Chapter 16 of Part 2 Section 2

The Causes of the slow Progress of Opulence

September 9, 2015

It is surprising for nations to continue to be poor for so long when we consider the immediate effects of the division of labour in improving the arts.

This is caused by natural impediments and the oppression by the government.

Lack of Division of Labor or Teamwork

A barbarous people are ignorant of the effects of the division of labour. It takes a long time before a person can produce more than is necessary for his daily subsistence.

Before labour can be divided, some accumulation of stock is necessary, A poor man with no stock can never begin a manufacture.

Before a man can be a farmer, he must at least have laid in a year’s provision because he does not receive the fruits of his labour until the season’s end.

In a nation of hunters or shepherds, no one can quit his employment until he has some stock to maintain him and begin the new trade.

Everyone knows how difficult it is, even in a refined society, to raise one’s self to moderate circumstances. It is still more difficult to raise one’s self by those trades which require no art nor ingenuity.

A porter or day-labourer must continue poor forever.

In the beginnings of society, this is still more difficult.

A savage can only procure bare subsistence as he has no stock to begin with. He only has his own strength to maintain him and so he continues long in an indigent state.

The meanest labourer in a polished society has an advantage over a savage=

  • he has more assistance in his labour.
  • he has only one thing to do. By assiduity, he becomes able to to perform it well.
  • he has machines and instruments to assist him.

An Indian has his own labour and a pick-axe, spade, or shovel.

This is one great cause of the slow progress of opulence in every country. Until some stock is produced, there can be no division of labour. Before a division of labour take place, there can be very little accumulation of stock.

Violent Governments

The violent civil government is the biggest obstacle to the progress of opulence.

In society’s infancy, government is weak and feeble. It takes a long time before it can protect the industry of individuals from the rapacity of their neighbours.

When people find themselves in danger of being robbed of everything, they have no motive to be industrious. There could be little accumulation of stock. The indolent would be the greatest number and would live off of the industrious and spend whatever they produced.

When the government’s power becomes so great as to defend the produce of industry from its citizens, foreign invaders become the next problem. There are perpetual wars among neighbouring barbarous nations which plunder each other. In this way, it is still nearly impossible to accumulate stock.

There are always more violent convulsions among savage nations than among advanced ones. Among the Mongols and Arabs, great bands of barbarians are always roaming in quest of plunder. They pillage every country as they go along. Large tracts of country are often laid waste and all the effects carried away. Germany too was in the same condition around the fall of the Roman Empire.

We shall next consider the effect of oppressive measures on agriculture and commerce.

Of all the arts, agriculture is the most beneficent to society. Whatever retards its improvement is extremely prejudicial to the public interest.

The produce of agriculture is much greater than that of any other manufacture.

  • The rents of the whole lands in England amounts to about 24 million.
  • The rent is generally around 1/3 of the produce.
  • The whole annual produce of the lands must be around 72 million.

This is much more than the produce of the linen or woollen manufactures.

  • The annual consumption is around 100 million.
  • If you deduct the 72 million produce of agriculture, only 28 million will be left for all the other manufactures of the nation.

Whatever discourages agriculture are extremely prejudicial to the progress of opulence.

Engrossment of Land

One great hindrance to agriculture is the throwing great tracts of land into the hands of single persons. If any man’s estate is more than he is able to cultivate, a part of it is lost.

When a nation of savages conquers a country, the powerful divide the whole lands among them and leave none for the lower ranks of people. In this way, the Celts and the Saxons took possession of Britain.

When land is divided in big portions among the powerful, it is cultivated by slaves which is a very unprofitable method of cultivation. The labour of a slave proceeds only from the dread of punishment. If he could escape this, he would not work at all. If he exerts himself in the most extraordinary manner, he cannot expect any reward. He has no encouragement to industry since all the produce of his labour goes to his master.

A young slave might exert himself a little at first, to attain his master’s favour. But he soon finds that it is all in vain and that he will always get the same severe treatment no matter what his behaviour is. Therefore, when lands are cultivated by slaves, they cannot be greatly improved, as they have no motive to industry.

A cultivation by villains is of the same kind. The landlord gives a man land to cultivate and allows him to maintain himself by it and give back anything in excess. This was equally unfavourable to agriculture as the villains, who were a kind of slaves, had no motive to industry but their own maintenance.

The West Indies have been cultivated and greatly improved by slaves. But they might have been cultivated by freemen more cheaply. The planters could not have supported the expense of slaves if the sugar profits weren’t very great. But their profits have been so enormous, that the extraordinary expense of slave cultivation has vanished before it.

In the northern colonies, they employ few slaves which are in a very flourishing condition. The lands are generally cultivated by the proprietors. This method is the most favourable to agriculture.

The best tenant always=

  • has a rent to pay, and
  • has much less to lay out on improvements.

When a country sends out a colony, it can prevent a single person from acquiring a large tract of land. But when savages seize a country, the strongest man takes most of the land and agriculture declines.

Steel bow tenants succeeded villains. They had no stock and no encouragement to lay it out on improvements. The landlord gave them a farm with stock, in exchange for 50% of the produce at the end of the year.

This method always was unfavourable to agriculture because it deprived the tenant of 50% of the produce, just as tithes hinder improvement by depriving the farmer of 10% of his produce.

Most of France is still cultivated by steel bow tenants. It still remains in some parts of the Highlands of Scotland.

Our present tenants created a new kind of cultivation. Some steel bow tenants, by extreme pinching and cunning, acquired a small stock. They offered their masters a fixed rent, instead of 50%. In time, this became the norm, but it was liable to inconveniences for a long time.

If the landlord sold his land, the new proprietor was not bound to the terms of the agreement and the tenant was often kicked out. The landlord also invented a method to get rid of the tenant when he pleased by selling the estate to another. He had a back bond to the buyer to make him return the estate whenever the tenants were kicked out.

The tenants had no motive to improve the ground because they were continually in danger of being kicked out. This takes place to this day in every European country, except Britain. Contracts of this kind were rendered as real rights=

  • in Scotland, under James III, and
  • in England, under Henry VII.

Besides these, there were several other impediments to the progress of agriculture.

Initially, all rents were paid in kind so that in a dear year, the tenants were in danger of being ruined. A tenant who paid rent in money would be seldom hurt because grain prices rise in proportion to its scarcity. Society, however, must be considerably advanced before money is used for all payments.

Another embarrassment was that the feudal lords sometimes allowed the king to levy subsidies from their tenants which greatly discouraged their industry. Under the tyranny of the feudal aristocracy, the landlords could=

  • squeeze their tenants and
  • raise the rents as high as they pleased.

England is better secured from this than any country. Everyone who holds but 40 shillings a year for life has a vote for a member of parliament. This vote secures him from oppression if he rents a farm.

Several circumstances concurred to continue land engrossment=

  • The right of primogeniture hindered estates from being divided and was established early
  • The institution of entails, present even today
  • The embarrassment of the feudal law in transferring property

Non-commoditization of Land

Commodities can be bought or sold in an instant. But in buying four or five acres of land, a lot of time must be spent in=

  • examining the progress of writs, and
  • getting your right legally constituted.

This tends greatly to the engrossment of lands, and consequently stops their improvement. If all the paperwork in buying lands were abolished, every person who had some money would be ready to buy land with it. The land would be better improved by passing through the different hands.

There is no natural reason why 1,000 acres should not be as easily bought as 1,000 yards of cloth. The keeping land out of the market always hinders its improvement. A merchant who buys a little piece of land wants to=

  • improve it, and
  • make the most of it.

In contrast, great and ancient families seldom have stock or the inclination to improve their estates, other than a small piece of pleasure-ground around their house.

Ban on Import-export

There are many errors in the policy of almost every country which can hinder agriculture.

Our fathers banned grain exports during grievous dearths occurring every two or three years. This is still the policy of most of Europe. It causes the dearth which it is trying to prevent.

Spain is the most fertile country in the world. In a plentiful year, its grain is not worth harvesting. They let it rot on the ground because they would get nothing for it since it cannot be exported. So in the next year, he turns his grounds to grass and a famine happens in the next year. This was one great cause of ancient Italy’s depopulation.

Grain exportation was banned by severe penalties and its importation was encouraged by high premiums. The Italian farmers had no encouragement to industry, not being sure of a market.

In the latter times of the Republic, the Emperors tried several ways to promote the country’s cultivation. But they didn’t know that the real cause was the immense amount of corn daily imported from Egypt and Africa and so their endeavours were ineffective.

Caligula and Claudius gave their soldiers land on the condition that they would cultivate it. But as the soldiers had no other motive, very inconsiderable improvements were made. Virgil also published his Georgics to bring the cultivation of land into fashion, but all was in vain.

Foreign grain was always sold cheaper than their own could be raised. Thus we find Cato, in the Third Book of Cicero’s Offices, preferring pasturage to farming.

The free export and import of gain is favourable to agriculture. Since its exportation was allowed, grain prices have gradually sunk. The bounty on exportation does harm in other respects, but it increases the amount of grain.

In Holland, grain is cheaper and plentier than anywhere else and a dearth there is unknown. Holland is a granary for a big part of Europe due to their free export and import. If no improper regulations took place, any European country might do more than maintain itself with all sorts of grain.

Preference for Urban over Rural

The Kings of Spain have also done all in their power to promote land improvement. Philip IV himself farmed, to set the fashion.

  • He did everything for the farmers except bringing them a good market.
  • He conferred the titles of nobility on several farmers.
  • He very absurdly tried to oppress manufacturers with heavy taxes to force them to the countryside as he thought that the rural population decreased as the urban population increased.

This notion was highly ridiculous. The populousness of a town is the very cause of the populousness of the countryside, because it gives greater encouragement to industry.

Every man in a town must be fed by a man in the countryside. It is always a sign that the country is improving when men go to town. The best inhabited and cultivated lands are those near populous cities.

The more manufacturers there are in any country, the more improved agriculture is. The causes which prevent the progress of these react on agriculture.

Slavery

The slow progress of arts and commerce is due to similar causes. In all places where slavery took place, the manufactures were carried on by slaves.

It is impossible for manufactures to be well-done by slaves as by freemen, because they=

  • can have no motive to labour but the dread of punishment, and
  • can never invent any machine for facilitating their business.

Freemen who have a stock of their own, can get anything accomplished. If a carpenter thinks that a plane will serve his purpose better than a knife, he may go to a smith and get it made. But if a slave makes such a proposal he is called a lazy rascal. No experiments are made to give him ease.

Presently, the Turks and Hungarians work the same kind of mines, situated on opposite sides of the same mountains. But the Hungarians make much more than the Turks because they employ free men, while the Turks employ slaves. When the Hungarians encounter any obstacle, every invention is on work to find out some easy way of surmounting it. But the Turks only think of setting more slaves to work.

In the ancient world, the arts were all carried on by slaves. They had no stock and thus could not invent machinery. This was also true all over Europe after the fall of the Roman Empire.

Those principles of the human mind which are most beneficial to society, are not marked by nature as the most honourable. Hunger, thirst, and lust are the great supports of the human species. Yet almost every expression of these excites contempt.

In the same way, that principle in the mind which prompts to truck, barter, and exchange is not marked with anything amiable even if it is the great foundation of arts, commerce, and the division of labour. To perform anything, or to give anything without a reward, is always generous and noble. But to barter one thing for another is mean. This is because these principles are so strongly implanted by nature. They do not need that additional force which the weaker principles need.

In rude ages, this contempt is at its highest. Even in a refined society, it is not utterly extinguished. In Britain, a small retailer is even odious in some degree today. The trade of a merchant or mechanic was thus depreciated in the beginnings of society and so it was confined to the lowest ranks of people.

Even when emancipated slaves began to practice these trades, it was impossible for them to accumulate much stock because=

  • the government oppressed them severely, and
  • they were obliged to pay licences for their liberty of trading.

The Domesday-book has an account of=

  • all the different traders in every county,
  • how many of them were under the king,
  • how many under such a bishop, and
  • what acknowledgments they were obliged to pay for their liberty of trading.

Their mean and despicable idea of merchants greatly obstructed the progress of commerce. The merchant is the medium between the manufacturer and the consumer. The weaver must not go to the market himself. There must be somebody to do this for him. This person must have a considerable stock to buy the commodity and maintain the manufacturer.

But merchants could never amass that stock necessary for making the division of labour and improving manufactures when they were so despicable and taxed heavily for the liberty to trade.

The only persons then who made any money by trade were the Jews who were considered as vagabonds.

  • They could not buy lands.
  • The only employment they could get was by becoming mechanics or merchants.
  • Their character could not be spoiled by merchandise because they could not be more odious than what their religion made them.
  • Even they were grievously oppressed.
  • Consequently, the progress of opulence was greatly retarded.

No Law on Contracts

Another thing which greatly retarded commerce was the imperfection of the law with regard to contracts.

Contracts were the last kinds of rights that sustained action.

  • Originally, the law gave no redress for any but those concluded on the spot.
  • Presently, all considerable commerce is carried on by commissions. Unless these sustained action, little could be done.

The first action on contracts extended only to the inconsiderable moveable goods of the contractor. He and his lands could not be touched. Probity is not a prevalent virtue among a rude people because it is commerce that introduces probity and punctuality.

Bad Peace and Order and Infrastructure

Another obstacle to the improvement of commerce was the difficulty of transportation due to=

  • lack of peace and order, and
    • The countryside was then filled with retainers who were idle people depended on the lords. The lords’ violence and disorders rendered travelling very difficult.
  • bad infrastructure as the lack of good highways.

In a rude society, only war is honourable. In the Odyssey, Ulysses is sometimes asked, by way of affront, whether he is a pirate or a merchant. Back then, a merchant was reckoned odious and despicable, but a pirate or robber was treated with honour, since he had military bravery.

In Britain, a man made his testament before leaving Edinburgh for Aberdeen. It was even more dangerous to go overseas. The laws of countries on aliens and strangers are far from being favourable.

Sea travel remained difficult and piracy was an honourable occupation as men were ignorant of navigation.

The lack of navigable rivers was also an inconvenience, which is still the case in Asia and other Eastern countries. All inland commerce is carried on by great caravans.

The price of all these risks was laid on the goods. This raised their prices so much above the natural price that the improvement of commerce was greatly retarded.

Fixed Fairs

Another policy which had the same effect was the fairs and markets all over Europe. Our forefathers thought that these were wise. Until the 16th century, all commerce was carried on by fairs.

The following fairs were much talked of in antiquity=

  • Bartholomew of Leipzig
  • Troyes in Champagne, France
  • Glasgow.

These were the most central places best for carrying on business and all linen and black cattle were brought in to them. They were brought on a certain day and not allowed to be sold on any other day.

Forestallers went up and down the country buying up commodities. They were severely punished as they would reduce the goods for the market. This might be necessary if it were not safe to go anywhere alone. But even if there were no fairs, buyers and sellers will find a way to each other.

Easy conveyance and other conveniences of trafficking will be of more advantageous than bringing them to a fixed market which confines buying and selling to a certain season. All fairs, however necessary they then were, are now real nuisances. It is absurd to preserve old customs when their causes – the lack of security – are removed.

Staple towns

Staple towns had the exclusive privilege of selling a certain commodity within that district. When Calais belonged to the English, it was the staple for wool for a long time. Its price was very high as men were obliged to carry their wool very far. However, it was a very great advantage to any town to have the staple. Therefore, the king=

  • gave it to the town that he was best pleased with, and
  • took it away whenever it disobliged him.

Staple towns had all the disadvantages of fairs and markets. It had an extra disadvantage that the staple commodity could not be sold at any other market or fair. This reduced the liberty of exchange and consequently the division of labour.

Import and Export taxes

All taxes on export and imported goods also hinder commerce. Initially, merchants were so contemptible that the law abandoned them. The law obliged the merchants to pay and to have their goods taxed, which raised the price of goods. This led to fewer goods and discouraged manufactures and the division of labour.

Monopolies and exclusive privileges

All monopolies and exclusive privileges of corporations, for whatever good ends they were at first instituted, have the same bad effect.

The Statute of apprenticeship

Similarly, the statute of apprenticeship has a bad tendency. They imagined that the cause of so much bad cloth was that the weaver had not been properly educated, so they made a statute that he should serve a seven years apprenticeship before making any cloth.

But this is not a sufficient security against bad cloth since you cannot inspect a large piece of cloth. Instead, you rely on the stampmaster’s skill.

Bounties

Above all other causes, the giving bounties for one commodity, and the discouraging another, hurts the natural state of commerce.