BOOK V. OF THE REVENUE OF THE SOVEREIGN OR
COMMONWEALTH
CHAPTER I. OF THE EXPENSES OF
THE SOVEREIGN OR COMMONWEALTH
PART I. Of the Expense of
Defence
The first duty of the
sovereign, that of protecting the society from the violence and invasion
of other independent societies, can be performed only by means of a
military force. But the expense both of preparing this military force in
time of peace, and of employing it in time of war, is very different in
the different states of society, in the different periods of
improvement.
Among nations of hunters, the
lowest and rudest state of society, such as we find it among the native
tribes of North America, every man is a warrior, as well as a hunter.
When he goes to war, either to defend his society, or to revenge the
injuries which have been done to it by other societies, he maintains
himself by his own labour, in the same manner as when he lives at home.
His society (for in this state of things there is properly neither
sovereign nor commonwealth) is at no sort of expense, either to prepare
him for the field, or to maintain him while he is in it.
***
When a civilized nation depends
for its defence upon a militia, it is at all times exposed to be
conquered by any barbarous nation which happens to be in its
neighbourhood. The frequent conquests of all the civilized countries in
Asia by the Tartars, sufficiently demonstrates the natural superiority
which the militia of a barbarous has over that of a civilized nation. A
well regulated standing army is superior to every militia. Such an army,
as it can best be maintained by an opulent and civilized nation, so it
can alone defend such a nation against the invasion of a poor and
barbarous neighbour. It is only by means of a standing army, therefore,
that the civilization of any country can be perpetuated, or even
preserved, for any considerable time.
As it is only by means of a
well regulated standing army, that a civilized country can be defended,
so it is only by means of it that a barbarous country can be suddenly
and tolerably civilized. A standing army establishes, with an
irresistible force, the law of the sovereign through the remotest
provinces of the empire, and maintains some degree of regular government
in countries which could not otherwise admit of any. Whoever examines
with attention, the improvements which Peter the Great introduced into
the Russian empire, will find that they almost all resolve themselves
into the establishment of a well regulated standing army. It is the
instrument which executes and maintains all his other regulations. That
degree of order and internal peace, which that empire has ever since
enjoyed, is altogether owing to the influence of that army.
Men of republican principles
have been jealous of a standing army, as dangerous to liberty. It
certainly is so, wherever the interest of the general, and that of the
principal officers, are not necessarily connected with the support of
the constitution of the state. The standing army of Caesar destroyed the
Roman republic. The standing army of Cromwell turned the long parliament
out of doors. But where the sovereign is himself the general, and the
principal nobility and gentry of the country the chief officers of the
army; where the military force is placed under the command of those who
have the greatest interest in the support of the civil authority,
because they have themselves the greatest share of that authority, a
standing army can never be dangerous to liberty. On the contrary, it
may, in some cases, be favourable to liberty. The security which it
gives to the sovereign renders unnecessary that troublesome jealousy,
which, in some modern republics, seems to watch over the minutest
actions, and to be at all times ready to disturb the peace of every
citizen. Where the security of the magistrate, though supported by the
principal people of the country, is endangered by every popular
discontent; where a small tumult is capable of bringing about in a few
hours a great revolution, the whole authority of government must be
employed to suppress and punish every murmur and complaint against it.
To a sovereign, on the contrary, who feels himself supported, not only
by the natural aristocracy of the country, but by a well regulated
standing army, the rudest, the most groundless, and the most licentious
remonstrances, can give little disturbance. He can safely pardon or
neglect them, and his consciousness of his own superiority naturally
disposes him to do so. That degree of liberty which approaches to
licentiousness, can be tolerated only in countries where the sovereign
is secured by a well regulated standing army. It is in such countries
only, that the public safety does not require that the sovereign should
be trusted with any discretionary power, for suppressing even the
impertinent wantonness of this licentious liberty.
The first duty of the
sovereign, therefore, that of defending the society from the violence
and injustice of other independent societies, grows gradually more and
more expensive, as the society advances in civilization. The military
force of the society, which originally cost the sovereign no expense,
either in time of peace, or in time of war, must, in the progress of
improvement, first be maintained by him in time of war, and afterwards
even in time of peace.
The great change introduced
into the art of war by the invention of fire-arms, has enhanced still
further both the expense of exercising and disciplining any particular
number of soldiers in time of peace, and that of employing them in time
of war. Both their arms and their ammunition are become more expensive.
A musket is a more expensive machine than a javelin or a bow and arrows;
a cannon or a mortar, than a balista or a catapulta. The powder which is
spent in a modern review is lost irrecoverably, and occasions a very
considerable expense. The javelins and arrows which were thrown or shot
in an ancient one, could easily be picked up again, and were, besides,
of very little value. The cannon and the mortar are not only much
dearer, but much heavier machines than the balista or catapulta; and
require a greater expense, not only to prepare them for the field, but
to carry them to it. As the superiority of the modern artillery, too,
over that of the ancients, is very great; it has become much more
difficult, and consequently much more expensive, to fortify a town, so
as to resist, even for a few weeks, the attack of that superior
artillery. In modern times, many different causes contribute to render
the defence of the society more expensive. The unavoidable effects of
the natural progress of improvement have, in this respect, been a good
deal enhanced by a great revolution in the art of war, to which a mere
accident, the invention of gunpowder, seems to have given occasion.
In modern war, the great
expense of firearms gives an evident advantage to the nation which can
best afford that expense; and, consequently, to an opulent and
civilized, over a poor and barbarous nation. In ancient times, the
opulent and civilized found it difficult to defend themselves against
the poor and barbarous nations. In modern times, the poor and barbarous
find it difficult to defend themselves against the opulent and
civilized. The invention of fire-arms, an invention which at first sight
appears to be so pernicious, is certainly favourable, both to the
permanency and to the extension of civilization.
PART II. Of the Expense of
Justice
The second duty of the
sovereign, that of protecting, as far as possible, every member of the
society from the injustice or oppression of every other member of it, or
the duty of establishing an exact administration of justice, requires
two very different degrees of expense in the different periods of
society.
***
Justice, however, never was in
reality administered gratis in any country. Lawyers and attorneys, at
least, must always be paid by the parties; and if they were not, they
would perform their duty still worse than they actually perform it. The
fees annually paid to lawyers and attorneys, amount, in every court, to
a much greater sum than the salaries of the judges. The circumstance of
those salaries being paid by the crown, can nowhere much diminish the
necessary expense of a law-suit. But it was not so much to diminish the
expense, as to prevent the corruption of justice, that the judges were
prohibited from receiving my present or fee from the parties.
The office of judge is in
itself so very honourable, that men are willing to accept of it, though
accompanied with very small emoluments. The inferior office of justice
of peace, though attended with a good deal of trouble, and in most cases
with no emoluments at all, is an object of ambition to the greater part
of our country gentlemen. The salaries of all the different judges, high
and low, together with the whole expense of the administration and
execution of justice, even where it is not managed with very good
economy, makes, in any civilized country, but a very inconsiderable part
of the whole expense of government.
The whole expense of justice,
too, might easily be defrayed by the fees of court; and, without
exposing the administration of justice to any real hazard of corruption,
the public revenue might thus be entirely discharged from a certain,
though perhaps but a small incumbrance. It is difficult to regulate the
fees of court effectually, where a person so powerful as the sovereign
is to share in them and to derive any considerable part of his revenue
from them. It is very easy, where the judge is the principal person who
can reap any benefit from them. The law can very easily oblige the judge
to respect the regulation though it might not always be able to make the
sovereign respect it. Where the fees of court are precisely regulated
and ascertained where they are paid all at once, at a certain period of
every process, into the hands of a cashier or receiver, to be by him
distributed in certain known proportions among the different judges
after the process is decided and not till it is decided; there seems to
be no more danger of corruption than when such fees are prohibited
altogether. Those fees, without occasioning any considerable increase in
the expense of a law-suit, might be rendered fully sufficient for
defraying the whole expense of justice. But not being paid to the judges
till the process was determined, they might be some incitement to the
diligence of the court in examining and deciding it. In courts which
consisted of a considerable number of judges, by proportioning the share
of each judge to the number of hours and days which he had employed in
examining the process, either in the court, or in a committee, by order
of the court, those fees might give some encouragement to the diligence
of each particular judge. Public services are never better performed,
than when their reward comes only in consequence of their being
performed, and is proportioned to the diligence employed in performing
them....
A stamp-duty upon the law
proceedings of each particular court, to be levied by that court, and
applied towards the maintenance of the judges, and other officers
belonging to it, might in the same manner, afford a revenue sufficient
for defraying the expense of the administration of justice, without
bringing any burden upon the general revenue of the society. The judges,
indeed, might in this case, be under the temptation of multiplying
unnecessarily the proceedings upon every cause, in order to increase, as
much as possible, the produce of such a stamp-duty. It has been the
custom in modern Europe to regulate, upon most occasions, the payment of
the attorneys and clerks of court according to the number of pages which
they had occasion to write; the court, however, requiring that each page
should contain so many lines, and each line so many words. In order to
increase their payment, the attorneys and clerks have contrived to
multiply words beyond all necessity, to the corruption of the law
language of, I believe, every court of justice in Europe. A like
temptation might, perhaps, occasion a like corruption in the form of law
proceedings.
PART III. Of the Expense of
public Works and public Institutions.
The third and last duty of the
sovereign or commonwealth, is that of erecting and maintaining those
public institutions and those public works, which though they may be in
the highest degree advantageous to a great society, are, however, of
such a nature, that the profit could never repay the expense to any
individual, or small number of individuals; and which it, therefore,
cannot be expected that any individual, or small number of individuals,
should erect or maintain. The performance of this duty requires, too,
very different degrees of expense in the different periods of society.
After the public institutions
and public works necessary for the defence of the society, and for the
administration of justice, both of which have already been mentioned,
the other works and institutions of this kind are chiefly for
facilitating the commerce of the society, and those for promoting the
instruction of the people. The institutions for instruction are of two
kinds: those for the education of the youth, and those for the
instruction of people of all ages. The consideration of the manner in
which the expense of those different sorts of public works and
institutions may be most properly defrayed will divide this third part
of the present chapter into three different articles.
ARTICLE I. Of the public Works
and Institutions for facilitating the Commerce of the Society.
And, first, of those which are
necessary for facilitating Commerce in general.
That the erection and
maintenance of the public works which facilitate the commerce of any
country, such as good roads, bridges, navigable canals, harbours, etc.
must require very different degrees of expense in the different periods
of society, is evident without any proof. The expense of making and
maintaining the public roads of any country must evidently increase with
the annual produce of the land and labour of that country, or with the
quantity and weight of the goods which it becomes necessary to fetch and
carry upon those roads. The strength of a bridge must be suited to the
number and weight of the carriages which are likely to pass over it. The
depth and the supply of water for a navigable canal must be proportioned
to the number and tonnage of the lighters which are likely to carry
goods upon it; the extent of a harbour, to the number of the shipping
which are likely to take shelter in it.
It does not seem necessary that
the expense of those public works should be defrayed from that public
revenue, as it is commonly called, of which the collection and
application are in most countries, assigned to the executive power. The
greater part of such public works may easily be so managed, as to afford
a particular revenue, sufficient for defraying their own expense without
bringing any burden upon the general revenue of the society.
A highway, a bridge, a
navigable canal, for example, may, in most cases, be both made add
maintained by a small toll upon the carriages which make use of them; a
harbour, by a moderate port-duty upon the tonnage of the shipping which
load or unload in it. The coinage, another institution for facilitating
commerce, in many countries, not only defrays its own expense, but
affords a small revenue or a seignorage to the sovereign. The
post-office, another institution for the same purpose, over and above
defraying its own expense, affords, in almost all countries, a very
considerable revenue to the sovereign.
When the carriages which pass
over a highway or a bridge, and the lighters which sail upon a navigable
canal, pay toll in proportion to their weight or their tonnage, they pay
for the maintenance of those public works exactly in proportion to the
wear and tear which they occasion of them. It seems scarce possible to
invent a more equitable way of maintaining such works. This tax or toll,
too, though it is advanced by the carrier, is finally paid by the
consumer, to whom it must always be charged in the price of the goods.
As the expense of carriage, however, is very much reduced by means of
such public works, the goods, notwithstanding the toll, come cheaper to
the consumer than they could otherwise have done, their price not being
so much raised by the toll, as it is lowered by the cheapness of the
carriage. The person who finally pays this tax, therefore, gains by the
application more than he loses by the payment of it. His payment is
exactly in proportion to his gain. It is, in reality, no more than a
part of that gain which he is obliged to give up, in order to get the
rest. It seems impossible to imagine a more equitable method of raising
a tax.
When the toll upon carriages of luxury, upon coaches,
post-chaises, etc. is made somewhat higher in proportion to their
weight, than upon carriages of necessary use, such as carts, waggons,
etc. the indolence and vanity of the rich is made to contribute, in a
very easy manner, to the relief of the poor, by rendering cheaper the
transportation of heavy goods to all the different parts of the country.
When high-roads, bridges,
canals, etc. are in this manner made and supported by the commerce which
is carried on by means of them, they can be made only where that
commerce requires them, and, consequently, where it is proper to make
them. Their expense, too, their grandeur and magnificence, must be
suited to what that commerce can afford to pay. They must be made,
consequently, as it is proper to make them. A magnificent high-road
cannot be made through a desert country, where there is little or no
commerce, or merely because it happens to lead to the country villa of
the intendant of the province, or to that of some great lord, to whom
the intendant finds it convenient to make his court. A great bridge
cannot be thrown over a river at a place where nobody passes, or merely
to embellish the view from the windows of a neighbouring palace; things
which sometimes happen in countries, where works of this kind are
carried on by any other revenue than that which they themselves are
capable of affording.
In several different parts of
Europe, the toll or lock-duty upon a canal is the property of private
persons, whose private interest obliges them to keep up the canal. If it
is not kept in tolerable order, the navigation necessarily ceases
altogether, and, along with it, the whole profit which they can make by
the tolls. If those tolls were put under the management of
commissioners, who had themselves no interest in them, they might be
less attentive to the maintenance of the works which produced them. The
canal of Languedoc cost the king of France and the province upwards of
thirteen millions of livres, which (at twenty-eight livres the mark of
silver, the value of French money in the end of the last century)
amounted to upwards of nine hundred thousand pounds sterling. When that
great work was finished, the most likely method, it was found, of
keeping it in constant repair, was to make a present of the tolls to
Riquet, the engineer who planned and conducted the work. Those tolls
constitute, at present, a very large estate to the different branches of
the family of that gentleman, who have, therefore, a great interest to
keep the work in constant repair. But had those tolls been put under the
management of commissioners, who had no such interest, they might
perhaps, have been dissipated in ornamental and unnecessary expenses,
while the most essential parts of the works were allowed to go to ruin.
The tolls for the maintenance
of a highroad cannot, with any safety, be made the property of private
persons. A high-road, though entirely neglected, does not become
altogether impassable, though a canal does. The proprietors of the tolls
upon a high-road, therefore, might neglect altogether the repair of the
road, and yet continue to levy very nearly the same tolls. It is proper,
therefore, that the tolls for the maintenance of such a work should be
put under the management of commissioners or trustees.
***
Even those public works, which
are of such a nature that they cannot afford any revenue for maintaining
themselves, but of which the conveniency is nearly confined to some
particular place or district, are always better maintained by a local or
provincial revenue, under the management of a local and provincial
administration, than by the general revenue of the state, of which the
executive power must always have the management. Were the streets of
London to be lighted and paved at the expense of the treasury, is there
any probability that they would be so well lighted and paved as they are
at present, or even at so small an expense? The expense, besides,
instead of being raised by a local tax upon the inhabitants of each
particular street, parish, or district in London, would, in this case,
be defrayed out of the general revenue of the state, and would
consequently be raised by a tax upon all the inhabitants of the kingdom,
of whom the greater part derive no sort of benefit from the lighting and
paving of the streets of London.
The abuses which sometimes
creep into the local and provincial administration of a local and
provincial revenue, how enormous soever they may appear, are in reality,
however, almost always very trifling in comparison of those which
commonly take place in the administration and expenditure of the revenue
of a great empire. They are, besides, much more easily corrected. Under
the local or provincial administration of the justices of the peace in
Great Britain, the six days labour which the country people are obliged
to give to the reparation of the highways, is not always, perhaps, very
judiciously applied, but it is scarce ever exacted with any circumstance
of cruelty or oppression. In France, under the administration of the
intendants, the application is not always more judicious, and the
exaction is frequently the most cruel and oppressive. Such corvees, as
they are called, make one of the principal instruments of tyranny by
which those officers chastise any parish or communeaute, which has had
the misfortune to fall under their displeasure.
Of the public Works and
Institution which are necessary for facilitating particular Branches of
Commerce
The object of the public works
and institutions above mentioned, is to facilitate commerce in general.
But in order to facilitate some particular branches of it, particular
institutions are necessary, which again require a particular and
extraordinary expense.
Some particular branches of
commerce which are carried on with barbarous and uncivilized nations,
require extraordinary protection. An ordinary store or counting-house
could give little security to the goods of the merchants who trade to
the western coast of Africa. To defend them from the barbarous natives,
it is necessary that the place where they are deposited should be in
some measure fortified. The disorders in the government of Indostan have
been supposed to render a like precaution necessary, even among that
mild and gentle people; and it was under pretence of securing their
persons and property from violence, that both the English and French
East India companies were allowed to erect the first forts which they
possessed in that country. Among other nations, whose vigorous
government will suffer no strangers to possess any fortified place
within their territory, it may be necessary to maintain some ambassador,
minister, or consul, who may both decide, according to their own
customs, the differences arising among his own countrymen, and, in their
disputes with the natives, may by means of his public character,
interfere with more authority and afford them a more powerful protection
than they could expect from any private man. The interests of commerce
have frequently made it necessary to maintain ministers in foreign
countries, where the purposes either of war or alliance would not have
required any. The commerce of the Turkey company first occasioned the
establishment of an ordinary ambassador at Constantinople. The first
English embassies to Russia arose altogether from commercial interests.
The constant interference with those interests, necessarily occasioned
between the subjects of the different states of Europe, has probably
introduced the custom of keeping, in all neighbouring countries,
ambassadors or ministers constantly resident, even in the time of peace.
This custom, unknown to ancient times, seems not to be older than the
end of the fifteenth, or beginning of the sixteenth century; that is,
than the time when commerce first began to extend itself to the greater
part of the nations of Europe, and when they first began to attend to
its interests.
It seems not unreasonable, that
the extraordinary expense which the protection of any particular branch
of commerce may occasion, should be defrayed by a moderate tax upon that
particular branch; by a moderate fine, for example, to be paid by the
traders when they first enter into it; or, what is more equal, by a
particular duty of so much per cent. upon the goods which they either
import into, or export out of, the particular countries with which it is
carried on. The protection of trade, in general, from pirates and
freebooters, is said to have given occasion to the first institution of
the duties of customs. But, if it was thought reasonable to lay a
general tax upon trade, in order to defray the expense of protecting
trade in general, it should seem equally reasonable to lay a particular
tax upon a particular branch of trade, in order to defray the
extraordinary expense of protecting that branch.
The protection of trade, in
general, has always been considered as essential to the defence of the
commonwealth, and, upon that account, a necessary part of the duty of
the executive power. The collection and application of the general
duties of customs, therefore, have always been left to that power. But
the protection of any particular branch of trade is a part of the
general protection of trade; a part, therefore, of the duty of that
power; and if nations always acted consistently, the particular duties
levied for the purposes of such particular protection, should always
have been left equally to its disposal. But in this respect, as well as
in many others, nations have not always acted consistently; and in the
greater part of the commercial states of Europe, particular companies of
merchants have had the address to persuade the legislature to entrust to
them the performance of this part of the duty of the sovereign, together
with all the powers which are necessarily connected with it.
These companies, though they
may, perhaps, have been useful for the first introduction of some
branches of commerce, by making, at their own expense, an experiment
which the state might not think it prudent to make, have in the long-run
proved, universally, either burdensome or useless, and have either
mismanaged or confined the trade.
When those companies do not
trade upon a joint stock, but are obliged to admit any person, properly
qualified, upon paying a certain fine, and agreeing to submit to the
regulations of the company, each member trading upon his own stock, and
at his own risk, they are called regulated companies. When they trade
upon a joint stock, each member sharing in the common profit or loss, in
proportion to his share in this stock, they are called joint-stock
companies. Such companies, whether regulated or joint-stock, sometimes
have, and sometimes have not, exclusive privileges.
***
When a company of merchants
undertake, at their own risk and expense, to establish a new trade with
some remote and barbarous nation, it may not be unreasonable to
incorporate them into a joint-stock company, and to grant them, in case
of their success, a monopoly of the trade for a certain number of years.
It is the easiest and most natural way in which the state can recompense
them for hazarding a dangerous and expensive experiment, of which the
public is afterwards to reap the benefit. A temporary monopoly of this
kind may be vindicated, upon the same principles upon which a like
monopoly of a new machine is granted to its inventor, and that of a new
book to its author. But upon the expiration of the term, the monopoly
ought certainly to determine; the forts and garrisons, if it was found
necessary to establish any, to be taken into the hands of government,
their value to be paid to the company, and the trade to be laid open to
all the subjects of the state. By a perpetual monopoly, all the other
subjects of the state are taxed very absurdly in two different ways:
first, by the high price of goods, which, in the case of a free trade,
they could buy much cheaper; and, secondly, by their total exclusion
from a branch of business which it might be both convenient and
profitable for many of them to carry on. It is for the most worthless of
all purposes, too, that they are taxed in this manner. It is merely to
enable the company to support the negligence, profusion, and
malversation of their own servants, whose disorderly conduct seldom
allows the dividend of the company to exceed the ordinary rate of profit
in trades which are altogether free, and very frequently makes a fall
even a good deal short of that rate. Without a monopoly, however, a
joint-stock company, it would appear from experience, cannot long carry
on any branch of foreign trade. To buy in one market, in order to sell
with profit in another, when there are many competitors in both; to
watch over, not only the occasional variations in the demand, but the
much greater and more frequent variations in the competition, or in the
supply which that demand is likely to get from other people; and to suit
with dexterity and judgment both the quantity and quality of each
assortment of goods to all these circumstances, is a species of warfare,
of which the operations are continually changing, and which can scarce
ever be conducted successfully, without such an unremitting exertion of
vigilance and attention as cannot long be expected from the directors of
a joint-stock company. The East India company, upon the redemption of
their funds, and the expiration of their exclusive privilege, have a
right, by act of parliament, to continue a corporation with a joint
stock, and to trade in their corporate capacity to the East Indies, in
common with the rest of their fellow subjects. But in this situation,
the superior vigilance and attention of a private adventurer would, in
all probability, soon make them weary of the trade.
An eminent French author, of
great knowledge in matters of political economy, the Abbe Morellet,
gives a list of fifty-five joint-stock companies for foreign trade,
which have been established in different parts of Europe since the year
1600, and which, according to him, have all failed from mismanagement,
notwithstanding they had exclusive privileges. He has been misinformed
with regard to the history of two or three of them, which were not
joint-stock companies and have not failed. But, in compensation, there
have been several joint-stock companies which have failed, and which he
has omitted.
The only trades which it seems
possible for a joint-stock company to carry on successfully, without an
exclusive privilege, are those, of which all the operations are capable
of being reduced to what is called a routine, or to such a uniformity of
method as admits of little or no variation. Of this kind is, first, the
banking trade; secondly, the trade of insurance from fire and from sea
risk, and capture in time of war; thirdly, the trade of making and
maintaining a navigable cut or canal; and, fourthly, the similar trade
of bringing water for the supply of a great city.
Though the principles of the
banking trade may appear somewhat abstruse, the practice is capable of
being reduced to strict rules. To depart upon any occasion from those
rules, in consequence of some flattering speculation of extraordinary
gain, is almost always extremely dangerous and frequently fatal to the
banking company which attempts it. But the constitution of joint-stock
companies renders them in general, more tenacious of established rules
than any private copartnery. Such companies, therefore, seem extremely
well fitted for this trade. The principal banking companies in Europe,
accordingly, are joint-stock companies, many of which manage their trade
very successfully without any exclusive privilege. The bank of England
has no other exclusive privilege, except that no other banking company
in England shall consist of more than six persons. The two banks of
Edinburgh are joint-stock companies, without any exclusive privilege.
The value of the risk, either
from fire, or from loss by sea, or by capture, though it cannot,
perhaps, be calculated very exactly, admits, however, of such a gross
estimation, as renders it, in some degree, reducible to strict rule and
method. The trade of insurance, therefore, may be carried on
successfully by a joint-stock company, without any exclusive privilege.
Neither the London Assurance, nor the Royal Exchange Assurance companies
have any such privilege.
When a navigable cut or canal
has been once made, the management of it becomes quite simple and easy,
and it is reducible to strict rule and method. Even the making of it is
so, as it may be contracted for with undertakers, at so much a mile, and
so much a lock. The same thing may be said of a canal, an aqueduct, or a
great pipe for bringing water to supply a great city. Such
under-takings, therefore, may be, and accordingly frequently are, very
successfully managed by joint-stock companies, without any exclusive
privilege.
To establish a joint-stock
company, however, for any undertaking, merely because such a company
might be capable of managing it successfully; or, to exempt a particular
set of dealers from some of the general laws which take place with
regard to all their neighbours, merely because they might be capable of
thriving, if they had such an exemption, would certainly not be
reasonable. To render such an establishment perfectly reasonable, with
the circumstance of being reducible to strict rule and method, two other
circumstances ought to concur. First, it ought to appear with the
clearest evidence, that the undertaking is of greater and more general
utility than the greater part of common trades; and, secondly, that it
requires a greater capital than can easily be collected into a private
copartnery. If a moderate capital were sufficient, the great utility of
the undertaking would not be a sufficient reason for establishing a
joint-stock company; because, in this case, the demand for what it was
to produce, would readily and easily be supplied by private adventurers.
In the four trades above mentioned, both those circumstances concur.
The great and general utility
of the banking trade, when prudently managed, has been fully explained
in the second book of this Inquiry. But a public bank, which is to
support public credit, and, upon particular emergencies, to advance to
government the whole produce of a tax, to the amount, perhaps, of
several millions, a year or two before it comes in, requires a greater
capital than can easily be collected into any private copartnery.
The trade of insurance gives
great security to the fortunes of private people, and, by dividing among
a great many that loss which would ruin an individual, makes it fall
light and easy upon the whole society. In order to give this security,
however, it is necessary that the insurers should have a very large
capital. Before the establishment of the two joint-stock companies for
insurance in London, a list, it is said, was laid before the
attorney-general, of one hundred and fifty private usurers, who had
failed in the course of a few years.
That navigable cuts and canals,
and the works which are sometimes necessary for supplying a great city
with water, are of great and general utility, while, at the same time,
they frequently require a greater expense than suits the fortunes of
private people, is sufficiently obvious.
Except the four trades above
mentioned, I have not been able to recollect any other, in which all the
three circumstances requisite for rendering reasonable the establishment
of a joint-stock company concur. The English copper company of London,
the lead-smelting company, the glass-grinding company, have not even the
pretext of any great or singular utility in the object which they
pursue; nor does the pursuit of that object seem to require any expense
unsuitable to the fortunes of many private men. Whether the trade which
those companies carry on, is reducible to such strict rule and method as
to render it fit for the management of a joint-stock company, or whether
they have any reason to boast of their extraordinary profits, I do not
pretend to know. The mine-adventurers company has been long ago
bankrupt. A share in the stock of the British Linen company of Edinburgh
sells, at present, very much below par, though less so than it did some
years ago. The joint-stock companies, which are established for the
public-spirited purpose of promoting some particular manufacture, over
and above managing their own affairs ill, to the diminution of the
general stock of the society, can, in other respects, scarce ever fail
to do more harm than good. Notwithstanding the most upright intentions,
the unavoidable partiality of their directors to particular branches of
the manufacture, of which the undertakers mislead and impose upon them,
is a real discouragement to the rest, and necessarily breaks, more or
less, that natural proportion which would otherwise establish itself
between judicious industry and profit, and which, to the general
industry of the country, is of all encouragements the greatest and the
most effectual.
ARTICLE II. Of the Expense
of the Institution for the Education of Youth
The institutions for the
education of the youth may, in the same manner, furnish a revenue
sufficient for defraying their own expense. The fee or honorary, which
the scholar pays to the master, naturally constitutes a revenue of this
kind.
Even where the reward of the
master does not arise altogether from this natural revenue, it still is
not necessary that it should be derived from that general revenue of the
society, of which the collection and application are, in most countries,
assigned to the executive power. Through the greater part of Europe,
accordingly, the endowment of schools and colleges makes either no
charge upon that general revenue, or but a very small one. It everywhere
arises chiefly from some local or provincial revenue, from the rent of
some landed estate, or from the interest of some sum of money, allotted
and put under the management of trustees for this particular purpose,
sometimes by the sovereign himself, and sometimes by some private donor.
ARTICLE III. Of the Expense of the
Institutions for the Instruction of People of all Ages
The institutions for the
instruction of people of all ages, are chiefly those for religious
instruction. This is a species of instruction, of which the object is
not so much to render the people good citizens in this world, as to
prepare them for another and a better world in the life to come. The
teachers of the doctrine which contains this instruction, in the same
manner as other teachers, may either depend altogether for their
subsistence upon the voluntary contributions of their hearers; or they
may derive it from some other fund, to which the law of their country
may entitle them; such as a landed estate, a tythe or land tax, an
established salary or stipend. Their exertion, their zeal and industry,
are likely to be much greater in the former situation than in the
latter. In this respect, the teachers of a new religion have always had
a considerable advantage in attacking those ancient and established
systems, of which the clergy, reposing themselves upon their benefices,
had neglected to keep up the fervour of faith and devotion in the great
body of the people; and having given themselves up to indolence, were
become altogether incapable of making any vigorous exertion in defence
even of their own establishment.
PART IV. Of the Expense of
supporting the Dignity of the Sovereign
Over and above the expenses
necessary for enabling the sovereign to perform his several duties, a
certain expense is requisite for the support of his dignity. This
expense varies, both with the different periods of improvement, and with
the different forms of government.
In an opulent and improved
society, where all the different orders of people are growing every day
more expensive in their houses, in their furniture, in their tables, in
their dress, and in their equipage; it cannot well be expected that the
sovereign should alone hold out against the fashion. He naturally,
therefore, or rather necessarily, becomes more expensive in all those
different articles too. His dignity even seems to require that he should
become so.
As, in point of dignity, a
monarch is more raised above his subjects than the chief magistrate of
any republic is ever supposed to be above his fellow-citizens; so a
greater expense is necessary for supporting that higher dignity. We
naturally expect more splendour in the court of a king, than in the
mansion-house of a doge or burgo-master.
CONCLUSION
The expense of defending the
society, and that of supporting the dignity of the chief magistrate, are
both laid out for the general benefit of the whole society. It is
reasonable, therefore, that they should be defrayed by the general
contribution of the whole society; all the different members
contributing, as nearly as possible, in proportion to their respective
abilities.
The expense of the
administration of justice, too, may no doubt be considered as laid out
for the benefit of the whole society. There is no impropriety,
therefore, in its being defrayed by the general contribution of the
whole society. The persons, however, who give occasion to this expense,
are those who, by their injustice in one way or another, make it
necessary to seek redress or protection from the courts of justice. The
persons, again, most immediately benefited by this expense, are those
whom the courts of justice either restore to their rights, or maintain
in their rights. The expense of the administration of justice,
therefore, may very properly be defrayed by the particular contribution
of one or other, or both, of those two different sets of persons,
according as different occasions may require, that is, by the fees of
court. It cannot be necessary to have recourse to the general
contribution of the whole society, except for the conviction of those
criminals who have not themselves any estate or fund sufficient for
paying those fees.
Those local or provincial
expenses, of which the benefit is local or provincial (what is laid out,
for example, upon the police of a particular town or district), ought to
be defrayed by a local or provincial revenue, and ought to be no burden
upon the general revenue of the society. It is unjust that the whole
society should contribute towards an expense, of which the benefit is
confined to a part of the society.
The expense of maintaining good
roads and communications is, no doubt, beneficial to the whole society,
and may, therefore, without any injustice, be defrayed by the general
contributions of the whole society. This expense, however, is most
immediately and directly beneficial to those who travel or carry goods
from one place to another, and to those who consume such goods. The
turnpike tolls in England, and the duties called peages in other
countries, lay it altogether upon those two different sets of people,
and thereby discharge the general revenue of the society from a very
considerable burden.
The expense of the institutions
for education and religious instruction, is likewise, no doubt,
beneficial to the whole society, and may, therefore, without injustice,
be defrayed by the general contribution of the whole society. This
expense, however, might, perhaps, with equal propriety, and even with
some advantage, be defrayed altogether by those who receive the
immediate benefit of such education and instruction, or by the voluntary
contribution of those who think they have occasion for either the one or
the other.
When the institutions, or
public works, which are beneficial to the whole society, either cannot
be maintained altogether, or are not maintained altogether, by the
contribution of such particular members of the society as are most
immediately benefited by them; the deficiency must, in most cases, be
made up by the general contribution of the whole society. The general
revenue of the society, over and above defraying the expense of
defending the society, and of supporting the dignity of the chief
magistrate, must make up for the deficiency of many particular branches
of revenue. The sources of this general or public revenue, I shall
endeavour to explain in the following chapter
Go to Next Page
|