trades above mentioned, both those circumstances 
The great and general utility of the banking 
trade, when prudently managed, has been 
fully explained in the second book of this 
Inquiry. But a public bank, which is to 
support public credit, and, upon particular 
emergencies, to advance to government the 
whole produce of a tax, to the amount, perhaps, 
of several millions, a year or two before 
it comes in, requires a greater capital than 
can easily be collected into any private copartnery
The trade of insurance gives great security 
to the fortunes of private people, and, by 
dividing among a great many that loss which 
would ruin an individual, makes it fall light 
and easy upon the whole society. In order 
to give this security, however, it is necessary 
that the insurers should have a very large 
capital. Before the establishment of the two 
joint-stock companies for insurance in London
a list, it is said, was laid before the attorney-general
of one hundred and fifty private 
insurers, who had failed in the course of 
a few years. 
That navigable cuts and canals, and the 
works which are sometimes necessary for 
supplying a great city with water, are of 
great and general utility, while, at the same 
time, they frequently require a greater expense 
than suits the fortunes of private people, is 
sufficiently obvious
Except the four trades above mentioned, I 
have not been able to recollect any other, in 
which all the three circumstances requisite for 
rendering reasonable the establishment of a 
joint-stock company concur. The English 
copper company of London, the lead-smelting 
company, the glass-grinding company
have not even the pretext of any great or 
singular utility in the object which they pursue
nor does the pursuit of that object seem 
to require any expense unsuitable to the fortunes 
of many private men. Whether the 
trade which those companies carry on, is reducible 
to such strict rule and method as to 
render it fit for the management of a joint-stock 
company, or whether they have any 
reason to boast of their extraordinary profits, 
I do not pretend to know. The mine-adventurers 
company has been long ago bankrupt
A share in the stock of the British Linen 
company of Edinburgh sells, at present, very 
much below par, though less so than it did 
some years ago. The joint-stock companies
which are established for the public-spirited 
purpose of promoting some particular manufacture, 
over and above managing their own 
affairs ill, to the diminution of the general stock 
of the society, can, in other respects, scarce 
ever fail to do more harm than good. Notwithstanding 
the most upright intentions, the 
unavoidable partiality of their directors to 
particular branches of the manufacture, of 
which the undertakers mislead and impose 
upon them, is a real discouragement to the 
rest, and necessarily breaks, more or less, that 
natural proportion which would otherwise 
establish itself between judicious industry and 
profit, and which, to the general industry of 
the country, is of all encouragements the 
greatest and the most effectual. 
ART. II.—Of the Expense of the Institution 
for the Education of Youth
The institutions for the education of the 
youth may, in the same manner, furnish
revenue sufficient for defraying their own expense
The fee or honorary, which the 
scholar pays to the master, naturally constitutes 
a revenue of this kind. 
Even where the reward of the master does 
not arise altogether from this natural revenue
it still is not necessary that it should be derived 
from that general revenue of the society
of which the collection and application 
are, in most countries, assigned to the executive 
power. Through the greater part of 
Europe, accordingly, the endowment of 
schools and colleges makes either no charge 
upon that general revenue, or but a very 
small one. It everywhere arises chiefly from 
some local or provincial revenue, from the 
rent of some landed estate, or from the interest 
of some sum of money, allotted and 
put under the management of trustees for 
this particular purpose, sometimes by the sovereign 
himself, and sometimes by some private 
Have those public endowments contributed 
in general, to promote the end of their institution
Have they contributed to encourage 
the diligence, and to improve the abilities, of 
the teachers? Have they directed the course 
of education towards objects more useful, 
both to the individual and to the public, than 
those to which it would naturally have gone 
of its own accord? It should not seem very 
difficult to give at least a probable answer to 
each of those questions. 
In every profession, the exertion of the 
greater part of those who exercise it, is always 
in proportion to the necessity they are 
under of making that exertion. This necessity 
is greatest with those to whom the emoluments 
of their profession are the only 
source from which they expect their fortune
or even their ordinary revenue and subsistence. 
In order to acquire this fortune, or 
even to get this subsistence, they must, in the 
course of a year, execute a certain quantity 
of work of a known value; and, where the 
competition is free, the rivalship of competitors, 
who are all endeavouring to justle one another 
out of employment, obliges every man to endeavour 
to execute his work with a certain 
degree of exactness. The greatness of the objects