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Here is a summary of the Project Gutenberg EBook of An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith:

This eBook contains Adam Smith’s classic work on political economy originally published in 1776. It lays out Smith’s theories on division of labor, productivity, free markets, and how wealth is created at both the individual and national levels.
The book is divided into five books. Book I discusses the causes of improvement in labor productivity and how output gets distributed in society. Book II covers capital accumulation and different types of labor. Book III examines economic progress internationally. Book IV analyzes different systems of economic thought. Book V deals with government revenue and public finance.
The introduction outlines Smith’s view that a nation’s wealth depends on the productivity of its labor and how the output from labor gets allocated. The rest of the work then delves into Smith’s theories on division of labor, markets, wages, profits, rents, trade, taxation and other factors influencing a nation’s overall wealth and prosperity.
The eBook is part of Project Gutenberg and is available for free public distribution with minimal restrictions, allowing anyone to download, share or reuse it. It contains the full text of Smith’s classic work laying out his seminal ideas in political economy and arguments for free markets.

The passage discusses how the division of labor increases productivity according to Adam Smith’s classic economic principles. It explains that dividing any manufacturing process into distinct steps and having specialized workers focus only on one step increases their dexterity and efficiency. Fewer transitions between tasks means less time is wasted. Machines are also developed to aid different steps, allowing one person to do the work of many.

As an example, it describes the 18 distinct steps of pin making and how 10 workers managing just 1-3 steps each could produce 48,000 pins per day, whereas individually they may struggle to make even one pin per day without specialization. This principle of increasing output through specialized division of labor is seen across industries. Countries with more advanced economies typically divide labor the most.

The passage discusses the advantages of the division of labor. It provides three key points:

Division of labor increases productivity. Individuals can specialize in specific tasks and become highly skilled and efficient at performing them. For example, nail smiths in the 1700s could produce over 2,300 nails per day.
It reduces time lost switching between tasks. When tasks are separated, workers don’t have to waste time adjusting between different tools and workspaces. This increases overall efficiency.
It leads to technological innovation. Workers focusing on single tasks are more likely to invent machines that improve their productivity, like the example given of a boy inventing an automatic water valve. Overall, specialization drives improvements across many industries.

The passage concludes by emphasizing how modern goods are a result of this extensive division and collaboration of labor across many industries and locations. Even basic goods rely on a vast network and variety of production tasks. Division of labor is what drives widespread prosperity in societies.

The passage argues that the accommodation (living standards) of an European prince does not always greatly exceed that of an industrious peasant, in the same way that the peasant’s accommodation exceeds that of many African kings.
It suggests African kings, as absolute rulers over thousands of subjects, live more primitive lives and have lower standards of living compared to European peasants, despite their positions of power.
So the gap between a prince and peasant in Europe may be smaller than the gap between a peasant and some African kings, in terms of amenities, resources and overall quality of life.
This reflects differences in levels of economic and social development between regions at this time in history. Monarchs in less developed parts of Africa maintained control through dominance rather than wealth or advanced infrastructure.
In remote rural areas like the Scottish highlands, individual farmers have to perform many jobs themselves that would be specialized in more populated areas, like being a butcher, baker, and brewer for their own families.
Very small villages may not have dedicated craftsmen like smiths, carpenters or masons within less than 20 miles. Isolated families must learn to do more work themselves.
Rural craftsmen have to perform multiple related tasks, like a country carpenter doing carpentry, joinery, cabinetry, and wheelwright work. Rural smiths do varied metal work.
Specialized trades like nail-making would not be feasible in remote areas, as it would be impossible to sell a day’s production of nails in a year.
Industry tends to specialize and improve first along sea and river coasts where water transport opens larger markets than land transport allows. Improvements spread inland later.
Water transport is far more efficient than land transport for carrying goods long distances. This encourages the development of trade between distant places accessible by sea/river routes.
Inland areas are initially limited to local markets until the surrounding region develops. Their improvement comes later.
Early civilizations tended to develop first along fertile coastlines with navigable rivers, like ancient Egypt and China, where agriculture and industry could advance.
In a commercial society, individuals specialize in production and exchange surplus produce for goods they need from others through trade. This relies on the ability to exchange, which was difficult before division of labor when finding someone with matching needs was challenging.
To facilitate exchange, men began using commodities like cattle, salt, tobacco, nails, etc. as currency before settling on metals as a preferred medium of exchange. Metals can be easily divided and reunited without loss.
Initially metals were used in unstamped bars, which required weighing and assaying to determine quality/quantity, introducing inconveniences.
To address this, mints began stamping coins to certify the metal’s fineness and weight through a public stamp, allowing exchange by tale without weighing.
Early coin denominations expressed the weight of metal contained, like the Roman as containing a Roman pound of copper. This helped establish currencies and monetary systems.
In ancient times, the values of currencies like the shilling and penny fluctuated and were not always consistently proportional. The value of currencies compared to goods also changed over time as rulers debased coins by reducing their metal content.
Today, most currencies have been stable in proportion since the times of Charlemagne and William the Conqueror, though the value of each currency unit has declined significantly compared to historical levels. Rulers benefited by using less precious metal in coins while still demanding debts be paid in the same nominal sums.
The real price or cost of goods is the amount of labor required to produce or acquire them. Goods are valuable in use or in exchange - things most useful like water have little exchange value while luxuries may have high exchange value.
Labor is the true measure of the exchangeable value of all commodities. The real price of things is the labor needed to acquire them, and their value when sold is the labor they allow the seller to be spared or impose on others.
While labor is the real measure, goods are not commonly estimated by labor units but rather by other goods or currencies through bargaining in markets. Money in particular has become the common instrument for estimating exchangeable values.

The passage discusses the value of commodities and how they are estimated or measured. A farmer typically exchanges his produce like meat for money at the market. It is more natural for him to estimate the value of his produce based on the quantity of money he receives rather than other goods like bread or beer which he would need to buy with the money.

Gold and silver, which are used as currency, fluctuate in value over time depending on factors like the fertility of mines producing them. For example, the discovery of mines in America caused gold and silver to decrease in value in Europe. But labor is a more stable measure of value as the amount of labor needed to acquire a good does not change, even if the quantity of gold/silver needed does.

While the amount of labor is equally valuable to laborers, its apparent value fluctuates to employers based on the goods it can purchase. Rents reserved in money fluctuate more than those in corn, as corn preserves value better. Corn rents are less impacted by money debasement over time. Overall, labor and corn provide more stable measures of value than precious metals used as currency.

Silver has historically been used as the standard measure of value for calculating the prices of goods and services, as its value does not fluctuate much from year to year.
However, the price of corn can vary significantly from one year to the next. So for short-term comparisons, corn may be a better measure of the ‘real’ value of goods than silver.
Over long periods like centuries, corn is a better measure than silver, as the value of silver can change dramatically while corn maintains similar purchasing power.
For everyday transactions like buying and selling, nominal prices (denoted in the standard money like silver) are what matter, as these determine whether a deal is profitable.
Different countries have used different metals like gold, silver and copper as their standards of value. One metal would become customary even after others were introduced.
Establishing fixed exchange rates between metals (e.g. 21 shillings per guinea) makes their distinction nominal, but devaluations could make the standard meaningful again.
Labour is argued to be the most accurate and universal measure of comparing values across time and place.

The passage discusses the relative values of gold and silver coins and bullion under different conditions. It argues that whichever metal is used most commonly for accounting purposes and expressing sums will appear more stable in value relative to the other.

Historically in England, silver was used more than gold for these purposes. But after a proposed change where gold instead became more commonly used in notes and accounts, gold would then seem more stable compared to silver.

In reality, the most precious metal used in coins at any time regulates the value of the whole coinage. Changes to the proportions or qualities of the metals in coins can impact their relative perceived values.

The passage examines historical changes to the gold and silver coins and bullion values in England. It explains that reforms which brought gold coin closer to its standard raised the value of silver coin and bullion too, though not necessarily in exact proportion to other commodities. It considers whether further reforms are needed to maintain the proportional values of gold and silver.

The passage discusses the components that make up the price of commodities. In early societies before the accumulation of capital and private ownership of land, labor was the primary factor determining value and prices. The amount of labor required to produce different goods would set their relative values and prices.

As capital starts to accumulate in the hands of individuals, some use it to employ workers and set up operations to produce goods for sale. The prices of manufactured goods must cover not just the costs of materials and wages, but also provide a profit for the businessman investing the capital. Profits are a return on the capital invested and are regulated by the size of capital stock, not by the labor of management and supervision.

The passage gives a hypothetical example to illustrate this. It compares two manufacturing businesses each employing 20 workers at £15 per year. One business uses £700 of materials while the other uses £7,000. Assuming a 10% annual profit rate, the owner of the smaller business expects £100 profit while the owner employing larger capital expects £730 profit, in proportion to the size of capital stock invested.

This passage summarizes the key components of price according to classical economic theory, namely wages, profit, and rent. It provides examples to illustrate how the price of different goods and commodities can be broken down into these three parts.

The key points are:

Profits can differ greatly between businesses but inspection labor may be similar. Profits are a separate component of price from wages.
As land becomes privately owned, landlords demand rent even for natural products from the land. Rent is a third component of price.
The value of components is measured by the amount of labor they can command.
In developed economies, most prices contain all three components of wages, profit, and rent to varying degrees.
Examples are given of how prices of commodities like corn, flax, linen progressively include more wages and profits as they become more processed.
A few goods like sea fish rely mainly on wages, while some include rent too.
All revenue is ultimately derived from these three sources: wages, profit, rent. Taxes also draw from these.

So in summary, it analyzes the classical economic framework that market prices are determined by payments for wages, profits, and rent for land.

Here is a summary of the provided text:

The passage discusses how the natural price of a commodity is the price that covers the costs of rent, wages, and profit to produce and bring that commodity to market. The market price may fluctuate above or below the natural price depending on supply and demand conditions. If supply exceeds demand, competition will drive the market price below the natural price. If demand exceeds supply, competition for the limited goods will drive the market price above the natural price. Under normal conditions, the market price will tend toward the natural price as supply and demand reach an equilibrium where the quantity supplied meets the effectual demand from buyers.

This passage discusses the concept of the central or natural price that commodities tend to gravitate towards. Some key points:

The natural price is the central price or center of repose that prices continually tend towards, though various factors may cause temporary fluctuations above or below it.
Producers aim to bring to market a quantity of goods that matches effective demand, not more or less. But production levels can vary yearly in some industries like agriculture more than others like textiles.
This causes price fluctuations above or below the natural price when supply doesn’t match demand perfectly. Rent is less affected than wages/profits.
Temporary high prices from under supply attract more producers, eventually reducing price back to natural level. Conversely, oversupply reduces prices below natural level temporarily.
Certain scarce commodities can sell above normal costs of production and remain high priced indefinitely due to limited land available. Monopolies and trade restrictions can also artificially maintain above normal prices long-term.
In general prices cannot remain below normal costs of production for long before producers leave that industry.

The passage discusses how the natural price of a commodity can deviate from its market price due to factors like regulations on industries or occupations. It argues that when demand for a commodity decreases, the quantity supplied would also decrease to match the effective demand, pushing prices back up to the natural level.

It notes that guild-type regulations can both raise wages above the natural rate when an industry is prosperous, by limiting the labor supply, but also sink wages below the natural rate when it declines, by preventing workers from finding other jobs. However, these below-market impacts are not as long-lasting as the above-market impacts. Once the old regulated generation of workers dies out, new entrants will supply labor at the natural rate to meet demand.

The passage then outlines that it will explore in subsequent chapters the natural rates and circumstances that determine wages of labor, profits, and rent, as well as how these are impacted by the wealth, growth, or decline of society. It will look at how wages, profits, and their proportion between occupations are set, and the factors influencing the price of land.

The passage discusses wage combinations and how wages are determined. Masters often secretly combine to lower wages, while workers sometimes combine defensively or offensively to raise wages, usually resorting to loud clamors and violence. However, workers rarely benefit from these turbulent combinations.

Wages cannot be reduced indefinitely and must provide enough for a laborer to at least sustain themselves. The lowest wage possible is debated but must allow laborers to raise two children to adulthood on average.

Wages can rise above this minimum level when the demand for labor is continuously increasing. This happens when the revenue and stocks of masters that fund wages are increasing. It is not the overall wealth of a country but its rising wealth that leads to higher wages.

Areas with the fastest economic growth, like North America at the time, see the highest wages even if not as wealthy overall as places like England. The thriving economy and rapidly increasing population in the colonies drives frequent need for more laborers and bidding up of wages. Wages remain low if an economically stationary country does not have continuously growing funds available for hiring more workers.

China has long been one of the richest and most populous countries in the world, yet wages have remained very low and the standard of living for laborers is poor, just barely enough to survive.
Even though China is not declining, the low wages mean the lower classes live in dire poverty with little ability to improve their situation. Marriage is encouraged by allowing parents to abandon or kill infant girls.
In contrast, wages in Great Britain appear to be higher than the minimum needed just for basic survival. Several indicators are provided:

Summer wages are higher than winter despite winter being more expensive, showing wages are set based on work value rather than bare minimum.
Wages do not fluctuate directly with food prices, showing workers can maintain their families even in dear years.
Wages vary more between places than food prices, yet goods are not transported long distances to arbitrage the differences, showing transportation of humans is more difficult than goods.
Wage variations do not correlate directly to food price variations and sometimes move in opposite directions.

So in summary, the passage contrasts the dire poverty and low wages in China keeping the lower classes at bare subsistence, against evidently higher wages in Britain not directly tied to basic minimum costs of living.

This passage discusses wages and the standard of living for laborers in England and Scotland over the 18th century. Some key points:

Grain was more expensive in both England and Scotland in the 1700s compared to the 1800s, though proof is stronger for Scotland via public records.
Labor wages were much lower in the 1700s - common wages were 5-6 pence per day in Scotland and laborers could support a family of 6 on 10 shillings (about 26 pounds) per week in England.
By the 1800s, wages had risen - common wages were 8 pence per day or 10-12 pence near cities in Scotland.
Other necessities like potatoes, vegetables and clothing became much cheaper, improving real wages even if money wages did not rise as much.
While poverty does not prevent marriage and childbearing, it greatly harms child survival rates due to poor nutrition and living conditions. Many children of poor families, like soldiers or Highland Scots, did not survive to adolescence.

So in summary, it discusses the history of wages and standards of living for common laborers in the two countries over the 18th-19th century transition period.

In many places, half of all children die before age 4, and in almost all places before ages 9-10. This high mortality is mostly among common people who cannot afford proper care. Foundling hospitals and parish charities see even higher mortality.
In nature, all species multiply according to available sustenance. In civilized society, only lower ranks are limited by scarce subsistence, which destroys many of their children.
Liberal wages enable common people to better support more children, naturally extending population limits. Wages regulate population growth to match labor demand - incentivizing more children when demand grows, and limiting them when demand shrinks.
While slave maintenance is the master’s cost, free labor maintenance is the worker’s own cost. However, free labor actually costs masters less due to more frugal management by workers.
Liberal wages encourage both population growth and industry. Higher wages make workers more active and productive. Excessive work can damage health.
The condition of laborers is best during economic growth, not after achieving full wealth. Growth is cheerful while decline is miserable.
Years of plenty may relax some, but most work better with good sustenance than poor. Mortality rises in scarce years, reducing productivity. Plenty encourages masters to hire more while farmers keep servants instead of selling cheap crops.

This passage discusses the relationship between wages, stock, and profits during periods of plenty and scarcity. Some key points:

In times of scarcity (dear years), many workers are willing to accept lower wages in order to find employment. This pushes wages down. Masters benefit from lower wage costs.
In times of plenty (cheap years), there is more demand for labor as stock/funding allows for more employment. Workers can demand higher wages in bidding against each other for jobs.
However, wage fluctuations don’t always correspond to food price changes, as demand for labor and cost of living also impact wages.
While higher wages increase costs for commodity producers, productivity gains from improved machinery and division of labor allow many commodities to be made with less labor, offsetting higher wage costs.
Profits tend to fall when more stock/capital is invested in a trade, as competition intensifies. Profits are harder to determine accurately than wages on average or over time for a given place.

So in summary, it discusses the complex relationships between wages, profits, stock/capital investment, demand for labor, and food prices during different economic conditions. Productivity gains help balance higher labor costs.

Measuring average profits from stock is difficult because profits fluctuate daily due to variations in commodity prices, competition from rivals and customers, and risks like damage during transportation.
Interest rates can provide some indication of average profits over time. Historically in England, legally allowable interest rates fell from over 10% in the 15th century to 8% in the 17th century to 5% in the early 18th century. This likely followed market rates.
Since the 18th century, England’s wealth and GDP have grown continuously, and wages have risen while stock profits have fallen slightly as more capital is employed.
Profits tend to be lower but wages higher in large towns versus rural villages due to competition.
Interest rates are generally higher in other countries like Scotland, France, and the Netherlands compared to England, indicating higher average profits. Wages are also often lower in these countries.
Profits and interest rates are highest in English colonies in North America and the West Indies due to limited capital and land supply compared to demand.
In new colonies, profits from cultivating land are very high initially as the best and most fertile lands are available. This allows planters to pay very high interest rates to borrow money.
As more lands are occupied, less fertile and inferior lands must be cultivated, reducing profits. Interest rates have fallen in many colonies over the past century as riches and population increased.
Wages do not necessarily fall as profits decline - demand for labor increases with increased stock/capital, keeping wages stable or rising.
A large stock with low profits can grow faster than a small stock with high profits, as money makes more money through compound interest and investment.
New territories or trades can temporarily raise interest rates by increasing overall business demand beyond existing capital supply. Competition falls in some existing trades, raising their profits and allowing higher interest.
In a fully developed country with max wealth/population, wages and profits would be low due to competition. Interest rates would also be very low, making it hard for those with small fortunes to live off interest income alone.
In a free society where people can choose occupations, wages and profits tend to equalize across different jobs over time as people flock to more advantageous fields and leave less advantageous ones.
Nonetheless, European wages and profits vary significantly based on attributes of jobs themselves and government policies.
Job attributes that influence wages/profits include agreeableness, ease of learning the work, stability of employment, trust required, and probability of success. More pleasant, clean, honorable jobs tend to be compensated less despite difficulty or risks.
Hunting/fishing were crucial jobs for early society but become hobbies now as they cannot sustain many people as occupations. Licensed hunters fare little better.
Disagreeable/disgraceful jobs like butchery tend to be highly profitable despite conditions. Public executioner was also well-paid given the work.
Wages also vary by learning costs - jobs requiring lengthy, expensive training tend to reward workers better to offset their education costs over time.
These five job attributes, along with government policies, help explain wage/profit differences across occupations within the same society.

This passage provides an analysis and summary of factors that influence the variation in wages of different types of labor:

Skilled vs unskilled labor. European policy considers mechanics/manufacturers as skilled and requires apprenticeships, while country laborers are considered unskilled. Skilled labor earns somewhat higher wages to compensate for the expense and training of apprenticeships.
Constancy of employment. Employment in manufacturing is steadier than trades like masonry which depend on weather and customer demand. Variable employment receives higher wages as compensation for idle periods and anxiety.
Difficulty of learning the trade. Most manufacturing trades seem equally easy to learn but wages are affected more by employment factors.
Trust required in the work. High-trust occupations like goldsmiths earn more due to the high value materials and trust placed in them. Risky occupations are also compensated more.
Probability of success in the field. Professions with low success rates, like law, should reward successes more to make up for many failures since outcomes are probabilistic and not certain.

In summary, the passage analyzes how wages vary based on skills required, employment patterns, difficulty of learning the trade, trust involved, and likelihood of success in that occupation.

The passage discusses why certain professions like law, medicine, and the arts seem to be undercompensated financially, despite requiring extensive and expensive education. It argues this is because the careers must repay not just the individual’s costs but the costs of many others who failed to achieve success.

It also addresses why these fields remain appealing careers despite financial risks. Prestige and reputation are rewards for excellence uncommon in other fields. Additionally, overconfidence in one’s abilities and good fortune lead many to underestimate risks and overvalue potential gains.

Lotteries and insurance are used as examples to show people naturally overvalue gains and undervalue losses. The passage also notes how young people particularly underestimate risks when choosing professions like the military or maritime work due to hopes of recognition, advancement and luck. While risks are high, so are perceived potential rewards.

In summary, the passage analyzes why seemingly underpaid fields like law remain desirable careers and why people are prone to underestimate risks and overvalue potential gains when choosing a vocation. Reputation and overconfidence influence decision making despite long odds of financial success.

Seamen’s wages are generally similar across British ports and are regulated by the port of London, where wages are highest. Sailors from London earn only a few shillings more per month than those from other ports like Leith.
The dangers of seafaring do not seem to discourage young people from joining, perhaps because the prospect of adventure is appealing despite the risks. Hazardous trades where courage cannot ensure safety do pay higher wages.
Profits in stock investments vary depending on certainty/risk of returns. Foreign trades have more risk than domestic, and some foreign trades more than others. Profits generally rise with risk but not always proportionately. Bankruptcies are most common in high risk trades.
Of the factors affecting wages, only business disagreeableness/risk affect stock profits. Stock profits across trades are more level than wages. Apparent profit differences between trades often reflect wages disguised as profits.
Retail profits appear higher than wholesale but reflect wages in smaller places with narrower markets. In large towns, higher stock levels mean lower apparent yet similar real profits across trade types. Great fortunes are more common from trade in large towns due to ability to expand with increased stock.
A merchant’s profits are proportional to the scale of their trade, and their annual accumulation depends on profit levels. However, great fortunes are rarely made through a single established business, but through a lifetime of industry, frugality and attention.
Sudden fortunes can be made through speculation, where merchants trade in different goods opportunistically based on foreseen profitability rather than a single established business. Their profits and losses are irregular. Speculation requires intelligence available only in large commercial towns.
Five factors (jobs being well-known, in normal state, sole occupation) ensure equality in advantages/disadvantages across occupations. New jobs tend to offer higher wages until established. Demand fluctuations impact wages/profits in some jobs more than others. Jobs must be sole occupations for equality to hold.
Cottagers in Scotland supplemented low regular wages through small land plots, accepting very low occasional wages from others. Produce from such supplementary labor could be cheaper than regular wages would allow.
The passage discusses inequalities caused by policies in European countries that restrict competition in certain trades/industries.
It focuses on the exclusive privileges granted to incorporated trades/guilds which restrict membership and competition. Requirements like serving lengthy apprenticeships in a town limit who can enter these trades.
Regulations on the number of apprentices a master can have directly restrict competition. Long apprenticeships also restrict it by increasing education costs.
Examples are given of regulations in places like Sheffield, Norfolk, and the rules for hatters in England/colonies.
The Statute of Apprenticeship in England required 7 years of apprenticeship to practice most incorporated trades. This mainly applied to market towns.
Apprenticeship lengths vary by town and trade in other countries like France and Scotland. Requirements are generally less restrictive there than under the monopoly powers of English guilds.

The passage discusses apprenticeships and corporation laws in Scotland and Europe. It notes that apprenticeships are a common term of employment even in some higher skilled trades in Scotland.

It argues that restricting a worker’s ability to freely choose their employment through oppressive corporation laws violates their property rights in their own labor. Long apprenticeships also do little to ensure skill and tend to make workers idle, as they receive no pay. Apprenticeships were unknown in ancient Rome and Greece.

The passage claims most trades can be learned within a few weeks or days, not years. If workers were paid from the start, even as learners, they would practice more diligently. This would make education more effective and less costly than the current apprenticeship system.

Corporation laws and guilds were established by town governments dominated by tradesman to prevent competition and keep market prices high. This benefits workers and employers within towns but burdens farmers and laborers in surrounding countries who must pay more for manufactured goods. In summary, the passage is largely critical of restrictive apprenticeship and corporation laws of the time.

In Europe, there are far more people who have acquired great fortunes through trade and manufacturing (town industries) compared to farming and agriculture (country industries). This indicates that town industries are better rewarded.
Workers and capital naturally seek out the most advantageous and profitable employment. Therefore, they tend to move to towns where industries are more profitable.
Inhabitants of towns can easily combine and collude due to their proximity. Many town trades have formed incorporated monopolies that limit competition and apprenticeships to keep wages low.
Country workers are more dispersed and cannot easily combine. There is more skill involved in agricultural work compared to many mechanic trades in towns.
Regulations like corporations and high import tariffs help town industries maintain higher prices without competition. This enrichment ultimately comes at the expense of farmers, laborers and landlords in rural areas.
Corporations are not actually necessary for trade governance. Customers and competition are what truly keep individual workers and trades in line, not internal corporation discipline. Exclusive corporations weaken these market forces.

This passage discusses the impacts of guilds and privileges on inequality in employment opportunities and compensation in Europe. It makes two main points:

Guild privileges that restrict competition lead to unequal advantages and disadvantages across different trades. Workmen in large towns with guild privileges do inferior work since they face no competition. Workers must go to the suburbs where there is no exclusive privilege and they must rely on their reputation.
Government support for certain professions like the church leads to overcrowding in those fields and drives down compensation. Many people are educated for the church through public and private funding, which increases competition and forces curates and chaplains to accept lower pay than comparable trades like masonry. This “competition of the poor takes away the reward of the rich.” Similar dynamics occur in other learned professions like law and medicine if too many are educated at public expense.

The passage argues these policies by European governments and institutions create inequality in employment opportunities and compensation across different occupations and social classes. Privileges restrict competition while subsidies can cause overcrowding in fields like the church.

In ancient Greece, prominent teachers like Plato, Aristotle, Protagoras and others commanded high fees for their instruction, sometimes earning fortunes. Some like Georgias donated extravagantly to temples.
Their lavish lifestyles are described as ostentatious by Plato. Aristotle also lived grandly despite being well-paid previously by Alexander the Great and Philip of Macedon.
Teachers were less common then and enjoyed more admiration and status than modern teachers. Athenians sent philosophers like Carneades and Diogenes on diplomatic missions due to their high standing.
Poor laws and apprenticeship statutes in Europe obstructed the free movement of labor between occupations and places, creating inequalities. Workers could not easily switch industries even within the same town if demand changed.
The 43rd of Elizabeth established the parish system in England to provide for the poor after monasteries closed. Subsequent acts defined settlement rights and ways to gain settlements, making it difficult for the poor to move freely to new parishes.
Historical laws around settlements and removal from parishes made it difficult for poor laborers to move freely in search of work. It was hard to gain a settlement and easy to be removed, restricting their movement.
Certificates were introduced to allow movement between parishes while preventing people from gaining a settlement. However, parishes had broad discretion around granting certificates, and refusal effectively imprisoned people where they lived.
This led to unequal wages between nearby parishes as labor couldn’t flow freely. It violated people’s natural liberty and mobility.
Attempts to regulate wages directly through general laws or parish orders fell out of use, as experience showed different wages were needed in different areas and trades. Particular acts still sometimes regulated certain trades.
When regulations favored workers, they tended to be fair, but regulations favoring masters were sometimes unjust, such as limiting tailors’ wages despite rising costs of living. Overall the system restricted labor mobility and fairness.
Historically, governments tried to regulate wages and prices by imposing limits (called combinations) on what workers could earn or merchants could charge. However, this led to negative consequences and was seen as unfair.
The 8th of George III enforced regulations that masters sometimes tried to impose through combinations. Workers argue this puts all workers on equal footing regardless of ability.
Ancient governments also tried to regulate merchant profits by setting prices for necessities like bread. The assize of bread in Britain was one remnant of this, though competition generally sets prices better than government mandates.
Establishing an assize of bread in Scotland caused issues due to a defect in enforcement. When this was remedied, it did not provide significant advantages. Some towns had baker incorporations with exclusive privileges, but these were not strictly enforced.
Revolutions in a society’s wealth do not significantly affect the relative wage and profit rates between different jobs and industries. Proportions tend to remain the same despite broader economic changes.
Land near a town commands a higher rent than equally fertile distant land, as it is more expensive to transport produce to market from far away. This leaves less surplus profits for the farmer and landlord.
Improved infrastructure like roads, canals, and navigable rivers help distant areas compete by reducing transport costs. This benefits towns by increasing competition, and benefits distant areas by opening new markets.
Initially in unimproved land, meat is more abundant than bread and cheaper. As cultivation increases, more land is needed for cattle, making meat more valuable than bread.
Over time, rents and profits from pasture come to be regulated by and similar to those from cultivated corn lands. Grass cannot be transported as easily as grain.
In very populous areas, all land may be used for grass rather than grain, which must then be imported.
Well-fenced grassland can sometimes command higher rents than neighboring cornfields, as it supports cattle which work the cornfields.
Artificial grasses and innovations in animal feed have helped reduce meat’s price advantage over bread to some degree.
In the early 18th century, butcher’s meat (beef) was more expensive relative to bread in London compared to the beginning of the 17th century.
According to records from Prince Henry in 1612, the price of beef was 31 shillings and 8 pence per hundred pounds.
In a 1764 parliamentary inquiry, Virginia merchants said beef typically cost 24-25 shillings per hundred pounds in 1763, and 27 shillings during that year’s high food prices. This was still cheaper than Prince Henry’s time.
Retail beef prices in 1764 were estimated to be 4d to 41⁄2d per pound for choice cuts and 7 farthings to 21⁄2d-23⁄4d for coarser cuts. This was slightly higher than usual prices.
Wheat prices were also lower in the early 17th century compared to the early-mid 18th century.

So in summary, in the early 18th century London market, beef prices relative to bread were lower than in the early 17th century, indicating beef had become cheaper or bread more expensive over time.

This passage discusses the economics of land rent and crop prices. Some key points:

For crops where demand exceeds supply, the price can exceed levels needed to cover costs of production and typical profit margins. The excess revenue (“surplus”) accrues mainly to landlords in rents.
This is especially true for high quality/scarce crops like premium wines and sugars. Their prices far exceed staple crops like corn even though costs may be similar.
Sugar profits depend on rum/molasses sales covering all cultivation costs, with sugar being “clear profit.” This monopolistic pricing is enabled by distance/trade barriers.
Tobacco cultivation is also very profitable in colonies, though supply appears closer to meeting demand than sugar. Output controls like plant limits and occasional burning are used to maintain prices.
Rent for most crops is set relative to comparable corn/grain land, as these are the primary human foods in Europe. Superior vegetable foods that produce much higher yields would generate much greater landlord rents.

So in summary, it analyzes market mechanisms and profitability of different crops, with an emphasis on how landlord rents reflect variations in scarcity, quality and effective demand above the costs of production.

The passage discusses how the rent derived from land depends on the production of certain goods from that land. Food production, such as rice or potatoes, always provides some rent to the landlord since people need food. Materials for clothing and shelter can sometimes provide rent but not always.

In more primitive societies where these materials are superabundant, they have little value since more is produced than can be used. But in commercial societies, they may be exported and have value if other nations want them. For example, skins and pelts from North America were exported, as was English wool in the past. This export demand raised their prices and provided some rent.

Building materials are less transportable than clothing materials. So if abundantly produced locally, like stone or timber, they may have no value and provide no rent if there is no demand. But a strategic quarry near a city could command high prices and rents. The passage discusses various examples of timber and wood in Scotland having little or no value when overproduced locally. So goods only provide rent when there is demand sufficient to raise their price above production costs.

Countries are more populated based on how much food their produce can feed, not how many people it can house or clothe. Once food is available, housing and clothing can be found.
Among hunter-gatherer societies, almost all labor goes towards finding food. As agriculture develops and one family can produce enough food for two, half the society is freed up to provide other goods and services like housing, clothing, furniture.
The rich consume similar quantities of food as the poor but spend more on housing, clothing, decorations. Producers provide excess food in exchange for these goods. This drives specialization and increases the variety of goods.
Food is the original source of rent for land. Other outputs like minerals or coal can also generate rent, depending on quality (“fertility”) and location. Poor-quality or remote mines may not cover costs. Marginal mines just break even. The best-located mines set prices for others.
Wood was once abundant but cultivation and grazing reduced forests over centuries. Timber now generates rent. Coal competes as fuel where available and affordable via local mines or transport. Mines balance selling more at slightly above cost versus less at the highest possible price.
For coal mines where no rent can be charged by the landlord, the price of coal must be high enough to cover the ordinary profits needed to bring the coal to market.
Rent typically accounts for a smaller portion of the price of coal than for most other goods produced from land. Coal mine rents are usually around 10% of production value compared to one-third for land rents. Coal mine rents are also less stable.
The value of a coal mine depends more on its location, whereas metallic mines depend more on their fertility. Metals can be transported long distances by land and sea to find buyers globally, whereas coal markets are usually local.
As a result, the prices of precious metals like silver are interconnected globally and influenced by the most productive mines, unlike coal which has local markets. After new silver mines opened in Peru, many older European silver mines became unprofitable.
Rent typically accounts for a smaller portion of metal mine production values than coal mines, as labor and profits dominate. Examples are given of average rents on tin, lead, silver and gold mines around the world.
Undertaking new metal mines is seen as very risky. Regulations give owners of newly discovered mines certain rights to encourage exploration for tax revenue.

This passage discusses the factors that determine the value of precious metals and precious stones. Some key points:

The value of precious metals like gold and silver is based on their utility, beauty, and scarcity. Their scarcity is what makes them particularly suitable for use as currency.
The value of precious stones is based entirely on their beauty. They have no practical use beyond ornamentation. Their beauty and scarcity is what drives their high value.
The most abundant mines of precious metals or stones could do little to increase global wealth, as their value comes from their scarcity. Greater abundance would degrade their value.
The value of agricultural land increases with improvements that boost food production. This creates demand for other goods as well. In general, as food production increases, so does demand and value for goods used in clothing, housing, decoration, etc.
However, the value of mines producing scarce goods like silver is regulated globally based on the most fertile mines. New, more abundant mines could lower the value of silver even if demand is increasing in a local area or country. Abundance of supply can outpace growth in demand.

So in summary, it discusses the factors of utility, beauty and scarcity that drive the value of precious commodities, and how their value relates to improvements in food production and potential discoveries of more abundant sources.

The passage discusses the variation in the value of silver over the previous four centuries and how it impacted the price of grain like wheat. It argues that in the mid-14th century, the ordinary price of a quarter (8 bushels) of wheat was estimated at around 4 ounces of silver, which gradually fell to around 2 ounces of silver by the early 16th century.

It provides evidence from various statutes and records from the 13th-15th centuries to support these price estimates. Then it notes that from the mid-14th century to the early 16th century, the reasonable price of wheat gradually declined to about half of its original price of 4 ounces of silver.

The author divides this period into three phases - in the first phase from 1350-1570, the value of silver rose and the price of wheat fell. In the second possible phase, if the supply of silver increased more than demand, it would become cheaper and wheat prices would rise. In the third phase, if supply and demand increased equally, silver would purchase the same amount of wheat.

In the late 15th and early 16th centuries, the average price of grain in France and other parts of Europe was significantly lower than in the preceding two centuries, according to several studies.
The value of silver, in terms of grain, increased during this period. This could be due to either increasing demand for silver from improvement and cultivation, while supply remained the same, or decreasing supply as many known silver mines were exhausted and more expensive to operate.
Europe was becoming more politically stable, which would increase industry, trade, and demand for luxuries including precious metals. A larger economy also required more coins for circulation.
Many authors argue that from the Norman conquest until the discovery of America, the value of silver was continuously declining. However, they seem to have been misled in their conclusions about historical grain and commodity prices for several reasons:

Confusing conversion prices used to pay rents with actual market prices.
Incomplete transcription of old statutes regulating prices.
Focusing only on the very lowest historical grain prices, without considering the highest prices were also much higher than later periods.

So the evidence for a long-term decline in silver’s value is questionable based on flaws in the price data and analyses of early writers and economists.

In disorderly medieval societies like England under the Plantagenets, food shortages were common as communication and trade between regions was disrupted by local lords and weather events. One area could experience famine while a nearby area had plenty.
Under the stronger central administration of the Tudors in the late 15th-16th centuries, no lord was powerful enough to disturb public security and trade between regions.
Fleetwood collected wheat prices in England from 1202-1597. Prices generally fell over time until the late 16th century when they began rising again. This confirms the author’s view that precious metal values were stable rather than constantly declining over this period.
While grain was expensive due to being “manufactured”, unprocessed commodities like meat and poultry were very cheap in poor societies since they were abundant relative to demand. This cheapness reflected the low value of these goods, not high metal values.
Labor, not any single commodity, is the true measure of value for both metals and goods. Grain best reflects labor value cross-culturally due to being widely farmed and consumed.
Precious metals like gold and silver will naturally increase in quantity over time due to vanity and luxury demands, not just practical use. Their value is linked more to overall wealth than mining output.
The value of precious metals is higher in rich countries than poor ones due to greater demand. Transportation costs can also influence small differences between nearby regions.
Wages and living costs are generally higher in improving economies and lower in declining ones, separate from actual wealth levels.
In the 15th-16th century, increased mining from the Americas likely did not substantially impact silver values in Europe given economic growth. Opinions vary on this period.
From 1570-1640, abundant American silver discoveries caused the metal’s real value to fall significantly as supply outstripped demand. Prices of goods like wheat rose sharply.
By around 1636, the effect of the Americas appeared complete, with silver reaching its lowest value relative to crops of the era. It began rising again slowly in the 17th-18th centuries.
Large towns and rich commercial areas can have artificially high food prices due to import reliance, not local production levels directly impacting currency values.

The passage examines wheat prices in England over the late 17th and early 18th centuries. It notes that from 1637-1701, wheat prices at Windsor market were on average just over 1 shilling higher than in the preceding 16 years, despite major events that should have increased scarcity and prices more significantly.

The first event was the English Civil War from 1642-1651, which disrupted agriculture and trade, hugely increasing wheat prices in 1648 and 1649 to over double normal levels. Spread out over the later 64 years, this period of high prices alone accounts for the overall small price rise.

The second event was the introduction of a bounty on wheat exports in 1688 to encourage farming. Though meant to increase long-run supply, in the short term from 1688-1700 it could only raise domestic prices by increasing exports during bumper years. Poor harvests from 1693-1699 in England and Europe exacerbated shortages.

The third factor was the degradation of the silver coinage from clipping and wear from the 1660s, raising nominal prices even if real values changed little. By 1695, silver coins were nearly 25% below face value. Overall prices reflected the debased coinage.

In the following 64 years of the 18th century, average wheat prices fell significantly compared to the late 17th century, likely due to some impact of the long-running export bounty on increased farming and availability.

This passage discusses the impact of bounties on corn prices in England over the 18th century. Some key points:

Bounties were paid to encourage corn production by keeping prices high even in plentiful years. This had the effect of raising prices above natural levels.
In years of plenty, bounties caused additional exports that prevented surplus from one year compensating for shortages in others.
Prices were higher than they would have been without bounties in both plentiful and scarce years.
While corn prices averaged lower in the early 18th century than late 17th century, they would have been much lower still without bounties impacting export levels and domestic prices.
Price changes may also reflect a gradual rise in the real value of silver rather than a fall in corn value. Similar price trends occurred in France without export incentives.
Bounties particularly raised prices in years they stimulated very high export levels, as seen in 1749 when over £300,000 was paid out.

So in summary, the passage argues corn bounties artificially inflated prices from the late 17th to 18th centuries in England by affecting both export levels and domestic market prices.

This passage discusses the market for silver from the Americas in the 15th-18th centuries. It can be summarized as follows:

The market for American silver expanded gradually over this period. Initially it was just Europe, but new demand came from the Americas themselves as colonies developed, and from the East Indies via both direct and indirect trade.
Europe industrialized and modernized, increasing demand for coins and silver goods. The growth of wealthy elites also drove new demand.
The Americas were largely undeveloped originally but colonies increased populations and economic activity rapidly, becoming a major new silver market.
East India trade expanded dramatically over this period as more European nations participated, increasing demand for American silver in Asian markets via goods trade.
Precious metals generally had higher value in Asia due to greater abundance of food and larger wealthy populations, so American silver found a lucrative market in places like China and India.

So in summary, the growing interconnected global markets between Europe, the Americas, and Asia gradually expanded the potential customer base and demand for silver from the New World over the 15th-18th centuries.

Precious metals like gold and silver would naturally exchange for a greater quantity of precious stones and much more food in India compared to Europe, as those commodities were more abundant in India.
Wages and the price of food were much lower in India (China and India were the two main markets), so the money price of labor was lower due to lower wages and food prices.
Most manufactured goods would therefore be lower priced in India as well, due to lower labor costs. Transport costs were also lower within India compared to Europe.
Therefore, it was very advantageous historically for Europe to export precious metals like silver to India, as they would purchase a greater amount of goods there relative to the resources required to produce them in Europe. Silver in particular exchanged at a better rate in Indian markets.
Large quantities of silver and gold were needed annually to supply Indian markets and make up for losses from wear, industrial usage, ship transport, treasure hoarding practices, etc.
Estimates placed the annual Spanish imports of silver and gold into Cadiz and Lisbon port at around 6 million pounds sterling overall to supply demand.

This passage provides an analysis of how the relative values of precious metals like gold and silver have varied over time. Some key points:

Historically, the value of gold to silver was regulated between 1:10 and 1:12 in European mines, but by the mid-1700s it had risen to between 1:14 and 1:15. This meant gold had increased in its nominal value relative to silver.
The discovery of abundant silver mines in America, which exceeded fertility levels more than gold mines, caused silver to decline in value more than gold on world markets.
Transporting large quantities of silver annually to India from Europe gradually reduced its value relative to gold in some English settlements in India, like Calcutta.
The author questions the idea that the quantity ratio of metals traded must equal their value ratio, using the example of lambs and oxen.
All things considered, while silver has always been considered “cheaper” than gold in one sense, the author argues gold may now be somewhat “cheaper” than silver in the Spanish market due to Spain’s lower taxes on gold.

So in summary, it analyzes how the discovery of new world resources changed historic gold-silver value ratios on global trade networks over the 1700-1800 period.

Taxes on silver mining in Spanish America gradually made the mines more expensive to operate as they had to dig deeper to find silver.
This increasing difficulty/cost of silver mining is equivalent to a growing scarcity of silver, since it takes more effort to obtain the same amount.
Over time, this growing scarcity/cost will need to be offset either by higher silver prices, lower taxes on silver mining, or some combination of both.
Previous tax reductions on silver slowed but did not prevent rises in the value/price of silver in Europe. A tax cut in 1736 likely made silver prices in Europe about 10% lower than they otherwise would have been.
Some evidence and arguments suggest the value of silver may have begun rising slightly in Europe in the 18th century, though the increase was small and uncertain.

So in summary, the passage discusses how increasing costs of silver mining in the Americas could lead to higher silver prices in Europe, and how tax reductions may retard but not prevent such price rises.

The passage discusses the rising prices of various agricultural commodities as economies progress and improve. Specifically, it considers the prices of wheat, cattle, and other livestock.

It notes that in ancient Roman times, the value of silver was lower relative to today, so nominal prices cited in historical sources likely understate the real quantities of labor and goods exchanged. For example, a nightingale reportedly sold for the equivalent of around £66 in modern currency, but its real cost was about one-third higher due to the higher value of money at the time.

As for cattle and other livestock naturally produced without labor, their numbers decline as land is cultivated for other crops. However, demand for livestock rises with population growth and economic activity. This causes their real prices, measured in labor, to gradually increase over time until raising livestock becomes as profitable as growing crops.

The passage argues it was difficult for most Scottish farms before the early 18th century to fully cultivate their lands, since cattle prices had not risen enough to make maintaining higher livestock numbers profitable. This kept manure supplies low and forced farmers to leave large areas of land uncultivated or used poorly as pasture. Economic progress requires rising livestock stocks and improved lands to advance together over long periods.

In new colonies, there is plenty of inexpensive pasture land for grazing cattle initially. But it takes time for the cultivation of crops to become profitable due to lack of manure and imbalance between livestock and cultivated land.
Early North American colonies followed a similar extensive grazing system as parts of 18th century Scotland due to these same factors. Native grasses were overgrazed and degraded the quality of pasture.
Cattle are among the first forms of agricultural produce to become profitable enough through higher prices to justify cultivating crops for their feed. Other meats like venison remain unprofitable for a long time.
Poultry and pigs can initially be raised inexpensively on farm waste but their prices rise over time as demand increases and land needs to be specifically cultivated for their feed.
In Britain, improved cropping techniques using clover, turnips etc. helped lower beef prices from the early 18th century by allowing more cattle to graze on the same land.
The reduction in small landholders/cottagers in Europe may have contributed to somewhat faster rises in prices of poultry and pork, which they previously reared inexpensively.

The prices of some agricultural products naturally rise over time as countries improve and populations increase. Food produced without much labor, like milk from dairy cattle, originally provides extra for farmers to sell. As demand grows, prices rise enough for farmers to invest more in clean dairies and better quality milk. English dairy prices are now high enough to justify using good farmland just for feeding cattle.

Scottish dairy prices are still too low for this, but rising. Quality also lags England due to lower prices. Complete land improvement requires prices high enough to cover costs and provide normal profits. This price rise precedes improved cultivation.

Some products like wool and hides have market scope beyond their home country due to ease of transport. Their prices versus livestock prices were historically higher in undeveloped places due to limited meat demand. Now meat demand is broader, so relative prices shifted. Some underdeveloped areas still mainly value livestock for hides, wool and tallow alone over meat. Improving populations and trade give value to other outputs.

In the early stages of a society’s development, the market for meat is limited to the local area, but the market for wool and hides can extend globally. As a country improves and populations grow, the meat market expands but the wool/hide markets may not grow as much due to broader global factors.
Records from the 14th century show wool prices in England were much higher then than now, indicating its real value has declined. This was caused by policies like banning wool exports, allowing duty-free Spanish wool imports, and forcing Irish wool to be sold in England only. This artificially reduced English wool prices.
Hide prices based on a 1425 account suggest their nominal price was lower then but real value (buying power) was about the same or slightly higher now. Regulations since then have generally raised real hide prices a bit in England.
Anything that lowers wool or hide prices below natural levels, like the policies described, would tend to raise meat prices to compensate farmers and landlords. The division of livestock prices between meat, wool and hides is unimportant as long as total revenue covers costs.

This passage discusses how industry affects the prices and quantities of various goods, including:

In an improved agricultural country, regulations on wool/hide prices wouldn’t significantly affect land/farming interests but could raise food prices for consumers.
In an unimproved pastoral country dependent on cattle, such regulations would deeply reduce land values and farm/landlord profits since wool/hides are the main cattle product values.
Scottish wool prices fell after union with England but higher meat prices compensated landowners.
Industry’s ability to increase wool/hide quantities is limited by domestic production but also depends on restraints in other countries.
Fish quantities are limited by geography but demand grows with population/wealth, requiring greater fishing efforts and raising prices over time.
Precious metal quantities depend more on a country’s purchasing power than its industry/wealth, and on the fertility of global mines supplying the market, independent of any one country.

So in summary, it discusses how various economic factors limit and make uncertain the effects of industry on prices and quantities of different goods like wool, meat, fish, and precious metals.

The passage discusses the advantages and disadvantages of changes in the value of precious metals like silver.

The main potential advantage noted is that a fall in the value of silver due to abundant new mines could benefit the world by increasing the quantity of silver available for use.

However, the passage notes that such a change would have little real disadvantage. It acknowledges that some “trifling superfluities” whose prices are set relative to silver could become marginally more expensive or scarce. But it characterizes this effect as minor and inconsequential.

In conclusion, the passage weighs the significant potential advantage of increased silver quantity against the minimal potential disadvantage of marginal price increases for some goods. It ultimately concludes that the world could derive substantial benefit on net from events that increase the silver supply and lower its value.

The passage discusses the increasing value of land as Britain’s most important and durable form of wealth. Having proof of rising land values can be useful for the public.
Rising food prices could be due to declining silver values or improved farming productivity. It’s difficult to judge the appropriate response, like whether wages should rise.
Agricultural improvements typically raise animal food prices but reduce vegetable prices by increasing crop yields. Some new crops like potatoes are cheaper than older ones.
For the poor, rising corn (grain) prices cause distress but moderate prices are offset by falling prices of other foods like potatoes. Tax increases on manufactured goods affect them more.
Manufacturing costs usually fall with improvements in machinery, skills and work division. This has greatly reduced prices for goods made from coarse metals like clocks, tools and toys. Clothing prices rose in the short term but fallen in the long run since the 1500s.

So in summary, it discusses trends in land values, food prices, wage adjustments and long term declines in manufacturing costs driven by technological progress.

In the past, the price of a yard of cloth was equivalent to 8 shillings and 9 pence worth of wheat, which was considered a large amount that would require a poor servant to give up a significant portion of their means of subsistence.
Laws at the time prohibited servants from wearing hose (stockings) that cost more than 14 pence per pair, equivalent to around 8-28 pence today. 14 pence was worth around 5 shillings and 3 pence worth of wheat at current prices. This would have been considered a very high price for a poor servant’s stockings.
Knitting stockings was not known in Europe at the time of Edward IV. Hose were made of cloth, making them expensive. Queen Elizabeth is said to have introduced stockings to England as a gift.
Machinery for wool and cloth production was much more primitive then vs now, leading to higher prices. Improvements included the spinning wheel, machinery to facilitate winding yarn, and fulling mills. Mills were not known in England until the 16th century.
Higher prices in the past were partly due to greater labor required and costs to bring goods to market without modern machinery and transportation. Coarse cloth was also made more locally as a household activity.
The chapter concludes by summarizing how improvements in society, cultivation, and production tend to raise land rents while declines have the opposite effect.
The passage discusses the accumulation and employment of stock (savings/capital) in different stages of society.
In a primitive society without division of labor, no accumulation of stock is necessary as each person provides for their own needs through direct production.
But with advanced division of labor, one’s own production can satisfy only a small part of needs. Most needs are met through exchange with the production of others.
For exchanges to take place regularly, some stock of produce must be stored or accumulated before being exchanged. This accumulated stock is what is called capital.
The employment of stock is what puts into motion the productive labor of society. Those who employ stock for profit direct most important productive operations.
The interest of stock employers is not always the same as the general interest of society. They may try to narrow competition and widen profits in ways that are against the public interest. Their proposals should be examined cautiously.

So in summary, it discusses how the accumulation and employment of capital/stock became necessary for advanced economies with division of labor and regular exchange, and some of the implications of this for society.

Labour cannot be fully specialized or divided until a stock of goods is accumulated to support workers until their work is completed and sold. For example, a weaver needs a stock of materials, tools, and provisions to support themself until they finish and sell their woven goods.

As the accumulation of stock is necessary to allow specialization and division of labour, it naturally leads to these improvements. Those employing stock wish to maximize output, so they organize labour best and acquire the best machines. Greater stock means more specialization and more output from the same quantity of labour.

Society’s overall stock naturally divides into three parts. First, the portion reserved for immediate consumption that yields no profit. Second, capital stock employed in trade by circulating goods for profit. Third, fixed capital employed in land improvement, machinery, etc. that yields profit without circulating further. Different occupations require different mixes of fixed and circulating capital. Merchants require all circulating capital while manufacturers require some fixed capital in tools and buildings.

Stocks can be divided into three portions: consumer goods stock, fixed capital stock, and circulating capital stock.
Consumer goods stock includes goods like clothes, furniture, and dwellings that are purchased for final consumption. These provide utility but don’t directly generate revenue.
Fixed capital includes machines, commercial buildings, farmland improvements, and worker skills/training. These generate revenue over time without changing hands.
Circulating capital includes materials, works-in-progress, finished goods, provisions, and money that enable production. It regularly changes hands as goods move through the production/distribution process.
Fixed and circulating capital require each other - fixed capital needs circulating capital to operate, and circulating capital needs fixed capital like machines.
The overall goal is to maintain and grow the consumer goods stock that supports consumption. Fixed and circulating capital work together to replenish goods withdrawn from the consumer stock.
Circulating capital is replenished from land/resource production, which provides raw materials and provisions to replace goods withdrawn during production and distribution.

The passage discusses the relationship between a country’s capital and its productive capacity. It states that when capitals are equal in size and efficiency of use, a country’s natural fertility determines its productive capacity.

It notes that in secure countries, everyone will employ any capital they have access to either for present enjoyment through consumption or future profit through investment. Investment capital can either remain with the owner as a fixed capital or go to others as a circulating capital. It would be irrational not to employ capital in one of these ways where there is security.

In insecure countries, people may hide or bury parts of their wealth to have on hand in case of threats. This was common practice historically in places like Turkey, India and other Asian governments due to threats under feudal systems. Hidden treasure was considered an important source of revenue for some European sovereigns as well.

The passage then discusses how the price of goods resolves into wages, profits and rent. It argues the value of total annual production also resolves into these components, which make up the revenues of a country’s inhabitants. It distinguishes between gross and neat revenue, with the latter being net of capital maintenance costs. Only neat revenue constitutes real wealth. While circulating capital costs can be part of neat revenue, fixed capital costs must be excluded. Maintaining fixed capital increases long-term productivity and overall wealth, though it diverts resources away from immediate consumption.

The passage discusses the use of money and capital in a society’s revenue. It makes several key points:

Money is the only part of circulating capital that can diminish a society’s net revenue, as other goods circulating in commerce are replenished through derived revenue.
Money and fixed capital (machines, tools, etc.) bear similarities in how they affect revenue. Both require initial and ongoing expenses to support them, reducing gross revenue, but don’t directly contribute to net revenue.
Money circulates goods in society just as machines facilitate production, but money itself is not part of the revenue, just as machines are not. Revenue consists of the circulated goods, not the instruments of circulation/production.
Savings in maintaining fixed capital or the money stock can improve net revenue if they don’t decrease productive abilities. This leaves more funds for circulating capital (raw materials, wages) to fuel industry and output.
Substituting cheaper paper money for gold/silver saves costs and can similarly boost revenue by freeing up funds for productive investment and economic activity.

Banks and bankers are well suited to issue promissory notes that function like money based on people’s trust in the bank. A banker can lend out notes worth £100,000 while only keeping £20,000 in reserves to redeem notes as needed. This allows £80,000 of gold/silver to be spared from circulation.

If several banks did this, circulation could function with only 1/5 as much gold/silver that would otherwise be needed. For example, if £1 million was needed for circulation but banks issued £1 million in notes while reserving £200,000 in specie, £800,000 in gold/silver could be exported. This export of specie occurs because more money (notes + specie) enters circulation than is needed, so the excess spills out abroad.

Exported specie is used to purchase foreign goods, either for re-sale between other countries or direct consumption. This increases domestic industry and income if used to buy imports to employ more workers, who will reproduce the value of what they consume.

When calculating a society’s employable industry, money must be deducted, as it serves only to circulate materials, tools and wages, not as something to work on or with itself. Paper money substitutes for specie free up precious metals for use in industry and trade, just as mechanization might for an entrepreneur.

Different authors have estimated the circulating money (gold/silver coins) used for transactions as comprising 5-30% of the total annual value produced in an economy. However, only a fraction of annual production is actually used to maintain industry/economic activity.
If paper money replaces 75% of precious metals used for circulation, and even a portion of the value of those metals is added to funds for industry, it can greatly increase economic activity and production.
This occurred in Scotland in the late 18th/early 19th century when new banks issued paper notes, allowing commerce to be conducted largely through banknotes rather than coins. This is argued to have doubled some regional economies like Glasgow within 15 years.
Precious metals circulating in Scotland pre-Union was estimated at over £1 million sterling, but circulation now is estimated at over £2 million despite a decline in gold/silver to perhaps half a million - showing increased prosperity.
Banks issue notes by “discounting” bills of exchange, i.e. lending against future receipt of funds from bills. This allows them to effectively lend more than their reserves and earn interest.
Scottish banks additionally grant “cash accounts” - overdraft facilities backed by guarantors, allowing interest-free interim borrowing and repayment over time. This significantly increased trade capacities for merchants compared to London.
In summary, the paper money and banking system in Scotland is argued to have considerably increased national trade and prosperity in the late 18th/early 19th century by substantially increasing the money supply and flexibility of credit.
The total value of paper currency (e.g. banknotes) circulating in a country cannot exceed the value of gold and silver that would be needed for transactions. If there is excess paper currency, it will quickly be returned to banks for redemption in gold/silver.
Banks incur costs from keeping reserves of gold/silver to redeem notes, and from replenishing reserves as funds are withdrawn. They must increase reserves and replenishment costs more than proportionally if circulating excess paper currency.
The Bank of England was obliged to continuously mint large quantities of gold (800,000-1,000,000 pounds per year) due to excess paper currency being redeemed. This cost 2.5-3% per coinage due to high gold prices.
Scottish banks had to use expensive London agents (1.5-2% fee) and drawing bills on correspondents to get funds to redeem notes during periods of distress from excessive circulation.
Any gold coins returned for paper currency redemption would be melted down and exported as bullion, as there was no domestic use for excess funds.
Over-trading by some projectors was the original cause of excessive paper currency circulation in both England and Scotland.

This passage discusses how banks can lend money to merchants and traders without exceeding the amount of currency that would normally circulate in the economy.

The key points are:

When a bank discounts real bills for merchants, it is essentially advancing money that the merchant would otherwise have to keep idle as working capital. This replaces cash but is repaid when the bill comes due.
Banks can also provide cash advances on a merchant’s account against future sales, allowing the merchant to avoid keeping idle capital. As long as repayments within a period roughly match advances, the bank’s reserves stay stable.
Regular repayments signal a thriving merchant, while irregular payments indicate a declining one. This allows banks to judge creditworthiness from their own records.
Frequent repayments also ensure banks don’t issue more paper money than the economy can absorb, by demonstrating advances didn’t exceed the merchant’s normal working capital needs.
However, banks cannot consistently lend the majority of a trader’s fixed or circulating capital, as returns are too far in the future to maintain stable bank reserves in the interim.

So in summary, the passage discusses how banks can lend productively by replacing idle merchant capital, while avoiding exceeding currency circulation through regular monitoring of repayments.

The passage describes the practice of “raising money by circulation” that some traders in Scotland engaged in during a period of overtrading and expansion of credit. The process worked as follows:

Trader A in Edinburgh would draw a bill of exchange on Trader B in London, even though B didn’t actually owe A any money. B would accept the bill on the condition that before it was due, B would redraw a bill back on A with added interest and commission. This process would continue, with bills constantly being drawn back and forth between A and B over periods of months or even years.

This allowed A to raise money but at an enormous expense, with interest rates of 5% or more per year plus repeated commissions of at least 0.5% each time. Some variations involved more traders and higher premiums when discounting bills. Overall, the costs for the traders engaging in this practice could be well over 8% and up to 14% annually or more. Many extensive business projects were undertaken relying solely on funds from this unsustainable source. More often than not, the projects did not end up generating enough returns to repay the exorbitant borrowing costs.

This summary provides context about banks in Edinburgh and London lending money through circulating bills of exchange in the late 18th century:

A in Edinburgh would draw bills on B in London, discounting them with local banks 2 months before due. B would redraw on A, discounting with the Bank of England or London banks.
This created paper money beyond what could circulate, as new bills were drawn before old ones were due. The funds lent were fictional as repayments didn’t really return to the lending banks.
Several projectors would assist each other, drawing and redrawing to obscure who the real creditors/debtors were. Banks eventually realized what was happening and made discounting more difficult.
A new Scottish bank aimed to relieve “distress” by lending more liberally. However, its notes returned quickly as values exceeded real circulation. Within 2 years it had lent over £800k at 5% but was paying 8% on over £600k in London bills, losing over 3% on most deals.
The bank’s effects seem to have been opposite to its intentions, producing problems rather than solutions.
A new bank was established in Scotland in the 1720s to support various business projects and undertakings across the country. This bank aimed to take over the banking business from other established Scottish banks.
In the short-term, the bank provided relief to these projects by enabling them to continue for another 2 years. However, this just increased their debt burden more in the long run. When ruin came, it was worse due to the additional debt.
The bank temporarily relieved pressure on the other Scottish banks by taking on bills of exchange business. But its activities overall exacerbated the country’s real distress in the long run.
The bank’s plan to replenish its coffers by lending money and collecting interest did not work and was basically unprofitable. It ended up relying on continuously drawing bills on London with interest and commissions.
The bank increased distress rather than relieving it, but did effectively relieve the rival Scottish banks it had aimed to supplant.
In the early 1700s, the Bank of England had advanced £9.375 million to the public and had a capital stock of £8.96 million, meaning its advances exceeded its capital for the first time. This marked the beginning of the bank having an “undivided capital” over its “divided capital” paid out as dividends.
By 1746, the bank’s advances had grown to £11.69 million while its divided capital had increased to £10.78 million through various subscriptions and calls. This gap between advances and capital has remained.
The bank’s dividend has varied over time according to the interest it receives from the public and other factors, ranging from 8% to the current 5.5%.
The bank acts not only as an ordinary bank but also as an important institution for the British government, facilitating tax collection, exchequer bill circulation, and advances to the government.
The author discusses how banking can increase economic activity by allowing capital to be more productively employed rather than sitting idle, and the risks of relying too heavily on paper money circulation.
The passage discusses the use of paper money (bank notes) versus gold/silver coins in circulating money.
It argues that bank notes work best when confined to circulation between dealers, as in London where minimum notes are £10. Notes below £5 could flood circulation and drive out precious metals.
In places like Scotland and North America where notes also circulated between consumers and dealers, gold/silver was banished. Limiting small notes helped restore precious metals.
Even with no small notes, banks could still support trade through discounting bills and loans, maintaining circulation between dealers.
Well-backed bank notes immediately payable on demand are as good as precious metals. Problems arose from notes dependent on bank discretion or distant payment times.
Optional payment periods and small-sum conditions in some currency schemes degraded their value below gold/silver. Laws addressed these issues.
North American colonial currencies were government-issued, not backed by banks, paid no interest and required forced acceptance, unjustly imposing on creditors. This was a fraudulent debtors’ scheme.

This passage discusses the concepts of productive labor and unproductive labor. Some key points:

Productive labor adds value to a product or subject, such as a manufacturer adding value through their labor. Their wages are often returned with profit through the improved value of the product.
Unproductive labor does not add value to any product or subject. Examples given are menial servants and the labor of officials like the sovereign, officers, army, navy. Their work provides value but does not result in any product.
Other professions deemed unproductive include churchmen, lawyers, doctors and various entertainers. While their labor has value, it does not produce anything tangible that could later be exchanged for an equal amount of labor.
A major benefit of productive labor is that it “fixes and realizes itself” in a vendible commodity that retains value even after the labor is complete. This stored up labor can then be put to use in other productions if needed. Unproductive labor perishes in the moment and leaves no stored value.
Banking practices are discussed, arguing that restraining certain activities while allowing free competition makes banking safer and more beneficial for the public.

So in summary, it distinguishes between labor that adds value through production of goods versus labor that provides services but does not directly result in stored or vendible value.

The passage discusses the sources and proportions of productive versus unproductive labor in an economy. It argues that the annual produce of a country is ultimately meant to supply consumption and generate revenue. However, it initially divides into two parts - one replacing capital, and one constituting revenue through profits or rents.

The part replacing capital is always used to maintain productive labor like farmers, manufacturers, etc. The revenue part can maintain either productive or unproductive labor like servants. Owners of capital and land like landlords are the main sources supporting unproductive labor, using rents and profits.

The proportion of annual produce going to capital replacement versus revenue determines the balance of productive to unproductive labor in a country. In rich nations like Europe, a large part replaces capital due to greater investment, while the revenue share does more, meaning more productive labor. Historically under feudal systems, nearly all produce went to landlords as revenue, and laborers were unproductive serfs.

Greater capital allocation to productive uses versus revenue or profits that could support non-productive activities is what leads to greater industriousness in modern nations compared to the past.

The author discusses how the proportion of capital versus revenue in a city or town impacts its level of industry and idleness. Cities that are primarily maintained by spending from large revenues, like courts, tend to have idle and poor populations since people are not supported by employment of capital. Cities with more capital employed see more industry.

Two exceptions are Rouen and Bordeaux in France, which have trade due to their advantageous locations as ports. Other French parliament towns have little industry beyond supplying local needs.

London, Lisbon and Copenhagen can be considered both court towns and trading cities due to their situations allowing them to be commercial hubs.

Where capital predominates, industry prevails. Increasing or decreasing capital naturally increases or decreases industry, productive jobs, and overall wealth. Capital grows through savings, while being diminished by wasteful spending. Savings employ more labor and increase annual production value, whereas spending on non-productive things subtracts from what could support industry. A frugal person’s savings establishes a perpetual fund to maintain productive jobs forever.

Money is used as a medium of exchange to circulate goods and services in an economy. The quantity of money needed is determined by the value of consumable goods produced and traded within a country.
If the value of annual production decreases, less money will be needed in circulation. Money taken out of domestic circulation will be invested or sent abroad to purchase foreign goods. This can support consumption for a time by drawing on past savings.
A country’s real wealth is determined either by the value of annual production or the quantity of precious metals in circulation. Frugality benefits the public by increasing productive resources, while prodigality diminishes them.
Misconduct like failed business ventures also reduces productive funds, though individuals’ behavior has little impact on large nations. Prudent undertakings far outnumber risky ones.
Public rather than private profligacy poses the greater risk, by consuming tax revenue needed to maintain productive laborers. However, individuals’ constant efforts to better their conditions through work and savings often compensate for errors in policy or administration.
National production can only increase by adding more productive laborers through capital accumulation, or by improving laborers’ productivity via technology or specialization. Both require additional capital investment over time. Economic progress relies on a growth in productive capital from conduct of frugal individuals.
The annual produce and wealth of a country is difficult to assess over short periods, as gradual improvements may not be obvious. Books were often published claiming England’s wealth was declining, though this was not always true.
England’s wealth and industry has grown significantly since the Norman conquest, and each period had improvements despite wars, public spending, and other disruptions slowing natural accumulation.
Though government spending retarded England’s progress, private industry and conduct allowed accumulation over time. Frugality and conduct aimed at bettering individuals’ conditions drove improvements.
Spending on durable goods like houses, furniture and collections contributes more to public wealth, as items can be passed down and accumulated over time. Sumptuous spending on consumption provides no lasting value.
When the rich tire of durable items, inferiors can purchase them, gradually improving living standards. One finds inferiors living in fine old houses and possessing quality heirlooms in long-established nations.

So in summary, it argues England’s wealth has steadily grown despite setbacks, private industry being key, and certain spending habits building wealth more than others like focusing on durable goods over consumption.

The passage discusses uriosities (things that excite curiosity or interest) like great houses and monuments which can honor and ornament a country. It cites examples like Versailles in France and Stowe and Wilton in England.

It then argues that spending on durable goods is more beneficial than lavish hospitality. Durable goods spending accumulates value over time and supports more jobs like craftsmen. It also encourages frugality since change can be made discreetly, unlike cutting back on a large household.

While hospitality spending also supports people, much is wasted and it does not increase a country’s wealth long-term. Durable goods spending maintains productive industries and workers. However, the passage notes that hospitality can indicate generosity while durable goods spending may be selfish if focused on minor ornamentation.

Overall, durable goods spending is seen as more conducive to public wealth growth since it results in accumulated valuable goods, encourages private saving, and maintains productive industries and workers in a country.

A loan of capital at interest can be seen as an agreement where the lender assigns a portion of the annual production to the borrower in exchange for interest payments and repayment of the capital. The interest is a small annual portion and the repayment is an equally sizable portion at the end.
As more capital accumulates in a country, more stock is available to be lent at interest. This increased supply leads to diminishing interest rates due to ordinary market forces as well as declining profits from investing additional capital.
Some economic thinkers argued that the discovery of silver in the Americas lowered interest rates by decreasing the value of money. However, this theory is flawed - if capital and interest declined equally due to devaluation, their relative values and thus interest rates would remain the same.
Increasing the money supply while keeping commodities constant would raise nominal prices but not real values or interest rates. However, increasing commodities while keeping money constant would augment the real capital and demand for labor, lowering profits and interest rates.
Usury laws prohibiting interest led to higher effective costs as borrowers had to insure lenders against penalties, counteracting the intent of the laws. Permitted interest rates should be above the market rate to prevent usury.
Capital can be employed in four main ways: 1) procuring raw materials for production, 2) manufacturing/processing raw materials, 3) transporting goods, 4) breaking down goods into smaller retail portions.
Each of these employment types is necessary for the others and for overall economic activity. Raw materials are needed for manufacturing, transportation moves goods to markets, and retailers provide convenient access for consumers.
Unless capital is used to procure enough raw materials, manufacturing and trade cannot exist.
Unless materials are processed, raw goods may never be produced due to lack of demand or would have no value if produced spontaneously.
Without transportation, only as much could be produced as local areas need. Transport allows surpluses in one area to be exchanged for other places’ surpluses.
Without retailers, individuals would need to buy more goods than immediately required in larger bulk quantities, which is inconvenient and less capital-efficient.
Those employing capital in these four areas are productive workers. Their labor added value through processing, transporting, etc. and yields profits from good prices.

The passage discusses four ways of employing capital:

Agriculture - Capital employed in agriculture puts the greatest quantity of productive labor into motion and increases the value of annual produce the most, as nature also contributes to productivity in agriculture. A portion of output takes the form of rent paid to landlords.
Manufacturing - Manufacturing employs more productive labor and increases annual produce value more than wholesale trade or retail trade. Nature does nothing in manufacturing; all work is done by humans.
Wholesale trade - Wholesale merchants indirectly support producers by replacing farmers’/manufacturers’ capital and enabling continued production. They transport goods and increase prices.
Retail trade - Retailers are the only productive laborers their capital directly employs. Their profits are the only value added to annual produce.

The passage then discusses the potential locations of different types of capital. Agricultural and retail capital must reside within society. Wholesale capital can reside anywhere. Manufacturing capital is best located within the country. A country may need to import capital for wholesaling or exporting if it lacks sufficient domestic capital for all purposes.

The passage discusses the employment of capital (wealth/resources) in different economic activities and how that affects a country’s prosperity. It argues that capital is limited for any nation, just as it is for an individual.

Capital is best employed in ways that generate the highest revenue, as this allows people to save and reinvest more. Agriculture is singled out as particularly effective for increasing a country’s production and wealth. Manufacturing and foreign trade can also contribute, but have limitations.

Prematurely trying to do all activities (agriculture, manufacturing, foreign trade) with insufficient capital is not the fastest way for a nation to accumulate wealth. The optimal allocation of capital depends on maximizing total revenue across industries in order to maximize savings and growth.

Historical examples are given of very wealthy ancient civilizations that focused more on agriculture and domestic manufacturing than foreign trade. In general, no country has managed to sufficiently develop all three activities simultaneously without a long period of growth. The type of trade - domestic, imports/exports, or carrying goods between other nations - also impacts how much it stimulates the domestic economy.

The passage discusses how gold, silver, and other precious metals are used in international trade. It argues that these metals must have been originally purchased with something of value produced in the exporting country, such as industry or other goods.

International trade that uses gold/silver has both advantages and disadvantages similar to other types of “roundabout” international trade. It may replace capital as fast or slow as other forms of trade.

One advantage is that transporting precious metals is less expensive than other goods of equal value due to their high value and low bulk. This means an equal quantity of foreign goods can sometimes be purchased with less domestic production using precious metals as an intermediary.

The carrying trade (transporting goods between other countries) fully withdraws capital from supporting domestic productive labor. However, a domestic merchant could employ capital this way without using domestic ships. Carrying trade is not inherently more advantageous than other forms of trade in terms of employing sailors or ships.

Each type of trade - domestic, foreign consumer, and carrying - becomes necessary when domestic production exceeds domestic demand. Surplus must be traded for goods with domestic demand. The passage argues governments should not favor one form of trade over others through preferential policies or encouragements.

This passage discusses the natural progression of economic development in nations from an agricultural base to increased urbanization and manufacturing. Some key points:

Trade between towns and the countryside is essential, with the country supplying food and raw materials in exchange for manufactured goods. This benefits both sides.
Agricultural development and surplus production must necessarily come before the growth of towns, which rely on the countryside for subsistence.
People prefer to invest in agriculture over other sectors due to security, independence, and lifestyle.
Small towns and villages naturally develop around agricultural areas to serve farmers’ needs with artisans like blacksmiths, millers, etc. This brings other suppliers like butchers, brewers.
Towns function as markets where agriculture and manufacturing exchange goods. The demand from the countryside drives urban production and employment levels.

So in summary, it outlines a model of agriculture leading economic development and driving the subsequent growth of towns specializing in manufacturing and trade, with mutual benefits for urban and rural areas. Political/legal factors could disrupt this natural progression between sectors.

The passage discusses how human institutions have disrupted the natural development of towns and agriculture. Originally, as a society’s agricultural lands became more developed and cultivated, the towns would grow progressively along with this increasing wealth.

However, in medieval Europe following the fall of the Roman Empire, the situation was inverted due to the enclosures of land by conquerors. Large properties became consolidated under few proprietors. The introduction of primogeniture and entail laws prevented these large land holdings from being subdivided over time.

This led to a discouragement of agriculture, as land was left uncultivated but owned by the nobility. Manufacturing and foreign trade grew in the cities instead of agriculture developing in tune with cultivation as normally occurs. Only in North America was the natural order observed, where settlers turned from artisans to farmers as uncultivated land was readily available for improvement.

The passage argues this disruption of the normal development pattern, with agriculture discouraged, was an unnatural result of the political and legal institutions imposed after the fall of Rome in medieval Europe.

The passage discusses the history of land ownership and tenant farming in Europe. It describes how under feudal systems, great landed estates were held by powerful families through strict entail laws. These estates were often left uncultivated or poorly managed.

The land was occupied by slaves or serfs who belonged to the landowner. As slaves, they could acquire no property and had little incentive to work beyond their basic maintenance. This led to inefficient farming.

Gradually, a system of tenant farmers called metayers or coloni partiarii emerged, where the landowner provided seed, livestock, and tools, and the crop was split equally between them. These tenants had more incentive to maximize production as they could acquire property.

The passage suggests this system of peasant farming gradually replaced slave systems across Europe, partly due to the inefficiency of slave labor and partly due to peasants gaining more freedoms and challenging landowner authority over time. However, it notes the specific details of this transition are unclear from historical records.

In the 12th century, Pope Alexander III issued a bull calling for the emancipation of slaves, but it did not have the force of law and slavery continued for centuries.
As landowners and sovereigns both saw benefits, slavery was gradually abolished. Freed slaves often became “metayers” - tenants who cultivated the land in exchange for a share of produce, but had no independent stock.
Metayer arrangements were not conducive to long-term improvement of the land, as tenants got no benefit from additional investments. Over time, farmer tenants emerged who cultivated land with their own stock, paying rent.
Tenant security greatly improved in England by the 15th century with legal protections against eviction. This respect for tenants contributed to England’s advancement more than commerce laws. Other European countries secured tenants for much shorter periods.
Historically, tenants owed arbitrary private and public services to landlords and were subject to oppressive taxes, further hindering improvement of lands. Reforms improved conditions for tenants over time.
After the fall of the Roman Empire, farmers and landowners generally lived in fortified castles on their estates, surrounded by tenants and dependents. Towns were inhabited by tradesmen, mechanics, and other servile people.
Early town charters show the inhabitants had near-servile status prior to being granted privileges like marrying without lordly consent, passing property to children, and writing wills.
Town-dwellers acted as traveling merchants and peddlers, paying various taxes like passage fees when crossing land or selling goods. Some received “free trader” exemptions from lords in exchange for poll taxes.
Over time, towns began leasing or buying the “farm” of taxes raised within their boundaries from kings or lords. This conferred more independence and exemptions became perpetual for the town rather than any individual.
Towns were granted rights to self-government like electing magistrates, making by-laws, building fortifications, and military obligations for inhabitants. They gained exemption from many feudal courts and rights to their own jurisdiction.
These increasing rights and privileges elevated town-dwellers out of near-servility into a truly free status compared to occupants of land still under feudal systems. Their independence was important for economic and civic functions.
In medieval Europe, weaker subjects had no protection from oppression by powerful lords. Cities formed leagues for mutual defense against lords.
Kings granted cities autonomous rights (self-government, walls, militias) to gain their support against lords, who the kings also opposed. This made cities more secure and independent.
Cities’ militias often matched or exceeded rural militias, giving cities advantages in disputes. Some cities became independent republics by conquering surrounding nobles.
In countries where royal authority declined but not disappeared, cities gained representation in national assemblies to counterbalance nobles.
Order and liberties in cities encouraged commerce and industry more than rural areas controlled by lords. Accumulated wealth fled to cities’ protection.
Seafaring cities could trade far beyond their local areas for subsistence and employment, growing wealthier than surrounding lands. Some areas like Italian city-states and Islamic empires were initially more prosperous centers of commerce.
The Crusades favored growth of Italian commercial cities situated along trade routes between Europe and the Holy Land.
During the Crusades, trading cities like Venice, Genoa and Pisa benefited by transporting armies to the Holy Land and supplying them with provisions. This highly destructive conflict was a source of wealth for these republics.
Traders in cities imported luxury goods from richer countries, which the wealthy landed classes purchased in exchange for their agricultural output. This stimulated trade within Europe.
Manufactures for distant sale first arose when merchants established industries imitating foreign goods. Over time, more natural growth occurred as household industries in rural areas refined and specialized production.
Inland regions with fertile land and surplus agricultural output encouraged workshops to meet local demand for processed goods, recycling wealth into new production. These workshops served wider markets as quality improved.
Commercial and manufacturing towns contributed to rural development by providing markets for raw materials, investing wealth in new farmland, and circulating money from trade throughout the countryside via purchases. This gave incentive to further cultivate lands and specialize output.

The passage discusses how the introduction of commerce and manufacturing gradually brought about order, good government, and individual liberty among rural populations that had previously lived in a state of almost continual war with neighbors and servile dependence on feudal lords.

Before commerce, large landowners would consume most of the surplus produce from their lands by maintaining huge households of retainers and dependents who had to obey them, as they provided for their livelihood. Small tenant farmers were also extremely dependent on landlords.

This gave barons tremendous authority over the inhabitants on their lands, as they were best able to maintain order and execute the law. The king had little authority in these rural areas.

While territorial jurisdictions predated feudal law, it did little to curb the power of great allodial landowners. The introduction of commerce helped establish a more regular system of government with less power in the hands of local magnates, bringing about greater order, security and individual liberty among rural populations.

After the establishment of feudalism, kings were unable to control the violence of powerful lords, just as before. The lords continued to wage wars against each other and the king without restraint.
The growth of foreign commerce and manufacturing eventually weakened the power of the lords. They could exchange their surplus farm production for luxuries to consume themselves rather than sharing with tenants.
This allowed them to gradually dismiss tenants and reduce their numbers to only those needed to farm the land. Merchants then provided goods the lords could buy, replacing the need to support many retainers.
Tenants gained independence as they were no longer wholly dependent on particular lords. Long-term leases also gave them security. Lords lost their ability to disrupt justice or disturb the peace.
Over generations, great family fortunes did not persist in commercial societies where wealth could be spent on luxuries rather than maintaining many people. Simple pastoral societies retained ancient families.
In this way, commerce unexpectedly undermined feudal authority and led to a more peaceful society, though it progressed gradually rather than being the natural order. Growth was slower in Europe but faster in the agriculturally-focused American colonies.

This passage discusses the relationship between foreign commerce, manufacturing, and agricultural cultivation and improvement across various European countries from the 15th-18th centuries. Some key points:

England experienced significant growth in foreign commerce and manufacturing starting in the Elizabethan era (late 16th century), which indirectly encouraged agricultural improvement, though agriculture lagged behind other sectors. English law directly supported agriculture through protections for grain and livestock.
Other countries, like France, Spain, Portugal and Italy engaged in foreign commerce earlier but saw less agricultural improvement. Italy was more fully cultivated due to independent city-states and advantageous geography/trade before the 15th century.
Wealth from commerce and manufacturing is precarious unless invested in long-term land cultivation and improvements. Cities like the Hanseatic towns declined rapidly after losing their commerce. Flanders remained prosperous despite losing Antwerp, Ghent and Bruges’s trade.
Overall the passage analyzes the relationship between foreign trade, industry and agriculture across European history, finding agriculture generally improved slower than commerce/manufacturing and required secure property rights and investment in land to develop fully.
Under the commercial/mercantilist system of political economy, wealth was viewed as consisting primarily of gold and silver (money). Countries sought to accumulate these precious metals.
Spain and Portugal, which controlled the main mines producing gold and silver, imposed strict laws banning or taxing exports of the metals. Other European nations did the same.
Merchants argued against these export prohibitions, saying they hindered trade. They claimed exports of gold/silver did not necessarily decrease a nation’s stock if imports were sold abroad at a profit.
They said prohibitions did not prevent exports anyway, only made them more expensive via smuggling. What mattered was maintaining a “balance of trade” - exporting more than importing, resulting in gold/silver inflows to pay the difference.
If imports exceeded exports, gold/silver would flow out, worsening the exchange rate against that nation’s currency. This would further disadvantage its trade situation.
So the merchants argued nations should focus on the trade balance rather than direct controls over gold/silver flows to maintain or increase their stocks of the precious metals.

This passage makes several key points about government intervention in trade:

Governments historically tried to prohibit exporting gold/silver coin in order to preserve quantities within their country. However, this restriction actually harmed merchants who needed to pay for imports. It also didn’t truly prevent gold/silver from leaving if demand was there.
Arguments that restrictive trade laws increased an “unfavorable balance of trade” and export of gold/silver were not fully convincing. High exchange rates from prohibitions actually pushed merchants to balance imports/exports more evenly.
Over time, policies shifted to allowing free export of foreign coins and bullion. Attention turned to managing the “balance of trade” rather than directly restricting metal flows.
Domestic or homeland trade was seen as secondary to foreign trade in bringing wealth or draining it. But in reality, domestic trade is most important for revenue, employment and prosperity.
The supply of gold/silver naturally regulates itself according to demand across countries. No government intervention is needed to ensure sufficient quantities are available for use or purchase. Market forces and transport easily move metals from surplus to deficit areas.

So in summary, the passage argues that government restrictions on trade and metal flows are unnecessary and even counterproductive. The free movement of goods and money across borders best serves an economy.

The passage discusses the idea of a perceived “scarcity of money” in an economy. It argues that this is often not due to an actual lack of gold/silver circulating, but rather difficulties that traders face in borrowing money when needed.

Over-trading, where merchants disproportionately take on projects relative to their capital, is a common cause of perceived money scarcity. Merchants run short on capital and credit before their projects come to fruition.

While merchants may struggle to exchange goods for money in the short-run, nations as a whole are less vulnerable because most production is used domestically rather than exported for money. Nations can maintain production and employment even if goods trading is disrupted.

Long-run, goods necessarily draw money through demand, as money exists only to facilitate exchange, while goods have multiple uses. Nations aiming to artificially increase money stocks through imports will actually decrease wealth by spending on unnecessary “kitchen utensils” like coins and plates.

A country need not stockpile gold/silver to wage foreign wars - it can pay for foreign goods, armies, and navies through exports of manufactures and raw materials from its annual production. Different parts of accumulated and circulating money stocks can be used for such purposes as needed.

The passage discusses how countries finance foreign wars through financial means other than simply exporting currency like gold and silver.

When a war begins, some currency is withdrawn from domestic circulation as fewer goods are traded at home. However, this provides only limited resources to support an expensive, long-term war abroad. Exporting private silver plates or the treasury of a ruler are also insignificant sources.

The most expensive wars of the 18th century, like Britain’s war with France in the 1750s-60s costing over £90 million, were not principally financed by exporting gold/silver. Instead, the surplus output of British manufactures was exported abroad without returning goods, to purchase army expenses. Princes did not accumulate treasure like in the past.

Some gold/silver circulates internationally between trading nations as a form of “mercantile money” and was possibly used to support wars. But ultimately, war expenditures had to be paid for through British exports, not gold/silver flows, supported by the annual production of the country’s agriculture and industry. Financing prolonged foreign wars by exporting raw commodities alone would be impractical due to high transport costs.

The passage discusses the ability of ancient kings in England to carry out long foreign wars. In the past, England lacked manufactured goods that could be exported to purchase supplies for armies abroad. They could only export raw materials and basic manufactured goods, but transportation was too expensive.

It also touches on how sovereigns in less developed nations relied on accumulating treasures as a resource for emergencies, since they could not easily tax subjects. Developed commercial nations’ monarchs follow trends of extravagance rather than parsimony.

While importing gold and silver is important, foreign trade more significantly benefits nations by allowing exports of surplus goods and imports of goods desired at home. This encourages more division of labor and production. The discovery of America enormously expanded markets for European goods and improved productivity.

The discovery of the Cape route to Asia was also important, though Europe benefited less due to early trade monopolies. In general, foreign trade increases national wealth more than just imports of bullion.

Countries impose tariffs and bans on imports of goods that can be produced domestically in order to secure a monopoly in the domestic/home market for their own domestic industries that produce those goods. This is intended to encourage and support those domestic industries.
However, whether this actually increases the overall industry and wealth of a country is debatable, as the total industry is limited by the capital available in that country. Protecting domestic industries may simply divert capital to those industries rather than others, without necessarily increasing overall output.
Individuals and merchants naturally tend to invest capital where it can be most profitably and conveniently employed, which often supports domestic industries first before foreign industries. However, their primary goal is individual profit rather than national interests.
The arguments around restricting imports to encourage exports and maintain a trade surplus, in the belief this brings gold/silver into the country, are examined critically in later chapters. The real impacts on domestic output and wealth are considered more important than monetary flows.

The passage discusses using trade to benefit domestic industries and economic growth. It argues that free trade allowing businesses to import goods from wherever is cheapest is generally best for a nation’s economy. While protecting certain domestic industries through monopoly or import restrictions may help develop those industries faster, it ultimately diminishes the total wealth and growth of the economy. By forcing resources into less optimal uses, it reduces the value of total production. Over time, completely free trade will still allow domestic industries to develop naturally as they become competitive through innovation and advantages in certain goods. While governments may aim to develop certain industries, centrally planning the economy in this way risks doing more harm than good by distorting the natural flows of trade and capital. Overall economic health depends on allowing markets and businesses to direct resources to their most valuable uses.

The passage discusses the idea of using trade restrictions or tariffs to promote domestic industries even if those industries are much less efficient than importing from abroad.
It argues that prohibiting imports of wine from other countries to promote winemaking in Scotland would be absurd, as Scottish wines would cost 30 times as much to produce.
Even small trade barriers just to give a slight advantage to domestic industries would be an “absurdity” if importing is significantly cheaper.
Manufactured goods are more easily imported than raw materials like grain or livestock. Free imports of manufactured goods could damage domestic industries, while free imports of raw materials would have little impact.
Free imports of livestock or salt meat from other countries like Ireland would not significantly impact British graziers, as transportation costs make large imports uneconomical.
Free grain imports would also have little impact on British farmers, as average imports are a very small fraction of consumption even in times of shortage. Barriers mainly benefit grain merchants rather than farmers.
In general, farmers and landowners tend not to support monopolistic trade barriers like manufacturers do, and often want to help neighboring farms improve.

The passage discusses restrictive trade policies such as prohibiting imports of goods that can be produced domestically. It argues such policies are misguided as they inhibit population and industry growth by limiting countries to only what can be produced locally.

However, there are two cases where restricting some foreign trade may be advantageous. The first is for national defense purposes. The passage uses the example of the British Navigation Acts, which aimed to promote British shipping and sailors through regulations like reserving coastal trade for British ships. While these rules decreased Dutch trade, they enhanced British security at a time of conflict between the nations.

The second case is implementing equivalent taxes on imports when domestic production of similar goods is taxed. This maintains a level playing field between domestic and foreign goods. However, the passage is skeptical of broadly taxing all foreign goods when domestic necessities are taxed, as the effects on prices are hard to accurately measure and such policies restrict industry adjustment. Overall the performance of an economy is better served by allowing it to accommodate to circumstances rather than imposing overly restrictive trade barriers.

High import taxes (“duties”) on foreign goods are generally harmful when they grow to a significant level, similar to natural disasters. However, some prosperous nations have imposed such high taxes.
There are two cases where limiting free trade may be considered: 1) When another country restricts imports of our goods, retaliation could be considered. However, retaliation often just leads to ongoing tariffs without resolving the issue. 2) When domestic industries have grown dependent on import protections, removing them too quickly could disrupt many workers. It may be better to gradually restore free trade to give industries time to adapt.
In the first case, retaliation is only justified if it can realistically achieve removing the other country’s restrictions. Otherwise, it just harms consumers and other industries in both countries.
In the second case of removing protections, while some workers would be disrupted, history shows they often find new work without severe problems. Industries adapt, capital remains in the economy, and limiting free trade long-term is generally not good policy.

The passage discusses the commercial system’s use of extraordinary restraints on imports from countries where trade is deemed disadvantageous. It argues this approach is unreasonable, even within the commercial system’s logic, for three main reasons:

Even if the balance of trade favors France over England, trade could still benefit England if French goods are cheaper and better quality than alternatives. This would lower overall import costs.
Much of the imported French goods could be re-exported, generating profits and returns that offset the original costs. As seen with Dutch carriage of French wines elsewhere in Europe.
There is no certain way to determine which country really has an advantageous balance in trade between any two. Reported balances are unreliable and influenced by monetary exchanges not fully captured.

So in summary, the passage critiques extraordinary restraints on specific countries’ imports as unreasonable, claiming trade can still benefit the importing country and balances are uncertain - contradicting the commercial system’s rationale for such protectionist policies.

This passage discusses the complexity of determining trade balances between countries based on commonly used metrics like customs records and exchange rates. Some key points:

Customs records and exchange rates are imperfect measures, subject to inaccuracies. National biases also influence trade judgments.
Exchange rates can seem to indicate trade imbalances but are also affected by dealings with other trading partners. One country may send money abroad even with trade surplus with that country due to dealings elsewhere.
Real exchange rates differ from nominal rates based on mint standards, as actual coin purity varies. French coinage had seigniorage tax, so French money was worth slightly more.
Paying foreign bills in “bank money” (as in Amsterdam) rather than common currency also impacts nominal exchange rates, as bank money is more valuable. So nominal rates may misrepresent real trade balances.

In summary, the passage cautions against relying too heavily on standard trade metrics like customs data and nominal exchange rates, as various economic and political factors can obscure actual trade imbalances between nations. Real trade balances are complex with many variables in play.

Small states like Genoa and Hamburg often had currencies made up of coins from neighboring states due to trade. This made their currencies uncertain and devalued in foreign exchanges.

To remedy this, these states established banks that would pay foreign bills of exchange in “bank money” rather than common currency. Bank money was backed by and exchangeable for real coin at the bank, maintaining a stable value.

Venice, Genoa, Amsterdam, Hamburg and Nuremberg originally established banks in this way. For example, Hamburg’s bank money traded at around 14% above the degraded common currency.

Amsterdam similarly established a bank in 1609 to deal with degraded foreign coin flooding in. The bank exchanged standard coin for deposits of common currency and foreign coin. It paid debts in “bank money”, keeping values stable.

Bank money had advantages like security, easy transferability and use in foreign trade. It always bore a premium over common currency. Depositors had little reason to withdraw coin from the bank once they held bank money.

Over time the banks also facilitated bullion trades, accepting deposits and granting credit slightly below mint prices, to be redeemed later at the depositor’s option. This helped stabilize bullion values and supported trade.

The Bank of Amsterdam allows depositors to receive both a bank credit and a receipt for deposited bullion. Depositors can use their bank credit to pay bills while keeping or selling their receipt depending on expected bullion price movements. Receipts and bank credits seldom remain paired as there is ample supply of each available for purchase by those wanting the other.

Holders of receipts and owners of bank credits constitute different types of creditors against the bank. Receipt holders cannot withdraw bullion without repurchasing an equivalent amount of bank money, while bank money owners cannot withdraw bullion without purchasing receipts. These transactions allow both parties to take advantage of typical premiums of 2-3% or 5% respectively between bullion and bank money/receipts.

Receipts given for coin deposits like ducatoons are often worthless as withdrawing the coins requires paying storage fees that exceed their value. Receipts for gold deposits incur higher 0.5% storage fees, causing them to expire to the bank more frequently. The 5% fee the bank gains on expired deposits acts as permanent warehouse rent.

While some portion of bank money likely has expired receipts, there is no specific sum that cannot be demanded by presenting a receipt. However, during crises people may try to withdraw all funds, raising receipt prices and pressuring the bank. It is said the bank would pay full value to those lacking receipts in such emergencies.

The bank aims to keep equal value in specie or bullion to correspond to circulated bank money, maintaining public faith in its solvency. Annual audits by changing government overseers help assure reserves are intact.

The Bank of Amsterdam has existed for a long time and has not been accused of any mismanagement or wrongdoing over its history, even during times of political upheaval or war. This suggests it has handled people’s money faithfully.
The exact amount of treasure held in the bank is unknown, but estimates put it at around 33 million guilders based on assumptions about average account balances. This is a large sum but below some exaggerated claims.
The city of Amsterdam generates substantial revenue from fees charged by the bank for account openings, transfers, penalties for improper account management, and profits from transactions involving foreign coins and currency exchange.
However, the original purpose of establishing the bank was public utility, to alleviate merchant issues with unfavorable currency exchanges, not revenue generation. Revenue has been an unexpected byproduct.
The essay then discusses principles of international trade balances and argues that trade is generally advantageous to both sides as long as it is naturally conducted, not forced through monopolies or subsidies. Both sides benefit through expanded markets for their products.

The passage argues that exporting gold and silver from a country is not necessarily detrimental and may actually augment the capital and industry of that country. Exporting commodities in exchange for goods worth more back home increases the value of the country’s capital.

It acknowledges direct trade is usually better than roundabout trade, but says trading gold/silver for goods is no less advantageous than other indirect trades. A country will not run out of gold/silver if it has goods to trade for them.

It disputes that trade with wine countries is unfavorable, as some claim trade with alehouses is losing. Moderate wine consumption does not cause excess like cheap ale does in northern nations. Restrictions on wine mainly favor Portuguese traders over the French.

Most of the arguments against free trade stem from merchants trying to secure domestic monopolies, not genuine national interest. In reality, cheap imports benefit consumers, and other nations’ wealth increases their ability to trade with and market goods from other countries.

This passage discusses the benefits of free trade between neighboring nations, using France and Britain as an example. Some key points:

Trade between neighboring countries with frequent returns can allow both nations’ capital to circulate more rapidly, employing more people and producing more wealth. Trade between France and Britain could be much more advantageous than their North American colonial trades.
However, mercantilist thinking and national animosity between France and Britain led to trade restrictions instead of open commerce. Each nation feared the other’s competition would harm its traders and manufacturers.
In reality, European nations that opened their ports to free trade have been enriched rather than ruined by it. The true measure of a nation’s wealth is the balance of its annual production and consumption over time. A trade deficit does not necessarily harm a nation.
While nations seek trade surpluses, no European country appears to have been impoverished by trade imbalances. Free trade tends to increase total production and national wealth, contrary to predictions based on mercantilist thinking. Open commerce between France and Britain could have greatly benefited both economies.

Country: Great Britain

Employment: Drawbacks (refunds of import tariffs paid upon exportation of goods) tend not to overturn the natural balance and division of labor in a society. They aim to preserve this balance by allowing goods to be exported freely without import duties hindering trade.

Specifically in Great Britain, major drawbacks included refunding half the import duty on exported goods (old subsidy rule) and fully refunding duties on goods like tobacco and sugar that were exported in large quantities beyond domestic needs. Exceptions were made for goods seen as competing with domestic manufacturing like silks, where no drawbacks were given.

Over time, rules around drawbacks became more complex, but generally aimed to facilitate trade rather than hinder it through imposing high retained import duties, while also protecting certain domestic industries like wine which faced national preference policies and higher retained duties on exports.

Drawbacks (refunding of duties paid on imported goods used to produce exports) are only justified for goods exported to truly foreign and independent countries, not countries where our merchants enjoy a monopoly, like American colonies.
In colonies with a monopoly, the same amount would likely be exported without drawbacks, so drawbacks just lose revenue without changing trade.
However, drawbacks can be a proper way to encourage industry in colonies. Whether exempting colonies from taxes paid by others at home is advantageous will be discussed later when talking about colonies specifically.
Drawbacks only work if goods are truly exported and not clandestinely re-imported, which tobacco drawbacks have enabled fraud by being re-imported.
Bounties on exports are sometimes granted to boost particular industries, arguing sellers can then sell as cheap abroad. But bounties should only support trades that cannot be done at a profit without them.
Trades done at a loss need bounties to compensate losses and encourage continuing or starting that trade. But bounties distort trade away from the most advantageous channels.
A bounty on wheat exports leads to higher prices for both exported and domestically consumed wheat. This imposes a significant tax on consumers through higher food prices.
Higher wheat prices could reduce the standard of living of laborers by lowering real wages or make employers less able to hire as many workers. This restrains population growth and economic activity.
While the bounty may appear to encourage wheat production by raising nominal prices, it mainly degrades the value of currency. Real commodity prices and living standards are barely affected.
The bounty’s main effect is increasing money prices for all goods proportionately. So farmers and landlords are not actually made materially better off.
Spain and Portugal hurt their economies by taxing and prohibiting gold/silver exports. This keeps precious metal values artificially high domestically but lowers the value of all other goods and discourages farming/manufacturing. It enables foreign competition.
Removing these restrictions would normalize relative prices and benefit domestic producers in Spain and Portugal. The “floodgates” analogy is used to illustrate this point.
Spain and Portugal levied high taxes and restrictions on gold and silver exports. This artificially inflated the quantity and value of those metals domestically.
Removing those taxes and restrictions would cause gold and silver quantities to diminish in Spain/Portugal as it flows to other countries. Meanwhile their value would level out across places.
This outflow would not really hurt Spain/Portugal economically. The nominal value of their goods and production would fall, but the real value would remain the same.
The outflowing metals would be traded for imported goods. These goods would consist partly of materials and provisions to employ more local workers, increasing overall industry and production over time.
Corn export bounties have a similar effect as the Spanish/Portuguese policies. They raise domestic corn prices, hurt manufacturing, and mainly benefit corn merchants rather than farmers.
Bounties on exports don’t really increase real corn values or encourage more production. Only bounties directly on production would more directly boost a commodity’s production.
In conclusion, restrictive metal policies and export bounties are largely counterproductive and damage general industry for minor benefits to some groups. Direct production subsidies are preferable to encourage a good’s growth.

This passage discusses bounties, or government subsidies, for various fisheries in Scotland. The key points are:

Bounties were traditionally given more for exports than domestic production, under the idea that exports brought money into the country. But bounties on production could potentially lower commodity prices domestically.
The white herring fishery received a substantial tonnage bounty per ship burden, rather than based on success. This incentivized sending ships just to collect the bounty, not catch fish.
The boat fishery was better suited to Scotland’s coastal geography but was replaced by the less efficient decked-ship (buss) fishery due to its higher bounty. This damaged the domestic herring supply.
Calculations show the substantial costs to the government of the herring buss bounties, which far exceeded the value of the herrings. Most of the subsidized catch was exported.
Higher herring prices in recent years may have been partly due to depletion from overfishing incentivized by the bounties, rather than true scarcity.

So in summary, the passage critiques the herring buss bounty program for being poorly targeted and incentivizing overfishing at large public expense, while undermining domestic herring production.

The passage discusses different aspects of the herring trade and prices over time. It notes that the price of barrels for herring has doubled from 3s to 6s since the American war. Accounts of past prices vary but an old trader said a guinea was typically paid for a barrel 50 years ago.
When fisheries receive bounties but continue selling at the same or higher prices, their profits might seem great. However, the passage argues these bounties often encourage inexperienced traders who lose money, offsetting government support.
A failed example is described of a joint stock company formed in 1750 with £500,000 capital and various bounties and incentives, but nearly all associated companies lost most or all of their capital.
Bounties on exports can sometimes just be drawbacks on import duties, which are less objectionable than true bounties. Premiums to reward skill are also less problematic than bounties.
The passage then launches into a lengthy digression criticizing the corn laws and policy around grain exports, arguing the praise they receive is unmerited. It analyzes problems with different aspects of the grain trade.

The passage discusses excess greediness or avarice on the part of corn merchants. It argues that in years of scarcity, merchants who try to excessively drive up prices by hoarding corn will end up suffering the most. Not only will they face public indignation, but they will be left holding large stocks of corn by the end of the season that have to be sold at lower prices once the next season’s harvest arrives.

While a single monopoly on all corn could theoretically benefit from restricting supply, it is not really possible to form such a monopoly in practice given how dispersed farmers and other corn sellers are. Corn production involves many small sellers across a wide area.

Years of famine have historically been caused not by sellers colluding to restrict supply, but rather by actual poor harvests sometimes made worse by government policies. Allowing free trade is the best way to prevent famines, as scarcity in one area can be compensated by surplus in others through commerce.

Corn merchants play an important role but face public hatred in times of dearth. Ancient European policies tried to demonize and restrict their trade, thinking people could get corn directly from farmers more cheaply. But intermediaries help link farmers to consumers, and unrestrained freedom in the corn trade is the most effective way to deal with supply issues.

Laws in the past tried to regulate different trades, like forcing farmers to act as corn merchants and prohibiting manufacturers from being retailers.
These laws violated principles of natural liberty and were impractical, as farmers and manufacturers could not afford to operate in additional trades without the normal profits.
It is best to let people manage their own interests based on their local situations, rather than having the legislature dictate everything.
The law forcing farmers to be corn merchants was especially harmful. It made them divide their capital between farming and selling corn, reducing cultivation. It also hindered the development of the specialized corn merchant trade.
Ideally, farmers would sell their entire crops to corn merchants quickly. This would support the farmer trade like wholesalers support manufacturers, allowing maximum capital invested in cultivation. It could greatly improve agricultural production.
The statute tried to eliminate middlemen between farmers and consumers, but middlemen like corn merchants help prevent dearth by taking crops quickly and supporting farmers during hard times. Their trade is very beneficial to agriculture.
Early laws restricted ‘engrossing’ (buying up large quantities) and ‘forestalling’ (buying before goods reached market) of corn out of concerns these practices could hurt the public. Later laws gradually eased these restrictions.
The 15th of Charles II statute declared engrossing lawful as long as wheat prices did not exceed 48 shillings per quarter, lowering restrictions on inland corn dealers.
The statute supposed high prices meant corn was likely being engrossed to hurt people, but the author argues dealers cannot engross enough to truly hurt people and high prices sometimes naturally occur straight after harvest.
It also supposed corn could be ‘forestalled’ (bought up for resale in the same market soon after) to hurt people, but the author says if a merchant does this it must be because they judge supply is limited and prices will rise, providing a useful service.
The 15th of Charles II statute has contributed more to ample supply and increased farming than any other law, giving inland corn trading its first real protection and liberty.
Inland trade is far more important than import/export trade both for supply and encouraging farming, according to estimates from other authors.

So in summary, the passage critically discusses popular assumptions around engrossing and forestalling of corn, while arguing the 15th of Charles II statute was an important step in liberalizing corn trade.

Prior to the bounty, there were subsidies on imported corn ranging from 1/3 to 2/3 and a flat subsidy in 1747. Laws increased import duties over time.
During scarce years, suspending duties through temporary laws helped avoid distress. This shows the general law was improper.
Restraints on importation aligned with the later bounty’s goal of raising domestic prices, even if harmful. Bounty could be exploited otherwise.
Freely exporting surplus corn beyond domestic demand allows farms to grow more, improving cultivation. Restraints limit growth to domestic needs.
Laws from Charles II to William III increasingly freed corn export, though inland sales faced more restraints. This could aggravate domestic scarcity for merchant profits.
Temporary laws relieving export/import restraints show the general system was flawed if it required departing from regularly.
Free trade ideally prevents famines, as surplus in one area relieves scarcity elsewhere. However, countries rarely fully adopt this and bad policies can endanger neighbors.
Carriers importing to export help supply domestic markets, though not their aim. They will sell cheaply to save costs. Restraining carrying trade harmed supply.
Bounty laws do not deserve praise for British prosperity, which was better explained by security of property rights solidified in the Revolution.
Treaties that grant preferential trade terms to one country, like lowering tariffs or allowing entry of certain goods, give advantages to merchants/manufacturers of that country by creating a more extensive and advantageous market for their goods.
However, this disadvantages the merchants/manufacturers of the country granting the preferential terms, as they face more competition and may have to buy necessary foreign goods at higher prices.
While prices of domestic goods may decrease as a result, it is unlikely to sink below costs of production. Trade would not continue if prices fell below costs.
Some treaties have aimed to create an annual trade balance in gold/silver by expecting the signing country to annually buy more than it sells.
The Methuen Treaty of 1703 between England and Portugal is cited as an example, where Portugal agreed to admit British woolen goods duty-free in exchange for England charging Portuguese wines lower import duties (a third lower) than French wines. This was aimed to induce an annual surplus of Portuguese wine imports over British woolen exports.
This treaty obligates Portugal to admit English woolens at the same duties as before a previous prohibition, but not on better terms than other nations like France or Holland. Britain must admit Portuguese wines paying only 2/3 the duty of French wines, giving Portugal an advantage.
However, the treaty has been praised as commercially beneficial for Britain. Portugal receives huge gold imports from Brazil that must be exported as it exceeds domestic needs. Much of this gold flows to Britain in exchange for goods or via other nations trading through Britain.
While imports of gold from Portugal sound large, only a small portion is used domestically for coins or plate. The rest must be re-exported to obtain consumer goods. It would be more advantageous for British industry to directly produce goods for other markets where consumer goods are available, rather than buying gold from Portugal and then using that to obtain foreign goods.
Even without the Portugal trade, Britain could easily obtain necessary gold supplies from other nations, as gold will always be available somewhere in exchange for its value. The treaty maintained an advantageous but not essential trade relationship.
In Great Britain before recent reforms, coins contained less gold/silver than their standard weights, with gold being over 2% light and silver over 8% light.
With underweight coins, merchants had to pay more than the mint price to buy enough gold/silver to make up the deficiency, so the market price of bullion was higher than the mint price.
Freshly minted coins wouldn’t fetch a higher price until mixed with other coins, as it was too much trouble to distinguish them. So they were also worth the market price.
There was profit to be made melting down new coins and selling the bullion, so the mint worked more to replace melted coins than add new ones.
A moderate seignorage (fee) for minting coins raises their value to cover the fees without encouraging counterfeiting. This prevents melting down coins for profit.
For the Bank of England, a seignorage would have left them equally well off before recent reforms, neither gaining nor losing on transactions taking bullion to the mint.
In general, with a moderate seignorage that doesn’t encourage counterfeiting, everybody ends up paying the fee in higher coin values rather than individually bearing the costs.

The passage discusses the motivations for establishing new colonies. It contrasts the colonies of ancient Greece and Rome with the European colonies in America and the West Indies.

The Greek city-states set up colonies to relieve population pressures within their small territories. The colonies were independent states with no direct authority from the mother city. Rome established colonies mainly in newly conquered provinces of Italy to act as garrisons and exert control. They were not independent but subject to Rome’s authority.

The establishment of European colonies in the Americas and West Indies did not arise from necessity as with the ancient Greek and Roman colonies. While they proved very useful, the utility was not as clear and distinct a motivating factor as it was for the ancient colonies, which were founded to directly address problems of overpopulation or security of new territories.

In summary, it distinguishes the motivations and relationships between mother cities/states and colonies for the ancient Greek, Roman, and European colonial models.

Venetians dominated trade of spices and East Indian goods in the 15th century, which they obtained from Egypt under Mameluke rule. This profitable trade tempted the Portuguese to seek an alternative sea route to India.
After a century of exploration and discovery of Atlantic islands, Vasco de Gama succeeded in 1497 in reaching India, establishing the sea route for the Portuguese.
A few years prior, Christopher Columbus proposed sailing west to reach Asia, convincing the Spanish to fund his expedition. In 1492 he reached the Bahamas and Hispaniola, believing he had reached Asia but had in fact discovered the Americas.
Columbus persisted in the belief he had reached Asia, hence the name “West Indies” was given to the Americas. It was important to Columbus to represent the new lands as rich to justify claiming them for Spain.
However, the islands held few valuable resources besides cotton. Columbus emphasized the presence of gold, hoping to find wealth through minerals. High Spanish taxes on gold and silver production later hampered mining.
Early Spanish explorers and conquistadors in the New World, like Columbus, were primarily motivated by a desire to find gold and silver. Their first question upon reaching any new land was whether it contained precious metals worth exploiting.
Projects focused on mining silver and gold are often ruinous, as the rewards are few while most investors lose their fortunes. However, human avarice leads many to pursue such speculative ventures anyway.
The Spanish initially found enough gold and silver in Mexico and Peru through luck and circumstance to fuel continued exploration, though modern surveys find few mines now considered worthwhile. Other European colonies were less fortunate in their initial discoveries.
New colonies can prosper rapidly through establishing knowledge of advanced arts, legal systems, and incentivizing population growth and agricultural/industrial development with available land, high wages, and low taxes/rents. This allows both laborers and proprietors to rapidly improve their conditions and establish independent enterprises.

Ancient Greek colonies in Sicily, Italy and Asia Minor (such as Agrigentum, Tarentum, Locri, Ephesus and Miletus) flourished around the same time and to the same degree as cities in Greece proper in terms of refinement, philosophy, poetry, and eloquence. In contrast, Roman colonies like Florence grew more slowly and were established in already inhabited conquered provinces with less land allotted to each colonist and less independence.

European colonies in the Americas and West Indies had more abundant land and distance from oversight, allowing more autonomy like the Greek colonies. The Spanish colonies attracted more attention but did not always thrive as a result, while others were neglected but still progressed rapidly in population and development.

Brazil was Portugal’s oldest colony in the Americas, growing substantially during a period of neglect before gold/silver was found. The Dutch seized parts of Brazil but were expelled by Portuguese colonists. Sweden and Denmark also established short-lived colonies. In the 17th century, other European powers increasingly colonized the Americas as Spain’s naval power declined after failing to invade England.

Many early Dutch and French colonies in the Americas were governed by exclusive trading companies, which hindered their growth and prosperity compared to privately governed colonies.
The Dutch West India Company’s rule slowed the progress of colonies like Suriname, though they still grew. When it dissolved, prosperity increased greatly.
The French colony of Canada developed slowly under the control of an exclusive company but grew much faster after it was dissolved.
French St. Domingo (Haiti) grew rapidly despite being established by pirates and subject to company rule for a time, showing its potential.
No colonies grew more quickly than the English colonies in North America, due to plentiful good land and managing their own affairs.
English colonial land policies like restricting land engrossing and laws of primogeniture promoted cultivation more than Spanish, Portuguese and French rules.
English colonists kept more of their productive labor since taxes were moderate, allowing reinvestment in more development. Defense costs were also borne by Britain, keeping colonial expenses low.

The passage discusses the different policies that European colonial powers have pursued with regards to trade with their colonies. Spain and Portugal maintained control through taxes and colonial administration, while France did not draw much revenue from colonies. However, all three nations had expensive ceremonies when appointing new colonial administrators.

The English colonies have been more favorable to colonists in allowing a wider export market. European nations usually tried to monopolize colonial trade, either through exclusive trading companies or by restricting trade to a single port in the mother country. This policy aimed to maximize profits for European merchants but hurt colonists through high import prices and low prices for their exports.

England generally allowed freer trade for its colonies starting in the 17th century. Colonists could trade directly with multiple ports in Britain and export many important commodities wherever they wanted. Commodities like grain, fish, timber and meat were non-enumerated and could be traded more freely. This policy aimed to encourage colonial growth and production for mutual benefit.

Sugar exports from British colonies were originally only permitted to Great Britain, but in 1751 they were allowed to all parts of the world. However, restrictions and high sugar prices in Britain made this ineffective. Britain and its colonies remain the primary market for sugar from British plantations.
Rum is important in the trade Africans carry on with America, bringing back slaves in exchange.
Enumerated commodities are those peculiar to America or not produced in Britain. Non-enumerated goods could originally be exported anywhere but are now restricted to south of Cape Finisterre.
Regulations aimed to benefit British merchants by keeping commodity prices low for import to Britain while establishing colonial trade with other countries going through Britain. Restrictions on exports encouraged clearing land in America by raising timber prices.
Complete freedom of trade exists between British American and West Indies colonies for enumerated and non-enumerated goods, creating an extensive internal market.
Britain reserves more advanced manufactures for itself, prohibiting or restricting colonial production through duties or bans, including refined sugar, steel works, and wool/hat manufacturing. However, these have not been very detrimental due to cheap land and labor in the colonies.
The advanced manufactures of Britain were cheaper than what the colonies could make for themselves. Prohibiting colonial manufactures at this stage would have been unnecessary and seen as a “badge of slavery.”
Britain gives some colonial goods (sugar, tobacco, iron) an advantage in the British home market by imposing higher duties on imports from other countries. It also gives bounties for importing raw materials and goods from the colonies like silk, hemp, indigo, naval stores and timber.
Britain allows drawbacks (partial refunds of import duties) on exports of foreign goods to colonies, as with exports to independent countries. This benefited colonial and merchant interests before 1763 reforms.
Colonial trade regulations primarily benefited merchant interests in exclusive trading privileges and duty drawbacks. This sometimes sacrificed colonial and British interests.
Overall, Britain’s colonial trade policies have been less oppressive than other nations, dictated by mercantile interests but not as illiberal.
The colonial governments provided more liberty than in the mother country, with elected assemblies and les corruption than Britain. This made conditions more equal and republican in spirit.
Absolute foreign colonial governments like Spain, Portugal and France exercised more violence and tyranny in distant colonies compared to Britain’s legal and free system.
The sugar colonies of France have progressed equally or superior to England’s sugar colonies, despite France’s colonies enjoying less autonomy than England’s.
France’s colonies are not restricted from refining their own sugar, and France’s government manages slave labor better than England.
Sugar cultivation relies on slave labor in European colonies. Slavery is managed better under arbitrary governments like France than free governments like England, as magistrates have more authority to protect slaves.
French planters are generally acknowledged to treat slaves more humanely than English planters. Gentler treatment makes slaves more productive.
The success of French colonies is due to colonists’ good management, while English colonies benefited more from direct support from wealthy England.
Different European policies toward colonies ranged from unjust conquest to more noble pursuit of religious freedom. But overall colonial establishment and governance did little to help colonies and often aimed to exploit them for the home country’s gain.
Europe benefited from colonies through trade opportunities and establish of powerful colonial empires. But their policies actively undermined colonial success and prosperity in many cases.

The discovery and colonization of America provided economic benefits to Europe in two main ways. First, it increased Europe’s enjoyment through importing surplus produce from America. Commodities like sugar, chocolate and tobacco from America increased the variety of goods available for both necessity and pleasure in Europe.

Second, it augmented Europe’s industry. Countries that traded directly with America, like Spain, Portugal, England and France, gained a larger market for their surplus goods. Countries that sent goods to America indirectly also benefited from expanded trade. Even countries with no direct America trade saw benefits as American goods increased demand for their outputs. More trade circulating in Europe created more opportunities.

While exclusive trade policies by mother countries limited these gains by restricting colonial and foreign markets, the colonies still represented an overall increase in sources of goods enriching Europe. Individual colonizing nations received defense and tax revenue benefits from controlling colonies, though American colonies provided little military aid. The principal advantage was retaining monopolies over key colonial exports, raising domestic prices and industry over foreign competitors. So exclusive trade gave relative rather than absolute gains by handicapping rivals.

The passage discusses how free trade between European countries and the British colonies of Maryland and Virginia may have led to lower tobacco prices than what exists currently. With a more extensive market, tobacco production likely would have increased, lowering profits and prices compared to corn production. This would have allowed other countries to purchase more tobacco at a better price from the colonies.

However, Britain established a colonial trade monopoly through the Navigation Acts. This withdrew foreign capital from the colony trade and forced British capital to supply all the colonies’ needs. Goods to and from the colonies had to be sold at very high/low prices respectively due to insufficient British capital. This led to abnormally high profits in the colonial trade, attracting capital away from other trades. It raised overall British trade profits above normal levels.

The monopoly has continually drawn capital away from other British trades to the highly profitable colonial trade. It has caused decay in other branches of foreign trade and accommodated British manufactures primarily to the colonial market rather than European markets. The monopoly helped Britain gain a relative but not absolute advantage over other countries in trade.

The monopoly established by the Navigation Acts reduced the total amount of capital employed in the restricted trades, lowering competition. This necessarily raised profits in those trades.
It also lowered competition for British capital in other trades, raising British profits across all other trades as well. So as long as the Navigation Acts were in place, they raised the ordinary rate of British profit higher than it otherwise would have been.
However, any policy that raises domestic profits also subjects the country to absolute and relative disadvantages in trades they don’t have a monopoly over. Absolutely, merchants can’t earn higher profits without selling goods at higher prices, reducing both exports and imports. Relatively, it strengthens other countries’ positions versus Britain in those trades.
Specifically, the colony trade monopoly partly drew British capital away from other trades by offering superior colonial profits. And it partly drove British capital from other trades by giving foreigners a competitive advantage through lower costs from Britain’s higher domestic profits.
So in summary, while the colonial monopoly benefited some British traders in restricted trades, it overall damaged Britain’s competitiveness and capital allocation in other trades where they faced competition.

The foreign trade of consumption for certain enumerated British commodities exported to the colonies is transformed into an indirect/roundabout trade due to excess supply. For example, over 80,000 hogsheads of tobacco exported annually from the American colonies to Britain exceeds Britain’s consumption of 14,000 hogsheads. This surplus must be re-exported to other countries like France and Holland, forcing British capital into an indirect trade.

Goods purchased with the surplus tobacco would otherwise likely have been bought directly with British industry or manufactures. The monopoly of the colonial trade has diverted British capital away from other foreign trades of consumption and towards transporting colonial goods, supporting colonial and foreign industries partially rather than Britain’s fully.

This has disrupted Britain’s natural industrial balance and made the economy less secure by concentrating trade in one large channel rather than many smaller ones. A disruption in colonial trade could have far worse effects than difficulties with European neighbors. A gradual relaxation of trade laws is needed to withdraw capital from this oversized sector and restore a healthier proportion across British industries.

The passage discusses the effects of Britain’s monopoly on trade with its North American colonies. While the monopoly has some negative impacts by redirecting trade and capital away from more productive avenues, overall the colony trade is still beneficial to Britain.

Five unrelated events have helped mitigate the negative effects of being cut off from the North American market. Over time, British industry can adapt and find new markets to prevent major distress.

The colony trade naturally expands Britain’s market and encourages increased production. The monopoly draws some capital and production away from other trades, but the new colonial market and production created still outweigh these negative impacts.

Colonies mainly import manufactured goods rather than raw materials. The colonial trade expands Europe’s consumer market and beneficially encourages manufacturing growth. However, monopolies alone cannot establish manufacturing as seen by the declines in Spain and Portugal despite their colonies.

Britain has faced less severe impacts due to greater general trade freedoms compared to issues like monopolies, currency devaluations, taxation, and uneven justice faced in Spain and Portugal. Overall the passage considers the colony trade beneficial to Britain despite some negatives from the monopoly.

The liberty for British subjects to export goods duty-free to foreign countries and transport goods freely within Britain encourages domestic industry without bureaucratic interference. This, along with impartial justice, incentivizes all forms of industry.
British manufactures grew not because of the colony trade monopoly but in spite of it. The monopoly altered what was produced to suit distant colonial markets rather than near markets, diverting capital away from occupations maintaining higher industry to ones maintaining less.
The monopoly depresses industry everywhere except the country that established it. It hinders capital in that country from supporting as much productive labor and revenue for inhabitants as otherwise.
The monopoly lowers wages, rent, and profit from other original sources of revenue. It keeps interest rates higher than necessary.
The monopoly only benefits merchants by raising ordinary profit rates, but this tends to diminish total revenue from stock profits. High profit also encourages expensive habits that prevent accumulation.
Establishing empires solely to gain customers may seem fit for shopkeepers but not nations influenced by them. Only such statesmen would think benefits come from spending blood and treasure to found empires to boost trade.
In the early colonial period, land in North America was plentiful and cultivators could sell their crops freely. This led to prosperous growth in the colonies over 30-40 years.
English traders then lobbied parliament to impose restrictions. They wanted the colonies confined to trading solely with Britain, buying goods from England and selling designated crops back. This established Britain’s monopoly over colonial trade.
Maintaining this monopoly has been Britain’s main motivation for assuming control over the colonies. The colonies have not generated revenue or military support for Britain. The monopoly is seen as the symbol and sole benefit of colonial dependency.
Britain has spent vast sums defending the colonies and enforcing the trade monopoly, including during wars that were primarily about colonial issues. However, the colonies do not generate enough revenue to cover their own administration, let alone contribute proportionally to wider British expenditures.
Fully relinquishing control is unrealistic, but a treaty of mutual affection and advantageous trade could benefit both parties more than the current system, which only generates losses for Britain.

This passage provides a lengthy summary and analysis of the proposed system of taxation by requisition for the British colonies in America. Some key points:

It would be difficult to manage all the colony assemblies in the same way as the British parliament, due to their number, distance, and varying constitutions.
The colony assemblies cannot properly judge defense/support needs of the whole empire, as that’s not their responsibility and they lack information.
It was proposed colonies be taxed by parliamentary requisition, with Britain determining each colony’s contribution to be assessed locally.
Examples exist of other empires taxing provinces differently, with the sovereign setting sums and letting provinces decide collection.
Colonies could fear unreasonable taxation, but Britain could fear contributions never reaching a proper proportion.
Colonies/assemblies may find excuses to evade reasonable requisitions, especially for needs like defense from which they feel removed.
If Britain established the full right to tax colonies without assembly consent, it would end the importance of colonial assemblies and leaders.
Leaders desire preserving their own importance, and would oppose being made “humble ministers” of the British parliament.

The passage discusses how to preserve the importance and satisfy the ambition of leading men in the American colonies so that they will voluntarily submit to British rule. It suggests giving the colonies representation in Parliament proportionate to their contribution to British tax revenue. This would give colonial leaders a new and dazzling source of importance and ambition - competing for prestigious roles in British national politics. Instead of vying for small stakes in colonial factions, they could aspire to “great prizes” from the “great state lottery of British politics.” Unless some new avenue is provided to gratify colonial ambition, it will not be easy to conquer the colonies through force alone given how their leaders now feel an elevated sense of importance through positions in the Continental Congress. Representation could help complete the British constitution and seems imperfect without incorporating the colonies. Potential concerns around representation are addressed, such as worrying colony numbers could overturn the constitutional balance of power or that distance could expose colonies to oppression, but these seem surmountable if representation is proportional. The summary outlines how the proposal ties colonial importance and aspirations to continued union with Britain.

The passage discusses how trade and manufacturing have shifted from being focused on local European markets to global markets with the opening up of new worlds like America and Asia. It argues that colonial powers often benefit less from their colonial trade than other countries do. For example, much of the linen consumed in Spanish and Portuguese colonies comes from countries like France, Flanders, Holland and Germany rather than Spain and Portugal themselves.

The passage also discusses how restrictive trade policies aimed at monopolizing colonial trade often backfire and hurt the imposing country more than other nations. For example, rules requiring Hamburg merchants to route trade through London slow down returns on capital for the Germans compared to if they could trade directly.

While monopoly over large colonial markets may seem attractive, the passage says this actually draws more capital than is optimal away from more productive domestic industries. Capital naturally seeks the most advantageous local employment rather than distant colonial trade. If colonial profits rise above normal levels, it signals other industries are underserved and prices need adjustment to benefit society as a whole. Overall, private self-interest and markets naturally distribute capital efficiently between industries without intervention.

The essay discusses how government regulations and trade monopolies disrupt the natural distribution of stock (capital) in a society. It focuses on how regulations of trade with America and the East Indies specifically disrupt this distribution.

For the American trade, countries try to monopolize the entire market for their own colonies by excluding other nations. For the East Indies trade, historically Portugal and the Dutch claimed exclusive rights over sailing in those seas. Now, the trade is controlled by exclusive trading companies in most European nations.

These monopolies divert stock from other trades it may have flowed to, and force consumers to pay higher prices. The distortions are greater with East India trade monopolies, as entire nations are excluded.

However, the impact depends on the country. Poorer nations like Sweden and Denmark likely would not engage in East India trade without an exclusive company attracting stock. Richer nations like Holland may repel excess stock due to company limits, diverting it to less suitable distant trades.

In general, such distortions hurt societies by misallocating scarce capital. While direct trade may not be feasible for all nations, exclusive companies are not always necessary as demonstrated by Portugal’s century of East India trade without one. Private merchants can still engage in trade through local agents.

The passage discusses how European nations have established colonies and trade relationships in Africa, Asia, and the Americas. It argues that establishing colonies directly requires significant capital and resources from the colonizing nation. For some countries, it may be better initially to import goods from other European nations rather than try to set up their own direct colonial trade, which could distract capital away from more important domestic needs.

In Africa and Asia, native populations like shepherds were more developed than hunter-gatherers in the Americas, making it harder to displace them and establish plantations. Exclusive trading companies also hindered new colony growth. However, the Dutch and Portuguese had some success with settlements due to less restrictive policies.

The Dutch Cape of Good Hope and Batavia colonies thrived due to their strategic locations along major trade routes. However, the Dutch and English companies generally took a destructive approach in their territories, limiting production to maintain monopoly profits. This went against the long-term interests of stable sovereignty and tax revenue. The companies prioritized trade profits over responsible governance of colonized peoples and lands.

This summary covers two key points:

The East India Company’s interests as sovereigns of the colonies (wanting cheap European goods and high prices for Indian goods) are opposed to its interests as merchants (wanting dear European goods and cheap Indian goods). As merchants, its aim is monopolistic profits, while as sovereigns its aim should be the welfare of the colonies.
The administration of the colonies by the East India Company is problematic. As merchants themselves, the company servants have private interests that conflict with their duties. They aim to establish monopolies over trade which stifles growth. Their interests are not aligned with the long-term welfare of the colonies. The situation incentivizes oppressive behavior toward the colonies for private gain.

The text discusses incentives and regulations around the importation of goods and raw materials for manufacturing in Britain.
Generally, importation of finished manufactured goods was prohibited or discouraged to protect domestic industries. But importation of raw materials was sometimes encouraged through exemptions from duties or bounties.
Sheep’s wool, cotton, flax, hides, dyeing materials were exempted from duties to encourage their import. Manufacturers also lobbied for these exemptions.
Bounties were given on import of naval stores, indigo, hemp/flax from colonies to encourage supply. Bounties varied in amount over time and depending on the source.
There was debate around fully exempting imports of materials like linen yarn, as this could undermine domestic spinners. Manufacturers aimed to keep costs low for themselves.
The system aimed to encourage import of raw materials but protect domestic production of manufactured goods. It also aimed to benefit large manufacturers over poor workers in some cases.

The passage discusses laws and restrictions imposed by the British legislature on the production and trade of wool and flax in order to benefits its manufacturers. Specifically, it imposed:

Bounties/subsidies on importing wool and flax from America but imposed duties on imports from other countries. This was to benefit American colonies and consider their interests as the same as Britain’s.
Prohibitions on exporting live sheep, wool, and flax from Britain to prevent materials from being used in foreign manufacture. Penalties for violations included death, heavy fines, exile, and other harsh punishments.
Restrictions on internal trade of wool within Britain, requiring packing, marking, registrations, bonds, and limiting transport within certain distances of ports. Coastal trade also had onerous entry and reporting rules.

The passage criticizes these restrictions as “written in blood” and giving manufacturers successful monopolies at the expense of farmers, growers and consumers. It argues the severity of penalties went beyond reason and common humanity, though some statutes were eventually repealed or amended.

English wool regulations imposed severe restrictions and penalties on exporting wool from England in order to benefit English wool manufacturers. This included a prohibition on exporting wool and a penalty of 3 shillings per pound if wool was exported without an officer present.
Wool manufacturers claimed English wool was uniquely high quality and necessary for fine cloth production. This justified the strict regulations to control the wool supply and trade. However, this claim was false - fine cloth is actually made from Spanish wool, and English wool is unsuitable for fine cloth.
The regulations depressed the price of English wool below its natural price level. This was the intended effect but ultimately did little to impact the annual wool production quantity, though it may have reduced wool quality slightly over time. The profit from sheep came more from meat than wool, balancing out the lower wool prices.
Rather than an absolute prohibition, a sizable tax on wool exports would have been a better policy. It would generate tax revenue, benefit manufacturers still with cheaper wool, and hurt wool growers less than a prohibition. Smuggling of wool still occurred despite penalties.
Similar prohibitions were placed on exporting fuller’s earth and leather, though tanners were later exempted with a small tax. The policies aimed to protect domestic industries from competition.
Tanned leather exported from Britain is subject to a duty of 1 shilling per 100 pounds, but exporters can claim a drawback (repayment) of 2/3 of any excise duties paid. All leather manufactures can be exported duty-free.
Graziers still face some monopoly restrictions but cannot easily coordinate due to their dispersed locations. Manufacturers find it easier to form monopolies due their concentration in cities. Even horns and animal parts face some export restrictions favoring certain trades.
Britain restricts the export of partially manufactured goods like woolen yarn and dyed cloth to allow domestic manufacturers to complete the work. Watch cases and clocks parts also face export bans.
Many materials like metals, leather, wool and raw materials for dyeing were banned from export under old statutes to develop domestic manufacturing. Some export restrictions remain.
The export of instruments/tools of trades like knitting frames is flatly prohibited rather than taxed to develop domestic manufacturing capacity. Heavy duties are placed on coal exports, substantially above its production cost.

This passage provides a summary of laws and regulations passed in Britain in the 18th century to restrict the export of manufacturing tools and the emigration of skilled tradesmen. Some key points:

Exporting cotton, linen, wool or silk manufacturing tools was prohibited and punishable by fines up to £200 for the exporter and ship’s master.
The act of 1723 made it illegal to entice skilled tradesmen to practice or teach their trade abroad, with fines up to £100 and 3 months imprisonment for a first offense, increased later to £500 and 12 months.
Tradesmen risked losing inheritance rights, property, status as British subjects if they did not return after being warned by British authorities while practicing abroad.
These regulations were contrary to concepts of individual liberty but intended to protect and extend British manufacturing by restricting competition from foreign industries. Overall the passage frames these as misguided restrictions that sacrificed consumer interests to those of domestic producers and manufacturers.
In France under Colbert’s policies in the 17th century, agriculture was discouraged and depressed in order to promote manufacturing in towns. Export of corn was banned, and internal transport of corn between provinces was restricted with arbitrary taxes.
This led to agriculture being below its potential given France’s fertile soil and climate. Inquiries looked into causes, including Colbert’s preference for towns over countryside.
In response, some French philosophers proposed a system viewing agriculture as the sole source of wealth. They argued Colbert overvalued towns and their system undervalued towns.
They divided people into three classes - proprietors of land, cultivators/farmers as the “productive class”, and artificers/manufacturers/merchants as the “barren class”.
Proprietors’ expenses improving land were seen as “ground expenses” that increased rents. Farmers’ expenses were “productive expenses” replenishing themselves and rent.
But manufacturers and merchants only continued the value of their stock/materials and did not produce new value like farmers. Their expenses and profits were seen as “barren”.

So in summary, it outlines Colbert’s policies promoting towns over agriculture, and a contrasting philosophy arguing agriculture alone creates wealth while manufacturing creates no new value.

Lacemakers and other craftspeople in expensive manufactures barely earn enough through their labor to cover their subsistence costs. Their work does not increase the overall value produced.
Farmers and laborers are different - their work produces a surplus above subsistence that increases the total revenue and wealth of society through rent.
Artificers, manufacturers and merchants can only increase wealth through savings/privation, as their work just replaces their own consumption each year.
Countries with many proprietors/cultivators like England can grow rich through industry and enjoyment. Merchant-based countries like Holland can only grow rich through parsimony.
The unproductive classes (merchants, artificers) are useful as they allow farmers to specialize and produce more. Their industries are maintained by surplus from farmers.
It is not in the interest of farmers to restrain trade or merchants, as this increases competition and lowers farmers’ costs.
Merchant states are also useful to other countries by filling the role of domestic merchants, manufacturers, etc. It is not in the interest of “landed nations” to discourage these merchant states.
Gradually, as art and skill improve, manufacturers in landed nations will be able to export their goods to foreign markets and displace manufacturers from mercantile nations. This exports surplus production.
The continual growth of exports will create a larger capital than can be employed domestically. This excess capital will naturally turn to foreign trade and exporting surplus production.
Merchants in landed nations exporting domestic production will have an advantage over merchants from mercantile nations due to lower transport costs.
If landed nations grant free trade, the value of domestic production increases, establishing a growing fund that trains domestic artificers, manufacturers and merchants over time.
However, if landed nations oppress foreign trade through tariffs or prohibitions, it hurts domestic interests by raising prices and lowering the value of surplus production used to purchase imports. It also draws capital and labor away from agriculture by raising non-agricultural profits through protectionism.
While protectionism may raise domestic industries faster, it does so “prematurely” by drawing resources away from more productive agricultural industries and lowering overall wealth and output in the long run.

This passage summarizes the key ideas of a political economic system that argues:

Labor of servants and farmers is “unproductive” as it only produces perishable services and does not result in a vendible commodity. Labor of merchants, manufacturers and artisans is “productive” as it results in vendible commodities that can replace the value of wages.
Even if manufacturers consume as much as they produce, their labor adds value by increasing total goods in the market compared to if that consumption was by unproductive laborers.
Farmers and laborers cannot augment real revenue/annual production without parsimony like manufacturers through improved skills/tools or increased capital/labor.
A trading/manufacturing country’s revenue/subsistence is greater than a non-trading one as it imports more subsistence through trade compared to what its own lands produce.
While this system’s views on productive/unproductive labor are narrow, it correctly represents national wealth as annual consumption goods produced, and liberty as increasing this production. It influenced French policy to support agriculture.
The passage discusses the economic policies of various historical societies, focusing on how they either promoted agriculture or manufacturing/foreign trade.
It notes that Chinese policy strongly favored agriculture over manufacturing or foreign trade. Farming was seen as a more prestigious occupation than crafts or commerce. Their domestic market was large enough to support manufacturing without extensive international trade.
Ancient Egypt and India’s economies were also structured around castes, with priests and soldiers at the top and farmers above merchants/craftsmen. Their governments invested heavily in irrigation works to support agriculture. Both were food exporters though limited by their aversion to sea travel.
Manufacturing requires a larger market than agriculture to thrive, so the confined foreign markets in these societies discouraged manufacturing growth more than farm production. However, extensive internal waterways in Egypt and India opened their domestic markets.

In summary, the passage examines the historical economic policies of China, Egypt, and India, noting how each favored agriculture to varying degrees and how this influenced manufacturing and international trade.

The passage discusses ancient agriculture and trade in various empires and city-states. It notes that rulers in China, Egypt, and Indian kingdoms derived most of their revenue from taxes on agricultural land. This made them attentive to supporting agriculture, on which their revenue depended.

Ancient Greek and Roman republics honored agriculture more than manufacturing or foreign trade. However, their policies seem to have indirectly discouraged manufacturing rather than directly encouraging agriculture. Many Greek city-states banned foreign trade and saw manufacturing as weakening for citizens. Such work was left to slaves.

This meant manufacturing was more expensive in ancient times due to inefficient slave labor and technology. Prices of fine textiles were extremely high. Variety in fashion was also less than today.

The passage argues that systems which try to favor one industry over others through encouragement or restraint tend to undermine their own goals. They divert capital away from more productive uses and actually retard overall economic progress and growth. The natural system of free competition without interference is seen as best allowing industries to develop to their advantage.

The passage discusses the necessary expenses that a sovereign or state must incur to fulfill its three basic duties: protecting the society from external threats, maintaining domestic security and justice, and providing certain public works.

It focuses specifically on the expenses related to defense or military protection. In primitive societies, every man is a warrior who maintains himself, so there are no state expenses for defense. Among nomadic shepherds like Tartars and Arabs, the whole tribe acts as a military force when needed, as they already live a semi-nomadic lifestyle. No special preparations or provisions are required.

However, as societies become more commercial and settled, standing armies are needed for defense. Maintaining these peacetime forces and waging war requires major expenses. The chapter will examine what defense expenses should be covered by public funds versus private sources, and different methods of raising public revenue to pay for these obligations of the sovereign.

Large numbers of nomadic shepherds or hunters can march together as they take their herds/flocks to new grazing areas, with seemingly no limit to the army size as long as supply lines remain open. Shepherds in particular can become a formidable military force.
Hunter-gatherer societies are less threatening than pastoralist ones due to their minimal territorial claims and more isolating lifestyle. Pastoralist unifications, like the Scythians or early Islamic armies, have historically devastated parts of Asia.
Agricultural societies require some population to remain behind to tend crops/habitats, so not all fighting-age men can serve. However, many could fight for short campaigns between planting and harvest without major loss of productivity.
In more advanced societies, the development of crafts means soldiers can no longer subsist on their own labor. They must be maintained by public funds when mobilized for war, which is increasingly prolonged multi-campaign affairs.
Civilized states can field a far smaller proportion of their population as standing armies than agrarian ones due to supporting many non-military occupations. Estimates put it at 1/100th rather than 1/4-1/5.

This passage provides a summary of different types of militias and standing armies as military forces. Some key points:

A militia is a military force composed of ordinary citizens who receive little military training but can be called up in an emergency. Standing armies consist of professional soldiers as their full-time occupation.
Historically, militias have taken different forms - some were individually trained while others were organized into regiments with permanent officers.
Standing armies developed as warfare became more complicated with technology, requiring full-time training. Their discipline and organization made them superior to part-time militias.
Pre-firearm armies relied more on individual soldier skill, while modern weapons favor coordination, order and obeying commands over individual ability. This favors standing armies.
Militias trained only occasionally cannot match the expertise and obedience of full-time professional soldiers in a standing army. Those like Arab or Tartar militias led by their normal civilian leaders are most effective part-time forces.

So in summary, it contrasts the development and effectiveness of militias versus standing armies as military organization models over time.

The passage discusses the superiority of standing armies compared to militias. It notes that militias can become standing armies over time if they go through successive campaigns in the field, as they become better trained and disciplined.

It then gives historical examples to illustrate this point. Philip of Macedon gradually transformed his troops into a disciplined standing army that was able to defeat Greek militias. Similarly, the armies of Carthage under leaders like Hannibal became highly trained through constant warfare, giving them an advantage over the less battle-hardened Roman militias early in the conflicts between the two powers.

As the Roman militias spent more time in the field, they evolved into a strong standing army. This allowed them to gain the upper hand against Carthage and other opponents. Roman armies remained disciplined standing forces that generally defeated militia armies, with some exceptions like the Germanic and Parthian militias.

The passage attributes the fall of the Western Roman Empire partly to the militias degenerating into undisciplined local forces as the empire declined, making them no match for invading Germanic and Scythian militias. In summary, it argues history shows the long-term superiority of professional standing armies over part-time militias.

The passage discusses how the military forces of nations have changed over time as societies transitioned from hunter-gatherer to agricultural to civilized. Originally, nations relied on militias of farmers and herders led by chieftains. As societies developed industry and arts, the authority of chieftains declined and standing armies became necessary for defense against other militaries.

Standing armies provided better training and discipline than militias. Even soldiers who had never seen combat proved courageous in battle for civilized nations with long-standing armies. Standing armies also allowed barbarous nations to suddenly become more civilized by establishing control and regular government over large areas.

While some were wary of standing armies as a threat to liberty, the author argues they were not a danger if under the command of the sovereign and aristocracy, whose interests were tied to preserving the state. Over time, maintaining large standing forces in peace and utilizing new weapons like firearms became more expensive for sovereigns and gave advantages to wealthier, civilized nations over poorer ones in war. The development of civilization was thus dependent on and furthered by the growth of standing professional military forces.

The passage discusses the origins and development of civil government and social hierarchies. It argues that as valuable property becomes more common, civil government becomes necessary to protect ownership rights. Great inequalities in wealth also arise, exacerbating tensions.

Four primary factors are said to naturally introduce social subordination: 1) Superior personal qualities like strength or wisdom. 2) Superior age, as the old command more respect. 3) Superior wealth or fortune, which can leverage dependents. 4) Superior birth status from coming from a long line of wealth and respect.

Of these, fortune is argued to be the greatest source of authority, especially in pastoral societies where great wealth in livestock can support many dependents. Wealthy pastoral chieftains would thus naturally gain military and judicial authority over their tribes or clans. The distinctions of both fortune and birth then become fully established in such pastoral societies characterized by inequality of wealth. In contrast, equality of conditions among hunter-gatherer societies prevents significant social stratification.

In early agricultural societies, inequality of wealth begins to emerge as some individuals acquire more livestock and property than others. This introduces some level of authority and subordination.
Richer individuals, especially great shepherds or herdsmen, naturally take on a judicial role as others turn to them to settle disputes. Their birth, fortune, and ability to maintain security gives them this authority.
Initially, exercising judicial power was a source of revenue for these early rulers or chieftains. People paid presents or fees for justice, and the guilty party would have to pay an additional fee (amercement).
Over time, as states grew in size and complexity, the administration of justice became delegated to bailiffs or judges who were accountable to the ruler. However, corruption could still occur as these officials might act unjustly to gain benefits for themselves or their ruler.
Eventually, as rulers relied more on tax revenue rather than judicial fees, it became more common to prohibit judges from accepting gifts or payments from parties. They received fixed salaries instead to try to reduce corruption in the administration of justice.

The passage discusses the separation of the judicial and executive powers. It notes that as governments and societies became more complex, the administration of justice became too burdensome for political leaders to handle directly. Deputies or judges were appointed to take over judicial functions.

Initially, court fees helped support the courts. However, when political leaders received a share of these fees, it risked corruption. The passage proposes alternative funding models, like courts receiving revenue from rental estates or interest on funds. It argues the judiciary should be independently maintained to ensure impartial justice and protect individual rights.

Overall, the key idea is that as government grew larger, separating the judicial power became necessary to properly administer justice without political interference. Independent funding of the courts is also important to maintain this separation.

Here is a summary of the provided text:

The passage discusses the role of governments in funding public works and institutions. It argues that the costs of certain large-scale infrastructure projects and other endeavors that benefit society as a whole may be too great for any individual or small group to undertake alone. Therefore, governments have a duty to fund such projects through taxation or other means.

Specifically, it states that one of the government’s duties is to erect and maintain public works and institutions that are advantageous to society as a whole but would not be profitable for individuals to build or sustain on their own. This may require varying degrees of expense over time as societies develop and needs change.

It gives examples of infrastructure like roads, bridges, harbors, and canals that facilitate commerce. The passage argues such projects can often be self-funding through modest tolls and fees on their use, without placing additional burden on general tax revenues. This allows costs to be paid by those directly benefiting from the infrastructure improvements.

In summary, the key point is that large-scale projects with diffuse public benefits fall appropriately within the role and responsibilities of governments to fund for the betterment of society overall.

This passage summarizes several key points about turnpike tolls in Britain and road maintenance policies in other countries:

The author argues that all the turnpike tolls levied in Britain do not produce more than half a million pounds in revenue, which would not be enough to properly maintain five major roads.
Some propose using turnpike tolls to contribute to general state expenses like the post office, but the author thinks this could raise tolls too high and hinder commerce.
High turnpike tolls would disproportionately impact transportation of bulkier cheaper goods over lighter valuable goods, hurting the poor more than rich.
If government neglected road maintenance, it would be difficult to compel proper use of toll funds for repairs.
Road maintenance works in France, China, and Asian countries, but cross-roads in France are neglected while main roads are kept up. Quality varies across countries and accounts.
Revenue sources differ between Europe and Asia, impacting sovereign incentives around transportation infrastructure.

So in summary, the passage analyzes pros and cons of using turnpike tolls for broader revenue and compares foreign road policies to those in Britain.

Local administration and taxation of infrastructure like streets and roads tends to be more efficient and less costly than national administration and taxation. Local communities have more incentive to properly manage funds for local services they directly benefit from.
Central/national administration of revenue is more prone to abuse and mismanagement compared to local/provincial administration. Local issues are also easier to correct.
Special institutions may be needed to facilitate certain branches of trade that require extra protection, like trading with barbarous nations. This can include things like fortified trading posts.
The extraordinary expenses of protecting specific trades can reasonably be paid for by moderate taxes or duties on those trades. Though protecting all trade is the duty of the executive, historically particular companies have lobbied for control over certain trade protections and revenues.
Regulated companies resemble trade guilds and impose burdensome regulations to restrict competition, while joint-stock companies share profits/losses among members. Both types sometimes have exclusive trade privileges granted by the state.
Regulated companies like the Russia, Eastland, Hamburgh and Turkey companies were once oppressive monopolies that imposed high fines and restrictions on trade.
Parliament passed acts in the late 17th/early 18th centuries to reduce fines and open up trade for these companies, in response to complaints about their conduct restricting trade.
Regulated companies are not well-suited to maintaining forts or garrisons abroad, unlike joint-stock companies, as their directors have conflicting private interests versus the general trade.
The Africa Company established in 1750 was structured differently as a regulated company. It had aims to restrict monopolistic behavior and force attention to maintaining forts, through measures like limiting fines, prohibiting corporate/joint stock trading, and requiring elected directors with term limits selected from major ports.
In summary, regulated companies evolved over time from strictly oppressive monopolies, through parliamentary reforms, toward more restricted and specialized roles like maintaining diplomatic relations rather than active trading or military facilities abroad.

The passage discusses joint-stock companies and their limitations compared to private partnerships. It notes that in joint-stock companies, members can transfer shares without consent and are only liable up to their share amount. Management is by a board of directors overseeing other people’s money, making negligence more likely.

It then discusses the Royal African Company, which initially had an exclusive charter for trade but saw its monopoly challenged after the Revolution. Though private traders were later taxed 10%, the company still could not competitively maintain forts and trade against private adventurers without exclusive privileges. Other companies like the South Sea and East India companies did maintain monopolies thanks to exclusive privileges granted by Acts of Parliament.

In summary, the passage examines the differences between joint-stock companies and private partnerships, and how the Royal African Company struggled to compete without an exclusive monopoly despite trying to tax private traders. It suggests joint-stock management structures made negligence more common.

The Royal African Company struggled financially from 1712 onwards due to large debts. In 1730 their affairs were in great disorder and they could no longer properly maintain their forts.
In 1732 they gave up trading slaves to the West Indies and instead traded goods like gold dust and ivory within Africa, but this was no more successful.
They continued declining and were eventually dissolved by parliament, with their assets transferred to a new Regulated Company of Merchants.
The Hudson’s Bay Company fared better prior to wars in the late 1700s. They had a small workforce of around 120 people and capital of £110,000, which was enough to engross the fur trade in their charter area as no private competitors emerged.
The South Sea Company lacked forts or garrisons but had a huge capital base. They suffered from mismanagement, negligence and losses in their mercantile projects like supplying slaves to Spanish colonies.
They petitioned repeatedly to reduce their trading stock and focus more on government annuities. Finally in 1748 their trade rights were given up and the remaining company ceased trading operations.
The old English East India Company was established in 1600 with an exclusive charter, though this was not initially confirmed by parliament. They traded successfully for many years with little competition due to this exclusivity.
The East India Company was established in 1600 via a royal charter granting them exclusive privileges to trade with India. Their initial capital was £744,000 but profits allowed moderate dividends.
Over time, doubts arose about the legality of an exclusive charter not approved by Parliament. Other traders (interlopers) began competing which caused the Company distress in the late 1600s.
In 1698, a new East India Company was established via an Act of Parliament after promising the government an £2 million loan at 8% interest. The old Company got rights to continue trading till 1701.
Competition between the Companies and private traders hurt profits. The Companies were unified in 1702 and fully consolidated in 1708. The private traders were bought out by 1711.
The Company’s trade prospered as a monopoly after 1711. Profits increased dividends over time. Wars in the 1740-50s expanded their territories which led to revenues of over £3 million but also debts.
In the late 1760s, the British government took over the Company’s Indian territories but allowed dividend increases over 5 years in exchange for an annual £400,000 payment. However, debts continued rising in the 1770s instead of declining.

The British East India Company was facing major financial problems due to large accumulated debts from claims against them amounting to over 12 hundred thousand pounds. This distress forced them to reduce dividends to 6% and request relief from the British government in the form of releasing them from paying further annual sums of 400,000 pounds and providing a loan of 14 hundred thousand pounds to avoid bankruptcy.

This led to a parliamentary inquiry into the Company’s affairs in India and Europe. Reforms were implemented, including bringing the three main settlements (Madras, Bombay, Calcutta) under a single Governor-General and council appointed by Britain. The Calcutta court was restructured and a new Supreme Court was established. Qualification requirements for voting rights of proprietors were increased. The board of directors would now serve four-year terms with six rotating out each year.

However, it seems reforms could not make the Company fit to govern its empire due to the lack of interest of most proprietors in its affairs and prosperity. The new regulations perhaps made the situation worse by reducing Company control over surplus funds. Further issues continued and the Company found itself unable to withstand Hyder Ali’s incursions, leading it to once again request government assistance and acknowledge its incapacity to govern territories.

This passage discusses joint-stock companies and when they may or may not be suitable for carrying out certain business ventures. Some key points:

Most joint-stock companies established in Europe since 1600 have failed due to mismanagement, even with exclusive privileges, according to an French economist.
The only trades that seem suited for successful joint-stock companies without exclusivity are those that can be reduced to a “routine” or uniform method with little variation, like banking, insurance, maintaining navigable canals/waterways.
To reasonably establish a joint-stock company for any undertaking, it should have clear general utility beyond common trades and require more capital than a private partnership can provide.
Banking, insurance, and infrastructure projects like canals often meet these criteria due to their high costs and benefits, which is why related joint-stock companies have been successful.
Other joint-stock companies in industries like copper, lead smelting and glass grinding are not as clearly useful or capital-intensive enough to reasonably warrant their special establishment.

So in summary, it argues that most joint-stock companies fail, but a few standard business types involving large capital outlays and clear public benefits are generally best suited for this corporate form.

The passage discusses how teachers’ incentives and motivation can be affected by their pay and working conditions. It argues that when teachers rely solely on their salary, which is independent of their performance or student outcomes, they have less incentive to exert effort and teach diligently.

Some key points made:

Teachers paid solely by salary, without fees from students, have their interests directly opposed to their duties as there is no gain from working hard.
Oversight by a university board made up of other teachers leads to lax standards as they make common cause to neglect duties.
External oversight bodies often exercise power ignorantly or arbitrarily, degrading teachers’ status. Teachers may prioritize currying favor over students’ interests.
Privileges or scholarships that require attendance at specific universities, independent of quality, diminish incentives for those universities to maintain high standards.
Appointing tutors without student choice could reduce diligence, as could policies hindering students changing tutors in cases of neglect.

Overall it argues that when pay and conditions are divorced from performance and student outcomes, teachers’ motivation and incentives to teach diligently are reduced. Oversight bodies can also impact this if not exercising power judiciously.

The passage discusses the original purpose and evolution of universities in Europe. Originally, universities were ecclesiastical institutions founded by the Pope to educate clergy. They taught theology and subjects preparatory to theology in Latin, which was the language of the Church.

Over time, other subjects began to be taught as well. The Greek and Hebrew languages and texts became important with the Protestant Reformation, as reformers identified errors in the Latin Vulgate Bible translation. Classical learning, including Greek, also came into fashion. So Greek studies were added to the curriculum before philosophy, while Hebrew was studied later as part of theology.

The ancient Greek philosophy taught at universities contained three branches - natural philosophy, ethics/moral philosophy, and logic. Natural philosophy addressed phenomena in nature like astronomy. Ethics examined proper conduct. Logic studied reasoning. The earliest philosophers focused on natural philosophy to explain wonders of nature. Ethics was also essential as rules for conduct developed. So these three disciplines came to form the core of university philosophical education.

Here is a summary of the key points about orks of Hesiod:

In ancient times, systems of natural and moral philosophy began to develop, organizing various observations and maxims into some systematic arrangement connected by common principles.
Different philosophers proposed different systems to explain natural and moral phenomena. However, their arguments were often weak probabilities or sophisms based on ambiguities in language, rather than demonstrations.
Examining opposing philosophical systems led to the emergence of logic as a way to distinguish good and bad reasoning.
In later universities, philosophy was divided into five parts - logic, ontology, pneumatology (about the human soul and deity), physics, and a corrupted moral philosophy focused on theology and the afterlife.
This university curriculum was intended to prepare students for theology, but introduced more subtlety, sophistry, casuistry and ascetic morality than a liberal education.
Major improvements in philosophy often occurred outside universities, which were slow to adopt changes and protect outdated ideas. Richer universities were especially conservative.
While universities were originally for clergy, they drew most students including gentlemen, lacking better options for the interval between childhood and careers. However, much of what was taught did not seem ideal preparation for adult life and work.
In the 18th century, it was a common practice for young men from wealthy families in European countries to travel abroad immediately after finishing school, without attending university.
These Grand Tours were said to improve young men by exposing them to foreign languages and cultures. However, in reality the men often returned home more arrogant, undisciplined, dissipated, and unable or unwilling to seriously study or work.
By traveling so young without parental supervision, they lost discipline and failed to develop useful habits. The only benefit was relieving fathers of unemployed sons at home.
Education systems varied historically. In ancient Greece, all citizens received gymnastics and music training under public officials to develop martial skills and promote social virtues.
In Rome, military exercises like in Greece developed martial skills. Roman morals were arguably superior despite lacking music education, showing its limited impact on morality.
Early education also involved basic reading, writing, arithmetic. Wealthier citizens might hire tutors while poorer citizens attended schools run by teachers for pay.
Over time, philosophy and rhetoric schools developed but were not publicly supported, with teachers relying on student fees. Law was also studied privately by some Roman families.

The passage discusses the importance of established judicial systems and precedent in developing coherent case law. It argues the Roman legal system became so orderly and regular because judges naturally adhered to precedents set by previous judges in order to avoid blame for unjust decisions. This attention to practice and precedent had a similar effect on other legal systems.

The passage then compares the education systems of ancient Greece and Rome. While Greeks and Romans had equal natural abilities, the Romans had a better system of courts that held judges more accountable. Their respect for oaths also came from swearing before diligent courts rather than disorderly assemblies.

Private teachers in ancient times were highly successful without modern constraints, as there was demand for any useful knowledge. But modern universities have corrupted teaching by making salaries independent of performance and restricting credentials needed for professions. As a result, private teaching is now seen as low status. There is no such issue for women’s education, which remains practical and career-focused.

In conclusion, some degree of government involvement is needed in education to prevent intellectual and social decline among the populace performing repetitive jobs in developed economies, unlike in more primitive societies where varied work prevents stagnation.

In a primitive society, each individual performs a variety of tasks but society as a whole lacks variety. In a civilized society, there is great diversity of occupations across society despite less variety for individuals.
This greater diversity of occupations in a civilized society exercises the minds of those not tied to a single trade through endless comparisons and combinations, making their understanding more acute and comprehensive.
However, most people are engaged in simple, uniform occupations that don’t challenge the mind. Their work is also constant and physically demanding, leaving little time or energy for further education.
Educating common people requires more public attention in a civilized society. Their parents can’t afford education and they must work from a young age. But societies can establish basic schools providing affordable education in reading, writing and math.
Providing small rewards and requiring basic education for certain roles can help impose and encourage education for common people, as the ancient Greeks and Romans did with physical training to maintain a martial spirit in citizens.
Standing militias of modern times are less effective at this than the simpler ancient institutions, which largely maintained themselves with little government effort once established.

This passage discusses the importance and methods of instructing the general population. Some key points:

In the past, most people received universal instruction in use of arms through militia service, making them competent defenders. Now only small portions receive such training.
Cowardice is seen as a deformity of character, leaving one incapable of self-defense or revenge. This makes one wretched like being physically deformed.
Even if martial instruction served no defense purpose, preventing the spread of cowardice through society deserves attention to prevent a “loathsome disease.”
Ignorance also deforms one’s character and is as contemptible as cowardice. The state benefits from an instructed populace less prone to enthusiasm, superstition, disorder, and faction.
Religious instruction was a primary means of popular instruction. Clergy could depend on voluntary donations or legal entitlements like estates.
Clergy relying on donations tend to be more zealous while legally supported clergy risk indolence without donations incentivizing exertion. This makes them vulnerable in religious disputes.
The Catholic clergy’s partial reliance on donations through confession and orders relying solely on donations keeps them more active, popular preachers compared to legally supported Protestant clergy.

So in summary, it discusses the importance of instructing the general population for moral and civic benefits, comparing different historical methods and their impacts on clergy enthusiasm.

The passage discusses the independent provision of clergy or religious teachers by liberal individuals versus a fixed establishment paid by the state. It argues that an interested diligence by independent clergy seeking donations can be pernicious, as each will try to outdo others and inspire “violent abhorrence” of other sects through novelties and passions to attract more followers. Truth, morals and decency may be ignored.

When religious sects aligned with political parties, the winning sect would demand the state silence opponents and provide an independent salary. Sects that helped victories felt entitled to “spoils”. The state usually had to submit due to necessity, though reluctantly.

Without such politics, the state would treat all sects equally and let individuals choose religions. This would produce many small sects, preventing any one from becoming too influential. Teachers of small sects would have to be candid and moderate towards each other for survival. Over time this could reduce doctrines to a rational, moderate religion free of absurdity.

The passage argues this plan, though of “very unphilosophical origin”, could produce “philosophical good temper and moderation” if sects remained numerous and too small to disturb peace, even if not all became moderate. The state need only let all alone and oblige all to let each other alone.

The passage discusses the relationship between religious sects/clergy and the state/sovereign. It argues that religious sects typically originate among common people and adopt an austere morality system to attract followers. Some sects even develop excessively rigid rules to gain respect.

The passage then outlines two ways a state could address overly strict morals in sects. First, by promoting science/philosophy education among higher ranks to combat enthusiasm/superstition. Second, by encouraging public diversions like art, music, theater which promote gaiety over melancholy/gloom typically nurturing of fanaticism.

However, in countries with an established religion, the sovereign cannot feel secure without influencing clergy. Clergy constitute a powerful body pursuing their own interests, not always aligned with the ruler. If they oppose the sovereign on doctrine or usurpations, it threatens the sovereign’s authority which relies on religion. So the sovereign needs means to counterbalance clergy power for the public tranquility and their own security.

The passage discusses how rulers can influence and control the clergy in their domains. It argues that using force against the clergy is counterproductive and will only cause them to resist more strongly. Instead, rulers should use “management and persuasion” by controlling preferments (promotions) within the clergy.

Historically, bishops and abbots were elected locally by clergy and laypeople. Over time, the clergy took control of elections and the Pope began appointing many high-ranking clergy. This made the clergy a powerful “spiritual army” that could oppose sovereigns if directed by the Pope.

The clergy’s wealth gave them influence over the common people similar to barons. Their estates had independent jurisdictions. Many depended on the hospitality of monasteries. Together with tithes, the clergy’s wealth exceeded their own needs and they used surplus for hospitality and charity, gaining loyalty and a potential military force from retainers.

Overall, the passage argues rulers are better off managing the clergy through preferments rather than force, and that historically the clergy constituted a formidable political/military power when united under the Pope against their local sovereigns.

In medieval Europe, the clergy held significant power and respect due to their role in spiritual matters and charity work feeding the poor. Their possessions, doctrines, and privileges were seen as sacred by the common people. This made it very difficult for kings and sovereigns to challenge the clergy or violate their rights, as the clergy could count on support from both their own order and locals.

Over time, improvements in trades, manufacturing, and commerce weakened the temporal power and influence of the clergy, similar to how it weakened powerful barons. As clergy spent more on luxury and their own comfort instead of charity, common people felt less beholden to them.

Kings worked to regain influence over high Church appointments like bishops and abbots. Regulations like the Pragmatic Sanction in France and acts in England curtailed papal power over these positions. By the time of the Reformation, the clergy had less power over people and states had more influence over the clergy. This made challenging Church authority by propagating new doctrines somewhat easier for reformers.

The church had long neglected the common people, who the new doctrines of the reformation appealed to. Their novelty and the passion of their preachers attracted many followers.
Princes who were opposed to Rome easily established the reformation in their lands, since the church had lost respect. This included rulers in Germany, Sweden, and Denmark. Swiss city leaders did the same.
The papal court allied with powerful states like France and Spain to resist the reformation where it could, though it failed to entirely suppress it. Henry VIII broke from Rome with support from reformation followers.
The reformation in some weak states like Scotland toppled not just the church but the government. Disagreements among followers led to divisions, particularly between Lutherans and Calvinists over church government and control of ecclesiastical positions.
Lutherans retained more episcopal structure while Calvinists gave parishes control over pastor selection, leading to disputes. This created problems but equality among clergy had positive effects.

The passage discusses the impact of moderate versus large church benefices on society. It argues that systems with moderate, equal benefices tend to have several positive effects:

Clergy are less dependent on wealthy patrons and more independent in spirit.
Clergy must rely on virtuous conduct and service to common people to gain esteem, avoiding vices of vanity.
Common people develop strong affection for clergy of similar social standing.

Large, unequal benefices tend to drain universities of talented scholars, as church offers more lucrative positions. Countries with moderate benefices see many renowned professors and scholars.

Teaching is an important role for intellectuals and helps solidify one’s knowledge. Moderate benefices draw more men of letters to teaching roles that benefit public.

Revenue given to churches reduces funds available to state for defense. But some Protestant systems have moderate church incomes that fully fund clergy salaries while providing state budget savings.

The church of Scotland has a very modest revenue of around £68,000 per year to support 944 ministers. The total expenses of the church are estimated to be £80-85,000 per year.
Despite the low funding, the Church of Scotland maintains religious uniformity, devotion, order, and morals among the people as effectively as other better funded churches. The similarly low-funded Protestant churches in Switzerland also produce strong religious outcomes.
The performance of any institution requires compensation proportionate to the role. Underpayment risks poorer quality workers, while overpayment risks negligence and dissipation. Clergy need adequate but not excessive pay to maintain their sanctity and authority.

So in summary, the Church of Scotland and some Swiss churches demonstrate that a religious institution can be very effective even with very modest funding, as long as the compensation allows for decent livelihoods and maintains the sanctity of the clergy’s role.

The passage discusses sources of public revenue for governments. It notes that public banks have provided revenue to cities like Hamburg, Venice and Amsterdam. It claims the Bank of England provides nearly £600,000 in annual profit to the British government.

It suggests the post office is the only commercial venture governments usually manage successfully, as the capital needs are low, returns are certain and immediate, and there is no complexity. However, princes often fail when directly engaging in trade due to the profligate spending of their agents.

Governments can also derive revenue from interest on lending money. Berne lends to foreign states by investing in their public funds. Hamburg has a public pawn shop that lends at interest. Pennsylvania issued paper bills of credit that circulated like money and generated revenue.

However, stock, credit and capital are unstable revenue sources for governments. Historically, the chief revenue sources for major states beyond subsistence levels were rents from public lands. In ancient times, this largely covered government expenses, which were modest apart from military needs met by citizens. In medieval European monarchies, citizens’ feudal obligations also reduced military spending needs.

Ables was committed to the charge of the lord constable and lord marshal. His houses were built like castles, which served as the principal fortresses under his control. The keepers of the houses/castles acted like military governors, maintaining order in peacetime. The rents from Ables’ large estate were sufficient to pay for necessary governance.
In modern European monarchies, the total rental income from all land in a country, if privately owned, would not produce enough revenue for peacetime governance. For example, Britain’s ordinary annual revenue is over £10 million but land tax yields under £2 million. Much land tax revenue comes from houses and capital rather than land.
The productivity and therefore revenue of land is lowered by mismanagement under a single proprietary owner compared to private ownership. Crown lands in Europe are typically unimproved forests yielding little revenue. Selling crown lands could raise money while boosting the economy over time as lands become cultivated private property.
Revenue sources ideally suited for sovereigns are limited to certain pleasure lands, not sources of tax income. Public debt and unproductive crown lands are insufficient for modern governance. Taxes levied upon individuals contribute private revenue for public use. Different types of taxes and their effects are discussed in detail.

This passage discusses several key points about taxes:

Taxes should be certain and not arbitrary. Things like the amount paid, timing of payment, and manner of payment should be clear to avoid uncertainty and abuse of power.
It focuses on how an inequality that affects one type of revenue does not necessarily impact other types. The analysis will focus on inequalities related to specific taxes and the revenues they affect.
It provides an overview of the land tax system in Great Britain as an example. While originally equal, the fixed valuation over time leads to inequality as lands improve or decline differently.
It notes the land tax is certain, collects at a convenient time for landowners, and has low administrative costs. However, the fixed valuation has benefited landowners as rents rose, rather than the sovereign sharing in improved profits.
It argues the fixed valuation system could be problematic if economic circumstances changed substantially, such as a large change in the value of currency that impacts revenues for landlords vs the sovereign.

So in summary, it uses the British land tax to illustrate key principles of tax design and some of the potential issues that can arise from a fixed valuation system depending on changing economic conditions over time.

The passage discusses different views on how to tax land rents, including a system used in Venice where land given to farmers is taxed at 10% of rent. This is considered more equitable than England’s land tax.
It proposes a system where leases are publicly recorded to prevent concealment, and fines for lease renewals are taxed higher to discourage the practice which often hurts landlords, tenants, and the community.
Rents paid in kind (e.g. crops) rather than money are generally more harmful and could be taxed slightly higher to discourage the practice.
Landlords who cultivate some of their own land could receive a moderate tax abatement, up to a certain income level, to encourage improvement and experimentation.
A variable land tax based on rental value would need administration to avoid uncertainty but could be moderate in cost. The main objection is it may discourage landlord improvements, but allowing tax assessments after the fact could address this concern.

The key point is the passage discusses proposals for implementing a more efficient and equitable land value tax system compared to other countries like England at the time. It aims to both generate revenue and encourage agricultural improvement.

The passage discusses different systems of taxing land, including land taxes based on a registration of leases, actual surveys and valuations of land, and taxes on the produce/output of land.
It analyzes land taxes used in Prussia, Bohemia, Milan, Sardinia and other places, noting things like church land being taxed higher than lay property in Prussia.
Taxes on land produce/output are effectively taxes on rent, as farmers will factor the tax into reduced rents paid to landlords. Tithes (taxes on output) are presented as very unequal taxes, with the same percentage tax representing a much higher percentage of rent on poorer lands than richer lands.
Output/produce taxes highly discourage land improvements by landlords and more valuable crop cultivation by farmers, since the church receives part of the increased output without contributing to improvements.

So in summary, it provides a detailed examination and comparison of different historical land taxation systems, focusing on issues like surveys, treatment of church lands, inequality of output/produce taxes, and disincentives to improvement.

Madder cultivation was originally confined to the Netherlands due to an exemption from “tythe”, a destructive tax that supported the church. When England later allowed madder cultivation with a fixed fee per acre instead of tythe, it helped introduce the plant.
In many parts of Europe and Asia, land taxes traditionally supported either the church or state. Rates varied from place to place - in China it was 10% of production, estimated at just 30% in some provinces. In Bengal under Islamic rule it was around 20% of production. Ancient Egypt also had around a 20% land tax.
Landlords in Asia were said to invest in infrastructure like roads and canals to boost land productivity and market access, unlike small church landowners.
Land taxes could be collected in-kind or in monetary valuation. In-kind had issues with mismanagement, but still occurred to some extent in China. Monetary valuation could vary with market prices or use fixed prices.
Ground rent and building rent are two components of house rent. Building rent should provide a normal rate of return, and surplus typically went to ground rent reflecting location advantages. Ground rents were highest in cities and prestigious areas.
A tax on overall house rent paid by tenants could not sustainably affect building rent and would partly fall on both tenants and groundowners. An example calculates the tax costs for a hypothetical tenant.

The passage discusses how a tax on house rents would be divided and paid. If someone currently rents a £60 house, with the new 10% tax they would have to pay £66 total. To afford this, they may get a £50 house instead of a £60 one.

This lowers competition for £50 and £60 houses, reducing their rents slightly. Landlords would see reduced ground rents. Over time, the tax burden would be split between tenants and landlords. Tenants would have less spending money and get worse houses, while landlords would make less from ground rents.

The division depends on circumstances and could impact tenants and landlords unequally. Poorer people spend more on necessities, so housing is a smaller part of their budget. Richer people spend more on luxuries like nice houses.

A tax on house rent could reveal tenants’ spending habits. If very high, many may get smaller houses to avoid the tax. Ground rents are an even better target as landlords earn them passively from their land ownership. The passage advocates taxing ground rents to fund government services that enable higher land values.

This passage discusses taxes on real estate (land and buildings) and business profits in England. Some key points:

The land tax varied by district and fell more lightly on rents from houses than land in most areas. Untenanted houses were often exempted.
In Holland, all houses were taxed at 2.5% of their assessed value, whether tenanted or not, which could be a heavy burden.
Early taxes on houses in England included hearth tax (per hearth) and window tax (per window). These were easier to assess than actual rents.
Taxes on houses tend to lower rents by reducing what tenants can afford to pay. However, in England rents have generally risen due to increased demand outweighing the tax effects.
Business profits can be divided into the portion paying interest and the surplus. The surplus portion is difficult to tax directly as employers need it as compensation.
Taxing interest directly may not raise interest rates as the quantity of money and stock available wouldn’t change. However, assessing private stock levels would be challenging due to fluctuations. Stock can also be moved unlike land.
Stockholders/proprietors of stock are citizens of the world and not necessarily attached to any particular country. They would be likely to remove their stock from a country that imposed a heavy or burdensome tax on it.
Removing stock from a country would end the industry and employment that stock supports. It cultivates land and employs labor. Taxation that drives away stock would reduce sources of revenue for both government and society.
Nations that have tried taxing stock revenues have generally imposed very loose and arbitrary estimations due to the difficulty of stringent inquisition. Such moderate taxes are tolerated due to their uncertainty.
Some countries and cities have tried taxing citizens based on self-reported wealth declarations, with varying degrees of success/acceptance. This depends on factors like trust in government and urgency of need for tax revenue.
Taxes meant to tax capital directly are difficult to sustain, while taxes meant for interest/profits on stock can work if moderate and proportionate to the economic activity.
Some places have imposed special taxes on the profits of stock employed in particular trades, but these ultimately burden consumers through higher prices.
Coaches/chairs licenses and shop taxes were proportionate to business size, giving some advantage to larger operators but moderation in tax rates contained inequality.
A tax directly on shop profits would have been impossible to proportion precisely without excessive “inquisition” and would have oppressed small shops or forced consolidation into monopolies raising prices. It was abandoned for other reasons.
In medieval Europe, kings taxed weaker occupants like peasants. Landlords established “taille” taxes on occupiers’ land profits which were sometimes real (property-held land) or personal (estimated profits).
Personal taille in France targeted estimated profits, so was necessarily arbitrary/unequal. It totaled 40M livres across 20 regions annually, divided in unknown/changing proportions among regions/districts based on unclear “reports.”
Farmers under personal taille were assessed on assumed stock/profits, fearing over-assessment so pretended poverty with poor equipment. This costly strategy did little to save in tax versus lost production. Overall the tax burden fell on landlords through reduced rents.

This passage discusses different types of taxes on property:

Poll taxes (called “taille” in France) on slaves employed in agriculture in the West Indies/American South. These were essentially taxes on the profits of slave labor and fell on planters as both farmers and landlords.
Historically, poll taxes were common in Europe as taxes per head on bondmen/slaves used for cultivation. Russia still had such a poll tax.
Taxes on the sale/transfer of property from the dead to the living (inheritance taxes) and from the living to the living (property transfer taxes). Examples given are the Roman vicesima hereditatum inheritance tax and Dutch succession taxes.
Feudal casaulties in Europe, which taxed the transfer of land from dead to living heirs or between living owners. Heirs paid duties to the lord and minority periods disadvantaged estates. Fines were also required to grant permission to alienate/sell land.

Such transaction taxes could be imposed indirectly via stamp duties or duties on property registration. Overall it discusses the different forms property and transaction taxes took historically.

The passage discusses stamp duties and duties on property registration in different countries. In Great Britain, stamp duties are based more on the type of deed than the property value. Holland has both stamp duties and registration duties, some but not all proportional to property value. France also has stamp and registration duties handled by different agencies.

Registration of mortgages and some deeds provides security, but registering all deeds risks individuals’ credit and privacy. Where registration fees generate state revenue, many registers have been created unnecessarily.

Stamp duties on items like cards, newspapers are actually consumption taxes that ultimately fall on consumers. Licenses for ale and liquor are also mainly paid by consumers.

Taxes on wages will generally just raise wages somewhat above the tax level, as demand and food prices are the main determinants of wages. Overall wages are regulated by labor demand and average food prices in an area.

This passage discusses taxes, specifically direct taxes on wages and capitation taxes.

The key points are:

A direct tax on wages of 10% would require wages to rise not just 10% to cover the tax, but more like 12.5% in order for workers to have the same spending power after tax. The entire tax burden plus the additional wage increase would ultimately be passed on to consumers through higher prices.
Capitation taxes (head taxes) are difficult to apply fairly. If based on estimated wealth, they become arbitrary. If based on social rank, they treat unequal fortunes equally and become unequal. Some degree of inequality may be tolerated in a light tax but is intolerable in a heavy tax.
Examples are given of poll taxes in England where people were taxed based on social rank like duke, earl, gentleman, which was considered more than estimated wealth which could vary daily.
In France, the highest ranks are taxed at a fixed rate based on rank, while lower ranks are re-assessed annually based on estimated wealth.

So in summary, it discusses the challenges of direct taxes on wages and head taxes, and gives some historical examples from England and France.

The passage discusses different methods of taxation used in England and France. In France, nobles pay the least in poll taxes (capitation taxes), while those subject to other taxes (taille) pay more based on what they pay in that tax. Capitation taxes function like direct taxes on wages for lower classes.

England’s poll taxes did not raise as much as expected due to some not paying. France assesses each region a fixed sum that intendants must collect however they can.

The passage then discusses taxes on consumable goods as an indirect way to tax people’s income when direct taxation is difficult. Necessities are distinguished from luxuries. Taxes on necessities raise prices and wages, so the burden ultimately falls on consumers or landlords. Taxes on luxuries generally do not raise wages. Though they increase prices, sober poor may spend less on luxuries and bring up larger families through forced frugality. Only disorderly poor would continue indulging without regard for family needs.

This passage discusses different types of taxes and their effects:

Taxes on luxuries only impact the goods being taxed and are paid by consumers without affecting other goods or industries.
Taxes on necessities can raise the prices of other goods and industries since they increase the costs of labor. Workers demand higher wages to afford necessities when they are taxed.
Necessity taxes are ultimately paid by landlords, manufacturers, and wealthy consumers in the form of lower rents, higher goods prices, and living expenses.
Common necessity taxes in Britain at the time were on salt, leather, soap, candles, and coal. These increased costs of living for the poor.
Fuel/coal taxes particularly impacted industries that relied on coal for production.
Many other European countries had even higher taxes on necessities like bread, meat, and flour that severely damaged manufacturing.
Consumption taxes can be implemented either as an annual tax on using a good, or as a tax on the good prior to consumer purchase. An annual tax is usually more convenient for durable goods.

The passage discusses various taxes, duties and proposals related to the importing and exporting of goods. It describes Sir Matthew Decker’s proposal to tax goods of immediate consumption by requiring consumers to purchase a license, rather than taxing dealers. The passage outlines four objections to this approach.

It then discusses excise duties, which are imposed mainly on domestic goods for domestic consumption, focusing on necessities rather than luxuries. Customs duties are described as much older, originally seen as taxes on merchant profits during feudal times. Ancient customs included duties on wool, leather and wine (tonnage) as well as other goods priced by pound (poundage). Over time, the duty on most goods became 5% (the old subsidy). Additional subsidies of 5% were added later.

The system evolved to favor exportation over importation. Old duties on exports were reduced or removed, while import duties remained or increased. Drawbacks were introduced to refund some import duties on export. Exceptions protect raw materials for domestic industries. Overall it analyzes the historical development of Britain’s tax system as it related to international trade.

Exportation of English wool and importation of beaver skins, beaver wool, and gum senega have been subjected to higher duties since Great Britain gained monopolies over these commodities through conquering Canada and Senegal.
The mercantile system has not been favorable to sovereign revenue that depends on customs duties, according to the author. It has led to prohibiting some imports altogether and diminishing others through encouraging smuggling. This has annihilated potential customs revenue.
High import duties imposed to discourage consumption only encourage smuggling and reduce customs revenues below what moderate duties could provide. Bounties and drawbacks given on exports/re-exports have led to fraud and a destructive type of smuggling to obtain the incentives.
Due to different frauds, exports appear greatly inflated compared to imports in customs records, misleading politicians. Almost all imports face some customs duty unless exempted.
The author argues customs duties could be confined to key imported goods like wines, brandies, spices, tea without revenue loss if administered properly to curb smuggling like excise duties. High duties sometimes yield less revenue than moderate duties due to reduced consumption or smuggling.

The passage discusses ways to simplify and improve the system of taxation and customs duties in Britain. It suggests lowering or eliminating duties on commonly consumed goods to generate steady revenue without artificially manipulating prices. Money saved from eliminating drawbacks and non-necessary export bounties could offset revenue losses.

This would make trade in non-taxed goods completely free and boost manufacturers by easing import of raw materials. Even taxed commodity trade would benefit from exemption until domestic sale. The carrying trade overall would gain advantages.

Sir Robert Walpole’s failed excise scheme on wine and tobacco proposed a similar system, but factions opposed it. Duties on luxuries fall mostly on the affluent, while duties on common goods affect all ranks proportionally. The poor’s total expenses are greater than the rich in quantity and value terms.

Excise duties are most productive if levied on mass consumption of the many, not luxuries of the few. The poor should never bear necessary expense taxes as the costs fall on the rich. Exemptions for private distilling and brewing lighten duties on the affluent compared to common people.

This passage discusses potential alternatives to the UK’s system of excise duties on malt, beer, and spirits in the late 18th century. Some key points:

It proposes tripling the malt tax from 6 shillings to 18 shillings per quarter of malt. It argues this could raise more revenue than the current taxes on malt, beer, and ale, which average around 24-25 shillings per quarter.
It acknowledges this would require reducing excise duties on products made with malt, like low wines and spirits, to account for malt being a significant input.
It considers objections that a high malt tax would disproportionately burden maltsters and reduce demand for barley. However, it argues maltsters could pass on the costs like other producers, and lower beer/ale prices may increase rather than decrease demand for barley.
Overall it analyzes the revenue and economic impacts of shifting excise duties more towards malt production and away from downstream beer, ale, and spirits to reduce opportunities for tax evasion.
A tax on wine or sugar (monopoly goods) would necessarily reduce the rent and profits of vineyards/sugar plantations, as the price is already at the maximum level. The full weight of the tax would fall on producers.
Taxes on malt, beer and ale have never lowered the price of barley. The prices paid by brewers have risen in proportion to the taxes, and these taxes have been passed onto consumers through higher prices or reduced quality of beer/ale.
Local duties (peages) were originally for maintenance but sovereigns now retain revenue. This can neglect maintenance goals. Transit duties across states only affect foreigners.
Taxes on luxuries like customs/excise fall on consumers regardless of income. But contributions are voluntary based on consumption choices. They are generally paid gradually and conveniently.
However, collecting luxury taxes requires many officers, salaries are a real tax paid by people that yields nothing. There is also enforcement and evasion costs passed to consumers. So they take more out of people’s pockets than other taxes.

The passage discusses some of the disadvantages of taxes on consumable goods. Specifically, it mentions four main disadvantages:

They necessarily raise the prices of taxed commodities, discouraging their consumption and production. This can reduce overall productive labor and distort the natural direction of industry.
They encourage smuggling by providing opportunities to evade taxes. This damages law enforcement efforts and can turn some smugglers into hardened criminals.
They subject dealers of taxed goods to frequent visits and examinations by tax collectors, exposing them to oppression and vexation (equivalent to an expense).
When duties are repeatedly levied on successive sales, like Spain’s alcavala tax, it requires a large number of tax officers and subjects all farmers, manufacturers, merchants, and shopkeepers to continual interference. This can ruin domestic manufactures and constrain local production.

In summary, it outlines several ways in which taxes on consumables may unintentionally hinder certain industries, encourage criminal behavior, and excessively interfere with business activities.

Many towns and parishes in some countries can pay a composition fee in lieu of certain taxes, which they then levy internally in a way that does not disrupt local commerce. The taxes in Naples are not as ruinous as those in Spain.
The uniform taxation system in Britain allows internal and coastal trade to be almost completely free, facilitating commercial prosperity.
In France, different tax laws in different provinces require many revenue officers and interrupt internal commerce. Some provinces pay compositions while others face different taxes. Local duties vary as well.
Small duchies like Milan and Parma are also divided into taxation districts, undermining economic development due to administrative inefficiencies.
Taxes are often inefficiently farmed out to private tax collectors for a guaranteed rent, who impose additional costs and have no concern for taxpayers. Farming encourages more severe tax laws over time. Direct government administration is preferable.
The passage discusses taxes and public revenues in France and other European countries in the 18th century.
In France, the main sources of actual revenue for the crown come from eight taxes: the taille, capitation, two vingtiemes taxes, gabelles (salt tax), aides, traites, domaine, and tobacco farm. The last five were often farmed out to private individuals.
The three taxes directly administered by the government (taille, capitation, vingtiemes) bring more revenue relative to what is collected from the people compared to the other five taxes, whose administration is more wasteful and expensive.
The author proposes three reforms for the French tax system: 1) Replace taille and capitation with increased vingtiemes taxes. 2) Make taxes like gabelles, aides, traites uniform across France. 3) Subject all taxes to direct government administration to reduce profits of tax farmers.
Compared to Britain’s system, the French system is seen as inferior in that France levies much less revenue (15 million pounds) relative to its larger population (23-24 million) than Britain does, even though France has agricultural and infrastructural advantages.
Taxes are also discussed on other European countries like Holland, where high taxes on necessities have damaged industries, and the republican government supports the country’s current wealth and commerce.

The passage discusses hospitality and frugality in feudal times compared to modern commercial societies. In feudal times, nobility practicing hospitality through feasts and entertainment did not often ruin themselves financially. While hospitality was seen as important, feudal lords generally lived within their means and saved parts of their incomes through activities like wool and hide sales. They also hoarded money for security in unstable times.

The passage contrasts this with commercial states where luxury goods are abundant and vanity drives lavish spending. Both nobles and monarchs in commercial societies spend heavily on displays of wealth and status. This leaves little room for savings and forces governments to take on debt for wars and emergencies. However, merchants and manufacturers in commercial societies are well positioned to lend money to governments due to the liquidity of their capital and confidence in the legal system upholding contracts. They see lending as beneficial and are eager to invest in government loans. Thus commercial states have both a need for debt and an ability of citizens to lend.

The passage discusses how governments come to depend on borrowing large sums of money. In early societies, there is little ability or willingness to lend to governments. So governments must save to fund extraordinary expenses themselves.

As societies develop greater economic activity, individuals accumulate larger financial holdings and are more willing to lend. Governments then begin borrowing on “personal credit” without dedicating specific revenue streams. If this fails, they assign tax revenue as security.

In Great Britain, early borrowing often anticipated tax revenues for short periods (4-7 years) to cover deficits. Repeated deficiencies required prolonging anticipated tax periods into successive “general mortgage funds.” Eventually in 1711-1715, under the South Sea Bubble period, most taxes were made perpetual funds dedicated to paying interest on government debt, rather than paying off the principal.

This set Britain on the path of accumulating enormous public debts that would grow dangerously large over centuries and potentially undermine the fiscal strength of great European nations. The passage traces how permanent peacetime deficits and reliance on perpetual borrowing instead of saving led down this unsustainable route.

Many European governments took on more debt than they could repay in the initial term, and took on new debt before paying off previous debts. This overloaded their debt funds.
To deal with insufficient funds, interest payments became perpetual (never to be paid off), launching the “more ruinous practice of perpetual funding.”
Perpetual funding indefinitely delays liberating the public revenue compared to anticipation loans. But it raises more money short-term, which governments prefer.
England lowered interest rates over time from 6% to 5%, 4%, 3.5%, and 3%, growing the “sinking fund” but also enabling more new borrowing.
Other borrowing methods included annuities for terms of years and lives. Such loans were sometimes used but generally less desirable than perpetual debts.
France had a larger portion of its debt in annuities for lives (estimated at 8% of total debt), raising more money but delaying repayment more than England’s focus on merchants investing.

The passage discusses the advantages and disadvantages of different types of loans and investments for governments and investors. It notes that perpetual annuities are more convenient than life annuities, as their real value remains stable over time. However, many wealthy individuals in France who advance money to the government do not care about posterity and prefer investments that last their lifetime.

The passage also analyzes how governments fund wars through borrowing rather than increasing taxes. This allows them to continue wars with only moderate tax increases. However, postwar debts accumulate and are difficult to pay off. Sinking funds established to repay debts are often misapplied to other purposes rather than debt reduction. In Great Britain, the national debt accumulated significantly during wars but was reduced very little during peace periods due to misapplications of sinking funds.

In 1764, the total public debt of Great Britain (funded and unfunded) amounted to £139,561,807:2:4 according to the author’s estimates.
The funded debt alone on January 5, 1775 was £124,996,086, 1:61⁄4d. The unfunded debt was £4,150,236:3:11 7/8.
During 11 years of peace, only £10,415,476:16:9 7/8 of debt was paid off. However, not all of this came from ordinary state revenue - extraneous funds like additional taxes and payments from the East India Company contributed.
If additional funds are included, such as from asset sales, the amount paid off from ordinary revenue was likely under half a million pounds per year.
The author argues that full repayment of the debt is unlikely given current ordinary revenues, and new wars will require new borrowing that outpaces repayments.
Funding shifts capital from productive to unproductive uses, though it allows private accumulation to continue during wars since taxes are lighter. Defraying war costs annually would prevent capital destruction but hurt private saving more during wars.

The passage argues that the system of public funding (i.e. issuing government bonds) impairs a nation’s ability to accumulate wealth and sustain economic activity just as much in peacetime as an expensive war would. While proponents claim funding merely transfers money between citizens, it actually removes money from productive investment in land and capital.

Landowners and capital owners have incentives to maintain their assets, but transferring revenue from them to public creditors diminishes this incentive. Over time, neglect of land and removal of capital will damage agriculture, trade, manufacturing as the original sources of wealth decline.

Every state that has adopted long-term public funding has become weakened by it. While Britain’s tax system has so far avoided major impediments to industry, past profligacy leaves the nation heavily in debt. National debts rarely get fully repaid - liberation usually requires bankruptcy, often disguised as devaluing the currency in a “pretended payment” that actually defrauds creditors.

In summary, the passage argues public funding long-used by other nations undermines economic strength by transferring wealth away from productive investment in land and capital toward public creditors over time.

This passage discusses monetary policy and government debt. Some key points:

Declaring formal bankruptcy is preferable to deceiving creditors through monetary tricks like debasing the currency. Rome debased its currency after wars to pay its debts with less silver than owed.
Many states and ancient Romehave debased their currencies by reducing silver content over time to pay debts with less than owed. Rome reduced denominations down to 1/24 original value.
Adulterating the standard (adding more alloy) is unjust fraud, while openly raising denominations is open violence, but adulteration angers people more when discovered.
England debased currency under Henry VIII and Edward VI to pay debts. Scotland also did this during royal minorities.
Great Britain can’t fully liberate public revenue from debt while surpluses are small. This requires either raising more revenue through fairer taxes or reducing expenses.
Extending Britain’s tax system across its empire could raise more money but challenging given political obstacles and need for fair representation of provinces in parliament.

So in summary, it discusses the dishonest but common historical tactic of currency debasement to pay debts, preferring honest bankruptcy, and challenges of reducing public debt through revenue and expense measures.

The passage discusses how the British tax system of land tax, stamp duties, customs duties and excise taxes could be extended to Ireland and the American/West Indian plantations. It argues that these colonies are able to pay more land tax than Great Britain since they don’t have to pay tithes (church taxes) or poor rates. It also argues that stamp duties and custom duties could similarly be extended with some modifications. The excise tax would require more changes to account for different production and consumption in the colonies compared to Britain. It provides some potential options for taxing liquors, sugar, rum and tobacco in the colonies. Finally, it estimates that if this tax system was extended to the entire British Empire of around 13 million people, it could potentially raise over £16 million in revenue, leaving around £15 million that could be used to pay off the public debt after exempting around £1 million for governing Ireland and the plantations.

The passage discusses the potential for reducing taxes on necessities and materials to boost economic activity in Britain’s colonies and empire. It argues that lowering taxes could relieve the burden on the poor, allowing them to live better and work cheaper. Goods would become more affordable, increasing demand and jobs.

More people would enter the market as consumers, raising other tax revenues. Over time, this system could generate enough money to pay off national debts and restore Britain’s economic strength. Gradual tax relief would be given to colonies adjusting to new burdens.

While tax revenues may not immediately match population growth in poorer areas with more smuggling, two reforms could help: 1) replacing multiple taxes with a single tax on malt, reducing smuggling opportunities, and 2) limiting tariffs to key imported goods subject to excise laws, also reducing smuggling.

In colonies, consumption of taxed goods could match Britain despite lack of silver/gold coins, which are instead sent to Britain. Colonists use paper currency and invest surplus in development rather than hoarding metals. Lowering taxes could thus benefit both Britain and its colonies over time.

It was convenient for British merchants trading with Virginia and Maryland colonies to receive payment in tobacco rather than gold/silver, as they could sell the tobacco for a profit. As a result, gold/silver currency was rare in trade between Britain and those tobacco colonies.

In northern colonies like Pennsylvania and New England, the value of exports to Britain was less than imports, so they generally had to pay a balance in gold/silver.

The sugar colonies like Jamaica exported more value to Britain than they imported, so without other arrangements a large gold/silver balance would have to be paid annually. However, many plantation owners lived in Britain and were paid their rents in sugar/rum. Additionally, West India merchants’ purchases in the colonies did not equal the value of their sales, so they had to be paid a balance in gold/silver.

Payment irregularities from colonies to Britain were due more to speculative overtrading than actual poverty. Colonies had means to obtain necessary gold/silver for transactions but preferred investing surplus in growing industries rather than “dead stock”. Contributions from colonies to Britain’s public debt from protecting their interests were justified. A union with Britain would benefit Ireland and colonies by reducing factionalism and delivering from oppressive powers.

The passage discusses potential sources of revenue for the British empire to replace revenue lost from the colonies.
It suggests Ireland and the colonies could be subjected to higher taxes than currently, though these may not need to be permanent if other revenue sources are found.
The territorial acquisitions of the East India Company in India could provide abundant revenue, as those countries are represented as more fertile, extensive and wealthier than Britain. Lightening existing taxes there may draw revenue without new taxes.
If more revenue cannot be found from these sources, Britain must reduce its expenses. Its military establishment and expense of defending colonies are already moderate compared to other European powers.
The colonies have cost Britain greatly in past wars but do not contribute revenue or forces to the empire. If they cannot be made to support the empire financially, Britain should stop defending them militarily and reduce colonial expenses.
Britain’s leaders have long imagined a rich colonial empire, but it has mainly existed in imagination and cost much to defend with little profit. It may be time to realize this empire or scale back commitments to match financial means.

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Inquiry Into the Nature and Causes of the Wealth of Nations, An - Adam Smith