The passage, I am speaking of, is in the fourth chapter of your second book, volume the second of the 8vo. edition of 1784. <c The legal rate" (you say) " it is to be observed, though " it ought to be somewhat above, " ought not to be much above, the <c lowest market rate. If the legal rate " of interest in Great Britain, for ex- " ample, was fixed so high as eight or <c ten per cent, the greater part of the " money which was to be lent, would " be lent to prodigals and projectors, " who alone would be willing to give " this high interest. Sober people, " who will give for the use of money " no more than a part of what they " are likely to make by the use of it, " would not venture into the compe- " tition. A great part of the capital "of 134 LETT. XIII. To Dr. Smith, " of the country would thus be kept <c out of the hands which were most " likely to make a profitable and ad- " vantageous use of it, and thrown " into those which were most likely to " waste and destroy it. Where the " legal interest on the contrary, is tf fixed but a very little above the " lowest market rate, sober people are " universally preferred as borrowers, " to prodigals and projectors. The " person who lends money, gets near- '* ly as much interest from the former, " as he dares to take from the latter, " and his money is much safer in the " hands of the one set of people than " in those of the other. A great part "of the capital of the country is thus " thrown into the hands in which it " is most likely to be employed with " advantage."
It happens fortunately for the side you on Projects in Arts, Sfc. 135 you appear to have taken, and as un- fortunately for mine, that the appella- tive, which the custom of the language has authorised you, and which the po- verty and perversity of the language has in a manner forced you, to make use of, is one, which, along with the idea of the sort of persons in question, conveys the idea of reprobation, as in- discriminately and deservedly applied to them. With what justice or con- sistency, or by the influence of what causes, this stamp of indiscriminate re- probation has been thus affixed, it is not immediately necessary to inquire. But, that it does stand thus affixed, you and every body else, I imagine, will be ready enough to allow. This being the case, the question stands al- ready decided, in the first instance at least, if not irrevocably, in the judg- ments of all those, who, unable or un- willing 136 LETT. XIII. To Dr. Smith, willing to be at the pains of analys- ing their ideas, suffer their minds to be led captive by the tyranny of sounds: that is, I doubt, of by far the greater proportion of those whom we are likely to have to judge us. In the concep- tions of all such persons, to ask whether it be fit to restrain projects and pro- jectors, will be as much as to ask, whether it be fit to restrain rashness, and folly, and absurdity, and knavery, and waste.
Of prodigals I shall say no more at present. I have already stated my rea- sons for thinking, that it is not among them that we are to look for the na- tural customers for money at high rates of interest. As far as those rea- sons are conclusive, it will follow, that, of the two sorts of men you mention as proper objects of the burthen of these restraints, prodigals and project- ors, on Projects in Arts, Sfc. 137 ors, that burthen falls exclusively on the latter. As to these, what your de- finition is of projectors, and what de- scriptions of persons you meant to in- clude under the censure conveyed by that name, might be material for the purpose of judging of the propriety of that censure, but makes no differ- ence in judging of the propriety of the law, which that censure is employ- ed to justify. Whether you yourself, were the several classes of persons made to pass before you in review, would be disposed to pick out this or that class, or this and that individual, in order to exempt them from such cen- sure, is what for that purpose we have no need to inquire. The law, it is certain, makes no such distinctions: it falls with equal weight, and with all its weight, upon all those persons, without distinction, to whom the term projectors, in the most unpartial and extensive 138 LETT. XIII. To Dr. Smith, extensive signification of which it is capable, can be applied. It falls at any rate (to repeat some of the words of my former definition), upon all such persons, as, in the pursuit of wealth, or even of any other ob- ject, endeavour, by the assistance of wealth, to strike into any channel of invention. It falls upon all such per- sons, as, in the cultivation of any of those arts which have been by way of eminence termed useful, direct their en- deavours to any of those departments in which their utility shines most con- spicuous and indubitable; upon all such persons as, in the line of any of their pursuits, aim at any thing that can be called improvement j whether it consist in the production of any new article adapted to man's use, or in the meliorating the quality, or diminishing the expense, of any of those which are already known to us. It falls, in short^ on Projects in Arts, Kc. 139 short, upon every application of the hu- man powers, in which ingenuity stands in need of wealth for its assistant.
High and extraordinary rates of in- terest, how little soever adapted to the situation of the prodigal, are certainly, as you very justly observe, particularly adapted to the situation of the pro- jector: not however to that of the im- prudent projector only, nor even to his case more than another's, but to that of the prudent and well-grounded projector, if the existence of such a being were to be supposed. Whatever be the prudence or other qualities of the project, in whatever circumstance the novelty of it may lie, it has this circumstance against it, viz. that it is new. But the rates of interest, the highest rates allowed, are, as you ex- pressly say they are, and as you would have them to be, adjusted to the situa- tion 140 LETT. XIII. To Dr. Smith, tion which the sort of trader is in, whose trade runs in the old channels, and to the best security which such channels can afford. But in the na- ture of things, no new trade, no trade carried on in any new channel, can af- ford a security equal to that which may be afforded by a trade carried on in any of the old ones: in whatever light the matter might appear to perfect in- telligence, in the eye of every prudent person, exerting the best powers of judg- ing which the fallible condition of the human faculties affords, the novelty of any commercial adventure will oppose a chance of ill success, superadded to every one which could attend the same, or any other, adventure, already tried, and proved to be profitable by experi- ence.
The limitation of the profit that is to be made, by lending money to per- sons on Projects in Arts, Sfc. 141 sons embarked in trade, will render the monied man more anxious, you may say, about the goodness of his security, and accordingly more anxious to satis- fy himself respecting the prudence of a project in the carrying on of which the money is to be employed, than he would be otherwise: and in this way it may be thought that these laws have a tendency to pick out the good pro- jects from the bad, and favour the for- mer at the expense of the latter. The first of these positions I admit: but I can never admit the consequence to follow. A prudent man, (I mean no- thing more than a man of ordinary pru- dence) a prudent man acting under the sole governance of prudential motives, I still say, will not, in these circum- stances, pick out the good projects from the bad, for he will not meddle with projects at all. He will pick out old- established 142 LETT. XIII. To Dr. Smith, established trades from all sorts of pro- jects, good and bad; for with a new project, be it ever so promising, he never will have any thing to do. By every man that has money, five per cent, or whatever be the highest legal rate, is at all times, and always will be, to be had upon the very best security, that the best and most prosperous old- established trade can afford. Traders in general, I believe, it is commonly understood, are well enough inclined to enlarge their capital, as far as all the money they can borrow at the highest legal rate, while that rate is so low as 5 per cent, will enlarge it. How it is pos- sible therefore for a project, be it ever so promising, to afford, to a lender at any such rate of interest, terms equal- ly advantageous, upon the whole, with those he might be sure of obtaining from an old-established business, is more on Projects in Arts, Sfc. 143 more than I can conceive. Loans of money may certainly chance, now and then, to find their way into the poc- kets of projectors as well as of other men: but when this happens, it must be through incautiousness, or friend- ship, or the expectation of some colla- teral benefit, and not through any idea of the advantageousness of the transaction, in the light of a pecuniary bargain.
I should not expect to see it alleg- ed, that there is any thing, that should render the number of well-grounded projects, in comparison of the ill- grounded, less in time future, than it has been in time past. I am sure at least that I know of no reasons why it should be so, though I know of some reasons, which I shall beg leave to sub- mit to you by and by, which appear to me 144 LETT. XIII. To Dr. Smith, me pretty good ones, why the advan- tage should be on the side of futurity. But, unless the stock of well-grounded projects is already spent, and the whole stock of ill-grounded projects that ever were possible, are to be looked for exclusively in the time to come, the censure you have passed on projec- tors, measuring still the extent of it by that of the operation of the laws in the defence of which it is employed, looks as far backward as forward: it con- demns as rash and ill-grounded, all those projects, by which our species have been successively advanced from that state in which acorns were their food, and raw hides their cloathing, to the state in which it stands at pre- sent: for think, Sir, let me beg of you, whether whatever is now the routine of trade was not, at its commence- ment, on Projects in Arts, fife. 145 ment, project? whether whatever is now establishment, was not, at one time, innovation?
How it is that the tribe of well- grounded projects, and of prudent pro- jectors (if by this time I may have your leave for applying this epithet to some at least among the projectors of time past), have managed to struggle through the obstacles which the laws in question have been holding in their way, it is neither easy to know, nor necessary to inquire. Manifest enough, I think, it must be by this time, that difficulties, and those not inconsider- able ones, those laws must have been holding up, in the way of projects of all sorts, of improvement (if I may say so) in every line, so long as they have had existence: reasonable therefore it must be to conclude, that, had it not been for these discouragements, pro-" H jects 146 LETT. XIII. To Dr. Smith, jects of all sorts, well-grounded and successful ones, as well as others, would have been more numerous than they have been: and that accordingly, on the other hand, as soon, if ever, as these discouragements shall be removed, projects of all sorts, and among the rest, well-grounded and successful ones, will be more numerous than they would otherwise have been: in short, that, as, without these discou- ragements, the progress of mankind in the career of prosperity, would have been greater than it has been under them in time past; so, were they to be removed, it would be at least propor- tionably greater in time future.
That I had done you no injustice, in assigning to your idea of projectors so great a latitude, and that the unfa- vourable opinion you have professed to entertain of them is not confined to the on Projects in Arts, fife. 147 the above passage, might be made, I think, pretty apparent, if it be mate- rial, by another passage in the tenth chapter of your first book*. " The " establishment of any new manufac- " ture, of any new branch of com- " merce, or of any new practice in " agriculture," all these you compre- hend by name under the list of " pro- "jects:" of everyone of them you ob- serve, that " it is a speculation from " which the projector promises himself " extraordinary profits. These pro- " fits (you add) are sometimes very " great, and sometimes, more frequently " perhaps, they are quite otherwise: but " in general they bear no regular pro- " portion to those of other old trades " in the neighbourhood. If the pro- " ject succeeds, they are commonly 148 LETT. XIII. To Dr. Smith, " at first very high. When the trade " or practice becomes thoroughly es* " tablished and well known, the com- " petition reduces them to the level of " other trades." But on this head I forbear to insist: nor should I have taken this liberty of giving you back your own words, but in the hope of seeing some alteration made in them in your next edition, should I be fortunate enough to find my sentiments confirm- ed by your's. In other respects, what is essential to the public, is, what the error is in the sentiments entertained, not who it is that entertains them.
I know not whether the observations \vhich I have been troubling you with, will be thought to need, or whether they will be thought to receive, any additional support from those comfortable positions, of which you have made such good and such fre- quent en Projects in Arts, Xc. 149 quent use, concerning the constant tendency of mankind to get forward in the career of prosperity, the preva- lence of prudence over imprudence, in the sum of private conduct at least, and the superior fitness of individuals for managing their own pecuniary con- cerns, of which they know the parti- culars and the circumstances, in com- parison of the legislator, who can have no such knowledge. I will make the experiment: for, so long as I havo the mortification to see you on the oppo- site side, I can never think the ground I have taken strong enough, while any thing remains that appears capable of rendering it still stronger.
" With regard to misconduct, the " number of prudent and successful " undertakings" (you observe*) " is » B. II. cb. iii. edit. 8vo. 1784. vol. ii. p. 20.
" every 150 LETT. XIII. To Dr. Smith, " every where much greater than that " of injudicious and unsuccessful ones. " After all our complaints of the fre- " quency of bankruptcies, the unhap- *' py men who fall into this misfor- " tune make but a very small part of " the whole number engaged in trade, " and all other sorts of business j not " much more perhaps than one in a "thousand."
'Tis in support of this position that you appeal to history for the constant and uninterrupted progress of man- kind, in our island at least, in the ca- reer of prosperity: calling upon any one who should entertain a doubt of the fact, to divide the history into any number of periods, from the time of Caesar's visit down to the present: pro- posing for instance the respective aeras of the Restoration, the Accession of Elizabeth, that of Henry VII. the Norman on Projects in Arts, 8fc. 1.51 Norman Conquest, and the Heptar- chy; and putting it to the sceptic to find out, if he can, among all these periods, any one at which the condi- tion of the country was not more pros- perous than at the period immediately preceding it: spite of so many wars, and fires, and plagues, and all other public calamities, with which it has been at different times afflicted, whe- ther by the hand of God, or by the misconduct of the sovereign. No very easy task, I believe: the fact is too manifest for the most jaundiced eye to escape seeing it: — But what and whom are we to thank for it, but projects, and projectors?
" No," I think 1 hear you saying, " I will not thank projectors for it, I " will rather thank the laws, which " by fixing the rates of interest, have " been exercising their vigilance in " repressing 152 LETT. XIII. To Dr. Smith, " repressing the temerity of projectors, " and preventing their imprudence " from making those defalcations from " the sum of national prosperity, which " it would not have failed to make, " had it been left free. If, during all *e these periods, that adventurous race " of men had been left at liberty by " the laws to give full scope to their " rash enterprizes, the increase of " national prosperity during these (e periods might have afforded some " ground for regarding them in a " more favourable point of view. But " the fact is, that their activity has " had these laws to check it; without t( which checks you must give me " leave to suppose, that the current " of prosperity, if not totally stopt, or " turned the other way, would at any " rate have been more or less retard- *c ed. Here then" (you conclude) " lies on Projects in Arts, 5fc. 153 " lies the difference between us. What " you look upon as the cause of the " increase about which we are both " agreed, I look upon as an obstacle " to it: and what you look upon as the <f obstacle, I look upon as the cause."
Instead of starting this as a sort of plea that might be urged by you, I ought, perhaps, rather to have men- tioned it as what might be urged by some people in your place: for as I do not imagine your penetration would suffer you to rest satisfied with it, still less can I suppose that, if you were not, your candour would allow you to make use of it as if you were.
To prevent your resting satisfied with it, the following considerations would, I think, be sufficient.
In the first place, of the seven pe- riods which you have pitched upon, as so many stages for the eye to rest H3 at 154 LETT. XIII. To Dr. Smith, at in viewing the progress of prospe- rity, it is only during the three last, that the country has had the benefit, if such we are to call it, of these laws: for it is to the reign of Henry VIII. that we owe the first of them.
Here a multitude of questions might be started: Whether the curbing of projectors formed any part of the de- sign of that first statute, or whether the views of it were not wholly con- fined to the reducing the gains of that obnoxious and envied class of men, the money-lenders? Whether projec- tors have been most abundant before that statute, or since that statute? And •whether the nation has suffered, as you might say — benefited, as I should say, most by them, upon the whole, dur- ing the former period or the latter? All these discussions, and many more that might be started, I decline engag- ing on Projects in Arts, Kc. 155 ing in, as more likely to retard, than to forward, our coming to any agree- ment concerning the main question.
In the next place, I must here take the liberty of referring you to the proof, which I think I have already given, of the proposition, that the re- straints in question could never have had the effect, in any degree, of lessen- ing the proportion of bad projects to good ones, but only of diminishing, as far as their influence may have ex- tended, the total number of projects, good and bad together. Whatever therefore was the general tendency of the projecting spirit previously to the first of these laws, such it must have remained ever since, for any effect which they could have had in purify- ing and correcting it.
But what may appear more satisfac- tory perhaps than both the above con- siderations, 156 LETT. XIII. To Dr. Smith, siderations, and may afford us the best help towards extricating ourselves from the perplexity, which the plea I have been combating (and which I thought it necessary to bring to view, as the best that could be urged) seems much better calculated to plunge us into, than bring us out of, is, the con- sideration of the small effect which the greatest waste that can be conceived to have been made within any compass of time, by injudicious projects, can have had on the sum of prosperity, even in the estimation of those whose opinion is most unfavourable to projectors, in comparison of the effect which within the same compass of time must have been produced by prodigality.
Of the two causes, and only two causes, which you mention, as contri- buting to retard the accumulation of national wealth, as far as the conduct of on Projects in Arts, &c. 157 of individuals is concerned, project- ing, as I observed before, is the one, and prodigality is the other: but the detriment, which society can receive even from the concurrent efficacy of both these causes, you represent on se- veral occasions, as inconsiderable; and, if I do not misapprehend you, too inconsiderable, either to need, or to warrant, the interposition of govern- ment to oppose it. Be this as it may with regard to projecting and pro- digality taken together, with regard to prodigality at least, I am certain 1 do not misapprehend you. On this subject you ride triumphant, and chastise the " impertinence and pre " sumption of kings and ministers," with a tone of authority, which it re quired a courage like your's to ven ture upon, and a genius like your's to 158 LETT. XIII. To Dr. Smith, to warrant a man to assume*. After drawing the parallel between private thrift and public profusion, " It is " (you conclude) " the highest imper- " tinence and presumption therefore " in kings and ministers to pretend to " watch over the economy of private " people, and to restrain their expense, f( either by sumptuary laws, or by (f prohibiting the importation of fo- " reign luxuries. They are themselves " always, and without exception, the " greatest spendthrifts in the society. " Let them look well after their own " expense, and they may safely trust " private people with theirs. If their " own extravagance does not ruin the " state, that of their subjects never « will."
B. II. ch. iii. vol. ii. p. 27. edit. 8vo. 1784.
That on Projects in Arts, fife. 159 That the employing the expedients you mention for restraining prodiga- lity, is indeed generally, perhaps even without exception, improper, and in many cases even ridiculous. I agree with you: nor will I here step aside from my subject to defend from that imputation another mode suggested in a former part of these papers. But however presumptuous and imperti- nent it may be for the sovereign to at- tempt in any way to check by legal restraints the prodigality of individuals, to attempt to check their bad manage- ment by such restraints, seems abun- dantly more so. To err in the way of prodigality is the lot, though, as you well observe, not of many men, in comparison of the whole mass of man- kind, yet at least of any man: the stuff fit to make a prodigal of is to be found in every alehouse, and under every hedge.
160 LETT. XIII. To Dr. Smith, hedge. But even to err in the way of projecting is the lot only of the privi- leged few. Prodigality, though not so common as to make any very ma- terial drain from the general mass of wealth, is however too common to be regarded as a mark of distinction or as a singularity. But the stepping aside from any of the beaten paths of traffic, is regarded as a singularity, as serving to distinguish a man from other men. Even where it requires no ge- nius, no peculiarity of talent, as where it consists in nothing more than the finding out a new market to buy or sell in, it requires however at least a degree of courage, which is not to be found in the common herd of men. "What shall we say of it, where, in addition to the vulgar quality of cou- rage, it requires the rare endowment of genius, as in the instance of all those successive ton Projects in Arts, Kc. 161 successive enterprises by which arts and manufactures have been brought from their original nothing to their present splendour? Think how small a part of the community these must make, in comparison of the race of prodigals; of that very race, which, were it only on account of the small- ness of its number, would appear too inconsiderable to you to deserve at- tention. Yet prodigality is essentially and necessarily hurtful, as far as it goes, to the opulence of the state: project- ing, only by accident. Every prodi- gal, without exception, impairs, by the very supposition impairs, if he does not annihilate, his fortune. But it certainly is not every projector that impairs his: it is not every projector that would have done so, had there been none of those wise laws to hin- der him: for the fabric of national opulence, 162 LETT. XIII. To Dr. Smith, opulence, that fabric of which you proclaim, with so generous an exulta- tion, the continual increase, that fa- bric, in every apartment of which, innumerable as they are, it required the reprobated hand of a projector to lay the first stone, has required some hands at least to be employed, and successfully employed. When in com- parison of the number of prodigals, which is too inconsiderable to deserve notice, the number of projectors of all kinds is so much more inconsi- derable— and when from this incon- siderable number, must be deducted, the not inconsiderable proportion of successful projectors — and from this remainder again, all those who can carry on their projects without need of borrowing — think whether it be possi- ble, that this last remainder could af- ford a multitude, the reducing of which would on Projects in Arts, fife. 163 would be an object, deserving the in- terposition of government by its mag- nitude, even taking for granted that it were an object proper in its na- ture?
If it be still a question, whether it be worth while for government, by its reason, to attempt to controul the con- duct of men visibly and undeniably under the dominion of passion, and acting under that dominion, contrary to the dictates of their own reason; in short, to effect what is acknowledged to be their better judgment, against what every body, even themselves, would acknowledge to be their worse: is it endurable that the legislator should by violence substitute his own pretended reason, the result of a mo- mentary and scornful glance, the off- spring of wantonness and arrogance, much rather than of social anxiety and study, 164 LETT. XIII. To Dr. Smith,