Agricultural Systems: Land's Produce as the Sole or Main Source of National Wealth and Revenue

The agricultural systems of political economy will not require so long an explanation as that which I have thought it necessary to bestow upon the mercantile or commercial system.

The agricultural systems of political economy will not need as long an explanation as I thought necessary for the mercantile or commercial system.

That system which represents the produce of land as the sole source of the revenue and wealth of every country, has so far as I know, never been adopted by any nation, and it at present exists only in the speculations of a few men of great learning and ingenuity in France. It would not, surely, be worth while to examine at great length the errors of a system which never has done, and probably never will do, any harm in any part of the world. I shall endeavour to explain, however, as distinctly as I can, the great outlines of this very ingenious system.

The system that presents the produce of land as the sole source of every country's income and wealth has, as far as I know, never been adopted by any nation. Today it exists only in the theories of a few highly learned and ingenious men in France. Surely, it would not be worth examining the errors of this system at great length. It has never done any harm anywhere in the world and probably never will. However, I will try to explain the broad outlines of this very ingenious system as clearly as I can.

Mr. Colbert, the famous minister of Lewis XIV. was a man of probity, of great industry, and knowledge of detail; of great experience and acuteness in the examination of public accounts; and of abilities, in short, every way fitted for introducing method and good order into the collection and expenditure of the public revenue. That minister had unfortunately embraced all the prejudices of the mercantile system, in its nature and essence a system of restraint and regulation, and such as could scarce fail to be agreeable to a laborious and plodding man of business, who had been accustomed to regulate the different departments of public offices, and to establish the necessary checks and controls for confining each to its proper sphere. The industry and commerce of a great country, he endeavoured to regulate upon the same model as the departments of a public office; and instead of allowing every man to pursue his own interest his own way, upon the liberal plan of equality, liberty, and justice, he bestowed upon certain branches of industry extraordinary privileges, while he laid others under as extraordinary restraints. He was not only disposed, like other European ministers, to encourage more the industry of the towns than that of the country; but, in order to support the industry of the towns, he was willing even to depress and keep down that of the country. In order to render provisions cheap to the inhabitants of the towns, and thereby to encourage manufactures and foreign commerce, he prohibited altogether the exportation of corn, and thus excluded the inhabitants of the country from every foreign market, for by far the most important part of the produce of their industry. This prohibition, joined to the restraints imposed by the ancient provincial laws of France upon the transportation of corn from one province to another, and to the arbitrary and degrading taxes which are levied upon the cultivators in almost all the provinces, discouraged and kept down the agriculture of that country very much below the state to which it would naturally have risen in so very fertile a soil, and so very happy a climate. This state of discouragement and depression was felt more or less in every different part of the country, and many different inquiries were set on foot concerning the causes of it. One of those causes appeared to be the preference given, by the institutions of Mr. Colbert, to the industry of the towns above that of the country.

Mr. Colbert, the famous minister of Louis XIV, was a man of integrity, great industry, and detailed knowledge. He had great experience and skill in examining public accounts. In short, his abilities suited him in every way to bringing method and order to collecting and spending public revenue. Unfortunately, Colbert had embraced all the prejudices of the mercantile system. That system was, by its very nature, one of restraint and regulation. It could hardly fail to appeal to a hardworking, plodding man of business. He was accustomed to regulating government departments and establishing the checks and controls needed to keep each within its proper sphere. Colbert tried to regulate the industry and commerce of a great country on the same model as government departments. He did not allow everyone to pursue their own interest in their own way, on the liberal principles of equality, liberty, and justice. Instead, he gave certain branches of industry extraordinary privileges, while placing equally extraordinary restraints on others. Like other European ministers, he favored the industry of the towns over that of the countryside. But he was even willing to suppress the industry of the countryside to support that of the towns. To make food cheap for town residents, and thereby encourage manufacturing and foreign trade, he prohibited the export of grain altogether. He thus excluded country people from every foreign market for by far the most important part of their produce. This prohibition combined with restraints imposed by France's old provincial laws on transporting grain between provinces. It also combined with the arbitrary and degrading taxes levied on farmers in almost all the provinces. Together, these measures discouraged and suppressed French agriculture. They kept it far below the level it would naturally have reached in such fertile soil and such a favorable climate. This discouragement and decline were felt to some extent in every part of the country. Many inquiries were started into their causes. One apparent cause was the preference Colbert's policies gave to the industry of the towns over that of the countryside.

If the rod be bent too much one way, says the proverb, in order to make it straight, you must bend it as much the other. The French philosophers, who have proposed the system which represents agriculture as the sole source of the revenue and wealth of every country, seem to have adopted this proverbial maxim; and, as in the plan of Mr. Colbert, the industry of the towns was certainly overvalued in comparison with that of the country, so in their system it seems to be as certainly under-valued.

A proverb says that if a rod is bent too far one way, you must bend it equally far the other way to straighten it. The French philosophers seem to have followed this proverb. They proposed a system that presents agriculture as the only source of every country's income and wealth. Mr. Colbert's plan certainly valued the work of towns too highly compared with that of the countryside. The philosophers' system seems just as certainly to value it too little.

The different orders of people, who have ever been supposed to contribute in any respect towards the annual produce of the land and labour of the country, they divide into three classes. The first is the class of the proprietors of land. The second is the class of the cultivators, of farmers and country labourers, whom they honour with the peculiar appellation of the productive class. The third is the class of artificers, manufacturers, and merchants, whom they endeavour to degrade by the humiliating appellation of the barren or unproductive class.

They divide into three classes the groups of people who have ever been thought to contribute in any way to the annual output of the country’s land and labor. The first class consists of landowners. The second consists of cultivators, farmers and rural laborers, whom they honor with the special name of the productive class. The third consists of craftspeople, manufacturers and merchants. They try to degrade this third class with the humiliating name of the barren or unproductive class.

The class of proprietors contributes to the annual produce, by the expense which they may occasionally lay out upon the improvement of the land, upon the buildings, drains, inclosures, and other ameliorations, which they may either make or maintain upon it, and by means of which the cultivators are enabled, with the same capital, to raise a greater produce, and consequently to pay a greater rent. This advanced rent may be considered as the interest or profit due to the proprietor, upon the expense or capital which he thus employs in the improvement of his land. Such expenses are in this system called ground expenses (depenses foncieres).

Landowners contribute to the annual produce through the money they sometimes spend improving their land. They may build or maintain buildings, drains, fences, and other improvements. These improvements allow farmers to produce more with the same capital and therefore to pay higher rent. This increase in rent may be seen as the interest or profit owed to the landowner for the money spent improving the land. In this system, such spending is called ground expenses (depenses foncieres).

The cultivators or farmers contribute to the annual produce, by what are in this system called the original and annual expenses (depenses primitives, et depenses annuelles), which they lay out upon the cultivation of the land. The original expenses consist in the instruments of husbandry, in the stock of cattle, in the seed, and in the maintenance of the farmer’s family, servants, and cattle, during at least a great part of the first year of his occupancy, or till he can receive some return from the land. The annual expenses consist in the seed, in the wear and tear of instruments of husbandry, and in the annual maintenance of the farmer’s servants and cattle, and of his family too, so far as any part of them can be considered as servants employed in cultivation. That part of the produce of the land which remains to him after paying the rent, ought to be sufficient, first, to replace to him, within a reasonable time, at least during the term of his occupancy, the whole of his original expenses, together with the ordinary profits of stock; and, secondly, to replace to him annually the whole of his annual expenses, together likewise with the ordinary profits of stock. Those two sorts of expenses are two capitals which the farmer employs in cultivation; and unless they are regularly restored to him, together with a reasonable profit, he cannot carry on his employment upon a level with other employments; but, from a regard to his own interest, must desert it as soon as possible, and seek some other. That part of the produce of the land which is thus necessary for enabling the farmer to continue his business, ought to be considered as a fund sacred to cultivation, which, if the landlord violates, he necessarily reduces the produce of his own land, and, in a few years, not only disables the farmer from paying this racked rent, but from paying the reasonable rent which he might otherwise have got for his land. The rent which properly belongs to the landlord, is no more than the neat produce which remains after paying, in the completest manner, all the necessary expenses which must be previously laid out, in order to raise the gross or the whole produce. It is because the labour of the cultivators, over and above paying completely all those necessary expenses, affords a neat produce of this kind, that this class of people are in this system peculiarly distinguished by the honourable appellation of the productive class. Their original and annual expenses are for the same reason called, In this system, productive expenses, because, over and above replacing their own value, they occasion the annual reproduction of this neat produce.

Farmers contribute to the annual produce through what this system calls original and annual expenses (depenses primitives, et depenses annuelles). They spend these funds on cultivating the land. Original expenses include farming tools, livestock, and seed. They also include the cost of supporting the farmer’s family, servants, and livestock. This support must last through at least much of the first year of the tenancy, or until the land yields a return. Annual expenses include seed, wear and tear on farming tools, and the yearly cost of supporting the farmer’s servants and livestock. They also include the cost of supporting any family members who can be regarded as servants employed in cultivation. The farmer’s share of the land’s produce, after rent is paid, should be sufficient for two purposes. First, it should repay all the original expenses within a reasonable time, or at least during the tenancy. It should also provide the usual profit on that investment. Second, it should repay all the annual expenses each year, along with the usual profit on that investment. These two kinds of expenses are two forms of capital that the farmer invests in cultivation. Unless both are regularly repaid with a reasonable profit, farming cannot compete with other occupations. The farmer must then, out of self-interest, leave farming as soon as possible and seek another occupation. The farmer needs this share of the land’s produce to continue farming. It should therefore be regarded as a fund reserved for cultivation. If the landlord takes from this fund, the landlord necessarily reduces the produce of the land. Within a few years, the farmer will be unable to pay not only the excessive rent but also the reasonable rent the landlord might otherwise have received. The rent that properly belongs to the landlord is no more than the net produce left after all necessary expenses have been fully paid. These expenses must be paid first to raise the gross, or total, produce. The farmers’ labor fully covers all these necessary expenses and yields a net produce besides. For that reason, this system gives farmers the special honor of calling them the productive class. For the same reason, it calls their original and annual expenses productive expenses. These expenses replace their own value and also bring about the yearly reproduction of this net produce.

The ground expenses, as they are called, or what the landlord lays out upon the improvement of his land, are, in this system, too, honoured with the appellation of productive expenses. Till the whole of those expenses, together with the ordinary profits of stock, have been completely repaid to him by the advanced rent which he gets from his land, that advanced rent ought to be regarded as sacred and inviolable, both by the church and by the king; ought to be subject neither to tithe nor to taxation. If it is otherwise, by discouraging the improvement of land, the church discourages the future increase of her own tithes, and the king the future increase of his own taxes. As in a well ordered state of things, therefore, those ground expenses, over and above reproducing in the completest manner their own value, occasion likewise, after a certain time, a reproduction of a neat produce, they are in this system considered as productive expenses.

In this system, what are called ground expenses, the money a landlord spends improving his land, are also honored as productive expenses. The church and the king should regard the resulting increase in rent as sacred and untouchable until it has fully repaid the landlord for those expenses, along with the ordinary profits on his investment. The increased rent should be subject neither to tithes nor to taxes. Otherwise, by discouraging land improvement, the church discourages future growth in its own tithes, and the king discourages future growth in his own taxes. In a well-ordered system, ground expenses not only fully repay their own value but also, after a time, produce a net surplus. For this reason, they are considered productive expenses in this system.

The ground expenses of the landlord, however, together with the original and the annual expenses of the farmer, are the only three sorts of expenses which in this system are considered as productive. All other expenses, and all other orders of people, even those who, in the common apprehensions of men, are regarded as the most productive, are, in this account of things, represented as altogether barren and unproductive.

In this system, however, only three kinds of expenses are considered productive: the landlord’s expenses for the land, and the farmer’s initial and annual expenses. All other expenses and all other classes of people are presented as entirely barren and unproductive. This includes even those people commonly regarded as the most productive.

Artificers and manufacturers, in particular, whose industry, in the common apprehensions of men, increases so much the value of the rude produce of land, are in this system represented as a class of people altogether barren and unproductive. Their labour, it is said, replaces only the stock which employs them, together with its ordinary profits. That stock consists in the materials, tools, and wages, advanced to them by their employer; and is the fund destined for their employment and maintenance. Its profits are the fund destined for the maintenance of their employer. Their employer, as he advances to them the stock of materials, tools, and wages, necessary for their employment, so he advances to himself what is necessary for his own maintenance; and this maintenance he generally proportions to the profit which he expects to make by the price of their work. Unless its price repays to him the maintenance which he advances to himself, as well as the materials, tools, and wages, which he advances to his workmen, it evidently does not repay to him the whole expense which he lays out upon it. The profits of manufacturing stock, therefore, are not, like the rent of land, a neat produce which remains after completely repaying the whole expense which must be laid out in order to obtain them. The stock of the farmer yields him a profit, as well as that of the master manufacturer; and it yields a rent likewise to another person, which that of the master manufacturer does not. The expense, therefore, laid out in employing and maintaining artificers and manufacturers, does no more than continue, if one may say so, the existence of its own value, and does not produce any new value. It is, therefore, altogether a barren and unproductive expense. The expense, on the contrary, laid out in employing farmers and country labourers, over and above continuing the existence of its own value, produces a new value the rent of the landlord. It is, therefore, a productive expense.

Craftspeople and manufacturers, in particular, are commonly thought to greatly increase the value of raw produce from the land. Yet this system portrays them as a wholly barren and unproductive class. Their labor, it is said, only replaces the capital that employs them, along with its ordinary profits. That capital consists of the materials, tools, and wages their employer advances to them. It is the fund set aside for their employment and maintenance. The profits are the fund set aside for their employer’s maintenance. The employer advances the materials, tools, and wages the workers need for their work. In the same way, the employer advances what is needed for their own maintenance. The employer generally sets this amount according to the profit expected from the price of the workers’ output. Unless that price repays the employer’s maintenance as well as the materials, tools, and wages advanced to the workers, it plainly does not repay the whole expense. Profits on manufacturing capital, therefore, are not like land rent. Rent is a net product that remains after the whole expense of obtaining it has been repaid. The farmer’s capital yields a profit, just as the master manufacturer’s capital does. But the farmer’s capital also yields rent to another person, while the master manufacturer’s capital does not. The expense of employing and maintaining craftspeople and manufacturers therefore does no more than continue, so to speak, the existence of its own value. It produces no new value. It is therefore a wholly barren and unproductive expense. By contrast, the expense of employing farmers and rural laborers continues the existence of its own value and also produces a new value: the landlord’s rent. It is therefore a productive expense.

Mercantile stock is equally barren and unproductive with manufacturing stock. It only continues the existence of its own value, without producing any new value. Its profits are only the repayment of the maintenance which its employer advances to himself during the time that he employs it, or till he receives the returns of it. They are only the repayment of a part of the expense which must be laid out in employing it.

Commercial capital is just as barren and unproductive as manufacturing capital. It only preserves its own value, without creating any new value. Its profits merely repay the owner for the living expenses paid while using it, until it brings a return. They only repay part of the expense of putting the capital to use.

The labour of artificers and manufacturers never adds any thing to the value of the whole annual amount of the rude produce of the land. It adds, indeed, greatly to the value of some particular parts of it. But the consumption which, in the mean time, it occasions of other parts, is precisely equal to the value which it adds to those parts; so that the value of the whole amount is not, at any one moment of time, in the least augmented by it. The person who works the lace of a pair of fine ruffles for example, will sometimes raise the value of, perhaps, a pennyworth of flax to £30 sterling. But though, at first sight, he appears thereby to multiply the value of a part of the rude produce about seven thousand and two hundred times, he in reality adds nothing to the value of the whole annual amount of the rude produce. The working of that lace costs him, perhaps, two years labour. The £30 which he gets for it when it is finished, is no more than the repayment of the subsistence which he advances to himself during the two years that he is employed about it. The value which, by every day’s, month’s, or year’s labour, he adds to the flax, does no more than replace the value of his own consumption during that day, month, or year. At no moment of time, therefore, does he add any thing to the value of the whole annual amount of the rude produce of the land: the portion of that produce which he is continually consuming, being always equal to the value which he is continually producing. The extreme poverty of the greater part of the persons employed in this expensive, though trifling manufacture, may satisfy us that the price of their work does not, in ordinary cases, exceed the value of their subsistence. It is otherwise with the work of farmers and country labourers. The rent of the landlord is a value which, in ordinary cases, it is continually producing over and above replacing, in the most complete manner, the whole consumption, the whole expense laid out upon the employment and maintenance both of the workmen and of their employer.

The work of craftspeople and manufacturers never adds to the total value of the land’s raw produce each year. It does greatly increase the value of some parts of that produce. But their work also causes other parts to be consumed. The value of what they consume is exactly equal to the value they add. So their work never increases the total value of the annual produce, even for a moment. For example, a person who makes lace for a pair of fine ruffles may turn a penny’s worth of flax into something worth £30 sterling. At first, the lacemaker seems to multiply the value of some raw produce about seven thousand two hundred times. But in reality, the lacemaker adds nothing to the total value of the raw produce harvested that year. Making the lace may cost the lacemaker two years of work. The £30 earned for the finished lace only repays the cost of supporting the lacemaker during those two years. The value added to the flax each day, month, or year only replaces the value consumed by the lacemaker during that time. So at no moment does the lacemaker add anything to the total value of the land’s annual raw produce. The portion of that produce the lacemaker continually consumes is always equal to the value continually produced. Most people employed in this expensive but trifling manufacture live in extreme poverty. This may convince us that the price of their work ordinarily does not exceed the cost of supporting them. The work of farmers and country laborers is different. Their work ordinarily produces the value of the landlord’s rent. It does so while also fully replacing everything consumed and spent on employing and supporting both the workers and their employer.

Artificers, manufacturers, and merchants, can augment the revenue and wealth of their society by parsimony only; or, as it is expressed in this system, by privation, that is, by depriving themselves of a part of the funds destined for their own subsistence. They annually reproduce nothing but those funds. Unless, therefore, they annually save some part of them, unless they annually deprive themselves of the enjoyment of some part of them, the revenue and wealth of their society can never be, in the smallest degree, augmented by means of their industry. Farmers and country labourers, on the contrary, may enjoy completely the whole funds destined for their own subsistence, and yet augment, at the same time, the revenue and wealth of their society. Over and above what is destined for their own subsistence, their industry annually affords a neat produce, of which the augmentation necessarily augments the revenue and wealth of their society. Nations, therefore, which, like France or England, consist in a great measure, of proprietors and cultivators, can be enriched by industry and enjoyment. Nations, on the contrary, which, like Holland and Hamburgh, are composed chiefly of merchants, artificers, and manufacturers, can grow rich only through parsimony and privation. As the interest of nations so differently circumstanced is very different, so is likewise the common character of the people. In those of the former kind, liberality, frankness, and good fellowship, naturally make a part of their common character; in the latter, narrowness, meanness, and a selfish disposition, averse to all social pleasure and enjoyment.

Craftspeople, manufacturers, and merchants can increase their society's income and wealth only by saving. In this system, that means depriving themselves of part of the funds meant for their own support. Each year, they reproduce only those funds. So unless they save some part each year, and deny themselves the enjoyment of it, their work can never increase their society's income and wealth in the slightest degree. Farmers and rural laborers, by contrast, can enjoy all the funds meant for their own support. At the same time, they can increase their society's income and wealth. Beyond what they need for their own support, their work produces a net surplus each year. Any increase in that surplus necessarily increases their society's income and wealth. Nations like France or England consist largely of landowners and farmers. They can therefore grow rich through work and enjoyment. Nations like Holland and Hamburgh, by contrast, consist chiefly of merchants, craftspeople, and manufacturers. They can grow rich only through saving and self-denial. The interests of nations in such different circumstances differ greatly, and so do the common characters of their people. In the first kind of nation, generosity, openness, and good fellowship naturally form part of the common character. In the second, the common character is marked by narrow-mindedness, stinginess, and a selfish disposition opposed to all social pleasure and enjoyment.

The unproductive class, that of merchants, artificers, and manufacturers, is maintained and employed altogether at the expense of the two other classes, of that of proprietors, and of that of cultivators. They furnish it both with the materials of its work, and with the fund of its subsistence, with the corn and cattle which it consumes while it is employed about that work. The proprietors and cultivators finally pay both the wages of all the workmen of the unproductive class, and the profits of all their employers. Those workmen and their employers are properly the servants of the proprietors and cultivators. They are only servants who work without doors, as menial servants work within. Both the one and the other, however, are equally maintained at the expense of the same masters. The labour of both is equally unproductive. It adds nothing to the value of the sum total of the rude produce of the land. Instead of increasing the value of that sum total, it is a charge and expense which must be paid out of it.

The unproductive class consists of merchants, craftspeople, and manufacturers. They are supported and employed entirely at the expense of the other two classes, landowners and farmers. Landowners and farmers supply them with both the materials for their work and the means to support themselves. They provide the grain and cattle the unproductive class consumes while working. In the end, landowners and farmers pay both the wages of all workers in the unproductive class and the profits of all their employers. These workers and their employers are really the servants of the landowners and farmers. They are simply servants who work outside the home, as domestic servants work inside it. Both, however, are equally supported at the expense of the same masters. The work of both is equally unproductive. It adds nothing to the total value of the land’s raw produce. Instead of increasing that total value, their work is a cost that must be paid out of it.

The unproductive class, however, is not only useful, but greatly useful, to the other two classes. By means of the industry of merchants, artificers, and manufacturers, the proprietors and cultivators can purchase both the foreign goods and the manufactured produce of their own country, which they have occasion for, with the produce of a much smaller quantity of their own labour, than what they would be obliged to employ, if they were to attempt, in an awkward and unskilful manner, either to import the one, or to make the other, for their own use. By means of the unproductive class, the cultivators are delivered from many cares, which would otherwise distract their attention from the cultivation of land. The superiority of produce, which in consequence of this undivided attention, they are enabled to raise, is fully sufficient to pay the whole expense which the maintenance and employment of the unproductive class costs either the proprietors or themselves. The industry of merchants, artificers, and manufacturers, though in its own nature altogether unproductive, yet contributes in this manner indirectly to increase the produce of the land. It increases the productive powers of productive labour, by leaving it at liberty to confine itself to its proper employment, the cultivation of land; and the plough goes frequently the easier and the better, by means of the labour of the man whose business is most remote from the plough.

The unproductive class, however, is not just useful but greatly useful to the other two classes. Thanks to the work of merchants, craftspeople, and manufacturers, landowners and farmers can buy the foreign and domestic manufactured goods they need. They can pay for these goods with the produce of far less of their own labor than they would otherwise need. Without these workers, they would have to import the foreign goods or make the domestic goods themselves, awkwardly and without skill. The unproductive class also frees farmers from many concerns that would otherwise distract them from cultivating the land. Because farmers can give the land their full attention, they can grow more produce. This extra produce is fully sufficient to pay the entire cost of supporting and employing the unproductive class, whether borne by the landowners or the farmers themselves. The work of merchants, craftspeople, and manufacturers is, by its nature, entirely unproductive. Yet in this way it indirectly helps increase the produce of the land. It makes productive labor more effective by leaving it free to concentrate on its proper work, cultivating the land. The plow often goes more easily and works better thanks to the labor of someone whose work is farthest removed from the plow.

It can never be the interest of the proprietors and cultivators, to restrain or to discourage, in any respect, the industry of merchants, artificers, and manufacturers. The greater the liberty which this unproductive class enjoys, the greater will be the competition in all the different trades which compose it, and the cheaper will the other two classes be supplied, both with foreign goods and with the manufactured produce of their own country.

Landowners and farmers can never benefit from restricting or discouraging the work of merchants, craftspeople, and manufacturers in any way. The more freedom this unproductive class enjoys, the greater the competition in all its trades. In turn, the other two classes can buy both foreign goods and goods manufactured in their own country more cheaply.

It can never be the interest of the unproductive class to oppress the other two classes. It is the surplus produce of the land, or what remains after deducting the maintenance, first of the cultivators, and afterwards of the proprietors, that maintains and employs the unproductive class. The greater this surplus, the greater must likewise be the maintenance and employment of that class. The establishment of perfect justice, of perfect liberty, and of perfect equality, is the very simple secret which most effectually secures the highest degree of prosperity to all the three classes.

It can never be in the interest of the unproductive class to oppress the other two classes. The unproductive class is supported and employed by the surplus produce of the land. This is what remains after the cultivators and then the landowners have been provided for. The greater this surplus, the more support and employment the unproductive class must have. Establishing perfect justice, perfect liberty, and perfect equality is the very simple secret to securing the greatest prosperity for all three classes.

The merchants, artificers, and manufacturers of those mercantile states, which, like Holland and Hamburgh, consist chiefly of this unproductive class, are in the same manner maintained and employed altogether at the expense of the proprietors and cultivators of land. The only difference is, that those proprietors and cultivators are, the greater part of them, placed at a most inconvenient distance from the merchants, artificers, and manufacturers, whom they supply with the materials of their work and the fund of their subsistence; are the inhabitants of other countries, and the subjects of other governments.

In the same way, the merchants, craftspeople, and manufacturers of trading states like Holland and Hamburgh are entirely supported and employed at the expense of landowners and farmers. These states consist chiefly of this unproductive class. The only difference is that most of these landowners and farmers live an inconvenient distance from the merchants, craftspeople, and manufacturers. They live in other countries and are subjects of other governments. Yet they supply the materials for the merchants, craftspeople, and manufacturers to work with, as well as the funds for their support.

Such mercantile states, however, are not only useful, but greatly useful, to the inhabitants of those other countries. They fill up, in some measure, a very important void; and supply the place of the merchants, artificers, and manufacturers, whom the inhabitants of those countries ought to find at home, but whom, from some defect in their policy, they do not find at home.

Such trading states, however, are not just useful to the people of those other countries. They are extremely useful. They fill, to some extent, a very important gap. They take the place of the merchants, craftspeople, and manufacturers whom those countries should have at home. But because of some flaw in their policies, those countries do not have them.

It can never be the interest of those landed nations, if I may call them so, to discourage or distress the industry of such mercantile states, by imposing high duties upon their trade, or upon the commodities which they furnish. Such duties, by rendering those commodities dearer, could serve only to sink the real value of the surplus produce of their own land, with which, or, what comes to the same thing, with the price of which those commodities are purchased. Such duties could only serve to discourage the increase of that surplus produce, and consequently the improvement and cultivation of their own land. The most effectual expedient, on the contrary, for raising the value of that surplus produce, for encouraging its increase, and consequently the improvement and cultivation of their own land, would be to allow the most perfect freedom to the trade of all such mercantile nations.

It can never be in the interest of what I might call landed nations to hinder the industry of such trading states. Yet they do so by imposing high duties on their trade or the goods they supply. Such duties make those goods more expensive. They can therefore only reduce the real value of the surplus produce of the landed nations. Those nations buy the goods with their surplus produce or, what amounts to the same thing, with the money from selling it. Such duties can only discourage an increase in that surplus and, consequently, the improvement and cultivation of their own land. On the contrary, the most effective way to raise the value of that surplus would be to allow all such trading nations complete freedom to trade. This would encourage an increase in the surplus and, consequently, the improvement and cultivation of their own land.

This perfect freedom of trade would even be the most effectual expedient for supplying them, in due time, with all the artificers, manufacturers, and merchants, whom they wanted at home; and for filling up, in the properest and most advantageous manner, that very important void which they felt there.

Complete freedom of trade would even be the most effective way to supply them, in time, with all the craftspeople, manufacturers, and merchants they lacked at home. It would fill this important gap in the most suitable and advantageous way.

The continual increase of the surplus produce of their land would, in due time, create a greater capital than what would be employed with the ordinary rate of profit in the improvement and cultivation of land; and the surplus part of it would naturally turn itself to the employment of artificers and manufacturers, at home. But these artificers and manufacturers, finding at home both the materials of their work and the fund of their subsistence, might immediately, even with much less art and skill be able to work as cheap as the little artificers and manufacturers of such mercantile states, who had both to bring from a greater distance. Even though, from want of art and skill, they might not for some time be able to work as cheap, yet, finding a market at home, they might be able to sell their work there as cheap as that of the artificers and manufacturers of such mercantile states, which could not be brought to that market but from so great a distance; and as their art and skill improved, they would soon be able to sell it cheaper. The artificers and manufacturers of such mercantile states, therefore, would immediately be rivalled in the market of those landed nations, and soon after undersold and justled out of it altogether. The cheapness of the manufactures of those landed nations, in consequence of the gradual improvements of art and skill, would, in due time, extend their sale beyond the home market, and carry them to many foreign markets, from which they would, in the same manner, gradually justle out many of the manufacturers of such mercantile nations.

The continued growth of surplus produce from their land would eventually create more capital than could be invested in improving and cultivating land at the usual rate of profit. The excess capital would naturally be used to employ craftspeople and manufacturers at home. These workers would find both their raw materials and the resources needed to support themselves at home. Even with much less skill, they might immediately be able to produce goods as cheaply as the small craftspeople and manufacturers of commercial states. Those foreign workers had to bring both their materials and their means of support from farther away. Even if their lack of skill kept them from producing goods as cheaply for a time, they would still have a market at home. There they might be able to sell their goods as cheaply as those from commercial states. Foreign goods could reach that market only after being transported over a great distance. As the domestic workers’ skill improved, they would soon be able to sell their goods more cheaply. The craftspeople and manufacturers of commercial states would therefore face immediate competition in the markets of those agricultural nations. Soon afterward, domestic producers would undercut their prices and drive them out of those markets altogether. As skill gradually improved, the goods made by agricultural nations would become cheaper. In time, sales would extend beyond the home market to many foreign markets. There, in the same way, these goods would gradually displace many manufacturers from commercial nations.

This continual increase, both of the rude and manufactured produce of those landed nations, would, in due time, create a greater capital than could, with the ordinary rate of profit, be employed either in agriculture or in manufactures. The surplus of this capital would naturally turn itself to foreign trade and be employed in exporting, to foreign countries, such parts of the rude and manufactured produce of its own country, as exceeded the demand of the home market. In the exportation of the produce of their own country, the merchants of a landed nation would have an advantage of the same kind over those of mercantile nations, which its artificers and manufacturers had over the artificers and manufacturers of such nations; the advantage of finding at home that cargo, and those stores and provisions, which the others were obliged to seek for at a distance. With inferior art and skill in navigation, therefore, they would be able to sell that cargo as cheap in foreign markets as the merchants of such mercantile nations; and with equal art and skill they would be able to sell it cheaper. They would soon, therefore, rival those mercantile nations in this branch of foreign trade, and, in due time, would justle them out of it altogether.

As these agricultural nations continued to increase their output of raw materials and manufactured goods, their capital would grow. In time, it would exceed what could be invested in agriculture or manufacturing at the usual rate of profit. The surplus capital would naturally turn to foreign trade. It would be used to export the country’s raw materials and manufactured goods beyond what the domestic market demanded. In exporting their own country’s goods, merchants from an agricultural nation would have an advantage over merchants from trading nations. It would be the same kind of advantage that the agricultural nation’s craftspeople and manufacturers had over those of trading nations. Its merchants could find at home the cargo, supplies, and provisions that merchants from trading nations had to seek far away. Even with less skill and expertise in navigation, they could sell their cargo just as cheaply in foreign markets. With equal skill and expertise, they could sell it more cheaply. They would therefore soon rival the trading nations in this branch of foreign trade. In time, they would drive them out of it altogether.

According to this liberal and generous system, therefore, the most advantageous method in which a landed nation can raise up artificers, manufacturers, and merchants of its own, is to grant the most perfect freedom of trade to the artificers, manufacturers, and merchants of all other nations. It thereby raises the value of the surplus produce of its own land, of which the continual increase gradually establishes a fund, which, in due time, necessarily raises up all the artificers, manufacturers, and merchants, whom it has occasion for.

According to this liberal and generous system, a nation rich in land can best develop its own craftspeople, manufacturers, and merchants by granting complete freedom of trade to those of all other nations. This raises the value of the surplus produce from its land. As that surplus continues to grow, it gradually creates a fund that will, in time, necessarily bring forth all the craftspeople, manufacturers, and merchants the nation needs.

When a landed nation on the contrary, oppresses, either by high duties or by prohibitions, the trade of foreign nations, it necessarily hurts its own interest in two different ways. First, by raising the price of all foreign goods, and of all sorts of manufactures, it necessarily sinks the real value of the surplus produce of its own land, with which, or, what comes to the same thing, with the price of which, it purchases those foreign goods and manufactures. Secondly, by giving a sort of monopoly of the home market to its own merchants, artificers, and manufacturers, it raises the rate of mercantile and manufacturing profit, in proportion to that of agricultural profit; and, consequently, either draws from agriculture a part of the capital which had before been employed in it, or hinders from going to it a part of what would otherwise have gone to it. This policy, therefore, discourages agriculture in two different ways; first, by sinking the real value of its produce, and thereby lowering the rate of its profits; and, secondly, by raising the rate of profit in all other employments. Agriculture is rendered less advantageous, and trade and manufactures more advantageous, than they otherwise would be; and every man is tempted by his own interest to turn, as much as he can, both his capital and his industry from the former to the latter employments.

When a nation that depends on agriculture restricts foreign trade through high duties or prohibitions, it necessarily harms its own interests in two ways. First, the restrictions raise the price of all foreign goods and all kinds of manufactured goods. This necessarily lowers the real value of the nation's surplus farm produce. The nation buys foreign goods and manufactured goods with that surplus, or, what amounts to the same thing, with the money it receives for the surplus. Second, the restrictions give the nation's merchants, craftspeople, and manufacturers a kind of monopoly in the home market. This raises profits in trade and manufacturing relative to profits in agriculture. As a result, some capital previously invested in agriculture is drawn away. Or some capital that would otherwise have gone into agriculture is kept from it. This policy therefore discourages agriculture in two ways. First, it lowers the real value of farm produce and thereby reduces agricultural profits. Second, it raises profits in all other occupations. Agriculture becomes less profitable than it otherwise would be, while trade and manufacturing become more profitable. Each person's own interest tempts them to shift as much capital and effort as possible from agriculture to those other occupations.

Though, by this oppressive policy, a landed nation should be able to raise up artificers, manufacturers, and merchants of its own, somewhat sooner than it could do by the freedom of trade; a matter, however, which is not a little doubtful; yet it would raise them up, if one may say so, prematurely, and before it was perfectly ripe for them. By raising up too hastily one species of industry, it would depress another more valuable species of industry. By raising up too hastily a species of industry which duly replaces the stock which employs it, together with the ordinary profit, it would depress a species of industry which, over and above replacing that stock, with its profit, affords likewise a neat produce, a free rent to the landlord. It would depress productive labour, by encouraging too hastily that labour which is altogether barren and unproductive.

This oppressive policy might help an agricultural nation develop its own craftspeople, manufacturers, and merchants somewhat sooner than free trade would. That, however, is highly doubtful. Even so, the policy would, if one may say so, bring them into being prematurely, before the nation was fully ready for them. By developing one kind of industry too quickly, the policy would hold back another, more valuable kind. The industry it encouraged would replace the capital invested in it and provide the usual profit. But the industry it held back would do more. Besides replacing the capital and providing a profit, it would also yield a net produce, a rent for the landlord. The policy would hold back productive labor by encouraging labor that is altogether barren and unproductive too soon.

In what manner, according to this system, the sum total of the annual produce of the land is distributed among the three classes above mentioned, and in what manner the labour of the unproductive class does no more than replace the value of its own consumption, without increasing in any respect the value of that sum total, is represented by Mr Quesnai, the very ingenious and profound author of this system, in some arithmetical formularies. The first of these formularies, which, by way of eminence, he peculiarly distinguishes by the name of the Economical Table, represents the manner in which he supposes this distribution takes place, in a state of the most perfect liberty, and, therefore, of the highest prosperity; in a state where the annual produce is such as to afford the greatest possible neat produce, and where each class enjoys its proper share of the whole annual produce. Some subsequent formularies represent the manner in which he supposes this distribution is made in different states of restraint and regulation; in which, either the class of proprietors, or the barren and unproductive class, is more favoured than the class of cultivators; and in which either the one or the other encroaches, more or less, upon the share which ought properly to belong to this productive class. Every such encroachment, every violation of that natural distribution, which the most perfect liberty would establish, must, according to this system, necessarily degrade, more or less, from one year to another, the value and sum total of the annual produce, and must necessarily occasion a gradual declension in the real wealth and revenue of the society; a declension, of which the progress must be quicker or slower, according to the degree of this encroachment, according as that natural distribution, which the most perfect liberty would establish, is more or less violated. Those subsequent formularies represent the different degrees of declension which, according to this system, correspond to the different degrees in which this natural distribution of things is violated.

Mr Quesnai, the very ingenious and profound author of this system, uses arithmetical formulas to explain it. The formulas show how the land’s total annual produce is distributed among the three classes mentioned above. They also show how the labor of the unproductive class merely replaces the value of what it consumes, without increasing the value of the total produce in any way. He gives the first formula the special name of the Economical Table. It shows how he supposes this distribution takes place under perfect liberty and, therefore, the greatest prosperity. In this state, the annual produce yields the greatest possible net produce. Each class also receives its proper share of the whole annual produce. Some later formulas show how he supposes the distribution takes place under different kinds of restrictions and regulations. In these cases, either the class of proprietors or the barren and unproductive class is favored over the class of cultivators. One or the other takes more or less of the share that properly belongs to the productive class. According to this system, every such encroachment violates the natural distribution that perfect liberty would establish. Each violation must necessarily reduce the value and total amount of annual produce from one year to the next. It must also cause a gradual decline in the society’s real wealth and revenue. This decline must be faster or slower according to the extent of the encroachment and violation of the natural distribution. The later formulas show the different degrees of decline that, according to this system, correspond to different degrees of violation.

Some speculative physicians seem to have imagined that the health of the human body could be preserved only by a certain precise regimen of diet and exercise, of which every, the smallest violation, necessarily occasioned some degree of disease or disorder proportionate to the degree of the violation. Experience, however, would seem to shew, that the human body frequently preserves, to all appearance at least, the most perfect state of health under a vast variety of different regimens; even under some which are generally believed to be very far from being perfectly wholesome. But the healthful state of the human body, it would seem, contains in itself some unknown principle of preservation, capable either of preventing or of correcting, in many respects, the bad effects even of a very faulty regimen. Mr Quesnai, who was himself a physician, and a very speculative physician, seems to have entertained a notion of the same kind concerning the political body, and to have imagined that it would thrive and prosper only under a certain precise regimen, the exact regimen of perfect liberty and perfect justice. He seems not to have considered, that in the political body, the natural effort which every man is continually making to better his own condition, is a principle of preservation capable of preventing and correcting, in many respects, the bad effects of a political economy, in some degree both partial and oppressive. Such a political economy, though it no doubt retards more or less, is not always capable of stopping altogether, the natural progress of a nation towards wealth and prosperity, and still less of making it go backwards. If a nation could not prosper without the enjoyment of perfect liberty and perfect justice, there is not in the world a nation which could ever have prospered. In the political body, however, the wisdom of nature has fortunately made ample provision for remedying many of the bad effects of the folly and injustice of man; it the same manner as it has done in the natural body, for remedying those of his sloth and intemperance.

Some theoretical physicians seem to have imagined that health depended on a precise routine of diet and exercise. They thought that even the smallest departure necessarily caused illness or disorder in proportion to the departure. Experience, however, seems to show that the body often remains, at least apparently, in perfect health under many different routines. This is true even of some routines generally believed to be far from healthy. A healthy body seems to contain some unknown principle of preservation. In many respects, this principle can prevent or correct the bad effects of even a very unhealthy routine. Mr Quesnai was himself a physician, and a highly theoretical one. He seems to have held a similar view of the body politic. He apparently imagined that it could thrive and prosper only under a precise routine of perfect liberty and perfect justice. He seems not to have considered the natural effort everyone continually makes to improve their own condition. In the body politic, this effort is a principle of preservation. It can prevent and correct, in many respects, the bad effects of a political economy that is somewhat biased and oppressive. Such a political economy undoubtedly slows a nation's natural progress toward wealth and prosperity to some degree. But it cannot always stop that progress altogether, much less reverse it. If a nation could not prosper without perfect liberty and perfect justice, no nation in the world could ever have prospered. Fortunately, the wisdom of nature has made ample provision for remedying many bad effects of human folly and injustice in the body politic. It has done the same in the human body for the effects of human laziness and excess.

The capital error of this system, however, seems to lie in its representing the class of artificers, manufacturers, and merchants, as altogether barren and unproductive. The following observations may serve to shew the impropriety of this representation:—

The main error of this system, however, seems to be its claim that craftspeople, manufacturers, and merchants are entirely barren and unproductive. The following observations may show why this claim is mistaken:

First, this class, it is acknowledged, reproduces annually the value of its own annual consumption, and continues, at least, the existence of the stock or capital which maintains and employs it. But, upon this account alone, the denomination of barren or unproductive should seem to be very improperly applied to it. We should not call a marriage barren or unproductive, though it produced only a son and a daughter, to replace the father and mother, and though it did not increase the number of the human species, but only continued it as it was before. Farmers and country labourers, indeed, over and above the stock which maintains and employs them, reproduce annually a neat produce, a free rent to the landlord. As a marriage which affords three children is certainly more productive than one which affords only two, so the labour of farmers and country labourers is certainly more productive than that of merchants, artificers, and manufacturers. The superior produce of the one class, however, does not, render the other barren or unproductive.

First, it is acknowledged that this class reproduces each year the value of what it consumes. It also at least preserves the stock or capital that supports and employs it. But for this reason alone, calling the class barren or unproductive seems quite inappropriate. We would not call a marriage barren or unproductive if it produced only a son and a daughter to replace their parents. This would be true even if the marriage merely maintained the population rather than increasing it. Farmers and rural laborers, however, reproduce more than the stock that supports and employs them. Each year, they also produce a net surplus, a rent available to the landlord. A marriage that produces three children is certainly more productive than one that produces only two. In the same way, the labor of farmers and rural laborers is certainly more productive than that of merchants, craftspeople, and manufacturers. But the greater output of one class does not make the other barren or unproductive.

Secondly, it seems, on this account, altogether improper to consider artificers, manufacturers, and merchants, in the same light as menial servants. The labour of menial servants does not continue the existence of the fund which maintains and employs them. Their maintenance and employment is altogether at the expense of their masters, and the work which they perform is not of a nature to repay that expense. That work consists in services which perish generally in the very instant of their performance, and does not fix or realize itself in any vendible commodity, which can replace the value of their wages and maintenance. The labour, on the contrary, of artificers, manufacturers, and merchants, naturally does fix and realize itself in some such vendible commodity. It is upon this account that, in the chapter in which I treat of productive and unproductive labour, I have classed artificers, manufacturers, and merchants among the productive labourers, and menial servants among the barren or unproductive.

Second, for this reason, it seems entirely wrong to treat artisans, manufacturers, and merchants like domestic servants. The work of domestic servants does not maintain the fund that supports and employs them. Their masters pay the full cost of supporting and employing them, and their work does not repay that expense. Their work consists of services that generally disappear the moment they are performed. It does not take the form of a product for sale that can replace the value of their wages and support. By contrast, the work of artisans, manufacturers, and merchants naturally takes the form of such a product. For this reason, I have classed artisans, manufacturers, and merchants as productive workers in the chapter on productive and unproductive labor. I have classed domestic servants as barren or unproductive.

Thirdly, it seems, upon every supposition, improper to say, that the labour of artificers, manufacturers, and merchants, does not increase the real revenue of the society. Though we should suppose, for example, as it seems to be supposed in this system, that the value of the daily, monthly, and yearly consumption of this class was exactly equal to that of its daily, monthly, and yearly production; yet it would not from thence follow, that its labour added nothing to the real revenue, to the real value of the annual produce of the land and labour of the society. An artificer, for example, who, in the first six months after harvest, executes ten pounds worth of work, though he should, in the same time, consume ten pounds worth of corn and other necessaries, yet really adds the value of ten pounds to the annual produce of the land and labour of the society. While he has been consuming a half-yearly revenue of ten pounds worth of corn and other necessaries, he has produced an equal value of work, capable of purchasing, either to himself, or to some other person, an equal half-yearly revenue. The value, therefore, of what has been consumed and produced during these six months, is equal, not to ten, but to twenty pounds. It is possible, indeed, that no more than ten pounds worth of this value may ever have existed at any one moment of time. But if the ten pounds worth of corn and other necessaries which were consumed by the artificer, had been consumed by a soldier, or by a menial servant, the value of that part of the annual produce which existed at the end of the six months, would have been ten pounds less than it actually is in consequence of the labour of the artificer. Though the value of what the artificer produces, therefore, should not, at any one moment of time, be supposed greater than the value he consumes, yet, at every moment of time, the actually existing value of goods in the market is, in consequence of what he produces, greater than it otherwise would be.

Thirdly, it seems wrong, under any assumption, to say that craftsmen, manufacturers, and merchants add nothing to society's real revenue. Suppose, for example, that the value this class consumes each day, month, and year exactly equals what it produces. This seems to be the assumption of the system. Even so, it does not follow that their labor adds nothing to society's real revenue. It does not follow that their labor adds nothing to the real value of the annual produce of society's land and labor. For example, a craftsman might produce £10 worth of work in the first six months after harvest. During that time, he might also consume £10 worth of grain and other necessities. Even so, he adds £10 in value to the annual produce of society's land and labor. While consuming £10 worth of grain and other necessities, enough to sustain him for six months, he has produced work of equal value. That work can purchase an equal six months' revenue for himself or someone else. The value of what was consumed and produced during those six months is therefore not £10, but £20. It is indeed possible that no more than £10 of this value existed at any one moment. But suppose a soldier or domestic servant had consumed the £10 worth of grain and other necessities instead of the craftsman. The value of the annual produce remaining at the end of the six months would then have been £10 less. It would have been less than it actually was because of the craftsman's labor. The value of what the craftsman produces might never exceed the value he consumes at any one moment. Even so, because of what he produces, the value of goods actually available in the market is always greater than it otherwise would be.

When the patrons of this system assert, that the consumption of artificers, manufacturers, and merchants, is equal to the value of what they produce, they probably mean no more than that their revenue, or the fund destined for their consumption, is equal to it. But if they had expressed themselves more accurately, and only asserted, that the revenue of this class was equal to the value of what they produced, it might readily have occurred to the reader, that what would naturally be saved out of this revenue, must necessarily increase more or less the real wealth of the society. In order, therefore, to make out something like an argument, it was necessary that they should express themselves as they have done; and this argument, even supposing things actually were as it seems to presume them to be, turns out to be a very inconclusive one.

Supporters of this system claim that craftsmen, manufacturers, and merchants consume as much as they produce. They probably mean only that this group’s income, or the funds available for its consumption, equals the value of its output. But they could have stated their claim more accurately. They could have said only that this group’s income equals the value of what it produces. In that case, the reader might readily have realized that any savings from this income must increase society’s real wealth to some degree. So, to make anything resembling an argument, the supporters had to express themselves as they did. Yet even if things were actually as their argument seems to assume, it would still be very inconclusive.

Fourthly, farmers and country labourers can no more augment, without parsimony, the real revenue, the annual produce of the land and labour of their society, than artificers, manufacturers, and merchants. The annual produce of the land and labour of any society can be augmented only in two ways; either, first, by some improvement in the productive powers of the useful labour actually maintained within it; or, secondly, by some increase in the quantity of that labour.

Fourthly, farmers and farm workers can no more increase their society’s real income without saving than craftspeople, manufacturers, and merchants can. Real income is the annual output of a society’s land and labor. This output can increase in only two ways. First, the useful labor already supported by the society can become more productive. Second, the amount of useful labor can increase.

The improvement in the productive powers of useful labour depends, first, upon the improvement in the ability of the workman; and, secondly, upon that of the machinery with which he works. But the labour of artificers and manufacturers, as it is capable of being more subdivided, and the labour of each workman reduced to a greater simplicity of operation, than that of farmers and country labourers; so it is likewise capable of both these sorts of improvement in a much higher degree {See book i chap. 1.} In this respect, therefore, the class of cultivators can have no sort of advantage over that of artificers and manufacturers.

Improvements in the productivity of useful labor depend first on improvements in workers’ skills and second on improvements in their machinery. But the work of craftspeople and manufacturers can be divided more finely than that of farmers and farm laborers. Each worker’s task can be reduced to a simpler operation. As a result, the work of craftspeople and manufacturers is also much more capable of improvement in both ways. {See book i chap. 1.} In this respect, therefore, farmers can have no advantage over craftspeople and manufacturers.

The increase in the quantity of useful labour actually employed within any society must depend altogether upon the increase of the capital which employs it; and the increase of that capital, again, must be exactly equal to the amount of the savings from the revenue, either of the particular persons who manage and direct the employment of that capital, or of some other persons, who lend it to them. If merchants, artificers, and manufacturers are, as this system seems to suppose, naturally more inclined to parsimony and saving than proprietors and cultivators, they are, so far, more likely to augment the quantity of useful labour employed within their society, and consequently to increase its real revenue, the annual produce of its land and labour.

Any increase in the useful labor a society employs depends entirely on an increase in the capital that employs it. That increase in capital must equal the amount saved from income. The savings may come from those who manage and direct the use of the capital. Or they may come from others who lend their savings to them. This system seems to assume that merchants, craftspeople, and manufacturers are naturally more inclined to save than landowners and farmers. If so, they are more likely to increase the useful labor employed in their society. They are therefore more likely to increase its real income, the annual produce of its land and labor.

Fifthly and lastly, though the revenue of the inhabitants of every country was supposed to consist altogether, as this system seems to suppose, in the quantity of subsistence which their industry could procure to them; yet, even upon this supposition, the revenue of a trading and manufacturing country must, other things being equal, always be much greater than that of one without trade or manufactures. By means of trade and manufactures, a greater quantity of subsistence can be annually imported into a particular country, than what its own lands, in the actual state of their cultivation, could afford. The inhabitants of a town, though they frequently possess no lands of their own, yet draw to themselves, by their industry, such a quantity of the rude produce of the lands of other people, as supplies them, not only with the materials of their work, but with the fund of their subsistence. What a town always is with regard to the country in its neighbourhood, one independent state or country may frequently be with regard to other independent states or countries. It is thus that Holland draws a great part of its subsistence from other countries; live cattle from Holstein and Jutland, and corn from almost all the different countries of Europe. A small quantity of manufactured produce, purchases a great quantity of rude produce. A trading and manufacturing country, therefore, naturally purchases, with a small part of its manufactured produce, a great part of the rude produce of other countries; while, on the contrary, a country without trade and manufactures is generally obliged to purchase, at the expense of a great part of its rude produce, a very small part of the manufactured produce of other countries. The one exports what can subsist and accommodate but a very few, and imports the subsistence and accommodation of a great number. The other exports the accommodation and subsistence of a great number, and imports that of a very few only. The inhabitants of the one must always enjoy a much greater quantity of subsistence than what their own lands, in the actual state of their cultivation, could afford. The inhabitants of the other must always enjoy a much smaller quantity.

Fifth and lastly, suppose that a country’s income consists entirely of the food and other necessities its people’s labor can obtain. This system seems to assume as much. Even on that assumption, a country with trade and manufacturing must always have a much greater income than one without them, other things being equal. Through trade and manufacturing, a country can import more necessities each year than its own land could provide at its current level of cultivation. Town residents often own no land. Yet through their labor, they draw enough raw produce from other people’s land to supply both their materials and their necessities. An independent state or country may often do the same with other countries as a town always does with the surrounding countryside. In this way, Holland draws much of its necessities from other countries. It imports live cattle from Holstein and Jutland, and grain from almost every country in Europe. A small quantity of manufactured goods buys a large quantity of raw produce. A country with trade and manufacturing therefore naturally buys much of other countries’ raw produce with a small portion of its manufactured goods. By contrast, a country without trade or manufacturing must generally spend much of its raw produce to buy very few manufactured goods from other countries. The first country exports goods that can support and supply only a few people. It imports enough to support and supply many people. The second exports enough to support and supply many people, and imports enough for only a few. The people of the first country must always enjoy more necessities than their own land could provide at its current level of cultivation. The people of the second must always enjoy much less.

This system, however, with all its imperfections, is perhaps the nearest approximation to the truth that has yet been published upon the subject of political economy; and is upon that account, well worth the consideration of every man who wishes to examine with attention the principles of that very important science. Though in representing the labour which is employed upon land as the only productive labour, the notions which it inculcates are, perhaps, too narrow and confined; yet in representing the wealth of nations as consisting, not in the unconsumable riches of money, but in the consumable goods annually reproduced by the labour of the society, and in representing perfect liberty as the only effectual expedient for rendering this annual reproduction the greatest possible, its doctrine seems to be in every respect as just as it is generous and liberal. Its followers are very numerous; and as men are fond of paradoxes, and of appearing to understand what surpasses the comprehensions of ordinary people, the paradox which it maintains, concerning the unproductive nature of manufacturing labour, has not, perhaps, contributed a little to increase the number of its admirers. They have for some years past made a pretty considerable sect, distinguished in the French republic of letters by the name of the Economists. Their works have certainly been of some service to their country; not only by bringing into general discussion, many subjects which had never been well examined before, but by influencing, in some measure, the public administration in favour of agriculture. It has been in consequence of their representations, accordingly, that the agriculture of France has been delivered from several of the oppressions which it before laboured under. The term, during which such a lease can be granted, as will be valid against every future purchaser or proprietor of the land, has been prolonged from nine to twenty-seven years. The ancient provincial restraints upon the transportation of corn from one province of the kingdom to another, have been entirely taken away; and the liberty of exporting it to all foreign countries, has been established as the common law of the kingdom in all ordinary cases. This sect, in their works, which are very numerous, and which treat not only of what is properly called Political Economy, or of the nature and causes or the wealth of nations, but of every other branch of the system of civil government, all follow implicitly, and without any sensible variation, the doctrine of Mr. Qttesnai. There is, upon this account, little variety in the greater part of their works. The most distinct and best connected account of this doctrine is to be found in a little book written by Mr. Mercier de la Riviere, some time intendant of Martinico, entitled, The natural and essential Order of Political Societies. The admiration of this whole sect for their master, who was himself a man of the greatest modesty and simplicity, is not inferior to that of any of the ancient philosophers for the founders of their respective systems. ‘There have been since the world began,’ says a very diligent and respectable author, the Marquis de Mirabeau, ‘three great inventions which have principally given stability to political societies, independent of many other inventions which have enriched and adorned them. The first is the invention of writing, which alone gives human nature the power of transmitting, without alteration, its laws, its contracts, its annals, and its discoveries. The second is the invention of money, which binds together all the relations between civilized societies. The third is the economical table, the result of the other two, which completes them both by perfecting their object; the great discovery of our age, but of which our posterity will reap the benefit.’

Despite all its imperfections, this system is perhaps the closest approach to the truth yet published on political economy. It is therefore well worth considering by anyone who wants to examine the principles of this very important science carefully. The system teaches that only labor employed on land is productive. In this respect, its ideas are perhaps too narrow and limited. Yet it describes the wealth of nations as consisting of consumable goods produced each year by society’s labor. It does not describe wealth as consisting of money, which cannot be consumed. It also presents complete freedom as the only effective way to make this yearly production as great as possible. In these respects, its doctrine seems to be as sound as it is generous and liberal. The system has many followers. People are fond of paradoxes and of appearing to understand what is beyond the grasp of ordinary people. The system’s paradox about the unproductive nature of manufacturing labor has perhaps helped considerably to increase its admirers. For some years, its followers have formed a fairly large group. In French literary circles, they are known as the Economists. Their works have certainly done their country some good. They have brought many subjects into general discussion that had never been properly examined before. They have also influenced public administration to some extent in favor of agriculture. As a result of their arguments, French agriculture has been freed from several of its former burdens. The term of a lease that remains valid against every future purchaser or owner of the land has been extended from nine to twenty-seven years. The old provincial restrictions on transporting corn from one province of the kingdom to another have been removed entirely. Freedom to export corn to all foreign countries has been established as the general law of the kingdom in all ordinary cases. The members of this group have written many works. These deal not only with political economy, properly speaking, or the nature and causes of the wealth of nations. They also deal with every other branch of the system of civil government. In all of them, the authors follow the doctrine of Mr. Qttesnai unquestioningly and without any noticeable variation. For this reason, there is little variety in most of their works. The clearest and most coherent account of the doctrine is found in a short book by Mr. Mercier de la Riviere, who was once intendant of Martinico. It is entitled The natural and essential Order of Political Societies. The whole group admires its master as much as any ancient philosophers admired the founders of their own systems. He himself was a man of the greatest modesty and simplicity. ‘Since the world began,’ says the Marquis de Mirabeau, a very diligent and respectable author, ‘three great inventions have chiefly given stability to political societies. This is apart from the many other inventions that have enriched and adorned them. The first is writing. It alone gives human beings the power to pass on their laws, contracts, histories, and discoveries without alteration. The second is money, which binds together all the relations between civilized societies. The third is the economical table, which results from the other two. It completes them both by perfecting their purpose. It is the great discovery of our age, but our descendants will reap its benefits.’

As the political economy of the nations of modern Europe has been more favourable to manufactures and foreign trade, the industry of the towns, than to agriculture, the industry of the country; so that of other nations has followed a different plan, and has been more favourable to agriculture than to manufactures and foreign trade.

The economic policies of modern European nations have favored manufacturing and foreign trade over agriculture. Manufacturing and foreign trade are the work of towns, while agriculture is the work of the countryside. Other nations have taken a different approach, favoring agriculture over manufacturing and foreign trade.

The policy of China favours agriculture more than all other employments. In China, the condition of a labourer is said to be as much superior to that of an artificer, as in most parts of Europe that of an artificer is to that of a labourer. In China, the great ambition of every man is to get possession of a little bit of land, either in property or in lease; and leases are there said to be granted upon very moderate terms, and to be sufficiently secured to the lessees. The Chinese have little respect for foreign trade. Your beggarly commerce! was the language in which the mandarins of Pekin used to talk to Mr. De Lange, the Russian envoy, concerning it {See the Journal of Mr. De Lange, in Bell’s Travels, vol. ii. p. 258, 276, 293.}. Except with Japan, the Chinese carry on, themselves, and in their own bottoms, little or no foreign trade; and it is only into one or two ports of their kingdom that they even admit the ships of foreign nations. Foreign trade, therefore, is, in China, every way confined within a much narrower circle than that to which it would naturally extend itself, if more freedom was allowed to it, either in their own ships, or in those of foreign nations.

China’s policies favor agriculture over all other occupations. In China, a laborer’s position is said to be much better than an artisan’s. In most of Europe, an artisan’s position is better than a laborer’s by the same degree. In China, every man’s great ambition is to own or lease a small piece of land. Leases there are said to be granted on very reasonable terms and to give tenants sufficient security. The Chinese have little respect for foreign trade. “Your beggarly commerce!” was how the mandarins of Pekin used to speak of it to Mr. De Lange, the Russian envoy. {See the Journal of Mr. De Lange, in Bell’s Travels, vol. ii. p. 258, 276, 293.} Except with Japan, the Chinese conduct little or no foreign trade in their own ships. They admit foreign ships to only one or two ports in their kingdom. Foreign trade in China is therefore restricted in every way. It is much narrower than it would naturally be if more freedom were allowed, whether for Chinese or foreign ships.

Manufactures, as in a small bulk they frequently contain a great value, and can upon that account be transported at less expense from one country to another than most parts of rude produce, are, in almost all countries, the principal support of foreign trade. In countries, besides, less extensive, and less favourably circumstanced for inferior commerce than China, they generally require the support of foreign trade. Without an extensive foreign market, they could not well flourish, either in countries so moderately extensive as to afford but a narrow home market, or in countries where the communication between one province and another was so difficult, as to render it impossible for the goods of any particular place to enjoy the whole of that home market which the country could afford. The perfection of manufacturing industry, it must be remembered, depends altogether upon the division of labour; and the degree to which the division of labour can be introduced into any manufacture, is necessarily regulated, it has already been shewn, by the extent of the market. But the great extent of the empire of China, the vast multitude of its inhabitants, the variety of climate, and consequently of productions in its different provinces, and the easy communication by means of water-carriage between the greater part of them, render the home market of that country of so great extent, as to be alone sufficient to support very great manufactures, and to admit of very considerable subdivisions of labour. The home market of China is, perhaps, in extent, not much inferior to the market of all the different countries of Europe put together. A more extensive foreign trade, however, which to this great home market added the foreign market of all the rest of the world, especially if any considerable part of this trade was carried on in Chinese ships, could scarce fail to increase very much the manufactures of China, and to improve very much the productive powers of its manufacturing industry. By a more extensive navigation, the Chinese would naturally learn the art of using and constructing, themselves, all the different machines made use of in other countries, as well as the other improvements of art and industry which are practised in all the different parts of the world. Upon their present plan, they have little opportunity of improving themselves by the example of any other nation, except that of the Japanese.

Manufactured goods often contain great value in a small volume. They can therefore be transported between countries more cheaply than most raw goods. For this reason, they are the main support of foreign trade in almost all countries. In countries smaller than China and less suited to domestic trade, manufactures also generally need foreign trade to support them. Without a large foreign market, manufacturing could not flourish in countries with a home market limited by their moderate size. Nor could it flourish in countries where communication between provinces was difficult. There, goods from any one place could not reach the whole home market the country could offer. We must remember that the perfection of manufacturing depends entirely on the division of labor. As already shown, the extent of the market necessarily limits how far labor can be divided in any manufacture. China has a vast empire, a huge population, and a variety of climates and therefore products across its provinces. Most of those provinces are also easily connected by water transport. These features make China’s home market large enough by itself to support very large manufactures and allow a considerable division of labor. China’s home market is perhaps almost as large as the markets of all European countries put together. A more extensive foreign trade, however, would add the markets of the rest of the world to this great home market. It could hardly fail to increase China’s manufactures greatly and improve the productive powers of its manufacturing industry. This would be especially true if Chinese ships carried on a considerable part of the trade. By sailing more widely, the Chinese would naturally learn to use and build all the different machines used in other countries. They would also learn the other improvements in skill and industry practiced throughout the world. Under their present system, they have little opportunity to improve by following the example of any other nation, except the Japanese.

The policy of ancient Egypt, too, and that of the Gentoo government of Indostan, seem to have favoured agriculture more than all other employments.

The policies of ancient Egypt and the Gentoo government of Indostan also seem to have favored agriculture over all other occupations.

Both in ancient Egypt and Indostan, the whole body of the people was divided into different casts or tribes each of which was confined, from father to son, to a particular employment, or class of employments. The son of a priest was necessarily a priest; the son of a soldier, a soldier; the son of a labourer, a labourer; the son of a weaver, a weaver; the son of a tailor, a tailor, etc. In both countries, the cast of the priests holds the highest rank, and that of the soldiers the next; and in both countries the cast of the farmers and labourers was superior to the casts of merchants and manufacturers.

In both ancient Egypt and Indostan, all the people were divided into castes or tribes. Each caste was restricted to a particular occupation or group of occupations, passed down from father to son. A priest’s son had to be a priest, a soldier’s son a soldier, a labourer’s son a labourer, a weaver’s son a weaver, a tailor’s son a tailor, and so on. In both countries, the priests’ caste ranks highest, followed by the soldiers’ caste. In both countries, the caste of farmers and labourers ranked above the castes of merchants and manufacturers.

The government of both countries was particularly attentive to the interest of agriculture. The works constructed by the ancient sovereigns of Egypt, for the proper distribution of the waters of the Nile, were famous in antiquity, and the ruined remains of some of them are still the admiration of travellers. Those of the same kind which were constructed by the ancient sovereigns of Indostan, for the proper distribution of the waters of the Ganges, as well as of many other rivers, though they have been less celebrated, seem to have been equally great. Both countries, accordingly, though subject occasionally to dearths, have been famous for their great fertility. Though both were extremely populous, yet, in years of moderate plenty, they were both able to export great quantities of grain to their neighbours.

The governments of both countries paid special attention to agriculture. The ancient rulers of Egypt built works to distribute the waters of the Nile properly. These works were famous in ancient times. Travelers still admire the ruins of some of them. The ancient rulers of Indostan built similar works to distribute the waters of the Ganges and many other rivers. Though less celebrated, these works seem to have been equally great. Both countries were therefore famous for their great fertility, though they occasionally suffered shortages. Both were extremely populous. Yet in years of moderate abundance, both could export large quantities of grain to their neighbors.

The ancient Egyptians had a superstitious aversion to the sea; and as the Gentoo religion does not permit its followers to light a fire, nor consequently to dress any victuals, upon the water, it, in effect, prohibits them from all distant sea voyages. Both the Egyptians and Indians must have depended almost altogether upon the navigation of other nations for the exportation of their surplus produce; and this dependency, as it must have confined the market, so it must have discouraged the increase of this surplus produce. It must have discouraged, too, the increase of the manufactured produce, more than that of the rude produce. Manufactures require a much more extensive market than the most important parts of the rude produce of the land. A single shoemaker will make more than 300 pairs of shoes in the year; and his own family will not, perhaps, wear out six pairs. Unless, therefore, he has the custom of, at least, 50 such families as his own, he cannot dispose of the whole product of his own labour. The most numerous class of artificers will seldom, in a large country, make more than one in 50, or one in a 100, of the whole number of families contained in it. But in such large countries, as France and England, the number of people employed in agriculture has, by some authors been computed at a half, by others at a third and by no author that I know of, at less that a fifth of the whole inhabitants of the country. But as the produce of the agriculture of both France and England is, the far greater part of it, consumed at home, each person employed in it must, according to these computations, require little more than the custom of one, two, or, at most, of four such families as his own, in order to dispose of the whole produce of his own labour. Agriculture, therefore, can support itself under the discouragement of a confined market much better than manufactures. In both ancient Egypt and Indostan, indeed, the confinement of the foreign market was in some measure compensated by the conveniency of many inland navigations, which opened, in the most advantageous manner, the whole extent of the home market to every part of the produce of every different district of those countries. The great extent of Indostan, too, rendered the home market of that country very great, and sufficient to support a great variety of manufactures. But the small extent of ancient Egypt, which was never equal to England, must at all times, have rendered the home market of that country too narrow for supporting any great variety of manufactures. Bengal accordingly, the province of Indostan which commonly exports the greatest quantity of rice, has always been more remarkable for the exportation of a great variety of manufactures, than for that of its grain. Ancient Egypt, on the contrary, though it exported some manufactures, fine linen in particular, as well as some other goods, was always most distinguished for its great exportation of grain. It was long the granary of the Roman empire.

The ancient Egyptians had a superstitious aversion to the sea. The Gentoo religion forbids its followers to light a fire on the water, so they cannot cook food there. In effect, it forbids them from making any long sea voyages. Both the Egyptians and Indians must have depended almost entirely on other nations’ ships to export their surplus produce. This dependence must have limited their market and discouraged them from increasing that surplus. It must also have discouraged growth in manufactured goods more than growth in raw produce. Manufactures require a much larger market than the most important kinds of raw produce from the land. A single shoemaker makes more than 300 pairs of shoes a year. His own family may not wear out even six pairs. So he needs at least 50 families like his own as customers to sell everything he makes. In a large country, even the most numerous class of craftspeople will rarely make up more than one in 50 or one in 100 of all families. But some authors have estimated that half the people in large countries like France and England work in agriculture. Others have estimated a third. No author I know of has estimated less than a fifth of the population. The great majority of agricultural produce in both France and England is consumed at home. According to these estimates, then, each agricultural worker needs little more than one, two, or at most four families like his own as customers to sell everything he produces. Agriculture can therefore survive the disadvantage of a limited market much better than manufacturing. In both ancient Egypt and Indostan, the limited foreign market was partly offset by convenient inland waterways. These gave every district’s produce the most advantageous access to the entire home market. Indostan was also very large. Its home market was therefore large enough to support a great variety of manufactures. But ancient Egypt was smaller than England. Its home market must therefore always have been too small to support a great variety of manufactures. Bengal is the province of Indostan that usually exports the most rice. Yet it has always been more noted for exporting a great variety of manufactures than for exporting grain. Ancient Egypt, by contrast, exported some manufactures, especially fine linen, as well as some other goods. But it was always best known for its large grain exports. For a long time, it was the granary of the Roman empire.

The sovereigns of China, of ancient Egypt, and of the different kingdoms into which Indostan has, at different times, been divided, have always derived the whole, or by far the most considerable part, of their revenue, from some sort of land tax or land rent. This land tax, or land rent, like the tithe in Europe, consisted in a certain proportion, a fifth, it is said, of the produce of the land, which was either delivered in kind, or paid in money, according to a certain valuation, and which, therefore, varied from year to year, according to all the variations of the produce. It was natural, therefore, that the sovereigns of those countries should be particularly attentive to the interests of agriculture, upon the prosperity or declension of which immediately depended the yearly increase or diminution of their own revenue.

The rulers of China, ancient Egypt, and the kingdoms into which Indostan has been divided at different times have always drawn all or by far the largest part of their revenue from some form of land tax or land rent. Like the tithe in Europe, this tax or rent consisted of a fixed share of the land’s produce. The share was said to be one fifth. It was paid either in produce or in money, according to a fixed valuation. The amount therefore varied from year to year as the produce varied. It was natural, then, for these rulers to pay particular attention to the interests of agriculture. Their annual revenue rose or fell directly with its prosperity or decline.

The policy of the ancient republics of Greece, and that of Rome, though it honoured agriculture more than manufactures or foreign trade, yet seems rather to have discouraged the latter employments, than to have given any direct or intentional encouragement to the former. In several of the ancient states of Greece, foreign trade was prohibited altogether; and in several others, the employments of artificers and manufacturers were considered as hurtful to the strength and agility of the human body, as rendering it incapable of those habits which their military and gymnastic exercises endeavoured to form in it, and as thereby disqualifying it, more or less, for undergoing the fatigues and encountering the dangers of war. Such occupations were considered as fit only for slaves, and the free citizens of the states were prohibited from exercising them. Even in those states where no such prohibition took place, as in Rome and Athens, the great body of the people were in effect excluded from all the trades which are now commonly exercised by the lower sort of the inhabitants of towns. Such trades were, at Athens and Rome, all occupied by the slaves of the rich, who exercised them for the benefit of their masters, whose wealth, power, and protection, made it almost impossible for a poor freeman to find a market for his work, when it came into competition with that of the slaves of the rich. Slaves, however, are very seldom inventive; and all the most important improvements, either in machinery, or in the arrangement and distribution of work, which facilitate and abridge labour have been the discoveries of freemen. Should a slave propose any improvement of this kind, his master would be very apt to consider the proposal as the suggestion of laziness, and of a desire to save his own labour at the master’s expense. The poor slave, instead of reward would probably meet with much abuse, perhaps with some punishment. In the manufactures carried on by slaves, therefore, more labour must generally have been employed to execute the same quantity of work, than in those carried on by freemen. The work of the farmer must, upon that account, generally have been dearer than that of the latter. The Hungarian mines, it is remarked by Mr. Montesquieu, though not richer, have always been wrought with less expense, and therefore with more profit, than the Turkish mines in their neighbourhood. The Turkish mines are wrought by slaves; and the arms of those slaves are the only machines which the Turks have ever thought of employing. The Hungarian mines are wrought by freemen, who employ a great deal of machinery, by which they facilitate and abridge their own labour. From the very little that is known about the price of manufactures in the times of the Greeks and Romans, it would appear that those of the finer sort were excessively dear. Silk sold for its weight in gold. It was not, indeed, in those times an European manufacture; and as it was all brought from the East Indies, the distance of the carriage may in some measure account for the greatness of the price. The price, however, which a lady, it is said, would sometimes pay for a piece of very fine linen, seems to have been equally extravagant; and as linen was always either an European, or at farthest, an Egyptian manufacture, this high price can be accounted for only by the great expense of the labour which must have been employed about It, and the expense of this labour again could arise from nothing but the awkwardness of the machinery which is made use of. The price of fine woollens, too, though not quite so extravagant, seems, however, to have been much above that of the present times. Some cloths, we are told by Pliny {Plin. 1. ix.c.39.}, dyed in a particular manner, cost a hundred denarii, or £3:6s:8d. the pound weight. Others, dyed in another manner, cost a thousand denarii the pound weight, or £33:6s:8d. The Roman pound, it must be remembered, contained only twelve of our avoirdupois ounces. This high price, indeed, seems to have been principally owing to the dye. But had not the cloths themselves been much dearer than any which are made in the present times, so very expensive a dye would not probably have been bestowed upon them. The disproportion would have been too great between the value of the accessory and that of the principal. The price mentioned by the same author {Plin. 1. viii.c.48.}, of some triclinaria, a sort of woollen pillows or cushions made use of to lean upon as they reclined upon their couches at table, passes all credibility; some of them being said to have cost more than £30,000, others more than £300,000. This high price, too, is not said to have arisen from the dye. In the dress of the people of fashion of both sexes, there seems to have been much less variety, it is observed by Dr. Arbuthnot, in ancient than in modern times; and the very little variety which we find in that of the ancient statues, confirms his observation. He infers from this, that their dress must, upon the whole, have been cheaper than ours; but the conclusion does not seem to follow. When the expense of fashionable dress is very great, the variety must be very small. But when, by the improvements in the productive powers of manufacturing art and industry, the expense of any one dress comes to be very moderate, the variety will naturally be very great. The rich, not being able to distinguish themselves by the expense of any one dress, will naturally endeavour to do so by the multitude and variety of their dresses.

The ancient republics of Greece and Rome valued agriculture more than manufacturing or foreign trade. Yet their policies seem to have discouraged manufacturing and trade rather than deliberately giving agriculture any direct support. Several ancient Greek states banned foreign trade altogether. Several others regarded craft and manufacturing work as harmful to the body's strength and agility. They believed it made the body unfit for the habits developed by military and gymnastic exercises. This, in turn, made a person less able to endure the hardships and face the dangers of war. Such occupations were thought fit only for slaves, and free citizens were forbidden to practice them. Even in states without such a ban, such as Rome and Athens, most people were effectively excluded from many trades. These were the trades now commonly practiced by the lower classes in towns. In Athens and Rome, they were all occupied by the slaves of the rich, who worked for their masters' benefit. Their masters' wealth, power, and protection made competition almost impossible for a poor free man. He could hardly find a market for his work when it competed with that of the slaves of the rich. Slaves, however, are very seldom inventive. All the most important improvements in machinery or in organizing and distributing work have been discoveries made by free people. These improvements make labor easier and reduce the amount needed. If a slave proposed such an improvement, his master would be very likely to see it as laziness. He would think the slave wanted to save his own labor at the master's expense. Instead of a reward, the poor slave would probably suffer much abuse, and perhaps some punishment. Manufacturing by slaves must therefore generally have required more labor than manufacturing by free people to produce the same quantity. For that reason, the products of slave labor must generally have been more expensive than those made by free people. Mr. Montesquieu remarks that the Hungarian mines have always been worked at less expense, and therefore more profitably, than the neighboring Turkish mines. Yet the Hungarian mines are no richer. The Turkish mines are worked by slaves, and the arms of those slaves are the only machines the Turks have ever thought to use. The Hungarian mines are worked by free people, who use a great deal of machinery to ease and reduce their labor. Very little is known about the price of manufactured goods in Greek and Roman times. What we do know suggests that finer goods were excessively expensive. Silk sold for its weight in gold. Silk was not then manufactured in Europe, and all of it came from the East Indies. The distance it had to travel may partly explain its high price. However, the price a lady is said sometimes to have paid for a piece of very fine linen seems equally extravagant. Linen was always manufactured in Europe, or at the farthest in Egypt. Its high price can therefore be explained only by the great expense of the labor needed to produce it. That expense, in turn, could have arisen only from the clumsiness of the machinery used. Fine woolens also seem to have cost much more than they do today, though their prices were not quite so extravagant. Pliny tells us that some cloths {Plin. 1. ix.c.39.}, dyed in a particular way, cost a hundred denarii per pound. That was £3:6s:8d. Others, dyed in another way, cost a thousand denarii per pound, or £33:6s:8d. We must remember that the Roman pound contained only twelve of our avoirdupois ounces. These high prices do seem to have been mainly due to the dye. But the cloths themselves must have been much more expensive than any made today. Otherwise, such an expensive dye would probably not have been used on them. The difference between the value of the dye and the cloth itself would have been too great. The price mentioned by the same author {Plin. 1. viii.c.48.} for some triclinaria is beyond belief. These were woolen pillows or cushions used for support while people reclined on couches at the table. Some are said to have cost more than £30,000, and others more than £300,000. In this case, too, the high price is not said to have been caused by the dye. Dr. Arbuthnot observes that fashionable people of both sexes dressed with much less variety in ancient times than in modern times. The very limited variety of dress in ancient statues confirms his observation. He concludes from this that their clothes must, on the whole, have been cheaper than ours. But that conclusion does not seem to follow. When fashionable clothes are very expensive, there must be very little variety. But improvements in manufacturing skill and industry can greatly reduce the cost of any one outfit. Then variety will naturally become very great. The rich can no longer distinguish themselves by the cost of any one outfit. So they will naturally try to do so through the number and variety of their clothes.

The greatest and most important branch of the commerce of every nation, it has already been observed, is that which is carried on between the inhabitants of the town and those of the country. The inhabitants of the town draw from the country the rude produce, which constitutes both the materials of their work and the fund of their subsistence; and they pay for this rude produce, by sending back to the country a certain portion of it manufactured and prepared for immediate use. The trade which is carried on between these two different sets of people, consists ultimately in a certain quantity of rude produce exchanged for a certain quantity of manufactured produce. The dearer the latter, therefore, the cheaper the former; and whatever tends in any country to raise the price of manufactured produce, tends to lower that of the rude produce of the land, and thereby to discourage agriculture. The smaller the quantity of manufactured produce, which any given quantity of rude produce, or, what comes to the same thing, which the price of any given quantity of rude produce, is capable of purchasing, the smaller the exchangeable value of that given quantity of rude produce; the smaller the encouragement which either the landlord has to increase its quantity by improving, or the farmer by cultivating the land. Whatever, besides, tends to diminish in any country the number of artificers and manufacturers, tends to diminish the home market, the most important of all markets, for the rude produce of the land, and thereby still further to discourage agriculture.

As already noted, the largest and most important branch of every nation’s trade is between town and country. Townspeople get raw produce from the country. It supplies both the materials for their work and the means of their subsistence. They pay for it by sending some of it back to the country, manufactured and ready for use. Ultimately, this trade consists of exchanging a quantity of raw produce for a quantity of manufactured goods. The more expensive manufactured goods are, therefore, the cheaper raw produce is. Anything that raises the price of manufactured goods in a country lowers the price of its land’s raw produce. It therefore discourages agriculture. A given quantity of raw produce, or its price, may buy less in manufactured goods. If so, the raw produce has a lower exchange value. This gives landlords less incentive to increase its quantity by improving the land. It also gives farmers less incentive to increase it by cultivating the land. Anything that reduces the number of craftspeople and manufacturers in a country also reduces its domestic market for raw produce. This market is the most important of all for the land’s raw produce. Reducing it therefore discourages agriculture still further.

Those systems, therefore, which preferring agriculture to all other employments, in order to promote it, impose restraints upon manufactures and foreign trade, act contrary to the very end which they propose, and indirectly discourage that very species of industry which they mean to promote. They are so far, perhaps, more inconsistent than even the mercantile system. That system, by encouraging manufactures and foreign trade more than agriculture, turns a certain portion of the capital of the society, from supporting a more advantageous, to support a less advantageous species of industry. But still it really, and in the end, encourages that species of industry which it means to promote. Those agricultural systems, on the contrary, really, and in the end, discourage their own favourite species of industry.

Some systems favor agriculture over all other occupations. To promote it, they restrict manufacturing and foreign trade. These systems therefore work against their own purpose. They indirectly discourage the very kind of industry they mean to promote. In this respect, perhaps they are even more inconsistent than the mercantile system. The mercantile system encourages manufacturing and foreign trade more than agriculture. It thus directs some of society’s capital away from a more advantageous kind of industry toward a less advantageous one. But in the end, it does encourage the kind of industry it means to promote. Agricultural systems, by contrast, actually discourage their own favored kind of industry in the end.

It is thus that every system which endeavours, either, by extraordinary encouragements to draw towards a particular species of industry a greater share of the capital of the society than what would naturally go to it, or, by extraordinary restraints, to force from a particular species of industry some share of the capital which would otherwise be employed in it, is, in reality, subversive of the great purpose which it means to promote. It retards, instead of accelerating the progress of the society towards real wealth and greatness; and diminishes, instead of increasing, the real value of the annual produce of its land and labour.

Every system of this kind undermines the very purpose it seeks to promote. Such a system may use special incentives to draw more of society’s capital into a particular industry than would naturally go there. Or it may use special restrictions to force capital away from an industry where it would otherwise be invested. Instead of speeding society’s progress toward real wealth and greatness, the system slows it down. It also reduces, rather than increases, the real value of what the land and labor produce each year.

All systems, either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men. The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which, no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interests of the society. According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of great importance, indeed, but plain and intelligible to common understandings: first, the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and, thirdly, the duty of erecting and maintaining certain public works, and certain public institutions, which it can never be for the interest of any individual, or small number of individuals to erect and maintain; because the profit could never repay the expense to any individual, or small number of individuals, though it may frequently do much more than repay it to a great society.

Once all systems of preference or restriction are completely removed, the obvious and simple system of natural liberty establishes itself. As long as people do not violate the laws of justice, they are perfectly free to pursue their own interests in their own way. They are also free to bring their labor and capital into competition with those of any other person or group. The ruler is completely freed from a duty that would always expose him to countless errors. No human wisdom or knowledge could ever be sufficient to carry it out properly. That duty is to oversee the work of private people and direct it toward the activities best suited to society’s interests. Under the system of natural liberty, the ruler has only three duties. They are duties of great importance, but ordinary people can understand them clearly. The first is to protect society from violence and invasion by other independent societies. The second is to protect, as far as possible, every member of society from injustice or oppression by any other member. This means establishing a precise administration of justice. The third is to build and maintain certain public works and institutions. These are works and institutions that no individual or small group would ever have an interest in providing. The profit could never repay the expense for an individual or small group, though it may often more than repay the expense for a large society.

The proper performance of those several duties of the sovereign necessarily supposes a certain expense; and this expense again necessarily requires a certain revenue to support it. In the following book, therefore, I shall endeavour to explain, first, what are the necessary expenses of the sovereign or commonwealth; and which of those expenses ought to be defrayed by the general contribution of the whole society; and which of them, by that of some particular part only, or of some particular members of the society: secondly, what are the different methods in which the whole society may be made to contribute towards defraying the expenses incumbent on the whole society; and what are the principal advantages and inconveniencies of each of those methods: and thirdly, what are the reasons and causes which have induced almost all modern governments to mortgage some part of this revenue, or to contract debts; and what have been the effects of those debts upon the real wealth, the annual produce of the land and labour of the society. The following book, therefore, will naturally be divided into three chapters.

Properly carrying out the sovereign’s various duties necessarily involves expense. These expenses, in turn, require revenue to cover them. In the following book, I will therefore try to explain three things. First, I will explain the necessary expenses of the sovereign or commonwealth. I will consider which expenses should be paid for by society as a whole. I will also consider which should be paid for by only a particular part of society or by particular members. Second, I will explain the different ways society as a whole can contribute to expenses that it must bear collectively. I will also explain the principal advantages and disadvantages of each method. Third, I will explain why almost all modern governments have pledged part of their revenue or taken on debt. I will also explain how these debts have affected society’s real wealth, the annual produce of its land and labor. The following book will therefore naturally be divided into three chapters.