An Inquiry into the Permanent Causes of the Decline and Fall of Powerful and Wealthy Nations Part 26

{136} If one of the brute creation is in want, it will supply that where it is most easily to be had, physical difficulty is the only one it knows; bodily pain the only one it feels. But men are different, they often undergo great want amongst strangers, to avoid more insufferable feelings amongst friends.

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It has been noticed, that, in every society, as wealth increases hospitality dies away. And those good offices interchanged between man and man, to which life owes many of its comforts in a less advanced state of society, and which protect individuals from the frowns of fortune, gradually disappear. The social feelings become less active, and men turn selfish and interested, thinking for themselves, and careless for the community; while, on the other hand, the causes for poverty increase; on the other, the means of relief are misapplied, neglected, or squandered away. The funds that ought to be administered with disinteredness and integrity are committed to the hands of men who live on the general misfortune, and thus the wretched, who are relieved, are not fairly treated, while the public, that is burthened with their misfortunes, is loaded far beyond its proper degree.

The population of a country is diminished in a double ratio as the poor increases: they create nothing, but they consume; and if a country sees one-tenth of its population living on charity, it is equivalent at least to seeing one-seventh diminished in numbers altogether.

Most sorts of labour require those employed in it to have some capital, such as decent clothes, or tools, or money to live upon till wages are due. Little as that capital is, yet thousands are reduced to absolute beggary for want of it; their industry finding no means of exertion. A man becomes dependant =sic= on charity for existence; and, though able to work, eats the bread of idleness, and that without being in fault.

The number of persons absolutely unable to labour is nearly the same in every country, and is not much augmented by its wealth; so that if there were, as there easily might be, always employment for those who would otherwise be ent.i.tled to relief, and if they were allowed a fair price for their labour, they would then cease either to be a burthen to themselves or to the public.

Little coercion would, in this case, be necessary. A few proper regulations, to prevent theft and losses, would be all that could be wanted with those who could labour; and those who could not, being few in number, would be provided for in a better manner than when [end of page #159] they can be, where their portion is shared with those who are able to procure for themselves an existence.

We must by no means look for relief, in cases of this sort, from difficult or intricate management and regulation. If we look at the nature of things, it points out the way.

Those that cannot labour are the only persons who ought to be a burthen on the public; and they are the only ones that would be so, if the matters were properly regulated and attended to. As it is in most countries, there are many who cannot get work to do, and those are provided for in different ways, but always at the expense of the public.

Sometimes it is by a regular a.s.sessment, sometimes by theft and depredation, sometimes by individual charity, or those other means to which a man has recourse before he will absolutely starve for want.

Those who, from philanthropy, are for relieving all, soon find themselves deceived, and unable to proceed. Those who, disgusted with the vices of a few, consider them all as equally culpable are much to blame. Surely, the individual case of a fellow-creature in misfortune is worth attending to; and he must be ignorant indeed who cannot, in most instances, avoid deception. [end of page #160]

CHAP. VIII.

_Of the Tendency of Capital and Industry to leave a wealthy Country, and of the Depreciation of Money in agricultural and commercial Countries_.

As the increase of capital in every country is the consequence of former productive industry, so also is it the support of future exertion.

When the capital of a country has become sufficient for all the employment that can be procured for it, the first effect is the lowering of interest, which sinks down under the rate appointed by law, and under the rate at which it is lent out at in other countries.

When capital is not in sufficient quant.i.ty, those who want to borrow are more numerous than those who have money to lend; then the compet.i.tion is amongst the borrowers to obtain the preference, and they all give as high an interest as the law allows, and would give more if they could avoid the penalty, which, in all countries, has been attached to accepting more than the regulated sum; a sum regulated merely to prevent the effect of compet.i.tion, which might induce people to give more than in the end they would find they could afford to pay.

When capital becomes over abundant, the very reverse takes place; the lenders become rivals, and offer to lend at an under rate of interest.

The first effect of this is, that people who were but scantily supplied with capital before borrow, and carry on business more at ease, so that more capital is employed in business, and new employments are found out for capital.

The usual employments for a superabundant capital are improving lands, building houses, erecting machines, digging ca.n.a.ls, &c. for the use of trade; and finally, giving longer credit to merchants in other countries, {137} as well as to those who are running in debt in their own. The stock on hand in manufactured goods increases something also. But when all these have taken place, to as great an extent as wanted, then the money begins to flow into other countries. By degrees, more money is sent away than should go, and the persons who are the proprietors of it frequently follow.

If the capital that leaves a country were only that which cannot find employment in it, the harm would not be great, though it would tend to enrich other countries, and bring them nearer a level. But that is not the case, the advantage of lending money abroad, if regularly paid at a higher interest than can be obtained at home, induces people to draw their money from trade, and vest it in the hands of foreigners. The Venetians, the Genoese, the Dutch, the Hanseatic Towns, and the cities of Flanders, did this; and the capital, which, when employed at home, formerly maintained perhaps one hundred people in affluence and industry, only supported one single family living in indolence and splendid penury. {138}

After being in possession of money for a considerable time, men prefer a certain employment at a low interest to one attended with risk, even where the interest is higher; and when great sums have been got by trade, those who have got them retire and live on the interest, which men, who have only gained a small capital cannot do.

There are many other circ.u.mstances, besides the abundance of capital, that tend to carry it away from a wealthy country. The depreciation of money that takes place, in every country that grows

{137} As the subject is here treated in the general way, applicable to all nations, the employment found by national debt, and the funds rising is not taken into account, as it will be noticed in the case of England. When money is plenty, all individuals in trade give longer credit; but this employs little more capital, when they give it to each other it employs no more, but when to consumers it does.

{138} The manner in which those families live is peculiar to themselves; great shew with great economy, and without the smallest spark of love, either for their fellow-citizens or their country.

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rich, falls nearly all on the lender at interest, {139} who, as he cannot bring back things to their former value, seeks enjoyment in another country, and obtains, by change of place, what he lost by lapse of time.

The weight of taxes is another cause that drives capital from wealthy to poorer countries; and last of all, in case of anxiety, or of mistrust, the capitalists are generally the first to emigrate. [{140}] Anxiety and mistrust are periodical amongst a wealthy people.

As the burthens sustained by a people in prosperity are generally great, in proportion to their capital and industry, it is clear, that when capital and industry diminish, the burthens, (which do not admit of being diminished in the same proportion,) fall more heavily on those who remain; this increased cause produces, naturally, an increased effect. Thus, like a falling column, the weight increases, and the momentum becomes irresistible.

It is then that necessity, the spur to industry in new and rising nations, (that spur which taxes and rent continue to excite, for the good of mankind, for a certain period,) begins to crush what it had raised, and to stab where it formerly stimulated. Then it is that the money-lenders, who, at first, sent off their capital, having ceased to be engaged in trade, withdraw, by degrees, and rather content themselves with a diminished income in another country, than struggle with the difficulties they find they have to encounter in their own.

{139} Money lent out at interest loses, money laid out in purchases gains, in a country that is advancing in riches.

If a man, who had 2000 L. thirty years ago, had laid out 1000 L. at interest, and, with the other bought land, he would, indeed, have got less rent for his land at first, but now it would be doubled, he would get 60 L. a year, and if he wished to sell he would get 2000 L.

whereas, the other 1000 L. would only produce 50 L. and, if called in, the single thousand would be all he would receive.

{140} [Transcriber's note: footnote not a.s.signed a place in the original text, intended location a.s.sumed to be as shown] This was seen at the beginning of the French revolution, though the a.s.signats, by lowering the rate of exchange, frightened many from transferring their money, at an apparent loss of twelve or fifteen per cent. But those that overlooked this loss have rejoiced in it ever since, as the others have repented bitterly the avarice that made them risk all to save a little, and to become beggars.

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It is difficult to say at what point this would stop, if the effect produced did not affix the boundary.

The prices of land, of rent, of houses, and of provisions, sink low, and induce some people to remain; for, as those articles cannot be transported, or carried off, and are always worth possessing and enjoying, it is clear there must be a term set to the decay and emigration, by the nature of things. Unfortunately for countries that have been great, that term does not seem to arrive till it is reduced far below the level of other nations. {141}

There are, however, some peculiar causes that operate in some modern nations, in counteracting this effect, so far as it is occasioned by a superabundance of capital; but, as this is not general to all nations, the proper place for speaking of it will be when we come to treat of the tendency of capital to quit this country.

The effects, arising from that depreciation of money, which takes place in every wealthy country, are great and numerous, and have been always found where wealth abounded. The people in such countries can easily command the labour of others that are not so rich, but the others cannot afford to pay for theirs; this tends to remove industry. On the other hand, if a supply of the necessaries of life are wanted in a rich country, they may be obtained from countries where the value of money is less, without throwing prices out of their level; whereas, in the country where money is of great value, that is not the case.

The price of bread, for instance, is, at Paris, one penny the pound, and in London at eight-pence the quartern loaf, which weighs just four French pounds, the price is exactly double. If every thing was conducted in a fair way, corn, from all countries, where it is equally as cheap as in France, might be brought and sold in London, at the

{141} At Bruges, (in Flanders) at Antwerp, Cologne, Ghent, or any of those decayed towns, house-rent was fallen, before the French revolution, to little more than an acknowledgement for occupation, where the houses were large and retired. This induced people to live at those places, who would not otherwise have done so. Small houses, lately built, were more expensive than the large old ones, built in the time that commerce flourished.

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usual market price; but, before Paris could get a supply from London, the bread would cost three times its usual price. This circ.u.mstance, if properly managed, might be turned to advantage; why it is not, is difficult to say, and is a proof that there are either regulations, or practices without regulation, that counteract the true nature of things; for it would not cost a farthing a pound to bring the corn from Paris to the London market.

Paris is only mentioned here for the sake of comparison, and because the average prices have nearly the proportion of one to two. The reasons why corn is not brought from thence are no secret, but the same reasoning will apply to American corn, corn from Barbary, or the Baltic, and from other places, where the value of money is greater than in England. {142}

The princ.i.p.al of the other effects of the depreciation of money are to be found in the chapter on the exterior Causes of the Decline of Nations, as it is in its foreign transactions that the depreciation of money is the most felt.

In the interior, that depreciation only acts when there is a considerable lapse of time, during which the value has altered; it has, in general, no effect on transactions that are begun and finished within a short period, and in the interior of the country itself.