PART III. Of the Advantages which Europe has derived From the Discovery
of America, and from that of a Passage to the East Indies by the Cape of
Good Hope.

Such are the advantages which the colonies of America have derived from
the policy of Europe.

What are those which Europe has derived from the discovery and
colonization of America?

Those advantages may be divided, first, into the general advantages
which Europe, considered as one great country, has derived from those
great events; and, secondly, into the particular advantages which each
colonizing country has derived from the colonies which particularly
belong to it, in consequence of the authority or dominion which it
exercises over them.

The general advantages which Europe, considered as one great country,
has derived from the discovery and colonization of America, consist,
first, in the increase of its enjoyments; and, secondly, in the
augmentation of its industry.

The surplus produce of America imported into Europe, furnishes the
inhabitants of this great continent with a variety of commodities which
they could not otherwise have possessed; some for conveniency and use,
some for pleasure, and some for ornament; and thereby contributes to
increase their enjoyments.

The discovery and colonization of America, it will readily be allowed,
have contributed to augment the industry, first, of all the countries
which trade to it directly, such as Spain, Portugal, France, and
England; and, secondly, of all those which, without trading to it
directly, send, through the medium of other countries, goods to it of
their own produce, such as Austrian Flanders, and some provinces of
Germany, which, through the medium of the countries before mentioned,
send to it a considerable quantity of linen and other goods. All such
countries have evidently gained a more extensive market for their
surplus produce, and must consequently have been encouraged to increase
its quantity.

But that those great events should likewise have contributed to
encourage the industry of countries such as Hungary and Poland, which
may never, perhaps, have sent a single commodity of their own produce to
America, is not, perhaps, altogether so evident. That those events have
done so, however, cannot be doubted. Some part of the produce of America
is consumed in Hungary and Poland, and there is some demand there for
the sugar, chocolate, and tobacco, of that new quarter of the world. But
those commodities must be purchased with something which is either the
produce of the industry of Hungary and Poland, or with something which
had been purchased with some part of that produce. Those commodities
of America are new values, new equivalents, introduced into Hungary
and Poland, to be exchanged there for the surplus produce of these
countries. By being carried thither, they create a new and more
extensive market for that surplus produce. They raise its value, and
thereby contribute to encourage its increase. Though no part of it may
ever be carried to America, it may be carried to other countries,
which purchase it with a part of their share of the surplus produce of
America, and it may find a market by means of the circulation of that
trade which was originally put into motion by the surplus produce of
America.

Those great events may even have contributed to increase the enjoyments,
and to augment the industry, of countries which not only never sent
any commodities to America, but never received any from it. Even such
countries may have received a greater abundance of other commodities
from countries, of which the surplus produce had been augmented by means
of the American trade. This greater abundance, as it must necessarily
have increased their enjoyments, so it must likewise have augmented
their industry. A greater number of new equivalents, of some kind or
other, must have been presented to them to be exchanged for the surplus
produce of that industry. A more extensive market must have been
created for that surplus produce, so as to raise its value, and thereby
encourage its increase. The mass of commodities annually thrown into
the great circle of European commerce, and by its various revolutions
annually distributed among all the different nations comprehended within
it, must have been augmented by the whole surplus produce of America. A
greater share of this greater mass, therefore, is likely to have fallen
to each of those nations, to have increased their enjoyments, and
augmented their industry.

The exclusive trade of the mother countries tends to diminish, or at
least to keep down below what they would otherwise rise to, both the
enjoyments and industry of all those nations in general, and of the
American colonies in particular. It is a dead weight upon the action
of one of the great springs which puts into motion a great part of the
business of mankind. By rendering the colony produce dearer in all other
countries, it lessens its consumption, and thereby cramps the industry
of the colonies, and both the enjoyments and the industry of all other
countries, which both enjoy less when they pay more for what they enjoy,
and produce less when they get less for what they produce. By rendering
the produce of all other countries dearer in the colonies, it cramps
in the same manner the industry of all other colonies, and both the
enjoyments and the industry of the colonies. It is a clog which, for the
supposed benefit of some particular countries, embarrasses the pleasures
and encumbers the industry of all other countries, but of the colonies
more than of any other. It not only excludes as much as possible all
other countries from one particular market, but it confines as much as
possible the colonies to one particular market; and the difference is
very great between being excluded from one particular market when all
others are open, and being confined to one particular market when all
others are shut up. The surplus produce of the colonies, however, is the
original source of all that increase of enjoyments and industry which
Europe derives from the discovery and colonization of America, and the
exclusive trade of the mother countries tends to render this source much
less abundant than it otherwise would be.

The particular advantages which each colonizing country derives from the
colonies which particularly belong to it, are of two different kinds;
first, those common advantages which every empire derives from the
provinces subject to its dominion; and, secondly, those peculiar
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.