foreign nations into one or two of its ports only, 
cannot transact the same quantity of business 
which it might do with different laws 
and institutions. In a country, too, where, 
though the rich, or the owners of large capitals, 
enjoy a good deal of security, the poor
or the owners of small capitals, enjoy scarce 
any, but are liable, under the pretence of justice
to be pillaged and plundered at any time 
by the inferior mandarins, the quantity of 
stock employed in all the different branches of 
business transacted within it, can never be 
equal to what the nature and extent of that 
business might admit. In every different 
branch, the oppression of the poor must establish 
the monopoly of the rich, who, by engrossing 
the whole trade to themselves, will 
be able to make very large profits. Twelve 
per cent. accordingly, is said to be the common 
interest of money in China, and the ordinary 
profits of stock must be sufficient to 
afford this large interest
A defect in the law may sometimes raise 
the rate of interest considerably above what 
the condition of the country, as to wealth or 
poverty, would require. When the law does 
not enforce the performance of contracts, it 
puts all borrowers nearly upon the same footing 
with bankrupts, or people of doubtful 
credit, in better regulated countries. The uncertainty 
of recovering his money makes the 
lender exact the same usurious interest which 
is usually required from bankrupts. Among 
the barbarous nations who overran the western 
provinces of the Roman empire, the performance 
of contracts was left for many ages to 
the faith of the contracting parties. The 
courts of justice of their kings seldom intermeddled 
in it. The high rate of interest 
which took place in those ancient times, may 
perhaps, be partly accounted for from this 
When the law prohibits interest altogether
it does not prevent it. Many people must 
borrow, and nobody will lend without such a 
consideration for the use of their money as is 
suitable, not only to what can be made by the 
use of it, but to the difficulty and danger of 
evading the law. The high rate of interest 
among all Mahometan nations is accounted for 
by M. Montesquieu, not from their poverty
but partly from this, and partly from the difficulty 
of recovering the money. 
The lowest ordinary rate of profit must always 
be something more than what is sufficient 
to compensate the occasional losses to 
which every employment of stock is exposed. 
It is this surplus only which is neat or clear 
profit. What is called gross profit, comprehends 
frequently not only this surplus, but 
what is retained for compensating such extraordinary 
losses. The interest which the borrower 
can afford to pay is in proportion to the 
clear profit only. 
The lowest ordinary rate of interest must, 
in the same manner, be something more than 
sufficient to compensate the occasional losses 
to which lending, even with tolerable prudence, 
is exposed. Were it not, mere charity 
or friendship could be the only motives for 
In a country which had acquired its full 
complement of riches, where, in every particular 
branch of business, there was the greatest 
quantity of stock that could be employed 
in it, as the ordinary rate of clear profit would 
be very small, so the usual market rate of interest 
which could be afforded out of it would 
be so low as to render it impossible for any 
but the very wealthiest people to live upon 
the interest of their money. All people of 
small or middling fortunes would be obliged 
to superintend themselves the employment of 
their own stocks. It would be necessary that 
almost every man should be a man of business
or engage in some sort of trade. The province 
of Holland seems to be approaching 
near to this state. It is there unfashionable 
not to be a man of business. Necessity 
makes it usual for almost every man to be so, 
and custom everywhere regulates fashion. As 
it is ridiculous not to dress, so is it, in some 
measure, not to be employed like other people. 
As a man of a civil profession seems awkward 
in camp or a garrison, and is even in some 
danger of being despised there, so does an 
idle man among men of business
The highest ordinary rate of profit may be 
such as, in the price of the greater part of 
commodities, eats up the whole of what should 
go to the rent of the land, and leaves only 
what is sufficient to pay the labour of preparing 
and bringing them to market, according 
to the lowest rate at which labour can anywhere 
be paid, the bare subsistence of the labourer
The workman must always have 
been fed in some way or other while he was 
about the work, but the landlord may not always 
have been paid. The profits of the 
trade which the servants of the East India 
Company carry on in Bengal may not, perhaps, 
be very far from this rate
The proportion which the usual market 
rate of interest ought to bear to the ordinary 
rate of clear profit, necessarily varies as profit 
rises or falls. Double interest is in Great 
Britain reckoned what the merchants call a 
good, moderate, reasonable profit; terms 
which, I apprehend, mean no more than a 
common and usual profit. In a country where 
the ordinary rate of clear profit is eight or 
ten per cent. it may be reasonable that one 
half of it should go to interest, wherever business 
is carried on with borrowed money. The 
stock is at the risk of the borrower, who, as it 
were, insures it to the lender; and four or five 
per cent. may, in the greater part of trades, 
be both a sufficient profit upon the risk of 
this insurance, and a sufficient recompence for 
the trouble of employing the stock. But the 
proportion between interest and clear profit