The stock accumulated in them comes in time to be so great that it can no longer be employed with the ancient profit in that species of industry which is peculiar to them.That industry has its limits like every other; and the increase of stock, by increasing the competition, necessarily reduces the profit.The lowering of profit in the town forces out stock to the country, where, by creating a new demand for country labour, it necessarily raises its wages.It then spreads itself, if I may say so, over the face of the land, and by being employed in agriculture is in part restored to the country, at the expense of which, in a great measure, it had originally been accumulated in the town.That everywhere in Europe the greatest improvements of the country have been owing to such overflowings of the stock originally accumulated in the towns, I shall endeavour to show hereafter; and at the same time to demonstrate that, though some countries have by this course attained to a considerable degree of opulence, it is in itself necessarily slow, uncertain, liable to be disturbed and interrupted by innumerable accidents, and in every respect contrary to the order of nature and of reason.The interests, prejudices, laws and customs, which have given occasion to it, I shall endeavour to explain as fully and distinctly as I can in the third and fourth books of this Inquiry.
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice.But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.
A regulation which obliges all those of the same trade in a particular town to enter their names and places of abode in a public register, facilitates such assemblies.It connects individuals who might never otherwise be known to one another, and gives every man of the trade a direction where to find every other man of it.
A regulation which enables those of the same trade to tax themselves in order to provide for their poor, their sick, their widows and orphans, by giving them a common interest to manage, renders such assemblies necessary.
An incorporation not only renders them necessary, but makes the act of the majority binding upon the whole.In a free trade an effectual combination cannot be established but by the unanimous consent of every single trader, and it cannot last longer than every single trader continues of the same mind.The majority of a corporation can enact a bye-law with proper penalties, which will limit the competition more effectually and more durably than any voluntary combination whatever.
The pretence that corporations are necessary for the better government of the trade is without any foundation.The real and effectual discipline which is exercised over a workman is not that of his corporation, but that of his customers.It is the fear of losing their employment which restrains his frauds and corrects his negligence.An exclusive corporation necessarily weakens the force of this discipline.A particular set of workmen must then be employed, let them behave well or ill.It is upon this account that in many large incorporated towns no tolerable workmen are to be found, even in some of the most necessary trades.If you would have your work tolerably executed, it must be done in the suburbs, where the workmen, having no exclusive privilege, have nothing but their character to depend upon, and you must then smuggle it into the town as well as you can.
It is in this manner that the policy of Europe, by restraining the competition in some employments to a smaller number than would otherwise be disposed to enter into them, occasions a very important inequality in the whole of the advantages and disadvantages of the different employments of labour and stock.
Secondly, the policy of Europe, by increasing the competition in some employments beyond what it naturally would be, occasions another inequality of an opposite kind in the whole of the advantages and disadvantages of the different employments of labour and stock.