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An Inquiry Into The Nature And Causes Of The Wealth Of Nations - Chapter 3

1. Introduction And Plan Of The Work

2. Book 1, Chapter 1

3. Chapter 2

4. Chapter 3

5. Chapter 4

6. Chapter 5

7. Chapter 6

8. Chapter 7

9. Chapter 8

10. Chapter 8 continue

11. Chapter 9

12. Chapter 10

13. Chapter 10 continue

14. Chapter 11

15. Chapter 11 continue

16. Chapter 11 continue.

17. Chapter 11 continue..

18. Chapter 11 continue...

19. Conclusion of the Chapter 11

20. Book 2 Introduction

21. Chapter 1

22. Chapter II

23. Chapter II continue

24. Chapter II continue

25. Chapter 3

26. Chapter 4

27. Chapter 5

28. Book 3, Chapter 1

29. Chapter 2

30. Chapter 3

31. Chapter 4

32. Book 4, Chapter 1

33. Chapter 1 continue

34. Chapter 2

35. Chapter 3, Part 1

36. Chapter 3, Part 2

37. Chapter 4

38. Chapter 5

39. Chapter 5 continue

40. Chapter 6

41. Chapter 7, Part 1

42. Chapter 7, Part 2

43. Chapter 7, Part 3

44. Chapter 7, Part 3 continue

45. Chapter 8

46. Chapter 9

47. Book 5, Chapter 1, Part 1

48. Chapter 1, Part 2

49. Chapter 1, Part 3

50. Chapter 1, Part 3 continue

51. Chapter 1, Part 3 continue B

52. Chapter 1, Part 4

53. Chapter 2, Part 1

54. Chapter 2, Part 2

55. Chapter 2, Part 2 continue

56. Chapter 2, Part 2 continue B

57. Chapter 2, Part 2 continue C

58. Chapter 2, Part 2 continue D

59. Chapter 3

60. Chapter 3 continue

Chapter III. Of The Rise And Progress Of Cities And Towns, After The
Fall Of The Roman Empire.

The inhabitants of cities and towns were, after the fall of the Roman
empire, not more favoured than those of the country. They consisted,
indeed, of a very different order of people from the first inhabitants
of the ancient republics of Greece and Italy. These last were composed
chiefly of the proprietors of lands, among whom the public territory was
originally divided, and who found it convenient to build their houses in
the neighbourhood of one another, and to surround them with a wall, for
the sake of common defence. After the fall of the Roman empire, on
the contrary, the proprietors of land seem generally to have lived in
fortified castles on their own estates, and in the midst of their own
tenants and dependants. The towns were chiefly inhabited by tradesmen
and mechanics, who seem, in those days, to have been of servile, or very
nearly of servile condition. The privileges which we find granted by
ancient charters to the inhabitants of some of the principal towns in
Europe, sufficiently show what they were before those grants. The people
to whom it is granted as a privilege, that they might give away their
own daughters in marriage without the consent of their lord, that upon
their death their own children, and not their lord, should succeed to
their goods, and that they might dispose of their own effects by will,
must, before those grants, have been either altogether, or very nearly,
in the same state of villanage with the occupiers of land in the

They seem, indeed, to have been a very poor, mean set of people, who
seemed to travel about with their goods from place to place, and from
fair to fair, like the hawkers and pedlars of the present times. In all
the different countries of Europe then, in the same manner as in several
of the Tartar governments of Asia at present, taxes used to be levied
upon the persons and goods of travellers, when they passed through
certain manors, when they went over certain bridges, when they carried
about their goods from place to place in a fair, when they erected in
it a booth or stall to sell them in. These different taxes were known
in England by the names of passage, pontage, lastage, and stallage.
Sometimes the king, sometimes a great lord, who had, it seems, upon some
occasions, authority to do this, would grant to particular traders, to
such particularly as lived in their own demesnes, a general exemption
from such taxes. Such traders, though in other respects of servile, or
very nearly of servile condition, were upon this account called free
traders. They, in return, usually paid to their protector a sort of
annual poll-tax. In those days protection was seldom granted without
a valuable consideration, and this tax might perhaps be considered as
compensation for what their patrons might lose by their exemption from
other taxes. At first, both those poll-taxes and those exemptions seem
to have been altogether personal, and to have affected only particular
individuals, during either their lives, or the pleasure of their
protectors. In the very imperfect accounts which have been published
from Doomsday-book, of several of the towns of England, mention is
frequently made, sometimes of the tax which particular burghers paid,
each of them, either to the king, or to some other great lord, for this
sort of protection, and sometimes of the general amount only of all
those taxes. {see Brady's Historical Treatise of Cities and Boroughs, p.
3. etc.}

But how servile soever may have been originally the condition of the
inhabitants of the towns, it appears evidently, that they arrived at
liberty and independency much earlier than the occupiers of land in
the country. That part of the king's revenue which arose from such
poll-taxes in any particular town, used commonly to be let in farm,
during a term of years, for a rent certain, sometimes to the sheriff
of the county, and sometimes to other persons. The burghers themselves
frequently got credit enough to be admitted to farm the revenues of
this sort winch arose out of their own town, they becoming jointly and
severally answerable for the whole rent. {See Madox, Firma Burgi, p.
18; also History of the Exchequer, chap. 10, sect. v, p. 223, first
edition.} To let a farm in this manner, was quite agreeable to the usual
economy of, I believe, the sovereigns of all the different countries of
Europe, who used frequently to let whole manors to all the tenants of
those manors, they becoming jointly and severally answerable for the
whole rent; but in return being allowed to collect it in their own
way, and to pay it into the king's exchequer by the hands of their
own bailiff, and being thus altogether freed from the insolence of
the king's officers; a circumstance in those days regarded as of the
greatest importance.

At first, the farm of the town was probably let to the burghers, in the
same manner as it had been to other farmers, for a term of years
only. In process of time, however, it seems to have become the general
practice to grant it to them in fee, that is for ever, reserving a
rent certain, never afterwards to be augmented. The payment having thus
become perpetual, the exemptions, in return, for which it was made,
naturally became perpetual too. Those exemptions, therefore, ceased
to be personal, and could not afterwards be considered as belonging
to individuals, as individuals, but as burghers of a particular burgh,
which, upon this account, was called a free burgh, for the same reason
that they had been called free burghers or free traders.

Along with this grant, the important privileges, above mentioned,
that they might give away their own daughters in marriage, that their
children should succeed to them, and that they might dispose of their
own effects by will, were generally bestowed upon the burghers of the
town to whom it was given. Whether such privileges had before been
usually granted, along with the freedom of trade, to particular
burghers, as individuals, I know not. I reckon it not improbable that
they were, though I cannot produce any direct evidence of it. But
however this may have been, the principal attributes of villanage and
slavery being thus taken away from them, they now at least became really
free, in our present sense of the word freedom.

Nor was this all. They were generally at the same time erected into a
commonalty or corporation, with the privilege of having magistrates
and a town-council of their own, of making bye-laws for their own
government, of building walls for their own defence, and of reducing all
their inhabitants under a sort of military discipline, by obliging them
to watch and ward; that is, as anciently understood, to guard and defend
those walls against all attacks and surprises, by night as well as by
day. In England they were generally exempted from suit to the hundred
and county courts: and all such pleas as should arise among them, the
pleas of the crown excepted, were left to the decision of their own
magistrates. In other countries, much greater and more extensive
jurisdictions were frequently granted to them. {See Madox, Firma Burgi.
See also Pfeffel in the Remarkable events under Frederick II. and his
Successors of the House of Suabia.}

It might, probably, be necessary to grant to such towns as were admitted
to farm their own revenues, some sort of compulsive jurisdiction to
oblige their own citizens to make payment. In those disorderly times,
it might have been extremely inconvenient to have left them to seek this
sort of justice from any other tribunal. But it must seem extraordinary,
that the sovereigns of all the different countries of Europe should have
exchanged in this manner for a rent certain, never more to be augmented,
that branch of their revenue, which was, perhaps, of all others, the
most likely to be improved by the natural course of things, without
either expense or attention of their own; and that they should, besides,
have in this manner voluntarily erected a sort of independent republics
in the heart of their own dominions.

In order to understand this, it must be remembered, that, in those
days, the sovereign of perhaps no country in Europe was able to protect,
through the whole extent of his dominions, the weaker part of his
subjects from the oppression of the great lords. Those whom the law
could not protect, and who were not strong enough to defend themselves,
were obliged either to have recourse to the protection of some great
lord, and in order to obtain it, to become either his slaves or vassals;
or to enter into a league of mutual defence for the common protection of
one another. The inhabitants of cities and burghs, considered as single
individuals, had no power to defend themselves; but by entering into
a league of mutual defence with their neighbours, they were capable of
making no contemptible resistance. The lords despised the burghers,
whom they considered not only as a different order, but as a parcel of
emancipated slaves, almost of a different species from themselves.
The wealth of the burghers never failed to provoke their envy and
indignation, and they plundered them upon every occasion without mercy
or remorse. The burghers naturally hated and feared the lords. The king
hated and feared them too; but though, perhaps, he might despise, he
had no reason either to hate or fear the burghers. Mutual interest,
therefore, disposed them to support the king, and the king to support
them against the lords. They were the enemies of his enemies, and it was
his interest to render them as secure and independent of those enemies
as he could. By granting them magistrates of their own, the privilege
of making bye-laws for their own government, that of building walls for
their own defence, and that of reducing all their inhabitants under a
sort of military discipline, he gave them all the means of security and
independency of the barons which it was in his power to bestow. Without
the establishment of some regular government of this kind, without some
authority to compel their inhabitants to act according to some certain
plan or system, no voluntary league of mutual defence could either have
afforded them any permanent security, or have enabled them to give the
king any considerable support. By granting them the farm of their own
town in fee, he took away from those whom he wished to have for his
friends, and, if one may say so, for his allies, all ground of jealousy
and suspicion, that he was ever afterwards to oppress them, either by
raising the farm-rent of their town, or by granting it to some other

The princes who lived upon the worst terms with their barons, seem
accordingly to have been the most liberal in grants of this kind to
their burghs. King John of England, for example, appears to have been
a most munificent benefactor to his towns. {See Madox.} Philip I. of
France lost all authority over his barons. Towards the end of his reign,
his son Lewis, known afterwards by the name of Lewis the Fat, consulted,
according to Father Daniel, with the bishops of the royal demesnes,
concerning the most proper means of restraining the violence of the
great lords. Their advice consisted of two different proposals. One was
to erect a new order of jurisdiction, by establishing magistrates and a
town-council in every considerable town of his demesnes. The other was
to form a new militia, by making the inhabitants of those towns, under
the command of their own magistrates, march out upon proper occasions
to the assistance of the king. It is from this period, according to
the French antiquarians, that we are to date the institution of
the magistrates and councils of cities in France. It was during the
unprosperous reigns of the princes of the house of Suabia, that the
greater part of the free towns of Germany received the first grants
of their privileges, and that the famous Hanseatic league first became
formidable. {See Pfeffel.}

The militia of the cities seems, in those times, not to have been
inferior to that of the country; and as they could be more readily
assembled upon any sudden occasion, they frequently had the advantage in
their disputes with the neighbouring lords. In countries such as Italy
or Switzerland, in which, on account either of their distance from the
principal seat of government, of the natural strength of the country
itself, or of some other reason, the sovereign came to lose the whole
of his authority; the cities generally became independent republics, and
conquered all the nobility in their neighbourhood; obliging them to pull
down their castles in the country, and to live, like other peaceable
inhabitants, in the city. This is the short history of the republic of
Berne, as well as of several other cities in Switzerland. If you except
Venice, for of that city the history is somewhat different, it is the
history of all the considerable Italian republics, of which so great
a number arose and perished between the end of the twelfth and the
beginning of the sixteenth century.

In countries such as France and England, where the authority of the
sovereign, though frequently very low, never was destroyed altogether,
the cities had no opportunity of becoming entirely independent. They
became, however, so considerable, that the sovereign could impose no tax
upon them, besides the stated farm-rent of the town, without their
own consent. They were, therefore, called upon to send deputies to the
general assembly of the states of the kingdom, where they might join
with the clergy and the barons in granting, upon urgent occasions, some
extraordinary aid to the king. Being generally, too, more favourable to
his power, their deputies seem sometimes to have been employed by him
as a counterbalance in those assemblies to the authority of the
great lords. Hence the origin of the representation of burghs in the
states-general of all great monarchies in Europe.

Order and good government, and along with them the liberty and security
of individuals, were in this manner established in cities, at a time
when the occupiers of land in the country, were exposed to every sort of
violence. But men in this defenceless state naturally content themselves
with their necessary subsistence; because, to acquire more, might only
tempt the injustice of their oppressors. On the contrary, when they are
secure of enjoying the fruits of their industry, they naturally exert it
to better their condition, and to acquire not only the necessaries,
but the conveniencies and elegancies of life. That industry, therefore,
which aims at something more than necessary subsistence, was established
in cities long before it was commonly practised by the occupiers of land
in the country. If, in the hands of a poor cultivator, oppressed with
the servitude of villanage, some little stock should accumulate, he
would naturally conceal it with great care from his master, to whom it
would otherwise have belonged, and take the first opportunity of running
away to a town. The law was at that time so indulgent to the inhabitants
of towns, and so desirous of diminishing the authority of the lords over
those of the country, that if he could conceal himself there from the
pursuit of his lord for a year, he was free for ever. Whatever stock,
therefore, accumulated in the hands of the industrious part of the
inhabitants of the country, naturally took refuge in cities, as the only
sanctuaries in which it could be secure to the person that acquired it.

The inhabitants of a city, it is true, must always ultimately derive
their subsistence, and the whole materials and means of their industry,
from the country. But those of a city, situated near either the
sea-coast or the banks of a navigable river, are not necessarily
confined to derive them from the country in their neighbourhood. They
have a much wider range, and may draw them from the most remote corners
of the world, either in exchange for the manufactured produce of their
own industry, or by performing the office of carriers between distant
countries, and exchanging the produce of one for that of another. A city
might, in this manner, grow up to great wealth and splendour, while not
only the country in its neighbourhood, but all those to which it traded,
were in poverty and wretchedness. Each of those countries, perhaps,
taken singly, could afford it but a small part, either of its
subsistence or of its employment; but all of them taken together, could
afford it both a great subsistence and a great employment. There were,
however, within the narrow circle of the commerce of those times, some
countries that were opulent and industrious. Such was the Greek empire
as long as it subsisted, and that of the Saracens during the reigns of
the Abassides. Such, too, was Egypt till it was conquered by the Turks,
some part of the coast of Barbary, and all those provinces of Spain
which were under the government of the Moors.

The cities of Italy seem to have been the first in Europe which were
raised by commerce to any considerable degree of opulence. Italy lay in
the centre of what was at that time the improved and civilized part of
the world. The crusades, too, though, by the great waste of stock and
destruction of inhabitants which they occasioned, they must necessarily
have retarded the progress of the greater part of Europe, were extremely
favourable to that of some Italian cities. The great armies which
marched from all parts to the conquest of the Holy Land, gave
extraordinary encouragement to the shipping of Venice, Genoa, and Pisa,
sometimes in transporting them thither, and always in supplying them
with provisions. They were the commissaries, if one may say so, of those
armies; and the most destructive frenzy that ever befel the European
nations, was a source of opulence to those republics.

The inhabitants of trading cities, by importing the improved
manufactures and expensive luxuries of richer countries, afforded some
food to the vanity of the great proprietors, who eagerly purchased
them with great quantities of the rude produce of their own lands.
The commerce of a great part of Europe in those times, accordingly,
consisted chiefly in the exchange of their own rude, for the
manufactured produce of more civilized nations. Thus the wool of England
used to be exchanged for the wines of France, and the fine cloths of
Flanders, in the same manner as the corn in Poland is at this day,
exchanged for the wines and brandies of France, and for the silks and
velvets of France and Italy.

A taste for the finer and more improved manufactures was, in this
manner, introduced by foreign commerce into countries where no such
works were carried on. But when this taste became so general as to
occasion a considerable demand, the merchants, in order to save
the expense of carriage, naturally endeavoured to establish some
manufactures of the same kind in their own country. Hence the origin
of the first manufactures for distant sale, that seem to have been
established in the western provinces of Europe, after the fall of the
Roman empire.

No large country, it must be observed, ever did or could subsist without
some sort of manufactures being carried on in it; and when it is said
of any such country that it has no manufactures, it must always be
understood of the finer and more improved, or of such as are fit for
distant sale. In every large country both the clothing and household
furniture or the far greater part of the people, are the produce of
their own industry. This is even more universally the case in those poor
countries which are commonly said to have no manufactures, than in
those rich ones that are said to abound in them. In the latter you
will generally find, both in the clothes and household furniture of the
lowest rank of people, a much greater proportion of foreign productions
than in the former.

Those manufactures which are fit for distant sale, seem to have been
introduced into different countries in two different ways.

Sometimes they have been introduced in the manner above mentioned, by
the violent operation, if one may say so, of the stocks of particular
merchants and undertakers, who established them in imitation of some
foreign manufactures of the same kind. Such manufactures, therefore,
are the offspring of foreign commerce; and such seem to have been the
ancient manufactures of silks, velvets, and brocades, which flourished
in Lucca during the thirteenth century. They were banished from thence
by the tyranny of one of Machiavel's heroes, Castruccio Castracani. In
1310, nine hundred families were driven out of Lucca, of whom thirty-one
retired to Venice, and offered to introduce there the silk manufacture.
{See Sandi Istoria civile de Vinezia, part 2 vol. i, page 247 and 256.}
Their offer was accepted, many privileges were conferred upon them, and
they began the manufacture with three hundred workmen. Such, too, seem
to have been the manufactures of fine cloths that anciently flourished
in Flanders, and which were introduced into England in the beginning of
the reign of Elizabeth, and such are the present silk manufactures
of Lyons and Spitalfields. Manufactures introduced in this manner are
generally employed upon foreign materials, being imitations of foreign
manufactures. When the Venetian manufacture was first established, the
materials were all brought from Sicily and the Levant. The more ancient
manufacture of Lucca was likewise carried on with foreign materials. The
cultivation of mulberry trees, and the breeding of silk-worms, seem not
to have been common in the northern parts of Italy before the sixteenth
century. Those arts were not introduced into France till the reign of
Charles IX. The manufactures of Flanders were carried on chiefly with
Spanish and English wool. Spanish wool was the material, not of the
first woollen manufacture of England, but of the first that was fit for
distant sale. More than one half the materials of the Lyons manufacture
is at this day foreign silk; when it was first established, the whole,
or very nearly the whole, was so. No part of the materials of the
Spitalfields manufacture is ever likely to be the produce of England.
The seat of such manufactures, as they are generally introduced by the
scheme and project of a few individuals, is sometimes established in
a maritime city, and sometimes in an inland town, according as their
interest, judgment, or caprice, happen to determine.

At other times, manufactures for distant sale grow up naturally, and
as it were of their own accord, by the gradual refinement of those
household and coarser manufactures which must at all times be carried
on even in the poorest and rudest countries. Such manufactures are
generally employed upon the materials which the country produces, and
they seem frequently to have been first refined and improved In
such inland countries as were not, indeed, at a very great, but at a
considerable distance from the sea-coast, and sometimes even from
all water carriage. An inland country, naturally fertile and easily
cultivated, produces a great surplus of provisions beyond what is
necessary for maintaining the cultivators; and on account of the
expense of land carriage, and inconveniency of river navigation, it
may frequently be difficult to send this surplus abroad. Abundance,
therefore, renders provisions cheap, and encourages a great number of
workmen to settle in the neighbourhood, who find that their industry
can there procure them more of the necessaries and conveniencies of life
than in other places. They work up the materials of manufacture which
the land produces, and exchange their finished work, or, what is the
same thing, the price of it, for more materials and provisions. They
give a new value to the surplus part of the rude produce, by saving the
expense of carrying it to the water-side, or to some distant market; and
they furnish the cultivators with something in exchange for it that is
either useful or agreeable to them, upon easier terms than they could
have obtained it before. The cultivators get a better price for their
surplus produce, and can purchase cheaper other conveniencies which they
have occasion for. They are thus both encouraged and enabled to increase
this surplus produce by a further improvement and better cultivation
of the land; and as the fertility of she land had given birth to the
manufacture, so the progress of the manufacture reacts upon the land,
and increases still further it's fertility. The manufacturers first
supply the neighbourhood, and afterwards, as their work improves and
refines, more distant markets. For though neither the rude produce, nor
even the coarse manufacture, could, without the greatest difficulty,
support the expense of a considerable land-carriage, the refined and
improved manufacture easily may. In a small bulk it frequently contains
the price of a great quantity of rude produce. A piece of fine cloth,
for example which weighs only eighty pounds, contains in it the price,
not only of eighty pounds weight of wool, but sometimes of several
thousand weight of corn, the maintenance of the different working
people, and of their immediate employers. The corn which could with
difficulty have been carried abroad in its own shape, is in this manner
virtually exported in that of the complete manufacture, and may easily
be sent to the remotest corners of the world. In this manner have grown
up naturally, and, as it were, of their own accord, the manufactures
of Leeds, Halifax, Sheffield, Birmingham, and Wolverhampton. Such
manufactures are the offspring of agriculture. In the modern history of
Europe, their extension and improvement have generally been posterior
to those which were the offspring of foreign commerce. England was noted
for the manufacture of fine cloths made of Spanish wool, more than
a century before any of those which now flourish in the places above
mentioned were fit for foreign sale. The extension and improvement of
these last could not take place but in consequence of the extension
and improvement of agriculture, the last and greatest effect of foreign
commerce, and of the manufactures immediately introduced by it, and
which I shall now proceed to explain.

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