Defence of Usury [41]
it is evident that accumulation is not more favoured by the restraint in one way, than it is checked in the other. In another way the restraint in question counteracts this part of its object in a more manifest and conspicuous manner: viz. by lessening the quantity of borrowed capital employed in accumulation. The world can augment its capital only in one way: viz. by parsimony. A nation may augment its capital, as an individual may augment his capital, in either of two ways: by saving, or by borrowing. By borrowing capital for the purpose of accumulation, is it likely to add to the stock of national wealth? Yes: if the value of what is thereby produced is greater than the value of what is paid for interest: in that case the clear amount of the accumulation, the clear gain to the nation, is to the amount of the difference. But this it may always be reckoned, and that on two different accounts which concurr in encreasing the advantage: 1. In the first place, the general rate of mercantile profit is greater every where than the rate of interest: it is in general at least double: 2. In the next place, in manufactures(33*) the rate of profit encreases with the encrease of capital by the advantages derivable from the division of labour, and the making the same quantity of machinery and warehouse room and even labour in some cases serve for a larger quantity of work than would have been necessary for a smaller. It has already been shewn in the body of the work that the quantity of good success in all branches of industry taken together is much superior to the quantity of ill success: and this it is not less likely to be in the instances where a man aids his original by borrowed capital than in others. If a man engaged in industry did not expect to get more by the money he borrows than he pays for it, he would not borrow it: and it has been shewn that such expectations are much more frequently realised than frustrated. To seek to restrain industrious men from borrowing money under the apprehension of its not answering to them would be an additional instance, but an instance not more flagrant than those which are perpetually exhibited, of the ignorance and folly, and blindness, and vanity, and presumption, and despotism that hitherto have been endemial among legislators. Look into pamphlets and debates, you will find people disposed to quarrel with outlandish money, because it is outlandish, at least for the purpose of the argument. The popular notion that ill-gotten money does not thrive, howsoever hacknied by superstition, has not only a much better effect, but even a more rational ground. Two ill effects are attributed to outlandish money: 1st. That the interest paid for it is so much money sent out of the country. But were not the interest sent out of the country, the profit would not come into it. And profit, we have seen, ought to be estimated at more than double the value of the interest. The force of this argument depends upon the forgetting altogether the chapter of profit: and supposing that the money thus sent out of the country, is sent out for nothing. It is an argument that applies against selling any thing to foreigners: or indeed to any body on any terms. What are the particular courses taken by such imported money, whether for example it being laid out in the public funds or lent out to individuals, makes no sort of difference. If the money laid out by the Dutch in the English funds, that is, lent to the English government, had not been so disposed of, English money to the same amount must have lain there: there would therefore have been so much less English money to be applied in the support of English industry, in the encrease of the sum of the national wealth of England.(34*) 2dly. That money borrowed of foreigners will be perpetually liable to be recalled. To render this an objection, two circumstances must concur. 1. The foreign money must be more liable to be recalled than home money. 2. When recalled, the prejudice resulting from the recall must be likely to be