The erroneous notion that national opulence consists in money had also given rise to the absurd opinion that “no home consumption can hurt the opulence of a country.”40
It was this notion too that led to Law’s Mississippi scheme, compared to which our own South Sea scheme was a trifle.41
Interest does not depend on the value of money, but on the quantity of stock. Exchange is a method of dispensing with the transmission of money.42
Under the third heading, the history of commerce, or the causes of the slow progress of opulence, Adam Smith dealt with “first, natural impediments, and secondly, the oppression of civil government.”43 He is not recorded to have mentioned any natural impediments except the absence of division of labour in rude and barbarous times owing to the want of stock.44 But on the oppression of civil government he had much to say. At first governments were so feeble that they could not offer their subjects that security without which no man has any motive to be industrious. Afterwards, when governments became powerful enough to give internal security, they fought among themselves, and their subjects were harried by foreign enemies. Agriculture was hindered by great tracts of land being thrown into the hands of single persons. This led at first to cultivation by slaves, who had no motive to industry; then came tenants by steel-bow (métayers) who had no sufficient inducement to improve the land; finally the present method of cultivation by tenants was introduced, but these for a long time were insecure in their holdings, and had to pay rent in kind, which made them liable to be severely affected by bad seasons. Feudal subsidies discouraged industry, the law of primogeniture, entails, and the expense of transferring land prevented the large estates from being divided. The restrictions on the export of corn helped to stop the progress of agriculture. Progress in arts and commerce was also hindered by slavery, as well as by the ancient contempt for industry and commerce, by the want of enforcement of contracts, by the various difficulties and dangers of transport, by the establishment of fairs, markets and staple towns, by duties on imports and exports, and by monopolies, corporation privileges, the statute of apprenticeship and bounties.45
Under the fourth and last head, the influence of commerce on the manners of a people, Smith pronounced that “whenever commerce is introduced into any country probity and punctuality always accompany it.”46 The trader deals so often that he finds honesty is the best policy. “Politicians are not the most remarkable men in the world for probity and punctuality. Ambassadors from different nations are still less so,”47 the reason being that nations treat with one another much more seldom than merchants.
But certain inconveniences arise from a commercial spirit. Men’s views are confined, and “when a person’s whole attention is bestowed on the seventeenth part of a pin or the eightieth part of a button,”48 he becomes stupid. Education is neglected. In Scotland the meanest porter can read and write, but at Birmingham boys of six or seven can earn threepence or sixpence a day, so that their parents set them to work early and their education is neglected. To be able merely to read is good as it “gives people the benefit of religion, which is a great advantage, not only considered in a pious sense, but as it affords them subject for thought and speculation.”49 There is too “another great loss which attends the putting boys too soon to work.” The boys throw off parental authority, and betake themselves to drunkenness and riot. The workmen in the commercial parts of England are consequently in a “despicable condition; their work through half the week is sufficient to maintain them, and through want of education they have no amusement for the other but riot and debauchery. So it may very justly be said that the people who clothe the whole world are in rags themselves.”50
Further, commerce sinks courage and extinguishes martial spirit; the defence of the country is handed over to a special class, and the bulk of the people grow effeminate and dastardly, as was shown by the fact that in 1745 “four or five thousand naked unarmed Highlanders would have overturned the government of Great Britain with little difficulty if they had not been opposed by a standing army.”51
“To remedy” these evils introduced by commerce “would be an object worthy of serious attention.”
Revenue, at any rate in the year when the notes of his lectures were made, was treated by Adam Smith before the last head of police just discussed, ostensibly on the ground that it was in reality one of the causes of the slow progress of opulence.52
Originally, he taught, no revenue was necessary; the magistrate was satisfied with the eminence of his station and any presents he might receive. The receipt of presents soon led to corruption. At first too soldiers were unpaid, but this did not last. The earliest method adopted for supplying revenue was assignment of lands to the support of government. To maintain the British government would require at least a fourth of the whole of the land of the country. “After government becomes expensive, it is the worst possible method to support it by a land rent.”53 Civilisation and expensive government go together.
Taxes may be divided into taxes upon possessions and taxes upon commodities. It is easy to tax land, but difficult to tax stock or money; the land tax is very cheaply collected and does not raise the price of commodities and thus restrict the number of persons who have stock sufficient to carry on trade in them. It is hard on
