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I.

BOOK posed purpose of many of those violent reductions

of interest was to prepare the way for reducing that of the public debts ; a purpose which has sometimes been executed. France is perhaps in the present times not so rich a country as England; and though the legal rate of interest has in France frequently been lower than in England, the market rate has generally been higher ; for there, as in other countries, they have several very safe and easy methods of evading the law. The profits of trade, I have been assured by British mercliants who have traded in both countries, are higher in France than in England; and it is no doubt

upon this account that many British subjects chuse rather to employ their capitals in a country where trade is in disgrace, than in one where it is highly respected. The wages of labour are lower in France than in England. When you go

from Scotland to England, the difference which you may remark between the dress and countenance of the common people in the one country and in the other, fufficiently indicates the difference in their condition. The contrast is still greater when you return from France. France, though no doubt a richer country than Scotland, seems not to be going forward fo fast. It is a common and even a popular opinion in the country, that it is going backwards ; an opinion which, I apprehend, is ill-founded even with regard to France, but which nobody can poslibly entertain with regard to Scotland, who sees the country now, and who saw it twenty or thirty years ago.

The

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The province of Holland, on the other hand, CHA P. in proportion to the extent of its territory and the number of its people, is a richer country than England. The government there borrow at two per cent., and private people of good credit at three. The wages of labour are faid to be higher in Holland than in England, and the Dutch, it is well known, trade upon

lower profits than any people in Europe. The trade of Holland, it has been pretended by some people, is decaying, and it may perhaps be true that some particular branches of it are so. But these fymptoms seem to indicate fufficiently that there is no general decay. When profit diminishes, merchants are very apt to complain that trade decays; though the diminution of profit is the natural effect of its prosperity, or of a greater stock being employed in it than before. During the late war the Dutch gained the whole carrying trade of France, of which they still retain a very large share.

The great property which they possess both in the French and English funds, about forty millions, it is said, in the latter (in which I suspect, however, there is a considerable exaggeration); the great sums which they lend to private people in countries where the rate of interest is higher than in their own, are circumstances which no doubt demonstrate the redundancy of their stock, or that it has increased beyond what they can employ with tolerable profit in the proper business of their own country: but they do not demonstrate that that business has decreased. As the capital of a

private

I.

BOO K private man, though acquired by a particular

trade, may increase beyond what he can employ in it, and yet that trade continue to increase too; fo

may likewise the capital of a great nation.

In our North American and West Indian colonies, not only the wages of labour, but the interest of money, and consequently the profits of stock, are higher than in England. In the different colonies both the legal and the market rate of interest run from fix to eight per cent. High wages of labour and high profits of stock, however, are things, perhaps, which scarce ever go together, except in the peculiar circumstances of new colonies. A new colony must always for fome time be more under-stocked in propor. tion to the extent of its territory, and more under-peopled in proportion to the extent of its stock, than the greater part of other countries. They have more land than they have stock to cultivate. What they have, therefore, is applied to the cultivation only of what is most fera tile and most favourably situated, the land near the sea shore, and along the banks of navigable rivers. Such land too is frequently purchased at a price below the value even of its natural produce. Stock employed in the purchase and improvement of such lands must yield a very large profit, and consequently afford to pay a very large intereft. Its rapid accumulation in fo profitable an employment enables the planter to increase the number of his hands faster than he can find them in a new settlement. Those whom he can find, therefore, are very liberally rewarded.

IX.

Às the colony increases, the profits of stock gra- C HÁ P. dually diminish. When the most fertile and best fituated lands have been all occupied, less profit can be made by the cultivation of what is inferior both in foil and fituation, and less interest can be afforded for the stock which is so employed. In the greater part of our colonies, accordingly, both the legal and the market rate of intereft have been considerably reduced during the course of the present century. As riches, improvement, and population have increased, in. tereft has declined. The wages of labour do not fink with the profits of stock. The demand for labour increases with the increase of stock whatever be its profits; and after these are dimi. nished, stock may not only continue to increase, but to increase much faster than before. It is with industrious nations who are advancing in the acquisition of riches, as with industrious individuals. A great stock, though with small profits, generally increases faster than a fmall stock with great profits. Money, says the proverb, makes money.

When you have got a little, it is often easy to get more. The great difficulty is to get that little. The connection between the increase of stock and that of induftry, or of the demand for ufeful labour, has partly been explained already, but will be explained more fully hereafter in treating of the accumulation of stock.

The acquisition of new territory, or of new branches of trade, may sometimes raise the fits of stock, and with them the interest of money,

pro

1.

BO O K even in a country which is fast advancing in the

acquisition of riches. The stock of the country not being fufficient for the whole accession of business, which such acquisitions present to the different people among whom it is divided, is applied to those particular branches only which afford the greatest profit. Part of what had before been employed in other trades, is necessarily withdrawn from them, and turned into some of the new and more profitable ones. In all those old trades, therefore, the competition comes to be less than before. The market comes to be less fully supplied with many different forts of goods. Their price neceffarily rises more or less, and yields a greater profit to those who deal in them, who can, therefore, afford to borrow at a higher intereft. For fome time after the conclusion of the late war, not only private people of the best credit, but some of the greatest companies in London, commonly borrowed at five per cent. who before that had not been used to pay more than four, and four and a half per cent. The great accession both of territory and trade, by our acquisitions in North America and the West Indies, will sufficiently account for this, without supposing any diminution in the capital stock of the society. So great an acceflion of new business to be carried on by the old stock, must necessarily have diminished the quantity employed in a great number of particular branches, in which the competition being less, the profits must have been greater. I shall here. after have occasion to mention the reasons which

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