increase of stock in all the different trades
carried on in the same society, 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 seldom 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 thousand other accidents, to which goods,
when carried either by sea 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, some 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 deal will commonly be
given for the use of it; and that, wherever
little can be made by it, less will commonly
be given for it. Accordingly, therefore, 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. The progress
of interest, therefore, may lead us to form
some 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 same
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 six per cent. soon 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 war, the government borrowed
at three per cent.; and people of good credit
in the capital, and in 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 stock have been
diminishing.
It generally requires a greater stock to
carry on any sort of trade in a great town
than in a country village. The great stock
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 sufficient
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
is the same as in England, the market
rate is rather higher. People of the best credit
there seldom borrow under five per cent.
Even private bankers in Edinburgh give four
per cent. upon their promissory-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,