An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith (ebook reader with highlighter txt) 📖

averse to enter into it.

It is abandoned to an inferior set of dealers; and millers,

bakers, meal-men, and meal-factors, together with a number of

wretched hucksters, are almost the only middle people that, in

the home market, come between the grower and the consumer.

 

The ancient policy of Europe, instead of discountenancing this

popular odium against a trade so beneficial to the public, seems,

on the contrary, to have authorised and encouraged it.

 

By the 5th and 6th of Edward VI cap. 14, it was enacted, that

whoever should buy any corn or grain, with intent to sell it

again, should be reputed an unlawful engrosser, and should, for

the first fault, suffer two months imprisonment, and forfeit the

value of the corn ; for the second, suffer six months

imprisonment, and forfeit double the value; and, for the third,

be set in the pillory, suffer imprisonment during the king’s

pleasure, and forfeit all his goods and chattels. The ancient

policy of most other parts of Europe was no better than that of

England.

 

Our ancestors seem to have imagined, that the people would buy

their corn cheaper of the farmer than of the corn merchant, who,

they were afraid, would require, over and above the price which

he paid to the farmer, an exorbitant profit to himself. They

endeavoured, therefore, to annihilate his trade altogether. They

even endeavoured to hinder, as much as possible, any middle man

of any kind from coming in between the grower and the consumer;

and this was the meaning of the many restraints which they

imposed upon the trade of those whom they called kidders, or

carriers of corn ; a trade which nobody was allowed to exercise

without a licence, ascertaining his qualifications as a man of

probity and fair dealing. The authority of three justices of the

peace was, by the statute of Edward VI. necessary in order to

grant this licence. But even this restraint was afterwards

thought insufficient, and, by a statute of Elizabeth, the

privilege of granting it was confined to the quarter-sessions.

 

The ancient policy of Europe endeavoured, in this manner, to

regulate agriculture, the great trade of the country, by maxims

quite different from those which it established with regard to

manufactures, the great trade of the towns. By leaving a farmer

no other customers but either the consumers or their immediate

factors, the kidders and carriers of corn, it endeavoured to

force him to exercise the trade, not only of a farmer, but of a

corn merchant, or corn retailer. On the contrary, it, in many

cases, prohibited the manufacturer from exercising the trade of a

shopkeeper, or from selling his own goods by retail. It meant, by

the one law, to promote the general interest of the country, or

to render corn cheap, without, perhaps, its being well understood

how this was to be done. By the other, it meant to promote that

of a particular order of men, the shopkeepers, who would be so

much undersold by the manufacturer, it was supposed, that their

trade would be ruined, if he was allowed to retail at all.

 

The manufacturer, however, though he had been allowed to keep a

shop, and to sell his own goods by retail, could not have

undersold the common shopkeeper. Whatever part of his capital he

might have placed in his shop, he must have withdrawn it from his

manufacture. In order to carry on his business on a level with

that of other people, as he must have had the profit of a

manufacturer on the one part, so he must have had that of a

shopkeper upon the other. Let us suppose, for example, that in

the particular town where he lived, ten per cent. was the

ordinary profit both of manufacturing and shopkeeping stock ; he

must in this case have charged upon every piece of his own goods,

which he sold in his shop, a profit of twenty per cent. When he

carried them from his workhouse to his shop, he must have valued

them at the price for which he could have sold them to a dealer

or shopkeeper, who would have bought them by wholesale. If he

valued them lower, he lost a part of the profit of his

manufacturing capital. When, again, he sold them from his shop,

unless he got the same price at which a shopkeeper would have

sold them, he lost a part of the profit of his shopkeeping

capital. Though he might appear, therefore, to make a double

profit upon the same piece of goods, yet, as these goods made

successively a part of two distinct capitals, he made but a

single profit upon the whole capital employed about them ; and if

he made less than his profit, he was a loser, and did not employ

his whole capital with the same advantage as the greater part of

his neighbours.

 

What the manufacturer was prohibited to do, the farmer was in

some measure enjoined to do ; to divide his capital between two

different employments; to keep one part of it in his granaries

and stack-yard, for supplying the occasional demands of the

market, and to employ the other in the cultivation of his land.

But as he could not afford to employ the latter for less than the

ordinary profits of farming stock, so he could as little afford

to employ the former for less than the ordinary profits of

mercantile stock. Whether the stock which really carried on the

business of a corn merchant belonged to the person who was called

a farmer, or to the person who was called a corn merchant, an

equal profit was in both cases requisite, in order to indemnify

its owner for employing it in this manner, in order to put his

business on a level with other trades, and in order to hinder him

from having an interest to change it as soon as possible for some

other. The farmer, therefore, who was thus forced to exercise the

trade of a corn merchant, could not afford to sell his corn

cheaper than any other corn merchant would have been obliged to

do in the case of a free competition.

 

The dealer who can employ his whole stock in one single branch of

business, has an advantage of the same kind with the workman who

can employ his whole labour in one single operation. As the

latter acquires a dexterity which enables him, with the same two

hands, to perform a much greater quantity of work, so the former

acquires so easy and ready a method of transacting his business,

of buying and disposing of his goods, that with the same capital

he can transact a much greater quantity of business. As the one

can commonly afford his work a good deal cheaper, so the other

can commonly afford his goods somewhat cheaper, than if his stock

and attention were both employed about a greater variety of

objects. The greater part of manufacturers could not afford to

retail their own goods so cheap as a vigilant and active

shopkeeper, whose sole business it was to buy them by wholesale

and to retail them again. The greater part of farmers could still

less afford to retail their own corn, to supply the inhabitants

of a town, at perhaps four or five miles distance from the

greater part of them, so cheap as a vigilant and active corn

merchant, whose sole business it was to purchase corn by

wholesale, to collect it into a great magazine, and to retail it

again.

 

The law which prohibited the manufacturer from exercising the

trade of a shopkeeper, endeavoured to force this division in the

employment of stock to go on faster than it might otherwise have

done. The law which obliged the farmer to exercise the trade of a

corn merchant, endeavoured to hinder it from going on so fast.

Both laws were evident violations of natural liberty, and

therefore unjust; and they were both, too, as impolitic as they

were unjust. It is the interest of every society, that things of

this kind should never either he forced or obstructed. The man

who employs either his labour or his stock in a greater variety

of ways than his situation renders necessary, can never hurt his

neighbour by underselling him. He may hurt himself, and he

generally does so. Jack-of-all-trades will never be rich, says

the proverb. But the law ought always to trust people with the

care of their own interest, as in their local situations they

must generally he able to judge better of it than the legislature

can do. The law, however, which obliged the farmer to exercise

the trade of a corn merchant was by far the most pernicious of

the two.

 

It obstructed not only that division in the employment of stock

which is so advantageous to every society, but it obstructed

likewise the improvement and cultivation of the land. By obliging

the farmer to carry on two trades instead of one, it forced him

to divide his capital into two parts, of which one only could be

employed in cultivation. But if he had been at liberty to sell

his whole crop to a corn mercliant as fast as he could thresh it

out, his whole capital might have returned immediately to the

land, and have been employed in buying more cattle, and hiring

more servants, in order to improve and cultivate it better. But

by being obliged to sell his corn by retail, he was obliged to

keep a great part of his capital in his granaries and stack-yard

through the year, and could not therefore cultivate so well as

with the same capital he might otherwise have done. This law,

therefore, necessarily obstructed the improvement of the land,

and, instead of tending to render corn cheaper, must have tended

to render it scarcer, and therefore dearer, than it would

otherwise have been.

 

After the business of the farmer, that of the corn merchant is in

reality the trade which, if properly protected and encouraged,

would contribute the most to the raising of corn. It would

support the trade of the farmer, in the same manner as the trade

of the wholesale dealer supports that of the manufacturer.

 

The wholesale dealer, by affording a ready market to the

manufacturer, by taking his goods off his hand as fast as he can

make them, and by sometimes even advancing their price to him

before he has made them, enables him to keep his whole capital,

and sometimes even more than his whole capital, constantly

employed in manufacturing, and consequently to manufacture a much

greater quantity of goods than if he was obliged to dispose of

them himself to the immediate consumers, or even to the

retailers. As the capital of the wholesale merchant, too, is

generally sufficient to replace that of many manufacturers, this

intercourse between him and them interests the owner of a large

capital to support the owners of a great number of small ones,

and to assist them in those losses and misfortunes which might

otherwise prove ruinous to them.

 

An intercourse of the same kind universally established between

the farmers and the corn merchants, would be attended with

effects equally beneficial to the farmers. They would be enabled

to keep their whole capitals, and even more than their whole

capitals constantly employed in cultivation. In case of any of

those accidents to which no trade is more liable than theirs,

they would find in their ordinary customer, the wealthy corn

merchant, a person who had both an interest to support them, and

the ability to do it ; and they would not, as at present, be

entirely dependent upon the forbearance of their landlord, or the

mercy of his steward. Were it possible, as perhaps it is not, to

establish this intercourse universally,