrid sacrilege if he changed it for another, which can, in any particular employment, and for several generations together, sink either the wages of labor or the profits of stock below their natural rate. This is all that I think necessary to be observed at present concerning the deviations, whether occasional or permanent, of the market price of commodities from the natural price. The natural price itself varies with the natural rate of each of its component parts, of wages, profit, and rent, and in every society this rate varies according to their circumstances, according to their riches or poverty, their advancing, stationary, or declining condition. I shall, in the four following chapters, endeavor to explain as fully and distinctly as I can the causes of those different variations. First, I shall endeavor to explain what are the circumstances which naturally determine the rate of wages, and in what manner those circumstances are affected by the riches or poverty, by the advancing, stationary, or declining state of the society. Secondly, I shall endeavor to show what are the circumstances which naturally determine the rate of profit, and in what manner, too, those circumstances are affected by the like variations in the state of the society. Though pecuniary wages and profits are very different in the different employments of labor and stock, yet a certain proportion seems commonly to take place between both the pecuniary wages and all the different employments of labor and the pecuniary profits in all the different employments of stock. This proportion, it will appear hereafter, depends partly upon the nature of the different employments, and partly upon the different laws and policy of the society in which they are carried on. But though in many respects dependent upon the laws and policy, this proportion seems to be little affected by the riches or poverty of that society, by its advancing, stationary, or declining condition, but to remain the same, or very nearly the same, in all those different states. I shall, in the third place, endeavor to explain all the different circumstances which regulate this proportion. In the fourth and last place, I shall endeavor to show what are the circumstances which regulate the rent of land, and which either raise or lower the real price of all the different circumstances which it produces. End of Book 1, Chapter 7. Part 1 of Chapter 8 of Book 1 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. Part 1 of Chapter 8 of Book 1. Of The Wages of Labor. The produce of labor constitutes the natural recompense or wages of labor. In that original state of things which precedes both the appropriation of land and the accumulation of stock, the whole produce of labor belongs to the laborer. He has neither landlord nor master to share with him. Had this state continued, the wages of labor would have augmented with all those improvements in its productive powers, to which the division of labor gives occasion. All things would gradually have become cheaper. They would have been produced by a smaller quantity of labor, and as the commodities produced by equal quantities of labor would naturally in this state of things be exchanged for one another, they would have been purchased likewise with the produce of a smaller quantity. But though all things would have become cheaper in reality, in appearance many things might have become dearer than before, or have been exchanged for a greater quantity of other goods. Let us suppose, for example, that in the greater part of employment the productive labor could have been improved to ten-fold, or that a day's labor could produce ten times the quantity of work which it had done originally, but that in a particular employment they had been improved only to double, or that a day's labor could produce only twice the quantity of work which it had done before. In exchange in the produce of a day's labor in the greater part of employment, for that of a day's labor in this particular one, ten times the original quantity of work in them would purchase only twice the original quantity in it. Any particular pound weight, for example, would appear to be five times dearer than before. In reality, however, it would be twice as cheap. Though it required five times the quantity of other goods to purchase it, it would require only half the quantity of labor either to purchase or to produce it. The acquisition, therefore, would be twice as easy as before. But this original state of things in which the laborer enjoyed the whole produce of his own labor could not last beyond the first introduction of the appropriation of land and the stock. It was at an end, therefore, long before the most considerable improvements were made in the productive powers of labor. And it would be to no purpose to trace further what might have been its effects upon the recompense or wages of labor. As soon as land becomes private property, the landlord demands a share of almost all the produce which the laborer can either raise or collect from it. His rent makes the first deduction from the produce of the labor which is employed upon land. It seldom happens that the person who is around has wherewithal to maintain himself till he reaps the harvest. His maintenance is generally advanced to him from the stock of a master, the farmer who employs him, and who would have no interest to employ him unless he was to share in the produce of his labor or unless his stock was to be replaced to him with a profit. This profit makes a second deduction from the produce of the labor which is employed upon land. The produce of almost all other labor is liable to the like deduction of profit. In terms, the great part of the workman stand in need of a master to advance the materials of their work and their wages and maintenance till it be completed. He shares in the produce of their labor or in the value which it adds to the materials upon which it is bestowed, and in this share consists his profit. It sometimes happens indeed that a single independent workman has stock sufficient both to purchase the materials of his work and to maintain himself till it be completed. He shares in the produce of his own labor or the whole value which it adds to the materials upon which it is bestowed. It includes what are usually two distinct revenues belonging to two distinct persons, the profits of stock and the wages of labor. Such cases however are not very frequent, and in every part of Europe twenty workmen serve under a master for one that is independent and the wages of labor are everywhere understood to be what they usually are. For the common wages of labor depends everywhere upon the contract usually made between those two parties whose interests are by no means the same. The workmen desire to get as much the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labor. It is not however difficult to foresee which of the two parties must upon all ordinary occasions have the advantage in the dispute and force the other into a share. The masters being few in number can combine much more easily, and the law besides authorizes or at least does not prohibit their combinations while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work, but many against combining to raise it. In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, or merchant, though they did not employ a single workman could generally live a year or two as they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him, but the necessity is not so immediate. We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines upon this account that masters rarely combine is as ignorant of the world as of the time. Masters are always and everywhere in a sort of tacit but constant and uniform combination not to raise the wages of labor above their actual rate. To violate this combination is everywhere in most unpopular action and is sort of reproached to a master among his neighbors and equals. We seldom indeed hear of this combination because it is the usual in one may say the natural state of things which nobody ever hears of. Masters too sometimes enter into particular combinations to sink the below this rate. These are always conducted with the utmost silence and secrecy till the moment of execution and when the workmen yield as they sometimes do without resistance those severely felt by them they are never heard of by other people. Such combinations however are frequently resisted by a contrary defensive combination of the workmen who sometimes too without any provocation of this kind combine of their own accord to raise tile price of their labor. Their usual pretenses are sometimes the great profit which their masters make by their work but whether their combinations be offensive or defensive they are always abundantly heard of. In order to bring the point to a speedy decision they have always recourse to the loudest clamor and sometimes to the most shocking violence and outrage. They are desperate and act with the folly and extravagance of desperate men who must either starve or frighten their masters into an immediate compliance with their demands. The masters upon these occasions are just as clamors upon the side and never cease to call allowed for the assistance of the civil magistrate and the rigorous execution of those laws which have been enacted with so much severity against the combination of servants, laborers, and journeymen. The workmen accordingly very seldom derive any advantage from the violence of those tumultuous combinations which partly from the interposition of the civil magistrate, partly from the superior steadiness of the masters, partly from the necessity which the greater part of the workmen are under of present subsistence generally end in nothing but the punishment or ruin of the ringleaders. But though in disputes with their workmen, masters must generally have the advantage, there is however a certain rate below which it seems impossible to reduce for any considerable time the ordinary wages even of the lowest species of labor. A man must always live by his work and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more otherwise it would possible for him to bring up a family, and the race of such workmen could not last beyond the first generation. Mr. Cantillon seems upon this account to suppose that the lowest species of common laborers must everywhere earn at least double their own maintenance. In order that, one with another, they may be enabled to bring up two children. The labor of the wife, on account of her necessary attendance on the children, being supposed no more than sufficient to provide for herself. But one half the children born, it is the age of manhood. The poorest laborers therefore, according to this account, must, one with another, attempt to rear at least four children, in order that two may have an equal chance of living to that age. But the necessary maintenance of four children, it is supposed, may be nearly equal to that of one man. The labor of an able-bodied slave, the same author adds, is computed to be worth double his maintenance, and that of the meanest labor, he thinks, cannot be worth less than that of an able-bodied slave. Thus far at least, seems certain that in order to bring up a family, the laborer of the husband and wife together must, even in the lowest species of common labor, be able to earn something more than what is precisely necessary for their own maintenance. But in what proportion, whether in that above mentioned or many other, I shall not take upon me to determine. There are certain circumstances, however, which sometimes give the laborers an advantage and enable them to raise their wages considerably above this rate, evidently the lowest which is consistent with this rate. When, in any country, the demand for those who live by wages, laborers, journeymen, servants of every kind is continually increasing, when every year furnishes employment for a greater number than had been employed the year before, the workmen have no occasion to combine in order to raise their wages. The scarcity of hands occasions a competition among masters, who bid against one another in order to get workmen, and thus voluntarily break through the natural combination of masters not to raise wages. The demand for those who live by wages, it is evident, cannot increase but in proportion to the increase of the funds which are destined to the payment of wages. These funds are of two kinds. First, the revenue which is over and above what is necessary for the maintenance, and secondly, the stock which is over and above what is necessary for the employment of their masters. When the landlord and eutent or moneyed man has a greater revenue than what he judges sufficient to maintain his own family, he employs either the whole or part of the surplus in maintaining one or more menial servants. Increase the surplus and he will naturally increase the number of those servants. When an independent workman, such as a weaver or shoemaker, has got more stock than what is sufficient to purchase the materials of his own work, and to maintain himself till he can dispose of it, he naturally employs one or more journeymen with the surplus in order to make a profit by their work. Increase the surplus and he will naturally increase the number of his journeymen. The demand for those who live by wages therefore necessarily increases with the increase of the revenue and stock of every country, and cannot possibly increase without it. The increase of revenue and stock is the increase of national wealth. The demand for those who live by wages therefore naturally increases with the increase of national wealth, and cannot possibly increase without it. It is not the actual greatness of national wealth, but its continual increase which occasions arise in the wages of labor. It is not accordingly in the richest countries but in the most thriving, or in those which are growing rich the fastest that the wages of labor are highest. England is certainly in the present times a much richer country than any part of North America. The wages of labor, however, are much higher in North America than in any part of England. In the province of New York, common laborers earned in 1773, before the commencement of the late disturbances, three shillings and sixpence currency equal to two shillings sterling a day. Ship carpenters, ten shillings and sixpence currency with a pint of rum worth sixpence sterling equal in all to six shillings and sixpence sterling. House carpenters and bricklayers eight shillings currency equal to four shillings and sixpence sterling. Journeymen tailors five shillings currency equal to about two shillings and tenpence sterling. These prices are all above the London price and wages are said to be as high in the other colonies as in New York. The price of provisions is everywhere in North America much lower than in England. A dearth has never been known there. In the worst seasons they have always had a sufficiency for themselves, though less for exploitation. If the money price of labor, therefore, be higher than it is anywhere in the mother country, its real price, the real command of the necessaries and conveniences of life which it conveys to the laborer, must be higher in a still greater proportion. But though North America is not yet so rich as England, it is much more thriving and advancing with much greater rapidity to the further reaches. The most decisive mark of the prosperity of any country is the increase of the number of its inhabitants. In Great Britain and most other European countries, they are not supposed to double in less than 500 years. In the British colonies in North America, it has been found that they double in 20 or 5 and 20 years. Nor in the present times is this increase principally owing to the continual importation of new inhabitants but to the great multiplication of the species. Those who live to old age, it is said, frequently see there from 50 to 100 and sometimes many more descendants from their own body. Labor is there so well rewarded that a numerous family of children instead of being a burden is a source of opulence and prosperity to the parents. The labor of each child before it can leave their house is computed to be worth 100 pounds clear gain to them. A young widow with 4 or 5 young children who among the middling or inferior ranks of people in Europe would have so little chance for a second husband is there frequently courted as a sort of fortune. The value of children is the greatest of all encouragements to marriage. We cannot therefore wonder that the people in North America should generally marry very young. Notwithstanding the great increase occasion by such early marriages, there is a continual complaint of the scarcity of hands in North America. The demand for laborers, the funds destined for maintaining them increase it seems still faster than they can find laborers to employ. Though the wealth of a laborer should be very great, yet if it has been long stationary we must not expect to find the wages of labor very high in it. The funds destined for the payment of wages, the revenue and stock of its inhabitants may be of the greatest extent, but if they have continued for several centuries of the same, or very nearly of the same extent, the number of laborers employed every year could easily supply and even more than supply the number wanted the following year. There could seldom be any scarcity of hands nor could the masters be obliged to bid against one another in order to get them. The hands on the contrary would in this case naturally multiply beyond their employment. There would be a constant scarcity of employment and the laborers would be obliged to bid against one another in order to get it. If in such a country the wages of labor had ever been more than sufficient to maintain the labor and to enable them to bring up a family, the competition of the laborers and the interest of the masters would soon reduce them to the lowest rate which is consistent with common humanity. It is perhaps long one of the richest that is one of the most fertile, best cultivated, most industrious, and most populist countries in the world. It seems however to have been long stationary. Marco Polo, who visited it more than 500 years ago, describes its cultivation, industry, and populistness almost in the same terms in which they are described by travelers in the present times. It had perhaps even long before his time acquired that full complement of riches which the nature of its laws and institutes the accounts of all travelers inconsistent in many other respects agree in the low wages of labor and in the difficulty which a laborer finds in bringing up a family in China. If by digging the ground the whole day he can get what will purchase a small quantity of rice in the evening he is contented. The condition of artificers is, if possible, still worse. Instead of waiting indolently in their workhouses for the calls of their customers as in Europe they are continually running about the streets and schools of their respective trades offering their services and, as it were, begging employment. The poverty of the lower ranks of people in China far surpasses that of the most beggarly nations in Europe. In the neighborhood of Canton many hundred, it is commonly said, many thousand families have no habitation on the land but live constantly in little fishing boats upon the rivers and canals. The subsistence which they find there is so scanty that they are eager to fish up the nastiest garbage thrown overboard from any European country. Any carrion, the carcass of a dead dog or cat, for example, though half-putured and stinking is as welcome to them as the most wholesome food to the people of other countries. Marriage is encouraged in China not by the profitableness of children but by the liberty of destroying them. In all great towns, several are every night exposed in the street or drowned like puppies in the water. The performance of this horrid office is even said to be the avowed business by which some people earn their subsistence. China, however, though it may perhaps stand still, does not seem to go backwards. Its towns are nowhere deserted by the inhabitants. The lands which had once been cultivated are nowhere neglected. The same, or very nearly the same, annual labor must therefore continue to be performed and the funds destined for maintaining it must not consequently be sensibly diminished. The lowest class of laborers, therefore, notwithstanding their scanty subsistence, must some way or another make shift to continue their race so far as to keep up their usual numbers. But it would be otherwise in a country where the funds destined for the maintenance of labor were sensibly decayed. Every year the demand for servants and laborers would, in all the different classes of employment, be less than it had been the year before. Many who had been bred in the superior classes, not being able to find employment in their own business would be glad to seek it in the lowest. The lowest class being not only overstocked with its own workmen, but with the overflowing of all the other classes, the competition for employment would be so great in it as to reduce the wages of labor to the most miserable and scanty subsistence of the laborer. Many would not be able to find employment even upon these hard times, but would either starve or be driven to seek subsistence either by begging or by the perpetuation perhaps of the greatest enormities. Want, famine, and mortality would immediately prevail in that class and from thence extend themselves to all the superior classes till the number of inhabitants in the country was reduced to what could easily be maintained by the revenue and stock which maintained in it in which had escaped either the tyranny or calamity which had destroyed the rest. This perhaps is nearly the present state of Bengal and of some other of the English settlements in the East Indies. In a fertile country which had before been much depopulated where subsistence, consequently, should not be very difficult and where notwithstanding three or four hundred thousand people die of hunger in one year, we may be assured that the funds of the labouring poor are fast decaying. The difference between the genius of the British constitution which protects and governs North America and that of the mercantile company which oppresses and dominiers in the East Indies cannot perhaps be better illustrated than by the different state of those countries. The liberal reward of labour therefore as it is the necessary effect so it is the necessary symptom of increasing national wealth. The scanty maintenance of the labouring poor on the other hand is the natural symptom of what things are at a stand and their starving condition that they are going fast backwards. In Great Britain the wages of labour seem in the present times to be evidently more than what is precisely necessary to enable the labourer to bring up a family. In order to satisfy ourselves upon this point it will not be necessary to enter into any tedious or doubtful calculation of what may be the lowest sum upon which it is possible to do this. There are many plain symptoms that the wages of labour are nowhere in this country regulated by the lowest rate which is consistent with common humanity. First in almost every part of Great Britain there is a distinction even in the lowest species of labour between summer and winter wages. Summer wages are always highest but on account of the extraordinary expense of fuel the maintenance of a family is most expensive in winter. Wages therefore being highest when this expense is lowest it seems evident that they are not regulated by what is necessary for this expense to be the lowest value of the work. A labour it may be said indeed ought to save part of the summer wages in order to defray his winter expense and that through the whole year they do not exceed what is necessary to maintain his family through the whole year. A slave however or one absolutely dependent on us for immediate subsistence would not be treated in this manner his daily subsistence would be proportioned to his daily necessities. Secondly the wages of labour do not in Great Britain fluctuate these vary everywhere from year to year frequently from month to month but in many places the money price of labour remains uniformly the same sometimes for half a century together. If in these places therefore the labouring poor can maintain their families in dear years they must be at their ease in times of moderate plenty and in affluence in those of extraordinary cheapness. The high price of provisions during these ten years past has not in many parts of the kingdom been accompanied with any sensible rise in the money price of labour. It has indeed in some owing probably more to the increase of the demand for labour than to that of the price of provisions. Thirdly as the price of provisions varies more from year to year than the wages of labour so on the other hand the wages of labour vary more from place to place than the price of provisions. The prices of bread and butchers meat are generally the same or very nearly the same through the greater part of the United Kingdom. These and most other things by retail, the way in which the labouring poor by all things are generally fully as cheap or cheaper in great towns than in the remotor parts of the country for reasons which I shall have occasion to explain hereafter. But the wages of labour in a great town in its neighborhood are frequently a fourth or a fifth part, twenty or five and twenty percent higher than at a few miles distance. Eighteen pence a day may be reckoned the common price of labour in London in its neighborhood. At a few miles distance it falls to eight pence, the usual price of common labour through the greater part of the low country of Scotland, where it varies a good deal less than in England. Such a difference of prices which it seems is not always sufficient to transport a man from one parish to another would necessarily occasion so great a transportation of the most bulky commodities not only from one parish to another but from one end of the kingdom almost from one end of the world. The average price of labour in Scotland varies from one parish to another from one end of the kingdom almost from one end of the world to the other as would soon reduce them more nearly to a level. After all that has been said of the levity and inconstancy of human nature it appears evidently from experience that man is of all sorts of luggage the most difficult to be transported. If the labouring poor therefore can maintain their families in those parts of the kingdom where the price of labour is lowest they must be in affluence where it is highest. Fourthly the variations in the price of labour are either in place or time with those in the price of provisions but they are frequently quite opposite. Grain, the food of the common people is dearer in Scotland than in England when Scotland receives almost every year very large supplies. But English corn must be sold dearer in Scotland the country to which it is brought than in England the country from which it comes and in proportion to its quality it cannot be sold dearer in Scotland than the Scotch corn that comes chiefly upon the quantity of flour or meal which it yields at the mill and in this respect English grain is so much superior to the Scotch that though often dearer in appearance or in proportion to the measure of its bulk it is generally cheaper in reality or in proportion to its quality or even to the measure of its weight. The price of labour on the contrary is dearer in England than in Scotland if the labouring poor therefore can maintain their families in the one part of the United Kingdom they must be coat meal indeed supplies the common people in Scotland with the greatest and the best part of their food which is in general much inferior to that of their neighbors of the same rank in England. This difference however in the mode of their subsistence is not the cause but the effect of their difference in their wages though by a strange misapprehension I have frequently heard it represented as the cause it is not because one man keeps a coach while his neighbor walks a foot that the one is rich and the other poor but because the one is rich he keeps a coach and because the other is poor he walks a foot. During the course of the last century taking one year from another grain was dearer in both parts of the United Kingdom than during that of the present. This is a matter of fact which cannot now admit of any reasonable doubt and the proof of it is if possible still more decisive with regard to Scotland than with regard to England. It is in Scotland supported by the evidence of the public fires, annual valuations made upon oath, according to the actual state of the markets of different sorts of grain in every different county of Scotland. If such direct proof could require any collateral evidence to confirm it I would observe that this has likewise been the case in France and probably in most other parts of Europe. With regard to France there is the clearest proof but though it is certain that in both parts of the United Kingdom grain was somewhat dearer in the last century than in the present it is equally certain that labor was much cheaper. If the laboring poor therefore could bring up their families then they must be much more at their ease now. In the last century the most usual day wages of common labor through the greater part of Scotland were six pence in summer and five pence in winter. Three shillings a week the same price very nearly still continues to be paid in some parts of the highlands and western islands. Through the greater part of the low country the most usual wages of common labor are now eight pence a day, ten pence sometimes a shilling about Edinburgh and the counties which border upon England probably on account of that neighborhood and in a few other places where there has lately been a considerable rise in demand for labor about Glasgow, Caron, Ayrshire, etc. In England the improvements of agriculture, manufacturers and commerce began much earlier than in Scotland. The demand for labor and consequently its price must necessarily have increased with those improvements. In the last century accordingly as well as in the present the wages of labor were higher in England than in Scotland. They have risen too considerably since though on account of the greater variety of wages paid there in different places it is more difficult to ascertain how much. In 1614 the pay of a foot soldier was the same as in the present times, eight pence a day. When it was first established it would naturally be regulated by the usual wages of common laborers, the rank of people from which foot soldiers are commonly drawn. Lord Chief Justice Hales who wrote in the time of Charles II computes the necessary expense of a laborer's family consisting of six persons the father and mother, two children able to do something and two not able at 10 shillings a week or 26 pounds a year. If they cannot earn this by their labor they must make it up he supposes either by begging or stealing. He appears to have inquired very carefully into this subject. In 1688 Mr. Gregory King whose skill and political arithmetic is so much extolled by Dr. Davenette computed the ordinary income of laborers and out-servants to be 15 pounds a year to a family supposed to consist one with another of three and a half persons. His calculation therefore, though different in appearance, corresponds very nearly at bottom with that of Judge Hales. Both suppose the weekly expense of such families to be about 20 pence ahead. Both the pecuniary income and expense of such families have increased considerably since that time through the greater part of the kingdom. In some places more and in some less though perhaps scarce anywhere so much as some exaggerated accounts of the present of labor have lately represented them to the public. The price of labor it must be observed cannot be ascertained very accurately anywhere. Different prices being often paid at the same place and for the same sort of labor not only according to the different abilities of the workmen but according to the easiness and hardness of the masters. Where wages are not regulated by law all that we can pretend to determine is what are the most usual and experience seems to show that law can never regulate them properly though as we have pretended to do so. End of Book 1, Chapter 8, Part 1. Part 2 of Chapter 8 of Book 1 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. Part 2 of Chapter 8 of Book 1 of the Wages of Labor. The real recompense of labor the real quantity of the necessaries and conveniences of life which it can procure to the laborer has during the course of the present century increased perhaps in a still greater proportion than its money price. Not only grain has become somewhat cheaper but many other things from which the industrious poor derive an agreeable and wholesome variety of food have become a great deal cheaper. Potatoes for example do not at present through the greater part of the kingdom that it used to do 30 or 40 years ago. The same thing may be said of turnips, carrots, cabbages things which were formerly never raised but by the spade but which are now commonly raised by the plow. All sort of garden stuff too has become cheaper. The greater part of the apples and even of the onions consumed in Great Britain were in the last century imported from Flanders. The great improvements in the coarser manufactures of both linen and woolen cloth furnish the laborers with cheaper and better clothing and manufactures of the coarser materials with cheaper and better instruments of trade as well as with many agreeable and convenient pieces of household furniture. Soap, salt, candles, leather and fermented liquors have indeed become a good deal dear chiefly from the taxes which have been laid upon them. The quantity of these however which the laboring poor are under any necessity of consuming is so very small that the increase in their price does not compensate the diminution in that of so many other things. The common complaint that luxury sends itself even to the lowest ranks of the people and that the laboring poor will not now be contended with the same food, clothing and lodging which satisfied them in former times may convince us that it is not the money price of labor only but its real recompense which has augmented. Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconvenience to the society? The answer seems at first abundantly plain. Servants, labors and workmen of different kinds make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as any inconvenience to the whole. No society can surely be flourishing and happy of which the far greater part of the members are poor and miserable. It is but equity besides that they who feed, clothe and lodge the whole body of the people should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed and lodged. Poverty, though it no doubt discourages, does not always prevent marriage. It seems even to be favorable to generation. A half-starved Highland woman frequently bears more than twenty children while a pampered fine lady is often incapable of bearing any and is generally exhausted by two or three. Bearingness so frequent among women of fashion is very rare among those of inferior station. Luxury and the fair sex, while it inflames, perhaps the passion for enjoyment seems also to weaken and frequently to destroy altogether the powers of generation. But poverty, though it does not prevent the generation is extremely unfavorable to the rearing of children. The tender plant is produced, but in so cold a soil and so severe a climate soon withers and dies. It is not uncommon I have been frequently told in the Highlands of Scotland for a mother who has born twenty children not to have two alive. Several officers of great experience have assured me that, so far from recruiting their regiment, they have never been able to supply it with drums and fives from all the soldiers children that were born in it. A greater number of fine children, however, is seldom seen anywhere than about a barrack of soldiers. Very few of them, it seems, arrive at the age of thirteen or fourteen. In some places, one half the children die before they are four years of age, in many places before they are seven, and in almost all places before they are nine or ten. This great mortality, however, will everywhere be found chiefly among the children of the common people who cannot afford to tend them with the same care as those of better station. Though their marriages are generally more fruitful than those of people of fashion, a smaller proportion of their children arrive at maturity. In founding hospitals and among the children brought up by parish charities, the mortality is still greater than among those of the common people. Every species of animals naturally multiplies in proportion to the means of their subsistence, and no species can ever multiply beyond it. But in civilized society it is only among the inferior ranks of people that the scantiness of subsistence can set limits to the further multiplication of the human species. And it can do so in no other way than by destroying a great part of the children which their fruitful marriages produce. The liberal reward of labor by enabling them to provide better for their children, and consequently to bring up a greater number, naturally tends to widen and extend those limits. It deserves to be remarked, too, that it necessarily does this as nearly as possible in the proportion which the demand for labor requires. If this demand is continually increasing, the reward of labor must necessarily encourage in such a manner the marriage and multiplication of labor, as may enable them to supply that continually increasing demand by a continually increasing population. If the reward should at any time be less than what was requisite for this purpose, the deficiency of hands would soon raise it. And if it should at any time be more, their excessive multiplication would soon lower it to this necessary rate. The market would be so much under stock with labor in the one case, and so much overstocked in the other, as would soon force back its price to that proper rate which the circumstances of the society required. It is in this manner that the demand for men, like that for any other commodity, necessarily regulates the production of men, quickens it when it goes on too slowly, and stops it when it advances too fast. It is this demand which regulates and determines the state of propagation in all the different countries of the world, in North America, in Europe, and in China, which renders it rapidly progressive in the first, slow and gradual in the second, and altogether stationary in the last. The wear and tear of a slave, it has been said, is at the expense of his master, but that of a free servant is at his own expense. The wear and tear of the latter, however, is in reality as much at the expense of his master as that of the former. The wages paid to journeymen and servants of every kind must be such as may enable them, one with another to continue the race of journeymen and servants according as the increase, diminishing, or stationary demand of the society may happen to require. But though the wear and tear of a free servant be equally at the expense of his master, it generally costs him much less than that of a slave. The fund, destined for replacing or repairing, if I may say so, the wear and tear of the slave, is commonly managed by a negligent master or careless overseer. That destined for performing the same office with regard to the free man is managed by the free man himself. The disorders which generally prevail in the economy of the rich naturally introduce themselves into the management of the former. The strict frugality and parsimonious attention of the poor as naturally establish themselves in that of the latter. Under such different management, the same purpose must require very different degrees of expense to execute it. It appears, accordingly, from the experience of all ages and nations I believe that the work done by free man comes cheaper in the end than that performed by slaves. It is found to do so even at Boston, New York, and Philadelphia, where the wages of common labor are so very high. The liberal reward of labor, therefore, as it is the effect of increasing wealth, so it is the cause of increasing population. To complain of it is to lament over the necessary cause and effect of the greatest public prosperity. It deserves to be remarked, perhaps, that it is in the progressive state that this society is advancing to the further acquisition rather than when it has acquired its full complement of riches, that the condition of the laboring poor, of the great body of the people, seems to be the happiest and the most comfortable. It is hard in the stationary and miserable in the declining state. The progressive state is, in reality, the cheerful and the hearty state to all the different orders of the society. The stationary is dull, the declining melancholy. The liberal reward of labor, as it encourages the propagation so it increases the industry of the common people. The wages of labor are the encouragement of industry, which, like every other human quality, improves in proportion to the encouragement it receives. A plentiful subsistence increases the bodily strength of the laborer and the comfortable hope of bettering his condition and of ending his days, perhaps, in ease and plenty, animates him to exert that strength to the utmost. Where wages are high, accordingly, we shall always find the workmen more active, diligent, and expedious than where they are low. In England, for example, then in Scotland. In the neighborhood of great towns, then in remote country places. Some workmen, indeed, when they can earn in four days what will maintain them through the week will be idled the other three. This, however, is by no means the case with the greater part. Workmen on the contrary, when they are liberally paid by the peace, are very apt to overwork themselves and to ruin their health and constitution in a few years. A carpenter in London and in some other places is not supposed to last in his utmost vigor above eight years. Something of the same kind happens in many other trades in which the workmen are paid by the peace as they generally are in manufacturers and even in country labor wherever wages are higher than ordinary. Almost every class of artificers is subject to some peculiar infirmity occasioned by excessive application to their peculiar species of work. Ramazzini, an imminent Italian physician, has written a particular book concerning such diseases. We do not reckon our soldiers the most industrious set of people among us. Yet when soldiers have been employed in some particular sorts of work and liberally paid by the peace their officers have frequently been obliged to stipulate with the undertaker that they should not be allowed to earn above a certain sum every day according to the rate at which they were paid. Till the stipulation was made, mutual emulation and the desire of greater gain frequently prompted them to overwork themselves and to hurt their health by excessive labor. Excessive application during four days of the week is frequently the real cause of the idleness of the other three so much and so loudly complained of. Great labor, either of mind or body continued for several days together is in most men naturally followed by a great desire of relaxation which if not restrained by force or by some strong necessity is almost irresistible. It is the call of nature which requires to be relieved by some indulgence sometimes of ease only but sometimes too of dissipation is led with the consequences are often dangerous and sometimes fatal and such as almost always sooner or later bring on the peculiar infirmity of the trade. If masters would always listen to the dictates of reason and humanity they have frequently occasioned rather to moderate than to animate the application of many of their workmen. It will be found I believe in every sort of trade that the man who works so moderately as to be able to work constantly not only preserves his health the longest but in the course of the year executes work. In cheap years it is pretended workmen are generally more idle and in dear times more industrious than ordinary. A plentiful subsistence therefore it has been concluded, relaxes, and a scanty one quickens their industry. That a little more plenty than ordinary may render some workmen idle cannot be well doubted but that it should have this effect upon the greater part or that men in general should work better when they are ill fed than when they are well fed, when they are disheartened than when they are in good spirits when they are frequently sick than when they are generally in good health seems not very probable. Years of dearth it is to be observed are generally among the common people years of sickness and mortality which cannot fail to diminish the produce of their industry. In years of plenty servants frequently leave their masters and trust their subsistence to what they can make by their own industry. But the same cheapness of provisions by increasing the fund which is destined for the maintenance of servants encourages masters farmers especially to employ a greater number. Farmers upon such occasions expect more profit from their corn by maintaining a few more labouring servants than by selling it at a low price in the market. The demand for servants increases while the number of those who offer to supply that demand diminishes. The price of labour therefore frequently rises in cheap years. In years of scarcity the difficulty and uncertainty of subsistence make all such people eager to return to service but the high price of provisions by diminishing the funds destined for maintenance of servants disposes masters rather to diminish than to increase the number of those they have. In dear years too poor independent workmen frequently consume the little stock with which they had used to supply themselves with the materials of their work and are obliged to become journeymen for subsistence. More people want employment than easily get it. Many are willing to take it upon lower terms than ordinary and the wages of both servants and journeymen frequently sink in dear years. Masters of all sorts therefore frequently make better bargains with their servants in dear than in cheap years and find them more humble and dependent in the former than in the latter. They naturally therefore commend the former as more favourable to industry. Landlords and farmers besides two of the largest classes of masters have another reason for being pleased with dear years. The rents of the one and the profits of the other depend very much upon the price of provisions. Nothing can be more absurd however than to imagine that men in general should work less than they work for themselves than when they work for other people. A poor independent workman will generally be more industrious than even a journeyman who works by the peace. The one enjoys the whole produce of his own industry, the other shares it with his master. The one in his separate independent state is less liable to the temptations of bad company which enlarge manufacturers so frequently ruin the morals of the other. The superiority of the independent workmen over those servants who are higher by the month and whose wages and maintenance are the same whether they do much or do little is likely to be still greater. Cheap years tend to increase the proportion of independent workmen to journeymen and servants of all kinds and dear years to diminish it. A French author of great knowledge and ingenuity, Mr. Massant's receiver of the tallies in the election of Saint Etienne endeavors to show that the poor do more work and cheap than in dear years by comparing the quantity and value of the goods made upon those different occasions in three different manufacturers. One, of course, Woolens carried on in Elbeuf, one of Lennon, and another of Silk, both which extend through the whole generality of Rouen. It appears from his account which is copied from the registers of the public offices that the quantity and value of the goods made in all those three manufacturers has generally been greater in cheap than in dear years and that it has always been, greatest in the cheapest and least in the dearest years. All the three seem to be stationary manufacturers, or which, though their produce may vary somewhat from year to year, are, upon the whole, neither going backwards nor forwards. The manufacture of Lennon and Scotland and that of course Woolens in the west riding of Yorkshire are growing manufacturers of which the produce is generally though with some variations increasing both in quantity and value. Upon examining however the accounts which have been published of their annual produce I have not been able to observe that its variations have had any sensible connection with the dearness or cheapness of the seasons. In 1740 a year of great scarcity both manufacturers indeed appeared to have declined very considerably. But in 1756 another year of great scarcity the Scotch manufacturers made more than ordinary advances. The Yorkshire manufacturer indeed declined and its produce did not rise to what it had been in 1755 till 1766 after the repeal of the American Stamp Act. In that and the following year it greatly exceeded what it had ever been before and it has continued to advance ever since. The produce of all great manufacturers for distant sale must necessarily depend not so much upon the dearness or cheapness of the seasons in the countries where they are carried on as upon the circumstances which affect the demand in the countries where they are consumed. Upon peace or war upon the prosperity or declension of other rival manufacturers and upon the good or bad humor of their principal customers. A great part of the extraordinary work besides which is probably done in cheap years never enters the public registers of manufacturers. The men's servants who leave their masters become independent laborers. The women return to their parents and commonly spin in order to make clothes for themselves and their families. Even the independent workmen do not always work for public sale but are employed by some of their neighbors and manufacturers for family use. The produce of their labor therefore frequently makes no figure in those public registers of which the records are sometimes published with so much parade and from merchants and manufacturers would often vainly pretend to announce the prosperity or declension of the greatest empires. Though the variations in the price of labor not only do not always correspond with those in the price of provisions but are frequently quite opposite, we must not upon this account imagine that the price of provisions has no influence upon that of labor. The money price of labor is necessarily regulated by two circumstances. The demand for labor and the price of the necessaries and conveniences of life. The demand for labor according as it happens to be increasing stationary or declining or to require an increasing stationary or declining population determines the quantities of the necessaries and conveniences of life which must be given to the laborer and the money price of labor is determined by what is requisite for purchasing this quantity. Though the money price of labor therefore is sometimes high where the price of provisions is low it would be still higher the demand continuing the same if the price of provisions was high. It is because the demand for labor increases in years of sudden and extraordinary plenty and diminishes in those of sudden and extraordinary scarcity that the money price of labor sometimes rises in the one and sinks in the other. In a year of sudden and extraordinary plenty there are funds in the hands of many of the employers of industry sufficient to maintain and employ a greater number of industrious people than had been employed the year before and this extraordinary number cannot always be bad. Those masters therefore who want to invest one another in order to get them which sometimes raises both the real and the money price of their labor. The contrary of this happens in a year of sudden and extraordinary scarcity. The funds destined for employing industry are less than they had been the year before a considerable number of people are thrown out of employment who bid one against another in order to get it which sometimes lowers both the real and the money price of labor. In 1740 a year of extraordinary scarcity many people were willing to work for their jobs. In the succeeding years of plenty it was more difficult to get laborers and servants. The scarcity of a dear year by diminishing the demand for labor tends to lower its price as the high price of provisions tends to raise it. The plenty of a cheap year on the contrary by increasing the demand tends to raise the price of labor as the cheapness of provisions tends to lower it. In the ordinary variations of the prices of provisions those two opposite causes seem to counterbalance one another which is probably in part that the wages of labor are everywhere so much more steady and permanent than the price of provisions. The increase in the wages of labor necessarily increases the price of many commodities by increasing that part of it which resolves itself into wages and so far tends to diminish their consumption both at home and abroad. The same cause however which raises the wages of labor the increase of stock tends to increase its productive powers and to make a smaller quantity of labor produce a greater quantity of work. A great number of laborers necessarily endeavors for his own advantage to make such a proper division and distribution of employment that they may be enabled to produce the greatest quantity of work possible. For the same reason he endeavors to supply them with the best machinery which either he or they can think of. What takes place among the laborers in a particular workhouse takes place for the same reason among those of a great society. The greater their number the more they naturally divide themselves into different classes and subdivisions of employment. The heads are occupied in inventing the most proper machinery for executing the work of each and it is therefore more likely to be invented. There are many commodities therefore which in consequence of these improvements come to be produced by so much less labor than before that the increase of its price is more than compensated by the diminution of its quantity. End of Book 1 Chapter 8 Part 2 Chapter 9 of Book 1 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 Ascalara The Wealth of Nations by Adam Smith Chapter 9 of Book 1 of the Prophets of Stock The rise and fall in the prophets of stock depend upon the same causes with the rise and fall in the wages of labor the increasing or declining state of the wealth of the society. These causes affect the one and the other very differently. The increase of stock which raises wages tends to lower profit. When the stocks of many rich merchants are turned into the same trade their mutual competition naturally tends to lower its profits. And when there is a like increase of stock and all the different trades carried on in the same society, the same competition must produce the same effect in them all. It is not easy, it has already been observed, to ascertain the wages of labor, even in a particular place and at a particular time. We can, even in this case, seldom determine more than what are the most usual wages. But even this can seldom be done with regard to the prophets of stock. Profit is so very fluctuating that the person who carries on a particular trade cannot always tell you himself what is the average of his annual profit. It is affected not only by every variation of price in the commodities which he deals in good or bad fortune both of his rivals and of his customers and by a thousand other accidents to which goods when carried either by sea or by land or even when stored in a warehouse are liable. It varies therefore not only from year to year but from day to day and almost from hour to hour. To ascertain what is the average profit of all the different trades carried on in a great kingdom must be much more difficult and to judge of what it may have been formally or in remote periods of time the degree of precision must be altogether impossible. But though it may be impossible to determine with any degree of precision what are or were the average profits of stock either in the present or in ancient times some notion may be formed of them from the interest of money. It may be laid down as a maxim that wherever a great deal can be made by the use of money a great deal will commonly be given for the use of it and that wherever little can be made by it less will commonly be given for it. Therefore, as the usual market rate of interest varies in any country, we may be assured that the ordinary profits of stock must vary with it, must sink as it sinks and rise as it rises. The progress of interest therefore may lead us to form some notion of the progress of profit. By the 37th of Henry VIII all interest above 10% was declared unlawful. More it seems had sometimes been taken before that. In the reign of Edward VI religious zeal prohibited all interest. This prohibition, however, like all others of the same kind is said to have produced no effect and probably rather increased than diminished the evil of usury. The Statute of Henry VIII was revived by the 13th of Elizabeth, Cap VIII, and 10% continued to be the legal rate of interest until the 21st of James I when it was restricted to 8%. It was reduced to 6% soon after the restoration and by the 12th of Queen Anne to 5%. All these different statutory regulations seem to have been made with great propriety. They seem to have followed and not to have gone before the market rate of interest or the rate at which people of good credit usually borrowed. Since the time of Queen Anne 5% seems to have been rather above than below the market rate. Before the late war the government borrowed at 3% and people of good credit in the capital and in many other parts of the kingdom at 3.5%, 4, and 4.5%. Since the time of Henry VIII the wealth and revenue of the country have been continually advancing and in the course of their progress their pace seems rather to have been gradually accelerating than retarded. They seem to not only have been going on but to have been going on faster and faster. The wages of labor have been continually increasing during the same period and in the greater part of the different branches of trade and manufacturers the profits of stock have been diminishing. It generally requires a greater stock to carry on any sort of trade in a great town than in a country village. The great stocks employed in every branch of trade and the number of rich competitors generally reduce the rate of profit in the former below what is in the latter. But the wages of labor are generally higher in a great town than in a country village. In a thriving town the people who have great stocks to employ frequently cannot get the number of workmen they want and therefore bid against one another in order to get as many as they can which raises the wages of labor and the profits of stock. In the remote parts of the country there is frequently not stock sufficient to employ all the people who therefore bid against one another in order to get employment which lowers the wages of labor and raises the profits of stock. In Scotland though the legal rate of interest is the same as in England the market rate is rather higher. People of the best credit there sell and borrow under 5%. Even private bankers in Edinburgh give 4% upon their promissory notes and either in whole or in part may be demanded at pleasure. Private bankers in London give no interest for the money which is deposited with them. There are few trades which cannot be carried on with a similar stock in Scotland than in England. The common rate of profit therefore must be somewhat greater. The wages of labor it has already been observed are lower in Scotland than in England. The country too is not only much poorer but the steps by which it advances to a better condition for it is evidently advancing seem to be much slower and more tardy. The legal rate of interest in France has not during the course of the present century been always regulated by the market rate. In 1720 interest was reduced from the 20th to the 50th penny or from 5 to 2%. In 1724 it was raised to the 30th penny or to 3 and a third percent. In 1725 it was again raised to the 20th penny or to 5%. In 1766 during the restoration of Mr. Laverde it was reduced to the 25th penny or to 4%. The Abattere raised it afterwards to the old rate of 5%. The supposed purpose of many of those violent reductions of interest was to prepare the way for reducing that of the public debts, a purpose which has sometimes been executed. France is perhaps in the present times not so rich a country as England and though the legal rate of interest has in France frequently been lower than in England the market rate has generally higher. For there, as in other countries, they have several very safe and easy methods of evading the law. The profits of trade I have been assured by British merchants who had traded in both countries are higher in France than in England and it is no doubt upon this account that many British subjects choose rather to employ their capitals in a country where trade is in disgrace than in one where it is highly respected. The wages of labor are lower in France than in England. When you go from Scotland to England the difference is marked between the dress and countenance of the common people in the one country and in the other sufficiently indicates the difference in their condition. The contrast is still greater when you return from France. France, though no doubt a richer country than Scotland, seems not to be going forward so fast. It is a common and even a popular opinion in the country that it is going backwards, an opinion which I apprehend is ill-founded even with regard to France, but which nobody can possibly entertain with regard to Scotland in a country now and who saw it twenty or thirty years ago. The province of Holland on the other hand in proportion to the extent of its territory and the number of its people is a richer country than England. The government there borrow at two percent and private people of good credit at three. The wages of labor are said to be higher in Holland than in England and the Dutch it is well known trade upon lower profits than any people in Europe. The trade of Holland it has been pretended by some people and it may perhaps be true that some particular branches of it are so, but these symptoms seem to indicate sufficiently that there is no general decay. When profit diminishes, merchants are very apt to complain that trade decays, though the diminution of profit is the natural effect of its prosperity or of a greater stock being employed in it than before. During the late war the Dutch gained the whole carrying trade of France, of which they still retain a very large share. The great property which they possess, both Dutch and English funds, about 40 millions, it is said in the latter, in which I suspect however there is a considerable exaggeration, the great sums which they lend to private people in countries where the rate of interest is higher than in their own are circumstances which no doubt demonstrate the redundancy of their stock or that it has increased beyond what they can employ with tolerable profit in the proper business of their own country. But they do not demonstrate that that business has decreased. As the capital of a private man, by a particular trade may increase beyond what he can employ in it, and yet that trade continued to increase too, so may likewise the capital of a great nation. In our North American and West Indian colonies, not only the wages of labor, but the interest of money and consequently the profits of stock are higher than in England. In the different colonies, both the legal and the market rate of interest run from 6 to 8 percent. High wages of labor and high profits of stock however are things perhaps which scarce ever go together, except in the peculiar circumstances of new colonies. A new colony must always for some time be more understocked in proportion to the extent of its territory and more under-peopled in proportion to the extent of its stock than the greater part of other countries. They have more land than they have stocked to cultivate. What they have therefore is applied to the cultivation only of what is most fertile and most favorably situated to land near the seashore and along the banks of navigable rivers. Such land too is frequently purchased at a price below the value even of its natural produce. Stock employed in the purchase and improvement of such lands must yield a very large profit and, consequently, afford to pay a very large interest. Its rapid accumulation in so profitable unemployment enables the planner to increase the number of his hands faster than he can find them in a new settlement. Those whom he can find therefore are very liberally rewarded. As the colony increases, the profits of stock gradually diminish. When the most fertile and best situated lands have been all occupied, less profit can be made by the cultivation of what is inferior both in soil and situation, and less interest can be afforded for the stock which is so employed. In the greater part of our colonies, accordingly, both the legal and the market rate of interest have been considerably reduced during the course of the present century. As riches, improvement, and population have increased, interest has declined. The wages of the profits of stock, the demand for labor increases with the increase of stock, whatever be its profits, and after these are diminished, stock may not only continue to increase, but to increase much faster than before. It is with industrious nations who are advancing in the acquisition of riches as with industrious individuals. A great stock, though with small profits, generally increases faster than a small stock with great profits. Money, says the proverb, makes money. When you have got little, it is often easy to get more. The great difficulty is to get that little. The connection between the increase of stock and that of industry or of the demand for useful labor has partly been explained already, but will be explained more fully hereafter in treating of the accumulation of stock. The acquisition of new territory or of new branches of trade may sometimes raise the profits of stock and with them the interest of money even in a country which is fast advancing in the acquisition of trade. The stock of the country, not being sufficient for the whole accession of business which such acquisitions present to the different people among whom it is divided, is applied to those particular branches only which afford the greatest profit. Part of what had been before employed in other trades is necessarily with drawn from them and turned into some of the new and more profitable ones. In all those old trades, therefore, the competition comes to be less than before. The market comes to be less goods. Their profit necessarily rises more or less and yields a greater profit to those who deal in them who can, therefore, afford to borrow at a higher interest rate. Their price necessarily rises more or less and yields a greater profit to those who deal in them who can, therefore, afford to borrow at a higher interest. For some time after the conclusion of the late war, not only private people are the best credit, but some of the greatest companies in London commonly borrowed at 5% who before used to pay more than 4% and 4.5%. The great accession both of territory and trade by our acquisitions in North America and the West Indies will sufficiently account for this without supposing any diminution in the capital stock of the society. So great an accession of new business to be carried on by the old stock must necessarily have diminished the quantity employed in a great number of particular branches in which the competition being less, the profits must have been greater. I have no occasion to mention the reasons which disposed me to believe that the capital stock of Great Britain was not diminished even by the enormous expense of the late war. The diminution of the capital stock of the society or of the funds destined for the maintenance of industry, however, as it lowers the wages of labor so it raises the profits of stock and consequently the interest of money. By the wages of labor being lowered, the owners of what stock remains in the society can bring their goods at the fore, and less stock being employed in supplying the market than before, they can sell them dearer. Their goods cost them less and they get more for them. Their profits, therefore, being augmented at both ends, can well afford a large interest. The great fortunes so suddenly and so easily acquired in Bengal and the other British settlements in the East Indies may satisfy us, but as the wages of labor are very low, so the profits of stock are very high in those ruined countries. The interest of money is so. In Bengal, money is frequently lent to the farmers at 40, 50, and 60 percent, and the succeeding crop is mortgaged for the payment. As the profits which can afford such an interest must eat up almost the whole rent of the landlord, so such enormous usury must in its turn eat up the greater part of those profits. Before the fall of the Roman Republic, a usury of the same kind seems to have been common in the provinces under the ruinous administration of their pro-consuls. Brutus lent money in Cyprus at 8 and 40 percent, as we learn from the letters of Cicero. In a country which had acquired that full complement of riches, which the nature of its soil and climate, and its situation with respect to other countries, allowed it to acquire, which could, therefore, advance no further in which was not going backwards, both the wages of labor and the profits of stock would probably be very low. In a country fully peopled, in proportion to all the business it had to transact, as great a quantity of stock would be employed in every particular branch as the nature and extent of the trade would admit. The competition, therefore, would everywhere be as great and, consequently, the ordinary profit as low as possible. But, in a country fully stocked and proportioned to all the business it had to transact, as great a quantity of stock would be employed in every particular branch but as low as possible. But, perhaps, no country has ever yet arrived at this degree of opulence. China seems to have been long stationary and had, probably, long ago acquired that full complement of riches which is consistent with the nature of its laws and institutions. But this complement may be much inferior to what, with other laws and institutions, the nature of its soil, climate, and situation might admit of. A country which neglects or despises foreign commerce and which foreign nations into one or two of its ports only cannot transact the same quantity of business which it might do with different laws and institutions. In a country too where, though the rich or the owners of large capitals enjoy a good deal of security, the poor or the owners of small capitals enjoy scarce any but are liable under their pretense of justice to be pillaged and plundered at any time by the inferior mandarins, the quantity of stock employed in all the different branches of business transacted within it can never be equal to what the nature and extent of that business might admit. In every different branch the oppression of the poor must establish the monopoly of the rich, whom, by engrossing the whole trade to themselves, will be able to make very large profits. Twelve percent, accordingly, is said to be the common interest of money in China, and the ordinary profits of stock must be sufficient to afford this large interest. A defect in the law may sometimes raise the rate of interest considerably above what the condition of the country of wealth or poverty would require. When the law does not enforce the performance of contracts, it puts all borrowers nearly upon the same footing with bankrupts or people of doubtful credit in better regulated countries. The uncertainty of recovering his money makes the lender exact the same user's interest which is usually required from bankrupts. Among the barbarous nations who overran the western provinces of the Roman Empire their performance of contracts was left for many ages to the faith of the country. The courts of justice of their kings seldom intermeddled in it. The high rate of interest which took place in those ancient times may perhaps be partly accounted for from this cause. When the law prohibits interest altogether, it does not prevent it. Many people must borrow and nobody will lend without such a consideration for the use of their money as is suitable, not only to what can be made by the use of it, but to the difficulty and danger of evading the law. The high rate of interest of the nations is accounted for by Monsieur Montesquieu, not from their poverty, but partly from this and partly from the difficulty of recovering the money. The lowest ordinary rate of profit must always be something more than what is sufficient to compensate the occasional losses to which every employment of stock is exposed. It is this surplus only which is neat or clear profit. What is called gross profit comprehends frequently not only this surplus, but what is retained for compensating such extraordinary losses. The interest which the borrower can afford to pay is in proportion to the clear profit only. The lowest ordinary rate of interest must, in the same manner, be something more than sufficient to compensate the occasional losses to which lending, even with tolerable prudence, is exposed. Where it not, mere charity or friendship could be the only motives for lending. In a country which had acquired its full complement of riches where, in every particular branch of business, there was the greatest quantity of stock that would benefit, as the ordinary rate of clear profit would be very small, so the usual market rate of interest which could be afforded out of it would be so low as to render it impossible for any, but the very wealthiest people to live upon the interest of their money. All people of small or middling fortunes would be obliged to superintend themselves the employment of their own stocks. It would be necessary that almost every man should be a man of business, or engage in some sort of trade. The province of Holland seems to be approaching near to it. It is, therefore, unfashionable not to be a man of business. Necessity makes it usual for almost every man to be so, and custom everywhere regulates fashion. As it is ridiculous not to dress, so is it, in some measure, not to be employed like other people. As a man of a civil profession seems awkward in a camp or a garrison, or is even in some danger of being despised there, so does an idle man among men of business. The highest ordinary rate of profit may be such as, in the price of the greater part of commodities, eats up the whole of what should go to the rent of the land, and leaves only what is sufficient to pay the labourer of preparing and bringing them to market, according to the lowest rate at which labourer can anywhere be paid, the bare subsistence of the labourer. The workman must always have been fed in some way or other while he was about the work, but the landlord may not always have been paid. The profits of the trade which the servants of the East India Company carry on at far from this rate. The proportion which the usual market rate of interest ought to bear to the ordinary rate of clear profit necessarily varies as profit rises or falls. Double interest is in Great Britain reckon what the merchants call a good, moderate, reasonable profit. Terms which, I apprehend, mean no more than a common and usual profit. In a country where the ordinary rate of clear profit is 8 or 10%, it may be reasonable that one half of it should go to wherever business is carried on with borrowed money. The stock is at the risk of the borrower, who, as it were, insures it to the lender, and 4 or 5% may in the greater part of trades be both a sufficient profit upon the risk of this insurance and a sufficient recompense for the trouble of employing the stock. But the proportion between interest and clear profit might not be the same in countries where the ordinary rate of profit was either a good deal lower or a good deal higher. If it were a good deal, half of it perhaps could not be afforded for interest, and more might be afforded if it were a good deal higher. In countries which are fast advancing to riches, the low rate of profit may, in the price of many commodities, compensate the high wages of labor and enable those countries to sell as cheap as their less thriving neighbors, among whom the wages of labor may be lower. In reality, high profits tend much more to raise the price of work than high wages. If, in the different working people, the flak stressors, the spinners, the weavers, etc., should all of them be advanced two pence a day, it would be necessary to heighten the price of a piece of linen only by a number of two pences equal to the number of people that had been employed about it, multiplied by the number of days during which they had been so employed. That part of the price of the commodity which resolved itself into the wages would, through all the different stages of the manufacturer, rise only in geometrical proportion to this rise of profit. The employer of the flak stressors would, in selling his flaks, require an additional 5% upon the whole value of the materials and wages which he advanced to his workmen. The employer of the spinners would require an additional 5%, both upon the advanced price of the flaks and upon the higher wages of the workers. The employer of the spinners would require an additional 5%, both upon the advanced price of the flaks and upon the wages of the spinners. And the employer of the weavers would require a like 5%, both upon the advanced price of the linen yarn and upon the wages of the weavers. In raising the price of commodities, the rise of wages operates in the same manner as simple interest does in the accumulation of debt. The rise of profit operates like compound interest. Our merchants and master manufacturers complain much of the bad effects of high wages in raising the price by lessening the sale of their goods, both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains, they complain only of those of other people. End of Book 1, Chapter 9 Part 1 of Chapter 10 of Book 1 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 the LibriVox.org recording by Stephen Escalara. The Wealth of Nations by Adam Smith. Part 1 of Chapter 10 of Book 1 of Wages and Profit in the Different Employments of Labor and Stock. The whole of the advantages and disadvantages of the different employment of Labor and Stock must in the same neighborhood be either perfectly equal or continually tending to equality. If in the same neighborhood there was any employment evidently more or less advantageous than the rest, so many people would crowd into it in the one case, and so many would desert it in the other, that its advantages would soon return to the level of other employment. This at least would be the case in a society where things were left to follow their natural course, where there was perfect liberty and where every man was perfectly free both to choose what occupation he thought proper and to change it as often as he thought proper. Every man's interest would be advantageous and to shun the disadvantageous employment. Pecuniary wages and profit indeed are everywhere in Europe extremely different according to the different employment of Labor and Stock. But this difference arises partly from certain circumstances in the employment themselves which either really or at least in the imagination of men make up for a small pecuniary gain in some and counterbalance a great one in others and partly from the policy of Europe which is at perfect liberty. The particular consideration of those circumstances and of that policy will divide this chapter into two parts. Part one, inequalities arising from the nature of the employment themselves. The five following are the principal circumstances which so far as I have been able to observe make up for a small pecuniary gain in some employment and counterbalance a great one in others. First, the agreeableness or ease of the employment themselves. Secondly, the easiness and cheapness or the difficulty and expense of learning them. Thirdly, the constancy or inconstancy of employment in them. Fourthly, the small or great trust which must be reposed in those who exercise them and fifthly, the probability or improbability of success in them. First, the wages of Labor vary with the ease or hardship, the cleanliness or dirtiness, the dishonorableness or dishonorableness of the employment. Thus, in most places, take the year round a journeyman tailor earns less than a journeyman weaver. His work is much easier. A journeyman weaver earns less than a journeyman Smith. His work is not always easier, but it is much cleanlier. A journeyman blacksmith, though an artificer, seldom earns so much in twelve hours as a collier who is only a laborer does in eight. His work is not quite ready, is less dangerous, and is carried on in daylight and above ground. Honor makes a great part of the reward of all honorable professions. In point of pecuniary gain, all things considered, they are generally under-recompensed, as I shall endeavor to show by and by. Disgrace has the contrary effect. The trade of a butcher is a brutal and an odious business, but it is in most places more profitable than the greater part of common trades. The most detestable of all employments, that of public executioner, is, in proportion to the quantity of work done, better paid than any common trade whatever. Hunting and fishing, the most important employments of mankind in the rude state of society, become in its advanced state, their most agreeable amusements, and they pursue for pleasure what they once followed from necessity. In the advanced state of society, therefore, they are all very poor people who follow as a trade what other people pursue as a pastime. Fishermen have been so since the time of Theocrates. A poacher is everywhere a very poor man in Great Britain. In countries where the rigor of the law suffers no poachers, the licensed hunter is not in a much better condition. The natural taste for those employments makes more people follow them than can live comfortably by them, and the produce of their labor in proportion to its quantity comes always too cheap to market to afford anything but the most scanty subsistence to the laborers. Disagreeableness and disgrace affect the profits of stock in the same manner as the wages of labor. The keeper of an inn or tavern who is never master of his own house and who is exposed to the brutality of every junkard exercises neither a very agreeable nor a very creditable business. But there is scarce any common trade in which a small stock yields so great a profit. Secondly, the wages of labor vary with the easiness and cheapness, or the inequality and expense of learning the business. When any expensive machine is erected, the extraordinary work to be performed by it before it is worn out it must be expected will replace the capital laid out upon it with at least the ordinary profits. A man educated at the expense of much labor and time to any of those employments which require extraordinary dexterity and skill may be compared to one of those expensive machines. The work which he learns to perform it must be expected over and above the wages of common labor will replace to him the whole expense of his education with at least the ordinary profits of an equally valuable capital. It must do this too in a reasonable time regard being had to the very uncertain duration of human life in the same manner as to the more certain duration of the machine. The difference between the wages of skilled labor and those of common labor is founded upon this principle. The policy of Europe considers the labor of all mechanics, artificers, and manufacturers as skilled labor and that of all country laborers as common labor. It seems to suppose that of the former to be of a more nice and delicate nature than that of the latter. It is so perhaps in some cases but in the greater part it is quite otherwise as I shall endeavor to show by and by. The laws and customs of Europe therefore in order to qualify any person for exercising the one species of labor imposed the necessity of an apprenticeship though in different places. They leave the other free and open to everybody. During the continuance of the apprenticeship the whole labor of the apprentice belongs to his master. In the meantime he must in many cases be maintained by his parents or relations and in almost all cases must be clothed by them. Some money too is commonly given to the master for teaching him his trade. They who cannot give money give time or become bound for more than the usual number of years. A rich though it is not always advantageous to the master on account of the usual idleness of apprentices is always disadvantageous to the apprentice. In country labor on the contrary the laborer while he is employed about the easier learns the more difficult parts of his business and his own labor maintains him through all the different stages of his employment. It is reasonable therefore that in Europe the wages of mechanics, artificers and manufacturers should be somewhat higher accordingly and their superior gains make them in most places be considered as a superior rank of people. This superiority however is generally very small. The daily or weekly earnings of a journeyman in the more common sorts of manufacturers such as those of plain linen and woolen cloth computed at an average are in most places very little more than the day wages of common laborers. Their employment indeed is more steady in uniform and the superiority of their earnings taking a whole year together may be somewhat greater. It seems evidently however to be no greater than what is sufficient to compensate the superior expense of their education. Education in the ingenious arts and in the liberal professions is still more tedious and expensive. The pecuniary recompense therefore of painters and sculptures of lawyers and physicians ought to be much more liberal and it is so accordingly. The profits of stock seem to be very little affected by the easiness or difficulty of learning in which it is employed. All the different ways in which stock is commonly employed in great towns, same in reality to be almost equally easy and equally difficult to learn. One branch either of foreign or domestic trade cannot well be a much more intricate business than another. Thirdly, the wages of labor in different occupations vary with the constancy or inconstancy of employment. Employment is much more constant in some trades than in others. In the greater part of manufacturers a journeyman may be pretty sure of employment almost every day in the year that he is able to work. A mason or bricklayer on the contrary can work neither in hard frost nor in foul weather and his employment at all other times depends upon the occasional calls of his customers. He is liable and consequence to be frequently without any. What he earns therefore while he is employed must not only maintain him while he is idle, but make him some compensation for those anxious and desponding moments which the thought of so precarious a situation must sometimes occasion. Where the computed earnings of the greater part of manufacturers accordingly are nearly upon a level with the day wages of common laborers, those of masons and bricklayers are generally from one half more to double those wages. Where common laborers earn four or five shillings a week, masons and bricklayers frequently earn seven and eight. Where the former earn six, the latter often earn nine and ten. And where the former earn nine and ten as in London the latter commonly earn fifteen and eighteen. No species of skilled labor however seems more easy to learn than that of masons and bricklayers. Chairman in London during the summer season are said sometimes to be employed as bricklayers. The high wages of those workmen therefore are not so much the recompense of their skill as the compensation for the inconstancy of their employment. A house carpenter seems to exercise rather a nicer and a more ingenious trade than a mason. In most places however, for it is not universally so, his day wages are somewhat lower. His employment, though it depends much, does not depend so entirely upon the occasional call of his customers, and it is not liable to be interrupted by the weather. When the trades which generally afford constant employment happen in a particular place not to do so, the wages of the workmen always rise a good deal above their ordinary proportion to those of common labor. In London all journeymen artificers are liable to be called upon and dismissed by their masters from day to day, and from week to week in the same manner as day laborers in other places. The lowest order of artificers, journeymen tailors, accordingly, earn their half a crown a day, though 18 pence may be reckoned the wages of common labor. In small towns and country villages the wages of journeymen tailors frequently scarce equal those of common labor, but in London they are often many weeks without work. When the inconstancy of employment is combined with the hardship, disagreeableness, and dirtiness of the work, it sometimes raises the wages of the most common labor above those of the most skillful artificers. A collier working by the peace is supposed at Newcastle to earn commonly about double, and in many parts of Scotland about three times the wages of common labor. His high wages arise altogether from the hardship, disagreeableness, and dirtiness of his work. His employment may sometimes be as constant as he pleases. The coal heavers in London exercise a trade which, in hardship, dirtiness, and disagreeableness, almost equals that of colliers. And, from the unavoidable irregularity in the arrivals of coal ships, the employment of the greater part of them is necessarily very inconstant. If colliers therefore commonly earn double and triple the wages of common labor, it ought not to seem unreasonable that coal heavers should sometimes earn four and five times the wages. In the inquiry made into their condition a few years ago, it was found that, at the rate at which they were then paid, they could earn from six to ten shillings a day. Six shillings are about four times the wages of common labor in London, and, in every particular trade, the lowest common earnings may always be considered as those of the far greater number. How extravagant, so ever, those earnings may appear, if they were more than sufficient to compensate all the disagreeable they would soon be so great a number of competitors as, in a trade which has no exclusive privilege, would quickly reduce them to a lower rate. The constancy or inconstancy of employment cannot affect the ordinary profits of stock in any particular trade. Whether the stock is, or is not constantly employed, depends not upon the trade, but the trader. Fourthly, the wages of labor vary accordingly to the small or great trust which must be reposed in the workmen. The wages of goldsmiths and jewelers are everywhere superior to those of many other workmen, not only of equal, but of much superior ingenuity, on account of the precious materials with which they are entrusted. We trust our health to the physician, our fortune, and sometimes our life and reputation to the lawyer and attorney. Such confidence could not safely be reposed in people of a very mean or low condition. Their reward must be such, therefore, as may give them that rank in the society that their trust requires. The long time and the great expense which must be laid out in their education when combined with this circumstance necessarily enhance still further the price of their labor. When a person employs only his own stock in trade, there is no trust, and the credit which he may get from other people depends not upon the nature of the trade, but upon their opinion of his fortune, probity, and prudence. The different rates of profit, therefore, and the different branches cannot arise from the different degrees of trust reposed in the traders. Fifthly, the wages of labor in different employments vary according to the probability or improbability of success in them. The probability that any particular person shall ever be qualified for the employments to which he is educated is very different in different occupations. In the greatest part of mechanic trades, success is almost certain, but very uncertain in the liberal professions. Put your son apprentice to a shoemaker, there is little doubt of his learning to make a pair of shoes, but send him to study the law. It is at least twenty to one if he ever makes such proficiency as will enable him to live by the business. In a perfectly fair lottery, those who draw the prizes ought to gain all that is lost by those who draw the blanks. In a profession where twenty fail for one that succeeds, that one ought to gain all that should have been gained by the unsuccessful twenty. The counselor at law, who perhaps at near forty years of age begins to make something by his profession, ought to receive the retribution not only of his own so tedious and expensive education, but of that of more than twenty others who are never likely to make anything by it. How extravagant, so ever, the fees of counselors at law may sometimes appear, their real retribution is never equal to this. Compute in any particular place, what is likely to be annually gained and what is likely to be annually spent by different workmen in any common trade, such as that of shoemakers or weavers, and you will find that the former some will generally exceed the latter. But make the same computation with regard to all the counselors and students of law and all the different ends of court, and you will find that their annual gains bear but a very small proportion to their annual expense, even though you rate the former as a high and the latter as low, as can well be done. The lottery of the law, therefore, is very far from being a perfectly fair lottery, and that as well as many other liberal and honorable professions is, in point of pecuniary gain, evidently under recompensed. Those professions keep their level, however, with other occupations, and notwithstanding these discouragements, all the most generous and liberal spirits are eager to crowd into them. Two different causes contribute to recommend them. First, the desire of the reputation which attends upon superior excellence in any of them, and secondly, the natural confidence which every man has, more or less, dwelling in his own abilities, but in his own good fortune. To excel in any profession in which but few arrive at mediocrity, it is the most decisive mark of what is called genius or superior talents. The public admiration which attends upon such distinguished abilities makes always a part of their reward, a greater or smaller in proportion as it is higher or lower in degree. It makes a considerable part of that reward in the profession of physics, a still greater, perhaps in that of law. In poetry and philosophy, it makes almost a whole. There are some very agreeable and beautiful talents of which the possession commands a certain sort of admiration, but of which the exercise for the sake of gain is considered, whether from reason or prejudice, as a sort of public prostitution. The pecuniary recompense, therefore, of those who exercise them in this manner must be sufficient not only to pay for the time, labor, and expense of acquiring the talents, but for the discredit which attends the employment of them in the means of subsistence. The exorbitant rewards of players, opera singers, opera dancers, etc. are founded upon those two principles, the rarity and beauty of the talents, and the discredit of employing them in this manner. It seems absurd at first sight that we should despise their persons and yet reward their talents with the most profuse liberality. While we do the one, however, we must of necessity do the other. Should the public opinion or prejudice ever alter with regard to such occupations, their pecuniary recompense would quickly diminish. More people would apply to them and the competition would quickly reduce the price of their labor. Such talents, though far from being common, are by no means so rare as imagined. Many people possess them in great perfection, who disdain to make this use of them, and many more are capable of acquiring them if anything could be made honorably by them. The overweening conceit which the greater part of men have of their own abilities is an ancient evil remarked by the philosophers in more or less of all ages. Their absurd presumption in their own good fortune has been less taken notice of. It is, however, if possible, still more universal. There is no man living who, when intolerable health and spirits, has not some share of it. The chance of gain is by every man more or less overvalued, and the chance of loss is by most men undervalued, and by scarce any man who is intolerable health and spirits valued more than it is worth. That the chance of gain is naturally overvalued, we may learn from the universal success of lotteries. The world neither ever saw, nor ever will see, a perfectly fair lottery, or one in which the whole gain compensated the whole loss, because the undertaker could make nothing by it. In the state lotteries, the tickets are really not worth the price which is paid by the original subscribers, and yet commonly sell in the market for twenty, thirty, and sometimes forty percent advance. The vain hopes of gaining some of the great prizes is the sole cause of this demand. The soberest people scarce look upon it as a folly to pay a small sum for the chance of gaining ten or twenty thousand pounds, though they know that even that small sum is perhaps twenty or thirty percent more than the chance is worth. In a lottery in which no prize exceeded twenty pounds, though in other respects it approached much nearer to a perfectly fair one than the common state lotteries, there would not be the same demand for tickets. In order to have a chance for some of the great prizes, some people purchase several tickets, and others, small shares in a still greater number. There is not, however, a more certain proposition in mathematics than that the more tickets you adventure upon, the more likely you are to be a loser. Adventure upon all the tickets in the lottery, and you lose for certain, and the greater the number of your tickets, the nearer you approach to this certainty. That the chance of losses frequently undervalued and scarce ever valued more than it is worth, from the very moderate profit of insurers. In order to make insurance either from fire or sea risk, a trade at all, the common premium must be sufficient to compensate the common losses, to pay the expensive management, and to afford such a profit as might have been drawn from an equal capital employed in any common trade. The person who pays no more than this evidently pays no more than the real value of the risk, or the lowest price at which he can reasonably expect to insure it. But though many people have made a little money by insurance, very few have made a great fortune, and from this consideration alone it seems evident enough that the ordinary balance of profit and loss is not more advantageous in this than in other common trades, by which so many people make fortunes. Moderate, however, as the premium of insurance commonly is, many people despise the risk too much to care to pay it. Taking the whole kingdom at an average, 19 houses and 20, or rather perhaps 99 and 100 are not insured from fire. Sea risk is more alarming to the greater part of people, and the proportion of ships insured to those not insured is much greater. Many sale, however, at all seasons, and even in time of war, without any insurance. This may sometimes perhaps be done without any imprudence. When a great company, or even a great merchant, has 20 or 30 ships at sea, they may, as it were, insure one another. The premium saved upon them all may more than compensate such losses as they are likely to meet within the common course of chances. The neglect of insurance upon shipping, however, in the same manner as upon houses is, in most cases, the effect of no such nice calculation, but of mere thoughtless rashness and presumptuous contempt of the risk. The contempt of risk and the presumptuous hope of success are, in no period of life, more active than at the age at which young people choose their professions. How little the fear of misfortune is capable of balancing the hope of good luck appears still more evidently in the readiness of the common people to enlist as soldiers, or to go to sea, then in the eagerness of those of better fashion to enter into what are called the liberal professions. What a common soldier may lose is obvious enough. Without regarding the danger, however, young volunteers never enlist so readily as at the beginning of a new war, and though they have scarce any chance of preferment, they figure to themselves, in their youthful fancies, on occasions of acquiring honor and distinction which never occur. These romantic hopes make the whole price of their blood. Their pay is less than that of common laborers, and, in actual service, their fatigues are much greater. End of Book 1, Chapter 10, Part 1.