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to a better condition； for it is evidently advancing； seem to be
much slower and more tardy。
The legal rate of interest in France has not； during the
course of the present century； been always regulated by the
market rate。 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 3 1/3 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 Abbe 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 choose 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； 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 borrows 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 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 the 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 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
century。 As riches； improvement； and population have increased；
interest has declined。 The wages of labour do not sink with the
profits of stock。 The demand for labour increases with the
increase of stock whatever be its profits； and after these are
diminished； stock may not only continue to increase； but to
increase much faster than before。 It is with industrious nations
who are advancing in the acquisition of riches as with
industrious individuals。 A great stock； though with small
profits； generally increases faster than a small stock with great
profits。 Money； says the proverb； makes money。 When you have got
a little； it is often easy to get more。 The great difficulty is
to get that little。 The connection between the increase of stock
and that of industry； or of the demand for useful labour； has
partly been explained already； but will be explained more fully
hereafter in treating of the accumulation of stock。
The acquisition of new territory； or of new branches of
trade； may sometimes raise the profits of stock； and with them
the interest of money； even in a country which is fast advancing
in the acquisition of riches。 The stock of the country not being
sufficient for the whole accession of business； which such
acquisitions present to the different people among whom it is
divided； is applied to those particular branches only which
afford the greatest profit。 Part of what had before been employed
in other trades is necessarily withdrawn from them； and turned
into some of the new and more profitable ones。 In all those old
trades； therefore； the competition comes to be less than before。
The market comes to be less fully supplied with many different
sorts of goods。 Their price necessarily rises more or less； and
yields a greater profit to those who deal in them； who can；
therefore； afford to borrow at a higher interest。 For some time
after the conclusion of the late war； not only private people of
the best credit； but some of the greatest companies in London；
commonly borrowed at five per cent； who before that had not been
used to pay more than four； and four and a half per cent。 The
great accession both of territory and trade； by our acquisitions
in North America and the West Indies； will sufficiently account
for this； without supposing any diminution in the capital stock
of the society。 So great an accession of new business to be
carried on by the old stock must necessarily have diminished the
quantity employed in a great number of particular branches； in
which the competition being less； the profits must have been
greater。 I shall hereafter have occasion to mention the reasons
which dispose me to believe that the capital stock of Great
Britain was not diminished even by the enormous expense of the
late war。
The diminution of the capital stock of the society； or of
the funds destined for the maintenance of industry； however； as
it lowers the wages of labour； so it raises the profits of stock；
and consequently the interest of money。 By the wages of labour
being lowered； the owners of what stock remains in the society
can bring their goods at less expense to market than before； and
less sto