during the course of the present century, been
always regulated by the market rate[10]. 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 three and a third 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 Abbé Terray raised it afterwards
to the old rate of five per cent. The
supposed 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 merchants who had 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, sufficiently 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
so 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 possibly entertain with regard
to Scotland, who sees the country now,
and who saw it twenty or thirty years ago.
The province of Holland, on the other
hand, 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 said 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 symptoms
seem to indicate sufficiently 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 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 man,
though acquired by a particular trade, may
increase beyond what he can employ in it, and
yet that trade continue to increase too, so 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 six 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 some time, be
more understocked in proportion to the extent
of its territory, and more underpeopled 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 fertile 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 interest. Its rapid accumulation
in so 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. As the colony
increases, the profits of stock gradually diminish.
When the most fertile and best situated
lands have been all occupied, less profit
can be made by the cultivation of what is inferior
both in soil and situation, 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 interest have been considerably
reduced during the course of the present