EconGuru Economics Guide » Classics

MONSIEUR,– Before resuming my “Inquiries into Government and Property,” it is fitting, for the satisfaction of some worthy people, and also in the interest of order, that I should make to you a plain, straightforward explanation. In a much-governed State, no one would be allowed to attack the external form of the society, and the groundwork of its institutions, until he had established his right to do so,–first, by his morality; second, by his capacity; and, third, by the purity of his intentions. Any one who, wishing to publish a treatise upon the constitution of the country, could not satisfy this threefold condition, would be obliged to procure the endorsement of a responsible patron possessing the requisite qualifications.

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Part Second

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Part First

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The development of this proposition will be the resume of the preceding ones.

1. It is a principle of economical justice, that PRODUCTS ARE BOUGHT ONLY BY PRODUCTS. Property, being capable of defence only on the ground that it produces utility, is, since it produces nothing, for ever condemned.

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I. By the third corollary of our axiom, interest tells against the proprietor as well as the stranger. This economical principle is universally admitted. Nothing simpler at first blush; yet, nothing more absurd, more contradictory in terms, or more absolutely impossible.

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If men, living in equality, should grant to one of their number the exclusive right of property; and this sole proprietor should lend one hundred francs to the human race at compound interest, payable to his descendants twenty-four generations hence,–at the end of six hundred years this sum of one hundred francs, at five per cent., would amount to 107,854,010,777,600 francs; two thousand six hundred and ninety-six and one-third times the capital of France (supposing her capital to be 40,000,000,000), or more than twenty times the value of the terrestrial globe!

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I. If, with the economists, we consider the laborer as a living machine, we must regard the wages paid to him as the amount necessary to support this machine, and keep it in repair. The head of a manufacturing establishment–who employs laborers at three, five, ten, and fifteen francs per day, and who charges twenty francs for his superintendence–does not regard his disbursements as losses, because he knows they will return to him in the form of products. Consequently, LABOR and REPRODUCTIVE CONSUMPTION are identical.

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What is government? Government is public economy, the supreme administrative power over public works and national possessions.

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When the ass is too heavily loaded, he lies down; man always moves on. Upon this indomitable courage, the proprietor–well knowing that it exists–bases his hopes of speculation. The free laborer produces ten; for me, thinks the proprietor, he will produce twelve.

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If the right of increase could be subjected to the laws of reason and justice, it would be reduced to an indemnity or reward whose MAXIMUM never could exceed, for a single laborer, a certain fraction of that which he is capable of producing. This we have just shown. But why should the right of increase–let us not fear to call it by its right name, the right of robbery–be governed by reason, with which it has nothing in common? The proprietor is not content with the increase allotted him by good sense and the nature of things: he demands ten times, a hundred times, a thousand times, a million times as much. By his own labor, his property would yield him a product equal only to one; and he demands of society, no longer a right proportional to his productive capacity, but a per capita tax. He taxes his fellows in proportion to their strength, their number, and their industry. A son is born to a farmer. “Good!” says the proprietor; “one more chance for increase!” By what process has farm-rent been thus changed into a poll-tax? Why have our jurists and our theologians failed, with all their shrewdness, to check the extension of the right of increase?

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To pay a farm-rent of one hundred at the rate of ten per cent. of the product, the product must be one thousand; that the product may be one thousand, a force of one thousand laborers is needed. It follows, that in granting a furlough, as we have just done, to our one hundred laborer-proprietors, all of whom had an equal right to lead the life of men of income,–we have placed ourselves in a position where we are unable to pay their revenues. In fact, the productive power, which at first was one thousand, being now but nine hundred, the production is also reduced to nine hundred, one-tenth of which is ninety. Either, then, ten proprietors out of the one hundred cannot be paid,– provided the remaining ninety are to get the whole amount of their farm-rent,–or else all must consent to a decrease of ten per cent. For it is not for the laborer, who has been wanting in no particular, who has produced as in the past, to suffer by the withdrawal of the proprietor. The latter must take the consequences of his own idleness. But, then, the proprietor becomes poorer for the very reason that he wishes to enjoy; by exercising his right, he loses it; so that property seems to decrease and vanish in proportion as we try to lay hold of it,– the more we pursue it, the more it eludes our grasp. What sort of a right is that which is governed by numerical relations, and which an arithmetical calculation can destroy?

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The preceding proposition was legislative in its nature; this one is economical. It serves to prove that property, which originates in violence, results in waste.

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The discussion of this proposition covers the same ground as that of the origin of farm-rent, which is so much debated by the economists. When I read the writings of the greater part of these men, I cannot avoid a feeling of contempt mingled with anger, in view of this mass of nonsense, in which the detestable vies with the absurd. It would be a repetition of the story of the elephant in the moon, were it not for the atrocity of the consequences. To seek a rational and legitimate origin of that which is, and ever must be, only robbery, extortion, and plunder–that must be the height of the proprietor’s folly; the last degree of bedevilment into which minds, otherwise judicious, can be thrown by the perversity of selfishness.
“A farmer,” says Say, “is a wheat manufacturer who, among other tools which serve him in modifying the material from which he makes the wheat, employs one large tool, which we call a field. If he is not the proprietor of the field, if he is only a tenant, he pays the proprietor for the productive service of this tool. The tenant is reimbursed by the purchaser, the latter by another, until the product reaches the consumer; who redeems the first payment, PLUS all the others, by means of which the product has at last come into his hands.”
Let us lay aside the subsequent payments by which the product reaches the consumer, and, for the present, pay attention only to the first one of all,–the rent paid to the proprietor by the tenant. On what ground, we ask, is the proprietor entitled to this rent?

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The last resort of proprietors,–the overwhelming argument whose invincible potency reassures them,–is that, in their opinion, equality of conditions is impossible. “Equality of conditions is a chimera,” they cry with a knowing air; “distribute wealth equally to-day–to-morrow this equality will have vanished.”

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Nearly all the modern writers on jurisprudence, taking their cue from the economists, have abandoned the theory of first occupancy as a too dangerous one, and have adopted that which regards property as born of labor. In this they are deluded; they reason in a circle. To labor it is necessary to occupy, says M. Cousin.

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The Roman law defined property as the right to use and abuse one’s own within the limits of the law–jus utendi et abutendi re sua, guatenus juris ratio patitur. A justification of the word ABUSE has been attempted, on the ground that it signifies, not senseless and immoral abuse, but only absolute domain. Vain distinction! invented as an excuse for property, and powerless against the frenzy of possession, which it neither prevents nor represses. The proprietor may, if he chooses, allow his crops to rot under foot; sow his field with salt; milk his cows on the sand; change his vineyard into a desert, and use his vegetable- garden as a park: do these things constitute abuse, or not? In the matter of property, use and abuse are necessarily indistinguishable.

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First Memoir

_Adversus hostem aeterna auctertas esto._

Against the enemy, revendication is eternal. LAW OF THE TWELVE TABLES.

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The following letter served as a preface to the first edition of this memoir:–
“To the Members of the Academy of Besancon
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Preface

The four following essays were published eighteen months ago in the “Cornhill Magazine”, and were reprobated in a violent manner, as far as I could hear, by most of the readers they met with.

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The Economic Consequences of the Peace is a book published by John Maynard Keynes in 1919. Keynes attended the Versailles Conference as a delegate of the British Treasury and argued for a much more generous peace. It was a best seller throughout the world and was critical in establishing a general opinion that the Versailles Treaty was a Carthaginian peace. It helped to consolidate American public opinion against the treaty and involvement in the League of Nations. The perception by much of the British public that Germany had been treated unfairly in turn was a crucial factor in public support for appeasement. The success of the book established Keynes’ reputation as a leading economist especially on the left. When Keynes was a key player in establishing the Bretton Woods system in 1944, he remembered the lessons from Versailles as well as the Great Depression. The Marshall Plan after Second World War is a similar system to that proposed by Keynes in The Economic Consequences of the Peace.

It is difficult to maintain true perspective in large affairs. I have criticised the work of Paris, and have depicted in sombre colours the condition and the prospects of Europe. This is one aspect of the position and, I believe, a true one. But in so complex a phenomenon the prognostics do not all point one way; and we may make the error of expecting consequences to follow too swiftly and too inevitably from what perhaps are not all the relevant causes. The blackness of the prospect itself leads us to doubt its accuracy; our imagination is dulled rather than stimulated by too woeful a narration, and our minds rebound from what is felt ‘too bad to be true’. But before the reader allows himself to be too much swayed by these natural reflections, and before I lead him, as is the intention of this chapter, towards and ameliorations remedies and the discovery of happier tendencies, let him redress the balance of his thought by recalling two contrasts — England and Russia, of which the one may encourage his optimism too much, but the other should remind him that catastrophes can still happen, and that modern society is not immune from the very greatest evils.

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This chapter must be one of pessimism. The treaty includes no provisions for the economic rehabilitation of Europe — nothing to make the defeated Central empires into good neighbours, nothing to stabilise the new states of Europe, nothing to reclaim Russia; nor does it promote in any way a compact of economic solidarity amongst the Allies themselves; no arrangement was reached at Paris for restoring the disordered finances of France and Italy, or to adjust the systems of the Old World and the New.

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I. Undertakings Given Pride to the Peace Negotiations

The categories of damage in respect of which the Allies were entitled to ask for reparation are governed by the relevant passages in President Wilson’s Fourteen Points of 8 January 1918, as modified by the Allied governments in their qualifying Note, the text of which the President formally communicated to the German government as the basis of peace on 5 November 1918. These passages have been quoted in full at the beginning of chapter 4. That is to say, ‘compensation will be made by Germany for all damage done to the civilian population of the Allies and to their property by the aggression of Germany by land, by sea, and from the air.’ The limiting quality of this sentence is reinforced by the passage in the President’s speech before Congress on 11 February 1918 (the terms of this speech being an express part of the contract with the enemy), that there shall be ‘no contributions’ and ‘no punitive damages’.

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The thoughts which I have expressed in the second chapter were not present to the mind of Paris. The future life of Europe was not their concern; its means of livelihood was not their anxiety. Their preoccupations, good and bad alike, related to frontiers and nationalities, to the balance of power, to imperial aggrandisements, to the future enfeeblement of a strong and dangerous enemy, to revenge, and to the shifting by the victors of their unbearable financial burdens on to the shoulders of the defeated.

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In chapters 4 and 5 I shall study in some detail the economic and financial provisions of the treaty of peace with Germany. But it will be easier to appreciate the true origin of many of these terms if we examine here some of the personal factors which influenced their preparation. In attempting this task I touch, inevitably, questions of motive, on which spectators are liable to error and are not entitled to take on themselves the responsibilities of final judgment. Yet, if I seem in this chapter to assume sometimes the liberties which are habitual to historians, but which, in spite of the greater knowledge with which we speak, we generally hesitate to assume towards contemporaries, let the reader excuse me when he remembers how greatly, if it is to understand its destiny, the world needs light, even if it is partial and uncertain, on the complex struggle of human will and purpose, not yet finished, which, concentrated in the persons of four individuals in a manner never paralleled, made them in the first months of 1919 the microcosm of mankind.

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Before 1870 different parts of the small continent of Europe had specialised in their own products; but, taken as a whole, it was substantially self-subsistent. And its population was adjusted to this state of affairs.

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The power to become habituated to his surroundings is a marked characteristic of mankind. Very few of us realise with conviction the intensely unusual, unstable, complicated, unreliable, temporary nature of the economic organisation by which Western Europe has lived for the last half century. We assume some of the most peculiar and temporary of our late advantages as natural, permanent, and to be depended on, and we lay our plans accordingly. On this sandy and false foundation we scheme for social improvement and dress our political platforms, pursue our animosities and particular ambitions, and feel ourselves with enough margin in hand to foster, not assuage, civil conflict in the European family. Moved by insane delusion and reckless self-regard, the German people overturned the foundations on which we all lived and built. But the spokesmen of the French and British peoples have run the risk of completing the ruin which Germany began, by a peace which, if it is carried into effect, must impair yet further, when it might have restored, the delicate, complicated organisation, already shaken and broken by war, through which alone the European peoples can employ themselves and live.

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A Song of Swords

“A drove of cattle came into a village called Swords;

and was stopped by the rioters.”–Daily Paper.

In the place called Swords on the Irish road

It is told for a new renown

How we held the horns of the cattle, and how

We will hold the horns of the devils now

Ere the lord of hell with the horn on his brow

Is crowned in Dublin town.

Light in the East and light in the West,

And light on the cruel lords,

On the souls that suddenly all men knew,

And the green flag flew and the red flag flew,

And many a wheel of the world stopped, too,

When the cattle were stopped at Swords.

Be they sinners or less than saints

That smite in the street for rage,

We know where the shame shines bright; we know

You that they smite at, you their foe,

Lords of the lawless wage and low,

This is your lawful wage.

You pinched a child to a torture price

That you dared not name in words;

So black a jest was the silver bit

That your own speech shook for the shame of it,

And the coward was plain as a cow they hit

When the cattle have strayed at Swords.

The wheel of the torrent of wives went round

To break men’s brotherhood;

You gave the good Irish blood to grease

The clubs of your country’s enemies;

You saw the brave man beat to the knees:

And you saw that it was good.

The rope of the rich is long and long–

The longest of hangmen’s cords;

But the kings and crowds are holding their breath,

In a giant shadow o’er all beneath

Where God stands holding the scales of Death

Between the cattle and Swords.

Haply the lords that hire and lend

The lowest of all men’s lords,

Who sell their kind like kine at a fair,

Will find no head of their cattle there;

But faces of men where cattle were:

Faces of men–and Swords.

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An Inquiry into the Nature and Causes of the Wealth of Nations is the magnum opus of the Scottish economist Adam Smith, published on March 9, 1776, during the Scottish Enlightenment. It is a clearly written account of political economy at the dawn of the Industrial Revolution, and is widely considered to be the first modern work in the field of economics. The work is also the first comprehensive defense of free market policies. It is broken down into five books between two volumes. The Wealth of Nations was written for the average educated individual of the 18th century rather than for specialists and mathematicians.

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In that rude state of society which precedes the extension of commerce and the improvement of manufactures, when those expensive luxuries which commerce and manufactures can alone introduce are altogether unknown, the person who possesses a large revenue, I have endeavoured to show in the third book of this Inquiry, can spend or enjoy that revenue in no other way than by maintaining nearly as many people as it can maintain. A large revenue may at all times be said to consist in the command of a large quantity of the necessaries of life. In that rude state of things it is commonly paid in a large quantity of those necessaries, in the materials of plain food and coarse clothing, in corn and cattle, in wool and raw hides. When neither commerce nor manufactures furnish anything for which the owner can exchange the greater part of those materials which are over and above his own consumption, he can do nothing with the surplus but feed and clothe nearly as many people as it will feed and clothe. A hospitality in which there is no luxury, and a liberality in which there is no ostentation, occasion, in this situation of things, the principal expenses of the rich and the great. But these, I have likewise endeavoured to show in the same book, are expenses by which people are not very apt to ruin themselves. There is not, perhaps, any selfish pleasure so frivolous of which the pursuit has not sometimes ruined even sensible men. A passion for cock-fighting has ruined many. But the instances, I believe, are not very numerous of people who have been ruined by a hospitality or liberality of this kind, though the hospitality of luxury and the liberality of ostentation have ruined many. Among our feudal ancestors, the long time during which estates used to continue in the same family sufficiently demonstrates the general disposition of people to live within their income. Though the rustic hospitality constantly exercised by the great land-holders may not, to us in the present times, seem consistent with that order which we are apt to consider as inseparably connected with good economy, yet we must certainly allow them to have been at least so far frugal as not commonly to have spent their whole income. A part of their wool and raw hides they had generally an opportunity of selling for money. Some part of this money, perhaps, they spent in purchasing the few objects of vanity and luxury with which the circumstances of the times could furnish them; but some part of it they seem commonly to have hoarded. They could not well, indeed, do anything else but hoard whatever money they saved. To trade was disgraceful to a gentleman, and to lend money at interest, which at that time was considered as usury and prohibited by law, would have been still more so. In those times of violence and disorder, besides, it was convenient to have a hoard of money at hand, that in case they should be driven from their own home they might have something of known value to carry with them to some place of safety. The same violence which made it convenient to hoard made it equally convenient to conceal the hoard. The frequency of treasure-trove, or of treasure found of which no owner was known, sufficiently demonstrates the frequency in those times both of hoarding and of concealing the board. Treasure-trove was then considered as an important branch of the revenue of the sovereign. All the treasure-trove of the kingdom would scarce perhaps in the present times make an important branch of the revenue of a private gentleman of a good estate. The same disposition to save and to hoard prevailed in the sovereign as well as in the subjects. Among nations to whom commerce and manufactures are little known, the sovereign, it has already been observed in the fourth book, is in a situation which naturally disposes him to the parsimony requisite for accumulation. In that situation the expense even of a sovereign cannot be directed by that vanity which delights in the gaudy finery of a court. The ignorance of the times affords but few of the trinkets in which that finery consists. Standing armies are not then necessary, so that the expense even of a sovereign, like that of any other great lord, can be employed in scarce anything but bounty to his tenants and hospitality to his retainers. But bounty and hospitality very seldom lead to extravagance; though vanity almost always does. All the ancient sovereigns of Europe accordingly, it has already been observed, had treasures. Every Tartar chief in the present times is said to have one.

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The revenue which must defray, not only the expense of defending the society and of supporting the dignity of the chief magistrate, but all the other necessary expenses of government for which the constitution of the state has not provided any particular revenue, may be drawn either, first, from some fund which peculiarly belongs to the sovereign or commonwealth, and which is independent of the revenue of the people; or, secondly, from the revenue of the people.

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Part 1: Of the Expense of Defence

The first duty of the sovereign, that of protecting the society from the violence and invasion of other independent societies, can be performed only by means of a military force. But the expense both of preparing this military force in time of peace, and of employing it in time of war, is very different in the different states of society, in the different periods of improvement.

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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.

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Though the encouragement of exportation and the discouragement of importation are the two great engines by which the mercantile system proposes to enrich every country, yet with regard to some particular commodities it seems to follow an opposite plan: to discourage exportation and to encourage importation. Its ultimate object, however, it pretends, is always the same, to enrich the country by an advantageous balance of trade. It discourages the exportation of the materials of manufacture, and of the instruments of trade, in order to give our own workmen an advantage, and to enable them to undersell those of other nations in all foreign markets; and by restraining, in this manner, the exportation of a few commodities, of no great price, it proposes to occasion a much greater and more valuable exportation of others. It encourages the importation of the materials of manufacture in order that our own people may be enabled to work them up more cheaply, and thereby prevent a greater and more valuable importation of the manufactured commodities. I do not observe, at least in our Statute Book, any encouragement given to the importation of the instruments of trade. When manufactures have advanced to a certain pitch of greatness, the fabrication of the instruments of trade becomes itself the object of a great number of very important manufactures. To give any particular encouragement to the importation of such instruments would interfere too much with the interest of those manufactures. Such importation, therefore, instead of being encouraged, has frequently been prohibited. Thus the importation of wool cards, except from Ireland, or when brought in as wreck or prize goods, was prohibited by the 3rd of Edward IV; which prohibition was renewed by the 39th of Elizabeth, and has been continued and rendered perpetual by subsequent laws.

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Part 1: Of the Motives for establishing new Colonies

The interest which occasioned the first settlement of the different European colonies in America and the West Indies was not altogether so plain and distinct as that which directed the establishment of those of ancient Greece and Rome. All the different states of ancient Greece possessed, each of them, but a very small territory, and when the people in any one of them multiplied beyond what that territory could easily maintain, a part of them were sent in quest of a new habitation in some remote and distant part of the world; the warlike neighbours who surrounded them on all sides, rendering it difficult for any of them to enlarge very much its territory at home. The colonies of the Dorians resorted chiefly to Italy and Sicily, which, in the times preceding the foundation of Rome, were inhabited by barbarous and uncivilised nations: those of the Ionians and Aeolians, the two other great tribes of the Greeks, to Asia Minor and the islands of the Aegean Sea, of which the inhabitants seem at that time to have been pretty much in the same state as those of Sicily and Italy. The mother city, though she considered the colony as a child, at all times entitled to great favour and assistance, and owing in return much gratitude and respect, yet considered it as an emancipated child over whom she pretended to claim no direct authority or jurisdiction. The colony settled its own form of government, enacted its own laws, elected its own magistrates, and made peace or war with its neighbours as an independent state, which had no occasion to wait for the approbation or consent of the mother city. Nothing can be more plain and distinct than the interest which directed every such establishment.

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When a nation binds itself by treaty either to permit the entry of certain goods from one foreign country which it prohibits from all others, or to exempt the goods of one country from duties to which it subjects those of all others, the country, or at least the merchants and manufacturers of the country, whose commerce is so favoured, must necessarily derive great advantage from the treaty. Those merchants and manufacturers enjoy a sort of monopoly in the country which is so indulgent to them. That country becomes a market both more extensive and more advantageous for their goods: more extensive, because the goods of other nations being either excluded or subjected to heavier duties, it takes off a greater quantity of theirs: more advantageous, because the merchants of the favoured country, enjoying a sort of monopoly there, will often sell their goods for a better price than if exposed to the free competition of all other nations.

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Bounties upon exportation are, in Great Britain, frequently petitioned for, and sometimes granted to the produce of particular branches of domestic industry. By means of them our merchants and manufacturers, it is pretended, will be enabled to sell their goods as cheap, or cheaper than their rivals in the foreign market. A greater quantity, it is said, will thus be exported, and the balance of trade consequently turned more in favour of our own country. We cannot give our workmen a monopoly in the foreign as we have done in the home market. We cannot force foreigners to buy their goods as we have done our own countrymen. The next best expedient, it has been thought, therefore, is to pay them for buying. It is in this manner that the mercantile system proposes to enrich the whole country, and to put money into all our pockets by means of the balance of trade.

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Merchants and manufacturers are not contented with the monopoly of the home market, but desire likewise the most extensive foreign sale for their goods. Their country has no jurisdiction in foreign nations, and therefore can seldom procure them any monopoly there. They are generally obliged, therefore, to content themselves with petitioning for certain encouragements to exportation.

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Part 1: Of the Unreasonableness of those Restraints even upon the Principles of the Commercial System

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By restraining, either by high duties or by absolute prohibitions, the importation of such goods from foreign countries as can be produced at home, the monopoly of the home market is more or less secured to the domestic industry employed in producing them. Thus the prohibition of importing either live cattle or salt provisions from foreign countries secures to the graziers of Great Britain the monopoly of the home market for butcher’s meat. The high duties upon the importation of corn, which in times of moderate plenty amount to a prohibition, give a like advantage to the growers of that commodity. The prohibition of the importation of foreign woollens is equally favourable to the woollen manufacturers. The silk manufacture, though altogether employed upon foreign materials, has lately obtained the same advantage. The linen manufacture has not yet obtained it, but is making great strides towards it. Many other sorts of manufacturers have, in the same manner, obtained in Great Britain, either altogether or very nearly, a monopoly against their countrymen. The variety of goods of which the importation into Great Britain is prohibited, either absolutely, or under certain circumstances, greatly exceeds what can easily be suspected by those who are not well acquainted with the laws of the customs.

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That wealth consists in money, or and silver, is a popular notion which naturally arises from the double function of money, as the instrument of commerce and as the measure of value. In consequence of its being the instrument of commerce, when we have money we can more readily obtain whatever else we have occasion for than by means of any other commodity. The great affair, we always find, is to get money. When that is obtained, there is no difficulty in making any subsequent purchase. In consequence of its being the measure of value, we estimate that of all other commodities by the quantity of money which they will exchange for. We say of a rich man that he is worth a great deal, and of a poor man that he is worth very little money. A frugal man, or a man eager to be rich, is said to love money; and a careless, a generous, or a profuse man, is said to be indifferent about it. To grow rich is to get money; and wealth and money, in short, are, in common language, considered as in every respect synonymous.

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First, by affording a great and ready market for the rude produce of the country, they gave encouragement to its cultivation and further improvement. This benefit was not even confined to the countries in which they were situated, but extended more or less to all those with which they had any dealings. To all of them they afforded a market for some part either of their rude or manufactured produce, and consequently gave some encouragement to the industry and improvement of all. Their own country, however, on account of its neighbourhood, necessarily derived the greatest benefit from this market. Its rude produce being charged with less carriage, the traders could pay the growers a better price for it, and yet afford it as cheap to the consumers as that of more distant countries.

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The inhabitants of cities and towns were, after the fall of the Roman empire, not more favoured than those of the country. They consisted, indeed, of a very different order of people from the first inhabitants of the ancient republics of Greece and Italy. These last were composed chiefly of the proprietors of lands, among whom the public territory was originally divided, and who found it convenient to build their houses in the neighbourhood of one another, and to surround them with a wall, for the sake of common defence. After the fall of the Roman empire, on the contrary, the proprietors of land seem generally to have lived in fortified castles on their own estates, and in the midst of their own tenants and dependants. The towns were chiefly inhabited by tradesmen and mechanics, who seem in those days to have been of servile, or very nearly of servile condition. The privileges which we find granted by ancient charters to the inhabitants of some of the principal towns in Europe sufficiently show what they were before those grants. The people to whom it is granted as a privilege that they might give away their own daughters in marriage without the consent of their lord, that upon their death their own children, and not their lord, should succeed to their goods, and that they might dispose of their own effects by will, must, before those grants, have been either altogether or very nearly in the same state of villanage with the occupiers of land in the country.

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When the German and Scythian nations overran the western provinces of the Roman empire, the confusions which followed so great a revolution lasted for several centuries. The rapine and violence which the barbarians exercised against the ancient inhabitants interrupted the commerce between the towns and the country. The towns were deserted, and the country was left uncultivated, and the western provinces of Europe, which had enjoyed a considerable degree of opulence under the Roman empire, sunk into the lowest state of poverty and barbarism. During the continuance of those confusions, the chiefs and principal leaders of those nations acquired or usurped to themselves the greater part of the lands of those countries. A great part of them was uncultivated; but no part of them, whether cultivated or uncultivated, was left without a proprietor. All of them were engrossed, and the greater part by a few great proprietors.

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The great commerce of every civilised society is that carried on between the inhabitants of the town and those of the country. It consists in the exchange of rude for manufactured produce, either immediately, or by the intervention of money, or of some sort of paper which represents money. The country supplies the town with the means of subsistence and the materials of manufacture. The town repays this supply by sending back a part of the manufactured produce to the inhabitants of the country. The town, in which there neither is nor can be any reproduction of substances, may very properly be said to gain its whole wealth and subsistence from the country. We must not, however, upon this account, imagine that the gain of the town is the loss of the country. The gains of both are mutual and reciprocal, and the division of labour is in this, as in all other cases, advantageous to all the different persons employed in the various occupations into which it is subdivided. The inhabitants of the country purchase of the town a greater quantity of manufactured goods, with the produce of a much smaller quantity of their own labour, than they must have employed had they attempted to prepare them themselves. The town affords a market for the surplus produce of the country, or what is over and above the maintenance of the cultivators, and it is there that the inhabitants of the country exchange it for something else which is in demand among them. The greater the number and revenue of the inhabitants of the town, the more extensive is the market which it affords to those of the country; and the more extensive that market, it is always the more advantageous to a great number. The corn which grows within a mile of the town sells there for the same price with that which comes from twenty miles distance. But the price of the latter must generally not only pay the expense of raising and bringing it to market, but afford, too, the ordinary profits of agriculture to the farmer. The proprietors and cultivators of the country, therefore, which lies in the neighbourhood of the town, over and above the ordinary profits of agriculture, gain, in the price of what they sell, the whole value of the carriage of the like produce that is brought from more distant parts, and they have, besides, the whole value of this carriage in the price of what they buy. Compare the cultivation of the lands in the neighbourhood of any considerable town with that of those which lie at some distance from it, and you will easily satisfy yourself how much the country is benefited by the commerce of the town. Among all the absurd speculations that have been propagated concerning the balance of trade, it has never been pretended that either the country loses by its commerce with the town, or the town by that with the country which maintains it.

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Though all capitals are destined for the maintenance of productive labour only, yet the quantity of that labour which equal capitals are capable of putting into motion varies extremely according to the diversity of their employment; as does likewise the value which that employment adds to the annual produce of the land and labour of the country.

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