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rent profit, however, is frequently no more than the reasonable wages of labour. The skill of an apothecary is a much nicer and more delicate matter than that of any artificer whatever; and the trust which is reposed in him is of much greater importance. He is the physician of the poor in all cases, and of the rich where the distress or danger is not very great. His reward, therefore, ought to be suitable to his skill and his trust, and it arises generally from the price at which he sells his drugs. But the whole drugs which the best employed apothecary in a large market town will sell in a year may not perhaps cost him above thirty or forty pounds. Though he should sell them, therefore, for three or four hundred, or perhaps at a thousand per cent. profit, this may be frequently no more than the reasonable wages of his labour, charged in the only way in which he can charge them, upon the price of his drugs. The greater part of the apparent profit is real wages, disguised in the garb of profit.

"In a small seaport town, a little grocer will make forty or fifty per cent. upon a stock of a single hundred pounds, while a considerable wholesale merchant in the same place will scarce make eight or ten per cent. upon a stock of ten thousand. The trade of the grocer may be necessary for the conveniency of the inhabitants, and the narrowness of the market may not admit the employment of a larger capital in the business. The man, however, must not only live by his trade, but live by it suitably to the qualifications which it requires. Besides possessing a little capital, he must be able to read, write, and account, and must be a tolerable judge too of, perhaps, fifty or sixty different sorts of goods, their prices, qualities, and the markets where they are to be had cheapest. He must have all the knowledge, in short, that is necessary for a great merchant, which nothing hinders him from becoming but the want of a sufficient capital. Thirty or forty pounds a year cannot be considered as too great a recompense for the labour of a person so accomplished. Deduct this from the seemingly great profits of his capital, and little more will remain, perhaps, than the ordinary profits of stock. The greater part of the apparent profit is, in this case, too, real wages."

What Smith says in the cases of the apothecary and the grocer is true to a certain extent, but not wholly so. The skill necessary to carry on a druggist's or a grocer's business is probably not more. difficult to acquire than that required in many other trades. But

they deal in immensely smaller sums. The druggist probably sells for a shilling drugs which cost him a farthing. This apparently enormous profit is simply the necessary consequence of the exceedingly minute sums in which he deals. When a trader deals with large sums he can live upon a profit of 5 per cent. per day, or less. But when the sums he deals in are pence and half-pence, the profit must be enormous to enable him to live. Now, people do not require medicine by pounds' worths, but by ha'p'orths and pennyworths, and hence this enormous profit is absolutely necessary to enable the trade to exist.

10. Persons who engage in trade must live by their trade; they must, therefore, necessarily charge their customers such prices as will enable them in the long run to support themselves out of the profits. Hence, when transactions are very trifling in number and magnitude, they must charge very high prices in order to enable them to live. But when the transactions increase in magnitude and number, they are enabled to reduce the profits upon each, and lower their price. It is this circumstance that compels small shopkeepers in rural districts to charge such high prices for their goods, to the great indignation of many well-meaning but unreflecting persons. It is not uncommon to hear such persons exclaim against what they call the extortionate charges of country shopkeepers, quite forgetting that if the traders cannot make a living out of their business, they must give it up altogether, and the people be totally deprived of the convenience.

It has sometimes happened that gentlemen having plenty of other means to back them, have established rival shops for the express purpose of beating down the prices of the country shopkeepers. The consequence has been that the traders who had nothing but their business to support them have been ruined, the gentleman in process of time either got tired of his whim, or for other reasons abandoned it, and the germ of a nascent trade in a district destroyed, a pregnant example of the Spanish proverb,"Hell is paved with good intentions."

11. There can be nothing more mischievous or injurious to a trade than for persons to interfere with it who are not regularly engaged in it. Mr. Laing mentions a very remarkable instance of this at Drontheim-"I was surprised on inquiring at the only 1 Residence in Norway, p. 79. Travellers' Library.

now.

bookseller's shop, for a New Testament in the Norwegian tongue, to find that he kept none; I thought at first he had misunderstood me, but really found he did not keep any of late years. As he understood German, I asked him how in a population of 12,000 people, the only bookseller kept no stock of Testaments and Bibles; he said that country booksellers did not find it answer, as the Bible Society in London had once sent out a stock which were sold much lower than the trade could afford, and it was only after the Society's Bibles were sold that they could get clear of what they had on hand; hence, they could not venture to keep any It is plain if any benevolent society were to supply a parish with boots and shoes below prime cost, until all the shoemakers in the parish had turned to other employments, the parish would soon be barefooted, and that they would do more harm than good unless they had funds to continue the supply for ever. This bookseller, a very respectable man, laid no stress upon the circumstance, but simply explained it as he might have answered any other inquiry about books; and a bookbinder, whom I afterwards saw, gave me the same reason. Men of the first capacity are connected with our societies for the distribution of the Scriptures, and it may well deserve their consideration whether such distributions may not, in the long run, do more harm than good. If the ordinary mode of supplying human wants, by affording a fair remuneration to those who bring an article to where it is wanted, be invaded, they may be interfering with, and stopping up the natural channel, by which society must in the long run be supplied with religious books."

12. Hence, we see that when transactions are few and paltry, prices, and the profits upon each, must be high, and that a multiplication of transactions, and an increase of their amount, has a tendency to lower prices. Nowhere are rents so high as in the City of London; and nowhere are prices for ordinary goods so moderate. Goods in the City are in many cases twenty-five per cent. cheaper than in the suburbs, and this is not entirely the result of competition, which is equally active in the one as in the other, but is the result of the great number and magnitude of their transactions. The profits upon each transaction are much less than a country shopkeeper receives; but it is found that small profit upon a large and rapid circulation of commodities

leads much faster to opulence than a large profit upon a slow and small circulation. Instead of the grasping rapacity which formerly used to make as great a profit as possible upon each transaction, modern experience demonstrates that the true axiom of trade is small profits and quick returns. Bacon saw clearly, what has been far too much overlooked by writers on Political Economy, that the frequency of returns is of far more consequence than the magnitude of each case of profit. "The proverb is true that light gains make heavy purses, for light gains come thick, whereas great come but now and then."1

13. It is unquestionably true, that a very rapid sale, accompanied by an unlimited supply, has the effect of lowering prices, even where the cost of production is increased. As a familiar instance, we may take the fares of cabs in London and the provinces. Cabs are sixpence a mile in London, but much higher in all provincial towns. Now, the cost of maintaining cabs, feeding horses, rent of stables, &c., is much higher in London than in the provinces. And, therefore, according to the notion that cost of production regulates value, the fares ought to be much higher. But the fact is, the demand for cabs is much greater in London than in the country. A London cabby gets many more fares than his provincial brother. Thus the returns are made so much more quickly, that a much greater amount of profit is made in the same time, and fares adjust themselves to that.

14. It is because no single trade is sufficient to occupy a man's time, or gain him a livelihood, that dealers in country districts, and in the commencement of trade, are obliged to unite so many different kinds of business. At a small watering place in England we saw the prospectus of a tradesman who united thirty-six kinds of trade. As population and wealth increase there are more demands in each of these different kinds of business, and the trader finds that he can gain a living by confining himself to a fewer number. At last every one confines himself to a single business, being able to make a livelihood out of it. Thus also in the rise of the arts, Michael Angelo was sculptor, painter, architect and engineer. Gradually these employments disintegrate. Not only in time each man confines himself to a single trade, but even 1 Essays: Of Ceremonies and Respects.

to one small department of a trade. Each department of trade separates itself into a distinct employment. This is also the case in the sciences as soon as they attain a certain magnitude. Not only in modern times do men devote themselves to a single science, but in many cases a single branch of that science is sufficient to employ a lifetime. So also in the professions. Men become oculists, aurists, dentists. This is that principle of the separation of employments which has long been observed by Economists, and which Smith calls the "division of labour" with which he has commenced his work, but which comes more naturally, we think, in a subsequent stage of the inquiry, and which we have more fully considered in a future chapter.

"It will

15. It is often said that Profits tend to an equality. be admitted," says Senior,1 "that in the absence of disturbing causes, the Rate of Profit in all employments of Capital is equal." Even if it were admitted that there may be a tendency to equalise actual profits, the difference of the time in which profits are made completely destroys all equality in the Rate of Profit. If an active and pushing tradesman manages to effect sales with greater rapidity than his neighbours he increases his Rate of Profit enormously. In fact such a person often begins his business by lowering his prices, in order to increase the rapidity of the sale of his goods.

16. Moreover, this doctrine of the equality of Profits is deceptive in another sense. Smith says "The increase of stock, which raises wages, tends to lower [actual] 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 generally requires a greater stock to carry on any sort of trade in a great town than in a country village. The great stocks employed in every branch of trade, and the number of rich competitors, generally reduce the Rate of Profit in the former below what it is in the latter. But the wages of labour are generally higher in a great town than in a country village. In a thriving

1 Political Economy, p. 188. 2 Wealth of Nations, B. 1., ch. 9.

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