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.
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.
