Book I: Chapter 9

CHAPTER IX.

OF THE PROFITS OF STOCK.

The rise and fall in the profits of stock depend upon the same causes with
the rise and fall in the wages of labour, the increasing or declining state
of the wealth of the society ; but those causes affect the one and the other
very differently.

The increase of stock, which raises wages, tends to lower profit. When the
stocks of many rich merchants are turned into the same trade, their mutual
competition naturally tends to lower its profit; and when there is a like
increase of stock in all the different trades carried on in the same
society, the same competition must produce the same effect in them all.

It is not easy, it has already been observed, to ascertain what are the
average wages of labour, even in a particular place, and at a particular
time. We can, even in this case, seldom determine more than what are the
most usual wages. But even this can seldom be done with regard to the
profits of stock. Profit is so very fluctuating, that the person who carries
on a particular trade, cannot always tell you himself what is the average of
his annual profit. It is affected, not only by every variation of price in
the commodities which he deals in, but by the good or bad fortune both of
his rivals and of his customers, and by a thousand other accidents, to which
goods, when carried either by sea or by land, or even when stored in a
warehouse, are liable. It varies, therefore, not only from year to year, but
from day to day, and almost from hour to hour. To ascertain what is the
average profit of all the different trades carried on in a great kingdom,
must be much more difficult; and to judge of what it may have been formerly,
or in remote periods of time, with any degree of precision, must be
altogether impossible.

But though it may be impossible to determine, with any degree of precision,
what are or were the average profits of stock, either in the present or in
ancient times, some notion may be formed of them from the interest of money.
It may be laid down as a maxim, that wherever a great deal can be made by
the use of money, a great deal will commonly be given for the use of it; and
that, wherever little can be made by it, less will commonly he given for it.
Accordingly, therefore, as the usual market rate of interest varies in any
country, we may be assured that the ordinary profits of stock must vary with
it, must sink as it sinks, and rise as it rises. The progress of interest,
therefore, may lead us to form some notion of the progress of profit.

By the 37th of Henry VIII. all interest above ten per cent. was declared
unlawful. More, it seems, had sometimes been taken before that. In the reign
of Edward VI. religious zeal prohibited all interest.