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An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith

Part 12 out of 19

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advantages which are supposed to result from provinces of so very
peculiar a nature as the European colonies of America.

The common advantages which every empire derives from the provinces
subject to its dominion consist, first, in the military force which
they furnish for its defence; and, secondly, in the revenue which they
furnish for the support of its civil government. The Roman colonies
furnished occasionally both the one and the other. The Greek colonies
sometimes furnished a military force, but seldom any revenue. They
seldom acknowledged themselves subject to the dominion of the mother
city. They were generally her allies in war, but very seldom her
subjects in peace.

The European colonies of America have never yet furnished any military
force for the defence of the mother country. The military force has
never yet been sufficient for their own defence; and in the different
wars in which the mother countries have been engaged, the defence of
their colonies has generally occasioned a very considerable
distraction of the military force of those countries. In this respect,
therefore, all the European colonies have, without exception, been a
cause rather of weakness than of strength to their respective mother
countries.

The colonies of Spain and Portugal only have contributed any revenue
towards the defence of the mother country, or the support of her civil
government. The taxes which have been levied upon those of other
European nations, upon those of England in particular, have seldom
been equal to the expense laid out upon them in time of peace, and
never sufficient to defray that which they occasioned in time of war.
Such colonies, therefore, have been a source of expense, and not of
revenue, to their respective mother countries.

The advantages of such colonies to their respective mother countries,
consist altogether in those peculiar advantages which are supposed to
result from provinces of so very peculiar a nature as the European
colonies of America; and the exclusive trade, it is acknowledged, is
the sole source of all those peculiar advantages.

In consequence of this exclusive trade, all that part of the surplus
produce of the English colonies, for example, which consists in what
are called enumerated commodities, can be sent to no other country but
England. Other countries must afterwards buy it of her. It must be
cheaper, therefore, in England than it can be in any other country,
and must contribute more to increase the enjoyments of England than
those of any other country. It must likewise contribute more to
encourage her industry. For all those parts of her own surplus produce
which England exchanges for those enumerated commodities, she must get
a better price than any other countries can get for the like parts of
theirs, when they exchange them for the same commodities. The
manufactures of England, for example, will purchase a greater quantity
of the sugar and tobacco of her own colonies than the like
manufactures of other countries can purchase of that sugar and
tobacco. So far, therefore, as the manufactures of England and those
of other countries are both to be exchanged for the sugar and tobacco
of the English colonies, this superiority of price gives an
encouragement to the former beyond what the latter can, in these
circumstances, enjoy. The exclusive trade of the colonies, therefore,
as it diminishes, or at least keeps down below what they would
otherwise rise to, both the enjoyments and the industry of the
countries which do not possess it, so it gives an evident advantage to
the countries which do possess it over those other countries.

This advantage, however, will, perhaps, be found to be rather what may
be called a relative than an absolute advantage, and to give a
superiority to the country which enjoys it, rather by depressing the
industry and produce of other countries, than by raising those of that
particular country above what they would naturally rise to in the case
of a free trade.

The tobacco of Maryland and Virginia, for example, by means of the
monopoly which England enjoys of it, certainly comes cheaper to
England than it can do to France to whom England commonly sells a
considerable part of it. But had France and all other European
countries been at all times allowed a free trade to Maryland and
Virginia, the tobacco of those colonies might by this time have come
cheaper than it actually does, not only to all those other countries,
but likewise to England. The produce of tobacco, in consequence of a
market so much more extensive than any which it has hitherto enjoyed,
might, and probably would, by this time have been so much increased as
to reduce the profits of a tobacco plantation to their natural level
with those of a corn plantation, which it is supposed they are still
somewhat above. The price of tobacco might, and probably would, by
this time have fallen somewhat lower than it is at present. An equal
quantity of the commodities, either of England or of those other
countries, might have purchased in Maryland and Virginia a greater
quantity of tobacco than it can do at present, and consequently have
been sold there for so much a better price. So far as that weed,
therefore, can, by its cheapness and abundance, increase the
enjoyments, or augment the industry, either of England or of any other
country, it would probably, in the case of a free trade, have produced
both these effects in somewhat a greater degree than it can do at
present. England, indeed, would not, in this case, have had any
advantage over other countries. She might have bought the tobacco of
her colonies somewhat cheaper, and consequently have sold some of her
own commodities somewhat dearer, than she actually does; but she could
neither have bought the one cheaper, nor sold the other dearer, than
any other country might have done. She might, perhaps, have gained an
absolute, but she would certainly have lost a relative advantage.

In order, however, to obtain this relative advantage in the colony
trade, in order to execute the invidious and malignant project of
excluding, as much as possible, other nations from any share in it,
England, there are very probable reasons for believing, has not only
sacrificed a part of the absolute advantage which she, as well as
every other nation, might have derived from that trade, but has
subjected herself both to an absolute and to a relative disadvantage
in almost every other branch of trade.

When, by the act of navigation, England assumed to herself the
monopoly of the colony trade, the foreign capitals which had before
been employed in it, were necessarily withdrawn from it. The English
capital, which had before carried on but a part of it, was now to
carry on the whole. The capital which had before supplied the colonies
with but a part of the goods which they wanted from Europe, was now
all that was employed to supply them with the whole. But it could not
supply them with the whole; and the goods with which it did supply
them were necessarily sold very dear. The capital which had before
bought but a part of the surplus produce of the colonies, was now all
that was employed to buy the whole. But it could not buy the whole at
any thing near the old price; and therefore, whatever it did buy, it
necessarily bought very cheap. But in an employment of capital, in
which the merchant sold very dear, and bought very cheap, the profit
must have been very great, and much above the ordinary level of profit
in other branches of trade. This superiority of profit in the colony
trade could not fail to draw from other branches of trade a part of
the capital which had before been employed in them. But this revulsion
of capital, as it must have gradually increased the competition of
capitals in the colony trade, so it must have gradually diminished
that competition in all those other branches of trade; as it must have
gradually lowered the profits of the one, so it must have gradually
raised those of the other, till the profits of all came to a new
level, different from, and somewhat higher, than that at which they
had been before.

This double effect of drawing capital from all other trades, and of
raising the rate of profit somewhat higher than it otherwise would
have been in all trades, was not only produced by this monopoly upon
its first establishment, but has continued to be produced by it ever
since.

First, This monopoly has been continually drawing capital from all
other trades, to be employed in that of the colonies.

Though the wealth of Great Britain has increased very much since the
establishment of the act of navigation, it certainly has not increased
in the same proportion as that or the colonies. But the foreign trade
of every country naturally increases in proportion to its wealth, its
surplus produce in proportion to its whole produce; and Great Britain
having engrossed to herself almost the whole of what may be called the
foreign trade of the colonies, and her capital not having increased in
the same proportion as the extent of that trade, she could not carry
it on without continually withdrawing from other branches of trade
some part of the capital which had before been employed in them, as
well as withholding from them a great deal more which would otherwise
have gone to them. Since the establishment of the act of navigation,
accordingly, the colony trade has been continually increasing, while
many other branches of foreign trade, particularly of that to other
parts of Europe, have been continually decaying. Our manufactures for
foreign sale, instead of being suited, as before the act of
navigation, to the neighbouring market of Europe, or to the more
distant one of the countries which lie round the Mediterranean sea,
have the greater part of them, been accommodated to the still more
distant one of the colonies; to the market in which they have the
monopoly, rather than to that in which they have many competitors. The
causes of decay in other branches of foreign trade, which, by Sir
Matthew Decker and other writers, have been sought for in the excess
and improper mode of taxation, in the high price of labour, in the
increase of luxury, etc. may all be found in the overgrowth of the
colony trade. The mercantile capital of Great Britain, though very
great, yet not being infinite, and though greatly increased since the
act of navigation, yet not being increased in the same proportion as
the colony trade, that trade could not possibly be carried on without
withdrawing some part of that capital from other branches of trade,
nor consequently without some decay of those other branches.

England, it must be observed, was a great trading country, her
mercantile capital was very great, and likely to become still greater
and greater every day, not only before the act of navigation had
established the monopoly of the corn trade, but before that trade was
very considerable. In the Dutch war, during the government of
Cromwell, her navy was superior to that of Holland; and in that which
broke out in the beginning of the reign of Charles II., it was at
least equal, perhaps superior to the united navies of France and
Holland. Its superiority, perhaps, would scarce appear greater in the
present times, at least if the Dutch navy were to bear the same
proportion to the Dutch commerce now which it did then. But this great
naval power could not, in either of those wars, be owing to the act of
navigation. During the first of them, the plan of that act had been
but just formed; and though, before the breaking out of the second, it
had been fully enacted by legal authority, yet no part of it could
have had time to produce any considerable effect, and least of all
that part which established the exclusive trade to the colonies. Both
the colonies and their trade were inconsiderable then, in comparison
of what they are how. The island of Jamaica was an unwholesome desert,
little inhabited, and less cultivated. New York and New Jersey were in
the possession of the Dutch, the half of St. Christopher's in that of
the French. The island of Antigua, the two Carolinas, Pennsylvania,
Georgia, and Nova Scotia, were not planted. Virginia, Maryland, and
New England were planted; and though they were very thriving colonies,
yet there was not perhaps at that time, either in Europe or America, a
single person who foresaw, or even suspected, the rapid progress which
they have since made in wealth, population, and improvement. The
island of Barbadoes, in short, was the only British colony of any
consequence, of which the condition at that time bore any resemblance
to what it is at present. The trade of the colonies, of which England,
even for some time after the act of navigation, enjoyed but a part
(for the act of navigation was not very strictly executed till several
years after it was enacted), could not at that time be the cause of
the great trade of England, nor of the great naval power which was
supported by that trade. The trade which at that time supported that
great naval power was the trade of Europe, and of the countries which
lie round the Mediterranean sea. But the share which Great Britain at
present enjoys of that trade could not support any such great naval
power. Had the growing trade of the colonies been left free to all
nations, whatever share of it might have fallen to Great Britain, and
a very considerable share would probably have fallen to her, must have
been all an addition to this great trade of which she was before in
possession. In consequence of the monopoly, the increase of the colony
trade has not so much occasioned an addition to the trade which Great
Britain had before, as a total change in its direction.

Secondly, This monopoly has necessarily contributed to keep up the
rate of profit, in all the different branches of British trade, higher
than it naturally would have been, had all nations been allowed a free
trade to the British colonies.

The monopoly of the colony trade, as it necessarily drew towards that
trade a greater proportion of the capital of Great Britain than what
would have gone to it of its own accord, so, by the expulsion of all
foreign capitals, it necessarily reduced the whole quantity of capital
employed in that trade below what it naturally would have been in the
case of a free trade. But, by lessening the competition of capitals in
that branch of trade, it necessarily raised the rate of profit in that
branch. By lessening, too, the competition of British capitals in all
other branches of trade, it necessarily raised the rate of British
profit in all those other branches. Whatever may have been, at any
particular period since the establishment of the act of navigation,
the state or extent of the mercantile capital of Great Britain, the
monopoly of the colony trade must, during the continuance of that
state, have raised the ordinary rate of British profit higher than it
otherwise would have been, both in that and in all the other branches
of British trade. If, since the establishment of the act of
navigation, the ordinary rate of British profit has fallen
considerably, as it certainly has, it must have fallen still lower,
had not the monopoly established by that act contributed to keep it
up.

But whatever raises, in any country, the ordinary rate of profit
higher than it otherwise would be, necessarily subjects that country
both to an absolute, and to a relative disadvantage in every branch of
trade of which she has not the monopoly.

It subjects her to an absolute disadvantage; because, in such branches
of trade, her merchants cannot get this greater profit without selling
dearer than they otherwise would do, both the goods of foreign
countries which they import into their own, and the goods of their own
country which they export to foreign countries. Their own country must
both buy dearer and sell dearer; must both buy less, and sell less;
must both enjoy less and produce less, than she otherwise would do.

It subjects her to a relative disadvantage; because, in such branches
of trade, it sets other countries, which are not subject to the same
absolute disadvantage, either more above her or less below her, than
they otherwise would be. It enables them both to enjoy more and to
produce more, in proportion to what she enjoys and produces. It
renders their superiority greater, or their inferiority less, than it
otherwise would be. By raising the price of her produce above what it
otherwise would be, it enables the merchants of other countries to
undersell her in foreign markets, and thereby to justle her out of
almost all those branches of trade, of which she has not the monopoly.

Our merchants frequently complain of the high wages of British labour,
as the cause of their manufactures being undersold in foreign markets;
but they are silent about the high profits of stock. They complain of
the extravagant gain of other people; but they say nothing of their
own. The high profits of British stock, however, may contribute
towards raising the price of British manufactures, in many cases, as
much, and in some perhaps more, than the high wages of British labour.

It is in this manner that the capital of Great Britain, one may justly
say, has partly been drawn and partly been driven from the greater
part of the different branches of trade of which she has not the
monopoly; from the trade of Europe, in particular, and from that of
the countries which lie round the Mediterranean sea.

It has partly been drawn from those branches of trade, by the
attraction of superior profit in the colony trade, in consequence of
the continual increase of that trade, and of the continual
insufficiency of the capital which had carried it on one year to carry
it on the next.

It has partly been driven from them, by the advantage which the high
rate of profit established in Great Britain gives to other countries,
in all the different branches of trade of which Great Britain has not
the monopoly.

As the monopoly of the colony trade has drawn from those other
branches a part of the British capital, which would otherwise have
been employed in them, so it has forced into them many foreign
capitals which would never have gone to them, had they not been
expelled from the colony trade. In those other branches of trade, it
has diminished the competition of British capitals, and thereby raised
the rate of British profit higher than it otherwise would have been.
On the contrary, it has increased the competition of foreign capitals,
and thereby sunk the rate of foreign profit lower than it otherwise
would have been. Both in the one way and in the other, it must
evidently have subjected Great Britain to a relative disadvantage in
all those other branches of trade.

The colony trade, however, it may perhaps be said, is more
advantageous to Great Britain than any other; and the monopoly, by
forcing into that trade a greater proportion of the capital of Great
Britain than what would otherwise have gone to it, has turned that
capital into an employment, more advantageous to the country than any
other which it could have found.

The most advantageous employment of any capital to the country to
which it belongs, is that which maintains there the greatest quantity
of productive labour, and increases the most the annual produce of the
land and labour of that country. But the quantity of productive labour
which any capital employed in the foreign trade of consumption can
maintain, is exactly in proportion, it has been shown in the second
book, to the frequency of its returns. A capital of a thousand pounds,
for example, employed in a foreign trade of consumption, of which the
returns are made regularly once in the year, can keep in constant
employment, in the country to which it belongs, a quantity of
productive labour, equal to what a thousand pounds can maintain there
for a year. If the returns are made twice or thrice in the year, it
can keep in constant employment a quantity of productive labour, equal
to what two or three thousand pounds can maintain there for a year. A
foreign trade of consumption carried on with a neighbouring, is, upon
that account, in general, more advantageous than one carried on with a
distant country; and, for the same reason, a direct foreign trade of
consumption, as it has likewise been shown in the second book, is in
general more advantageous than a round-about one.

But the monopoly of the colony trade, so far as it has operated upon
the employment of the capital of Great Britain, has, in all cases,
forced some part of it from a foreign trade of consumption carried on
with a neighbouring, to one carried on with a more distant country,
and in many cases from a direct foreign trade of consumption to a
round-about one.

First, The monopoly of the colony trade has, in all cases, forced
some part of the capital of Great Britain from a foreign trade of
consumption carried on with a neighbouring, to one carried on with a
more distant country.

It has, in all cases, forced some part of that capital from the trade
with Europe, and with the countries which lie round the Mediterranean
sea, to that with the more distant regions of America and the West
Indies; from which the returns are necessarily less frequent, not only
on account of the greater distance, but on account of the peculiar
circumstances of those countries. New colonies, it has already been
observed, are always understocked. Their capital is always much less
than what they could employ with great profit and advantage in the
improvement and cultivation of their land. They have a constant
demand, therefore, for more capital than they have of their own; and,
in order to supply the deficiency of their own, they endeavour to
borrow as much as they can of the mother country, to whom they are,
therefore, always in debt. The most common way in which the colonies
contract this debt, is not by borrowing upon bond of the rich people
of the mother country, though they sometimes do this too, but by
running as much in arrear to their correspondents, who supply them
with goods from Europe, as those correspondents will allow them. Their
annual returns frequently do not amount to more than a third, and
sometimes not to so great a proportion of what they owe. The whole
capital, therefore, which their correspondents advance to them, is
seldom returned to Britain in less than three, and sometimes not in
less than four or five years. But a British capital of a thousand
pounds, for example, which is returned to Great Britain only once in
five years, can keep in constant employment only one-fifth part of the
British industry which it could maintain, if the whole was returned
once in the year; and, instead of the quantity of industry which a
thousand pounds could maintain for a year, can keep in constant
employment the quantity only which two hundred pounds can maintain for
a year. The planter, no doubt, by the high price which he pays for the
goods from Europe, by the interest upon the bills which he grants at
distant dates, and by the commission upon the renewal of those which
he grants at near dates, makes up, and probably more than makes up,
all the loss which his correspondent can sustain by this delay. But,
though he make up the loss of his correspondent, he cannot make up
that of Great Britain. In a trade of which the returns are very
distant, the profit of the merchant may be as great or greater than in
one in which they are very frequent and near; but the advantage of the
country in which he resides, the quantity of productive labour
constantly maintained there, the annual produce of the land and
labour, must always be much less. That the returns of the trade to
America, and still more those of that to the West Indies, are, in
general, not only more distant, but more irregular and more uncertain,
too, than those of the trade to any part of Europe, or even of the
countries which lie round the Mediterranean sea, will readily be
allowed, I imagine, by everybody who has any experience of those
different branches of trade.

Secondly, The monopoly of the colony trade, has, in many cases,
forced some part of the capital of Great Britain from a direct foreign
trade of consumption, into a round-about one.

Among the enumerated commodities which can be sent to no other market
but Great Britain, there are several of which the quantity exceeds
very much the consumption of Great Britain, and of which, a part,
therefore, must be exported to other countries. But this cannot be
done without forcing some part of the capital of Great Britain into a
round-about foreign trade of consumption. Maryland, and Virginia, for
example, send annually to Great Britain upwards of ninety-six thousand
hogsheads of tobacco, and the consumption of Great Britain is said not
to exceed fourteen thousand. Upwards of eighty-two thousand hogsheads,
therefore, must be exported to other countries, to France, to Holland,
and, to the countries which lie round the Baltic and Mediterranean
seas. But that part of the capital of Great Britain which brings those
eighty-two thousand hogsheads to Great Britain, which re-exports them
from thence to those other countries, and which brings back from those
other countries to Great Britain either goods or money in return, is
employed in a round-about foreign trade of consumption; and is
necessarily forced into this employment, in order to dispose of this
great surplus. If we would compute in how many years the whole of this
capital is likely to come back to Great Britain, we must add to the
distance of the American returns that of the returns from those other
countries. If, in the direct foreign trade of consumption which we
carry on with America, the whole capital employed frequently does not
come back in less than three or four years, the whole capital employed
in this round-about one is not likely to come back in less than four
or five. If the one can keep in constant employment but a third or a
fourth part of the domestic industry which could be maintained by a
capital returned once in the year, the other can keep in constant
employment but a fourth or a fifth part of that industry. At some of
the outports a credit is commonly given to those foreign
correspondents to whom they export them tobacco. At the port of
London, indeed, it is commonly sold for ready money: the rule is Weigh
and pay. At the port of London, therefore, the final returns of the
whole round-about trade are more distant than the returns from
America, by the time only which the goods may lie unsold in the
warehouse; where, however, they may sometimes lie long enough. But,
had not the colonies been confined to the market of Great Britain for
the sale of their tobacco, very little more of it would probably have
come to us than what was necessary for the home consumption. The goods
which Great Britain purchases at present for her own consumption with
the great surplus of tobacco which she exports to other countries, she
would, in this case, probably have purchased with the immediate
produce of her own industry, or with some part of her own
manufactures. That produce, those manufactures, instead of being
almost entirely suited to one great market, as at present, would
probably have been fitted to a great number of smaller markets.
Instead of one great round-about foreign trade of consumption, Great
Britain would probably have carried on a great number of small direct
foreign trades of the same kind. On account of the frequency of the
returns, a part, and probably but a small part, perhaps not above a
third or a fourth of the capital which at present carries on this
great round-about trade, might have been sufficient to carry on all
those small direct ones; might have kept inconstant employment an
equal quantity of British industry; and have equally supported the
annual produce of the land and labour of Great Britain. All the
purposes of this trade being, in this manner, answered by a much
smaller capital, there would have been a large spare capital to apply
to other purposes; to improve the lands, to increase the manufactures,
and to extend the commerce of Great Britain; to come into competition
at least with the other British capitals employed in all those
different ways, to reduce the rate of profit in them all, and thereby
to give to Great Britain, in all of them, a superiority over other
countries, still greater than what she at present enjoys.

The monopoly of the colony trade, too, has forced some part of the
capital of Great Britain from all foreign trade of consumption to a
carrying trade; and, consequently from supporting more or less the
industry of Great Britain, to be employed altogether in supporting
partly that of the colonies, and partly that of some other countries.

The goods, for example, which are annually purchased with the great
surplus of eighty-two thousand hogsheads of tobacco annually
re-exported from Great Britain, are not all consumed in Great Britain.
Part of them, linen from Germany and Holland, for example, is returned
to the colonies for their particular consumption. But that part of the
capital of Great Britain which buys the tobacco with which this linen
is afterwards bought, is necessarily withdrawn from supporting the
industry of Great Britain, to be employed altogether in supporting,
partly that of the colonies, and partly that of the particular
countries who pay for this tobacco with the produce of their own
industry.

The monopoly of the colony trade, besides, by forcing towards it a
much greater proportion of the capital of Great Britain than what
would naturally have gone to it, seems to have broken altogether that
natural balance which would otherwise have taken place among all the
different branches of British industry. The industry of Great Britain,
instead of being accommodated to a great number of small markets, has
been principally suited to one great market. Her commerce, instead of
running in a great number of small channels, has been taught to run
principally in one great channel. But the whole system of her industry
and commerce has thereby been rendered less secure; the whole state of
her body politic less healthful than it otherwise would have been. In
her present condition, Great Britain resembles one of those
unwholesome bodies in which some of the vital parts are overgrown, and
which, upon that account, are liable to many dangerous disorders,
scarce incident to those in which all the parts are more properly
proportioned. A small stop in that great blood-vessel, which has been
artificially swelled beyond its natural dimensions, and through which
an unnatural proportion of the industry and commerce of the country
has been forced to circulate, is very likely to bring on the most
dangerous disorders upon the whole body politic. The expectation of a
rupture with the colonies, accordingly, has struck the people of Great
Britain with more terror than they ever felt for a Spanish armada, or
a French invasion. It was this terror, whether well or ill grounded,
which rendered the repeal of the stamp act, among the merchants at
least, a popular measure. In the total exclusion from the colony
market, was it to last only for a few years, the greater part of our
merchants used to fancy that they foresaw an entire stop to their
trade; the greater part of our master manufacturers, the entire ruin
of their business; and the greater part of our workmen, an end of
their employment. A rupture with any of our neighbours upon the
continent, though likely, too, to occasion some stop or interruption
in the employments of some of all these different orders of people, is
foreseen, however, without any such general emotion. The blood, of
which the circulation is stopt in some of the smaller vessels, easily
disgorges itself into the greater, without occasioning any dangerous
disorder; but, when it is stopt in any of the greater vessels,
convulsions, apoplexy, or death, are the immediate and unavoidable
consequences. If but one of those overgrown manufactures, which, by
means either of bounties or of the monopoly of the home and colony
markets, have been artificially raised up to any unnatural height,
finds some small stop or interruption in its employment, it frequently
occasions a mutiny and disorder alarming to government, and
embarrassing even to the deliberations of the legislature. How great,
therefore, would be the disorder and confusion, it was thought, which
must necessarily be occasioned by a sudden and entire stop in the
employment of so great a proportion of our principal manufacturers?

Some moderate and gradual relaxation of the laws which give to Great
Britain the exclusive trade to the colonies, till it is rendered in a
great measure free, seems to be the only expedient which can, in all
future times, deliver her from this danger; which can enable her, or
even force her, to withdraw some part of her capital from this
overgrown employment, and to turn it, though with less profit, towards
other employments; and which, by gradually diminishing one branch of
her industry, and gradually increasing all the rest, can, by degrees,
restore all the different branches of it to that natural, healthful,
and proper proportion, which perfect liberty necessarily establishes,
and which perfect liberty can alone preserve. To open the colony trade
all at once to all nations, might not only occasion some transitory
inconveniency, but a great permanent loss, to the greater part of
those whose industry or capital is at present engaged in it. The
sudden loss of the employment, even of the ships which import the
eighty-two thousand hogsheads of tobacco, which are over and above the
consumption of Great Britain, might alone be felt very sensibly. Such
are the unfortunate effects of all the regulations of the mercantile
system. They not only introduce very dangerous disorders into the
state of the body politic, but disorders which it is often difficult
to remedy, without occasioning, for a time at least, still greater
disorders. In what manner, therefore, the colony trade ought gradually
to be opened; what are the restraints which ought first, and what are
those which ought last, to be taken away; or in what manner the
natural system of perfect liberty and justice ought gradually to be
restored, we must leave to the wisdom of future statesmen and
legislators to determine.

Five different events, unforeseen and unthought of, have very
fortunately concurred to hinder Great Britain from feeling, so
sensibly as it was generally expected she would, the total exclusion
which has now taken place for more than a year (from the first of
December 1774) from a very important branch of the colony trade, that
of the twelve associated provinces of North America. First, those
colonies, in preparing themselves for their non-importation agreement,
drained Great Britain completely of all the commodities which were fit
for their market; secondly, the extra ordinary demand of the Spanish
flota has, this year, drained Germany and the north of many
commodities, linen in particular, which used to come into competition,
even in the British market, with the manufactures of Great Britain;
thirdly, the peace between Russia and Turkey has occasioned an
extraordinary demand from the Turkey market, which, during the
distress of the country, and while a Russian fleet was cruizing in the
Archipelago, had been very poorly supplied; fourthly, the demand of
the north of Europe for the manufactures of Great Britain has been
increasing from year to year, for some time past; and, fifthly, the
late partition, and consequential pacification of Poland, by opening
the market of that great country, have, this year, added an
extraordinary demand from thence to the increasing demand of the
north. These events are all, except the fourth, in their nature
transitory and accidental; and the exclusion from so important a
branch of the colony trade, if unfortunately it should continue much
longer, may still occasion some degree of distress. This distress,
however, as it will come on gradually, will be felt much less severely
than if it had come on all at once; and, in the mean time, the
industry and capital of the country may find a new employment and
direction, so as to prevent this distress from ever rising to any
considerable height.

The monopoly of the colony trade, therefore, so far as it has turned
towards that trade a greater proportion of the capital of Great
Britain than what would otherwise have gone to it, has in all cases
turned it, from a foreign trade of consumption with a neighbouring,
into one with a more distant country; in many cases from a direct
foreign trade of consumption into a round-about one; and, in some
cases, from all foreign trade of consumption into a carrying trade. It
has, in all cases, therefore, turned it from a direction in which it
would have maintained a greater quantity of productive labour, into
one in which it can maintain a much smaller quantity. By suiting,
besides, to one particular market only, so great a part of the
industry and commerce of Great Britain, it has rendered the whole
state of that industry and commerce more precarious and less secure,
than if their produce had been accommodated to a greater variety of
markets.

We must carefully distinguish between the effects of the colony trade
and those of the monopoly of that trade. The former are always and
necessarily beneficial; the latter always and necessarily hurtful. But
the former are so beneficial, that the colony trade, though subject to
a monopoly, and, notwithstanding the hurtful effects of that monopoly,
is still, upon the whole, beneficial, and greatly beneficial, though a
good deal less so than it otherwise would be.

The effect of the colony trade, in its natural and free state, is to
open a great though distant market, for such parts of the produce of
British industry as may exceed the demand of the markets nearer home,
of those of Europe, and of the countries which lie round the
Mediterranean sea. In its natural and free state, the colony trade,
without drawing from those markets any part of the produce which had
ever been sent to them, encourages Great Britain to increase the
surplus continually, by continually presenting new equivalents to be
exchanged for it. In its natural and free state, the colony trade
tends to increase the quantity of productive labour in Great Britain,
but without altering in any respect the direction of that which had
been employed there before. In the natural and free state of the
colony trade, the competition of all other nations would hinder the
rate of profit from rising above the common level, either in the new
market, or in the new employment. The new market, without drawing any
thing from the old one, would create, if one may say so, a new produce
for its own supply; and that new produce would constitute a new
capital for carrying on the new employment, which, in the same manner,
would draw nothing from the old one.

The monopoly of the colony trade, on the contrary, by excluding the
competition of other nations, and thereby raising the rate of profit,
both in the new market and in the new employment, draws produce from
the old market, and capital from the old employment. To augment our
share of the colony trade beyond what it otherwise would be, is the
avowed purpose of the monopoly. If our share of that trade were to be
no greater with, than it would have been without the monopoly, there
could have been no reason for establishing the monopoly. But whatever
forces into a branch of trade, of which the returns are slower and
more distant than those of the greater part of other trades, a greater
proportion of the capital of any country, than what of its own accord
would go to that branch, necessarily renders the whole quantity of
productive labour annually maintained there, the whole annual produce
of the land and labour of that country, less than they otherwise would
be. It keeps down the revenue of the inhabitants of that country below
what it would naturally rise to, and thereby diminishes their power of
accumulation. It not only hinders, at all times, their capital from
maintaining so great a quantity of productive labour as it would
otherwise maintain, but it hinders it from increasing so fast as it
would otherwise increase, and, consequently, from maintaining a still
greater quantity of productive labour.

The natural good effects of the colony trade, however, more than
counterbalance to Great Britain the bad effects of the monopoly; so
that, monopoly and altogether, that trade, even as it is carried on at
present, is not only advantageous, but greatly advantageous. The new
market and the new employment which are opened by the colony trade,
are of much greater extent than that portion of the old market and of
the old employment which is lost by the monopoly. The new produce and
the new capital which has been created, if one may say so, by the
colony trade, maintain in Great Britain a greater quantity of
productive labour than what can have been thrown out of employment by
the revulsion of capital from other trades of which the returns are
more frequent. If the colony trade, however, even as it is carried on
at present, is advantageous to Great Britain, it is not by means of
the monopoly, but in spite of the monopoly.

It is rather for the manufactured than for the rude produce of Europe,
that the colony trade opens a new market. Agriculture is the proper
business of all new colonies; a business which the cheapness of land
renders more advantageous than any other. They abound, therefore, in
the rude produce of land; and instead of importing it from other
countries, they have generally a large surplus to export. In new
colonies, agriculture either draws hands from all other employments,
or keeps them from going to any other employment. There are few hands
to spare for the necessary, and none for the ornamental manufactures.
The greater part of the manufactures of both kinds they find it
cheaper to purchase of other countries than to make for themselves. It
is chiefly by encouraging the manufactures of Europe, that the colony
trade indirectly encourages its agriculture. The manufacturers of
Europe, to whom that trade gives employment, constitute a new market
for the produce of the land, and the most advantageous of all markets;
the home market for the corn and cattle, for the bread and butcher's
meat of Europe, is thus greatly extended by means of the trade to
America.

But that the monopoly of the trade of populous and thriving colonies
is not alone sufficient to establish, or even to maintain,
manufactures in any country, the examples of Spain and Portugal
sufficiently demonstrate. Spain and Portugal were manufacturing
countries before they had any considerable colonies. Since they had
the richest and most fertile in the world, they have both ceased to be
so.

In Spain and Portugal, the bad effects of the monopoly, aggravated by
other causes, have, perhaps, nearly overbalanced the natural good
effects of the colony trade. These causes seem to be other monopolies
of different kinds: the degradation of the value of gold and silver
below what it is in most other countries; the exclusion from foreign
markets by improper taxes upon exportation, and the narrowing of the
home market, by still more improper taxes upon the transportation of
goods from one part of the country to another; but above all, that
irregular and partial administration of justice which often protects
the rich and powerful debtor from the pursuit of his injured creditor,
and which makes the industrious part of the nation afraid to prepare
goods for the consumption of those haughty and great men, to whom they
dare not refuse to sell upon credit, and from whom they are altogether
uncertain of repayment.

In England, on the contrary, the natural good effects of the colony
trade, assisted by other causes, have in a great measure conquered the
bad effects of the monopoly. These causes seem to be, the general
liberty of trade, which, notwithstanding some restraints, is at least
equal, perhaps superior, to what it is in any other country; the
liberty of exporting, duty free, almost all sorts of goods which are
the produce of domestic industry, to almost any foreign country; and
what, perhaps, is of still greater importance, the unbounded liberty
of transporting them from one part of our own country to any other,
without being obliged to give any account to any public office,
without being liable to question or examination of any kind; but,
above all, that equal and impartial administration of justice, which
renders the rights of the meanest British subject respectable to the
greatest, and which, by securing to every man the fruits of his own
industry, gives the greatest and most effectual encouragement to every
sort of industry.

If the manufactures of Great Britain, however, have been advanced, as
they certainly have, by the colony trade, it has not been by means of
the monopoly of that trade, but in spite of the monopoly. The effect
of the monopoly has been, not to augment the quantity, but to alter
the quality and shape of a part of the manufactures of Great Britain,
and to accommodate to a market, from which the returns are slow and
distant, what would otherwise have been accommodated to one from which
the returns are frequent and near. Its effect has consequently been,
to turn a part of the capital of Great Britain from an employment in
which it would have maintained a greater quantity of manufacturing
industry, to one in which it maintains a much smaller, and thereby to
diminish, instead of increasing, the whole quantity of manufacturing
industry maintained in Great Britain.

The monopoly of the colony trade, therefore, like all the other mean
and malignant expedients of the mercantile system, depresses the
industry of all other countries, but chiefly that of the colonies,
without in the least increasing, but on the contrary diminishing, that
of the country in whose favour it is established.

The monopoly hinders the capital of that country, whatever may, at any
particular time, be the extent of that capital, from maintaining so
great a quantity of productive labour as it would otherwise maintain,
and from affording so great a revenue to the industrious inhabitants
as it would otherwise afford. But as capital can be increased only by
savings from revenue, the monopoly, by hindering it from affording so
great a revenue as it would otherwise afford, necessarily hinders it
from increasing so fast as it would otherwise increase, and
consequently from maintaining a still greater quantity of productive
labour, and affording a still greater revenue to the industrious
inhabitants of that country. One great original source of revenue,
therefore, the wages of labour, the monopoly must necessarily have
rendered, at all times, less abundant than it otherwise would have
been.

By raising the rate of mercantile profit, the monopoly discourages the
improvement of land. The profit of improvement depends upon the
difference between what the land actually produces, and what, by the
application of a certain capital, it can be made to produce. If this
difference affords a greater profit than what can be drawn from an
equal capital in any mercantile employment, the improvement of land
will draw capital from all mercantile employments. If the profit is
less, mercantile employments will draw capital from the improvement of
land. Whatever, therefore, raises the rate of mercantile profit,
either lessens the superiority, or increases the inferiority of the
profit of improvement: and, in the one case, hinders capital from
going to improvement, and in the other draws capital from it; but by
discouraging improvement, the monopoly necessarily retards the natural
increase of another great original source of revenue, the rent of
land. By raising the rate of profit, too, the monopoly necessarily
keeps up the market rate of interest higher than it otherwise would
be. But the price of land, in proportion to the rent which it affords,
the number of years purchase which is commonly paid for it,
necessarily falls as the rate of interest rises, and rises as the rate
of interest falls. The monopoly, therefore, hurts the interest of the
landlord two different ways, by retarding the natural increase, first,
of his rent, and, secondly, of the price which he would get for his
land, in proportion to the rent which it affords.

The monopoly, indeed, raises the rate of mercantile profit and thereby
augments somewhat the gain of our merchants. But as it obstructs the
natural increase of capital, it tends rather to diminish than to
increase the sum total of the revenue which the inhabitants of the
country derive from the profits of stock; a small profit upon a great
capital generally affording a greater revenue than a great profit upon
a small one. The monopoly raises the rate of profit, but it hinders
the sum of profit from rising so high as it otherwise would do.

All the original sources of revenue, the wages of labour, the rent of
land, and the profits of stock, the monopoly renders much less
abundant than they otherwise would be. To promote the little interest
of one little order of men in one country, it hurts the interest of
all other orders of men in that country, and of all the men in all
other countries.

It is solely by raising the ordinary rate of profit, that the monopoly
either has proved, or could prove, advantageous to any one particular
order of men. But besides all the bad effects to the country in
general, which have already been mentioned as necessarily resulting
from a higher rate of profit, there is one more fatal, perhaps, than
all these put together, but which, if we may judge from experience, is
inseparably connected with it. The high rate of profit seems
everywhere to destroy that parsimony which, in other circumstances, is
natural to the character of the merchant. When profits are high, that
sober virtue seems to be superfluous, and expensive luxury to suit
better the affluence of his situation. But the owners of the great
mercantile capitals are necessarily the leaders and conductors of the
whole industry of every nation; and their example has a much greater
influence upon the manners of the whole industrious part of it than
that of any other order of men. If his employer is attentive and
parsimonious, the workman is very likely to be so too; but if the
master is dissolute and disorderly, the servant, who shapes his work
according to the pattern which his master prescribes to him, will
shape his life, too, according to the example which he sets him.
Accumulation is thus prevented in the hands of all those who are
naturally the most disposed to accumulate; and the funds destined for
the maintenance of productive labour, receive no augmentation from the
revenue of those who ought naturally to augment them the most. The
capital of the country, instead of increasing, gradually dwindles
away, and the quantity of productive labour maintained in it grows
every day less and less. Have the exorbitant profits of the merchants
of Cadiz and Lisbon augmented the capital of Spain and Portugal? Have
they alleviated the poverty, have they promoted the industry, of those
two beggarly countries? Such has been the tone of mercantile expense
in those two trading cities, that those exorbitant profits, far from
augmenting the general capital of the country, seem scarce to have
been sufficient to keep up the capitals upon which they were made.
Foreign capitals are every day intruding themselves, if I may say so,
more and more into the trade of Cadiz and Lisbon. It is to expel those
foreign capitals from a trade which their own grows every day more and
more insufficient for carrying on, that the Spaniards and Portuguese
endeavour every day to straiten more and more the galling bands of
their absurd monopoly. Compare the mercantile manners of Cadiz and
Lisbon with those of Amsterdam, and you will be sensible how
differently the conduct and character of merchants are affected by the
high and by the low profits of stock. The merchants of London, indeed,
have not yet generally become such magnificent lords as those of Cadiz
and Lisbon; but neither are they in general such attetitive and
parsimonious burghers as those of Amsterdam. They are supposed,
however, many of them, to be a good deal richer than the greater part
of the former, and not quire so rich as many of the latter: but the
rate of their profit is commonly much lower than that of the former,
and a good deal higher than that of the latter. Light come, light go,
says the proverb; and the ordinary tone of expense seems everywhere to
be regulated, not so much according to the real ability of spending,
as to the supposed facility of getting money to spend.

It is thus that the single advantage which the monopoly procures to a
single order of men, is in many different ways hurtful to the general
interest of the country.

To found a great empire for the sole purpose of raising up a people of
customers, may at first sight, appear a project fit only for a nation
of shopkeepers. It is, however, a project altogether unfit for a
nation of shopkeepers, but extremely fit for a nation whose government
is influenced by shopkeepers. Such statesmen, and such statesmen only,
are capable of fancying that they will find some advantage in
employing the blood and treasure of their fellow-citizens, to found
and maintain such an empire. Say to a shopkeeper, Buy me a good
estate, and I shall always buy my clothes at your shop, even though I
should pay somewhat dearer than what I can have them for at other
shops; and you will not find him very forward to embrace your
proposal. But should any other person buy you such an estate, the
shopkeeper will be much obliged to your benefactor if he would enjoin
you to buy all your clothes at his shop. England purchased for some of
her subjects, who found themselves uneasy at home, a great estate in a
distant country. The price, indeed, was very small, and instead of
thirty years purchase, the ordinary price of land in the present
times, it amounted to little more than the expense of the different
equipments which made the first discovery, reconnoitered the coast, and
took a fictitious possession of the country. The land was good, and of
great extent; and the cultivators having plenty of good ground to work
upon, and being for some time at liberty to sell their produce where
they pleased, became, in the course of little more than thirty or
forty years (between 1620 and 1660), so numerous and thriving a
people, that the shopkeepers and other traders of England wished to
secure to themselves the monopoly of their custom. Without pretending,
therefore, that they had paid any part, either of the original
purchase money, or of the subsequent expense of improvement, they
petitioned the parliament, that the cultivators of America might for
the future be confined to their shop; first, for buying all the goods
which they wanted from Europe; and, secondly, for selling all such
parts of their own produce as those traders might find it convenient
to buy. For they did not find it convenient to buy every part of it.
Some parts of it imported into England, might have interfered with
some of the trades which they themselves carried on at home. Those
particular parts of it, therefore, they were willing that the
colonists should sell where they could; the farther off the better;
and upon that account proposed that their market should be confined to
the countries south of Cape Finisterre. A clause in the famous act of
navigation established this truly shopkeeper proposal into a law.

The maintenance of this monopoly has hitherto been the principal, or
more properly, perhaps, the sole end and purpose of the dominion which
Great Britain assumes over her colonies. In the exclusive trade, it is
supposed, consists the great advantage of provinces, which have never
yet afforded either revenue or military force for the support of the
civil government, or the defence of the mother country. The monopoly
is the principal badge of their dependency, and it is the sole fruit
which has hitherto been gathered from that dependency. Whatever
expense Great Britain has hitherto laid out in maintaining this
dependency, has really been laid out in order to support this
monopoly. The expense of the ordinary peace establishment of the
colonies amounted, before the commencement of the present disturbances
to the pay of twenty regiments of foot; to the expense of the
artillery, stores, and extraordinary provisions, with which it was
necessary to supply them; and to the expense of a very considerable
naval force, which was constantly kept up, in order to guard from the
smuggling vessels of other nations, the immense coast of North
America, and that of our West Indian islands. The whole expense of
this peace establishment was a charge upon the revenue of Great
Britain, and was, at the same time, the smallest part of what the
dominion of the colonies has cost the mother country. If we would know
the amount of the whole, we must add to the annual expense of this
peace establishment, the interest of the sums which, in consequence of
their considering her colonies as provinces subject to her dominion,
Great Britain has, upon different occasions, laid out upon their
defence. We must add to it, in particular, the whole expense of the
late war, and a great part of that of the war which preceded it. The
late war was altogether a colony quarrel; and the whole expense of it,
in whatever part of the world it might have been laid out, whether in
Germany or the East Indies, ought justly to be stated to the account
of the colonies. It amounted to more than ninety millions sterling,
including not only the new debt which was contracted, but the two
shillings in the pound additional land tax, and the sums which were
every year borrowed from the sinking fund. The Spanish war which began
in 1739 was principally a colony quarrel. Its principal object was to
prevent the search of the colony ships, which carried on a contraband
trade with the Spanish Main. This whole expense is, in reality, a
bounty which has been given in order to support a monopoly. The
pretended purpose of it was to encourage the manufactures, and to
increase the commerce of Great Britain. But its real effect has been
to raise the rate of mercantile profit, and to enable our merchants to
turn into a branch of trade, of which the returns are more slow and
distant than those of the greater part of other trades, a greater
proportion of their capital than they otherwise would have done; two
events which, if a bounty could have prevented, it might perhaps have
been very well worth while to give such a bounty.

Under the present system of management, therefore, Great Britain
derives nothing but loss from the dominion which she assumes over her
colonies.

To propose that Great Britain should voluntarily give up all authority
over her colonies, and leave them to elect their own magistrates, to
enact their own laws, and to make peace and war, as they might think
proper, would be to propose such a measure as never was, and never
will be, adopted by any nation in the world. No nation ever
voluntarily gave up the dominion of any province, how troublesome
soever it might be to govern it, and how small soever the revenue
which it afforded might be in proportion to the expense which it
occasioned. Such sacrifices, though they might frequently be agreeable
to the interest, are always mortifying to the pride of every nation;
and, what is perhaps of still greater consequence, they are always
contrary to the private interest of the governing part of it, who
would thereby be deprived of the disposal of many places of trust and
profit, of many opportunities of acquiring wealth and distinction,
which the possession of the most turbulent, and, to the great body of
the people, the most unprofitable province, seldom fails to afford.
The most visionary enthusiasts would scarce be capable of proposing
such a measure, with any serious hopes at least of its ever being
adopted. If it was adopted, however, Great Britain would not only be
immediately freed from the whole annual expense of the peace
establishment of the colonies, but might settle with them such a
treaty of commerce as would effectually secure to her a free trade,
more advantageous to the great body of the people, though less so to
the merchants, than the monopoly which she at present enjoys. By thus
parting good friends, the natural affection of the colonies to the
mother country, which, perhaps, our late dissensions have well nigh
extinguished, would quickly revive. It might dispose them not only to
respect, for whole centuries together, that treaty of commerce which
they had concluded with us at parting, but to favour us in war as well
as in trade, and instead of turbulent and factious subjects, to become
our most faithful, affectionate, and generous allies; and the same
sort of parental affection on the one side, and filial respect on the
other, might revive between Great Britain and her colonies, which used
to subsist between those of ancient Greece and the mother city from
which they descended.

In order to render any province advantageous to the empire to which it
belongs, it ought to afford, in time of peace, a revenue to the
public, sufficient not only for defraying the whole expense of its own
peace establishment, but for contributing its proportion to the
support of the general government of the empire. Every province
necessarily contributes, more or less, to increase the expense of that
general government. If any particular province, therefore, does not
contribute its share towards defraying this expense, an unequal burden
must be thrown upon some other part of the empire. The extraordinary
revenue, too, which every province affords to the public in time of
war, ought, from parity of reason, to bear the same proportion to the
extraordinary revenue of the whole empire, which its ordinary revenue
does in time of peace. That neither the ordinary nor extraordinary
revenue which Great Britain derives from her colonies, bears this
proportion to the whole revenue of the British empire, will readily be
allowed. The monopoly, it has been supposed, indeed, by increasing the
private revenue of the people of Great Britain, and thereby enabling
them to pay greater taxes, compensates the deficiency of the public
revenue of the colonies. But this monopoly, I have endeavoured to
show, though a very grievous tax upon the colonies, and though it may
increase the revenue of a particular order of men in Great Britain,
diminishes, instead of increasing, that of the great body of the
people, and consequently diminishes, instead of increasing, the
ability of the great body of the people to pay taxes. The men, too,
whose revenue the monopoly increases, constitute a particular order,
which it is both absolutely impossible to tax beyond the proportion of
other orders, and extremely impolitic even to attempt to tax beyond
that proportion, as I shall endeavour to show in the following book.
No particular resource, therefore, can be drawn from this particular
order.

The colonies may be taxed either by their own assemblies, or by the
parliament of Great Britain.

That the colony assemblies can never be so managed as to levy upon
their constituents a public revenue, sufficient, not only to maintain
at all times their own civil and military establishment, but to pay
their proper proportion of the expense of the general government of
the British empire, seems not very probable. It was a long time before
even the parliament of England, though placed immediately under the
eye of the sovereign, could be brought under such a system of
management, or could be rendered sufficiently liberal in their grants
for supporting the civil and military establishments even of their own
country. It was only by distributing among the particular members of
parliament a great part either of the offices, or of the disposal of
the offices arising from this civil and military establishment, that
such a system of management could be established, even with regard to
the parliament of England. But the distance of the colony assemblies
from the eye of the sovereign, their number, their dispersed
situation, and their various constitutions, would render it very
difficult to manage them in the same manner, even though the sovereign
had the same means of doing it; and those means are wanting. It would
be absolutely impossible to distribute among all the leading members
of all the colony assemblies such a share, either of the offices, or
of the disposal of the offices, arising from the general government of
the British empire, as to dispose them to give up their popularity at
home, and to tax their constituents for the support of that general
government, of which almost the whole emoluments were to be divided
among people who were strangers to them. The unavoidable ignorance of
administration, besides, concerning the relative importance of the
different members of those different assemblies, the offences which
must frequently be given, the blunders which must constantly be
committed, in attempting to manage them in this manner, seems to
render such a system of management altogether impracticable with
regard to them.

The colony assemblies, besides, cannot be supposed the proper judges
of what is necessary for the defence and support of the whole empire.
The care of that defence and support is not entrusted to them. It is
not their business, and they have no regular means of information
concerning it. The assembly of a province, like the vestry of a
parish, may judge very properly concerning the affairs of its own
particular district, but can have no proper means of judging
concerning those of the whole empire. It cannot even judge properly
concerning the proportion which its own province bears to the whole
empire, or concerning the relative degree of its wealth and
importance, compared with the other provinces; because those other
provinces are not under the inspection and superintendency of the
assembly of a particular province. What is necessary for the defence
and support of the whole empire, and in what proportion each part
ought to contribute, can be judged of only by that assembly which
inspects and super-intends the affairs of the whole empire.

It has been proposed, accordingly, that the colonies should be taxed
by requisition, the parliament of Great Britain determining the sum
which each colony ought to pay, and the provincial assembly assessing
and levying it in the way that suited best the circumstances of the
province. What concerned the whole empire would in this way be
determined by the assembly which inspects and superintends the affairs
of the whole empire; and the provincial affairs of each colony might
still be regulated by its own assembly. Though the colonies should, in
this case, have no representatives in the British parliament, yet, if
we may judge by experience, there is no probability that the
parliamentary requisition would be unreasonable. The parliament of
England has not, upon any occasion, shewn the smallest disposition to
overburden those parts of the empire which are not represented in
parliament. The islands of Guernsey and Jersey, without any means of
resisting the authority of parliament, are more lightly taxed than any
part of Great Britain. Parliament, in attempting to exercise its
supposed right, whether well or ill grounded, of taxing the colonies,
has never hitherto demanded of them anything which even approached to
a just proportion to what was paid by their fellow subjects at home.
If the contribution of the colonies, besides, was to rise or fall in
proportion to the rise or fall of the land-tax, parliament could not
tax them without taxing, at the same time, its own constituents, and
the colonies might, in this case, be considered as virtually
represented in parliament.

Examples are not wanting of empires in which all the different
provinces are not taxed, if I may be allowed the expression, in one
mass; but in which the sovereign regulates the sum which each province
ought to pay, and in some provinces assesses and levies it as he
thinks proper; while in others he leaves it to be assessed and levied
as the respective states of each province shall determine. In some
provinces of France, the king not only imposes what taxes he thinks
proper, but assesses and levies them in the way he thinks proper. From
others he demands a certain sum, but leaves it to the states of each
province to assess and levy that sum as they think proper. According
to the scheme of taxing by requisition, the parliament of Great
Britain would stand nearly in the same situation towards the colony
assemblies, as the king of France does towards the states of those
provinces which still enjoy the privilege of having states of their
own, the provinces of France which are supposed to be the best
governed.

But though, according to this scheme, the colonies could have no just
reason to fear that their share of the public burdens should ever
exceed the proper proportion to that of their fellow-citizens at home,
Great Britain might have just reason to fear that it never would
amount to that proper proportion. The parliament of Great Britain has
not, for some time past, had the same established authority in the
colonies, which the French king has in those provinces of France which
still enjoy the privilege of having states of their own. The colony
assemblies, if they were not very favourably disposed (and unless more
skilfully managed than they ever have been hitherto, they are not very
likely to be so), might still find many pretences for evading or
rejecting the most reasonable requisitions of parliament. A French war
breaks out, we shall suppose; ten millions must immediately be raised,
in order to defend the seat of the empire. This sum must be borrowed
upon the credit of some parliamentary fund mortgaged for paying the
interest. Part of this fund parliament proposes to raise by a tax to
be levied in Great Britain; and part of it by a requisition to all the
different colony assemblies of America and the West Indies. Would
people readily advance their money upon the credit of a fund which
partly depended upon the good humour of all those assemblies, far
distant from the seat of the war, and sometimes, perhaps, thinking
themselves not much concerned in the event of it? Upon such a fund, no
more money would probably be advanced than what the tax to be levied
in Great Britain might be supposed to answer for. The whole burden of
the debt contracted on account of the war would in this manner fall,
as it always has done hitherto, upon Great Britain; upon a part of the
empire, and not upon the whole empire. Great Britain is, perhaps,
since the world began, the only state which, as it has extended its
empire, has only increased its expense, without once augmenting its
resources. Other states have generally disburdened themselves, upon
their subject and subordinate provinces, of the most considerable part
of the expense of defending the empire. Great Britain has hitherto
suffered her subject and subordinate provinces to disburden themselves
upon her of almost this whole expense. In order to put Great Britain
upon a footing of equality with her own colonies, which the law has
hitherto supposed to be subject and subordinate, it seems necessary,
upon the scheme of taxing them by parliamentary requisition, that
parliament should have some means of rendering its requisitions
immediately effectual, in case the colony assemblies should attempt to
evade or reject them; and what those means are, it is not very easy to
conceive, and it has not yet been explained.

Should the parliament of Great Britain, at the same time, be ever
fully established in the right of taxing the colonies, even
independent of the consent of their own assemblies, the importance of
those assemblies would, from that moment, be at an end, and with it,
that of all the leading men of British America. Men desire to have
some share in the management of public affairs, chiefly on account of
the importance which it gives them. Upon the power which the greater
part of the leading men, the natural aristocracy of every country,
have of preserving or defending their respective importance, depends
the stability and duration of every system of free government. In the
attacks which those leading men are continually making upon the
importance of one another, and in the defence of their own, consists
the whole play of domestic faction and ambition. The leading men of
America, like those of all other countries, desire to preserve their
own importance. They feel, or imagine, that if their assemblies, which
they are fond of calling parliaments, and of considering as equal in
authority to the parliament of Great Britain, should be so far
degraded as to become the humble ministers and executive officers of
that parliament, the greater part of their own importance would be at
an end. They have rejected, therefore, the proposal of being taxed by
parliamentary requisition, and, like other ambitious and high-spirited
men, have rather chosen to draw the sword in defence of their own
importance.

Towards the declension of the Roman republic, the allies of Rome, who
had borne the principal burden of defending the state and extending
the empire, demanded to be admitted to all the privileges of Roman
citizens. Upon being refused, the social war broke out. During the
course of that war, Rome granted those privileges to the greater part
of them, one by one, and in proportion as they detached themselves
from the general confederacy. The parliament of Great Britain insists
upon taxing the colonies; and they refuse to be taxed by a parliament
in which they are not represented. If to each colony which should
detach itself from the general confederacy, Great Britain should allow
such a number of representatives as suited the proportion of what it
contributed to the public revenue of the empire, in consequence of its
being subjected to the same taxes, and in compensation admitted to the
same freedom of trade with its fellow-subjects at home; the number of
its representatives to be augmented as the proportion of its
contribution might afterwards augment; a new method of acquiring
importance, a new and more dazzling object of ambition, would be
presented to the leading men of each colony. Instead of piddling for
the little prizes which are to be found in what may be called the
paltry raffle of colony faction, they might then hope, from the
presumption which men naturally have in their own ability and good
fortune, to draw some of the great prizes which sometimes come from
the wheel of the great state lottery of British politics. Unless this
or some other method is fallen upon, and there seems to be none more
obvious than this, of preserving the importance and of gratifying the
ambition of the leading men of America, it is not very probable that
they will ever voluntarily submit to us; and we ought to consider,
that the blood which must be shed in forcing them to do so, is, every
drop of it, the blood either of those who are, or of those whom we
wish to have for our fellow citizens. They are very weak who flatter
themselves that, in the state to which things have come, our colonies
will be easily conquered by force alone. The persons who now govern
the resolutions of what they call their continental congress, feel in
themselves at this moment a degree of importance which, perhaps, the
greatest subjects in Europe scarce feel. From shopkeepers, trades men,
and attorneys, they are become statesmen and legislators, and are
employed in contriving a new form of government for an extensive
empire, which, they flatter themselves, will become, and which,
indeed, seems very likely to become, one of the greatest and most
formidable that ever was in the world. Five hundred different people,
perhaps, who, in different ways, act immediately under the continental
congress, and five hundred thousand, perhaps, who act under those five
hundred, all feel, in the same manner, a proportionable rise in their
own importance. Almost every individual of the governing party in
America fills, at present, in his own fancy, a station superior, not
only to what he had ever filled before, but to what he had ever
expected to fill; and unless some new object of ambition is presented
either to him or to his leaders, if he has the ordinary spirit of a
man, he will die in defence of that station.

It is a remark of the President Heynaut, that we now read with
pleasure the account of many little transactions of the Ligue, which,
when they happened, were not, perhaps, considered as very important
pieces of news. But everyman then, says he, fancied himself of some
importance; and the innumerable memoirs which have come down to us
from those times, were the greater part of them written by people who
took pleasure in recording and magnifying events, in which they
flattered themselves they had been considerable actors. How
obstinately the city of Paris, upon that occasion, defended itself,
what a dreadful famine it supported, rather than submit to the best,
and afterwards the most beloved of all the French kings, is well
known. The greater part of the citizens, or those who governed the
greater part of them, fought in defence of their own importance,
which, they foresaw, was to be at an end whenever the ancient
government should be re-established. Our colonies, unless they can be
induced to consent to a union, are very likely to defend themselves,
against the best of all mother countries, as obstinately as the city
of Paris did against one of the best of kings.

The idea of representation was unknown in ancient times. When the
people of one state were admitted to the right of citizenship in
another, they had no other means of exercising that right, but by
coming in a body to vote and deliberate with the people of that other
state. The admission of the greater part of the inhabitants of Italy
to the privileges of Roman citizens, completely ruined the Roman
republic. It was no longer possible to distinguish between who was,
and who was not, a Roman citizen. No tribe could know its own members.
A rabble of any kind could be introduced into the assemblies of the
people, could drive out the real citizens, and decide upon the affairs
of the republic, as if they themselves had been such. But though
America were to send fifty or sixty new representatives to parliament,
the door-keeper of the house of commons could not find any great
difficulty in distinguishing between who was and who was not a member.
Though the Roman constitution, therefore, was necessarily ruined by
the union of Rome with the allied states of Italy, there is not the
least probability that the British constitution would be hurt by the
union of Great Britain with her colonies. That constitution, on the
contrary, would be completed by it, and seems to be imperfect without
it. The assembly which deliberates and decides concerning the affairs
of every part of the empire, in order to be properly informed, ought
certainly to have representatives from every part of it. That this
union, however, could be easily effectuated, or that difficulties, and
great difficulties, might not occur in the execution, I do not
pretend. I have yet heard of none, however, which appear
insurmountable. The principal, perhaps, arise, not from the nature of
things, but from the prejudices and opinions of the people, both on
this and on the other side of the Atlantic.

We on this side the water are afraid lest the multitude of American
representatives should overturn the balance of the constitution, and
increase too much either the influence of the crown on the one hand,
or the force of the democracy on the other. But if the number of
American representatives were to be in proportion to the produce of
American taxation, the number of people to be managed would increase
exactly in proportion to the means of managing them, and the means of
managing to the number of people to be managed. The monarchical and
democratical parts of the constitution would, after the union, stand
exactly in the same degree of relative force with regard to one
another as they had done before.

The people on the other side of the water are afraid lest their
distance from the seat of government might expose them to many
oppressions; but their representatives in parliament, of which the
number ought from the first to be considerable, would easily be able
to protect them from all oppression. The distance could not much
weaken the dependency of the representative upon the constituent, and
the former would still feel that he owed his seat in parliament, and
all the consequence which he derived from it, to the good-will of the
latter. It would be the interest of the former, therefore, to
cultivate that good-will, by complaining, with all the authority of a
member of the legislature, of every outrage which any civil or
military officer might be guilty of in those remote parts of the
empire. The distance of America from the seat of government, besides,
the natives of that country might flatter themselves, with some
appearance of reason too, would not be of very long continuance. Such
has hitherto been the rapid progress of that country in wealth,
population, and improvement, that in the course of little more than a
century, perhaps, the produce of the American might exceed that of the
British taxation. The seat of the empire would then naturally remove
itself to that part of the empire which contributed most to the
general defence and support of the whole.

The discovery of America, and that of a passage to the East Indies by
the Cape of Good Hope, are the two greatest and most important events
recorded in the history of mankind. Their consequences have already
been great; but, in the short period of between two and three
centuries which has elapsed since these discoveries were made, it is
impossible that the whole extent of their consequences can have been
seen. What benefits or what misfortunes to mankind may hereafter
result from those great events, no human wisdom can foresee. By
uniting in some measure the most distant parts of the world, by
enabling them to relieve one another's wants, to increase one
another's enjoyments, and to encourage one another's industry, their
general tendency would seem to be beneficial. To the natives, however,
both of the East and West Indies, all the commercial benefits which
can have resulted from those events have been sunk and lost in the
dreadful misfortunes which they have occasioned. These misfortunes,
however, seem to have arisen rather from accident than from any thing
in the nature of those events themselves. At the particular time when
these discoveries were made, the superiority of force happened to be
so great on the side of the Europeans, that they were enabled to
commit with impunity every sort of injustice in those remote
countries. Hereafter, perhaps, the natives of those countries may grow
stronger, or those of Europe may grow weaker; and the inhabitants of
all the different quarters of the world may arrive at that equality of
courage and force which, by inspiring mutual fear, can alone overawe
the injustice of independent nations into some sort of respect for the
rights of one another. But nothing seems more likely to establish this
equality of force, than that mutual communication of knowledge, and of
all sorts of improvements, which an extensive commerce from all
countries to all countries naturally, or rather necessarily, carries
along with it.

In the mean time, one of the principal effects of those discoveries
has been, to raise the mercantile system to a degree of splendour and
glory which it could never otherwise have attained to. It is the
object of that system to enrich a great nation, rather by trade and
manufactures than by the improvement and cultivation of land, rather
by the industry of the towns than by that of the country. But in
consequence of those discoveries, the commercial towns of Europe,
instead of being the manufacturers and carriers for but a very small
part of the world (that part of Europe which is washed by the Atlantic
ocean, and the countries which lie round the Baltic and Mediterranean
seas), have now become the manufacturers for the numerous and thriving
cultivators of America, and the carriers, and in some respects the
manufacturers too, for almost all the different nations of Asia,
Africa, and America. Two new worlds have been opened to their
industry, each of them much greater and more extensive than the old
one, and the market of one of them growing still greater and greater
every day.

The countries which possess the colonies of America, and which trade
directly to the East Indies, enjoy indeed the whole show and splendour
of this great commerce. Other countries, however, notwithstanding all
the invidious restraints by which it is meant to exclude them,
frequently enjoy a greater share of the real benefit of it. The
colonies of Spain and. Portugal, for example, give more real
encouragement to the industry of other countries than to that of Spain
and Portugal. In the single article of linen alone, the consumption of
those colonies amounts, it is said (but I do not pretend to warrant
the quantity ), to more than three millions sterling a-year. But this
great consumption is almost entirely supplied by France, Flanders,
Holland, and Germany. Spain and Portugal furnish but a small part of
it. The capital which supplies the colonies with this great quantity
of linen, is annually distributed among, and furnishes a revenue to,
the inhabitants of those other countries. The profits of it only are
spent in Spain and Portugal, where they help to support the sumptuous
profusion of the merchants of Cadiz and Lisbon.

Even the regulations by which each nation endeavours to secure to
itself the exclusive trade of its own colonies, are frequently more
hurtful to the countries in favour of which they are established, than
to those against which they are established. The unjust oppression of
the industry of other countries falls back, if I may say so, upon the
heads of the oppressors, and crushes their industry more than it does
that of those other countries. By those regulations, for example, the
merchant of Hamburg must send the linen which he destines for the
American market to London, and he must bring back from thence the
tobacco which he destines for the German market; because he can
neither send the one directly to America, nor bring the other directly
from thence. By this restraint he is probably obliged to sell the one
somewhat cheaper, and to buy the other somewhat dearer, than he
otherwise might have done; and his profits are probably somewhat
abridged by means of it. In this trade, however, between Hamburg and
London, he certainly receives the returns of his capital much more
quickly than he could possibly have done in the direct trade to
America, even though we should suppose, what is by no means the case,
that the payments of America were as punctual as those of London. In
the trade, therefore, to which those regulations confine the merchant
of Hamburg, his capital can keep in constant employment a much greater
quantity of German industry than he possibly could have done in the
trade from which he is excluded. Though the one employment, therefore,
may to him perhaps be less profitable than the other, it cannot be
less advantageous to his country. It is quite otherwise with the
employment into which the monopoly naturally attracts, if I may say so,
the capital of the London merchant. That employment may, perhaps, be
more profitable to him than the greater part of other employments; but
on account of the slowness of the returns, it cannot be more
advantageous to his country.

After all the unjust attempts, therefore, of every country in Europe
to engross to itself the whole advantage of the trade of its own
colonies, no country has yet been able to engross to itself any thing
but the expense of supporting in time of peace, and of defending in
time of war, the oppressive authority which it assumes over them. The
inconveniencies resulting from the possession of its colonies, every
country has engrossed to itself completely. The advantages resulting
from their trade, it has been obliged to share with many other
countries.

At first sight, no doubt, the monopoly of the great commerce of
America naturally seems to be an acquisition of the highest value. To
the undiscerning eye of giddy ambition it naturally presents itself,
amidst the confused scramble of politics and war, as a very dazzling
object to fight for. The dazzling splendour of the object, however,
the immense greatness of the commerce, is the very quality which
renders the monopoly of it hurtful, or which makes one employment, in
its own nature necessarily less advantageous to the country than the
greater part of other employments, absorb a much greater proportion of
the capital of the country than what would otherwise have gone to it.

The mercantile stock of every country, it has been shown in the second
book, naturally seeks, if one may say so, the employment most
advantageous to that country. If it is employed in the carrying trade,
the country to which it belongs becomes the emporium of the goods of
all the countries whose trade that stock carries on. But the owner of
that stock necessarily wishes to dispose of as great a part of those
goods as he can at home. He thereby saves himself the trouble, risk,
and expense of exportation; and he will upon that account be glad to
sell them at home, not only for a much smaller price, but with
somewhat a smaller profit, than he might expect to make by sending
them abroad. He naturally, therefore, endeavours as much as he can to
turn his carrying trade into a foreign trade of consumption, If his
stock, again, is employed in a foreign trade of consumption, he will,
for the same reason, be glad to dispose of, at home, as great a part
as he can of the home goods which he collects in order to export to
some foreign market, and he will thus endeavour, as much as he can, to
turn his foreign trade of consumption into a home trade. The
mercantile stock of every country naturally courts in this manner the
near, and shuns the distant employment: naturally courts the
employment in which the returns are frequent, and shuns that in which
they are distant and slow; naturally courts the employment in which it
can maintain the greatest quantity of productive labour in the country
to which it belongs, or in which its owner resides, and shuns that in
which it can maintain there the smallest quantity. It naturally courts
the employment which in ordinary cases is most advantageous, and shuns
that which in ordinary cases is least advantageous to that country.

But if, in any one of those distant employments, which in ordinary
cases are less advantageous to the country, the profit should happen
to rise somewhat higher than what is sufficient to balance the natural
preference which is given to nearer employments, this superiority of
profit will draw stock from those nearer employments, till the profits
of all return to their proper level. This superiority of profit,
however, is a proof that, in the actual circumstances of the society,
those distant employments are somewhat understocked in proportion to
other employments, and that the stock of the society is not
distributed in the properest manner among all the different
employments carried on in it. It is a proof that something is either
bought cheaper or sold dearer than it ought to be, and that some
particular class of citizens is more or less oppressed, either by
paying more, or by getting less than what is suitable to that equality
which ought to take place, and which naturally does take place, among
all the different classes of them. Though the same capital never will
maintain the same quantity of productive labour in a distant as in a
near employment, yet a distant employment maybe as necessary for the
welfare of the society as a near one; the goods which the distant
employment deals in being necessary, perhaps, for carrying on many of
the nearer employments. But if the profits of those who deal in such
goods are above their proper level, those goods will be sold dearer
than they ought to be, or somewhat above their natural price, and all
those engaged in the nearer employments will be more or less oppressed
by this high price. Their interest, therefore, in this case, requires,
that some stock should be withdrawn from those nearer employments, and
turned towards that distant one, in order to reduce its profits to
their proper level, and the price of the goods which it deals in to
their natural price. In this extraordinary case, the public interest
requires that some stock should be withdrawn from those employments
which, in ordinary cases, are more advantageous, and turned towards
one which, in ordinary cases, is less advantageous to the public; and,
in this extraordinary case, the natural interests and inclinations of
men coincide as exactly with the public interests as in all other
ordinary cases, and lead them to withdraw stock from the near, and to
turn it towards the distant employments.

It is thus that the private interests and passions of individuals
naturally dispose them to turn their stock towards the employments
which in ordinary cases, are most advantageous to the society. But if
from this natural preference they should turn too much of it towards
those employments, the fall of profit in them, and the rise of it in
all others, immediately dispose them to alter this faulty
distribution. Without any intervention of law, therefore, the private
interests and passions of men naturally lead them to divide and
distribute the stock of every society among all the different
employments carried on in it; as nearly as possible in the proportion
which is most agreeable to the interest of the whole society.

All the different regulations of the mercantile system necessarily
derange more or less this natural and most advantageous distribution
of stock. But those which concern the trade to America and the East
Indies derange it, perhaps, more than any other; because the trade to
those two great continents absorbs a greater quantity of stock than
any two other branches of trade. The regulations, however, by which
this derangement is effected in those two different branches of trade,
are not altogether the same. Monopoly is the great engine of both; but
it is a different sort of monopoly. Monopoly of one kind or another,
indeed, seems to be the sole engine of the mercantile system.

In the trade to America, every nation endeavours to engross as much as
possible the whole market of its own colonies, by fairly excluding all
other nations from any direct trade to them. During the greater part
of the sixteenth century, the Portuguese endeavoured to manage the
trade to the East Indies in the same manner, by claiming the sole
right of sailing in the Indian seas, on account of the merit of having
first found out the road to them. The Dutch still continue to exclude
all other European nations from any direct trade to their spice
islands. Monopolies of this kind are evidently established against all
other European nations, who are thereby not only excluded from a trade
to which it might be convenient for them to turn some part of their
stock, but are obliged to buy the goods which that trade deals in,
somewhat dearer than if they could import them themselves directly
from the countries which produced them.

But since the fall of the power of Portugal, no European nation has
claimed the exclusive right of sailing in the Indian seas, of which
the principal ports are now open to the ships of all European nations.
Except in Portugal, however, and within these few years in France, the
trade to the East Indies has, in every European country, been
subjected to an exclusive company. Monopolies of this kind are
properly established against the very nation which erects them. The
greater part of that nation are thereby not only excluded from a trade
to which it might be convenient for them to turn some part of their
stock, but are obliged to buy the goods which that trade deals in
somewhat dearer than if it was open and free to all their countrymen.
Since the establishment of the English East India company, for
example, the other inhabitants of England, over and above being
excluded from the trade, must have paid, in the price of the East
India goods which they have consumed, not only for all the
extraordinary profits which the company may have made upon those goods
in consequence of their monopoly, but for all the extraordinary waste
which the fraud and abuse inseparable from the management of the
affairs of so great a company must necessarily have occasioned. The
absurdity of this second kind of monopoly, therefore, is much more
manifest than that of the first.

Both these kinds of monopolies derange more or less the natural
distribution of the stock of the society; but they do not always
derange it in the same way.

Monopolies of the first kind always attract to the particular trade in
which they are established a greater proportion of the stock of the
society than what would go to that trade of its own accord.

Monopolies of the second kind may sometimes attract stock towards the
particular trade in which they are established, and sometimes repel it
from that trade, according to different circumstances. In poor
countries, they naturally attract towards that trade more stock than
would otherwise go to it. In rich countries, they naturally repel from
it a good deal of stock which would otherwise go to it.

Such poor countries as Sweden and Denmark, for example, would probably
have never sent a single ship to the East Indies, had not the trade
been subjected to an exclusive company. The establishment of such a
company necessarily encourages adventurers. Their monopoly secures
them against all competitors in the home market, and they have the
same chance for foreign markets with the traders of other nations.
Their monopoly shows them the certainty of a great profit upon a
considerable quantity of goods, and the chance of a considerable
profit upon a great quantity. Without such extraordinary
encouragement, the poor traders of such poor countries would probably
never have thought of hazarding their small capitals in so very
distant and uncertain an adventure as the trade to the East Indies
must naturally have appeared to them.

Such a rich country as Holland, on the contrary, would probably, in
the case of a free trade, send many more ships to the East Indies than
it actually does. The limited stock of the Dutch East India company
probably repels from that trade many great mercantile capitals which
would otherwise go to it. The mercantile capital of Holland is so
great, that it is, as it were, continually overflowing, sometimes into
the public funds of foreign countries, sometimes into loans to private
traders and adventurers of foreign countries, sometimes into the most
round-about foreign trades of consumption, and sometimes into the
carrying trade. All near employments being completely filled up, all
the capital which can be placed in them with any tolerable profit
being already placed in them, the capital of Holland necessarily flows
towards the most distant employments. The trade to the East Indies, if
it were altogether free, would probably absorb the greater part of
this redundant capital. The East Indies offer a market both for the
manufactures of Europe, and for the gold and silver, as well as for
the several other productions of America, greater and more extensive
than both Europe and America put together.

Every derangement of the natural distribution of stock is necessarily
hurtful to the society in which it takes place; whether it be by
repelling from a particular trade the stock which would otherwise go
to it, or by attracting towards a particular trade that which would
not otherwise come to it. If, without any exclusive company, the trade
of Holland to the East Indies would be greater than it actually is,
that country must suffer a considerable loss, by part of its capital
being excluded from the employment most convenient for that port. And,
in the same manner, if, without an exclusive company, the trade of
Sweden and Denmark to the East Indies would be less than it actually
is, or, what perhaps is more probable, would not exist at all, those
two countries must likewise suffer a considerable loss, by part of
their capital being drawn into an employment which must be more or
less unsuitable to their present circumstances. Better for them,
perhaps, in the present circumstances, to buy East India goods of
other nations, even though they should pay somewhat dearer, than to
turn so great a part of their small capital to so very distant a
trade, in which the returns are so very slow, in which that capital
can maintain so small a quantity of productive labour at home, where
productive labour is so much wanted, where so little is done, and
where so much is to do.

Though without an exclusive company, therefore, a particular country
should not be able to carry on any direct trade to the East Indies, it
will not from thence follow, that such a company ought to be
established there, but only that such a country ought not, in these
circumstances, to trade directly to the East Indies. That such
companies are not in general necessary for carrying on the East India
trade, is sufficiently demonstrated by the experience of the
Portuguese, who enjoyed almost the whole of it for more than a century
together, without any exclusive company.

No private merchant, it has been said, could well have capital
sufficient to maintain factors and agents in the different ports of
the East Indies, in order to provide goods for the ships which he
might occasionally send thither; and yet, unless he was able to do
this, the difficulty of finding a cargo might frequently make his
ships lose the season for returning; and the expense of so long a
delay would not only eat up the whole profit of the adventure, but
frequently occasion a very considerable loss. This argument, however,
if it proved any thing at all, would prove that no one great branch of
trade could be carried on without an exclusive company, which is
contrary to the experience of all nations. There is no great branch of
trade, in which the capital of any one private merchant is sufficient
for carrying on all the subordinate branches which must be carried on,
in order to carry on the principal one. But when a nation is ripe for
any great branch of trade, some merchants naturally turn their
capitals towards the principal, and some towards the subordinate
branches of it; and though all the different branches of it are in
this manner carried on, yet it very seldom happens that they are all
carried on by the capital of one private merchant. If a nation,
therefore, is ripe for the East India trade, a certain portion of its
capital will naturally divide itself among all the different branches
of that trade. Some of its merchants will find it for their interest
to reside in the East Indies, and to employ their capitals there in
providing goods for the ships which are to be sent out by other
merchants who reside in Europe. The settlements which different
European nations have obtained in the East Indies, if they were taken
from the exclusive companies to which they at present belong, and put
under the immediate protection of the sovereign, would render this
residence both safe and easy, at least to the merchants of the
particular nations to whom those settlements belong. If, at any
particular time, that part of the capital of any country which of its
own accord tended and inclined, if I may say so, towards the East
India trade, was not sufficient for carrying on all those different
branches of it, it would be a proof that, at that particular time,
that country was not ripe for that trade, and that it would do better
to buy for some time, even at a higher price, from other European
nations, the East India goods it had occasion for, than to import them
itself directly from the East Indies. What it might lose by the high
price of those goods, could seldom be equal to the loss which it would
sustain by the distraction of a large portion of its capital from
other employments more necessary, or more useful, or more suitable to
its circumstances and situation, than a direct trade to the East
Indies.

Though the Europeans possess many considerable settlements both upon
the coast of Africa and in the East Indies, they have not yet
established, in either of those countries, such numerous and thriving
colonies as those in the islands and continent of America. Africa,
however, as well as several of the countries comprehended under the
general name of the East Indies, is inhabited by barbarous nations.
But those nations were by no means so weak and defenceless as the
miserable and helpless Americans; and in proportion to the natural
fertility of the countries which they inhabited, they were, besides,
much more populous. The most barbarous nations either of Africa or of
the East Indies, were shepherds; even the Hottentots were so. But the
natives of every part of America, except Mexico and Peru, were only
hunters and the difference is very great between the number of
shepherds and that of hunters whom the same extent of equally fertile
territory can maintain. In Africa and the East Indies, therefore, it
was more difficult to displace the natives, and to extend the European
plantations over the greater part of the lands of the original
inhabitants. The genius of exclusive companies, besides, is
unfavourable, it has already been observed, to the growth of new
colonies, and has probably been the principal cause of the little
progress which they have made in the East Indies. The Portuguese
carried on the trade both to Africa and the East Indies, without any
exclusive companies; and their settlements at Congo, Angola, and
Benguela, on the coast of Africa, and at Goa in the East Indies though
much depressed by superstition and every sort of bad government, yet
bear some resemblance to the colonies of America, and are partly
inhabited by Portuguese who have been established there for several
generations. The Dutch settlements at the Cape of Good Hope and at
Batavia, are at present the most considerable colonies which the
Europeans have established, either in Africa or in the East Indies;
and both those settlements an peculiarly fortunate in their situation.
The Cape of Good Hope was inhabited by a race of people almost as
barbarous, and quite as incapable of defending themselves, as the
natives of America. It is, besides, the half-way house, if one may say
so, between Europe and the East Indies, at which almost every European
ship makes some stay, both in going and returning. The supplying of
those ships with every sort of fresh provisions, with fruit, and
sometimes with wine, affords alone a very extensive market for the
surplus produce of the colonies. What the Cape of Good Hope is between
Europe and every part of the East Indies, Batavia is between the
principal countries of the East Indies. It lies upon the most
frequented road from Indostan to China and Japan, and is nearly about
mid-way upon that road. Almost all the ships too, that sail between
Europe and China, touch at Batavia; and it is, over and above all
this, the centre and principal mart of what is called the country
trade of the East Indies; not only of that part of it which is carried
on by Europeans, but of that which is carried on by the native
Indians; and vessels navigated by the inhabitants of China and Japan,
of Tonquin, Malacca, Cochin-China, and the island of Celebes, are
frequently to be seen in its port. Such advantageous situations have
enabled those two colonies to surmount all the obstacles which the
oppressive genius of an exclusive company may have occasionally
opposed to their growth. They have enabled Batavia to surmount the
additional disadvantage of perhaps the most unwholesome climate in the
world.

The English and Dutch companies, though they have established no
considerable colonies, except the two above mentioned, have both made
considerable conquests in the East Indies. But in the manner in which
they both govern their new subjects, the natural genius of an
exclusive company has shewn itself most distinctly. In the spice
islands, the Dutch are said to burn all the spiceries which a fertile
season produces, beyond what they expect to dispose of in Europe with
such a profit as they think sufficient. In the islands where they have
no settlements, they give a premium to those who collect the young
blossoms and green leaves of the clove and nutmeg trees, which
naturally grow there, but which this savage policy has now, it is
said, almost completely extirpated. Even in the islands where they
have settlements, they have very much reduced, it is said, the number
of those trees. If the produce even of their own islands was much
greater than what suited their market, the natives, they suspect,
might find means to convey some part of it to other nations; and the
best way, they imagine, to secure their own monopoly, is to take care
that no more shall grow than what they themselves carry to market. By
different arts of oppression, they have reduced the population of
several of the Moluccas nearly to the number which is sufficient to
supply with fresh provisions, and other necessaries of life, their own
insignificant garrisons, and such of their ships as occasionally come
there for a cargo of spices. Under the government even of the
Portuguese, however, those islands are said to have been tolerably
well inhabited. The English company have not yet had time to establish
in Bengal so perfectly destructive a system. The plan of their
government, however, has had exactly the same tendency. It has not
been uncommon, I am well assured, for the chief, that is, the first
clerk or a factory, to order a peasant to plough up a rich field of
poppies, and sow it with rice, or some other grain. The pretence was,
to prevent a scarcity of provisions; but the real reason, to give the
chief an opportunity of selling at a better price a large quantity of
opium which he happened then to have upon hand. Upon other occasions,
the order has been reversed; and a rich field of rice or other grain
has been ploughed up, in order to make room for a plantation of
poppies, when the chief foresaw that extraordinary profit was likely
to be made by opium. The servants of the company have, upon several
occasions, attempted to establish in their own favour the monopoly of
some of the most important branches, not only of the foreign, but of
the inland trade of the country. Had they been allowed to go on, it is
impossible that they should not, at some time or another, have
attempted to restrain the production of the particular articles of
which they had thus usurped the monopoly, not only to the quantity
which they themselves could purchase, but to that which they could
expect to sell with such a profit as they might think sufficient. In
the course of a century or two, the policy of the English company
would, in this manner, have probably proved as completely destructive
as that of the Dutch.

Nothing, however, can be more directly contrary to the real interest
of those companies, considered as the sovereigns of the countries
which they have conquered, than this destructive plan. In almost all
countries, the revenue of the sovereign is drawn from that of the
people. The greater the revenue of the people, therefore, the greater
the annual produce of their land and labour, the more they can afford
to the sovereign. It is his interest, therefore, to increase as much
as possible that annual produce. But if this is the interest of every
sovereign, it is peculiarly so of one whose revenue, like that of the
sovereign of Bengal, arises chiefly from a land-rent. That rent must
necessarily be in proportion to the quantity and value of the produce;
and both the one and the other must depend upon the extent of the
market. The quantity will always be suited, with more or less
exactness, to the consumption of those who can afford to pay for it;
and the price which they will pay will always be in proportion to the
eagerness of their competition. It is the interest of such a
sovereign, therefore, to open the most extensive market for the
produce of his country, to allow the most perfect freedom of commerce,
in order to increase as much as possible the number and competition of
buyers; and upon this account to abolish, not only all monopolies, but
all restraints upon the transportation of the home produce from one
part of the country to mother, upon its exportation to foreign
countries, or upon the importation of goods of' any kind for which it
can be exchanged. He is in this manner most likely to increase both
the quantity and value of that produce, and consequently of his own
share of it, or of his own revenue.

But a company of merchants, are, it seems, incapable of considering
themselves as sovereigns, even after they have become such. Trade, or
buying in order to sell again, they still consider as their principal
business, and by a strange absurdity, regard the character of the
sovereign as but an appendix to that of the merchant; as something
which ought to be made subservient to it, or by means of which they
may be enabled to buy cheaper in India, and thereby to sell with a
better profit in Europe. They endeavour, for this purpose, to keep out
as much as possible all competitors from the market of the countries
which are subject to their government, and consequently to reduce, at
least, some part of the surplus produce of those countries to what is
barely sufficient for supplying their own demand, or to what they can
expect to sell in Europe, with such a profit as they may think
reasonable. Their mercantile habits draw them in this manner, almost
necessarily, though perhaps insensibly, to prefer, upon all ordinary
occasions, the little and transitory profit of the monopolist to the
great and permanent revenue of the sovereign; and would gradually lead
them to treat the countries subject to their government nearly as the
Dutch treat the Moluccas. It is the interest of the East India
company, considered as sovereigns, that the European goods which are
carried to their Indian dominions should be sold there as cheap as
possible; and that the Indian goods which are brought from thence
should bring there as good a price, or should be sold there as dear as
possible. But the reverse of this is their interest as merchants. As
sovereigns, their interest is exactly the same with that of the
country which they govern. As merchants, their interest is directly
opposite to that interest.

But if the genius of such a government, even as to what concerns its
direction in Europe, is in this manner essentially, and perhaps
incurably faulty, that of its administration in India is still more
so. That administration is necessarily composed of a council of
merchants, a profession no doubt extremely respectable, but which in
no country in the world carries along with it that sort of authority
which naturally overawes the people, and without force commands their
willing obedience. Such a council can command obedience only by the
military force with which they are accompanied; and their government
is, therefore, necessarily military and despotical. Their proper
business, however, is that of merchants. It is to sell, upon their
master's account, the European goods consigned to them, and to buy, in
return, Indian goods for the European market. It is to sell the one as
dear, and to buy the other as cheap as possible, and consequently to
exclude, as much as possible, all rivals from the particular market
where they keep their shop. The genius of the administration,
therefore, so far as concerns the trade of the company, is the same as
that of the direction. It tends to make government subservient to the
interest of monopoly, and consequently to stunt the natural growth of
some parts, at least, of the surplus produce of the country, to what
is barely sufficient for answering the demand of the company,

All the members of the administration besides, trade more or less upon
their own account; and it is in vain to prohibit them from doing so.
Nothing can be more completely foolish than to expect that the clerk
of a great counting-house, at ten thousand miles distance, and
consequently almost quite out of sight, should, upon a simple order
from their master, give up at once doing any sort of business upon
their own account abandon for ever all hopes of making a fortune, of
which they have the means in their hands; and content themselves with
the moderate salaries which those masters allow them, and which,
moderate as they are, can seldom be augmented, being commonly as large
as the real profits of the company trade can afford. In such
circumstances, to prohibit the servants of the company from trading
upon their own account, can have scarce any other effect than to
enable its superior servants, under pretence of executing their
master's order, to oppress such of the inferior ones as have had the
misfortune to fall under their displeasure. The servants naturally
endeavour to establish the same monopoly in favour of their own
private trade as of the public trade of the company. If they are
suffered to act as they could wish, they will establish this monopoly
openly and directly, by fairly prohibiting all other people from
trading in the articles in which they choose to deal; and this,
perhaps, is the best and least oppressive way of establishing it. But
if, by an order from Europe, they are prohibited from doing this, they
will, notwithstanding, endeavour to establish a monopoly of the same
kind secretly and indirectly, in a way that is much more destructive
to the country. They will employ the whole authority of government,
and pervert the administration of Justice, in order to harass and ruin
those who interfere with them in any branch of commerce, which by
means of agents, either concealed, or at least not publicly avowed,
they may choose to carry on. But the private trade of the servants
will naturally extend to a much greater variety of articles than the
public trade of the company. The public trade of the company extends
no further than the trade with Europe, and comprehends a part only of
the foreign trade of the country. But the private trade of the
servants may extend to all the different branches both of its inland
and foreign trade. The monopoly of the company can tend only to stunt
the natural growth of that part of the surplus produce which, in the
case of a free trade, would be exported to Europe. That of the
servants tends to stunt the natural growth of every part of the
produce in which they choose to deal; of what is destined for home
consumption, as well as of what is destined for exportation; and
consequently to degrade the cultivation of the whole country, and to
reduce the number of its inhabitants. It tends to reduce the quantity
of every sort of produce, even that of the necessaries of life,
whenever the servants of the country choose to deal in them, to what
those servants can both afford to buy and expect to sell with such a
profit as pleases them.

From the nature of their situation, too, the servants must be more
disposed to support with rigourous severity their own interest,
against that of the country which they govern, than their masters can
be to support theirs. The country belongs to their masters, who cannot
avoid having some regard for the interest of what belongs to them; but
it does not belong to the servants. The real interest of their
masters, if they were capable of understanding it, is the same with
that of the country; {The interest of every proprietor of India stock,
however, is by no means the same with that of the country in the
government of which his vote gives him some influence. --See book v,
chap. 1, part ii.}and it is from ignorance chiefly, and the meanness
of mercantile prejudice, that they ever oppress it. But the real
interest of the servants is by no means the same with that of the
country, and the most perfect information would not necessarily put an
end to their oppressions. The regulations, accordingly, which have
been sent out from Europe, though they have been frequently weak, have
upon most occasions been well meaning. More intelligence, and perhaps
less good meaning, has sometimes appeared in those established by the
servants in India. It is a very singular government in which every
member of the administration wishes to get out of the country, and
consequently to have done with the government, as soon as he can, and
to whose interest, the day after he has left it, and carried his whole
fortune with him, it is perfectly indifferent though the whole country
was swallowed up by an earthquake.

I mean not, however, by any thing which I have here said, to throw any
odious imputation upon the general character of the servants of the
East India company, and touch less upon that of any particular
persons. It is the system of government, the situation in which they
are placed, that I mean to censure, not the character of those who
have acted in it. They acted as their situation naturally directed,
and they who have clamoured the loudest against them would probably
not have acted better themselves. In war and negotiation, the councils
of Madras and Calcutta, have upon several occasions, conducted
themselves with a resolution and decisive wisdom, which would have
done honour to the senate of Rome in the best days of that republic.
The members of those councils, however, had been bred to professions
very different from war and politics. But their situation alone,
without education, experience, or even example, seems to have formed
in them all at once the great qualities which it required, and to have
inspired them both with abilities and virtues which they themselves
could not well know that they possessed. If upon some occasions,
therefore, it has animated them to actions of magnanimity which could
not well have been expected from them, we should not wonder if, upon
others, it has prompted them to exploits of somewhat a different
nature.

Such exclusive companies, therefore, are nuisances in every respect;
always more or less inconvenient to the countries in which they are
established, and destructive to those which have the misfortune to
fall under their government.

CHAPTER VIII.

CONCLUSION OF THE MERCANTILE SYSTEM.

Though the encouragement of exportation, and the discouragement of
importation, are the two great engines by which the mercantile system
proposes to enrich every country, yet, with regard to some particular
commodities, it seems to follow an opposite plan: to discourage
exportation, and to encourage importation. Its ultimate object,
however, it pretends, is always the same, to enrich the country by an
advantageous balance of trade. It discourages the exportation of the
materials of manufacture, and of the instruments of trade, in order to
give our own workmen an advantage, and to enable them to undersell
those of other nations in all foreign markets; and by restraining, in
this manner, the exportation of a few commodities, of no great price,
it proposes to occasion a much greater and more valuable exportation
of others. It encourages the importation of the materials of
manufacture, in order that our own people may be enabled to work them
up more cheaply, and thereby prevent a greater and more valuable
importation of the manufactured commodities. I do not observe, at
least in our statute book, any encouragement given to the importation
of the instruments of trade. When manufactures have advanced to a
certain pitch of greatness, the fabrication of the instruments of
trade becomes itself the object of a great number of very important
manufactures. To give any particular encouragement to the importation
of such instruments, would interfere too much with the interest of
those manufactures. Such importation, therefore, instead of being
encouraged, has frequently been prohibited. Thus the importation of
wool cards, except from Ireland, or when brought in as wreck or prize
goods, was prohibited by the 3rd of Edward IV.; which prohibition was
renewed by the 39th of Elizabeth, and has been continued and rendered
perpetual by subsequent laws.

The importation of the materials of manufacture has sometimes been
encouraged by an exemption from the duties to which other goods are
subject, and sometimes by bounties.

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