CodalSearch this book — or all of Codal…⌘K
Projects
Sign inStart a book
nydus/Hume's Political DiscoursesPublic

This volume presents David Hume’s 1752 work, *Political Discourses*, which outlines his foundational principles of political economy. The text includes an autobiographical sketch by the author and an account of his death written by Adam Smith.

Page 81 of 386
Table of Contents

OF INTEREST.

become tired of business or have heirs unwilling or unfit to engage in commerce, a great deal of these riches will seek an annual and secure revenue. The plenty diminishes the price, and makes the lenders accept of a low interest. This consideration obliges many to keep their stocks in trade, and rather be content with low profits than dispose of their money at an under value. On the other hand, when commerce has become very extensive, and employs very large stocks, there must arise rivalships among the merchants, which diminish the profits of trade, at the same time that they increase the trade itself. The low profits of merchandise induce the merchants to accept more willingly of a low interest, when they leave off business and begin to indulge themselves in ease and indolence. It is needless, therefore, to inquire which of these circumstances—viz., low interest or low profits, is the cause, and which the effect. They both arise from an {p47} extensive commerce, and mutually forward each other. No man will accept of low profits where he can have high interest, and no man will accept of low interest where he can have high profits. An extensive commerce, by producing large stocks, diminishes both interest and profits; and is always assisted in its diminution of the one by the proportional sinking of the other. I may add, that as low profits arise from the increase of commerce and industry, they serve in their turn to the further increase of commerce, by rendering the commodities cheaper, encouraging the consumption, and heightening the industry. And thus, if we consider the whole connection of causes and effects, interest is the true barometer of the state, and its lowness is a sign almost infallible of the flourishing of a people. It proves the increase of industry, and its prompt circulation through the whole state, little inferior to a demonstration. And though, perhaps, it may not be impossible but a sudden and a great check to commerce may have a momentary effect of the same kind, by throwing so many stocks out of trade, it must be attended with such misery and want of employment in the poor that, besides its short duration, it will not be possible to mistake the one case for the other.

81