THE NATURE AND CAUSES OF

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to the lender; and four or live per cent, may, in the greaterpart of trades, be both a sufficient profit upon the risk of thisinsurance, and a sufficient recompense for the trouble of em-ploying the stock. But the proportion between interest andclear profit might not be the same in countries where the or-dinary rate of profit was either a good deal lower, or a gooddeal higher. If it were a good deal lower, one half of it per-haps could not be afforded for interest; and more might beafforded if it were a good deal higher.

In countries which are fast advancing to riches, the lowrate of profit may, in the price of many commodities, com-pensate the high wages of labour, and enable those countriesto sell as cheap as their less thriving neighbours, amongwhom the wages of labour may be lower.

", In reality high profits tend much more to raise the price/of work than high wages. If in the linen manufacture, forexample, the wages of the different working people, the flax-dressers, the spinners, the weavers, Ike. should, all of them,be advanced two-pence a day; it would be necessary toheighten the price of a piece of linen only by a number oftwo-pences equal to the number of people that had been em-ployed about it, multiplied by the number of days duringwhich they had been so employed. That part of the priceof the commodity which resolved itseif into wages would,through all the different stages of the manufacture, rise onlyin arithmetical proportion to this rise of wages. But if theprofits of all the different employers of those working peopleshould be raised five per cent, that part of the price of thecommodity which resolved itself into profit would, throughall the different stages of the manufacture, rise in geometricalproportion to this rise of profit. The employer of the flax-dressers would, in selling his flax, require an additional fiveper cent, upon the whole value of the materials and wageswhich he advanced to his workmen. The employer of thespinners would require an additional five per cent, both uponthe advanced price ol the flax and upon the wages of thespinners. And the employer of the weavers would require alike five per cent, both upon the advanced price of the linenyam and upon the wages of the weavers. In raising theprice of commodities, the rise of wages operates in the samemanner as simple interest does in the accumulation of debt.The rise of profit operates like compound interest. Our mer-chants and master-manufacturers complain much of the bad