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workhouse, takes place, for the same reason, c HAP among those of a great fociety. The greater their number, the more they naturally divide themselves into different claffes and subdivisions of employment. More heads are occupied in inventing the most proper machinery for executing the work of each, and it is, therefore, more likely to be invented. There are many commodities, therefore, which, in consequence of these improvements, come to be produced by so much less labour than before, that the increase of its price is more than compensated by the diminu. tion of its quantity.

Of the Profits of Stock.


TH 'HE rise and fall in the profits of stock C HA P.

depend upon the same causes with the rise and fall in the wages of labour, the increasing or declining state of the wealth of the fociety ; but those causes affect the one and the other very differently.

The increase of stock, which raises wages, tends to lower profit. When the stocks of many rich merchants are turned into the same trade, their mutual competition naturally tends to lower its profit; and when there is a like increase of stock in all the different trades carried


BOOK on in the same fociety, the same competition

must produce the same effect in them all.

It is not easy, it has already been observed, to ascertain what are the average wages of labour even in a particular place, and at a particular time. We can, even in this case, seldom determine more than what are the most usual wages. But even this can feldom be done with regard to the profits of stock. Profit is so very fluctuating, that the person who carries on a particular trade cannot always tell you himself what is the average of his annual profit. It is affected, not only by every variation of price in the commodities which he deals in, but by the good or bad fortune both of his rivals and of his customers, and by a thoufand other accidents to which goods when carried either by fea or by land, or even when stored in a warehouse, are liable. It varies, therefore, not only from

year to year, but from day to day, and almost from hour to hour. To ascertain what is the average profit of all the different trades carried on in a great kingdom, must be much more difficult; and to judge of what it may have been formerly, or in remote periods of time, with any degree of precision, must be altogether impossible.

But though it may be impossible to determine with any degree of precision, what are or were the average profits of stock, either in the present, or in ancient times, fome notion may be formed of them from the interest of money. It may be laid down as a maxim, that wherever a great deal can be made by the use of money,

a great


a great deal will commonly be given for the use c H A P. of it; and that wherever little can be made by it, less will commonly be given for it. According, therefore, as the usual' market rate of interest varies in any country, we may be assured that the ordinary profits of stock muft vary with it, must fink as it sinks, and rise as it rises. The progress of interest, therefore, may lead us to form fome notion of the progress of profit.

By the 37th of Henry VIII. all interest above ten per cent. was declared unlawful. More, it seems, had sometimes been taken before that. In the reign of Edward VI. religious zeal prohibited all interest. This prohibition, however, like all others of the fame kind, is said to have produced no effect, and probably rather increased than diminished the evil of usury. The statute of Henry VIII., was revived by the 13th of Elizabeth, cap. 8. and ten per cent continued to be the legal rate of interest till the 21st of James I. when it was restricted to eight per cent. It was reduced to fix per cent. foon after the restoration, and by the 12th of Queen Anne, to five per cent. All these different statutory regulations seem to have been made with great propriety. They seem to have followed and not to have gone before the market rate of interest, or the rate at which people of good credit usually borrowed. Since the time of Queen Anne, five per cent. seems to have been rather above than below the market rate. Before the late


the government borrowed at three per cent. ; and people of good credit in the capital, and in


K 4


BOOK many other parts of the kingdom, at three and a

half, four, and four and a half per cent.

Since the time of Henry VIII. the wealth and revenue of the country have been continually advancing, and, in the course of their progress, their pace seems rather to have been gradually accelerated than retarded. They seem, not only to have been going on, but to have been going on faster and faster. The wages of labour have been continually increasing during the same period, and in the greater part of the different branches of trade and manufactures the profits of ftock have been diminishing.

It generally requires a greater stock to carry on any fort of trade in a great town than in a country village. The great stocks employed in every branch of trade, and the number of rich competitors, generally reduce the rate of profit in the former below what it is in the latter. But the wages of labour are generally higher in a great town than in a country village. In a thriving town the people who have great stocks to employ, frequently cannot get the number of workmen they want, and therefore bid against one another in order to get as many as they can, which raises the wages of labour, and lowers the profits of stock.

In the remote parts of the country there is frequently not stock fufficient to employ all the people, who therefore bid against one another in order to get employment, which lowers the wages of labour, and raises the profits of stock.


In Scotland, though the legal rate of interest C HA P. is the same as in England, the market rate is rather higher. People of the best credit there feldom borrow under five per cent.

Even private bankers in Edinburgh give four per cent. upon their promiffory notes, of which payment either in whole or in part may be demanded at pleasure. Private bankers in London give no interest for the money which is deposited with them. There are few trades which cannot be carried on with a smaller stock in Scotland than in England. The common rate of profit, therefore, must be somewhat greater. The wages of labour, it has already been observed, are lower in Scotland than in England. The country too is not only much poorer, but the steps by which it advances to a better condition, for it is evidently advancing, seem to be much slower and more tardy.

The legal rate of interest in France has not, during the course of the present century, been always regulated by the market rate*. In 1720 interest was reduced from the twentieth to the fiftieth penny, or from five to two per cent. In 1724 it was raised to the thirtieth penny, or to 35 per cent.

In 1725 it was again raised to the twentieth penny, or to five per cent. In 1766, during the administration of Mr. Laverdy, it was reduced to the twenty-fifth penny, or to four per cent. The Abbe Terray raised it afterwards to the old rate of five per cent. The fup

* See Denisart, Article Taux des Interets, tom. iii. p. 18.


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