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Chapter 9

CHAPTER IX.

OF THE AGRICULTURAL SYSTEMS, OR OF THOSE SYSTEMS OF POLITICAL
ECONOMY WHICH REPRESENT THE PRODUCE OF LAND, AS EITHER THE SOLE
OR THE PRINCIPAL SOURCE OF THE REVENUE AND WEALTH OF EVERY
COUNTRY.

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.

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.

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 expendture 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
controlls 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 degading 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.

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.

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.

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 be thus employs in the improvement of his land.
Such expenses are in this system 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.

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.

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.

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.

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.

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.

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.

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, 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 cuitivators 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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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 :

First, this class, it is acknowledged, reproduces annually the
value of its own annual consmnption, 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.

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.

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.

When the patrons of this system assert, that the consumption of
artificers, manufacturer's, 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.

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.

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 be
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.

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 anount 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.

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.

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.'

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 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.

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.

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

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.

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 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 sovereigns of China, of ancient Egypt, and of the different
kindoms 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 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 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.

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.

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.

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.

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 ouly, 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.

Adam Smith

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