greater than that of agriculture. Thus the progress of a nation from agriculture to manufactures, from manufactures to commerce, and from commerce to retail trade, the least profitable of all, continues to be conducted by individual interest, till the equalization of profit and the increase of human wants, through inincreasing civilization, stimulate agriculture afresh, and the process is slowly and insensibly but perpetually repeated. But, not only is agriculture preferred to manufactures, manufactures to commerce, and commerce to retail trade, in the cases where the preference is dictated by the superior profit to the individual, but fortunately for the state the same preference appears still to exist even where the profits are only equal. The simplicity, quiet, and salubrity of an agricultural life, make it a more enviable lot than the life of the manufacturer (1). Again, manufactures are chosen rather than commerce, from the security which, by their fixed and permanent nature, they afford for the capital engaged, as well as from the personal influence which the manufacturer derives from the multitudes whom he employs; while commerce, in the last place, is preferred to retail trade, from the grandeur of its scale, and the liberality of its habits. (2) The identity of the general with the individual interest is not less observable throughout the subdivisions into which the single employment of commerce distributes itself. We have before remarked, that commerce, properly so called, (that is to say) the operation of buying and selling by wholesale, is of three kinds : the home trade, the foreign trade of consumption, and the carrying trade. The home trade, which appears to be the most advantageous to the state, inasmuch as it sets in motion the greatest quantity of labour, is carried on by individuals in preference to any other, till competition brings the level of its profits so low as to make the foreign trade of consumption, which is the next in the scale of utility, the more beneficial employment; and foreign trade is sought and pursued till, from the same cause, the carrying trade best repays the capitalist. In the mean time, the increase of population and of domestic wants has widened the field for the home trade; the home trade again attracts capital, and the process is repeated as before: and the reason why, as long as the profit remains equal, the home trade (1) 2 Smith, 125. 202. (2) 2 Smith, 127. 202. is preferred to the foreign trade of consumption, and the foreign trade of consumption to the carrying trade, has been clearly explained by Dr. Adam Smith (1). In the home trade the capital is on no one occasion so long out of its owner's sight as it is on most occasions in the foreign trade of consumption; besides that he can better investigate the character and situation of those whom he trusts; and if he happen to be deceived, he better knows the laws from which he can seek redress. But if in the foreign trade of consumption the capital is out of the owner's sight for very long periods, in the carrying trade it will not necessarily be in his sight at any period at all: the risk, and the trouble and anxiety, which, even with all the precautions of insurance, a merchant must always endure, are, of course, so much the greater. rest of the indi and it is of no But as the exact coincidence of public interest with that of When the intethe individual, in regard to the different directions of capital, vidual ceases in has hitherto been traced no further than while the direction of any particular channel of trade, capital, which is publicly the most advantageous, continues to the interest of clear greater profit to the private capitalist than those directions the state accords; which, in the abstract, are less advantageous to the public; we avail to attempt will now endeavour to show, that as soon as the profit of the in- to force it into dividual in any particular employment of capital begins to fall below that of certain other employments, immediately the employment thus unprofitable to the individual becomes also unprofitable to the state. We will take our example from the comparative public utility of agriculture and manufactures. It may appear that as agriculture has been allowed to be capable of supporting a greater quantity of labour than any other employment, it would be best for the state that every man's capital should be directed to agriculture, even though his individual profit were a little less than it might be if directed otherwise. It is not so. Suppose a law passed that no stock should be turned to manufactures, commerce, or any employment but agriculture. The decrease of profit to each capitalist which must follow from the direction of all men's capitals into one channel, would presently lower the wages of labour, so that population would receive a check, even in the first step: but this is not all; as soon as the competition should have reduced another channe'. the profits to the lowest rate at which they could maintain the capitalist and his family, no further capital would be employed at all, unless it were permitted to flow into other more open channels; for no man would embark his capital without the prospect of any advantage whatever: nay more, it is obvious that even though a certain profit should be still attainable, yet if that profit were so small as to be barely sufficient for a hard maintenance, which, under such a competition, must inevitably be the case, no agriculturist could in any possibility lay up a store with which he might either enlarge his own scale of farming, or encourage the industry of his neighbours; so that the consequence of forcing capital into the channel of agriculture, when the channel of manufactures would be more profitable to the individual capitalist, must be simply this, that only a certain number of capitalists could make any profit at all; that the profit of these few after a little while would be too small to allow any improvements or advances in agriculture, the very employment by which population is to be supported; and that the wages even of this limited quantity of employment would be reduced, by this low rate of the employer's profit, to the smallest stipend upon which it is possible for human nature to subsist. The produce too of almost every district can support many times more hands than are necessary to raise it; but since, after the passing of such a regulation as we have supposed, there would be scarcely any persons capable of purchasing this surplus produce, except other agriculturists, who would have a surplus produce of their own to dispose of, it would never be purchased at all; it would not continue to be given away, for that could not answer to the capitalist; and the consequence must be, that it could no longer be raised: no man would rent more land than was necessary for the maintenance of his own family; the landlords would even receive these rents in kind, because in such a state of things there would be hardly any property in the kingdom except rude produce; and the great proprietors of the soil would be compelled, for want of manufactured produce, to waste their whole income in prodigal hospitality (1). It is impossible to conceive a state of things more unfavorable to population, and indeed to improvement of every kind. It appears then, that though agriculture be in the first instance more profitable to individuals than any other direc (1) ante 2. note 3. tion of capital, and, in conducing to the support of a greater population, more beneficial also to the state; yet, if capital be unnaturally forced into this channel, the advantages are diminished, and in a little while totally destroyed. It will happen therefore that manufactures, if at that particular time they be most profitable to the individual, will become the most profitable to the state. The number of persons immediately set at work may not be so great, but the greater be the profit of the capitalist, the greater is likely to be the whole quantity of labour that he will ultimately set in motion, in some shape or other, by adding that profit to his capital, and thus enlarging the scale of his own commerce; or by spending that profit, and thus encouraging the industry of others; or by lending that profit at interest, and thus at once enriching his own family, and furnishing capital to new adventurers. The same principle, though the inconveniences would be of a different kind, applies equally to the unnatural compulsion of capital into any other channel which may happen at the time to be unprofitable for the individual. As, for example, into the channel of manufactures rather than of commerce, of commerce rather than of retail trade, of domestic rather than of foreign commerce, and so on in every other instance; though the channel into which the capital may be thus compelled, be really with equal profits the more advantageous to the state. After all these deductions it can scarcely be necessary to add, that whenever we may hereafter speak of the superior advantage to be derived by the state from one employment or another, it will be assumed that the clear profits of that employment so considered as superior, are at least equal to the profits of the employments with which it may be compared; because, if the clear profit upon capital in one employment be greater than in another, then, according to the principles already laid down the employment so affording the greater clear profit is, ipso facto, proved to be the more advantageous to the state. The great position, that no occupation is ever encouraged by unnaturally forcing capital into it, ought, indeed, to be sufficiently evident from this plain consideration, that the increased competition of capital always diminishes profit, and the diminution of profit in any-employment can be but a very slender encouragement to the undertaking of it. The public are not gainers by It seems to have been thought, that the public are gainers by the depression of the depression of the rate of profit in any way whatever; but the rate of profit. this is a great error (1). No state which has not reached its full What foreign export and import trades are best for the state. perfection, its utmost complement of comfortably supported population, can be said to thrive greatly, unless the profits of all industry be very considerable. High profits, where competition is free, that is to say, profits universally high, are at once the symptom and the cause of a nation's prosperity: the symptom, inasmuch as they usually evince that the industrious portion of the state is amply provided with the means of subsistence; and the cause, inasmuch as by giving to that class an extensive power over the land, they furnish the comfortable means of increasing the population. We will now concisely consider those frequently discussed questions, whether it be most advantageous for a nation to export manufactures, for rude produce? or, secondly, manufac tures for manufactures? or, thirdly, rude produce for rude produce? or, fourthly and lastly, rude produce for manufactures? The substance of the doctrine usually received (2) appears to be this: that the trade most beneficial to the state is the export of manufactures for rude produce, because this kind of traffic not only enables the people, by the quantity of employment it creates, to consume their own rude produce, and thus increases the amount of the comfortably supported population, but by bringing back an additional quantity of rude produce, which usually consists either of the materials for fresh manufactures, or of human food, supplies the means of employing or of comfortably supporting a still greater population. It is supposed that the kind of export next in utility is the export of manufactures for other manufactures; because here is one of the same advantages. as in the former case, the advantage of furnishing profitable employments to the people at home, and so enabling them to consume their own raw produce; though not the other advantage, which is the increase in the supply of raw produce, for the employment and maintenance of a still greater population. The (1) 1 Smith, 91, 2. Sir J. Child on Trade, Preface, 12, 13., and context of Work, 19, 20; where this position is laid down and established: "Wherever wages are high universally throughout the |