home | authors | books | about

Home -> Adam Smith -> An Inquiry Into The Nature And Causes Of The Wealth Of Nations -> Chapter 2

An Inquiry Into The Nature And Causes Of The Wealth Of Nations - Chapter 2

1. Introduction And Plan Of The Work

2. Book 1, Chapter 1

3. Chapter 2

4. Chapter 3

5. Chapter 4

6. Chapter 5

7. Chapter 6

8. Chapter 7

9. Chapter 8

10. Chapter 8 continue

11. Chapter 9

12. Chapter 10

13. Chapter 10 continue

14. Chapter 11

15. Chapter 11 continue

16. Chapter 11 continue.

17. Chapter 11 continue..

18. Chapter 11 continue...

19. Conclusion of the Chapter 11

20. Book 2 Introduction

21. Chapter 1

22. Chapter II

23. Chapter II continue

24. Chapter II continue

25. Chapter 3

26. Chapter 4

27. Chapter 5

28. Book 3, Chapter 1

29. Chapter 2

30. Chapter 3

31. Chapter 4

32. Book 4, Chapter 1

33. Chapter 1 continue

34. Chapter 2

35. Chapter 3, Part 1

36. Chapter 3, Part 2

37. Chapter 4

38. Chapter 5

39. Chapter 5 continue

40. Chapter 6

41. Chapter 7, Part 1

42. Chapter 7, Part 2

43. Chapter 7, Part 3

44. Chapter 7, Part 3 continue

45. Chapter 8

46. Chapter 9

47. Book 5, Chapter 1, Part 1

48. Chapter 1, Part 2

49. Chapter 1, Part 3

50. Chapter 1, Part 3 continue

51. Chapter 1, Part 3 continue B

52. Chapter 1, Part 4

53. Chapter 2, Part 1

54. Chapter 2, Part 2

55. Chapter 2, Part 2 continue

56. Chapter 2, Part 2 continue B

57. Chapter 2, Part 2 continue C

58. Chapter 2, Part 2 continue D

59. Chapter 3

60. Chapter 3 continue







Chapter II. Of Restraints Upon Importation From Foreign Countries Of
Such Goods As Can Be Produced At Home.

By restraining, either by high duties, or by absolute prohibitions, the
importation of such goods from foreign countries as can be produced at
home, the monopoly of the home market is more or less secured to the
domestic industry employed in producing them. Thus the prohibition of
importing either live cattle or salt provisions from foreign countries,
secures to the graziers of Great Britain the monopoly of the home market
for butcher's meat. The high duties upon the importation of corn,
which, in times of moderate plenty, amount to a prohibition, give a
like advantage to the growers of that commodity. The prohibition of
the importation of foreign woollen is equally favourable to the woollen
manufacturers. The silk manufacture, though altogether employed upon
foreign materials, has lately obtained the same advantage. The linen
manufacture has not yet obtained it, but is making great strides towards
it. Many other sorts of manufactures have, in the same manner obtained
in Great Britain, either altogether, or very nearly, a monopoly against
their countrymen. The variety of goods, of which the importation
into Great Britain is prohibited, either absolutely, or under certain
circumstances, greatly exceeds what can easily be suspected by those who
are not well acquainted with the laws of the customs.

That this monopoly of the home market frequently gives great
encouragement to that particular species of industry which enjoys it,
and frequently turns towards that employment a greater share of both the
labour and stock of the society than would otherwise have gone to it,
cannot be doubted. But whether it tends either to increase the general
industry of the society, or to give it the most advantageous direction,
is not, perhaps, altogether so evident.

The general industry of the society can never exceed what the capital
of the society can employ. As the number of workmen that can be kept in
employment by any particular person must bear a certain proportion to
his capital, so the number of those that can be continually employed by
all the members of a great society must bear a certain proportion to the
whole capital of the society, and never can exceed that proportion.
No regulation of commerce can increase the quantity of industry in any
society beyond what its capital can maintain. It can only divert a part
of it into a direction into which it might not otherwise have gone; and
it is by no means certain that this artificial direction is likely to
be more advantageous to the society, than that into which it would have
gone of its own accord.

Every individual is continually exerting himself to find out the most
advantageous employment for whatever capital he can command. It is his
own advantage, indeed, and not that of the society, which he has
in view. But the study of his own advantage naturally, or rather
necessarily, leads him to prefer that employment which is most
advantageous to the society.

First, every individual endeavours to employ his capital as near home
as he can, and consequently as much as he can in the support of domestic
industry, provided always that he can thereby obtain the ordinary, or
not a great deal less than the ordinary profits of stock.

Thus, upon equal, or nearly equal profits, every wholesale merchant
naturally prefers the home trade to the foreign trade of consumption,
and the foreign trade of consumption to the carrying trade. In the home
trade, his capital is never so long out of his sight as it frequently
is in the foreign trade of consumption. He can know better the character
and situation of the persons whom he trusts; and if he should happen to
be deceived, he knows better the laws of the country from which he must
seek redress. In the carrying trade, the capital of the merchant is,
as it were, divided between two foreign countries, and no part of it is
ever necessarily brought home, or placed under his own immediate view
and command. The capital which an Amsterdam merchant employs in carrying
corn from Koningsberg to Lisbon, and fruit and wine from Lisbon to
Koningsberg, must generally be the one half of it at Koningsberg, and
the other half at Lisbon. No part of it need ever come to Amsterdam. The
natural residence of such a merchant should either be at Koningsberg or
Lisbon; and it can only be some very particular circumstances which can
make him prefer the residence of Amsterdam. The uneasiness, however,
which he feels at being separated so far from his capital, generally
determines him to bring part both of the Koningsberg goods which he
destines for the market of Lisbon, and of the Lisbon goods which
he destines for that of Koningsberg, to Amsterdam; and though this
necessarily subjects him to a double charge of loading and unloading as
well as to the payment of some duties and customs, yet, for the sake of
having some part of his capital always under his own view and command,
he willingly submits to this extraordinary charge; and it is in this
manner that every country which has any considerable share of the
carrying trade, becomes always the emporium, or general market, for
the goods of all the different countries whose trade it carries on. The
merchant, in order to save a second loading and unloading, endeavours
always to sell in the home market, as much of the goods of all those
different countries as he can; and thus, so far as he can, to convert
his carrying trade into a foreign trade of consumption. A merchant, in
the same manner, who is engaged in the foreign trade of consumption,
when he collects goods for foreign markets, will always be glad, upon
equal or nearly equal profits, to sell as great a part of them at home
as he can. He saves himself the risk and trouble of exportation, when,
so far as he can, he thus converts his foreign trade of consumption into
a home trade. Home is in this manner the centre, if I may say so, round
which the capitals of the inhabitants of every country are continually
circulating, and towards which they are always tending, though, by
particular causes, they may sometimes be driven off and repelled from
it towards more distant employments. But a capital employed in the home
trade, it has already been shown, necessarily puts into motion a greater
quantity of domestic industry, and gives revenue and employment to a
greater number of the inhabitants of the country, than an equal capital
employed in the foreign trade of consumption; and one employed in
the foreign trade of consumption has the same advantage over an equal
capital employed in the carrying trade. Upon equal, or only nearly equal
profits, therefore, every individual naturally inclines to employ his
capital in the manner in which it is likely to afford the greatest
support to domestic industry, and to give revenue and employment to the
greatest number of people of his own country.

Secondly, every individual who employs his capital in the support of
domestic industry, necessarily endeavours so to direct that industry,
that its produce may be of the greatest possible value.

The produce of industry is what it adds to the subject or materials
upon which it is employed. In proportion as the value of this produce is
great or small, so will likewise be the profits of the employer. But
it is only for the sake of profit that any man employs a capital in the
support of industry; and he will always, therefore, endeavour to employ
it in the support of that industry of which the produce is likely to be
of the greatest value, or to exchange for the greatest quantity either
of money or of other goods.

But the annual revenue of every society is always precisely equal to
the exchangeable value of the whole annual produce of its industry,
or rather is precisely the same thing with that exchangeable value.
As every individual, therefore, endeavours as much as he can, both to
employ his capital in the support of domestic industry, and so to
direct that industry that its produce maybe of the greatest value;
every individual necessarily labours to render the annual revenue of
the society as great as he can. He generally, indeed, neither intends to
promote the public interest, nor knows how much he is promoting it.
By preferring the support of domestic to that of foreign industry, he
intends only his own security; and by directing that industry in such a
manner as its produce may be of the greatest value, he intends only his
own gain; and he is in this, as in many other cases, led by an invisible
hand to promote an end which was no part of his intention. Nor is it
always the worse for the society that it was no part of it. By pursuing
his own interest, he frequently promotes that of the society more
effectually than when he really intends to promote it. I have never
known much good done by those who affected to trade for the public good.
It is an affectation, indeed, not very common among merchants, and very
few words need be employed in dissuading them from it.

What is the species of domestic industry which his capital can employ,
and of which the produce is likely to be of the greatest value, every
individual, it is evident, can in his local situation judge much better
than any statesman or lawgiver can do for him. The statesman, who should
attempt to direct private people in what manner they ought to employ
their capitals, would not only load himself with a most unnecessary
attention, but assume an authority which could safely be trusted, not
only to no single person, but to no council or senate whatever, and
which would nowhere be so dangerous as in the hands of a man who had
folly and presumption enough to fancy himself fit to exercise it.

To give the monopoly of the home market to the produce of domestic
industry, in any particular art or manufacture, is in some measure
to direct private people in what manner they ought to employ their
capitals, and must in almost all cases be either a useless or a hurtful
regulation. If the produce of domestic can be brought there as cheap
as that of foreign industry, the regulation is evidently useless. If it
cannot, it must generally be hurtful. It is the maxim of every prudent
master of a family, never to attempt to make at home what it will cost
him more to make than to buy. The tailor does not attempt to make
his own shoes, but buys them of the shoemaker. The shoemaker does
not attempt to make his own clothes, but employs a tailor. The farmer
attempts to make neither the one nor the other, but employs those
different artificers. All of them find it for their interest to employ
their whole industry in a way in which they have some advantage over
their neighbours, and to purchase with a part of its produce, or, what
is the same thing, with the price of a part of it, whatever else they
have occasion for.

What is prudence in the conduct of every private family, can scarce be
folly In that of a great kingdom. If a foreign country can supply us
with a commodity cheaper than we ourselves can make it, better buy it
of them with some part of the produce of our own industry, employed in a
way in which we have some advantage. The general industry of the country
being always in proportion to the capital which employs it, will
not thereby be diminished, no more than that of the abovementioned
artificers; but only left to find out the way in which it can be
employed with the greatest advantage. It is certainly not employed to
the greatest advantage, when it is thus directed towards an object which
it can buy cheaper than it can make. The value of its annual produce
is certainly more or less diminished, when it is thus turned away from
producing commodities evidently of more value than the commodity which
it is directed to produce. According to the supposition, that commodity
could be purchased from foreign countries cheaper than it can be made
at home; it could therefore have been purchased with a part only of the
commodities, or, what is the same thing, with a part only of the price
of the commodities, which the industry employed by an equal capital
would have produced at home, had it been left to follow its natural
course. The industry of the country, therefore, is thus turned away from
a more to a less advantageous employment; and the exchangeable value
of its annual produce, instead of being increased, according to the
intention of the lawgiver, must necessarily be diminished by every such
regulation.

By means of such regulations, indeed, a particular manufacture may
sometimes be acquired sooner than it could have been otherwise, and
after a certain time may be made at home as cheap, or cheaper, than in
the foreign country. But though the industry of the society may be thus
carried with advantage into a particular channel sooner than it could
have been otherwise, it will by no means follow that the sum-total,
either of its industry, or of its revenue, can ever be augmented by
any such regulation. The industry of the society can augment only in
proportion as its capital augments, and its capital can augment only in
proportion to what can be gradually saved out of its revenue. But the
immediate effect of every such regulation is to diminish its revenue;
and what diminishes its revenue is certainly not very likely to augment
its capital faster than it would have augmented of its own accord,
had both capital and industry been left to find out their natural
employments.

Though, for want of such regulations, the society should never acquire
the proposed manufacture, it would not upon that account necessarily
be the poorer in anyone period of its duration. In every period of its
duration its whole capital and industry might still have been employed,
though upon different objects, in the manner that was most advantageous
at the time. In every period its revenue might have been the greatest
which its capital could afford, and both capital and revenue might have
been augmented with the greatest possible rapidity.

The natural advantages which one country has over another, in producing
particular commodities, are sometimes so great, that it is acknowledged
by all the world to be in vain to struggle with them. By means of
glasses, hot-beds, and hot-walls, very good grapes can be raised in
Scotland, and very good wine, too, can be made of them, at about thirty
times the expense for which at least equally good can be brought
from foreign countries. Would it be a reasonable law to prohibit the
importation of all foreign wines, merely to encourage the making of
claret and Burgundy in Scotland? But if there would be a manifest
absurdity in turning towards any employment thirty times more of the
capital and industry of the country than would be necessary to purchase
from foreign countries an equal quantity of the commodities wanted,
there must be an absurdity, though not altogether so glaring, yet
exactly of the same kind, in turning towards any such employment a
thirtieth, or even a three hundredth part more of either. Whether the
advantages which one country has over another be natural or acquired, is
in this respect of no consequence. As long as the one country has
those advantages, and the other wants them, it will always be more
advantageous for the latter rather to buy of the former than to make.
It is an acquired advantage only, which one artificer has over his
neighbour, who exercises another trade; and yet they both find it more
advantageous to buy of one another, than to make what does not belong to
their particular trades.

Merchants and manufacturers are the people who derive the greatest
advantage from this monopoly of the home market The prohibition of the
importation of foreign cattle and of salt provisions, together with the
high duties upon foreign corn, which in times of moderate plenty amount
to a prohibition, are not near so advantageous to the graziers and
farmers of Great Britain, as other regulations of the same kind are to
its merchants and manufacturers. Manufactures, those of the finer kind
especially, are more easily transported from one country to another
than corn or cattle. It is in the fetching and carrying manufactures,
accordingly, that foreign trade is chiefly employed. In manufactures,
a very small advantage will enable foreigners to undersell our own
workmen, even in the home market. It will require a very great one
to enable them to do so in the rude produce of the soil. If the free
importation of foreign manufactures were permitted, several of the home
manufactures would probably suffer, and some of them perhaps go to ruin
altogether, and a considerable part of the stock and industry at present
employed in them, would be forced to find out some other employment.
But the freest importation of the rude produce of the soil could have no
such effect upon the agriculture of the country.

If the importation of foreign cattle, for example, were made ever so
free, so few could be imported, that the grazing trade of Great Britain
could be little affected by it. Live cattle are, perhaps, the only
commodity of which the transportation is more expensive by sea than
by land. By land they carry themselves to market. By sea, not only the
cattle, but their food and their water too, must be carried at no small
expense and inconveniency. The short sea between Ireland and Great
Britain, indeed, renders the importation of Irish cattle more easy. But
though the free importation of them, which was lately permitted only for
a limited time, were rendered perpetual, it could have no considerable
effect upon the interest of the graziers of Great Britain. Those
parts of Great Britain which border upon the Irish sea are all grazing
countries. Irish cattle could never be imported for their use, but must
be drove through those very extensive countries, at no small expense
and inconveniency, before they could arrive at their proper market. Fat
cattle could not be drove so far. Lean cattle, therefore, could only be
imported; and such importation could interfere not with the interest of
the feeding or fattening countries, to which, by reducing the price
of lean cattle it would rather be advantageous, but with that of the
breeding countries only. The small number of Irish cattle imported since
their importation was permitted, together with the good price at which
lean cattle still continue to sell, seem to demonstrate, that even the
breeding countries of Great Britain are never likely to be much affected
by the free importation of Irish cattle. The common people of Ireland,
indeed, are said to have sometimes opposed with violence the exportation
of their cattle. But if the exporters had found any great advantage in
continuing the trade, they could easily, when the law was on their side,
have conquered this mobbish opposition.

Feeding and fattening countries, besides, must always be highly
improved, whereas breeding countries are generally uncultivated. The
high price of lean cattle, by augmenting the value of uncultivated land,
is like a bounty against improvement. To any country which was highly
improved throughout, it would be more advantageous to import its lean
cattle than to breed them. The province of Holland, accordingly, is said
to follow this maxim at present. The mountains of Scotland, Wales, and
Northumberland, indeed, are countries not capable of much improvement,
and seem destined by nature to be the breeding countries of Great
Britain. The freest importation of foreign cattle could have no other
effect than to hinder those breeding countries from taking advantage of
the increasing population and improvement of the rest of the kingdom,
from raising their price to an exorbitant height, and from laying a real
tax upon all the more improved and cultivated parts of the country.

The freest importation of salt provisions, in the same manner, could
have as little effect upon the interest of the graziers of Great Britain
as that of live cattle. Salt provisions are not only a very bulky
commodity, but when compared with fresh meat they are a commodity both
of worse quality, and, as they cost more labour and expense, of higher
price. They could never, therefore, come into competition with the fresh
meat, though they might with the salt provisions of the country. They
might be used for victualling ships for distant voyages, and such like
uses, but could never make any considerable part of the food of the
people. The small quantity of salt provisions imported from Ireland
since their importation was rendered free, is an experimental proof that
our graziers have nothing to apprehend from it. It does not appear that
the price of butcher's meat has ever been sensibly affected by it.

Even the free importation of foreign corn could very little affect the
interest of the farmers of Great Britain. Corn is a much more bulky
commodity than butcher's meat. A pound of wheat at a penny is as dear
as a pound of butcher's meat at fourpence. The small quantity of foreign
corn imported even in times of the greatest scarcity, may satisfy our
farmers that they can have nothing to fear from the freest importation.
The average quantity imported, one year with another, amounts only,
according to the very well informed author of the Tracts upon the Corn
Trade, to 23,728 quarters of all sorts of grain, and does not exceed the
five hundredth and seventy-one part of the annual consumption. But as
the bounty upon corn occasions a greater exportation in years of plenty,
so it must, of consequence, occasion a greater importation in years
of scarcity, than in the actual state of tillage would otherwise take
place. By means of it, the plenty of one year does not compensate the
scarcity of another; and as the average quantity exported is necessarily
augmented by it, so must likewise, in the actual state of tillage, the
average quantity imported. If there were no bounty, as less corn would
be exported, suit is probable that, one year with another, less would be
imported than at present. The corn-merchants, the fetchers and carriers
of corn between Great Britain and foreign countries, would have
much less employment, and might suffer considerably; but the
country gentlemen and farmers could suffer very little. It is in the
corn-merchants, accordingly, rather than the country gentlemen and
farmers, that I have observed the greatest anxiety for the renewal and
continuation of the bounty.

Country gentlemen and farmers are, to their great honour, of all people,
the least subject to the wretched spirit of monopoly. The undertaker
of a great manufactory is sometimes alarmed if another work of the same
kind is established within twenty miles of him; the Dutch undertaker
of the woollen manufacture at Abbeville, stipulated that no work of
the same kind should be established within thirty leagues of that city.
Farmers and country gentlemen, on the contrary, are generally disposed
rather to promote, than to obstruct, the cultivation and improvement of
their neighbours farms and estates. They have no secrets, such as those
of the greater part of manufacturers, but are generally rather fond of
communicating to their neighbours, and of extending as far as possible
any new practice which they may have found to be advantageous. "Pius
quaestus", says old Cato, "stabilissimusque, minimeque invidiosus;
minimeque male cogitantes sunt, qui in eo studio occupati sunt." Country
gentlemen and farmers, dispersed in different parts of the country,
cannot so easily combine as merchants and manufacturers, who being
collected into towns, and accustomed to that exclusive corporation
spirit which prevails in them, naturally endeavour to obtain, against
all their countrymen, the same exclusive privilege which they generally
possess against the inhabitants of their respective towns. They
accordingly seem to have been the original inventors of those restraints
upon the importation of foreign goods, which secure to them the monopoly
of the home market. It was probably in imitation of them, and to put
themselves upon a level with those who, they found, were disposed to
oppress them, that the country gentlemen and farmers of Great Britain
so far forgot the generosity which is natural to their station, as to
demand the exclusive privilege of supplying their countrymen with corn
and butcher's meat. They did not, perhaps, take time to consider how
much less their interest could be affected by the freedom of trade, than
that of the people whose example they followed.

To prohibit, by a perpetual law, the importation of foreign corn and
cattle, is in reality to enact, that the population and industry of the
country shall, at no time, exceed what the rude produce of its own soil
can maintain.

There seem, however, to be two cases, in which it will generally be
advantageous to lay some burden upon foreign, for the encouragement of
domestic industry.

The first is, when some particular sort of industry is necessary for
the defence of the country. The defence of Great Britain, for example,
depends very much upon the number of its sailors and shipping. The act
of navigation, therefore, very properly endeavours to give the sailors
and shipping of Great Britain the monopoly of the trade of their own
country, in some cases, by absolute prohibitions, and in others, by
heavy burdens upon the shipping of foreign countries. The following are
the principal dispositions of this act.

First, All ships, of which the owners, masters, and three-fourths of
the mariners, are not British subjects, are prohibited, upon pain of
forfeiting ship and cargo, from trading to the British settlements
and plantations, or from being employed in the coasting trade of Great
Britain.

Secondly, A great variety of the most bulky articles of importation can
be brought into Great Britain only, either in such ships as are above
described, or in ships of the country where those goods are produced,
and of which the owners, masters, and three-fourths of the mariners,
are of that particular country; and when imported even in ships of this
latter kind, they are subject to double aliens duty. If imported in
ships of any other country, the penalty is forfeiture of ship and goods.
When this act was made, the Dutch were, what they still are, the great
carriers of Europe; and by this regulation they were entirely excluded
from being the carriers to Great Britain, or from importing to us the
goods of any other European country.

Thirdly, A great variety of the most bulky articles of importation are
prohibited from being imported, even in British ships, from any country
but that in which they are produced, under pain of forfeiting ship and
cargo. This regulation, too, was probably intended against the Dutch.
Holland was then, as now, the great emporium for all European goods; and
by this regulation, British ships were hindered from loading in Holland
the goods of any other European country.

Fourthly, Salt fish of all kinds, whale fins, whalebone, oil, and
blubber, not caught by and cured on board British vessels, when imported
into Great Britain, are subject to double aliens duty. The Dutch, as
they are still the principal, were then the only fishers in Europe that
attempted to supply foreign nations with fish. By this regulation, a
very heavy burden was laid upon their supplying Great Britain.

When the act of navigation was made, though England and Holland were not
actually at war, the most violent animosity subsisted between the two
nations. It had begun during the government of the long parliament,
which first framed this act, and it broke out soon after in the
Dutch wars, during that of the Protector and of Charles II. It is not
impossible, therefore, that some of the regulations of this famous act
may have proceeded from national animosity. They are as wise, however,
as if they had all been dictated by the most deliberate wisdom. National
animosity, at that particular time, aimed at the very same object which
the most deliberate wisdom would have recommended, the diminution of the
naval power of Holland, the only naval power which could endanger the
security of England.

The act of navigation is not favourable to foreign commerce, or to
the growth of that opulence which can arise from it. The interest of a
nation, in its commercial relations to foreign nations, is, like that
of a merchant with regard to the different people with whom he deals,
to buy as cheap, and to sell as dear as possible. But it will be most
likely to buy cheap, when, by the most perfect freedom of trade, it
encourages all nations to bring to it the goods which it has occasion to
purchase; and, for the same reason, it will be most likely to sell dear,
when its markets are thus filled with the greatest number of buyers. The
act of navigation, it is true, lays no burden upon foreign ships that
come to export the produce of British industry. Even the ancient
aliens duty, which used to be paid upon all goods, exported as well
as imported, has, by several subsequent acts, been taken off from the
greater part of the articles of exportation. But if foreigners, either
by prohibitions or high duties, are hindered from coming to sell, they
cannot always afford to come to buy; because, coming without a cargo,
they must lose the freight from their own country to Great Britain. By
diminishing the number of sellers, therefore, we necessarily diminish
that of buyers, and are thus likely not only to buy foreign goods
dearer, but to sell our own cheaper, than if there was a more perfect
freedom of trade. As defence, however, is of much more importance than
opulence, the act of navigation is, perhaps, the wisest of all the
commercial regulations of England.

The second case, in which it will generally be advantageous to lay some
burden upon foreign for the encouragement of domestic industry, is when
some tax is imposed at home upon the produce of the latter. In this
case, it seems reasonable that an equal tax should be imposed upon the
like produce of the former. This would not give the monopoly of the
borne market to domestic industry, nor turn towards a particular
employment a greater share of the stock and labour of the country, than
what would naturally go to it. It would only hinder any part of what
would naturally go to it from being turned away by the tax into a less
natural direction, and would leave the competition between foreign and
domestic industry, after the tax, as nearly as possible upon the same
footing as before it. In Great Britain, when any such tax is laid upon
the produce of domestic industry, it is usual, at the same time,
in order to stop the clamorous complaints of our merchants and
manufacturers, that they will be undersold at home, to lay a much
heavier duty upon the importation of all foreign goods of the same kind.

This second limitation of the freedom of trade, according to some
people, should, upon most occasions, be extended much farther than to
the precise foreign commodities which could come into competition with
those which had been taxed at home. When the necessaries of life have
been taxed in any country, it becomes proper, they pretend, to tax not
only the like necessaries of life imported from other countries, but all
sorts of foreign goods which can come into competition with any thing
that is the produce of domestic industry. Subsistence, they say, becomes
necessarily dearer in consequence of such taxes; and the price of labour
must always rise with the price of the labourer's subsistence. Every
commodity, therefore, which is the produce of domestic industry, though
not immediately taxed itself, becomes dearer in consequence of such
taxes, because the labour which produces it becomes so. Such taxes,
therefore, are really equivalent, they say, to a tax upon every
particular commodity produced at home. In order to put domestic upon
the same footing with foreign industry, therefore, it becomes necessary,
they think, to lay some duty upon every foreign commodity, equal to this
enhancement of the price of the home commodities with which it can come
into competition.

Whether taxes upon the necessaries of life, such as those in Great
Britain upon soap, salt, leather, candles, etc. necessarily raise the
price of labour, and consequently that of all other commodities, I shall
consider hereafter, when I come to treat of taxes. Supposing, however,
in the mean time, that they have this effect, and they have it
undoubtedly, this general enhancement of the price of all commodities,
in consequence of that labour, is a case which differs in the two
following respects from that of a particular commodity, of which the
price was enhanced by a particular tax immediately imposed upon it.

First, It might always be known with great exactness, how far the price
of such a commodity could be enhanced by such a tax; but how far the
general enhancement of the price of labour might affect that of every
different commodity about which labour was employed, could never be
known with any tolerable exactness. It would be impossible, therefore,
to proportion, with any tolerable exactness, the tax of every foreign,
to the enhancement of the price of every home commodity.

Secondly, Taxes upon the necessaries of life have nearly the same effect
upon the circumstances of the people as a poor soil and a bad climate.
Provisions are thereby rendered dearer, in the same manner as if it
required extraordinary labour and expense to raise them. As, in the
natural scarcity arising from soil and climate, it would be absurd to
direct the people in what manner they ought to employ their capitals and
industry, so is it likewise in the artificial scarcity arising from such
taxes. To be left to accommodate, as well as they could, their industry
to their situation, and to find out those employments in which,
notwithstanding their unfavourable circumstances, they might have some
advantage either in the home or in the foreign market, is what, in both
cases, would evidently be most for their advantage. To lay a new-tax
upon them, because they are already overburdened with taxes, and because
they already pay too dear for the necessaries of life, to make them
likewise pay too dear for the greater part of other commodities, is
certainly a most absurd way of making amends.

Such taxes, when they have grown up to a certain height, are a curse
equal to the barrenness of the earth, and the inclemency of the heavens,
and yet it is in the richest and most industrious countries that they
have been most generally imposed. No other countries could support so
great a disorder. As the strongest bodies only can live and enjoy health
under an unwholesome regimen, so the nations only, that in every sort of
industry have the greatest natural and acquired advantages, can subsist
and prosper under such taxes. Holland is the country in Europe in which
they abound most, and which, from peculiar circumstances, continues to
prosper, not by means of them, as has been most absurdly supposed, but
in spite of them.

As there are two cases in which it will generally be advantageous to lay
some burden upon foreign for the encouragement of domestic industry,
so there are two others in which it may sometimes be a matter of
deliberation, in the one, how far it is proper to continue the free
importation of certain foreign goods; and, in the other, how far, or in
what manner, it may be proper to restore that free importation, after it
has been for some time interrupted.

The case in which it may sometimes be a matter of deliberation how far
it is proper to continue the free importation of certain foreign goods,
is when some foreign nation restrains, by high duties or prohibitions,
the importation of some of our manufactures into their country. Revenge,
in this case, naturally dictates retaliation, and that we should impose
the like duties and prohibitions upon the importation of some or all
of their manufactures into ours. Nations, accordingly, seldom fail to
retaliate in this manner. The French have been particularly forward to
favour their own manufactures, by restraining the importation of
such foreign goods as could come into competition with them. In this
consisted a great part of the policy of Mr Colbert, who, notwithstanding
his great abilities, seems in this case to have been imposed upon by
the sophistry of merchants and manufacturers, who are always demanding
a monopoly against their countrymen. It is at present the opinion of the
most intelligent men in France, that his operations of this kind have
not been beneficial to his country. That minister, by the tariff
of 1667, imposed very high duties upon a great number of foreign
manufactures. Upon his refusing to moderate them in favour of the Dutch,
they, in 1671, prohibited the importation of the wines, brandies, and
manufactures of France. The war of 1672 seems to have been in part
occasioned by this commercial dispute. The peace of Nimeguen put an
end to it in 1678, by moderating some of those duties in favour of the
Dutch, who in consequence took off their prohibition. It was about the
same time that the French and English began mutually to oppress each
other's industry, by the like duties and prohibitions, of which the
French, however, seem to have set the first example, The spirit of
hostility which has subsisted between the two nations ever since, has
hitherto hindered them from being moderated on either side. In 1697,
the Ehglish prohibited the importation of bone lace, the manufacture
of Flanders. The government of that country, at that time under the
dominion of Spain, prohibited, in return, the importation of English
woollens. In 1700, the prohibition of importing bone lace into England
was taken oft; upon condition that the importation of English woollens
into Flanders should be put on the same footing as before.

There may be good policy in retaliations of this kind, when there is
a probability that they will procure the repeal of the high duties or
prohibitions complained of. The recovery of a great foreign market will
generally more than compensate the transitory inconveniency of paying
dearer during a short time for some sorts of goods. To judge whether
such retaliations are likely to produce such an effect, does not,
perhaps, belong so much to the science of a legislator, whose
deliberations ought to be governed by general principles, which are
always the same, as to the skill of that insidious and crafty animal
vulgarly called a statesman or politician, whose councils are directed
by the momentary fluctuations of affairs. When there is no probability
that any such repeal can be procured, it seems a bad method of
compensating the injury done to certain classes of our people, to do
another injury ourselves, not only to those classes, but to almost all
the other classes of them. When our neighbours prohibit some manufacture
of ours, we generally prohibit, not only the same, for that alone would
seldom affect them considerably, but some other manufacture of theirs.
This may, no doubt, give encouragement to some particular class of
workmen among ourselves, and, by excluding some of their rivals, may
enable them to raise their price in the home market. Those workmen
however, who suffered by our neighbours prohibition, will not be
benefited by ours. On the contrary, they, and almost all the other
classes of our citizens, will thereby be obliged to pay dearer than
before for certain goods. Every such law, therefore, imposes a real
tax upon the whole country, not in favour of that particular class of
workmen who were injured by our neighbours prohibitions, but of some
other class.

The case in which it may sometimes be a matter of deliberation, how
far, or in what manner, it is proper to restore the free importation
of foreign goods, after it has been for some time interrupted, is when
particular manufactures, by means of high duties or prohibitions upon
all foreign goods which can come into competition with them, have been
so far extended as to employ a great multitude of hands. Humanity may in
this case require that the freedom of trade should be restored only by
slow gradations, and with a good deal of reserve and circumspection.
Were those high duties and prohibitions taken away all at once, cheaper
foreign goods of the same kind might be poured so fast into the home
market, as to deprive all at once many thousands of our people of their
ordinary employment and means of subsistence. The disorder which this
would occasion might no doubt be very considerable. It would in all
probability, however, be much less than is commonly imagined, for the
two following reasons.

First, All those manufactures of which any part is commonly exported to
other European countries without a bounty, could be very little affected
by the freest importation of foreign goods. Such manufactures must be
sold as cheap abroad as any other foreign goods of the same quality and
kind, and consequently must be sold cheaper at home. They would still,
therefore, keep possession of the home market; and though a capricious
man of fashion might sometimes prefer foreign wares, merely because they
were foreign, to cheaper and better goods of the same kind that were
made at home, this folly could, from the nature of things, extend to
so few, that it could make no sensible impression upon the general
employment of the people. But a great part of all the different branches
of our woollen manufacture, of our tanned leather, and of our hardware,
are annually exported to other European countries without any bounty,
and these are the manufactures which employ the greatest number of
hands. The silk, perhaps, is the manufacture which would suffer the most
by this freedom of trade, and after it the linen, though the latter much
less than the former.

Secondly, Though a great number of people should, by thus restoring the
freedom of trade, be thrown all at once out of their ordinary employment
and common method of subsistence, it would by no means follow that they
would thereby be deprived either of employment or subsistence. By the
reduction of the army and navy at the end of the late war, more than
100,000 soldiers and seamen, a number equal to what is employed in the
greatest manufactures, were all at once thrown out of their ordinary
employment: but though they no doubt suffered some inconveniency, they
were not thereby deprived of all employment and subsistence. The greater
part of the seamen, it is probable, gradually betook themselves to the
merchant service as they could find occasion, and in the mean time both
they and the soldiers were absorbed in the great mass of the people,
and employed in a great variety of occupations. Not only no great
convulsion, but no sensible disorder, arose from so great a change in
the situation of more than 100,000 men, all accustomed to the use of
arms, and many of them to rapine and plunder. The number of vagrants was
scarce anywhere sensibly increased by it; even the wages of labour
were not reduced by it in any occupation, so far as I have been able
to learn, except in that of seamen in the merchant service. But if
we compare together the habits of a soldier and of any sort of
manufacturer, we shall find that those of the latter do not tend so much
to disqualify him from being employed in a new trade, as those of the
former from being employed in any. The manufacturer has always been
accustomed to look for his subsistence from his labour only; the soldier
to expect it from his pay. Application and industry have been familiar
to the one; idleness and dissipation to the other. But it is surely much
easier to change the direction of industry from one sort of labour to
another, than to turn idleness and dissipation to any. To the greater
part of manufactures, besides, it has already been observed, there are
other collateral manufactures of so similar a nature, that a workman can
easily transfer his industry from one of them to another. The greater
part of such workmen, too, are occasionally employed in country labour.
The stock which employed them in a particular manufacture before, will
still remain in the country, to employ an equal number of people in some
other way. The capital of the country remaining the same, the demand for
labour will likewise be the same, or very nearly the same, though it may
be exerted in different places, and for different occupations. Soldiers
and seamen, indeed, when discharged from the king's service, are at
liberty to exercise any trade within any town or place of Great Britain
or Ireland. Let the same natural liberty of exercising what species of
industry they please, be restored to all his Majesty's subjects, in the
same manner as to soldiers and seamen; that is, break down the exclusive
privileges of corporations, and repeal the statute of apprenticeship,
both which are really encroachments upon natural Liberty, and add to
those the repeal of the law of settlements, so that a poor workman, when
thrown out of employment, either in one trade or in one place, may seek
for it in another trade or in another place, without the fear either
of a prosecution or of a removal; and neither the public nor the
individuals will suffer much more from the occasional disbanding some
particular classes of manufacturers, than from that of the soldiers.
Our manufacturers have no doubt great merit with their country, but they
cannot have more than those who defend it with their blood, nor deserve
to be treated with more delicacy.

To expect, indeed, that the freedom of trade should ever be entirely
restored in Great Britain, is as absurd as to expect that an Oceana or
Utopia should ever be established in it. Not only the prejudices of the
public, but, what is much more unconquerable, the private interests of
many individuals, irresistibly oppose it. Were the officers of the army
to oppose, with the same zeal and unanimity, any reduction in the number
of forces, with which master manufacturers set themselves against every
law that is likely to increase the number of their rivals in the home
market; were the former to animate their soldiers. In the same manner
as the latter inflame their workmen, to attack with violence and outrage
the proposers of any such regulation; to attempt to reduce the army
would be as dangerous as it has now become to attempt to diminish, in
any respect, the monopoly which our manufacturers have obtained against
us. This monopoly has so much increased the number of some particular
tribes of them, that, like an overgrown standing army, they have become
formidable to the government, and, upon many occasions, intimidate the
legislature. The member of parliament who supports every proposal for
strengthening this monopoly, is sure to acquire not only the reputation
of understanding trade, but great popularity and influence with an order
of men whose numbers and wealth render them of great importance. If
he opposes them, on the contrary, and still more, if he has authority
enough to be able to thwart them, neither the most acknowledged probity,
nor the highest rank, nor the greatest public services, can protect him
from the most infamous abuse and detraction, from personal insults, nor
sometimes from real danger, arising from the insolent outrage of furious
and disappointed monopolists.

The undertaker of a great manufacture, who, by the home markets being
suddenly laid open to the competition of foreigners, should be obliged
to abandon his trade, would no doubt suffer very considerably. That part
of his capital which had usually been employed in purchasing materials,
and in paying his workmen, might, without much difficulty, perhaps, find
another employment; but that part of it which was fixed in workhouses,
and in the instruments of trade, could scarce be disposed of without
considerable loss. The equitable regard, therefore, to his interest,
requires that changes of this kind should never be introduced suddenly,
but slowly, gradually, and after a very long warning. The legislature,
were it possible that its deliberations could be always directed, not by
the clamorous importunity of partial interests, but by an extensive
view of the general good, ought, upon this very account, perhaps, to be
particularly careful, neither to establish any new monopolies of this
kind, nor to extend further those which are already established.
Every such regulation introduces some degree of real disorder into the
constitution of the state, which it will be difficult afterwards to cure
without occasioning another disorder.

How far it may be proper to impose taxes upon the importation of foreign
goods, in order not to prevent their importation, but to raise a revenue
for government, I shall consider hereafter when I come to treat of
taxes. Taxes imposed with a view to prevent, or even to diminish
importation, are evidently as destructive of the revenue of the customs as of the freedom of trade.




© Art Branch Inc. | English Dictionary