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trade of insurance； therefore； may be carried on successfully by
a joint stock company without any exclusive privilege。 Neither
the London Assurance nor the Royal Exchange Assurance companies
have any such privilege。
When a navigable cut or canal has been once made； the
management of it becomes quite simple and easy； and it is
reducible to strict rule and method。 Even the making of it is so
as it may be contracted for with undertakers at so much a mile；
and so much a lock。 The same thing may be said of a canal； an
aqueduct； or a great pipe for bringing water to supply a great
city。 Such undertakings； therefore； may be； and accordingly
frequently are； very successfully managed by joint stock
companies without any exclusive privilege。
To establish a joint stock company； however； for any
undertaking； merely because such a company might be capable of
managing it successfully； or to exempt a particular set of
dealers from some of the general laws which take place with
regard to all their neighbours； merely because they might be
capable of thriving if they had such an exemption； would
certainly not be reasonable。 To render such an establishment
perfectly reasonable； with the circumstance of being reducible to
strict rule and method； two other circumstances ought to concur。
First； it ought to appear with the clearest evidence that the
undertaking is of greater and more general utility than the
greater part of common trades； and secondly； that it requires a
greater capital than can easily be collected into a private
copartnery。 If a moderate capital were sufficient； the great
utility of the undertaking would not be a sufficient reason for
establishing a joint stock company； because； in this case； the
demand for what it was to produce would readily and easily be
supplied by private adventures。 In the four 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
that 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 dimunition 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。
ARTICLE II
Of the Expense of the Institutions 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 is； 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
which are to be acquired by success in some particular
professions may； no doubt； sometimes animate the exertion of a
few men of extraordinary spirit and ambition。 Great objects；
however； are evidently not necessary in order to occasion the
greatest exertions。 Rivalship and emulation render excellency；
even in mean professions； an object of ambition； and frequently
occasion the very greatest exertions。 Great objects； on the
contrary； alone and unsupported by the necessity of application；
have seldom been sufficient to occasion any considerable
exertion。 In England； success in the profession of the law leads
to some very great objects of ambition； and yet how few men； born
to easy fortunes； have ever in this country been eminent in that
profession！
The endowments of schools and colleges have necessarily
diminished more or less the necessity of application in the
teachers。 Their subsistence； so far as it arises from their
salaries； is evidently derived from a fund altogether independent
of their success and reputation in their particular professions。
In some universities the salary makes but a part； and
frequently but a small part； of the emoluments of the teacher； of
which the greater part arises from the honoraries or fees of his
pupils。 The necessity of application； though always more or less
diminished； is not in this case entirely taken away。 Reputation
in his profession is still of some importance to him； and he
still has some dependency upon the affection； gratitude； and
favourable report of those who have attended upon his
instructions； and these favourable sentiments he is likely to
gain i