Book IV, Chapter IX, 4

Just as the political economy of modern European nations has favored manufacturing and foreign trade, the industry of towns, over agriculture, the industry of the countryside, so that of other nations has followed a different course and favored agriculture over manufacturing and foreign trade.

China’s policy favors agriculture above all other occupations. The condition of a laborer in China is said to stand as far above that of an artisan as an artisan’s condition in most of Europe stands above a laborer’s. Every man in China aspires to obtain a small piece of land, whether owned or leased; leases are said to be granted on very moderate terms and to give tenants sufficient security. The Chinese have little regard for foreign trade. “Your beggarly commerce!” was how the mandarins of Pekin used to speak of it to Mr De Lange, the Russian envoy [See the Journal of Mr De Lange, in Bell’s Travels, vol. ii. p. 258, 276, 293.]. Except for trade with Japan, the Chinese themselves conduct little or no foreign trade in their own ships, and they admit foreign ships into only one or two ports of their kingdom. Foreign trade in China is thus restricted in every respect to a much narrower compass than it would naturally reach if it had greater freedom, whether in Chinese or foreign ships.

Manufactured goods often contain great value in a small bulk, and can therefore be carried between countries at less expense than most raw produce; in almost every country, they are the principal support of foreign trade. Moreover, in countries smaller and less favorably situated for internal commerce than China, manufacturing generally needs the support of foreign trade. Without an extensive foreign market, it could scarcely flourish either where the country is only moderately large and so has a limited home market, or where travel between provinces is so difficult that the goods of any one place cannot reach the whole home market the country offers. We must remember that the excellence of manufacturing depends entirely on the division of labor, and that, as already shown, the extent of the market necessarily governs how far labor can be divided in any manufacture. But China’s immense territory, its vast population, the variety of its climates and hence of the products of its provinces, and the easy waterborne communication among most of them give it a home market so extensive that it alone can sustain substantial manufacturing and permit a considerable division of labor. China’s home market may be little smaller than the markets of all the European countries combined. Yet a wider foreign trade, adding the rest of the world’s markets to this great home market, could scarcely fail to increase Chinese manufacturing greatly and greatly improve its productive powers, particularly if a substantial share of that trade were carried in Chinese ships. With more extensive navigation, the Chinese would naturally learn to use and build for themselves the various machines used abroad, as well as to adopt the other improvements in craftsmanship and industry practiced throughout the world. Under their present system, they have little opportunity to learn by the example of any other nation except Japan.

The policies of ancient Egypt and of the Gentoo government of Indostan also appear to have favored agriculture above all other occupations.

In both ancient Egypt and Indostan, the whole population was divided into different castes or tribes, each confined from father to son to a particular occupation or group of occupations. A priest’s son had to be a priest; a soldier’s son, a soldier; a laborer’s son, a laborer; a weaver’s son, a weaver; a tailor’s son, a tailor; and so on. In both countries, priests held the highest rank and soldiers the next; in both, the caste of farmers and laborers ranked above those of merchants and manufacturers.

Both governments paid particular attention to agriculture. The works built by Egypt’s ancient rulers to distribute the Nile’s waters properly were famous in antiquity, and the surviving ruins of some still inspire travelers’ admiration. Similar works built by the ancient rulers of Indostan to distribute the waters of the Ganges and many other rivers, though less celebrated, seem to have been equally grand. Both countries were consequently famous for their great fertility, though they occasionally suffered shortages. Despite their immense populations, both could export great quantities of grain to their neighbors in years of moderately abundant harvests.

The ancient Egyptians held a superstitious aversion to the sea. The Gentoo religion forbids its followers to light a fire on the water and therefore to cook food there, effectively barring them from long sea voyages. Egyptians and Indians alike must have depended almost entirely on the ships of other nations to export their surplus produce. This dependence must have limited their markets and discouraged growth in that surplus. It must have discouraged growth in manufactured produce still more than in raw produce. Manufactured goods need a much larger market than the most important kinds of raw produce from the land. One shoemaker will make more than 300 pairs of shoes in a year, while his own family may wear out fewer than six. Unless he has at least 50 families like his own as customers, he cannot sell all he makes. Even the largest class of artisans in a large country will seldom amount to more than one in 50, or one in a 100, of all its families. But some writers have calculated that half the population of such large countries as France and England works in agriculture, others a third, and none I know of less than a fifth. Since by far the greater part of those countries’ agricultural produce is consumed at home, each agricultural worker, on these estimates, needs scarcely more than one, two, or at most four families like his own as customers to dispose of all he produces. Agriculture can therefore sustain itself under a limited market far better than manufacturing. In ancient Egypt and Indostan, indeed, the limitation of foreign markets was partly offset by the convenience of many inland waterways, which opened the entire home market to the produce of every district in the most advantageous manner. Indostan’s great extent, moreover, gave it a very large home market, sufficient to support a wide variety of manufactures. But ancient Egypt, never as large as England, must always have had too small a home market to support any great variety. Accordingly, Bengal, the province of Indostan that commonly exports the most rice, has always been more notable for exporting a great variety of manufactured goods than for exporting grain. Ancient Egypt, by contrast, though it exported some manufactured goods, especially fine linen, along with other wares, was always best known for its vast grain exports. For a long time it was the granary of the Roman empire.

The rulers of China, ancient Egypt, and the various kingdoms into which Indostan has at different times been divided have always drawn all, or by far the greatest part, of their revenue from some kind of land tax or land rent. Like the European tithe, this tax or rent consisted of a fixed share—one fifth, it is said—of the land’s produce, either delivered in kind or paid in money at a prescribed valuation. It therefore varied from year to year as the harvest varied. It was natural, then, that the rulers of these countries should attend closely to agriculture, whose flourishing or decline directly determined the annual increase or decrease of their own revenue.

The policy of the ancient Greek republics and of Rome honored agriculture above manufacturing and foreign trade, yet seems to have discouraged these latter occupations rather than deliberately encouraged the former. In several ancient Greek states foreign trade was altogether prohibited; in several others, the occupations of artisans and manufacturers were considered harmful to the body’s strength and agility. They were thought to make a person incapable of developing the habits encouraged by military and gymnastic exercises, and thus more or less unfit to endure the hardships and face the dangers of war. Such occupations were judged suitable only for slaves, and free citizens were forbidden to practice them. Even in states without such a prohibition, including Rome and Athens, most people were effectively excluded from trades now commonly practiced by poorer townspeople. In Athens and Rome all these trades were carried on by the slaves of the rich for their masters’ benefit. The wealth, power, and protection of those masters made it almost impossible for a poor free person to find a market for work competing with that of their slaves. Slaves, however, are very seldom inventive. The most important improvements in machinery and in the organization and division of work that make labor easier and shorter have been discovered by free people. If a slave proposed such an improvement, his master would be apt to see it as an excuse for laziness, a wish to spare himself labor at his master’s expense. The unfortunate slave, rather than being rewarded, would probably be abused and perhaps punished. Manufacturing performed by slaves must therefore generally have required more labor to produce the same quantity of work than manufacturing performed by free people. The work of the former must consequently have been generally more expensive than that of the latter. Mr Montesquieu observes that the Hungarian mines, though no richer than nearby Turkish mines, have always been worked at less expense and therefore with greater profit. Turkish mines are worked by slaves, whose arms are the only machines the Turks have ever thought to employ. Hungarian mines are worked by free people who use much machinery to make their labor easier and shorter. From the little known about manufacturing prices in Greek and Roman times, finer goods appear to have been extraordinarily expensive. Silk sold for its weight in gold. It was not then manufactured in Europe; since all of it came from the East Indies, the long journey may partly explain its great price. But the price a lady would sometimes pay, it is said, for a piece of very fine linen appears equally extravagant. Since linen was always made either in Europe or, at the farthest, in Egypt, its high price can be explained only by the great expense of the labor involved; that expense, in turn, could only have resulted from the clumsiness of the machinery used. Fine woolens also seem to have cost much more than they do today, though their prices were not quite so extravagant. Pliny tells us [Plin. 1. ix.c.39.] that some cloths dyed in a particular fashion cost a hundred denarii, or £3:6s:8d. the pound weight. Others, dyed differently, cost a thousand denarii the pound weight, or £33:6s:8d. We must remember that the Roman pound contained only twelve of our avoirdupois ounces. This high price does seem to have been principally due to the dye. But if the cloths themselves had not been far more expensive than any made today, so costly a dye would probably never have been used on them: the disparity between the value of the accessory and that of the principal would have been too great. The same writer gives the price [Plin. 1. viii.c.48.] of certain triclinaria, woolen pillows or cushions on which people leaned while reclining at table, at a scarcely credible figure: some are said to have cost more than £30,000, others more than £300,000. Nor is this high price said to have resulted from the dye. Dr Arbuthnot observes that fashionable dress among both sexes appears to have been much less varied in ancient than in modern times; the very limited variety visible in ancient statues confirms his observation. He concludes that clothing must therefore have been cheaper overall then than now, but that conclusion does not seem to follow. When fashionable dress costs a great deal, variety must be limited. When improvements in the productive powers of manufacturing skill and industry make any single outfit moderately priced, variety will naturally be great. Unable to distinguish themselves through the expense of a single outfit, rich people will naturally try to do so through the number and variety of their clothes.

The economic policies of modern European nations have favored manufacturing and foreign trade, the work of towns, over agriculture, the work of the countryside. Other nations have taken the opposite approach, favoring agriculture over manufacturing and foreign trade.

China's policies favor agriculture above every other occupation. In China, a farmworker is said to be as much better off than an artisan as an artisan is better off than a farmworker in most of Europe. Everyone in China chiefly wants a small piece of land, either owned or leased. Leases there are said to be available on very moderate terms and to give tenants adequate security. The Chinese have little respect for foreign trade. “Your beggarly commerce!” was how the mandarins of Pekin used to describe it to Mr De Lange, the Russian envoy [See the Journal of Mr De Lange, in Bell’s Travels, vol. ii. p. 258, 276, 293.]. Apart from trade with Japan, the Chinese conduct little or no foreign trade themselves in their own ships. They admit foreign ships into only one or two of their ports. Foreign trade in China is therefore restricted on every side to a much smaller scale than it would naturally reach if Chinese and foreign ships alike were allowed more freedom.

Manufactured goods often carry a great deal of value in a small space, so they cost less to ship between countries than most raw produce. In nearly every country, they are therefore the chief support of foreign trade. In countries smaller than China, or less suited to domestic trade, manufacturing generally needs foreign trade to support it too. Without a large foreign market, manufacturing could hardly flourish in countries too small to have a broad home market. Nor could it flourish where travel between provinces is so difficult that goods made in one place cannot reach all the customers in the country. Remember that excellence in manufacturing depends entirely on the division of labor. As already shown, the size of the market necessarily limits how far that division can go in any kind of manufacturing. China, however, has a vast territory and population. Its provinces have different climates and thus produce different goods, and water transport connects most of them easily. Its home market is therefore large enough by itself to support major manufacturing industries and a substantial division of labor. China's home market may be almost as extensive as the markets of all the European countries combined. Still, a larger foreign trade would add the rest of the world's markets to this great home market. Especially if a substantial share were carried in Chinese ships, it could hardly fail to increase China's manufacturing greatly and make its manufacturing labor much more productive. With more shipping, the Chinese would naturally learn to use and build for themselves the many kinds of machines used in other countries. They would also learn other improvements in methods and industry practiced around the world. Under their present policy, they have little chance to learn from any other nation except Japan.

Ancient Egypt's policies, and those of the Gentoo government of Indostan, also seem to have favored agriculture above every other occupation.

In ancient Egypt and Indostan, the entire population was divided into separate castes or groups, each bound to an occupation or group of occupations from one generation to the next. A priest's son had to be a priest; a soldier's son, a soldier; a laborer's son, a laborer; a weaver's son, a weaver; a tailor's son, a tailor; and so on. In both countries, priests held the highest rank and soldiers the next highest. Farmers and laborers ranked above merchants and manufacturers in both.

Both governments paid special attention to agriculture. The works built by Egypt's ancient rulers to distribute the waters of the Nile properly were famous in antiquity. Travelers still admire some of their ruins. The ancient rulers of Indostan built similar works to distribute the waters of the Ganges and many other rivers. Though less celebrated, these seem to have been equally impressive. Both countries were therefore known for their great fertility, despite occasional shortages. Though their populations were very large, both could export great quantities of grain to their neighbors in years of moderate abundance.

The ancient Egyptians had a religious aversion to the sea. The Gentoo religion forbids its followers to light a fire on water, and therefore to cook any food there. In practice this bars them from long sea voyages. Both Egyptians and Indians must have depended almost entirely on other nations' ships to export their surplus produce. This dependence must have limited their markets and discouraged growth in the surplus. It must have discouraged growth in manufactured goods even more than growth in raw produce. Manufacturing needs a much wider market than the most important kinds of raw produce from the land. A single shoemaker will make more than 300 pairs of shoes in a year, while his family may not wear out even six pairs. Unless he has customers from at least 50 families like his own, he cannot sell everything he makes. Even the most numerous group of artisans in a large country will rarely account for more than one in 50, or one in a 100, of all its families. Yet some writers have estimated that half the people in large countries such as France and England work in agriculture; others have estimated a third. No writer I know of estimates less than a fifth. Since by far most of the agricultural produce of France and England is consumed at home, each farmworker, on these estimates, needs customers from little more than one, two, or at most four families like his own to sell everything he produces. Agriculture can therefore survive a restricted market much better than manufacturing can. In ancient Egypt and Indostan, however, many convenient inland waterways partly offset the limits on foreign markets. They opened up the entire home market to the produce of each district in the most advantageous way. Indostan's great size also gave it a very large home market, enough to support many different manufactures. Ancient Egypt, however, was never as large as England. Its home market must always have been too small to support a great variety of manufactures. Accordingly, Bengal, the province of Indostan that commonly exports the most rice, has always been more notable for exporting many kinds of manufactured goods than for exporting grain. Ancient Egypt exported some manufactured goods, especially fine linen, as well as other goods. But it was best known for its large grain exports. For a long time it was the granary of the Roman empire.

The rulers of China, ancient Egypt, and the various kingdoms into which Indostan has been divided at different times have always drawn all, or by far the largest part, of their revenue from a tax on land or from land rent. Like Europe's tithe, this tax or rent took a fixed share of the land's produce, said to be a fifth. The share was either delivered as produce or paid in money according to an assessment. The amount therefore changed from year to year as the produce changed. It was natural for these rulers to pay special attention to agriculture: increases or decreases in their own annual revenue depended directly on whether it flourished or declined.

The ancient republics of Greece and Rome honored agriculture more than manufacturing or foreign trade. Their policies, though, seem to have discouraged those other occupations rather than directly and deliberately encouraged agriculture. Several ancient Greek states banned foreign trade altogether. In several others, artisans' and manufacturers' jobs were thought to weaken the body and make it less agile. Such work was thought to prevent the physical habits that military training and athletic exercise aimed to develop, leaving people less able to endure the hardships and dangers of war. These occupations were considered suitable only for slaves, and free citizens were forbidden to practice them. Even where there was no such ban, as in Rome and Athens, most people were effectively shut out of the trades now commonly practiced by poorer town residents. In Athens and Rome, these trades were all carried on by rich people's slaves for their masters' benefit. The masters' wealth, power, and protection made it nearly impossible for a poor free person to find buyers when competing with the slaves' work. Slaves, however, very seldom invent improvements. Free people discovered all the most important improvements in machinery and in organizing and dividing work that make labor easier and quicker. If a slave proposed such an improvement, the master would likely see the suggestion as laziness and an attempt to avoid work at the master's expense. Instead of a reward, the unfortunate slave would probably receive abuse, or perhaps punishment. Manufacturing done by slaves must therefore generally have required more labor to produce the same quantity of goods than manufacturing done by free workers. For that reason, the former's work must generally have cost more than the latter's. Mr Montesquieu notes that the Hungarian mines have always been worked at lower cost, and therefore for greater profit, than nearby Turkish mines, though they are no richer. Turkish mines are worked by slaves, whose arms are the only machines the Turks have ever thought to use. Hungarian mines are worked by free people, who use a great deal of machinery to make their work easier and quicker. From what little we know about prices of manufactured goods among the Greeks and Romans, finer goods seem to have been extremely expensive. Silk sold for its weight in gold. Of course, it was not made in Europe at that time. It all came from the East Indies, and the long journey may partly explain its high price. But a lady is said sometimes to have paid an equally extravagant price for a piece of very fine linen. Linen was always made either in Europe or, at the farthest, in Egypt. Its high price can therefore be explained only by the great cost of the labor required to make it. That cost, in turn, could only come from the awkward machinery used. Fine woolen cloth also seems to have cost much more than it does today, though its price was not quite so extravagant. Pliny tells us [Plin. 1. ix.c.39.] that some cloth dyed in a particular way cost a hundred denarii, or £3:6s:8d. per pound weight. Cloth dyed in another way cost a thousand denarii per pound weight, or £33:6s:8d. Remember that the Roman pound contained only twelve of our avoirdupois ounces. The dye seems to have been the main reason for these high prices. But people would probably not have applied such an expensive dye unless the cloth itself had cost much more than any cloth made today. Otherwise the added decoration would have been worth far too much compared with the cloth. The same author gives prices for some triclinaria [Plin. 1. viii.c.48.], a kind of woolen pillow or cushion people leaned on while reclining at table. These prices are almost unbelievable: some supposedly cost more than £30,000 and others more than £300,000. Their high price is not said to have come from the dye either. Dr Arbuthnot observes that fashionable dress for both sexes seems to have varied much less in ancient times than in modern ones. The small amount of variation visible in ancient statues supports his observation. He concludes that ancient dress must have been cheaper overall than ours, but that does not follow. When fashionable clothes are very expensive, people can afford little variety. When improvements in manufacturing methods and productivity make any one outfit fairly cheap, people naturally own a greater variety. The rich can no longer set themselves apart through the cost of a single outfit, so they naturally try to do so through the number and variety of their clothes.