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sufficient to maintain and employ a greater number of industrious
people than had been employed the year before； and this
extraordinary number cannot always be had。 Those masters；
therefore； who want more workmen bid against one another； in
order to get them； which sometimes raises both the real and the
money price of their labour。
The contrary of this happens in a year of sudden and
extraordinary scarcity。 The funds destined for employing industry
are less than they had been the year before。 A considerable
number of people are thrown out of employment； who bid against
one another； in order to get it； which sometimes lowers both the
real and the money price of labour。 In 1740； a year of
extraordinary scarcity； many people were willing to work for bare
subsistence。 In the succeeding years of plenty； it was more
difficult to get labourers and servants。
The scarcity of a dear year； by diminishing the demand for
labour； tends to lower its price； as the high price of provisions
tends to raise it。 The plenty of a cheap year； on the contrary；
by increasing the demand； tends to raise the price of labour； as
the cheapness of provisions tends to lower it。 In the ordinary
variations of the price of provisions those two opposite causes
seem to counterbalance one another； which is probably in part the
reason why the wages of labour are everywhere so much more steady
and permanent than the price of provisions。
The increase in the wages of labour necessarily increases
the price of many commodities； by increasing that part of it
which resolves itself into wages； and so far tends to diminish
their consumption both at home and abroad。 The same cause；
however； which raises the wages of labour； the increase of stock；
tends to increase its productive powers； and to make a smaller
quantity of labour produce a greater quantity of work。 The owner
of the stock which employs a great number of labourers；
necessarily endeavours； for his own advantage； to make such a
proper division and distribution of employment that they may be
enabled to produce the greatest quantity of work possible。 For
the same reason； he endeavours to supply them with the best
machinery which either he or they can think of。 What takes place
among the labourers in a particular workhouse takes place； for
the same reason； among those of a great society。 The greater
their number； the more they naturally divide themselves into
different classes and subdivisions of employment。 More heads are
occupied in inventing the most proper machinery for executing the
work of each； and it is； therefore； more likely to be invented。
There are many commodities； therefore； which； in consequence of
these improvements； come to be produced by so much less labour
than before that the increase of its price is more than
compensated by the diminution of its quantity。
CHAPTER IX
Of the Profits of Stock
THE rise and fall in the profits of stock depend upon the
same causes with the rise and fall in the wages of labour； the
increasing or declining state of the wealth of the society； but
those causes affect the one and the other very differently。
The increase of stock； which raises wages； tends to lower
profit。 When the stocks of many rich merchants are turned into
the same trade； their mutual competition naturally tends to lower
its profit； and when there is a like 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。 According； 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； c。 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
stocks 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。