exchange for it in every part of the globe. The nation which employs its capitals in manufactures and commerce is therefore evidently nearer the source of wealth, than the nation which employs them in agriculture, and which, under the most favourable supposition, can, after all, derive no wealth but from the prosperity of manufactures and commerce.

And what ought particularly to recommend this system to every friend of humanity and social happiness, is this: while the agricultural system, according to Adam Smith himself, always tends ultimately to discourage manufactures and commerce, through which alone it can prosper; it is in the very nature of the mercantile system to encourage agriculture, to develope its power, and to carry it to the highest degree of improvement of which it is susceptible. The characteristic of the mercantile system is every where to stimulate labour, to accumulate its produce, and to increase wealth. The greater the wealth of the country, the more it prospers; it increases by the very increase which it affords to public wealth. The capitals which commerce employs must therefore be the most beneficial, not only to the wealth of one nation, but even to universal wealth. The mercantile system is as preferable to the agricultural system with regard to the employment of capital, as with regard to the nature and effects of labour. If it be advantageous for mankind to prefer the labours of industry and commerce to those of agriculture, it is equally advantageous for them to employ their savings and capitals in the same way. The greater their progress in manufactures and commerce, the

nearer will they be to wealth, and their wealth will be so much the larger, the more capitals they have employed in manufactures and commerce.

This result of facts and reason is also that of the human instict, of the propensity of man to exchange commodities, and of his fondness for all those enjoyments which can be had only by means of such exchanges.

Adam Smith is of opinion, that, "had not social institutions deranged the order of things, the wealth and aggrandizement of towns would in every civilized society have advanced with equal steps with the improvements of the agriculture of the country."

I think, on the contrary, that if social institutions had seconded, or, at least, not thrown any obstacle in the way of, the developement of human faculties, these faculties would have been turned to those labours, the produce of which is most sought for, and which afford most objects of exchange: and as manufactures and commerce are eminently possessed of this privilege, the mercantile would every where have been preferred to the agricultural system. The least industrious and skilful would alone have continued attached to the rude and less productive labours of agriculture.

And in spite of those social institutions which oppose the developement of industry and commerce, is it not still to manufactures, commerce, and the arts, that the most industrious, the most ingenious. individuals, those whom nature and education have endowed with most talents and faculties, devote themselves? And is not agriculture the lot of men the

least endowed by nature, and the least disposed to occupations which require dexterity and talents?

This general tendency of men to industry and commerce renders it impossible to be blind to their advantages; and it is without any foundation, that Adam Smith asserted that capitals employed in agriculture are more favourable to national wealth, than those employed in manufactures and commerce. The most profitable capitals are not those which put most labour, but the most useful labour, into motion; not those which employ most, but the most skilful individuals; not those which yield the largest, but the most valuable produce. The most profitable capitals are, consequently, those employed in manufactures

and commerce.

CHAP. V.

Of the Profit of Stock.

ADAM SMITH is the first and only writer on political economy, who discovered the laws which regulate the rent of capitals or profit of stock; and this theory has not met with any criticism, nor does it appear susceptible of being criticized.

He observes, first, that the profit of capital stock employed in any private business, is so very fluctuating, that the person who carries on a particular trade, cannot always tell himself what is the average

of his annual profit. It varies 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 therefore be much more difficult.

The only rule which can direct us in this difficult and complicated research, is the rate of the interest of money in a given country, and at a given time. According as the usual market-rate of interest varies in any country, we may be assured that the ordinary profits of stock must vary with it, must sink as it sinks, and rise as it rises; whence Adam Smith draws various consequences relative to the progress of wealth in France, England, Holland, and Mexico.*

But this rule is liable to several exceptions, which render its application extremely doubtful and uncertain. According as circumstances augment or diminish capitals, or bad laws derange the monetary system of a country, the profits of stock may be more considerable than they ought to be. Certain it is, in general, that the profits of stock decrease in proportion to the increase of wealth, and augment in proportion to its decline. When a country possesses the sum of capitals which it wants, the profits of stock are very low.

Such is the doctrine of Adam Smith on this part of political economy. Though it does not afford much positive information, and is confined to mere conjectures, it yet furnishes us with one corollary worthy to be treasured up; namely, that the operations of governments, when not conducted with proper know

* Adam Smith's Wealth of Nations, vol. i. book i. chap. 9.

ledge and prudence, may have the most distressing influence on the individual, social, and foreign relations of a country.

If government, by any political, legislative, or administrative regulation, deranges the natural rate of the interest of money, the private interest of all suffers; the land-owner is sacrificed to the capitalist, or the capitalist to the land-owner; agricultural, manufactural, and commercial undertakings are carried on beyond, or stop short of their means; and in both cases labour is a sufferer, and wealth declines.

On the other hand, if government do not avail itself of the new methods which the science of capital has introduced in other countries, the nation over which it rules, labours with equal capitals under an unavoidable disadvantage in its dealings with other nations, and for a great length of time contributes unknowingly to enrich them at his own expence.

The employment of capital is, beyond contradiction, one of the most difficult branches of the science of public administration; it is that which deserves the greatest attention, and on which depends the progress or the decay of public prosperity.

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