trades above mentioned, both those circumstances
concur.
The great and general utility of the banking
trade, when prudently managed, has been
fully explained in the second book of this
Inquiry. But a public bank, which is to
support public credit, and, upon particular
emergencies, to advance to government the
whole produce of a tax, to the amount, perhaps,
of several millions, a year or two before
it comes in, requires a greater capital than
can easily be collected into any private copartnery.
The trade of insurance gives great security
to the fortunes of private people, and, by
dividing among a great many that loss which
would ruin an individual, makes it fall light
and easy upon the whole society. In order
to give this security, however, it is necessary
that the insurers should have a very large
capital. Before the establishment of the two
joint-stock companies for insurance in London,
a list, it is said, was laid before the attorney-general,
of one hundred and fifty private
insurers, who had failed in the course of
a few years.
That navigable cuts and canals, and the
works which are sometimes necessary for
supplying a great city with water, are of
great and general utility, while, at the same
time, they frequently require a greater expense
than suits the fortunes of private people, is
sufficiently obvious.
Except the four trades above mentioned, I
have not been able to recollect any other, in
which all the three circumstances requisite for
rendering reasonable the establishment of a
joint-stock company concur. The English
copper company of London, the lead-smelting
company, the glass-grinding company,
have not even the pretext of any great or
singular utility in the object which they pursue;
nor does the pursuit of that object seem
to require any expense unsuitable to the fortunes
of many private men. Whether the
trade which those companies carry on, is reducible
to such strict rule and method as to
render it fit for the management of a joint-stock
company, or whether they have any
reason to boast of their extraordinary profits,
I do not pretend to know. The mine-adventurers
company has been long ago bankrupt.
A share in the stock of the British Linen
company of Edinburgh sells, at present, very
much below par, though less so than it did
some years ago. The joint-stock companies,
which are established for the public-spirited
purpose of promoting some particular manufacture,
over and above managing their own
affairs ill, to the diminution of the general stock
of the society, can, in other respects, scarce
ever fail to do more harm than good. Notwithstanding
the most upright intentions, the
unavoidable partiality of their directors to
particular branches of the manufacture, of
which the undertakers mislead and impose
upon them, is a real discouragement to the
rest, and necessarily breaks, more or less, that
natural proportion which would otherwise
establish itself between judicious industry and
profit, and which, to the general industry of
the country, is of all encouragements the
greatest and the most effectual.
ART. II.—Of the Expense of the Institution
for the Education of Youth.
The institutions for the education of the
youth may, in the same manner, furnish a
revenue sufficient for defraying their own expense.
The fee or honorary, which the
scholar pays to the master, naturally constitutes
a revenue of this kind.
Even where the reward of the master does
not arise altogether from this natural revenue,
it still is not necessary that it should be derived
from that general revenue of the society,
of which the collection and application
are, in most countries, assigned to the executive
power. Through the greater part of
Europe, accordingly, the endowment of
schools and colleges makes either no charge
upon that general revenue, or but a very
small one. It everywhere arises chiefly from
some local or provincial revenue, from the
rent of some landed estate, or from the interest
of some sum of money, allotted and
put under the management of trustees for
this particular purpose, sometimes by the sovereign
himself, and sometimes by some private
donor.
Have those public endowments contributed
in general, to promote the end of their institution?
Have they contributed to encourage
the diligence, and to improve the abilities, of
the teachers? Have they directed the course
of education towards objects more useful,
both to the individual and to the public, than
those to which it would naturally have gone
of its own accord? It should not seem very
difficult to give at least a probable answer to
each of those questions.
In every profession, the exertion of the
greater part of those who exercise it, is always
in proportion to the necessity they are
under of making that exertion. This necessity
is greatest with those to whom the emoluments
of their profession are the only
source from which they expect their fortune,
or even their ordinary revenue and subsistence.
In order to acquire this fortune, or
even to get this subsistence, they must, in the
course of a year, execute a certain quantity
of work of a known value; and, where the
competition is free, the rivalship of competitors,
who are all endeavouring to justle one another
out of employment, obliges every man to endeavour
to execute his work with a certain
degree of exactness. The greatness of the objects